Mapping the Listed BDC Landscape

Morningstar

Sakshi Singh, Abhishek Dutta

Research

17 Pages

Morningstar examines listed BDCs as a liquid bridge between private credit and public markets. The paper introduces the Morningstar PitchBook Listed BDC Index, showing how a credit focused and dividend weighted approach can increase yield while keeping exposure tied to corporate lending. It also notes that BDC income can be attractive, but more volatile in tougher credit cycles.

Key Takeaways

Higher yield: The Morningstar PitchBook Listed BDC Index raises weighted trailing 12 month yield to 14.39% from 12.93%.
Private access: BDCs must invest at least 70% of assets in U.S. private firms or smaller public companies.
Risk tradeoff: Higher yielding BDCs can perform well in favorable markets, but income durability is weaker in tightening cycles.
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