Blackstone Secured Lending Fund outlook revised to positive by S&P

Investing.com -- S&P Global Ratings has revised its outlook on Blackstone (NYSE:BX) Secured Lending Fund (BXSL) to positive from stable, citing the fund’s steady investment performance and ample liquidity. The ’BBB-’ long-term issuer credit and senior unsecured debt ratings were also reaffirmed.

BXSL, which has a relatively short operating history, has maintained steady operating results, a diversified funding profile, financial flexibility, and ample liquidity to meet its operational needs. As of the end of 2024, BXSL’s liquidity of $2.4 billion covered its unfunded commitments of $1.7 billion.

The positive outlook indicates that S&P Global Ratings could raise the ratings over the next 12-24 months if BXSL maintains ample liquidity, leverage below 1.25x, steady investment portfolio performance, consistent funding, and financial flexibility.

The outlook revision also reflects BXSL’s affiliation with Blackstone Credit, which gives it access to a deep and experienced investment team and allows it to compete for large loans in the upper-middle market.

At the end of 2024, BXSL’s investment portfolio at cost had grown to $13.2 billion across 276 portfolio companies, up from $9.9 billion across 196 portfolio companies at the end of 2023. The portfolio at cost was 98% first-lien debt, 0.6% equity, and the remainder second-lien debt and unsecured debt.

The portfolio spans a wide array of industries, with the largest exposures by fair value being software (20%) and health care (15%).

BXSL’s leverage, as measured by debt to adjusted total equity (ATE), remains within S&P Global Ratings’ expectations and well below the downside threshold of 1.5x. At the end of 2024, leverage was 1.14x, up from 0.98x at the end of 2023.

At the end of 2024, BXSL had five loans on nonaccrual across four portfolio companies totaling $37 million at cost, which is higher than 0.01% at year-end 2023 but still below the publicly traded business development company (BDC) peer average of about 2.6%.

The fund also continues to report strong earnings metrics relative to other BDCs, including a realized return on average investments of 6.2%, non-deal-dependent coverage of interest expense of 3.0x, and non-deal-dependent coverage of interest and dividends of 1.1x.

In February 2025, BXSL raised $500 million of unsecured debt, demonstrating its ready access to debt and equity markets. As a result of this issuance, BXSL had $7.6 billion of debt outstanding, of which around 58% was unsecured.

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