Absolute Return Podcast #261 - Beyond the Headlines: The Outlook for Private Credit with Kayne Anderson BDC President Frank Karl
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Nov 24, 2025 
In this engaging conversation, Frank Karl, President of Kayne Anderson BDC, shares his expertise in middle-market direct lending. He discusses the recent volatility in BDC prices, attributing it to rate cuts and credit market concerns. Frank explains the appeal of core middle-market lending, emphasizing its lower leverage and attractive documentation. He also highlights KBDC's strategic shift back to private loans, the nuances of payment-in-kind loans, and why private credit offers valuable downside protection for investors.
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Core Middle-Market Advantage
- Kayne Anderson focuses on core middle-market, senior-secured, private-equity-backed loans with median borrower EBITDA around $35M.
- They prioritize low leverage, first-lien positions, and covenants to create durable, downside-protected portfolios.
Sentiment, Not Hidden Losses
- Recent BDC price volatility reflects sentiment and rate-cut expectations more than broad underlying credit deterioration.
- Frank expects a prove-out period; fundamentals reported by many BDCs remain relatively stable so prices may re-rally once confidence returns.
Check Valuation Governance
- Assess valuation governance when judging BDC marks by checking third-party involvement and board sign-off.
- Evaluate managers' workout experience and processes rather than assuming marks are uniformly optimistic.