Carlyle Secured Lending, Inc.

Carlyle Secured Lending, Inc. (CGBD) operates as a specialty finance company, structured as a closed-end, externally managed, non-diversified management investment company, which has elected to be regulated as a Business Development Company (BDC) under the Investment Company Act of 1940 and as a Regulated Investment Company (RIC) for U.S. federal income tax purposes ¹. The company's investment objective is to generate current income and, to a lesser extent, capital appreciation, primarily by building a portfolio of secured debt investments in U.S. middle market companies, defined as those with approximately $25.0 million or greater in EBITDA, typically supported by financial sponsors ². This core strategy is complemented by other lending and investing strategies that leverage Carlyle's Global Credit platform ³.

The core business model revolves around direct origination of secured debt instruments, including first lien senior secured loans (which may encompass stand-alone first lien loans, first lien/last out loans, and "unitranche" loans) and second lien senior secured loans, collectively termed "Middle Market Senior Loans" ⁴. A minority of assets are allocated to higher-yielding investments such as unsecured debt, subordinated debt, equities, and structured products ⁵. The primary customer segments are private U.S. middle market companies, often controlled by private equity firms ⁶. The company benefits from the significant scale and resources of Carlyle's Global Credit platform, which had $211 billion in AUM as of December 31, 2025 ⁷.

As of December 31, 2025, the fair value of CGBD's investments totaled approximately $2.5 billion across 165 portfolio companies and investment funds ⁸. The portfolio composition by type was 83.7% in First Lien Debt, 3.9% in Second Lien Debt, 5.8% in Equity Investments, and 6.6% in Investment Funds ⁹. The First and Second Lien Debt was predominantly floating rate at 99.4%, with 0.6% in fixed rate ¹⁰. Geographically, 88.1% of investments were in the United States, with other notable exposures including Canada (4.3%), United Kingdom (4.1%), France (1.1%), and Italy (1.1%) ¹¹.

Industry concentration as of December 31, 2025, showed Healthcare & Pharmaceuticals as the largest segment at 19.4%, followed by Software at 12.0%, Consumer Services at 8.1%, Diversified Financial Services at 7.8%, and Business Services at 7.6% ¹². Other significant industries included High Tech Industries (6.5%), Investment Funds (6.6%), Leisure Products & Services (4.9%), Capital Equipment (4.3%), and Construction & Building (4.4%) ¹³.

For the fiscal year ended December 31, 2025, the company had outstanding consolidated indebtedness of $1,543.7 million under its Credit Facility, Senior Notes, and 2015-1N Debt ¹⁴. The weighted average effective annualized interest rate on this debt was 6.02%, excluding fees ¹⁵. The asset coverage ratio, calculated in accordance with the Investment Company Act, was 175.6% as of December 31, 2025 ¹⁶.

A significant operational development during the period was the completion of the acquisition of Carlyle Secured Lending III (CSL III) on March 27, 2025 ¹⁷. This CSL III Merger involved CSL III merging into CGBD, with CGBD continuing as the surviving company ¹⁸. Additionally, on February 10, 2025, CGBD and Cliffwater Corporate Lending Fund (CCLF) amended the Credit Fund II limited liability company agreement, resulting in a $2.7 million distribution to CCLF and a $140.0 million cash contribution by CGBD to Credit Fund II ¹⁹. On February 11, 2025, CGBD purchased CCLF's remaining membership interest in Credit Fund II for cash at its net asset value, making Credit Fund II a wholly owned subsidiary ²⁰. In December 2025, CGBD, along with Carlyle Credit Solutions, Inc. and affiliates of Sixth Street Partners, agreed to co-invest through Structured Credit Partners JV, LLC, with each Carlyle SCP Member committing up to $150.0 million, and total initial capital commitments of up to $600.0 million ²¹.

Management's specific revenue, margin, or EPS guidance for the upcoming period is not explicitly provided in the filing.

One major growth vector for the company is its strategic relationships. In February 2016, CGBD and Credit Partners USA LLC established Credit Fund, a joint venture focused on senior secured loans to middle market companies, which has invested over $4.0 billion since inception through December 31, 2025, before any repayments or exits ²². CGBD and Credit Partners each have commitments to fund up to $175.0 million each as of December 31, 2025, which was subsequently increased to $250.0 million each on February 11, 2026 ²³. Additionally, in December 2025, CGBD, Carlyle Credit Solutions, Inc., and affiliates of Sixth Street Partners, LLC agreed to co-invest through Structured Credit Partners JV, LLC, a joint venture primarily investing in broadly syndicated loans ²⁴. Each Carlyle SCP Member's initial capital commitment to Structured Credit Partners is up to $150.0 million, with total initial capital commitments of up to $600.0 million ²⁵. These joint ventures are designed to diversify product offerings, increase scale, and enhance origination capabilities.

Another growth area is the continued focus on direct origination within the U.S. middle market. The Carlyle Direct Lending platform directly originates nearly 100% of its investments, sourcing approximately 1,500 opportunities per annum ²⁶. This approach allows for highly selective diligence, with only 5% of new investment opportunities screened over the past 12 months closing ²⁷. The company targets loans to U.S.-based middle market companies with EBITDA of $25-$100 million, seeking strong management teams and private equity sponsor support ²⁸.

Regarding operational outlook, the company's investment team views proactive portfolio monitoring as a vital part of its investment process, including ongoing review by portfolio management, underwriting, and workout professionals, with multiple layers of risk review and oversight ²⁹. This involves a rigorous monitoring strategy utilizing a proprietary dashboard template for each transaction, tracking financial performance, covenant compliance, follow-on transactions, amendments, and real-time updates to internal risk ratings ³⁰. The portfolio management process includes detailed portfolio dashboard updates, weekly credit events meetings, and quarterly formal portfolio reviews focusing on technical analysis of financial performance and portfolio diversification ³¹.

Planned capital allocation includes a stock repurchase program. On October 29, 2025, the Board of Directors authorized the continuation of the $200.0 million stock repurchase program until November 5, 2026, or until the approved dollar amount has been used ³². Effective February 18, 2026, the authorized amount for repurchases under this program was increased to up to $300.0 million ³³. The company is authorized to repurchase its outstanding common stock in the open market and/or through privately negotiated transactions at prices not exceeding its net asset value per share ³⁴.

Management explicitly flagged several structural headwinds and execution risks. The company is currently operating in a period of capital markets disruption and economic uncertainty, with potential for future instability ³⁵. Inflation has adversely affected and may continue to adversely affect the business, results of operations, and financial condition of portfolio companies, increasing costs of labor, energy, and raw materials, and impacting consumer spending ³⁶. Economic recessions or downturns could impair portfolio companies, leading to increased non-performing assets and decreased portfolio value ³⁷. Changes in interest rates have increased and may in the future increase the cost of capital, reduce the ability of portfolio companies to service debt, and decrease net investment income ³⁸. The company is dependent on the Investment Adviser for future success, and there are significant potential conflicts of interest due to the management of other investment funds and accounts by the Investment Adviser ³⁹. Cybersecurity risks and cyber incidents may adversely affect the business or those of portfolio companies by causing disruptions, compromising confidential information, or damaging business relationships ⁴⁰. The use of artificial intelligence technology could lead to data exposure, performance failures, and increased competitive, operational, legal, and regulatory risks ⁴¹.

The company faces material risks including ongoing capital markets disruption and economic uncertainty, which could negatively impact debt and equity markets, and increase funding costs ⁴². Inflationary pressures have increased operating costs for portfolio companies, potentially impairing their ability to service debt, especially if interest rates continue to rise ⁴³. Economic recessions or downturns could lead to increased non-performing assets and decreased portfolio value, as many portfolio companies are susceptible to such conditions ⁴⁴. The company is highly dependent on the Investment Adviser, whose loss of key personnel or conflicts of interest from managing other funds could materially affect investment returns ⁴⁵. Cybersecurity threats are increasing in frequency and severity, posing risks of operational disruption, data compromise, and reputational damage, with insurance potentially only partially covering losses ⁴⁶. The use of artificial intelligence technologies introduces new competitive, operational, legal, and regulatory risks, including potential data exposure and reliance on potentially inaccurate algorithms ⁴⁷. Changes in laws or regulations, or their interpretation, could increase compliance costs and restrict business activities ⁴⁸. The company's significant leverage, with $1,543.7 million in outstanding consolidated indebtedness as of December 31, 2025, magnifies potential gains or losses and exposes it to increased risk of default if asset values decline or covenants are breached ⁴⁹. The asset coverage ratio of 175.6% as of December 31, 2025, must be maintained after each issuance of senior securities, and failure to do so could restrict dividend payments and force asset sales ⁵⁰.

Management's overall tone emphasizes a disciplined, credit-driven investment strategy focused on capital preservation and long-term fundamental credit performance, leveraging Carlyle's extensive global credit platform ⁵¹. They highlight the Investment Adviser's rigorous, systematic, and consistent investment process, refined over Carlyle's 38-year history, designed to achieve enhanced risk-adjusted returns ⁵². A key strategic priority is the continued focus on direct origination of secured debt instruments in U.S. middle market companies, opportunistically supplemented by differentiated and complementary lending and investing strategies that utilize Carlyle's broad capabilities ⁵³. Another strategic priority is the expansion and leveraging of strategic relationships, as evidenced by the increased capital commitments to Credit Fund to $250.0 million each on February 11, 2026, and the formation of Structured Credit Partners JV, LLC with initial capital commitments of up to $600.0 million ⁵⁴. Management also prioritizes proactive portfolio monitoring and risk management, utilizing a proprietary dashboard template for each transaction to track financial performance, covenant compliance, and internal risk ratings, ensuring early detection of issues and escalation to avoid credit losses ⁵⁵.