BDCs: PIKing into PIK: BDC 1Q‘26 PIK Report

Research evidence excerpt

BDCs: PIKing into PIK: BDC 1Q‘26 PIK Report

J P M O R G A N North America Credit Research

15 June 2026

BDCs: PIKing into PIK

BDC 1Q’26 PIK Report

As we do each quarter, we dive into PIK portfolios to understand "good vs. bad North America Corporate Credit -

PIK." See our prior reports (here, here, here, and here). The conversation around Banks (IG), Nonbank Financials (IG),

PIK has become less of a reported topic compared to the past as software and and Financials (HY)

redemptions have received more attention from the mainstream media. With that Kabir Caprihan, CFA AC

said, we still believe PIK is a very important detail for BDCs and one of the most (1-212) 834-5613

accurate ways to forecast stress within a BDC portfolio. As a reminder, our kabir.x.caprihan@jpmorgan.com

definition of bad PIK remains very objective – any PIK loan marked below 90% Vincent Barretta

we view as bad PIK. We understand that skeptics will question the BDC's marking (1-212) 464-0374

vincent.barretta@jpmorgan.com

methodology, but that is a separate discussion and one with which we have become J.P. Morgan Securities LLC

very comfortable with over the years. Also note that we don’t include non-accrual

loans in our PIK analysis. We believe that non-accrual loans are already captured

in the asset quality section. This report is more about the data and we present the

summary and individual performance in the following pages.

Across the 29 BDCs that we track (we removed OBDCII from the analysis this

quarter and prior quarters to ensure that comparisons are apples-to-apples), the

total amount of PIK loans for 1Q'26 decreased to $46.5bn or 15.3% of the debt

portfolio, from $46.7bn QoQ or 15.4%. The decline was spread out across vehicles,

including sizeable declines at FSK, BCRED, BXSL, HLEND, and OBDC.