v3.26.1
Derivative Financial Instruments
 6 Months Ended
Jun. 30, 2026
Derivative Instruments and Hedging Activities Disclosure [Abstract]  
Derivative Financial Instruments DERIVATIVE FINANCIAL INSTRUMENTS
The objective of our use of derivative financial instruments is to minimize the risks and/or costs associated with our
investments and/or financing transactions. These derivatives may or may not qualify as net investment, cash flow, or fair
value hedges under the hedge accounting requirements of the ASC Topic 815, “Derivatives and Hedging.” Derivatives not
designated as hedges are not speculative and are used to manage our exposure to interest rate movements and other
identified risks. Refer to Note 2 for further discussion of the accounting for designated and non-designated hedges.
The use of derivative financial instruments involves certain risks, including the risk that the counterparties to these
contractual arrangements do not perform as agreed. To mitigate this risk, we only enter into derivative financial
instruments with counterparties that have appropriate credit ratings and are major financial institutions with which we and
our affiliates also have other financial relationships.
Net Investment Hedges of Foreign Currency Risk
Certain of our international investments expose us to fluctuations in foreign interest rates and currency exchange rates.
These fluctuations may impact the value of our cash receipts and payments in terms of our functional currency, the U.S.
dollar. We use foreign currency forward contracts to protect the value or fix the amount of certain investments or cash
flows in terms of the U.S. dollar.
Designated Hedges of Foreign Currency Risk
The following table details our outstanding foreign exchange derivatives that were designated as net investment hedges of
foreign currency risk (notional amounts in thousands):
June 30, 2026
December 31, 2025
Foreign Currency Derivatives
Number of
Instruments
Notional
Amount
Foreign Currency Derivatives
Number of
Instruments
Notional
Amount
Buy USD / Sell SEK Forward
3
kr 940,679
Buy USD / Sell SEK Forward
2
kr 970,417
Buy USD / Sell EUR Forward
12
€695,360
Buy USD / Sell GBP Forward
6
£739,956
Buy USD / Sell GBP Forward
5
£684,764
Buy USD / Sell EUR Forward
10
€689,868
Buy USD / Sell AUD Forward
9
A$389,995
Buy USD / Sell AUD Forward
7
A$371,141
Buy USD / Sell CAD Forward
3
C$120,799
Buy USD / Sell CAD Forward
3
C$120,557
Buy USD / Sell CHF Forward
1
CHF52
Buy USD / Sell CHF Forward
1
CHF52
Non-designated Hedges of Foreign Currency Risk
The following table details our outstanding foreign exchange derivatives that were non-designated hedges of foreign
currency risk (notional amounts in thousands):
June 30, 2026
December 31, 2025
Non-designated Hedges
Number of
Instruments
Notional
Amount
Non-designated Hedges
Number of
Instruments
Notional
Amount
Buy EUR / Sell USD Forward
2
€119,100
Buy GBP / Sell USD Forward
2
£86,800
Buy USD / Sell EUR Forward
2
€119,100
Buy USD / Sell GBP Forward
2
£86,800
Buy GBP / Sell USD Forward
4
£111,100
Buy EUR / Sell USD Forward
3
€44,700
Buy USD / Sell GBP Forward
4
£111,100
Buy USD / Sell EUR Forward
3
€44,700
Buy AUD / Sell USD Forward
2
A$15,500
Buy AUD / Sell USD Forward
2
A$10,200
Buy USD / Sell AUD Forward
2
A$15,500
Buy USD / Sell AUD Forward
2
A$10,200
Cash Flow Hedges of Interest Rate Risk
Certain of our financing transactions expose us to a fixed versus floating rate mismatch between our assets and liabilities.
We use derivative financial instruments, which include interest rate swaps (and may also include interest rate caps, interest
rate options, floors, and other interest rate derivative contracts) to hedge interest rate risk associated with our borrowings
where there is potential for an index mismatch.
The following table details our outstanding interest rate derivatives that were designated as cash flow hedges of interest rate
risk (notional amounts in thousands):
June 30, 2026
Interest Rate Derivatives
Number of
Instruments
Notional Amount
Fixed Rate
Index
Maturity (Years)
Interest Rate Swaps
1
$35,600
3.51%
SOFR
4.5
December 31, 2025
Interest Rate Derivatives
Number of
Instruments
Notional Amount
Fixed Rate
Index
Maturity (Years)
Interest Rate Swaps
1
$35,600
3.51%
SOFR
5.0
Fair Value Hedges of Interest Rate Risk
Certain of our corporate financings expose us to fluctuations in the fair value of our outstanding fixed rate debt. We use
derivative financial instruments, which include interest rate swaps, to hedge interest rate risk associated with changes in the
fair value of our fixed rate debt. The changes in the value of the interest rate swap is recognized in earnings and offset the
corresponding changes in the fair value of the debt.
Designated Hedges of Interest Rate Risk 
The following tables detail our outstanding interest rate derivatives that were designated as fair value hedges of interest rate
risk (notional amount in thousands):
June 30, 2026
Interest Rate Derivatives
Number of
Instruments
Aggregate Notional
Amount
Fixed Rate
Index
Maturity (Years)
Interest Rate Swaps
2
$900,000
3.75% - 3.81%
SOFR
3.4 - 4.9
December 31, 2025
Interest Rate Derivatives
Number of
Instruments
Notional Amount
Fixed Rate
Index
Maturity (Years)
Interest Rate Swaps
1
$450,000
3.81%
SOFR
3.9
The following tables detail the carrying amount and cumulative basis adjustments on hedged items designated as fair value
hedges ($ in thousands):
June 30, 2026
Line Item in the Consolidated Balance
Sheets in which the Hedged Item is
Included
Carrying Amount of the Hedged Assets/
Liabilities
Cumulative Amount of Fair Value Hedging
Adjustment Included in Carrying Amount
Senior secured notes, net
$882,722
$(4,706)
December 31, 2025
Line Item in the Consolidated Balance
Sheets in which the Hedged Item is
Included
Carrying Amount of the Hedged Assets/
Liabilities
Cumulative Amount of Fair Value Hedging
Adjustment Included in Carrying Amount
Senior secured notes, net
$450,597
$6,840
Financial Statement Impact of Hedges of Foreign Currency and Interest Rate Risks
The following table presents the effect of our derivative financial instruments on our consolidated statements of operations
($ in thousands):
Increase (Decrease) to Net Interest Income Recognized from Derivatives
Three Months Ended June 30,
Six Months Ended June 30,
Derivatives in Hedging Relationships
Location of Income
(Expense) Recognized
2026
2025
2026
2025
Designated Hedges
Interest Income(1)
$3,504
$4,694
$7,464
$7,645
Designated Hedges
Interest Expense(2)
260
(625)
421
(1,210)
Non-Designated Hedges
Interest Income(1)
(7)
(50)
(12)
(50)
Non-Designated Hedges
Interest Expense(3)
17
(1,931)
24
(1,928)
Total
$3,774
$2,088
$7,897
$4,457
(1)Represents the forward points earned on our foreign currency forward contracts, which reflect the interest rate
differentials between the applicable base rate for our foreign currency investments and prevailing U.S. interest rates.
These forward contracts effectively convert the foreign currency rate exposure for such investments to
USD-equivalent interest rates.
(2)Represents the financial statement impact of proceeds (payments) from periodic settlements related to our interest
rate swap.
(3)Represents the spot rate movement in our non-designated foreign currency hedges, which are marked-to-market and
recognized in interest and related expenses in our consolidated statements of operations. The amounts in the three
and six months ended June 30, 2025 also include a realized loss on an interest rate swap related to our Bank Loan
Portfolio Joint Venture that was entered into during the three months ended June 30, 2025 and subsequently
terminated.
Fair Value Hedges
The following table presents the net gains (losses) on derivatives and the related hedged items in fair value hedging
relationships ($ in thousands):
Three Months Ended June 30,
Six Months Ended June 30,
2026
2025
2026
2025
Total interest and related expenses presented in the
consolidated statements of operations
$227,182
$264,727
$447,918
$506,960
Gains (losses) on fair value hedging relationships
Total (loss) gain on derivative instruments
$(8,159)
$9,124
$(11,453)
$12,288
Fair value basis adjustment on hedged items
8,245
(4,231)
11,546
(7,340)
Derivative settlements and accruals
175
624
328
1,442
Net gain on fair value hedging relationships(1)
$261
$5,517
$421
$6,390
(1)Included within interest and related expenses presented in the consolidated statements of operations.
Valuation and Other Comprehensive Income
The following table summarizes the fair value of our derivative financial instruments ($ in thousands):
Fair Value of Derivatives in an Asset
Position(1) as of
Fair Value of Derivatives in a Liability
Position(2) as of
June 30, 2026
December 31, 2025
June 30, 2026
December 31, 2025
Derivatives designated as hedging instruments
Foreign exchange contracts
$41,178
$22
$6
$24,994
Interest rate derivatives
580
6,877
4,576
76
Total derivatives designated as hedging
instruments
$41,758
$6,899
$4,582
$25,070
Derivatives not designated as hedging instruments
Foreign exchange contracts
$6,150
$3,593
$5,769
$1,526
Total derivatives not designated as hedging
instruments
$6,150
$3,593
$5,769
$1,526
Total derivatives
$47,908
$10,492
$10,351
$26,596
(1)Included in other assets in our consolidated balance sheets.
(2)Included in other liabilities in our consolidated balance sheets.
The following table presents the effect of our derivative financial instruments on our consolidated statements of
comprehensive income and operations ($ in thousands):
Derivatives in Hedging
Relationships
Amount of Gain (Loss) Recognized in
OCI on Derivatives
Location of Gain
(Loss)
Reclassified
from Accumulated
OCI into Income
Amount of Gain (Loss) Reclassified from
Accumulated OCI into Income
Three Months Ended
June 30, 2026
Six Months Ended
June 30, 2026
Three Months Ended
June 30, 2026
Six Months Ended
June 30, 2026
Net Investment Hedges
Foreign exchange
contracts(1)
$13,705
$41,895
Interest Expense
$3,504
$7,464
Cash Flow Hedges
Interest rate
derivatives(2)
427
684
Interest
Expense(3)
13
28
Total
$14,132
$42,579
$3,517
$7,492
(1)During the three and six months ended June 30, 2026, we paid net cash settlements of $4.6 million and
$22.6 million, respectively, on our foreign currency forward contracts. Those amounts are included as a component
of accumulated other comprehensive income on our consolidated balance sheets.
(2)During the three and six months ended June 30, 2026, we received net cash settlements of $0.1 million and
$0.2 million, respectively, on our interest rate swaps. Those amounts are included within interest and related
expenses in the consolidated statements of operations.
(3)During the three and six months ended June 30, 2026, we recorded total interest and related expenses of
$227.2 million and $447.9 million, which was reduced by $13 thousand and $28 thousand, respectively, related to
income generated by our cash flow hedges.
There were no cash flow hedges outstanding during the three and six months ended June 30, 2025.
Credit–Risk Related Contingent Features
We have entered into agreements with certain of our derivative counterparties that contain provisions where if we were to
default on any of our indebtedness, including default where repayment of the indebtedness has not been accelerated by the
lender, we may also be declared in default on our derivative obligations. In addition, certain of our agreements with our
derivative counterparties require that we post collateral to secure net liability positions. As of June 30, 2026, we were in a
net asset position with our two counterparties related to our foreign exchange hedges and had no collateral posted with such
counterparties. As of June 30, 2026, we were in a net liability position with our two counterparties related to our interest
rate swaps and had $3.3 million collateral posted with such counterparties. As of December 31, 2025, we were in a net
asset position with one of our counterparties and in a net liability position with our other two counterparties related to our
foreign exchange hedges and had $25.3 million of collateral posted with such counterparties.