Ares Capital Corp (ARCC) 2023 Q2 法說會逐字稿

Good morning. Welcome to Ares Capital Corporation's Second Quarter June 30, 2023 Earnings Conference Call. (Operator Instructions) As a reminder, this conference is being recorded on Tuesday, July 25, 2023. I will now turn the call over to Mr. John Stilmar, Managing Director of Ares Investor Relations.

早上好。歡迎參加 Ares Capital Corporation 於 2023 年 6 月 30 日舉行的第二季度收益電話會議。 （操作員說明）謹此提醒，本次會議將於 2023 年 7 月 25 日星期二進行錄製。我現在將電話轉給 Ares 投資者關係董事總經理 John Stilmar 先生。

Thank you very much. Let me start with some important reminders. Comments made during the course of this conference call and webcast as well as the accompanying documents contain forward-looking statements and are subject to risks and uncertainties. The company's actual results could differ materially from those expressed in such forward-looking statements for any reason, including those listed in its SEC filings. Various Capital Corporation assumes no obligation to update any such forward-looking statements. Please also note that past performance or market information is not a guarantee of future results.

非常感謝。讓我從一些重要的提醒開始。本次電話會議和網絡直播期間發表的評論以及隨附文件包含前瞻性陳述，並存在風險和不確定性。該公司的實際結果可能出於任何原因與此類前瞻性聲明中表達的結果存在重大差異，包括其向美國證券交易委員會提交的文件中列出的結果。各種資本公司不承擔更新任何此類前瞻性陳述的義務。另請注意，過去的表現或市場信息並不能保證未來的結果。

During this conference call, the company may discuss certain non-GAAP measures as defined by SEC Regulation G, such as core earnings per share or core EPS. The company believes that core EPS provides useful information to investors regarding financial performance because it is one method the company uses to measure its financial condition and results of operation. A reconciliation of GAAP net income per share, the most directly comparable GAAP financial measure to core EPS can be found in the accompanying slide presentation for this call. In addition, reconciliation of these measures may also be found in our earnings release filed this morning with the SEC on Form 8-K.

在本次電話會議期間，公司可能會討論 SEC G 條例定義的某些非 GAAP 指標，例如核心每股收益或核心每股收益。該公司認為，核心每股收益為投資者提供了有關財務業績的有用信息，因為它是公司用來衡量其財務狀況和經營業績的一種方法。 GAAP 每股淨利潤的調節表是與核心每股收益最直接可比的 GAAP 財務指標，可在本次電話會議隨附的幻燈片演示中找到。此外，這些措施的協調也可以在我們今天早上向 SEC 提交的 8-K 表格收益報告中找到。

Certain information discussed in this conference call and the accompanying slide presentation, including information relating to portfolio companies, was derived from third-party sources and has not been independently verified. And accordingly, the company makes no such representations or warranties with respect to this information. The company's second quarter ended June 30, 2020, earnings presentation can be found on the company's website at www.arescapitalcorp.com by clicking on the Second Quarter 2023 Earnings Presentation link on the homepage of the Investor Resources section of our website. [Penni's] Capital Corporation's earnings release and Form 10-Q are also available on the company's website. I'll now turn the call over to Mr. Kip DeVeer, Ares Capital Corporation's Chief Executive Officer.

本次電話會議和隨附的幻燈片演示中討論的某些信息（包括與投資組合公司相關的信息）來自第三方來源，未經獨立核實。因此，公司對此信息不作任何此類陳述或保證。該公司截至 2020 年 6 月 30 日的第二季度收益報告可在公司網站 www.arescapitalcorp.com 上找到，只需點擊我們網站投資者資源部分主頁上的 2023 年第二季度收益報告鏈接即可。 [Penni's] Capital Corporation 的收益報告和 10-Q 表格也可在該公司網站上獲取。現在我將把電話轉給 Ares Capital Corporation 首席執行官 Kip DeVeer 先生。

Hello, everyone, and thanks for joining our earnings call today. I'm here with our Co-President, Mitch Goldstein and Kort Schnabel, our Chief Financial Officer, Penni Roll; our Chief Operating Officer, Jana Markowitz and other members of the management team. I'd like to start by highlighting our second quarter results, and I'll follow that with some thoughts on the economic environment and the current market. This morning, we reported strong second quarter results. Our core earnings per share of $0.58 increased 26% year-over-year, primarily driven by the benefit of higher interest rates on new and existing investments. Our GAAP earnings per share for the quarter were $0.61, driven by our strong core earnings and a modest increase in the overall value of our investment portfolio.

大家好，感謝您參加今天的財報電話會議。我和我們的聯席總裁米奇·戈德斯坦 (Mitch Goldstein) 以及我們的首席財務官科特·施納貝爾 (Kort Schnabel) 一起來到這裡。我們的首席運營官 Jana Markowitz 和管理團隊的其他成員。我想首先強調我們第二季度的業績，然後我將談談對經濟環境和當前市場的一些想法。今天早上，我們報告了強勁的第二季度業績。我們的每股核心收益為 0.58 美元，同比增長 26%，這主要是受到新投資和現有投資利率上升的推動。我們本季度的 GAAP 每股收益為 0.61 美元，這得益於我們強勁的核心收益和投資組合整體價值的小幅增長。

These results led to another quarter of sequential growth in our net asset value per share to $18.58. We are pleased with these results, and we think it's important to put them into context of what we're seeing in the broader credit markets. Over the past 2 decades, direct lenders have demonstrated their ability to be a stable source of capital, supporting the growth of U.S. companies, even when bank and syndicated capital markets are volatile and hard to access. More recently, this trend has accelerated and direct lenders such as areas have stepped in to fill the void. Although second quarter transaction activity remains slower than recent history, it picked up compared to the first quarter and the firming tone of the capital markets is an important step towards greater M&A deal activity.

這些結果導致我們的每股淨資產值又連續增長一個季度，達到 18.58 美元。我們對這些結果感到滿意，我們認為將它們與我們在更廣泛的信貸市場中看到的情況結合起來很重要。在過去的 20 年裡，直接貸款機構已經證明了它們有能力成為穩定的資本來源，支持美國公司的發展，即使在銀行和銀團資本市場波動且難以進入的情況下也是如此。最近，這種趨勢有所加速，地區等直接貸款機構已介入以填補空白。儘管第二季度交易活動仍低於近期歷史記錄，但與第一季度相比有所回升，資本市場的堅挺基調是邁向更大併購交易活動的重要一步。

Importantly, we are seeing direct lenders gain significant share as 85% of new issue LBO financing in the U.S. was completed by direct lenders. In less volatile market, this percentage would typically be lower and transactions, particularly the large deals would be more heavily weighted towards the broadly syndicated bank loan and high-yield markets. Direct lending also continues to be increasingly active away from the LBO market as direct lenders completed 1.5x as many non-buyout financings as the broadly syndicated market during the second quarter, according to data by LCD. As it relates to our business, the number of deals we reviewed in the second quarter increased 20% over the first quarter.

重要的是，我們看到直接貸款人獲得了顯著的份額，因為美國 85% 的新發行槓桿收購融資是由直接貸款人完成的。在波動性較小的市場中，這一百分比通常會較低，並且交易（尤其是大型交易）將更傾向於廣泛的銀團貸款和高收益市場。 LCD 的數據顯示，槓桿收購市場以外的直接貸款也繼續變得越來越活躍，第二季度直接貸款機構完成的非收購融資數量是廣泛銀團市場的 1.5 倍。與我們的業務相關，我們第二季度審查的交易數量比第一季度增加了 20%。

This includes certain incumbent portfolio companies seeking incremental financing opportunities, which provides us with a steady source of differentiated originations. Overall, we're sourcing many compelling transactions, and we are cautiously optimistic that a recent pickup in activity will translate into a higher level of closed transactions. During the second quarter, market pricing and terms continue to be highly attractive as it relates to our new deals. (inaudible) in our new loans are well above historical averages, Leverage levels are lower and equity contributions are higher. Similar to the existing portfolio, most of our new investments are floating rate deals that benefit from higher base rates.

這包括某些尋求增量融資機會的現有投資組合公司，這為我們提供了穩定的差異化來源。總體而言，我們正在尋找許多引人注目的交易，並且我們謹慎樂觀地認為，近期活動的回升將轉化為更高水平的已完成交易。在第二季度，市場定價和條款繼續極具吸引力，因為這與我們的新交易有關。 （聽不清）我們的新貸款遠高於歷史平均水平，槓桿水平較低，股權貢獻較高。與現有投資組合類似，我們的大多數新投資都是浮動利率交易，受益於更高的基本利率。

Market data provided by LCD underscores our view that the current vintage buyout transactions has the highest level of equity support of any time in history. At the same time, the risk-adjusted returns in our lending business are historically very attractive as spread per unit of leverage, which measures returns relative to risk are 15% better than the 10-year average. We believe the current vintage ranked as one of the best for our lending business in the past 10 years.

LCD 提供的市場數據強調了我們的觀點，即當前的老式收購交易擁有歷史上最高水平的股權支持。與此同時，我們的貸款業務的風險調整回報在歷史上非常有吸引力，因為每單位槓桿的利差（衡量相對於風險的回報）比 10 年平均水平高 15%。我們相信當前的年份是過去十年來我們貸款業務最好的年份之一。

Within this attractive and growing market, we continue to enhance our leading market position. We believe our large and long tenured U.S. direct lending team of 170 investment professionals, delivers a compelling brand in the market, and this provides us with many intangible benefits, particularly in sourcing. Given the impact of our participation and the value we add in transactions, we believe we sometimes get more looks on new opportunities and have an ability to negotiate preferred terms with our counterparties. In recent periods, we have taken additional steps to further support our sourcing and credit advantages, expanding on our extensive sponsor and nonsponsor coverage over the past 5 to 10 years, we've continued to develop a significant amount of industry expertise, specifically in software and technology, specialty health care, financial services, infrastructure and power, and sports, media and entertainment to name a few.

在這個有吸引力且不斷增長的市場中，我們不斷增強我們的領先市場地位。我們相信，我們由 170 名投資專業人士組成的大型且長期任職的美國直接貸款團隊在市場上打造了一個引人注目的品牌，這為我們帶來了許多無形的好處，特別是在採購方面。考慮到我們參與的影響以及我們在交易中增加的價值，我們相信有時我們會更多地關注新機會，並有能力與交易對手協商優惠條款。最近一段時間，我們採取了額外的措施來進一步支持我們的採購和信貸優勢，擴大了我們在過去 5 到 10 年中廣泛的讚助商和非贊助商覆蓋範圍，我們繼續發展大量的行業專業知識，特別是在軟件方面和技術、專業醫療保健、金融服務、基礎設施和電力、體育、媒體和娛樂等等。

More recently, we formalized the industry specializations creating 8 dedicated industry teams and enhance the significant sponsor and non-sponsored coverage that we enjoy today. We believe that formalizing these teams has further contributed to the strength of our process and our risk management capabilities and made us an even more compelling partner for sponsors and for portfolio companies. Despite companies dealing with higher borrowing costs, we believe corporate fundamentals remain solid, perhaps stronger than we would have expected. Our portfolio companies continued to perform well, and we see no evidence of what many believe is an imminent recession.

最近，我們正式確定了行業專業化，創建了 8 個專門的行業團隊，並增強了我們今天享有的重要贊助商和非贊助商的覆蓋範圍。我們相信，這些團隊的正規化進一步增強了我們的流程優勢和風險管理能力，並使我們成為贊助商和投資組合公司更具吸引力的合作夥伴。儘管企業面臨較高的借貸成本，但我們認為企業基本面仍然穩固，或許比我們預期的要強。我們的投資組合公司繼續表現良好，我們沒有看到許多人認為的經濟衰退即將到來的跡象。

Credit quality has been stable and inflationary pressures have begun to show some easing. Our weighted average portfolio grade is flat quarter-over-quarter and slightly better than our 15-year average. Our non-accruals at cost decreased slightly and remain well below our own and BDC averages over the past 15 years. Despite the constructive view that we maintain on the economy and the portfolio, we are paying particular attention to the cash flows at our portfolio companies.

信貸質量穩定，通脹壓力開始有所緩解。我們的加權平均投資組合評級環比持平，略好於 15 年平均水平。我們的非應計成本略有下降，仍遠低於我們自己和 BDC 過去 15 年的平均水平。儘管我們對經濟和投資組合保持建設性看法，但我們特別關注投資組合公司的現金流。

EBITDA continues to grow nicely, as Kort will describe, and our portfolio interest coverage ratio remained relatively stable quarter-over-quarter. While some market participants are calculating interest coverage ratio test using actual interest expense over the past 12 months, which we don't necessarily think is particularly relevant we calculate the ratio using pro forma annual interest expense using market rates at quarter end. If we instead did the calculation using the actual interest expense over the past 12 months, our portfolio interest coverage ratio would have been 30% higher for the second quarter or approximately 2.1x.

正如 Kort 所描述的那樣，EBITDA 繼續保持良好增長，並且我們的投資組合利息覆蓋率環比保持相對穩定。雖然一些市場參與者使用過去 12 個月的實際利息支出來計算利息覆蓋率測試，但我們認為這不一定特別相關，但我們使用季末市場利率的預計年度利息支出來計算該比率。如果我們使用過去 12 個月的實際利息支出進行計算，我們第二季度的投資組合利息覆蓋率將高出 30%，即大約 2.1 倍。

The loan-to-value in our portfolio continues to be conservative and at quarter end, we estimate it to be around 43%. There's significant invested capital and value beneath us in most capital structures, a lot of it supplied by large and well-established private equity firms with whom we have great relationships and do repeat business. We continue to believe that a lot of the focus should and will be on the behavior of our partners who own the equity in these businesses, and we would expect solutions for companies needing assistance to come from a partnership approach between lenders and these partners [if history is] any indication.

我們投資組合中的貸款價值比仍然保守，截至季度末，我們估計約為 43%。在大多數資本結構中，我們都有大量的投資資本和價值，其中很多是由大型、成熟的私募股權公司提供的，我們與這些公司有著良好的關係並有重複的業務。我們仍然認為，很多重點應該而且將會集中在擁有這些企業股權的合作夥伴的行為上，我們預計需要援助的公司的解決方案來自貸款人和這些合作夥伴之間的合作夥伴關係[如果歷史是]任何跡象。

So as a result of these dynamics in the company's overall performance, feel confident about the results we were able to deliver for the second quarter and our competitive positioning going forward. With that, let me turn the call over to Penni to provide more details on our results and our strong balance sheet position.

因此，由於公司整體業績的這些動態，我們對第二季度能夠交付的業績以及我們未來的競爭地位充滿信心。接下來，讓我將電話轉給佩尼，以提供有關我們的業績和強勁的資產負債表狀況的更多詳細信息。

Thanks, Kipp. For the second quarter of 2023, we had core earnings per share of $0.58 compared to $0.57 in the prior quarter and $0.46 in the second quarter of 2022. We continue to see the benefits of higher base rates on our predominantly floating rate portfolio in the second quarter of 2023 as our interest and dividend income increased both from the prior quarter and the second quarter of the prior year.

謝謝，基普。 2023 年第二季度，我們的每股核心收益為 0.58 美元，而上一季度為 0.57 美元，2022 年第二季度為 0.46 美元。我們繼續看到第二季度以浮動利率為主的投資組合提高基本利率的好處2023 年第四季度，我們的利息和股息收入較上一季度和去年第二季度均有所增加。

Our income was bolstered by higher capital structuring fees as compared to the prior quarter despite a generally continued slower origination environment in the quarter. On a GAAP basis, we reported GAAP net income per share of $0.61 for the second quarter of 2023 compared to $0.52 in the prior quarter and $0.22 in the second quarter of 2022. Our higher GAAP net income per share in the second quarter of 2023 benefited from modestly higher portfolio values during the quarter. Our stockholders' equity ended the quarter at nearly $10.4 billion or $18.58 per share, which is an approximate 1% increase in NAV per share over the prior quarter.

儘管本季度的發起環境普遍持續放緩，但與上一季度相比，資本結構費用的增加支撐了我們的收入。按 GAAP 計算，我們報告 2023 年第二季度 GAAP 每股淨利潤為 0.61 美元，上一季度為 0.52 美元，2022 年第二季度為 0.22 美元。2023 年第二季度 GAAP 每股淨利潤較高，受益於此來自本季度適度較高的投資組合價值。本季度末，我們的股東權益接近 104 億美元，即每股 18.58 美元，每股資產淨值比上一季度增長約 1%。

Our annualized return on equity this quarter was greater than 12.5%, whether one measures this on a core or a GAAP basis. This strong level of profitability further builds upon our long-term track record of a 12% GAAP-based annual return on NAV since inception. Our total portfolio at fair value at the end of the quarter was $21.5 billion, up from $21.1 billion at the end of the first quarter, reflecting net fundings from the portfolio. The weighted average yield on our debt and other income-producing securities at amortized cost was 12.2% at June 30, 2023, which increased from 12% at March 31, 2023, and 9.5% at June 30, 2022.

無論是根據核心還是根據 GAAP 衡量，我們本季度的年化股本回報率均超過 12.5%。這種強勁的盈利水平進一步建立在我們自成立以來基於 GAAP 的資產淨值年回報率為 12% 的長期記錄之上。截至本季度末，我們的投資組合公允價值總額為 215 億美元，高於第一季度末的 211 億美元，反映了投資組合的淨資金。截至2023年6月30日，我們的債務和其他創收證券的加權平均收益率為12.2%，高於2023年3月31日的12%和2022年6月30日的9.5%。

The weighted average yield on total investments at amortized cost was 11%, which increased from 10.8% at March 31, 2023, and 8.7% at June 30, 2022. The yields on our portfolio reflect the continued increases in interest rates. Shifting to our capitalization and liquidity we ended the second quarter with a debt-to-equity ratio net of available cash of 1.07x as compared to 1.09x a quarter ago. Our liquidity position remains strong with approximately $4.7 billion of total available liquidity, including available cash. We believe our significant amount of dry powder positions us well to continue to support our existing portfolio commitments to remain active in the current investing environment and to have no refinancing risk with respect to next year's term debt maturities.

按攤餘成本計算的總投資的加權平均收益率為11%，高於2023年3月31日的10.8%和2022年6月30日的8.7%。我們投資組合的收益率反映了利率的持續上升。轉向我們的資本化和流動性，第二季度結束時，扣除可用現金後的債務股本比率為 1.07 倍，而上一季度為 1.09 倍。我們的流動性狀況依然強勁，包括可用現金在內的可用流動性總額約為 47 億美元。我們相信，我們大量的干火藥使我們能夠繼續支持我們現有的投資組合承諾，在當前的投資環境中保持活躍，並且在明年的定期債務到期時不存在再融資風險。

We declared a third quarter 2023 dividend of $0.48 per share, which marks the 56th consecutive quarter of steady or increasing dividends.

我們宣布 2023 年第三季度股息為每股 0.48 美元，這標誌著股息連續第 56 個季度保持穩定或增加。

This dividend is payable on September 29, 2023, to stockholders of record on September 15, 2023, and is consistent with our second quarter 2023 dividend. With that, I would like to turn the call over to Kort to walk through our investment activities for the quarter.

該股息將於 2023 年 9 月 29 日支付給 2023 年 9 月 15 日登記在冊的股東，與我們 2023 年第二季度的股息一致。說到這裡，我想將電話轉給科特，以介紹我們本季度的投資活動。

Thanks, Penni. I'm now going to spend a few minutes providing more details on our investment activity and our portfolio performance and positioning for the second quarter. I will then conclude with an update on our post-quarter-end activity, backlog and pipeline. In the second quarter, we originated $1.2 billion of new investments across 46 different transactions, as broader middle market sponsors and businesses continue to value Ares as a consistent and reliable source of capital.

謝謝，佩妮。我現在將花幾分鐘提供有關我們的投資活動以及第二季度投資組合表現和定位的更多詳細信息。最後，我將介紹我們季度末活動、積壓訂單和渠道的最新情況。第二季度，我們通過 46 項不同的交易發起了 12 億美元的新投資，因為更廣泛的中間市場贊助商和企業繼續將 Ares 視為一致且可靠的資本來源。

Underscoring the breadth of our market coverage, the EBITDA of the portfolio companies we financed during the quarter ranged from below $20 million to over $1 billion, and we were the lead arranger on 77% of the transactions we closed in the second quarter. We believe that our ability to lead transactions is an important benefit of our scale, providing us greater control over capital structures, pricing and documentation and longer term, better tools to drive successful credit outcomes.

我們在本季度融資的投資組合公司的 EBITDA 從低於 2000 萬美元到超過 10 億美元不等，這凸顯了我們市場覆蓋的廣度，而且我們是第二季度完成的 77% 交易的牽頭安排人。我們相信，我們主導交易的能力是我們規模的一個重要優勢，使我們能夠更好地控制資本結構、定價和文件，並提供更長期、更好的工具來推動成功的信貸成果。

We continue to find compelling value in today's market. This is demonstrated by the first lien investments we originated in the quarter, which had a weighted average yield in excess of 11.5% and but leverage of only 4.5x debt-to-EBITDA. Underscoring Kipp's earlier point about the historically attractive relative value, we are able to achieve on our new investments -- the weighted average LTV of our second quarter commitments, including our junior capital investments was below 40%. We also believe the breadth and quality of our incumbent portfolio provides differentiated access to attractive new investment opportunities.

我們繼續在當今市場中尋找令人信服的價值。我們在本季度發起的第一筆留置權投資就證明了這一點，該投資的加權平均收益率超過 11.5%，但債務與 EBITDA 之比僅為 4.5 倍。強調了 Kipp 之前關於歷史上有吸引力的相對價值的觀點，我們能夠實現我們的新投資——我們第二季度承諾的加權平均 LTV（包括我們的初級資本投資）低於 40%。我們還相信，我們現有投資組合的廣度和質量為獲得有吸引力的新投資機會提供了差異化的途徑。

We continue to invest in what we believe are our strongest portfolio companies as over 70% of our transactions during the quarter were to existing borrowers, many of whom are executing tuck-in acquisitions or seeking growth capital and have elected to grow with us as their financing provider of choice. Our portfolio continues to perform well, and we are seeing a lot of stability within our credit metrics. We believe this is largely due to our defensively positioned portfolio in market-leading companies with high free cash flow in resilient industries.

我們繼續投資於我們認為最強大的投資組合公司，因為本季度超過 70% 的交易是針對現有借款人，其中許多人正在執行收購或尋求增長資本，並選擇與我們一起成長作為他們的發展目標。首選融資提供商。我們的投資組合繼續表現良好，並且我們的信用指標非常穩定。我們認為，這主要是由於我們在市場領先的公司中採取防禦性定位的投資組合，這些公司在彈性行業中擁有高自由現金流。

In the second quarter, the weighted average annual EBITDA growth rate of our portfolio companies was a healthy 7%, in line with historical levels, and the weighted average portfolio grade of our borrowers at cost was stable with last quarter at 3.1%. As we have discussed in the past, we are carefully monitoring the impacts of inflation. While our portfolio companies are not immune, the percentage of the portfolio that we estimate to be highly impacted by inflation risk has improved modestly and is now at the lower end of our 5% to 10% range as we are seeing some improvements from supply chain pressures.

第二季度，我們投資組合公司的加權平均年度 EBITDA 增長率為 7%，符合歷史水平，借款人按成本計算的加權平均投資組合等級穩定，上季度為 3.1%。正如我們過去所討論的，我們正在仔細監測通貨膨脹的影響。雖然我們的投資組合公司也未能倖免，但我們估計受通脹風險影響較大的投資組合百分比已略有改善，目前處於 5% 至 10% 範圍的下限，因為我們看到供應鏈有所改善壓力。

All of these factors resulted in our nonaccrual rates continuing to be well below historical levels. Our nonaccruals at fair value improved modestly from 1.3% last quarter to 1.1% this quarter, while our nonaccrual rate at cost also improved from 2.3% last quarter to 2.1% this quarter and remains well below our 3% 15-year historical average and the KBW BDC average of 3.8% for the most recent 15-year period available. Looking forward, we remain confident about the performance of our portfolio, in part due to our disciplined approach to risk management and portfolio diversification, which reduces the single name risk in the portfolio.

所有這些因素導致我們的非應計利率繼續遠低於歷史水平。我們按公允價值計算的非應計費用從上季度的 1.3% 小幅提高到本季度的 1.1%，而按成本計算的非應計費用率也從上季度的 2.3% 提高到本季度的 2.1%，仍然遠低於 3% 的 15 年曆史平均水平和最近 15 年的 KBW BDC 平均值為 3.8%。展望未來，我們對投資組合的表現仍然充滿信心，部分原因是我們嚴格的風險管理和投資組合多元化方法，降低了投資組合中的單一名稱風險。

Our $21.5 billion portfolio at fair value is diversified across 475 different companies and 25 different industries. This means that any single investment accounts for just 0.2% of the portfolio on average. And our largest investment in any single company, excluding SDLP and Ivy Hill is just 2% of the portfolio. We believe we have the greatest level of portfolio diversification of any publicly traded BDC. In addition to the benefits of diversification in our portfolio, there is a meaningful amount of enterprise value beneath us.

我們按公允價值計算的 215 億美元投資組合涵蓋 475 家不同公司和 25 個不同行業。這意味著任何單一投資平均僅佔投資組合的 0.2%。我們對任何單一公司最大的投資（不包括 SDLP 和 Ivy Hill）僅佔投資組合的 2%。我們相信，我們在所有公開交易的 BDC 中擁有最高水平的投資組合多元化。除了我們投資組合多元化的好處之外，我們還擁有大量的企業價值。

The weighted average LTV of our portfolio is 43%, inclusive of our second lien and subordinated investments. On average, these junior capital investments are in meaningfully larger companies in defensive industries and with significant equity capital supporting our positions. At quarter end, our entire junior capital portfolio had a weighted average EBITDA in excess of $400 million and a weighted average LTV of less than 50%. Our compelling junior capital track record, which includes annualized loss rates of less than 20 basis points over our nearly 20-year history, supports our continued strategy of seeking attractive risk-adjusted returns through selective deployment into this asset class.

我們投資組合的加權平均 LTV 為 43%，包括我們的第二留置權和次級投資。平均而言，這些初級資本投資是在防禦性行業中規模較大的公司，並有大量股權資本支持我們的立場。截至季度末，我們整個初級資本投資組合的加權平均 EBITDA 超過 4 億美元，加權平均 LTV 低於 50%。我們令人信服的初級資本業績記錄，包括近 20 年曆史中低於 20 個基點的年化損失率，支持我們通過選擇性部署到該資產類別來尋求有吸引力的風險調整回報的持續戰略。

Finally, I will provide a brief update on our post quarter end investment activity and pipeline. From July 1 through July 19, 2023, we made new investment commitments totaling $211 million, of which $119 million were funded. We exited or were repaid on $118 million of investment commitments. As of July 19, our backlog and pipeline stood at roughly $470 million. Our backlog and pipeline contain investments that are subject to approvals and documentation and may not close or we may sell a portion of these investments post closing. I will now turn the call back over to Kipp for some closing remarks.

最後，我將簡要介紹我們季度末投資活動和渠道的最新情況。從2023年7月1日到7月19日，我們做出了總額2.11億美元的新投資承諾，其中1.19億美元已到位。我們退出或償還了 1.18 億美元的投資承諾。截至 7 月 19 日，我們的積壓訂單和籌措資金約為 4.7 億美元。我們的積壓訂單和管道包含需要獲得批准和文件記錄的投資，可能不會關閉，或者我們可能會在關閉後出售這些投資的一部分。現在我將把電話轉回給基普，讓他發表一些結束語。

Thanks a lot, Kort. In closing, we believe that our portfolio continues to demonstrate strong overall performance, and we are well positioned to navigate any potential future economic challenges. We believe our many long-term competitive investing advantages, the strength of our balance sheet and the defensive positioning of our portfolio should allow us to deliver differentiated performance and attractive risk-adjusted returns for our shareholders. We are hopeful that activity will pick up as volatility subsides and as market participants have a more certain outlook on the direction of interest rates and the economy and we stand ready to capitalize on this highly attractive new investing climate.

非常感謝，科特。最後，我們相信我們的投資組合將繼續展現出強勁的整體業績，並且我們已做好準備應對未來任何潛在的經濟挑戰。我們相信，我們的許多長期競爭性投資優勢、資產負債表的實力以及投資組合的防禦性定位應該使我們能夠為股東提供差異化的業績和有吸引力的風險調整回報。我們希望，隨著波動性的消退以及市場參與者對利率和經濟方向的前景更加確定，經濟活動將會回升，我們隨時準備利用這種極具吸引力的新投資環境。

For Ares Capital, we believe that this is a good time to focus on our diversified portfolio and our sourcing, underwriting credit and portfolio management strengths with a view to delivering strong financial results and a significant level of core earnings from our diversified portfolio. As always, we appreciate you all joining us today. We're happy to open the line now for questions.

對於 Ares Capital 來說，我們認為現在是專注於我們的多元化投資組合以及我們的採購、承銷信貸和投資組合管理優勢的好時機，以期通過我們的多元化投資組合實現強勁的財務業績和高水平的核心收益。一如既往，我們感謝大家今天加入我們。我們很高興現在開通提問熱線。

(Operator Instructions) Our first question comes from the line of Melissa Wedel with JPMorgan.

（操作員說明）我們的第一個問題來自摩根大通的 Melissa Wedel。

I wanted to touch on actually some of the activities that you disclosed in the press release for this -- for 3Q to date noted that I think it was 49% in preferred and fixed rate deals so far in 3Q, which was down, I think, a decent amount from 2Q levels in terms of fixed rate allocation. I was hoping you could just elaborate on that and what you're seeing?

我實際上想談談您在新聞稿中披露的一些活動 - 迄今為止，我認為第三季度迄今為止的優先和固定利率交易為 49%，我認為這一數字有所下降就固定利率分配而言，較第二季度水平相當可觀。我希望你能詳細說明一下你所看到的情況？

Thanks for the question, Melissa. Nothing that for me jumped off the Penni and I and Kort are looking at it. It's one, frankly, single fixed rate, large preferred investment that skews the mix on a pretty small denominator.

謝謝你的提問，梅麗莎。對我來說，佩尼和科特都在關注它。坦率地說，這是一項單一固定利率、大型優先投資，在一個相當小的分母上扭曲了組合。

Yes. The other thing to add maybe to that would be on some of these preferred investments, we actually are able to get warrants and equity upside kickers as well. So the fixed rate component doesn't capture the totality of the return.

是的。另一件需要補充的事情可能是在其中一些優先投資上，我們實際上也可以獲得認股權證和股票上漲推動者。因此，固定利率部分並不能反映全部回報。

Understood. And just as a strategy going forward with the uncertainty of the rate environment are is your willingness to allocate more fixed rate deals sort of increasing? And are you more amenable to requests from borrowers for that?

明白了。正如針對利率環境的不確定性而採取的策略一樣，您分配更多固定利率交易的意願是否有所增加？您是否更願意接受借款人的要求？

Not really. I think (inaudible) just a follow on. I think this is just literally a single circumstance of one negotiated deal with 1 particular company.

並不真地。我認為（聽不清）只是後續。我認為這實際上只是與一家特定公司達成一項談判協議的單一情況。

Our next question comes from the line of Finian O'Shea with Wells Fargo Securities.

我們的下一個問題來自富國銀行證券公司的菲尼安·奧謝 (Finian O'Shea)。

Can you talk about the change at Varagon and what that might mean near or long term for the SDLP ?

您能否談談 Varragon 的變化以及這對 SDLP 的近期或長期意味著什麼？

To be honest, not in a lot of detail and that, that news is pretty new. We're excited -- and then I think our partners at Varagon are feeling good about having a large institution to partner with. My guess is that Man Group is going to want to run Varagon the way it's been run and continue to grow. And I'd expect that, that relationship with them would be unchanged. But since the news is new, I don't really have any confirmation beyond that Fin.

老實說，沒有太多細節，而且這個消息相當新。我們很興奮——而且我認為我們在 Varragon 的合作夥伴對於與一家大型機構合作感到高興。我的猜測是，英仕曼集團將希望按照過去的方式運營 Varragon，並繼續發展。我希望與他們的關係不會改變。但由於這個消息是新的，除了 Fin 之外我還沒有任何確認。

Great. perfectly understandable. Just a follow-up for -- does Ares BDC receive? Or is it interested in allocation from the Ares alternative credit line?

偉大的。完全可以理解。只是後續——Ares BDC 收到了嗎？或者它對阿瑞斯替代信貸額度的分配感興趣？

From that business, for sure. I mean, as we say all the time, we think we're real beneficiaries at the BDC of the breadth of our credit platform here. So -- what we've typically excluded has been what we're doing in Europe for the most part, we really run that stand-alone. But everything else that we're doing in U.S. credit benefits the BDC and alternative credit for sure, can be part of that.

當然，來自那項業務。我的意思是，正如我們一直所說的那樣，我們認為我們是 BDC 信貸平台廣泛性的真正受益者。因此，我們通常排除的是我們在歐洲所做的大部分事情，我們實際上是獨立運營的。但我們在美國信貸方面所做的一切其他事情肯定有利於 BDC 和替代信貸，可以成為其中的一部分。

Our next question comes from Arren Cyganovich with Citi.

我們的下一個問題來自花旗銀行的 Arren Cyganovich。

It sounds like in structures and leverage levels are attractive here. Are you seeing any kind of opening up the of sponsors willingness to invest in what do you think the time frame will be until you start to see deal activity start to increase?

聽起來結構和槓桿水平在這裡很有吸引力。您是否看到贊助商願意投資，您認為在您開始看到交易活動開始增加之前的時間範圍是多少？

That's probably the hardest one Arren. And if you actually ask the senior folks here, I think you get a range of different responses in terms of optimism, pessimism whatever it may be I probably fit somewhere in the middle. I mean, look, we've seen the pipeline pick up a little bit. Specifically, we actually saw the number of deals that we review increased each month during the second quarter, if that's any indication, it's picking up a little bit. But as I said in the prepared remarks, I think different folks have a very different view or at least there's not consensus perhaps around the direction of the economy or the trajectory for rates.

這可能是最難的一個阿倫。如果你真的問這裡的資深人士，我想你會得到一系列不同的回答，包括樂觀、悲觀，無論是什麼，我可能處於中間的某個位置。我的意思是，看，我們已經看到管道有所回升。具體來說，我們實際上看到第二季度每個月審查的交易數量都在增加，如果有任何跡象的話，那就是數量有所增加。但正如我在準備好的發言中所說，我認為不同的人有非常不同的觀點，或者至少在經濟方向或利率軌跡方面尚未達成共識。

Are they going to stay higher for longer. There are going to be rate cuts this year, which I don't think we see on the table anymore early into next year if the economy weakened. So Look, I mean, anecdotally, we're starting to see things pick up, but it's the middle of the summer, it's a really difficult time to gauge that.

他們會在更高的位置保持更長時間嗎？今年將會有降息，我認為如果經濟疲軟，我們不會在明年初再看到降息。所以，聽著，我的意思是，有趣的是，我們開始看到情況有所好轉，但現在是仲夏，這是一個非常難以衡量的時期。

Fair answer. The other question I had was just in terms of funding. You've always had a nice balance between secured and unsecured funding. How are you thinking about funding going forward? You don't really have anything on the unsecured side, I guess coming due until next year.

公平的答案。我的另一個問題是資金方面的。您始終在有擔保和無擔保資金之間取得良好的平衡。您如何考慮未來的融資？你實際上沒有任何無擔保的東西，我猜要到明年才能到期。

I'll turn it to Penni, but I mean I think the answer is we don't really have a change in our view of how we're going to do things, but Penni you should pile on to that general comment, if you'd like to.

我會把它轉給佩尼，但我的意思是，我認為答案是我們對如何做事的看法並沒有真正改變，但佩尼，你應該繼續強調這一一般性評論，如果你願意。

Yes. Yes. I would just say, look, I think it's more of the same. We have a view of having a very solid balance sheet liability structure that shows ladder maturities and a nice mix of secured and unsecured. For the '24 maturities, they're effectively resolved at this point. We have $4.7 billion of liquidity available. We've done a lot to grow the capacity that we have. And therefore, I think there's no refinancing risk going into next year, but we're going to continue to look at the markets. And as we've done in the past, be as opportunistic as we can about thinking about how to access those markets to continue to [fill] out our ladder maturities over time.

是的。是的。我只想說，看，我認為這更像是一樣的。我們希望擁有一個非常穩固的資產負債表負債結構，顯示階梯式到期日以及擔保和無擔保的良好組合。對於 24 年到期的問題，此時已得到有效解決。我們有 47 億美元的可用流動資金。我們已經做了很多工作來提高我們的能力。因此，我認為明年不存在再融資風險，但我們將繼續關注市場。正如我們過去所做的那樣，盡可能地抓住機會，思考如何進入這些市場，以隨著時間的推移繼續[填補]我們的階梯成熟度。

Our next question comes from the line of Ryan Lynch with KBW.

我們的下一個問題來自 Ryan Lynch 與 KBW 的對話。

Following up on the previous question on kind of market activity. I was just curious obviously, there's been a big decline in kind of LBO sponsor activity recently. And I know you said that you're starting to see a little bit of pickup in activity but those are obviously coming off very low levels, very low base.

繼續之前關於市場活動類型的問題。我顯然只是很好奇，最近槓桿收購贊助商活動大幅下降。我知道你說過，你開始看到活動有所回升，但這些活動顯然是從非常低的水平、非常低的基數開始的。

And so my question is, do you think you can see a significant pickup in LBO sponsor activity if base rates stabilize around these levels are a little bit higher. Is that enough to really get sponsors interested just to have that sort of clarity? Or do you think you actually have to have the Fed cutting base rates so that the cost of capital is actually cheaper for some of these deals.

所以我的問題是，如果基本利率穩定在這些水平附近並稍微高一點，您是否認為槓桿收購贊助商活動會顯著增加。僅憑這種清晰度就足以真正引起贊助商的興趣嗎？或者您是否認為實際上必須讓美聯儲削減基本利率，以便其中一些交易的資本成本實際上更便宜。

Yes. I mean, again, I'm not sure that's a hard question. I appreciate the question, Ryan. I mean, I think if seller expectations for where they hope to sell companies to sponsors go down, the current level of rates is probably fine. And then the counterpoint is decreases in rates in 2024, perhaps and beyond, I think, should loosen activity levels up and make it a bit busier.

是的。我的意思是，我再次不確定這是一個難題。我很欣賞這個問題，瑞安。我的意思是，我認為如果賣方對將公司出售給贊助商的期望下降，那麼目前的費率水平可能還不錯。然後，我認為，2024 年以及之後的利率下降可能會放鬆活動水平並使其變得更加繁忙。

But we're seeing folks try to put capital structures together with the current base rates, right? And again, activity is going up from here. But yes, the cost of debt is much, much higher, and you just have to factor that into the model in terms of how you think about buying something right now. And I think that's why everything is sort of slow. You're a period of just feeling things out.

但我們看到人們試圖將資本結構與當前的基本利率結合起來，對嗎？再次，活動從這裡開始增加。但是，是的，債務成本要高得多，你只需根據你現在考慮購買東西的方式將其納入模型即可。我認為這就是為什麼一切都有點慢的原因。你正處在一個只憑感覺去感受的時期。

Yes. I don't think it's an unwillingness on the part of sponsors to invest. I think it's just the uncertainty creating a difficult environment to transact between buyers and sellers. So I do think that the more certainty there is, the higher the likelihood that we're going to see a pickup in transaction activity.

是的。我不認為贊助商不願意投資。我認為這只是不確定性造成了買家和賣家之間的交易環境變得困難。因此，我確實認為確定性越高，交易活動增加的可能性就越大。

Okay. Understood. And then it feels like the economy has been much more resilient than [when] people were expecting, certainly when there are predictions now. 6 and 9 months ago of recession [not concurring] in 2023. But while the overall economy seems to be pretty resilient, I would assume that there are certain sectors that are maybe you guys, whether it's your own portfolio or broadly speaking, are seeing particular weakness.

好的。明白了。然後感覺經濟比人們預期的更有彈性，當然現在有預測。 6 個月和 9 個月前的 2023 年經濟衰退[不同意]。但是，雖然整體經濟似乎相當有彈性，但我認為某些部門可能是你們，無論是你們自己的投資組合還是廣義上來說，都在看到特別弱點。

Are there any sectors that you are more concerned over maybe feeling more weakness in what would otherwise be considered a more resilient economy?

您是否更擔心哪些行業可能在原本被認為更具彈性的經濟中感到更加疲軟？

Not really, Ryan. I mean, as you know and many others probably on the call now, we try to position the portfolio defensively in terms of industry mix. So I think the places where you're likely to see real spikes in defaults are places where we try to have very little or no exposure. I, too, agree with your comment that the economy is actually performing materially better than I might have expected 12 months ago, if you would ask me in terms of where we'd be in the summer of '23. So I don't know if the soft landing is really in the cars.

不完全是，瑞安。我的意思是，正如您和許多其他可能正在通話的人所知，我們試圖在行業組合方面對投資組合進行防禦性定位。因此，我認為，在那些可能會看到違約率真正飆升的地方，我們會盡量減少或根本不進行曝光。我也同意你的評論，即如果你問我 23 年夏天我們會處於什麼位置，經濟實際上表現比我 12 個月前預期的要好。所以我不知道軟著陸是否真的發生在汽車上。

Obviously, the newspapers seem to imply that there's a chance of that now. But look, for the back half of the year, borrowers, just I said this in the prepared remarks, have less cash flow, right? They're deleveraging less quickly and we need to be focused on every company in every industry to make sure that we're doing what we need to do from a risk management perspective. But when we look across our industry mix, there's now one particular place where we feel more concerned rather than in the aggregate.

顯然，報紙似乎暗示現在有這樣的機會。但是你看，下半年，借款人，剛才我在準備好的發言中說過，現金流量減少了，對吧？他們去槓桿化的速度較慢，我們需要關注每個行業的每家公司，以確保我們從風險管理的角度做我們需要做的事情。但當我們審視我們的行業組合時，現在有一個特定的地方讓我們感到比整體更令人擔憂。

Our next question comes from the line of Kenneth Lee with RBC Capital Markets.

我們的下一個問題來自加拿大皇家銀行資本市場 (RBC Capital Markets) 的肯尼思·李 (Kenneth Lee)。

Just in terms of any potential future capital raising needs, wondering if utilization of the ATM equity program is still the preferred method here? Or would you be open to any sort of [block] transaction.

就未來任何潛在的融資需求而言，想知道利用 ATM 股權計劃是否仍然是這裡的首選方法？或者您是否願意接受任何類型的[區塊]交易。

I think the simple answer to that is we felt like we've been able to grow the company modestly through the ATM program and accretive cost-effective ways. We'll probably stick to that as the primary source of where we go from here. The leverage level is in a very reasonable level at the end of this quarter. So we feel confident that we have dry powder enough to take advantage of what we think is a compelling environment. So for now, I think the ATM program is going to prove to be sufficient.

我認為簡單的答案是我們覺得我們已經能夠通過 ATM 計劃和增加成本效益的方式適度發展公司。我們可能會堅持將其作為我們下一步的主要來源。截至本季度末，槓桿水平處於非常合理的水平。因此，我們相信我們有足夠的干粉來利用我們認為具有吸引力的環境。因此，就目前而言，我認為 ATM 計劃將被證明是足夠的。

Got you. Very helpful there. And that's all I had.

明白你了。那裡非常有幫助。這就是我所擁有的一切。

Our next question comes from the line of Casey Alexander with Compass Point.

我們的下一個問題來自凱西·亞歷山大（Casey Alexander）與指南針點（Compass Point）的關係。

Yes. And sort of given your comments about the economy performing better than you would expect. Can you give us some color on the pace of amendments and modifications in the portfolio? And are you actually doing less of that than you might have -- also might have expected at this point in time?

是的。鑑於您對經濟表現的評論比您預期的要好。您能給我們介紹一下投資組合的修訂和修改的進度嗎？您實際上所做的事情是否比您此時可能所做的以及可能預期的要少？

Yes. I mean it's less than certainly it was, although there's still some activity there case yet put it -- I'd call it sort of middle of the road, right? It's not very active, but certainly, it's part of the discussion that we're having with owners of all these companies say that, again, may not be meaning plan, may not have as much cash flow as they expected, but that's -- I call it just ordinary course.

是的。我的意思是，這比肯定的要少，儘管那裡仍然有一些活動，但我認為這有點中間，對吧？它不是很活躍，但當然，這是我們與所有這些公司的所有者進行的討論的一部分，他們再次表示，這可能不是意味著計劃，可能沒有他們預期的現金流，但那就是——我稱之為普通課程。

Okay. And secondly, did Penni mention how much spillover there is in -- on a per share basis?

好的。其次，佩尼是否提到了每股的溢出效應有多大？

I did not. But it was the same as last quarter. So if you look at what we estimate to be carrying forward from 2022 into '23 it's stable at $650 million or $1.19 a share.

我沒有。但與上季度相同。因此，如果你看看我們預計從 2022 年結轉到 23 年的金額，它穩定在 6.5 億美元或每股 1.19 美元。

Our next question comes from the line of Robert Dodd with Raymond James.

我們的下一個問題來自羅伯特·多德和雷蒙德·詹姆斯的對話。

So your comments obviously reduced cash flow, et cetera, and that's across the portfolio, but EBITDA is still growing, et cetera, and interest coverage in aggregate is pretty good. Can you give us color on where -- how much of the portfolio will or does have interest coverage below one at peak SOFR, call it, $550 million. And then related to that, for those that are stressed, what's the step-up rate, so to speak, from the sponsors in terms of stepping up and providing incremental capital for that proportion of the portfolio.

因此，您的評論顯然減少了現金流等，並且這是整個投資組合的一部分，但 EBITDA 仍在增長等，並且總體利息覆蓋率相當不錯。您能否告訴我們，在 SOFR 峰值時，有多少投資組合的利息覆蓋率將或確實低於 1，稱之為 5.5 億美元。與此相關的是，對於那些有壓力的人來說，可以說，贊助商在為該比例的投資組合提供增量資本方面的升級率是多少。

Yes. I mean where we always direct people on that, Robert, thinking about companies that have probably insufficient or less than we'd like cash flow, really points you to the mix of 1s and 2s in the portfolios, which again is our underperformers, material and underperformers are the 1s and 2s or kind of what I think of as the watch list. So that number adds up to well less than 10% today. I'm sorry, the follow-up was through -- do you have any question.

是的。我的意思是，我們總是在這方面指導人們，羅伯特，考慮那些現金流可能不足或少於我們想要的公司，真正向您指出投資組合中 1 和 2 的組合，這又是我們表現不佳的公司，材料表現不佳的是 1 級和 2 級，或者是我認為的觀察名單。所以今天這個數字加起來遠低於 10%。抱歉，後續行動已結束——您還有什麼問題嗎？

What proportion of those businesses are the sponsors stepping up 100% incident rate or 90 a mean -- how are the negotiations gone? Are they coming through and supporting those businesses? Or are you having to do more of?

贊助商將這些企業的事故率提高到 100% 或平均 90%，談判進展如何？他們是否會參與並支持這些企業？或者你需要做更多的事情嗎？

I think they have generally. And if you look at the percentage of our portfolio, it's kind of a -- it's a 3-year low at this point. So the playbook during COVID, where we actually provided the lease and paying cash interest is not really part of the playbook today. I would say that we've seen good sponsorship support in situations that have required it. But the way it's progressing, just to maybe try to give you all a little bit more color is even if a company has a longer-term problem with capital structure, where interest payments perhaps look too high with the base rate being this much higher.

我認為他們一般都有。如果你看一下我們投資組合的百分比，你會發現，目前這是三年來的最低點。因此，在新冠疫情期間，我們實際提供租賃並支付現金利息的劇本，實際上並不是今天劇本的一部分。我想說的是，我們在需要的情況下看到了良好的讚助支持。但它的進展方式，只是為了給大家帶來更多的色彩，即使一家公司在資本結構方面存在長期問題，在基準利率高得多的情況下，利息支付可能看起來太高了。

In most of those circumstances, they still have significant cash on the balance sheet. They have access to undrawn revolving credit facilities, which they can use. So there are a handful of interim tools before sponsor probably needs to step up and support a company I would say that is performing with more capital. And I think that's another reason why activity levels are low. I think you see a lot of private equity firms that are really focused on what's going on in the existing portfolio. And thinking about how to deal with that as much as they're struggling to do new deals. Hopefully, that gives you a little bit of color.

在大多數情況下，他們的資產負債表上仍然有大量現金。他們可以使用未提取的循環信貸額度。因此，在讚助商可能需要加強和支持一家我認為正在以更多資本運作的公司之前，有一些臨時工具。我認為這是活動水平低的另一個原因。我認為你會看到很多私募股權公司真正關注現有投資組合中發生的事情。在努力達成新交易的同時，他們也在思考如何應對這一問題。希望這能給你一點色彩。

Yes, to underscore the first point Kipp made though, and to answer your question spot on, we're not -- when it gets to the point where the company does need liquidity, we're seeing no change in sponsor behavior in terms of their willingness to support those companies. And we spent a lot of time in the prepared remarks talking about the loan to values. But given the loan to values in our portfolio on a go-forward basis, we certainly would expect to see the same thing.

是的，為了強調基普提出的第一點，並直接回答你的問題，我們不是——當公司確實需要流動性時，我們發現贊助商的行為在以下方面沒有變化：他們願意支持這些公司。我們在準備好的發言中花了很多時間討論貸款價值。但考慮到我們投資組合中價值的貸款是在未來的基礎上，我們當然希望看到同樣的事情。

Got it. Got it. Then 1 sort of follow-up and (inaudible). Ivy hill has been a tremendously successful business for you. It's now 10% of the portfolio if we look at the -- is there -- I think we've talked about this on par. Is there still room to grow that? Or is 10% of the portfolio kind of the cap for the size of (inaudible).

知道了。知道了。然後是一種後續行動（聽不清）。 Ivy Hill 對您來說是一個非常成功的企業。現在它佔投資組合的 10%，如果我們看一下——是否存在——我想我們已經平等地討論過這個問題了。還有增長空間嗎？或者是投資組合規模上限的 10%（聽不清）。

Yes. I mean we don't really have a cap, particularly on things that have been that successful. I have acknowledged in a different setting. So I'll acknowledge it now that having a 10% exposure to a single name, even though we don't really think about it as a single name because there are a host of underlying funds and cash flows that deliver the return is probably near the upper limit, at least for me personally. So I wouldn't expect it to grow materially from here.

是的。我的意思是，我們真的沒有上限，特別是對於那些已經如此成功的事情。我已經在不同的環境中承認了。因此，我現在承認，儘管我們並沒有真正將其視為單一名稱，但對單一名稱擁有 10% 的敞口，因為有大量基礎基金和現金流可以提供接近的回報。上限，至少對我個人來說是這樣。所以我不指望它會從這裡開始大幅增長。

Our next question comes from the line of Mark Hughes with Truth Securities.

我們的下一個問題來自真相證券公司的馬克休斯。

The nonaccruals improved this quarter after stepping up for a bit for a quarter or 2. Was there anything on to that improvement? Was it one-off? You talked about inflationary pressure easing? was that a driver perhaps.

在一兩個季度略有增加之後，本季度的非應計項目有所改善。這種改善有什麼影響嗎？是一次性的嗎？您談到通脹壓力緩解？也許那是一名司機。

I mean really, Mark, when you go through it with a little more detail, really what happened is we resolved 1 of the nonaccruals through a restructuring of a specific portfolio companies. So removing that nonaccrual is what actually just from a math point of view, took the number down. Obviously, with that, I'll say, just to be clear, we didn't see other companies added in a material way, right? So -- but the decrease was really the result of 1 significant restructuring that we did at a portfolio company.

我的意思是，馬克，當你更詳細地了解一下時，實際上發生的是我們通過重組特定投資組合公司解決了其中一項非應計費用。因此，從數學角度來看，刪除非應計費用實際上就是減少了數字。顯然，我要說的是，我們沒有看到其他公司以實質性方式加入，對嗎？所以，但下降實際上是我們在一家投資組合公司進行的一次重大重組的結果。

Understood. And then with the potential for deal activity to pick up, if interest rates improve, do you -- do you see maybe some pause as the expectations for interest rates to decline further? And then the question is, when do you transact? How does it work at this point in the interest rate cycle? I mean I think it's very hard to tell. Again, I think if you have stability in rates and makes it easier back to 1 of the earlier questions for buyers, to at least understand what their maximum cost of debt financing may be when you set up a model to do a transaction. Obviously, more compelling for transaction activity would be a decline in rates.

明白了。然後，隨著交易活動有可能回升，如果利率改善，您是否認為隨著利率進一步下降的預期可能會有所停頓？那麼問題來了，什麼​​時候進行交易？在利率週期的這個階段，它是如何運作的？我的意思是我認為這很難說。再說一遍，我認為，如果您的利率穩定，並且可以讓買家更容易地回到之前的問題之一，那麼至少可以了解當您建立模型進行交易時，他們的最大債務融資成本可能是多少。顯然，對交易活動更有吸引力的是利率下降。

Right, where you actually had the expectation for cuts to start coming through, but your guess is as good as mine when that actually happens, if at all. So I think we kind of are where we are for the time being.

是的，你實際上期望削減會開始實現，但當這種情況真正發生時，你的猜測和我的一樣好，如果有的話。所以我認為我們目前就處於這種狀態。

Our next question comes from the line of Bryce Rowe with B. Riley.

我們的下一個問題來自 Bryce Rowe 和 B. Riley 的對話。

Great. Maybe first one is around balance sheet leverage. You all delevered a bit in the first quarter and maybe even a little bit more here in the second quarter. Can you talk about kind of your view on maybe relevering or maintaining at these levels? Just kind of curious where your comfort level is at this point.

偉大的。也許第一個是圍繞資產負債表槓桿。你們在第一季度都減少了一點，在第二季度甚至可能更多。您能談談您對重新槓桿化或維持在這些水平的看法嗎？只是有點好奇你現在的舒適度在哪裡。

Yes. Thanks for the question. I mean it's the same answer, I think, as it's been in the past, maybe with a modest footnote. We tend to run kind of between 1x and 1.25x. -- The leverage helps drive earnings a little bit. But again, just as a reminder, the BDCs are really not particularly leveraged companies, right? So going from 1.05 to 1.17x doesn't have a huge impact. We, I think, at this point in the cycle, though, would like to have a lot of liquidity, both to versus new investing and also to make sure that we can invest in portfolio companies to the extent we want to or need to.

是的。謝謝你的提問。我的意思是，我認為這是相同的答案，就像過去一樣，也許有一個適度的腳註。我們傾向於在 1 倍到 1.25 倍之間運行。 ——槓桿有助於稍微推動盈利。但再次提醒一下，BDC 實際上並不是槓桿率特別高的公司，對吧？所以從 1.05 到 1.17x 不會產生太大的影響。不過，我認為，在周期的這個階段，我們希望擁有大量的流動性，既可以用於新的投資，也可以確保我們能夠在我們想要或需要的範圍內投資於投資組合公司。

So I think it's really just driven quarter-to-quarter by how active we are and what the repayment calendar looks like. that's hard to predict. But we feel comfortable with where it is today. If it went up a little bit, that would be fine. If it went down a little bit, that would be fine. So the earnings are more than supporting the dividend, and we felt good about the trajectory here. So we don't feel any need to lever back up in the way that you referred to. We're happy with where we are today.

所以我認為這實際上只是由我們的活躍程度和還款日曆的情況推動的。這很難預測。但我們對今天的現狀感到滿意。如果能漲一點點就好了。如果能稍微下降一點就好了。因此，收益不僅僅是支持股息，我們對這裡的發展軌跡感覺良好。因此，我們認為沒有必要按照您提到的方式進行備份。我們對今天的處境感到滿意。

Okay. That's helpful. And maybe a follow-up to these kind of Kipp no view of imminent recession based on your prepared remarks. Obviously, dividend coverage is extremely strong here, 20% plus. At what point do you kind of take it up another notch in terms of dividend increases? I mean, obviously, you've seen some great dividend increases over the last year. But with that view of no imminent recession, just how are you thinking about dividend levels, given that level of dividend coverage.

好的。這很有幫助。也許是基普根據你準備好的言論對即將到來的經濟衰退沒有看法的後續行動。顯然，這裡的股息覆蓋率非常高，超過 20%。在什麼時候你會在股息增加方面再上一個台階？我的意思是，顯然，去年股息大幅增加。但考慮到經濟衰退不會迫在眉睫，考慮到股息覆蓋率的水平，您如何看待股息水平。

I think the discussion that we had when we raised the dividend, obviously, was the earnings are well in excess of even the raised dividend level, what's prudent, right? And the discussion, it was much more about the direction of interest rates and it was about portfolio credit quality, right? So if we pull a couple of the different levers that could allow us to have a higher dividend or a lower dividend, the one that's the most impactful would be a significant decrease in base rates. You have to model nonaccruals up a lot to have it have any real impact on how we thought about the dividend today.

我認為我們在提高股息時進行的討論顯然是，收益遠遠超過了提高的股息水平，什麼是謹慎的，對吧？討論更多的是關於利率的方向，以及投資組合的信用質量，對吧？因此，如果我們使用幾種不同的槓桿來獲得更高或更低的股息，那麼影響最大的就是基本利率的大幅下降。你必須對非應計項目進行大量建模，​​才能對我們今天對股息的看法產生真正的影響。

That's helpful. Appreciate the answers.

這很有幫助。感謝您的回答。

Our next question comes from the line of Erik Zwick with Hovde Group to foresee what your question is.

我們的下一個問題來自 Hovde Group 的 Erik Zwick，以預見您的問題是什麼。

I wanted to start, I guess, just first a follow-up to so the guidance quite about the last quarter. So in terms of your new commitments, 92% had floors this quarter. I'm curious if borrowers accepting of your maybe a request to move that floor up a little bit from kind of the 1% level that you've been operating for a while? Or is that still kind of (inaudible).

我想，我想首先對上個季度的指導進行跟進。因此，就新承諾而言，92% 的人本季度已經達成了底線。我很好奇借款人是否會接受您的請求，將利率水平從您已經運營了一段時間的 1% 水平上調一點？或者仍然是這樣（聽不清）。

We've been trying and we haven't had a lot of luck.

我們一直在努力，但運氣並不好。

Okay. Fair enough. And then my second question is maybe similar to some prior questions but maybe just thinking about it a slightly different way. So looking at new commitments in the quarter up noticeably from 1Q, but still running well below the level that we've seen in prior years. So curious how much of that is just a reflection of the market and slower deal activity versus maybe caution on your part just given that there's still uncertain economic environment at this point?

好的。很公平。然後我的第二個問題可能與之前的一些問題相似，但可能只是以稍微不同的方式思考。因此，本季度的新承諾較第一季度明顯增加，但仍遠低於我們前幾年看到的水平。很好奇，其中有多少只是市場和交易活動放緩的反映，而不是考慮到目前經濟環境仍然不確定，您可能會保持謹慎？

I mean we wish there was more activity. We're not particularly cautious. I think we're thoughtful about the existing portfolio, but we would love a busier environment. The reality is there are not a lot of opportunistic recaps getting done because people have pretty good balance sheets in place. What's really going to drive a pickup from here is just going to be more M&A activity. And as we've mentioned, we've got the benefit of having a large diverse portfolio that contributes to a lot of follow-on capital opportunities for us. But yes, to be materially busier, we just need the M&A environment to pick up.

我的意思是我們希望有更多的活動。我們並不是特別謹慎。我認為我們對現有的投資組合進行了深思熟慮，但我們希望有一個更繁忙的環境。現實情況是，由於人們擁有相當不錯的資產負債表，因此並沒有進行太多機會主義的回顧。真正推動經濟復甦的將是更多的併購活動。正如我們所提到的，我們受益於擁有龐大的多元化投資組合，這為我們帶來了許多後續資本機會。但是，是的，為了物質上更加忙碌，我們只需要併購環境好轉。

Of course, the counter -- the flip side of that is that the repayment activity is also lower than historical levels. So we're getting more duration on our existing loans. So it's not all bad, it all sort of balances out.

當然，相反的一面是，還款活動也低於歷史水平。因此，我們現有貸款的期限更長。所以這並不全是壞事，一切都平衡了。

And our next question comes from the line of John Rowan with Janney.

我們的下一個問題來自約翰·羅文和珍妮的對話。

So just to talk a little bit about the interest coverage and specifically kind of the 1s and 2s. And I appreciate the information you gave and how it's calculated and particularly the loan-to-value rates which would seem to be compelling for sponsors to step up and help struggling investment. But I'm curious, is there a difference in kind of the LTVs across the portfolio relative to what would be in the 1s and 2s. I'm just trying to gauge if that same reason to step up and support a company is the same in the 1s and 2s as it is for the rest of the portfolio.

簡單談談利息保障範圍以及 1 和 2 的具體類型。我很欣賞您提供的信息及其計算方式，特別是貸款價值比率，這似乎促使贊助商加強並幫助陷入困境的投資。但我很好奇，相對於 1 和 2 的 LTV，整個投資組合的 LTV 類型是否存在差異。我只是想衡量一下，在 1 和 2 部分中，站出來支持一家公司的理由是否與投資組合的其他部分相同。

Yes. No, I think it's not, right? So the LTVs are going to be much higher in the underperformers.

是的。不，我認為不是，對嗎？因此，表現不佳的企業的生命週期價值將會高得多。

Yes. We're marketing the equity value to market every quarter. And so as there's underperformance, we're marking the equity value down. There still might be significant cash equity there, which would incentivize support. But obviously, sponsors are going to evaluate performance of the company and the lower performance might be harder for them to support.

是的。我們每個季度都會向市場推銷股權價值。因此，由於表現不佳，我們正在下調股票價值。那裡可能仍然有大量現金股本，這將激勵支持。但顯然，贊助商將評估公司的業績，而較低的業績可能會讓他們更難以支持。

Okay. And then just one kind of housekeeping question. Obviously, nonaccruals came down. You did restructure one large loan. Is that what drove the realized loss in the quarter?

好的。然後只是一種內務問題。顯然，非應計費用有所下降。您確實重組了一筆大額貸款。這是導致本季度實現虧損的原因嗎？

Yes, primarily. Yes.

是的，主要是。是的。

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

我們的問答環節到此結束。我想將會議轉回給 Kipp DeVeer 先生做總結髮言。

I'd just thank everybody for participating and the good questions. And I hope everyone enjoys the rest of the summer. We'll be in touch soon. Thanks.

我只想感謝大家的參與和提出的好問題。我希望每個人都能享受剩下的夏天。我們很快就會聯繫。謝謝。

And ladies and gentlemen, this concludes our conference call for today. If you missed any part of today's call, an archived replay of the call will be available approximately 1 hour after the end of the call through August 22 at 5 p.m. Eastern time. To domestic callers, by dialing (877) 660-6853 and to international callers by dialing (201) 612-7415. For all replays, please reference conference number 1 373-8-840. An archived replay will also be available on a webcast link located on the homepage of the Investor Resources section of Ares Capital's website.

女士們、先生們，我們今天的電話會議到此結束。如果您錯過了今天通話的任何部分，通話結束後大約 1 小時至 8 月 22 日下午 5 點之間將提供通話的存檔重播。東部時間。國內呼叫者請撥打 (877) 660-6853，國際呼叫者請撥打 (201) 612-7415。對於所有重播，請參考會議號碼 1 373-8-840。存檔重播也可通過位於 Ares Capital 網站投資者資源部分主頁上的網絡廣播鏈接獲取。