HPS Corporate Lending Fund's Assets Surge, Income Up Amid FX Losses

TL;DR

**HPS is growing fast, but watch out for those currency losses eating into the bottom line.**

AI Summary

HPS Corporate Lending Fund reported a significant increase in total assets to $21.397 billion as of June 30, 2025, up from $16.630 billion at December 31, 2024. Total investments at fair value grew to $20.757 billion from $16.131 billion in the same period. The fund's net assets increased to $10.683 billion from $8.734 billion. For the six months ended June 30, 2025, total investment income rose to $949.506 million, a substantial increase from $644.761 million in the prior year. Net investment income after excise tax also saw a healthy rise to $500.463 million from $347.919 million. However, the fund experienced a net realized loss of $152.238 million for the six months ended June 30, 2025, compared to a loss of $5.007 million in the same period last year, largely due to foreign currency forward contracts. Net change in unrealized appreciation (depreciation) was a loss of $4.662 million, a sharp decline from an appreciation of $81.235 million in the prior year. Overall, the net increase in net assets from operations decreased to $343.563 million from $424.147 million year-over-year, despite strong investment income growth.

Why It Matters

This filing reveals HPS Corporate Lending Fund's aggressive growth strategy, with a substantial increase in assets and investment income, which could signal robust returns for investors. However, the significant realized and unrealized losses from foreign currency forward contracts and translation of foreign currencies highlight a key risk in their global lending strategy, potentially impacting overall profitability. For employees, continued growth could mean stability and expansion. Customers of HPS Corporate Lending Fund, primarily borrowers, benefit from the fund's increased lending capacity. In the competitive landscape, HPS's expansion indicates its strong position in the corporate lending market, but currency volatility could be a differentiator for competitors.

Risk Assessment

Risk Level: medium — The fund exhibits medium risk due to significant foreign currency exposure, evidenced by a net realized loss of $104.374 million on foreign currency forward contracts and a net change in unrealized depreciation of $109.152 million for the six months ended June 30, 2025. While investment income is strong, these substantial currency-related losses introduce volatility and could erode returns.

Analyst Insight

Investors should scrutinize HPS Corporate Lending Fund's foreign currency hedging strategies and exposure. While the fund shows strong core lending performance, the significant currency losses warrant a deeper dive into how these risks are managed and if they are likely to persist, potentially impacting future distributions.

Financial Highlights

debt To Equity

0.93

revenue

$949.506M

operating Margin

N/A

total Assets

$21.397B

total Debt

$9.992B

net Income

$343.563M

eps

$0.81

gross Margin

N/A

cash Position

$355.620M

revenue Growth

47.27%

Key Numbers

• $21.397B — Total Assets (Increased from $16.630B at Dec 31, 2024, showing significant growth.)
• $20.757B — Total Investments at Fair Value (Increased from $16.131B at Dec 31, 2024, indicating expanded lending activity.)
• $949.506M — Total Investment Income (For six months ended June 30, 2025, up from $644.761M in prior year, demonstrating strong revenue generation.)
• $500.463M — Net Investment Income After Excise Tax (For six months ended June 30, 2025, up from $347.919M in prior year, reflecting improved operational profitability.)
• $152.238M — Net Realized Loss (For six months ended June 30, 2025, a significant increase from $5.007M in prior year, primarily due to foreign currency.)
• $104.374M — Realized Loss on Foreign Currency Forward Contracts (For six months ended June 30, 2025, a major contributor to overall realized losses.)
• $109.152M — Unrealized Depreciation on Foreign Currency Forward Contracts (For six months ended June 30, 2025, indicating substantial negative mark-to-market adjustments.)
• $343.563M — Net Increase in Net Assets from Operations (For six months ended June 30, 2025, a decrease from $424.147M in prior year, despite higher investment income.)
• 423,617,904 — Common Shares Issued and Outstanding (As of June 30, 2025, up from 341,366,636 at December 31, 2024, indicating capital raising.)
• $25.22 — Net Asset Value Per Share (Class I, D, F, S) (As of June 30, 2025, a slight decrease from $25.59 at December 31, 2024.)

Key Players & Entities

• HPS Corporate Lending Fund (company) — Registrant
• HPS Advisors, LLC (company) — Adviser
• $21.397 billion (dollar_amount) — Total assets as of June 30, 2025
• $16.630 billion (dollar_amount) — Total assets as of December 31, 2024
• $949.506 million (dollar_amount) — Total investment income for six months ended June 30, 2025
• $644.761 million (dollar_amount) — Total investment income for six months ended June 30, 2024
• $152.238 million (dollar_amount) — Net realized loss for six months ended June 30, 2025
• $104.374 million (dollar_amount) — Net realized loss on foreign currency forward contracts for six months ended June 30, 2025
• $109.152 million (dollar_amount) — Net change in unrealized depreciation on foreign currency forward contracts for six months ended June 30, 2025
• $4.662 million (dollar_amount) — Net change in unrealized depreciation for six months ended June 30, 2025

FAQ

Risk Factors

• Foreign Currency Fluctuations [high — financial]: The fund experienced a significant net realized loss of $152.238 million for the six months ended June 30, 2025, primarily driven by foreign currency forward contracts. This included a realized loss of $104.374 million and unrealized depreciation of $109.152 million on these contracts, indicating substantial negative mark-to-market adjustments and realized losses impacting overall performance.
• Market Volatility and Investment Performance [medium — market]: The net change in unrealized appreciation (depreciation) was a loss of $4.662 million for the six months ended June 30, 2025, a sharp decline from an appreciation of $81.235 million in the prior year. This indicates a deterioration in the fair value of investments, potentially due to broader market volatility or specific asset performance.
• Increased Debt Levels [high — financial]: Total debt increased significantly from $7.446 billion at December 31, 2024, to $9.992 billion at June 30, 2025. This substantial leverage amplifies both potential gains and losses, increasing financial risk.
• Growth in Share Repurchases [medium — operational]: Payable for share repurchases increased from $110.784 million at December 31, 2024, to $186.568 million at June 30, 2025. While this can return capital to shareholders, a significant increase may signal underlying pressures or strategic decisions impacting liquidity.

Industry Context

The corporate lending sector, particularly for Business Development Companies (BDCs) like HPS Corporate Lending Fund, operates in a dynamic environment characterized by fluctuating interest rates and credit market conditions. Increased demand for private credit solutions continues to drive asset growth, but heightened competition and macroeconomic uncertainties pose challenges. Funds in this space often leverage debt to enhance returns, making them sensitive to interest rate movements and credit quality.

Regulatory Implications

As a registered investment company, HPS Corporate Lending Fund is subject to regulations under the Investment Company Act of 1940, which governs its structure, operations, and disclosure requirements. The significant use of leverage and derivative instruments necessitates robust risk management and compliance frameworks to adhere to regulatory limits and reporting standards.

What Investors Should Do

1. Monitor foreign currency exposure: The substantial realized and unrealized losses from foreign currency forward contracts warrant close attention. Investors should assess the fund's hedging strategies and the impact of currency fluctuations on future performance.
2. Analyze leverage utilization: The increase in debt from $7.446 billion to $9.992 billion significantly raises the fund's financial leverage. Investors should evaluate the associated risks and the fund's ability to service its debt, especially in a rising interest rate environment.
3. Assess NAV per share trend: Despite strong investment income, the slight decline in Net Asset Value Per Share (NAVPS) from $25.59 to $25.22 is a concern. Investors should investigate the factors contributing to this dilution, such as increased share issuance or the impact of realized losses.
4. Evaluate investment income drivers: While total investment income grew substantially, understanding the composition and sustainability of this income is crucial. The fund's ability to generate consistent, high-quality income will be key to its long-term success.

Key Dates

• 2025-06-30: End of Second Quarter Reporting Period — Marks the period for which the 10-Q financial statements are reported, showing significant asset growth and increased investment income but also substantial realized losses.
• 2025-12-31: End of Previous Fiscal Year Reporting Period — Provides the comparative baseline for asset values, investment income, and net assets, highlighting the fund's growth and changes in performance drivers.

Glossary

Amortized Cost

The original cost of an asset, adjusted over time for amortization or accretion. For investments, it represents the cost adjusted for premium or discount amortization. (Used to present the cost basis of the fund's investments, providing context for fair value adjustments.)

Derivative Assets/Liabilities

Financial instruments whose value is derived from an underlying asset, index, or rate. They can be used for hedging or speculation and are reported at fair value. (Significant changes in derivative assets and liabilities, particularly related to foreign currency forward contracts, heavily impacted the fund's realized and unrealized gains/losses.)

Distributable Earnings (Loss)

The cumulative net investment income earned by the fund that has not yet been distributed to shareholders. (A decrease in distributable earnings from $208.859 million to $63.108 million suggests that a portion of the income generated was offset by realized losses or other factors.)

Net Asset Value Per Share (NAVPS)

The value of each share of a fund, calculated by dividing the total net assets by the number of outstanding shares. (The slight decrease in NAVPS from $25.59 to $25.22, despite overall growth in net assets, indicates that the increase in shares outstanding or other factors diluted the per-share value.)

Income Based Incentive Fees

Fees paid to the investment advisor based on a percentage of the fund's investment income. (These fees increased from $32.014 million to $38.163 million, reflecting the higher investment income generated.)

Capital Gains Incentive Fees

Fees paid to the investment advisor based on a percentage of the fund's realized capital gains. (These fees decreased from $12.950 million to $0, consistent with the net realized loss reported for the period.)

Year-Over-Year Comparison

Compared to the prior year's six-month period, HPS Corporate Lending Fund demonstrated robust growth in total assets, increasing from $16.630 billion to $21.397 billion, and a significant rise in total investment income from $644.761 million to $949.506 million. Net investment income after excise tax also saw a healthy increase. However, the fund experienced a dramatic shift in realized gains/losses, moving from a minor loss of $5.007 million to a substantial loss of $152.238 million, largely due to foreign currency contracts. Furthermore, unrealized appreciation diminished significantly, contributing to a lower net increase in net assets from operations ($343.563 million vs. $424.147 million), despite the strong top-line revenue growth.

Key Financial Figures

• $0.01 — Yes No The Registrant's Common Shares, $0.01 par value per share, outstanding as of

Filing Documents

• hps-20250630.htm (10-Q) — 12370KB
• exhibit311q2202510q.htm (EX-31.1) — 10KB
• exhibit312q2202510q.htm (EX-31.2) — 10KB
• exhibit321q2202510q.htm (EX-32.1) — 5KB
• exhibit322q2202510q.htm (EX-32.2) — 5KB
• 0001838126-25-000055.txt ( ) — 38343KB
• hps-20250630.xsd (EX-101.SCH) — 102KB
• hps-20250630_cal.xml (EX-101.CAL) — 91KB
• hps-20250630_def.xml (EX-101.DEF) — 708KB
• hps-20250630_lab.xml (EX-101.LAB) — 957KB
• hps-20250630_pre.xml (EX-101.PRE) — 831KB
• hps-20250630_htm.xml (XML) — 12701KB

Notes to Consolidated Financial Statements (Unaudited)

Notes to Consolidated Financial Statements (Unaudited) 57 Item 2.

Management's Discussion and Analysis of Financial Condition and Results of Operations

Management's Discussion and Analysis of Financial Condition and Results of Operations 113 Item 3.

Quantitative and Qualitative Disclosures About Market Risk

Quantitative and Qualitative Disclosures About Market Risk 137 Item 4.

Controls and Procedures

Controls and Procedures 138 PART II OTHER INFORMATION Item 1.

Legal Proceedings

Legal Proceedings 139 Item 1A.

Risk Factors

Risk Factors 139 Item 2. Unregistered Sales of Equity Securities and Use of Proceeds 141 Item 3. Defaults Upon Senior Securities 141 Item 4. Mine Safety Disclosures 141 Item 5. Other Information 141 Item 6. Exhibits 142

Signatures

Signatures Table of Contents CAUTIONARY STATEMENT REGARDING FORWARD-LOOKING STATEMENTS This report contains forward-looking statements that involve substantial risks and uncertainties. Such statements involve known and unknown risks, uncertainties and other factors and undue reliance should not be placed thereon. These forward-looking statements are not historical facts, but rather are based on current expectations, estimates and projections about HPS Corporate Lending Fund (together, with its consolidated subsidiaries, the "Company", "we" or "our"), our current and prospective portfolio investments, our industry, our beliefs and opinions, and our assumptions. Words such as "anticipates," "expects," "intends," "plans," "will," "may," "continue," "believes," "seeks," "estimates," "would," "could," "should," "targets," "projects," "outlook," "potential," "predicts" and variations of these words and similar expressions are intended to identify forward-looking statements. These statements are not guarantees of future performance and are subject to risks, uncertainties and other factors, some of which are beyond our control and difficult to predict and could cause actual results to differ materially from those expressed or forecasted in the forward-looking statements, including without limitation: our future operating results; our business prospects and the prospects of our portfolio companies, including our and their ability to achieve our respective objectives as a result of inflation, the imposition of tariffs, increases in borrowing costs and a potential global recession; the impact of geo-political conditions, including revolution, insurgency, terrorism or war, including those arising out of the ongoing conflict between Russia and Ukraine and the broader Middle East conflict; the impact of the investments that we expect to make; our ability to raise sufficient capital to execute our investment strategy; our current and expected financing arrangements and

- FINANCIAL INFORMATION

PART I - FINANCIAL INFORMATION

Consolidated Financial Statements

Item 1. Consolidated Financial Statements. HPS Corporate Lending Fund Consolidated Statements of Assets and Liabilities (in thousands, except share and per share amounts) June 30, 2025 December 31, 2024 ASSETS (Unaudited) Investments at fair value Non-controlled/non-affiliated investments (amortized cost of $ 20,074,071 and $ 15,753,920 at June 30, 2025 and December 31, 2024, respectively) $ 20,346,151 $ 15,790,937 Non-controlled/affiliated investments (amortized cost of $ 86,086 and $ 19,411 at June 30, 2025 and December 31, 2024, respectively) 86,662 19,969 Controlled/affiliated investments (amortized cost of $ 303,997 and $ 297,747 at June 30, 2025 and December 31, 2024, respectively) 323,788 320,350 Total investments at fair value (amortized cost of $ 20,464,154 and $ 16,071,078 at June 30, 2025 and December 31, 2024, respectively) 20,756,601 16,131,256 Cash and cash equivalents 355,620 228,899 Interest receivable from non-controlled/non-affiliated investments 157,911 140,686 Interest receivable from non-controlled/affiliated investments 199 — Dividend receivable from non-controlled/non-affiliated investments 23 68 Deferred financing costs 47,702 41,633 Deferred offering costs 532 915 Derivative assets, at fair value (Note 6) 59,800 43,003 Receivable for investments 18,143 32,428 Other assets 95 10,851 Total assets $ 21,396,626 $ 16,629,739 LIABILITIES Debt (net of unamortized debt issuance costs of $ 84,654 and $ 51,573 at June 30, 2025 and December 31, 2024, respectively) $ 9,991,929 $ 7,445,580 Payable for investments purchased 113,454 75,489 Interest payable 144,688 104,735 Derivative liabilities, at fair value (Note 6) 66,149 11,510 Due to affiliates 9,578 13,881 Distribution payable (Note 9) 89,857 71,896 Payable for share repurchases (Note 9) 186,568 110,784 Management fees payable (Note 3) 11,186 9,377 Income based incentive fees payable (Note 3) 38,163 32,014 Capital gains incentive fees payable (Note 3) — 12,950 Sh

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