Carlyle Secured Lending (CGBD) FY2025 10-K Risk Factors: 5 New, 18 Dropped

What the changes say

New risk additions highlight exposures to Carlyle affiliate conflicts, artificial intelligence adoption, covenant-lite loans, and international tariffs.
Floating-rate leverage increases borrowing cost sensitivity when benchmark interest rates rise.
Several note maturities and credit facility details were updated to include 2030 and 2031 Notes.

What changed since the prior 10-K

New

NewRisks Related to Our Business and Structure
investment funds managed by the Investment Adviser or an investment manager affiliated with the Investment Adviser, including Carlyle
Carlyle and its affiliates may invest in competing companies or different capital structure levels, creating conflicts of interest in portfolio and resource decisions.
NewRisks Related to Our Business and Structure
pay interest at a floating rate on our Credit Facility and 2015-1N Debt and the effective rate of our Senior Notes is floating due to our interest rate swap, an increase in interest rates will generally increase our borrowing costs
An increase in interest rates raises our borrowing costs because our Credit Facility, 2015-1N Debt, and Senior Notes use floating rates or swaps.
NewRisks Related to Our Business and Structure
Use of artificial intelligence technology by us could lead to the exposure of our data or other adverse effects and increase competitive, operational, legal, and regulatory risks in ways that we cannot predict
Using artificial intelligence technologies for operational tasks, due diligence, and investment decisions creates unpredictable legal, regulatory, and data exposure risks.
NewRisks Related to Our Investments
in loans, we have acquired and may in the future acquire equity securities as well. However, we may not be able to realize gains from our equity interests, and any gains that we do realize on the disposition of any equity interests may not be sufficient to offset any other losses we experience
Investments in covenant-lite loans reduce our protective terms and lender rights, exposing us to greater liquidity and recovery loss risks.
NewRisks Related to Our Investments
Tariffs may adversely affect us or our portfolio companies
U.S. and retaliatory foreign tariffs on imported goods like steel and aluminum from China, Canada, and Mexico could increase costs and reduce portfolio company profitability.

Dropped

DroppedRisks Related to Our Business and Structure
controls over financial reporting, we could lose investor confidence in the accuracy and completeness of our financial reports. This could materially adversely affect us and lead to a decline in the price of the securities we issue
DroppedRisks Related to Our Business and Structure
we will amend our bylaws to be subject to the Control Share Act only if our Board of Directors determines that it would be in our best interests and if the SEC staff does not object to our determination that our being subject to the Control Share Act does not conflict with the Investment Company Act
DroppedRisks Related to Our Investments
would have to share on an equal basis any distributions with other creditors holding such debt in the event of an insolvency, liquidation, dissolution, reorganization or bankruptcy of the relevant portfolio company
DroppedRisks Related to an Investment in Our Securities
We issued the Preferred Stock in May 2020 and we may in the future determine to issue additional preferred stock, which could adversely affect the market value of our common stock
DroppedRisks Related to an Investment in Our Securities
Our stockholders may experience dilution upon the conversion of the Preferred Stock
DroppedRisks Related to an Investment in Our Securities
In addition, the indenture and the 2028 Notes does not require us to make an offer to purchase the 2028 Notes in connection with a change of control or any other event
DroppedRisks Related to an Investment in Our Securities
The 2030 Notes are redeemable in whole or in part upon certain conditions at any time or from time to time at our
DroppedRisks Related to an Investment in Our Securities
A downgrade, suspension or withdrawal of the credit rating assigned by a rating agency to us or the 2028 Notes or change in the debt markets could cause the liquidity or market value of the 2028 Notes to decline significantly
DroppedRisks Related to the Mergers
Sales of shares of our common stock after the completion of the Mergers may cause the trading price of our common stock to decline
DroppedRisks Related to the Mergers
Most of our stockholders will experience a reduction in percentage ownership and voting power in the combined company as a result of the Mergers
DroppedRisks Related to the Mergers
We may be unable to realize the benefits anticipated by the Mergers, including estimated cost savings, or it may take longer than anticipated to achieve such benefits
DroppedRisks Related to the Mergers
If the Mergers do not close, we will not benefit from the expenses incurred in pursuit of the Mergers
DroppedRisks Related to the Mergers
The termination of the Merger Agreement could negatively impact us
DroppedRisks Related to the Mergers
The Mergers are subject to closing conditions, including stockholder approvals, that, if not satisfied or (to the extent legally allowed) waived, will result in the Mergers not being completed, which may result in material adverse consequences to our business and operations
DroppedRisks Related to the Mergers
We may, to the extent legally allowed, waive one or more conditions to the Mergers without resoliciting stockholder approval
DroppedRisks Related to the Mergers
Uncertainty about the effect of the Mergers may have an adverse effect on us and, consequently, on the combined company following completion of the Mergers
DroppedRisks Related to the Mergers
The market price of our common stock after the Mergers may be affected by factors different from those affecting our common stock currently
DroppedRisks Related to the Mergers
Litigation against us, CSL III, or the members of our Board of Directors and CSL III’s board of trustees, could prevent or delay the completion of the Mergers or result in the payment of damages following completion of the Mergers

Reworded

92% rewrittenRisks Related to an Investment in Our Securities
We may choose to redeem the 2030 Notes and 2031 Notes when prevailing interest rates are relatively low
Updated note references and redemption terms from 2028 Notes to include both 2030 Notes and 2031 Notes.
Was: We may choose to redeem the 2028 Notes and 2030 Notes when prevailing interest rates are relatively low
85% rewrittenRisks Related to Our Investments
Our investments are risky and speculative
Minor stylistic and phrasing adjustments regarding below investment grade middle-market loans.
76% rewrittenRisks Related to Our Business and Structure
There are significant potential conflicts of interest, including the management of other investment funds and accounts by the Investment Adviser, which could impact our investment returns and the holders of our common stock
Updated references from 'our Investment Adviser' to 'the Investment Adviser' regarding Carlyle and affiliated BDC management.
Was: There are significant potential conflicts of interest, including the management of other investment funds and accounts by our Investment Adviser, which could impact our investment returns and the holders of our common stock
70% rewrittenRisks Related to Our Investments
Our portfolio companies may incur debt that ranks equally with, or senior to, some of our investments in such companies and if there is a default, we may experience a loss on our investment
No substantive changes made to the text regarding portfolio company senior debt seniority and default loss risks.
63% rewrittenRisks Related to Our Business and Structure
These events, in turn, could have a material adverse effect on our operating results and negatively affect the market price of our common stock and our ability to pay dividends to our stockholders
No substantive changes made to the cybersecurity and cyber incident disruption risk text.
50% rewrittenRisks Related to Our Business and Structure
Provisions of the MGCL and of our Charter and bylaws could deter takeover attempts and have an adverse impact on the price of our common stock
No substantive changes made to Maryland General Corporation Law and takeover defense provisions.
48% rewrittenRisks Related to an Investment in Our Securities
Sales of substantial amounts of our common stock in the public market may have an adverse effect on the market price of our common stock
Updated common stock share count from 50,956,965 shares as of February 24, 2025, to 70,676,923 shares as of February 23, 2026.
47% rewrittenRisks Related to an Investment in Our Securities
We cannot assure that an active trading market for the 2030 Notes or 2031 Notes will develop or be maintained
Replaced listings and trading market disclosures for 2028 Notes with unlisted 2030 and 2031 Notes lacking exchange quotation.
Was: We cannot assure that an active trading market for the 2028 Notes or 2030 Notes will develop or be maintained
44% rewrittenRisks Related to Our Business and Structure
If we fail to maintain the adequacy of our internal controls over financial reporting, we may not be able to accurately report our financial results, which may adversely affect investor confidence in us and, as a result, the value of the securities we issue
43% rewrittenRisks Related to Our Business and Structure
We borrow money, which magnifies the potential for gain or loss on amounts invested and may increase the risk of investing in us
42% rewrittenRisks Related to Our Business and Structure
(1)Assumes, as of December 31, 2025, (i) $2,790.2 million in total assets, (ii) $1,543.7 million in outstanding indebtedness, (iii) $1,167.4 million in net assets and (iv) weighted average effective annual interest rate, excluding fees (such as fees on unused amounts and amortization of financing costs), of 6.02%
Was: (1)Assumes, as of December 31, 2024, (i) $1,926.0 million in total assets, (ii) $978.4 million in outstanding indebtedness, (iii) $905.2 million in net assets and (iv) weighted average effective annual interest rate, excluding fees (such as fees on undrawn amounts and amortization of financing costs), of 6.65%
41% rewrittenRisks Related to an Investment in Our Securities
Holders of any preferred stock we may issue may have the right to elect members of the board of directors and class voting rights on certain matters
Was: Holders of the Preferred Stock have the right to elect members of the board of directors and class voting rights on certain matters
34% rewrittenRisks Related to an Investment in Our Securities
The indenture under which the 2030 Notes and 2031 Notes were issued contain limited protection for holders of the 2030 Notes and 2031 Notes, respectively
Was: The indenture under which the 2028 Notes and 2030 Notes were issued contain limited protection for holders of the 2028 Notes and 2030 Notes, respectively
31% rewrittenRisks Related to Our Business and Structure
The “catch-up” portion of the incentive fees may encourage the Investment Adviser to accelerate or defer interest payable by portfolio companies from one calendar quarter to another, potentially resulting in fluctuations in timing and dividend amounts
Was: The “catch-up” portion of the incentive fees may encourage our Investment Adviser to accelerate or defer interest payable by portfolio companies from one calendar quarter to another, potentially resulting in fluctuations in timing and dividend amounts
29% rewrittenRisks Related to Our Business and Structure
Changes in interest rates have affected, and may in the future affect, our cost of capital, reduce the ability of our portfolio companies to service their debt obligations and decrease our net investment income
Was: Changes in interest rates have increased, and may in the future increase, our cost of capital, reduce the ability of our portfolio companies to service their debt obligations and decrease our net investment income
29% rewrittenRisks Related to Our Business and Structure
Regulations governing our operation as a BDC affect our ability to, and the way in which we will, raise additional capital. As a BDC, the necessity of raising additional capital may expose us to risks, including the typical risks associated with leverage
28% rewrittenRisks Related to Our Investments
The financial projections of our portfolio companies could prove inaccurate
25% rewrittenRisks Related to Our Business and Structure
We are dependent upon the Investment Adviser for our future success
Was: We are dependent upon our Investment Adviser for our future success
25% rewrittenRisks Related to an Investment in Our Securities
Certain of our debt instruments include more protections for their holders than the indenture and the Senior Notes
23% rewrittenRisks Related to Our Business and Structure
The Investment Adviser’s liability is limited under the Investment Advisory Agreement, and we are required to indemnify the Investment Adviser against certain liabilities, which may lead the Investment Adviser to act in a riskier manner on our behalf than it would when acting for its own account
Was: Our Investment Adviser’s liability is limited under the Investment Advisory Agreement, and we are required to indemnify our Investment Adviser against certain liabilities, which may lead our Investment Adviser to act in a riskier manner on our behalf than it would when acting for its own account
21% rewrittenRisks Related to Our Business and Structure
Our Board of Directors is authorized to reclassify any unissued shares of common stock into one or more classes of preferred stock, which could convey special rights and privileges to its owners
21% rewrittenRisks Related to Our Business and Structure
Our ability to achieve our investment objective and to grow depends on our ability to acquire suitable investments and monitor and administer those investments, which depends, in turn, on the Investment Adviser’s ability to identify, invest in and monitor companies that meet our investment criteria
Was: Our ability to achieve our investment objective and to grow depends on our ability to acquire suitable investments and monitor and administer those investments, which depends, in turn, on our Investment Adviser’s ability to identify, invest in and monitor companies that meet our investment criteria

All 72 risk factors

Headings as the filing states them, in filing order.

Risks Related to Our Business and Structure

01Inflation has adversely affected and may continue to adversely affect the business, results of operations and financial condition of our portfolio companies
02Economic recessions or downturns could impair our portfolio companies and harm our operating results
03We are dependent upon the Investment Adviser for our future success25% rewritten
04There are significant potential conflicts of interest, including the management of other investment funds and accounts by the Investment Adviser, which could impact our investment returns and the holders of our common stock76% rewritten
05investment funds managed by the Investment Adviser or an investment manager affiliated with the Investment Adviser, including CarlyleNew
06Our ability to achieve our investment objective and to grow depends on our ability to acquire suitable investments and monitor and administer those investments, which depends, in turn, on the Investment Adviser’s ability to identify, invest in and monitor companies that meet our investment criteria21% rewritten
07We may need to raise additional capital to grow because we must distribute most of our income
08Any failure on our part to maintain our status as a BDC or RIC would reduce our operating flexibility, may hinder our achievement of our investment objective, may limit our investment choices and may subject us to greater regulation
09Regulations governing our operation as a BDC affect our ability to, and the way in which we will, raise additional capital. As a BDC, the necessity of raising additional capital may expose us to risks, including the typical risks associated with leverage29% rewritten
10The NAV per share of our common stock may be diluted if we sell shares of our common stock in one or more offerings at prices below the then current NAV per share of our common stock
11We borrow money, which magnifies the potential for gain or loss on amounts invested and may increase the risk of investing in us43% rewritten
12pay interest at a floating rate on our Credit Facility and 2015-1N Debt and the effective rate of our Senior Notes is floating due to our interest rate swap, an increase in interest rates will generally increase our borrowing costsNew
13(1)Assumes, as of December 31, 2025, (i) $2,790.2 million in total assets, (ii) $1,543.7 million in outstanding indebtedness, (iii) $1,167.4 million in net assets and (iv) weighted average effective annual interest rate, excluding fees (such as fees on unused amounts and amortization of financing costs), of 6.02%42% rewritten
14Our indebtedness could adversely affect our business, financial conditions or results of operations
15Changes in interest rates have affected, and may in the future affect, our cost of capital, reduce the ability of our portfolio companies to service their debt obligations and decrease our net investment income29% rewritten
16We may experience fluctuations in our quarterly results
17We may be obligated to pay the Investment Adviser incentive compensation even if we incur a loss
18Our fee structure may induce the Investment Adviser to pursue speculative investments and incur leverage, and investors may bear the cost of multiple levels of fees and expenses
19The “catch-up” portion of the incentive fees may encourage the Investment Adviser to accelerate or defer interest payable by portfolio companies from one calendar quarter to another, potentially resulting in fluctuations in timing and dividend amounts31% rewritten
20We will be subject to corporate-level income tax if we are unable to maintain our qualification as a RIC for U.S. federal income tax purposes under Subchapter M of the Code
21A portion of our income and fees may not be qualifying income for purposes of the income source requirement
22If we fail to maintain the adequacy of our internal controls over financial reporting, we may not be able to accurately report our financial results, which may adversely affect investor confidence in us and, as a result, the value of the securities we issue44% rewritten
23Certain investors are limited in their ability to make significant investments in us
24Our Board of Directors is authorized to reclassify any unissued shares of common stock into one or more classes of preferred stock, which could convey special rights and privileges to its owners21% rewritten
25Provisions of the MGCL and of our Charter and bylaws could deter takeover attempts and have an adverse impact on the price of our common stock50% rewritten
26Our Board of Directors may change our investment objective, operating policies and strategies without prior notice and without stockholder approval
27We are highly dependent on information systems, and systems failures could significantly disrupt our business
28These events, in turn, could have a material adverse effect on our operating results and negatively affect the market price of our common stock and our ability to pay dividends to our stockholders63% rewritten
29Use of artificial intelligence technology by us could lead to the exposure of our data or other adverse effects and increase competitive, operational, legal, and regulatory risks in ways that we cannot predictNew
30The Investment Adviser’s liability is limited under the Investment Advisory Agreement, and we are required to indemnify the Investment Adviser against certain liabilities, which may lead the Investment Adviser to act in a riskier manner on our behalf than it would when acting for its own account23% rewritten
31We are subject to certain risks as a result of our direct interest in the 2015-1 Issuer Preferred Interests
32The 2015-1 Issuer Preferred Interests are subordinated obligations and therefore we may not receive cash from the 2015-1 Issuer
33The interests of holders of the 2015-1N Debt issued by the 2015-1 Issuer may not be aligned with our interests
34Under the documents governing the 2015-1R Refinancing, there are two coverage tests applicable to the 2015-1N Debt
35We may be required to assume liabilities of the 2015-1 Issuer and are indirectly liable for certain representations and warranties in connection with the 2015-1R Refinancing

Risks Related to Our Investments

36Our investments are risky and speculative85% rewritten
37in loans, we have acquired and may in the future acquire equity securities as well. However, we may not be able to realize gains from our equity interests, and any gains that we do realize on the disposition of any equity interests may not be sufficient to offset any other losses we experienceNew
38We operate in a highly competitive market for investment opportunities, and compete with investment vehicles sponsored or advised by our affiliates
39Our portfolio companies may be highly leveraged
40Our portfolio companies may incur debt that ranks equally with, or senior to, some of our investments in such companies and if there is a default, we may experience a loss on our investment70% rewritten
41Our portfolio may be concentrated in a limited number of portfolio companies and industries, which will subject us to a risk of significant loss if any of these companies defaults on its obligations under any of its debt instruments or if there is a downturn in a particular industry
42Declines in the prices of corporate debt securities and illiquidity in the corporate debt markets may adversely affect the fair value of our portfolio investments, reducing our NAV through increased net unrealized depreciation
43To the extent we make investments in restructurings and reorganizations they may be subject to greater regulatory and legal risks than other traditional direct investments in portfolio companies
44The financial projections of our portfolio companies could prove inaccurate28% rewritten
45The due diligence investigation that the Investment Adviser carries out with respect to an investment opportunity may not reveal or highlight all relevant facts that may be necessary or helpful in evaluating such investment opportunity
46Our portfolio companies prepay loans from time to time, which may have the effect of reducing our investment income if the returned capital cannot be invested in transactions with equal or greater yields
47We invest through joint ventures, partnerships or other special purpose vehicles and our investments through these vehicles may entail greater risks, or risks that we otherwise would not incur, if we otherwise made such investments directly
48Our ability to enter into transactions with Carlyle and our other affiliates is restricted
49Our failure to make follow-on investments in our portfolio companies could impair the value of our investments
50The disposition of our investments may result in contingent liabilities
51Because we generally do not hold controlling equity interests in our portfolio companies, we may not be in a position to exercise control over our portfolio companies or to prevent decisions by management of our portfolio companies that could decrease the value of our investments
52Our investments in foreign securities may involve significant risks in addition to the risks inherent in U.S. investments
53We may expose ourselves to risks if we engage in hedging transactions
54There are certain risks associated with holding debt obligations that have original issue discount or payment-in-kind interest
55OID instruments may have unreliable valuations because their continuing accruals require continuing judgments about the collectability of the deferred payments and the value of any associated collateral. OID income may also create uncertainty about the source of our cash dividends
56Our investments may be affected by force majeure events
57Tariffs may adversely affect us or our portfolio companiesNew

Risks Related to an Investment in Our Securities

58Investing in our securities involves a high degree of risk
59The market price of our securities may fluctuate significantly
60Our shares of common stock have traded at a discount to NAV and may do so again, which could limit our ability to raise additional equity capital
61Holders of any preferred stock we may issue may have the right to elect members of the board of directors and class voting rights on certain matters41% rewritten
62Purchases of our common stock under our stock repurchase program, including the Company 10b5-1 Plan, may have resulted in the price of our common stock being higher than the price that otherwise might have existed in the open market
63Sales of substantial amounts of our common stock in the public market may have an adverse effect on the market price of our common stock48% rewritten
64Our stockholders will experience dilution in their ownership percentage if they opt out of our dividend reinvestment plan
65Our stockholders may receive shares of our common stock as dividends, which could result in adverse tax consequences to them
66We may have difficulty paying our required distributions if we recognize taxable income before or without receiving cash representing such income
67We cannot assure that an active trading market for the 2030 Notes or 2031 Notes will develop or be maintained47% rewritten
68The indenture under which the 2030 Notes and 2031 Notes were issued contain limited protection for holders of the 2030 Notes and 2031 Notes, respectively34% rewritten
69Certain of our debt instruments include more protections for their holders than the indenture and the Senior Notes25% rewritten
70If we default on our obligations to pay our other indebtedness, we may not be able to make payments on the 2030 Notes or the 2031 Notes
71We may not be able to repurchase the 2030 Notes or 2031 Notes upon a Change of Control Repurchase Event
72We may choose to redeem the 2030 Notes and 2031 Notes when prevailing interest rates are relatively low92% rewritten

Other Carlyle Secured Lending 10-Ks

FY2024 10-K risk factors
85 risks
Portfolio companies face high risks from inflation, rising interest rates, and economic recessions that threaten loan repayment. High leverage across our middle-market portfolio and reliance on external advisers dominate these risk factors. We rely heavily on debt financing and securitizations like the 2015-1R Refinancing, introducing structural subordination risks.
Filed Feb 25, 2025

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The headings are the filing's own. The one-line readings and the overview are automated and can be wrong: read Item 1A of the 10-K for the exact wording.