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How Ares Capital Corporation Performed in 3Q17

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Part 4
How Ares Capital Corporation Performed in 3Q17 PART 4 OF 6

Assessing Ares Capital’s Portfolio Investments in 3Q17

Portfolio investments

Ares Capital Corporation (ARCC) saw a significant increase in its portfolio investments at fair value from $8.8 billion in 3Q16 to $11.5 billion in 3Q17. This trend reflects a substantial YoY rise. 

In 3Q17, portfolio investments at fair value also include investments of $1.8 billion on the back of the acquisition of American Capital (ACAS).

Assessing Ares Capital’s Portfolio Investments in 3Q17

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The breakdown of the company’s portfolio investments at fair value in 3Q17 follow:

  • first lien senior secured loans: $4.7 billion
  • subordinated certificates of the SDLP: $437.0 million
  • second lien senior secured loans: ~$4.1 billion
  • collateralized loan obligations: $158.0 million
  • senior subordinated loans: $922.0 million
  • preferred equity securities: $435.0 million
  • other equity securities: $765.0 million

On an LTM (last-12-months) basis, Ares Capital has reported a net income margin of ~45.4%. Among its peers (XLF), Hercules Capital (HTGC), BlackRock Capital Investment (BKCC), and Apollo Investment (AINV) reported net income margin of ~39.1%, ~18.3%, and ~29.9%, respectively, on an LTM basis.

October 2017 commitments

From October 1, 2017, to October 26, 2017, Ares Capital entered into new investment commitments of ~$294 million. These commitments follow:

  • first lien senior secured loans: 81.0%
  • second lien senior secured loans: 19.0%

These investment commitments may be sold at the company’s discretion, in full or in part, although the company does not guarantee the same. ARCC had total assets of ~$12.0 billion on September 30, 2017, compared to ~$9.1 billion on September 30, 2016.

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