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Public BDCs rebound as private credit steadies in Q2
Second-quarter results show non-accrual loans rising at Ares Capital, but overall market conditions were described as more stable than Q1.
Private credit has faced investor fears over liquidity and portfolio credit quality, but publicly traded business development companies, which pool direct loans and trade on stock exchanges, are offering a clearer read on how the sector is holding up, according to coverage summarized by LiveMint Markets. Unlike non-traded peers that are dealing with large redemption backlogs, these listed vehicles have dedicated pools of capital. That has shifted attention to loan valuations and credit performance, with managers emphasizing portfolio cleanup efforts such as trimming weaker holdings, reducing the share of non-accruals, and lowering leverage. The latest reporting has largely supported shares after many BDCs hit multi-year lows earlier this year. LiveMint Markets notes that some funds previously resorted to cutting dividends, while more recent quarters have helped buoy prices, with BlackRock and Blue Owl posting some of their biggest gains in months. Blue Owl’s leadership said the second quarter was more stable than the first, and encouraged investors to take a longer-term view. Still, the outlook for renewed growth remains unclear as the industry contends with exposure to businesses vulnerable to advances in AI, and some larger private credit firms have pivoted toward higher-rated borrowers and larger deals tied to building AI infrastructure.
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