Blackstone Secured Lending

BXSL

Market cap $5.41B

We take a look at the action in business development companies through the fourth week of May and highlight some of the key themes we are watching. BDC sector saw a -2.5% average return this week, with sentiment and valuations near 1-year lows despite stable credit metrics. Median NII declined nearly 6% in Q1, but the downward trend is expected to moderate as spreads widen and deal activity recovers.

April net investment activity reached a multi-year low as rising stock valuations and BDC sector weakness prompted a cautious approach and selective BDC purchases. Focused April allocations on Ares Capital, Blue Owl Capital, and Hercules Capital, yielding a 7.5% average on new investments despite sector headwinds. Dividend income set a modest April record at $990, up 3% year-over-year, with BDCs contributing 27% of Q2 year-to-date dividends but facing potential further cuts.

There is a principle I have followed for 30 years in this business. When the smartest credit team on the planet starts aggressively buying a beaten-down asset class they understand better than anyone alive, you do not sit on your hands and debate whether the timing is perfect.

Passive income is characterized by its ability to generate revenue without requiring the earner's continuous active effort, making it a desirable financial strategy for those seeking to diversify their income streams or achieve financial independence.

The BDC sector has been hit hard since July 2025. However, I think the tide may be about to turn with a bright future ahead for some companies in the sector. I share which BDC names I think are poised to outperform moving forward.

More than 1,500 stocks have reported earnings since the current season began in mid-April, and the average stock that has reported has seen an average absolute one-day share price reaction of roughly 7%. The last time we saw earnings vol spike was during the Financial Crisis bear market, when stocks were tanking. This time around, we're seeing earnings vol increase during a strong AI-driven bull market. Tech stocks are seeing record earnings day volatility as investors and traders presumably make snap judgements about AI's future impact on the bottom line.

These shares offer big yields but far more stability than investors expect. Recent market downturns enabled attractive entry points for big yields with capital gains. It's best to prepare for these opportunities in advance. Because we were already evaluating these shares regularly, we were able to jump on opportunities during the big dip.

I love buying high-yield stocks on sale. However, not all high-yield stocks are buys on the dip. I detail one compelling high-yield stock to buy after a big pullback and one high-yield stock that looks like a yield trap.

Blackstone Secured Lending faces mounting risks with sequential declines in net investment income and NAV and a sharp rise in non-accruals. BXSL's dividend coverage dropped to 100%, and non-accruals surged from 0.6% to 4.7%, signaling deteriorating credit quality. Despite a 12.6% yield and 7.3% NAV discount, I see no near-term catalysts and expect a potential 9–10% dividend cut before year-end.

Blackstone Secured Lending Fund. (BXSL) Q1 2026 Earnings Call Transcript