BDCs Sport Lofty Yields, But the Risks Are Growing

Business development companies lend to midsize private companies at high interest rates. They have proven popular with retail investors in recent years by offering dividend yields of around 10%. Total industry assets have doubled to about $260 billion since late 2020.

Leading BDCs include


Ares Capital


(ticker: ARCC),


Owl Rock Capital


(ORCC),


FS KKR Capital


(FSK), and


Blackstone Secured Lending


(BXSL). The largest BDC is the nontraded


Blackstone


Private Credit fund, known as Bcred, which has grown to $22 billion in net assets since its inception in January 2021, more than twice the size of


Ares


Capital, the largest public BDC.