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Octus BDC Weekly Roundup: Nonaccruals Jump 40% Sequentially; Adjusted Rate Reaches 3.24%; BDC Investor Redemption Rates Continue Climb in Q2

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Relevant Items:
Octus’ BDC Database
Private Credit Dashboard

Editor’s Note: A weekly roundup of business development company, or BDC, articles available to Private Credit and Deal Origination subscribers is below. To access any of the articles below, please reach out to [email protected]. Octus’ BDC analysis team has published a series of articles covering BDC quarterly earnings, sector-level stressed watchlists and proprietary analysis built on top of the BDC data that Octus extracts from more than 170 private and public BDCs. Octus’ full Private Credit product suite includes deal origination and private credit coverage, BDC and Private Credit Data, Private Credit Fundamentals, Deal Term Analytics and Covenants analysis. Contact [email protected] or your account manager for a demo.
 

Stressed Private Credit

Q1’26 Nonaccrual Report: Octus identified a total of $9.98 billion of debt (at cost) in nonaccrual status reported in the first quarter of 2026, a dramatic jump of 40% from $7.12 billion in the fourth quarter of 2025. The aggregate debt nonaccruals represented 2.01% of total aggregate BDC reported debt investments (at cost) in the first quarter, up from 1.45% the prior quarter. Octus also performed a cross-BDC analysis to identify the total cost and fair value of all tranches held across the BDC sector for any issuer marked as nonaccrual by at least one peer. Our analysis shows that total exposure at cost would have been $16.04 billion, representing a 61% increase over reported values; this translates to 123 bps of additional exposure (3.24% adjusted versus 2.01% reported).

Fair-Value Change Analysis: In the first quarter, BDCs reduced fair values by more than 15% sequentially on loans to 135 distinct borrowers. This reflects a significant increase from the 88 borrowers identified in the previous quarter and compared with the 86 identified in the third quarter. Across this cohort, the total principal of loans being written down reached $9 billion. Information technology stood out as the sector driving the most significant deterioration in the first quarter of 2026.

Cash to PIK Report: Octus identified 32 borrowers, accounting for $1.3 billion in principal, that switched a portion or all of the interest paid to lenders to PIK in the first quarter ended March 31, after paying all-cash interest in the fourth quarter ended Dec. 31, 2025.
 

Nontraded BDC Tenders

Octus has been tracking redemption requests by shareholders of nontraded BDCs with second quarter results beginning to trickle in. Although many funds have limited quarterly tenders to 5% of total shares outstanding, certain redemption requests have far exceeded the 5% maximum.

In the second quarter, Blackstone Private Credit Fund, BlackRock Private Credit Fund, HPS Corporate Lending Fund, Monroe Capital Income Plus Corp., New Mountain Private Credit Fund and Fidelity Private Credit Fund all reported results.

Additionally, investors holding 17% of Cliffwater Corporate Lending Fund’s outstanding shares submitted redemption requests in the second quarter.

For results by BDC for a sample of the largest funds are shown below, along with results dating back to the first quarter of 2025, please email [email protected].
 

 

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