Core Viewpoint - Nuveen Churchill Direct Lending Corporation (NCDL) has shown stable performance in Q2 2024, with a positive alpha of approximately 6.5%, despite uncertainties in the broader Business Development Company (BDC) sector [3][5]. Financial Performance - NCDL's net investment income per share for Q2 2024 was 0.01 from the previous quarter, indicating a relatively stable income stream compared to peers [5]. - The dividend coverage ratio stands at approximately 126% when adjusted for supplemental distributions, which is significantly above the BDC sector average [5]. - The forward yield based on the base dividend is around 10.3%, reflecting an attractive investment opportunity [5]. Investment Activity - During Q2, NCDL originated 196 million [5]. - The proportion of first lien senior loan investments in the portfolio has risen to nearly 91% based on fair value [5]. Leverage and Risk Management - NCDL's leverage increased from 0.82x to 1.04x, which is still below the sector average, indicating a cautious approach to portfolio expansion [5]. - The company recognized an unrealized loss of $0.20 per share due to two underperforming investments, but this is mitigated by the high quality of the portfolio, which is primarily composed of defensive investments backed by private equity sponsors [5]. Conclusion - Based on the Q2 2024 earnings data, the rating for NCDL has been upgraded from hold to buy, as the company has demonstrated the ability to grow its portfolio conservatively and maintain strong dividend coverage [6].
NCDL: The Data Is Too Good To Maintain Hold (Rating Upgrade)