Q2 2026 Kayne Anderson BDC Inc Earnings Call

August 11, 2026

Operator 1: Hello, everyone. Thank you for joining us, and welcome to the Kayne Anderson BDC Inc.'s second quarter 2026 earnings call. As a reminder, this call is being recorded. It is now my pleasure to turn the call over to Andy Wedderburn-Maxwell, Managing Director.

Operator: Hello, everyone. Thank you for joining us, and welcome to the Kayne Anderson BDC Inc.'s Q2 2026 Earnings Call. As a reminder, this call is being recorded. It is now my pleasure to turn the call over to Andy Wedderburn-Maxwell, Managing Director.

Speaker #1: It is now my pleasure to turn the call over to Andy Wetterburn Maxwell, Managing Director.

Speaker #2: Good morning and welcome to Kayne Anderson BDC, Inc.'s second quarter 2026 earnings call. Today I'm joined by Ken Leonard and Doug Goodwillie, co-CEOs of KBDC.

Andy Wedderburn-Maxwell: Good morning and welcome to Kayne Anderson BDC Inc.'s second quarter 2026 earnings call. Today I am joined by Ken Leonard and Doug Goodwillie, Co-CEOs of KBDC, Frank Karl, President, and Terry Hart, CFO. Following our prepared remarks, we will be available to take your questions. Today's call may include forward-looking statements. Such statements involve known and unknown risks, uncertainties, and other factors, and undue reliance should not be placed thereon. These forward-looking statements are not historical facts, but rather are based on current expectations, estimates, and projections about the company, our current and prospective portfolio investments, our industry, our beliefs and our opinions, and our assumptions. 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. Actual results may differ materially from those expressed or forecasted in the forward-looking statements.

Andy Wedderburn-Maxwell: Good morning and welcome to Kayne Anderson BDC Inc.'s Q2 2026 earnings call. Today I am joined by Ken Leonard and Doug Goodwillie, Co-CEOs of KBDC, Frank Karl, President, and Terry Hart, CFO. Following our prepared remarks, we will be available to take your questions. Today's call may include forward-looking statements. Such statements involve known and unknown risks, uncertainties, and other factors, and undue reliance should not be placed thereon. These forward-looking statements are not historical facts, but rather are based on current expectations, estimates, and projections about the company, our current and prospective portfolio investments, our industry, our beliefs and our opinions, and our assumptions.

Speaker #2: Frank Karl, President, and Terry Hart, CFO. Following our prepared remarks, we'll be available to take your questions. Today's call may include forward-looking statements. Such statements involve known and unknown risks, uncertainties, and other factors and undue reliance should not be placed thereon.

Speaker #2: These forward-looking statements are not historical facts but rather are based on current expectations, estimates, and projections about the company, our current and prospective portfolio investments, our industry, our beliefs, and our opinions, and our assumptions.

Speaker #2: 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.

Andy Wedderburn-Maxwell: 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. Actual results may differ materially from those expressed or forecasted in the forward-looking statements.

Speaker #2: Actual results may differ materially from those expressed or forecasted in the forward-looking statements. We ask that you refer to the company's most recent filings with the SEC for important risk factors.

Andy Wedderburn-Maxwell: We ask that you refer to the company's most recent filings with the SEC for important risk factors. Any forward-looking statements made today do not guarantee future performance, and undue reliance should not be placed on them. The company assumes no obligation to update any forward-looking statements at any time. Our earnings release, 10-Q, and supplemental earnings presentation are available on the financial section of our website at kaynebdc.com. Now I would like to turn the call over to Ken Leonard.

Speaker #2: Any forward-looking statements made today do not guarantee future performance and undue reliance should not be placed on them. The company assumes no obligation to update any forward-looking statements at any time.

Speaker #2: Our earnings release 10Q and supplemental earnings presentation are available on the financial section of our website at kaynebdc.com. Now I'd like to turn the call over to Ken Leonard.

Speaker #3: Good morning, everyone. I'm pleased to report that Kayne Anderson BDC delivered another quarter of solid performance. Demonstrating the continued resilience of our value-adding approach in what remains a challenging and bifurcated market environment.

Ken Leonard: Good morning, everyone. I am pleased to report that Kayne Anderson BDC delivered another quarter of solid performance, demonstrating the continued resilience of our value lending approach in what remains a challenging and bifurcated market environment. I will provide an overview of KBDC's performance this quarter. Frank Karl will then provide a more detailed overview of our portfolio with some relevant market commentary, and Terry Hart will conclude with KBDC's financial results. For the second quarter of 2026, we generated net investment income of $0.42 per share. Our board of directors has declared a regular quarterly dividend of $0.40 per share for the third quarter. This represents our annualized dividend yield of approximately 10% based on our current NAV per share. The dividend will be payable on 16 October to shareholders of record as of 30 September. This payout represents a dividend coverage ratio of 105%.

Ken Leonard: Good morning, everyone. I am pleased to report that Kayne Anderson BDC delivered another quarter of solid performance, demonstrating the continued resilience of our value lending approach in what remains a challenging and bifurcated market environment. I will provide an overview of KBDC's performance this quarter. Frank Karl will then provide a more detailed overview of our portfolio with some relevant market commentary, and Terry Hart will conclude with KBDC's financial results. For the Q2 of 2026, we generated net investment income of $0.42 per share. Our board of directors has declared a regular quarterly dividend of $0.40 per share for the third quarter. This represents our annualized dividend yield of approximately 10% based on our current NAV per share. The dividend will be payable on 16 October to shareholders of record as of 30 September. This payout represents a dividend coverage ratio of 105%.

Speaker #3: I'll provide an overview of KBDC's performance this quarter. Frank Karl will then provide a more detailed overview of our portfolio, with some relevant market commentary, and Terry Hart will conclude with KBDC's financial results.

Speaker #3: For the second quarter of 2026, we generated net investment income of $42 per share. Our board of directors has declared a regular quarterly dividend of $0.40 per share for the third quarter.

Speaker #3: This represents our annualized dividend yield of approximately 10% based on our current NAV per share. The dividend will be payable on October 16th to shareholders of record as of September 30th.

Speaker #3: This payout represents a dividend coverage ratio of 105%. Our annualized return on equity based on net investment income was 10.5%, reflecting the attractive risk-adjusted returns we have continued to generate for our shareholders.

Ken Leonard: Our annualized return on equity based on net investment income was 10.5%, reflecting the attractive risk-adjusted returns we have continued to generate for our shareholders. As communicated in our last two earnings calls, we remain confident in our ability to sustain this dividend through 2026. Net asset value per share as of 30 June was $16, representing a decline of $0.23 per share, or approximately 1.4% from the prior quarter's $16.23. We experienced realized and unrealized losses totaling $0.26 per share during the quarter, driven primarily by fair market value adjustments on certain portfolio positions and our completion of our strategic rotation out of our remaining broadly syndicated loan positions. These losses were partially offset by net investment income, exceeding the dividend combined with the impact of accretive share repurchases. Our overall credit quality remains strong. KBDC's non-accrual rate was 2.7%, up just 20 basis points from last quarter.

Speaker #3: As communicated in our last two earnings calls, we remain confident in our ability to sustain this dividend through 2026. Net asset value per share as of June 30 was $16.00, representing a decline of $0.23 per share, or approximately 1.4%, from the prior quarter's $16.23.

Speaker #3: We experienced realized and unrealized losses totaling $26 per share during the quarter, driven primarily by fair market value adjustments on certain portfolio positions and our completion of our strategic rotation out of our remaining broadly syndicated loan positions.

Speaker #3: These losses were partially offset by net investment income, exceeding the dividend combined with the impact of creative share repurchases. Our overall credit quality remained strong.

Speaker #3: KBDC's non-accrual rate was 2.7%, up just 20 basis points from last quarter. In terms of specific companies, we added 4 over and diversified last out tranche to non-accrual status, and took Sundance off non-accrual as the position was fully realized during the quarter.

Ken Leonard: In terms of specific companies, we added 4over and Diversified's last out tranche to non-accrual status and took Sundance off non-accrual as the position was fully realized during the quarter. Turning to investment activity, we closed USD 138.7 million in new private credit commitments during the quarter, demonstrating our continued ability to source attractive opportunities that meet our rigorous underwriting standards. The pricing environment for new originations remains favorable, with our new floating rate loans averaging 566 basis points over SOFR during the quarter, which was 17 basis points wider than in the first quarter. The current pricing environment reflects sustained demand for private credit amongst middle-market borrowers, slowing capital formation in non-traded and private vehicles, and a general increase in risk premiums.

Speaker #3: Turning to investment activity, we closed $138.7 million in new private credit commitments during the quarter. Demonstrating our continued ability to source attractive opportunities that meet our rigorous underwriting standards.

Speaker #3: The pricing environment for new originations remains favorable, with our new floating rate loans averaging $566 basis points over SOFR during the quarter, which was 17 basis points wider than in the first quarter.

Speaker #3: The current pricing environment reflects sustained demand for private credit amongst middle-market borrowers, slowing capital formation and non-traded and private vehicles, and a general increase in risk premiums.

Speaker #3: Regardless, we remain disciplined and passed on numerous opportunities during the second quarter, where either risk-adjusted returns fell short of our standards, sector exposure raised concern, or leverage profiles exceeded our comfort levels.

Ken Leonard: Regardless, we remain disciplined and passed on numerous opportunities during the second quarter, where either risk-adjusted returns fell short of our standards, sector exposure raised concern, or leverage profiles exceeded our comfort levels. We continue to see quality deal flow from sponsors who value our consistency, our ability to move quickly on transactions that fit our criteria, and our track record as constructive partners. Our fundings for the quarter totaled $146.4 million, which included both new investments and draws on existing unfunded commitments from our portfolio companies. On the repayment side, we saw USD 67.9 million of activity, including USD 38.1 million of private credit repayments and USD 29.8 million from the sale of our remaining broadly syndicated loan positions, which we have discussed in our prior calls.

Ken Leonard: Regardless, we remain disciplined and passed on numerous opportunities during the Q2, where either risk-adjusted returns fell short of our standards, sector exposure raised concern, or leverage profiles exceeded our comfort levels. We continue to see quality deal flow from sponsors who value our consistency, our ability to move quickly on transactions that fit our criteria, and our track record as constructive partners. Our fundings for the quarter totaled $146.4 million, which included both new investments and draws on existing unfunded commitments from our portfolio companies. On the repayment side, we saw USD 67.9 million of activity, including USD 38.1 million of private credit repayments and USD 29.8 million from the sale of our remaining broadly syndicated loan positions, which we have discussed in our prior calls.

Speaker #3: We continue to see quality deal flow from sponsors who value our consistency, our ability to move quickly on transactions that fit our criteria, and our track record as constructive partners.

Speaker #3: Our fundings for the quarter totaled $146.4 million. Which included both new investments and draws on existing unfunded commitments from our portfolio companies. On the repayment side, we saw $67.9 million of activity including $38.1 million of private credit repayments, and $29.8 million from the sale of our remaining broadly syndicated loan positions.

Speaker #3: Which we have discussed in our prior calls. Turning to our balance sheet strength and liquidity position, we ended the quarter with a debt-to-equity ratio of 1.17 times, comfortably within our target range of 1 to 1 and a quarter.

Ken Leonard: Turning to our balance sheet strength and liquidity position, we ended the quarter with a debt-to-equity ratio of 1.17 times, comfortably within our target range of one to 1.25. This positioning gives us flexibility to be opportunistic when we see compelling investment opportunities while maintaining conservative leverage. Our total liquidity position as of 30 June was $476.7 million, consisting of $39.7 million in cash and cash equivalents and $437 million in undrawn committed debt capacity under our credit lines. M&A activity in our core middle market segment shows encouraging signs. After muted activity in late 2025 and in the H1 2026, deal flow has picked up modestly in recent months. Private equity sponsors are more active, and financing markets, while selective, remain open for quality business.

Speaker #3: This positioning gives us flexibility to be opportunistic when we see compelling investment opportunities while maintaining conservative leverage. Our total liquidity position as of June 30th was $476.7 million, consisting of 39.7 million in cash and cash equivalents, and $437 million in underwriting committed debt capacity under our credit lines.

Speaker #3: M&A activity in our core middle-market segment shows encouraging signs. After muted activity first half of 2026, deal flow has picked up modestly in recent months.

Speaker #3: Private equity sponsors are more active, and financing markets, while selective, remain open for quality business. We continue to see opportunities in our target sectors and win our fair share of pursued deals based on our reputation and execution capabilities.

Ken Leonard: We continue to see opportunities in our target sectors and win our fair share of pursued deals based on our reputation and execution capabilities. For H2 2026, we expect to maintain this disciplined approach, deploying capital that meets our return and credit standards while preserving defensive positioning and sector diversification. In closing, we are encouraged that investors are increasingly differentiating BDCs based on portfolio composition, sector exposure, credit performance, and track record rather than treating the sector as homogenous. We expect this trend to continue as performance divergence among managers becomes more pronounced. Our conviction in our value-lending strategy has never been stronger, and we remain fully committed to delivering sustainable value for our shareholders. I will now pass the call over to Frank Karl to discuss our portfolio.

Speaker #3: For the second half of 2026, we expect to maintain this disciplined approach, deploying capital that meets our return and credit standards while preserving defensive positioning in sector diversification.

Speaker #3: In closing, we are encouraged that investors are increasingly differentiating BDCs based on portfolio composition, sector exposure, credit performance, and track record, rather than treating the sector as homogenous.

Speaker #3: We expect this trend to continue as performance divergence among managers becomes more pronounced. Our conviction in our value lending strategy has never been stronger, and we remain fully committed to delivering sustainable value for our shareholders.

Speaker #3: I will now pass the call over to Frank Karl to discuss our portfolio.

Speaker #2: Thanks, Ken. As of June 30th, our portfolio includes $104 companies with a fair value of $2.3 billion, plus $293 million of unfunded commitments. Since quarter end, we have closed or are finalizing 69 million dollars of new commitments as we've seen volumes remain relatively robust over the summer months.

Frank Karl: Thanks, Ken. As of 30 June, our portfolio includes 104 companies with a fair value of $2.3 billion, plus $293 million of unfunded commitments. Since quarter end, we have closed or are finalizing $69 million of new commitments as we've seen volumes remain relatively robust over the summer months. We do expect some realizations in Q3, including some that slipped from Q2 to Q3. As such, we are not expecting a significant change in leverage in Q3. Investments in KBDC's portfolio, excluding those on our watchlist and opportunistic investments, have a weighted average leverage of 4.5x, interest coverage of 2.4x, and loan to enterprise value of approximately 43%. Weighted average EBITDA of our private middle market portfolio companies is $53.7 million, reflecting our focus on established middle market businesses with meaningful scale.

Speaker #2: We do expect some realizations in third quarter, including some that slipped from second quarter to third quarter. As such, we are not expecting a significant change in leverage in the third quarter.

Speaker #2: Investments in KBDC's portfolio, excluding those on our watchlist and opportunistic investments, have a weighted average leverage of 4.5 times, interest coverage of 2.4 times, and loan-to-enterprise value of approximately 43%.

Speaker #2: Weighted average EBITDA of our private middle-market portfolio companies is 53.7 million dollars, reflecting our focus on established middle-market businesses with meaningful scale. Company count declined by 1, reflecting our exit from the broadly syndicated loan portfolio, and some realizations in the quarter.

Frank Karl: Company count declined by one, reflecting our exit from the broadly syndicated loan portfolio and some realizations in the quarter. The portfolio remains highly diversified. Average position size is approximately 1% of fair value, and our top 10 investments are only approximately 20% of the portfolio. Our top five industry sectors, healthcare, commercial services and supplies, distributors, food products, and containers and packaging, account for approximately 55% of the portfolio and have remained consistent quarter-over-quarter as we focus on avoiding sector concentration risks. Approximately 95% of our debt investments are floating rate, matched by a predominantly floating rate liability stack. Our only material fixed rate investment is the SG Credit loan at an 11% coupon. The SG Credit platform continues to perform very well in the lower middle market asset-backed financing space.

Speaker #2: The portfolio remains highly diversified, average position size is approximately 1% of fair value, and our top 10 investments are only approximately 20% of the portfolio.

Speaker #2: Our top 5 industry sectors: healthcare, commercial services and supplies, distributors, food products, and containers and packaging, account for approximately 55% of the portfolio, and have remained consistent quarter over quarter as we focus on avoiding sector concentration risks.

Speaker #2: Approximately 95% of our debt investments are floating rate, matched by a predominantly floating rate liability stack. Our only material fixed-rate investment is the SG Credit loan at an 11% coupon.

Speaker #2: The SG credit platform continues to perform very well in the lower middle-market asset-backed financing space. Credit performance remains strong, with 2.7% of debt investments at fair value on non-accrual versus 2.5% last quarter.

Frank Karl: Credit performance remains strong, with 2.7% of debt investments at fair value on non-accrual versus 2.5% last quarter. As previewed on our last call, Sundance came off non-accrual in Q2. However, Regiment's sale process is still ongoing while the company's performance continues to improve. We look forward to providing an update on Regiment next quarter. As Ken mentioned, we moved 4over and Diverzify's last out tranche to non-accrual this quarter, which did move our non-accruals up 20 basis points. Total PIK income for the quarter dropped to 4.5%, down 300 basis points from last quarter. Given last quarter we had elevated PIK income due to a one-time catch-up on ArborWorks. Terry will provide more specifics. Weighted average yield was 10.2% on fair value, excluding non-accruals, up slightly from 10.1% last quarter.

Speaker #2: As previewed on our last call, Sundance came off non-accrual in the second quarter. However, regimen sale process is still ongoing, while the companies' performance continues to improve.

Speaker #2: We look forward to providing an update on Regimen next quarter. As Ken mentioned, we moved our Over and Diversified’s last outstanding tranche to non-accrual this quarter, which did move our non-accruals up 20 basis points.

Speaker #2: Total PIC income for the quarter dropped to 4.5%, down 300 basis points from last quarter, given last quarter we had elevated PIC income due to a one-time catch-up on ArborWorks, Terry will provide more specifics.

Speaker #2: Weighted average yield was 10.2% on fair value, excluding non-accruals, up slightly from 10.1% last quarter. As we continue to invest and manage our portfolio, we remain focused on the geopolitical and macroeconomic risks that require our constant attention.

Frank Karl: As we continue to invest and manage our portfolio, we remain focused on the geopolitical and macroeconomic risks that require our constant attention. This reinforces our focus on borrowers with strong interest coverage and conservative leverage, providing meaningful cushion against continued rate pressure. We remain willing to be patient and wait for opportunities that meet our standards rather than deploy capital indiscriminately. Broader market sentiment has kept BDC valuations depressed for several quarters. Headlines around redemption pressures at large non-traded BDCs creates a disconnect with higher quality public BDCs, delivering strong operational performance, consistent dividend coverage, stable credit metrics, and disciplined capital deployment. We believe that the higher quality managers will be able to close the price-to-NAV discounts as the market will increasingly reward BDCs like KBDC that demonstrate consistent returns, discipline, and defensive market positioning. With that, I'll turn it over to Terry.

Speaker #2: This reinforces our focus on borrowers with strong interest coverage and conservative leverage, providing a meaningful cushion against continued rate pressure. We remain willing to be patient and wait for opportunities that meet our standards, rather than deploy capital indiscriminately.

Speaker #2: Broader market sentiment has kept BDC valuations depressed for several quarters, headlines around redemption pressures at large non-traded BDCs creates a disconnect with higher-quality public BDCs, delivering strong operational performance, consistent dividend coverage, stable credit metrics, and disciplined capital deployment.

Speaker #2: We believe that higher-quality managers will be able to close the price-to-NAV discounts, as the market will increasingly reward BDCs like KBDC that demonstrate consistent returns discipline and defensive market positioning.

Speaker #2: With that, I'll turn it over to Terry.

Speaker #3: Thanks, Frank. I'll begin by reviewing our financial results. During the second quarter, we earned net income per share of 16 cents and net investment income per share of 42 cents, compared to 43 cents in the prior quarter and 2 cents above our dividend.

Terry Hart: Thanks, Frank. I'll begin by reviewing our financial results. During the second quarter, we earned net income per share of $0.16 and net investment income per share of $0.42, compared to $0.43 in the prior quarter and $0.02 above our dividend. Total investment income for the second quarter was $55.7 million, as compared to $57.3 million in the prior quarter. The decrease in investment income was primarily a result of $2 million less PIK interest income related to our investment in ArborWorks, which moved to accrual status in the first quarter and recognized income that had been deferred since the fourth quarter of 2023. Interest income was also lower due to American Soccer being on non-accrual status during the second quarter, but was offset by income from new investments and the rotation out of the remaining broadly syndicated loans.

Terry Hart: Thanks, Frank. I'll begin by reviewing our financial results. During the Q2, we earned net income per share of $0.16 and net investment income per share of $0.42, compared to $0.43 in the prior quarter and $0.02 above our dividend. Total investment income for the Q2 was $55.7 million, as compared to $57.3 million in the prior quarter. The decrease in investment income was primarily a result of $2 million less PIK interest income related to our investment in ArborWorks, which moved to accrual status in the first quarter and recognized income that had been deferred since the fourth quarter of 2023. Interest income was also lower due to American Soccer being on non-accrual status during the Q2, but was offset by income from new investments and the rotation out of the remaining broadly syndicated loans.

Speaker #3: Total investment income for the second quarter was 55.7 million, as compared to 57.3 million in the prior quarter. The decrease in investment income was primarily a result of 2 million less PIC interest income related to our investment in ArborWorks, which moved to accrual status in the first quarter and recognized income that had been deferred since the fourth quarter of 2023.

Speaker #3: Interest income was also lower due to American soccer being on non-accrual status during the second quarter but was offset by income from new investments and the rotation out of the remaining broadly syndicated loans.

Speaker #3: Accelerated amortization of OID related to realization activity was approximately 0.3 million during the quarter, and PIC interest represented 4.5% of total investment income for the quarter.

Terry Hart: Accelerated amortization of OID related to realization activity was approximately $0.3 million during the quarter, and PIK interest represented 4.5% of total investment income for the quarter. Additionally, the 10 basis point increase in our portfolio yield was primarily a result of rotating out of our remaining BSL positions into higher yielding private credit investments. Total expenses for the second quarter were $28.2 million compared to $28.4 million in the prior quarter. The decrease was primarily the result of $1.2 million lower incentive fees, partially offset by a $0.7 million increase in interest expense on higher average credit facility borrowings during the second quarter. During the quarter, our incentive management fees were reduced by the 12-quarter incentive fee cap.

Terry Hart: Accelerated amortization of OID related to realization activity was approximately $0.3 million during the quarter, and PIK interest represented 4.5% of total investment income for the quarter. Additionally, the 10 basis point increase in our portfolio yield was primarily a result of rotating out of our remaining BSL positions into higher yielding private credit investments. Total expenses for the Q2 were $28.2 million compared to $28.4 million in the prior quarter. The decrease was primarily the result of $1.2 million lower incentive fees, partially offset by a $0.7 million increase in interest expense on higher average credit facility borrowings during the Q2. During the quarter, our incentive management fees were reduced by the 12-quarter incentive fee cap.

Speaker #3: Additionally, the 10 basis point increase in our portfolio yield was primarily a result of rotating out of our remaining BSL positions into higher-yielding private credit investments.

Speaker #3: Total expenses for the second quarter were 28.2 million compared to 28.4 million in the prior quarter. The decrease was primarily the result of 1.2 million lower incentive fees partially offset by a 0.7 million increase in interest expense on higher average credit facility borrowings during the second quarter.

Speaker #3: During the quarter, our incentive management fees were reduced by the 12th quarter incentive fee cap. During the second quarter, we had realized losses of 12.2 million related to the liquidation of our investment in Sundance that resulted in a realized loss of 9.4 million; the restructure of our debt investment and diversify that resulted in a 0.9 million realized loss; and we recognized 1.9 million in realized losses as we rotated out of our remaining broadly syndicated loans.

Terry Hart: During the second quarter, we had realized losses of $12.2 million related to the liquidation of our investment in Sundance that resulted in a realized loss of $9.4 million, the restructure of our debt investment in Diverzify that resulted in a $0.9 million realized loss, and we recognized $1.9 million in realized losses as we rotated out of our remaining broadly syndicated loans. During the quarter, we had net unrealized losses on the portfolio of $4.6 million compared to unrealized losses of $9 million in the prior quarter. The unrealized losses were largely the result of negative fair value changes to our investments in American Soccer, 4over, and Regiment Security, partially offset by the reversal of unrealized losses related to Sundance, Diverzify, and the remaining broadly syndicated loans that were realized this quarter. As of 30 June, total assets were $2.3 billion and net assets were $1.1 billion.

Terry Hart: During the Q2, we had realized losses of $12.2 million related to the liquidation of our investment in Sundance that resulted in a realized loss of $9.4 million, the restructure of our debt investment in Diverzify that resulted in a $0.9 million realized loss, and we recognized $1.9 million in realized losses as we rotated out of our remaining broadly syndicated loans. During the quarter, we had net unrealized losses on the portfolio of $4.6 million compared to unrealized losses of $9 million in the prior quarter. The unrealized losses were largely the result of negative fair value changes to our investments in American Soccer, 4over, and Regiment Security, partially offset by the reversal of unrealized losses related to Sundance, Diverzify, and the remaining broadly syndicated loans that were realized this quarter. As of 30 June, total assets were $2.3 billion and net assets were $1.1 billion.

Speaker #3: During the quarter, we had net unrealized losses on the portfolio of 4.6 million, compared to unrealized losses of 9 million in the prior quarter.

Speaker #3: The unrealized losses were largely the result of negative fair value changes to our investments in American Soccer, ForOver, and Regimen Security, partially offset by the reversal of unrealized losses related to Sundance Diversify and the remaining broadly syndicated loans that were realized this quarter.

Speaker #3: As of June 30th, total assets were $2.3 billion and net assets were $1.1 billion. As of that date, our net asset value was $16.00 per share. The decrease of $0.23 from $16.23 per share as of March 31st was comprised of $0.26 per share related to net realized and unrealized losses, partially offset by $0.02 of net investment income in excess of our dividend, and $0.01 related to accretive share repurchases during the second quarter.

Terry Hart: As of that date, our net asset value was $16 per share. The decrease of $0.23 from $16.23 per share as of 31 March was comprised of $0.26 per share related to net realized and unrealized losses, partially offset by $0.02 of net investment income in excess of our dividend and $0.01 related to accretive share repurchases during Q2. At the end of Q2, we had debt outstanding of $1.238 billion, and our debt-to-equity ratio was 1.17x, which is an increase from 1.05x at the end of Q1. The increase in leverage during Q2 was largely a result of expected realizations being delayed rather than a deliberate move higher. We plan to operate around the midpoint of our debt-to-equity target range, with some quarters being higher or lower depending on realization activity.

Speaker #3: At the end of the second quarter, we had debt outstanding of 1,238,000,000 and our debt-to-equity ratio was 1.17 times which is an increase from 1.05 times at the end of the first quarter.

Speaker #3: The increase in leverage during the second quarter was largely a result of expected realizations being delayed rather than a delivered move higher. We plan to operate around the midpoint of our debt-to-equity target range, with some quarters being higher or lower depending on realization activity.

Speaker #3: Now turning to our distributions. On August 5th, our board of directors declared a regular dividend for the third quarter of 40 cents per share to shareholders of record on September 30th.

Terry Hart: Now turning to our distributions. On 5 August, our board of directors declared a regular dividend for Q3 of $0.40 per share to shareholders of record on 30 September. As of 30 June, our undistributed net investment income was approximately $0.26 per share. Finally, for the remainder of 2026, we plan to stay focused on our value lending strategy, which we believe will continue to differentiate us from our competitors. With that, operator, please open the line for questions.

Speaker #3: As of June 30th, our undistributed net investment income was approximately $0.26 per share. And finally, for the remainder of 2026, we plan to stay focused on our value lending strategy, which we believe will continue to differentiate us from our competitors.

Speaker #3: With that, operator, please open the line for questions.

Speaker #4: We will now begin the question and answer session. If you would like to ask a question, please press star 1 to raise your hand.

Operator 1: We will now begin the question and answer session. If you would like to ask a question, please press star one to raise your hand. To withdraw your question, press star one again. We ask that you pick up your handset when asking a question to allow for optimum sound quality. If you are muted locally, please remember to unmute your device. Please stand by while we compile the Q&A roster. Your first question comes from the line of Kenneth Lee with RBC Capital Markets. Your line is open. Please go ahead.

Operator: We will now begin the question and answer session. If you would like to ask a question, please press star one to raise your hand. To withdraw your question, press star one again. We ask that you pick up your handset when asking a question to allow for optimum sound quality. If you are muted locally, please remember to unmute your device. Please stand by while we compile the Q&A roster. Your first question comes from the line of Kenneth Lee with RBC Capital Markets. Your line is open. Please go ahead.

Speaker #4: To withdraw your question, press star 1 again. We ask that you pick up your handset when asking a question to allow for optimum sound quality.

Speaker #4: If you are muted locally, please remember to unmute your device. Please stand by while we compile the Q&A roster. Your first question comes from the line of Kenneth Lee with RBC Capital Markets.

Speaker #4: Your line is open. Please go ahead.

Speaker #5: Hey, good morning, and thanks for taking my question. I'm wondering about prepayment activity. And I realize it's difficult to predict, but any kind of outlook around where or what levels prepayment activities could trend over the near term there?

Kenneth Lee: Hey, good morning, and thanks for taking my question. Wondering about prepayment activity. I realize it is difficult to predict, but any kind of outlook around where or what levels prepayment activities could trend over the near term there? Thanks.

Speaker #5: Thanks.

Speaker #6: Thanks, Ken. This is Frank. I think you said it right. It is very hard to predict. We had a couple of names push from expected realizations in second quarter to third quarter.

Frank Karl: Thanks, Ken. This is Frank. I think you said it right. It is very hard to predict. We had a couple of names push from expected realizations in Q2 to Q3. I think we have, for H2 of the year, something around 5% of the portfolio scheduled as maturities. Broadly, something in line with that would be a reasonable expectation, absent some material pickup in exit activity inside the portfolio.

Speaker #6: And I think we have for second half of the year something around 5% of the portfolio scheduled as maturities. So I think broadly something in line with that would be a reasonable expectation, absent some material pickup in exit activity inside the portfolio.

Speaker #5: Gotcha. Very helpful there. And then one follow-up, if I may, just on the investment portfolio itself, could you talk about any sort of watchlist that you may have and perhaps where that's trending over the last few quarters?

Kenneth Lee: Got you. Very helpful there. One follow-up, if I may, just on the investment portfolio itself. Could you talk about any sort of watch list that you may have and perhaps where that's trending over the last few quarters? Thanks.

Speaker #5: Thanks.

Speaker #6: Sure. And again, this is Frank. The watchlist right now is at, call it, 5.5% of the fair market value of the debt portfolio. That's been relatively consistent over a pretty extended period of time.

Frank Karl: Sure. Again, this is Frank. Watch list right now is at, call it, 5.5% of fair market value of the debt portfolio. That's been relatively consistent over a pretty extended period of time. I think we generally think something in that mid-single digit range. Again, this is inclusive of non-accrual investments, I should make that clear. Something in that range is, I'd say, our typical over, call it, the last decade plus, speaking at the platform level more broadly. Obviously, there are periods where you're a little bit lower than that, a little bit higher than that. I think we look at watch list broadly, I'm sorry, watch list specifically and credit more broadly and think that we're sort of in a period where I think it would be disingenuous to say that there's no credit noise out there, right?

Speaker #6: I think we generally think something in that mid-single-digit range. Again, this is inclusive of non-accrual investments, which make that clear. But something in that range is, I'd say, our typical over, call it, the last decade plus speaking at the platform level more broadly.

Speaker #6: Obviously, there are periods where you're a little bit lower than that, a little bit higher than that, but I think we look at watchlist broadly I'm sorry, watchlist specifically in credit more broadly and think that we're sort of in a period where I think it would be disingenuous to say that there's no credit noise out there, right?

Speaker #6: I think every call that we've listened to this quarter and you can see it in our reporting, right? There is a little bit of signs of increased stress, more non-accruals, more restructurings, picking comes up a little bit, etc.

Frank Karl: I think every call we've listened to this quarter, you can see it in our reporting, right? There is a little bit of signs of increased stress, more non-accruals, more restructurings, picking comes up a little bit, et cetera, NAV down across the board. I think we're seeing something of sort of a shallow slow down, is how I characterize it. I think you're seeing that in a relatively stable watch list number.

Speaker #6: Now it's down across the board, but I think we're seeing something of sort of a shallow slow, slowdown is how I would characterize it.

Speaker #6: And I think you're seeing that in a relatively stable watchlist number.

Speaker #5: Gotcha. Very helpful there. Thanks again.

Kenneth Lee: Got you. Very helpful there. Thanks again.

Speaker #4: Your next question comes from the line of Paul Johnson with KBW. Your line is open. Please go ahead.

Operator 1: Your next question comes from the line of Paul Johnson with KBW. Your line is open. Please go ahead.

Operator: Your next question comes from the line of Paul Johnson with KBW. Your line is open. Please go ahead.

Paul Johnson: Yeah, good morning. Thanks for taking my questions. It sounds like the watch list is relatively stable quarter-over-quarter. But in terms of the non-accrual marks this quarter, I think most of them were pretty much most of them are marked lower quarter-over-quarter to the lower 50% or so, we will call it, of fair value. What does that, I guess, suggest about your expectation over recoveries on those assets and maybe how does that line up with the Kayne Anderson platform historically? Are you also just kind of leaving, I guess, or building in some level of conservatism there potentially for better than expected, I guess, recoveries?

Speaker #7: Yeah, good morning. Thanks for taking my questions. So, it sounds like the watchlist is relatively stable quarter over quarter, but, in terms of the non-accrual marks this quarter, I think most of them were—pretty much most of them were marked lower.

Speaker #7: Quarter over quarter, to the lower 50% or so we'll call it of fair value. I mean, what does that, I guess, suggest about your expectation over recoveries on those assets?

Speaker #7: And maybe how does that line up with the Kayne Anderson platform historically and are you also just kind of leaving, I guess, or building in some level of conservatism there potentially for a better than expected, I guess, recoveries?

Speaker #6: Yeah, thanks, Paul. And again, this is Frank. Yeah, I think we'd certainly saw some downward moves on the watchlist broadly. I would call out that regiment, the last out piece there, yes, there was a markdown in second quarter where expecting an exit in the third quarter that has a little bit of upside.

Frank Karl: Yeah. Thanks, Paul. Again, this is Frank. Yeah, I think we certainly saw some downward moves on the watch list broadly. I would call out that Regiment, the last out piece there. Yes, there was a markdown in Q2. We are expecting an exit in Q3 that has a little bit of upside to that current mark. Not all negative, broadly speaking. But as far as where these things are marked, I think we try to be conservative in our process, and it is the same process for the BDC portfolio as it is for all investments across our entire loan book. That is almost 100% overlap between the private funds and separate accounts, et cetera, and the BDC.

Speaker #6: To that current mark, so not all negative, broadly speaking. But as far as where these things are marked, I mean, I think we try to be conservative in our process, and it's the same process for the BDC portfolio as it is for all investments across our entire loan book.

Speaker #6: And that's almost 100% overlap between the private funds and separate accounts, etc., and the BDC. So, I don't think we want to get super specific about any of these situations, other than to say we historically have thought of ourselves—and try to act—as conservatively as possible in situations that are sort of stressed, with some unknowns by their very nature.

Frank Karl: I don't think we want to get super specific about any of these situations other than to say we historically have thought of ourselves and try to act as conservatively as possible in situations that are stressed and with some unknowns, by their very nature.

Speaker #7: Got it. Very helpful. Thanks for that, Carl. My last question would just be on the BSL rotation this quarter. When you're rotating, I guess maybe just speaking about this quarter, but the rotation there—what is kind of the spread, roughly?

Paul Johnson: Got it. Very helpful. Thanks for that, Carl. My last question would just be on the BSL rotation this quarter. When you are rotating, I guess maybe just speaking about this quarter, but the rotation there, what is the spread? Roughly, what is the spread pickup there in terms of what is going into the 566 direct lending origination spread this quarter? I guess is the reason for the timing on that just more so not necessarily to draw down additional leverage on the portfolio and kind of access there or monetize these assets, or is it just more of an opportunistic sale that you saw during the quarter? Thanks.

Speaker #7: What's the spread pickup there in terms of what's going into the 566 direct lending origination spread this quarter? And I guess the reason for the timing on that, just more so not necessarily to drill down additional leverage on the portfolio and kind of access or monetize these assets or is it just more of an opportunistic sale that you saw during the quarter?

Speaker #7: Thanks.

Speaker #6: Yeah. So we're out of all the broadly syndicated loans at this point. Those were ballpark so far plus 300 directionally. So you're picking up 250 basis points plus or minus on a rotation out of those names.

Frank Karl: Yeah. We are out of all the broadly syndicated loans at this point. Those were, ballpark SOFR plus 300 directionally. So you are picking up 250 basis points plus or minus on a rotation out of those names. We were not looking to time the market specifically on an exit. I think we had opportunities to invest that capital in the core of our business, these middle-market loans. The BSL book was remaining names. Just to be clear, I think we were down to three or four of those names last quarter. Timing was right to move on, as we have been communicating to you all and investors since our IPO, that that was a temporary position for us.

Speaker #6: I don't think we were we were not looking to time the market specifically on an exit. I think we had opportunities to invest that capital in the core of our business, these middle market loans, and the BSL book was remaining names.

Speaker #6: And just to be clear, right, I think we were down to three or four of those names last quarter. Timing was right to move on as we've been communicating to you all and investors since our IPO, that that was a temporary position for us.

Speaker #7: Appreciate it. Thanks, Nicole, from me.

Paul Johnson: Appreciate it. Thanks. That is all for me.

Speaker #4: Your next question comes from the line of Finney and O'Shea with Wells Fargo Securities. Your line is open. Please go ahead.

Operator 1: Your next question comes from the line of Finian O'Shea with Wells Fargo Securities. Your line is open. Please go ahead.

Operator: Your next question comes from the line of Finian O'Shea with Wells Fargo Securities. Your line is open. Please go ahead.

Speaker #8: Oh, hey, everyone. Good morning. So, part of the storyline we're getting this quarter is competition in the core lower middle market continues to pick up. A lot of the players there are still raising private funds and such.

Finian O'Shea: Hey, everyone. Good morning. Part of the storyline we are getting this quarter is competition in the sort of core lower middle market is continuing to pick up. A lot of the players there are still raising private funds and such. Then maybe more are looking at your sort of focus in the value sector. Seeing if you could give us some feel on what the competition is like, how much sort of wallet is showing up for the deals that you prefer.

Speaker #8: And then maybe more are looking at your sort of focus in the value sector. So seeing if you could give us some feel on what the competition is like, how much sort of wallet is showing up for the deals that you prefer.

Speaker #6: Thanks, Ben. I mean, look, I think market has been constructive. There's been a, I would say, decent amount of flow in the markets where we've participated.

Frank Karl: Thanks, Finn. Look, I think market has been constructive. There has been a, I would say, decent amount of flow in the markets where we participate. I know we have seen a handful of folks in the upper market reporting slower quarters. That does not surprise me when the last 5 years has been 25% or 30% software originations. There is much less of that right now. That is sort of broad strokes on, hey, are there a decent amount of deals out there? I would say yes for our segment specifically on the demand side. On competition and what we are seeing in different segments of the market, I think it is absolutely the case that what we would characterize as lower middle market, so call it $15 million of EBITDA, maybe $20 million of EV done below. That space is very competitive.

Speaker #6: I know we've seen a handful of folks in the upper market reporting slower quarters. I mean, that doesn't surprise me when last five years has been 25 or 30 percent software originations and there's much less of that right now.

Speaker #6: That's sort of like broad strokes on, hey, are there a decent amount of deals out there? I'd say yes. For our segment specifically, on the supply side, I'm sorry, on the demand side.

Speaker #6: On competition and what we're seeing in different segments of the market, I think it's absolutely the case that what we would characterize as lower middle market—so, call it $15 million of EBITDA, maybe $20 million of EBITDA and below—that space is very competitive.

Frank Karl: It is usually one-lender deals, only takes sort of one person to show up, write the check, and those will clear sometimes at very tight spreads. I think we have seen, if anything, something of the opposite at the larger end of where we focus, as you have seen a slowdown in the non-traded and just a little bit less net new capital being formed. To the extent that people are focusing more on the segments and industries where we have historically invested, we are not seeing that from the very large guys directly, or if they are, it has been offset by a little bit less capital formed more broadly. I know that is a sort of generic response, but that is what we are seeing real-time. I think you see it in spreads. We look at some reporting that has spreads in, call it upper market, gapping out a little bit wider than lower market.

Speaker #6: It's usually one lender deals, only takes sort of one person to show up, write the check, and those will clear sometimes at very tight spreads.

Speaker #6: I think we've seen, if anything, something of the opposite at the larger end of where we focus, as you've seen us slow down in the non-tradeds, and just a little bit less net new capital being formed.

Speaker #6: So, to the extent that people are focusing more on the segments where an industry is, where we've historically invested, I mean, we're not seeing that from the very large guys directly, or if they are.

Speaker #6: It's been offset by a little bit less capital formed more broadly. I know that's a sort of generic response, but that's what we're seeing in real time.

Speaker #6: I think you see it in spreads, right? We look at some reporting that has spreads in, call it, upper market gapping out a little bit wider than lower market.

Doug Goodwillie: Hey, Finn, this is Doug. Thanks, Frank. You hit on the most relevant points there. On the industry side, Finn, I do not know that it is so much people coming into the value lending, call it stable and staple industries in a purposeful way. I just think that higher growth businesses, software businesses, and technology businesses are generally, obviously not transacting. I think kind of the core segments of the market, the companies that are being sold or purchased at 7 to 10 times are the ones that are going to market these days. I think that is where you are seeing more people transact.

Speaker #2: Hey, Ben, this is Doug. Thanks, Frank. You hit on most of the relevant points there. On the industry side, Ben, I don't know that it's so much people coming into the value lending—call it stable and staple industries.

Speaker #2: In a purposeful way, I just think that higher growth, businesses, software businesses, and technology businesses are generally obviously not transacting. And so I think kind of the core segments of the market, the companies that are being sold or purchased at 7 to 10 times are the ones that are going to market these days.

Speaker #2: So I think that's where you're seeing more people transact. And I think, just quickly to hit on Frank's point, I think when some of the non-tradeds and capital outflows in the upper mid-market sector are creating—it's not a severe dislocation by any means right now, but enough of a dislocation that putting together $400 or $500 million clubs, if you will, there's a decent risk-reward there right now in that $50 to $100 million range.

Doug Goodwillie: I think just quickly to hit on Frank's point, I think when some of the non-traded and capital outflows in the upper mid-market sector are creating a, it is not a severe dislocation by any means right now, but enough of a dislocation that putting together 4 or $500 million clubs, if you will. There is a decent risk reward there right now in that $50 to $100 million range of EBITDA, where in certain markets the call them more liquid, more efficient. You would see cov-lite or very loose covenants and pricing in the 4s. We are seeing reasonable covenants, reasonable documentation, small lender clubs with decent pricing in the 500s as it relates to call it the $10 to $15 million EBITDA, lower mid-market space.

Speaker #2: Of EBITDA where in certain markets that call them more liquid, more efficient, you'd see Cove Light or very loose covenants and pricing in the fours.

Speaker #2: We're seeing reasonable covenants, reasonable documentation, small lender clubs with decent pricing in the 500s as it relates to, call it, the $10 to $15 million EBITDA lower mid-market space.

Speaker #8: Very helpful. Another sort of follow-up – in healthcare, we've seen more of that. There's a dental name this quarter, and that whole area has been a bit of a headwind again for the space.

Finian O'Shea: Very helpful. Another follow-up. In healthcare, we have seen more of that. There is a dental name this quarter. That area has been a bit of a headwind again for the space. Is that something that has become a deep and cheap sort of value sector as you describe it, or is it perhaps more opportunistic as others might be pulling out from another sort of credit wave?

Speaker #8: Is that something that's become a deep-and-cheap sort of value sector, as you describe it? Or is it perhaps more opportunistic, as others might be pulling out from another sort of credit wave?

Speaker #2: Yeah, good question. And we've certainly read and seen some of the credit stress there. I think, historically, going back, Ken, I'd say four or five years, you saw in those roll-ups where leverage would be five to six times, but with aggressive add-backs as locations were being opened in the practice management space—whether it was dental, ophthalmology, or dermatology—we largely stayed away from the space during that time.

Doug Goodwillie: Yeah. Good question. We have certainly read and seen some of the credit stress there. I think historically, going back, Ken, I would say 4 or 5 years, you saw in those roll-ups where leverage would be 5 to 6 times, but with aggressive add-backs, as locations were being opened in the practice management space, whether it was dental or ophthalmology or dermatology. We largely stayed away from the space during that time. Now, I think over the last few years, as people saw pullback after some of the headwinds a few years ago with labor costs and not being able to pass through slower growth, or sorry, pass through costs combined with slower growth. Leverage multiples then really normalized in the 4 to 5 times range.

Speaker #2: Now, I think over the last few years, as people saw pullback after some of the headwinds a few years ago with labor costs and not being able to pass through, slower growth or sorry, pass-through costs combined with slower growth, leverage multiples then really normalized in the four to five times range.

Speaker #2: I think I'm not going to put Frank on the spot, but I would say our average leverage for our practice management businesses is probably still mid fours.

Doug Goodwillie: I think I'm not going to put Frank on the spot, but I would say our average leverage for our practice management businesses is probably still mid-fours. I think when you structure those businesses right, when you work with the right sponsors and people aren't looking for aggressive add-backs on really aggressive location build-out, we still think that space is viable as long as you're not too aggressive on the structuring side.

Speaker #2: So I think when you structure those businesses right, when you work with the right sponsors and people aren't looking for aggressive add-backs or really aggressive location build-outs, we still think that space is viable as long as you're not too aggressive on the structuring side.

Ken Leonard: Doug, this is Ken. Just to add in, none of those medical practice management deals are on the watch list right now or trending that way.

Speaker #5: And Doug, this is Ken just to add in. None of those medical practice management deals are on the watch list right now or trending that way.

Ken Leonard: Doug, this is Ken. Just to add in, none of those medical practice management deals are on the watch list right now or trending that way.

Terry Hart: Great. Thanks, everyone.

Finian O'Shea: Great. Thanks, everyone.

Speaker #8: Thanks, everyone.

Speaker #4: Your next question comes from the line of Melissa Widdell with UBS. Your line is open. Please go ahead.

Operator 1: Your next question comes from the line of Melissa Weddle with UBS. Your line is open. Please go ahead.

Operator: Your next question comes from the line of Melissa Weddle with UBS. Your line is open. Please go ahead.

Speaker #7: Good morning. Thanks for taking my questions today. I had one more follow-up on the rotation of the BSL. It's a little bit specific and in the weeds, so apologies.

Melissa Weddle: Good morning. Thanks for taking my questions today. I had one more follow-up on the rotation of the BSL. It is a little bit specific and in the weeds, so apologies. I am wondering if there was anything in particular that we should be thinking about in terms of timing in rotating out of the BSL allocation. Was that front-end loaded or sporadic throughout the quarter? The timing of redeployment back into higher-yielding portfolio assets, was there any drag, do you think, during the quarter from that rotation?

Speaker #7: I'm wondering if there was anything in particular that we should be thinking about in terms of timing in rotating out of the BSL allocation?

Speaker #7: Was that front-end loaded, or was it kind of sporadic throughout the quarter? And regarding the timing of redeployment back into higher-yielding portfolio assets, was there any drag, do you think, during the quarter from that rotation?

Doug Goodwillie: Terry, do you have a perspective there?

Speaker #2: Terry, do you have a perspective there?

Terry Hart: Melissa, it is a good question, and I can follow up with you. I cannot remember off the top of my head the timing of it. I do think that we had a fairly large chunk of the BSLs rotate out early, but we also had a decent amount of private credit deals that closed early in the quarter, too. Let me get a little bit more in the weeds with you on that one, but that is how I recollect at least part of it.

Speaker #8: Melissa, that's a good question, and I can follow up with you. I can't remember off the top of my head the timing of it.

Speaker #8: I do think that we had a fairly large chunk of the BSLs rotate out early, but we also had a decent amount of private credit deals that closed early in the quarter too.

Speaker #8: So let me get a little bit more in the weeds with you on that one. But that's how I recollect. At least part of it.

Melissa Weddle: Okay. Yeah. Appreciate it.

Doug Goodwillie: Terry, the absolute dollar amount, it's not a big mover.

Speaker #2: But Terry, I mean, the absolute dollar amount—it's not a big mover.

Doug Goodwillie: Terry, the absolute dollar amount, it's not a big mover.

Terry Hart: You're talking about, the total was inside of $30 million principal during the quarter, so fairly small amount.

Speaker #8: Yeah. You're talking about, I mean, the total was inside of $30 million principal during the quarter, so fairly small amount. But, like Frank said, the spread differential is definitely meaningful.

Terry Hart: You're talking about, the total was inside of $30 million principal during the quarter, so fairly small amount.

Terry Hart: Okay.

Melissa Weddle: Okay.

Terry Hart: Frank said, the spread differential is definitely meaningful.

Speaker #7: Yep. Okay. Thanks for that. And then you talked earlier about not expecting much change in portfolio leverage and sort of aiming for that middle-of-the-range with some plus or minus in any given quarter.

Melissa Weddle: Yep. Okay. Thanks for that. You talked earlier about not expecting much change in portfolio leverage and sort of aiming for that middle of the range with some plus or minus in any given quarter. When you think about it at sort of current levels and towards that middle of the range, do you think that gives you enough room for both deployment into new opportunities, even if you don't have a lot of recycling of capital in the portfolio, and still allow you to repurchase shares at these levels? Thanks.

Speaker #7: When you think about it at sort of current levels and towards that middle-of-the-range, do you think that gives you enough room for both deployment into new opportunities, even if you don't have a lot of recycling of capital in the portfolio, and still allow you to repurchase shares at these levels?

Speaker #7: Thanks.

Speaker #2: Yeah, this is Frank. And I'll start. Terry, jump in if you have anything else to add. I mean, it's definitely a bit of a hard question to answer with specificity.

Frank Karl: Yeah. This is Frank, and I will start. Terry, jump in if you have anything else to add. It is definitely a bit of a hard question to answer with specificity. I think we like to manage our leverage profile on the more conservative side for the market as a whole, such that we have some breathing room for the share repurchase program, capital to invest in new deals. But it is kind of a week by week and month by month on the new deal side as to what is coming back, what can we deploy? We are looking at it closely every quarter. So I think we are trying to sort of hit that middle ground of being fully deployed or as close to it as we can be while keeping some capacity for really attractive uses of that capital, whether it is new deals or repurchases.

Speaker #2: I think we like to manage our leverage profile on the more conservative side, for the market as a whole, so that we have some breathing room for the share purchase program and capital to invest in new deals.

Speaker #2: But it's kind of a week-by-week and month-by-month on the new deal side, as to what's coming back, what we can deploy. We're looking at it closely every quarter.

Speaker #2: So I think we're trying to sort of hit that middle ground of being fully deployed or as close to it as we can be while keeping some capacity for really attractive uses of that capital, whether it's new deals or repurchases.

Speaker #7: Thank you.

Melissa Weddle: Thank you.

Operator 1: There are no further questions at this time. I will now turn the call back to Ken Leonard for closing remarks.

Operator: There are no further questions at this time. I will now turn the call back to Ken Leonard for closing remarks.

Speaker #4: There are no further questions at this time. I will now turn the call back to Ken Leonard for closing remarks.

Ken Leonard: Thanks, Sarah. We appreciate the continued support and engagement from all of our shareholders and analysts. We feel very good about where the business is positioned today. We have a clear strategy, a strong team, and significant opportunities ahead of us. We know that ultimately we will be judged on execution, and that remains our focus each and every day. Thank you all for joining us today, and we look forward to updating you again next quarter.

Speaker #2: We appreciate the continued support and engagement from all of our shareholders and analysts. We feel very good about where the business is positioned today.

Speaker #2: We have a clear strategy, a strong team, and significant opportunities ahead of us. We know that, ultimately, we'll be judged on execution, and that remains our focus each and every day.

Speaker #2: Thank you all for joining us today, and we look forward to updating you again next quarter.

Operator 1: This concludes today's call. Thank you for attending. You may now disconnect.

Operator: This concludes today's call. Thank you for attending. You may now disconnect.

Q2 2026 Kayne Anderson BDC Inc Earnings Call

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