Crescent Capital BDC (NASDAQ:CCAP) reported fourth-quarter net investment income (NII) of $0.45 per share, down slightly from $0.46 in the prior quarter, as lower reference rates weighed on interest income. Management said results again exceeded the quarterly dividend, and the board declared a regular quarterly cash dividend of $0.42 per share for the first quarter of 2026, payable April 15, 2026, to stockholders of record as of March 31.
Quarterly results and net asset value
Net asset value (NAV) per share was $19.10 at Dec. 31, 2025, compared with $19.28 at Sept. 30. Chief Executive Officer Jason Breaux attributed the decline to unrealized losses tied to certain portfolio companies, while emphasizing that the broader portfolio remains “fundamentally healthy,” citing stable credit metrics, sponsor support, and performance in line with underwriting expectations.
Dividend coverage, spillover income, and review of earnings durability
Management discussed earnings power in the context of a shifting rate environment. Breaux said fourth-quarter NII covered the base dividend by 107% and highlighted spillover income of about $1.16 per share, which he described as nearly three times the base dividend, as additional support during the transition to lower base rates.
At the same time, Breaux said the company recognizes “earnings headwinds” across the BDC sector tied to forward rate expectations. On the question-and-answer portion of the call, President Henry Chung said management and the board are conducting a review focused on long-term earnings durability and alignment with shareholders, including:
- Evaluation of the company’s fee structure
- Assessment of the base dividend level relative to forward earnings expectations
Chung said CCAP is positioned for near-term stability given that it is currently overearning the dividend, but added the company wants to proactively adapt to a potentially lower-rate environment because its assets are predominantly floating rate. Management said it expects to provide a more detailed update in May when the company reports next quarter’s results.
Chung also said the supplemental dividend framework remains in place. However, due to the supplemental dividend’s measurement test, no supplemental dividend will be paid related to fourth-quarter earnings. In response to an analyst question, Chung confirmed the test includes a two-quarter lookback tied to NAV.
Portfolio composition, yields, and credit quality
Chung said CCAP ended 2025 with about $1.6 billion of investments at fair value across 184 companies, with an average investment size of roughly 0.6% of the portfolio. He said the portfolio is primarily first-lien loans, with first-lien representing 91% of investments at fair value at year-end. He also said 99% of the debt portfolio was sponsor-backed as of year-end and that the weighted average loan-to-value at origination was about 40%.
Chung noted that 71% of the portfolio includes covenants, which he described as an important risk management tool compared with the upper middle market or broadly syndicated loan market.
The weighted average yield on income-producing securities at cost fell 40 basis points quarter over quarter to 10%, which management attributed primarily to lower base rates after recent rate cuts. Chung added that weighted average interest coverage improved to 2.2x at year-end.
On credit quality, Chung said internal performance ratings remained stable, with a weighted average portfolio risk rating of 2.1. Investments rated 1 or 2—those performing at or above underwriting expectations—represented 86% of the portfolio at fair value, down from 87% in the prior quarter.
Non-accruals increased during the quarter, with non-accruals rising to 4.1% of debt investments at cost and 2.0% at fair value as of Dec. 31, driven by the addition of two new non-accrual investments. Chung said that in January one non-accrual investment restructured and another was fully realized via a sale, reducing pro forma non-accruals to 3.2% of debt investments at cost and 1.4% at fair value.
Investment activity and market conditions
Gross deployment in the fourth quarter totaled $71 million, including five new platform investments totaling $29 million and $42 million of add-on investments in existing portfolio companies. The new platform investments were loans to private equity-backed companies with a weighted average spread of about 490 basis points, and Crescent served as lead or agent on all of them, Chung said.
Exits, sales, and repayments totaled about $78 million, resulting in net realizations of about $7 million for the quarter.
On the call, management discussed a realized gain related to an investment sold during the quarter. Chung said an investment previously on non-accrual—MCS—was realized above cost basis and closed during the fourth quarter. On unrealized losses, Chung said the largest drivers were the two investments placed on non-accrual during the quarter, Generate and Transportation Insight, with Transportation Insight tied to continued challenges in the third-party logistics sector.
Management also addressed capital allocation between new investments and share repurchases. Chung said the company’s buyback program remains in place and that CCAP has been repurchasing shares, but management balances buybacks against the attractiveness of the investment pipeline and the goal of generating durable long-term income through private credit investments.
Breaux described an increasingly competitive private credit market, citing strong capital formation and more lenders competing for sponsor-backed deals, which has contributed to tighter spreads and evolving deal structures. Chung said spreads for high-quality first-lien assets have been largely stable in the 475 to 500 basis point range over SOFR over the past three to four quarters, while noting that deal activity appeared to pick up late in the fourth quarter and in early 2026.
Balance sheet, leverage, and refinancing activity
Chief Financial Officer Gerhard Lombard said the investment portfolio totaled $1.6 billion at fair value at year-end, consistent with the prior quarter, with total net assets of $706 million. He reported a quarter-end debt-to-equity ratio of 1.25x, or 1.2x net of cash, within the company’s stated 1.1x to 1.3x target range.
Lombard also discussed unsecured debt refinancing. He said CCAP in October priced $185 million of senior unsecured notes across three tranches with a delayed draw feature intended to align proceeds with the 2026 maturity schedule and limit negative carry. The first two tranches totaling $135 million closed Feb. 17, and the final $50 million tranche is expected to fund in May ahead of additional 2026 maturities. Pro forma for this activity, Lombard said more than 90% of committed debt now matures in 2028 or later.
Liquidity at year-end included $242 million of undrawn capacity, subject to leverage and other restrictions, and more than $30 million of cash and cash equivalents, Lombard said. The weighted average stated interest rate on total borrowings was 5.83% at year-end, down from 5.99% in the prior quarter.
In closing remarks, Breaux said CCAP enters 2026 “from a position of strength,” pointing to diversification, first-lien exposure, sponsor support, extended liability duration, and preserved liquidity. Management said it plans to provide further updates during its next earnings report in May.
About Crescent Capital BDC (NASDAQ:CCAP)
Crescent Capital BDC, Inc is a closed-end, externally managed business development company that provides flexible financing solutions to middle market companies in the United States. Trading on the Nasdaq under the ticker CCAP, the firm offers investors exposure to a diversified portfolio of debt and equity instruments, targeting businesses with attractive risk-adjusted return profiles. Its primary objective is to generate current income through interest payments and potential capital appreciation via selective equity co-investments.
The company’s investment strategy emphasizes senior secured loans, unsecured second-lien loans, mezzanine debt, as well as preferred and common equity co-investments.
