FS KKR Capital Swings to Profit as Combined Loss Narrows

The Tip Desk · November 6, 2026 · 3 min read

The BDC reported $0.26 a share of earnings after a $0.13 loss a share in the second quarter, with net investment income at $0.46 a share.

FS KKR Capital Corp. (FSK), a publicly traded business development company focused on senior secured credit to private middle-market U.S. companies, reported earnings of $0.26 a share for the quarter ended September 30, 2026, after a $0.13 loss a share in the prior quarter.

The swing followed a $1.44 sequential improvement in the quarter before. Total net realized and unrealized loss narrowed to $0.19 a share from $0.56 a share. Adjusted net realized and unrealized loss was $0.18 a share.

Net investment income was $0.46 a share, up from $0.44 a share in the quarter ended June 30, 2026. Adjusted net investment income was $0.46 a share, compared with $0.43 a share.

Net asset value was $18.28 a share as of September 30, 2026, compared with $18.30 a share at June 30.

Total investment income for the three months ended September 30, 2026 was $294 million, down from $373 million a year earlier. Interest income from non-controlled/unaffiliated investments was $152 million. Net investment income was $127 million. Net expenses were $165 million after a $12 million subordinated income incentive fee waiver.

The company said it continued making progress toward previously stated strategic goals. Chief Executive Officer and Chairman Michael C. Forman said the firm repurchased approximately six million shares of common stock at a weighted average price of $11.24 a share, totaling approximately $69 million, and received full and partial repayments of portfolio investments totaling $442 million. He said the investment team continues focusing on portfolio rotation and that the company expects the portfolio will move toward more first-lien exposure.

Total purchases were $335 million versus $442 million of sales and repayments, a smaller net runoff than the prior quarter’s $590 million of purchases versus $1,334 million of sales and repayments.

Total fair value of investments was $11.31 billion as of September 30, 2026, down from $11.42 billion at June 30. Of that total, 63.2% was invested in senior secured securities. First-lien senior secured loans were 58.9% of fair value. Asset-based finance declined to 11.6% from 12.6%. Equity/other rose to 9.9% from 9.1%.

Weighted average annual yield on accruing debt investments was 10.0%, compared with 9.8% at June 30. Yield on all debt investments was 9.0%. Investments on non-accrual status represented 3.4% of the portfolio at fair value and 6.4% at amortized cost, compared with 3.8% and 7.1% at June 30.

Debt to equity was 127%, unchanged from June 30, based on $6.3 billion in total debt outstanding and common stockholders’ equity of $5.0 billion. Net debt to equity was 125%, compared with 122%. Cash, cash equivalents, and foreign currency were $111 million, with $3.2 billion of availability under financing arrangements, subject to borrowing base and other limitations. The weighted average stated interest rate on borrowings was 5.57%.

On October 7, 2026, the board declared a fourth-quarter 2026 common distribution of $0.44 a share, to be paid on or about December 24, 2026, and a special distribution of $0.20 a share, to be paid on or about December 15, 2026. The company said the special distribution represents a portion of estimated accumulated spillback income and is intended to distribute additional taxable income in connection with maintaining regulated investment company treatment.

From October 1 through October 30, 2026, FSK repurchased 1,546,162 shares at an average price of $10.88 a share, totaling $17 million. Those purchases were in addition to 6,533,672 shares totaling $73 million repurchased from the start of the program on June 29, 2026 through the end of the third quarter. The weighted average purchase price for all repurchases from June 29 through October 30, 2026 was $11.14 a share.