Morningstar DBRS confirmed Carlyle Secured Lending, Inc.'s Long-Term Issuer Rating and Long-Term Senior Debt rating at BBB (high), with stable trends. This confirmation reflects CGBD's consistent generation of solid operating results and its diversified funding profile. The rating agency acknowledged the efficiencies expected from the recently completed Carlyle Secured Lending III (CSL III) merger and the company's strong franchise supported by The Carlyle Group's global credit platform.
The report noted that the net increase in net assets from operations for Q1 2025 was $14.1 million, a decrease from $29.3 million in Q1 2024. This lower earnings figure was primarily attributed to a 24% reduction in net investment income to $21.6 million, driven by lower base rates and narrower spreads on newly originated loans. Additionally, the company experienced $7.6 million of net realized and unrealized loss/depreciation during the quarter.
Morningstar DBRS highlighted that non-accruals as a percentage of the total portfolio at cost were 2.2% as of March 31, 2025, an increase from 1.0% at year-end 2024, mainly due to the net addition of one portfolio company to non-accrual status. Despite these challenges, CGBD's regulatory leverage stood at 1.04x as of March 31, 2025, well within limits, and the company holds $0.85 per share in spillover income, providing a cushion for dividend coverage.
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