Private credit investments are pools of non-publicly traded loans to corporations, in which investors invest and participate in the earnings of a private credit portfolio. These investments are sold through investment advisors who like offering investments that their clients cannot source on their own.
In recent months, a fear has gripped investors about the possibility of massive defaults on loans in private credit portfolios. The private credit investments, by contract, limit the amount an investor can withdraw each quarter.
Fears about potential private credit problems have pushed investors into these products to request withdrawals well above the contract limits. With the news, fear grows, and the share prices of the companies that provide private credit investments have been hammered. For example, Blue Owl Capital Inc. (OWL) is down 43% year to date, and KKR 7 Co. (KKR) is off 28%.
Private credit market fears have spread to stocks that are not directly connected to or affected by any potential problems with the types of investments offered by the likes of OWL and KKR.
Publicly traded business development companies (BDCs) also make loans to corporations. BDC client companies are smaller than the typical private credit borrower, and they become deeply involved in the business operations of the companies they finance. The businesses and profits of quality BDCs will be fine. However, fears about private lending have also driven BDC share prices down.
With that in mind, I want to highlight Hercules Capital Corp (HTGC), a $2.7 billion market cap BDC.
HTGC is down 20% this year, pushing its regular dividend yield to more than 10%. And, the company has declared quarterly supplemental dividends, pushing the total yield to almost 13%.
On April 6, Hercules issued a press release announcing that, for the first quarter, the company had all-time-high commitments for new debt and equity investments. It continued :
“In the three months ended March 31, 2026, Hercules originated $1.81 billion of new debt and equity commitments to 16 new and 12 existing portfolio companies.”
Hercules Capital is a BDC of the highest quality. The company has provided great returns to investors for almost 20 years. Private credit fears have put HTGC shares “on sale,” and buying some now will make you a very happy investor a year or two down the road.
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