Blackstone Sets Record of Top Investments since '21

In its fourth quarter and full-year 2024 results, Blackstone reported record total investment income and an increase in net asset value. New investments reached their highest level since 2021, marking a fourth consecutive quarter-over-quarter increase.

BXSL has positioned itself as a premium Business Development Company (BDC) with strong performance metrics and a focus on first-lien senior secured debt. Recent financial results show continued strength with record total investment income and increased net asset value as of Q4 2024.

Blackstone Secured Lending (BXSL): Performance Analysis vs. Peers

Key Performance Metrics Comparison

BXSL demonstrates several competitive advantages against peers like ARCC, ORCC, and other large BDCs:

The fund has demonstrated strong recent performance with a YTD return of 15.16% and a one-year return of 20.79% as of mid-2024.

Loan Performance Metrics

Delinquency Rates

While BXSL reports "minimal non-accruals" in its Q4 2024 results, specific 30/60/90 day delinquency breakdowns for BXSL aren't available. However:

• The default rate for BXSL was 1.84% in Q1 2024, down from 2.15% in Q1 2023, indicating improving credit quality.

• For context, industry-wide mortgage delinquency rates as of September 2024 were: 1.6% for 30-59 days past due, 0.5% for 60-89 days past due, and 0.9% for 90+ days past due.

Credit Quality

• BXSL maintains a 98% first-lien senior secured debt portfolio with a loan-to-value ratio of 46.0%.

• This compares favorably to peers like ARCC, which reported newly originated first lien loans in 2023 with an average LTV of 33%.

Resolution Timeframes

Specific workout ratios and resolution timeframes for BXSL aren't available. However, industry data shows:

• The average time to final resolution for delinquent mortgages (time in "foreclosure limbo") averages 18.76 months.

• Most utility and telecom companies send accounts to collections between 90-120 days past due.

Origination Strategy

BXSL benefits from Blackstone's extensive direct lending platform, which provides significant origination capabilities:

1. Direct Origination Focus: BXSL is "backed by large direct lending platform able to source, replenish and optimize portfolio". This gives them pricing power and better deal selection compared to passive buyers of syndicated deals.

2. Operating Platform Advantage: BXSL leverages "operating platform as a unique advantage that drives value for our borrowers and shareholders". This includes a dedicated operating team that provides support to portfolio companies.

3. Deployment Momentum: New investments increased to their highest level since 2021 in Q4 2024, marking a fourth consecutive quarter-over-quarter increase.

4. Blackstone Ecosystem: The fund benefits from Blackstone's broader ecosystem, with executives making open market purchases of BXSL shares, demonstrating alignment with shareholders.

Risk Factors

Despite strong performance, investors should consider:

• Historical maximum drawdown of -36.85% and current drawdown of -4.46%

• Daily standard deviation of 15.11%, indicating significant volatility

• Potential impact of changing interest rates on portfolio performance

• Broader economic uncertainties that could affect borrower repayment capabilities

BXSL's predominantly first-lien portfolio structure and low leverage ratio position it well to manage these risks compared to peers.

Sources: Blackstone, Blackstone Report, Kavout, Businesswire

Beyond Banks Podcast: Idea Financial's Automated Lending: 60% Cash Flow Underwriting Emphasis, Niche Legal Finance

About the Client (Idea Financial)

• Company Profile: Small business lender operating for 6 years

• Products:

  • Revolving line of credit (flagship product)

  • Term loan

  • Specialty finance product for plaintiff law firms (contingency fee case expenses)

• Volume: Processes 5,000-10,000 applications monthly

• Competitive Advantage: True revolving line of credit (borrow what you need, pay for what you use, no prepayment penalties) vs. competitors' term loans with fixed factor rates

Pain Points Solved by Cobalt Intelligence API

• Manual Processing Bottleneck: Prior to Cobalt, verification was "the Achilles heel" of their process - an area they couldn't automate

• Integration Speed: One of their faster integrations compared to traditional bureaus

• Technical Implementation: Described as "straightforward" with "up-to-date and simple" format and protocol

• Adoption Success: "Amazing" adoption results - successfully automated a previously manual verification process

Industry Insights on Alternative Business Lending

• Data Evolution: Permission-based data becoming more accessible and agreeable to end users

• Risk Assessment Shift: From primarily credit-based to 60% cashflow-based assessment for short-term products (12-36 months)

• Credit Importance: Still represents 40-50% of predictive validity but cashflow data is increasingly critical

• Competitive Rates: Their legal financing offers interest rates in the teens, general business financing in the twenties (compared to 40-60% at some competitors)

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Bronstein, Gewirtz & Grossman, LLC Announces an Investigation Against Open Lending Corporation (LRPO) and Encourages Stockholders to Learn More About the Investigation

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RippleX Product Director Confirms Under-Collateralized Loans are Coming to the XRP Ledger

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