After reviewing the IIIQ 2020 BDC results, there are two developments worth noting at Learfield Communications, owned by A-L Parent, which we last wrote about last quarter. First, our decision to downgrade the company to CCR 4 from CCR 3 on August 7, 2020 was validated by Apollo Investment’s (AINV) latest valuation. The BDC is discounting the second lien Term loan by (34%) from (22%). That’s a ($0.650mn) reduction in FMV to $3.654mn. The income involved – still being received – amounts to just under $0.5mn a year.
Secondly, Bain Capital Specialty Finance (BCSF) – which was also a second lien lender as of June, seems to have decamped, leaving AINV as the only remaining lender.
We affirm the CCR 4 rating and the inclusion of the company on the Weakest Links list, which means chances are high of a default in the next quarter.