The Charlotte-based investment company reported a net loss of approximately $881,000 amid AI-related disruption and geopolitical pressures in the syndicated loan market.

May 15, 2026

Steele Creek Capital Corporation, the Charlotte-based business development company that focuses on syndicated corporate loans and structured credit products, reported a continued decline in net assets for the quarter ended March 31, 2026, as broader market volatility weighed on portfolio valuations.

The company’s investment portfolio finished the quarter with a fair value of approximately $108.6 million across 223 investments, down from $115.3 million at year-end 2025. Net assets fell to roughly $50.5 million from $53.4 million, while net asset value per share declined to $8.38 from $8.65. The company reported a net decrease in net assets from operations of approximately $881,000, narrower than the $1.1 million loss recorded in the comparable 2025 quarter.

Drivers of the Quarterly Loss

The decline was driven primarily by unrealized depreciation of approximately $1.2 million and realized losses of roughly $617,000, which together outpaced net investment income of $903,000. Total investment income came in at approximately $2.1 million, down from $2.6 million in the year-earlier period, reflecting reduced portfolio size and lower base interest rates.

The results extend a challenging stretch for the company. Its annual report for fiscal 2025 disclosed a net decrease in assets amid realized and unrealized losses that offset steady investment income.

Market Backdrop

Management cited a difficult first-quarter environment in which volatility struck the syndicated loan market amid concerns over artificial intelligence-related business disruption and the conflict involving Iran. A few large M&A and leveraged-buyout deals cleared syndication during the quarter, but opportunistic activity was largely sidelined after an early wave of January repricings.

The J.P. Morgan Leveraged Loan Index posted a negative return of 0.44 percent for the quarter, with technology leading the decline at down 4.57 percent. The percentage of loans trading at or above par dropped sharply to 17.5 percent by quarter-end, compared with 50.9 percent at the end of 2025.

Expenses and Fee Waivers

Total expenses for the quarter came in at approximately $1.6 million before fee waivers, down from $1.9 million in the prior-year quarter. Interest and debt financing costs remained the largest expense category at roughly $932,000. Notably, the Investment Advisor waived the entire $312,000 in management fees that would have been due, as realized income was insufficient to support both the targeted 6 percent annual distribution and a full management fee. After waivers, net expenses totaled approximately $1.2 million.

Portfolio Composition

The portfolio remained diversified across 28 industries and 10 domiciled countries, with the largest industry concentrations being:

• Banking, finance, insurance and real estate — 14.1 percent
• Business services — 13.9 percent
• Healthcare and pharmaceuticals — 10.7 percent

All term loan investments continued to bear floating interest rates, predominantly benchmarked to SOFR. The average investment exposure stood at approximately $487,000, or 0.5 percent of the total portfolio. Portfolio turnover slowed dramatically to 7.9 percent for the quarter, compared with 36.3 percent in the year-earlier quarter.

Financing and Capital Activity

The company continued to operate under its three-year secured revolving credit facility with Bank of America, which carries a maximum capacity of $80 million and matures in October 2027. As of March 31, approximately $67 million was drawn with about $13 million available, and the weighted average interest rate on outstanding debt declined to 5.17 percent from 5.82 percent at year-end 2025. The company maintained an asset coverage ratio of 175.4 percent, comfortably above the 150 percent regulatory minimum.

Capital activity reflected ongoing investor redemptions. Steele Creek issued 61,069 new shares for approximately $510,000 while repurchasing 211,165 shares for roughly $1.8 million through its quarterly share repurchase program. Affiliates of the Investment Advisor and Moelis Asset Management LP now own approximately 45 percent of the company, up from 43 percent at year-end.

Trade Policy Risk and Outlook

The company expanded its disclosure of geographic risk, noting in a newly added risk factor that recently enacted and proposed U.S. tariffs, along with ongoing uncertainty about trade policies, could materially affect global economic conditions and significantly reduce global trade. Management cautioned that such developments could depress economic activity, restrict portfolio companies’ access to suppliers or customers, and ultimately have negative implications for investment performance.

In subsequent events, Steele Creek accepted approximately 204,160 shares tendered in its March 2026 tender offer and paid roughly $1.7 million for those shares in April. The company also paid its quarterly distribution of approximately $762,000 on April 22, with $390,000 reinvested through the DRIP. As of May 14, the company had 5,821,906 shares of common stock outstanding.

Glenn Duffy continues to serve as Chief Executive Officer and Chief Investment Officer, while Douglas Applegate Jr. serves as Chief Financial Officer.