Carlyle Secured Lending (NASDAQ:CGBD) reported second-quarter 2026 net investment income of $24 million, or $0.35 per share, fully covering its recently revised base quarterly dividend. The company said it continued to expand its investment portfolio and joint ventures despite what Chief Executive Officer Alex Chi described as a complicated backdrop for new deal activity shaped by macroeconomic and geopolitical uncertainty.
The board declared a third-quarter dividend of $0.35 per share, payable to stockholders of record as of Sept. 30. President and Chief Financial Officer Tom Hennigan said the company continues to target supplemental dividends of at least 50% of earnings above the base dividend.
Originations, Portfolio Growth and Selectivity
At the broader Carlyle Direct Lending platform, the company closed $1.5 billion of new and incremental commitments during the quarter, excluding joint venture activity. Platform originations rose more than 20% from the first quarter, while the commitment rate on second-quarter pipeline opportunities remained below 5%.
CGBD funded $248 million of investments during the period. Repayments declined to $68 million, while the company also completed $123 million in sales to its Middle Market Credit Fund joint venture and made $50 million of equity fundings at Structured Credit Partners. Total investments rose to $2.4 billion at June 30 from $2.3 billion at the end of the first quarter.
Chi said weighted-average spreads on new originations were steady with the first quarter, while weighted-average leverage at entry continued to decline. Carlyle served in a lead role in nearly 90% of platform originations.
The portfolio comprised 177 companies across more than 25 industries at quarter-end. Ninety-five percent of investments were senior secured loans, and the average exposure to any one portfolio company was less than 60 basis points of total investments. Median EBITDA across the portfolio was $101 million.
Chi said the company’s current pipeline is weighted toward “old economy” sectors, including industrials, aerospace and defense, health care and consumer products. In response to analyst questions, he said Carlyle favors less-cyclical industrial business models such as aftermarket, repair, replacement and maintenance businesses, while becoming more selective in areas such as home and residential services.
Joint Ventures Continue to Scale
Carlyle highlighted growth at both of its joint ventures. Investments at the Middle Market Credit Fund, or MMCF, increased to $1.2 billion, while its annualized dividend yield to CGBD increased by more than 200 basis points from the prior quarter to 17.6%.
During the quarter, MMCF completed a $400 million upsizing of its main credit facility, bringing total commitments under that facility to $1.2 billion at a spread of SOFR plus 170 basis points. Hennigan said the joint venture operates without fees at the venture level.
Structured Credit Partners, or SCP, grew to $1.7 billion of investments and generated an annualized dividend yield of 18.7% to CGBD. Hennigan said SCP accelerated the pricing and closing of its first two collateralized loan obligations in April, citing lower loan prices and tight liability pricing amid market volatility.
The company expects SCP to price and close two additional CLOs in 2026, subject to market conditions. Management said it generally plans to issue about four CLOs annually to maintain vintage diversification, with SCP expected over time to manage roughly $6 billion to $7 billion of assets.
Financial Results, NAV and Credit Performance
Total investment income was $62 million in the second quarter, down from the prior quarter primarily because of lower interest income associated with reduced original issue discount accretion from lower repayment activity, as well as lower fee income. Higher dividend income from MMCF and SCP partly offset those declines.
Total expenses declined to $38 million, primarily reflecting lower interest expense from a lower outstanding debt balance. The company’s net asset value was $15.61 per share as of June 30, down from $15.89 per share on March 31.
CGBD recorded aggregate realized and unrealized net losses of about $24 million, or $0.35 per share, during the quarter. Hennigan cited markdowns on a limited number of investments, including SPF debt and equity and US Infra.
For SPF, the company lowered the value of its residual equity position to reflect revised expectations for total lender recovery, including higher-than-expected proceeds to management and doctors. Hennigan said the company nevertheless expects a successful exit later this year and a 1.4 times multiple on invested capital. For US Infra, a provider of infrastructure inspection, maintenance and rehabilitation services, CGBD reduced its valuation based on expectations for lower fiscal 2026 earnings and said its workout team is working with the sponsor and management to adjust the capital structure and provide liquidity.
Non-accrual investments represented 0.6% of the portfolio at fair value and 1.2% at amortized cost at June 30. The restructuring of DCA closed during the quarter, returning that investment to accrual status, while US Infra and Project Castle, also known as Material Handling Systems, were added to non-accrual status.
Capital Position and Market Outlook
The company repurchased $12.5 million of its shares during the second quarter at an average 29% discount to net asset value. Management said the repurchases added $0.07 per share to NAV. Cumulative repurchases under the program have exceeded $200 million.
CGBD ended the quarter with both statutory and net financial leverage of 1.2 times. Its debt stack is entirely floating rate, matching its primarily floating-rate assets, according to Hennigan. The company also estimated it had $0.73 per share of spillover income available to support its quarterly dividend.
Chi said broader merger-and-acquisition activity remains muted, though the top of the deal funnel has expanded. He said greater clarity around inflation, interest rates, oil prices and geopolitical developments could support a more meaningful recovery in activity later in 2026 or early 2027. In the meantime, management said it intends to maintain its focus on selective underwriting, meaningful equity cushions, conservative leverage profiles and attractive spreads.
About Carlyle Secured Lending (NASDAQ:CGBD)
Carlyle Secured Lending, Inc (NASDAQ: CGBD) is a closed-end, non-diversified business development company that provides customized debt financing solutions to middle-market companies. Chartered under the Investment Company Act of 1940, the company invests primarily in floating-rate senior secured loans, including first-lien, unitranche and one-stop structures. Its objective is to generate current income and capital appreciation through disciplined credit selection and active portfolio management.
The firm focuses on U.S.
