Executive Summary

“BXSL delivered another strong quarter in Q1 2025, demonstrating resilient earnings, robust credit quality, and stable portfolio fundamentals. The company continues to benefit from its focus on first-lien senior secured lending and its affiliation with Blackstone, allowing it to navigate ongoing market volatility and macroeconomic headwinds, including tariffs“. Perplexity Summary

Key Financial Metrics

Financial Performance and Dividend Coverage

• Earnings: BXSL reported net investment income (NII) of $0.83 per share, beating consensus estimates and covering the quarterly dividend at 108%.
• Total Investment Income: $357.8 million for the quarter, up 18% year-over-year.
• Dividend: The Board declared a Q2 2025 dividend of $0.77 per share, consistent with the previous quarter. When the dividend is paid it will be the 8th quarter in a row at this level.
• NAV Stability: NAV per share was unchanged at $27.39 compared to Q4 2024, supported by $0.06 per share of excess earnings to the dividend and offset by ($0.17 per share) of unrealized losses, primarily in a few larger positions.

Portfolio Quality and Investment Activity

• Portfolio Composition: 98.2% of investments are in first-lien senior secured debt.
• Credit Quality: According to management “Only 0.7% of debt investments at cost are marked below 80% of par.
• Underlying Company Health: Portfolio companies reported nearly 10% average EBITDA growth year-over-year, According to the conference call “This growth percentage is nearly 2x larger than that of companies in the Lincoln International Private Market database”.
• Investment Activity: BXSL funded approximately $700 million of new investments and made over $750 million in new commitments during the quarter. Repayments were elevated, including $13 million in accelerated OID, prepayment premiums, and unamortized discounts.

Leverage and Capital Structure

• Leverage: Debt-to-equity ratio was 1.18x, within management’s target range.
• Liquidity: The company maintains ample liquidity and access to capital.

Conference Call Highlights: Key Discussion Topics

1. Credit Quality and Portfolio Performance
Management emphasized the continued strength of BXSL’s portfolio, with minimal non-accruals and strong underlying company EBITDA growth. Proactive risk management and stable credit watchlists were highlighted as ongoing priorities

2. Dividend Policy and Earnings Coverage
Management reiterated their commitment to a stable, well-covered dividend, citing the 108% NII coverage ratio and $0.06 per share of excess earnings. No immediate plans for a dividend increase were announced, with stability prioritized.

3. Market Environment and Competition
Executives discussed spread compression in the upper middle-market due to heightened competition. Despite this, BXSL continues to see robust deal flow, leveraging Blackstone’s scale and sourcing network. Elevated repayments were attributed to healthy borrower refinancing activity.

4. Investment Activity and Pipeline
The company detailed $700 million in new fundings and over $750 million in new commitments for the quarter, maintaining a focus on first-lien, senior secured loans. The forward pipeline remains robust.

5. Leverage and Balance Sheet
BXSL reaffirmed its leverage policy, currently at 1.18x, and highlighted ample liquidity and access to funding.

6. Interest Rate Environment
Management noted that while some yield compression is expected as rates stabilize or decline, the floating rate structure of the portfolio supports strong net interest margins^.

7. Shareholder Value and Premium to NAV
Management attributed the premium to NAV to consistent performance and Blackstone’s platform, with no plans for a share issuance at current levels.

8. Tariffs and Macroeconomic Impacts
Management addressed the potential impact of recently announced or anticipated tariffs:

• Limited Direct Exposure: Most portfolio companies have limited direct exposure to international supply chains most affected by new tariffs, as BXSL focuses on U.S.-based, service-oriented, and less export-dependent businesses.
• Ongoing Monitoring: The investment team is closely monitoring sectors that could be indirectly affected by increased input costs or supply chain disruptions, such as manufacturing and industrials.
• Risk Mitigation: Management emphasized their proactive approach in assessing tariff-related risks during underwriting and ongoing portfolio reviews, and they remain prepared to take action if any credits show signs of stress.
• Communication with Borrowers: BXSL maintains regular dialogue with portfolio company management teams to understand their contingency plans and ability to pass through higher costs or adjust operations as needed.

Overall, management expressed confidence that the portfolio is well-positioned to withstand current tariff developments, but they remain vigilant for any potential second-order effects.