Q1 2025 Morgan Stanley Direct Lending Fund Earnings Call Transcript
Key Points
- Morgan Stanley Direct Lending Fund (MSDL) generated strong performance in the first quarter with net investment income of $0.52 per share, exceeding the $0.50 dividend declared.
- New investment commitments increased to approximately $233 million, showcasing MSDL's ability to leverage its origination engine for quality deal flow.
- MSDL's sponsor-backed direct lending business in North America surpassed $20 billion in committed capital, marking a significant milestone.
- The portfolio's credit quality remains strong, with over 98% of the total portfolio at an internal risk rating of 2 or better.
- MSDL successfully extended its secured revolving credit facility, increasing total commitment by $150 million to $1.45 billion, and lowered borrowing costs.
- The tariff-driven volatility has delayed the anticipated recovery in M&A activity, impacting deal flow.
- MSDL's debt to NAV increased modestly from 1.08 times to 1.11 times, indicating a rise in leverage.
- The net change in unrealized losses was $17 million, driven by credit spread widening within the secondary market.
- Net investment income declined from the prior quarter, partly due to the expiration of IPO-related fee waivers.
- One portfolio company, Continental Battery, was placed on non-accrual status, although non-accruals remain low at 20 basis points of the portfolio at cost.
Welcome to Morgan Stanley Direct Lending first-quarter 2025 earnings call. At this time, all participants are in a listen and only mode. A question-and-answer session will follow the prepared remarks. As a reminder, this conference call is being recorded. At this time, I'd like to turn the call over to Ms. Sanna Johnson. Please go ahead, ma'am.
Good morning and welcome to Morgan Stanley Direct Lending Fund's first-quarter 2025 earnings call. Joining me this morning are Jeff Levin, Chief Executive Officer; Michael Occi, President; David Pessah, Chief Financial Officer; and Rebecca Shaoul, Head of Portfolio Management. Morgan Stanley Direct Lending Fund's first-quarter 2025 financial results were released yesterday after market closed and can be accessed on the Investor Relations section of our website at www.msdl.com. We have arranged for a replay of today's event that will be accessible from the Morgan Stanley Direct Lending Fund
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