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BS

Blackstone Secured Lending Fund (BXSL)·Q3 2025 Earnings Summary

Executive Summary

  • BXSL delivered record total investment income ($359.0M) and net investment income ($189.0M), with NII per share of $0.82 covering the $0.77 dividend at 106% and an annualized NII ROE of 12.0% .
  • Q3 2025 beat Wall Street consensus: EPS $0.82 vs $0.79*, and revenue $359.0M vs $353.4M*; the beat was driven by higher recurring cash interest (91% of TII), net deployment acceleration, and repayment-related fee/OID accruals .
  • Portfolio quality remained strong: non-accruals 0.1% at cost, first-lien exposure 97.5%, average loan-to-value 49.7%, and weighted average portfolio yield 10.0% (down 20 bps QoQ) .
  • Balance sheet catalysts: $2.5B liquidity, 1.22x ending leverage (target 1.0–1.25x, positioned near the high end amid heightened deal activity), and a $500M bond at 155 bps over UST (5.125% coupon), supporting one of the lowest cost-of-debt profiles among peers .

Values marked with * retrieved from S&P Global.

What Went Well and What Went Wrong

What Went Well

  • Record NII and TII on a dollar basis; NII/share $0.82 covered the dividend at 106%, with management emphasizing the “quality” of income (91% cash interest, minimal PIC/fees/dividends) .
  • Deployment and activity re-accelerated: $1.289B commitments, $1.007B fundings, and repayments up ~150% QoQ to $433M, improving near-term earnings via OID acceleration and fees .
  • Credit metrics: 0.1% non-accruals at cost, ~98% first-lien exposure, and interest coverage at ~2.0x on average; management reiterated portfolio resilience vs traded BDC peers .

What Went Wrong

  • NAV/share declined $0.18 QoQ to $27.15 due to $0.09/share realized and $0.16/share unrealized losses concentrated in a few larger positions (e.g., ongoing attention to names like Medallia) .
  • Weighted average yield on performing debt fell 20 bps QoQ to 10.0%, reflecting lower base rates; new deal yields averaged 9.3% vs 9.8% in Q2 .
  • Loan-to-value rose to 49.7% (from 46.9% in Q2), driven by marginal enterprise value adjustments and add-on financings; management flagged this as an equity-driven dynamic rather than increased credit risk .

Financial Results

Quarterly Trend (oldest → newest)

MetricQ1 2025Q2 2025Q3 2025
Total Investment Income ($USD Millions)$358.0 $345.0 $359.0
Net Investment Income ($USD Millions)$189.0 $176.0 $189.0
NII per Share ($)$0.83 $0.77 $0.82
Net Income per Share ($)$0.66 $0.68 $0.57
Dividend per Share ($)$0.77 $0.77 $0.77
NAV per Share ($)$27.39 $27.33 $27.15
Weighted Avg Yield (Performing Debt, %)10.2% 10.2% 10.0%
Investments at Fair Value ($USD Billions)$12.834 $13.253 $13.810
Total Debt Outstanding, Principal ($USD Billions)$7.414 $7.108 $7.669
Ending Debt-to-Equity (x)1.19x 1.13x 1.22x
Portfolio Companies (#)284 295 311
First-Lien Exposure (%)98.2% 98.2% 97.5%
Non-Accruals (% of Cost)—0.3% 0.1%
Average Loan-to-Value (%)47.4% 46.9% 49.7%

Q3 2025 vs Prior Year and vs Estimates

MetricQ3 2024Q3 2025 ActualConsensus EstimateSurprise
Total Investment Income ($USD Millions)$343.0 $359.0 $353.4*+$5.6M (beat)
NII per Share ($)$0.91 $0.82 ——
EPS (Net Income per Share, $)$0.75 $0.57 ——
Dividend per Share ($)$0.77 $0.77 ——
EPS (Primary, $)—$0.82 $0.79*+$0.03 (beat)

Values marked with * retrieved from S&P Global.

KPIs and Activity (Q3 2025)

KPIQ3 2025
Commitments / Fundings / Repayments ($USD Millions)$1,289 / $1,007 / $433
Weighted Avg Yield: New Investments (%)9.3%
Weighted Avg Yield: Repayments (%)9.9%
Weighted Avg Yield: Performing Debt (%)10.0%
First-Lien Exposure (%)97.5%
Non-Accruals (% of Cost)0.1%
Average Loan-to-Value (%)49.7%
Liquidity ($USD Billions)$2.5
Total All-In Cost of Debt (%)5.04%
Weighted Avg Maturity (Years)3.3

Guidance Changes

MetricPeriodPrevious GuidanceCurrent GuidanceChange
Base Dividend per ShareQ4 2025$0.77 (Q3 declaration for Q3 dividend) $0.77 (Q4 declaration) Maintained
Leverage Target RangeOngoing1.0–1.25x (historical target) Operate near high end amid heightened activity Maintained; positioning higher
Cost of Debt (All-In)Current run-rate5.10% (Q2) 5.04% (Q3) Lowered
Revolver PricingCurrentCSA + SOFR + 1.525–1.775% (pre-amend) CSA removed; tightest priced revolver among peers Improved

No formal quantitative guidance provided on revenue/margins/OpEx/OI&E/tax rate; management emphasized maintaining competitive dividend coverage and disciplined deployment .

Earnings Call Themes & Trends

TopicQ1 2025 (Previous Mentions)Q2 2025 (Previous Mentions)Q3 2025 (Current)Trend
Dividend Coverage & Quality of IncomeNII/share $0.83; coverage 108%; 98.2% first lien; LTV 47.4% NII/share $0.77; coverage 100% NII/share $0.82; coverage 106%; 91% cash interest Stable-to-Improving coverage
Portfolio Yield & SpreadsPortfolio yield 10.2% Portfolio yield 10.2%; new 9.8% Portfolio yield 10.0%; new 9.3%; spreads mid-500s context Slight compression vs lower base rates
Credit Quality & Non-AccrualsMinimal non-accruals cited Non-accruals 0.3% cost (0.1% fair value) Non-accruals 0.1% cost; no new additions Improving
M&A/Repayments & TurnoverInvestments at FV $12.8B; active platform Lower gross activity; repayments $185M Activity accelerated; repayments $433M; upside to earnings via fees/OID Accelerating
Leverage & LiquidityEnding D/E 1.19x; liquidity $3.0B Ending D/E 1.13x; liquidity $3.0B Ending D/E 1.22x; liquidity $2.5B; operate near high end of range Higher within target
AI Exposure & Strategy——“Picks and shovels” approach (data center infrastructure, equipment providers); cites Layer Zero, Sabre Power Emerging focus

Management Commentary

  • “BXSL reported another strong quarter with our net investment income, or NII, of $0.82 per share, representing a 12% annualized return on equity… Our distribution of $0.77 per share was 106% covered” — Brad Marshall .
  • “We ended the quarter with $13.8 billion of investments at fair value… 97.5% first-lien senior secured… average loan-to-value of 49.7%” — Jonathan Bock .
  • “BXSL funded over $1 billion in the quarter… repayments up nearly 150% QoQ… total all-in cost of debt of 5.04%” — Teddy Desloge .
  • “You will continue to see us play in the picks and shovels around AI and drive more secure-type investments in that space” — Jonathan Bock .

Q&A Highlights

  • Spreads and repricing risk: Management stated spreads on new deals are stable in the mid-500s and do not expect widespread repricing to tight syndicated levels; specific structures (e.g., first-out tranches) are situational .
  • Dividend outlook: With ~99% floating-rate assets and high-quality recurring interest income, base dividend remains competitive; any adjustment would be thoughtful as rates move lower and earnings normalize .
  • LTV movement: Increase to ~50% reflects marginal EV adjustments and add-on financings; subordination remains significant, limiting credit concern .
  • AI infrastructure opportunities: Focus on infrastructure (e.g., Layer Zero; Sabre Power) rather than volatile applications; leverage Blackstone’s technology resources to underwrite risk .
  • Spillover income: Estimated spillover supporting dividend cited at $1.89 .
  • Europe vs U.S.: Europe offers ~25–50 bps wider terms vs U.S. due to less developed markets and competition .

Estimates Context

  • Q3 2025 EPS beat: $0.82 actual vs $0.79* consensus; revenue beat: $359.0M actual vs $353.4M* consensus. Beats driven by higher recurring cash interest, increased turnover fees/OID accruals, and active deployments despite lower base rates .
  • Estimate implications: Modest upward revisions likely to near-term TII/NII run-rate given activity backdrop and repayment acceleration; watch for yield normalization as base rates drift lower .

Values marked with * retrieved from S&P Global.

Key Takeaways for Investors

  • Quality-driven earnings and dividend coverage remain robust (106% in Q3) with record NII/TII; portfolio largely first-lien senior secured with minimal non-accruals, supporting defensive yield .
  • Activity is inflecting positively (commitments/fundings up, repayments accelerating), which can provide near-term earnings tailwinds via fees/OID even as base rates ease .
  • Cost of capital continues to improve (5.04% all-in; tightest-priced revolver; $500M bond at 155 bps over UST), underpinning earnings resilience vs peers .
  • Yield compression from lower base rates is manageable given spread stability in mid-500s and focus on larger, sponsor-backed credits with ~2.0x interest coverage .
  • LTV uptick to ~49.7% appears equity-driven (EV adjustments/add-ons) rather than deteriorating credit; subordination remains significant beneath BXSL’s senior position .
  • Strategic AI exposure favors infrastructure/picks-and-shovels, avoiding high-disruption verticals; expect disciplined growth in those segments .
  • Near-term trading: Positive reaction potential to consensus beats and resilient credit quality; medium-term, monitor base rate trajectory vs dividend sustainability and ongoing activity/margins .
Note: Values marked with * are retrieved from S&P Global.