A toy model shows how the BDC ARCC is like a commercial bank without deposits. Skilled but costly managers use leverage to translate >5% spreads into 16% ROE, which drops to ~10% after compensation.
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How do BDCs generate >10% dividend yield?
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A toy model shows how the BDC ARCC is like a commercial bank without deposits. Skilled but costly managers use leverage to translate >5% spreads into 16% ROE, which drops to ~10% after compensation.