BXSL 2026年第3四半期決算説明会：NIIが0.68ドルに達するなか配当を0.60ドルにリセット

主要なポイント

• ブラックストーン・セキュアード・レンディング・ファンドの2026年第3四半期の純投資所得（NII）は1億5,800万ドル（1株当たり0.68ドル）となり、前四半期の1株当たり0.75ドルから減少しました。年率換算のNII利回りは10.7%でした。
• BXSLは2026年第4四半期の1株当たり0.77ドルの配当を維持したものの、2027年第1四半期の四半期配当を1株当たり0.60ドルに改定（リセット）しました。この新水準は、第3四半期のNAVに対して年率換算で約9.5%の利回りに相当します。
• 純資産価値（NAV）は前四半期比1.1%減の1株当たり25.25ドルとなりました。この減少には、1株当たり0.19ドルの純実現損益および未実現損益、ならびにNIIと配当との間の1株当たり0.09ドルの不足分が反映されています。
• 129億ドルの投資ポートフォリオのうち、約96%が引き続き第一抵当権付シニア担保ローンで占められています。不稼働資産（ノンアクルーアル）の割合は、公正価値ベースで2.1%、取得原価ベースで2.8%となり、第2四半期のそれぞれ1.8%、3.6%から推移しました。
• ポートフォリオ企業は前年同期比で約10%のEBITDA成長を記録し、平均インタレスト・カバレッジ・レシオは2.1倍となりました。公正価値の19%を占めるソフトウェア分野の借り手のインタレスト・カバレッジは2.3倍でした。
• グロス・レバレッジは1.28倍から1.22倍に低下しました。経営陣は1.0倍から1.25倍という長期目標レンジ内での運用を目指しています。

主要財務データ

事業およびポートフォリオの業績

BXSLは当四半期中に約2億5,000万ドルの融資（資金実行）を行いました。新規投資および追加融資のオールイン・スプレッドは500ベース・ポイント（bp）を超えました。回収された資産の利回りが8%台半ばから後半であったのに対し、新規投資の利回りは約9%でした。

回収および売却額は、第2四半期の7億ドル超に続き、6億5,000万ドルを超えました。経営陣によると、このポートフォリオの回転（ターンオーバー）により、現在の条件で資金運用を行うための流動性が確保され、返済手数料、発行時割引（OID）の償還加速、およびパー（額面）への収束効果（プル・ツー・パー）による利益がもたらされる可能性があるとのことです。

ソフトウェア分野は、約70社の借り手にわたりポートフォリオ公正価値の19%を占めました。直近12ヶ月（LTM）の加重平均EBITDAは2億9,000万ドルを超え、インタレスト・カバレッジは2.3倍でした。経営陣は、第一抵当権付ソフトウェア関連エクスポージャーのほぼすべてが借入比率（LTV）40%未満で設定されたものだと述べています。

Medalliaを含む3件の投資が不稼働状態から脱却した一方、新たに3件が不稼働資産に追加されました。経営陣は、新規の不稼働化事例について、セクター、地域、スポンサーに起因する共通要因ではなく、個別固有の要因によるものだと説明しました。

AudaxがRexelへの14億ドルでの売却提案を発表したことを受け、当ファンドはGenuine Cable Groupの株式ポジションにおいて約1,050万ドルの未実現利益を計上しました。取引の完了を前提とすれば、これはBXSLにとって通算7件目の実現（または実質的に実現）された株式ポジションとなり、投下資本倍率（MOIC）は合計で約3倍に達することになります。

経営陣の見通し

BXSLの取締役会は、2026年第4四半期に1株当たり0.77ドル、2027年第1四半期に1株当たり0.60ドルの配当を宣言しました。経営陣は、この改定（リセット）の目的について、未分配利益によるクッションを維持しつつ、配当支払いをポートフォリオの長期的な収益力により適合させるためだと説明しています。

経営陣は、第4四半期に未分配利益がさらに減少すると予想しています。取締役会とともに、NAVに対するディスカウント率、再投資の経済性、資本コスト、物品税（エキサイス税）などの要因を考慮しながら、内部留保バランスの評価を継続していきます。

同社は、第4四半期の新規投資スプレッドが返済分のスプレッドを上回り続けると見込んでいます。また経営陣は、過去2〜3ヶ月間にM&Aアドバイザーからの初期段階の融資要請が約30%増加したことを挙げ、2027年前半に案件活動が加速すると予想しています。

BXSLは、レバレッジを目標レンジである1.0倍〜1.25倍以内に維持する計画です。経営陣は、基準金利の上昇が変動金利資産の収益を下支えする可能性がある一方で、利上げサイクル前に発行された30億ドル超の低コスト固定利付社債のリファイナンスによってその効果が相殺される可能性があると述べています。

リスクおよび注視すべき点

• BXSLは、2020年と2021年に平均利率2.97%で発行された約32億ドルの固定利付社債のリファイナンスの中盤に差し掛かっています。さらに2028年9月までに、2027年第1四半期の6億5,000万ドルを含め、25億ドルの満期が到来します。
• 第3四半期の配当がNIIを上回ったため、過去の未分配利益を取り崩す必要が生じました。1株当たり0.60ドルへの減額改定は2027年第1四半期から開始されます。
• 不稼働資産の割合は、取得原価ベースでは3.6%から2.8%へ低下したものの、公正価値ベースでは1.8%から2.1%へ上昇しました。
• 経営陣は、高金利や選挙に関連する不確実性を背景に、2026年後半のM&A活動が予想以上に停滞していたと指摘しました。
• ポートフォリオ資産の約28%が2027年および2028年に満期を迎えます。経営陣は、このグループにおける最大規模の案件は堅調に推移しているかスポンサーからの資金支援を受けているものの、小規模な一部の案件については引き続き注視が必要であると述べています。

アナリスト質疑応答のハイライト

配当の持続可能性：経営陣は、四半期当たり0.60ドルの配当が、リファイナンス費用、基準金利の影響、成功報酬（インセンティブ・フィー）の仕組みなど、判明している長期的なモデル要因を反映したものであると述べました。数式ベースの追加配当プログラムの導入については明言しませんでした。

ポートフォリオの成長：BXSLはポートフォリオの入れ替え、株式発行、ジョイントベンチャー、および収益増大に寄与するM&Aを検討しています。経営陣は、買収するポートフォリオは正常稼働する第一抵当権付資産に重点を置く自社方針に適合する必要があることを強調し、大幅なNAVディスカウントで取引されているポートフォリオに対しては慎重な姿勢を示しました。

信用回収：設定以来の再編対象ポジション全体において、利息分を除いた実現元本回収額に足元の未実現価値を加えた比率は0.76倍でした。完全またはほぼ完全に回収が実現したポジションの回収率は0.87倍でした。経営陣はこの実績について、早期発見、積極的な評価替え、迅速な再編、およびブラックストーンの運用リソースによるものだとしています。

競合状況：BXCIの北米パイプラインにおけるダイレクト・レンディングのスプレッドおよび手数料は、2025年第4四半期と比較して約25〜50ベース・ポイント拡大しました。経営陣は、デジタル・インフラ、ライフサイエンス、航空宇宙・防衛、ハードアセット、およびリショアリング関連の産業需要を活発な分野として挙げました。

借入企業の耐性：ポートフォリオの平均インタレスト・カバレッジは2.1倍を維持しており、公正価値ベースのポートフォリオのほぼ半分は基準金利が現在より高い水準にあった時期に実行されたものです。そのため経営陣は、ポートフォリオは短期的な金利上昇の可能性に対処できる態勢が整っていると述べました。

決算説明会文字起こし全文

決算説明会の完全なトランスクリプト

経営陣による説明

Operator

Good day, and welcome to the Blackstone Secured Lending Third Quarter 2026 Investor Call. Today's call is being recorded. [Operator Instructions]

At this time, I'd like to turn the conference over to Stacy Wang, Head of Stakeholder Relations. Please go ahead.

Stacy Wang

Thank you, Katie. Good morning, and welcome to Blackstone Secured Lending Fund's Third Quarter Results Conference Call. Joining me today are Brad Marshall, Chief Executive Officer; and Teddy Desloge, Chief Financial Officer, along with other members of the management team available for Q&A, including Carlos Whitaker, President.

Earlier today, we issued a press release with a presentation of our results and filed our 10-Q, both of which are available on our Shareholder Resources section of our website, www.bxsl.com. We will be referring to that presentation throughout today's call. I'd like to remind you that this call may include forward-looking statements, which are uncertain and outside of the firm's control and may differ materially from actual results. We do not undertake any duty to update these statements. For some of the risks that could affect results, please see the Risk Factors section of our Form 10-Q filed earlier today. The audiocast is copyrighted material of Blackstone and may not be duplicated without consent.

With that, I'll turn the call over to Brad Marshall.

Brad Marshall

Thank you, Stacy, and good morning, everyone. Today, I'll cover 3 key areas: the market backdrop, our third quarter results and portfolio performance and how we are thinking about the macro environment going forward.

Starting with the market backdrop. U.S. economic data continues to show strength and corporate earnings growth is both strong and broadening across sectors. This is consistent with what we see within Blackstone's portfolio, where 97% of CEOs surveyed expect stable to improving conditions over the next 6 to 12 months. The third quarter also brought a clear shift in the rate environment. The Fed raised its policy rate for the first time since 2023 and longer-term yields rose sharply with the 10 year treasury moving above 5.3%, its highest level since 2002 before settling in around 4.9% today.

While the Fed held rates steady in October, the forward curve is pricing in an additional increase by year-end. For predominantly floating rate senior secured private credit strategy like BXSL, we believe the current environment is increasingly attractive. Higher base rates continue to support income, while our healthy fundamentals support borrowers' ability to service their debt. Sentiment towards private credit has also stabilized and begun to improve from earlier this year when investor concerns centered on defaults, software exposure and systemic risk.

To date, those concerns have largely not played out in many fundamentals. On average, across BXSL's portfolio, borrowers have grown EBITDA year-over-year at approximately 10% with interest coverage at 2.1x. A growing economy with higher yields due to rate increases, wider spreads compared to last year, and an improved competitive backdrop all helped drive better overall outcomes for our investors. With that in mind, institutional investors are recognizing these favorable conditions with fundraising for institutional U.S. closed-end direct lending funds up 45% over the last 12 months compared with prior year period.

Turning to the quarter. BXSL generated net investment income, or NII, of $0.68 per share, representing a 10.7% annualized NII yield. NAV per share was $25.25, down 1.1% from $25.53 last quarter, and we maintained our $0.77 per share dividend, supported by income and undistributed earnings. BXSL's net return for the quarter was 2.2% and 10.5% annualized since inception.

As discussed on previous calls, we regularly evaluate our dividend relative to the long-term earnings power of the portfolio. As we communicated earlier this year, our $0.77 per share dividend would serve as a bridge to a level aligned with the earnings power, supported by undistributed earnings we have built over time.

As a result, our dividend has represented an annualized distribution yield of over 11% on NAV in every quarter for the past 3 years and approximately 12% this year, among the highest across our traded BDC peers. We're now completing that transition and resetting the dividend, which is more closely aligned to our traded BDC peers. Our Board has declared a $0.77 per share dividend for the fourth quarter, maintaining our existing dividend rate and then a $0.60 per share dividend for the first quarter of 2027. This reset will represent an annualized distribution yield of approximately 9.5% on our Q3 ending NAV.

We believe this is an attractive level for a portfolio that is nearly 96% first-lien senior secured, among the highest across our traded BDC peers. And that benefits from among the lowest operating and financing costs in the peer group. While asset yields are improving, as I mentioned earlier, we are also midway through refinancing approximately $3.2 billion of lower cost fixed rate notes issued in 2020 and 2021 at an average coupon of 2.97% fixed.

Moving to our portfolio, which remains nearly 96% first-lien senior secured, the story this quarter is one of broad-based stability. Underperformance remains limited to a few isolated situations, which are reflected in our marks and where we remain highly proactive in driving outcomes. Away from these names, the broader portfolio continues to perform well. We are also seeing encouraging results in some of the companies where BXCI led restructurings and now owns equity, which I'll discuss shortly.

Software, which represents 19% of the portfolio at fair value, continues to generally perform well across nearly 70 borrowers with weighted average LTM EBITDA of over $290 million and interest coverage of 2.3x. More broadly, the market continues to differentiate between software businesses. High-quality growing software companies similar in profile to many in our portfolio traded over 13x EBITDA in public equity markets as of quarter end.

And first-lien loans to these businesses trade above 98 in the broadly syndicated loan market as of quarter end. We believe this continued market demand for high-quality software credit supports the strength of our position in the capital structure, where our software loans sit above substantial equity cushions. Nonaccrual ended the quarter at 2.1% at fair value and 2.8% at cost compared to 1.8% and 3.6%, respectively, last quarter. Three names exited nonaccrual status during the quarter, including Medallia, while 3 were added.

Across the BDC space, nonaccrual rates have remained relatively stable this year, albeit closer to historical averages. However, as we have stated previously, what matters in our view is what happens before and after an investment becomes challenged. We want to identify stress early. We want to reflect the performance in our marks proactively. And if a restructuring is required, we want to use our senior secured position and resources across the Blackstone platform to drive recovery and preserve value, particularly relative to equity holders who absorb the losses first.

In those situations, we draw on Blackstone's nearly 40 years of private equity experience, the workout expertise of BXCI's 120-plus person office of the CIO, insights from our 50-plus data scientists and AI experts and BXCI's value creation team working closely with sponsors and management teams to provide operational support and maximize recovery. A multisite health care company in our portfolio illustrates this approach. Following a restructuring in the third quarter of 2024, the business has benefited from active involvement by BXCI's workout team and value creation team on initiatives that have contributed to margin improvement and EBITDA has grown more than 35% year-over-year.

Reflecting that recovery in fundamentals, its current mark is more than 20 points above its trough mark in 2024. Affordable Care and Dental Care Alliance, both previously on nonaccrual, we believe are benefiting also from Blackstone's operating resources, including procurement, employee health care benefits and cost optimization initiatives.

More broadly, across all of BXCI's restructured positions since inception, the realized principal recoveries, including -- excluding coupons plus the current unrealized value through the end of the quarter is 0.76x. For positions that have been fully or substantially realized, recovery rate, excluding coupons was 0.87x. We also continue to benefit from selective equity upside. During the quarter, Audax announced the sale of Genuine Cable Group, also known as GCG or EIS, to Rexel for $1.4 billion.

GCG, a distributor of wire, cable and related products has benefited from demand tied to power infrastructure, data centers and electrification. BXSL's recognized approximately $10.5 million of unrealized gains on its equity position this quarter. Subject to satisfaction of customary closing conditions, this would mark our seventh realized or substantially realized equity position in BXSL with a combined MOIC of nearly 3x.

On activity, repayments and sales remain elevated this year at over $650 million or roughly 20% annualized, following over $700 million last quarter. We continue to see healthy environment for repayments, which provides liquidity for new investments at today's more attractive terms, can pull marks to par on repaid positions and can generate additional income through repayment fees and accelerated OID while supporting portfolio diversification over time.

We funded approximately $250 million in the quarter with new deals and add-ons at all-in spreads over 500 basis points. Spreads and deal fees in BXCI's North American direct lending pipeline are approximately 25 to 50 basis points wider than in the fourth quarter of last year, and we are seeing strong demand from large corporates alongside opportunities in infrastructure, hard assets, aerospace and defense and life sciences, where Blackstone has scale and expertise.

As we suggested on prior calls this year, we brought leverage down to 1.22x, and we intend to continue to manage within our target of 1 to 1.25x. While the forward curve is pricing in higher base rates, we believe the portfolio is well positioned to manage through higher yields with average interest coverage of 2.1x and LTM growth of nearly 10% today. Importantly, our portfolio has been tested through a significant steeper hiking cycle.

When the Fed raised rates from 0 to more than 5% by 2023, average EBITDA growth for our portfolio companies remained positive each quarter. Interest coverage remained at or above 1.8x and nonaccruals remained low throughout the rate hike cycle. Today, nearly half of our portfolio at fair market value was funded when base rates were higher than today, meaning these borrowers have already demonstrated their ability to service debt at higher interest costs.

As a reminder, BXSL was designed to deliver premium current income and attractive long-term returns across market cycles and has delivered a 10.5% annualized net return since inception, over 500 basis points above leverage loans in that same period. That performance has been driven by senior secured positioning, disciplined marks, pull to par from repayments, active asset management and one of the most shareholder-aligned fee structures in the industry. The decision we announced today on our dividend reflects that same discipline.

With that, I'll turn it over to Teddy.

Teddy Desloge

Thanks, Brad. First, on performance. BXSL generated net investment income of $158 million or $0.68 per share for the third quarter compared to $0.77 per share dividend paid. This equates to a 10.7% annualized NII yield and a 12.2% annualized distribution yield. NII declined from $0.75 per share last quarter, primarily due to a smaller benefit from our 3-year incentive fee look back. The quality of our earnings continued to remain strong in the quarter. Interest income, excluding payment in kind, fees and dividends, represented more than 94% of total investment income. PIK income declined to 5.8% from 6.6% last quarter and over 8% in the fourth quarter of 2025.

Turning to the dividend. As previously communicated, we funded the quarter's $0.77 per share dividend through a combination of current quarter NII and undistributed prior period earnings. Undistributed earnings totaled approximately $1.68 per share at quarter end compared with $1.80 at the beginning of the year. This reflects our deliberate use of retained earnings to bridge to what we view as a normalized dividend aligned with the portfolio's long-term earnings power.

For the first quarter of 2027, we have reset our quarterly dividend to $0.60 per share, consistent with this previously communicated approach. At that level, the dividend will represent an annualized yield of approximately 9.5% on third quarter ending NAV remaining above but more closely aligned with our publicly traded BDC peers. As a reminder, BXSL's distribution yield as of the third quarter was more than 250 basis points above the average of our traded BDC peers despite having among the highest first-lien exposure in the peer group.

Turning to the balance sheet. We ended the quarter with $12.9 billion of total portfolio investments at fair value, $7.2 billion of outstanding debt and $5.9 billion of total net assets. NAV per share was $25.25 compared with $25.53 last quarter. The $0.28 decline primarily reflected $0.19 per share of net realized and unrealized losses and $0.09 per share by which the dividend exceeded quarterly NII. Realized losses totaled approximately $1 per share, primarily related to the realization of previously recorded unrealized losses on Medallia upon completion of the restructuring.

We continue to work constructively with our portfolio companies on amendments that support growth and M&A activity while improving lender protections and economics where appropriate. During the quarter, we completed amendments involving 25 issuers and over 97% of the portfolio's fair market value either was unaffected by amendments or related to amendments associated with what we believe were positive events or immaterial technical matters. Our liability structure remains well diversified with a low cost of capital. At quarter end, we had $9.7 billion of committed debt capacity and $7.2 billion of funded debt, of which 62% was unsecured and 38% was secured.

Further, during the quarter, we completed an upsize and extension to our revolving credit facility, bringing total commitments to approximately $2.5 billion and extending the facility's tenor by 1 year to August 2031, with no change to pricing at 153 basis points over the base rate undrawn amounts. In September, we paid down $700 million of lower cost investment-grade bonds maturing in Q3, which brings total maturities in 2026 to $1.5 billion. While these maturities had a weighted average coupon of 3.2%, we issued 2 new unsecured borrowings in 2026 that swapped to floating at a weighted average price of 197 basis points over the base rate.

We have an additional $2.5 billion of maturities through September 2028, including $650 million in the first quarter of 2027. Our all-in cost of debt was 5.14%, and we ended the quarter with a total of $2.6 billion of liquidity. Gross and net leverage declined to 1.22 and 1.2 turns debt to equity, respectively, from 1.28 and 1.25 last quarter, and both remained within our long-term average or long-term range of 1 to 1.25 turns.

As a reminder, BXSL's Board of Trustees approved a discretionary share repurchase plan under which BXSL may repurchase up to $250 million in the aggregate of its outstanding common shares in the open market at prices below NAV per share. While we did not repurchase shares during the quarter, we continue to evaluate repurchases relative to new investment opportunities, taking into account, among other factors, the discount to NAV and our target leverage range.

Stepping back, BXSL demonstrated a few enduring strengths this quarter. First, a predominantly first-lien portfolio that continues to perform well; second, BXCI's ability to actively manage the full life cycle of investments; and third, a disciplined approach to capital structure and distributions designed to support attractive and sustainable shareholder returns across market cycles.

With that, I'll ask the operator to open it up for questions. Thank you.

Operator

[Operator Instructions] We will take our first question from Fin O'Shea with Wells Fargo Securities.

質疑応答

Finian O'Shea

Just first question on the credit picture. It looks like at this point, you've gotten through a lot of the 2021 vintage underperformers. How would you -- or would you agree with that? Or do you think you're mostly through? Or is there still a bit of a tail of underperformers that might carry credit headwinds into '27?

Brad Marshall

Great. Fin, this is Brad. I can take that. I think as you look at the '21 vintage assets, you'll start to see those assets have maturities coming up in '27 and '28. So we have about 28% of our assets that mature in that time frame, so over the next couple of years. And what's interesting, if you just look at the top 10 names that make up that percentage of our near-term maturities, I think that's roughly about half of the names, maybe a little bit more.

100% of those names are either seeing very strong performance, are seeing equity come into the business because of acquisitions. Some of them are for sale or going to be sold like Genuine Cable. So we're seeing kind of very good tailwinds actually in those near-term maturities because that would kind of be the '21 kind of vintage assets. There's a handful of assets outside of those top 10 positions that we're focused on, but they're a smaller portion of BXSL and the overall portfolio.

Finian O'Shea

Great. Very good. And I also appreciate you moved with the dividend, much cleaner picture. Does the $0.60 assume you're able to hang on to spillover? Or should we expect something perhaps on the special dividend side next year? And would that impact ability to pay out on the $0.60 base dividend?

Teddy Desloge

Yes. Thanks, Fin. This is Teddy. I'm happy to take that. So I think you're right. We wanted to provide some very clear visibility to the market. We have stated on past calls, excess earnings have been a temporary bridge to reset to a longer-term level that aligns with our earnings power, and we're now completing that transition. On your question on spillover, I think what we guided to was that we would draw down spillover this year while maintaining our dividend.

We've been very deliberate with that approach. We were at $1.80. We're now at $1.67 of undistributed earnings per share. We expect a further decline expected through Q4. And we're still well inside of 3/4 of spillover relative to the reset dividend, which represents valuable cushion, right? That's been capital that's been reinvesting it accretively in the portfolio that's in NAV. I would say we're always going to continue to evaluate that level with the Board. Certainly, a sustained discount to NAV is a consideration.

Other considerations would be reinvestment economics or cost of capital relative to our excise tax, neither of those are triggers or relevant today. So very comfortable where we are from a spillover perspective and wanted to give the market clear visibility into aligning our dividends with the longer-term earnings power of the portfolio.

Operator

We will take our next question from Rick Shane with JPMorgan.

Richard Shane

Really 2 questions. Look, third quarter was a very unusual quarter in terms of deal flow. As we know, typically, August tends to be slow. September tends to be a quarter that's very weighted towards September activity. I am curious, given the unique dynamics, what the sort of cadence of third quarter was and what that suggests as we enter into the fourth quarter and perhaps into a slightly more stable, predictable environment.

Brad Marshall

Thanks, Rick. This is Brad. I'll take that one. I think your summary is a good one. I think with rates moving higher, the election, I think that dampened some of the tick up in M&A activity that we were expecting. For us, in particular, we saw more activity actually from our existing portfolio companies, which were out doing acquisitions and drawing on capital, which we like because we obviously are invested in these companies. So that kind of drove most of our deal flow for this quarter and probably next quarter for this current quarter as well. So that's kind of generally the backdrop that we're seeing.

Now that we're past the election, now that we have maybe a little bit more clarity on rates, our expectation is that deal flow will accelerate next year in the first half. We're starting to see signs of that because we do get early requests from M&A advisers to look at financing for companies that they're going to put up for sale, and that's picked up by about 30% from where we were maybe 2 or 3 months ago. So that's the picture. A lot of activity in the existing portfolio companies, M&A starting to reaccelerate into next year.

Richard Shane

Got it. And with that in mind, look, the portfolio peaked in size almost 6 months -- a year ago -- actually, it was a year ago exactly. And in terms of portfolio size, you're back to late '24 levels. Do you think that Q3 represents a trough in terms of the size of the balance sheet? Should we expect growth from here or at least sort of stability?

Brad Marshall

We'd love to continue to build the portfolio Rick, either through -- primarily through equity issuance and so we can invest new equity dollars in new opportunities as the market accelerates next year. For now, we're a little bit more reliant on turnover in the portfolio, which was actually pretty decent this year. We had about in the middle of our range of 15% to 20%. And I think next year, we'll probably see something similar. So that will drive a lot of the kind of deployment dollars in the absence of equity capital that we continue to raise. But we're also continue to evaluate other options and other ways to continue to grow the portfolio over time because I think we're in line with kind of your view that it would be helpful to continue to expand our assets.

Richard Shane

Got it. I have a funny feeling you're going to get some questions about alternative ways to grow from my peers following. So I will turn it back to you guys.

Operator

We will take our next question from Melissa Wedel with UBS.

Melissa Wedel

Why don't we go ahead and take that one right up there? Alternative ways to grow the portfolio.

Brad Marshall

Well, again, turnover is the clearest way to kind of continue to grow the portfolio, recycling out of the names that we've been working on as equity owners is another way. We constantly look at whether we want to consider a JV structure for the benefit of our shareholders. Equity issuance continues to be top of mind. We are always open-minded to M&A, but it has to be accretive to shareholders. We want to be make sure that there's a portfolio of assets that would come into BXSL that is consistent with our strategy of trying to primarily focus on first-lien performing assets. And so those are all the different ways that we can continue to build the portfolio so we can drive shareholder value.

Melissa Wedel

Got it. And speaking hypothetically around potential M&A, I mean, obviously, shares are trading at a discount to NAV and have been for a little bit, but there are certainly other portfolios that trade at much larger discounts to NAV. Would you potentially consider issuing shares below NAV in order to buy assets at a much greater discount?

Brad Marshall

Going back to kind of what I mentioned, our core focus is we don't want to go out and buy a portfolio of average or below average assets. That's our kind of primary kind of North Star because we want to be able to continue to build a high-quality performing portfolio. And so there's growth that we want to do that is higher quality, and that's our primary focus. But of course, if there's a portfolio out there that we could bring into BXSL to help grow, then we're going to be entirely open mindset. The problem is, as we see it, things that trade at deep discounts to NAV, trade there for a reason. And so we're very, very cautious about what we're -- what's out there as potential M&A.

Operator

We will take our next question from Robert Dodd with Raymond James.

Robert Dodd

A couple of questions. On the first one, going back to the dividend issue, if I can, not really what the level is. But if I look forward to expectation of increase of activity in the first half, which would probably be an increase in the back half as well next year. You had about -- on the new with the spillover that goes down, you'd be about 2.5 quarters, give or take. I mean, it looks like there may need to Fin's question, be a need for something incremental above the base if the market shows any kind of real activity next year. Has there been any consideration of kind of like a formulaic supplemental program if earnings do perform better with higher rates and maybe more activity fees? Or is it -- should we be more thinking about, if anything, it'd be board discretion quarterly and a little less predictable than a formulaic approach?

Teddy Desloge

Yes. Thanks, Robert. I'm happy to take that. I think first, just to answer your question directly, we are -- we have been evaluating all different types of structures. As we think about sort of the level that we set, we're resetting at a level that considers sort of all knowable pieces of the long-term model today, right? So we've talked about a refinancing of over $3 billion of bonds issued pre-rate hike. We expect that to offset potential benefits from rate hikes. We do have incentive fees that were lower this year structurally just tied to our look-back mechanism and unrealized marks. That's been concentrated to a small handful of assets that we're now working through.

And overall, the level was supported by broad-based portfolio health, right, where challenges have been well identified and being addressed. 10% EBITDA growth, some reacceleration of growth in the portfolio, nonaccruals down for the second consecutive quarter, interest coverage over 2 turns for 5 consecutive quarters. So we're taking all sort of pieces of the model into play here. I think on spillover, we feel comfortable where we are today. We'll continue to reevaluate that. But at this point in time, giving clear visibility to a dividend level that's still on the higher end of peers with a portfolio that's highest first-lien exposure, lowest G&A and lowest financing costs across our peer set.

Brad Marshall

And the only thing I would add to that, Robert, is one of the things that we're focused on is just the predictability of income stream. It's the reason why we don't really factor in fees that come in depending on turnover of assets. That's certainly upside when that happens. We don't rely on dividends that are coming up through other structures. So it's very kind of a high-quality income stream that we're evaluating. And we want to be able to have excess coverage at all times. And if we do have -- continue to have that excess coverage, that only helps with build NAV.

Robert Dodd

Got it. One more, if I can, right? And this relates to your point. I mean credit is only part of the picture for wealth, not credit. Credit is the picture for BDC to a large degree, but nonaccruals are not the only component of credit, right, the recovery. So can you give us -- I mean, to your point, right, your realized recovery so far, excluding coupons, thank you for that, 87% or maybe it was 86%, right? So well north of 80%, significantly above the long-run industry average. Small data set, obviously, so far for this portfolio. But I mean, can you give us any more other than it's the Blackstone secret sauce and we're bigger than everybody else as a kind of catalyst for why that's sustainable? Because obviously, if it is -- if you get a 90% recovery on a default, I worry a lot less about a default than if it's -- your average recovery rate is 20%, right? So I mean it kind of changes the outlook materially for me and my suspicion is other investors as well.

Brad Marshall

Yes. Thanks, Robert. Maybe I'll answer it in 2 parts. One, as you think about your restructurings, we're trying to do a couple of things. One, we're trying to make sure there's no surprises. So we're marking assets down as they underperform. Last thing we want is an asset to go from 98 to 50. So you're seeing kind of that movement in some of these underperformers. The second thing is we're trying to pull forward restructurings, if at all possible versus trying to delay them. I think that's maybe what some parts of the market do. The advantage of pulling forward a restructuring is that you can get in there earlier and ultimately, you're playing for a different outcome than the equity investor.

And so we're very focused on doing that where we can. And the way we do that is we incentivize the sponsor, the owner of the business to hand over the keys to Blackstone, and we give them some sort of equity participation once we fully recover kind of our debt. So we're trying to actively mark the portfolio, pull assets forward. And then as you put it, sprinkle the Blackstone pixie dust on these companies. And the way we do that is obviously bring in all the private equity resources that we have to bear.

And sometimes that has a meaningful impact and sometimes it has a marginal impact, but it always is impactful to the business. Even something like Medallia, for example, which is going through this kind of more transformative change in their business model. And by the way, I'll give a plug for them. Forrester just ranked them as the #1 product in their space above all their peers. But even with something like that, we're bringing them into our health care program. That's going to save them $1 million in expenses next year. So all these things are actually quite additive, and that's what we're trying to do, and that's something we've been focused on since we started 21 years ago.

The second thing I'll just say as it relates to restructurings and maybe more relevant on NAV if you look at our portfolio, roughly 2/3 of our assets are marked below par, getting back to my comment on marks. 80-plus -- or around 80% of these assets are seeing very attractive EBITDA growth. So there is -- as these assets start to turn over in your portfolio, you see this NAV kind of pull to par that we've mentioned on several calls. Take Genuine Cable where we just marked the equity up. We're going to make 4x our money on the equity. That asset last year, the debt was marked at 94% that had a tricky quarter. So turnover in assets is a real driver of return for our investors, and that's why you hear us talk about it a lot.

Operator

We will take our next question from Ken Lee with RBC Capital Markets.

Kenneth Lee

And I realize it's difficult to predict here, but any sense of the outlook for prepayment activity over the near term? Or is that something that just going to be once again tied to M&A and we would have to wait until early parts of next year to see an acceleration there?

Brad Marshall

Yes. So a little bit tied to my comments earlier to Rick, I think this past quarter and the quarter we're in, we're seeing investment activity predominantly from our existing portfolio companies that are doing M&A and looking to grow their businesses. That's driving a lot of the deal activity, which, again, we're actually quite supportive of. In terms of kind of the broader market, M&A activity was a little bit slower in the second half of the year than I think we were expecting, but you are seeing it start to reaccelerate. You're seeing it reaccelerate, Ken, in digital infrastructure, for example, in life science and pharma. You're seeing more industrial demand for capital as we think about reshoring and onshoring. Aerospace and defense is another kind of area that's seen an uptick in activity. So the market is reaccelerating and it's reaccelerating in certain sectors that were historically maybe a little bit less active.

Kenneth Lee

Got you. Very helpful there. And then just one follow-up, if I may, just within the software portfolio there. Any color around the average LTVs that you're seeing within the portfolio now?

Teddy Desloge

Yes. Thanks, Ken. I'm happy to take that. I would say no specific change quarter-over-quarter. I will say we did get through sort of full Q2 numbers, not seeing the deceleration that I think the market was expecting in the first quarter. In fact, our software companies are growing in line with our broader portfolio. Again, we're fairly diversified. We have over 65 positions. We're financing larger companies, larger end of the market, near $300 million of EBITDA. And nearly all of our first-lien exposure was set up with LTVs below 40%.

So certainly, you're going to see a little bit of re-rating of LTVs just tied to the market. That said, where we're invested, we sort of map those to multiples in the public markets. And what we see is public market multiples of well north of 13x, that implies a pretty significant equity cushion below our exposure where we sit in the capital structure.

Operator

We will take our next question from Arren Cyganovich with Truist Securities.

Arren Cyganovich

There was commentary about some amendments, I think 25 issuers that were done in the quarter. Maybe just talk a little bit about the areas that you were focusing on there. Any notable themes across that group?

Teddy Desloge

Yes, absolutely. I'm happy to take that one as well. Thank you for the question. I would say, as we look at amendment activity, we want to give this stat every quarter just to give some transparency into what's really happening in the portfolio. We are constantly working with our companies on DDTL refreshes. We are working proactively to retain exposure for companies that are performing well. In a lot of cases, we're also seeing equity come into our capital structures to support M&A.

So as you put numbers to it, we saw about 25 amendments in the quarter, over 90% of -- over 97% of the portfolio was either unaffected by amendments or the amendments were benign or positive. So certainly, to Brad's comments, where we can be proactive with our companies underperforming, we are doing that. You see that in our numbers, but the vast majority of the portfolio is seeing -- is unaffected or seeing positive or immaterial amendments.

Arren Cyganovich

And then on the competitive environment, historically, we kind of see these kind of spreads widen, spreads get tighter. What are you seeing from in the upper middle market from a competitive environment in terms of structuring? And are we starting to see spreads kind of come back in, et cetera?

Brad Marshall

I think what we're seeing from a spread standpoint, Arren, is that they've definitely tightened from the start of the year where there was a little bit more kind of market volatility. But they haven't tightened all the way to kind of where they were at this time last year. So we're seeing 25 to 50 basis points spread widening to last year. I will say, however, that the public markets are actually quite strong in the broadly syndicated market. And in some cases, that's leading to some refinancings of our existing positions, which we're perfectly fine with. But if a company is large, and for a variety of reasons, it wants to or needs to be done privately, then those are actually representing some of the best risk-adjusted opportunities in the market because the depth of capital today is not what it was last year, which, as I think about it, represents a pretty good road map to what next year could look like if deal activity starts to reaccelerate, you have less supply of capital and the demand starts to accelerate, and that should lead to spreads being fairly attractive.

So that's what I would say about that. And again, it is centering around some of these assets that are in digital infrastructure, life science, things that are a little bit more complicated. You're seeing relative value actually quite a bit better than what you're seeing even in the middle market.

Operator

We will take our next question from Jason Stewart with Compass Point.

Jason Stewart

If I could ask a question on rates. I know you talked about the cycle historically in the underlying portfolio companies performing quite well going from, say, 0 to 5%. But if I could ask you to just shift that commentary a little bit and talk about assuming normalized credit in the portfolio, forwards are realized, is this 9.5% payout on NAV indicative of a new paradigm of returns? Or are there other factors that we should be thinking about going forward in terms of spreads and funding rates? And basically, my question is, can underlying borrowers support higher rates and higher spreads? Or is this 9.5% a new paradigm?

Teddy Desloge

Yes. I'm happy to take that. Thanks for the question, Jason. I'd probably answer that in 2 ways. First, just in terms of the reset level, we mentioned that there are a couple of moving pieces in the model long term, and the level takes into account all of those pieces as we sit here today that are knowable. So again, halfway through refinancing over $3 billion of bonds that -- the impact of that likely offsets potential rate benefits from higher rates on a floating rate portfolio. We did see incentive fees lower this year due to look-back mechanism and unrealized marks that was concentrated. That was about a $0.06 benefit in the quarter.

And overall, as we think about the fundamentals, the second part of the question, what we see is now 5 consecutive quarters of over 2x interest coverage ratios. We've seen, as Brad mentioned, over half of the portfolio operate in a different paradigm than today, where rates were higher. We've generally seen larger companies operate more stable -- in more stable ways in terms of fundamentals and margin resilience through that period.

So we feel very well positioned. You also see that in nonaccruals now having declined for 2 quarters in a row. Brad also went through some of the tail stats and where we're addressing any near-term challenges that are well identified. So overall, seeing healthy growth in the portfolio as well as healthy cash flow trends, which should support our companies in a potential environment where there's deceleration of growth from higher rates.

Brad Marshall

Yes. I think the big kind of push there, Jason, is that, one, interest coverage is actually pretty good today. It's whatever, 2, 2.1x. But the economic backdrop is actually quite favorable. And it's not kind of just around kind of the AI kind of ecosystem. We're seeing broad-based kind of momentum in the economy. And that's quite supportive of our companies and is an additional kind of tailwind to their already high interest coverage that their cash flows are supporting. So we feel good about any sort of near-term rate increases and their impact on the company.

Operator

We'll take our next question from Chris Muller with Citizens Capital Markets.

Christopher Muller

Nice to be on with you this morning. It looks like you guys are picking up some yield on new investments versus what is repaying. If you guys look at your upcoming maturities versus current market pricing, do you expect that dynamic to continue?

Teddy Desloge

Yes. I think what you've seen to Brad's comments is we've been able to take advantage of a little bit of a wider spread environment this year. And that's true for both new deals as well as add-ons within the portfolio. Typically, when we're committing to a newly underwritten add-on to an existing portfolio company, we're generally able to price that in line with market. So as older vintages at lower spreads pay off, we can potentially see some upside over time to put some numbers to it. We had around a 9% yield for new versus what was repaid in the mid- to high 8s.

Brad Marshall

And Chris, as I look at the fourth quarter, I think you'll see a similar pattern to what you saw this past quarter with new investments spreads being higher than repayments from what we see today.

Christopher Muller

Got it. And then I think you guys said 3 new nonaccruals in the quarter. Are there any common themes in those like sector, geography or sponsor?

Brad Marshall

Great question. No common themes. And I would say that's consistent with the past. It's very idiosyncratic, one case, they grew the business too quickly and weren't able to manage their costs appropriately. And now we just need to kind of reset kind of the business, the base business and grow the business. By the way, not terribly dissimilar to what we're seeing in some of our other kind of health care service businesses where the sponsor goes in and tries to do a bunch of M&A and really accelerate the growth of the business because that's what kind of their focus is. And then along the way, they may kind of lose control over kind of the cost side of the business or integration, they have integration issues. So our job in those situations is pause, reset the capital structure and rebuild from a base, and that's been a pretty good playbook for us historically.

Operator

We'll take our final question from Paul Johnson with KBW.

Paul Johnson

I was just wondering if you can kind of talk to just competition from banks in the BSL market, what you've seen there? And I guess, have you seen more of, I guess, you would call them these crossover refinancing deals of any sort of borrower within the BXSL market that having potential refinancing challenges looking to kind of move over to the private credit market for capital, if that's something you've seen more of or not?

Brad Marshall

Yes. So thanks, Paul. The liquid broadly syndicated market is actually quite strong. There's not a lot of supply of new deals, but there's a lot of demand of capital that's in that market looking to deploy. So you've seen spreads kind of decline in the broadly syndicated market. So you're seeing a lot of -- I wouldn't say it's competition from the banks because the banks are just underwriting and distributing. It's more from kind of CLOs, which have a lot of appetite.

What CLOs don't have appetite for is underperforming assets. And so you've seen those assets that are typically downgraded to B3 or CCC. You've seen those kind of trade down quite a bit. Those are not assets that the private markets are looking to rescue. You do have more distressed funds that are potentially providing kind of capital solutions that may be pari or senior to the liquid loans, but those are more distressed type activities. So to summarize, the broadly syndicated market is quite strong, but only for kind of higher quality assets.

Paul Johnson

Appreciate all the additional color that you guys provided on credit metrics.

Operator

Thank you. With no additional questions in queue at this time, I'd like to turn the call back over to Stacy Wang for any additional or closing remarks.

Stacy Wang

Thank you. That concludes our call for this quarter, and we look forward to continue our dialogue next quarter. Thanks.