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Not investment advice. Educational reading. See Disclaimer.
L.8 · INTERMEDIATE · 2 MIN

Building a BDC Watchlist

A disciplined BDC investor ranks names on five criteria: (1) NAV discount/premium, (2) non-accrual rate, (3) NII dividend coverage, (4) leverage vs regulatory limit, and (5) manager track record. Top decile on all five = core holding. Weak on two or more = avoid until thesis changes.

Quiz · 5 questions ↓
§ 01

Build the ranking once, then rerun it every quarter post-earnings. The score moves slowly -- changes signal real shifts.

§ 02
TierExamplesProfile
Top-tier (core)ARCC, BXSL, OBDC, HTGCStrong manager, low non-accruals, covered dividend
Mid-tier (tactical)OCSL, TSLX, GBDCSolid but more volatile or smaller scale
Contrarian / valueDiscounted but stable NAV namesHigher reward, higher work required
AvoidSub-90% NAV + 5%+ non-accrualsPersistent quality issues
§ 03
In the BDC view (/?view=bdc), build a 5-name watchlist using these tiers. Track price-to-NAV, yield, and non-accrual every quarter.
§ 04

The first profile checks every box: modest premium (market trusts marks), low non-accruals, dividend more than covered by NII, conservative leverage, and a long manager track record. This is the ARCC / BXSL playbook. The second is a value t

§ 05
You're building a BDC watchlist. Criteria to prioritize?
Five questions · AI feedback

Sit with the ideas.

Which BDC profile is the strongest core holding candidate?

Why:

Other lessons in this course.

  1. 01What is a Business Development Company?
  2. 02Reading a BDC's Schedule of Investments
  3. 03NAV and Premium / Discount
  4. 04Yield Decomposition -- Is the Dividend Safe?
  5. 05Non-Accruals -- The #1 Credit Metric
  6. 06Leverage and Regulatory Limits
  7. 07Manager Quality and Alignment
  8. 08Building a BDC Watchlist— reading now
See it on a real ticker →