Net funding activity among the top publicly traded business development companies contracted in Q4 as lenders found themselves sandwiched between declining new investment activity and rising repayment and exit volume.
An LCD analysis of the top 12 BDCs found that repayments and sales totaled approximately $9.4 billion, up from $7.6 billion in Q3 2025 and from $8.5 billion in Q4 2024.
By contrast, gross funding volume totaled $8.9 billion in Q4, surpassing the $8.4 billion funded in Q3 2025 but falling short of the $10.4 billion funded in Q4 2024.
Much of the contraction stems from just one lender, Blue Owl Capital Corp., which recorded $521 million of new investments funded against $1.4 billion in sales and repayments. The company used its capital in part to pay down debt and to fund a $148 million share buyback, which it said was its largest quarterly repurchase to date; it increased its maximum repurchase program for Q1 2026 to $300 million, from $200 million.
Importantly, the repayment volume in Q4 does not reflect any part of Blue Owl’s $1.4 billion asset sale announced in February, which will see $400 million of OBDC’s direct lending assets sold to a group of pension funds and insurance investors.
Several other BDC portfolios also saw negative net funding totals in Q4, including FS KKR Capital Corp., Golub Capital Corp., New Mountain Finance Corp., and Bain Capital Specialty Finance Inc.
Other BDCs reported positive net funding totals. Ares Capital Corp. reported $4.8 billion in gross fundings against $4.3 billion in repayments and sales, for a net funding total of $515 million. Blackstone Secured Lending Fund reported a positive net funding total of $413 million.
Meanwhile, average yield reported by the top BDCs — reflecting a weighted average figure reported at fair value — decreased to 10.1% in Q4 2025, from 11.1% in Q4 2024. Every BDC reported a decline in yield in Q4 2025, with the exception of Goldman Sachs BDC, which does not break out its yield data.
The bulk of the decline can be attributed to rate cuts and tightening spreads. Blue Owl, for example, reported new investment yields of 8.7%, compared to 10.0% on the overall portfolio.
Increased repayments can accelerate these trends by taking higher-yielding assets out of the portfolio. Among BDCs that report the yields on repaid investments, the gap between new investments versus repaid ones is wide.
For example, Ares reported that the average yield on new investments was 9.0% in Q4 2025, while the average yield on investments sold or repaid was 10.1%. For Blackstone, the same metrics were 8.9% and 9.9%, respectively.
Market participants say that pricing dynamics shifted in Q1 in response to investor anxieties, including a pullback among lenders in the software sector. Lenders said pricing had widened by 50 bps or more on many loans, and survey respondents expected more widening in the coming months.
Featured image: Adam Gault/Getty Images
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