CCAP Stock Recent News

I believe BDC investors face higher odds of unfavorable returns over the next 1-3 years due to macro and sector-specific headwinds. Key risks include a negatively sloped interest rate curve, tight spreads, thin dividend coverage, and historically low non-accruals likely to mean-revert. My strategy: short- to medium-term profit seekers should exit BDCs, while long-term income investors should upgrade to higher-quality names.

Crescent Capital BDC trades at a 26% discount to NAV, which I believe is exaggerated and presents a re-rating opportunity. Despite a rising non-accrual ratio and higher payout, the dividend appears safe in the near term, supported by strong floating-rate First Lien assets. The company's net investment income has declined, due to increased non-accruals, but steady interest rates should support income, unless credit quality worsens.

Since the announcement of tariffs in early April, the BDC market has become a less interesting place for capital deployment (as we can imply from higher discounts). Yet, as it is usually the case, higher discounts mean more opportunities for patient investors. In this article, I discuss two 10%+ yielding BDCs, which, even before the uncertainty level spiked higher, were bargains and now have become even more attractive buys.

Currently, an average BDC trades at an 8% discount to NAV. However, those with high dividend cut probabilities have 20%+ discounts. Many of these heavily punished BDCs are busts.

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BDCs have entered a challenging period. This is why the market has assigned notable discounts across the board. Some BDCs have become very deeply discounted.

I am increasingly cautious on BDCs due to rising non-accruals, weaker earnings, and looser underwriting amid intense competition for private credit deals. Elevated interest rates are suppressing BDC valuations and making it harder for borrowers to service debt, leading to fewer quality investment opportunities. Dividend coverage is weakening across many BDCs, with higher non-accruals and PIK income threatening the sustainability of distributions investors rely on.

Crescent Capital BDC offers a compelling 10.9% dividend yield and trades at a 22% discount to NAV, providing a strong margin of safety. Recent headwinds, including lower NII and some non-accruals, are largely priced in, with the portfolio remaining healthy and well-protected by first-lien debt. Management's confidence is evident through continued regular dividends and two special dividends, signaling belief in near-term NII recovery.

Crescent Capital BDC trades at a significant discount to NAV and offers a high 12.5% yield, but recent performance and total returns have been weak. Rising non-accruals, declining earnings, and weakening distribution coverage raise concerns about portfolio health and dividend sustainability. While the portfolio is diversified and focused on first lien, floating rate debt, higher interest rates are pressuring borrowers and increasing risks.

I'm downgrading Crescent Capital from buy to hold due to weakening fundamentals and rising economic uncertainty. Recent earnings showed sequential declines in total and net investment income, with increasing non-accruals and NAV erosion. CCAP's leverage is above peer average, raising risk, and the probability of a dividend cut is higher if economic conditions worsen.