Reading a US credit fund starts with two questions: what does it lend to, and how does it finance those loans? Ares Capital Corporation (NASDAQ: ARCC) and Blackstone Secured Lending Fund (NYSE: BXSL) provide useful examples. Both are listed business development companies, or BDCs, that invest in private businesses. Their public reporting offers a window into lending that is otherwise difficult to observe. Ares Capital results; BXSL results.

Two names, different portfolio details

Ares Capital lends predominantly through senior secured loans, alongside subordinated debt and equity investments. At 30 June 2026, it reported non-accrual loans—loans on which it had stopped accruing interest income—representing 2.4% of total investments measured at amortised cost, or 1.4% measured at fair value. The two percentages describe the same reporting date using different valuation bases. Comparing funds requires matching those definitions, rather than simply choosing the smaller number. Ares Capital, published 29 July 2026.

BXSL reported that first-lien senior secured debt accounted for 96.8% of its portfolio at fair value on 30 June 2026. Its presentation also states that the underlying loans are not rated. “First lien” describes a lender’s priority over collateral; it does not remove the risk that a borrower cannot repay. The disclosure is a useful reminder to examine what sits inside the fund. BXSL, published 6 August 2026.

What a credit rating actually answers

An issuer credit rating concerns the issuer’s ability to meet financial obligations. A rating on a particular debt instrument concerns that obligation. Neither is a rating of the ordinary shares, a guarantee of repayment or an assessment of whether the investment suits an investor. Ratings can also change. These distinctions are set out in the US Securities and Exchange Commission’s investor education bulletin. SEC: the ABCs of credit ratings.

A lender’s issuer rating should therefore not be read as a grade for every loan it owns. Nor is it interchangeable with a fund research assessment covering strategy, management, fees and investor access. This article assigns no IIR rating to either company. The practical task is to keep the issuer, the debt instrument and the portfolio separate when reading a report.

Three risks worth understanding

Cash income versus accrued income. Payment-in-kind interest, or PIK, adds interest to the borrower’s debt instead of paying it immediately in cash. An August 2026 study published by the Boston Fed identified increasing PIK use in BDC portfolios as a potential sign of borrower pressure. The authors also explain that PIK can be part of an agreed financing structure. Its presence calls for further investigation; it does not automatically establish distress. Boston Fed research.

Valuation uncertainty. Private loans do not always have readily observable market prices. The Boston Fed study discusses the judgement involved in valuing them. Reported asset values should be read alongside payment performance and changes in borrower conditions. The study examines BDCs, a segment of private credit, and should not be treated as a finding about every private credit fund. Study scope and findings.

How investors exit. Listed BDC shares trade on an exchange. That differs from asking a non-traded vehicle to redeem units. The Federal Reserve’s May 2026 stability report explains how different private credit structures create different liquidity exposures. A redemption restriction in one structure should not automatically be attributed to another. Exchange trading still leaves investors exposed to the available market price, which may be below reported net asset value. Borrowing can also magnify losses borne by shareholders. The SEC explains these pricing and leverage risks. Federal Reserve funding-risk analysis.

For a first reading, check the reporting date, loan mix, non-accrual definition, cash versus PIK income, borrowing arrangements and exit mechanism. Together, those details make the fund easier to understand than an isolated yield or rating headline.

General information only. This article does not consider your objectives, financial situation or needs and is not a recommendation to buy, sell or hold any investment.