Investment Performance - The company reported total investments at fair value of 3,193,561,000 as of December 31, 2023, reflecting an increase of approximately 14.0%[191] - First lien debt constitutes 96.0% of total investments at fair value, amounting to 3,004,544,000 as of December 31, 2023[191] - As of September 30, 2024, equity investments accounted for 1.5% of total investments at fair value, valued at 54,538,000 as of December 31, 2023[191] - The investment portfolio at amortized cost grew from 3,662,618 as of September 30, 2024, representing an increase of about 15.8%[200] - The number of portfolio companies increased to 200 as of September 30, 2024, compared to 172 as of December 31, 2023[192] Revenue Generation - The company primarily generates revenue through interest income from debt investments, with a typical term of five to eight years and interest rates based on benchmarks like SOFR[189] - Total revenue is supplemented by various fees, including commitment, origination, and structuring fees, contributing to overall income generation[189] - Total investment income increased to 94,451 for the same period in 2023, reflecting a growth of approximately 16.4%[199] - Net investment income after taxes for the three months ended September 30, 2024, was 50,574 in the same period of 2023, indicating a rise of approximately 16.3%[199] Investment Strategy - The company’s investment strategy focuses on middle-market companies with annual EBITDA between 200 million, targeting attractive risk-adjusted returns[187] - The company plans to invest prudently in the secondary loan market during periods of market dislocation to provide better risk-adjusted returns[223] Financial Management - The company expects general and administrative expenses to remain stable or decline as a percentage of total assets during periods of asset growth[190] - The weighted average yield on debt and income-producing investments at fair value was 11.0% as of September 30, 2024, down from 12.1% as of December 31, 2023[192] - The weighted average net leverage through tranche decreased to 5.8x as of September 30, 2024, from 6.0x as of December 31, 2023[192] - The percentage of debt investments with one or more financial covenants was 65.8% as of September 30, 2024, down from 74.6% as of December 31, 2023[192] Debt and Equity Management - As of September 30, 2024, the total outstanding debt obligations amounted to 1,102,735,000[217] - The company had borrowings denominated in Euros (EUR) of 238 and Canadian dollars (CAD) of 2,657,000, 3,608,000 respectively[217] Shareholder Returns - Total distributions declared for the nine months ended September 30, 2024, amounted to 1,723,988, compared to 100 million in Common Stock at prices below net asset value[215] - The company repurchased a total of 429,653 shares under the 10b5-1 Plan during the three months ended September 30, 2024[216] - A distribution of $0.50 per share was declared on November 4, 2024, payable on January 24, 2025, to shareholders of record as of December 31, 2024[217] Market Risks - The company is subject to financial market risks, including valuation risk, market risk, and interest rate risk[222] - Changes in interest rates may materially affect the company's net investment income due to the expected funding of investments with borrowings[226] - The company may face risks related to investments in the commercial services and supplies industry[229] - A downturn in the commercial services and supplies industry could significantly impact aggregate returns on investments[229] - Operating results and financial conditions of portfolio companies may be adversely affected by decreased demand due to seasonality or market forces[229] - High costs and time requirements for recruiting and training workforce could delay service provision and supply delivery[229] - Ineffective sales and marketing efforts by portfolio companies could lead to insufficient revenue generation and profitability issues[229] - Failure to repay interest or principal on debt investments may arise from portfolio companies' inability to sustain profitability[229] - Overall business, financial condition, and operational results could be materially adversely affected by these factors[229]
Morgan Stanley Direct Lending Fund(MSDL) - 2024 Q3 - Quarterly Report