Blackstone Secured Lending Fund Q1 2025 Earnings Report

Blackstone Secured Lending Fund EPS Results

• Actual EPS: $0.83
• Consensus EPS: $0.82
• Beat/Miss: Beat by +$0.01
• One Year Ago EPS: N/A

Blackstone Secured Lending Fund Revenue Results

• Actual Revenue: $357.76 million
• Expected Revenue: $358.40 million
• Beat/Miss: Missed by -$633.00 thousand
• YoY Revenue Growth: N/A

Blackstone Secured Lending Fund Announcement Details

• Quarter: Q1 2025
• Date: 5/7/2025
• Time: Before Market Opens
• Conference Call Date: Wednesday, May 7, 2025
• Conference Call Time: 9:30AM ET

Blackstone Secured Lending Fund (NYSE:BXSL) (NYSE: BXSL) is a closed-end management investment company sponsored by Blackstone Credit, the credit-oriented business of Blackstone Inc. Launched in May 2020, BXSL seeks to deliver attractive risk-adjusted returns primarily through current income and, to a lesser extent, capital appreciation. The fund raises capital from institutional and retail investors and deploys it into a diversified portfolio of senior secured loans and other credit instruments.

The fund’s principal investment focus is on first-lien senior secured loans and unitranche debt extended to middle-market companies across North America. BXSL’s portfolio may also include second-lien loans, mezzanine debt and collateralized loan obligations (CLO) equity tranches. The strategy emphasizes protection of capital through rigorous underwriting, structural enhancements such as covenants and collateral pledges, and active portfolio management to monitor credit quality and performance.

Blackstone Secured Lending Fund leverages the deep credit research capabilities and deal-sourcing network of Blackstone Credit, which oversees one of the largest private credit platforms globally. The fund’s management team draws on decades of experience underwriting and structuring private credit transactions, seeking to capitalize on market inefficiencies and supply/demand imbalances in the leveraged finance markets. BXSL’s asset allocation is diversified across industries, including healthcare, technology, business services, manufacturing and consumer sectors.

Since its inception, BXSL has aimed to provide investors with access to the private credit market, which typically offers higher yields than public fixed-income instruments. The fund maintains a focus on managing downside risk through strict credit selection and active portfolio oversight. Although BXSL primarily serves U.S. borrowers, its underlying credit platform is supported by Blackstone’s global footprint, which enables cross-border deal sourcing and market intelligence. Investors considering BXSL should evaluate the fund’s objectives, strategy, risks and expenses before investing.

Blackstone Secured Lending Fund Q1 2025 Earnings Call Transcript

Key Takeaways

• Strong Q1 results with net investment income of $0.83 per share (12.1% ROE), 11.2% annualized distribution yield fully covered by NII, and credit quality with just 0.3% non-accruals versus 2.7% peer average.
• Robust capital position with portfolio assets of $12.8 billion (20% growth YoY), leverage at 1.19× near target, and $3.4 billion of liquidity for opportunistic deployment.
• Cost of capital optimized through $500 million of new debt at 5.3% (147 bp spread), leading to a 5.01% weighted average borrowing cost versus 10.2% weighted average yield on debt investments.
• Defensive portfolio composition of 98% first-lien senior secured loans to sponsor-backed companies (47% average LTV) in resilient sectors like software, professional services, and healthcare, with proactive tariff risk management via Blackstone’s value creation program.
• Maintained NAV at $27.39 and a quarterly dividend of $0.77, reflecting disciplined capital allocation amid ongoing macro uncertainty around tariffs.

Presentation

[Operator]

Thank you for standing by. You are on hold for the Blackstone Secured Lending First Quarter twenty twenty five Earnings Call. At this time, we are gathering additional participants and should be underway shortly. We appreciate your patience and ask that you continue to hold. Good day, and welcome to the Blackstone Secured Lending First Quarter twenty twenty five Earnings Call.

[Operator]

Today's call is being recorded. At this time, all participants are in a listen only mode. At this time, I'd like to turn the conference over to Justin Farshidi, Principal for Blackstone Credit and Insurance. Please go ahead.

[Justin Farshidi, Principal at Blackstone Secured Lending Fund]

Thank you. Good morning, and welcome to Blackstone Secured Lending Fund's first quarter conference call. Joining me today are Brad Marshall, Co Chief Executive Officer Jonathan Bach, Co Chief Executive Officer Carlos Whitaker, President Teddy Deloge, Chief Financial Officer and other members of the management team. Earlier today, we issued a press release with a presentation of our results and filed our 10 Q, both of which are available on the shareholder resources section of our website, www.bxsl.com. We will be referring to that presentation throughout today's call.

[Justin Farshidi, Principal at Blackstone Secured Lending Fund]

I'd like to remind you that this call may include forward looking statements, which are uncertain and outside of the firm's control and may differ materially from actual results. We do not undertake any duty to update these statements. For some of the risks that could affect results, please see the risk factor section of our Form 10 Q filed earlier today. This audio cast is copyright material of Blackstone and may not be duplicated without consent. With that, I'll turn the call over to Brad Marshall.

[Brad Marshall, Trustee, Chairman & Co-CEO at Blackstone Secured Lending Fund]

Great. Thank you, Justin, and good morning, everyone. Thanks for joining our call. Before I dive into some details with John, Carlos and Teddy, I do want to hit on some high level views of current environment and thoughts around our first quarter. Since the start of the year, uncertainty around tariffs and their potential impact on economic growth and inflation has certainly impacted investor sentiment. While we believe it's too early to assess the full implications of tariffs, the complex nature of the situation means that patience and discipline are key. Tenants we have had since BXSL's inception. On the broader economy, it's important to remember we entered this period in a fundamentally strong position. And we believe those fundamentals remain intact.

[Brad Marshall, Trustee, Chairman & Co-CEO at Blackstone Secured Lending Fund]

Blackstone has lived through multiple cycles in its four decade history. And we've used the firm's significant scale and data insights to benefit both our clients and portfolio companies. This includes investing in sectors that we think are more resilient in periods of volatility, and it also includes using resources like our value creation program to add value. For example, we have identified a relatively small group of companies in our portfolio that may be impacted by tariffs. And our team is actively helping these companies, whether it be through our procurement and e sourcing programs or supply chain consulting.

[Brad Marshall, Trustee, Chairman & Co-CEO at Blackstone Secured Lending Fund]

Of course, it's one thing to highlight tariff exposure. It is certainly another thing to have the resources to potentially manage its impact. Despite the near term market volatility, VXSL reported another strong quarter. Our net investment income or NII of $0.83 per share this quarter represented a 12.1% annualized return on equity and is made up overwhelmingly of interest income rather than income from PIK or dividends. Net asset value per share remained flat at $27.39 quarter over quarter.

[Brad Marshall, Trustee, Chairman & Co-CEO at Blackstone Secured Lending Fund]

Our distribution of 77¢ per share was covered by our net investment income per share by a 8% and represents an 11.2% annualized distribution yield. One of the highest among our traded BDC peers with as much of their portfolio invested in first lien senior secured assets. BXSL still has among the lowest management fee and lowest G and A costs as a percentage of NAV across our traded BDC peers, which allows us to focus on high quality assets. Finally, credit quality remains strong with 0.3% investments on non accrual at cost and 0.1 at fair market value, well below the average of our traded BDC peers of 2.71.2% respectively in the fourth quarter. Last quarter, we discussed positioning BXSL for an anticipated ramp up in deal activity in the back portion of 2025.

[Brad Marshall, Trustee, Chairman & Co-CEO at Blackstone Secured Lending Fund]

And despite market uncertainty, we've been building our investment firepower to take advantage of opportunities that arise. For example, this quarter, we issued $500,000,000 of new debt at a coupon of 5.3% or a spread of 147 basis points over the relevant benchmark treasury rate. The tightest spread compared to traded BDC peers in 2025. Our liability stack continues to be diverse with floating rate components allowing us to help offset the reduced base rates on the asset side this quarter. In fact, the total weighted average interest rate on drawn debt decreased to 5.01% in Q1.

[Brad Marshall, Trustee, Chairman & Co-CEO at Blackstone Secured Lending Fund]

In Q1, we had over $750,000,000 of investment commitments, our sixth consecutive quarter of $750,000,000 or above in total commitments. We also had nearly $700,000,000 in new investment fundings. This was offset by an increased repayments of $900,000,000 during the quarter. We believe the Fund's capitalization positions it well for potential future opportunities amidst market volatility. And with that, I will pass over to my colleague, Jonathan.

[Jonathan Bock, Co-Chief Executive Officer at Blackstone Secured Lending Fund]

Thank you, Brad. And let's turn to slide six. We ended the quarter with $12,800,000,000 of investments at fair value over a 20% increase from a $10,400,000,000 year over year. In Q1, BXSL also added 14 new borrowers to our portfolio while exiting six positions netting a total of two eighty four companies. Ending leverage and average leverage ticked up slightly compared to prior quarters at 1.19 times and 1.16 times respectively, remaining near the middle of our average target range of one to 1.25 times.

[Jonathan Bock, Co-Chief Executive Officer at Blackstone Secured Lending Fund]

Our weighted average yield on performing debt investments at fair value was 10.2% this quarter end compared to 10.4% last quarter. The yields on new debt investment fundings and assets sold and repaid during the quarter averaged 9.510.3% respectively. I jump to slide seven. 90 eight percent of BXSL investments are in first lien senior secured loans and 99 of those loans are to companies owned by financial sponsors who generally have significant equity value in these capital structures demonstrated by an average loan to value 47.4%. Our portfolio also has an LTM EBITDA base averaging $210,000,000 with year over year EBITDA growth at nearly 10%.

[Jonathan Bock, Co-Chief Executive Officer at Blackstone Secured Lending Fund]

This growth percentage is nearly two times larger than that of companies in the Lincoln International private market database. And while we evaluate opportunities across the size spectrum, we continue to see strength of performance from larger companies, which is the majority of our portfolio. Now while we continue to emphasize these stats on every earnings call, the recent tariff announcement and subsequent market volatility are strong reminders on why we choose to focus on first lien new secured lending to larger companies and what we believe are good investment neighborhoods. Turn to slide eight, which focuses on our industry exposure. On tariffs, we believe there's a potential material credit impact to a relatively small group of our portfolio companies.

[Jonathan Bock, Co-Chief Executive Officer at Blackstone Secured Lending Fund]

Now recall, we focus on domestic businesses in less capital intensive sectors with our highest exposures in software, professional services, and healthcare provider services in in those industries. Now this quarter, nearly 100% of the new private debt investments during the quarter were first lien senior secured positions with an average LTV of 40%, meaning there's significant amount of capital beneath our loans. Our first lien senior secured debt in lower default rate industries is what we view as a very defensive place for investors. And that's further evidenced by our low non accrual rate of 0.3 at cost compared to our traded BDC peer average of 2.7% from last quarter. Now, we remain consistent in our focus on strength of documentation and amendment activity.

[Jonathan Bock, Co-Chief Executive Officer at Blackstone Secured Lending Fund]

And as a reminder, remain highly focused on control and lender protections when we negotiate our credit agreements. Amendment activity was up slightly quarter over quarter by count with 48 of BXSL private borrowers amending documents in q one. Now, nearly all these amendments weighted by position size were associated with add ons m and a DVT l extensions, immaterial technical matters or slight changes to terms. Beyond these amendments, only one amendment accounting for fewer than 15 basis points of the portfolio cost was associated with an underperforming investment mark below 85 and featured additional document tightening as well as incremental economics. With that, let me turn it over to Carlos.

[Carlos Whitaker, President at Blackstone Secured Lending Fund]

Thanks, John. Turn to slide nine. BXSL maintained its dividend distribution of $0.77 per share, as we remain focused on delivering high quality yield to shareholders. During the quarter, we had another equity realization. Over the past few years, we've had several successful exits, highlighting ways that can potentially positively impact returns through our selective equity investments.

[Carlos Whitaker, President at Blackstone Secured Lending Fund]

And while this has not been more than one to 2% of our portfolio historically, it has the ability to add value. This quarter, for instance, we realized our equity in frontline, where we made a $2,900,000 equity investment and realized a gain of over $7,000,000,000 Although this is smaller than some of our other exits, we believe it is important to have these in our portfolio. I echo the point on the strength of BXSL's portfolio owed to the scale and platform of Blackstone that Brad emphasized earlier. Our BXCI platform allows us to be active with existing companies. We can expand the portfolio with newer borrowers and aim to enhance the quality of our assets.

[Carlos Whitaker, President at Blackstone Secured Lending Fund]

But our ongoing involvement with our portfolio companies is now more important than ever. Recall, once we make an investment, we try to be more than capital providers. In an uncertain economic environment, not only does our CIO office leverage Blackstone's scaled insights to help identify and proactively mitigate portfolio risks, but our BXCI value creation program also supports our portfolio companies by seeking to enhance revenue and lower costs. For example, as mentioned earlier, it's one thing to highlight tariff exposure, and it's another thing to have the resources to potentially help manage their impact. This program is used by over 90% of BXCI's portfolio companies who are offered the service and can help create equity value either by plugging borrowers into the Blackstone ecosystem or by simply saving them capital through our group procurement system.

[Carlos Whitaker, President at Blackstone Secured Lending Fund]

Truly a differentiated offering in the private credit space. Even better, it is offered at no charge to eligible participants and at no expense to BXSL. And it has created $5,000,000,000 in illustrative value for BXCI portfolio companies since its inception. And more specifically right now, portfolio companies are looking for guidance on how to price products given tariff impacts. In response, we have made more introductions to our consulting partners who provide pricing expertise and facilitate the development of tailored industry specific pricing strategies.

[Carlos Whitaker, President at Blackstone Secured Lending Fund]

We have been actively utilizing our Blackstone sourcing center, where we have over 57,000 supplier contracts in 106 countries that have been included in our e sourcing events. This sourcing center supports bids across multiple geographies and languages. Further, as an added bonus, BXCI's value creation program and Blackstone's market leading scale provide us with real time insights from other Blackstone business units and proprietary views from our portfolio companies CEOs. This in turn can support our investment expertise as we selectively deploy capital into new opportunities we see in this market. And with that, I'll turn it over to Teddy.

[Teddy Desloge, CFO at Blackstone Secured Lending Fund]

Thanks, Carlos. I'll start with our operating results on slide 10. In the first quarter, BXSL's net investment income was $189,000,000 or $0.83 per share, in dollar terms up over 14% year over year and the highest dollar amount since inception. Total investment income for the quarter, a record for the fund, was up $54,000,000 or 18% year over year driven by increased interest income. As a reminder, we amortize 100% of OID earned over the life of each loan versus recognizing OID upfront as a fee at close, which we believe leads to greater stability over the long term.

[Teddy Desloge, CFO at Blackstone Secured Lending Fund]

As Brad noted, we did see elevated repayments in the first quarter, which accounted for nearly $13,000,000 of accelerated OID, prepayment premiums and unamortized discounts in the first quarter. This in term flows through interest income representing about $06 per share. Interest income excluding PIK, fees and dividends represented approximately 94% of our total investment income in the quarter. Turning to the balance sheet on slide 11, we ended the quarter with $12,800,000,000 of total portfolio investments at fair value, nearly $7,400,000,000 of outstanding debt and over $6,200,000,000 of total net assets. NAV per share at quarter end was $27.39 flat since the fourth quarter of last year.

[Teddy Desloge, CFO at Blackstone Secured Lending Fund]

NAV per share was supported by $06 per share of excess earnings to our dividend, dollars $1.01 from share issuance from our ATM program at a premium to NAV. However, offsetting this was $0.17 of unrealized losses in the portfolio, primarily concentrated to a small handful of larger positions. We continue to see stable fundamentals across the majority of our portfolio companies with only 0.7% of debt investments at cost marked below 80. Further, while we are focused on maintaining a senior secured portfolio, we also had a realization on an equity position as Brad noted earlier, receiving proceeds of over a two and a half x the original investment contributing $03 of positive impact to NAV. BXSL funded approximately $700,000,000 in the quarter and committed over $750,000,000 and held an estimated additional 59,000,000 committed by BXCI and earmarked for BXSL as of March 31.

[Teddy Desloge, CFO at Blackstone Secured Lending Fund]

Net funded investment activity was negative $289,000,000 as deployment activity was offset by $978,000,000 of repayments, primarily due to a few larger repayments during the quarter. This represented an annualized repayment rate of 28% of the portfolio at fair value, up from 6% from the prior quarter. Note, in periods of public market volatility and or slower M and A volumes as we've seen in recent periods, we would expect more muted repayment volumes. Next, slide 13 outlines our attractive and diverse liability profile, which includes 38% of drawn debt in unsecured bonds that are not swapped. These unsecured bonds have a weighted average fixed coupon of less than 3%, which we view as a key advantage in an elevated rate environment and contributed to an overall weighted average interest rate on our borrowings of 5.01%, down from 5.17% last quarter.

[Teddy Desloge, CFO at Blackstone Secured Lending Fund]

This also compares to a weighted average yield at fair value on our performing debt investments of 10.2%, down from 10.4% in the fourth quarter. We have 2,200,000,000.0 of debt maturities within the next two years and our debt and funding facilities have an overall weighted average maturity of three and a half years. Further, we continue to optimize our cost of capital. As Brad noted in February, we issued a $500,000,000 5 point 3 percent year bond with which priced five point three year bond, which priced at a 47 basis points over the relevant benchmark treasury. As we have noted previously, as spreads have tightened across liabilities since 2023, we have been highly focused on bringing down our cost of capital through both new issuance at tighter levels and amendments to existing facilities.

[Teddy Desloge, CFO at Blackstone Secured Lending Fund]

Today, we have one of the lowest cost revolvers across traded BDCs at SOFR plus 152.5 basis points at the tightest tier. We've issued 1,600,000,000.0 of new bonds since the start of the second quarter of last year, which included the tightest new issue spread in the last two years within our traded BDC peer set. We are one of the highest rated BDCs with a b double a two and stable outlook by Moody's and triple b minus and positive outlook by positive outlook by S and P.

[Teddy Desloge, CFO at Blackstone Secured Lending Fund]

We issued our inaugural private credit CLO in the fourth quarter with senior most tranche pricing at SOFR plus 155, 1 hundred 50 1, 1 of the of the tightest spreads on the senior most notes any middle market private credit CLO among 200 plus issued since 2021. As a result of these actions, the first quarter twenty twenty five weighted average spread on our floating rate committed liabilities was just so for plus one sixty seven, 30 basis points tighter than a year ago. BXSL's over overall cost of debt of 5.01% is among the lowest we see across the traded BDC peer set last quarter. Additionally, total liquidity was 3,400,000,000.0 of cash and undrawn debt available to borrow at these low financing costs, while ending leverage as of March 31 was 1.19 turns, slightly up from 1.17 turns in the first quarter and near the midpoint of our target range of one to one and a quarter turns. With that, I'll ask the operator to open it up for questions. Thank you.

[Operator]

Thank you. We'll go first to Finian O'Shea with Wells Fargo Securities.

[Finian O'shea, Analyst at Wells Fargo]

Hey, everyone. Good morning.

[Finian O'shea, Analyst at Wells Fargo]

First question on dividend coverage. If you strip out the prepay fee and look back support, it looks like you're right at the dividend. So understanding there's perhaps some leverage headroom and whatnot. But assuming the SOFR curve puts you under the dividend, curious as to your policy on spillover if you'll use that or adjust the base dividend as needed? Thanks.

[Brad Marshall, Trustee, Chairman & Co-CEO at Blackstone Secured Lending Fund]

Thanks Ben, it's Brad. Why don't I start and then John may touch on the spillover. So, I think since rates peaked last year, we've seen three cuts, but 100 basis points. I think we're, as you point out, the curve would suggest that there's more cuts. And obviously that then has an impact on earnings, earnings will come down.

[Brad Marshall, Trustee, Chairman & Co-CEO at Blackstone Secured Lending Fund]

So there's kind of three ways you can offset that, Fin. As you know, you can see more turnover in your portfolio, which creates fees, which you saw this quarter. We've had more turnover. Challenge with that, as you point out, is a little less predictable. So, the second way you can manage falling rates is you can lower your expenses.

[Brad Marshall, Trustee, Chairman & Co-CEO at Blackstone Secured Lending Fund]

And we talked, Teddy talked a little bit about what we did in the liability front with issuing bonds that are 147 basis points over, which we think are pretty low. We continue to focus on bringing down our G and A fees as much as possible. As you know, our overall fee structure is among the lowest in the BDC space. So that's in works. We'll continue to focus on that.

[Brad Marshall, Trustee, Chairman & Co-CEO at Blackstone Secured Lending Fund]

And then the third is we can take more risk. We can put more junior assets in the portfolio. We could look at harder sectors, harder credits, and try and offset lower base rates with more spread. But that's not us. So we know how that movie ends.

[Brad Marshall, Trustee, Chairman & Co-CEO at Blackstone Secured Lending Fund]

So, we're going to continue to focus on quality. Today, the dividends 11.2% and if earnings decline, then we'll reflect that in the dividends going forward as it relates to rates. And on spillover, I'd

[Jonathan Bock, Co-Chief Executive Officer at Blackstone Secured Lending Fund]

say that if you look at it, there's some benefits. And just as a quick reminder, to understand that the cost of the underlying spillover at roughly 4%, right? That's very cheap cost of capital as you think about retained equity. And it also builds an earnings base, right? It builds an earnings base because your equities grown, but you've not issued new shares to do so.

[Jonathan Bock, Co-Chief Executive Officer at Blackstone Secured Lending Fund]

So you have a level of additional earnings impact as a result of spillover retention, is positive. I'd say when you think about management, it's return of capital. Our view is simply, we think about where the shares trade and the valuation impact of having additional earnings. I'd say as opposed to a BDC that might be below book value, certainly returning spillover in that case makes complete sense because you're giving people whole dollars as opposed to owning shares at a discount. And so for us, we will always look at it, but at a positive earnings profile, continued strength of the portfolio and an attractive valuation, it makes sense to have a level of retention, but we'll always revisit it. It's a good question.

[Finian O'shea, Analyst at Wells Fargo]

Okay, thanks. And as a follow-up, I wanted to ask about donuts, the large refi. Wondering how hard did you fight to keep that and where maybe you lost out. Obviously, there's the value creation program. You've been a pioneer in repricing technology, but just to get a sense on the limitations of those approaches and perhaps the outlook for higher repays on the go forward? Thanks.

[Brad Marshall, Trustee, Chairman & Co-CEO at Blackstone Secured Lending Fund]

Yeah, that deal was refinanced the whole business securitization then. So, not much for us to do there. Great credit. It was a good asset in our portfolio. We saw two other larger repayments that went to strategics.

[Brad Marshall, Trustee, Chairman & Co-CEO at Blackstone Secured Lending Fund]

So not a lot we could do there either, but our policy will remain the same. Try and hold on to good assets as much as possible and let the less good assets get repaid over time.

[Finian O'shea, Analyst at Wells Fargo]

Thanks so much.

[Operator]

Thank you. We'll take our next question from Mark Hughes, Truist Securities. Mr. Hughes, please go ahead. Your line is open.

[Operator]

Please check your mute function. Hearing no response. We'll go to Melissa Wedel with JPMorgan.

[Melissa Wedel, Vice President, Equity Research at JP Morgan]

Good morning. Thanks for taking my questions today. When we think about sort of the amount of leverage in the portfolio, when you on a gross basis, it seems towards the higher end of the range. But when we back out the amount of cash on the balance sheet, it takes you down towards the low end of the range. By our math, it's about 103 net debt to equity.

[Melissa Wedel, Vice President, Equity Research at JP Morgan]

Assuming that you would have sort of agree with this, it looks like you might be sitting on some dry powder. And as you think about deploying capital in this environment, curious about how you pace that. Obviously, you've got access to additional capital through the at the market program. But in terms of the environment and the spread environment that you're seeing, given the amount of uncertainty from policy, how eager are you to deploy additional capital?

[Teddy Desloge, CFO at Blackstone Secured Lending Fund]

Yeah, I'm happy to take that. Thanks, Melissa. So you're right. We did have a little bit of excess cash in the end of the quarter that was really tied to timing of some repayments towards the the end of the quarter. Backing that out, we're closer to the lower end of the range from a leverage perspective.

[Teddy Desloge, CFO at Blackstone Secured Lending Fund]

I think from our perspective, as we think about periods of volatility, uncertainty, what we've seen really in the liquid markets in the last month or so has been a bit of a shift from a deal flow from the liquid markets to the private market. Right? We saw that play out in in certainly in 2023 that led to, you know, fairly material spread widening in that period. From our perspective, we wanna be well capitalized to take advantage of that. Right?

[Teddy Desloge, CFO at Blackstone Secured Lending Fund]

We are seeing a bit of a pickup in the pipeline in the near term. We'll see how that translates to deal activity in the next quarter, but we feel very good about how we are capitalized today. I mentioned our low cost financing at five point o 1% interest interest rate across funded liabilities. We have unfunded liabilities at low cost as well. So we'll lean into that as we see the market opportunity.

[Brad Marshall, Trustee, Chairman & Co-CEO at Blackstone Secured Lending Fund]

And Melissa, what I'd add to that is our pass rate in the first quarter was probably among the highest it's been in a long time. Just as you think about wanting a little bit more clarity in the direction of travel in The US and global economy. We were pretty cautious. Built up some capital to invest into the dislocation and we found a few things, but we probably were more on the pass side.

[Brad Marshall, Trustee, Chairman & Co-CEO at Blackstone Secured Lending Fund]

As I sit here today, we have our heads up meeting. Have 20 deals going through that heads up review process, which is pretty high. We're obviously doing this instead of sitting in that meeting, so we don't know the quality. But in terms of the number of deals coming through, it's actually pretty steady. In terms of spreads, what we have seen clearly the public markets, you saw some spread widening, mostly in the more tariff impacted sectors.

[Brad Marshall, Trustee, Chairman & Co-CEO at Blackstone Secured Lending Fund]

And I would say similarly in private markets, the lower quality assets, you've seen spreads widen by 50 to 100 basis points. The higher quality assets less. So there's definitely still a quality bias and that's probably somewhere around, maybe it's up 25 basis points, but not much more than that. So we'll continue to see the markets evolve here and hopefully get more clarity and M and A will pick up. But as Teddy said, in the meantime, more deals are shifting to the private markets away from the public.

[Melissa Wedel, Vice President, Equity Research at JP Morgan]

I appreciate all that color that you gave there. I wanted to follow-up also on Fin's question too. When we back out the $06 a share of NII that came from the repayment activity, would you say that most of the decline in base rates is effectively fully running through the income statement at this point? I know there tends to be a little bit of a lag, but just curious if that's fully caught up now. Thank you.

[Teddy Desloge, CFO at Blackstone Secured Lending Fund]

Yes. Thanks, Melissa. I'm happy to take that. Yes, we would expect the current base rate environment to be fully reflective earnings in the quarter.

[Operator]

Thank you. We'll go next to Hallie Sheath with Raymond James.

[Heli Sheth, Equity Research Associate at Raymond James]

Thanks for the question. We've heard from other BDCs this earnings season who are shifting largely down market, while your shift is moving further up market. Can you expand on your strategy there?

[Brad Marshall, Trustee, Chairman & Co-CEO at Blackstone Secured Lending Fund]

Yeah, I can hit on that, Ali. So, it's a little bit what I was saying earlier with Fin's question on where we want to be investing. I think in market times of volatility, uncertainty, you definitely want to be shifting to higher quality assets. For more expensive BDCs, that's really hard to do because their expense flow is really high. But as you know with BXSL, the management fees, the G and A fees, the liabilities are low.

[Brad Marshall, Trustee, Chairman & Co-CEO at Blackstone Secured Lending Fund]

And so that allows us to look at higher quality assets. And we think those are just more resilient. We think they're bigger companies or better. We think that the sectors we're picking are more resilient. And so that will remain our strategy.

[Brad Marshall, Trustee, Chairman & Co-CEO at Blackstone Secured Lending Fund]

We do not want to reach for risk in periods of volatility. We think it's a much better strategy to maintain quality even if spreads compress or don't widen as much as some of the lower quality assets.

[Heli Sheth, Equity Research Associate at Raymond James]

Got it. Understood. Thanks. And then a real quick follow-up. Have you received any specific feedback from portfolio companies on tariff impacts and seen any emerging patterns or trends with specific industries seeing stress?

[Heli Sheth, Equity Research Associate at Raymond James]

And accordingly, has your investment strategy shifted going forward in terms of targeting certain industries or deemphasizing exposure in other industries?

[Teddy Desloge, CFO at Blackstone Secured Lending Fund]

Yeah. Thanks. Thanks, Holly. I I can take that. So I think overall, our view is it's still very early to tell.

[Teddy Desloge, CFO at Blackstone Secured Lending Fund]

Right? As we look at our portfolio, what are we not doing? We're not financing foreign companies selling physical goods in The US. So we feel pretty good about where we're positioned. The industries that you see on the page, predominantly US based software services and healthcare.

[Teddy Desloge, CFO at Blackstone Secured Lending Fund]

These are business models that are and should be less impacted in in as a result of tariffs. As we characterize that, it's it's about 90% of the portfolio that's that's in those less impacted areas. Now, John mentioned it, but we did do a name by name analysis. Actually across 2,000 sub investment grade and investment grade companies across our platform that included all all 284 companies in BXSL, and found a relatively small group of companies that may be materially impacted. So again, think it's it's a little bit too early to tell, but overall feel very good about positioning, not changing how we're thinking about investing.

[Teddy Desloge, CFO at Blackstone Secured Lending Fund]

Right? As Brad mentioned, we've taken a defensive first strategy that's leaning into first lien exposure. That's leaning into more stable growing sectors in The US. We do think some parts of direct lending may be tested as a result of tariffs. If you think about the more fragile parts of the economy, junior exposure, non sponsor exposure, where there's limited junior capital support potentially could be under stress and may have been less tested in recent environments.

[Teddy Desloge, CFO at Blackstone Secured Lending Fund]

So, we feel very good about our position, continue to take more of a defensive approach.

[Brad Marshall, Trustee, Chairman & Co-CEO at Blackstone Secured Lending Fund]

And Alec, Carlos hit on this, and I did as well. It is, and I mean this quite sincerely, it is one thing to talk about tariffs and their impact, but then to have the ability to go and try and do something about it. In the Blackstone value creation program, this is what it's designed for. It's designed to help with procurement. It's designed to run e sourcing programs to lower cost of goods or get better deals on services or products.

[Brad Marshall, Trustee, Chairman & Co-CEO at Blackstone Secured Lending Fund]

We have a consulting effort. So, this team that sits in credit, all they do is call our companies and say, hey, we noticed that potentially your costs are up because of tariffs. What can we do to help? And it's kept, since liberation day, kept that team quite busy seeing where we can indeed help.

[Heli Sheth, Equity Research Associate at Raymond James]

Got it. Appreciate the color. Thank you.

[Operator]

We'll take our next question from Paul Johnson with KBW.

[Paul Johnson, Vice President at Keefe, Bruyette & Woods (KBW)]

Good morning. Thanks for taking my question. I'm just curious if you could maybe kind of parse out a little bit just the 17% or 60 basis points of kind of NAV decline on the portfolios or how much may have been driven to more credit specific stuff versus mark to market?

[Teddy Desloge, CFO at Blackstone Secured Lending Fund]

Yeah, I'm happy to take that. Thanks, Paul. So just to summarize, as we mentioned, NAV flat quarter over quarter, 6¢ benefit from out earnings, 11¢ benefit from ATM issuance, and then 17¢ unrealized losses. As we dig into that 17¢, there are really two primary drivers of it. The first was about 30% of the net impact was actually repayments.

[Teddy Desloge, CFO at Blackstone Secured Lending Fund]

That's a reversal of unrealized gains in the quarter tied to that repayment activity. Just under half of that impact was one company and that's Medallia, which we talked about last quarter that was now marked down to 89 in the quarter, down from 94. Without getting into too much detail, that mark reflects a more competitive pricing environment. We are backing a sponsor here who is highly specialized in this space with significant cash equity. We've been supportive of of management and sponsor actions.

[Teddy Desloge, CFO at Blackstone Secured Lending Fund]

We're actually using Blackstone resources to also help where possible. Product quality there actually remains very high. Gartner recently rated Medallia as a leader in in their voice of customers platform. So, one we'll continue to watch. I think if you look across the portfolio overall seeing healthy trends, 75% of our companies were either marked up or flat over the the prior quarter.

[Teddy Desloge, CFO at Blackstone Secured Lending Fund]

And if you strip out Medallia, the vast majority of markdowns were one point or less predominantly performing names marked above 95. So overall, we feel good about the portfolio. 70 basis points of assets marked below 80, and it's well below the average of the traded BDC peer set and non accruals just 30 basis points.

[Paul Johnson, Vice President at Keefe, Bruyette & Woods (KBW)]

Thanks for that. That's really good color. And I also appreciate all the detail that you guys provide on amendments and amendment activity during the quarter. Be great to hear that same kind of information from some of your peers. But just going to one specific credit during the quarter navigator looks like it may have been kind of must have just marginally, but that was another loan that was kind of in the 80s last quarter.

[Paul Johnson, Vice President at Keefe, Bruyette & Woods (KBW)]

Maturity was pushed out with a little bit of a kick in there. Just wondering if that was the one company you'd mentioned regarding the kind of the negative amendments in the quarter and any kind of color you might be able to provide there?

[Brad Marshall, Trustee, Chairman & Co-CEO at Blackstone Secured Lending Fund]

Yeah, just on that company, you're right. They underperformed last year. They started this year stronger than anticipated. So we did mark that up during the quarter as we think we probably had more than a dozen names that ended up getting marked up just because they came out, started the year much stronger than they ended the year.

[Paul Johnson, Vice President at Keefe, Bruyette & Woods (KBW)]

Okay. Thanks for that. And then lastly for me, just on kind of the equity investment that you'd kind of mentioned on the call. I was just wondering how it's obviously a very small percent of the portfolio, but how frequently, I guess, are you able to get any sort of equity co investment in fields, knowing that you're obviously competing in the larger end of the market, one would think that it's very competitive there and a little bit harder to come by. But just wondering how frequently you're able to see that. That's all for me. Thank you.

[Brad Marshall, Trustee, Chairman & Co-CEO at Blackstone Secured Lending Fund]

Yeah, actually, just because of some of the things, the value that we can add to many of these companies because we can plug them into the Blackstone network. We do have a little bit more ability to get equity in the businesses where we want to get equity. So, despite us focusing on the mid to larger end of the market, I think it's available to us where and when we want it. Not all great credit stories are great equity stories in our minds, so we pick our spots. And we do want to highlight, when we do have realizations like, Frontline and some of the previous ones we've had, because they're nice kind of offsets to any potential kind of credit losses.

[Brad Marshall, Trustee, Chairman & Co-CEO at Blackstone Secured Lending Fund]

And we do have a more strategic contribution when we make those equity investments. It'll never be a big part of the portfolio though, Paul.

[Brad Marshall, Trustee, Chairman & Co-CEO at Blackstone Secured Lending Fund]

We want to make sure we stick to what we've advertised and so it's going to be very selective.

[Operator]

Thank you. We'll go next to Maxwell Fritzsche with Truist.

[Maxwell Fritscher, Equity Research Associate at Truist Securities]

Hi, good morning. I'm on for Mark Hughes. Sorry for the earlier confusion. Given the current macro backdrop, has there been any change in your credit evaluation process on new deals?

[Brad Marshall, Trustee, Chairman & Co-CEO at Blackstone Secured Lending Fund]

Yeah, I mentioned earlier that the first quarter was a pretty it's actually a busy quarter from an underwriting standpoint, but we ended up passing on a lot of deals, especially on the larger end, primarily because of just the backdrop, which is a little bit uncertain. And as tariff diplomacy takes a little bit of time to get sorted out. But our underwriting standards haven't changed. We continue to be focused on sectors that we ultimately think will be less impacted by economic weakness. So sectors that tend to outgrow the broader economy like software, technology, healthcare IT, business services, and underweight more product heavy consumer focused businesses.

[Brad Marshall, Trustee, Chairman & Co-CEO at Blackstone Secured Lending Fund]

That remains true. It remains, I guess, especially true right now just given what's potentially going to how companies are potentially going to be impacted by tariffs. But I think we're underwriting a little less growth in the economy and that will be reflected in leverage. That'll be reflected in the sectors we invest in and the companies we choose.

[Maxwell Fritscher, Equity Research Associate at Truist Securities]

Understood. Thank you. And sorry if I missed this and it was touched on, but was there any commonality among the larger repayments in the quarter, if there were any larger payments? Then maybe how have repayments trended thus far into 2Q? Thanks.

[Teddy Desloge, CFO at Blackstone Secured Lending Fund]

I'm happy to take that, Max. So I wouldn't say there was any specific commonality. It is a relatively small handful of companies that were repaid. A couple of them were larger positions. Brad mentioned two were refinanced via the securitization markets.

[Teddy Desloge, CFO at Blackstone Secured Lending Fund]

We view those as success stories. Companies that were smaller, we grew with, we grew exposure, and then had access to a much lower cost market that even the public market had a hard time competing with. Two were sold to strategic, a couple of sponsor sponsor sales. We actually had very limited, if any exposure refinanced by the syndicated market. I don't wanna give forward looking guidance, but I think generally speaking, as it relates to repayment in periods of excess volatility combination with low M and A, we would expect repayment volumes to be quite muted.

[Teddy Desloge, CFO at Blackstone Secured Lending Fund]

And those are those two things we are seeing this quarter.

[Maxwell Fritscher, Equity Research Associate at Truist Securities]

Very good. Thank you.

[Operator]

Thank you. We'll take our final question from Finian O'Shea with Wells Fargo Securities.

[Finian O'shea, Analyst at Wells Fargo]

Hey, everyone. Thanks for the follow-up. I wanted to ask about growth. It looks like you hit the brakes on the ATM early in the quarter. And just with a lot of the talks that came out on the Q and A on being more selective, you know, what we should expect say this year or at least for the outlook as you can see it, you know, starting, you know, now or tomorrow as as you're out out of the the blackout window on equity growth for the ATM? Thanks.

[Jonathan Bock, Co-Chief Executive Officer at Blackstone Secured Lending Fund]

I think you can expect it to be tied with originations. And so clearly as we're slowly ramping and Brad outlined kind of build in the portfolio, you can expect that to be a part of it. However, if you look back when we saw that deal activity would be muted, you can see that early on, it ceased. So, it's a part of it, I'd say it's probably a little less emphasized now as a result of the slow markets, but to the extent the activity picks up so too with ATM issuance, always accretive and designed to drive an attractive return for our end investors.

[Finian O'shea, Analyst at Wells Fargo]

Okay. Thanks so much.

[Operator]

Thank you. That will conclude our question and answer session. At this time, I would like to turn the call back over to Justin Forshidi for any additional or closing remarks.

[Justin Farshidi, Principal at Blackstone Secured Lending Fund]

Thank you, and thanks to all of you for joining today's call. We look forward to our follow-up discussions, and we'll reconvene again next quarter.

Participants

Executives

• Justin Farshidi, Principal
• Brad Marshall, Trustee, Chairman & Co-CEO
• Jonathan Bock, Co-Chief Executive Officer
• Carlos Whitaker, President
• Teddy Desloge, CFO

Analysts

• Finian O'shea, Analyst at Wells Fargo
• Melissa Wedel, Vice President, Equity Research at JP Morgan
• Heli Sheth, Equity Research Associate at Raymond James
• Paul Johnson, Vice President at Keefe, Bruyette & Woods (KBW)
• Maxwell Fritscher, Equity Research Associate at Truist Securities