Financial Data and Key Metrics Changes - The company reported net investment income (NII) of $0.46 per share for Q2 2025, an increase from $0.45 per share in Q1 2025. Excluding one-time accelerated amortization, NII was $0.48 per share [5][21] - NAV per share decreased by approximately 0.4% to $19.55, down from $19.62 at the end of Q1 2025, primarily due to a special dividend of $0.05 per share paid during the quarter [6][22] - The company maintained a 110% base dividend coverage for the quarter [6] Business Line Data and Key Metrics Changes - The investment portfolio totaled over $1.6 billion at fair value, consisting of 187 companies with an average investment size of approximately 0.6% of the total portfolio [9] - First lien loans represented 91% of the portfolio at fair value, indicating a strong focus on senior secured debt [11] Market Data and Key Metrics Changes - Deal activity remained constrained in Q2 2025 due to ongoing tariff discussions and regulatory uncertainty, impacting M&A volume [6] - The weighted average yield of income-producing securities remained stable at 10.4% [18] Company Strategy and Development Direction - The company focuses on disciplined credit underwriting, capital preservation, and strong free cash flow generation, particularly in the lower middle market [26] - A $20 million stock repurchase program was approved to opportunistically repurchase shares, reflecting confidence in the company's valuation [15] Management's Comments on Operating Environment and Future Outlook - Management expressed that the current discount to NAV is unwarranted and highlighted the company's long-term performance track record, which has outperformed public BDC averages [14][15] - The company remains optimistic about its ability to navigate market volatility and maintain a stable NAV profile [26] Other Important Information - The company declared a regular dividend of $0.42 per share for Q3 2025, payable on October 15, 2025 [12][24] - The company will not pay a Q3 supplemental dividend as the measurement test cap exceeded 50% of this quarter's excess available earnings [25] Q&A Session Summary Question: Credit quality concerns regarding the watch list - Management acknowledged a slight increase in the watch list to 14% but emphasized a proactive approach to monitoring investments and maintaining transparency about portfolio health [29][30][31] Question: Impact of tariffs on portfolio companies - Management indicated that the direct impact of tariffs on the portfolio remains low and that companies are proactively managing tariff exposure through pricing power and alternative sourcing strategies [36][38][40] Question: Future portfolio growth and repositioning - Management stated that while they do not expect significant net portfolio growth, they are focused on rotating acquired assets into Crescent-originated opportunities without sacrificing diversification [42][46][49] Question: Evaluation of unitranche investments - Management noted that unitranche investments remain a small part of the portfolio, and they are opportunistic in pursuing such opportunities, ensuring control over the capital structure [52][54] Question: Operating leverage from declining energy prices - Management clarified that fuel input costs are not a significant component of the cost structure for most borrowers, and while some benefits may arise, they do not expect it to materially impact portfolio performance [57][58] Question: Second lien loan strategy - Management confirmed that second lien loans will not become a large component of the portfolio, maintaining a focus on first lien investments due to risk considerations [61][62]

Financial Data and Key Metrics Changes - Gross investment income for Q2 2025 was $13.1 million, up from $11.9 million in Q1 2025, indicating a positive trend in income generation [14] - Net investment income remained consistent at $7.7 million or $0.34 per share, maintaining the same dividend rate for four consecutive quarters [7][14] - Net assets at the end of the quarter were $302 million, with a net asset value per share of $13.23 [14] Business Line Data and Key Metrics Changes - The company funded $39.1 million in new debt investments during Q2, with 100% being senior secured and 88% floating rate [15] - The portfolio consists of 33 companies, with 22% invested in non-cannabis sectors [11][12] - The average debt investment position size is 3% of the investment portfolio, and 76% of the portfolio has floating interest rates [12] Market Data and Key Metrics Changes - The current pipeline includes approximately $780 million in potential debt transactions, with $649 million in cannabis opportunities and $131 million in non-cannabis investments [16][19] - The company has approximately $125.4 million in liquidity, providing ample capacity for future investments [13] Company Strategy and Development Direction - The company focuses on lending to cannabis companies and underserved markets, positioning itself uniquely in the BDC sector [5][10] - The strategy includes underwriting investments based on current cash flow and collateral profiles, rather than relying on potential regulatory changes [9][10] - The company aims to grow returns to shareholders as it scales its platform and navigates market conditions [8] Management's Comments on Operating Environment and Future Outlook - Management expressed optimism about the cannabis market, noting that potential rescheduling could lead to increased cash flow for borrowers and higher valuations [8][9] - There is a belief that the current environment will continue to provide opportunities for growth, despite regulatory uncertainties [9][19] - The company remains focused on originating loans that deliver attractive risk-adjusted returns [20] Other Important Information - The company has no non-accrual loans, contrasting with the industry average of 3.8% [7] - The weighted average yield on debt investments is 16.1%, significantly higher than the average BDC yield of 11.8% [6] Q&A Session Summary Question: Overview on market sentiment about the BDC sector - Management noted that the BDC sector has been impacted by uncertainty around tariffs but is insulated from broader market dynamics due to its niche strategy [22][23] Question: Changes under the Trump administration regarding BDC regulation - Management indicated that it is too early to speculate on potential regulatory changes under the new administration [24] Question: Changes in pipeline and opportunities since becoming Chicago Atlantic BDC - The company has gained access to a broader pipeline of non-cannabis opportunities and identified new types of cannabis opportunities, including restructurings and ESOP transactions [25][26][27] Question: Impact of rescheduling news on potential clients - Management observed that operators are more optimistic and seeking capital earlier to execute growth strategies, rather than pausing for potential regulatory changes [28][29]

Financial Data and Key Metrics Changes - Net asset value per share was $11.18, reflecting a 1% decline quarter over quarter [25] - Net investment income for the quarter was $0.28 per share, an increase from $0.25 per share in the prior quarter [12][27] - The weighted average yield at fair value remained unchanged at 10.1% [14] - The net leverage ratio was 1.29 times at quarter end, up from 1.24 times as of March 31 [28] Business Line Data and Key Metrics Changes - Gross originations were nearly $200 million, with net originations of $32 million [6] - Barings originated positions now make up 95% of the BBDC portfolio at fair value, up from 76% in 2022 [13] - Non-accrual rate improved to 50 basis points at fair value, well below industry averages [13][23] Market Data and Key Metrics Changes - The portfolio consists of 74% secured investments, with approximately 71% being first lien securities [21] - Interest coverage within the portfolio was 2.4 times, above industry averages [21] Company Strategy and Development Direction - The company focuses on core middle market investments due to lower leverage and stronger risk-adjusted returns [6] - Emphasis on sectors that perform resiliently across economic environments to provide stability [6] - The company maintains a cautious optimism about the broader economy and is well-positioned to withstand various economic developments [7][16] Management's Comments on Operating Environment and Future Outlook - The economic outlook remains uncertain, but the company believes its durable portfolio construction will help navigate future challenges [16] - Management noted that macroeconomic events have not historically produced widespread defaults, with idiosyncratic risks being more significant [20] - The company expects increased M&A activity in the latter half of the year based on current market indicators [11] Other Important Information - The Board declared a third-quarter dividend of $0.26 per share, consistent with the prior quarter [14][30] - The company repurchased 100,000 shares during the quarter, totaling 250,000 shares under the current plan [31] Q&A Session Summary Question: Can you expand on the profile of sales to Jakafi and overall leverage? - Management indicated that Jakafi has ample liquidity to absorb incremental investments and that they will continue to run leverage towards the higher end of their range due to strong credit quality [35][40] Question: How does the new name ScreenVision fit into the Barings platform? - Management noted that there is significant collaboration across investment teams, with a centralized sourcing process [43][44] Question: What percentage of originations were follow-ons versus new borrowers? - Approximately 60-70% of originations were follow-ons for existing borrowers [50] Question: How is the pipeline looking after the second quarter? - Management expressed optimism about forward visibility on origination, despite the same economic outlook as previous years [52] Question: How sustainable is the dividend given the forward curve? - Management expressed confidence in earning the dividend based on the current SAFR curve, despite potential changes due to rate cuts [60][62] Question: What is the current state of credit in the cycle? - Management indicated a constructive setup for credit, with modest growth and stable inflation, but acknowledged uncertainty in the future [63] Question: How is the share repurchase program being managed? - Management explained that tactical elements and blackout periods influence share repurchase activity, but they remain focused on shareholder accretive activities [68][70] Question: Is August seeing increased deal activity? - Management noted that while the pipeline is higher, it is too early to declare August as one of the busiest months [72][75]

Financial Data and Key Metrics Changes - The company generated $0.39 per share of net investment income for the quarter on both a GAAP basis and after adjusting for asset acquisition accounting [6][12] - Total investment income for the second quarter was $67 million, significantly up from the prior quarter due to a higher investment portfolio balance [11] - Net asset value as of June 30 was $16.43 per share, down from $16.63 per share as of March 31 [6] Business Line Data and Key Metrics Changes - CGBD funded $376 million of investments into new and existing borrowers, the highest level since its IPO in 2017 [7] - Total investments at CGBD increased from $2.2 billion to $2.3 billion during the quarter after adjusting for $150 million of investments sold to a joint venture [7] Market Data and Key Metrics Changes - The company noted that spreads in the private credit space remain at historically tight levels, which may present a headwind to near-term earnings [9] - Less than 5% of the portfolio has material direct risk from tariffs, indicating a stable exposure to trade policy changes [8][9] Company Strategy and Development Direction - The company remains focused on overall credit performance and portfolio diversification while maintaining target leverage [9] - The management is optimistic about rebuilding the pipeline for a busier end of the year and remains focused on sourcing transactions with significant equity cushions and conservative leverage profiles [8][17] Management's Comments on Operating Environment and Future Outlook - Management expressed optimism about increased deal activity in the second half of the year, particularly in Q4 and into 2026 [23][45] - The company is confident in its ability to invest in quality companies despite current market uncertainties [25][26] Other Important Information - The Board of Directors declared a third-quarter dividend of $0.40 per share, representing an attractive yield of over 11% based on the recent share price [12] - The company has an estimated $0.89 per share of spillover income generated over the last five years, supporting its ability to maintain the quarterly dividend [12] Q&A Session Summary Question: What has driven the tighter spreads over the past year? - Management indicated that deal activity was not as robust in the first half as hoped, but they are optimistic about increased deal activity in the second half of the year [22] Question: Are there concerns about the US economic environment going forward? - Management noted that certainty in tariff policy would be positive for the markets, and they are happy with the companies they are investing in [25][26] Question: What about the unrealized losses recorded in the quarter? - The unrealized losses were primarily company-specific, with a mix of credit issues and market technical factors [28][29] Question: How does the company view potential share buybacks? - Management is considering share buybacks based on stock trading relative to NAV but remains focused on growth [30] Question: What is the timeline for fully deploying the current credit fund? - The goal is to fully utilize the current credit fund within the next two to three quarters [56] Question: Is there a change in the quality of opportunities entering the pipeline? - Management stated that there has not been a material change in the quality of the companies they are able to invest in [62]

Financial Data and Key Metrics Changes - The company reported net investment income (NII) of $16.6 million or $0.45 per share for Q1 2025, down from $20.5 million or $0.55 per share in Q4 2024, primarily due to lower base rates, the roll-off of one-time items, and reduced dividend income from the Logan JV [5][23][24] - The increase in loans on non-accrual rose to 3.5% of debt investments at cost and fair value, with four new names added, representing less than 1.2% of the total portfolio at fair value [6][12] Business Line Data and Key Metrics Changes - Gross deployment in Q1 totaled $105 million, with 98% in first lien investments, compared to approximately $78 million in exits, resulting in a net deployment of approximately $27 million [17] - The weighted average yield of income-producing securities at cost decreased by 50 basis points quarter over quarter to 10.4% [20] Market Data and Key Metrics Changes - The company noted a slowdown in M&A activity due to tariff announcements, leading to a backlog of deal activity [8] - The overall direct material exposure of the portfolio to tariffs is modest at 4%, with a focus on service businesses with low material costs [18] Company Strategy and Development Direction - The company continues to focus on first lien loans, which represent 91% of the portfolio at fair value, and aims to invest in non-cyclical industries [11] - The management emphasized a disciplined credit underwriting approach and capital preservation, particularly in light of market volatility [30] Management's Comments on Operating Environment and Future Outlook - Management expressed that the current earnings reflect a near-term baseline, with potential tailwinds from asset-based facility repricing and rightsizing completed at the beginning of the quarter [6][7] - The company remains optimistic about its ability to weather potential volatility due to its diversified portfolio and strong relationships with private equity sponsors [20] Other Important Information - The company declared a regular dividend of $0.42 per share for Q2 2025, along with a special dividend related to undistributed taxable income [12][29] - The stockholders' equity was reported at $727 million, resulting in a net asset value per share of $19.62 [26] Q&A Session Summary Question: Regarding the new accruals this quarter, specifically New Era of Technology - Management clarified that the mark reflects the latest view on earnings outlook and that the company has not yet restructured [34][36] Question: What is Crescent's approach to resolving non-accrual situations? - Management stated that the primary goal is to preserve capital, and they consider various options including restructuring or selling the company [42][44] Question: Can you explain the significant decline in the Logan dividend? - Management explained that the decline was due to timing mismatches in cash distributions and the impact of overcollateralization tests within the CLO structure [50][56] Question: What percentage of the portfolio consists of Crescent-led deals? - Management indicated that about 8% of the total fair value consists of acquired assets, while 92% are loans originated by Crescent [46] Question: What is the sentiment towards the overall market and outlook for spreads? - Management noted significant inflows into non-traded BDCs, which are putting pressure on spreads, but they remain selective in their investment approach [78][82]

Financial Data and Key Metrics Changes - The company reported net investment income (NII) of $16.6 million or $0.45 per share for Q1 2025, down from $20.5 million or $0.55 per share in Q4 2024, primarily due to lower base rates, the roll-off of one-time items, and reduced dividend income from the Logan JV [5][23][24] - The weighted average yield of income-producing securities at cost decreased by 50 basis points quarter over quarter to 10.4% [20] - GAAP earnings per share for Q1 2025 was $0.11, with stockholders' equity at $727 million, resulting in a net asset value (NAV) per share of $19.62 [26] Business Line Data and Key Metrics Changes - Gross deployment in Q1 totaled $105 million, with 98% in first lien investments, compared to approximately $78 million in exits, resulting in a net deployment of approximately $27 million [16][17] - The investment portfolio consists primarily of first lien loans, representing 91% of the portfolio at fair value, with a focus on non-cyclical industries [11] Market Data and Key Metrics Changes - The company noted a slowdown in M&A activity due to tariff announcements, leading to a wait-and-see approach from sponsors [7] - The overall direct material exposure of the portfolio to tariffs is modest at 4%, with most businesses serving domestic markets [18] Company Strategy and Development Direction - The company emphasizes a disciplined credit underwriting approach, capital preservation, and strong free cash flow generation to navigate market volatility [30] - The focus remains on high-quality assets and maintaining a stable NAV rather than chasing yield [82] Management's Comments on Operating Environment and Future Outlook - Management expressed cautious optimism about the market, noting that while there are attractive investment opportunities, the recent tariff announcements have created uncertainty [8][78] - The company anticipates potential near-term tailwinds from asset-based facility repricing and rightsizing completed at the beginning of the quarter [6] Other Important Information - The company declared a regular dividend of $0.42 per share for Q2 2025, along with a special dividend related to undistributed taxable income [12][29] - The weighted average loan-to-value across investments is 39%, indicating a conservative approach to leverage [11] Q&A Session Summary Question: Regarding the new accruals this quarter, does it reflect the restructuring recently announced for that company? - Management clarified that the company has not yet restructured and that the mark reflects the latest view on earnings outlook [34][37] Question: What is Crescent's overall approach to working toward a resolution for non-accruals? - The company prioritizes capital preservation and may consider various options, including restructuring or selling the company, depending on the situation [42][43] Question: How much of the portfolio consists of Crescent-led or originated deals? - Approximately 8% of the total fair value consists of acquired assets, while 92% are loans originated by Crescent [45] Question: Can you explain the significant sequential decline in the Logan dividend? - Management explained that the decline was due to timing mismatches in cash flows and the nature of the equity tranche, which can be volatile during the deleveraging period [48][54] Question: Were there any warning signs for the new non-accruals? - Management indicated that the non-accruals were previously on the watch list, and developments at the respective borrowers warranted the classification [59]

Financial Data and Key Metrics Changes - The investment portfolio grew by approximately $300 million or 21% from $1.5 billion to $1.8 billion [4] - Weighted average leverage in the investment portfolio decreased to 3.5 times, with non-accruals at fair value reduced from 2.3% to 1.7% [4][27] - Pre-tax net investment income was $28.5 million or $0.56 per share, with adjusted pre-tax net investment income at $31.3 million or $0.61 per share [26] - Total investment income increased to $52.4 million from $52 million in the prior quarter [26] - The company's NAV per share increased from $16.59 to $16.70 [30] Business Line Data and Key Metrics Changes - The credit portfolio ended the quarter at $1.6 billion, representing year-over-year growth of 19% from $1.3 billion [17] - 100% of new portfolio company debt originations were first lien senior secured [17] - The equity co-investment portfolio consisted of 79 investments with a total fair value of $179 million, representing 10% of the total portfolio [19] Market Data and Key Metrics Changes - The lower middle market remains competitive, with a significant number of private equity firms represented across the investment portfolio [20] - Approximately 93% of the credit portfolio is backed by private equity firms, which provide guidance and potential junior capital support [18] Company Strategy and Development Direction - The company aims to maintain dividend sustainability, strong credit performance, and continued access to capital from multiple sources [8] - The recent approval for a second FDIC license allows for an additional $175 million in debt capital to support the lower middle market platform [6] - The company plans to methodically and opportunistically raise secured and unsecured debt capital, as well as equity capital through its ATM program [32] Management's Comments on Operating Environment and Future Outlook - The geopolitical landscape has created uncertainty, impacting the lower middle market and potentially leading to slower M&A activity [11][12] - The company has identified 7% of the debt portfolio as moderate risk due to tariff exposure, but only 1% has significant exposure with a loan-to-value above 50% [13] - Management remains optimistic about the quality of deals being underwritten, focusing on service industries less affected by macroeconomic uncertainties [36] Other Important Information - The company raised over $300 million in new debt capital commitments during the year [5] - The regular dividend increased from $2.24 per share to $2.31 per share, with an additional $0.23 per share in supplemental dividends [7][8] - The company has a robust liquidity position with approximately $384 million in cash and undrawn leverage commitments [31] Q&A Session Summary Question: How attractive is the current vintage of investments in the lower middle market? - Management believes the current deals are of high quality, particularly in service industries, while cyclical deals are being delayed or pulled from the market [36] Question: What were the main drivers of the net realized loss and markdown in the credit portfolio? - The realized and unrealized losses were primarily driven by restructurings of two portfolio companies [39] Question: When will the company start injecting capital into the new SBIC subsidiary? - Capital injection is expected to begin in the next three months, with the first draws anticipated shortly thereafter [41] Question: What is the outlook for the PIK income trend? - PIK income has increased due to a few companies electing it, but it is expected to decrease as companies return to cash payments [52] Question: What does the current pipeline look like? - The pipeline includes 3 to 5 new platform companies with expected capital commitments of $75 to $100 million, along with around $50 million in add-on activity [56]

Financial Data and Key Metrics Changes - For the quarter ending March 31, 2025, the company reported net investment income before taxes of $700,000 or $0.05 per share, down from $0.06 per share in the prior quarter [4] - The net asset value per share increased by $0.02 to $5.42 compared to $5.39 as of September 30, 2024 [4] - The fair value of the portfolio was $192.4 million, an increase from $191.6 million on December 31 [14] - Net assets increased by $500,000 from the prior quarter to $78.1 million [14] - The weighted average yield of the debt portfolio increased to 10.8% from 10.4% in the previous quarter [14] Business Line Data and Key Metrics Changes - The company invested in one new portfolio company and two existing portfolio companies during the quarter, with total fundings for new investments amounting to $5.1 million [9] - The weighted average yield of debt investments made in the quarter was approximately 10.2% [9] - The five largest industry concentrations by fair market value were professional services (15.5%), containers and packaging (9.2%), trading companies and distributors (8.6%), commercial services and suppliers (8%), and IT services (7.9%) [12] Market Data and Key Metrics Changes - There was a noticeable slowdown in new deal activity, attributed to a decline in M&A volume and sponsor-less financing [6] - The company estimates that less than 20% of its portfolio may experience moderate direct effects from tariffs [7] Company Strategy and Development Direction - The company is focused on maintaining NAV stability and sustainable net investment income while selectively deploying capital in high-quality opportunities [18] - The management is optimistic about the second half of the year providing interesting investment opportunities due to current market volatility [18] Management's Comments on Operating Environment and Future Outlook - Management noted that the portfolio remains stable, with a significant reduction in non-accruals, now representing approximately 1.7% of the total portfolio at fair value [5] - There is cautious optimism that market fundamentals will improve, leading to a rebound in activity as macro uncertainty decreases [6] - Management indicated that they are currently in the process of raising another pool of capital, expected to benefit the company in the second half of 2025 [27] Other Important Information - The company declared a distribution of $0.12 per share payable in cash on June 14, 2025, to stockholders of record as of May 24, 2025 [16] - Gross leverage was 1.53x and net leverage was 1.37x as of March 31, compared to 1.57x and 1.42x in the previous quarter [17] Q&A Session Summary Question: How can the adviser scale or provide benefits to the BDC? - Management indicated that waiving fees is always a consideration and that they are working on scaling the private credit platform, which will help absorb overhead and expenses [21][23] Question: What is the timeline for capital raising? - Management confirmed that they are currently in the process of raising capital, which is expected to benefit shareholders in the second half of 2025 [27] Question: Why not consider share repurchases given the current stock price? - Management acknowledged that share repurchases are a tool they consider but have no immediate plans to implement [32] Question: Should there be an increase in net investment income in the second quarter? - Management suggested that there could be an increase in net investment income due to spread widening in new opportunities [34][35]

Financial Data and Key Metrics Changes - The company reported total portfolio investments of nearly $18 billion, total net assets of nearly $8 billion, and total outstanding debt of approximately $10 billion [17] - The first quarter NAV per share was $15.14, down $0.12 from the last quarter, primarily due to changes in credit spreads and write-downs on a small number of high-focus investments [17] - Adjusted net investment income was $0.39 per share, down $0.08 from the prior quarter, reflecting a reduction in one-time income [17][18] - The company declared a supplemental dividend of $0.01 and a second quarter base dividend of $0.37, indicating a 106% dividend coverage [18][19] Business Line Data and Key Metrics Changes - The company recorded $1.2 billion of new investment commitments and $800 million of fundings in the first quarter, with over 90% of direct loan originations consisting of first lien investments [9][10] - The median EBITDA of portfolio borrowers grew slightly to $120 million, and weighted average EBITDA increased to $215 million [10] - The non-accrual rate was 0.8% at fair value and 1.4% at cost, compared to 0.4% and 1.9% in the prior quarter, reflecting two additions and the removal of three positions [12] Market Data and Key Metrics Changes - The company noted that portfolio company revenues and EBITDA increased in the mid to high single digits year over year, approximately double the U.S. GDP growth rate [11] - The average loan-to-value (LTV) ratio was just over 40%, providing significant support underneath the capital [11] - The company highlighted a stable interest coverage ratio of 1.8 times based on current spot rates, benefiting from lower rates [13] Company Strategy and Development Direction - The company aims to capitalize on market volatility by providing support to borrowers and sponsors facing challenges in accessing financing [23][25] - The strategy remains focused on credit quality, with an emphasis on upper middle market companies and diversified portfolios [84] - The company is exploring opportunities to increase exposure to non-traditional lending strategies, aiming to grow this segment from low double digits to around 15% of the portfolio [66] Management's Comments on Operating Environment and Future Outlook - Management expressed confidence in the portfolio's resilience and the ability to maintain dividend levels despite macroeconomic uncertainties [26] - The company is closely monitoring investments for potential tariff impacts but remains confident in its defensive positioning [14] - Management acknowledged the uncertainty in the M&A environment due to tariffs and indicated that this may continue for a while [32] Other Important Information - The company introduced non-GAAP accounting adjustments due to the merger with OBDE, recognizing an $83 million purchase discount on the assets acquired [15] - The company ended the quarter with over $3 billion of total cash and capacity on its facilities, providing ample liquidity to meet near-term funding needs [21] Q&A Session Summary Question: Perspective on macroeconomic developments and M&A activity - Management noted that the M&A environment remains muted due to uncertainty created by tariffs, impacting deal flow and spreads [30][32] Question: Timeline for public listing of OTF post-merger - Management stated there is nothing specific to disclose regarding the public listing of OTF at this time [39][40] Question: Share repurchase strategy during volatility - Management confirmed that share repurchase programs are regularly evaluated, but recent volatility did not coincide with open windows for repurchases [46][48] Question: Opportunities to rationalize inherited liabilities - Management indicated that there are opportunities to reprice certain dropdown facilities and CLOs inherited from the merger [51][52] Question: Probability of near-term recession and its impact on underwriting - Management acknowledged the need for caution in underwriting due to potential economic changes but noted that their portfolio companies are currently stable [57][58] Question: Operational efficiencies from the merger - Management highlighted ongoing efforts to optimize capital structure and reduce funding costs, with some synergies already realized [72][75] Question: Pipeline mix of new versus incumbent borrowers - Management reported that more than half of the deal flow in the first quarter came from existing borrowers, with a consistent pipeline expected [92][93]

Financial Data and Key Metrics Changes - The net investment income (NII) for Q1 2025 was $189 million or $0.83 per share, representing a year-over-year increase of over 14% and the highest dollar amount since inception [25] - Total investment income for the quarter reached a record $354 million, up $54 million or 18% year-over-year, driven by increased interest income [25] - The net asset value (NAV) per share remained flat at $27.39 quarter over quarter, supported by $0.06 per share of excess earnings and $1.01 from share issuance at a premium to NAV [26][27] Business Line Data and Key Metrics Changes - BXSL ended the quarter with $12.8 billion of investments at fair value, a 20% increase from $10.4 billion year-over-year [14] - The weighted average yield on performing debt investments at fair value was 10.2%, down from 10.4% in the previous quarter [15] - 98% of BXSL investments are in first lien senior secured loans, with an average loan-to-value (LTV) of 47.4% [15][18] Market Data and Key Metrics Changes - The company issued $500 million of new debt at a coupon of 5.3%, the tightest spread compared to traded BDC peers in 2025 [12] - The total weighted average interest rate on drawn debt decreased to 5.01% in Q1, down from 5.17% in the previous quarter [28] - The repayment rate for the portfolio was 28% at fair value, significantly up from 6% in the prior quarter [28] Company Strategy and Development Direction - The company continues to focus on investing in sectors that are more resilient during periods of volatility, emphasizing first lien senior secured lending to larger companies [16][56] - The value creation program is actively helping portfolio companies manage tariff impacts and enhance revenue while lowering costs [22][63] - The management team remains cautious in deploying capital, preferring to maintain quality over taking on additional risk in uncertain economic conditions [56][78] Management's Comments on Operating Environment and Future Outlook - Management noted that uncertainty around tariffs has impacted investor sentiment, but the company believes it is in a fundamentally strong position [7] - The management team is optimistic about the potential for increased deal activity in the latter half of 2025, despite current market volatility [11][12] - The company is focused on maintaining a senior secured portfolio and has identified a small group of companies that may be impacted by tariffs [16][60] Other Important Information - The company reported a realization on an equity position, contributing positively to NAV, with a gain of over $7 million from a $2.9 million investment [20] - The company has a diverse liability profile, with 38% of drawn debt in unsecured bonds, contributing to a competitive overall cost of debt [28][30] Q&A Session Summary Question: Dividend coverage and spillover policy - Management acknowledged the potential impact of falling rates on earnings and discussed strategies to manage this, including maintaining low expenses and focusing on quality assets [34][36] Question: Refinance of a large deal - Management indicated that the deal was refinanced through securitization, limiting their ability to retain the asset, but they aim to hold onto good assets while allowing weaker ones to be repaid [42] Question: Leverage and capital deployment - Management confirmed that they had excess cash at the end of the quarter and are well-capitalized to take advantage of market opportunities as they arise [46][48] Question: Shift in investment strategy - Management emphasized a focus on higher quality assets during periods of volatility, avoiding riskier investments [56][78] Question: Impact of tariffs on portfolio companies - Management stated that 90% of the portfolio is in less impacted sectors, and they are actively monitoring potential tariff impacts on a small group of companies [58][60] Question: NAV decline and credit specifics - Management explained that the NAV remained flat, with unrealized losses primarily driven by repayments and one specific company, Medallia, being marked down due to competitive pricing [70][72]