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25 Undervalued BDCs for High Yields in 2025
Undervalued business development companies (BDCs) are a top choice for income investing BDCs in 2025, offering high yields up to 18.2% and BDC NAV discounts as deep as -59.0%. These 27 undervalued BDCs, like Prospect Capital (PSEC) and FS KKR Capital (FSK), are among the best BDCs for income 2025, delivering both income and capital appreciation potential. For more on income strategies, check our guide to high-yield investing. But tread carefully—credit risks and rate pressures loom!
Discover Top Undervalued BDCs NowWhy Invest in Undervalued BDCs in 2025?
Business development companies 2025 offer capital to small- and mid-sized businesses, delivering high-yield BDCs with tax-advantaged dividends. Their ability to trade at BDC NAV discounts creates opportunities for savvy investors. Key metrics include:
- Price-to-NAV (P/NAV): A discount (e.g., -20%) signals undervaluation. Hover for moreP/NAV compares a BDC’s stock price to its net asset value per share.
- Dividend Yield: Yields of 10%+ must be backed by net investment income (NII) and low non-accruals for sustainability.
- Portfolio Quality: Senior secured loans and resilient sectors (e.g., software, healthcare) reduce risk.
- Market Risks: Rising non-accruals and declining rates challenge high-yield BDCs. Learn moreIndustry reports note rising non-accruals and rate pressures for business development companies 2025.
Top 27 Undervalued BDCs for 2025
These 27 high-yield BDCs, trading at significant BDC NAV discounts, are among the best BDCs for income 2025, offering value and income in a competitive market, based on data as of August 6, 2025.
| BDC (Ticker) | Market Cap (MM) | Dividend Yield | P/NAV | % 1st/2nd Lien |
|---|---|---|---|---|
| Barings BDC (BBDC) | $966.3 | 11.33% | -18.69% | 73.5% |
| Bain Capital Specialty Finance (BCSF) | $954.9 | 11.41% | -16.55% | 63.4% |
| Blackstone Secured Lending Fund (BXSL) | $7,111.6 | 9.87% | 13.87% | 92.2% |
| Crescent Capital BDC (CCAP) | $522.9 | 11.91% | -28.08% | 92.2% |
| Carlyle Secured Lending (CGBD) | $998.8 | 11.68% | -17.62% | 89.2% |
| CION Investment Corp (CION) | $506.9 | 14.97% | -32.63% | 84.5% |
| Equus Total Return (EQS) | $20.1 | 0.00% | -41.27% | 45.5% |
| Fidus Investment Corp (FDUS) | $722.6 | 8.33% | 6.45% | 73.1% |
| FS KKR Capital Corp (FSK) | $5,741.4 | 12.49% | -12.28% | 80.5% |
| Golub Capital BDC (GBDC) | $3,921.2 | 10.60% | -2.13% | 90.6% |
| Great Elm Capital Corp (GECC) | $126.6 | 13.49% | -4.28% | 58.2% |
| Goldman Sachs BDC (GSBD) | $1,295.0 | 11.59% | -16.36% | 97.4% |
| Horizon Technology Finance (HRZN) | $309.9 | 17.19% | 1.45% | 87.7% |
| Investcorp Credit Management BDC (ICMB) | $40.8 | 16.96% | -47.79% | 77.0% |
| Kayne Anderson BDC (KBDC) | $1,083.1 | 10.47% | -7.45% | 97.6% |
| Chicago Atlantic BDC (LIEN) | $232.1 | 13.37% | -22.90% | 99.8% |
| MidCap Financial Investment Corp (MFIC) | $1,152.3 | 12.31% | -17.28% | 92.9% |
| Monroe Capital Corp (MRCC) | $136.5 | 15.87% | -27.00% | 84.8% |
| MS Direct Lending Fund (MSDL) | $1,616.6 | 10.78% | -10.17% | 96.5% |
| New Mountain Finance Corp (NMFC) | $1,123.8 | 12.28% | -16.31% | 70.3% |
| Blue Owl Capital Corp (OBDC) | $7,195.6 | 10.51% | -7.00% | 82.5% |
| Oaktree Specialty Lending (OCSL) | $1,194.4 | 11.80% | -19.04% | 81.2% |
| OFS Capital Corp (OFS) | $111.2 | 16.39% | -23.92% | 53.6% |
| PennantPark Investment Corp (PNNT) | $466.2 | 13.45% | -4.55% | 41.8% |
| Prospect Capital Corp (PSEC) | $1,341.1 | 18.18% | -59.03% | 76.1% |
| Portman Ridge Finance Corp (PTMN) | $161.6 | 15.36% | -35.07% | 79.5% |
| WhiteHorse Finance (WHF) | $202.2 | 17.70% | -28.16% | 78.2% |
Deep Dive into High-Yield BDCs
Market Alert: High-yield BDCs face a tough 2025 with non-accruals at 1.36% in Q1 and $7.3B in debt maturities. BDC NAV discounts (average -8.05%) and yields (10%+) make these the best BDCs for income 2025, but credit risks loom.
Barings BDC (BBDC): High-Yield Value
This undervalued BDC offers an 11.33% yield and -18.69% P/NAV ($9.18 vs. $11.29). Its 73.5% first/second lien loans and healthcare/tech focus make it a top pick for income investing BDCs.
Golub Capital BDC (GBDC): High-Yield Value
GBDC’s -2.13% P/NAV ($14.72 vs. $15.04) and 10.60% yield make it a stable choice among business development companies 2025. Its 90.6% first/second lien loans and $3.92B market cap ensure resilience.
Goldman Sachs BDC (GSBD): High-Yield Value
This high-yield BDC trades at -16.36% P/NAV ($11.04 vs. $13.20) with an 11.59% yield. Its 97.4% first/second lien focus and software exposure make it a top pick for income investing BDCs.
FS KKR Capital Corp (FSK): High-Yield Value
FSK’s $5.74B market cap, 12.49% yield, and -12.28% P/NAV ($20.50 vs. $23.37) position it among the best BDCs for income 2025. Its 80.5% first/second lien loans offer diversification.
CION Investment Corp (CION): High-Yield Value
CION’s -32.63% P/NAV ($9.62 vs. $14.28) and 14.97% yield scream undervaluation. Its 84.5% first/second lien loans and 1.5% NAV growth make it a compelling undervalued BDC, despite 64.19% leverage.
PennantPark Investment Corp (PNNT): High-Yield Value
PNNT’s -4.55% P/NAV ($7.14 vs. $7.48) and 13.45% yield are attractive for income investing BDCs. Its 41.8% first/second lien exposure is riskier, but a 12.23% one-year return shows strength.
Portman Ridge Finance Corp (PTMN): High-Yield Value
This high-yield BDC offers a -35.07% P/NAV ($12.24 vs. $18.85) and 15.36% yield. Its 79.5% first/second lien loans make it an undervalued BDC, but a -18.91% YTD return raises concerns.
WhiteHorse Finance (WHF): High-Yield Value
WHF’s -28.16% P/NAV ($8.70 vs. $12.11) and 17.70% yield are compelling for business development companies 2025. Its 78.2% first/second lien loans offer income, but rate pressures threaten coverage.
Prospect Capital Corp (PSEC): High-Yield Value
PSEC’s -59.03% P/NAV ($2.97 vs. $7.25) and 18.18% yield make it a standout undervalued BDC. Governance concerns explain the discount, but 76.1% first/second lien loans provide stability.
Investcorp Credit Management BDC (ICMB): High-Yield Value
ICMB’s -47.79% P/NAV ($2.83 vs. $5.42) and 16.96% yield suggest deep value among high-yield BDCs. Its 77.0% first/second lien loans offer safety, but a $40.8M market cap increases risk.
Chicago Atlantic BDC (LIEN): High-Yield Value
LIEN’s -22.90% P/NAV and 13.37% yield target cannabis lending, making it a niche pick for business development companies 2025. Its 99.8% first/second lien loans and $232.1M market cap add appeal.
Kayne Anderson BDC (KBDC): High-Yield Value
KBDC’s -7.45% P/NAV and 10.47% yield focus on energy and private credit. Its 97.6% first/second lien loans and $1.08B market cap make it a stable undervalued BDC, despite energy volatility.
Market Outlook: Challenges and Opportunities
2025 Outlook: Undervalued BDCs face rising non-accruals (1.36% in Q1 2025) and $7.3B in debt maturities. BDC NAV discounts (average -8.05%) and high yields (10%+) offer value, but selective origination is key.
Key risks include:
- Credit Risk: Non-accruals hit 1.36% in Q1 2025, impacting high-yield BDCs in healthcare and tech.
- Leverage: Average leverage is 0.97x, but BDCs like CION (64.19%) carry higher risk.
- Rate Pressure: Declining rates may compress yields, affecting income investing BDCs.
- Debt Maturities: $7.3B due in 2025 tests funding flexibility for business development companies 2025.
Opportunities: Deep BDC NAV discounts (e.g., PSEC’s -59.03%) offer upside. High-yield BDCs with low non-accruals (e.g., GSBD’s 1.6%) and high first/second lien exposure (e.g., LIEN’s 99.8%) shine.
Investment Strategies for High-Yield BDCs in 2025
- Target Deep Discounts: Seek undervalued BDCs with P/NAV below -8.05%, like PSEC (-59.03%) or ICMB (-47.79%), but verify credit quality.
- Check Earnings: Review Q2 2025 financial filings for portfolio health and non-accrual trends.
- Diversify with ETFs: BDC-focused ETFs offer 10% yields and exposure to the best BDCs for income 2025, reducing single-stock risk.
- Prioritize Quality: Focus on low-leverage BDCs (below 50%, e.g., GBDC) and resilient sectors (software, healthcare).
- Monitor PIK Income: Payment-in-kind income rose to 8.2% in Q1 2025, signaling credit stress. Avoid BDCs with PIK above 10%.
FAQ: Undervalued BDCs in 2025
What Are Business Development Companies (BDCs)?
Business development companies 2025 are publicly traded firms that invest in small- to mid-sized businesses, offering high-yield dividends and trading at BDC NAV discounts or premiums.
How to Evaluate BDC NAV Discounts?
Compare a BDC’s stock price to its NAV per share. A discount (e.g., -20%) means buying assets below their value, offering gains as discounts narrow for undervalued BDCs.
Why Invest in High-Yield BDCs in 2025?
High-yield BDCs provide income (10%+ yields) and deep BDC NAV discounts (up to -59.0%), making them the best BDCs for income 2025 in a volatile market.
Final Thoughts
Undervalued BDCs like PSEC, ICMB, CION, PTMN, and WHF are among the best BDCs for income 2025, offering high yields and deep BDC NAV discounts. Rising non-accruals and rate pressures demand caution, but quality high-yield BDCs with low non-accruals and resilient portfolios can deliver outsized returns. For broader income strategies, explore our guide to high-yield investing. Research diligently to capture these income investing BDCs!
Disclaimer: This article is for informational purposes only and does not constitute financial advice. Consult a qualified financial advisor before investing. Data is current as of August 10, 2025, and subject to change.
