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Net investment income rose to $0.46 per share, its highest level in five years, covering the $0.40 quarterly dividend by 115%. The board declared another $0.40 dividend for the fourth quarter, while providing no guidance on the 2027 payout.
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Credit issues weighed on net asset value, which fell to $15.71 per share from $16.00, and non-accruals increased to 3.6% of debt investments at fair value. More than 70% of quarterly investment losses came from three portfolio companies; management described the problems as company-specific.
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The portfolio totaled $2.2 billion across 100 companies, with 93% in first-lien senior secured investments. Kayne Anderson ended the quarter with $508.7 million in liquidity and leverage of 1.17 times debt-to-equity.
Kayne Anderson BDC (NYSE:KBDC) reported higher third-quarter investment income and maintained its quarterly dividend, even as credit problems in several portfolio companies weighed on net asset value and pushed non-accruals higher.
The business development company generated net investment income of $0.46 per share for the third quarter of 2026, up from $0.42 in the preceding quarter and its highest level in five years, Co-CEO Doug Goodwillie said. Net investment income covered the $0.40 quarterly dividend by 115%.
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The board declared a fourth-quarter dividend of $0.40 per share, payable Jan. 19, 2027, to shareholders of record on Dec. 31, 2026. Kayne Anderson had approximately $0.32 per share in undistributed net investment income as of Sept. 30.
Goodwillie said management remained confident in its ability to maintain the base dividend, citing portfolio spreads and expectations for higher interest rates. Co-CEO Ken Leonard cautioned that the board had not provided approval or guidance for a 2027 dividend. He said third-quarter net investment income comfortably exceeded the dividend even excluding $1.7 million of non-recurring income.
Credit Issues Pressure Net Asset Value
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Net asset value fell to $15.71 per share from $16.00 at the end of the second quarter. The $0.29 decline reflected $0.36 per share in net realized and unrealized losses, partly offset by income above the dividend and the benefit of share repurchases.
Goodwillie said more than 70% of the quarter’s net realized and unrealized losses came from three investments: American Soccer, Centerline Communications and Seagull Egg. He characterized their difficulties as company-specific rather than evidence of a broader credit problem, while acknowledging that the watch list and non-accruals were elevated compared with historical levels.
