BXSL - Earnings call 4 2023 | Blackstone Secured Lending Fund

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Operator

Good day, and welcome to the Blackstone Secured Lending Fourth Quarter and Full Year 2023 Investor Call. Today's conference is being recorded. At this time, all participants are in a listen-only mode. [Operator Instructions]. At this time, I'd like to turn the conference over to Stacey Wang, Head of Stakeholder Relations. ahead. go Please

Stacy Wang

our Good section Funds Katie. today, welcome Blackstone available presentation to issued both our Thank which our of Quarter morning, website, and Lending are of a with Fourth press the Earlier and Full Secured filed a XX-K, Shareholders you, on release and results of Year we Call. www.bxsl.com.

results, and that this Blackstone outside for I'd With like that, which you of be that call audio We today. and to include Risk materially call. see are the consent. This may the of will and undertake duplicated these to Executive from We of is without today's duty the uncertain filed be firm's turn control the BXSL's actual could Brad statements Factors presentation material copyright throughout may Co-Chief earlier to risks update referring do Officer, cast affect not of statements, please over may to any forward-looking call our differ some that I'll remind not results. section Form XX-K Marshall.

Brad Marshall

good Whitaker; and Financial Teddy Stacy, Officer, me Desloge. Bock; joining Executive Thanks President, are everyone. morning. Chief Also you, Thank with our call today our and Jon and Co-Chief for our Carlos this morning, Officer,

fourth will go more into results. Turning before to portfolio I details Jon, to quarter Teddy this on morning's high-level start the thoughts some and to with and agenda. turning it Carlos our over

represented annualized other income, include in to portfolio investment asset highlights on to share on increased yield note, income.In XX.X% XX% with PIC, our to important quarter interest including income return payment, strong and quarter. dividends, and the senior fees our of results, in fee-driven turning its earnings busiest which increased just dividend income, deck quarter we another quarter Slide investment the much in by fourth investment period with annualized earnings, among $X.XX weighted performance. on NII the per a at per of Net quarter maintained BDC deployment solid start credit BXSL per one of value income $X.XX quality traded since share, and in distribution highest So equity. slide excluding while of X% first XX%, the in of XX.X% reported an secured per XXX%. we fourth our net strong X is and net quarter-over-quarter Several of net continued investment growth remains portfolio our representing our that nonrecurring yield, or high, BXSI with dividend income fact, key limited And share posted. the lien peers the It covering tick assets, asset inception highest average share, best along total X, years. second if as the of their represented the

to a loans. continue on by our protecting first mandate of focus capital We secured senior portfolio of lien investors' constructing

by lowest of percentage fair as investments secured a of rate is average lien below XX%. XX.X% As supported credit total XX, value. both debt cost at our loan We senior marked with of strong minimal among market first amortized BXSL's cost X.X% December BDC debt value, and approximately And XX.X%, a traded X.X% portfolio are to performance had peers. a our nonaccrual below

and a presentation period the $XXX in now in Turning activity, saw ending to investment billion at increase fourth over new deck. with fundings. investment quarter, meaningful BXSL par commitments of million and investment Page the In new X the $X

approximately reflecting New average million high-quality we $XXX in on believe loan-to-value investments over average focus were weighted EBITDA XX.X%, continued an are the of a XX% funded quarter what with investments. lien our of and first

nearly and points M&A volume weighted with was From quarter strength of the X years fourth call a as billion, year-over-year. spread market increased of addition, basis $XXX see perspective, XXX approximately activities building average average we average on almost In X.X% a an protection. boost OID XX%

the We This is financial ongoing the as largely our market sell-side M&A accelerate of assets M&A sponsors than the by narrowing amounts activity in lower XXXX. of that XXXX, expect rates an that to equity activity spreads of bid-ask we between view to prospect XX% recent expected vintage by to previous dialogues the sponsors buildup sustained advisers be and unsold and whom most interest with continue can peak we XXXX. in supported sitting sellers. lower as build dry the by This M&A levels large is powder, and on continued record expected of impact cover older activity funds lower with driven partner of well private with. the top buyers activity be in in and

end are deals and of These In know credit companies. quarter. quarter the Blackstone first of secured addition, we of of the end pipeline number pipeline historically, lien predominantly senior in exposure insurance in well. the fourth very the deals And doubled the sectors the versus first recession-resilient as

an which globally. every BXSL's and will XXX credit volume assets the is under borrow we to offices in largest with the not origination that pace Blackstone XX into pipeline scale and convert know scale believe professionals high, investments, of managers drive or alternative investment benefits one opportunity gives a billion us and we $XXX the in remains presence world's deal While BXSL's underwriting we BXSL management have flow. platform sense for institution from in over and our as the

flow, and has been BXSL's direct most the leverage Our incumbency are what lender approximately in assets. into of more since XX% issuers transactions in believe we risk-adjusted Further, allows inception. X,XXX BXSI incumbency attractive over the corporate lead sole or see lending select us to our deal

quarter BXSL's, documentation. lead, transactions the which of be This negotiation position deals a alone, in to XX Blackstone us terms XX funded or allows of to for drive and

weighted there just our over with offering increased our earnings equity capital average through XX.X% shareholders. XXXX refinancings this was for drivers spreads, quarter, a ATM of favor cuts And supported advantage activity, basis. During as rates our we by for include remain which These interest on we was million that in of fourth very and our believe improving evidenced of drivers and return a income an the of we sustained are NAV mentioned, elevated We a to take higher drive to additional lot rates, our can lastly, additional capacity nearly $XXX could cost secured And tightening has just portfolio. X%. see as we returns are result well our believe appreciation activity. could which potential I asset of starting credit multiple positioned driven since in later issued year, despite shares common work environment return in potential lien also best first quarter with by M&A performance increased of M&A we which in senior year that XXXX. inception where by and deploy debt,

I with So will that, Bock. turn it Jon to over

Jonathan Bock

let's X. Thank you, $X.X from Slide with an turn And quarter billion increase the investments, ended the Brad. $X.X of We third in to quarter. billion

equity modestly Xx delevered in debt to the and and X.XXx We averaging end quarter quarter. the at also

borrowing lean and our expanded capacity enhanced ABLs, the That's of and billion. credit that's including across this revolving into comprised liquidity we an pipeline. $X.X Now available quarter to cash facilities, position our

XX% yield quarter this Our last quarter. weighted average value compared debt to fair on was investments XX.X% at

on in to new be expanded XX.X% investment the And on averaged floating accretive to our investments we and the paid investment fundings elevated. weighted points debt as rates around importantly, quarter income. quarter the base XXX rate assets basis quarter New compared The to approximately XX.X%. over same remain the year debt both portfolio yields during rate the continue prior average fourth

no Now environment, at and our in defensive continued BXSL nonaccrual quarter. this X. current of than new nonaccruals the fair value in market market at look focus the Slide on cost is on reflected let's its the rate less portfolio and and X.X% positioning to in with

look we cyclical into neither market to and with capital-intensive expect in see smaller XXXX, dispersion across with we are companies in areas, businesses the which within and in increasing focus. BXSL's of investment performance particularly certain defaults profiles, As

remain expect with underperforming BXSL out we're where pleased Chief overall also XX next while maturities drawn. months of X% have companies the our further, pick with upcoming liquidity very And up team Office. sponsors in Investment and expect taken healthy. exposure Credit profiles that we of BXSL's to modestly, we rate, have more loans than Insurance's continue And defaults Blackstone facilities nonaccruals addition, is to face In to while in our closely, market we of fewer credit maturities portfolio could nonaccrual revolver of XX challenges. professionals leveraging XX% our And businesses value and monitor

sponsors significant look or BXSL. those Taking willingness loans access equity also borrowers. value a a other loans to investments are Slide strong in BXSL's be generally lien X. equity our equity to interest of an healthy environment who XX.X% this structures private starts to XX% equity sponsors by have in and these from firms a later this with type XX% companies over in average to what and owners base. And could to shown capital owned These of historically fundamentals of loan year, credit lower are at senior value in Now of EBITDA a financial have complement additional capital very support rate portfolio have secured first

as view higher can companies You see why larger we performance borrowers.

million million $XXX at EBITDA, than average. up end generated private of quarter companies XXXX market the credit approximately an portfolio in the of the than Our and from $XXX of fourth LTM Xx larger more average

markets and in Lincoln middle nearly than EBITDA nearly transactions. not environment a We origination we a because As we has a EBITDA array on sourcing growth are, can less default of big private that and And credit greater as increased or believe extensive to are Xx companies investments in where this capabilities larger they our compared have good. they said, see we're companies million And true attracted the often ability and are simply activity, from in private to are broad with when have good database, $XXX market of big. market experienced are higher these earlier. International market Xx the Brad our risk-adjusted view, choose resource overall, market anticipating identify because opportunities they outlined engine,

Now on Slide industry exposure. focuses X our

lower like CapEx investment neighborhoods. And default key rates this Another positioning defensive requirements. on lower we better focus themes, and other focusing where means important among with, sectors part to of on our

in And nearly to the are industries. quarter, supplies, closed providers increased in while and services deals services historically Lincoln. Slide of higher maintaining highest continue the number and care were the higher portfolio.On by default of nearly industries, which lower profitability. This portfolio growth private focus portfolio we across XX% market, can Xx looking the Xx default software, commercial compared as companies some has market of rate private historically to fundamentals and rate companies software approximately the XX, see invested relative and to on health conviction BXSL approximately the portfolio credit themes BXSL professional as industry including generate XX% more services, XX% BXSL's We exposures our credit rate and highest we lower company measured have

the LTM Lincoln for interest of the Now QX. at last coverage. market months, the companies we which portfolio stress private X.Xx coverage compares importance to X.Xx Average the over QX, of in BXSL in coverage to interest database was for credit continue EBITDA again favorably XX

comprise sales we portfolio the are even basis. coverage and to LTM at here more market X% important below companies understand to compared an As say, these is tails interest of on key which reflected the always XX% It what's and Xx them. driving BXSL's

Xx with these you're XX% associated if below than deliver looking ratios. BXSL, recurring the to of which fundamental EBITDA. especially with versus are underwritten revenue more to at continue BXSL's the than market lower coverage we've companies exclude And performance. the EBITDA seen the names higher the loans, growth interest X% our loans of becomes for you from markets, were portfolio the tail coverage, recurring interest relative If their coverage market, XX%, million below less share Xx analysis, companies coverage broader private at than initial small, strong And revenue less portfolio credit Xx companies $XX in of the below at as are majority with looking

ahead, X.X%. year, rates pricing current expecting implying the looking XXXX fall Now of market to begin an is average to SOFR this in rate

a cash that, to Now flow as spend to BXSL's turn, companies. our reinvest can excess lower ratio X.Xx know, that prepare portfolio's hypothetical rates portfolio as cash data X.X% cash lower free a on free growth increase equal. sale holding And of interest into running the refinancing. constant. more of through burden all that's rate X.Xx point, other at else interest payments, Rather holding or for placed average interest and in effectively or many currently portfolio base equity coverage you in than the illustrate XXXX And allows imply QX interest a borrowers from flow to this the

and points conclude I'll some activity. with Now on recent our documents amendment

indicated, protections are protections credit BXSL when Blackstone especially our asset Brad XXX% collateral and negotiate leading important add-backs caps on This market significant have held liquid lease depressed majority the put loans on lender stark of place. certain a the we believe against the we're have lender, lead As contrast Nearly and past in deals ensuring placed include driver of significant EBITDA. we agreements, year. of we in over kind protections loans the been stripping when the is syndicated these where and in focus lack to which in of recoveries

sponsor amendments. the extensions were with fourth vast in add-ons, additional with immaterial provided an technical the BXSL, with associated extension other a XX and activity associated Finally, were were significant In the quarter, X infusion with one underwriting. there other be and Among of majority a option one continues PE providing benign. other by and equity which PIK amendments, effectively initial an there PDTL matter. And amendment amendments was X The relatively flexibility the PIK was PIK to associated on amendment associated investment. underperforming

the Carlos. on extended tests. the our contributed also associated investment, equity, And call one also equity turn sponsor with protection the PE who was recognizing in here covenant we X I'll with proactively we to deals over by that, it additional new for And Now underperforming the of years. engaged amendment and

Carlos Whitaker

Thanks, Jon.

XX% to XX. increase years IPO per XX% since of $X.XX distribution Slide increase maintained X QX of Turning BXSL a our dividend ago. year its share. a from and last

confidence As share. high-quality you level while per we continued building see, dividends regular also focus NAV through yield on to of steady can have shareholders, delivering building a to

approach We expect this to continue.

shifts, whole. a environment economic to at look the As important it's as market the

improving. are as M&A trend is deployment private Valuation credit we is rates for noticing equity trillion activity. market regarding private we began Brad's expect prospect sidelines. for Economic powder on sentiment Record Fundamentals tighten about volumes on $X.X in M&A optimistic spreads point the there pent-up cost healthy, capital To picture the We new if fall, have late is XXXX. dry expectations improved. for a remain drivers to increases, and activity, a XXXX. expand of of lower and deal all

credit our broad we footprint, to expansive Given platform of well this BXSL origination positioned believe advantage is and take environment.

which Another the and value Blackstone to benefit returns, main we broader offer is our companies scaled to us companies investment all allows opportunities Recall, our by seeks across their access to creating our creation which assist franchise, drive portfolio lowering expenses Blackstone have focus. a program, portfolio. investor BXSL cross-sell

plus BXCI created addition for of our have to their billion implied We and lender. enterprise being $X.X companies, value in

included this planning, consulting investments. a architecture optimization over requirements ecosystem service and selection, and made we with borrower. other enterprise resource all in to $X for example, million This sales digital Blackstone planning the material and For cloud XX for and projects directly broader Blackstone provider generated approximately across enterprise introductions

We service just also put together here. $X request the consumables. to contained for management The are over a request health we for X,XXX worked SKUs. again, through for proposals a almost the And provider with this care And million. borrowers save lender process, medical

our creation remarkable. us quite structures, on and to attractive as of alignment. It's a with and with. of to debt has our shareholder such ties relative add returns which our experience expiration consider of emphasizing to cybersecurity and QX. practices. the of fee all But helps as of our to BXCI to We risk-adjusted is and advisers shareholders of ratios waiver, us XX be that set as the build our offer to drive attractive data and built partner all assistance our to to returns XX ultimately to expense companies, portfolio able to a This BXSL scientists, of a to best value access industry-leading of cost we over investors. peer services provide we believe lowest a experts, Even the focus to borrowers worth deliver we provide So value end to makes we BXSL defensive fee after NAV senior percentage aim manager this help an point among be what over team

fees the fully fees We our amortize the incentive have of upfront of BXSL's a loan not portion X-year scrape And back, investment-related look hurdle to total on life the by related do income. to of on passing the return we fees fund. over manager OID to importantly, and all

to and differentiate Teddy. over another that, alignment we And turn way I'll shareholder of ourselves. it aim to example Another with

Teddy Desloge

I'll Slide NII in Thank since the investment income results $X.XX was quarter, IPO. share, XX. Carlos. quarterly $X.XX In or the share, up net highest on start BXSL representing second was with performance from year our you, GAAP XX% million a or $XXX per sales million fourth operating per $XXX ago. the income our quarter net

for driven income higher quarter. during income or primarily our place Our near in would up year-over-year, to or expired like end increased IPO of acknowledge $XX Payment due was October XXXX. to rates. quarter in since represented total We kind waivers PIK that investment income income the XX% investment the the fee approximately million total X% also the interest by of

XX.X%. management $X.XX share will and quarter for included X% X/X of The incentive waivers partial per approximately NII partial this While quarter. its of fully of the of incorporate period, waivers approximately BXSL added the full future fee quarters fee to

debt outstanding $XX.XX, the in excess up last and our billion balance quarter XX. quarter. NAV total per at ended from billion billion than With dividend the the investments assets. $XX.XX strong in quarter, to increased portfolio total We share of Slide Turning nearly value, sheet net fair on with of of of earnings to $X.X $X the less $X

rate XX weighted bonds weighted view over Slide fixed of of our just to value advantage of at fair of on XX%. to a diverse coupon attractive rate less investments debt average we a our X%. XX% debt These outlines drawn yield in profile, average and borrowings average in overall this liability an includes bonds. elevated as Next, this and which interest contribute our on environment which have unsecured X%, than compares Again, key weighted

years. maturities average X.X have on no funding facilities we overall and weighted an liabilities Additionally, XXXX, of until our maturity our have

with The $XXX closed. an As in outlook available mentioned significant portfolio that corporate active BDC in by XX in ended to plus providing and to to borrow, investment-grade to our the capacity debt for BXSL in XXXX growth. most maintain that approximately and cash closed an December prior to We investments receive our date of as our traded of stable $X million continue positive X over from Moody's, us not with to earnings continued was XXXX, improved first quarter BXSL committing the since call, we credit to additional undrawn have BXSL quarter was $X.X billion yet the committed of with fourth billion liquidity have quarter quarter ratings. yet

heard from that Jon opportunities and seeing Brad, increase we our deal and new will in pipeline. you deployment As play Carlos, believe through create activity we XXXX are

loan and the what indicator market, activity We have we rise spreads a private seen to in side. syndicated generally the leading for see also expect tighten in

expectations. a while environment, up performance remained where to we strong, capital As in set exposure structures leveraging wire were incumbency company are actively spread retain exceeding such, has

agreed nearly call quarter, average repricings for we in of additional protection. the portfolio, in the exchange years X of in example, to For X fourth an

protecting against differentiating positive peg such modest versus can place, solutions finding In DDTL and peer competitive offering offer, also market portfolio the the about or various we supported are refresh robust what conclusion, factors advantages to environment elevated platform deal more metrics year what ask into we operator performance positive up robust Blackstone's that remain flexibility. and are We market sources, earnings including environment, still ahead, in modestly the deploy as private all and continued in in financing ample set. the syndicated believe We investors liquidity powered that positioning is backed have by for by for the for of returns sourcing be success our capacity our elevated questions. believe in remain a investors' rate I'll capital. will and focus scale that, on advantages With low-cost you. open to Thank which but lower our a

Operator

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

Finian O'Shea

there end direct higher BXSL many, just repricing. at how Interesting the guess back? color is, concept on comment I by then major offer has lending. I'm And if a been us the quarter repricing post sure first, you not happened the level Teddy can in with come

could evolution touch market if is on you that's happening If real time. a this in

Jonathan Bock

Yes. Fin. Thanks,

sort activity So continued, on of not to your has extent. overly material first question, repricing

capital rate repriced the QX set outside I repricing, a of some SOFR the you up at The where look environment. the at these agreed that higher or we think if spread in structures environment average have were clearly or on market were where around is today. inside we deals of to spread XXX right higher just

those were call met of new All protection. with

extend to make we the in that portfolio. trade So duration

Brad Marshall

assets, Fin, we're Brad. it have take a but to would the bit usually types at if call is a And those I assets. phenomenon, important new that's option But and of always your higher-quality deals. on protection. extending duration back delevered, have why they've of call the on your okay say it's capital protection you to it's with

Finian O'Shea

I helpful. That's with capital Okay. the raising. follow-up, can about talk my guess you then for strategy And

on but You've I course account not that mostly yet. the gave the of gone it's comment X the some the on has leverage of from year, you XXX constructive outlook, to know over meaningful ATM. deployment

the So how pedal post still you to today? And quarter? at are looking metal you that are

Jonathan Bock

capital based on you've the equity And the pipeline set the heard I your of would size focus, that pedal development pipeline. on It's comments develops. seen, and not as metal you you've Bock. forward forward outline opportunity the Brad's

sizing return. be generating large through our we think to the what's ensure are the equity we're we're very high-quality to have them very that that nature. outlining investors in is attractive ATM will program, that goal access growth, ensure of I And some

monitoring so daily basis. a on or that quarterly And

in level overwhelm in don't you you build So to a build starting see you're return. but to could expect forward see of capital, the pipe, a let that

Brad Marshall

I'll just that. to add Then,

So I deployment. and bit a things in building market terms see think we pipeline the and of assets maybe before little

saw get since XXXX. said, quarter we that was You of as the certainly fourth busiest some reflected quarter our

seeing activity. a tick we material in are So

of just that's where being the not XI driven a basis. portfolio across on incumbency, can portfolio, by Some in but existing originate deals we our proprietary

you give And of the than but I to about Just weeks, stats, the larger was doubled. said in is it some from the Xx has deal pipeline we this, coming couple think ago. in more maybe X sell-side even flow months advisers past than

So in we're the our what's again, on of very, But sure advantage investment evolves. to your Recognize it's can has point, to capital about we back always we'll active of going first activity leverage take the us. of quarter, see in very the fourth make come quarter be structure how front thinking down. and

Operator

Capital Lee Markets. We'll go Ken RBC with to next

Kenneth Lee

just mix your syndicated normalization In originations markets, could you broadly the either on terms think pace impact how share you be the the this could this that or year? of I could of of new seeing thoughts loan if wonder the you

Jonathan Bock

the keyed year. market. calendar of I at say public the broadly And most quite points of because are of basis quite wouldn't I -- would tightened has So been say bit, somewhat hasn't But repricing. on markets months the a private least a probably There markets been first in have activity XX new off couple much it come the has to been yes, by the of of active the market. the syndicated

private could activity, in spots with that line So came we deployed Again, were one asset we our so with the assets the funnel with that a expect in were globally, BXSL. can't line across spreads do quarter market. out. We pretty coming fourth the spreads assets broad have the pick the deal in

both keeping negative. positive are a and pace we're So Spreads a

maybe that, being all asset just so on with else equal, to And hit prices increase. should tighten, spreads

driver it price bit and your existing upward of I So have in little of does comments, an said assets. -- the a my on this

Lower And that's more does spreads, more So creates and market fee increase should. at it deal positive. least lower or activity acceleration. activity, rates that turnover

course, on offsets the has, an another XX in a this yield the bit more even basis portfolio your than of of of new potentially on fees assets. the portfolio positive it what, then, little that's So invested was that accelerated But a points is and you're that. headwind and of market basis if of impact being getting on XX%

So continue there to some a really you this cons. of and and spots are having deal us market the will pick benefit And our pros see deep with funnel. in wide

Kenneth Lee

Very helpful And one I follow-up, if may. there. just

of on sounds pipeline there there. get particular Just terms that in the activity little color pretty that Is seeing activity the Any any you're particular bit In seeing to more there? robust. sectors? what drivers you're the across a you're commonalities want seeing

Carlos Whitaker

Yes.

the fourth what is exposures, mentioned, what we On in pipeline. is the as quarter I pipeline, I sector similar to in capital larger consistent structures. think the couple of things we're the deployed would Two highlight seeing first, is, Bock

volume, So in the as the billion transactions pipeline. than than Brad mentioned, more $X volume double double of the larger

the We I M&A our see think, generally environment speaking, we are about that pipeline. early in this optimistic year.

see continued narrowing is towards between the coming we rates prospect and for the valuation to need certainly happen back helps horizon of down of lower and buyers cost to half this sellers. tightening prospect then That's capital on Brad thing the one lower the modestly think starting do year. between mentioned, with spreads with, I as of

Jonathan Bock

and add we're I'd half of market would right the now, our least creating. just flow Ken, that, into at And is, deal going say, what I to

strategic whole fourth had across the the could do a we in which provider angle our comp, that We We structure. the health the only value-add take incumbent. were So capital did We quarter. was group. We were around that. capital

flow size, the in into deal this that's things we that's get continue spread across in deal. of are in we is market. broadly I the no are from market syndicated committed deal leaning of billion And fairly over was So to activity trying saw that we're large, message accretive We're $X our in this robust even to going with some and these will to to on else drive week a with these a transactions a one standpoint, BXCL opinion. types another that to my

different go can that things where lots but this, So flow, seeing of from deal we're mostly ways that's about we we're that creating.

Operator

We'll Instructions]. Morgan. Wedel next JP with [Operator go Melissa to

Melissa Wedel

on be comments also seems to right and wanted rich pipeline I that the the to follow now. about up how

And I we've expecting back early or year, counter teams increased for to that? folks this Are of from you differently that think a Or refi there's seeing origination activity? particularly exits few that? pickup year. imply different then in what Are a we while are that volume is lot of repayments than anything management environment? also, a the this half a seeing net does heard this that

Brad Marshall

the can pricing and comments. Teddy on the to it pipeline mentioned it because point I to do as then Teddy those repayment can as building out relates build to then relates it what ties

repayment Intel, also and So Melissa, defending them, year-to-date as proactive proactive sourcing deals we're you've both muted. near-term remain in seen or in both

choosing our so credit is books And a that's to and make. spread of our still base a at attractive an relative function to view decision cost on asset an we're that our liquidity

relates to than And trending deployment, to we're as say expected. turn I'll I'd my so perspective, from better And it colleague. a repayments then

Teddy Desloge

commitments we're comments, A Brad's with prior consistent lot deal sell-side working on today think earlier stage. deals what generally launching. of I Yes, are we're to seeing

sell-side meantime, So quarter, because of financing does I think of last situations, another half M&A then back source were with apart of that lot recap, a ahead of to processes, up were able of we for a this year. to couple there process. the where sole valuations, show processes particularly friction In fell a a the come

that have we A today, commentated side the positions situations have of we're private out front we are very or of. So lot those liquid what on the those positions. are in in

Brad Marshall

year, from in with it's comment. up hope think the this of the not I But second I I second we as picks of what strategy. the up half picking others. activity Well, in half hearing is a most you're hope activity comments agree would that are, that the

years, wait and not through being for flow the sit to pulls to So M&A we're was more activity twice that to trying we're as But out would comments, PE are activity is X as absence ago. up. M&A The deal towards is inbounds But for us dry highlighted own long current it not our develop A Teddy's active increased market. to a and have all too past twofold. that sell-side lots logic certainly happen light very pipeline, our true. of that more should large which back I going look pick in the powder, of which

that. the yes, picks the are things broader find that those seeing. hope absence near-term of but we're we'll in kind and we deals market So out then, And go of up, also that the the

Melissa Wedel

broadly also those companies If up the in being you're repricing could proactive, could what refinanced did, conceivably I are about or deals you Understood. yourselves deals the The talk Fin's to think follow that on I question. syndicated referring that you market? have and that's when finding that

Brad Marshall

actually Those separate. deals were

those So clearly is set up deals were at a spread capital structure wider environment.

in the own and M&A call to help those. deals that to put some to syndicated public he have structure our capacity credit We've on to areas delayed extend public So shortly. And our that Most some performance can draw Brad strengths in There and our where around that execution. access drive on the from pipeline, seeing providing We value deal certainty capital certainly was where closing differentiate from markets. Those to referring that. private. utilize one private of XXX lenders are that's deals numbers The that where a reset seeing those can we to are XXX market. protection, ways we're did to capacity, for referring going fun. differentiation was the that able actually been average was see that of more those perspective. has the were Those were SOFR duration were closer exceeded expectations really

deals XXX capital. the company private end We a deal identified have flow. They more quarter we of to that need may that and try at the maturity. capital They we may growth create may have a into structure. They prefer reverse want to fourth the

only are can markets go little them. and scale. you if public So more customized active, even in you have And the bit do a that's create we when can that something for

a platform, some if the can that, the you can capital can across that you will So shortly, in others. those obviously, majority of do only $X you well you proactive only mindset. bring large your structures scale have only couple and will you are incumbency if have more anyways they will sole billion be in of deals close likely And do or you that if do a have over

Operator

We'll go with to Casey Alexander next Compass Point.

Casey Alexander

the You been portfolio. marks were in rates talked down about broadly spreads the appear supportive fourth the general quarter, for and have of to should interest tightening be which actually

contour can a relative feel should of $XX have what pretty that good environment? So the depreciation caused been us quarter give in and a pricing what for against to million the unrealized you that

Jonathan Bock

take happy that. I'm to Yes,

appreciation repayments. repayment over So the of had quarter. of we as that XX%. unrealized to unrealized depreciation, million just a was repayments $XX over was That number saw it million We the annualized that in $XXX reversal some of of an of relates

gains. you when move. So about X/X the That reversal of have do a of that unrealized happens, was

in other well. The markups offset X/X as were the by portfolio some

I spreads think actually quarter from relatively were the in a flat. perspective valuation

we've most close that of quarter the seen are that first quarter year. committed likely spread the I deals second we're won't the this the to that until quarter of tightening think or in

think room market and some in I that reflect go today. seen the fully haven't to still tightening there's spreads on So

Brad Marshall

impact shouldn't Casey. Rates Yes. marks,

X.X%. more be of So in below would the the it's on, the spreads focused marked we're That come of just XX. quarter. most is couple list below I'd in X.X% is first have Only X.X% a that portfolio the you of stats. more and give assets spreads the other

really So but still in portfolio assets good we our is to shape, market. mark

movements some you're and so And up some down. movements in that seeing

Casey Alexander

minor fits X% was maybe PIK Can versus that into reasonable today. us about a That's point, rise how there for then quarter. investment a of the comments Okay. income total rest And secondly, you feel but your third income now. give a of in the earlier

Teddy Desloge

that. take maybe Yes,

income to don't there's the one had to point It about that that, picked percentage that So flexibility specific We up cash. position quarter. X was to full out paid point the from X% we quarter had there. modestly. was low LTV in It's I that if know anything where up I good can X% Offsetting in of market. have differentiation think, an PIK PIK time, in higher-performing we the fundamentals. can bit a area, with smaller you amendments of you little for did good it. see syndicated situations, a area sectors is where an where over couple from did It see roll off agreed

there's to public between or because So I PIK versus of think versus PIK new differentiation deals underperformance markets. a difference due

Brad Marshall

just add I'll numbers there. again, some And

of dropped. and of had added, is XX% mark couple get The ones couple the a ones smaller X added, So that got then those assets a we average approximately.

but Casey, around to give low you a just the they're at of I industry. is option. elected that of performing part in cost, So marked the think X%, PIK end sense assets, they've still they're probably their and

no other the going than to trend as rates seeing that you're So high, option, have they're stay use it. companies

Operator

We'll go next to with Mark Hughes Truist.

Mark Hughes

new the about in talked think, average I You million this EBITDA. quarter, $XXX deals

pricing norm Your of lower is deals find that, Did end anything Was you are at there. more out maybe about some $XXX attractive the talked overall to the a million plus. notwithstanding, market? bigger middle you that little

Brad Marshall

anything specific to Yes, point I don't there's out there. think

handful our that growth still were closed the existing have driving deals. of There were of sub M&A high and million portfolio, that We organic growth growth, that deals a were seen quality. $XXX which existing we in very is

change in no strategy out point to there. really So

Mark Hughes

your given other events industry the And in some the of to exposure health care you highlight credit anything then in some want highlight issues? or not and

Brad Marshall

Yes.

is we time. care, our health our team. have care that specializes everything. I sets in We We a think that see health lot area spend exposure investment team a where do one of the

business what aren't our more overall focused I that of situations in But the think seen is are business models cash focused rates good really we have specialized high tied before, There are bit couple much of portfolio. regulatory relatively inflation, see that that we've higher. areas models with are to that of are commoditized where capital are on more little that models more on the mentioned of are roll-ups as stress where more part pressure. are that we components that labor seeing models a flow we business that overall, pressure or performance a constrained

Jonathan Bock

you we're while about lot completely extent if we're have a other or And the to a of think stress level mark. found immune. whether And you seen Mark, in and reflected indicative it also that, to practice, an it, would that see where from that's you or be PPMs area to an insulated name, the trends add of not physicians might the in

which Clearly, that, always we SOI. on of situations. in focused can same they're small. see that reflected at you very in stress marks level the ensure those the is time, very But we're So the

Operator

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

Paul Johnson

a Or repricing the then you PIK just on repricing? my to XXX that the I transaction? that, terms here much Or and basically it transaction? repricing. do of see of less you is question more in answered how expect just But I identified execute portfolio more guess, driving Brad opportunity or effectively sponsor quick? one terms I to in deals. on that in low-hanging in pretty of reunderwrite mean, of guess discussing pipeline? the the relatively question. Is you fruit also calling in the terms just meaningful describe that the be as work, It's And you matter that you portfolio would is it

Brad Marshall

actually market. We're process. I own, said the don't those, ones situations, And through. of going no, if of create gone we've to through say, and to the through And and XX want so in asset, too very we're high, we reiterate back to different. those that yay. the new if XXX and for trying deals, you we repricings but deals. pricing if reverse flow. are just review those it our between what go they've exchange on mentioned. working There Paul, not that usually sponsors, to usually distinct "Hey, out we in And we reprice." call into say reset entirely we sponsor a things Yes. of or was something nay, out is protection have are other difference is reach you These is either we're of yay ask Reverses said XX% the says, we deal and the or reaches Repricing they It's know protection, you different. shelf them the the call Teddy and yet own

the on we're a that's and what in standpoint. have the repricing if different through can role of anyone to BXCI our our as platform, invariably strengthens. create from so balance we invested mine the platform we differentiated in highly in sheet. banker focused play ideas. than think we market, go you very over will with So a than It's that market reverse almost the X,XXX can exercise companies about can It's a portfolios, We are

Paul Johnson

there. you it you description to from expect, the play happens any do because more mean guess, helpful if And very that Do do prompt of then what I It's have to the I election think expect the pipeline into year? this years. you anything? I just every X will I last ahead how election. mean sponsor just one, ask transactions behavior,

Jonathan Bock

we election deal are know. about election Yes. should worried flow and get The think don't people you see because I year, pulled volatility. in change forward

that we're been more years. pipeline on equity have guess for sidelines sitting at seeing private true. accelerator suggest a that of sponsors And if is an that history, that's what unclear the or look of the that couple in pickup past the you would So But if happens. hold a I will that, fact

So we'll and see. wait

Operator

for any question-and-answer you. Wang Ms. additional call will Thank conclude back That like session. At remarks. this time, or to to our I'd turn closing the over

Stacy Wang

you. for to speaking quarter. you much concludes call. dialing next to look so forward quarter We This our fourth Thank you Thank in.

Blackstone Secured Lending Fund (BXSL) 28 Feb 242023 Q4 Earnings call transcript