Golub Capital BDC Inc (GBDC) 2015 Q1 法說會逐字稿

Good afternoon. Welcome to the Golub Capital BDC December 31, 2014 quarterly earnings conference Call. Before we begin, I would like to take a moment to remind our listeners that remarks made during this call may contain forward-looking statements with the meaning of the Private Securities Litigation Reform Act of 1995.

Statements other than statements of the historical fact made during this call may refer to forward-looking statements and are not guarantees of future performance or results and may involve any number of risks and uncertainties. Actual results may differ materially from the forward-looking statements as a result of number of factors, including those described from the time-to-time in Golub Capital BDC filings with the Securities and Exchange Commission.

For the slide presentation that we intend to refer to in the earnings conference call, please visit the investor resource tab on the homepage of our website, www.golubcapitalbdc.com, and click the events/presentation link to find the December 31, 2014 investor presentation. Golub Capital BDC's earnings release is also available on the companies website in the investor resources section.

As a reminder this call is being recorded for replay purposes. I would now like to turn the conference over to Mr. David Golub, Chief Executive Officer of Golub Capital BDC. Please go ahead, sir.

Thanks, Operator. Good afternoon, everybody. Thanks for joining us today. I'm joined today here at Golub Capital by Ross Teune, our Chief Financial Officer; and Greg Robbins, Managing Director.

Last Friday we issued our quarterly earnings press release for the quarter ended December 31. And we posted a supplemental earnings presentation on our website. We'll be referring to this presentation throughout the call today.

I'd like to start by providing an overview of the December 31, 2014 quarterly results. Ross is then going to take you through our quarterly results in more detail. And I'll come back at the end and provide an update on our outlook for conditions in middle-market lending and at Golub Capital BDC for the next several quarters.

Let me, before we begin though, give a bit of an overview. Despite a tough quarter for credit as an asset class and despite a tough quarter for some of our fellow BDCs, I'm pleased to report that Golub Capital BDC had another solid quarter. The December 31 quarter results were very consistent with several themes I highlighted in prior calls.

First, I said last quarter that originations and repayments in the 9/30 quarter were unusually high and that both would slow in the December 31 quarter, and they both did. Originations and repayments were unusually high in the 9/30 quarter and were unusually low in the 12/31 quarter. And this lead to a reduction in prepayment fees and in amortization of original issue discounts.

Second, I said last quarter that pricing and terms were getting a little better after a long period of spread compression and leverage creep. And pricing in terms have gotten a little better. That's reflected in our December 31 quarter numbers.

We'll talk about that in more depth. But the middle market is lagging changes in other credit Markets. Market conditions remain very competitive in the middle market. We'll talk more about that as well.

And finally, third theme, frequent attendees on these calls have heard me say many times that our business is all about credit and minimizing credit losses, and I'll repeat that today. We're hearing more and more about middle-market portfolios experiencing credit stress.

But I'm happy to report that GBDC's portfolio is performing very well. Credit quality remains quite outstanding. So with that context, let's run through the numbers. I'm going to start on page 2 of the investor presentation.

For the quarter ended 12/31/2014, we generated net investment income of $14.6 million. That's $0.31 per share, and that compares to $14.9 million or $0.32 per share for the quarter ended September 30. Net investment income declined slightly from the prior quarter primarily due to lower repayments, as I mentioned, which in turn caused lower prepayment fees and lower fee amortization.

Net increase in net assets resulting from operations, or what I call net income for the quarter, was $15.2 million or $0.32 per share, and that compared to $20.2 million or $0.43 per share for the quarter ended September 30. The $0.01 difference per share between net investment income and net income for the three months ended December 31 was due to net realized and unrealized gains on investments and secured borrowings of $0.6 million.

Net realized gains totaled $1.7 million. That was primarily the result of the sale of two equity investments. And those net realized gains were offset by $1.1 million of [net] unrealized depreciation. That unrealized depreciation primarily related to the reversal of net unrealized appreciation on the two equity investments that we sold.

This was, and I think this is really important, this was the eighth quarter in a row that GBDC had net realized and unrealized gain. This is what you've heard me refer to previously as negative credit losses.

Overall credit quality continues to remain very strong. Our non-accrual rate is just 0.2% of total investments at fair value.

In regards to new investment activity, new investment commitments totaled $146.5 million for the quarter. About 53% of the new commitments were senior secured loans, 43% were one stops, 3% were investments in SLF, and 1% were investments in equity securities. Overall net funds growth for the quarter was $53.1 million; that's an increase of 3.9% quarter over quarter.

Turning to slide 3 of the investor presentation, you can see in the table the $0.31 per share in NII and the $0.32 per share in net income. As our quarterly earnings exceeded our quarterly dividend, NAV per share increased. It increased by less than a penny, so with rounding, NAV per share remained at $15.55 per share.

As shown on the bottom of the slide, we had a slight increase in the average size of our investments. But the portfolio remains very granular, very well diversified with 147 different portfolio companies and an average investment size of $9.3 million.

I'm going to now turn it over to Ross who'll provide some additional portfolio highlights and discuss the financial results in more detail. I'll come back at the end, address what we see coming in the next several quarters, and then we'll take some questions. Over to you Ross.

All right, thanks, David. I'm going to begin on slide 4. As David mentioned, we had total originations of $146.5 million and total portfolio run-off of $80.9 million.

As shown in the comparative table, new origination commitments and portfolio run-off were both down from unusually high levels in the quarter ended September 30. In that quarter new origination commitments totaled $332.6 million and total portfolio run-off was $286.6 million. Overall net funds growth for the quarter was $53.1 million, a 3.9% increase over the prior quarter.

As shown on the bottom, 53% of our new origination commitments were in traditional senior secured investments, 43% were in one-stop investments, 3% in senior loan fund, and the remaining 1% in equity co-investments. In future quarters, we expect that the origination asset mix will shift back with one stops comprising the majority of new investment commitments.

Turning to slide 5, these four charts provide a break down of the portfolio by investment type, industry classification, investment size, and fixed versus floating rate. Looking first at the charts on the left-hand side, despite originating a higher percentage of traditional senior secured investments this quarter, the proportion of one-stop investments in the portfolio increased. And the proportion of traditional senior secured investments declined.

This was the result of a reclassification change. We have been categorizing some of our late-stage lending activities as senior secured loans. But we chose to re-class these as one-stop investments because the pricing and risk profile of these investments is more similar to those of our one stops.

The total fair value of late stage lending loans reclassified during the quarter as one-stops was $47.1 million. As a result of the re-class, one-stop investments increased to 72% of the portfolio as of 12/31, and traditional senior secured investments declined to 18%. We had about 10% in junior debt and equity co-investments and investment in the senior loan fund.

In regards to industry diversification, the portfolio remains well diversified by industry. And there have been no significant changes with these industry classification percentages over the past year.

Over the past couple of months, several investors have asked us about our exposure to the oil and gas industry given concerns about this sector. The answer is we have almost none. Less than 1% of our portfolio is classified as oil and gas.

On balance, we think lower oil prices are a net positive for our portfolio company investments. In looking at the charts on the right hand side, the investment portfolio continues to remain diversified by investment size. And our debt investment portfolio remains predominantly invested in floating-rate loans.

Turning to slide 6, for new investments, for the first time in eight quarters, the weighted average rate on new investments exceeded the rate on investments that paid off. This is evidence that the market spread compression we have been experiencing for over the past two years may have finally worked its way through the portfolio. And it's consistent with the stable to slightly higher pricing we are seeing on new investments being quoted.

For the quarter ended December 31, the weighted average rate and new investments was 6.8%, up from 6.7% the previous quarter. The weighted average rate on new investments was also above the weighted average interest rate on investments that paid off during the quarter with that rate being 6.5%.

Shifting to the graph on the right hand side, this graph summarizes investment portfolio spreads for the quarter. Focusing first on the gray line, this line represents the income yield or the actual amount earned on the investments including interest and fee income, but excluding the amortization of discounts and up-front origination fees.

Despite stable to increased pricing on new investments, the income yield dropped by 40 basis points from 8.2% to 7.8% primarily due to a $1 million decline in prepayment fees. The investment income yield, the dark blue line, which includes amortization of fees and discounts, declined by 100 basis points primarily for the same reason, lower run-off.

For the quarter ended 12/31, total OID fee amortization was $1.7 million. This was down from $3.6 million in the quarter ended 9/30. Looking at the green line the weighted average cost of debt has remained relatively stable for the past three quarters and was 3.3% for the quarter ended 12/31.

Flipping to the next slide, overall portfolio quality continues to remain strong with non-earning assets as a percentage of total investments on a cost basis of 0.5% and 0.2% as a percentage of total investments on a fair-value basis. During the quarter, we took one additional investment non-accrual which has a fair value of $2.2 million as of December 31.

Flipping to slide 8. The percentage of investments risk rated at five or four, our two highest categories, remain stable quarter-over-quarter and continues to represent over 90% of our portfolio. The percentage of investments risk rated at one through three increased slightly, but these percentages still remain low relative to our historical benchmarks.

As a reminder, independent valuation firms valued approximately 25% of our investments as of December 31. In reviewing the more detailed balance sheet and income statement on the following two slides, we ended the quarter with total investments of just over $1.4 billion, total cash and restricted cash of $41.4 million, and total assets of approximately $1.46 billion.

Total debt was $714.7 million. This includes $461 million in floating-rate debt issued through our securitization vehicles, $208.8 million of fixed-rate debentures, and $44.9 million of debt outstanding in our revolving credit facilities.

Total net asset value on a per share basis was stable at the end of the quarter at $15.55. Our GAAP debt-to-equity ratio was 0.97 times at 12/31, while our regulatory debt-to-equity ratio was 0.69 times.

Flipping to the Statement of Operations, total investment income for the quarter ended 12/31 was $27.5 million. This was down $3.1 million from the prior quarter.

As previously mentioned, the decline in investment income was caused by significantly lower portfolio churn this quarter, which led to a $1.9 million decrease in OID fee amortization and a $1 million decline in prepayment fees. On the expense side, total expenses of $13 million decreased by $2.8 million during the quarter, primarily due to a decrease in incentive fee expense of a like amount, as the investment advisor absorbed the majority of the decline in investment income, as we were not fully through the catch-up provision of the incentive fee calculation.

As David highlighted earlier, we had net realized and unrealized gains on investments of $0.6 million during the quarter. Net income totaled $15.2 million.

Turning to the following slide, the tables on the top provide a summary of our earnings per share and return on equity from both a net investment income and a net income perspective for the past five quarters. NII, or net investment income, on a per share basis has remained stable at between $0.31 and $0.32 a share for the past five quarters, a return of about 8%.

Due to strong credit performance and strong equity gains, we have consistently generated positive net realized and unrealized gains over the past eight quarters, which has increased our return on equity and net asset value as shown in the charts. Turning to slide 12, this provides some financial highlights for our investment in Senior Loan Fund, or what we call SLF.

Total assets increased to $126.4 million as of December 31. As expected, we experienced faster growth this quarter as we started to transfer senior secured loans from GBDC's balance sheet to SLF, a trend we expect to continue in future quarters. The annualized returns of 5.7% and 5.8% for the past two quarters have been negatively impacted by mark-to-market adjustments from spread widening on the broadly syndicated loans held within this portfolio.

Turning to the next slide, as of 12/31 we had approximately $119 million of capital available for new investments. This consisted of restricted cash and unrestricted cash, undrawn SBIC debentures, and availability on our revolving credit facilities.

As of 12/31, subject to leverage and borrowing base restrictions, we had $61 million of availability under our revolving line of credits with Wells Fargo and Private bank. In regards to our SBIC subsidiaries as of 12/31 we had $16.2 million of additional debentures available subject to customary regulatory requirements. And in addition to the $119 million, we expect future loan sales of senior secured investments from GBDC to SLF to generate additional investment capacity.

Turning to slide 14, we have summarized the terms of our low-cost, long-term debt financings. And lastly, on slide 15, our Board of Directors declared a distribution of $0.32 a share payable on March 27 to shareholders of record as of March 20. I'll now turn it back to David who will provide an update on current market conditions and some other closing remarks. David?

Thanks, Ross. I want to share a couple of themes that I think we'll be talking about over the course of calendar 2015. The first I mentioned in my opening remarks, the market for middle-market lending remains challenging.

Spreads have widened modestly, but the middle market remains highly competitive. And most of the deals we see today are not passing our credit screens. Either the underlying business isn't adequately resilient, or the financial structure is too aggressive, or both.

Interestingly, many of these deals are getting done right now. They're just not getting done by us. Our deal rejection rate is at or near an all-time high.

Second insight. Middle-market junior debt, which has historically been a meaningful part of the Golub Capital BDC portfolio, we're finding middle-market junior debt, in general, to be down right unattractive right now. Attachment points are too high, pricing is too low, and, importantly, structural protections including covenants are weak.

This is an area where we have not seen a meaningful degree of widening -- spread widening or structure improvement, since September. We think this is a situation where there are too many players chasing too few attractive middle-market junior debt deals. And consequently, we're sticking with our strategy of de-emphasizing junior debt at this time.

A third theme, you've heard me talk about this before, we started talking about it in the last couple of quarters. We plan to continue to focus where our competitive advantages are most prominent. So right now, we're focused on senior and one-stop loans to resilient borrowers with low risk capital structures who are backed by relationship-oriented private equity sponsors.

In calendar 2014, more than 80% of our new investments involved repeat private equity sponsor clients. More than half were to companies Golub Capital had previously been a lender to. A record proportion was in one-stops.

I'd say, generally, our reputation, our relationships, our domain expertise, and our industry verticals, and our capacity to provide large buy-and-hold senior and one-stop solutions, these today are our most important differentiators in what is a challenging market. And finally, I want to talk a little bit about volatility.

2014 came with a large number of surprises. Collapse of oil prices, the ruble, the return of the European debt crisis, the globalization of quantitative easing, ebola, a very big move in the US dollar and strengthening -- we talked about that last quarter -- a marked decline in Real Estate prices in China that at least has me nervous, reversal of fund in flows in high-yield and broadly-syndicated loans.

We think the pace of these surprises is unlikely to ebb, that the everybody's-a-genius part of the credit cycle is probably over, and that now is the time where it makes sense to be careful out there. That's certainly the strategy we're pursuing.

That concludes our prepared remarks for today. As always, I want to thank all of you for your time and for your continued support and want to open up the floor for some questions. Operator, please open up the floor.

Thank you.

(Operator Instructions)

Our first question comes from the line of Troy Ward from KBW. Please go ahead. Your line is open.

Great, thank you. And good afternoon, gentlemen. David, on slide 8, that's got your internal credit ratings. We saw, like you mentioned, a slight tick up in ratings one to three.

Can you just give us a little bit of clarification on those ratings? Are those buckets impacted by volatility in the mark-to-market? Or are those ratings just reflective of the fundamental performance of the underlying companies?

Both are factors. I think volatility in pricing is typically -- because our instruments are floating rate -- it's typically influenced by credit factors. It's rare that you have a mark-to-market change that doesn't have any credit relationship, Troy, so I'd say both.

Okay and then one other question about -- we've seen a BDC that announced today that they've -- are looking at strategic alternatives. And with this particular BDC, it's like the third time they've done it. So I don't think that's any new information.

But from your participation in the market, not about any specific portfolio, but when you see a potential opportunity to pick up a portfolio of loans, whether it be large or small or somewhere in between, how do you evaluate that type of opportunity? When you think about taking on somebody else's underwriting is that just a non-starter for you? Or how do lenders view that type of opportunity?

It's by no means a non-starter. I think the opportunity to purchase existing portfolios tends to be associated in our business with downturns. What makes the situation today unusual is the firm you're talking about is seeking strategic alternatives and selling a portfolio in what's not a stressed market.

We would look at that sort of situation in the context of what our alternatives are in generating good returns for shareholders. So if we thought that we could acquire a portfolio at a price and on terms that would be good for our shareholders, we'd pursue it. And if not, then not.

That's kind of apple pie. I think that the more tricky part of evaluating situations like this, and I think this is what you're alluding to, Troy, the tricky part is it's rare when you're looking at acquiring a portfolio for us to be able to get the same kind of detailed granular data on each of the underlying credits that we're used to when we're doing new originations. So we need to weigh the relative decline in information quality against potentially attractive price as a mitigant.

Okay, great. And then just one more quick question before I hop back in the queue. You talked a lot about, obviously, saying that it's all about the underwriting and maybe we're getting past a point where everybody looks like a super-star underwriter. Do those comments lead us to believe that you think a down cycle is coming? Or where do you think we are in the current credit cycle?

I think that we're seeing, today, we're seeing a heightened degree of dispersion of credit results. And I think this is not a great insight for those of you on this call who have been looking at the results that have come out in respect of other BDCs.

You can see the dispersion in the results in our industry. So my expectation is that dispersion is going to continue, that we're no longer in a period when an improving economy and loosening credit standards keeps defaults artificially low. And so returns are going to accrue to those who are good underwriters in a way that perhaps some weaker underwriters have been benefited by market conditions over the last couple of years and will no longer be.

Great, thank you.

Thank you.

(Operator Instructions)

Our next question comes from the line of Robert Dodd with Raymond James. Please go ahead. Your line is open.

Hi guys. A much more simple question in a sense. As you talked about on the call, your prepayment and accretion income was down substantially, but year over year and versus the prior quarter.

And obviously, I realize that is very difficult to predict. That's the whole point. It can be very choppy. But to what level do you feel this quarter is a new base case if the markets a little bit more choppy, et cetera. Maybe there aren't as many repayments et cetera.

Can you give us a little bit more color? Do you think this is the go-forward run-rate level? Or do you think this quarter did still represent an abnormally low amount of prepayment activity?

I think that's a great question. So flip to page 4 of the presentation. And you can see in the second line on the chart, you can see a line called exits includes full and partial pay-offs.

And you can see in the September 30 quarter, it was $287 million. And it fell to $80.9 million in the December 31 quarter. This is obviously speculative.

There's going to be some movement in these numbers from quarter to quarter. But if you ask me for our judgment, our judgment would be the $287 million was very unusually high and the $80.9 million feels unusually low.

Okay got it. And then, obviously, also it's a function of mix of age of assets. Obviously, if something is coming up on it's a maturity date then there's less prepayment and OID to recognize and accelerate it from. So partly on that front as well, do you expect more loans to run the course rather than get repriced as you said?

This is a quarter where you saw incremental yields, for the first time in awhile, above repayment yields. Is that an indicator that maybe there's going to be less of that repricing activity, as well, and more of the repayment to the older loans where that income is less volatile? Because the prepayment fees, obviously, or the OID, has already been run through the P&L.

I guess I look at it slightly differently. So, very few of our loans ever go to maturity. The typical loan that we make is repaid in about two and a half years, maybe three at the outside. And they're typically repaid in connection with an acquisition, a sale of the company, a major refinancing of some sort.

I don't think that pattern is going to change. So if one thinks about the portfolio, $1.4 billion, and one thinks that a third of it is going to turnover each year, which is, again, I think approximately been our experience over the course of many years. It points you toward a $400 million to $500 million repayment rate annually. And as I said, that number would be in between the $80.9 million and the $286.6 million per quarter.

Okay got it. Just one final one if I can. Obviously, you talked about not finding junior debt particularly attractive at all and more and more of your business, again, going back to the one-stop forum, where you got a first lien.

There's obviously another tier in the middle there with second lien. I don't know whether you automatically classify that as junior, but the attachment points and the pricing even on second lien until very recently had appeared to be getting a bit stretched.

So what's your appetite for that versus, obviously, the one stops you control? First lien might be stretched in terms of attachment, but you've got much more control versus doing a second lien. So do you have any appetite to be doing second lien, or would you put that in the unattractive bucket at this point as well?

When I say junior debt, I mean to be including second lien and mezzanine in one broader category. So I very much was meaning that we view second lien as, in general, quite unattractive in today's environment.

And again, if you look on that same page, page 4, at the second lien category in the asset mix table in the middle of the bottom of the page, you'll see over the course of the last five quarters its been 0%, 6%, 0%, 0%, and 7% of origination. So its been, on average, a very small piece of our business, and I would anticipate it will stay small.

Got it. Thank you.

Thank you. Our next question comes from the line of Doug Mewhirter from SunTrust. Please go ahead. Your line is open.

Hi, good afternoon. I had a question about the Senior Loan Fund and how it interacts with your portfolio and your origination pipeline. So, first, just a numbers question.

Were there any sell downs during this quarter? And how much was that if there were any from transfers from your existing on balance sheet to your SLF?

We did do some sales from balance sheet to SLF this quarter. I don't have the exact number in front of me right now. We can certainly get back to you with that. It was in the range of $20 million.

Okay, well, round numbers is fine. And so the second maybe more broader question is if you just look at the, just the numbers that you presented -- and I know there's a lot of nuances that are not in these numbers. But just looking at your originations about roughly 75 million were senior secured, which is generally your target for what you would like to book in the SLF.

But you had a much smaller number actually go into the SLF. And I was wondering, what's the difference between the loans you kept on balance sheet and the SLF? And if you're doing sell downs anyway, why don't you just cut out the middle man and originate more of them directly into the SLF?

Well, we, in the quarter, had sufficient equity and debt capacity within balance sheet, within parent, to be able to acquire all of the things that we acquired. So all we would have done if we had accelerated sales to SLF would be to reduce earnings because we would be paying unused fees at the parent level and incurring, basically, analogous interest costs at SLF to the ones that we incurred on balance sheet.

So the way we're looking at it, and we talked a bit about this on the last call, the way we're looking at it is that as we continue to originate and to use the capacity that we've got on balance sheet, we will look to some faster sales from balance sheet to SLF. But we're going to do it in a measured and methodical way designed to optimize shareholder returns rather than simply growing SLF for the sake of growing SLF.

Okay, that actually makes a lot of sense when you explain it that way. Thanks, that's all my questions.

Thank you.

(Operator Instructions)

Our next question comes from the line of Jonathan Bock from Wells Fargo. Please go ahead. Your line is open.

Good afternoon, and thank you for taking my questions. David, if I took your comments as it relates to SLF and the ability to self-syndicate into SLF, would it also be fair to say there's really no near-term need for equity capital at GBDC in light of the fact that you can generate your own liquidity if needed?

Well, I want to be a little careful here because we don't control SLF. It is, as everyone knows, a joint venture. And purchase decisions by SLF are not just ours.

But having said that, I think our plan, our goal -- subject to making sure that our joint-venture partner is satisfied that the acquisitions that we're proposing from balance sheet to SLF are attractive -- our goal would be very consistent with where you were headed, John, which is we want to spend the capacity that we've got on balance sheet today. And we want to grow that capacity by transferring some of balance sheet senior secured assets to SLF.

Okay, appreciate that. And then, excuse me, the governors on the SLF, just in terms of is there anything on portfolio concentrations issues that you might see as limiting factors, as opposed to, yes, you have another party. But is there anything contractual over time in terms of how fast this can grow that could limit it that we might want to be made aware of?

None that I can think of. None that I can think of at this time.

That's fair. And then in terms of credit risk, so in complete agreement that junior credit in many cases may be seen as potentially unattractive, David, can you give us a sense of one-stop transactions, we've also heard, though, do run into an issue where leverage and either unitranche or stretch senior or how you define it is also becoming stretched, as well. I think you mentioned it in your broad comments overall.

Is what we're seeing essentially just a switch from what we first saw with capital structures that were first and second that generally took on too much leverage? Is that not now applied to the people that can come and write one giant check for everything? Or are you seeing a little bit more, in your view, underwriting discipline on the part of those that can write one giant check and own a unitranche piece of paper?

I think the latter. I think we're seeing there are a very small number of competitors in addition to Golub Capital that have the capacity to do one-stops, particularly one-stops of size. And the one that comes to mind, obviously, is Ares. We compete often with Ares in our one-stop product.

And our view for a long time now has been that Ares does a very good job in its underwriting. And it does a very good job in thinking about credit. So I think we and they both are very selective about where we want to play with one stops.

Many credits that sponsors would like us to provide one-stops on, we reject. I think it's fair to say that we're seeing more credit discipline in one-stops than we're seeing in junior debt by a substantial margin.

Appreciate that. And then, this gets to Doug's question just as a wrap up on the SLF. We understand you don't want to grow for growth sake, just by the fact that you're within the NOI incentives, it's respected to grow prudently because, obviously, you're taking less in the form of fees where you are.

Is it possible that the volatility that we've experienced in the broader credit markets and your capabilities within other credit baskets, be it BSL or other areas, and I understand you run CLOs et cetera. Is there not now an opportunity to perhaps take advantage of the spread widening that's occurred in the more liquid paper to perhaps generate what might be an even better risk adjusted return in SLF, buying on the broad market exchanges today, as opposed to slowly self-syndicating down?

I'm just curious on your thoughts. Because both can achieve a decent ROE outcome, but both also have different levels of risk associated with that and timing in terms of investors realizing those returns.

I think the question of whether we should be accelerating deployment of SLF in broadly-syndicated loans is an intriguing one. It's one we've been thinking about a lot over the course of the last two quarters. We've actually acquired some broadly-syndicated loans within SLF, as you can see in our filings.

I think it's something we're going to continue to study. I don't think it is our current intention to have SLF become heavily weighted in broadly-syndicated loans.

We think that would be a larger change in strategy than we're looking at right now. I think it's really a question more at the margin as to what proportion of the SLF portfolio we'd want to see in opportunistic BSL purchases.

All right, guys, thank you very much.

Thank you. And we presently have no further questions on the phone line at this time.

Well, again, thank you everyone for tuning in for our call today. And if you have any further questions that we didn't address, please, as always, feel free to call either Ross or me at any time. Look forward to speaking to you again next quarter.

Thank you. Ladies and Gentlemen, that does conclude the conference call for today. We thank you for your participation. And we ask that you please disconnect your lines.