Bain Capital Specialty (BCSF) appears an attractive pick, as it has been recently upgraded to a Zacks Rank #1 (Strong Buy). An upward trend in earnings estimates -- one of the most powerful forces impacting stock prices -- has triggered this rating change.The Zacks rating relies solely on a company's changing earnings picture. It tracks EPS estimates for the current and following years from the sell-side analysts covering the stock through a consensus measure -- the Zacks Consensus Estimate.The power of a c ...

Group 1 - The private equity giant Carlyle Group is nearing a significant deal to sell its Dutch tech services company HSO to Bain Capital, with an estimated valuation of approximately $1 billion [1][2] - HSO's management plans to reinvest in the business through this transaction, indicating a commitment to the company's future development [1] - The deal reflects a resurgence in the private equity market after a prolonged period of inactivity, driven by investor demands for accelerated capital deployment and cash flow [1] Group 2 - HSO specializes in designing, implementing, and operating business application systems based on Microsoft cloud technologies, serving around 1,200 clients globally with approximately 2,800 employees [2] - Carlyle Group made a strategic investment in HSO in 2019 and has since expanded its business through multiple acquisitions, including the purchase of cloud transformation service provider Motion10 in 2022 [2] - If the transaction proceeds, it will mark another landmark deal in the private equity sector, enhancing Bain Capital's influence in the cloud computing and enterprise services space [2]

Group 1 - The author has adopted a conservative stance towards Business Development Company (BDC) investments while maintaining a structural bullish outlook on the sector [1] - The author has a significant portion of their portfolio allocated to BDC investments, indicating a strong belief in the long-term potential of the sector [1] Group 2 - Roberts Berzins has over a decade of experience in financial management, focusing on helping top-tier corporates with financial strategies and large-scale financings [1] - Berzins has contributed to institutionalizing the Real Estate Investment Trust (REIT) framework in Latvia to enhance liquidity in pan-Baltic capital markets [1] - His policy-level work includes developing national State-Owned Enterprise (SOE) financing guidelines and frameworks to channel private capital into affordable housing [1]

Financial Data and Key Metrics Changes - Q2 net investment income per share was $0.47, representing an annualized yield on book value of 10.7%, exceeding regular dividend payout by 12% [6][7] - Q2 earnings per share were $0.37, reflecting an annualized return on book value of 8.3% [7] - Net asset value per share was $17.56, down $0.08 from the prior quarter [7][24] - Total investment income increased to $71 million from $66.8 million in the previous quarter [22] - Net investment income for the quarter was $30.6 million, down from $32.1 million in the prior quarter [24] Business Line Data and Key Metrics Changes - New investment fundings during Q2 totaled $530 million, with $242 million into 12 new companies and $273 million into 81 existing companies [15] - 93% of new fundings were in first lien senior secured loans, indicating a focus on downside management [16] - The investment portfolio at fair value was approximately $2.5 billion across 185 portfolio companies [18] Market Data and Key Metrics Changes - Gross originations were $530 million, up 73% year over year [9] - The weighted average spread of new originations was over 580 basis points [11] - 62% of outstanding debt was in floating rate debt, positioning the company favorably in a higher interest rate environment [25] Company Strategy and Development Direction - The company remains focused on investing in the middle market to drive attractive returns for investors [28] - The strategy includes leveraging Bain Capital's platform advantage to source investment opportunities [10] - The company aims to maintain a disciplined underwriting approach while navigating competitive market conditions [11] Management's Comments on Operating Environment and Future Outlook - Management noted increased market volatility due to higher tariffs but observed a return to normalized deal volume [8] - The company is well-positioned to navigate the current market environment despite spread compression [11] - Dividend coverage remains strong, with a focus on maintaining an attractive dividend policy [13] Other Important Information - The company declared a third-quarter dividend of $0.42 per share, with total dividends for the third quarter amounting to $0.45 per share [7] - Non-accrual investments represented 1.7% of the total investment portfolio, with a slight uptick due to one new addition [12][21] Q&A Session Summary Question: What drove the decision to refinance the 2019 middle market securitization? - The refinancing was driven by attractive pricing opportunities in the market, allowing the company to issue at a lower cost compared to the previous securitization [31][32] Question: How would you characterize the origination activity for the quarter? - The activity was roughly 50% new company originations and 50% existing company add-ons, driven by strong relationships and expanded outreach in the middle market [34][35] Question: Can those investments eventually be sold down into the JVs? - Yes, the investments are primarily first lien loans that fit well into the joint ventures if the company decides to move them in future quarters [36]

Financial Performance - The company's net investment income (NII) per share was $0.47, resulting in an annualized NII yield on book value of 10.7%[15] - Net income per share was $0.37, equating to an annualized return on book value of 8.3%[15] - The net asset value (NAV) per share decreased slightly to $17.56 as of June 30, 2025, compared to $17.64 as of March 31, 2025[15] - The Board of Directors declared a dividend of $0.42 per share for the third quarter of 2025, along with an additional dividend of $0.03 per share[15] Portfolio Composition and Activity - The total investment portfolio at fair value reached $2,501.8 million, primarily consisting of senior secured, floating-rate loans[15] - Gross investment fundings amounted to $529.6 million, while net investment fundings were $27.3 million[15] - The investment portfolio is diversified across 185 portfolio companies operating in 29 different industries[15] - The weighted average yield at amortized cost on the investment portfolio was 11.4%[15] - Investments on non-accrual represented 1.7% of the total investment portfolio at amortized cost and 0.6% at fair value[15] Liquidity and Funding - The company reported strong liquidity totaling $796 million, including $592 million of undrawn capacity on a revolving credit facility[15] - Unsecured debt represents 61% of the total debt outstanding at quarter-end[15]

UNITED STATES SECURITIES AND EXCHANGE COMMISSION WASHINGTON, D.C. 20549 FORM 8-K CURRENT REPORT Pursuant to Section 13 or 15(d) of the Securities Exchange Act of 1934 Date of Report (Date of earliest event reported): July 22, 2025 (IRS Employer Identification No.) Registrant's Telephone Number, Including Area Code: (617) 516-2000 N/A (Former Name or Former Address, if Changed Since Last Report) Securities registered pursuant to Section 12(b) of the Act: | | Trading | Name of each exchange | | --- | --- | -- ...

[Forward-Looking Statements](index=3&type=section&id=FORWARD-LOOKING%20STATEMENTS) This section outlines the inherent risks and uncertainties associated with forward-looking statements, noting potential material differences from actual results - This report contains forward-looking statements based on current expectations, estimates, projections, opinions, and beliefs, which involve known and unknown risks and uncertainties. Actual results may differ materially due to factors identified in the Annual Report on Form 10-K and other SEC filings[9](index=9&type=chunk)[10](index=10&type=chunk) - The safe harbor provisions of Section 21E of the Securities Exchange Act of 1934 do not apply to these forward-looking statements because the registrant is an investment company[10](index=10&type=chunk) [PART I. FINANCIAL INFORMATION](index=4&type=section&id=PART%20I.%20FINANCIAL%20INFORMATION) [Item 1. Consolidated Financial Statements](index=4&type=section&id=Item%201.%20Consolidated%20Financial%20Statements) This section presents the unaudited consolidated financial statements, including assets, operations, net assets, cash flows, and investment schedules, for the specified periods [Consolidated Statements of Assets and Liabilities](index=4&type=section&id=Consolidated%20Statements%20of%20Assets%20and%20Liabilities) This statement provides a snapshot of the company's financial position, detailing assets, liabilities, and net assets at specific reporting dates | Metric | June 30, 2025 (Unaudited) (in thousands) | December 31, 2024 (in thousands) | | :----- | :--------------------------------------- | :------------------------------- | | Total Assets | $2,774,306 | $2,632,157 | | Total Liabilities | $1,635,271 | $1,492,485 | | Total Net Assets | $1,139,035 | $1,139,672 | | Net asset value per share | $17.56 | $17.65 | - Total assets increased by **$142.1 million** from December 31, 2024, to June 30, 2025, primarily driven by an increase in investments at fair value[13](index=13&type=chunk) - Total liabilities increased by **$142.8 million**, mainly due to an increase in debt[13](index=13&type=chunk) - Net asset value per share slightly decreased from **$17.65 to $17.56**[14](index=14&type=chunk) [Consolidated Statements of Operations](index=6&type=section&id=Consolidated%20Statements%20of%20Operations) This statement details the company's revenues, expenses, and net investment income, culminating in the net increase in net assets from operations | Metric (in thousands) | Three Months Ended June 30, 2025 | Three Months Ended June 30, 2024 | Six Months Ended June 30, 2025 | Six Months Ended June 30, 2024 | | :-------------------- | :------------------------------- | :------------------------------- | :----------------------------- | :----------------------------- | | Total investment income | $70,965 | $72,271 | $137,804 | $146,770 | | Total expenses | $39,299 | $38,004 | $72,952 | $77,528 | | Net investment income | $30,590 | $33,117 | $62,700 | $67,067 | | Total net loss | $(6,868) | $(4,027) | $(10,431) | $(2,882) | | Net increase in net assets from operations | $23,722 | $29,090 | $52,269 | $64,185 | | Basic and diluted net investment income per share | $0.47 | $0.51 | $0.97 | $1.04 | | Basic and diluted increase in net assets per share | $0.37 | $0.45 | $0.81 | $1.00 | - Total investment income decreased by **$1,306 thousand** for the three months ended June 30, 2025, compared to the same period in 2024, and by **$8,966 thousand** for the six months ended June 30, 2025, compared to 2024[17](index=17&type=chunk) - Net investment income decreased for both the three-month and six-month periods ended June 30, 2025, compared to 2024[17](index=17&type=chunk) - The company reported a total net loss for both periods in 2025, which was higher than in 2024, leading to a decrease in net assets resulting from operations[17](index=17&type=chunk) [Consolidated Statements of Changes in Net Assets](index=7&type=section&id=Consolidated%20Statements%20of%20Changes%20in%20Net%20Assets) This statement tracks changes in the company's net assets, reflecting operational results, distributions, and capital share transactions | Metric (in thousands) | Three Months Ended June 30, 2025 | Three Months Ended June 30, 2024 | Six Months Ended June 30, 2025 | Six Months Ended June 30, 2024 | | :-------------------- | :------------------------------- | :------------------------------- | :----------------------------- | :----------------------------- | | Net increase in net assets from operations | $23,722 | $29,090 | $52,269 | $64,185 | | Distributions from distributable earnings | $(29,191) | $(29,053) | $(58,382) | $(58,106) | | Net increase from capital share transactions | $0 | $0 | $5,476 | $0 | | Total increase (decrease) in net assets | $(5,469) | $37 | $(637) | $6,079 | | Net assets at end of period | $1,139,035 | $1,142,545 | $1,139,035 | $1,142,545 | | Net asset value per share | $17.56 | $17.70 | $17.56 | $17.70 | - Net assets decreased by **$5,469 thousand** for the three months ended June 30, 2025, primarily due to distributions exceeding net increase from operations[20](index=20&type=chunk) - For the six months ended June 30, 2025, net assets decreased by **$637 thousand**, with distributions exceeding net increase from operations, partially offset by capital share transactions[20](index=20&type=chunk) [Consolidated Statements of Cash Flows](index=8&type=section&id=Consolidated%20Statements%20of%20Cash%20Flows) This statement summarizes the cash inflows and outflows from operating, investing, and financing activities over the reporting periods | Metric (in thousands) | Six Months Ended June 30, 2025 | Six Months Ended June 30, 2024 | | :-------------------- | :----------------------------- | :----------------------------- | | Net cash provided by (used in) operating activities | $(6,623) | $128,739 | | Net cash provided by (used in) financing activities | $79,791 | $(142,643) | | Net (increase) decrease in cash, foreign cash, restricted cash and cash equivalents | $73,168 | $(13,904) | | Cash, foreign cash, restricted cash and cash equivalents, end of period | $174,485 | $98,126 | - Operating activities shifted from providing **$128.7 million** in cash in H1 2024 to using **$6.6 million** in H1 2025, mainly due to higher purchases of investments relative to proceeds from sales[22](index=22&type=chunk) - Financing activities provided **$79.8 million** in H1 2025, a significant turnaround from using **$142.6 million** in H1 2024, driven by increased borrowings on debt and proceeds from common stock issuances[22](index=22&type=chunk) - Overall cash, foreign cash, and restricted cash increased by **$73.2 million** in H1 2025, ending the period at **$174.5 million**[22](index=22&type=chunk) [Consolidated Schedules of Investments](index=9&type=section&id=Consolidated%20Schedules%20of%20Investments) This section details the company's investment portfolio by type, industry, and geography, including affiliate and non-affiliate holdings, cash equivalents, and derivatives [As of June 30, 2025](index=9&type=section&id=As%20of%20June%2030%2C%202025) This schedule provides a detailed breakdown of the investment portfolio and cash equivalents as of June 30, 2025 | Investment Type | Market Value (in thousands) | % of NAV | | :---------------- | :-------------------------- | :------- | | Non-Controlled/Non-Affiliate Investments Total | $1,847,266 | 162.2% | | Non-Controlled/Affiliate Investments Total | $63,735 | 5.6% | | Controlled Affiliate Investments Total | $590,796 | 51.9% | | Investments Total | $2,501,797 | 219.7% | | Cash Equivalents Total | $133,631 | 11.7% | | Investments and Cash Equivalents Total | $2,635,428 | 231.4% | - As of June 30, 2025, the total investment portfolio at fair value was **$2,501,797 thousand**, representing **219.7% of Net Asset Value (NAV)**[44](index=44&type=chunk) - Controlled affiliate investments constitute a significant portion of the portfolio, totaling **$590,796 thousand** or **51.9% of NAV**[44](index=44&type=chunk) [As of December 31, 2024](index=30&type=section&id=As%20of%20December%2031%2C%202024) This schedule provides a detailed breakdown of the investment portfolio and cash equivalents as of December 31, 2024 | Investment Type | Market Value (in thousands) | % of NAV | | :---------------- | :-------------------------- | :------- | | Non-Controlled/Non-Affiliate Investments Total | $1,773,742 | 155.6% | | Non-Controlled/Affiliate Investments Total | $75,733 | 6.6% | | Controlled Affiliate Investments Total | $581,714 | 51.1% | | Investments Total | $2,431,189 | 213.3% | | Cash Equivalents Total | $103,582 | 9.1% | | Investments and Cash Equivalents Total | $2,534,771 | 222.4% | - As of December 31, 2024, the total investment portfolio at fair value was **$2,431,189 thousand**, representing **213.3% of Net Asset Value (NAV)**[69](index=69&type=chunk) - Non-controlled/affiliate investments decreased from **$75,733 thousand** to **$63,735 thousand** by June 30, 2025[43](index=43&type=chunk)[68](index=68&type=chunk) [Notes to Consolidated Financial Statements](index=49&type=section&id=Notes%20to%20Consolidated%20Financial%20Statements) This section provides detailed disclosures and explanations for the consolidated financial statements, covering organization, accounting policies, investments, fair value, related parties, debt, and other financial details [Note 1. Organization](index=49&type=section&id=Note%201.%20Organization) This note describes the company's formation, operational commencement, regulatory status as a BDC and RIC, and its external management structure - Bain Capital Specialty Finance, Inc. (BCSF) was formed on October 5, 2015, and commenced investment operations on October 13, 2016, operating as a Business Development Company (BDC) and a Regulated Investment Company (RIC)[75](index=75&type=chunk) - The company is externally managed by BCSF Advisors, LP, focusing on a Senior Direct Lending Strategy primarily investing in middle-market companies with **$10.0 million to $150.0 million** in annual EBITDA[75](index=75&type=chunk)[77](index=77&type=chunk) - BCSF's primary investment focus is on senior investments (first or second lien) with strong structures, but it may also invest in mezzanine debt, junior securities, and equity on an opportunistic basis[77](index=77&type=chunk) [Note 2. Summary of Significant Accounting Policies](index=49&type=section&id=Note%202.%20Summary%20of%20Significant%20Accounting%20Policies) This note outlines the key accounting principles and methods used in preparing the financial statements, including investment valuation and revenue recognition - The financial statements are prepared in accordance with US GAAP for investment companies (ASC Topic 946) and reflect adjustments necessary for fair statement[79](index=79&type=chunk) - Investments are valued at fair value, with market quotations used when available, and unquoted investments valued using discounted cash flow models, comparable company multiples, and other factors, subject to Board oversight[84](index=84&type=chunk)[85](index=85&type=chunk)[87](index=87&type=chunk) - Interest income is recorded on an accrual basis, adjusted for amortization/accretion, and PIK income is recognized as interest or dividend income. Loans are placed on non-accrual status when collectibility is doubtful[92](index=92&type=chunk)[95](index=95&type=chunk)[99](index=99&type=chunk) - The company uses forward currency exchange contracts and interest rate swaps to manage market risks, recognizing them at fair value with changes in unrealized appreciation/depreciation recorded in operations[108](index=108&type=chunk)[111](index=111&type=chunk) [Note 3. Investments](index=61&type=section&id=Note%203.%20Investments) This note provides a detailed breakdown of the investment portfolio by type, geographic region, and industry, including joint venture specifics Investment Portfolio by Type | Investment Type | Amortized Cost (in thousands) | Fair Value (in thousands) | % of Total Portfolio (Fair Value) | | :--------------------------------- | :---------------------------- | :------------------------ | :-------------------------------- | | First Lien Senior Secured Loan | $1,606,552 | $1,577,960 | 63.1% | | Second Lien Senior Secured Loan | $20,125 | $20,350 | 0.8% | | Subordinated Debt | $92,775 | $91,052 | 3.6% | | Preferred Equity | $136,203 | $180,711 | 7.2% | | Equity Interest | $212,920 | $230,141 | 9.2% | | Subordinated Notes in Investment Vehicles | $354,723 | $342,654 | 13.7% | | Total Investments | $2,489,516 | $2,501,797 | 100.0% | Investment Portfolio by Geographic Region | Geographic Region | Amortized Cost (in thousands) | Fair Value (in thousands) | % of Total Portfolio (Fair Value) | | :------------------ | :---------------------------- | :------------------------ | :-------------------------------- | | USA | $2,197,162 | $2,161,486 | 86.5% | | Cayman Islands | $112,016 | $125,219 | 5.1% | | United Kingdom | $40,790 | $43,543 | 1.7% | | Germany | $31,672 | $31,672 | 1.3% | | France | $29,900 | $31,140 | 1.2% | | Total Investments | $2,489,516 | $2,501,797 | 100.0% | Investment Portfolio by Industry | Industry | Amortized Cost (in thousands) | Fair Value (in thousands) | % of Total Portfolio (Fair Value) | | :-------------------------- | :---------------------------- | :------------------------ | :-------------------------------- | | Investment Vehicles | $420,941 | $400,763 | 16.0% | | High Tech Industries | $282,073 | $297,097 | 11.9% | | Aerospace & Defense | $251,329 | $248,741 | 9.9% | | Services: Business | $199,990 | $225,558 | 9.0% | | Healthcare & Pharmaceuticals | $179,953 | $177,679 | 7.1% | | Total Investments | $2,489,516 | $2,501,797 | 100.0% | - International Senior Loan Program, LLC (ISLP), a joint venture with Pantheon, primarily invests in non-US first lien senior secured loans. As of June 30, 2025, ISLP had **$717.7 million** in debt and equity investments at fair value, with a weighted average yield of **10.1%**[122](index=122&type=chunk)[133](index=133&type=chunk)[360](index=360&type=chunk) - Bain Capital Senior Loan Program, LLC (SLP), a joint venture with Amberstone, primarily invests in senior secured first lien loans of U.S. borrowers. As of June 30, 2025, SLP had **$1,518.7 million** in total investments at fair value, with a weighted average yield of **10.2%**[163](index=163&type=chunk)[178](index=178&type=chunk)[363](index=363&type=chunk) [Note 4. Fair Value Measurements](index=103&type=section&id=Note%204.%20Fair%20Value%20Measurements) This note details the methodologies and inputs used for fair value measurements of investments and debt, categorized by the fair value hierarchy Fair Value Measurements of Investments | Investment Type | Level 1 (in thousands) | Level 2 (in thousands) | Level 3 (in thousands) | Measured at Net Asset Value (in thousands) | Total (in thousands) | | :--------------------------------- | :--------------------- | :--------------------- | :--------------------- | :----------------------------------------- | :------------------- | | First Lien Senior Secured Loans | $0 | $7,496 | $1,564,667 | $5,797 | $1,577,960 | | Second Lien Senior Secured Loans | $0 | $0 | $20,350 | $0 | $20,350 | | Subordinated Debt | $0 | $0 | $91,052 | $0 | $91,052 | | Preferred Equity | $0 | $0 | $180,711 | $0 | $180,711 | | Equity Interests | $0 | $0 | $220,604 | $9,537 | $230,141 | | Subordinated Notes Investment Vehicles | $0 | $0 | $342,654 | $0 | $342,654 | | Total Investments | $0 | $7,496 | $2,420,858 | $73,443 | $2,501,797 | - As of June 30, 2025, a substantial portion of investments, **$2,420,858 thousand**, are classified as Level 3, indicating significant unobservable inputs in their fair value measurement[199](index=199&type=chunk) - Key unobservable inputs for Level 3 assets include comparative yields (**5.1%–22.0%**), EBITDA multiples (**7.0x–15.3x**), and recovery rates (**92.6%–100.0%**)[203](index=203&type=chunk) Fair Value Measurements of Debt | Debt Type | Level | June 30, 2025 (in thousands) | December 31, 2024 (in thousands) | | :------------------ | :---- | :--------------------------- | :------------------------------- | | 2019-1 Debt | 2 | $352,518 | $352,500 | | March 2026 Notes | 2 | $295,915 | $291,280 | | October 2026 Notes | 2 | $290,995 | $285,940 | | March 2030 Notes | 2 | $347,821 | $0 | | Sumitomo Credit Facility | 3 | $263,000 | $442,699 | | Total Debt | | $1,550,249 | $1,372,419 | [Note 5. Related Party Transactions](index=109&type=section&id=Note%205.%20Related%20Party%20Transactions) This note describes the company's transactions and agreements with its Advisor and Administrator, including management and incentive fees - The company pays its Advisor a Base Management Fee of **1.5% annually (0.375% quarterly)** of gross assets, with a tiered rate of **1.0%** for assets attributable to leverage below a 200% asset coverage ratio[210](index=210&type=chunk) Management and Incentive Fees | Fee Type | Three Months Ended June 30, 2025 (in millions) | Three Months Ended June 30, 2024 (in millions) | Six Months Ended June 30, 2025 (in millions) | Six Months Ended June 30, 2024 (in millions) | | :--------- | :--------------------------------------------- | :--------------------------------------------- | :------------------------------------------- | :------------------------------------------- | | Management fees | $9.3 | $8.8 | $18.3 | $17.6 | | Incentive fees | $5.4 | $7.9 | $7.7 | $17.2 | - The incentive fee has two parts: one based on income (subject to a three-year lookback and a cap based on Cumulative Net Return) and a capital gains incentive fee (**17.5%** of realized capital gains, net of losses and unrealized depreciation)[212](index=212&type=chunk)[217](index=217&type=chunk)[219](index=219&type=chunk)[226](index=226&type=chunk) - The Administrator provides administrative services, and the company reimburses its costs and allocable overhead. The Advisor also has a Resource Sharing Agreement with Bain Capital Credit for investment professionals and resources[230](index=230&type=chunk)[233](index=233&type=chunk) [Note 6. Debt](index=118&type=section&id=Note%206.%20Debt) This note details the company's debt obligations, including principal amounts, carrying values, maturity dates, and compliance with regulatory asset coverage ratios - The company's asset coverage ratio was **172.4%** as of June 30, 2025, and **181.7%** as of December 31, 2024, exceeding the **150%** regulatory requirement[240](index=240&type=chunk) Debt Instruments | Debt Instrument | Principal Amount Outstanding (in thousands) | Carrying Value (in thousands) | Maturity Date | | :------------------ | :---------------------------------------- | :---------------------------- | :------------ | | 2019-1 Debt | $352,500 | $351,423 | October 15, 2033 | | March 2026 Notes | $300,000 | $299,216 | March 10, 2026 | | October 2026 Notes | $300,000 | $298,236 | October 13, 2026 | | March 2030 Notes | $350,000 | $350,703 | March 15, 2030 | | Sumitomo Credit Facility | $263,000 | $263,000 | May 18, 2029 | | Total Debt | $1,565,500 | $1,562,578 | | - The weighted average interest rate of aggregate borrowings outstanding was **4.8%** for the six months ended June 30, 2025, down from **5.1%** for the year ended December 31, 2024[241](index=241&type=chunk) Debt Obligations by Maturity Period | Maturity Period | Total Debt Obligations (in thousands) | | :---------------- | :---------------------------------- | | Less than 1 year | $300,000 | | 1 – 3 years | $300,000 | | 3 – 5 years | $613,000 | | More than 5 years | $352,500 | | Total | $1,565,500 | [Note 7. Derivatives](index=127&type=section&id=Note%207.%20Derivatives) This note describes the company's use of derivative financial instruments to manage interest rate and foreign currency risks - The company uses derivative financial instruments, including forward currency exchange contracts and interest rate swaps, to manage interest rate and foreign currency risk exposures[279](index=279&type=chunk) Net Realized and Unrealized Gains (Losses) on Forward Currency Exchange Contracts | Derivative Type | Three Months Ended June 30, 2025 (in thousands) | Six Months Ended June 30, 2025 (in thousands) | | :------------------------------------------------- | :---------------------------------------------- | :-------------------------------------------- | | Net realized gain (loss) on forward currency exchange contracts | $(1,409) | $(3,814) | | Net change in unrealized appreciation on forward currency exchange contracts | $(15,074) | $(17,147) | | Total net realized and unrealized gain (loss) on forward currency exchange contracts | $(16,483) | $(20,961) | - For the six months ended June 30, 2025, the net impact of foreign currency on total net gains (losses) was **$(1.5) million**, compared to **$1.0 million** in the prior year[285](index=285&type=chunk) - The company's interest rate swaps are designated in a qualifying hedge accounting relationship, with related interest expense components recognized in the Consolidated Statements of Operations[286](index=286&type=chunk) [Note 8. Distributions](index=129&type=section&id=Note%208.%20Distributions) This note details the distributions declared and paid to stockholders, including regular and special dividends Distributions Declared | Date Declared | Record Date | Payment Date | Amount Per Share | Total Distributions (in thousands) | | :-------------- | :---------- | :----------- | :--------------- | :------------------------------- | | Feb 27, 2025 | Mar 17, 2025 | Mar 31, 2025 | $0.42 | $27,245 | | Feb 27, 2025 | Mar 17, 2025 | Mar 31, 2025 | $0.03 (Special) | $1,946 | | May 5, 2025 | Jun 16, 2025 | Jun 30, 2025 | $0.42 | $27,245 | | May 5, 2025 | Jun 16, 2025 | Jun 30, 2025 | $0.03 (Special) | $1,946 | | Total | | | $0.90 | $58,382 | - Total distributions declared for the six months ended June 30, 2025, were **$58,382 thousand**, including special dividends, consistent with the **$58,106 thousand** declared in the prior year[287](index=287&type=chunk)[288](index=288&type=chunk) [Note 9. Common Stock/Capital](index=130&type=section&id=Note%209.%20Common%20Stock%2FCapital) This note outlines the company's authorized and outstanding common stock, equity distribution agreements, and share repurchase authorizations - The company has authorized **100 billion shares** of common stock and **10 billion shares** of preferred stock, with **64,868,507 common shares** outstanding as of June 30, 2025[14](index=14&type=chunk)[290](index=290&type=chunk) - On February 27, 2025, the company entered into equity distribution agreements to sell up to **$250.0 million** of common stock through 'at the market' offerings[295](index=295&type=chunk)[296](index=296&type=chunk) 'At the Market' Offerings | Issuance Type | Number of Shares Issued (in thousands) | Gross Proceeds (in thousands) | Offering Expenses (in thousands) | Net Proceeds (in thousands) | Average Offering Price Per Share | | :-------------- | :------------------------------------- | :---------------------------- | :------------------------------- | :-------------------------- | :------------------------------- | | 'At the market' offerings | 253.9 | $4,574.7 | $23.2 | $4,551.4 | $18.02 | - No common stock repurchases have occurred as of June 30, 2025, despite Board authorization for up to **$50 million** in repurchases[294](index=294&type=chunk)[398](index=398&type=chunk) [Note 10. Commitments and Contingencies](index=132&type=section&id=Note%2010.%20Commitments%20and%20Contingencies) This note discloses the company's unfunded commitments under loan agreements and confirms the absence of material legal proceedings - As of June 30, 2025, the company had **$512.7 million** in unfunded commitments under loan and financing agreements, a decrease from **$560.9 million** as of December 31, 2024[298](index=298&type=chunk)[302](index=302&type=chunk) - These commitments are subject to borrowers meeting certain criteria and may remain outstanding until the commitment period expires[301](index=301&type=chunk) - The company is not currently subject to any material legal proceedings or threatened claims, and no liability for indemnities is considered necessary[306](index=306&type=chunk) [Note 11. Financial Highlights](index=140&type=section&id=Note%2011.%20Financial%20Highlights) This note presents key financial performance metrics and ratios, including net asset value, total return, and expense ratios Financial Highlights | Metric | Six Months Ended June 30, 2025 | Six Months Ended June 30, 2024 | | :------------------------------------------ | :----------------------------- | :----------------------------- | | Net asset value at beginning of period | $17.65 | $17.60 | | Net investment income per share | $0.97 | $1.04 | | Net increase in net assets from operations per share | $0.81 | $1.00 | | Stockholder distributions from income per share | $(0.90) | $(0.90) | | Net asset value at end of period | $17.56 | $17.70 | | Total return based on net asset value | 4.64% | 5.73% | | Ratio of net investment income to average net assets | 11.93% | 13.55% | | Ratio of total expenses to average net assets | 12.38% | 12.35% | | Portfolio turnover | 30.36% | 30.17% | - Net asset value per share decreased slightly from **$17.65 to $17.56** during the six months ended June 30, 2025[308](index=308&type=chunk) - The ratio of net investment income to average net assets decreased to **11.93%** in H1 2025 from **13.55%** in H1 2024[308](index=308&type=chunk) [Note 12. Subsequent Events](index=142&type=section&id=Note%2012.%20Subsequent%20Events) This note discloses significant events occurring after the reporting period, including a CLO Reset Transaction and stockholder meeting outcomes - On July 2, 2025, BCC Middle Market CLO 2019-1, Ltd. completed a **$430.25 million** CLO Reset Transaction, refinancing its term debt securitization through the issuance of new Replacement Notes[310](index=310&type=chunk)[311](index=311&type=chunk) - The company continues to serve as portfolio manager and retention holder for the CLO Issuer, waiving all portfolio management fees[312](index=312&type=chunk)[315](index=315&type=chunk) - At the 2025 Annual Meeting of Stockholders on July 15, 2025, stockholders did not renew the authorization to sell common stock below net asset value[317](index=317&type=chunk) [Item 2. Management's Discussion and Analysis of Financial Condition and Results of Operations](index=145&type=section&id=Item%202.%20Management%27s%20Discussion%20and%20Analysis%20of%20Financial%20Condition%20and%20Results%20of%20Operations) This section provides management's analysis of the company's financial condition, operations, and cash flows, detailing investment strategies, market risks, and performance drivers [Overview](index=145&type=section&id=Overview) This overview describes the company's structure, investment strategy, and primary sources of revenue as an externally managed specialty finance company - Bain Capital Specialty Finance, Inc. operates as an externally managed specialty finance company, regulated as a BDC and managed by BCSF Advisors, LP[320](index=320&type=chunk) - The company's primary strategy is Senior Direct Lending, focusing on middle-market companies with **$10.0 million to $150.0 million** in annual EBITDA, primarily through secured debt investments[322](index=322&type=chunk) - Revenues are primarily generated from interest income on debt investments, distributions on equity, and various loan origination and other fees[323](index=323&type=chunk) [Investments](index=145&type=section&id=Investments) This section discusses factors influencing investment activity and the regulatory requirements for qualifying and non-qualifying assets as a BDC - Investment activity fluctuates based on factors like available capital, M&A activity, economic environment, and competitive landscape[327](index=327&type=chunk) - As a BDC, at least **70%** of total assets must be 'qualifying assets,' primarily investments in 'eligible portfolio companies' (companies not listed on national exchanges or public companies with market capitalization less than **$250 million**)[328](index=328&type=chunk) - Up to **30%** of the portfolio can be invested opportunistically in 'non-qualifying' assets, such as non-U.S. companies[329](index=329&type=chunk) [Revenues](index=147&type=section&id=Revenues) This section details the company's revenue sources, emphasizing interest income from its predominantly floating-rate debt portfolio and the treatment of PIK income - Revenue is primarily derived from interest income on debt investments and distributions on equity, with additional income from fees (commitment, origination, structuring, diligence) and capital gains[330](index=330&type=chunk) - The debt investment portfolio is predominantly floating rate (**92.6%** as of June 30, 2025), making net investment income sensitive to base interest rate trends like SOFR[331](index=331&type=chunk) - PIK interest and dividends are recognized as income, but investments generating PIK are placed on non-accrual status if realization is doubtful[330](index=330&type=chunk) [Expenses](index=147&type=section&id=Expenses) This section outlines the company's primary operating expenses, including management fees, incentive fees, administrative costs, and other operational expenditures - Primary operating expenses include Base Management Fees and Incentive Fees paid to the Advisor, allocable overhead under the Administration Agreement, and other operational costs[333](index=333&type=chunk) - The company bears all other out-of-pocket costs, including public offering costs, valuation fees, interest on debt, distributions, transfer agent fees, and various administrative and compliance expenses[333](index=333&type=chunk)[335](index=335&type=chunk) Operating Expenses by Category | Expense Category | Three Months Ended June 30, 2025 (in millions) | Three Months Ended June 30, 2024 (in millions) | Six Months Ended June 30, 2025 (in millions) | Six Months Ended June 30, 2024 (in millions) | | :------------------------------- | :--------------------------------------------- | :--------------------------------------------- | :------------------------------------------- | :------------------------------------------- | | Interest and debt financing expenses | $21.8 | $17.6 | $40.7 | $35.7 | | Base management fee | $9.3 | $8.8 | $18.3 | $17.6 | | Incentive fee | $5.4 | $7.9 | $7.7 | $17.2 | | Professional fees | $0.7 | $1.0 | $1.4 | $1.8 | | Other general and administrative expenses | $1.9 | $2.5 | $4.5 | $4.9 | | Total expenses, net of fee waivers | $39.3 | $38.0 | $73.0 | $77.5 | [Leverage](index=151&type=section&id=Leverage) This section discusses the company's use of leverage to achieve investment objectives, adhering to the regulatory asset coverage ratio requirement - The company may use leverage to meet its investment objective, subject to a regulatory asset coverage ratio of at least **150%**[337](index=337&type=chunk) - As of June 30, 2025, the company's asset coverage ratio was **172.4%**, indicating compliance with regulatory limits[337](index=337&type=chunk) [Investment Decision Process](index=151&type=section&id=Investment%20Decision%20Process) This section details the Advisor's five-stage investment process, from sourcing and diligence to approval, portfolio construction, and ongoing risk management - The Advisor's investment process involves five stages: Sourcing and Idea Generation, Investment Diligence & Recommendation, Credit Committee Approval, Portfolio Construction, and Portfolio & Risk Management[338](index=338&type=chunk) - Sourcing leverages Bain Capital Credit's global contacts and industry groups to generate middle-market investment opportunities[339](index=339&type=chunk) - Diligence involves detailed review, independent research, management meetings, and facilities visits, summarized in investment memorandums and credit packs[340](index=340&type=chunk) - Investments require approval from at least the Private Credit Investment Committee, while portfolio managers are responsible for portfolio construction and sell decisions[342](index=342&type=chunk)[343](index=343&type=chunk) - Ongoing monitoring of financial performance and market developments is conducted by the Private Credit Group, with corrective actions taken as deemed appropriate[344](index=344&type=chunk) [Portfolio and Investment Activity](index=153&type=section&id=Portfolio%20and%20Investment%20Activity) This section summarizes the company's investment activity, portfolio composition, and performance ratings, including changes in the number of portfolio companies and weighted average yields Investment Activity | Period | Investments (including PIK) (in millions) | Principal Repayments and Sales (in millions) | Net Increase (Decrease) in Investments (in millions) | | :----- | :---------------------------------------- | :------------------------------------------- | :--------------------------------------------------- | | Q2 2025 | $529.6 | $502.3 | $27.3 | | Q2 2024 | $306.7 | $473.7 | $(167.0) | | H1 2025 | $806.8 | $748.7 | $58.1 | | H1 2024 | $709.8 | $769.7 | $(59.9) | Portfolio Metrics | Metric | June 30, 2025 | December 31, 2024 | | :------------------------------------ | :------------ | :---------------- | | Number of portfolio companies | 185 | 168 | | Percentage of debt bearing a floating rate | 92.6% | 92.0% | | Percentage of debt bearing a fixed rate | 7.4% | 8.0% | | Weighted average yield on investments (at amortized cost) | 11.4% | 11.7% | | Weighted average yield on investments (at fair value) | 11.4% | 11.8% | Investment Performance Rating | Investment Performance Rating (Fair Value) | June 30, 2025 (in thousands) | % of Total | December 31, 2024 (in thousands) | % of Total | | :--------------------------------------- | :--------------------------- | :--------- | :------------------------------- | :--------- | | 1 (Above expectations) | $4,984 | 0.2% | $2,491 | 0.1% | | 2 (As expected) | $2,385,732 | 95.3% | $2,344,745 | 96.4% | | 3 (Below expectations) | $96,419 | 3.9% | $62,149 | 2.6% | | 4 (Materially below expectations) | $14,662 | 0.6% | $21,804 | 0.9% | | Total | $2,501,797 | 100.0% | $2,431,189 | 100.0% | - The company's portfolio monitoring includes assessing adherence to business plans, compliance with covenants, and regular contact with management. Investments are rated on a 1-4 scale, with 3 and 4 indicating underperformance and increased scrutiny[355](index=355&type=chunk)[356](index=356&type=chunk)[357](index=357&type=chunk) [International Senior Loan Program, LLC](index=159&type=section&id=International%20Senior%20Loan%20Program%2C%20LLC) This section describes ISLP, an unconsolidated joint venture focused on non-US first lien senior secured loans, detailing its investment value and yield - ISLP is an unconsolidated joint venture with Pantheon, primarily investing in non-US first lien senior secured loans[358](index=358&type=chunk)[359](index=359&type=chunk) - As of June 30, 2025, ISLP had **$717.7 million** in debt and equity investments at fair value, with a weighted average yield of **10.1%**[360](index=360&type=chunk) ISLP Metrics | Metric | June 30, 2025 (in thousands) | December 31, 2024 (in thousands) | | :-------------------------------- | :--------------------------- | :------------------------------- | | Total investments | $717,686 | $655,804 | | Weighted average yield on investments | 10.1% | 10.6% | | Number of borrowers in ISLP | 39 | 35 | | Largest portfolio company investment | $53,839 | $51,142 | | Unfunded commitments | $0 | $3,907 | [Bain Capital Senior Loan Program, LLC](index=160&type=section&id=Bain%20Capital%20Senior%20Loan%20Program%2C%20LLC) This section describes SLP, a joint venture with Amberstone, focusing on U.S. senior secured first lien loans, detailing its investment value and yield - SLP is a newly formed joint venture with Amberstone, primarily investing in senior secured first lien loans of U.S. borrowers[361](index=361&type=chunk)[362](index=362&type=chunk) - As of June 30, 2025, SLP had **$1,518.7 million** in total investments at fair value, with a weighted average yield of **10.2%**[363](index=363&type=chunk) SLP Metrics | Metric | June 30, 2025 (in thousands) | December 31, 2024 (in thousands) | | :-------------------------------- | :--------------------------- | :------------------------------- | | Total investments | $1,518,682 | $1,399,241 | | Weighted average yield on investments | 10.2% | 10.6% | | Number of borrowers in SLP | 87 | 100 | | Largest portfolio company investment | $40,353 | $35,681 | | Unfunded commitments | $1,545 | $991 | [Results of Operations](index=161&type=section&id=Results%20of%20Operations) This section summarizes the company's financial performance, detailing total investment income, expenses, net investment income, and net increase in net assets from operations Key Operational Metrics | Metric (in thousands) | Three Months Ended June 30, 2025 | Three Months Ended June 30, 2024 | Six Months Ended June 30, 2025 | Six Months Ended June 30, 2024 | | :-------------------- | :------------------------------- | :------------------------------- | :----------------------------- | :----------------------------- | | Total investment income | $70,965 | $72,271 | $137,804 | $146,770 | | Total expenses | $39,299 | $38,004 | $72,952 | $77,528 | | Net investment income | $30,590 | $33,117 | $62,700 | $67,067 | | Net increase in net assets from operations | $23,722 | $29,090 | $52,269 | $64,185 | - Net increase in net assets from operations decreased to **$23.7 million** in Q2 2025 from **$29.1 million** in Q2 2024, and to **$52.3 million** in H1 2025 from **$64.2 million** in H1 2024[364](index=364&type=chunk)[365](index=365&type=chunk) [Investment Income](index=161&type=section&id=Investment%20Income) This section analyzes the components of investment income, including interest, dividends, PIK income, and other income, and their changes over the periods Investment Income by Type | Income Type (in thousands) | Three Months Ended June 30, 2025 | Three Months Ended June 30, 2024 | Six Months Ended June 30, 2025 | Six Months Ended June 30, 2024 | | :------------------------- | :------------------------------- | :------------------------------- | :----------------------------- | :----------------------------- | | Interest income | $54,226 | $55,106 | $105,054 | $110,701 | | Dividend income | $5,063 | $8,238 | $11,574 | $16,505 | | PIK income | $7,518 | $5,786 | $14,143 | $11,168 | | Other income | $4,158 | $3,141 | $7,033 | $8,396 | | Total investment income | $70,965 | $72,271 | $137,804 | $146,770 | - Interest income decreased due to a lower yield on the investment portfolio (**11.4%** in H1 2025 vs. **13.1%** in H1 2024)[366](index=366&type=chunk)[367](index=367&type=chunk) - Dividend income decreased primarily from lower contributions from SLP and ISLP. PIK income increased due to more investments earning PIK[366](index=366&type=chunk)[367](index=367&type=chunk) [Operating Expenses](index=162&type=section&id=Operating%20Expenses) This section details the company's operating expenses, including interest, management fees, incentive fees, and administrative costs, and explains their period-over-period changes Operating Expenses by Category | Expense Category (in thousands) | Three Months Ended June 30, 2025 | Three Months Ended June 30, 2024 | Six Months Ended June 30, 2025 | Six Months Ended June 30, 2024 | | :------------------------------ | :------------------------------- | :------------------------------- | :----------------------------- | :----------------------------- | | Interest and debt financing expenses | $21,772 | $17,631 | $40,676 | $35,687 | | Base management fee | $9,257 | $8,769 | $18,325 | $17,587 | | Incentive fee | $5,446 | $7,924 | $7,668 | $17,156 | | Professional fees | $714 | $1,029 | $1,428 | $1,830 | | Other general and administrative expenses | $1,928 | $2,477 | $4,499 | $4,920 | | Total expenses, net of fee waivers | $39,299 | $38,004 | $72,952 | $77,528 | - Interest and debt financing expenses increased due to higher debt outstanding (weighted average principal debt of **$1.6 billion** in Q2 2025 vs. **$1.2 billion** in Q2 2024)[369](index=369&type=chunk)[370](index=370&type=chunk) - Incentive fees decreased significantly in H1 2025 due to the incentive fee cap. Management fees increased due to higher total assets[372](index=372&type=chunk)[374](index=374&type=chunk) - Professional fees and other general and administrative expenses decreased, primarily due to lower costs associated with servicing the investment portfolio[375](index=375&type=chunk)[376](index=376&type=chunk) [Net Realized and Unrealized Gains and Losses](index=165&type=section&id=Net%20Realized%20and%20Unrealized%20Gains%20and%20Losses) This section analyzes the net realized and unrealized gains and losses on investments, detailing the drivers of appreciation and depreciation within the portfolio Net Realized and Unrealized Gains and Losses | Metric (in thousands) | Three Months Ended June 30, 2025 | Three Months Ended June 30, 2024 | Six Months Ended June 30, 2025 | Six Months Ended June 30, 2024 | | :-------------------- | :------------------------------- | :------------------------------- | :----------------------------- | :----------------------------- | | Net realized gain (loss) | $3,322 | $(5,617) | $(23,285) | $(1,684) | | Net change in unrealized appreciation | $(10,190) | $1,590 | $12,854 | $(1,198) | - Net realized gains (losses) on investments were **$4.2 million** in Q2 2025 (vs. **$(5.3) million** in Q2 2024) and **$(19.8) million** in H1 2025 (vs. **$(3.2) million** in H1 2024), driven by sales/paydowns[377](index=377&type=chunk)[381](index=381&type=chunk) - Net change in unrealized appreciation was **$(10.2) million** in Q2 2025 (vs. **$1.6 million** in Q2 2024) and **$12.9 million** in H1 2025 (vs. **$(1.2) million** in H1 2024)[377](index=377&type=chunk)[381](index=381&type=chunk) - Unrealized appreciation in H1 2025 was **$75.3 million** on 90 portfolio companies, offset by **$47.3 million** in depreciation on 100 companies, primarily due to positive valuation adjustments and widening credit spreads[382](index=382&type=chunk) [Interest Rate Swaps](index=167&type=section&id=Interest%20Rate%20Swaps) This section explains the company's use of interest rate swaps to manage interest rate risk associated with its fixed-rate liabilities - The company utilizes interest rate swaps to mitigate interest rate risk associated with its fixed-rate liabilities, with certain swaps designated in a hedge accounting relationship[388](index=388&type=chunk) [Net Increase (Decrease) in Net Assets Resulting from Operations](index=168&type=section&id=Net%20Increase%20%28Decrease%29%20in%20Net%20Assets%20Resulting%20from%20Operations) This section summarizes the net change in the company's net assets attributable to its operational activities for the reporting periods Net Increase in Net Assets from Operations | Period | Net Increase in Net Assets from Operations (in millions) | Per Share Net Increase | | :----- | :--------------------------------------- | :--------------------- | | Q2 2025 | $23.7 | $0.37 | | Q2 2024 | $29.1 | $0.45 | | H1 2025 | $52.3 | $0.81 | | H1 2024 | $64.2 | $1.00 | - The net increase in net assets from operations decreased for both the three-month and six-month periods ended June 30, 2025, compared to the prior year[389](index=389&type=chunk)[390](index=390&type=chunk) [Financial Condition, Liquidity and Capital Resources](index=168&type=section&id=Financial%20Condition%2C%20Liquidity%20and%20Capital%20Resources) This section discusses the company's financial health, sources of liquidity, and capital resources, including equity issuances, credit facilities, and debt notes - Liquidity is primarily derived from equity issuances, credit facilities, various debt notes (2019-1, March 2026, October 2026, March 2030), the Sumitomo Credit Facility, and cash flows from operations[391](index=391&type=chunk) - Primary uses of cash include investments, debt service, distributions, and operational costs[391](index=391&type=chunk) Cash and Credit Facility Availability | Metric | June 30, 2025 (in millions) | December 31, 2024 (in millions) | | :------------------------------------------ | :-------------------------- | :------------------------------ | | Cash, foreign cash, restricted cash and cash equivalents | $174.5 | $99.1 | | Availability on Sumitomo Credit Facility | $592.0 | $412.3 | - Cash, foreign cash, and restricted cash equivalents increased by **$75.4 million** in H1 2025, driven by financing activities (new debt issuances) despite cash usage in operating activities[394](index=394&type=chunk) [Equity](index=168&type=section&id=Equity) This section details the company's equity structure, including IPO proceeds, 'at the market' offerings, and share repurchase authorizations - The company closed its IPO on November 19, 2018, issuing **7.5 million common shares** at **$20.25 per share**, generating **$145.4 million** in net proceeds[397](index=397&type=chunk) - On February 27, 2025, the company entered into equity distribution agreements to sell up to **$250.0 million** of common stock through 'at the market' offerings[399](index=399&type=chunk)[400](index=400&type=chunk) 'At the Market' Offerings | Issuance Type | Number of Shares Issued (in thousands) | Gross Proceeds (in thousands) | Offering Expenses (in thousands) | Net Proceeds (in thousands) | Average Offering Price Per Share | | :-------------- | :------------------------------------- | :---------------------------- | :------------------------------- | :-------------------------- | :------------------------------- | | 'At the market' offerings | 253.9 | $4,574.7 | $23.2 | $4,551.4 | $18.02 | [Debt](index=170&type=section&id=Debt) This section provides a detailed overview of the company's debt instruments, including principal amounts, carrying values, and maturity dates Debt Instruments | Debt Instrument | Principal Amount Outstanding (in thousands) | Carrying Value (in thousands) | Maturity Date | | :------------------ | :---------------------------------------- | :---------------------------- | :------------ | | 2019-1 Debt | $352,500 | $351,423 | October 15, 2033 | | March 2026 Notes | $300,000 | $299,216 | March 10, 2026 | | October 2026 Notes | $300,000 | $298,236 | October 13, 2026 | | March 2030 Notes | $350,000 | $350,703 | March 15, 2030 | | Sumitomo Credit Facility | $263,000 | $263,000 | May 18, 2029 | | Total Debt | $1,565,500 | $1,562,578 | | - Total principal amount outstanding increased from **$1,395,199 thousand** as of December 31, 2024, to **$1,565,500 thousand** as of June 30, 2025[402](index=402&type=chunk) [Distribution Policy](index=171&type=section&id=Distribution%20Policy) This section outlines the company's policy for quarterly dividends, requirements for RIC tax treatment, and details of the dividend reinvestment plan - The company intends to distribute quarterly dividends to stockholders from legally available assets, determined by the Board[405](index=405&type=chunk) - To maintain RIC tax treatment and avoid excise taxes, the company must distribute at least **90%** of its net ordinary income and net short-term capital gains annually[406](index=406&type=chunk) - The company has a dividend reinvestment plan where stockholders who do not opt out have cash dividends automatically reinvested in additional common stock[408](index=408&type=chunk) [Commitments and Off-Balance Sheet Arrangements](index=173&type=section&id=Commitments%20and%20Off-Balance%20Sheet%20Arrangements) This section addresses the company's potential exposure to off-balance sheet risks through commitments to extend credit for investments - The company may enter into financial instruments with off-balance sheet risk, such as commitments to extend credit, to fund investments and meet portfolio companies' needs[410](index=410&type=chunk) [Related Party Transactions](index=173&type=section&id=Related%20Party%20Transactions) This section describes the company's business relationships with affiliated parties, including advisory and administration agreements, and co-investment policies - The company has business relationships with affiliated parties, including the Amended Advisory Agreement and Administration Agreement[411](index=411&type=chunk) - Exemptive relief from the SEC allows co-investments with other Bain Capital Credit Clients, subject to independent director approval and specific conditions[412](index=412&type=chunk) [Recent Developments](index=173&type=section&id=Recent%20Developments) This section refers to Note 12 for a summary of significant events occurring after the reporting period - Recent developments are summarized in Note 12 to the Consolidated Financial Statements[413](index=413&type=chunk) [Significant Accounting Estimates and Critical Accounting Policies](index=173&type=section&id=Significant%20Accounting%20Estimates%20and%20Critical%20Accounting%20Policies) This section highlights the key accounting estimates and critical policies, particularly those related to investment valuation and revenue recognition, which involve inherent judgment - The financial statements are prepared under US GAAP for investment companies, requiring significant estimates and assumptions, particularly for asset and liability reporting[414](index=414&type=chunk)[415](index=415&type=chunk) - Revenue recognition policies include accrual-based interest income, amortization/accretion of discounts/premiums, and evaluation of distributions from equity interests[416](index=416&type=chunk)[417](index=417&type=chunk) - Investment valuation relies on market quotations or, for unquoted investments, discounted cash flow models and comparable company multiples, with inherent uncertainty in fair value determination[420](index=420&type=chunk)[421](index=421&type=chunk)[422](index=422&type=chunk) [Contractual Obligations](index=177&type=section&id=Contractual%20Obligations) This section outlines the company's contractual commitments, including advisory and administration fees, and debt obligations with their respective maturity periods - The company has contractual obligations under its Amended Advisory Agreement and Administration Agreement, including annual base management fees and incentive fees[425](index=425&type=chunk)[426](index=426&type=chunk)[427](index=427&type=chunk) Debt Obligations by Maturity Period | Maturity Period | Total Debt Obligations (in thousands) | | :---------------- | :---------------------------------- | | Less than 1 year | $300,000 | | 1 – 3 years | $300,000 | | 3 – 5 years | $613,000 | | More than 5 years | $352,500 | | Total | $1,565,500 | [Item 3. Quantitative and Qualitative Disclosures About Market Risk](index=178&type=section&id=Item%203.%20Quantitative%20and%20Qualitative%20Disclosures%20About%20Market%20Risk) This section details the company's exposure to financial market risks, particularly interest rate and foreign currency fluctuations, and their potential impact on net investment income - The company is subject to financial market risks, including interest rate changes, due to investments in illiquid loans and securities, with fair value determinations involving inherent uncertainty[430](index=430&type=chunk) Sensitivity to Interest Rate Changes | Change in Interest Rates | Net Increase (Decrease) in Net Investment Income (in thousands) | | :----------------------- | :------------------------------------------------------------ | | Down 100 Basis Points | $(6,434) | | Down 200 Basis Points | $(12,649) | | Down 300 Basis Points | $(18,137) | | Up 100 Basis Points | $6,466 | | Up 200 Basis Points | $12,934 | | Up 300 Basis Points | $19,400 | - The company is exposed to foreign currency exchange rate movements from foreign-denominated investments and may use hedging techniques like forward contracts to mitigate these risks[431](index=431&type=chunk) [Item 4. Controls and Procedures](index=178&type=section&id=Item%204.%20Controls%20and%20Procedures) This section reports on management's evaluation of the effectiveness of disclosure controls and procedures and any changes in internal controls over financial reporting - As of June 30, 2025, management, including the CEO and CFO, concluded that disclosure controls and procedures are effective in providing reasonable assurance for timely and accurate financial reporting[432](index=432&type=chunk) - No material changes in internal controls over financial reporting occurred during the fiscal quarter ended June 30, 2025[433](index=433&type=chunk) [PART II. OTHER INFORMATION](index=179&type=section&id=PART%20II.%20OTHER%20INFORMATION) [Item 1. Legal Proceedings](index=179&type=section&id=Item%201.%20Legal%20Proceedings) This section confirms the absence of any material legal proceedings or threatened claims against the company - The company is not currently subject to any material legal proceedings, nor is any material legal proceeding threatened against it[435](index=435&type=chunk) [Item 1A. Risk Factors](index=179&type=section&id=Item%201A.%20Risk%20Factors) This section highlights any material changes to the risk factors previously disclosed, particularly concerning potential impacts from U.S. trade policy changes - No material changes to the risk factors set forth in the Annual Report on Form 10-K for the year ended December 31, 2024, occurred during the fiscal quarter ended June 30, 2025, except for potential negative impacts from changes to U.S. tariff and import/export regulations[436](index=436&type=chunk)[437](index=437&type=chunk) - Changes in U.S. trade policy, including new tariffs, could adversely affect global economic conditions, reduce global trade, and negatively impact portfolio companies' business, financial condition, and results of operations[437](index=437&type=chunk) [Item 2. Unregistered Sales of Equity Securities, Use of Proceeds, and Issuer Purchases of Equity Securities](index=179&type=section&id=Item%202.%20Unregistered%20Sales%20of%20Equity%20Securities%2C%20Use%20of%20Proceeds%2C%20and%20Issuer%20Purchases%20of%20Equity%20Securities) This section confirms the absence of unregistered equity sales, common stock issuances under the dividend reinvestment plan, or share repurchases during the reporting period - The company did not engage in any unregistered sales of equity securities, issue common stock under its dividend reinvestment plan, or purchase any common stock during the three months ended June 30, 2025[438](index=438&type=chunk) [Item 3. Default Upon Senior Securities](index=179&type=section&id=Item%203.%20Default%20Upon%20Senior%20Securities) This section confirms that there was no default upon senior securities during the reporting period - Not applicable[439](index=439&type=chunk) [Item 4. Mine Safety Disclosures](index=179&type=section&id=Item%204.%20Mine%20Safety%20Disclosures) This section states that mine safety disclosures are not applicable to the company's operations - Not applicable[440](index=440&type=chunk) [Item 5. Other Information](index=179&type=section&id=Item%205.%20Other%20Information) This section provides information regarding Rule 10b5-1 trading plans and arrangements by directors and executive officers - None of the company's directors or executive officers adopted or terminated any Rule 10b5-1 trading plans or non-Rule 10b5-1 trading arrangements during the fiscal quarter ended June 30, 2025[441](index=441&type=chunk) [Item 6. Exhibits, Consolidated Financial Statement Schedules](index=180&type=section&id=Item%206.%20Exhibits%2C%20Consolidated%20Financial%20Statement%20Schedules) This section lists all exhibits and consolidated financial statement schedules included or incorporated by reference in the Quarterly Report on Form 10-Q - The report includes a comprehensive list of exhibits, such as the Amended and Restated Certificate of Incorporation, Bylaws, Investment Advisory Agreement, Administration Agreement, various Indentures, Loan Sale Agreements, and other relevant documents[443](index=443&type=chunk)[444](index=444&type=chunk)[445](index=445&type=chunk)[446](index=446&type=chunk)[447](index=447&type=chunk)[448](index=448&type=chunk)[449](index=449&type=chunk)[450](index=450&type=chunk)[451](index=451&type=chunk)[452](index=452&type=chunk)[453](index=453&type=chunk)[454](index=454&type=chunk)[455](index=455&type=chunk)[456](index=456&type=chunk) [SIGNATURES](index=188&type=section&id=SIGNATURES) This section contains the official signatures of the company's Chief Executive Officer and Chief Financial Officer, certifying the report - The report is duly signed on behalf of Bain Capital Specialty Finance, Inc. by Michael A. Ewald, Chief Executive Officer, and Amit Joshi, Chief Financial Officer, as of August 5, 2025[459](index=459&type=chunk)[460](index=460&type=chunk)[461](index=461&type=chunk)

Core Insights - Roberts Berzins has over a decade of experience in financial management, focusing on helping top-tier corporates shape financial strategies and execute large-scale financings [1] - Significant efforts have been made to institutionalize the REIT framework in Latvia to enhance the liquidity of pan-Baltic capital markets [1] - Development of national SOE financing guidelines and frameworks for channeling private capital into affordable housing stock has been a key policy-level initiative [1] - Roberts is a CFA Charterholder and holds an ESG investing certificate, indicating a strong background in finance and sustainable investing [1] - Active involvement in "thought-leadership" activities supports the development of pan-Baltic capital markets [1]

Group 1 - The negative year-to-date performance of some Business Development Companies (BDCs) has created opportunities to invest in high-quality private credit tickers [1] - Bain Capital Specialty Finance (BCSF) has experienced an approximate decline of 11% since the beginning of the year [1] - The equity market is characterized by daily price fluctuations that can lead to significant long-term wealth creation or destruction [1] Group 2 - Pacifica Yield focuses on long-term wealth creation by targeting undervalued yet high-growth companies, high-dividend tickers, Real Estate Investment Trusts (REITs), and green energy firms [1]

Core Viewpoint - Small-cap stocks are currently undervalued, presenting potential investment opportunities, especially those offering high dividend yields ranging from 8.3% to 17.1% [2] Group 1: Small-Cap Stocks Overview - The valuation gap between the S&P 500 and S&P 600 is at its widest since the late 1990s, suggesting small-cap stocks are significantly cheaper [2] - The article discusses five small-cap stocks with attractive dividend yields, indicating a potential for high returns despite their current low valuations [2] Group 2: Playtika Holding (PLTK) - Playtika, a mobile game developer, has a dividend yield exceeding 8% but has not raised its payout recently, indicating a decline in earnings and sales [4][5] - Analysts project a 32% increase in profits for 2024, despite the company's struggles in the competitive mobile gaming market [6] - Playtika's valuation is low at 6 times forward earnings, but there are concerns about its growth prospects [7] Group 3: Carlyle Secured Lending (CGBD) - CGBD is a business development company focused on U.S. middle-market companies, primarily investing in first-lien debt [8][9] - Recent earnings reports have shown disappointing results, with an increase in non-accrual loans and a stagnant base dividend of 40 cents per share [10][11] - CGBD shares are trading at a 16% discount to net asset value, but operational challenges raise concerns about future dividend sustainability [12] Group 4: Bain Capital Specialty Finance (BCSF) - BCSF provides financing solutions to a diverse range of companies, with a significant portion of its investments in first-lien debt [13][14] - The company has maintained its regular dividend but has introduced special dividends, raising concerns about future dividend coverage due to declining net investment income projections [16][17] - Analysts expect BCSF's dividend ratios to be high, leaving little room for error in case of operational difficulties [17] Group 5: Two Harbors Investment Corp. (TWO) - TWO operates in the mortgage REIT sector, focusing on mortgage servicing rights and agency residential mortgage-backed securities [19][22] - The company has faced significant share price declines, resulting in a high yield of over 17%, but recent litigation charges could impact its book value and dividend sustainability [24][25] - TWO's current dividend rate of 45 cents per share is at risk due to the potential impact of litigation on earnings available for distribution [25] Group 6: Franklin BSP Realty Trust (FBRT) - FBRT is a mortgage REIT focused on commercial mortgage-backed securities, with a significant portion of its portfolio in multifamily properties [26][27] - The company is trading at a 28% discount to book value, with a low P/E ratio based on 2026 earnings estimates, indicating potential value [28] - Concerns exist regarding the stability of its dividend, as the payout has not changed since 2021, and market conditions could necessitate a review of the dividend policy [29][30]