Blackstone Secured Lending Fund (BXSL) 8 Nov 232023 Q3 Earnings call transcript

Good day, and welcome to the Blackstone Secured Lending Third Quarter 2023 Investor Call. Today's conference is being recorded. [Operator Instructions]. At this time, I'd like to turn the conference over to Stacy Wang, Head of Stakeholder Relations. Please go ahead.

Thank you, Katie. XX-Q, to a Lending's presentation section press results filed welcome today, Quarter of of and are and issued which we release our our morning, website, Blackstone the Third Secure Call. Earlier our available www.bxsl.com. Good on of Shareholders both with a

materially of call. I'd and outside may statements, risks affect actual be will duplicated statements, include and in from We consent. With could today's which on referring Brad may of Factors you annual BXSL's not may that, remind the are Risk without duty report turn Officer, the to that to to Executive I'd to section Marshall. be material of and the for forward-looking Form over control firm's XX-K. that that differ throughout uncertain do cast the Blackstone any please most Co-Chief audio call recent We presentation like results, this of not our results. This like see some copyright call undertake these updating is

Teddy and you, Carlos you call our Whitaker; joining our today everyone. our Jon morning. With morning, me and CFO, Thank for this is, President, Thank Co-CEO, good Stacy, Bock; Desloge.

with morning's on go some this will and third portfolio thoughts agenda. to quarter Carlos I and into before Jon, Turning our high-level detail start Teddy more results.

about XXXX. in opportunity portfolio highlight Looking and and have at in the pleased results set. marks have very of I'm the very QX that to X-year investment to optimistic strength the X. turning the since delivered to want presentation shareholders, that IPO highly I'm built, and with I our anniversary BXSL's our confident we Slide we the

sectors. dividend net in net another in third growth distributions, large businesses quarter, with all of historically BXSL's value resilient credit default first on regular along fundamentals BXSL portfolio a income and Focusing asset quarter strong lien with including strong low higher predominantly invested share, on built the reported results per in

Looking of $X.XX last from investment in investment a the income, increased per fee-driven the as investment our with XX.X% compared continues rates. third share excluding quality to over covering details, the lien in assets. to represent year XX% represented that. XX% limited benefit remains dividends invested share per dividends, at among of This our and rate return $X.XX to total Interest and while second one of to PIK, share in of and excluding up peers first PIK, income yield, our its fees dividend highest declared our much increased high, quarter. We quarter portfolio the floating is XX% per an and represents annualized I'll NII, interest income, annualized XX.X% dividend secured of of distribution portfolio senior at total higher third previously distributed repeat income sustained compared our XX% quarter. well. in quarter represents time. XXX%. $X.XX payment-in-kind, our quarter, equity. The share of as limited BDC income XX.X% Net on by our income interest per or income. Net earnings this fees with Further, the nonrecurring

In a yield. higher environment, from may elevated interest an rate interest benefit investors income

place on rate rates pressure interest floating higher However, borrowers.

portfolio on we result, continue to protecting our a investors' intention As focus building with the capital. of

with of invested XX.X%. an funds lien During average XX% were the than first loan-to-value more quarter, secured third of senior

lien BXSL XX% is XX, secured first loan-to-value. senior XX.X% over portfolio As average of September with

$XX.XX quarter, which previous further and of at the and share minimal a at approximately portfolio asset stability. quarter the increased have per market net from amortized both believe our in below marked value, investments X.X% fair fair We value third debt below X% highlights XX. rate value, nonaccrual to cost $XX.XX We

new in $XXX of the commitments quarter, the X $XXX -- meaningful and during in million third $XXX par increase QX quarter with funding ending in and to represent new investment investments new compared -- compared were to Turning in $XXX commitments, million quarter. Slide in repayments investment funded We $XXX a and the to page at $XXX million from presentation. million million million. million Unfunded QX. during Proceeds the to quarter increased commitments last sales $XXX saw commitments

common levels offering million quarter, issued the and $XXX.X and public program follow-on an our also offering accretive costs, underwriting During existing we underwritten to additional of BXSL. shares both through ATM before at

end end are with in our pipeline historically during transactions we also recession-resilient uptick in senior by billion, the pipeline of the are seeing companies secured investment our excess pipeline an the with of number in These first know as larger deals the increasing deals in highlight, number of valued predominantly of the to since seen have exposure of quarter, versus QX. well. We a deals QX same these Xx lien doubled resurgence of in very in pipeline a first Important also sectors, period. $X we the

new wanted across the Insurance, announced or firm's unit, issuers Blackstone integration forward, about believe of outlook new also X,XXX we to from M&A and corporate financing recently finance opportunities, a credit insurance into corporate active of driven additional highlight what groups Looking by our optimistic we investment Credit. I a environment BXCI. Credit and needs asset-based portfolio our existing are Blackstone single more over the is of and

it are further borrowers for as and we about a experience both our the seamless our one-stop create will the and scale very more believe by offering We integration clients capabilities of excited solution. platform, expand and

this for to continues opportunity. the allow better As private demand the BXCI should expand, integration credit us to capture

scale lean should integration in differentiation: turn, scaled For deeper expertise allows connectivity scale, globally. those of key about creation. Taking all but extend capital, the to with it's scale with the value corporates, have often Blackstone with sponsors, of platform, M&A as which a to about of us us to core relates not with advisers, platform of it's banks, it just we like BXSL the and scale, specifically, into areas allow our

credit extensive a as has platform is certain to reach expertise, As sectors it think in Blackstone. relates I that don't as there any

We our different platforms. that have XXX technologists support

We have over XXX advisers.

have doctors. We MDs, PhDs, XX

expertise areas tech science, transition. be of All care really in smarter life energy like of this and helps software, certain us health

As highlighted to as it of aim add a remains investment use offered make company. through we are in And it. have we our creation, Blackstone we this value the past, the value after the core focus relates XX% Credit finance ours. to these programs, that in companies We over of

a predominantly of which as and set, leads earlier, we primarily in quality believe of passive together, investor companies about on to We of their highly of of you'll terms a So when passionately shows portfolio, in the I allows of we XX% seek and market peer the sole senior lead BXSL later, businesses in is our that defensive to scaled just approximately little us that transactions negotiate loans I capital or hear mentioned in historically in lead we the in structure. structure which of investing lender BXSL, a put our that quality that the quality transactions, which financing better instead our advantages. and bit which to in the the Credit the liabilities, lower believe income, And govern these are these discussed, quality being sectors. Relative portfolio Blackstone default alignment. developing all

turn with I Jon that, Bock. will over to So it

advantage allows building and the Thank of our us a from defensive healthy to believe take expanded continue you, that a on we strength. Brad. to of And Brad portfolio mentioned focus position pipeline

of to X. jump So billion the ended with quarter Slide We $X.X investments.

well We also are was within our leverage at X.XXx of X.XXx. and X.XXx, and range average The those continued quarterly delever to X to modestly. fund was quarter end target

liquidity comprised amounts We facilities borrowing also remain available of in of billion that well mentioned. cash Brad $X.X to pipeline, revolving all to expanded our positioned across with lean and credit

continues increase quarter investments end, higher steadily, to on at XX.X% fair rates. yield average XX.X% quarter, from this to primarily weighted base driven value Our debt last by at

income. to debt The continue weighted a compared for approximately the and or continue the fundings of environment yield focus In assets investments quarter the debt while quarter rates, on our constructing basis XX.X% repaid downside year. the to the down points to averaged portfolio same yield improving in sold floating-rate investment this base to resiliency quarter of averaged higher portfolio the expanded in be protection. we portfolio. And prior during on XX.X%, third a New XXX on debt new importantly, accretive yield investment rates XX.X%, or our

to So portfolio growth first jump as we building most to Slide defensive senior especially X. economy. debt, secured and in focus Since slower BXSL's our on we've place investors, been interest in inception, is rate that disciplined the a higher for lien believe

equity other investments have of are significant loans over companies an are of support have BXSL. firms shown access over and historically owned private equity who structures to of senior XX% financial BXSL portfolio additional XX% sponsors capital equity a in in in capital, companies. average loans their sponsors secured lien These have to by willingness Now the with generally these loan-to-value XX.X% or and first value

We tailwinds, importance and neighborhoods portfolio. don't growth and scale we ability default increases to that slowdown. we And the that we sectors only also better of historically stress seniority in are sectors, consistent investment believe more the emphasized or rate We've specifically, companies as view what lower facing the favorable businesses trends, should we share, in to price believe on significant CapEx. a greater larger focus have able stable withstand addition, pass strong businesses that visibility, growing margins, management, revenue be with and lower market through

BXSL as to driver X.X% cost have companies of average as higher and sectors larger-scale for the traded EBITDA businesses compared scale peers. lower fact to as BDC that cost at QX on rate than $XXX default less compared $XXX specifically, is loans a looking our performance, a quality, of of supported X.X% credit to QX nonaccrual This Now in at last of million key by has portfolio million weighted focus on year. BXSL

from quarter, in declined quarter. third rate the by nonaccrual driven Our previous a the restructuring

with where Now Slide better our lower other XX% portfolio. default which in neighborhoods health approximately lower are exposure, in some strong industry key historically of better requirements drive lower BXSL's over investing and This focuses invested care, the highest on software, services, focusing returns including commercial we themes, rates, on sectors, means believe to in exposures among companies sectors X rate in total portfolio of default the CapEx time. is

Now further portfolio outlines our quality. X Slide

businesses face to to our companies larger focus is lower addition on on the quality belief that scale of default historically more In BXSL's higher larger and that resilient rate headwinds portfolio in in in sectors, smaller and had focused rates. investing lower has relative based economic counterparts on our are investing default

substantial to deals Private International Lincoln credit Markets underlying of leverage more supporting for smaller most or found. The or based Our million in rate the risk-adjusted a rate origination $XXX refer Xx effort why of return default spread turn companies company's that what the scale measured the has we is would direct relative of has believe at per deals but businesses larger disparity, data that's growth and because remain lending. This larger economic cycles LTM less, health. experienced database, at steadfast true versus is belief middle a we of have of market on from on EBITDA in slight higher in where better. the compelling XX% EBITDA $XX differences that return an lower greater as than indicates risk-adjusted EBITDA larger million in scale been noticed we Based the adversity slide our companies handle we

Xx fundamentals generates credit of turn over Now private portfolio me EBITDA LTM Xx greater the that BXSL's company profitability, is by private nearly can larger to and average XX% credit XX. Lincoln. that the compared and the measured Compared BXSL's market higher coverage. Slide as importance to see to to on over interest the leads and We has growth market, portfolio

into We deep provide this continue to to level go call, the our it's last and this discussion of on portfolio transparency. goal

pressure XX% or at the XX%, interest all to nearly as into today, EBITDA credit dispersion with believe it. build, has we not higher rates below in market XX% of companies an X.X% will According in million forward the is market private we are rates. $XX see dive private over less, equal. ratio as created Of let's of X So base Lincoln credit the coverage that

can with run stability average X.Xx. below profitable X% For to versus see this LTM BXSL, credit ICR on LTM for market BXSL's when have was we private with below at X.X% on businesses. And tails coverage the story broader would of with we tell at on facilities has we an growth double structured ICR market X.X. basis tail XX% base the interest at that X of the average assess interest what that an not favorable an market choosing risk tails portfolio private limit about a portfolio will our higher-growth ICR our year-over-year X.X%, we rates, And XX% continue the BXSL's our investments compared ARR portfolio of And in to sectors, forward we attribute brings basis, portfolio average half view, earlier, XX% rates through will, the X.X% still versus proactive ICRs, exhibit the originally Xx. forward at a And is Xx we larger, X.Xx ratio focus to believe the associated the when that of X.Xx rates, more And to credit ICR and of we default performance. management, our lower with to about exposure. that disciplined namely focus larger to In be mentioned higher better, seek the BXSL on lower of and see portfolio. we historically as underwriting growth. Averages our transactions results in that businesses

the BXSL's X in loans, fair provide documented at by covenant. financial agreements our measured value, protections on XX% focused also loans over governing least of with to We're

to collateral to against not in aim on loans. loan protections related were result, an XX% in the turning team Credit addition, And held technical, had the we ensure due relief related Blackstone in our BXSL the or there liquidity focused to of who XX a quarter amendments key principal. And another amendments. to the was seen take during to amendments, documentation. leverage in-house and lender, X% and covenant repricings. maintains extensions, third were Blackstone quality documentation were add-ons deals inability or and pay a commonly as lead relief of In amendments Approximately XXX% have focus release. And also covenants, review and Credit private quarter. stripping on or of syndicated legal no audit to immediately asset refinancings We the interest or they to protections

a jump of XX% XX, increase increased IPO, now since dividend BXSL increase XX% delivering a distribution to As and X per years Slide is share, an $X.XX our we quarter-over-quarter ago.

dividend, level And at through ratio as we've delivering XXX% of continued a Our to earnings. by shareholders, it ability our to confidence a of headwinds. And increased steadily our shareholders macroeconomic share. to while that, on building to deliver speaks Carlos. see, our dividend that to We can base for to focus covered turn NAV raise yield the believe is also high-quality building despite over you per fund's with I'll continuing

John. Thanks,

the hundreds we years, amongst direct have performance. corporate engage resource. meaningfully, private a investment in important transact inception, opinions With top while a on bandwidth senior over process investment has and and professionals Credit and most financial the to to only global plow that our who we've them significantly average professionals, those our origination investment our team drive refine performing of with. grown an insights investment credit are departures through XXX credit investment team we investment strategy. us with of take continuity together for few into valuable Blackstone BXSL's BXSL's scale people committee back process. Since and team We has XX Our senior has BXSL's X,XXX issuers. The American North form of investment seen helps investment over a involved portfolio monitoring lending worked sponsors

that a addition, advisers and deal cover globally, and opportunities investment with sharing joint sell-side have In we pipeline dedicated strategic team that relationships often flow. drive M&A

echo That's possible across life scientists over We GP opportunities the invest, technologists expertise widening we XXX benefit support tactical to insights helping value private savings, sector size cybersecurity us platform, opportunities, offer across earlier deep ourselves benefit our other made also and Blackstone over with credit and our valuable private portfolio our to platform a XXX Blackstone's the XX the how point us at of our benefits we business stakes our full Blackstone, and credit with on platform, from the sciences, all including funnel. senior more procurement also in by investment flow owed just and scale offered end that platform real monitor no data to deal borrowers of cross-sell pipeline, Blackstone BXSL Brad's perspectives platform equity Blackstone. In and through strength partners, competitive capabilities, Blackstone. portfolio. I advisers, BXSL with portfolio. access deep leverage capital origination cost than insights we an Credit's on cost are because increasingly from for scale while and the franchise all program. differentiated the science, our to our companies. additional data and strategic BXSL, creation market, deal ways. estate, understand of can Growth, and providing providing

and Let me Credit recently billion came which merger lender advantages the in sole private the announced of believe IT sector. Capital, a credit top-tier the platform Mountain recent combination play. Blackstone walk New through from us lenders. other number We health led transaction of a of of in expertise Virgin by into deep our differentiated a was the $X Pulse sponsor HealthComp we with factors care

ability the financing, our and levels one-stop across structure. various solution scale committed the of a Our commitment of entire Blackstone the structure. large XXX% deliver Credit to capital to for a capital

matters, scale only or a in where sponsor or call X really a is confidentiality where is situation This critical, X can partners. especially when

We a have Mountain portfolio companies. an of lend and existing to the New excellent sponsor, relationship Capital, number with

with New addition, In has the a Mountain broader firm. across Blackstone relationship

credit their lender we doesn't broadly credit and talk Virgin We us to our lender Prior in private is their lead knew loan. our existing example to added this relationship for portfolio, were existing well individually strong presents both we and which Pulse were the is about this our on them. companies merits merger. liquid platform. like to our conviction every that syndicated and HealthComp private existing with side the also to our an with mean across liquid we great and to While them. We deal incumbency, work deal, and opportunities a and lead leveraging credit closely

value to HealthComp. private a grow has longer Credit combined to no believe the the just was X HealthComp, opportunities assist who Credit particularly We broader last are to but to a cross-sell years creation portfolio. on our also has value. This us demonstrated been across a company, Blackstone value-added value-added the multiple program we pull truly during Finally, lender aims equity the potential Blackstone as help levers differentiate to Blackstone capabilities when lender partner

already for procurement yielded example not partner. million in with also our Credit care believe this health We our in the to a this first approximately results, of portfolio, team, company. And on the project. the Blackstone we another a and worked but improved stage for engagement procurement savings of firm-wide professionalize project BXSL's instance value-added XX% value borrower project has of services function a company As prepare creation $XX being the financial only as the another this view helped know,

set Parallel among as BXSL returns of the borrower us allows on to which on are highly to pass ratios experience. structures, focused investors. lowest quarter, end second the experience, our our of debt of fee we the cost shareholder has our expense peer of and more to

owed XXX% and results are over our that BXSL to important attractive complement BXSL. to believe distinction, I'll are our strong of We points ones strengthen that, our investors. And of to for risk-adjusted drive deal it turn fees returns paid to Additionally, Teddy. to with these continue ability

on our quarter, net Carlos. I'll you, investment XX. In Thank results $X.XX the was million per start operating or BXSL's share. third $XXX income with Slide

a $X.XX income. GAAP depreciation less year-over-year, $XX primarily by of and per million represents share rates. up unrealized of income higher interest or income XX% $XX from total ago, $X.XX million this X% income investment remained year-over-year, net driven income Our part than or share, flat increased the quarter driven or due total by was Payment-in-kind was investment net to in in million $XXX quarter. year per up PIK

equity. per investment a share represents $X.XX net on return of income XX.X% Our annualized yield

our remains excluding Importantly, income, quality payment-in-kind, investment high, and represents nonrecurring as PIK, Brad of total mentioned, fees the in fee-driven the dividends of with limited third our and earnings income quarter. Interest income. XX%

This for $X.X XX. rate loans fair are of a to compares rise. of total portfolio floating We weighted between fixed lower That X.X%. with XX.X%. the floating assets spread if company average sheet with weighted rate $X billion quarter rate ended with our cost rates value average of to earnings billion outstanding continue than less the of just yield which growth to with investments, Turning balance of Slide potential debt on over our additional a liabilities XX.X% cost, at mostly and provides

in result dividend in As up earnings our third last share NAV to of quarter, a increased $XX.XX, from quarter. of excess per strong $XX.XX the

the our ended this approximately of fund X.XXx was us and includes outlook These key ending We was cushion. attractive Slide outlines of provides bonds. We environment. expect balance BXSL quarter believe X%, the and coupon which debt pipeline Next, a as this advantage an BDC borrow. drawn on the we Moody's. We rising remain leverage to and Average positive a XX the we fixed listed maintained weighted our to undrawn of and which by to less credit in our target XX% than with X.Xx. in billion bonds in investment-grade $X.X receive the improved over profile, activity, diverse available year. to liability corporate liquidity within debt have quarter of unsecured through leverage unsecured and flexibility view cash average rate X stable was first ratings, X.XXx to from Based of significant our X would with

an Additionally, years. weighted our maturity any we debt outstanding date X% next few overall facilities XXXX, next low the maturing average The the next have X maturities with level maturity of years for years. of in debt X.X and of debt only within of over

debt positioned maintain We believe as rate is have on dividends floating to reset higher. of continued rates our BXSL continue investments excess to to in well XX.X% earnings

market, portfolio direct senior We've learned and cycles positioning, Blackstone and management. benefits and to direct dry portfolio opportunity unique a earnings Blackstone key believe cycle. Today, and asset defensive large we resources power managers regular deploy may of portfolio of drive managing team science independent set Brad this backed portfolio rolling the across result and of our includes along our history proactive unique individuals, is to rate this higher quantitative have deployed for investors, up more established lessons "outpacing" which growth early that broader we insights a companies. In XX with continued at borrowers. to which ample mentioned, be lending all and lending low-cost and our applied differentiation Investment deploys As ago, positive Office powder enhance reunderwriting, years on in processes elevated financing remain data earnings specialized legal end, that into data investment intervention portfolio over that with sources, Chief the process also And from open up and floating and John to for screens to several debt supports company's and driver to through company a and pressure brings an to to an XX advantage, assets is ultimately yield early insights healthy will platform capital. With resources built while outlook, it Blackstone dedicated to questions. from sourcing, I'll leveraging have financial resources ask aimed portfolios. expertise, outcomes intervention operator nearly our We it resources and investors' management positive of protect years basis conclusion, through to restructuring about Blackstone's that, We established and be for management. watch process infrastructure list, across review for to a culture for encourages we and deem operational premier our on given a ultimately the management across providing by

first [Operator O'Shea with to Fargo. Wells go Finian Instructions] We'll

week fee lapse the anniversary pursuant Did question. housekeeping the waiver so? a or Just last to X-year

is Yes, ended Fin, waiver Yes, XXXX. of fee this Ted. October the XX

on range, year, come that this has question Great. you some on it's obviously Brad, it's leverage. Okay. still a your And and but mentioned impact down an target within returns.

how pipeline the a as come we the see real market expect see if or could we this feel that. it you we're So need about come back And you low today. end if to seeing see to off

Thanks, Fin.

so. In fourth comments. on with saw up all companies probably more The that's million follow being the of think whether Blackstone overall portfolio pipeline financings, do looking busiest and M&A in to quarter to $XXX it's picked quarter, commitments our the whether just quite or standpoint, from bit active a third things, my indicative it's credit existing that recapitalization. you but bit, market, pipeline seen a Just is it I the we've And an year. of little also add-on just more the

would range. the thing, which never a I So deals, time is tricky perfectly you we is give can which expect, why Fin, always

towards us we could get year, see we As the than end little are of bit the get higher you a today. where

anyone Awesome. if third, for I was came in relief? appreciated covenant I -- curious relief. could pick from that amendments or on or I sneak color the And none which a John's asked covenant if pick

No, Fin, they didn't.

We'll to go Raymond with James. Robert Dodd next

was QX your than fundings Can was give commitments was Congrats that to should there? you last -- going any back On quarter. us expect the can start mean are people that looking kind recurring much the that of us making to between normal. any I on we more setting of to if color you forward? that substantial the give financing and on color the spread the we what first? up pipeline in Brad, for to commitments gap large DDTLs and the versus point, look reason And the over Or instead be the multiple acquisitions on quarters,

Just timing.

So actually, in a already handful the those of have quarter. fourth funded

XX So these commitments close. of end just usually takes XX to third deals to the quarter. days towards the some for made It the we of

that's that's number, So the all, in Robert. the gap

all on coming whole you've terms lien, lower first obviously, leverage your the expect on look changes mean, rates a not take then you're we structured is doing or risk at maybe you in the mean, the some deals stack as market of how kind where getting it. willing to seeing obviously, being Got next being more they versus, focus, do we to maybe some in And whatever is, first first leverage see maintained lien to rates mean, than elevated? with expect you're you Because who's it if rates some tranches, or year, the of I more next the large as I so bit to willing in behind Xx of year, with shift in a done elevated do? I do with it's if lien, somebody are time to structural it's as kind of of terms Xx of go through active of of

Yes.

now to companies that are in debt point set out, up seeing service expense, leverage because with right their with appropriately. higher to being you're less order You're interest

that the quarter. bit a saw you So little in

mid-XXs. which average versus was of in Our LTV, is XX.X% the kind loan-to-value historical our

cases, you're pointed equity seeing in sponsor fund in kind on you're the the of senior is piece to help these this environment glad behind you leverage and So preferred come this better you're because companies get companies less a But -- lower rates. out primarily of excited But seeing in put seeing some I'm of in get we seeing equity And some less yes, with more put also return, transactions. you're loan-to-value. more debt about leverage. base is, order yield, what so to because it's market

get most it. in classes. kind a actually going our of very it we less will about to take portfolio risk this market don't return more So risk to forward is because need And of return other lot asset relative drive to how construction and think attractive you a

to Ken next go with RBC. Lee We'll

Credit one the about the time think on Just based the portfolio platform. or How you changes originations over implications integration. of Blackstone potential integration in mix of the the on insurance and do potential

question, the appreciate So Ken.

very more these corporates, for capital focused corporate simple out with construction. much when has them with does day, end team structure. the at sponsors, to to structure, we're portfolio more us, a What more we're do we're the facing because us credit, we in to think of it relevant junior a what we clients, it don't bigger So implications asset-based an do clients top kind continue more exposure that secured strategy, I of for solutions. BXSL but be facility, to capital is any something the gives senior will of the on offering more can because it exposure can

integration. people, of the scale, connectivity, and We resources, have points more BXCI of power that's the more more more

our to multiple end As expanding, private solutions the clients. you asset can more will become look at managers relevant that credit provide those class

one helpful you. And Got I there. Very follow-up, if may. just

terms talk In trends seeing been investments, activity bit if terms, deal deal docs, of about Just terms you more some of any changes the newer terms you're protection? of the there's of could of little in there. some in a that wondering just recent

little of I rates earlier, the say a the would over attribute little which I the down I are which of as higher leverage, more to bit for is couple with and structures things. look to saying has will gone stay have capital in in have was set a going a are course that what come they're day. a come Spreads we trade -- all less longer, spreads take Well, But therefore, bit, risk like up year. being that

they markets The again. little open were trend. now, briefly maybe one that's So public feel shaky bit a

leverage as gives a So remarks. the docs, his more it negotiating of lot prepared us relates one highlighted that in to larger deals, which especially for Carlos

a level documentation So risk and of say, very, large, and by return from from a I for standpoint. would both it's attractive, a very

We'll with KBW. go to next Paul Johnson

market is private that on -- the I last guys -- I I CLO seeing guess, threaten Or that a a adding I you of addition that mean, long can to kind that would to predicated think little bit think market sustained probably how what today? what that, keep guys I returning? of today you start I up all question, guess guess, are kind to the you long, what's on little in think it bit? can be you do it terms the do that how market? in mean, on the going I is Ken's mean, mean, Just

look finance market, million started little trillion. market leverage grown over when what, to we a has you from, little $X Private $X trillion. a the over U.S. if $XX it's at Listen,

were a We market runway the lot expect attractive that there's of a And wide is issuers, that regardless looking largest some looking flexibility. that were the more public was for they were looking solution closed, open. sponsors were XXXX under premise of solution for the for certainty, the evidence much them. more best open the private for for or is when public whether private And was, markets credit period they privacy, growth the for

bullish private So trends we're the of credit. on very long-term

most earlier -- that's But it's Now around driving will coming a private of on bit. not little spreads, through getting move spreads credit, now base to it's comments rates. spread in in right returns my it's increase

will our so base your higher. think how the predicated be private on rates returns will view rates long and credit on in view stay interest And we or

that is view Our they'll is around trend a stay longer, higher actually good. move they but may for little bit, quite long-term

and not very deal environment. market for this flow, the there So those can rely rate just should opportunity M&A is create stay market, robust on who returns the in investors

And the kind last your that. because question, case, across companies. curious decent one. I'm of more much one amount general just is well. as And sector a just Appreciate it's software-related of has but portfolio It's a the pretty this

the the game in I'm be there just guess, be a way, some evolution an proliferates curious it your companies parts mean could to AI, terms big of would I in -- changer sector. positive I it of that of seem if and both and software of But seems could maybe cannibalize a negative your thoughts a of for opportunity

So on curious, guys I'm of changes, thoughts just software the I of have any mean, underwriting that guess, technology broader you how sector? the kind story I

our of is conversation. the charge Blackstone leading has that I part been X-hour that AI, AI, in What a understanding process. integrating is, terms say of using investment will So

new is this kind So because not new this everyone months it to of be X -- may of past it to ChatGPT, kind well, Blackstone. of on over the call to X

decision-making, been not impactful. has So and our to be going every in has impactful AI to where and its we've it's be this underwriting applications space, going the and it's done forefront AI at of where that

having have portfolio answer it a to will on implications issues about But So selected it the don't right, the space. answer in We market. X-hour the we parts is, shorter you're we that the this lot. see it of think in

We'll go next with JPMorgan. to Melissa Wedel

to one comments the on the from of prepared remarks. follow up wanted I

in about I dispersion Brad, expecting think were was talking you it the market. some

longer on and put that pressure could to that the for higher of sort I was environment think related the credit.

Just hoping to view you the in. expect on could cycle elaborate on evolve, that, add and if credit could it a that doesn't you you how incorporate

are higher to the economy. slow So down rates meant

obviously health it it you're of consume rates of so people's top on then flows. impact more pressure And a X so earnings on some you're cash correlated potential puts higher cash, has of going portfolios. have the more to One, bit secondly, And if to overall little the economy, areas line pressure.

our So that higher to bit meant driver the slowness. cause of of -- behind kind that remarks are rates a that little is

were of really So rate most -- rates, lag this that of because about the feel we'll year impact think higher because interest on this you the because year of full kind next haven't of this as hedges, where just year. I of rates seen

to about lot you next going in it's of generate as think sectors that be a year, So don't typically felt cash.

an because diversity that has may business. means in that a could probably talent of management. capital has it business maybe have more So be smaller -- intensive, It customer they're manufacturing senior revenue, concentration, less higher industrial, its less just

more structure in up will of So we capital older the vintage, in tail, the further which And tails the in system of a the size course, by be, stress about the you're layer driven business. think will protected you the your the you in focus of the talked will and John portfolios. of become be kind sectors better are, then,

next make company bit, So a was won't struggling little year if any the already easier. it

dispersion, drive driving as the that's the scale. which portfolio. will talk Those that's was comments. of internally, my when building it So BXSL of being really and the that Melissa, the we performance and Ss, we're sectors factors us kind when for about And driver and we X talk that's seniority, about

Thanks, up seen pretty and been space have you has manageable, to far nonaccruals, restructurings. about seems terms expect what's Brad. like -- you do Could any some of what you see the we've in defaults across thoughts broader so come and

you that about, the expecting some or nature, sort in certain weakening businesses, if just one-off the a smaller perhaps of sectors? you to continue line capital-intensive to talked if you're of broad wonder Just be along that things of sort expect more

at Well, we is say doing, What I crystal is, too. how ball. have else I and look would a everyone don't

bit how probably think I their year this little have everyone well portfolios is surprised done. a

uptick nonaccruals. big haven't seen You a in

year, And nonexistent. I see growth quite gave and of market, some next touching Teddy housing some subsectors you is industrial strong. of X.X care rates stats think on our in almost in market the is year-over-year actually so say our I nonaccrual default retail, could would manufacturing, of up kind the tick health which and companies, consumer. anything obviously, in portfolio something in earnings portfolio,

X% that composition, rates, that stats of there and answer sure portfolio kind have is there's think, default I'm I question. for So out I would maybe or and say you will, to at look people's market better so. have others which your JPMorgan

comes will may say of really I've by areas heard another But use. mentioned. kind others year more it these could really, that I've be and that down dispersion this, be So number to, you driven next

with Instructions]. Truist. [Operator next We'll go Hughes to Mark

Just rates will following are higher down the slow you think that, Do that interest mentioned work? that the up on you meant economy. to

work. It's kind labor started a change do you've -- of I it see to in think Yes, will market. the

to the So higher you're of effects starting rates. see

impact the on and companies much spend portfolio to in growth. on it see You how they excess capital have

has have the a yes, keep but to on how of elevated, long it desired will impact hoping whether that little starting that how it is certainly what's they think full debatable Fed have long depend rates So and is the that impact, slowly will I all effect, is the how an desired bit deep.

come a bit, to I deal that have but think, you, You largely little attributed the mentioned spreads in to structure.

equities, there's you from that? lot insulated Is do you competitive more felt a have of think powder lot there powder dry -- been you're Or think still There's among You private pressure. direct but amongst dry that? a presumably of lenders?

No.

deals the surprising not company might they open those in for structure, deals say, a than there's fair end I a the a lower like, little haven't more we market, tend taking public of the for deals. for that been it's those leverage, which half and actually what bit so, kind competitive markets but deals to just other how if ultimately spreads large have a -- think a been would deals of of are leveraged are less and I And -- is amount have in less of been a some priced, are market. Again, a getting turn quite terms the and discipline turn,

allow contrast be a That the there's lot dynamic So customize capital is mentioned the of million market a of us middle and the lower write a to entrants. can a new We were competitive pieces new for we structure that capital can them with smaller lender. set because right grow, $XXX by solution billion. been more deal. Carlos That's all that good the sole may the up deal $X.X because sponsor it ticket. to really you for They with raised

depend market really and to deal. will on it where So created, how was of comes the size that the deal it

Cyganovich We'll from Arren Citi. with take final our question

levels. talk conversations the equity whether little bit sponsors not you kind accept of equity, where environment about them or different you expected starting down see to where in, with and a could valuations they what and maybe the Is get Maybe we're point? to now of market? matter needed will lower previously it folks in that And a time necessarily less be to are volatility just a to little

have will valuations to Yes, come down.

done. get deals You're that seeing new in

in of I year. think they're the half turns second probably the X in by

lot equity little the and I from So to get a up. that and coming our bit from bid-ask A of right Arren, just I out, now, -- closer force think will as it's them existing of it through deal portfolio. picking We'll we're But is their maybe accelerate flow point and coming funds another X, you X of that have transact, think view. the different private together. I kind always just structures sellers. a our away months buyers acceleration

and companies, and So just to taking private coming what's deal it's year, -- accelerate. you'll M&A, looking so incumbency the together, activity to do you'll on necessarily see flow platform for closer driving I now. start that that's we're from versus it's bid-ask not private or this our whether public from new think whether see next But our investments, a deal they're acquisitions do right

back or to I'd the Ms. Wang, to over any for like call That turn will our session. conclude question-and-answer closing remarks. additional

speaking That look today. forward everyone. Thanks, great thank questions. everyone, all and quarter. We our the to wrap call you you for would for to you, Thank next us, up joining for

Goodbye.