Core Insights - Blackstone Secured Lending (BXSL) and Morgan Stanley Direct Lending (MSDL) are comparable business development companies (BDCs) focusing on first-lien debt investments in US middle-market businesses [1] Company Overview - Both BXSL and MSDL share a similar investment strategy, primarily investing in first-lien debt [1] - The companies are exposed to the changing dynamics of the market, which can impact their performance [1] Investment Philosophy - The article emphasizes the importance of dividend investing as a pathway to financial freedom, highlighting its accessibility for investors [1] - The author aims to share insights and experiences to help others navigate the world of dividend investing [1]

Group 1 - Golub Capital BDC and Blackstone Secured Lending are recognized as blue-chip business development companies, appealing to retirees due to their investment-grade balance sheets [1] - Both companies are noted for their reputable management teams and conservatively positioned investment portfolios, which contribute to strong underwriting performance [1] Group 2 - The investment service mentioned is the fastest growing high yield-seeking service on Seeking Alpha, boasting a perfect 5/5 rating from 180 reviews [2] - Members of this service are reportedly profiting from high-yielding strategies, with an invitation to join at the lowest rate ever offered [2]

Core Insights - The private credit segment has significantly expanded in recent years, driven by a more regulated banking environment, an increasing share of private equity, and higher base rates [1] Group 1: Market Dynamics - The growth in private credit is attributed to the regulatory changes in the banking sector, which have limited traditional lending options [1] - The expanding market share of private equity has contributed to the rise in private credit, indicating a shift in investment strategies [1] - Higher base rates have created favorable conditions for private credit, allowing for more attractive financing options [1] Group 2: Individual Contributions - Roberts Berzins has over a decade of experience in financial management, focusing on shaping financial strategies for top-tier corporates [1] - He has played a significant role in institutionalizing the REIT framework in Latvia to enhance liquidity in pan-Baltic capital markets [1] - Berzins has also contributed to policy-level work, including the development of national SOE financing guidelines and frameworks for channeling private capital into affordable housing [1]

Group 1 - The focus is on growth and dividend income as a strategy for retirement planning [1] - The portfolio is structured to generate monthly dividend income that grows through reinvestment and annual increases [1] Group 2 - The article expresses personal opinions and is not intended as investment advice [2] - It emphasizes the importance of conducting individual research before making investment decisions [2]

Core Viewpoint - The article emphasizes a personal investment strategy focused on growth and dividend income, aiming for an easy retirement through a portfolio that generates monthly dividend income and benefits from reinvestment and annual increases [1]. Group 1 - The investment strategy is centered around compounding dividend income and growth, highlighting the importance of dividends in achieving financial goals [1]. - The portfolio is structured to provide monthly dividend income, which is expected to grow through reinvestment and yearly increases [1]. Group 2 - The article does not provide specific recommendations for stock purchases or sales, indicating that the views expressed are personal opinions and not professional advice [2][3]. - It stresses the importance of individual research for investors to determine if the discussed companies align with their investment objectives and financial situations [2].

Financial Data and Key Metrics Changes - BXSL reported net investment income (NII) of $186 million or $0.91 per share, up 16% year-over-year and the highest dollar amount since inception [32] - Total investment income for the quarter was a record $59 million or 21% year-over-year, driven by increased interest income [32] - Net asset value (NAV) per share increased to $27.27, up from $27.19 last quarter, marking the eighth consecutive quarter of NAV growth [34] Business Line Data and Key Metrics Changes - BXSL ended the quarter with $12 billion of investments at fair value, a 6% increase from $11.3 billion in Q2 [15] - The weighted average yield on performing debt investments was 11.2%, down from 11.6% in the previous quarter [16] - The portfolio maintained a low nonaccrual rate of 0.2% at cost, compared to the average of 2.8% among traded BDC peers [19] Market Data and Key Metrics Changes - The company ended the quarter with $1.1 billion in new commitments and $956 million in fundings, marking the highest quarter of fundings since 2021 [11] - The economic environment showed optimism for a soft landing, with Q3 GDP growth at 2.8% annualized [13] - The company noted a significant increase in deal flow, with over 2x growth in the investment pipeline since Q1 of last year [12] Company Strategy and Development Direction - BXSL aims to maintain a focus on first lien senior secured loans, with 99% of investments in this category [17] - The company is positioned to benefit from increased M&A activity and private equity sponsor activity as interest rates decline [25] - BXSL's strategy includes leveraging its scale and platform to enhance asset quality and transaction speed [28] Management's Comments on Operating Environment and Future Outlook - Management expressed confidence in a "super cycle" for deal volume in 2025, driven by lower capital costs and a supportive economic outlook [60] - The company highlighted the importance of maintaining a conservative leverage ratio to maximize long-term returns [56] - Management noted that the current economic conditions and the administration's support for deal activity contribute to a positive outlook for the upcoming year [61] Other Important Information - Moody's upgraded BXSL's credit rating from Baa3 to Baa2, making it the only manager with two BDCs holding this distinction [10] - The company maintained a strong liquidity position with $1.1 billion in cash and available borrowing capacity [34] - BXSL's corporate revolver was upsized by $300 million, tightening the lowest tier drawn spread [40] Q&A Session Summary Question: Spillover and Earnings Management - Spillover is currently about $1.82 per share, representing over two quarters' worth of dividends [45] - Management emphasized the importance of maintaining adequate spillover to ensure attractive returns [48] Question: Outlook for M&A Activity - Management believes that lower rates and spreads will accelerate deal activity, leading to increased turnover and fee generation [49] Question: Impact of M&A on Earnings - A more active M&A market could lead to increased earnings, with potential turnover rates of 20% to 25% [52] Question: Confidence in Future Activity - The primary changes contributing to increased confidence include lower rates, improved economic outlook, and significant dry powder among private equity sponsors [60] Question: Documentation Trends - The average spread on new deals was in the range of 500 to 515 basis points, with nearly 100% of documents including key protections [67] Question: Borrower Size Target - BXSL is currently more active in the middle market but may skew towards larger companies if the market conditions are favorable [74] Question: PIK Income Trajectory - PIK income represented about 6% of total income, with expectations for quality to align with earnings growth [76] Question: Aftermarket Program Outlook - Management indicated that while there is optimism for the deal environment, timing remains uncertain [81]

Core Insights - Blackstone Secured Lending Fund (BXSL) reported a revenue of $343 million for the quarter ended September 2024, reflecting a year-over-year increase of 20.8% [1] - The earnings per share (EPS) for the quarter was $0.91, slightly down from $0.95 in the same quarter last year [1] - The reported revenue exceeded the Zacks Consensus Estimate of $334.1 million, resulting in a positive surprise of +2.67% [1] - The EPS also surpassed the consensus estimate of $0.90, with a surprise of +1.11% [1] Financial Metrics - Fee income for the quarter was $0.51 million, below the average estimate of $0.83 million from three analysts [3] - Interest income amounted to $321.49 million, exceeding the average estimate of $304.39 million from two analysts [3] - Payment-in-kind interest income was reported at $21.21 million, slightly below the average estimate of $21.25 million from two analysts [3] Stock Performance - Over the past month, shares of Blackstone Secured Lending Fund have returned +4.4%, outperforming the Zacks S&P 500 composite's +3.3% change [4] - The stock currently holds a Zacks Rank 3 (Hold), indicating expected performance in line with the broader market in the near term [4]

Financial Performance - BXSL reported net investment income of $186 million, or $0.91 per share, for Q3 2024, compared to $0.89 per share in the prior quarter and $0.95 per share in Q3 2023[9]. - 3Q24 total investment income increased to $343 million, up from $284 million in 3Q23, representing a 20.7% year-over-year growth[21]. - Net investment income for 3Q24 was $186 million, compared to $161 million in 3Q23, reflecting a 15.5% increase[21]. - The company reported a net increase in net assets resulting from operations of $186 million for Q3 2024, compared to $171 million in Q3 2023[31][33]. - Net investment income for Q3 2024 was $188 million, up from $161 million in Q3 2023, reflecting a year-over-year increase of approximately 16.8%[31][33]. Asset and Investment Growth - The net asset value (NAV) increased to approximately $5.7 billion, or $27.27 per share, reflecting a 0.3% growth from the previous quarter[9]. - Total assets as of September 30, 2024, were $12.372 billion, up from $9.802 billion a year earlier, indicating a 26.2% increase[22]. - Investments at fair value reached $11.979 billion as of September 30, 2024, up from $9.500 billion a year earlier, reflecting a 26.1% increase[22]. - New investment commitments totaled $1.1 billion at par, with $1.0 billion funded during the quarter[10]. - New investment commitments for Q3 2024 totaled $1.106 billion, compared to $656 million in Q3 2023, indicating a significant increase in investment activity[33]. Dividend and Returns - BXSL declared a regular dividend of $0.77 per share, representing an annualized dividend yield of 11.3% based on NAV[9]. - The company reported a regular dividend of $0.77 per share, with a dividend coverage ratio of 118%[20]. - BXSL's total return was 11.4% annualized since inception and 2.9% for the quarter[9]. Credit and Liquidity - The company maintained a strong credit performance with only 0.2% of investments on non-accrual[6]. - The company achieved a credit rating upgrade to Baa2 from Moody's in September 2024[10]. - The company maintains investment grade corporate credit ratings of BBB-/stable from S&P and BBB/stable from Fitch[26]. - The company had $1.1 billion of liquidity in cash and undrawn debt at quarter-end[10]. - The company has a well-structured capital profile with $1.1 billion in liquidity, including $194 million in available cash and $897 million in undrawn borrowing capacity[27][35]. Debt and Leverage - Total liabilities increased to $6.671 billion as of September 30, 2024, compared to $5.200 billion a year earlier, marking a 28.3% rise[22]. - Total debt outstanding is $6.403 billion, with a weighted average coupon of 2.88% and only $1.5 billion of debt maturities within the next two years[27][32]. - The average loan-to-value ratio for the portfolio was 46.5%, indicating a conservative approach to leverage[2]. - The company maintained a loan-to-value (LTV) ratio of 46.5% across its portfolio[21]. - The average debt-to-equity ratio was 1.12x as of Q3 2024, reflecting a stable capital structure[32]. Investment Performance - BXSL's weighted average yield on performing debt investments was 11.2% at quarter-end, down from 11.6% in the prior quarter[9]. - The weighted average yield on new investments was 11.0% for 3Q24, while the yield on investments fully sold or paid down was 10.5%[24]. - The weighted average yield on performing debt and income-producing investments was 11.2% in Q3 2024[32]. Forward-Looking Statements - Forward-looking statements include financial estimates and expectations regarding future operations and market trends, subject to various risks and uncertainties[37]. - The company does not undertake any obligation to publicly update or revise forward-looking statements unless required by federal securities laws[37].

Financial Performance - For the three and nine months ended September 30, 2024, the Company recorded $1.6 million and $3.8 million in non-recurring interest income, compared to $1.0 million and $14.4 million for the same periods in 2023[166]. - The Company incurred $3.9 million and $10.7 million in U.S. federal excise tax for the three and nine months ended September 30, 2024, compared to $5.0 million and $12.6 million for the same periods in 2023[176]. - For the three and nine months ended September 30, 2024, base management fees were $30.2 million and $84.3 million, respectively, compared to $24.2 million and $73.2 million for the same periods in 2023, with $6.1 million and $18.3 million waived in 2023[186]. - For the three and nine months ended September 30, 2024, the Company accrued income based incentive fees of $38.2 million and $111.4 million, respectively, compared to $33.4 million and $98.3 million for the same periods in 2023, with $4.8 million and $14.0 million waived in 2023[203]. - The Company reported a net increase in net assets resulting from operations of $531.6 million for the nine months ended September 30, 2024, compared to $454.6 million for the same period in 2023[311]. - Total investment income increased to $343.2 million for the three months ended September 30, 2024, an increase of $59.3 million, or 21%, compared to the same period in the prior year[347]. - Total investment income for the nine months ended September 30, 2024, was $974.2 million, an increase of $135.0 million, or 16%, compared to the same period in the prior year[349]. Investment Portfolio - As of September 30, 2024, the total investment portfolio at fair value was $11,978,616, with a cost of $12,006,522, indicating a slight decrease in value[217]. - The composition of the investment portfolio included 98.7% in first lien debt, 0.3% in second lien debt, 0.1% in unsecured debt, and 0.9% in equity[217]. - The geographic distribution of investments showed that 89.9% were in the United States, 7.8% in Europe, and 2.3% in Canada as of September 30, 2024[221]. - The industry composition revealed that 18.4% of investments were in software, followed by 10.2% in healthcare providers and services, and 8.9% in professional services[219]. - As of September 30, 2024, 99.8% of performing debt investments bore interest at a floating rate, while 0.2% bore interest at a fixed rate[223]. - The total amount of investments funded at principal was $990.3 million for the three months ended September 30, 2024, compared to $351.6 million in the same period of 2023[344]. - The number of portfolio companies increased to 252 as of September 30, 2024, compared to 196 as of December 31, 2023[344]. Debt and Financing - The Company has loans with payment-in-kind (PIK) provisions, which are recorded as interest income at contractual rates and increase the loan principal[167]. - The Company must distribute at least 90% of its investment company taxable income to maintain its status as a RIC, avoiding corporate-level U.S. federal income taxes[174]. - The Company has a total committed principal of $7,300 million, with an outstanding principal of $6,402.7 million as of September 30, 2024[283]. - The average principal debt outstanding for the three months ended September 30, 2024, was $6,299.6 million, compared to $5,033.7 million for the same period in 2023, reflecting a 25.2% increase[287]. - The weighted average interest rate on all borrowings outstanding for the three months ended September 30, 2024, was 5.45%, up from 4.94% in the same period of 2023[285]. - The total interest expense for the nine months ended September 30, 2024, was $233.8 million, compared to $198.1 million for the same period in 2023, representing an 18.0% increase[289]. - The Company had unfunded commitments of $1,850 million as of September 30, 2024, compared to $985.9 million as of December 31, 2023[290]. Management and Advisory - The Investment Advisory Agreement was most recently renewed on May 1, 2024, for a one-year period ending on May 31, 2025[182]. - The Waiver Period for management fees ended on October 28, 2023, during which the Adviser waived its right to receive fees above 0.75% of the average value of the Company's gross assets[185]. - The Administration Agreement was renewed on May 1, 2024, for a one-year period, providing administrative and compliance services[206]. - The Company approved a new administration agreement effective January 1, 2025, with Blackstone Private Credit Strategies LLC as the new administrator[327]. - Effective January 1, 2025, the New Adviser will become the company's investment adviser following the assignment of the Investment Advisory Agreement[326]. Shareholder Distributions - The Company intends to make quarterly distributions to shareholders, which will depend on earnings, financial condition, and compliance with applicable regulations[177]. - The Company declared total distributions of $461.4 million for the nine months ended September 30, 2024, with a per share amount of $2.31[301]. - The Company declared a distribution of $0.77 per share on November 12, 2024, payable on or about January 24, 2025[323]. - The Company issued a total of 553,799 shares through its Dividend Reinvestment Plan (DRIP) during the nine months ended September 30, 2024[307]. Risk Management - The Company has commitments and risks from investment transactions, including those involving derivative instruments, which are subject to market, credit, liquidity, and operational risks[161]. - The Company evaluates tax positions to determine if they are "more-likely-than-not" to be sustained by tax authorities, with any penalties and interest included in tax expense[173]. - Significant increases in discount rates would lead to a significantly lower fair value measurement for investments[236]. - Future decreases in benchmark interest rates may adversely impact investment income, while increases could negatively affect free cash flow and credit quality of borrowers[351].

One of the main benefits of devising a durable income focused portfolio strategy is that the entire investing process is de-risked both from goal achievement and mental perspective. Roberts Berzins has over a decade of experience in the financial management helping top-tier corporates shape their financial strategies and execute large-scale financings. He has also made significant efforts to institutionalize REIT framework in Latvia to boost the liquidity of pan-Baltic capital markets. Other policylevel wor ...