Private Credit Fund Burned by Risky Bets Is Bleeding Cash

According to SOLVE, about three-quarters of PIK loans were valued at more than 95 cents on the dollar at the end of September.

“Around 13% of the fund’s loan exposure, including via collateralized loan obligations, is marked at 80 cents on the dollar or below, a common threshold for distress. Among the 15 largest publicly traded BDCs, the next highest was around 5%, data compiled by fixed-income specialist SOLVE show. That’s even as SOLVE’s analysis of BDC filings shows that Prospect is among the most reluctant firms to mark down their loans compared to peers.”

An equally perplexing sign is the number of private funds who own publicly traded loans, and still value them much more highly than where the same loan is quoted in the public market.

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