Blackstone Secured Lending Fund(BXSL) - 2024 Q2 - Quarterly Report

PART I FINANCIAL INFORMATION Item 1. Financial Statements Presents unaudited condensed consolidated financial statements for Blackstone Secured Lending Fund as of June 30, 2024, detailing assets, operations, cash flows, and investments Condensed Consolidated Statements of Assets and Liabilities Total assets, liabilities, and net assets increased, with NAV per share rising to $27.19 as of June 30, 2024 Condensed Consolidated Statements of Assets and Liabilities (in thousands, except per share data) | Financial Metric | June 30, 2024 | December 31, 2023 | | :--- | :--- | :--- | | Total investments at fair value | $11,293,797 | $9,868,440 | | Total assets | $11,770,391 | $10,134,618 | | Total debt (net) | $6,084,261 | $4,911,930 | | Total liabilities | $6,375,818 | $5,182,577 | | Total net assets | $5,394,573 | $4,952,041 | | Net Asset Value per share | $27.19 | $26.66 | Condensed Consolidated Statements of Operations Total investment income and net assets increased year-over-year for both three and six-month periods ended June 30, 2024 Key Operating Results (in thousands, except per share data) | Metric | Three Months Ended June 30, 2024 | Three Months Ended June 30, 2023 | Six Months Ended June 30, 2024 | Six Months Ended June 30, 2023 | | :--- | :--- | :--- | :--- | :--- | | Total investment income | $327,064 | $290,365 | $631,024 | $555,303 | | Net investment income | $173,098 | $171,485 | $338,946 | $320,660 | | Net increase in net assets | $196,186 | $144,850 | $379,941 | $283,648 | | Earnings (loss) per share | $1.01 | $0.90 | $1.98 | $1.76 | Condensed Consolidated Statements of Changes in Net Assets Net assets grew from $4.95 billion to $5.39 billion by June 30, 2024, driven by net income and share issuances, offset by dividends Changes in Net Assets for the Six Months Ended June 30, 2024 (in thousands) | Description | Amount | | :--- | :--- | | Net assets, December 31, 2023 | $4,952,041 | | Issuance of common shares, net | $352,133 | | Reinvestment of dividends | $10,907 | | Net investment income | $338,946 | | Net realized gain (loss) | $8,145 | | Net change in unrealized appreciation | $32,850 | | Dividends declared | ($300,449) | | Net assets, June 30, 2024 | $5,394,573 | Condensed Consolidated Statements of Cash Flows Net cash outflow from operations was offset by financing inflows, resulting in a $136.4 million increase in cash and equivalents Summary of Cash Flows for the Six Months Ended June 30 (in thousands) | Cash Flow Activity | 2024 | 2023 | | :--- | :--- | :--- | | Net cash provided by (used in) operating activities | ($1,104,710) | $677,142 | | Net cash provided by (used in) financing activities | $1,241,128 | ($673,289) | | Net increase (decrease) in cash and cash equivalents | $136,418 | $3,853 | | Cash and cash equivalents, end of period | $291,292 | $147,383 | Condensed Consolidated Schedules of Investments The $11.29 billion investment portfolio is 98.6% First Lien Debt, diversified across industries like Software and Health Care Investment Portfolio Composition by Type (June 30, 2024) | Investment Type | Fair Value (in thousands) | % of Total Investments | | :--- | :--- | :--- | | First Lien Debt | $11,141,918 | 98.6% | | Second Lien Debt | $41,985 | 0.4% | | Unsecured Debt | $12,278 | 0.1% | | Equity | $97,616 | 0.9% | | Total | $11,293,797 | 100.0% | Top 5 Industry Concentrations by Fair Value (June 30, 2024) | Industry | % of Total Investments | | :--- | :--- | | Software | 18.4% | | Health Care Providers & Services | 10.5% | | Professional Services | 8.9% | | Commercial Services & Supplies | 7.1% | | Insurance | 5.5% | Notes to Condensed Consolidated Financial Statements This section details the company's organization, accounting policies, related party agreements, investments, fair value measurements, borrowings, and net assets Item 2. Management's Discussion and Analysis of Financial Condition and Results of Operations Management discusses financial performance, highlighting a 13% YoY increase in Q2 2024 investment income, $1.29 billion in new commitments, and sufficient liquidity Portfolio and Investment Activity Q2 2024 saw $1.29 billion in new first lien debt commitments, increasing portfolio companies to 231, with 99.8% of debt investments being floating rate Investment Activity Highlights (Three Months Ended June 30) | Metric | 2024 | 2023 | | :--- | :--- | :--- | | New investments purchased (at cost) | $890.6M | $116.9M | | Investments sold or repaid | ($89.4M) | ($464.8M) | | Number of portfolio companies (end of period) | 231 | N/A | | Weighted average yield of new investments | 10.9% | 12.0% | - As of June 30, 2024, 99.8% of the company's debt investments by fair value bore a floating interest rate[280] Results of Operations Q2 2024 total investment income rose 13% YoY to $327.1 million, with net investment income stable and a significant reversal to unrealized gains - Total investment income for Q2 2024 increased by 13% YoY to $327.1 million, primarily due to a 15% increase in the average fair value of investments[283] - Total interest expense for Q2 2024 rose 19% YoY to $78.8 million, driven by a higher weighted average interest rate (5.26% vs. 4.84%) and increased average debt outstanding[290] - The company experienced a net change in unrealized gains of $21.1 million in Q2 2024, compared to a loss of $37.5 million in Q2 2023, primarily due to an increase in the fair value of its debt investments[302] Financial Condition, Liquidity and Capital Resources As of June 30, 2024, the company held $291.3 million in cash and $888.3 million in unused credit, maintaining an asset coverage ratio of 188.3% - As of June 30, 2024, the company had $291.3 million in cash and cash equivalents and $888.3 million of unused borrowing capacity under its credit facilities[310][311] - The company's asset coverage ratio was 188.3% as of June 30, 2024, exceeding the regulatory minimum of 150%[309] - During the six months ended June 30, 2024, the company raised $352.2 million in net proceeds through its "at-the-market" (ATM) equity offering program[313] Item 3. Quantitative and Qualitative Disclosures About Market Risk Primary market risk is interest rate sensitivity, with 99.8% of debt investments floating rate; a 100 bps increase would boost net income by $79.9 million - As of June 30, 2024, 99.8% of the company's debt investments by fair value were at floating rates, making its income sensitive to interest rate changes[328] Annualized Impact on Net Income of Hypothetical Base Rate Changes (as of June 30, 2024) | Basis Point Change | Change in Interest Income (in thousands) | Change in Interest Expense (in thousands) | Change in Net Income (in thousands) | | :--- | :--- | :--- | :--- | | +300 | $339,050 | ($99,500) | $239,550 | | +200 | $226,034 | ($66,334) | $159,700 | | +100 | $113,017 | ($33,167) | $79,850 | | -100 | ($113,017) | $33,167 | ($79,850) | | -200 | ($226,034) | $66,334 | ($159,700) | Item 4. Controls and Procedures Management concluded that disclosure controls and procedures were effective as of June 30, 2024, with no material changes to internal control over financial reporting - The Co-Chief Executive Officers and Chief Financial Officer concluded that the company's disclosure controls and procedures were effective as of the end of the period covered by this report[331] - There were no changes in internal control over financial reporting during the most recent fiscal quarter that have materially affected, or are reasonably likely to materially affect, these controls[332] PART II OTHER INFORMATION Item 1. Legal Proceedings The company is not currently subject to any material legal proceedings, though it may be involved in ordinary course business litigation - As of the reporting date, the company is not subject to any material legal proceedings[334] Item 1A. Risk Factors No material changes to the risk factors previously disclosed in the Annual Report on Form 10-K for the year ended December 31, 2023 - No material changes to risk factors from the Annual Report on Form 10-K for the year ended December 31, 2023, have been reported[334] Item 2. Unregistered Sales of Equity Securities and Use of Proceeds The company reported no unregistered sales of equity securities during the period - None[334] Item 3. Defaults Upon Senior Securities The company reported no defaults upon its senior securities during the period - None[334] Item 5. Other Information On August 6, 2024, the company amended its Revolving Credit Facility, increasing commitment to $2.075 billion, extending maturity, and introducing tiered interest rates - The company amended its Revolving Credit Facility on August 6, 2024, increasing the aggregate committed principal from $1.775 billion to $2.075 billion[335] - The amendment extends the maturity date of the Revolving Credit Facility from June 2028 to August 2029[335] - A new tiered interest rate structure was introduced, with rates potentially decreasing based on the ratio of the gross borrowing base to the combined revolving debt amount[335] Item 6. Exhibits This section lists exhibits filed with Form 10-Q, including credit agreement amendments, officer certifications, and XBRL data files