BDC loan spread over the base rate, cost-weighted

## What this measures

The average spread over the base rate that business development companies earn on their floating-rate debt, weighted by cost.

## Why it matters

Spreads are the price of private credit. They fall when lenders compete for deals and rise when they can demand more for risk.

## How it is made

Palanor reads every BDC 10-K and 10-Q in the SEC's BDC data sets (inline XBRL, periods from August 2022) and turns the tagged schedule of investments into one row per holding: borrower, holding type, lien, base rate, spread, PIK rate, maturity, principal, cost, fair value. Some filers also tag subtotals on the same rows, so rows are pruned in steps and a filing counts only when its rows add up to between 85% and 120% of the total investments it reports. Amended filings replace the original. A quarter is the calendar quarter the balance-sheet date falls in, and it publishes once at least 60 BDCs pass the check and 80 days have passed since it ended. Debt is every loan and bond with a positive cost: first lien, unitranche, second lien, subordinated and unsecured. Equity, warrants, structured products (CLO and ABS tranches), fund and joint-venture interests and cash are left out. The spread is the tagged InvestmentBasisSpreadVariableRate on each loan (between 0% and 25%); loans on non-accrual are left out. The reading is the cost-weighted mean, in percentage points.

## How to read it

A falling line means tighter pricing: more money chasing the same borrowers. It moves slowly because only new and repriced loans change it. The series starts in Q1 2023 at 6.15%. The reading for Q2 2026 is 5.14%, from 143 BDCs. Over the series the high is 6.17% (Q3 2023) and the low 5.14% (Q1 2026).

## What it does not say

The panel changes as BDCs start and stop filing, and as new funds launch, so a move can come from who is in it as well as from credit. Marks are each lender's own fair values, set by its valuation process each quarter; they move with market spreads as well as with the borrowers. Holdings a BDC owns through a joint venture are counted where the BDC tags them on its own schedule. It leaves out fees, original issue discount and the rate floor, and fixed-rate loans.

## Source

Palanor calculation from SEC filings: the SEC Business Development Company (BDC) data sets and each filing's XBRL on EDGAR (U.S. Securities and Exchange Commission; public domain).