Investment Portfolio - As of September 30, 2025, the company had investments in 108 portfolio companies with an aggregate fair value of approximately $2,256 million and unfunded commitments of $277 million[261]. - The portfolio consisted of 93.7% first lien senior secured loans, 4.6% subordinated debt, and 1.7% equity investments[261]. - For the three months ended September 30, 2025, gross new investment commitments were $295.5 million, compared to $182.6 million for the same period in 2024, representing a 62% increase[271]. - The weighted average yield for private middle market loans was 10.7% based on fair value as of September 30, 2025[263]. - The average position size based on total investment commitments was $23.8 million as of September 30, 2025[265]. - The fair value of debt investments as of September 30, 2025, was $74.3 million, with 3.4% on the watch list, compared to $69.4 million and 3.5% on the watch list as of December 31, 2024[275]. - As of September 30, 2025, there were five debt investments on non-accrual status, up from two in the same period of 2024[279]. - The largest contributor to unrealized gains for the three months ended September 30, 2025, was SGCP Intermediate, Inc. (SG Credit) with $1.9 million[284]. - The top contributor to unrealized gains for the nine months ended September 30, 2025, was Arborworks Acquisition, LLC, with gains of $3.9 million[287]. Financial Performance - Total investment income for the three months ended September 30, 2025, was $61.3 million, an increase from $57.8 million in the same period of 2024, representing a growth of 6.1%[277]. - Net investment income for the three months ended September 30, 2025, was $30.0 million, down from $37.1 million in 2024, reflecting a decrease of 19.1%[278]. - Operating expenses for the three months ended September 30, 2025, totaled $31.3 million, compared to $20.7 million in 2024, indicating an increase of 51.5%[280]. - The company had a net increase in net assets resulting from operations of $24.6 million for the three months ended September 30, 2025, down from $37.6 million in 2024, a decrease of 34.6%[278]. - Unrealized losses on investments for the three months ended September 30, 2025, were $(14.3) million, compared to $(7.5) million in 2024, showing an increase in losses of 90.7%[282]. - PIK interest included in interest income for the three months ended September 30, 2025, was $2.1 million, compared to $1.5 million in 2024, an increase of 40.0%[279]. Debt and Financing - The company completed a private placement offering of $200 million of senior unsecured notes on October 15, 2025, with net proceeds used to refinance existing debt and for general corporate purposes[255]. - As of September 30, 2025, the company had $75 million in senior unsecured notes outstanding, with $25 million of 8.65% Series A Notes due June 2027 and $50 million of 8.74% Series B Notes due June 2028[292]. - As of September 30, 2025, the company had $1,078 million borrowed under credit facilities and cash and cash equivalents of $46.1 million[291]. - The asset coverage ratios as of September 30, 2025, and December 31, 2024, were 199% and 238%, respectively, indicating strong compliance with the 150% coverage requirement[289]. - The company has $322 million of undrawn commitments available on its credit facilities as of September 30, 2025[291]. - Total contractual obligations amount to $1,153 million, with $301 million due from the Corporate Credit Facility and $570 million from the Revolving Funding Facility[298]. Interest Rate Sensitivity - As of September 30, 2025, 96% of the company's debt investments had floating interest rates[263]. - Interest rate sensitivity may affect net investment income due to the difference between investment and borrowing rates[316]. - The company experienced a decrease in net interest income due to changes in interest rates, with a decline of $42.1 million when rates decreased by 200 basis points[318]. - When interest rates decreased by 100 basis points, net interest income fell by $21.1 million[318]. - Conversely, an increase of 100 basis points in interest rates would result in a net interest income increase of $21.1 million[318]. - The company may utilize standard hedging instruments such as futures, options, and forward contracts to mitigate interest rate fluctuations[319]. - Hedging activities may protect the company from adverse interest rate changes but could also limit benefits from lower interest rates on fixed-rate investments[319]. Corporate Governance and Fees - The base management fee under the Amended Investment Advisory Agreement is calculated at an annual rate of 1.00%[309]. - The incentive fee on income is subject to a twelve-quarter lookback hurdle rate of 1.50%[309]. Market Risks - The company is subject to financial market risks, including valuation risk and interest rate risk[314]. - The company expects a significant majority of its investments to be classified as Level 3 investments, which require fair value determination[303].
Kayne Anderson BDC, Inc.(KBDC) - 2025 Q3 - Quarterly Report