Highlights

  • Net asset value per share was $19.50 at June 30, 2026, compared with $20.26 at December 31, 2025.
  • Net investment income after taxes was $38,160 thousand for the quarter, and the net increase in net assets from operations was $7,928 thousand.
  • Non-accrual investments covered seven portfolio companies at June 30, 2026, with amortized cost of $106,451 thousand, or 2.9%.
  • The Board declared a $0.45 per share distribution, and the company issued $350,000 thousand of 6.100% notes due 2031 in July.

Morgan Stanley Direct Lending Fund (NYSE: MSDL) shares were trading at USD 13.69 on October 27, 2026, up 2.70%, with a relative volume at time of 3.04. The business development company issued $350,000 thousand of 6.100% notes due 2031 on July 9, declared a $0.45 per share distribution on August 4, and filed its quarterly report for the period ended June 30, 2026 on August 6.

Morgan Stanley Direct Lending Fund is a Delaware entity with principal executive offices at 1585 Broadway, New York. It describes itself as a non-diversified, externally managed specialty finance company focused on lending to middle-market companies. It has elected to be regulated as a business development company under the Investment Company Act of 1940 and to be treated as a regulated investment company for U.S. federal income tax purposes. Its investment objective is current income and, to a lesser extent, capital appreciation, primarily through directly originated senior secured term loans to U.S. middle-market companies. It held investments in 229 portfolio companies across 36 industries as of June 30, 2026.

Second Quarter 2026 Results

For the three months ended June 30, 2026, total investment income was $88,774 thousand, compared with $99,508 thousand a year earlier. The company attributed the decrease primarily to declining base rates and repricings on existing investments. Net expenses were $49,814 thousand, compared with $55,651 thousand. Net investment income after taxes was $38,160 thousand, compared with $43,657 thousand.

Net realized loss was $7,431 thousand, which the company attributed primarily to the restructuring of first lien debt investments in Abracon Group Holdings LLC and Vardiman Black Holdings LLC. Net unrealized depreciation was $22,801 thousand. The net increase in net assets resulting from operations was $7,928 thousand, compared with $36,096 thousand in the second quarter of 2025. For the six months, the figure was $3,418 thousand, compared with $65,766 thousand.

Portfolio, Net Assets and Credit

Total net assets were $1,647,868 thousand at June 30, 2026, compared with $1,748,089 thousand at December 31, 2025. Net asset value per share was $19.50, compared with $20.26. The weighted average yield on the total portfolio at cost was 8.7% and the weighted average yield on debt and income producing investments at cost was 9.1%. Of performing debt at fair value, 99.6% bore a floating rate.

Non-accrual investments represented seven portfolio companies at June 30, 2026, compared with four at December 31, 2025. Their amortized cost was $106,451 thousand, or 2.9% of total amortized cost, compared with $60,392 thousand, or 1.6%. Performing investments had an amortized cost of $3,570,188 thousand. The asset coverage ratio was 182.7%, compared with 187.0%.

Financing and Distributions

On July 9, 2026, the company issued $350,000 thousand aggregate principal amount of 6.100% notes due July 15, 2031. On June 30, 2026, it entered into interest rate swaps under which it receives a fixed rate of 6.10% and pays a floating rate of SOFR plus 2.20% on the same amount, starting October 15, 2026. The company's average interest rate was 5.40% as of June 30, 2026, compared with 6.02% a year earlier.

On August 4, 2026, the Board declared a distribution of $0.45 per share, payable on or around October 23, 2026 to shareholders as of September 30, 2026. On February 26, 2026, the Board approved a share repurchase program for up to $100 million of common stock at prices below net asset value per share. There were 84,105,122 shares outstanding at August 5, 2026.

Outlook

The quarterly report does not provide numerical earnings guidance. It states that net investment income is expected to be affected by the difference between the rates at which the company invests and borrows, and that changes in market interest rates could have a material adverse effect on net investment income.