Video
BDC redemptions: Have we seen the peak?
We don't think managers will have to rely on force asset sales.
Redemption requests rose in Q2, but underlying data is encouraging: six BDCs saw quarter-over-quarter declines (vs. one in Q1), and new redemption activity fell sharply from 30-40% to 7%. This suggests Q2 may be the peak, though clearing backlogs will take a few more quarters.
On liquidity, BDCs have four ways to meet redemptions without forced asset sales: ongoing interest/principal payments, cash on hand (2-3% industry average), liquid broadly syndicated loan sleeves, and credit facilities (dependent on credit conditions staying benign). Overall, managers are well-positioned to avoid forced asset sales.
Read more from Private Capital Unlocked: “Through the Gates“
Moderator
Alona Gornick
Senior Investment Strategist
Churchill Asset Management
Speaker
Peter Repetto
Editor in Chief
The Lead
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