10-Q · May 6, 2026
Palmer Square Capital BDC (PSBD) reported a decrease in total investment income to $26.2 million for Q1 2026 compared to $31.2 million in Q1 2025, reflecting an income drop primarily due to a falling interest rate…
Earnings analysis · 10-Q
PSBD earnings analysis
Filed August 5, 2026 · Our reading of the company's report
The latest report
Palmer Square Capital BDC reported softer Q2 income, with total investment income down $4.4 million year over year to $27.3 million and net investment income down $1.8 million to $12.0 million, reflecting falling…
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Palmer Square Capital BDC reported softer Q2 income, with total investment income down $4.4 million year over year to $27.3 million and net investment income down $1.8 million to $12.0 million, reflecting falling benchmark rates and a smaller portfolio. Lower interest expense helped preserve the net investment income margin at 44.1%, and Q2 net assets increased $8.5 million from operations. However, first-half unrealized losses widened to $37.9 million, non-accruals increased to 0.29% of fair-value investments, and the 158% asset-coverage ratio leaves limited headroom over the 150% requirement.
Gross and operating margin
How much of each revenue dollar the business keeps.
One point per quarterly or annual filing. Both margins are shares of that report's revenue.
How we read each report
Our analysis across the last few reports.
Our model's reading of each filing, not the share price or the market's reaction. Annual and quarterly reports each occupy one position.
Reported figures
- Operating margin
- 44.11%
What stood out
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Falling rates reduced investment income
Q2 total investment income was $27.3 million, down 13.8% from $31.7 million in Q2 2025, while net investment income declined 13.0% to $12.0 million. Management attributed the six-month income decline to its predominantly floating-rate loan portfolio in a falling-rate environment and a smaller portfolio.
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Lower funding costs partly offset income pressure
Net expenses decreased 14.5% year over year to $15.3 million in Q2, led by a $1.9 million decline in interest expense to $10.6 million. The average debt rate fell to 5.34% at June 30, 2026 from 6.06% a year earlier, and average debt outstanding fell to $708.1 million from $786.7 million.
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NII margin modestly improved
Net investment income margin, calculated as net investment income divided by total investment income, was 44.1% in Q2 2026 versus 43.7% in Q2 2025. Quarterly net assets increased $8.5 million from operations, compared with a $7.2 million increase a year earlier.
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Portfolio yield and credit spreads improved
Portfolio yield at fair value increased to 11.95% at June 30, 2026 from 11.30% at December 31, 2025. The spread over reference rates on floating-rate investments was broadly stable at 4.47%, versus 4.46%.
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Share repurchases support per-share value
The company repurchased 517,882 shares for $5.7 million during the first six months, at an average price of $10.96 per share. Its authorized open-market repurchase capacity remaining was $30.1 million at June 30, 2026.
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Liquidity capacity remains substantial
Available revolver capacity totaled $328.5 million at June 30, comprising $288.1 million under the BoA facility and $40.4 million under the Wells Fargo facility. The company reported compliance with facility covenants and a 158% regulatory asset-coverage ratio.
What to watch
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Portfolio marks deteriorated sharply in H1
First-half net unrealized depreciation was $37.9 million, more than double the $16.3 million loss in the prior-year period; this drove a $28.8 million decrease in net assets from operations, versus a $1.2 million decrease in H1 2025.
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Credit watch indicators increased
Loans on non-accrual increased to 0.29% of investments at fair value at June 30, 2026 from 0.09% at December 31, 2025. Investments rated 2 ('Sell Opportunistically/Don't Add') also rose to $81.9 million, or 7.8% of rated debt and equity investments, from $74.4 million, or 6.8%.
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Leverage and rate-cut sensitivity remain material
The company had $696.5 million of net contractual debt obligations at June 30, 2026 and an asset-coverage ratio of 158%, only 8 percentage points above the 150% regulatory minimum. A 100-basis-point base-rate decline is estimated to reduce annual net investment income by $5.0 million.
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Portfolio contracted and on-balance-sheet cash is low
Fair value of total investments declined to $1.113 billion at June 30, 2026 from $1.204 billion at December 31, 2025, while cash and cash equivalents were only $2.4 million. The portfolio recorded net sales/repayments exceeding gross investments by $8.0 million in the first half.
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No quantified risk-factor update disclosed
No material risk-factor updates were disclosed: the filing states that, other than matters set forth below, there were no material changes to risks in the December 31, 2025 Form 10-K. The supplied Item 1A text does not include a newly enumerated risk-factor change.
Management's outlook
The 10-Q provides no explicit numeric earnings or revenue guidance. Management states it anticipates liquidity from future equity/debt offerings and operating cash flows, but provides no forecast range.
Earlier filings 4
10-K · February 26, 2026
Palmer Square Capital BDC (PSBD) ended 2025 with approximately $1.2 billion of total assets and 264 debt and equity investments across 205 portfolio companies, focused on corporate debt and CLO equity/junior debt…
10-Q · November 5, 2025
Palmer Square Capital BDC reported Q3 2025 total investment income of $31,685,269 and net investment income per share of $0.43, missing year-ago levels but beating consensus. Investment income fell versus Q3 2024,…
10-Q · August 6, 2025
Palmer Square Capital BDC reported Q2 2025 total investment income of $31,676,920 (down from $36,549,496 in Q2 2024) and net investment income per share of $0.43 (down from $0.48). Net cash provided by operating…
This is our reading of a public filing, not the filing itself. Analysis can contain errors; check the source document for full context.