Floating-rate portfolios at ARCC and MAIN could boost income if the Fed resumes rate hikes amid elevated inflation.
Ares Capital (ARCC) and Main Street Capital (MAIN) report portfolio yields exceeding 10%, leveraging floating-rate loans tied to short-term interest rates. Both business development companies (BDCs) stand to gain if the Federal Reserve raises rates further, as their loan income resets higher with fed funds moves.
ARCC’s second-quarter 2026 portfolio yield reached 10.3% at cost, while MAIN’s lower-middle-market debt carried a weighted-average effective yield of 12%. Non-accrual rates for both remain below the 2.8% sector median, and liquidity levels support dividend payouts despite private-credit stress.
The Fed held its benchmark rate at 3.50% to 3.75% throughout 2026 after three cuts in 2025, with investors monitoring inflation data for policy shifts. Floating-rate lenders like ARCC and MAIN fill a gap left by banks for mid-sized firms, positioning them to benefit from higher rates.