Investment Portfolio - As of December 31, 2022, the company had 204 debt and equity investments in 176 portfolio companies with an aggregate fair value of approximately $966.9 million[328]. - As of December 31, 2022, total investments amounted to $1.12 billion at amortized cost, with a fair value of $1.02 billion[334]. - The investment portfolio at fair value decreased from $1.1 billion as of December 31, 2021, to $966.9 million as of December 31, 2022, a decline of 11.9%[340]. - The net change in unrealized losses on investments for 2022 was $(107.4) million, compared to $(8.5) million in 2021, indicating a significant deterioration in portfolio value[346]. - The company expects to value many of its portfolio investments at fair value, which may differ significantly from values that would have been used if readily available market quotations existed[378]. - The company engages independent valuation providers to review the valuation of each portfolio investment that constitutes a material portion of its portfolio at least once annually[377]. Investment Performance - Total investment income for the year ended December 31, 2022, was $74.5 million, a significant increase from $39.7 million in 2021, representing an 87.7% growth[337]. - Net investment income for 2022 was $41.1 million, compared to $22.8 million in 2021, reflecting an increase of 80.0%[337]. - The weighted average total yield to maturity of debt and income-producing securities at fair value was 11.47% as of December 31, 2022, compared to 5.77% as of December 31, 2021[327][328]. - The weighted average total yield of debt and income-producing securities rose to 11.47% in 2022 from 5.77% in 2021[336]. Investment Strategy - The company aims to maximize total return through current income and capital appreciation, focusing on corporate debt securities and CLO structured credit[324]. - The company expects to continue evaluating other investment strategies without a specific allocation to any single strategy[324]. Debt and Financing - The principal amount of first-lien senior secured debt investments funded in 2022 was $247.23 million, down from $829.59 million in 2021[332]. - Average debt outstanding increased from $477.0 million in 2021 to $667.5 million in 2022, an increase of 40.0%[342]. - As of December 31, 2022, the principal outstanding under the Bank of America Credit Facility was approximately $514.5 million, with $210.5 million of available commitments[358]. - Under the Wells Fargo Credit Facility, as of December 31, 2022, approximately $126.8 million was outstanding, with $23.2 million of available commitments[363]. - The Bank of America Credit Facility's commitment amount increased from $200 million to $725 million over various dates, with the ability to draw scheduled to terminate on February 11, 2025[355]. - The Wells Fargo Credit Facility has a facility amount of $150 million, with the ability to draw scheduled to terminate on December 18, 2023[360]. - The interest rates for loans under the Bank of America Credit Facility are base rate plus 1.30% or LIBOR plus 1.30%[356]. - The interest rates for loans under the Wells Fargo Credit Facility are LIBOR or base rate plus 1.85% for Broadly Syndicated Loans and plus 2.35% for Middle Market Loans[361]. Expenses and Obligations - Net expenses for 2022 were $33.4 million, up from $16.9 million in 2021, marking a 97.5% increase[341]. - The company has significant contractual obligations totaling $641,309,417, with $513,726,164 due in the 1-3 year period and $127,583,253 in the 3-5 year period[383]. - As of December 31, 2022, the company had two unfunded commitments totaling $2.6 million, compared to nine unfunded commitments totaling $11.3 million as of December 31, 2021[384]. Dividends and Shareholder Returns - The company intends to distribute quarterly dividends to stockholders, with a goal to distribute at least 90% of net ordinary income and net short-term capital gains to maintain RIC tax treatment[365]. - The company has adopted a dividend reinvestment plan, allowing stockholders to reinvest dividends in additional shares unless they opt for cash[369]. Management and Governance - The company is externally managed by an Investment Advisor, which is a majority-owned subsidiary of Palmer Square, specializing in global alternative investments[323]. - The Board has designated the Investment Advisor to serve as the valuation designee for determining fair value of portfolio investments effective August 11, 2022[376]. - The company has a registered investment adviser that is majority-owned by Palmer Square, with related party transactions involving board members[381]. Risk Management - Interest rate sensitivity indicates that a 100 basis point increase in interest rates could result in an increase of $10,526,946 in net investment income[388]. - The company anticipates that changes in interest rates could have a material adverse effect on net investment income due to its reliance on borrowings[386]. - The company may hedge against interest rate and currency exchange rate fluctuations using standard hedging instruments[390]. - The company has entered into an Advisory Agreement with an annual base management fee of 2.0% of the average value of total net assets[382].
Palmer Square Capital BDC(PSBD) - 2022 Q4 - Annual Report