Greetings, and welcome to the CION Investment Corp First Quarter 2022 Earnings Call. At this time, all participants are in a listen-only mode. A question-and-answer session will follow the formal presentation. If anyone should require operator assistance during the conference, please press star zero on your telephone keypad. As a reminder, this conference is being recorded. I would now like to turn the conference over to your host, Jeehae Linford, a company representative. Thank you. You may begin.
Thank you. Good morning, and welcome to CION Investment Corporation's First Quarter Ended March 31, 2022 Earnings Conference Call. An earnings press release was distributed earlier this morning before market open. A copy of the press release, along with the supplemental earnings presentation, is available on the company's website at www.cionbdc.com in the Investor Resources section and should be reviewed in conjunction with the company's Form 10-Q filed with the SEC. As a reminder, this conference call is being recorded for replay purposes. Please note that today's conference call may contain forward-looking statements which are not guarantees of future performance or results and involve a number of risks and uncertainties. Actual results may differ materially from those in the forward-looking statements as a result of a number of factors, including those described in the company's filings with the SEC.
We caution you to not place undue reliance on forward-looking statements which reflects management's view only as of the date of this call. CION Investment Corporation undertakes no obligation to update or revise any such forward-looking statements unless required by law. Speaking on today's call will be Mark Gatto and Michael Reisner, CION Investment Corporation's Co-Chief Executive Officers, Gregg Bresner, President and Chief Investment Officer, and Keith Franz, Chief Financial Officer. With that, I would now like to turn the call over to Mark Gatto. Please go ahead, Mark.
Thank you, Jeehae. Good morning, everyone, and thank you for joining us today. I will start our call today with an overview of our first quarter results. Michael will discuss our long-term corporate strategy and where we stand to date. Gregg will review our investment activity during the quarter, and Keith will provide additional detail on our financial results. This morning, we reported solid first quarter 2022 results. Our net investment income for the first quarter increased to $0.34 per share as compared to $0.32 per share for the fourth quarter of 2021. This quarter's net investment income reflects the growth of the portfolio as we ended the quarter with net funded portfolio activity of $77 million.
We have discussed our growth plans on previous calls, and we believe we are well-positioned to continue to grow our portfolio and begin to see the benefits of being more fully invested. Michael will further dive into this topic in his remarks. As mentioned, investment activity in the first quarter was solid, with new investment commitments totaling $155 million relative to sales and repayments of $61 million. We funded 15 new investments, with over 50% of such investment commitments to new portfolio companies. We remain focused on first-lien debt investments, and we're able to keep the level of these investments at the end of the quarter unchanged from a year ended 2021 at 92%, which represents a significant increase from 82% of our portfolio at year-end 2020. In terms of credit quality, the portfolio continues to perform well.
There were no new investments placed on non-accrual status during the quarter. Non-accruals accounted for just 0.6% of the overall portfolio at fair value at quarter end, a slight decrease in the overall percentage from year-end 2021. Currently, we have ample leverage capacity to pursue our measured and disciplined growth strategy. As many of you on this call know, we received shareholder approval to reduce our asset coverage ratio requirement from 200% to 150% at the end of last year. As Michael will discuss in more detail shortly, during the quarter and subsequent to quarter end, we successfully increased our total debt capacity by $150 million by increasing the principal amount available for borrowing from JP Morgan by $100 million and borrowed an additional $50 million pursuant to an unsecured term loan.
We recognize that rising interest rates are top of mind to those on this call and in our industry. At quarter end, roughly 90% of our performing loan portfolio was in floating rate investments, of which 80% had a LIBOR or SOFR floor with a weighted average floor of 0.85%. On the liability side, we do expect rising interest rates will increase the cost of our borrowings, but we expect a net positive impact to net investment income as rates continue to rise. As we all know, we are living in uncertain times with respect to the U.S. and global economies. Inflation, rising interest rates, and geopolitical events are impacting the financial markets and the broader macroeconomy.
From our perspective, when we think about the uncertainties that lie ahead, we are focused on aspects under our control as we think about managing risk while pursuing growth in a prudent and measured manner. We believe we have the ability and capacity to continue to generate investment income without veering from our core investment strategy. With that, let me turn it over to Michael.
Thank you, Mark, and good morning, everyone. Given the economic environment that we're in today, it seems especially pertinent to provide a few remarks on our long-term strategy and our current positioning. As many of you on this call know, CION operated as a non-traded BDC for nearly a decade prior to our listing on New York Stock Exchange in 2021. We have always viewed ourselves as a senior secured lender, primarily first lien, with our differentiation driven by our approach to investing, characterized by our deep relationships and the singular focus of our investment team on our BDC. In a crowded and competitive field, we believe our niche position has served us well in sourcing high-quality investment opportunities and in turn, generating solid investor returns through current yields.
Our listing on the New York Stock Exchange last fall gave us the opportunity to provide enhanced liquidity to our shareholders and to position us for potential growth. During the quarter, we took initial steps to increase our borrowings to support this planned growth objective after receiving shareholder approval to reduce our asset coverage ratio to 150% at year-end 2021. Despite challenging market conditions, we are pleased to have successfully increased our total available borrowing capacity by $150 million from two of our existing lenders, consisting of an increase in the total committed principal amount available for borrowing from JPMorgan by $100 million in March, and the closing of a $50 million five-year floating rate unsecured term loan in April. Looking ahead, our plan is to continue pursuing growth in a prudent and measured manner.
Despite the uncertainty of the current operating environment, we believe that high-quality investment opportunities exist and should continue to exist. We are committed to continue doing our best in sourcing these opportunities in order to make investments that make sense for our shareholders. As a result, we do expect our debt-to-equity ratio to increase to at least the lower end of our targeted range, which we have previously communicated to be 1-1.25. Furthermore, it has always been our preference to directly utilize leverage to primarily finance first lien debt investments, rather than rely on the capital structure of our portfolio companies to generate risk-adjusted returns from junior debt and equity investments. In times like now, we stand behind this philosophy more than ever. Now, I'd like to turn it over to Gregg for an overview of the investment market and our investment activity for the quarter.
Thank you, Michael. Good morning, everyone. I will start by sharing some data on the backdrop of the current U.S. credit markets before moving to our investment activity for the quarter. Overall, we believe the overriding enduring market themes for the quarter were volatility and uncertainty. The U.S. leveraged loan sector broke nearly all records in 2021 on the backdrop of a market awash in liquidity where investor demand significantly eclipsed supply. That trend continued into February of 2022 as unprecedented fund inflows into the loan market, particularly in private credit, effectively masked the fundamental impacts of supply chain challenges and inflation on borrowers and consumers that we have seen for some time. We believe some managers needed to more urgently put their unprecedented cash raises to work, resulting in tighter investment spreads, deal oversubscriptions, and the flexing down of pricing terms.
This is particularly well noted in the fact that riskier credits with at least one B- equivalent rating accounted for 50% of the total new issuance during the quarter, an all-time record. This intuitively unsustainable market dynamic abated in February as uncertainty over the war in Ukraine and the ever-rippling effects of supply chain and inflation challenges eventually rattled investors and resulted in the first weekly loan outflow in March 2022 to loan mutual funds and ETFs since early 2021. Nevertheless, overall net loan fund inflows in the first quarter of 2022 through March 30 totaled $21.8 billion, the most for any quarter since 2013.
In spite of the high net inflows into the loan market during the quarter, market uncertainty impacted transaction activity as the total new market loan issuance was $149.1 billion, a 35% decline from the first quarter of 2021. New issue spreads for institutional loans increased dramatically in March to 453 basis points, up from 374 basis points in January and 405 basis points in February. The March 2022 level is the highest since December 2018. The average yield to maturity for the middle market loan index at the end of the quarter was 5.79%. While many managers point to the relatively low current default rates as an indicator of a relatively strong overall market credit profile, we do not share that sentiment.
We believe the inherent lagging nature of the default rate calculation and the large overall percentage of covenant-like debt structures in the market have substantially diluted the predictive value of the default rate for credit profiling. The total quarterly return performance of key index, indexes captures the overall reversals in investment sentiment that took place later in the quarter. The S&P/LSTA Leveraged Loan Index was down 10 basis points. The S&P U.S. High Yield Corporate Bond Index was down 4.83%. The S&P 500 Index down 4.6%. The S&P U.S. Investment Grade Corporate Bond Index down 7.06% and NASDAQ down 9%.
CION's total return to investors of 2.6% for the first quarter of 2022 was driven by the fund's continued defensive underwriting and outlook, staunch first lien focus, and highly selective and diversified approach to investing. We were certainly not immune to the macroeconomic and geopolitical factors affecting the overall market as increases in spreads and volatility resulted in a net negative mark-to-market impact of 1.2% to our total quarterly return to investors. CION continues to implement a measured and cautious approach to our organic portfolio growth through the utilization of our increased debt capacity. We have strategically chosen to avoid disproportionately large fundraisers that inherently raise the risk to our investor returns through us having to urgently put cash to work and buy the market during less attractive market periods.
We have chosen instead to implement a measured step function growth approach to achieving our targeted 1.0x-1.25x leverage level that better matches our fundraising to our selective originated investment pipeline. Turning now to investment activity. Despite the highly volatile market environment, Q1 was a solid quarter for CION on the heels of a robust Q4 of 2021. During the quarter, we made 15 new investment commitments totaling $155 million across eight new portfolio companies and seven existing portfolio companies. Of the $155 million in new investment commitments made during the quarter, $123 million were funded and $32 million were unfunded. Fundings of previously unfunded commitments totaled $15 million for the quarter. As a result, net funded investment activity increased by $77 million.
We were able to sustain our ability to originate new first lien debt investments at a significant premium to the 5.79% yield to maturity of the S&P middle market loan index. During Q1, the weighted average yield to maturity of our funded first lien fundings was approximately 8.8%. Moving on to portfolio composition. At quarter end, we had 198 investments across 115 portfolio companies in 22 industries with a total fair value of about $1.7 billion, comprised of 93.9% in senior secured debt. This included 91.8% in first lien debt, 2.1% in second lien debt, 4.3% in equity, 1.6% in unsecured debt, and less than 1% in structured products.
Approximately 90% of the performing loan portfolio was in floating rate investments. As of March 31, our performing loan portfolio had a gross annual yield prior to leverage of 9.12% compared to 9.16% at the end of the fourth quarter, with a weighted average purchase price of 98.06% of par and an average investment size of about $15.1 million per portfolio company. Turning next to credit quality. The weighted average net debt to EBITDA of our portfolio companies was 4.74x at March 31 as compared to 4.52x at December 31, 2021. The weighted average interest coverage of our portfolio companies remained stable at 3.7x, consistent with the prior- quarter.
As of March 31, investments on non-accrual status were 0.6% and 2.3% of the total investment portfolio at fair value and at an amortized cost, respectively, compared to 0.7% and 2.4%, respectively, as of the end of the fourth quarter. We did not place any new investments on non-accrual status during the quarter. Our investments with internal risk ratings of four and five continue to make up less than 1% of the total portfolio. Of note, those investments rated two or higher increased from roughly 85% at year-end to approximately 89% at quarter- end.
Although about 11% of our investments were rated three at quarter end, which was down from 14% at year-end, it is important to note that our definition of a rated three investment is one that indicates a higher risk to our ability to recoup the cost of such investment. It has increased since origination or acquisition, but a full return of principal and interest or dividend is expected. A portfolio company with an internal risk rating of three requires more active monitoring. I will now turn the call over to Keith.
Okay. Thank you, Gregg, and good morning, everyone. As Mark mentioned, we reported solid first quarter results driven by the increase in the size of our investment portfolio. During the quarter, net investment income increased by $0.02 per share to $19.5 million, or $0.34 per share, compared to $18.4 million, or $0.32 per share in the fourth quarter. Total investment income during the quarter was $41.7 million compared to $40.4 million in the prior- quarter. On the expense side, total operating expenses were $22.2 million for the quarter compared to $21.7 million in the prior- quarter.
The increase was primarily due to slightly higher interest expense and incentive fees. At the end of the quarter, we had total assets of $1.8 billion and total equity or net assets of $922 million, with total debt outstanding of $875 million and 56.9 million shares outstanding. As a result, at the end of the quarter, our debt-to-equity ratio was 95% compared to 89% at the end of the fourth quarter, which reflects the growth of our portfolio through the use of additional leverage. At March 31, our NAV was $16.20 per share compared to $16.34 per share at the end of the fourth quarter.
The decrease in the NAV of $0.14 per share, or less than 1%, was driven by mark-to-market adjustments caused by wider credit spreads and price declines in our liquid portfolio. As Mark mentioned, during the quarter, we upsized our senior secured credit facility with JP Morgan by $100 million, which enhanced our liquidity and supported the growth of our portfolio. Furthermore, at the quarter- end, we borrowed an additional $50 million in connection with the new five-year unsecured floating rate term loan from one of our existing lenders. We ended the quarter with a strong and flexible balance sheet with $400 million in uncovered assets, low leverage, a strong debt servicing capacity, and solid liquidity. We had over $33 million in cash and short-term investments and access to another $105 million under our current facilities to finance our investment pipeline.
Our current debt mix is 82% senior secured and 18% unsecured. The weighted average cost of our debt capital is about 3.7%, with the majority of our senior secured facilities maturing in 2024 and all of our unsecured debt maturing in 2026 and beyond. As interest rates continue to rise above our floor levels, we expect an increase in our net interest income of about $0.05 per share for the next 100 basis point increase to the current base rate and $0.18 per share for a 200 basis point increase to the base rate as of March 31st. That's assuming no changes in the investment portfolio or our debt structure.
In terms of our distributions, during the first quarter, we paid cash distributions to our shareholders of about $15.9 million, reflecting a regular quarterly distribution of $0.28 per share, all of which were fully covered by our taxable income. As a reminder, on March 8th, we declared a regular quarterly distribution of $0.28 per share for the second quarter, consistent with the $0.28 per share paid in the first quarter. This distribution will be paid on June 8hth to shareholders of record on June 1st. As a final note, we expect to declare and announce our regular distribution for the third quarter during our second quarter earnings release, which will be held in August, and we expect to stick to this timing going forward. Okay, with that, I will turn the call back over to Mark for some closing comments.
Thank you, Keith. As a final thought before we open the line for questions, we would like to communicate that we are very optimistic about future prospects for CION despite the concerns we discussed regarding current market conditions. We believe the value proposition of our platform will become increasingly evident over time and through various cycles. Currently, with our relatively low leverage, we believe that we have the flexibility to weather potential headwinds as well as considered measured growth. We also believe that our laser focus on high-quality senior secured investments and credit discipline places us in solid position, particularly during times of greater uncertainty. With that operator, we are ready to take questions.
Thank you. At this time, we'll be conducting a question-and-answer session. If you'd like to ask a question, please press star one on your telephone keypad. A confirmation tone will indicate your line is in the question queue. You may press star two if you'd like to remove your question from the queue. For participants using speaker equipment, it may be necessary to pick up your handset before pressing the star keys. Our first question comes from the line of Finian O'Shea with Wells Fargo. Please proceed with your question.
Hi, guys. Good morning. It's Jordan on for Fin. I was just looking through your new origination this quarter, and it looks like a lot of it was in business services, maybe four of the top five names, business services. Is this something kind of an active choice, maybe looking for credits that might be more durable given what's going on? Or was this kind of just like what's out there in the market or maybe a little bit of both? Anything you can any color you can give on that would be helpful.
Sure. It is a combination of both. I would say we have been defensive for a while now and are really underwriting to obviously can never get to zero beta against the economy, but we have been you know very defensive for many quarters now. It's a combination of underwriting to situations that we feel comfortable from a credit point of view as well as a reflection of the deal flow that we're seeing.
Okay, that's helpful. As we think about what's going on in private credit, we've heard some managers say that maybe what's happening in the liquid side hasn't translated yet into spread on the private side. I was just wondering what you guys are seeing out there. Maybe if and, you know, let's say that, you know, terms never catch up, spreads don't widen in private credit, even though public loans are selling off. Have you guys thought about maybe your willingness to tap into some liquid names? Anything you can, any color you can add on that?
Sure. We are always looking at that market. Up until recently, candidly, it hasn't been very attractive for a while in terms of spreads and opportunities. We're always looking for what we consider to be good value credits in the market. Part of the challenge, there's a very big difference between quotes and actual trading activity and the ability to execute. You know, we're always mindful of that, but we are always looking at that market, particularly for what we consider to be special situation opportunities where we can pick up names at a discount.
That's good to hear, and that's all my questions. Thanks so much.
Thank you, Fin.
Thank you. Ladies and gentlemen, as a reminder, if you'd like to join the question queue, please press star one on your telephone keypad. Our next question comes from the line of Jenaro Cardona-Fox with North Ground Capital. Please proceed with your question.
Hey, guys. Thanks for taking my question. I wanted to see if you could provide any more color on the 10b5-1 and, if that's being coordinated with the next lockup. Thanks.
I think that's right. Our next lockup is July 5th, I believe. At that point in time, we will refocus on the 10b5-1. We expect probably late Q3, Q4 to implement that plan.
Great. Thanks.
Thank you.
Thank you. Ladies and gentlemen, this concludes our question-and-answer session. I'll turn the floor back to management for any final comments.
Again, we'd just like to reiterate that we appreciate your support and thank you for joining the call. We feel very confident that we can continue to perform in this manner, and given our size and scale and our ability to grow methodically and prudently will give us a real advantage in what we all believe is a, you know, an uncertain market. Thank you, and we look forward to speaking with you soon.
Thank you. This concludes today's conference. You may disconnect your lines at this time. Thank you for your participation.