Ares Capital Bolsters Balance Sheet with New Debt Offering

For Ares Capital Corporation, the leading publicly-traded business development company (BDC), the routine announcement of quarterly earnings carries significant weight. The company has taken a strategic step ahead of its 2025 annual report, moving to reinforce its financial foundation with a substantial influx of new capital.

In a key financing move, Ares Capital successfully priced a new debt issuance on Monday, January 5, 2026. The company placed $750 million in unsecured notes, which are set to mature in 2031 and carry a fixed interest rate of 5.250%. Management's objective with this long-term capital is twofold: to fund the firm's extensive middle-market lending activities and to refinance shorter-term obligations. This transaction underscores the company's proactive approach to managing its cost of capital within a challenging interest rate environment.

Should investors sell immediately? Or is it worth buying Ares Capital?

Dividend Sustainability in Focus

A primary attraction for shareholders has consistently been Ares Capital's substantial dividend yield. The company has maintained a steady quarterly distribution of $0.48 per share. This payout appears well-supported by recent core earnings, which came in at $0.50 per share. Looking forward, the critical metric for investors will be whether net investment income can continue its growth trajectory. Sufficient growth is necessary to service the interest expense from this new bond issue and to ensure the long-term viability of the current dividend, which yields approximately 9.4%.

Anticipating the 2025 Full-Year Report

All eyes are now on the scheduled release of Ares Capital's fourth-quarter and full-year 2025 results on February 4, 2026. The balance sheet as of September 30, 2025, reported a net asset value (NAV) per share of $20.01. The market will scrutinize the upcoming report to confirm the continued health of the company's credit portfolio, which had a fair value of about $28.7 billion. Historically, a low rate of non-accruals has been a cornerstone of the company's performance; any shift in this metric could prompt immediate share price volatility. In the interim, the stock has been trading in a narrow range close to its net asset value.