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HLEND Books $49.3M in Realized Losses on Four Restructured Private Credit Deals

By Mari Nicholson

HPS Corporate Lending Fund, or HLEND, a nontraded business development company, recorded $382.5 million in net unrealized depreciation for the six months ended June 30, 2026, more than 80 times the $4.7 million recorded in the same period last year. The second quarter alone accounted for $156.3 million of that depreciation, compared with $12.4 million in the same quarter last year.

The losses coincided with a decline in earnings. Net increase in net assets resulting from operations fell to $211.8 million for the first half of 2026, down from $343.6 million a year earlier, a 38% drop. On a cumulative basis, the fund’s distributable earnings flipped from a positive $71.2 million at year-end 2025 to a negative $342.3 million as of June 30, a swing of more than $413 million.

Part of the decline traces to four restructurings. The fund reported $49.3 million in realized losses tied to the restructuring of four private debt investments during the first half, including $16.6 million on Foundation Automotive US Corp.; $15.8 million on Daphne S.P.A.; $15.6 million on Spanx LLC; and $1.4 million on DCA Acquisition Holdings LLC.

Credit quality metrics were mixed. Non-accrual investments rose to 1.27% of debt and income-producing investments at amortized cost as of June 30, up from 1.08% at year-end 2025, though the fair-value measure improved slightly to 0.7% from 0.74% over the same period. The number of portfolio companies fell to 359 from 380. The weighted average yield on the total portfolio, at amortized cost, slipped to 9.2% from 9.4%. Asset coverage – the fund’s cushion above the 150% regulatory minimum – improved to 198.5% from 195.7%.

The disclosure adds to redemption pressure that AltsWire has tracked through the year. HLEND’s board rejected an unsolicited, below-net asset value mini-tender offer from Cox Capital on July 28, citing the fund’s NAV per share of $24.42 and aggregate NAV of $12.05 billion as of June 30. Separately, second-quarter repurchase requests jumped to approximately 13.3% of shares outstanding, up from 9.3% in the first quarter, when the fund prorated tendered shares at roughly 54% after paying out $610.8 million.

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