Advisor sees double-digit yield opportunity, despite volatility

A relatively high-profile story has cast a pall over a swathe of private credit strategies. US asset manager Blue Owl Capital announced late in 2025 that they would halt the proposed merger of two Business Development Corporation funds (BDCs). One of those BDCs was publicly listed, while the other was private. The deal involved a restriction on redemptions despite some paper losses, which investors bristled at, forcing Blue Owl to pull back on its merger. In the wake of this story, Francis Sabourin sees a chance to capture yield.

Sabourin, Senior Investment Advisor and Senior portfolio manager at Francis Sabourin Wealth Management of Richardson Wealth, argues that the current volatility in the BDC market has resulted in investors conflating public and private BDCs. He explains that these instruments lend to small, medium and large sized businesses, offering retail exposure to private firms, and often come with income that might be classified as high yield, despite loans that classify as investment grade. Sabourin argues that the current volatility in BDCs has created a pricing opportunity in publicly listed BDCs, offering greater liquidity and transparency while matching the price and yield of their private equivalents.

“There's a huge dispersion between the private NAV and the public NAV, and that's what I like right now. The public NAV is a huge discount. They pay a yield between 12 and almost 13% right now,” Sabourin says. “For those looking at income sources for your TFSA in 2026, this is interesting… They look beat up right now, but it’s always been part of that transaction, if you look at BDCs that have been trading since 2013, it’s not the first time. You have to accept the volatility, it’s not stable like some other private credit funds, but if you trade it at the right time, you can get a really good yield.”

Sabourin likens this opportunity to the discounts certain massive Canadian financial names traded at during the COVID panic of March 2020. While this is a different product set, Sabourin argues that the diversity of loans held in these BDCs should reassure advisors about the longevity of these funds. He notes that while BDCs are a US instrument, a few Canadian-listed public BDC options have emerged which can help manage US tax issues as well.

While there is risk associated with BDCs, Sabourin argues that these vehicles have become a popular means for businesses to access capital, often for short-term capital expenditures. While some borrowers might be in a distressed situation, others use BDCs for speed and convenience, borrowing from firms like Blackstone and Oaktree to finance a new project or purchase, only for those loans to be refinanced into a longer-term instrument. The high yields paid on those loans come with the territory and can drive income for BDC investors.

This kind of lending has become more popular in the US, Sabourin says, after the country’s small financial crisis in 2023. Many regional US banks stopped lending to businesses, cutting them off from quick capital injections. As a result, private lenders and BDCs have filled that gap.

For advisors, Sabourin stresses the attractiveness of public BDCs over private vehicles. He argues that these BDCs are trading at steeper discounts, with better liquidity provisions and similar yields compared to their private equivalents. While public BDCs are more volatile on paper than their private equivalents, Sabourin notes that private BDCs are “stable until they are not stable,” noting that less frequent pricing only masks volatility rather than eliminating it.

While private credit markets are less transparent by definition, Sabourin notes that public BDCs require a degree of loan quality disclosure. He explains that this allows advisors and investors to more fully understand the structure of what they’re getting into than many other private credit investments. Advisors should still expect volatility in any BDC allocations, he says, noting that some BDCs are down double digits right now. Sabourin argues, though, that the promise of high yield and eventual NAV recovery are enough to encourage advisors to take a look.

Sabourin emphasizes, too, that these are not CDOs. Where those vehicles were tied directly to the US housing market, the diversity of borrowing businesses that BDCs lend to can insulate them somewhat from sectoral shocks. Businesses need to borrow money, and these vehicles may offer an opportunity for advisors and clients willing to take on some vol to enjoy some income.

“It's a high yield return with an investment grade quality overall,” Sabourin says. “It’s a little more volatile and you have to expect that, but if you know how to trade it or if you add a small amount into the fixed income portfolio, you can get those coupons and watch.”