Quarterly Report for Quarter Ending September 30, 2026 (Form 10-Q)

Item 2. Management's Discussion and Analysis of Financial Condition and Results of Operations

The following discussion should be read in conjunction with the consolidated financial statements and notes thereto appearing elsewhere in this Quarterly Report on Form 10-Q and the Annual Report on Form 10-K for the fiscal year ended December 31, 2025 (the "Annual Report"). In addition to historical data, this discussion contains forward-looking statements about our business, operations and financial performance based on current expectations that involve risks, uncertainties and assumptions. Our actual results may differ materially from those in this discussion as a result of various factors, including but not limited to those discussed in "Item 1A. Risk Factors" in our Annual Report.

The investment activities of Apollo IG Core Replacement, L.P. (the "Partnership") are carried out through Apollo IG Core Replacement Intermediate A, SPC, Apollo IG Core Replacement Aggregator A(S), L.P., Apollo IG Core Replacement Intermediate B, LLC, Apollo IG Core Replacement Aggregator B(S), L.P. and Apollo IG Core Replacement SwapsCo, LLC (the "Investee Funds"). Each of Apollo IG Core Replacement Aggregator A(S), L.P., Apollo IG Core Replacement Aggregator B(S), L.P. and Apollo IG Core Replacement SwapsCo, LLC were added to the fund structure during the reporting period to facilitate the Partnership's investment activities. The Partnership has a 100% ownership interest, consolidates, and has control over significant operating, financial, and monetary decisions of Intermediate A(S) and Intermediate B(S). As such, in this discussion and analysis, we believe it is important to present information for both the Partnership and the Investee Funds.

The financial statements of the Partnership, which include a summary of the condensed, combined, and consolidated financial statements of the Investee Funds, are presented in "Item 1. Financial Statements" of this document.

Overview

The Partnership was formed on June 13, 2025 as a Delaware limited partnership and is a private fund exempt from registration under Section 3(c)(7) of the Investment Company Act of 1940, as amended (the "Investment Company Act"). The Partnership commenced investment operations on October 1, 2025. The Partnership forms a part of a private investment program comprised of the Partnership and other affiliated entities (the "Fund") designed to capitalize on what Apollo believes to be an evolving opportunity in fixed income markets to provide a differentiated investment grade solution spanning the breadth of Apollo's Credit platform. For purposes of this section, "Apollo" refers collectively to Apollo Asset Management, Inc. and its subsidiaries and affiliated entities.

We expect to conduct a continuous private offering (the "Private Offering") of our limited partnership interests ("Interests") in reliance on exemptions from the registration requirements of the Securities Act of 1933, as amended (the "Securities Act") to investors that are both (i) accredited investors (as defined in Regulation D under the Securities Act) and (ii) qualified purchasers (as defined in the Investment Company Act and the rules thereunder).

Apollo IG Core Replacement Advisors, L.P. (the "General Partner"), a Cayman Islands exempted limited partnership, is the general partner of the Partnership. The Partnership entered into an agreement with Apollo IG Replacement Management, L.P. (the "Investment Manager") on August 1, 2025 to provide administrative and management services to the Partnership. The Investment Manager, a Delaware limited partnership, is an affiliate of the General Partner and of Apollo.

The Partnership's investment objective is to generate attractive risk-adjusted returns and achieve medium-to-long-term capital appreciation through a well-diversified portfolio of private credit investments, primarily in the United States and Western European markets. It invests across four key pillars: (1) Investment Grade Asset-Backed Finance, (2) Investment Grade Warehouse, (3) Private Investment Grade Corporates, and (4) High Conviction Investment Grade Credit. The Partnership seeks to achieve its investment objectives by investing in the Investee Funds.

Results of Operations

We are dependent upon the proceeds from our continuous Private Offering in order to conduct our business. We intend to continue to make investments with the capital received from our continuous Private Offering and any indebtedness that we may incur in connection with such activities.

A discussion of the results of operations for the three and nine months ended September 30, 2026 is as follows:

Revenues

We generate revenues primarily from our investments in the Investee Funds. These revenues may consist of interest income, net realized gains or losses and net change in unrealized gains or losses.

We recorded $(38.9) million of losses for the three months ended September 30, 2026 consisting of $(0.7) million of net investment loss and $(38.2) million of net change in unrealized losses. There were no net realized gains or losses from the investments in Investee Funds for the three months ended September 30, 2026.

We recorded $(9.1) million of losses for the nine months ended September 30, 2026 consisting of $(1.0) million of net investment loss and $(8.1) million of net change in unrealized losses. There were no net realized gains or losses from the investments in Investee Funds for the nine months ended September 30, 2026.

Investee Funds Net Increase (Decrease) in Partners' Capital/Members' Equity Resulting From Operations

The Partnership generates revenue primarily from its investments in the Investee Funds. The Partnership has an interest of 54.21% in the Investee Funds as of September 30, 2026. For the three months ended September 30, 2026, the Investee Funds generated a net decrease in partners' capital/members' equity resulting from operations of $(51.0) million. For the nine months ended September 30, 2026, the Investee Funds generated a net decrease in partners' capital/members' equity resulting from operations of $(18.0) million. Key drivers of the results of operations of the Investee Funds are discussed below.

Investee Funds Net Investment Income (Loss) and Net Realized and Net Change in Unrealized Gains (Losses) on Investments, Derivatives, and Foreign Currency

The Investee Funds generate investment income from investments made across four key pillars: (1) Investment Grade Asset-Backed Finance, (2) Investment Grade Warehouse, (3) Private Investment Grade Corporates, and (4) High Conviction Investment Grade Credit. The Investee Funds' investments also generate net realized and unrealized gains and losses on investments, derivatives, and foreign currency.

Realized gains or losses are measured as the difference between the net proceeds from the sale, repayment, or disposal of an asset and the adjusted cost basis of the asset, without regard to unrealized gains or losses previously recognized. Net change in unrealized gains or losses reflects the change in investment values during the reporting period, including any reversal of previously recorded unrealized gains or losses, when gains or losses are realized.

For the three months ended September 30, 2026, the Investee Funds recorded $25.4 million of net investment income and $(76.4) million of net realized and net change in unrealized gains (losses) on investments, derivatives, and foreign currency. For the nine months ended September 30, 2026, the Investee Funds recorded $70.2 million of net investment income and $(88.2) million of net realized and net change in unrealized gains (losses) on investments, derivatives, and foreign currency.

Expenses

The potential fees and expenses that may affect distributions to holders of our Interests are described below.

Management Fee

The Management Fee is paid in advance on a monthly basis at a monthly rate based on the adjusted contributions of the holders of our Interests. The Management Fee will be paid based on the immediately preceding month-end valuations, after giving effect to withdrawals occurring as of such month-end and contributions occurring as of the first day of such month. The Management Fee ranges from 0.35% to 0.50% per annum for Annual Liquidity Interests and from 0.45% to 0.60% per annum for Monthly Liquidity Interests. The Partners who are affiliated with the Investment Manager may not be allocated such fee. The Management Fee is charged at the Investee Funds' level and allocated to the Partnership as part of its net asset value. For a discussion of the compensation of the Investment Manager, see "Item 1. Business - Investment Management Agreement-Compensation of the Investment Manager" in our Annual Report.

Organizational Expenses

The Partnership will pay all of its own, the Investment Manager's, the General Partner's, and certain other Fund entities' fees, costs, and expenses and other liabilities incurred in connection with the offering and sale of Interests to prospective Limited Partners, including all out-of-pocket legal, accounting, filing, capital raising, printing, electronic database and other similar fees, costs and expenses, including travel, accommodation, meal and related expenses and other similar fees, costs and expenses (collectively, "Organizational Expenses") that are attributable to the Partnership and all of its pro rata share of any Organizational Expenses that are not attributable to any specific series (each, a "Series") of any limited partnership that comprise the Fund (each, a "Limited Partnership"). Service providers are compensated for their services pursuant to the terms of their relevant engagements.

For accounting purposes, certain of the Organizational Expenses relating to offering costs will be amortized over a 60-month period from the commencement of operations. Other Organizational Expenses will be amortized over a 12-month period. If a Limited Partner withdraws all or a portion of its Capital Account prior to the end of the 12-month or 60-month period during which the Fund is amortizing expenses, the General Partner may, but is not required to, accelerate a proportionate share of the unamortized expenses based upon the amount being withdrawn and reduce withdrawal proceeds by the amount of such accelerated expenses.

We incurred Organizational Expenses of $0.6 million for the period from October 1, 2025 (commencement of operations) to September 30, 2026. We amortized $0.5 million of these expenses during the nine months ended September 30, 2026, and there were no accrued Organizational Expenses at period end.

Placement Fees

The Fund may specially allocate any placement fees and expenses incurred in connection with the offering of Interests to the Capital Accounts or capital subaccounts of the Limited Partners on any basis that it considers equitable; provided, however, that any placement fees paid by the Fund will offset the Management Fees otherwise payable to the Investment Manager on a dollar-for-dollar basis; and provided, further, that, amounts paid to locally licensed intermediaries, distributors or similar service providers that the General Partner determines are necessary for compliance with laws and regulations governing the offer and sale of Fund interests in any jurisdiction. For the avoidance of doubt, if any Limited Partner is required to bear a separate fee by any placement agent, such separate fee will not reduce the Management Fee.

For the three and nine months ended September 30, 2026, we did not incur placement fees and there was no reduction in Management Fees.

Other Fees

Except as provided below, the General Partner and the Investment Manager will pay or otherwise bear all of their own operating, overhead and administrative expenses, including all costs and expenses on account of compensation and benefits due to their employees and rent (collectively, the "Overhead"), without reimbursement by the Fund.

To the extent practicable, Operating Expenses attributable solely to one Limited Partnership or Series, as applicable, will be borne by the Partners in such Limited Partnership or Series, and may vary among Limited Partnerships and Series, and will be capped at 0.25% per annum of the Partnership's net asset value. The cap on Operating Expenses excludes: (i) investments and transactions of the Fund (whether or not consummated) including any commissions, transaction fees and other investment costs; (ii) litigation, proceedings, investigations or inquiries, prosecution, defense, judgments or settlements thereof and other extraordinary expenses (being expenses that are classified as extraordinary expenses under generally accepted accounting principles); (iii) indemnification obligations of the Fund and advancements of costs and expenses related to such indemnification obligations; and (iv) Management Fees.

On an ongoing basis, except for Overhead and Organizational Expenses, each Limited Partnership or Series, as applicable, (and not the General Partner, the Investment Manager or any of their respective affiliates) will pay or otherwise bear its share (as equitably allocated by the General Partner in its sole discretion) of all fees, costs, expenses and other liabilities or obligations resulting from, related to, associated with, arising from or incurred in connection with such Series and any Parallel Fund's (as defined in the Partnership Agreement) operations (the "Operating Expenses"). Notwithstanding anything to the contrary in the partnership agreement, or equivalent agreement, entered into by the applicable Limited Partnership, the General Partner, the Investment Manager and their respective affiliates will be entitled to reimbursement from the Fund for any Operating Expenses or Organizational Expenses paid and/or incurred by them on behalf of the Fund, including fees, costs and expenses and allocated portions of the General Partner's, the Investment Manager's or any of their respective affiliates' Overhead incurred in connection with services performed by personnel or employees of the General Partner, the Investment Manager and/or their respective affiliates that are services the fees, costs and expenses that constitute Operating Expenses or Organizational Expenses. In addition, the categories of fees, costs, expenses and other liabilities identified above will be Operating Expenses and Organizational Expenses, respectively, regardless of whether the person providing or performing the service or output giving rise to such fees, costs, expenses or other liabilities is the General Partner, the Investment Manager or any of their respective affiliates or a third party.

Distributions

For the three and nine months ended September 30, 2026, the Partnership had distributions of $11.3 million and $45.0 million, respectively.

Financial Condition, Liquidity and Capital Resources

We generate cash primarily from the Partnership's net proceeds of offering our Interests, which are then invested into the Investee Funds. The Investee Funds further generate cash from interest, fees, principal repayments and proceeds from sale of investments. The primary uses of our cash and cash equivalents include purchasing investments, funding the costs of our operations, and distributions to our partners.

As of September 30, 2026, the Partnership's and the Investee Funds' cash and cash equivalents, taken together with the continuous offering of Interests is expected to be sufficient for investing activities and to conduct operations in the near term. This determination is based in part on our expectations for the timing of funding investment purchases and the timing and amount of future proceeds from sales of our Interests.

Cash Flows

There was no increase or decrease in cash and cash equivalents for the nine months ended September 30, 2026.

Net Cash Used in Operating Activities

Our cash flow from operating activities was $(983.7) million for the nine months ended September 30, 2026, which primarily relates to the acquisition and disposition of investments.

Net Cash Provided by Financing Activities

Our cash flow from financing activities was $983.7 million for the nine months ended September 30, 2026 which reflects the proceeds from issuance of Interests and distributions paid to holders of Interests.

Hedging

The Fund and/or its operating subsidiaries expect to employ hedging in support of financing techniques or that is designed to reduce the risks of adverse movements in interest rates, securities prices, commodities prices and currency exchange rates, as well as other risks. While such transactions may reduce certain risks, such transactions themselves may entail certain other risks, including counterparty default, convergence and other related risks. Thus, while the Fund and/or its operating subsidiaries may benefit from the use of these hedging strategies, unanticipated changes in interest rates, securities prices, commodities prices or currency exchange rates or other events related to hedging activities could result in a poorer overall performance for the Fund and/or its operating subsidiaries than if it or its operating subsidiaries had not implemented such hedging transactions. See "Item 1A. Risk Factors-Certain Risks Relating to the Fund's Investments-Hedging Transactions" in our Annual Report for more information about the Fund's potential hedging transactions.

Critical Accounting Estimates

The preparation of our financial statements requires us to make estimates and assumptions that affect the reported amounts of assets, liabilities, revenues and expenses. Changes in the economic environment, financial markets, and any other parameters used in determining such estimates could cause actual results to differ. For a further discussion about our critical accounting policies, see Note 2 in the notes to consolidated financial statements included in this Quarterly Report.

Fair Value Measurements

As investment companies under Financial Accounting Standards Board Accounting Standards Codification ("ASC") Topic 946, Financial Services ‐ Investment Companies ("ASC 946"), the Partnership and the Investee Funds are required to report investments, including those for which current market values are not readily available, at fair value in accordance with ASC Topic 820, Fair Value Measurements ("ASC 820"). ASC 820 defines fair value as the amount that would be received to sell an asset or paid to transfer a liability in an orderly transaction between market participants at the applicable measurement date.