Financial Services >> Analyst Interviews >> March 31, 2026
Key Takeaways: Despite a resilient broader economy, the BDC sector faces a challenging 2026 characterized by mounting credit concerns and valuation compression. KBW analyst Paul Johnson notes that while non-accruals remain relatively stable, KBW’s "Watchlist Investments" surged by 60 basis points this quarter, signaling underlying portfolio stress. Market anxiety is primarily driven by heavy software exposure and the disruptive potential of AI, pushing sector valuations down to 0.77x price-to-NAV. While he expects a "tough" six to nine months marked by NAV risk and potential dividend cuts, he highlights defensive opportunities in Ares (ARCC), Golub (GBDC), Kayne Anderson (KBDC), and MSC Income Fund (MSIF) for long-term investors. Profile
Paul Johnson, CFA, is an Equity Research Analyst at Keefe, Bruyette & Woods, Inc. He has covered Specialty Financials and BDCs since 2024. Prior to that he was Equity Research Associate at Keefe, Bruyette & Woods, Inc. since 2016. Prior to his roles in equity research, Mr. Johnson worked as a Financial Adviser Associate for a wealth management group at Stifel, Inc. Mr. Johnson is a CFA Charterholder and received an undergraduate degree from the University of Missouri – St. Louis. Profile
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TWST: To start, I wanted to get some of your macroeconomic outlook. So far in 2026, how have actual economic and market results compared to your
