Ares Capital (ARCC) 1 May 242024 Q1 Earnings call transcript

Good morning. Welcome to Ares Capital Corporation's First Quarter March 31, 2024, Earnings Conference Call. [Operator Instructions] As a reminder, this conference is being recorded on Wednesday, May 1, 2024. I will now turn the call over to Mr. John Stilmar, partner of Ares Public Markets Investor Relations.

you. Thank

are with conference Comments the filings. results call contain including statements in start course during accompanying listed could important and those statements forward-looking this risks for those of and and such differ some materially me company's SEC expressed made reminders: the documents uncertainties. from Let The to in actual forward-looking subject its webcast reason, and any

Please update Capital guarantee that also assumes statements. obligation such Ares information of a note to performance not any market Corporation results. or past forward-looking no is future

this discuss financial The investors condition method performance because defined as as During its provides believes the the call, G, operation. earnings regarding financial company core conference EPS company to company certain non-GAAP such information one Regulation measure SEC may and it's that measures to share. of uses per results core by useful

per measure be directly GAAP most share net the reconciliation the in call. found core A to for accompanying slide income of this to presentation financial EPS GAAP comparable can

in In found respect companies may in Form Certain this conference information slide discussed and not of with third-party been representation information. including accordingly, measures the no is independently release the to presentation, to with and earnings SEC portfolio accompanying sources also call these X-K. related warranty information this be on of this or reconciliation the filed addition, morning verified from derived and has company makes our

on also XXXX Capital release XX, www.arescapitalcorp.com link the the clicking Investor Form found Corporation's the at on website. ended on presentation by of Ares quarter XX-Q be and section. the March quarter company's first first XXXX, are company's earnings earnings homepage company's can available presentation Resources The on website earnings

DeVeer, Kipp Chief turn Officer. Capital to Corporation's now the call Executive Kipp? over Ares I'll

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

start with Financial to to Scott as us He's accounting our than XX his welcoming quite call like Scott years. leader Chief with has been as for business at new and key been within first while his a earnings Officer. team. Ares for finance a by in I'd me role more

newly the So having talent as Ares us contributions him continuing that the to We strongest his promotion is market. of the We exists of culture companies Scott this our his join example to depth and us look other of CFO believe our from forward in to great. appointed just promote and at shows Capital. Ares. another our players differentiates is continued still

Now our results. we'll move to on

core This strong morning, reported $X.XX of we of earnings another share. per quarter

well year value valuation were above strong dividends. investment Our of the increased $X.XX per core portfolio paying dividend. quarter from credit spreads. were share healthy in environment X.X% share supported solid asset prior in our has beneficial of The and first the earnings growth earnings also rates share momentum our positive level and the of and attractive by higher our regular regular net continued attractive impact base our strength after and results per These per driven a

typically availability of this relatively The as capital record Our to business the and active strong. brings and market confidence banks merger good of M&A transactions. again first more generally share. the and all adds for more out seeking activity in continues while our NAV, X% increased reached for financing to are participants companies is acquisition very year-over-year, increased another low, quarter the XXXX, remain which remain of $XX.XX In share per levels

all $X.X factors from by as pickup quarter of The private amounts date. in equity the We're the pressures powder higher capital dry activity a of support to of LPs continued significant aging of evidenced that and second are levels transaction billion firming of credit the the we've of seeing commitments in to markets, activity. the signs return closed

current this for new are more competitive, not is phenomenon conditions a market While us.

navigated X low, activity. large market competitive of many span the markets segments portfolio We the believe drive over a very these And in direct also In was recent decades, entirety have investment even become that most upper helps was middle having that environments, the from middle XXXX past the we valuable. our more expansive that similar. capabilities the to and origination new

weighted turn risk. originations yield leverage We below the measure is past at average current return originated relative over which XX%. as historically years. X the levels Furthermore, the continue was in nearly average of average. nearly our unit And leverage, was recent XX% investments LTV we quarter, our of lower of find first and X-year were for below weighted above X.X All-in compelling environment risk-adjusted the in returns to per XX% the specifically yields one with attractive the the rate view

credit Our also health fundamentals and strength. are our across indicating portfolio

organic remarkable environment. last levels coverage remained Interest portfolio today's XX% XX stable to in down. EBITDA growth leverage of over tick improved economic companies the showed levels slightly months Our which and is

annual us by further, portfolio data and companies as enable point, On our we which capital provided efficiently. than annual does the will the market The S&P. more to EBITDA current XXX, of raise final a is in the more environment of growth companies S&P Scott through source growth double discuss

markets we an amongst all far tightest BDCs. pricing notes as the in So levels issued issuer been CLO secured are unsecured active and year, the in the market the this believe in and bank what We've we've these markets.

and provide further call our me let sheet. that, some on to turn more Scott details With results financial balance over to on thoughts our the

and Kipp. quarter $X.XX prior opportunity XXXX This serve first for morning, in first net Thanks, the share Capital's per the I'm of income of compared the CFO. in reported quarter excited to as we for quarter $X.XX GAAP Ares $X.XX to of the XXXX.

the per for XXXX to earnings $X.XX quarter also and in of compared As XXXX. $X.XX first reported first prior the stated, Kipp $X.XX in of the quarter quarter we share of core

was benefits quarter and primarily by an driven structuring base of the in income investment due investing fees to continued the improving higher rates environment. Our

Our restructuring fourth business. from given from usual quarter increased in last of year. first meaningfully the the our of quarter the fees They XXXX seasonality decreased

X% Our prior ended from which the a or increase stockholders' per equity the a and per for $XX.X a high share year nearly at $XX.XX share, ago. us, per X.X% share billion quarter record over new a increase quarter is

down on by from billion, securities but in quarter. and portfolio value XX, XX.X% XXXX, cost Our was XXXX. the $XX.X than The December XX, of at yield largely XX% unrealized XX.X% at other debt average for billion total fair our from end at fourth quarter, March which net the at at weighted gains the XX, in was the portfolio at of at $XX.X XXXX, was driven higher completion the March up quarter end slightly amortized the

In terms of fairly to the our have capitalization continue are start making a we supporting we and sure able had active year our liquidity, to investment opportunities.

year, raised ARCC. this we amended for $X of billion financing over far So extended or have

shares, to of capital and capital permanent newly us unsecured issued the our quarter, in base. $XXX convertible specifically, million settled market-leading we More $X retain issued successfully notes further equity notes the and allowing billion of spreads almost bolster in maturing at first all our

terms. revolving X and our funding maturity extended and In period our another maturity the date by same renewed facility also year, Post we credit quarter with each the for SMBC pricing largest a March, facility of pushing X-year it years. revolving to for we end, full

the also We BNP facility lowered XXX pricing funding plus to points. on SOFR our basis

first closing priced blended the XXX CLO nearly of weeks, on was this is we conditions. part pricing the one believe Finally, amongst the years. the we next XX of our SOFR executions Closing to just in the $XXX is in on-balance AA which basis week, last subject notes few expected tightest sheet of through tranche plus points, market. million The in issuers customary

at other funding levels This currently in us committed further of transaction of our forms diversify allows financing pricing market. debt below the secured available to sources

available total approximately forma and post end available liquidity liquidity, mentioned. billion including of position Our with all remains quarter overall previously transactions pro strong of cash $X.X for

available a ratio to the remain and significant net We compared commitments, the amount leverage eliminate first since any portfolio believe the to of dry the investment debt powder and quarter environment our active of positions as X.XXx us ended company net in of to also series term continue maturities. our well a lowest with XXXX. our of ago risk We supporting with respect end quarter cash X.XXx remaining current debt-to-equity refinancing ratio

quarter XXXX a XX, of is of XXXX to quarter is share. record June and XX, on per second dividend. June on the our This We $X.XX with consistent first Moving XXXX, dividend XXXX, to stockholders declared payable on dividend. dividend

of million we that share with ended $XXX $X.XX or terms XXXX. we estimate XXXX in income taxable In distribution spillover, for our per approximately to stockholders currently

estimated spillover dividend. current This to bring than believe stability more our Xx helps regular quarterly dividend, is which level our we

now I activities. the Mitch to will our call investment over walk through turn to

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

originated across first commitments $X.X billion transactions. approximately the team of quarter, investment In our XX new

attractive competitive to some returns We with compelling continue despite more risk-adjusted conditions. investments find market

EBITDA. loan with yields levels on commitments are senior Xx below a to double-digit LTV generating We average weighted debt at our

billion XXXX. first Excluding transactions of the as tripled loans our quarter agent, the of on distributed $X.X nearly and originated we from commitments

$XX of sourcing companies with than less to $XXX our million The EBITDA in value from to over us breadth million. find capabilities allow

sizes less of strong believe have where all we coverage market or across transactions that we where we extensive us companies Our in seeing are the enables advantage. source competitive of segments a market competition to

the The portfolio Shifting billion fair to portfolio middle EBITDA quarter and our both middle presence from market year. a at with is EBITDA the core $XX.X which We the the mentioned, that Kipp the ended $XX upper portfolio is which X% XX%, also in broad-based. X% our market. portfolio. prior grew our growth first million, from reflects weighted value, the The of prior of average LTM of median and quarter

our selection in have drive performance. EBITDA as million as company the underwriting million higher similar as of been $XX a industry believe of growth portfolio, a of size types well our companies to compared driver results. process our We with even million of not has of Importantly, these and to in rates positive $XXX or over EBITDA. with portfolio to company $XX Companies

on quantitative over investing. a more fact, loan In XXX than total for based found could approximately for that U.S. that returns senior in basis selection by account view difference the of Ares points decade is of study our done group a industry research

to unchanged our from average respect performance, prior weighted level. credit With remained our X.X of the grade quarter's portfolio

at quarter prior quarter a same slightly up year the ended quarter X.X%, Our from cost than nonaccruals the at ago. but lower the

Our well KBW nonaccrual current and average remains since BDC financial same the of levels X.X% for historical average the the period. below X.X% crisis great our

rate to at value nonaccrual levels last consistent Our be for at our fair continues X.X%, company. historical well below which remained quarter with

is that indicator companies of fact performance our X X risk Another declined the a quarter-over-quarter. rate stable portfolio or of credit with

And by was portfolio primarily the downside company, is XX%, well-established weighted the gives finally, in protection equity we firms. portfolio also our our strong equity substantial by us reinforced in amount believe the our the loan-to-value the first private quality loans. large end of quarter, of and At which invested average in

including our to outperformance more among As from believe significant we is diversification, our market differentiates competition. starting the position, dispersion see and us credit results our managers,

the strong and across different year increased number at XXX has over growing years, market. of companies is and in fair X well the that value. only span The the is X% past Our past the portfolio average over size hold our portfolio diversified XX% and companies X.X%

own, in accounts Hill XX overall the our investment believe believe investments are single more of the the X% top for investments totaled of of SDLP, it the their diversified reduces an no on credit portfolio from at than fair portfolio impact which the negative our largest and Excluding further we XX% And well value. single Ivy adds this degree diversification to company. strength at our individual portfolio We fair portfolio the of at any credited event value. to as just

which active of billion, totaling investment resulted start funded. which quarter. exited an We we Xst repaid April finally, commitments, $X.X on realized or were new April had have were million million XX, of XXXX, made $XXX earning second From through the of us $X.X commitments we net gains. to billion And in investment $X

As and XX, of backlog roughly pipeline at April $X.X our stood billion.

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

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

well opportunities believe our conclusion, of rate positioned ahead in and Mitch. company cycles us. to environments, Thanks equity Ares At cycles market the return is we've a on a interest of average history digits. that navigated variety Capital, navigate In credit with a the the cumulative lot, over XX-year double we

a this is invested in a focused credit. our opinion, good very on to In time high-quality private company be

on potential historical portfolio Our is we by standards. and believe our well, returns compelling remain that performing the investment

are the mindful companies delivered with remain in defensively for we increased levels we and longer healthy and While of for demonstrating growth. differentiated rate are credit risks our diversified a environment, potential companies higher positioned of highly

place. driven remain investment in historical us as Overall, advantage we Our strong, we about balance believe remains And future environment. the this that our to that have sheet we our which and optimistic liquidity remain confident result, allows outperformance compelling position are firmly take new a of factors prospects.

us we the appreciate forward we for operator, speaking you joining today. always, quarter. to next questions. We With line look can you As that, with open

Instructions] our [Operator take from we'll first Hecht And with Jefferies. John today question

in wondering, syndicated can Kipp, and Thinking on you they're lot liquid give elsewhere the and update about you the of in a with both on market? of kind markets side, of deployment quarter, the an how owned repayment activity the and influencing and I'm us guys activity

try I lot and on perhaps frankly, mean the to say, press, market John. think traditional been risk to huge way returning a Sure, bank's driver, arrange There's we're I more and doing. I'd transaction. finance to syndicate leveraged of more not underwrite the it's about to a what of a

up. picked certainly that So

portfolio, factors I I were the slower think was little deals prepared for it optimistic our as year. in think the should bit play was a you which new on remarks, remain look if in that specifically I at activity But side, we're existing this a bit our of compel little kind of from pretty pretty us. mentioned of a transaction XX% activity, new about the coming that platform surprising handful good

deployment is and is had of then as to that that and again, repayment read the you And that Okay. obviously little a side percentage were of, function a mix just lower, the fees there or on lot a capital anything of structuring originations? activity a

in upfront as many It's than mix pressure say a simply on new anything, the there we've I market more although of fees will because them. on noticed little aren't deals bit of

certain a of else. more one degree can try it's attractive levers So borrower to achieve to more a the but to that pull financing, it's anything mix than

little there $X also a we add real because bit did just also the was I'd enrolled are quick, probably so an to some billion. origination deals, inflated true numbers as closer the front we the probably agent,

You out. sort of have to number back that

exactly. Yes,

-- what origination -- true the was So true that was what? the

billion role $X.X for as our about because billion $X fronting was About deals. of some us agent

that just the fund who depending of can look sort to This who sure time. when that closing, light. to happens math syndicate like, technical time point, just make looks but composition you time you can it, time happens from at on in evaluate Yes, it it from what the

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

meaningfully second you about for or market are Can your there junior there exposure wondering replace that to related a applicable, the that at ability portfolio should recedes? second if equity, reduced talk with forms positioning? continue the And there's if in sort or is there lot if lien that of your if if portfolio, volumes adequate environment of the but structured other of lien more

in market. I as when is and doing representing to players unitranche around private On of I'm the follow-on of new that everything year last would of deals Kort included, credit my going a thoughts. look, we're the Almost really, kind getting couple say, size. were done that's regardless Yes, side, have a came

is wait second see. get lien back the market a as large if syndicated as of which larger guess, effort, terms come in the Maybe, frankly the prevalent has of done that some lien, and been we that where actually market part first And investing we'll I junior provide deals. new capital? not in Does our deals can just in of mix

our just X, last, often syndicated the and the As here. second with X you investing know, line first market, in And companies larger that really I'd been hasn't say, and the tends emphasize X, much very transaction in months, call prevalent is where to much, lien. from lien see for go we'll it, we

well, lot add investing The only really don't cash of it expected. wants we he structured that, thing to a kick flow Kort are point, amount the on they if equity have that about seeing junior I'd other capital add, and performing are and companies, I'll good to and but all your to of of simply is,

some I'm they to," I and of see for frankly, with "Well, saying, lenders not was the rates, other achieve perspective. that equity to what really senior duration on side, want looking you an So way from higher probably the IRR extension the accomplish to hoping deleveraging are is an

there we if pipeline these the So hopefully, to and pretty interesting answers do it. capital credit that a question. have deleveraging to But you funnel some think, opportunistic of is deals. to anything Kort, junior add

I are the all. you the it lien we're return covered opportunities Obviously, super in attractive. Kipp, No, market first -- think

So a too that right opportunities that many purposeful now, second than not aren't regardless our lien giving a fact opportunities function bothered is on part. there of certainly, change market market more we're given the showing the that as is the by the us. what of other But rather

change collaboration anticipated how sort or guess under ASOF that there Group Kipp. you And forward? over over presumably domain, might Is special change going moved if and was of is Like that the co-investment maybe small or your maybe can -- there? to that historical opportunities with any go credit, your a I unit follow-up, noticed Awesome. related. We

mean more it should I that Yes. was quarter. the year-end frankly, all that efforts. comment about into of a plays because It here credit. less to business just of be look been around over equity the at and And years collaboration the it opportunistic I is like say, move I'd made a say guess I credit opportunity became bit formal that of there's pretty and that missed made little attached to us our changing, I'd we the kind private first facing end simple a for lot was

with Our next Wedel from question Melissa will come JPMorgan.

I noticed quarter-over-quarter. was substantially that higher dividend income

about that as should going in we with aligned change dividend about a being forward, direction and piece we As rates the as income consider rate think interest much portfolio? stream floating think of the the and that really

Yes, the question. for Melissa thanks

it's things, right. So X

lion's on So of Ivy onetime say kind took from the income. share our that equity of dividend it's I'd investments. this we But because quarter, one Hill, actually obviously, dividend represents higher for of

maybe probably obviously that you that's I away there a big So event, see from there's it equity portfolio diversified dividends but onetime why a think from having time. from to up. can that time tick don't change we benefit deliver

I of you. with forward was I on. one follow to on things to CLO working Scott hoping look Okay. The the up end. that And touched welcome. Scott, post then quarter issuance

I talk or forward, CLO unsecured? that and role funding versus like hoping going flex of it's strategy was what that that. you think done you about other secured could mentioned as issuance you've you will something mix part since while When can a play? been I the

Yes, sure.

for for other opportunity our main is and of The themes financing. think diversity attractive I think us. are one compelling in very is capital that to secured spreads market relative a pretty of forms I raising So it

into in from moving capital private assets to we're flow also CLO just think seeing side debt is -- the I market as the BSL the as the credit, that So way. moved have also of

funding playbook us at a for spread. market, think to going made diversify of tap And now. it So our a sense attractive pretty part forward, I definitely it's lot sources that of

question will come Alexander next from Casey Compass Our with Point.

At could special that, But -- income traditionally, number was what pile what or up is, time didn't which the which in forced in continue you quarter-over-quarter. do that tax? you do point wondering reach mentioned financing do spillover you'd not you be? the consider what income to did to mention I missed mention it with limit at kind you Scott the a be form the of you spillover cheap reach point guys he unless sort it, But I to time is. be limit just of distributions? the make when some sort of But excise of

Yes. the ways. appreciate over whole that we because I loads at the done little as I of and and we've I it's appreciate, up an year, a want at dividend, it make going that's because typically we of true on tricky this we to But forward history we reasonably regular for we're different as mean, probably said annual basis Casey, the in in to specials look, obviously is when calculation company, determinations. a really of a the tax question, of tend of the the really of look host position while can the a earnings excess trajectory you end bit can have rates And uncertain.

around ask very if the you have table, different views. folks think would I

out with and fact a any building position, we So to combining better the earning its put we place really the the have in NAV. where where just dividend, aren't opinion, materially we a want reduce it we to in feel company way today in would regular my that that

where the the we much a $X.XX. of for lot. Board. a So Do that in dialogue we the credit little tricky it's very management our increased is a specials? dividend get talk hopefully, it's with Do to obviously not? But the the something rate the team We When All company and time? yes, when bit we about right power but the we to of changed more environment the much wanted quickly. recognize that the world answers question, in earnings substantial

Our KBW. Paul come from Johnson will with next question

little market on as fee well? pressure is also compression new fee on platform of You deals you've that more experienced kind that But terms you on of income. in think are just the touched or refinanced something a on my deals seeing that bit question of you in you've

say Schnabel on here. existing transactions. it's primarily would it's Yes, I Kort

as driver case, we to numbers New our borrowers that as before, of was But fee kind seeing same and the this shift quarter, fronts. existing pressure. borrowers XX% companies some all transactions big mix think incumbent mentioned really But the normally the seeing were I was definitely portfolio are you're originations fees that there. of is some don't new do. is the as pressure of the There across the deliver were

Appreciate about last of that. any on I just level, portability, to that's loans, more be of but thoughts one had, you've feature was feature kind that loan on that something of if across? something your of wondering And get a come that's in thoughts -- question if a higher offered your any heard you kind kind I nice feature that hear. But that would we've

We've stuff. all to of of We've that it documentation, would what do when the we loan a will can put around be with, board, guardrails other i.e., a Yes. to obviously, of sorts be couple to what lot counterparty fees, be agreed financing times. involved continuing

year I environment actually where more frankly, of financing the that's felt think last a feature, of complicated. more

So the an financing check today. of kind having particularly feel sponsor-to-sponsor the the say group markets deal a valuable, markets uncertain is that right, of over wouldn't the with feel incumbent uncertain. equity I in new financing move value when highly

from see But we the where assets request is would go for guess my down. we'll So go here. portability

Our next with from Hughes will Mark Truist. question come

points basis industry in it XXX You've those of How that stable groups over that to your that time group is basis quantitative XXX or call account mentioned for steady? to could the outperformance. migrate got pretty industry points is or earlier determined selection

the period been as in our to look long invest Hughes, been stable. our And for Mitch, Yes, time this, this was where we've tend if did as doing at an over industry way. pretty portfolio. our is that us group extended have has -- how the you you if by been of analysis, following they we it groups

able period So they get of that analytics through very over portfolio time. our were extended to a

that stable is on that have industry focused that... And it and been the groups you reasonably

care low-margin where changed invest We have in businesses. look our we services, lot. health don't services, you We industries missed if our haven't the cyclical business really at businesses. don't Yes, in a invest

So to analysis able amount make they to with of which have a of. that significant were data out

Yes.

Okay. low exit April. seemed Anything that for Appreciate then the And be just happen or that. lower? to to

Yes. just data, there's don't of anything much away. a month think to too it. I single It's so wouldn't I take

Hovde next from with will question Our come Group. Erik Zwick

I mentioned the not future maybe earlier, if Kipp curious all all of the either their year-over-year, preference regard means, a Slide wanted start but do of or quick that's change at the any huge just a versus know of percentage you by fixed, uncertainty, as interest bit borrower in rates floating reflective given that's there's your is more direction little maybe to direction think, or I migration preference we belief of kind natural fixed from quarter-to-quarter? just rates a X, interest to to in looking of investments up maybe some portfolio with at follow-up. rate and

don't may fixed think we say because I mix our for of another think balance want opposite. and anything a say of floating higher do fixed try to I strike you're rate, some frankly, I when have think today the targeted junior right, borrower between will we investing, borrower there. there's the Yes. particularly and than right one we're that longer say may yes, I both. But I exact capital

there's So situations to away. particularly nothing and too I wouldn't intentional take outcomes. just different different lead much there

intentional having market portfolio, more environments. to is for operate versus the but in the rate the around a definitely change us in gives through balance think I just some different us of differentiator small others quarter-to-quarter, and kinds terms which of all intentional in exposure fixed Nothing

right his some of of higher of the rate rates, are seeing tying sheets also those Some back opportunistic opportunities. that fixed rate, delevering for comment balance to as the mentioned, about situations junior capital given lot the Kipp we're a fixed now

a seeing. that that's pickup that little probably bit So driving of you're

for of of the follow-up debt a active kind year and unsecured very on of on appreciate there. -- the noticed bit your spreads market, mentioned tight the have then as I or strategy you. first funding been the part today, you just And the a color well how you've been attractive

you're So guess, your And I over unsecured sounds to of well, the picture on point. wonder well. of debt is? preferred XX% picture you as just your what total about, at And mix CLOs kind time, have this up if of view it of kind you to refresh reentered as as noted I could debt bigger like,

your kind So just bigger of picture overall of there. thoughts curious

always important unsecured. majority think Yes. investment-grade our we're a and that I very is Look, us that making big and -- is we're maintaining component definitely of rating to sure

but we're heavier think little So unsecured I probably now. we're at think a happy would we're the at we the I at normally, levels moment than

And I also -- CLO and playbook. our financing part I think doing like secured of our mentioned, forms other the of like part of are

So to probably do continue we'll everything.

next Instructions] Our Dodd question with James. [Operator Robert Raymond from will come

update lot. low, but delayed this you us hundred quarter. this new AA some quarter, were of questions. If a noncore I utilization, liquidity on gave of is portfolio, X Obviously, raw there not go not mean, I there basis only the and really look side the a Last quarter, at the couple points an revolver is X they up

on do is in longer point the pressures do which can color tail think give So liquidity the in really stay are you that? what liquidity portfolio? more into pressures if XXXX, tough And any become there on for a there's rates us you higher the end to

a companies say that have least there's of Yes. mentioned the that a a drawdown. my time kind the strong It's bit this long earlier probably obviously in That company pretty call. a this performance. Robert. of opinion, they unique we liquidity material I and does than wouldn't done I at tell a just revolver a having have question, period, saw lot you obviously because in Thanks uptick like, likely less in for I mean us but modest, might

which And that up capital our and set with X% longer, in seeing to you is to equity company have that higher more lot be of of structured of remain even that's rates performance, live base a potential more got time. with through structures for for that strong frankly, rates may come expectation you're baseline long equity situations here. why these can't for a period deleverage around And kind

materially base higher have as up about right? rates below touch portfolio the percentage to and again, our be the are But for Our terms the longer. consistent what a at and we and risk historical but Xs the So Xs, when of averages. shifted of have it's in we're materially, the again, we look you managing underperformers portfolio. none thinking And our watchlist, of consider really pretty if nonaccruals metrics

all, assets a not all whole, particular as we in it's that's So managing think as how about about portfolio big macro that to definitely consideration and a the thinking into today, the take a concern. we but overlay

trends and voluntary rather have last necessarily any there cash peak more, can. peak repayment. of Got is it. mean peak collections but borrower Obviously, problem huge I low. by for don't I have with on the collections a the Obviously, And one been there? couple peak, I think if I quarters quite than

the anyway, to I from cash now mean in it's quarter-to-quarter but peak and instead? electing want don't their to have volatile borrowers might seeing past anything hold in pay who just you're the are cash

at word, that looked predict. wouldn't from all just to it's away I quarter, easy not I which take any trend. of trend it significant it's any and that quarter comes episodic, I there's data. Scott think a he don't just big whispered to and picture think I some

we're you'll because companies which up, when happy the to continue where think when sheet picks look to M&A a of a our exits, when lot value we And see stay at right? Robert, that out I we real like it's just see lot the through you of on to invest that to up, are come picks see is based M&A have Mitch, is performing. balance preferred there, M&A preferred you'll down where slow,

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

their everybody speaking participation look thank next all you today and for to just to quarter. forward I'll

This gentlemen. our and ladies today. you, Thank concludes conference for call

missed will you available Ares replay available If hour the also today's callers link webcast through X:XX to archived section callers on call, Capital's a May any the after dialing An X the of Eastern will be international homepage be and end of to replay the by call dialing the part XX of X-XXX-XXX-XXXX p.m. by Investor call website. at Resources of Time domestic on approximately of located archived X-XXX-XXX-XXXX. an