v3.26.1
Fair Value Measurements
 6 Months Ended
Jun. 30, 2026
Fair Value Disclosures [Abstract]  
Fair Value Measurements

Note 4. Fair Value Measurements

The following table presents the fair value measurements of the Company's investments, by major class according to the fair value hierarchy, as of June 30, 2026 (dollars in thousands):

 

 

As of June 30, 2026

 

Investments

Level 1

 

Level 2

 

Level 3

 

Total

 

Senior Secured First Lien Loans

$

—

 

$

58

 

$

655,377

 

$

655,435

 

Equity

 

—

 

 

—

 

 

9,343

 

 

9,343

 

Subordinated Certificates of the SDLP

 

—

 

 

—

 

 

171,854

 

 

171,854

 

Total investments at fair value

$

—

 

$

58

 

$

836,574

 

$

836,632

 

Cash Equivalents

 

 

 

 

 

 

 

 

Money Market Funds

 

14,745

 

 

—

 

 

—

 

 

14,745

 

Total cash equivalents

$

14,745

 

$

—

 

$

—

 

$

14,745

 

Interest rate swaps

 

—

 

 

(311

)

 

—

 

 

(311

)

Total interest rate swaps

$

—

 

$

(311

)

$

—

 

$

(311

)

 

 

 

 

 

 

 

 

 

 

The following table presents the fair value measurements of the Company's investments, by major class according to the fair value hierarchy, as of December 31, 2025 (dollars in thousands):

 

As of December 31, 2025

 

Investments

Level 1

 

Level 2

 

Level 3

 

Total

 

Senior Secured First Lien Loans

$

—

 

$

83

 

$

673,630

 

$

673,713

 

Equity

 

—

 

 

—

 

 

9,939

 

 

9,939

 

Subordinated Certificates of the SDLP

 

—

 

 

—

 

 

165,702

 

 

165,702

 

Total investments at fair value

$

—

 

$

83

 

$

849,271

 

$

849,354

 

Cash Equivalents

 

 

 

 

 

 

 

 

Money Market Funds

 

13,450

 

 

—

 

 

—

 

 

13,450

 

Total cash equivalents

$

13,450

 

$

—

 

$

—

 

$

13,450

 

Interest rate swaps

 

—

 

 

185

 

 

—

 

 

185

 

Total interest rate swaps

$

—

 

$

185

 

$

—

 

$

185

 

 

The following tables provide a reconciliation of the beginning and ending balances for investments that use Level 3 inputs for the three and six months ended June 30, 2026 (dollars in thousands):

 

 

 

 

 

Senior Secured First Lien Loans

 

Equity

 

Subordinated Certificates of the SDLP

 

Total

 

Balance as of March 31, 2026

$

644,368

 

$

9,466

 

$

171,632

 

$

825,466

 

Purchases

 

50,495

 

 

130

 

 

6,743

 

 

57,368

 

Payment-in-kind and other adjustments to cost

 

(4,321

)

 

1

 

 

(59

)

 

(4,379

)

Repayments of investments

 

(32,784

)

 

(6

)

 

(7,541

)

 

(40,331

)

Net realized gains/(losses)

 

253

 

 

—

 

 

—

 

 

253

 

Net amortization of premium/discount

 

942

 

 

—

 

 

—

 

 

942

 

Net change in unrealized gains/(losses)

 

(3,576

)

 

(248

)

 

1,079

 

 

(2,745

)

Balance as of June 30, 2026

$

655,377

 

$

9,343

 

$

171,854

 

$

836,574

 

Net change in unrealized appreciation/(depreciation) for
   investments still held as of June 30, 2026

$

(3,572

)

$

(248

)

$

1,079

 

$

(2,741

)

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Senior Secured First Lien Loans

 

Equity

 

Subordinated Certificates of the SDLP

 

Total

 

Balance as of December 31, 2025

$

673,630

 

$

9,939

 

$

165,702

 

$

849,271

 

Purchases

 

70,965

 

 

275

 

 

13,515

 

 

84,755

 

Payment-in-kind and other adjustments to cost

 

949

 

 

2

 

 

168

 

 

1,119

 

Repayments of investments

 

(80,497

)

 

(6

)

 

(8,268

)

 

(88,771

)

Net realized gains/(losses)

 

253

 

 

(348

)

 

—

 

 

(95

)

Net amortization of premium/discount

 

1,600

 

 

—

 

 

—

 

 

1,600

 

Net change in unrealized gains/(losses)

 

(11,523

)

 

(519

)

 

737

 

 

(11,305

)

Balance as of June 30, 2026

$

655,377

 

$

9,343

 

$

171,854

 

$

836,574

 

Net change in unrealized appreciation/(depreciation) for
   investments still held as of June 30, 2026

$

(23,075

)

$

(1,536

)

$

(11,523

)

$

(36,134

)

 

The following tables provide a reconciliation of the beginning and ending balances for investments that use Level 3 inputs for the three and six months ended June 30, 2025 (dollars in thousands):

 

 

 

 

Senior Secured First Lien Loans

 

Equity

 

Subordinated Certificates of the SDLP

 

Total

 

Balance as of March 31, 2025

$

659,058

 

$

3,765

 

$

164,804

 

$

827,627

 

Purchases

 

54,128

 

 

8

 

 

4,167

 

 

58,303

 

Investment increases due to payment-in-kind income

 

504

 

 

—

 

 

(575

)

 

(71

)

Principal repayments

 

(60,383

)

 

8

 

 

(11,409

)

 

(71,784

)

Net realized gains/(losses)

 

—

 

 

—

 

 

—

 

 

—

 

Net amortization of premium/discount

 

751

 

 

—

 

 

—

 

 

751

 

Net change unrealized gains/(losses)

 

(4,806

)

 

(60

)

 

(2,658

)

 

(7,524

)

Balance as of June 30, 2025

$

649,252

 

$

3,721

 

$

154,329

 

$

807,302

 

Net change unrealized appreciation/(depreciation) for
   investments still held as of June 30, 2025

$

(4,805

)

$

(63

)

$

(2,658

)

$

(7,526

)

 

 

 

 

 

 

 

 

 

 

Senior Secured First Lien Loans

 

Equity

 

Subordinated Certificates of the SDLP

 

Total

 

Balance as of December 31, 2024

$

627,439

 

$

4,437

 

$

172,152

 

$

804,028

 

Purchases

 

103,486

 

 

376

 

 

7,559

 

 

111,421

 

Payment-in-kind and other adjustments to cost

 

1,563

 

 

—

 

 

(1,041

)

 

522

 

Repayments of investments

 

(78,424

)

 

(301

)

 

(18,807

)

 

(97,532

)

Net realized gains/(losses)

 

—

 

 

—

 

 

—

 

 

—

 

Net amortization of premium/discount

 

1,315

 

 

—

 

 

—

 

 

1,315

 

Net change in unrealized gains/(losses)

 

(6,127

)

 

(791

)

 

(5,534

)

 

(12,452

)

Balance as of June 30, 2025

$

649,252

 

$

3,721

 

$

154,329

 

$

807,302

 

Net change in unrealized appreciation/(depreciation) for
   investments still held as of June 30, 2025

$

(13,052

)

$

(1,132

)

$

(17,364

)

$

(31,548

)

 

The Company conducts a review of the fair value hierarchy classifications on a quarterly basis. The Company monitors the availability of observable market data to assess the appropriate classification of financial instruments within the fair value hierarchy. Changes in the observability of valuation inputs may result in a reclassification for certain financial assets or liabilities. Changes in economic conditions or model based valuation techniques may require the transfer of financial instruments from one fair value level to another. Reclassifications impacting Level 3 of the fair value hierarchy are reported as transfers in/out of the Level 3 category as of the beginning of the quarter in which the reclassifications occur. For the six months ended June 30, 2026, the Company had no investments transferred in/out of the Level 3 category. For the year ended December 31, 2025, the Company had no investments transferred in/out of the Level 3 category.

The Company generally employs the Income Based Approach (as described below) to estimate the fair value of its investments. Additionally, the Company may employ the Market Based Approach (as described below) to assess the total enterprise value of the portfolio company or any applicable collateral, in order to evaluate coverage of the Company’s investments.

Income Based Approach: The Company may use a discounted cash flow analysis to estimate the fair value of the investment, specifically the yield method. Projected cash flows represent the relevant investment’s contractual interest, fee and principal payments plus the assumption of full principal recovery at the investment’s expected maturity date. These cash flows are discounted at a rate that is calibrated to the initial transaction and monitored over time to adjust for changes in observed market spreads and yields since the issuance of the investment as well as changes in company specific factors. Significant increases or decreases in the discount rate would result in a decrease or increase in the fair value measurement.

Market Based Approach: The Company may estimate the total enterprise value of each portfolio company by utilizing cash flow (typically EBITDA or revenue, or the relevant industry metric) multiples of publicly traded comparable companies and comparable transactions. The Company considers numerous factors when selecting the appropriate companies whose trading multiples are used to value its portfolio companies. These factors include, but are not limited to, the type of organization, similarity to the business being valued, and relevant risk factors, as well as size, profitability and growth expectations. The Company may apply an average of various relevant comparable company multiples to the portfolio company’s latest twelve month EBITDA, revenue or other applicable metric to calculate the enterprise value of the portfolio company. The Company may also consider projected multiples in the assessment if applicable.

 

The following table presents the quantitative information about Level 3 fair value measurements of the Company's investments, as of June 30, 2026 (dollars in thousands):

 

 

As of June 30, 2026

 

Fair Value

 

Valuation Techniques

Significant Unobservable Inputs

Range of Significant Unobservable Inputs

Weighted Average (1)

Senior Secured First Lien Term Loans

$

572,332

 

Income Approach (DCF)

Discount Rate

6.7% - 22.9%

9.4%

Senior Secured First Lien Term Loans

 

25,784

 

Recent Transaction

Transaction Prices

98.0% - 99.5%

98.5%

Senior Secured First Lien Term Loans

 

57,261

 

Recovery Analysis

Recovery Rate

7.0x - 10.8x

9.2x

Equity

 

5,391

 

Market Approach

Market Multiple

9.5x - 19.6x

10.7x

Equity

 

3,851

 

Income Approach (DCF)

Discount Rate

6.0% - 15.8%

8.6%

 

 

 

Market Approach

EBITDA Multiple

5.9x - 15.2x

11.6x

Equity

 

101

 

Recent Transaction

Transaction Prices

100.0% - 100.0%

100.0%

Subordinated Certificates of the SDLP

 

171,854

 

Income Approach (DCF)

Discount Rate

7.5% - 7.5%

7.5%

Total

$

836,574

 

 

 

 

 

(1) Unobservable inputs were weighted by the fair value of the investments.

The following table presents the quantitative information about Level 3 fair value measurements of the Company's investments, as of December 31, 2025 (dollars in thousands):

 

As of December 31, 2025

 

Fair Value

 

Valuation Techniques

Significant Unobservable Inputs

Range of Significant Unobservable Inputs

Weighted Average (1)

Senior Secured First Lien Term Loans

$

622,287

 

Income Approach (DCF)

Discount Rate

6.6% - 81.4%

10.1%

Senior Secured First Lien Term Loans

 

23,686

 

Recent Transaction

Transaction Prices

98.7% - 99.5%

99.3%

Senior Secured First Lien Term Loans

 

27,657

 

Recovery Analysis

Recovery Rate

1.7x - 11.4x

9.0x

Equity

 

5,613

 

Market Approach

Market Multiple

9.5x - 28.8x

11.0x

Equity

 

3,996

 

Income Approach (DCF)

Discount Rate

6.0% - 17.9%

9.3%

 

 

 

Market Approach

EBITDA Multiple

6.2x - 18.2x

11.4x

Equity

 

330

 

Recent Transaction

Transaction Prices

100.0% - 100.0%

100.0%

Subordinated Certificates of the SDLP

 

165,702

 

Income Approach (DCF)

Discount Rate

7.5% - 7.5%

7.5%

Total

$

849,271

 

 

 

 

 

(1) Unobservable inputs were weighted by the fair value of the investments.

Increases or decreases in any of the above unobservable inputs in isolation would result in a lower or higher fair value measurement for such assets. The significant unobservable input used in the market approach is the market multiple, derived from precedent transactions or comparable companies. The multiple is used to estimate the enterprise value of the underlying investment. An increase or decrease in the multiple would result in an increase or decrease, respectively, in the fair value. The significant unobservable input used in the income approach is the discount rate. The discount rate is used to discount the estimated future cash flows expected to be received from the underlying investment. An increase/decrease in the discount rate would result in a decrease or increase, respectively, in the fair value. The significant unobservable input used in the recovery analysis is the recovery rate. The recovery rate is typically derived from using a blended income and market approach to estimate proceeds that would be received in a liquidation scenario. An increase or decrease in the recovery rate would result in an increase or decrease, respectively, in the fair value.