v3.26.1
Note 4 - Fair Value Measurements
6 Months Ended
Jun. 30, 2026
Notes to Financial Statements  
Fair Value Disclosures [Text Block]

Note 4. Fair Value Measurements

 

The following table summarizes the valuation of the Company’s investments by the fair value hierarchy levels required under ASC 820, Fair Value Measurement ("ASC 820") as of June 30, 2026:

 

  

Fair

             
  

Value

  

Level 1

  

Level 2

  

Level 3

 

Senior secured term loans

 $128,864,890  $  $  $128,864,890 

Senior secured term loan participations

  66,297,945         66,297,945 

Senior secured trade finance participations

  24,859,079         24,859,079 

Convertible notes

  30,806,874         30,806,874 

Other investments

  11,816,853         11,816,853 

Equity warrants

            

Total

 $262,645,641  $  $  $262,645,641 

 

 

The following table summarizes the valuation of the Company’s investments by the fair value hierarchy levels required under ASC 820 as of December 31, 2025:

 

  

Fair

             
  

Value

  

Level 1

  

Level 2

  

Level 3

 

Senior secured term loans

 $123,807,284  $  $  $123,807,284 

Senior secured term loan participations

  71,371,727         71,371,727 

Senior secured trade finance participations

  26,493,018         26,493,018 

Convertible notes

  29,092,471         29,092,471 

Other investments

  11,451,817         11,451,817 

Equity warrants

            

Total

 $262,216,317  $  $  $262,216,317 

 

  The fair value of the repurchase obligation as of  June 30, 2026, is $2,876,926, which equals the principal amount outstanding (see Note 5. Contingencies and Related Parties for additional information).

 

The following is a reconciliation of activity for the six months ended June 30, 2026, of investments classified as Level 3: 

 

  

Fair Value at December 31, 2025

  

Purchases

  

Proceeds from disposition and paydowns of investments

  

Reclassifications

   

Capitalized payment-in-kind interest income

  

Net change in unrealized appreciation (depreciation)

  

Net realized gains (losses)

  

Fair Value at June 30, 2026

 

Senior secured term loans

 $123,807,284  $  $  $   $7,333,443  $(2,275,837) $  $128,864,890 

Senior secured term loan participations

  71,371,727      (5,652,998)      732,561   (153,345)     66,297,945 

Senior secured trade finance participations

  26,493,018      (60,874)  381,883 

(1)

     (1,954,948)     24,859,079 

Convertible notes

  29,092,471             1,714,403         30,806,874 

Other investments

  11,451,817      (274,146)         639,182      11,816,853 

Equity warrants

                         

Total

 $262,216,317  $  $(5,988,018) $381,883   $9,780,407  $(3,744,948) $  $262,645,641 

 

(1) The amount represents principal repayments received during the year ended December 31, 2025 that were inadvertently overallocated to the Company by the agent responsible for administering payments related to the settlement with CAGSA. See the Watch List Investments section below for more information regarding the settlement. As of June 30, 2026, the overallocated amount was reclassified from principal repayments to a payable account to reflect the Company's obligation to remit the excess funds to the appropriate parties.

 

The following is a reconciliation of activity for the year ended December 31, 2025, of investments classified as Level 3:

 

  

Fair Value at December 31, 2024

  

Purchases

  

Proceeds from disposition and paydowns of investments

  

Reclassifications

   

Capitalized payment-in-kind interest income

  

Net change in unrealized appreciation (depreciation)

  

Net realized gains (losses)

  

Fair Value at December 31, 2025

 

Senior secured term loans

 $121,679,322  $  $  $(3,904,117)

(1)

 $14,872,272  $(8,840,193) $  $123,807,284 

Senior secured term loan participations

  78,156,693      (6,632,559)      1,852,138   (2,004,545)     71,371,727 

Senior secured trade finance participations

  27,665,139      (776,478)         5,625,010   (6,020,653)  26,493,018 

Convertible notes

  25,387,189             3,178,475   526,807      29,092,471 

Other investments

  13,054,395      (1,326,315)         (202,392)  (73,871)  11,451,817 

Equity warrants

  2,466,534                (2,466,534)      

Total

 $268,409,272  $  $(8,735,352) $(3,904,117)  $19,902,885  $(7,361,847) $(6,094,524) $262,216,317 

 

(1) The total amount pertains to the repurchase obligation (see Note 5. Contingencies and Related Parties for additional information) and the reversion to the original contractual terms of the debt agreement for a specific investment following a failure to reach an agreement on the investment's restructuring.

 

Net change in unrealized depreciation for the six months ended June 30, 2026 and for the year ended  December 31, 2025 reported in the Company’s consolidated statements of operations attributable to the Company’s Level 3 assets still held at period end were $3,744,948 and $7,361,847, respectively.

 

As of June 30, 2026, all of the Company’s portfolio investments utilized Level 3 inputs. The following table presents the quantitative information about Level 3 fair value measurements of the Company’s investments as of June 30, 2026

 

  

Fair value

 

Valuation technique

 

Unobservable input

 

Range (weighted average) (4)

Senior secured trade finance participations (1)

 $6,310,193 

Collateral based approach

 

Value of collateral (collateral coverage ratio), Discount rate, Estimated duration period (5)

 

1.65x - 6.45x, 11.75% - 17.67% (15.43%), 1.0 - 3.0 years

Senior secured trade finance participations (2)

 $18,548,886 

Income approach (DCF)

 

Discount rate, Estimated duration period (5)

 

15.0% - 21.50% (19.42%), 4.0 - 13.1 years

Senior secured term loans (2)

 $114,035,365 

Income approach (DCF)

 

Discount rate, Estimated duration period (5)

 

15.50% - 21.50% (17.93%), 0.8 - 24.5 years

Senior secured term loans (3)

 $14,829,525 

A hybrid of the collateral based or conversion approach and the income approach (DCF)

 

Value of collateral (collateral coverage ratio), Discount rate, Estimated duration period (5)

 

0.60x - 1.18x, 19.0% - 35.0% (23.23%), 1.0 - 6.8 years

Senior secured term loan participations (1)

 $21,573,387 

Collateral based approach

 

Value of collateral (collateral coverage ratio), Discount rate, Estimated duration period (5)

 

0.35x - 2.60x, 13.50% - 19.0% (18.21%), 1.0 - 3.5 years

Senior secured term loan participations (2)

 $36,425,260 

Income approach (DCF)

 

Discount rate, EBITDA multiple, Estimated duration period (5)

 

5.03% - 17.0% (11.40%), 7x, 0.1 - 8.0 years

Senior secured term loan participations (3)

 $8,299,298 

A hybrid of the collateral based approach and the income approach (DCF)

 

Value of collateral (collateral coverage ratio), Discount rate, Estimated duration period (5)

 

0.36x - 4.52x, 22.50% - 22.75% (22.55%), 1.5 - 3.2 years

Other investments (1)

 $7,872,732 

Collateral based approach

 

Value of collateral (collateral coverage ratio), Discount rate, Estimated duration period (5)

 

0.53x - 1.02x, 20.0% - 30.0% (26.03%), 0.5 - 3.0 years

Other investments (2)

 $3,944,121 

Income approach (DCF)

 

Discount rate, Estimated duration period (5)

 

6.63% - 13.25% (8.10%), 0.5 - 3.5 years

Convertible notes (2)

 $30,806,874 

Income approach (DCF)

 

Discount rate, Estimated duration period (5)

 

15.75% - 18.0% (17.95%), 0.5 years

Equity warrants

 $ 

Option Pricing Method

 

Risk free rate, volatility, time to liquidity

 

3.7%, 90.6%, 5 years

 

(1)

The Company used a collateral based approach for the following Watch List investments: MICD, Trustco, Sancor, WinRep, IIG TOF B.V., Algodonera, and Frigorifico.

(2)

The Company used the income approach for the following Watch List investments: Grupo Surpapel, Limas, Triton, Dock Brasil, Agilis Partners, Agilis Partners Holding, CAGSA, Producam, Itelecom and Equity Participation in Cocoa Transaction. 

(3)

The Company used a hybrid of the collateral or the conversion approach and the income approach for the following Watch List investments: PT Citra, Vikudha, Ecsponent and Lidas.

(4)

The inputs were weighted based on the fair value of the investments included in the range.

(5)Represents estimated period from  June 30, 2026 to receipt date of final payment for investments under the income approach or estimated period from  June 30, 2026 to collection date of proceeds from liquidation of collateral for investments under the liquidation approach. 

 

As of December 31, 2025, all of the Company’s portfolio investments utilized Level 3 inputs. The following table presents the quantitative information about Level 3 fair value measurements of the Company’s investments as of December 31, 2025

 

  

Fair value

 

Valuation technique

 

Unobservable input

 

Range (weighted average) (4)

Senior secured trade finance participations (1)

 $6,926,432 

Collateral based approach

 

Value of collateral (collateral coverage ratio), Discount rate, Estimated duration period (5)

 

1.24x - 1.65x, 11.75% - 17.67% (15.38%), 1.0 - 3.3 years

Senior secured trade finance participations (2)

 $19,566,586 

Income approach (DCF)

 

Discount rate, Estimated duration period (5)

 

15.0% - 20.50% (18.80%), 4.0 - 13.6 years

Senior secured term loans (2)

 $106,838,273 

Income approach (DCF)

 

Discount rate, Estimated duration period (5)

 

15.50% - 21.0% (19.13%), 0.8 - 25.0 years

Senior secured term loans (3)

 $16,969,011 

A hybrid of the collateral based approach and the income approach (DCF)

 

Value of collateral (collateral coverage ratio), Discount rate, Estimated duration period (5)

 

0.74x - 1.18x, 19.0% - 35.0% (22.79%), 1.0 - 4.0 years

Senior secured term loan participations (1)

 $21,129,236 

Collateral based approach

 

Value of collateral (collateral coverage ratio), Discount rate, Estimated duration period (5)

 

0.37x - 2.73x, 13.50% - 19.0% (18.19%), 1.0 - 3.5 years

Senior secured term loan participations (2)

 $48,465,183 

Income approach (DCF)

 

Discount rate, EBITDA multiple, Estimated duration period (5)

 

11.0% - 22.5% (14.48%), 7x, 0.2 - 8.5 years

Senior secured term loan participations (3)

 $1,777,308 

A hybrid of the collateral based approach and the income approach (DCF)

 

Value of collateral (collateral coverage ratio), Discount rate, Estimated duration period (5)

 

0.37x, 22.75%, 2.9 - 3.0 years

Other investments (1)

 $8,637,158 

Collateral based approach

 

Value of collateral (collateral coverage ratio), Discount rate, Estimated duration period (5)

 

0.53x - 1.32x, 5.18% - 30.0% (24.19%), 0.5 - 4.0 years

Other investments (2)

 $2,814,659 

Income approach (DCF)

 

Discount rate, Estimated duration period (5)

 

8.0% - 13.25% (9.23%), 0.5 - 2.0 years

Convertible notes (2)

 $29,092,471 

Income approach (DCF)

 

Discount rate

 

15.75% - 17.0% (16.97%)

Equity warrants

 $ 

Option Pricing Method

 

Risk free rate, volatility, time to liquidity

 

3.7%, 90.6%, 5 years

 

(1)

The Company used a collateral based approach for the following Watch List investments: MICD, Trustco, Sancor, WinRep, IIG TOF B.V., Itelecom, Algodonera, and Frigorifico.

(2)

The Company used the income approach for the following Watch List investments: Grupo Surpapel, Limas, Triton, Dock Brasil, Cevher, Maritime One, Lidas, Agilis Partners, Agilis Partners Holding, CAGSA, and Producam. 

(3)

The Company used a hybrid of the collateral or the conversion approach and the income approach for the following Watch List investments: PT Citra, Vikudha and Ecsponent.

(4)

The inputs were weighted based on the fair value of the investments included in the range.

(5)Represents estimated period from December 31, 2025 to receipt date of final payment for investments under the income approach or estimated period from December 31, 2025 to collection date of proceeds from liquidation of collateral for investments under the liquidation approach. 

 

The significant unobservable Level 3 inputs used in the fair value measurement of the Company’s investments are market yields used to discount the estimated future cash flows expected to be received from the underlying investments, which include both future principal and interest payments. Significant increases in market yields would result in significantly lower fair value measurements. In addition, a significant decrease in future cash flows is expected to be received from the underlying investments due to a projected decrease in results of operations and cash flows from the underlying investments, would result in significantly lower fair value measurements.

 

For additional information concerning the country-specific risk concentrations for the Company’s investments, refer to the Consolidated Schedule of Investments and Note 3.