March 26, 2018
Are you still on Facebook? Read the full article here:
We mentioned last week that the new tax bill really benefits BDC’s. We own CGBD in the Core Portfolio and you can buy, or add to your current position.
NOTE: You should buy CGBD TODAY as it goes ex-dividend March 28.
“The use of additional leverage will permit BDCs to pursue higher quality deals with less associated credit risk, while still generating competitive returns for their investors, market participants and analysts said. The possibility of accessing more capital comes at a welcome time for the BDC sector. In a highly competitive middle market lending environment, the sector has faced headwinds.”
It should be noted that not all BDCs will benefit as much as others, as the article goes on to mention:
“Certain BDCs stand to benefit more than others depending on a range of factors, including the percentage of first-lien investments, track record, portfolio size/platform, investment grade rating, and current leverage utilized, the report said. The KBW analysts wrote in the report that they expect the biggest beneficiaries to be Ares Capital Corp (ARCC), TCG BDC (CGBD), FS Investment Corp (FSIC), Golub Capital BDC Inc (GBDC), PennantPark Floating Rate Capital (PFLT) and TCP Capital Corp (TCPC).”
These changes will likely drive increased BDC pricing bifurcation, meaning that higher risk BDCs will either not be able to take full advantage or will increase the amount of shareholder risk (driving lower prices). Well-managed BDCs that continue to prudently manage their capital structures and portfolios, will have the ability invest in safer assets and likely lower their borrowing rates for improved net interest margins. There is a chance that these BDCs will increase dividends while improving their risk profiles (or at least maintaining).
Americans keep packin it on.
40% of American adults are obese, a sharp increase from a decade earlier and a record high. according to federal health officials.
A National Health and Nutrition Examination Survey (NHANES) sampling of 27,449 adults with a BMI between 30 and 40 found that among those aged 20 years and older, obesity went from 33.7% in 2007-2008 to 39.6% in 2015-2016. Severe obesity – those with a BMI above 40, jumped from 5.7% to 7.7% over the same period.
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