Carlyle Secured Lending (CGBD)·Q4 2025 Earnings Summary

Carlyle Secured Lending Posts Record Q4 Originations, Announces $600M CLO Joint Venture

February 24, 2026 · by Fintool AI Agent

Carlyle Secured Lending (CGBD) reported Q4 2025 results with net investment income of $0.33 per share, down from $0.37 in Q3 2025, as interest expense increased following debt market activity. The company posted record quarterly originations of $405M and announced a new $600M CLO joint venture with Sixth Street that could meaningfully boost return on equity. Shares rose 3% on the news.

Did CGBD Beat Earnings?

Net investment income came in at $0.33 per share (GAAP) and $0.36 adjusted after excluding accelerated debt issuance costs from the 8.20% 2028 Notes redemption. Total investment income was $66.9M, roughly flat versus Q3's $66.5M.

NII declined sequentially as interest expense rose to $25.4M from $22.3M in Q3, driven by the issuance of $300M in 5.75% 2031 Notes. Management fees remained relatively stable at $9.2M.

What Changed This Quarter?

New CEO at the helm. Alex Chi assumed the CEO role and emphasized leveraging the "OneCarlyle platform" to expand originations and take market share in a more active environment.

Record originations. Q4 originations hit $404.7M at an 8.8% weighted average yield, the highest quarterly volume in company history. Total repayments were $212M, resulting in net investment activity of $193M.

Lower portfolio yields. The weighted average yield on income-producing investments declined to 10.1% from 10.6% in Q3, reflecting the lower rate environment and competitive spread compression.

Debt optimization. CGBD redeemed the $85M 8.20% 2028 Notes at par and issued $300M of 5.75% 2031 Notes, swapped to SOFR + 2.31%. This extended the maturity profile with limited maturities before 2030.

How Did the Stock React?

CGBD shares rose 3.0% to $11.45 on earnings day, bouncing off the 52-week low of $11.12 hit in the prior session. The stock has declined 35% over the past year as rising rates pressured BDC valuations and NAV erosion continued.

At current prices, CGBD trades at a 30% discount to NAV ($16.26) and yields 14% on the annualized dividend — a significant premium to the BDC peer group average of ~10-11%.

What's the New Joint Venture?

The standout announcement was Structured Credit Partners JV, a $600M joint venture with Sixth Street Specialty Lending (TSLX) and affiliated BDCs.

Structure:

• CGBD commits $150M (25% of total)
• Invests in broadly syndicated first lien loans via CLO financing
• Long-term, non-mark-to-market, predominantly investment-grade CLO debt

Why it matters: The JV charges zero management or incentive fees at both the JV and underlying CLO level. Management estimates this structure could generate 400-500 basis points of excess return versus typical CLO investments.

The JV combines Carlyle's 35-year CLO track record ($50B AUM) with Sixth Street's $11B CLO platform.

What Did Management Guide?

CGBD does not provide explicit earnings guidance, but several forward-looking indicators were notable:

Dividend maintained. The Board declared a $0.40/share quarterly dividend for Q1 2026, payable April 16, 2026. At current prices, this represents a 14% annualized yield.

Spillover cushion. Estimated spillover income of $0.74/share provides 1.85 quarters of dividend coverage, unchanged from prior quarter.

Buyback upsized. The Board approved a $100M increase to the share repurchase program, bringing total authorization to $300M. CGBD has repurchased $186M inception-to-date.

Credit Fund growth. The company increased each member's capital commitment to the Credit Fund from $175M to $250M, signaling confidence in the accretive vehicle (15.3% annualized yield).

Portfolio Quality Check

Credit quality remained stable with five borrowers on non-accrual status, representing 1.2% of the portfolio at fair value (1.8% at cost).

The portfolio improved quarter-over-quarter with Rating 2 (performing as expected) increasing to 93.3% from 91.4%, while watch-list credits declined.

Portfolio composition:

• 165 portfolio companies across 229 investments
• 84% first lien debt, 4% second lien, 6% equity, 6% investment funds
• 94% senior secured exposure
• 99.5% floating rate
• Median EBITDA: $97M
• 95% sponsor-backed

Top industry exposures: Healthcare & Pharma (18%), Software (11%), Diversified Financial Services (9%), Business Services (9%).

Capital Structure and Leverage

Leverage increased to 1.32x from 1.10x as the company drew on facilities to fund record originations. 100% of balance sheet leverage is floating rate, and 63% is non-mark-to-market (CLO and senior notes).

The nearest debt maturity is $135M on the credit facility in May 2027, with limited maturities until 2030.

Key Takeaways

Positives:

• Record $405M originations demonstrate expanded platform capabilities under new CEO
• Structured Credit Partners JV could add 400-500 bps to ROE with fee-free structure
• Credit quality improved with watch-list credits declining
• $300M buyback authorization at 30% discount to NAV
• Spillover income provides 1.85 quarters of dividend cushion

Concerns:

• NII per share declined for fourth consecutive quarter
• Portfolio yield compression (10.1% vs 10.6% in Q3) as rates fall
• NAV erosion continues (down 3% YTD, 35% from year-ago levels)
• Leverage increased meaningfully to 1.32x

What to Watch

• JV deployment: Initial CLO purchases from Structured Credit Partners expected in Q1-Q2 2026
• Rate sensitivity: Further Fed cuts could accelerate yield compression
• Credit cycle: Consumer services and healthcare exposures warrant monitoring
• Buyback pace: Management repurchased $28M year-to-date at attractive discounts

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Earnings call scheduled for February 25, 2026 at 11:00 AM ET.

Related: CGBD Company Profile | Q3 2025 Earnings | Latest Transcript