Business Context and Reporting Period
Company: Carlyle Secured Lending, Inc. (CGBD)
Filing Type: Form 10-Q (Unaudited)
Reporting Period: Three months ended March 31, 2026
Business Overview: CGBD is an externally managed, non-diversified closed-end management investment company regulated as a Business Development Company (BDC). Its investment objective is to generate current income and capital appreciation primarily through secured debt investments in U.S. middle market companies.
Key Financial Metrics
| Metric | Q1 2026 | Q4 2025 | Q1 2025 |
|---|---|---|---|
| Total Investments (Fair Value) | $2,277,105 | $2,463,922 | $2,245,626 |
| Total Assets | $2,557,613 | $2,790,167 | N/A |
| Total Debt & Secured Borrowings | $1,379,555 | $1,531,210 | N/A |
| Net Assets | $1,116,561 | $1,167,388 | $1,212,389 |
| Net Asset Value (NAV) per Share | $15.89 | $16.26 | $16.63 |
| Net Investment Income | $25,204 | $24,028 | $21,629 |
| Net Increase (Decrease) in Net Assets from Operations | $(4,218) | $17,385 | $14,054 |
| Earnings Per Share (Basic & Diluted) | $(0.06) | $0.24 | $0.25 |
| Dividends Declared per Common Share | $0.40 | $0.40 | $0.45 |
| Weighted Average Shares Outstanding | 70,907,909 | 72,617,834 | 51,923,228 |
Material Changes vs. Prior Comparable Period
- Portfolio Size: Total investments at fair value decreased by approximately $187 million from December 31, 2025, primarily due to sales to Credit Fund and repayments, despite new purchases of $238 million.
- Net Income: The company reported a net decrease in net assets from operations of $4.2 million for Q1 2026, compared to a net increase of $17.4 million in Q4 2025 and $14.1 million in Q1 2025. This decline was driven by a net change in unrealized depreciation of $23.8 million and net realized losses of $9.5 million.
- Investment Income: Total investment income increased to $64.1 million in Q1 2026 from $54.9 million in Q1 2025, driven by a higher average outstanding investment balance following the CSL III Merger and Credit Fund II Purchase in early 2025, partially offset by lower yields.
- Expenses: Total expenses increased to $38.9 million in Q1 2026 from $33.2 million in Q1 2025. Interest expense and credit facility fees rose to $21.8 million due to a higher average principal balance. Base management fees increased to $8.8 million due to higher average gross assets.
- Debt Reduction: Total debt and secured borrowings decreased by approximately $152 million from the prior quarter, with significant repayments on the Credit Facility.
Guidance, Outlook, and Management Commentary
- Dividend Policy: On April 29, 2026, the Board declared a base quarterly common stock dividend of $0.35 per share, payable July 16, 2026. This represents a reduction from the $0.40 per share declared in the prior quarter.
- Stock Repurchases: The Board approved a $100 million increase in the authorized amount for the Stock Repurchase Program to $300 million on February 18, 2026. During Q1 2026, the company repurchased 1,536,254 shares for approximately $18.5 million. Additional repurchases of 773,808 shares occurred in April and May 2026.
- Liquidity: Total liquidity as of March 31, 2026, was $641.9 million, consisting of cash and unused debt capacity under the Credit Facility ($544.6 million available).
- Portfolio Credit Quality: Non-accrual investments represented 0.9% of the portfolio by fair value ($20.6 million). The weighted average Internal Risk Rating for first and second lien debt was 2.1.
- Unfunded Commitments: The company had $395.2 million in unfunded commitments to fund delayed draw and revolving senior secured loans as of March 31, 2026.
Important Facts for Investor Verification
- NAV Decline: Verify the drivers of the $0.37 per share decline in NAV from Q4 2025 to Q1 2026, specifically the impact of unrealized depreciation on the portfolio.
- Dividend Reduction: Confirm the rationale for the reduction in the declared dividend from $0.40 to $0.35 per share and its impact on future distribution coverage.
- Realized Losses: Review the details of the $9.5 million net realized loss, including the restructuring of investments in 48forty Intermediate Holdings, Inc.
- Debt Structure: Note the composition of debt, including $600 million in Senior Notes (2030 and 2031) and $380 million in Securitization debt (2015-1N), and the associated interest rate swap hedges.
- Asset Coverage: Verify the asset coverage ratio of 180.0% as of March 31, 2026, ensuring compliance with the 150% minimum requirement under the Investment Company Act.