Palmer Square Capital BDC(PSBD) - 2024 Q2 - Quarterly Report

Investment Portfolio - As of June 30, 2024, the company had 256 debt and equity investments in 209 portfolio companies with an aggregate fair value of approximately $1.4 billion, up from 227 investments valued at $1.0 billion as of December 31, 2023[169] - The investment portfolio at fair value increased from $1.0 billion as of December 31, 2023, to $1.4 billion as of June 30, 2024[184] - The company’s investment objective is to maximize total return, which includes current income and capital appreciation, focusing on corporate debt securities and CLO structured credit funds[164] - The company’s investment strategy includes a focus on "Covenant-Lite Loans," which have fewer or no maintenance covenants compared to traditional loans[164] Investment Activity - For the three months ended June 30, 2024, the company made new investments totaling $189.3 million, significantly higher than $46.7 million for the same period in 2023[171] - As of June 30, 2024, the company’s total new investments for the six months amounted to $326.2 million, a significant increase from a net outflow of $25.8 million in the same period of 2023[171] - The principal amount of investments sold or repaid for the three months ended June 30, 2024, was $140.0 million, compared to $33.8 million for the same period in 2023[171] Financial Performance - Total investment income for the three months ended June 30, 2024, was $36,549,496, compared to $27,441,864 for the same period in 2023, representing a 33% increase[181] - Net investment income for the six months ended June 30, 2024, was $32,076,080, up from $27,792,799 in the same period of 2023, reflecting a 15% increase[181] - Net realized losses on investments for the three months ended June 30, 2024, were $(9,411,924), compared to $(2,570) in the same period of 2023[181] Debt and Financing - The company had $386.6 million principal outstanding under the BoA Credit Facility as of June 30, 2024, down from $490.0 million in the previous year[195][202] - The company entered into a share repurchase plan to acquire up to $15 million in shares if the market price is below the most recently reported NAV per share[197] - On May 23, 2024, the company completed a $400.5 million term debt securitization (CLO Transaction) to finance a portion of its portfolio investments[213] - The outstanding indebtedness under the CLO Transaction was $300 million as of June 30, 2024[215] Cash and Liquidity - Cash and cash equivalents increased to $14.8 million as of June 30, 2024, up from $6.7 million as of June 30, 2023[195] - During the six months ended June 30, 2024, the company experienced a net increase in cash and cash equivalents of $12.7 million, primarily due to financing activities[192] Dividends and Shareholder Returns - The company intends to distribute quarterly dividends to stockholders, aiming to distribute at least 90% of its net ordinary income and net short-term capital gains to maintain RIC tax treatment[216] - The company has adopted a dividend reinvestment plan allowing stockholders to reinvest dividends in additional shares of common stock unless they opt for cash[219] Risk Management - The company is subject to financial market risks, including changes in interest rates, which can materially affect net investment income[235] - The company may hedge against interest rate and currency exchange rate fluctuations using standard hedging instruments, subject to regulatory requirements[240] Management and Advisory - The company is externally managed by an Investment Advisor registered with the SEC, which oversees day-to-day operations and investment management[163] - The base management fee under the Advisory Agreement is set at an annual rate of 1.75% of the average value of total net assets[231] Market Conditions - The weighted average total yield to maturity of debt and income producing securities at fair value was 9.82% as of June 30, 2024, compared to 10.51% as of December 31, 2023[169] - The weighted average interest rate of new investment commitments was 9.96% for the three months ended June 30, 2024, down from 10.15% in the same period of 2023[173] - The percentage of new debt investment commitments at floating rates was 97.01% for the three months ended June 30, 2024, compared to 100.00% in the same period of 2023[173] Commitments and Obligations - The company has twenty-two unfunded commitments totaling $30.0 million as of June 30, 2024, indicating potential future cash requirements[233] - As of June 30, 2024, total contractual obligations amount to $820,390,080, with $383,148,268 due under the BoA Credit Facility and $136,717,785 under the WF Credit Facility[232]