Stone Point Credit Corp: Fiscal Year 2025 Performance Snapshot

Important Note for Potential Investors:

Before we delve into Stone Point Credit Corp's performance, it's important for potential investors to understand a key distinction: the company's shares are only offered to "accredited investors." This means they are not typically available to the general public seeking to buy shares on the open market. Furthermore, these shares come with significant restrictions on when and how they can be sold. While this summary provides insight into the company's operations, direct investment may not be an option for all readers.

Business Overview

Stone Point Credit Corp operates as a Business Development Company (BDC), focusing on a vital segment of the financial market. It primarily lends money to and invests in smaller, privately held companies that often struggle to secure loans from traditional banks. For tax purposes, the company also functions as a Regulated Investment Company (RIC), which requires it to distribute most of its taxable income to shareholders.

The company's main objective is to generate steady income and, secondarily, capital appreciation. It achieves this by focusing on private credit investments, primarily senior secured loans (loans backed by assets) to U.S. middle-market companies. These target companies typically have annual earnings (EBITDA) between $30 million and $250 million. Stone Point Credit Corp specializes in sectors such as financial services, business services, software and technology, and healthcare.

To fund its investments and operations, the company raises capital from investors (through share sales) and borrows from banks and other lenders.

Financial Performance

The fiscal year ended December 31, 2025, presented a mixed financial picture for Stone Point Credit Corp. While the company successfully grew its total investments and expanded its portfolio, profitability (Net Investment Income) decreased due to a significant rise in operating costs.

Here's a breakdown of key financial metrics:

• Total Investment Income (Revenue): Increased slightly from $277.5 million in 2024 to $283.1 million in 2025 (+2%). This income primarily comes from interest and dividends on loans and investments.
• Total Expenses: Increased significantly from $132.6 million in 2024 to $162.8 million in 2025 (+23%). This surge mainly resulted from higher management and incentive fees paid to the adviser, alongside increased administrative costs from expanding operations.
• Net Investment Income (Profit): Decreased from $144.9 million in 2024 to $120.3 million in 2025 (-17%), largely due to the rise in expenses.
• Overall Profit from Operations (Net increase in net assets from operations): Also decreased from $153.6 million in 2024 to $120.7 million in 2025.
• Distributions per share: Declined from $2.55 in 2024 to $1.91 in 2025.
• Total Investments (fair value): Grew from $2.50 billion in 2024 to $2.88 billion in 2025 (+15%).
• Number of Companies in Portfolio: Increased from 100 in 2024 to 127 in 2025.
• Shares Outstanding: Grew from 63.05 million in 2024 to 69.07 million in 2025 (+9.5%), which diluted per-share metrics.
• Net Investment Income per share: $1.88 in 2025, down from $2.53 in 2024.
• Net Asset Value (NAV) per share: $19.83 in 2025, a slight dip from $19.85 in 2024.
• Total Return (based on NAV): Decreased from 14.34% in 2024 to 9.86% in 2025.
• Capital Raised: The company raised approximately $120 million in new equity from investors in 2025 (following $252 million in 2024) to fuel portfolio growth.

Risk Factors

Key risks that could impact Stone Point Credit Corp and its shareholders include:

• Limited Investor Access & Liquidity: Shares are restricted to "accredited investors" and have significant transfer limitations, making them illiquid for most investors.
• Rising Operating Expenses: Continued increases in operating costs, particularly management and incentive fees, could further erode profitability and reduce distributions.
• Lower Investment Returns: A sustained decrease in yields on new loans could negatively affect overall income generation.
• Credit Risk and Loan Defaults: As a lender to private companies, the company faces inherent credit risk; borrowers may default, leading to potential losses.
• Interest Rate Risk (Falling Rates): While over 96% of debt investments have floating rates, a significant and prolonged decline in interest rates could reduce income from these loans.
• Valuation Risk of Private Investments: Management determines the fair value of private investments, which can be subjective and lead to NAV fluctuations.
• Dependence on the Adviser: The company heavily relies on its Adviser (Stone Point Credit Adviser LLC) for investment management and daily operations. Fees paid to the Adviser represent a substantial portion of expenses.
• Economic Downturn: A general economic slowdown could adversely affect the financial health of middle-market companies, potentially increasing loan defaults and reducing demand for new loans.

Management Discussion (MD&A Highlights)

Management's discussion highlights the company's operational performance, financial condition, and liquidity. The year was characterized by strategic portfolio expansion alongside challenges in managing expenses.

Operational Highlights & Challenges:

• Portfolio Growth: The company successfully expanded its investment portfolio, increasing both total investment value and the number of companies supported. The median EBITDA of portfolio companies increased from $110.7 million in 2024 to $129.6 million in 2025, indicating a focus on more established middle-market businesses.
• Floating-Rate Focus: Over 96% of performing debt investments feature floating interest rates, positioning the company to benefit from rising interest rates.
• Expense Management: A primary challenge was the significant increase in operating costs, particularly management and incentive fees, which directly impacted Net Investment Income and distributions per share.
• Yield Compression: The average yield on new loans decreased from 10.3% in 2024 to 9.3% in 2025, suggesting a more competitive lending environment or a shift in investment strategy.
• Total Return & NAV: The decrease in total return based on NAV and a slight dip in NAV per share reflect the impact of higher expenses and lower new investment yields.

Strategy and Leadership:

• Strategy Flexibility: The company can change its main investment objective and its policy to invest at least 80% in private credit without shareholder vote (with 60 days' notice for the 80% policy). This provides significant flexibility in adapting its investment approach.

Market Trends and Regulatory Environment:

• BDC Regulations: As a BDC, the company must adhere to specific regulations, including maintaining an asset coverage ratio of at least 150%. It comfortably exceeded this at 188% in 2025.
• RIC Tax Requirements: To maintain its RIC tax status, the company must distribute at least 90% of its taxable income to shareholders annually.
• Interest Rate Environment: The high proportion of floating-rate loans makes the company sensitive to interest rate fluctuations. While rising rates can increase income, falling rates could reduce it.
• Private Credit Market: The private credit market remains competitive, with ongoing capital inflows. The company's performance is also influenced by the overall economic health of the U.S. middle market, including M&A activity and business confidence.

Financial Health (Debt, Cash, Liquidity)

Stone Point Credit Corp maintained sound financial health, balancing growth with prudent leverage management.

• Cash Position: The company ended 2025 with $56.4 million in cash, a slight increase from $51.8 million in 2024.
• Debt Levels: Total debt (net carrying value) increased from $1.32 billion in 2024 to $1.54 billion in 2025, supporting portfolio growth. The principal amount of debt also rose from $1.33 billion to $1.56 billion.
  • Capital Call Facility: $31.5 million outstanding in 2025 (floating rate, e.g., SOFR + 2.35%).
  • Revolving Credit Facility: $803.5 million outstanding in 2025 (floating rate, e.g., Term SOFR + 2.00%).
  • Secured Credit Facility: $223.5 million outstanding in 2025 (floating rate, e.g., Term SOFR + 2.00%).
  • Notes: The company repaid $225 million of 2025 Notes. It issued $300 million in new Senior Notes in March 2025 (maturing 2028 and 2030) with fixed rates (6.03% and 6.26%). It also holds $200 million in 2029 Notes (fixed rate of 6.70%).
• Liquidity: Beyond its cash reserves, the company had approximately $156.5 million available to draw from its credit facilities at year-end 2025 (down from $308 million in 2024). It also held $251.6 million in unfunded capital commitments from investors for future investments (down from $336.6 million in 2024).
• Leverage: The asset coverage ratio stood at 188% in 2025 (down from 194% in 2024), comfortably exceeding the regulatory minimum of 150% and indicating appropriate leverage.
• Total Net Assets (Shareholder Equity): Grew from $1.25 billion in 2024 to $1.37 billion in 2025, reflecting an increase in the company's underlying value.

Future Outlook

Looking ahead, management prioritizes continued investment growth. The company plans to leverage its remaining $251.6 million in unfunded capital commitments and utilize its various credit facilities and potential future debt issuances to expand its investment portfolio. This growth should drive higher total investment income. However, management recognizes the need to carefully manage operating expenses to improve net investment income and distribution coverage per share in the upcoming fiscal year.

Competitive Position

Stone Point Credit Corp maintains a competitive position by focusing on a specialized niche within the private credit market:

• Investment Focus: The company primarily targets directly originated, senior secured first lien loans, aiming for lower-risk positions in a company's capital structure.
• Sector Specialization: It concentrates 75% of its investments in specific sectors (financial services, business services, software and technology, and healthcare services). This provides deep industry expertise but also implies sector concentration risk.
• Market Size: The company operates in the U.S. middle-market segment (companies with EBITDA between $30 million and $250 million), a segment that may experience less competition from larger banks or public market lenders.
• Competitive Advantage: Its competitive edge likely stems from its industry expertise, established relationships within its target sectors, and the ability to provide flexible and timely financing solutions to middle-market companies underserved by traditional financial institutions.