Carlyle Secured Lending, Inc. (CGBD): BCG Matrix [Dec-2025 Updated]

You're looking at Carlyle Secured Lending, Inc.'s portfolio right now, and honestly, it's a mixed picture as we map their $2.4$ billion investment base using the classic BCG Matrix for late 2025. While the core business is a solid Cash Cow, consistently generating income that cushions the $0.40$ quarterly dividend with $0.86$ in spillover, we see clear Stars in their strategic shift to 85.7% first-lien debt and high-yield JV activity. Still, the Question Marks are real: management sees an earnings trough coming, and new loan spreads are tight at a weighted average yield of just 9.5%, even as non-accruals remain a small 1.0% Dog. Dive in below to see exactly where Carlyle Secured Lending, Inc. needs to invest, hold, or manage risk across these four quadrants.

Background of Carlyle Secured Lending, Inc. (CGBD)

You're looking at Carlyle Secured Lending, Inc. (CGBD), which is an externally managed specialty finance company. Honestly, its main gig is lending money to middle-market companies in the U.S. for current income and potential capital appreciation. This firm is managed by Carlyle Global Credit Investment Management L.L.C., which is part of the much larger The Carlyle Group Inc. organization.

CGBD has elected to be regulated as a business development company, or BDC, under the Investment Company Act of 1940. Its investment mandate is pretty focused: debt investments in those middle-market firms. Specifically, they target first lien debt, senior secured loans, and they also dabble in second lien senior secured debt, mezzanine debt, and some equity investments.

As of the end of the third quarter of 2025, the total fair value of Carlyle Secured Lending, Inc.'s investments had grown to about $2.4 billion. That portfolio was spread across 158 different companies. To give you a sense of their risk posture, 95% of their investments were in senior secured loans by Q3 2025, with first lien debt making up 85.7% of that exposure. That's a defintely defensive stance for this market.

Financially, for the third quarter of 2025, Carlyle Secured Lending, Inc. reported Net Investment Income (NII) per share of $0.37 on a GAAP basis, or $0.38 when adjusted for asset acquisition accounting. The Net Asset Value (NAV) per common share settled at $16.36 on September 30, 2025. The Board declared a quarterly dividend of $0.40 per share for the fourth quarter of 2025, which translates to an annualized payout of $1.60 and offered a yield of over 12% based on recent share prices. Still, you should note the payout ratio was running high at 135.59%.

The company was busy optimizing its structure around this time. They closed the merger with Carlyle Secured Lending III (CSL III) in March 2025, which helped scale the business. Plus, post-quarter-end, they issued $300 million in 2031 notes and repaid the CSL III SPV Credit Facility, actions management said would lower their cost of financing. Credit quality showed improvement, with non-accruals falling to 1.0% of fair value following a key restructuring.

Carlyle Secured Lending, Inc. (CGBD) - BCG Matrix: Stars

The Stars quadrant represents the business units or products for Carlyle Secured Lending, Inc. that possess a high market share within a rapidly expanding segment of the market. For Carlyle Secured Lending, Inc., this is characterized by aggressive, high-quality deployment into defensive credit structures, which consumes significant capital but solidifies market leadership.

Deployment activity in the third quarter of 2025 was robust, signaling a strong commitment to growing the core asset base. New investment fundings totaled $260.4 million during Q3 2025, achieving a weighted average yield of 9.5% on those new commitments. This deployment activity drove portfolio expansion, with total investments increasing to $2.423 billion as of September 30, 2025, up from $2.3 billion the prior quarter. This reflects strong origination activity, with year-over-year deal flow at the top of the funnel increasing nearly 30% over the last two months leading into the quarter end.

The strategic focus within this high-growth deployment is clearly weighted toward the most secure asset class, which is a key characteristic of a Star investment strategy-investing heavily to maintain market leadership in a growing area. This is evidenced by the portfolio composition shift:

• The strategic shift to 85.7% first-lien debt, which is considered a high-growth, defensive segment within the Business Development Company (BDC) market.
• The portfolio remains overwhelmingly floating rate, with 99.5% floating rate exposure, positioning Carlyle Secured Lending, Inc. well against potential future interest rate movements.
• Credit quality improved sequentially, with non-accruals decreasing to 1.0% of the portfolio at fair value as of September 30, 2025.

A major component fueling the cash flow and growth of these Stars is the joint venture structure, which allows Carlyle Secured Lending, Inc. to participate in larger, high-yielding opportunities. The Middle Market Credit Fund (MMCF JV) investment is a prime example, providing a high annualized dividend yield of 15.3% back to Carlyle Secured Lending, Inc. This JV structure is a critical mechanism for scaling deployment while managing capital efficiently.

Here is a snapshot of the key Q3 2025 deployment and portfolio metrics that define this Star activity:

Sustaining this success means continuing to invest in these high-market-share areas, which are expected to mature into Cash Cows when the overall market growth rate inevitably slows. The current deployment pace, with total investments rising to $2.42 billion, shows Carlyle Secured Lending, Inc. is actively feeding these growth engines.

Carlyle Secured Lending, Inc. (CGBD) - BCG Matrix: Cash Cows

You're looking at the engine room of Carlyle Secured Lending, Inc.'s portfolio, the assets that generate the steady returns you need to fund everything else. These Cash Cows are built on a foundation of low-growth, high-market-share assets, which for Carlyle Secured Lending, Inc. means their core lending business. The portfolio is overwhelmingly concentrated in what we want to see for stability: 99.5% of investments are floating-rate, meaning income adjusts upward with market rates, and 95% of investments are in senior secured loans, which sit at the top of the capital structure for protection.

This structure is designed to deliver consistent interest income, which is exactly what we saw in the third quarter of 2025. Total investment income hit $66.51 million for the period, which is the primary cash flow stream that supports the regular payout. This consistent generation of income is what allows Carlyle Secured Lending, Inc. to maintain its commitment to shareholders despite any near-term market noise. Honestly, this is the part of the business that funds the corporate overhead and keeps the lights on.

Here's a quick look at the Q3 2025 numbers that define this cash-generating machine:

The base quarterly dividend of $0.40 per share is well-cushioned by the earnings power of these assets. To be fair, the reported earnings per share (NII) was $0.37 GAAP, but the adjusted figure was $0.38, still slightly below the dividend. The real safety net here is the estimated spillover income, which was reported at $0.86 per share for the quarter. That large cushion means the dividend is secure even if NII dips a bit, which is what you want from a Cash Cow-it consumes less than it produces.

Furthermore, the underlying quality of the borrowers in this segment contributes to its low-maintenance status, requiring less promotional spend. Carlyle Secured Lending, Inc. has deliberately positioned its portfolio in defensive sectors that historically provide stable cash flows, even in a slower economy. You see this concentration in:

• Software exposure at 28%.
• Healthcare & Pharmaceuticals exposure at 17%.

The focus on these areas, combined with low non-accruals at 1.0% of fair value, suggests the infrastructure supporting these loans is efficient and requires minimal active management to maintain its high market share and profitability.

Carlyle Secured Lending, Inc. (CGBD) - BCG Matrix: Dogs

You're looking at the parts of Carlyle Secured Lending, Inc. (CGBD) that aren't driving growth or generating significant cash right now. These are the Dogs-units with low market share in low-growth areas. Honestly, the goal here is minimization, not expensive turnarounds.

For Carlyle Secured Lending, Inc., the Dog category is represented by specific portfolio segments that are underperforming or represent legacy exposures that no longer fit the current growth strategy. These positions tie up capital that could be deployed into higher-yielding, first-lien opportunities, which currently make up 85.7% of the portfolio as of Q3 2025. The total fair value of the investment portfolio stood at approximately $2.423 billion at the end of Q3 2025.

The primary indicators of these Dog-like assets are visible in the credit quality metrics and realized/unrealized performance:

• Non-accrual investments, despite a recent drop, still represent 1.0% of the portfolio at fair value as of Q3 2025.
• Select underperforming investments contributed to an aggregate realized and unrealized net loss of $3 million in Q3 2025.
• The portfolio experienced a sequential Net Investment Income (NII) per share decline to $0.37 GAAP basis in Q3 2025 from $0.39 in Q2 2025.
• Net asset value per common share decreased by 0.4% for the third quarter to $16.36 from $16.43 as of June 30, 2025.

These underperformers are often the source of realized and unrealized write-downs. The $3 million aggregate realized and unrealized net loss in Q3 2025, which equates to $0.04 per share, is a concrete example of the drag these assets place on overall performance.

Legacy assets with lower yields are candidates for exit to free up capital. During Q3 2025, Carlyle Secured Lending, Inc. had total repayments and sales amounting to $143.4 million. These exits likely included the disposition of older, lower-yielding assets that are not aligned with the current weighted average yield on income-producing investments of 10.6%.

Here is a look at the investment activity during Q3 2025, highlighting the contrast between new deployment and asset realization:

The remaining positions that fit the Dog profile, carrying higher relative risk for potentially lower current returns, are any remaining second-lien debt and equity positions. While the majority of the portfolio is senior secured first-lien debt at 85.7% of fair value, these other positions represent the residual risk exposure that management is likely working to minimize or exit strategically. These positions are generally avoided in new originations, as evidenced by the tight underwriting focus on first-lien loans.

The management commentary suggests an expectation of an earnings trough over the next couple of quarters, which is often a signal that the current mix includes assets that are not performing optimally under tight spread conditions. Finance: draft 13-week cash view by Friday.

Carlyle Secured Lending, Inc. (CGBD) - BCG Matrix: Question Marks

You're looking at the segment of Carlyle Secured Lending, Inc. (CGBD) that demands immediate strategic attention-the Question Marks. These are areas with high growth potential in the market but where the company currently holds a low market share, meaning they consume cash now with uncertain near-term returns. For CGBD, this quadrant reflects the current pressure points between deployment activity and immediate earnings realization.

The near-term outlook is explicitly cautious. Management has signaled a near-term earnings headwind, with CEO Justin Plouffe stating, 'We see an earnings trough in the next couple of quarters,' with an expected recovery building in the second half of 2026 into 2027. This expectation of a temporary dip in performance is a classic characteristic of a Question Mark needing a decision: invest heavily or divest.

The immediate financial coverage of the payout highlights the cash consumption aspect. The declared fourth quarter dividend stands at $$0.40$ per share, while the Adjusted Net Investment Income (NII) for the third quarter was $$0.38$ per share. This gap means that for the current period, the dividend was covered by drawing down on retained earnings or, as management noted, by utilizing significant spillover income available to support the payout. This reliance on spillover income to bridge the gap between earnings and the declared distribution is a key indicator of the cash-consuming nature of this quadrant.

The pressure on future NII growth is directly tied to the current investment environment. New origination spreads are tight, which directly impacts the return on new capital deployed. For Q3 fundings, the weighted average yield was only $9.5\%$ on $$260.4$ million in new investments. This spread compression, noted by management, pressures future NII growth, as new deals are not immediately yielding as much as the existing portfolio, a common challenge when trying to quickly gain share in a growing market.

The slight erosion in the balance sheet value further underscores the risk. The Net Asset Value (NAV) per share slightly declined to $$16.36$ as of September 30, 2025, down from $$16.43$ at the end of the prior quarter. This decline, which accompanied a total realized and unrealized net loss of about $$3$ million for the quarter, suggests that the market is marking down some assets, which is the downside risk when investing in high-growth, but perhaps riskier or less established, market segments.

Here is a quick look at the key metrics defining this current positioning for Carlyle Secured Lending, Inc.:

The strategic imperative for Carlyle Secured Lending, Inc. here is clear. You must decide whether to heavily invest in these new, high-growth areas-perhaps through scaling joint ventures as mentioned by management-to rapidly increase market share and convert these Question Marks into Stars, or if the current spread environment dictates a divestiture to conserve cash.

• Fundings totaled $$260.4$ million in Q3 2025.
• Non-accruals decreased to $1.6\%$ of total investments at cost.
• Total portfolio fair value increased to $$2.4$ billion.
• The company is actively optimizing its capital structure post-quarter.

Finance: draft the 13-week cash flow view incorporating the expected earnings trough by Friday.