| Fair Value of Financial Instruments |
6. Fair Value of Financial Instruments Investments The following tables present fair value measurements of investments as of September 30, 2026 and December 31, 2025:
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Fair Value Hierarchy at September 30, 2026 |
|
|
|
Level 1 |
|
|
Level 2 |
|
|
Level 3 |
|
|
Total |
|
First-lien debt investments |
|
$ |
— |
|
|
$ |
16,609 |
|
|
$ |
2,933,775 |
|
|
$ |
2,950,384 |
|
Second-lien debt investments |
|
|
— |
|
|
|
5 |
|
|
|
24,893 |
|
|
|
24,898 |
|
Mezzanine debt investments |
|
|
— |
|
|
|
— |
|
|
|
63,966 |
|
|
|
63,966 |
|
Equity investments |
|
|
1,493 |
|
|
|
10,717 |
|
|
|
179,990 |
|
|
|
192,200 |
|
Structured credit investments |
|
|
— |
|
|
|
81,597 |
|
|
|
— |
|
|
|
81,597 |
|
Joint venture investments |
|
|
— |
|
|
|
— |
|
|
|
79,990 |
|
|
|
79,990 |
|
Total investments at fair value |
|
$ |
1,493 |
|
|
$ |
108,928 |
|
|
$ |
3,282,614 |
|
|
$ |
3,393,035 |
|
Interest rate swaps |
|
|
— |
|
|
|
(33,692 |
) |
|
|
— |
|
|
|
(33,692 |
) |
Total |
|
$ |
1,493 |
|
|
$ |
75,236 |
|
|
$ |
3,282,614 |
|
|
$ |
3,359,343 |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Fair Value Hierarchy at December 31, 2025 |
|
|
|
Level 1 |
|
|
Level 2 |
|
|
Level 3 |
|
|
Total |
|
First-lien debt investments |
|
$ |
— |
|
|
$ |
28,204 |
|
|
$ |
2,956,297 |
|
|
$ |
2,984,501 |
|
Second-lien debt investments |
|
|
— |
|
|
|
222 |
|
|
|
30,456 |
|
|
|
30,678 |
|
Mezzanine debt investments |
|
|
— |
|
|
|
— |
|
|
|
61,684 |
|
|
|
61,684 |
|
Equity investments |
|
|
28,169 |
|
|
|
11,016 |
|
|
|
133,397 |
|
|
|
172,582 |
|
Structured credit investments |
|
|
— |
|
|
|
97,872 |
|
|
|
— |
|
|
|
97,872 |
|
Total investments at fair value |
|
$ |
28,169 |
|
|
$ |
137,314 |
|
|
$ |
3,181,834 |
|
|
$ |
3,347,317 |
|
Interest rate swaps |
|
|
— |
|
|
|
10,301 |
|
|
|
— |
|
|
|
10,301 |
|
Total |
|
$ |
28,169 |
|
|
$ |
147,615 |
|
|
$ |
3,181,834 |
|
|
$ |
3,357,618 |
|
Transfers between levels, if any, are recognized at the beginning of the quarter in which the transfers occur. The following tables present the changes in the fair value of investments for which Level 3 inputs were used to determine the fair value as of and for the three and nine months ended September 30, 2026:
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
As of and for the Three Months Ended |
|
|
|
September 30, 2026 |
|
|
|
First-lien
debt
investments |
|
|
Second-lien
debt
investments |
|
|
Mezzanine
debt
investments |
|
|
Equity
and structured
credit investments |
|
|
Joint venture investments |
|
|
Total |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Balance, beginning of period |
|
$ |
2,901,631 |
|
|
$ |
23,675 |
|
|
$ |
64,621 |
|
|
$ |
131,957 |
|
|
$ |
53,832 |
|
|
$ |
3,175,716 |
|
Purchases or originations |
|
|
220,203 |
|
|
|
— |
|
|
|
— |
|
|
|
26,599 |
|
|
|
24,250 |
|
|
|
271,052 |
|
Repayments / redemptions |
|
|
(162,200 |
) |
|
|
— |
|
|
|
(854 |
) |
|
|
— |
|
|
|
— |
|
|
|
(163,054 |
) |
Sales Proceeds |
|
|
(10 |
) |
|
|
— |
|
|
|
— |
|
|
|
— |
|
|
|
— |
|
|
|
(10 |
) |
Paid-in-kind interest |
|
|
4,068 |
|
|
|
925 |
|
|
|
1,702 |
|
|
|
196 |
|
|
|
— |
|
|
|
6,891 |
|
Net change in unrealized gains (losses) |
|
|
(10,826 |
) |
|
|
166 |
|
|
|
(453 |
) |
|
|
12,225 |
|
|
|
1,908 |
|
|
|
3,020 |
|
Net realized gains (losses) |
|
|
(12,865 |
) |
|
|
— |
|
|
|
— |
|
|
|
(3,000 |
) |
|
|
— |
|
|
|
(15,865 |
) |
Net amortization of discount on securities |
|
|
4,701 |
|
|
|
127 |
|
|
|
36 |
|
|
|
— |
|
|
|
— |
|
|
|
4,864 |
|
Transfers within Level 3 |
|
|
(10,927 |
) |
|
|
— |
|
|
|
(1,086 |
) |
|
|
12,013 |
|
|
|
— |
|
|
|
— |
|
Transfers into (out of) Level 3 |
|
|
— |
|
|
|
— |
|
|
|
— |
|
|
|
— |
|
|
|
— |
|
|
|
— |
|
Balance, End of Period |
|
$ |
2,933,775 |
|
|
$ |
24,893 |
|
|
$ |
63,966 |
|
|
$ |
179,990 |
|
|
$ |
79,990 |
|
|
$ |
3,282,614 |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
As of and for the Nine Months Ended |
|
|
|
September 30, 2026 |
|
|
|
First-lien
debt
investments |
|
|
Second-lien
debt
investments |
|
|
Mezzanine
debt
investments |
|
|
Equity
and structured
credit investments |
|
|
Joint venture investments |
|
|
Total |
|
Balance, beginning of period |
|
$ |
2,956,297 |
|
|
$ |
30,456 |
|
|
$ |
61,684 |
|
|
$ |
133,397 |
|
|
$ |
— |
|
|
$ |
3,181,834 |
|
Purchases or originations |
|
|
516,576 |
|
|
|
— |
|
|
|
— |
|
|
|
26,635 |
|
|
|
75,641 |
|
|
|
618,852 |
|
Repayments / redemptions |
|
|
(461,454 |
) |
|
|
(8,245 |
) |
|
|
(1,604 |
) |
|
|
— |
|
|
|
— |
|
|
|
(471,303 |
) |
Sales Proceeds |
|
|
— |
|
|
|
— |
|
|
|
— |
|
|
|
— |
|
|
|
— |
|
|
|
- |
|
Paid-in-kind interest |
|
|
9,549 |
|
|
|
3,235 |
|
|
|
5,017 |
|
|
|
196 |
|
|
|
— |
|
|
|
17,997 |
|
Net change in unrealized gains (losses) |
|
|
(75,585 |
) |
|
|
38,487 |
|
|
|
(150 |
) |
|
|
14,286 |
|
|
|
4,349 |
|
|
|
(18,613 |
) |
Net realized gains (losses) |
|
|
(12,855 |
) |
|
|
(39,489 |
) |
|
|
— |
|
|
|
(6,255 |
) |
|
|
— |
|
|
|
(58,599 |
) |
Net amortization of discount on securities |
|
|
12,174 |
|
|
|
449 |
|
|
|
105 |
|
|
|
— |
|
|
|
— |
|
|
|
12,728 |
|
Transfers within Level 3 |
|
|
(10,927 |
) |
|
|
— |
|
|
|
(1,086 |
) |
|
|
12,013 |
|
|
|
— |
|
|
|
— |
|
Transfers into (out of) Level 3 |
|
|
— |
|
|
|
— |
|
|
|
— |
|
|
|
(282 |
) |
|
|
— |
|
|
|
(282 |
) |
Balance, End of Period |
|
$ |
2,933,775 |
|
|
$ |
24,893 |
|
|
$ |
63,966 |
|
|
$ |
179,990 |
|
|
$ |
79,990 |
|
|
$ |
3,282,614 |
|
Dye & Durham, Ltd. was transferred out of Level 3 into Level 1 for fair value measurement purposes during the nine months ended September 30, 2026, as a result of changes in the observability of inputs into the security valuation for this portfolio company. The following tables present the changes in the fair value of investments for which Level 3 inputs were used to determine the fair value as of and for the three and nine months ended September 30, 2025:
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
As of and for the Three Months Ended |
|
|
|
September 30, 2025 |
|
|
|
First-lien
debt
investments |
|
|
Second-lien
debt
investments |
|
|
Mezzanine
debt
investments |
|
|
Equity
investments |
|
|
Total |
|
Balance, beginning of period |
|
$ |
3,014,071 |
|
|
$ |
28,735 |
|
|
$ |
53,567 |
|
|
$ |
120,739 |
|
|
$ |
3,217,112 |
|
Purchases or originations |
|
|
283,139 |
|
|
|
— |
|
|
|
6,000 |
|
|
|
127 |
|
|
|
289,266 |
|
Repayments / redemptions |
|
|
(312,964 |
) |
|
|
(217 |
) |
|
|
— |
|
|
|
— |
|
|
|
(313,181 |
) |
Sales Proceeds |
|
|
— |
|
|
|
— |
|
|
|
— |
|
|
|
(1,588 |
) |
|
|
(1,588 |
) |
Paid-in-kind interest |
|
|
4,365 |
|
|
|
1,074 |
|
|
|
1,408 |
|
|
|
— |
|
|
|
6,847 |
|
Net change in unrealized gains (losses) |
|
|
(12,641 |
) |
|
|
(725 |
) |
|
|
(925 |
) |
|
|
3,773 |
|
|
|
(10,518 |
) |
Net realized gains (losses) |
|
|
10 |
|
|
|
— |
|
|
|
— |
|
|
|
769 |
|
|
|
779 |
|
Net amortization of discount on securities |
|
|
6,395 |
|
|
|
117 |
|
|
|
32 |
|
|
|
— |
|
|
|
6,544 |
|
Transfers within Level 3 |
|
|
— |
|
|
|
— |
|
|
|
— |
|
|
|
— |
|
|
|
— |
|
Transfers into (out of) Level 3 |
|
|
— |
|
|
|
— |
|
|
|
— |
|
|
|
— |
|
|
|
— |
|
Balance, End of Period |
|
$ |
2,982,375 |
|
|
$ |
28,984 |
|
|
$ |
60,082 |
|
|
$ |
123,820 |
|
|
$ |
3,195,261 |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
As of and for the Nine Months Ended |
|
|
|
September 30, 2025 |
|
|
|
First-lien
debt
investments |
|
|
Second-lien
debt
investments |
|
|
Mezzanine
debt
investments |
|
|
Equity
investments |
|
|
Total |
|
Balance, beginning of period |
|
$ |
3,287,829 |
|
|
$ |
18,535 |
|
|
$ |
39,091 |
|
|
$ |
139,586 |
|
|
$ |
3,485,041 |
|
Purchases or originations |
|
|
679,358 |
|
|
|
15,357 |
|
|
|
18,740 |
|
|
|
5,216 |
|
|
|
718,671 |
|
Repayments / redemptions |
|
|
(977,186 |
) |
|
|
(3,574 |
) |
|
|
— |
|
|
|
— |
|
|
|
(980,760 |
) |
Sales Proceeds |
|
|
(36,910 |
) |
|
|
— |
|
|
|
— |
|
|
|
(9,786 |
) |
|
|
(46,696 |
) |
Paid-in-kind interest |
|
|
11,110 |
|
|
|
2,906 |
|
|
|
3,607 |
|
|
|
81 |
|
|
|
17,704 |
|
Net change in unrealized gains (losses) |
|
|
47,109 |
|
|
|
(4,751 |
) |
|
|
(1,441 |
) |
|
|
(1,213 |
) |
|
|
39,704 |
|
Net realized gains (losses) |
|
|
(41,472 |
) |
|
|
— |
|
|
|
— |
|
|
|
4,421 |
|
|
|
(37,051 |
) |
Net amortization of discount on securities |
|
|
20,070 |
|
|
|
511 |
|
|
|
85 |
|
|
|
— |
|
|
|
20,666 |
|
Transfers within Level 3 |
|
|
(7,533 |
) |
|
|
— |
|
|
|
— |
|
|
|
7,533 |
|
|
|
— |
|
Transfers into (out of) Level 3 |
|
|
— |
|
|
|
— |
|
|
|
— |
|
|
|
(22,018 |
) |
|
|
(22,018 |
) |
Balance, End of Period |
|
$ |
2,982,375 |
|
|
$ |
28,984 |
|
|
$ |
60,082 |
|
|
$ |
123,820 |
|
|
$ |
3,195,261 |
|
Caris Life Sciences, Inc. was transferred out of Level 3 into Level 1 for fair value measurement purposes during the nine months ended September 30, 2025, as a result of changes in the observability of inputs into the security valuation for this portfolio company. The following table presents information with respect to the net change in unrealized gains or losses on investments for which Level 3 inputs were used in determining fair value that are still held by the Company at September 30, 2026 and 2025:
|
|
|
|
|
|
|
|
|
|
|
Net Change in Unrealized |
|
|
Net Change in Unrealized |
|
|
|
Gains or (Losses) |
|
|
Gains or (Losses) |
|
|
|
for the Three Months Ended |
|
|
for the Three Months Ended |
|
|
|
September 30, 2026 on |
|
|
September 30, 2025 on |
|
|
|
Investments Held at |
|
|
Investments Held at |
|
|
|
September 30, 2026 |
|
|
September 30, 2025 |
|
First-lien debt investments |
|
$ |
(10,611 |
) |
|
$ |
(6,123 |
) |
Second-lien debt investments |
|
|
166 |
|
|
|
(724 |
) |
Mezzanine debt investments |
|
|
749 |
|
|
|
(925 |
) |
Equity investments |
|
|
9,286 |
|
|
|
4,354 |
|
Joint venture investments |
|
|
3,110 |
|
|
|
— |
|
Total |
|
$ |
2,700 |
|
|
$ |
(3,418 |
) |
|
|
|
|
|
|
|
|
|
|
|
Net Change in Unrealized |
|
|
Net Change in Unrealized |
|
|
|
Gains or (Losses) |
|
|
Gains or (Losses) |
|
|
|
for the Nine Months Ended |
|
|
for the Nine Months Ended |
|
|
|
September 30, 2026 on |
|
|
September 30, 2025 on |
|
|
|
Investments Held at |
|
|
Investments Held at |
|
|
|
September 30, 2026 |
|
|
September 30, 2025 |
|
First-lien debt investments |
|
$ |
(69,306 |
) |
|
$ |
20,648 |
|
Second-lien debt investments |
|
|
(1,002 |
) |
|
|
(4,544 |
) |
Mezzanine debt investments |
|
|
(69 |
) |
|
|
(1,441 |
) |
Equity investments |
|
|
11,700 |
|
|
|
1,313 |
|
Joint venture investments |
|
|
4,349 |
|
|
|
— |
|
Total |
|
$ |
(54,328 |
) |
|
$ |
15,976 |
|
The following tables present the fair value of Level 3 Investments and the significant unobservable inputs used in the valuations as of September 30, 2026 and December 31, 2025. The tables are not intended to be all-inclusive, but instead capture the significant unobservable inputs relevant to the Company’s determination of fair values.
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
September 30, 2026 |
|
|
|
|
|
Valuation |
|
Unobservable |
|
Range (Weighted |
|
Impact to Valuation
from an |
|
|
Fair Value |
|
|
Technique |
|
Input |
|
Average) |
|
Increase to Input |
First-lien debt investments |
|
$ |
2,933,775 |
|
|
Income approach (1) |
|
Discount rate |
|
8.0% — 27.5% (12.3%) |
|
Decrease |
Second-lien debt investments |
|
|
24,893 |
|
|
Income approach |
|
Discount rate |
|
16.3% — 17.7% (16.5%) |
|
Decrease |
Mezzanine debt investments |
|
|
63,966 |
|
|
Income approach (2) |
|
Discount rate |
|
10.8% — 11.5% (11.5%) |
|
Decrease |
Equity investments |
|
|
42,043 |
|
|
Income approach |
|
Discount rate |
|
8.0% — 22.6% (16.6%) |
|
Decrease |
Equity investments |
|
|
137,947 |
|
|
Market Multiple (3) |
|
Comparable multiple |
|
1.5x — 24.0x (11.9x) |
|
Increase |
Joint venture investments |
|
|
79,990 |
|
|
Income approach |
|
Discount rate |
|
13.0% — 13.0% (13.0%) |
|
Decrease |
Total |
|
$ |
3,282,614 |
|
|
|
|
|
|
|
|
|
(1)Includes $92.4 million of debt investments which were valued using an asset valuation waterfall. (2)Includes $0.1 million of debt investments which were valued using an asset valuation waterfall. (3)Includes $35.3 million of equity investments which were valued using an asset valuation waterfall.
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
December 31, 2025 |
|
|
|
|
|
Valuation |
|
Unobservable |
|
Range (Weighted |
|
Impact to Valuation
from an |
|
|
Fair Value |
|
|
Technique |
|
Input |
|
Average) |
|
Increase to Input |
First-lien debt investments |
|
$ |
2,956,297 |
|
|
Income approach (1) |
|
Discount rate |
|
6.6% — 17.5% (11.0%) |
|
Decrease |
Second-lien debt investments |
|
|
30,456 |
|
|
Income approach |
|
Discount rate |
|
12.5% — 15.3% (14.2%) |
|
Decrease |
Mezzanine debt investments |
|
|
61,684 |
|
|
Income approach (2) |
|
Discount rate |
|
10.8% — 20.0% (11.1%) |
|
Decrease |
Equity investments |
|
|
133,397 |
|
|
Market Multiple (3) |
|
Comparable multiple |
|
1.8x — 25.0x (10.4x) |
|
Increase |
Total |
|
$ |
3,181,834 |
|
|
|
|
|
|
|
|
|
(1)Includes $105.9 million of debt investments which were valued using an asset valuation waterfall. (2)Includes $0.1 million of debt investments which were valued using an asset valuation waterfall. (3)Includes $13.1 million of equity investments which were valued using an asset valuation waterfall and $20.1 million of equity investments using a discounted cash flow analysis. The Company typically determines the fair value of its performing Level 3 debt investments utilizing a yield analysis. In a yield analysis, a price is ascribed for each investment based upon an assessment of current and expected market yields for similar investments and risk profiles. Additional consideration is given to the expected life, portfolio company performance since close, and other terms and risks associated with an investment. Among other factors, a determinant of risk is the amount of leverage used by the portfolio company relative to the total enterprise value of the company, and the rights and remedies of our investment within each portfolio company’s capital structure. Significant unobservable quantitative inputs typically considered in the fair value measurement of the Company’s Level 3 debt investments primarily include current market yields, including relevant market indices, but may also include quotes from brokers, dealers, and pricing services as indicated by comparable investments. If debt investments are credit impaired, an enterprise value analysis may be used to value such debt investments; however, in addition to the methods outlined above, other methods such as a liquidation or wind-down analysis may be utilized to estimate enterprise value. For the Company’s Level 3 equity investments, multiples of similar companies’ revenues, earnings before income taxes, depreciation and amortization (“EBITDA”) or some combination thereof and comparable market transactions are typically used. Structured Credit Partners JV, LLC (“SCP”) On December 23, 2025, affiliates of Sixth Street, including us, and affiliates of Carlyle entered into the Limited Liability Company Agreement to co-manage SCP, a joint venture focused on investing in broadly syndicated first lien senior secured loans, financed with long-term, non-mark-to-market, and predominantly investment grade rated CLO debt managed by affiliates of Sixth Street or Carlyle on a no-fee basis. Sixth Street affiliates own 50.0% of the equity interests in SCP and Carlyle affiliates own 50.0%, with investment decisions requiring approval by representatives of both the Sixth Street affiliates and the Carlyle affiliates. Equity contributions will be called from each member on a pro-rata basis, based on their equity commitments. Funding of such commitments requires the approval of SCP’s board of managers, including the board members appointed by the Company. SCP’s board of managers consists of an equal number of representatives appointed by the Sixth Street-affiliated members of SCP and the Carlyle-affiliated members of SCP. Portfolio construction and investment decisions must be unanimously approved by SCP’s investment committee, as delegated by the board of managers of SCP. Our investment in SCP is made with certain of our affiliates in accordance with the terms of the exemptive relief that we received from the SEC. Because the Company does not own more than 25% of the voting interests of SCP, the Company does not believe that it has control over SCP for accounting purposes under U.S. GAAP or for purposes of the 1940 Act and therefore, does not consolidate SCP. As of September 30, 2026, SCP had total capital commitments of $600.0 million comprised of $200.0 million of capital commitments from Sixth Street Specialty Lending, Inc., $100.0 million of capital commitments from Sixth Street Lending Partners, $150.0 million of capital commitments from Carlyle Secured Lending, Inc., and $150.0 million of capital commitments from Carlyle Credit Solutions, Inc., with all members of SCP having equal voting control. As of September 30, 2026, SCP had the following contributed capital and unfunded commitments from its members:
|
|
|
|
|
|
|
September 30, 2026 |
|
Total contributed capital by Sixth Street Specialty Lending Inc. |
|
$ |
75,641 |
|
Total contributed capital by Sixth Street Lending Partners |
|
|
37,832 |
|
Total contributed capital by Carlyle |
|
|
113,473 |
|
Total contributed capital |
|
$ |
226,946 |
|
Total unfunded commitments by Sixth Street Specialty Lending Inc. |
|
|
124,360 |
|
Total unfunded commitments by Sixth Street Lending Partners |
|
|
62,169 |
|
Total unfunded commitments by Carlyle |
|
|
186,529 |
|
Total unfunded commitments |
|
$ |
373,058 |
|
As of September 30, 2026, SCP had six subsidiaries. The wholly owned subsidiaries include; (i) Carlyle US CLO 2026-3, Ltd., a Cayman Islands corporation; (ii) Carlyle US CLO 2026-B, Ltd., a Cayman Islands corporation; (iii) Sixth Street CLO 32, Ltd., a Cayman Islands corporation; (iv) Sixth Street CLO 33, Ltd., a Cayman Islands corporation and (v) Carlyle CLO 2026-D, Ltd., a Cayman Islands corporation. Sixth Street SCP Warehouse 4, Ltd., a Cayman Islands corporation is a majority owned subsidiary. Each subsidiary primarily invests in broadly syndicated loans. As SCP has a controlling financial interest in all subsidiaries, they are consolidated in SCP’s unaudited consolidated financial statements commencing from the date of their respective formation. Below is selected consolidated balance sheet information for SCP as of September 30, 2026:
|
|
|
|
|
|
|
September 30, 2026 |
|
|
|
(unaudited) |
|
Selected Consolidated Balance Sheet Information: |
|
|
|
Assets |
|
|
|
Investments at fair value (amortized cost of $2,138,270) |
|
$ |
2,135,823 |
|
Cash and cash equivalents (1) |
|
|
460,529 |
|
Prepaid expenses and other assets |
|
|
31,896 |
|
Total Assets |
|
$ |
2,628,248 |
|
Liabilities and Members' Equity |
|
|
|
Secured borrowings |
|
$ |
1,991,070 |
|
Dividend payable |
|
|
14,850 |
|
Accrued expenses and other liabilities |
|
|
396,839 |
|
Members equity (2) |
|
|
224,023 |
|
Non-controlling interest (3) |
|
|
1,466 |
|
Total Liabilities and Members' Equity |
|
$ |
2,628,248 |
|
(1)As of September 30, 2026, $39,609 of SCP’s cash and cash equivalents was restricted. (2)As of September 30, 2026, the fair value of the Company’s ownership interest in the members’ equity was $79,990. (3)As of September 30, 2026, a third-party investor had a 5% economic interest in Sixth Street SCP Warehouse 4, Ltd., a consolidated subsidiary of SCP. Below is selected consolidated statement of operations information for SCP for the three and nine months ended September 30, 2026:
|
|
|
|
|
|
|
|
|
|
|
Three Months Ended |
|
|
Nine Months Ended |
|
|
|
September 30, 2026 |
|
|
September 30, 2026 |
|
|
|
(unaudited) |
|
|
(unaudited) |
|
Selected Consolidated Statement of Operations Information: |
|
|
|
|
|
|
Total Investment Income |
|
$ |
27,942 |
|
|
$ |
51,515 |
|
Expenses |
|
|
|
|
|
|
Interest expense |
|
|
18,169 |
|
|
|
35,142 |
|
Other expenses |
|
|
404 |
|
|
|
1,572 |
|
Total expenses |
|
|
18,573 |
|
|
|
36,714 |
|
Net Investment Income |
|
|
9,369 |
|
|
|
14,801 |
|
Net change in unrealized gains (losses) on investments |
|
|
2,291 |
|
|
|
(2,447 |
) |
Net realized gains (losses) on investments |
|
|
133 |
|
|
|
266 |
|
Increase (Decrease) in Net Assets Resulting from Operations |
|
$ |
11,793 |
|
|
$ |
12,620 |
|
Net income (loss) attributable to non-controlling interest |
|
|
36 |
|
|
|
23 |
|
Increase (Decrease) in Net Assets Resulting from Operations Attributable to Members |
|
$ |
11,757 |
|
|
$ |
12,597 |
|
For the three and nine months ended September 30, 2026, SCP declared $9.8 million and $15.5 million, respectively, in distributions, of which $3.3 million and $5.2 million, respectively, was recognized as dividend income in the Company’s Consolidated Statements of Operations. As of September 30, 2026, the daily weighted average yield on our investment in Structured Credit Partners JV, LLC was 20.3%. Below is a summary of SCP’s portfolio as of September 30, 2026:
|
|
|
|
|
|
|
September 30, 2026 |
|
Total investments (1) |
|
$ |
2,157,543 |
|
Weighted average yield on total investments at amortized cost |
|
|
6.95 |
% |
Weighted average yield on total investments at fair value |
|
|
6.96 |
% |
Weighted average spread on investments |
|
|
2.77 |
% |
Number of portfolio companies in SCP |
|
|
461 |
|
Percentage of loans at floating interest rates |
|
|
99.64 |
% |
The industry composition of SCP’s portfolio at fair value as of September 30, 2026 is as follows:
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
September 30, 2026 |
|
|
|
Amortized Cost |
|
|
Fair Value |
|
|
% of Fair Value |
|
Aerospace & Defense |
|
$ |
82,517 |
|
|
$ |
82,555 |
|
|
|
3.9 |
% |
Auto Aftermarket & Services |
|
|
66,097 |
|
|
|
66,009 |
|
|
|
3.1 |
% |
Beverage & Food |
|
|
64,031 |
|
|
|
63,940 |
|
|
|
3.0 |
% |
Business Services |
|
|
256,298 |
|
|
|
256,465 |
|
|
|
12.0 |
% |
Capital Equipment |
|
|
117,964 |
|
|
|
118,019 |
|
|
|
5.5 |
% |
Chemicals, Plastics & Rubber |
|
|
35,392 |
|
|
|
35,540 |
|
|
|
1.7 |
% |
Construction & Building |
|
|
127,853 |
|
|
|
127,274 |
|
|
|
6.0 |
% |
Consumer goods: Durable |
|
|
40,008 |
|
|
|
39,997 |
|
|
|
1.9 |
% |
Consumer goods: Non-durable |
|
|
49,757 |
|
|
|
49,781 |
|
|
|
2.3 |
% |
Consumer Services |
|
|
138,343 |
|
|
|
138,534 |
|
|
|
6.5 |
% |
Containers, Packaging & Glass |
|
|
57,202 |
|
|
|
57,368 |
|
|
|
2.7 |
% |
Diversified Financial Services |
|
|
252,087 |
|
|
|
249,538 |
|
|
|
11.7 |
% |
Energy: Electricity |
|
|
29,905 |
|
|
|
29,850 |
|
|
|
1.4 |
% |
Energy: Oil & Gas |
|
|
33,698 |
|
|
|
33,774 |
|
|
|
1.6 |
% |
Environmental Industries |
|
|
36,189 |
|
|
|
36,211 |
|
|
|
1.7 |
% |
Forest Products & Paper |
|
|
8,624 |
|
|
|
8,620 |
|
|
|
0.4 |
% |
Healthcare & Pharmaceuticals |
|
|
135,146 |
|
|
|
135,332 |
|
|
|
6.3 |
% |
High Tech Industries |
|
|
144,844 |
|
|
|
145,952 |
|
|
|
6.8 |
% |
Leisure Products & Services |
|
|
102,719 |
|
|
|
101,895 |
|
|
|
4.8 |
% |
Media: Advertising, Printing & Publishing |
|
|
16,830 |
|
|
|
16,917 |
|
|
|
0.8 |
% |
Media: Broadcasting & Subscription |
|
|
22,134 |
|
|
|
22,163 |
|
|
|
1.0 |
% |
Media: Diversified & Production |
|
|
33,681 |
|
|
|
33,946 |
|
|
|
1.6 |
% |
Metals & Mining |
|
|
3,971 |
|
|
|
3,992 |
|
|
|
0.2 |
% |
Retail |
|
|
41,253 |
|
|
|
41,108 |
|
|
|
1.9 |
% |
Sovereign & Public Finance |
|
|
13,084 |
|
|
|
13,122 |
|
|
|
0.6 |
% |
Telecommunications |
|
|
19,748 |
|
|
|
19,574 |
|
|
|
0.9 |
% |
Transportation: Cargo |
|
|
8,306 |
|
|
|
8,449 |
|
|
|
0.4 |
% |
Transportation: Consumer |
|
|
38,724 |
|
|
|
38,230 |
|
|
|
1.8 |
% |
Utilities: Electric |
|
|
11,155 |
|
|
|
11,191 |
|
|
|
0.5 |
% |
Utilities: Oil & Gas |
|
|
4,874 |
|
|
|
4,920 |
|
|
|
0.2 |
% |
Wholesale |
|
|
145,836 |
|
|
|
145,557 |
|
|
|
6.8 |
% |
Total |
|
$ |
2,138,270 |
|
|
$ |
2,135,823 |
|
|
|
100.0 |
% |
The geographic composition of SCP’s portfolio at fair value as of September 30, 2026 is as follows:
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
September 30, 2026 |
|
|
|
Amortized Cost |
|
|
Fair Value |
|
|
% of Fair Value |
|
Australia |
|
$ |
1,981 |
|
|
$ |
2,006 |
|
|
|
0.1 |
% |
Austria |
|
|
2,054 |
|
|
|
2,044 |
|
|
|
0.1 |
% |
Canada |
|
|
21,334 |
|
|
|
21,171 |
|
|
|
1.0 |
% |
France |
|
|
10,609 |
|
|
|
10,619 |
|
|
|
0.5 |
% |
Germany |
|
|
13,422 |
|
|
|
13,518 |
|
|
|
0.6 |
% |
Ireland (1) |
|
|
885 |
|
|
|
843 |
|
|
|
0.0 |
% |
Luxembourg |
|
|
24,574 |
|
|
|
24,686 |
|
|
|
1.2 |
% |
Netherlands |
|
|
23,521 |
|
|
|
23,636 |
|
|
|
1.1 |
% |
United Kingdom |
|
|
31,300 |
|
|
|
30,834 |
|
|
|
1.5 |
% |
United States |
|
|
2,008,590 |
|
|
|
2,006,466 |
|
|
|
93.9 |
% |
Total |
|
$ |
2,138,270 |
|
|
$ |
2,135,823 |
|
|
|
100.0 |
% |
(1)Value sums to less than 0.1%. Financial Instruments Not Carried at Fair Value Debt The fair value of the Company’s Revolving Credit Facility, which is categorized as Level 3 within the fair value hierarchy, as of September 30, 2026 and December 31, 2025, approximates its carrying value as the outstanding balance is callable at carrying value. The following table presents the fair value of the Company’s 2026 Notes, 2028 Notes, 2029 Notes, 2030 Notes and 2031 Notes as of September 30, 2026 and December 31, 2025.
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
September 30, 2026 |
|
|
December 31, 2025 |
|
|
|
Outstanding
Principal |
|
|
Fair
Value (1) |
|
|
Outstanding
Principal |
|
|
Fair
Value (1) |
|
2026 Notes |
|
$ |
— |
|
|
$ |
— |
|
|
$ |
300,000 |
|
|
$ |
296,659 |
|
2028 Notes |
|
|
300,000 |
|
|
|
304,238 |
|
|
|
300,000 |
|
|
|
314,473 |
|
2029 Notes |
|
|
350,000 |
|
|
|
348,327 |
|
|
|
350,000 |
|
|
|
361,359 |
|
2030 Notes |
|
|
300,000 |
|
|
|
289,928 |
|
|
|
300,000 |
|
|
|
303,186 |
|
2031 Notes |
|
|
300,000 |
|
|
|
283,761 |
|
|
|
— |
|
|
|
— |
|
Total |
|
$ |
1,250,000 |
|
|
$ |
1,226,254 |
|
|
$ |
1,250,000 |
|
|
$ |
1,275,677 |
|
(1)The fair value is based on broker quotes received by the Company and is categorized as Level 2 within the fair value hierarchy. Other Financial Assets and Liabilities The carrying amounts of the Company’s assets and liabilities, other than investments at fair value and the 2026 Notes, 2028 Notes, 2029 Notes, 2030 Notes and 2031 Notes, approximate fair value due to their short maturities or their close proximity of the originations to the measurement date. Under the fair value hierarchy, cash and cash equivalents are classified as Level 1 while the Company’s other assets and liabilities, other than investments at fair value and Revolving Credit Facility, are classified as Level 2.
|