BofA maintains underperform ratings on six BDC stocks

Investing.com -- Bank of America maintained its underperform rating on Runway Growth Finance Corp. (NYSE: RWAY) following the company's acquisition of SWK Holdings. The deal increased RWAY's scale and expanded its investment capabilities in healthcare and life sciences while diversifying the portfolio.

The bank expressed concerns about the venture lending operating environment, concentration risk, upcoming debt maturities in 2026 and 2027, and high leverage levels.

Bank of America also kept its underperform rating on Goldman Sachs BDC Inc. (NYSE: GSBD). The company's profitability improved as a lookback provision eliminated incentive fees and several investments resumed accrual status. Non-accruals at cost remained elevated, and the bank cited weaker credit performance, reduced earnings power, and limited options for near-term improvement.

Carlyle Secured Lending Inc. (NASDAQ: CGBD) received an underperform rating after what the bank described as a mixed quarter. Core earnings per share covered the base dividend, non-accruals stayed low, and capital deployment improved. Several portfolio markdowns affected overall profitability and net asset value.

Palmer Square Capital BDC Inc. (NYSE: PSBD) earned a neutral rating from Bank of America. The company's profitability increased and credit quality remained strong despite a small rise in non-accruals. The bank noted PSBD's strategy of investing across liquid and private markets could generate attractive risk-adjusted returns but viewed the risk-reward profile as balanced.

MidCap Financial Investment Corp. (NASDAQ: MFIC) kept its underperform rating after credit weakness in select positions reduced profitability and net asset value. Non-accruals improved and share buybacks added value. The company continued to reduce new originations and focus on deleveraging.

New Mountain Finance Corp. (NASDAQ: NMFC) also maintained an underperform rating. Profitability improved as losses moderated, non-accruals declined, and portfolio yield held steady. The bank said more work is needed to improve profitability and narrow the valuation gap with top-performing peers.

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