Ares Capital Defaults Rise to 2.4%, Software Loans Slashed
ARCC is trading near its 52-week low of $17.4 (7.6% above the low).
Summary
Ares Capital's $29B private-credit fund reported a $188M unrealized loss in Q2, driven by software loan writedowns. Defaults climbed to 2.4% from 2.1% last quarter, though still below the 3% long-term average. The fund marked its Cornerstone OnDemand loan to 63 cents on the dollar and Symplr to 65 cents, reflecting AI disruption risks. On the positive side, new deal activity picked up in June and July as competitors pulled back, allowing Ares to secure tougher terms. This follows the Q2 earnings filing yesterday that showed declining net income and NAV. The rising defaults and specific loan impairments signal credit deterioration that could pressure future earnings and dividends.
At the time of this announcement, ARCC was trading at $18.72 on NASDAQ in the Finance sector, with a market capitalization of approximately $13.4B. The 52-week trading range was $17.40 to $22.94. This news item was assessed with negative market sentiment and an importance score of 8 out of 10. Source: Dow Jones Newswires.