Carlyle Credit Income Fund Q2 2026 Earnings Report

Carlyle Credit Income Fund EPS Results

• Actual EPS: N/A
• Consensus EPS: $0.13
• Beat/Miss: N/A
• One Year Ago EPS: N/A

Carlyle Credit Income Fund Revenue Results

• Actual Revenue: N/A
• Expected Revenue: $7.19 million
• Beat/Miss: N/A
• YoY Revenue Growth: N/A

Carlyle Credit Income Fund Announcement Details

• Quarter: Q2 2026
• Date: 5/19/2026
• Time: After Market Closes
• Conference Call Date: Wednesday, May 20, 2026
• Conference Call Time: 10:00AM ET

Carlyle Credit Income Fund (NYSE:CCIF) is a close ended fixed income mutual fund launched and managed by Vertical Capital Asset Management, LLC. The fund is co - managed by Behringer Advisors, LLC. The Fund invests mainly in fixed-income securities. The fund invests in stocks of companies operating across diversified sectors. It seeks to benchmark the performance of its portfolio against the Barclays Capital U.S. Mortgage Backed Securities Index. Carlyle Credit Income Fund was formed on December 30, 2011 and is domiciled in the United States.

Carlyle Credit Income Fund Q2 2026 Earnings Call Transcript

Key Takeaways

• Neutral Sentiment: CCIF said its portfolio was pressured in the quarter by January repricing activity, weaker software-related loans tied to AI disintermediation concerns, and Middle East volatility, which weighed on loan prices and CLO equity valuations. Management emphasized that underlying credit fundamentals remained broadly stable.
• Positive Sentiment: The fund maintained its $0.06 monthly dividend and said core net investment income of $0.29 per share covered the dividend by 161%, supported by strong cash generation from its underlying CLO investments.
• Positive Sentiment: CCIF completed four resets in Q2 and said it will continue pursuing refinancings and resets to lower liability costs and support equity cash flows. The fund also used sale proceeds to redeem $20 million of Series C preferred shares, reducing leverage.
• Neutral Sentiment: Net asset value was $3.34 per share as of March 31, and management noted April brought some stabilization in NAV and loan prices after earlier declines. They also said repricings, which had paused, have started again in May.
• Neutral Sentiment: Management highlighted a conservative portfolio profile, including roughly 1,850 underlying loans, less than 1% exposure per issuer, and over 97% exposure to first-lien senior secured loans. They said this structure, along with experienced CLO managers, should help the fund navigate ongoing market and sector risks.

Presentation

[Operator]

Good day. Thank you for standing by. Welcome to the Carlyle Credit Income Fund's second quarter 2026 financial results and investor conference call. At this time, all participants are in a listen-only mode. After the speaker's presentation, there will be a question and answer session. To ask a question during the session, you will need to press star one one on your telephone. You will hear an automated message advising that your hand is raised. To withdraw your question, please press star one one again. Please be advised that today's conference is being recorded. I would now like to hand the conference over to your first speaker today, Joseph Castia. Please go ahead.

[Joseph Castia, Managing Director and Head of Liquid and Structured Credit at Carlyle Credit Income Fund]

Good morning, and welcome to Carlyle Credit Income Fund's second quarter 2026 earnings call. With me on the call today is Nishil Mehta, CCIF's Principal Executive Officer and President, Lauren Basmadjian, CCIF's Chair and Carlyle's Global Head of Liquid Credit, and Nelson Joseph, CCIF's Principal Financial Officer. Last night, we issued our Q2 financial statements and a corresponding press release and earnings presentation discussing our results, which are available on the investor relations section of our website. Following our remarks today, we will hold a question and answer session for analysts and institutional investors. This call is being webcast, and a replay will be available on our website. Any forward-looking statements made today do not guarantee future performance, and any undue reliance should not be placed on them.

[Joseph Castia, Managing Director and Head of Liquid and Structured Credit at Carlyle Credit Income Fund]

These statements are based on current management expectations and involve inherent risks and uncertainties, including those identified in the risk factors section of our annual report on the Form N-CSR. These risks and uncertainties could cause actual results to differ materially from those indicated. Carlyle Credit Income Fund assumes no obligation to update any forward-looking statements at any time. During the conference call, we may discuss adjusted net investment income per common share and core net investment income per common share, which are calculated and presented on a basis other than in accordance with GAAP.

[Joseph Castia, Managing Director and Head of Liquid and Structured Credit at Carlyle Credit Income Fund]

We use these non-GAAP financial measures internally to analyze and evaluate financial results and performance, and we believe these non-GAAP financial measures are useful to investors gauging the quality of the Fund's financial performance, identifying trends in its results, and providing meaningful period-to-period comparisons. The presentation of this non-GAAP measure is not intended to be a substitute for financial results prepared in accordance with GAAP and should not be considered in isolation. With that, I'll turn the call over to Nishil.

[Nishil Mehta, Principal Executive Officer and President at Carlyle Credit Income Fund]

Thanks, Joe. Good morning, everyone, and thank you all for joining CCIF's quarterly earnings call. CLO equity market continued to face pressure during the quarter due to a combination of a repricing wave in January, which led to further declines in weighted average spreads, weakness in certain software-related loans due to concerns regarding AI disintermediation, and volatility from the conflict in the Middle East. These factors weighed on loan prices, CLO equity valuations, and CLO equity cash flows across the market and within CCIF's portfolio. However, underlying credit fundamentals remained broadly stable during the quarter, and the volatility created better balance in the market with very limited repricings in February and March. To navigate this market environment, we continue to focus on optimizing the portfolio, including selectively completing refinancings and resets, and defensively position CCIF with experienced CLO managers and transactions with longer reinvestment periods.

[Nishil Mehta, Principal Executive Officer and President at Carlyle Credit Income Fund]

I'd like to highlight the Fund's activities over the last quarter and key stats on the portfolio as of March 31st. We maintain our monthly dividend of $0.06 per share for 21.5% annualized based on the share price as of May 12th, which is now declared through August 2026. CCIF's underlying CLO investments generated an annualized cash-on-cash yield of 20.11% for the quarter, which resulted in $0.44 of recurring cash flows and $0.29 of core net investment income for the quarter at the Fund level. Core net investment income provided dividend coverage of 161% for revised monthly dividend of $0.06 per share. New CLO investments during the quarter totaled $1.5 million with a weighted average GAAP yield of 11.5%.

[Nishil Mehta, Principal Executive Officer and President at Carlyle Credit Income Fund]

Total sales proceeds during the quarter totaled $21.7 million as we used the proceeds to redeem $20 million of the 7.5% Series C convertible preferred shares in cash to reduce leverage. Within CCIF's portfolio, we completed four resets in Q2 2026, in addition to the 26 refinancings and resets completed in calendar year 2025. Refinancings and resets reduce the cost of liabilities and extend the investment periods across CLOs and bolster equity cash flows. We expect to continue to refinance and reset the portfolio to enhance returns. The weighted average years left during this period decreased slightly from approximately 3.4 years to 3.3 years. This provides CLO managers the opportunity to capitalize on periods of volatility through active management. There are also zero CLOs in the portfolio that were post-reinvestment period as of March 31st.

[Nishil Mehta, Principal Executive Officer and President at Carlyle Credit Income Fund]

We believe the portfolio weighted average junior overcollateralization cushion of 4.18% is healthy and offsets potential defaults and losses in the underlying loan portfolios. The average percentage of loans rated CCC by S&P was 4.1% below the 7.5% CCC limit in CLOs. The weighted average spread of the underlying loan portfolio was 2.96%, a 10-basis point decline from the prior quarter. The continued decline in weighted average spread reflects the cumulative impact of the elevated repricing activity over the last several quarters, particularly the very high level of repricing activity experienced in January. Lower loan spreads continue to pressure the earnings power of CLO equity as resets and refinancings have not fully offset spread compression. Importantly, underlying credit fundamentals across CCIF's portfolio remain broadly stable.

[Nishil Mehta, Principal Executive Officer and President at Carlyle Credit Income Fund]

We believe recent CLO equity performance has been driven more by valuation and technical factors than broad-based credit deterioration. We remain confident in the resilience of our portfolio, which is diversified across high-quality managers and structured to navigate evolving market conditions. While liability costs have increased and equity distributions have moderated, we believe resilient credit fundamentals and continued demand for floating-rate assets will support CLO performance over time. We saw a stabilization of NAVs in April as loan prices partly retraced the declines from earlier this year, and we saw very limited loan repricings. Now I will switch gears to discuss our outlook. CLO equity continues to benefit from historically attractive liability costs. Any normalization in loan spreads or increase in loan supply could improve excess spread generation over time, particularly for deals with longer reinvestment windows.

[Nishil Mehta, Principal Executive Officer and President at Carlyle Credit Income Fund]

With approximately 17% of the loan market maturing by end of 2028, we expect heightened refinancing activity, which could also lead to spread widening, benefiting CLO equity. Looking ahead, we believe CLO equity performance will continue to depend on manager selection, reinvestment discipline, and active credit management. We continue to position CCIF conservatively while selectively deploying capital into opportunities where we believe valuations appropriately compensate investors for underlying risk.

[Nishil Mehta, Principal Executive Officer and President at Carlyle Credit Income Fund]

We also continue to leverage Carlyle's in-house credit research platform to conduct a detailed bottom-up analysis across underlying loan portfolios, including software-related exposures and evolving AI-related risk. CCIF's portfolio remains highly diversified across approximately 1,850 underlying loans, with exposure to any single issuer representing less than 1% of the portfolio. In addition, the portfolio is predominantly compromised of first lien senior secured loans, representing over 97% exposure, which we believe provides meaningful downside protection and structural resilience. With that, I will now hand the call over to Lauren to discuss the current market environment.

[Lauren Basmadjian, Chair and Global Head of Liquid Credit at Carlyle Credit Income Fund]

Thank you, Nishil. I'd now like to provide an update on the recent developments across both the loan and CLO markets. CLO liability spreads widened modestly across the capital stack, with AAA spreads widening by about 5 basis points quarter-over-quarter and BB spreads widening by about 150 basis points. New issued CLO volume totaled approximately $47 billion during the quarter, compared to $44 billion in the prior year. CLO resets and refinancings totaled $28 billion and $23 billion respectively, down from $57 billion and $37 billion in the first quarter of 2025 as wider liability spreads and increased market volatility reduced refinancing and reset activity during the quarter. The share of U.S. CLOs out of their reinvestment period has declined to roughly 11%, down from about 40% in 2023, reflecting a market with expanded reinvestment capacity.

[Lauren Basmadjian, Chair and Global Head of Liquid Credit at Carlyle Credit Income Fund]

Turning to the loan market, leveraged loans experienced modest weakness in the first quarter of 2026 as market volatility increased during this period. The LSTA U.S. Leveraged Loan Index declined 60 basis points during the quarter as loan prices declined 2.1%. Similar to prior quarters, issuance activity was largely driven by opportunistic refinancings and a significant number of repricings in January. The market also saw an increase in LBO and M&A activity during the quarter, most notably the Electronic Arts LBO, contributing to about $51 billion of quarterly LBO and M&A volume in the broadly syndicated loan market, the highest quarterly total in more than four years. Credit fundamentals within the U.S. portfolio of over 550 borrowers remained resilient in the fourth quarter of 2025.

[Lauren Basmadjian, Chair and Global Head of Liquid Credit at Carlyle Credit Income Fund]

Free cash flow generation continues to be a key focus, with over 75% of borrowers producing positive free cash flow, supported by the benefit of prior rate cuts and lower spreads on corporate loans. Revenue and EBITDA growth remained positive at 5% and 6% year-over-year, which is similar to what we saw in the third quarter. Interest coverage remained healthy at 3.8x, with only a small portion of the portfolio below one-time interest coverage. Overall, borrower performance and the credit quality remained broadly stable. While Chapter 11 activity remains moderate relative to historical averages, liability management exercises continue across the market. The broadly syndicated loan default rate, inclusive of liability management exercises, has declined from a recent cycle peak of 4.4% at the end of 2024 to approximately 3% in March and further to 2.8% in April, retreating closer to historical averages.

[Lauren Basmadjian, Chair and Global Head of Liquid Credit at Carlyle Credit Income Fund]

With about 17% of the loan market maturing before the end of 2028, we think the next year will be busy with refinancing transactions. Unlike the last two-plus years, some of these transactions should be spread additive. We have not yet seen software companies look to extend their maturities, but we anticipate activity among some of the larger companies with 2028 maturities, which should show the market where the true cost of capital is for performing software. As capital for data centers remains in high demand, we are beginning to see companies access the leveraged loan market for financing, creating a new source of collateral. Overall, given the current geopolitical, AI, and inflationary risks. We think 2026 will continue to be a year of dispersion, with the haves and have-nots experiencing very different outcomes. I will now turn the call to Nelson, our CFO, to discuss the financial results.

[Nelson Joseph, Principal Financial Officer. at Carlyle Credit Income Fund]

Thank you, Lauren. Today, I will begin with a review of our second quarter earnings. Total investment income for the second quarter was $5.5 million, or $0.26 per share. Total expenses for the quarter were $3.6 million. Total net investment income for the second quarter was $1.9 million, or $0.09 per share. Adjusted net investment income for the second quarter was $2.4 million, or $0.11 per share. Adjusted NII adjusts for the $0.02 per share impact from the amortization of the OID and insurance costs for the fund's preferred shares and credit facility. Core net investment income for the second quarter was $0.29 per share, providing dividend coverage of 161% on a revised monthly dividend of $0.06 per share. We believe core net investment income is a more accurate representation of CCIF's distribution requirement.

[Nelson Joseph, Principal Financial Officer. at Carlyle Credit Income Fund]

Net asset value as of March 31st was $3.34 per share. Our net asset value and valuations are based on the bid-side mark we received from a third party of 100% of the CLO portfolio. We continue to hold one legacy real estate asset in the portfolio. Fair market value of the loan is $2.2 million. With that, I'll turn it back to Nishil.

[Nishil Mehta, Principal Executive Officer and President at Carlyle Credit Income Fund]

Thanks, Nelson. We remain confident in the fundamentals of CCIF's portfolio, which remains defensively positioned in the current market environment. We remain focused on experienced managers and transactions that demonstrate durable par build, strong underlying collateral quality, and a disciplined credit underwriting, including ongoing evaluation of evolving AI-related risk across certain sectors. We are deploying capital selectively, prioritizing opportunities that offer attractive relative value across both new issue and seasoned transactions. We continue to leverage the depth of the Carlyle liquid credit platform and our collaborative One Carlyle platform to source and invest in high-quality CLO portfolios through a disciplined bottom-up 15 step investment process.

[Operator]

As a reminder, to ask a question, you'll need to press star one one on your telephone and wait for your name to be announced. To withdraw your question, please press star one one again. Please stand by while we compile our Q&A roster. Our first question will be coming from the line of Gaurav Mehta of A.G.P. Alliance Global Partners. Your line is open.

[Gaurav Mehta, Analyst at Alliance Global Partners]

Thank you. Good morning. I wanted to ask on the trends you guys are seeing in April. I think you talked about stabilization of NAV and improvement in loan prices. Just want to get some more color on what you guys are seeing in loan repricings and any comments on spreads and yields.

[Nishil Mehta, Principal Executive Officer and President at Carlyle Credit Income Fund]

Yeah.

[Lauren Basmadjian, Chair and Global Head of Liquid Credit at Carlyle Credit Income Fund]

Yeah.

[Nishil Mehta, Principal Executive Officer and President at Carlyle Credit Income Fund]

Sorry.

[Lauren Basmadjian, Chair and Global Head of Liquid Credit at Carlyle Credit Income Fund]

Sorry. I'll talk about the loan repricings. We had seen a period where they stopped, including up until April. I will say that in May, they have started again.

[Nishil Mehta, Principal Executive Officer and President at Carlyle Credit Income Fund]

I would add to that we have seen the loan market kind of stabilize over the past couple of months. As a result, we've seen some stabilization in NAV as well.

[Gaurav Mehta, Analyst at Alliance Global Partners]

Second question on resets and refi. Can you maybe provide some color on how much opportunity do you have for resets and refis in your portfolio for this year?

[Nishil Mehta, Principal Executive Officer and President at Carlyle Credit Income Fund]

Yeah. Look, it's something that we continue to focus on, because the best way to offset loan repricings is completing the accretive refinancings and resets. We completed four in the first quarter. Now that CLO debt spreads have tightened in line with kind of overall fixed income market tightening, we expect to continue to be very active in refinancing and resetting the portfolio.

[Gaurav Mehta, Analyst at Alliance Global Partners]

All right. Thank you. That's all I had.

[Operator]

As a reminder, to ask a question, please press star one one on your telephone. Our next question will be coming from the line of Erik Zwick of Lucid Capital Markets. Your line is open, Erik.

[Erik Zwick, Analyst at Lucid Capital Markets]

Thanks. Good morning. I wanted to start with a question on software, and I guess it may be a multi-part question. If I look at your Slide 12 in the right-hand side, I guess the first question is, most of your software exposure in that high tech category? Where is there spillover into other some maybe kind of tangential businesses that utilize software heavily as well? The second question is, if you decided you wanted to reduce software exposure in the portfolio, how easy is that to accomplish? Can you have discussions with the CLO issuers or the CLO primarily just reflective of overall leverage loan issuance? Just kind of curious how, if you wanted to reduce that or change any sector, how easy is that to accomplish?

[Nishil Mehta, Principal Executive Officer and President at Carlyle Credit Income Fund]

Sure. Maybe on the second part, I'll touch up on that. Software right now is around 12%-13% of the overall loan market, BSL market. Right now, I think for CCIF, it's around 12%. The way that we can adjust our software exposure, there's two ways. One, we're always looking to optimize our portfolios. If we see a portfolio where it's not necessarily the amount of software exposure, it's utilizing our in-house credit experts and analysts to do kind of a line-by-line review of each of the loans, really looking at the quality of the software names within each CLO. We can always rotate out of a position if we don't like the risk profile and credit profile of those underlying software names.

[Nishil Mehta, Principal Executive Officer and President at Carlyle Credit Income Fund]

Two, we do have discussions with our managers on software exposure, their views on software, and kind of what their strategies are on software. We won't necessarily dictate to them, in terms of changing their strategy, because ultimately they have ultimate discretion, but we can always rotate out of positions and CLO managers accordingly. I think the third is, I think what you're naturally going to see is software exposure decline over time. That's going to be a market-wide phenomenon. One, you're probably going to see less activity in the software space, less capital market activity, just given everything going on. Two, as new CLOs are created, we're already seeing that software exposure in newer CLOs are typically closer to half of what the current exposure is. Maybe mid to high single digits.

[Erik Zwick, Analyst at Lucid Capital Markets]

Thanks, Nishil. That's very helpful and insightful. Second one from me, just what was the driver of realized losses in the most recent quarter?

[Nishil Mehta, Principal Executive Officer and President at Carlyle Credit Income Fund]

Yeah. The one thing that we did is, I think, just prudent management of the capital structure. Given the decline in NAV, our leverage was higher than kind of what our target range is. We proactively sold some of our positions and used the proceeds to redeem our Series C, which is around $20 million.

[Erik Zwick, Analyst at Lucid Capital Markets]

Excellent. Thanks for taking my questions.

[Nishil Mehta, Principal Executive Officer and President at Carlyle Credit Income Fund]

Thanks, Erik.

[Operator]

I am showing no further questions. I would now like to turn it back to management for closing remarks.

[Nishil Mehta, Principal Executive Officer and President at Carlyle Credit Income Fund]

Thank you all for joining. We look forward to speaking to everyone next quarter, if not sooner. Please feel free to reach out if you have any questions. Thank you again for your support.

[Operator]

This concludes today's program. Thank you for participating. You may now disconnect.

Participants

Executives

• Joseph Castia, Managing Director and Head of Liquid and Structured Credit
• Lauren Basmadjian, Chair and Global Head of Liquid Credit
• Nelson Joseph, Principal Financial Officer.
• Nishil Mehta, Principal Executive Officer and President

Analysts

• Erik Zwick, Analyst at Lucid Capital Markets
• Gaurav Mehta, Analyst at Alliance Global Partners