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DEBT
 3 Months Ended
Mar. 31, 2024
Debt Disclosure [Abstract]  
DEBT
5. DEBT

In accordance with the Investment Company Act, the Company is allowed to borrow amounts such that its asset coverage, calculated pursuant to the Investment Company Act, is at least 150% after such borrowing. The Company’s asset coverage requirement applicable to senior securities was reduced from 200% to 150% effective June 21, 2019. As of March 31, 2024, the aggregate principal amount outstanding of the senior securities issued by the Company was $11,754 and the Company’s asset coverage was 200%.
The Company’s outstanding debt as of March 31, 2024 and December 31, 2023 was as follows:

 As of 
March 31, 2024December 31, 2023
Total Aggregate Principal Amount Committed/ Outstanding (1)Principal Amount OutstandingCarrying ValueTotal Aggregate Principal Amount Committed/ Outstanding (1)Principal Amount OutstandingCarrying Value
Revolving Credit Facility$4,608 (2)$1,102 $1,102 $4,758 (2)$1,413 $1,413 
Revolving Funding Facility1,775 651 651 1,775 863 863 
SMBC Funding Facility800 (3)176 176 800 (3)401 401 
BNP Funding Facility865 575 575 865 575 575 
2024 Convertible Notes— — — (4)403 403 402 (4)
2024 Notes900 900 900 (4)900 900 899 (4)
March 2025 Notes600 600 599 (4)600 600 599 (4)
July 2025 Notes1,250 1,250 1,254 (4)1,250 1,250 1,255 (4)
January 2026 Notes1,150 1,150 1,147 (4)1,150 1,150 1,146 (4)
July 2026 Notes1,000 1,000 993 (4)1,000 1,000 993 (4)
January 2027 Notes900 900 890 (4)(5)900 900 905 (4)(5)
June 2027 Notes500 500 496 (4)500 500 495 (4)
2028 Notes1,250 1,250 1,247 (4)1,250 1,250 1,247 (4)
2029 Notes1,000 1,000 974 (4)(5)— — — 
2031 Notes700 700 691 (4)700 700 691 (4)
Total$17,298 $11,754 $11,695 $16,851 $11,905 $11,884 
________________________________________

(1)Represents the total aggregate amount committed or outstanding, as applicable, under such instrument. Borrowings under the committed Revolving Credit Facility, Revolving Funding Facility, SMBC Funding Facility and BNP Funding Facility (each as defined below) are subject to borrowing base and other restrictions.

(2)Provides for a feature that allows the Company, under certain circumstances, to increase the size of the Revolving Credit Facility to a maximum of $7,137.

(3)Provides for a feature that allows ACJB (as defined below), under certain circumstances, to increase the size of the SMBC Funding Facility to a maximum of $1,000.

(4)Represents the aggregate principal amount outstanding, less unamortized debt issuance costs and the net unaccreted/amortized discount or premium recorded upon issuance. In March 2024, the Company repaid in full the 2024 Convertible Notes (as defined below) upon their maturity.

(5)The carrying values of the January 2027 Notes and 2029 Notes (each as defined below) as of March 31, 2024 includes a $1 increase and $9 decrease, respectively, as a result of an effective hedge accounting relationship. The carrying value of the January 2027 Notes as of December 31, 2023 includes a $15 increase as a result of an effective hedge accounting relationship. See Note 6 for additional information.

 The weighted average stated interest rate and weighted average maturity, both on aggregate principal amount outstanding, of all the Company’s outstanding debt as of March 31, 2024 were 4.9% and 3.0 years, respectively, and as of December 31, 2023 were 4.8% and 3.0 years, respectively. The weighted average stated interest rate of all the Company’s debt outstanding as of March 31, 2024 and December 31, 2023 includes the impact of interest rate swaps. See Note 6 for additional information on the interest rate swaps.
 
Revolving Credit Facility
 
The Company is party to a senior secured revolving credit facility (as amended and restated, the “Revolving Credit Facility”), that allows the Company to borrow up to $4,608 at any one time outstanding. The Revolving Credit Facility consists of a $3,506 revolving tranche and a $1,102 term loan tranche. As of March 31, 2024, the end of the revolving periods and the stated maturity dates of the various revolving and term loan tranches of the Revolving Credit Facility were as follows:

Total Aggregate Principal Amount Committed/ OutstandingEnd of Revolving PeriodMaturity Date
Revolving tranche$2,905 April 19, 2027April 19, 2028
494March 31, 2026March 31, 2027
107March 31, 2025March 31, 2026
3,506 
Term loan tranche908 April 19, 2028
116March 31, 2027
28March 31, 2026
50March 30, 2025
1,102 
$4,608 

The Revolving Credit Facility also provides for a feature that allows the Company, under certain circumstances, to increase the overall size of the Revolving Credit Facility to a maximum of $7,137. The Revolving Credit Facility generally requires payments of interest at the end of each SOFR interest period, but no less frequently than quarterly, on SOFR based loans, and monthly payments of interest on other loans. Subsequent to the end of the respective revolving periods and prior to the respective stated maturity dates, the Company is required to repay the relevant outstanding principal amounts under both the term loan tranche and revolving tranche on a monthly basis in an amount equal to 1/12th of the outstanding principal amount at the end of the respective revolving periods. See Note 14 for a subsequent event relating to the Revolving Credit Facility.

Under the Revolving Credit Facility, the Company is required to comply with various covenants, reporting requirements and other customary requirements for similar revolving credit facilities, including, without limitation, covenants related to: (a) limitations on the incurrence of additional indebtedness and liens, (b) limitations on certain investments, (c) limitations on certain restricted payments, (d) maintaining a certain minimum stockholders’ equity, (e) maintaining a ratio of total assets (less total liabilities not representing indebtedness) to total indebtedness of the Company and its consolidated subsidiaries (subject to certain exceptions) of not less than 1.5:1.0, (f) limitations on pledging certain unencumbered assets, and (g) limitations on the creation or existence of agreements that prohibit liens on certain properties of the Company and certain of its subsidiaries. These covenants are subject to important limitations and exceptions that are described in the documents governing the Revolving Credit Facility. Amounts available to borrow under the Revolving Credit Facility (and the incurrence of certain other permitted debt) are also subject to compliance with a borrowing base that applies different advance rates to different types of assets (based on their value as determined pursuant to the Revolving Credit Facility) that are pledged as collateral. As of March 31, 2024, the Company was in compliance in all material respects with the terms of the Revolving Credit Facility.
 
As of March 31, 2024 and December 31, 2023, there was $1,102 and $1,413 outstanding, respectively, under the Revolving Credit Facility. The Revolving Credit Facility also provides for a sub-limit for the issuance of letters of credit for up to an aggregate amount of $250 with the ability to increase by an incremental $50 on an uncommitted basis. As of March 31, 2024 and December 31, 2023, the Company had $57 and $60, respectively, in letters of credit issued through the Revolving Credit Facility. The amount available for borrowing under the Revolving Credit Facility is reduced by any letters of credit issued. As of March 31, 2024, there was $3,449, available for borrowing (net of letters of credit issued) under the Revolving Credit Facility, subject to borrowing base restrictions.
 
The interest rate charged on the Revolving Credit Facility is based on SOFR plus a credit spread adjustment of 0.10% (or an alternate rate of interest for certain loans, commitments and/or other extensions of credit denominated in Sterling, Canadian Dollars, Euros and certain other foreign currencies plus a spread adjustment, if applicable) and an applicable spread of either 1.75% or 1.875% or an “alternate base rate” (as defined in the agreements governing the Revolving Credit Facility) plus an applicable spread of 0.75% or 0.875%, in each case, determined monthly based on the total amount of the borrowing base relative to the sum of (i) the greater of (a) the aggregate amount of revolving exposure and term loans outstanding under the Revolving Credit Facility and (b) 85% of the total commitments of the Revolving Credit Facility (or, if higher, the total
revolving exposure) plus (ii) other debt, if any, secured by the same collateral as the Revolving Credit Facility. The Revolving Credit Facility allows for borrowings to be made using one, three or six month SOFR. As of March 31, 2024, the one, three and six month SOFR was 5.33%, 5.30% and 5.22%, respectively. As of March 31, 2024, the applicable spread in effect was 1.75%. In addition to the stated interest expense on the Revolving Credit Facility, the Company is required to pay a commitment fee of 0.375% per annum on any unused portion of the Revolving Credit Facility. The Company is also required to pay a letter of credit fee of either 2.00% or 2.125% per annum on letters of credit issued, determined monthly based on the total amount of the borrowing base relative to the total commitments of the Revolving Credit Facility and other debt, if any, secured by the same collateral as the Revolving Credit Facility.

The Revolving Credit Facility is secured by certain assets in the Company’s portfolio and excludes investments held by Ares Capital CP (as defined below) under the Revolving Funding Facility, those held by ACJB under the SMBC Funding Facility and those held by AFB (as defined below) under the BNP Funding Facility, each as described below, and certain other investments.

For the three months ended March 31, 2024 and 2023, the components of interest and credit facility fees expense, cash paid for interest expense, average stated interest rates (i.e., rate in effect plus the spread) and average outstanding balances for the Revolving Credit Facility were as follows:

 For the Three Months Ended March 31,
 20242023
Stated interest expense$22 $34 
Credit facility fees4 3 
Amortization of debt issuance costs2 2 
Total interest and credit facility fees expense$28 $39 
Cash paid for interest expense$38 $32 
Average stated interest rate7.29 %6.35 %
Average outstanding balance$1,196 $2,117 
 
Letter of Credit Facility

In May 2023, the Company and Deutsche Bank AG New York Branch (the “DB Issuer”) entered into an uncommitted continuing agreement (the “Letter of Credit Facility”), which allows the DB Issuer to issue letters of credit or demand guarantees, at the request of the Company, on behalf of certain portfolio companies. The Company is required to make payments to the DB Issuer if the portfolio companies were to default on their related payment obligations. The Letter of Credit Facility is secured on a pari passu basis with the Revolving Credit Facility and pursuant to substantially the same collateral as the Revolving Credit Facility. As of March 31, 2024, the DB Issuer had $56 in letters of credit issued under the Letter of Credit Facility.

Revolving Funding Facility
 
The Company and the Company’s consolidated subsidiary, Ares Capital CP Funding LLC (“Ares Capital CP”), are party to a revolving funding facility (as amended, the “Revolving Funding Facility”), that allows Ares Capital CP to borrow up to $1,775 at any one time outstanding. The Revolving Funding Facility is secured by all of the assets held by, and the membership interest in, Ares Capital CP. The end of the reinvestment period and the stated maturity date for the Revolving Funding Facility are December 29, 2024 and December 29, 2026, respectively.
 
Amounts available to borrow under the Revolving Funding Facility are subject to a borrowing base that applies different advance rates to different types of assets held by Ares Capital CP. Ares Capital CP is also subject to limitations with respect to the loans securing the Revolving Funding Facility, including restrictions on sector concentrations, loan size, payment frequency and status, collateral interests and loans with fixed rates, as well as restrictions on portfolio company leverage, all of which may also affect the borrowing base and therefore amounts available to borrow. The Company and Ares Capital CP are also required to comply with various covenants, reporting requirements and other customary requirements for similar facilities. These covenants are subject to important limitations and exceptions that are described in the agreements governing the Revolving Funding Facility. As of March 31, 2024, the Company and Ares Capital CP were in compliance in all material respects with the terms of the Revolving Funding Facility.
 
As of March 31, 2024 and December 31, 2023, there was $651 and $863 outstanding, respectively, under the Revolving Funding Facility. The interest rate charged on the Revolving Funding Facility is based on SOFR plus a credit spread adjustment of 0.10% or a “base rate” (as defined in the agreements governing the Revolving Funding Facility) plus an applicable spread of 1.90% per annum. Ares Capital CP is also required to pay a commitment fee of between 0.50% and 1.25% per annum depending on the size of the unused portion of the Revolving Funding Facility.
  
For the three months ended March 31, 2024 and 2023, the components of interest and credit facility fees expense, cash paid for interest expense, average stated interest rates (i.e., rate in effect plus the spread) and average outstanding balances for the Revolving Funding Facility were as follows:
 For the Three Months Ended March 31,
 20242023
Stated interest expense$10 $13 
Credit facility fees2 1 
Amortization of debt issuance costs1 1 
Total interest and credit facility fees expense$13 $15 
Cash paid for interest expense$13 $12 
Average stated interest rate7.36 %6.46 %
Average outstanding balance$544 $812 

SMBC Funding Facility
 
The Company and the Company’s consolidated subsidiary, Ares Capital JB Funding LLC (“ACJB”), are party to a revolving funding facility (as amended, the “SMBC Funding Facility”), with ACJB, as the borrower, and Sumitomo Mitsui Banking Corporation, as the administrative agent and collateral agent, that allows ACJB to borrow up to $800 at any one time outstanding. The SMBC Funding Facility also provides for a feature that allows ACJB, subject to receiving certain consents, to increase the overall size of the SMBC Funding Facility to $1,000. The SMBC Funding Facility is secured by all of the assets held by ACJB. The end of the reinvestment period and the stated maturity date for the SMBC Funding Facility are March 28, 2027 and March 28, 2029, respectively. The reinvestment period and the stated maturity date are both subject to two one-year extensions by mutual agreement.
 
Amounts available to borrow under the SMBC Funding Facility are subject to a borrowing base that applies an advance rate to assets held by ACJB. ACJB is also subject to limitations with respect to the loans securing the SMBC Funding Facility, including restrictions on sector concentrations, loan size, payment frequency and status, collateral interests and loans with fixed rates, as well as restrictions on portfolio company leverage, all of which may also affect the borrowing base and therefore amounts available to borrow. The Company and ACJB are also required to comply with various covenants, reporting requirements and other customary requirements for similar facilities. These covenants are subject to important limitations and exceptions that are described in the documents governing the SMBC Funding Facility. As of March 31, 2024, the Company and ACJB were in compliance in all material respects with the terms of the SMBC Funding Facility.
 
As of March 31, 2024 and December 31, 2023, there was $176 and $401 outstanding, respectively, under the SMBC Funding Facility. Since March 28, 2024, the interest rate charged on the SMBC Funding Facility is based on an applicable spread of either (i) 2.50% over one month SOFR or (ii) 1.50% over a “base rate” (as defined in the agreements governing the SMBC Funding Facility), in each case, determined monthly based on the amount of the average borrowings outstanding under the SMBC Funding Facility. From April 28, 2023 to March 27, 2024, the interest rate charged on the SMBC Funding Facility was based on an applicable spread of either (i) 1.75% or 2.00% over one month SOFR plus a credit spread adjustment of 0.10% or (ii) 0.75% or 1.00% over a “base rate” (as defined in the agreements governing the SMBC Funding Facility), in each case, determined monthly based on the amount of the average borrowings outstanding under the SMBC Funding Facility. Prior to April 28, 2023, the interest rate charged on the SMBC Funding Facility was based on an applicable spread of either (i) 1.75% or 2.00% over one month London Interbank Offered Rate (“LIBOR”) or (ii) 0.75% or 1.00% over a “base rate” (as defined in the agreements governing the SMBC Funding Facility), in each case, determined monthly based on the amount of the average borrowings outstanding under the SMBC Funding Facility. As of March 31, 2024, the applicable spread in effect was 2.50%. ACJB is required to pay a commitment fee of between 0.50% and 1.00% per annum depending on the size of the unused portion of the SMBC Funding Facility.
 
For the three months ended March 31, 2024 and 2023, the components of interest and credit facility fees expense, cash paid for interest expense, average stated interest rates (i.e., rate in effect plus the spread) and average outstanding balances for the SMBC Funding Facility were as follows:
 For the Three Months Ended March 31,
 20242023
Stated interest expense$5 $7 
Credit facility fees1 1 
Amortization of debt issuance costs1 1 
Total interest and credit facility fees expense$7 $9 
Cash paid for interest expense$6 $7 
Average stated interest rate7.30 %6.27 %
Average outstanding balance$286 $427 
    
BNP Funding Facility
 
The Company and the Company’s consolidated subsidiary, ARCC FB Funding LLC (“AFB”), are party to a revolving funding facility (as amended, the “BNP Funding Facility”) with AFB, as the borrower, and BNP Paribas, as the administrative agent and lender, that allows AFB to borrow up to $865 at any one time outstanding. The BNP Funding Facility is secured by all of the assets held by AFB. The end of the reinvestment period and the stated maturity date for the BNP Funding Facility are April 20, 2026 and April 20, 2028, respectively. The reinvestment period and the stated maturity date are both subject to a one-year extension by mutual agreement.
 
Amounts available to borrow under the BNP Funding Facility are subject to a borrowing base that applies an advance rate to assets held by AFB. AFB is also subject to limitations with respect to the loans securing the BNP Funding Facility, including restrictions on sector concentrations, loan size, payment frequency and status, collateral interests and loans with fixed rates, as well as restrictions on portfolio company leverage, all of which may also affect the borrowing base and therefore amounts available to borrow. The Company and AFB are also required to comply with various covenants, reporting requirements and other customary requirements for similar facilities. These covenants are subject to important limitations and exceptions that are described in the documents governing the BNP Funding Facility. As of March 31, 2024, the Company and AFB were in compliance in all material respects with the terms of the BNP Funding Facility.
 
As of March 31, 2024 and December 31, 2023, there was $575 and $575, respectively, outstanding under the BNP Funding Facility. Since February 2, 2024, the interest rate charged on the BNP Funding Facility is based on an applicable SOFR or a “base rate” (as defined in the agreements governing the BNP Funding Facility) plus a margin of (i) 2.65% during the reinvestment period and (ii) 3.15% following the reinvestment period. From April 20, 2023 to February 1, 2024, the interest rate charged on the BNP Funding Facility was based on an applicable SOFR or a “base rate” (as defined in the agreements governing the BNP Funding Facility) plus a margin of (i) 2.80% during the reinvestment period and (ii) 3.30% following the reinvestment period. From January 9, 2023 to April 19, 2023, the interest rate charged on the BNP Funding Facility was based on an applicable SOFR or a “base rate” (as defined in the agreements governing the BNP Funding Facility) plus a margin of (i) 2.30% during the reinvestment period and (ii) 2.80% following the reinvestment period. Prior to January 9, 2023, the interest rate charged on the BNP Funding Facility was based on an applicable LIBOR or a “base rate” (as defined in the agreements governing the BNP Funding Facility) plus a margin of (i) 1.80% during the reinvestment period and (ii) 2.30% following the reinvestment period. As of March 31, 2024, the applicable spread in effect was 2.65%. AFB is required to pay a commitment fee of between 0.00% and 1.25% per annum depending on the size of the unused portion of the BNP Funding Facility. See Note 14 for a subsequent event relating to the BNP Funding Facility.

For the three months ended March 31, 2024 and 2023, the components of interest and credit facility fees expense, cash paid for interest expense, average stated interest rates (i.e., rate in effect plus the spread) and average outstanding balances for the BNP Funding Facility were as follows:
For the Three Months Ended March 31,
 20242023
Stated interest expense$13 $5 
Credit facility fees— — 
Amortization of debt issuance costs— — 
Total interest and credit facility fees expense$13 $5 
Cash paid for interest expense$12 $5 
Average stated interest rate8.13 %6.80 %
Average outstanding balance$572 $314 

2024 Convertible Unsecured Notes

In March 2024, the Company repaid in full the $403 in aggregate principal amount of unsecured convertible notes, which bore interest at a rate of 4.625% per year, payable semi-annually (the “2024 Convertible Notes”) upon their maturity, resulting in a realized loss on extinguishment of debt of $14. In accordance with the indenture governing the 2024 Convertible Notes, the Company settled the repayment of the 2024 Convertible Notes with a combination of cash and shares of its common stock. Approximately $393 of aggregate principal amount was settled with approximately 20 shares of the Company’s common stock and the remaining $10 was settled with available cash.

For the three months ended March 31, 2024 and 2023, the components of interest expense and cash paid for interest expense for the 2024 Convertible Notes were as follows.
 For the Three Months Ended March 31,
 20242023
Stated interest expense$3 $5 
Accretion of original issue discount— 1 
Total interest expense$3 $6 
Cash paid for interest expense$9 $9 

Unsecured Notes
 
The Company has issued certain unsecured notes (each issuance of which is referred to herein using the “defined term” set forth under the “Unsecured Notes” column of the table below and collectively referred to as the “Unsecured Notes”), that pay interest semi-annually and all principal amounts are due upon maturity. Each of the Unsecured Notes may be redeemed in whole or in part at any time at the Company’s option at a redemption price equal to par plus a “make whole” premium, if applicable, as determined pursuant to the indentures governing each of the Unsecured Notes, plus any accrued and unpaid interest. Certain key terms related to the features for the Unsecured Notes as of March 31, 2024 are listed below.


Unsecured Notes		Aggregate Principal Amount IssuedEffective Stated Interest RateOriginal Issuance DateMaturity Date
2024 Notes$900 4.200%June 10, 2019June 10, 2024
March 2025 Notes$600 4.250%January 11, 2018March 1, 2025
July 2025 Notes$1,250 3.250%January 15, 2020July 15, 2025
January 2026 Notes$1,150 3.875%July 15, 2020January 15, 2026
July 2026 Notes$1,000 2.150%January 13, 2021July 15, 2026
January 2027 Notes(1)$900 7.906%August 3, 2023January 15, 2027
June 2027 Notes $500 2.875%January 13, 2022June 15, 2027
2028 Notes$1,250 2.875%June 10, 2021June 15, 2028
2029 Notes(1)$1,000 7.348%January 23, 2024March 1, 2029
2031 Notes$700 3.200%November 4, 2021November 15, 2031
________________________________________

(1)The effective stated interest rates for the January 2027 Notes and 2029 Notes include the impact of interest rate swaps.
In connection with the January 2027 Notes, the Company entered into interest rate swap agreements for a total notional amount of $900 that mature on January 15, 2027 to more closely align the interest rate of such liability with its investment portfolio, which consists of primarily floating rate loans. Under the interest rate swap agreements, the Company receives a fixed interest rate of 7.000% and pays a floating interest rate of one-month SOFR plus 2.581%. The Company designated these interest rate swaps and the January 2027 Notes as a qualifying hedge accounting relationship. See Note 6 for more information on the interest rate swaps.

In connection with the 2029 Notes, the Company entered into an interest rate swap agreement for a total notional amount of $1,000 that matures on March 1, 2029 to more closely align the interest rate of such liability with its investment portfolio, which consists of primarily floating rate loans. Under the interest rate swap agreement, the Company receives a fixed interest rate of 5.875% and pays a floating interest rate of one-month SOFR plus 2.023%. The Company designated this interest rate swap and the 2029 Notes as a qualifying hedge accounting relationship. See Note 6 for more information on the interest rate swap.

For the three months ended March 31, 2024 and 2023, the components of interest expense and cash paid for interest expense for the Unsecured Notes, as well as any other unsecured notes outstanding during the periods presented are listed below.
 For the Three Months Ended March 31,
 20242023
Stated interest expense(1)$93 $64 
Amortization of debt issuance costs4 3 
Net amortization of original issue premium/discount(2)(2)
Total interest expense$95 $65 
Cash paid for interest expense$98 $79 
________________________________________

(1)Includes the impact to interest expense related to the interest rate swaps for the three months ended March 31, 2024.
 
The Unsecured Notes contain certain covenants, including covenants requiring the Company to comply with Section 18(a)(1)(A) as modified by Section 61(a) of the Investment Company Act, or any successor provisions, and to provide financial information to the holders of such notes under certain circumstances. These covenants are subject to important limitations and exceptions set forth in the indentures governing such notes. As of March 31, 2024, the Company was in compliance in all material respects with the terms of the respective indentures governing each of the Unsecured Notes.
 
The Unsecured Notes are the Company’s senior unsecured obligations and rank senior in right of payment to any future indebtedness that is expressly subordinated in right of payment to the Unsecured Notes; equal in right of payment to the Company’s existing and future unsecured indebtedness that is not expressly subordinated; effectively junior in right of payment to any of its secured indebtedness (including existing unsecured indebtedness that the Company later secures) to the extent of the value of the assets securing such indebtedness; and structurally junior to all existing and future indebtedness (including trade payables) incurred by the Company’s subsidiaries, financing vehicles or similar facilities.