One we have a sizable position is ARRC ARES Capital Corporation, is one of if not the largest of these BDC companies that basically are mezzanine lenders to midtier companies. It’s a good business today as the larger banks are leaving the lending business in taters due to their Fed regulated Tier 1 Capital ratio obsessions. Take at look at this good report from JP Morgan on the group. Note that those companies have to pay out 90% of their earnings in dividend income so you can do the math. JP doesn’t break out yields which I think is a bit lazy but the math is simple. Most of these in particular ARES is immunized to rising rates. In fact they will do swell buy it as their loans are 90% floating rate. As long as the portfolio companies can pay a rising debt burden shareholders will be happy.
