Steele Creek NAV Dips to $53.4M Amid Portfolio Rebalancing

TL;DR

**Steele Creek's NAV decline and high-yield focus make it a risky bet, but active portfolio shifts could signal a contrarian opportunity for aggressive traders.**

AI Summary

Steele Creek Capital Corporation, a BDC externally managed by Steele Creek Investment Management LLC, reported a fair value investment portfolio of approximately $115.3 million as of December 31, 2025, a decrease from $121.6 million in 2024. Net asset value (NAV) also declined to $53.4 million in 2025 from $54.7 million in 2024. The company primarily invests in syndicated corporate bank loans, bonds, other debt securities, and structured products, with a focus on generating high current income. During 2025, Steele Creek invested $88.5 million and received $91.2 million from investments sold or repaid, indicating active portfolio management. A key strategic change was the complete winding down of Funding I by September 24, 2025, and the formation of Funding II on August 28, 2024, to hold investments and serve as collateral for a Bank of America credit facility. Risks include investing in below investment grade securities, known as 'high yield bonds' or 'junk bonds,' and 'Covenant-Lite Loans' which offer less lender protection. The strategic outlook emphasizes leveraging the Investment Team's experience in broadly syndicated loans and CLO Securities to capitalize on perceived misvalued assets and attractive risk-adjusted returns in a stressed U.S. economy.

Why It Matters

Steele Creek Capital's 10-K reveals a slight dip in NAV and portfolio value, signaling a challenging environment for BDCs focused on high-yield debt. For investors, this highlights the inherent risks in below-investment-grade securities and the importance of active management in volatile markets. The shift from Funding I to Funding II and the reliance on external management by Moelis Asset Management underscore the competitive landscape where operational efficiency and strong advisory relationships are crucial. Employees and customers are indirectly affected by the firm's financial health and strategic direction, particularly its ability to generate returns and manage risk in a market segment characterized by 'junk bonds' and 'Covenant-Lite Loans.'

Risk Assessment

Risk Level: high — The company's investment strategy explicitly targets 'below investment grade' securities, also known as 'high yield bonds' or 'junk bonds,' which inherently carry greater credit and liquidity risk. Furthermore, a significant portion of its loans may be 'Covenant-Lite Loans,' meaning they offer fewer protections to lenders and increase default risk, as stated in the filing.

Analyst Insight

Investors should exercise extreme caution due to the high-risk investment profile, focusing on the company's ability to generate current income and manage its leverage. Monitor the quarterly share repurchase program and the performance of its 'Covenant-Lite' and 'junk bond' portfolio for signs of distress or opportunity.

Key Numbers

• $115.3M — Fair Value of Investment Portfolio (As of December 31, 2025, decreased from $121.6M in 2024)
• $53.4M — Net Asset Value (NAV) (As of December 31, 2025, decreased from $54.7M in 2024)
• 222 — Number of Investments (As of December 31, 2025, increased from 190 in 2024)
• $88.5M — Investments Made (During the year ended December 31, 2025)
• $91.2M — Proceeds from Investments Sold/Repaid (During the year ended December 31, 2025)
• 6,026,867 — Shares of Common Stock Outstanding (As of March 25, 2026)
• 1,190,243 — Shares Tendered through Repurchase Program (As of December 31, 2025)
• 10 — Investment Professionals (Comprised the Investment Team as of December 31, 2025)
• 19 — Average Years of Experience (Senior Investment Team members in broadly syndicated loan market)
• 30% — Maximum Portfolio Allocation (To equity and junior debt tranches of CLO Securities and other purchases)

Key Players & Entities

• Steele Creek Capital Corporation (company) — Registrant and BDC
• Steele Creek Investment Management LLC (company) — Investment Advisor and Administrator
• Moelis Asset Management LP (company) — Indirect parent of Investment Advisor
• Kenneth Moelis (person) — Ultimate controlling shareholder of Moelis Asset and Moelis & Company
• BNP Paribas (company) — Collateral recipient for Funding I
• Bank of America (company) — Collateral recipient for Funding II
• Glenn Duffy (person) — Chair of the Investment Committee
• U.S. Bank (company) — Sub-Administrator for administrative functions
• SEC (regulator) — Regulates investment advisers
• Moelis & Company (company) — Global independent investment bank under common control with Moelis Asset

FAQ

Risk Factors

• Investment in Below Investment Grade Securities [high — financial]: The Company primarily invests in fixed income instruments, including broadly syndicated bank loans, structured products, mezzanine financings and senior secured bonds. A significant portion of these investments are rated below investment grade, commonly referred to as 'high yield bonds' or 'junk bonds'. These securities carry a higher risk of default and price volatility compared to investment-grade securities.
• Covenant-Lite Loans [medium — financial]: The Company invests in 'Covenant-Lite Loans,' which are debt instruments with fewer restrictive covenants for borrowers. This structure offers less protection to lenders, potentially increasing the risk of loss in the event of borrower default or financial distress.
• Economic Downturn Impact [high — market]: The Company's strategic outlook emphasizes capitalizing on perceived misvalued assets and attractive risk-adjusted returns in a stressed U.S. economy. However, a prolonged or severe economic downturn could negatively impact the performance of its investment portfolio, leading to increased defaults and reduced valuations.
• Reliance on Investment Advisor [medium — operational]: Steele Creek Capital Corporation is externally managed by Steele Creek Investment Management LLC. The Company's success is heavily dependent on the expertise, performance, and retention of the Investment Advisor's investment team, which consists of 10 investment professionals with an average of 19 years of experience in the broadly syndicated loan market.
• Portfolio Concentration [medium — financial]: While the Company invests in a variety of debt securities, there is a stated maximum portfolio allocation of 30% to equity and junior debt tranches of CLO Securities and other purchases. This concentration could expose the Company to significant losses if these specific asset classes underperform.
• Fair Value and NAV Decline [medium — financial]: The fair value of the investment portfolio decreased to $115.3 million as of December 31, 2025, from $121.6 million in 2024. Similarly, Net Asset Value (NAV) declined to $53.4 million from $54.7 million. This trend indicates potential challenges in asset appreciation or increased impairments.

Industry Context

Steele Creek Capital Corporation operates within the Business Development Company (BDC) sector, which focuses on providing capital to small and medium-sized enterprises. The industry is characterized by a focus on generating current income through debt investments, often in below-investment-grade securities. Competition exists among BDCs and other private credit providers, with a prevailing trend towards active portfolio management and leveraging specialized investment expertise in areas like syndicated loans and structured products.

Regulatory Implications

As a BDC regulated under the Investment Company Act of 1940, Steele Creek Capital Corp faces specific compliance requirements regarding its investment activities, portfolio diversification, and shareholder protections. Its election to be treated as a RIC impacts its tax obligations and dividend distribution policies. The company must also adhere to regulations governing investment advisors, as it is externally managed.

What Investors Should Do

1. Monitor portfolio performance closely, paying attention to the impact of investments in below-investment-grade securities and covenant-lite loans.
2. Evaluate the effectiveness of the Investment Advisor's strategy in capitalizing on perceived misvalued assets within a stressed U.S. economy.
3. Assess the impact of the shift from Funding I to Funding II on the company's leverage and borrowing costs.
4. Review the company's share repurchase program activity and its impact on NAV per share.

Key Dates

• 2024-08-28: Formation of Funding II — Established a new special purpose financing vehicle to hold investments and serve as collateral for a Bank of America credit facility, indicating ongoing financing strategies.
• 2025-09-24: Winding down of Funding I — Completed the closure of the previous financing vehicle, Funding I, signifying a transition in the Company's debt structure and collateral arrangements.

Glossary

Business Development Company (BDC)

A type of closed-end investment company that invests in small and medium-sized businesses, often providing capital and strategic advice. BDCs are regulated under the Investment Company Act of 1940. (Steele Creek Capital Corp is registered and regulated as a BDC, defining its investment mandate and operational framework.)

Regulated Investment Company (RIC)

A U.S. tax designation for investment companies that meet specific distribution and diversification requirements, allowing them to avoid corporate income tax by passing income and capital gains directly to shareholders. (Steele Creek Capital Corp elects RIC status to manage its tax obligations, impacting how it distributes earnings to investors.)

Broadly Syndicated Loans

Large loans, typically made by a group (syndicate) of lenders to a single borrower, that are then traded in the secondary market. These are often made to larger corporations. (This is a primary investment focus for Steele Creek Capital Corp, aiming to generate current income.)

Covenant-Lite Loans

Loans with fewer restrictive covenants imposed on the borrower, offering less protection to lenders compared to traditional loans. (Represents a specific risk factor for Steele Creek Capital Corp due to reduced lender protections.)

CLO Securities

Collateralized Loan Obligations are complex structured finance products backed by a pool of corporate loans. (Steele Creek Capital Corp invests in these, particularly equity and junior debt tranches, which carry higher risk and potential return.)

Net Asset Value (NAV)

The per-share market value of a fund's assets minus its liabilities. For a BDC, it represents the value of its investments and other assets, less its debts and expenses. (The decline in NAV from $54.7M in 2024 to $53.4M in 2025 is a key indicator of the company's performance.)

Year-Over-Year Comparison

The fair value of Steele Creek Capital Corp's investment portfolio decreased to $115.3 million in 2025 from $121.6 million in 2024, and its Net Asset Value (NAV) also declined from $54.7 million to $53.4 million. While the number of investments increased from 190 to 222, indicating active portfolio expansion or diversification, the overall value and NAV contraction suggest potential headwinds or valuation adjustments within the portfolio. The company also completed the winding down of its Funding I vehicle and continued operations with Funding II, signaling a shift in its financing structure.

Key Financial Figures

• $0.001 — (g) of the Act: Common Stock, par value $0.001 per share Indicate by check mark if th
• $115,326 thousand — ed companies that totaled approximately $115,326 thousand at fair value and our net asset value (
• $53,448 thousand — lue and our net asset value ("NAV") was $53,448 thousand. Due to the liquidity in our portfolio
• $88,546 thousand — d the leverage loan market, we invested $88,546 thousand and received $91,202 thousand from inve
• $91,202 thousand — invested $88,546 thousand and received $91,202 thousand from investments sold or repaid during
• $121,572 thousand — ed companies that totaled approximately $121,572 thousand at fair value and our NAV was $54,684 t
• $54,684 thousand — thousand at fair value and our NAV was $54,684 thousand. Due to the liquidity in our portfolio
• $262,909 thousand — d the leverage loan market, we invested $262,909 thousand and received $278,598 thousand from inv
• $278,598 thousand — invested $262,909 thousand and received $278,598 thousand from investments sold or repaid during
• $1.54 — panies. The BSL market is approximately $1.54 trillion and offers a plethora of inves

Filing Documents

• ea0275882-10k_steele.htm (10-K) — 5567KB
• ea027588201ex4-1_steele.htm (EX-4.1) — 51KB
• ea027588201ex10-7_steele.htm (EX-10.7) — 192KB
• ea027588201ex14-1_steele.htm (EX-14.1) — 188KB
• ea027588201ex21-1_steele.htm (EX-21.1) — 2KB
• ea027588201ex31-1_steele.htm (EX-31.1) — 11KB
• ea027588201ex31-2_steele.htm (EX-31.2) — 11KB
• ea027588201ex32-1_steele.htm (EX-32.1) — 4KB
• ea027588201ex32-2_steele.htm (EX-32.2) — 4KB
• ex10-13_001.jpg (GRAPHIC) — 11KB
• ex14-1_001.jpg (GRAPHIC) — 28KB
• ex14-1_002.jpg (GRAPHIC) — 2KB
• 0001213900-26-034052.txt ( ) — 17387KB
• ck0000181782-20251231.xsd (EX-101.SCH) — 61KB
• ck0000181782-20251231_cal.xml (EX-101.CAL) — 38KB
• ck0000181782-20251231_def.xml (EX-101.DEF) — 215KB
• ck0000181782-20251231_lab.xml (EX-101.LAB) — 471KB
• ck0000181782-20251231_pre.xml (EX-101.PRE) — 239KB
• ea0275882-10k_steele_htm.xml (XML) — 4224KB

Business

Business 1 Item 1A. Risk Factors 30 Item 1B. Unresolved Staff Comments 68 Item 1C. Cybersecurity 68 Item 2.

Properties

Properties 69 Item 3. Legal Proceedings 69 Item 4. Mine Safety Disclosures 69 PART II Item 5. Market for Registrant's Common Equity, Related Stockholders and Issuer Purchase of Equity Securities 70 Item 6. Reserved 71 Item 7. Management's Discussion and Analysis of Financial Condition and Results of Operations 71 Item 7A. Quantitative and Qualitative Disclosures about Market Risk 89 Item 8. Consolidated

Financial Statements

Financial Statements F-1 Item 9. Changes in Disagreements with Accountants on Accounting and Financial Disclosure 90 Item 9A. Controls and Procedures 90 Item 9B. Other Information 90 Item 9C. Disclosure Regarding Foreign Jurisdictions that Prevents Inspections 90 PART III Item 10. Directors, Executive Officers and Corporate Governance 91 Item 11. Executive Compensation 91 Item 12. Security 91 Item 13. Certain Relationships and Related Transaction and Director Independence 91 Item 14. Principal Accountant Fees and Services 91 PART IV Item 15. Exhibits and Financial Statement Schedules 92 Item 16. Form 10-K Summary 92

Signatures

Signatures 93 i PART I

Business

Item 1. Business Steele Creek Capital Corporation (which is referred to as the "Company", "we", "us" and "our") is a financial services company that primarily invests in syndicated corporate bank loans, bonds, other debt securities, and structured products. We are an externally managed, non-diversified, closed-end management investment company that has elected to be regulated as a business development company ("BDC") under the Investment Company Act of 1940, as amended (the "1940 Act"), and has elected to be treated for U.S. federal income tax purposes, and to qualify annually thereafter, as a regulated investment company ("RIC") under the Internal Revenue Code of 1986, as amended (the "Code"). We were formed on June 3, 2020 as a Delaware limited liability company under the name MSC Capital LLC. MSC Capital LLC was formed by Steele Creek Investment Management LLC (the "Investment Advisor"), Moelis Asset Management LP and two affiliates (the "Members"). On October 7, 2020, MSC Capital LLC converted to a Maryland corporation, named Steele Creek Capital Corporation. On September 3, 2020, we formed a wholly-owned consolidated special purpose financing vehicle, Steele Creek Capital Funding I, LLC ("Funding I"), a Delaware limited liability company. Funding I was formed to hold the Company's investments, and a first priority continuing security interest in, to and under each investment, all underlying investments and underlying assets were granted to BNP Paribas ("BNP") and to be used as collateral for the credit facility. On August 28, 2024, we formed a wholly-owned special purpose financing vehicle, Steele Creek Capital Funding II, LLC ("Funding II"), a Delaware limited liability company. Funding II was formed to hold the Company's investments, and a first priority continuing security interest in, to and under each investment, all underlying investments and underlying assets were granted to Bank of America ("BoA") and to be used as collateral for the credit facility.

View Full Filing

View this 10-K filing on SEC EDGAR