Hi YXI friends,

Today, we are going to examine Blackstone Secured Lending Fund (BXSL). BXSL is a Business Development Company (BDC) that invests in the first lien senior secured debt of private US companies.

We dive in to BXSL’s latest performance, its capital structure, the impact of the upcoming Fed rate cut cycle, and its valuation compared with historical returns as well as peers.

Let’s start!

DISCLAIMER: This newsletter is strictly educational. Any information or analysis in this note is not an offer to sell or the solicitation of an offer to buy any securities. Nothing in this note is intended to be investment advice and nor should it be relied upon to make investment decisions. Any opinions, analyses, or probabilities expressed in this note are those of the author as of the note's date of publication and are subject to change without notice.

1. BXSL is among the leaders of BDCs

While launched only in 2018, BXSL is already one of the largest BDCs, with $11.3 billion of investments at fair value.

BXSL’s portfolio is remarkably focused. Out of 231 portfolio companies, 98.6% of the investments are in First Lien Senior Secured debt. 98.8% of the debt investments are floating rates. The debt investments enjoy a relatively benign 47.4% average Loan-to-Value Ratio.

This means BXSL has hugely benefitted from the Fed’s latest rate hiking cycle with very little risks. In the last quarter, non-accrual was 0.3% of the total debt investments.

Finally, the weighted average yield of debt investments at fair value is 11.6% versus BXSL’s own weighted average interest rate on borrowing of 5.26%. It’s a very healthy spread, but as we will see later, this spread likely declines in the upcoming rate cut cycle.

2. Q2 Growth Highlights

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