10-K: CION Investment Corp. 2025 Annual Report Highlights Debt Offerings, Portfolio Shifts

Sentiment:

Annual Report 11 March 2026 8:50 PM

CION Investment Corporation's 2025 annual report details a decrease in net assets from operations, significant realized and unrealized losses, and recent debt issuances, alongside a shift to monthly base distributions.

Capital raiseIssued and sold $135.000 million in aggregate principal amount of 7.50% Notes due March 2031 on February 9, 2026, including $10.000 million from underwriters' overallotment option.The 2031 Notes will mature on March 31, 2031, bear an interest rate of 7.50% per year, payable quarterly in arrears, commencing March 30, 2026.The 2031 Notes are direct unsecured obligations, ranking pari passu with existing and future unsecured, unsubordinated indebtedness, senior to preferred stock, and effectively subordinated to secured indebtedness.The 2031 Notes may be redeemed at the company's option on or after March 31, 2028, at a redemption price of $25 per note plus accrued interest.

Worse than expectedNet assets resulting from operations decreased by $20.631 million in 2025, a significant negative shift from increases in previous years ($33.902 million in 2024 and $95.314 million in 2023).Net realized losses on investments increased to $39.569 million in 2025 from $28.313 million in 2024.Net change in unrealized depreciation on investments significantly increased to $74.102 million in 2025 from $33.645 million in 2024, indicating a decline in portfolio values.Total investment income decreased in 2025, primarily due to lower SOFR rates, impacting overall revenue generation.Gross annual portfolio yield decreased from 10.96% in 2024 to 9.15% in 2025.

Summary

Net assets resulting from operations decreased by $20.631 million in 2025, a significant decline from an increase of $33.902 million in 2024 and $95.314 million in 2023.
Net realized losses on investments totaled $39.569 million in 2025, up from $28.313 million in 2024.
Net change in unrealized depreciation on investments increased to $74.102 million in 2025, compared to $33.645 million in 2024.
Total investment income decreased to $240.821 million in 2025 from $252.432 million in 2024, primarily due to lower SOFR rates.
Operating expenses and income taxes decreased to $147.781 million in 2025 from $156.572 million in 2024, mainly due to lower interest expense.
The company issued and sold $135.000 million in aggregate principal amount of 7.50% Notes due March 2031, which began trading on the NYSE under the ticker symbol CICC on February 12, 2026.
Base distributions to shareholders shifted from quarterly to monthly, commencing in January 2026, with $0.10 per share declared for January, February, and March 2026, and subsequently for April, May, and June 2026.
The company's investment portfolio, at fair value, was $1.812.990 billion as of December 31, 2025, down from $1.888.688 billion as of December 31, 2024.
Senior secured first lien debt constituted 80.8% of the investment portfolio at fair value as of December 31, 2025.
The asset coverage ratio was 162% as of December 31, 2025, compared to 173% as of December 31, 2024, remaining above the 150% minimum requirement.
The company repurchased 1,771,403 shares of common stock for an aggregate price of $17.190 million in 2025, at an average price of $9.70 per share.
Unfunded commitments amounted to $47.779 million as of December 31, 2025, and $49.174 million as of March 4, 2026.

Sentiment

Score: 4

Explanation: StockSavvy.ai views this filing with a slightly negative sentiment due to the significant decline in net assets from operations and increased realized and unrealized losses in 2025, despite successful debt issuances and a healthy asset coverage ratio.

Positives

Successfully issued $135.000 million in 7.50% Notes due 2031, demonstrating continued access to debt capital markets.
Increased share repurchase authorization by $20 million to an aggregate of $80 million, indicating confidence in intrinsic value and a commitment to shareholder returns.
Maintained compliance with all covenants and reporting requirements for its JPM Credit Facility, UBS Credit Facility, and various unsecured notes.
The asset coverage ratio of 162% as of December 31, 2025, remains above the regulatory minimum of 150%, providing financial flexibility.
Shifted to monthly base distributions, declared quarterly in advance, which may appeal to income-focused investors.

Negatives

Net decrease in net assets resulting from operations of $20.631 million in 2025, a significant reversal from increases in prior years.
Experienced substantial net realized losses of $39.569 million and net unrealized depreciation of $74.102 million on investments in 2025.
Total investment income decreased in 2025, primarily due to lower SOFR rates, impacting revenue generation.
The market price of common stock traded at a significant discount to NAV, with a 41.1% discount on March 4, 2026, indicating negative market sentiment.
Gross annual portfolio yield decreased to 9.15% in 2025 from 10.96% in 2024.

Risks

Dependence on CIM's senior management team, with potential harm to investment objectives if key members depart.
Increasing competition for investment opportunities, potentially delaying capital deployment, reducing returns, and leading to losses.
Uncertainty in the fair value of portfolio investments, as a significant portion is recorded at fair value determined in good faith by CIM, subject to board oversight.
Risk that common stock investors may not receive distributions or that distributions may not grow over time, with potential for distributions to be a return of capital.
Exposure to changes in interest rates, including the current high interest rate environment, which can increase borrowing costs and reduce net investment income.
Inflationary pressures adversely affecting portfolio companies' business, results of operations, and financial condition.
Second priority liens on collateral securing debt investments may be controlled by senior creditors, potentially leading to insufficient collateral to repay both first and second priority creditors upon default.
Economic recessions or downturns could impair portfolio companies and adversely affect operating results, increasing non-performing assets.
Covenant breaches or other defaults by portfolio companies could adversely affect operating results and jeopardize their ability to meet obligations.
Investments in middle-market companies involve significant risks due to limited financial resources, shorter operating histories, and dependence on small management teams.
Lack of liquidity in certain investments may make it difficult to sell them promptly or at a desired price, potentially leading to losses.
Inability to make additional investments in portfolio companies or fund unfunded debt commitments could negatively impact portfolio companies and reduce expected returns.
Prepayments of debt investments by portfolio companies could adversely impact results of operations and reduce return on equity due to reinvestment at lower yields.
The effect of global climate change may impact operations and portfolio companies, leading to increased costs or decreased revenues.
Leverage magnifies potential for loss on investments and may increase the risk of investing, adversely affecting return on assets and cash available for distribution.
Unsecured debt (e.g., 2031 Notes) is effectively subordinated to secured indebtedness, increasing risk for holders in liquidation.
Failure to qualify as a Regulated Investment Company (RIC) or satisfy distribution requirements would result in corporate-level income tax.
Market price of common stock may fluctuate significantly and trade at a discount from Net Asset Value (NAV).
Cybersecurity failures and data security incidents could disrupt operations, compromise confidential information, and damage business relationships or reputation.
Technological developments in artificial intelligence could disrupt markets, increase competition, and introduce new legal, regulatory, and compliance costs.

Future Outlook

The company anticipates that a portion of its income may constitute original issue discount or other income required to be included in taxable income prior to receipt of cash, potentially creating challenges in meeting annual distribution requirements for RIC tax treatment. It expects to monitor transactions and make tax elections to mitigate adverse effects. The company's future success is highly dependent on the general economy and its impact on the industries in which it invests, including tariffs, trade disputes, inflation, high interest rates, and the risk of recession. The company also acknowledges the potential impact of rapid technological advances, including artificial intelligence, and the risks of information technology system failures, data security breaches, and cybersecurity attacks.

Management Comments

Our management declared and our board of directors ratified distributions for 4 record dates during the year ended December 31, 2025.
On January 6, 2026, our co-chief executive officers declared base distributions of $0.10 per share for each of January, February, and March 2026.
On March 9, 2026, our co-chief executive officers declared base distributions of $0.10 per share for each of April, May, and June 2026.

Industry Context

StockSavvy.ai notes that the company operates within the U.S. middle-market lending sector, which is characterized by significant demand for debt capital due to bank consolidation reducing focus on this segment. The fragmented nature of the middle market creates barriers to entry for new direct lending platforms, potentially insulating existing players like CION Investment Corporation from rapid shifts in capital supply. The continued active role of private equity firms, with approximately $1.3 trillion raised since 2015, is expected to drive demand for senior debt capital, creating substantial investment opportunities. The company's focus on senior secured first lien debt in this attractive market segment aims to capitalize on favorable transaction pricing and security features.

Comparison to Industry Standards

Compared to below-investment grade corporate bonds typically available to the public, the company's targeted first lien secured and second lien secured loan investments are positioned higher in the capital structure, have priority in payment, are secured by issuer assets, allow collateral seizure, and generally exhibit higher rates of recovery in default.
Middle-market companies, where the company primarily invests, are noted to offer attractive economics in terms of transaction pricing (including higher debt yields), upfront and ongoing fees, prepayment penalties, and more attractive security features like stricter covenants and quality collateral, compared to larger companies.

Corporate Governance

Change Type	Description	Effective Date	Impact Assessment
Board Composition	The Board of Directors is comprised of eight directors, six of whom are independent, divided into three classes serving staggered three-year terms.	Ongoing	Ensures continuity and stability of management and policies, with a majority of independent directors overseeing operations and risk.
Committee Structure	Established standing audit, nominating and corporate governance, and compensation committees, all composed of independent directors.	Ongoing	Provides specialized oversight functions for financial reporting, director nominations, and compensation, enhancing governance effectiveness.
Lead Independent Director Policy	Does not have a separately designated lead independent director; chairmen of the audit and nominating committees preside over executive sessions on a rotational basis.	Ongoing	Maintains independent oversight of the board without a single designated lead independent director, allowing for shared leadership among key independent committee chairs.
Code of Business Conduct	Adopted a code of business conduct prohibiting conflicts of interest for officers, directors, and employees, with waivers publicly disclosed.	Ongoing	Promotes ethical conduct and transparency, mitigating risks associated with conflicts of interest.
Insider Trading Policy	Adopted a statement of policy on insider trading applicable to officers, directors, CIM, and affiliated funds, prohibiting personal trading with material nonpublic information and restricting hedging/monetization transactions without approval.	Ongoing	Designed to promote compliance with insider trading laws and protect against misuse of confidential information, enhancing market integrity.

Legal Proceedings

Not currently subject to any material legal proceedings, nor is any material legal proceeding threatened against the company.

Related Party Transactions

CION Investment Management, LLC (CIM) serves as the investment adviser, receiving base management fees ($26.076 million in 2025) and incentive fees ($19.736 million in 2025).
CIM also provides administrative services, for which the company reimbursed $5.180 million in 2025.
Mark Gatto and Michael A. Reisner, Co-Chairmen and Co-Chief Executive Officers, also serve as Co-Chief Executive Officers of CIM and indirectly own approximately 38% of CION Investment Group, LLC's (CIG) ownership of CIM.
Apollo Investment Management, L.P. (AIM), a subsidiary of Apollo Global Management, Inc., is a member of CIM and performs certain services for CIM, sharing in CIM's profits, losses, distributions, and expenses.
CION/EagleTree Partners, LLC is an off-balance sheet joint venture partnership with ET-BC Debt Opportunities, LP (an affiliate of EagleTree Capital, LP), in which the company holds senior secured notes and equity interests.

Stakeholder Impact

Shareholders: Impacted by decreased net assets from operations, realized and unrealized losses, and the market price trading at a discount to NAV. However, the increased share repurchase authorization and shift to monthly distributions could be positive for some.
Creditors: The issuance of new unsecured notes and maintenance of asset coverage ratios demonstrate continued ability to manage debt obligations, but the effective subordination of unsecured debt to secured debt presents a risk.
Portfolio Companies: Affected by the company's investment strategy, which focuses on middle-market companies, and the potential for additional funding through unfunded commitments. Economic downturns and high interest rates pose risks to their ability to repay loans.
Management (CIM): Compensation is tied to gross assets and performance, creating potential conflicts of interest, but also incentives to identify and manage investments effectively.
Employees: The company has no direct employees; services are provided by CIM personnel, whose compensation is reimbursed by the company.

Next Steps

Continue monthly base distributions of $0.10 per share for January, February, and March 2026, and for April, May, and June 2026.
Monitor the performance of the newly issued 7.50% Notes due 2031, which commenced trading on the NYSE on February 12, 2026.
CION/EagleTree's senior secured notes maturity date extended to December 21, 2027.

Key Dates

Date	Description
2011-08-09	Company incorporated under Maryland General Corporation Law.
2012-07-02	Company's initial continuous public offering commenced.
2012-12-17	Company met minimum offering requirement and commenced operations.
2015-12-31	End of initial continuous public offering.
2016-01-25	Company's follow-on continuous public offering commenced.
2016-08-26	34th Street entered into JPM Credit Facility with JPMorgan Chase Bank, National Association.
2017-05-19	Company, through subsidiaries, entered into financing arrangement (UBS Repurchase Facility) with UBS.
2017-07-11	Members of CIM entered into Third Amended CIM LLC Agreement, creating a joint venture between AIM and CIG; AIM became a member of CIM.
2017-09-28	Board of directors delegated to management the authority to determine distribution terms.
2017-12-01	Murray Hill Funding II amended and restated UBS Indenture, increasing principal amount of Notes.
2017-12-04	Members of CIM entered into Fourth Amended CIM LLC Agreement, detailing services performed by AIM for CIM.
2018-03-23	Small Business Credit Availability Act of 2018 signed into law, permitting BDCs to reduce minimum asset coverage ratio to 150%.
2019-01-01	Company entered into servicing agreement with Apollo Investment Administration, L.P. (AIA).
2019-01-25	Company closed the public offering of its shares.
2020-12-17	Murray Hill Funding entered into Revolving Credit Note Agreement with Murray Hill Funding II, UBS, and U.S. Bank.
2021-02-11	Company entered into Note Purchase Agreement for $125.000 million 4.50% senior unsecured notes due 2026 (2026 Notes).
2021-04-14	Company entered into Unsecured Term Loan Facility Agreement (2021 Term Loan) for $30.000 million with an Israeli institutional investor.
2021-08-10	Amended and restated investment advisory agreement became effective, changing calculation of subordinated incentive fee.
2021-09-15	Company changed timing of declaring and paying base distributions from monthly to quarterly; adopted new distribution reinvestment plan (DRP); board approved share repurchase policy for up to $50 million.
2021-10-05	Company's common stock commenced trading on the NYSE under ticker symbol CION; second amended and restated investment advisory agreement became effective.
2021-12-21	Company formed CION/EagleTree Partners, LLC, an off-balance sheet joint venture.
2021-12-30	Shareholders approved proposal to reduce asset coverage ratio to 150%.
2021-12-31	Reduced asset coverage ratio of 150% became effective.
2022-04-27	Company entered into Unsecured Term Loan Facility Agreement (2022 Term Loan) for $50.000 million with an Israeli institutional investor.
2022-06-24	Board increased share repurchase policy by $10 million to $60 million.
2022-08-30	Company, CIM, and affiliates granted exemptive relief order by the SEC for co-investment.
2023-02-28	Company issued $80.712 million Series A Unsecured Notes due 2026, which listed and commenced trading on the TASE.
2023-10-10	Company issued $34.132 million Additional Series A Unsecured Notes due 2026 to institutional investors in Israel.
2023-11-08	Company entered into Note Purchase Agreement for $100.000 million Tranche A Floating Rate 2027 Notes.
2024-08-27	Shareholders approved ability to issue common stock below NAV for 12 months (expired August 27, 2025).
2024-09-24	Company fully repaid all outstanding principal and interest on the 2021 Term Loan.
2024-09-30	Company entered into Unsecured Term Loan Facility Agreement (2024 Term Loan) for $30.000 million with an Israeli institutional investor.
2024-10-03	Company issued and sold $172.500 million in aggregate principal amount of 7.50% Notes due 2029.
2024-10-09	7.50% Notes due 2029 commenced trading on the NYSE under ticker symbol CICB.
2024-12-29	Company fully repaid all outstanding principal and interest on the 2026 Notes.
2025-02-13	Murray Hill Funding II entered into a Termination Agreement with UBS, terminating the Amended UBS Repurchase Facility, and simultaneously entered into the UBS Credit Facility.
2025-08-05	Board approved renewal of administration agreement with CIM for 12 months; board increased share repurchase policy by $20 million to $80 million.
2025-08-15	Company entered into a new 10b5-1 trading plan for share repurchases.
2025-09-18	Company entered into Amended and Restated Note Purchase Agreement for $100.000 million Tranche B Floating Rate 2027 Notes.
2025-11-03	Company changed timing of paying base distributions to shareholders from quarterly to monthly, commencing January 2026.
2025-12-16	Company entered into Note Purchase Agreement for $172.500 million senior unsecured notes, consisting of 7.70% 2029 Notes and 7.41% 2027 Notes.
2026-01-06	Co-chief executive officers declared base distributions of $0.10 per share for January, February, and March 2026.
2026-02-09	Company issued and sold $135.000 million in aggregate principal amount of 7.50% Notes due 2031.
2026-02-12	7.50% Notes due 2031 commenced trading on the NYSE under ticker symbol CICC.
2026-03-04	CION/EagleTree extended the maturity date of its senior secured notes from December 21, 2026 to December 21, 2027.
2026-03-09	Co-chief executive officers declared base distributions of $0.10 per share for April, May, and June 2026.
2026-08-15	Expiration date of the 10b5-1 trading plan for share repurchases.
2026-08-31	Maturity date for Series A Notes.
2027-03-31	Maturity date for 2031 Notes.
2027-04-27	Maturity date for 2022 Term Loan.
2027-06-15	Maturity date for JPM Credit Facility.
2027-09-30	Maturity date for 2024 Term Loan.
2027-11-08	Maturity date for Floating Rate 2027 Notes (Tranche A and B).
2027-12-15	Maturity date for 7.41% 2027 Notes.
2028-02-13	Maturity date for UBS Credit Facility.
2029-12-15	Maturity date for 7.70% 2029 Notes.
2029-12-30	Maturity date for 7.50% 2029 Notes.

Recommendation

hold

The company's 2025 performance, marked by a decrease in net assets from operations and significant realized and unrealized losses, indicates underlying challenges. While the company successfully issued new debt and increased its share repurchase program, suggesting financial stability and a commitment to shareholder value, the persistent discount to NAV and the negative trend in investment performance warrant caution. The shift to monthly distributions may attract some investors, but the overall financial results suggest a 'hold' position until there is clear evidence of improved investment performance and a narrowing of the NAV discount.

Keywords

Business Development Company, BDC, SEC Filing, 10-K, Financial Report, Investment Portfolio, Senior Secured Debt, Unsecured Notes, Distributions, Share Repurchase, Asset Coverage Ratio, Middle Market Lending, Investment Management, Corporate Governance, Risk Factors, Interest Rates, Inflation, Cybersecurity, Artificial Intelligence

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