Senior Credit Investments, LLC Annual Report

This guide explains Senior Credit Investments, LLC's annual report. It gives you key insights into their business, money situation, and plans. This helps investors understand the company better.

Important Heads-Up Right Away: Understanding the Investment Structure Before we dive in, know this: Senior Credit Investments, LLC's common units do not trade on public stock exchanges. You won't find them on the NYSE or Nasdaq. This makes them an illiquid investment. You cannot easily buy or sell them through a regular brokerage account. The company sells its common units only through private offerings. These offerings do not need standard public registration with the SEC. So, these units are usually only for specific investors. This includes "accredited investors" (people or groups meeting certain income or asset levels) or non-U.S. persons. This private setup greatly limits how you can sell or transfer units. It makes it hard to quickly get out of the investment if you need to. As of March 10, 2026, the company had 129,757 common units issued. Senior Credit Investments, LLC is a real business. It is not a 'shell company' or an empty corporate structure.

The SEC classifies the company as a "Non-accelerated filer" and an "Emerging growth company." These labels usually apply to smaller companies. Non-accelerated filers have less than $100 million in public shares. Emerging growth companies have under $1.235 billion in yearly sales. These classifications mean Senior Credit Investments, LLC reports less information. Larger, older public companies report more. For example, as an "emerging growth company," they skip some Sarbanes-Oxley Act rules. Their auditor does not need to report on their internal money controls. They also do not need shareholder votes on executive pay ("say-on-pay") or special severance packages. These exemptions ease the company's paperwork. But they also mean less public information and oversight. This differs from larger, fully public companies.

The full report details their business, money situation, and risks. This summary will explain them step-by-step.

1. What does this company do and how did they perform this year? Senior Credit Investments, LLC is a special investment fund. It is not a traditional product or service company. It is a private, externally managed, closed-end investment company. It chose to be a Business Development Company (BDC) under the Investment Company Act of 1940. It also aims to be a Regulated Investment Company (RIC) for U.S. tax purposes. This dual status is smart. As a BDC, they get operational freedom and market access. As a RIC, they avoid corporate income tax on distributed earnings. They must distribute at least 90% of their taxable income yearly. This structure lets them pass most earnings directly to investors.

   Investment Objectives: Senior Credit Investments, LLC's main goal is good returns for investors. They do this in two ways: current income (interest from loans) and capital appreciation (growth in investment value). They follow a value-focused approach. They protect money and watch risks closely. This builds a strong portfolio that performs well in any economy.

   Investment Strategy: Their main strategy is giving senior secured loans to U.S. companies. They focus on the "upper middle market." These are usually larger, established businesses. They typically earn over $75 million each year (EBITDA). They mainly focus on these larger companies. But they might invest in smaller businesses sometimes. They target the upper middle market for its stability. These companies have strong operations, diverse products, customers, and suppliers. They also reach more markets, making them more reliable borrowers.

   The company sees a big chance to lend money to these U.S. companies. Many are backed by private equity firms. Private equity firms hold lots of "dry powder" (un-invested money). This creates steady demand for the loans Senior Credit Investments offers. These loans support company buyouts, purchases, growth, and debt refinancing. Private credit, like what Senior Credit Investments provides, is popular with these sponsors. It offers reliability, clear costs, and protection from public debt market swings. A private equity sponsor is often a good sign for lenders. Sponsors usually improve management and reporting. They also invest their own money, adding security.

   Competitive Advantage: A key advantage for Senior Credit Investments, LLC is its link to Jefferies Financial Group Inc. This includes its investment banking arm, Jefferies LLC. This link gives their Investment Adviser (Jefferies Credit Management LLC) wide access to investment chances. It greatly boosts their ability to find deals. This wide access lets them be very picky. They focus on loans with good returns for their risk. They use Jefferies' strong ties with private equity firms and corporate clients.

   Investment Process - Sourcing and Underwriting: The Investment Team has 65 dedicated professionals as of December 31, 2025. They handle the whole investment process. This includes finding chances, setting up deals, and watching them. They use a strict and full review process. This helps them deeply check a potential company's business, money situation, and credit history. This process finds, understands, and reduces key credit risks. They focus on the company's basic strengths and weaknesses. The team uses a "bottom-up, fundamental credit approach." They analyze each company separately. They strongly focus on protecting money. The team also organizes by industry. Special review leaders ensure expert checks in specific areas.

   Their investment rules guide how they pick investments. Not every potential investment will meet every rule. They consider key factors like:

   • How stable the industry is and the company's market position.
   • Future growth chances for the industry and the company.
   • Diverse customers, suppliers, and products.
   • Past money performance and expected growth.
   • Money needed for big purchases and expected free cash flow.
   • Current and expected cash on hand.
   • The management team's experience and past success.
   • The financial sponsor's reputation and past success.
   • The overall business plan.

   The review process is strict. After an initial internal check, a "deal team" investigates deeply. Sector experts often lead this team. They work closely with the company's management and financial sponsors. This checks its money health and if it's a good investment. Senior investment pros and the Investment Adviser's legal team negotiate and finalize loan papers. Typical review steps include:

   • Checking past and future financial reports.
   • Analyzing the company's debt and ownership structure.
   • Deep study of the business model and industry trends.
   • Thorough review of all legal loan papers.
   • Evaluating reports from outside experts.
   • Assessing management, products, services, market position, and competition.

   After the review, the deal team presents its ideas to the Investment Committee. This committee has four experienced members: Thomas Brady, Jason Kennedy, John Liguori, and E. Joseph Hess. Together, they have over 30 years of relevant experience. A key part of their rules: the committee must unanimously approve any investment. A quorum must be present. This strict approval ensures they stick to their investment philosophy. The Investment Committee members do not get extra pay from the company.

   Post-Investment Monitoring: The investment process does not end with funding. The Investment Adviser's sector team constantly watches portfolio companies. Other team members focus on overseeing the whole investment portfolio. They track performance against original plans. They review budgets and new forecasts. They ensure companies meet financial agreements. They also re-evaluate risks regularly. They also check ongoing compliance with ESG factors. These are found during initial review or appear later.

   Loan Characteristics:

   • Floating Rate: Most of their investments are floating rate loans. This means interest rates change regularly, often tied to benchmarks like SOFR. This helps the company when interest rates rise. Income from these loans can increase. Many loans also have interest rate 'floors.' These set a minimum rate, protecting against falling rates.
   • Return Sources: They earn returns from ongoing interest payments and original issue discounts (buying loans below face value). They also get upfront fees, call protection (penalties for early repayment), and fees for early repayments. Buying loans at a discount in the secondary market also adds to returns.
   • Maturity and Life: These loans usually mature in five to eight years. But the company expects investments to last about three years. This is due to early payments and refinancings.
   • Loan Type: They mainly invest in funded senior secured term loans. These loans have collateral and are paid out upfront. They might also make "unfunded commitments." These include revolving credit lines or delayed draw loans.

   Distributions to Investors: Senior Credit Investments, LLC aims to pay out almost all its available earnings monthly. This helps it qualify as a Regulated Investment Company (RIC) for tax purposes. This status requires distributing at least 90% of its taxable income.

   Management and Oversight Structure:

   • Investment Adviser: Jefferies Credit Management LLC manages investments. It is an indirect subsidiary of JFIN. JFIN is a joint venture. It's between Jefferies Financial Group (a public financial services company) and MassMutual. This structure offers strong institutional support and expertise.
   • Administrator: Alter Domus (US) LLC is the administrator. It handles key back-office tasks. These include accounting, legal compliance, operational support, and preparing financial reports for investors and the SEC.
   • Board of Directors: A Board of Directors with five members governs the company. Four of these five directors are "Independent Directors." This means they have no major business ties to the company or its related firms. This ensures their independence. The Board's main job is to oversee the Investment Adviser and other service providers. They ensure the company follows rules and operates properly.

2. Key risks that could hurt the investment Investing in Senior Credit Investments, LLC carries high risk. It is "above average" compared to many other investments. Investors should carefully weigh these risks:

   • General Business & Structure Risks:

     • New Company, Limited History: The company is relatively new. It has limited operating history. This makes it hard to judge its performance in different markets. It also makes predicting future results difficult.
     • Highly Competitive Market: The company operates in a crowded, competitive market. It competes with many other financial firms. They all seek good investment chances and investor money.
     • Reliance on Key Relationships: Finding new investment chances relies heavily on Jefferies Financial Group Inc.'s connections. Its wide client network is key. Weaker relationships could hurt the flow of deals.
     • Dependent on Management: The company's success and growth depend greatly on the Investment Adviser's team. Their expertise, performance, and stability are crucial.

   • Economic & Market Risks:

     • Macroeconomic Factors: The company is sensitive to big economic changes. This includes inflation, interest rate shifts (like SOFR), and overall economic slowdowns. For instance, rising rates can increase the company's borrowing costs. They also make it harder for portfolio companies to pay debts. This raises their default risk. On the other hand, long periods of low rates could squeeze lending profits.
     • Geopolitical Events: Big global events can cause problems. Wars, like in Ukraine and Russia, or Middle East conflicts, create market swings. They disrupt supply chains. They also hurt portfolio companies' money health.
     • Regulatory and Trade Policies: Changes in government rules, trade policies, or global agreements can affect industries. This might impact portfolio companies' profits and their ability to repay loans.
     • Currency Fluctuations: They mainly focus on U.S. companies. But indirect exposure to global markets or currency changes could add more risk.

   • Investment-Specific Risks:

     • Portfolio Company Performance: Senior Credit Investments' returns depend on its portfolio companies. Their money health and operational success are key. Poor performance, bankruptcy, or unexpected value changes in these companies could directly hurt the company's investment value.
     • Middle Market Risk: Investing in "middle market" companies is usually riskier. It's riskier than investing in larger, public companies. These companies might have fewer income sources. They have less money and are more sensitive to economic slowdowns.
     • Limited Control: As a lender, Senior Credit Investments has limited control. They cannot fully control daily operations or big decisions of portfolio companies. This limits their ability to prevent bad outcomes.
     • Speculative Nature: The company's investments are very risky and speculative. They suit only investors who can lose all their money.

   • Operational & Management Risks:

     • Manager's Interests & Conflicts of Interest: The Investment Adviser (Jefferies Credit Management LLC) gets management fees and incentive fees. Management fees are usually a percentage of assets managed. Incentive fees often come from "pre-incentive fee net investment income." This means the adviser can earn fees even if investment unit value drops. The incentive fee might push the adviser to take higher risks. This helps them reach certain income goals. Also, Jefferies and its related firms might earn extra fees. These come from portfolio companies or finding investment chances. This creates potential conflicts of interest.

     • Allocation of Investment Opportunities: Senior Credit Investments shares investment goals and strategies. Other funds and clients managed by Jefferies Finance and its related firms do too. The same investment professionals often manage these different "Accounts." This creates a big conflict of interest. It concerns how they share good investment chances. This is especially true when chances are few or co-investment is not possible for all.

       To reduce this, Senior Credit Investments and its Investment Adviser got SEC permission. This lets them do "co-investment" transactions. This lets them invest alongside other funds. These funds are managed by the same adviser and its related firms. This helps them negotiate terms better. But even with co-investment, conflicts can remain. For example, investment terms (like price, timing) might differ between funds. This is due to legal, tax, or regulatory reasons. Different investment timelines or target returns among funds could also create conflicting goals for the Investment Adviser.

       The Investment Adviser uses principles to share investment chances. They consider each fund's goals, portfolio fit, concentration limits, borrowing deals, available money, future capacity, and other chances. These varying factors mean funds with similar strategies might hold different investments. Their performance could also differ. The Investment Adviser might also create new strategies or chances. These may not apply to all managed funds equally.

     • Restrictions on Deals with Affiliates: Strict rules under the Investment Company Act limit Senior Credit Investments. They cannot do certain deals with their "affiliates." These include groups or people owning 5% or more, or the Investment Adviser and its related companies. These deals, like buying or selling assets or co-investing, often need special approval. A majority of independent directors and sometimes the SEC must approve. These rules protect investors. But they can also limit the company's operational freedom.

   • Regulatory & Legal Risks:

     • BDC and RIC Status Maintenance: Keeping its special tax status as a BDC and RIC is critical for the company. As a BDC, it must follow specific rules. It must invest at least 70% of its assets in "qualifying assets." These are mainly loans to private U.S. companies. Not meeting BDC rules could cause big operational problems. It might also mean re-regulation as a "closed-end investment company" with new restrictions. Losing RIC status would mean corporate income tax for the company. This would greatly cut investor returns.
     • Changes in Laws: Bad changes in tax laws, securities rules, or other legal frameworks could hurt the company. This includes its business model, profits, or ability to operate.

   • Financial Risks:

     • Leverage Risk: The company uses borrowed money for investments (leverage). This can make both gains and losses bigger. Leverage can boost returns. But it also raises loss risk. It makes the company more sensitive to interest rate changes.
     • Liquidity and Funding Risk: Having enough cash flow is vital. It covers operational costs, debt payments, and planned investor payouts. Access to new money, through debt or ownership shares, is key for growth and managing cash.
     • Interest Rate Risk: Changes in benchmark interest rates, like SOFR, directly affect the company. They impact borrowing costs and income from its floating-rate loans. Floors offer some protection. But big rate changes can still hurt profits.

   • Risks Specific to Your Investment Units:

     • Illiquid Investment: As noted, common units do not trade publicly. This makes them very illiquid. Investors should prepare for a long-term commitment. They might not sell units quickly or at their desired price.
     • High Degree of Risk: The investment has an "above average" risk level. This reflects its assets and how it operates.
     • Potential for Fewer Units: Future offerings might mean fewer units for investors than expected. This depends on market conditions and offering terms.

3. Competitive positioning Senior Credit Investments, LLC sees its main competitive edge in its strong link to Jefferies Financial Group. This includes its investment banking arm, Jefferies LLC. This link acts as a powerful "super-connector" in finance. It gives its Investment Adviser (Jefferies Credit Management LLC) access to many investment chances. This large deal flow lets the company be very selective. They pick the best loans with good returns for their risk. They use Jefferies' strong ties with private equity firms and corporate clients. This "sourcing advantage" is a key difference in a competitive market. To boost this edge, Jefferies Finance, a related firm, has a strong, long track record. It has actively invested in senior secured loans for sponsor-owned companies for over 20 years. This adds deep experience and market insight.

   Despite these benefits, the private credit and middle-market lending market is very competitive. Senior Credit Investments competes with many different players, such as:

   • Other Business Development Companies (BDCs).
   • Large commercial and investment banks.
   • Specialized lending companies.
   • Private funds, like hedge funds and private equity firms.

   Many competitors are much larger. They have more money, better technology, and wider marketing reach. They might also get cheaper funding. Or they access money sources not open to Senior Credit Investments. Also, some competitors operate without strict rules. Senior Credit Investments, as a BDC, faces these rules. This might give competitors more operational freedom.

   To compete well, Senior Credit Investments does not mainly offer the lowest interest rates. Instead, its competitive plan focuses on:

   • Its strong reputation in the financial world.
   • Its established investment platform and strong setup.
   • The investment team's deep experience and special expertise.
   • Its focused investment plan for the upper middle-market.
   • Its disciplined review and investment approach.
   • Its wide industry connections through the Jefferies network.
   • Its ability to create flexible, custom lending solutions for borrowers.

   These factors help Senior Credit Investments attract good investment chances. They also help it stand out in a crowded market.

4. Leadership or strategy changes The company's governance includes a five-member Board of Directors, with four independent directors. This setup ensures strong oversight of the Investment Adviser and company operations, promoting accountability and best practices. The consistent oversight by a majority-independent board suggests stable governance.