Finance
These Firms Borrowed to Lend to Indebted Companies. It’s Going Badly
- Analysts sound alarms over business development companies
- ‘Sector is among those most affected by this credit shock’
A "Do Not Enter" sign stands across a street in the Financial District of New York.
Photographer: Gabby Jones/BloombergThis article is for subscribers only.
Renowned as risk-takers, they raised cash by selling stock, multiplied the haul with borrowed money, then used it to lend to some of the country’s most indebted companies. If all went well, they would profit handsomely.
But right now, the strategy is going badly for many business development companies -- key players in the $812 billion private credit market.