BDC Weekly Review: SaaSpocalypse Is Cancelled

We take a look at the action in business development companies through the second week of July and highlight some of the key themes we are watching. Business Development Companies (BDCs) showed resilience, bouncing from recent lows and signaling a strong Q2, with sector returns estimated at +3% to 4% valuation-adjusted. Market fears over the 'SaaSpocalypse' are moderating, with investors recognizing the durable moats of incumbent software firms, especially those managing critical systems of record. Early Q2 results from FSCO and FSSL indicate solid performance, with returns of 1.8% and 2% respectively, outpacing Q1 and suggesting broader BDC strength. MSDL's recent 6.1% 5-year bond pricing reflects typical BDC spread dynamics; its valuation-adjusted ROE is around 12%, and the stock has rebounded 13% from its lows.