The BDC Credit Reporter is adding Barnes & Noble Inc. – the iconic bookseller – to the Underperformers list. We’ve noted that the company’s 2024 Term Loan is trading at around 80 cents on the dollar. Moreover, most bookstore locations are closed during Covid-19, which cannot be good for the bottom line and the ability to service debt. We are initiating the company at a Corporate Credit Rating of 3.
There are two related BDCs with exposure – recently booked – to the company: Carlyle’s TCG BDC (CGBD) and its non-traded twin CGBD II. (No one can accuse Carlyle of a fanciful BDC naming policy). As of year end 2019, total exposure – all in the 2024 Term Loan – was $34.4mn and valued at par and equally divided between the two BDCs. There is $3.1mn of investment income potentially at risk. We’ve not learned much, though, from the public record about Barnes & Noble’s financial condition, so we’ll revisit the CGBD valuation when IQ 2020 earnings are released in May.