Saratoga Investment Corp. shares fell 3.8% following the quarter as margin compression and a cautious outlook amid declining short-term rates and tightening spreads disappointed investors. Despite solid origination activity, lower net interest margin and portfolio markdowns weighed on sentiment.

• Adjusted net investment income (NII) was $0.53 per share, or $0.61 excluding a $1.7 million excise tax, consistent with the prior quarter but pressured by declining short-term interest rates.
• Core BDC net interest margin declined 4%, driven by a 12 basis point drop in average SOFR and lower yields on new asset repayments.
• Total portfolio marked down 1% ($9.6 million), with the overall portfolio valuation 2.4% below cost despite some unrealized appreciation in select investments.
• Net originations totaled $101.1 million during the quarter, including five new investments and 15 follow-ons, offsetting multiple debt repayments.
• Credit quality remained stable with only 0.2% of fair value on nonaccruals, below industry averages, and 82.1% of investments in first lien debt.