Ares Capital is heading into the final quarter of 2026 with management signaling a stronger transaction environment after a measured pace of lending earlier in the year. The business development company is scheduled to release results for the quarter ended Sept. 30 before the market opened on Oct. 27, followed by a noon Eastern conference call.
The latest completed quarter available before that release showed Ares Capital making about $2. 6 billion of new investment commitments. The company said 75% of its second-quarter transactions involved incumbent borrowers, reflecting continued reliance on existing sponsor and borrower relationships while broader middle-market deal activity remained uneven.
Management also described signs of improving conditions. Ares Capital said it reviewed more than 25% more transactions as the second quarter progressed than in the prior quarter, with June ranking among its strongest months for new transactions reviewed in the previous two years. Executives said deal quality had weakened somewhat during the slower period, leading the company to close fewer transactions as a percentage of those it evaluated, but said activity and quality were improving as the quarter ended.
The company’s second-quarter results included $768 million of total investment income, $359 million of net investment income and core earnings of 47 cents per share. At June 30, portfolio investments were valued at $29. 35 billion, net asset value was $19. 35 per share and the debt-to-equity ratio was 1. 15 times.
Credit indicators remained an important part of the backdrop. Loans on non-accrual status represented 2. 4% of investments at amortized cost, or 1. 4% at fair value, at the end of June, compared with 1. 8% and 1. 2%, respectively, at the end of 2025. Ares Capital also reported approximately $6. 7 billion of borrowing capacity under its existing credit facilities, giving it room to support additional investments if transaction volume continues to recover.
Management attributed the expected improvement in deal flow partly to more stable market conditions and less intense competition at the larger end of the lending market. Executives said volatility in interest rates had been a greater obstacle to transactions than the absolute level of rates, because buyers and sellers found it harder to price deals when future financing costs were uncertain. The next earnings release and conference call will provide the first formal account of third-quarter originations, portfolio performance and whether the reported pickup translated into a materially busier fourth quarter.