8-K: Carlyle Secured Lending Reports Record Originations, Strategic JV

Carlyle Secured Lending, Inc. announced strong Q4 and full year 2025 financial results, including record origination volume and a new structured credit joint venture.

Summary

• Carlyle Secured Lending, Inc. (CGBD) reported Net Investment Income (NII) of $0.33 per common share and Adjusted Net Investment Income of $0.36 per common share for Q4 2025.
• For the full year 2025, NII was $1.48 per common share and Adjusted NII was $1.51 per common share.
• Net asset value (NAV) per common share decreased slightly by 0.6% to $16.26 as of December 31, 2025, from $16.36 as of September 30, 2025.
• The total fair value of investments increased to $2.5 billion as of December 31, 2025.
• CGBD achieved record origination volume of $404.7 million in Q4 2025, with a weighted average yield of 8.8%.
• A quarterly common dividend of $0.40 per share was declared for Q1 2026, payable on April 16, 2026, to stockholders of record on March 31, 2026.
• The Board of Directors approved an additional $100.0 million for the stock repurchase program, increasing its total size to $300.0 million.
• CGBD repurchased $13.9 million of shares in Q4 2025, resulting in $0.06 per share of NAV accretion.
• A new Structured Credit Partners JV, LLC (SCP) was formed with an affiliated BDC and two BDCs managed by Sixth Street Partners LLC, initially capitalized with $600 million of equity commitments, including $150 million from CGBD.
• The company enhanced its liability structure by issuing $300.0 million 5.75% unsecured 2031 Notes and redeeming $85.0 million 8.20% unsecured 2028 Notes, decreasing the weighted average cost of debt by 10 basis points and extending maturities.
• Non-accrual investments remained relatively flat at 1.2% of total investments at fair value and 1.8% at amortized cost as of December 31, 2025.

Sentiment

Score: 8

Explanation: StockSavvy.ai views this as a strong report, driven by record originations, strategic expansion into a fee-advantaged structured credit JV, and proactive liability management. The stable NAV performance relative to peers and robust dividend coverage are also significant positives, despite a slight increase in leverage.

Positives

• Record origination volume of $404.7 million in Q4 2025 demonstrates strong market activity and CGBD's ability to deploy capital.
• The newly announced Structured Credit Partners JV (SCP) is expected to be accretive to return on equity due to a fee-free structure at both the JV and underlying CLOs, potentially generating 400-500 basis points of incremental CLO return.
• Enhancements to the liability structure, including the issuance of new notes and redemption of higher-cost debt, decreased the weighted average cost of debt by 10 basis points and extended the maturity profile with limited maturities before 2030.
• The upsize of the stock repurchase program by an additional $100.0 million to $300.0 million signals confidence in the company's valuation and provides a mechanism for NAV accretion.
• Share repurchases in Q4 2025 at an average discount of 22.6% to NAV resulted in $0.06 per share of NAV accretion.
• The Q1 2026 dividend of $0.40 per share is supported by an estimated $0.74 per share in spillover income, indicating strong dividend coverage.
• The Credit Fund continues to grow, with its portfolio increasing to $958 million, and provides an annualized yield of 15.3% to CGBD.
• CGBD's NAV per share has remained relatively flat since 2019, while BDC peers experienced an average decline of 9.7%, highlighting strong NAV preservation.

Negatives

• Net asset value (NAV) per common share decreased by 0.6% in Q4 2025 to $16.26 from $16.36.
• Statutory Debt to Equity increased to 1.32x in Q4 2025 from 1.10x in Q3 2025, indicating higher leverage.
• Net realized and change in unrealized losses for Q4 2025 were $6.643 million, contributing to the decrease in net assets.
• Non-accrual investments, while relatively flat, still represent 1.2% of total investments at fair value and 1.8% at amortized cost, indicating some underperforming assets.
• Risk Rating 4 investments (operating materially below expectations) increased from 0.4% to 0.9% of fair value, suggesting a slight deterioration in a portion of the portfolio's credit quality.

Risks

• The company's core strategy remains focused on stable, high-quality credits in the middle market, but volatility in the market environment could impact portfolio performance.
• Non-accrual investments, though relatively flat, could increase if economic conditions deteriorate, impacting interest income.
• The increase in Statutory Debt to Equity to 1.32x could expose the company to higher financial risk if market conditions become unfavorable or interest rates rise significantly.
• Forward-looking statements, including expectations for the SCP JV's accretion to return on equity and the ability to take share in an active market, involve substantial risks and uncertainties and may not be realized.
• The company's reliance on the 'OneCarlyle platform' and strategic partnerships means its performance is tied to the broader Carlyle Group's capabilities and market standing.

Future Outlook

Carlyle Secured Lending aims to continue expanding its origination capabilities and leveraging the 'OneCarlyle platform' to gain market share in an active market environment. The company is confident in the strength and credit quality of its existing portfolio, even if volatility persists. The newly formed Structured Credit Partners JV is expected to enhance return on equity and expand investment opportunities, contributing to the acceleration of the Carlyle Direct Lending business's growth and impact. The core strategy remains focused on stable, high-quality credits in the middle market, complemented by strategic partnerships.

Management Comments

• "As CGBD's newly appointed CEO, I look forward to continuing to build on Carlyle's strong track record and world-class platform."
• "Building off record origination volume in the fourth quarter and full year 2025, we continue to expand our origination apparatus and are focused on further harnessing the full power of the OneCarlyle platform."
• "The depth of our underwriting sector expertise positions us to take share in a more active market environment, and we are confident in the strength and credit quality of our existing portfolio should volatility persist."
• "As we accelerate the growth and impact of the Carlyle Direct Lending business, CGBD's core strategy remains focused on stable, high-quality credits in the middle market, complimented by strategic partnerships that enhance return on equity, exemplified by our newly announced structured credit joint venture."

Industry Context

StockSavvy.ai notes that Carlyle Secured Lending's strong origination volume and strategic expansion into structured credit through the SCP joint venture reflect a broader trend among direct lenders seeking to diversify revenue streams and optimize capital deployment. The focus on middle-market lending remains core, but the move into broadly syndicated loans via CLO debt, especially with a fee-free structure, positions CGBD to capture additional yield in a competitive credit market. The emphasis on 'OneCarlyle platform' highlights the increasing integration of large alternative asset managers' various credit strategies to create synergistic advantages.

Comparison to Industry Standards

• CGBD's NAV per share has remained relatively flat since 2019, while BDC peers (externally managed, publicly traded BDCs with market capitalizations over $750 million with pre-COVID IPO dates and excluding BDCs with reverse stock splits during the period) experienced an average decline of 9.7% over the same period, indicating superior NAV preservation.
• The Structured Credit Partners JV (SCP) is expected to generate 400-500 basis points of incremental CLO return compared to typical market CLOs, primarily due to the absence of management or incentive fees at the JV or underlying CLOs. This advantaged structure provides a significant competitive edge over standard CLO investments.
• The Credit Fund's annualized dividend yield of 15.3% to CGBD is a strong return, potentially outperforming many direct lending or credit fund investments in the current market.

Management Changes

Related Party Transactions

• Carlyle Secured Lending, Inc. is managed by Carlyle Global Credit Investment Management L.L.C., a wholly owned subsidiary of The Carlyle Group Inc.
• The new Structured Credit Partners JV, LLC (SCP) was formed with Carlyle Credit Solutions, Inc., an affiliated BDC, and two BDCs managed by Sixth Street Partners LLC.
• The Credit Fund's portfolio growth was driven by purchases from CGBD and direct originations, with no management fees or incentive fees charged to the vehicle.

Stakeholder Impact

• Shareholders benefit from a consistent quarterly dividend of $0.40 per share, supported by spillover income, and potential NAV accretion from the share repurchase program.
• Shareholders could see enhanced returns on equity from the new Structured Credit Partners JV due to its fee-free structure.
• Creditors benefit from the company's proactive management of its liability structure, including extending maturities and reducing the weighted average cost of debt.
• Employees of Carlyle Global Credit Investment Management L.L.C. continue to manage CGBD's portfolio, with potential for growth in the direct lending and structured credit businesses.

Next Steps

• Host a conference call on Wednesday, February 25, 2026, at 11:00 a.m. (Eastern Time) to discuss financial results.
• Continue to expand origination apparatus and harness the 'OneCarlyle platform' for growth.
• SCP will invest in broadly syndicated first lien senior secured loans, financed with long-term, non-mark-to-market, and predominantly investment grade rated CLO debt.
• Continue to execute on the upsized $300.0 million stock repurchase program.
• The Q1 2026 dividend of $0.40 per share is payable on April 16, 2026, to stockholders of record as of March 31, 2026.

Key Dates

Recommendation

The filing presents a strong case for a 'buy' recommendation. Carlyle Secured Lending demonstrated robust operational performance with record originations and strategic initiatives like the Structured Credit Partners JV, which is designed to be accretive to return on equity. Proactive liability management, including debt refinancing and maturity extensions, strengthens the balance sheet. The company's consistent dividend, well-supported by spillover income, combined with an active share repurchase program at a discount to NAV, signals a commitment to shareholder returns. Furthermore, CGBD's superior NAV preservation compared to BDC peers highlights its resilient portfolio management. While leverage increased slightly, the overall strategic direction and financial health suggest continued positive performance.

Keywords

Carlyle Secured Lending, CGBD, Business Development Company, BDC, Financial Results, Q4 2025, Full Year 2025, Net Investment Income, NAV, Dividends, Origination Volume, Structured Credit JV, CLO, Share Repurchase Program, Middle Market Lending, Direct Lending, Corporate Debt, Credit Fund, Liability Management