Direct Lending Returns
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A1 Alkuperäisartikkeli tieteellisessä aikakauslehdessä
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Authors
Date
2024
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Mcode
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Language
en
Pages
27
Series
Financial Analysts Journal, Volume 80, issue 1, pp. 57-83
Abstract
I examine the performance of US business development companies (“BDC”). BDCs have produced returns in line with those of private funds engaged in direct lending. Leveraged loan and small-cap value equity returns explain a significant part of BDC performance, and the alpha of BDCs is zero on a market-value basis but a statistically significant 2.74% per annum based on net asset value (NAV) valuations. I find no evidence of an illiquidity premium, which suggests that the alpha could result from regulatory arbitrage or a peso problem. Cross-sectional BDC returns are widely dispersed and exhibit strong persistence in top- and bottom-quartile manager performance.Description
Publisher Copyright: © 2023 The Author(s). Published with license by Taylor & Francis Group, LLC.
Keywords
2.0, benchmarking, business development company, direct lending, performance attribution, performance persistence, private credit
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Citation
Suhonen, A 2024, ' Direct Lending Returns ', Financial Analysts Journal, vol. 80, no. 1, pp. 57-83 . https://doi.org/10.1080/0015198X.2023.2254199