The Q2 2026 edition of the ACC Quarterly Market Update found that:

• Q2 data shows more stability than stress: Loan valuations remain broadly healthy but the bifurcation between performing and stressed loans has deepened since Q1 2026. 85% of loans were valued above 97% of par, while the percentage of loans valued below 90% of par edged up from 5% to 7%. This cohort remains concentrated in identifiable sectors — particularly software — and in smaller borrowers, where 12% of loans in the $10–20mn EBITDA (earnings before interest, tax, depreciation and amortisation) bracket are priced below 90% of par.
• Borrower earnings continue to improve: Median revenues rose 6.5% and EBITDA rose 7.4% year-on-year in Q2 2026, extending the current period of margin expansion by another quarter. In plain terms, the typical borrower is generating more operating profit per dollar of revenue than it was three years ago - a sign of sustained operating discipline.
• Most borrowers remain well placed to meet their interest payments: Interest coverage ratios -a key measure of debt serviceability - remain near their recent highs at a median of 1.72x. The share of borrowers with coverage below 1.00x ticked up to 14.1% — the first increase in six quarters, but still well below the peak of 23.2% observed in December 2023. The dollar value of amended PIK loan interest (often stress driven) remains very low at 1.6% of total interest dollars.
• This quarter’s focus examines Business Development Companies (BDCs), using data from Raymond James and Cliffwater: This shows that after falling sharply in Q1, public BDC prices rebounded decisively through Q2 and into early Q3. The Cliffwater BDC Index has returned +7.4% in Q3 to date, and the sectors discount to NAV narrowed from 24% in March to 10% by mid-August.
• This data also provides evidence that the initial market reaction ran well ahead of credit fundamentals at the time: NAV-based returns on the underlying loans remained positive throughout. Q2 filings show NAV declines moderating, non-accruals near 1% for large private BDCs, and unsecured debt markets firmly open, with approximately $7.5bn of index-eligible issuance in Q2 alone.

The ACC Quarterly Market Update incorporates data from the Houlihan Lokey DataBank which covers more than 70,000 loan valuations and contains hundreds of loan-level metrics and standardised fields derived from Houlihan Lokey’s recurring portfolio valuation work dating back to 2017. Data is collected at monthly, quarterly, and annual intervals over most of an investment’s holding period to provide a comprehensive time-series view of portfolio company performance, credit quality, market benchmarking, and valuation outcomes throughout a loan’s lifecycle.