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Date

Tuesday, March 3, 2026 at 10 a.m. ET

Call participants

  • Chief Executive Officer — Ken Leonard
  • President and Chief Investment Officer — Frank Karl
  • Chief Financial Officer — Terry Hart
  • Managing Director — Doug Goodwillie

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Takeaways

  • Net Investment Income Per Share -- $0.44, up from $0.43 in the previous quarter, exceeding the declared dividend.
  • Annualized Return on Equity -- 10.8% for the quarter, signaling consistent core earnings power.
  • Net Asset Value (NAV) Per Share -- $16.32 at quarter-end, down $0.02 from prior quarter, due to net realized and unrealized losses partially offset by income and share repurchases.
  • Dividend Coverage Ratio -- 110%, supporting a declared dividend of $0.40 per share for the next quarter.
  • Nonaccrual Investments -- 1.4% of total, unchanged quarter over quarter, including five positions out of 107 portfolio companies.
  • Portfolio Yield -- Weighted average of 10.3% on income-producing investments, decreasing from 10.6% the previous quarter, mainly reflecting lower reference rates.
  • Portfolio Composition -- 93% in senior secured debt and 95.7% of debt investments are floating rate, helping match asset-liability cash flows in the current rate environment.
  • New Investment Activity -- $113 million in new commitments and $99.3 million in total fundings, with $72.3 million representing new investments and $27 million from existing unfunded commitments.
  • Portfolio Repayments and Rotation -- $131.7 million repaid and $19.8 million in broadly syndicated loan (BSL) sales, resulting in a net funded investment reduction of $52.2 million.
  • Software Sector Exposure -- Approximately 2% of the portfolio, significantly below peer averages; management reiterates low exposure to “deep and cheap” software lending risk.
  • Average Spreads on New Floating Rate Loans -- Excluding one opportunistic investment, 529 basis points over SOFR; including it, 593 basis points over SOFR.
  • Portfolio Leverage and Liquidity -- Debt-to-equity ratio of 1.02x at quarter end, with $588.4 million in total liquidity ($43.4 million cash and $545 million undrawn debt capacity), placing the company at the low end of its 1.0x-1.25x target range.
  • Share Repurchase Activity -- $24.9 million repurchased during the quarter, totaling $14.5 million year-to-date through February 20 at an average price to NAV of 87%.
  • Portfolio Diversification -- 107 companies with an average position size of 0.9% of fair value; the top 10 investments comprise 20% of the portfolio.
  • Weighted Average Borrower Metrics (excluding watch list and opportunistic investments) -- Leverage at 4.5x, interest coverage of 2.4x, and loan-to-enterprise value of 43%.
  • Yield Composition -- Payment-in-kind (PIK) interest accounted for 7.4% of interest income during the quarter, up from prior quarters predominantly from the Regiment investment; 3.9% for the full year.
  • Credit Facility Update -- Extension and repricing of the largest facility to SOFR plus 195 basis points, down from SOFR plus 215 basis points.

Summary

Kayne Anderson BDC (KBDC 1.58%) delivered stable net investment income that continued to outpace its declared dividend, while management maintained a cautious credit profile and emphasized minimal software sector risk. Portfolio rotation out of broadly syndicated loans continued, affecting net funding but supporting higher spreads as new originations progress. The board reaffirmed the regular dividend and highlighted a strong liquidity position and ongoing share repurchase program, with the company positioned at the low end of its target leverage range.

  • Management said, “we expect to be able to pay the $0.40 dividend for the entirety of 2026.”
  • The company’s active reduction of G&A costs was attributed to its outsourced administration and fund accounting model. Management indicated its expenses could be double if traditional staff expenses were passed through.
  • Exposure to software is less than 2%, and less than 10% of the entire portfolio is on the watch list, reflecting stable credit trends.
  • The recent extension of the credit facility’s term and interest rate reduction are expected to lower future borrowing costs and contribute to the company’s targeted earnings growth.
  • Management highlighted only modest supply chain exposure due to the predominantly U.S.-based borrower set, following diligence related to prior tariff and inflation risks.

Industry glossary

  • Net Investment Income (NII): The company’s total investment income minus all expenses, excluding realized and unrealized gains or losses; used as the primary basis for dividend coverage in BDCs.
  • First Lien Senior Secured Debt: Loans with a primary claim on a borrower’s assets in the event of default, considered the most senior form of lender protection.
  • Broadly Syndicated Loans (BSLs): Large debt financings assembled by multiple lenders for corporate borrowers, generally more liquid but lower yielding than private loans.
  • Payment-in-Kind (PIK) Interest: Non-cash interest that accrues and is paid by increasing the principal balance rather than as periodic cash payments, often an early warning sign of borrower stress.
  • SOFR (Secured Overnight Financing Rate): The benchmark interest rate replacing LIBOR for loans and debt securities in the U.S., used for determining floating rate loan spreads.

Full Conference Call Transcript

Ken Leonard: Good morning, and thank you for joining us today. I will begin by providing an overview of our fourth quarter results, and then share some thoughts on the current direct lending market conditions. I plan to highlight how Kayne Anderson BDC, Inc.'s value lending strategy has created a unique portfolio well positioned to weather any current headwinds associated with the market dislocation related to software and/or tariffs. Frank Karl will then provide a more detailed overview of our portfolio and performance, before Terry Hart concludes with Kayne Anderson BDC, Inc.'s financial results. I am pleased to report another solid quarter for Kayne Anderson BDC, Inc. as we closed out 2025 on a strong note.

For the fourth quarter, we generated net investment income of $0.44 per share, representing an increase from $0.43 per share in the third quarter and a premium to the declared dividend. This performance translates to an annualized return on equity of 10.8%, demonstrating our continued ability to generate attractive risk-adjusted returns for shareholders in what has otherwise been a noisy period for the BDC sector. Our net asset value per share was $16.32 at quarter end, down slightly from $16.34 in the prior quarter, reflecting the impact of some marks of the portfolio which was partially offset by new investment originations and our strategic share repurchase activity during the period.

Our dividend coverage ratio was 110%, supporting our regular quarterly distribution, and our board of directors has declared a regular dividend of $0.40 per share for the first quarter payable on 04/16/2026 to shareholders of record as of 03/31/2026. I would like to add that based on our current view of the market and our portfolio, we expect to be able to pay the $0.40 dividend for the entirety of 2026. Our portfolio continues to perform well from a credit perspective, with only 1.4% of the investments on nonaccrual status. The portfolio's weighted average yield of approximately 10.3% on our income-producing investments positions us well to continue generating attractive returns in the current interest rate environment.

These results underscore the resilience of our investment approach and the quality of our portfolio construction, with 93% of our portfolio structured as senior secured debt. As mentioned in my introduction, our value lending strategy deliberately avoids highly leveraged loans—what we call “deep and cheap”—made to software businesses. While many BDC peers report more than 20% of their portfolios allocated there, our portfolio has approximately 2% to these sectors. Instead, Kayne Anderson private credit has a long track record providing loans to core middle market companies operating in traditional, stable industry sectors such as industrial and business services, distribution, and food products. Our underwriting emphasizes durable cash flows, tangible enterprise value, and disciplined leverage profiles.

Our new originations have had average leverage to the borrower between 3.8x and 4.2x for the last 25 years. We believe this approach enhances downside protection and positions the portfolio to perform consistently across market cycles. Turning to our investment activity in the fourth quarter, we maintained our disciplined approach to capital deployment while continuing to successfully source attractive opportunities in the private credit markets. During the quarter, we committed approximately $113 million to new private credit investments. Our total fundings reached $99.3 million, of which $72.3 million represented new investments and $27 million represented existing previously unfunded commitments. The funding activity reflects our selective approach to capital deployment, focusing on high-quality opportunities that meet our stringent underwriting standards.

During the fourth quarter, we experienced repayments of $131.7 million, which represents a healthy level of portfolio turnover and activity within our core middle market borrower base. Additionally, we continued our rotation out of broadly syndicated loans with sales of $19.8 million. This repayment activity, combined with $99.3 million in new fundings, resulted in a reduction in net funded investment activity of $52.2 million for the quarter. Excluding one higher-yielding opportunistic investment, the average spread in our new floating rate loans in the fourth quarter was 529 basis points over SOFR. Including that opportunistic investment, the average spread on our new floating rate loans was 593 basis points over SOFR.

So we continue to see a reasonably healthy premium in spreads in our core markets relative to the upper middle and broadly syndicated markets, but we have continued to see pressure on spreads overall relative to longer-term historical averages, albeit more or less at these levels for the last year. I would like to provide just a quick reminder on our strategic positioning and some aspects of our investment philosophy that we think differentiate us in the current market landscape. First, our portfolio is highly defensive by nature, with 93% of our investments in first lien senior secured debt positions.

We also prioritize control, and we are agent or co-agent in 75% of the investments we make, providing us with higher closing fees, enhanced information rights, and greater control in potential workout situations. Second, we are particularly conservative and selective in our capital deployment, prioritizing transactions where we can emphasize downside protection while capturing appropriate returns for the risk we are taking. This typically manifests itself in lower-than-market leverage levels across our portfolio. Third, 99% of our portfolio companies are backed by private equity sponsors who tend to provide best-in-class governance, operational expertise, and additional capital to these businesses when necessary.

Our selective capital deployment philosophy also means we are willing to maintain lower leverage and higher liquidity when we do not see compelling opportunities that meet our risk-adjusted return thresholds. At quarter end, our debt-to-equity ratio was 1.02x. This positions us at the lower end of our target leverage range of 1.0x to 1.25x. With total liquidity of $588.4 million, including $43.4 million in cash and $545 million in undrawn debt capacity, we maintain substantial flexibility for accretive capital deployment. We have worked hard to create a foundation for consistent income generation and capital protection that we believe will continue to serve our shareholders well, regardless of where we are in the credit cycle.

Turning to the current environment for private credit and BDCs, in Q4, conditions were characterized by a combination of lower base rates, relatively tight spreads, and somewhat muted M&A activity and continued concerns around credit performance. These factors together have pressured industry returns and reduced sector-wide ROEs compared to recent years. This is before the recent pressure on most of the market for software-related exposure and associated AI risks, regardless of whether one feels those risks are overblown. Despite the combination of headwinds, underlying credit fundamentals across middle market portfolios remain generally stable. Nonaccrual levels remain low in absolute terms across the sector, although managers continue to reference an elevated but manageable level of idiosyncratic credit stress within certain borrowers.

I think it is fair to say that we and most of our peers feel that current public BDC valuations are not in line with the continued strong fundamentals we see in our businesses. Looking ahead, we believe the industry is entering a period that will likely be marked by increased dispersion in outcomes for managers across the sector. As the potential for a prolonged AI software dislocation increases, capital will become tougher to raise in private credit.

When you add in the perception of undisciplined underwriting causing the potential for increased losses in the upper middle market, we think it is reasonably likely that spreads will widen over the next year or two as investors worry about a credit cycle. We believe that this will actually create a good environment for new originations and an attractive opportunity for Kayne Anderson BDC, Inc. to invest while other BDCs and direct lending platforms are dealing with their software portfolios. On a relative basis, we believe Kayne Anderson BDC, Inc. is very well positioned to continue to be a strong performing BDC delivering attractive risk-adjusted returns to our shareholders.

I will now pass the call over to Frank Karl to discuss our portfolio.

Frank Karl: Thank you, Ken. I will now provide a comprehensive overview of our portfolio composition and key performance metrics as of 12/31/2025. Our portfolio consists of 107 companies with a total fair market value of $2.2 billion, representing a well-diversified collection of core middle market investments. We maintain unfunded commitments of $287 million across our existing portfolio companies, providing us with additional opportunities to support our borrowers' growth initiatives. Since 12/31/2025, Kayne Anderson BDC, Inc. has closed or is in the final closing process on $50 million of new commitments, and we have seen a steady flow of opportunities so far this year, though it is too early to glean any sort of meaningful insights for total 2026 activity levels.

Investments in Kayne Anderson BDC, Inc.'s portfolio, excluding those on the watch list and our opportunistic investments, have a weighted average leverage of 4.5x, interest coverage of 2.4x, and loan-to-enterprise value of approximately 43%. Weighted average EBITDA of our private middle market portfolio companies is $52.7 million, reflecting our focus on established businesses with meaningful scale. For the quarter, the number of companies in our portfolio declined by one, mainly due to our continued rotation out of the broadly syndicated loan portfolio. We continue to have a highly diversified portfolio with an average position size of approximately 0.9% of fair value, and our top 10 investments represent only approximately 20% of our portfolio.

This approach allows us to maintain appropriate exposure to our best performing assets while also maintaining prudent diversification across the broader investment base. 95.7% of our debt investments are floating rate, which mirrors our liabilities, where the vast majority of our debt funding utilizes floating rate borrowings as well. The only fixed rate investment that we have is the SG Credit loan that closed in early Q3 2025 and has an 11% fixed coupon. Credit performance across our portfolio remains strong to date, with only 1.4% of total debt investments at fair value on nonaccrual, representing only five positions out of 107. That is flat quarter over quarter.

We continue to have financial covenants in all of our core first lien private middle market investments. Lastly, we have built this conservative portfolio with a healthy weighted average yield of approximately 10.3% on fair value of investments, excluding nonaccruals, and this reflects a small decline from 10.6% last quarter. This strong level of yield has been achieved with leverage levels at the borrower level that are considerably lower than many of our peers, and while we continue rotation out of broadly syndicated loans into higher spread private credit investments. Ken discussed the well-publicized software-related headwinds affecting the sector and emphasized that we believe Kayne Anderson BDC, Inc. is well positioned.

While AI-related risks are difficult to fully mitigate, we are confident that the businesses in our portfolio are much more likely to benefit from the use of AI than they are to be displaced by the technology. We remain firmly committed to the disciplined lending strategy that our management team has executed and refined successfully across multiple market cycles for more than two decades. Our credit performance metrics continue to demonstrate the strength and quality of our portfolio construction. As mentioned earlier, nonaccruals are flat quarter over quarter at 1.4% of total debt investments. We did see an uptick in PIK in the fourth quarter predominantly due to one investment, where Terry will provide more detail on that situation later.

We view this as consistent with normal course credit management in a diversified portfolio. As a quick reminder, our portfolio construction philosophy has always emphasized a conservative approach to borrower-level leverage and capital structure design. As I mentioned earlier, our weighted average borrower net leverage, where we are still seeing 4.5x, compares favorably to the broader market, where we are seeing many transactions with leverage levels of 5x to 6x or higher. We have maintained this disciplined approach as we believe that lending on cash flows, as opposed to just loan-to-value, better positions the portfolio for periods of potential distress or in slower growth environments.

Looking ahead to 2026, we expect our near- to medium-term investment activity pipeline to remain solid, supported by a slowly increasing flow of M&A transactions. While we expect market conditions to remain competitive, we believe that recent increases in overall uncertainty favor experienced lenders like us. With that, I will turn it over to Terry Hart to discuss Kayne Anderson BDC, Inc.'s fourth quarter 2025 financial results.

Terry Hart: Thanks, Frank. Let us first review results of operations. During the fourth quarter, we earned net income per share of $0.32 and net investment income per share was $0.44, compared to $0.43 in the prior quarter and $0.04 above our dividend. Total investment income for the fourth quarter was $61.9 million as compared to $61.4 million in the prior quarter. The increase to investment income was primarily driven by the full-quarter impact of portfolio rotations out of broadly syndicated loans into middle market loans and an increase in accelerated amortization of OID and prepayments related to realization activity.

Our portfolio yield decreased by 30 basis points, mainly related to lower reference rates, and PIK interest for the quarter was elevated from prior quarters as a result of year-to-date interest income from our investment in Regiment being converted to PIK during the fourth quarter. PIK interest represented 7.4% of total interest income during the quarter but continues to be relatively low at 3.9% for the full year. As mentioned, during the fourth quarter, we had approximately $2.6 million of accelerated amortization of OID and prepayment fees related to realization activity. Total expenses for the fourth quarter were $31.8 million compared to $31.3 million for the prior quarter.

The increase was primarily the result of higher average borrowings and the issuance of notes during the fourth quarter, partially offset by $500,000 of lower incentive management fees. During the quarter, our incentive management fees were reduced by the 12-quarter lookback incentive fee cap. During the fourth quarter, we had a small realized loss of approximately $600,000 related to the sale of several broadly syndicated loans, and we had net unrealized losses on the portfolio of $7.2 million compared to unrealized losses of $5 million in the prior quarter.

The unrealized losses were largely the result of negative fair value changes related to our investments in SCORE Sports, Regiment, and Bell USA, as well as accelerated amortization of OID related to repayment activity. These items were partially offset by positive marks on ArborWorks and Centerline. Additionally, we had deferred income tax expense of $300,000 related to unrealized gains on equity investments held in our taxable subsidiary. As of December 31, total assets were $2.3 billion and net assets were $1.1 billion. As of that date, our net asset value was $16.32 per share.

The decrease of $0.02 from $16.34 per share as of September 30 was comprised of $0.12 per share related to net realized and unrealized losses, partially offset by $0.04 of net investment income in excess of our dividend and $0.06 related to accretive share repurchases during the fourth quarter. At the end of the quarter, we had debt outstanding of $1.13 billion and our debt-to-equity ratio was 1.02x, which is a slight increase from 1.01x at the end of the third quarter. On October 15, we funded and issued $200 million of notes that were priced in August at attractive rates. As mentioned earlier, we had share repurchases of $24.9 million pursuant to our $100 million share repurchase program.

Year-to-date through February 20, Kayne Anderson BDC, Inc. has repurchased shares valued at approximately $14.5 million at an average price to NAV per share of 87%. Now turning to our distributions. On February 12, our board of directors declared a regular dividend for the first quarter of $0.40 per share to shareholders of record on 03/31/2026. As of December 31, our undistributed net investment income was approximately $0.21 per share. Our positioning to maximize earnings during 2026 centers on several key initiatives. First, we plan to complete the rotation out of our remaining lower-yielding BSL positions, which will provide additional capital to redeploy into higher-yielding direct lending opportunities.

Second, we intend to gradually optimize our leverage within our target debt-to-equity range of 1.0x to 1.25x. Our current leverage ratio of 1.02x provides us with substantial capacity to increase earnings through prudent use of additional leverage. Third, we continue to work with our banking partners to reduce our borrowing costs. In fact, yesterday, we announced the term extension of our largest credit facility, led by Wells Fargo, and the reduction of the interest rate on this facility from SOFR plus 215 basis points to SOFR plus 195 basis points. With that, Operator, please open the line for questions.

Operator: We will now begin the question and answer session. Our first question comes from the line of Michael Brown with UBS. Please go ahead.

Cory Johnson: Hi, this is Cory Johnson on for Mike. I just have a question. So in regards to your NII for this quarter, I am guessing it was a partial impact from Fed rate cuts. How much do you estimate that was in the fourth quarter, and how much would you expect to be the impact in the first quarter of this year?

Doug Goodwillie: Thank you for the question. This is Doug Goodwillie. Terry, do you want to handle that?

Terry Hart: Yes, sure. For the quarter itself, we can get you the exact details after the call, but I can say that we did not see the full impact of the Fed rate cuts in this quarter. During the first quarter, we would see the full impacts of that, so it was a partial impact during the quarter. Offsetting those cuts during the quarter, we saw an uptick in the full quarter's activity and full investment in SG Credit, and that helped offset some of those Fed cuts.

In addition to that, as we mentioned, we did see a full-quarter impact of the rotations out of BSLs during the third quarter, and then also in the fourth quarter we saw additional rotations out of the BSLs, and that offset some of those Fed cuts.

Cory Johnson: Great. Thank you. And just one follow-up. You had mentioned about there possibly being opportunity for you to be able to take advantage of as other BDCs went more to software companies or are dealing with their credit issues. Can you maybe just talk a little bit more about what opportunities you expect to be able to see and take advantage of?

Doug Goodwillie: Yes, thanks for the question. This is Doug Goodwillie again. I think when we say capitalize on that, it is capitalizing by buying loans from any other stressed BDCs, so to speak. We agree with some of the commentary in terms of probably a bit of an overcorrection in the public markets for the AI risk for some of those software portfolios. But what we are talking about there is when a BDC has 20%, 30%, 40% of their portfolio in software, that becomes time consuming.

If you are in any types of restructures or dealing with companies that could potentially be on a watch list, that tends to take up time, and then it also keeps valuations generally under, you know, a price to NAV of one in certain circumstances. So it allows those that are trading at better levels and those that have less stress and have portfolio capacity to put more capital to work in the current market.

Operator: Great. Thank you. Our next question will come from the line of Kenneth Lee with RBC Capital Markets. Please go ahead.

Kenneth S. Lee: Just one on the target portfolio ramp. Any updated outlook in terms of time frames when you might get to the targeted range within the 1.0x to 1.25x? And given the current environment and what you are seeing, do you think you could be closer to the lower end or the higher end of the range in the near term there? Thanks.

Frank Karl: Thanks, Ken. I will start there. Total deployment or net deployment for the quarter was effectively flat. I think we are seeing a decent amount of activity. I alluded to we have got $50 million of commitments sort of in process for Q1. We are still working out of the broadly syndicated book, which you did quarter over quarter and will continue to do in the first part of this year. Our repurchase program has been reasonably active, so there is a decent number of levers that we think will push that leverage ratio up a bit more towards the middle of the range.

But putting any specific time frame on it is difficult to do and will depend on market conditions and deployment activity, which, again, I think we are reasonably seeing signs of some increases in activity. It will be a steady sort of progression over the next couple of quarters.

Doug Goodwillie: Right. I think, Ken, at the outset of what may be a bit of a dislocation in the credit markets, to be at 1.0x, with $550 million of dry powder, so to speak, or liquidity, we think it is a good position to be in. So we would expect that to increase beyond the 1.02x, I think, where we are as of this quarter, but likely to remain somewhere in the 1.0x to 1.2x range over the next few quarters.

Kenneth S. Lee: Gotcha. Very helpful there. And just one follow-up, if I may, and appreciate that the portfolio with only 2% of software exposure. Wondering if you could just talk a little bit more about any investments on the current watch list, any particular areas where you are seeing any kind of stress within the portfolio or otherwise challenges within the companies there? Thanks.

Doug Goodwillie: Sure. This is Doug again. I will start. As it relates to software companies, there are no investments in software companies that we have that are on the watch list. As we talked about in Ken's section of the call, it is less than 2% of the portfolio. Less than 10% of the entire portfolio is on the watch list, and I think from our perspective, there are five credits that are on nonaccrual. So we think that is kind of, frankly, a normal course watch list. An amount of nonaccrual kind of in the mid-1% range is fairly low, I think, in respect to our competition. So we are happy with the portfolio.

I would say from our perspective, I am not sure that anything that we have seen is all that new in terms of there has been continued pressure on the consumer affecting two or three of the companies on our watch list, and then, frankly, some management missteps that we are working with the sponsors and some management teams to correct. But those are really the two themes that do not really come back to what is going on around AI. I think what we have seen in terms of a theme in terms of stress has been a little bit more on the consumer side over the last 12 to 18 months.

Kenneth S. Lee: Gotcha. Super helpful there. Thank you very much.

Operator: Our next question comes from the line of Binyan with Wells Fargo. Please go ahead.

Binyan: Hi, everyone. Good morning. Just to start, a small follow-up on the preceding topic with Ken there. It looks like you have a pretty good clip of 2026 maturities. Is there a big overlay with that cohort and then the sort of underperformers as you described?

Doug Goodwillie: I think that when we think about the repayment outlook, it has been relatively slow in the first quarter and, thus far, I think for the second quarter. We will go through it name by name. It looks like it picks up at a reasonable level into the third and fourth quarter.

Frank Karl: There is no concentration of names on the watch list in 2026 maturities.

Binyan: Okay. That is helpful. And then we also want to ask about G&A, broadly in the context of the size of your book, the size of your platform. You guys are just off the scatter plot, in a good way, in regards to G&A expense being very low. Can you walk us through as many specifics as you will give as to what are the sort of conventional items that you elect not to expense that, say, your advisers or consultants told you that you could? And then how can we be sure that you will not change your mind one day in the future? Thanks.

Doug Goodwillie: Yes, good question. I will turn it over to Terry in terms of policy and what could be expensed, and maybe give some idea of that quantity too, Terry, as you answer the question.

Terry Hart: Sure. Our agreements do allow us to pass through, and as you see other managers passing through, the cost of the CFO, in some cases the cost of the Chief Compliance Officer, and then their staff. We have a model where we outsource a lot of our administration and fund accounting, and so we do pass that through, but that tends to be much cheaper than if we had our own staff and then charged back all of that time. In magnitude, if you look at funds that are similar in size or BDCs that are similar in size, our ratio could be twice as high as it is today.

From 40 basis points it could be 80 basis points or higher if we were to charge some of those things through. I think we take pride in having a low G&A cost generally, and I think that we do the right thing for our investors. Especially in an environment where coverage is tight, I think that we are going to be very mindful of our G&A expense. As we grow, are we always going to have a zero for any of those costs? That is hard to say, but like I said, we are going to be very mindful of our G&A as it relates to coverage and our dividend policy.

Binyan: Very helpful. Thanks so much.

Doug Goodwillie: Thanks, Binyan.

Operator: Again, to ask a question, press 1. Our next question will come from the line of Paul Johnson with KBW. Please go ahead.

Paul Johnson: Yes, good morning. Thanks for taking my questions. Just wondering your thoughts generally: what is the supply chain sort of risk within the portfolio—food companies, distributors, trading companies, those sorts of businesses—given the recent disruption in the shipping market in the Middle East?

Doug Goodwillie: Yes. You are right that I think when we talk about our value lending philosophy and the stable industries, our biggest industries are industrial and business services, food products, health care. But the vast majority, and I will let Lee or Frank weigh in as well, of the supply chain is from the U.S. We took a deep dive on this when we were analyzing the prior and, I guess, potential tariff risk on the portfolio, finding it to be fairly minimal. But I will let Frank give some specific stats.

Frank Karl: It gets back to—it is not the same analysis as the tariff risk—but there are some downstream effects. Is inflation picking back up, and what does that mean over the near and medium term for our borrowers? We think our book performed very well through a substantially elevated inflationary period. We think our book performed very well through tariffs and tariff uncertainty, and I think we would expect more of the same, admitting that it is hard to see around the corner for all scenarios and downstream effects.

Paul Johnson: Got it. Thanks for that. And then in terms of the remaining BSL rotation, you have already obviously taken a fairly measured approach to ramping the portfolio. Loan prices are obviously trading at a more depressed level this quarter. If that kind of sustains itself for the next few quarters or so, for any of the liquid names in the portfolio, how willing are you to be selling out at a small loss to fund new originations as opposed to kind of holding out for the volatility to maturity?

Doug Goodwillie: Yes, it is a good question. This is Doug. I will start. We are down to a handful of BSL names at this point. I think it was less than $50 million at the end of the quarter, and it is down from there. I will put Frank on the exact spot, but we have been actively continuing to exit that portfolio in this quarter.

I think the good part of where we are at from a leverage perspective is we have still a decent ways to go before we are at the point of needing to make a decision around exiting a position at a loss—albeit very small dollars given the size of this book—versus funding new private credit assets.

Paul Johnson: Got it. Thanks. That is all for me. Thank you.

Operator: This concludes our question and answer session, and I will hand the call back over to Goodwillie for any closing comments.

Doug Goodwillie: I would like to thank everyone who joined our earnings call today for their time and continued interest in Kayne Anderson BDC, Inc. We hope you enjoyed the call and look forward to speaking again in a few months to discuss Q1 2026 performance. Thank you.

Operator: This concludes today's call. Thank you all for joining. You may now disconnect.