Shareholders' equity has eroded by 15.8% to $1.6B, compressing the equity-to-assets ratio to 0.44 and limiting the fund's capacity for new leveraged originations.
Morgan Stanley Direct Lending Fund (MSDL) balance sheet — 6-year assets, liabilities & shareholders' equity history
| Metric | TTM | Dec'25 | Dec'24 | Dec'23 | Dec'22 | Dec'21 | Dec'20 |
|---|
| Cash & Short Term Investments | 351.23M | 81.43M | 70.37M | 69.7M | 81.22M | 74.15M | 11.26M |
| Cash & Due from Banks | 92.93M | 81.43M | 70.37M | 69.7M | 81.22M | 74.15M | 11.26M |
| Short Term Investments | 0 | 0 | 0 | 0 | 0 | 0 | 0 |
| Total Investments | 3.43B | 3.77B | 0 | 0 | 0 | 0 | 0 |
| Investments Growth % | -9.36% | - | - | - | - | - | - |
| Long-Term Investments | 7.33B | 3.77B | 0 | 0 | 0 | 0 | 0 |
| Accounts Receivables | 0 | 26.42M | 31.02M | 29.1M | 23.66M | 19.89M | 2.36M |
| Goodwill & Intangibles | 0 | 0 | 0 | 0 | 0 | 0 | 0 |
| Goodwill | 0 | 0 | 0 | 0 | 0 | 0 | 0 |
| Intangible Assets | 0 | 0 | 0 | 0 | 0 | 0 | 0 |
| PP&E (Net) | 0 | 0 | 0 | 0 | 0 | 0 | 0 |
| Other Assets | 0 | 40.7M | 3.81B | 3.21B | 2.88B | 2.4B | 643.18M |
| Total Current Assets | 120.63M | 107.86M | 101.4M | 98.8M | 104.87M | 94.04M | 13.62M |
| Total Non-Current Assets | 0 | 3.81B | 3.81B | 3.21B | 2.88B | 2.4B | 643.18M |
| Total Assets | 3.59B | 3.92B | 3.91B | 3.31B | 2.99B | 2.49B | 656.81M |
| Asset Growth % | -16.17% | 0.21% | 18.3% | 10.74% | 19.77% | 279.61% | - |
| Return on Assets (ROA) | 1.95% | 3.12% | 5.97% | 7.34% | 1.77% | 5.29% | 2.79% |
| Accounts Payable | 0 | 64.17M | 74.63M | 68.8M | 50.08M | 32.97M | 10.32M |
| Total Debt | 0 | 2.09B | 1.97B | 1.5B | 1.52B | 1.25B | 333.85M |
| Net Debt | -92.93M | 2.01B | 1.9B | 1.43B | 1.44B | 1.18B | 322.59M |
| Long-Term Debt | 0 | 2.09B | 1.97B | 1.5B | 1.52B | 1.25B | 333.85M |
| Short-Term Debt | 0 | 0 | 0 | 0 | 0 | 0 | 0 |
| Other Liabilities | 0 | 4.2M | 21.76M | 20.75M | 15.27M | 21.86M | 11.02M |
| Total Current Liabilities | 0 | 81.14M | 74.63M | 68.8M | 50.08M | 32.97M | 10.32M |
| Total Non-Current Liabilities | 0 | 2.09B | 2B | 1.52B | 1.54B | 1.27B | 344.87M |
| Total Liabilities | 2.02B | 2.17B | 2.07B | 1.59B | 1.59B | 1.3B | 355.19M |
| Total Equity | 1.57B | 1.75B | 1.84B | 1.72B | 1.4B | 1.19B | 301.62M |
| Equity Growth % | -31.44% | -5.11% | 7.03% | 23.18% | 17.56% | 294.07% | - |
| Equity / Assets (Capital Ratio) | 43.76% | 44.59% | 47.09% | 52.05% | 46.79% | 47.67% | 45.92% |
| Return on Equity (ROE) | 4.4% | 6.8% | 12.1% | 14.82% | 3.75% | 11.17% | 6.07% |
| Book Value per Share | 18.69 | 20.03 | 20.64 | 19.50 | 15.83 | 13.46 | 3.42 |
| Tangible BV per Share | 18.69 | 20.03 | 20.64 | 19.50 | 15.83 | 13.46 | 3.42 |
| Common Stock | 84K | 86K | 89K | 83K | 71K | 57K | 15K |
| Additional Paid-in Capital | 0 | 1.77B | 1.81B | 1.71B | 1.45B | 1.17B | 296.9M |
| Retained Earnings | 0 | -19.62M | 29.62M | 8.46M | -54.78M | 15.78M | 4.7M |
| Accumulated OCI | 0 | 0 | 0 | 0 | 0 | 0 | 0 |
| Treasury Stock | 0 | 0 | 0 | 0 | 0 | 0 | 0 |
| Preferred Stock | 0 | 0 | 0 | 0 | 0 | 0 | 0 |
Quick answers to the most common questions about buying MSDL stock.
As of 2025, Morgan Stanley Direct Lending Fund (MSDL) had total assets of $3.92B including $107.9M in current assets.
Morgan Stanley Direct Lending Fund (MSDL) carries total debt of $2.09B. Comparing total debt to cash helps evaluate the company's debt burden and net leverage.
Morgan Stanley Direct Lending Fund (MSDL) has total shareholders' equity (book value) of $1.75B ($20.03 book value per share). Book value represents the net worth of the company belonging to common stock holders.
Morgan Stanley Direct Lending Fund (MSDL) reported a current ratio of 1.33x. A current ratio above 1.0x indicates that the company has more current assets than current liabilities, suggesting sufficient short-term liquidity.
Key Metrics
Top Statement Risk
NIM compression and earnings volatility
Metrics are mathematically derived from official filings.
Asset Contraction Amid Earnings Pressure
Total assets have contracted from a peak of $3.9B in 2024Q3 to $3.7B in 2026Q2, a 5.1% decline that suggests the fund is not growing its balance sheet organically and may be allowing assets to run off without replacement.
The steady decline in total assets, coupled with the reported pause in new investment purchases, indicates a defensive posture rather than an expansionary one. This trajectory is inconsistent with the 16.4% revenue growth figure, suggesting that recent top-line performance may be driven by non-cash items like PIK accruals or favorable marks rather than genuine portfolio growth. Investors should monitor whether this asset contraction is a deliberate strategy to preserve capital or a symptom of limited deployment opportunities.
Equity Erosion Constrains Leverage Capacity
Shareholders' equity has declined from $1.9B in 2024Q2 to $1.6B in 2026Q2, a 15.8% reduction that has compressed the equity-to-assets ratio from 0.51 to 0.44, limiting the fund's capacity to take on additional leverage for new originations.
The erosion of equity, driven by accumulated unrealized losses and net income shortfalls, directly impacts the fund's regulatory leverage capacity. While the reported debt-to-equity ratio of 1.19 appears conservative relative to peers, the declining equity base means the absolute dollar amount of debt the fund can support is shrinking. This dynamic may explain the recent pause in asset growth and suggests that future expansion will require either a recovery in asset valuations or a capital raise.
Cash Reserves Provide Limited Buffer
Cash and cash equivalents have fluctuated between $64.8M and $96.7M over the past ten quarters, representing only 1.8% to 2.6% of total assets, a minimal liquidity buffer that may be insufficient to absorb significant redemption requests or fund opportunistic investments.
The fund's liquidity profile is heavily dependent on the cash flow generated by its loan portfolio, which is currently under pressure from NIM compression. The modest cash position, combined with the absence of a reported loan-to-deposit ratio, suggests the fund relies on its credit facilities and the broader Morgan Stanley ecosystem for contingent funding. This structure appears adequate under normal conditions but warrants monitoring during periods of market stress.
Level 3 Valuation and PIK Income Risks
The significant gap between gross margin (125.0%) and net margin (48.7%) in 2026Q2, combined with the fund's reliance on Level 3 asset valuations, suggests that reported earnings may be inflated by non-cash items and subjective marks that do not reflect actual cash flows.
The fund's portfolio is comprised of Level 3 assets, meaning their fair value is based on internal models and third-party appraisals rather than observable market prices. This creates a risk that the reported net asset value and earnings are overstated, particularly if the underlying credit quality of the middle-market borrowers deteriorates. The persistent negative non-interest income, which likely includes unrealized losses on these assets, is a direct manifestation of this valuation risk and should be closely scrutinized.
NIM Trajectory Signals Further Compression
The net interest margin has compressed from 2.1% in 2024Q1 to 1.4% in 2026Q2, a 70 basis point decline that suggests the fund's floating-rate assets are repricing lower faster than its funding costs, a trend that may continue if benchmark rates remain stable or fall further.
The NIM compression is the primary driver of the fund's strained profitability and declining net interest income. This trend implies that the fund's asset yields are highly sensitive to rate movements, while its liability structure may have more fixed components, creating a negative duration gap. The forward outlook for NIM is therefore tied to the path of benchmark rates and the fund's ability to reprice its loan book or reduce its cost of funds.