Some specialty finance companies that lend to midsize businesses are confronting the threat of a funding squeeze just as the coronavirus pandemic is causing defaults to rise, a potential one-two punch that could curtail their activities.
In the past seven weeks, two prominent companies that lend to middle-market businesses, Bain Capital Specialty Finance Inc. and Golub Capital BDC Inc., have both raised money by completing stock sales at significant discounts to their net asset values. Such a sale is typically seen as a sign…