Blog Post
Data Drop: Aggregate BDC debt nonaccruals decline 5% QoQ in Q2’26 to $9.5B at cost, total 1.9% of all BDC debt investments at cost; Q2’26 adjusted rate rises to 3.74%
In a universe of 173 business development companies, or BDCs, Octus identified a total of $9.5 billion of debt (at cost) in nonaccrual status reported in the second quarter of 2026, a slight decline of 5% from $10 billion in the first quarter of 2026. The aggregate debt nonaccruals represented 1.9% of total aggregate BDC reported debt investments (at cost) in the second quarter, down from 2.02% the prior quarter. Although there was a sequential decline in nonaccruals, the total cost of nonaccruals was 58% higher year over year.
When looking at the full sectorwide exposure to any nonaccrual name, the numbers paint a different picture. Octus 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. This methodology provides an adjusted nonaccrual rate that captures the full sectorwide exposure to any nonaccrual name.
Our analysis shows that total exposure at cost would have been $18.7 billion, almost double the reported values; this translates to 184 bps of additional exposure (3.74% adjusted versus 1.9% reported). Moreover, when looking at the quarter-over-quarter increase in nonaccruals, adjusted nonaccruals at cost increased 17% in the second quarter of 2026, compared to the 5% decline based on reported levels.
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