Palmer Square Capital BDC (NYSE:PSBD) reported second-quarter 2026 net investment income of $12 million, or $0.39 per share, matching its total quarterly dividend of $0.39 per share. The payout included a $0.36 base dividend and a $0.03 supplemental distribution.
The company said its board declared a third-quarter base dividend of $0.36 per share, while any supplemental dividend will be determined in the normal course. President Matt Bloomfield said the company has generally sought to distribute nearly all income generated over time, although payouts can vary from quarterly net investment income because of spillover income.
Investment income declines from prior year
Total investment income was $27.3 million in the second quarter, down 13.8% from $31.7 million a year earlier. Chief Financial Officer Jeff Fox attributed the decline primarily to lower base rates compared with the prior-year period, along with paydown-related income and fee income.
Total net expenses fell to $15.3 million from $17.8 million in the prior-year quarter. Net investment income declined from $13.8 million, or $0.43 per share, in the second quarter of 2025.
The company recorded total net realized and unrealized losses of $3.6 million, compared with losses of $6.7 million in the prior-year period. Fox said the quarter included $6.3 million of net unrealized depreciation on existing portfolio investments and $6 million of net unrealized appreciation associated with exited investments.
Net asset value per share was $13.21 as of June 30, down from $13.30 at the end of the first quarter. Long said the June NAV reflected fair-value adjustments tied to pricing moves in the broadly syndicated loan market.
Portfolio activity and credit metrics
Palmer Square’s investment portfolio had a fair value of approximately $1.11 billion as of June 30, compared with $1.15 billion at the end of the first quarter. During the quarter, the company made 21 new investment commitments totaling $72.4 million, with an average commitment value of about $3.3 million. It also realized approximately $109.8 million through repayments and sales.
Bloomfield said the portfolio was diversified across 45 industries and was 96% senior secured. The company’s 10 largest investments represented 10.74% of the portfolio, while its average hold size was approximately $4.2 million.
- Weighted average total yield to maturity at fair value was 11.95%.
- Weighted average total yield to maturity at amortized cost was 8.43%.
- Non-accruals represented approximately 29 basis points of the portfolio at fair value and 149 basis points at cost.
- PIK income represented approximately 1.37% of total investment income.
- New private-credit loans accounted for 24.1% of new investments and carried a weighted average spread of 534 basis points over the reference rate.
Bloomfield said private-credit loans represented approximately 14% of the portfolio as of the prior quarter and had median revenue and EBITDA growth of about 9% each. He said current BDC-sector trading discounts imply default expectations that the company believes are disconnected from portfolio fundamentals.
Buybacks, leverage and financing changes
Management said the expanded repurchase authorization is intended to capitalize on the company’s trading discount while maintaining balance-sheet flexibility. Of the new $30 million program, $10 million is subject to a Rule 10b5-1 plan and $20 million can be deployed through discretionary open-market purchases, Bloomfield said.
The company’s debt-to-equity ratio was 1.71x at quarter-end, compared with 1.70x at the end of the first quarter. Bloomfield said leverage was toward the higher end of the company’s traditional target range, largely reflecting NAV movement, but added that the liquidity of much of the portfolio allows management to monitor and manage leverage closely.
Total assets were $1.1 billion and total net assets were $406.2 million at June 30. Available liquidity, including cash and undrawn credit-facility capacity, was approximately $331 million, up from $325.3 million at the end of the first quarter.
Chief Investment Officer Angie Long said the company reset and extended its BDC CLO, reducing its weighted average cost of debt to SOFR plus 1.39% from SOFR plus 1.72%. The transaction closed July 15, extended the reinvestment period to July 2031 and maturity to July 2039, and is expected to become fully accretive after refinancing costs beginning in the fourth quarter.
The company also reduced excess capacity on its Bank of America broadly syndicated loan funding facility to lower unused fees, while maintaining availability under its Wells Fargo facility for private-credit investments.
Management sees selective opportunities
Management said market activity remained muted but noted a pickup in broadly syndicated loan refinancing activity late in the second quarter and into the third quarter. Bloomfield said borrowers have refinanced debt at spreads that, in some cases, were tighter than the company considered attractive for its portfolio, contributing to elevated repayments.
At the same time, management said it is finding selected discounted opportunities in broadly syndicated loans, including software and cyclical credits, particularly among companies with nearer-term maturities. Bloomfield said cybersecurity remains an area where the company is constructive, while Angie Long said underwriting remains focused on credit-by-credit analysis because of increased dispersion and more complex capital structures.
Chris Long said the company remains confident in its software portfolio, emphasizing investments in cybersecurity, IT infrastructure and ERP businesses. He said outcomes for loans originated in 2021 and 2022 will increasingly depend on individual borrower fundamentals as maturities approach in a higher-rate and more constrained exit environment.
About Palmer Square Capital BDC (NYSE:PSBD)
Palmer Square Capital BDC Inc (NYSE: PSBD) is a closed-end, externally managed business development company that provides customized financing solutions to middle-market companies in the United States. The firm offers a broad range of debt and equity products—including first-lien and second-lien senior secured loans, unitranche financings, mezzanine debt and equity co-investments—to support corporate acquisitions, refinancings, growth initiatives and balance sheet restructurings.
PSBD primarily targets established privately owned and sponsored businesses across diverse industries such as healthcare, business services, industrials and consumer products.
