Kayne Anderson BDC

KBDC

Market cap $1.01B

CHICAGO--(BUSINESS WIRE)--Kayne Anderson BDC, Inc. (NYSE: KBDC) (“KBDC”), a business development company externally managed by its investment adviser, KA Credit Advisors, LLC, announced today that it will release its financial results for the fourth quarter ended December 31, 2025 on Monday, March 2, 2026, after the close of financial markets. KBDC will host a conference call at 10:00 am ET on Tuesday, March 3, 2026, to review its financial results. All interested parties are invited to partici.

BDC sector valuations remain depressed, with P/NAV metrics under 1x due to falling rates and credit risk concerns. Dividend sustainability is diverging across BDCs; not all will cut, but the ones with sustainable dividends do not automatically have strong total return prospects. I highlight one BDC as a compelling bargain with strong total return prospects and contrast it with another viewed as highly overpriced.

Investors have started to question how sustainable BDC dividends are. A lot of this skepticism is logical and justified by valid reasons. My calculus shows that on average BDCs could cut their dividends by 20% in order to avoid NAV erosion.

BDC net investment income levels are declining as the Fed lowers rates. Despite lower base rates, I see no reason to rotate out of the BDC sector. In the article I detail how BDCs have outperformed the S&P 500 and high yield credit even in prolonged low-rate environments.

BDCs face earnings pressure from lower base rates, but fears of severe dividend cuts are overstated. Quite many BDCs have several levers to pull in order to absorb ~100 bps of base rate cuts without touching their dividends. Yet, I would say that the non-accrual risk is understated.

The market seems to question the true fair value of BDC portfolios. There is a fear that the BDCs will start to report elevated non-accruals, which would make their life more difficult (as they have already a lower interest rate problem at hand). For durable and high-yield income investors this has created a truly enticing and timely opportunity, which simply has to be explored given the direction of overall asset yields.

There is certainly no shortage of arguments why not to invest in BDCs. The sector median BDC trades at a 21% discount to NAV. For me, this provides an opportunity to scoop up unfairly punished gems.

The Fed's dovishness has been the key driver for the BDC sell-off. The idea is that lower interest rates should lead to lower dividends (i.e., BDCs cutting their dividend across the board). While it is a process that takes time, the current data show that many BDCs are well-positioned to safeguard their existing dividends.

BDCs have had a rough year so far. Yet, Q3 earnings data points indicate that the tide could be turning. While there are some tangible improvements in BDC business environment, many risks remain open.

Kayne Anderson BDC, Inc. ( KBDC ) Q3 2025 Earnings Call November 11, 2025 10:00 AM EST Company Participants Andy Wedderburn-Maxwell Douglas Goodwillie - Co-CEO & Co-Chief Investment Officer Frank Karl - Senior Vice President Terry Hart - CFO & Treasurer Kenneth Leonard - Co-CEO & Co-Chief Investment Officer Conference Call Participants Douglas Harter - UBS Investment Bank, Research Division Kenneth Lee - RBC Capital Markets, Research Division Presentation Operator Hello, and welcome to Kayne Anderson BDC, Inc.'s Third Quarter 2025 Earnings Call. [Operator Instructions] As a reminder, this conference call is being recorded.