Palmer Square Capital BDC(US:PSBD)2025-05-07 11:00Investment Portfolio - As of March 31, 2025, the company had 260 debt and equity investments in 209 portfolio companies with an aggregate fair value of approximately $1.3 billion[201]. - Total investments as of March 31, 2025, amounted to $1.4 billion, a decrease from $1.45 billion as of December 31, 2024[206]. - The investment portfolio at fair value remained unchanged at $1.3 billion from December 31, 2024, to March 31, 2025[210]. - Loans on non-accrual status represented 0.24% of total investments at fair value as of March 31, 2025, up from 0.08% as of December 31, 2024[210]. - The company had 23 unfunded commitments totaling $20.2 million, down from 26 commitments totaling $21.6 million as of December 31, 2024[260]. Financial Performance - Total investment income for the three months ended March 31, 2025, was $31.2 million, down from $34.8 million in the same period of 2024, primarily due to lower interest income from floating rate loans[210]. - Net investment income for the three months ended March 31, 2025, was $12.9 million, compared to $16.3 million in the prior year[209]. - Net unrealized losses on investments for the three months ended March 31, 2025, were $(15.4) million, contrasting with net unrealized gains of $8.3 million in the same period of 2024[216]. - Interest expense for the three months ended March 31, 2025, was $13.0 million, a decrease from $13.2 million in the prior year[211]. - The weighted average total yield to maturity of debt and income-producing securities at fair value was 10.37% as of March 31, 2025[199]. - Weighted average total yield of debt and income-producing securities decreased to 10.37% as of March 31, 2025, from 10.65% as of December 31, 2024[207]. Capital Structure and Financing - The company completed a $400.5 million term debt securitization (CLO Transaction) on May 23, 2024, to provide long-term financing for its portfolio investments[240]. - The Wells Fargo Credit Facility was amended to increase the borrowing amount from $150 million to $175 million and extend the maturity date to December 18, 2028[235]. - As of March 31, 2025, the company had $319.1 million principal outstanding under the Bank of America Credit Facility[233]. - The company has a commitment fee structure for the Bank of America Credit Facility, with fees ranging from 0.50% to 1.30% based on the amount of commitments utilized[229]. - Total contractual obligations related to outstanding indebtedness as of March 31, 2025, amount to $774.45 million, with $317.28 million due within one year and $302.13 million due beyond five years[259]. Cash Flow and Liquidity - Net cash provided by operating activities for the three months ended March 31, 2025, was $46.4 million, with net repayments under credit facilities totaling $29.7 million[218]. - As of March 31, 2025, the company had cash and cash equivalents of $2.9 million, down from $8.3 million as of March 31, 2024[220]. - The company anticipates generating cash from future equity and debt offerings, as well as cash flows from operations[217]. - The company had $40.7 million in net purchases that had not yet settled as of March 31, 2025, which may increase future interest expenses due to additional borrowing[265]. Shareholder Returns - The company intends to distribute quarterly dividends to stockholders, with a goal of distributing at least 90% of net ordinary income and net short-term capital gains to maintain RIC tax treatment[244]. - The company plans to distribute net capital gains at least annually, but may retain them for investment purposes, incurring corporate-level tax on such gains[246]. - The company has adopted a dividend reinvestment plan, allowing stockholders to reinvest dividends in additional shares unless they opt for cash[247]. - During the three months ended March 31, 2025, the company issued and sold 32,662 shares for an aggregate purchase price of $0.5 million, compared to 5,450,000 shares for $89.7 million in the same period of 2024[222]. - The company repurchased 98,399 shares of common stock under the Company Rule 10b5-1 Repurchase Plan during the three months ended March 31, 2025[225]. Risk Factors - The company is subject to financial market risks, particularly interest rate sensitivity, which can significantly impact net investment income due to borrowing costs[262]. - A hypothetical increase of 300 basis points in interest rates could lead to a net increase in investment income of $16.6 million, while a decrease of 300 basis points could result in a decrease of $16.6 million[264]. - Investments denominated in foreign currencies expose the company to risks from currency exchange rate fluctuations, which can lead to significant market volatility[266]. - The company actively measures exposure to interest rate and currency exchange rate fluctuations and may use hedging instruments to mitigate these risks[267]. Regulatory and Compliance - The company has elected to be regulated as a BDC under the 1940 Act and expects to qualify as a RIC annually[193]. - The asset coverage ratio was 167% as of March 31, 2025, exceeding the required minimum of 150%[221]. - The company is in compliance with all applicable covenants under both the Bank of America and Wells Fargo Credit Facilities as of March 31, 2025[233][239]. - The Advisory Agreement with the Investment Advisor includes a base management fee of 1.75% of the average value of total net assets and an incentive fee based on performance[258]. - The Notes from the CLO Transaction are scheduled to mature on July 15, 2037, with potential early redemption options starting July 15, 2026[241].