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10-Q 1 cars_1q2022x10qxdocument.htm 10-Q Document

UNITED STATES

SECURITIES AND EXCHANGE COMMISSION

Washington, D.C. 20549

FORM 10-Q


x			QUARTERLY REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934

For the quarterly period ended March 31, 2022


o			TRANSITION REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934

For the transition period to

Commission File No. 814-01248

Carlyle Credit Solutions, Inc.

(Exact name of Registrant as specified in its charter)


Maryland						81-5320146
(State or other jurisdiction of incorporation or organization)						(I.R.S. Employer Identification Number)

One Vanderbilt Avenue, Suite 3400, New York, NY 10017						(212) 813-4900
(Address of principal executive office) (Zip Code)						(Registrant’s telephone number, including area code)

Not Applicable

(Former name, former address and former fiscal year, if changed since last report)

Securities registered pursuant to Section 12(b) of the Act:


Title of Each Class	Trading Symbol(s)	Name of Each Exchange on Which Registered
N/A	N/A	N/A

Indicate by check mark whether the registrant (1) has filed all reports required to be filed by Section 13 or 15(d) of the Securities Exchange Act of 1934 during the preceding 12 months (or for such shorter period that the registrant was required to file such reports), and (2) has been subject to such filing requirements for the past 90 days: Yes ☒ No ☐

Indicate by check mark whether the registrant has submitted electronically every Interactive Data File required to be submitted pursuant to Rule 405 of Regulation S-T (§232.405 of this chapter) during the preceding 12 months (or for such shorter period that the registrant was required to submit such files). Yes ☐ No ☐

Indicate by check mark whether the registrant is a large accelerated filer, an accelerated filer, a non-accelerated filer, a smaller reporting company, or an emerging growth company. See definitions of “large accelerated filer,” “accelerated filer,” “smaller reporting company,” and “emerging growth company” in Rule 12b-2 of the Exchange Act. (Check one):

Large accelerated filer

Accelerated filer

Non-accelerated filer

Smaller reporting company

Emerging growth company

If an emerging growth company, indicate by check mark if the registrant has elected not to use the extended transition period for complying with any new or revised financial accounting standards provided pursuant to Section 13(a) of the Exchange Act. x

Indicate by check mark whether the registrant is a shell company (as defined in Rule 12b-2 of the Exchange Act). Yes ☐ No x

The number of shares of the registrant’s common stock, $0.01 par value per share, outstanding at May 10, 2022 was 57,005,057.

CARLYLE CREDIT SOLUTIONS, INC.

INDEX



Part I.	Financial Information
Item 1.	Financial Statements
	Consolidated Statements of Assets and Liabilities as of March 31, 2022 (unaudited) and December 31, 2021	1
	Consolidated Statements of Operations for the three month periods ended March 31, 2022 (unaudited) and March 31, 2021 (unaudited)	2
	Consolidated Statements of Changes in Net Assets for the three month periods ended March 3 1 , 202 2 (unaudited) and March 3 1 , 202 1 (unaudited)	3
	Consolidated Statements of Cash Flows for the three month periods ended March 3 1 , 202 2 (unaudited) and March 3 1 , 202 1 (unaudited)	4
	Consolidated Schedules of Investments as of March 31, 2022 (unaudited) and December 31, 2021	5
	Notes to Consolidated Financial Statements (unaudited)	26
Item 2.	Management’s Discussion and Analysis of Financial Condition and Results of Operations	44
Item 3.	Quantitative and Qualitative Disclosures About Market Risk	59
Item 4.	Controls and Procedures	59
Part II.	Other Information
Item 1.	Legal Proceedings	61
Item 1A.	Risk Factors	61
Item 2.	Unregistered Sales of Equity Securities and Use of Proceeds	61
Item 3.	Defaults Upon Senior Securities	61
Item 4.	Mine Safety Disclosures	61
Item 5.	Other Information	61
Item 6.	Exhibits	61
	Signatures	62

CARLYLE CREDIT SOLUTIONS, INC.

CONSOLIDATED STATEMENTS OF ASSETS AND LIABILITIES

(dollar amounts in thousands, except per share data)


	March 31, 2022		December 31, 2021
ASSETS	(unaudited)
Investments—non-controlled/non-affiliated, at fair value (amortized cost of $1,980,691 and $2,070,975, respectively)	$	1,961,355	$	2,070,083
Cash, cash equivalents and restricted cash	65,771		65,838
Deferred financing costs	8,607		5,962
Receivable for investment sold/repaid	46,221		5,424

Interest receivable from non-controlled/non-affiliated investments	23,430		24,410
Prepaid expenses and other assets	1,674		1,427
Receivable for issuance of common stock	1,151		3,846
Total assets	$	2,108,209	$	2,176,990
LIABILITIES
Secured borrowings (Note 5)	$	889,297	$	966,947
Payable for investments purchased	18,834		93
Due to Investment Adviser	361		448
Interest and credit facility fees payable (Note 5)	5,494		5,576
Dividend payable (Note 7)	34,417		27,362
Management and incentive fees payable (Note 4)	7,720		7,763
Administrative service fees payable (Note 4)	494		239
Other accrued expenses and liabilities	2,390		2,321
Total liabilities	959,007		1,010,749
Commitments and contingencies (Notes 6 and 9)
NET ASSETS
Common stock, $0.01 par value; 200,000,000 shares authorized; 57,005,057 and 57,005,057 shares issued and outstanding at March 31, 2022 and December 31, 2021, respectively	570		570
Paid-in capital in excess of par value	1,160,819		1,160,819


Total distributable earnings (loss)	(12,187)		4,852
Total net assets	$	1,149,202	$	1,166,241
NET ASSETS PER SHARE	$	20.16	$	20.46

The accompanying notes are an integral part of these consolidated financial statements.

CARLYLE CREDIT SOLUTIONS, INC.

CONSOLIDATED STATEMENTS OF OPERATIONS

(dollar amounts in thousands, except per share data)

(unaudited)


	For the three month periods ended
	March 31, 2022		March 31, 2021
Investment income:
From non-controlled/non-affiliated investments:
Interest income	$	42,909	$	36,824
Other income	1,937		1,025
Total investment income from non-controlled/non-affiliated investments	44,846		37,849
Total investment income	44,846		37,849
Expenses:


Management fees (Note 4)	2,800		3,075
Net investment income incentive fees (Note 4)	4,917		4,126

Professional fees	1,172		385
Administrative service fees (Note 4)	314		154
Interest expense (Note 5)	6,198		5,861
Credit facility fees (Note 5)	704		358
Directors’ fees and expenses	95		59
Other general and administrative	670		429
Total expenses	16,870		14,447


Net investment income (loss)	27,976		23,402
Net realized gain (loss) and change in unrealized appreciation (depreciation):
Net realized gain (loss) on investments:
Non-controlled/non-affiliated investments	4,532		1,815
Currency gains (losses) on non-investment assets and liabilities	(1,338)		(42)
Net change in unrealized appreciation (depreciation) on investments:
Non-controlled/non-affiliated investments	(18,444)		12,159
Net change in unrealized currency gains (losses) on non-investment assets and liabilities	4,652		635
Net realized and unrealized gain (loss) on investments and non-investment assets and liabilities	(10,598)		14,567
Net increase (decrease) in net assets resulting from operations	$	17,378	$	37,969
Basic and diluted earnings per common share (Note 7)	$	0.30	$	0.77
Weighted-average shares of common stock outstanding—Basic and Diluted (Note 7)	57,005,057		49,062,820

The accompanying notes are an integral part of these consolidated financial statements.

CARLYLE CREDIT SOLUTIONS, INC.

CONSOLIDATED STATEMENTS OF CHANGES IN NET ASSETS

(dollar amounts in thousands)

(unaudited)


	For the three month period ended
	March 31, 2022		March 31, 2021
Increase (decrease) in net assets resulting from operations:
Net investment income (loss)	$	27,976	$	23,402
Net realized gain (loss) on investments and non-investment assets and liabilities	3,194		1,773
Net change in unrealized appreciation (depreciation) on investments and non-investment assets and liabilities	(13,792)		12,794
Net increase (decrease) in net assets resulting from operations	17,378		37,969
Capital transactions:
Common stock issued	—		—
Dividends declared (Note 10)	(34,417)		(23,550)
Net increase (decrease) in net assets resulting from capital share transactions	(34,417)		(23,550)
Net increase (decrease) in net assets	(17,039)		14,419
Net assets at beginning of period	1,166,241		963,136
Net assets at end of period	$	1,149,202	$	977,555

The accompanying notes are an integral part of these consolidated financial statements.

CARLYLE CREDIT SOLUTIONS, INC.

CONSOLIDATED STATEMENTS OF CASH FLOWS

(dollar amounts in thousands)

(unaudited)


	For the three month period ended
	March 31, 2022		March 31, 2021
Cash flows from operating activities:
Net increase (decrease) in net assets resulting from operations	$	17,378	$	37,969
Adjustments to reconcile net increase (decrease) in net assets resulting from operations to net cash provided by (used in) operating activities:
Amortization of deferred financing costs	403		285

Net accretion of discount on investments	(3,788)		(2,081)
Paid-in-kind interest	(2,382)		(1,616)
Net realized (gain) loss on investments	(4,532)		(1,773)
Net change in unrealized (appreciation) depreciation on investments	18,444		(12,159)
Net change in unrealized currency (gains) losses on non-investment assets and liabilities	(4,652)		(635)
Cost of investments purchased and change in payable for investments purchased	(42,508)		(101,515)
Proceeds from sales and repayments of investments and change in receivable for investments sold/repaid	121,438		97,249
Changes in operating assets:
Interest receivable	980		(530)
Prepaid expenses and other assets	(247)		1,566
Changes in operating liabilities:

Due to Investment Adviser	(87)		(7)
Interest and credit facility fees payable	(82)		(95)
Management and incentive fees payable	(43)		(233)
Administrative service fees payable	255		1

Other accrued expenses and liabilities	69		152
Net cash provided by (used in) operating activities	100,646		16,578
Cash flows from financing activities:
Proceeds from issuance of common stock, net of change in receivable for issuance of common stock	2,695		—
Borrowings on the Credit Facilities	35,164		31,612
Repayments of the Credit Facilities	(108,162)		(35,612)
Dividends paid in cash	(27,362)		(23,766)
Debt issuance costs paid	(3,048)		(470)

Net cash provided by (used in) financing activities	(100,713)		(28,236)
Net increase (decrease) in cash, cash equivalents and restricted cash	(67)		(11,658)
Cash, cash equivalents and restricted cash, beginning of period	65,838		50,217
Cash, cash equivalents and restricted cash, end of period	$	65,771	$	38,559
Supplemental disclosures:

Interest paid during the period	$	6,575	$	5,956
Dividends declared during the period	$	34,417	$	23,550

The accompanying notes are an integral part of these consolidated financial statements.

CARLYLE CREDIT SOLUTIONS, INC.

CONSOLIDATED SCHEDULE OF INVESTMENTS

As of March 31, 2022

(dollar amounts in thousands)

(unaudited)


Investments—non-controlled/non-affiliated (1)		Footnotes	Industry	Reference Rate & Spread (2)	Interest Rate (2)	Acquisition Date	Maturity Date	Par/ Principal Amount		Amortized Cost (4)		Fair Value (5)		Percentage of Net Assets
First Lien Debt (82.0% of fair value)
Advanced Web Technologies Holding Company	^+	(2)(3)(6)	Containers, Packaging & Glass	L + 5.75%	6.75%	12/17/2020	12/17/2026	$	17,229	$	16,899	$	17,301	1.51	%
Airnov, Inc.	^#	(2)(3)(6)	Containers, Packaging & Glass	L + 5.00%	6.00%	12/20/2019	12/19/2025	25,434		25,161		25,414		2.21
Allied Universal Holdco LLC	^	(2)(3)	Business Services	L + 4.25%	4.75%	2/17/2021	7/10/2026	496		499		488		0.04
American Physician Partners, LLC	+#	(2)(3)(6)	Healthcare & Pharmaceuticals	L + 8.75%, 1.50% PIK	10.75%	1/7/2019	4/8/2022	38,239		38,239		38,239		3.33
Analogic Corporation	^+#	(2)(3)(6)	Capital Equipment	L + 5.25%	6.25%	6/22/2018	6/22/2024	26,978		26,766		26,435		2.30
Applied Technical Services, LLC	^	(2)(3)(6)	Business Services	L + 5.75%	6.75%	12/29/2020	12/29/2026	529		519		529		0.05
Appriss Health, LLC	^+#	(2)(3)(6)	Healthcare & Pharmaceuticals	L + 7.25%	8.25%	5/6/2021	5/6/2027	44,444		43,613		43,624		3.80
Apptio, Inc.	^+#	(2)(3)(6)	Software	L + 7.25%	8.25%	1/10/2019	1/10/2025	36,488		36,085		36,488		3.18
Ascend Buyer, LLC	#	(2)(3)(6)	Containers, Packaging & Glass	L + 5.75%	6.50%	9/30/2021	9/30/2028	12,806		12,546		12,476		1.09
Associations, Inc.	^#	(2)(3)(6)	Construction & Building	L + 4.00%, 2.50% PIK	7.50%	7/2/2021	7/2/2027	12,609		12,496		12,281		1.07
Aurora Lux FinCo S.Á.R.L. (Luxembourg)	+#	(2)(3)(7)	Software	L + 6.00%	7.00%	12/24/2019	12/24/2026	36,750		36,079		33,351		2.90
Barnes & Noble, Inc.	+#	(2)(3)(10)	Retail	L + 6.50%	9.31%	8/7/2019	12/20/2026	28,570		27,696		28,214		2.46
BlueCat Networks, Inc. (Canada)	+	(2)(3)(7)	High Tech Industries	L + 6.25%	7.25%	10/30/2020	10/30/2026	22,878		22,497		23,053		2.01
BMS Holdings III Corp.	+#	(2)(3)	Construction & Building	L + 5.50%	6.50%	9/30/2019	9/30/2026	29,283		28,776		28,861		2.51
Bubbles Bidco S.P.A. (Italy)	^	(2)(3)(6)(7)	Consumer Goods: Non-Durable	L + 9.25% (100% PIK)	9.25%	10/20/2021	10/20/2028	€	4,700	5,307		4,996		0.43
Bubbles Bidco S.P.A. (Italy)	^	(2)(3)(6)(7)	Consumer Goods: Non-Durable	L + 6.25%	6.25%	10/20/2021	10/20/2028	€	—	—		(30)		—
Chartis Holding, LLC	^+#	(2)(3)(6)	Business Services	L + 5.50%	6.60%	5/1/2019	5/1/2025	39,064		38,582		38,927		3.39
Chemical Computing Group ULC (Canada)	^+	(2)(3)(6)(7)	Software	L + 4.50%	5.50%	8/30/2018	8/30/2024	14,341		14,271		14,173		1.23
Chudy Group, LLC	#	(2)(3)(6)	Healthcare & Pharmaceuticals	L + 5.75%	6.75%	6/30/2021	6/30/2027	823		810		828		0.07
CircusTrix Holdings, LLC	^+	(2)(3)	Hotel, Gaming & Leisure	L + 5.50%, 2.50% PIK	9.00%	2/2/2018	1/16/2024	10,570		10,536		9,720		0.85
CircusTrix Holdings, LLC	^	(2)(3)	Hotel, Gaming & Leisure	L + 5.50%, 2.50% PIK	9.00%	1/8/2021	7/16/2023	700		643		700		0.06
Cobblestone Intermediate Holdco LLC	#	(2)(3)	Consumer Services	L + 5.50%	6.50%	1/29/2020	1/29/2026	721		716		718		0.06
Comar Holding Company, LLC	+#	(2)(3)(6)	Containers, Packaging & Glass	L + 5.75%	6.75%	6/18/2018	6/18/2024	41,251		40,861		39,948		3.48
Cority Software Inc. (Canada)	^+#	(2)(3)(6)(7)	Software	L + 5.00%	6.00%	7/2/2019	7/2/2026	56,066		55,272		55,884		4.86
Cority Software Inc. (Canada)	#	(2)(3)(7)	Software	L + 7.00%	8.00%	9/3/2020	7/2/2026	1,874		1,830		1,890		0.16

CARLYLE CREDIT SOLUTIONS, INC.

CONSOLIDATED SCHEDULE OF INVESTMENTS (Continued)

As of March 31, 2022

(dollar amounts in thousands)

(unaudited)


Investments—non-controlled/non-affiliated (1)		Footnotes	Industry	Reference Rate & Spread (2)	Interest Rate (2)	Acquisition Date	Maturity Date	Par/ Principal Amount		Amortized Cost (4)		Fair Value (5)		Percentage of Net Assets
DCA Investment Holding LLC	+	(2)(3)(6)	Healthcare & Pharmaceuticals	SOFR + 6.00%	6.75%	3/11/2021	4/3/2028	$	11,499	$	11,343	$	11,337	0.99	%
Derm Growth Partners III, LLC	^	(2)(3)(9)	Healthcare & Pharmaceuticals	L + 6.25%	7.25%	2/15/2018	5/31/2022	16,139		14,730		11,879		1.03
Diligent Corporation	^	(2)(3)(6)	Telecommunications	L + 6.25%	7.25%	8/4/2020	8/4/2025	650		636		647		0.06
DTI Holdco, Inc.	#	(2)(3)	High Tech Industries	L + 4.75%	5.75%	12/18/2018	9/30/2023	1,928		1,885		1,896		0.17
Dwyer Instruments, Inc	#	(2)(3)(6)	Capital Equipment	L + 5.50%	6.50%	7/21/2021	7/21/2027	12,246		12,002		12,208		1.06
Ellkay, LLC	#	(2)(3)(6)	Healthcare & Pharmaceuticals	L + 5.75%	6.75%	9/14/2021	9/14/2027	14,214		13,918		13,883		1.21
EPS Nass Parent, Inc.	#	(2)(3)(6)	Utilities: Electric	L + 5.75%	6.75%	4/19/2021	4/19/2028	890		873		878		0.08
Ethos Veterinary Health LLC	+#	(2)(3)	Consumer Services	L + 4.75%	5.21%	5/17/2019	5/15/2026	10,701		10,637		10,701		0.93
Flagship Intermediate Holdco, LLC	^+	(2)(3)(6)(13)	Consumer Services	SOFR + 5.50%	6.50%	2/18/2022	2/18/2028	6,072		5,717		5,710		0.50
Greenhouse Software, Inc.	^+#	(2)(3)(6)	Software	L + 6.50%	7.50%	3/1/2021	3/1/2027	15,196		14,870		14,740		1.28
Hadrian Acquisition Limited (United Kingdom)	+	(2)(3)	Banking, Finance, Insurance & Real Estate	SONIA + 5.26%, 3.47% PIK	9.48%	2/28/2022	2/28/2029	£	7,130	9,280		8,851		0.77
Hadrian Acquisition Limited (United Kingdom)	+	(2)(3)(6)	Banking, Finance, Insurance & Real Estate	SONIA + 5.00%, 2.75% PIK	8.50%	2/28/2022	2/28/2029	£	206	165		256		0.02
Harbour Benefit Holdings, Inc.	+#	(2)(3)(6)	Business Services	L + 5.25%	6.25%	12/13/2017	12/13/2024	11,039		10,982		11,022		0.96
Heartland Home Services, Inc	+#	(2)(3)(6)	Consumer Services	L + 6.00%	7.00%	12/15/2020	12/15/2026	32,114		31,578		32,051		2.79
Heartland Home Services, Inc	^	(2)(3)(6)	Consumer Services	L + 5.75%	6.50%	2/10/2022	12/15/2026	—		(49)		(57)		(0.01)
Hercules Borrower LLC	^+	(2)(3)(6)	Environmental Industries	L + 6.50%	7.50%	12/14/2020	12/14/2026	18,636		18,216		18,806		1.64
Hoosier Intermediate, LLC	#	(2)(3)(6)	Healthcare & Pharmaceuticals	L + 5.50%	6.50%	11/15/2021	11/15/2028	16,479		16,119		16,188		1.41
iCIMS, Inc.	+#	(2)(3)	Software	L + 6.50%	7.50%	9/12/2018	9/12/2024	29,019		28,718		29,019		2.53
Individual FoodService Holdings, LLC	#	(2)(3)(6)	Wholesale	L + 6.25%	7.56%	2/21/2020	11/22/2025	20,038		19,731		20,028		1.74
Infront Luxembourg Finance S.À R.L. (Luxembourg)	+#	(2)(3)(7)	Hotel, Gaming & Leisure	L + 9.00%	9.00%	5/28/2021	5/28/2027	€	33,000	39,140		35,502		3.09
Integrity Marketing Acquisition, LLC	+#	(2)(3)	Banking, Finance, Insurance & Real Estate	L + 5.75%	6.75%	1/15/2020	8/27/2025	24,539		24,297		24,002		2.09
Integrity Marketing Acquisition, LLC	#	(2)(3)	Banking, Finance, Insurance & Real Estate	L + 5.50%	6.25%	8/7/2020	8/27/2025	7,893		7,829		7,692		0.67
Jeg's Automotive, LLC	#	(2)(3)(6)	Automotive	L + 5.75%	6.75%	12/22/2021	12/22/2027	15,339		14,956		15,048		1.31
K2 Insurance Services, LLC	^+#	(2)(3)(6)	Banking, Finance, Insurance & Real Estate	L + 5.00%	6.00%	7/3/2019	7/1/2026	25,242		24,908		25,208		2.19
Kaseya, Inc.	^+#	(2)(3)(6)	High Tech Industries	L + 5.50%, 1.00% PIK	7.50%	5/3/2019	5/3/2025	28,239		27,902		27,981		2.43

CARLYLE CREDIT SOLUTIONS, INC.

CONSOLIDATED SCHEDULE OF INVESTMENTS (Continued)

As of March 31, 2022

(dollar amounts in thousands)

(unaudited)


Investments—non-controlled/non-affiliated (1)		Footnotes	Industry	Reference Rate & Spread (2)	Interest Rate (2)	Acquisition Date	Maturity Date	Par/ Principal Amount		Amortized Cost (4)		Fair Value (5)		Percentage of Net Assets
Lifelong Learner Holdings, LLC	^+#	(2)(3)(6)	Business Services	L + 5.75%	6.75%	10/18/2019	10/18/2026	52,298		51,576		48,213		4.20
LinQuest Corporation	#	(2)(3)	Aerospace & Defense	L + 5.75%	6.50%	7/28/2021	7/28/2028	$	9,950	$	9,766	$	9,701	0.84	%
Liqui-Box Holdings, Inc.	#	(2)(3)(6)	Containers, Packaging & Glass	L + 4.50%	5.50%	6/3/2019	6/3/2024	1,504		1,489		1,240		0.11
LVF Holdings, Inc.	^+#	(2)(3)(6)	Beverage, Food & Tobacco	L + 6.25%	7.82%	6/10/2021	6/10/2027	41,478		40,644		39,315		3.42
Material Holdings, LLC	#	(2)(3)(6)	Business Services	L + 5.75%	6.75%	8/19/2021	8/19/2027	15,003		14,683		14,472		1.26
Maverick Acquisition, Inc.	^+#	(2)(3)(6)	Aerospace & Defense	L + 6.00%	7.00%	6/1/2021	6/1/2027	43,852		42,972		41,767		3.63
Medical Manufacturing Technologies, LLC	#	(2)(3)(6)(13)	Healthcare & Pharmaceuticals	SOFR + 6.00%	7.00%	12/23/2021	12/23/2027	10,738		10,438		10,507		0.91
MMIT Holdings, LLC	#	(2)(3)(6)	High Tech Industries	L + 6.25%	7.25%	9/15/2021	9/15/2027	10,937		10,717		10,697		0.93
NES Global Talent Finance US, LLC (United Kingdom)	+#	(2)(3)(7)	Energy: Oil & Gas	L + 5.50%	6.50%	5/9/2018	5/11/2023	9,662		9,618		9,414		0.82
Performance Health Holdings, Inc.	#	(2)(3)	Healthcare & Pharmaceuticals	L + 6.00%	7.00%	7/12/2021	7/12/2027	6,444		6,328		6,286		0.55
PF Atlantic Holdco 2, LLC	^#	(2)(3)(6)	Hotel, Gaming & Leisure	L + 6.00%	7.00%	11/12/2021	11/12/2027	27,654		26,900		27,037		2.35
PF Growth Partners, LLC	+	(2)(3)	Hotel, Gaming & Leisure	L + 5.00%	6.00%	7/1/2019	7/11/2025	8,019		7,946		7,885		0.69
Prophix Software Inc. (Canada)	^+	(2)(3)(6)(7)	Software	L + 6.50%	7.50%	2/1/2021	2/1/2026	14,618		14,324		14,791		1.29
PXO Holdings I Corp.	^+	(2)(3)(6)(13)	Chemicals, Plastics & Rubber	SOFR + 5.50%	6.25%	3/8/2022	3/8/2028	7,395		7,202		7,201		0.63
Quantic Electronics, LLC	#	(2)(3)(6)	Aerospace & Defense	L + 6.00%	7.00%	11/19/2020	11/19/2026	14,588		14,308		14,248		1.24
Quantic Electronics, LLC	#	(2)(3)(6)	Aerospace & Defense	L + 6.00%	7.00%	3/1/2021	3/1/2027	8,860		8,650		8,604		0.75
Redwood Services Group, LLC	+#	(2)(3)	High Tech Industries	L + 6.00%	7.00%	11/13/2018	6/6/2024	40,769		40,355		40,388		3.51
Regency Entertainment, Inc.	+#	(2)(3)	Media: Diversified & Production	L + 6.75%	7.75%	5/22/2020	10/22/2025	70,000		69,007		69,006		6.00
Riveron Acquisition Holdings, Inc.	+#	(2)(3)	Banking, Finance, Insurance & Real Estate	L + 5.75%	6.75%	5/22/2019	5/22/2025	19,524		19,303		19,524		1.70
RSC Acquisition, Inc.	+#	(2)(3)(6)	Banking, Finance, Insurance & Real Estate	L + 5.50%	6.28%	11/1/2019	11/1/2026	33,813		33,322		32,675		2.84
Sapphire Convention, Inc.	^+#	(2)(3)(6)	Telecommunications	L + 6.25%	7.25%	11/20/2018	11/20/2025	29,803		29,449		25,461		2.22
Smarsh Inc.	^+	(2)(3)(6)	Software	SOFR + 6.50%	7.25%	2/18/2022	2/18/2029	3,265		3,181		3,180		0.28
SPay, Inc.	^+	(2)(3)	Hotel, Gaming & Leisure	L + 2.30%, 6.95% PIK	10.25%	6/15/2018	6/17/2024	23,440		23,269		20,445		1.78
Speedstar Holding, LLC	+#	(2)(3)(6)	Automotive	L + 7.00%	8.00%	1/22/2021	1/22/2027	27,157		26,641		27,164		2.36
Tank Holding Corp.	^+	(2)(3)(6)(13)	Capital Equipment	SOFR + 6.00%	6.75%	3/31/2022	3/31/2028	18,966		18,569		18,569		1.62
TCFI Aevex LLC	+#	(2)(3)(6)	Aerospace & Defense	L + 6.00%	7.00%	3/18/2020	3/18/2026	28,778		28,351		24,008		2.09
Trafigura Trading LLC	^	(2)(3)(6)(12)	Metals & Mining	L + 8.40%	9.37%	7/26/2021	7/18/2022	4,174		4,213		4,207		0.37

CARLYLE CREDIT SOLUTIONS, INC.

CONSOLIDATED SCHEDULE OF INVESTMENTS (Continued)

As of March 31, 2022

(dollar amounts in thousands)

(unaudited)


Investments—non-controlled/non-affiliated (1)		Footnotes	Industry	Reference Rate & Spread (2)	Interest Rate (2)	Acquisition Date	Maturity Date	Par/ Principal Amount		Amortized Cost (4)		Fair Value (5)		Percentage of Net Assets
Turbo Buyer, Inc.	+#	(2)(3)(6)	Automotive	L + 6.00%	7.00%	12/2/2019	12/2/2025	42,320		41,590		41,636		3.62
Unifrutti Financing PLC (Cyprus)	+	(7)	Beverage, Food & Tobacco	7.50%, 1.00% PIK	8.50%	9/15/2019	9/15/2026	€	18,629	19,835		20,608		1.79	%
Unifrutti Financing PLC (Cyprus)	^	(7)	Beverage, Food & Tobacco	11.00% PIK	11.00%	10/22/2020	9/15/2026	€	3,119	3,537		3,658		0.32
US INFRA SVCS Buyer, LLC	+#	(2)(3)(6)	Environmental Industries	L + 6.50%	7.50%	4/13/2020	4/13/2026	$	59,094	58,112		57,028		4.96
USALCO, LLC	#	(2)(3)	Chemicals, Plastics & Rubber	L + 6.00%	7.00%	10/19/2021	10/19/2027	998		979		967		0.08
U.S. Legal Support, Inc.	^+	(2)(3)(6)(13)	Business Services	SOFR + 5.75%	6.75%	11/30/2018	11/30/2024	21,836		21,615		21,383		1.86
Westfall Technik, Inc.	^+#	(2)(3)	Chemicals, Plastics & Rubber	L + 5.75%	6.75%	9/13/2018	9/13/2024	27,832		27,605		27,386		2.38
Westfall Technik, Inc.	#	(2)(3)	Chemicals, Plastics & Rubber	L + 6.25%	7.25%	7/1/2021	9/13/2024	4,945		4,857		4,888		0.43
Wineshipping.com LLC	#	(2)(3)(6)	Beverage, Food & Tobacco	L + 5.75%	6.75%	10/29/2021	10/29/2027	14,425		14,089		14,074		1.22
Yellowstone Buyer Acquisition, LLC	^	(2)(3)	Consumer Goods: Durable	L + 5.75%	6.75%	9/13/2021	9/13/2027	448		439		435		0.04
YLG Holdings, Inc.	+	(2)(3)	Consumer Services	L + 5.25%	6.32%	9/30/2020	11/1/2025	9,877		9,637		9,877		0.86




First Lien Debt Total										$	1,632,598	$	1,607,929	139.94	%
Second Lien Debt (15.0% of fair value)
11852604 Canada Inc. (Canada)	^	(2)(3)(7)	Healthcare & Pharmaceuticals	L + 9.50% (100% PIK)	10.50%	9/30/2021	9/30/2028	$	6,767	$	6,616	$	6,597	0.57	%
AI Convoy S.A.R.L (United Kingdom)	+#	(2)(3)(7)	Aerospace & Defense	L + 8.25%	9.25%	1/17/2020	1/17/2028	30,327		29,788		31,540		2.74
Aimbridge Acquisition Co., Inc.	+	(2)(3)	Hotel, Gaming & Leisure	L + 7.50%	7.73%	2/1/2019	2/1/2027	21,047		20,663		19,530		1.70
AP Plastics Acquisition Holdings, LLC	+#	(2)(3)	Chemicals, Plastics & Rubber	L + 7.50%	8.25%	8/10/2021	8/10/2029	38,180		37,192		38,218		3.33
AQA Acquisition Holdings, Inc.	+	(2)(3)	High Tech Industries	L + 7.50%	8.50%	5/14/2021	3/3/2029	5,538		5,412		5,534		0.48
Blackbird Purchaser, Inc.	^+	(2)(3)(6)	Capital Equipment	L + 7.50%	8.25%	12/14/2021	4/8/2027	9,194		8,961		8,739		0.76
Brave Parent Holdings, Inc.	+	(2)(3)	Software	L + 7.50%	7.96%	10/3/2018	4/19/2026	18,197		17,937		18,197		1.58
Drilling Info Holdings, Inc.	^	(2)(3)	Energy: Oil & Gas	L + 8.25%	8.71%	2/11/2020	7/30/2026	18,600		18,229		18,786		1.63
Jazz Acquisition, Inc.	+	(2)(3)	Aerospace & Defense	L + 8.00%	8.46%	6/13/2019	6/18/2027	23,450		23,198		20,947		1.82
Outcomes Group Holdings, Inc.	#	(2)(3)	Business Services	L + 7.50%	7.85%	10/23/2018	10/26/2026	1,731		1,728		1,731		0.15
PAI Holdco, Inc.	+	(2)(3)	Automotive	L + 5.50%, 2.00% PIK	8.50%	10/28/2020	10/28/2028	13,878		13,529		13,945		1.21
Peraton Corp.	+	(2)(3)	Aerospace & Defense	L + 7.75%	8.50%	2/24/2021	2/1/2029	11,941		11,777		11,798		1.03
Quartz Holding Company	+	(2)(3)	Software	L + 8.00%	8.46%	4/2/2019	4/2/2027	11,900		11,734		11,900		1.04

CARLYLE CREDIT SOLUTIONS, INC.

CONSOLIDATED SCHEDULE OF INVESTMENTS (Continued)

As of March 31, 2022

(dollar amounts in thousands)

(unaudited)


Investments—non-controlled/non-affiliated (1)		Footnotes	Industry	Reference Rate & Spread (2)	Interest Rate (2)	Acquisition Date	Maturity Date	Par/ Principal Amount		Amortized Cost (4)		Fair Value (5)		Percentage of Net Assets
Stonegate Pub Company Bidco Limited (United Kingdom)	^	(2)(3)(7)	Beverage, Food & Tobacco	SONIA + 8.50%	9.19%	3/12/2020	3/12/2028	€	20,000	24,802		22,445		1.95
TruGreen Limited Partnership	+	(2)(3)	Consumer Services	L + 8.50%	9.25%	11/16/2020	11/2/2028	$	13,000	$	12,775	$	13,089	1.14	%
World 50, Inc.	#	(11)	Business Services	11.50%	11.50%	1/10/2020	1/9/2027	24,017		23,610		23,022		2.00
WP CPP Holdings, LLC	+	(2)(3)	Aerospace & Defense	L + 7.75%	8.75%	7/18/2019	4/30/2026	29,500		29,303		28,659		2.49


Second Lien Debt Total										$	297,254	$	294,677	25.62	%


Investments—non-controlled/non-affiliated (1)		Footnotes	Industry	Acquisition Date	Shares/ Units	Cost		Fair Value (5)		Percentage of Net Assets
Equity Investments (3.0% of fair value)
ANLG Holdings, LLC	^	(8)	Capital Equipment	6/22/2018	592	$	592	$	729	0.06	%
Appriss Health, LLC	^	(8)	Healthcare & Pharmaceuticals	5/6/2021	—	457		458		0.04
Atlas Ontario LP (Canada)	^	(8)(7)	Business Services	4/7/2021	5,114	5,114		5,114		0.45
Avenu Holdings, LLC	^	(8)	Sovereign & Public Finance	9/28/2018	172	172		558		0.05
Blackbird Holdco, Inc.	^	(8)	Capital Equipment	12/14/2021	7	6,542		6,548		0.57
Buckeye Parent, LLC	^	(8)	Automotive	12/22/2021	442	442		442		0.04
Chartis Holding, LLC	^	(8)	Business Services	5/1/2019	433	433		683		0.06
Cority Software Inc. (Canada)	^	(8)	Software	7/2/2019	250	250		579		0.05
ECP Parent, LLC	^	(8)	Healthcare & Pharmaceuticals	3/29/2018	268	—		290		0.03
GB Vino Parent, L.P.	^	(8)	Beverage, Food & Tobacco	10/29/2021	4	351		351		0.03
Integrity Marketing Group, LLC	^	(8)	Banking, Finance, Insurance & Real Estate	12/21/2021	15,425	15,125		15,173		1.32
K2 Insurance Services, LLC	^	(8)	Banking, Finance, Insurance & Real Estate	7/3/2019	433	306		690		0.06
Mailgun Technologies, Inc.	^	(8)	High Tech Industries	3/26/2019	51	—		367		0.03
North Haven Goldfinch Topco, LLC	^	(8)	Containers, Packaging & Glass	6/18/2018	2,315	2,315		1,881		0.16
Pascal Ultimate Holdings, L.P	^	(8)	Capital Equipment	7/21/2021	36	363		363		0.03
Profile Holdings I, LP	^	(8)	Chemicals, Plastics & Rubber	3/8/2022	3	262		262		0.02
Sinch AB (Sweden)	^	(8)	High Tech Industries	3/26/2019	53	kr	594	364		0.03
Tank Holding Corp.	^	(8)	Capital Equipment	3/26/2019	850	—		1,982		0.17
Titan DI Preferred Holdings, Inc.	^	(8)	Energy: Oil & Gas	2/11/2020	13,270	13,021		13,403		1.17
Turbo Buyer, Inc.	^	(8)	Automotive	12/2/2019	1,925	933		2,872		0.25
Unifrutti Financing PLC (Cyprus)	^	(8)	Beverage, Food & Tobacco	10/22/2020	2	€	1,984	2,670		0.23
Unifrutti Financing PLC (Cyprus)	^	(8)	Beverage, Food & Tobacco	10/22/2020	1	€	532	873		0.08

CARLYLE CREDIT SOLUTIONS, INC.

CONSOLIDATED SCHEDULE OF INVESTMENTS (Continued)

As of March 31, 2022

(dollar amounts in thousands)

(unaudited)


Investments—non-controlled/non-affiliated (1)		Footnotes	Industry	Acquisition Date	Shares/ Units	Cost		Fair Value (5)		Percentage of Net Assets
U.S. Legal Support Investment Holdings, LLC	^	(8)	Business Services	11/30/2018	641	641		942		0.08
W50 Parent LLC	^	(8)	Business Services	1/10/2020	500	190		752		0.07
Zenith American Holding, Inc.	^	(8)	Business Services	12/13/2017	440	$	220	$	403	0.04	%

Equity Investments Total						$	50,839	$	58,749	5.12	%
Total investments—non-controlled/non-affiliated						$	1,980,691	$	1,961,355	170.68	%
Total investments						$	1,980,691	$	1,961,355	170.68	%

^ Denotes that all or a portion of the assets are owned by Carlyle Credit Solutions, Inc. (together with its consolidated subsidiaries, “we,” “us,” “our,” “CARS” or the “Company”). Accordingly, such assets are not available to creditors of Carlyle Credit Solutions SPV LLC (the “SPV”) or Carlyle Credit Solutions SPV2 LLC ("SPV2").

+ Denotes that all or a portion of the assets are owned by the Company's wholly owned subsidiary, the SPV. The SPV has entered into a senior secured revolving credit facility (as amended, the “SPV Credit Facility”). The lenders of the SPV Credit Facility have a first lien security interest in substantially all of the assets of the SPV (see Note 5, Borrowings, to these consolidated financial statements). Accordingly, such assets are not available to creditors of the Company or SPV2.

# Denotes that all or a portion of the assets are owned by the Company's wholly owned subsidiary, SPV2. SPV2 has entered into a senior secured revolving credit facility (as amended, the “SPV2 Credit Facility”). The lenders of the SPV2 Credit Facility have a first lien security interest in substantially all of the assets of SPV2 (see Note 5, Borrowings, to these consolidated financial statements). Accordingly, such assets are not available to creditors of the Company or the SPV.

(1) Unless otherwise indicated, issuers of debt and equity investments held by the Company are domiciled in the United States. Under the Investment Company Act of 1940, as amended (together with the rules and regulations promulgated thereunder, the “Investment Company Act”), the Company would be deemed to “control” a portfolio company if the Company owned more than 25% of its outstanding voting securities and/or held the power to exercise control over the management or policies of the portfolio company. As of March 31, 2022, the Company does not “control” any of these portfolio companies. Under the Investment Company Act, the Company would be deemed an “affiliated person” of a portfolio company if the Company owns 5% or more of the portfolio company’s outstanding voting securities. As of March 31, 2022, the Company is not an “affiliated person” of any of these portfolio companies. Certain portfolio company investments are subject to contractual restrictions on sales.

(2)Variable rate loans to the portfolio companies bear interest at a rate that is determined by reference to either LIBOR (“L”), the Secured Overnight Financing Rate ("SOFR") or an alternate base rate (commonly based on the Federal Funds Rate or the U.S. Prime Rate), which generally resets quarterly. For each such loan, the Company has indicated the reference rate used and provided the spread and the interest rate in effect as of March 31, 2022. As of March 31, 2022, the reference rates for our variable rate loans were the 30-day LIBOR at 0.45%, the 90-day LIBOR at 0.96%, the 180-day LIBOR rate at 1.47%, the 30-day SOFR at 0.30%, and the 90-day SOFR at 0.68%.

(3)Loan includes interest rate floor feature, generally 1.00%.

(4)Amortized cost represents original cost, including origination fees and upfront fees received that are deemed to be an adjustment to yield, adjusted for the accretion/amortization of discounts/premiums, as applicable, on debt investments using the effective interest method.

(5)Fair value is determined in good faith by or under the direction of the Board of Directors of the Company (see Note 2, Significant Accounting Policies, and Note 3, Fair Value Measurements, to these consolidated financial statements), pursuant to the Company’s valuation policy. The fair value of all first lien and second lien debt investments and equity investments was determined using significant unobservable inputs.

(6)As of March 31, 2022, the Company had the following unfunded commitments to fund delayed draw and revolving senior secured loans:


Investments—non-controlled/non-affiliated	Type	Unused Fee		Par/ Principal Amount		Fair Value
First and Second Lien Debt—unfunded delayed draw and revolving term loans commitments
Advanced Web Technologies Holding Company	Delayed Draw	1.00	%	$	1,000	$	4
Advanced Web Technologies Holding Company	Revolver	0.50		1,708		6
Airnov, Inc.	Revolver	0.50		2,292		(2)
American Physician Partners, LLC	Revolver	0.50		550		—
Analogic Corporation	Revolver	0.50		735		(14)
Applied Technical Services, LLC	Revolver	0.50		45		—

CARLYLE CREDIT SOLUTIONS, INC.

CONSOLIDATED SCHEDULE OF INVESTMENTS (Continued)

As of March 31, 2022

(dollar amounts in thousands)

(unaudited)


Investments—non-controlled/non-affiliated	Type	Unused Fee	Par/ Principal Amount		Fair Value
Appriss Health, LLC	Revolver	0.50	$	2,963	$	(51)
Apptio, Inc.	Revolver	0.50	1,420		—
Ascend Buyer, LLC	Revolver	0.50	1,070		(25)
Associations, Inc.	Revolver	0.50	723		(18)
Blackbird Purchaser, Inc.	Delayed Draw	1.00	3,065		(114)
Bubbles Bidco S.P.A. (Italy)	Delayed Draw	2.80	€	873	(24)
Bubbles Bidco S.P.A. (Italy)	Revolver	—	€	537	(7)
Chartis Holding, LLC	Revolver	0.50	2,401		(8)
Chemical Computing Group ULC (Canada)	Revolver	0.50	903		(10)
Chudy Group, LLC	Delayed Draw	1.00	138		1
Chudy Group, LLC	Revolver	0.50	34		—
Comar Holding Company, LLC	Revolver	0.50	2,935		(87)
Cority Software Inc. (Canada)	Revolver	0.50	3,000		(9)
DCA Investment Holding LLC	Delayed Draw	1.00	809		(11)
Diligent Corporation	Revolver	0.50	47		—
Dwyer Instruments, Inc	Delayed Draw	1.00	1,003		(3)
Dwyer Instruments, Inc	Revolver	0.50	599		(2)
Ellkay, LLC	Revolver	0.50	1,786		(37)
EPS Nass Parent, Inc.	Delayed Draw	1.00	85		(1)
EPS Nass Parent, Inc.	Revolver	0.50	20		—
Flagship Intermediate Holdco, LLC	Delayed Draw	1.00	12,000		(240)
Greenhouse Software, Inc.	Revolver	0.50	1,471		(40)
Hadrian Acquisition Limited (United Kingdom)	Delayed Draw	2.30	£	2,608	(60)
Harbour Benefit Holdings, Inc.	Revolver	0.50	1,219		(2)
Heartland Home Services, Inc	Delayed Draw	—	5,145		(58)
Heartland Home Services, Inc	Delayed Draw	1.00	91		—
Heartland Home Services, Inc	Revolver	0.50	2,570		(5)
Hercules Borrower LLC	Revolver	0.50	1,929		16
Hoosier Intermediate, LLC	Revolver	0.50	2,400		(37)
Individual FoodService Holdings, LLC	Revolver	0.50	2,087		—
Jeg's Automotive, LLC	Delayed Draw	1.00	3,333		(48)
Jeg's Automotive, LLC	Revolver	0.50	1,292		(19)
K2 Insurance Services, LLC	Revolver	0.50	2,290		(3)
Kaseya, Inc.	Delayed Draw	1.00	484		(4)
Kaseya, Inc.	Revolver	0.50	1,543		(13)
Lifelong Learner Holdings, LLC	Revolver	0.50	4		—

CARLYLE CREDIT SOLUTIONS, INC.

CONSOLIDATED SCHEDULE OF INVESTMENTS (Continued)

As of March 31, 2022

(dollar amounts in thousands)

(unaudited)


Investments—non-controlled/non-affiliated	Type	Unused Fee	Par/ Principal Amount		Fair Value
Liqui-Box Holdings, Inc.	Revolver	0.50	$	1,126	$	(113)
LVF Holdings, Inc.	Delayed Draw	1.00	4,670		(214)
LVF Holdings, Inc.	Revolver	0.50	1,109		(51)
Material Holdings, LLC	Delayed Draw	—	1,916		(58)
Material Holdings, LLC	Revolver	1.00	652		(20)
Maverick Acquisition, Inc.	Delayed Draw	1.00	4,679		(196)
Maverick Acquisition, Inc.	Delayed Draw	1.00	1,290		(54)
Medical Manufacturing Technologies, LLC	Delayed Draw	1.00	4,132		(61)
Medical Manufacturing Technologies, LLC	Revolver	0.50	806		(12)
MMIT Holdings, LLC	Revolver	0.50	980		(20)
PF Atlantic HoldCo 2, LLC	Delayed Draw	0.80	9,517		(147)
PF Atlantic HoldCo 2, LLC	Revolver	0.50	2,759		(43)
Prophix Software Inc. (Canada)	Revolver	0.50	2,658		27
PXO Holdings I Corp.	Delayed Draw	1.00	1,643		(33)
PXO Holdings I Corp.	Revolver	0.50	657		(13)
Quantic Electronics, LLC	Delayed Draw	1.00	3,164		(67)
Quantic Electronics, LLC	Revolver	0.50	557		(12)
Quantic Electronics, LLC	Revolver	0.50	824		(18)
RSC Acquisition, Inc.	Revolver	0.50	1,096		(36)
Sapphire Convention, Inc.	Revolver	0.50	2,652		(355)
Smarsh Inc.	Delayed Draw	1.00	816		(16)
Smarsh Inc.	Revolver	0.50	204		(4)
Speedstar Holding, LLC	Delayed Draw	1.00	3,775		1
Tank Holding Corp.	Revolver	0.50	828		(17)
TCFI Aevex LLC	Delayed Draw	1.00	521		(84)
TCFI Aevex LLC	Delayed Draw	1.00	417		(67)
Trafigura Trading LLC	Revolver	0.50	5,722		(43)
Turbo Buyer, Inc.	Revolver	0.50	2,151		(33)
US INFRA SVCS Buyer, LLC	Delayed Draw	1.00	9,972		(298)
U.S. Legal Support, Inc.	Revolver	0.50	757		(15)
Wineshipping.com LLC	Delayed Draw	1.00	1,986		(39)
Wineshipping.com LLC	Revolver	0.50	1,430		(28)
Total unfunded commitments			$	147,645	$	(3,064)

(7)The Company has determined the indicated investments are non-qualifying assets under Section 55(a) of the Investment Company Act. Under the Investment Company Act, the Company may not acquire any non-qualifying assets unless, at the time such acquisition is made, qualifying assets represent at least 70% of the Company’s total assets.

(8)Security acquired in transaction exempt from registration under the Securities Act of 1933, as amended (the “Securities Act”), and may be deemed to be “restricted securities” under the Securities Act, unless otherwise noted. As of March 31, 2022, the aggregate fair value of these securities is $58,749, or 5.12% of the Company's net assets.

CARLYLE CREDIT SOLUTIONS, INC.

CONSOLIDATED SCHEDULE OF INVESTMENTS (Continued)

As of March 31, 2022

(dollar amounts in thousands)

(unaudited)

(9)Loan was on non-accrual status as of March 31, 2022.

(10)In addition to the interest earned based on the stated interest rate of this loan, which is the amount reflected in this schedule, the Company is entitled to receive additional interest as a result of an agreement among lenders. Pursuant to the agreement among lenders in respect of this loan, this investment represents a first lien/last out loan, which has a secondary priority behind the first lien/first out loan with respect to principal, interest and other payments.

(11)Represents a corporate mezzanine loan, which is subordinated to senior secured term loans of the portfolio company.

(12)The investment is secured by receivables purchased from the portfolio company, with an implied discount of 9.37%. The investment was made via a tranched participation arrangement between the purchaser of such receivables and the Company. The investment has a secondary priority behind the rights of such purchaser.

(13)Loans include a credit spread adjustment that ranges from 0.10% to 0.43%.

As of March 31, 2022, investments at fair value consisted of the following:


Type	Amortized Cost		Fair Value		% of Fair Value


First Lien Debt	$	1,632,598	$	1,607,929	82.0	%
Second Lien Debt	297,254		294,677		15.0
Equity Investments	50,839		58,749		3.0
Total	$	1,980,691	$	1,961,355	100.0	%

The rate type of debt investments at fair value as of March 31, 2022 was as follows:


Rate Type	Amortized Cost		Fair Value		% of Fair Value of First and Second Lien Debt
Floating Rate	1,882,870		1,855,318		97.5	%
Fixed Rate	46,982		47,288		2.5	%
Total	$	1,929,852	$	1,902,606	100.0	%

CARLYLE CREDIT SOLUTIONS, INC.

CONSOLIDATED SCHEDULE OF INVESTMENTS (Continued)

As of March 31, 2022

(dollar amounts in thousands)

(unaudited)

The industry composition of investments at fair value as of March 31, 2022 was as follows:


Industry	Amortized Cost		Fair Value		% of Fair Value
Aerospace & Defense	$	198,113	$	191,272	9.8	%
Automotive	98,091		101,107		5.2
Banking, Finance, Insurance & Real Estate	134,535		134,071		6.9
Beverage, Food & Tobacco	105,774		103,994		5.3
Business Services	170,392		167,681		8.5
Capital Equipment	73,795		75,573		3.9
Chemicals, Plastics & Rubber	78,097		78,922		4.0
Construction & Building	41,272		41,142		2.1
Consumer Goods: Durable	439		435		—
Consumer Goods: Non-Durable	5,307		4,966		0.3
Consumer Services	71,011		72,089		3.7
Containers, Packaging & Glass	99,271		98,260		5.0
Energy: Oil & Gas	40,868		41,603		2.1
Environmental Industries	76,328		75,834		3.9
Healthcare & Pharmaceuticals	162,611		160,116		8.2
High Tech Industries	109,362		110,280		5.6
Hotel, Gaming & Leisure	129,097		120,819		6.2

Media: Diversified & Production	69,007		69,006		3.5
Metals & Mining	4,213		4,207		0.2
Retail	27,696		28,214		1.4
Software	234,551		234,192		11.9
Sovereign & Public Finance	172		558		—
Telecommunications	30,085		26,108		1.3

Utilities: Electric	873		878		—
Wholesale	19,731		20,028		1.0
Total	$	1,980,691	$	1,961,355	100.0	%

CARLYLE CREDIT SOLUTIONS, INC.

CONSOLIDATED SCHEDULE OF INVESTMENTS (Continued)

As of March 31, 2022

(dollar amounts in thousands)

(unaudited)

The geographical composition of investments at fair value as of March 31, 2022 was as follows:


Geography	Amortized Cost		Fair Value		% of Fair Value
Canada	120,174		122,081		6.2	%
Cyprus	25,888		27,809		1.4
Italy	5,307		4,966		0.3

Luxembourg	75,219		68,853		3.5
Sweden	594		364		—
United Kingdom	73,653		72,506		3.7
United States	1,679,856		1,664,776		84.9
Total	$	1,980,691	$	1,961,355	100.0	%

The accompanying notes are an integral part of these consolidated financial statements.

CARLYLE CREDIT SOLUTIONS, INC.

CONSOLIDATED SCHEDULE OF INVESTMENTS

As of December 31, 2021

(dollar amounts in thousands)


Investments—non-controlled/non-affiliated (1)		Footnotes	Industry	Reference Rate & Spread (2)	Interest Rate (2)	Acquisition Date	Maturity Date	Par/ Principal Amount		Amortized Cost (4)		Fair Value (5)		Percentage of Net Assets
First Lien Debt (80.9% of fair value)
Advanced Web Technologies Holding Company	^+	(2)(3)(6)	Containers, Packaging & Glass	L + 5.75%	6.75%	12/17/2020	12/17/2026	$	14,357	$	14,014	$	14,555	1.25	%
Airnov, Inc.	^#	(2)(3)(6)	Containers, Packaging & Glass	L + 5.00%	6.00%	12/20/2019	12/19/2025	24,869		24,578		24,869		2.13
Allied Universal Holdco LLC	^	(2)(3)	Business Services	L + 4.25%	4.46%	2/17/2021	7/10/2026	497		500		498		0.04
American Physician Partners, LLC	+#	(2)(3)(6)	Healthcare & Pharmaceuticals	L + 6.75%, 1.50% PIK	9.25%	1/7/2019	2/21/2022	38,097		38,093		38,097		3.27
Analogic Corporation	^+#	(2)(3)(6)	Capital Equipment	L + 5.25%	6.25%	6/22/2018	6/22/2024	26,675		26,441		26,395		2.26
Applied Technical Services, LLC	^	(2)(3)(6)	Business Services	L + 5.75%	6.75%	12/29/2020	12/29/2026	536		525		534		0.05
Appriss Health, LLC	^+#	(2)(3)(6)	Healthcare & Pharmaceuticals	L + 7.25%	8.25%	5/6/2021	5/6/2027	44,444		43,581		44,493		3.82
Apptio, Inc.	^+#	(2)(3)(6)	Software	L + 7.25%	8.25%	1/10/2019	1/10/2025	36,488		36,053		36,488		3.13
Ascend Buyer, LLC	#	(2)(3)(6)	Containers, Packaging & Glass	L + 5.75%	6.50%	9/30/2021	9/30/2028	12,838		12,569		12,618		1.08
Associations, Inc.	#	(2)(3)(6)	Construction & Building	L + 4.00%, 2.50% PIK	7.50%	7/2/2021	7/2/2027	11,570		11,457		11,599		0.99
Aurora Lux FinCo S.Á.R.L. (Luxembourg)	+#	(2)(3)(7)	Software	L + 6.00%	7.00%	12/24/2019	12/24/2026	36,844		36,142		33,192		2.85
Avenu Holdings, LLC	+#	(2)(3)	Sovereign & Public Finance	L + 5.25%	6.25%	9/28/2018	9/28/2024	37,882		37,621		37,880		3.25
Barnes & Noble, Inc.	+#	(2)(3)(10)	Retail	L + 6.50%	7.50%	8/7/2019	12/20/2026	28,933		27,917		28,146		2.41
BlueCat Networks, Inc. (Canada)	+	(2)(3)(7)	High Tech Industries	L + 6.25%	7.25%	10/30/2020	10/30/2026	22,936		22,540		23,165		1.99
BMS Holdings III Corp.	+#	(2)(3)	Construction & Building	L + 5.50%	6.50%	9/30/2019	9/30/2026	29,357		28,826		28,906		2.48
Bubbles Bidco S.P.A. (Italy)	^	(2)(3)(7)(6)	Consumer Goods: Non-Durable	L + 9.25% (100% PIK)	9.25%	10/20/2021	10/20/2028	€	4,700	5,312		5,167		0.44
Bubbles Bidco S.P.A. (Italy)	^	(2)(3)(7)(6)	Consumer Goods: Non-Durable	L + 6.25%	6.25%	10/20/2021	10/20/2028	€	—	(9)		(9)		—
Chartis Holding, LLC	^+#	(2)(3)(6)	Business Services	L + 5.50%	6.50%	5/1/2019	5/1/2025	39,165		38,647		39,165		3.36
Chemical Computing Group ULC (Canada)	^+	(2)(3)(7)(6)	Software	L + 4.50%	5.50%	8/30/2018	8/30/2024	14,378		14,297		14,309		1.23
Chudy Group, LLC	#	(2)(3)(6)	Healthcare & Pharmaceuticals	L + 5.75%	6.75%	6/30/2021	6/30/2027	826		812		842		0.07
CircusTrix Holdings, LLC	^+	(2)(3)	Hotel, Gaming & Leisure	L + 5.50%, 2.50% PIK	9.00%	2/2/2018	1/16/2024	10,528		10,492		9,401		0.81
CircusTrix Holdings, LLC	^	(2)(3)	Hotel, Gaming & Leisure	L + 5.50%, 2.50% PIK	9.00%	1/8/2021	7/16/2023	697		640		697		0.06
Cobblestone Intermediate Holdco LLC	#	(2)(3)	Consumer Services	L + 5.50%	6.25%	1/29/2020	1/29/2026	723		718		712		0.06
Comar Holding Company, LLC	+#	(2)(3)(6)	Containers, Packaging & Glass	L + 5.75%	6.75%	6/18/2018	6/18/2024	41,358		40,925		40,472		3.47

CARLYLE CREDIT SOLUTIONS, INC.

CONSOLIDATED SCHEDULE OF INVESTMENTS (Continued)

As of December 31, 2021

(dollar amounts in thousands)


Investments—non-controlled/non-affiliated (1)		Footnotes	Industry	Reference Rate & Spread (2)	Interest Rate (2)	Acquisition Date	Maturity Date	Par/ Principal Amount		Amortized Cost (4)		Fair Value (5)		Percentage of Net Assets
Cority Software Inc. (Canada)	^+#	(2)(3)(7)(6)	Software	L + 5.00%	6.00%	7/2/2019	7/2/2026	$	56,209	$	55,372	$	56,180	4.82	%
Cority Software Inc. (Canada)	#	(2)(3)(7)	Software	L + 7.00%	8.00%	9/3/2020	7/2/2026	1,879		1,833		1,902		0.16	%
DCA Investment Holding, LLC	+	(2)(3)(6)	Healthcare & Pharmaceuticals	L + 6.25%	7.00%	3/11/2021	3/12/2027	10,841		10,678		10,777		0.92
Derm Growth Partners III, LLC	^	(2)(3)(9)	Healthcare & Pharmaceuticals	L + 6.25%	7.25%	2/15/2018	5/31/2022	16,140		14,730		10,836		0.93
Designer Brands Inc.	+#	(2)(3)(7)	Retail	L + 8.50%	9.75%	8/7/2020	8/7/2025	34,090		33,436		33,691		2.88
Diligent Corporation	^	(2)(3)(6)	Telecommunications	L + 6.25%	7.25%	8/4/2020	8/4/2025	603		587		616		0.05
DTI Holdco, Inc.	#	(2)(3)	High Tech Industries	L + 4.75%	5.75%	12/18/2018	9/30/2023	1,934		1,883		1,907		0.16
Dwyer Instruments, Inc	#	(2)(3)(6)	Capital Equipment	L + 5.50%	6.25%	7/21/2021	7/21/2027	12,463		12,206		12,427		1.07
Ellkay, LLC	#	(2)(3)(6)	Healthcare & Pharmaceuticals	L + 5.75%	6.75%	9/14/2021	9/14/2027	14,249		13,943		13,923		1.19
EPS Nass Parent, Inc.	#	(2)(3)(6)	Utilities: Electric	L + 5.75%	6.75%	4/19/2021	4/19/2028	887		869		879		0.08
Ethos Veterinary Health LLC	+#	(2)(3)	Consumer Services	L + 4.75%	4.85%	5/17/2019	5/15/2026	10,720		10,652		10,720		0.92
Greenhouse Software, Inc.	^+#	(2)(3)(6)	Software	L + 6.50%	7.50%	3/1/2021	3/1/2027	15,196		14,858		14,870		1.28
Harbour Benefit Holdings, Inc.	+#	(2)(3)(6)	Business Services	L + 5.25%	6.25%	12/13/2017	12/13/2024	11,487		11,425		11,365		0.97
Heartland Home Services, Inc	+#	(2)(3)(6)	Consumer Services	L + 6.00%	7.00%	12/15/2020	12/15/2026	30,096		29,538		30,233		2.59
Hercules Borrower LLC	^+	(2)(3)(6)	Environmental Industries	L + 6.50%	7.50%	12/14/2020	12/14/2026	18,453		18,012		18,865		1.62
Hoosier Intermediate, LLC	#	(2)(3)(6)	Healthcare & Pharmaceuticals	L + 5.50%	6.50%	11/15/2021	11/15/2028	16,479		16,108		16,101		1.38
iCIMS, Inc.	+#	(2)(3)	Software	L + 6.50%	7.50%	9/12/2018	9/12/2024	29,019		28,693		29,019		2.49
Individual FoodService Holdings, LLC	#	(2)(3)(6)	Wholesale	L + 6.25%	7.25%	2/21/2020	11/22/2025	18,952		18,623		18,958		1.63
Infront Luxembourg Finance S.À R.L. (Luxembourg)	+#	(2)(3)(7)	Hotel, Gaming & Leisure	L + 9.00%	9.00%	5/28/2021	5/28/2027	€	33,000	39,110		36,537		3.13
Integrity Marketing Acquisition, LLC	+#	(2)(3)	Banking, Finance, Insurance & Real Estate	L + 5.75%	6.75%	1/15/2020	8/27/2025	24,601		24,345		24,476		2.10
Integrity Marketing Acquisition, LLC	#	(2)(3)	Banking, Finance, Insurance & Real Estate	L + 5.50%	6.25%	8/7/2020	8/27/2025	7,913		7,844		7,832		0.67
Jeg's Automotive, LLC	#	(2)(3)(6)	Automotive	L + 5.75%	6.75%	12/22/2021	12/22/2027	15,000		14,602		14,602		1.25
K2 Insurance Services, LLC	^+#	(2)(3)(6)	Banking, Finance, Insurance & Real Estate	L + 5.00%	6.00%	7/3/2019	7/1/2026	25,305		25,010		25,261		2.17
Kaseya, Inc.	^+#	(2)(3)(6)	High Tech Industries	L + 5.50%, 1.00% PIK	7.50%	5/3/2019	5/3/2025	28,064		27,705		27,886		2.39
Lifelong Learner Holdings, LLC	^+#	(2)(3)(6)	Business Services	L + 5.75%	6.75%	10/18/2019	10/18/2026	52,420		51,662		48,069		4.12
LinQuest Corporation	#	(2)(3)	Aerospace & Defense	L + 5.75%	6.50%	7/28/2021	7/28/2028	9,975		9,785		9,816		0.84

CARLYLE CREDIT SOLUTIONS, INC.

CONSOLIDATED SCHEDULE OF INVESTMENTS (Continued)

As of December 31, 2021

(dollar amounts in thousands)


Investments—non-controlled/non-affiliated (1)		Footnotes	Industry	Reference Rate & Spread (2)	Interest Rate (2)	Acquisition Date	Maturity Date	Par/ Principal Amount		Amortized Cost (4)		Fair Value (5)		Percentage of Net Assets
Liqui-Box Holdings, Inc.	#	(2)(3)(6)	Containers, Packaging & Glass	L + 4.50%	5.50%	6/3/2019	6/3/2024	$	1,490	$	1,474	$	1,229	0.11	%
LVF Holdings, Inc.	^+#	(2)(3)(6)	Beverage, Food & Tobacco	L + 6.25%	7.25%	6/10/2021	6/10/2027	41,227		40,357		40,056		3.43
Material Holdings, LLC	#	(2)(3)(6)	Business Services	L + 5.75%	6.50%	8/19/2021	8/19/2027	14,886		14,552		14,692		1.26
Maverick Acquisition, Inc.	^+#	(2)(3)(6)	Aerospace & Defense	L + 6.00%	7.00%	6/1/2021	6/1/2027	43,942		43,025		42,869		3.68
Medical Manufacturing Technologies, LLC	#	(2)(3)(6)	Healthcare & Pharmaceuticals	SOFR + 6.00%	7.00%	12/23/2021	12/23/2027	10,640		10,327		10,327		0.89
MMIT Holdings, LLC	#	(2)(3)(6)	High Tech Industries	L + 6.25%	7.25%	9/15/2021	9/15/2027	11,087		10,858		10,853		0.93
NES Global Talent Finance US, LLC (United Kingdom)	+#	(2)(3)(7)	Energy: Oil & Gas	L + 5.50%	6.50%	5/9/2018	5/11/2023	9,688		9,634		9,424		0.81
Performance Health Holdings, Inc.	#	(2)(3)	Healthcare & Pharmaceuticals	L + 6.00%	7.00%	7/12/2021	7/12/2027	7,182		7,048		7,083		0.61
PF Atlantic Holdco 2, LLC	^#	(2)(3)(6)	Hotel, Gaming & Leisure	L + 6.00%	7.00%	11/12/2021	11/12/2027	27,723		26,941		26,923		2.31
PF Growth Partners, LLC	+	(2)(3)	Hotel, Gaming & Leisure	L + 5.50%	6.50%	7/1/2019	7/11/2025	8,039		7,962		7,922		0.68
Prophix Software Inc. (Canada)	^+	(2)(3)(7)(6)	Software	L + 6.50%	7.50%	2/1/2021	2/1/2026	14,618		14,313		14,791		1.27
Quantic Electronics, LLC	#	(2)(3)(6)	Aerospace & Defense	L + 6.25%	7.25%	11/19/2020	11/19/2026	14,625		14,333		14,418		1.24
Quantic Electronics, LLC	#	(2)(3)(6)	Aerospace & Defense	L + 6.25%	7.25%	3/1/2021	3/1/2027	8,882		8,663		8,727		0.75
Redwood Services Group, LLC	+#	(2)(3)	High Tech Industries	L + 6.00%	7.00%	11/13/2018	6/6/2024	40,864		40,370		40,863		3.50
Regency Entertainment, Inc.	+#	(2)(3)	Media: Diversified & Production	L + 6.75%	7.75%	5/22/2020	10/22/2025	70,000		68,949		68,832		5.90
Riveron Acquisition Holdings, Inc.	+#	(2)(3)	Banking, Finance, Insurance & Real Estate	L + 5.75%	6.75%	5/22/2019	5/22/2025	19,574		19,337		19,574		1.68
RSC Acquisition, Inc.	+#	(2)(3)(6)	Banking, Finance, Insurance & Real Estate	L + 5.50%	6.25%	11/1/2019	11/1/2026	34,486		33,970		34,622		2.97
Sapphire Convention, Inc.	^+#	(2)(3)(6)	Telecommunications	L + 6.25%	7.25%	11/20/2018	11/20/2025	29,906		29,528		25,528		2.19
SPay, Inc.	^+	(2)(3)	Hotel, Gaming & Leisure	L + 2.30%, 6.95% PIK	10.25%	6/15/2018	6/17/2024	23,005		22,809		20,218		1.73
Speedstar Holding, LLC	+#	(2)(3)(6)	Automotive	L + 7.00%	8.00%	1/22/2021	1/22/2027	27,225		26,687		27,536		2.36
TCFI Aevex LLC	+#	(2)(3)(6)	Aerospace & Defense	L + 6.00%	7.00%	3/18/2020	3/18/2026	28,867		28,414		24,601		2.11
The Leaders Romans Bidco Limited (United Kingdom) Term Loan B	+	(2)(3)(7)	Banking, Finance, Insurance & Real Estate	SONIA + 6.25%, 2.50% PIK	9.50%	7/23/2019	6/30/2024	£	21,299	26,332		28,830		2.47
The Leaders Romans Bidco Limited (United Kingdom) Term Loan C	+	(2)(3)(7)(6)	Banking, Finance, Insurance & Real Estate	SONIA + 6.25%, 2.50% PIK	9.50%	7/23/2019	6/30/2024	£	6,164	7,778		9,848		0.84
Trafigura Trading LLC	^	(2)(3)(6)(12)	Metals & Mining	L + 8.40%	8.75%	7/26/2021	7/18/2022	2,236		2,234		2,086		0.18
Turbo Buyer, Inc.	+#	(2)(3)(6)	Automotive	L + 6.00%	7.00%	12/2/2019	12/2/2025	42,428		41,652		41,537		3.56
Unifrutti Financing PLC (Cyprus)	+	(7)	Beverage, Food & Tobacco	7.50%, 1.00% PIK	8.50%	9/15/2019	9/15/2026	€	18,536	19,701		21,473		1.84
Unifrutti Financing PLC (Cyprus)	^	(7)	Beverage, Food & Tobacco	11.00% PIK	11.00%	10/22/2020	9/15/2026	€	3,036	3,439		3,559		0.31

CARLYLE CREDIT SOLUTIONS, INC.

CONSOLIDATED SCHEDULE OF INVESTMENTS (Continued)

As of December 31, 2021

(dollar amounts in thousands)


Investments—non-controlled/non-affiliated (1)		Footnotes	Industry	Reference Rate & Spread (2)	Interest Rate (2)	Acquisition Date	Maturity Date	Par/ Principal Amount		Amortized Cost (4)		Fair Value (5)		Percentage of Net Assets
US INFRA SVCS Buyer, LLC	+#	(2)(3)(6)	Environmental Industries	L + 6.50%	7.50%	4/13/2020	4/13/2026	$	58,708	$	57,673	$	57,068	4.89	%
USALCO, LLC	#	(2)(3)	Chemicals, Plastics & Rubber	L + 6.00%	7.00%	10/19/2021	10/19/2027	1,000		981		980		0.08
USLS Acquisition, Inc.	^+	(2)(3)(6)	Business Services	L + 5.50%	6.50%	11/30/2018	11/30/2024	21,513		21,271		21,263		1.82
Westfall Technik, Inc.	^+#	(2)(3)	Chemicals, Plastics & Rubber	L + 5.75%	6.75%	9/13/2018	9/13/2024	27,920		27,673		27,661		2.37
Westfall Technik, Inc.	#	(2)(3)	Chemicals, Plastics & Rubber	L + 6.25%	7.25%	7/1/2021	9/13/2024	4,958		4,865		4,929		0.42
Wineshipping.com LLC	#	(2)(3)(6)	Beverage, Food & Tobacco	L + 5.75%	6.75%	10/29/2021	10/29/2027	14,459		14,110		14,111		1.21
Yellowstone Buyer Acquisition, LLC	^	(2)(3)	Consumer Goods: Durable	L + 5.75%	6.75%	9/13/2021	9/13/2027	449		440		440		0.04
YLG Holdings, Inc.	+	(2)(3)	Consumer Services	L + 5.25%	6.25%	9/30/2020	11/1/2025	9,903		9,650		9,903		0.85




First Lien Debt Total										$	1,683,550	$	1,674,715	143.60	%
Second Lien Debt (16.3% of fair value)
11852604 Canada Inc. (Canada)	^	(2)(3)(7)	Healthcare & Pharmaceuticals	L+9.50% (100% PIK)	10.50%	9/30/2021	9/30/2028	$	6,590	$	6,432	$	6,425	0.55	%
AI Convoy S.A.R.L (United Kingdom)	+#	(2)(3)(7)	Aerospace & Defense	L + 8.25%	9.25%	1/17/2020	1/17/2028	30,327		29,771		31,464		2.69
Aimbridge Acquisition Co., Inc.	+	(2)(3)	Hotel, Gaming & Leisure	L + 7.50%	7.60%	2/1/2019	2/1/2027	21,047		20,647		19,600		1.68
AP Plastics Acquisition Holdings, LLC	+#	(2)(3)	Chemicals, Plastics & Rubber	L + 7.50%	8.25%	8/10/2021	8/10/2029	38,180		37,168		38,394		3.29
AQA Acquisition Holdings, Inc.	^	(2)(3)	High Tech Industries	L + 7.50%	8.00%	5/14/2021	3/3/2029	5,538		5,409		5,543		0.48
Blackbird Purchaser, Inc.	^	(2)(3)(6)	Capital Equipment	L + 7.50%	8.25%	12/14/2021	4/8/2027	9,195		8,949		8,949		0.77
Brave Parent Holdings, Inc.	+	(2)(3)	Software	L + 7.50%	7.60%	10/3/2018	4/19/2026	18,197		17,923		18,197		1.56
Drilling Info Holdings, Inc.	^	(2)(3)	Energy: Oil & Gas	L + 8.25%	8.35%	2/11/2020	7/30/2026	18,600		18,212		18,786		1.61
Jazz Acquisition, Inc.	+	(2)(3)	Aerospace & Defense	L + 8.00%	8.10%	6/13/2019	6/18/2027	23,450		23,188		20,826		1.79
Outcomes Group Holdings, Inc.	#	(2)(3)	Business Services	L + 7.50%	7.85%	10/23/2018	10/26/2026	1,731		1,728		1,731		0.15
PAI Holdco, Inc.	+	(2)(3)	Automotive	L + 5.50%, 2.00% PIK	8.50%	10/28/2020	10/28/2028	13,806		13,446		13,806		1.18
Peraton Corp.	^	(2)(3)	Aerospace & Defense	L + 7.75%	8.50%	2/24/2021	2/1/2029	12,300		12,126		12,345		1.06
Quartz Holding Company	+	(2)(3)	Software	L + 8.00%	8.10%	4/2/2019	4/2/2027	11,900		11,728		11,900		1.02
Stonegate Pub Company Bidco Limited (United Kingdom)	^	(2)(3)(7)	Beverage, Food & Tobacco	SONIA + 8.50%	8.60%	3/12/2020	3/12/2028	£	20,000	24,787		22,263		1.91
Tank Holding Corp.	+#	(2)(3)	Capital Equipment	L + 8.25%	8.35%	3/26/2019	3/26/2027	41,479		40,905		41,894		3.59
TruGreen Limited Partnership	^	(2)(3)	Consumer Services	L + 8.50%	9.25%	11/16/2020	11/2/2028	13,000		12,769		13,260		1.14
World 50, Inc.	#	(11)	Business Services	11.50%	11.50%	1/10/2020	1/9/2027	24,017		23,595		23,827		2.04

CARLYLE CREDIT SOLUTIONS, INC.

CONSOLIDATED SCHEDULE OF INVESTMENTS (Continued)

As of December 31, 2021

(dollar amounts in thousands)


Investments—non-controlled/non-affiliated (1)		Footnotes	Industry	Reference Rate & Spread (2)	Interest Rate (2)	Acquisition Date	Maturity Date	Par/ Principal Amount		Amortized Cost (4)		Fair Value (5)		Percentage of Net Assets
WP CPP Holdings, LLC	+	(2)(3)	Aerospace & Defense	L + 7.75%	8.75%	7/18/2019	4/30/2026	$	29,500	$	29,293	$	28,689	2.46	%





Second Lien Debt Total										$	338,076	$	337,899	28.97	%


Investments—non-controlled/non-affiliated (1)			Footnotes	Industry	Acquisition Date	Shares/ Units	Cost		Fair Value (5)		Percentage of Net Assets
Equity Investments (2.8% of fair value)
ANLG Holdings, LLC	^		(8)	Capital Equipment	6/22/2018	592	$	592	$	821	0.07	%
Appriss Health, LLC	^		(8)	Healthcare & Pharmaceuticals	5/6/2021	—	445		466		0.04
Atlas Ontario LP (Canada)	^		(7)(8)	Business Services	4/7/2021	5,114	5,114		5,114		0.44
Avenu Holdings, LLC	^		(8)	Sovereign & Public Finance	9/28/2018	172	172		491		0.04
Blackbird Holdco, Inc.	^		(8)	Capital Equipment	12/14/2021	6	6,308		6,308		0.54
Buckeye Parent, LLC	^		(8)	Automotive	12/22/2021	442	442		442		0.04
Chartis Holding, LLC	^		(8)	Business Services	5/1/2019	433	433		690		0.06
Cority Software Inc. (Canada)	^		(8)	Software	7/2/2019	250	250		454		0.04
ECP Parent, LLC	^		(8)	Healthcare & Pharmaceuticals	3/29/2018	268	—		290		0.02
GB Vino Parent, L.P.	^		(8)	Beverage, Food & Tobacco	10/29/2021	4	351		351		0.03
Integrity Marketing Group, LLC	^		(8)	Banking, Finance, Insurance & Real Estate	12/21/2021	15,038	14,738		14,738		1.26
K2 Insurance Services, LLC	^		(8)	Banking, Finance, Insurance & Real Estate	7/3/2019	433	306		651		0.06
Mailgun Technologies, Inc.	^		(8)	High Tech Industries	3/26/2019	104	—		1,328		0.11
North Haven Goldfinch Topco, LLC	^		(8)	Containers, Packaging & Glass	6/18/2018	2,315	2,315		2,411		0.21
Pascal Ultimate Holdings, L.P	^		(8)	Capital Equipment	7/21/2021	36	364		364		0.03
Tank Holding Corp.	^		(8)	Capital Equipment	3/26/2019	850	482		1,260		0.12
Titan DI Preferred Holdings, Inc.	^		(8)	Energy: Oil & Gas	2/11/2020	12,843	12,587		12,969		1.11
Turbo Buyer, Inc.	^		(8)	Automotive	12/2/2019	1,925	933		2,774		0.24
Unifrutti Financing PLC (Cyprus)	^		(8)	Beverage, Food & Tobacco	10/22/2020	3	1,934		2,600		0.22
Unifrutti Financing PLC (Cyprus)	^	^	(8)	Beverage, Food & Tobacco	10/22/2020	—	532		837		0.07
USLS Acquisition, Inc.	^	^	(8)	Business Services	11/30/2018	641	641		940		0.08
W50 Parent LLC	^		(8)	Business Services	1/10/2020	500	190		762		0.07
Zenith American Holding, Inc.	^		(8)	Business Services	12/13/2017	440	220		408		0.03



Equity Investments Total							$	49,349	$	57,469	4.93	%
Total investments—non-controlled/non-affiliated							$	2,070,975	$	2,070,083	177.50	%
Total investments							$	2,070,975	$	2,070,083	177.50	%

^ Denotes that all or a portion of the assets are owned by Carlyle Credit Solutions, Inc. (together with its consolidated subsidiary, “we,” “us,” “our,” “CARS” or the “Company”). Accordingly, such assets are not available to creditors of Carlyle Credit Solutions SPV LLC (the “SPV”) or Carlyle Credit Solutions SPV2 LLC (“SPV2”).

CARLYLE CREDIT SOLUTIONS, INC.

CONSOLIDATED SCHEDULE OF INVESTMENTS (Continued)

As of December 31, 2021

(dollar amounts in thousands)

+ Denotes that all or a portion of the assets are owned by the Company's wholly owned subsidiary, the SPV. The SPV has entered into a senior secured revolving credit facility (as amended, the “SPV Credit Facility”). The lenders of the SPV Credit Facility have a first lien security interest in substantially all of the assets of the SPV (see Note 5, Borrowings to these consolidated financial statements). Accordingly, such assets are not available to creditors of the Company or SPV2.

# Denotes that all or a portion of the assets are owned by the Company's wholly-owned subsidiary, SPV2. SPV2 has entered into a senior secured revolving credit facility (the "SPV2 Credit Facility", and together with the Subscription Facility and the SPV Credit Facility, the "Credit Facilities"). The lenders of the SPV2 Credit Facility have a first lien security interest in substantially all of the assets of SPV2 (see Note 5, Borrowings, to these consolidated financial statements). Accordingly, such assets are not available to creditors of the Company or the SPV.

(1) Unless otherwise indicated, issuers of debt and equity investments held by the Company are domiciled in the United States. Under the Investment Company Act of 1940, as amended (together with the rules and regulations promulgated thereunder, the “Investment Company Act”), the Company would be deemed to “control” a portfolio company if the Company owned more than 25% of its outstanding voting securities and/or held the power to exercise control over the management or policies of the portfolio company. As of December 31, 2021, the Company does not “control” any of these portfolio companies. Under the Investment Company Act, the Company would be deemed an “affiliated person” of a portfolio company if the Company owns 5% or more of the portfolio company’s outstanding voting securities. As of December 31, 2021, the Company is not an “affiliated person” of any of these portfolio companies. Certain portfolio company investments are subject to contractual restrictions on sales.

(2)Variable rate loans to the portfolio companies bear interest at a rate that is determined by reference to either LIBOR (“L”) or an alternate base rate (commonly based on the Federal Funds Rate or the U.S. Prime Rate), which generally resets quarterly. For each such loan, the Company has indicated the reference rate used and provided the spread and the interest rate in effect as of December 31, 2021. As of December 31, 2021, the reference rates for all LIBOR loans were the 30-day LIBOR at 0.10%, the 90-day LIBOR at 0.22% and the 180-day LIBOR rate at 0.33%.

(3)Loan includes interest rate floor feature, which is generally 1.00%.

(6)As of December 31, 2021, the Company had the following unfunded commitments to fund delayed draw and revolving senior secured loans:


Investments—non-controlled/non-affiliated	Type	Unused Fee		Par/ Principal Amount		Fair Value
First and Second Lien Debt—unfunded delayed draw and revolving term loans commitments
Advanced Web Technologies Holding Company	Delayed Draw	1.00	%	$	1,700	$	17
Advanced Web Technologies Holding Company	Delayed Draw	1.00		2,102		21
Advanced Web Technologies Holding Company	Revolver	0.50		1,813		18
Airnov, Inc.	Revolver	0.50		2,917		—
American Physician Partners, LLC	Revolver	0.50		550		—
Analogic Corporation	Revolver	0.50		1,102		(11)
Applied Technical Services, LLC	Revolver	0.50		40		—
Appriss Health, LLC	Revolver	0.50		2,963		3
Apptio, Inc.	Revolver	0.50		1,420		—
Ascend Buyer, LLC	Revolver	0.50		1,070		(17)
Associations, Inc.	Revolver	0.50		723		2
Blackbird Purchaser, Inc.	Delayed Draw	1.00		3,065		(61)
Bubbles Bidco S.P.A. (Italy)	Delayed Draw	2.80		€	873	(30)
Bubbles Bidco S.P.A. (Italy)	Revolver	—		€	537	(9)
Chartis Holding, LLC	Revolver	0.50		2,401		—
Chemical Computing Group ULC (Canada)	Revolver	0.50		903		(4)
Chudy Group, LLC	Delayed Draw	1.00		138		2
Chudy Group, LLC	Revolver	0.50		34		1
Comar Holding Company, LLC	Revolver	0.50		2,935		(59)

CARLYLE CREDIT SOLUTIONS, INC.

CONSOLIDATED SCHEDULE OF INVESTMENTS (Continued)

As of December 31, 2021

(dollar amounts in thousands)


Investments—non-controlled/non-affiliated	Type	Unused Fee		Par/ Principal Amount		Fair Value
Cority Software Inc. (Canada)	Revolver	0.50	%	$	3,000	$	(1)
DCA Investment Holding, LLC	Delayed Draw	1.00		1,495		(8)
Diligent Corporation	Delayed Draw	1.00		110		2
Diligent Corporation	Revolver	0.50		47		1
Dwyer Instruments, Inc	Delayed Draw	1.00		1,003		(3)
Dwyer Instruments, Inc	Revolver	0.50		411		(1)
Ellkay, LLC	Revolver	0.50		1,786		(37)
EPS Nass Parent, Inc.	Delayed Draw	1.00		85		(1)
EPS Nass Parent, Inc.	Revolver	0.50		25		—
Greenhouse Software, Inc.	Revolver	0.50		1,471		(29)
Harbour Benefit Holdings, Inc.	Revolver	0.50		813		(8)
Heartland Home Services, Inc	Delayed Draw	1.00		2,072		8
Heartland Home Services, Inc	Revolver	0.50		2,687		10
Hercules Borrower LLC	Revolver	0.50		2,160		43
Hoosier Intermediate, LLC	Revolver	0.50		2,400		(48)
Individual FoodService Holdings, LLC	Delayed Draw	1.00		48		—
Individual FoodService Holdings, LLC	Delayed Draw	1.00		750		—
Individual FoodService Holdings, LLC	Revolver	0.50		2,426		—
Jeg's Automotive, LLC	Delayed Draw	1.00		3,333		(67)
Jeg's Automotive, LLC	Revolver	0.50		1,667		(33)
K2 Insurance Services, LLC	Revolver	0.50		2,290		(4)
Kaseya, Inc.	Delayed Draw	1.00		585		(3)
Kaseya, Inc.	Revolver	0.50		1,542		(9)
Lifelong Learner Holdings, LLC	Revolver	0.50		4		—
Liqui-Box Holdings, Inc.	Revolver	0.50		1,140		(113)
LVF Holdings, Inc.	Delayed Draw	1.00		4,670		(116)
LVF Holdings, Inc.	Revolver	0.50		1,459		(36)
Material Holdings, LLC	Delayed Draw	—		1,916		(21)
Material Holdings, LLC	Revolver	1.00		806		(9)
Maverick Acquisition, Inc.	Delayed Draw	1.00		4,679		(101)
Maverick Acquisition, Inc.	Delayed Draw	1.00		1,290		(28)
Medical Manufacturing Technologies, LLC	Delayed Draw	1.00		4,132		(83)
Medical Manufacturing Technologies, LLC	Revolver	0.50		930		(19)
MMIT Holdings, LLC	Revolver	0.50		857		(17)
PF Atlantic HoldCo 2, LLC	Revolver	0.50		2,759		(55)
PF Atlantic HoldCo 2, LLC	Delayed Draw	0.75		9,517		(190)
Prophix Software Inc. (Canada)	Revolver	0.50		2,657		27

CARLYLE CREDIT SOLUTIONS, INC.

CONSOLIDATED SCHEDULE OF INVESTMENTS (Continued)

As of December 31, 2021

(dollar amounts in thousands)


Investments—non-controlled/non-affiliated	Type	Unused Fee		Par/ Principal Amount		Fair Value
Quantic Electronics, LLC	Revolver	0.50	%	$	557	$	(7)
Quantic Electronics, LLC	Delayed Draw	1.00		3,164		(41)
Quantic Electronics, LLC	Revolver	0.50		824		(11)
RSC Acquisition, Inc.	Revolver	0.50		510		2
Sapphire Convention, Inc.	Revolver	0.50		2,560		(345)
Speedstar Holding, LLC	Delayed Draw	1.00		3,775		38
TCFI Aevex LLC	Delayed Draw	1.00		521		(75)
TCFI Aevex LLC	Delayed Draw	1.00		417		(60)
The Leaders Romans Bidco Limited (United Kingdom)	Delayed Draw	1.56		£	1,902	399
Trafigura Trading LLC	Revolver	0.50		7,762		(133)
Turbo Buyer, Inc.	Revolver	0.50		2,151		(43)
US INFRA SVCS Buyer, LLC	Delayed Draw	1.00		9,972		(236)
US INFRA SVCS Buyer, LLC	Revolver	0.50		525		(12)
USLS Acquisition, Inc.	Revolver	0.50		1,134		(12)
Wineshipping.com LLC	Delayed Draw	1.00		1,986		(39)
Wineshipping.com LLC	Revolver	0.50		1,430		(28)








Total unfunded commitments				$	136,365	$	(1,679)

(8)Security acquired in transaction exempt from registration under the Securities Act of 1933, as amended (the “Securities Act”), and may be deemed to be “restricted securities” under the Securities Act, unless otherwise noted. As of December 31, 2021, the aggregate fair value of these securities is $57,469, or 4.93% of the Company’s net assets.

(9)Loan was on non-accrual status as of December 31, 2021.

(11)Represents a corporate mezzanine loan, which is subordinated to senior secured term loans of the portfolio company.

(12)The investment is secured by receivables purchased from the portfolio company, with an implied discount of 8.75%. The investment was made via a tranched participation arrangement between the purchaser of such receivables and the Company. The investment has a secondary priority behind the rights of such purchaser.

As of December 31, 2021, investments at fair value consisted of the following:


Type	Amortized Cost		Fair Value		% of Fair Value


First Lien Debt	$	1,683,550	$	1,674,715	80.9	%
Second Lien Debt	338,076		337,899		16.3
Equity Investments	49,349		57,469		2.8
Total	$	2,070,975	$	2,070,083	100.0	%

CARLYLE CREDIT SOLUTIONS, INC.

CONSOLIDATED SCHEDULE OF INVESTMENTS (Continued)

As of December 31, 2021

(dollar amounts in thousands)

The rate type of debt investments at fair value as of December 31, 2021 was as follows:


Rate Type	Amortized Cost		Fair Value		% of Fair Value of First and Second Lien Debt
Floating Rate	$	1,974,891	$	1,963,755	97.6	%
Fixed Rate	46,735		48,859		2.4
Total	$	2,021,626	$	2,012,614	100.0	%

The industry composition of investments at fair value as of December 31, 2021 was as follows:


Industry	Amortized Cost		Fair Value		% of Fair Value
Aerospace & Defense	$	198,598	$	193,755	9.4	%
Automotive	97,762		100,697		4.9
Banking, Finance, Insurance & Real Estate	159,660		165,832		8.0
Beverage, Food & Tobacco	105,211		105,250		5.1
Business Services	170,503		169,058		8.1
Capital Equipment	96,247		98,418		4.8
Chemicals, Plastics & Rubber	70,687		71,964		3.5
Construction & Building	40,283		40,505		2.0
Consumer Goods: Durable	440		440		—
Consumer Goods: Non-Durable	5,303		5,158		0.2
Consumer Services	63,327		64,828		3.1
Containers, Packaging & Glass	95,875		96,154		4.6
Energy: Oil & Gas	40,433		41,179		2.0
Environmental Industries	75,685		75,933		3.7
Healthcare & Pharmaceuticals	162,197		159,660		7.7
High Tech Industries	108,765		111,545		5.4
Hotel, Gaming & Leisure	128,601		121,298		5.9

Media: Diversified & Production	68,949		68,832		3.3
Metals & Mining	2,234		2,086		0.1
Retail	61,353		61,837		3.0
Software	231,462		231,302		11.1
Sovereign & Public Finance	37,793		38,371		1.9
Telecommunications	30,115		26,144		1.3

Utilities: Electric	869		879		—
Wholesale	18,623		18,958		0.9
Total	$	2,070,975	$	2,070,083	100.0	%

CARLYLE CREDIT SOLUTIONS, INC.

CONSOLIDATED SCHEDULE OF INVESTMENTS (Continued)

As of December 31, 2021

(dollar amounts in thousands)

The geographical composition of investments at fair value as of December 31, 2021 was as follows:


Geography	Amortized Cost		Fair Value		% of Fair Value
Canada	$	120,151	$	122,340	5.9	%
Cyprus	25,606		28,469		1.4
Italy	5,303		5,158		0.2

Luxembourg	75,252		69,729		3.4
United Kingdom	98,302		101,829		4.9
United States	1,746,361		1,742,558		84.2
Total	$	2,070,975	$	2,070,083	100.0	%

The accompanying notes are an integral part of these consolidated financial statements.

CARLYLE CREDIT SOLUTIONS, INC.

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (unaudited)

As of March 31, 2022

(dollar amounts in thousands, except per share data)

1. ORGANIZATION

Carlyle Credit Solutions, Inc. (“CARS” or the “Company”) was formed on February 10, 2017 as a Maryland corporation with the name Carlyle Private Credit, Inc. Its name was changed to TCG BDC II, Inc. on March 3, 2017, and was changed again to Carlyle Credit Solutions, Inc. on March 29, 2022. The Company is structured as an externally managed, non-diversified closed-end investment company. The Company is managed by its investment adviser, Carlyle Global Credit Investment Management L.L.C. (“Investment Adviser”), a wholly owned subsidiary of The Carlyle Group Inc. The Company has elected to be regulated as a business development company (“BDC”) under the Investment Company Act of 1940, as amended (together with the rules and regulations promulgated thereunder, the “Investment Company Act”). In addition, the Company has elected to be treated, and intends to continue to comply with the requirements to qualify annually, as a regulated investment company (“RIC”) under Subchapter M of the Internal Revenue Code of 1986, as amended (together with the rules and regulations promulgated thereunder, the “Code”).

The Company’s investment objective is to generate attractive risk adjusted returns and current income primarily by investing in senior secured term loans to U.S. middle market companies in which private equity sponsors hold, directly or indirectly, a financial interest in the form of debt and/or equity. The Company's core investment strategy focuses on lending to U.S. middle market companies, which the Company defines as companies with approximately $25 million to $100 million of earnings before interest, taxes, depreciation and amortization (“EBITDA”), which the Company believes is a useful proxy for cash flow. This core strategy is supplemented with the Company’s complementary specialty lending strategy, which takes advantage of the broad capabilities of Carlyle's Global Credit platform while offering risk-diversifying portfolio benefits. Generally, the Company expects its core strategy and its complementary strategy to be 70-85% and 15-30%, respectively, of the portfolio. The Company seeks to achieve its investment objective primarily through direct originations of secured debt instruments, including first lien senior secured loans (which may include stand-alone first lien loans, first lien/last out loans, and "unitranche" loans) and second lien senior secured loans (collectively, “Middle Market Senior Loans”), with the balance of its assets invested in higher yielding investments (which may include unsecured debt, mezzanine debt and investments in equities).

The Company invests primarily in loans to middle market companies whose debt, if rated, is rated below investment grade and, if not rated, would likely be rated below investment grade if it were rated (that is, below BBB- or Baa3, which is often referred to as "junk"). Exposure to below investment grade instruments involves certain risks, including speculation with respect to the borrower's capacity to pay interest and repay principal.

On September 11, 2017 ("Commencement"), the Company completed its initial closing of capital commitments (the “Initial Closing”) and subsequently commenced substantial investment operations. On January 21, 2022, stockholders approved the Company's conversion from a finite life private BDC with no interim liquidity to a private BDC with a perpetual life and a regular quarterly liquidity program. The conversion extends indefinitely the Company's finite term and finite investment period and permits the Company to accept new subscriptions for shares of its common stock in a new continuous private offering (the “New Continuous Offering”).

The Company is an “emerging growth company” as defined in the Jumpstart Our Business Startups Act of 2012.

The Company is externally managed by the Investment Adviser, an investment adviser registered under the Investment Advisers Act of 1940, as amended. Carlyle Global Credit Administration L.L.C. (the “Administrator”) provides the administrative services necessary for the Company to operate. Both the Investment Adviser and the Administrator are wholly owned subsidiaries of Carlyle Investment Management L.L.C., a subsidiary of The Carlyle Group Inc. “Carlyle” refers to The Carlyle Group Inc. and its affiliates and its consolidated subsidiaries (other than portfolio companies of its affiliated funds), a global investment firm publicly traded on the Nasdaq Global Select Market under the symbol “CG”. Refer to the sec.gov website for further information on Carlyle.

Carlyle Credit Solutions SPV LLC (the “SPV”, formerly TCG BDC II SPV LLC) is a Delaware limited liability company that was formed on January 28, 2019. The SPV invests in first and second lien senior secured loans. The SPV is a wholly owned subsidiary of the Company and is consolidated in these consolidated financial statements commencing from the date of its formation, January 28, 2019.

Carlyle Credit Solutions SPV 2 LLC (“SPV2”, formerly TCG BDC II SPV 2 LLC, and collectively with the SPV, the “SPVs”) is a Delaware limited liability company that was formed on March 10, 2020. SPV2 is a wholly owned subsidiary of

the Company and is consolidated in these consolidated financial statements commencing from the date of its formation, March 10, 2020.

As a BDC, the Company is required to comply with certain regulatory requirements. As part of these requirements, the Company must not acquire any assets other than “qualifying assets” specified in the Investment Company Act unless, at the time the acquisition is made, at least 70% of its total assets are qualifying assets (with certain limited exceptions).

To qualify as a RIC, the Company must, among other things, meet certain source-of-income and asset diversification requirements and timely distribute to its stockholders generally at least 90% of its investment company taxable income, as defined by the Code, for each year. Pursuant to this election, the Company generally does not have to pay corporate level taxes on any income that it distributes to stockholders, provided that the Company satisfies those requirements.

2. SIGNIFICANT ACCOUNTING POLICIES

Basis of Presentation

The consolidated financial statements have been prepared on the accrual basis of accounting in accordance with accounting principles generally accepted in the United States (“U.S. GAAP”). The Company is an investment company for the purposes of accounting and financial reporting in accordance with Financial Accounting Standards Board ("FASB") Accounting Standards Codification (“ASC”) Topic 946, Financial Services—Investment Companies ("ASC 946"). The consolidated financial statements include the accounts of the Company and its wholly owned subsidiaries, the SPVs. All significant intercompany balances and transactions have been eliminated. U.S. GAAP for an investment company requires investments to be recorded at fair value. The carrying value for all other assets and liabilities approximates their fair value.

The interim consolidated financial statements have been prepared in accordance with U.S. GAAP for interim financial information and pursuant to the requirements for reporting on Form 10-Q and Articles 6 and 10 of Regulation S-X. Accordingly, certain disclosures accompanying the annual consolidated financial statements prepared in accordance with U.S. GAAP are omitted. In the opinion of management, all adjustments considered necessary for the fair presentation of consolidated financial statements for the interim periods presented have been included. These adjustments are of a normal, recurring nature. This Form 10-Q should be read in conjunction with the Company’s annual report on Form 10-K for the year ended December 31, 2021. The results of operations for the three month period ended March 31, 2022 are not necessarily indicative of the operating results to be expected for the full year.

Use of Estimates

The preparation of consolidated financial statements in conformity with U.S. GAAP requires management to make assumptions and estimates that affect the reported amounts of assets and liabilities and disclosure of contingent assets and liabilities at the date of the consolidated financial statements and the reported amounts of revenues and expenses during the reporting period. Management’s estimates are based on historical experiences and other factors, including expectations of future events that management believes to be reasonable under the circumstances. It also requires management to exercise judgment in the process of applying the Company’s accounting policies. Assumptions and estimates regarding the valuation of investments and their resulting impact on management and incentive fees involve a higher degree of judgment and complexity and these assumptions and estimates may be significant to the consolidated financial statements. Actual results could differ from these estimates and such differences could be material.

Investments

Investment transactions are recorded on the trade date. Realized gains or losses are measured by the difference between the net proceeds from the repayment or sale and the amortized cost basis of the investment using the specific identification method without regard to unrealized appreciation or depreciation previously recognized, and includes investments charged off during the period, net of recoveries. Net change in unrealized appreciation or depreciation on investments as presented in the accompanying Consolidated Statements of Operations reflects the net change in the fair value of investments, including the reversal of previously recorded unrealized appreciation or depreciation when gains or losses are realized. See Note 3, Fair Value Measurements, to these consolidated financial statements for further information about fair value measurements.

Cash, Cash Equivalents and Restricted Cash

Cash, cash equivalents and restricted cash consist of demand deposits and highly liquid investments (e.g., money market funds, U.S. treasury notes) with original maturities of three months or less. Cash equivalents are carried at amortized cost,

which approximates fair value. The Company’s cash, cash equivalents and restricted cash are held with two large financial institutions and cash held in such financial institutions may, at times, exceed the Federal Deposit Insurance Corporation insured limit. As of March 31, 2022 and December 31, 2021, the Company had restricted cash balances of $46,850 and $31,553, respectively, which represent amounts that are collected by trustees who have been appointed as custodians of the assets securing certain of the Company's financing transactions, and held for payment of interest expense and principal on the outstanding borrowings, or reinvestment into new assets. As of March 31, 2022 and December 31, 2021, approximately $1,067 and $269, respectively, of the restricted cash balances were denominated in a foreign currency.

Revenue Recognition

Interest from Investments and Realized Gain/Loss on Investments

Interest income is recorded on an accrual basis and includes the accretion of discounts and amortization of premiums. Discounts from and premiums to par value on debt investments purchased are accreted/amortized into interest income over the life of the respective security using the effective interest method. The amortized cost of debt investments represents the original cost, including origination fees and upfront fees received that are deemed to be an adjustment to yield, adjusted for the accretion of discounts and amortization of premiums, if any. At time of exit, the realized gain or loss on an investment is the difference between the amortized cost at time of exit and the cash received at exit using the specific identification method.

The Company may have loans in its portfolio that contain payment-in-kind (“PIK”) provisions. PIK represents interest that is accrued and recorded as interest income at the contractual rates, increases the loan principal on the respective capitalization dates, and is generally due at maturity. Such income is included in interest income in the Consolidated Statements of Operations. As of March 31, 2022 and December 31, 2021, the fair value of the loans in the portfolio with PIK provisions was $168,277 and $197,006, respectively, which represented approximately 8.6% and 9.5%, respectively, of total investments at fair value. For the three month periods ended March 31, 2022 and 2021, the Company earned $2,546 and $1,609, respectively, in PIK income, included in interest income in the Consolidated Statements of Operations.

Other Income

Other income may include income such as consent, waiver, amendment, unused, underwriting, arranger and prepayment fees associated with the Company’s investment activities as well as any fees for managerial assistance services rendered by the Company to the portfolio companies. Such fees are recognized as income when earned or the services are rendered. The Company may receive fees for guaranteeing the outstanding debt of a portfolio company. Such fees are amortized into other income over the life of the guarantee. The unamortized amount, if any, is included in prepaid expenses and other assets in the accompanying Consolidated Statements of Assets and Liabilities. For the three month periods ended March 31, 2022 and 2021, the Company earned $1,937 and $1,025, respectively, in other income, primarily from prepayment fees and underwriting fees.

Non-Accrual Income

Loans are generally placed on non-accrual status when principal or interest payments are past due 30 days or more or when there is reasonable doubt that principal or interest will be collected in full. Accrued and unpaid interest is generally reversed when a loan is placed on non-accrual status. Interest payments received on non-accrual loans may be recognized as income or applied to principal depending upon management’s judgment regarding collectability. Non-accrual loans are restored to accrual status when past due principal and interest are paid current and, in management’s judgment, are likely to remain current. Management may determine not to place a loan on non-accrual status if the loan has sufficient collateral value and is in the process of collection. As of March 31, 2022 and December 31, 2021, the fair value of loans on non-accrual status was $11,879 and $10,836, respectively, which represented approximately 0.6% and 0.5%, respectively, of the total investments at fair value. The remaining first and second lien debt investments were performing and current on their interest payments as of March 31, 2022 and December 31, 2021 and for the periods then ended.

Credit Facilities – Related Costs, Expenses and Deferred Financing Costs

The Company, the SPV and SPV2 have each entered into a senior secured revolving credit facility (as amended, the "Subscription Facility", "SPV Credit Facility" and "SPV2 Credit Facility", respectively, and together, the "Credit Facilities"). Interest expense and unused commitment fees on the Credit Facilities are recorded on an accrual basis. Unused commitment fees are included in credit facility fees in the accompanying Consolidated Statements of Operations.

The Credit Facilities are recorded at carrying value, which approximates fair value.

Deferred financing costs include capitalized expenses related to the closing or amendments of the Credit Facilities. Amortization of deferred financing costs for each credit facility is computed on the straight-line basis over the respective term of each credit facility. The unamortized balance of such costs is included in deferred financing costs in the accompanying Consolidated Statements of Assets and Liabilities. The amortization of such costs is included in credit facility fees in the accompanying Consolidated Statements of Operations.

Income Taxes

For federal income tax purposes, the Company has elected to be treated as a RIC under the Code, and intends to make the required distributions to its stockholders as specified therein. In order to qualify as a RIC, the Company must meet certain minimum distribution, source-of-income and asset diversification requirements. If such requirements are met, then the Company is generally required to pay income taxes only on the portion of its taxable income and gains it does not distribute.

The minimum distribution requirements applicable to RICs require the Company to distribute to its stockholders at least 90% of its investment company taxable income (“ICTI”), as defined by the Code, each year. Depending on the level of ICTI earned in a tax year, the Company may choose to carry forward ICTI in excess of current year distributions into the next tax year. Any such carryover ICTI must be distributed before the end of that next tax year through a dividend declared prior to filing the final tax return related to the year which generated such ICTI.

In addition, based on the excise distribution requirements, the Company is subject to a 4% nondeductible federal excise tax on undistributed income unless the Company distributes in a timely manner an amount at least equal to the sum of (1) 98% of its ordinary income for each calendar year, (2) 98.2% of capital gain net income (both long-term and short-term) for the one-year period ending October 31 in that calendar year and (3) any income realized, but not distributed, in the preceding years. For this purpose, however, any ordinary income or capital gain net income retained by the Company that is subject to corporate income tax is considered to have been distributed. The Company did not incur excise tax for the three month periods ended March 31, 2022 and 2021.

The Company evaluates tax positions taken or expected to be taken in the course of preparing its consolidated financial statements to determine whether the tax positions are “more likely than not” to be sustained by the applicable tax authority. All penalties and interest associated with income taxes, if any, are included in income tax expense. The SPVs are disregarded entities for tax purposes and are consolidated with the tax return of the Company. All penalties and interest associated with income taxes, if any, are included in income tax expense.

Dividends and Distributions to Common Stockholders

To the extent that the Company has taxable income available, the Company intends to make quarterly distributions to its common stockholders. Dividends and distributions to common stockholders are recorded on the record date. The amount to be distributed is determined by the Board of Directors each quarter and is generally based upon the taxable earnings estimated by management and available cash. Net realized capital gains, if any, are generally distributed at least annually, although the Company may decide to retain such capital gains for investment.

Dividends and distributions, if any, are paid in cash to common stockholders.

Functional Currency

The functional currency of the Company is the U.S. Dollar. Investments are generally made in the local currency of the country in which the investments are domiciled and are translated into U.S. Dollars with foreign currency translation gains or losses recorded within net change in unrealized appreciation (depreciation) on investments in the accompanying Consolidated Statements of Operations. Foreign currency translation gains and losses on non-investment assets and liabilities are separately reflected in the accompanying Consolidated Statements of Operations.

Recent Accounting Standards Updates

In March 2020, the FASB issued ASU No. 2020-04, “Reference Rate Reform (Topic 848),” which provides optional expedients and exceptions for applying GAAP to contracts, hedging relationships, and other transactions affected by reference rate reform if certain criteria are met. The amendments apply only to contracts, hedging relationships, and other transactions that reference London Interbank Offered Rate ("LIBOR") or another reference rate expected to be discontinued because of reference rate reform. In January 2021, the FASB issued ASU No. 2021-01, Reference Rate Reform (Topic 848), which expanded the scope of Topic 848 to include derivative instruments impacted by discounting transition. ASU 2020-04 and ASU

2021-01 are effective for all entities through December 31, 2022. The expedients and exceptions provided by the amendments do not apply to contract modifications and hedging relationships entered into or evaluated after December 31, 2022, except for hedging transactions as of December 31, 2022, that an entity has elected certain optional expedients for and that are retained through the end of the hedging relationship. The Company is currently evaluating the impact of adopting ASU 2020-04 and 2021-01 on its consolidated financial statements.

3. FAIR VALUE MEASUREMENTS

The Company applies fair value accounting in accordance with the terms of FASB ASC Topic 820, Fair Value Measurement (“ASC 820”). ASC 820 defines fair value as the amount that would be exchanged to sell an asset or transfer a liability in an orderly transfer between market participants at the measurement date. The Company values securities/instruments traded in active markets on the measurement date by multiplying the closing price of such traded securities/instruments by the quantity of shares or amount of the instrument held. The Company may also obtain quotes with respect to certain of its investments, such as its securities/instruments traded in active markets and its liquid securities/instruments that are not traded in active markets, from pricing services, brokers, or counterparties (i.e., “consensus pricing”). When doing so, the Company determines whether the quote obtained is sufficient according to U.S. GAAP to determine the fair value of the security. The Company may use the quote obtained or alternative pricing sources may be utilized including valuation techniques typically utilized for illiquid securities/instruments.

Securities/instruments that are illiquid or for which the pricing source does not provide a valuation or methodology or provides a valuation or methodology that, in the judgment of the Investment Adviser or the Company’s Board of Directors, does not represent fair value shall each be valued as of the measurement date using all techniques appropriate under the circumstances and for which sufficient data is available. These valuation techniques may vary by investment and include comparable public market valuations, comparable precedent transaction valuations and/or discounted cash flow analyses. The process generally used to determine the applicable value is as follows: (i) the value of each portfolio company or investment is initially reviewed by the investment professionals responsible for such portfolio company or investment and, for non-traded investments, a standardized template designed to approximate fair market value based on observable market inputs, updated credit statistics and unobservable inputs is used to determine a preliminary value, which is also reviewed alongside consensus pricing, where available; (ii) preliminary valuation conclusions are documented and reviewed by a valuation committee comprised of members of senior management; (iii) the Board of Directors engages a third-party valuation firm to provide positive assurance on portions of the Middle Market Senior Loans and equity investments portfolio each quarter (such that each non-traded investment is reviewed by a third-party valuation firm at least once on a rolling twelve month basis) including a review of management’s preliminary valuation and conclusion on fair value; (iv) if applicable, the Audit Committee of the Board of Directors (the “Audit Committee”) reviews the assessments of the Investment Adviser and the third-party valuation firm and provides the Board of Directors with any recommendations with respect to changes to the fair value of each investment in the portfolio; and (v) if applicable, the Board of Directors discusses the valuation recommendations of the Audit Committee and determines the fair value of each investment in the portfolio in good faith based on the input of the Investment Adviser and, where applicable, the third-party valuation firm.

All factors that might materially impact the value of an investment are considered, including, but not limited to the assessment of the following factors, as relevant:

•the nature and realizable value of any collateral;

•call features, put features and other relevant terms of debt;

•the portfolio company’s leverage and ability to make payments;

•the portfolio company’s public or private credit rating;

•the portfolio company’s actual and expected earnings and discounted cash flow;

•prevailing interest rates and spreads for similar securities and expected volatility in future interest rates;

•the markets in which the portfolio company does business and recent economic and/or market events; and

•comparisons to comparable transactions and publicly traded securities.

Investment performance data utilized are the most recently available financial statements and compliance certificates received from the portfolio companies as of the measurement date which in many cases may reflect a lag in information.

valuation, these estimated values may differ significantly from the values that would have been reported had a ready market for the investments existed, and it is reasonably possible that the difference could be material.

In addition, changes in the market environment and other events that may occur over the life of the investments may cause the realized gains or losses on investments to be different from the net change in unrealized appreciation or depreciation currently reflected in the consolidated financial statements as of March 31, 2022 and December 31, 2021.

U.S. GAAP establishes a hierarchical disclosure framework which ranks the level of observability of market price inputs used in measuring investments at fair value. The observability of inputs is impacted by a number of factors, including the type of investment and the characteristics specific to the investment and state of the marketplace, including the existence and transparency of transactions between market participants. Investments with readily available quoted prices or for which fair value can be measured from quoted prices in active markets generally have a higher degree of market price observability and a lesser degree of judgment applied in determining fair value.

Investments measured and reported at fair value are classified and disclosed based on the observability of inputs used in determination of fair values, as follows:

•Level 1—inputs to the valuation methodology are quoted prices available in active markets for identical investments as of the reporting date. Financial instruments in this category generally include unrestricted securities, including equities and derivatives, listed in active markets. The Company does not adjust the quoted price for these investments, even in situations where the Company holds a large position and a sale could reasonably impact the quoted price.

•Level 2—inputs to the valuation methodology are either directly or indirectly observable as of the reporting date and are those other than quoted prices in active markets. Financial instruments in this category generally include less liquid and restricted securities listed in active markets, securities traded in other than active markets, government and agency securities, and certain over-the-counter derivatives where the fair value is based on observable inputs.

•Level 3—inputs to the valuation methodology are unobservable and significant to overall fair value measurement. The inputs into the determination of fair value require significant management judgment or estimation. Financial instruments in this category generally include investments in privately-held entities, and certain over-the-counter derivatives where the fair value is based on unobservable inputs.

In certain cases, the inputs used to measure fair value may fall into different levels of the fair value hierarchy. In such cases, an investment’s level within the fair value hierarchy is based on the lowest level of input that is significant to the overall fair value measurement. The Investment Adviser’s assessment of the significance of a particular input to the fair value measurement in its entirety requires judgment, and considers factors specific to the investment.

Transfers between levels, if any, are recognized at the beginning of the quarter in which the transfers occur. For the three month periods ended March 31, 2022 and 2021, there were no transfers between levels.

The following tables summarize the Company’s investments measured at fair value on a recurring basis by the above fair value hierarchy levels as of March 31, 2022 and December 31, 2021:


	March 31, 2022
	Level 1		Level 2		Level 3		Total
Assets
First Lien Debt	$	—	$	—	$	1,607,929	$	1,607,929
Second Lien Debt	—		—		294,677		294,677
Equity Investments	—		—		58,749		58,749
Total	$	—	$	—	$	1,961,355	$	1,961,355


	December 31, 2021
	Level 1		Level 2		Level 3		Total
Assets
First Lien Debt	$	—	$	—	$	1,674,715	$	1,674,715
Second Lien Debt	—		—		337,899		337,899
Equity Investments	—		—		57,469		57,469
Total	$	—	$	—	$	2,070,083	$	2,070,083

The changes in the Company’s investments at fair value for which the Company has used Level 3 inputs to determine fair value and net change in unrealized appreciation (depreciation) included in earnings for Level 3 investments still held are as follows:


	Financial Assets
	For the three month period ended March 31, 2022
	First Lien Debt		Second Lien Debt		Equity Investments		Total
Balance, beginning of period	$	1,674,715	$	337,899	$	57,469	$	2,070,083
Purchases	62,012		248		1,371		63,631
Sales	—		—		—		—
Paydowns	(119,380)		(41,838)		(1,017)		(162,235)
Accretion of discount	3,013		768		7		3,788
Net realized gains (losses)	3,403		—		1,129		4,532
Net change in unrealized appreciation (depreciation)	(15,834)		(2,400)		(210)		(18,444)
Balance, end of period	$	1,607,929	$	294,677	$	58,749	$	1,961,355
Net change in unrealized appreciation (depreciation) included in earnings related to investments still held at the reporting date included in net change in unrealized appreciation (depreciation) on investments on the Consolidated Statements of Operations	$	(10,752)	$	(1,411)	$	(210)	$	(12,373)


	Financial Assets
	For the three month period ended March 31, 2021
	First Lien Debt		Second Lien Debt		Equity Investments		Total
Balance, beginning of period	$	1,523,542	$	260,258	$	27,735	$	1,811,535
Purchases	102,970		12,184		374		115,528
Sales	(64,656)		—		(1,127)		(65,783)
Paydowns	(28,553)		(2,531)		—		(31,084)
Accretion of discount	1,914		155		12		2,081
Net realized gains (losses)	1,134		—		681		1,815
Net change in unrealized appreciation (depreciation)	5,304		5,537		1,318		12,159
Balance, end of period	$	1,541,655	$	275,603	$	28,993	$	1,846,251
Net change in unrealized appreciation (depreciation) included in earnings related to investments still held at the reporting date included in net change in unrealized appreciation (depreciation) on investments on the Consolidated Statements of Operations	$	5,212	$	5,522	$	1,398	$	12,132

The Company generally uses the following framework when determining the fair value of investments that are categorized as Level 3:

Investments in debt securities are initially evaluated to determine whether the enterprise value of the portfolio company is greater than the applicable debt. The enterprise value of the portfolio company is estimated using a market approach and an income approach. The market approach utilizes market value (EBITDA) multiples of publicly traded comparable companies and available precedent sales transactions of comparable companies. The Company carefully considers numerous factors when selecting the appropriate companies whose multiples are used to value its portfolio companies. These factors include, but are

not limited to, the type of organization, similarity to the business being valued, relevant risk factors, as well as size, profitability and growth expectations. The income approach typically uses a discounted cash flow analysis of the portfolio company.

Investments in debt securities that do not have sufficient coverage through the enterprise value analysis are valued based on an expected probability of default and discount recovery analysis.

Investments in debt securities with sufficient coverage through the enterprise value analysis are generally valued using a discounted cash flow analysis of the underlying security. Projected cash flows in the discounted cash flow typically represent the relevant security’s contractual interest, fees and principal payments plus the assumption of full principal recovery at the security’s expected maturity date. The discount rate to be used is determined using an average of two market-based methodologies. Investments in debt securities may also be valued using consensus pricing.

Investments in equities are generally valued using a market approach and/or an income approach. The market approach utilizes EBITDA multiples of publicly traded comparable companies and available precedent sales transactions of comparable companies. The income approach typically uses a discounted cash flow analysis of the portfolio company.

The following tables summarize the quantitative information related to the significant unobservable inputs for Level 3 instruments which are carried at fair value as of March 31, 2022 and December 31, 2021:


	Fair Value as of March 31, 2022		Valuation Techniques	Significant Unobservable Inputs	Range
					Low		High		Weighted Average
Investments in First Lien Debt	$	1,456,911	Discounted Cash Flow	Discount Rate	4.07	%	14.40	%	7.70	%
	139,138		Consensus Pricing	Indicative Quotes	97.00	%	100.00	%	98.27	%
	11,880		Income Approach	Discount Rate	11.56	%	11.56	%	11.56	%

Total First Lien Debt	1,607,929
Investments in Second Lien Debt	266,018		Discounted Cash Flow	Discount Rate	7.26	%	14.69	%	9.66	%
	28,659		Consensus Pricing	Indicative Quotes	97.15	%	97.15	%	97.15	%
Total Second Lien Debt	294,677
Investments in Equity	58,749		Income Approach	Discount Rate	7.22	%	10.12	%	8.15	%
			Market Approach	Comparable Multiple	9.10x		17.79x		11.21x
Total Equity Investments	58,749
Total Level 3 Investments	$	1,961,355


	Fair Value as of December 31, 2021		Valuation Techniques	Significant Unobservable Inputs	Range
					Low		High		Weighted Average
Investments in First Lien Debt	$	1,430,227	Discounted Cash Flow	Discount Rate	3.90	%	13.99	%	7.13	%
	233,652		Consensus Pricing	Indicative Quotes	98.00	%	100.00	%	98.17	%
	10,836		Income Approach	Discount Rate	11.55	%	11.55	%	11.55	%

Total First Lien Debt	1,674,715
Investments in Second Lien Debt	300,262		Discounted Cash Flow	Discount Rate	7.11	%	15.83	%	9.55	%
	37,637		Consensus Pricing	Indicative Quotes	97.25	%	98.00	%	97.43	%
Total Second Lien Debt	337,899
Investments in Equity	57,469		Income Approach	Discount Rate	7.22	%	10.19	%	8.31	%
			Market Approach	Comparable Multiple	9.10x		16.43x		11.86x
Total Equity Investments	57,469
Total Level 3 Investments	$	2,070,083

The significant unobservable inputs used in the fair value measurement of the Company’s investments in first and second lien debt securities are discount rates, indicative quotes and comparable EBITDA multiples. Significant increases in discount rates in isolation would result in a significantly lower fair value measurement. Significant decreases in indicative quotes or comparable EBITDA multiples in isolation would result in a significantly lower fair value measurement.

The significant unobservable inputs used in the fair value measurement of the Company’s investments in equities are discount rates and comparable EBITDA multiples. Significant increases in discount rates in isolation would result in a significantly lower fair value measurement. Significant decreases in comparable EBITDA multiples in isolation would result in a significantly lower fair value measurement.

Financial instruments disclosed but not carried at fair value

The following table presents the carrying value and fair value of the Company’s secured borrowings disclosed but not carried at fair value as of March 31, 2022 and December 31, 2021:


	March 31, 2022				December 31, 2021
	Carrying Value		Fair Value		Carrying Value		Fair Value
Secured borrowings	$	889,297	$	889,297	$	966,947	$	966,947
Total	$	889,297	$	889,297	$	966,947	$	966,947

The carrying values of the secured borrowings generally approximate their respective fair values due to their variable interest rates and are categorized as Level 3 within the hierarchy. The significant unobservable inputs used in the fair value measurement of the Company’s secured borrowings are discount rates. Significant increases in discount rates would result in a significantly lower fair value measurement.

The carrying value of other financial assets and liabilities approximates their fair value based on the short term nature of these items.

4. RELATED PARTY TRANSACTIONS

Investment Advisory Agreement

On June 26, 2017, the Company entered into an investment advisory agreement (the “Investment Advisory Agreement”) with the Investment Adviser. The initial term of the Investment Advisory Agreement was two years from June 26, 2017 and, unless terminated earlier, the Investment Advisory Agreement renewed automatically for successive annual periods, provided that such continuance was specifically approved at least annually by the vote of the Board of Directors and by the vote of a majority of the directors who are not “interested persons” as defined in Section 2(a)(19) of the Investment Company Act (the “Independent Directors”). On May 26, 2021, the Company’s Board of Directors, including a majority of the Independent Directors, approved the continuance of the Company’s Investment Advisory Agreement with the Adviser for an additional one year term. Pursuant to relief granted by the SEC in light of the COVID-19 pandemic (the "Order") and a determination by the Board of Directors that reliance on the order was appropriate due to circumstances related to the current or potential side-effects of COVID-19, the May 26 meeting was held by video- and telephone-conference. On October 11, 2021, the Board, including all of its Independent Directors, reviewed and approved the terms of an amended and restated investment advisory agreement for an initial term of two years, conditional upon stockholders’ approval of the proposal to convert the Company to a perpetual life BDC as discussed below. Pursuant to the Order and a determination by the Board that reliance on the Order was appropriate due to circumstances related to the current or potential side effects of COVID-19, the October 11, 2021 meeting was held by video- and telephone-conference.

Pursuant to the Investment Advisory Agreement, which was amended and restated effective as of January 21, 2022 as discussed below, and subject to the overall supervision of the Board of Directors, the Investment Adviser provides investment advisory services to the Company. For providing these services, the Investment Adviser receives fees from the Company consisting of two components—a management fee and an incentive fee.

Under the Investment Advisory Agreement, the management fee was calculated and payable quarterly in arrears at an annual rate of 1.00% of the Company’s average Capital Under Management (as defined below) at the end of the then-current quarter and the prior calendar quarter (and, in the case of the Company’s first quarter, the Company’s Capital Under Management as of such quarter-end). “Capital Under Management” means cumulative capital called, less cumulative distributions categorized as Returned Capital. “Returned Capital” means unused capital commitments increased by the

aggregate amount of (i) any portion of distributions made by the Company to an investor during the Original Investment Period (as defined below) which represents (A) proceeds realized from the sale or repayment of any investment (as opposed to investment income) during the Investment Period (but not in excess of the cost of any such investment) or (B) a return of such investor’s capital contributions to the Company, as determined by the Board of Directors, and (ii) any amount drawn down by the Company from unused capital commitments to pay management fees, incentive fees, organizational expenses or Company expenses, to the extent such investor receives subsequent distributions. The “Original Investment Period” commenced on September 11, 2017 and was scheduled to expire September 11, 2021. On January 11, 2021, the Board of Directors extended the Investment Period for one additional one-year period through September 11, 2022. On January 11, 2021, the Company, in connection with the extension of the Investment Period to September 11, 2022, entered into a letter agreement with the Investment Adviser, under which the Adviser agreed that effective September 12, 2021 the annual rate of its management fee would decrease from a rate of 1.25% to 1.00% of the Company's average Capital Under Management. For the avoidance of doubt, Capital Under Management does not include capital acquired through the use of leverage, and Returned Capital does not include distributions of the Company’s investment income (i.e., proceeds received in respect of interest payments, dividends or fees, net of expenses) or net realized capital gains to the investors.

Under the Investment Advisory Agreement, the incentive fee consisted of two parts. The first part was calculated and payable quarterly in arrears and equaled 15% of pre-incentive fee net investment income for the immediately preceding calendar quarter, subject to a preferred return of 1.75% per quarter (7% annualized), or “hurdle rate,” and a “catch-up” feature. The second part was determined and payable in arrears as of the end of each calendar year in an amount equal to 15% of realized capital gains, if any, on a cumulative basis from inception through the end of each calendar year, computed net of all realized capital losses on a cumulative basis and unrealized capital depreciation less the aggregate amount of any previously paid capital gain incentive fees, provided that no incentive fee on capital gains is payable to the Investment Adviser unless cumulative total return exceeded a 7% annual return on weighted average cumulative capital called less cumulative distributions categorized as Returned Capital.

On January 21, 2022, stockholders approved the amended and restated investment advisory agreement, which the Company entered into effective as of the date of such approval (the “Amended and Restated Investment Advisory Agreement”). Pursuant to the Amended and Restated Investment Advisory Agreement, (i) the income-based incentive fee rate was reduced from 15.0% to 12.5%, and the "hurdle rate" was reduced from 1.75% (7.0% annualized) to 1.25% (5.0% annualized); (ii) the capital gains incentive fee was reduced from 15.0% to 12.5%; and (iii) the calculation of the annual base management fee was changed to 1.00% of the Company's net asset value as of the end of the immediately preceding calendar quarter (as adjusted for capital called, dividends reinvested, distributions paid and issuer share repurchases made during the current calendar quarter) from 1.00% of the Company's average capital under management. The terms of the Amended and Restated Investment Advisory Agreement were effective upon execution of the agreement, except for the change to the income-based incentive fee which became effective for the calendar quarter ending June 30, 2022. The Amended and Restated Investment Advisory Agreement will continue in effect until January 21, 2024 and, unless terminated earlier, will renew automatically for successive annual periods, provided that such continuance is specifically approved at least annually by the vote of the Board and by the vote of a majority of the Independent Directors. The Amended and Restated Investment Advisory Agreement will automatically terminate in the event of an assignment and may be terminated by either party without penalty upon at least 60 days’ written notice to the other party.

Below is a summary of the base management fees and incentive fees incurred during the three month period ended March 31, 2022 and 2021:


	For the three month periods ended
	March 31, 2022		March 31, 2021
Base management fees	$	2,800	$	3,075
Incentive fees on pre-incentive fee net investment income	4,917		4,126
Realized capital gains incentive fees	—		—
Accrued capital gains incentive fees	—		—
Total capital gains incentive fees	—		—
Total incentive fees	4,917		4,126
Total base management fees and incentive fees	$	7,717	$	7,201

Accrued capital gains incentive fees are based upon the cumulative net realized and unrealized appreciation (depreciation) from inception. Accordingly, the accrual for any capital gains incentive fee under U.S. GAAP in a given period may result in an additional expense if such cumulative amount is greater than in the prior period or a reduction of previously recorded expense if such cumulative amount is less than in the prior period. If such cumulative amount is negative, then there is no accrual.

As of March 31, 2022 and December 31, 2021, $7,720 and $7,763, respectively, were included in management and incentive fees payable in the accompanying Consolidated Statements of Assets and Liabilities.

On June 26, 2017, the Investment Adviser entered into a personnel agreement with The Carlyle Group Employee Co., L.L.C. (“Carlyle Employee Co.”), an affiliate of the Investment Adviser, pursuant to which Carlyle Employee Co. provides the Investment Adviser with access to investment professionals.

Administration Agreement

On April 18, 2017, the Company entered into an administration agreement (the “Administration Agreement”) with the Administrator. Unless terminated earlier, the Administration Agreement will renew automatically for successive annual periods, provided that such continuance is specifically approved at least annually by (i) the vote of the Board of Directors or by a majority vote of the outstanding voting securities of the Company and (ii) the vote of a majority of the Company’s Independent Directors. The Administration Agreement may not be assigned by a party without the consent of the other party and may be terminated by either party without penalty upon at least 60 days’ written notice to the other party. On May 26, 2021, the Company’s Board of Directors, including a majority of the Independent Directors, approved the continuance of the Company’s Administration Agreement with the Administrator for an additional one year term.

Pursuant to the Administration Agreement, the Administrator provides services and receives reimbursements equal to an amount that reimburses the Administrator for its costs and expenses and the Company's allocable portion of overhead incurred by the Administrator in performing its obligations under the Administration Agreement, including the Company's allocable portion of the compensation paid to or compensatory distributions received by the Company’s officers (including the Chief Compliance Officer, Chief Financial Officer, and Treasurer) and respective staff who provide services to the Company, operations staff who provide services to the Company, and any internal audit staff, to the extent internal audit performs a role in the Company's internal control assessment under the Sarbanes-Oxley Act of 2002 (the “Sarbanes-Oxley Act”). Reimbursement under the Administration Agreement occurs quarterly in arrears.

For the three month periods ended March 31, 2022 and 2021, the Company incurred $314 and $154, respectively, in fees under the Administration Agreement, which were included in administrative service fees in the accompanying Consolidated Statements of Operations. As of March 31, 2022 and December 31, 2021, $494 and $239, respectively, was unpaid and included in administrative service fees payable in the accompanying Consolidated Statements of Assets and Liabilities.

Sub-Administration Agreements

On June 26, 2017, the Administrator entered into sub-administration agreements with Carlyle Employee Co. (the “Carlyle Sub-Administration Agreement”). Pursuant to the Carlyle Sub-Administration Agreement, Carlyle Employee Co. provides the Administrator with access to personnel.

On June 22, 2017, the Administrator entered into a sub-administration agreement with State Street Bank and Trust Company (“State Street” and, such agreement, the “State Street Sub-Administration Agreement” and, together with the Carlyle Sub-Administration Agreements, the “Sub-Administration Agreements”).

On May 26, 2021, the Company’s Board of Directors, including a majority of the Independent Directors, approved the continuance of the Company’s Sub-Administration Agreements for an additional one year term.

For the three month periods ended March 31, 2022 and 2021, fees incurred in connection with the State Street Sub-Administration Agreement, which amounted to $263 and $173, respectively, were included in other general and administrative expenses in the accompanying Consolidated Statements of Operations. As of March 31, 2022 and December 31, 2021, $621 and $726, respectively, was unpaid and included in other accrued expenses and liabilities in the accompanying Consolidated Statements of Assets and Liabilities.

Placement Fees

On June 26, 2017, the Company entered into a placement fee arrangement with TCG Securities, L.L.C. (“TCG”), a licensed broker-dealer and an affiliate of the Investment Adviser, which may require stockholders to pay a placement fee to TCG for TCG’s services. No such fees were earned by TCG during the three month periods ended March 31, 2022 and 2021.

Board of Directors

The Company’s Board of Directors currently consists of eight members, five of whom are Independent Directors. The Board of Directors has established an audit committee and a pricing committee of the Board of Directors, and may establish additional committees in the future. For the three month periods ended March 31, 2022 and 2021, the Company incurred $95 and $59, respectively, in fees and expenses associated with its Independent Directors' services on the Company's Board of Directors and its committees. As of March 31, 2022, there were no unpaid directors' fees and expenses. As of December 31, 2021, $99 was unpaid and included in other accrued expenses and liabilities in the accompanying Consolidated Statements of Assets and Liabilities.

5. BORROWINGS

The Company, the SPV and SPV2 are party to the Credit Facilities as described below. In accordance with the Investment Company Act, the Company is currently only allowed to borrow amounts such that its asset coverage, as defined in the Investment Company Act, is at least 200% after such borrowing. As of March 31, 2022 and December 31, 2021, asset coverage was 229.23% and 220.61%, respectively, and the Company and the SPVs were in compliance with all covenants and other requirements under the Credit Facilities as of March 31, 2022 and December 31, 2021. Below is a summary of the borrowings and repayments under the Credit Facilities for the three month period ended March 31, 2022 and 2021.


	For the three month periods ended
	March 31, 2022		March 31, 2021
Outstanding borrowing, beginning of period	$	966,947	$	880,956
Borrowings	35,164		31,612
Repayments	(108,162)		(35,612)
Foreign currency translation	(4,652)		(593)
Outstanding borrowing, end of period	$	889,297	$	876,363

Subscription Facility

The Company entered into the Subscription Facility with a lender on October 3, 2017, which was subsequently amended on March 14, 2018, November 16, 2018, May 12, 2020 and October 2, 2020. The Subscription Facility provides for secured borrowings of $50,000. The maximum principal amount is subject to availability under the Subscription Facility, which is based on certain of the Company’s unfunded investor equity capital commitments, and restrictions imposed on borrowings under the Investment Company Act. The Subscription Facility has a maturity date of October 3, 2022. The Company may borrow amounts in U.S. Dollars or certain other permitted currencies. Borrowings under the Subscription Facility bear interest currently at LIBOR plus an applicable spread of 1.95% per year, subject to a 0.50% floor on LIBOR. The Company also pays a fee of 0.25% per year on undrawn amounts under the Subscription Facility.

Subject to certain exceptions, the Subscription Facility is secured by a first lien security interest in the Company’s unfunded investor equity capital commitments. The Subscription Facility includes customary covenants, certain limitations on the incurrence of additional indebtedness and liens, and other maintenance covenants, as well as usual and customary events of default for senior secured revolving credit facilities of this nature.

SPV Credit Facility

The SPV entered into the SPV Credit Facility with a lender on April 1, 2019, which was subsequently amended October 25, 2019, February 7, 2020, December 4, 2020, June 2, 2021, December 28, 2021 and March 28, 2022. The SPV Credit Facility provides for secured borrowings of $700,000, subject to availability under the SPV Credit Facility and restrictions imposed on borrowings under the Investment Company Act. The SPV Credit Facility has a revolving period through October 15, 2024 (October 15, 2022 prior to the March 2022 amendment), and a maturity date of April 1, 2026 (April 1, 2025 prior to the March 2022 amendment), with one one-year extension option, subject to the SPV's and lender's consent. The SPV may borrow amounts in U.S. Dollars or certain other permitted currencies. Borrowings under the SPV Credit

Facility bear interest initially at SOFR (LIBOR prior to the March 2022 amendment) (or, if applicable, a rate based on the prime rate or federal funds rate) plus 2.50% per year (2.40% prior to the March 2022 amendment). The SPV also pays a fee of between 0.50% and 0.75% per year on undrawn amounts under the SPV Credit Facility. Payments under the SPV Credit Facility are made quarterly. The lender has a first lien security interest on substantially all of the assets of the SPV.

SPV2 Credit Facility

SPV2 entered into the SPV2 Credit Facility with a lender on May 13, 2020, which was subsequently amended on February 11, 2021, August 13, 2021 and March 7, 2022. The SPV2 Credit Facility provides for secured borrowings during the applicable revolving period up to a principal amount of $450,000 as of March 31, 2022, subject to availability under the SPV2 Credit Facility and restrictions imposed on borrowings under the Investment Company Act. The SPV2 Credit Facility has a revolving period through March 7, 2025 (May 13, 2023 prior to the March 2022 amendment), and a maturity date of March 7, 2030 (May 13, 2028 prior to the March 2022 amendment). Borrowings under the SPV2 Credit Facility bear interest initially at LIBOR (or, if applicable, a rate based on the prime rate or federal funds rate plus 0.50%) plus 2.40% (2.66% prior to the March 2022 amendment). SPV2 pays a fee of 0.25% per year on undrawn amounts under the SPV2 Credit Facility. Payments under the SPV2 Credit Facility are made quarterly. The lender has a security interest on substantially all of the assets of SPV2.

Short Term Liabilities

In order to finance certain investment transactions, the Company may, from time to time, enter into repurchase agreements with Macquarie US Trading LLC (“Macquarie”), whereby the Company sells to Macquarie an investment that it holds and concurrently enters into an agreement to repurchase the same investment at an agreed-upon price at a future date, generally not to exceed 90-days from the date it was sold (the “Macquarie Transaction”).

In accordance with ASC 860, Transfers and Servicing, these Macquarie Transactions meet the criteria for secured borrowings. Accordingly, the investment financed by the Macquarie Transaction remains on the Company’s Consolidated Statements of Assets and Liabilities as an asset, and the Company records a liability to reflect its repurchase obligation to Macquarie (the “Repurchase Obligation”). The Repurchase Obligation is secured by the respective investment that is the subject of the repurchase agreement. Interest expense associated with the Repurchase Obligation is reported on the Company’s Consolidated Statements of Operations within Other expenses.

As of March 31, 2022 and December 31, 2021, the Company had no outstanding Repurchase Obligations. For the three month period ended March 31, 2022 and March 31, 2021, the Company did not enter into any repurchase agreements.

Summary of Credit Facilities

The Credit Facilities consisted of the following as of March 31, 2022 and December 31, 2021:


	March 31, 2022
	Total Facility		Borrowings Outstanding		Unused Portion (1)		Amount Available (2)
Subscription Facility	$	50,000	$	29,545	$	20,455	$	2,397
SPV Credit Facility	700,000		580,352		119,648		61,721
SPV2 Credit Facility	450,000		279,400		170,600		145,253
Total	$	1,200,000	$	889,297	$	310,703	$	209,371

	December 31, 2021
	Total Facility		Borrowings Outstanding		Unused Portion (1)		Amount Available (2)
Subscription Facility	$	50,000	$	30,190	$	19,810	$	1,744
SPV Credit Facility	700,000		594,357		105,643		30,961
SPV2 Credit Facility	450,000		342,400		107,600		107,600
Total	$	1,200,000	$	966,947	$	233,053	$	140,305

(1)The unused portion is the amount upon which commitment fees are based.

(2)Available for borrowing based on the computation of collateral to support the borrowings and subject to compliance with applicable covenants and financial ratios.

For the three month periods ended March 31, 2022 and 2021, the components of interest expense and credit facility fees were as follows:


	For the three month periods ended
	March 31, 2022			March 31, 2021
Interest expense	$	6,198		$	5,861
Facility unused commitment fee	301			73
Amortization of deferred financing costs	403			285

Total interest expense and credit facility fees	$	6,902		$	6,219
Cash paid for interest expense	$	6,575		$	5,956

Average principal debt outstanding	$	929,713		$	889,029
Weighted average interest rate	2.65		%	2.64		%

As of March 31, 2022 and December 31, 2021, the components of interest and credit facility fees payable were as follows:


	As of
	March 31, 2022			December 31, 2021
Interest expense payable	$	5,202		$	5,506
Unused commitment fees payable	292			70
Total interest expense and credit facility fees payable	$	5,494		$	5,576
Weighted average interest rate (1)	2.70		%	2.63		%

(1) Based on floating LIBOR rates.

6. COMMITMENTS AND CONTINGENCIES

A summary of significant contractual payment obligations was as follows as of March 31, 2022 and December 31, 2021:


	As of
Payment Due by Period	March 31, 2022		December 31, 2021
Less than 1 Year	$	29,545	$	30,190
1-3 Years	—		—
3-5 Years	580,352		594,357
More than 5 Years	279,400		342,400
Total	$	889,297	$	966,947

In the ordinary course of its business, the Company enters into contracts or agreements that contain indemnification or warranties. Future events could occur that lead to the execution of these provisions against the Company. The Company believes that the likelihood of such an event is remote; however, the maximum potential exposure is unknown. No accrual has been made in the consolidated financial statements as of March 31, 2022 and December 31, 2021 for any such exposure.

The Company has in the past, currently are and may in the future become obligated to fund commitments such as revolving credit facilities, bridge financing commitments, or delayed draw commitments. The Company had the following unfunded commitments to fund delayed draw and revolving senior secured loans as of the indicated dates:


	Par Value as of
	March 31, 2022		December 31, 2021
Unfunded delayed draw commitments	$	80,046	$	66,093
Unfunded revolving commitments	67,599		70,272
Total unfunded commitments	$	147,645	$	136,365

7. NET ASSETS

The Company has the authority to issue 200,000,000 shares of common stock, $0.01 per share par value.

The following table summarizes capital activity during the three month period ended March 31, 2022:


	Common Stock			Capital in Excess of Par Value		Accumulated Net Investment Income (Loss)		Accumulated Net Realized Gain (Loss)		Accumulated Net Unrealized Appreciation (Depreciation)		Total Net Assets
	Shares	Amount
Balance, beginning of period	57,005,057	$	570	$	1,160,819	$	2,212	$	3,795	$	(1,155)	$	1,166,241

Net investment income (loss)	—	—		—		27,976		—		—		27,976
Net realized gain (loss)	—	—		—		—		3,194		—		3,194
Net change in unrealized appreciation (depreciation) on investments	—	—		—		—		—		(18,444)		(18,444)
Net change in unrealized currency gains (losses) on non-investment assets and liabilities	—	—		—		—		—		4,652		4,652
Dividends declared	—	—		—		(28,503)		(5,914)		—		(34,417)

Balance, end of period	57,005,057	$	570	$	1,160,819	$	1,685	$	1,075	$	(14,947)	$	1,149,202

The following table summarizes capital activity during the three month period ended March 31, 2021:


	Common Stock			Capital in Excess of Par Value		Accumulated Net Investment Income (Loss)		Accumulated Net Realized Gain (Loss)		Accumulated Net Unrealized Appreciation (Depreciation)		Total Net Assets
	Shares	Amount
Balance, beginning of period	49,062,820	$	491	$	996,001	$	1,117	$	(6,891)	$	(27,582)	$	963,136



Net investment income (loss)	—	—		—		23,402		—		—		23,402
Net realized gain (loss)	—	—		—		—		1,773		—		1,773
Net change in unrealized appreciation (depreciation) on investments	—	—		—		—		—		12,159		12,159
Net change in unrealized currency gains (losses) on non-investment assets and liabilities	—	—		—		—		—		635		635
Dividends declared	—	—		—		(23,550)		—		—		(23,550)

Balance, end of period	49,062,820	$	491	$	996,001	$	969	$	(5,118)	$	(14,788)	$	977,555

The Company did not issue common shares during the three month periods ended March 31, 2022 and 2021.

The Company computes earnings per common share in accordance with ASC 260, Earnings Per Share. Basic earnings per common share were calculated by dividing net increase (decrease) in net assets resulting from operations attributable to the Company by the weighted-average number of common shares outstanding for the period.

Basic and diluted earnings per common share were as follows:


	For the three month periods ended
	March 31, 2022		March 31, 2021
Net increase (decrease) in net assets resulting from operations	$	17,378	$	37,969
Weighted-average common shares outstanding	57,005,057		49,062,820
Basic and diluted earnings per common share	$	0.30	$	0.77

The following table summarizes the Company’s dividends declared during the two most recent fiscal years and the current fiscal year-to-date:

Date Declared

Record Date

Payment Date

Per Share Amount

March 4, 2020

April 17, 2020

0.53

June 30, 2020

July 17, 2020

0.45

September 28, 2020

October 16, 2020

0.46

December 14, 2020

January 15, 2021

0.50

March 30, 2021

April 16, 2021

0.48

June 29, 2021

July 16, 2021

0.48

September 29, 2021

October 15, 2021

0.49

December 20, 2021

December 30, 2021

January 18, 2022

0.48

March 25, 2022

April 18, 2022

0.50

March 25, 2022

April 18, 2022

0.10

(1)

(1) Represents a capital gain distribution of $0.103745 per share.

8. CONSOLIDATED FINANCIAL HIGHLIGHTS

The following is a schedule of consolidated financial highlights for the three month period ended March 31, 2022 and 2021:


	For the three month period ended
	March 31, 2022			March 31, 2021
Per Share Data:
Net asset value per share, beginning of period	$	20.46		$	19.63
Net investment income (loss) (1)	0.49			0.48
Net realized gain (loss) and net change in unrealized appreciation (depreciation) on investments and non-investment assets and liabilities	(0.19)			0.29
Net increase (decrease) in net assets resulting from operations	0.30			0.77
Dividends declared (2)	(0.60)			(0.48)


Net asset value per share, end of period	$	20.16		$	19.92

Number of shares outstanding, end of period	57,005,057			49,062,820
Total return based on net asset value (3)	1.47		%	3.92		%
Net assets, end of period	$	1,149,202		$	977,555
Ratio to average net assets (4):
Expenses before incentive fees	1.03		%	1.06		%
Expenses after incentive fees	1.46		%	1.49		%
Net investment income (loss)	2.42		%	2.41		%
Interest expense and credit facility fees	0.60		%	0.64		%
Ratios/Supplemental Data:
Asset coverage, end of period	229.23		%	211.55		%
Portfolio turnover	3.12		%	5.30		%
Total committed capital, end of period	$	1,227,312		$	1,227,312
Ratio of total contributed capital to total committed capital, end of period	94.73		%	81.28		%
Weighted-average shares outstanding	57,005,057			49,062,820

(1)Net investment income (loss) per share was calculated as net investment income (loss) for the period divided by the weighted average number of shares outstanding for the period.

(2)Dividends declared per share was calculated as the sum of dividends declared during the period divided by the number of shares outstanding at the quarter-end date (refer to Note 7, Net Assets to these consolidated financial statements).

(3)Total return based on net asset value (not annualized) is based on the change in net asset value per share during the period plus the declared dividends divided by the beginning net asset value for the period.

(4)These ratios to average net assets have not been annualized.

9. LITIGATION

The Company may become party to certain lawsuits in the ordinary course of business. The Company does not believe that the outcome of current matters, if any, will materially impact the Company or its consolidated financial statements. As of March 31, 2022 and December 31, 2021, the Company was not subject to any material legal proceedings, nor, to the Company’s knowledge, is any material legal proceeding threatened against the Company.

In addition, portfolio investments of the Company could be the subject of litigation or regulatory investigations in the ordinary course of business. The Company does not believe that the outcome of any current contingent liabilities of its portfolio investments, if any, will materially affect the Company or these consolidated financial statements.

10. TAX

The Company has not recorded a liability for any uncertain tax positions pursuant to the provisions of ASC 740, Income Taxes, as of March 31, 2022 and March 31, 2021.

In the normal course of business, the Company is subject to examination by federal and certain state, local and foreign tax regulators. The Company elected a tax year-end of June 30.

The Company's taxable income for each period is an estimate and will not be finally determined until the Company files its tax return for each year. Therefore, the final taxable income earned in each period and carried forward for distribution in the following period may be different than this estimate. The tax character of the distributions paid for the period from July 1, 2021 to March 31, 2022 and for the period from July 1, 2020 to March 31, 2021 was as follows:


	For the period from July 1, 2021 to March 31, 2022		For the period from July 1, 2020 to March 31, 2021
Ordinary income	$	82,274	$	69,181
Long-term capital gains	$	5,914	$	—
Tax return of capital	—		—

11. SUBSEQUENT EVENTS

On April 5, 2022, CDL Tender Fund 2022-1, L.P. (the “Purchaser”) launched a special tender offer (the “Offer”) to purchase up to $100,000,000 in aggregate amount of shares of the Company’s common stock at a purchase price of $20.13 per share (the “Purchase Price”), which represented the net asset value per share of the Company’s common stock as determined by the Company on March 29, 2022. The Offer expired on May 3, 2022. The Purchaser accepted for purchase $100,000,000 in aggregate amount of the Company’s common stock at the Purchase Price, which represented approximately 8.71% of the total number of the Company’s outstanding shares of common stock as of May 6, 2022. The Purchaser is wholly owned by its limited partners, the Investment Adviser, Cliffwater Corporate Lending Fund, a Delaware statutory trust, and AlpInvest Indigo I CI-A, L.P., a Delaware limited partnership which is advised by an affiliate of the Investment Adviser. These limited partners contributed approximately $28.6 million, $50.0 million and $21.4 million, respectively, in cash to the Purchaser to fund the purchase of the shares.

Item 2. Management’s Discussion and Analysis of Financial Condition and Results of Operations.

(dollar amounts in thousands, except per share data, unless otherwise indicated)

CAUTIONARY STATEMENT REGARDING FORWARD-LOOKING STATEMENTS

We have included or incorporated by reference in this Form 10-Q, and from time to time our management may make, “forward-looking statements”. These forward-looking statements are not historical facts, but instead relate to future events or the future performance or financial condition of Carlyle Credit Solutions, Inc. (together with its consolidated subsidiaries, “we,” “us,” “our,” “CARS” or the “Company”). These statements are based on current expectations, estimates and projections about us, our current or prospective portfolio investments, our industry, our beliefs, and our assumptions. The forward-looking statements contained in this Form 10-Q involve a number of risks and uncertainties, including statements concerning:

•our, or our portfolio companies’, future business, operations, operating results or prospects, including our and their ability to achieve our respective objectives as a result of the COVID-19 pandemic;

•the return or impact of current and future investments;

•the general economy and its impact on the industries in which we invest, and the impact of the COVID-19 pandemic thereon;

•the impact of any protracted decline in the liquidity of credit markets on our business;

•the impact of fluctuations in interest rates on our business, including from the discontinuation of LIBOR and the implementation of alternatives to LIBOR;

•the valuation of our investments in portfolio companies, particularly those having no liquid trading market, and the impact of the COVID-19 pandemic thereon;

•the impact of supply chain constraints on our portfolio companies and the global economy;

•the elevating levels of inflation, and its impact on our portfolio companies and on the industries in which we invest;

•the impact on our business of changes in laws, policies or regulations (including the interpretation thereof) affecting our operations or the operations of our portfolio companies;

•our ability to recover unrealized losses;

•market conditions and our ability to access alternative debt markets and additional debt and equity capital, and the impact of the COVID-19 pandemic thereon;

•our contractual arrangements and relationships with third parties;

•uncertainty surrounding the financial stability of the United States, Europe and China;

•the social, geopolitical, financial, trade and legal implications of the exit of the United Kingdom from the European Union, or Brexit;

•competition with other entities and our affiliates for investment opportunities;

•the speculative and illiquid nature of our investments;

•the use of borrowed money to finance a portion of our investments;

•our expected financings and investments;

•our intention to conduct recurring quarterly tender offers for a limited number of shares of our common stock, subject to market and other conditions (the "Quarterly Tender Offer");

•the adequacy of our cash resources and working capital;

•the timing, form and amount of any dividend distributions;

•the timing of cash flows, if any, from the operations of our portfolio companies, and the impact of the COVID-19 pandemic thereon;

•the ability to consummate acquisitions;

•the ability of Carlyle Global Credit Investment Management L.L.C. (the "Investment Adviser") to locate suitable investments for us and to monitor and administer our investments;

•currency fluctuations could adversely affect the results of our investments in foreign companies, particularly to the extent that we receive payments denominated in foreign currency rather than U.S. dollars;

•the impact of information technology system failures, data security breaches, data privacy compliance, network disruptions, and cybersecurity attacks;

•the ability of The Carlyle Group Employee Co., L.L.C. to attract and retain highly talented professionals that can provide services to our Investment Adviser and Carlyle Global Credit Administration L.L.C. (the "Administrator");

•our ability to maintain our status as a business development company; and

•our intent to satisfy the requirements of a regulated investment company under Subchapter M of the Internal Revenue Code of 1986, as amended.

We use words such as “anticipates,” “believes,” “expects,” “intends,” “will,” “should,” “may,” “plans,” “continue,” “believes,” “seeks,” “estimates,” “would,” “could,” “targets,” “projects,” “outlook,” “potential,” “predicts” and variations of these words and similar expressions to identify forward-looking statements, although not all forward-looking statements include these words. Our actual results and condition could differ materially from those implied or expressed in the forward-looking statements for any reason, including the factors set forth in “Risk Factors” in Part I, Item 1A of our annual report for the year ended December 31, 2021 (our “2021 Form 10-K”).

We have based the forward-looking statements included in this Form 10-Q on information available to us on the date of this Form 10-Q, and we assume no obligation to update any such forward-looking statements. Although we undertake no obligation to revise or update any forward-looking statements, whether as a result of new information, future events or otherwise, you are advised to consult any additional disclosures that we may make directly to you or through reports that we have filed or in the future may file with the Securities and Exchange Commission (the “SEC”), including our annual reports on Form 10-K, quarterly reports on Form 10-Q and current reports on Form 8-K.

OVERVIEW

The following discussion and analysis of our financial condition and results of operations should be read in conjunction with Part I, Item 1 of this Form 10-Q “Financial Statements.” This discussion contains forward-looking statements and involves numerous risks and uncertainties, including, but not limited to those described in "Risk Factors" in Part I, Item 1A of our 2021 Form 10-K. Our actual results could differ materially from those anticipated by such forward-looking statements due to factors discussed under “Risk Factors” in our 2021 Form 10-K and “Cautionary Statements Regarding Forward-Looking Statements” appearing elsewhere in this Form 10-Q.

We were incorporated on February 10, 2017 as a Maryland corporation with the name Carlyle Private Credit, Inc. Our name was changed to TCG BDC II, Inc. on March 3, 2017, and was changed again to Carlyle Credit Solutions, Inc. on March 29, 2022. We are structured as an externally managed, non-diversified closed-end investment company. On September 11, 2017, we completed our initial closing of capital commitments (together with subsequent closings, the “Initial Private Offering”) and subsequently commenced substantial investment operations. On January 21, 2022, stockholders approved our conversion from a finite life private BDC with no interim liquidity to a private BDC with a perpetual life and a regular quarterly liquidity program. The conversion extends indefinitely our finite term and finite investment period and permits us to accept new subscriptions for shares of our common stock in a new continuous private offering (the “New Continuous Offering”). We conducted the Initial Private Offering and intend to conduct the New Continuous Offering of our shares of common stock to investors in reliance on exemptions from the registration requirements of the Securities Act of 1933, as amended. We have elected to be regulated as a business development company ("BDC") under the Investment Company Act of 1940, as amended (together with the rules and regulations promulgated thereunder, the "Investment Company Act"). We have elected to be treated, and intend to continue to comply with the requirements to qualify annually, as a regulated investment company ("RIC") under Subchapter M of the of the Internal Revenue Code of 1986, as amended (together with the rules and regulations promulgated thereunder, the “Code”). We have an indefinite term.

Our investment objective is to generate attractive risk adjusted returns and current income primarily by investing in senior secured term loans to U.S. middle market companies in which private equity sponsors hold, directly or indirectly, a financial interest in the form of debt and/or equity. Our core investment strategy focuses on lending to U.S. middle market companies supported by financial sponsors, which we define as companies with approximately $25 million to $100 million of earnings before interest, taxes, depreciation and amortization (“EBITDA”), which we believe is a useful proxy for cash flow. This core strategy is supplemented with our complementary specialty lending strategy, which takes advantage of the broad

capabilities of Carlyle's Global Credit platform while offering risk-diversifying portfolio benefits. Generally, we expect our core strategy and our complementary strategy to be 70-85% and 15-30%, respectively, of the portfolio. We seek to achieve our investment objective primarily through direct origination of secured debt instruments, including first lien senior secured loans (which may include stand-alone first lien loans, first lien/last out loans and “unitranche” loans) and second lien senior secured loans (collectively, “Middle Market Senior Loans”), with a minority of our assets invested in investments that are typically higher yielding than Middle Market Senior Loans (which may include unsecured debt, mezzanine debt and investments in equities).

We invest primarily in loans to middle market companies whose debt, if rated, is rated below investment grade and, if not rated, would likely be rated below investment grade if it were rated (that is, below BBB- or Baa3, which is often referred to as "junk"). Exposure to below investment grade instruments involves certain risks, including speculation with respect to the borrower's capacity to pay interest and repay principal.

We are externally managed by our Investment Adviser, an investment adviser registered under the Investment Advisers Act of 1940, as amended. Our Administrator provides the administrative services necessary for us to operate. Both our Investment Adviser and our Administrator are wholly owned subsidiaries of Carlyle Investment Management L.L.C., a subsidiary of Carlyle. As of March 31, 2022, our Investment Adviser’s investment team included a team of more than 180 investment professionals across the Carlyle Global Credit segment. Our Investment Adviser’s five-person investment committee is responsible for reviewing and approving our investment opportunities. The members of the investment committee have experience investing through different credit cycles. Our Investment Adviser’s investment committee comprises five of the most senior credit professionals within the Carlyle Global Credit segment, with backgrounds and expertise across asset classes and over 26 years of average industry experience and 10 years of average tenure. In addition, our Investment Adviser and its investment team are supported by a team of finance, operations and administrative professionals currently employed by Carlyle Employee Co., a wholly owned subsidiary of Carlyle.

In conducting our investment activities, we believe that we benefit from the significant scale and resources of Carlyle, including our Investment Adviser and its affiliates.

KEY COMPONENTS OF OUR CONSOLIDATED RESULTS OF OPERATIONS

Investments

Our level of investment activity can and does vary substantially from period to period depending on many factors, including the amount of debt available to middle market companies, the general economic environment and the competitive environment for the type of investments we make.

Revenue

We generate revenue primarily in the form of interest income on debt investments we hold. In addition, we generate income from dividends on direct equity investments, capital gains on the sales of loans and debt and equity securities and various loan origination and other fees. Our debt investments generally have a stated term of five to eight years and generally bear interest at a floating rate usually determined on the basis of a benchmark such as LIBOR. Interest on these debt investments is generally paid quarterly. In some instances, we receive payments on our debt investments based on scheduled amortization of the outstanding balances. In addition, we receive repayments of some of our debt investments prior to their scheduled maturity date. The frequency or volume of these repayments fluctuates significantly from period to period. Our portfolio activity also reflects the proceeds of sales of securities. We may also generate revenue in the form of commitment, origination, amendment, structuring or due diligence fees, fees for providing managerial assistance and consulting fees.

Expenses

Our primary operating expenses include the payment of: (i) investment advisory fees, including management fees and incentive fees, to our Investment Adviser pursuant to the Amended and Restated Investment Advisory Agreement between us and our Investment Adviser; (ii) costs and other expenses and our allocable portion of overhead incurred by our Administrator in performing its administrative obligations under an administration agreement between us and our Administrator; (iii) debt service and other costs of borrowings or other financing arrangements; and (iv) other operating expenses as detailed below:

•administration fees payable under our sub-administration agreements, including related expenses;

•the costs of any other offerings of our common stock and other securities, if any;

•calculating individual asset values and our net asset value (including the cost and expenses of any independent valuation firms);

•expenses, including travel expenses, incurred by our Investment Adviser, or members of our Investment Adviser team managing our investments, or payable to third parties, performing due diligence on prospective portfolio companies and, if necessary, expenses of enforcing our rights;

•certain costs and expenses relating to distributions paid on our shares;

•the allocated costs incurred by our Investment Adviser in providing managerial assistance to those portfolio companies that request it;

•amounts payable to third parties relating to, or associated with, making or holding investments;

•the costs associated with subscriptions to data service, research-related subscriptions and expenses and quotation equipment and services used in making or holding investments;

•transfer agent and custodial fees;

•costs of hedging;

•commissions and other compensation payable to brokers or dealers;

•federal and state registration fees;

•any U.S. federal, state and local taxes, including any excise taxes;

•independent director fees and expenses;

•costs of preparing financial statements and maintaining books and records, costs of preparing tax returns, costs of Sarbanes-Oxley Act compliance and attestation and costs of filing reports or other documents with the SEC (or other regulatory bodies), and other reporting and compliance costs, including registration and listing fees, and the compensation of professionals responsible for the preparation or review of the foregoing;

•the costs of any reports, proxy statements or other notices to our stockholders (including printing and mailing costs), the costs of any stockholders’ meetings and the compensation of investor relations personnel responsible for the preparation of the foregoing and related matters;

•the costs of specialty and custom software for monitoring risk, compliance and overall portfolio, including any development costs incurred prior to the filing of our election to be regulated as a BDC;

•our fidelity bond;

•directors and officers/errors and omissions liability insurance, and any other insurance premiums;

•indemnification payments;

•direct fees and expenses associated with independent audits, agency, consulting and legal costs; and

•all other expenses incurred by us or our Administrator in connection with administering our business, including our allocable share of certain officers and their staff compensation.

We expect our general and administrative expenses to be relatively stable or to decline as a percentage of total assets during periods of asset growth and to increase during periods of asset declines.

PORTFOLIO AND INVESTMENT ACTIVITY

Below is a summary of certain characteristics of our investment portfolio as of March 31, 2022 and December 31, 2021.


	As of
	March 31, 2022		December 31, 2021
Number of investments	130		126
Number of portfolio companies	99		97
Number of industries	25		25

Percentage of total investment fair value:


First Lien Debt	82.0	%	80.9	%
Second Lien Debt	15.0	%	16.3	%
Total secured debt	97.0	%	97.2	%
Equity investments	3.0	%	2.8	%
Percentage of debt investment fair value:
Floating rate (1)	97.5	%	97.6	%
Fixed interest rate	2.5	%	2.4	%

(1) Primarily subject to interest rate floors.

Our investment activity for the three month periods ended March 31, 2022 and 2021 is presented below (information presented herein is at amortized cost unless otherwise indicated):


	For the three month periods ended
	March 31, 2022			March 31, 2021
Investments:
Total investments, beginning of period	$	2,070,975		$	1,833,385
New investments purchased	63,631			115,528
Net accretion of discount on investments	3,788			2,081
Net realized gain (loss) on investments	4,532			1,815
Investments sold or repaid	(162,235)			(96,867)
Total Investments, end of period	$	1,980,691		$	1,855,942
Principal amount of investments funded:


First Lien Debt	$	61,781		$	104,325
Second Lien Debt	249			12,369
Equity Investments	817			643
Total	$	62,847		$	117,337
Principal amount of investments sold or repaid:


First Lien Debt	$	(108,686)		$	(93,450)
Second Lien Debt	(41,838)			(2,531)
Equity Investments	—			—
Total	$	(150,524)		$	(95,981)
Number of new funded investments	9			10
Average amount of new funded investments	$	4,788		$	8,975
Percentage of new funded debt investments at floating interest rates	100		%	100		%
Percentage of new funded debt investments at fixed interest rates	—		%	—		%

As of March 31, 2022 and December 31, 2021, investments consisted of the following:


	March 31, 2022				December 31, 2021
	Amortized Cost		Fair Value		Amortized Cost		Fair Value


First Lien Debt	$	1,632,598	$	1,607,929	$	1,683,550	$	1,674,715
Second Lien Debt	297,254		294,677		338,076		337,899
Equity Investments	50,839		58,749		49,349		57,469
Total	$	1,980,691	$	1,961,355	$	2,070,975	$	2,070,083

The weighted average yields (1) for our first and second lien debt, based on the amortized cost and fair value as of March 31, 2022 and December 31, 2021, were as follows:


	March 31, 2022				December 31, 2021
	Amortized Cost		Fair Value		Amortized Cost		Fair Value


First Lien Debt Total	7.68	%	7.80	%	7.71	%	7.75	%
Second Lien Debt	9.32	%	9.40	%	9.11	%	9.12	%
First and Second Lien Debt Total	7.93	%	8.05	%	7.95	%	7.98	%

(1)Weighted average yields include the effect of accretion of discounts and amortization of premiums and are based on interest rates as of March 31, 2022 and December 31, 2021. Weighted average yield on debt and income producing securities at fair value is computed as (a) the annual stated interest rate or yield earned plus the net annual amortization of original issue discount ("OID") and market discount earned on accruing debt included in such securities, divided by (b) total first lien and second lien debt at fair value included in such securities. Weighted average yield on debt and income producing securities at amortized cost is computed as (a) the annual stated interest rate or yield earned plus the net annual amortization of OID and market discount earned on accruing debt included in such securities, divided by (b) total first lien and second lien debt at amortized cost included in such securities. Actual yields earned over the life of each investment could differ materially from the yields presented above.

Total weighted average yields (which includes the effect of accretion of discount and amortization of premiums) of our first and second lien debt investments as measured on an amortized cost basis decreased slightly from 7.95% to 7.93% from December 31, 2021 to March 31, 2022.

As of March 31, 2022 and December 31, 2021, one and one of our debt investments was on non-accrual status, respectively. The remaining first and second lien debt investments were performing and current on their interest payments as of March 31, 2022 and December 31, 2021. The following table summarizes the fair value of our performing and non-accrual/non-performing investments as of March 31, 2022 and December 31, 2021:


	March 31, 2022				December 31, 2021
	Fair Value		Percentage		Fair Value		Percentage
Performing	$	1,949,476	99.4	%	$	2,059,247	99.5	%
Non-accrual (1)	11,879		0.6	%	10,836		0.5	%
Total	$	1,961,355	100.0	%	$	2,070,083	100.0	%

(1) For information regarding our non-accrual policy, see Note 2, Significant Accounting Policies, to our consolidated financial statements in Part I, Item 1 of this Form 10-Q.

As part of the monitoring process, our Investment Adviser has developed risk policies pursuant to which it regularly assesses the risk profile of each of our debt investments and rates each of them based on the following categories, which we refer to as “Internal Risk Ratings”. Pursuant to these risk policies, an Internal Risk Rating of 1 – 5, which are defined below, is assigned to each debt investment in our portfolio. Key drivers of internal risk ratings include financial metrics, financial covenants, liquidity and enterprise value coverage.

Internal Risk Ratings Definitions


Rating						Definition
1						Borrower is operating above expectations, and the trends and risk factors are generally favorable.

2						Borrower is operating generally as expected or at an acceptable level of performance. The level of risk to our initial cost bases is similar to the risk to our initial cost basis at the time of origination. This is the initial risk rating assigned to all new borrowers.

3						Borrower is operating below expectations and level of risk to our cost basis has increased since the time of origination. The borrower may be out of compliance with debt covenants. Payments are generally current although there may be higher risk of payment default.

4						Borrower is operating materially below expectations and the loan’s risk has increased materially since origination. In addition to the borrower being generally out of compliance with debt covenants, loan payments may be past due, but generally not by more than 120 days. It is anticipated that we may not recoup our initial cost basis and may realize a loss of our initial cost basis upon exit.

5						Borrower is operating substantially below expectations and the loan’s risk has increased substantially since origination. Most or all of the debt covenants are out of compliance and payments are substantially delinquent. It is anticipated that we will not recoup our initial cost basis and may realize a substantial loss of our initial cost basis upon exit.

Our Investment Adviser monitors and, when appropriate, changes the risk ratings assigned to each debt investment in our portfolio. Our Investment Adviser reviews our investment ratings in connection with our quarterly valuation process. The below table summarizes the Internal Risk Ratings as of March 31, 2022 and December 31, 2021.


	March 31, 2022				December 31, 2021
	Fair Value		% of Fair Value		Fair Value		% of Fair Value
(dollar amounts in millions)
Internal Risk Rating 1	$	59.1	3.1	%	$	39.6	2.0	%
Internal Risk Rating 2	1,540.6		81.0		1,671.7		83.1
Internal Risk Rating 3	291.0		15.3		290.5		14.4
Internal Risk Rating 4	—		—		—		—
Internal Risk Rating 5	11.9		0.6		10.8		0.5
Total	$	1,902.6	100.0	%	$	2,012.6	100.0	%

As of March 31, 2022 and December 31, 2021, the weighted average Internal Risk Rating of our debt investment portfolio was 2.1 and 2.1, respectively. As of March 31, 2022 and December 31, 2021, one and one of our debt investments, with an aggregate fair value of $11.9 million and $10.8 million, respectively, was assigned an Internal Risk Rating of 5.

See the Consolidated Schedules of Investments as of March 31, 2022 and December 31, 2021 in our consolidated financial statements in Part I, Item 1 of this Form 10-Q for more information on our investments, including a list of companies and type and amount of investments.

CONSOLIDATED RESULTS OF OPERATIONS

For the three month periods ended March 31, 2022 and 2021

The net increase or decrease in net assets from operations may vary substantially from period to period as a result of various factors, including the recognition of realized gains and losses and net change in unrealized appreciation and depreciation. As a result, quarterly comparisons may not be meaningful.

Investment Income

Investment income for the three month periods ended March 31, 2022 and 2021 was as follows:


	For the three month periods ended
	March 31, 2022		March 31, 2021
First Lien Debt	$	35,597	$	31,716
Second Lien Debt	7,889		5,757
Equity Investments	1,360		374
Cash	—		2
Total investment income	$	44,846	$	37,849

The increase in investment income for the three month period ended March 31, 2022 from the comparable period in 2021 was primarily driven by a higher average loan balance, an increase in acceleration of amortization from the repayment of loans and higher other income. The size of our portfolio increased to $1,980,691 as of March 31, 2022 from $1,855,942 as of March 31, 2021 at amortized cost. As of March 31, 2022, the weighted average yield of our first and second lien debt investments increased to 7.93% from 7.85% as of March 31, 2021, on amortized cost primarily due to new fundings being originated at a higher weighted average yield than the yield of positions being repaid or sold.

Interest income on our first and second lien debt investments is dependent on the composition and credit quality of the portfolio. Generally, we expect the portfolio to generate predictable quarterly interest income based on the terms stated in each loan’s credit agreement. As of March 31, 2022, 1 first lien debt investment was on non-accrual status. The fair value of the debt investment on non-accrual status was $11,879, which represents approximately 0.6% of total investments at fair value. The remaining first and second lien debt investments were performing and current on their interest payments. As of March 31, 2021, 1 first lien debt investment was on non-accrual status. The fair value of the debt investment on non-accrual status was $9,238, which represents approximately 0.5% of total investments at fair value. The remaining first and second lien debt investments were performing and current on their interest payments.

Net investment income for the three month periods ended March 31, 2022 and 2021 was as follows:


	For the three month periods ended
	March 31, 2022		March 31, 2021
Total investment income	$	44,846	$	37,849
Total expenses	16,870		14,447
Net investment income (loss)	$	27,976	$	23,402

Expenses

Expenses for the three month periods ended March 31, 2022 and 2021 comprised the following:


	For the three month periods ended
	March 31, 2022		March 31, 2021


Management fees	$	2,800	$	3,075
Net investment income incentive fees	4,917		4,126

Professional fees	1,172		385
Administrative service fees	314		154
Interest expense	6,198		5,861
Credit facility fees	704		358
Directors’ fees and expenses	95		59
Other general and administrative	670		429

Total expenses	$	16,870	$	14,447

Interest expense and credit facility fees for the three month periods ended March 31, 2022 and 2021 comprised the following:


	For the three month periods ended
	March 31, 2022			March 31, 2021
Interest expense	$	6,198		$	5,861
Facility unused commitment fee	301			73
Amortization of deferred financing costs	403			285

Total interest expense and credit facility fees	$	6,902		$	6,219
Cash paid for interest expense	$	6,575		$	5,956

Average principal debt outstanding	$	929,713		$	889,029
Average interest rate	2.65		%	2.64		%

The increase in interest expense for the three month period ended March 31, 2022 compared to the comparable period in 2021 was driven primarily by higher average principal debt outstanding.

Below is a summary of the base management fees and incentive fees during the three month periods ended March 31, 2022 and 2021:


	For the three month periods ended
	March 31, 2022		March 31, 2021
Base management fees	$	2,800	$	3,075
Incentive fees on pre-incentive fee net investment income	4,917		4,126
Realized capital gains incentive fees	—		—
Accrued capital gains incentive fees	—		—
Total capital gains incentive fees	—		—
Total incentive fees	4,917		4,126
Total base management fees and incentive fees	$	7,717	$	7,201

The increase in management fees and incentive fees for the three month period ended March 31, 2022 from the comparable period in 2021 was driven by our increased deployment of capital, as well as higher pre-incentive fee net investment income. The accrual for any capital gains incentive fee under U.S. GAAP in a given period may result in an additional expense if such cumulative amount is greater than in the prior period or a reduction of previously recorded expense if such cumulative amount is less than in the prior period. If such cumulative amount is negative, then there is no accrual. See Note 4, Related Party Transactions, to the consolidated financial statements included in Part I, Item 1 of this Form 10-Q for more information on the incentive and management fees.

Professional fees include legal, rating agencies, audit, tax, valuation, technology and other professional fees incurred related to the management of the Company. Administrative service fees represent fees paid to the Administrator for our allocable portion of overhead and other expenses incurred by the Administrator in performing its obligations under the administration agreement, including our allocable portion of the cost of certain of our executive officers and their respective staff. Other general and administrative expenses include insurance, filing, research, subscriptions, sub-administrative fees and other costs.

Net Change in Unrealized Appreciation (Depreciation) on Investments

During the three month period ended March 31, 2022, we recorded realized gain of approximately $4,532 on 3 investments and no realized losses. We recorded a change in unrealized appreciation on 35 investments totaling approximately $5,181 and a change in unrealized depreciation on 89 investments of approximately $23,625. During the three month period ended March 31, 2021, we recorded realized gain of approximately $1,815 on 5 investments and no realized loss. We recorded a change in unrealized appreciation on 82 investments totaling approximately $18,600 and a change in unrealized depreciation on 39 investments of approximately $6,441.

Net realized gain (loss) and net change in unrealized appreciation (depreciation) for the three month periods ended March 31, 2022 and 2021 were as follows:


	For the three month periods ended
	March 31, 2022		March 31, 2021
Net realized gain (loss) on investments	$	4,532	$	1,815
Net change in unrealized appreciation (depreciation) on investments	(18,444)		12,159
Net realized gain (loss) and net change in unrealized appreciation (depreciation) on investments	$	(13,912)	$	13,974

Net realized gain (loss) and net change in unrealized appreciation (depreciation) by the type of investments for the three month periods ended March 31, 2022 and 2021 were as follows:


	For the three month periods ended
	March 31, 2022				March 31, 2021
	Net realized gain (loss)		Net change in unrealized appreciation (depreciation)		Net realized gain (loss)		Net change in unrealized appreciation (depreciation)
First Lien Debt	$	3,403	$	(15,834)	$	1,134	$	5,304
Second Lien Debt	—		(2,400)		—		5,537
Equity Investments	1,129		(210)		681		1,318
Total	$	4,532	$	(18,444)	$	1,815	$	12,159

Net change in unrealized depreciation in our investments for the three month period ended March 31, 2022 as compared to the comparable period in 2021 was primarily due to negative impact of widening market yields. Net change in unrealized appreciation (depreciation) is also driven by changes in other inputs utilized under our valuation methodology, including, but not limited to, enterprise value multiples, borrower leverage multiples and borrower ratings, and the impact of exits.

FINANCIAL CONDITION, LIQUIDITY AND CAPITAL RESOURCES

We generate cash from the net proceeds of offerings of our common stock and through cash flows from operations, including investment sales and repayments as well as income earned on investments and cash equivalents. We may also fund a portion of our investments through borrowings under the Credit Facilities, as well as through securitization of a portion of our existing investments. The primary use of existing funds and any funds raised in the future is expected to be for investments in portfolio companies, repayment of indebtedness, cash distributions to our stockholders, the repurchase of our shares through the Quarterly Tender Offer, and for other general corporate purposes. We believe our current cash position, available capacity on our revolving credit facilities and net cash provided by operating activities will provide us with sufficient resources to meet our obligations and continue to support our investment objectives, including reserving for the capital needs which may arise at our portfolio companies.

We entered into a senior secured revolving credit facility with a lender on October 3, 2017, which was subsequently amended on March 14, 2018, November 16, 2018, May 12, 2020 and October 2, 2020 (as amended, the “Subscription Facility”). As of March 31, 2022, the maximum principal amount of the Subscription Facility was $50,000 and is subject to availability under the Subscription Facility, which is based on certain of the Company's unfunded investor equity capital commitments, and restrictions imposed on borrowings under the Investment Company Act. The Subscription Facility has a maturity date of October 3, 2022. The Company may borrow amounts in U.S. Dollars or certain other permitted currencies. Borrowings under the Subscription Facility bear interest currently at LIBOR plus an applicable spread of 1.95% per year, subject to a 0.50% floor on LIBOR. The Company is also required to pay an undrawn commitment fee of 0.25% per year. Subject to certain exceptions, the Subscription Facility is secured by a first lien security interest in our equity investors’ unfunded capital commitments.

We entered into a senior secured revolving credit facility with a lender on April 1, 2019 (the “SPV Credit Facility”), which was subsequently amended on October 25, 2019, February 7, 2020, December 4, 2020, June 2, 2021, December 28, 2021, and March 28, 2022. As of March 31, 2022, the maximum principal amount of the SPV Credit Facility was $700,000,

and is subject to availability under the SPV Credit Facility and restrictions imposed on borrowings under the Investment Company Act. The SPV Credit Facility has a maturity date of April 1, 2026 (April 1, 2025 prior to the March 2022 amendment), with one one-year extension option, subject to the SPV's and the lender's consent. The SPV may borrow amounts in U.S. Dollars or certain other permitted currencies. Borrowings under the SPV Credit Facility bear interest initially at SOFR (LIBOR prior to the March 2022 amendment) (or, if applicable, a rate based on the prime rate or federal funds rate) plus 2.50% per year with a step-up based on collateral coverage and asset mix (2.40% prior to the March 2022 amendment). The SPV also pays a fee of between 0.50% and 0.75% per year on undrawn amounts under the SPV Credit Facility. Payments under the SPV Credit Facility are made quarterly. The SPV Credit Facility is secured by a first lien security interest on substantially all of the assets of the SPV.

We entered into a senior secured revolving credit facility with a lender on May 13, 2020 (the “SPV2 Credit Facility”, together with the Subscription Facility and SPV Credit Facility, the "Credit Facilities"), which was subsequently amended on February 11, 2021, August 13, 2021 and March 7, 2022. The SPV2 Credit Facility provides for secured borrowings during the applicable revolving period up to a principal amount of $450,000, subject to availability under the SPV2 Credit Facility and restrictions imposed on borrowings under the Investment Company Act. The SPV2 Credit Facility has a revolving period through March 7, 2025 (May 13, 2023 prior to the March 2022 amendment), and a maturity date of March 7, 2030 (May 13, 2028 prior to the March 2022 amendment). Borrowings under the SPV2 Credit Facility bear interest initially at LIBOR (or, if applicable, a rate based on the prime rate or federal funds rate plus 0.50%) plus 2.40% per year (2.66% prior to the March 2022 amendment). SPV2 is also required to pay an undrawn commitment fee of 0.25% per year. Payments under the SPV2 Credit Facility are made quarterly. The lenders have a security interest on substantially all of the assets of SPV2.

Although we believe that we, the SPV and SPV2 will remain in compliance, there are no assurances that we, the SPV and SPV2 will continue to comply with the covenants in the respective Credit Facilities, as applicable. Failure to comply with these covenants could result in a default under the Subscription Facility, the SPV Credit Facility and/or the SPV2 Credit Facility that, if we were unable to obtain a waiver from the applicable lenders, could result in the immediate acceleration of the amounts due under the respective facility, and thereby have a material adverse impact on our business, financial condition and results of operations. Moreover, to the extent that we cannot meet our financing obligations, we risk the loss of some or all of our assets to liquidation or sale to satisfy the obligations. In such an event, we may be forced to sell assets at significantly depressed prices due to market conditions or otherwise, which may result in losses.

For more information on the Credit Facilities, see Note 5, Borrowings, to the consolidated financial statements in Part I, Item 1 of this Form 10-Q.

As of March 31, 2022 and December 31, 2021, the Company had $65,771 and $65,838, respectively, in cash and cash equivalents. The Secured Borrowings consisted of the following as of March 31, 2022 and December 31, 2021:


	March 31, 2022
	Total Facility		Borrowings Outstanding		Unused Portion (1)		Amount Available (2)
Subscription Facility	$	50,000	$	29,545	$	20,455	$	2,397
SPV Credit Facility	700,000		580,352		119,648		61,721
SPV2 Credit Facility	450,000		279,400		170,600		145,253
Total	$	1,200,000	$	889,297	$	310,703	$	209,371


	December 31, 2021
	Total Facility		Borrowings Outstanding		Unused Portion (1)		Amount Available (2)
Subscription Facility	$	50,000	$	30,190	$	19,810	$	1,744
SPV Credit Facility	700,000		594,357		105,643		30,961
SPV2 Credit Facility	450,000		342,400		107,600		107,600
Total	$	1,200,000	$	966,947	$	233,053	$	140,305

(1)The unused portion is the amount upon which commitment fees are based.

(2)Available for borrowing based on the computation of collateral to support the borrowings and subject to compliance with applicable covenants and financial ratios.

Equity Activity

Shares issued and outstanding as of March 31, 2022 and December 31, 2021 were 57,005,057 and 57,005,057, respectively.

The following table summarizes activity in the number of shares of our common stock outstanding during the three month period ended March 31, 2022 and 2021:


	For the three month period ended
	March 31, 2022	March 31, 2021
Shares outstanding, beginning of period	57,005,057	49,062,820
Common stock issued	—	—
Shares outstanding, end of period	57,005,057	49,062,820

On April 5, 2022, CDL Tender Fund 2022-1, L.P. (the “Purchaser”) launched a tender offer (the “Offer”) to purchase up to $100,000,000 in aggregate amount of shares of our common stock at a purchase price of $20.13 per share (the “Purchase Price”), which represented the net asset value per share of our common stock as determined by the Company on March 29, 2022. The Offer expired on May 3, 2022. The Purchaser accepted for purchase $100,000,000 in aggregate amount of our common stock at the Purchase Price, which represented approximately 8.71% of the total number of our outstanding shares of common stock as of May 6, 2022. The Purchaser is wholly owned by its limited partners, the Investment Adviser, Cliffwater Corporate Lending Fund, a Delaware statutory trust, and AlpInvest Indigo I CI-A, L.P., a Delaware limited partnership which is advised by an affiliate of the Investment Adviser. These limited partners contributed approximately $28.6 million, $50.0 million and $21.4 million, respectively, in cash to the Purchaser to fund the purchase of the shares.

OFF BALANCE SHEET ARRANGEMENTS

In the ordinary course of our business, we enter into contracts or agreements that contain indemnifications or warranties. Future events could occur which may give rise to liabilities arising from these provisions against us. We believe that the likelihood of such an event is remote; however, the maximum potential exposure is unknown. No accrual has been made in these consolidated financial statements as of March 31, 2022 and December 31, 2021 included in Part I, Item 1 of this Form 10-Q for any such exposure.

We have in the past, currently are and may in the future become obligated to fund commitments such as revolving credit facilities, bridge financing commitments, or delayed draw commitments.

We had the following unfunded commitments to fund delayed draw and revolving senior secured loans as of the indicated dates:


	Par Value as of
	March 31, 2022		December 31, 2021
Unfunded delayed draw commitments	$	80,046	$	66,093
Unfunded revolving commitments	67,599		70,272
Total unfunded commitments	$	147,645	$	136,365

DIVIDENDS AND DISTRIBUTIONS TO COMMON STOCKHOLDERS

The following table summarizes our dividends declared during the two most recent fiscal years and the current fiscal year to date:

Date Declared

Record Date

Payment Date

Per Share Amount

2020

March 4, 2020

April 17, 2020

0.53

June 30, 2020

July 17, 2020

0.45

September 28, 2020

October 16, 2020

0.46

December 14, 2020

January 15, 2021

0.50

1.94

2021

March 30, 2021

April 16, 2021

0.48

June 29, 2021

July 16, 2021

0.48

September 29, 2021

October 15, 2021

0.49

December 20, 2021

December 30, 2021

January 18, 2022

0.48

Total

1.93

2022

March 25, 2022

April 18, 2022

0.50

March 25, 2022

April 18, 2022

0.10

(1)

Total

0.60

(1) Represents a capital gain distribution of $0.103745 per share.

CRITICAL ACCOUNTING POLICIES AND ESTIMATES

The preparation of our consolidated financial statements in conformity with U.S. GAAP requires us to make estimates and assumptions that affect the reported amounts of assets, liabilities, revenues, and expenses. These estimates and judgments are based on historical information, information currently available to us and on various other assumptions management believes to be reasonable under the circumstances. Actual results could vary from those estimates and we may change our estimates and assumptions in future evaluations. Changes in these estimates and assumptions may have a material effect on our results of operations and financial condition. We believe the critical accounting policies discussed below affect our more significant judgments and estimates used in the preparation of our consolidated financial statements and should be read in conjunction with our consolidated financial statements and related note in Part I, Item 1 of this Form 10-Q and in Part II, Item 8 of the Company’s annual report on Form 10-K for the year ended December 31, 2021.

Fair Value Measurements

The Company applies fair value accounting in accordance with the terms of Financial Accounting Standards Board ASC Topic 820, Fair Value Measurement (“ASC 820”). ASC 820 defines fair value as the amount that would be exchanged to sell an asset or transfer a liability in an orderly transfer between market participants at the measurement date. The Company values securities/instruments traded in active markets on the measurement date by multiplying the closing price of such traded securities/instruments by the quantity of shares or amount of the instrument held. The Company may also obtain quotes with respect to certain of its investments, such as its securities/instruments traded in active markets and its liquid securities/instruments that are not traded in active markets, from pricing services, brokers, or counterparties (i.e., “consensus pricing”). When doing so, the Company determines whether the quote obtained is sufficient according to U.S. GAAP to determine the fair value of the security. The Company may use the quote obtained or alternative pricing sources may be utilized including valuation techniques typically utilized for illiquid securities/instruments.

used to determine the applicable value is as follows: (i) the value of each portfolio company or investment is initially reviewed by the investment professionals responsible for such portfolio company or investment and, for non-traded investments, a standardized template designed to approximate fair market value based on observable market inputs, updated credit statistics and unobservable inputs is used to determine a preliminary value, which is also reviewed alongside consensus pricing, where available; (ii) preliminary valuation conclusions are documented and reviewed by a valuation committee comprised of members of senior management; (iii) the Board of Directors engages a third-party valuation firm to provide positive assurance on portions of the Middle Market Senior Loans and equity investments portfolio each quarter (such that each non-traded investment is reviewed by a third-party valuation firm at least once on a rolling twelve month basis) including a review of management’s preliminary valuation and conclusion on fair value; (iv) the Audit Committee of the Board of Directors (the “Audit Committee”) reviews the assessments of the Investment Adviser and the third-party valuation firm and provides the Board of Directors with any recommendations with respect to changes to the fair value of each investment in the portfolio; and (v) the Board of Directors discusses the valuation recommendations of the Audit Committee and determines the fair value of each investment in the portfolio in good faith based on the input of the Investment Adviser and, where applicable, the third-party valuation firm.

All factors that might materially impact the value of an investment are considered, including, but not limited to the assessment of the following factors, as relevant:

•the nature and realizable value of any collateral;

•call features, put features and other relevant terms of debt;

•the portfolio company’s leverage and ability to make payments;

•the portfolio company’s public or private credit rating;

•the portfolio company’s actual and expected earnings and discounted cash flow;

•prevailing interest rates and spreads for similar securities and expected volatility in future interest rates;

•the markets in which the portfolio company does business and recent economic and/or market events; and

•comparisons to comparable transactions and publicly traded securities.

Due to the inherent uncertainty of determining the fair value of investments that do not have a readily available market value, the fair value of the Company’s investments may fluctuate from period to period. Because of the inherent uncertainty of valuation, these estimated values may differ significantly from the values that would have been reported had a ready market for the investments existed, and it is reasonably possible that the difference could be material.

For further information on the fair value hierarchies, our framework for determining fair value and the composition of our portfolio, see Note 3, Fair Value Measurements, to the consolidated financial statements in Part I, Item 1 of this Form 10-Q.

Investments

Investment transactions are recorded on the trade date. Realized gains or losses are measured by the difference between the net proceeds from the repayment or sale and the amortized cost basis of the investment using the specific identification method without regard to unrealized appreciation or depreciation previously recognized, and includes investments charged off during the period, net of recoveries. Net change in unrealized appreciation or depreciation on investments as presented in the Consolidated Statements of Operations in Part I, Item 1 of this Form 10-Q reflects the net change in the fair value of

investments, including the reversal of previously recorded unrealized appreciation or depreciation when gains or losses are realized.

Revenue Recognition

Non-Accrual Income

Income Taxes

In addition, based on the excise distribution requirements, the Company is subject to a 4% nondeductible federal excise tax on undistributed income unless the Company distributes in a timely manner an amount at least equal to the sum of (1) 98% of its ordinary income for each calendar year, (2) 98.2% of capital gain net income (both long-term and short-term) for the one-year period ending October 31 in that calendar year and (3) any income realized, but not distributed, in the preceding year. For this purpose, however, any ordinary income or capital gain net income retained by the Company that is subject to corporate income tax is considered to have been distributed.

The SPV and SPV 2 are disregarded entities for tax purposes and are consolidated with the tax return of the Company.

Item 3. Quantitative and Qualitative Disclosures About Market Risk.

We are subject to financial market risks, including changes in the valuations of our investment portfolio and interest rates.

Valuation Risk

Our investments generally do not have a readily available market price, and we value these investments at fair value as determined in good faith by our Board of Directors in accordance with our valuation policy. There is no single standard for determining fair value in good faith. As a result, determining fair value requires that judgment be applied to the specific facts and circumstances of each portfolio investment while employing a consistently applied valuation process for the types of investments we make. Due to the inherent uncertainty of determining the fair value of investments that do not have a readily available market value, the fair value of our investments may fluctuate from period to period. In addition, because of the inherent uncertainty of valuation, these estimated values may differ significantly from the values that would have been used had a ready market for the investments existed, and it is possible that the difference could be material.

Interest Rate Risk

As of March 31, 2022, on a fair value basis, approximately 2.5% of our debt investments bear interest at a fixed rate and approximately 97.5% of our debt investments bear interest at a floating rate, which primarily are subject to interest rate floors. Interest rates on the investments held within our portfolio of investments are typically based on floating LIBOR or SOFR, with many of these investments also having a reference rate floor. Additionally, our Credit Facilities are subject to floating interest rates and are typically paid based on floating LIBOR or SOFR rates.

Interest rate sensitivity refers to the change in earnings that may result from changes in the level of interest rates. There can be no assurance that a significant change in market interest rates will not have a material adverse effect on our income in the future.

The following table estimates the potential changes in net cash flow generated from interest income, should interest rates increase or decrease by 100, 200 or 300 basis points. These hypothetical interest income calculations are based on a model of the settled debt investments in our portfolio, held as of March 31, 2022 and December 31, 2021, and are only adjusted for assumed changes in the underlying base interest rates and the impact of that change on interest income. Interest expense is calculated based on outstanding secured borrowings as of March 31, 2022 and December 31, 2021 and based on the terms of our Credit Facilities. Interest expense on our Credit Facilities is calculated using the interest rate as of March 31, 2022 and 2021, adjusted for the hypothetical changes in rates, as shown below. We intend to continue to finance a portion of our investments with borrowings and the interest rates paid on our borrowings may impact significantly our net interest income.

We regularly measure exposure to interest rate risk. We assess interest rate risk and manage interest rate exposure on an ongoing basis by comparing our interest rate sensitive assets to our interest rate sensitive liabilities. Based on that review, we determine whether or not any hedging transactions are necessary to mitigate exposure to changes in interest rates.

Based on our Consolidated Statements of Assets and Liabilities as of March 31, 2022 and December 31, 2021, the following table shows the annual impact on net investment income of base rate changes in interest rates for our settled debt investments (considering interest rate floors for variable rate instruments) and outstanding secured borrowings assuming no changes in our investment and borrowing structure:


	March 31, 2022						December 31, 2021
Basis Point Change	Interest Income		Interest Expense		Net Investment Income		Interest Income		Interest Expense		Net Investment Income
Up 300 basis points	$	55,073	$	(26,606)	$	28,467	$	46,242	$	(28,722)	$	17,520
Up 200 basis points	$	36,545	$	(17,713)	$	18,832	$	26,312	$	(19,024)	$	7,288
Up 100 basis points	$	18,016	$	(8,820)	$	9,196	$	6,396	$	(9,326)	$	(2,930)
Down 100 basis points	$	(1,082)	$	2,056	$	974	$	(178)	$	1,870	$	1,692
Down 200 basis points	$	(1,082)	$	2,056	$	974	$	(178)	$	1,870	$	1,692
Down 300 basis points	$	(1,082)	$	2,056	$	974	$	(178)	$	1,870	$	1,692

Item 4. Controls and Procedures.

Evaluation of Disclosure Controls and Procedures

As of the end of the period covered by this report, we carried out an evaluation, under the supervision and with the participation of our management, including our Chief Executive Officer (Principal Executive Officer) and our Chief Financial Officer (Principal Financial Officer), of the effectiveness of the design and operation of our disclosure controls and procedures (as defined in Rule 13a-15 of the Securities Exchange Act of 1934, as amended (the “Exchange Act”). Based on that evaluation, our Chief Executive Officer and our Chief Financial Officer have concluded that our current disclosure controls and procedures are effective in timely alerting them of material information relating to the Company that is required to be disclosed by us in the reports we file or submit under the Exchange Act.

Changes in Internal Controls over Financial Reporting

There have been no changes in our internal control over financial reporting during the three month period ended March 31, 2022 that have materially affected, or are reasonably likely to materially affect, our internal control over financial reporting.

PART II—OTHER INFORMATION

Item 1. Legal Proceedings

The Company may become party to certain lawsuits in the ordinary course of business, including proceedings relating to the enforcement of our rights under contracts with our portfolio companies. The Company is not currently subject to any material legal proceedings, nor, to our knowledge, is any material legal proceeding threatened against the Company. See also Note 9, Litigation, to the consolidated financial statements in Part I, Item 1 of this Form 10-Q.

Item 1A. Risk Factors.

In addition to the other information set forth within this Form 10-Q, consideration should be given to the information disclosed in “Risk Factors” in Part I, Item 1A of our annual report on Form 10-K for the year ended December 31, 2021.

Item 2. Unregistered Sales of Equity Securities and Use of Proceeds.

Except as previously reported by the Company on a Current Report on Form 8-K, we did not sell any equity securities during the period covered in this report that were not registered under the Securities Act of 1933, as amended.

Item 3. Defaults Upon Senior Securities.

Not applicable.

Item 4. Mine Safety Disclosures.

Not applicable.

Item 5. Other Information.

None.

Item 6. Exhibits.


3.1						Articles of Amendment, effective March 29, 2022. Incorporated by reference to the Company’s Form 8-K filed by the Company on March 24, 2022 (File No. 814-01248).

10.1						Amended and Restated Investment Advisory agreement, dated as of January 21, 2022, by and between the Company and the Investment Adviser. Incorporated by reference to the Company’s Form 8-K filed by the Company on January 25, 2022 (File No. 814-01248).

10.2						Amended and Restated Loan and Security Agreement, dated as of June 2, 2021 and Conformed through Amendment No. 2 dated as of March 28, 2022, among TCG BDC II SPV LLC as borrower, the Lenders party hereto, the Collateral Administrator, Collateral Agent and Securities Intermediary Party hereto, JPMorgan Chase Bank, National Association, as Administrative Agent and TCG BDC II, Inc., as Servicer.*

10.3						Amended and Restated Loan and Servicing Agreement, dated as of May 13, 2020 and Conformed through Amendment No. 3 dated as of March 7, 2022, among TCG BDC II SPV2 LLC, as borrower, the lenders from time to time party thereto, and U.S. Bank National Association as administrative agent.*†

31.1						Certification of Chief Executive Officer (Principal Executive Officer) Pursuant to Rule 13a-14(a) of the Securities Exchange Act of 1934, as amended.*

31.2						Certification of Chief Financial Officer (Principal Financial Officer) Pursuant to Rule 13a-14 of the Securities Exchange Act of 1934, as amended.*

32.1						Certification of Chief Executive Officer (Principal Executive Officer) Pursuant to 18 U.S.C. Section 1350, as Adopted Pursuant to Section 906 of the Sarbanes-Oxley Act of 2002.*

32.2						Certification of Chief Financial Officer (Principal Financial Officer) Pursuant to 18 U.S.C. Section 1350, as Adopted Pursuant to Section 906 of the Sarbanes-Oxley Act of 2002.*

* Filed herewith

† Information in this exhibit (indicated by brackets) has been redacted pursuant to Item 601(b)(10)(iv) of Regulation S-K.

SIGNATURES

Pursuant to the requirements of the Securities Exchange Act of 1934, the registrant has duly caused this report to be signed on its behalf by the undersigned thereunto duly authorized.


	CARLYLE CREDIT SOLUTIONS, INC.

Dated: May 10, 2022	By	/s/ Thomas M. Hennigan
		Thomas M. Hennigan Chief Financial Officer (principal financial officer)