The Zhitong Finance App learned that Blackstone Secured Lending Fund (BXSL.US), a publicly traded private credit fund under the Blackstone Group, released its second-quarter earnings report on Thursday, saying that net profit for the second quarter plummeted 94% due to declining asset valuations, but loan quality performance stabilized.
The Blackstone Mortgage Fund achieved net profit of 9 million US dollars in the three months up to the end of June, a sharp decrease from 155 million US dollars in the same period last year, mainly due to asset write-down. During the period, the company recorded an unrealized loss of US$137 million, an increase of more than 12 times over the previous year; realized losses were US$28 million.
Despite this, the fund's net investment income was US$174 million, which is roughly the same as the same period last year. The Business Development Corporation (BDC) did not add any new loans to non-accrued status during the quarter.
Market pressure: divestment wave and AI shock wave
This has been a difficult year for private credit funds. Investors have withdrawn their capital due to concerns about loan quality and risk exposure to software companies (impacted by advances in AI technology). Although Wall Street still debates whether these concerns are excessive, they have put additional pressure on asset prices and the funds that hold these assets.
The fund's assets under management reached $13.4 billion, and the net asset value (NAV) per share fell from $26.26 in the first quarter to $25.53, lower than the average forecast of $26.19 by market tracking analysts.
The company said unaccrued loans represented 3.6% of the portfolio in terms of cost, better than the 4.73% estimated by two analysts.
In-kind payment (PIK) revenue declined during the quarter, as did the number of assets marked below $0.85 (generally viewed as a difficult level).
Fund portfolio adjustments intensified in the second quarter. The scale of repayments rose sharply to over US$700 million, while the newly committed investment only slightly exceeded US$300 million, and net investment activity contracted. During the period, the fund added five new portfolio companies and withdrew eight investments at the same time. The overall portfolio was streamlined.
In terms of industry allocation, the software industry is still the biggest investment area, but its share of exposure is gradually being optimized. Notably, in June, a consortium led by Blackstone took over Thoma Bravo's heavily indebted Medallia Inc., and injected 100 million US dollars of new capital into it, indicating that Kuroishi is actively involved in the restructuring and bailout of problematic assets.
The fund's repayment scale during the period exceeded the new investment: the additional repayment was over $700 million, while the new promised investment was only slightly over $300 million. The fund added five new portfolio companies and withdrew from eight investments. The software industry continues to be its biggest investment area.