Ares Capital Raises $750M Through New Notes, Impact on Dividend Uncertain
On September 8, Ares Capital (NASDAQ:ARCC) issued $750 million in unsecured notes with a coupon of 6.25%, maturing in 2033. The funds will be used to repay existing bank borrowings, providing the company longer-term liquidity and flexibility by replacing shorter-dated debt. CFO Scott Lem noted that ARCC has around $6 billion in available liquidity as of June 30, 2026. Despite this financial cushion, concerns arise from a higher interest rate compared to previous notes issued at lower coupons (5.55%) and weaker second-quarter results. GAAP net income per share dropped significantly due to unrealized losses, while core EPS fell short of the $0.48 dividend paid in July 2026. Additionally, non-accrual loans increased slightly, signaling potential credit concerns. Short sellers remain active with a high percentage of shares sold short (5.77%), and hedge fund interest has declined marginally from previous quarters. While the company maintains a long history without cutting dividends, investors are advised to monitor its financial performance closely for signs of weakening trends.
Tickers: $ARCC
Topics: debt issuance dividend sustainability liquidity management