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Fitch Ratings has completed a peer review of 13 U.S. business development companies (BDCs). We have affirmed the Long-Term Issuer Default Ratings (IDRs) on 12 issuers and completed one Review No Action. The Rating Outlooks are Negative for three BDCs and Stable for 10 BDCs in this peer group.
Fitch’s 2026 sector outlook for BDCs is ‘deteriorating’, reflecting expectations for continued pressure on net investment income (NII) and dividend coverage, deteriorating asset quality metrics and elevated redemption pressure for perpetually nontraded BDCs.
Fitch also expects the competitive underwriting environment for BDCs to continue in the near term due to limited M&A activity. However, higher redemptions and slower fundraising at perpetually non-traded BDCs, if sustained, could reshape the competitive landscape. Spreads have started to widen from tight levels and BDCs with access to growth capital could gain a competitive advantage if improved deal terms persist.
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