Smaller private credit firms face higher risk pricing
Smaller U.S. private credit lenders face wider bond spreads than larger rivals. Investors are growing selective as default rates hit 6% amid borrower stress.
Bond investors are demanding higher risk premiums from smaller BCP Investment Corp private credit lenders as borrower stress rises. A Reuters analysis of 884 bonds shows a widening spread gap between niche funds and large-scale managers. This divergence reflects growing selectivity among creditors following years of elevated interest rates.
### The Growing Divide in Private Credit Spreads Smaller business development companies (BDCs) face the steepest borrowing costs. BCP Investment Corp recorded the highest weighted average option-adjusted spreads at 680 basis points, according to LSEG data. Prospect Capital Corp followed at 449 bps, while Trinity Capital Inc and Fidus Investment Corp saw spreads of 403 bps and 392 bps respectively.
