UBS on Business Development Companies: 2Q and 2H Look at ARCC, GBDC, MCC, HRZN
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Price: $20.65 --0%
Rating Summary:
17 Buy, 4 Hold, 0 Sell
Rating Trend:
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Today's Overall Ratings:
Up: 11 | Down: 8 | New: 11
Rating Summary:
17 Buy, 4 Hold, 0 Sell
Rating Trend:
Up
Today's Overall Ratings:
Up: 11 | Down: 8 | New: 11
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UBS on Business Development Companies: Estimate Most 2Q Results to Come in Slightly Over Consensus
Analyst, Abu Ramin, said, "There seems to be no singular trend driving the mildly positive 2Q results, though changes in the middle market lending landscape imply less robust loan growth in 2H12. June quarter originations likely began strong at most BDCs as deteriorating economic news halted the 1Q high yield rally and stabilized yields. The second half of the June quarter likely slowed down for BDCs as more aggressive deal structures committed to in 1Q made the market less attractive. Looking forward, we believe 2H will see increased M&A activity, but that the positives will be partially offset as riskier underwriting limits the upside for BDCs."
"We prefer higher quality names like Ares Capital (Nasdaq: ARCC) and Golub Capital (Nasdaq: GBDC) since most BDCs in our coverage trade in a very tight range around 1.02x P/BV. We also prefer smaller, niche market BDCs that trade at discount to peers like Medley Capital (NYSE: MCC) and Horizon Technology Finance (Nasdaq: HRZN)."
Analyst, Abu Ramin, said, "There seems to be no singular trend driving the mildly positive 2Q results, though changes in the middle market lending landscape imply less robust loan growth in 2H12. June quarter originations likely began strong at most BDCs as deteriorating economic news halted the 1Q high yield rally and stabilized yields. The second half of the June quarter likely slowed down for BDCs as more aggressive deal structures committed to in 1Q made the market less attractive. Looking forward, we believe 2H will see increased M&A activity, but that the positives will be partially offset as riskier underwriting limits the upside for BDCs."
"We prefer higher quality names like Ares Capital (Nasdaq: ARCC) and Golub Capital (Nasdaq: GBDC) since most BDCs in our coverage trade in a very tight range around 1.02x P/BV. We also prefer smaller, niche market BDCs that trade at discount to peers like Medley Capital (NYSE: MCC) and Horizon Technology Finance (Nasdaq: HRZN)."
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