Q4 2025 Morgan Stanley Direct Lending Fund Earnings Call Transcript
Key Points
- MSDL generated solid performance in the fourth quarter with net investment income of $0.49 per share.
- The portfolio continues to perform well with limited contributions from payment in kind and other income.
- MSDL's borrowers have shown resilience despite economic challenges, with underperformance being isolated and not systemic.
- The fund benefits from being part of the broader Morgan Stanley platform, providing immense resources for underwriting and portfolio management.
- MSDL successfully closed a joint venture that is expected to be accretive to net investment income, with the JV already close to 50% ramped.
- MSDL's portfolio yield has contracted since the late 2023 peak, although the contraction has decelerated.
- The Board declared a distribution of $0.45 per share for Q1 2026, a $0.05 reduction from the prior quarter.
- Total investment income decreased to $96.6 million from $99.7 million in the previous quarter due to recent Fed rate cuts.
- Non-accruals ticked up modestly, with some underperformance in a small number of portfolio companies.
- The weighted average yield on debt and income-producing investments declined by roughly 40 basis points quarter-over-quarter.
Welcome to the Morgan Stanley Direct Lending Fund's fourth-quarter and full year 2025 earnings call. (Operator Instructions)
As a reminder, this conference is being recorded. At this time, I'd like to turn the call over to Sanna Johnson, Head of Investor Relations. Please go ahead.
Good morning, and welcome to Morgan Stanley Direct Lending Fund's fourth-quarter and full year 2025 earnings call. I am joined this morning by Michael Occi, Chief Executive Officer; Jeff Day, Co-President; David Pessah, Chief Financial Officer; and Rebecca Shaoul, Head of Portfolio Management.
Morgan Stanley Direct Lending funds fourth-quarter and full year 2025 financial results were released yesterday after market close and can be accessed on the Investor Relations section of our website at www.mscl.com. We have arranged for a replay of today's event that will be accessible from the Morgan Stanley Direct Lending Fund website.
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