Kayne Anderson BDC's NAV Falls as Non-Accruals Rise

The Tip Desk · November 11, 2026 · 4 min read

Net investment income was $0.46 a share in the third quarter, above the $0.40 base dividend, as net asset value slipped to $15.71 a share.

Kayne Anderson BDC, Inc. (KBDC), a business development company that invests primarily in first-lien senior secured loans, reported net investment income of $30.2 million, or $0.46 a share, for the quarter ended September 30, 2026, reversing a prior-quarter dip from $28.9 million, or $0.43 a share, in the first quarter.

Net asset value per share fell to $15.71 from $16.00 at June 30, a $0.29 decline the company attributed to $0.36 of realized and unrealized losses, partly offset by $0.06 of net investment income over distributions and $0.01 of accretive share repurchases. NAV had already declined from $16.23 to $16.00 in the prior quarter.

Co-Chief Executive Officer Doug Goodwillie said the $0.46 a share of net investment income exceeded the $0.40 base dividend and generated an annualized return on equity from net investment income of 11.7%. He said credit performance had been strong since the May 2024 IPO, but that the company experienced pressure in the quarter with a slight decline in NAV and a momentary increase in non-accruals. The company said it expects to resolve the related credit issues in the near future, which it said should support NAV stability and bring non-accrual metrics back in line with its historical track record.

Total investment income was $59.0 million, up from $55.7 million in the second quarter. The company said the increase was primarily related to prepayment and accelerated amortization from realizations and higher average outstanding private credit investment balances. Payment-in-kind income was 4.9% of total interest income, versus 4.5% in the second quarter.

Net expenses were $28.8 million, versus $28.2 million in the second quarter, which the company said was primarily related to higher interest expense associated with increased average borrowings, partially offset by lower incentive fees.

The company recorded a $14.9 million realized loss from the restructure of American Soccer Company, Incorporated (Score), whereby a portion of the existing debt investment was exchanged for new debt investments and a preferred equity investment. Net change in unrealized losses was $8.5 million. The company said unrealized losses were primarily driven by decreases in fair value of investments on watch list and quarterly amortization of original issue discounts, partially offset by new upfront fees for originations and the reversal of the $14.9 million unrealized loss on Score that was realized in the quarter.

Non-accrual debt investments at fair value increased to $78.4 million, or 3.6% of debt investments at fair value, from $59.1 million, or 2.7%, at June 30. Two quarters earlier, non-accruals were $53.7 million, or 2.5%.

Portfolio company investments at fair value declined to $2.22 billion from $2.27 billion, with 100 portfolio companies versus 104. Average position size was $22.2 million. First-lien debt was 92.5% of the portfolio; floating-rate debt was 95.1%. Weighted average yield excluding non-accruals was 10.3%; including non-accruals it was 10.0%.

Gross new investment commitments fell to $76.3 million from $138.7 million in the second quarter. Fundings were $91.9 million and repayments and sales were $114.9 million, producing a net funded decrease of $23.0 million after a net funded increase of $78.5 million in the second quarter.

Total debt outstanding at principal declined to $1.212 billion from $1.238 billion; the debt-to-equity ratio held at 1.17x. Liquidity was $508.7 million, including $45.7 million of cash and cash equivalents and $463 million of undrawn committed capacity.

The board declared a fourth-quarter 2026 dividend of $0.40 a share, to be paid on January 19, 2027, to stockholders of record as of December 31, 2026. Undistributed net investment income was $0.32 a share at quarter-end. Co-Chief Executive Officer Ken Leonard said the company remained selective, committing $76 million to new private credit investments, and that with over $500 million of liquidity it was well-positioned to support sponsor partners as deal activity picks up. He said the income-producing portfolio earns an average spread of 587 basis points over SOFR.

During the third quarter the company repurchased 265,761 shares for $3.6 million. From October 1 to October 29, 2026, the agent repurchased 146,242 shares at an average $12.60 a share for $1.8 million, leaving $92.8 million remaining under the current 10b5-1 plan.