The deadline is approaching for the Securities and Exchange
Commission (SEC) to make the necessary revisions to the
Investment Company Act that will allow business development
companies (BDCs) to increase their leverage. The SEC is yet to
take the necessary actions as required by the new legislation,
which is causing market uncertainty as BDCs look to increase
the debt that they take on.
Following the passing of the
S.2324 - Small Business Credit Availability Act in March of
this year, BDCs were allowed to increase the amount of debt
they can borrow against their equity by 200%, provided they
gain either board or shareholder approval.
BDCs are able to double the amount of leverage they are able
to utilise"We are headed into the period where one would assume
that the SEC is going to begin to take action," said Anna
Pinedo, partner at Mayer Brown. "They only have a year...