10-Q – 2025-10-28 – arcc-20250930.htm

Amounts available to borrow under the Revolving Funding Facility are subject to a borrowing base that applies different advance rates to different types of assets held by Ares Capital CP. Ares Capital CP is also subject to limitations with respect to the loans securing the Revolving Funding Facility, including restrictions on sector concentrations, loan size, payment frequency and status, collateral interests and loans with fixed rates, as well as restrictions on portfolio company leverage, all of which may also affect the borrowing base and therefore amounts available to borrow. The Company and Ares Capital CP are also required to comply with various covenants, reporting requirements and other customary requirements for similar facilities. These covenants are subject to important limitations and exceptions that are described in the documents governing the Revolving Funding Facility. As of September 30, 2025, the Company and Ares Capital CP were in compliance in all material respects with the terms of the Revolving Funding Facility.
 
As of September 30, 2025 and December 31, 2024, there was $ 1,239 and $ 1,065 outstanding, respectively, under the Revolving Funding Facility. Since July 28, 2025, the interest rate charged on the Revolving Funding Facility is based on SOFR or a “base rate” (as defined in the documents governing the Revolving Funding Facility) plus an applicable spread of 1.80 % per annum. From October 8, 2024 to July 27, 2025, the interest rate charged on the Revolving Funding Facility was based on SOFR or a “base rate” plus an applicable spread of 2.00 % per annum. Prior to October 8, 2024, the interest rate charged on the Revolving Funding Facility was based on SOFR plus a credit spread adjustment of 0.10 % or a “base rate” plus an applicable spread of 1.90 % per annum. Ares Capital CP is also required to pay a commitment fee of between 0.50 % and 1.25 % per annum depending on the size of the unused portion of the Revolving Funding Facility.
  
For the three and nine months ended September 30, 2025 and 2024, the components of interest and credit facility fees expense, cash paid for interest expense, average stated interest rates (i.e., rate in effect plus the spread) and average outstanding balances for the Revolving Funding Facility were as follows:

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  For the Three Months Ended September 30, For the Nine Months Ended September 30,
  2025 2024 2025 2024
Stated interest expense $ 18   $ 17   $ 48   $ 41  
Credit facility fees 1   1   5   5  
Amortization of debt issuance costs 1   1   4   3  
Total interest and credit facility fees expense $ 20   $ 19   $ 57   $ 49  
Cash paid for interest expense $ 18   $ 16   $ 53   $ 42  
Average stated interest rate 6.17   % 7.34   % 6.26   % 7.42   %
Average outstanding balance $ 1,157   $ 872   $ 1,022   $ 721  

SMBC Funding Facility
 
The Company and the Company’s consolidated subsidiary, Ares Capital JB Funding LLC (“ACJB”), are party to a revolving funding facility (as amended, the “SMBC Funding Facility”), with ACJB, as the borrower, and Sumitomo Mitsui Banking Corporation, as the administrative agent and collateral agent, that allows ACJB to borrow up to $ 1,100 at any one time outstanding. The SMBC Funding Facility also provides for an “accordion” feature that allows ACJB, under certain circumstances, to increase the overall size of the SMBC Funding Facility to $ 1,300 . The SMBC Funding Facility is secured by all of the assets held by ACJB. The end of the reinvestment period and the stated maturity date for the SMBC Funding Facility are July 25, 2028 and July 25, 2030, respectively. The reinvestment period and the stated maturity date are both subject to two one-year extensions by mutual agreement.
 
Amounts available to borrow under the SMBC Funding Facility are subject to a borrowing base that applies an advance rate to assets held by ACJB. ACJB is also subject to limitations with respect to the loans securing the SMBC Funding Facility, including restrictions on sector concentrations, loan size, payment frequency and status, collateral interests and loans with fixed rates, as well as restrictions on portfolio company leverage, all of which may also affect the borrowing base and therefore amounts available to borrow. The Company and ACJB are also required to comply with various covenants, reporting requirements and other customary requirements for similar facilities. These covenants are subject to important limitations and exceptions that are described in the documents governing the SMBC Funding Facility. As of September 30, 2025, the Company and ACJB were in compliance in all material respects with the terms of the SMBC Funding Facility.
 
As of September 30, 2025 and December 31, 2024, there was $ 539 and $ 502 outstanding, respectively, under the SMBC Funding Facility. Since July 25, 2025, the interest rate charged on the SMBC Funding Facility is based on an applicable spread of either (i) 1.80 % over SOFR or (ii) 0.80 % over a “base rate” (as defined in the documents governing the SMBC Funding Facility). From December 6, 2024 to July 24, 2025, the interest rate charged on the SMBC Funding Facility was based on an applicable spread of either (i) 2.00 % over SOFR or (ii) 1.00 % over a “base rate”, in each case, determined monthly based on the amount of the average borrowings outstanding under the SMBC Funding Facility. From March 28, 2024 to December 5, 2024, the interest rate charged on the SMBC Funding Facility was based on an applicable spread of either (i) 2.50 % over SOFR or (ii) 1.50 % over a “base rate”, in each case, determined monthly based on the amount of the average borrowings outstanding under the SMBC Funding Facility. Prior to March 28, 2024, the interest rate charged on the SMBC Funding Facility was based on an applicable spread of either (i) 1.75 % or 2.00 % over SOFR plus a credit spread adjustment of 0.10 % or (ii) 0.75 % or 1.00 % over a “base rate”, in each case, determined monthly based on the amount of the average borrowings outstanding under the SMBC Funding Facility. ACJB is required to pay a commitment fee of between 0.50 % and 1.00 % per annum depending on the size of the unused portion of the SMBC Funding Facility.
 
For the three and nine months ended September 30, 2025 and 2024, the components of interest and credit facility fees expense, cash paid for interest expense, average stated interest rates (i.e., rate in effect plus the spread) and average outstanding balances for the SMBC Funding Facility were as follows:

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  For the Three Months Ended September 30, For the Nine Months Ended September 30,
  2025 2024 2025 2024
Stated interest expense $ 7   $ 10   $ 21   $ 22  
Credit facility fees 1   —   2   2  
Amortization of debt issuance costs 1   1   2   2  
Total interest and credit facility fees expense $ 9   $ 11   $ 25   $ 26  
Cash paid for interest expense $ 7   $ 9   $ 22   $ 21  
Average stated interest rate 6.16   % 7.80   % 6.27   % 8.11   %
Average outstanding balance $ 433   $ 482   $ 432   $ 356  

    
BNP Funding Facility
 
The Company and the Company’s consolidated subsidiary, ARCC FB Funding LLC (“AFB”), are party to a revolving funding facility (as amended, the “BNP Funding Facility”) with AFB, as the borrower, and BNP Paribas, as the administrative agent and lender, that allows AFB to borrow up to $ 1,265 at any one time outstanding. The BNP Funding Facility is secured by all of the assets held by AFB. The end of the reinvestment period and the stated maturity date for the BNP Funding Facility are March 20, 2028 and March 20, 2030, respectively.
 
Amounts available to borrow under the BNP Funding Facility are subject to a borrowing base that applies an advance rate to assets held by AFB. AFB is also subject to limitations with respect to the loans securing the BNP Funding Facility, including restrictions on sector concentrations, loan size, payment frequency and status, collateral interests and loans with fixed rates, as well as restrictions on portfolio company leverage, all of which may also affect the borrowing base and therefore amounts available to borrow. The Company and AFB are also required to comply with various covenants, reporting requirements and other customary requirements for similar facilities. These covenants are subject to important limitations and exceptions that are described in the documents governing the BNP Funding Facility. As of September 30, 2025, the Company and AFB were in compliance in all material respects with the terms of the BNP Funding Facility.
 
As of September 30, 2025 and December 31, 2024, there was $ 774 and $ 889 , respectively, outstanding under the BNP Funding Facility. Since March 20, 2025, the interest rate charged on the BNP Funding Facility is based on an applicable SOFR or a “base rate” (as defined in the documents governing the BNP Funding Facility) plus a margin of (i) 1.90 % during the reinvestment period and (ii) 2.40 % following the reinvestment period. From April 20, 2023 to March 19, 2025, the range of interest rate charged on the BNP Funding Facility was based on an applicable SOFR or a “base rate” plus a margin of between 2.10 % and 2.80 % during the reinvestment period.

For the three and nine months ended September 30, 2025 and 2024, the components of interest and credit facility fees expense, cash paid for interest expense, average stated interest rates (i.e., rate in effect plus the spread) and average outstanding balances for the BNP Funding Facility were as follows:

For the Three Months Ended September 30, For the Nine Months Ended September 30,
  2025 2024 2025 2024

Stated interest expense $ 11   $ 12   $ 33   $ 35  
Credit facility fees 1   1   2   1  
Amortization of debt issuance costs 1   1   2   1  
Total interest and credit facility fees expense $ 13   $ 14   $ 37   $ 37  
Cash paid for interest expense $ 11   $ 11   $ 36   $ 34  
Average stated interest rate 6.22   % 7.52   % 6.28   % 7.76   %
Average outstanding balance $ 741   $ 623   $ 706   $ 587  

Debt Securitizations

ADL CLO 1 Debt Securitization

In May 2024, the Company, through its wholly owned, consolidated subsidiary, Ares Direct Lending CLO 1 LLC (“ADL CLO 1”), completed a $ 702 term debt securitization (the “ADL CLO 1 Debt Securitization”). The ADL CLO 1 Debt Securitization is also known as a collateralized loan obligation and is an on-balance sheet financing incurred by the Company,
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which is consolidated by the Company for financial reporting purposes and subject to its overall asset coverage requirement. The notes offered in the ADL CLO 1 Debt Securitization that mature on April 25, 2036 (collectively, the “April 2036 CLO Notes”) were issued by ADL CLO 1 pursuant to the indenture governing the April 2036 CLO Notes (the “April 2036 CLO Indenture”) and include (i) $ 406 of Class A Senior Notes (the “April 2036 Class A CLO Notes”); (ii) $ 70 of Class B Senior Notes (the “April 2036 Class B CLO Notes” and, together with the April 2036 Class A CLO Notes, the “April 2036 CLO Secured Notes”); and (iii) approximately $ 226 of subordinated notes (the “April 2036 CLO Subordinated Notes”). The Company retained all of the April 2036 CLO Subordinated Notes, as such, the April 2036 CLO Subordinated Notes are eliminated in consolidation. The following table presents information on the April 2036 CLO Notes as of September 30, 2025:

Class Type Principal Outstanding Maturity Date Interest Rate
April 2036 Class A CLO Notes Senior Secured Floating Rate $ 406   April 25, 2036 SOFR+ 1.80 %

April 2036 Class B CLO Notes Senior Secured Floating Rate 70   April 25, 2036 SOFR+ 2.20 %

Total April 2036 CLO Secured Notes 476  
April 2036 CLO Subordinated Notes Subordinated 226   April 25, 2036 None
Total April 2036 CLO Notes $ 702  

The April 2036 CLO Secured Notes are the secured obligations of ADL CLO 1 and are backed by a diversified portfolio of first lien senior secured loans contributed by the Company to ADL CLO 1 pursuant to the terms of a contribution agreement. The April 2036 CLO Indenture contains certain conditions pursuant to which additional loans can be acquired by ADL CLO 1, in accordance with rating agency criteria or as otherwise agreed with certain institutional investors who purchased the April 2036 CLO Secured Notes. Through April 25, 2028, all principal collections received on the underlying collateral may be used by ADL CLO 1 to purchase new collateral under the direction of the Company’s investment adviser in its capacity as asset manager to ADL CLO 1 under an asset management agreement and in accordance with the Company’s investment strategy, including additional collateral that may be purchased from the Company, pursuant to the terms of a master purchase and sale agreement between the Company as seller and ADL CLO 1 as buyer.

The April 2036 CLO Indenture includes customary covenants and events of default. The Company’s investment adviser serves as asset manager to ADL CLO 1 under an asset management agreement and is entitled to receive certain management fees for providing these services under the agreement. The Company’s investment adviser has agreed to waive any management fees from ADL CLO 1 .

ADL CLO 4 Debt Securitization

In November 2024, the Company, through its wholly owned, consolidated subsidiary, Ares Direct Lending CLO 4 LLC (“ADL CLO 4”), completed a $ 544 term debt securitization (the “ADL CLO 4 Debt Securitization”). The ADL CLO 4 Debt Securitization is also known as a collateralized loan obligation and is an on-balance sheet financing incurred by the Company, which is consolidated by the Company for financial reporting purposes and subject to its overall asset coverage requirement. The loans incurred by ADL CLO 4 in the ADL CLO 4 Debt Securitization that mature on October 24, 2036 (collectively, the “October 2036 CLO Secured Loans”) were issued by ADL CLO 4 pursuant to the indenture governing the October 2036 CLO Secured Loans (the “October 2036 CLO Indenture”) and include (i) $ 464 of Class A Senior Loans (the “October 2036 Class A CLO Loans”), and (ii) $ 80 of Class B Senior Loans (the “October 2036 Class B CLO Loans”). In addition, in connection with the ADL CLO 4 Debt Securitization, ADL CLO 4 issued approximately $ 260 of subordinated notes (the “October 2036 CLO Subordinated Notes”). The Company retained all of the October 2036 CLO Subordinated Notes, as such, the October 2036 CLO Subordinated Notes are eliminated in consolidation. The October 2036 CLO Secured Loans may be converted by the lender into notes issued by ADL CLO 4 and bearing the same economic terms, subject to certain conditions under the documents governing the October 2036 CLO Secured Loans and the indenture governing such notes (the “October 2036 CLO Indenture”). The following table presents information on the October 2036 CLO Secured Loans as of September 30, 2025:

Class Type Principal Outstanding Maturity Date Interest Rate
October 2036 Class A CLO Loans
Senior Secured Floating Rate $ 464   October 24, 2036 SOFR+ 1.54 %

October 2036 Class B CLO Loans
Senior Secured Floating Rate 80   October 24, 2036 SOFR+ 1.83 %

Total October 2036 CLO Secured Loans $ 544  

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The October 2036 CLO Secured Loans are the secured obligations of ADL CLO 4 and are backed by a diversified portfolio of first lien senior secured loans contributed by the Company to ADL CLO 4 pursuant to the terms of a contribution agreement. The documents governing the October 2036 CLO Secured Loans contain certain conditions pursuant to which additional loans can be acquired by ADL CLO 4, in accordance with rating agency criteria or as otherwise agreed with lenders who extended the October 2036 CLO Secured Loans. Through October 24, 2028, all principal collections received on the underlying collateral may be used by ADL CLO 4 to purchase new collateral under the direction of the Company’s investment adviser in its capacity as asset manager to ADL CLO 4 under an asset management agreement and in accordance with the Company’s investment strategy, including additional collateral that may be purchased from the Company, pursuant to the terms of a master purchase and sale agreement between the Company as seller and ADL CLO 4 as buyer.

The October 2036 CLO Indenture includes customary covenants and events of default. The Company’s investment adviser serves as asset manager to ADL CLO 4 under an asset management agreement and is entitled to receive certain management fees for providing these services under the agreement. The Company’s investment adviser has agreed to waive any management fees from ADL CLO 4 .

The interest rate charged on the April 2036 CLO Secured Notes and the October 2036 CLO Secured Loans is based on SOFR plus a blended weighted average spread of 1.86 % and 1.58 %, respectively. For the three and nine months ended September 30, 2025 and 2024, the components of interest expense, cash paid for interest expense, average stated interest rates (i.e., rate in effect plus the spread) and average outstanding balances for the April 2036 CLO Secured Notes and the October 2036 CLO Secured Loans were as follows.

  For the Three Months Ended September 30, For the Nine Months Ended September 30,
  2025 2024 2025 2024
Stated interest expense $ 15   $ 9   $ 46   $ 13  
Amortization of debt issuance costs —   —   1   —  

Total interest expense $ 15   $ 9   $ 47   $ 13  
Cash paid for interest expense $ 15   $ —   $ 44   $ —  
Average stated interest rate 6.02   % 7.32   % 6.03   % 7.26   %
Average outstanding balance $ 1,020   $ 476   $ 1,020   $ 226  

2024 Convertible Unsecured Notes

In March 2024, the Company repaid in full the $ 403 in aggregate principal amount of unsecured convertible notes, which bore interest at a rate of 4.625 % per year (the “2024 Convertible Notes”) upon their maturity, resulting in a realized loss on extinguishment of debt of $ 14 . In accordance with the indenture governing the 2024 Convertible Notes, the Company settled the repayment of the 2024 Convertible Notes with a combination of cash and shares of its common stock. Approximately $ 393 of aggregate principal amount was settled with approximately 20 shares of the Company’s common stock and the remaining $ 10 of aggregate principal amount was settled with available cash.

For the three and nine months ended September 30, 2024, the components of interest expense and cash paid for interest expense for the 2024 Convertible Notes were as follows.

  For the Three Months Ended September 30, 2024 For the Nine Months Ended September 30, 2024

Stated interest expense $ —   $ 3  

Total interest expense $ —   $ 3  
Cash paid for interest expense $ —   $ 9  

Unsecured Notes
 
The Company has issued certain unsecured notes (the Company refers to each series of unsecured notes using the defined term set forth under the “Unsecured Notes” column of the table below and collectively refers to all such series as the “Unsecured Notes”), that pay interest semi-annually and all principal amounts are due upon maturity. Each of the Unsecured Notes may be redeemed in whole or in part at any time at the Company’s option at a redemption price equal to par plus a “make whole” premium, if applicable, as determined pursuant to the indentures governing each of the Unsecured Notes, plus any
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accrued and unpaid interest. Certain key terms related to the features for the Unsecured Notes as of September 30, 2025 are listed below.

Unsecured Notes Aggregate Principal Amount Issued Effective Stated Interest Rate Original Issuance Date Maturity Date

January 2026 Notes $ 1,150   3.875 % July 15, 2020 January 15, 2026
July 2026 Notes $ 1,000   2.150 % January 13, 2021 July 15, 2026
January 2027 Notes(1) $ 900   6.731 % August 3, 2023 January 15, 2027
June 2027 Notes $ 500   2.875 % January 13, 2022 June 15, 2027
June 2028 Notes $ 1,250   2.875 % June 10, 2021 June 15, 2028
March 2029 Notes(1) $ 1,000   6.303 % January 23, 2024 March 1, 2029
July 2029 Notes(1) $ 850   5.793 % May 13, 2024 July 15, 2029
September 2030 Notes(1) $ 750   6.051 % June 3, 2025 September 1, 2030
January 2031 Notes $ 650   5.100 % September 9, 2025 January 15, 2031
November 2031 Notes $ 700   3.200 % November 4, 2021 November 15, 2031
March 2032 Notes $ 1,000   5.800 % January 8, 2025 March 8, 2032

________________________________________

(1) The effective stated interest rates for the January 2027 Notes, the March 2029 Notes, the July 2029 Notes and the September 2030 Notes include the impact of interest rate swaps.

In March 2025, the Company repaid in full the $ 600 in aggregate principal amount outstanding of unsecured notes (the “March 2025 Notes”) upon their maturity. The March 2025 Notes bore interest at a rate of 4.250 % per annum. In July 2025, the Company also repaid in full the $ 1,250 in aggregate principal amount outstanding of unsecured notes (the “July 2025 Notes”) upon their maturity. The July 2025 Notes bore interest at a rate of 3.250 % per annum.

In connection with certain of the unsecured notes issued by the Company, the Company has entered into interest rate swaps to more closely align the interest rates of such liabilities with the Company’s investment portfolio, which consists primarily of floating rate loans. Under the interest rate swaps, the Company receives a fixed interest rate and pays a floating interest rate of one-month SOFR plus an applicable spread. The Company designated these interest rate swaps and the associated unsecured notes as qualifying fair value hedge accounting relationships. See Note 6 for more information on the interest rate swaps.

For the three and nine months ended September 30, 2025 and 2024, the components of interest expense and cash paid for interest expense for the Unsecured Notes, as well as any other unsecured notes outstanding during the periods presented were as follows.

  For the Three Months Ended September 30, For the Nine Months Ended September 30,
  2025 2024 2025 2024
Stated interest expense(1) $ 110   $ 103   $ 325   $ 299  
Amortization of debt issuance costs 3   4   11   12  
Net accretion (amortization) of original issue discount/premium 1   ( 2 ) ( 1 ) ( 5 )
Net gain on interest rate swaps accounted for as hedge instruments and the related hedged items —   ( 1 ) ( 2 ) ( 1 )
Total interest expense $ 114   $ 104   $ 333   $ 305  
Cash paid for interest expense(1) $ 149   $ 162   $ 341   $ 315  

________________________________________

(1) Includes the impact of the interest rate swaps.
 
The Unsecured Notes contain certain covenants, including covenants requiring the Company to comply with Section 18(a)(1)(A) as modified by Section 61(a) of the Investment Company Act, or any successor provisions, and to provide financial information to the holders of such notes under certain circumstances. These covenants are subject to important
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limitations and exceptions set forth in the indentures governing such notes. As of September 30, 2025, the Company was in compliance in all material respects with the terms of the respective indentures governing each of the Unsecured Notes.
 
The Unsecured Notes are the Company’s senior unsecured obligations and rank senior in right of payment to any future indebtedness that is expressly subordinated in right of payment to the Unsecured Notes; equal in right of payment to the Company’s existing and future unsecured indebtedness that is not expressly subordinated; effectively junior in right of payment to any of its secured indebtedness (including existing unsecured indebtedness that the Company later secures) to the extent of the value of the assets securing such indebtedness; and structurally junior to all existing and future indebtedness (including trade payables) incurred by the Company’s subsidiaries, financing vehicles or similar facilities.

6. DERIVATIVE INSTRUMENTS

The Company enters into derivative instruments from time to time to help mitigate its foreign currency and interest rate risk exposures.

Foreign Currency Forward Contracts

Certain information related to the Company’s foreign currency forward derivative instruments as of September 30, 2025 and December 31, 2024 is presented below.

  As of September 30, 2025
Derivative Instrument Notional
Amount Gross Amount of Recognized Assets Gross Amount of Recognized Liabilities Balance Sheet
Location of Net Amounts
Foreign currency forward contract ¥ 8,131 $ 58   $ ( 58 )  Accounts payable and other liabilities
Foreign currency forward contract  CAD 390 284   ( 281 ) Other assets
Foreign currency forward contract £ 255 309   ( 309 )  Accounts payable and other liabilities
Foreign currency forward contract £ 192 252   ( 255 )  Accounts payable and other liabilities
Foreign currency forward contract € 165 194   ( 195 )  Accounts payable and other liabilities
Foreign currency forward contract  CAD 141 103   ( 103 ) Other assets
Foreign currency forward contract € 86 102   ( 102 ) Other assets
Foreign currency forward contract  NOK 64 6   ( 6 )  Accounts payable and other liabilities
Foreign currency forward contract  NZD 64 39   ( 37 ) Other assets
Foreign currency forward contract  AUD 22 15   ( 15 )  Accounts payable and other liabilities
Total $ 1,362   $ ( 1,361 )

  As of December 31, 2024
Derivative Instrument Notional
Amount Gross Amount of Recognized Assets Gross Amount of Recognized Liabilities Balance Sheet
Location of Net Amounts
Foreign currency forward contract CAD 240 $ 184   $ ( 179 ) Other assets
Foreign currency forward contract CAD 188 133   ( 131 ) Other assets
Foreign currency forward contract € 182 195   ( 189 ) Other assets
Foreign currency forward contract £ 133 168   ( 166 ) Other assets
Foreign currency forward contract € 103 109   ( 105 ) Other assets
Foreign currency forward contract NOK 97 96   ( 96 ) Other assets
Foreign currency forward contract £ 74 95   ( 93 ) Other assets
Foreign currency forward contract NZD 68 41   ( 38 ) Other assets
Foreign currency forward contract NOK 63 6   ( 6 ) Other assets
Foreign currency forward contract AUD 21 14   ( 14 ) Other assets
Total $ 1,041   $ ( 1,017 )

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As of September 30, 2025 and December 31, 2024, the counterparties to each of the Company’s foreign currency forward contracts were Canadian Imperial Bank of Commerce or Royal Bank of Canada.

Net realized and unrealized gains and losses on derivative instruments not designated as a qualifying hedge accounting relationship recognized by the Company for the three and nine months ended September 30, 2025 and 2024 is in the following location in the consolidated statements of operations:

For the Three Months Ended September 30, For the Nine Months Ended September 30,
Derivative Instrument Statement Location 2025 2024 2025 2024

Foreign currency forward contract Net realized gains (losses) from foreign currency and other transactions $ ( 12 ) $ ( 9 ) $ ( 21 ) $ ( 10 )
Foreign currency forward contract Net unrealized gains (losses) from foreign currency and other transactions $ 30   $ ( 16 ) $ ( 24 ) $ 4  

Interest Rate Swaps

In connection with certain of the unsecured notes issued by the Company, the Company has entered into interest rate swaps to more closely align the interest rates of such liabilities with the Company’s investment portfolio, which consists primarily of floating rate loans. Under the interest rate swaps, the Company receives a fixed interest rate and pays a floating interest rate of one-month SOFR plus an applicable spread, as disclosed below. The Company designated these interest rate swaps and the associated unsecured notes as qualifying fair value hedge accounting relationships. As of September 30, 2025 and December 31, 2024, the counterparties to each of the Company’s interest rate swaps were Wells Fargo Bank, N.A or SMBC Capital Markets, Inc. Certain information related to the Company’s interest rate swaps as of September 30, 2025 is presented below.

Description Hedged Item Company Receives Company Pays Maturity Date Notional Amount
Interest rate swap January 2027 Notes 7.000   % SOFR + 2.5810 %
January 15, 2027 $ 900  
Interest rate swap March 2029 Notes 5.875   % SOFR + 2.0230 %
March 1, 2029 $ 1,000  
Interest rate swap July 2029 Notes 5.950   % SOFR + 1.6430 %
July 15, 2029 $ 850  
Interest rate swap September 2030 Notes 5.500   % SOFR + 1.7705 %
September 1, 2030 $ 750  
Interest rate swap(1) January 2031 Notes 5.100   % SOFR + 1.7270 %
January 15, 2031 $ 650  
Interest rate swap(1) March 2032 Notes 5.800   % SOFR + 1.6995 %
March 8, 2032 $ 1,000  

________________________________________

(1) In connection with the issuances of the January 2031 Notes and the March 2032 Notes, the Company entered into forward-starting interest rate swaps with an effective date of July 15, 2026 and January 8, 2026, respectively.

See Note 5 for more information on the January 2027 Notes, the March 2029 Notes, the July 2029 Notes, the September 2030 Notes, the January 2031 Notes and the March 2032 Notes.

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As a result of the Company’s designation of the interest rate swaps as hedging instruments in qualifying fair value hedge accounting relationships, the Company is required to fair value the hedging instruments and the related hedged items, with the changes in the fair value of each being recorded in interest expense. The net gain related to the fair value hedges was approximately $ 0 and $ 2 for the three and nine months ended September 30, 2025, respectively, and approximately $ 1 for each of the comparable periods in 2024, which is included in “interest and credit facility fees” in the Company’s consolidated statement of operations. The balance sheet impact of fair valuing the interest rate swaps as of September 30, 2025 and December 31, 2024 is presented below:

  As of September 30, 2025
Derivative Instrument Notional Amount Maturity Date Gross Amount of Recognized Assets Gross Amount of Recognized Liabilities Balance Sheet Location of Amounts
Interest rate swap(1) $ 900   January 15, 2027 $ 9   $ —   Other assets
Interest rate swap(2) $ 1,000   March 1, 2029 14   —   Other assets
Interest rate swap(3) $ 850 July 15, 2029 27   —   Other assets
Interest rate swap(4) $ 750   September 1, 2030 9   —   Other assets
Interest rate swap(5) $ 650   January 15, 2031 —   ( 1 ) Accounts payable and other liabilities
Interest rate swap(6) $ 1,000   March 8, 2032 34   —   Other assets
Total $ 93   $ ( 1 )

________________________________________

(1) The asset related to the fair value of the interest rate swaps was offset by a $ 9 increase to the carrying value of the January 2027 Notes.

(2) The asset related to the fair value of the interest rate swap was offset by a $ 14 increase to the carrying value of the March 2029 Notes.

(3) The asset related to the fair value of the interest rate swap was offset by a $ 27 increase to the carrying value of the July 2029 Notes.

(4) The asset related to the fair value of the interest rate swap was offset by a $ 9 increase to the carrying value of the September 2030 Notes.

(5) The liability related to the fair value of the interest rate swap was offset by a $ 1 decrease to the carrying value of the January 2031 Notes.

(6) The asset related to the fair value of the interest rate swap was offset by a $ 34 increase to the carrying value of the March 2032 Notes.

  As of December 31, 2024
Derivative Instrument Notional Amount Maturity Date Gross Amount of Recognized Assets Gross Amount of Recognized Liabilities Balance Sheet Location of Amounts
Interest rate swap(1) $ 900   January 15, 2027 $ 4   $ —   Other assets
Interest rate swap(2) $ 1,000   March 1, 2029 —   ( 9 ) Accounts payable and other liabilities
Interest rate swap(3) $ 850 July 15, 2029 7   —   Other assets
Total $ 11   $ ( 9 )

________________________________________

(1) The asset related to the fair value of the interest rate swaps was offset by a $ 4 increase to the carrying value of the January 2027 Notes.

(2) The liability related to the fair value of the interest rate swap was offset by a $ 9 decrease to the carrying value of the March 2029 Notes.
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(3) The asset related to the fair value of the interest rate swap was offset by a $ 7 increase to the carrying value of the July 2029 Notes.

7. COMMITMENTS AND CONTINGENCIES

Investment Commitments

The Company has various commitments to fund investments in its portfolio as described below. As of September 30, 2025 and December 31, 2024, the Company had the following commitments to fund various revolving and delayed draw senior secured and subordinated loans, including commitments to fund which are at (or substantially at) the Company’s discretion:

  As of
  September 30, 2025 December 31, 2024
Total revolving loan commitments $ 2,566   $ 2,254  
Less: funded commitments ( 441 ) ( 529 )
Less: unavailable revolving loan commitments due to borrowing base or other covenant restrictions ( 11 ) ( 1 )

Total net unfunded revolving loan commitments 2,114   1,724  

Total unfunded delayed draw loan commitments 2,516   2,193  
Less: unavailable delayed draw loan commitments due to borrowing base or other covenant restrictions ( 14 ) ( 22 )

Total net unfunded delayed draw loan commitments 2,502   2,171  
Total net unfunded revolving and delayed draw loan commitments $ 4,616   $ 3,895  

    
The Company’s commitment to fund delayed draw loans is generally triggered upon the satisfaction of certain pre-negotiated terms and conditions. Generally, the most significant and uncertain term requires the borrower to satisfy a specific use of proceeds covenant. The use of proceeds covenant typically requires the borrower to use the additional loans for the specific purpose of a permitted acquisition or permitted investment, for example. In addition to the use of proceeds covenant, the borrower is generally required to satisfy additional negotiated covenants (including specified leverage levels).

Also included within the total revolving loan commitments as of September 30, 2025 were commitments to issue up to $ 400 in letters of credit through a financial intermediary on behalf of certain portfolio companies. As of September 30, 2025, the Company had $ 64 in letters of credit issued and outstanding under these commitments on behalf of the portfolio companies. For all these letters of credit issued and outstanding, the Company would be required to make payments to third parties if the portfolio companies were to default on their related payment obligations. Of these letters of credit, $ 27 expire in 2025 and $ 37 expire in 2026.
 
The Company also has commitments to co-invest in the SDLP for the Company’s portion of the SDLP’s commitments to fund delayed draw loans to certain portfolio companies of the SDLP. See Note 4 for more information.
 
As of September 30, 2025 and December 31, 2024, the Company was party to agreements to fund equity investment commitments as follows:

  As of
  September 30, 2025 December 31, 2024
Total equity commitments $ 175   $ 191  
Less: funded equity commitments ( 40 ) ( 88 )
Total unfunded equity commitments 135   103  
Less: equity commitments substantially at discretion of the Company ( 43 ) ( 43 )
Total net unfunded equity commitments $ 92   $ 60  

 
In the ordinary course of business, the Company may sell certain of its investments to third party purchasers. In particular, in connection with the sale of certain controlled portfolio company equity investments (as well as certain other sales)
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the Company has, and may continue to do so in the future, agreed to indemnify such purchasers for future liabilities arising from the investments and the related sale transaction. Such indemnification provisions have given rise to liabilities in the past and may do so in the future.

In addition, in the ordinary course of business, the Company may guarantee certain obligations in connection with its portfolio companies (in particular, certain controlled portfolio companies). Under these guarantee arrangements, payments may be required to be made to third parties if such guarantees are called upon or if the portfolio companies were to default on their related obligations, as applicable.

8. FAIR VALUE OF FINANCIAL INSTRUMENTS

The Company follows ASC 825-10, R ecognition and Measurement of Financial Assets and Financial Liabilities (“ASC 825-10”), which provides companies the option to report selected financial assets and liabilities at fair value. ASC 825-10 also establishes presentation and disclosure requirements designed to facilitate comparisons between companies that choose different measurement attributes for similar types of assets and liabilities and a better understanding of the effect of the company’s choice to use fair value on its earnings. ASC 825-10 also requires entities to display the fair value of the selected assets and liabilities on the face of the balance sheet. The Company has not elected the ASC 825-10 option to report selected financial assets and liabilities at fair value. With the exception of the line items entitled “other assets” and “debt,” which are reported at amortized cost, the carrying value of all other assets and liabilities approximate fair value.
 
The Company also follows ASC 820-10, Fair Value Measurements and Disclosures (“ASC 820-10”), which expands the application of fair value accounting. ASC 820-10 defines fair value, establishes a framework for measuring fair value in accordance with GAAP and expands disclosure of fair value measurements. ASC 820-10 determines fair value to be the price that would be received for an investment in a current sale, which assumes an orderly transaction between market participants on the measurement date. ASC 820-10 requires the Company to assume that the portfolio investment is sold in its principal market to market participants or, in the absence of a principal market, the most advantageous market, which may be a hypothetical market. Market participants are defined as buyers and sellers in the principal or most advantageous market that are independent, knowledgeable, and willing and able to transact. In accordance with ASC 820-10, the Company has considered its principal market as the market in which the Company exits its portfolio investments with the greatest volume and level of activity. ASC 820-10 specifies a hierarchy of valuation techniques based on whether the inputs to those valuation techniques are observable or unobservable. In accordance with ASC 820-10, these inputs are summarized in the three broad levels listed below:

• Level 1—Valuations based on quoted prices in active markets for identical assets or liabilities that the Company has the ability to access.

• Level 2—Valuations based on quoted prices in markets that are not active or for which all significant inputs are observable, either directly or indirectly.

• Level 3—Valuations based on inputs that are unobservable and significant to the overall fair value measurement.
 
In addition to using the above inputs in investment valuations, the Valuation Designee continues to employ its net asset valuation policy and procedures that have been reviewed by the Company’s board of directors in connection with their designation of the Company’s investment adviser as the valuation designee and are consistent with the provisions of Rule 2a-5 under the Investment Company Act and ASC 820-10 (see Note 2 for more information). Consistent with its valuation policy and procedures, the Valuation Designee evaluates the source of inputs, including any markets in which the Company’s investments are trading (or any markets in which securities with similar attributes are trading), in determining fair value. Because there is not a readily available market value for most of the investments in the Company’s portfolio, the fair value of the investments must typically be determined using unobservable inputs.
 
The Company’s portfolio investments (other than as described below in the following paragraph) are typically valued using two different valuation techniques. The first valuation technique is an analysis of the enterprise value (“EV”) of the portfolio company. EV means the entire value of the portfolio company to a market participant, including the sum of the values of debt and equity securities used to capitalize the enterprise at a point in time. The primary method for determining EV uses a multiple analysis whereby appropriate multiples are applied to the portfolio company’s EBITDA (generally defined as net income before net interest expense, income tax expense, depreciation and amortization). EBITDA multiples are typically determined based upon review of market comparable transactions and publicly traded comparable companies, if any. The Valuation Designee may also employ other valuation multiples to determine EV, such as revenues or, in the case of certain portfolio companies in the power generation industry, kilowatt capacity. The second method for determining EV uses a discounted cash flow analysis whereby future expected cash flows of the portfolio company are discounted to determine a
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present value using estimated discount rates (typically a weighted average cost of capital based on costs of debt and equity consistent with current market conditions). The EV analysis is performed to determine the value of equity investments, the value of debt investments in portfolio companies where the Company has control or could gain control through an option or warrant security, and to determine if there is credit impairment for debt investments. If debt investments are credit impaired, an EV analysis may be used to value such debt investments; however, in addition to the methods outlined above, other methods such as a liquidation or wind-down analysis may be utilized to estimate EV. The second valuation technique is a yield analysis, which is typically performed for non-credit impaired debt investments in portfolio companies where the Company does not own a controlling equity position. To determine fair value using a yield analysis, a current price is imputed for the investment based upon an assessment of the expected market yield for a similarly structured investment with a similar level of risk. In the yield analysis, the Valuation Designee considers the current contractual interest rate, the maturity and other terms of the investment relative to risk of the company and the specific investment. A key determinant of risk, among other things, is the leverage through the investment relative to the EV of the portfolio company. As debt investments held by the Company are substantially illiquid with no active transaction market, the Valuation Designee depends on primary market data, including newly funded transactions, as well as secondary market data with respect to high yield debt instruments and syndicated loans, as inputs in determining the appropriate market yield, as applicable.
 
For other portfolio investments such as investments in the SDLP Certificates and IHAM, discounted cash flow analysis is the primary technique utilized to determine fair value. Expected future cash flows associated with the investment are discounted to determine a present value using a discount rate that reflects estimated market return requirements.

The following table presents fair value measurements of cash and cash equivalents, restricted cash, investments, unfunded revolving and delayed draw loan commitments and derivatives as of September 30, 2025:

  Fair Value Measurements Using
Total Level 1 Level 2 Level 3
Cash and cash equivalents $ 1,036   $ 1,036   $ —   $ —  
Restricted cash $ 218   $ 218   $ —   $ —  
Investments not measured at net asset value $ 28,676   $ 21   $ 800   $ 27,855  
Investments measured at net asset value(1) 17  
 Total investments $ 28,693  
Unfunded revolving and delayed draw loan commitments(2) $ ( 28 ) $ —   $ —   $ ( 28 )
Derivatives:
Foreign currency forward contracts $ 1   $ —   $ 1   $ —  
Interest rate swaps $ 92   $ —   $ 92   $ —  

________________________________________

(1) Certain investments that are measured at fair value using the net asset value per share (or its equivalent) practical expedient have not been categorized in the fair value hierarchy. The fair value amounts presented in this table are intended to permit reconciliation of the fair value hierarchy to the amounts presented in the consolidated balance sheet.

(2) The fair value of unfunded revolving and delayed draw loan commitments is included in “accounts payable and other liabilities” in the accompanying consolidated balance sheet.

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The following table presents fair value measurements of cash and cash equivalents, restricted cash, investments, unfunded revolving and delayed draw loan commitments and derivatives as of December 31, 2024:

  Fair Value Measurements Using
Total Level 1 Level 2 Level 3
Cash and cash equivalents $ 635   $ 635   $ —   $ —  
Restricted cash $ 225   $ 225   $ —   $ —  
Investments not measured at net asset value $ 26,711   $ 33   $ 587   $ 26,091  
Investments measured at net asset value(1) 9  
 Total investments $ 26,720  
Unfunded revolving and delayed draw loan commitments(2) $ ( 29 ) $ —   $ —   $ ( 29 )
Derivatives:
Foreign currency forward contracts $ 24   $ —   $ 24   $ —  
Interest rate swaps $ 2   $ —   $ 2   $ —  

________________________________________

(1) Certain investments that are measured at fair value using the net asset value per share (or its equivalent) practical expedient have not been categorized in the fair value hierarchy. The fair value amounts presented in this table are intended to permit reconciliation of the fair value hierarchy to the amounts presented in the consolidated balance sheet.

(2) The fair value of unfunded revolving and delayed draw loan commitments is included in “accounts payable and other liabilities” in the accompanying consolidated balance sheet.

The following tables summarize the significant unobservable inputs the Valuation Designee used to value the majority of the Company’s investments categorized within Level 3 as of September 30, 2025 and December 31, 2024. The tables are not intended to be all-inclusive, but instead to capture the significant unobservable inputs relevant to the Valuation Designee’s determination of fair values.

  As of September 30, 2025
Unobservable Input
Asset Category Fair Value Primary Valuation Techniques Input Estimated Range Weighted Average (1)

First lien senior secured loans $ 17,331   Yield analysis Market yield 4.5 % - 20.8 %
9.8   %
Second lien senior secured loans 1,226   Yield analysis Market yield 10.0 % - 20.2 %
13.9   %
Subordinated certificates of the SDLP 1,042   Discounted cash flow analysis Discount rate 9.7 % - 12.8 %
11.3   %
Senior subordinated loans 1,391   Yield analysis Market yield 7.0 % - 24.7 %
13.4   %
Preferred equity 2,461   Yield analysis Market yield 7.0 % - 20.3 %
13.1   %
EV market multiple analysis EBITDA multiple 3.4 x - 27.3 x
14.9 x
Ivy Hill Asset Management, L.P.(2) 2,018   Discounted cash flow analysis Discount rate 9.3 % - 16.7 %
10.3   %

Other equity 2,386   EV market multiple analysis EBITDA multiple 5.0 x - 34.0 x
15.7 x
Total investments $ 27,855  

________________________________________

(1) Unobservable inputs were weighted by the relative fair value of the investments.

(2) Includes the Company’s subordinated loan to and equity investments in IHAM, as applicable.
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  As of December 31, 2024
Unobservable Input
Asset Category Fair Value Primary Valuation Techniques Input Estimated Range Weighted Average (1)

First lien senior secured loans $ 14,722   Yield analysis Market yield 3.8 % - 22.9 %
10.4   %
Second lien senior secured loans 1,724   Yield analysis Market yield 9.6 % - 23.2 %
14.2   %
Subordinated certificates of the SDLP 1,192   Discounted cash flow analysis Discount rate 10.0 % - 13.0 %
12.0   %
Senior subordinated loans 1,343   Yield analysis Market yield 8.4 % - 21.9 %
12.8   %
Preferred equity 2,649   Yield analysis Market yield 7.0 % - 19.0 %
13.3   %
EV market multiple analysis EBITDA multiple 2.6 x - 25.1 x
15.4 x
Ivy Hill Asset Management, L.P.(2) 1,915   Discounted cash flow analysis Discount rate 9.9 % - 19.0 %
11.4   %
Other equity 2,546   EV market multiple analysis EBITDA multiple 5.6 x - 49.7 x
18.1 x
Total investments $ 26,091  

________________________________________

(1) Unobservable inputs were weighted by the relative fair value of the investments.

(2) Includes the Company’s subordinated loan to and equity investments in IHAM, as applicable.

Changes in market yields, discount rates or EBITDA multiples, each in isolation, may change the fair value of certain of the Company’s investments. Generally, an increase in market yields or discount rates or a decrease in EBITDA multiples may result in a decrease in the fair value of certain of the Company’s investments.
 
Due to the inherent uncertainty of determining the fair value of investments that do not have a readily available market value, the fair value of the Company’s investments may fluctuate from period to period. Additionally, the fair value of the Company’s investments may differ significantly from the values that would have been used had a ready market existed for such investments and may differ materially from the values that the Company may ultimately realize. Further, such investments are generally subject to legal and other restrictions on resale or otherwise are less liquid than publicly traded securities. If the Company was required to liquidate a portfolio investment in a forced or liquidation sale, it could realize significantly less than the value at which the Company has recorded it.

In addition, changes in the market environment and other events that may occur over the life of the investments may cause the gains or losses ultimately realized on these investments to be different than the unrealized gains or losses reflected in the valuations currently assigned.

The following tables present changes in investments that use Level 3 inputs as of and for the three and nine months ended September 30, 2025:

  As of and For the Three Months Ended September 30, 2025
Balance as of June 30, 2025 $ 27,126  
Net realized gains 245  
Net unrealized losses ( 188 )
Purchases 3,379  
Sales ( 687 )
Repayments ( 2,130 )
PIK interest and dividends 108  
Net accretion of discount on investments 2  
Transfers into Level 3 —  
Transfers out of Level 3 —  

Balance as of September 30, 2025 $ 27,855  

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  As of and For the Nine Months Ended September 30, 2025
Balance as of December 31, 2024 $ 26,091  
Net realized gains 252  
Net unrealized losses ( 245 )
Purchases 8,788  
Sales ( 2,151 )
Repayments ( 5,038 )
PIK interest and dividends 363  
Net accretion of discount on investments 7  
Transfers into Level 3 —  
Transfers out of Level 3 ( 212 )

Balance as of September 30, 2025 $ 27,855  

Investments that were transferred into and out of Level 3 during the nine months ended September 30, 2025 were generally as a result of changes in the observability of significant inputs or available market data for certain portfolio companies.

As of September 30, 2025, the net unrealized appreciation on the investments that use Level 3 inputs was $ 128 .

For the three and nine months ended September 30, 2025, the total amount of gains (losses) for the period included in earnings attributable to the change in unrealized gains (losses) relating to the Company’s Level 3 assets still held as of September 30, 2025, and reported within the net unrealized gains (losses) on investments, foreign currency and other transactions in the Company’s consolidated statement of operations was $( 8 ) and $( 57 ), respectively.

The following tables present changes in investments that use Level 3 inputs as of and for the three and nine months ended September 30, 2024:

  As of and For the Three Months Ended September 30, 2024
Balance as of June 30, 2024 $ 24,302  
Net realized losses ( 20 )
Net unrealized gains 73  
Purchases 3,279  
Sales ( 846 )
Repayments ( 1,663 )
PIK interest and dividends 111  
Net accretion of discount on investments 3  
Transfers into Level 3 —  
Transfers out of Level 3 ( 83 )

Balance as of September 30, 2024 $ 25,156  

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  As of and For the Nine Months Ended September 30, 2024
Balance as of December 31, 2023 $ 22,084  
Net realized losses ( 33 )
Net unrealized gains 132  
Purchases 9,395  
Sales ( 1,957 )
Repayments ( 4,718 )
PIK interest and dividends 329  
Net accretion of discount on investments 7  
Transfers into Level 3 —  
Transfers out of Level 3 ( 83 )

Balance as of September 30, 2024 $ 25,156  

Investments that were transferred out of Level 3 during the three and nine months ended September 30, 2024 were generally as a result of changes in the observability of significant inputs or available market data for certain portfolio companies.

As of September 30, 2024, the net unrealized appreciation on the investments that use Level 3 inputs was $ 366 .

For the three and nine months ended September 30, 2024, the total amount of gains (losses) for the period included in earnings attributable to the change in unrealized gains (losses) relating to the Company’s Level 3 assets still held as of September 30, 2024, and reported within the net unrealized gains (losses) on investments, foreign currency and other transactions in the Company’s consolidated statement of operations was $ 39 and $ 126 , respectively.

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The following are the carrying and fair values of the Company’s debt obligations as of September 30, 2025 and December 31, 2024. Fair value is estimated by discounting remaining payments using applicable current market rates, which take into account changes in the Company’s marketplace credit ratings, or market quotes, if available.

  As of
  September 30, 2025 December 31, 2024
Carrying Value(1) Fair Value(6) Carrying Value(1) Fair Value(6)
Revolving Credit Facility $ 2,293   $ 2,293   $ 1,113   $ 1,113  
Revolving Funding Facility 1,239   1,239   1,065   1,065  
SMBC Funding Facility 539   539   502   502  
BNP Funding Facility 774   774   889   889  
April 2036 CLO Notes (principal amount outstanding of $ 476 )(2)
474   (3) 474   473   (3) 476  
October 2036 CLO Secured Loans (principal amount outstanding of $ 544 )(2)
541   (3) 541   541   (3) 544  
March 2025 Notes (principal amount outstanding of $ 0 and $ 600 , respectively)
—   —   600   (3) 599  
July 2025 Notes (principal amount outstanding of $ 0 and $ 1,250 , respectively)
—   —   1,252   (3) 1,238  
January 2026 Notes (principal amount outstanding of $ 1,150 )
1,149   (3) 1,148   1,148   (3) 1,137  
July 2026 Notes (principal amount outstanding of $ 1,000 )
998   (3) 983   996   (3) 957  
January 2027 Notes (principal amount outstanding of $ 900 )
901   (3)(4) 927   891   (3)(4) 933  
June 2027 Notes (principal amount outstanding of $ 500 )
498   (3) 488   497   (3) 475  
June 2028 Notes (principal amount outstanding of $ 1,250 )
1,248   (3) 1,195   1,248   (3) 1,151  
March 2029 Notes (principal amount outstanding of $ 1,000 )
1,000   (3)(4) 1,029   985   (3)(4) 1,010  
July 2029 Notes (principal amount outstanding of $ 850 )
862   (3)(4) 878   835   (3)(4) 861  
September 2030 Notes (principal amount outstanding of $ 750 and $ 0 , respectively)
744   (3)(4) 760   —   —  
January 2031 Notes (principal amount outstanding of $ 650 and $ 0 , respectively)
636   (3)(4) 645   —   —  
November 2031 Notes (principal amount outstanding of $ 700 )
693   (3) 627   692   (3) 602  
March 2032 Notes (principal amount outstanding of $ 1,000 and $ 0 , respectively)
1,016   (3)(4) 1,020   —   —  
Total $ 15,605   (5) $ 15,560   $ 13,727   (5) $ 13,552  

________________________________________

(1) The Revolving Credit Facility, the Revolving Funding Facility, the SMBC Funding Facility and the BNP Funding Facility carrying values are the same as the principal amounts outstanding.

(2) Excludes the April 2036 CLO Subordinated Notes and October 2036 CLO Subordinated Notes, which were retained by the Company and, as such, eliminated in consolidation. See Note 5 for more information on the Debt Securitizations.

(3) Represents the aggregate principal amount outstanding, less unamortized debt issuance costs and the net unaccreted/amortized discount or premium recorded upon issuance.

(4) The carrying value of the January 2027 Notes, the March 2029 Notes, the July 2029 Notes, the September 2030 Notes, the January 2031 Notes and the March 2032 Notes as of September 30, 2025 includes adjustments as a result of effective hedge accounting relationships. The carrying value of the January 2027 Notes, the March 2029 Notes and the
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July 2029 Notes as of December 31, 2024 includes adjustments as a result of effective hedge accounting relationships. See Notes 5 and 6 for more information.

(5) Total principal amount of outstanding debt totaled $ 15,615 and $ 13,789 as of September 30, 2025 and December 31, 2024, respectively.

(6) The fair value of these debt obligations would be categorized as Level 2 under ASC 820-10.

9. STOCKHOLDERS’ EQUITY

The Company may from time to time issue and sell shares of its common stock through public or “at the market” offerings. During the nine months ended September 30, 2025, the Company issued and sold the following shares of common stock:

Issuances of Common Stock Number of Shares Issued Gross Proceeds Underwriting Fees/Offering Expenses Net Proceeds Average Offering Price Per Share(1)

“At the market” offerings 41.3 $ 915.1   $ 9.5   $ 905.6   $ 22.15  
Total 41.3 $ 915.1   $ 9.5   $ 905.6  

________________________________________

(1)    Represents the gross offering price per share before deducting underwriting discounts and commissions and offering expenses.

During the nine months ended September 30, 2024, the Company issued and sold the following shares of common stock:

Issuances of Common Stock Number of Shares Issued Gross Proceeds Underwriting Fees/Offering Expenses Net Proceeds Average Offering Price Per Share(1)

“At the market” offerings 40.6 $ 844.0   $ 8.8   $ 835.2   $ 20.81  
Total 40.6 $ 844.0   $ 8.8   $ 835.2  

________________________________________

(1)    Represents the gross offering price per share before deducting underwriting discounts and commissions and offering expenses.

“At the Market” Offerings

The Company is party to equity distribution agreements with several banks (the “Equity Distribution Agreements”). The Equity Distribution Agreements provide that the Company may from time to time issue and sell, by means of “at the market” offerings, up to $ 1,500 of its common stock. Subject to the terms and conditions of the Equity Distribution Agreements, sales of common stock, if any, may be made in transactions that are deemed to be “at the market” offerings as defined in Rule 415(a)(4) under the Securities Act of 1933, as amended. Under the Equity Distribution Agreements, common stock with an aggregate offering amount of $ 585 remained available for issuance as of September 30, 2025.

Conversion of the 2024 Convertible Notes

In March 2024, in connection with the repayment of the 2024 Convertible Notes, the Company issued approximately 20 shares of its common stock at a conversion price of $ 20.12 per share for a total value of $ 407 . See Note 5 for more information relating to the repayment of the 2024 Convertible Notes.

Dividend Reinvestment Plan

See Note 11 for information regarding shares of common stock issued or purchased in accordance with the Company’s dividend reinvestment plan.

Stock Repurchase Program

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The Company is authorized under its stock repurchase program to purchase up to $ 1,000 in the aggregate of its outstanding common stock in the open market at certain thresholds below its net asset value per share, in accordance with the guidelines specified in Rule 10b-18 under the Securities Exchange Act of 1934, as amended. The timing, manner, price and amount of any share repurchases will be determined by the Company, in its sole discretion, based upon an evaluation of economic and market conditions, stock price, applicable legal and regulatory requirements and other factors. The stock repurchase program does not require the Company to repurchase any specific number of shares of common stock or any shares of common stock at all. Consequently, the Company cannot assure stockholders that any specific number of shares of common stock, if any, will be repurchased under the stock repurchase program. As of September 30, 2025, the expiration date of the stock repurchase program was February 15, 2026. The program may be suspended, extended, modified or discontinued at any time. As of September 30, 2025, there was $ 1,000 available for repurchases under the stock repurchase program.

During the nine months ended September 30, 2025 and 2024, the Company did not repurchase any shares of the Company’s common stock under the stock repurchase program.

10. EARNINGS PER SHARE

The following information sets forth the computations of basic and diluted net increase in stockholders’ equity resulting from operations per share for the three and nine months ended September 30, 2025 and 2024:

  For the Three Months Ended September 30, For the Nine Months Ended September 30,
  2025 2024 2025 2024

Net increase in stockholders’ equity resulting from operations $ 404   $ 394   $ 1,006   $ 1,165  

Weighted average shares of common stock outstanding—basic and diluted 709   635   694   614  

Basic and diluted net increase in stockholders’ equity resulting from operations per share $ 0.57   $ 0.62   $ 1.45   $ 1.90  

11. DIVIDENDS AND DISTRIBUTIONS

The following table summarizes the Company’s dividends declared and payable during the nine months ended September 30, 2025 and 2024:

Date declared Record date Payment date Per share
amount Total amount
July 29, 2025 September 15, 2025 September 30, 2025 $ 0.48   $ 342  
April 29, 2025 June 13, 2025 June 30, 2025 0.48   337  
February 5, 2025 March 14, 2025 March 31, 2025 0.48   328  

Total dividends declared and payable for the nine months ended September 30, 2025
$ 1.44   $ 1,007  

July 30, 2024 September 13, 2024 September 30, 2024 $ 0.48   $ 308  
May 1, 2024 June 14, 2024 June 28, 2024 0.48   300  
February 7, 2024 March 15, 2024 March 29, 2024 0.48   291  

Total dividends declared and payable for the nine months ended September 30, 2024
$ 1.44   $ 899  

The Company has a dividend reinvestment plan, whereby the Company may buy shares of its common stock in the open market or issue new shares in order to satisfy dividend reinvestment requests. When the Company issues new shares in
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connection with the dividend reinvestment plan, the issue price is equal to the closing price of its common stock on the dividend payment date. Dividend reinvestment plan activity for the nine months ended September 30, 2025 and 2024, was as follows:

For the Nine Months Ended September 30,
2025 2024
Shares issued 2.9   3.0  
Average issue price per share $ 21.45   $ 20.87  

12. RELATED PARTY TRANSACTIONS

In accordance with the investment advisory and management agreement, the Company bears all costs and expenses of the operation of the Company and reimburses its investment adviser or its affiliates for certain of such costs and expenses paid for by the investment adviser or its affiliates on behalf of the Company. For the three and nine months ended September 30, 2025, the Company’s investment adviser or its affiliates incurred and the Company reimbursed such expenses totaling $ 1 and $ 4 , respectively. For the three and nine months ended September 30, 2024, the Company’s investment adviser or its affiliates incurred and the Company reimbursed such expenses totaling $ 2 and $ 9 , respectively.

The Company has entered into agreements with Ares Management LLC and IHAM, pursuant to which Ares Management LLC and IHAM are entitled to use the Company’s proprietary portfolio management software. For the three and nine months ended September 30, 2025, amounts payable to the Company under these agreements totaled $ 0 and $ 0 , respectively. For the three and nine months ended September 30, 2024, amounts payable to the Company under these agreements totaled $ 0 and $ 0 , respectively.

Ares Management Capital Markets LLC (“AMCM”), an affiliate of Ares Management, served as a co-manager and an underwriter in connection with the Company’s offering of the September 2030 Notes, the January 2031 Notes and the March 2032 Notes issued during the nine months ended September 30, 2025. Under the purchase agreements the Company entered into in connection with such issuances, AMCM received an aggregate of $ 0.7 of underwriting and advisory fees for the nine months ended September 30, 2025. The underwriting and advisory fees AMCM received were on terms equivalent to those of other underwriters.

See Notes 3, 4 and 5 for descriptions of other related party transactions.

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13. FINANCIAL HIGHLIGHTS

The following is a schedule of financial highlights as of and for the nine months ended September 30, 2025 and 2024:

  As of and For the Nine Months Ended September 30,
Per Share Data: 2025 2024
Net asset value at beginning of period(1) $ 19.89   $ 19.24  
Issuances of common stock 0.11   0.06  
Conversion of 2024 Convertible Notes —   0.01  

Net investment income for period(2) 1.51   1.70  
Net realized and unrealized gains (losses) for period(2) ( 0.06 ) 0.20  
Net increase in stockholders' equity resulting from operations 1.56   1.97  
Total distributions to stockholders ( 1.44 ) ( 1.44 )
Net asset value at end of period(1) $ 20.01   $ 19.77  
Per share market value at end of period $ 20.41   $ 20.94  
Total return based on market value(3) ( 0.34 ) % 12.12   %
Total return based on net asset value(4) 8.06   % 10.48   %
Shares outstanding at end of period 716   646  
Ratio/Supplemental Data:  
Net assets at end of period $ 14,322   $ 12,773  
Ratio of operating expenses to average net assets(5)(6) 11.47   % 12.45   %
Ratio of net investment income to average net assets(5)(7) 10.13   % 11.87   %
Portfolio turnover rate(5) 35   % 38   %

_________________________________________________________________________________

(1) The net assets used equals the total stockholders’ equity on the consolidated balance sheet.

(2) Weighted average basic per share data.

(3) For the nine months ended September 30, 2025, the total return based on market value equaled the decrease of the ending market value at September 30, 2025 of $ 20.41 per share from the ending market value at December 31, 2024 of $ 21.89 per share plus the declared and payable dividends of $ 1.44 per share for the nine months ended September 30, 2025, divided by the market value at December 31, 2024. For the nine months ended September 30, 2024, the total return based on market value equaled the increase of the ending market value at September 30, 2024 of $ 20.94 per share from the ending market value at December 31, 2023 of $ 20.03 per share plus the declared and payable dividends of $ 1.44 per share for the nine months ended September 30, 2024, divided by the market value at December 31, 2023. The Company’s performance changes over time and currently may be different than that shown. Past performance is no guarantee of future results.

(4) For the nine months ended September 30, 2025, the total return based on net asset value equaled the change in net asset value during the period plus the declared and payable dividends of $ 1.44 per share for the nine months ended September 30, 2025, divided by the beginning net asset value for the period. For the nine months ended September 30, 2024, the total return based on net asset value equaled the change in net asset value during the period plus the declared and payable dividends of $ 1.44 per share for the nine months ended September 30, 2024, divided by the beginning net asset value for the period. The Company’s performance changes over time and currently may be different than that shown. Past performance is no guarantee of future results.

(5) The ratios reflect an annualized amount.

(6) For the nine months ended September 30, 2025 and 2024, the ratio of operating expenses to average net assets consisted of the following:
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  For the Nine Months Ended September 30,
2025 2024
Base management fee 3.04   % 3.03   %
Income based fee and capital gains incentive fee 2.43   3.22  
Interest and credit facility fees 5.63   5.83  
Other operating expenses 0.37   0.37  
Total operating expenses 11.47   % 12.45   %

(7) The ratio of net investment income to average net assets excludes income taxes related to realized gains and losses.

14. SEGMENT REPORTING

The Company operates through a single operating and reporting segment with an investment objective to generate both current income and capital appreciation through debt and equity investments. The chief operating decision maker (“CODM”) is comprised of the Company’s chief executive officer, president, chief financial officer and chief operating officer and the CODM assesses the performance and makes operating decisions of the Company on a consolidated basis primarily based on the Company’s net increase in stockholders’ equity resulting from operations (“net income”). In addition to numerous other factors and metrics, the CODM utilizes net income as a key metric in determining the amount of dividends to be distributed to the Company’s stockholders. As the Company’s operations comprise of a single reporting segment, the segment assets are reflected on the accompanying consolidated balance sheet as “total assets” and the significant segment expenses are listed on the accompanying consolidated statement of operations.

15. SUBSEQUENT EVENTS

The Company’s management has evaluated subsequent events through the date of issuance of the consolidated financial statements included herein. There have been no subsequent events that occurred during such period that would require disclosure in this Form 10-Q or would be required to be recognized in the consolidated financial statements as of and for the nine months ended September 30, 2025.

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Item 2.    Management’s Discussion and Analysis of Financial Condition and Results of Operations

The information contained in this section should be read in conjunction with our consolidated financial statements and notes thereto appearing elsewhere in this Quarterly Report. In addition, some of the statements in this Quarterly Report (including in the following discussion) constitute forward-looking statements, which relate to future events or the future performance or financial condition of Ares Capital Corporation (the “Company,” “Ares Capital,” “we,” “us,” or “our”). The forward-looking statements contained in this report involve a number of risks and uncertainties, including statements concerning:

• our, or our portfolio companies’, future business, operations, operating results or prospects;

• the return or impact of current and future investments;

• the impact of a protracted decline in the liquidity of credit markets on our business;

• changes in the general economy, including those caused by tariffs and trade disputes with other countries, changes in inflation and risk of recession;

• fluctuations in global interest rates;

• the impact of changes in laws or regulations (including the interpretation thereof), including tax laws, governing our operations or the operations of our portfolio companies or the operations of our competitors;

• the valuation of our investments in portfolio companies, particularly those having no liquid trading market;

• our ability to recover unrealized losses;

• market conditions and our ability to access different debt markets and additional debt and equity capital and our ability to manage our capital resources effectively;

• our contractual arrangements and relationships with third parties;

• political and regulatory conditions that contribute to uncertainty and market volatility including the impact of a prolonged U.S. government shutdown as well as the legislative, regulatory, trade, immigration and other policies associated with the current U.S. presidential administration;

• the impact of supply chain constraints on our portfolio companies and the global economy;

• uncertainty surrounding global financial stability;

• ongoing conflicts in the Middle East and the Russia-Ukraine war, including the potential for volatility in energy prices and other commodities and their impact on the industries in which we invest;

• the disruption of global shipping activities;

• the financial condition of our current and prospective portfolio companies and their ability to achieve their objectives;

• the impact of information technology system failures, data security breaches, data privacy compliance, network disruptions, and cybersecurity attacks;

• the impact of global health crises on our or our portfolio companies’ business and the U.S. and global economy;

• our ability to anticipate and identify evolving market expectations with respect to environmental, social and governance matters, including the environmental impacts of our portfolio companies’ supply chain and operations;

• our ability to successfully complete and integrate any acquisitions;

• the outcome and impact of any litigation or regulatory proceeding;

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• the adequacy of our cash resources and working capital;

• the timing, form and amount of any dividend distributions;

• the timing of cash flows, if any, from the operations of our portfolio companies; and

• the ability of our investment adviser to locate suitable investments for us and to monitor and administer our investments.

We use words such as “anticipates,” “believes,” “expects,” “intends,” “projects,” “seeks,” “estimates,” “will,” “should,” “could,” “would,” “likely,” “may” and similar expressions to identify forward-looking statements, although not all forward-looking statements include these words. You should not place undue reliance on these forward-looking statements, and our actual results and condition could differ materially from those implied or expressed in the forward-looking statements for any reason, including the factors set forth in “Risk Factors” and elsewhere in our Annual Report on Form 10-K for the fiscal year ended December 31, 2024 and in this Quarterly Report.

We have based the forward-looking statements included in this Quarterly Report on information available to us as of the filing date of this Quarterly Report, and we assume no obligation to update any such forward-looking statements. Although we undertake no obligation to revise or update any forward-looking statements, whether as a result of new information, future events or otherwise, you are advised to consult any additional disclosures that we may make directly to you or through reports that we have filed or in the future may file with the Securities and Exchange Commission (the “SEC”), including annual reports on Form 10-K, registration statements on Form N-2, quarterly reports on Form 10-Q and current reports on Form 8-K.

OVERVIEW

We are a specialty finance company that is a closed-end, non-diversified management investment company incorporated in Maryland. We have elected to be regulated as a business development company (“BDC”) under the Investment Company Act of 1940, as amended (together with the rules and regulations promulgated thereunder, the “Investment Company Act”).
 
We are externally managed by Ares Capital Management LLC (“Ares Capital Management” or our “investment adviser”), a subsidiary of Ares Management Corporation (“Ares Management”), a publicly traded, leading global alternative investment manager, pursuant to our investment advisory and management agreement. Ares Operations LLC (“Ares Operations” or our “administrator”), a subsidiary of Ares Management, provides certain administrative and other services necessary for us to operate.
 
Our investment objective is to generate both current income and capital appreciation through debt and equity investments. We invest primarily in first lien senior secured loans (including “unitranche” loans, which are loans that combine both senior and subordinated debt, generally in a first lien position) and second lien senior secured loans. In addition to senior secured loans, we also invest in subordinated loans (sometimes referred to as mezzanine debt) and preferred equity.
 
To a lesser extent, we also make common equity investments, which have generally been non-control equity investments of less than $20 million (usually in conjunction with a concurrent debt investment). However, we may increase the size or change the nature of these investments.
 
Since our initial public offering (“IPO”) on October 8, 2004 through September 30, 2025, our exited investments resulted in an asset level realized gross internal rate of return to us of approximately 13% (based on original cash invested, net of syndications, of approximately $53.1 billion and total proceeds from such exited investments of approximately $68.6 billion). Internal rate of return is the discount rate that makes the net present value of all cash flows related to a particular investment equal to zero. Internal rate of return is gross of expenses related to investments as these expenses are not allocable to specific investments. Investments are considered to be exited when the original investment objective has been achieved through the receipt of cash and/or non-cash consideration upon the repayment of a debt investment or sale of an investment or through the determination that no further consideration was collectible and, thus, a loss may have been realized.

Additionally, since our IPO on October 8, 2004 through September 30, 2025, our realized gains have exceeded our realized losses by approximately $1.1 billion (excluding a one-time gain on the acquisition of Allied Capital Corporation in April 2010 (the “Allied Acquisition”), income tax expense on net realized gains, and realized gains/losses from the extinguishment of debt and other transactions). For the same time period, our average annualized net realized gain rate was approximately 0.8% (excluding a one-time gain on the Allied Acquisition, income tax expense on net realized gains, and
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realized gains/losses from the extinguishment of debt and other transactions). Net realized gain/loss rates for a particular period are the amount of net realized gains/losses during such period divided by the average quarterly investments at amortized cost in such period.
 
Information included herein regarding internal rates of return, realized gains and losses and annualized net realized gain rates are historical results relating to our past performance and are not necessarily indicative of future results, the achievement of which cannot be assured.

As a BDC, we are required to comply with certain regulatory requirements. For instance, we generally have to invest at least 70% of our total assets in “qualifying assets,” including securities and indebtedness of private U.S. companies and certain public U.S. companies, cash, cash equivalents, U.S. government securities and high-quality debt investments that mature in one year or less. We also may invest up to 30% of our portfolio in non-qualifying assets, as permitted by the Investment Company Act. Specifically, as part of this 30% basket, we may invest in entities that are not considered “eligible portfolio companies” (as defined in the Investment Company Act), including companies located outside of the United States, entities that are operating pursuant to certain exceptions under the Investment Company Act, and publicly traded entities whose public equity market capitalization exceeds the levels provided for under the Investment Company Act. In addition, we, our investment adviser and certain of our affiliates have received an exemptive relief order from the SEC that permits us and other BDCs and registered closed-end management investment companies managed by Ares Management and its affiliates to co-invest in portfolio companies with each other and with other affiliated investment entities (the “Co-Investment Exemptive Order”). As required by the Co-Investment Exemptive Order, we have adopted, and our board of directors has approved, policies and procedures reasonably designed to ensure compliance with the terms of the Co-Investment Exemptive Order, and our investment adviser and our Chief Compliance Officer will provide reporting to our board of directors. Co-investments made under the Co-Investment Exemptive Order are subject to compliance with certain conditions and other requirements, which could limit our ability to participate in a co-investment transaction. There could be significant overlap in our investment portfolio and the investment portfolio of affiliated Ares Management entities that can avail themselves of the Co-Investment Exemptive Order and that have an investment objective similar to ours. We may also otherwise co-invest with funds managed by Ares Management or any of its downstream affiliates, subject to compliance with existing regulatory guidance, applicable regulations and our investment adviser’s allocation policy.
 
We have elected to be treated as a regulated investment company (“RIC”) under the Internal Revenue Code of 1986, as amended (the “Code”), and operate in a manner so as to qualify for the tax treatment applicable to RICs. To qualify as a RIC, we must, among other requirements, meet certain source-of-income and asset diversification requirements and timely distribute to our stockholders generally at least 90% of our investment company taxable income, as defined by the Code, for each year. Pursuant to this election, we generally will not have to pay U.S. federal corporate-level taxes on any income that we distribute to our stockholders provided that we satisfy those requirements.

MACROECONOMIC ENVIRONMENT

During the third quarter of 2025, leveraged corporate credit markets generated positive total returns amidst growing U.S. gross domestic product and consumer spending, stable inflation and historically low unemployment rates offset by slower job growth. Although future economic growth is expected to slow relative to 2024 levels, the U.S debt and equity markets have shown strength as the Federal Reserve’s anticipated accommodative monetary policies are expected to support overall economic activity.
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PORTFOLIO AND INVESTMENT ACTIVITY

Our investment activity for the three months ended September 30, 2025 and 2024 is presented below.

  For the Three Months Ended September 30,
(dollar amounts in millions) 2025 2024
New investment commitments(1):    
New portfolio companies $ 2,429  $ 881 
Existing portfolio companies 1,495  3,038 
Total new investment commitments(2) $ 3,924  $ 3,919 
Less:  
Investment commitments exited(3) (2,625) (2,598)
Net investment commitments $ 1,299  $ 1,321 
Principal amount of investments funded:  
First lien senior secured loans(4) $ 2,899  $ 3,009 
Second lien senior secured loans 125  41 
Subordinated certificates of the SDLP(5) 71  89 
Senior subordinated loans 87  44 
Preferred equity 58  17 
Ivy Hill Asset Management, L.P.(6) 139  41 
Other equity 128  42 
Total $ 3,507  $ 3,283 
Principal amount of investments sold or repaid:  
First lien senior secured loans(4) $ 1,751  $ 1,816 
Second lien senior secured loans —  308 
Subordinated certificates of the SDLP(5) 87  134 
Senior subordinated loans 91  66 

Preferred equity 252  154 
Ivy Hill Asset Management, L.P.(6) 195  36 
Other equity 259  28 
Total $ 2,635  $ 2,542 
Number of new investment commitments(7) 80  74 
Average new investment commitment amount $ 49  $ 53 
Weighted average term for new investment commitments (in months) 71  74 
Percentage of new investment commitments at floating rates 93  % 95  %
Percentage of new investment commitments at fixed rates 2  % 4  %
Weighted average yield of debt and other income producing securities(8):  
Funded during the period at amortized cost 10.0  % 10.3  %
Funded during the period at fair value(9) 10.0  % 10.4  %
Exited or repaid during the period at amortized cost 10.9  % 11.8  %
Exited or repaid during the period at fair value(9) 10.8  % 12.1  %

_______________________________________________________________________________

(1) New investment commitments include new agreements to fund revolving loans or delayed draw loans. See Note 7 to our consolidated financial statements for the three and nine months ended September 30, 2025 for more information on our commitments to fund revolving loans or delayed draw loans.

(2) Includes both funded and unfunded commitments. Of these new investment commitments, we funded $3.0 billion and $2.7 billion for the three months ended September 30, 2025 and 2024, respectively.

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(3) Includes both funded and unfunded commitments. For the three months ended September 30, 2025 and 2024, investment commitments exited included exits of unfunded commitments of $281 million and $333 million, respectively.

(4) For the three months ended September 30, 2025 and 2024, net repayments of first lien secured revolving loans were $58 million and $55 million, respectively.

(5) See “Senior Direct Lending Program” below and Note 4 to our consolidated financial statements for the three and nine months ended September 30, 2025 for more information on the SDLP (as defined below). 

(6) Includes our subordinated loan to and equity investments in IHAM (as defined below), as applicable. See “Ivy Hill Asset Management, L.P.” below and Note 4 to our consolidated financial statements for the three and nine months ended September 30, 2025 for more information on IHAM.

(7) Number of new investment commitments represents each commitment to a particular portfolio company or a commitment to multiple companies as part of an individual transaction (e.g., the purchase of a portfolio of investments).

(8) “Weighted average yield of debt and other income producing securities” is computed as (a) the annual stated interest rate or yield earned plus the net annual amortization of original issue discount and market discount or premium earned on accruing debt and other income producing securities (including the annualized amount of the regular dividend received by us related to our equity investment in IHAM during the most recent quarter end, as applicable), divided by (b) the total accruing debt and other income producing securities at amortized cost or at fair value (including the amortized cost or fair value of our equity investment in IHAM as applicable), as applicable.

(9) Represents fair value for investments in the portfolio as of the most recent prior quarter end, if applicable.

As of September 30, 2025 and December 31, 2024, our investments consisted of the following:

  As of
  September 30, 2025 December 31, 2024
(in millions) Amortized Cost(1) Fair Value Amortized Cost(1) Fair Value
First lien senior secured loans(2) $ 17,963  $ 17,687  $ 15,519  $ 15,179 
Second lien senior secured loans 1,738  1,649  1,935  1,847 
Subordinated certificates of the SDLP(3) 1,048  1,042  1,263  1,192 
Senior subordinated loans 1,484  1,399  1,384  1,351 

Preferred equity 2,605  2,461  2,667  2,649 
Ivy Hill Asset Management, L.P.(4) 1,800  2,018  1,701  1,915 
Other equity 1,929  2,437  1,905  2,587 
Total $ 28,567  $ 28,693  $ 26,374  $ 26,720 

_______________________________________________________________________________

(1) The amortized cost represents the original cost adjusted for any accretion of discounts, amortization of premiums and payment-in-kind (“PIK”) interest or dividends.

(2) First lien senior secured loans include certain loans that we classify as “unitranche” loans. The total amortized cost and fair value of the loans that we classified as “unitranche” loans were $11.2 billion and $11.1 billion, respectively, as of September 30, 2025, and $8.8 billion and $8.6 billion, respectively, as of December 31, 2024.

(3) The proceeds from these certificates were applied to co-investments with Varagon Capital Partners (“Varagon”) and its clients to fund first lien senior secured loans to 23 and 20 different borrowers as of September 30, 2025 and December 31, 2024, respectively.

(4) Includes our subordinated loan to and equity investments in IHAM, as applicable.

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We have commitments to fund various revolving and delayed draw senior secured and subordinated loans, including commitments to fund which are at (or substantially at) our discretion. Our commitment to fund delayed draw loans is triggered upon the satisfaction of certain pre-negotiated terms and conditions. Generally, the most significant and uncertain term requires the borrower to satisfy a specific use of proceeds covenant. The use of proceeds covenant typically requires the borrower to use the additional loans for the specific purpose of a permitted acquisition or permitted investment, for example. In addition to the use of proceeds covenant, the borrower is generally required to satisfy additional negotiated covenants (including specified leverage levels). We are also party to subscription agreements to fund equity investments. See Note 7 to our consolidated financial statements for the three and nine months ended September 30, 2025 for more information on our unfunded commitments, including commitments to issue letters of credit, related to certain of our portfolio companies.

The weighted average yields at amortized cost and fair value of the following portions of our portfolio as of September 30, 2025 and December 31, 2024 were as follows:

  As of
  September 30, 2025 December 31, 2024
  Amortized Cost Fair Value Amortized Cost Fair Value
Debt and other income producing securities(1) 10.6  % 10.7  % 11.1  % 11.2  %
Total portfolio(2) 9.6  % 9.6  % 10.0  % 9.9  %
First lien senior secured loans(3) 9.5  % 9.6  % 9.9  % 10.1  %
Second lien senior secured loans(3) 10.6  % 11.2  % 12.1  % 12.7  %
Subordinated certificates of the SDLP(3)(6) 13.0  % 13.1  % 12.4  % 13.2  %
Senior subordinated loans(3) 11.0  % 11.6  % 11.9  % 12.2  %

Ivy Hill Asset Management L.P.(4) 17.2  % 15.2  % 16.7  % 14.8  %
Other income producing equity securities(5) 11.0  % 11.2  % 11.3  % 11.5  %

_______________________________________________________________________________

(1) “Weighted average yields on debt and other income producing securities” are computed as (a) the annual stated interest rate or yield earned plus the net annual amortization of original issue discount and market discount or premium earned on accruing debt and other income producing securities (including the annualized amount of the regular dividend received by us related to our equity investment in IHAM during the most recent quarter end), divided by (b) the total accruing debt and other income producing securities at amortized cost or at fair value (including the amortized cost or fair value of our equity investment in IHAM as applicable), as applicable.

(2) “Weighted average yields on total portfolio” are computed as (a) the annual stated interest rate or yield earned plus the net annual amortization of original issue discount and market discount or premium earned on accruing debt and other income producing securities (including the annualized amount of the regular dividend received by us related to our equity investment in IHAM during the most recent quarter end), divided by (b) total investments at amortized cost or at fair value, as applicable.

(3) “Weighted average yields” of investments are computed as (a) the annual stated interest rate or yield earned plus the net annual amortization of original issue discount and market discount or premium earned on the relevant accruing investments, divided by (b) the total relevant investments at amortized cost or at fair value, as applicable.

(4) Represents the yield on our equity investment in IHAM, which is computed as (a) the annualized amount of the regular dividend received by us related to our equity investment in IHAM during the most recent quarter end, divided by (b) the amortized cost or fair value of our equity investment in IHAM, as applicable.

(5) “Weighted average yield on other income producing equity securities” is computed as (a) the yield earned on the relevant income producing equity securities, divided by (b) the total relevant income producing equity securities at amortized cost or fair value, as applicable.

(6) The proceeds from these certificates were applied to co-investments with Varagon and its clients to fund first lien senior secured loans.
 
Ares Capital Management employs an investment rating system to categorize our investments. In addition to various risk management and monitoring tools, our investment adviser grades the credit risk of all investments on a scale of 1 to 4 no less frequently than quarterly. This system is intended primarily to reflect the underlying risk of a portfolio investment relative
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to our initial cost basis in respect of such portfolio investment (i.e., at the time of origination or acquisition), although it may also take into account under certain circumstances the performance of the portfolio company’s business, the collateral coverage of the investment and other relevant factors. The grade of a portfolio investment may be reduced or increased over time. The following is a description of each investment grade:

Investment grade Description
4 Involves the least amount of risk to our initial cost basis. The trends and risk factors for this investment since origination or acquisition are generally favorable, which may include the performance of the portfolio company or a potential exit.
3 Involves a level of risk to our initial cost basis that is similar to the risk to our initial cost basis at the time of origination or acquisition. This portfolio company is generally performing as expected and the risk factors to our ability to ultimately recoup the cost of our investment are neutral to favorable. All investments or acquired investments in new portfolio companies are initially assessed a grade of 3.
2 Indicates that the risk to our ability to recoup the initial cost basis of such investment has increased materially since origination or acquisition, including as a result of factors such as declining performance and non-compliance with debt covenants; however, payments are generally not more than 120 days past due. For investments graded 2, our investment adviser enhances its level of scrutiny over the monitoring of such portfolio company.
1 Indicates that the risk to our ability to recoup the initial cost basis of such investment has substantially increased since origination or acquisition, and the portfolio company likely has materially declining performance. For debt investments with an investment grade of 1, most or all of the debt covenants are out of compliance and payments are substantially delinquent. For investments graded 1, it is anticipated that we will not recoup our initial cost basis and may realize a substantial loss of our initial cost basis upon exit. For investments graded 1, our investment adviser enhances its level of scrutiny over the monitoring of such portfolio company.

    
Set forth below is the grade distribution of our portfolio companies as of September 30, 2025 and December 31, 2024:

  As of
  September 30, 2025 December 31, 2024
(dollar amounts in millions) Fair Value % Number of
Companies % Fair Value % Number of
Companies %
Grade 4 $ 4,446  15.5  % 63  10.7  % $ 4,792  17.9  % 64  11.6  %
Grade 3 23,209  80.9  471  80.2  21,156  79.2  432  78.6 
Grade 2 664  2.3  29  5.0  513  1.9  31  5.6 
Grade 1 374  1.3  24  4.1  259  1.0  23  4.2 
Total $ 28,693  100.0  % 587  100.0  % $ 26,720  100.0  % 550 100.0  %

As of September 30, 2025 and December 31, 2024, the weighted average grade of the investments in our portfolio at fair value was 3.1 and 3.1, respectively.

As of September 30, 2025 and December 31, 2024, loans on non-accrual status represented 1.8% of the total investments at amortized cost (or 1.0% at fair value) and 1.7% at amortized cost (or 1.0% at fair value), respectively.

Ivy Hill Asset Management, L.P.

Ivy Hill Asset Management, L.P. (“IHAM”), our wholly owned portfolio company, is an asset manager and an SEC-registered investment adviser. As of September 30, 2025, IHAM had assets under management of approximately $13.5 billion. As of September 30, 2025, IHAM managed 22 vehicles (the “IHAM Vehicles”). IHAM earns fee income from managing the IHAM Vehicles and has also invested in certain of these vehicles as part of its business strategy. The amortized cost of IHAM’s total investments as of September 30, 2025 and December 31, 2024 was $2,767 million and $2,237 million, respectively. For the three and nine months ended September 30, 2025, IHAM had management and incentive fee income of $15 million and $39 million, respectively, and other investment-related income of $86 million and $199 million, respectively, which included net realized gains or losses on investments and other transactions. For the three and nine months ended September 30, 2024, IHAM had management and incentive fee income of $13 million and $41 million, respectively, and investment related income of $75 million and $266 million, respectively, which included net realized gains or losses on investments and other transactions.
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 The amortized cost and fair value of our investments in IHAM as of September 30, 2025 and December 31, 2024 were as follows:

As of
September 30, 2025 December 31, 2024
(in millions) Amortized Cost Fair Value Amortized Cost Fair Value
Subordinated loan(1)
$ 99  $ 99  $ —  $ — 
Equity
1,701  1,919  1,701  1,915 
Total investment in IHAM $ 1,800  $ 2,018  $ 1,701  $ 1,915 

_______________________________________________________________________________

(1) We have provided a commitment to fund up to $500 million to IHAM, of which the availability is solely at our discretion.

The interest income and dividend income that we earned from IHAM for the three and nine months ended September 30, 2025 and 2024 were as follows:

For the Three Months Ended September 30, For the Nine Months Ended September 30,
(in millions) 2025 2024 2025 2024
Interest income
$ 1  $ 1  $ 2  $ 2 
Dividend income
$ 73  $ 69  $ 219  $ 204 

From time to time, IHAM or certain IHAM Vehicles may purchase investments from, or sell investments to, us. For any such sales or purchases by the IHAM Vehicles to or from us, the IHAM Vehicle must obtain approval from third parties unaffiliated with us or IHAM, as applicable. During the nine months ended September 30, 2025 and 2024, IHAM or certain of the IHAM Vehicles purchased $1.8 billion and $301 million, respectively, of loans from us. For the nine months ended September 30, 2025 and 2024, we recognized $0 million of net realized gains and $1 million of net realized losses, respectively, from these sales. During the nine months ended September 30, 2025, IHAM or certain IHAM Vehicles did not sell any investments to us. During the nine months ended September 30, 2024, IHAM or certain IHAM vehicles sold $32 million of investments to us.

The yields at amortized cost and fair value of our investments in IHAM as of September 30, 2025 and December 31, 2024 were as follows:

  As of
  September 30, 2025 December 31, 2024
  Amortized Cost Fair Value Amortized Cost Fair Value
Subordinated loan
10.7  % 10.7  % —  % —  %
Equity(1)
17.2  % 15.2  % 16.7  % 14.8  %

_______________________________________________________________________________

(1) Represents the yield on our equity investment in IHAM, which is computed as (a) the annualized amount of the regular dividend received by us related to our equity investment in IHAM during the most recent quarter end, divided by (b) the amortized cost or fair value of our equity investment in IHAM, as applicable.

Selected Financial Information

Pursuant to Rule 4-08(g) of Regulation S-X, selected financial information of IHAM, in conformity with U.S. generally accepted accounting principles (“GAAP”), as of September 30, 2025 and December 31, 2024 and for the three and nine months ended September 30, 2025 and 2024 are presented below.

In conformity with GAAP, IHAM is required to consolidate entities in which IHAM has a direct or indirect controlling financial interest based on either a variable interest model or voting interest model, which include certain of the IHAM Vehicles (the “Consolidated IHAM Vehicles”). As such, for GAAP purposes only, IHAM consolidates (a) entities in which it holds a majority voting interest or has majority ownership and control over the operational, financial and investing decisions of that
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entity and (b) entities that it concludes are variable interest entities in which IHAM has more than insignificant economic interest and power to direct the activities that most significantly impact the entities, and for which IHAM is deemed to be the primary beneficiary.

When IHAM consolidates an IHAM Vehicle for GAAP purposes only, IHAM reflects the assets, liabilities, revenues and expenses of the Consolidated IHAM Vehicles on a gross basis, including the economic interests held by third-party investors in the Consolidated IHAM Vehicles as debt obligations, subordinated notes or non-controlling interests, in the consolidated IHAM financials below. All of the revenues earned by IHAM as the investment manager of the Consolidated IHAM Vehicles are eliminated in GAAP consolidation. However, because the eliminated amounts are earned from and funded by third-party investors, the GAAP consolidation of an IHAM Vehicle does not impact the net income or loss attributable to IHAM. As a result, we believe an assessment of IHAM’s business and the impact to our investment in IHAM is best viewed on a stand-alone basis as reflected in the first column in the tables below.

As of September 30, 2025

(in millions) IHAM Consolidated IHAM Vehicles(1) Eliminations Consolidated
Selected Balance Sheet Information:
Assets
Investments at fair value(2) $ 2,720  $ 9,826  $ (2,612) $ 9,934 
Cash and cash equivalents 8  656  —  664 
Other assets 84  93  (72) 105 

Total assets $ 2,812  $ 10,575  $ (2,684) $ 10,703 

Liabilities
Debt $ 888  $ 7,399  $ —  $ 8,287 
Subordinated note from ARCC 99  —  —  99 
Subordinated notes(3) —  1,201  (862) 339 
Other liabilities 20  286  (14) 292 

Total liabilities 1,007  8,886  (876) 9,017 
Equity
Contributed capital 1,701  —  —  1,701 
Accumulated earnings 152  —  —  152 
Net unrealized losses on investments and foreign currency transactions(4) (48) —  —  (48)
Non-controlling interests in Consolidated IHAM Vehicles(5)
—  1,689  (1,808) (119)

Total equity 1,805  1,689  (1,808) 1,686 
Total liabilities and equity $ 2,812  $ 10,575  $ (2,684) $ 10,703 

207

As of December 31, 2024
(in millions) IHAM Consolidated IHAM Vehicles(1) Eliminations Consolidated
Selected Balance Sheet Information:
Assets

Investments at fair value(2) $ 2,160  $ 8,098  $ (2,086) $ 8,172 
Cash and cash equivalents 9  967  —  976 

Other assets 60  122  (54) 128 

Total assets $ 2,229  $ 9,187  $ (2,140) $ 9,276 

Liabilities

Debt $ 406  $ 6,550  $ —  $ 6,956 

Subordinated notes(3) —  1,025  (714) 311 

Other liabilities 16  266  (13) 269 

Total liabilities 422  7,841  (727) 7,536 
Equity
Contributed capital 1,700  —  —  1,700 
Accumulated earnings 186  —  —  186 
Net unrealized losses on investments and foreign currency transactions(4) (79) —  —  (79)
Non-controlling interests in Consolidated IHAM Vehicles(5)
—  1,346  (1,413) (67)

Total equity 1,807  1,346  (1,413) 1,740 
Total liabilities and equity $ 2,229  $ 9,187  $ (2,140) $ 9,276 

____________________________________

(1) Consolidated for GAAP purposes only.

(2) The determination of such fair value is determined in accordance with IHAM’s valuation process (separate and apart from our valuation process described elsewhere herein). The amortized cost of IHAM’s total investments as of September 30, 2025 and December 31, 2024 was $2,767 million and $2,237 million, respectively. The amortized cost of the total investments of IHAM on a consolidated basis as of September 30, 2025 and December 31, 2024 was $10,086 million and $8,343 million, respectively.

(3) Subordinated notes generally represent the most junior capital in certain of the Consolidated IHAM Vehicles and effectively represent equity in such vehicles.

(4) As of September 30, 2025 and December 31, 2024, net unrealized losses of $61 million and $70 million, respectively, have been eliminated upon consolidation and the elimination is included in “non-controlling interests in Consolidated IHAM Vehicles” in the selected balance sheet information.

(5) Non-controlling interests in Consolidated IHAM Vehicles includes net unrealized depreciation in the Consolidated IHAM Vehicles of $152 million and $171 million as of September 30, 2025 and December 31, 2024, respectively.

208

For the Three Months Ended September 30, 2025
IHAM Consolidated IHAM Vehicles(1) Eliminations Consolidated
Selected Statement of Operations Information:
Revenues

Investment income $ 84  $ 238  $ (82) $ 240 
Management fees and other income 15  2  (14) 3 

Total revenues 99  240  (96) 243 
Expenses

Interest expense 18  124  —  142 
Distributions to subordinated notes —  97  (84) 13 
Management fees and other expenses 4  16  (14) 6 

Total expenses 22  237  (98) 161 
Net operating income 77  3  2  82 

Net realized gains (losses) on investments and foreign currency 2  (27) (3) (28)
Net realized loss on extinguishment of debt —  (2) —  (2)
Net unrealized gains (losses) on investments, foreign currency and other transactions (13) 11  13  11 

Total net realized and unrealized losses on investments, foreign currency and other transactions (11) (18) 10  (19)
Net income (loss) 66  (15) 12  63 

Less: Net loss attributable to non-controlling interests in Consolidated IHAM Vehicles —  (15) 12  (3)
Net income attributable to Ivy Hill Asset Management, L.P. $ 66  $ —  $ —  $ 66 

For the Nine Months Ended September 30, 2025
(in millions) IHAM Consolidated IHAM Vehicles(1) Eliminations Consolidated
Selected Statement of Operations Information:
Revenues

Investment income $ 228  $ 687  $ (223) $ 692 
Management fees and other income 39  6  (37) 8 

Total revenues 267  693  (260) 700 
Expenses

Interest expense 41  362  —  403 
Distributions to subordinated notes —  161  (130) 31 
Management fees and other expenses 12  44  (37) 19 

Total expenses 53  567  (167) 453 
Net operating income 214  126  (93) 247 

Net realized losses on investments and foreign currency (29) (83) 18  (94)
Net realized gains (losses) on extinguishment of debt —  20  (23) (3)
Net unrealized gains (losses) on investments, foreign currency and other transactions 31  (8) (8) 15 

Total net realized and unrealized gains (losses) on investments, foreign currency and other transactions 2  (71) (13) (82)
Net income 216  55  (106) 165 

Less: Net income (loss) attributable to non-controlling interests in Consolidated IHAM Vehicles —  55  (106) (51)
Net income attributable to Ivy Hill Asset Management, L.P. $ 216  $ —  $ —  $ 216 

209

For the Three Months Ended September 30, 2024
IHAM Consolidated IHAM Vehicles(1) Eliminations Consolidated
Selected Statement of Operations Information:
Revenues

Investment income $ 77  $ 251  $ (75) $ 253 
Management fees and other income 13  2  (12) 3 

Total revenues 90  253  (87) 256 
Expenses

Interest expense 10  139  —  149 
Distributions to subordinated notes —  49  (37) 12 
Management fees and other expenses 4  14  (12) 6 

Total expenses 14  202  (49) 167 
Net operating income (loss) 76  51  (38) 89 

Net realized losses on investments and foreign currency (2) (39) 2  (39)

Net unrealized gains (losses) on investments, foreign currency and other transactions (8) 41  10  43 

Total net realized and unrealized gains (losses) on investments, foreign currency and other transactions (10) 2  12  4 
Net income 66  53  (26) 93 

Less: Net income attributable to non-controlling interests in Consolidated IHAM Vehicles —  53  (26) 27 
Net income attributable to Ivy Hill Asset Management, L.P. $ 66  $ —  $ —  $ 66 

For the Nine Months Ended September 30, 2024
(in millions) IHAM Consolidated IHAM Vehicles(1) Eliminations Consolidated
Selected Statement of Operations Information:
Revenues

Investment income $ 263  $ 784  $ (257) $ 790 
Management fees and other income 41  8  (38) 11 

Total revenues 304  792  (295) 801 
Expenses

Interest expense 30  432  —  462 
Distributions to subordinated notes —  154  (114) 40 
Management fees and other expenses 11  47  (38) 20 

Total expenses 41  633  (152) 522 
Net operating income 263  159  (143) 279 

Net realized gains (losses) on investments and foreign currency 3  (113) (7) (117)
Net realized loss on extinguishment of debt —  (1) —  (1)
Net unrealized gains (losses) on investments, foreign currency and other transactions (41) 88  40  87 

Total net realized and unrealized losses on investments, foreign currency and other transactions (38) (26) 33  (31)
Net income 225  133  (110) 248 
Less: Net income attributable to non-controlling interests in Consolidated IHAM Vehicles —  133  (110) 23 
Net income attributable to Ivy Hill Asset Management, L.P. $ 225  $ —  $ —  $ 225 

____________________________________
(1) Consolidated for GAAP purposes only.

210

Senior Direct Lending Program

We have established a joint venture with Varagon to make certain first lien senior secured loans, including certain stretch senior and unitranche loans, primarily to U.S. middle-market companies. The joint venture is called the Senior Direct Lending Program, LLC (d/b/a the “Senior Direct Lending Program” or the “SDLP”). In July 2016, we and Varagon and its clients completed the initial funding of the SDLP. The SDLP may generally commit and hold individual loans of up to $450 million. We, and other BDCs, registered closed-end management investment companies and other affiliated investment entities managed by our investment adviser or its affiliates, may directly co-invest with the SDLP to accommodate larger transactions. The SDLP is capitalized as transactions are completed and all portfolio decisions and generally all other decisions in respect of the SDLP must be approved by an investment committee of the SDLP consisting of representatives of ours and Varagon (with approval from a representative of each required).

We provide capital to the SDLP in the form of subordinated certificates (the “SDLP Certificates”), and Varagon and its clients provide capital to the SDLP in the form of senior notes, intermediate funding notes and the SDLP Certificates. As of September 30, 2025, we and a client of Varagon owned 87.5% and 12.5%, respectively, of the outstanding SDLP Certificates.

As of September 30, 2025 and December 31, 2024, we and Varagon and its clients had agreed to make capital available to the SDLP of $6.2 billion and $6.2 billion, respectively, in the aggregate, of which $1.4 billion and $1.4 billion, respectively, is to be made available from us. This capital will only be committed to the SDLP upon approval of transactions by the investment committee of the SDLP. Below is a summary of the funded capital and unfunded capital commitments of the SDLP.

  As of
(in millions) September 30, 2025 December 31, 2024
Total capital funded to the SDLP(1) $ 4,669  $ 5,054 
Total capital funded to the SDLP by the Company(1) $ 1,221  $ 1,310 
Total unfunded capital commitments to the SDLP(2) $ 260  $ 489 
Total unfunded capital commitments to the SDLP by the Company(2) $ 61  $ 119 

___________________________________________________________________________
(1) At principal amount.

(2) These commitments to fund delayed draw loans have been approved by the investment committee of the SDLP and will be funded if and when conditions to funding such delayed draw loans are met.

The SDLP Certificates pay a coupon equal to Secured Overnight Financing Rate (“SOFR”) plus 8.0% and also entitle the holders thereof to receive a portion of the excess cash flow from the loan portfolio, after expenses, which may result in a return to the holders of the SDLP Certificates that is greater than the stated coupon. The SDLP Certificates are junior in right of payment to the senior notes and intermediate funding notes.

The amortized cost and fair value of our SDLP Certificates and our yield on our investment in the SDLP Certificates at amortized cost and fair value as of September 30, 2025 and December 31, 2024 were as follows:

As of
September 30, 2025 December 31, 2024
(dollar amounts in millions) Amortized Cost Fair Value Amortized Cost Fair Value
Investment in the SDLP Certificates $ 1,048  $ 1,042  $ 1,263  $ 1,192 
Yield on the investment in the SDLP Certificates 13.0  % 13.1  % 12.4  % 13.2  %

The interest income, capital structuring service fees and other income earned with respect to our investment in the SDLP Certificates for the three and nine months ended September 30, 2025 and 2024 were as follows:

211

For the Three Months Ended September 30, For the Nine Months Ended September 30,
(in millions) 2025 2024 2025 2024
Interest income
$ 34  $ 43  $ 110  $ 131 
Capital structuring service fees and other income
$ 2  $ 4  $ 7  $ 9 

As of September 30, 2025 and December 31, 2024, the SDLP portfolio was comprised of first lien senior secured loans to primarily U.S. middle-market companies in industries similar to the companies in our portfolio. As of September 30, 2025, one of the loans in the SDLP portfolio was on non-accrual status. As of December 31, 2024, two of the loans in the SDLP portfolio were on non-accrual status. Below is a summary of the SDLP portfolio as of September 30, 2025 and December 31, 2024:

  As of
(dollar amounts in millions) September 30, 2025 December 31, 2024
Total first lien senior secured loans(1)(2) $ 4,518  $ 4,759 
Weighted average yield on first lien senior secured loans(3) 8.3  % 8.9  %
Largest loan to a single borrower(1) $ 418  $ 400 
Total of five largest loans to borrowers(1) $ 1,706  $ 1,692 
Number of borrowers in the SDLP 23  20 
Commitments to fund delayed draw loans(4) $ 260  $ 489 

_______________________________________________________________________________

(1) At principal amount.

(2) First lien senior secured loans include certain loans that the SDLP classifies as “unitranche” loans. As of September 30, 2025 and December 31, 2024, the total principal amount of loans in the SDLP portfolio that the SDLP classified as “unitranche” loans was $3,504 million and $3,937 million, respectively.

(3)   Computed as (a) the annual stated interest rate on accruing first lien senior secured loans, divided by (b) total first lien senior secured loans at principal amount.

(4) These commitments to fund delayed draw loans have been approved by the investment committee of the SDLP and will be funded if and when conditions to funding such delayed draw loans are met.

Selected financial information of the SDLP, in conformity with GAAP, as of September 30, 2025 and December 31, 2024 and for the three and nine months ended September 30, 2025 and 2024 are presented below:

As of
(in millions) September 30, 2025 December 31, 2024
Selected Balance Sheet Information:
Investments at fair value (amortized cost of $4,478 and $4,591, respectively)
$ 4,233  $ 4,390 
Other assets 136  449 
Total assets $ 4,369  $ 4,839 

Senior notes $ 3,156  $ 3,428 
Intermediate funding notes 118  130 
Other liabilities 105  124 
Total liabilities 3,379  3,682 
Subordinated certificates and members’ capital 990  1,157 
Total liabilities and members’ capital $ 4,369  $ 4,839 

212

For the Three Months Ended September 30, For the Nine Months Ended September 30,
(in millions) 2025 2024 2025 2024
Selected Statement of Operations Information:
Total investment income $ 99  $ 137  $ 311  $ 420 
Interest expense 54  74  174  228 
Other expenses 5  5  13  13 
Total expenses 59  79  187  241 
Net investment income 40  58  124  179 
Net realized and unrealized losses on investments (3) (25) (40) (97)
Net increase in members’ capital resulting from operations $ 37  $ 33  $ 84  $ 82 

213

SDLP Loan Portfolio as of September 30, 2025

(dollar amounts in millions)
Portfolio Company Business Description Maturity Date Stated Interest Rate(1) Principal Amount Amortized Cost Fair
Value(2)
Arrowhead Holdco Company (3)(4) Distributor of non-discretionary, mission-critical aftermarket replacement parts 08/2028 6.7  % $ 286.2  $ 279.6  $ 226.0 
Big Bucks Acquisition Corporation (3) Designer, manufacturer and distributor of hunting-related supplies 09/2031 9.0  % 8.3  8.3  8.2 
Concert Golf Partners Holdco LLC (3) Golf club owner and operator 03/2031 8.7  % 288.3  288.3  288.3 
Doxim, Inc. (3) Enterprise content management provider 11/2027 10.7  % 13.0  13.0  12.9 
EIS Legacy Holdco, LLC (3) Distributor of electric applicator components 11/2031 8.8  % 269.6  269.6  269.6 
FS Squared Holding Corp. (3) Provider of on-site vending and micro market solutions 12/2030 8.9  % 417.5  417.5  417.5 
Ground Penetrating Radar Systems, LLC (3)(4) Provider of underground utility locating and concrete scanning 01/2032 8.8  % 187.4  187.4  187.4 
Harvey Tool Company, LLC (3) Manufacturer of cutting tools used in the metalworking industry 08/2032 8.9  % 240.2  240.2  239.0 
ISQ Hawkeye Holdco, Inc. (3)(4) Provider of commercial and industrial waste processing and disposal services 08/2031 8.9  % 309.8  309.8  309.8 
LHS Borrower, LLC and LH Equity Investors, L.P. (3)(4) Provider of direct-to-consumer residential home improvement solutions 09/2031 9.4  % 19.7  19.7  19.5 
Manna Pro Products, LLC (3) Manufacturer and supplier of specialty nutrition and care products for animals 12/2029 7.4  % 268.7  262.2  212.3 
NMN Holdings III Corp. (3)(4) Provider of complex rehabilitation technology solutions for patients with mobility loss 07/2031 8.7  % 227.2  227.2  227.2 
North Haven Falcon Buyer, LLC (3)(4)(5) Manufacturer of aftermarket golf cart parts and accessories 05/2027 246.6  220.2  105.7 
Pave America Holding, LLC (3) Provider of high-quality asphalt and concrete services for commercial properties 08/2032 9.3  % 8.6  8.6  8.6 
Penn Power Group LLC Distributor of aftermarket parts to the heavy-duty truck industry 12/2027 11.3  % 32.9  32.9  31.3 
Pritchard Industries, LLC (3)(4) Provider of janitorial and facilities management services 10/2027 9.9  % 240.8  240.8  231.2 
SePro Holdings, LLC Provider of specialty chemicals for aquatics, turf and ornamental horticulture 07/2030 9.4  % 117.4  117.4  117.4 
Surescripts, LLC (3) Healthcare network for e-prescription routing, patient eligibility checks, and secure exchange of medical records 11/2031 8.0  % 111.9  111.9  111.9 
THG Acquisition, LLC (3) Multi-line insurance broker 10/2031 8.9  % 126.5  126.5  126.5 
Tiger Holdco LLC (3) Provider of payment processing solutions 03/2031 8.2  % 140.0  140.0  140.0 
Triwizard Holdings, Inc.(3)(4) Parking management and hospitality services provider 06/2029 9.1  % 267.1  267.1  267.1 
Valcourt Holdings II, LLC (3) Provider of window cleaning and building facade maintenance and restoration services 11/2029 9.4  % 323.4  323.4  323.4 
Walnut Parent, Inc. (3) Manufacturer of natural solution pest and animal control products 11/2027 10.0  % 366.6  366.6  351.8 
$ 4,517.7  $ 4,478.2  $ 4,232.6 

____________________________________________________________________________

(1) Represents the weighted average annual stated interest rate as of September 30, 2025. All interest rates are payable in cash, except for portions of the stated interest rate which are PIK for the investment in Pave America Holding, LLC.

(2) Represents the fair value in accordance with Accounting Standards Codification 820-10, Fair Value Measurements and Disclosures (“ASC 820-10”). The determination of such fair value is not included in our valuation process described elsewhere herein.

(3) We also hold a portion of this company’s first lien senior secured loan.

(4) We also hold an equity investment in this company.

(5) Loan was on non-accrual status as of September 30, 2025.
214

SDLP Loan Portfolio as of December 31, 2024

(dollar amounts in millions)
Portfolio Company Business Description Maturity Date Stated Interest Rate(1) Principal Amount Amortized Cost Fair
Value(2)
Arrowhead Holdco Company (3)(4) Distributor of non-discretionary, mission-critical aftermarket replacement parts 08/2028 9.9  % $ 279.6  $ 279.6  $ 234.9 
Center for Autism and Related Disorders, LLC (3)(5) Autism treatment and services provider specializing in applied behavior analysis therapy 11/2024 164.3  —  — 
Concert Golf Partners Holdco LLC (3) Golf club owner and operator 04/2030 9.1  % 286.2  286.2  286.2 
EIS Legacy Holdco, LLC (3) Distributor of electric applicator components 11/2031 9.3  % 220.5  220.5  218.3 
FS Squared Holding Corp. (3)(4) Provider of on-site vending and micro market solutions 12/2030 9.1  % 250.8  250.8  246.4 
Harvey Tool Company, LLC (3) Manufacturer of cutting tools used in the metalworking industry 10/2027 9.6  % 268.1  268.1  268.1 
HGC Holdings, LLC (3) Operator of golf facilities 06/2026 9.9  % 400.1  400.1  400.1 
ISQ Hawkeye Holdco, Inc. (3)(4) Provider of commercial and industrial waste processing and disposal services 08/2031 9.1  % 312.2  312.2  312.2 
Manna Pro Products, LLC (3) Manufacturer and supplier of specialty nutrition and care products for animals 12/2026 10.5  % 264.8  264.8  217.1 
NMN Holdings III Corp. (3)(4) Provider of complex rehabilitation technology solutions for patients with mobility loss 07/2031 8.9  % 228.9  228.9  226.6 
North Haven Falcon Buyer, LLC (3)(4)(5) Manufacturer of aftermarket golf cart parts and accessories 05/2027 237.3  233.9  154.3 
Penn Power Group LLC Distributor of aftermarket parts to the heavy-duty truck industry 12/2027 10.2  % 32.9  32.9  32.9 
Pritchard Industries, LLC (3)(4) Provider of janitorial and facilities management services 10/2027 10.3  % 242.7  242.7  238.3 
Qnnect, LLC (3)(4) Manufacturer of highly engineered hermetic packaging products 11/2029 10.3  % 275.6  275.6  275.6 
SePro Holdings, LLC (3) Provider of specialty chemicals for aquatics, turf and ornamental horticulture 07/2030 9.6  % 118.3  118.3  115.9 
Surescripts, LLC (3) Healthcare network for e-prescription routing, patient eligibility checks, and secure exchange of medical records 11/2031 8.3  % 112.5  112.5  111.4 
THG Acquisition, LLC (3) Multi-line insurance broker 10/2031 9.1  % 122.7  122.7  121.4 
Triwizard Holdings, Inc. (4) Parking management and hospitality services provider 06/2029 9.7  % 247.9  247.9  247.9 
Valcourt Holdings II, LLC (3) Provider of window cleaning and building facade maintenance and restoration services 11/2029 10.4  % 325.9  325.9  325.9 
Walnut Parent, Inc. (3) Manufacturer of natural solution pest and animal control products 11/2027 10.0  % 367.3  367.3  356.3 
$ 4,758.6  $ 4,590.9  $ 4,389.8 

____________________________________________________________________________

(1) Represents the weighted average annual stated interest rate as of December 31, 2024. All interest rates are payable in cash, except for portions of the stated interest rates which are PIK for the investment in Arrowhead Holdco Company.

(2) Represents the fair value in accordance with ASC 820-10. The determination of such fair value is not included in our valuation process described elsewhere herein.

(3) We also hold a portion of this company’s first lien senior secured loan.

(4) We hold an equity investment in this company.

(5) Loan was on non-accrual status as of December 31, 2024.

215

RESULTS OF OPERATIONS

For the three and nine months ended September 30, 2025 and 2024

Operating results for the three and nine months ended September 30, 2025 and 2024 were as follows:

  For the Three Months Ended September 30, For the Nine Months Ended September 30,
(in millions) 2025 2024 2025 2024
Total investment income $ 782  $ 775  $ 2,259  $ 2,231 
Total expenses 433  402  1,188  1,127 
Net investment income before income taxes 349  373  1,071  1,104 
Income tax expense, including excise taxes 11  12  26  30 
Net investment income 338  361  1,045  1,074 
Net realized gains (losses) on investments, foreign currency and other transactions 162  (24) 135  (60)
Net unrealized gains (losses) on investments, foreign currency and other transactions (96) 57  (174) 165 
 Realized loss on extinguishment of debt —  —  —  (14)
Net increase in stockholders’ equity resulting from operations $ 404  $ 394  $ 1,006  $ 1,165 

Net income can vary substantially from period to period due to various factors, including acquisitions, the level of new investment commitments, the level of base interest rates and the recognition of realized gains and losses and unrealized appreciation and depreciation. As a result, comparisons of net increase in stockholders’ equity resulting from operations may not be meaningful.

Investment Income

  For the Three Months Ended September 30, For the Nine Months Ended September 30,
(in millions) 2025 2024 2025 2024
Interest income from investments $ 561  $ 568  $ 1,620  $ 1,620 
Capital structuring service fees 48  38  128  124 
Dividend income 141  151  442  441 
Other income 32  18  69  46 
Total investment income $ 782  $ 775  $ 2,259  $ 2,231 

Interest income from investments for the three months ended September 30, 2025 decreased from the comparable period in 2024 primarily as a result of declining base rates, resulting in a decrease in the weighted average yield of our portfolio, and partially offset by an increase in the average size of our portfolio. The average size and weighted average yield of our portfolio at amortized cost for the three and nine months ended September 30, 2025 and 2024 were as follows:

  For the Three Months Ended September 30, For the Nine Months Ended September 30,
(dollar amounts in millions) 2025 2024 2025 2024
Average size of portfolio(1) $ 28,074  $ 25,141  $ 27,277  $ 23,878 
Weighted average yield on portfolio 9.9  % 11.3  % 10.1  % 11.4  %

_______________________________________________________________________________

(1)    Includes non-interest earning investments.

Capital structuring service fees for the three and nine months ended September 30, 2025 increased from the comparable periods in 2024 primarily due to an increase in new investment commitments. The new investment commitments and weighted average capital structuring service fee percentages for the three and nine months ended September 30, 2025 and 2024 were as follows:
216

  For the Three Months Ended September 30, For the Nine Months Ended September 30,
(dollar amounts in millions) 2025 2024 2025 2024
New investment commitments(1) $ 3,410  $ 3,209  $ 8,755  $ 8,771 
Weighted average capital structuring service fee percentages(1) 1.4  % 1.2  % 1.4  % 1.4  %

_______________________________________________________________________________

(1) Excludes $375 million and $669 million of new investment commitments sold to third party lenders during the three months ended September 30, 2025 and 2024, respectively, and $901 million and $2,255 million during the nine months ended September 30, 2025 and 2024, respectively. Excludes $139 million and $294 million of investment commitments to IHAM for the three and nine months ended September 30, 2025, respectively, and $41 million and $304 million, respectively for the comparable periods in 2024.

Dividend income for the three and nine months ended September 30, 2025 and 2024 were as follows:

  For the Three Months Ended September 30, For the Nine Months Ended September 30,
(in millions) 2025 2024 2025 2024
Dividend income received from IHAM $ 73  $ 69  $ 219  $ 204 
Recurring dividend income 67  77  211  216 
Non-recurring dividend income 1  5  12  21 
Total dividend income $ 141  $ 151  $ 442  $ 441 

Dividend income received from IHAM for the three and nine months ended September 30, 2025 increased from the comparable periods in 2024 primarily due to the increased earnings from the IHAM Vehicles. Recurring dividend income for the three and nine months ended September 30, 2025 decreased from the comparable periods in 2024 primarily due to a decrease in yielding preferred equity investments.
    
Operating Expenses

  For the Three Months Ended September 30, For the Nine Months Ended September 30,
(in millions) 2025 2024 2025 2024
Interest and credit facility fees $ 209  $ 195  $ 583  $ 528 
Base management fee 108  96  314  274 
Income based fee 88  92  259  273 
Capital gains incentive fee(1) 13  7  (8) 19 
Administrative and other fees 4  3  12  9 
Other general and administrative 11  9  28  24 

Total expenses $ 433  $ 402  $ 1,188  $ 1,127 

_______________________________________________________________________________
                        
(1) Calculated in accordance with GAAP as discussed below.

217

Interest and credit facility fees for the three and nine months ended September 30, 2025 and 2024, were comprised of the following:

  For the Three Months Ended September 30, For the Nine Months Ended September 30,
(in millions) 2025 2024 2025 2024
Stated interest expense(1) $ 194  $ 184  $ 541  $ 491 
Credit facility fees 6  5  19  18 
Amortization of debt issuance costs 8  9  26  25 
Net accretion (amortization) of discount/premium on notes payable 1  (2) (1) (5)
Net gain on interest rate swaps accounted for as hedge instruments and the related hedged items —  (1) (2) (1)
Total interest and credit facility fees $ 209  $ 195  $ 583  $ 528 

________________________________________

(1) Includes the impact of the interest rate swaps.

Stated interest expense for the three and nine months ended September 30, 2025 increased from the comparable periods in 2024 primarily due to the increase in the average principal amount of outstanding debt. Average outstanding debt and weighted average stated interest rate on our outstanding debt for the three and nine months ended September 30, 2025 and 2024 were as follows:

  For the Three Months Ended September 30, For the Nine Months Ended September 30,
(dollar amounts in millions) 2025 2024 2025 2024
Average outstanding debt $ 14,903  $ 13,470  $ 14,302  $ 12,656 
Weighted average stated interest rate on outstanding debt(1) 5.1  % 5.4  % 4.8  % 5.1  %
________________________________________

(1) The weighted average stated interest rate on our outstanding debt includes the impact of interest rate swaps. See Note 6 to our consolidated financial statements for the three and nine months ended September 30, 2025 for more information on the interest rate swaps.

The base management fee for the three and nine months ended September 30, 2025 increased from the comparable periods in 2024 primarily due to the increase in the average size of our portfolio.

The income based fee for the three and nine months ended September 30, 2025 decreased from the comparable periods in 2024 primarily due to the pre-incentive fee net investment income, as defined in the investment advisory and management agreement, for the three and nine months ended September 30, 2025 being lower than in the comparable periods in 2024.

For the three months ended September 30, 2025, the capital gains incentive fee calculated in accordance with GAAP was $13 million. For the nine months ended September 30, 2025, the reduction in the capital gains incentive fee calculated in accordance with GAAP was $8 million. For the three and nine months ended September 30, 2024, the capital gains incentive fee calculated in accordance with GAAP was $7 million and $19 million, respectively. The capital gains incentive fee accrual for the nine months ended September 30, 2025 changed from the comparable period in 2024 primarily due to net losses on investments, foreign currency, other transactions and the extinguishment of debt of $39 million compared to net gains of $91 million for the comparable period in 2024. The capital gains incentive fee accrued under GAAP includes an accrual related to unrealized capital appreciation, whereas the capital gains incentive fee actually payable under our investment advisory and management agreement does not. There can be no assurance that such unrealized capital appreciation will be realized in the future. The accrual for any capital gains incentive fee under GAAP in a given period may result in an additional expense if such cumulative amount is greater than in the prior period or a reduction of previously recorded expense if such cumulative amount is less than in the prior period. If such cumulative amount is negative, then there is no accrual. As of September 30, 2025, there was $97 million of capital gains incentive fee accrued in accordance with GAAP. As of September 30, 2025, there was no capital gains incentive fee actually payable under our investment advisory and management agreement. See Note 3 to our consolidated financial statements for the three and nine months ended September 30, 2025 for more information on the base management fee, income based fee and capital gains incentive fee.
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Cash payment of any income based fee and capital gains incentive fee otherwise earned by our investment adviser is deferred if during the most recent four full calendar quarter period ending on or prior to the date such payment is to be made the sum of (a) the aggregate distributions to our stockholders and (b) the change in net assets (defined as total assets less indebtedness and before taking into account any income based fee and capital gains incentive fee payable during the period) is less than 7.0% of our net assets (defined as total assets less indebtedness) at the beginning of such period. These calculations will be adjusted for any share issuances or repurchases. Any income based fee and capital gains incentive fee deferred for payment are carried over for payment in subsequent calculation periods to the extent such fees are payable under the terms of the investment advisory and management agreement. See Note 3 to our consolidated financial statements for the three and nine months ended September 30, 2025 for more information on the related deferral terms.

Administrative and other fees represent fees paid to Ares Operations and our investment adviser for our allocable portion of overhead and other expenses incurred by Ares Operations and our investment adviser in performing their obligations under the administration agreement and the investment advisory and management agreement, respectively, including our allocable portion of the compensation, rent and other expenses of certain of our officers and their respective staffs. See Note 3 to our consolidated financial statements for the three and nine months ended September 30, 2025, for more information on the administrative and other fees.

Other general and administrative expenses include, among other costs, professional fees, insurance, fees and expenses related to evaluating and making investments in portfolio companies and independent directors’ fees.

Income Tax Expense, Including Excise Taxes

We have elected to be treated as a RIC under the Code and operate in a manner so as to qualify for the tax treatment applicable to RICs. To qualify as a RIC, we must, among other requirements, meet certain source-of-income and asset diversification requirements and timely distribute to our stockholders at least 90% of our investment company taxable income, as defined by the Code, for each year. We have made and intend to continue to make the requisite distributions to our stockholders which will generally relieve us from U.S. federal corporate-level income taxes.
 
Depending on the level of taxable income earned in a tax year, we may choose to carry forward such taxable income in excess of current year dividend distributions from such current year taxable income into the next tax year and pay a 4% excise tax on such income, as required. To the extent that we determine that our estimated current year taxable income will be in excess of estimated dividend distributions for the current year from such income, we accrue excise tax, if any, on estimated excess taxable income as such taxable income is earned. For the three and nine months ended September 30, 2025, we recorded a net expense of $11 million and $25 million, respectively, for U.S. federal excise taxes. For the three and nine months ended September 30, 2024 we recorded a net expense of $7 million and $24 million, respectively, for U.S. federal excise taxes.

Certain of our consolidated subsidiaries are subject to U.S. federal and state income taxes. For the three and nine months ended September 30, 2025, we recorded a net tax expense of $72 million and $117 million, respectively, for these subsidiaries. For the three and nine months ended September 30, 2024, we recorded a net tax expense of $5 million and $37 million, respectively, for these subsidiaries. The income tax expense for our taxable consolidated subsidiaries will vary depending on the level of realized gains from the exits of investments held by such taxable subsidiaries during the respective periods.

Net Realized Gains/Losses

The net realized gains (losses) from the sales, repayments or exits of investments during the three and nine months ended September 30, 2025 and 2024 were comprised of the following:

For the Three Months Ended September 30, For the Nine Months Ended September 30,
(in millions) 2025 2024 2025 2024
Sales, repayments or exits of investments(1) $ 2,876  $ 2,514  $ 7,462  $ 4,005 
Net realized gains (losses) on investments:
Gross realized gains $ 317  $ 72  $ 592  $ 276 
Gross realized losses (70) (91) (320) (301)
Total net realized gains (losses) on investments $ 247  $ (19) $ 272  $ (25)

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_______________________________________________________________________________

(1) Includes $400 million and $1,771 million of loans sold to IHAM or certain vehicles managed by IHAM during the three and nine months ended September 30, 2025, respectively. Includes $266 million and $301 million of loans sold to IHAM or certain vehicles managed by IHAM during the three and nine months ended September 30, 2024, respectively. There were no net realized gains (losses) on these transactions with IHAM during the three months ended September 30, 2025. Net realized gains of $0 million were recorded on these transactions with IHAM during the nine months ended September 30, 2025. There were no net realized gains (losses) on these transactions with IHAM during the three months ended September 30, 2024. Net realized losses of $1 million were recorded on these transactions with IHAM during the nine months ended September 30, 2024. See Note 4 to our consolidated financial statements for the three and nine months ended September 30, 2025 for more information on IHAM and its managed vehicles.

The net realized losses on investments during the three months ended September 30, 2025 consisted of the following:

(in millions)
Portfolio Company Net Realized Gains (Losses)
Potomac Intermediate Holdings II LLC $ 262 
Corient Holdings, Inc. 21 
Align Precision Group, LLC and Align Precision Topco, L.P. (15)
Implus Footcare, LLC, Implus Holdings, LLC, and Implus Topco, LLC (49)
Other, net 28 
Total $ 247 

During the three months ended September 30, 2025, we also recognized net realized losses on foreign currency and other transactions of $13 million.

The net realized losses on investments during the three months ended September 30, 2024 consisted of the following:

(in millions)
Portfolio Company Net Realized Gains (Losses)
Pegasus Global Enterprise Holdings, LLC $ 20 
RF HP SCF Investor, LLC 19 
Emergency Communications Network, LLC (22)
Pluralsight, Inc. (60)

Other, net 24 
Total $ (19)

During the three months ended September 30, 2024, we also recognized net realized losses on foreign currency and other transactions of $5 million.

The net realized gains on investments during the nine months ended September 30, 2025 consisted of the following:
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(in millions)
Portfolio Company Net Realized Gains (Losses)
Potomac Intermediate Holdings II LLC $ 262 
SageSure Holdings, LLC and SageSure LLC 68 
Redwood Services, LLC and Redwood Services Holdco, LLC 64 
Accommodations Plus Technologies LLC and Accommodations Plus Technologies Holdings LLC 39 
Corient Holdings, Inc. 21 
FS Squared Holding Corp. and FS Squared, LLC 19 
Project Alpha Intermediate Holding, Inc. and Qlik Parent, Inc. 15 
Align Precision Group, LLC and Align Precision Topco, L.P. (15)
Aimbridge Acquisition Co., Inc. (19)
H-Food Holdings, LLC and Matterhorn Parent, LLC (20)
SVP-Singer Holdings Inc. and SVP-Singer Holdings LP (22)
Implus Footcare, LLC, Implus Holdings, LLC, and Implus Topco, LLC (49)
Vobev, LLC and Vobev Holdings, LLC (63)
Senior Direct Lending Program, LLC (112)
Other, net 84 
Total $ 272 

During the nine months ended September 30, 2025, we also recognized net realized losses on foreign currency and other transactions of $21 million.

The net realized losses on investments during the nine months ended September 30, 2024 consisted of the following:

(in millions)
Portfolio Company Net Realized Gains (Losses)
Heelstone Renewable Energy, LLC $ 146 
Benecon Midco II LLC 24 
Pegasus Global Enterprise Holdings, LLC 20 
RF HP SCF Investor, LLC 19 
SVP-Singer Holdings Inc. (19)
OTG Management, LLC (20)
SSE Buyer, Inc. (21)
Emergency Communications Network, LLC (22)
Pluralsight, Inc. (60)
SHO Holding I Corporation, Shoes For Crews (Europe) Limited and Never Slip TopCo, Inc. (119)
Other, net 27 
Total $ (25)

During the nine months ended September 30, 2024, we also recognized net realized losses on foreign currency and other transactions of $5 million.

During the nine months ended September 30, 2024, we repaid in full the $403 million in aggregate principal amount of unsecured convertible notes, which bore interest at a rate of 4.625% per year, upon their maturity with a combination of cash and shares of our common stock, resulting in a realized loss on extinguishment of debt of approximately $14 million.

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Net Unrealized Gains/Losses

We value our portfolio investments at least quarterly and the changes in value are recorded as unrealized gains or losses in our consolidated statement of operations. Net unrealized gains and losses on investments, including the net change in deferred tax liabilities, for the three and nine months ended September 30, 2025 and 2024, were comprised of the following:

  For the Three Months Ended September 30, For the Nine Months Ended September 30,
(in millions) 2025 2024 2025 2024
Unrealized appreciation $ 268  $ 306  $ 571  $ 667 
Unrealized depreciation (254) (257) (564) (516)
Net unrealized (appreciation) depreciation reversed related to net realized gains or losses(1) (140) 25  (157) 11 
Total net unrealized gains (losses) on investments $ (126) $ 74  $ (150) $ 162 

_______________________________________________________________________________

(1) The net unrealized (appreciation) depreciation reversed related to net realized gains or losses represents the unrealized appreciation or depreciation recorded on the related asset at the end of the prior periods.

The changes in net unrealized appreciation and depreciation on investments during the three months ended September 30, 2025 consisted of the following:

(in millions)
Portfolio Company Net Unrealized Appreciation (Depreciation)
Storm Investment S.a.r.l. $ 27 
FEH Group, LLC. 17 
Global Medical Response, Inc. 16 
Imaging Business Machines, L.L.C. and Scanner Holdings Corporation 16 
Eagle Football Holdings BidCo Limited and Eagle Football Holdings Limited (18)
Production Resource Group, L.L.C. and PRG III, LLC (20)

Other, net (24)
Total $ 14 

During the three months ended September 30, 2025, we also recognized net unrealized gains on foreign currency and other transactions of $30 million.

The changes in net unrealized appreciation and depreciation on investments during the three months ended September 30, 2024 consisted of the following:

(in millions)
Portfolio Company Net Unrealized Appreciation (Depreciation)

Potomac Intermediate Holdings II LLC $ 67 
Apex Clean Energy TopCo, LLC 20 
ADG, LLC (16)
Vobev, LLC and Vobev Holdings, LLC (20)
Senior Direct Lending Program, LLC (42)
Other, net 40 
Total $ 49 

During the three months ended September 30, 2024, we also recognized net unrealized losses on foreign currency and other transactions of $17 million.

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The changes in net unrealized appreciation and depreciation on investments during the nine months ended September 30, 2025 consisted of the following:

(in millions)
Portfolio Company Net Unrealized Appreciation (Depreciation)
Senior Direct Lending Program, LLC $ 65 
Storm Investment S.a.r.l. 36 
Global Medical Response, Inc. 34 
Neptune Bidco US Inc. 21 
FEH Group, LLC. 20 
Imaging Business Machines, L.L.C. and Scanner Holdings Corporation 19 
Sunrun Atlas Depositor 2019-2, LLC and Sunrun Atlas Holdings 2019-2, LLC (17)
Absolute Dental Group LLC and Absolute Dental Equity, LLC (18)
Visual Edge Technology, Inc. (27)
Eagle Football Holdings BidCo Limited and Eagle Football Holdings Limited (29)
VPROP Operating, LLC and V SandCo, LLC (38)
Production Resource Group, L.L.C. and PRG III, LLC (41)
Other, net (18)
Total $ 7 

During the nine months ended September 30, 2025, we also recognized net unrealized losses on foreign currency and other transactions of $24 million.

The changes in net unrealized appreciation and depreciation on investments during the nine months ended September 30, 2024 consisted of the following:

(in millions)
Portfolio Company Net Unrealized Appreciation (Depreciation)
Potomac Intermediate Holdings II LLC $ 105 
Redwood Services, LLC 36 
SageSure Holdings, LLC 34 
Apex Clean Energy TopCo, LLC 30 
Global Medical Response, Inc. and GMR Buyer Corp. 29 
Cloud Software Group, Inc. 26 
Centric Brands LLC 21 
High Street Buyer, Inc. and High Street Holdco LLC 16 
Huskies Parent, Inc., GI Insurity Parent LLC and GI Insurity TopCo LP 15 
North American Science Associates, LLC, Cardinal Purchaser LLC and Cardinal Topco Holdings, L.P. (15)
ADG, LLC (19)
Production Resource Group, L.L.C. (28)
Vobev, LLC and Vobev Holdings, LLC (28)
H-Food Holdings, LLC (37)
Senior Direct Lending Program, LLC (44)
Other, net 10 
Total $ 151 

During the nine months ended September 30, 2024, we also recognized net unrealized gains on foreign currency and other transactions of $3 million.

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FINANCIAL CONDITION, LIQUIDITY AND CAPITAL RESOURCES

Our liquidity and capital resources are generated primarily from the net proceeds of public offerings of equity and debt securities, advances from our credit facilities (the Revolving Credit Facility, the Revolving Funding Facility, the SMBC Funding Facility and the BNP Funding Facility (each as defined below, and together, the “Credit Facilities”)), net proceeds from the issuance of other securities, including unsecured notes and debt securitizations, as well as cash flows from operations.

In accordance with the Investment Company Act, we are allowed to borrow amounts such that our asset coverage, calculated pursuant to the Investment Company Act, is at least 150% after such borrowings (i.e., we are able to borrow up to two dollars for every dollar we have in assets less all liabilities and indebtedness not represented by senior securities issued by us). As of September 30, 2025, we had $1.0 billion in cash and cash equivalents and $15.6 billion in total aggregate principal amount of outstanding debt ($15.6 billion at carrying value) and our asset coverage was 192%. Subject to borrowing base and other restrictions, we had approximately $5.2 billion available for additional borrowings under the Credit Facilities as of September 30, 2025.
 
We may from time to time seek to retire or repurchase our common stock through cash purchases, as well as retire, cancel or purchase our outstanding debt through cash purchases and/or exchanges, in open market purchases, privately negotiated transactions or otherwise. The amounts involved may be material. In addition, we may from time to time enter into additional debt facilities, increase the size of existing facilities or issue additional debt securities, including secured debt, unsecured debt and/or debt securities convertible into common stock. Any such purchases or exchanges of common stock or outstanding debt, or incurrence or issuance of additional debt would be subject to prevailing market conditions, our liquidity requirements, contractual and regulatory restrictions and other factors.

Equity Capital Activities

As of September 30, 2025 and December 31, 2024, our total equity market capitalization was $14.6 billion and $14.7 billion, respectively.
    
We may from time to time issue and sell shares of our common stock through public or “at the market” offerings. During the nine months ended September 30, 2025, we issued and sold the following shares of common stock:

(in millions, except per share amount)
Issuances of Common Stock Number of Shares Issued Gross Proceeds Underwriting Fees/Offering Expenses Net Proceeds Average Offering Price Per Share(1)

“At the market” offerings 41.3 $ 915.1  $ 9.5  $ 905.6  $ 22.15 
Total 41.3 $ 915.1  $ 9.5  $ 905.6 

________________________________________

(1)    Represents the gross offering price per share before deducting underwriting discounts and commissions and offering expenses.

“At the Market” Offerings

We are a party to equity distribution agreements with several banks (the “Equity Distribution Agreements”). The Equity Distribution Agreements provide that we may from time to time issue and sell, by means of “at the market” offerings, up to $1.5 billion of our common stock. Subject to the terms and conditions of the Equity Distribution Agreements, sales of common stock, if any, may be made in transactions that are deemed to be “at the market” offerings as defined in Rule 415(a)(4) under the Securities Act of 1933, as amended (the “Securities Act”). Under the currently effective Equity Distribution Agreements, common stock with an aggregate offering amount of $585 million remained available for issuance as of September 30, 2025.

Dividend Reinvestment Plan

See Note 11 to our consolidated financial statements for the three and nine months ended September 30, 2025 for information regarding shares of common stock issued or purchased in accordance with our dividend reinvestment plan.

Stock Repurchase Program

We are authorized under our stock repurchase program to purchase up to $1.0 billion in the aggregate of our outstanding common stock in the open market at certain thresholds below our net asset value per share, in accordance with the
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guidelines specified in Rule 10b-18 under the Securities Exchange Act of 1934, as amended (the “Exchange Act”). The timing, manner, price and amount of any share repurchases will be determined by us, in our sole discretion, based upon an evaluation of economic and market conditions, stock price, applicable legal and regulatory requirements and other factors. The stock repurchase program does not require us to repurchase any specific number of shares of common stock or any shares of common stock at all. Consequently, we cannot assure stockholders that any specific number of shares of common stock, if any, will be repurchased under the stock repurchase program. As of September 30, 2025, the expiration date of the stock repurchase program was February 15, 2026. The program may be suspended, extended, modified or discontinued at any time. As of September 30, 2025, there was $1.0 billion available for additional repurchases under the program.
 
During the nine months ended September 30, 2025 and 2024, we did not repurchase any shares of our common stock in the open market under the stock repurchase program.

Price Range of Common Stock

The following table sets forth, for the third quarter of the year ending December 31, 2025 and each fiscal quarter for the fiscal years ended December 31, 2024 and 2023, the net asset value per share of our common stock, the range of high and low closing sales prices of our common stock, the closing sales price as a premium (discount) to net asset value and the dividends or distributions declared by us. On October 23, 2025, the last reported closing sales price of our common stock on the NASDAQ Global Select Market was $19.94 per share, which represented a discount of approximately 0.35% to the net asset value per share reported by us as of September 30, 2025.

Net
Asset
Price Range
High
Sales Price
Premium
(Discount)
to Net Asset
Low
Sales Price
Premium
(Discount)
to Net Asset
Cash
Dividend
Per

Value(1)
High
Low
Value(2)
Value(2)
Share(3)

Year ending December 31, 2025
First Quarter
$ 19.82  $ 23.81  $ 21.28  20.13  % 7.37  % $ 0.48 
Second Quarter
$ 19.90  $ 22.43  $ 18.91  12.71  % (4.97) % $ 0.48 
Third Quarter
$ 20.01  $ 23.25  $ 20.41  16.19  % 2.00  % $ 0.48 
Year ended December 31, 2024
First Quarter
$ 19.53  $ 20.82  $ 19.94  6.61  % 2.10  % $ 0.48 
Second Quarter
$ 19.61  $ 21.58  $ 20.24  10.05  % 3.21  % $ 0.48 
Third Quarter
$ 19.77  $ 21.28  $ 19.80  7.64  % 0.15  % $ 0.48 
Fourth Quarter
$ 19.89  $ 22.27  $ 20.74  11.97  % 4.27  % $ 0.48 
Year ended December 31, 2023
First Quarter
$ 18.45  $ 20.04  $ 17.19  8.62  % (6.83) % $ 0.48 
Second Quarter
$ 18.58  $ 19.11  $ 17.65  2.85  % (5.01) % $ 0.48 
Third Quarter
$ 18.99  $ 19.81  $ 18.86  4.32  % (0.68) % $ 0.48 
Fourth Quarter
$ 19.24  $ 20.21  $ 18.66  5.04  % (3.01) % $ 0.48 

_______________________________________________________________________________

(1) Net asset value per share is determined as of the last day in the relevant quarter and therefore may not reflect the net asset value per share on the date of the high and low closing sales prices. The net asset values shown are based on outstanding shares at the end of the relevant quarter.

(2) Calculated as the respective high or low closing sales price less net asset value, divided by net asset value (in each case, as of the applicable quarter).

(3) Represents the dividend or distribution declared in the relevant quarter.
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Debt Capital Activities

Our debt obligations consisted of the following as of September 30, 2025 and December 31, 2024:

  As of  
  September 30, 2025 December 31, 2024  
(in millions) Total
Aggregate
Principal
Amount
Available/
Outstanding(1)   Principal Amount Outstanding Carrying
Value   Total
Aggregate
Principal
Amount
Available/
Outstanding(1)   Principal Amount Outstanding Carrying
Value  
Revolving Credit Facility $ 5,493  (2) $ 2,293  $ 2,293  $ 4,513  (2) $ 1,113  $ 1,113 
Revolving Funding Facility 2,250  1,239  1,239  2,150  1,065  1,065 
SMBC Funding Facility 1,100  (3) 539  539  800  (3) 502  502 
BNP Funding Facility 1,265  774  774  1,265  889  889 
April 2036 CLO Notes(4) 476  476  474  (5) 476  476  473  (5)
October 2036 CLO Secured Loans(4) 544  544  541  (5) 544  544  541  (5)
March 2025 Notes —  —  —  (5) 600  600  600  (5)
July 2025 Notes —  —  —  (5) 1,250  1,250  1,252  (5)
January 2026 Notes 1,150  1,150  1,149  (5) 1,150  1,150  1,148  (5)
July 2026 Notes 1,000  1,000  998  (5) 1,000  1,000  996  (5)
January 2027 Notes 900  900  901  (5)(6) 900  900  891  (5)(6)
June 2027 Notes 500  500  498  (5) 500  500  497  (5)
June 2028 Notes 1,250  1,250  1,248  (5) 1,250  1,250  1,248  (5)
March 2029 Notes 1,000  1,000  1,000  (5)(6) 1,000  1,000  985  (5)(6)
July 2029 Notes 850  850  862  (5)(6) 850  850  835  (5)(6)
September 2030 Notes 750  750  744  (5)(6) —  —  — 
January 2031 Notes 650  650  636  (5)(6) —  —  — 
November 2031 Notes 700  700  693  (5) 700  700  692  (5)
March 2032 Notes 1,000  1,000  1,016  (5)(6) —  —  — 
Total $ 20,878  $ 15,615  $ 15,605  $ 18,948  $ 13,789  $ 13,727 

________________________________________

(1) Represents the total aggregate amount committed or outstanding, as applicable, under such instrument. Borrowings under the committed Credit Facilities are subject to borrowing base and other restrictions.

(2) Provides for an “accordion” feature that allows us, under certain circumstances, to increase the size of the Revolving Credit Facility to a maximum of $7.9 billion and $6.7 billion as of September 30, 2025 and December 31, 2024, respectively.

(3) Provides for an “accordion” feature that allows ACJB (as defined below), under certain circumstances, to increase the size of the SMBC Funding Facility to a maximum of $1.3 billion and $1.0 billion as of September 30, 2025 and December 31, 2024, respectively.

(4) Excludes the April 2036 CLO Subordinated Notes and the October 2036 CLO Subordinated Notes (each as defined below), which were retained by us and, as such, eliminated in consolidation.

(5) Represents the aggregate principal amount outstanding, less unamortized debt issuance costs and the net unaccreted/amortized discount or premium recorded upon issuance. In March 2025 and July 2025, we repaid in full the March 2025 Notes and the July 2025 Notes (each as defined below), respectively, upon their maturity.
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(6) The carrying value of the January 2027 Notes, the March 2029 Notes, the July 2029 Notes, the September 2030 Notes, the January 2031 Notes and the March 2032 Notes (each as defined below) includes adjustments as a result of effective hedge accounting relationships. See Note 6 to our consolidated financial statements for the three and nine months ended September 30, 2025 for more information on the interest rate swaps related to these unsecured notes issuances.

 The weighted average stated interest rate and weighted average maturity, both on aggregate principal amount outstanding, of all our outstanding debt as of September 30, 2025 were 5.1% and 4.1 years, respectively, and as of December 31, 2024 were 4.9% and 3.8 years, respectively. The weighted average stated interest rate of all our outstanding debt as of September 30, 2025 and December 31, 2024 includes the impact of interest rate swaps. See Note 6 to our consolidated financial statements for the three and nine months ended September 30, 2025 for more information on the interest rate swaps.
 
The ratio of total principal amount of outstanding debt to stockholders’ equity as of September 30, 2025 was 1.09:1.00 compared to 1.03:1.00 as of December 31, 2024.
 
Revolving Credit Facility
 
We are party to a senior secured revolving credit facility (as amended and restated, the “Revolving Credit Facility”), that allows us to borrow up to $5.5 billion at any one time outstanding. The Revolving Credit Facility consists of an approximately $4.4 billion revolving tranche and an approximately $1.1 billion term loan tranche. As of September 30, 2025, the end of the revolving periods and the stated maturity dates of the various revolving and term loan tranches of the Revolving Credit Facility were as follows:

(in millions) Total Aggregate Principal Amount Committed End of Revolving Period Maturity Date
Revolving tranche $ 4,058  April 15, 2029 April 15, 2030
246 March 31, 2026 March 31, 2027
45 April 12, 2028 April 12, 2029
4,349 
Term loan tranche 1,035  April 15, 2030
45 April 12, 2029
40 April 19, 2028
24 March 31, 2027
1,144 
$ 5,493 

The Revolving Credit Facility also provides for an “accordion” feature that allows us, under certain circumstances, to increase the overall size of the Revolving Credit Facility to a maximum of approximately $7.9 billion.

Subject to certain exceptions, the interest rate charged on the Revolving Credit Facility is based on SOFR plus a credit spread adjustment of 0.10% (or an alternate rate of interest for certain loans, commitments and/or other extensions of credit denominated in certain approved foreign currencies plus a spread adjustment, if applicable) plus an applicable spread of either 1.525%, 1.650%, 1.775% or an “alternate base rate” (as defined in the documents governing the Revolving Credit Facility) plus an applicable spread of either 0.525%, 0.650% or 0.775%, in each case, determined monthly based on the total amount of the borrowing base relative to the sum of (i) the greater of (a) the aggregate amount of revolving credit exposure and term loans outstanding under the Revolving Credit Facility and (b) 85% of the total commitments of the Revolving Credit Facility (or, if higher, the total revolving credit exposure) plus (ii) other debt, if any, secured by the same collateral as the Revolving Credit Facility. As of September 30, 2025, the applicable weighted average spread in effect was 1.59%. Subject to certain exceptions, we are required to pay a commitment fee of 0.325% per annum on any unused portion of the Revolving Credit Facility. We are also required to pay letter of credit fees of 1.775%, 1.900% or 2.025% per annum on letters of credit issued, determined monthly based on the total amount of the borrowing base relative to the total commitments of the Revolving Credit Facility and other debt, if any, secured by the same collateral as the Revolving Credit Facility. As of September 30, 2025, there was $2.3 billion outstanding under the Revolving Credit Facility and we were in compliance in all material respects with the terms of the Revolving Credit Facility.
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Revolving Funding Facility
 
We and our consolidated subsidiary, Ares Capital CP Funding LLC (“Ares Capital CP”), are party to a revolving funding facility (as amended, the “Revolving Funding Facility”), that allows Ares Capital CP to borrow up to $2.3 billion at any one time outstanding. The Revolving Funding Facility is secured by all of the assets held by, and our membership interest in, Ares Capital CP. The end of the reinvestment period and the stated maturity date for the Revolving Funding Facility are July 28, 2028 and July 28, 2030, respectively. The interest rate charged on the Revolving Funding Facility is based on SOFR or a “base rate” (as defined in the documents governing the Revolving Funding Facility) plus an applicable spread of 1.80% per annum. Ares Capital CP is also required to pay a commitment fee of between 0.50% and 1.25% per annum depending on the size of the unused portion of the Revolving Funding Facility. As of September 30, 2025, there was $1.2 billion outstanding under the Revolving Funding Facility and we and Ares Capital CP were in compliance in all material respects with the terms of the Revolving Funding Facility.

SMBC Funding Facility
 
We and our consolidated subsidiary, Ares Capital JB Funding LLC (“ACJB”), are party to a revolving funding facility (as amended, the “SMBC Funding Facility”), with ACJB, as the borrower, and Sumitomo Mitsui Banking Corporation, as the administrative agent and collateral agent, that allows ACJB to borrow up to $1.1 billion at any one time outstanding. The SMBC Funding Facility also provides for an “accordion” feature that allows ACJB, under certain circumstances, to increase the overall size of the SMBC Funding Facility to $1.3 billion. The SMBC Funding Facility is secured by all of the assets held by ACJB. The end of the reinvestment period and the stated maturity date for the SMBC Funding Facility are July 25, 2028 and July 25, 2030, respectively. The reinvestment period and the stated maturity date are both subject to two one-year extensions by mutual agreement. The interest rate charged on the SMBC Funding Facility is based on an applicable spread of either (i) 1.80% over one month SOFR or (ii) 0.80% over a “base rate” (as defined in the documents governing the SMBC Funding Facility). ACJB is also required to pay a commitment fee of between 0.50% and 1.00% per annum depending on the size of the unused portion of the SMBC Funding Facility. As of September 30, 2025, there was $539 million outstanding under the SMBC Funding Facility and we and ACJB were in compliance in all material respects with the terms of the SMBC Funding Facility.
  
BNP Funding Facility
 
We and our consolidated subsidiary, ARCC FB Funding LLC (“AFB”), are party to a revolving funding facility (as amended, the “BNP Funding Facility”) with AFB, as the borrower, and BNP Paribas, as the administrative agent and lender, that allows AFB to borrow up to approximately $1.3 billion at any one time outstanding. The BNP Funding Facility is secured by all of the assets held by AFB. The end of the reinvestment period and the stated maturity date for the BNP Funding Facility are March 20, 2028 and March 20, 2030, respectively. The interest rate charged on the BNP Funding Facility is based on applicable SOFR, or a “base rate” (as defined in the documents governing the BNP Funding Facility) plus a margin of (i) 1.90% during the reinvestment period and (ii) 2.40% following the reinvestment period. As of September 30, 2025, the applicable spread in effect was 1.90%. AFB is required to pay a commitment fee of between 0.00% and 1.25% per annum depending on the size of the unused portion of the BNP Funding Facility. As of September 30, 2025, there was $774 million outstanding under the BNP Funding Facility and we and AFB were in compliance in all material respects with the terms of the BNP Funding Facility.

Debt Securitizations

ADL CLO 1 Debt Securitization

In May 2024, we, through our wholly owned consolidated subsidiary, Ares Direct Lending CLO 1 LLC (“ADL CLO 1”), completed a $702 million term debt securitization (the “ADL CLO 1 Debt Securitization”). The ADL CLO 1 Debt Securitization is also known as a collateralized loan obligation and is an on-balance sheet financing incurred by us, which is consolidated by us for financial reporting purposes and subject to our overall asset coverage requirement. The notes offered in the ADL CLO 1 Debt Securitization that mature on April 25, 2036 (collectively, the “April 2036 CLO Notes”) were issued by ADL CLO 1 pursuant to the indenture governing the April 2036 CLO Notes and include (i) $406 million of Class A Senior Notes (the “April 2036 Class A CLO Notes”); (ii) $70 million of Class B Senior Notes (the “April 2036 Class B CLO Notes” and, together with the April 2036 Class A CLO Notes, the “April 2036 CLO Secured Notes”); and (iii) approximately $226 million of subordinated notes (the “April 2036 CLO Subordinated Notes”). We retained all of the April 2036 CLO Subordinated Notes, as such, the April 2036 CLO Subordinated Notes are eliminated in consolidation. The following table presents information on the April 2036 CLO Notes as of September 30, 2025 (dollar amounts in millions):

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Class Type Principal Outstanding Maturity Date Interest Rate
April 2036 Class A CLO Notes Senior Secured Floating Rate $ 406  April 25, 2036 SOFR+1.80%

April 2036 Class B CLO Notes Senior Secured Floating Rate 70  April 25, 2036 SOFR+2.20%

Total April 2036 CLO Secured Notes 476 
April 2036 CLO Subordinated Notes Subordinated 226  April 25, 2036 None
Total April 2036 CLO Notes $ 702 

The April 2036 CLO Secured Notes are the secured obligations of ADL CLO 1 and are backed by a diversified portfolio of first lien senior secured loans contributed by us to ADL CLO 1 pursuant to the terms of a contribution agreement. The interest rate charged on the April 2036 CLO Secured Notes is based on SOFR plus a blended weighted average spread of 1.86%.

Our investment adviser serves as asset manager to ADL CLO 1 under an asset management agreement and is entitled to receive certain management fees for providing these services under the agreement. Our investment adviser has agreed to waive any management fees from ADL CLO 1 .

ADL CLO 4 Debt Securitization

In November 2024, we, through our wholly owned consolidated subsidiary, Ares Direct Lending CLO 4 LLC (“ADL CLO 4”), completed a $544 million term debt securitization (the “ADL CLO 4 Debt Securitization”). The ADL CLO 4 Debt Securitization is also known as a collateralized loan obligation and is an on-balance sheet financing incurred by us, which is consolidated by us for financial reporting purposes and subject to our overall asset coverage requirement. The loans incurred by ADL CLO 4 in the ADL CLO 4 Debt Securitization that mature on October 24, 2036 (collectively, the “October 2036 CLO Secured Loans”) include (i) $464 million of Class A Senior Loans (the “October 2036 Class A CLO Loans”), and (ii) $80 million of Class B Senior Loans (the “October 2036 Class B CLO Loans”). In addition, in connection with the ADL CLO 4 Debt Securitization, ADL CLO 4 issued approximately $260 million of subordinated notes (the “October 2036 CLO Subordinated Notes”). We retained all of the October 2036 CLO Subordinated Notes, as such, the October 2036 CLO Subordinated Notes are eliminated in consolidation. The October 2036 CLO Secured Loans may be converted by the lender into notes issued by ADL CLO 4 and bearing the same economic terms, subject to certain conditions under the documents governing the October 2036 CLO Secured Loans and the indenture governing such notes. The following table presents information on the October 2036 CLO Secured Loans as of September 30, 2025 (dollar amounts in millions):

Class Type Principal Outstanding Maturity Date Interest Rate
October 2036 Class A CLO Loans
Senior Secured Floating Rate $ 464  October 24, 2036 SOFR+1.54%
October 2036 Class B CLO Loans
Senior Secured Floating Rate 80  October 24, 2036 SOFR+1.83%
Total October 2036 CLO Secured Loans $ 544 

The October 2036 CLO Secured Loans are the secured obligations of ADL CLO 4 and are backed by a diversified portfolio of first lien senior secured loans contributed by us to ADL CLO 4 pursuant to the terms of a contribution agreement. The interest rate charged on the October 2036 CLO Secured Loans is based on SOFR plus a blended weighted average spread of 1.58%.

Our investment adviser serves as asset manager to ADL CLO 4 under an asset management agreement and is entitled to receive certain management fees for providing these services under the agreement. Our investment adviser has agreed to waive any management fees from ADL CLO 4 .

Unsecured Notes
 
We issued certain unsecured notes (we refer to each series of unsecured notes using the defined term set forth under the “Unsecured Notes” column of the table below and collectively refer to all such series as the “Unsecured Notes”), that pay interest semi-annually and all principal amounts are due upon maturity. Each of the Unsecured Notes may be redeemed in whole or in part at any time at our option at a redemption price equal to par plus a “make whole” premium, if applicable, as determined pursuant to the indentures governing each of the Unsecured Notes, plus any accrued and unpaid interest. Certain key terms related to the features for the Unsecured Notes as of September 30, 2025 are listed below.

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(dollar amounts in millions)
Unsecured Notes Aggregate Principal Amount Issued Effective Stated Interest Rate Original Issuance Date Maturity Date

January 2026 Notes $ 1,150  3.875% July 15, 2020 January 15, 2026
July 2026 Notes $ 1,000  2.150% January 13, 2021 July 15, 2026
January 2027 Notes(1) $ 900  6.731% August 3, 2023 January 15, 2027
June 2027 Notes $ 500  2.875% January 13, 2022 June 15, 2027
June 2028 Notes $ 1,250  2.875% June 10, 2021 June 15, 2028
March 2029 Notes(1) $ 1,000  6.303% January 23, 2024 March 1, 2029
July 2029 Notes(1) $ 850  5.793% May 13, 2024 July 15, 2029
September 2030 Notes(1) $ 750  6.051% June 3, 2025 September 1, 2030
January 2031 Notes $ 650  5.100% September 9, 2025 January 15, 2031
November 2031 Notes $ 700  3.200% November 4, 2021 November 15, 2031
March 2032 Notes $ 1,000  5.800% January 8, 2025 March 8, 2032

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(1) The effective stated interest rates of the January 2027 Notes, the March 2029 Notes, the July 2029 Notes and the September 2030 Notes include the impact of interest rate swaps.

In March 2025, we repaid in full the $600 million in aggregate principal amount outstanding of unsecured notes (the “March 2025 Notes”) upon their maturity. The March 2025 Notes bore interest at a rate of 4.250% per annum. In July 2025, we also repaid in full the $1,250 million in aggregate principal amount outstanding of unsecured notes (the “July 2025 Notes”) upon their maturity. The July 2025 Notes bore interest at a rate of 3.250% per annum.

In connection with certain of the unsecured notes issued by us, we have entered into interest rate swaps to more closely align the interest rates of such liabilities with our investment portfolio, which consists primarily of floating rate loans. We designated these interest rate swaps and the associated unsecured notes as qualifying fair value hedge accounting relationships. Under the interest rate swaps, we receive a fixed interest rate and pay a floating interest rate of one-month SOFR plus an applicable spread, as disclosed below. Certain information related to our interest rate swaps as of September 30, 2025 is presented below.

(dollar amounts in millions) Description Hedged Item Company Receives Company Pays Maturity Date Notional Amount
Interest rate swap January 2027 Notes 7.000  % SOFR +2.5810%
January 15, 2027 $ 900 

Interest rate swap March 2029 Notes 5.875  % SOFR +2.0230%
March 1, 2029 $ 1,000 
Interest rate swap July 2029 Notes 5.950  % SOFR +1.6430%
July 15, 2029 $ 850 
Interest rate swap September 2030 Notes 5.500  % SOFR +1.7705%
September 1, 2030 $ 750 
Interest rate swap(1) January 2031 Notes 5.100  % SOFR +1.7270%
January 15, 2031 $ 650 
Interest rate swap(1) March 2032 Notes 5.800  % SOFR +1.6995%
March 8, 2032 $ 1,000 

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(1) In connection with the issuances of the January 2031 Notes and the March 2032 Notes, we entered into forward-starting interest rate swaps with an effective date of July 15, 2026 and January 8, 2026, respectively.

See Note 6 to our consolidated financial statements for the three and nine months ended September 30, 2025 for more information on our interest rate swaps.

As of September 30, 2025, we were in compliance in all material respects with the indentures governing the Unsecured Notes.

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The Unsecured Notes are our senior unsecured obligations and rank senior in right of payment to any future indebtedness that is expressly subordinated in right of payment to the Unsecured Notes; equal in right of payment to our existing and future unsecured indebtedness that is not expressly subordinated; effectively junior in right of payment to any of our secured indebtedness (including existing unsecured indebtedness that we later secure) to the extent of the value of the assets securing such indebtedness; and structurally junior to all existing and future indebtedness (including trade payables) incurred by our subsidiaries, financing vehicles or similar facilities.

RECENT DEVELOPMENTS

From October 1, 2025 through October 23, 2025, we made new investment commitments of approximately $735 million, of which approximately $445 million were funded. Of the approximately $735 million in new investment commitments, 95% were in first lien senior secured loans, 1% were in subordinated certificates of the SDLP, 2% were in preferred equity and 2% were in other equity. Of the approximately $735 million in new investment commitments, 96% were floating rate, 2% were fixed rate and 2% were non-income producing. The weighted average yield of debt and other income producing securities funded during the period at amortized cost was 9.1% and the weighted average yield on total investments funded during the period at amortized cost was 8.9%. We may seek to sell all or a portion of these new investment commitments, although there can be no assurance that we will be able to do so.

From October 1, 2025 through October 23, 2025, we exited approximately $1.1 billion of investment commitments, including $600 million of loans sold to IHAM or certain vehicles managed by IHAM. Of the approximately $1.1 billion of exited investment commitments, 81% were first lien senior secured loans, 11% were second lien senior secured loans, 1% were subordinated certificates of the SDLP, 6% were our subordinated loan to IHAM and 1% were preferred equity. Of the approximately $1.1 billion of exited investment commitments, 93% were floating rate and 7% were on non-accrual status. The weighted average yield of debt and other income producing securities exited or repaid during the period at amortized cost was 9.3% and the weighted average yield on total investments exited or repaid during the period at amortized cost was 8.6%. Of the approximately $1.1 billion of investment commitments exited from October 1, 2025 through October 23, 2025, we recognized total net realized losses of approximately $67 million, with no realized gains or losses recognized from the sale of loans to IHAM or certain vehicles managed by IHAM.

In addition, as of October 23, 2025, we had an investment backlog of approximately $3.0 billion. Investment backlog includes transactions approved by our investment adviser’s U.S. direct lending investment committee and/or for which a formal mandate, letter of intent or a signed commitment have been issued, and therefore we believe are likely to close. The consummation of any of the investments in this backlog depends upon, among other things, one or more of the following: our acceptance of the terms and structure of such investment and the execution and delivery of satisfactory transaction documentation. In addition, we may sell all or a portion of these investments and certain of these investments may result in the repayment of existing investments. We cannot assure you that we will make any of these investments or that we will sell all or any portion of these investments.

CRITICAL ACCOUNTING ESTIMATES

The preparation of our consolidated financial statements requires us to make estimates and assumptions that affect the reported amounts of assets, liabilities, revenues, and expenses. Changes in the economic environment, financial markets, and any other parameters used in determining such estimates could cause actual results to differ. Our critical accounting estimates, including those relating to the valuation of our investment portfolio, are described below. The critical accounting estimates should be read in conjunction with our risk factors as disclosed in “Item 1A. Risk Factors.” See Note 2 to our consolidated financial statements for the three and nine months ended September 30, 2025 for more information on our critical accounting policies.

Investments

Investment transactions are recorded on the trade date. Realized gains or losses are measured by the difference between the net proceeds from the repayment or sale and the amortized cost basis of the investment using the specific identification method without regard to unrealized gains or losses previously recognized, and include investments charged off during the period, net of recoveries. Unrealized gains or losses primarily reflect the change in investment values, including the reversal of previously recorded unrealized gains or losses when gains or losses are realized.

Pursuant to Rule 2a-5 under the Investment Company Act, our board of directors designated our investment adviser as our valuation designee (the “Valuation Designee”) to perform the fair value determinations for investments held by us without
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readily available market quotations, subject to the oversight of our board of directors. All investments are recorded at their fair value.