Carlyle Credit Solutions' Net Assets Dip Amid Rising Debt, Investment Losses

TL;DR

**Carlyle Credit Solutions is taking on more debt and seeing investment losses, making it a riskier play despite higher income.**

AI Summary

Carlyle Credit Solutions, Inc. reported a net increase in net assets from operations of $82.787 million for the nine months ended September 30, 2025, a decrease from $90.634 million in the prior year period. Total investment income rose to $177.664 million for the nine months ended September 30, 2025, up from $171.121 million in the same period of 2024, driven by increased interest income from non-controlled/non-affiliated investments. Expenses for the nine months decreased to $69.453 million from $72.804 million, primarily due to lower interest expense and credit facility fees, which fell to $38.010 million from $46.194 million. However, net realized loss on investments significantly increased to $36.809 million for the nine months ended September 30, 2025, compared to a loss of $43.182 million in the prior year. Net assets per share decreased to $19.03 as of September 30, 2025, from $19.43 at December 31, 2024. The company's debt and secured borrowings more than doubled to $1,061.711 million from $506.655 million, indicating substantial leverage growth. Cash, cash equivalents, and restricted cash decreased to $93.641 million from $108.453 million.

Why It Matters

Carlyle Credit Solutions' increased leverage, with debt and secured borrowings more than doubling to over $1 billion, signals a more aggressive investment strategy or a need for capital, which could impact future returns and risk for investors. The decline in net assets per share from $19.43 to $19.03, coupled with a significant net realized loss on investments of $36.809 million, suggests potential challenges in portfolio performance and valuation. In a competitive credit solutions market, this could affect the company's ability to attract and retain capital, potentially impacting its market position against rivals. Employees and customers might see this as a sign of financial tightening, though the overall investment income growth indicates continued business activity.

Risk Assessment

Risk Level: high — The company's debt and secured borrowings surged from $506.655 million to $1,061.711 million, representing a 109.5% increase, significantly elevating financial leverage. Concurrently, net realized loss on investments was $36.809 million for the nine months ended September 30, 2025, indicating substantial portfolio underperformance or write-downs.

Analyst Insight

Investors should exercise caution and thoroughly review Carlyle Credit Solutions' investment portfolio for concentration risks and credit quality, given the substantial increase in debt and realized losses. Consider if the increased leverage is sustainable and if the investment income growth can offset potential future losses and rising interest expenses.

Financial Highlights

revenue

$177.664M

total Debt

$1,061.711M

net Income

$82.787M

cash Position

$93.641M

revenue Growth

+3.8%

Revenue Breakdown

Key Numbers

• $82.787M — Net increase in net assets from operations (Decreased from $90.634M in prior year, indicating a slight slowdown in operational profitability.)
• $177.664M — Total investment income (Increased from $171.121M, showing growth in revenue generation from investments.)
• $69.453M — Total expenses (Decreased from $72.804M, primarily due to lower interest expense.)
• $38.010M — Interest expense and credit facility fees (Decreased from $46.194M, contributing to overall expense reduction.)
• $36.809M — Net realized loss on investments (Increased from $43.182M loss in prior year, indicating continued challenges in investment performance.)
• $1,061.711M — Debt and secured borrowings (More than doubled from $506.655M, significantly increasing financial leverage.)
• $19.03 — Net assets per share (Decreased from $19.43, reflecting a decline in shareholder value.)
• $93.641M — Cash, cash equivalents and restricted cash (Decreased from $108.453M, indicating a reduction in liquidity.)
• 92,364,957 — Shares of common stock outstanding (As of November 12, 2025, indicating the total equity base.)
• 109.5% — Increase in Debt and Secured Borrowings (From $506.655 million to $1,061.711 million, highlighting a significant increase in leverage.)

Key Players & Entities

• Carlyle Credit Solutions, Inc. (company) — Registrant
• $82.787 million (dollar_amount) — Net increase in net assets from operations for nine months ended Sep 30, 2025
• $90.634 million (dollar_amount) — Net increase in net assets from operations for nine months ended Sep 30, 2024
• $177.664 million (dollar_amount) — Total investment income for nine months ended Sep 30, 2025
• $171.121 million (dollar_amount) — Total investment income for nine months ended Sep 30, 2024
• $69.453 million (dollar_amount) — Total expenses for nine months ended Sep 30, 2025
• $72.804 million (dollar_amount) — Total expenses for nine months ended Sep 30, 2024
• $36.809 million (dollar_amount) — Net realized loss on investments for nine months ended Sep 30, 2025
• $43.182 million (dollar_amount) — Net realized loss on investments for nine months ended Sep 30, 2024
• $1,061.711 million (dollar_amount) — Debt and secured borrowings as of Sep 30, 2025

FAQ

Risk Factors

• Increased Leverage and Debt [high — financial]: Debt and secured borrowings more than doubled to $1,061.711 million as of September 30, 2025, from $506.655 million at December 31, 2024. This substantial increase in leverage amplifies financial risk and sensitivity to market fluctuations.
• Declining Net Assets Per Share [medium — financial]: Net assets per share decreased to $19.03 as of September 30, 2025, from $19.43 at December 31, 2024. This indicates a reduction in the underlying value of the company's equity on a per-share basis.
• Increased Net Realized Losses on Investments [medium — financial]: The company experienced a net realized loss on investments of $36.809 million for the nine months ended September 30, 2025, compared to a loss of $43.182 million in the prior year. While the absolute loss decreased, it still represents a significant drag on performance.
• Reduced Liquidity [medium — financial]: Cash, cash equivalents, and restricted cash decreased to $93.641 million from $108.453 million as of September 30, 2025. This reduction in readily available funds could impact the company's ability to meet short-term obligations or capitalize on new opportunities.
• Interest Rate Sensitivity [high — market]: As a credit solutions provider, the company's performance is highly sensitive to interest rate movements. Changes in interest rates can impact investment income, borrowing costs, and the valuation of its investment portfolio.
• Investment Performance Volatility [high — operational]: The significant realized losses on investments highlight the inherent volatility in the company's investment strategy. Unfavorable market conditions or poor investment selection can lead to substantial financial impairments.

Industry Context

The credit solutions industry is characterized by its sensitivity to interest rate environments and economic cycles. Companies in this sector often employ significant leverage to enhance returns, making them vulnerable to market downturns and credit events. Competition is intense, with firms vying for deal flow and investor capital in a landscape shaped by regulatory scrutiny and evolving investor preferences for yield and risk management.

Regulatory Implications

As a financial services entity, Carlyle Credit Solutions is subject to various regulatory frameworks governing investment management and capital markets. Changes in regulations related to leverage, capital requirements, or disclosure could impact its operations and profitability. Compliance with these evolving rules is critical to maintaining market access and investor confidence.

What Investors Should Do

1. Monitor leverage levels closely.
2. Analyze the drivers of investment losses.
3. Evaluate the impact of reduced liquidity.
4. Assess the trend in net assets per share.

Glossary

Net assets from operations

The increase or decrease in the total value of the company's assets minus its liabilities, resulting from its core business activities during a specific period. (Indicates the profitability and operational efficiency of Carlyle Credit Solutions, Inc.)

Non-controlled/non-affiliated investments

Investments in companies where Carlyle Credit Solutions does not have significant influence or control over the investee's management and operating policies. (Explains a key driver of investment income growth, highlighting reliance on external investment performance.)

Leverage

The use of borrowed money to finance the purchase of assets, with the expectation that the income or capital gain from the new asset will exceed the cost of borrowing. (Crucial for understanding the company's increased debt and its potential impact on risk and returns.)

Net realized loss on investments

The total loss incurred when an investment is sold for less than its purchase price, after accounting for any gains or losses from other sold investments. (Highlights the performance of the company's investment portfolio and potential for capital erosion.)

Liquidity

The ability of a company to meet its short-term obligations as they come due, typically measured by the amount of cash and cash equivalents available. (Indicates the company's financial flexibility and capacity to manage immediate financial needs.)

Year-Over-Year Comparison

For the nine months ended September 30, 2025, Carlyle Credit Solutions reported a slight decrease in net increase in net assets from operations to $82.787 million, down from $90.634 million in the prior year. While total investment income saw a modest increase to $177.664 million, driven by interest income, this was offset by a significant increase in net realized losses on investments, which rose to $36.809 million. A key concern is the dramatic increase in debt and secured borrowings, which more than doubled to $1,061.711 million, indicating a substantial rise in financial leverage and associated risks compared to the previous reporting period.

Key Financial Figures

• $0.01 — hares of the registrant's common stock, $0.01 par value per share, outstanding at Nov

Filing Documents

• cars-20250930.htm (10-Q) — 6420KB
• cars_2025930x10-qxex311.htm (EX-31.1) — 9KB
• cars_2025930x10-qxex312.htm (EX-31.2) — 9KB
• cars_2025930x10-qex321.htm (EX-32.1) — 5KB
• cars_2025930x10-qxex322.htm (EX-32.2) — 5KB
• 0001702510-25-000139.txt ( ) — 25055KB
• cars-20250930.xsd (EX-101.SCH) — 65KB
• cars-20250930_cal.xml (EX-101.CAL) — 63KB
• cars-20250930_def.xml (EX-101.DEF) — 458KB
• cars-20250930_lab.xml (EX-101.LAB) — 732KB
• cars-20250930_pre.xml (EX-101.PRE) — 563KB
• cars-20250930_htm.xml (XML) — 7145KB

Financial Information

Part I. Financial Information

Financial Statements

Item 1. Financial Statements Consolidated Statements of Assets and Liabilities as of September 30, 2025 (unaudited) and December 31, 2024 2 Consolidated Statements of Operations for the three and nine months ended September 30, 2025 and 2024 (unaudited) 3 Consolidated Statements of Changes in Net Assets for the nine months ended September 30, 2025 and 2024 (unaudited) 4 Consolidated Statements of Cash Flows for the nine months ended September 30, 2025 and 2024 (unaudited) 5 Consolidated Schedules of Investments as of September 30, 2025 (unaudited) and December 31, 2024 6

Notes to Consolidated Financial Statements (unaudited)

Notes to Consolidated Financial Statements (unaudited) 43

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

Item 2. Management's Discussion and Analysis of Financial Condition and Results of Operations 71

Quantitative and Qualitative Disclosures About Market Risk

Item 3. Quantitative and Qualitative Disclosures About Market Risk 86

Controls and Procedures

Item 4. Controls and Procedures 87

Other Information

Part II. Other Information

Legal Proceedings

Item 1. Legal Proceedings 89

Risk Factors

Item 1A. Risk Factors 89

Unregistered Sales of Equity Securities and Use of Proceeds

Item 2. Unregistered Sales of Equity Securities and Use of Proceeds 89

Defaults Upon Senior Securities

Item 3. Defaults Upon Senior Securities 89

Mine Safety Disclosures

Item 4. Mine Safety Disclosures 89

Other Information

Item 5. Other Information 90

Exhibits

Item 6. Exhibits 91

Signatures

Signatures 92 1 Table of Contents CARLYLE CREDIT SOLUTIONS, INC. CONSOLIDATED STATEMENTS OF ASSETS AND LIABILITIES (amounts in thousands, except share and per share data) September 30, 2025 December 31, 2024 ASSETS (unaudited) Investments, at fair value Investments—non-controlled/non-affiliated, at fair value (amortized cost of $ 2,442,397 and $ 2,008,800 , respectively) $ 2,412,668 $ 1,951,269 Investments—non-controlled/affiliated, at fair value (amortized cost of $ 28,121 and $ 0 , respectively) 27,772 — Total investments, at fair value (amortized cost of $ 2,470,518 and $ 2,008,800 , respectively) 2,440,440 1,951,269 Cash, cash equivalents and restricted cash 93,641 108,453 Receivable for investments sold 687 2,140 Interest receivable 22,278 18,885 Receivable for issuance of common stock 22 22 Derivative assets, at fair value (Note 5) 477 3,772 Prepaid expenses and other assets 15,395 10,619 Total assets $ 2,572,940 $ 2,095,160 LIABILITIES Debt and secured borrowings (Note 6) $ 1,061,711 $ 506,655 Payable for investments purchased — 50,974 Interest and credit facility fees payable (Note 6) 11,964 6,104 Dividend payable (Note 8) 13,192 13,091 Management and incentive fees payable (Note 4) 8,759 8,738 Administrative service fees payable (Note 4) 923 1,504 Common stock proceeds received in advance — 12,454 Other accrued expenses and liabilities 3,383 3,178 Total liabilities 1,099,932 602,698 Commitments and contingencies (Notes 7 and 11) NET ASSETS Common stock, $ 0.01 par value; 200,000,000 shares authorized; 77,403,084 and 76,812,863 shares issued and outstanding at September 30, 2025 and December 31, 2024, respectively 774 768 Paid-in capital in excess of par value 1,560,717 1,549,238 Total distributable earnings (loss) ( 88,483 ) ( 57,544 ) Total net assets $ 1,473,008 $ 1,492,462 NET ASSETS PER SHARE $ 19.03 $ 19.43 The accompanying notes are an integral part of these unaudited consolidated financial st

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