BofA maintains underperform ratings on six BDC stocks

Bank of America kept its underperform rating on six business development company (BDC) stocks. The bank cited concerns about the venture lending environment, concentration risk, upcoming debt maturities in 2026 and 2027, and high leverage levels for Runway Growth Finance Corp. (RWAY). Goldman Sachs BDC Inc. (GSBD) also maintained an underperform rating due to improved profitability but elevated non-accruals at cost.

Carlyle Secured Lending Inc. (CGBD) and Palmer Square Capital BDC Inc. (PSBD) received neutral ratings. CGBD's profitability covered the base dividend, non-accruals remained low, and capital deployment improved. However, portfolio markdowns negatively impacted profitability and net asset value. PSBD increased profitability and credit quality, despite a slight rise in non-accruals, through its strategy of investing across liquid and private markets.

MidCap Financial Investment Corp. (MFIC) maintained its underperform rating due to credit weakness in select positions that reduced profitability and net asset value. The company reduced new originations and focused on deleveraging. New Mountain Finance Corp. (NMFC) also kept its underperform rating, with profitability showing improvement as losses moderated, non-accruals declined, and portfolio yield remained steady.