| Fair Value of Financial Instruments |
5. | Fair Value of Financial Instruments |
Under existing accounting guidance, fair value is defined as the price that the Company would receive upon selling an investment or pay to transfer a liability in an orderly transaction to a market participant in the principal or most advantageous market for the investment. This accounting guidance emphasizes valuation techniques that maximize the use of observable market inputs and minimize the use of unobservable inputs. Inputs refer broadly to the assumptions that market participants would use in pricing an asset or liability, including assumptions about risk. Inputs may be observable or unobservable. Observable inputs are inputs that reflect the assumptions market participants would use in pricing an asset or liability developed based on market data obtained from sources independent of the Company. Unobservable inputs are inputs that reflect the assumptions market participants would use in pricing an asset or liability developed based on the best information available in the circumstances. The Investment Adviser classifies the inputs used to measure these fair values into the following hierarchy as defined by current accounting guidance: Level 1: Quoted prices are available in active markets for identical investments as of the reporting date. The types of investments in Level 1 include listed equities and listed derivatives. The Company does not adjust the quoted price for these investments, even in situations where the Company may hold a large position and a sale could reasonably impact the quoted price. Level 2: Pricing inputs are other than quoted prices in active markets of comparable instruments, which are either directly or indirectly observable as of the reporting date, and fair value is determined through the use of models or other valuation methodologies. Investments in this category generally include corporate bonds and loans, less liquid and restricted equity securities and certain over-the-counter derivatives. Level 3: Pricing inputs are unobservable for the investment and include situations where there is little, if any, market activity for the investment. The inputs into the determination of fair value are based upon the best information in the circumstances and may require significant management judgment or estimation. Investments in this category generally include equity and debt positions in private companies. A financial instrument’s categorization within the valuation hierarchy is based upon the lowest level of input that is significant to the fair value measurement. As of June 30, 2026, the Company’s investments were categorized as follows in the fair value hierarchy: | | | | | | | | | | | | | | | As of June 30, 2026 | | | Fair Value | | Level 1 | | Level 2 | | Level 3 | Senior Secured First Lien Term Loan | | $ | 584,052 | | $ | — | | $ | — | | $ | 584,052 | Senior Secured Term Loan | | | 176,198 | | | — | | | — | | | 176,198 | Delayed Draw Term Loan | | | 33,216 | | | — | | | — | | | 33,216 | Revolver | | | 11,400 | | | — | | | — | | | 11,400 | Convertible Promissory Note | | | 43 | | | — | | | — | | | 43 | Common Units | | | 6,219 | | | — | | | — | | | 6,219 | Preferred Units | | | 8,960 | | | — | | | — | | | 8,960 | Warrants | | | 401 | | | — | | | — | | | 401 | Total Investments | | | 820,489 | | | — | | | — | | | 820,489 | Cash Equivalents | | | 3,625 | | | 3,625 | | | — | | | — | Total Investments and cash equivalents | | $ | 824,114 | | $ | 3,625 | | $ | — | | $ | 820,489 |
As of December 31, 2025, the Company’s investments were categorized as follows in the fair value hierarchy: | | | | | | | | | | | | | | | As of December 31, 2025 | | | Fair Value | | Level 1 | | Level 2 | | Level 3 | Senior Secured First Lien Term Loan | | $ | 561,494 | | $ | — | | $ | — | | $ | 561,494 | Senior Secured Term Loan | | | 175,761 | | | — | | | — | | | 175,761 | Delayed Draw Term Loan | | | 36,902 | | | — | | | — | | | 36,902 | Revolver | | | 9,111 | | | — | | | — | | | 9,111 | Convertible Promissory Note | | | 62 | | | — | | | — | | | 62 | Common Units | | | 8,929 | | | — | | | — | | | 8,929 | Preferred Units | | | 7,377 | | | — | | | — | | | 7,377 | Warrants | | | 464 | | | — | | | — | | | 464 | Total Investments | | | 800,100 | | | — | | | — | | | 800,100 | Cash Equivalents | | | 1,374 | | | 1,374 | | | — | | | — | Total Investments and cash equivalents | | $ | 801,474 | | $ | 1,374 | | $ | — | | $ | 800,100 |
The following is a reconciliation for the six months ended June 30, 2026, of investments for which significant unobservable inputs (Level 3) were used in determining fair value | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | For the Six Months Ended June 30, 2026 | | | Senior | | Senior | | | | | | | | | | | | | | | | | | | | | | | | Secured | | Secured | | Delayed | | | | | | | | | | | | | | Convertible | | | | | | First Lien | | Term | | Draw | | | | | Common | | Preferred | | | | | Promissory | | | | | | Term Loan | | Loan | | Term Loan | | Revolver | | Units | | Units | | Warrants | | Note | | Total | Fair value at beginning of year | | $ | 561,494 | | $ | 175,761 | | $ | 36,902 | | $ | 9,111 | | $ | 8,929 | | $ | 7,377 | | $ | 464 | | $ | 62 | | $ | 800,100 | Purchases | | | 75,763 | | | 19,238 | | | 5,589 | | | 2,442 | | | 568 | | | 1,051 | | | — | | | 32 | | | 104,683 | Accretion of discount (amortization of premium) | | | 1,542 | | | 623 | | | 163 | | | 61 | | | — | | | — | | | — | | | — | | | 2,389 | Sales and repayments | | | (57,228) | | | (13,625) | | | (9,299) | | | (3,115) | | | (4,304) | | | — | | | — | | | — | | | (87,571) | Unrealized gain (loss) | | | 1,430 | | | (5,943) | | | (363) | | | 2,853 | | | (2,176) | | | 532 | | | (63) | | | (51) | | | (3,781) | Paid in-kind interest | | | 1,051 | | | 144 | | | 224 | | | 48 | | | — | | | — | | | — | | | — | | | 1,467 | Net transfers in or out of Level 3 | | | — | | | — | | | — | | | — | | | — | | | — | | | — | | | — | | | — | Realized gain (loss) | | | — | | | — | | | — | | | — | | | 3,202 | | | — | | | — | | | — | | | 3,202 | Fair value at end of year | | $ | 584,052 | | $ | 176,198 | | $ | 33,216 | | $ | 11,400 | | $ | 6,219 | | $ | 8,960 | | $ | 401 | | $ | 43 | | $ | 820,489 | The amount of total gains or losses for the period included in changes in net assets attributable to the change in unrealized gains or losses relating to investments still held at the reporting date | | $ | 1,430 | | $ | (5,943) | | $ | (363) | | $ | 2,853 | | $ | (2,176) | | $ | 532 | | $ | (63) | | $ | (51) | | $ | (3,781) |
There were no transfers of investments into or out of Level 1, 2, or 3 in the fair value hierarchy during the three and six months ended June 30, 2026. The following is a reconciliation for the six months ended June 30, 2025, of investments for which significant unobservable inputs (Level 3) were used in determining fair value: | | | | | | | | | | | | | | | | | | | | | For the Six Months Ended June 30, 2025 | | | Senior | | | | | | | | | | | | | | | | | | | Secured | | Senior | | | | | | | | | | | | | | | | | First | | Secured | | Delayed | | | | | | | | | | Convertible | | | | | Lien Term | | Term | | Draw | | | | Common | | Preferred | | | | Promissory | | | | | Loan | | Loan | | Term Loan | | Revolver | | Units | | Units | | Warrants | | Note | | Total | Fair value at beginning of period | | 479,581 | | 240,610 | | 27,378 | | 14,337 | | 4,603 | | 9,663 | | 17 | | — | | 776,189 | Purchases | | 73,444 | | — | | 7,535 | | 5,717 | | 100 | | — | | — | | 42 | | 86,838 | Accretion of discount (amortization of premium) | | 1,389 | | 930 | | 165 | | 102 | | — | | — | | — | | — | | 2,586 | Sales and repayments | | (19,537) | | (13,599) | | (957) | | (2,716) | | — | | — | | — | | — | | (36,809) | Unrealized gain (loss) | | (702) | | (2,170) | | (1,105) | | (759) | | (340) | | (724) | | 33 | | — | | (5,767) | Paid in-kind interest | | 210 | | — | | — | | — | | — | | — | | — | | — | | 210 | Net transfers in or out of Level 3 | | — | | — | | — | | — | | — | | — | | — | | — | | — | Fair value at end of period | | 534,385 | | 225,771 | | 33,016 | | 16,681 | | 4,363 | | 8,939 | | 50 | | 42 | | 823,247 | The amount of total gains or losses for the period included in changes in net assets attributable to the change in unrealized gains or losses relating to investments still held at the reporting date | | (702) | | (2,170) | | (1,105) | | (759) | | (340) | | (724) | | 33 | | — | | (5,767) |
There were no transfers of investments into or out of Level 1, 2, or 3 in the fair value hierarchy during the three and six months ended June 30, 2025. The valuation techniques and significant unobservable inputs used in Level 3 fair value measurements as of June 30, 2026, were as follows: | | | | | | | | | | Type of Investment | | Fair Value | | Valuation Technique | | Unobservable Inputs * | | Range (Weighted Average) ** | Debt investments | | $ | 719,963 | | Discounted Cash Flows | | Discount Rate | | 7.51%-25.65% (11.29%) | | | $ | 42,562 | | Enterprise Value | | Revenue Multiple | | 0.10x-10.00x (5.28x) | | | $ | 14,948 | | Broker Quoted | | Broker Quote | | N/A | Equity investments | | $ | 14,679 | | Enterprise Value | | EBITDA Multiple | | 3.50x-12.75x (7.54x) | Warrants | | $ | 401 | | Enterprise Value | | EBITDA Multiple | | 0.10x-10.75x (7.75x) | Total | | $ | 792,553 | | | | | | |
* | In determining certain of these inputs, the Company evaluates a variety of factors including economic conditions, industry and market developments, market valuations of comparable companies and company-specific developments including exit strategies and realization opportunities. The Company has determined that market participants would take these inputs into account when valuing the investments. EBITDA means Earnings Before Interest, Taxes, Depreciation and Amortization. |
** | Unobservable inputs were weighted by the relative fair value of the instruments. |
Certain of the Company’s Level 3 investments have been valued using unadjusted inputs that have not been internally developed by the Company, including recent acquisitions, third-party transactions, or quotations. As a result, fair value assets of approximately $27,936 have been excluded from the preceding table. The valuation techniques and significant unobservable inputs used in Level 3 fair value measurements as of December 31, 2025, were as follows: | | | | | | | | | | Type of Investment | | Fair Value | | Valuation Technique | | Unobservable Inputs * | | Range (Weighted Average) ** | Debt investments | | $ | 719,243 | | Discounted Cash Flows | | Discount Rate | | 6.80% - 22.20% (10.39%) | | | $ | 39,605 | | Enterprise Value | | Revenue Multiple | | 0.13x – 13.00x (4.52x) | | | $ | 14,566 | | Broker Quoted | | Broker Quote | | N/A | Equity investments | | $ | 12,005 | | Enterprise Value | | EBITDA Multiple | | 2.00x – 13.00x (7.38x) | Warrants | | $ | 464 | | Enterprise Value | | EBITDA Multiple | | 0.13x – 8.50x (7.02x) | Total | | $ | 785,883 | | | | | | |
* | In determining certain of these inputs, the Company evaluates a variety of factors including economic conditions, industry and market developments, market valuations of comparable companies and company-specific developments including exit strategies and realization opportunities. The Company has determined that market participants would take these inputs into account when valuing the investments. EBITDA means Earnings Before Interest, Taxes, Depreciation and Amortization. |
** | Unobservable inputs were weighted by the relative fair value of the instruments. |
Certain of the Company’s Level 3 investments have been valued using unadjusted inputs that have not been internally developed by the Company, including recent acquisitions, third-party transactions, or quotations. As a result, fair value assets of approximately $14,217 have been excluded from the preceding table.
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