Re: BDC Oil Exposure...TICC Q3 Earnings Mystery
Regarding the comment from 'chuter on interest rate risk, it is definitely worth looking into the details for each BDC since the info is usually in the 10Q report. For example, TICC says that a 1% interest rate increase will have a small negative impact but a 5% increase will have a more significant positive impact:
To illustrate the potential impact of a change in the underlying interest rate on our net investment income as it pertains to our debt portfolio, we have assumed a 1% increase in the underlying five- year Treasury note, the Prime rate or LIBOR, and no other change in our portfolio as of September 30, 2014. We have also assumed outstanding variable rate borrowings of $341.3 million.
Under this analysis, net investment income would decrease by $2.3 million on an annualized basis, reflecting the amount of investments in our portfolio which have implied floors that would be unaffected by a 1% change in the underlying interest rate. However, if the increase in rates was more significant, such as 5%, the net effect on net investment income would be an increase
of approximately $9.3 million.