Good day, welcome to the Blackstone Secured Lending First Quarter 2026 investor call. Today's call is being recorded. At this time, all participants are in a listen-only mode. If you require operator assistance, please press star zero. If you would like to ask a question, please signal by pressing star one. If you are using a speakerphone, please make sure your mute function is turned off to allow your signal to reach our equipment. At this time, I'd like to turn the conference over to Stacy Wang, Head of Stakeholder Relations. Please go ahead. Thank you, Katie. Good morning, and welcome to Blackstone Secured Lending Fund's first quarter results conference call. Joining me today are Brad Marshall, Co-Chief Executive Officer, and Teddy Desloge, Chief Financial Officer, along with other members of the management team available for Q&A, including Jonathan Bock, Co-Chief Executive Officer, and Carlos Whitaker, President. Earlier today, we issued a press release with a presentation of our results and filed our 10-Q, both of which are available on the shareholder resources section of our website, www.bxsl.com. We will be referring to that presentation throughout today's call. I'd like to remind you that this call may include forward-looking statements which are uncertain and outside of the firm's control and may differ materially from actual results. We do not undertake any duty to update these statements. For some of the risks that could affect results, please see the risk factors section of our form 10-Q filed earlier today. This audiocast is copyright material of Blackstone and may not be duplicated without consent. With that, I'll turn the call over to Brad Marshall. Thank you and good morning. Before turning to the quarter's results, I want to take a step back and address the broader market environment. The first quarter unfolded against an uncertain backdrop across asset classes, with the S&P 500, investment grade, high yield, and broadly syndicated loan markets all posting negative returns amidst geopolitical developments, concerns around AI's impact on software businesses, and overall wider spreads. Simply looking at the leveraged loan index, spreads widened roughly 50 basis points, and returns were down 55 basis points during the quarter. Investor sentiment was clearly negative during the quarter. Despite private credit generally outperforming the broadly syndicated loan and public equity markets, capital flows into several non-traded BDCs declined and public BDCs traded down meaningfully. Amidst the volatility and broader market pressure, the private credit markets continued to be well-capitalized and in high demand by private and public companies. Through Q1, over 80% of borrowers chose private lenders for LBO financings. The direct-to-borrower model is often a better solution to our corporate partners, all while seeking to provide investors with risk mitigation through senior positioning, covenant protections, and contractual income-generated returns. We believe these attributes have contributed positive returns in direct lending for Blackstone Credit & Insurance, or BXCI, since starting nearly 20 years ago. Over the past 20 years, over $160 billion has been invested in BXCI's North American direct lending strategy with less than 10 basis points of realized annual losses, as described in materials. More broadly, while we expect continued normalization of default activity across public and private sub-investment grade markets from historically low levels, the private credit model is built for that environment. In our view, performance in our portfolio will continue to be underpinned by high embedded earn income, disciplined asset marks, and highly negotiated structural protections. We expect that long-term outperformance to continue relative to liquid markets. For BXSL specifically, first and foremost, we have nearly 98% first lien exposure with substantial cushion of nearly 50% junior capital or equity below our capital structures on average. Second, our credit agreements are heavily reviewed with key provisions we negotiate during periods of underperformance and include strong collateral protections. Third, nearly 80% of BXCI's historical exposure is with either a sole or lead lender role, typically providing a position of influence. We are positioned in capital structures to enforce our rights. We believe we have unmatched resources, experience, and infrastructure as part of Blackstone to help drive positive outcomes. Furthermore, in BXSL, as we enter our eighth year, we have had a total of eight restructurings that incurred realized losses, two of which have now been fully realized. In those two deals, inclusive interest received, we achieved a realized multiple on invested capital of 0.98x, reflecting nearly a full recovery of our loan basis. Turning to performance this quarter, we generated net investment income, or NII, of $0.77 per share, fully covering our dividend. Our total net return was over 70 basis points for the quarter despite a volatile market backdrop. We deployed $325 million of new capital. We saw nearly $450 million of repayments, consistent with our messaging that repayment volumes remain healthy. As we sit here today, we see visibility to over $600 million of repayments in the next 3 to 4 months, which we expect to use for a combination of new investments and share buybacks. NAV per share as of Q1 was $26.26, down approximately 2.5% quarter-over-quarter. Reflecting changes to both public and private loan market spreads and company fundamentals. While these marks reduce NAV in the quarter, we believe they are an important part of the private credit model that reflect current information and market conditions. Every line item is publicly reported versus investment costs and par value. Non-accruals for the quarter were 3.1% at fair value and 4.7% at cost. We added three new positions to non-accrual, including Medallia, now marked at 60.3, Affordable Care, now marked at 69.8, and Paramount Global Services, now marked at 65. Of the 316 portfolio companies in BXSL, these three names make up over 88% of our non-accrual based on fair market value. Before detailing these portfolio developments, it is worth highlighting that we believe the overall portfolio remains resilient if you look at averages across our book. Stable, high single-digit EBITDA growth over the last 12 months. Consistent portfolio company EBITDA margins of 28%. Interest coverage at two times, which is a 17% increase over the last 2 years. An average mark of 96.2, which is generally in line with the broadly syndicated loan market. Moreover, the bottom 10% of the portfolio is marked at 73, with valuations reflecting underperformance on a handful of names. Certain borrowers may continue to see challenges and require sponsor capital or capital structure improvements. We believe we are very well positioned to drive this process as senior secured lenders. On the names we added to non-accrual this quarter, the largest is Medallia, which represents a 1.7% of BXSL's fair market value. While the company paid its full quarterly interest in cash in March, we have begun working towards a restructuring. As part of this restructuring, we, together with the other lenders, plan to invest new capital into the business and meaningfully delever the balance sheet. This will allow the company to, one, better serve its customers and two, invest in new products and AI features. As we mentioned previously, Medallia is highly profitable today, and we expect it will greatly benefit from a delevered capital structure, which we expect to finalize over the next few months. Affordable Care, representing 0.73% of BXSL's fair market value, operates in the dental service space, where demand trends have weakened and the business carries a relatively elevated cost structure. Importantly, we are first lien lenders in a capital structure with multiple layers of junior capital below our exposure and strong lender documentation. We plan to enforce our rights as senior lenders, and we are actively engaged with the sponsor management team, junior capital providers, and lender base to improve the capital structure. Finally, Paramount Global Services, which represents 0.26% of fair market value and remains current on its coupon payments, was also added to non-accrual. The business is a building products distributor within the trading companies and distribution industry, and has seen softening demand consistent with the broader industry, which has impacted performance. In our view, the sponsor has been supportive to date and believes the challenge is to be more cyclical in nature. The consistent theme across these three names is that we sit at the top of the capital structure where we have both strong documentation and lender protections. We use these to help improve the outcomes for our investors and the companies. On the new deal front, our largest new commitment was to Firmus Technologies during the quarter, an emerging GPU Cloud service provider. Blackstone led a $10 billion GPU-backed debt financing to support the company's Cloud build-out, serving large investment-grade counterparties, including major hyperscalers and enterprise Cloud customers. The loan is senior secured, denominated in U.S. dollars, with lenders having a first lien on GPUs. To date, Blackstone has led or anchored nearly $25 billion of GPU financings and is the largest owner of data centers globally. We leverage the insights gained from our experience investing across the digital infrastructure ecosystem to identify investments that benefit from the continued tailwinds we see from the build-out and demand for AI infrastructure. In this case, proprietary origination and structuring complexity helped create attractive relative value for our investors. At BXCI, we continue to see attractive opportunities within the digital infrastructure, life science, and infrastructure services area of the market. Three higher conviction themes with secular tailwinds where we can leverage Blackstone's specialized expertise. We said last quarter that repayments would create additional balance sheet capacity if they materialized. We emphasize this because repayments give us room to be patient, stay disciplined, and make capital allocation decisions between paying down debt, investing in new deals as spreads may widen, and potentially buying back shares. Natural turnover can pull assets back to par upon realization. In other words, when a credit is marked below par due to market volatility or temporary performance pressure, but the underlying business retains meaningful equity value. Repayments at par converts that discount into a positive realization for shareholders. A few recent instances. SelectQuote was previously marked as low as 88.4, and Colony Hardware at 91.75. Both were repaid at par during Q1. Alliance Ground's loan was marked at 96.75 previously and was taken out at par, while our equity position returned 2x invested capital. Lastly, and probably most notably, AEVEX Aerospace, which went public in April last month. The business underperformed early in our BXSL investment. We held the position at a low mark of 82.5, and yet we are taken out at par in Q2 following a very successful IPO. These four examples represent over $300 million of total repayments at par since Q4, despite a previous combined average mark in the 1980s. These are also examples of what we have stated in past quarters. We believe realized performance is what ultimately matters, and a more active deal market leading to more repayments can be a helpful longer-term return driver. This is also why we view interim marks and embedded income together. Current income can provide a significant return cushion, while repayment activity can convert below par marks into par realizations. Finally, on software and AI, we continue to see public market bifurcation between business models that are more resilient and more insulated versus those at greater risk of potential disruption. For public loans in the leveraged loan index, companies growing earnings greater than 10% in more protected end markets have seen modest spread widening and are trading on average north of 95. In public equities, companies with a similar profile trade at a median of nearly 14x EBITDA. BXSL software portfolio has continued to perform well, with low double-digit percent LTM EBITDA growth and a large portion of our exposure in historically resilient subverticals such as data management, ERP, and security. Across approximately 70 software companies in the portfolio, weighted average LTM EBITDA is over $280 million, and weighted average revenue exceeds $750 million. On average, these companies also maintain interest coverage of two times. As the sole or lead lender for the majority of transactions, BXCI can be more proactive and influence change versus acting as a passive investor. In many cases, BXCI's AI team has been working directly with some of these companies. We believe Blackstone has a differentiated perspective on AI. Across the firm, we have deep technology verticals that support and inform investment activity, including hundreds of technologists helping Blackstone's expansive portfolio on software procurement, technology implementations, and AI adoption. We also benefit from senior AI experts and technology leaders across the platform. Additionally, Rodney Zemmel, former global leader of McKinsey Digital, is helping us advance AI-enabled underwriting, risk analytics, and portfolio activities to support BXCI's investment process. At large, the firm is in constant dialogue with AI market leaders across the digital infrastructure ecosystem. You may have seen the announcement this week that Blackstone is helping create a new AI service firm with Anthropic to bridge the gap between the technology and actual business applications. Once built, we expect that BXSL portfolio companies could engage the new firm and benefit from these services. Stepping back, our message this quarter is that while defaults may continue to normalize off historically low levels in the sub-investment grade market, this activity is not new and is built into the long-term return model across diversified portfolios of senior secured assets. The important point is that performance is underpinned by high embedded interest income, disciplined marks that create cushion for future outcomes, and the structural protections we negotiate as first lien lenders. Said differently, this is a model designed to produce a range of positive performance over time, even as individual credit experience sees volatility. We believe the market is functioning, our portfolio remains broadly healthy, our underwriting and senior positioning matter, and our active asset management is designed to drive positive performance where companies see turbulence. At Blackstone, as the world's largest alternative asset manager, we have the scale, operating resources, and experience through cycles to lean into situations that require operational support. That matters because even when defaults occur, we believe there is no better platform than Blackstone to manage them. BXSL has delivered a nearly 11% inception to date return, which represents 550 basis points of excess return to the broadly syndicated loans. We've done this through a simple formula that remains in place today, and that has continued to support outperformance. Senior positioning in BXCI-originated assets in defensive areas of the market, high current income, low expense ratios, strong structural protections, disciplined marks, and an active asset management. Taken together, these elements give us confidence in BXSL's ability to outperform for shareholders across cycles. With that, I'll turn it over to Teddy. Thanks, Brad. First on performance. BXSL's net investment income for the quarter was $179 million, or $0.77 per share, representing 100% coverage to our dividend on a per share basis. Payment in kind income represents less than 7% of total income, which is down 21% on a quarter-over-quarter basis from over 8% of total investment income. Interest income excluding payment in kind, fees, and dividends represented over 92% of total investment income in the quarter. Looking back, BXSL has out earned its dividend every quarter since inception. More recently, since the beginning of 2023, BXSL's annualized earnings exceeded its distribution yield by approximately 160 basis points on a weighted average basis. Over this period, undistributed earnings were retained in net asset value, which represents approximately $1.80 per share as of the first quarter, or over $410 million. This capital has been reinvested into new deals, which has been accretive to NII by approximately $0.07 per share after accounting for annual excise tax on undistributed amounts. We outlined last quarter that should BXSL stock trade at a discount to net asset value, we would consider returning a portion of undistributed earnings to investors. We are doing so by reaffirming BXSL's quarterly dividend of $0.77 per share, which we anticipate will be covered by a combination of both current and previous undistributed earnings. This provides a temporary bridge as we realigned our dividend with a longer-term earnings profile as rates have reset on our predominantly floating rate portfolio. As always, we will continue to evaluate the dividend with our board every quarter. It is worth noting we manage BXSL with a long-term orientation. That means remaining patient through periods of market volatility, continuing to focus on income generation and positive realizations, and making capital allocation decisions based on long-term shareholder value rather than short-term sentiment. Moving to the balance sheet, we ended the quarter with $13.9 billion of total portfolio investments at fair value, $8.1 billion of outstanding debt, and $6.1 billion of total net assets. Net Asset Value per share at quarter end was $26.26, down from $26.92 in the fourth quarter, or 2.5%, which was impacted primarily by $0.67 of unrealized losses in the portfolio, partially offset by $0.01 of net realized gains. The portfolio was marked at 96.2 as of the first quarter, down from 97.3 last quarter, reflecting a combination of broader spread widening across the public and private credit markets and company specific fundamentals. Importantly, we have delivered net cumulative realized gains overall on investments since inception. As Brad highlighted, we saw healthy fundamentals on average across our portfolio companies, demonstrated by consistent high single-digit percent EBITDA growth and increasing interest coverage ratios of two turns, which are up 5% from a year ago and 17% in the last 2 years. Earlier, Brad mentioned some of the advantages of senior private lending. Documentation is an important part of that defensive positioning. When we lead a transaction, we are able to negotiate directly with our borrowers and sponsors. We place significant emphasis on lender protections from the outset. We conducted a bottoms-up review of Blackstone credit agreements across key covenant protections relative to broadly syndicated loans. In BXCI-led transactions, nearly 100 included enhanced protections against asset stripping and collateral release, as well as caps on EBITDA add backs. Only 40% of broadly syndicated loan documents contain similar protective provisions. We believe that discipline is critical and will support recoveries in the private market through cycles. This reinforces the value of directly negotiated documents which can lead to benefits for senior secured private credit portfolios. Further, we did not see an increase in material amendments or performance driven PIK amendments in the first quarter. Both PIK income and amendment activity dropped this quarter. We had 30 amendments in the quarter across our portfolio, down 25% over Q4, with over 95% related to amendments associated with add-ons, DDTL extensions, and immaterial technical matters. Turning to activity, as Brad mentioned, BXSL funded over $325 million at a weighted average spread of nearly 530 basis points above the reference rate. Net funded investment activity was -$126 million after nearly $450 million of repayments. This represented an annualized repayment rate of 13% of the portfolio at fair value, compared to 15% for the prior quarter and 28% for the same quarter in the prior year. As a reminder, BXSL's board of directors approved a discretionary share repurchase plan last quarter under which BXSL may repurchase up to $250 million in the aggregate of its outstanding common shares in the open market at prices below its net asset value per share. As we see repayment activity creating additional capacity through year-end, we expect to evaluate share repurchases so long as trading levels persist at similar discounts to NAV as seen in the 1st and 2nd quarter thus far. That said, capital allocation for share repurchases will be weighed against both new deployment opportunities and repayment volume as we manage to our stated long-term leverage range of one to one and quarter turns. Our liability profile remains diverse across multiple financing markets, including $10.2 billion of committed debt capacity and $8.1 billion of funded debt as of the end of the first quarter. We have relationships across diverse lending counterparties and a balanced mix of unsecured and secured funding, with approximately 56% of funded debt unsecured and 44% secured. This diversity of funding sources, combined with our scale and long-standing lender relationships, supports financial flexibility and a cost of capital that remains attractive relative to our traded BDC peers. We remained active in the quarter on liabilities while reducing our cost of capital. We have $1.7 billion of drawn on our asset-based facilities with multiple banks, of which had a weighted average drawn spread of SOFR plus 184, down 8 basis points since Q1 2025. We successfully closed an upside for the BXSL revolver, increasing the facility by $100 million to a total size of $2.5 billion. BXSL to date continues to have the most competitively priced revolvers across our traded BDC peers. In addition, we have over $450 million of CLO debt outstanding at a weighted average coupon of SOFR plus 154, and $4.5 billion of unsecured bonds outstanding as of March 31st, $2 billion of which is not swapped and has a weighted average coupon of 2.58%. This includes a $400 million, 3.5- year bond we issued in February, priced 200 basis points above the benchmark treasury rate, or 5.25% coupon. Taking all of this together, our all-in cost of debt for the first quarter was 4.9%, down from 5.09% in the first quarter of 2025. Total liquidity at the end of the first quarter was $2.3 billion, including unrestricted cash and undrawn debt available to borrow, while ending leverage as of March 31st was 1.27 on a net of cash basis and 1.32 turns on a gross basis. We expect repayment volumes to continue, with that, we can manage to the high end of our range of 1-1.25 turns. With that, I'll ask the operator to open it up for questions. Thank you. Thank you. As a reminder, please press star one to ask a question. We ask you limit yourself to one question and one follow-up question to allow as many callers to join the queue as possible. We will take our first question from Rick Shane with J.P. Morgan. Hey, guys. Thanks for taking my question. Look, the framework that we've been asking most of the BDCs this quarter is really trying to understand where you think we are in the continuum, both in terms of return profile and also where we are in terms of deal structure. I am curious, particularly on the ROE side, sort of if you can frame what you think the opportunity is now and put it in the context of what you think is we've seen historically, realizing, of course, you guys are asset sensitive, so if you want to think about it as a ROE as a SOFR plus, that's a great way to do it. Sure. Thanks, Rick. This is Brad. We mentioned some of this on the call, but we have seen spreads move a little bit wider, and we've seen the cost of our leverage decline. That's, you know, a net positive. The other positive is that as we see continued turnover, then you should expect some of those assets, four of which we talked about on the call, that were marked below par, start to gravitate to their repayment price of par or better. Those are the two kind of positive kind of drivers of return, and that's offset by, mark-to-market volatility in our assets, driven by what we're seeing in the market backdrop, and if there is interim underperformancing performance on assets. What we've tried to do on our calls is identify on that last bucket, the bottom 10% of our portfolio, which we've marked it at $0.73 on the dollar. As they perform in future quarters, we'll either take those marks up or down, or the sponsors may contribute more capital, but that's where you'll see kind of most of the volatility from a mark-to-market standpoint. The good news there is historically, recovery rates have been higher than that. Even if they're lower than that and all of those assets default, the downside from a realized NAV standpoint is actually pretty limited. If you assume 50% recovery rate on those bottom 10% of your assets, that means we have 2.3% asset movement from here. I think to frame your answer without, you know, perfectly answering it, you have very high income across our vehicle and other BDCs. That helps offset any potential losses in an asset class that historically has had moderate default rates and very strong recovery rates. BXSL is uniquely positioned because we're 98% senior secured. When we do see non-accruals, three of which we talked about on this call, we're in control. We can reset the capital structure, work to improve the business, and capture the upsides to the extent we're successful. We talked about the long history we've had doing that, where we've actually only lost less than 10 basis points annually in realized losses because of that seniority, because of the high income that we generate on these investments. From here, Rick, I would say you have a couple positive potential drivers of return. We'll see what happens with rates. You have a couple interim points of volatility that are based on market conditions and based on certain assets' interim performance. I appreciate it. I think somewhere along the line we've written, we shouldn't assume that everything going forward will be unprecedented, but I'm hoping at some point soon we'll be right on that. Thanks, Rick. I'm with you. Thanks, guys. We will take our next question from Cory Johnson with UBS. Hi. I was wondering if you could, maybe, you know, size how much of losses that you saw this quarter were sort of a result of, you know, credit issues versus, like the AI concerns versus, you know, spread widening that we've seen in the market? Sure. Why don't I take a stab at that, Cory. Your line was a little bit muffled, but I think I heard it. If you look at this quarter, about half the markdowns that we saw were related to two of the positions we put on non-accrual. That made up about 48% of the markdowns. The remaining 52% was spread very broadly across the portfolio. More specifically, our software names, we took down 270 basis points during the quarter based on AI kind of concerns, you know, for the most part. Got it. Thank you. Thank you. We'll take our next question from Kenneth Lee with RBC Capital Markets. Hey, good morning, and thanks for taking my question. Just on the prepayment activity there, the visibility that you're seeing there, what's driving some of the healthiness that you're seeing in terms of prepayment activity even despite a potentially wider spread kind of environment there? Thanks. Yeah, I'm happy to take that. This is Teddy. Thanks, Ken. We're tracking a number of repayments. I think as you look at the list, right, it's really a mix of a few things, sales to strategics. We did have one company go public in the quarter, as Brad mentioned. Sponsor M&A, you know, continues, although it's been a little bit softer and also refinancing. It is a bit of a mix. We did highlight last quarter, we had visibility to over $550 million of repayments near term. We saw that conversion in the first quarter. We saw $450 million as we sit here at the end of the first quarter, visibility to another $600 million in Q2. You know, that turnover continues at a healthy place. As it relates to, you know, the full portfolio and what the potential return impact on that is, we do have about two points of call protection and unamortized OID across the portfolio. As those repayments continue, there is potential for monetization of that call protection and unamortized OID and income. Ken, I would expect that repayment activity picks up towards the end of the year. We've had a healthy start. We've got good visibility, and I think that continues to pick up towards the end of the year as we see more deal activity flow through the system. Gotcha. Very helpful there. One follow-up, if I may, just in terms of the common dividends there. Sounds like there's some supplementing from the undistributed distributable earnings there. Wondering how many you know, how many additional quarters could you see that, and then how would you frame out some of the potential return there? Thanks. Thanks, Ken. Just to summarize, right, as we take a big step back, we've covered our dividend every quarter since inception, most recently outearning by over 150 basis points, right? We're paying out 11.7% distribution among the highest across the peers. As a result of that, we're sitting with about $1.80 of undistributed NII, and that capital has been reinvested in the portfolio. We also did mention previously that we consider distributions from undistributed NII if trading below NAV, which we have been over the last couple quarters. To facilitate that, reaffirming our dividend for the 2nd quarter, we expect that to be covered by a combination of previous undistributed and current earnings. This would be viewed as a temporary bridge As we've said previously, we recognize that rates have come down. We continuously evaluate the longer-term dividend to align with the earnings generation of the portfolio, and we'll continue to evaluate that with our board each quarter. Gotcha. Very helpful there. Thanks again. Thank you. We'll take our next question from Finian O'Shea with Wells Fargo Securities. Hey, everyone. Good morning. Thank you. I guess, Brad, sort of a crystal ball question, admittedly, just on credit. I think the industry is rolling through just a bit of a tough vintage right now. And I know there's spread widening on top of that, but just sticking to credit, like new non-accruals, what inning do you think we're in, in dealing with underperforming assets? How long should we expect new non-accruals to continue to roll in? Thanks, Fin. Well, I would expect that in levered credit, there is always going to be some level of non-accruals flowing through everyone's portfolios. We generate, a double-digit, you know, dividend for our investors and along the way, we take some risk in doing so. I think default rates will normalize off what has been very low levels. You're seeing that flow through I think most people's earnings over the course of the year. I don't think it's elevated. I don't think it will be much more elevated from here. As we look at our portfolio, most of the issues that we're seeing, one, we think are already marked into the portfolio. Two, are fairly identifiable, meaning, we know what the issues are. They're not broad-based. They're, you know, maybe a bad acquisition, maybe some operating issues, maybe a customer loss. I think it's actually quite manageable. Doesn't mean there won't be more defaults in our portfolio and others. I think what really matters, as you think about kind of the outcome of any future defaults or assets that go in non-accrual is, are you first lien in the capital structure? Can you control the outcomes of those non-accruals? Are you in a position to enforce your rights as first lien lenders? If you are, then if you look back over a long history, certainly at Blackstone, 20+ years, the outcomes are actually pretty good. Loss rates are fairly low. You're able to reset the capital structure, gives the company more flexibility to grow their business, to invest into their business versus cutting costs to service their debt. I think it's you have to put all of it in perspective when you're looking at coming off of low default rate environment and where you sit in the capital structure. I appreciate that. I guess sort of a small or sort of a follow-up to that thread. If the non-accrual rate, you know, in the industry, again, if it's more of a normalization than a flare-up, do you think like the 400-500 spread frame is just way too low and the industry needs to sort of reprice risk in a more attractive way? Well, I think the spread environment will be dictated by the quality of deals you do and how the broader market, including the public loan market, is pricing risk. What we've seen over the past number of years is the public markets continue to price risk tighter and tighter, reflecting that, you know, the default environment. What I think will happen, Fin, over the course of this year, if deal activity accelerates, then you could see a widening of spreads in order to get those deals done in the private markets. For us, our kind of true north is to deliver premium over those public markets. You know this better than anyone, last year, we generated a 360 basis point premium to the public markets despite some markdowns on certain assets. First quarter, that premium was over 100 basis points. I think the asset class in BXSL and others continues to deliver what it set out to do, which is deliver that premium to the public markets and drive an attractive return for investors. Great. Thank you, Brad. Thanks, Fin. As a reminder, star one if you would like to ask a question. We'll take our next question from Arren Cyganovich with Truist Securities. Thanks. I was hoping we could discuss some of the AI infrastructure investments that you were referencing, the GPU-backed debt financing. How are these structured? What kind of rate do you get on these loans? Are they backed by the borrower or are they non-recourse? Just trying to understand the kind of risks, rewards of the giant investment that's going on in the industry. Yeah, Arren, I think I caught most of that. In terms of kind of where we're investing, across AI, maybe just start with a point of perspective. I think today, you know, Blackstone has become the largest investor in AI-related infrastructure in the world. We have this, you know, pretty unique vantage in this ecosystem that continues to grow. We've developed these in-house capabilities, which I mentioned. I know your question is around investing, it's also worth highlighting that these capabilities, these viewpoints, helps us manage our AI exposure, helps us implement AI strategy in our portfolio companies. We're currently working with Medallia, more specifically. It's a very unique asset to have within Blackstone because it's a 24/7 resource. We announced the partnership with Anthropic as well as an addition to that. This entire, you know, build-out of the AI infrastructure is something that we will continue to stay very active in, and BXSL will benefit from that. Our investments in the space will continue to be first lien, senior secured, backed by collateral, backed by contracts. That is what you saw in our announcement with Firmus. That deal was a commitment last quarter. That will start to fund this quarter, and we'll disclose the terms of that loan next quarter. Okay, that's helpful. In understanding that you have a strong history with credit and recoveries, but the near-term impact of these new non-accruals is gonna weigh on your earnings power. You know, how can you, I guess, get some of that earnings power back, in what is the investment appetite right now, given the environment? Are you continuing to see good opportunities? And, you know, when would you expect to start to see some of that investment activity to occur? Yeah. On the non-accruals, they're clearly not accruing any income. As we work through the restructuring, we'll reset the debt lower, such that the debt that we reinstate lower will be accruing income. There's earnings upside from those non-accrual names going forward. In terms of the opportunity set, will really be, you know, defined by how much repayment activity that we see that allow us to reinvest into the market backdrop. Again, repayment activity does two things. It helps drive a little bit of extra returnings because of the fee acceleration that we get. It does help with NAV. Lastly, those repayments we will use either to, you know, buy back shares or to reinvest into a market backdrop that in this moment, feels a little bit wider, albeit there's not a ton of activity that we've seen, more recently. Okay. Thank you. We will take our next question from Ethan Kaye with Lucid Capital Markets. Hey, guys. You mentioned kind of balancing, you know, the allocation of repayment activity between share buybacks and new investments, I guess, based on kind of relative attractiveness there. Given some of the commentary we've heard about, you know, improving economics and terms on new deals, kinda curious how you see those two kind of competing uses of capital stacking up currently. Like, is there a kind of a clearly more favorable use, you know, in the current kind of environment? Yeah. Thanks, Ethan. This is Teddy. I'm happy to take that. I think it's a few things. Number one, do see clear repayment volume continuing, right? We're mentioning $600 million in the near term. As that happens, there are some competing allocations of capital. Number one, you know, we do wanna manage our leverage ratio to the 1x to 1.25x longer term target. We are at 1.25x net, so we're not too far off of that. You know, number two, what we have said in the last quarter and continue to see is that buying back stock, buying back shares is accretive at similar discounts that we've seen in the first and second quarter. If those continue, we will certainly evaluate that as a real option in the back half of the year. Number three, as Brad mentioned, as repayments hit, we see a little bit of a return benefit from potential return benefit from unamortized OID, we can redeploy that potentially at wider spreads. We saw spreads marginally wider in the first quarter. As we look at what's getting done in the market today, it's continuing to move a little bit wider. We will have potentially some capital to take advantage of that tied to repayments. Okay, that's helpful. Then one other on Medallia. I guess you kinda talked about like the confidence you have in the underlying business going forward, right? I'm wondering, you know, how much of the challenges over there would you categorize as like capital structure related versus, you know, maybe more fundamental or, you know, pressure related to competition from AI, say? Great. Thanks, Ethan. It's Brad. I'll take that. I think most of their challenges have been around their capital structure, and it's prevented them from fully investing into the company for growth because their debt levels were higher than what their cash flow supported. As we go forward, our job is to reset the capital structure in a way that will position them to reinvest in the business and grow. I think after we do finish the restructuring, they'll be less levered than their competitor and therefore potentially better capitalized to continue to expand. They will most definitively need to invest into AI to continue to improve their product offering for their clients. The company has already started this journey. We're supporting them with more capital and our AI resources. As I mentioned on the call, the company today is highly profitable. With the new capital structure, we're very optimistic. Appreciate it. Thanks, guys. Thank you. With no additional questions in queue, I'd like to turn the call back over to Stacy Wang for any additional or closing remarks. Thank you again for your time and continued interest in BXSL and for all your questions today. We look forward to updating you next quarter. Have a great day.