Skip to content
    CCAP
    Earnings call· Jun 2026(Q2 FY26)

    Crescent Capital BDC Q2 FY26 earnings call CCAP

    Aug 11, 2026 Source

    Executive summary

    Crescent Capital BDC, Inc. Q2 FY26 — NAV Decline Amidst Portfolio Rotation and Deleveraging Focus

    Crescent Capital BDC reported a decline in NAV and an elevated debt-to-equity ratio in Q2 FY26, primarily driven by unrealized losses on non-accrual investments and a modest increase in watch list assets. Management is focused on rotating watch list investments and deleveraging the portfolio, supported by a recently revised fee structure and strong liquidity. The company aims to stabilize the portfolio and improve long-term shareholder returns amidst a normalizing private credit market.

    Highlights

    5

    • Net investment income (NII) of $0.36 per share exceeded the $0.34 base dividend.

    • Fee structure revised with reduced management and incentive fees effective April 1, enhancing long-term earnings power.

    • Maintained a strong liquidity position with approximately $200 million of available borrowing capacity and $36 million of cash.

    • Upsized SPV asset facility by $100 million to $500 million and SMBC corporate facility by $25 million to $335 million.

    • Unsecured debt maturity profile extended to 2028 and beyond, providing meaningful financial flexibility.

    Concerns

    4

    • Net asset value (NAV) declined to $17.82 per share from $18.27, primarily due to $0.47 per share in unrealized losses on non-accrual investments.

    • Debt to equity ratio increased to 1.42 times (1.37 times net of cash), ending the quarter above the long-term target range.

    • Watch list investments increased modestly from 14% to 15% quarter over quarter, concentrated in deferrable consumer spending.

    • NAV has declined for several consecutive quarters, reflecting ongoing pressure from challenged credits.

    Guidance & targets

    1
    CategoryTargetConfidence
    Net leverage ratio
    within our target net leverage range
    high materiality
    High

    Operational metrics

    35
    Net investment income per share (adjusted)
    $0.36down from $0.38 per share
    Q2 FY26

    Excluding the impact of a one-time incentive fee waiver in Q1.

    Net asset value per share
    $17.82down from $18.27
    June 30, 2026

    Primarily driven by unrealized losses associated with non-accrual investments.

    Debt to equity ratio (gross)
    1.42
    Q2 FY26

    Increased reflecting the decline in net asset value together with positive net deployment.

    Debt to equity ratio (net of cash)
    1.37
    Q2 FY26

    Reflecting the decline in net asset value together with positive net deployment.

    Available borrowing capacity
    $200 million
    Q2 FY26

    Part of the company's strong liquidity position.

    Cash and cash equivalents
    $36 million
    Q2 FY26

    Balance sheet cash at quarter end.

    SPV asset facility size
    $500 millionupsized by $100 million
    Q2 FY26

    Enhanced available liquidity.

    SMBC corporate facility size
    $335 millionupsized by $25 million
    Q2 FY26

    Enhanced available liquidity.

    Unsecured debt maturity profile
    extended to 2028 and beyond
    Q2 FY26

    Providing meaningful financial flexibility.

    Dividend income
    $1.2 milliondown approximately $1.8 million quarter-over-quarter
    Q2 FY26

    Primarily reflecting a decline in the distribution from the Logan JV.

    Accelerated amortization and prepayment fee income
    $0.4 millioncompared with an average of approximately $0.8 million over the past year
    Q2 FY26

    Lower due to lower LBO activity.

    Investment portfolio fair value
    $1.6 billion
    June 30, 2026

    Total investment portfolio at fair value.

    Total net assets
    $656 million
    June 30, 2026

    Total net assets at quarter end.

    Realized losses from restructurings
    $0.48
    Q2 FY26

    Directly offset by the reversal of previously recognized unrealized losses.

    Unrealized losses (separately recognized)
    $0.47
    Q2 FY26

    Primarily reflecting continued operating pressure across a subset of non-accrual investments.

    Realized gains
    $0.03
    Q2 FY26

    Partially offset unrealized losses.

    Special dividend paid
    $0.03
    Q2 FY26

    Reduced NAV.

    Number of portfolio companies
    192
    Q2 FY26

    Across a highly diversified portfolio.

    Average investment size
    0.5%
    Q2 FY26

    Of the total portfolio.

    Senior first lien loans
    91%
    Q2 FY26

    Of the portfolio invested in senior first lien loans.

    Weighted average portfolio risk rating
    2.1
    Q2 FY26

    Approximately 85% of investments remained rated one or two.

    Weighted average interest coverage
    2.2stable
    Q2 FY26

    Reflecting continued resilience across the broader portfolio.

    Watch list investments percentage
    15%increased modestly from 14%
    Q2 FY26

    Concentrated in businesses indexed to deferrable consumer spending.

    Non-accruals percentage of debt investments at cost
    4.8%declining from 5.7%
    Q2 FY26

    Resulting from three restructurings during the quarter with no new non-accruals.

    Post deployment
    $57 million
    Q2 FY26

    Moderated hold sizes given current leverage profile.

    Weighted average spreads on new investments
    550
    Q2 FY26

    For new platform investments.

    Exits, sales, and repayments
    $36 million
    Q2 FY26

    Total for the period.

    Net deployment
    $21 million
    Q2 FY26

    Resulting from post deployment minus exits, sales, and repayments.

    Legacy First Eagle portfolio reduction
    27reduced from over 70
    June 30, 2026

    Progress on rotating the legacy portfolio.

    Regular dividend declared
    $0.34
    Q3 FY26

    Declared by the Board for the third quarter.

    Second special dividend
    $0.03
    Q3 FY26

    To be paid on September 15th.

    Debt repaid
    $162 million
    Q2 FY26

    Maturing fixed rate debt repaid during the quarter.

    Capital sources funded (aggregate)
    $175 million
    Q2 FY26

    From facility upsizes and unsecured notes funding.

    Sun Life investment/commitment
    $1.5 billion
    since 2021

    Across Crescent's strategies, reflecting confidence in the platform.

    Sun Life ownership of CCAP
    6%
    Q2 FY26

    Approximately 6% of CCAP's outstanding shares.

    Industry KPIs

    1
    MetricValueDetails
    Deployment realizations$57 million deployed / $36 million realizedUSD

    Deals & partnerships

    3
    Not statedUpsized SPV asset credit facility$100 million increase to $500 million

    Upsized the SPV asset facility by $100 million to $500 million.

    Not statedUpsized SMBC corporate credit facility$25 million increase to $335 million

    Upsized the SMBC corporate facility by $25 million to $335 million.

    Not statedFunded tranche of fixed rate unsecured notes$50 milliondue May 2029

    Funded the previously committed $50 million tranche of Series 2025 fixed rate unsecured notes.

    Risks & headwinds

    5
    NAV decline due to unrealized lossesQ2 FY26

    $0.47 per share in unrealized losses

    Mitigation: Actively managing non-accrual investments and focusing on long-term value maximization through portfolio rotation.

    Elevated debt to equity ratioQ2 FY26

    1.42 times (1.37 times net of cash), above target range

    Mitigation: Expects portfolio realizations in the near term to reduce leverage to within target range during the second half of the year.

    Increased watch list investmentsQ2 FY26

    Increased from 14% to 15% of portfolio

    Mitigation: Closely monitoring businesses indexed to deferrable consumer spending; proactive designation and management of watch list assets.

    Legacy acquired assets (First Eagle portfolio) challengesOngoing

    Represents approximately 7% of CCAP's portfolio at fair value, reduced from over 70 to 27 investments

    Mitigation: Continued focus on rotating the portfolio through restructurings and exits to improve overall portfolio quality.

    Normalization of credit cycle and higher defaultsOngoing

    Reflecting higher overall defaults and credit relative to a couple of years ago, stemming from more aggressive structures in 2021-2022 vintage and zero base rates.

    Mitigation: Intentional moderation of hold sizes on new investments and disciplined deployment.

    What to watch in Q3 FY26

    5

    Net leverage ratio

    second half of the year
    Current1.37 times (net of cash)
    Targetwithin target range

    Why it matters

    Achieving the target leverage ratio is a key near-term priority for management and indicates successful portfolio realizations.

    We have visibility into several portfolio realizations in the near term, which, all else equal, we expect will reduce leverage to within our target net leverage range during the second half of the year.

    Q&A highlights

    4

    Given the consistent NAV decline over eight consecutive quarters, is the issue that turnarounds are not progressing as expected, or is the fair value being revised downward each quarter to keep up with current performance rather than being more forward-looking? How close is the company to the bottom on NAV?

    Management acknowledges the long-term trend and emphasizes a focus on long-term value and recovery maximization for watch list investments, not just quick exits. Valuations reflect the nearest-term operating performance and outlook, which can vary significantly for watch list and non-accrual investments. The watch list increased modestly to 15%, and the company aims to be proactive in designating investments.

    “Our goal and what we commit to is reflecting those in real time and providing the best current view that we have on the respective watches investments. So when I think about making sure that we factor in every relevant app input, those can change.”

    asked by Robert Dodd · answered by Henry Chung

    2 min read5 chapters

    Detailed Narrative

    01

    NAV Decline and Credit Quality

    The company's net asset value (NAV) per share decreased to $17.82 from $18.27 in the prior quarter. This reduction was primarily driven by $0.47 per share of separately recognized unrealized losses, reflecting continued operating pressure across a subset of non-accrual investments. Realized losses from restructurings totaled $0.48 per share, which were offset by the reversal of previously recognized unrealized losses. The watch list increased modestly from 14% to 15% quarter over quarter, with a concentration in businesses indexed to deferrable consumer spending.

    02

    Portfolio Management and Rotation

    Management is actively rotating its watch list investments and focusing on long-term value maximization. Three restructurings were completed during the quarter, leading to a decline in non-accruals from 5.7% to 4.8% of debt investments at cost. The legacy First Eagle portfolio, a significant contributor to the watch list, has been reduced from over 70 to 27 investments, now representing approximately 7% of CCAP's portfolio at fair value, with further realizations expected.

    03

    Leverage and Liquidity Management

    The debt to equity ratio increased to 1.42 times (1.37 times net of cash), exceeding the target range due to NAV decline and positive net deployment. However, the company maintains strong liquidity with $200 million of available borrowing capacity and $36 million in cash. Facilities were upsized, including the SPV asset facility by $100 million to $500 million and the SMBC corporate facility by $25 million to $335 million, extending the unsecured debt maturity profile to 2028 and beyond.

    04

    Fee Structure and Shareholder Alignment

    A revised fee and dividend framework, including reduced management and incentive fees, became effective April 1. These actions are expected to enhance CCAP's long-term earnings power, support sustainable shareholder returns, and position the company with a competitive fee structure in the public BDC sector. Sun Life, a long-term holder of approximately 6% of CCAP's shares, continues to support the platform with over $1.5 billion invested or committed since 2021.

    05

    Investment Activity and Market Conditions

    Given the deleveraging priority, CCAP moderated its hold sizes on platform-originated investments. Post deployment totaled $57 million, including $28 million in new platform investments at weighted average spreads of approximately 550 basis points, and $29 million in follow-on investments. Exits, sales, and repayments amounted to $36 million, resulting in net deployment of $21 million. Competitive dynamics in the private credit market have improved, particularly in the upper mid-market, due to slower capital formation in the non-traded retail BDC market.

    AI-generated summary of the company’s earnings call. Not investment advice.