Blackstone Secured Lending Fund NYSE: BXSL reported first-quarter 2026 net investment income of $179 million, or $0.77 per share, fully covering its quarterly dividend, as management emphasized the resilience of its senior secured lending portfolio amid market volatility and rising non-accruals.
Co-Chief Executive Officer Brad Marshall said the quarter unfolded against “an uncertain backdrop across asset classes,” citing negative returns for the S&P 500, investment-grade credit, high yield and broadly syndicated loans. He said leveraged loan spreads widened by roughly 50 basis points during the quarter, while private credit continued to see demand from borrowers, with more than 80% of leveraged buyout financings through the quarter choosing private lenders.
Marshall said BXSL generated a total net return of more than 70 basis points during the quarter, deployed $325 million of new capital and saw nearly $450 million of repayments. He added that the company has visibility into more than $600 million of repayments over the next three to four months, which management expects to use for a combination of new investments and share repurchases.
Dividend Covered as NAV Declines
Chief Financial Officer Teddy Desloge said BXSL’s $0.77 per-share net investment income represented 100% coverage of the dividend on a per-share basis. Payment-in-kind income represented less than 7% of total income, down from more than 8% in the prior quarter, while interest income excluding payment-in-kind, fees and dividends represented more than 92% of total investment income.
Desloge said BXSL has out-earned its dividend every quarter since inception. Since the beginning of 2023, he said annualized earnings exceeded the distribution yield by about 160 basis points on a weighted average basis, leaving approximately $1.80 per share, or more than $410 million, of undistributed earnings in net asset value as of the first quarter.
The board reaffirmed the quarterly dividend of $0.77 per share. Desloge said the dividend is expected to be covered by a combination of current earnings and prior undistributed earnings, describing it as a “temporary bridge” as the company aligns its dividend with a longer-term earnings profile following lower rates on its predominantly floating-rate portfolio.
Net asset value per share declined to $26.26 at quarter-end from $26.92 in the fourth quarter, a 2.5% decrease. Desloge said the decline was primarily driven by $0.67 per share of unrealized losses, partly offset by $0.01 per share of net realized gains. The portfolio was marked at 96.2, down from 97.3 in the prior quarter, reflecting broader spread widening and company-specific fundamentals.
Non-Accruals Rise With Three New Positions
Non-accruals were 3.1% of the portfolio at fair value and 4.7% at cost. Marshall said BXSL added three positions to non-accrual during the quarter: Medallia, Affordable Care and Paramount Global Services. The three names represented more than 88% of non-accruals based on fair market value.
Medallia, the largest of the three, represented 1.7% of BXSL’s fair market value and was marked at 60.3. Marshall said the company paid its full quarterly interest in cash in March, but lenders have begun working toward a restructuring. He said BXSL and other lenders plan to invest new capital and “meaningfully delever the balance sheet,” allowing Medallia to better serve customers and invest in new products and artificial intelligence features.
Affordable Care, which represented 0.73% of fair market value and was marked at 69.8, operates in the dental services space. Marshall said the business has faced weaker demand trends and an elevated cost structure. Paramount Global Services, a building products distributor, represented 0.26% of fair market value, was marked at 65 and remained current on coupon payments. Marshall said the business has been affected by softer demand consistent with the broader industry.
Management stressed BXSL’s position at the top of the capital structure. Marshall said the fund had nearly 98% first-lien exposure, with almost 50% junior capital or equity below its positions on average. He said the portfolio’s average fundamentals remained stable, including high single-digit EBITDA growth over the last 12 months, EBITDA margins of 28% and interest coverage of two times.
Repayments and Share Buybacks in Focus
BXSL ended the quarter with $13.9 billion of total portfolio investments at fair value, $8.1 billion of outstanding debt and $6.1 billion of total net assets. Total liquidity stood at $2.3 billion, including unrestricted cash and undrawn debt available to borrow. Net leverage was 1.27 times on a net-of-cash basis and 1.32 times on a gross basis.
The company’s board previously approved a discretionary share repurchase plan allowing BXSL to buy back up to $250 million of common stock in the open market at prices below net asset value. Desloge said management expects to evaluate repurchases if the stock continues to trade at discounts to NAV similar to those seen in the first and second quarters, while also weighing new deployment opportunities and repayment volumes.
During the question-and-answer session, Desloge said repayment activity reflected a mix of strategic sales, one company going public, sponsor M&A and refinancing activity. He said the portfolio has about two points of call protection and unamortized original issue discount, which could contribute to income as repayments occur.
AI Infrastructure Highlighted as Investment Theme
Marshall said BXSL’s largest new commitment during the quarter was to Firmus Technologies, described as an emerging GPU cloud service provider. Blackstone led a $10 billion GPU-backed debt financing to support the company’s cloud build-out for large investment-grade counterparties, including hyperscalers and enterprise cloud customers. He said the loan is senior secured, denominated in U.S. dollars and backed by a first lien on GPUs.
Marshall said Blackstone has led or anchored nearly $25 billion of GPU financings and is the largest owner of data centers globally. He said BXCI continues to see opportunities in digital infrastructure, life sciences and infrastructure services, areas where management believes Blackstone can use specialized expertise.
Management also addressed AI-related concerns in software holdings. Marshall said BXSL’s software portfolio had low double-digit percentage last-12-month EBITDA growth, with exposure concentrated in historically resilient subverticals such as data management, enterprise resource planning and security. In response to an analyst question, he said about half of the quarter’s markdowns were tied to two positions placed on non-accrual, while software names were marked down 270 basis points during the quarter “based on AI concerns, for the most part.”
Marshall said defaults may continue to normalize from historically low levels across sub-investment-grade markets, but he argued BXSL’s senior positioning, negotiated lender protections, income generation and active asset management are designed to support performance through credit cycles.
About Blackstone Secured Lending Fund NYSE: BXSL
Blackstone Secured Lending Fund 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.
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