Cion Investment Corp (CION) 2024 Q2 法說會逐字稿

Greetings, and welcome to the CION Investment Corporation second-quarter 2024 conference call. (Operator Instructions). As a reminder, this conference is being recorded.

您好，歡迎您參加 CION Investment Corporation 2024 年第二季電話會議。（操作員說明）。提醒一下，本次會議正在錄製中。

It is now my pleasure to introduce your Charlie Arestia, Head of Investor Relations. Thank you. Please go ahead.

現在我很高興向您介紹投資者關係主管查理·阿雷斯蒂亞 (Charlie Arestia)。謝謝。請繼續。

Good morning, and welcome to CION Investment Corporation's Second Quarter 2024 Earnings Conference Call. An earnings press release was distributed earlier this morning before market opened. A copy of the release, along with the supplemental earnings presentation is available on the company's website at www.cionbdc.com in the Investor Resources section and should be reviewed in conjunction with the company's Form 10-Q filed with the SEC.

早安，歡迎參加 CION Investment Corporation 2024 年第二季財報電話會議。今天早上開市前發布了一份收益新聞稿。新聞稿的副本以及補充收益報告可在公司網站 www.cionbdc.com 的「投資者資源」部分獲取，並應與本公司向 SEC 提交的 10-Q 表格一併審查。

As a reminder, this conference call is being recorded for replay purposes. Please note that today's conference call may contain forward-looking statements, which are not guarantees of future performance or results and involve a number of risks and uncertainties. Actual results may differ materially from those in the forward-looking statements as a result of a number of factors, including those described in the company's filings with the SEC.

謹此提醒，本次電話會議正在錄音以供重播之用。請注意，今天的電話會議可能包含前瞻性陳述，這些陳述不是對未來業績或結果的保證，並且涉及許多風險和不確定性。由於多種因素（包括該公司向美國證券交易委員會提交的文件中所述的因素），實際結果可能與前瞻性陳述中的結果有重大差異。

Joining me on today's call will be Mark Gatto, CION Investment Corporation's Co-Chief Executive Officer; Gregg Bresner, President and Chief Investment Officer; and Keith Franz, Chief Financial Officer.

參加今天電話會議的還有 CION Investment Corporation 聯合執行長 Mark Gatto； Gregg Bresner，總裁兼首席投資長；和財務長基斯‧弗蘭茨(Keith Franz)。

With that, I'd like to now turn the call over to Mark Gatto. Please go ahead, Mark.

現在，我想將電話轉給馬克·加托。請繼續，馬克。

Thank you, Charlie. Good morning, everyone, and thanks for joining our call today. I am pleased to report that CION continues to perform well with strong results across the board in net investment income, NAV growth, capital deployment and portfolio credit performance. I believe these results are particularly impressive given what many lenders have described as a challenging market environment.

謝謝你，查理。大家早安，感謝您今天加入我們的電話會議。我很高興地向大家報告，CION 繼續表現良好，在淨投資收入、資產淨值增長、資本部署和投資組合信用表現方面均取得了強勁的業績。我相信，考慮到許多貸款人所描述的充滿挑戰的市場環境，這些結果尤其令人印象深刻。

I will discuss in more detail later, but I believe this quarter reflected CION's continued focus on deal selection and measured growth rather than buying the market like many of our peers.

我稍後將更詳細地討論，但我相信本季反映了 CION 繼續專注於交易選擇和衡量成長，而不是像我們的許多同業那樣買入市場。

CION reported $0.43 per share in quarterly net investment income more than covering our recently increased quarterly base dividend. As you recall, last quarter, we recognized significant accretion from several structured yield-enhancing provisions and beneficial resolutions in our special situations investment portfolio. These tend to be transactional in nature and may not always recur every quarter.

CION 公佈的季度淨投資收益為每股 0.43 美元，超過了我們最近增加的季度基本股息。正如您所記得的那樣，上個季度，我們認識到我們的特殊情況投資組合中的幾項結構化收益增強條款和有益解決方案帶來了顯著增長。這些往往是交易性質的，可能並不總是每個季度都會發生。

We believe that CION's differentiated strategy of combining a conservatively positioned loan portfolio paired with opportunistic first lien investing in more complex special situations is a superior model for driving attractive risk-adjusted returns.

我們認為，CION 的差異化策略將保守定位的貸款組合與在更複雜的特殊情況下的機會主義第一留置權投資相結合，是推動有吸引力的風險調整回報的卓越模式。

Our net asset value grew modestly quarter-over-quarter to $16.08 driven by over-earning our quarterly base dividend and ongoing accretive share repurchases, all set partially by unrealized and realized appreciation in the portfolio. This represents approximately 5% NAV appreciation compared to the same quarter last year.

我們的淨資產價值環比小幅增長至 16.08 美元，這得益於我們超額賺取季度基本股息和持續增值的股票回購，所有這些都部分歸因於投資組合中未實現和已實現的升值。與去年同期相比，資產淨值上漲約 5%。

We remain laser-focused on the credit performance of our portfolio and closely monitor the underlying fundamentals of our borrowers. During the quarter, following the review process that includes both internal and external examinations of various borrower key metrics and fair value marks.

我們仍然高度關注投資組合的信用表現，並密切監控借款人的基本面。在本季度，遵循審查流程，包括對各種借款人關鍵指標和公允價值分數進行內部和外部檢查。

We downgraded three loans, offset by upgrading four loans on our risk rating scale. We also added one new loan to nonaccrual status during the quarter, bringing the total nonaccruals to 1.36% of the portfolio at fair value. In the aggregate, loans rated 4 or 5 comprised less than 1.5% of our total portfolio. We are pleased with the credit performance of our portfolio but remain conservatively positioned with a net leverage ratio of 1.13x.

我們下調了三筆貸款的評級，並透過提升四筆貸款的風險評級來抵消影響力。我們還在本季增加了一筆新的非應計貸款，使非應計貸款總額達到以公允價值計算的投資組合的 1.36%。總的來說，評級為 4 或 5 級的貸款占我們總投資組合的比例不到 1.5%。我們對投資組合的信貸表現感到滿意，但仍保持保守立場，淨槓桿率為 1.13 倍。

We remain active repurchasers of our common stock in Q2, buying back approximately 235,000 shares at an average price of $11.37. Subsequent to the quarter end, we intend to renew our share repurchase authorization, which we believe preserves a strong alignment with CION shareholders.

我們在第二季仍然積極回購普通股，以平均價格 11.37 美元回購了約 235,000 股。在季度末後，我們打算更新我們的股票回購授權，我們相信這將保持與 CION 股東的緊密一致。

I mentioned earlier that we are operating in a challenging marketing environment, where there is an enormous amount of capital chasing a relatively small pool of new deal opportunities compared to prior years. The logical consequence of this dynamic is that new deals often have tighter credit spreads and looser protection for lenders.

我之前提到，我們正在一個充滿挑戰的行銷環境中運營，與前幾年相比，有大量資本追逐相對較小的新交易機會。這種動態的邏輯後果是，新交易往往會導致信用利差收窄，而對貸款人的保護則更為寬鬆。

Amidst this backdrop, we remain highly selective in evaluating new deal opportunities, both in our traditional middle-market direct lending portfolio and in the lightly syndicated loan market. We believe this positioning is prudent given the macroeconomic environment, but at the same time, we remain nimble to adapt as needed as conditions evolve in the second half of the year.

在此背景下，我們在評估新交易機會時仍然保持高度選擇性，無論是在傳統的中間市場直接貸款組合還是在輕度銀團貸款市場。我們認為，考慮到宏觀經濟環境，這一定位是審慎的，但同時，我們仍然可以根據下半年情況的變化靈活地進行調整。

As Keith will discuss later, our recent amendment of our largest secured credit facility also reduces our cost of capital and provides increased operational flexibility as we navigate the current landscape. We believe CION's neatly positioned for this environment given our middle market direct lending focus, paired with our opportunistic strategy that can capture alpha in volatile and complex situations.

正如基斯稍後將討論的，我們最近對最大的擔保信貸安排的修訂也降低了我們的資本成本，並在我們應對當前情況時提供了更高的營運靈活性。我們相信，鑑於我們對中間市場直接貸款的關注，以及我們能夠在動盪和複雜的情況下捕捉阿爾法的機會主義策略，CION 已經在這種環境中做好了充分的定位。

With that, I will now turn the call over to Gregg to discuss our portfolio and investment activity during the quarter.

現在，我將把電話轉給格雷格，討論本季我們的投資組合和投資活動。

Thank you, Mark, and good morning, everyone. Our Q2 net investment income benefited from a diverse combination of coupon income, dividends, origination and transaction fees and yield enhancing provisions such as MOICs and prepayment premiums.

謝謝你，馬克，大家早安。我們第二季的淨投資收入受益於息票收入、股息、發起費和交易費以及 MOIC 和預付款溢價等收益增強條款的多種組合。

As Mark noted in his remarks, we remain highly selective with new investments as market conditions created a dynamic of capital chasing transactions, resulting in lower coupon spreads, higher leverage attachment levels and easing credit terms throughout the leveraged loan markets.

正如馬克在演講中指出的那樣，我們對新投資保持高度選擇性，因為市場條件創造了資本追逐交易的動態，導致整個槓桿貸款市場的息差降低、槓桿附加水平提高以及信貸條件寬鬆。

We continue to strategically focus on first lien investing at the top of the capital structure and prefer to utilize secured yield enhancement provisions such as PIK features, call protection, make whole provisions and MOIC to incrementally enhance yields at the top of the capital structure rather than reaching deeper into capital structures for mezzanine and equity co-investments.

我們繼續策略性地關注資本結構頂層的第一留置權投資，並傾向於利用PIK功能、贖回保護、全額準備金和MOIC等擔保收益提升條款來逐步提高資本結構頂層的收益率，而不是更深入地研究夾層和股權共同投資的資本結構。

We believe our continued investment selectivity and proportional deployment levels relative to our fund size helped us to invest in first lien loans at higher spreads when compared to the overall loan market during the quarter.

我們相信，與本季整體貸款市場相比，我們持續的投資選擇性和相對於我們基金規模的比例部署水準幫助我們以更高的利差投資於第一留置權貸款。

We also continued our highly selective focus on secondary investments where we see attractive risk return profiles or the opportunity to acquire lightly syndicated first lien loan tranches at significant discounts to par due to technical reasons where we expect to have active roles in the processes that drive the refinancing or restructuring of the investments.

我們也繼續高度選擇性地關註二級投資，在這些投資中，我們看到具有吸引力的風險回報狀況，或者由於技術原因，有機會以較面值大幅折扣的價格收購輕度銀團第一留置權貸款部分，我們希望在推動這一過程中發揮積極作用。

Historically, we have been able to realize healthy recoveries on our one (inaudible) restructured, reorganized transactions as our realized weighted average total recoveries have been in excess of the amortized cost of those investments at the time of restructuring.

從歷史上看，我們能夠在一項（聽不清楚）重組交易中實現健康的回收，因為我們實現的加權平均總回收率超過了重組時這些投資的攤餘成本。

The majority of our annual PIK income is strategically derived from highly structured situations such as our litigation finance investments, where we can attain higher yields by matching flexible PIK timing features with strict cash flow sweeps upon collections or through coupon structures where PIK is incremental to our cash interest.

我們的大部分年度PIK 收入策略性地來自高度結構化的情況，例如我們的訴訟財務投資，在這種情況下，我們可以透過將靈活的PIK 計時功能與收款時嚴格的現金流掃描相匹配或透過優惠券結構（其中PIK 是我們的增量）來獲得更高的收益。

Over 60% of our PIK investments are in portfolio companies risk rated either 1 or 2 and 98%, risk rated 3 or better. As a result, we believe this PIK income may not compare to restructured PIK driven by a deterioration in credit.

我們超過 60% 的 PIK 投資投資於風險評級為 1 或 2 的投資組合公司，98% 投資於風險評級為 3 或更高的公司。因此，我們認為這種 PIK 收入可能無法與信貸惡化導致的重組 PIK 相比。

Turning now to our Q2 investment and portfolio activity. Our Q2 pipeline benefited from new M&A financing opportunities as well as refinancing, add-on acquisition and secondary activities through our portfolio companies. We completed private direct first lien financings for new portfolio companies, including Voyager mobility, health e-commerce and core health fitness where we acted as either a co-lead arranger or impactful club partner.

現在轉向我們第二季的投資和投資組合活動。我們第二季的管道受益於新的併購融資機會以及透過我們的投資組合公司進行的再融資、附加收購和二次活動。我們為新的投資組合公司完成了私人直接第一留置權融資，包括 Voyager 行動、健康電子商務和核心健康健身，其中我們擔任聯合牽頭安排人或有影響力的俱樂部合作夥伴。

We completed direct refinancings and add-on investments for portfolio companies, including opco borrower also known as Giving Home Health, OptioRx, David's Bridal, WorkGenius, STATinMED, Synnex, Gold Metal Holdings and LGC. We completed secondary market first lien purchases for portfolio companies, including Avison Young, AHF products, JP Intermediate and PH Beauty.

我們為投資組合公司完成了直接再融資和附加投資，包括 Opco 借款人（也稱為 Giving Home Health）、OptioRx、David's Bridal、WorkGenius、STATinMED、Synnex、Gold Metal Holdings 和 LGC。我們為投資組合公司完成了二級市場第一留置權購買，包括 Avison Young、AHF products、JP Intermediate 和 PH Beauty。

The weighted average coupon for total funded debt investments was approximately SOFR plus 6.6% for the quarter and approximately SOFR plus 7.1% or direct (inaudible) investments in new portfolio companies. We opportunistically increased our common equity ownership in Longview Power through attractive restricted Stock purchases.

本季總融資債務投資的加權平均票面利率約為 SOFR 加 6.6%，或對新投資組合公司的直接（聽不清楚）投資約為 SOFR 加 7.1%。我們透過有吸引力的限制性股票購買機會，增加了我們在 Longview Power 的普通股所有權。

During Q2, we made a total of $148 million in new investment commitments across three new and 16 existing portfolio companies, of which $137 million was funded. Approximately 39% were direct first lien loans to new portfolio companies, 54% primary first lien loans to existing portfolio companies and 7% for secondary investments in existing portfolio companies.

第二季度，我們對 3 家新投資組合公司和 16 家現有投資組合公司做出了總計 1.48 億美元的新投資承諾，其中已融資 1.37 億美元。約 39% 是向新投資組合公司提供的直接第一留置權貸款，54% 是向現有投資組合公司提供的主要第一留置權貸款，7% 是向現有投資組合公司的二次投資。

We also funded a total of $10 million of previously unfunded commitments. We had sales and repayments totaling $77 million for the quarter, which consisted of the refinancing of our first and second lien investment in giving home health. The full paydown of our preferred equity holding in Yak Mat. As a result of all of these activities, our net funded investments increased by approximately $70 million during the quarter.

我們也為先前未提供資金的承諾提供了總計 1000 萬美元的資金。本季我們的銷售和還款總額為 7,700 萬美元，其中包括為家庭健康提供第一和第二留置權投資的再融資。我們持有的 Yak Mat 優先股已全額償還。由於所有這些活動，我們的淨資金投資在本季度增加了約 7000 萬美元。

In terms of portfolio performance, our net asset value per share increased from $16.05 in Q1 to $16.08 per share in Q2. We saw increases in the value of our equity investments in Longview Power, Carestream Health and CHC Medical which were driven by increased earnings and cash flow performance at each of the companies and our ability to acquire additional equity shares in Longview via secondary restricted stock sales at attractive levels.

就投資組合表現而言，我們的每股資產淨值從第一季的 16.05 美元增加到第二季的每股 16.08 美元。我們看到，我們對Longview Power、Carestream Health 和CHC Medical 的股權投資價值增加，這是由於每家公司的利潤和現金流量表現增加，以及我們有能力透過二級限制性股票出售來收購Longview的額外股權。

We also had market-to-market declines in value for portfolio positions, including our first lien investment in Trademark Global and our equity investment in TMK TriMark based on LTM earnings performance and our equity investments and David's Bridal based on seasonal working capital borrowings.

我們的投資組合部位的價值也出現了市場對市場的下跌，包括我們對Trademark Global 的第一筆留置權投資，以及我們基於LTM 盈利表現對TMK TriMark 的股權投資，以及我們基於季節性營運資本借款的股權投資和David's Bridal。

From a portfolio credit perspective, our nonaccruals increased from 0.86% of fair value at the end of Q1 to 1.36% of fair value at the end of Q2. We added one new name to nonaccrual this quarter, our first lien investment in new cycle. As we gain more clarity on corporate development activities of the company and the expected pro forma business strategy going forward, we will continue to reevaluate the nonaccrual status of this investment.

從投資組合信用角度來看，我們的非應計費用從第一季末公允價值的0.86%增加到第二季末公允價值的1.36%。本季我們為非應計利息增加了一個新名稱，這是我們在新周期中的第一個留置權投資。隨著我們對公司的企業發展活動和未來預期的備考業務策略更加清晰，我們將繼續重新評估這項投資的非應計狀態。

On an absolute basis, nonaccruals continue to be largely benign, and we are pleased with the continued credit performance of our portfolio, particularly in the current interest rate environment.

從絕對角度來看，非應計項目在很大程度上仍然是良性的，我們對我們投資組合的持續信貸表現感到滿意，特別是在當前的利率環境下。

During the quarter, Cigna's GAAP realized losses of approximately $20 million which resulted in only a $2 million negative impact to NAV as they consisted largely of the final write-off of legacy stub and trust investments in Country Fresh, Deluxe Entertainment and K&B holdings that were valued at or near zero as of 3/31/24. This also included a $4.6 million realized loss based on market-to-market value of our HW acquisition first lien position at the time of restructure, which constituted $1.3 million of the total $2 million negative impact to NAV from GAAP realized loss transactions.

本季度，Cigna 的GAAP 實現了約2000 萬美元的虧損，這對資產淨值僅造成了200 萬美元的負面影響，因為這些損失主要包括對Country Fresh、Deluxe Entertainment 和K&B 控股的遺留存根和信託投資的最終沖銷。這還包括根據重組時我們的 HW 收購第一留置權頭寸的市值計算的 460 萬美元已實現損失，這佔 GAAP 已實現損失交易對資產淨值 200 萬美元負面影響中的 130 萬美元。

We completed the exchange of HW acquisition first lien debt into new first lien debt preferred and common equity in order to drive recovery by providing the company with the financial flexibility to pursue new product introductions and growth initiatives.

我們完成了將 HW 收購第一留置權債務轉換為新的第一留置權債務優先股和普通股，以便透過為公司提供財務靈活性來推行新產品推出和成長計畫來推動復甦。

Overall, our portfolio remains defensive in nature with 84% in first lien investments and 85% in senior secured investments. Approximately 99% of our portfolio remains risk rated 3 or better. Our risk rated 3 investments, which are investments where we expect full repayment but are either spending more engagement time and/or have seen increased risk since the initial asset purchase declined from approximately 10.4% and to 9.1% of the portfolio.

總體而言，我們的投資組合仍然具有防禦性，其中 84% 為第一留置權投資，85% 為優先擔保投資。我們大約 99% 的投資組合的風險評級仍為 3 或更高。我們的風險評級為 3 級投資，這些投資是我們期望全額償還的投資，但要么花費更多的參與時間，要么自初始資產購買從投資組合的約 10.4% 下降到 9.1% 以來風險增加。

I will now turn the call over to Keith.

我現在將把電話轉給基斯。

Okay. Thank you, Gregg, and good morning, everyone. As Mark mentioned, we reported another quarter of solid financial results, driven by a combination of income generated from our quarterly investment activity, including dividend income and yield enhancing provisions realized within the portfolio.

好的。謝謝你，格雷格，大家早安。正如馬克所提到的，我們報告了又一個季度穩健的財務業績，這是由我們季度投資活動產生的收入綜合推動的，包括股息收入和投資組合中實現的收益增強準備金。

During the quarter, net investment income was $23 million or $0.43 per share compared to $32.6 million or $0.60 per share reported in the first quarter a decrease of $9.6 million or $0.17 per share. Total investment income was $61.4 million during Q2 as compared to $73.6 million reported in Q1. This decrease was driven by lower income recorded during Q2 relating to restructuring and prepayment activities and make whole premiums earned in connection with the repayment of certain investments when compared to the first quarter.

本季淨投資收益為 2,300 萬美元，即每股 0.43 美元，與第一季的 3,260 萬美元，即每股 0.60 美元相比，減少了 960 萬美元，即每股 0.17 美元。第二季的總投資收入為 6,140 萬美元，而第一季的總投資收入為 7,360 萬美元。與第一季相比，這一下降是由於第二季與重組和預付款活動相關的收入下降以及與償還某些投資相關的全部保費所致。

On the expense side, total operating expenses were $38.4 million as compared to $41 million reported in the first quarter. Decrease was primarily driven by lower advisory fees due to a decrease in total investment income when compared to the prior quarter.

在費用方面，總營運費用為 3,840 萬美元，而第一季報告的營運費用為 4,100 萬美元。下降主要是由於總投資收入較上一季下降而導致諮詢費下降。

At June 30, we had total assets of approximately $2 billion and total equity or net assets of $861 million with total debt outstanding of $1.07 billion and 53.5 million shares outstanding. At the end of the quarter, our net debt-to-equity ratio was 1.13x and which is slightly higher than 1.03x at the end of Q1.

截至 6 月 30 日，我們的總資產約為 20 億美元，總股本或淨資產為 8.61 億美元，未償債務總額為 10.7 億美元，已發行股票為 5,350 萬股。截至本季末，我們的淨負債股本比率為 1.13 倍，略高於第一季末的 1.03 倍。

Our portfolio at fair value ended the quarter at $1.8 billion, up over $80 million from the first quarter primarily reflecting an increase in net funded investment activity during the quarter. The weighted average yield on our debt and other income-producing investments at amortized cost was 12.9% at June 30 which is consistent with the first quarter.

本季末，我們的投資組合以公允價值計算為 18 億美元，比第一季增加超過 8,000 萬美元，主要反映了本季淨融資投資活動的增加。截至 6 月 30 日，我們的債務和其他創收投資以攤餘成本計算的加權平均收益率為 12.9%，與第一季一致。

At June 30, our NAV was $16.08 per share as compared to $16.05 per share at the end of March. The increase of $0.03 per share or 0.2% was primarily due to outearning our distributions and the accretive nature of our share repurchase program during the quarter, partially offset by price declines in our portfolio.

截至 6 月 30 日，我們的資產淨值為每股 16.08 美元，而 3 月底為每股 16.05 美元。每股成長 0.03 美元或 0.2%，主要是由於本季我們的分配收益和股票回購計畫的增值性質，部分被我們投資組合的價格下跌所抵銷。

We ended the second quarter with a strong and flexible balance sheet with over $600 million in unencumbered assets, lower net leverage relative to our peers, a strong debt servicing capacity and solid liquidity.

第二季結束時，我們的資產負債表強勁而靈活，未支配資產超過 6 億美元，淨槓桿率相對同業較低，償債能力強大，流動性穩定。

We had $93 million in cash and short-term investments and an additional $175 million available under our credit facility to further finance our investment pipeline and continue to support our existing portfolio companies.

我們擁有 9,300 萬美元的現金和短期投資，以及我們的信貸安排下的額外 1.75 億美元，以進一步為我們的投資管道提供資金，並繼續支持我們現有的投資組合公司。

Our current debt mix is about 60% in secured and 40% in unsecured with over 85% in floating rate. During the quarter, the weighted average cost of our debt capital was about 8.4%, which is unchanged from the first quarter.

我們目前的債務結構約為 60% 有擔保，40% 無擔保，浮動利率超過 85%。本季度，我們的債務資本加權平均成本約為8.4%，與第一季持平。

In terms of our debt capital, we have recently amended and extended our senior secured credit facility with JPMorgan for an additional two years with more constructive operating provisions and better economics. The effective credit spread was reduced by 45 basis points which will help reduce our overall cost of debt capital in the second half of the year. We believe these new terms will give us the flexibility needed to further diversify our debt mix and to continue to expand our group of lending partners.

就我們的債務資本而言，我們最近修改了與摩根大通的優先擔保信貸額度，並將其延長兩年，提供更具建設性的營運條款和更好的經濟效益。有效信用利差降低了45個基點，這將有助於降低我們下半年的整體債務資本成本。我們相信這些新條款將為我們提供進一步實現債務結構多元化並繼續擴大貸款合作夥伴群體所需的靈活性。

Now turning to distributions. During the second quarter, we paid total distributions to our shareholders of $0.41 per share, which includes a base distribution of $0.36 per share, which is an increase of $0.02 per share from $0.34 in Q1 and a midyear supplemental distribution of $0.05 per share.

現在轉向發行版。第二季度，我們向股東支付了每股 0.41 美元的總分配，其中包括每股 0.36 美元的基本分配，比第一季度的 0.34 美元增加了 0.02 美元，以及每股 0.05 美元的年中補充分配。

We have now increased our quarterly base distribution 4 times since we listed back in October 2021, raising the base distribution by $0.10 per share or 38% from $0.26 per share to $0.36 per share. As a result, the trailing 12-month distribution yield through the second quarter based on the average NAV was 10.5% and the trailing 12-month distribution yield based on the quarter end market price was 13.9%.

自 2021 年 10 月上市以來，我們現已將季度基本分配增加了 4 倍，將基本分配提高了每股 0.10 美元，即 38%，從每股 0.26 美元增至每股 0.36 美元。結果，第二季基於平均資產淨值的追蹤 12 個月分配收益率為 10.5%，基於季度末市場價格的追蹤 12 個月分配收益率為 13.9%。

As announced this morning, we declared our third quarter base distribution of $0.36 per share, which is the same as the second quarter. The third quarter base distribution will be paid on September 17 to shareholders of record on September 3. Open the line for questions.

正如今天早上宣布的那樣，我們宣布第三季的基本分配為每股 0.36 美元，與第二季相同。第三季基本分配將於 9 月 17 日支付給 9 月 3 日登記在冊的股東。打開提問熱線。

(Operator Instructions)

（操作員說明）

Eric Zwick, Lucid Capital

埃里克·茲威克 (Eric Zwick)，Lucid 資本

Thanks. Good morning, everyone. I wanted to start first. You mentioned that spreads on new originations have been under pressure in the past few quarters, and that's pretty consistent with what we're hearing from others as well. Just curious, are you seeing any signs of those stabilizing either kind of in the latter part of 2Q or as you look at the pipeline going forward?

謝謝。大家早安。我想先開始。您提到，過去幾季新產品的利差一直面臨壓力，這與我們從其他人那裡聽到的情況非常一致。只是好奇，您是否在第二季後半段或在展望未來的管道時看到任何穩定的跡象？

Hi, Eric, it's Gregg. Broader market, no. I think spreads are continuing to be tight just based on supply and demand of money coming in and an investable universe that really hasn't grown accordingly. For us, we invested at SOFR 660 last quarter, which is consistent where we've been in previous quarters. So we were able to maintain that premium. But it really depends on your selectivity and your deployment level versus your fund size. And for us, it was a proportional quarter.

嗨，艾瑞克，我是格雷格。更廣闊的市場，沒有。我認為利差繼續收緊只是基於資金的供需關係以及可投資領域並沒有相應增長。對我們來說，上個季度我們投資了 SOFR 660，這與前幾季的情況一致。所以我們能夠維持這個溢價。但這實際上取決於您的選擇性以及您的部署水準與您的基金規模。對我們來說，這是一個比例四分之一的季度。

That's helpful. Thank you. And then a follow-up maybe on the pipeline, just in terms of the mix between new and follow-on activity. Is that shifting at all or still pretty similar at this point given the slow M&A market at this point?

這很有幫助。謝謝。然後，後續行動可能正在醞釀中，只是就新活動和後續活動之間的混合而言。鑑於目前併購市場緩慢，這種情況是否發生了變化，還是仍然非常相似？

I would say it's similar to what we experienced, Q3 look is shaping up. We think very consistent with what we saw in Q2, which was a balance slightly higher portfolio investments in current portfolio companies. But we still have a pretty robust new issue pipeline that we're looking at. So I would say from where we sit today, it will be consistent with what we saw in Q2.

我想說這與我們經歷的類似，第三季的外觀正在形成。我們認為與我們在第二季度看到的情況非常一致，即當前投資組合公司的投資組合投資餘額略高。但我們仍然有一個非常強大的新發行管道正在研究中。所以我想說，從我們今天的立場來看，這將與我們在第二季看到的情況一致。

And then moving on to leverage. You noted that the net leverage increased slightly in the quarter. And just given that there's still a fair amount of uncertain outlook regarding the economy. Just maybe kind of refresh us on how you think about managing leverage given the outlook and what's appropriate for the portfolio today and kind of what the top end of that range would be based on what you see today?

然後轉向槓桿。您注意到本季淨槓桿率略有增加。鑑於經濟前景仍存在相當大的不確定性。考慮到前景，什麼適合今天的投資組合，以及基於您今天看到的情況，該範圍的上限是什麼？

Eric, it's Keith. Yes, as we previously disclosed to the market, our target leverage range is about 1.25. We're currently at about 1.13. So yes, leverage ticked up a little bit, but that was directly correlated to the net investment activity, the funding of the activity for the quarter.

埃里克，這是基思。是的，正如我們之前向市場披露的那樣，我們的目標槓桿範圍約為 1.25。我們目前大約是 1.13。所以，是的，槓桿率略有上升，但這與淨投資活動、本季活動的融資直接相關。

And then last one for me. We're starting to see some anecdotal evidence of weakening in the US economy. And just given your portfolio, what you're able to see. You've done a great job over the past year or so working down the nonaccrual levels and not seeing any signs of acceleration, reacceleration at this point, which is solid.

然後是我的最後一張。我們開始看到一些美國經濟疲軟的軼事證據。只要給出你的投資組合，你就能看到什麼。在過去一年左右的時間裡，你在降低非應計水平方面做得很好，目前沒有看到任何加速、再加速的跡象，這是可靠的。

But as you look out across the pipeline in deals review, curious, are you seeing any of the signs of weakening? And if so, are there any commonalities in terms of industry or geography? So just kind of curious, given your seat and the ability you have to look out, what you're seeing at this point?

但當你在交易審查中觀察整個管道時，好奇的是，你是否看到任何疲軟的跡象？如果是的話，在行業或地理方面有什麼共同點嗎？所以有點好奇，考慮到你的座位和你必須向外看的能力，你現在看到了什麼？

Eric, it's Gregg. I would say it's a very similar environment to what we've seen since the first quarter of '23. I mean we've been underwriting very defensively since and honestly, we haven't seen that much change. I think maybe perhaps other people are becoming more aware of it.

艾瑞克，我是格雷格。我想說，這與我們自 23 年第一季以來所看到的環境非常相似。我的意思是，從那時起我們一直非常謹慎地承保，老實說，我們沒有看到太大的變化。我想也許其他人正在變得更加意識到這一點。

But I think we've been in this defense mode for a while. And in terms of what we're seeing, I can't say there's any specific material change in the type of credit. What we're seeing is in some of the universe, just the funds coming in or forcing people to be more aggressive with spreads and loosening documents is more driving the credit outcome than the actual credit fundamentals of the borrower.

但我認為我們處於這種防禦模式已經有一段時間了。就我們所看到的情況而言，我不能說信貸類型有任何具體的實質變化。我們所看到的是，在某些領域，資金的流入或迫使人們對利差和寬鬆的文件採取更激進的態度，比借款人的實際信貸基本面更能推動信貸結果。

Greg and Keith, thank you both for all the answers today. I appreciate the time.

格雷格和基思，謝謝你們今天的所有回答。我很感激時間。

Finian O'Shea, Wells Fargo Securities.

Finian O'Shea，富國銀行證券公司。

Hi, everyone. Good morning. A question on the buyback. Appreciating you extending your renewing that. I guess, first, can you remind us if that's programmatic or discretionary plan? And then next with your size and assuming you'll no longer do those at some point. Why not a sort of, say, economically commensurate fee structure change that would be more lasting and allow you to maintain your scale?

大家好。早安.關於回購的問題。感謝您延長更新時間。我想，首先，您能否提醒我們這是計劃性計劃還是自行決定計劃？然後接下來是你的尺寸，並假設你在某個時候不再這樣做。為什麼不進行某種經濟上相稱的費用結構改變，這樣會更持久，讓你保持規模呢？

The programmatic at this stage, and we're using it wisely and we'll continue to use it as long as the share price is undervalued, but we'll do that in a prudent way. And we think that's the most effective way to address the issue and the second part of your question, we'll take into consideration. But right now, we're focused on managing the portfolio and going to perform. We think our performance is solid and the share price should reflect that. And hopefully, that will happen soon.

現階段的程序化，我們正在明智地使用它，只要股價被低估，我們就會繼續使用它，但我們會以謹慎的方式這樣做。我們認為這是解決問題的最有效方法，我們將考慮您問題的第二部分。但現在，我們專注於管理投資組合併執行。我們認為我們的業績穩健，股價應該反映出這一點。希望這很快就會發生。

Awesome, thanks so much.

太棒了，非常感謝。

Thank you.

謝謝。

Ladies and gentlemen, this brings us to the end of today's question-and-answer session. We would like to thank everyone for their participation, and I'd like to turn it over to Mr. Gatto at this time for closing comments.

女士們、先生們，今天的問答環節到此結束。我們要感謝大家的參與，我想現在請加托先生發表總結意見。

In closing, we are focused on building a durable franchise at CION. Our investment team, which serves only the BDC continues to source, underwrite and execute attractive deal opportunities in the middle market direct lending space.

最後，我們致力於在 CION 建立持久的特許經營權。我們的投資團隊僅為 BDC 提供服務，繼續在中間市場直接貸款領域尋找、承銷和執行有吸引力的交易機會。

Our credit performance reflects our ongoing portfolio management and our ability to navigate complex and opportunistic restructurings, enable CION to benefit from situations often overlooked by other capital providers.

我們的信用表現反映了我們持續的投資組合管理以及我​​們應對複雜和機會主義重組的能力，使 CION 能夠從其他資本提供者經常忽視的情況中受益。

While this complexity may add another layer to the CION story, it has also produced a total return over the last 12 months that is in the top quartile of all publicly traded BDCs through the second quarter. Given this performance in an environment where broader BDC sector, valuations remain near historical highs, we believe our discounted share price is unwarranted and CION provides investors with a unique opportunity for both strong income and price appreciation potential.

雖然這種複雜性可能會為 CION 的故事增添另一層色彩，但它在過去 12 個月中產生的總回報在第二季度所有公開交易的 BDC 中名列前四分之一。考慮到在更廣泛的BDC 行業、估值仍接近歷史高點的環境下的這種表現，我們認為我們的股價折扣是沒有根據的，CION 為投資者提供了獲得強勁收入和價格升值潛力的獨特機會。

Thank you all for your continued support of CION, and we look forward to speaking again next quarter.

感謝大家對 CION 的持續支持，我們期待下季再次發言。

Ladies and gentlemen, this concludes today's event. You may disconnect your lines at this time and walk off the webcast and enjoy the rest of your day.

女士們、先生們，今天的活動到此結束。此時您可以斷開線路並退出網路廣播並享受剩下的一天。