On August 8, 2024, Palmer Square Capital BDC Inc (PSBD, Financial) released its 8-K filing announcing its financial results for the second quarter ended June 30, 2024. Palmer Square Capital BDC Inc is a financial services company that lends to and invests in corporate debt securities of companies, including small to large private U.S. companies. Their investment objective is to maximize total return, comprised of current income and capital appreciation.
Financial and Operating Highlights
Palmer Square Capital BDC Inc (PSBD, Financial) reported net investment income per share of $0.48 for Q2 2024, surpassing the analyst estimate of $0.42. The company also reported net investment income of $15.76 million, slightly down from $16.32 million in Q1 2024 but up from $14.20 million in Q2 2023. The net asset value (NAV) per share stood at $16.85, a slight decrease from $17.16 in the previous quarter.
Portfolio and Investment Activity
As of June 30, 2024, PSBD had 256 investments in 209 portfolio companies with an aggregate fair value of approximately $1.4 billion. The portfolio consisted of 85.7% first lien senior secured debt investments, 6.1% second lien senior secured debt investments, 0.6% corporate bond investments, 3.2% collateralized loan obligation structured credit funds (CLOs) mezzanine and equity investments, and 4.4% short-term investments. Notably, 98% of the long-term investments were at floating rates, and there were no loans on non-accrual status.
Liquidity and Capital Resources
As of June 30, 2024, PSBD had $14.8 million in cash and cash equivalents and approximately $820.4 million in total aggregate principal amount of debt outstanding. The company had available liquidity of approximately $192.0 million, compared to $30.0 million of undrawn investment commitments.
Recent Developments
On May 23, 2024, PSBD, along with Bank of America as arranging partner, closed Palmer Square BDC CLO I, a $400.5 million CLO secured by broadly syndicated loans held by PSBD. The CLO has a reinvestment period through 2029 and matures in 2037, with flexibility to refinance if spreads tighten in the future.
Additionally, PSBD’s loan to ConvergeOne was moved to non-accrual status in April 2024, and the company subsequently worked to restructure the loan before the quarter ended. The majority of the loan was converted to equity, and PSBD recorded a realized loss in June.
Dividend Announcement
PSBD’s Board of Directors declared a third quarter regular base dividend distribution of $0.42 per share payable on October 14, 2024, to shareholders of record as of September 27, 2024. An additional quarterly supplemental dividend distribution for the third quarter of 2024 is expected to be announced in September.
Financial Metrics
| Metric | Q2 2024 | Q1 2024 | Q2 2023 |
|---|---|---|---|
| Net Investment Income Per Share | $0.48 | $0.52 | $0.56 |
| Net Investment Income | $15.76 million | $16.32 million | $14.20 million |
| NAV Per Share | $16.85 | $17.16 | $16.55 |
| Total Fair Value of Investments | $1.43 billion | $1.39 billion | $1.06 billion |
Analysis
Palmer Square Capital BDC Inc (PSBD, Financial) has demonstrated resilience and strategic acumen in navigating a volatile market environment. The company's ability to exceed analyst estimates for net investment income per share underscores the effectiveness of its differentiated liquid loan strategy. The strong portfolio performance, coupled with prudent liquidity management, positions PSBD well for future growth and stability.
Value investors and potential GuruFocus.com members should take note of PSBD's strategic initiatives and robust financial health. The company's focus on first lien senior secured debt investments and floating rate assets provides a solid foundation for generating long-term shareholder value, even amid market uncertainties.
Explore the complete 8-K earnings release (here) from Palmer Square Capital BDC Inc for further details.
