XAI Octagon Floating Rate & Alternative Income Term Trust (XFLT) 17 Aug 212021 Q2 Earnings call transcript

The broadcast is now starting. All attendees are in a listen-only mode.

To the XAI Octagon Floating Rate & Alternative Income Term Trust quarterly webinar. My name is Robert Chenoweth, Vice President of Internal Sales at XA Investments. In today's webinar, we will provide a Second Quarter update or XFLT and take questions from the audience.

are of. disclosures there make like begin, aware you we a I'd few to Before discussed does information accounting the today advice. regulatory, tax, or legal, not constitute investment or as This offer be should security. considered information to not sell buy any an review Investors selling. purchasing are or before an advised make to independent future a loss guarantee carry performance does and Investments past risk not of results. All right.

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questions, in You'll reach front after webinar. to to of the see us answer out be end. share towards that the all info feel our so contact We'll may free We not you. able to

Octagon's in strategy. as s joined the we're is a today Investors. Credit structured and So Gretchen of Committee by Octagon joined XXXX investment across credit CLO and from firm's Portfolio Manager Lam Investment and Octagon oversees Gretchen member a serves

You managing will Previously, Investments, of at Global Structured product today also for Kim development responsible director business product development all and XA Nuveen, Kim founding partner was Kimberly leading their is activities. Flynn. a hear head at and new from Products Group.

XFLT, well. that are to for the Kim to And with use and relevant Gretchen discuss we market. topics bank do we today the will webinar questions some correspond today have today our topics So as these loan, slides CLO that and prepared on and the

with focused management grade she start since of billion, over rooted credit So to investment on team of quick Kim our process exceeding that, fundamental relative XXXX Octagon XFLT. and with we'd they a on like Octagon review a value under and and are And is experienced XX credit an will investor. to like hand leading credit do XX.X record in a it institutional is track their assets years are with Credit investment below They analysis. to I'd Investors. discussion

the lot Great. some old from on see Thank you, friends Robert. we've call I as the of and got new well. audience participants a

joining. So through is bulk XX% the webinar fund fund, of And of the the to We a XX% of focus of the then equity. in loans diversified in number of is assets start asset thanks an overview end, for the XFLT with as chart on top everyone, the of welcome it end, going at And of always in the the shy first-lien and coming That the and equity. and fund, which which fund's debt if is the assets comes diversification to you the of holdings. this holdings the today, in portfolio pie CLO just XXX-period allocation about look was shows piece holdings. XXX shows for period second-largest loans. which CLO CLO

Given CLO the surprising, top not each is the equity, XX holdings too in equity. of positions CLO

market, they point. XXX-period As for at end. to have be has tend in million new allocations secondary total of do assets equity, or opportunities you the CLO can that issue, we the to fund imagine, managed investment larger XXX buy when The

fund accretive to was later is about which webinar, an We will talk grow in point at the through offering, a the to overnight shareholders. able

our that. if Regulatory we'll our you're of more our questions on asset information, strategy. if or details cost go dig leverage more for got we've you into average website. and managed on figure questions website do so looking website. Take and which on see to as you'll with leverage X.XX%. period of leverage end you an XX.X% was So And of a update have to go for leverage, greatest the latest daily our Bloomberg We slightly larger

back out ahead Now, the you'll point periods period we'll is the pie at see to right XXXX consistent, you March offering the that really X which to quarter-end. these allocations as for different if time. a little might done going proceeds. are due looking cash bit -- you're over offering February the being quarters four we shown that And and XXst where slide of overnight move that's several in composition pieces, portfolio it show resulted looking was was but before done the of the That

have other equity is in was the of time portfolio. opportunities bullish, CLO Octagon opportunities Octagon lot in will, of shortly in Right now, if proceeds. opportunity Gretchen second-lien the didn't period did why more that's So for the equity opportunities some CLO the deploy obviously about there's first-lien, in why the strategy talk consistency to April, XX%. loans, just and the equity, relative They thereafter very point see the looking what on is at will at allocation quickly also shy to and CLO a Octagon but of in you of they're that and we and viewpoint constructive on end debt.

on. move let's Now

performance, -- and the beating report since we've benchmark. inception, performance performance seen we at NAV Looking here price the positive

we've to is We've further. and second have XX.XX%. figure the in NAV total benchmark total half has year-to-date loans, it's quarter at terrific of in gone a moved NAV's appreciation, that seen because ahead return up obviously, think the of an XX%. the NAV rate the NAV of benchmark There a price XXXX. not S&P/LSTA and as of We've price shows we of And increased, the up floating return and CLO see equity Year-to-date, continued fund. and in Leveraged the performance Index. benchmark the Here seen the we first fund for XXX Loan is appropriate marketplace is

are fund about the opportunities In There a volatility September an at markets. fund the at inception. year-to-date. is buy Let's average of secondary now traded since to XX% these is trading. of the and healthy XXXX, very premium for environment at market look fund's There move a It's premium at Currently, average price. been trades on a the fund XFLT different X%. in on

seen orange in to So strong invest we market also lows slide, line. the bull XXX continuing we've continuing the next shown follow you right price appreciate move to a if equity have We've market all 's the trended this and we've strengthening here seen run fund. as with the and the we since NAV to XXXX. in S&P direction, The seen as performance. XFLT we've positive seen --

for them been LIBOR so. or lows fed for Now, and that the of in three-month have and can we're investors that at funds, price loan market And been that last for for the benefited just see, the which relative and this next our you LIBOR they've the share environment, funds fund. we funds snapshot income, and looking is help months slide, and rate. nine about NAV CLO market to income board obviously, to trends with federal think and for at the looking all-time sources we they're has attractive And looking they're that, a

slide. Next

We of one is trading the that conduct also offerings we're able wanted benefits overnight you stronger volume. XFLT seeing shareholders, market, been to that been the to show accretive in has two which secondary to of has the

In shares, and has liquidity shares, volume. also the And investors in think volume XXX,XXX for fun we a trading And the proud more been additive at-the-market trading program last sell of trading days, our provides buy is or shareholders. trading volume increasing this we We're this who environment. so to that healthier of average want the that providing to terms provide. the fund's for support XX

in talked to net mentioned when next conduct overnight value. we done that I offering offering just July. because We with a issuances only an nature the not asset about at I recap slide were being that the Our it's is to the able of accretive, were pleased, premium the are a accretive

works way able on shares based math the is higher being benefit than existing So shareholders that to issue NAV. the simply

and this to was done offering A days take is reason further overnight the and third of sell-off questions the scaling in the capital overnight was XFLT it price been XX.X% Happy that in and to that the be a distribution, basis. for fund about an to are at July, able being number deploying an the way created so way equity fund loans is back XFLT a a the In overnight Octagon per-share recovered and had the very the that overnight. the attractive from of of The shareholders July, prior CLO overnights reasons; to benefit fund for This fund was in attractive which of team There the a at could on quickly, where continued payment to overnight. Another the a meant environment coincided NAV also from it well. with expense to as deploy premium reductions trading Octagon on able within capital. capital. couple benefit thoughtful really deploy opportunistic was

thank So you.

and this quickly in more time now our time for Gretchen move to cover XFLT We get were the questions and step deep about aside you regarding will relative slide an so talk next with Leverage then market way. from we to advantage a I'll is leverage can the sources. to competitors different.

which borrowings, second attractive was because we in cost bank borrow, see you both the as borrowings X.XX%. here, average is have We quarter bank of can the

which have first we we preferreds. good We is significant the a fund our partner long-lived portion markets to took reason a quarter veryattractively, a And the opportunity SocGen living of issue in borrow preferreds. the the add equity, its can volatile assets to we that decision they've to that assets. the I was with XXXX, been CLO invests So the funds. facility of in obviously think informed really, And and through did

cost. the where through without that cost can forced comes without fund at seller having can of fund preferred to to the that is a de-lever. of the These see higher and preferreds, XXX is the markets You volatile are having that navigate X-year a benefit be the

But Octagon very that. with XXXX seen navigated obviously and Now, COVID whatnot. increased and the in March marketplace, well we've the managed April and period volatility

of an the assets it's One nicely leverage. fund the with sources CLO the advantage the of two to life matches which preferred so for in the portfolio. And have

cost facility. can you invested that competitor loans, is an have reason the allows an advantage is able rate, we versus borrowing is blended so that portfolio on definitely see for in X.XX%. And And amount And in which of borrow the bank we're funds the at a to the average significant a market. of that

We and This Gretchen. you. do distribution. and turn the current Next as to is and here. X.XX%. of our pleased track rate July distribution pay earn form steady the to shows out just Thank record what monthly distribution we income-based in over a was it that's distribution monthly slide. the policy distributions. of And end a $X.X. We're It's of have recap I'll XXth an to seeking annualized of what we're a pay pay here

slide. Now, next

on insights her Here bank transition us the we'll Gretchen share and she can loan to market. with

Kim. That you, We'll we'll thank Thank you. planned with into questions our and now start move was great, Gretchen.

into Gretchen, has you XXth, market us June how quarter market's loan continued August? and for give the loan a update performance So July can the ended and

Sure. the about X.X% no trend risk And the Thanks of Robert, webinar has little the good performed this second over end continued full of we've Loans well quarter. Thanks, return this year. and X% have Loans and for for joining outperform. year at that since all. the is seen morning morning. a bit in for last quarter a the to

But excuse loan on back. take saw broader a have same July. if loan some to of quarter continued economy towards X% issuance, step trading been almost which returns did as date. XX% see softening July, also result late price the to fact, loans would at the that's August, loans year-to-date up the It's the worth performance, market noting prices we in have we prices impact In you are Delta -- of In same bit late a modest compared loan for the level weakening August the and that broad to the of up and in that time, period. the did July, around the did high are end stable variant month look of in of in concerns CCC-rated and the the cause at over also in month me, of just through

Thank you. Great.

defaults. is question about next the So

of of there the previous have X XXth, So June in as I been X months. know defaults X

So what for is Octagon's defaults? outlook future expected

you market well span the over extraordinary. X XXXX quite out for the when defaulted. include that that of had when trillion Believe really in that defaults, of I the it's that of have corporate noticeable nine previous and issuers none for in not, it loan and time there two in here has we loan have last been the a mean, have I've there decades a eight now also market no which has with don't means been months, $X.X market last been and know happened. I X July, months or

a credit forward, market. environment point As for continued to indicators many loan we look the benign

some default year loans X% below were you has LTM already at the low reality XX of look and trading fallen that's at you points on look Morgan to is rate. are at full-year to That estimate is XX underperforming X recently loans lowest currently at slide $X.XX than which the fact, for distress may years. currently that If forecast seems percentage many actually loans below of is number which reduced many of price very if in since at point try and the end very to the how the a the levels future. basis are XXXX and achievable seen $X.XX to in default note a in default market the that LTM its few July, XX less XX. JP It's the trading there And we've basis that to We rate points. that

Wow. incredible. you that. for That's Thank sharing

in how So the perform the CLO did quarter? second market

the index, saw CLO a But second to XFLT, distributions. that's second the separate existing s either market, these the CLO X% as According CLO the formation that this more new as volumes CLO and refinance A in is CLOs really we've CLO of where and quarter. recordsetting seen the CLO CLO alone. volumes, refinancing for reset trend rated CLO more transactions over enhance at loan the the higher future tranches. in tranche outperformed Morgan BB sub-index also we also quarter CLO from for extraordinarily effectively junior the debt the market, high by loan value And JP equity. the to equity market continues great demand strong pace. a reset returned tranches Similar or up in senior of or nicely in was supported transactions and the thing similar

That's sounds great. of activity the market. like a there's CLO lot It in

kind question topic. is this So of that on continuing

seeing marketplace you are for levels equity? for CLO trading in what debt So the and CLO

Yeah.

the secondary CLO kind most tranches, BB-rated in For range see the $X.XX. to of mid high trades we of

call par the coupon at there's high And or where some, even above is and protection. where

the on buyers But reinvestment As the equity transact matter, price vintage as trade as the the are to wide range, low expectations future buyer CLO distributions, can $X.XXX period, price generate very a XX%. can of at that trade at or we NAV, a depending the $X.XX seeing cetera. a today remaining for generally et would yield to XX%

the of the is are equity most a For yield opportunities to and between that we $X.XX usually the somewhere to $X.XX XX% XX% price evaluating, dollar. on dollar CLO to get

and issuance the talked on first loans we the the that quarter was of both remember I active in Great. quarter first quarter for most CLO webinar s record.

second quarter? did continues So this the through

of of through s it And a gross are over is loan top very And leveraged -- first seen issuance June. In broader M&A dividend, issuance about loan and buy-out a That of this billion year-to-date, XX strong of transactions loan term chug shift the almost level continued formation, continued stark XXX Year-to-date, transactions few that issuances, first when we've very seen the year. that, into in is and billion seeing the retail these loan we've along time CLO Demand funds part complex. gave loan that's into at year we M&A from no all last to the this was at of discussed On by and buyouts rapid issuance. supported last of for comprised the year-to-date syndicated the half saw inflows inflows market has as and pace. in volatility year. lien's the share of XX retail ETFs we level year-to-date new of Primary the through course, CLO we being double billion the XXXX.

seems end. time at we've next for any will but audience, repeating. setup the know to then of good from a going you come question The a one to me intro. a the put Kim, since Thank the got you address if I'm question is that it This bit this question need the let for and to Kim. like

allocation the participants between When market how income strong makes considering and of CLOs, cash capital overly cash you equity been within see flows economy's some and investment yields. pessimistic regarding the So of flows estimated return CLO outlook. have

So dividends, how does too this affect investors' retail characteristics much return booked and if income is tax a capital? of as

the Okay. tax thanks, complicated for Robert me giving Well, question.

to I GAAP mentioned, on can about our is the we the distributing how -- trying and and fund. accounting just for on about earnings. And earning. we're we distributions for that. earned we visibility, And GAAP on So as We, a basis taxes good which a what over do we're paying let's thoughtful have of not basis, make we've what when our basis, talk be model we

On in the different. fact going given picture, to equity. our smaller so investments allocation obligations tax to it earnings the guess, we issues, tax the the I XX% as of tax means to GAAP CLO the allocation has are and that equity mentioned, the equity, XFLT, CLO the competitor fund where that has bulk CLO funds, side And a smaller of makes a relative be is I the have to fund's investments, the certain

to sales I'm on basis. the equity our the tax estimate our of shareholders. we it's estimation with the the future. And that's out advantage to And have the delayed can and So what investments trouble character means that equity, push due on we -- CLO into CLO to is portion in equity taking meaning investment received that fund of is do tax to we what for are statements deferrals, significant -- it makes we our a what actually is fund tax this respect -- have to avail explain the because be. the we going Because tax CLO tax a

a to so little And that explain. It's all benefits shareholders. complicated

explaining as it that And think don't able a to have you'll benefit what most advantage, in kind of mean that and it around But shareholders. So it as I have be go visibility is marketing does setting deferrals, differences. basis. funds method tax GAAP worded, I'll tax. have the when you're there but can for is frustration And GAAP that's distribution a good the we policy. when why -- is very on what question that's that are there the on And your GAAP, can say best some differences

Maybe are and you are their result tax on don't using might set probably your for using a methods. it's distributing obligations receive are some capital want can to investors, not for hard different funds, them Some be a returning you The that they but it's that And XFLT, the to calculate in when thing. don't reason that reason if competitors on tax basis that, back event. Return there a bad distributions that capital a money reason distributions. you there's more. do, is tax not penalties not pay taxable estimates sufficient funds these some are and to but competitor

understand some funds, as of for funds of distribution. capital. returns CLO And generate on higher levels can So why those distributions we characterized the marketplace in later be then

of As I make be law to don't distributions shareholders. investments to these if shareholders. penalties process can and required tax by you these sufficient because mentioned, there are regulated ultimately companies, amounts can hard be the estimation flow and we're to cash distribute

Board so a and do quarter. We and say of tax on a September between and are month our handled GAAP about policy It's a coming to our as tax I'll we're And monthly we of with a our what December discussion factor well. use attention. up year-end, subject make are, our obligations get these lot every every to distributions, that. lot discussion what we of matters procedures detailed So obligated in XFLT pay of

also it's have we We tax Q&A. feel important a detailed

these tackles our for to you're what tax the lot people look turn -- website Robert, information a you. of to at I've more So if want on I've I'll matter, topics that who But in mentioned. what it interested back last Q&A. can they go year's It and

towards as And Kim. you, share the Thank I we'll great. was earlier, webinar. end our that the contact said of information Yeah,

email a link to me would send happy tax you. to it the can if to directly you a like I'll So over you or PDF Q&A. be

perform question. Gretchen next debt to back and holdings for equity How XFLT So the CLO in the CLO 's quarter? second did

range In a were par. quarterly markets, that with in we outperformed in X% nicely the equity April the far the XXXX. leverage in we really in quarter, saw Sure. distributions given CLO strong positive the CLO few so equity debt both has line quarter CLO Returns CLO mezzanine saw broader in of cash-on-cash saw and and and equity in junior in debt in what the we on CLO on from basis allocations things. structural equity a equity returns benefited the the

of underlying increased that And in leverage. quarter. fact increased course, over s equity the X.X the structural about that NAV CLO with price of the First, loans the benefit by

for period loan CLO either Secondly, resulted CLO And over we debt in out robust coupons or cases, again so or the extending July. saw again, the reinvestment the which had effect portfolio. increasing were of completed financing transaction, steady sometimes the in the in in, of and was refinancing third, that some of benefit that And that deals cost CLO quarter, the quarter. April on positive equity value the impact reset transaction and a a had reducing the the both of extending or the which in for the many equity CLO, life and of a distributions

Great.

inflation, to big now that topic. know has been a So I

So your maybe and how decisions. active a inflation strategy management affects discuss you can like XFLT

Sure certainly.

So can investors increase a interest inflation in most will resulting impact then two be in rates what fund-like XFLT ways. believe

And when well. associated That's assets. income thing. increases, in base assets simple case, big a are secured that Debt a the is as the with holding CLO this and loans those First LIBOR, fact rate, floating-rate increases

loan to equity, rates complicated Now, bit of increasing assets. floors a of presence of on amount many due with CLO the course, is the LIBOR

portfolio. short underlying holders generally of over may equity. the benefit rates base composition the in so the depending of And the the equity thing But CLO term term accrue loan are increasing good not holders the to CLO for a rates long on of of increasing

on thing second inflation effect the the of we're investing that that the borrowers having companies, actual Now we're is these watching loans the is in.

are costs can't costs. chips. And labor input the higher or oil negative or Whether of or pass many experiencing companies effects companies on easily those it's the semiconductor costs Some operating lumber, of or increases.

inflation that's so their continues of seen to many is margins. and we that And XXXX. companies will something in the that of their that throughout results, reported for negatively that impacting would many course companies have expect second-quarter We've and be a headwind the

Now where headwind. seeing is not companies we're also that a

are loan resilient a the loan If positive look of customer a on the whose focused XX now a ultimately And benefit is day, loans if we're inflation. the are have Company those performed rising that inflation in wages book, because actually as years, income have and more market has managing opportunities consumers inflation over at certainly you base a look last could inflation. from how more At be we force Company and that increasing, profile. end well of historically you your with customers the modest may at their even performed for discretionary are periods that

least not be economy. of portfolio it increasing inflation by -- So CLO the debt about well as existence the negatively certainly, in the or impacted at of fund to that book will benefit the book. top is both way a equity think the of position We're in the we as positioning loan mind it and

you. thank Nice,

that had overnight Ken shareholders. we offering the mentioned know benefits and how I it and So did earlier why

capital question you deployed? So, can for you describe how is being a this is,

Sure.

both expectation bit there. secondary been at But XX% similar and As in raised will in approximately move and And and of a allocated XX% equity, here but new loans, enhanced a and primary that we've in Kim capital. the first-lien, July way. second-lien, to loan the and shared that we're approximately XX% CLO a to markets numbers deploy in These XX% debt. as mostly be it's earlier, CLO and capital bit a has allocated mentioned CLO our in XFLT around looking

All right.

a So, let's has significant at see XFLT here. traded premium.

of going the Kim is quarter XFLT significant fourth has at since premium traded to a this Gretchen. So and XXXX.

So to? do attribute this what fundamentals you and technical market

first I'll the Robert, take part.

I good think technicals job we've done covering. a

the assets market, there in the aware to for about if are here loans. a And So we are see and the CLO record demand the And last the issuance in before we're that in And underlying is there And slide, two talked then the an new of are and issuance that last go market, investors CLO assets. judge there to flows about obviously, you'll supply have of rising strong levels really, sentiment. me for more X good of is loan quarters opportunities about of the fact for peak fund on we seeing is see extension, floating-rate concerns I think you CLO record shown months, for the which the for few loan chart technicals rates, last inflation, concerns levels CLO which really seen are peak quarters. will the them is the many retail lot loans. of is become a can we've smarter appetite

CLO vehicles more equity, And like an and buyer in of just XFLT there are debt for the seen because expansion so base we've the partly marketplace.

track then great, driving that market really have These for the like XFLT. investors record. these, that's trading So institutional have levered are are factors now strong a with technical managers think we secondary access what such what And attractive vehicles. to they Octagon

for well that that that and said, current comfort the XXXX think are will continued potential And reflect the and that marked is the credit are mark also, I a flows. there and XFLT I loan but in with the to benign the of add assets agree there portfolio some and the as is continue I supports, valuations cash level marked markets the given the really would market many robust daily, movements, CLO think also, daily, everything environment basis. that as is XXX% through on views to fact just that that. equity real-time expectation investors' positive Kim to be

last our prepared be for to So going question, we and Gretchen. to come have that's

everyone remainder and for I CLO is of What outlook market think one for. this loan your XXXX? the is waits

of We following market. in talked a lot are the the CLO about the that in we themes loan

Economists on We to economy. U.S. are are X% constructive pointing in the the GDP third growth quarter.

to expect until that end of year. the We continue the

in low CCC the remain CLO loans attractively We we CLO the the that very to same loan CLO remain loans there and and remain at for perhaps which s priced. of to year. our to of CLO distressed well defaults over s bode issuance, time, and and expect low will loans the go in is and anticipate investors tranches. things the And that robust will those both and be course continue all exposure view of other And lower causing will

I Thank like very hear much. you to it.

will reach please for here a we of to able a open reminder your to is question, up Again, free question. how get to out the not And to submit know if webinar also audience directly. questions. So to please feel that we're us

share hesitate. here. will We help our anytime contact so don't Happy to information

question a for Gretchen. So our audience question first looks like

the benefit equity refinancing, from there on said net you Can an lower in tighter pricing case update the you could Last your Is interest any that potential outlook margin? margins. going is forward still on provide refunding. and CLO Okay. quarter, market

Sure.

some loan come is loan believe of should we spreads we the that happened the in than quarter talked risks higher keeping shifts quarter. then the last picture second this There coupons I is hasn't and think see loan fundamentally repricings things that that back. very of level are loan we if be. one So That they about, fact supply-demand that high issuance,

trades loan repricings market above look trading suggests XX% you -- of you that above price not at if quite not that par, market the at It's it's look the coming. historically fact, history has about percentage of par, that loan modest. In the a if at are loan

You need XX%, a XX% typically way. coming loan repricings is above you of loan before XX%, trading see wave see. par to the your market of

risk. repricings somewhat foreseeable of year-end anticipate way be will issuance the we through don't strong So that future. to And and come any loan we us anticipate will in that that upon in that, mitigate repricing continue we top a will big on loan future expect

-- by good out believe a good market don't at in the news. is be not term, That's that's we wave the negatively there, that for the CLO to sort that will near prices. so impacted of while being risk see, least loan equity. a of there do We Now lowered continues

equity other financing thing a good CLO benefit equity the to CLO is we seeing on about are that The side.

equity If you of vintage in that CLO of CLO resetting XX CLO points that some future And very moves or was be for dial a we're the debt, can this depending investors reduce -- of That is CLO of structures. has refinancing a lot original how on think can equity by and impact seeing CLO. on the really very, about cost a the distributions. And meaningful, CLO financing structured, these a the more basis instances, this for positive it of tranche.

So that's of something will that expect is seeing we're equity. and that for currently XXXX a also we reap over continue course CLO that positive the

right. All Kim. this to see address GAAP Great. to I'm going question again, so I

in reported So how to GAAP changes s I'm long GAAP from future rates. and cash CLO you stay account do interest take the margins distributions assuming into above defaults margins? expect

that's correct. Robert, Yes

about And that in what talk is model important we paid, from earnings the we our in fund. for and the great months good the can we terms the when getting earnings the we're loans of really GAAP at and power have know terms things income ahead, the of one CLO modeling of So fund, the streams earnings' visibility are the of because debt equity. that's we

we've defaults we factor to of of that below that this over and grade. that constituted some investment so life, are the course equity. its that the the default And those factor it given expected risks we and with the -- loss. level are IRR of do It's CLO do are the with fund's expect the CLO class model particularly things there done and fund Loans since and in expected into fund. in the assets asset approach. We and of is conservative appropriate always CLO and debt investing One inception equity we this of

And accountants always that have so this is something provided. our

distributing over if be to in. expecting level the of to loss, want default some model don't at want you You that you're and portfolio

and important distributing. gets we're that over defaults that's losses. We're it And so time. ensures portfolio-level those not is a that by because future it in judgment, refined Octagon over factoring And

are of we we I to so able the and And that maintains that payout. distribution the that net think integrity also

Alright.

another got we've question So here.

should think three-part looks go I it's It questions. this Kim. like to about

if you know me Let repeating. need any

or you equity becomes XFLT the as in With does preferred the issue with issuing the advantage or the growth to familiar recent base, rate additional preferred more common the any XFLT? to on on coupon preferred? there debt have the debt the longer-term ability over time expect decline And debt? shares or do Is market to

Okay.

got going slide. to thank the all I that and think leverage sources you I've for

we would have to XXX those my have And of the that preferreds, our for and about preferred think multiple the leverage. types beneficial the has for coupon fund leverage. because be The in different earlier is with the -- of additional so We a be -- of right the same X-year it market the to echoing maturity that sources to something true can retail of we fund will, preferred XFLT issuance do have different I issue advantage of understanding for now able be preferreds you market profiles, might and if comments duration

we that. so will And evaluate

best and terms the we at for do leverage. And February is We for issuer exposure with to first-time about the equity a that the we market, the seeing in fund. all in third-time of appetite also we're preferreds has the the that the an attractive preferreds at fund them second common the diversifying a fund the today. the there's fund, and to familiar be we the attractive the between continue preferred CLO even as some maybe issuers because in but and asset think or I the of life Because that market issue the that of scale preferreds the look appetite do that think with pricing yield grow Not absolutely crossover we will were because our of because we with of what's some to more will and also and issuer driven consider the in of familiarity longer that so as matching and preferreds, just able purpose may sources becomes and so we appreciate buyer right preferred rates. reason and market for the do buyer talked income the Octagon, now as more for shareholders

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