Publicly traded BDCs have been increasingly returning capital to investors through share buybacks instead of investing it in loans.

Once the domain of distressed borrowers, PIK loans are a favored option for healthy companies navigating the punishing reality of high interest rates, raising questions about whether today’s cash flow cushion could become tomorrow’s repayment crisis.

BDC stock prices have fallen meaningfully this year while the broader stock market has rallied.

Spreads have been in broad decline across portfolios.