Investment Portfolio - As of December 31, 2024, the company had 262 debt and equity investments in 207 portfolio companies with an aggregate fair value of approximately $1.3 billion[365]. - As of December 31, 2023, the company had 227 debt and equity investments in 191 portfolio companies with an aggregate fair value of approximately $1.0 billion[366]. - Total investments increased from $1.0 billion as of December 31, 2023 to $1.3 billion as of December 31, 2024, representing a growth of approximately 30%[375]. - The investment portfolio's fair value composition showed a decrease in Software from 14.0% in 2023 to 10.2% in 2024, while Chemicals increased from 2.9% to 5.1%[375]. Investment Performance - Total investment income for the year ended December 31, 2024 was $143.5 million, up from $112.2 million in 2023, reflecting a year-over-year increase of 28%[374]. - Net investment income for 2024 was $62.6 million, compared to $58.0 million in 2023, indicating a growth of approximately 8.5%[374]. - The weighted average total yield of debt and income-producing securities increased to 10.65% in 2024 from 10.51% in 2023[373]. - The weighted average interest rate of new investment commitments was 9.12% in 2024, compared to 10.22% in 2023[369]. - Net change in unrealized gains on investments for 2024 was $2.8 million, a significant decrease from $52.6 million in 2023[383]. - The company reported net realized losses on investments of $17.8 million in 2024, compared to losses of $2.7 million in 2023[374]. Investment Strategy - The company’s investment objective is to maximize total return, which includes current income and capital appreciation, primarily through corporate debt securities[361]. - The company’s investment strategy includes a focus on "Covenant-Lite Loans," which have fewer or no maintenance covenants compared to other loans[361]. Debt and Financing - The principal amount of first-lien senior secured debt investments funded in 2024 was $687.35 million, significantly higher than $267.27 million in 2023[368]. - The company funded portfolio investments of $773.8 million during the year ended December 31, 2024, partially offset by proceeds from the sale of investments totaling $468.8 million[386]. - The company completed a $400.5 million term debt securitization (CLO Transaction) on May 23, 2024, which serves as a source of long-term financing for portfolio investments[408]. - As of December 31, 2024, the company had outstanding indebtedness of $300.0 million under the CLO Transaction[410]. - The BoA Credit Facility has a current commitment amount of $525 million, with the ability to draw until February 11, 2028[397]. - As of December 31, 2024, the company had $352.3 million principal outstanding under the BoA Credit Facility and was in compliance with applicable covenants[401]. - The WF Credit Facility was amended on December 18, 2023, increasing the borrowing amount from $150 million to $175 million and extending the maturity date to December 18, 2028[403]. - As of December 31, 2024, the outstanding loans under the WF Credit Facility amounted to $150.8 million, with $24.2 million of available commitments[407]. Cash and Liquidity - As of December 31, 2024, the company had cash and cash equivalents of $2.8 million and $172.7 million in undrawn capacity under the BoA Credit Facility[389]. - For the year ended December 31, 2024, the company experienced a net increase in cash and cash equivalents of $649 thousand, with net cash used in operating activities amounting to $200.6 million[386]. - Average net assets increased from $420.4 million in 2023 to $801.0 million in 2024, reflecting a substantial growth in asset management[379]. - The company has total contractual obligations of $804,155,659, with $501,650,602 due in 3-5 years and $302,505,057 due beyond 5 years[427]. - The company had $59.7 million in net purchases that had not yet settled as of December 31, 2024[432]. Shareholder Returns - The company intends to distribute quarterly dividends to stockholders, contingent on available income, with a commitment to distribute at least 90% of net ordinary income and net short-term capital gains to maintain RIC tax treatment[411][412]. - The company has adopted a dividend reinvestment plan, allowing stockholders to reinvest dividends in additional shares unless they opt for cash[415]. - During the years ended December 31, 2024, 2023, and 2022, the company issued and sold a total of 5,576,363 shares for an aggregate purchase price of $91.7 million[391]. - The company repurchased 78,964 shares of its common stock under the Company Rule 10b5-1 Repurchase Plan for the year ended December 31, 2024[393]. Risk Management - The company is subject to interest rate sensitivity, which may significantly affect net investment income due to the difference between investment and borrowing rates[430]. - A hypothetical increase of 300 basis points in interest rates could result in a net investment income decrease of $17,415,738[432]. - The company measures exposure to interest rate and currency exchange rate fluctuations and may use hedging instruments to mitigate risks[434]. - The company does not have any off-balance sheet financings or liabilities other than contractual commitments and legal contingencies[429]. Compliance and Governance - The company expects to qualify as a RIC annually under Subchapter M of the Code, which is crucial for its tax treatment[358]. - The company is required to comply with leverage restrictions under the 1940 Act and has made customary representations and warranties regarding its obligations under the WF Credit Facility[406]. - The company has pledged all its assets to U.S. Bank as collateral for the WF Credit Facility, ensuring compliance with various covenants and reporting requirements[406]. - The investment advisor has been designated to determine fair value for portfolio investments, effective August 11, 2022, under the SEC's Rule 2a-5[421]. - The company may engage independent valuation providers to review the valuation of material portfolio investments at least annually[422]. Unfunded Commitments - As of December 31, 2024, the company had 26 unfunded commitments totaling $21.6 million, compared to 15 commitments totaling $20.1 million as of December 31, 2023[428]. - The company’s unfunded commitments may expire without being drawn upon, indicating potential liquidity management strategies[428].
Palmer Square Capital BDC(PSBD) - 2024 Q4 - Annual Report