Release Date: November 06, 2024
For the complete transcript of the earnings call, please refer to the full earnings call transcript.
Q: Can you explain the decline in portfolio yield this quarter? A: Michael Boyle, President: The yield decline was primarily due to lower base rates, contributing about 38 basis points, and a decrease in spreads on credit assets, contributing about 10 basis points. The most significant factor was a reduction in dividend income, particularly from our aviation investment and joint ventures, which led to a decrease in yield.
Q: How do you view the current pipeline and potential spread compression in the portfolio? A: Michael A Ewald, CEO: We believe most of the spread compression has occurred this year. Currently, there's more bifurcation in spreads based on credit quality. While high-quality credits might see some compression, average deals should maintain stable spreads similar to this quarter.
Q: What is your perspective on the private credit market's yield premium compared to syndicated markets, especially internationally? A: Michael A Ewald, CEO: In the U.S., there's a 100-200 basis points spread between private credit and syndicated loans. In Europe, the markets are less developed, making direct comparisons difficult. However, spreads are similar, but Europe sees more demand for payment-in-kind (PIK) options, affecting relative value.
Q: Can you elaborate on the increase in companies rated three and four in your credit scoring? A: Michael Boyle, President: The increase is due to idiosyncratic issues rather than a specific industry trend. These companies are on our watch list for underperformance but are not necessarily on non-accrual status.
Q: What drove the realized gain in the portfolio this quarter? A: Michael Boyle, President: The gain was primarily from the exit of an investment in Blackbrush, which was restructured during COVID. We completed the sale above par value, resulting in a realized gain.
Q: How do you plan to address the USD300 million bonds maturing in early 2026? A: Amit Joshi, CFO: We plan to access the market in 2025 to manage these maturities. We are in continuous dialogue with our banking partners and have increased our revolving facility to manage liabilities prudently.
For the complete transcript of the earnings call, please refer to the full earnings call transcript.
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