Palmer Square Capital BDC(US:PSBD)2026-02-26 12:01Investment Portfolio - As of December 31, 2025, the company had 264 debt and equity investments in 205 portfolio companies with an aggregate fair value of approximately $1.2 billion[384]. - Total investments decreased from $1.3 billion as of December 31, 2024 to $1.2 billion as of December 31, 2025, representing a decline of approximately 8.3%[391]. - The investment portfolio at fair value increased from $966.9 million as of December 31, 2022 to $1.0 billion as of December 31, 2023, and then to $1.3 billion as of December 31, 2024 before decreasing to $1.2 billion in 2025[393]. - The company has 22 unfunded commitments totaling $21.5 million, compared to 26 commitments totaling $21.6 million as of December 31, 2024[449]. Financial Performance - For the year ended December 31, 2025, total investment income was $124.39 million, down from $143.51 million in 2024, a decrease of about 13.3%[393]. - Net investment income for 2025 was $53.46 million, compared to $62.60 million in 2024, reflecting a decline of approximately 14.6%[391]. - The company reported a net decrease in net assets resulting from operations of $(3.17) million for the year ended December 31, 2025, compared to an increase of $47.67 million in 2024[391]. - For the year ended December 31, 2025, the net change in unrealized gains (losses) on investments was $(43.4) million, compared to $2.8 million in 2024 and $52.6 million in 2023[401]. Investment Strategy - 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[379]. - The company is externally managed by an Investment Advisor registered with the SEC, which oversees day-to-day operations and investment management[378]. - The company has elected to be regulated as a BDC under the 1940 Act and expects to qualify as a RIC annually[375]. Debt and Financing - The principal amount of first-lien senior secured debt investments sold or repaid in 2025 was $541.15 million, compared to $416.69 million in 2024[385]. - The company had $262.4 million in undrawn capacity under the Bank of America Credit Facility and $45.7 million under the Wells Fargo Credit Facility as of December 31, 2025[406]. - The asset coverage ratio was 165% as of December 31, 2025, exceeding the required minimum of 150%[407]. - The Bank of America Credit Facility has a commitment amount of $525 million, with the ability to draw scheduled to terminate on February 11, 2028[418]. - As of December 31, 2025, approximately $262.6 million principal was outstanding under the Bank of America Credit Facility, with compliance to applicable covenants[421]. - The Wells Fargo Credit Facility was amended to increase the amount available for borrowing and extend the facility maturity date as of November 4, 2025[423]. - The company has a BoA Credit Facility with a total obligation of $260.4 million and a WF Credit Facility with a total obligation of $154.0 million[448]. Interest Rates and Risks - The weighted average total yield to maturity of debt and income-producing securities at fair value was 11.30% as of December 31, 2025, compared to 10.65% as of December 31, 2024[381][382]. - The average interest rate on debt decreased from 6.82% at December 31, 2024 to 5.97% at December 31, 2025[395]. - A 200 basis points decrease in interest rates could lead to a net investment income decrease of $10.0 million, while a 200 basis points increase could result in a net increase of $9.98 million[453]. - The company is subject to financial market risks, including interest rate changes that could materially affect net investment income[451]. - The company measures exposure to interest rate and currency exchange rate fluctuations and may use hedging instruments to mitigate risks[455]. - The company’s interest rate sensitivity indicates that changes in market interest rates could have a significant impact on earnings[451]. - The company’s investments in foreign currencies are subject to risks associated with currency exchange rate fluctuations[454]. Shareholder Returns - The company intends to distribute quarterly dividends to stockholders, contingent on available income[431]. - To maintain RIC tax treatment, the company must distribute at least 90% of its net ordinary income and net short-term capital gains[432]. - The company has adopted a dividend reinvestment plan, allowing stockholders to reinvest dividends in additional shares unless they opt for cash[435]. - The company issued 32,662 shares at an aggregate purchase price of $0.5 million in 2025, compared to 5,576,363 shares for $91.7 million in 2024[408]. - The company repurchased 1,371,447 shares of common stock in 2025 under the Company Rule 10b5-1 Repurchase Plan and Extended Company Rule 10b5-1 Stock Repurchase Plan[412]. Valuation and Obligations - The valuation of portfolio investments is conducted by the Investment Advisor, with independent valuation providers engaged for material investments[442]. - Realized gains or losses are measured by the difference between net proceeds from sales and the amortized cost basis of investments[445]. - Total contractual obligations amount to $716.5 million, with $260.4 million due in 1-3 years and $154.0 million due in 3-5 years[448]. - The company has no off-balance sheet financings or liabilities other than contractual commitments and legal contingencies[450]. - The company maintains sufficient liquidity to fund unfunded commitments through cash, receivables, and borrowing capacity[449].