Q2 2026 Earnings Call

We have good optimism that over the near term we can exit some of those positions. And when I say near term, I would say the next quarter or two. And then I think on a number of other positions, I think I would characterize it as having a lot of irons in the fire as it relates to, you know, monetizing certain of our larger positions. And so on those, I think it's tough to give you exact guidance as to when it's going to happen. But I would say across a number of positions, there's a great degree of focus on executing some monetization events. And I would certainly be hopeful that we could do so, you know, across the coming quarters. It's just tough to know which names will come first and which names will take a little longer. But I think the overarching theme is that, you know, a number of these positions are performing well. And we believe that we do have the near-term ability to exit in a value-accreditive manner to an MSC shareholder. So we're overall excited about that, but there's still a bit of work to do with regard to executing the deals that we have in mind.

Well, I appreciate that. And follow-up, I know you get this one a fair amount on the borrowings, but the market changes, of course. So, a lot of your unsecured stack turns over in the next couple of years. Any feel on what you might be able to achieve there on borrowing spreads into, you know, through 27, 28?

Yeah, absolutely. I do think we've talked in the past about how we view kind of the rotation of our liability stack as a real opportunity. You know, some of it ties to some of the comments that John just made around some of our strategic initiatives, which include, you know, monetizing some of our equity positions, getting more diverse, decreasing PIC. So, you know, a little bit of a, you know, chicken and egg to some degree. But I think if we are able to execute and continue to execute on those strategic initiatives, I do think that will pay benefits when we think about, you know, going back to the unsecured market in the relatively near future. And, again, I think the good news is, you know, a lot of our maturing debt, you know, is not the most low-cost debt. So, when we think about, you know, going back to the unsecured market, we do view it as an opportunity, hopefully, to really reduce that cost of financing over time.

Very good. I'll hop back in the queue. Thank you.

As a reminder, if you would like to ask a question, you may press star 1 on your telephone keypad now. We'll move to our next question from Haley Sheth with Raymond James.

Good morning. Thanks for the question. So kind of continuing with the theme of rotating out of these equity and non-income producing assets, I know you mentioned some near-term opportunities. Are you looking for a more active M&A market to kind of rotate out of a majority of these, or do you think for a majority it's more achievable under these current market conditions?

Yeah, you know, it's funny. First of all, thank you for the question. We think the market for M&A is getting better, and so as we look forward to the fall, we think that's going to help our business in a lot of different ways. we'll be able to originate what we think will be, you know, good fresh new loans into NMFC, but we'll also be able to take advantage of what we view as potentially a better M&A environment to exit some of these deals. So I don't think we need help from the macro. I think, you know, we feel good about the environment. And then we also feel good about, you know, the underlying performance of a lot of our positions that we feel that we have the opportunity to exit. And so that's probably the most exciting part. It's no matter what the environment is like, if you have a well-performing business, it's a lot easier to exit than if you have struggling businesses. So, you know, we really feel, and I just want to emphasize this, we feel like we're just a couple moves away from delivering a portfolio that has really great diversity and much better, you know, income quality characteristics and performance characteristics. And so we just have to execute a couple of those moves, and we're optimistic that we can do so, but the timing is still a bit uncertain, but we're very focused on it.

Got it. Thanks for the caller. And a follow-up, any further insight into what we should expect in terms of pacing of both repayments and originations for the remainder of the year? Are there any catalysts outside of, obviously, the M&A market that you think will drive activity?

Yeah, I think the biggest catalyst when we think about the back half of the year is just what we see as a better environment. So the first half of the year for direct lending was not a great environment, not a lot of M&A. There's just volatility around the SaaS-pocalypse. And, you know, I think as we look forward into our pipeline, there's just more activity. There's no other way to put it, and that's just a really good thing. In some cases within our portfolio, particularly around the equity positions, that involves a more proactive approach to the market with regard to selling full companies. And so that's a little bit of a different exercise. And, again, we think that the environment is just fine for that as well.

Got it. I appreciate the time.

It appears there are no further questions at this time. I'd like to turn the conference back over to John for any additional or closing remarks.

Well, great. Well, thank you for the questions, and thank you for your participation in our second quarter earnings call, and we look forward to speaking to you again in November.

This concludes today's call. Thank you again for your participation. You may now disconnect, and have a great day.