Palmer Square Capital Reports $8.4 Million Net Decrease in Assets for Q1 2025

Palmer Square Capital BDC Inc. reported a net decrease in net assets resulting from operations of $8.4 million for the three months ended March 31, 2025, compared to a net increase of $22.9 million for the same period in 2024. The company's total investment income for the quarter was $31.2 million, down from $34.8 million year-over-year, primarily due to a decline in interest income from its investment portfolio, which was affected by a falling rate environment. Interest income specifically decreased to $29.8 million from $33.3 million, while dividend income also saw a significant drop from $1.3 million to $0.6 million.

In terms of expenses, Palmer Square reported total expenses of $18.3 million, slightly lower than the $18.5 million recorded in the previous year. The decrease in expenses was attributed to lower management and incentive fees, which fell in line with the reduced net investment income. Interest expenses remained relatively stable, totaling $13.0 million compared to $13.2 million in the prior year. The company’s net investment income per share was $0.40, down from $0.52 in the same quarter last year, while the net asset value per share decreased to $15.85 from $16.50.

Operationally, Palmer Square's investment portfolio remained stable, with a fair value of approximately $1.3 billion as of March 31, 2025, unchanged from the previous quarter. The company had 260 debt and equity investments across 209 portfolio companies. However, the company experienced a net realized loss of $5.9 million and a net change in unrealized losses of $15.4 million during the quarter, reflecting a challenging market environment. The company also reported that loans on non-accrual status represented 0.24% of total investments at fair value, an increase from 0.08% in the previous quarter.

Strategically, Palmer Square has continued to utilize its credit facilities effectively, with $319.1 million outstanding under the Bank of America Credit Facility and $154.3 million under the Wells Fargo Credit Facility as of March 31, 2025. The company has also engaged in share repurchase activities, buying back 98,399 shares during the quarter as part of its ongoing stock repurchase plan. Looking ahead, Palmer Square anticipates that its investment strategy will continue to focus on corporate debt securities and CLO structured credit funds, while maintaining compliance with regulatory asset coverage requirements.

The company’s outlook remains cautious, with management highlighting potential risks from market volatility, interest rate fluctuations, and economic conditions that could impact its investment performance. Palmer Square is committed to maximizing total return through careful management of its investment portfolio and maintaining sufficient liquidity to meet its operational and strategic needs.