Q2 2026 Palmer Square Capital BDC Inc Earnings Call Transcript
Key Points
- PSBD delivered net investment income of $0.39 per share, matching its total dividend payout, which represents an attractive 11.8% yield on NAV and 16.3% yield on stock price.
- The company successfully reset and extended its BDC CLO, lowering the weighted average cost of debt to SOFR plus 1.39% from SOFR plus 1.72%, and extending the reinvestment period to July 2031, which is expected to be accretive starting in Q4 2026.
- PSBD maintains a strong credit profile with a low nonaccrual rate of 0.29% on a fair value basis and a PIK income of only 1.37% of total investment income, well below peers.
- The company expanded its share repurchase program to $30 million, viewing it as a compelling and accretive use of capital given the current trading discount, with $10 million in a 10b5-1 program and $20 million in open market repurchases.
- PSBD's portfolio is well-diversified across 45 industries with 96% senior secured exposure, and the company benefits from its parent platform's visibility across the entire broadly syndicated loan market, providing a competitive sourcing advantage.
- The company reduced excess capacity on its Bank of America BSL funding facility to lower unused fees, while maintaining availability under its Wells Fargo facility for private credit opportunities, enhancing financial flexibility.
- Net investment income declined to $0.39 per share in Q2 2026 from $0.43 per share in the prior year period, impacted by lower base rates and reduced income generation.
- NAV per share decreased to $13.21 from $13.30 at the end of Q1 2026, reflecting fair value adjustments due to pricing moves in the broadly syndicated loan market, particularly in software.
- The company experienced net realized and unrealized losses of $3.6 million in Q2 2026, including net unrealized depreciation of $6.3 million on existing investments.
- Deal activity across private credit and the broadly syndicated loan market remains subdued, limiting near-term investment opportunities and leading to portfolio shrinkage as repayments exceeded new investments.
- The debt-to-equity ratio remains elevated at 1.71 times, on the higher end of the target range, partly due to NAV declines, which could limit financial flexibility.
- Persistent inflation, driven in part by the Iran war's impact on energy prices, creates uncertainty around the interest rate outlook, which could affect portfolio companies' performance.
Welcome to Palmer Square Capital BDC's Second Quarter 2026 Earnings Call. (Operator Instructions) As a reminder, this conference call is being recorded. At this time, I'd like to turn the call over to Jeremy Goff, Managing Director. You may begin.
Welcome to Palmer Square Capital BDC's second quarter 2026 earnings call. Joining me this afternoon are Chris Long, Chairman and Chief Executive Officer; Angie Long, Chief Investment Officer; Matt Bloomfield, President; and Jeff Fox, Chief Financial Officer and Director.
Palmer Square Capital BDC's Second Quarter 2026 financial results were released earlier today and can also be accessed on Palmer Square's Investor Relations website at palmersquarebdc.com. We have also arranged for a replay of today's event that can be accessed on our website.
During this call, I want to remind you that the forward-looking statements we make are based on current expectations. The statements on this call that are not purely historical are forward-looking
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