Barings BDC Inc (BBDC) 2023 Q3 法說會逐字稿

Greetings. At this time, I would like to welcome everyone to the Barings BDC, Inc. conference call for the quarter ended September 30, 2023. (Operator Instructions) Today's call is being recorded, and a replay will be available approximately 2 hours after the conclusion of the call on the company's website at www.baringsbdc.com under the Investor Relations section.

問候。此時，我歡迎大家參加 Barings BDC, Inc. 截至 2023 年 9 月 30 日的季度的電話會議。（操作員說明）今天的電話會議正在錄音，結束後大約 2 小時將提供重播請在公司網站www .baringsbdc.com 的「投資者關係」部分查看此次電話會議的詳情。

Please note that this call may contain forward-looking statements that include statements regarding the company's goals, beliefs, strategies, future operating results and cash flows. Although the company believes these statements are reasonable, actual results could differ materially from those projected in forward-looking statements.

請注意，本次電話會議可能包含前瞻性陳述，其中包括有關公司目標、信念、策略、未來營運績效和現金流量的陳述。儘管該公司認為這些陳述是合理的，但實際結果可能與前瞻性陳述中的預測有重大差異。

These statements are based on various underlying assumptions and are subject to numerous uncertainties and risks including those disclosed under the sections titled Risk Factors and Forward-Looking Statements in the company's quarterly report on Form 10-Q for the quarter ended September 30, 2023, as filed with the Securities and Exchange Commission. Barings BDC undertakes no obligation to update or revise any forward-looking statements unless required by law.

這些陳述基於各種基本假設，並受到許多不確定性和風險的影響，包括在公司截至2023 年9 月30 日的季度10-Q 表格的季度報告中標題為“風險因素和前瞻性陳述”的部分揭露的不確定性和風險，如下：向美國證券交易委員會備案。除非法律要求，霸菱 BDC 不承擔更新或修改任何前瞻性聲明的義務。

I will now turn the call over to Eric Lloyd, Chief Executive Officer of Barings BDC.

我現在將把電話轉給巴林銀行 BDC 執行長 Eric Lloyd。

Thank you, operator, and good morning, everyone. With it being Veterans Day tomorrow, I want to start off by thanking all the veterans that are on the phone and any of their family members or loved ones who supported veterans over the years. We're very grateful for your service and everything you've done for our country.

謝謝接線員，大家早安。明天是退伍軍人節，我首先要感謝所有打電話的退伍軍人以及他們多年來支持退伍軍人的家人或親人。我們非常感謝您的服務以及您為我們國家所做的一切。

For everybody, we appreciate you joining us for today's call. Please note that throughout today's call, we'll be referring to our third quarter 2023 earnings presentation. that's posted on the Investor Relations section of our website.

對大家來說，我們感謝您參加今天的電話會議。請注意，在今天的電話會議中，我們將提及 2023 年第三季的收益演示。這些資訊發佈在我們網站的投資者關係部分。

On the call today, I'm joined by Barings Co-Head of Global Private Finance and President of Barings BDC, Ian Fowler; the BDC's Chief Financial Officer, Elizabeth Murray; and the BDC's Co-Portfolio Managers, Bryan High and Matt Freund.

巴林銀行全球私人金融聯席主管兼巴林銀行 BDC 總裁 Ian Fowler 參加了今天的電話會議。 BDC 財務長 Elizabeth Murray；以及 BDC 的聯合投資組合經理 Bryan High 和 Matt Freund。

I'd like to start by acknowledging that we have refreshed some of the presentation of our financial information and portfolio statistics. Over the course of the past several months, the team has been intentional about presenting information in a manner consistent with how we review and manage the portfolio. The strategy has not changed. Barings BDC was and remains an investor in the credit of companies engaged in the middle market. Our portfolio is predominantly sponsor-backed and is complemented by a selection of nonsponsored and platform investments. Our portfolio strategy is outlined in greater detail on Slide 5.

首先，我想承認我們已經更新了一些財務資訊和投資組合統計數據的表述方式。在過去的幾個月中，團隊一直有意以與我們審查和管理投資組合的方式一致的方式呈現資訊。策略沒有改變。巴林銀行 BDC 過去是、現在仍然是從事中間市場的公司信貸的投資者。我們的投資組合主要由贊助商支持，並輔以一系列非贊助投資和平台投資。投影片 5 更詳細地概述了我們的投資組合策略。

We will not spend time this morning discussing our approach. We hope our investors and partners understand that this strategy serves as our guiding light and as we continue to successfully invest throughout the market and deliver compelling returns to our shareholders.

今天早上我們不會花時間討論我們的方法。我們希望我們的投資者和合作夥伴明白，這項策略是我們的指路明燈，我們將繼續成功地在整個市場進行投資，並為股東帶來可觀的回報。

And with the acknowledgment of a new stylistic deal out of the way, we will shift our attentions to the important matters at hand and discussing performance during the quarter. BBDC exhibited stability and strong operating results against the backdrop of significant economic uncertainty and macroeconomic volatility during the quarter ended September 30. Our focus on the top of the capital structure investments and sponsor-backed issuers is serving investors well in these uncertain times.

隨著新風格協議的達成，我們將把注意力轉向手頭上的重要事項並討論本季的業績。在截至9 月30 日的季度中，在經濟存在重大不確定性和宏觀經濟波動的背景下，BBDC 表現出穩定性和強勁的經營業績。我們對資本結構投資和保薦人支持的發行人的關注，在這些不確定的時期為投資者提供了良好的服務。

Net asset value per share was $11.25 compared to the prior quarter of $11.34 and $11.05 at December 2022, reflecting a year-to-date increase of 1.8%. Net investment income for the quarter was $0.31, unchanged from the prior quarter. Consistent NII was fueled by normalization of yields from rising base rates; secondly, continued strong credit performance within our portfolio; and third, lower incentive fees due to the incentive cap in our shareholder-friendly structure.

每股淨值為 11.25 美元，較上一季的 11.34 美元和 2022 年 12 月的 11.05 美元相比，今年迄今成長了 1.8%。本季淨投資收益為 0.31 美元，與上一季持平。基準利率上升所帶來的殖利率正常化推動了NII的持續穩定；其次，我們的投資組合中的信用表現持續強勁；第三，由於我們的股東友善結構中的激勵上限，激勵費用較低。

Our performance is a result of the focus on the top of the capital structure and within more defensive industries. We believe BBDC remains well positioned for any further volatility and uncertainty in the market going forward. Investment activity during the quarter reflected a modest degree of net deployments as we viewed certain opportunities in the market as some of the most compelling review during the year. As our shareholders know, we're actively working to maximize the value in our legacy holdings acquired from MVC Capital and Sierra Income and rotate them into compelling Barings originated positions.

我們的業績是關注資本結構頂層和防禦性更強的行業的結果。我們相信 BBDC 仍能應對未來市場的任何進一步波動和不確定性。本季的投資活動反映了適度的淨部署，因為我們將市場上的某些機會視為今年最引人注目的審查之一。正如我們的股東所知，我們正在積極努力最大化我們從 MVC Capital 和 Sierra Income 收購的傳統持股的價值，並將其輪換為引人注目的巴林銀行起源職位。

Our investment portfolio continued to perform well in the third quarter. Including the acquired Sierra and MVC assets, our total nonaccruals are 2.5% of the portfolio on a cost basis and 1.6% on a fair value basis with 1 new nonaccrual book during the quarter. With the exception of 2 investments, all of our nonaccrual assets were from acquired portfolios and therefore, are covered by our credit support agreements.

我們的投資組合在第三季繼續表現良好。包括收購的Sierra 和MVC 資產在內，我們的非應計費用總額以成本計算佔投資組合的2.5%，以公允價值計算佔投資組合的1.6%，本季有1 個新的非應計帳簿。除 2 項投資外，我們所有的非應計資產均來自收購的投資組合，因此均包含在我們的信貸支援協議內。

BBDC shareholders continue to benefit from the credit support agreements provided by the manager. For the current quarter, the CSA valuation was approximately $54 million on a combined basis for the Sierra and MVC credit support agreements. They're designed to insulate shareholders from realized losses in the portfolio. The reduction in the CSA valuation quarter-over-quarter is primarily due to unrealized appreciation related to positions in the underlying Sierra portfolio. As investors know, when the issued collateral improves in value, the value of the insurance declines in vice versa.

BBDC 股東繼續受益於管理公司提供的信貸支援協議。本季度，CSA 對 Sierra 和 MVC 信貸支持協議的綜合估值約為 5,400 萬美元。它們旨在使股東免受投資組合中已實現損失的影響。 CSA 估值環比下降主要是由於與基礎 Sierra 投資組合部位相關的未實現升值。投資者知道，當發行的抵押品價值提高時，保險的價值就會下降，反之亦然。

To date, less than $35 million of net losses have been realized at the acquired portfolios. The remaining unrealized depreciation within the portfolio are spread across a wide number of issuers and to believe to reflect market discounts to par rather than anticipated impairments. Recall that the bulk of the Sierra portfolio was comprised of semi-liquid broadly syndicated loans that traded infrequently. Following the end of the quarter, 2 Sierra positions on nonaccrual were fully realized.

迄今為止，所收購的投資組合已實現不到 3,500 萬美元的淨虧損。投資組合中剩餘的未實現折舊分佈在眾多發行人中，並被認為反映了市場對面值的折扣，而不是預期的減值。回想一下，Sierra 投資組合的大部分由交易不頻繁的半流動性銀團貸款組成。本季末後，2 個 Sierra 的非應計利息部位已全部實現。

Turning to the earnings power of the portfolio. Increasing base rates continue to lift yields on our predominantly floating rate portfolio with weighted average yields on floating rate investments increasing to 11.2% from the prior quarter of 11.0%. We remain conservative on our base dividend policy, and our Board declared a fourth quarter dividend of $0.26 per share, consistent with the prior quarter. On an annualized basis, the dividend level equates to 9.2% yield on our net asset value of $11.25.

轉向投資組合的獲利能力。基礎利率的提高繼續提高了我們以浮動利率為主的投資組合的收益率，浮動利率投資的加權平均收益率從上一季的 11.0% 增至 11.2%。我們對基本股利政策保持保守，董事會宣布第四季股利為每股 0.26 美元，與上一季一致。以年化計算，股息水準相當於我們 11.25 美元資產淨值的 9.2% 收益率。

Looking at liquidity, net leverage, which is leverage net of cash and unsettled transactions, was 1.18x. This is within our target leverage range of 0.9 to 1.25x. We continue to prioritize risk management while balancing the deployment of capital into what has become a very attractive environment for private credit.

從流動性來看，淨槓桿率（扣除現金和未結算交易的槓桿率）為 1.18 倍。這在我們 0.9 至 1.25 倍的目標槓桿範圍內。我們繼續優先考慮風險管理，同時平衡資本部署，創造對私人信貸極具吸引力的環境。

Before turning over the call, as many of you know, Barings BDC hosted our 2023 Investor Day in early October. We were grateful that many of our investors and partners were able to attend. The presentation shared at that event and replays of the content are available under the Investor Relations section of our website. For those of you who were unable to attend, we encourage you to review that if you're able.

正如你們許多人所知，在轉交電話會議之前，Barings BDC 於 10 月初舉辦了 2023 年投資者日。我們非常感謝許多投資者和合作夥伴能夠參加。活動中分享的簡報和內容重播可在我們網站的投資者關係部分查看。對於那些無法參加的人，我們鼓勵您在可以的情況下回顧一下。

I'll now turn the call over to Ian.

我現在將電話轉給伊恩。

Thanks, Eric. Recall that BBDC is managed by Barings LLC, a credit-focused asset manager with more than $300 billion of assets under management. The bulk of our portfolio is sourced from the global private finance team, an organization with more than 100 investment professionals located around the globe, providing financing solutions to preeminent middle market companies sponsored by private equity firms.

謝謝，埃里克。回想一下，BBDC 由 Barings LLC 管理，這是一家專注於信貸的資產管理公司，管理超過 3000 億美元的資產。我們的投資組合大多來自全球私募融資團隊，該團隊在全球擁有 100 多名投資專業人士，為私募股權公司贊助的傑出中間市場公司提供融資解決方案。

BBDC's portfolio increased by $34 million on a net basis in the quarter, with gross fundings of $138 million offset by $104 million of repayments and sales, which included approximately $50 million of sales to our Jocassee joint venture. Activity during the year has been tempered as private equity buyers take a pause in this rising rate environment to likely determine any impact on valuations.

BBDC 的投資組合在本季淨額增加了 3,400 萬美元，總資金額為 1.38 億美元，被 1.04 億美元的還款和銷售抵消，其中包括向我們的 Jocassee 合資企業出售的約 5,000 萬美元。由於私募股權買家在利率上升的環境下暫停，以可能確定對估值的影響，因此今年的活動有所放緩。

Investment bankers who serve as the tip of the spear, and a sell-side buyout have indicated they are sitting on record backlogs of new transaction opportunities. The messaging has been consistent for the past 12 months as more and more opportunities are being added to the backlog. However, sponsors appear reticent to bridge the valuation gap between 2021 purchase price multiples and today's range based on financing costs. The deluge of opportunities is being held up by the dam that is buttressed by a resetting of the cost of capital and general economic unease.

作為矛尖的投資銀行家和賣方收購表明，他們積壓的新交易機會創歷史新高。在過去 12 個月裡，隨著越來越多的機會被添加到待辦事項中，訊息一直保持一致。然而，贊助商似乎不願彌合 2021 年購買價格倍數與目前基於融資成本的範圍之間的估值差距。大量的機會被資本成本重置和普遍經濟不安所支撐的大壩所阻擋。

We have seen an increase in the number of early-stage opportunities within the platform, but unfortunately, conversion rates to close deals are trending towards historic lows. Sponsors continue to execute on add-ons for companies already within their portfolios, which makes sense as add-on multiples are below the original platform purchase price, in effect, enabling sponsors to reduce their cost basis and hedge against any compression and exit multiples. Investors in Barings BDC benefit by having a seasoned portfolio that provides opportunities to deploy capital into issuers, we already know well. We're not in a position to call the bottom.

我們看到該平台內的早期機會數量增加，但不幸的是，完成交易的轉換率正趨向歷史低點。贊助商繼續為其投資組合中已有的公司執行附加項目，這是有道理的，因為附加倍數低於原始平台購買價格，實際上，使贊助商能夠降低其成本基礎並對沖任何壓縮和退出倍數。我們已經很清楚，Barings BDC 的投資者受益於擁有經驗豐富的投資組合，該投資組合提供了將資本部署到發行人的機會。我們無法判斷底部。

There is a logical reason to believe transaction volumes improve in the months to come, namely a record backlog of sell-side mandates among the investment banking community and a need for private equity managers to show distributions to their LPs. Counter to those facts is a high level of uncertainty created by 2-arm conflicts, persistently high inflation, a rapid increase in interest rates and the forthcoming political cycle. When opportunities ultimately do convert into an increase in closed transactions, we will continue to use our disciplined underwriting strategy to invest capital in the most compelling opportunities.

有一個合乎邏輯的理由相信交易量在未來幾個月會有所改善，即投資銀行界賣方委託的積壓創紀錄，以及私募股權經理需要向其有限合夥人展示分配情況。與這些事實相反的是兩臂衝突、持續高通膨、利率快速上升以及即將到來的政治週期造成的高度不確定性。當機會最終轉化為已完成交易的增加時，我們將繼續使用嚴格的承保策略，將資金投資於最引人注目的機會。

Turning to our current portfolio. 74% consists of secured investments with approximately 67% of investments constituting first lien securities. Interest coverage within the portfolio stood at 2.3x, a modest decline from 2.5x a quarter earlier. We're forecasting a steady state, weighted average interest coverage for the portfolio will ultimately fall between 2x and 2.25x as the full impact of higher rates is reflected in issuers financials and performance.

轉向我們目前的投資組合。 74% 為擔保投資，其中約 67% 的投資構成第一留置權證券。投資組合內的利息覆蓋率為 2.3 倍，較上季的 2.5 倍略有下降。我們預測，在穩定狀態下，投資組合的加權平均利息保障倍數最終將降至 2 倍至 2.25 倍，因為利率上升的全面影響反映在發行人的財務和業績中。

Our avoidance of various industries prone to economic volatility, oil and gas, restaurants, retail, metals among them, has proven to be a sound strategy against a backdrop of less economic predictability. One of the benefits to a predominantly sponsor-backed strategy has proven out over the past several quarters, combined with what we believe were reasonable going in leverage multiples, the median gross margin in the North American Global Private Finance portfolio, similar to the BDC portfolio stood at 49%, up from 44% 1 year earlier. And gives us confidence that our issuers are successfully pushing through price increases to combat inflationary pressures in their businesses.

事實證明，在經濟可預測性較差的背景下，我們避開易受經濟波動影響的各個行業，包括石油和天然氣、餐飲、零售、金屬等，這被證明是一個明智的策略。過去幾季已經證明了主要由贊助商支持的策略的好處之一，再加上我們認為槓桿倍數合理，北美全球私人金融投資組合的毛利率中位數（與 BDC 投資組合類似）為49% ，高於一年前的44%。這讓我們相信，我們的發行人正在成功推動價格上漲，以應對其業務的通膨壓力。

Adjusted EBITDA margins for the same sample were -- set were 21%, flat from a year earlier, believed to be a reflection of the fact that wage gains have consumed some degree of gross margin expansion previously noted. While not a perfectly comparable metric period-to-period as the volume of transaction activity in the past 5 quarters will skew these metrics somewhat, we believe we have reason to feel comfortable with the performance of the portfolio. The portfolio composition remains highly diversified, the top 10 issuers accounting for 21.8% of fair market value.

同一樣本的調整後 EBITDA 利潤率設定為 21%，與去年同期持平，據信反映了工資增長在一定程度上消耗了先前提到的毛利率擴張這一事實。雖然這不是一個完全可比較的周期指標，因為過去 5 個季度的交易活動量會在一定程度上扭曲這些指標，但我們相信我們有理由對投資組合的表現感到滿意。投資組合組成仍高度多元化，前 10 名發行人佔公平市值的 21.8%。

Recall that the 2 top positions within the portfolio, Eclipse Business Capital and Rocade Holdings, our platform investments, originating middle market loans. These positions have a number of underlying issuers, assets included in the other classification includes structure positions and certain acquired positions that will not be originated on a new issue basis going forward. We anticipate rolling out of these positions as market conditions allow in the quarters to come.

回想一下，投資組合中前兩位的 Eclipse Business Capital 和 Rocade Holdings（我們的平台投資）發放了中間市場貸款。這些頭寸有許多基礎發行人，其他分類中包含的資產包括結構頭寸和某些未來不會在新發行基礎上產生的收購頭寸。我們預計在未來幾個季度，隨著市場條件的允許，我們將撤出這些部位。

In addition to the new formatting, we're publishing a risk rating schedule for our shareholders. Risk ratings exhibit minimal movement during the quarter as our issuers exhibiting the most stress classified as risk ratings 4 and 5 were unchanged at 6% on a combined basis quarter-over-quarter. Encouragingly, we're -- we also experienced some positive movement as certain issuers performing consistent with expectations at underwriting have outperformed during third quarter. We remain confident in the credit quality of our underlying portfolio, but we do not -- but we do see increased volatility heading into 2024 for the reasons previously mentioned.

除了新的格式之外，我們還為股東發布了風險評級表。本季度風險評級變動最小，因為風險評級 4 和 5 級風險評級最大的發行人環比保持在 6% 不變。令人鼓舞的是，我們也經歷了一些正面的變化，因為某些發行人的承銷業績符合預期，在第三季表現優於大盤。我們對基礎投資組合的信用品質仍然充滿信心，但我們確實沒有——但由於前面提到的原因，我們確實看到 2024 年波動性將會增加。

The uncorrelated nature and associated value of investments in Eclipse and Rocade should bolster the portfolio in the event the economy enters into a long expected recession. BBDC is committed to delivering an attractive risk-adjusted return to shareholders over a long time horizon. We're investors of credit and middle market companies. Our global reach and significant scale across asset classes gives BBDC a unique ability to select risk and return compared to other managers, but our core middle market credit is what we do.

如果經濟陷入長期預期的衰退，Eclipse 和 Rocade 投資的不相關性和相關價值應該會支撐投資組合。 BBDC 致力於長期為股東提供有吸引力的風險調整回報。我們是信貸和中間市場公司的投資者。與其他管理公司相比，我們的全球影響力和跨資產類別的巨大規模使 BBDC 具有選擇風險和回報的獨特能力，但我們的核心中間市場信用就是我們的工作。

I'll now turn the call over to Elizabeth.

我現在將電話轉給伊莉莎白。

Thanks, Ian. On Slide 15, you can see the full bridge of the NAV per share movement in the third quarter. Our net investment income exceeded the $0.26 per share dividend by 19%. Net unrealized appreciation from investments, CSA and FX listed NAV per share by $0.02 which was offset by net realized losses on the portfolio of $0.16 per share. The $0.16 per share realized loss was predominantly due to the exit of our investment in Carlson Travel and the restructuring of Learfield Communications, which were partially reclassified from unrealized depreciation.

謝謝，伊恩。在投影片 15 上，您可以看到第三季每股淨值變動的全橋。我們的淨投資收益比每股 0.26 美元的股息高出 19%。投資、CSA 和外匯上市資產淨值每股未實現淨增值 0.02 美元，被投資組合每股已實現淨虧損 0.16 美元所抵銷。每股 0.16 美元的已實現虧損主要是由於我們退出對卡爾森旅遊的投資以及利爾菲爾德通訊公司的重組，其中部分未實現折舊被重新分類。

We're very pleased with our portfolio's performance amid a backdrop of economic uncertainty, and this highlights our conservative approach to underwriting and portfolio construction. The valuation of the credit support agreements decreased approximately $6 million, which was driven by improved performance in the underlying Sierra position, as Eric mentioned.

在經濟不確定的背景下，我們對我們的投資組合的表現非常滿意，這凸顯了我們在承保和投資組合建構方面的保守態度。正如艾瑞克所提到的，信貸支援協議的估值減少了約 600 萬美元，這是由於 Sierra 基礎地位的業績改善所致。

Our net investment income per share was $0.31 for the quarter driven by higher base rates and lower incentive fees due to realized and unrealized losses in the quarter and the incentive fee cap. This was partially offset by lower dividends from our platform and joint venture investments.

我們本季的每股淨投資收益為 0.31 美元，原因是基本利率較高，而本季已實現和未實現的虧損以及激勵費用上限導致激勵費用較低。我們的平台和合資企業投資的股利減少部分抵銷了這種影響。

From a balance sheet perspective, gross total debt-to-equity was 1.27x at September 30. Our net leverage ratio, which we view as more reflective of the true leverage position of the vehicle was 1.18x at quarter end, up modestly from 1.15x in the quarter ended June 30 and currently sits within our long-term target of 0.9 to 1.25x. We will continue to manage the capital structure in a manner that is consistent with our investment-grade rating profile.

從資產負債表的角度來看，截至 9 月 30 日，負債股本總額為 1.27 倍。我們認為更能反映該工具真實槓桿狀況的淨槓桿率，季末為 1.18 倍，略高於 1.15 倍截至6月30 日的季度的成長率為x，目前處於我們0.9 至1.25 倍的長期目標之內。我們將繼續以與我們的投資級評級一致的方式管理資本結構。

Barings BDC is thankful that years of thoughtful stewardship of our liability structure leads us in the enviable position of avoiding issuance at historically high rates. Our funding mix remains highly defensible, both in terms of seniority and asset class, including the significant level of support provided by the $720 million of unsecured debt in our capital structure. As of the end of the third quarter, roughly half of our funding was comprised of fixed rate unsecured debt with a weighted average coupon of 3.79%. And we have approximately 2 years until the next bond maturity in August 2025.

Barings BDC 感謝多年來對我們負債結構的深思熟慮的管理，使我們處於避免以歷史高利率發行的令人羨慕的地位。無論是在資歷還是資產類別方面，我們的融資組合仍然具有高度的防禦性，包括我們資本結構中 7.2 億美元的無擔保債務提供的大力支持。截至第三季末，我們大約一半的資金由固定利率無擔保債務組成，加權平均票面利率為 3.79%。距離 2025 年 8 月下一次債券到期還有大約 2 年。

Barings BDC currently has $338 million of unfunded commitments to our portfolio companies as well as $65 million of outstanding commitments to our joint venture investments. We have available cushion against our leverage limit to meet the entirety of these commitments if called upon.

Barings BDC 目前對我們的投資組合公司有 3.38 億美元的無資金承諾，以及對我們的合資企業投資的 6,500 萬美元的未兌現承諾。如果需要，我們可以根據槓桿限制提供緩衝，以履行全部這些承諾。

As Eric mentioned earlier, the Board declared a fourth quarter dividend of $0.26 per share, a 9.2% distribution on net asset value. We consistently evaluate our dividend policy in the manner we manage our broader business, driven by stability. Given the higher level of earnings and the fact that base rates have remained higher for longer, shareholders should benefit an increase we announced at our June results remains appropriate. We believe our portfolio will continue to earn above the high hurdle in a normalized rate environment, and we expect that our platform investments, Eclipse and Rocade as well as our Jocassee joint venture will continue to generate significant dividend income.

正如艾瑞克之前提到的，董事會宣布第四季股息為每股 0.26 美元，佔資產淨值的 9.2%。在穩定性的推動下，我們以管理更廣泛業務的方式一致地評估我們的股利政策。鑑於較高的盈利水平以及基本利率在較長時間內保持較高水平的事實，股東應該受益於我們在 6 月份業績中宣布的增長仍然是適當的。我們相信，在正常化的利率環境下，我們的投資組合將繼續獲得高於高門檻的收益，並且我們預計我們的平台投資 Eclipse 和 Rocade 以及我們的 Jocassee 合資企業將繼續產生可觀的股息收入。

These investments help highlight the importance of less correlated assets and the benefits of a diverse portfolio. I'll wrap up our prepared remarks with the note on our investment pipeline. Thus far in Q4, we have made $105 million of new commitments, of which $97 million have closed and funded. We've also funded $12 million of previously committed debt and equity facilities.

這些投資有助於凸顯相關性較低的資產的重要性以及多元化投資組合的好處。我將用關於我們的投資管道的說明來結束我們準備好的發言。到目前為止，第四季度我們已做出 1.05 億美元的新承諾，其中 9,700 萬美元已完成並提供資金。我們也為先前承諾的債務和股權融資提供了 1,200 萬美元的資金。

With that, operator, we'll open the line for questions.

接線員，我們將開通提問熱線。

We will now be conducting a question-and-answer session. (Operator Instructions) Our first question comes from the line of Kyle Joseph with Jefferies.

我們現在將進行問答環節。 （操作員說明）我們的第一個問題來自凱爾·約瑟夫 (Kyle Joseph) 和傑弗里斯 (Jefferies) 的線路。

Ian, I appreciate the color you gave on the deal outlook into '24. It sounds like a little bit cautiously optimistic with a lot of dry powder out there, but an election cycle and some macro uncertainty. Just kind of want to pick your brain on what you see spreads doing. Obviously, we can look at the forward curve to see what base rates are expected to do. But given a lot of the moving parts in the market, just kind of want to see where spreads are in the context historically and where you could see those trending next year? And give us a sense for the portfolio yields as you look into '24, given market dynamics in the forward curve.

Ian，我很欣賞你對 24 年交易前景的看法。這聽起來有點謹慎樂觀，因為有很多乾粉，但選舉週期和一些宏觀不確定性。只是想了解您所看到的傳播行為。顯然，我們可以透過遠期曲線來了解基本利率的預期變化。但考慮到市場上有很多變動因素，只是想看看歷史上的價差在哪裡，以及明年的趨勢在哪裡？考慮到遠期曲線的市場動態，讓我們了解 24 年的投資組合報酬率。

Yes. Sure. Kyle. Happy to do that. And I'll start off -- obviously, I don't have a crystal ball, and I have been doing this for 25-plus years, and this is definitely a little bit of a different market than I've seen over the 25 years. But I think you nailed it. I mean, right now, we're in this anemic environment in terms of deal activity because of this gap between buyer and seller on valuation and you can understand why private equity firms are hesitant to go all in right now because there's still obviously inflationary pressures out there. I think that it seems like the Fed's kind of backed off on telegraphing another 25, 50 basis points, but the higher and longer is -- elevated rates is definitely going to have an impact. And we really don't know where valuations are trading at because it's not a normal functioning market with a lot of deal flow.

是的。當然。凱爾.很高興這樣做。我首先要說的是——顯然，我沒有水晶球，而且我已經這樣做了 25 年多了，這絕對是一個與我過去 25 年所見的市場有所不同的市場年。但我認為你已經做到了。我的意思是，目前，由於買方和賣方之間的估值差距，我們正處於交易活動疲軟的環境中，你可以理解為什麼私募股權公司現在猶豫是否全力以赴，因為仍然存在明顯的通膨壓力在那裡。我認為，聯準會似乎在再次升息 25、50 個基點方面有所退縮，但更高、更長的利率肯定會產生影響。我們真的不知道估值在哪裡，因為這不是一個擁有大量交易流的正常運作的市場。

So that -- like you said, that's the environment that we're in. I think to the extent we start to see some direction in terms of base rates, maybe getting closer to election pulling back a bit and then getting through the uncertainty of the election. I think that's when you might see. I'm not going to say floodgates open, but there is a ton of deals out there waiting to come to the market. So when you look at today's market and the deal activity that's out there, especially on the new platform side, there are law managers that don't have portfolios that they can rely on. 70% of our deal flow is coming from our portfolio, which is great because of all the economic uncertainty. It's nice being able to invest in companies you know and understand well. So that's very attractive.

所以，就像你說的，這就是我們所處的環境。我認為，在某種程度上，我們開始在基本利率方面看到一些方向，也許接近選舉時會稍微回撤，然後克服不確定性。選舉。我想那時你可能會看到。我不會說閘門已打開，但仍有大量交易等待進入市場。因此，當你觀察當今的市場和交易活動時，尤其是在新平台方面，你會發現有些法律經理沒有可以依賴的投資組合。我們 70% 的交易流來自我們的投資組合，考慮到經濟的不確定性，這非常好。能夠投資您熟悉和了解的公司真是太好了。所以這非常有吸引力。

But for new activity and with managers that don't have portfolios, they're being pretty aggressive on spreads. And so if it's an attractive property that's coming to market, we're seeing spreads compress anywhere from 50 to 75 basis points, maybe even as high as 100 basis points depending on the deal and the opportunity. But again, I think if you kind of look at -- this is my perspective over 25 years, if you kind of look at the all-in yields over 25 years, there's always been a little bit of a reversion to a mean as base rates go up, spreads come down, and we've just seen that historically in this asset class. So I'm not surprised by it, but at the end of the day, we're still generating extremely attractive all-in yields for first lien senior secured risk. So it's a great vintage for this asset class.

但對於新活動以及沒有投資組合的管理人來說，他們在利差方面相當積極。因此，如果這是一個即將上市的有吸引力的房產，我們會看到利差會壓縮 50 到 75 個基點，甚至可能高達 100 個基點，具體取決於交易和機會。但我想，如果你看一下——這是我對 25 年的看法，如果你看一下 25 年來的總收益率，你會發現總是有一點回歸均值作為基礎利率上升，利差下降，我們剛剛在這一資產類別中看到了這一點。因此，我對此並不感到驚訝，但最終，我們仍然為第一留置權優先擔保風險產生了極具吸引力的總收益率。因此，對於該資產類別來說，這是一個很好的年份。

Got it. Very helpful. And -- oh, sorry.

知道了。很有幫助。還有——哦，抱歉。

No, I was just going to say sorry for the long-winded answer.

不，我只是想對冗長的回答表示抱歉。

Oh, No. No. I was going to say I have a follow-up that keep your crystal ball out. But so in the context of potentially declining rates next year, how do you guys think about repayments? Obviously, the rate environment has muted repayments over the last, call it, 18 months. But as we go into a potentially declining base rate environment, obviously, these are floating rate assets, which probably provide some insulation. But obviously, if M&A were to pick up, that would offset that. But yes, kind of give us a sense -- repayments have been muted for a while now, but your outlook into '24.

哦，不，不。我想說我有一個後續行動可以讓你的水晶球遠離。但在明年利率可能下降的背景下，你們如何看待還款問題？顯然，在過去 18 個月裡，利率環境抑制了還款。但當我們進入一個可能下降的基本利率環境時，顯然，這些都是浮動利率資產，可能會提供一些絕緣作用。但顯然，如果併購活動加速，這將抵消這種影響。但是，是的，這給了我們一種感覺——還款已經有一段時間了，但你對 24 歲的展望。

Yes. So great question. I can use '21, the back half of '21 as a benchmark because obviously, different reasons, but same situation. The M&A market was stalled. And then once we came out of COVID, the floodgates opened and the back half of '21 was an incredible year in terms of volume and quality of deals that came to market. And if the crystal ball is true and it plays out that the Fed starts cutting rates close to the election and we go into '25, I would expect the same sort of situation to occur with the M&A market.

是的。很好的問題。我可以使用'21，'21的後半部作為基準，因為顯然，不同的原因，但相同的情況。併購市場陷入停滯。然後，一旦我們擺脫了新冠疫情，閘門就打開了，21 年下半年無論是在市場交易的數量還是質量上都是令人難以置信的一年。如果水晶球是真的，而結果顯示聯準會在接近大選時開始降息，而我們進入 25 年，我預計併購市場也會出現同樣的情況。

And I think to your point, right now, the benefit that we have, especially with our portfolio, which is performing really well, we have very low runoff. And so whatever new deal activity we have is actually allowing us to increase our AUM. This is across our platform. That will obviously change. We saw that in '21, where runoff increased pretty dramatically as properties were traded. So definitely would expect that to increase dramatically when the M&A market opens up. But on the flip side, as long as you have a strong origination team and a leadership position in the market, I think you'll be able to replace that runoff with new deal activity. So it'll be extremely busy just like it was back half of '21.

我認為就你的觀點而言，目前我們所擁有的好處，特別是我們的投資組合，表現非常好，我們的徑流量非常低。因此，無論我們有什麼新交易活動，實際上都讓我們能夠增加我們的資產管理規模。這是我們整個平台的情況。這顯然會改變。我們在 21 年就看到了這一點，隨著財產的交易，徑流急劇增加。因此，當併購市場開放時，肯定會預期這一數字將大幅增加。但另一方面，只要你擁有強大的發起團隊和市場領導地位，我認為你將能夠用新的交易活動取代這種決選。因此，就像 21 年後半年一樣，它將非常繁忙。

Our next questions come 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。

Congrats on the quarter. Another question for me. And probably in your prepared remarks, you said the conversion rates of actually -- deals actually coming to closing heading towards historic close. Can you give us any -- I mean, is that because sponsors are pulling deals because of the valuation? Is it the level of competition for the high-quality deals that still a lot of people don't want them? I mean can you give us any color on what's driving that all to historic low levels of conversion?

恭喜本季。我的另一個問題。也許在您準備好的演講中，您提到了實際上即將完成的交易的轉換率正在接近歷史性的結束。你能給我們一些資訊嗎——我的意思是，這是因為贊助商因為估值而取消交易嗎？是因為高品質交易的競爭程度仍然很多人不想要嗎？我的意思是，您能否告訴我們是什麼原因導致轉換率達到歷史低點？

Sure, Robert. I can probably, at some point, get you an exact breakdown, but I mean, for sure, it's all of the above. I would say that it's not so much like the quality of deals, right, because those deals just aren't even making it through the screen, at least with the sponsors that we focus on. And so they're looking at properties that are high-quality properties. I think you have a couple of factors. I think definitely the valuation is an issue. And also, there's a catch-up, right? Because if you think about the elevated interest rate environment, you're not really seeing the full impact of that interest rate effect until you kind of get the next quarter's financials. And now we're kind of at this point where we're starting to see like the full year impact.

當然，羅伯特。我也許可以在某個時候為您提供準確的細分，但我的意思是，可以肯定的是，以上都是。我想說，這與交易的品質不太一樣，對吧，因為這些交易甚至沒有通過螢幕，至少對於我們關注的贊助商來說是這樣。因此，他們正在尋找高品質的房產。我認為你有幾個因素。我認為估值絕對是個問題。而且，還有一個追趕，對吧？因為如果您考慮利率上升的環境，那麼在您獲得下一季的財務數據之前，您並沒有真正看到利率效應的全部影響。現在我們已經開始看到全年的影響了。

So if we kind of go back over the last 3, 6 months, there was a little bit of a catch-up because they're showing a quarter earlier and maybe the performance was much more decent. But now all of a sudden, performance is eroding a bit because of the inflationary and higher base rates and so then you get into this whole negotiation around valuation and deals kind of fall apart. So I've seen that for sure in a lot of situations.

因此，如果我們回顧過去 3、6 個月，就會發現有一點追趕，因為他們提前一個季度展示，也許表現要好得多。但現在突然之間，由於通貨膨脹和較高的基本利率，業績出現了一些下滑，因此你陷入了圍繞估值的整個談判，交易有點破裂。所以我在很多情況下都確實看到了這一點。

On the competitive side, what's really unique, I think, right now in this deal environment, it's because there's not some -- there's not a lot of new properties coming to the market that are extremely attractive. So the compression of the deal cycle has really been reduced. And a lot of times, lenders are really not coming in or allowed to come in by the investment bankers to kind of the second stage because they're really trying to control these deals. And certainly, sponsors that are working these deals are trying to avoid losing to the competition. So it's fiercely competitive out there. We've got to be really responsive as a team to be working very quickly with these sponsors going through all the third-party diligence and doing our underwriting. So we're not slowing them down. But that definitely is an overall theme in the market.

在競爭方面，我認為，目前在這種交易環境中，真正獨特的地方是，沒有一些非常有吸引力的新房產進入市場。所以交易週期的壓縮確實減少了。很多時候，貸款人實際上並沒有進入或投資銀行家不允許進入第二階段，因為他們真的想控制這些交易。當然，進行這些交易的贊助商正在努力避免在競爭中失敗。因此，那裡的競爭非常激烈。作為一個團隊，我們必須真正做出反應，才能與這些贊助商快速合作，完成所有第三方盡職調查並進行承保。所以我們不會放慢他們的速度。但這絕對是市場的整體主題。

I appreciate that. Another one on different subject. On the buyback, obviously, you didn't buy back in the second -- third quarter, did in the second. Can you give us any -- I mean, was it blackout dates? Was it -- what would -- obviously, it wasn't year-end or anything, but you did have an Investor Day. Can you give us any color on why no buybacks in Q3 versus quite a lot in Q2 was done?

我很感激。另一篇關於不同主題的文章。在回購方面，顯然，你沒有在第二、第三季回購，而是在第二季回購。你能給我們一些資訊嗎——我的意思是，這是限制日期嗎？顯然，這不是年底或其他什麼，但你確實有一個投資者日。您能否告訴我們為什麼第三季沒有回購，而第二季卻進行了大量回購？

Yes, Robert, great question. And as we mentioned in our Investor Day, since 2019, we spent $73 million buying shares which equates to like 8 million shares. In 2Q, we bought 1.4 million shares at an average price of $7.75. As of yesterday, I think we were around $9.39 that's what we closed that. And this quarter, we had to balance leverage with some portfolio opportunities. And as we've always said, we're very shareholder-friendly. We're very committed to our share buybacks, but this just wasn't a quarter that it worked out, and you will see us in the market in coming quarters.

是的，羅伯特，好問題。正如我們在投資者日所提到的，自 2019 年以來，我們花了 7,300 萬美元購買股票，相當於約 800 萬股。第二季度，我們以 7.75 美元的平均價格購買了 140 萬股。截至昨天，我認為我們的收盤價約為 9.39 美元。本季度，我們必須平衡槓桿與一些投資組合機會。正如我們一直所說的，我們對股東非常友好。我們非常致力於股票回購，但這並不是一個成功的季度，您將在未來幾季的市場上看到我們。

Since 2019, we've been in the market 11 out of 12 times when we weren't blacked out. So you can know that we're committed to it. This just -- we just had to choose different levers this quarter.

自 2019 年以來，我們進入市場的 12 次中，有 11 次沒有被駭。所以您可以知道我們致力於此。這只是——我們本季必須選擇不同的槓桿。

Our next questions come from the line of Casey Alexander with Compass Point.

我們的下一個問題來自 Casey Alexander 和 Compass Point 的線路。

The 2 Sierra positions that were realized after the end of the quarter, can you tell us how -- what -- how they were realized just relative to what their marks were? I don't even know -- need to know the names, just if there's any additional gain or loss on those subsequent to the end of the quarter versus the 3 quarter mark?

本季末後實現的 2 個 Sierra 職位，您能否告訴我們相對於他們的分數，它們是如何、什麼、如何實現的？我什至不知道 - 需要知道名稱，只是季度末之後的那些與第三季度相比是否有任何額外的收益或損失？

Yes, Casey. So like you said, we exited 2. One, we exited, I want to say, about $20,000 above the mark. And the other one was marked at only $9,000 and we either exited that like right around the mark or slightly under. So very immaterial to the overall portfolio.

是的，凱西。所以就像你說的，我們退出了 2。一，我想說，我們退出了大約 20,000 美元。另一件的標價僅為 9,000 美元，我們要么在接近標價的位置退出，要么略低於標價。因此對於整體投資組合來說非常不重要。

Okay. That's fine. That's fine, Elizabeth. Then looking at Slide 13, we see what the portfolios are at. What is the mark-to-market loss on the Sierra portfolio and the MVC portfolio, just so that we can compare them to where the credit support agreements are valued?

好的。沒關係。沒關係，伊麗莎白。然後看投影片 13，我們可以看到投資組合的內容。 Sierra 投資組合和 MVC 投資組合的按市值計算的損失是多少，以便我們可以將它們與信貸支持協議的估值進行比較？

So I'm going to give you a couple of data points, Casey, which I think will answer your question. If not, let me know. So MVC, the current portfolio is valued at $62.5 versus prior quarter was $72.4, where the CSA was valued at $16.8 versus $15.6. So that's the MVC portfolio.

因此，凱西，我將向您提供一些數據點，我認為這可以回答您的問題。如果沒有，請告訴我。因此，MVC 目前投資組合的估值為 62.5 美元，上一季為 72.4 美元，CSA 的估值為 16.8 美元，上一季為 15.6 美元。這就是 MVC 組合。

But that's not what I'm asking. What I'm asking is the CSA is -- for MVC is valued at $16.8. The top side of the CSA is $23 million, what is the actual current mark-to-market loss on the MVC portfolio?

但這不是我要問的。我要問的是 CSA 的價值是——MVC 的價值為 16.8 美元。 CSA 的上限為 2,300 萬美元，MVC 投資組合目前以市值計價的實際損失為何？

Got you. So that's about $30 million, Casey.

明白你了。凱西，這大約是 3000 萬美元。

Okay. That's about $30 million. Okay. And what's the actual mark-to-market loss on the Sierra portfolio?

好的。這大約是 3000 萬美元。好的。 Sierra 投資組合按市值計算的實際損失是多少？

It was -- it's about $28 million.

大約是 2800 萬美元。

Okay. It's about $28 million. So all right. That's great. And then Ian, can you give us some view into security, which I understand is an MVC position, but it was marked down $10 million quarter-over-quarter. So that's a pretty big change in that valuation.

好的。大約是2800萬美元。那麼好吧。那太棒了。然後，Ian，您能給我們一些關於安全性的看法嗎？據我所知，這是一個 MVC 職位，但它比上一季減少了 1000 萬美元。因此，估值發生了相當大的變化。

And then past that, I know you've got different guys who work on core. Core was marked up $6 million to 75% of par. I would be interested in hearing about the package of securities that you think you're going to receive on core that fed into your ability to market at 75% of par.

除此之外，我知道你們有不同的人從事核心工作。核心價格上漲 600 萬美元，達到面額的 75%。我有興趣了解您認為您將在核心上收到的一攬子證券，這些證券將增強您以票面價值 75% 的價格進行行銷的能力。

Yes.

是的。

Ian, let me answer that. Ian and I had the same thoughts. Casey, I appreciate the question. And so as you may recall, the position in security holdings is equity-oriented. During the course of the past quarter, there were some projects that unfortunately shifted to the right. And I think that the impact of the financials is that the EBITDA trended a little bit against us as you apply an enterprise value multiple to that figure, it just magnifies the impact of the timing dynamic associated with performance.

伊恩，讓我回答。伊恩和我有同樣的想法。凱西，我很欣賞這個問題。您可能還記得，證券持有的部位是以股權為導向的。在過去的一個季度中，有一些項目不幸地向右移動。我認為財務的影響是，當你將企業價值倍數應用於該數字時，EBITDA 的趨勢對我們有點不利，它只會放大與績效相關的時間動態的影響。

And so this is the unfortunate reality of equity positions whenever they constitute a portfolio. It's that they can be a little bit more volatile, and we were exposed on the volatility side this particular quarter. But don't have any reason to be concerned with respect to that position longer term and are optimistic that over an intermediate period of time, we'll see the recovery in the performance.

因此，每當股票部位構成投資組合時，這就是股票部位的不幸現實。而是它們的波動性可能會更大一些，而我們在這個特定季度就面臨波動性的風險。但沒有任何理由長期擔心這一狀況，樂觀地認為，在一段時間內，我們將看到業績的復甦。

I'm actually going to turn the call over to Bryan to speak to core more specifically.

實際上，我將把電話轉給 Bryan，以便更具體地與核心人員交談。

Yes. Thanks, Matt. Casey, in terms of core, so from a process perspective, they've reached an agreement with all parties. They still have to get disclosure statements approved and solicitation needs to go out for everyone to make elections in terms of how they want to vote as it relates to the plan.

是的。謝謝，馬特。凱西，從核心來講，所以從流程的角度來說，他們和各方都達成了一致。他們仍然需要獲得披露聲明的批准，並且需要徵求每個人的意見，以便根據與該計劃相關的方式進行投票。

As I know, you know, when we've talked about previously, there's a couple of different options in terms of what the equipment loan holders can receive, one of which is reinstated debt of roughly $0.80 on the dollar and the other is equity in the business on a go forward reorganized equity. So that solicitation process has not happened yet. We still have the ability to make an election there, and we're evaluating both of those options.

如我所知，當我們之前討論過時，設備貸款持有人可以獲得多種不同的選擇，其中之一是恢復約 0.80 美元的債務，另一個是設備貸款持有人的股權該業務繼續進行股權重組。因此，招標過程尚未發生。我們仍然有能力在那裡進行選舉，我們正在評估這兩個選項。

We have reached the end of our question-and-answer session. I would now like to turn the floor back over to Eric Lloyd for any closing remarks.

我們的問答環節已經結束。現在我想請埃里克·勞埃德（Eric Lloyd）發表結束語。

Just thanks, everybody, for dialing in and everybody, have a wonderful weekend.

謝謝大家撥電話，祝大家週末愉快。

Thank you. This does conclude today's teleconference. We appreciate your participation. You may disconnect your lines at this time. Enjoy the rest of your day.

謝謝。今天的電話會議到此結束。我們感謝您的參與。此時您可以斷開線路。享受你一天剩下的時間。