The Wrap highlights select data points to provide a readout on business development company (BDC) growth, structure, financing and asset quality. For context, growth (AUM) data includes the entire BDC universe, which consists of 179 funds; all other data captures BDCs reporting financials by May 18th, a universe of 176 funds.
Market. In 1Q26, BDC gross AUM increased 21% year-over-year and 0.50% quarter-over-quarter to $575B according to LSEG LPC’s 1Q26 BDC Report (“Report”).
The data is segmented into three cohorts: publicly traded BDCs, non-traded and private BDCs, and perpetual-life BDCs (i.e., non-traded BDCs with indefinite durations that offer shares continuously by redeploying periodic share redemptions). Despite the headline growth, the aggregate rate of growth has declined for the last five quarters. Still, the growth posted was driven by perpetual BDCs, which continued to experience strong growth with a 37% YoY increase (down from 49.5% YoY in 4Q25) to $309.5B in AUM. This figure represents 53 funds, or 30% of the universe. By comparison, excluding perpetuals, non-traded and private BDCs increased 4.9% YoY (from 7.6% YoY in 4Q25) to $89B in AUM and publicly traded BDCs grew 7.7% (from 15.3% YoY in 4Q25) to $176B in AUM (though it declined 2.6% quarter over quarter).
Leverage. Average leverage for the BDC universe was flat at 0.92x quarter-over-quarter, according to JP Morgan’s BDC Quarterly Earnings Review published May 20th. BDCs issued $7.6B in unsecured debt in 1Q26, 16.8% year-over year, according to Truist Securities. Year-to-date through June 4th, BDC unsecured issuance totaled $14B, down only 4.8% YoY, as a rebound in issuance in May and early June helped recover a significant portion of the year-over-year declines in volume through March highlighted in the 4Q25 Wrap. As previously noted, that drop in issuance came on the back of a very active 2025 and tighter market conditions attributable to contagion from the software selloff and elevated redemption activity. The index has since retraced around 80bps, creating a more opportunistic environment.
While some additional refinancing activity is expected near term, issuance is expected to slow until later in the summer. According to Truist, $7.6B of BDC bonds mature in 2026, $11.6B in 2027, and $15.2B in 2028 – in aggregate approximately 38% of the roughly $91.5B of BDC bonds outstanding (which is not unusual given most BDC issuance is in 3- and 5-year maturities).
Composition. According to the Report, the share of BDC portfolios comprising first-lien loans was flat in 1Q26 at 86.4%, compared to 86.5% in 4Q25 and 86.3% in 1Q25, while the share of second-lien loans ticked up 2.8%% from 2.7% in 4Q25 but was down from 2.9% in 1Q25. The share of equities in 1Q26 was flat to 4Q25 and up YoY at 7.1%.
In a June 3rd research report, Raymond James points out that while many BDC managers have anecdotally pointed to signs of modest spread widening in the private credit market, 1Q26 origination data suggests material widening would be necessary in many cases to offset the compression that has already occurred and has yet to fully flow into portfolios. Current first lien origination spreads remain below existing portfolio spreads across Raymond James's public BDC coverage universe, making asset turnover dilutive rather than accretive.
On average across the coverage universe, 1Q26 weighted average origination spreads trail existing portfolio spreads by 55-60 basis points, ranging from roughly 10 basis points at the tight end to over 100 basis points at the wide end, the report notes.
Credit Risk. Net realized losses increased to $767M in 1Q26 from $727M in 4Q25 but decreased from $805M in 3Q24, the Report shows. BDCs have reported net realized losses for the last 15 quarters. The weighted average non-accrual rate for public and non-traded/private BDCs combined 
increased to 1.99% in 1Q26 from 1.42% in 4Q25 and 1.36% in 1Q25. Loans to borrowers in the healthcare, technology and services sectors accounted for the most non-accruals. 77% of BDCs reported a decline in the weighted average mark of their term loans in 1Q26, up from 67% in 4Q25 and over 60% in 1Q25. On average, 7.6% of BDC portfolios were marked below 85 in 1Q26, compared to 6.98% in 4Q25. The share of portfolios in the technology section was 20.3% in 1Q26, in line with the previous quarter (20.1%) and the prior-year quarter (20.4%).
PIK as a feature of new loans declined sequentially and YoY. In 1Q26, PIK was included in 4.33% of new investments in BDCs, down from 6.11% in 4Q25 and 9.47% in the same period a year ago, according to SOLVE. This decline may reflect slower deal flow amid market dislocation in 1Q26, a shift toward reserving PIK capacity for potential amendments on existing loans, or reduced origination in the software sector, where PIK at origination has historically been more prevalent, amid increased lender scrutiny.
Redemptions. Redemption pressure across the nine perpetual BDCs tracked by JPM (representing 74% of $309.5B in total perpetual BDC assets and therefore serving as a proxy for the perpetual BDC universe) intensified in 1Q26, with aggregate redemption requests reaching $13.4 billion against $7.8 billion fulfilled. This compares to $7.2B in aggregate redemption requests as of April 6th, the release date of JPM's 4Q25 BDC report.
Subscriptions (excluding dividend reinvestment) totaled $5.6B for the quarter, but the monthly trajectory reflects deceleration. Inflows ran at $2.1B in January, $2.2B in February, and $1.3B in March. Barclays noted in a June 8th report that May inflows at perpetual BDCs in the IG index declined 33% month-over-month, following a 45% decline in April, raising the likelihood of net negative flows in 2Q26.
Liquidity. The most liquid portion of these portfolios - broadly syndicated loans - totaled approximately $25.5 billion across the BDCs for which JPM provides this data as of 1Q26, down from $31B in 4Q25, or 18% quarter-over-quarter and 8% YoY ($27.8B). Nearly all saw BSL holdings decline, implying that liquid assets are actively being sold to fund redemptions.
On the facility side, available credit capacity across the six perpetual BDCs for which JPM provided facility detail totaled approximately $31.9 billion as of 1Q26, up from $18.5 billion in 4Q25, due to new facility additions and paydowns on existing lines. Barclays cites this committed secured bank capacity alongside the ability of some BDCs to slow growth and use portfolio cash flow to fund redemptions rather than rely on new borrowing as factors limiting liquidity risk.
