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BS

Blackstone Secured Lending Fund (BXSL)·Q4 2024 Earnings Summary

Executive Summary

  • BXSL delivered record total investment income ($353M) and solid NII ($183M; $0.84/share), while NAV/share rose for the ninth straight quarter to $27.39; asset yields fell to 10.4% from 11.2% QoQ as spreads tightened, partially offset by lower borrowing costs (5.17% vs. 5.45%) and strong deployment .
  • Liquidity expanded sharply to $2.4B as management prepositioned for an “active 2025” deployment backdrop; leverage moved to 1.17x (midpoint of 1.0–1.25x target range) .
  • Dividend of $0.77/share was maintained and covered at 109%; first‑lien exposure remained 98.0% with non‑accruals minimal at 0.3% of cost (0.2% of fair value), supporting durable earnings power and NAV stability .
  • Liability optimization and scale are core catalysts: tightest‑spread 2024 BDC bond issues (5.35% due 2028, +$300M tap) and an inaugural $458M CLO at SOFR+154 reinforce low cost of capital and funding durability that can support origination leadership and shareholder returns .

What Went Well and What Went Wrong

What Went Well

  • Deployment and originations: highest fundings since 2021 ($1.377B) and $1.241B in commitments; management emphasized incumbency and platform scale to create deal flow amid slow M&A, with over half of Q4 deals proactively originated within Blackstone’s ecosystem .
  • Funding and liabilities: $700M of 5.35% notes due 2028 (tightest BDC bond spread in 2024) and a $458M CLO at SOFR+154 lowered borrowing costs and extended maturities, bolstering liquidity to $2.4B .
  • Credit quality: non‑accruals remained minimal (0.3% cost; 0.2% fair value), with 98% first‑lien exposure and average LTV ~46%, sustaining NAV stability and defensive positioning; management highlighted interest coverage of 1.7x and only 9% of portfolio below 1x vs. 15% market .

What Went Wrong

  • Asset yields compressed: weighted average yield on performing debt fell to 10.4% from 11.2% QoQ (and 11.6% in Q2), reflecting broad market spread tightening; management expects near‑term stability, potential widening mid‑year as M&A rebounds .
  • NII per share ticked down to $0.84 (from $0.91 in Q3 and $0.89 in Q2) as asset yields tightened and expenses rose with scale, though lower borrowing costs and stronger fundings offset some pressure .
  • Isolated marks: Medallia marked mid‑90s due to slower growth into capital structure despite meaningful EBITDA growth; management emphasized control, documentation strength, and ecosystem cross‑sell to mitigate risk .

Financial Results

MetricQ2 2024Q3 2024Q4 2024
Total Investment Income ($USD Millions)$327 $343 $353
Net Investment Income ($USD Millions)$173 $186 $183
Net Investment Income per Share ($USD)$0.89 $0.91 $0.84
Net Income per Share ($USD)$1.01 $0.75 $0.75
Regular Dividend per Share ($USD)$0.77 $0.77 $0.77
NAV per Share ($USD)$27.19 $27.27 $27.39
Weighted Avg Yield on Performing Debt (%)11.6% 11.2% 10.4%
Ending Debt-to-Equity (x)1.13x 1.12x 1.17x
Liquidity ($USD Billions)$1.2B $1.1B $2.4B
First Lien (% of Investments)98.6% 98.7% 98.0%

Segment/Composition (Q4 only):

Portfolio Composition (Q4 2024)Value
First Lien Debt98.0%
Second Lien Debt0.9%
Unsecured Debt0.3%
Equity0.8%

Key KPIs

KPIQ2 2024Q3 2024Q4 2024
Non‑Accruals (% of investments at cost)0.3% 0.2% 0.3%
Average Loan‑to‑Value (%)47.4% 46.5% 46.0%
Number of Portfolio Companies231 252 276
New Investment Commitments ($USD Billions)$1.29B $1.11B $1.24B
New Investment Fundings ($USD Billions)$0.89B $0.96B $1.38B
Proceeds from Sales/Repayments ($USD Billions)$0.09B $0.30B $0.21B
Weighted Avg Interest Rate on Drawn Debt (%)5.26% 5.45% 5.17%
Dividend Coverage (%)116% 118% 109%

Guidance Changes

MetricPeriodPrevious GuidanceCurrent GuidanceChange
Regular Dividend per ShareQ1 2025$0.77/share (Q4 2024 declared/paid cadence) $0.77/share declared; record 3/31/2025; payable ~4/25/2025 Maintained

Management did not provide quantitative guidance on revenue/EPS, margins, OpEx, OI&E, tax rate, or segment‑specific metrics; qualitative outlook favored “active 2025” deployment .

Earnings Call Themes & Trends

TopicQ2 2024 (Prev‑2)Q3 2024 (Prev‑1)Q4 2024 (Current)Trend
Deployment/OriginationsMost active quarter since IPO; commitments $1.287B; fundings $0.891B Another active quarter; commitments $1.106B; fundings $0.956B Highest fundings since 2021; commitments $1.241B; fundings $1.377B; incumbency >50% of deals Strengthening
Spreads/YieldsAsset yields 11.6%; liabilities optimized; revolver spread reduced Asset yields 11.2%; cost of debt 5.45% Asset yields 10.4%; cost of debt 5.17%; spreads tightened broadly; expect near‑term stability, possible widening with M&A pickup Tightening then stabilizing
Credit quality98.6% first lien; non‑accruals 0.3% 98.7% first lien; non‑accruals 0.2% 98.0% first lien; non‑accruals 0.3%; interest coverage 1.7x; only 9% below 1x vs 15% market Stable/Defensive
Liability management & ratingsABL/revolver upsized; cost down; BBB/Stable (Fitch) Moody’s upgrade to Baa2; liquidity $1.1B Tightest‑spread bond in 2024; $458M CLO at SOFR+154; liquidity $2.4B Improving
Macro/TariffsN/A in Q2 releaseN/A in Q3 releaseMid‑single digit tariff exposure; vigilant on consumer goods; M&A outlook positive Watchful
Competition/Public marketsN/A in Q2 releaseN/A in Q3 releaseBSLs more active; repayments may pick up; BXSL leverages scale/brand to differentiate Rising competition
Portfolio size/mix231 companies; LTV ~47% 252 companies; LTV 46.5% 276 companies; LTV 46.0%; 93% of new private debt first‑lien, average LTV <40% Scaling up defensively

Management Commentary

  • “BXSL reported another strong quarter, highlighted by its record total investment income, increased net asset value…continued solid credit performance and active deployment.”
  • “Our net investment income…represented a 12.3% annualized return on equity…made up overwhelmingly from contractual income rather than one‑time fees or dividend income.”
  • “We ended the quarter with $13.1 billion of investments…adding 28 new borrowers…liquidity position to $2.4 billion…weighted average yield…10.4%.”
  • “BXCI led a $2 billion debt financing for Dropbox…closed…with an implied loan‑to‑value ratio of under 30%.”
  • “Total investment income…a record for the fund…up $49 million…NAV per share increased to $27.39…weighted average interest rate on our borrowings of 5.17%, down from 5.4% last quarter.”

Q&A Highlights

  • Originations despite slow M&A: Over half of Q4 deals were proactive/incumbent origination, leveraging platform scale to “create deal flow when the market doesn’t provide it.”
  • Middle market tilt and spreads: Median EBITDA of new investments was $138M; weighted average spread on deals funded SOFR+510 with point OID; 3‑yr implied spread ~SOFR+550; expect near‑term spread stability .
  • Tariff exposure: Management estimates mid‑single digit exposure; more cautious on consumer goods; monitoring Mexico/China/Canada channels .
  • Specific mark (Medallia): Mark reflects slower growth into capital structure; EBITDA has “tripled since we made the investment”; documentation/control protections emphasized .
  • Competition and repayments: BSLs more active; expect repayments to rise with M&A rebound, providing upside via call protection and accelerated OID .

Guidance Changes

See table above; dividend of $0.77/share for Q1 2025 maintained; no quantitative guidance ranges provided beyond dividend cadence .

Estimates Context

  • S&P Global consensus estimates for quarterly EPS and revenue were not retrievable in this session due to provider limit constraints; thus, we cannot assess beat/miss vs. consensus in Q4 2024 at this time [Values retrieved from S&P Global unavailable due to limit].

Key Takeaways for Investors

  • Earnings power remained robust and durable: record total investment income, strong NII, and ninth consecutive NAV/share increase underscore disciplined underwriting and portfolio defensiveness .
  • Yield compression is real but manageable: asset yields tightened to 10.4%; liability cost fell to 5.17% with tight spreads on bonds/CLOs, preserving net interest while deployment ramps .
  • Defensive credit posture persists: 98% first‑lien, ~46% LTV, minimal non‑accruals, and superior interest coverage vs. market mitigate downside risk and support dividend coverage (109%) .
  • Scale and origination edge: liquidity at $2.4B and platform incumbency enable BXSL to originate in slow M&A environments and position for an “active 2025” deployment pipeline .
  • Funding tailwinds and ratings: Baa2 (Moody’s) and BBB/Stable (Fitch) complement tight funding spreads; no maturities until 2026 provide runway to compound NAV and earnings .
  • Watch list: spreads vs. risk (focus on LTV and recurring revenue), tariff sensitivity in select sectors, and asset‑level marks (e.g., Medallia) as performance normalizes in a tighter spread regime .
  • Trading implications: sustained dividend coverage and improving liability costs are supportive, while near‑term valuation sensitivity may track spread dynamics and evidence of M&A‑driven repayments/fee accruals in 1H–2H 2025 .