2Q26 BDC Preview

Research evidence excerpt

2Q26 BDC Preview

USA | Commercial Finance EquityJulyResearch20, 2026

KEY STOCKS FEATURED INCLUDE:2Q26 BDC Preview

BDC shares have stabilized as headwinds from lower rates are now largely TICKER RATING PRICE TARGET

understood; however, investors remain focused on credit trends, especially ARCC BUY $23.00

within software portfolios. In our view, software exposure shows no outsized OBDC BUY $15.00

risks and, while there could be some modest inflows to non-accruals, we FSK BUY $15.00

don't expect any serious trend change. We see caution towards the space HTGC BUY $25.00

creating opportunity for select BDCs, favoring ARCC, HTGC, and TRIN into 2Q26 TRIN BUY $21.00

earnings.

BDC shares have started to stabilize, though investors remain cautious on credit performance. KEY CHANGES INCLUDE:

Headwinds from lower rates are now largely understood, and the likelihood of higher rates

TICKER RATING PRICE TARGET

has improved. However, continued uncertainty in the sector is keeping investors focused on

credit trends, specifically software related non-accruals. As attention has shifted toward portfolio TRIN BUY $21.00 ($19.00)

construction, AI-related risks, and vintage diversification, we continue to favor BDCs lending in

specialized verticals and those that have demonstrated a history of strong credit management.

For 2Q26 reports (starting late July) we expect:

Mixed portfolio growth Q/Q as some BDCs are in the midst of repositioning their B/S. We•

expect mixed trends among our covered BDCs, with some seeing net deployments this qtr

(ARCC, CSWC, TRIN) and others seeing net contraction sequentially (FSK, HTGC, OBDC).

Credit performance to remain steady after 1Q's modest uptick in avg non-accruals - we•

expect a similar result in 2Q.