First Eagle Credit Fund's Income Soars, Unrealized Losses Mount

TL;DR

**First Eagle Private Credit Fund is raking in cash from interest but watch out for those growing unrealized losses – it's a mixed bag of strong income and potential portfolio headaches.**

AI Summary

First Eagle Private Credit Fund reported a significant increase in net investment income for the six months ended June 30, 2025, reaching $17.40 million, up from $9.40 million in the prior year, representing an 85.1% increase. Total investment income also saw a substantial rise to $31.78 million for the six months ended June 30, 2025, compared to $13.73 million for the same period in 2024. This was primarily driven by a surge in interest income from non-controlled/non-affiliated investments, which grew from $10.02 million to $30.91 million. However, the fund experienced a net change in unrealized depreciation of $3.83 million for the six months ended June 30, 2025, a significant increase from $0.17 million in the prior year. Net assets decreased slightly to $299.10 million as of June 30, 2025, from $300.33 million at December 31, 2024. The fund's credit facilities increased to $395.00 million from $325.60 million, indicating increased leverage. Distributions to shareholders totaled $7.65 million for Class I shares for the three months ended June 30, 2025.

Why It Matters

First Eagle Private Credit Fund's robust increase in net investment income, driven by higher interest income, suggests a strong performance in its core lending activities, which is positive for investors seeking income. However, the significant rise in unrealized depreciation, from $0.17 million to $3.83 million, indicates potential valuation challenges within its investment portfolio, which could impact future net asset value and investor returns. The increased leverage through credit facilities, up to $395.00 million, while boosting potential returns, also amplifies risk in a volatile market. Competitors in the private credit space may face similar pressures from rising interest rates and potential credit quality deterioration, making First Eagle's ability to manage unrealized losses crucial for its competitive standing.

Risk Assessment

Risk Level: medium — The risk level is medium due to the significant increase in net investment income, which is positive, but offset by a substantial rise in net change in unrealized depreciation from $0.17 million in Q2 2024 to $3.83 million in Q2 2025. This indicates potential underlying issues with asset valuations. Additionally, the increase in credit facilities from $325.60 million to $395.00 million suggests higher leverage, which can amplify both gains and losses.

Analyst Insight

Investors should closely monitor the fund's future filings for trends in unrealized appreciation/depreciation and the credit quality of its underlying investments. While the strong interest income is attractive, the increasing unrealized losses warrant caution. Consider if the current yield adequately compensates for the potential risks associated with portfolio valuations and increased leverage.

Financial Highlights

debt To Equity

1.32

revenue

$31.78M

operating Margin

54.76%

total Assets

$708.56M

total Debt

$395.00M

net Income

$17.40M

eps

$1.05

gross Margin

N/A

cash Position

$24.86M

revenue Growth

+131.5%

Revenue Breakdown

Key Numbers

• $17.40M — Net Investment Income (6 months) (Increased 85.1% from $9.40M in 2024 to $17.40M in 2025)
• $31.78M — Total Investment Income (6 months) (Increased from $13.73M in 2024 to $31.78M in 2025)
• $30.91M — Interest Income (6 months) (Increased from $10.02M in 2024 to $30.91M in 2025)
• $3.83M — Net Unrealized Depreciation (6 months) (Increased from $0.17M in 2024 to $3.83M in 2025)
• $299.10M — Total Net Assets (Decreased from $300.33M at Dec 31, 2024 to $299.10M at June 30, 2025)
• $395.00M — Credit Facilities (Increased from $325.60M at Dec 31, 2024 to $395.00M at June 30, 2025)
• $0.68 — Basic and Diluted EPS (Class I, 3 months) (Increased from $0.45 in Q2 2024 to $0.68 in Q2 2025)
• $1.05 — Basic and Diluted EPS (Class I, 6 months) (Increased from $0.79 in H1 2024 to $1.05 in H1 2025)

Key Players & Entities

• First Eagle Private Credit Fund (company) — Registrant
• First Eagle Investment Management, LLC (company) — Investment Adviser
• First Eagle Alternative Credit, LLC (company) — Investment Sub-Adviser and Administrator
• SEC (regulator) — Securities and Exchange Commission
• $17.40 million (dollar_amount) — Net investment income after excise tax for six months ended June 30, 2025
• $9.40 million (dollar_amount) — Net investment income after excise tax for six months ended June 30, 2024
• $3.83 million (dollar_amount) — Net change in unrealized depreciation for six months ended June 30, 2025
• $0.17 million (dollar_amount) — Net change in unrealized depreciation for six months ended June 30, 2024
• $395.00 million (dollar_amount) — Credit facilities as of June 30, 2025
• $325.60 million (dollar_amount) — Credit facilities as of December 31, 2024

FAQ

Risk Factors

• Increased Leverage [high — financial]: The fund's credit facilities increased from $325.60 million at December 31, 2024, to $395.00 million as of June 30, 2025. This higher leverage amplifies both potential gains and losses, increasing financial risk.
• Unrealized Depreciation [medium — financial]: The fund experienced a net change in unrealized depreciation of $3.83 million for the six months ended June 30, 2025, a significant increase from $0.17 million in the prior year. This indicates a decline in the fair value of the fund's investments.
• Interest Rate Sensitivity [medium — market]: As a private credit fund, its performance is highly sensitive to interest rate fluctuations. Changes in interest rates can impact the value of its debt investments and the cost of its borrowings.
• Valuation of Investments [medium — operational]: The fair value of non-controlled/non-affiliated investments is based on estimates and valuations, which can be subjective. The increase in unrealized depreciation highlights the inherent uncertainty in valuing these assets.

Industry Context

The private credit market continues to be a dynamic sector, offering attractive yields but also facing evolving risks. Funds like First Eagle Private Credit are navigating a landscape influenced by rising interest rates, which can boost income from floating-rate assets but also increase borrowing costs and credit risks. Competition remains robust, with investors seeking yield in a low-yield environment, while regulatory scrutiny on alternative investment funds is also a growing consideration.

Regulatory Implications

As a registered investment company, First Eagle Private Credit Fund is subject to regulations governing investment advisers and funds, including disclosure requirements and capital adequacy rules. Changes in accounting standards or regulatory interpretations could impact how the fund values its assets or reports its financial performance.

What Investors Should Do

1. Monitor Unrealized Depreciation
2. Evaluate Leverage Strategy
3. Analyze Income Drivers
4. Assess Net Asset Value Trend

Key Dates

• 2025-06-30: End of Second Quarter and First Half of 2025 — Reporting period for the 10-Q, showing significant growth in net investment income and total investment income, but also an increase in unrealized depreciation and leverage.
• 2025-03-31: End of First Quarter of 2025 — Part of the six-month reporting period, contributing to the overall financial results presented.
• 2024-06-30: End of Second Quarter and First Half of 2024 — Prior year comparison period, highlighting the substantial increase in investment income and net investment income for 2025.
• 2024-12-31: End of Fiscal Year 2024 — Reference point for net assets and credit facilities, showing a slight decrease in net assets and an increase in credit facilities by mid-2025.

Glossary

Non-controlled/non-affiliated investments

Investments in companies where the fund does not have a controlling interest or affiliation, often valued at fair value. (The primary source of investment income for the fund, with a significant increase in interest income reported.)

Net Investment Income

The income generated from a fund's investments after deducting operating expenses. (Reported a substantial increase of 85.1% to $17.40 million for the six months ended June 30, 2025, indicating improved profitability from core operations.)

Unrealized Depreciation

A decrease in the fair value of an asset that has not yet been sold. (Increased significantly to $3.83 million for the six months ended June 30, 2025, signaling a potential decline in the value of the fund's holdings.)

Credit Facilities

Lines of credit or borrowing arrangements that a company can use to finance its operations or investments. (Increased to $395.00 million, indicating the fund is utilizing more leverage to finance its investment activities.)

Paid-in capital in excess of par value

The amount investors have paid for shares above their nominal par value. (Represents a significant portion of the fund's net assets, showing investor contributions.)

Distributable earnings (accumulated losses)

The cumulative profit or loss of the fund that is available for distribution to shareholders. (The fund has accumulated losses of $1.90 million as of June 30, 2025.)

Year-Over-Year Comparison

Compared to the prior year's six-month period, First Eagle Private Credit Fund has demonstrated a remarkable increase in total investment income, rising from $13.73 million to $31.78 million, primarily driven by a surge in interest income from non-controlled/non-affiliated investments. This has led to a substantial 85.1% growth in net investment income to $17.40 million. However, this growth comes with increased financial risk, as evidenced by a significant rise in unrealized depreciation to $3.83 million and a notable increase in total credit facilities to $395.00 million, indicating higher leverage.

Key Financial Figures

• $0.001 — s common shares of beneficial interest, $0.001 par value per share, outstanding as of
• $1 — 299,104 (1) Par Value is less than $1. 7 First Eagle Private Credit Fund

Filing Documents

• ck0001890107-20250630.htm (10-Q) — 14598KB
• ck0001890107-ex31_1.htm (EX-31.1) — 14KB
• ck0001890107-ex31_2.htm (EX-31.2) — 14KB
• ck0001890107-ex32_1.htm (EX-32.1) — 10KB
• ck0001890107-ex32_2.htm (EX-32.2) — 9KB
• 0000950170-25-108179.txt ( ) — 43146KB
• ck0001890107-20250630.xsd (EX-101.SCH) — 1788KB
• ck0001890107-20250630_htm.xml (XML) — 13382KB

Financial Statements

Financial Statements 5 Consolidated Statement of Assets and Liabilities as of June 30, 2025 (Unaudited) and December 31, 2024 5 Consolidated Statements of Operations for the three and six months ended June 30, 2025 and 2024 (Unaudited) 6 Consolidated Statements of Changes in Net Assets for the three and six months ended June 30, 2025 and 2024 (Unaudited) 7 Consolidated Statement of Cash Flows for the six months ended June 30, 2025 and 2024 (Unaudited) 9 Consolidated Schedule of Investments as of June 30, 2025 (Unaudited) and December 31, 2024 10

Notes to Consolidated Financial Statements (Unaudited)

Notes to Consolidated Financial Statements (Unaudited) 30 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 57 Item 3.

Quantitative and Qualitative Disclosures About Market Risk

Quantitative and Qualitative Disclosures About Market Risk 70 Item 4.

Controls and Procedures

Controls and Procedures 70 PART II. OTHER INFORMATION 72 Item 1.

Legal Proceedings

Legal Proceedings 72 Item 1A.

Risk Factors

Risk Factors 72 Item 2. Unregistered Sales of Equity Securities and Use of Proceeds 72 Item 3. Defaults Upon Senior Securities 72 Item 4. Mine Safety Disclosures 73 Item 5. Other Information 73 Item 6. Exhibits 74

Signatures

Signatures 75 2 CAUTIONARY STATEMENT REGARDING FORWARD-LOOKING STATEMENTS Except as otherwise specified, references to the " Company, " " we, " " us " and " our " refer to First Eagle Private Credit Fund and its consolidated subsidiaries; " FEIM " and " Adviser " refer to the First Eagle Investment Management , LLC, our investment adviser; and " FEAC, " " Subadviser, " and " Administrator " refer to First Eagle Alternative Credit, LLC, our investment sub-adviser (and, together with the Adviser, the " Advisers " ) and administrator. This quarterly report on Form 10-Q (the "Quarterly Report"), including Management's Discussion and Analysis of Financial Condition and Results of Operations, contains forward-looking statements that involve substantial known and unknown risks, uncertainties and other factors. Undue reliance should not be placed on such statements. These forward-looking statements are not historical facts, but rather are based on current expectations, estimates and projections about our company, our current and prospective portfolio investments, our industry, our beliefs and our assumptions. Words such as "anticipates," "expects," "intends," "plans," "will," "may," "continue," "believes," "seeks," "estimates," "would," "could," "should," "targets," "projects," and variations of these words and similar expressions are intended to identify forward-looking statements, although not all forward-looking statements include these words. 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. In addition to factors previously identified in the Item 1A. Risk Factors section of our most recent Annual Report on Form 10-K filed with the U.S. Securities and Exchange Commission ("SEC") on March 14, 2025, as well as in

- FINANCIAL INFORMATION

PART I - FINANCIAL INFORMATION

Financial Statements

Item 1. Financial Statements. First Eagle Private Credit Fund Consolidated Statement of Assets and Liabilities (in thousands, except share and per share amounts) June 30, 2025 December 31, 2024 (Unaudited) ASSETS Non-controlled/non-affiliated investments, at fair value (amortized cost of: $ 661,745 and $ 653,701 , respectively) $ 658,135 $ 653,925 Cash and cash equivalents 24,857 21,319 Interest and dividends receivable 5,851 4,247 Deferred financing costs 2,906 2,282 Deferred offering costs 1,770 1,968 Receivable for investments sold or repaid 12,009 5,019 Prepaid expenses and other assets 176 51 Due from Adviser 2,854 2,585 Total assets $ 708,558 $ 691,396 LIABILITIES Credit facilities 395,000 325,600 Accrued interest and other borrowing costs 6,456 5,384 Payable for investments purchased 3,659 55,343 Distributions payable 2,552 2,548 Offering costs payable 288 311 Due to affiliates 74 138 Accrued professional fees 487 577 Accrued administration expense 521 469 Accrued expenses and other liabilities 417 692 Total liabilities $ 409,454 $ 391,062 Commitments and contingencies (Note 7) NET ASSETS Common shares, par value $ 0.001 ( unlimited shares authorized, 12,446,559 and 12,407,361 shares issued and outstanding at June 30, 2025 and December 31, 2024, respectively) $ 12 $ 12 Paid-in capital in excess of par value 300,993 300,733 Distributable earnings (accumulated losses) ( 1,901 ) ( 411 ) Total net assets $ 299,104 $ 300,334 NET ASSET VALUE PER SHARE Class I Shares: Net assets $ 299,003 $ 300,334 Common Shares outstanding ($ 0.001 par value, unlimited shares authorized) 12,442,354 12,407,361 Net asset value per share $ 24.03 $ 24.21 Class D Shares: Net assets $ 101 $ — Common Shares outstanding ($ 0.001 par value, unlimited shares authorized)

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