Stepstone Private Credit Fund Assets Soar 69% Amid Aggressive Expansion

TL;DR

**Stepstone's massive asset growth and soaring income make it a strong buy in the private credit space, but keep an eye on rising debt costs.**

AI Summary

Stepstone Private Credit Fund LLC reported a significant increase in total assets, reaching $2,731,596 thousand as of September 30, 2025, up from $1,613,789 thousand at December 31, 2024, representing a 69.2% growth. Investment income more than doubled for the nine months ended September 30, 2025, hitting $163,270 thousand compared to $79,401 thousand in the prior year period. Net investment income also saw substantial growth, increasing to $89,959 thousand for the nine months ended September 30, 2025, from $41,305 thousand in the same period of 2024. The company's net assets grew to $1,509,265 thousand from $916,385 thousand, driven by $602,677 thousand from share issuances. Total liabilities increased to $1,222,331 thousand from $697,404 thousand, primarily due to increased lines of credit and debt securitization. The fund's strategy appears to be aggressive expansion, evidenced by $1,345,725 thousand in investment purchases during the nine months ended September 30, 2025. Risks include increased interest expense, which rose to $48,973 thousand for the nine months ended September 30, 2025, from $24,952 thousand in the prior year, reflecting higher borrowing costs.

Why It Matters

This substantial growth in Stepstone Private Credit Fund's assets and investment income signals a robust appetite for private credit, reflecting broader market trends where investors seek alternatives to traditional fixed income. For investors, the 69.2% asset growth and 105.6% increase in net investment income suggest strong performance and potential for continued returns, though the rising interest expense indicates increased leverage and associated risk. Employees and customers of the underlying portfolio companies benefit from the capital infusion, supporting their growth and operations. The competitive landscape for private credit funds is intensifying, and Stepstone's aggressive expansion positions it as a significant player, potentially drawing more capital into the sector and influencing lending terms.

Risk Assessment

Risk Level: medium — The risk level is medium due to the significant increase in leverage, with lines of credit growing to $819,592 thousand and new debt securitization of $344,805 thousand. This increased debt contributes to a 96.9% rise in interest expense to $48,973 thousand for the nine months ended September 30, 2025, compared to $24,952 thousand in the prior year, indicating higher financial risk if interest rates continue to climb or if portfolio performance falters.

Analyst Insight

Investors should consider Stepstone Private Credit Fund for exposure to the growing private credit market, given its strong asset and income growth. However, they must monitor the fund's increasing leverage and interest expense closely, as these could impact future profitability and net asset value, especially in a rising interest rate environment.

Financial Highlights

debt To Equity

0.81

revenue

$163,270,000

operating Margin

55.1%

total Assets

$2,731,596,000

total Debt

$1,164,397,000

net Income

$89,959,000

eps

$26.05

gross Margin

N/A

cash Position

$70,925,000

revenue Growth

+105.6%

Revenue Breakdown

Key Numbers

• $2.73B — Total Assets (Increased 69.2% from $1.61B at Dec 31, 2024 to $2.73B at Sep 30, 2025)
• $163.27M — Total Investment Income (Increased 105.6% for the nine months ended Sep 30, 2025, from $79.40M in 2024)
• $89.96M — Net Investment Income (Increased 117.8% for the nine months ended Sep 30, 2025, from $41.31M in 2024)
• $1.51B — Total Net Assets (Increased 64.7% from $916.39M at Dec 31, 2024 to $1.51B at Sep 30, 2025)
• $602.68M — Issuance of Shares (Contributed to net asset growth for the nine months ended Sep 30, 2025)
• $1.35B — Purchases of Investments (Reflects aggressive investment strategy for the nine months ended Sep 30, 2025)
• $819.59M — Lines of Credit (Increased from $654.70M at Dec 31, 2024, indicating higher leverage)
• $344.81M — Debt Securitization (New debt instrument contributing to increased liabilities)
• $48.97M — Interest Expense (Increased 96.9% for the nine months ended Sep 30, 2025, from $24.95M in 2024)
• 57,931,326 — Shares Outstanding (Increased from 35,246,926 at Dec 31, 2024)

Key Players & Entities

• Stepstone Private Credit Fund LLC (company) — Registrant
• $2,731,596 thousand (dollar_amount) — Total assets as of September 30, 2025
• $1,613,789 thousand (dollar_amount) — Total assets as of December 31, 2024
• $163,270 thousand (dollar_amount) — Total investment income for nine months ended September 30, 2025
• $79,401 thousand (dollar_amount) — Total investment income for nine months ended September 30, 2024
• $89,959 thousand (dollar_amount) — Net investment income for nine months ended September 30, 2025
• $41,305 thousand (dollar_amount) — Net investment income for nine months ended September 30, 2024
• $1,509,265 thousand (dollar_amount) — Total net assets as of September 30, 2025
• $819,592 thousand (dollar_amount) — Lines of credit as of September 30, 2025
• $48,973 thousand (dollar_amount) — Interest expense for nine months ended September 30, 2025

FAQ

Risk Factors

• Increased Leverage and Interest Expense [high — financial]: The fund has significantly increased its borrowings through lines of credit ($819.6M from $654.7M) and new debt securitization ($344.8M). This has led to a substantial rise in interest expense, which more than doubled to $48.97M for the nine months ended September 30, 2025, from $24.95M in the prior year. Higher interest rates or increased borrowing could further pressure profitability.
• Investment Valuation and Performance [medium — market]: The fund's total assets grew by 69.2% to $2.73B, driven by $1.35B in investment purchases. While investment income more than doubled, the fair value of investments is subject to market fluctuations. A downturn in the credit markets could negatively impact the value of the fund's portfolio.
• Dependence on Share Issuances for Growth [medium — financial]: Net assets increased by $593.1M to $1.51B, with $602.7M attributed to the issuance of shares. This indicates a reliance on capital inflows to fund growth and operations. A slowdown in investor demand for shares could impede the fund's expansion strategy.
• Operational Complexity of Expanded Portfolio [medium — operational]: The aggressive investment strategy and increased leverage introduce greater operational complexity. Managing a larger and more diverse portfolio, along with increased debt obligations, requires robust operational infrastructure and risk management processes.
• Concentration Risk in Investments [medium — financial]: While not explicitly detailed in the provided text, the significant increase in investment purchases ($1.35B) suggests a potential for concentration risk if a large portion of these investments are in similar industries or issuers. This could amplify losses if those specific areas underperform.

Industry Context

The private credit market continues to see robust activity, driven by demand for alternative financing solutions and a challenging traditional lending environment. Funds like Stepstone are capitalizing on this by expanding their investment portfolios and utilizing leverage. However, this growth is accompanied by increased competition and sensitivity to interest rate movements.

Regulatory Implications

As a private credit fund, Stepstone operates within a regulatory framework that is evolving. Increased leverage and the use of complex financial instruments like debt securitization may attract greater regulatory scrutiny regarding capital adequacy, risk management, and investor protection. Compliance with reporting requirements is crucial.

What Investors Should Do

1. Monitor interest rate sensitivity: Given the significant increase in debt and interest expense, investors should assess how rising rates could impact future net investment income and distributions.
2. Evaluate the sustainability of growth: The fund's aggressive expansion is heavily reliant on share issuances. Investors should consider the long-term viability of this growth strategy and potential dilution.
3. Analyze portfolio diversification: Understand the underlying assets within the fund's investments to assess concentration risk, especially given the substantial increase in investment purchases.
4. Review expense structure: While investment income has grown, so have expenses, particularly interest expense. Investors should track the efficiency of expense management relative to income generation.

Key Dates

• 2025-09-30: Quarterly Financial Reporting — Provides updated financial position and performance metrics, showing significant asset and income growth, alongside increased leverage.
• 2024-12-31: Previous Fiscal Year End — Serves as a baseline for year-over-year comparisons, highlighting the substantial growth in assets, income, and liabilities.

Glossary

Payment in-kind interest

Interest that is paid in the form of additional debt or equity rather than cash. (Contributes to investment income, indicating a portion of interest is not received in cash immediately.)

Debt securitization

The process of pooling various types of contractual debt (like mortgages, auto loans, or credit card debt) and selling their related cash flows to third-party investors as securities. (Represents a new and significant source of funding for the fund, contributing to its increased liabilities.)

Distributable earnings (accumulated loss)

The net income or loss of the fund that is available for distribution to shareholders. (Indicates the fund's historical profitability available for dividends, showing a small accumulated loss as of September 30, 2025.)

Net asset value per share

The value of a mutual fund's or ETF's assets minus its liabilities, divided by the number of outstanding shares. (Shows the per-share market value of the fund's holdings, which remained relatively stable between the two reporting periods.)

Year-Over-Year Comparison

Stepstone Private Credit Fund LLC has demonstrated aggressive growth since December 31, 2024. Total assets have surged by 69.2% to $2.73B, fueled by a 105.6% increase in investment income to $163.27M for the nine-month period. Net investment income more than doubled, indicating improved profitability. However, this expansion has been financed by a significant increase in liabilities, including a new debt securitization facility and higher lines of credit, leading to a 96.9% rise in interest expense. The fund's net assets have also grown substantially, largely due to share issuances, while the net asset value per share has remained relatively stable.

Filing Documents

• d202550d10q.htm (10-Q) — 23858KB
• d202550dex107.htm (EX-10.7) — 283KB
• d202550dex311.htm (EX-31.1) — 11KB
• d202550dex312.htm (EX-31.2) — 11KB
• d202550dex321.htm (EX-32.1) — 6KB
• 0001193125-25-279957.txt ( ) — 79961KB
• ck0001950803-20250930.xsd (EX-101.SCH) — 2438KB
• d202550d10q_htm.xml (XML) — 33592KB

Notes to Consolidated Financial Statements (Unaudited)

Notes to Consolidated Financial Statements (Unaudited) 66 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 99 Item 3. Quantitative and Qualitative Disclosure About Market Risk 121 Item 4.

Controls and Procedures

Controls and Procedures 122 PART II OTHER INFORMATION Item 1.

Legal Proceedings

Legal Proceedings 123 Item 1A.

Risk Factors

Risk Factors 123 Item 2. Unregistered Sales of Equity Securities, Use of Proceeds and Issuer Purchases of Equity 125 Item 3. Defaults Upon Senior Securities 125 Item 4. Mine Safety Disclosures 125 Item 5. Other Information 125 Item 6. Exhibits 126

SIGNATURES

SIGNATURES Table of Contents

FINANCIAL INFORMATION

PART I. FINANCIAL INFORMATION StepStone Private Credit Fund LLC Consolidated Statements of Assets and Liabilities (in thousands, except share and per share amounts) September 30, 2025 (Unaudited) December 31, 2024 Assets Investments in securities of unaffiliated issuers at fair value (cost $ 2,640,965 and $ 1,567,756 , respectively) $ 2,645,502 $ 1,570,542 Cash and restricted cash 9,865 7,952 Cash equivalents and restricted cash equivalents 61,060 23,292 Interest receivable 14,401 11,272 Prepaid and other assets 768 — Receivable from Advisor — 731 Total assets $ 2,731,596 $ 1,613,789 Liabilities Lines of credit (net of unamortized debt issuance costs of $ 11,979 and $ 7,466 , respectively) $ 819,592 $ 654,704 Debt securitization (net of unamortized debt issuance costs of $ 3,192 and $ 0 , respectively) 344,805 — Payables for investments purchased 9,369 7,555 Distributions payable 35,338 22,954 Repurchase offer payable — 1,742 Interest payable 4,337 4,513 Management fee payable 3,580 2,167 Incentive fee payable 3,102 1,983 Directors' fees payable 63 38 Accrued expenses 2,145 1,748 Total liabilities $ 1,222,331 $ 697,404 Commitments and contingencies (Note 8); Recoupments (Note 3) Net assets Shares, no par value, unlimited shares authorized, 57,931,326 and 35,246,926 , respectively, shares issued and outstanding $ 1,510,529 $ 915,356 Distributable earnings (accumulated loss) ( 1,264 ) 1,029 Total net assets $ 1,509,265 $ 916,385 Total liabilities and net assets $ 2,731,596 $ 1,613,789 Net asset value per share $ 26.05 $ 26.00 The accompanying notes are an integral part of these consolidated financial statements. 2 StepStone Private Credit Fund LLC Consolidated Statements of Operations (Unaudited) (in thousands, except share and per share amounts) Three Months Ended September 30, 2025 Three Months Ended Septembe

View Full Filing

View this 10-Q filing on SEC EDGAR