Last year in August I had sold a position in the business development company (BDC) Runway Growth Finance, based on performance concerns and while I still have some concerns the company has improved some metrics.
I bought a small position in the Runway Growth 8% baby bond (RWAYZ) due 12/31/2027.
BDC’s almost always rate their investments 1-5 with 1 being the top of the heap with 5 being on non-accrual status. Here is a chart of the current ratings of their companies.
Since December 31, 2024 they have successfully nursed about $30 million in investment from Category 3 into Category 2–improving the overall quality of their investments somewhat. Of course I would like to see everything in Category 1 or 2–it’s all about risk/reward. They continue to have the same 2 investments on ‘non-accrual’ status that they had in December and have forgone about $5 million in interest thus far.
I will keep this on a shorter leash than my other BDC holdings–as well as keep my position small. It is critical that one monitor their BDC holdings. No reason to think there will be big issues–but in this environment of the unknown one can never be too careful.
I’d go with trinz or trini over rwayz personally… same VC-type lending space, but better BDC with internal management, trin trades at 1.12x NAV and one of the few BDCs trading over 1.1x (for comparison RWAY trades at 0.72x NAV) so TRIN can issue stock at a premium, similar yields and more call protection and actually higher YTC on the trin BBs
trin also recently received a inv grade rating from moodys recently – https://www.bdcinvestor.com/trin/202505/trinity-capital-inc-receives-new-investment-grade-rating-from-moody-s/
my 2c
Hi Z–I have a position in TRINZ already so I’m covered there.