Ares Capital's Non-Accruals Rose to 2.4% of Its Portfolio, Still Below Its Own Historical Average
Ares Capital's troubled loans are up, but you have to put the risk into its proper perspective.
In Q2 2026, Ares Capital's non-acruals rose to 2.4% of its portfolio, but remained below its historical average. The company, a business development company (BDC), makes loans to smaller businesses, making timely repayment crucial. While a 60-basis-point year-over-year increase in troubled loans was observed, the company reassures investors that this is not a cause for alarm just yet.
Ares Capital's earnings depend on the spread between its cost of capital and the interest charged on the loans it provides. With an average interest rate of 10.3% paid by its clients, this business model can be highly profitable.
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