BDC leverage on the rise, one tool to combat falling Libor

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After peaking in December 2018 at over 2.8%, 3-month Libor has since fallen to 1.9% and BDCs are reporting lower weighted average yields in 3Q19 as a result. Following this steep decline, BDCs are taking advantage of their flexibility to increase leverage under the 2:1 Legislation to help boost returns. “Recently, the uptick in leverage has been swift which is contrary to how slowly things started.