Non-accrual status

A loan is placed on non-accrual status when the BDC or fund manager concludes that future interest payments are unlikely to be collected. Once placed on non-accrual, the manager stops recognizing interest income from that position in its reported earnings — even if the borrower technically owes the payments. Non-accrual is the formal accounting signal that a credit has deteriorated meaningfully.

BDCs disclose non-accrual positions in their 10-Q and 10-K filings, typically in the Schedule of Investments footnotes. The non-accrual rate — the dollar fair value of non-accrual positions divided by total portfolio fair value — is a closely watched credit-health metric. A rising non-accrual rate quarter-over-quarter is one of the earliest publicly-observable signals of portfolio stress.

Non-accrual status is not the same as a default. A position can be on non-accrual while still receiving partial payments (e.g., principal but not interest), and a position can default without ever being placed on non-accrual if the manager believes recovery is imminent. The criteria are at the manager's discretion, which is why analysts compare non-accrual rates across BDCs — material differences in non-accrual recognition timing can mask portfolio quality differences.

SpreadVista parses non-accrual flags from every BDC and fund filing, computes the rate by period, and surfaces trend reversals automatically. Cross-vehicle views let you see when the same credit goes non-accrual at one BDC but is still accruing at another — a common pre-default pattern worth investigating.