--- title: "BDC non-accruals: falling values and rising portfolio weights | Altss Blog" description: "June 2026 examples from FS KKR and Ares separate reported non-accrual portfolio weights from cash recovery results." canonical: "https://altss.com/blog/bdc-non-accruals-cost-fair-value-portfolio-scope-arcc-fsk" --- [Altss Research](https://www.linkedin.com/company/altss) 3 min read Updated Nov 14, 2026 Share # BDC non-accruals: falling values and rising portfolio weights June 2026 examples from FS KKR and Ares separate reported non-accrual portfolio weights from cash recovery results. [Back to blog](https://altss.com/blog) Share [LinkedIn](https://www.linkedin.com/sharing/share-offsite/?url=) [X](https://x.com/intent/tweet?url=&text=BDC%20non-accruals%3A%20falling%20values%20and%20rising%20portfolio%20weights) Copy link FS KKR Capital’s non-accrual fair value fell while its portfolio weight rose. Summing the rows flagged as non-accrual in its [June 30 report](https://www.sec.gov/Archives/edgar/data/1422183/000162828026053783/fsk-20260630.htm) gives $431.0 million at June 30, 2026, against $440.6 million at December 31, 2025. Total portfolio fair value contracted from $13,009 million to $11,418 million. The December and June ratios round to the reported 3.4% and 3.8%. The sums use disclosed rounded position values, not unrounded issuer totals. The earlier numerator over June’s portfolio gives approximately 3.86%; June’s numerator gives 3.77%. This mathematical decomposition does not attribute the change to repayments, disposals, markdowns or cures. ## Ares: changing the valuation basis In [Ares Capital’s June 30 report](https://www.sec.gov/Archives/edgar/data/1287750/000162828026050307/arcc-20260630.htm), the non-accrual schedule rows total $707.6 million at amortized cost and $404.4 million at fair value. The portfolio totals are $29,675 million and $29,349 million. Dividing within each basis reproduces the reported 2.4% and 1.4%, after rounding. Dividing those two headline percentages would also import the difference between the portfolio denominators. Amortized cost reflects discount, premium and payment-in-kind adjustments, not just cash advanced. Ares’s policy separately governs restoration to accrual when payment or collectability conditions are satisfied. A smaller fair-value weight alone does not establish that restoration. ## Two identical ratios, different workout questions Consider two fictional credit portfolios, each initially containing performing investments with cost and fair value of $900 million, plus one non-accrual position with cost and fair value of $100 million. Both therefore report 10% non-accrual exposure at fair value. Assume no other changes. These simplified numbers are not either issuer’s holdings or a reconstruction of its reporting period. In Portfolio A, the non-accrual position is marked down to $50 million. The total investment portfolio falls to $950 million, so the exposure ratio becomes 5.26%. There is no cash receipt and the position remains non-accrual. In Portfolio B, the borrower instead repays $50 million of principal, leaving a non-accrual investment with a $50 million cost basis and equal fair value. The investor holds the proceeds as cash outside the investment-portfolio denominator. Its remaining investments also total $950 million, producing the same 5.26% ratio. Before reinvestment, B holds a combined $1 billion in investments and cash; A holds $950 million of investments. An investment committee that rewards both managers for an identical improvement would overlook the economic difference. A has reduced the carrying value of an unresolved position; B has collected cash while retaining residual exposure. Reinvesting B’s $50 million in a new performing investment valued at its cost would lower its non-accrual ratio again, to 5%, without collecting another dollar from the troubled borrower. The investment denominator changes even though the remaining problem position does not. [Altss’s Apollo pricing analysis](https://altss.com/blog/apollo-daily-private-credit-pricing-valuation-liquidity) likewise distinguishes valuation estimates from access to cash. Now consider the cost comparison. With the stated assumptions, A still has $100 million of non-accrual cost against $1 billion of total investment cost: 10%, despite its 5.26% fair-value measure. B’s principal repayment reduces both the affected cost and the investment-cost denominator, yielding $50 million divided by $950 million before reinvestment. ## Current Altss product information Product reference revised: 2026-11-14. Altss provides private-markets intelligence for investment, fundraising and institutional business development. 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