BGX Blackstone Long Short Credit Income Fund

Item 1. Report to Stockholders.

On the demand side, the year started with loan inflows as investors continued to rotate into retail funds at the prospect of rising rates. However, macro volatility ended the positive streak with outflows experienced every month starting with May, turning the $22 billion of inflows through the end of April to full year outflows of -$13 billion^vii. High-yield funds notched two strong months of inflows in October and November, but had a tough yearoverall with nearly $50 billion exiting these funds over the course of the year.^viii

Despite low asset supply and a challenged arbitrage as liability spreads widened with the weakness of the primary markets, the CLO market had a relatively strong year of supply with $129 billion of CLOs pricing in 2022.^ix That compares with the CLO market’s 2021 record high of $187 billion. The loan market selloff created a ”pull-to-par“ price arbitrage opportunity, helping managers to offset the high cost of liabilities to potentially bolster equity returns. Solid performance followed as well, and CLO debt tranches outperformed U.S. loans and high-yield for the year, returning +0.21%.^x This positive performance was carried by the +1.05% return for CLO AAAs, while returns for all other rated CLO debt tranches were negative for the 2022 period.^xi

Fundamental concerns increased as the year progressed, as attention moved to slowing growth and recession. Downgrades increased, but U.S. loan and high-yield default rates remained near their historical lows, both finishing the year under 1%.^xii However, this is expected to rise in 2023 as companies become more vulnerable to higher interest expenses and cost pressures due to slower growth and tightening financial conditions.^xiii Unlike the early days of the COVID-19 pandemic, when downgrades spiked and then returned to normal relatively quickly, the weaker economic outlook means we don’t expect a near-term reversal in rising downgrades and defaults.^xiv

A technical rally has encompassed credit markets in the first month of 2023, and we believe technicals will remain a key driver of performance at least over the near term. Primary loan and high yield supply is expected to remain subdued, with the focus on managing the maturity wall. Demand from CLOs, which represent 61% of the loan buyer base,^xv is forecasted to stay subdued, at least during the first half of 2023.^xvi We believe a slower pace of CLO issuances due to tight arbitrage and limited loan supply has allowed liability spreads to tighten. Retail demand is expected to return as the macro backdrop stabilizes.

At Blackstone Credit, we value your continued investment and confidence in us and in our family of funds. Additional information about our funds is available on our website at www.blackstone-credit.com.

Sincerely, 

Blackstone Liquid Credit Strategies LLC

December 31, 2022 (Unaudited)

All figures are approximate and as of December 31, 2022, unless otherwise indicated. The words “we”, “us”, and “our” refer to BSL, BGX and BGB, unless the context requires otherwise. In all other instances, including with respect to current and forward-looking views and opinions of the market and BSL, BGX and BGB 's portfolio and performance positioning, these terms refer to BSL's, BGX's and BGB's adviser, Blackstone Liquid Credit Strategies LLC.

Certain information contained in this communication constitutes “forward-looking statements” within the meaning of the federal securities laws and the Private Securities Litigation Reform Act of 1995. These forward-looking statements can be identified by the use of forward-looking terminology, such as “outlook,” “indicator,” “believes,” “expects,” “potential,” “continues,” “may,” “can,” “will,” “should,” “seeks,” “approximately,” “predicts,” “intends,” “plans,” “estimates,” “anticipates”, “confident,” “conviction,” “identified” or the negative versions of these words or other comparable words thereof. These may include BSL's, BGX's and BGB's financial estimates and their underlying assumptions, statements about plans, objectives and expectations with respect to future operations, statements regarding future performance, statements regarding economic and market trends and statements regarding identified but not yet closed investments. Such forward-looking statements are inherently uncertain and there are or may be important factors that could cause actual outcomes or results to differ materially from those indicated in such statements. BSL, BGX and BGB believe these factors include but are not limited to those described under the section entitled “Risk Factors” in their prospectuses and annual reports for the most recent fiscal year, and any such updated factors included in their periodic filings with the Securities and Exchange Commission (the “SEC”), which are accessible on the SEC's website at www.sec.gov. These factors should not be construed as exhaustive and should be read in conjunction with the other cautionary statements that are included in this document (or BSL's, BGX's and BGB's prospectus and other filings). Except as otherwise required by federal securities laws, BSL, BGX and BGB undertake no obligation to publicly update or revise any forward-looking statements, whether as a result of new information, future developments or otherwise.

December 31, 2022 (Unaudited)

Blackstone Senior Floating Rate Term Fund

Fund Overview

Blackstone Senior Floating Rate Term Fund (“BSL” or herein, the “Fund”) is a closed-end term fund that trades on the New York Stock Exchange under the symbol “BSL”. BSL’s primary investment objective is to seek high current income, with a secondary objective to seek preservation of capital, consistent with its primary goal of high current income. Under normal market conditions, the Fund invests at least 80% of its Managed Assets in senior, secured floating rate loans (“Senior Loans”). BSL may also invest in second-lien loans and high yield bonds and employs financial leverage, which may increase risk to the Fund. The Fund has a limited term, and absent shareholder approval to extend the life of the Fund, the Fund will dissolve on or about May 31, 2027.

Portfolio Management Commentary

Fund Performance

As of December 31, 2022, BSL outperformed its benchmark, the Morningstar LSTA US Leveraged Loan Index (“Morningstar LLI”), on a Net Asset Value (“NAV”) per share basis for the ten-year and since inception periods and underperformed its benchmark for the one-year, three-year, and five-year periods. On a share price basis, the Fund underperformed its benchmark for the one-year, three-year, five-year, ten-year, and since inception periods. The shares of the Fund traded at an average discount to NAV of 7.3% for the 12 months ended December 31, 2022, compared to its peer group average discount of 8.1% over the same period.

NAV Performance Factors

The Fund’s underperformance relative to the benchmark for the twelve months ended December 31, 2022 was primarily attributable to leverage and credit selection. By issuer, the largest positive contributors to performance were Quidditch Acquisition, Vantage Specialty Chemicals, and National Intergovernmental Purchasing Alliance, and the most significant detractors were Carestream Health, Genesiscare USA, and AMC Entertainment.

Portfolio Activity and Positioning

During the period, we continued to dynamically manage the Fund to reduce risk into a strengthening market. The Fund’s largest sector overweights were Computers & Peripherals; Diversified Financial Services; and Healthcare Providers & Services. The largest sector underweights were Software; Hotels, Restaurants & Leisure; and IT Services. The Fund reduced its allocation to high yield bonds during the period in favor of CLO securities.

December 31, 2022 (Unaudited)

Performance Summary 

Performance quoted represents past performance, which may be higher or lower than current performance. Past performance is not indicative of future results. The returns shown do not reflect taxes that an investor would pay on Fund distributions or on the sale of Fund shares. To obtain the most recent month-end performance, visit www.blackstone-credit.com.

December 31, 2022 (Unaudited) 

December 31, 2022 (Unaudited)

Blackstone Long-Short Credit Income Fund

Fund Overview

Blackstone Long Short Credit Income Fund (“BGX” or herein, the “Fund”) is a closed-end fund that trades on the New York Stock Exchange under the symbol “BGX”. BGX’s primary investment objective is to provide current income, with a secondary objective of capital appreciation. BGX will take long positions in investments which we believe offer the potential for attractive returns under various economic and interest rate environments. BGX may also take short positions in investments which we believe will under-perform due to a greater sensitivity to earnings growth of the issuer, default risk or the general level and direction of interest rates. BGX must hold no less than 70% of its Managed Assets in first- and second-lien secured loans (“Secured Loans”), but may also invest in unsecured loans and high yield bonds.

Portfolio Management Commentary

Fund Performance 

As of December 31, 2022, BGX outperformed a composite weighting of the Morningstar LLI and the Bloomberg U.S. High Yield Index (“Bloomberg HYI”) (70% loans, 30% high yield bonds) on a NAV per share basis for the ten-year and since inception periods and underperformed its benchmark for the one-year, three-year, and five-year periods. On a share price basis, the Fund underperformed its benchmark for the one-year, three-year, five-year, ten-year, and since inception periods. The shares of the Fund traded at an average discount to NAV of 10.8% for the 12 months ended December 31, 2022, compared to its peer group average discount of 8.9% over the same period.

NAV Performance Factors 

The Fund’s underperformance relative to the benchmark for the twelve months ended December 31, 2022 was primarily attributable to leverage and credit selection within loans. By issuer, the largest positive contributors to performance were Quidditch Acquisition, Vantage Specialty Chemicals, and PBF Finance, and the most significant detractors were Carestream Health, AMC Entertainment, and Genesiscare USA.

Portfolio Activity and Positioning 

During the period, we continued to dynamically manage the Fund to reduce risk into a strengthening market. The Fund’s largest sector overweights were Diversified Financial Services; Computers & Peripherals; and Commercial Services & Supplies. The largest sector underweights were Media; Hotels, Restaurants & Leisure; and Diversified Telecommunication Services. The Fund increased its allocation to high yield bonds and CLO securities during the period, while reducing its exposure to broadly syndicated loans.

December 31, 2022 (Unaudited)

Performance Summary 

Performance quoted represents past performance, which may be higher or lower than current performance. Past performance is not indicative of future results. The returns shown do not reflect taxes that an investor would pay on Fund distributions or on the sale of Fund shares. To obtain the most recent month-end performance, visit www.blackstone-credit.com.

December 31, 2022 (Unaudited)

December 31, 2022 (Unaudited)

Blackstone Strategic Credit Fund

Fund Overview

Blackstone Strategic Credit Fund (“BGB” or herein, the “Fund”) is a closed-end term fund that trades on the New York Stock Exchange under the symbol “BGB”. BGB’s primary investment objective is to seek high current income, with a secondary objective to seek preservation of capital, consistent with its primary goal of high current income. BGB invests primarily in a diversified portfolio of loans and other fixed income instruments of predominantly U.S. corporate issuers, including first- and second-lien loans (“Senior Secured Loans”) and high yield corporate bonds of varying maturities. BGB must hold no less than 80% of its Managed Assets in credit investments comprised of corporate fixed income instruments and other investments (including derivatives) with similar economic characteristics. The Fund has a limited term and will dissolve on or about September 15, 2027, absent shareholder approval to extend such term.

Portfolio Management Commentary

Fund Performance 

As of December 31, 2022, BGB underperformed a composite weighting of the Morningstar LLI and the Bloomberg HYI (75% loans, 25% high yield bonds) on a NAV per share basis for the one-year, three-year, five-year, ten-year and since inception periods. On a share price basis, the Fund underperformed its benchmark for the one-year, three-year, five-year, ten-year and since inception periods. The shares of the Fund traded at an average discount to NAV of 10.2% for the 12 months ended December 31, 2022, compared to its peer group average discount of 9.0% over the same period.

NAV Performance Factors 

The Fund’s underperformance relative to the benchmark for the twelve months ended December 31, 2022 was primarily attributable to leverage and credit selection in loans. By issuer, the largest positive contributors to performance were Ridgeback Resources, PBF Finance, and Quidditch Acquisition, and the most significant detractors were Carestream Health, AMC Entertainment, and Genesiscare USA.

Portfolio Activity and Positioning 

During the period, we continued to dynamically manage the Fund to reduce risk into a strengthening market. The Fund’s largest sector overweights were Computers & Peripherals; Commercial Services & Supplies; and Healthcare Providers & Services. The largest sector underweights were Media; Hotels, Restaurants & Leisure; and Diversified Telecommunication Services. The Fund increased its allocation to high yield bonds during the period, while reducing its exposure to broadly syndicated loans.

December 31, 2022 (Unaudited)

Performance Summary 

Performance quoted represents past performance, which may be higher or lower than current performance. Past performance is not indicative of future results. The returns shown do not reflect taxes that an investor would pay on Fund distributions or on the sale of Fund shares. To obtain the most recent month-end performance, visit www.blackstone-credit.com.

December 31, 2022 (Unaudited)

See Notes to Financial Statements. 

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