Richard Darko/iStock via Getty Images Introduction Many may be wondering how well BDCs will fare in 2024, with rates still expected to decline. I am a big believer in the sector and think they are more than just high interest rate environment investments. With the banking crisis roughly a year ago causing tighter lending standards, I think this will benefit the sector for the long term. And even though many BDCs have rewarded shareholders these past two years with extra income because of their predominantly ...

Arsgera FS KKR Capital (NYSE:FSK) has seen significant selling pressure after the BDC reported net investment income results for the December quarter that matched adjusted NII consensus expectations. However, FS KKR’s earnings release, which was not bad at all, was overshadowed by an increase in the non-accrual percentage which unnecessarily caused irritations about the BDC's dividend. The current dividend is well-supported by cash flow, mostly interest income from the BDC’s loan portfolio, and I don’t ...

Dilok Klaisataporn FS KKR Capital Corp (NYSE:FSK) reported a concerning increase in its non-accrual ratio for the fourth quarter. The BDC’s stock price dropped 8% after quarterly earnings were released on Monday, and I think that the increase in non-accrual is too substantial to ignore. Hence, I feel compelled to lower my stock classification from Buy to Hold. Though FS KKR Capital out-earned its regular dividend with net investment income, the margin of dividend safety deteriorated. With the pay-out ra ...

deepblue4you FS KKR Capital Corp (NYSE:FSK) is one of the most compelling Business Development Companies (BIZD) aka BDCs right now. At a time when most blue-chip BDCs are a bit richly valued and the sector faces growing headwinds, FSK's well-covered 15.4% dividend yield and 24.2% discount to NAV make it the second most discounted and highest-yielding BDC among those with a market cap of at least $1 billion. Moreover, its portfolio has greater exposure to first-lien senior secured loans than industry sta ...

All information is as of December 31, 2023 unless otherwise noted • 63% of our drawn leverage was unsecured as of December 31, 2023 and our weighted average effective rate on borrowings was 5.42%. FSK | FS KKR Capital Corp. 1. See the Appendix for a reconciliation between NII and Adjusted NII. 2. Consists of three payments of $0.05 per share during Q2 2023, Q3 2023, and Q4 2023 and $0.05 per share payable during Q1 2024. 3. Includes cash, restricted cash, and cash denominated in foreign currency. 4. Princip ...

FORM 10-K _________________________________________________ ANNUAL REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934 FOR THE FISCAL YEAR ENDED DECEMBER 31, 2023 Table of Contents UNITED STATES SECURITIES AND EXCHANGE COMMISSION WASHINGTON, D.C. 20549 ________________________________________________ OR ¨ TRANSITION REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934 FOR THE TRANSITION PERIOD FROM TO COMMISSION FILE NUMBER: 814-00757 ______________________ ...

Table of Contents UNITED STATES SECURITIES AND EXCHANGE COMMISSION WASHINGTON, D.C. 20549 FORM 10-Q _________________________________________________ QUARTERLY REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934 FOR THE QUARTERLY PERIOD ENDED SEPTEMBER 30, 2023 ¨ TRANSITION REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934 COMMISSION FILE NUMBER: 814-00757 _________________________________________________ FS KKR Capital Corp. (Exact name of registrant as ...

Financial Performance - Net investment income (NII) for the quarter ended June 30, 2023, was $229 million, or $0.82 per share, compared to $229 million, or $0.81 per share, for the quarter ended March 31, 2023[37] - Adjusted net investment income (Adjusted NII) for the quarter ended June 30, 2023, was $219 million, or $0.78 per share, as compared to $219 million, or $0.78 per share, for the quarter ended March 31, 2023[37] - Net asset value (NAV) per share as of June 30, 2023, was $24.69, compared to $24.93 as of March 31, 2023[37] - Total investment income increased from $379 million in Q2 2022 to $462 million in Q2 2023[10] - Total net realized and unrealized loss was ($87) million for the three months ended June 30, 2023[1, 10] Investment Portfolio - Total investments at fair value were $14.764 billion as of June 30, 2023[12, 50] - New investment fundings in the second quarter were approximately $363 million and net investment activity was ($482) million[37, 30] - The portfolio consists of 195 companies[37, 50, 51] - 59.5% of the investment portfolio is in First Lien Senior Secured Loans as of June 30, 2023[50, 60] Capital Structure and Liquidity - Net Debt-to-Equity ratio was 1.13x as of June 30, 2023[35, 56] - The company has $3.5 billion of liquidity in undrawn debt, cash, and unsettled trades[38]

Financial Data and Key Metrics Changes - The company generated net investment income of $0.82 per share and adjusted net investment income of $0.78 per share, exceeding public guidance [90] - The net asset value per share as of June 30, 2023, was $24.69, down from $24.89 at the start of the year and $24.93 as of March 31, 2023 [90][112] - The company declared a third quarter regular distribution of $0.70 per share, consisting of a base distribution of $0.64 and a supplemental distribution of $0.06 [90][106] Business Line Data and Key Metrics Changes - The investment portfolio had a fair value of $14.8 billion, down from $15.3 billion as of March 31, 2023, with a decrease attributed to the sale of lower-yielding assets [9][96] - The company originated $363 million in new investments during the second quarter, primarily focused on add-on financings [7][109] - The weighted average yield on accruing debt investments increased to 12.1% as of June 30, 2023, compared to 11.7% as of March 31, 2023 [35] Market Data and Key Metrics Changes - The company reported a median interest coverage of 1.6 times for its portfolio companies at the end of the second quarter [8] - Non-accruals improved to 4.8% on a cost basis and 2.5% on a fair value basis, compared to 5.5% and 2.7% respectively as of March 31, 2023 [112] - The company expects recurring dividend income from its joint venture to approximate $54 million [114] Company Strategy and Development Direction - The company is focused on large high-quality borrowers with strong operating margins and deep equity cushions, with 59.5% of the portfolio in first lien loans [111] - The company is actively seeking opportunities in the asset-based finance sector, particularly due to pressures on regional banks [40][108] - The company aims to continue producing strong financial results and rewarding shareholders with attractive dividends over the long term [91][105] Management's Comments on Operating Environment and Future Outlook - Management noted that the resilience of the labor market and strong consumer spending make it unlikely for the economy to slow down significantly [92] - The company anticipates that the recent increase in new investment activity will not materially impact financial results until the fourth quarter of 2023 or early 2024 [93] - Management expressed optimism about the increasing deal flow and the potential for favorable origination activity [44][108] Other Important Information - The company completed the sale of approximately $500 million of lower-yielding investments to increase investment capacity [109] - The total investment income increased by $6 million quarter-over-quarter to $462 million, driven by increased interest income [142] - The company expects third quarter 2023 GAAP net investment income to approximate $0.79 per share [143] Q&A Session Summary Question: Update on Global Jet asset - Management indicated that the underlying performance of the assets remains strong, with good management and cost control [17] Question: Average price of portfolio sale as a percentage of par value - Management explained that the market is currently wide on a spread level, and the portfolio rotation was a strategic decision [20][21] Question: Inbound opportunities from regional banks - Management confirmed they are actively looking for opportunities to partner with banks on transactions, including buying entire portfolios [41] Question: Current share price and actions to narrow discount to NAV - Management emphasized the importance of consistent performance and guidance to improve market perception [30][31] Question: Driving factors behind portfolio sale - Management clarified that the sale was a strategic move related to a specific asset, Solera, which had temporary cash flow adjustments [125] Question: Restructuring environment and valuation changes - Management acknowledged that the restructuring process can be complex and that some situations have become more challenging [134][135]

Table of Contents UNITED STATES SECURITIES AND EXCHANGE COMMISSION WASHINGTON, D.C. 20549 FORM 10-Q _________________________________________________ QUARTERLY REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934 FOR THE QUARTERLY PERIOD ENDED JUNE 30, 2023 ¨ TRANSITION REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934 COMMISSION FILE NUMBER: 814-00757 _________________________________________________ FS KKR Capital Corp. (Exact name of registrant as spec ...