What do you get when banks consolidate, capital requirements escalate, lending standards rise and corporate lending arms shrink? You get non-bank lenders and business development companies (BDCs) helping to fill financing needs.
While becoming a financing option, BDCs have also emerged as an investment option—albeit one getting little attention in our view. Could BDCs follow a growth path similar to REITs? We think so.
What is a BDC?
BDCs are finance companies that lend to the middle-market segment. Increasingly, they are seen as an important part of the leveraged finance markets servicing middle-market companies.