Kayne Anderson BDC, Inc. 10-K

ITEM 7. MANAGEMENT’S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION AND RESULTS OF OPERATIONS The following discussion and analysis should be read in conjunction with our consolidated financial statements and related notes and other financial information appearing elsewhere in this Annual Report on Form 10-K. Except as otherwise specified, references to “we,” “us,” “our,” or the “Company” refer to Kayne Anderson BDC, Inc. Investment Objective, Principal Strategy and Investment Structure Kayne Anderson BDC, Inc. is a Delaware corporation that commenced operations on February 5, 2021. Following our initial public offering (“IPO”), our common stock began trading on the New York Stock Exchange (“NYSE”) under the ticker symbol “KBDC” on May 22, 2024. We are an externally managed, closed-end, non-diversified management investment company that has elected to be regulated as a BDC under the 1940 Act, as amended. In addition, for U.S. federal income tax purposes, we intend to qualify, annually, as a RIC under Subchapter M of the Code. Our investment activities are managed by KA Credit Advisors, LLC (the “Advisor”), an indirect controlled subsidiary of Kayne Anderson Capital Advisors, L.P. (“Kayne Anderson”), and the Advisor operates within Kayne Anderson’s middle market private credit platform (“KAPC” or “Kayne Anderson Private Credit”). The Advisor is an investment advisor registered with the United States Securities and Exchange Commission (the “SEC”) under the Investment Advisers Act of 1940, as amended. In accordance with the Investment Advisers Act of 1940, as amended, our Advisor is responsible for originating prospective investments, conducting research and due diligence investigations on potential investments, analyzing investment opportunities, negotiating and structuring investments, and monitoring our investments and portfolio companies on an ongoing basis. The Advisor benefits from the scale and resources of Kayne Anderson and specifically KAPC. Our investment objective is to generate current income and, to a lesser extent, capital appreciation. We intend to have nearly all of our debt investments in private middle market companies. We use “private” to refer to companies that are not traded on a securities exchange and define “middle market companies” as companies that, in general, generate between $10 million and $150 million of annual earnings before interest, taxes, depreciation and amortization, or EBITDA. Further, we refer to companies that generate between $10 million and $50 million of annual EBITDA as “core middle market companies” and companies that generate between $50 million and $150 million of annual EBITDA as “upper middle market companies.” We typically adjust EBITDA for non-recurring and/or normalizing items to assess the financial performance of our borrowers over time. We intend to achieve our investment objective by investing primarily in first lien senior secured loans, with a secondary focus on unitranche and split-lien loans to middle market companies. Under normal market conditions, we expect at least 90% of our portfolio (including investments purchased with proceeds from borrowings under credit facilities and issuances of senior unsecured notes) to be invested in first lien senior secured, unitranche and split-lien loans. We expect the remainder of our portfolio to be invested in second-lien loans, subordinated debt or equity securities (including those purchased in conjunction with other credit investments). We expect that a majority of these debt investments will be made in core middle market companies and will generally have stated maturities of three to six years. We expect that the loans in which we principally invest will be to companies that are located in the United States. We determine the location of a company as being in the United States by (i) such company being organized under the laws of one of the states in the United States; or (ii) during its most recent fiscal year, such company derived at least 50% of its revenues or profits from goods produced or sold, investments made, or services performed in the United States or has at least 50% of its assets in the United States. The Advisor executes on our investment objective by (1) accessing the established loan sourcing channels developed by KAPC, which includes an extensive network of private equity firms, other middle market lenders, financial advisors, intermediaries and management teams, (2) selecting investments within our middle market company focus, (3) implementing KAPC’s underwriting process and (4) drawing upon its experience and resources and the broader Kayne Anderson network. KAPC was established in 2011 and manages (directly and through affiliates) assets under management (“AUM”) of approximately $7.3 billion related to middle market private credit as of December 31, 2025. 65 Recent Developments On January 16, 2026, we paid a regular dividend of $0.40 per share to each common stockholder of record as of December 31, 2025. The total dividend was $27.2 million and, of this amount, $0.2 million was DRIP which was fulfilled through open market purchases of common stock. On February 12, 2026, our Board of Directors declared a regular dividend to common stockholders in the amount of $0.40 per share. The regular dividend of $0.40 per share will be paid on April 16, 2026 to stockholders of record as of the close of business on March 31, 2026, payable in cash or shares of our common stock pursuant to our Dividend Reinvestment Plan, as amended. On February 20, 2026, we and our wholly owned special purposes financing subsidiary, Kayne Anderson BDC Financing, LLC (“KABDCF”), amended the Revolving Funding Facility. Under the terms of the amendment, we extended the final maturity date to February 20, 2031 and reduced the interest rate on borrowings from daily SOFR plus 2.15% to daily SOFR plus 1.95% per annum. From January 1, 2026 to February 20, 2026, our agent repurchased 1,020,586 shares of common stock at an average price of $14.25 per share for a total amount of $14.5 million. As of February 20, 2026, $45.4 million remains for repurchase under our stock repurchase plan. Portfolio and Investment Activity Our portfolio is currently comprised of a broad mix of loans, with diversity among investment size and industry focus. The Advisor’s team of professionals conducts due diligence on prospective investments during the underwriting process and is involved in structuring the credit terms of our private middle market investments. Once an investment has been made, our Advisor closely monitors that portfolio investment and takes a proactive approach to identify and address sector or company specific risks. The Advisor seeks to maintain a regular dialogue with portfolio company management teams (as well as their owners, the majority of whom are private equity firms, where applicable), reviews detailed operating and financial results on a regular basis (typically monthly or quarterly) and monitors current and projected liquidity needs, in addition to other portfolio management activities. There are no assurances that we will achieve our investment objectives. As of December 31, 2025, we had investments in 107 portfolio companies with an aggregate fair value of approximately $2,198 million, and unfunded commitments to these portfolio companies of $287 million, and our portfolio consisted of 93.2% first lien senior secured loans, 4.9% subordinated debt and 1.9% equity investments. As of December 31, 2025, the weighted average remaining term of our debt investments was 3.1 years based on principal amount. As of December 31, 2025, we held investments in broadly syndicated loans in 5 portfolio companies with an aggregate principal amount of $47 million. Our investments in broadly syndicated loans were made in anticipation of the receipt of proceeds from our final capital call and our IPO which closed during the second quarter of 2024. We expect to rotate out of these investments over coming quarters to invest in private middle market loans consistent with our principal strategy. We have presented certain portfolio-related information below for our private middle market loans and broadly syndicated loans separately and on a combined basis for ease of reference. As of December 31, 2025, 95.7% of our debt investments had floating interest rates. Our weighted average yields for debt investments were as follows: Excluding Non-Income Producing Debt Investments Including Non-Income Producing Debt Investments Fair Value Amortized Cost Fair Value Amortized Cost Private middle market loans 10.4 % 10.5 % 10.2 % 10.2 % Broadly syndicated loans 6.0 % 6.0 % 6.0 % 6.0 % Total debt investments 10.3 % 10.4 % 10.1 % 10.1 % As of December 31, 2025, our portfolio was invested across 26 different industries (Global Industry Classification “GICS”, Level 3 – Industry). The largest industries in our portfolio as of December 31, 2025 were Distributors, Commercial Services & Supplies, Health Care Providers & Services and Food Products, which represented, as a percentage of our portfolio of long-term investments, 11.9%, 11.9%, 10.8% and 10.5%, respectively, based on fair value. We are generalist investors and the mix of industries represented by our portfolio companies will vary over time. As of December 31, 2025, our average position size based on commitment of private credit investments (at the portfolio company level) was $23.6 million. 66 As of December 31, 2025, the weighted average and median last twelve months (“LTM”) EBITDA of our portfolio companies were as follows: ● private middle market loans were $52.7 million and $39.8 million, respectively, based on fair value 1,2 ● broadly syndicated loans were $1,768.7 million and $1,406.2 million, respectively, based on fair value; and ● total investments were $95.1 million and $41.6 million, respectively, based on fair value 1,2 As of December 31, 2025, the weighted average loan-to-enterprise-value (“LTEV”) of our debt investments at the time of our initial investment was as follows: ● private middle market loans was 43.5%, based on par 1,2 ● broadly syndicated loans was 28.2%, based on par ● total investments was 43.1%, based on par 1,2 ; and ● LTEV represents the total par value of our debt investment relative to our estimate of the enterprise value of the underlying borrower As of December 31, 2025, we had five debt investments on non-accrual status, which represented 1.4% and 2.6% of total debt investments at fair value and cost, respectively. As of December 31, 2025, our portfolio companies’ weighted average leverage ratios and weighted average interest coverage ratios (the calculations of which are based on the most recent quarter end or latest available information from the portfolio companies) were as follows: ● private middle market loans were 4.5x and 2.4x, respectively, based on fair value 1,2 ● broadly syndicated loans were 2.5x and 4.7x, respectively, based on fair value; and ● total investments were 4.5x and 2.4x, respectively, based on fair value 1,2 As of December 31, 2025, the percentage of our debt investments including at least one financial maintenance covenant was as follows: ● private middle market loans was 100.0% based on fair value 1,2 ● broadly syndicated loans was 0%, based on fair value; and ● total investments was 97.5%, based on fair value 1,2 1 Excludes investments on watch list, which represent 5.1% of the total fair value of debt investments as of December 31, 2025. 2 Excludes opportunistic debt investments of BC CS 2, L.P. (Cuisine Solutions, Inc.), SGCP Partners, Inc. (SG Credit), Texas Coffee Holdco LLC and M2S Group Intermediate Holdings, Inc., which represent 7.4% of the total fair value of debt investments as of December 31, 2025. 67 Listed below are our top ten portfolio companies and industries represented as a percentage of total long-term investments as of December 31, 2025: Portfolio Company Industry Fair Value ($ in millions) Percentage of long-term investments 1 SGCP Intermediate, Inc. (SG Credit) Financial services $ 105.0 4.8 % 2 BR PJK Produce, LLC (Keany) Food products $ 39.1 1.8 % 3 CREO Group Inc. (HMS Manufacturing) Household products $ 37.7 1.7 % 4 WCHG Buyer, Inc. (Handgards) Containers & packaging $ 37.4 1.7 % 5 Vitesse Systems Parent, LLC Aerospace & defense $ 36.6 1.7 % 6 M2S Group Intermediate Holdings, Inc. Containers & packaging $ 36.5 1.6 % 7 Carton Packaging Buyer, Inc. (Century Box) Containers & packaging $ 36.2 1.6 % 8 IF&P Foods, LLC (FreshEdge) Food products $ 35.2 1.6 % 9 BLP Buyer, Inc. (Bishop Lifting Products) Commercial services & supplies $ 34.7 1.6 % 10 Improving Acquisition LLC IT services $ 34.7 1.6 % $ 433.1 19.7 % Our investment activity for the years ended December 31, 2025 and 2024 is presented below (information presented herein is at par value unless otherwise indicated). For the years ended December 31, 2025 ($ in millions) 2024 ($ in millions) New investments: Gross new investments commitments $ 877.1 $ 1,043.9 Less: investment commitments sold down, exited or repaid (1) (549.9 ) (371.3 ) Net investment commitments $ 327.2 672.6 Principal amount of investments funded (2) : Private credit investments $ 781.2 $ 673.0 Broadly syndicated loans - 328.1 Common equity investments 14.7 3.8 Total principal amount of investments funded $ 795.9 $ 1,004.9 Principal amount of investments sold / repaid (2) : Private credit investments $ (363.5 ) $ (294.8 ) Broadly syndicated loans (206.2 ) (74.7 ) Common equity investments (0.3 ) (0.3 ) Total principal amount of investments sold or repaid $ (570.0 ) $ (369.8 ) Number of new private credit investment commitments 51 61 Average new private credit investment commitment amount $ 17.2 $ 11.7 Number of new broadly syndicated loan commitments - 26 Average new broadly syndicated loan commitment amount $ - $ 12.6 Weighted average maturity for new investment commitments (3) 4.3 years 4.3 years Percentage of new debt investment commitments at floating rates 86.8 % 100.0 % Percentage of new debt investment commitments at fixed rates 13.2 % 0.0 % Weighted average interest rate of new private credit investment commitments (4) 9.6 % 10.1 % Weighted average interest rate of new broadly syndicated loan commitments (4) - 7.4 % Weighted average interest rate on investments sold or paid down (5) 8.7 % 10.8 % (1) Does not include repayments on revolving loans, which may be redrawn. (2) Does not include restructured activity. For common equity investments, amount represents cost. (3) For undrawn delayed draw term loans, the maturity date used is that of the associated term loan. (4) Based on the rate in effect at December 31 st of each year per our Consolidated Schedule of Investments for new commitments entered into during the year. (5) Based on the underlying rate if still held at December 31 st of each year. For those investments sold or paid down in full during the year, based on the rate in effect at the time of sale or paid down. 68 Portfolio Internal Performance Ratings In general, we employ a strategy designed to ensure early detection of potential issues at underlying borrowers, including monthly financial reviews internal tracking memoranda, weekly “watch list” discussions and other like activities. We have designed a risk rating system to aid in our portfolio management efforts where each investment is rated level 1-9, where Level 1 is the “least risky” and Level 9 is the “most risky.” This risk-rating system is quantitative in nature and aggregates criteria such as LTEV, leverage levels and fixed charge coverage ratios (“FCCR”) (each measured at point-in-time and as relates to levels at the close of the investment). The table below sets forth our fair value of debt investments and number of portfolio companies, including percentage of each total, that are on watch list as of December 31, 2025 and 2024. This table excludes equity investments. As of December 31, 2025 As of December 31, 2024 Fair Value ($ in millions) % Number of Companies % Fair Value ($ in millions) % Number of Companies % $ 110.1 5.1 % 9 8.4 % $ 69.4 3.5 % 5 4.5 % We use Global Industry Classification Standards (GICS), Level 3 – Industry, for classifying the industry groupings of our portfolio companies. The table below describes long-term investments by industry composition based on fair value as of December 31, 2025 and 2024: December 31, 2025 December 31, 2024 Distributors 11.9 % 15.1 % Commercial services & supplies 11.9 % 11.7 % Health care providers & services 10.8 % 8.4 % Food products 10.5 % 10.0 % Containers & packaging 9.1 % 7.5 % Machinery 6.9 % 3.7 % Professional services 6.6 % 4.7 % Financial services (1) 4.8 % - % Aerospace & defense 3.8 % 4.4 % Chemicals 3.7 % 1.1 % Leisure products 2.6 % 3.2 % Household products 2.4 % 0.8 % Textiles, apparel & luxury goods 1.8 % 2.1 % Automobile components 1.7 % 3.6 % Building products 1.6 % 2.3 % IT services 1.6 % 1.7 % Wireless telecommunication services 1.5 % 1.5 % Personal care products 1.1 % 3.7 % Health care equipment & supplies 1.1 % 1.4 % Insurance 1.0 % 2.0 % Household durables 0.9 % 1.0 % Diversified consumer services 0.8 % - % Specialty retail 0.8 % 2.1 % Biotechnology 0.6 % 0.6 % Pharmaceuticals 0.3 % 1.8 % Diversified telecommunication services 0.2 % 1.5 % Hotels, restaurants & leisure - % 1.4 % Media - % 0.8 % Diversified consumer services - % 0.1 % Construction materials - % 0.7 % Semiconductors & semiconductor equipment - % 0.6 % Electrical equipment - % 0.5 % 100.0 % 100.0 % (1) Includes the Company’s debt and equity investment in SGCP Partners, Inc . (SG Credit), through investments in SGCP Intermediate, Inc. and SGCP Holdings, LLC, an asset based lending platform company, where the Company has a minority investment. 69 Results of Operations The comparison for the years ended December 31, 2024 and 2023 can be found in “ Item 7: Management’s Discussion and Analysis of Financial Condition and Results of Operations ” in our Form 10-K for the fiscal year ended December 31, 2024. For the years ended December 31, 2025 and 2024, our total investment income was derived from our portfolio of investments. The following table represents the operating results for the years ended December 31, 2025 and 2024. For the years ended December 31, 2025 2024 ($ in millions) ($ in millions) Total investment income $ 235.8 $ 213.1 Less: Net expenses (118.2 ) (83.8 ) Net investment income 117.6 129.3 Net realized gains (losses) on investments (0.1 ) 0.5 Net change in unrealized gains (losses) on investments (22.2 ) 2.8 Income tax (expense) benefit on unrealized appreciation/depreciation on investments (1.6 ) (0.7 ) Net increase (decrease) in net assets resulting from operations $ 93.7 $ 131.9 Investment Income Investment income for the years ended December 31, 2025 and 2024 totaled $235.8 million and $213.1 million, respectively, and consisted primarily of interest income on our debt investments. For the years ended December 31, 2025 and 2024, we had $9.1 million and $2.7 million, respectively, of PIK interest included in interest income. As of December 31, 2025, we had five debt investments on non-accrual status. As of December 31, 2024, we had three debt investment on non-accrual status. Expenses Operating expenses for the years ended December 31, 2025 and 2024, were as follows: For the years ended December 31, 2025 2024 ($ in millions) ($ in millions) Interest and debt financing expenses $ 76.4 $ 61.5 Management fees 21.7 17.5 Incentive fees 17.3 17.4 Directors fees 0.7 0.6 Excise taxes 0.4 0.8 Other operating expenses 3.8 3.7 Total expenses 120.3 101.5 Management fee waiver (2.1 ) (2.9 ) Incentive fee waiver (Note 3) - (14.8 ) Net expenses $ 118.2 $ 83.8 Net Realized Gains (Losses) on Investments During the years ended December 31, 2025 and 2024, we had realized losses of $0.1 million and realized gains of $0.5 million, respectively, on our investments. 70 Net Unrealized Gains (Losses) on Investments We fair value our portfolio investments quarterly and any changes in fair value are recorded as unrealized gains or losses. During the years ended December 31, 2025 and 2024, net unrealized gains (losses) on our investment portfolio were comprised of the following: For the years ended December 31, 2025 2024 ($ in millions) ($ in millions) Unrealized gains on investments $ 19.5 $ 19.2 Unrealized (losses) on investments (41.7 ) (16.4 ) Net change in unrealized gains (losses) on investments $ (22.2 ) $ 2.8 For the years ended December 31, 2025 and 2024, we had a deferred income tax expense of $1.6 million and $0.7 million, respectively, related to our net unrealized gain on our investments in KABDC Corp, LLC, a wholly owned subsidiary, that has elected to be treated as a corporation for U.S. tax purposes. In addition, as of December 31, 2025 and 2024, our net deferred tax liability of $2.3 million and $0.7 million, respectively, is included in accrued expenses and other liabilities of our Consolidated Statement of Assets and Liabilities. For the years ended December 31, 2025 and 2024, the top five largest contributors to the change in unrealized gains and change in unrealized losses on investments are presented in the following tables. For the year ended December 31, 2025 ($ in millions) Portfolio Company Arborworks Acquisition, LLC $ 4.6 SGCP Intermediate, Inc. (SG Credit) 1.9 NMA Holdings, LLC (Neuromonitoring Associates) 1.1 Lakewood Acquisition Corporation (R&B Wholesale) 1.0 TL Atlas Merger Sub Corp. (Zep) 0.8 Other portfolio companies unrealized gains 10.1 Other portfolio companies unrealized (losses) (19.5 ) BEL USA, LLC (2.3 ) TG Parent Newco LLC (Trademark Global LLC) (3.4 ) American Soccer Company, Incorporated (SCORE) (4.6 ) Siegel Egg Co., LLC (5.0 ) Sundance Holdings Group, LLC (6.9 ) Total Change in Unrealized Gain (Loss), net $ (22.2 ) For the year ended December 31, 2024 ($ in millions) Portfolio Company Arborworks Acquisition LLC $ 1.8 M2S Group Intermediate Holdings, Inc. 1.3 American Soccer Company, Incorporated (SCORE) 1.1 CCFF Buyer, LLC (California Custom Fruits & Flavors, LLC) 1.0 WAM CR Acquisition, Inc. (Wolverine) 0.9 Other portfolio companies unrealized gains 13.1 Other portfolio companies unrealized (losses) (9.0 ) LSL Industries, LLC (LSL Healthcare) (0.6 ) Gulf Pacific Holdings, LLC (0.7 ) Siegel Egg Co., LLC (1.6 ) Trademark Global LLC (2.0 ) Sundance Holdings Group, LLC (2.5 ) Total Change in Unrealized Gain (Loss), net $ 2.8 71 Financial Condition, Liquidity and Capital Resources Our liquidity and capital resources are generated primarily from the net proceeds of any offering of our shares of common stock, proceeds from borrowing on our credit facilities, proceeds from the issuance of senior unsecured notes and from cash flows from interest and fees earned from our investments and principal repayments and proceeds from sales of our investments. Our primary use of cash will be investments in portfolio companies, payments of our expenses, repayments of borrowings under credit facilities and senior unsecured notes, and payment of cash distributions to our stockholders. We finance our investments with leverage in the form of borrowings under credit facilities and issuances of senior unsecured notes. We also intend to further borrow under credit facilities and/or issue senior unsecured notes in the future in order to finance our investments. In accordance with the 1940 Act, we are required to meet a coverage ratio of total assets (less total liabilities other than indebtedness) to total borrowings and other senior securities (and any preferred stock that we may issue in the future) of at least 150%. As defined in the 1940 Act, a 150% asset coverage means that for every $100 of net assets we hold, we can raise $200 from borrowing and issuing senior securities. If this ratio declines below 150%, we cannot incur additional leverage and could be required to sell a portion of our investments to repay some leverage when it is disadvantageous to do so. As of December 31, 2025 and December 31, 2024, our asset coverage ratios were 198% and 238%, respectively. We currently intend to target asset coverage of 200% to 180% (which equates to a debt-to-equity ratio of 1.0x to 1.25x) but may alter this target based on market conditions. Over the next twelve months, we expect that cash and cash equivalents, taken together with our available capacity under our credit facilities, will be sufficient to conduct anticipated investment activities. Beyond twelve months, we expect that our cash and liquidity needs will continue to be met by cash generated from our ongoing operations as well as financing activities. As of December 31, 2025, we had $275 million Notes outstanding, $855 million borrowed under our credit facilities and cash and cash equivalents of $43.4 million (including investments in money market funds, but excluding deposits for investments). As of that date, we had $545 million of undrawn commitments available on our credit facilities (subject to borrowing base restrictions and other conditions). As of February 20, 2026, we had $275 million Notes outstanding, $851.5 million borrowed under our credit facilities and cash and cash equivalents of $13.3 million (including investments in money market funds). Senior Unsecured Notes As of December 31, 2025, we have $275 million of senior unsecured notes outstanding, with $25 million of 8.65% Series A Notes due June 2027 (the “Series A Notes”), $50 million of 8.74% Series B Notes due June 2028 (the “Series B Notes”, $40 million of floating rate Series C Notes with an interest rate of SOFR plus 2.32% per annum due June 2028 (the “Series C Notes”), $60 million of 5.80% Series D Notes due June 2028 (the “Series D Notes”) and $100 million of 6.15% Series E Notes due October 2030 (the “Series E Notes”). We refer to all of these series of senior unsecured notes as, collectively, the “Notes”. In connection with the Series D and Series E Notes, we entered into interest rate swaps to more closely align the interest rates of our liabilities with our investment portfolio, which consists of predominantly floating rate loans. Under the interest rate swap agreement related to the Series D Notes, we receive a fixed interest rate of 5.80% per annum and pay a floating interest rate of SOFR plus 2.37% per annum on the $60 million of the Series D Notes. Under the interest rate swap agreement related to the Series E Notes, we receive a fixed interest rate of 6.15% per annum and pay a floating interest rate of SOFR plus 2.6565% per annum on the $100 million of the Series E Notes. We designated each interest rate swap as the hedging instrument in a qualifying hedge accounting relationship. Credit Facilities Corporate Credit Facility: We are party to a senior secured revolving credit facility (the “Corporate Credit Facility”), that has a total commitment of $475 million. The facility’s commitment termination date and the final maturity date are November 22, 2028 and November 22, 2029, respectively. The Corporate Credit Facility also provides for a feature that allows us, under certain circumstances, to increase the overall size of the Corporate Credit Facility to a maximum of $600 million. The interest rate on the Corporate Credit Facility is equal to Term SOFR (a forward-looking rate based on SOFR futures) plus an applicable spread of 2.10% per annum or an “alternate base rate” (as defined in the agreements governing the Corporate Credit Facility) plus an applicable spread of 1.00%. We are also required to pay a commitment fee of 0.375% per annum on any unused portion of the Corporate Credit Facility. 72 Revolving Funding Facility: We and our wholly owned, special purpose financing subsidiary, Kayne Anderson BDC Financing, LLC (“KABDCF”), are party to a senior secured revolving funding facility (the “Revolving Funding Facility”). We and KABDCF have a commitment of $675 million. The Revolving Funding Facility is secured by all of the assets held by KABDCF, and we have agreed that it will not grant or allow a lien on the membership interest of KABDCF. The end of the reinvestment period is February 20, 2029, and the maturity date is February 20, 2031. The interest rate on the Revolving Funding Facility is daily SOFR plus 1.95% per annum. KABDCF is also required to pay a commitment fee of between 0.50% and 1.50% per annum depending on the size of the unused portion of the Revolving Funding Facility. Revolving Funding Facility II: We and our wholly owned, special purpose financing subsidiary, Kayne Anderson BDC Financing II, LLC (“KABDCF II”), are party to a senior secured revolving credit facility (the “Revolving Funding Facility II”). The Revolving Funding Facility II has an initial commitment of $250 million which, under certain circumstances, can be increased up to $500 million. The Revolving Funding Facility II is secured by all of the assets held by KABDCF II, and we have agreed that it will not grant or allow a lien on the membership interest of KABDCF II. The end of the reinvestment period and the stated maturity date for the Revolving Funding Facility II are December 22, 2027, and December 22, 2029, respectively. The interest rate on the Revolving Funding Facility II is equal to 3-month term SOFR plus 2.25% per annum. KABDCF II is also required to pay a commitment fee of 0.55%. Contractual Obligations A summary of our significant contractual principal payment obligations related to the repayment of our outstanding indebtedness at December 31, 2025 is as follows: Payments Due by Period ($ in millions) Total Less than 1 year 1-3 years 3-5 years After 5 years Senior Unsecured Notes $ 275.0 $ - $ 175.0 $ 100.0 $ - Corporate Credit Facility 135.0 - - 135.0 - Revolving Funding Facility 525.0 - - 525.0 - Revolving Funding Facility II 195.0 - - 195.0 - Total contractual obligations $ 1,130.0 $ - $ 175.0 $ 955.0 $ - Off-Balance Sheet Arrangements As of December 31, 2025 and December 31, 2024, we had an aggregate $287.5 million and $186.3 million, respectively, of unfunded commitments, including $171.1 million and $126.7 million, respectively, of unfunded commitments on revolvers, to provide debt financing to our portfolio companies. Such commitments are generally subject to the satisfaction of certain financial and nonfinancial covenants and involve, to varying degrees, elements of credit risk in excess of the amount recognized in our financial statements. Other than contractual commitments and other legal contingencies incurred in the normal course of our business, we do not have any other off-balance sheet financings or liabilities. Critical Accounting Estimates The preparation of our consolidated financial statements requires us to make estimates and assumptions that affect the reported amounts of assets, liabilities, revenues, and expenses. Changes in the economic environment, financial markets, and any other parameters used in determining such estimates could cause actual results to differ. Our critical accounting policies, including those relating to the valuation of our investment portfolio, are described below. The critical accounting policies should be read in conjunction with our risk factors in this Annual Report. See Note 2 to our consolidated financial statements for the years ended December 31, 2025 and 2024, for more information on our critical accounting policies. 73 Investment Valuation Traded Investments (Level 1 or Level 2) Investments for which market quotations are readily available will typically be valued at those market quotations. Traded investments such as corporate bonds, preferred stock, bank notes, broadly syndicated loans or loan participations are valued by using the bid price provided by an independent pricing service, by an independent broker, the agent bank, syndicate bank or principal market maker. When price quotes for investments are not available, or such prices are stale or do not represent fair value in the judgment of our Advisor, fair market value will be determined using our Advisor’s valuation process for investments that are privately issued or otherwise restricted as to resale. We may also invest, to a lesser extent, in equity securities purchased in conjunction with debt investments. While we anticipate these equity securities to be issued by privately held companies, we may hold equity securities that are publicly traded. Equity securities listed on any exchange other than the NASDAQ Stock Market, Inc. (“NASDAQ”) are valued, except as indicated below, at the last sale price on the business day as of which such value is being determined. If there has been no sale on such day, the securities are valued at the mean of the most recent bid and ask prices on such day. Securities admitted to trade on the NASDAQ are valued at the NASDAQ official closing price. Equity securities traded on more than one securities exchange are valued at the last sale price on the business day as of which such value is being determined at the close of the exchange representing the principal market for such securities. Equity securities traded in the over-the-counter market, but excluding securities admitted to trading on the NASDAQ, are valued at the closing bid prices. Non-Traded Investments (Level 3) Investments that are privately issued or otherwise restricted as to resale, as well as any security for which (a) reliable market quotations are not available in the judgment of our Advisor, or (b) the independent pricing service or independent broker does not provide prices or provides a price that in the judgment of our Advisor is stale or does not represent fair value, shall each be valued in a manner that most fairly reflects fair value of the security on the valuation date. We expect that a significant majority of our investments will be Level 3 investments. Unless otherwise determined by the Advisor, the following valuation process is used for our Level 3 investments: ● Valuation Designee . The applicable investments will be valued no less frequently than quarterly by the Advisor, with new investments valued at the time such investment was made. The value of each Level 3 investment will be initially reviewed by the persons responsible for such portfolio company or investment. The Advisor will use a standardized template designed to approximate fair market value based on observable market inputs, updated credit statistics and unobservable inputs to determine a preliminary value. The Advisor will specify the titles of the persons responsible for determining the fair value of the Company’s investments, including by specifying the particular functions for which they are responsible, and will reasonably segregate fair value determinations from the portfolio management of the Company such that the portfolio manager(s) may not determine, or effectively determine by exerting substantial influence on, the fair values ascribed to portfolio investments. ● Valuation Firm . Quarterly, a third-party valuation firm engaged by the Advisor reviews the valuation methodologies and calculations employed for each of the Company’s investments that the Advisor has placed on the “watch list” and approximately 25% of the Company’s remaining investments. The third-party valuation firm will review and independently value all of the Level 3 investments at least once per year, on a rolling twelve-month basis. The quarterly report issued by the third-party valuation firm will provide positive assurance on the fair values of the investments reviewed. ● Oversight . The Board has appointed the Advisor as the valuation designee for the Company for purposes of making determinations of fair value as permitted by Rule 2a-5 under the 1940 Act. The Audit Committee shall aid the Board in overseeing the Advisor’s fair valuation of securities that are not publicly traded or for which current market values are not readily available. The Audit Committee shall meet quarterly to review the fair value determinations, processes and written reports of the Advisor as part of the Board’s oversight responsibilities. Refer to Note 5 – Fair Value – for more information on the Company’s valuation process. Revenue Recognition We record interest income on an accrual basis to the extent that we expect to collect such amounts. For loans and debt securities with contractual PIK interest, which represents contractual interest accrued and added to the principal balance, we generally will not accrue PIK interest for accounting purposes if the portfolio company valuation indicates that such PIK interest is not collectible. We do not accrue as a receivable interest on loans and debt securities for accounting purposes if we have reason to doubt our ability to collect such interest. OIDs, market discounts or premiums are accreted or amortized using the effective interest method as interest income. We record prepayment premiums on loans and debt securities as interest income. 74 Related Party Transactions Investment Advisory Agreement. On February 5, 2021, we entered into an Investment Advisory Agreement with our Advisor. On March 6, 2024, the Board approved an amended and restated investment advisory agreement (the “Amended Investment Advisory Agreement”) between the Company and the Advisor, which became effective upon the completion of the initial public offering of shares of common stock on May 24, 2024 (the “IPO Date”). On February 12, 2026, the Board approved an additional one-year term of the Amended Investment Advisory Agreement through March 15, 2027. For services rendered under the Amended Investment Advisory Agreement, we pay a base management fee quarterly in arrears to our Advisor based on the of the fair market value of our investments including, in each case, assets purchased with borrowed funds or other forms of leverage, but excluding cash, U.S. government securities and commercial paper instruments maturing within one year of purchase. We also pay an incentive fee on income and an incentive fee on capital gains to our Advisor. Under the Amended Investment Advisory Agreement, following the IPO Date, the base management fee is calculated at an annual rate of 1.00% and the incentive fee on income is subject to a twelve-quarter lookback quarterly hurdle rate of 1.50% as opposed to a single quarter measurement and is subject to an Incentive Fee Cap based on our Cumulative Pre-Incentive Fee Net Return. This lookback feature provides that the Advisor’s income incentive fee may be reduced if our portfolio experiences aggregate write-downs or net capital losses during the applicable Trailing Twelve Quarters. Administration Agreement. On February 5, 2021, we entered into the Administration Agreement with our Advisor, which serves as our Administrator and provides or oversees the performance of its required administrative services and professional services rendered by others, which include (but are not limited to), accounting, payment of our expenses, legal, compliance, operations, technology and investor relations, preparation and filing of our tax returns, and preparation of financial reports provided to its stockholders and filed with the SEC. On February 12, 2026, the Board approved an additional one-year term of the Administration Agreement through March 15, 2027. We reimburse the Administrator for its costs and expenses incurred in performing its obligations under the Administration Agreement, which may include its allocable portion of office facilities, overhead, and compensation paid to or compensatory distributions received by its officers (including our Chief Compliance Officer and Chief Financial Officer) and its respective staff who provide services to the Company. As the Company reimburses the Administrator for its expenses, such costs (including the costs of sub-administrators) are ultimately borne by common stockholders. The Administrator does not receive compensation from us other than reimbursement of its expenses. The Administration Agreement may be terminated by either party with 60 days’ written notice. Since the inception of the Company, the Administrator has engaged sub-administrators to assist the Administrator in performing certain of its administrative duties. During this period, the Administrator has not sought reimbursement of its expenses other than expenses incurred by the sub-administrators. The Administrator has engaged Ultimus Fund Solutions, LLC under a sub-administration agreement. Under the terms of the sub-administration agreement, Ultimus Fund Solutions, LLC provides fund administration and fund accounting services. The Company pays fees to Ultimus Fund Solutions, LLC, which constitute reimbursable expenses under the Administration Agreement. The Administrator may enter into additional sub-administration agreements with third parties to perform other administrative and professional services on behalf of the Administrator. Non-Controlled, Affiliated Investment . We hold TG Parent Newco LLC (Trademark Global LLC) and SGCP Partners, Inc. (SG Credit), which are non-controlled, affiliated investments, as defined in the 1940 Act. See “Item 1. – Notes to Consolidated Financial Statements – Note 3. Agreements and Related Party Transactions” for further details. 75