CION Investment (CION) - 2025 Q1 - Quarterly Report

Financial Performance - The company declared a quarterly base distribution of $0.36 per share for Q2 2025, payable on June 16, 2025[367]. - Investment income for Q1 2025 was $56,074, down from $73,554 in Q1 2024, primarily due to lower income from restructuring activities and lower SOFR rates[380]. - Operating expenses for Q1 2025 totaled $36,822, a decrease from $40,961 in Q1 2024, driven by lower subordinated incentive fees and interest expenses[382]. - Net investment income after taxes decreased to $19,252 for the three months ended March 31, 2025, down from $32,593 in the same period of 2024, reflecting a decline in investment income[384]. - The net decrease in net assets resulting from operations was $(42,705) for the three months ended March 31, 2025, compared to an increase of $6,445 in the same period of 2024[387]. Investment Portfolio - The total investments as of March 31, 2025, amounted to $1,964,916,000, with a fair value of $1,845,660,000[368]. - The total investment portfolio as of March 31, 2025, was valued at $1,791,684, compared to $1,819,870 as of December 31, 2024[377]. - The company had 104 portfolio companies as of March 31, 2025[368]. - The investment portfolio included 103 portfolio companies as of April 30, 2025[378]. - As of March 31, 2025, senior secured first lien debt constituted 86.9% of the investment portfolio[368]. Investment Activity - For the three months ended March 31, 2025, the company purchased $60,792,000 in senior secured first lien debt, compared to $101,895,000 in the same period of 2024[368]. - The company reported net portfolio activity of $15,465,000 for the three months ended March 31, 2025, compared to a net activity of $(95,985,000) in the same period of 2024[368]. - The fair value of floating interest rate investments was $1,469,869, representing 82.0% of the total investment portfolio as of March 31, 2025[373]. - The net change in unrealized depreciation on investments for Q1 2025 was $(64,251), compared to $(16,412) in Q1 2024[380]. - Net realized gains on investments improved to $2,294 for the three months ended March 31, 2025, compared to a loss of $(9,736) in the same period of 2024, driven by realized gains from the restructuring of certain investments[385]. Interest Rate Sensitivity - As of March 31, 2025, 82.0% of the company's investments paid variable interest rates, indicating a significant exposure to interest rate fluctuations[430]. - The company expects that a rise in interest rates could lead to a substantial increase in net investment income, particularly due to the majority of investments being in variable rate[430]. - The interest rate sensitivity analysis shows that a 300 basis point increase in interest rates could increase net interest income by 18.5%[432]. - Approximately 6.8% of the company's investments paid fixed interest rates as of March 31, 2025, which may lead to fair value declines in a rising interest rate environment[433]. - The Series A Notes bear interest at a floating rate equal to average overnight SOFR plus a credit spread of 3.82% per year, indicating the company's reliance on variable interest rates[431]. Market Conditions - The U.S. inflation rate remains elevated, with potential impacts on the company's portfolio companies' profit margins due to persistent inflationary pressures and market volatility[435]. - Market uncertainty and volatility have been exacerbated by geopolitical tensions and inflation, which could affect the company's investment strategy and performance[435]. Commitments and Financing - As of March 31, 2025, unfunded commitments amounted to $65,130, down from $70,681 as of December 31, 2024[374]. - Cash and short-term investments totaled $61,696 as of March 31, 2025, with $106 million available under secured financing arrangements[392]. - The company has entered into various credit facilities, including the JPM Credit Facility and the 2025 UBS Credit Facility, with specific terms related to interest rates and fees[421][422]. Valuation and Risk - The company has a risk of material error in the calculation of NAV of $0.01 per share or greater, which could affect fair value determinations[416]. - The investment valuation process involves independent valuation firms and management reviews, ensuring oversight and accuracy in fair value assessments[415].