Early Warning Signals in Private Credit? What BDC Portfolios Reveal about Emerging Risks

Jose Fillat, Leslie Sheng Shen and J. Christina Wang
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Leslie Sheng Shen: https://www.federalreserve.gov/econres/leslie-shen.htm

No 26-6, Current Policy Perspectives from Federal Reserve Bank of Boston

Abstract: Private credit—lending by nonbank financial institutions—has grown to over $1 trillion in the United States, yet most of it remains opaque to investors and policymakers because private credit funds are not required to publish their holdings. Business development companies (BDCs) are an exception and provide a window into this segment of the credit markets. All BDCs are publicly registered investment vehicles that must file periodic reports with the Securities and Exchange Commission, including quarterly and annual filings. We analyze these disclosures to detect trends in the pricing of BDC loans, borrowers’ creditworthiness, and the industry composition of BDC loan portfolios.

Keywords: private credit; Business development companies (BDCs); financial stability; credit risk; payment-in-kind; middle-market lending (search for similar items in EconPapers)
JEL-codes: G23 G24 G28 G32 (search for similar items in EconPapers)
Pages: 10
Date: 2026-08-05
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