The business development companies ((BDCs)) continue to garner more investor attention as the access to a different investment class and high yields become ever more attractive. After highlighting Prospect Capital Corporation (PSEC) a few weeks back, Fifth Street Finance Corp. (FSC) now garners our attention with a yield above 10%.
Fifth Street Finance is a specialty finance company that lends to and invests in small and mid-sized companies in connection with investments by private equity sponsors. The company provides full debt structure financing solutions including: first lien, second lien, mezzanine, and one-stop. It trades as a closed-end investment company that has elected to be treated as a business development company (BDC) under the Investment Company Act of 1940.
Though the company that went public in 2008 has historically not grown Net Asset Value (NAV), Fifth Street recently reported record transaction volumes for the December quarter.
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