New York, May 23, 2026, 15:39 EDT
Ares Capital Corp. slipped this week. Investors are looking at a double-digit dividend yield, but concerns about private-credit risk have come up again ahead of the three-day U.S. market break.
The Nasdaq-listed lender ended Friday at $18.59, slipping 0.8% for the session and about 1.6% under its May 15 finish of $18.90. The company’s market cap was around $13.35 billion.
No Monday trading means the tape won’t get a reset until Tuesday. Nasdaq’s 2026 holiday schedule puts U.S. equity markets shut on May 25 for Memorial Day. The next full session is set for Tuesday.
Ares Capital, the biggest public BDC by market cap at March 31, stuck with its dividend focus. The lender to private middle-market firms declared a $0.48 Q2 dividend payable June 30. Core EPS for Q1 came in at $0.47, which removes realized and unrealized gains and losses. Net asset value dropped to $19.59 a share from $19.94 at the end of last year. CEO Kort Schnabel commented on “low levels of non-accruing investments.” CFO Scott Lem said the company has a “strong and flexible balance sheet.” SEC
ARCC lagged Friday even with the main indexes up. ETFs on the S&P 500, Nasdaq 100 and Dow closed in the green. The move in ARCC seemed more about BDC flows than a risk-off pullback.
Private-credit funding is in focus for investors. A Reuters analysis on May 21 found option-adjusted spreads for bigger BDCs—Ares Capital, Blackstone Secured Lending, Blue Owl Capital, and Golub Capital BDC—grouped between 150 and 200 basis points. Option-adjusted spread measures the added yield over Treasuries after adjusting for call options and other features. “There’s dispersion in BDC equity,” Aditya Aney, who co-founded Andromeda Capital Management, told Reuters. He said bond dispersion could move if downgrades, rate swings, or software-as-a-service exposure attract more attention in the coming months. Reuters
But it’s easy to lay out the risks. If borrower stress goes up, bigger BDCs see bond spreads widen, or if AI upends software borrowers more than the market expects, Ares Capital’s net asset value and its dividend buffer both face more strain. Reuters reported the default rate among U.S. private-credit borrowers tracked by Fitch reached 6% in the 12 months to April, the highest since Fitch started tracking in August 2024.
ARCC faces its first hurdle this week: can it stay above the high-$18 range after the holiday? Investors are watching if the recent calmer tone in bonds for bigger BDCs continues. The draw here is the yield, but that gets less attractive fast if asset values or credit trends shift against it.
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