According to a September 30, 2019 news report: “All of the existing banking partners to private prison leader GEO Group have now officially committed to ending ties with the private prison and immigrant detention industry. These banks are JPMorgan Chase, Wells Fargo, Bank of America, SunTrust, BNP Paribas, Fifth Third Bancorp, Barclays, and PNC“.
This is notable because of existing BDC exposure to the private prison operator of $48.2mn, provided by two major players: Cion Investment and publicly listed New Mountain Finance (NMFC). At June 2019, the 2025 senior debt held by the two BDCs was carried at par and the traded loan maintains that value at time of writing. Nonetheless, we’ve chosen to add Geo Group to our under-performers list with an initial rating of CCR 3 (Watch List). That’s because of the risk that the bank boycott of the company – which follows lobbying by activist groups – could impact refinancing of existing debt when due, or even cause financial failure. Our sister publication – the BDC Reporter – discussed the subject of the boycott in a recent Twitter post.