Blackstone Secured Lending Fund (NYSE:BXSL) reported fourth-quarter net investment income (NII) of $0.80 per share, exceeding its $0.77 per-share distribution and marking 104% dividend coverage, according to management’s discussion on the company’s fourth-quarter and full-year results conference call. Executives also outlined an active deployment period, a modest decline in net asset value (NAV) tied primarily to unrealized marks in a limited number of positions, and a new share repurchase authorization designed to provide capital allocation flexibility while shares trade below NAV.
Quarterly earnings and distribution coverage
Co-CEO Brad Marshall said the quarter’s NII reflected a return profile “made up overwhelmingly of interest income rather than income from PIK or dividends.” CFO Teddy Desloge added that interest income excluding payment-in-kind, fees, and dividends represented more than 91% of total investment income during the quarter.
Desloge said management will continue to evaluate the dividend with the board each quarter as lower base rates move through the portfolio.
Portfolio activity and deployment themes
Management characterized the fourth quarter as a notably active period. Marshall said it was the second most active quarter of funding since 2021, with the portfolio expanding to 316 companies across 40 industries. The fund added 13 new credits and completed 15 add-on investments in existing names. Marshall said the new credits were underwritten at an average loan-to-value of under 41% and an average spread near 500 basis points.
Marshall highlighted several larger fundings, including AmTrust, MannKind, IEM, and Sabre Power. He also pointed to a “digital aviation solutions” business, Jeppesen, which he said was sold by Boeing for $10.5 billion. Marshall described Jeppesen as having a dominant market position and said it was categorized as well-positioned relative to AI risk, citing “deep entrenchment in the aerospace industry and high cost of failure.”
In response to analyst questions about the forward mix of the portfolio, Marshall said he expects continued opportunity in “the infrastructure around AI,” describing investments in areas like electrical equipment and infrastructure services as “picks and shovels” tied to the AI build-out.
Credit quality, marks, and software/AI commentary
Executives pushed back on external concerns about private credit and addressed investor focus on software exposure and AI disruption. Marshall said that across the portfolio, top-performing credits were inconsistent with “bubble” narratives. He cited metrics for the top 90% of the portfolio, including 9% EBITDA growth over the past 12 months, interest coverage above two times, and an average mark of 99.
On software, Marshall emphasized that “you cannot paint software with a broad brush,” describing certain subverticals as more insulated or potentially benefiting from AI adoption. He said BXSL’s software exposure is concentrated in areas such as vertical software, ERP, data infrastructure and management, and security, and that these software businesses have delivered 40% EBITDA growth since underwrite and generate more than two times interest coverage.
Marshall also discussed Medallia, which he said the firm continued to mark at 77.75, implying a steep reduction from its entry enterprise value due to a slower-than-expected turnaround. He said the underperformance was driven by execution issues, particularly go-to-market, rather than AI-related disruption. Marshall added that sponsor Thoma Bravo installed a new leadership team early last year and is working through a turnaround plan, and he expects discussions around the capital structure.
More broadly, Marshall said the “bottom 10%” of portfolio performers shared a common thread of operational challenges rather than secular pressures. He said those names were marked to an average of 82 and were underwritten at an average 42% LTV, and that over half had received additional sponsor equity or junior capital commitments or were showing improving performance. He also said the company’s watchlist declined versus the prior quarter.
Desloge provided additional detail on the quarter’s NAV movement. NAV per share ended at $26.92, down from $27.15 in the third quarter, which he attributed primarily to $0.27 of net unrealized losses, partly offset by $0.01 of unrealized gains and $0.03 of excess NII relative to the dividend. In Q&A, he said the unrealized marks were concentrated, with two positions accounting for roughly half of net unrealized movement and the top five accounting for over 60%.
Balance sheet, liquidity, and repurchase authorization
BXSL ended the quarter with $14.2 billion of total portfolio investments at fair value, $8.1 billion of outstanding debt, and $6.2 billion of net assets, Desloge said. Non-accruals were 0.6% at cost and 0.5% at fair value, up from 0.3% and 0.2% a year earlier, after two smaller positions were added during the quarter.
Desloge said the fund funded $1.0 billion for a second consecutive quarter and committed more than $900 million. Net funded investment activity totaled $400 million after $629 million of repayments and sales, with an annualized repayment rate of 15% of the portfolio at fair value. Management said it was tracking more than $550 million of potential repayments in the first six months of the year, which could expand capacity if realized. In Q&A, Marshall added that, using a typical repayment cycle, total repayments could be higher over the year, though he emphasized $550 million as the clearest near-term line of sight.
The company also announced a discretionary share repurchase plan. Desloge said the board authorized up to $250 million of common share repurchases in the open market when shares trade below NAV. Management said it would evaluate buybacks alongside reinvestment into new loans and potential deleveraging as repayments and income generate cash.
On leverage, Desloge said quarter-end leverage was 1.3 turns gross and 1.25 turns net of cash, and reiterated a long-term target of 1.25 times, with expectations to operate near the high end of the range in the near term.
Financing costs and market backdrop
Desloge said BXSL’s all-in cost of debt was 4.93% in the fourth quarter, down from 5.24% in the fourth quarter of 2024. He also detailed a diversified liability structure across a corporate revolver, asset-based facilities, CLO debt, and unsecured bonds. Total liquidity at quarter-end was $2.5 billion, including unrestricted cash and undrawn borrowing capacity.
Marshall opened the call by describing a “fundamentally healthy economic backdrop” despite volatility tied to tariffs, geopolitics, and headline risk. He pointed to resilient corporate earnings, consumer strength, and supportive fiscal and monetary conditions, and said Blackstone sees an early-stage, AI-driven capital expenditure cycle supporting growth across sectors. He added that Blackstone’s broader private credit platform and focus on first-lien lending position the portfolio defensively, a theme management returned to repeatedly in discussing both underwriting and marks.
About Blackstone Secured Lending Fund (NYSE:BXSL)
Blackstone Secured Lending Fund (NYSE: BXSL) is a closed-end management investment company sponsored by Blackstone Credit, the credit-oriented business of Blackstone Inc Launched in May 2020, BXSL seeks to deliver attractive risk-adjusted returns primarily through current income and, to a lesser extent, capital appreciation. The fund raises capital from institutional and retail investors and deploys it into a diversified portfolio of senior secured loans and other credit instruments.
The fund’s principal investment focus is on first-lien senior secured loans and unitranche debt extended to middle-market companies across North America.
