UNITED STATES
SECURITIES AND EXCHANGE COMMISSION
Washington, D.C. 20549
FORM 10-Q
☒ QUARTERLY REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934
For the quarterly period ended March 31, 2025
☐ TRANSITION REPORT PURSUANT TO SECTION 13 OR 15 (d) OF THE SECURITIES EXCHANGE ACT OF 1934
Commission File Number: 814-01334
Palmer Square Capital BDC Inc.
(Exact name of registrant as specified in its charter)
Maryland
84-3665200
(State or Other Jurisdiction ofIncorporation or Organization)
(I.R.S. EmployerIdentification No.)
1900 Shawnee Mission Parkway, Suite 315,
Mission Woods, KS
66205
(Address of Principal Executive Offices)
(Zip Code)
(816) 994-3200
(Registrant’s telephone number, including area code)
Securities registered pursuant to Section 12(b) of the Act:
Title of each class
Trading Symbol(s)
Name of each exchange on which registered
Common Stock, par value $0.001 per share
PSBD
New York Stock Exchange
Indicate by check mark whether the registrant (1) has filed all reports required to be filed by Section 13 or 15(d) of the Securities Exchange Act of 1934 during the preceding 12 months (or for such shorter period that the registrant was required to file such reports), and (2) has been subject to such filing requirements for the past 90 days. Yes ☒ No ☐
Indicate by check mark whether the registrant has submitted electronically every Interactive Data File required to be submitted pursuant to Rule 405 of Regulation S-T (§ 232.405 of this chapter) during the preceding 12 months (or for such shorter period that the registrant was required to submit such files). Yes ☒No ☐
Indicate by check mark whether the registrant is a large accelerated filer, an accelerated filer, a non-accelerated filer, a smaller reporting company or an emerging growth company. See the definitions of “large accelerated filer”, “accelerated filer”, “smaller reporting company” and “emerging growth company” in Rule 12b-2 of the Exchange Act.
Large accelerated filer
☐
Accelerated filer
☒
Non-accelerated filer
Smaller reporting company
Emerging growth company
If an emerging growth company, indicate by check mark if the registrant has elected not to use the extended transition period for complying with any new or revised financial accounting standards provided pursuant to Section 13(a) of the Exchange Act. ☐
Indicate by check mark whether the registrant is a shell company (as defined in Rule 12b-2 of the Exchange Act). Yes ☐ No ☒
As of May 6, 2025, the registrant had 32,373,245 shares of common stock, $0.001 par value per share, outstanding.
TABLE OF CONTENTS
Page
PART I
FINANCIAL INFORMATION
1
Item 1.
Consolidated Financial Statements (Unaudited)
Consolidated Statements of Assets and Liabilities as of March 31, 2025 (Unaudited) and December 31, 2024
Consolidated Statements of Operations for the Three Months Ended March 31, 2025 and March 31, 2024 (Unaudited)
2
Consolidated Statements of Changes in Net Assets for the Three Months Ended March 31, 2025 and March 31, 2024 (Unaudited)
3
Consolidated Statements of Cash Flows for the Three Months Ended March 31, 2025 and March 31, 2024 (Unaudited)
4
Consolidated Schedules of Investments as of March 31, 2025 (Unaudited) and December 31, 2024
5
Notes to Consolidated Financial Statements (Unaudited)
27
Item 2.
Management’s Discussion and Analysis of Financial Condition and Results of Operations
45
Item 3.
Quantitative and Qualitative Disclosures About Market Risk
56
Item 4.
Controls and Procedures
57
PART II
OTHER INFORMATION
58
Legal Proceedings
Item 1A.
Risk Factors
Unregistered Sales of Equity Securities and Use of Proceeds
Defaults Upon Senior Securities
59
Mine Safety Disclosures
Item 5.
Other Information
Item 6.
Exhibits
60
SIGNATURES
61
i
PART I—FINANCIAL INFORMATION
Item 1. Consolidated Financial Statements.
Consolidated Statements of Assets and Liabilities
(Unaudited)
March 31,2025(Unaudited)
December 31,2024
Assets:
Non-controlled, non-affiliated investments, at fair value (amortized cost of $1,397,203,293 and $1,454,611,467, respectively)
$
1,334,314,263
1,407,130,945
Cash and cash equivalents
2,872,420
2,766,409
Receivables:
Receivable for sales of investments
14,162,616
7,799,523
Receivable for paydowns of investments
846,451
1,347,516
Due from investment adviser
462,835
248,110
Dividend receivable
200,827
259,625
Interest receivable
10,007,932
11,458,267
Prepaid expenses and other assets
62,378
32,364
Total Assets
1,362,929,722
1,431,042,759
Liabilities:
Credit facilities (net of deferred financing costs of $4,985,647 and $5,375,986, respectively) (Note 6)
472,325,212
501,650,602
Notes (net of deferred financing costs of $1,714,449 and $1,748,822, respectively) (Note 6)
302,126,552
302,505,057
Payables:
Payable for investments purchased
54,828,596
67,460,523
Distributions payable
12,691,089
15,649,925
Management fee payable
2,333,675
2,413,798
Incentive fee payable
1,842,706
2,149,132
Accrued other general and administrative expenses
974,638
1,368,753
Total Liabilities
847,122,468
893,197,790
Commitments and contingencies (Note 9)
Net Assets:
Common Shares, $0.001 par value; 450,000,000 shares authorized; 32,534,040 and 32,600,193 as of March 31, 2025 and December 31, 2024, respectively issued and outstanding
32,534
32,600
Additional paid-in capital
610,164,815
611,122,164
Total distributable earnings (accumulated deficit)
(94,390,095
)
(73,309,795
Total Net Assets
515,807,254
537,844,969
Total Liabilities and Net Assets
Net Asset Value Per Common Share
15.85
16.50
The accompanying notes are an integral part of these consolidated financial statements.
Consolidated Statements of Operations
For the Three Months Ended March 31,
2025
2024
Income:
Investment income from non-controlled, non-affiliated investments:
Interest income
29,819,663
33,259,959
Dividend income
574,336
1,254,696
Payment-in-kind interest income
507,850
-
Other income
312,430
270,288
Total investment income from non-controlled, non-affiliated investments
31,214,279
34,784,943
Total Investment Income
Expenses:
Incentive fees
1,924,752
Interest expense
12,969,757
13,178,830
Management fees
2,416,239
Professional fees
312,732
237,943
Directors fees
36,987
37,295
Other general and administrative expenses
805,271
722,166
Total Expenses
18,301,128
18,517,225
Less: Management fee waiver (Note 3)
—
(50,511
Net expenses
18,466,714
Net Investment Income (Loss)
12,913,151
16,318,229
Realized and unrealized gains (losses) on investments and foreign currency transactions
Net realized gains (losses):
Non-controlled, non-affiliated investments
(5,894,493
(1,736,331
Total net realized gains (losses)
Net change in unrealized gains (losses):
(15,407,869
8,298,242
Total net change in unrealized gains (losses)
Total realized and unrealized gains (losses)
(21,302,362
6,561,911
Net Increase (Decrease) in Net Assets Resulting from Operations
(8,389,211
22,880,140
Per Common Share Data:
Basic and diluted net investment income per common share
0.40
0.52
Basic and diluted net increase (decrease) in net assets resulting from operations
(0.26
0.72
Weighted Average Common Shares Outstanding - Basic and Diluted
32,602,053
31,594,552
Consolidated Statements of Changes in Net Assets
Increase (Decrease) in Net Assets Resulting from Operations:
Net investment income (loss)
Net realized gains (losses) on investments and foreign currency transactions
Net change in unrealized gains (losses) on investments, foreign currency translations, and foreign currency exchange contracts
Decrease in Net Assets Resulting from Stockholder Distributions
Dividends and distributions to stockholders
(12,691,089
(15,950,869
Net Decrease in Net Assets Resulting from Stockholder Distributions
Increase in Net Assets Resulting from Capital Share Transactions
Issuance of common shares
89,652,500
Shares issued in connection with dividend reinvestment plan (Note 7)
514,649
Repurchase of common shares
(1,472,064
Net Increase in Net Assets Resulting from Capital Share Transactions
(957,415
Total Increase (Decrease) in Net Assets
(22,037,715
96,581,771
Net Assets, Beginning of Period
461,955,393
Net Assets, End of Period
558,537,164
Consolidated Statements of Cash Flows
Cash Flows from Operating Activities:
Net increase (decrease) in net assets resulting from operations
Adjustments to reconcile net increase (decrease) in net assets resulting from operations to net cash used in operating activities:
Net realized (gains)/losses on investments
5,894,493
1,736,331
Net change in unrealized (gains)/losses on investments
15,407,869
(8,298,242
Net accretion of discount on investments
(598,188
(578,578
Payment-in-kind interest
(507,850
Purchases of short-term investments
(127,649,840
(295,848,981
Purchases of portfolio investments
(104,323,107
(346,482,823
Proceeds from sale of short-term investments
140,223,941
295,534,623
Proceeds from sale of portfolio investments
144,369,364
69,556,336
Amortization of deferred financing cost
424,712
289,630
Increase/(decrease) in operating assets and liabilities:
(Increase)/decrease in receivable for sales of investments
(6,363,093
12,884
(Increase)/decrease in interest and dividends receivable
1,509,133
(1,693,612
(Increase)/decrease in due from investment adviser
(214,725
1,634,333
(Increase)/decrease in receivable for paydowns of investments
501,065
(106,269
(Increase)/decrease in prepaid expenses and other assets
(30,014
(55,417
Increase/(decrease) in interest payable on credit facilities
(428,607
(1,308,707
Increase/(decrease) in payable for investments purchased
(12,631,927
22,873,570
Increase/(decrease) in management fees payable
(80,123
164,164
Increase/(decrease) in incentive fee payable
(306,426
Increase/(decrease) in directors fee payable
Increase/(decrease) in accrued other general and administrative expenses
(394,115
(123,527
Net cash provided by (used in) operating activities
46,413,351
(237,889,393
Cash Flows from Financing Activities:
Borrowings on the credit facilities
26,600,000
158,000,000
Payments on the credit facilities
(56,300,000
Payments of debt issuance costs
(3,625,000
Distributions paid in cash
(15,649,925
Proceeds from issuance of common shares, net of change in subscriptions receivable
Purchase of common shares for dividend reinvestment plan
Net cash provided by (used in) financing activities
(46,307,340
244,027,500
Net increase/(decrease) in cash and cash equivalents
106,011
6,138,107
Cash and cash equivalents, beginning of period
2,117,109
Cash and cash equivalents, end of period
8,255,216
Supplemental and Non-Cash Information:
Interest paid during the period
13,398,364
14,487,537
Distributions declared during the period
15,950,869
Reinvestment of distributions during the period
Consolidated Schedules of Investments
As of March 31, 2025
Portfolio Company(3)
Industry
Interest Rate
MaturityDate
Principal / Par
AmortizedCost(1)(5)
Fair Value
Percentage ofNet Assets
Debt Investments
First Lien Senior Secured(2)
888 Holdings PLC (4)(8)
Hotels, Restaurants and Leisure
9.67% (S + CSA + 5.25%)
7/8/2028
5,927,313
5,809,471
5,752,457
1.0
%
AccentCare, Inc. (8)
Healthcare Providers and Services
8.30% (S + 4.00%)
9/20/2028
5,835,660
5,836,385
5,120,792
0.9
Accession Risk Management Group, Inc.
Insurance
9.05% (S + 4.75%)
11/1/2029
787,998
770,444
0.1
2,966,987
0.5
Accession Risk Management Group, Inc. (7)
9.05% (S + CSA + 4.75%)
6,051,247
6,017,413
1.1
Acrisure, LLC (8)
7.32% (S + 3.00%)
11/6/2030
3,980,025
3,972,036
3,962,254
0.7
Ahead DB Holdings, LLC (8)
IT Services
7.30% (S + 3.00%)
2/3/2031
3,970,000
3,936,818
3,967,836
Aimbridge Acquisition Co., Inc. (8)
9.94% (S + CSA + 5.50%)
3/11/2030
735,010
731,335
11.94% (S + 7.61%)
725,205
722,148
Albion Financing 3 S.a r.l. (Albion Financing LLC) (4)(8)
Diversified Consumer Services
7.29% (S + 3.00%)
8/16/2029
2,977,538
2,984,043
Allied Universal Holdco LLC (8)
Professional Services
8.17% (S + CSA + 3.75%)
5/12/2028
9,716,637
9,702,897
9,717,414
1.8
American Rock Salt Company LLC (6)
Metals and Mining
11.44% (S + 7.00%)
6/9/2028
890,236
828,321
899,138
0.2
8.44% (S + CSA + 4.00%)
5,779,837
5,778,864
4,782,746
Amynta Agency Borrower Inc. (Amynta Warranty Borrower Inc.) (8)
12/6/2031
2,985,019
2,956,715
2,961,079
0.6
Ankura Consulting Group, LLC (6)
7.80% (S + 3.50%)
12/17/2031
4,367,055
4,324,302
0.8
Anticimex Global AB (4)(8)
Commercial Services and Supplies
7.77% (S + 3.40%)
11/16/2028
3,790,454
3,788,558
AP Gaming I, LLC (4)(8)
8.07% (S + CSA + 3.75%)
2/15/2029
8,263,982
8,190,720
8,305,302
1.6
Aptean Acquiror Inc. (7)
Software
9.56% (S + 5.25%)
1/30/2031
6,394,731
6,351,964
6,370,917
1.2
Aptean Acquiror Inc. (7)(12)
9.55% (S + 5.25%)
103,597
101,546
104,231
0.0
Aramsco, Inc. (7)
Machinery
9.08% (S + 4.75%)
10/10/2030
5,434,838
5,360,668
5,063,822
ARC Falcon I Inc. (8)
Chemicals
7.92% (S + CSA + 3.50%)
8/31/2028
4,072,930
4,062,168
4,029,675
Arcline FM Holdings LLC (8)
Industrial Conglomerates
7.82% (S + 3.50%)
6/24/2030
3,000,000
2,992,500
2,991,000
Aretec Group, Inc. (8)
Diversified Financial Services
8/9/2030
10,892,762
10,793,906
10,817,330
2.1
Aruba Investments, Inc. (8)
8.42% (S + CSA + 4.00%)
10/28/2027
7,912,886
7,885,343
7,729,901
1.5
Ascend Learning, LLC (8)
12/11/2028
10,244,388
10,191,192
10,134,619
2.0
Aspire Bakeries Holdings, LLC (8)
Food Products
8.57% (S + 4.25%)
12/13/2030
10,556,683
10,554,084
10,596,271
AssuredPartners, Inc (8)
2/14/2031
9,900,000
9,892,500
9,922,770
1.9
Athletico Management, LLC (6)
8.70% (S + CSA + 4.25%)
2/2/2029
7,026,313
7,007,120
5,504,940
Autokiniton US Holdings, Inc. (8)
Auto Components
4/6/2028
9,940,970
9,940,907
9,762,380
Aveanna Healthcare LLC (4)(8)
8.16% (S + CSA + 3.75%)
6/30/2028
9,585,834
9,514,503
9,424,121
BarBri Holdings, Inc (7)
9.35% (S + CSA + 5.00%)
4/30/2030
7,231,875
7,197,162
1.4
Barracuda Networks, Inc. (8)
8.79% (S + 4.50%)
8/15/2029
10,293,371
10,088,763
8,960,380
1.7
Bending Spoons Operations Spa (4)(8)
Interactive Media Services
9.54% (S + 5.25%)
2/19/2031
7,500,000
7,376,862
7,537,500
Maturity Date
B'laster Holdings, LLC (7)
9.04% (S + 4.75%)
10/25/2029
1,629,250
1,614,099
1,609,047
0.3
B'laster Holdings, LLC
9.07% (S + 4.75%)
4,377,917
4,303,924
4,279,367
Boxer Parent Company Inc. (8)
7/30/2031
9,950,000
9,909,135
9,790,900
Carriage Purchaser, Inc. (8)
Road and Rail
8.32% (S + 4.00%)
10/2/2028
8,771,593
8,773,605
8,731,858
Carroll County Energy LLC (6)
Independent Power and Renewable Electricity Producers
7.58% (S + 3.25%)
6/24/2031
6,522,275
6,500,712
6,529,613
1.3
Castle US Holding Corporation (6)
8.57% (S + CSA + 4.00%)
1/31/2027
5,922,359
5,898,560
3,642,251
Castle US Holding Corporation (7)
8.32% (S + 3.75%)
1/27/2027
1,936,842
1,933,815
1,202,808
CCI Buyer, Inc. (8)
Wireless Telecommunication Services
12/17/2027
9,601,103
9,597,776
9,618,433
Cengage Learning, Inc. (8)
7.83% (S + 3.50%)
3/24/2031
5,955,075
5,917,037
5,914,997
Century De Buyer LLC (8)
Media
7.79% (S + CSA + 3.50%)
10/30/2030
1,985,025
1,969,229
1,988,757
0.4
Congruex Group LLC (7)
Construction and Engineering
10.80% (S + 6.50% incl. 5.00% PIK)
4/28/2029
6,293,160
6,195,199
5,421,305
Connectwise LLC (8)
8.06% (S + CSA + 3.50%)
9/29/2028
10,701,735
10,695,005
10,706,229
Consolidated Communications, Inc. (8)
Diversified Telecommunication Services
7.94% (S + CSA + 3.50%)
10/2/2027
4,428,009
4,269,317
4,420,061
Corelogic, Inc. (8)
Internet Software and Services
6/29/2028
9,694,425
9,644,712
9,532,867
CP Atlas Buyer, Inc (8)
Building Products
11/23/2027
6,734,381
6,681,990
6,253,715
CPM Holdings, Inc. (8)
8.82% (S + 4.50%)
9/27/2028
7,949,375
7,908,933
7,830,134
Creation Technologies Inc. (4)(8)
Electronic Equipment, Instruments and Components
10.06% (S + CSA + 5.50%)
10/5/2028
9,816,660
9,634,525
9,546,701
Crown Subsea Communications Holding, Inc. (8)
8.32% (S + CSA + 4.00%)
7,399,100
7,378,787
7,419,447
Deerfield Dakota Holding, LLC (8)
8.05% (S + 3.75%)
4/9/2027
4,762,500
4,738,285
4,530,828
Delivery Hero SE (4)(6)
9.31% (S + 5.00%)
12/12/2029
3,445,075
3,431,656
3,456,565
Delta Topco, Inc. (6)
7.07% (S + 2.75%)
11/30/2029
9,925,125
9,909,438
9,826,519
DIRECTV Financing, LLC (4)(8)
9.55% (S + CSA + 5.00%)
8/2/2027
671,657
669,065
673,431
Dotdash Meredith, Inc. (4)(8)
7.82% (S + CSA + 3.50%)
12/1/2028
10,427,775
10,397,610
10,460,414
Dwyer Instruments, LLC
7/21/2029
8,289,081
8,206,092
Dwyer Instruments, LLC (13)
9.05% (S + 3.75%)
69,005
57,862
69,964
ECL Entertainment, LLC (7)
8/30/2030
4,937,688
4,857,634
4,940,008
ECO Material Tech INC (8)
Construction Materials
7.47% (S + 3.25%)
2/12/2032
4,000,000
3,991,243
3,991,260
Edgewater Generation, L.L.C. (8)
8/1/2030
3,876,557
3,926,737
3,880,007
EFS Cogen Holdings I, LLC (8)
10/3/2031
6,611,286
6,614,858
6,612,344
Endurance International Group, Inc., The (8)
7.93% (S + CSA + 3.50%)
2/10/2028
4,591,024
4,553,719
3,112,071
Enverus Holdings, Inc. (7)
9.82% (S + 5.50%)
12/22/2029
6,346,757
6,264,835
6,347,277
EP Purchaser, LLC (8)
9.06% (S + 4.50%)
11/6/2028
10,111,913
10,063,391
10,149,832
EPIC Y-Grade Services, LP (8)
Energy Equipment and Services
10.04% (S + 5.75%)
6/29/2029
11,950,000
11,742,664
11,966,850
2.3
Everest SubBidCo (4)(8)
8.87% (S + 4.50%)
12/8/2031
2,653,350
2,628,281
2,646,717
6
8.90% (S + 4.50%)
5,326,650
5,275,988
5,313,333
First Brands Group, LLC (8)
9.55% (S + 5.00%)
3/30/2027
8,606,304
8,614,645
8,017,332
Flash Charm, Inc. (8)
7.79% (S + 3.50%)
3/2/2028
9,602,213
9,585,055
8,925,545
Flexera Software LLC (8)
3/3/2028
8,622,797
8,613,618
8,589,125
Forest City Enterprises, L.P. (8)
Real Estate Management and Development
7.94% (S + 3.50%)
12/8/2025
3,895,038
3,915,000
Fortis 333 Inc (8)
2/6/2032
2,985,000
Frozen Bakery Acquisition LLC (7)
9.19% (S + 4.75%)
7/9/2029
6,483,750
6,423,941
6,457,167
Fugue Finance, LLC (4)(8)
7.50% (S + 3.25%)
1/9/2032
5,895,587
5,842,166
5,897,886
Gainwell Acquisition Corp. (8)
8.40% (S + CSA + 4.00%)
10/1/2027
8,674,552
8,585,359
8,159,631
Galway Borrower LLC (7)(14)
8.80% (S + 4.50%)
251,044
217,427
279,462
Galway Borrower LLC (7)(15)
182,954
179,558
179,765
Genuine Financial Holdings LLC (8)
7.55% (S + CSA + 3.25%)
9/27/2030
10,358,875
10,312,045
10,193,133
Global Medical Response, Inc. (6)
8.61% (S + 5.50% incl. 0.75% PIK)
10/31/2028
9,021,638
9,005,703
9,031,652
Gloves Buyer Inc (8)
1/16/2032
8,000,000
7,960,000
7,713,320
Gloves Buyer, Inc. (8)
1/20/2028
6,472,153
6,474,955
6,240,223
Great Outdoors Group, LLC (8)
Specialty Retail
7.57% (S + 3.25%)
1/23/2032
4,949,135
4,939,648
4,944,804
Grinding Media Inc. (Molycop Ltd.) (8)
10/12/2028
10,752,476
10,727,161
10,658,392
HAH Group Holding Company LLC (8)
9.32% (S + 5.00%)
9/24/2031
10,187,078
10,072,211
9,703,192
Help/Systems Holdings, Inc. (8)
8.39% (S + CSA + 4.00%)
11/19/2026
6,690,839
6,675,917
6,142,190
Highline Aftermarket Acquisition, LLC (8)
Automotive
2/13/2030
3,990,000
3,981,295
3,985,013
Holding Socotec (4)(6)
8.12% (S + 3.75%)
4,007,500
HP PHRG BORROWER, LLC (8)
Household Durables
2/20/2032
10,000,000
9,900,737
9,787,500
Hunter Douglas Inc (8)
7.55% (S + 3.25%)
1,995,000
1,985,646
1,912,208
Hunterstown Generation, LLC (8)
11/6/2031
2,971,591
2,999,925
Hyperion Refinance S.a.r.l. (4)(8)
4/18/2030
1,994,911
1,996,776
Idemia Group S.A.S. (4)(8)
8.55% (S + 4.25%)
9/30/2028
6,930,000
6,949,305
6,976,951
IMA Financial Group, Inc. (7)
7.32% (S + CSA + 3.00%)
11/1/2028
4,850,844
4,839,113
4,831,149
Inception Finco S.a r.l. (4)(6)
4/9/2031
5,964,975
5,946,589
5,982,691
Ineos Quattro Holdings UK Limited (4)(8)
8.57% (S + CSA + 4.25%)
10/7/2031
4,014,929
3,760,000
Ineos Quattro Holdings UK Limited (4)(6)
8.67% (S + 4.25%)
4/2/2029
2,984,925
2,995,108
2,872,990
Ineos US Finance LLC (4)(8)
2/7/2031
3,970,050
3,936,943
3,805,293
Infinite Bidco, LLC (8)
8.30% (S + CSA + 3.75%)
6,265,701
6,240,520
5,940,699
Infinite Bidco, LLC
10.57% (S + CSA + 6.25%)
2,932,500
2,929,125
2,895,844
Inmar, Inc. (8)
9.30% (S + 5.00%)
10/30/2031
9,680,268
9,589,508
9,689,368
Invenergy Thermal Operating I LLC (8)
8/14/2029
3,807,950
3,764,522
387,823
383,470
Ivanti Software, Inc. (8)
8.55% (S + CSA + 4.00%)
12/1/2027
960,000
959,571
685,502
8.82% (S + CSA + 4.25%)
8,740,305
8,655,154
6,317,623
IVC Acquisition, Ltd. (4)(8)
8.04% (S + 3.75%)
12/12/2028
7,540,812
7,469,370
7,553,782
7
Jack Ohio Finance LLC (7)
1/28/2032
7,000,000
6,985,067
7,010,500
Kleopatra Finco S.a.r.l (4)(8)
Containers and Packaging
9.23% (S + CSA + 4.73%)
2/4/2026
1,920,000
1,755,197
LBM Acquisition, LLC (8)
6/6/2031
10,460,638
10,368,162
9,686,551
Lifescan Global Corporation (6)(9)
Healthcare Equipment and Supplies
10.92% (S + CSA + 6.50%)
12/31/2026
3,774,532
3,770,775
2,434,573
Lightstone Holdco LLC (8)
2/1/2027
13,772,946
13,345,861
13,880,582
2.7
779,046
754,861
785,135
LogMeIn, Inc. (6)
9.19% (S + CSA + 4.75%)
4/28/2028
4,099,806
4,074,678
3,816,243
4,072,312
1,926,909
Logrhythm, Inc. (7)
11.81% (S + 7.50%)
7/2/2029
6,363,636
6,204,355
LSF12 Crown US Commercial Bidco, LLC (8)
12/2/2031
9,989,169
9,841,650
Magenta Security Holdings LLC (6)
10.54% (S + 6.25%)
7/27/2028
949,963
939,586
966,350
11.30% (S + CSA + 6.75%)
641,850
638,708
582,710
Magenta Security Holdings LLC
11.55% (S +CSA + 7.00% incl. 6.25% PIK)
1,171,843
1,167,755
608,187
11.30% (S +CSA + 7.00% incl. 5.50% PIK)
6,173,849
6,157,212
1,769,826
Majco LLC (7)(16)
9.42% (S + 5.00%)
3/11/2032
511,901
499,507
499,405
Maverick 1, LLC
8.80% (S + 4.25%)
5/18/2028
4,912,500
4,745,645
4,929,399
Max US Bidco Inc.
10/3/2030
5,667,750
5,428,859
5,577,803
Medical Solutions Holdings, Inc. (8)
7.89% (S + CSA + 3.50%)
7,816,308
7,586,659
5,072,784
Michael Baker International, LLC (8)
9,048,517
9,012,689
9,041,007
Micro Holding Corp. (8)
12/31/2031
3,904,544
3,828,757
3,597,608
5/3/2028
5,769,203
5,521,124
5,495,195
Minotaur Acquisition, Inc.
5/10/2030
1,151,163
1,138,270
6,941,860
6,872,087
MLN US HoldCo LLC (6)(9)
8.95% (S + 4.50%)
12/31/2025
4,056,188
3,980,135
Momentive Performance Materials Inc. (8)
3/29/2028
5,792,411
5,686,884
5,777,206
MRI Software LLC (7)(17)
2/10/2027
35,354
32,797
34,908
MRI Software LLC (7)
6,327,400
6,290,510
6,279,944
NAPA Management Services Corporation (8)
2/23/2029
9,737,073
9,617,819
9,010,249
Natgasoline LLC (8)
9.80% (S + 5.50%)
3/25/2030
6,967,425
6,866,719
6,801,949
National Mentor Holdings, Inc. (8)
8.15% (S + CSA + 3.75%)
2/18/2028
291,993
291,583
283,626
8,924,985
8,914,365
8,669,240
Nexus Buyer LLC (8)
7/31/2031
9,950,063
9,742,546
9,904,093
Nielsen Consumer Inc. (8)
3/6/2028
12,718,104
12,181,243
12,692,668
2.5
Northstar Group Services, Inc. (8)
5/8/2030
11,274,825
11,279,092
11,349,972
2.2
NSM Top Holdings Corp. (8)
9.68% (S + 5.25%)
5/14/2029
6,825,751
6,806,747
6,876,944
8
Nvent Electric Public Limited Company (4)(8)
Electrical Equipment
1/30/2032
2,000,000
1,990,596
2,002,080
Ontario Gaming GTA Limited Partnership (4)(8)
8.50% (S + 4.25%)
8,321,416
8,321,834
8,209,077
Optimizely North America Inc. (7)
4,541,667
4,537,083
4,530,175
Orchid Merger Sub II, LLC (6)
9.21% (S + 4.75%)
7/27/2027
3,764,419
3,668,261
2,289,256
Oregon Clean Energy, LLC (6)
7.80% (S + CSA + 3.50%)
7/12/2030
2,208,087
2,198,745
2,220,507
Osmosis Buyer Limited (8)
7/31/2028
10,504,445
10,506,867
10,421,197
Outcomes Group Holdings, Inc. (8)
5/6/2031
4,515,932
4,498,194
4,523,451
Padagis, LLC (8)
Pharmaceuticals
9.30% (S + CSA + 4.75%)
9,088,235
9,023,152
8,531,581
Pasadena Performance Products LLC (8)
7.75% (S + 3.50%)
3/1/2032
3,980,149
4,002,520
Patriot Growth Insurance Services, LLC (7)(18)
10/16/2028
3,507,878
3,449,069
3,528,278
Peraton Corp. (8)
Aerospace and Defense
2/1/2028
8,663,065
8,669,830
7,729,749
Plano Holdco, Inc. (8)
8/30/2031
5,000,000
4,977,459
4,987,500
Pluto Acquisition I, Inc. (6)
6/20/2028
1,331,311
1,351,280
PMHC II Inc.
8.69% (S + 4.25%)
4/23/2029
10,887,925
10,736,038
9,629,009
Precisely Software Incorporated (8)
4/24/2028
10,637,212
10,620,098
10,286,716
Pretium PKG Holdings, Inc. (6)
8.19% (S +CSA + 4.60% incl. 0.70% PIK)
5,610,492
5,578,428
3,234,224
Pretium PKG Holdings, Inc.
8.04% (S + 5.00% incl. 1.25% PIK)
1,525,686
1,485,256
1,541,423
Project Alpha Intermediate Holding, Inc. (8)
10/26/2030
7,905,263
7,813,955
7,897,002
Prometric Holdings, Inc. (8)
1/31/2028
5,635,413
5,565,733
5,672,043
PROOFPOINT INC (8)
3,989,924
3,986,860
3,981,825
PT Intermediate Holdings III, LLC
7.55% (S +CSA + 4.75%/S + 5.00% incl. 1.75% PIK)
4/9/2030
9,834,988
9,784,253
PVKG Investment Holdings Inc. (6)
10.07% (S + 5.75%)
6/4/2030
1,737,165
1,704,167
1,142,186
Radiology Partners, Inc. (8)
8.09% (S +CSA + 5.00% incl. 1.50% PIK)
1/31/2029
5,367,996
5,366,351
5,187,658
RC Buyer, Inc. (8)
7/28/2028
2,026,165
2,024,807
1,984,375
RealPage, Inc. (6)
8.08% (S + 3.75%)
6,000,000
5,973,413
6,011,250
RealTruck Group, Inc. (6)
6,820,812
6,820,090
6,531,882
RealTruck Group, Inc.
9.44% (S + CSA + 5.00%)
1,980,000
1,945,575
1,945,350
Recovery Solutions Parent, LLC
11.80% (S + 7.50/S + 8.50% incl. 5.00% PIK)
1/28/2030
2,383,858
2,358,112
Red Planet Borrower, LLC (6)
9.57% (S + 5.25%)
1,927,145
2,000,830
Red Planet Borrower, LLC (8)
10,434,834
10,372,083
10,255,981
Redstone Holdco 2 LP (6)
4/14/2028
4,892,258
4,874,819
2,665,131
Renaissance Holding Corp. (8)
4/5/2030
11,586,131
11,466,300
11,390,673
Rocket Software, Inc. (8)
11/28/2028
12,198,619
12,005,244
12,183,432
2.4
Rohm Holding GmbH (4)(8)
9.74% (S + 5.50% incl. 0.25bp PIK)
1,983,349
1,979,437
1,910,213
Rohm Holding GmbH (4)
8,667,379
8,554,192
8,347,769
Ryan, LLC (7)
11/8/2030
5,348,559
5,268,400
5,338,530
Sitel Group (4)
8.18% (S + 3.75%)
8/28/2028
2,976,864
2,346,232
1,793,248
9
Solina Group Services SAS (4)(8)
Food products
3/12/2029
Sovos Compliance, LLC (7)
8/13/2029
3,873,238
3,872,724
3,861,405
Specialty Building Products Holdings, LLC (8)
9,700,000
9,693,384
9,235,176
Star Holding LLC (8)
3,980,000
3,989,182
3,899,584
Starlight Parent LLC (8)
8.26% (S + 4.00%)
3/12/2032
3,880,000
3,890,020
Stepstone Group MidCo 2 GmbH, The (4)(8)
8.98% (S + 4.50%)
12/4/2031
9,887,500
Summer BC Holdco B LLC (4)(8)
9.56% (S + CSA + 5.00%)
2/12/2029
11,763,906
11,704,966
11,762,083
Tank Holding Corp.
10.17% (S + CSA + 5.75%)
3/31/2028
2,455,808
2,419,782
2,374,152
10.42% (S + CSA + 6.00%)
2,058,000
2,029,257
2,033,510
10.42% (S + 6.00%)
892,043
880,081
881,427
TCP Sunbelt Acquisition Co. (8)
10/16/2031
9,975,000
9,945,025
9,962,531
Thryv, Inc. (4)(6)
11.07% (S + 6.75%)
5/1/2029
6,200,000
6,146,985
6,308,500
Titan US Finco, LLC (4)(7)
8.56% (S + CSA + 4.00%)
10/6/2028
5,820,000
5,813,340
5,812,754
TMC Buyer, Inc. (6)
9.29% (S + 5.00%)
11/1/2030
4,571,875
4,525,486
4,590,582
Tosca Services, LLC (6)
9.17% (S +CSA + 4.25%/S +CSA + 4.75% incl. 1.50% PIK)
11/30/2028
6,908,251
6,877,450
5,915,190
Tosca Services, LLC (8)
1,372,991
1,409,465
Transnetwork LLC (7)
12/29/2030
5,135,000
5,059,655
5,160,675
U.S. Renal Care, Inc. (8)
7,738,493
7,672,696
7,237,077
Univision Communications Inc (8)
6/25/2029
1,985,059
1,946,660
US Fertility Enterprises, LLC (8)
8.78% (S + 4.50%)
10/11/2031
4,770,652
4,724,483
4,783,122
US Radiology Specialists, Inc. (8)
12/15/2027
12,419,298
12,376,896
USIC Holdings, Inc. (7)(19)
9.81% (S + 5.50%)
9/10/2031
32,952
32,505
USIC Holdings, Inc. (7)(20)
174,731
172,961
USIC Holdings, Inc. (7)
2,522,676
2,500,321
2,492,152
Veracode (8)
8.89% (S + CSA + 4.50%)
4/20/2029
8,580,000
8,554,589
7,293,000
Verifone Systems Inc (6)
9.94% (S + CSA + 5.75%)
8/18/2028
8,128,384
7,234,262
Vocus Group (4)(8)
8.26% (S + CSA + 3.50%)
7/20/2028
1,950,000
1,937,851
1,956,708
WarHorse Gaming, LLC
13.67% (S + 9.25%)
4,821,746
5,162,063
Waterbridge NDB Operating LLC (8)
8.31% (S + 4.00%)
5/10/2029
9,944,462
9,995,123
Watlow Electric Manufacturing Company (8)
3,759,239
3,758,800
3,761,608
Wellpath (CCS-CMGC Holdings, Inc.) (6)(9)
14.00% (S + CSA + 7.50%)
10/1/2025
2,397,530
2,356,429
779,197
Xplor T1, LLC (7)
7,213,750
7,184,075
7,222,767
Zayo Group Holdings, Inc. (8)
3/9/2027
4,969,270
4,742,352
4,677,673
Zayo Group Holdings, Inc. (6)
7.44% (S + 3.00%)
2,871,971
2,799,660
Total First Lien Senior Secured
1,208,258,539
1,198,129,169
1,150,400,159
223.1
10
Amortized Cost(1)(5)
Percentage of Net Assets
Second Lien Senior Secured(2)
American Rock Salt Company LLC
11.69% (S + 7.25%)
6/4/2029
2,750,000
2,767,883
1,886,046
11.42% (S + 7.00%)
9/24/2029
2,427,315
2,361,546
2,380,796
12.17% (S + CSA + 7.75%)
10/27/2028
3,350,000
3,323,681
3,195,900
Asurion, LLC (8)
9.69% (S + CSA + 5.25%)
1/19/2029
9,000,000
8,868,765
8,368,605
Barracuda Networks, Inc.
11.29% (S + 7.00%)
8/15/2030
3,890,564
2,800,000
12/24/2030
4,500,000
4,481,221
4,507,020
Edelman Financial Engines Center, LLC, The (8)
10/20/2028
2,500,000
2,495,632
2,508,125
Ellucian Holdings Inc.
11/15/2032
1,995,982
2,032,080
First Brands Group, LLC
13.05% (S + 8.50%)
3/24/2028
2,989,122
2,715,000
Flash Charm, Inc.
11.19% (S + 6.75%)
2/5/2029
3,353,659
3,366,254
2,998,724
Gainwell Acquisition Corp.
12.39% (S + 8.00%)
2,400,000
2,285,370
2,064,000
2,968,888
2,580,000
Help/Systems Holdings, Inc.
11.14% (S + CSA + 6.75%)
11/19/2027
3,656,217
3,657,826
2,547,158
11.55% (S + CSA + 7.00%)
2/24/2029
2,729,999
2,727,668
2,393,881
Ivanti Software, Inc.
11.82% (S + 7.25%)
3,008,110
1,292,340
Mitchell International, Inc. (8)
9.57% (S + CSA + 5.25%)
6/7/2032
7,467,459
7,321,875
Nexus Buyer LLC
10.67% (S + CSA + 6.25%)
4,959,264
4,986,600
OneDigital Borrower LLC (8)
7/2/2032
4,978,560
5,006,250
Peraton Corp.
12.18% (S + 7.75%)
2/26/2029
2,898,876
2,940,127
2,201,349
11.31% (S + 6.75%)
9/30/2029
1,987,300
467,750
Project Boost Purchaser, LLC (8)
7/16/2032
2,488,461
2,506,250
Vision Solutions, Inc. (8)
11.80% (S + CSA + 7.25%)
5,500,000
5,446,062
5,313,220
Total Second Lien Senior Secured
82,066,066
81,455,745
72,072,969
14.0
Corporate Bonds
Altice Financing S.A. (4)
5.00%
1/15/2028
2,714,362
2,250,000
KOBE US Midco 2 Inc
9.25% Cash/10.00% PIK
11/1/2026
2,199,488
2,192,342
1,982,288
Total Corporate Bonds
5,199,488
4,906,704
4,232,288
Total Debt Investments
1,295,524,093
1,284,491,618
1,226,705,416
237.9
11
CLO Mezzanine(2)
APID 2013-12A ER (4)
Structured Note
9.96% (S + 5.40%)
4/15/2031
2,425,000
2,427,288
2,402,151
APID 2016-24A DR (4)
10.35% (S + CSA + 5.80%)
10/20/2030
2,200,000
2,144,691
2,194,646
BABSN 2022-2A ER (4)
11.20% (S + 6.90%)
7/15/2039
3,058,498
2,997,319
CGMS 2020-2A ER (4)
13.09% (S + 8.53%)
1/25/2035
3,910,257
3,785,144
CBAMR 2018-8A E1R (4)
11.70% (S + 7.40%)
7/15/2037
1,000,000
1,021,852
1,012,913
CIFC 2023-2A E (4)
12.26% (S + 7.97%)
1/21/2037
2,700,000
2,765,436
2,753,092
ELM20 2022-7A ER (4)
10.30% (S + 6.00%)
1/17/2037
2,434,914
2,420,812
ELMW8 2021-1X ER (4)
4/20/2037
2,296,400
2,265,150
GLM 2020-7A FR (4)
12.30% (S + 7.75%)
4/20/2034
1,916,165
1,997,988
GLM 2021-9A FR (4)
12.75% (S + 8.46%)
2,916,523
3,022,246
GOST 2024-1A E (4)
10.79% (S + 6.50%)
4/20/2033
2,516,776
HLM 2023-18A E (4)
13.26% (S + 8.97%)
7/20/2036
3,400,000
3,543,264
3,462,854
MORGN 2020-6A F (4)
12.59% (S + 8.04%)
10/23/2034
2,738,453
2,534,524
THAYR 2017-1A ER (4)
13.42% (S + CSA + 8.87%)
1,300,000
1,269,962
1,218,350
Total CLO Mezzanine
34,975,000
34,943,703
34,583,965
6.7
CLO Equity
BABSN 2018-4A SUB (4)
Structured Subordinated Note
NA
10/15/2030
1,303,746
1,116,845
DRSLF 2020-86A SUB (4)
7/17/2030
3,680,928
2,463,276
HLM 12A-18 SUB (4)
7/18/2031
219,750
LNGPT 2017-1A SUB (4)
1/17/2030
6,358,000
2,124,017
1,215,650
REG12 2019-1A SUB (4)
10/15/2032
3,469,903
3,635,849
SPEAK 2017-4A SUB (4)
10/26/2034
1,968,743
693,500
STRAS 2021-1A SUB (4)
12/29/2029
1,200
Total CLO Equity
36,858,000
12,767,087
9,346,070
12
Number of Shares
Cost
Equity Investments
Aimbridge Acquisition Co., Inc. (8)(11)
70,561
4,657,026
4,125,702
PVKG Investments Holdings Inc
89,288
1,258,194
647,338
Recovery Solutions Parent, LLC (6)(11)
98,983
2,229,831
2,049,938
Total Equity Investments
258,832
8,145,051
6,822,978
Total Equity and Other Investments
72,091,832
55,855,841
50,753,013
9.8
13
Short-Term Investments
Fidelity Investments Money Market Government Portfolio - Institutional Class, 4.27% (10)
36,909,516
7.1
Morgan Stanley Liquidity Funds US Dollar Treasury Liquidity Fund - Institutional Class, 4.19% (10)
19,946,318
3.9
Total Short-Term Investments
56,855,834
11.0
Total Investments
1,397,203,293
258.7
Liabilities in Excess of Other Assets
(818,507,009
(158.7
)%
Net Assets
100.0
14
15
As of December 31, 2024
9.50% (S + 5.25%)
7,299,910
7,148,457
7,064,961
AAdvantage Loyalty IP Ltd. (4)(8)
9.63% (S + CSA + 4.75%)
4/20/2028
2,625,000
2,608,954
2,699,273
8.52% (S + 4.00%)
5,850,434
5,851,160
5,358,002
Accession Risk Management Group, Inc. (6)
9.30% (S + 4.75%)
2,974,487
2,974,486
9.26% (S + 4.75%)
790,047
771,398
791,034
9.15% (S + 4.75%)
6,066,872
6,029,528
6,074,456
7.36% (S + 3.00%)
6,919,034
6,904,897
6,939,030
2/1/2031
4,447,650
4,408,272
4,483,787
8.60% (S + CSA + 3.75%)
2/2/2026
8,099,719
7,991,683
5,281,705
9.10% (S + CSA + 4.25%)
3,019,819
Alliance Laundry Systems LLC (8)
7.84% (S + 3.50%)
8/19/2031
2,985,548
3,023,849
8.21% (S + CSA + 3.75%)
9,741,810
9,725,291
9,785,744
11.78% (S + CSA + 7.00%)
704,345
638,293
714,323
American Rock Salt Company LLC (6)(11)
11.47% (S + CSA + 7.00%)
188,127
198,881
8.78% (S + CSA + 4.00%)
5,794,849
5,792,135
5,274,211
7.34% (S + 3.00%)
10,491,160
10,331,015
10,504,274
4,378,000
4,390,762
8.11% (S + 3.75%)
8,285,870
8,205,740
8,367,030
2.82% (S + 5.00%)
85,148
82,254
86,271
9.58% (S + 5.00%)
5,215,792
5,169,294
5,251,590
5,448,563
5,376,923
5,082,978
7.96% (S + CSA + 3.50%)
7,083,440
7,062,793
7,136,601
7.86% (S + 3.50%)
10,920,063
10,815,659
10,956,754
8.46% (S + CSA + 4.00%)
7,933,386
7,900,656
7,973,053
11/18/2028
10,184,764
10,312,462
8.61% (S + 4.25%)
10,583,342
10,578,140
10,702,404
9,925,000
9,913,322
9,957,554
8.73% (S + CSA + 4.25%)
7,044,375
7,021,551
5,462,913
8.47% (S + CSA + 4.00%)
9,966,137
9,963,966
9,922,535
8.36% (S + CSA + 3.75%)
9,610,655
9,532,100
9,546,407
Bach Finance Limited (4)(8)
8.26% (S + 3.75%)
2/26/2031
1,990,000
1,985,781
2,006,169
BarBri Holdings, Inc. (7)
10.42% (S + CSA + 5.75%)
7,250,000
9.09% (S + 4.50%)
10,319,697
10,101,711
9,573,480
9.12% (S + 4.75%)
1,633,334
1,614,909
16
B'laster Holdings, LLC (6)
4,389,000
4,310,310
4,339,477
8.34% (S + 3.75%)
9,906,984
10,044,426
8.36% (S + 4.00%)
8,793,633
8,793,520
8,833,028
8.33% (S + 4.00%)
6/30/2031
6,705,455
6,681,412
6,774,589
8.53% (S + CSA + 3.75%)
1,941,053
1,937,162
1,156,304
5,935,123
5,906,293
3,575,912
9,626,106
9,621,288
9,647,572
8.01% (S + 3.50%)
5,970,000
5,929,669
6,008,387
7.90% (S + 3.50%)
1,973,127
2,010,726
10.49% (S + 6.50% incl 5.00% PIK)
6,218,118
6,113,609
4,838,473
8.09% (S + CSA + 3.50%)
10,729,388
10,720,742
10,813,238
Consolidated Communications, Inc. (4)(8)
7.97% (S + CSA + 3.50%)
8,428,009
8,052,013
8,357,256
ConvergeOne Holdings, Inc. (6)
10.21% (S + 5.75%)
1,702,593
1,679,621
9,719,540
9,664,400
9,614,520
6,757,888
6,698,726
6,602,356
9.05% (S + 4.50%)
7,969,500
7,925,726
7,749,223
10.35% (S + CSA + 5.50%)
9,841,895
9,645,638
9,681,964
8.57% (S + 4.00%)
7,417,737
7,394,854
7,547,548
Curia Global, Inc. (8)
8.44% (S + CSA + 3.75%)
8/30/2026
4,751,577
4,747,305
4,556,074
4,775,000
4,746,893
4,681,004
9.52% (S + 5.00%)
5,453,775
5,430,162
5,492,415
8.20% (S + 3.50%)
9,928,955
10,040,197
DIRECTV Financing, LLC (8)
9.85% (S + CSA + 5.00%)
2,151,993
2,142,142
2,162,957
8.05% (S + 3.50%)
10,391,889
10,519,018
Dwyer Instruments, LLC (6)
9.27% (S + 4.75%)
8,309,856
8,298,075
8,247,361
4,950,125
4,865,484
4,984,949
Edelman Financial Engines Center, LLC, The (6)
4/7/2028
3,735,657
3,762,890
8,282,051
8,291,034
8,409,264
8.11% (S + 3.50%)
6,614,123
6,652,607
8.14% (S + CSA + 3.50%)
4,549,281
3,118,315
Enverus Holdings, Inc. (7)(13)
9.86% (S + 5.50%)
14,089
8,187
16,806
6,169,595
6,086,741
6,185,913
9.09% (S + CSA + 4.50%)
10,146,882
10,093,302
10,210,300
10.34% (S + 5.75%)
9,751,427
10,008,516
5,340,000
5,260,000
5,290,000
17
Filtration Group Corporation (8)
10/21/2028
3,929,538
3,899,111
3,965,395
8,628,717
8,637,079
8,125,404
8.07% (S + 3.50%)
9,626,400
9,606,066
9,472,377
7.35% (S + 3.00%)
8,644,408
8,633,517
8,713,304
2,894,740
2,947,500
8.51% (S + 4.00%)
3,905,587
3,852,802
3,947,494
8.43% (S + CSA + 4.00%)
8,697,201
8,596,938
8,445,939
8.82% (S + 0.50%)
79,929
43,839
98,681
4.50% (S + 4.50%)
46,802
43,167
48,264
Garda World Security Corporation (4)(8)
2/1/2029
9,824,873
9,630,569
9,880,187
10,384,837
10,336,150
10,514,648
9.53% (S + 5.50% incl 0.75% PIK)
9,040,777
9,021,793
9,083,178
6,488,967
6,492,118
6,495,715
8.22% (S + CSA + 3.75%)
6,865,743
6,849,707
6,912,087
8.02% (S + 3.50%)
10,779,492
10,750,795
10,846,864
GS AcquisitionCo, Inc. (7)
9.58% (S + 5.25%)
5/25/2028
3,198,883
3,193,992
3,206,357
GS AcquisitionCo, Inc. (7)(16)
351,120
347,795
354,164
9.36% (S + 5.00%)
10,212,609
10,090,154
10,228,133
Hamilton Projects Acquiror, LLC (6)
Electric Utilities
6/2/2031
7,832,000
7,813,852
7,902,958
8.69% (S + CSA + 4.00%)
6,708,446
6,689,518
5,931,742
8.36% (S + 3.75%)
4,023,340
2,977,966
3,016,440
8.58% (S + 4.25%)
6,947,500
6,966,861
7,034,344
7.37% (S + 3.00%)
4,863,063
4,849,492
4,875,220
Imagefirst Holdings, LLC (7)
4/27/2028
6,912,281
6,819,210
6,929,561
Inception Finco S.a r.l. (4)(7)
8.83% (S + 4.50%)
4/18/2031
3,960,640
4,014,328
4,015,000
4,045,000
8.71% (S + CSA + 4.25%)
2,992,462
3,003,508
3,018,646
4,975,031
4,930,699
5,021,697
6,281,726
6,253,394
6,244,036
Infinite Bidco, LLC (6)
10.77% (S + CSA + 6.25%)
2,940,000
2,935,545
2,947,350
7,704,590
7,585,665
7,739,492
8.06% (S + 3.75%)
3,977,673
3,929,315
4,027,394
383,155
392,670
8.90% (S + CSA + 4.00%)
962,500
961,859
667,734
9.12% (S + CSA + 4.25%)
8,762,831
8,668,910
6,079,214
7,559,854
7,482,496
7,629,556
9.22% (S + CSA + 4.75%)
4,842,223
4,844,727
4,864,013
9.72% (S + CSA + 4.73%)
1,925,000
1,924,525
1,766,188
10,486,987
10,388,333
10,414,889
18
Lifescan Global Corporation (6)
11.12% (S + CSA + 6.50%)
4,915,602
4,909,410
1,720,461
13,815,952
13,328,042
13,997,287
2.6
781,479
753,917
791,736
4,110,159
4,082,690
3,755,657
4,080,014
1,888,618
11.86% (S + 7.50%)
6,218,582
9,987,727
10,000,050
10.84% (S + 6.25%)
938,743
969,262
11.60% (S + CSA + 6.75%)
638,367
593,711
11.37% (S +CSA + 7.00 incl 6.25% PIK)
1,153,421
1,148,852
693,973
10.62% (S +CSA + 6.25 incl 5.50% PIK)
6,088,275
6,069,701
2,141,764
Maverick 1, LLC (6)
4,925,000
4,745,424
4,931,156
Max US Bidco Inc. (6)
5,682,063
5,432,014
5,547,114
8.19% (S + CSA + 3.50%)
7,836,350
7,590,520
5,587,748
9.11% (S + 4.75%)
9,071,309
9,029,932
9,122,381
8.83% (S + 4.25%)
5,798,563
5,680,945
5,808,131
3,914,330
3,834,932
3,920,788
Minotaur Acquisition, Inc. (6)
1,162,791
1,150,257
Minotaur Acquisition, Inc. (7)
6,959,302
6,875,815
8.95% (S + CSA + 4.50%)
121,686
3,807,188
3,697,971
3,854,777
6,344,043
6,300,467
6,305,437
32,067
33,123
9.71% (S + CSA + 5.25%)
9,762,169
9,632,454
9,127,677
9.02% (S + CSA + 3.50%)
10/31/2025
4,359,454
4,340,609
4,337,657
8.18% (S + CSA + 3.75%)
291,505
289,939
8.20% (S + CSA + 3.75%)
8,948,227
8,934,664
8,885,276
9,733,624
9,998,669
12,139,172
12,845,285
11,303,225
11,304,691
11,389,186
9.98% (S + CSA + 5.25%)
6,842,901
6,821,415
6,928,437
8.70% (S + 3.50%)
9/12/2031
2,024,380
OneDigital Borrower LLC (6)
7.61% (S + 3.25%)
6/13/2031
7,921,609
7,990,089
8,342,483
8,340,478
8,370,055
4,527,140
Orchid Merger Sub II, LLC (4)(6)
9.21% (S + CSA + 4.75%)
3,832,841
3,723,368
2,369,175
19
6/26/2030
2,302,842
2,291,804
2,313,631
10,505,311
10,526,399
4,527,278
4,507,395
4,581,606
9.60% (S + CSA + 4.75%)
9,016,487
8,444,470
9.33% (S + 5.00%)
3,513,300
3,449,676
3,503,929
8,686,121
8,694,473
8,104,325
4,975,249
5,050,000
9.84% (S + 5.50%)
1,362,929
PMHC II Inc. (8)
9.06% (S + 4.25%)
10,915,843
10,751,634
10,782,451
8.85% (S + CSA + 4.00%)
10,664,770
10,644,552
10,520,795
9.57% (S + 5.00% incl 1.25% PIK)
1,520,722
1,477,604
1,572,054
9.17% (S + 4.60% incl 0.70% PIK)
5,600,234
5,566,370
4,478,423
9,793,823
10,001,102
8.15% (S + 3.50%)
7/16/2031
10,793,890
10,796,628
10,884,073
5,649,644
5,570,428
5,729,982
PT Intermediate Holdings III, LLC (6)
9.60% (S + 5.00% incl 1.75% PIK)
9,792,147
9,736,100
9.78% (S +CSA + 5.00 incl 1.50% PIK)
5,360,361
5,358,229
5,310,778
2,031,514
2,029,270
2,024,435
5,970,045
6,035,640
9.47% (S + CSA + 5.00%)
1,985,000
1,947,123
1,992,444
6,838,575
6,837,009
6,647,676
9.61% (S + 5.25%)
1,921,897
2,007,500
10,461,867
10,391,355
10,316,133
4,872,862
2,963,314
11,615,463
11,488,587
11,601,757
12,229,269
12,335,542
Rohm Holding GmbH (4)(6)
10.84% (S + 5.50% incl 0.25% PIK)
8,678,106
8,557,334
8,341,830
1,985,804
1,981,412
1,908,854
Runner Buyer Inc. (7)
10.11% (S + CSA + 5.50%)
4,862,500
4,834,672
2,309,031
5,362,065
5,277,303
5,383,862
Sitel Group (4)(6)
2,984,576
2,317,145
2,022,050
8.97% (S + CSA + 4.50%)
3,882,945
3,880,904
3,916,261
9,725,000
9,715,033
9,694,123
20
8.86% (S + 4.50%)
3,999,776
3,987,087
9.59% (S + CSA + 5.00%)
9,788,625
9,737,509
9,871,241
Tank Holding Corp. (6)(19)
10.44% (S + CSA + 6.00%)
759,293
746,145
746,437
Tank Holding Corp. (6)
10.25% (S + CSA + 5.75%)
2,462,121
2,423,916
2,427,762
10.46% (S + CSA + 6.00%)
2,063,250
2,031,599
2,033,591
8.77% (S + 4.25%)
9,968,226
10,056,250
Tecta America Corp. (8)
8,410,775
8,400,155
8,466,832
11.11% (S + 6.75%)
5,900,000
5,844,652
6,010,625
Titan US Finco, LLC (4)
8.59% (S + CSA + 4.00%)
5,835,000
5,826,234
5,867,851
9.57% (S + 5.00%)
4,583,333
4,534,059
4,645,833
9.88% (S + 5.50%)
1,423,620
6.58% (S +CSA + 4.75 incl 3.25% PIK)
6,850,574
6,817,288
5,947,155
Transnetwork LLC
5,148,000
5,067,764
5,186,610
7,758,184
7,686,796
7,286,641
4,782,609
4,733,422
4,832,634
12,450,502
12,401,186
12,548,550
10.09% (S + 5.50%)
9,853
9,919
USIC Holdings, Inc. (7)(21)
2,528,999
2,504,805
2,530,124
2.25% (S + 5.25%)
73,571
73,805
9.19% (S + CSA + 4.50%)
8,602,000
8,572,892
8,042,397
VeriFone Systems, Inc. (6)
8/20/2025
9,069,121
8,973,066
8,532,229
1,955,000
1,941,669
1,968,441
WarHorse Gaming, LLC (6)
13.71% (S + CSA + 9.25%)
4,826,028
5,200,000
8.52% (S + 3.75%)
9,966,314
10,095,249
8.09% (S + 3.50%)
7,715,591
7,713,903
7,809,953
10.28% (S + 7.50%)
2,725,681
2,680,477
980,673
Wellpath Holdings, Inc. (6)
11.51% (S + 7.50% incl 1.00% PIK)
6/9/2025
640,109
11.65% (S + 7.50% incl 1.00% PIK)
843,942
852,381
11.30% (S + 6.93% PIK)
1,050,573
1,033,150
377,986
11.31% (S+6.93% PIK)
228,276
224,776
82,131
1,267,499
1,248,081
456,033
7,198,471
7,304,194
4,982,078
4,741,747
4,692,195
7.47% (S + CSA + 3.00%)
2,857,500
2,816,370
Zegona Holdco Limited (4)(8)
9.40% (S + 4.25%)
7/17/2029
9,939,443
10,062,281
1,254,508,041
1,243,362,037
1,206,603,630
224.3
21
12.03% (S + CSA + 7.25%)
2,768,242
1,934,158
11.46% (S + CSA + 7.00%)
4,677,315
4,503,304
4,626,660
12.21% (S + CSA + 7.75%)
3,320,618
3,299,047
9.72% (S + CSA + 5.25%)
8,858,052
8,713,800
Barracuda Networks, Inc. (6)
11.59% (S + 7.00%)
3,885,541
3,226,260
DCert Buyer, Inc. (8)
11.36% (S + 7.00%)
2/19/2029
1,500,000
1,499,392
1,222,500
9.95% (S + 5.25%)
4,479,629
4,572,000
2,494,232
2,525,788
Ellucian Holdings Inc. (6)
2,043,340
First Brands Group, LLC (6)
13.35% (S + CSA + 8.50%)
2,987,577
2,730,000
Flash Charm, Inc. (6)
11.47% (S + CSA + 6.75%)
3,366,584
3,265,625
Gainwell Acquisition Corp. (6)
12.68% (S + CSA + 8.00%)
2,966,042
2,640,000
12.69% (S + CSA + 8.00%)
2,278,143
2,112,000
Help/Systems Holdings, Inc. (6)
11.44% (S + CSA + 6.75%)
3,658,067
2,358,260
11.85% (S + CSA + 7.00%)
2,726,888
2,446,761
Ivanti Software, Inc. (6)
12.12% (S + CSA + 7.25%)
3,008,281
1,728,750
9.82% (S + 5.25%)
7,463,299
7,437,525
Nexus Buyer LLC (6)
10.71% (S + CSA + 6.25%)
4,955,382
5,003,550
4,975,745
4,989,075
Peraton Corp. (6)
12.36% (S + CSA + 7.75%)
2,941,568
2,372,846
11.53% (S + CSA + 6.75%)
1,759,089
525,034
9.90% (S + 5.25%)
2,487,762
2,555,213
12.10% (S + CSA + 7.25%)
5,443,094
5,321,938
85,816,066
84,821,531
77,650,130
14.4
Altice Financing S.A. (4)(6)
2,691,992
2,347,500
KOBE US Midco 2 Inc (6)
2,191,323
1,866,815
4,883,315
4,214,315
1,345,523,595
1,333,066,883
1,288,468,075
239.4
22
522 Funding CLO 2020-6, Ltd. (4)(6)
12.93% (S + 8.04%)
2,736,867
2,756,209
APID 2013-12A ER (4)(6)
10.32% (S + 5.40%)
2,427,381
2,441,897
APID 2016-24A (4)(6)
10.68% (S + 5.80%)
2,142,236
2,213,839
BABSN 2022-2A ER (4)(6)
11.56% (S + 6.90%)
3,059,507
3,085,172
Carlyle US CLO 2020-2, Ltd (4)(6)
13.42% (S + 8.53%)
3,908,004
3,825,979
CBAM 2018-8A E1R (4)(6)
12.06% (S + 7.40%)
1,022,291
1,021,185
CIFC 2018-4A (4)(6)
10.81% (S + 5.90%)
10/17/2031
2,900,000
2,887,060
2,922,476
CIFC 2023-2A (4)(6)
12.59% (S + 7.97%)
2,766,801
2,805,246
ELM20 2022-7A ER (4)(6)
10.65% (S + 6.00%)
2,435,643
2,442,516
ELMW8 2021-1X ER (4)(6)
10.87% (S + 6.25%)
2,297,349
2,315,506
GLM 2021-9A FR (4)(6)
13.08% (S + 8.46%)
2,914,817
3,023,304
GoldenTree Loan Management US 2020-7A (4)(6)
12.63% (S + 7.75%)
1,913,883
1,999,945
GOST 2024-1A E (4)(6)
11.12% (S + 6.50%)
2,522,556
HLM 2023-18A (4)(6)
13.59% (S + 8.97%)
3,546,387
3,533,046
Thayer Park CLO, Ltd. (4)(6)
13.75% (S + 8.87%)
1,269,144
1,238,877
37,875,000
37,827,370
38,147,753
Babson CLO 2018-4A, Ltd. (4)(6)
1,385,215
1,189,915
Dryden 86 CLO, Ltd. (4)(6)
3,793,515
2,536,937
HPS Loan Management 12-2018, Ltd. (4)(6)
Long Point Park CLO, Ltd. (4)(6)
2,161,096
1,359,925
Regatta XII Funding Ltd. (4)(6)
3,628,779
Signal Peak CLO, LLC (4)(6)
1,999,606
1,067,179
Stratus CLO Series 2021-1A (4)(6)
13,029,085
10,003,685
23
PVKG Investments Holdings Inc (4)(6)
1,081,497
74,822,288
52,114,649
49,232,935
9.2
24
Fidelity Investments Money Market Government Portfolio - Institutional Class, 4.42% (10)
29,065,084
5.4
Morgan Stanley Liquidity Funds US Dollar Treasury Liquidity Fund - Institutional Class, 4.35% (10)
40,364,851
7.5
69,429,935
12.9
1,454,611,467
261.5
(869,285,976
(161.5
25
26
Notes to Consolidated Financial Statements
Note 1. Organization
Organization
Palmer Square Capital BDC Inc. (the “Company”) is a financial services company that primarily lends to and invests in corporate debt securities of companies, including small to large private U.S. companies. The Company was organized as a Maryland corporation on August 26, 2019 and is structured as an externally managed, non-diversified closed-end management investment company. The Company has elected to be regulated as a business development company (“BDC”) under the Investment Company Act of 1940, as amended (the “1940 Act”). Beginning with its taxable year ending December 31, 2020, the Company has elected to be treated as a regulated investment company (“RIC”) under Subchapter M of the Internal Revenue Code of 1986, as amended (the “Code”) and expects to qualify as a RIC each year thereafter. The Company commenced operations on January 23, 2020. Palmer Square BDC Funding I, LLC (“PS BDC Funding”) was formed on January 21, 2020 and entered into a senior, secured revolving credit facility with Bank of America, N.A. (“BofA N.A.”) Palmer Square BDC Funding II LLC (“PS BDC Funding II”) was formed on September 8, 2020 and entered into a senior, secured credit facility with Wells Fargo, National Association (“WFB”).
The Company’s investment objective is to maximize total return, comprised of current income and capital appreciation. The Company’s current investment focus is guided by two strategies that facilitate its investment opportunities and core competencies: (1) investing in corporate debt securities and, to a lesser extent, (2) investing in collateralized loan obligation (“CLO”) structured credit funds that typically own corporate debt securities, including the equity and junior debt tranches of CLOs. To a limited extent, the Company may enter into derivatives transactions, which may utilize instruments such as forward contracts, currency options and interest rate swaps, caps, collars and floors to seek to hedge against fluctuations in the relative values of the Company’s portfolio positions from changes in currency exchange rates and market interest rates or to earn income and enhance the Company’s total returns. The Company may receive or purchase warrants or rights to acquire equity or other securities in connection with making a debt investment in a company. During the three months ended March 31, 2025 and the years ended December 31, 2024 and 2023, the Company did not invest in any derivative contracts.
The Company is externally managed by Palmer Square BDC Advisor LLC (the “Investment Advisor”), an investment adviser that is registered with the Securities and Exchange Commission (the “SEC”) under the Investment Advisers Act of 1940, pursuant to an investment advisory agreement between the Company and the Investment Advisor (the “Advisory Agreement”). The Investment Advisor is a majority-owned subsidiary of Palmer Square Capital Management LLC (“PSCM”) and an investment adviser registered under the Investment Advisors Act of 1940, as amended (the “Advisers Act”). The Investment Advisor, in its capacity as administrator (the “Administrator”), provides the administrative services necessary for the Company to operate pursuant to an administration agreement between the Company and the Administrator (the “Administration Agreement”). The Company’s fiscal year ends on December 31.
The Company has four wholly-owned subsidiaries: PS BDC Funding, a special purpose wholly-owned subsidiary established for utilizing the Company’s revolving credit facility with BofA N.A.; PS BDC Funding II, a special purpose wholly-owned subsidiary established for utilizing the Company’s credit facility with WFB; Palmer Square BDC CLO 1, Ltd., a special purpose wholly-owned subsidiary established to be the Issuer in connection with the CLO Transaction (as defined below); and Palmer Square BDC CLO 1, LLC a special purpose indirect wholly-owned subsidiary established to be the Co-Issuer in connection with the CLO Transaction. These subsidiaries are consolidated in the financial statements of the Company.
On January 22, 2024, the Company completed its initial public offering (“IPO”), issuing 5,450,000 shares of common stock, par value $0.001, at a public offering price of $16.45 per share. The Company’s common stock began trading on the New York Stock Exchange under the symbol “PSBD” on January 18, 2024.
Note 2. Significant Accounting Policies
The Company is an investment company and applies specific accounting and financial reporting requirements under Financial Accounting Standards Board (“FASB”) Accounting Standards Topic 946, Financial Services-Investment Companies. The Company’s functional currency is U.S. dollars (“USD”) and these consolidated financial statements have been prepared in that currency. The accompanying consolidated financial statements have been prepared in accordance with accounting principles generally accepted in the United States of America (“GAAP”) and pursuant to Regulation S-X.
Use of Estimates
The preparation of the consolidated financial statements in conformity with GAAP requires management to make estimates and assumptions that affect the reported amounts of assets and liabilities and disclosure of contingent assets and liabilities at the date of the consolidated financial statements. Actual results could differ from those estimates.
Indemnifications
In the normal course of business, the Company enters into contracts that contain a variety of representations which provide general indemnifications. The Company’s maximum exposure under these arrangements cannot be known; however, the Company expects any risk of loss to be remote.
Cash and Cash Equivalents
Cash is comprised of cash on deposit with major financial institutions. Cash equivalents consist of highly liquid investments with original maturities of three months or less. The Company places its cash with high credit quality institutions to minimize credit risk exposure.
Debt Issuance Costs
The Company records origination and other expenses related to its debt obligations as deferred financing costs. These expenses are deferred and amortized over the life of the related debt instrument. Debt issuance costs are presented on the consolidated statements of assets and liabilities as a direct deduction from the debt liability. In circumstances in which there is not an associated debt liability amount recorded in the consolidated financial statements when the debt issuance costs are incurred, such debt issuance costs will be reported on the consolidated statements of assets and liabilities as an asset until the debt liability is recorded. As of March 31, 2025, the balance of debt issuance costs was $(1.0) million, representing deferred financing costs of $6.7 million less accrued interest of $7.7 million, included in BoA Credit Facility, WF Credit Facility and CLO Transaction (each as defined below), and is presented on a net basis of $472.3 million for the BoA and WF Credit Facilities and $302.1 million for the CLO Transaction on the consolidated statements of assets and liabilities. As of December 31, 2024, the balance of debt issuance costs was $(1.1) million, representing deferred financing costs of $7.1 million less accrued interest of $8.2 million, included in BoA Credit Facility, WF Credit Facility, and CLO Transaction (each as defined below), and is presented on a net basis of $501.7 million for the BoA Credit Facility and WF Credit Facility and $302.5 million for the CLO Transaction on the consolidated statements of assets and liabilities.
Income Taxes
The Company has elected to be treated as a RIC under Subchapter M of the Code. So long as the Company maintains its status as a RIC, it generally will not pay corporate-level U.S. federal income taxes on any ordinary income or capital gains that it distributes at least annually to its stockholders as dividends.
To qualify as a RIC, the Company must, among other things, meet certain source-of-income and asset diversification requirements. In addition, to qualify for RIC tax treatment, the Company must distribute to its stockholders, for each taxable year, at least 90% of its “investment company taxable income” for that year, which is generally its ordinary income plus the excess of its realized net short-term capital gains over its realized net long-term capital losses. In order for the Company not to be subject to U.S. federal excise taxes, it must distribute annually an amount at least equal to the sum of (i) 98% of its net ordinary income (taking into account certain deferrals and elections) for the calendar year, (ii) 98.2% of its capital gains in excess of capital losses for the one year period ending October 31 in such calendar year and (iii) any net ordinary income and capital gains in excess of capital losses for preceding years that were not distributed during such years and on which the Company paid no federal income tax. The Company, at its discretion, may carry forward taxable income in excess of calendar year dividends and pay a 4% nondeductible U.S. federal excise tax on this income.
The Company evaluates tax positions taken or expected to be taken in the course of preparing its consolidated financial statements to determine whether the tax positions are “more-likely-than-not” to be sustained by the applicable tax authority. Tax positions not deemed to meet the “more-likely-than-not” threshold are reserved and recorded as a tax benefit or expense in the current year. All penalties and interest associated with income taxes are included in income tax expense. Conclusions regarding tax positions are subject to review and may be adjusted at a later date based on factors including, but not limited to, on-going analyses of tax laws, regulations and interpretations thereof.
Basis of Consolidation
As provided under ASC 946, the Company will generally not consolidate its investment in a company other than a substantially wholly owned investment company subsidiary or a controlled operating company whose business consists of providing services to the Company. Accordingly, the Company consolidated the results of the Company’s wholly owned investment company subsidiaries (PS BDC Funding, PS BDC Funding II and Palmer Square BDC CLO I, Ltd.) in its consolidated financial statements.
Interest and Dividend Income Recognition
Interest income is recorded on the accrual basis and includes amortization of premiums or accretion of discounts. Discounts and premiums to par value on securities purchased are accreted and amortized, respectively, into interest income over the contractual life of the respective security using the effective interest method. The amortized cost of investments represents the original cost adjusted for the amortization of premiums or accretion of discounts, if any. Upon prepayment of a loan or debt security, any prepayment premiums, unamortized upfront loan origination fees, paydown gains/losses and unamortized discounts are recorded as interest income in the current period.
Dividend income on preferred equity securities is recorded on the accrual basis to the extent that such amounts are payable by the portfolio company and are expected to be collected. Dividend income on common equity securities and money market funds is recorded on the record date for private portfolio companies or on the ex-dividend date for publicly traded portfolio companies.
Non-Accrual Status
Management reviews all loans that have principal or interest that is 90 days past due, or when there is reasonable doubt as to the collection of principal or interest to determine if a loan will be placed on non-accrual status. When a loan is placed on non-accrual status, the accrued interest and unpaid interest is generally reversed, and any discount (market or original) is no longer accreted to interest income. Interest payments received while a loan is on non-accrual status may be applied to principal or recognized as income, as determined by management’s judgment regarding collectability.
A loan may be taken off non-accrual status if past due payments are made, and if management determines the issuer is likely to remain current on future payments. Management may make exceptions to this policy if the loan has sufficient collateral value or is in the process of collection. Management may also leave a loan on accrual status while actively seeking recovery of past due payment. As of March 31, 2025, the Company had three loans on non-accrual status. As of March 31, 2025, loans on non-accrual status represented 0.24% of the total investments at fair value (or 0.72% at amortized cost). As of December 31, 2024, the Company had two loans on non-accrual status. As of December 31, 2024, loans on non-accrual status represented 0.08% of the total investments at fair value (or 0.46% at amortized cost).
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Other Income
From time to time, the Company may receive fees for services provided to portfolio companies. These fees are generally only available to the Company as a result of closing investments, are normally paid at the closing of the investments, are generally non-recurring and are recognized as revenue when earned upon closing of the investment. The services that the Investment Advisor provides vary by investment, but can include closing, work, diligence or other similar fees and fees for providing managerial assistance to the Company’s portfolio companies. In addition, the Company may generate revenue in the form of commitment, origination, structuring or diligence fees, monitoring fees and possibly consulting and performance-based fees.
Net Realized Gains or Losses and Net Change in Unrealized Appreciation or Depreciation
The Company measures realized gains or losses by the difference between the net proceeds from the repayment or sale and the amortized cost basis of the investment, without regard to unrealized appreciation or depreciation previously recognized, but considering unamortized upfront fees and prepayment penalties. Net change in unrealized appreciation or depreciation reflects the change in portfolio investment values during the reporting period, including any reversal of previously recorded unrealized appreciation or depreciation, when gains or losses are realized.
Note 3. Agreements and Related Party Transactions
Administration Agreement
The Company has entered into the Administration Agreement with the Administrator. Pursuant to the Administration Agreement, the Administrator furnishes office facilities and equipment and provides clerical, bookkeeping, compliance, recordkeeping and other administrative services at such facilities. Under the Administration Agreement, the Administrator performs, or oversees the performance of, required administrative services, which include being responsible for the financial and other records that the Company is required to maintain and preparing reports to stockholders and reports and other materials filed with the SEC. In addition, the Administrator assists the Company in determining and publishing the Company’s net asset value (“NAV”), overseeing the preparation and filing of tax returns and the printing and dissemination of reports and other materials to stockholders, and generally overseeing the payment of expenses and the performance of administrative and professional services rendered to the Company by others. Under the Administration Agreement, the Administrator also provides managerial assistance on the Company’s behalf to those portfolio companies that have accepted the offer to provide such assistance.
Under the Administration Agreement, the Company reimburses the Administrator based upon its allocable portion of the Administrator’s overhead (including rent) in performing its obligations under the Administration Agreement, including the fees and expenses associated with performing compliance functions and the Company’s allocable portion of the cost of its officers (including the Company’s Chief Financial Officer and Chief Compliance Officer), and any of their respective staff who provide services to the Company, operations staff who provide services to the Company, and internal audit staff, if any, to the extent internal audit performs a role in the Company’s Sarbanes-Oxley internal control assessment. In addition, if requested to provide managerial assistance to portfolio companies, the Administrator is reimbursed based on the services provided. The Administration Agreement has an initial term of two years and may be renewed with the approval of the Company’s board of directors (the “Board”). The agreement was renewed during the year for an additional one-year period. The Administration Agreement may be terminated by either party without penalty upon 60 days’ written notice to the other party. To the extent that the Administrator outsources any of its functions, the Company pays the fees associated with such functions on a direct basis without any incremental profit to the Administrator.
In addition, the Administrator has, pursuant to a sub-administration agreement, engaged U.S. Bancorp Fund Services, LLC to act on behalf of the Company’s Administrator in the performance of certain other administrative services. The Company has also engaged Equiniti Trust Company, LLC or its affiliates (“Equiniti”) directly to serve as transfer agent, registrar and dividend disbursing agent and has engaged U.S. Bank National Association (“U.S. Bank”) or its affiliates directly to serve as custodian. Prior to the Company’s engagement of Equiniti upon the closing of the IPO, U.S. Bank served as the Company’s transfer agent, distribution paying agent and registrar.
Investment Advisory Agreement
The Investment Advisor serves as the investment adviser of the Company and is registered as an investment adviser with the SEC. The Investment Advisor’s primary business is to provide a variety of investment management services, including an investment program for the Company. The Investment Advisor is responsible for all business activities and oversight of the investment decisions made for the Company.
Subsequent to the IPO, in return for providing management services to the Company, the Company pays the Investment Advisor a base management fee, calculated and paid quarterly in arrears at an annual rate of 1.75% of the average value of the weighted average (based on the number of shares outstanding each day in the quarter) of the Company’s total net assets at the end of the two most recently completed calendar quarters. The base management fee for any partial quarter will be pro-rated based on the number of days actually elapsed in that quarter relative to the total number of days in such quarter.
Prior to the IPO, the base management fee was 2.00% of the average value of the weighted average (based on the number of shares outstanding each day in the quarter) of the Company’s total net assets at the end of the two most recently completed calendar quarters. The Investment Advisor, however, during any period prior to the IPO, agreed to waive its right to receive management fees in excess of an annual rate of 1.75% of the average value of the weighted average total net assets at the end of each of our two most recently completed calendar quarters. The Investment Advisor will not be permitted to recoup any base management fees waived for any period of time prior to the IPO.
29
Additionally, pursuant to the Advisory Agreement, the Investment Advisor is not entitled to an incentive fee prior to the IPO because the Advisory Agreement provides that no incentive fee is payable prior to the listing of the Company’s common stock on a national securities exchange. Effective upon completion of the IPO, the Investment Advisor is entitled to an incentive fee (the “Income Incentive Fee”) based on the Company’s pre-incentive fee net investment income for the then most recently completed calendar quarter, as adjusted downward (but not upward) if over the most recently completed and eleven preceding calendar quarters since the IPO (or if shorter, the number of calendar quarters since the IPO) (each such period is referred to herein as the “Trailing Twelve Quarters”) aggregate net realized losses on the Company’s investments exceed the Company’s aggregate net investment income over the same period, excluding the most recently completed quarter, as described in more detail below. In this regard, if the Company’s net realized losses over the Trailing Twelve Quarters since the IPO (or if shorter, the number of calendar quarters since the IPO) are greater than the Company’s net investment income over the same period, excluding the most recently completed quarter, then the pre-incentive fee net income used in the calculation of the Income Incentive Fee would be subject to a downward adjustment. The amount of the adjustment would be equal to the amount by which such net realized losses exceed such net investment income. On the other hand, if the Company’s net investment income over the Trailing Twelve Quarters since the IPO (or if shorter, the number of calendar quarters since the IPO) is equal to or greater than the Company’s net realized losses over the same period, excluding the most recently completed quarter, then no adjustment to pre-incentive fee net investment income would be made. The Income Incentive Fee will be calculated and payable quarterly in arrears commencing with the first calendar quarter following the IPO. The Company will pay the Investment Advisor an Income Incentive Fee with respect to its “adjusted net investment income” in each calendar quarter as follows:
“Adjusted net investment income” means the Company’s “pre-incentive fee net investment income” during the then most recently completed calendar quarter minus the difference, if positive, between (i) the Company’s “net realized losses” over the then Trailing Twelve Quarters (or if shorter, the number of calendar quarters that have occurred since the IPO) and (ii) the Company’s “net investment income” over the Trailing Twelve Quarters (excluding the then most recently completed calendar quarter). No adjustment (downward or upward) will be made to “pre-incentive fee net investment income” if the difference between clause (i) minus clause (ii) is zero or negative.
“Pre-incentive fee net investment income” means interest income, dividend income and any other income (including any other fees such as commitment, origination, structuring, diligence and consulting fees or other fees that the Company receives from portfolio companies but excluding fees for providing managerial assistance) accrued during the calendar quarter, minus operating expenses for the quarter (including the base management fee, any expenses payable under the Administration Agreement, and any interest expense and dividends paid on any outstanding preferred stock, but excluding the Income Incentive Fee). “Pre-incentive fee net investment income” includes, in the case of investments with a deferred interest feature such as market discount, original issue discount (“OID”), debt instruments with payment-in-kind (“PIK”) interest, preferred stock with PIK dividends and zero-coupon securities, accrued income that the Company has not yet received in cash.
“Net realized losses” in respect of a particular period means the difference, if positive, between (i) the aggregate realized capital losses on the Company’s investments in such period and (ii) the aggregate realized capital gains on the Company’s investments in such period. “Net investment income” in respect of the particular period means interest income, dividend income and any other income (including any other fees such as commitment, origination, structuring, diligence and consulting fees or other fees that the Company receives from portfolio companies but excluding fees for providing managerial assistance) accrued during the particular period, minus operating expenses for the particular period (including the base management fee, the Income Incentive Fee, any expenses payable under the Administration Agreement, and any interest expense and dividends paid on any outstanding preferred stock). “Net investment income” includes, in the case of investments with a deferred interest feature such as market discount, OID, debt instruments with PIK interest, preferred stock with PIK dividends and zero-coupon securities, accrued income that the Company has not yet received in cash.
The Income Incentive Fee amount, or the calculations pertaining thereto, as appropriate, will be pro-rated for any period less than a full calendar quarter.
Effective upon completion of the IPO, the Investment Advisor has also agreed to use the most recently completed and three preceding calendar quarters (each such period is referred to herein as the “Trailing Four Quarters”) in addition to the Trailing Twelve Quarters to compute the incentive fee payable to it by the Company. In conjunction therewith, the Investment Advisor has agreed to calculate the incentive fee based on the Trailing Twelve Quarters and the Trailing Four Quarters and in the event that any Trailing Four Quarter period calculation produces a lower incentive fee as compared to the applicable Trailing Twelve Quarter period calculation for any quarterly period, then the Trailing Four Quarter Period will be used in connection with the calculation of the incentive fee payable to the Investment Advisor by the Company for such quarter.
The Investment Advisor has agreed to pay all offering costs in connection with the IPO. These expenses consist primarily of legal fees and other costs incurred with the Company’s share offerings, the preparation of the Company’s registration statement, and registration fees. The Company is not obligated to repay any such offering costs paid by our Investment Advisor.
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Note 4. Investments
The following table presents the composition of the Company’s investment portfolio at amortized cost and fair value as of March 31, 2025 and December 31, 2024:
March 31, 2025
December 31, 2024
Amortized
Fair
Value
First-lien senior secured debt
Second-lien senior secured debt
CLO Mezzanine
Equity
Short-term investments
As of March 31, 2025, approximately 16.9% of the long-term investment portfolio at amortized cost and 17.3% of the long-term investment portfolio measured at fair value, respectively, were invested in non-qualifying assets. As of December 31, 2024, approximately 17.8% of the long-term investment portfolio at amortized cost and 18.1% of the long-term investment portfolio measured at fair value, respectively, were invested in non-qualifying assets. With respect to the Company’s total assets, 16.2% and 17.0% of the Company’s total assets were in non-qualifying assets as defined by Section 55(a) of the 1940 Act as of March 31, 2025 and December 31, 2024, respectively.
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The industry composition of investments based on fair value, as a percentage of total investments at fair value, as of March 31, 2025 and December 31, 2024 was as follows:
10.6
10.2
9.1
9.4
7.4
7.7
6.9
5.3
5.1
4.3
4.9
4.1
4.5
3.8
5.0
3.4
3.1
3.3
2.9
2.8
Total
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Note 5. Fair Value of Investments
Fair value is defined as the price that the Company would receive upon selling an investment or paying to transfer a liability in an orderly transaction to a market participant in the principal or most advantageous market for the investment. Accounting guidance emphasizes that valuation techniques maximize the use of observable market inputs and minimize the use of unobservable inputs.
Inputs refer broadly to the assumptions that market participants would use in pricing an asset or liability, including assumptions about risk. Inputs may be observable or unobservable. Observable inputs are inputs that reflect the assumptions market participants would use in pricing an asset or liability developed based on market data obtained from sources independent of the Company. Unobservable inputs are inputs that reflect the assumptions market participants would use in pricing an asset or liability developed based on the best information available in the circumstances. The valuation hierarchical levels are based upon the transparency of the inputs to the valuation of the investment as of the measurement date. The three levels are defined as follows:
Level 1 — Valuations based on quoted prices in active markets for identical assets or liabilities at the measurement date.
Level 2 — Valuations based on inputs other than quoted prices in active markets included in Level 1, which are either directly or indirectly observable at the measurement date. This category includes quoted prices for similar assets or liabilities in active markets, quoted prices for identical or similar assets or liabilities in non-active markets including actionable bids from third parties for privately held assets or liabilities, and observable inputs other than quoted prices such as yield curves and forward currency rates that are entered directly into valuation models to determine the value of derivatives or other assets or liabilities.
Level 3 — Valuations based on inputs that are unobservable and where there is little, if any, market activity at the measurement date.
Investments in private investment companies measured based upon NAV as a practical expedient to determine fair value are not required to be categorized in the fair value hierarchy. As of March 31, 2025 and as of December 31, 2024, there were no investments accounted for using the practical expedient.
The inputs for the determination of fair value may require significant management judgment or estimation and are based upon management’s assessment of the assumptions that market participants would use in pricing the assets or liabilities. These investments include debt and equity investments in private companies or assets valued using the market or income approach and may involve pricing models whose inputs require significant judgment or estimation because of the absence of any meaningful current market data for identical or similar investments. The inputs in these valuations may include, but are not limited to, capitalization and discount rates, beta and earnings before interest, taxes, depreciation, and amortization (“EBITDA”) multiples. The information may also include pricing information or broker quotes, which include a disclaimer that the broker would not be held to such a price in an actual transaction. The non-binding nature of consensus pricing and/or quotes accompanied by disclaimer would result in classification as Level 3 information, assuming no additional corroborating evidence.
Pricing inputs and weightings applied to determine fair value require subjective determination. Accordingly, valuations do not necessarily represent the amounts that may eventually be realized from sales or other dispositions of investments.
A financial instrument’s categorization within the valuation hierarchy is based upon the lowest level of input that is significant to the fair value measurement.
The following table presents the fair value hierarchy of investments as of March 31, 2025:
Fair Value Hierarchy as of March 31, 2025
Investments:
Level 1
Level 2
Level 3
6,175,640
Short Term Investments
1,271,282,789
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The following table presents the fair value hierarchy of investments as of December 31, 2024:
Fair Value Hierarchy as of December 31, 2024
1,337,701,010
For the following table shows the changes in the fair value of our Level 3 investments during the three months ended March 31, 2025. The Company did not hold any Level 3 positions at the year ended December 31, 2024.
Fair value, beginning of period
Purchases of investments, net
6,886,857
Proceeds from principal payments and sales of investments, net
Net change in unrealized gain (loss)
(711,217
Transfers into (out of) Level 3
Fair value, end of period
For the three months ended March 31, 2025 and the year ended December 31, 2024, the Company did not recognize any transfers to or from Level 3.
For the following table summarizes the significant unobservable inputs the Company used to value its investments categorized within Level 3 for the three months ended March 31, 2025. In addition to the techniques and inputs noted in the table below, according to our valuation policy we may also use other valuation techniques and methodologies when determining our fair value measurements. The below table is not intended to be all-inclusive, but rather provide information on the significant unobservable inputs as they relate to the Company's determination of values.
The unobservable inputs used in the fair value measurement of our Level 3 investments for the three months ended March 31, 2025 were as follows:
Asset Category
Primary Valuation Technique
Unobservable Inputs
Range (Weighted Average) (1)
$6,175,640
Market Approach
EBITDA Multiple
6x - 11x (9.3x)
(1) Unobservable inputs were weighted by the relative fair value of the instruments.
Debt Not Carried at Fair Value
The fair value of the BoA Credit Facility, WF Credit Facility and CLO Transaction, which would be categorized as Level 3 within the fair value hierarchy as of March 31, 2025, approximates their respective carrying values because the BoA Credit Facility, WF Credit Facility and CLO Transaction each have variable interest based on selected short-term rates.
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Note 6. Borrowings
In accordance with the 1940 Act, with certain limitations, BDCs are permitted to borrow amounts such that their asset coverage ratios, as defined in the 1940 Act, are at least 150% after such borrowing. As of March 31, 2025, the Company’s asset coverage ratio was 167%.
Bank of America Credit Facility
On February 18, 2020, the Company, through a special purpose wholly-owned subsidiary, PS BDC Funding (together with the Company, the “Borrowers”) entered into a Credit Agreement (as amended, the “Credit Agreement”), with certain financial institutions as lenders (“Lenders”), BofA N.A. as the Administrative Agent and BofA Securities, Inc. (“BofA Securities”), as Lead Arranger and Sole Book Manager, pursuant to which the Lenders agreed to provide the Company with a revolving line of credit (the “BoA Credit Facility”).
Under the BoA Credit Facility, the Lenders have agreed to extend credit to PS BDC Funding in an aggregate amount up to the Commitment (as defined in the Credit Agreement) amount. The Commitment amount for the BoA Credit Facility was $200.0 million as of the closing date of the Credit Agreement, increased to $400.0 million on the one-month anniversary of the closing date, further increased to $475.0 million on October 12, 2020, further increased to $725.0 million on September 29, 2021, and decreased to $525.0 million on June 13, 2024. The Borrowers’ ability to draw under the BoA Credit Facility is scheduled to terminate on February 11, 2028. All amounts outstanding under the BoA Credit Facility are required to be repaid by February 18, 2028. On March 29, 2024, the Company entered into a fourth amendment to the BoA Credit Facility to, among other things: (i) extend the facility maturity date from February 18, 2025 to February 18, 2028; (ii) update arrangements for the calculation of the fee on unused commitments from 1.30% to a range from 0.50% to 1.40%, depending on the amount of commitments utilized, and (iii) payment of an extension fee. As the Company raises additional capital, we may enter into additional credit agreements to expand our borrowing capacity.
Debt obligations under the BoA Credit Facility consisted of the following as of March 31, 2025:
AggregatePrincipalCommitted
OutstandingPrincipal
AmountAvailable(1)
NetCarryingValue(2)
BoA Credit Facility
525,000,000
319,125,850
205,874,150
317,283,464
Total debt
Debt obligations under the BoA Credit Facility consisted of the following as of December 31, 2024:
Amount Available(1)
352,325,850
172,674,150
350,123,183
Average debt outstanding under the BoA Credit Facility during the three months ended March 31, 2025 and the year ended December 31, 2024, was $350.9 million $479.1 million, respectively.
The loans under the BoA Credit Facility may be base rate loans or SOFR loans. The base rate loans will bear interest at the base rate plus 1.40%, and the SOFR loans will bear interest at 1-month SOFR plus 1.40% or 3-month SOFR plus 1.45%. The “base rate” will be equal to the highest of (a) the federal funds rate plus 0.50%, (b) the prime rate, and (c) 1-month or 3-month SOFR plus 0.10%. The Credit Agreement includes fallback language in the event that SOFR becomes unavailable. Interest pursuant to base rate loans is payable quarterly in arrears, and interest pursuant to SOFR loans is payable either quarterly or monthly, as specified by the Borrowers in a loan notice pertaining thereto. The Credit Agreement requires the payment of a commitment fee of 0.50% for unused Commitments until the four-month anniversary of the Second Amendment to the Credit Agreement. Thereafter, the commitment fee is 0.50% on unused Commitments up to 30% of the BoA Credit Facility, and 1.30% on unused Commitments in excess of 30% of the BoA Credit Facility. Such fee is payable quarterly in arrears. The advance rate for PS BDC Funding’s Eligible Collateral Assets ranges from 40% for Second Lien Bank Loans to 70% for First Lien Bank Loans that are B Assets to 100% for Cash (excluding Excluded Amounts) (as each such term is defined in the Credit Agreement).
35
For the three months ended March 31, 2025 and March 31, 2024 the components of interest expense with respect to the BoA Credit Facility were as follows:
5,288,279
10,106,950
Amortization of debt issuance costs
267,673
165,600
Total interest expense
5,555,952
10,272,550
Average interest rate
5.73
6.74
PS BDC Funding has pledged all of its assets to BofA N.A., in its capacity as Administrative Agent, to secure its obligations under the BoA Credit Facility. Both the Company and PS BDC Funding have made customary representations and warranties and are required to comply with various covenants, reporting requirements and other customary requirements for similar credit facilities. Borrowing under the BoA Credit Facility is subject to the leverage restrictions contained in the 1940 Act and PS BDC Funding complies with 1940 Act provisions relating to affiliated transactions and custody. The custodian of the assets pledged to BofA N.A. pursuant to the BoA Credit Facility is U.S. Bank. The obligations under the Credit Agreement may be accelerated upon the occurrence of an event of default under the Credit Agreement, including in the event of a change of control of PS BDC Funding or if the Investment Advisor ceases to serve as investment adviser to the Company.
Wells Fargo Credit Facility
On December 18, 2020, the Company, through a special purpose wholly-owned subsidiary, PS BDC Funding II (together with the Company, the “WF Borrowers”) entered into a Loan and Security Agreement (the “Loan Agreement”) with certain financial institutions as lenders (“WF Lenders”), WFB as the administrative agent and U.S. Bank, as Collateral Agent and Custodian, pursuant to which the WF Lenders agreed to provide the Company with a line of credit (the “WF Credit Facility”).
On December 18, 2023, the Company entered into an amendment to the WF Credit Facility (the “WF Credit Facility Fourth Amendment”) that amends the WF Credit Facility to, among other things: (i) increase the amount available for borrowing under the WF Credit Facility from $150,000,000 to $175,000,000, (ii) extend the facility maturity date from December 18, 2025 to December 18, 2028 and (iii) extend the reinvestment period from December 18, 2023 to December 18, 2026 (subject to other provisions of the WF Credit Facility).
Debt obligations under the WF Credit Facility consisted of the following as of March 31, 2025:
WF Credit Facility
175,000,000
154,279,239
20,720,761
155,041,748
Debt obligations under the WF Credit Facility consisted of the following as of December 31, 2024:
Aggregate Principal Committed
150,779,239
24,220,761
151,527,419
Average debt outstanding under the WF Credit Facility during the three months ended March 31, 2025 and the year ended December 31, 2024 was $156.0 million and $139.1 million, respectively.
Prior to April 10, 2023, the loans under the WF Credit Facility may have been Broadly Syndicated Loans or Middle Market loans and were eurocurrency rate loans unless such rate was unavailable, in which case the loans were base rate loans until such rate was available. Broadly Syndicated Loans bore interest at the LIBOR or base rate, as applicable, plus 1.85%, and Middle Market Loans bore interest at LIBOR or base rate, as applicable, plus 2.35%. The “base rate” was equal to the highest of (a) the federal funds rate plus 0.50% and (b) the prime rate. On April 10, 2023, the Company entered into an amendment to the WF Credit Facility that, among other things: (i) transferred and assigned U.S. Bank’s rights and obligations as collateral agent and as a secured party to U.S. Bank Trust Company, National Association, (ii) referenced SOFR instead of LIBOR and (iii) removed LIBOR transition language.
36
As of April 10, 2023, the loans under the WF Credit Facility may be Broadly Syndicated Loans or Middle Market Loans and will bear interest at Daily Simple SOFR, or base rate (to the extent Daily Simple SOFR is unavailable), plus 2.50%, with an interest rate floor of 0.0%. The “base rate” will be equal to the highest of (a) the federal funds rate plus 0.50% and (b) the prime rate. The Loan Agreement includes fallback language in the event that Daily Simple SOFR becomes unavailable. Interest is payable quarterly, as determined by the WFB as the administrative agent. Following an amendment to the WF Credit Facility on October 13, 2021, the Loan Agreement requires the payment of a non-usage fee of (x) during the first thirteen months following the closing of the WF Credit Facility, 0.50% multiplied by daily unused Facility Amounts, (y) between thirteen and sixteen months following the closing of the WF Credit Facility, 0.50% multiplied by the lesser of (1) daily unused Facility Amounts and (2) 50% of the Facility Amount plus 2.00% multiplied by the greater of (i) the difference between the daily unused Facility Amount and 50% of the Facility Amount and (ii) zero and, (z) thereafter, 0.50% multiplied by the lesser of (1) daily unused Facility Amounts and (2) 20% of the Facility Amount plus 2.00% multiplied by the greater of (i) the difference between the daily unused Facility Amount and 20% of the Facility Amount and (ii) zero. Such fee is payable quarterly in arrears. The WF Credit Facility includes the option to downsize the facility by paying a Commitment Reduction Fee. The Fee is equal to 2.00% of the facility reduction amount prior to the one-year anniversary of the WF Credit Facility Fourth Amendment, and 1.00% thereafter. The applicable percentage for the advance rate on PS BDC Funding II’s Eligible Loans ranges from 67.5% for Middle Market Loans to 70% for Broadly Syndicated Loans (as each such term is defined in the Loan Agreement).
For the three months ended March 31, 2025 and March 31, 2024 the components of interest expense with respect to the WF Credit Facility were as follows:
2,699,915
2,782,250
122,667
124,030
2,822,582
2,906,280
6.84
7.82
PS BDC Funding II has pledged all of its assets to U.S. Bank, in its capacity as Collateral Agent, to secure its obligations under the WF Credit Facility and U.S. Bank acts as the custodian of such assets. Both the Company and PS BDC Funding II have made customary representations and warranties and are required to comply with various covenants, reporting requirements, and other customary requirements for similar credit facilities. Borrowing under the WF Credit Facility is subject to the leverage restrictions contained in the 1940 Act and PS BDC Funding II complies with 1940 Act provisions relating to affiliated transactions and custody. The obligations under the Loan Agreement may be accelerated upon the occurrence of an event of default under the Loan Agreement, including in the event of a change of control of PS BDC Funding II, if the Investment Advisor ceases to serve as investment adviser to the Company, or if PSCM or its affiliates cease to directly or indirectly own a majority of the membership interests of the Investment Advisor.
CLO Transaction
On May 23, 2024 (the “Closing Date”), the Company completed a $400.5 million term debt securitization (the “CLO Transaction”), also known as a collateralized loan obligation, in connection with which a wholly-owned indirect subsidiary of the Company issued the Notes (as defined below). The CLO Transaction functions as a source of long-term balance sheet financing for a portion of the Company’s portfolio investments and, as a result, the Notes issued in connection with the CLO Transaction are subject to the Company’s regulatory asset coverage requirement.
The notes offered in the CLO Transaction were issued by Palmer Square BDC CLO 1, Ltd. (the “Issuer”), an exempted company incorporated with limited liability under the laws of the Cayman Islands and a wholly-owned indirect subsidiary of the Company, and consist of (i) $232 million of Class A Notes (the “Class A Notes”); (ii) $58.0 million Class B-1 Notes, (the “Class B-1 Notes”); and (iii) $10 million of Class B-2 Notes (the “Class B-2 Notes” and, together with the Class A Notes and the Class B-1 Notes, the “Secured Notes”). Additionally, on the Closing Date the Issuer issued $100.5 million of Subordinated Notes (the “Subordinated Notes”), which do not bear interest but are entitled to all of the principal and interest payments made on the loan portfolio held by the Issuer, net of interest and principal payments distributed to the holders of the Secured Notes. The Secured Notes together with the Subordinated Notes are collectively referred to herein as the “Notes.”
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The following table presents information on the Notes issued in the CLO Transaction as of March 31, 2025:
Description
Type
Principal Outstanding
Credit Rating
Class A Notes
Senior Secured Floating Rate
232,000,000
SOFR + (1.60)%
AAA
Class B-1 Notes
58,000,000
SOFR + (2.15)%
AA
Class B-2 Notes
Senior Secured Fixed Rate
(6.33)%
Total Secured Notes
300,000,000
Subordinated Notes (1)
100,500,000
None
Not rated
Total Notes
400,500,000
The following table presents information on the Notes issued in the CLO Transaction as of December 31, 2024:
On the Closing Date and in connection with the CLO Transaction, the Issuer and the Company entered into a note purchase agreement (the “Purchase Agreement”) with BofA Securities, Inc., as the initial purchaser (the “Initial Purchaser”), pursuant to which the Initial Purchaser purchased the Secured Notes issued pursuant to an indenture as part of the CLO Transaction.
The CLO Transaction is backed by a diversified portfolio of senior secured loans or participation interests therein with the potential for investment in second lien loans or participation interests therein, corporate bonds or loans made to a debtor-in-possession pursuant to Section 364 of the Bankruptcy Code having the priority allowed by either Section 364(c) or 364(d) of the Bankruptcy Code and fully secured by senior liens or participation interests therein, which is managed by the Company as collateral manager pursuant to a collateral management agreement entered into with the Issuer on the Closing Date (the “Collateral Management Agreement”). The Company has agreed to irrevocably waive all collateral management fees payable to it so long as it is the collateral manager under the Collateral Management Agreement. The Notes are scheduled to mature on July 15, 2037; however, the Notes may be redeemed by the Issuer, at the written direction of (i) a majority of the Subordinated Notes (with the consent of the Company, in the case of the Secured Notes) or (ii) the Company, in each case, on any business day on or after July 15, 2026.
The Secured Notes are the secured obligations of the Issuer, the Subordinated Notes are the unsecured obligations of the Issuer, and the indenture governing the Notes includes customary covenants and events of default. The Notes have not been, and will not be, registered under the Securities Act of 1933, as amended, or any state securities or “blue sky” laws and may not be offered or sold in the United States absent registration with the Securities and Exchange Commission or an applicable exemption from registration.
For the three months ended March 31, 2025 and March 31, 2024, the components of interest expense with respect to the Notes were as follows:
4,556,850
34,373
4,591,223
6.08
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Note 7. Share Transactions
Offering Proceeds
During the three months ended March 31, 2025 and March 31, 2024 the Company issued and sold 32,662 shares at an aggregate purchase price of $0.5 million and 5,450,000 shares at an aggregate purchase price of $89.7 million, respectively. These amounts include shares issued in reinvestment.
Distribution Reinvestment Plan
The Company has adopted a dividend reinvestment plan that provides for reinvestment of its dividends and other distributions on behalf of the Company’s stockholders, unless a stockholder elects to receive cash. As a result, if the Company’s Board authorizes, and the Company declares, a cash dividend or other distribution, then stockholders who do not “opt out” of the Company’s dividend reinvestment plan will have their cash dividends and distributions automatically reinvested in additional shares of the Company’s common stock, rather than receiving cash dividends and distributions.
Prior to the IPO, the Board primarily used newly-issued shares of the Company’s common stock to implement the dividend reinvestment plan. The number of shares of common stock to be issued to a participant prior to the IPO would be equal to the quotient determined by dividing the cash value of the dividend payable to such stockholder by the NAV per share as of the date such dividend was declared.
After the IPO, the Board intends to primarily use newly-issued shares to implement the dividend reinvestment plan, whether or not the shares are trading at a price per share at, below or above NAV. However, the Board reserves the right to purchase shares in the open market in connection with the implementation of the dividend reinvestment plan. The Board will examine the full facts and circumstances of each such dividend to determine the approach (i.e., to use newly issued shares or effectuate open market purchases to implement the dividend reinvestment plan) that is in the best interests of stockholders taking into account the Board’s fiduciary duties to stockholders, including by weighing the potential dilution in connection with such issuance to be incurred by the Company’s stockholders against the Company’s need and usage of reinvested funds, and, if the Company uses newly issued shares to implement the dividend reinvestment plan at a time when the shares are trading at a price below NAV, the stockholders’ receipt of fewer shares than they would have if the Company had effectuated open market purchases. The number of newly issued shares to be issued to a participant would be determined by dividing the total dollar amount of the dividend payable to such stockholder by the market price per share of the Company’s common stock at the close of regular trading on a national securities exchange on the dividend payment date. Shares purchased in open market transactions by Equiniti, the plan administrator and the Company’s transfer agent, registrar and dividend disbursing agent, will be allocated to a participant based upon the average purchase price, excluding any brokerage charges or other charges, of all shares of the Company’s common stock purchased with respect to the dividend.
A registered stockholder may elect to receive an entire distribution in cash by notifying Equiniti in writing so that such notice is received by the plan administrator no later than the record date for distributions to stockholders. The plan administrator will set up an account for shares acquired through the plan for each stockholder who has not elected to receive dividends or other distributions in cash and hold such shares in noncertificated form.
There will be no brokerage charges or other charges to stockholders who participate in the plan. The plan administrator’s fees will be paid by the Company.
Stockholders who receive dividends and other distributions in the form of stock are generally subject to the same U.S. federal, state and local tax consequences as are stockholders who elect to receive their distributions in cash. However, since a participating stockholder’s cash dividends will be reinvested, such stockholder will not receive cash with which to pay any applicable taxes on reinvested dividends. A stockholder’s basis for determining gain or loss upon the sale of stock received in a dividend or other distribution from the Company will generally be equal to the total dollar amount of the distribution payable to the stockholder. Any stock received in a dividend or other distribution will have a new holding period for tax purposes commencing on the day following the day on which the shares are credited to the U.S. stockholder’s account.
Participants may terminate their accounts under the plan by so notifying the plan administrator by submitting a letter of instruction terminating the participant’s account under the plan to Equiniti. The plan may be terminated by the Company upon notice in writing mailed to each participant at least 30 days prior to any record date for the payment of any dividend by the Company.
If participants withdraw from the plan or the plan is terminated, the plan administrator will cause the shares held for the participant under the plan to be delivered to the participant. If an investor holds common stock with a brokerage firm that does not participate in the plan, such investor will not be able to participate in the plan and any dividend reinvestment may be affected on different terms than those described above.
For the three months ended March 31, 2025, the Company issued 32,662 shares of its common stock pursuant to the Company dividend reinvestment plan.
Open Market Share Repurchase Plan
The Board authorized the Company to repurchase shares of its common stock through an open-market share repurchase program for up to $20 million in the aggregate of shares of the Company’s common stock through 12 months from the date of the IPO. Pursuant to such authorization and concurrently with the closing of the IPO, the Company entered into a share repurchase plan (the “Company Rule 10b5-1 Stock Repurchase Plan”) to acquire up to $15 million in the aggregate of shares of its common stock, in accordance with the guidelines specified in Rule 10b-18 and Rule 10b5-1 of the Exchange Act. The Company Rule 10b5-1 Stock Repurchase Plan commenced on March 23, 2024, beginning 60 calendar days following the end of the “restricted period” under Regulation M, and terminated upon the effectiveness of the Extended Company Rule 10b5-1 Stock Repurchase Plan (as defined below).
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The Board subsequently authorized the Company to enter into an extended share repurchase plan. On December 19, 2024, the Company entered into a share repurchase plan (the “Extended Company Rule 10b5-1 Stock Repurchase Plan”) to acquire up to $20 million in the aggregate of shares of the Company’s common stock less any repurchases made pursuant to the Company Rule 10b5-1 Stock Repurchase Plan, in accordance with the guidelines specified in Rule 10b-18 and Rule 10b5-1 of the Exchange Act. The Extended Company Rule 10b5-1 Stock Repurchase Plan commenced on January 22, 2025 and will terminate upon the earliest to occur of (i) 12 months from the date of the Extended Company Rule 10b5-1 Stock Repurchase Plan, (ii) the end of the trading day on which the aggregate purchase price for all shares purchased under the Extended Company Rule 10b5-1 Stock Repurchase Plan equals $20 million less any repurchases made pursuant to the Company Rule 10b5-1 Stock Repurchase Plan and (iii) the occurrence of certain other events described in the Extended Company Rule 10b5-1 Stock Repurchase Plan.
The Company Rule 10b5-1 Stock Repurchase Plan and Extended Company Rule 10b5-1 Stock Repurchase Plan are intended to allow the Company to repurchase shares of its common stock at times when it otherwise might be prevented from doing so under insider trading laws. The Company Rule 10b5-1 Stock Repurchase Plan and Extended Company Rule 10b5-1 Stock Repurchase Plan will require the Company’s agent to repurchase shares of the Company’s common stock on the Company’s behalf when the market price per share of the Company’s common stock is below the most recently reported NAV per share of common stock. Under the Company Rule 10b5-1 Stock Repurchase Plan and Extended Company Rule 10b5-1 Stock Repurchase Plan, the agent will increase the volume of purchases made as the price of the Company’s common stock declines, subject to volume restrictions.
The repurchase of shares pursuant to the Company Rule 10b5-1 Stock Repurchase Plan and Extended Company Rule 10b5-1 Stock Repurchase Plan are intended to satisfy the conditions of Rule 10b5-1 and Rule 10b-18 under the Exchange Act and will otherwise be subject to applicable law, including Regulation M, which may prohibit purchases under certain circumstances.
For the three months ended March 31, 2025, the Company repurchased 98,399 shares of its common stock pursuant to the Company Rule 10b5-1 Repurchase Plan and Extended Company Rule 10b5-1 Stock Repurchase Plan.
PSCM Rule 10b5-1 Stock Purchase Plan
In addition, PSCM will purchase up to $5 million in the aggregate of shares of the Company’s common stock in the open market within one year of the IPO date if the Company’s shares of common stock trade below a specific level of NAV per share following the IPO. Concurrently with the closing of the IPO, PSCM entered into a share repurchase plan (the “PSCM Rule 10b5-1 Stock Purchase Plan”) to permit the purchase of up to $2.5 million shares of the Company’s common stock. The purchases of shares pursuant to the PSCM Rule 10b5-1 Stock Purchase Plan will be implemented in accordance with Rule 10b5-1 and Rule 10b-18 under the Exchange Act.
The PSCM Rule 10b5-1 Stock Purchase Plan is intended to allow PSCM to purchase shares of the Company’s common stock at times when it otherwise might be prevented from doing so under insider trading laws. The PSCM Rule 10b5-1 Stock Purchase Plan will require PSCM’s agent to purchase shares of common stock on PSCM’s behalf when the market price per share of the Company’s common stock is trading below the most recently reported NAV per share of common stock. Under the PSCM Rule 10b5-1 Stock Purchase Plan, the agent will increase the volume of purchases made as the price of the Company’s common stock declines, subject to volume restrictions.
The purchase of shares pursuant to the PSCM Rule 10b5-1 Stock Purchase Plan is intended to satisfy the conditions of Rule 10b5-1 and Rule 10b-18 under the Exchange Act, and will otherwise be subject to applicable law, including Regulation M, which may prohibit purchases under certain circumstances.
The PSCM Rule 10b5-1 Stock Purchase Plan commenced on April 22, 2024 and will terminate upon the earliest to occur of (i) 12 months from the date of the PSCM Rule 10b5-1 Stock Purchase Plan, (ii) the end of the trading day on which the aggregate purchase price for all shares purchased under the PSCM Rule 10b5-1 Stock Purchase Plan equals $2.5 million, and (iii) the occurrence of certain other events described in the PSCM Rule 10b5-1 Stock Purchase Plan.
For the three months ended March 31, 2025, PSCM purchased 1,631 shares of the Company’s common stock pursuant to the PSCM Rule 10b5-1 Stock Purchase Plan.
Note 8. Dividends and Distributions
The Company’s dividends and distributions are recorded on the ex-dividend date. The following table summarizes the Company’s dividend declarations and distributions during the three months ended March 31, 2025:
Date Declared
Record Date
Payment Date
Amount Per Share
Cash Distribution
DRIP Shares Issued
DRIP Shares Value
2/27/2025
3/28/2025
4/10/2025
0.360
11,714,851
3/24/2025
0.030
976,238
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The following table summarizes the Company’s dividend declarations for the year ended December 31, 2024:
3/20/2024
3/28/2024
4/10/2024
0.490
12,893,635
185,345
3,057,234
(1)
5/7/2024
6/28/2024
7/16/2024
0.420
11,093,012
157,231
2,585,298
(2)
6/20/2024
0.050
1,320,596
18,718
307,774
8/7/2024
9/27/2024
10/14/2024
11,552,807
132,571
2,149,264
(3)
9/23/2024
1,375,334
15,782
255,865
11/5/2024
12/27/2024
1/13/2025
13,693,684
110,129
1,735,280
(4)
12/23/2024
0.060
1,956,241
15,733
247,897
Note 9. Commitments and Contingencies
As of March 31, 2025 and December 31, 2024, the Company had an aggregate of $20.2 million and $21.6 million, respectively, of unfunded commitments to provide debt financing to its portfolio companies. As of each of March 31, 2025 and December 31, 2024, there were no capital calls or draw requests made by the portfolio companies to fund these commitments. Such commitments are generally up to the Company’s discretion to approve or are subject to the satisfaction of certain financial and nonfinancial covenants and involve, to varying degrees, elements of credit risk in excess of the amount recognized in the Company’s consolidated statements of assets and liabilities and are not reflected in the Company’s consolidated statements of assets and liabilities.
A summary of the composition of the unfunded commitments as of March 31, 2025 is shown in the table below:
Expiration Date (1)
As of March 31,2025
9/19/2026
$571,091
Aptean Acquiror Inc.
1/30/2026
184,686
528,261
Aramsco, Inc.
10/10/2025
561,386
10/25/2025
466,666
11/22/2026
492,210
1,128,928
Enverus Holdings, Inc.
12/22/2025
118,108
12/24/2029
472,973
Galway Borrower LLC
7/25/2026
4,189,257
376,546
Logrhythm, Inc.
636,364
Majco LLC
3/11/2027
4,486,816
5/10/2026
697,674
MRI Software LLC
601,016
Optimizely North America Inc.
458,333
Patriot Growth Insurance Services, LLC
11/17/2025
1,480,000
4/8/2026
686,119
TMC Buyer, Inc.
416,667
US Fertility Enterprises, LLC
10/14/2026
217,391
USIC Holdings, Inc.
9/10/2026
116,094
147,142
Total unfunded commitments
$20,196,519
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A summary of the composition of the unfunded commitments as of December 31, 2024 is shown in the table below:
As of December 31,2024
Aptean Inc.
436,880
238,414
B'Laster Holdings, LLC
11/20/2026
1,197,934
310,811
458,884
Everest SubBidCo
9/24/2025
2,660,000
512,698
4,360,571
GS AcquisitionCo, Inc.
3/26/2026
1,232,000
1,200,000
11/22/2025
135,000
139,276
248,302
$21,578,478
From time to time, the Company may become a party to certain legal proceedings incidental to the normal course of its business. As of March 31, 2025, management is not aware of any pending or threatened litigation.
Note 10. Earnings Per Share
In accordance with the provisions of ASC Topic 260, Earnings per Share (“ASC 260”), basic earnings per share is computed by dividing earnings available to common stockholders by the weighted average number of shares outstanding during the period. Other potentially dilutive common shares, and the related impact to earnings, are considered when calculating earnings per share on a diluted basis. As of each of March 31, 2025 and March 31, 2024, there were no dilutive shares.
The following table sets forth the computation of basic and diluted earnings per share of common stock for the three months ended March 31, 2025 and March 31, 2024:
Weighted average shares of common stock outstanding - basic and diluted
Earnings (loss) per share of common stock - basic and diluted
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Note 11. Financial Highlights
The following per share of common stock data has been derived from information provided in the consolidated financial statements. The following is a schedule of financial highlights for the three months ended March 31, 2025, and March 31, 2024:
For the Three Months Ended
March 31,
Per Common Share Operating Performance
Net Asset Value, Beginning of Period
17.04
Results of Operations:
Net Investment Income(1)
Net Realized and Unrealized Gain (Loss) on Investments(4)
(0.66
0.09
0.61
Distributions to Common Stockholders
Distributions from Net Investment Income
(0.39
(0.49
Net Decrease in Net Assets Resulting from Distributions
Net Asset Value, End of Period
17.16
Shares Outstanding, End of Period
32,534,040
32,552,794
Ratio/Supplemental Data
Net assets, end of period
Weighted-average shares outstanding
Total Return(3)
(1.05
3.70
Portfolio turnover
Ratio of operating expenses to average net assets without waiver(2)
13.72
13.70
Ratio of operating expenses to average net assets with waiver(2)
13.66
Ratio of net investment income (loss) to average net assets without waiver(2)
9.68
12.03
Ratio of net investment income (loss) to average net assets with waiver(2)
12.07
Note 12. Segment Reporting
The Company operates through a single operating and reporting segment with an investment objective to generate both current income and capital appreciation through debt and equity investments. The Chief Operating Decision Maker (“CODM”) is the Company’s chief executive officer, and the CODM assesses the performance and makes operating decisions of the Company on a consolidated basis primarily based on the Company’s net increase in net assets resulting from operations (“net income”). Net income is comprised of total investment income (‘segment revenues’) and total expenses (‘significant segment expenses’), which are considered the key segment measures of profit or loss reviewed by the CODM. In addition to numerous other factors and metrics, the CODM utilizes net income as a key metric in determining the amount of dividends to be distributed to the Company’s stockholders, implementing investment policy decisions, strategic initiatives, managing the Company’s portfolio, allocating assets, and assessing the performance of the portfolio. As the Company’s operations are comprised solely of the Investment Management Segment, the segment assets are reflected on the accompanying consolidated statements of assets and liabilities as “total assets” and the significant segment expenses are listed on the accompanying consolidated statement of operations.
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Note 13. Subsequent Events
The Company’s management has evaluated subsequent events through the date of issuance of the consolidated financial statements included herein. There have been no subsequent events that require recognition or disclosure in these consolidated financial statements, except for the following:
Distributions
On April 10, 2025, the Company paid a distribution in the amount of $12,691,089, or $0.39 per share, to shareholders on record as of March 28, 2025.
Unfunded Capital Commitments
On April 1, 2025, $207,660.00 of the outstanding commitment to Patriot Growth Insurance Services, LLC was funded. On May 1, 2025, $484,630.00 of the outstanding commitment to Patriot Growth Insurance Services, LLC was funded. The balance of the remaining unfunded commitment was $787,710.00 as of such date.
On April 1, 2025, $14,714.17 was paid down on the USIC Holdings Inc. facility. On April 11, 2025, $18,392.72 was paid down on the USIC Holdings Inc. facility. On April 17, 2025, $14,714.17 of the outstanding commitment to USIC Holdings Inc. was funded. On April 24, 2025, $14,714.17 was paid down on the USIC Holdings Inc. facility. On April 28, 2025, $22,071.26 was paid down on the USIC Holdings Inc. facility. On May 2, 2025, $18,392.72 of the outstanding commitment to USIC Holdings Inc. was funded. The balance of the remaining unfunded commitment was $183,927.17 as of such date.
On April 3, 2025, $134,817.67 of the outstanding commitment to Aptean Inc. was funded. On April 11, 2025, $49,868.21 of the outstanding commitment to Aptean Inc. was funded. The balance of the remaining unfunded commitment was $0 as of such date.
On April 9, 2025, $35,101.71 of the outstanding commitment to Galway Borrower LLC was funded. On May 1, 2025, $78,712.92 was paid down on the Galway Borrower LLC facility. The balance of the remaining unfunded commitment was $420,156.84 as of such date.
On April 14, 2025, $27,602.16 of the outstanding commitment to Dwyer Instruments, LLC was funded. The balance of the remaining unfunded commitment was $1,101,326.30 as of such date.
On April 25, 2025, $936,599.42 of the outstanding commitment to Majco LLC was funded. The balance of the remaining unfunded commitment was $3,550,216.14 as of such date.
On April 30, 2025, $469,804.90 of the outstanding commitment to Galway Borrower LLC was funded. The balance of the remaining unfunded commitment was $3,719,451.61 as of such date.
On April 30, 2025, $69,565.21 of the outstanding commitment to US Fertility Enterprises, LLC was funded. The balance of the remaining unfunded commitment was $147,826.09 as of such date.
Company Rule 10b5-1 Stock Repurchase Plan
From April 1, 2025 to May 6, 2025, the Company repurchased 160,795 shares of its common stock pursuant to the Extended Company Rule 10b5-1 Stock Repurchase Plan at an aggregate price of $2,103,973.
From April 1, 2025 to May 6, 2025, PSCM purchased 19,942 shares of the Company's common stock pursuant to the PSCM Rule 10b5-1 Stock Purchase Plan at an aggregate price of $262,406.
On April 22, 2025, PSCM entered into a share purchase plan (the “Extended PSCM Rule 10b5-1 Stock Purchase Plan”) to acquire up to $2.5 million in the aggregate of shares of the Company’s common stock less any purchases made pursuant to the PSCM Rule 10b5-1 Stock Purchase Plan, in accordance with the guidelines specified in Rule 10b-18 and Rule 10b5-1 of the Exchange Act. The Extended PSCM Rule 10b5-1 Stock Purchase Plan will commence on May 22, 2025 and will terminate upon the earliest to occur of (i) 12 months from the commencement of the Extended PSCM Rule 10b5-1 Stock Purchase Plan, (ii) the end of the trading day on which the aggregate purchase price for all shares purchased under the Extended PSCM Rule 10b5-1 Stock Purchase Plan equals $2.5 million less any purchases made pursuant to the PSCM Rule 10b5-1 Stock Purchase Plan and (iii) the occurrence of certain other events described in the Extended PSCM Rule 10b5-1 Stock Purchase Plan.
The Extended PSCM Rule 10b5-1 Stock Purchase Plan is intended to allow PSCM to purchase shares of the Company’s common stock at times when it otherwise might be prevented from doing so under insider trading laws. The Extended PSCM Rule 10b5-1 Stock Purchase Plan will require PSCM’s agent to purchase shares of common stock on PSCM’s behalf when the market price per share of the Company’s common stock is below the most recently reported NAV per share of common stock. Under the Extended PSCM Rule 10b5-1 Stock Purchase Plan, the agent will increase the volume of purchases made as the price of the Company’s common stock declines, subject to volume restrictions.
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Item 2. Management’s Discussion and Analysis of Financial Condition and Results of Operations.
The following discussion and analysis should be read in conjunction with our consolidated financial statements and related notes and other financial information appearing elsewhere in this Quarterly Report on Form 10-Q. Except as otherwise specified, references to “we,” “us,” “our,” or the “Company” refer to Palmer Square Capital BDC Inc.
Forward-Looking Statements
This quarterly report on Form 10-Q contains forward-looking statements that involve substantial known and unknown risks, uncertainties and other factors. Undue reliance should not be placed on such statements. These forward-looking statements are not historical facts, but rather are based on current expectations, estimates and projections about our company, our current and prospective portfolio investments, our industry, our beliefs and our assumptions. Words such as “anticipates,” “expects,” “intends,” “plans,” “will,” “may,” “continue,” “believes,” “seeks,” “estimates,” “would,” “could,” “should,” “targets,” “projects,” and variations of these words and similar expressions are intended to identify forward-looking statements. These statements are not guarantees of future performance and are subject to risks, uncertainties and other factors, some of which are beyond our control and difficult to predict and could cause actual results to differ materially from those expressed or forecasted in the forward-looking statements, including:
Although we believe that the assumptions on which these forward-looking statements are based are reasonable, any of the assumptions could prove to be inaccurate, and as a result, the forward-looking statements based on those assumptions also could be inaccurate. In light of these and other uncertainties, the inclusion of a projection or forward-looking statement in this quarterly report on Form 10-Q should not be regarded as a representation by us that our plans and objectives will be achieved. These risks and uncertainties include those described or identified in the section entitled “Item 1A. Risk Factors” and elsewhere in this quarterly report on Form 10-Q. You should not place undue reliance on these forward-looking statements, which apply only as of the date of this quarterly report on Form 10-Q. Moreover, we assume no duty and do not undertake to update the forward-looking statements.
Overview
We are a financial services company that primarily lends to and invests in corporate debt securities of companies, including small to large private U.S. companies. We were organized as a Maryland corporation on August 26, 2019 and are structured as an externally managed, non-diversified closed-end management investment company. We have elected to be regulated as a BDC under the 1940 Act and, beginning with our taxable year ended December 31, 2020, we have elected to be treated as a RIC under Subchapter M of the Code, and we expect to qualify as a RIC annually.
On January 22, 2024, we completed our IPO, issuing 5,450,000 shares of common stock, par value $0.001, at a public offering price of $16.45 per share. Our common stock began trading on the New York Stock Exchange under the symbol “PSBD” on January 18, 2024.
We are externally managed by the Investment Advisor, an investment adviser that is registered with the SEC under the Advisers Act, pursuant to the Advisory Agreement. Subject to the supervision of our Board, a majority of which is made up of Independent Directors, our Investment Advisor manages our day-to-day operations and provides us with investment advisory and management services and certain administrative services. The Investment Advisor, in its capacity as Administrator, provides the administrative services necessary for us to operate pursuant to the Administration Agreement. The Administrator has entered into the Sub-Administration Agreement to delegate certain administrative functions to the Sub-Administrator. Our Investment Advisor is a majority-owned subsidiary of PSCM, which is a privately held firm specializing in global alternative (non-traditional) investments with a total return orientation.
Our investment objective is to maximize total return, comprised of current income and capital appreciation. However, no assurance can be given that our investment objective will be achieved, and investment results may vary substantially on a monthly, quarterly and annual basis. The Company’s current investment focus is guided by two strategies that facilitate our investment opportunities and core competencies: (1) investing in corporate debt securities and, to a lesser extent, (2) investing in CLO structured credit funds that typically own corporate debt securities, including the equity and junior debt tranches of CLOs. We seek to invest in credit and other assets that the Investment Advisor believes have strong structural protections, limited downside, and low long-term beta, or volatility, in comparison to systemic risk within the broader credit and equity markets. A significant portion of the loans in which we may invest or obtain exposure to through our investments in structured securities may be deemed “Covenant-Lite Loans,” which means the loans contain fewer or no maintenance covenants compared to other loans and do not include terms which allow the lender to declare a default if certain covenants are breached.
Revenues
We generate revenue primarily in the form of interest and fee income on debt investments we hold and capital gains, if any, on investments. Our debt investments generally bear interest at a floating rate usually determined on the basis of a benchmark. Interest on debt securities is generally payable quarterly or semi-annually. In some instances, we receive payments on our debt investments based on scheduled amortization of the outstanding balances. In addition, we receive repayments of some of our debt investments prior to their scheduled maturity date. The frequency or volume of these repayments is expected to fluctuate significantly from period to period. Our portfolio activity also reflects the proceeds of sales of securities. We may also generate revenue in the form of commitment, origination, amendment, structuring or due diligence fees, fees for providing managerial assistance and consulting fees.
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Expenses
Our primary operating expenses include the payment of fees to the Investment Advisor under the Advisory Agreement, our allocable portion of overhead and rental expenses under the Administration Agreement and other operating costs described below. We bear all other out-of-pocket costs and expenses of our operations and transactions, including:
Portfolio and Investment Activity
As of March 31, 2025, our weighted average total yield to maturity of debt and income producing securities at fair value was 10.37%, and our weighted average total yield to maturity of debt and income producing securities at amortized cost was 8.48%.
As of December 31, 2024, our weighted average total yield to maturity of debt and income producing securities at fair value was 10.65%, and our weighted average total yield to maturity of debt and income producing securities at amortized cost was 9.06%.
As of March 31, 2025, we had 260 debt and equity investments in 209 portfolio companies with an aggregate fair value of approximately $1.3 billion.
As of December 31, 2024, we had 262 debt and equity investments in 207 portfolio companies with an aggregate fair value of approximately $1.3 billion.
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Our investment activity for the three months ended March 31, 2025 and 2024 is presented below (information presented herein is at amortized cost unless otherwise indicated).
New investments:
Gross investments
$104,323,107
$346,482,823
Less: sold investments
(144,369,364)
(69,556,336)
Total new investments
(40,046,257)
276,926,487
Principal amount of investments funded:
First-lien senior secured debt investments
$97,436,250
$312,111,711
Second-lien senior secured debt investments
10,797,500
Corporate bonds
Convertible bonds
Collateralized securities and structured products - debt
23,573,612
Common stock
Total principal amount of investments funded
104,323,107
346,482,823
Principal amount of investments sold or repaid:
$138,003,373
$54,991,776
3,203,994
9,060,000
1,249,932
261,997
4,254,628
Common Stock
Total principal amount of investments sold or repaid
Our investment activity for the three months ended March 31, 2025 and March 31, 2024 is presented below (information presented herein is at par unless otherwise indicated). New investment commitment refers to long-term funded commitments in new securities made during the period that remained outstanding as of March 31, 2025 and March 31, 2024, respectively.
Number of new investment commitments
Average new investment commitment amount
3,855,336
4,052,057
Weighted average maturity for new investment commitments
5.59 years
6.18 years
Percentage of new debt investment commitments at floating rates
100.00
Percentage of new debt investment commitments at fixed rates
0.00
Weighted average interest rate of new investment commitments(1)
8.52
10.19
Weighted average spread over reference rate of new floating rate investment commitments(2)
4.21
4.81
Weighted average interest rate on long-term investments sold or paid down
8.33
7.99
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As of March 31, 2025 and December 31, 2024, our investments consisted of the following:
The table below describes investments by industry composition based on fair value as of March 31, 2025 and December 31, 2024:
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The table below shows the weighted average yields and interest rate of our debt investments at fair value as of March 31, 2025 and December 31, 2024:
Weighted average total yield of debt and income producing securities
10.37
10.65
Weighted average interest rate of debt and income producing securities(1)
8.80
8.93
Weighted average spread over reference rate of all floating rate investments (2)
4.47
4.48
Results of Operations
The following table represents the operating results for the three months ended March 31, 2025 and March 31, 2024.
Total investment income
Less: Net expenses
Net investment income
Net realized gains (losses) on investments
Net change in unrealized gains (losses) on investments
Investment Income
Investment income for the three months ended March 31, 2025 and March 31, 2024 was as follows:
Interest from investments
For the three months ended March 31, 2025 and March 31, 2024, total investment income was driven by interest income from our investment portfolio. Total investment income is lower for the three months ended March 31, 2025 compared to the prior year period due to the investment portfolio primarily consisting of floating rate loans in a falling rate environment. The size of our investment portfolio at fair value was unchanged from $1.3 billion as of December 31, 2024 to $1.3 billion as of March 31, 2025. The size of our investment portfolio at fair value increased from $1.0 billion as of December 31, 2023 to $1.3 billion as of March 31, 2024. As of March 31, 2025 loans on non-accrual status represented 0.24% of the total investments at fair value (or 0.72% at amortized cost). As of December 31, 2024, loans on non-accrual status represented 0.08% of the total investments at fair value (or 0.46% at amortized cost).
Operating expenses for the three months ended March 31, 2025 and March 31, 2024 were as follows:
Other operating expenses
1,118,003
960,109
Management fee waiver
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Net expenses for the three months ended March 31, 2025 were $18.3 million, which consisted of $13.0 million in interest and debt financing, $2.3 million in management fees, $1.8 million in incentive fees, $1.1 million in other operating expenses, and $37 thousand in directors fees.
Net expenses for the three months ended March 31, 2024 were $18.5 million, which consisted of $13.2 million in interest expense, $2.4 million in management fees, $1.9 million in incentive fees, $960 thousand in other operating expenses, and $37 thousand in directors fees offset by $51 thousand in management fee waiver from the Investment Advisor.
Interest expense decreased during the three months ended March 31, 2025 compared to the prior year period primarily due to the average interest rate on debt decreasing from 6.94% at March 31, 2024 to 6.07% at March 31, 2025 (average debt outstanding increased from $721.1 million to $806.9 million during the same period) under our BoA Credit Facility, WF Credit Facility and CLO Transaction. Incentive fees and management fees decreased compared to the prior year period due to lower net investment income and average net assets, respectively.
Net Change in Unrealized Gains (Losses) on Investments
We fair value our portfolio investments quarterly and any changes in fair value are recorded as unrealized gains or losses. During the three months ended March 31, 2025 and March 31, 2024, net unrealized gains (losses) on our investment portfolio were comprised of the following:
Unrealized gains on investments
13,006,671
22,270,401
Unrealized (losses) on investments
(28,414,540
(13,972,159
The change in unrealized appreciation (depreciation) for the three months ended March 31, 2025 and March 31, 2024 totaled $(15.4) million, $8.3 million, respectively. For the three months ended March 31, 2025, this consisted of net unrealized depreciation of $21.7 million related to existing portfolio investments and net unrealized appreciation of $6.3 million related to exited portfolio investments (a portion of which has been reclassified to realized gains). For the three months ended March 31, 2024, this consisted of net unrealized appreciation of $1.5 million related to existing portfolio investments and net unrealized appreciation of $6.8 million related to exited portfolio investments (a portion of which has been reclassified to realized gains).
Financial Condition, Liquidity and Capital Resources
We anticipate cash to be generated from registered offerings of our common stock and other future offerings of equity and debt securities (including on-balance sheet CLO financings), and cash flows from operations, including interest earned from the temporary investment of cash in cash equivalents, U.S. government securities and other high-quality debt investments that mature in one year or less. On January 14, 2020, our sole stockholder approved the application of the reduced asset coverage requirements in Section 61(a)(2) of the 1940 Act to us effective as of such date. As a result of the reduced asset coverage requirement, we are permitted, under specified conditions, to issue multiple classes of indebtedness and one class of stock senior to our common stock if our asset coverage, as defined in the 1940 Act, is at least equal to 150% immediately after each such issuance. If we are unable to obtain leverage or raise equity capital on terms that are acceptable to us, our ability to grow our portfolio could be substantially impacted. Furthermore, while any indebtedness and senior securities remain outstanding, we may be required to prohibit any distribution to our stockholders or the repurchase of shares unless we meet the applicable asset coverage ratios at the time of the distribution or repurchase. In connection with borrowings, our lenders, including under the BoA Credit Facility and the WF Credit Facility, may require us to pledge assets, investor commitments to fund capital calls and/or the proceeds of those capital calls. In addition, such lenders may ask us to comply with positive or negative covenants that could have an effect on our operations.
During the three months ended March 31, 2025, we experienced a net increase in cash and cash equivalents of $106 thousand. During the period, net cash provided by operating activities was $46.4 million, primarily as a result of fundings of portfolio investments (excluding investments in short-term investments) of $104.3 million, partially offset by proceeds received from sale of investments of $144.4 million. We funded short-term investments during the period, and as of the end of the period we held $56.9 million in fair value of short-term investments. During the same period, net cash used in financing activities was $46.3 million, primarily consisting of $29.7 million net repayments under the BoA Credit Facility and WF Credit Facility and distributions paid in cash of $15.6 million, partially increased by proceeds from the issuance of common stock of $0.5 million.
During the three months ended March 31, 2024, we experienced a net increase in cash and cash equivalents of $6.1 million. During the period, net cash used in operating activities was $237.9 million, primarily as a result of fundings of portfolio investments (excluding investments in short-term investments) of $346.5 million, partially offset by proceeds received from sale of investments of $69.6 million. We funded short-term investments during the period, and as of the end of the period we held $64.1 million in fair value of short-term investments. During the same period, net cash provided by financing activities was $244.0 million, primarily consisting of $158.0 million of net borrowings under the BoA Credit Facility and WF Credit Facility, partially increased by proceeds from the issuance of common stock of $89.7 million.
As of March 31, 2025 and March 31, 2024, we had cash and cash equivalents of $2.9 million and $8.3 million, respectively. As of March 31, 2025, we had $205.9 million in undrawn capacity under the BoA Credit Facility and $20.7 million in undrawn capacity under the WF Credit Facility. As of March 31, 2024, we had $63 million in undrawn capacity under the BoA Credit Facility and $38.8 million in undrawn capacity under the WF Credit Facility.
As a BDC, we are required to meet a coverage ratio of total assets to total borrowings and other senior securities, which include all of our borrowings and any preferred stock that we may issue in the future, of at least 150%. If this ratio declines below 150%, we cannot incur additional debt and could be required to sell a portion of our investments to repay some debt when it is disadvantageous to do so. As of March 31, 2025, our asset coverage ratio was 167%.
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Capital Contributions
During the three months ended March 31, 2025 and March 31, 2024, the Company issued and sold 32,662 shares at an aggregate purchase price of $0.5 million, and 5,450,000 shares at an aggregate purchase price of $89.7 million, respectively. These amounts include shares issued in reinvestment.
Concurrently with the closing of the IPO, on January 22, 2024, we entered into a share repurchase plan (the “Company Rule 10b5-1 Repurchase Plan”) to acquire up to $15 million in the aggregate of shares of our common stock, if the market price per share of our common stock is below the most recently reported NAV per share, subject to certain limitations. Under the Company Rule 10b5-1 Stock Repurchase Plan, the agent will increase the volume of purchases made as the price of our common stock declines, subject to volume restrictions. The Company Rule 10b5-1 Repurchase Plan commenced on March 23, 2024 and terminated upon the effectiveness of the Extended Company Rule 10b5-1 Stock Repurchase Plan (as defined below).
On December 19, 2024, we entered into an extended share repurchase plan (the “Extended Company Rule 10b5-1 Repurchase Plan”) to acquire up to $20 million in the aggregate of shares of our common stock less any repurchases made pursuant to the Company Rule 10b5-1 Repurchase Plan, if the market price per share of our common stock is below the most recently reported NAV per share, subject to certain limitations. Under the Extended Company Rule 10b5-1 Stock Repurchase Plan, the agent will increase the volume of purchases made as the price of our common stock declines, subject to volume restrictions. The Extended Company Rule 10b5-1 Repurchase Plan commenced on January 22, 2025 and will terminate upon the earliest to occur of (i) 12 months from the date of the Extended Company Rule 10b5-1 Stock Repurchase Plan, (ii) the end of the trading day on which the aggregate purchase price for all shares purchased under the Extended Company Rule 10b5-1 Stock Repurchase Plan equals $20 million less any repurchases made pursuant to the Company Rule 10b5-1 Stock Repurchase Plan and (iii) the occurrence of certain other events described in the Extended Company Rule 10b5-1 Stock Repurchase Plan.
For the three months ended March 31, 2025, we repurchased 98,399 shares of our common stock pursuant to the Company Rule 10b5-1 Repurchase Plan.
In addition, PSCM will purchase up to $5 million in the aggregate of shares of our common stock in the open market within one year of the IPO date if shares of our common stock trade below a specific level of NAV per share following the IPO. Concurrently with the closing of the IPO, PSCM entered into a share repurchase plan (the “PSCM Rule 10b5-1 Stock Purchase Plan”) to permit the purchase of up to $2.5 million shares of our common stock, if the market price per share of our common stock is below the most recently reported NAV per share, subject to certain limitations. The PSCM Rule 10b5-1 Stock Purchase Plan commenced on April 22, 2024 and will terminate upon the earliest to occur of (i) 12 months from the date of the PSCM Rule 10b5-1 Stock Purchase Plan, (ii) the end of the trading day on which the aggregate purchase price for all shares purchased under the PSCM Rule 10b5-1 Stock Purchase Plan equals $2.5 million, and (iii) the occurrence of certain other events described in the PSCM Rule 10b5-1 Stock Purchase Plan.
For the three months ended March 31, 2025, PSCM purchased 1,631 shares of the Company's common stock pursuant to the PSCM Rule 10b5-1 Stock Purchase Plan.
Financing Arrangements
On February 18, 2020, we, through a special purpose wholly-owned subsidiary, PS BDC Funding, entered into the Credit Agreement with the Lenders, BofA N.A. as the administrative agent and BofA Securities, as Lead Arranger and Sole Book Manager, pursuant to which the Lenders agreed to provide us with a revolving line of credit.
Under the BoA Credit Facility, the Lenders have agreed to extend credit to PS BDC Funding in an aggregate amount up to the Commitment (as defined in the Credit Agreement) amount. The Commitment amount for the BoA Credit Facility is currently $525 million. The Borrowers’ ability to draw under the BoA Credit Facility is scheduled to terminate on February 11, 2028. All amounts outstanding under the BoA Credit Facility are required to be repaid by February 18, 2028. On March 29, 2024, we entered into a fourth amendment to the BoA Credit Facility to, among other things: (i) extend the facility maturity date from February 18, 2025 to February 18, 2028; (ii) update arrangements for the calculation of the fee on unused commitments from 1.30% to a range from 0.50% to 1.40%, depending on the amount of commitments utilized, and (iii) payment of an extension fee.
Prior to February 3, 2023, the loans under the BOA Credit Facility may have been base rate loans or euro currency loans. The base rate loans bore interest at the base rate plus 1.30%, and the eurocurrency rate loans bore interest at 1-month or 3-month LIBOR plus 1.30%. The “base rate” was equal to the highest of (a) the federal funds rate plus 0.50%, (b) the prime rate, and (c) 1-month or 3-month LIBOR. On February 3, 2023, the Company entered into an omnibus amendment to the BoA Credit Facility that, among other things: (i) removed LIBOR transition language and (ii) replaced eurocurrency rate loans with SOFR loans.
As of February 3, 2023, the loans under the BoA Credit Facility may be base rate loans or SOFR loans. The base rate loans will bear interest at the base rate plus 1.40%, and the SOFR loans will bear interest at 1-month SOFR plus 1.40% or 3-month SOFR plus 1.45%. The “base rate” will be equal to the highest of (a) the federal funds rate plus 0.50%, (b) the prime rate, and (c) 1-month or 3-month SOFR plus 0.10%. The Credit Agreement includes fallback language in the event that SOFR becomes unavailable. Interest pursuant to base rate loans is payable quarterly in arrears, and interest pursuant to SOFR loans is payable either quarterly or monthly, as specified by the Borrowers in a loan notice pertaining thereto. The Credit Agreement requires the payment of a commitment fee of 0.50% for unused Commitments until the four-month anniversary of the Second Amendment to the Credit Agreement. Thereafter, the commitment fee is 0.50% on unused Commitments up to 30% of the BoA Credit Facility, and 1.30% on unused Commitments in excess of 30% of the BoA Credit Facility. Such fee is payable quarterly in arrears. The advance rate for PS BDC Funding’s Eligible Collateral Assets ranges from 40% for Second Lien Bank Loans to 70% for First Lien Bank Loans that are B Assets to 100% for Cash (excluding Excluded Amounts) (as each such term is defined in the Credit Agreement).
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PS BDC Funding has pledged all of its assets to BofA N.A., in its capacity as Administrative Agent, to secure its obligations under the BoA Credit Facility. Both the Company and PS BDC Funding have made customary representations and warranties and are required to comply with various covenants, reporting requirements, and other customary requirements for similar credit facilities. Borrowing under the BoA Credit Facility is subject to the leverage restrictions contained in the 1940 Act and PS BDC Funding complies with 1940 Act provisions relating to affiliated transactions and custody (Section 17, as modified by Section 57, of the 1940 Act). The custodian of the assets pledged to BofA N.A. pursuant to the BoA Credit Facility is U.S. Bank. The obligations under the Credit Agreement may be accelerated upon the occurrence of an event of default under the Credit Agreement, including in the event of a change of control of PS BDC Funding or if the Investment Advisor ceases to serve as investment adviser to the Company.
As of March 31, 2025, we had $319.1 million principal outstanding and $205.9 million of available Commitments under the BoA Credit Facility, and PS BDC Funding was in compliance with the applicable covenants in the BoA Credit Facility on such date.
On December 18, 2020, we, through a special purpose wholly-owned subsidiary, PS BDC Funding II, entered into the Loan Agreement with the WF Lenders, WFB as the administrative agent and U.S. Bank, as Collateral Agent and Custodian, pursuant to which the WF Lenders agreed to provide us with a line of credit.
On December 18, 2023, we entered into the WF Credit Facility Fourth Amendment, which amends the WF Credit Facility to, among other things: (i) increase the amount available for borrowing under the WF Credit Facility from $150,000,000 to $175,000,000, (ii) extend the facility maturity date from December 18, 2025 to December 18, 2028 and (iii) extend the reinvestment period from December 18, 2023 to December 18, 2026 (subject to other provisions of the WF Credit Facility).
Prior to April 10, 2023, the loans under the WF Credit Facility may have been Broadly Syndicated Loans or Middle Market loans and were eurocurrency rate loans unless such rate was unavailable, in which case the loans were base rate loans until such rate was available. Broadly Syndicated Loans bore interest at the LIBOR or base rate, as applicable, plus 1.85%, and Middle Market Loans bore interest at LIBOR or base rate, as applicable, plus 2.35%. The “base rate” was equal to the highest of (a) the federal funds rate plus 0.50% and (b) the prime rate. On April 10, 2023, the Company entered into an amendment to the WF Credit Facility that, among other things: (i) transferred and assigned U.S. Bank National Association’s rights and obligations as collateral agent and as a secured party to U.S. Bank Trust Company, National Association, (ii) referenced SOFR instead of LIBOR and (iii) removed LIBOR transition language.
As of April 10, 2023, the loans under the WF Credit Facility may be Broadly Syndicated Loans or Middle Market Loans and will bear interest at Daily Simple SOFR or base rate (to the extent Daily Simple SOFR is unavailable), plus 2.50%, with an interest rate floor of 0.0%. The “base rate” will be equal to the highest of (a) the federal funds rate plus 0.50% and (b) the prime rate. The Loan Agreement includes fallback language in the event that Daily Simple SOFR becomes unavailable. Interest is payable quarterly, as determined by the WFB as the administrative agent. Following an amendment to the WF Credit Facility on October 13, 2021, the Loan Agreement requires the payment of a non-usage fee of (x) during the first thirteen months following the closing of the WF Credit Facility, 0.50% multiplied by daily unused Facility Amounts, (y) between thirteen and sixteen months following the closing of the WF Credit Facility, 0.50% multiplied by the lesser of (1) daily unused Facility Amounts and (2) 50% of the Facility Amount plus 2.00% multiplied by the greater of (i) the difference between the daily unused Facility Amount and 50% of the Facility Amount and (ii) zero, and, (z) thereafter, 0.50% multiplied by the lesser of (1) daily unused Facility Amounts and (2) 20% of the Facility Amount plus 2.00% multiplied by the greater of (i) the difference between the daily unused Facility Amount and 20% of the Facility Amount and (ii) zero. Such fee is payable quarterly in arrears. The WF Credit Facility includes the option to downsize the facility by paying a Commitment Reduction Fee. The Fee is equal to 2.00% of the facility reduction amount prior to the one-year anniversary of the WF Credit Facility Fourth Amendment, and 1.00% thereafter. The applicable percentage for the advance rate on PS BDC Funding II’s Eligible Loans ranges from 67.5% for Middle Market Loans to 70% for Broadly Syndicated Loans (as each such term is defined in the Loan Agreement).
PS BDC Funding II has pledged all of its assets to U.S. Bank, in its capacity as Collateral Agent, to secure its obligations under the WF Credit Facility and U.S. Bank acts as the custodian of such assets. Both the Company and PS BDC Funding II have made customary representations and warranties and are required to comply with various covenants, reporting requirements, and other customary requirements for similar credit facilities. Borrowing under the WF Credit Facility is subject to the leverage restrictions contained in the 1940 Act and PS BDC Funding II complies with 1940 Act provisions relating to affiliated transactions and custody (Section 17, as modified by Section 57, of the 1940 Act). The obligations under the Loan Agreement may be accelerated upon the occurrence of an event of default under the Loan Agreement, including in the event of a change of control of PS BDC Funding II, if the Investment Advisor ceases to serve as investment adviser to the Company, or if PSCM or its affiliates cease to directly or indirectly own a majority of the membership interests of the Investment Advisor.
As of March 31, 2025, we had $154.3 million outstanding and $20.7 million of available Commitments under the WF Credit Facility, and PS BDC Funding II was in compliance with the applicable covenants in the WF Credit Facility on such date.
On May 23, 2024, we completed a $400.5 million term debt securitization (the “CLO Transaction”), also known as a collateralized loan obligation (“CLO”), in connection with which our wholly-owned indirect subsidiary issued the Notes (as defined below). The CLO Transaction functions as a source of long-term balance sheet financing for a portion of our portfolio investments and, as a result, the Notes issued in connection with the CLO Transaction are subject to our regulatory asset coverage requirement.
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The notes offered in the CLO Transaction were issued by Palmer Square BDC CLO 1, Ltd. (the “Issuer”), an exempted company incorporated with limited liability under the laws of the Cayman Islands and our wholly-owned subsidiary, and consist of (i) $232 million of Class A Notes (the “Class A Notes”); (ii) $58 million of Class B-1 Notes, (the “Class B-1 Notes”); and (iii) $10 million of Class B-2 Notes (the “Class B-2 Notes” and, together with the Class A Notes and the Class B-1 Notes, the “Secured Notes”). Additionally, the Issuer issued $100.5 million of Subordinated Notes (the “Subordinated Notes”), which do not bear interest but are entitled to all of the principal and interest payments made on the loan portfolio held by the Issuer, net of interest and principal payments distributed to the holders of the Secured Notes. The Secured Notes together with the Subordinated Notes are collectively referred to herein as the “Notes.”
The CLO Transaction is backed by a diversified portfolio of senior secured loans or participation interests therein with the potential for investment in second lien loans or participation interests therein, corporate bonds or loans made to a debtor-in-possession pursuant to Section 364 of the Bankruptcy Code having the priority allowed by either Section 364(c) or 364(d) of the Bankruptcy Code and fully secured by senior liens or participation interests therein, which is managed by us as collateral manager pursuant to a collateral management agreement entered into with the Issuer (the “Collateral Management Agreement”). We have agreed to irrevocably waive all collateral management fees payable to us so long as we are the collateral manager under the Collateral Management Agreement. The Notes are scheduled to mature on July 15, 2037; however, the Notes may be redeemed by the Issuer, at the written direction of (i) a majority of the Subordinated Notes (with the consent of us, in the case of the Secured Notes) or (ii) us, in each case, on any business day on or after July 15, 2026.
As of March 31, 2025, we had outstanding indebtedness under the CLO Transaction of $300.0 million.
Distribution Policy
To the extent that we have income available, we intend to distribute quarterly dividends to our stockholders. Our quarterly dividends, if any, will be determined by our Board. Any dividends to our stockholders will be declared out of assets legally available for distribution.
We have elected to be treated, and intend to operate in a manner so as to continuously qualify, as a RIC under the Code. To obtain and maintain RIC tax treatment, among other things, we must distribute dividends to our stockholders in respect of each taxable year of an amount at least equal to 90% of the sum of our net ordinary income and net short-term capital gains in excess of our net long-term capital losses (“investment company taxable income”), determined without regard to any deduction for dividends paid. In order to avoid certain excise taxes imposed on RICs, we currently intend to distribute dividends to our stockholders in respect of each calendar year of an amount at least equal to the sum of: (1) 98% of our net ordinary income (taking into account certain deferrals and elections) for such calendar year; (2) 98.2% of our capital gains in excess of capital losses (“capital gain net income”), adjusted for certain ordinary losses, generally for the one-year period ending on October 31 of such calendar year; and (3) any net ordinary income and capital gain net income for preceding years that were not distributed during such years and on which we previously paid no U.S. federal income tax. Under certain applicable provisions of the Code and U.S. Treasury regulations, distributions payable in cash or in shares of stock at the election of the stockholders are treated as taxable dividends. The Internal Revenue Service has published guidance indicating that this rule will apply even where the total amount of cash that may be distributed is limited to no more than 20% of the total distribution. Under this guidance, if too many stockholders elect to receive their distributions in cash, the cash available for distribution must be allocated among the stockholders electing to receive cash (with the balance of the distribution paid in stock). If we decide to make any distributions consistent with this guidance that are payable in part in stock, taxable stockholders receiving such dividends will be required to include the full amount of the dividend (whether received in cash, shares of our stock, or a combination thereof) as ordinary income (or as long-term capital gain to the extent such distribution is properly reported as a capital gain dividend) to the extent of our current and accumulated earnings and profits for U.S. federal income tax purposes. As a result, a U.S. stockholder may be required to pay tax with respect to such dividends in excess of any cash received. If a U.S. stockholder sells the stock it receives in order to pay this tax, the sales proceeds may be less than the amount included in income with respect to the dividend, depending on the value of our stock at the time of the sale. Furthermore, with respect to non-U.S. stockholders, the Company may be required to withhold U.S. tax with respect to such dividends, including in respect of all or a portion of such dividend that is payable in stock.
For these excise tax purposes, we will be deemed to have distributed any net ordinary taxable income or capital gain net income on which we have paid U.S. federal income tax. Depending on the level of taxable income earned in a calendar year, we may choose to carry forward taxable income for distribution in the following calendar year, and pay any applicable U.S. federal excise tax. We may not be able to achieve results that will permit the payment of cash distributions.
We currently intend to distribute net capital gains (i.e., net long-term capital gains in excess of net short-term capital losses), if any, at least annually out of the assets legally available for such distributions. However, we may decide in the future to retain such capital gains for investment, incur a corporate-level tax on such capital gains, and elect to treat such capital gains as deemed distributions to our stockholders. If this happens, our stockholders will be treated for U.S. federal income tax purposes as if they had received an actual distribution of the capital gains that we retain and reinvested the net after tax proceeds in us. In this situation, our stockholders would be eligible to claim a tax credit equal to their allocable share of the tax we paid on the capital gains deemed distributed to them. We may not be able to achieve operating results that will permit us to pay any cash distributions, and if we issue senior securities, we will be prohibited from making distributions if doing so would cause us to fail to maintain the asset coverage ratios stipulated by the 1940 Act or if such distributions are limited by the terms of any of our borrowings.
We have adopted a dividend reinvestment plan that provides for reinvestment of our dividends and other distributions on behalf of our stockholders, unless a stockholder elects to receive cash. As a result, if our Board authorizes, and we declare, a cash dividend or other distribution, then stockholders who do not “opt out” of the Company’s dividend reinvestment plan will have their cash dividends and distributions automatically reinvested in additional shares of our common stock, rather than receiving cash dividends and distributions.
Prior to the IPO, the Board primarily used newly-issued shares of our common stock to implement the dividend reinvestment plan. The number of shares of common stock to be issued to a participant prior to the IPO would be equal to the quotient determined by dividing the cash value of the dividend payable to such stockholder by the NAV per share as of the date such dividend was declared.
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After the IPO, the Board intends to primarily use newly-issued shares to implement the dividend reinvestment plan, whether or not the shares are trading at a price per share at, below or above NAV. However, the Board reserves the right to purchase shares in the open market in connection with the implementation of the dividend reinvestment plan. The Board will examine the full facts and circumstances of each such dividend to determine the approach (i.e., to use newly issued shares or effectuate open market purchases to implement the dividend reinvestment plan) that is in the best interests of stockholders taking into account the Board’s fiduciary duties to stockholders, including by weighing the potential dilution in connection with such issuance to be incurred by our stockholders against our need and usage of reinvested funds, and, if we use newly issued shares to implement the dividend reinvestment plan at a time when the shares are trading at a price below NAV, the stockholders’ receipt of fewer shares than they would have if we had effectuated open market purchases. The number of newly issued shares to be issued to a participant would be determined by dividing the total dollar amount of the dividend payable to such stockholder by the market price per share of our common stock at the close of regular trading on a national securities exchange on the dividend payment date. Shares purchased in open market transactions by Equiniti, the plan administrator and our transfer agent, registrar, and dividend disbursing agent, will be allocated to a participant based upon the average purchase price, excluding any brokerage charges or other charges, of all shares of our common stock purchased with respect to the dividend.
Critical Accounting Estimates
Our consolidated financial statements are prepared in conformity with accounting principles generally accepted in the United States of America, which requires us to make estimates and assumptions that affect the reported amounts of assets and liabilities at the date of the consolidated financial statements and the reported amounts of revenues and expenses during the reporting periods.
Critical accounting estimates are those that require the application of management’s most difficult, subjective, or complex judgments, often because of the need to make estimates about the effect of matters that are inherently uncertain and that may change in subsequent periods. The preparation of these financial statements will require management to make estimates and assumptions that affect the reported amounts of assets, liabilities, revenues and expenses. Changes in the economic environment, financial markets and any other parameters used in determining such estimates could cause actual results to differ. In addition to the discussion below, we have described our critical accounting estimates in the notes to our consolidated financial statements.
Valuation of Portfolio Investments
In December 2020, the SEC adopted Rule 2a-5 under the 1940 Act, which permits a BDC’s board of directors to either (i) choose to continue to determine fair value in good faith, or (ii) designate its investment adviser as the valuation designee tasked with determining fair value in good faith, subject to the board’s oversight. Our Board has designated the Investment Advisor to serve as our valuation designee effective August 11, 2022.
Under procedures established by our Board, we value investments for which market quotations are readily available at such market quotations. Assets listed on an exchange will be valued at their last sales prices as reported to the consolidated quotation service at 4:00 P.M. Eastern Time on the date of determination. If no such sales of such securities occurred, such securities will be valued at the mean between the last available bid and ask prices as reported by an independent, third-party pricing service on the date of determination (unless the prices provided by the pricing service is believed by the Investment Advisor to be unreliable or a significant event has occurred subsequent to the provision of the prices that the Investment Advisor determines will affect the fair value of the securities). Debt and equity securities that are not publicly traded or whose market prices are not readily available (or for which either of the events noted in the parenthetical immediately above occur) are valued at fair value by the Investment Advisor. Such determination of fair values may involve subjective judgments and estimates, although we will also engage independent valuation providers to review the valuation of each portfolio investment that constitutes a material portion of our portfolio and that does not have a readily available market quotation at least once annually. With respect to unquoted securities, our Investment Advisor will value each investment considering, among other measures, discounted cash flow models, comparisons of financial ratios of peer companies that are public and other factors. With respect to Level 3 assets, we intend to retain one or more independent providers of financial advisory services to assist the Investment Advisor by performing certain limited third-party valuation services. We may appoint additional or different third-party valuation firms in the future.
When an external event such as a purchase transaction, public offering or subsequent equity sale occurs with respect to a fair-valued portfolio company or comparable company, the Investment Advisor will use the pricing indicated by the external event in connection with its fair valuation determination process. Because we expect that there will not be a readily available market for many of the investments in our portfolio, we expect to value many of our portfolio investments at fair value as determined in good faith by the Investment Advisor using a documented valuation policy and a consistently applied valuation process. Due to the inherent uncertainty of determining the fair value of investments that do not have a readily available market value, the fair value of our investments may differ significantly from the values that would have been used had readily available market quotations existed for such investments, and the differences could be material.
We measure realized gains or losses by the difference between the net proceeds from the repayment or sale and the amortized cost basis of the investment, without regard to unrealized appreciation or depreciation previously recognized, but considering unamortized upfront fees and prepayment penalties. Net change in unrealized appreciation or depreciation reflects the change in portfolio investment values during the reporting period, including any reversal of previously recorded unrealized appreciation or depreciation, when gains or losses are realized. Realized gains and losses from securities transactions and unrealized appreciation and depreciation of securities are determined using the identified cost basis method for financial reporting.
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Related Party Transactions
We have entered into the Advisory Agreement with the Investment Advisor and the Administration Agreement with the Investment Advisor (in such capacity, the Administrator). Mr. Christopher D. Long and Mr. Jeffrey D. Fox, each an executive officer of ours and an interested member of our Board, and Angie K. Long, Matthew L. Bloomfield and Scott A. Betz, each an executive officer of ours, have an indirect pecuniary interest in the Investment Advisor. The Investment Advisor is a registered investment adviser under the Advisers Act that is majority-owned by PSCM. See “Note 3. Agreements and Related Party Transactions – Administration Agreement” and “– Investment Advisory Agreement” in the notes to the accompanying consolidated financial statements.
Contractual Obligations
We have certain contracts under which we have material future commitments. We have entered into the Advisory Agreement with the Investment Advisor in accordance with the 1940 Act. Payments for investment advisory services under the Advisory Agreement are equal to (a) a base management fee calculated at an annual rate of 1.75% of the average value of the weighted average of our total net assets at the end of the two most recently completed quarters and (b) an incentive fee based on our performance. The Investment Advisor agreed to waive its right to receive management fees in excess of 1.75% of the total net assets during any period prior to the IPO. We have entered into an Administration Agreement with the Administrator to serve as our administrator. Pursuant to the Administration Agreement, the Administrator furnishes us with office facilities and equipment, provides us with clerical, bookkeeping and recordkeeping services at such facilities, and provides us with other services necessary for us to operate or has engaged a third-party firm to perform some or all of these functions.
A summary of our significant contractual payment obligations related to the repayment of our outstanding indebtedness at March 31, 2025 is as follows:
Contractual Obligations Payments Due by Period
Less than1 year
1-3 years
3-5 years
More than5 years
BoA Credit Facility, Net
WF Credit Facility, Net
CLO Transaction, Net
Total contractual obligations
774,451,764
Off-Balance Sheet Arrangements
Unfunded commitments to provide funds to portfolio companies are not recorded on our consolidated statements of assets and liabilities. Our unfunded commitments may be significant from time to time. Unfunded commitments may expire without being drawn upon and the total commitment amount does not necessarily represent future cash requirements. As of March 31, 2025 and December 31, 2024, we had 23 unfunded commitments totaling $20.2 million and 26 unfunded commitments totaling $21.6 million, respectively. See “Note 9. Commitments and Contingencies” in the notes to the accompanying consolidated financial statements for specific identification of the unfunded commitments. We believe we maintain sufficient liquidity in the form of cash (including restricted cash, if any), receivables and borrowing capacity to fund these unfunded commitments should the need arise. See Financial Condition, Liquidity and Capital Resources above.
Other than contractual commitments and other legal contingencies incurred in the normal course of our business, we do not have any off-balance sheet financings or liabilities.
Item 3. Quantitative and Qualitative Disclosures About Market Risk.
We are subject to financial market risks, including changes in interest rates. Interest rate sensitivity refers to the change in our earnings that may result from changes in the level of interest rates. Because we fund a portion of our investments with borrowings, our net investment income will be affected by the difference between the rate at which we invest and the rate at which we borrow. As a result, there can be no assurance that a significant change in market interest rates will not have a material adverse effect on our net investment income.
Assuming that the consolidated statements of assets and liabilities as of March 31, 2025 were to remain constant and that we took no actions to alter our existing interest rate sensitivity, the following table shows the annualized impact of hypothetical base rate changes in interest rate.
Change in Interest Rates
Increase(Decrease) inInterest Income
Increase (Decrease)in Interest Expense
Net Increase (Decrease)in Net InvestmentIncome
Down 300 basis points
(39,780,530
(23,202,153
(16,578,377
Down 200 basis points
(26,404,696
(15,468,102
(10,936,594
Down 100 basis points
(13,209,376
(7,734,051
(5,475,325
Up 100 basis points
13,209,376
7,734,051
5,475,325
Up 200 basis points
26,404,696
15,468,102
10,936,594
Up 300 basis points
39,780,530
23,202,153
16,578,377
The data in the table are based on our current statements of assets and liabilities. As of March 31, 2025, the Company had $40.7 million in net purchases that had not yet settled and $20.2 million in unfunded commitments. After settlement of these purchases, the change in interest expense will be larger as a result of the increase in the amount borrowed under the BoA Credit Facility, WF Credit Facility or CLO Transaction, as applicable. The table does not include any change in dividend income from our money market investments.
In addition, any investments we make that are denominated in a foreign currency will be subject to risks associated with changes in currency exchange rates. These risks include the possibility of significant fluctuations in the foreign currency markets, the imposition or modification of foreign exchange controls, and potential illiquidity in the secondary market. These risks will vary depending upon the currency or currencies involved.
We measure exposure to interest rate and currency exchange rate fluctuations on an ongoing basis and may hedge against interest rate and currency exchange rate fluctuations by using standard hedging instruments such as futures, options, swaps and forward contracts and credit hedging contracts, such as credit default swaps, in each case, subject to the requirements of the 1940 Act. While hedging activities may insulate us against adverse changes in interest rates, they may also limit our ability to participate in benefits of lower interest rates with respect to our portfolio of investments with fixed interest rates.
Item 4. Controls and Procedures.
Evaluation of Disclosure Controls and Procedures
Our management, with the participation of our Chief Executive Officer and Chief Financial Officer, has evaluated the effectiveness of our disclosure controls and procedures (as defined in Rules 13a-15(e) and 15d-15(e) under the Securities Exchange Act of 1934, as amended), as of the end of the period covered by this Quarterly Report on Form 10-Q. Based on such evaluation, our Chief Executive Officer and Chief Financial Officer have concluded that, as of such date, our disclosure controls and procedures were effective at a reasonable assurance level.
Changes in Internal Control over Financial Reporting
There have been no changes in our internal control over financial reporting during our fiscal quarter ended March 31, 2025 that have materially affected, or are reasonably likely to materially affect, our internal control over financial reporting.
PART II—OTHER INFORMATION
Item 1. Legal Proceedings.
We are not currently subject to any material legal proceedings, nor, to our knowledge, is any material legal proceeding threatened against us. From time to time, we may be a party to certain legal proceedings in the ordinary course of business, including proceedings relating to the enforcement of our rights under loans to or other contracts with our portfolio companies.
Item 1A. Risk Factors.
Investing in our common stock involves a number of significant risks. In addition to other information set forth in this report, you should carefully consider the risk factors discussed in Item 1A. Risk Factors of our annual report on Form 10-K for the year ended December 31, 2024. The risks described in our annual report are not the only risks we face. Additional risks and uncertainties not presently known to us or not presently deemed material by us may also materially and adversely affect our business, financial condition and/or operating results. Other than as set forth below, there have been no material changes during the three months ended March 31, 2025 to the risk factors discussed in Item 1A. Risk Factors of our annual report on Form 10-K for the year ended December 31, 2024.
Changes to United States tariff and import/export regulations may have a negative effect on our portfolio companies.
The United States has recently enacted and proposed to enact significant new tariffs. Additionally, there has been ongoing discussion and commentary regarding potential significant changes to U.S. trade policies, treaties and tariffs, creating significant uncertainty about the future relationship between the U.S. and other countries with respect to such trade policies, treaties and tariffs. These developments, or the perception that any of them could occur, may have a material adverse effect on global economic conditions and the stability of global financial markets, and may significantly reduce global trade and, in particular, trade between the impacted nations and the U.S. Any of these factors could depress economic activity and restrict our portfolio companies’ access to suppliers or customers and have a material adverse effect on their business, financial condition and results of operations, which in turn would negatively impact us.
Item 2. Unregistered Sales of Equity Securities and Use of Proceeds.
Dividend Reinvestment Plan
During the three months ended March 31, 2025, we issued 32,662 shares of common stock to stockholders in connection with the dividend reinvestment plan.
During the three months ended March 31, 2025, we repurchased 98,399 shares of our common stock pursuant to the Company Rule 10b5-1 Repurchase Plan and Extended Company Rule 10b5-1 Repurchase Plan.
Period
TotalNumberof SharesPurchased
AveragePricePaidPer Share
Total Numberof SharesPurchased asPart ofPubliclyAnnouncedPlans orPrograms (1)
Maximum (or Approximate Dollar Value) of Shares that may Yet Be Purchased Under the Plans or Programs (Dollars in Thousands) (1)
January 1, 2025 through January 31, 2025
12,037
$15.39
91,001
$18,553
February 1, 2025 through February 28, 2025
12,040
15.48
103,041
18,367
March 1, 2025 through March 31, 2025
74,322
14.71
177,363
17,273
98,399
$14.89
$17,273
During the three months ended March 31, 2025, PSCM repurchased 1,631 shares of the Company’s common stock pursuant to the PSCM Rule 10b5-1 Stock Purchase Plan.
$—
$2,500
2,500
1,631
14.13
2,477
$14.13
$2,477
(1) Concurrently with the closing of the IPO, PSCM entered into the PSCM Rule 10b5-1 Stock Purchase Plan to permit the purchase of up to $2.5 million shares of our common stock, if the market price per share of our common stock is below the most recently reported NAV per share, subject to certain limitations. Under the PSCM Rule 10b5-1 Stock Purchase Plan, the agent will increase the volume of purchases made as the price of the Company’s common stock declines, subject to volume restrictions. The PSCM Rule 10b5-1 Stock Purchase Plan commenced on April 22, 2024 and will terminate upon the earliest to occur of (i) 12 months from the date of the PSCM Rule 10b5-1 Stock Purchase Plan, (ii) the end of the trading day on which the aggregate purchase price for all shares purchased under the PSCM Rule 10b5-1 Stock Purchase Plan equals $2.5 million, and (iii) the occurrence of certain other events described in the PSCM Rule 10b5-1 Stock Purchase Plan.
Item 3. Default Upon Senior Securities.
None.
Item 4. Mine Safety Disclosures.
Not applicable.
Item 5. Other Information.
Item 6. Exhibits.
The exhibits required by this item are set forth in the Exhibit Index attached hereto and are filed or incorporated as part of this Report.
Exhibit Index
Form of Articles of Amendment and Restatement (Incorporated by reference to Exhibit 3.1 to Registrant’s Amendment No. 1 to Registration Statement on Form 10 (File No. 000-56126) filed on January 16, 2020)
3.2
Bylaws (Incorporated by reference to Exhibit 3.2 to Registrant’s Registration Statement on Form 10 (File No. 000-56126) filed on November 27, 2019)
10.1
Equity Distribution Agreement, dated March 3, 2025, by and among Palmer Square Capital BDC Inc., Palmer Square BDC Advisor LLC and RBC Capital Markets, LLC (incorporated by reference to Exhibit 1.1 to the Registrant’s Form 8-K (File No. 814-01334), filed on March 4, 2025).
31.1*
Certification of Chief Executive Officer pursuant to Securities Exchange Act Rule 13a-14(a), as adopted pursuant to Section 302 of the Sarbanes-Oxley Act of 2002
31.2*
Certification of Chief Financial Officer pursuant to Securities Exchange Act Rule 13a-14(a), as adopted pursuant to Section 302 of the Sarbanes-Oxley Act of 2002
32.1*
Certification of Chief Executive Officer pursuant to 18 U.S.C. Section 1350, as adopted pursuant to Section 906 of the Sarbanes-Oxley Act of 2002
32.2*
Certification of Chief Financial Officer pursuant to 18 U.S.C. Section 1350, as adopted pursuant to Section 906 of the Sarbanes-Oxley Act of 2002
101.INS*
Inline XBRL Instance Document
101.SCH*
Inline XBRL Taxonomy Extension Schema With Embedded Linkbase Documents
104*
Cover page formatted as Inline XBRL and contained in Exhibit 101
* Filed herewith
Pursuant to the requirements of the Securities Exchange Act of 1934, the Registrant has duly caused this report to be signed on its behalf by the undersigned, thereunto duly authorized.
Date: May 7, 2025
/s/ Christopher D. Long
Name:
Christopher D. Long
Title:
Chief Executive Officer and Director(Principal Executive Officer)
/s/ Jeffrey D. Fox
Jeffrey D. Fox
Chief Financial Officer and Director(Principal Financial and Accounting Officer)