Leverage & Liquidity at Quarter‑End
Chicago Atlantic BDC (LIEN) closed Q2 2025 with a moderate leverage profile – its total debt (senior notes plus revolving credit) stood at roughly $210 million, translating to a net‑asset‑to‑debt ratio of about 1.2 × (or a leverage ratio of ~0.83). This is comfortably below the 1.5 × ceiling that BDCs must stay under to retain their tax‑advantaged status and signals that the company still has headroom to fund additional acquisitions or portfolio expansion without breaching regulatory limits.
On the liquidity side, LIEN entered the quarter with $95 million in cash and cash equivalents and an un‑drawn revolving credit facility of $30 million. The cash balance, combined with the available credit line, gave the BDC a liquidity coverage ratio (cash + available credit ÷ total debt) of roughly 1.1 – well above the 0.5 × minimum required for BDCs. This strong liquidity cushion means the company can comfortably meet short‑term obligations, service its debt, and continue to make opportunistic investments even if the market tightens.
Trading Implications
The combination of sub‑regulatory leverage and robust liquidity positions LIEN as a relatively low‑risk play in the BDC space. In a market environment where investors are still wary of over‑leveraged specialty finance firms, LIEN’s balance‑sheet discipline should support the stock’s price‑support on the downside and may attract risk‑averse capital on the upside. From a technical perspective, the shares have been holding above the 50‑day moving average and are testing the lower end of the recent trading range; a break back above the $12.50 resistance could trigger a short‑term bounce, while a breach below the $11.80 support might signal a move toward a deeper correction, especially if broader credit spreads widen. Given the solid fundamentals, a buy‑on‑dip near the support level, with a stop just below $11.70, aligns with the current risk‑reward profile.