By Bill Alpert
With private-credit stocks weighed down by worries over their loans to software firms, investors are anxious to learn the latest on their loan portfolios. Wednesday morning offered a chance to check in.
Ares Capital, the business development company run by Ares Management, issued its results for the December quarter, making it among the first in the sector to do so. A conference call to discuss the numbers is scheduled for noon on the East Coast.
Ares Capital reported earnings in line with Wall Street forecasts, saying that its December quarter net income was 41 cents a share. Adjusting for onetime gains and costs, the earnings were 50 cents. For the 2025 year, the BDC's earnings were $2.01, just a tad above the consensus forecast for $1.99.
The BDC's stock was up 1.3% in morning trading, to $19.40.
"Our strong fourth quarter results capped another successful year for our company," said CEO Kort Schnabel. "We originated a record level of new investment commitments, maintained strong credit performance with stable non-accruals, and generated a healthy level of profits, including core earnings in excess of our dividends."
Reasons for concern about private credit haven't yet appeared in the Ares BDC's results. Only 1.8% of its total investments in December were on nonaccrual status -- meaning that interest payments were 90 days past due. That is the same proportion as in September.
Among the investments Ares Capital exited in the December quarter, 5% were on nonaccrual status, compared with 4% in the September quarter.
Publicly listed BDCs trade as stocks, making their shares a sensitive barometer of public sentiment toward private credit. While fear that new artificial-intelligence tools will vaporize the traditional software businesses that borrow from the private lenders has hit the stocks, Ares Capital shares have held up better than those of other BDCs such as Blue Owl Capital Corp., run by Blue Owl Capital.
Since fear began creeping into the sector last fall, half of publicly traded BDCs have sold off to a level that is just 80% of net asset value -- the most recently calculated book value of the loans they hold. Ares Capital stock had traded above its net asset value, only dipping just below it in this week's selloff.
When the Ares BDC last discussed its earnings in October, software worries were already in the air. At the time, Schnabel said that none of the fund's software loans were on nonaccrual status.
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(END) Dow Jones Newswires
February 04, 2026 12:05 ET (17:05 GMT)
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