Blackstone Secured Lending Fund (BXSL) risk factors, FY2024 10-K

Other

1. 01Price declines in the medium- and large-sized U.S. corporate debt market may adversely affect the fair value of our portfolio, reducing our NAV through increased net unrealized depreciation
2. 02We may face increasing competition for investment opportunities, which could delay deployment of our capital, reduce returns and result in losses
3. 03We may have difficulty sourcing investment opportunities
4. 04We face risks associated with the deployment of our capital
5. 05As required by the 1940 Act, a significant portion of our investment portfolio is and will be recorded at fair value as determined in good faith and, as a result, there is and will be uncertainty as to the value of our portfolio investments
6. 06We may not achieve investment results that will allow us to make a specified or stable level of cash distributions and our distributions may decrease over time. In addition, due to the asset coverage test applicable to us as a BDC, we may be limited in our ability to make distributions
7. 07We have not established any limit on the amount of funds we may use from available sources, such as borrowings, if any, or proceeds from securities offerings, to fund distributions (which may reduce the amount of capital we ultimately invest in assets)
8. 08As a public reporting company, we are subject to regulations not applicable to private companies, such as provisions of the Sarbanes-Oxley Act. Efforts to comply with such regulations will involve significant expenditures, and non-compliance with such regulations may adversely affect us
9. 09Changes in laws or regulations governing our operations may adversely affect our business or cause us to alter our business strategy
10. 10Trade negotiations and related government actions may create regulatory uncertainty for our portfolio companies and our investment strategies and adversely affect the profitability of our portfolio companies
11. 11Financial regulatory changes in the United States could adversely affect our business
12. 12We, the Adviser and its affiliates are subject to regulatory oversight, which could negatively impact our operations, cash flow or financial condition, impose additional costs on us or otherwise adversely affect our business
13. 13The impact of financial reform legislation on us is uncertain
14. 14We may experience fluctuations in our quarterly results
15. 15Transactions denominated in foreign currencies subject us to foreign currency risks
16. 16General economic conditions could adversely affect the performance of our investments and operations
17. 17Inflation and supply chain risks have had and may continue to have an adverse impact on our financial condition and results of operations
18. 18We may be impacted by general global economic and market conditions
19. 19It may be difficult to bring suit or foreclosure in non-U.S. countries
20. 20MiFID II obligations could have an adverse effect on the ability of Blackstone Credit & Insurance and its MiFID-authorized EEA affiliates to obtain and research in connection with the provision of an investment service
21. 21Any unrealized losses we experience on our portfolio may be an indication of future realized losses, which could reduce our income available for distribution
22. 22Terrorist attacks, acts of war or natural disasters may adversely affect our operations
23. 23Force majeure events may adversely affect our operations
24. 24Cybersecurity and data protection risks could result in the loss of data, interruptions in our business, and damage to our reputation, and subject us to regulatory actions , increased costs and financial losses, each of which could have a material adverse effect on our business and results of operations
25. 25negative publicity and reputational harm and may cause our shareholders to lose confidence in the effectiveness of our security measures and Blackstone more generally
26. 26We may not be able to obtain and maintain all required state licenses
27. 27Compliance with the SEC’s Regulation Best Interest by participating broker-dealers may negatively impact our ability to raise capital in a public offering, which could harm our ability to achieve our investment objectives
28. 28As a Delaware statutory trust, we are subject to the control share acquisition statute contained in the Delaware Statutory Trust Act
29. 29(6) a majority or more of all voting power
30. 30Any control shares of the Company acquired before August 1, 2022 are not subject to the DSTA Control Share Statute; however, any further acquisitions on or after August 1, 2022 are considered control shares subject to the DSTA Control Share Statute
31. 31Share Statute, which are summarized above, would continue to apply. The DSTA Control Share Statute further provides that the Board is under no obligation to grant any such exemptions
32. 32Our Declaration of Trust includes exclusive forum and jury trial waiver provisions that could limit a shareholder’s ability to bring a claim or, if such provisions are deemed inapplicable or unenforceable by a court, may cause the Company to incur additional costs associated with such action
33. 33Our Board may change our operating policies and strategies without prior notice or shareholder approval, the effects of which may be adverse to our results of operations and financial condition
34. 34Our Board may amend our Declaration of Trust without prior shareholder approval
35. 35Certain provisions of our Declaration of Trust could deter takeover attempts and have an adverse impact on the value of our common shares
36. 36Our investments in senior secured loans, senior secured bonds, subordinated debt and equity of private U.S. companies, including middle market companies, may be risky and, subject to compliance with our 80% policy, there is no limit on the amount of any such investments in which we may invest
37. 37The Company also may originate loans or acquire loans by participating in the initial issuance of the loan as part of a syndicate of banks and financial institutions, or receive its interest in a loan directly from the borrower
38. 38that debt is secured does not guarantee that we will receive principal and interest payments according to the debt’s terms, or at all, or that we will be able to collect on the debt should it be forced to enforce its remedies
39. 39Early repayments of our investments may have a material adverse effect on our investment objectives. In addition, depending on fluctuations of the equity markets and other factors, warrants and other equity investments may become worthless
40. 40The credit rating of a high-yield security does not necessarily address its market value risk. Ratings and market value may change from time to time, positively or negatively, to reflect new developments regarding the issuer
41. 41We are exposed to risks associated with changes in interest rates
42. 42Our portfolio companies may incur debt that ranks equally with, or senior to, our investments in such companies
43. 43There may be circumstances where our debt investments could be subordinated to claims of other creditors or we could be subject to lender liability claims
44. 44We generally do not control our portfolio companies
45. 45We are subject to risks related to sustainability matters
46. 46We and our investment adviser could be the target of litigation or regulatory investigations
47. 47Second priority liens on collateral securing debt investments that we make to our portfolio companies may be subject to control by senior creditors with first priority liens. If there is a default, the value of the collateral may not be sufficient to repay in full both the first priority creditors and us
48. 48Economic recessions or downturns or restrictions on trade could impair our portfolio companies and adversely affect our operating results
49. 49Our investments in CLOs may be riskier than a direct investment in the debt or other securities of the underlying companies
50. 50A covenant breach or other default by our portfolio companies may adversely affect our operating results
51. 51Our portfolio companies may be highly leveraged
52. 52Our portfolio may be concentrated in a limited number of industries, which may subject us to a risk of significant loss if there is a downturn in a particular industry in which a number of our investments are concentrated
53. 53We may be subject to risks associated with our investments in the software industry
54. 54Our investments in the healthcare providers and services industry face considerable uncertainties
55. 55Investing in large private U.S. borrowers may limit the Company’s ability to achieve high growth rates during times of economic expansion
56. 56We are subject to risks associated with investing in portfolio companies that derive a significant portion of their revenue from government contracts
57. 57Investing in private companies involves a number of significant risks, any one of which could have a material adverse effect on our operating results
58. 58We may not realize gains from our equity investments
59. 59An investment strategy focused primarily on privately-held companies presents certain challenges, including, but not limited to, the lack of available information about these companies
60. 60Our investments in securities or assets of publicly-traded companies are subject to the risks inherent in investing in public securities
61. 61A lack of liquidity in certain of our investments may adversely affect our business
62. 62We may not have the funds or ability to make additional investments in our portfolio companies or to fund our unfunded debt commitments
63. 63Our investments may include original issue discount and payment-in-kind instruments
64. 64We may enter into a TRS agreement that exposes us to certain risks, including market risk, liquidity risk and other risks similar to those associated with the use of leverage
65. 65We may enter into repurchase agreements or reverse repurchase agreements
66. 66We may enter into securities lending agreements
67. 67We may from time to time enter into credit default swaps or other derivative transactions which expose us to certain risks, including credit risk, market risk, liquidity risk and other risks similar to those associated with the use of leverage
68. 68We may acquire various financial instruments for purposes of “hedging” or reducing our risks, which may be costly and ineffective and could reduce our cash available for distribution to our shareholders
69. 69Prepayments of our debt investments by our portfolio companies could adversely impact our results of operations and reduce our return on equity
70. 70Technological or other innovations and industry disruptions may negatively impact us
71. 71We may invest through various joint ventures
72. 72We are subject to risks associated with investing alongside other third parties
73. 73We may syndicate co-investment opportunities, which may be costly
74. 74We may use a wide range of investment techniques that could expose us to a diverse range of risks
75. 75The Adviser and its affiliates, including our officers and some of our trustees, face conflicts of interest caused by compensation arrangements with us and our affiliates, which could result in actions that are not in the best interests of our shareholders
76. 76We may be obligated to pay the Adviser incentive compensation even if we incur a net loss due to a decline in the value of our portfolio
77. 77The incentive fee based on income takes into account our past performance
78. 78There may be conflicts of interest related to obligations that the Adviser’s senior management and investment team have to Other Clients
79. 79The time and resources that individuals employed by the Adviser devote to us may be diverted and we may face additional competition due to the fact that individuals employed by the Adviser are not prohibited from raising money for or managing other entities that make the same types of investments that we target
80. 80Our shares may be purchased by the Adviser or its affiliates
81. 81The Adviser relies on key personnel, the loss of any of whom could impair its ability to successfully manage us
82. 82We depend on the Adviser to select our investments and otherwise conduct our business, and any material adverse change in its financial condition or our relationship with the Adviser could have a material adverse effect on our business and ability to achieve our investment objectives
83. 83The compensation we pay to the Adviser will be determined without independent assessment on our behalf, and these terms may be less advantageous to us than if such terms had been the subject of arm’s-length negotiations
84. 84The Adviser’s influence on conducting our operations gives it the ability to increase its fees, which may reduce the amount of cash flow available for distribution to our shareholders
85. 85There may be trademark risk, as we do not own the Blackstone name
86. 86We may be subject to additional potential conflicts of interests as a consequence of Blackstone’s status as a public company
87. 87The requirement that we invest a sufficient portion of our assets in Qualifying Assets could preclude us from investing in accordance with our current business strategy; conversely, the failure to invest a sufficient portion of our assets in Qualifying Assets could result in our failure to maintain our status as a BDC
88. 88Regulations governing our operation as a BDC and RIC will affect our ability to raise, and the way in which we raise, additional capital or borrow for investment purposes, which may have a negative effect on our growth
89. 89Our ability to enter into transactions with our affiliates is restricted
90. 90We are uncertain of our sources for funding our future capital needs; if we cannot obtain debt or equity financing on acceptable terms, our ability to acquire investments and to expand our operations will be adversely affected
91. 91We are a non-diversified investment company within the meaning of the 1940 Act, and therefore we are not limited with respect to the proportion of our assets that may be invested in securities of a single issuer
92. 92When we use leverage, the potential for loss on amounts invested in us will be magnified and may increase the risk of investing in us. Leverage may also adversely affect the return on our assets, reduce cash available for distribution to our shareholders, and result in losses
93. 93reinvests the proceeds of a reverse repurchase agreement at a rate lower than the cost of the agreement, transacting under such agreement will lower the Company’s yield
94. 94We may default under our credit facilities
95. 95Our current or future credit ratings may not reflect all risks of an investment in our debt securities
96. 96The trading market or market value of our issued debt securities may fluctuate
97. 97Terms relating to redemption may materially adversely affect our noteholders return on any debt securities that we may issue
98. 98If we issue preferred shares or convertible debt securities, the NAV of our Common Shares may become more volatile
99. 99Holders of any preferred shares that we may issue will have the right to elect certain members of our Board and have class voting rights on certain matters
100. 100Provisions in a credit facility may limit our investment discretion
101. 101Corresponding Return to Common Shareholder (1)
102. 102Changes in interest rates may affect our cost of capital and net investment income
103. 103Compliance with SEC Rule 18f-4 governing derivatives and use of leverage may limit our investment discretion
104. 104We have formed CLOs, and may form additional CLOs in the future, which may subject us to certain structured financing risks
105. 105We will be subject to corporate-level income tax if we are unable to maintain RIC tax treatment under Subchapter M of the Code or satisfy RIC distribution requirements
106. 106We may have difficulty paying our required distributions if we recognize income before or without receiving cash representing such income
107. 107Some of our investments may be subject to corporate-level income tax
108. 108Our portfolio investments may present special tax issues
109. 109Legislative or regulatory tax changes could adversely affect investors
110. 110We cannot assure you that the market price of common shares will not decline below our NAV. The market price of common shares may be volatile and may fluctuate substantially
111. 111A shareholder’s interest in us will be diluted if we issue additional shares, which could reduce the overall value of an investment in us
112. 112We may have difficulty paying distributions and the tax character of any distributions is uncertain
113. 113Shareholders will experience dilution in their ownership percentage if they do not participate in our dividend reinvestment plan
114. 114Shareholders may experience dilution in the NAV of their shares if they do not participate in our dividend reinvestment plan and if our shares are trading at a discount to NAV
115. 115No shareholder approval is required for certain mergers
116. 116Investing in our shares involves a high degree of risk
117. 117The NAV of our shares may fluctuate significantly
118. 118Sales of substantial amounts of our common shares in the public market may have an adverse effect on the market price of our common shares
119. 119Various potential and actual conflicts of interest will arise, and there are conflicts that may not be identified or resolved in a manner favorable to us
120. 120resolved in favor of your interest. The following list of conflicts does not purport to be a complete enumeration or explanation of the actual and potential conflicts involved in an investment in the Company
121. 121“Other Clients” means, collectively, Other Blackstone Credit & Insurance Clients and Blackstone Clients
122. 122Procurement: Blackstone’s group purchasing program harnesses spending from portfolio companies across more than 75 categories, including IT hardware and software, office supplies, shipping, energy and telecommunications
123. 123Sustainability: By improving the operation and maintenance of mechanical systems, the Portfolio Operations Group seeks to reduce energy spend while improving productivity, safety, and environmental performance
124. 124as where Blackstone Credit & Insurance is expected to cause the Company or Other Clients to decline to exercise certain control-and/or foreclosure-related rights with respect to a portfolio company
125. 125Any financing provided by a shareholder or an affiliate to the Company or a portfolio company is not an investment in the Company
126. 126affect the prices and availability of the securities and instruments in which the Company invests. Participation in specific investment opportunities may be appropriate, at times, for both the Company and Other Clients
127. 127Blackstone and Blackstone Credit & Insurance employees are generally permitted to invest in alternative investment funds, real estate funds, hedge funds or other investment vehicles, including potential competitors of the Company. The Company will not receive any benefit from any such investments
128. 128Peridot Financial Services (“Peridot”) and Global Supply Chain Finance (“GSCF”). Blackstone through one or more of its Other Clients has made majority investments into Peridot and GSCF, which provide supply chain financing and accounts receivable services globally
129. 129Revantage. Revantage is a portfolio entity of certain Blackstone Clients that provides corporate support services, including, without limitation, accounting, legal, tax, treasury, information technology and human resources and operational services and management services
130. 130We have received an exemptive order from the SEC that permits us, among other things, to co-invest with certain other persons, including certain affiliates of the Adviser and certain funds managed and controlled by the Adviser and its affiliates, subject to certain terms and conditions