Moody's Ratings revised its outlook for the U.S. business development company (BDC) sector from stable to negative. The downgrade stems from intensifying redemption pressures, increased leverage, and restricted access to funding.
Perpetual non-traded BDCs recorded their first-ever net outflows in the first quarter of 2026. This trend marks a sharp reversal from the strong investment inflows seen throughout 2025. Quarterly redemption requests at some perpetual non-traded BDCs have now exceeded 7% to 10% of outstanding shares.
Despite the sector-wide outlook change, Moody's maintained stable ratings for most individual BDCs. These firms remain supported by their focus on first-lien senior secured lending and well-structured debt maturities. The report noted no specific market reaction for Moody’s Corporation (MCO) stock.