Business Context and Reporting Period
Company: Carlyle Secured Lending, Inc. (CGBD)
Filing Type: Form 10-K (Annual Report)
Reporting Period: Fiscal year ended December 31, 2025
Business Overview: CGBD is a closed-end, externally managed Business Development Company (BDC) and Regulated Investment Company (RIC). Its investment objective is to generate current income and capital appreciation primarily through secured debt investments in U.S. middle market companies. The company is managed by Carlyle Global Credit Investment Management L.L.C.
Key Financial Metrics
| Metric | 2025 | 2024 |
|---|---|---|
| Net Investment Income | $100.7 million | $105.3 million |
| Net Investment Income Per Share | $1.48 | $2.00 |
| Adjusted Net Investment Income Per Share (Non-GAAP) | $1.51 | $2.02 |
| Net Income Per Share (Basic) | $1.02 | $1.68 |
| Dividends Declared Per Share | $1.65 | $1.87 |
| Net Asset Value (NAV) Per Share | $16.26 | $16.80 |
| Total Portfolio Fair Value | $2.46 billion | $1.80 billion |
| Total Outstanding Indebtedness | $1.54 billion | $0.98 billion |
| Weighted Average Cost of Debt | 6.02% | 6.65% |
| Asset Coverage Ratio | 175.6% | 183.2% |
| Total Liquidity (Cash + Unused Debt Capacity) | $472.8 million | $565.7 million |
Material Changes vs. Prior Period
- Portfolio Growth: The investment portfolio grew from $1.8 billion to $2.5 billion, driven by the March 2025 merger with Carlyle Secured Lending III (CSL III) and the February 2025 acquisition of 100% ownership in Credit Fund II.
- Net Investment Income Decline: Net investment income decreased by approximately 4.3% year-over-year. This was primarily due to a lower weighted average yield on the portfolio (10.1% in 2025 vs. 11.7% in 2024) and higher interest expense, partially offset by a larger average investment balance.
- Debt Structure Changes: Total indebtedness increased significantly to $1.54 billion. Notable activities included the issuance of $300 million in 2031 Notes, the redemption of $85 million in 2028 Notes, and the repayment of the CSL III SPV Credit Facility.
- NAV Decline: NAV per share decreased to $16.26 from $16.80, reflecting net realized losses and unrealized depreciation on investments.
Guidance, Outlook, and Risks
- Management Commentary: Management highlighted the successful integration of the CSL III Merger and Credit Fund II Purchase. The company maintains a defensive approach to credit selection, focusing on sponsored middle market companies with strong fundamentals.
- Capital Markets: The company noted that capital markets continue to experience disruption and volatility due to geopolitical tensions, inflation, and interest rate fluctuations. The Federal Reserve cut rates in 2024 and 2025, but the outlook remains uncertain.
- Key Risks:
- Interest Rate Risk: Approximately 99.4% of debt investments are floating rate. While the company uses interest rate swaps to hedge fixed-rate debt, rising rates could increase borrowing costs and impact portfolio company ability to service debt.
- Credit Risk: Investments are primarily in below-investment grade ("junk") debt. Non-accrual investments represented 1.2% of the portfolio fair value as of year-end.
- Liquidity: The company relies on its Credit Facility and securitization structures. Failure to maintain asset coverage ratios could restrict distributions or borrowing capacity.
- Valuation Risk: A significant portion of the portfolio is valued using Level 3 inputs (unobservable), requiring significant management judgment.
- Recent Developments: In February 2026, the Board increased the stock repurchase program authorization to $300 million and declared a quarterly dividend of $0.40 per share.
Investor Verification Checklist
- Merger Integration: Verify the accretive impact of the CSL III Merger and Credit Fund II Purchase on future yields and expense ratios.
- Debt Maturity Profile: Review the maturity schedule of the $1.54 billion in debt, specifically the 2030 and 2031 Notes, to assess refinancing risks.
- Non-Accrual Trends: Monitor the 1.2% non-accrual rate and the specific portfolio companies contributing to this figure (e.g., Aimbridge Acquisition Co., Align Precision Group).
- Dividend Sustainability: Confirm that net investment income continues to cover the $1.65 per share dividend rate, noting the recent decline in NII.
- Asset Coverage Compliance: Ensure the company maintains the 150% minimum asset coverage ratio required by the Investment Company Act, currently at 175.6%.