Ares Capital Corp.

For the rolling 12 months ended March 31, 2024, payment-in-kind (PIK) income and dividends were flat from year-end 2023 at 13.9% of gross investment income. While at the higher end of the peer range, PIK income has remained relatively stable since the beginning of the pandemic in 2020. Additionally, the company has 11% exposure to preferred stock, which generally has a PIK component that boost ARCC's PIK income and dividends. Additionally, unlike most peers, ARCC's stock typically trades at a premium to net asset value (NAV). This allows the company to raise funding from equity markets, further supporting its financial flexibility. The company also has $2.4 billion in unfunded commitments to its portfolio companies that include delayed-draw term loans. While

...We expect the asset quality of Ares Capital Corp. (ARCC) to remain stable despite higher-for-longer interest rates and cooling but persistent inflation. As of March 31, 2024, loans on nonaccruals at cost increased to around 2.6%, up from 1.9% at year-end 2023 but still below the company's long-term average of around 3%. The portfolio's weighted average interest coverage was 1.6x--unchanged from the prior three quarters and marginally down from 1.7x on March 31, 2023. For the rolling 12 months ended March 31, 2024, payment-in-kind (PIK) income and dividends were flat from year-end 2023 at 13.9% of gross investment income. While at the higher end of the peer range, PIK income has remained relatively stable since the beginning of the pandemic in 2020. Additionally, the company has 11% exposure to preferred stock, which generally has a PIK component that boost ARCC's PIK income and dividends....

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