Financial Data and Key Metrics Changes - For Q1 2025, the company generated net investment income of $0.67 per share and adjusted net investment income of $0.65 per share, compared to public guidance of approximately $0.66 and $0.64 per share respectively [11] - The company ended the quarter with approximately $3.2 billion of available liquidity [11] - The net asset value per share decreased from $23.64 at the end of Q4 2024 to $23.37 at the end of Q1 2025 [30] Business Line Data and Key Metrics Changes - The company originated approximately $2 billion of new investments during the first quarter, with 45% focused on add-on financings to existing portfolio companies [18] - New investments included approximately 63% in first lien loans, 19% in asset-based finance, and 15% in capital calls to the joint venture [19] - The weighted average yield on accruing debt investments decreased to 10.8% as of March 31, down from 11% at the end of Q4 2024 [28] Market Data and Key Metrics Changes - Approximately 8% of the portfolio could have direct exposure to tariff policies, while low to mid single-digit exposure to DOGE is estimated [15] - Non-accruals represented 3.5% of the portfolio on a cost basis and 2.1% on a fair value basis, showing slight improvement from 3.7% and 2.2% respectively at the end of Q4 2024 [21] Company Strategy and Development Direction - The company aims to maintain a stable income for investors by keeping a consistent distribution strategy, with a declared second quarter distribution of $0.70 per share [11] - The focus remains on upper middle market companies with EBITDA between $50 million and $150 million, which are believed to have more resilience during challenging periods [20] - The company is actively managing exposure to tariffs and has exited two portfolio companies deemed to have higher risks related to tariffs [16] Management's Comments on Operating Environment and Future Outlook - The management expressed concerns about the worsening economic outlook and increased volatility in debt and equity markets [8] - The expectation is that the macroeconomic environment will stabilize by early next year, providing clearer insights into interest rates and other economic drivers [10] - The management remains cautious about the potential for a recession but believes that the company is well-positioned to navigate the current uncertainties [49] Other Important Information - The company closed on its second middle market CLO, raising $380 million of low-cost secured debt [33] - The management team has amended the Morgan Stanley funding facility, reducing the spread and extending the maturity date [33] Q&A Session Summary Question: Timing of deployments and rate changes impact - Management noted that the origination number was satisfactory and that the decline in rates has mostly flowed through as of the end of Q1 [38][40] Question: Market share and competitive environment - Management indicated that they are gaining market share through diversified origination sources and strong sponsor relationships, although M&A activity has slowed [41][43] Question: Macro group insights on recession odds - The macro group sees a higher likelihood of a recession, albeit potentially muted, and is actively monitoring economic indicators [48] Question: Yield compression expectations - Management acknowledged the potential for additional yield compression as the portfolio churns, with new money yields expected to be lower than previous repayments [50][52] Question: Asset-based financing risks - Management highlighted that consumer-related risks in the asset-based finance portfolio are being monitored, with a focus on secured, high FICO score borrowers [62] Question: Interest coverage trends - Management explained that the lag effect in interest coverage metrics is due to the timing of rate changes and portfolio adjustments [84]

Financial Data and Key Metrics Changes - For Q1 2025, the company generated net investment income of $0.67 per share and adjusted net investment income of $0.65 per share, slightly above public guidance of $0.66 and $0.64 per share respectively [11] - The total investment income decreased by $7 million quarter over quarter to $400 million, primarily due to two fewer days in the first quarter compared to the fourth quarter and the paydown of higher yielding investments [29] - The net asset value per share decreased from $23.64 at the end of Q4 2024 to $23.37 at the end of Q1 2025 [31] Business Line Data and Key Metrics Changes - The company originated approximately $2 billion in new investments during Q1 2025, with 45% focused on add-on financings to existing portfolio companies [19] - New investments included approximately 63% in first lien loans, 1% in other senior secured debt, 19% in asset-based finance, 15% in capital calls to the joint venture, and 2% in equity and other investments [20] - Non-accruals represented 3.5% of the portfolio on a cost basis and 2.1% on a fair value basis, showing slight improvement from 3.7% and 2.2% respectively at the end of Q4 2024 [22] Market Data and Key Metrics Changes - Approximately 8% of the portfolio could have direct exposure to tariff policies, with low to mid single-digit exposure to DOGE [14] - The weighted average yield on accruing debt investments decreased to 10.8% as of March 31, down from 11% at the end of Q4 2024 [29] - The portfolio companies reported a weighted average year-over-year EBITDA growth rate of approximately 10% [21] Company Strategy and Development Direction - The company aims to maintain a stable income for investors by keeping a healthy balance of spillover income during periods of higher interest rates [8] - The focus remains on investing in high-quality companies with strong defensive positions, particularly in the upper middle market [21] - The company is actively managing exposure to tariffs and has exited two portfolio companies deemed to have higher risks related to tariffs [16] Management's Comments on Operating Environment and Future Outlook - Management noted that the economic outlook has worsened, with increased volatility in debt and equity markets and major geopolitical risks [7] - The expectation is that the macroeconomic environment will stabilize by early next year, providing clearer insights into interest rates and other economic drivers [9] - The company anticipates that the second quarter of 2025 GAAP net investment income will approximate $0.64 per share, with adjusted net investment income expected to be around $0.62 per share [32] Other Important Information - The company closed on its second middle market CLO, raising $380 million of low-cost secured debt [33] - As of March 31, 2025, the company had approximately $3.2 billion in available liquidity [34] Q&A Session Summary Question: Timing of deployments and rate changes impact - Management indicated that the origination number was satisfactory and that the declining rates have mostly flowed through as of the end of Q1 [38][39] Question: Pipeline activity and market share - Management noted that while the M&A market has slowed, they continue to benefit from a large existing book and diversified origination sources [41][42] Question: Macro group insights on recession odds - Management acknowledged that the chances of a recession are more likely than not, but it could be muted [46][48] Question: Yield compression expectations - Management confirmed that additional yield compression is expected as the portfolio churns, with new money yields lower than previous repayments [49][51] Question: Preferred leverage ranges - Management stated that the target leverage range remains unchanged, with a focus on diversified funding sources [60] Question: Asset-based financing risks - Management highlighted that consumer risk in the asset-based finance portfolio is small, with a focus on secured, higher FICO score risks [62] Question: Continued strength in ABF group - Management indicated that while ABF dividends may vary, there is continued strength in the joint venture's dividends [70] Question: Trends in portfolio leverage and interest coverage - Management explained that the divergence in trends is likely due to a lag effect in interest coverage calculations [82][84] Question: Deal activity in different market segments - Management suggested that larger company activity may be more muted due to reliance on a more active M&A market [87]

Financial Performance - Net Investment Income (NII) was $187 million, or $0.67 per share, for the quarter ended March 31, 2025, compared to $171 million, or $0.61 per share, for the previous quarter[2] - Adjusted Net Investment Income (Adjusted NII) was $182 million, or $0.65 per share, for the quarter ended March 31, 2025, compared to $185 million, or $0.66 per share, for the previous quarter[2] - Net Asset Value (NAV) per share as of March 31, 2025, was $23.37, compared to $23.64 as of December 31, 2024[2] - The Adjusted NII / total dividend coverage ratio was 93% for the quarter ended March 31, 2025[2] Investment Activity - New investment fundings in the first quarter were approximately $2 billion[2] - Net investment activity in the first quarter was $881 million, including $290 million of sales to Credit Opportunities Partners JV, LLC (COPJV)[2] Capital Structure and Liquidity - $3.2 billion of liquidity in undrawn debt, cash, and unsettled trades[2] - 54% of drawn leverage was unsecured as of March 31, 2025, and the weighted average effective rate on borrowings was 5.5%[2] - In the first quarter, KKR FSK CLO 2 was closed, issuing $380 million of notes to third parties at a weighted average rate of S+1.58%[2] - 89% of liabilities mature in 2027 and beyond[2] Portfolio Composition - The fair value of investments was $14.1 billion with 224 portfolio companies[9] - Senior secured investments total 72.6% of the portfolio, looking through to the investments in COPJV as of March 31, 2025[14]