Release Date: March 07, 2025
For the complete transcript of the earnings call, please refer to the full earnings call transcript.
Q: Stuart, do you think there's scope for spreads to widen given the current market uncertainties? A: (Stuart Aronson, CEO) Spreads were stable in Q4 and remain so at the start of 2025. Despite market uncertainties, we haven't seen upward pressure on spreads. A larger economic disruption or a resumption of M&A flow could change this, but currently, the supply-demand balance doesn't support increased pricing.
Q: With the uptick in non-accruals, what's the strategy for mitigating credit quality pressure? A: (Stuart Aronson, CEO) We're focusing on first lien investments to mitigate non-accrual pressures. We're working to resolve issues with specific investments like Telestream. We're also cautious about tariff risks and ensuring debt service coverages are reasonable, avoiding cyclicals and overly leveraged deals.
Q: How much of the quarter-over-quarter decline in NII was due to base rates versus credit issues? A: (Joyson Thomas, CFO) The decline in effective yield from 13.1% to 12.5% was largely due to lower base rates, with a slight decrease in spreads. Most of the portfolio resets quarterly, so the impact of base rate changes will continue into Q1.
Q: Could 2025 be a year of deleveraging similar to 2024 given the current market conditions? A: (Stuart Aronson, CEO) Our goal is to maintain target leverage levels. We're focusing on non-sponsor markets to offset repayments and keep the BDC fully invested. Deleveraging would only occur if we can't originate enough to offset repayments, but current Q1 performance is promising.
Q: With significant spillover income, are you reluctant to adjust the dividend in the current spread environment? A: (Stuart Aronson, CEO) We're evaluating the BDC's earning power and the impact of non-accruals on dividend sustainability. The board is actively reviewing payout levels, but as of now, the dividend remains at $0.385 per share.
For the complete transcript of the earnings call, please refer to the full earnings call transcript.
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