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Ares Strategic Income Fund Enters Into Indenture, Interest Rate Swap

Ares Strategic Income Fund, a non-listed business development company launched in December 2022, entered into an indenture relating to the issuance, offer, and sale of its previously announced offering of $700 million of its 6.35% notes due 2029.

In connection, the company entered into a $700 million interest rate swap with Wells Fargo Bank, N.A., to swap from a fixed rate to a floating rate whereby the company will receive a fixed rate of 6.35% and pay a floating rate of one-month secured overnight financing rate plus 2.208%. The interest rate swap matures on Aug. 15, 2029.

The BDC expects to use the net proceeds of this offering to repay certain outstanding indebtedness under its debt facilities. It may reborrow under its debt facilities for general corporate purposes, which include investing in portfolio companies in accordance with its investment objective.

Following this, the Ares BDC amended its prospectus to increase the cap on upfront fees for its Class D shares from 1.5% to 2.0%, and Class I shares from no specified cap to 2%.

The BDC primarily invests in directly originated, senior secured, floating-rate loans to U.S. companies. As of April 30, 2024, it had investments in 343 portfolio companies with total fair value of approximately $4.1 billion and had sold shares via its $7.5 billion public offering and private offerings for total consideration of $3.1 billion.

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