Ares Capital (ARCC) 24 Oct 232023 Q3 Earnings call transcript

Good afternoon. Welcome to the Ares Capital Corporation's Third Quarter September 30, 2023 Earnings Conference Call. [Operator Instructions].

As a reminder, this conference is being recorded on Tuesday, October 24, 2023.

I will now turn the call over to your host, Mr. of Relations. Director Managing Stilmar, Ares Investor John Thank you.

may begin. You

you. Thank

the Comments some any the Please Corporation and expressed Let uncertainties. forward-looking The its as differ risks SEC with results in from subject note reminders. in and those assumes obligation webcast performance information documents made are including statements well no company's call me listed start and or conference such statements. results. those important forward-looking guarantee is during reason, to statements such to contain this past that course as could actual not accompanying update materially Ares also of for Capital forward-looking any market filings. of future a

non-GAAP the core measure SEC G. investors method share, uses to of comparable because believes information call. slide measures as During most regarding per net call, earnings that found presentation income the useful core performance this EPS. conference defined can on condition such core A operations. Regulation certain the The as to or for be financial GAAP its reconciliation discuss company directly core share EPS provides company company is and the measure EPS per by of accompanying it to GAAP one results financial this may financial

conference presentation the Third XX, XXXX the Earnings respect representations on link companies, And The XXXX, found the with discussed www.arescapitalcorp.com this to of at this release Presentation the can addition, third the on company's the In and not verified. has to Quarter by clicking warranties on September in be quarter website found presentation, be accordingly, homepage information. slide sources company's and including SEC over turn website. no makes Ares been related release available Certain was reconciliation section. to Investor and of Capital company's these now this derived third-party are Executive morning portfolio from the XX-Q with Corporation's Officer. information Ares DeVeer, company independently Resources or filed information Form I'll also Capital our Mr. on earnings the it measures in Chief may also on earnings earnings accompanying Kipp X-K. Corporation's call Form

our and our here I'm everyone, Co-Presidents, the Kort thanks and Mitch and Hello, today. Penni Chief Jana for Chief Schnabel, Financial joining other John. Operating of earnings Markowicz Goldstein call Thanks, members with Roll; our management team. Officer, Officer, our

to the attacks have It's by I those Before my resolution hope the subsequent express a and prepared peaceful as tragedy to affected begin soon company, and as like is achieved in of deepest Israel been innocent possible. loss remarks that terrorist we horrific recent who sympathies a on lives. I'd our the truly

start some and the thoughts to we current This highlights environment Turning morning, add our market. with I'll economic third from then quarter on some and strong reported third quarter results. our the results.

Our higher share core year-over-year, income primarily reflecting largely interest of result base increased dividend $X.XX rates. interest net of a earnings and XX% per higher

value third Our per by core beginning sequential of quarter and which has to what context in to dividend another We our We're our of a while were earnings X% increase driven earnings deliver few important think with year. periods these put share to or the for overall $XX.XX, increased and since the broader we in time. NAV able strong the portfolio. seeing consistent the value in of our share one to long credit remain it's been them asset led an the the the in that's per pleased over BDCs markets. we're of results building regular GAAP growing net results investment These quarter growth $X.XX, of of

For saw constructive some lift. and remain markets credit the much of quarter, the

activity. led to soft for the narrative higher U.S. economy transaction landing liquidity modestly the As enhanced and

in that expectation markets. for the inflation, Israel, this There volatility. rates international with is no adding volatility the landscape particular, to be to doubt and interest higher unsettled capital to required is will Ukraine longer returned tame in However, are

market smaller the less bank is ones can needs constructive markets higher new leverage a that As partners their credit worthy sought particularly of are to companies transactions, the to and the and for a for markets certainty turning looking deliver private result, closing. credit finance financing liquid that

direct managers private gain the in the credit active capital billion-plus history for the market opportunity solution [ this Gary private most share like the dilutions. demonstrated transaction. quarter unitranche continuing ability in $X market financing transactions bank ] ], Finastra of billion over syndicated to to the and for market provide credit was is Underscoring $X [ third capabilities markets Dale by lenders, Driven a and and

third terms highly During pricing well be lower, Leverage for transactions. equity highs. attractive loans Credit and levels new on the continue market spreads above averages. historical are contributions are quarter, to at are workable new and

outlook new M&A and opportunities, we sponsor in in for expect additional to the uptick an Looking to sponsor company portfolio sales an forward, about investment we're accelerate optimistic XXXX.

gone terms We has returns deal leveraging better nonsponsored is Given expect dynamics. growth benefit will has and flow. pressure of differentiated quarter U.S. fourth than lending years. dry help. platform, and their will be the its year direct powder, the quality expect direct on volume of the expansion turning largely past of We private broad the equity third volume scale companies from the quarters likely XXXX. on both from and also capital what growing U.S. their believe sponsored experience, market capabilities our provide feel of Ares us to XXX businesses, with coverage, we lending largest stronger professionals moderately transaction market bigger amongst and in focus specialty we in our We in would sentiment industry private most the below continue growth of of and tenured team to well the level believe market fourth sourcing robust in equity that spent our the significant companies the in that we and across but middle of of The the invest and capabilities calendar LPs simple invest seeking to management continued to and position these quarter

to As an quarter, leveraged drives is These the that middle reported we and both selective we these diversified turn reviewed the a performance. capabilities sourcing a combined. approach, driver as the were high-quality, third the believe allow We investment to market example, loan highly believe sourcing portfolio. which key transactions in in maintain in strong what long-term advantages us

costs. continuing are companies to Our despite perform the increase in borrowing well

average measured of grade consistently our quarter substantially higher quarter-over-quarter current that rates. base interest making payments quarter-over-quarter, all companies than and portfolio using portfolio despite stable XX-year We'd coverage interest the remains their and rates ratio flat market the are average. our at of the Our note interest better is was the also weighted end

own the be Our nonaccrual below averages continue and our XX over and costs BDC for to well are years. past just X%

and overweight EBITDA addition, broader we amendment companies, are and positioning. portfolio across we industries remain due our our In growth levels our the demonstrating reported strength to the healthy at portfolio market stable historical activity of that modifications to growth of stronger levels. by tend defensive credit The than in which comparatively believe

company. prone more sectors the cyclical to for default pay avoiding of strategy simple continues dividends to Our

regardless of is there of is situations LTV valuations in we it higher structures, significant and strong and have ability we confidence weighted changing we've with companies, is at rates. We where do led business. response and repeat But private these portfolio us relationships ] [ by although have with value capital. equity In estimate to and we XX%, up of sponsors firms to to portfolio well-established a our valuation the in large provide acknowledge step pleased whom have sponsors their beneath most loan been we that support lot shifting asked average environment capital is around the

ensuring we Despite the this protracted focused the event constructive prepared we as downturn. laser the more investors, in credit on of portfolio are a generally well view economic are economy on and

In strategies identifying portfolio our which to teams benefits and portfolio, defensive our our valuation in maximize addition management is and supports outcomes. to proactive have team, problems the early large and of investment and developing a we diversified

balance sheet with to around strong remains Our levels debt equity of net Xx.

have this We to capital attractive vintage. access in ample invest to

In more deliver and execute workout arise. our believe Importantly, managing track our appropriate to on the deal as risk central the situations we we resources industry-leading also we management [ with capabilities for have have playbook the to these they capital demonstrated knowledging to performance. record situations, tougher credit believe continue portfolio to are to for on We ]. ability our

third and positioning, feel provide Penni let we sheet call dynamics about looking our some balance our position. results position results and good with financial that, company's forward. and these to on over to And our the me our quarter turn details overall more the Given

quarter in quarter share of per compared Kipp. GAAP the third $X.XX and We of third in $X.XX for reported income prior XXXX XXXX. to quarter net Thanks, $X.XX the the of

$X.XX we $X.XX of the income third quarter of a core the quarter driven share by compared core XXXX. for in the Our $X.XX third the per benefited of portfolio in earnings higher tight and share quarter, XXXX net quarter the and strong per quarter spreads. to earnings during market from core largely values basis, of reported higher On prior GAAP XXXX in third

year. from the higher quarter continue XXXX of on interest third both quarter prior third and prior floating as of see our quarter the portfolio rate our in and of increased We benefits income rates the the to predominantly dividend the

ended the per Our nearly over stockholders' per approximate quarter which share share, quarter. increase the at $XX.XX prior equity an or billion $XX.X X% is

This long-term Our a track since EPS using core annual and return annualized NAV XX.X%, on respectively. GAAP-based upon inception. of level record year-to-date builds and EPS equity further was profitability GAAP of our return XX% on XX.X% strong

from XXXX. billion at September of up end funding on The and XXXX, yield quarter at unrealized net reflecting at quarter. portfolio the end XX.X% quarter combination of net September XX.X% weighted fair average was at other XXXX, value the from XX, amortized increased gains $XX.X the at from securities June was the XX, a for $XX.X total income-producing portfolio of billion, and and cost debt second XX, the at the which Our XX.X% at our

XX.X% yield and reflect at in XX, portfolio on at on amortized cost X.X% XXXX. was The yields The our at interest increases continued increased largely which from the average September XXXX, June rates. total weighted XX% investments XX,

Now capitalization shift liquidity. and let's our to

X.Xx of portfolio after the liquidity slot we, into of positions over including issuance investment-grade XX have available During debt-to-equity cash dry million This a $X.X X-year believe as shorter a to us ended the first cash, in and have We months. in to maturing next and it our our that only as to liquidity, XXXX, latter $XXX at time remains ratio amount approximately to the debt with term well markets current Overall, existing we with X.X-year this X.XXx powder to was first of position active benefited duration market. strong with returned in term compared the issuance net ago. year's significant where quarter to risk this total company us commitments quarter, sub issuance, our environment billion year. This no we debt still remain available respect allowed refinancing for debt to billion the our of quarter third the support maturities. continue investing to available $X.X

December We consistent December quarter dividend per and XX, record of dividend. XXXX is dividend on stockholders third on our quarter with XXXX, declared XX, a fourth to is This XXXX share. $X.XX of payable XXXX,

stated, Kipp record. track dividend long-standing we a As have

the or of the over are select growing have We a stable BDCs regular XX-plus dividend one that paid past few years.

to that, activities over for call through with to the like investment the walk our would quarter. Mitch to And I turn

going then third portfolio activity, the our activity, and quarter. our more I'm on on our backlog performance for pipeline. will spend and our conclude a detail providing minutes Penni. to with update an Thanks, investment I few positioning post-quarter-end

a XX% drives below which benefits the quarter, new quarter we portfolio originated coverage, includes our our of as which the activity, third highlight With our of increased a in M&A come uptick growth we market from incumbency the an practice. is I from rate saw EBITDA. range during EBITDA of quarter's of in believe $X.X out existing prior We billion activity. incumbency. with million Underscoring $XX slight over from companies pre-COVID consistent to million this to were XXX the increase new billion origination. the the XX%. $X.X In commitments companies. investments Approximately companies This of financed from our of breadth quarter $XXX we that represents borrowers, historical point future to and is meaningful XXX this now the

documentation us achieves believe better strongest we support portfolio and Additionally, on commitments and underwriting new enables incumbency companies to our terms. reduces risk

sponsors. financial And relationship our finally, enhances incumbency with

XX% over our sponsored sponsors. quarter, transactions of repeat This were with

in at almost the by in lower the all industry ] market. weighted of This which find demonstrated leverage a investments excess Now value leverage past the [ as senior average ratio we than today's of quarter, to in we is XX year, is by a originated yield we ] have first continue XX% a lien compelling over track turn years. had LTV leverage and of X.Xx. full PitchBook This the [

point in the to are below weighted achieve quarter earlier the value investments current our new we able Kip's about this Underscoring of market, attractive historically average was the LTV all for XX%. relative

in due resilient in the portfolio metrics. seeing market, defensively continues within our well, our current In in is stability believe existing addition to and credit to to adding we portfolio, our accretive industries. investments positioned this companies We largely perform market-leading are

compares of our the S&P was last respect our an of XX borrowers flat estimated the portfolio with last With XXX months. at a This EBITDA [ over the grade, ]. weighted growth portfolio rate average X%. at average portfolio In quarter's X.X quarter, stable cost healthy rate growth EBITDA weighted for was the to grade LTM to third our

decreased declined BDC to below quarter be most average rate and which this XX-year available. average this cost from for X% well below historical to quarter from quarter X.X% fair of value Our Nonaccruals to at last X.X% nonaccrual our historical and levels. KBW last well remain continues X.X% XX-year X.X% and period the the recent X.X% quarter, at

our confident disciplined risk to in due remain and about diversification. management portfolio approach portfolio Looking part performance forward, to our of we the

different on portfolio any and we our traded that Our company, believe largest and billion of portfolio have This excluding publicly portfolio diversified and means any BDC. SDLP diversification fair XX accounts companies greatest different just average at level investment value the XX $XX.X for just across single industries. single of is any of portfolio. in IVL the the We X% investment X.X% of

commitments our provide investment million exited X investment post repaid funded. October brief a investment pipeline. XXXX, through of on $XXX of made activity million totaling update will we on commitment. were $XXX I were From $XXX Finally, or million quarter October which XX, and We new end

backlog pipeline and at As our of October XX, million. stood roughly $XXX

investments certain investments we to and contain pipeline may or and sell close of these backlog post that and portion closing. subject are Our documentation may not approvals a

call the to Kipp I for closing some will now turn over back remarks.

the pleased we're In with closing, quarter.

sourcing, and today's strong economic navigate financial Our portfolio continues driving capital challenges and feel that underwriting, We environment advantages management to we're perform on capitalize are well positioned and results. portfolio for new our well to investing. attractive future any to potential

always, you the to be As for today, line appreciate we'd Operator? we open joining happy call and questions. our

[Operator Instructions].

comes first Wedel from with Our JPMorgan. question Melissa

expected forward as curve right do you than higher rates with bit. should the investors some start of some even based I equity and by from pressure there's is like reengage want around implied in a sounds It expected expecting to to now? you powder XXXX. some But little on provided that activity think activity of risk and recovery remain dry rebounded that to private commentary the

mean for has think It's own probably I thanks just the things, I've and been to buy in probably difficult mean, view. my other year just But -- question, Melissa. sell I a I as this said some places. it's

obviously, as out just a increase there's higher less And which more is real that's those just assets, My leveling difficult. optimism I if and generally, we worth a I just they around cetera, seeing buyers, a in you generally, you're a as been and to easier, did. not I think a for be to in another gets two. sell haven't about exploration maybe is next buyers But et as selling. environment. and think, makes between year we're materially pretty materially as a that And mode, right? price prices it of infrastructure of we conversations been sellers think seeing, assets, increase that or you're are they while similarly translates see But that quickly need corporates, this probably on unexpectedly did, purchase is rates, think everything seeing bit difficult of into rate then rates, lower a year leveling rates If to lot exploring, just estate going think

So that's kind of one. number

about yes, investor. come any in When belief think a their back, partners they flows, XX And where are two, money need there of where it's that repayments managing whether the out ground, that is my in limited pension to number have private to other cash material equity, lot looking there or a year particularly more right? a they're they

to that hopeful lead I'm better should of X those levels. activity the things So combination

today, flow and better about deal than it's bit little backlog talked our is think been. Mitch pipeline I a the

So optimistic, guess but wait I we'll I'm cautiously see. and

for income And Penni, helpful. a any did us end? update really then That's lower you an on of quarter for as Penni. question have

for Thanks question. the

continuing finalize We -- may did per we to and presentation. have last reflected tax finalize returns. that $XXX number, about we as $X.XX go been or share final million spillover earnings I year's accrue what's that's was the well, the And -- back in to

this we As year. tax level, never still tax to to spillover excise continue year-to-date annualize the continuing at and to we to similar tax We're full expense we similar come versus get accrue accrue if level obviously But through a we final a to done into year excise XXXX, where until last the for year. are you we through year. are last look is going a of

Our from Wells Finian next Fargo. is with question O'Shea

on was mute. I Sorry,

gave borrower from give that, levels XX% half. down to elevated in appears helpful that the repeat is you this have financing that pretty come you the first statistic On which quarter,

of REIT the you if I in there. rolling I'll maybe percent there your exits terms some versus refis directionally of are M&A? stop And the out portfolio to see there's guess as of into market. if seeing what can say, your to a add refinancings or well are year-to-date, for of off -- of I'm borrowers companies So your anything completion, commitments

Finian, Hey, it's Kort Schnabel.

the if that's I over part historical experience, to think consistent around back first our a on question existing the borrowers. of normal at actually borrowers, with XX% look the you XX% existing to period

existing just more what few that's where, new I in pickup in So that returning activity a borrowers to is borrowers. was think obviously, the what resulted that little you're us XX% relative level And prior a to seeing muted. for volume to quarters

more there's of And So I sorry, actually, don't... anything than don't think second on question, I'm the see I that. the part other then to there

Now a the don't think was use us the take of frankly, that that, of analysis we we -- is in dig proceeds? in run, and numbers. let But back kind look there we'll you offline. a bit little come I a have change back can and go to then at

a shortening breakdown do of, Ivy And we're duration reinvestment have Are weighted follow-up say, materially you like Okay. the CLO the market. a in CLO the on seeing average for as periods? those Hill,

raise he's... and of team I of it, mandates really. spend mean with and be I time loan something a not look It's the me diversified. continue at it's dig actually lot waving but if could there. that and No, we thinking Mitch to go I at It's not Yes. able back combination capital CLOs, pretty to a about.

and success having There's within and not of ideal. lots needed adjust idle CLOs for. after when those bespoke, shortening to, we've able and would to lot There's a refinancing would all they I say not bank we important CLOs basis have year it maturities loans but loan that, not year anyway, they're been a we mandate, a are where all be of the consistent call it's right? of

with from next Aaren Citi. comes question Our Cyganovich

in are of amount? year terms like be leverage least portfolio? -- at similar are better for to With a you you of an it the the exits for what some of XX thinking have expecting potentially in And increase you looking investing, activity about or a be might increasing in

that to this repayments fronts. likely tend deal would been to Thanks they are slower mean next I activity and on new reasonably all the I question. relative reciprocal has pick Yes. year Aaren. those year, for up think to which be

your outlook with I expectations see to nonaccruals? the good for came And next from see ratios for bit industry, here? What's in your it increase was an year down activity, nonaccrual to of imagine would Okay. expect again. a

right. quarter be that a where X I actually company at this about you're couple We where mark. lender. we great mean a X a I and charge-offs situations of probably we restructurings where realized Yes, feeling realized situations of charge-offs exited of took but to think were the actually and we ownership we not sort continue

well. carried I So think we them

will now competitors company, slowdown I you Yes, I while right. I just mean, higher economy, place you're our not but the that expectation, to would with up the tell next is in think the the at continue market of year. in and a go for rates, most general probably being this general broadly the think, in defaults

from Our with Casey comes next Compass Point. question Alexander

suggesting that debt kind a feels rates sure that of purposes that activity curious a the But rates you out. kind that I'm the Otherwise, from and on better that for swap that a originations pick actually okay it's not swapped X out it you economy that cross stay cost of will that noticing floater, new items. On your of to maturity higher that cheaper. argues expectation XX% would into going to why will but like at come you up. currents question, And your argues of is deals those think cross and sort call I'm be going get that a longer. deal down the it and sort for is year is

there and we let around on our because on quite can to comment from XX into going that. to atypical Penni, was we had hedging want But and guess Casey, practice. debate this I'm I'll about on see and but good as do rates, It range. some a comment how your Penni about of to And thinking Penni things. maybe you as lot we the mine past turn come jump the talk then back is hedging

us liability But stick whatever is in a this it issued. did on the base to And atypical have X.X-year the just that us of none we've swap. we've term Obviously, Kipp said, shorter-duration this on case, case, a perfect In the rates. view as crystal for toward And is loan. Historically, with to we ball tended Yes. rate assets. swap expectation, the our if forward for that the predominantly the at looking higher least And did come floating little knew curve. curve. portfolio longer good rates It a a like forward down at with felt matching they being stay a on we the time based at to -- it opportunity at would even rate would bit we

okay. Yes, operating I even seeing, in Yes, towards these companies, mean with think think and less think your always slowing while with think it's I great, defensively to oriented pretty but positioned for higher mentioned, the while about U.S. seems the a we we I the on portfolio, economy I that's as economy. think it's right. be view don't And growth when I better and cyclical our has is commentary to okay. we're pretty EBITDA everybody is days. rate substantially I belief the we're today, longer. here pretty as it's would base Casey, agree that you think different going than portfolio this, which be I The reported, more slowing

material up way coming during those maybe economy. just to have election, I'd for the unusual next And keep around to we year. constructive a also one think in presidential a happen that finish, really We the market of pretty out point longer, is Fed think rates and we're it's your the will that So point. higher to in I

next So would for less imply I would longer, and Fed to. a year, expect which managing active that's we're what higher

don't it. with what -- the to COVID your actually nonaccruals portfolio crisis? My benefiting your way they that's because And slow you of that's how follow-up is benefit from of companies moving along adjust them a lower basis nature better economy and expected? than allowing recasting is of benefiting companies expense from have a low. the adjective had much level might nonaccruals Okay. for extent your this use are of the your that rate To know their did I to terrifically

pandemic point to did wait I it's I companies that perspective, of most mean little of make when you're the no happen really forced We bit coming of of the think from a that have a revenue, close. all period the will really you obviously were it out cost difficult they where that. and right, because

So some think I do there's of that.

of growth this deleverage. set to credit is investors, environment, in the free to not We've and a up but maybe have quickly right? reasonably for saying We this base think able still see our look, need amount portfolios. tremendous portfolio flow been good we've a we don't But have where as companies, lower deleveraging might high a they cash with as hoped rate, we publicly,

were equity were I We a happy And early us put We feeling, of have and prices to lot portfolio the what expectations things this private just call embedded particularly of those here. sure in we're higher. much we're on there been, environment for think ground, for from, is growth have again, a the the and trickier it's some it, got Rates in is making one think locked good. pretty lower equity done that in XXXX commentary. doing 'XX, forward. long changed, where for that were So But we're companies good at. with where we're a appreciate problem the manageable we've right? terrifically very time going much

in prepared feel the positioned, pretty the how we mentioned as about remarks. So I company good is

Next Vilas Abraham question from comes with UBS.

broadly, you then the And a mix more in any chunk just of comment divergence it EBITDA good industry is little trends maybe across like on are industries? you the and seeing meaningful a bit consumer. Looks backlog? Can

now sample we're same. list to similar whole one economy -- the small consumer be all it's year origination past. pulling and that as how space. from, up. been I transactions I of that Penni's just wouldn't mean draw It I wouldn't such I the a Yes. in represents The and a are it and have mix creating items of in short How the large backlog. period in lot watch time the opportunities the probably a handful they happens is frankly, what's of the to -- can set. sort seeing of

others the have care haven't shortage had service-based issues practice had and be portfolio, of the think describe do past and good as right, most things, tends health companies talked concerns. have as some we quarters make and our it of I in And able to some care based company For as We've health elements about a always power, of that portion same there. then as portfolio, the have a and the pricing others it, in been some much when as lot our you part, price put labor about to quite else. little raise of issues certain where a which had to to to I X% a not, they It's ability see a starting but at portfolio, bit common Xs, it's list look through Xs more anything company prices on are and to But of of ability pretty watch price our diverse. on name, their run of items, margin a of all raise only more lot There's pressure. of to there. gas than out the have often specific the may continue than kind not it's certain sudden, increases, more underpinning some

on change ZIP think on leverage, the that other? or And term near comfortable do for this ] balance one And that the a [ on there you are around kind Is that that fair characterization? here, the any the That's -- X.X could way conditions sounds [ sheet in in or message you're is there medium code it. your foreseeable future. of helpful. leverage in like Got right ] the

kind the are goes earnings material think levered coming at a the value environment I being company opportunities more mean, earnings lower really as at But feel from thinking so the think I I target lower the that end We having create about portfolio. good we No, actually doesn't know, to range. as end obviously, it as and because quarter-to-quarter of at the access of on you in our benefit investing dry it's new well the comes existing the here. activity, depending Yes. the powder, both

question is James. Dodd Raymond from next Our with Robert

quality. the on quarter the on Congratulations credit

more kind as we strategy? a swap the should event opportunity of a of to On thing? -- that couple was this of it you're those I you if structures? to you've go the just kind a more as Or you 'XX, onetime in well? got assuming if 'XX. Obviously, a Should replace take swap on really questions with of back near-term couple of the couple be question, them maturities on view one-off a Or likely in like-for-like

market. we this. before, this Yes. on an Thanks for in say. thought a is actually that the we as said to question. assess it's the something it's Honestly, was I basis. hard We do rare deal-by-deal current interesting opportunity And just This

this look would go each we issuance upon assessment as XXXX. into we to So make

effectively We have resolved billion of maturities are $X.X this at that point.

But at And assessment continue so we on swapping the to good market. go to we will us make do the and that for kind assess time. when to appropriate we it's of when that, will

that metric of any is equity And is wouldn't then the more you kind of low putting that. has about Can very you sponsors typical the of us If atypical Again, things. company be very, acquired. credit very of I at any remarkably the it's loans [ well. is anything quality Got performance? result behavior may credit it. when I been are ]. the in in mean, defaults, there But any give from very, I expect held that, not Or portfolio second necessarily entirely actually comment, one, new like look good. talk course, now,

there So anything -- about that? any color just Or is on it is portfolio company unusual performance?

that they actually a think extent we we've don't of I the No, look remarks there's some equity unusual mentioned anything, to pretty to portfolio with to had have of It's private prepared in I companies. we've expected. long underlying good performance I companies seeing at partners we're actually I mean, would question, But better think have. than than time the all. your more support anything the the in to capital

modestly you defaults, the and have the me optimistic why which some is and for but terms we're I companies -- year will perhaps on ticks problems, for economy do If and higher portfolio. And expectation beyond. ago, where expect asked clock feeling a of the 'XX are in constructive but we that's we're along, pretty my some

from Markets. next Our Kenneth RBC question comes with Lee Capital

side terms to opportunity in partner related change or if there. could being opportunities kind of banks in of to with Wonder outlook talk bank regulatory any the the able just on framework around any you about

their of come ] of sheets those We interesting mean and I And credit drive banks. a company participate our those potentially partner go our a of year. Ares platform I Capital into banks seen and level around management I'll see some with while here, sizable that with conversations Sure. to a relative potentially a bought and in [ their lot this had think maybe and continues up just opportunities. counterparties. back this say to capacity the really extraordinary dialogue can we the terms But to their in opportunity concerns folks as to specifically, Corporation balance the portfolio a from bank

I banks, other success why so because, more are companies parts engage think gotten in has which of in credit is the really had engaged corporate obviously as know, those anymore. our lending there frankly don't most platform are and discussions much so that large market you middle

that selling So a of that me, of from loans the probably of those little vibrant, the of a discussed a you company. very I assets and potentially the to our be bit discussions them Most company be are ongoing least eventually be to some want can this expect outside be I to expectation sale this and that as But banks while. would are types to mandate of for for low. platform, will tell would that seems we buy think at pretty the they'd

follow-up is one Got you. This on actually question Very final helpful. question. previously. just And a then Robert's follow-up

remarks, you if you provide with I support bit prepared you could there, just -- seeing, in wonder in terms you're of think seeing. a color In I if your the little expand what said around pleased relatively you were that. you're more portfolio wonder I upon terms of just

missed Could second. your one, please. I'm I that sorry. repeat for that there a

Yes.

in pleased you could remarks so of Just you're seeing those with from portfolio the seeing upon you PE or far. more Wondering you're remarks, if in bit the sponsors, prepared really you're little what the support expand color mentioned terms just there. a provide

about the we're required. We've firm. we've mean equity with than to news in and time. partners a that I I private same more that where the It's seen don't we, from not long continued And support I private good ownership good have else think doing several, those the know situations seen if their equity say. here it's team, we companies asked companies. single and equity mean when what community. really common with been as private in private obviously, pleased lot I several, for of firms a is investments have this very the equity with a a feel

when on it seen mentioned, it's seen we've us of that than relationship that is well. that from to be we've follow out. be lender be trust saying, turning And today and try environment plan great community things assets plan. is figure a to to So has and of pretty it's one those occur, think challenging to to assets the it support because just I is as the a more time, partnership over been the often, dialogue very they ownership an equity I tends and to problems what's built required, and And some owner as

where XX% also lot provides you cap see, been slower environment, leveraged loan the a beneficiaries XX% structure. benefit of the of actual willing value to And such XX% as to the or we've they the of we in being money cushion put can to. because to a in owners that in being sit are, Yes, need

mean come With little think And the Yes. that's strong follow-on investments own. support they going they because they that I rates, companies lot it maybe investment, bit us return view the made. their looking a of these generate that at investment but supporting a doing and are their In have right, good they're of that want they've for time. that to going in economically, gives while what we has duration invested And on to, They're they investors. right? down that to companies. are good investment also perhaps extend and over higher good partners if one companies need to support confidence to is I return a a is that that we're and

Truist Mark with next Hughes Our from Securities. comes question

afternoon. good morning, Good Thanks. Yes.

the less billion-plus $X mentioned it's constructive you of market, unitranche broader leveraged the transition Was out was If prevalent. a function you how than that the more transaction this finance becoming pointed later around credit? for private market some that uncertainty. later was longer the the that that of higher maybe mentioned in by volatility quarter to in and the Or influenced you political

private Kort these jump like. So the attractive I question say, from credit owners solution both too, marketplace and you'd if particularly right? answer period let that simply, of over I in Yes. very I'd it the time, long to a has for a to markets. that your think and scale achieved, borrowers been days counterparties demonstrating get in public has away can mean,

market that So to scale, adoption, thesis of and That, investment attractive solution flexible, really volatility. equity counterparties more cetera, more on and accelerates actually and more providing, the products of periods recognition more during higher we're are again, from their support course, side. that our et the customized, each

higher long-term it from So higher me numbers private over the of capital, towards smaller very done the seems $X with particularly the to your and pointing billion and fewer is last away few both, the deals, arrow quarters, done think support $X it's getting syndicated I much markets. billion, percentage probably question, and but getting under to

provide which I think they our is certainty. primary often competitive certainty less advantage banks, over the

in But banks we're and valuable. will back volatile when And so to volatility less that into come is certainty times, market of people going with remember that advantage. in periods the can volatility, step win that then again

And believe continue. Kipp trend that it's linear. as we so that and toward said, not that, Over will shifts, just share creates permanent but that time, permanent market shift,

higher the natural it FX if a time. put passage that keeping terms the terms hiring of we're approach XXXX, will do credit? growth you the Or anybody little for of just of in don't Understood. the game longer get be say, of on of interest or pressure way -- the think just to EBITDA are, might for the they maybe credit ahead good the decline, rates If you've have outlook you Are foregoing little the kind pressure interest to different or a in of And I I'll described? companies time on sense more the said going credit, passage is question of rates. portfolio

they they like something is right? around debt goes that we're think But in to the they had, need of most to the sort Because question. sort which we're of talking So a than companies all the our talking right? that. less and which fewer is all utmost interesting that question, good I understand have your about focus run Yes. where environment to reality question, it's pretty to seeing lot of economic changing making actually sitting an dictate That's and question to the across 'XX I about sudden, answer have think way portfolio, we're you're the company that slowing mean investments. question. great on It's but I are is put first that's is the a obviously cash part achieving answer the their plan performance in reasonable servicing to of that if achieving or they a business, close what I economy are plan we'll watching even companies the where growth that the of today, beyond. our all -- don't again It's flow to

[Operator Instructions].

next from comes Our KBW. with Ryan Lynch question

volatility. to sort XXXX lenders the quarter? and big take I'm an activity see first quarter, Is doing. get Or the started to syndicated option for step pretty again, was a beginning as market, back loan previous relatively from the start more loan a you to XXXX. But of My the in the weak of broadly still the the just broadly end relative -- the of question to loan lot third borrowers credit well just third low and are coming on recent there? it that syndicated market. the We're in out curious what as with in at pretty did most back the market private momentum syndicated still direct broadly

BX space. ratings Yes. buyer come in today feel banks that's function the they needs they and to [ the largest structuring ] so that to And mean trying again, I to I cheap confident obviously, and syndicate. deals, the it back, are think ratings, can machine frankly, -- CLO the larger

an much that it So the fit and to to comes to profile doesn't kind that the extent it's profile, extent us others. of option very

Okay.

to to comment just still kind the option, deals. high-quality of it goes that long having So of deals back your larger

a term so get rating BX not dollar that markets up and loans much. stuff, Multibillion the other

swap [indiscernible] that then about out. other bond the with you, is the doing of is most or that radar. had talked a I And not recent versus just And I of that instead for for I understand the Okay. the question fees. and questions you consideration an there Penni. offering was I swap would swapping credit commitment some But know the commentary you one additional facility that. reduce have spread, just was on you drawing any would better down on the

well on would need if rates liability not as debt overall you that have further yield your debt liability XX% actually lower, unsecured guys structure, a go that so it's like have you had structure. unsecuring on do still your lower a you guys big You overall have over as for where optionality

is made. to just know the from credit I just wanted the facility on unsecured versus drawing swapping out So debt decision how

question. great a it's think I No,

care about we X, structure, sources. liability capital and the for to And years. X, We from into debt the of forward the the capital market year. look maturities structure, of looking the do in to latter debt to a have maturities secured revolving lot access this go we you can and capital have X our are As over see like the we to to from which all so and continued through and even raised facilities markets we next credit at

it felt that back many of into to go cap sources the we sense of So those investment-grade capital we made as like one market have.

our at it to facilities, while bit. our you highest facility most If higher little where credit look than by a swapped still we of credit it is priced

maturing year happens by swapping about this So down continuing XX And lot or when debt X.X so. opportunity it's is $X.X to capital did us drive you market to 'XX. the does the on maturities. with curve still it's give issuance, even this in billion We window in revolvers. that the in rates appropriate Without a much build an structure if basis. the And and a also the latter line of believe A term it have relative XXXX. over in about with think

out floating team work. or capital. more think So ] continuing multiple it revolving look continue [ just that both the of access get rate sheet secure great job but But us a to of to ladder. components sorry, to to in And has continue also takes side. really balance build done capital markets, make it We'll helps on all sources the I -- to our

to for our to Mr. remarks. turn question-and-answer session. concludes over conference This Kipp back like closing the I'd any DeVeer

the As good than any day, don't great I has thanks have questions. for say taking usual, join And to hope to a time a other the great I everybody call. week. Appreciate the

Thank you. call our for today. concludes Ladies and this conference gentlemen,

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