43% of a first-lien BDC loan coupon is now the base rate

The reference rate now supplies ~43% of first-lien BDC loan yield, against ~14% in 2021 — from our reconciliation of BDC Schedule-of-Investments filings (par-weighted).

43% of the coupon on a first-lien BDC loan is now the base rate. In 2021, it was 14%.

The Federal Reserve Board hiked in September and the market expects more. CME FedWatch priced 88% odds of at least a 25bp hike by December and essentially none of a cut (9 Oct 2026).

Because private-credit loans are floating rate, a higher base rate passes straight through as interest income. With base rates looking set to remain elevated — and making up a large portion of the loan coupon — private credit is well positioned for any potential rising-rate environment.

Cedarpool chart card: stacked area chart of the par-weighted first-lien BDC all-in coupon by quarter, Q1 2021 to Q2 2026. The base-rate component (dark green) grows from about 1% of the coupon in 2021 to about 3.8% by Q2 2026 while the spread component (mid green) narrows, and a gold line traces the all-in coupon from about 6.8% in 2021 to a peak of about 11.3% at Q3 2023 and about 8.9% at Q2 2026. Base rates are therefore about 43% of the coupon at Q2 2026, against about 14% in 2021. — Base rate share of the first-lien BDC all-in coupon, par-weighted, Q1 2021–Q2 2026. Dark green is the base-rate component, mid green the spread, gold the all-in coupon.

Par-weighted, first-lien debt positions disclosing both a spread and an all-in coupon; 43% is 42.7% at 2026-06-30 (n = 24,008). 2021 average 13.5% (range 12.9–14.2%).

43% of a first-lien BDC loan coupon is now the base rate

Sources

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