Bank of America Securities maintained underperform ratings on five business development companies (BDCs) and assigned a neutral rating to a sixth, citing credit quality concerns, elevated leverage and limited near-term earnings visibility.
Runway Growth Finance Corp. (NYSE: RWAY) retained its underperform rating as analysts flagged concentration risk in venture lending, upcoming debt maturities in 2026 and 2027, and high leverage following the company’s acquisition of SWK Holdings. The deal expanded RWAY’s investment capacity in healthcare and life sciences while diversifying its portfolio.
Goldman Sachs BDC Inc. (NYSE: GSBD) also kept its underperform rating despite improved profitability driven by a lookback provision that removed incentive fees and the return of accrual status for several investments. Analysts noted non-accruals at cost remained elevated, credit performance weakened and earnings power declined, leaving limited scope for near-term improvement.
Carlyle Secured Lending Inc. (NASDAQ: CGBD) received an underperform rating after a mixed quarter in which core earnings per share covered the base dividend, non-accruals stayed low and capital deployment improved. Portfolio markdowns, however, weighed on overall profitability and net asset value, prompting the downgrade.
MidCap Financial Investment Corp. (NASDAQ: MFIC) retained its underperform rating even as non-accruals improved and share buybacks supported value. The company continued to reduce new originations and focus on deleveraging amid credit weakness in select portfolio positions that pressured profitability and net asset value.
New Mountain Finance Corp. (NASDAQ: NMFC) maintained its underperform rating as analysts said more work is needed to improve profitability and close the valuation gap with top-performing peers, despite moderating losses, declining non-accruals and steady portfolio yields. NMFC’s shares closed at $7.56, up $0.01, or 0.13%.
Palmer Square Capital BDC Inc. (NYSE: PSBD) was the sole BDC to receive a neutral rating from BofA. Analysts highlighted improved profitability, strong credit quality and a balanced risk-reward profile from investing across liquid and private markets as reasons for the neutral stance.
Separately, BofA’s ProPicks AI model noted historical outperformance in Siemens Energy (+231.5%) and Sandisk (+189%) ahead of broader market moves.
