Biggest Losers of Credit Shock Poised to Be Private Debt’s BDCs

Renowned as risk-takers, they raised cash by selling stock, multiplied the haul with borrowed money, then used it to lend to some of the country’s most indebted companies. If all went well, they would profit handsomely.

But right now, the strategy is going badly for many business development companies -- key players in the $812 billion private credit market.

Analysts and ratings companies are sounding alarms as a number of the firms -- often just called BDCs -- rush to shore up their finances or throw lifelines to their borrowers. One of the largest, Golub Capital BDC Inc., is ...