Friday, June 15, 2012

BDC Article

Here is a Reuters article on business development companies (BDCs).  The article was published in Buyouts Magazine, and is a good primer on BDCs.  Franklin Square's first BDC, FS Investment Corporation, recently finished raising $2.5 billion.  Other sponsors see the opportunity and are rushing in:
All told, more than a dozen nontraded BDCs have registered with the Securities and Exchange Commission over the last five years, according to Krus. Those identified as being aimed at retail investors and advised by buyout shops have raised or are seeking an estimated $8.6 billion.
For reasons I don't understand, new, non-traded BDCs have somehow become the domain of non-traded REIT sponsors.

The article talks about the front end fees of BDCs, which are identical on the BDCs I have reviewed.  One point to note is that non-traded BDCs' ongoing fees are the same as listed BDCs.

Update:  Here is another article on BDCs from Bloomberg.   Pension funds are looking to BDCs for their high yields.  


OrthodoxJew said...

wow what a great blog

as an owner in lighstone, inland american, health care trust of america, and apple reit nine,

I love this blog

Anonymous said...

Public BDC's look to be doing just fine and offering a healthy yield. When ever you step down the quality ladder this far in search of higher yield you deserve what you get. These will work great until they don't.

Rational Realist said...

OrthodoxJew, thanks for the comment.

Anonymous, public BDCs offer a good yield. People need to remember that BDCs weren't created overnight and aren't some new way to earn risk-free 7% yields. BDCs pay high yields for a reason.