Kayne Anderson BDC, Inc. Q1 FY2025 earnings call

• Financial results: Net income per share was $0.31, net investment income $0.40 per share; declined due to expiration of incentive management fee waiver. Total investment income $55.2 million vs $56.3 million prior quarter. Expenses $26.5 million vs $22.3 million prior quarter.
• Investment activity: First quarter had $340 million total commitments, $264 million funded (113% increase from Q1 2024); net funded deployment $181 million. Portfolio fair market value $2.2 billion, unfunded commitments $236 million.
• Portfolio composition: 116 portfolio companies, weighted average leverage 4.2 times, interest coverage 3.2 times, LTV ~43%; 90% of portfolio in first lien securities, 99% private middle market investments backed by private equity sponsors; 100% debt investments floating rate.
• Market conditions: Private credit strategy consistent; Q1 middle market loans spread ~550 basis points; reviewing opportunities with spread over SOFR 500-600 basis points; plan to wind down broadly syndicated loan portfolio.

During the first quarter of 2025, Kayne Anderson BDC, Inc. generated net investment income of $0.40 per share and net income of $0.31 per share. In private middle market investment activity, they made $340 million of total commitments across 16 businesses, with $264 million funded (a 113% increase from Q1 2024). They maintained an average spread over SOFR of 5.49% and a weighted average net senior leverage ratio of 4 times. As of March 31st, the portfolio had 116 individual companies with $2.2 billion of fair market funded value investments, and an estimated spillover of net investment income was $0.22 per share. The portfolio had a weighted average yield of approximately 10.4%, with 1.6% of total debt investments at fair value non-accrual.

• Anticipate achieving debt to equity target range of 1 to 1.25 times in next 2 quarters.
• Renewed $100 million share repurchase plan for an additional year.
• Q2 expected to be net positive in terms of portfolio growth; still seeing good opportunities in 500-600 over SOFR range.

• Market volatility and political uncertainties.
• Potential spread tightening in larger markets.
• 1.6% of total debt investments at fair value non-accrual (represented by 4 positions).

Q: Hoping for more clarity on the timeline to achieve target leverage, pipeline today, and comparison of spreads on deals today vs three/four months ago.

A: Q1 was strong origination quarter. New investment spreads around 549 basis points over SOFR. Markets pulled back in Q2 but still expect Q2 net positive portfolio growth. Still seeing good opportunities in 500-600 over SOFR range; reasonably optimistic about achieving target leverage over next two quarters.