Ares Capital's Non-Accruals Rise to 2.4% but Remain Below Historical Average
In Q2 2026, Ares Capital (NASDAQ: ARCC) reported a rise in non-accrual loans to 2.4% of its portfolio from 1.8%, marking an increase of 60 basis points year-over-year. While this signals some deterioration in loan quality, the level remains below both the company's historical average and industry benchmarks. As a business development company (BDC), Ares Capital funds loans to smaller businesses using debt and equity capital. The health of these loans is crucial for maintaining its 9.5% yield. In Q2, clients paid an average interest rate of 10.3%, but rising non-accruals could pose a risk if they continue increasing. Despite the upward trend in troubled loans, analysts suggest this may be a reversion to historical norms rather than a sign of deeper issues. Investors are advised to monitor future developments closely.
Tickers: $ARCC
Topics: business_development_company non-accrual_loans portfolio_health