CORRECTION: Private Credit - BDCs a Path to Generating Income

Research evidence excerpt

CORRECTION: Private Credit - BDCs a Path to Generating Income

Industry Note

May 19, 2026 Specialty Finance

CORRECTION: Private Credit - BDCs a Path to GeneratingAnalysts

Henry Coffey, CFA Income

212-833-1382

Henry.Coffey@wedbush.com

Michael Piccolo CORRECTION: Please note our correction on page 9 of this report where we update212-668-9863

michael.piccolo@wedbush.com PFLT's current yield for the new dividend policy expected to begin in July'26.

● A Tough First Quarter, Followed by a Selective Recovery. The S&P Business

Development Company (BDC) Index fell -12.8% in the Mar'26 quarter, and the

median name in our screen of 48 publicly traded BDCs fell -11.3%. Two forces

drove the selloff: investor anxiety — some well-founded, much exaggerated

— over AI's potential impact on software services companies, one of private

credit's largest borrower subgroups; and a wave of redemption requests

from retail investors who discovered, too late, that the 5% quarterly caps on

most non-traded private credit funds meant a multi-quarter exit queue, not

immediate liquidity.

● The Recovery Is Real, But the Selloff Is Not Yet Fully Reversed. Starting in the

first week of March, the Morningstar Loan Syndications & Trading Association

(LSTA) US Leveraged Loan Index began recovering. High yield bond indexes and

most BDC stocks, along with the two primary ETFs linked to the group — the

Putnam BDC Income ETF (PBDC) and the VanEck BDC Income ETF (BIZD) —

followed later in the month. Since March 31, the S&P BDC Index has gained

1.8% and the median BDC in our screen has returned 3.1%. Most names have

not recovered to pre-selloff levels.

● March Quarter Earnings Were More Reassuring Than the Stock Prices

Suggested. Only 12 of the 48 BDCs in our screen reduced their dividends in the

quarter.