Shadow Bank Lending Vehicles on Pace for Worst Quarter on Record
- Benchmark BDC index has plunged 50% so far this year
- Panicked investors, forced ETN liquidations weigh on shares
Photographer: John Taggart/Bloomberg
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Business development companies, publicly-traded lenders to mid-size firms, are getting hammered as panicked investors dump shares amid uncertainty about the impact of the coronavirus on small businesses.
The Wells Fargo Business Development Company Total Return Index has plummeted 50% this year, with most of the losses occurring in March. It’s on track to be the worst quarter since the index was established in late 2004, according to data compiled by Bloomberg. Shares for such vehicles including Apollo Investment Corp., Prospect Capital Corp. and Golub Capital BDC Inc. have sunk to their lowest prices ever this month.