Palmer Square Capital BDC Inc. (PSBD) reported fourth‑quarter and full‑year 2025 results that fell short of analyst expectations. Total investment income for the quarter was $29.8 million, down from $34.9 million in Q4 2024, while net investment income was $13.1 million, or $0.41 per share, versus $14.8 million, or $0.45 per share, in the prior year’s quarter. The company’s revenue missed the consensus estimate of $31.1 million by $1.3 million, and EPS missed the consensus of $0.42 by $0.01.
The results also reflected a decline in earnings momentum when compared to recent periods. Q3 2025 EPS was $0.43, beating the estimate of $0.41, and revenue was $31.69 million, surpassing the estimate of $30.61 million. In contrast, Q4 2025 EPS of $0.41 and revenue of $29.8 million both fell short of expectations, indicating a slowdown in the company’s core income stream.
The shortfall is largely attributable to a tightening rate environment that has pressured the BDC’s portfolio of first‑lien senior secured debt and CLO exposures. Net realized and unrealized losses surged to $18.4 million in Q4 2025 from $2.9 million in Q4 2024, while the weighted‑average portfolio yield remained at 11.30 %. The non‑accrual rate fell to 0.09 % of the portfolio, and leverage stayed steady at 1.54×, underscoring the firm’s cautious balance‑sheet stance.
NAV per share declined from $15.39 at the end of Q3 2025 to $14.85 at the end of Q4 2025, and from $16.50 at the end of 2024 to $14.85 at the end of 2025, reflecting erosion in the underlying asset base. The company declared a regular base dividend of $0.36 per share for Q1 2026 and a supplemental dividend of $0.07 per share for Q4 2025, payable on January 14 2026.
Management emphasized “steady execution throughout 2025 amid dynamic market conditions” and highlighted healthier sponsor engagement and deal pipelines compared to a year ago. However, the company did not provide any quantitative guidance for the coming year, instead focusing on disciplined underwriting and portfolio positioning to support long‑term shareholder outcomes.
Investor sentiment was mixed, with concerns centered on the sharp rise in unrealized losses and the decline in NAV per share. The earnings miss, combined with the lack of forward guidance, suggests a cautious outlook for the near term while highlighting potential structural challenges in the portfolio’s performance trajectory.
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