Is the Private Credit Boom a Gift or a Risk for BDC Income Investors?
Private credit is a fast-growing business for large asset managers like Blackstone.
Overview
Business development companies (BDCs) are specifically designed to pass income on to investors. Some have particularly large yields, as well, often in the 10% area. However, there are important risks for investors to consider when buying a BDC. One of the biggest is the basic business model of investing in the debt of non-public companies.
This puts BDCs like Main Street Capital (NYSE: MAIN) and Ares Capital (NASDAQ: ARCC) in the same space as financial giants like Blackstone (NYSE: BX). One of Blackstone's big focuses is expanding in the private credit market, which is a mixed blessing for BDCs. Here's what you need to know.
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Originally published at www.fool.com.