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Carlyle Secured Lending Inc. (NASDAQ:CGBD) released its second quarter 2025 earnings presentation on August 6, highlighting significant portfolio growth and a strategic shift toward more secure assets. The business development company reported steady dividend performance despite a slight decline in net asset value (NAV).
Quarterly Performance Highlights
Carlyle Secured Lending generated $0.39 per common share in net investment income for Q2 2025, up from $0.35 in the previous quarter but down from $0.51 in the same period last year. The company declared a quarterly dividend of $0.40 per share for the third quarter of 2025, representing an annualized yield of 9.7%.
Total (EPA:TTEF) investment income reached $67.3 million in Q2 2025, a significant increase from $58.3 million in Q2 2024. Net asset value per share stood at $16.43 as of June 30, 2025, down slightly from $16.63 at the end of the previous quarter and $16.80 at year-end 2024.
As shown in the following quarterly highlights summary:
The company’s statutory leverage ratio was 1.10x, essentially unchanged from 1.12x in the same quarter last year. Total liquidity remained strong at $613.1 million, bolstered by an increase in credit facility commitments.
Portfolio Growth and Composition
The total fair value of Carlyle’s investment portfolio grew substantially to $2.3 billion across 148 portfolio companies, up from $1.7 billion in Q2 2024. The weighted average yield on income-producing investments stood at 10.9%.
New investment fundings reached $375.7 million in the second quarter with a weighted average yield of 10.0%, significantly higher than the $84.8 million reported in Q2 2024. Sales and repayments totaled $138.0 million, resulting in net investment activity of $237.7 million, a dramatic shift from the negative $41.6 million in the same period last year.
The company’s portfolio composition shows a strategic shift toward more secure investments, with first lien debt increasing to 85.6% of the portfolio from 70.9% a year earlier. This shift reflects the company’s defensive approach in the current economic environment.
The portfolio’s industry diversification is illustrated in the following breakdown:
Healthcare & Pharmaceuticals represented the largest sector exposure at 30%, followed by Software (ETR:SOWGn) (14%) and Business Services (12%). This diversification strategy helps mitigate risk across various economic sectors.
Non-accrual investments represented 3.0% of the portfolio at cost and 2.1% at fair value, indicating relatively stable credit quality.
Investment Fund Performance
Carlyle’s investment fund strategy continues to be an important component of its overall portfolio. The company maintains a 50% ownership stake in its investment fund, which represents 5.1% of CGBD’s portfolio.
The investment fund’s diversification strategy is shown below:
The fund maintains a balanced approach with its top 10 investments representing 19% of the portfolio, while the next 15 investments account for 39%. Business Services dominates the industry allocation at 39%, followed by Consumer Services at 12%.
Capital Structure and Funding
Carlyle Secured Lending maintains a diversified funding profile with $935 million in credit facility commitments, of which $379 million was outstanding as of June 30, 2025. The company recently upsized its senior secured Credit Facility by $25.0 million, bringing total commitments to $960.0 million.
The company’s financing structure is detailed in the following overview:
This balanced approach to leverage includes 23% of utilized balance sheet leverage at fixed rates and 32% of committed balance sheet leverage still available, providing flexibility for future growth opportunities.
Dividend and Shareholder Returns
Carlyle has maintained a consistent dividend policy, declaring a $0.40 per share quarterly dividend for Q3 2025. The company’s dividend history shows stability with occasional supplemental dividends when excess income is available.
The dividend history and yield information is illustrated below:
With an annualized dividend yield of 9.7%, CGBD offers an attractive income opportunity for investors in the current market environment. This yield is slightly lower than the 12.92% reported after Q1 2025 results, reflecting the recent recovery in share price.
NAV Performance Versus Peers
A notable strength for Carlyle Secured Lending has been its ability to maintain net asset value over time, outperforming its business development company peers. While CGBD’s NAV per share has slightly increased from $16.56 in Q4 2019 to $16.43 currently, its BDC peers have experienced an average decline of 7.4% over the same period.
This relative outperformance is shown in the following comparison:
Market Context and Outlook
Carlyle’s Q2 2025 results come after a challenging first quarter where the company missed earnings forecasts, with EPS of $0.40 versus an expected $0.4353. The stock had dropped 3.72% following that announcement.
The current share price of approximately $13.75 represents a significant discount to the NAV of $16.43, potentially offering value for investors willing to accept the risks associated with business development companies in the current economic environment.
Carlyle continues to focus on its strategy of targeting non-cyclical companies with strong financial sponsors, employing disciplined underwriting for a defensive approach. The company’s emphasis on first lien, secured, and floating rate instruments positions it well for the current interest rate environment while providing some protection against potential economic headwinds.
With total assets growing from $1.9 billion to $2.5 billion over recent quarters, partly due to the merger with CSL3, Carlyle Secured Lending appears positioned for continued growth while maintaining its focus on high-quality credit investments.
Full presentation:
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