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Citi starts at Buy on Palmer Square Capital, cites management expertise

Published 02/12/2024, 05:49 AM
Updated 02/12/2024, 08:37 AM

On Monday, Citi initiated coverage on Palmer Square Capital BDC, trading on the New York Stock Exchange under the ticker NYSE:PSBD, with a Buy rating and a price target of $17.00. The firm highlighted the investment's positive aspects, including the management's expertise, the potential for attractive profitability due to a lower fee expense structure, and an opportunistic investment policy.

Palmer Square Capital BDC's strengths were identified as its knowledgeable management team with a proven performance track record, a fully invested portfolio that does not require a ramp-up phase, a strong initial dividend payment, and shareholder-friendly management fees. These factors contribute to the firm's favorable outlook on the business development company (BDC).

However, some concerns were noted by the firm, such as Palmer Square Capital BDC's short operating history, having started in 2020, and its investment strategy that is heavily weighted towards liquid loans with quotable prices. This composition could potentially result in forced selling during periods of significant market volatility.

Despite these reservations, the firm expressed an overall positive stance on the leveraged lending investment environment heading into 2024. Citi anticipates a stable performance from Palmer Square Capital BDC's portfolio, which is expected to yield a solid total return over the coming year. The assessment reflects confidence in the BDC's ability to navigate the market and deliver value to its shareholders.

This article was generated with the support of AI and reviewed by an editor. For more information see our T&C.

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