CION Investment Corporation (CION) Analysis | BDC Stock Breakdown

0:00College football is back. So, Hilton called to me the superstition concierge to make your fan rituals a reality. Need a room to match your lucky number? We got you. Want to make sure our team doesn't wash your lucky jersey? Oh, that smells lucky. Hilton's unmatched hospitality can keep up with any superstition. Even a marching bandwick up call it 555 and 55 seconds. Hit it! When you need a team that will do whatever it takes on game day, it matters where you stay. Hilton, for this day. Welcome to the BDC Stock Breakdown, the show where we examine business development companies one stock at a time. Today we're looking at Cyan Investment Corporation, ticker symbol, C-I-O-N. A deeply discounted BDC offering an unusually high monthly dividend, but also carrying several risks investors should not ignore. Cyan is a publicly traded business development company,

1:00focused primarily on lending to private middle market businesses in the United States. As of March 31st, 2026, its investment portfolio had a fair value of roughly $1.7 billion and included 89 companies across 23 industries. About 80.8% of the portfolio was invested in senior secured first-lean loans. That is generally positive because first-lean lenders are near the front of the repayment line when a borrower runs into trouble. The portfolio is also heavily exposed to floating rate loans. Approximately 88.6% of Cyan's performing loans carried floating interest rates. Floating rates can help investment income when benchmark rates remain elevated.

2:01But they also place a more pressure on borrowers. If interest rates fail, fall, sorry, if interest rates fall, Cyan's investment income could decline. If rates remain high for too long, weaker borrowers may struggle to service their debt. I want to give you guys a quick heads up. This is not financial advice. Always speak to a financial advisor. Very, very important. You know, I'm just a guy on YouTube who loves doing this for the love of the game always. And I mean always talk to a financial advisor. College football is back. So Hilton called to me the superstition concierge to make your fan rituals a reality. Need a room to match your lucky number? We got you. Want to make sure our team doesn't wash your lucky, Jersey? Oh, that smells lucky. Hilton's unmatched hospitality can keep up with any superstition. Even a marching bandwick up call it 555 and 55 seconds. Hit it! When you need a team that will do whatever it takes on game day,

3:01it matters where you stay. Hilton, for this day. I do want to discuss the dividend because that is one of the main attractions. And that's one of the main reasons I do like having Cyan as part of my portfolio. It's not the main part of it, trust me. I am very diversified. Cyan currently pays a base distribution of 10 cents per share each month or $1.20 per share annually. At a stock price of approximately $6.46 on July 15th, 2026, that represents an annualized yield of roughly 18.6%. Cyan has already declared the 10-cent monthly distributions for July, August and September, 2026. That yield is enormous, but the latest quarter did not fully cover it. Cyan generated net investment income of 25 cents per share during the first quarter of 2026 while paying 30 cents

4:05in distributions. That equals dividend coverage of approximately 83%. One quarter does not automatically mean that a dividend cut is coming, especially because BDC earnings can fluctuate. However, this is something investors need to watch closely. A distribution is much safer when recurring net investment income consistently covers it. The company's net asset value is another major part of the story. Nav fell, NAV, fell from $13.76 per share at the end of 2025 to $13.11 at the end of March, 2026. That was a decline of approximately 4.7% in one quarter. Management attribute much of that decline to market adjustments on certain portfolio investments. At the recent market price of approximately $6.46,

5:07Cyan trades about 51% below its last reported NAV. That discount looks extraordinary. Investors are essentially paying around 49 cents for every dollar of reported net assets. However, a discount this large is not automatically a bargain. The market appears to be signaling concerns about future credit losses, the sustainability of NAV, leverage and the dividend. Credit quality presents a mixed picture. Investments on non-accurral represented 1.53% of the portfolio at fair value, which does not look disastrous. However, those same non-accurral investments represented 5.35% at amortized cost. The large difference means that some troubled investments have already been marked down substantially.

6:08That may limit some future downside, but it also demonstrates that Cyan has experienced real credit problems. Barrow or fundamentals also deserve attention. Oh, sorry, I gotta keep popping my neck, guys. I'm sorry about that weighted average interest coverage declined from 2.26 times at the end of 2025 to 2.08 times in the first quarter. The portfolios weighted average, net debt to EBITDA ratio, improved slightly to 4.62 times, but the lower interest coverage suggests borrowers have less breathing room after paying their interest expenses. Leverage is one of my largest concerns with Cyan. The company's net debt to equity ratio increased from 1.44 times to 1.62 times during the quarter.

7:10Its gross debt to equity ratio reached 1.78 times. Higher leverage can improve shareholder returns when credit performance is strong, but it magnifies losses when portfolio values decline. With Nav already moving lower, I would prefer to see Cyan's leverage stabilize or come down. There are also some meaningful positives. The portfolio is diversified. Most of its debt investments are first lean. And Cyan had $106 million in cash in short-term investments, plus another $100 million available under its financing arrangements at the end of the quarter. The company has also been repurchasing its own shares below Nav. During the first quarter, Cyan repurchased more than 1.1 million shares at an average price of $8.71 per share.

8:11Through March 31, the company had repurchased approximately $6.7 million shares under its trading plan for a total of $65.2 million. Buying shares at a large discount can increase Nav per remaining share and is generally a shareholder-friendly use of the capital. So what is my rating overall? I would say I gotta give Cyan investment corporation to 6.1 out of 10. Once again, 6.1 out of 10. The valuation and monthly income are highly attractive. In the massive discount to Nav provides substantial upside of credit quality stabilizes. However, the dividend was not covered by first quarter net investment income. Leverage is elevated in the Nav declined materially and non-accurals remain meaningful when measured at cost. For aggressive income investors, Cyan may be worth considering

9:14as a small position inside a diversified BDC portfolio. For a conservative investor seeking a dependable core holding, I would rank it below higher quality BDCs with stronger dividend coverage. More stable net asset values and lower leverage. The next major checkpoint is Cyan's second quarter earnings report, scheduled for August 6th, 2026. Investors should focus on dividend coverage, Nav movement, non-accurals and whether management reduces leverage. Anyway, that is my breakdown of Cyan investment corporation. Remember, this video is for educational and entertainment purposes only and is not financial advice. Always perform your own research and consider your personal risk tolerance before investing. Anyway, thank you guys so much for your time and your patience. If you found this breakdown useful, like the video, subscribe to the channel and let me know in the comments which BDC you want me to cover next.

10:15Until next time folks, thank you all for your time. Love you all. Bye for now. Booking.com is the easiest way from a day surrounded by noise. To estate. Surrounded by nature. That's nice. Go on, book it. It's easy. Booking.com. Booking. Yeah.