Publicly listed BDCs lag unlisted BDC peers as credit quality gap widens, Heron Finance analysis finds

 , Feb. 3, 2026 /PRNewswire/ — New analysis shows publicly listed business development companies lagging non-traded BDC peers across key risk metrics

Heron Finance released a Monthly Insights report, titled “What You Need to Know About Private Credit BDCs,” offering a data-driven look at the performance, risk characteristics, and structural differences between publicly listed and non-traded business development companies (BDCs).

The report highlights growing credit-quality concerns among publicly listed BDCs and BDC ETFs, while underscoring the relative resilience of non-traded BDCs available on the Heron platform.

“We continue to hear from investors considering BDCs for private credit exposure,” said Khang Nguyen, Chief Credit Officer at Heron Finance. “Our latest analysis shows that publicly listed BDCs are not just experiencing market-driven volatility—they’re also exhibiting weaker and deteriorating underlying credit fundamentals. In contrast, non-traded BDCs have maintained higher-quality and more stable credit profiles.”

Key finding: Publicly listed BDCs show signs of elevated credit stress compared to non-traded BDCs

Using Q3 2025 data from an analysis of 71 BDCs, Heron evaluated multiple portfolio health indicators of BDCs:

Payment-in-kind (PIK) interest
Higher PIK levels may indicate borrowers deferring cash interest payments due to financial strain.

• Publicly listed BDCs: 5.3%
• Non-traded BDCs: 3.1%
• Heron platform funds: 3.1%

Non-accrual loans
Elevated non-accruals often precede realized credit losses.

• Publicly listed BDCs: 2.7%
• Non-traded BDCs: 0.3%
• Heron platform funds: 0.0%

Loan valuation (Fair market value as % of cost)
Lower FMV may reflect rising default risk or deteriorating borrower health.

• Publicly listed BDCs: 98.4%
• Non-traded BDCs: 99.8%
• Heron platform funds: 100.5%

Portfolio underperformance
This metric can serve as an early indicator of future non-accruals and losses.

• Publicly listed BDCs: 10.6%
• Non-traded BDCs: 3.5%
• Heron platform funds: 1.7%

Read the full report at: https://heronfinance.com/blog/monthly-insights-what-you-need-to-know-about-private-credit-bdcs-january-2026/

Structural differences driving risk-return outcomes

Heron’s analysis emphasizes that publicly listed BDCs, which trade like equities, are more exposed to stock-market volatility, legacy loan vintages from low-rate environments, and pricing swings unrelated to underlying loan performance.

By contrast, non-traded BDCs—including those available through Heron—typically:

• Use monthly net asset value (NAV) pricing, reducing market noise
• Hold newer loan vintages aligned with the post-2021 higher-rate environment
• Exhibit lower reported volatility and stronger credit quality metrics

“Many publicly listed BDCs still hold legacy loans originated between 2018 and 2021,” Nguyen added. “Even if discounts to NAV appear attractive, investors must consider whether underlying credit issues could translate into more losses.”

About Heron Finance
Heron Finance is a private-markets investment platform offering accredited investors access to diversified private credit, private equity, and private infrastructure strategies. Heron leverages institutional-grade manager selection, multi-manager diversification, and proprietary portfolio analytics to deliver higher-quality, risk-adjusted private-market exposure designed for long-term investors. Learn more at www.heronfinance.com.

Media Contact
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Disclosure
Any financial forecasts or returns are for illustrative purposes only and are not guarantees of future results. Private credit investments involve risks, including credit, liquidity, and interest-rate risk. Investors may lose principal and accrued interest in the event of borrower default.

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SOURCE Heron Finance