PIK Income Rose at Seven of Nine Largest Nontraded BDCs in Q1
By Staff
Payment-in-kind income rose at seven of the nine largest nontraded business development companies where the measure can be compared directly in the quarter ended March 31, 2026, according to an AltsWire review of consolidated statements of operations. Across the nine funds, total PIK income reached approximately $285.4 million against $200.7 million a year earlier, an increase of roughly 42%.
Apollo Debt Solutions BDC recorded the sharpest increase, to $16.1 million from $5.3 million, up 205%. Its share measure told a different story: in June, Apollo told investors its PIK income of approximately 2.9% was roughly half its nontraded BDC peer average. Ares Strategic Income Fund’s PIK income more than doubled to $29.2 million, and Golub Capital Private Credit Fund’s rose 141% to $11.6 million. Blackstone Private Credit Fund, the largest in the group, reported $131.8 million against $97.9 million.
Yet at three funds the number sponsors more often put in front of advisers – PIK as a share of total investment income – fell over the same period. At only one of the three did PIK dollars actually rise.
That gap is arithmetic, not accounting, and it is the reason the two figures have to be read together.
PIK arrangements let a borrower satisfy an interest or dividend obligation by increasing principal instead of paying cash, which makes the income accrued rather than collected. Expressed as a percentage of investment income, PIK is a ratio – and a fund whose income is growing quickly can add PIK dollars while its percentage declines, because the denominator moves faster than the numerator.
That has been the prevailing condition across the category through a period of rapid capital formation. It is not the condition the category is in now. Nontraded BDC outflows exceeded inflows for the first time in the first quarter – the same quarter these figures cover – and sponsors returned nearly $5.9 billion more in the second, with roughly 99% of the market reporting, according to Robert A. Stanger & Co. As income bases flatten, the share measure has less room to absorb rising PIK.
The largest fund in the group is already there. Blackstone Private Credit Fund’s, or BCRED’s, net asset value per share fell to $23.65 at June 30 from $24.19 at March 31, a fourth consecutive quarterly decline, and the fund prorated second-quarter repurchase requests of roughly 10% of shares outstanding at its 5% cap after meeting 7.9% in full in the first quarter. Whatever its PIK income does in the second quarter, it will not be measured against a growing denominator.
The Two Clearest Cases
BlackRock Private Credit Fund shows the effect at its most extreme. Its PIK share fell to 1.32% from 2.49%, a decline of 117 basis points and the largest drop in the group. Its PIK dollars were essentially unchanged, at $716,927 against $720,176. The entire move came from total investment income, which rose 88% to $54.4 million. The fund’s repurchase requests exceeded its 5% quarterly cap for the first time since inception in the following quarter.
Blue Owl Technology Income Corp. is the mirror image. Its investment income fell 4.6%, to $135.1 million, while total PIK income rose 18.1% to $12.4 million. The share climbed 177 basis points to 9.18% from 7.42%, the highest of any fund reviewed. The company states the same figures in its own disclosures.
HPS Corporate Lending Fund is the single case of rising PIK with a falling share: PIK income up 27.6% to $30.7 million, investment income up faster at 36.6%, and the share down 36 basis points to 5.07%. HPS subsequently reported second-quarter repurchase requests of 13.3% of shares outstanding.
Oaktree Strategic Credit Fund is the counterexample. It is the only fund where PIK income declined meaningfully, falling 15.4% to $2.1 million on an investment income base 24.6% larger, taking its share to 1.17% from 1.73%.
What Counts as PIK
The figures above use total PIK – payment-in-kind interest plus PIK dividend income where a fund discloses the two separately. Four funds do: Blackstone Private Credit Fund, Blue Owl Credit Income Corp., Blue Owl Technology Income Corp., and Ares Strategic Income Fund.
The distinction is material at Blackstone. On PIK interest alone, its increase is 15.7% rather than 34.6%, and its share of investment income is 5.99% rather than 6.96%. The difference is a non-cash dividend income line that went from zero to $18.5 million in a year.
Goldman Sachs Private Credit Corp. is excluded from the comparison entirely. The fund does not present PIK as a line item on its income statement; its accounting policy note states PIK is recorded within interest or dividend income. The only quantified figure available measures PIK added to principal, a different concept that excludes PIK dividends.
Five funds – Blackstone, Blue Owl Credit Income, Blue Owl Technology Income, HPS, and Ares – break PIK out within each investment-affiliation category and print no consolidated PIK line. Those fund-level totals are AltsWire’s calculation from the printed lines. Golub Capital Private Credit Fund and Oaktree Strategic Credit Fund have Sept. 30 fiscal year ends; all periods here are labeled by period end.
What It Means for Advisers
None of the filings reviewed draws a connection between payment-in-kind income and credit quality, and this review does not. The point is narrower and more immediately usable.
A PIK figure expressed only as a percentage of investment income says as much about how fast a fund is growing as about what its borrowers are paying. This quarter, two funds moved in opposite directions on that measure for reasons unrelated to their PIK. An adviser handed a PIK percentage by a wholesaler has been handed a ratio whose denominator is doing much of the work – and the practical response is to ask for the dollar figure alongside it, and for the prior-year dollar figure next to that.
Second-quarter reports, most of them due by Aug. 14, will be the first test of the measure without a reliably growing denominator behind it.
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