Kayne Anderson: The Discounted BDC That's Not A Value Trap

Kayne Anderson BDC is a conservatively run lender trading at a 16% discount to book despite strong fundamentals. KBDC covers its 10% yield dividend at 108% from net investment income, with net asset value nearly flat and a 10.6% return on equity. The portfolio is 93% first-lien, has minimal tech exposure, low leverage (1.05x), and rising but contained non-accruals at 2.5%. I rate KBDC a Buy as the current discount misprices its quality. I would turn cautious only if non-accruals or dividend coverage deteriorate.

Kayne Anderson BDC, Inc. (KBDC) is a business development company that has been painted with the same brush as the rest of the industry's troubled names, but this could be its advantage. The private credit arena has had a rough