Fair Value of Investments

9 Months Ended

Sep. 30, 2024

Fair Value of Investments [Abstract]

Fair Value of Investments

Note 5. Fair Value of Investments

Fair value is defined as the price that the Company would receive upon selling an investment or paying to transfer a liability in an orderly transaction to a market participant in the principal or most advantageous market for the investment. Accounting guidance emphasizes that valuation techniques maximize the use of observable market inputs and minimize the use of unobservable inputs.

Inputs refer broadly to the assumptions that market participants would use in pricing an asset or liability, including assumptions about risk. Inputs may be observable or unobservable. Observable inputs are inputs that reflect the assumptions market participants would use in pricing an asset or liability developed based on market data obtained from sources independent of the Company. Unobservable inputs are inputs that reflect the assumptions market participants would use in pricing an asset or liability developed based on the best information available in the circumstances. The valuation hierarchical levels are based upon the transparency of the inputs to the valuation of the investment as of the measurement date. The three levels are defined as follows:

Level 1 — Valuations based on quoted prices in active markets for identical assets or liabilities at the measurement date.

Level 2 — Valuations based on inputs other than quoted prices in active markets included in Level 1, which are either directly or indirectly observable at the measurement date. This category includes quoted prices for similar assets or liabilities in active markets, quoted prices for identical or similar assets or liabilities in non-active markets including actionable bids from third parties for privately held assets or liabilities, and observable inputs other than quoted prices such as yield curves and forward currency rates that are entered directly into valuation models to determine the value of derivatives or other assets or liabilities.

Level 3 — Valuations based on inputs that are unobservable and where there is little, if any, market activity at the measurement date.

Investments in private investment companies measured based upon NAV as a practical expedient to determine fair value are not required to be categorized in the fair value hierarchy. As of September 30, 2024 and as of December 31, 2023, there were no investments accounted for using the practical expedient.

The inputs for the determination of fair value may require significant management judgment or estimation and are based upon management’s assessment of the assumptions that market participants would use in pricing the assets or liabilities. These investments include debt and equity investments in private companies or assets valued using the market or income approach and may involve pricing models whose inputs require significant judgment or estimation because of the absence of any meaningful current market data for identical or similar investments. The inputs in these valuations may include, but are not limited to, capitalization and discount rates, beta and earnings before interest, taxes, depreciation, and amortization (“EBITDA”) multiples. The information may also include pricing information or broker quotes, which include a disclaimer that the broker would not be held to such a price in an actual transaction. The non-binding nature of consensus pricing and/or quotes accompanied by disclaimer would result in classification as Level 3 information, assuming no additional corroborating evidence.

Pricing inputs and weightings applied to determine fair value require subjective determination. Accordingly, valuations do not necessarily represent the amounts that may eventually be realized from sales or other dispositions of investments.

A financial instrument’s categorization within the valuation hierarchy is based upon the lowest level of input that is significant to the fair value measurement.

The following table presents the fair value hierarchy of investments as of September 30, 2024:

	Fair Value Hierarchy as of September 30, 2024
Investments:	Level 1		Level 2		Level 3		Total
First-lien senior secured debt	$	—	$	1,209,941,742	$	—	$	1,209,941,742
Second-lien senior secured debt		—		85,944,690		—		85,944,690
Corporate Bonds		—		4,304,353		—		4,304,353
CLO Mezzanine		—		32,060,228		—		32,060,228
CLO Equity		—		10,944,702		—		10,944,702
Equity		—		1,258,157		—		1,258,157
Short Term Investments		45,347,272		—		—		45,347,272
Total Investments	$	45,347,272	$	1,344,453,872	$	—	$	1,389,801,144

The following table presents the fair value hierarchy of investments as of December 31, 2023:

	Fair Value Hierarchy as of December 31, 2023
Investments:	Level 1		Level 2		Level 3		Total
First-lien senior secured debt	$	—	$	952,100,626	$	—	$	952,100,626
Second-lien senior secured debt		—		55,989,218		—		55,989,218
Corporate Bonds		—		4,239,975		—		4,239,975
CLO Mezzanine		—		13,764,620		—		13,764,620
CLO Equity		—		18,953,309		—		18,953,309
Short Term Investments		63,763,005		—		—		63,763,005
Total Investments	$	63,763,005	$	1,045,047,748	$	—	$	1,108,810,753

For the nine months ended September 30, 2024 and the year ended December 31, 2023, the Company did not recognize any transfers to or from Level 3.

Debt Not Carried at Fair Value

The fair value of the BoA Credit Facility, WF Credit Facility and CLO Transaction, which would be categorized as Level 3 within the fair value hierarchy as of September 30, 2024, approximates their respective carrying values because the BoA Credit Facility, WF Credit Facility and CLO Transaction each have variable interest based on selected short-term rates.