Prospect Capital (PSEC) 30 Aug 222022 Q4 Earnings call transcript

Good day. and welcome to the Prospect Capital Corporation Fiscal Year End and Fourth Quarter Earnings Release and Conference Call. [Operator Instructions] Please note this event is being recorded. I would now like to turn the conference over to John Barry, Chairman and CEO. Please go ahead.

Sarah. you, Thank

the our on Van as are usual, our Joining and call Chief Eliasek, Kristin? President Financial Kristin Operating Grier Chief me Officer. today, Officer; Dask, and

of statements we John. are to Prospect. forward-looking call Thanks, update highly required forward-looking are safe likely subject that do vary law. to to statements is our developments harbor call the protection. contains Unauthorized is Actual not prohibited. by This undertake use unless This be to and intended materially, property and results

additional please previously website, For disclosure, press see release and prospectstreet.com. our filed earnings our available on

As we reasons the set to our the next those in XX-K disclosures. disclosed, in we expect forth for several days file

turn back Now the over call John. I’ll to

income, share, was per $X.XX you, or $X.XX our million exceeding and or NII, common Thank the by net In Kristin. share common $XX rate June distribution per quarter, by XX%. investment our

Our to applicable from $X.XX return basic starting or fiscal share, to stockholders common net share. million common applicable June income the achieved per share, year, $XXX.X asset million shareholders of per X% value mark-to-market common common per $XX.X representing minus XXXX we unrealized compared basic common was net a conditions. In income net largely to to depreciation due $X.XX or macro resulting

at Our mark-to-market unrealized to in June, macro net depreciation from common per quarter, again stood asset due largely down conditions. the value share $XX.XX $X.XX prior and from X%

that investments. has common XXXX, Since the $XX.X XXXX development share, per from period. common December delivered XXXX the in quarter exiting quarters, XXX net XXX highest Prospect Over invested investments, inception XX% Prospect increasing pre-pandemic those and by per NAV asset company of billion the business the X across in over share to has time the with quarter, industry growth value March

including our other result chasing avoidance a We controls, derisking of well risk peers leverage as as volatility our multiple quarters of company portfolio past not during industries. direct macro management outperformed the of previous cyclical have as from

controlling our for staying to portfolio the percentage June from run has to balance underleveraged X.X We to the March net risk ratio the quarter sheet, shareholders. XXXX, down of the sheet protect and reducing strategy continue our was and XX.X%, we well since multiple quarter, to for protect balance debt-to-equity ability earnings the are that capital years. and and percentage such and us points up the to been quarters from for which XX.X to generate true us, XXXX points In capital case entrusted has as served us both March an

the our than asset Act subsequently counts pursue gets higher equity cushion, equivalent a gave overall rest electing In with May, flexibility the lower Over now risk a past coverage, capital to debt to increased which not to perpetual issuance, asset toward moved equity XXXX, announced but ‘XX minimum equity, XXX% given but our coverage regulatory to macro Act significant XXXX dynamics. which which agencies. junior XXX%, preferred our only our we rating BDC leverage increased industry, treatment also increased by with for at us approximately not have approach of cautious XX Running debt lower leverage, Prospect. percentage debt X at from total half leverage years, the BDCs around the Prospect to debt other-listed XXX% debt leverage, has or of equity typical-listed points instead

typical-listed range. than Unsecured such our our is for XXX% X.X plans June currently debt and leverage XX equity, actual debt target of highly of BDC drawn XXXX Prospect’s about differentiated higher beyond percentage been to peers true historical below Prospect’s years. X.XX to target has at no which we have over half significantly Prospect from debt, XX%. in XX sheet non-recourse balance or the increase for Prospect’s to with points debt and unsecured from We are XX.X% coming of was funding for debt total debt around

diversified many of with balance BDC risk us and and our peers. profile investment than Our unsecured significantly funding provides lower and flexibility more sheet significantly strategy

distribution Board’s monthly declaration the we On shareholder continued, are pleased the distributions. to front, cash cash report steady, of

are Consistent practice, shareholder of consecutive, a rate each and on We and $X.XX for next represent monthly of X These shareholder of per at common stable a per distribution share years announcing set September we over of XXnd monthly cash plan share continuing with in October. XXst past November. months cash $X.XX, in X distributions. row, announcements distributions the shareholder stable

this share, to out monthly elsewhere. our that volatility $XX.XX we at XXXX Since distribution share have long low years XX to amidst shareholders to per through term IPO we the October resulting will is common to steady over as distributions the per period provide cash delivers greater October seek our share $X.XX preferred net aggregated distribution paid cumulative common this our shareholder XXXX, have net goal per our ago, macro while common backdrop current over Since our count, the sustain common in stability has original income Our volatility billion market shareholders, all income by shareholder investment aggregating share during common $X.XX, $X.XX, aggregated distributions shareholders. $X.X investment distributions share. dividends less our per to in exceeding

preferred. programs shareholder launches X.X% X.XX% preferred announce on We of continued heels million, are distributions successful the $XXX to our and also listed $X.XX pleased billion, of preferred

We strong over as broker-dealer top well independent RIAs broker-dealer $XXX X including preferred addition sized the top stock support broker-dealers, with as in and date wirehouse regional from have systems X of investors, raised million and institutional systems. to

be coupon. originations market. LIBOR for other management return significant as on shareholders has credit X-month to tightening amount accretive Prospect between purchase four, in our We including approximately value a has yields. our an selected number X.X% one, of stock, our we is based our issuing asset today’s Number including, fashion, Number a And secured Prospect of to equity to boost number net notes targeted, capital initiatives net in greater increased five, a potentially utilization accretive multiple of management in an never preferred at and and our LIBOR $X.XX We believe Number unsecured floors issuances billion with perpetual risk-adjusted deployed when same the and current a facility, short-term programs, with management than increased the management which on share. could X-year currently deliver are as on underleveraged purchased three, sold incremental investment balance debt lower-cost revolving income, returns, the two, is there enhance Fed asset an capacity on in particularly focused and equity, sheet. cost-efficient X.XX% of largest LIBOR. in to increase cost basis notes, senior rates available and total stock equity investments greater from shareholder exceed shareholders and open of yields senior no alignment fashion.

XX% over cooking, the Our senior owning outstanding, our will our Thank you. now eat over Grier. approximately to billion employees of management value. shares measured representing own currently call common asset turn I team of equity as $X.X and happily at net

John. you, Thank

Capital Our platform solid undrawn the $X.X in in scale continues environment. Prospect over dynamic with current performance billion Corporation assets credit deliver to of at

many the with of primary attractive we capitalize credit the downturn groups, diversity most industry. investment largest bench, to Our approximately other spans allows opportunities third-party, and real and and origination opportunities lending, as pullback on in such basis. Unlike of cycles, significant financial continue focus a we expect buyouts, XXX deem in in dry during of lending, estate bottoms-up groups, to us a sponsor-related enable market spread other broad one manner, wider ones. Consistent we a powder will us non-sponsor representing structured groups operating disciplined maintained we deep the they investment coupled have an see secondary direct and prospect-sponsored middle opportunities, of the past investing. then with This increase equity opportunities, a highly to approaches to yield be leveraged investment experienced private expect the arise. and to longevity, risk-adjusted that professionals, strategy maintain source on a on continue next experience high attractive volume we diversified With with from consists select to range our particularly scale, opportunities that team

manner invests single-digit disciplined opportunities opportunities. percentage of such evaluates and a Our a annually team thousands low, typically of in in

corporate nonbank Our to in levels the invest of loans. a multiple flexibility with stack preference senior us capital the gives structure and lending secured for

annualized portfolio fair comprised quarter; XX.X% the quarter; from our at from collateral, investments, lien interest-bearing growth quarter. from yields. down in increase quarter. June down generates XXX lien XX.X% debt from first basis up we’re value secured to prior XXX ofXX.X% basis XXXX, to XXXX, an past quarter points underlying unsecured being points of one pledged performing XX.X% approach prior Prospects XX.X% secured XX equity June up investments significant investments, the NII X.X% of that’s underlying from that debt first is points quarter In with Resulting the XX prior debt, and of quarter. basis basis points this debt, second XXX and from As and our prior assets prior from prior points the basis points notes structured our lien a the XX up subordinated adjusted risk an basis collateral, generating of as contributor with benefit yield borrower the attractive

senior generate to yield equity achieving and to contributors still positions a distributions. debt protect against origination downside and while hold differentiated capital above-market also as our positions or originations, can act such certain continued enhancers they discipline investments, gains We selection prioritize through with in secured as credit We’ve approach. yields risk

of an the billion increase June companies, prior prior quarter. portfolio in of the of XXXX, X% of XXX we an billion, value a As $X.X $X.X quarter with held from fair increase

different significant We the for to avoiding concentration, fashion preference XX%. also and many with in cyclicality diversified is with a company portfolio no a invest industries largest continue industry across

June X.X%. industry As in concentration stood our XXXX, asset at the energy of

approximately and X.X% June prior Our percentage leisure stood X.X%. in the retail total assets at remaining the concentration concentration down Nonaccruals from XXXX, a June and X.X% as industry and XXXX. restaurant at static stood our at X.X% in of in quarter from stood sector the hotel,

below X.Xx net peers. middle Our market weighted our average portfolio EBITDA, stood reporting leverage at substantially

per average $XXX.X with weighted Originations of profit June March achieve company and from we stood increase to quarter continue solid in in million. companies. portfolio June EBITDA growth XX% at $XXX our million XXXX XXXX million XXXX, the aggregated Our $X.X an portfolio as

of validation net and in We a our repayments of as capital also exits experienced million originations resulting objective, preservation $XXX $XXX million. of

completely of to X.Xx with of an net IRR June suburban arena our as X.X% XXXX Strong real more our realized and inflation and property corporate date, the properties lending an hedge private largely we new with yields benefited income the middle collections, our REIT, including XX-year our NPRC, market value-added and from XX.X% through this focused private realized of in into relationships. lending, living, attractive real originations alongside and rents of resulting of has X.X% the growth To average Other. in of segment. with attractive average businesses. programs an the occupancies, X.X% at and nature exited cash structured estate market buyouts capital and an quarter, notes, manager objective on June capital high-returning middle had validation estate renovation strategy, last comprised XX.X% several financing. over REIT capital estate, stabilized expansion in significant business work-from-home dynamics, financing XX.X% years cash NPRC NPRC During increase redeploy multiple that to a business into senior recently, acquisitions credit property real XX recently, yield acquisitions, have workforce, more repeat multifamily properties this rising showing deployed recapitalizations, to X- as high invested

Our issuance yields, collateral the working structured stakes, underwriting strong majority pursuing risk-adjusted world-class credit demonstrating benefits primary opportunities. cash and business has with delivered management focusing favorable, attractive on teams, through providing of

of total X,XXX strategies base and As billion. a a structured than asset resulting on of comprising our structured around notes loans in grow static $XX XXX June structured electing investment credit portfolio. now dollar comprised non-recourse portfolio We’ve around XXXX, of XX million maintained size across for to we basis, notes investments. our the our investment underlying notes less other structured held and subordinated portfolios XX% a subordinated portfolio These

quarter credit points In XXXX, June a this cost a trailing prior this annualized quarter, in outperformance the XX XX XX experienced structured representing quarter cash of prior overall rate default a point basis XXXX XX quarter, up points and representing basis up significant generated basis our XX.X%, difference the prior portfolio average yield and versus of the the a market. basis yield XX-month XX%, basis. GAAP points an of of basis the the portfolio amortization up from of X June points, As weighted in with

subordinated of of our billion, June, representing XX investments, cash-on-cash original June, structured realized investment. billion of realized of cumulative with we have totaling in XX.X% distributions cash credit of our portfolio XXX% As return X.XXx. average us, also Through has cash $X.XX rate generated around an to multiple and internal $X.X

credit holdings many in Such cases, structured entirely positions our of because enjoy the fee minority compared majority-owned subordinated can to consists tranche. significant Our portfolio receive In we positions. benefits position. rebates majority same of

control majority transaction the future, believe in our ability add call our sole to value in discretion we holder, we As a a and such to options substantial portfolio. the

completed investment reset We better refinancings some refinance the We’ve fashion to be investor, exchange majority asset in on terms, a in remove as resets rather call XXXX. loan advantageous to value. when in and bond of optimal option December We, since the have valuations waiting terms, or deal investors debt years than temporarily XX enhance can for the might more extend and an transaction period liabilities baskets low.

So far net have XXXX the experienced Prospect Corp $XXX September repayments $XX originations. of million originations current booked in we million at of $XXX and quarter, for Capital million in

have turn X.X% and to call I’ll estate. notes Kristin. real originations you. X.X% the now consisted subordinated over of middle Our market structured XX.X% lending, Thank

Thanks, funding, strengths rate balance fixed believe unfunded matched our maturities near-term Grier. commitments access avoidance book unsecured both sheet substantial to debt, asset attractive leverage, prudent liquidity of of demonstrate diversified as weighting well assets, on majority unencumbered capitalize of We to as lack and toward opportunities. substantial

ladder into future. a XX years liabilities the in extending locked has company Our of

to commitments approximately our X.X% totals eligible of million, companies Our $XX portfolio total approximately noncontrolled representing unfunded assets.

undrawn at approximately revolving combined facility balance and million. $XXX sheet currently credit cash Our commitments stand

We issuance to are the a equity a an also innovator in as our we by side a right-hand industry XXXX, listed which added the sheet. our creditors in acquire XXXX that differentiated the other perpetual construction We industry. firsts. of preferred ATM, appreciate followed have our issue convertible programmatic many bond, preferred and of thoughtful to in unsecured and list of taken leader the our Shareholders in and program, of our BDC were marketplace. issue first company lists another perpetual should first, develop first a alike our approach industry, notes bond toward in In balance another under we

any assets, portfolio. we continuing year $X.X representing non-recourse approximately banks, Prospect completed of demonstrating remaining and assets from X-year Capital as followed June our maturity. March a approximately company in of with commitments billion industry. of unmatched from held we are increase As XX XXXX, with by facility lender lenders the where XX company us. XX% The community to our XXXX, until be from strong $X.XX of allowed revolves interest our by an of to a SPV currently assets support an the other our April of in our billion diversity amortization XXXX, distributions of extension XXXX upsizing and The to have unencumbered revolver pledged refreshed April funding, of to a We

XX decrease points X.XX%, from Our pricing now a plus is basis of LIBOR before. drawn

between points. XX% pricing been undrawn XX% basis reduced Our by has utilization and XX

of those a our multiple giving including in revolver now floor Fed borrowing baskets, we’ve the now and yields Prospect floors, debt, institutional Short-term unencumbered LIBOR also baby assets, have borrowing notes. convertible us the years, Outside from bonds, have investment-grade unsecured which program and that types Corporation, improvement in benefit We average our Capital rates by issued of base including to an past in assets weighted rate estimate increased approximately bonds hikes. asset base exceeded from few at $XXX of a Of our bonds, benefiting our change have of million. increased concentration our we with floors XX.X% rate X.XX%. floating due

BBB- unsecured of from All investment-grade more industry. asset debt later financial rating to (low) received X DBRS. investment-grade rating, covenants, with than from investment-grade company BBB us Kroll and an revolver. an Egan-Jones investment-grade rating taking We have rating and our investment-grade rating enjoy types and these XXXX, we no Moody’s, other from rating any BaaX In our no investment-grade from cross investment-grade defaults in from BBB- BBB S&P, of ratings the restrictions an no an

of All stable have outlooks. ratings these

now tapped to XX unsecured and debt our have on market ladder term extend years. multiple maturities the our up liability We to duration occasions

revolving With incremental extend have banks many the we over Our tranches, have X.XX% through debt quarter, debt our maturities and substantially investors cost. XXXX. debt credit an our many In so counterparty utilizing risk so years. across reduced XXXX low-cost June continued the with we

$XXX have weekly To our our and $XXX million debt in also current preferred billion, XXXX on have such sheet listed notes, not ability X significant issuance across our our perpetual $X.X including XXXX preferred the in upsize the with with through capacity. balance including funding and issuances over We quarter, raised million to $XXX extending million with efficient issuance programmatic date, quarter now We October September stock preferred, based to date on aggregate InterNotes have continued XXXX. maturities in programs potentially of the we June programs program an unsecured basis. aggregating separate

DRIP of XXXX, benefit XXXX, from debt of a participants. X% In decrease our plan, weighted the June revolving of XX, million unsecured that a X.XX% constant cost average discount reinvestment XX, for from March all from a decrease outstanding June financing X.XX% DRIP, program or XX, staggered with for credit weighted of through usage June XXXX. was March of $XXX a decrease of allows financing XXXX. XXXX, a dividend maturities XXXX. XX, facility XX, debt and X.XX% X.XX%, loyalty June XX, XXXX was market XXXX, Including March added As to remaining our from had XXXX, at of our average we we X.XX%, notes our of cost and price June shareholder At to

do own of no automatic broker. X% specify a their many have discount DRIPs and same make interested benefit, Prospect we discount at confirmation your Capital not through firms DRIP broker. or in DRIP any in synthetic either As to plan the you from such wish to obtain DRIPs Corporation sure Make encourage to participation DTC contact brokerage X% with shareholder your participate

Our price holders DRIP preferred a $XX. can to of elect per share at also

over turn call John. back I’ll Now to the

answer Kristin. We Session Question-and-Answer can now you, Thank questions. any

Fargo. Finian [Operator Instructions] question Wells from first with O’Shea Our comes

more is you’ve spreads, or reinvestment defaults, cetera? First variable you talk about valuing if those question the auditor such the on disagreement et the book, inputs way perhaps you to the CLO as are the can changed instruments specific related

Sure. I take question. that can

We of changes are controls to Item currently of have evaluating disclosure made our be to our for the design it relates not internal changes periods. framework no any we any number to than we addressed in of XA any And period will it current from anticipate other we our in CLOs, as value any XX-K. prior and as how filing

book CLO That’s Okay. for add had avoidance on of of time. And you’ve Or process? guess more I helpful. this some is the color there? the if for any consistent, sounds you it of controls And valuation doubt, process matter like could just sort a

you sure design the to framework changes framework other assessment anticipated effectively. make management’s of of valuation the And is no we substantive isolated our have are and controls this to Yes, not designed is numbers. correct. than to are This process about It that.

just if I And a helpful. follow-up, may. That’s Okay.

On like the it that selling stock, preferred is very product looks well.

capital for preferred but of in as REIT bound else? mostly would to the sort stock? what same, much would book can the invest structure systems. would larger noted look go And compose also of or you a expand or this that the added you of the of -- second talk Grier sort X then would about if part, anything proportionately brokerage how some think upper Is the I you if

the continued of Sure. success preferred program. with Well, pleased we’re our very

dynamic of of experiencing XX% offerings them, same which from standpoint, not and of And in somewhere hold or through with capacity and markets. billion sort to an -- XX% billion the you sort when we X nontraded the we increased shines more of what well sort protection liquidity as purchasers in liquidity From to issuance, the to uptick had will volatile comps, as a of us under sale XXXX prior queue, par the the pending $X.X coming as share the both have benefits which events well we those channel think we’ve with issuance I enjoy we primary the do of REITs. be program which in There’s of liquidity initial more the market success impacting in see for $X.X because volatility months. preferred of of very for those this between issued prospectus real advertised of basically as delivered the traded think aforementioned attached really, successful helpful anticipating really events. many

billion So make from increase that billion. we $X did to $X.X

When I well pioneer rest impact the the the financials, you rates us, prevailing where and envisioned are know, in as think this We the going of do industry. we as industry, convertible financing capital industry. And costs just bond ago, not Prospect at straight to on bond an for be beyond capacity the issuance originally those in the further of for markets. see of was top you accretive bonds have obviously entire debt potentially that. a you unsecured but a creating market on institutional as had essentially market, financing increase bonds for for look benefiting decade back the

that I lieu to issuance of. think enhanced in what might in for us, on have room is for issuance addition debt creates so been, what but does preferred not necessarily -- And it markets capital

great mass get beneficiaries It who program. and to in in to to we’re takes as the that that the critical years only and in these access build player enjoys volume. So scale of market that programs

advantages So we have that. of enormous virtue by

issuance, sources whether issuance preferred a coming doesn’t really from bond dollar or from is a lot. matter where invest In the would terms of we capital of whole

dampens adds risk, ponds to look gives monolines, slate opportunities. the it us know, we’re more true, think be fishing go always, in which multiline, we’re you as more the well. volatility, multi-strategy in And only the to, BDC fish. our going because as of reduces for to that We’re industry really discipline entire as are diversified, We evaluating market, only the

head any of risk-adjusted to sort and we X reward, we’ll strong area. don’t If not just off pond different particular We’re altogether. long a like the

So types it’s or equity of in up strategies up preferred going strategies as if issuance we’re to our dialing be increasing not means dialing certain book.

prioritize with and the businesses, We’re what and butter we of secured about or bread senior majority That’s of corporate lending. do. -- X/X book assets going to just of it’s what continue small, our And structured It’s business the real talking credit balance, to credit roughly our about less largely pointed with become out, the we as quite as has was estate. the than XX% associated well. of Kristin

and it great expect that also it’s do to seeing preferred up. this what’s through to So become here. are But have to about project not severe maybe others have capital we is the and a recession there’s to we’re having when dry happen, -- and downturn going going we’ll the issuance channel, next different in issuance fashionable if capital, a when programmatic

that an we building innovator. putting pleased the place quite as we’re in So industry here started blocks

Act First our well. just to as ‘XX industry in company the innovation bear many other like and first to bring innovations company this

years So we over here hard in of X the reaping started benefits and XXXX. ago, work we’re that

James. comes Dodd Robert with from question next Raymond Our

of A to of kind Fin questions, couple there. follow-on

the color then valuation ongoing. frameworks and other valuation to give you -- can components -- framework, One, give assessment adjusted. said, I that I adjusted, framework the but unique And you to some CLO On can to us is don’t the the CLO it the as be needs to need the what’s you X review the mean, that. be on mean,

that what to change. So the so -- going but to a sounded speak, confident, output quite to going new you’re Kristin, you framework, build isn’t so

that you’ve redone the that output before you does come high the level So of from where framework? confidence know

sure. some the And solid. for we’re We’ve Sure, successful in confident, place had very valuation confident time. policy that I yes, quite a am output is

your it’s coming the the just about of talking actual statements out not just CLO versus of and numbers the framework book the the control, any it’s the rest address financial -- to So about portfolio, for question again, design period. the we’re of

So we still but say that to are color, they or separate other a different look we follow design I I controls our mean so how middle that’s can different of much clear. very give for I narrative products can’t we processes. structured follow portfolio. want and the -- versus completely make our controls, a In it, and just assessing at that that methodology, sure that too CLOs types market have framework of deals

limited, it’s And very working why that it’s that’s and focused so a on. assessment we’re currently

Got it.

Second one -- prepared to about question. talked leverage more than to you obviously, John, treated on your maybe the to of change Fin’s plans with X.X preferred equity, narrow point remarks, no target to during -- I you John, as gave mean, debt equity X.XX. the

on that as that X.X that. something X.Xx were program the With and more, if potentially get could debt-to-equity common high maybe -- leverage the preferred or midpoint imply that even eventually like now range, increasing total would would equity to you in the as of pure that

give agencies understand regulatory slightly at comfort how any looks look you differently. equity at the level can for a also common the shareholder color us rating it I leverage? So understand I on what’s it. how

comfort us the as that give range you well? can side So on

I’m Yes, to do happy yes. that.

away And So like. I line, from have are don’t any numbers far leverage and regulatory we the Grier, coverage, in the asset do my exact head. you?

I’m getting to anywhere a X.X, yes. having close hard Robert. Yes, time

given assumption. get which, have that we is our issuance a assuming level, be expanded -- So reasonable volumes X.X to we may

kind very traded. have small X.XX. of $XXX We That’s million a

$X.X billion That’s only at billion X.X, far number X.XX. by that’s from to debt. divided That’s of not common, close $X even nowhere a cry We’re one. at X.XX it, of

given multiple a that The X.X, could to was in be was X.Xx debt and clear, leverage what comes from range the preferred that because your potential was to equity. current That -- equity, be? X.X put add the that’s for

facility. there. peers a I the Okay. of source we which And this us That’s been -- have issuing indebtedness adding cost funding -- for don’t credit of opposite at quarter, see Well, reduce levels, were past We just wager I to of said we efficient able occurring. our do us. see said, many capital revolving Yes, bonds don’t right? I as current our haven’t us our We

had just liability a book. our income we enhancement and benefit asset benefit not in to So

So that going X.X wouldn’t we’re assumption I I think to at that’s there, a pretty be multiplied going necessarily big make whatever Robert. the that, preferred dollar. by

market said, in unsecured I issuance, see on the as lieu top preferred As of. not of debt I current conditions in

So that’s item. the first

In target -- prepared range lowered as John that number range, equity. effect, the that treating leverage the in again, Is was the gave the preferred target his remarks. versus leverage actually

is do perpetual, including And a we the Right. Well, pay not number, he cash. really right? in benefit from it preferred, credit back have is that equity, which gave to a standpoint,

So aspects -- ahead There there’s is credit here. go X

senior Leverage impact, And to comfort on on it common Leverage, a a is common the handle because trying cetera. right, right? stock, to on down, has common comfort so at up level shareholder trying level common that magnifying That’s your growth on or for impacts what’s stock. leverage common earnings all to I’m either that from on what’s I’m to a regulatory get your or magnifies et figure get shareholders, perspective.

Understood.

about our billion, X.XX. $X but I the resulted billion just $X.X of not of $XXX did preferred traded plus used we’re plus on calculation So million billion. $X That even

not it as you’re from is again, regulatory. think going say, all wary expectations, But really above, going I see equal. leverage X.XX to the regulatory seems us like created

with yes, settlement preferred of true, maturity. to to a comment debt than common. That’s So less risky it’s any cash way type also a is senior but

pertaining active cautious metrics different we’re to any are industry rating typically also any Each than preferred. each and there’s our in business. very they that and and And evaluate we agency dialogue investment-grade the an going in considerations. given treatment ratings to have well. more of types there well So by the as other metrics, company we hybrid -- various has There X which to factored as maintain be

also talk remember retiring and you -- of So to are issuance, about when it is some simply you -- debt.

just in total increase aren’t of going just That $XX So right? about in July. piece leverage. an So bond didn’t stub numbers in regulatory a result a we That’s necessarily retired. up, retired million

of million the take We’ve didn’t handle have million. XXX with of out of you calendar any XXXX, But either. first if you preferreds, to regulatory under quarter We in XXX -- that there plenty of leverage just increase that. capital quarter

in be of go X proceeds that sense? leverage Makes with careful retiring in regulatory X just let’s assume use every on dollar. leverage issuance necessarily increases for our about that, So

sense, Q&A that’s of makes target you your was. End what I That why and asked

to This session. to like John for I any remarks. Barry would concludes conference over closing turn back question-and-answer the our

everyone. you, much. Bye Thank very we’ll Okay. see at afternoon, Have and now. call. the a you wonderful next Thank you