Carlyle Credit Income Fund

Good day and thank you for standing by. Welcome to the Carlisle Credit Income Fund's second quarter 2025 earnings call. At this time, all participants are in a listen-only mode. After this presentation, there will be a question and answer session. To ask a question during the session, you'll need to press star 1 1 on your telephone. You will then hear an automated message advising your hand is raised. To withdraw your question, please press star 1 1 again. Please be advised that today's conference is being recorded. I would now like to hand the conference over to Nelson Joseph, Principal Financial Officer at CCIF. Please go ahead.

Good morning, and welcome to Carlyle Credit Income Fund's second quarter 2025 earnings call. With me on the call today is Nishal Mehta, CCIF's Principal Executive Officer and President, as well as Lauren Basmajian, CCIF's Chair and Carlyle's Global Head of Liquid Credit. Last night, we issued our Q2 financial statements. and a corresponding press release and earnings presentation discussing our results, which are available on the investor relations section of our website. Following our remarks today, we will hold a question and answer session for analysts and institutional investors. This call is being webcast, and a replay will be available on our website. Any forward-looking statements made today do not guarantee future performance, and any undue reliance should not be placed on them. These statements are based on current management expectations and involve inherent risks and uncertainties, including those identified in the risk factors section of our annual report on the forum NCSR. These risks and uncertainties could cause actual results to differ materially from those indicated. Parallel Credit Income Fund assumes no obligation to update any forward-looking statements at any time. During the conference call, we may discuss adjusted net investment income per common share and core net investment income per common share, which are calculated and presented on a basis other than accordance with GAAP. We use these non-GAAP financial measures internally to analyze and evaluate financial results and performance, and we believe these non-GAAP financial measures are useful to investors gauging the quality of the fund's financial performance, identifying trends in its results, and providing meaningful period-to-period comparisons. The presentation of this non-GAAP measure is not intended to be a substitute for financial results prepared in accordance with GAAP and should not be considered in isolation. With that, I will turn the call over to Nischal.

Thanks, Elson. Good morning, everyone, and thank you for all joining CCIS quarterly earnings call. I'd like to start by reviewing the fund's activities over the last quarter. We maintain our monthly dividend at 10.5 cents per share, or 18.8% annualized, based on the share price as of May 16, 2025, which is now declared through August of 2025. The monthly dividend is supported by 49 cents of recurring cash flows for the quarter. New steel investments during the quarter totaled $30.3 million, with a weighted average gap yield of 15.4%. The aggregate portfolio weighted average gap yield was 16.5% as of March 31st. Within CCI's portfolio, we completed 13 refinancings and resets in Q2 2025, reducing the cost of liabilities and extending the reinvestment periods across the CLOs and bolstering equity cash flows. We sold 1.61 million of our common shares in connection with the ATM offering program for total net proceeds of 12.2 million. As a reminder, in January, we completed a private placement of five-year 7.5% convertible preferred shares due in 2030. Six months after issuance, the holders have the option to convert the preferred shares into common stock at the greater of NAV or the average closing price of the five previous trading dates. We continue to leverage Carlyle's longstanding presence in the CELO market as one of the world's largest CELO managers and a 15-year track record investing in third-party CELOs to manage a diversified portfolio of CELO equity investments. As of March 31st, our portfolio comprised 61 unique SEAL investments managed by 30 different collateral managers. While recent widening in SEAL liabilities and tariff-induced volatility can weigh on SEAL equity valuations, we remain encouraged by the credit fundamentals across our holdings, which have demonstrated resilience to date. We continue to closely monitor these dynamics and have positioned CSAT's portfolio defensively with an emphasis on higher quality managers and structures that have ample time left in reinvestment period, and significant over-collatilization cushions. This is demonstrated by the portfolio's weighted average junior over-collatilization cushion of 4.46%. With that being said, our portfolio has experienced lagging impact of loan repricings, which created an additional 12 basis points decline in the weighted average spread of the fund's underlying loan portfolios. Despite these repricings, the portfolio generated cash on cash yield of 22.67%, supporting the fund's monthly dividend. I'd like to remind everyone that volatility is usually beneficial for the long-term returns for seal equity for several reasons. Significant repricing wave that we've witnessed over the past 15 months has ground to a halt due to the recent volatility, and we may see loan spreads increase as new loans are issued at wider spreads. The volatility also allows CLOs to purchase loans at discounted prices and help the PAR within the CLO portfolios to offset future losses. I'd like to share some key stats on the portfolio as of March 31st. The portfolio generates a gap yield of 16.48% on a cost basis, supported by cash-on-cash yields of 22.67% on CLO investments quarterly payments received during the quarter. The weighted average years left in reinvestment period increased from approximately two and a half years to 3.1 years, as there were eight accretive resets in the underlying portfolio during the quarter. This provides CLO managers the opportunity to capitalize on periods of volatility to improve portfolios or reposition them in zero CLOs that are out of reinvestment period. We believe the weighted average junior over-colonization cushion of 4.46% is a healthy cushion to offset defaulted losses in the underlying loan portfolios. The weight average spread of the underlying portfolios was 3.26%. The average percentage of loans rated CCC by S&P was 5.2%, below the 7.5% CCC limit in CLOs. As a reminder, once a CLO has more than 7.5% of its portfolio rated CCC, the excess over 7.5% is marked at the lower fair market value or rating into recovery rates and reduces the over-collarization cushion. And the percentage of loans trading below 80 decreased slightly from 3.4% to 3.3%. We continue to draw on the expertise of the Carlisle Liquid Credit platform and a collaborative one Carlisle approach to invest in high-quality CLO portfolios, sourced through our rigorous 14-step bottom-up investment process. With that, I will now hand the call over to Lauren to discuss the current market environment.