Blackstone Secured Lending: High-Quality Pick At A Time When Defense Matters

Core Viewpoint - Blackstone Secured Lending (BXSL) is identified as one of the strongest and highest quality Business Development Companies (BDCs) with a forward dividend yield of approximately 10.2% [2][3] Group 1: Portfolio Quality - Approximately 99% of BXSL's portfolio is invested in first lien senior secured loans, primarily directed towards companies owned by equity sponsors, enhancing the defensive quality of the portfolio [3] - BXSL ranks as the fourth largest BDC by NAV, with an average single investment concentration of around 1%, and approximately 230 companies across various sectors, leading to a diversified and lower-risk profile [3][4] - The average LTM EBITDA of investment companies in BXSL's portfolio is $206 million as of Q2 2024, reflecting a 13% increase from the previous year, indicating strong portfolio dynamics [5] Group 2: Financial Metrics - The interest coverage ratio for BXSL's companies is robust, with an LTM EBITDA coverage of 1.7x in Q2 2024, surpassing the sector average [5] - BXSL's dividend coverage stands at 113% as of Q2 2024, with over 93% of total income derived from interest income, showcasing a high-quality earnings generation profile [5][6] Group 3: Investment Activity - BXSL committed approximately $1.3 billion in Q2 2024, with net funded investment activity reaching $800 million, a 50% increase from the prior quarter, while maintaining strict underwriting standards [5] - The weighted average loan-to-value (LTV) ratio for newly funded investments was only 37.9%, indicating prudent risk management [5] Group 4: Market Position - BXSL's size and connections to the Blackstone global platform enhance its ability to source new deal volumes, contributing to its overall stability and growth potential [6] - The company trades at a 12% premium to NAV, justified by its above-average quality and stability in the current macroeconomic environment [6]