I used BlackRock TCP Capital (TCPC) to look at how write-downs actually happen on the books of a BDC. 

TL;DR: TCPC's non-accrual percentage fell from 5.6% to 3.5% over 2025. Management called it "progress". Seven weeks after that Q3 press release, NAV fell 19% in a single quarter.

The non-accrual metric got better because impaired loans were being restructured and written off (shrinking the numerator) not because companies were recovering. 

For the first three quarters of 2025, accounting reversals from those restructurings generated unrealized "gains" that masked the deterioration. 

Then Q4 arrived with no restructurings left in the pipeline, and new markdowns impacted NAV hard. 

This isn't a TCPC-specific problem. It's a structural feature of how BDC loan losses flow through the financial statements. 

One other thing. Take a look at the table below: I traced all non-accrual loans back to 2022, more than half of the non-accruals ended up being ZEROs after restructuring. That's $0 recovery on those loans. 

Full deep dive here: https://lnkd.in/g6BRV4BT