Derivative Financial Instruments

6 Months Ended

Jun. 30, 2025

Derivative Instruments and Hedging Activities Disclosure [Abstract]

Derivative Financial Instruments

DERIVATIVE FINANCIAL INSTRUMENTS

The objective of our use of derivative financial instruments is to minimize the risks and/or costs associated with our

investments and/or financing transactions. These derivatives may or may not qualify as net investment, cash flow, or fair

value hedges under the hedge accounting requirements of ASC 815 – “Derivatives and Hedging.” Derivatives not

designated as hedges are not speculative and are used to manage our exposure to interest rate movements and other

identified risks. Refer to Note 2 for additional discussion of the accounting for designated and non-designated hedges.

The use of derivative financial instruments involves certain risks, including the risk that the counterparties to these

contractual arrangements do not perform as agreed. To mitigate this risk, we only enter into derivative financial

instruments with counterparties that have appropriate credit ratings and are major financial institutions with which we and

our affiliates also have other financial relationships.

Net Investment Hedges of Foreign Currency Risk

Certain of our international investments expose us to fluctuations in foreign interest rates and currency exchange rates.

These fluctuations may impact the value of our cash receipts and payments in terms of our functional currency, the U.S.

dollar. We use foreign currency forward contracts to protect the value or fix the amount of certain investments or cash

flows in terms of the U.S. dollar.

Designated Hedges of Foreign Currency Risk

The following table details our outstanding foreign exchange derivatives that were designated as net investment hedges of

foreign currency risk (notional amounts in thousands):

June 30, 2025			December 31, 2024
Foreign Currency Derivatives	Number of Instruments	Notional Amount	Foreign Currency Derivatives	Number of Instruments	Notional Amount
Buy USD / Sell SEK Forward	3	kr 990,635	Buy USD / Sell SEK Forward	2	kr 971,180
Buy USD / Sell GBP Forward	13	£655,443	Buy USD / Sell GBP Forward	5	£604,739
Buy USD / Sell EUR Forward	10	€677,316	Buy USD / Sell EUR Forward	8	€603,910
Buy USD / Sell AUD Forward	4	A$349,343	Buy USD / Sell AUD Forward	6	A$355,703
Buy USD / Sell CAD Forward	3	C$121,887	Buy USD / Sell CHF Forward	1	CHF6,752
Buy USD / Sell CHF Forward	1	CHF6,752

Non-designated Hedges of Foreign Currency Risk

The following table details our outstanding foreign exchange derivatives that were non-designated hedges of foreign

currency risk (notional amounts in thousands):

June 30, 2025			December 31, 2024
Non-designated Hedges	Number of Instruments	Notional Amount	Non-designated Hedges	Number of Instruments	Notional Amount
Buy GBP / Sell USD Forward	4	£139,800	Buy GBP / Sell USD Forward	3	£54,400
Buy USD / Sell GBP Forward	4	£139,800	Buy USD / Sell GBP Forward	3	£54,400
Buy EUR / Sell USD Forward	3	€22,800
Buy USD / Sell EUR Forward	3	€22,800
Buy AUD / Sell USD Forward	1	A$26,000
Buy USD / Sell AUD Forward	1	A$26,000

Fair Value Hedges of Interest Rate Risk

Certain of our corporate financings expose us to fluctuations in the fair value of our outstanding fixed rate debt. We use

derivative financial instruments, which include interest rate swaps, to hedge interest rate risk associated with changes in the

fair value of our fixed rate debt. The changes in the value of the interest rate swap is recognized in earnings and offset the

corresponding changes in the fair value of the debt.

Designated Hedges of Interest Rate Risk 

The following tables detail our outstanding interest rate derivatives that were designated as fair value hedges of interest rate

risk (notional amount in thousands):

June 30, 2025
Interest Rate Derivatives	Number of Instruments	Notional Amount	Fixed Rate	Index	Maturity (Years)
Interest Rate Swaps	1	$450,000	3.81%	SOFR	4.4

December 31, 2024
Interest Rate Derivatives	Number of Instruments	Notional Amount	Fixed Rate	Index	Maturity (Years)
Interest Rate Swaps	1	$450,000	3.81%	SOFR	4.9

The following tables detail the carrying amount and cumulative basis adjustments on hedged items designated as fair value

hedges ($ in thousands):

June 30, 2025
Line Item in the Consolidated Balance Sheets in which the Hedged Item is Included	Carrying Amount of the Hedged Assets/ Liabilities	Cumulative Amount of Fair Value Hedging Adjustment Included in Carrying Amount
Senior secured notes, net	$450,292	$7,340

December 31, 2024
Line Item in the Consolidated Balance Sheets in which the Hedged Item is Included	Carrying Amount of the Hedged Assets/ Liabilities	Cumulative Amount of Fair Value Hedging Adjustment Included in Carrying Amount
Senior secured notes, net	$437,759	$(4,424)

Financial Statement Impact of Hedges of Foreign Currency and Interest Rate Risks

The following table presents the effect of our derivative financial instruments on our consolidated statements of operations

($ in thousands):

		Increase (Decrease) to Net Interest Income Recognized from Derivatives
		Three Months Ended June 30,		Six Months Ended June 30,
Derivatives in Hedging Relationships	Location of Income (Expense) Recognized	2025	2024	2025	2024
Designated Hedges	Interest Income(1)	$4,694	$4,455	$7,645	$8,867
Designated Hedges	Interest Expense(2)	(625)	420	(1,210)	845
Non-Designated Hedges	Interest Income(1)	(50)	(4)	(50)	(10)
Non-Designated Hedges	Interest Expense(3)	(1,931)	—	(1,928)	7
Total		$2,088	$4,871	$4,457	$9,709

(1)Represents the forward points earned on our foreign currency forward contracts, which reflect the interest rate

differentials between the applicable base rate for our foreign currency investments and prevailing U.S. interest rates.

These forward contracts effectively convert the foreign currency rate exposure for such investments to

USD-equivalent interest rates.

(2)Represents the financial statement impact of proceeds (payments) from periodic settlements related to our interest

rate swap.

(3)Represents the realized loss on an interest rate swap related to our Bank Loan Portfolio Joint Venture that was

entered into during the three months ended June 30, 2025 and subsequently terminated, and the spot rate movement

in our non-designated foreign currency hedges, which are marked to market and recognized in interest expense.

Fair Value Hedges

The following table presents the net gains (losses) on derivatives and the related hedged items in fair value hedging

relationships for the three and six months ended June 30, 2025 ($ in thousands):

	Three Months Ended June 30, 2025	Six Months Ended June 30, 2025
Total interest and related expenses presented in the consolidated statements of operations	$264,727	$506,960
Gains (losses) on fair value hedging relationships
Total gain on derivative instruments	$9,124	$12,288
Fair value basis adjustment on hedged items	(4,231)	(7,340)
Derivative settlements and accruals	624	1,442
Net Gain on Fair Value Hedging Relationships(1)	$5,517	$6,390

(1)Included within interest and related expenses presented in the consolidated statements of operations.

There were no fair value hedges outstanding during the six months ended June 30, 2024.

Valuation and Other Comprehensive Income

The following table summarizes the fair value of our derivative financial instruments ($ in thousands):

	Fair Value of Derivatives in an Asset Position(1) as of		Fair Value of Derivatives in a Liability Position(2) as of
	June 30, 2025	December 31, 2024	June 30, 2025	December 31, 2024
Derivatives designated as hedging instruments
Foreign exchange contracts	$11	$69,433	$84,352	$—
Interest rate derivatives	7,398	—	—	4,386
Total derivatives designated as hedging instruments	$7,409	$69,433	$84,352	$4,386
Derivatives not designated as hedging instruments
Foreign exchange contracts	$4,858	$3,021	$11,348	$852
Interest rate derivatives	—	—	—	—
Total derivatives not designated as hedging instruments	$4,858	$3,021	$11,348	$852
Total Derivatives	$12,267	$72,454	$95,700	$5,238

(1)Included in other assets in our consolidated balance sheets.

(2)Included in other liabilities in our consolidated balance sheets.

The following table presents the effect of our derivative financial instruments on our consolidated statements of

comprehensive income and operations ($ in thousands):

Derivatives in Hedging Relationships	Amount of Gain (Loss) Recognized in OCI on Derivatives		Location of Gain (Loss) Reclassified from Accumulated OCI into Income	Amount of Gain (Loss) Reclassified from Accumulated OCI into Income
	Three Months Ended June 30, 2025	Six Months Ended June 30, 2025		Three Months Ended June 30, 2025	Six Months Ended June 30, 2025
Net Investment Hedges
Foreign exchange contracts(1)	$(143,268)	$(203,663)	Interest Expense	$—	$—
Total	$(143,268)	$(203,663)		$—	$—

(1)During the three months ended June 30, 2025, we paid net cash settlements of $114.1 million on our foreign

currency forward contracts. During the six months ended June 30, 2025, we paid net cash settlements of

$33.6 million on our foreign currency forward contracts. Those amounts are included as a component of

accumulated other comprehensive income on our consolidated balance sheets.

There were no cash flow hedges outstanding during the three and six months ended June 30, 2025.

Credit–Risk Related Contingent Features

We have entered into agreements with certain of our derivative counterparties that contain provisions where if we were to

default on any of our indebtedness, including default where repayment of the indebtedness has not been accelerated by the

lender, we may also be declared in default on our derivative obligations. In addition, certain of our agreements with our

derivative counterparties require that we post collateral to secure net liability positions. As of June 30, 2025, we were in a

net liability position with our counterparties related to our foreign exchange hedges and had $86.4 million of collateral

posted with two counterparties. As of December 31, 2024, we were in a net asset position with our counterparties related to

our foreign exchange hedges and had $4.8 million of collateral posted with one counterparty related to our interest rate

swap.