MSC Income Fund, Inc. (MSIF) reported its financial results for the first quarter of 2026, revealing a total investment income of $34.1 million, a 3% increase from $33.2 million in the same period last year. The growth in investment income was primarily driven by a 7% rise in interest income, which reached $29.4 million, attributed to higher average levels of income-producing debt investments. However, dividend income decreased by 31% to $3.5 million, largely due to reduced contributions from lower middle market (LMM) portfolio companies. The Fund's net investment income before taxes was $17.2 million, reflecting a 3% increase from the previous year, while net investment income after taxes rose to $16.2 million, or $0.35 per share, consistent with the prior year.
Total expenses for the quarter increased by 2% to $16.8 million, influenced by higher interest expenses and management fees. Interest expenses rose to $8.9 million, up from $8.2 million, due to increased borrowings to support the Fund's investment activities. The base management fee also increased to $5.2 million, reflecting the growth in average total assets. Notably, the Fund waived $1 million of the incentive fee on income, which contributed to a net increase in net assets resulting from operations of $13.2 million, down from $15.9 million in the prior year.
In terms of operational metrics, MSC Income's total assets as of March 31, 2026, were reported at $1.41 billion, up from $1.38 billion at the end of 2025. The Fund's net asset value (NAV) per share increased slightly to $15.87 from $15.85. The total investments at fair value rose to $1.37 billion, with a significant portion in private loan investments, which accounted for approximately 60% of the total portfolio. The Fund's investment strategy has shifted to focus solely on private loan investments, with expectations for the LMM portfolio to decrease over time as existing investments are repaid or sold.
MSC Income's liquidity position remains strong, with $15.6 million in cash and cash equivalents and $194.4 million of unused capacity under its credit facilities. The Fund's debt obligations include $150 million in October 2026 Notes and $150 million in May 2029 Notes, both of which are fixed-rate instruments. The Fund's management has indicated that it will continue to monitor market conditions and adjust its investment strategy accordingly, particularly in light of potential economic fluctuations and interest rate changes.
Looking ahead, MSC Income plans to change its dividend payment frequency from quarterly to monthly starting in July 2026, with total dividends declared for the third quarter of 2026 set at $0.36 per share. The Fund's management remains focused on maximizing total returns through its investment strategies while navigating the challenges posed by the current economic environment.
About MSC INCOME FUND, INC.
MSC Income Fund, Inc. is a principal investment firm specializing in providing secured debt and equity financing to private companies, primarily in the U.S. private equity and lower middle market sectors. It focuses on supporting leveraged buyouts, recapitalizations, and growth financings through its Private Loan and LMM strategies. The company partners with private equity sponsors, emphasizes established companies, and aims to maximize total return via income and capital appreciation.
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