Palmer Square Capital BDC Inc. (PSBD) Q3 2026 Earnings Report

The call was broadly positive. Management highlighted solid quarterly earnings, a fully covered base dividend, NAV appreciation, lower leverage, reduced financing costs, strong portfolio diversification and credit metrics, and attractive opportunities in private credit and secondary markets. These positives were tempered by lower year-over-year investment income, a 2.3% decline in portfolio fair value, reduced liquidity, tight spreads, subdued deal activity, and elevated macroeconomic and AI-related uncertainty.

Management declared a fourth quarter 2026 base dividend of $0.36 per share, with the supplemental dividend to be determined in the normal course, and remains confident in the sustainability of the base dividend heading into 2027, anticipating paying out any additional excess income through supplementals. If interest rate volatility and geopolitical uncertainty remain elevated, management expects it to continue weighing on deal activity in the fourth quarter, although sponsors ultimately need to transact and activity is expected to improve over time, although the pace of that improvement may be uneven. Share repurchases remain a top near-term priority, with $24.8 million left on the plan after $5.2 million of third-quarter repurchases, while management feels good about 1.63x leverage and does not expect to take it too much higher; recent refinancing activity is expected to be additive to earnings power, and market implied base rate expectations are expected to be supportive as well.