Nuveen Churchill Direct Lending Corp.

11/03/2026 | Press release | Distributed by Public on 11/03/2026 05:05

Quarterly Report for Quarter Ending September 30, 2026 (Form 10-Q)

MANAGEMENT'S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION AND RESULTS OF OPERATIONS
The information in this management's discussion and analysis of our financial condition and results of operations relates to Nuveen Churchill Direct Lending Corp., including its wholly owned subsidiaries (collectively, "we", "us", "our", or the "Company"). The information in this section should be read in conjunction with our consolidated financial statements and related notes appearing elsewhere in this Quarterly Report on Form 10-Q. This discussion contains forward-looking statements, which relate to future events, or the future performance or financial condition of and involves numerous risks and uncertainties, including, but not limited to, those set forth in "Risk Factors" in Part I, Item 1A of our Annual Report on Form 10-K for the year ended December 31, 2025 and Part II, Item 1A of and elsewhere in this Quarterly Report on Form 10-Q. This discussion also should be read in conjunction with the "Forward-Looking Statements" in this Quarterly Report on Form 10-Q. Actual results could differ materially from those implied or expressed in any forward-looking statements.
Overview
We are a closed-end, externally managed, non-diversified 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"). In addition, we have elected, and intend to qualify annually, to be treated for U.S. federal income tax purposes as a regulated investment company ("RIC") under subchapter M of the Internal Revenue Code of 1986, as amended (the "Code"). We are externally managed by Churchill DLC Advisor LLC (the "Adviser"), which has delegated substantially all of its day-to-day portfolio management obligations to Churchill Asset Management LLC ("Churchill"). The Adviser and Churchill are subsidiaries of Nuveen, LLC ("Nuveen"), a wholly owned subsidiary of Teachers Insurance and Annuity Association of America ("TIAA").
Our investment objective is to generate attractive risk-adjusted returns primarily through current income by investing primarily in senior secured loans to private equity-owned U.S. middle market companies, which we define as companies with approximately $10 million to $250 million of annual earnings before interest, taxes, depreciation and amortization ("EBITDA"). We primarily focus on investing in U.S. middle market companies, with $10 million to $100 million in EBITDA, which we consider the core middle market. Our portfolio is comprised primarily of first-lien senior secured debt and unitranche loans. Although it is not our primary strategy, we also opportunistically invest in junior capital opportunities, including second-lien loans, subordinated debt, and equity co-investments and similar equity-related securities.
We have several wholly owned subsidiaries that are consolidated in these financial statements, including Churchill NCDLC CLO-I, LLC ("CLO-I") and Churchill NCDLC CLO-II, LLC ("CLO-II") each of which has completed a term debt securitization, and NCDL Equity Holdings LLC ("NCDL Equity Holdings"), which was formed to hold certain equity-related securities.
On January 29, 2024, we closed our initial public offering ("IPO") and our common stock began trading on the New York Stock Exchange ("NYSE") under the symbol "NCDL" on January 25, 2024.
Key Components of Our Results of Operations
Investments
Our level of investment activity varies substantially from period to period depending on many factors, including the amount we have available to invest, the amount of debt and equity capital available to middle market companies, the level of merger and acquisition and refinancing activity in the middle market, prevailing interest rates and capital market conditions, the general economic environment, and the competitive environment for the types of investments we make.
To qualify as a RIC, we must, among other things, meet certain source-of-income and asset diversification requirements.
As a BDC, we are required to comply with certain regulatory requirements. For instance, we are generally required to invest at least 70% of our total assets in "qualifying assets," including securities of private or thinly traded public U.S. companies, cash, cash equivalents, U.S. government securities and high-quality debt investments that mature in one year or less.
As a BDC, we must not acquire any assets other than "qualifying assets" specified in the 1940 Act unless, at the time the acquisition is made, at least 70% of our total assets are qualifying assets (with certain limited exceptions). Qualifying assets include investments in "eligible portfolio companies." Under the 1940 Act, the term "eligible portfolio company" includes all private companies, companies whose securities are not listed on a national securities exchange, and certain public companies that have listed their securities on a national securities exchange and have a market capitalization of less than $250.0 million. In addition, we must be organized in the United States to qualify as a BDC.
Revenues
We generate revenue primarily in the form of interest income on debt investments, which generally bear interest at a floating rate based on a benchmark such as the Secured Overnight Financing Rate ("SOFR"). Certain investments may also include payment-in-kind ("PIK") provisions whereby interest accrues and is added to loan principal. We may also generate income from dividends on equity investments, capital gains on the sale of securities, and fees associated with our investment activities, including prepayment, amendment, and origination fees, as well as fees for managerial assistance rendered to portfolio companies. The frequency and volume of investment repayments and sales fluctuate significantly from period to period.
Expenses
The Advisers and their respective affiliates are responsible for bearing the compensation and routine overhead expenses allocable to personnel providing investment advisory and management services to us. We bear all other out-of-pocket costs and expenses of its operations and transactions, including those costs and expenses incidental to the provision of investment advisory and management services to us (such as items in the third and fourth bullets listed below).
•our organizational costs;
•calculating net asset value (including the cost and expenses of any independent valuation firm);
•expenses, including travel, entertainment, lodging and meal expenses, incurred by the Advisers, or members of their investment teams or payable to third parties, in evaluating, developing, negotiating, structuring and performing due diligence on prospective portfolio companies, including such expenses related to potential investments that were not consummated, and, if necessary, enforcing our rights;
•fees and expenses incurred by the Advisers (and their affiliates) or the Administrator (or its affiliates) payable to third parties, including agents, consultants or other advisors, in monitoring financial and legal affairs for us and in conducting research and due diligence on prospective investments and equity sponsors, analyzing investment opportunities, structuring our investments and monitoring investments and portfolio companies on an ongoing basis;
•costs and expenses incurred in connection with the incurrence of leverage and indebtedness, including borrowings, credit facilities, securitizations, margin financing, and including any principal or interest on our borrowings and indebtedness;
•offerings, sales, and repurchases of our shares and other securities;
•fees and expenses payable under any underwriting, dealer manager or placement agent agreements;
•investment advisory fees payable under the Advisory Agreement;
•administration fees and expenses, if any, payable under the Administration Agreement (including payments under the Administration Agreement between us and the Administrator, based upon our allocable portion of the Administrator's overhead in performing its obligations under the Administration Agreement, including rent and the allocable portion of the cost of our chief financial officer and chief compliance officer, and their respective staffs);
•any applicable administrative agent fees or loan arranging fees incurred with respect to portfolio investments by the Advisers, the Administrator or an affiliate thereof;
•costs and expenses incurred in implementing or maintaining third-party or proprietary software tools, programs or other technology;
•transfer agent, dividend agent and custodial fees and expenses;
•federal and state registration fees;
•all costs of registration and listing our shares on any securities exchange;
•federal, state and local taxes;
•independent directors' fees and expenses, including reasonable travel, entertainment, lodging and meal expenses, and any legal counsel or other advisors retained by, or at the discretion or for the benefit of, the independent directors;
•costs of preparing and filing reports or other documents required by the SEC or other regulators, and all fees, costs and expenses related to compliance-related matters and regulatory filings related to our activities and/or other regulatory filings, notices or disclosures of the Advisers and their affiliates relating to us and its activities;
•costs of any reports, proxy statements or other notices to shareholders, including printing costs;
•fidelity bond, directors and officers/errors and omissions liability insurance, and any other insurance premiums;
•direct costs and expenses of administration, including printing, mailing, long distance telephone, copying, secretarial and other staff, independent auditors, tax preparers and outside legal costs;
•proxy voting expenses;
•all expenses relating to payments of dividends or interest or distributions in cash or any other form made or caused to be made by our Board to or on account of holders of our securities, including in connection with any dividend reinvestment plan or direct stock purchase plan;
•costs incurred in connection with the formation or maintenance of entities or vehicles to hold our assets for tax or other purposes;
•the allocated costs incurred by the Advisers and/or the Administrator in providing managerial assistance to those portfolio companies that request;
•allocable fees and expenses associated with marketing efforts on our behalf;
•all fees, costs and expenses of any litigation involving us or our portfolio companies and the amount of any judgments or settlements paid in connection therewith, directors and officers, liability or other insurance (including costs of title insurance) and indemnification (including advancement of any fees, costs or expenses to persons entitled to indemnification) or extraordinary expense or liability relating to our affairs;
•fees, costs and expenses of winding up and liquidating our assets; and
•all other expenses incurred by us, the Advisers or the Administrator in connection with administering our business.
Portfolio and Investment Activity
Portfolio Composition
Our portfolio and investment activity for the three and nine months ended September 30, 2026 and 2025 is presented below (amounts in thousands):
Three Months Ended September 30,
2026 2025
Net funded investment activity
New gross commitments at par 1
$ 213,290 $ 29,236
Net investments funded 134,789 36,277
Investments sold or repaid (192,361) (61,324)
Net funded (repaid) investment activity $ (57,572) $ (25,047)
Gross commitments at par 1
First-lien debt
$ 117,754 $ 22,100
Subordinated debt
- 3,072
Equity investments
2,786 4,064
Investments in Joint Venture 92,750 -
Total gross commitments $ 213,290 $ 29,236
Portfolio company activity
Portfolio companies, beginning of period 244 207
Number of new portfolio companies 17 10
Number of exited portfolio companies (3) (4)
Portfolio companies, end of period 258 213
Count of investments 599 499
Count of industries 27 26
New investment activity
Weighted average annual interest rate on new debt investments at par 2
8.93 % 9.17 %
Weighted average annual interest rate on new floating rate debt investments at par 2
8.93 % 8.64 %
Weighted average spread on new floating rate debt investments at par 4.82 % 4.66 %
Weighted average annual coupon on new fixed rate debt investments at par - % 13.00 %
Weighted average annual interest rate on exited or repaid investments at par 8.52 % 9.70 %
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1 Gross commitments at par includes unfunded investment commitments.
2 The weighted average interest rate is calculated using the effective interest rate for floating rate and fixed rate debt investments in portfolio companies, and excludes the investments in Senior Loan Fund I.
Nine Months Ended September 30,
2026 2025
Net funded investment activity
New gross commitments at par 1
$ 308,248 $ 243,173
Net investments funded 2
244,967 270,357
Investments sold or repaid 2
(324,855) (371,876)
Net funded (repaid) investment activity $ (79,888) $ (101,519)
Gross commitments at par 1
First-lien debt
$ 193,859 $ 219,319
Subordinated debt
3,516 16,402
Equity investments
18,123 7,452
Joint Venture 92,750 -
Total gross commitments $ 308,248 $ 243,173
Portfolio company activity
Portfolio companies, beginning of period 227 210
Number of new portfolio companies 41 36
Number of exited portfolio companies (10) (33)
Portfolio companies, end of period 258 213
Count of investments 599 499
Count of industries 27 26
New investment activity
Weighted average annual interest rate on new debt investments at par 3
8.77 % 9.30 %
Weighted average annual interest rate on new floating rate debt investments at par 3
8.72 % 9.05 %
Weighted average spread on new floating rate debt investments at par 4.78 % 4.79 %
Weighted average annual coupon on new fixed rate debt investments at par 10.97 % 12.65 %
Weighted average annual interest rate on exited or repaid investments at par 9.10 % 8.98 %
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1 Gross commitments at par includes unfunded investment commitments.
2 Net investments funded include $40.7 million contributed by the Company to the Joint Venture, while investments sold or repaid include $148.9 million of investments sold to the Joint Venture at fair value.
3 The weighted average interest rate is calculated using the effective interest rate for floating rate and fixed rate debt investments in portfolio companies, and excludes the investments in Joint Venture.
Joint Venture
On July 7, 2026, we established Senior Loan Fund I, LLC ("Senior Loan Fund I") alongside an unaffiliated institutional investor (the "JV Partner"), with us and the JV Partner holding ownership interests of 87.5% and 12.5%, respectively. Senior Loan Fund I was created to pursue portfolio company investments, encompassing first-lien senior secured debt, junior secured loans, subordinated or unsecured loans, or other debt or equity investments, either directly or indirectly through its wholly owned subsidiaries, including NCDL Senior Loan Fund I SPV LLC (the "JV SPV"). We and the JV Partner have equal representation on Senior Loan Fund I's investment committee, and investment decisions, as well as generally all other decisions in respect of Senior Loan Fund I, require approval by Senior Loan Fund I's investment committee or board of managers, as applicable, each of which consists of an equal number of representatives of us and the JV Partner.
On July 9, 2026, we and the JV Partner contributed $40.7 million and $5.8 million, respectively, through equity contributions to Senior Loan Fund I and funding debt obligations issued by the JV SPV. The proceeds of these equity contributions and debt issuances were used by Senior Loan Fund I to acquire a portfolio of first-lien debt from us with an aggregate fair value of $148.9 million.
For more information on Senior Loan Fund I see Note 3 to the consolidated financial statements in Part I, Item 1 of this Quarterly Report on Form 10-Q.
As of September 30, 2026, our debt portfolio reflected the following characteristics, based on fair value:
•Weighted average reported annual EBITDA of $79 million;1
•Weighted average of 2.31x interest coverage ratio for our first-lien loans;2
•Weighted average of 5.18x net leverage;3 and
•Approximately 85.63% of our debt investments have financial covenants.4
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1 These calculations include all private debt investments for which fair value is determined by the Adviser in its capacity as the Valuation Designee of the Company's board of directors (the "Board") and excludes quoted assets and the investments in Joint Venture. Amounts are weighted based on fair market value of each respective investment as of its most recent quarterly valuation, which are derived from the most recently available portfolio company financial statements.
2 The interest coverage ratio calculation is derived from the most recently available portfolio company financial information received by the Adviser and is a weighted average based on the fair market value of each respective first lien loan investment as of its most recent reporting to lenders. Such reporting may include assumptions regarding the impact of interest rate hedges established by borrowers to reduce their exposure to floating interest rates (resulting in a reduced hedging rate being used for the total interest expense in respect of such hedges, rather than any higher rates applicable under the documentation for such loans), even if such hedging instruments are not pledged as collateral to lenders in respect of such loans and do not secure the loans themselves. The interest rate coverage ratio excludes junior capital investments, equity co-investments, investments in Joint Venture, and applies solely to traditional middle market first lien loans held by us, which also excludes any upper middle market or other first lien loan investments that do not have financial maintenance covenants and first lien loans that the Adviser has assigned an internal risk rating of '8' or higher, as well as any portfolio companies with net senior leverage of 15x or greater. As a result of the foregoing exclusions, the interest coverage ratio shown herein applies to 72.29% of our total investments, and 82.97% of our total first lien loan investments, in each case based upon fair value.
3 Net leverage is the ratio of total debt minus cash divided by EBITDA, taking into account only the debt issued through the tranche in which we are a lender. Leverage is derived from the most recently available portfolio company financial statements and weighted by the fair value of each investment. Net leverage presented excludes equity investments, investments in Joint Venture, as well as debt instruments to which the Adviser has assigned an internal risk rating of 8 or higher and any portfolio companies with net leverage of 15x or greater.
4 Represents the percentage of debt investments with one or more maintenance financial covenants and excludes investments in Joint Venture.
As of September 30, 2026 and December 31, 2025, our investments consisted of the following (amounts in thousands):
September 30, 2026 December 31, 2025
Cost Fair Value % of Fair Value Cost Fair Value % of Fair Value
First-Lien Debt $ 1,658,504 $ 1,622,300 87.13 % $ 1,773,647 $ 1,756,620 89.51 %
Subordinated Debt 1
152,995 141,520 7.60 % 179,656 161,374 8.22 %
Equity Investments 61,947 57,434 3.08 % 47,904 44,455 2.27 %
Investments in Joint Venture 2
40,688 40,759 2.19 % - - - %
Total $ 1,914,134 $ 1,862,013 100.00 % $ 2,001,207 $ 1,962,449 100.00 %
Largest portfolio company investment $ 40,687 $ 40,759 2.19 % $ 30,926 $ 30,870 1.57 %
Average portfolio company investment $ 7,419 $ 7,217 0.39 % $ 8,816 $ 8,645 0.44 %
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1As of September 30, 2026, Subordinated Debt was comprised of second lien term loans and/or second lien notes of $61,688, mezzanine debt of $78,574 and structured debt of $1,258 at fair value; Subordinated Debt was comprised of second lien term loans and/or second lien notes of $63,417, mezzanine debt of $86,331 and structured debt of $3,247 at cost.
As of December 31, 2025, Subordinated Debt was comprised of second lien term loans and/or second lien notes of $74,262, mezzanine debt of $84,633 and structured debt of $2,479 at fair value; Subordinated Debt was comprised of second lien term loans and/or second lien notes of $78,960, mezzanine debt of $96,113 and structured debt of $4,583 at cost.
2As of September 30, 2026, Investments in Joint Venture at cost were comprised of secured loans of $24,938 and equity interests of $15,750; Investments in Joint Venture at fair value were comprised of secured loans of $24,938 and equity interests of $15,821.
The industry composition of our portfolio as a percentage of fair value as of September 30, 2026 and December 31, 2025 was as follows:
Industry September 30, 2026 December 31, 2025
Aerospace & Defense 0.81 % 1.71 %
Automotive 2.46 % 3.28 %
Banking, Finance, Insurance & Real Estate 3.83 % 4.01 %
Beverage, Food & Tobacco 8.74 % 7.62 %
Capital Equipment 5.81 % 5.75 %
Chemicals, Plastics & Rubber 0.94 % 1.10 %
Construction & Building 7.24 % 6.90 %
Consumer Goods: Durable 1.18 % 1.25 %
Consumer Goods: Non-durable 1.68 % 1.61 %
Containers, Packaging & Glass 3.62 % 4.02 %
Energy: Electricity 1.67 % 1.56 %
Environmental Industries 3.37 % 4.52 %
Healthcare & Pharmaceuticals 18.32 % 18.19 %
High Tech Industries 4.11 % 4.03 %
Hotel, Gaming & Leisure 0.19 % 0.17 %
Investments in Joint Venture 2.19 % - %
Media: Advertising, Printing & Publishing 1.15 % 0.93 %
Media: Diversified & Production 0.75 % 0.83 %
Services: Business 16.94 % 17.24 %
Services: Consumer 4.73 % 4.33 %
Sovereign & Public Finance 0.61 % 0.69 %
Telecommunications 3.33 % 3.55 %
Transportation: Cargo 2.49 % 3.05 %
Transportation: Consumer 0.54 % 0.53 %
Utilities: Electric 1.69 % 1.41 %
Utilities: Water 0.49 % 0.54 %
Wholesale 1.12 % 1.18 %
Total 100.00 % 100.00 %
As of September 30, 2026, our estimated exposure to the software sector represented 2.17%1 of the total portfolio, at fair value.
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1 The estimate of software exposure (i) includes any borrower whose business model reflects the operating or structural characteristics of a software company, regardless of its industry classification, and (ii) excludes technology-adjacent companies, such as managed service providers and systems integrators, that may be assigned to 'High-Tech Industries' under Moody's industry classification but do not derive revenue from the licensing or subscription of proprietary software. As a result, certain borrowers classified within 'High-Tech Industries' in the table above are excluded from the software sector estimate, while certain borrowers classified in other industries are included, based on whether they derive revenue from proprietary software licensing or subscriptions. We believe this estimate is an accurate representation of our software sector exposure. Results will differ, in some cases significantly, if an alternative industry classification methodology were applied.
The weighted average yields of our investments as of September 30, 2026 and December 31, 2025 were as follows:
September 30, 2026 December 31, 2025
Weighted average yield on debt and income producing investments, at cost 1
9.65 % 9.48 %
Weighted average yield on debt and income producing investments, at fair value 2
9.80 % 9.58 %
Percentage of debt investments bearing a floating rate 93.90 % 94.07 %
Percentage of debt investments bearing a fixed rate 6.10 % 5.93 %
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1 Weighted average yield inclusive of debt and income producing investments on non-accrual status, at cost, as of September 30, 2026 was 9.40%. Weighted average yield inclusive of debt and income producing investments on non-accrual status, at cost, as of December 31, 2025, was 9.36%.
2 Weighted average yield inclusive of debt and income producing investments on non-accrual status, at fair value, as of September 30, 2026 was 9.65%. Weighted average yield inclusive of debt and income producing investments on non-accrual status, at fair value, as of December 31, 2025, was 9.54%.
As of September 30, 2026, 97.97% and 97.94% of our floating rate debt and income producing investments at cost and at fair value, respectively, had interest rate floors that govern the minimum applicable interest rates on such loans. As of December 31, 2025, 99.95% and 99.95% of our floating rate debt and income producing investments at cost and at fair value, respectively, had interest rate floors that govern the minimum applicable interest rates on such loans.
The weighted average yield of our debt and income producing securities is not the same as a return on investment for our shareholders, but rather relates to our investment portfolio and is calculated before the payment of all of our and our subsidiaries' fees and expenses. The weighted average yield was computed using the effective interest rates as of each respective date, including accretion of original issue discount, but excluding any investments on non-accrual status. There can be no assurance that the weighted average yield will remain at its current level. Total weighted average yields of our debt and income producing investments, at cost, increased from 9.48% to 9.65% from December 31, 2025 to September 30, 2026.
Private equity mergers and acquisitions activity rebounded modestly in the third quarter, compared to a slower second quarter, reflecting a partial market recovery. Although U.S. private equity deal count and deal value increased sequentially, M&A activity remains highly selective and relatively light compared to prior year periods, driven by continued market volatility, as buyers navigated elevated borrowing costs, geopolitical uncertainties and AI-driven disruptions. Nevertheless, substantial dry powder remains available, and we believe a stabilization of market conditions could support a resumption of deal activity. Existing portfolio companies continue to be a source of deal volume as sponsors pursue inorganic growth through buy and build strategies. Repayment and exit activity in private equity sponsor deals continued to slow during the quarter amid increased macroeconomic uncertainty and AI-related sector disruptions. While repayment activity may continue to offset new investment deployment, we believe that well-capitalized lenders with available liquidity, existing portfolio company relationships, and strong proprietary sponsor networks are well-positioned to benefit from a market recovery when conditions stabilize.
In addition to market volatility and uncertainty, certain broader macroeconomic risks remain. Changes to trade policies, including the imposition of new tariffs by the current administration, could disrupt supply chains and may negatively impact the financial condition of certain of our portfolio companies as well as the macroeconomic environment. To the extent tariff policies are modified or customs refunds are processed, such developments could partially mitigate the impact on affected portfolio companies, though the timing and magnitude of any such adjustments remain uncertain. Additionally, rising geopolitical tensions have contributed to capital markets volatility and upward pressure on inflation, further complicating the macroeconomic outlook. While we have not observed significant energy input cost increases affecting our portfolio companies to date, we continue to monitor the potential effect of energy price volatility on portfolio company operating costs and margins. Given that inflation persists above the central bank's target, the Federal Reserve's interest rate expectations have shifted back toward rate hikes for the remainder of this year and into next year. The forward SOFR curve shows further potential rate increases through year-end 2027. To the extent the SOFR reference rate increases, such increases could create additional burden on levered portfolio companies in servicing their debt obligations. The rapid evolution and adoption of AI technologies also may create both opportunities and challenges for certain businesses, potentially reshaping competitive dynamics, operational models, and workforce requirements across industries. In light of these dynamics, we are closely monitoring the performance and outlook of our portfolio companies, and we will continue to seek to invest in defensive businesses with low levels of cyclicality, pricing power, strong free cash flow generation, and multiple channels to source products or materials. There can be no assurance that economic conditions or competitive market dynamics will not adversely impact certain of our portfolio companies, which could have an impact on our future results.
Asset Quality
In addition to various risk management and monitoring tools, we use the Advisers' investment rating system to characterize and monitor the credit profile and expected level of returns on each investment in our portfolio. Churchill, in its capacity as sub-adviser, utilizes a systematic, consistent approach to credit evaluation, with a particular focus on an acceptable level of debt repayment and deleveraging under a "base case" set of projections (the "Base Case"), which reflects a more conservative estimate than the set of projections provided by a prospective portfolio company (the "Management Case"). The following is a description of the conditions associated with each investment rating:
1.Performing - Superior: Borrower is performing significantly above Management Case.
2.Performing - High: Borrower is performing at or near the Management Case (i.e., in a range slightly below to slightly above).
3.Performing - Low Risk: Borrower is operating well ahead of the Base Case to slightly below the Management Case.
4.Performing - Stable Risk: Borrower is operating at or near the Base Case (i.e., in a range slightly below to slightly above). This is the initial rating assigned to all new borrowers.
5.Performing - Management Notice: Borrower is operating below the Base Case. Adverse trends in business conditions and/or industry outlook are viewed as temporary. There is no immediate risk of payment default and only a low to moderate risk of covenant default.
6.Watch List - Low Maintenance: Borrower is operating below the Base Case, with declining margin of protection. Adverse trends in business conditions and/or industry outlook are viewed as probably lasting for more than a year. Payment default is still considered unlikely, but there is a moderate to high risk of covenant default.
7.Watch List - Medium Maintenance: Borrower is operating well below the Base Case, but has adequate liquidity. Adverse trends are more pronounced than in Internal Risk Rating 6 above. There is a high risk of covenant default, or it may have already occurred. Payments are current, although subject to greater uncertainty, and there is a moderate to high risk of payment default.
8.Watch List - High Maintenance: Borrower is operating well below the Base Case. Liquidity may be strained. Covenant default is imminent or may have occurred. Payments are current, but there is a high risk of payment default. Negotiations to restructure or refinance debt on normal terms may have begun. Further significant deterioration appears unlikely and no loss of principal is currently anticipated.
9.Watch List - Possible Loss: At the current level of operations and financial condition, the borrower does not have the ability to service and ultimately repay or refinance all outstanding debt on current terms. Liquidity is strained. Payment default may have occurred or is very likely in the short term unless creditors grant some relief. Loss of principal is possible.
10.Watch List - Probable Loss: At the current level of operations and financial condition, the borrower does not have the ability to service and ultimately repay or refinance all outstanding debt on current terms. Payment default is very likely or may have already occurred. Liquidity is extremely limited. The prospects for improvement in the borrower's situation are sufficiently negative that loss of some or all principal is probable.
Churchill regularly monitors and, when appropriate, changes the investment rating assigned to each investment in our portfolio. Each investment team will review the investment ratings in connection with monthly or quarterly portfolio reviews.
The following table shows the investment ratings of the investments in our portfolio (amounts in thousands):
September 30, 2026 December 31, 2025
Fair Value % of Portfolio Number of Portfolio Companies Fair Value % of Portfolio Number of Portfolio Companies
1 $ - - % - $ - - % -
2 - - % - - - % -
3 112,014 6.02 % 11 95,983 4.89 % 5
4 1,303,942 70.02 % 181 1,510,150 76.95 % 173
5 230,471 12.38 % 32 198,368 10.11 % 24
6 162,350 8.72 % 20 119,513 6.09 % 17
7 30,088 1.62 % 6 27,735 1.41 % 5
8 9,905 0.53 % 4 8,020 0.41 % 2
9 - - % - 2,680 0.14 % 1
10 13,243 0.71 % 4 - - % -
Total $ 1,862,013 100.00 % 258 $ 1,962,449 100.00 % 227
As of September 30, 2026 and December 31, 2025, the weighted average Internal Risk Rating of our investment portfolio was 4.4 and 4.2, respectively. As of September 30, 2026, there were investments in nine portfolio companies on non-accrual with an aggregate cost of $49.2 million, which represented 2.57% of total investments, at cost. As of December 31, 2025, there were investments in four portfolio companies on non-accrual with an aggregate cost of $24.4 million, which represented 1.22% of total investments, at cost.
Results of Operations
Operating results for the three and nine months ended September 30, 2026 and 2025 were as follows (amounts in thousands):
Three Months Ended September 30,
2026 2025
Investment income:
Non-controlled/non-affiliate investments:
Interest income $ 39,567 $ 48,227
Payment-in-kind interest income 2,714 2,369
Dividend income 29 286
Other income 95 224
Total investment income from non-controlled/non-affiliate investments 42,405 51,106
Controlled/affiliate investments:
Interest income 431 -
Dividend income 751 -
Other income 87 -
Total investment income from controlled/affiliate investments 1,269 -
Total investment income 43,674 51,106
Expenses:
Interest and debt financing expenses 15,639 19,206
Management fees 4,821 5,128
Incentive fees on net investment income 2,812 3,293
Professional fees 665 709
Directors' fees 142 156
Administration fees 252 659
Other general and administrative expenses 567 569
Total expenses 24,898 29,720
Net investment income 18,776 21,386
Realized and unrealized gain (loss) on investments:
Net realized gain (loss)
Non-controlled/non-affiliate investments (3,445) 1,521
Net income tax expense on realized gain (569) -
Total net realized gain (loss) (4,014) 1,521
Net change in unrealized appreciation (depreciation)
Non-controlled/non-affiliate investments 426 (4,245)
Controlled/affiliate investments 71 -
Income tax (provision) benefit 732 (4)
Total net change in unrealized appreciation (depreciation) 1,229 (4,249)
Total net realized and unrealized gain (loss) on investments (2,785) (2,728)
Net increase (decrease) in net assets resulting from operations $ 15,991 $ 18,658
Nine Months Ended September 30,
2026 2025
Investment income:
Non-controlled/non-affiliate investments:
Interest income $ 124,239 $ 149,286
Payment-in-kind interest income 8,227 6,998
Dividend income 29 402
Other income 498 1,138
Total investment income from non-controlled/non-affiliate investments 132,993 157,824
Controlled/affiliate investments:
Interest income 431 -
Dividend income 751 -
Other income 87 -
Total investment income from controlled/affiliate investments 1,269 -
Total investment income 134,262 157,824
Expenses:
Interest and debt financing expenses 49,953 59,954
Management fees 14,694 14,221
Incentive fees on net investment income 4,993 8,373
Professional fees 2,435 2,310
Directors' fees 446 468
Administration fees 1,525 1,735
Other general and administrative expenses 1,175 1,322
Total expenses before incentive fees waived 75,221 88,383
Incentive fees waived - (2,253)
Net expenses after incentive fees waived 75,221 86,130
Net investment income 59,041 71,694
Realized and unrealized gain (loss) on investments:
Net realized gain (loss)
Non-controlled/non-affiliate investments (17,995) (8,078)
Net income tax expense on realized gain (569) -
Total net realized gain (loss) (18,564) (8,078)
Net change in unrealized appreciation (depreciation)
Non-controlled/non-affiliate investments (13,433) (14,048)
Controlled/affiliate investments 71 -
Income tax (provision) benefit 1,157 127
Total net change in unrealized appreciation (depreciation) (12,205) (13,921)
Total net realized and unrealized gain (loss) on investments (30,769) (21,999)
Net increase (decrease) in net assets resulting from operations $ 28,272 $ 49,695
Net increase (decrease) in net assets resulting from operations can vary from period to period as a result of various factors, including the level of new investment commitments and repayment activity, expenses, the recognition of realized gains and losses, and changes in unrealized appreciation and depreciation on the investment portfolio, changes in base interest rates and credit spreads, and broader macroeconomic conditions and market volatility.
Investment income
Investment income for the three and nine months ended September 30, 2026 was $43.7 million and $134.3 million, respectively, compared to $51.1 million and $157.8 million for the three and nine months ended September 30, 2025, respectively. As
of September 30, 2026 and September 30, 2025, the size of our portfolio was $1.9 billion and $2.0 billion, at cost, respectively. Average par value of funded debt investments for the three and nine months ended September 30, 2026 was $1.9 billion and $1.9 billion, respectively, compared to $2.0 billion and $2.0 billion for the three and nine months ended September 30, 2025, respectively. As of September 30, 2026, the weighted average yield of our debt and income producing investments decreased to 9.65% from 9.92% as of September 30, 2025, at cost, primarily due to the net decline in base interest rates over the period, as spreads on newly originated investments have remained relatively stable. Shifting base interest rates, such as SOFR and any applicable alternate rates, also may affect our investment income.
Expenses
Total expenses before waived incentive fees decreased to $24.9 million and $75.2 million for the three and nine months ended September 30, 2026, respectively, from $29.7 million and $88.4 million for the three and nine months ended September 30, 2025, respectively.
Interest and debt financing expenses decreased for the three and nine months ended September 30, 2026 compared to the three and nine months ended September 30, 2025, primarily due to a lower average interest rate and lower average daily borrowings, partially offset by one-time costs associated with debt facility refinancings completed during the first quarter and third quarter of 2026, as further described below in Borrowings. Average daily borrowings decreased during the nine months ended September 30, 2026 primarily due to the redemption of CLO-III during the third quarter of 2026, which was partially offset by the additional 2030 Notes offering. For the nine months ended September 30, 2026, we recorded $1.5 million of non-recurring interest and debt financing expenses relating to the acceleration of deferred financing costs in connection with the refinancing of CLO-II and the redemption of CLO-III. The average daily borrowings for the three and nine months ended September 30, 2026 were $1.0 billion and $1.1 billion, respectively, compared to $1.1 billion and $1.1 billion for the three and nine months ended September 30, 2025, respectively. The average annual interest rate for the three and nine months ended September 30, 2026 was 5.65% and 5.76%, respectively, compared to 6.64% and 6.61% for the three and nine months ended September 30, 2025, respectively.
In accordance with the terms of the Advisory Agreement, effective March 31, 2025, the management fee base rate increased from 0.75% to 1.00%. For the three months ended September 30, 2026, management fees decreased compared to the three months ended September 30, 2025, primarily due to a decrease in average gross assets during the period. For the nine months ended September 30, 2026, management fees increased compared to the nine months ended September 30, 2025, primarily due to the increase in the management fee base rate from 0.75% to 1.00%, effective March 31, 2025, which was in effect for the full nine months ended September 30, 2026 compared to only the six months ended September 30, 2025.
Additionally, effective March 31, 2025, the Adviser's waiver of incentive fees on income and on capital gains expired pursuant to the terms of the Advisory Agreement. For the three and nine months ended September 30, 2026, income-based incentive fees totaled $2.8 million and $5.0 million, respectively, with no amounts waived. For the three and nine months ended September 30, 2025, income-based incentive fees totaled $3.3 million and $8.4 million, respectively, of which $2.3 million was waived in the first quarter of 2025 in accordance with the terms of the Advisory Agreement. The decrease in income-based incentive fees for the three months ended September 30, 2026 compared to the three months ended September 30, 2025 was primarily attributable to lower net investment income and the impact of the incentive fee cap pursuant to the terms of the Advisory Agreement. The decrease in income-based incentive fees for the nine months ended September 30, 2026 compared to the nine months ended September 30, 2025 was primarily attributable to lower net investment income and the impact of the incentive fee cap, partially offset by the expiration of the incentive fee waiver. No capital gains incentive fees were incurred during the three and nine months ended September 30, 2026 or 2025.
Professional fees include legal, audit, tax, valuation, and other professional fees incurred related to the management of the Company. Administrative fees represent fees paid to the Administrator for our allocable portion of overhead and other expenses incurred by the Administrator in performing its obligations under the administration agreement, including our allocable portion of the cost of our chief financial officer and chief compliance officer, and their respective staffs. Other general and administrative expenses include insurance, filing, research, rating agencies, subscriptions and other costs. Professional, administration, and other general and administrative fees for the three and nine months ended September 30, 2026 were $1.5 million and $5.1 million, respectively, compared to $1.9 million and $5.4 million for the three and nine months ended September 30, 2025.
Net realized gain (loss) and Net change in unrealized gains (losses) on investments
For the three months ended September 30, 2026, we recorded a net realized loss on investments of $(3.4) million compared to a net realized gain of $1.5 million for the three months ended September 30, 2025. The net realized loss for the three months ended September 30, 2026 resulted primarily from the amendment and restructuring of two underperforming debt positions, respectively, partially offset by a gain from the realization of one equity position. For the nine months ended September 30, 2026, we recorded a net realized loss on investments of $(18.0) million, compared to a net realized loss of $(8.1) million for the nine months ended September 30, 2025. The net realized loss for the nine months ended September 30, 2026 was primarily driven by actions taken on six underperforming debt positions, three of which were restructured and three of which were amended, partially offset by realized gains from full or partial repayments and sales of investments in portfolio companies.
For the three and nine months ended September 30, 2026, we recorded a net change in unrealized gain of $0.4 million and a net change in unrealized loss of $(13.4) million, respectively, compared to a net change in unrealized loss of $(4.2) million for the three months ended September 30, 2025 and a net change in unrealized loss of $(14.0) million for the nine months ended September 30, 2025. The net change in unrealized gain for the three months ended September 30, 2026 was attributable primarily by the reversal of unrealized losses on underperforming debt positions amended or restructured during the period, partially offset by fair value declines in certain underperforming portfolio companies. For the nine months ended September 30, 2026, the net change in unrealized loss was largely driven by fair value decline in certain underperforming portfolio companies, partially offset by the reversal of unrealized losses on underperforming debt positions amended or restructured during the period.
Financial Condition, Liquidity and Capital Resources
Due to the diverse capital resources available to us at this time, we believe we have adequate liquidity to support our near-term capital requirements. Our liquidity and capital resources are generated primarily from cash flows from income earned from our investments and principal repayments, net proceeds of public offerings of debt securities and equity securities (including through the ATM Program, as described below), and our net borrowings from our Revolving Credit Facility (as defined below) and CLO debt issuances (discussed further below). Due to an uncertain economic outlook, elevated capital market volatility, and increased macroeconomic uncertainties (rising geopolitical tensions), we regularly evaluate our overall liquidity position and take proactive steps to maintain and strengthen that position based on such circumstances. The primary uses of our cash are (i) purchases of investments in portfolio companies, (ii) funding the cost of our operations (including fees paid to our Adviser), (iii) debt service, repayment and other financing costs of our borrowings, and collateral management of our interest rate swaps, (iv) cash distributions to the holders of our shares, and (v) share repurchases under the Company 10b5-1 Plan (as defined below).
To facilitate public offerings of equity securities and debt securities, on December 20, 2024, we filed a shelf registration statement with the SEC that is effective for a three-year term, expiring on December 20, 2027. The shelf registration statement permits us to offer, from time to time, up to $1.0 billion of our common stock, preferred stock, subscription rights to purchase shares of our common stock, debt securities or warrants representing rights to purchase shares of our common stock, preferred stock or debt securities, in one or more underwritten public offerings, at-the-market offerings, negotiated transactions, block trades, best efforts or a combination of these methods. The specifics of any future offerings, along with the use of proceeds of any securities offered, will be described in detail in a prospectus supplement at the time of any offering.
As of September 30, 2026 and December 31, 2025, our debt consisted of a revolving credit facility, debt securitizations, and unsecured notes. We have and will continue to, from time to time, enter into additional credit facilities, increase the size of our existing credit facilities or issue further debt securities. Any such incurrence or issuance would be subject to prevailing market conditions, our liquidity requirements, contractual and regulatory restrictions and other factors. We are generally permitted, under specified conditions, to issue multiple classes of indebtedness and one class of stock senior to our shares if our asset coverage, as defined in the 1940 Act, is at least equal to 150%, if certain requirements are met. As of September 30, 2026 and December 31, 2025, our asset coverage ratio was 181.16% and 178.55%, respectively.
Cash and cash equivalents as of September 30, 2026, taken together with our unused capacity under our Revolving Credit Facility is expected to be sufficient for our investing activities and to conduct our operations in the near term. As of September 30, 2026, we had $216.0 million available under our Revolving Credit Facility.We believe maintaining adequate liquidity is particularly important in the current market environment, as it positions us to take advantage of investment opportunities that may arise as market conditions evolve and stabilize.
Although we have historically been able to obtain sufficient borrowing capacity, a deterioration in economic conditions, elevated market volatility, or other negative economic developments could restrict our access to financing in the future. We may not be able to find new financing for future investments or liquidity needs and, even if we are able to obtain such financing, such financing may not be on as favorable terms as we have previously obtained.
For the nine months ended September 30, 2026, our cash and cash equivalents balance decreased by $23.4 million. During that period, $110.9 million was provided by operating activities, primarily relating to $324.9 million of proceeds from principal repayments and sales of investments, partially offset by purchases of investments of $245.0 million. During the same period, $134.3 million was used in financing activities, consisting of proceeds from debt of $691.1 million, offset by repayments of debt of $762.5 million, shareholder distributions of $60.7 million and payments of deferred financing costs of $2.2 million.
For the nine months ended September 30, 2025, our cash and cash equivalents balance increased by $3.0 million. During that period, $165.6 million was provided by operating activities, primarily relating to investment purchases of $270.4 million, offset by $371.9 million in repayments and sales of investments in portfolio companies. During the same period, $(162.6) million was used in financing activities, consisting primarily of net repayments of secured borrowings of $11.2 million, shareholder distributions of $80.0 million and repurchases of common shares of $65.7 million.
Equity
Our authorized stock consists of 500,000,000 shares of stock, par value $0.01 per share, all of which are initially designated as common stock.
Initial Public Offering
On January 29, 2024, we closed our IPO, issuing 5,500,000 shares of our common stock at a public offering price of $18.05 per share. We received total cash proceeds of $99.3 million. Our common stock began trading on the NYSE under the symbol "NCDL" on January 25, 2024.
ATM Program
On March 10, 2025, we established an equity at-the-market offering program (the "ATM Program"), pursuant to which the Company may offer and sell, from time to time, through distribution managers, or to them, as principals for their own accounts, shares of its common stock having an aggregate offering price up to $200 million. Sales of common stock made pursuant to the ATM Program may be made in negotiated transactions or transactions that are deemed to be "at-the-market" offerings as defined in Rule 415(a)(5) under the Securities Act. We intend to use the net proceeds from the ATM Program for general corporate purposes, which may include, among other things, investing in accordance with its investment objective and strategies, and repaying indebtedness (which may be subject to re-borrowing).
As of September 30, 2026, we had not sold any shares of common stock through the ATM Program.
Dividends and Distributions
To the extent that we have taxable income, we intend to make quarterly distributions to our common shareholders. Dividends and distributions to common shareholders are recorded on the applicable record date. The amount to be distributed to common shareholders is determined by our Board each quarter and is generally based upon the taxable earnings estimated by management and available cash. Net realized capital gains, if any, will generally be distributed at least annually, although we may decide to retain such capital gains for investment.
In connection with the IPO, our Board approved an amended and restated dividend reinvestment plan (the "Amended DRIP"), which became effective on January 29, 2024, concurrent with the consummation of the IPO.
The Amended DRIP changed the dividend reinvestment plan from an "opt in" dividend reinvestment plan to an "opt out" dividend reinvestment plan. As a result of the foregoing, if our Board authorizes, and we declare, a cash dividend or distribution, shareholders that acquired their shares in the IPO and do not "opt out" of the Amended DRIP will have their cash distributions automatically reinvested in additional shares rather than receiving cash. Notwithstanding the foregoing, a shareholder's election (or deemed election) under the dividend reinvestment plan, dated December 19, 2019, will remain in effect for such shareholder and no further action is required by such shareholder with respect to their election under the Amended DRIP.
With respect to each distribution under the Amended DRIP, our Board reserves the right to either issue new shares of common stock or purchase shares of common stock in the open market for the accounts of participants in the Amended DRIP. If newly issued shares are used to implement the Amended DRIP, the number of shares to be issued to a shareholder will be determined by dividing the total dollar amount of the distribution payable to such participant by the market price per share of our common stock at the close of regular trading of the NYSE on the distribution payment date, or if no sale is reported for such day, the average of the reported bid and asked prices. However, if the market price per share on the distribution payment date exceeds the most recently computed NAV per share, we will issue shares at the greater of (i) the most recently computed NAV per share and (ii) 95% of the current market price per share (or such lesser discount to the current market price per share that still exceeds the most recently computed NAV per share). If shares are purchased in the open market to implement the Amended DRIP, the number of shares to be
issued to a participant will be determined by dividing the dollar amount of the distribution payable to such participant by the weighted average price per share for all shares of common stock purchased by the plan administrator in the open market in connection with the dividend or distribution. Although each participant may from time to time have an undivided fractional interest in a share, no certificates for a fractional share will be issued. However, dividends and distributions on fractional shares will be credited to each participant's account.
See Note 9 to the consolidated financial statements in Part I, Item 1 of this Quarterly Report on Form 10-Q for more information on our distributions and dividend reinvestment plan.
The following table summarizes the Company's distributions recorded for the nine months ended September 30, 2026:
Date Declared Record Date Payment Date Dividend per Share
July 29, 2026 September 30, 2026 October 27, 2026 $0.36
July 29, 2026 September 30, 2026 October 27, 2026
$0.02 (1)
April 29, 2026 June 30, 2026 July 28, 2026 $0.36
April 29, 2026 June 30, 2026 July 28, 2026
$0.02 (1)
February 12, 2026 March 31, 2026 April 28, 2026 $0.36
February 12, 2026 March 31, 2026 April 28, 2026
$0.04 (1)
________________
(1) Represents a supplemental dividend.
The following table summarizes the Company's distributions recorded for the nine months ended September 30, 2025:
Date Declared Record Date Payment Date Dividend per Share
July 30, 2025 September 30, 2025 October 28, 2025 $0.45
April 30, 2025 June 30, 2025 July 28, 2025 $0.45
February 19, 2025 March 31, 2025 April 28, 2025 $0.45
January 10, 2024 February 12, 2025 April 28, 2025
$0.10 (1)
________________
(1) Represents a special dividend.
The distribution declared was derived from investment company taxable income and net capital gain, if any. The federal income tax characterization of distributions declared and paid for the fiscal year will be determined based upon our investment company taxable income for the full fiscal year and distributions paid during the full year.
The following table reflects the shares distributed pursuant to the dividend reinvestment plan for the nine months ended September 30, 2026:
Date Declared Record Date Payment Date
Shares (1)
April 29, 2026 June 30, 2026 July 28, 2026 70,660
February 12, 2026 March 31, 2026 April 28, 2026 59,772
October 29, 2025 December 31, 2025 January 27, 2026 80,391
________________
(1) In accordance with the Company's Amended DRIP, shares were purchased in the open market.
The following table reflects the shares distributed pursuant to the dividend reinvestment for the nine months ended September 30, 2025:
Date Declared Record Date Payment Date
Shares (1)
April 30, 2025 June 30, 2025 July 28, 2025 52,892
February 19, 2025 March 31, 2025 April 28, 2025
60,278
January 10, 2024 February 12, 2025 April 28, 2025
35,267
November 4, 2024 December 31, 2024 January 28, 2025
87,401
January 10, 2024 November 11, 2024 January 28, 2025
5,035
________________
(1) In accordance with the Company's Amended DRIP, shares were purchased in the open market.
Prior Share Repurchase Plan
On March 5, 2024, we entered into a share repurchase plan (the "Prior Company 10b5-1 Plan"), which permitted us to purchase up to $99.3 million in the aggregate of its outstanding shares of common stock in the open market at prices below its then-current net asset value ("NAV") per share over a specified period. Any purchase of the shares pursuant to the Prior Company 10b5-1 Plan were conducted in accordance with the guidelines and conditions of Rule 10b-18 and Rule 10b5-1 under the Securities Exchange Act of 1934, as amended (the "Exchange Act"). The Prior Company 10b5-1 Plan became effective on March 29, 2024, commenced on April 1, 2024 and was amended on March 28, 2025, which extended the Prior Company 10b5-1 Plan for an additional 12-month period and amended certain terms of the Prior Company 10b5-1 Plan as set forth in the guidelines therein. As a result of such amendment, the Prior Company 10b5-1 Plan would terminate upon the earliest to occur of (i) 12-months from March 29, 2025 (tolled for periods during which the Prior Company 10b5-1 Plan was suspended), (ii) the end of the trading day on which the aggregate purchase price for all shares of common stock purchased under the Prior Company 10b5-1 Plan equaled $99.3 million and (iii) the occurrence of certain other events described in the Prior Company 10b5-1 Plan. On July 21, 2025, the aggregate purchase price for all shares of common stock purchased under the Prior Company 10b5-1 Plan reached $99.3 million and the Prior Company 10b5-1 Plan was terminated in accordance with its terms on the same date.
The following table reflects the shares repurchased pursuant to the Prior Company 10b5-1 Plan for each month from inception through July 21, 2025, the date the Prior Company 10b5-1 Plan terminated (amounts in thousands, except share and per share data):
Period Total Number of Shares Repurchased Average Price Paid per Share Approximate Dollar Value of Shares that have been Purchased Under the Plan Approximate Dollar Value of Shares that May Yet Be Purchased Under the Plan
April 1, 2024 - April 30, 2024 104,075 $ 17.57 $ 1,828 $ 97,447
May 1, 2024 - May 31, 2024 96,598 17.56 1,696 95,751
June 1, 2024 - June 30, 2024 91,637 17.73 1,625 94,126
July 1, 2024 - July 31, 2024 75,675 17.61 1,333 92,793
August 1, 2024 - August 31, 2024 154,668 17.24 2,666 90,127
September 1, 2024 - September 30, 2024 109,646 17.69 1,940 88,187
October 1, 2024 - October 31, 2024 155,122 17.27 2,680 85,508
November 1, 2024 - November 30, 2024 375,949 17.06 6,412 79,095
December 1, 2024 - December 31, 2024 780,004 17.11 13,349 65,746
January 1, 2025 - January 31, 2025 972,752 16.74 16,289 49,458
February 1, 2025 - February 28, 2025 490,615 17.44 8,557 40,900
March 1, 2025 - March 31, 2025 706,657 17.28 12,210 28,689
April 1, 2025 - April 30, 2025 805,272 15.32 12,334 16,356
May 1, 2025 - May 31, 2025 602,662 15.63 9,417 6,939
June 1, 2025 - June 30, 2025 261,220 16.27 4,250 2,689
July 1, 2025 - July 21, 2025 161,033 16.70 2,689 -
Total 5,943,585 $ 99,275
Existing Share Repurchase Plan
On March 17, 2026, we entered into a new share repurchase plan (the "Company 10b5-1 Plan"), pursuant to which we may purchase up to $50.0 million in the aggregate of our outstanding shares of common stock in the open market at prices below the then-current NAV per share over a specified period. Any purchases of shares pursuant to the Company 10b5-1 Plan are conducted in accordance with the guidelines and conditions of Rule 10b-18 and Rule 10b5-1 of the Securities Exchange Act of 1934, as amended. The Company 10b5-1 Plan requires BofA Securities, Inc., as agent, to repurchase shares of common stock on our behalf when the market price per share is below the most recently reported NAV per share (including any updates, corrections or adjustments publicly announced by us to any previously announced NAV per share). Under the Company 10b5-1 Plan, the agent will increase the volume of purchases made as the price of our shares declines, subject to volume restrictions. The timing and amount of any share repurchases will depend on the terms and conditions of the Company 10b5-1 Plan, the market price of the shares of our common stock and trading volumes, and no assurance can be given that any particular amount of shares of our common stock will be repurchased.
The Company 10b5-1 Plan became effective on March 24, 2026 and will terminate upon the earliest to occur of (i) the expiry of the 12-month period commencing on March 24, 2026 (tolled for periods during which the Company 10b5-1 Plan is suspended), (ii) the end of the trading day on which the aggregate purchase price for all shares of common stock purchased under the Company 10b5-1 Plan equals $50.0 million and (iii) the occurrence of certain other events described in the Company 10b5-1 Plan.
As of September 30, 2026, we did not repurchase any shares under the Company 10b5-1 Plan.
See "Recent Developments" for more information.
Borrowings
See Note 7 to the consolidated financial statements in Part I, Item 1 of this Quarterly Report on Form 10-Q for more information on our borrowings, debt securitizations, and refinancings.
Revolving Credit Facility
On June 23, 2023, we entered into a senior secured revolving credit agreement (as amended from time to time, the "Senior Secured Revolving Credit Agreement" and facility thereunder, the "Revolving Credit Facility") with SMBC as the lender and administrative agent. The Revolving Credit Facility, as most recently amended on October 4, 2024, provides for total commitments of $325.0 million, with an availability period that terminates on October 4, 2028 and a final maturity date of October 4, 2029. The Revolving Credit Facility is secured by a perfected first-priority interest in substantially all of the portfolio investments held by us and our Guarantors, subject to certain exceptions, and includes a $25.0 million limit for swingline loans.
Amounts drawn under the Revolving Credit Facility bear interest at Term SOFR or the prime rate, in each case plus an applicable margin, and we pay a fee of 0.375% per annum on average daily undrawn amounts. As of September 30, 2026 and December 31, 2025, the Revolving Credit Facility bore interest at one-month SOFR plus 2.00% per annum.
The Senior Secured Revolving Credit Agreement includes customary covenants, including limitations on additional indebtedness and on our ability to make distributions, as well as financial covenants related to asset coverage and minimum shareholders' equity.
CLO-I
CLO-I is a direct, wholly owned, consolidated subsidiary of the Company through which we completed a $448.3 million term debt securitization on May 20, 2022, which was subsequently refinanced through a $458.0 million refinancing on March 20, 2025 (the "CLO-I Refinancing"). The notes and loans currently outstanding under the CLO-I Refinancing (collectively, the "2025 Debt") are backed by a diversified portfolio of senior secured and second lien loans and are the secured obligation of CLO-I. Through April 20, 2030, all principal collections received on the underlying collateral may be used by CLO-I to purchase new collateral under our direction, in our capacity as collateral manager of CLO-I, allowing us to maintain the initial leverage under the CLO-I Refinancing. The 2025 Debt matures on April 20, 2038 and may be optionally redeemed or prepaid on or after April 20, 2027.
We serve as collateral manager to CLO-I under a collateral management agreement and have waived the management fee due to us in consideration for providing these services
CLO-II
CLO-II is a direct, wholly owned, consolidated subsidiary of the Company through which we completed a $298.1 million term debt securitization on December 7, 2023, which was subsequently refinanced through a $299.7 million refinancing on February 20, 2026 (the "CLO-II Refinancing"). The notes and loans currently outstanding under the CLO-II Refinancing (collectively, the "2026 Debt") are backed by a diversified portfolio of senior secured and second lien loans and are the secured obligation of CLO-II. Through January 20, 2031, all principal collections received on the underlying collateral may be used by CLO-II to purchase new collateral under our direction, in our capacity as collateral manager of CLO-II, allowing us to maintain the initial leverage under the CLO-II Refinancing. The 2026 Debt matures on January 20, 2039 and may be optionally redeemed or prepaid on or after January 20, 2028.
We serve as collateral manager to CLO-II under a collateral management agreement and have waived the management fee due to us in consideration for providing these services.
CLO-III
On July 7, 2026, we exercised our optional redemption right under the indenture governing the notes issued by Churchill NCDLC CLO-III, LLC ("CLO-III"), redeeming all outstanding notes at par value plus accrued interest, with total proceeds of $302.5 million. Following the redemption, we no longer hold any investment in, or retain any management role with respect to, CLO-III.
Unsecured Notes
On January 22, 2025, we issued $300 million in aggregate principal amount of our 6.65% Notes due 2030 (the "Initial 2030 Notes"), and on July 10, 2026, we issued an additional $100 million in aggregate principal amount of our Initial 2030 Notes (the "Additional 2030 Notes" and, together with the Initial 2030 Notes, the "2030 Notes"). As of September 30, 2026, $400 million in aggregate principal amount of the 2030 Notes was outstanding.
The 2030 Notes bear interest at a rate of 6.65% per year, payable semi-annually in arrears on March 15 and September 15 of each year, and mature on March 15, 2030. The 2030 Notes are our direct unsecured obligations and may be redeemed, in whole or in part, at our option at any time prior to February 15, 2030, at par plus a "make-whole" premium plus accrued interest, and thereafter at par. The indenture governing the 2030 Notes contains certain covenants, including covenants requiring us to comply with certain provisions of the 1940 Act and to provide financial information to holders if we are no longer subject to the reporting requirements of the Securities Exchange Act of 1934, as amended.
Contractual Obligations
The following tables show the contractual maturities of our debt obligations as of September 30, 2026 and December 31, 2025 (amounts in thousands):
Payments Due by Period
As of September 30, 2026
Total Less than 1 Year 1 to 3 years 3 to 5 years More than 5 Years
Revolving Credit Facility $ 109,000 $ - $ - $ 109,000 $ -
CLO-I 320,608 - - - 320,608
CLO-II 213,000 - - - 213,000
2030 Notes 400,000 - - 400,000 -
Total debt obligations $ 1,042,608 $ - $ - $ 509,000 $ 533,608
Payments Due by Period
As of December 31, 2025
Total Less than 1 Year 1 to 3 years 3 to 5 years More than 5 Years
Revolving Credit Facility $ 66,000 $ - $ - $ 66,000 $ -
CLO-I 321,083 - - - 321,083
CLO-II 213,286 - - - 213,286
CLO-III 213,750 - - - 213,750
2030 Notes 300,000 - - 300,000 -
Total debt obligations $ 1,114,119 $ - $ - $ 366,000 $ 748,119
Derivatives
We use interest rate swaps to mitigate interest rate risk associated with our fixed rate liabilities and may designate certain interest rate swaps to be in a hedge accounting relationship.
In connection with the issuance of the 2030 Notes, we entered into interest rate swap agreements with Wells Fargo on January 22, 2025 and July 10, 2026, with total notional amounts of $300 million and $100 million, respectively, each maturing on March 15, 2030. Under these agreements, we receive a fixed interest rate of 6.65% and pay a floating interest rate of three-month Term SOFR + 2.30% and three-month Term SOFR + 2.55%, respectively. We have designated the interest rate swaps as hedging instruments in qualifying fair value hedge accounting relationships.
See the following footnotes to the consolidated financial statements in Part I, Item 1 of this Quarterly Report on Form 10-Q: (i) Note 2 for additional disclosures regarding our accounting for derivative instruments designated in a hedge accounting relationship; (ii) Note 4 for additional disclosures regarding these derivative instruments; and (iii) Note 5 for additional disclosures regarding the carrying value of our borrowings.
Related-Party Transactions
We have entered into a number of business relationships with affiliated or related parties, including the following (which are defined in the notes to the accompanying consolidated financial statements if not defined herein):
•the Advisory Agreement;
•the CAM Sub-Advisory Agreement;
•the NAM Sub-Advisory Agreement; and
•the Administration Agreement.
On August 5, 2025, the Company and certain of its affiliates were granted an order for co-investment exemptive relief by the SEC based on an updated model of co-investment order that was recently granted by the SEC (the "Order"). The Order supersedes the prior exemptive order granted on June 7, 2019 and amended on October 14, 2022. The Order permits the Company to participate in negotiated co-investment transactions with other funds managed by the Adviser and certain other affiliates pursuant to the conditions of the Order. The Order requires that a "required majority" (as defined in Section 57(o) of the 1940 Act) of the Board make certain findings with respect to the following, among other things: (1) when the Company co-invests with an affiliated entity (as defined in the exemptive application) in an issuer where an affiliated entity has an existing investment in the issuer under certain circumstances, and (2) if the Company disposes of an asset acquired in a co-investment transaction unless the disposition is done on a pro rata basis or the disposition is of a tradable security. Pursuant to the Order, the Board will oversee the Company's participation in the co-investment program. As required by the Order, the Company has adopted, and the Board has approved, policies and procedures reasonably designed to ensure the Company's compliance with the conditions of the Order, and the Adviser and the Company's Chief Compliance Officer will provide reporting to the Board.
For more information on our Related Party Transactions see Note 6 to the consolidated financial statements in Part I, Item 1 of this Quarterly Report on Form 10-Q.
Off-Balance Sheet Arrangements
In the ordinary course of its business, the Company enters into contracts or agreements that contain indemnifications or warranties. Future events could occur which may give rise to liabilities arising from these provisions against us. We believe that the likelihood of such an event is remote; however, the maximum potential exposure is unknown. No accrual has been made in these consolidated financial statements as of September 30, 2026 and December 31, 2025. We have in the past and may in the future become obligated to fund commitments such as delayed draw commitments, revolvers, and equity investment commitments.
For more information on our off-balance sheet arrangements, commitments and contingencies see Note 8 to the consolidated financial statements in Part I, Item 1 of this Quarterly Report on Form 10-Q.
Critical Accounting Policies and Estimates
The preparation of our consolidated financial statements requires us to make estimates and assumptions that affect the reported amounts of assets, liabilities, revenues, and expenses. Changes in the economic environment, financial markets, and any other parameters used in determining such estimates could cause actual results to differ. Our critical accounting policies and estimates, including those relating to the valuation of our portfolio investments, are described below. We consider the most significant accounting policies to be those related to our Valuation of Portfolio Investments, Revenue Recognition, and U.S. Federal Income Taxes, are described below. The valuation of investments is our most significant critical estimate. The critical accounting policies and estimates should be read in connection with our risk factors as disclosed under the heading "Risk Factors" in our Annual Report on Form 10-K for the year ended December 31, 2025.
Valuation of Portfolio Investments, including Derivative Instruments
At all times, consistent with U.S. GAAP and the 1940 Act, we conduct a valuation of our assets, pursuant to which our NAV is determined.
Our assets are valued on a quarterly basis or more frequently if required under the 1940 Act. Pursuant to Rule 2a-5 under the 1940 Act, the Board has designated the Adviser as the Company's valuation designee (the "Valuation Designee") to determine the fair value of the Company's investments that do not have readily available market quotations. Pursuant to the Company's valuation policy approved by the Board, a valuation committee comprised of employees of the Adviser (the "Valuation Committee") is responsible for determining the fair value of the Company's assets for which market quotations are not readily available, subject to the oversight of the Board.
Investments for which market quotations are readily available are typically valued at those market quotations. Market quotations are obtained from independent pricing services where available. Generally investments marked in this manner will be marked at the mean of the bid and ask of the quotes obtained. To validate market quotations, we utilize a number of factors to determine if the quotations are representative of fair value, including the source and number of the quotations. Derivative instruments, including interest rate swaps, are modeled using market prices for reference securities, yield curves, volatility assumptions and correlations of such inputs.
With respect to investments for which market quotations are not readily available, we or an independent third-party valuation firm engaged by the Valuation Designee will take into account relevant factors in determining the fair value of our investments, including and in combination of: comparison to publicly traded securities, including factors such as yield, maturity and measures of credit quality; the enterprise value of a portfolio company; the nature and realizable value of any collateral; the portfolio company's ability to make payments and its earnings and discounted cash flows; and the markets in which the portfolio company does business. Investment performance data utilized are the most recently available financial statements and compliance certificates received from the portfolio companies as of the measurement date which in many cases may reflect a lag in information. The independent third-party valuation firm provides a fair valuation report, a description of the methodology used to determine the fair value and their analysis and calculations to support their conclusion.
When an external event such as a purchase transaction, public offering or subsequent sale or paydown occurs, we use the pricing indicated by the external event to corroborate our valuation.
We apply the practical expedient relating to investments in certain portfolio companies that calculate NAV per share (or its equivalent). U.S. GAAP permits an entity holding investments in certain portfolio companies that either are investment companies, or have attributes similar to an investment company, and calculate NAV per share or its equivalent for which the fair value is not readily determinable, to measure the fair value of such investments on the basis of that NAV per share, or its equivalent, without adjustment. Investments which are valued using NAV per share or its equivalent as a practical expedient are not categorized within the fair value hierarchy, as described below.
U.S. GAAP establishes a hierarchical disclosure framework which ranks the level of observability of market price inputs used in measuring investments at fair value. The observability of inputs is impacted by a number of factors, including the type of investment and the characteristics specific to the investment and state of the marketplace, including the existence and transparency of transactions between market participants. Investments with readily available quoted prices or for which fair value can be measured from quoted prices in active markets generally have a higher degree of market price observability and a lesser degree of judgment applied in determining fair value. We review pricing and methodologies in order to determine if observable market information is being used as opposed to unobservable inputs.
Our accounting policy on the fair value of our investments is critical because the determination of fair value involves subjective judgments and estimates. Accordingly, the notes to our consolidated financial statements express the uncertainty with respect to the possible effect of these valuations, and any change in these valuations, on the consolidated financial statements.
For more information on the fair value hierarchies, our framework for determining fair value and the composition of our portfolio see Note 2 and Note 5 to the consolidated financial statements in Part I, Item 1 of this Quarterly Report on Form 10-Q.
Revenue Recognition
Our revenue recognition policies are as follows:
Net realized gains (losses) on investments: Investment transactions are recorded on the trade date. Realized gains or losses are measured by the difference between the net proceeds from the repayment or sale and the cost basis of the investment using the specific identification method.
Investment Income: Interest income, including amortization of premium and accretion of discount on loans, are recorded on the accrual basis. We accrue interest income based on the effective yield if we expect that, ultimately, we will be able to collect such income. We may have loans in our portfolio that contain payment-in-kind ("PIK") income provisions. PIK represents interest that is accrued and recorded as interest income at the contractual rates, increases the loan principal on the respective capitalization dates, and is generally due at maturity.
Dividend income on preferred equity securities is recorded on the accrual basis to the extent that such amounts are payable by the portfolio company and are expected to be collected. Dividend income on common equity securities is recorded on the record date for private portfolio companies or on the ex-dividend date for publicly-traded portfolio companies.
Distributions from investments in other investment companies occur at irregular intervals and the exact timing of the distributions cannot be determined. The classification of distributions received, including return of capital, realized gains and dividend income, is based on information received from the portfolio company.
Other income may include income such as consent, waiver, amendment, unused, and prepayment fees associated with our investment activities as well as any fees for managerial assistance services rendered by us to our portfolio companies. Such fees are recognized as income when earned or the services are rendered.
Non-accrual: Generally, if a payment default occurs on a loan in the portfolio, or if management otherwise believes that the issuer of the loan will not be able to make contractual interest payments or principal payments, Churchill will place the loan on non-accrual status, and we will cease recognizing interest income on that loan until all principal and interest is current through payment or until a restructuring occurs, such that the interest income is deemed to be collectible, even though we remain contractually entitled to this interest. We may make exceptions to this policy if the loan has sufficient collateral value and is in the process of collection. Accrued interest is written off when it becomes probable that the interest will not be collected and the amount of uncollectible interest can be reasonably estimated.
Our accounting policy on net realized gains (losses) and investment income recognition is critical because it involves the primary source of our revenue and accordingly is significant to the financial results as disclosed in our consolidated financial statements.
U.S. Federal Income Taxes
We have elected to be regulated as a BDC under the 1940 Act. We have elected, and intend to qualify annually, to be treated as a RIC under the Code; however, no assurance can be given that the Company will be able to qualify for and maintain RIC tax status. So long as we maintain our qualification as a RIC, we generally will not be subject to U.S. federal income or U.S. federal excise taxes on any ordinary income or capital gains that we timely distribute at least annually to our stockholders as dividends. As a result, any tax liability related to income earned and distributed by us represents obligations of our stockholders and will not be reflected in our consolidated financial statements.
We evaluate tax positions taken or expected to be taken in the course of preparing our financial statements to determine whether the tax positions are "more-likely-than-not" to be sustained by the applicable tax authority. Tax positions not deemed to meet the "more-likely-than-not" threshold are reversed and recorded as a tax benefit or expense in the current year. All penalties and interest associated with income taxes are included in income tax expense. Conclusions regarding tax positions are subject to review and may be adjusted at a later date based on factors including, but not limited to, ongoing analyses of tax laws, regulations and interpretations thereof. As of September 30, 2026, the Company did not have any uncertain tax positions that met the recognition or measurement criteria nor did the Company have any unrecognized tax benefits.
Our accounting policy on income taxes is critical because if we are unable to maintain our status as a RIC, we would be required to record a provision for U.S. federal income taxes, which may be significant to our financial results.
Recent Developments
Dividend Declaration
On October 28, 2026, the Board declared a regular distribution of $0.36 per share and a supplemental distribution of $0.02 per share, payable on or around January 28, 2027 to shareholders of record as of December 31, 2026.
Company 10b5-1 Plan
For the period from October 1, 2026 through October 30, 2026, BofA Securities, Inc., as agent, repurchased 278,294 shares of our common stock pursuant to the Company 10b5-1 Plan for approximately $3 million.
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