Carlyle cuts private credit fund's value by 2%

By Matt Tracy

May 11 (Reuters) - Global investment firm Carlyle reported a decline in the value of one of its private credit funds in the first quarter, which it attributed to higher interest rates facing borrowers in its portfolio, the fund said Monday.

Carlyle Secured Lending (CGBD) reported its net asset value per share (NAV) declined to $15.89 at the end of March, which is roughly 2.3% lower than the previous quarter.

"The decline was primarily from unrealized losses due to widening spreads," or higher borrowing costs, the firm said in its earnings filings.

Investors have taken a closer look at the portfolios of private credit funds known as business development companies, as advances in artificial intelligence threaten the business models of certain companies in the software sector. The firm's Carlyle Tactical Private Credit Fund experienced elevated investor withdrawal pressure in the first quarter. Investors requested to pull 15.7% of their shares in the first quarter-more than three times the 5% maximum threshold the fund allows for repurchases.

Approximately 10% of Carlyle Secured Lending's (CGBD) portfolio consisted of software-sector borrowers at the end of March, according to its quarterly report.

Its rate of non-accruals, where a borrower has fallen well behind on interest payments, declined to 0.9% at fair value from 1.2% in the fourth quarter, it said.

New loan originations totaled $217.5 million in the first quarter, while loan repayments and sales combined were $216 million, according to its filings. The fund declared a 35-cent dividend for the second quarter, compared to 40 cents in the previous quarter, it said.

(Reporting by Matt Tracy, editing by Chizu Nomiyama )