8-K: Carlyle Secured Lending Reports Record Originations

Carlyle Secured Lending, Inc. announced strong second quarter 2025 financial results, featuring record originations and a maintained quarterly dividend, despite a slight dip in Net Asset Value.

Summary

• Reported Net Investment Income and Adjusted Net Investment Income of $0.39 per common share for Q2 2025.
• Net asset value per common share decreased by 1.2% to $16.43 as of June 30, 2025, from $16.63 as of March 31, 2025.
• Total fair value of investments increased to $2.3 billion as of June 30, 2025.
• Declared a third quarter 2025 common dividend of $0.40 per share, payable on October 17, 2025, to stockholders of record on September 30, 2025.
• Achieved record originations for both CGBD and the broader Carlyle Direct Lending platform, with $375.7 million of fundings at CGBD at a weighted average yield of 10.0%.
• Total repayments and sales during the quarter were $138.0 million with a weighted average yield of 10.9%.
• Net investment activity for the quarter was $237.7 million.
• Statutory leverage was 1.10x as of June 30, 2025, compared to 1.04x as of March 31, 2025.
• Total liquidity as of June 30, 2025, was $613.1 million in cash and undrawn debt capacity.
• Non-accrual investments represented 3.0% (amortized cost) and 2.1% (fair value) of the total portfolio as of June 30, 2025.
• Including the successful restructuring of Maverick on July 3, 2025, non-accrual investments decreased to 1.3% (amortized cost) and 1.0% (fair value).

Sentiment

Score: 7

Explanation: The sentiment is moderately positive. While NAV per share saw a slight decline, this was overshadowed by record originations, strong liquidity, a maintained dividend, and a significant improvement in non-accrual rates post-restructuring. The company's performance relative to BDC peers also indicates strength.

Positives

• Achieved another record quarter of originations for both CGBD and the broader Carlyle Direct Lending platform, with $375.7 million in fundings.
• Maintained the quarterly common dividend at $0.40 per share, supported by an estimated $0.89 per share in spillover income.
• Net financial leverage is at the mid-point of the target range, positioning the company well for future deal volume.
• Total fair value of investments increased to $2.3 billion.
• Successfully restructured Maverick on July 3, 2025, significantly reducing non-accrual investments to 1.3% of amortized cost and 1.0% of fair value.
• Upsized total commitments at the senior secured Credit Facility by $25.0 million, bringing total commitments to $960.0 million.
• CGBD's NAV per share has increased by 0.4% over the past 5 years (Q4'19 to Q1'25), while BDC peers experienced an average decline of 7.4%.

Negatives

• Net asset value per common share decreased by 1.2% to $16.43 from $16.63 quarter-over-quarter.
• Non-accrual investments increased to 3.0% of amortized cost and 2.1% of fair value as of June 30, 2025, before the Maverick restructuring.

Risks

• Market uncertainty.
• Spreads in the overall market remain historically tight.
• Potential for loans to operate below expectations, as indicated by risk ratings 3, 4, and 5, which represent increased risk to initial cost basis or anticipated losses.

Future Outlook

The company remains well positioned to benefit from an expected pickup in deal volume in the second half of the year. The estimated spillover income of $0.89 per share is available to continue supporting the quarterly dividend.

Management Comments

• Justin Plouffe, CGBD's Chief Executive Officer, stated, "Despite market uncertainty, the second quarter was another record quarter of originations for both CGBD and the broader Carlyle Direct Lending platform."
• Justin Plouffe also noted, "With CGBD net financial leverage at the mid-point of our target range, we remain well positioned to benefit from the expected pickup in deal volume in the second half of the year."
• Justin Plouffe further commented, "Although spreads in the overall market remain historically tight, we continue to be dynamic in our origination strategies and disciplined in our underwriting approach, providing consistent credit performance and core middle market exposure."

Industry Context

The company operates in the direct lending to middle-market companies sector. Management acknowledges market uncertainty and historically tight spreads, indicating a challenging but active environment. The focus on disciplined underwriting and dynamic origination strategies reflects adaptation to current market conditions.

Comparison to Industry Standards

• CGBD's Net Asset Value (NAV) per share has increased by 0.4% over the past 5 years (Q4 2019 to Q1 2025), demonstrating resilience and growth.
• In contrast, a peer group of 15 externally managed, publicly traded Business Development Companies (BDCs) with market capitalizations over $750 million and pre-COVID IPO dates experienced an average NAV decline of 7.4% over the same period, highlighting CGBD's outperformance.

Stakeholder Impact

• Shareholders: Will receive a consistent quarterly dividend of $0.40 per share, supported by spillover income. The slight decrease in NAV per share may impact shareholder equity, but the long-term NAV performance compared to peers is favorable.
• Creditors: The upsizing of the credit facility and maintenance of leverage within the target range indicate stable financial management and continued access to capital.

Next Steps

• The company will host a conference call on Wednesday, August 6, 2025, at 11:00 a.m. (Eastern Time) to discuss these quarterly financial results.

Key Dates

Recommendation

While the company demonstrated strong operational performance with record originations and effective management of non-accrual assets, the slight quarter-over-quarter decline in NAV per share and the acknowledgment of tight market spreads suggest a 'hold' position. The consistent dividend and outperformance relative to peers are positive, but the overall market uncertainty warrants a cautious approach rather than a 'buy' or 'strong buy' at this time. Investors should monitor future deal volume and spread trends.

Keywords

Carlyle Secured Lending, CGBD, SEC filing, financial results, Q2 2025, earnings, dividend, Net Asset Value, originations, direct lending, middle market, non-accrual loans, leverage, credit facility, investment income