Q1 2025 Blackstone Secured Lending Fund Earnings Call
Good day and welcome to the Blackstone Secured Lending First Quarter 2025 earnings call.
Today's call is being recorded. At this time, we'll participate in journalists' lonely mode.
If you require operator assistance, please press star zero. If you would like to ask a question, please signal by pressing star one. If you're using a speaker phone, please make sure your mute function is turned off to allow your signal to reach our equipment.
Speaker Change: At this time, I'd like to turn the conference over to Justin Frasidi, principal for Blackstone Credit and Insurance. Please go ahead.
Justin Froschiti: Thank you. Good morning and welcome to Blackstone Secured Lending Fund's first quarter conference call.
Speaker Change: Joining me today are Brad Marshall, Code Chief Executive Officer, Jonathan Bock, Code Chief Executive Officer.
Speaker Change: President, Teddy Desloge, Chief Financial Officer, and other members of the management team.
Speaker Change: Earlier today we issued a press release with a presentation of our results and filed our 10Q, both of which are available on the shareholder resources section of our website www.bxsl.com.
We will be referring to that presentation throughout today's call.
Speaker Change: I'd like to remind you that this call may include forward-looking statements which are uncertain and outside of the firm's control and may defer materially from actual results.
We do not undertake any duty to update these things.
for some of the risks that could affect results.
Speaker Change: Please see the Risk Factor section of our Form 10Q filed earlier today.
Speaker Change: This audio cast is copyright material of Blackstone and may not be duplicated without consent with that. I'll turn the call over to Brad Marshall.
Brad Marshall: Great. Thank you, Justin, and good morning, everyone. Thanks for joining our call. Before I dive into some details with John , Carlos, and Teddy, I do want to hit on some high-level views of the current environment and thoughts around our first quarter.
Speaker Change: Since the start of the year, uncertainty around tariffs and their potential impact on economic growth, and inflation has certainly impacted investor sentiment.
Speaker Change: While we believe it's too early to assess the full implications of tariffs.
Speaker Change: The complex nature of the situation means that patients and discipline are key. Kenneth, we have had since [inaudible]
Speaker Change: On the broader economy, it's important to remember we entered this period in a fundamentally strong position.
and we believe those fundamentals remain intact.
Speaker Change: Blackstone has lived through multiple cycles in its four decade history, and we've used the firm's significant scale and data insights to benefit both our clients and portfolio companies.
Speaker Change: This includes investing in sectors that we think are more resilient in periods of volatility and it also includes using resources like our value creation program to add value.
Speaker Change: For example, we have identified a relatively small group of companies in our portfolio that may be impacted by tariffs and our team is actively helping these companies whether it be through our procurement and resourcing programs or supply chain consulting.
Speaker Change: Of course, it's one thing to highlight tariff exposure. It is certainly another thing to have the resources to potentially manage its impact.
Speaker Change: Despite the near-term market volatility, the exercise reported another strong quarter. Our net investment income or NII of 83 cents per share, this quarter, represented a 12.1% annualized return on equity, and is made up overwhelmingly of interest income rather than income from pick for dividends. [inaudible]
Speaker Change: Net asset value, per share, remained flat at $27.39, quarter of a quarter.
Speaker Change: Our Distribution of 77 cents per share was covered by our net investment income per share by 108% and represents an 11.2% annualized just
Speaker Change: Dr. One of the highest among our traded BDC peers, with as much of their portfolio invested in first-line senior secured assets.
Speaker Change: The exercise still has among the lowest management and lowest G&A costs as a percentage of
which allows us to focus on high quality assets.
Speaker Change: Finally, credit quality remains strong with 0.3% of investments on nonoccurial at cost and 0.1% at fair market value, well below the average of our traded BDC peers of 2.7% and 1.2% respectively in the fourth quarter.
Speaker Change: Last quarter we discussed positioning VXSL for an anticipated ramp-up in DL activity in the back portion of 2025.
Speaker Change: and despite market uncertainty, we've been building our investment power power to take advantage of opportunities that arise.
For example, [inaudible]
S. Quarter,
Speaker Change: We issued $500 million of new debt at a coupon of 5.3% or a spread of 147 basis points.
Speaker Change: Over the relevant benchmark treasure rate, the tightest spread compared to traded BDC peers in 2025.
Speaker Change: Our Liability Stack continues to be diverse, refloting rate components allowing us to help offset the reduced space rates on the asset side of this quarter. In fact, the total weighted average interest rate on Drondet decreased to 5.01 percent and Q1.
Speaker Change: In Q1, we had over 750 million of investment commitments, our sixth consecutive quarter of 750 million, or above in total commitments.
We also had nearly 700 million in new investment funding.
Speaker Change: This was offset by an increase repayments of 900 million during the quarter.
Jonathan Bock: We believe the fund's capitalization positions it well for potential future opportunities amidst market volatility. And with that, I'll pass over to my colleague, Johnson.
Thank you, Brad. And let's turn to slide six.
Speaker Change: Weem to the quarter with 12.8 billion of investment at fair value over a 20% increase from a 10.4 billion year over year.
Speaker Change: in Q1, BXSL, also added 14 new borrowers to our portfolio while exiting six positions netting a total of 284 companies.
Speaker Change: Ending leverage and average leverage picked up, slightly compared to prior quarters at 1.19 times and 1.16 times respectively remaining near the middle of our average target range of 1 to 1.25 times.
Speaker Change: Our weighted average yield on performing debt investments at fair value was 10.2% this quarter end compared to 10.4% last quarter.
Speaker Change: The yields on new debt investment funding and assets sold and repaid during the quarter average 9.5% and 10.3% respectively.
Speaker Change: 98% of BXSL investments are in first lean senior secured loans and 99% of those loans are to companies owned by financial sponsors who generally have significant equity value in these capital structures demonstrated by an average loan to value of 47.4%.
Speaker Change: Our portfolio also has an LPM EVDA base averaging $210 million, with your over-year EVDA growth at nearly 10%.
Speaker Change: This growth percentage is nearly two times larger than that of companies in the Lincoln International Private Market Database, and while we evaluate opportunities across the side spectrum.
Speaker Change: We continue to see strength of performance from larger companies which is the majority of our portfolio.
Speaker Change: Now while we continue to emphasize these stats on every earnings call, the recent tariff announcement and subsequent market volatility are strong reminders on why we choose to focus on first-linked and secure lending to larger companies and what we believe are good investment neighborhoods.
Turn to Slide 8, which focuses on our industry exposure.
on Paris, [inaudible]
We believe there's a potential material credit impact.
Speaker Change: to a relatively small group of our portfolio companies. Now recall, we focus on domestic businesses in less capital intensive sectors with our highest exposures in software, professional services, and healthcare providers services in those industries.
Speaker Change: Our first lean, senior secured debt in lower default rate industries is what we view as a very defensive place for investors, and that's further evidence by our low-nonocural rate of 0.3% at cost compared to our traded BDC peer average of 2.7% from last quarter.
Speaker Change: Now we remain consistent in our focus on strength of documentation and amendment activity.
Speaker Change: and as a reminder, we remain highly focused on control and lender protections when we negotiate our credit agreements.
Amendment Activity was up, slightly quarter of a quarter by count.
with 48 of BXSL's Pride of Bar Wars amending documents in Q1.
Now, nearly all these amendments,
Speaker Change: Only one amendment accounting for fewer than 15 basis points of the portfolio at cost was associated with an underperforming investment, Mark below 85, and featured additional document tightening, as well as incremental economics.
Thanks, John . Turn to slide 9.
Carlos Whitaker: The SSL maintained a dividend distribution of $0.77 per share, as we remain focused on delivering high quality yield to shareholders.
Carlos Whitaker: During the quarter, we had another equity realization. Over the past few years, we've had several successful exits highlighting ways that can potentially positively impact returns through our selective equity investments.
Carlos Whitaker: and while this has not been more than 1% to 2% of our portfolio historically, it has the ability to add value.
Carlos Whitaker: This quarter, for instance, we realized our equity and frontline where we made a $2.9 million equity investment and realized the gain of over $7 million.
Carlos Whitaker: Although this is smaller than some of our other exits, we believe it is important to have these in our portfolio.
Speaker Change: I echo the point on the strength of BXSL's portfolio owed to the scale and platform of Blackstone that Brad emphasized earlier. Our BXVI platform allows us to be active with existing companies.
Speaker Change: We can expand the portfolio with newer borrowers and aim to enhance the quality of our assets.
Speaker Change: But our ongoing involvement with our portfolio companies is now more important than ever.
Speaker Change: Recall, once we make an investment, we try to be more than capital providers.
Speaker Change: in an uncertain economic environment, not only does our CIO office leverage Blackstone scaled insights to help identify and proactively mitigate portfolio risks, but our BXCI value creation program also supports our portfolio companies.
Speaker Change: by seeking to enhance revenue and lower costs. For example, as mentioned earlier, it's one thing to highlight tariff exposure, and it's another thing to have the resources to potentially help manage their impacts.
Speaker Change: This program is used by over 90% of BXEI's portfolio companies who are offered the service.
Speaker Change: and can help create equity value either by plugging borrowers into the Blackstone ecosystem or by simply saving them capital through our group procurement system.
Speaker Change: Truly a differentiated offering and a private credit space. Even better, it is offered at no charge to eligible participants and at no expense to be a B.X.S.L.
Speaker Change: We have been actively utilizing our Blackstone Sourcing Center where we have over 57,000 supplier contracts in 106 countries that have been included in our e-sourcing event.
This sourcing center supports bids across multiple geographies and languages.
Speaker Change: Further, as an added bonus, BXCI's value creation program and Blackstone's market leading scale provide us with real-time insights from other Blackstone business units and proprietary views from our portfolio companies, CEOs.
Speaker Change: This and turn can support our investment expertise as we selectively deploy capital into new opportunities we see in this market. And with that, I'll turn it over to Teddy.
Speaker Change: In the first quarter, BXSL's net investment income was $189 million or 83 cents per share, and dollar terms up over 14 percent year over year, and the highest dollar amount since inception.
Speaker Change: Total investment income for the quarter or record for the fund was up 54 million or 18% year year driven by increased interest income.
Speaker Change: As a reminder, we amortize 100% of OID earned over the life of each loan versus recognize an OID up front as a fee at close, which we believe leads to greater stability over the long term.
Speaker Change: As Brad noted, we did see elevated repayments in the first quarter, which accounted for nearly 13 million of accelerated OID, prepayment premiums and unamortized discounts in the first quarter. This in term flows through interest income, representing about $0.6 per share.
Speaker Change: Interesting come excluding pick, fees and dividends represented approximately 94% of our total investment income in the quarter.
Speaker Change: Turning to the balance sheet on 5-11, we ended the quarter with 12.8 billion of total portfolio investments at fair value, nearly 7.4 billion of outstanding debt and over 6.2 billion of total net assets.
Speaker Change: Nav for Shared Quarter End was $27.39 flat since the fourth quarter of last year.
Speaker Change: Now for share was supported by six cents per share of excess earnings to our dividend, 11 cents from share issuance from our ATM program at a premium to NAV. However, offsetting this was 17 cents of unrealized losses in the portfolio, primarily concentrated to a small handful of larger positions.
Speaker Change: We continue to see stable fundamentals across the majority of our portfolio companies with only 0.7% of debt investments at cost marked below 80.
BXL, funded approximately 700 million in a quarter.
Speaker Change: and committed over $750 million, and held an estimated additional $59 million committed by BXVI, an earmarked for BXSL as of March 31st. Next funded investment activity was negative $289 million, as deployment activity was offset by $978 million of repayments, primarily due to a few larger repayments during the quarter.
Speaker Change: This represented an annualized repayment rate of 28% of the portfolio ed fair value, up from 6% from the prior quarter.
Speaker Change: Note, in periods of public market volatility and or slower M&A volumes, as we've seen in recent periods, we would expect more muted repayment volumes.
Speaker Change: Next, slide 13 outlines our attractive and diverse liability profile, which includes 38% of drawn debt in unsecured bonds that are not swapped.
Speaker Change: These obscure bonds had a weighted average fixed coupon of less than 3%, which we view as a key advantage in an elevated rate environment and contributed to an overall weighted average interest rate on our borrowings of 5.01% down from 5.17% last quarter.
Speaker Change: This also compares to a weighted average yield at fair value on a performing debt investment of 10.2% down from 10.4% in the fourth quarter.
Speaker Change: We have 2.2 billion of debt maturities within the next two years and our debt and funding facilities have an overall weighted average maturity of three and a half years.
Further, we continue to optimize our cost of capital.
Speaker Change: As Brad noted, in February we issued a $500 million dollar, 5.3% year bond with which priced 5.3 year bond, which priced at 147 basis points over the relevant benchmark treasury.
Speaker Change: As we have noted previously, as spreads have tightened across liabilities since 2023, we have been highly focused on bringing down our cost of capital through both new issuance at tighter levels and amendments to existing facilities.
Speaker Change: Today, we have one of the lowest cost revolvers across BDCs at sofa plus 152 and a half basis points at the tightest year.
Speaker Change: We've issued 1.6 billion of new bonds since the start of the second quarter of last year, which included the tightest new issue spread in the last two years within our traded BDC Pearson.
Speaker Change: We are one of the highest rated BDCs with a BAA2 and stable outlook by Moody's and triple B- and positive outlook by S&T.
Speaker Change: We issued our inaugural private credit CLO in the fourth quarter with senior most tranche pricing at sofa plus 155, 151, one of the tightest spreads on senior most notes of any middle market private credit CLO among 200 plus issued since 2021.
Speaker Change: As a result of these actions, the first quarter 2025 weighted average spread on our floating rate committed liabilities was just so for plus 167, 30 basis points tighter than a year ago.
Speaker Change: BXSL's overall cost of debt of 5.01 percent is among the lowest we see across the traded BDC peer set last quarter.
Speaker Change: Additionally, total liquidity was 3.4 billion of cash and undrawn debt available to borrow at these low financing costs. While ending leverage as of March 31st was 1.19 turns, slightly up from 1.17 turns in the first quarter.
Speaker Change: with that. I'll ask the operator to open it up for questions. Thank you.
Speaker Change: Thank you. If you would like to ask a question, you may do so by pressing star one on your telephone keypad.
Speaker Change: We ask you to limit yourself to one question and one follow-up to allow as many colors to
Speaker Change: Once again, star one for questions. We'll go first to Phineon O'Shae with Wells Fargo Securities.
I'm sorry. I'm sorry. I'm sorry. I'm sorry. I'm sorry.
Hey, Roy, good morning. First question on, on dividend coverage.
Speaker Change: So, so understanding there's perhaps some leverage headroom and whatnot, but assuming the sofa curve puts you under the dividend.
Speaker Change: Curious as to your policy on spillover, if you'll use that, or adjust the base dividend as needed. Thanks.
Speaker Change: Thanks, Dennis Brad. Why don't I start and then, you know, John meet on the still over. So, um,
Speaker Change: So I think since rates peak last year, we've seen three cuts, but a hundred basis points. I think we're, as you point out, the curve would suggest that there's more cuts.
Speaker Change: and obviously that then has an impact on earnings earnings will come down.
Speaker Change: So this cut three ways, you can offset that thing as you know, you can...
Speaker Change: See more turnover in your portfolio, which creates fees, which you saw this quarter. We had more turnover. Challenge with that, as you point out, is less predictable.
Speaker Change: So, the second way you can, you manage falling rates as you can lower your expenses.
Speaker Change: We talked a little bit about what we did in the liability front with issuing bonds that are 147 basis points over which we think are pretty low. We continue to focus on bringing them down our GNA fees.
Speaker Change: as much as possible. And as you know, our overall fee structure is the lowest among the lowest in the BDC space. So that's in works. We'll continue to focus on that. And then the third is we can take more risk.
Speaker Change: We can put more junior assets in the portfolio. We could look at harder sectors, harder credits.
and trying to offset lower bass rates with more spread.
Speaker Change: But that's not us. So we're we know how that movie ends.
So we're going to continue to focus on quality.
Speaker Change: Today, the dividends 11.2 percent and if earnings decline, then we'll reflect that in the dividend going forward as it relates to rates.
Speaker Change: and spillover. You know, say that if you look at it, there's some benefits and just as a quick reminder, so understand that the cost of the underlying spillover at roughly 4%, right? That's very cheap cost of capital as you think about retained equity.
Speaker Change: and it also builds an earnings base because your equity is grown but you've not issued new shares to do so so you have a level of additional earnings impact as a result of still over retention which is positive. [inaudible]
Speaker Change: I'd say when you think about management, its return of capital, our view is simply we think about where the shares trade and evaluation impact of having additional earnings.
Speaker Change: I'd say as opposed to a BDC that might be below book value.
Speaker Change: Certainly returning spillover in that case makes complete sense because you're giving people a whole dollar as opposed to owning shares that it discount.
Speaker Change: and so for us, we will always look at it, but at a positive earnings profile, continue to strengthen the portfolio and an attractive valuation. It makes sense to have a level of retention, but we'll always revisit it. Good question.
Speaker Change: Okay, thanks. And as a follow-up, I wanted to ask about...
Donuts, The Largery Phi, The Largery,
Speaker Change: Wondering how hard to do you fight to keep that and where maybe you lost out?
Obviously there's the the value creation program.
Speaker Change: You've been a pioneer in repricing technology but just to get a sense on the limitations of those approaches and perhaps the outlook for higher repays, I'm going to go forward. Thanks.
Speaker Change: Yeah, that deal was refinanced, the whole business curitization. So not much for us to do there. Great credit. It was a good asset in our portfolio. We saw two other.
Speaker Change: Larger repayments that went to strategic, so now a lot we could do there kind of either, but our policy will remain the same try and hold on to good assets as much as possible and let the less good assets.
Get repaid, you know, over time.
Thanks so much.
Mark Hughes: Thank you. We'll take our next question from Mark Hughes to his securities.
Speaker Change: Mr. Hewett, please go ahead, your line is over. Go ahead, Mark.
Please check your meat function.
Gary Nova, response to John Teleph, follow up on me.
We'll go to Melissa Wedel with JV Morgan.
Melissa Waddell: Good morning. Thanks for taking my questions today. But when we think about...
Speaker Change: sort of the the amount of leverage in the portfolio when you on a growth basis it it seems towards the higher end of the range but when we back out the amount of cash
Speaker Change: on the balance sheet. It takes you down towards the low end of the range fire map. It's about one of three net data equity.
Speaker Change: Assuming that you would have sort of agreed with this, it looks like you might be sitting on some dry powder. And as you think about deploying capital, you know, in this environment, curious about how you how you paste that, obviously you've got access. And that's what you're going to do.
Speaker Change: to additional capital through the At The Market Program, but in terms of the environment and the spread environment that you're seeing, given the amount of uncertainty from policy, how eager are you to deploy this new capital?
Speaker Change: Yeah, I'm happy to take that. Thanks Melissa. So you're right. We did have a little bit of exit cash in the end of the quarter. That was really tied to timing of some repayments.
Speaker Change: Towards the end of the corner, backing that out we're closer to the lower end of the range from a leverage perspective.
Speaker Change: I think from our perspective, as we think about periods of volatility, uncertainty, what we've seen really in the liquid markets in the last month or so has been a bit of a shift from a deal flow from the liquid markets to the private market.
Speaker Change: We saw that play out in certainly in 2023 that led to fairly material spread winding in that period.
from our perspective, we want to be well capitalized.
to take advantage of that.
Speaker Change: We are seeing a bit of a pick up in the pipeline in the near term. We'll see how that translates to deal activity in the next quarter, but we feel very good about how we are capitalized today. I mentioned our low cost financing at 5.01% interest.
Speaker Change: Interest rate across our funded liabilities, we have unfunded liabilities at low cost as well. So we'll lean into that as we see the market opportunity.
Speaker Change: and Melissa, what I'd add to that is our pass rate in the first quarter was probably that among the highest it's been in a long time.
just as you think about.
Speaker Change: You know, wanting a little bit more clarity in the direction of travel in the U.S. and global economy. We were pretty cautious. We built up some capital.
Speaker Change: to invest into the dislocation, and we found a few things, but we probably were more on the past side.
Speaker Change: You know, we have our kind of heads up meeting where we have 20 deals going through that heads up.
Speaker Change: You're a professor, which is pretty high. We're obviously doing this instead of sitting in that meeting, so we don't know the quality, but in terms of the number of deals coming through, it's actually pretty steady.
in terms of spreads.
Speaker Change: What we have seen clearly the public markets, you saw some spread widening mostly in the more tariff-impacted sectors.
Speaker Change: and I would say similarly in the private market, the lower quality assets you've seen spreads wide by 50 to 100 basis points.
Speaker Change: The higher quality assets less. So the stuff definitely still a quality bias.
Speaker Change: and that's probably somewhere around, you know, maybe it's up 25 basis points, but not much more than than that. So we'll...
Speaker Change: You know, continue to see, you know, the markets evolve here and hopefully get more clarity and M&A will pick up, but as Teddy said, in the meantime, more deals are shifting to the private markets away from the public.
Speaker Change: I appreciate all that color that you gave there. I wanted to follow up also on Finns' question to
Speaker Change: When we back out the six cents a share of NII that came from the repayment activity, would you say that most of the decline in base rates?
Speaker Change: is effectively fully running through the end of statement at this point. I know there tends to be a little bit of a lag, but just curious if that's fully caught up now. Thank you.
Speaker Change: Yeah, thanks, Melissa. I'm happy to take that. Yes, we would expect the current base-rate environment to be fully reflective of earnings in the quarter.
Thank you. We'll go next to Halley Sheath with...
Freeman James
Speaker Change: opening. Thanks for the question. We've heard from other BDCs this earnings season who are shifting largely down market while your shift is moving further up market. Can you stand on your strategy there?
Yeah, I can hit on that, Ali.
Speaker Change: So it's a little bit without saying earlier with Vince question on where we want to be investing.
Speaker Change: I think in market times of volatility uncertainty, you definitely want to be shifting to higher
Speaker Change: for more expensive BDCs. That's really hard to do because their expense flow is really high.
Speaker Change: But as you know, with BXSL, the management fees, the G&A fees, the liabilities are low.
Speaker Change: and so that allows us to look at higher quality assets, and we think those are just more resilient. We think their bigger companies are better. We think that the sectors we're picking are more resilient and so that what we may in our strategy, we do not.
Want to reach for risk, impure devalatility.
Speaker Change: We think it's a much better strategy to maintain quality even if spreads, you know, compress or don't widen as much as some of the lower quality assets.
Speaker Change: Got it, understood, thanks, and then a real quick follow-up. Have you received any specific feedback from portfolio companies on tariffs and seen any emerging patterns or trends with specific industry seeing stress? And accordingly, have your investment strategy shifted?
Speaker Change: Going forward in terms of targeting certain industries or de-emphasizing exposure in other industries.
Speaker Change: Yeah, thanks. Thanks, Holly. I can take that. So I think overall, our view is it's still very early to tell.
Speaker Change: As we look at our portfolio, what are we not doing? We're not financing foreign companies
Speaker Change: So we feel pretty good about where we're positioned, the industries that you see on the page predominantly US based software services and healthcare, right? These are business models that are and should be less impacted as a result of tariffs.
Speaker Change: As we characterize that, it's about 90% of the portfolio that's in those less impacted areas.
Speaker Change: Now, John mentioned it, but we did do a name-by-name analysis. I'm actually across 2,000 sub-investing grade and investment grade companies across our platform that included all 284 companies and BXSL and found a relatively small group of companies that may be materially impacted.
Speaker Change: So, again, I think it's a little bit too early to tell, but overall, feel very good about positioning, not changing how we're thinking about investing, right? As Brad mentioned, we've taken a defensive first strategy that's leaning into firstly an exposure that's leaning to more stable, growing, growing sectors in the US.
Speaker Change: You know, we do think some parts of direct lending may be tested as a result of tariffs.
Speaker Change: If you think about the more fragile parts of the economy, junior exposure, non-sponsored exposure where there's limited junior capital support potentially could be under stress and may have been less tested in recent environments.
Speaker Change: So we feel very good about our position, continue to take more of a defensive approach.
Speaker Change: and I did as well. It is, and I mean this quite sincerely, it is one thing to talk about tariffs and the impact, but then to have the ability to go and try and do something about it in the Blackstone Value Creation Program.
Speaker Change: This is what it's designed for. It's designed to help with procurement. It's designed to run e-sourcing programs to lower costs of goods or get better deals on services or products.
Speaker Change: We have a consulting effort. So, this team that sits in credit.
Speaker Change: All they do is call our companies and say, hey, we notice that potentially your costs are up because of the tariffs. What can we do to help? And it's kept since liberation day kept that team quite busy seeing where we can indeed help.
We'll take our next question from Paul Johnson with KBW.
Yeah, good morning.
Thanks for taking that question.
Speaker Change: I'm just curious if you could maybe kind of parse out a little bit, just to, you know, the 17th parentship, or 60 dates at the point, so kind of napkin on the portfolios, or how much may have been driven to more high specific stuff. First, mark the market.
Speaker Change: Yeah, I'm happy to take that thanks, Paul. So, just to summarize, as we mentioned.
Speaker Change: You know, NavFlat Court of Recorder, sink, six cents benefit from out earnings, 11 cents benefit from from from ATM issuance and then 17 cents unrealized losses. As we dig into that 70 scene cent there were really. [inaudible]
Speaker Change: Just under half of that impact was one company, and that's Medallia, which we talked about last quarter that was now marked down it to 89 in the quarter down from 94.
Without getting into too much detail, [inaudible]
You know, that Mark reflects a more competitive pricing environment.
We are backing a sponsor here who is highly specialized.
Speaker Change: in this space with significant cash equity. We've been supportive of management and sponsor actions. We're actually using Blackstone resources to also help where possible.
Speaker Change: Product quality there actually remains very high, no gardener recently rated medallia as a leader in their voice of customer's platform, so one will continue to watch, I think give you look across the portfolio, overall seeing healthy trends.
Speaker Change: 75% of our companies were either marked up or flat over the prior quarter and if you strip out medallia, the vast majority of mark downs were one point or less predominantly performing names marked above 95.
Speaker Change: So overall, we feel good about the portfolio. You know, 70 basis points of assets marked below 80 and it's well below the average of the traded BDC peer set and non accruals just, just 30 basis points.
Thanks for that, that's what's really good color.
Speaker Change: and I also appreciate all the details that you guys provide on amendments and amendment activity during...
The Quarer.
Speaker Change: I'd be great to hear that same kind of information from one of your peers. But just going to one to the credit, they're in the quarter navigator.
Speaker Change: Looks like it may have been kind of lost up just marginally but that was another loan that was kind of in the 80s. Last quarter of materials, push that pushed out with a little bit of kick in there and just wondering if that was the one company you mentioned regarding the kind of the negative amendments in the quarter and any kind of.
Kenneth, I already might be able to provide there.
Yeah, just on that company, you're right, they underperformed.
Speaker Change: Last year, they started this year stronger than anticipated, so we did.
Speaker Change: We did mark that up during the quarter as we think we probably had more than a dozen names that ended up getting marked up just because they came out, started the year much stronger than they ended the year.
Okay, thanks for that. And then, lastly, for me,
just on kind of the equity, the investment.
Unknown Executive, Jonathan Bock, Brad Marshall
Speaker Change: You know, get any sort of activity, call investment, you know, and it feels.
Speaker Change: Knowing that you're obviously competing in the larger end of the market, one of the things that it's very competitive there and a little bit harder to come by but just wondering, I frequently are able to see that.
and that's all from me. Thank you.
Yeah, actually, um...
Speaker Change: Just because of some of the things that the value that we can kind of add to many of these companies because we can plug them into the Blackstone network, you know, we do have a little bit more ability.
Speaker Change: to get equity in the businesses where we want to get equity. So, despite us focusing on
Speaker Change: The mid to larger end of the market. I think it's available to us where and when we want it. Not all great credit stories or great equity stories in our minds that we pick our spots.
Speaker Change: and we do want to highlight, when we do have realizations, like...
Speaker Change: Frontline and some of the previous ones we've had because they're nice kind of offsets to any potential kind of credit losses and we do. Thank you.
Speaker Change: Have a more strategic contribution when we make those equity investments. It'll never be a big part of the portfolio, though, Paul. We want to make sure we stick to kind of what we've advertised and so it's going to be very selective.
Speaker Change: Thank you. As a reminder, Star One, if you would like to ask a question, we'll go next to Maxwell Fritcher with Trist.
Speaker Change: Hi, good morning. I'm on from Mark Hughes. Sorry for the earlier confusion. Given the current macro backdrop, has there been any change in your credit evaluation process?
Owen Newdeals,
Yeah, I mentioned earlier.
that the first quarter was a pretty...
Speaker Change: Actually, a busy quarter from an underwriting standpoint, but we ended up passing on a lot of deals, especially in the larger end, primarily because of...
Speaker Change: Just the backdrop, which is a little bit uncertain. And as as pair of diplomacy takes a little bit of time to get sorted out. So, but our underwriting standards haven't changed. You know, we continue to be focused on
Speaker Change: Sectors that we ultimately think will be less impacted by, you know, economic.
Weakness, so, sectors that tend to outgrow the—
Speaker Change: The broader economy, software, technology, health care, IT, business services, and underweight more product heavy consumer focused.
Speaker Change: Businesses. So, that remains true. It remains, I guess, especially true right now, just given you know, what's potentially going to, how companies are potentially going to be impacted by tariffs.
Speaker Change: But, you know, I think we're underwriting a little less growth in the economy.
Speaker Change: and that will be reflected in leverage. That'll be reflected in the sectors we invest in and the companies we choose.
Speaker Change: Understood. Thank you. Sorry if I missed this and it was touched on but was there any commonality among the larger repayments in the order? Yes sir.
Speaker Change: If there were any large repayment, then maybe how have repayments turned us far into two Thank you. Thanks.
Speaker Change: I'm happy to take that, Mark. So I wouldn't say there was any specific commonality. It is a relatively small handful of companies that were repaid, a couple of them were larger positions.
Brad mentioned two were refinanced via the securitization markets.
We view those as success stories.
Speaker Change: Right, companies that were smaller, we grew with, we grew exposure and then had access to a much lower cost market.
Speaker Change: that even the public market had a hard time competing with.
Speaker Change: You know, two were sold to strategic, a couple of sponsor, sponsor sales. We actually had very limited if any exposure refinanced by the syndicated market.
Speaker Change: You know, I don't want to get forward looking guidance, but I think generally speaking has relates to repayment in periods of excess volatility.
Speaker Change: Combination with low M&A, we would expect repayment volumes to be quite muted, and those are those two things we are seeing this quarter.
Very good. Thank you.
Speaker Change: Thank you. We'll take our final question from Finian O'Shea with Wells Fargo's Securities.
Speaker Change: Hey, everyone. Thanks for the follow-up. I wanted to ask about growth. It looks like you hit the brakes on the ATM early in the quarter, and just with a lot of the talk that came out on the Q&A and on being more selective.
Speaker Change: You know what we should expect, say this year or at least for the outlook as you can see it.
Speaker Change: You know, say starting, you know, now or tomorrow as you're out of the blackout window on equity growth for the ATM. Thanks.
Speaker Change: I think you can expect it to be tied with originations. And so clearly as we're...
Speaker Change: Slowly wrapping and Brad outlined kind of the build in the portfolio. You could expect that to be a part of it. However, if you look back, when we saw how the deal activity would be muted, you can see that early on. You never know.
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Okay, thanks so much.
Speaker Change: Thank you. That will conclude our question and answer session. At this time I would like to turn the call back over to Justin and for sheeting for any additional or closing remarks.
Speaker Change: Thank you and thanks to all of you for joining today's call. We look forward to our follow-up discussions and we'll reconvene again next quarter.