A trade publication has written that Barnes & Noble Inc. has both closed a large store in New York City and let go an unknown number of its corporate staff. The company has been candid in recent months about the harsh impact of the Covid-19 crisis on its business.
The BDC Credit Reporter is adding the famous bookseller to the underperformers list based on the above, with a CCR 3 rating. There are only two BDCs with exposure – Carlyle Group’s public BDC TCG BDC (CGBD) and its non-traded sister BDC TCG BDC II. The exposure is in the company’s senior secured Term Loan and amounts to $34.0mn. As of March 31, 2020 the debt was discounted for the first time by (8%). Typically that’s modest enough a drop in value to keep a company on the performing list with a corporate credit rating of 2.
However, given this latest news and the continuing challenges in retail, we’re being careful and adding this debt – priced at LIBOR + 550 bps – on our underperformers Watch List. When we have access to public information that causes us to be concerned, the BDC Credit Reporter will make an independent assessment regardless of the BDC valuation which is our first port of call.