Annual report [Section 13 and 15(d), not S-K Item 405]

DEBT

v3.25.4
DEBT
 12 Months Ended
Dec. 31, 2025
Debt Disclosure [Abstract]  
DEBT DEBT
A summary of MSC Income’s debt as of December 31, 2025 is as follows:
Outstanding Balance
Unamortized Debt Issuance
Costs (1)
Recorded Value
Estimated Fair Value (2)
(in thousands)
SPV Facility $ 244,000  $ —  $ 244,000  $ 244,000 
Corporate Facility 209,000  —  209,000  209,000 
Series A Notes 150,000  (249) 149,751  146,936 
Total Debt $ 603,000  $ (249) $ 602,751  $ 599,936 
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(1)The unamortized debt issuance costs for the Credit Facilities are reflected as Deferred financing costs on the Consolidated Balance Sheets, while the deferred debt issuance costs related to the Series A Notes are reflected as a contra-liability to the Series A Notes on the Consolidated Balance Sheets.
(2)Estimated fair value for outstanding debt is shown as if MSC Income had adopted the fair value option under ASC 825, Financial Instruments (“ASC 825”). See discussion of the methods used to estimate the fair value of MSC Income’s debt in Note B.10. — Summary of Significant Accounting Policies — Fair Value of Financial Instruments.
A summary of MSC Income’s debt as of December 31, 2024 is as follows:
Outstanding Balance
Unamortized Debt Issuance Costs (1)
 Recorded Value
Estimated Fair Value (2)
(in thousands)
SPV Facility $ 266,688  $ —  $ 266,688  $ 266,688 
Corporate Facility 149,000  —  149,000  149,000 
Series A Notes 150,000  (547) 149,453  141,892 
Total Debt $ 565,688  $ (547) $ 565,141  $ 557,580 
_____________________________
(1)The unamortized debt issuance costs for the Credit Facilities are reflected as Deferred financing costs on the Consolidated Balance Sheets, while the deferred debt issuance costs related to the Series A Notes are reflected as a contra-liability to the Series A Notes on the Consolidated Balance Sheets.
(2)Estimated fair value for outstanding debt is shown as if MSC Income had adopted the fair value option under ASC 825. See discussion of the methods used to estimate the fair value of MSC Income’s debt in Note B.10. — Summary of Significant Accounting Policies — Fair Value of Financial Instruments.
A summary of MSC Income’s interest expense for the years ended December 31, 2025, 2024 and 2023 is as follows:
Year Ended December 31,
2025 2024 2023
(in thousands)
SPV Facility $ 17,221  $ 23,082  $ 22,184 
Corporate Facility 10,348  9,595  7,916 
Series A Notes 6,358  6,358  6,358 
Total Interest Expense $ 33,927  $ 39,035  $ 36,458 
A summary of MSC Income’s weighted-average amount of total borrowings outstanding and overall weighted-average effective interest rate including amortization of debt issuance costs, original issuance discounts and premiums and fees on unused lender commitments for the years ended December 31, 2025, 2024 and 2023 is as follows:
Year Ended December 31,
2025 2024 2023
(dollars in millions)
Weighted-average borrowings outstanding $ 547.0  $ 518.8  $ 486.2 
Weighted-average effective interest rate 6.1  % 7.5  % 7.5  %
SPV Facility
MSC Income, through MSIF Funding, LLC (“MSIF Funding”), a wholly-owned Structured Subsidiary that primarily holds debt investments, maintains a special purpose vehicle revolving credit facility dated February 3, 2021 (as amended, the “SPV Facility”) with JPMorgan Chase Bank, National Association (“JPM”), as administrative agent, and U.S. Bank, N.A., as collateral agent and collateral administrator, JPM and other financial institutions as lenders and MSIF as portfolio manager. In March 2025, the SPV Facility was amended to, among other things: (i) decrease the interest rate for advances to the applicable SOFR plus 2.20% from the prior interest rate of the applicable SOFR plus 3.00%, (ii) extend the revolving period from through February 2027 to through February 2029 and (iii) extend the final maturity date from February 2028 to February 2030.
As of December 31, 2025, the SPV Facility included (i) total commitments of $300.0 million, (ii) an accordion feature with the right to request an increase of total commitments and borrowing availability up to $450.0 million and (iii) a revolving period through February 2029 and a final maturity date in February 2030. As of December 31, 2025, advances under the SPV Facility bore interest at a rate equal to the applicable SOFR in effect, plus a margin of 2.20%. MSIF Funding also pays a commitment fee of 0.75% on the average daily unused amount of the financing commitments until February 2029. The SPV Facility is secured by a first lien on the assets of MSIF Funding. Borrowing availability under the SPV Facility is subject to certain leverage and borrowing base limitations, covenants, reporting and other requirements customary for similar credit facilities.
As of December 31, 2025, the interest rate for borrowings on the SPV Facility was 6.17%. The average interest rate for borrowings under the SPV Facility was 6.60% and 8.14% for the years ended December 31, 2025 and 2024, respectively. As of December 31, 2025, MSC Income was in compliance with all financial covenants of the SPV Facility.
Corporate Facility
MSC Income maintains a senior secured revolving credit agreement dated March 6, 2017 (as amended, the “Corporate Facility” and, together with the SPV Facility, the “Credit Facilities”) with EverBank, as administrative agent, and with EverBank and other financial institutions as lenders. On February 27, 2025, the Corporate Facility was amended to, among other things: (i) increase the total commitments from $165.0 million to $245.0 million and (ii) increase the accordion feature from up to a total of $200.0 million to up to a total of $300.0 million.
As of December 31, 2025, the Corporate Facility included (i) total commitments of $245.0 million from a diversified group of seven lenders, (ii) an accordion feature with the right to request an increase in commitments under the facility from new and existing lenders on the same terms and conditions as the existing commitments up to $300.0 million of total commitments and (iii) a revolving period through November 2028 and a final maturity date in May 2029, with two one-year extension options subject to lender approval.
Borrowings under the Corporate Facility bear interest, subject to MSC Income’s election, at a rate equal to (i) SOFR plus 2.05% or (ii) the base rate plus 1.05%. The base rate is defined as the higher of (a) the Prime rate, (b) the federal funds rate plus 0.5% or (c) SOFR plus 1.0%. Additionally, MSC Income pays an unused commitment fee of 0.25% on the unused lender commitments if 50% or more of the lender commitments are being used and an unused commitment fee of 0.375% on the unused lender commitments if less than 50% of the lender commitments are being used. Borrowings under the Corporate Facility are secured by a first lien on all of the assets of MSIF and its subsidiaries, excluding the assets of Structured Subsidiaries or immaterial subsidiaries, as well as all of the assets, and a pledge of equity ownership interests, of any future subsidiaries of MSIF (other than Structured Subsidiaries or immaterial subsidiaries). Borrowing availability under the Corporate Facility is subject to certain leverage and borrowing base limitations, covenants, reporting and other requirements customary for similar credit facilities.
As of December 31, 2025, the interest rate for borrowings on the Corporate Facility was 6.01%. The average interest rate for borrowings under the Corporate Facility was 6.29% and 7.60% for the years ended December 31, 2025 and 2024, respectively. As of December 31, 2025, MSC Income was in compliance with all financial covenants of the Corporate Facility.
Series A Notes
Pursuant to a Master Note Purchase Agreement dated October 21, 2021 (the “Note Purchase Agreement”), MSC Income issued $77.5 million in aggregate principal amount of 4.04% Series A Senior Notes due 2026 (the “Series A Notes”) upon entering into the Note Purchase Agreement and an additional $72.5 million aggregate principal amount on January 21, 2022. The Series A Notes bear a fixed interest rate of 4.04% per year and mature on October 30, 2026, unless redeemed, purchased or prepaid prior to such date by the Fund in accordance with their terms.
Interest on the Series A Notes is due semiannually on April 30 and October 30 of each year. The Series A Notes may be redeemed in whole or in part at any time at MSC Income’s option subject to certain make-whole provisions. In addition, MSC Income is obligated to offer to prepay the Series A Notes at par plus accrued and unpaid interest up to, but excluding, the date of prepayment, if certain change in control events occur. In the event that a Below Investment Grade Event (as defined in the Note Purchase Agreement) occurs, the Series A Notes will bear interest at a fixed rate of 5.04% per year from the date of the occurrence of the Below Investment Grade Event to and until the date on which the Below Investment Grade Event ends. The Series A Notes are general unsecured obligations of MSIF that rank pari passu with all outstanding and future unsecured unsubordinated indebtedness issued by MSIF.
The Note Purchase Agreement also contains customary events of default with customary cure and notice periods, including, without limitation, nonpayment, incorrect representation in any material respect, breach of covenant, cross-default under other indebtedness of MSIF or subsidiary guarantors subject to a cure pass-through, certain judgments and orders and certain events of bankruptcy. As of December 31, 2025, MSC Income was in compliance with all covenants and other requirements of the Note Purchase Agreement.
Contractual Payment Obligations
A summary of MSC Income’s contractual payment obligations for the repayment of outstanding indebtedness as of December 31, 2025 is as follows:
2026 2027 2028 2029 2030 Total
(in thousands)
SPV Facility $ —  $ —  $ —  $ —  $ 244,000  $ 244,000 
Corporate Facility —  —  —  209,000  —  209,000 
Series A Notes 150,000  —  —  —  —  150,000 
Total $ 150,000  $ —  $ —  $ 209,000  $ 244,000  $ 603,000 
Senior Securities
Information about MSC Income’s senior securities as of December 31 for the years indicated in the table, unless otherwise noted, is as follows:
Total Amount Outstanding Exclusive of Treasury Securities(1)
Asset Coverage per Unit(2)
Involuntary Liquidating Preference per Unit(3)
Average Market Value per Unit(4)
(in thousands)
Corporate Facility
2016 $ 80,000  $ 2,448  —  N/A
2017 82,000  2,506  —  N/A
2018 120,000  2,229  —  N/A
2019 105,000  2,369  —  N/A
2020 44,000  2,920  —  N/A
2021 153,000  2,214  —  N/A
2022 98,000  2,290  —  N/A
2023 132,000  2,280  —  N/A
2024 149,000  2,104  —  N/A
2025 209,000  2,225  —  N/A
SPV Facility
2021 $ 273,688  $ 2,214  —  N/A
2022 223,688  2,290  —  N/A
2023 203,688  2,280  —  N/A
2024 266,688  2,104  —  N/A
2025 244,000  2,225  —  N/A
Series A Notes
2021 $ 77,500  $ 2,214  —  N/A
2022 150,000  2,290  —  N/A
2023 150,000  2,280  —  N/A
2024 150,000  2,104  —  N/A
2025 150,000  2,225  —  N/A
Deutsche Bank Credit Facility
2016 $ 333,000  $ 2,448  —  N/A
2017 348,000  2,506  —  N/A
2018 389,000  2,229  —  N/A
2019 340,000  2,369  —  N/A
2020 257,816  2,920  —  N/A
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(1)Total amount of each class of senior securities outstanding at the end of the period presented.
(2)Asset coverage per unit is the ratio of the carrying value of MSC Income’s total consolidated assets, less all liabilities and indebtedness not represented by senior securities, to the aggregate amount of senior securities representing indebtedness. Asset coverage per unit is expressed in terms of dollar amounts per $1,000 of indebtedness.
(3)The amount to which such class of senior security would be entitled upon the involuntary liquidation of the issuer in preference to any security junior to it. The “—” indicates information that the SEC expressly does not require to be disclosed for certain types of senior securities.
(4)Not applicable because the senior securities are not registered for public trading on a stock exchange.