Business Context and Reporting Period
This Form 8-K Current Report is filed by Morgan Stanley Direct Lending Fund (the "Company") for the reporting period ending July 9, 2026. The filing documents the entry into a material definitive agreement regarding the issuance of new debt securities.
Key Financial Metrics and Transaction Details
- Debt Issuance: The Company issued $350.0 million aggregate principal amount of 6.100% Notes due 2031.
- Net Proceeds: Approximately $341.6 million after deducting underwriting discounts and estimated offering expenses.
- Interest Rate: 6.100% per annum, payable semi-annually starting January 15, 2027.
- Maturity Date: July 15, 2031.
- Use of Proceeds: Intended to repay outstanding secured indebtedness under existing financing arrangements.
- Hedging Activity: Entered into interest rate swaps to align fixed-rate liabilities with a predominantly floating-rate loan portfolio. The Company receives a fixed rate of 6.100% and pays a floating rate of SOFR + 2.1945% on $350.0 million of the Notes.
Material Changes and Debt Structure
The issuance represents a material increase in the Company's unsecured indebtedness. The Notes are general unsecured obligations with the following seniority:
- Senior to: All existing and future indebtedness expressly subordinated to the Notes.
- Pari Passu with: All existing and future unsecured unsubordinated indebtedness.
- Junior to: Secured indebtedness (to the extent of the value of securing assets) and structurally junior to all indebtedness of subsidiaries.
- Redemption: The Company may redeem the Notes prior to June 15, 2031, at par plus a "make-whole" premium. Redemption at par is permitted on or after June 15, 2031.
Management Commentary, Risks, and Contingencies
- Covenants: The Indenture requires compliance with asset coverage requirements under the Investment Company Act of 1940 and mandates the provision of financial information to Note holders if the Company ceases to be subject to Exchange Act reporting requirements.
- Change of Control: In the event of a "change of control repurchase event," the Company must offer to repurchase the Notes at 100% of the principal amount plus accrued and unpaid interest.
- Hedge Accounting: The interest rate swaps have been designated as qualifying hedge accounting relationships to manage interest rate risk.
Investor Verification Checklist
- Verify the exact amount of outstanding secured indebtedness being repaid with the $341.6 million in net proceeds.
- Review the full text of the Fourth Supplemental Indenture (Exhibit 4.2) for specific limitations and exceptions to covenants.
- Confirm the current asset coverage ratio to ensure compliance with Section 18(a)(1)(A) of the Investment Company Act of 1940 post-issuance.
- Assess the impact of the new fixed-rate liability on the Company's overall interest rate exposure given the floating-rate nature of its loan portfolio.