Key Takeaways
- • Roughly 12.3% of borrowers held by two or more US business development company (BDC) managers showed valuation marks differing by five points or more as of June 30, up from 9.3% a year earlier, according to Frankfurt School of Finance & Management research.
- • The Frankfurt School team analyzed public SEC filings to measure pricing dispersion across shared private credit loans.
- • The rising share of divergent marks signals growing valuation disagreement among private credit lenders holding the same borrower debt.
Summary
About one-eighth of firms whose loans are held by US business development companies are experiencing a wide disparity in how their debt is priced, according to academic research cited by Bloomberg. The share of borrowers held by two or more managers whose marks differ by five points or more rose to 12.3% as of June 30, up from 9.3% a year earlier.
The analysis was conducted by the Frankfurt School of Finance & Management, whose team reviewed public filings submitted to the Securities and Exchange Commission. The findings focus on loans where multiple managers hold positions in the same borrower, and measure the gap between the valuations each manager assigns to that debt.
The increase of roughly three percentage points in one year points to a widening dispersion in private credit valuations. For allocators and managers exposed to BDC portfolios, the trend raises questions about the consistency of mark-to-model pricing across lenders in the sector.
The primary source is brief, and the research summary does not disclose additional detail on the specific borrowers, sectors, or BDCs involved.
The analysis was conducted by the Frankfurt School of Finance & Management, whose team reviewed public filings submitted to the Securities and Exchange Commission. The findings focus on loans where multiple managers hold positions in the same borrower, and measure the gap between the valuations each manager assigns to that debt.
The increase of roughly three percentage points in one year points to a widening dispersion in private credit valuations. For allocators and managers exposed to BDC portfolios, the trend raises questions about the consistency of mark-to-model pricing across lenders in the sector.
The primary source is brief, and the research summary does not disclose additional detail on the specific borrowers, sectors, or BDCs involved.
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