Non-Traded BDCs: Distribution Rates Stay Below Portfolio Yields in Q1

In Q1 2025, non-traded BDCs largely held the line on distribution discipline: distribution yields tracked closely to portfolio yields, reflecting cautious optimism in a still-uncertain credit environment.

Note: Portfolio yield isn’t calculated uniformly across all funds. For specifics on each fund’s approach, see the Q1 filings. It also is not a “coverage” metric, but it does reflect what the assets are generating before operating expenses, waivers, and other noise. Continued over-distribution by some funds will inevitably erode NAV over time, reducing long-term return potential.

Quick Insights

• Avg.  Portfolio Yield: 9.6%

• Avg. Distribution Rate: 8.6%

• Avg. Spread (Yield - Distribution): +1.0%

• Most BDCs: Distributions remain just below asset yields, signaling restraint over reach.

• Aggressive Distributors: BlackRock Private Credit (−2.0%), Ares Strategic (−0.7%)

• Conservative Distributors: Hancock Park (+5.0%), FS Specialty (+4.4%), NexPoint (+4.0%)

Takeaway: The average spread between portfolio yield and distributions remains modest. Most non-traded BDCs are prioritizing sustainability over splashy payouts. Still, a handful are either leaning into risk or signaling stress. Worth watching for cracks if rates begin to fall and reinvestment risk rises.

Not investment advice.