1436 ET - Business development companies, which provide capital to small and midsize businesses, are less likely to face tariff-driven risks in their investments across the lower middle-market, or companies with less than $25 million of Ebitda, Morningstar says, noting that such businesses often have local customers and supply chains. On the other hand, tariffs may be more challenging for BDC deals in the upper middle-market, or businesses with more than $150 million in Ebitda, because they "typically have diversified international revenue and operations," Morningstar says. The tariffs that have already been announced for the automotive sector could make it particularly vulnerable, the financial-services firm adds. BDCs in 4Q 2024 had about $8 billion invested in more than 100 companies across the automotive and commercial-road sectors, it says, using data from Pitchbook LCD. (luis.garcia@wsj.com; @lhvgarcia)

(END) Dow Jones Newswires

May 20, 2025 14:36 ET (18:36 GMT)

Copyright (c) 2025 Dow Jones & Company, Inc.