§ 01
Par minus fair value = unrealized loss. A loan marked at 85% of par signals the manager already expects partial loss.
§ 02
| Loan type | Position in capital stack | Typical recovery | Risk |
|---|---|---|---|
| First lien senior secured | Top -- gets paid first | 70-90% | Lowest |
| Unitranche | Blended first/second lien | 60-80% | Moderate |
| Second lien | Behind first lien | 30-50% | Higher |
| Subordinated / mezz | Below all secured debt | 10-30% | High |
| Equity / warrants | Last in line, upside if exit | 0% or 100%+ | Highest |
§ 03
Pull up ARCC in the BDC view and look for its Ivy Hill Asset Management investment -- one of the largest BDC-within-a-BDC structures. Note par vs fair value.
§ 04
§ 05
A BDC's Schedule of Investments lists 45 portfolio loans. Top 5 positions are 32% of NAV. Largest single loan is 9% of NAV. Which observation is most concerning?
Five questions · AI feedback
Sit with the ideas.
A BDC reports a loan at par $10M and fair value $7M. What is the most likely interpretation?
Why:
Try this in paper trading
BDC yield spread vs Treasuries
Pick a publicly-traded BDC (ARCC, BXSL, OBDC, MAIN, etc.). Compute the spread between the BDC's dividend yield and the 10-year Treasury yield. Paper-buy with a thesis explaining whether the spread compensates for the credit risk you're taking.
Open paper portfolio →Practice mode — simulated trades, not investment advice.