베어링스 BDC(BBDC) 2026년 3분기 실적 발표 콘퍼런스콜: 안정적인 NAV, 4억 달러 규모 CLO 리파이낸싱

베어링스 BDC(Barings BDC, NYSE: BBDC)가 2026년 3분기에 안정적인 순자산가치와 배당금 전액 충당을 기록했다고 발표했다. 포트폴리오 성장으로 레버리지가 경영진의 목표 범위 상단에 근접한 한편, 신규 4억 달러 규모의 CLO 조달을 통해 단기 내 만기가 도래하는 최대 규모의 부채에 대응했다.

핵심 요약

• 2026년 9월 30일 기준 주당 순자산가치는 10.92달러로, 6월 30일의 10.94달러 대비 소폭 하락했다.
• 순투자소득은 2,720만 달러(주당 0.26달러)로, 분기 배당금인 주당 0.26달러를 전액 충당했다.
• BBDC는 1억 9,600만 달러의 투자를 집행하고 1억 4,600만 달러의 매각 및 상환을 기록해 약 5,000만 달러의 포트폴리오 순성장을 달성했다.
• 투자 포트폴리오는 공정가치 기준 약 25억 달러에 달했다. 채무증권 및 기타 수익증권에 대한 가중평균 수익률은 10.2%를 유지했다.
• 공정가치 기준 미수익자산 비율은 포트폴리오의 1.1%로 상승했다. 시에라(Sierra) 인수를 통해 취득하고 신용지원계약의 적용을 받는 자산을 제외하면 이 비율은 0.7%였다.
• 분기 종료 후 BBDC는 11월 23일 만기가 도래하는 3.3% 무담보 채권 3억 5,000만 달러를 상환하기 위해 4억 달러 규모의 CLO 조달 조건을 확정했다.

주요 재무 데이터

사업 및 영업 실적

해당 분기 신규 투자의 가중평균 스프레드는 541bp로, 상환된 자산의 스프레드인 540bp와 거의 일치했다. 분기 종료 이후 BBDC는 대부분 선순위 담보대출로 구성된 투자를 가중평균 수익률 9.1%에 7,360만 달러 추가 집행했다.

경영진은 초대형주(메가캡) 부문보다 상대적 가치가 더 우수하다고 판단되는 핵심 중견기업 시장에 주력하고 있다고 밝혔다. 포트폴리오는 주로 선순위 담보 및 변동금리 구조이며, 자산의 93%가 변동금리 조건이다.

거시경제적 불확실성 속에서 바이아웃 거래 성사율은 역사적 저점 부근에 머물렀다. 경영진은 거래 환경 둔화로 인해 대출 상환 역시 제한되면서 기존 차주로부터의 경상 수익이 유지되고 추가 투자 기회가 창출되고 있다고 설명했다.

위험 등급 변동은 완만했다. 가장 심각한 스트레스 등급에 해당하는 4등급 및 5등급 투자는 전분기 6%에서 포트폴리오의 7%로 소폭 상승했다. BBDC 투자의 약 90%는 베어링스가 주간사 또는 공동 주간 대출기관으로 참여하여 개시되었으며, 이를 통해 대출 조건 변경 및 워크아웃 과정에서 플랫폼의 영향력을 높이고 있다.

경영진 전망

이사회는 4분기 배당금을 주당 0.26달러로 동결하기로 결정했다. 경영진은 해당 잔액이 연말까지 줄어들 것으로 예상되지만, 포트폴리오 수익과 주당 약 0.80달러의 이월 소득이 배당금 지급을 지속적으로 뒷받침하고 있다고 밝혔다.

BBDC는 4분기 중 순레버리지가 약 1.15배~1.16배 수준으로 낮아질 것으로 예상하고 있다. 이러한 감소는 대출 상환과 합작투자회사(JV)로의 잠재적 포트폴리오 매각을 통해 이루어질 것으로 전망된다.

경영진의 기본 시나리오는 4분기 투자 스프레드가 3분기 수준을 유지하는 것이다. 다만 한정된 수의 차입매수(LBO) 거래를 둘러싼 경쟁 심화로 인해 2026년 말이나 2027년 초까지 스프레드가 완만하게 축소될 수 있음을 인정했다.

회사는 또한 이르면 2027년 1분기에 시큐리티 홀딩스(Security Holdings)에서 엑시트하는 방안을 검토 중이다. 경영진은 비수익 지분 포지션에서 회수한 자금을 수익 창출 자산에 재투자할 경우 높아진 리파이낸싱 비용을 상쇄하는 데 도움이 될 수 있다고 설명했다.

위험 요인 및 주시 분야

신규 CLO의 가중평균 금리는 SOFR+164bp로, 차환 대상 채권의 고정금리 3.3%를 크게 웃돈다. 경영진은 변동금리 포트폴리오와 시큐리티 홀딩스 매각 대금의 잠재적 재투자가 이러한 금리 상승분을 흡수하는 데 도움이 될 것으로 기대하면서도, 향후 신용 문제가 발생할 경우 배당 여력에 영향을 미칠 수 있다고 밝혔다. 회사는 배당금을 지키기 위해 순자산가치(NAV)를 훼손하기보다는 필요시 배당금을 삭감할 것이라고 설명했다.

현물지급이자(PIK) 수익도 증가했다. 경영진은 이러한 증가의 상당 부분이 플로리다주의 보험료 하락으로 타격을 입은 비표준 자동차 보험사 폴리시 서비스(Policy Services) 때문이라고 설명했다. BBDC는 해당 차주가 대응 방안을 검토하는 동안 유동성을 확보할 수 있도록 분기 중 이자를 현물(PIK)로 납부하도록 허용했다. 전체 PIK 수익의 약 60%는 대출 개시 당시 설정된 조건이었으며, 40%는 신용 문제가 발생한 차주와의 조건 변경에서 비롯되었다.

사모펀드의 보유 기간 장기화와 이른바 '좀비 펀드' 문제도 지속적인 우려 요인이다. 경영진은 투자 성과가 스폰서의 가용 자본, 운용 역량, 포트폴리오 기업 지원 의지에 갈수록 더 크게 좌우되고 있다고 말했다. 다가오는 2028년과 2029년의 만기 도래 집중(maturity wall)으로 인해 만기 연장, 리파이낸싱 또는 보다 적극적인 워크아웃이 필요할 수 있다.

BBDC는 또한 포트폴리오 내에 AI 파급 효과에 대한 직접적인 노출이 제한적이라고 밝혔다. 경영진은 BBDC의 중견기업 기업여신 투자 범위 내에서 네오클라우드(neocloud) 발행사, 반도체 자산담보부 금융, 데이터센터 부동산 등과 같은 특화된 AI 관련 전략을 추구할 계획이 없다고 설명했다.

애널리스트 질의응답 주요 내용

• 배당 지속가능성: 경영진은 CLO 거래 이후 리파이낸싱 비용이 상승할 것으로 예상하면서도, 변동금리 자산 수익과 시큐리티 홀딩스 매각 대금의 잠재적 재투자를 통해 이를 상쇄할 수 있을 것으로 보고 있다. 신용 악화는 여전히 배당에 대한 주요 하방 위험 요인이다.
• 레버리지: BBDC는 매력적인 투자 기회와 예상 상환액에 대한 가시성 덕분에 3분기 동안 의도적으로 레버리지 목표 범위 상단 부근에서 운용했다. 경영진은 연말까지 약 1.15배~1.16배 수준을 목표로 하고 있다.
• PIK 수익: 폴리시 서비스(Policy Services)가 분기 증가세를 견인한 주요 요인이었다. 경영진은 해당 차주의 시장을 경기순환적이라고 평가하며, 유동성 보존을 위해 PIK 납부를 허용했다.
• ECLIPSE 투자: 경영진은 ECLIPSE를 장기적이고 경기역행적인 자산담보대출 익스포저로 지속 평가하고 있다. BBDC는 현재 해당 포지션의 규모를 확대할 계획이 없다.
• 대출기관 통제력: 베어링스는 BBDC 투자의 약 90%에서 주간사 또는 공동 주간사 역할을 맡고 있으며, 경영진은 이것이 조건 변경, 만기 연장 및 회수 결과에 미치는 영향력을 높여준다고 보고 있다.

실적 발표 콘퍼런스콜 전문

전체 실적 발표 컨퍼런스 콜 녹취록

경영진 발표

Operator

At this time, I would like to welcome everyone to the Barings BDC, Inc. conference call for the quarter ended September 30, 2026. [Operator Instructions] Today's call is being recorded, and a replay will be available approximately 2 hours after the conclusion of the call on the company's website under the Investor Relations section.

Please note that this call may contain forward-looking statements that include statements regarding the company's goals, beliefs, strategies, future operating. Although the company believes these statements are reasonable, actual results could differ materially from those projected in forward-looking statements. These statements are based on various underlying assumptions and are subject to numerous uncertainties and risks, including those disclosed under the sections titled Risk Factors and Forward-Looking Statements in the company's quarterly report on Form 10-Q for the quarter ended September 30, 2026, and in other filings made with the Securities and Exchange Commission. Barings BDC undertakes no obligation to update or revise any forward-looking statements unless required by law.

I will now turn the call over to Tom McDonnell, Chief Executive Officer of Barings BDC.

Thomas McDonnell

Thanks, operator, and good morning, everyone. On the call today, I'm joined by Barings BDC's President and Co-Portfolio Manager; Matt Freund; and BBDC's Chief Financial Officer and Chief Operating Officer, Elizabeth Murray. I will begin with a brief overview of the quarter and then frame how we are viewing the market. Matt will follow with a more detailed discussion of the private credit environment, and Elizabeth will walk through our financial results.

Net asset value per share was $10.92 as of September 30, largely unchanged from $10.94 as of June 30. We remain active on the deployment front during the quarter. BBDC funded $196 million of investments, including 20 new portfolio companies and had $146 million of sales and repayments, resulting in net portfolio growth of approximately $50 million. The investment portfolio increased to approximately $2.5 billion at fair value, and the weighted average yield on debt and other income-producing securities was 10.2%, flat compared to the prior quarter. All told, the combination of a largely stable NAV and the strength of the underlying earnings profile of the portfolio produced a strong quarter.

During the quarter, we also continued to strengthen the balance sheet. Subsequent to quarter end, we addressed our November notes maturity ahead of schedule with a new CLO financing. Elizabeth will take you through the details, but I want to put it in context. Over the past several years, we have deliberately built the capital structure designed to hold up through a full cycle. A latter maturity profile access to multiple funding markets and revolver capacity to support our borrowers and pipeline. With this transaction behind us, our team can stay focused on investing and portfolio management.

Credit performance remains a key area of focus across the private credit market. For BBDC, nonaccruals increased modestly this quarter. But when excluding assets covered by the Sierra CSA, nonaccruals remain below 1% of the portfolio at fair value at 0.7%, and weighted average interest coverage remains healthy at 2.6x. We are actively managing each of these situations with a focus on maximizing recoveries.

One of the themes we have emphasized this year has been our expectation of greater manager dispersion in private credit. And we believe that dispersion is now clearly underway. For several years, abundant capital and benign credit backdrop allowed most managers to post similar results, masking meaningful differences in underwriting discipline. That is changing. As idiosyncratic credit issues surface and sponsors extend hold periods, differences in nonaccrual trends, NAV stability, dividend coverage and recovery outcomes are becoming more visible across the industry, and we expect that gap to widen as the cycle matures. Manager selection, underwriting, portfolio construction and workout experience matters.

In our views, the managers have performed from here will be distinguished by a few things. The quality of underwriting and documentation at origination, the depth of sponsor relationships when portfolio companies need additional support, disciplined diversification and position sizing and the experience and resources to work through stressed credits when they arise. These are not capabilities that can be built quickly in response to a turn in the cycle. Barings has invested through multiple credit cycles and the credit metrics I just described reflect that approach. We believe investors will increasingly differentiate between managers on these factors and that BBDC will benefit from that scrutiny.

With that overview, I will turn the call over to Matt to discuss the market backdrop and the BDC portfolio in more detail.

Matthew Freund

Thanks, Tom. After our first half of 2026 marked by a heightened scrutiny of private credit, investors are coming back to direct lending. The reasons are simple, and are the same ones that have drawn capital to the asset class for years, attractive income, diversification and defensive characteristics. Capital formation across the Barings platform was strong in the third quarter.

As BBDC shareholders know, we focus on the core of the middle market. We believe this segment is less competitive than the mega cap segment that has drawn so much attention during the past few years. Pricing in our core area of focus continue to offer compelling relative value compared to other credit strategies. New investments in the third quarter carried a weighted average spread of 541 basis points, in line with 540 basis points on repayments. That momentum has continued in the fourth quarter. And since quarter end, we have closed and funded $73.6 million of new investments, almost entirely first lien at a weighted average yield of 9.1%.

The scale of our existing portfolio and the breadth of our origination platform give us confidence that we can keep finding compelling risk-adjusted returns. The Barings Global Private Finance platform has deployed more capital year-to-date than it has at this point in 2025. Even so, buyout close rates are still near all-time lows as an uncertain macro backdrop keeps buyers cautious. Our pipeline is robust, but we expect the share of deals that close to stay low by historical standards. There is an upside to this dynamic. Slower deal activity also means lower repayments, which gives us a stable base of existing issuers. Our incumbent positions become a durable source of income and add-on opportunities.

Like many in our industry, we are paying close attention to private equity hold period and the rise of so-called zombie funds. In this environment, the quality of the sponsor matters more than ever. When an exit flips by 2 or 3 years, the outcome depends on whether the sponsor has capital, operating resources and willingness to keep supporting the company. It also depends on whether we have the kind of relationship that allows candid early conversations when plans change. Our portfolio is built around sponsors we have worked with through multiple cycles and that history is often what separates a constructive amendment from a contentious workout. In many instances, extending maturities to align with a sponsor's extended hold horizon may create an optimal outcome for all parties, but that is not always the case.

As we approach the maturity walls of 2028 and 2029, investors will be closely evaluating how lenders engage on these opportunities. Underlying all of this, our decisions at Barings start with capital preservation. Our portfolio continues to highlight why selectivity matters. Risk rating migration was modest this quarter. Investments rated 4 and 5, which is where we see the most stress, rose slightly to 7% of the portfolio from 6% last quarter. As Tom mentioned, weighted average interest coverage remained healthy at 2.6x. Nonaccruals ticked up modestly to 11 portfolio companies or 1.1% of the portfolio at fair value.

Excluding nonaccrual assets acquired in the Sierra transaction, which are covered by a credit support agreement, nonaccruals were 0.7% at fair value. We don't want to minimize the work these underperforming positions require. We are actively managing each of them with a focus on maximizing recoveries, preserving optionality and protecting shareholder value. AI remains a focus for our investors in every asset class. Early questions about direct lending centered on the stress and volatility AI could create for existing borrowers. As we said before, our internal analysis and discussions with industry experts show that BBDC's portfolio has very limited direct exposure to AI disruption. The longer-term effects on every industry are still unclear, but we are comfortable with the direct AI exposure and our current issuer base.

More recently, investors have asked whether we would pursue AI-related investments such as needle cloud issuers, ABS chip financing and data center real estate within the context of BBDC. To be clear, we do not believe that these strategies fit within BBDC's expected guidelines. BBDC exists to provide corporate credit exposure to middle market companies and the opportunity within that mandate is enormous. There are certainly attractive investments in the AI ecosystem, but investors should not look to BBDC for that risk profile.

To sum up, credit requires active management, and we remain focused on a small number of specific situations. Overall, the portfolio is diversified senior secured floating rate and positioned to generate attractive current income.

And with that, I will turn the call over to Elizabeth.

Elizabeth Murray

Thanks, Matt. As Tom mentioned, the third quarter was a steady one. And subsequent to quarter end, we took a significant step in our liability management strategy with the pricing of a $400 million CLO financing, which I will cover in some detail. I'll begin with our financial results and key balance sheet metrics for the third quarter.

Turning first to our results. NAV per share at September 30 was $10.92 and compared to $10.94 at June 30. The modest decline was driven by net realized losses of approximately $0.05, partially offset by net unrealized appreciation of approximately $0.02 per share while NII fully covered the dividend. Net investment income was $27.2 million or $0.26 per share compared to $0.28 last quarter. The decrease is primarily due to lower dividend income from certain equity positions that made elevated distributions in the second quarter and an increase in the income-based incentive fee.

NII of $0.26 per share covered our third quarter dividend of $0.26 per share, and year-to-date, NII has fully covered our dividend. We continue to maintain undistributed taxable deliver income of approximately $0.80 per share, and our Board declared a fourth quarter dividend of $0.26 per share, unchanged from the prior quarter. Looking ahead, we believe that the dividend remains well supported. Our predominantly floating rate portfolio benefits from the recent rise in base rates, which we expect to help offset the higher cost of refinancing or 3.3% notes.

Together with our spillover income, we believe we are well positioned to maintain this $0.26 quarterly dividend, and we'll continue to evaluate dividend levels as conditions evolve.

Moving to portfolio valuations and realized activity, net realized losses for the quarter were primarily associated with the exit of Varian and Biolam were largely offset by the reversal of previously reported unrealized depreciation. Net unrealized appreciation reflects gains in our foreign currency positions and hedges, which more than offset modest net depreciation on the portfolio, including markdowns on a small number of names.

Turning now to the CLO financing that Tom mentioned. As many investors are focused on our $350 million of 3.3% unsecured notes mature on November 23. On October 30, we priced a $400 million DLA financing, which we intend to use to fund the repayment of those notes at maturity. The CLO is expected to close mid-November and the floating rate notes carrying a weighted average interest rate of SOFR plus 164. Strategically, the transaction remains our largest near-term refinancing risk ahead of maturity as long-dated floating rig funding that is well matched to our 93% floating rate portfolio, diversifies our funding base and preserves revolver capacity for new investments and unfunded commitments. Because the 3.3% notes were issued at a very different rate environment, any refinancing will carry a higher cost. We believe the CLO is attractive relative to the alternatives available today.

Turning to the balance sheet. We ended the quarter with net leverage, which is defined as regulatory leverage net of unrestricted cash and net unsettled transactions of 1.24x and up from 1.18x at June 30, driven by net portfolio growth during the quarter as we funded $196 million of investments against $146 million for payments and sales. Leverage remains within our target range of 0.9x to 1.25x. We were comfortable operating toward the upper end of the range this quarter given the attractive investment opportunities we were seeing. And because we have visibility into a repayment pipeline, that we expected to be weighted toward year-end.

Looking ahead, we expect leverage to move back toward the middle of our target range by year-end driven by anticipated sales of portfolio investments to our joint venture with Dakas and expected repayments. Approximately 77% of our debt was unsecured at quarter end. That percentage will decline as we address our maturities to approximately 53% pro forma for the CLA. We believe that trade-off is the right one. And following the refinancing, our next maturity will not be until November 2027.

In closing, the third quarter delivered stable earnings in NAV with the pricing of our CLA, we have addressed our November maturity while further diversifying our funding sources. We believe our balance sheet is well positioned as we head into 2027.

And with that, I'll turn the call back to the operator.

Operator

[Operator Instructions] Our first question today is coming from Robert Dodd from Raymond James.

질의응답

Robert Dodd

Congrats on the quarter, I mean, a very nice stable quarter. No surprises what BBDC investors want to see. A couple of questions. [indiscernible] really well, it's a quarter, but kind of topics you brought up. I think Matt said that sometimes it makes sense to extend the maturity on an outstanding loan to match up to the expected kind of exit for a sponsor, which makes a lot of sense, right? You don't want to extend beyond the sponsor's fund life necessarily or be sure. I mean how would you characterize the portfolio maturities today versus the expected sponsor fund life?

Because that also kind of ties in with 1 of your comments, Tom, the strength of the sponsor relationship and do they actually have the capital to support a business if it has issues. I mean it's all that together in the same kind of concept of where are you relative to the equity holder in the positions just like expected life in the portfolio. And that was a bit of a rampant question.

Matthew Freund

Yes. Robert, thanks for the question. I appreciate you dialing in this morning. And so I think that you're touching on a theme that is very top of mind for us as we evaluate any request to modify the duration of an existing position. And so maybe let me just offer a couple of statistics for you to reinforce how we're thinking about that. And so within the BBDC portfolio, approximately 8% of the underlying investments have a stated maturity. The largest 1 is actually an affiliate in security holdings. And so obviously, we have a lot of control over that structure itself. And then as we kick through the other hands full, we have reasons to believe that either sale processes are underway and/or the sponsors are looking on refinancing options where we've declined to provide incremental flexibility.

And so it's something that is incredibly important for us as we think about managing the duration of the book as well as candidly working towards a credit risk profile that we think is appropriate for our underlying LPs. And as part of that evaluation, the underlying fund life, the sponsor characteristics, where the sponsors are in their fundraising capacities, all inform the degree of receptivity that we have whenever these kinds of requests are making their way through our respective committees.

Robert Dodd

Got it. That's very helpful. Another 1 also kind of related to a comment made rather than the actual quarter. On the diversification side, obviously, the BBDC portfolio is not generally the control investor. That doesn't mean bearing system though, right? So could you give us any color? I mean, obviously, as you point out, credit trends are kind of, I think, going to be the key diversifier over the next several years and being in control of a process or at very least, being at the top table on a process can have a significant influence on an outcome there. So what proportion of the portfolio today, and I probably knew this 2 years ago, but what proportion of the portfolio today, are you bearing not necessarily BBDC, the control investor or control lender in a position. .

Thomas McDonnell

Yes, Robert. Yes, roughly 90% of our investments were either the lead or co-lead. And you're exactly right, being in that position, it does allow us to, in effect, somewhat control the outcome and help us inform decisions as to whether or not we want to extend the runway for the sponsor, et cetera. So I think, again, that's extremely important as we work through some of these situations and certainly being in that position gives us, like I said, that element of control, which we think is really important as we move forward.

Robert Dodd

Got it. I appreciate it. And again, congrats on the quarter. .

Thomas McDonnell

Thank you.

Operator

Your next question today is coming from Finian O'Shea from Wells Fargo.

Finian O'Shea

I wanted to ask about ECLIPSE. It's a several -- 5 to 10 or so years, I think, since you bought it from another private equity firm just seeing where that sort of is and it's sort of half-life under your stewardship. Is it something you continue to seek to grow over the long term or maybe move out of?

Thomas McDonnell

Yes. Fin, great question. I appreciate you dialing in this morning. So ECLIPSE, the reason that ECLIPSE exists within this portfolio is to provide a combination of compelling kind of risk-adjusted return to the underlying shareholders, but also to provide a little bit of countercyclical exposure in the context of cash flow lending. It's longer in our belief that asset-based strategies are likely to outperform if and when broad-based cash flow strategy experienced a little bit of a wobble. And we have seen that in origination pipelines of the respective business units over the course of the past couple of years, where whenever we start to experience periods of economic volatility, Eclipse has really attractive opportunities for deployment. And perhaps interestingly, we're on the precipice of 1 of those periods now based on recent conversations we've had with the management team there.

In terms of our expected hold horizon, it's an asset that we have long patched as being willing and able to hold into perpetuity. I do think that over periods of time, different shareholder expectations they evolve and different return expectations on a forward basis may change. But as we sit here today, in October of 2026, we don't have any change of our plans with respect to the ownership structure as it exists.

Matthew Freund

Yes. Fin, I would just say we don't expect our investment there to increase in size. So it's going to be a sizable position here. But again, it's been 1 that's been a great performer for us, but not 1 we intend on increasing exposure and BBDC with.

Finian O'Shea

Okay. Great. Can you guys update us on your spillover?

Elizabeth Murray

Yes, Fin, the spillover this quarter is about $0.80. And I anticipate that will likely decrease as we're heading at year-end. But we feel comfortable with where it is. And it's something that we monitor, but we feel comfortable with where it is and comfortable with where our dividend is at this point.

Finian O'Shea

How will it decrease? .

Elizabeth Murray

There's just some various book-to-tax differences relative to our 2025 return that will flow through in the fourth quarter.

Operator

[Operator Instructions] Our next question is coming from Jason Stewart from Compass Point.

Jason Stewart

In terms of leverage and portfolio repayment activity, I guess just wondered if you could clarify, I get about $0.01 of fee income from repayments in the third quarter, that seems right to you. If you could just clarify that. And then is it your expectation that repayment activity is going to stay somewhat elevated in the fourth quarter? Or do you see opportunities for back leverage to bring leverage down? .

Thomas McDonnell

Yes. No. So I think, yes, we do expect repayments in the fourth quarter to be basically flat at this point. So we did run leverage a little higher in the third quarter, as you can see there. that was done on purpose with visibility towards a flattish repayment. We also, as you know, have the ability to sell loans down to [indiscernible] and we did not do that in the third quarter. we anticipate likely doing that in the fourth quarter. So as we've stated our target leverage, we look to bring that down probably to the 1.15, 1.16x as we move through the fourth quarter, something very similar that we did last year at this time as well.

Jason Stewart

Okay. And then just looking at spreads on new investments versus repayments that were basically flat this quarter. Any thoughts on where that's trending into the end of the year?

Thomas McDonnell

Yes. I think that if we look at the trended spreads over the course of the past 6 quarters, there was certainly an opportunity for more spread in Q1 and Q2 in light of broader private credit volatility. And I would say that, that has started to normalize in Q3. Our base case at this point is going to be that spread levels look very similar in Q4 as they did this particular quarter, but I would acknowledge that it wouldn't surprise me if a limited amount of LBO activity increases a bit of competition, and we could see a little bit of a narrowing of spreads as we move into the end of the year and the beginning of 2027. But very few data points to evidence that at this stage.

Operator

Next question is coming from Derek Hewett from Bank of America.

Derek Hewett

So PIC increased about to 10% of revenue from a little over 7% last quarter. Could you provide any additional color on that movement? And then just overall, what percentage of PIC revenue was built into the original underwrite versus amendment PIC?

Matthew Freund

Yes, sure. Thanks, Derek. Yes. And so really that for us really results from 1 investment called Policy Services. It's a nonstandard auto insurer investment that we have. And really, the market for that is primarily based in Florida. So just seeing a real softening in the rates that they charge on their insurance policies. It's really had an impact on the company's revenue and EBITDA line items. And we made the decision to allow them to pick interest for that third quarter in an effort to preserve liquidity and evaluate some of our options there. So we thought that was the prudent thing to do.

I will note that company in that market has a 40-year history of having a balance of volatility, if you will. And so quite a cyclical industry, and we do believe, ultimately, we feel like we bottomed out in terms of rate and win rate and buying rate there, and we do believe ultimately that, that will come back. But we thought it would be the prudent thing to do to have that go on pick for the quarter as we evaluate our options.

And then in terms of your question on, I think you're probably referring to whether good PIC, bad PIC overall the portfolio. Roughly 60% of the PIC in that line item is that which was structured at origination. And I would say 40% of that line item will be things we've had to do in terms of working with some of our investments that had credit issues. And so called out a kind of a 60-40 split between good and bad PIC.

Derek Hewett

Okay. And in terms of my follow-up, could you provide additional color on the dividend sustainability, just given that you're going to have some headwinds from a funding cost perspective as those low-cost bonds get refinanced? And then also in your analysis, are you assuming any additional movements in SOFR?

Elizabeth Murray

Yes. So Derek, it's a great question. It's something that we're spending a lot of time on currently with our modeling. And yes, good point top of mind for me is the fact that our funding costs do increase because we're moving from a 3.3% fixed to closer to SOFR to $1.64. The other thing that we're taking into account that both Matt and Tom have discussed in the past is the fact that we're in the process and looking to exit security holdings likely in the first quarter of 2027. And that currently is a big equity position that really doesn't generate any income producing it's not really income producing.

And so as that we're able to turn around and invest that into income-producing assets, that should help offset the higher funding cost. At the same time, if there are credit issues of any kind in the future, that could impact the dividend this point, we don't anticipate that. But if there are any -- and to your point, we do believe the uplift and where rates are going, could have a positive impact. I say all this that if for whatever reason there are credit issues, we will not we will decrease the dividend if we have to. We will not eat into NAV just to preserve a dividend.

Operator

We have reached the end of our question-and-answer session. I'd like to turn the floor back over to Tom for any further closing comments.

Thomas McDonnell

All right. Thank you, operator, and thank you to everyone for joining us today. This was a quarter in which we earned our dividend, kept NAV stable addressed our largest debt maturity ahead of schedule. We believe the dispersion emerging across private credit will increasingly reward disciplined managers, and we intend to be 1 of them. We look forward to updating you next quarter.

Operator

Thank you. That does conclude today's teleconference. You may disconnect your lines at this time, and have a wonderful day. We thank you for your participation today.