The Drift BDC Credit & Income Monitor

*Q2 2026 edition. Market prices through September 1, 2026. Last reviewed September 2, 2026.*

A fat yield is an invitation to investigate, not permission to stop thinking.

A business development company, or BDC, turns private-company loan payments into public-market income. That compact little sentence hides a whole machine: borrowers must pay, credit marks must hold, funding costs must stay manageable, and repaid loans must be replaced without lowering the underwriting bar.

The Drift BDC Credit & Income Monitor opens that machine. It compares ten widely followed BDCs using source-bound quarterly evidence, then translates the figures into plain English. The aim is not to crown a winner. It is to help investors ask better questions about where income comes from, what can interrupt it, and what price the market is charging for the underlying net assets.

Net investment income is abbreviated NII. Net asset value is abbreviated NAV. A non-accrual is a loan that is no longer producing normal recognized interest because collection is uncertain.

New to the machinery? Start with how NII coverage works, what NAV measures, how non-accruals expose credit trouble, and why BDCs trade at premiums or discounts to NAV.

The quick read

• Seven of the ten selected payout measures were covered by the selected NII measure. Blackstone Secured Lending Fund was just short at 0.97 times. Capital Southwest and Main Street look different when regular dividends are separated from supplemental payouts.
• Only Hercules Capital and Main Street Capital increased NAV per share. Sixth Street Specialty Lending was flat. The other seven declined.
• Hercules had the lowest reported fair-value non-accrual ratio in the comparable group at 0.1%. FS KKR Capital had the highest at 3.8%.
• Repayments were a recurring pressure on future earning assets. Several companies covered their payouts while still watching loans leave the portfolio faster than new capital went to work.
• Market prices told a story of extraordinary dispersion. On the September 1 close, the group ranged from roughly 0.39 times NAV for Prospect Capital to 1.71 times NAV for Main Street Capital.

Those last two figures do not mean “cheap” and “expensive” in isolation. A discount can be a bargain, a warning, or both. A premium can reflect quality, embedded economics, or expectations so polished that reality has little room to disappoint.

Ares Capital (ARCC)

Income: $0.50 of NII covered the $0.48 quarterly dividend by 1.04 times.

NAV and credit: NAV fell 1.2% to $19.35 from $19.59. Non-accruals were 1.4% at fair value and 2.4% at cost. Debt to equity, net of available cash, was 1.12 times.

Lending engine: Gross commitments were $2.592 billion while exits reached $2.915 billion, a $323 million gap. The portfolio remained enormous at $29.349 billion, but replacement volume still matters when loans leave the building.

Market price: The September 1 close of $19.91 equaled 1.03 times NAV, or a 2.9% premium.

The Drift read: The payout cleared the first gate, credit was on watch rather than in the ditch, and NAV slipped modestly. The next question is whether scale can turn a busy exit market into equally productive new lending.

Q2 SEC evidence · September 1 price record

Blackstone Secured Lending Fund (BXSL)

Income: $0.75 of NII covered the $0.77 dividend by 0.97 times. That is thin, not catastrophic, but the arithmetic deserves daylight.

NAV and credit: NAV fell 2.8% to $25.53 from $26.26. Non-accruals were 1.8% at fair value and 3.6% at cost. Debt to equity was 1.28 times. The reported yield on performing investments was 9.4%.

Lending engine: Investment fundings were $312 million against $754 million of sales and repayments. The portfolio declined to $13.364 billion from $13.942 billion.

Market price: The September 1 close of $24.68 equaled 0.97 times NAV, or a 3.3% discount.

The Drift read: A modest discount does not erase a quarter of thin coverage, NAV pressure, and portfolio contraction. It does make the valuation conversation more interesting than the operating figures alone.

Q2 SEC evidence · September 1 price record

Capital Southwest (CSWC)

Income: Pre-tax NII of $0.57 covered the $0.58 regular dividend by 0.98 times and the $0.64 total dividend by 0.89 times. The total included a supplemental dividend, so both views matter.

NAV and credit: NAV eased 0.5% to $16.61 from $16.69. Non-accruals were 1.1% at fair value and 2.9% at cost. Regulatory debt to equity was 0.91 times.

Lending engine: Originations reached $222.3 million while prepayments were $19.5 million.

Market price: The September 1 close of $24.96 equaled 1.50 times NAV, or a 50.3% premium.

The Drift read: The regular dividend was nearly covered on the selected pre-tax measure, portfolio activity was constructive, and NAV was steady. Investors were paying handsomely for those qualities, which means the underwriting standard applies to the stock price too.

Q2 SEC evidence · September 1 price record

FS KKR Capital (FSK)

Income: $0.44 of generally accepted accounting principles, or GAAP, NII exactly covered the $0.44 distribution. Adjusted NII of $0.43 covered 0.98 times.

NAV and credit: NAV fell 2.8% to $18.30 from $18.83. Non-accruals were 3.8% at fair value and 7.1% at cost, the highest levels in this comparison. Net debt to equity was 1.22 times.

Lending engine: Purchases totaled $590 million while sales and repayments reached $1.334 billion. The portfolio fell by $851 million at fair value.

Market price: The September 1 close of $12.27 equaled 0.67 times NAV, or a 33.0% discount.

The Drift read: The distribution passed by the narrowest GAAP margin while NAV, non-accruals, and the earning asset base moved the wrong way. The discount is substantial because the questions are substantial.

Q2 SEC evidence · September 1 price record

Golub Capital BDC (GBDC)

Income: Adjusted NII of $0.34 covered the $0.33 distribution by 1.03 times. GAAP NII of $0.33 covered it exactly.

NAV and credit: NAV fell 0.7% to $14.25 from $14.35. Non-accruals were 1.9% at fair value and 2.9% at cost. Net debt to equity was 1.23 times.

Lending engine: New commitments were $12.6 million while exits and sales reached $189.5 million. The portfolio declined by about $120.9 million at fair value.

Market price: The September 1 close of $12.89 equaled 0.90 times NAV, or a 9.5% discount.

The Drift read: Coverage and NAV were relatively steady, but new commitments did not keep pace with exits. The discount asks whether that contraction is temporary discipline or a slower income engine taking shape.

Q2 SEC evidence · September 1 price record

Hercules Capital (HTGC)

Income: $0.50 of NII covered the $0.40 base distribution by 1.25 times and the $0.47 total distribution by 1.06 times.

NAV and credit: NAV rose 2.1% to $12.15 from $11.90. Non-accruals were 0.1% at fair value and 0.3% at cost. Net GAAP leverage was 1.02 times. The reported core yield was 12.0%.

Lending engine: Fundings were $647.5 million, but early repayments reached $572.1 million and the net debt investment portfolio declined by $170.2 million.

Market price: The September 1 close of $17.67 equaled 1.45 times NAV, or a 45.4% premium.

The Drift read: This was the cleanest combination of coverage, NAV movement, and reported credit quality in the group. The rub is familiar: a fine lending book must keep finding fine loans, and the market already charges a substantial admission price.

Q2 SEC evidence · September 1 price record

Main Street Capital (MAIN)

Income: $0.97 of NII covered the $0.78 regular dividends by 1.24 times and the $1.08 total dividends by 0.90 times. Distributable NII was $1.04 per share and pre-tax distributable NII was $1.08, but those non-GAAP measures remain separately labeled.

NAV and credit: NAV rose 1.4% to $33.92 from $33.46. Non-accruals were 1.1% at fair value and 4.0% at cost. A standardized leverage value was not available in the current evidence packet.

Lending engine: Net lower-middle-market investment activity was $99.7 million and net private-loan investment activity was $238.9 million. These are company-reported net activity measures, not gross originations and exits.

Market price: The September 1 close of $57.97 equaled 1.71 times NAV, or a 70.9% premium.

The Drift read: Regular coverage and NAV movement were strong; total-dividend coverage depends on which income measure an investor believes best captures recurring economics. The market was paying the group’s largest premium for that structure and record.

Q2 SEC evidence · September 1 price record

Blue Owl Capital Corporation (OBDC)

Income: Adjusted NII of $0.34 covered the $0.33 total dividend by 1.03 times. GAAP NII of $0.36 covered it by 1.09 times.

NAV and credit: NAV fell 1.0% to $14.26 from $14.41. Non-accruals were 0.8% at fair value and 2.8% at cost. Net debt to equity was 1.11 times. The reported portfolio yield was 9.9%.

Lending engine: New commitments were $319 million while sales and repayments reached $747 million. The portfolio declined by about $389.2 million at fair value.

Market price: The September 1 close of $11.37 equaled 0.80 times NAV, or a 20.3% discount.

The Drift read: The dividend was covered and fair-value non-accruals were contained, but NAV slipped and loans left faster than new commitments arrived. The discount gives investors room to ask whether that is caution worth buying or earnings power walking out the door.

Q2 SEC evidence · September 1 price record

Prospect Capital (PSEC)

Income: $0.15 of NII covered the $0.115 quarterly common distribution by 1.30 times. Payment-in-kind interest, abbreviated PIK, was about 11.7% of total investment income. PIK is added to a borrower’s balance rather than paid in cash today.

NAV and credit: NAV fell 5.6% to $5.71 from $6.05, the largest decline in the group. PSEC reported non-accrual loans equal to 0.7% of total assets at fair value. That denominator is not comparable with the portfolio-based non-accrual ratios shown for peers. Net-of-cash debt was 40.7% of total equity, including preferred stock; it is not the same leverage definition used elsewhere.

Lending engine: Originations were $166.3 million and repayments and sales were $45.8 million.

Market price: The September 1 close of $2.21 equaled 0.39 times NAV, or a 61.3% discount.

The Drift read: Headline coverage was ample, but the NAV decline, the cash quality of income, and non-comparable balance-sheet measures demand more work than a single coverage ratio can perform. The market discount is not subtle.

Q2 SEC evidence · September 1 price record

Sixth Street Specialty Lending (TSLX)

Income: $0.43 of NII covered the $0.42 base dividend by 1.02 times.

NAV and credit: NAV held at $16.24. Non-accruals were 1.3% at fair value; a comparable cost ratio was not available in the release used for this edition. Debt to equity was 1.27 times. The reported yield on debt and income-producing securities at fair value was 11.1%.

Lending engine: Fundings were $136.7 million while exits and repayments reached $192.1 million. The portfolio declined by $11.3 million at fair value.

Market price: The September 1 close of $18.45 equaled 1.14 times NAV, or a 13.6% premium.

The Drift read: Coverage cleared the bar and NAV was steady. The premium says investors value that steadiness; the repayment balance says management still has to replenish the earning base with discipline.

Q2 SEC evidence · September 1 price record

What matters next

Cash quality of income

NII is not a jar of identical dollars. Cash interest, fee income, original issue discount accretion, and PIK income can all reach the income statement through different doors. Original issue discount, abbreviated OID, is the difference between a loan’s face value and its discounted issue price; that discount may be recognized as income over time. Future editions will expand PIK and OID comparisons only where company disclosures support honest denominator matching.

The refinancing race

Repayments are not automatically bad. Getting principal back at par can be a successful credit outcome. But a BDC that repeatedly loses high-yielding loans must either accept a smaller earning base, deploy into lower yields, or compete harder for replacements. That choice can shape next year’s dividend more than this quarter’s coverage ratio.

What the market already believes

The September 1 valuation range was too wide to wave away. MAIN, CSWC, and HTGC traded at premiums of roughly 71%, 50%, and 45% to NAV. PSEC, FSK, and OBDC traded at discounts of roughly 61%, 33%, and 20%. Price is not proof of quality, but it is evidence of expectations. A sensible investor underwrites the loans and the expectations.

How the monitor works

Each company entered this edition only after its SEC evidence packet passed the following controls:

1. The filing period was bound to the correct quarterly or annual filing.
2. The earnings filing and filed earnings exhibit were bound when available.
3. SEC application programming interface snapshots and source documents were hashed.
4. Material facts were reconciled.
5. Calculated values reproduced from the displayed inputs.
6. Every published figure retained a source document or calculation path.

The September 1, 2026 market prices are unadjusted closing prices from StockAnalysis.com. StockAnalysis identifies S&P Global Market Intelligence as the supplier of its historical-price data. Price to NAV divides that closing price by the latest reported Q2 NAV per share; it is a point-in-time valuation, not a total-return calculation.

Company definitions remain company definitions. Adjusted NII is not silently treated as GAAP NII. Supplemental distributions are not silently treated as base distributions. Regulatory leverage, GAAP leverage, and net debt to equity are not mashed into one mystery number. Missing information appears as not standardized, never as zero.

The monitor uses plain-language signals as navigation aids, not ratings. No proprietary master score is hiding behind the curtain.

For the wider map, visit the BDC research directory and The Drift's complete BDC guide.

Glossary

• BDC: business development company.
• GAAP: generally accepted accounting principles.
• NAV: net asset value, generally assets minus liabilities; NAV per share divides that value by shares outstanding.
• NII: net investment income, generally investment income minus financing and operating expenses.
• Non-accrual: a loan that is no longer producing normal recognized interest because collection is uncertain.
• OID: original issue discount, the discount between a loan’s face value and issue price that may be recognized as income over time.
• PIK: payment in kind, interest added to the loan balance instead of paid in cash.
• Price to NAV: market price per share divided by the latest reported NAV per share.

Disclosure

The Drift is published by Drift Research LLC for informational and educational purposes only. Nothing published by The Drift constitutes personalized investment advice, financial advice, tax advice, accounting advice, legal advice, or a recommendation to buy, sell, or hold any security. The Drift is not a registered investment adviser, broker-dealer, financial planner, or fiduciary. Data and calculations are derived from sources believed reliable and from methods described in the applicable source and calculation notes, but they may contain errors, estimates, rounding differences, or information that has become outdated. Readers should review the original sources and make their own assessment. All investments involve risk, including possible loss of principal. Past performance and hypothetical results do not guarantee future results. Consult qualified professionals before acting.

About, Methodology & Disclosures