Melissa Wedel: Okay. And then I was hoping to follow up on one of the things that Scott touched on. Scott, hi welcome, I look forward to working with you. The CLO issuance post quarter end. I think you mentioned it’s been a while since you’ve done something like that. I was hoping you could talk about CLO issuance as part of the funding strategy and mix going forward, what role can that play? When will you flex that versus other secured or unsecured? Thank you.
Scott Lem: Yes, sure. So, I think one of our main themes for capital raising is diversity and I think it is a pretty compelling opportunity for us. The spreads in that market are very attractive relative to other forms of secured financing. So, I think as we’re seeing also just as assets have moved into — from the BSL side to the private credit, the flow of debt capital in the CLO market is also moving that way. So, it made a lot of sense for us to tap that market, diversify funding sources at a pretty attractive spread. And going forward, I think it’s definitely part of our playbook now.
Operator: Our next question will come from Casey Alexander with Compass Point.
Casey Alexander: Yes, hi. Good morning and thank you for taking my question. Scott did not mention — traditionally, you guys mentioned what the spillover income is. But he didn’t mention that, I was wondering what that number is, unless I missed it, which could be? But you continue to pile up the spillover income quarter-over-quarter. At what point in time do you sort of reach the limit or do you just consider it to be a cheap form of financing with the excise tax? But when do you sort of reach the limit at which point in time you’d kind of be forced to make some special distributions?
Kipp DeVeer: Yes, I mean, look, over the history of the company, Casey, I appreciate the question, we’ve obviously done specials and a whole host of different ways. And I said this as we tend to really want to look at it on an annual basis because it’s a tax calculation that we can really true up at the end of the year, and that’s typically when we make determinations. But we’re in a little bit of a tricky position as you can probably appreciate, because while we have loads of earnings in excess of the regular dividend, the trajectory for rates going forward is reasonably uncertain. I think if you ask around the table, folks would have very different views. So, combining that with the fact that we really aren’t in a position, in my opinion, any way where we want to put the company in a place where we would have to reduce its regular dividend, we just feel better materially out earning it today and building the NAV.
So, hopefully, that answers the question, but it’s a little bit tricky in a world where the rate environment changed quickly. We obviously wanted to recognize the much more substantial earnings power of the company when we increased the dividend to the $0.48. But yes, it’s something we talk about a lot. When is the right time? Do we get credit for specials? Do we not? All of that very much in the dialogue with the management team and our Board.
Casey Alexander: That’s my only question. Thank you.
Kipp DeVeer: Okay. Thanks.
Operator: Our next question will come from Paul Johnson with KBW.
Paul Johnson: Hey, good afternoon or good morning. Thanks for taking my question. You touched on my question in terms of just kind of pressure on fee income. But is that something that you think you’ve experienced more on deals that you’ve refinanced in the market or are you also seeing a little bit of fee compression on new platform deals as well?
Kort Schnabel: Yes, it’s Kort Schnabel here. I would say it’s primarily on existing transactions. New transactions are seeing some fee pressure. But as was mentioned before, the mix shift this quarter, I think we were 72% of our originations were to the incumbent borrowers and that was really the big driver of the numbers that you’re seeing there. There is definitely some pressure across all fronts. But as is normally the case, existing portfolio companies don’t deliver the same kind of fees as new borrowers do.
Paul Johnson: Appreciate that. And one last question I had, just kind of higher level, but I was wondering kind of get your thoughts on a feature — a loan feature that we’ve heard more about portability, if that’s something that you’ve offered in any of your loans, if that’s something that you come across? But any kind of thoughts on that feature would be nice to hear. Thanks.
Kipp DeVeer: Yes, we’ve agreed to do it a couple of times. We’ve put a lot of guardrails obviously, around when that financing can board, i.e., to what counterparty would we be continuing to be involved with, what will be the fees, loan documentation, all sorts of other stuff. I actually think that’s more of a feature, frankly, of last year where the financing environment felt more complicated. So having the value of an incumbent group kind of move over with the new equity check in a sponsor-to-sponsor deal is highly valuable, right, when the financing markets feel uncertain. I wouldn’t say that the financing markets feel particularly uncertain today. So, my guess is the request for portability assets would go down. But we’ll see where we go from here.
Paul Johnson: Appreciate, that’s helpful. Congrats on a good quarter. Thanks guys.
Kipp DeVeer: Thanks. Appreciate the questions.
Operator: Our next question will come from Mark Hughes with Truist.
Mark Hughes: Thank you. Good morning. You’ve mentioned earlier in the call that your quantitative group determined that industry selection got to 500 basis points or could account for 500 basis points of outperformance. How stable is that over time those industry groups to migrate or is it pretty steady?
Mitch Goldstein: This is Mitch, by the way. Yes, our group — if you look at how they did the analysis, it was over an extended period of time in our portfolio. And if you have been following us for as long as we’ve been doing this, our industry groups that where we tend to invest has been pretty stable. So, they were able to get that analytics through our portfolio over a very extended period of time.
Mark Hughes: Is it that the industry groups that you focused on have been reasonably stable and–
Mitch Goldstein: Yes, if you look at our business services, our health care services, the industries where we have missed really haven’t changed a lot. We don’t invest in cyclical businesses. We don’t invest in low-margin businesses. So, they were able to have a significant amount of data with which to make that analysis out of.
Mark Hughes: Yes. Okay. Appreciate that. And then the exit seemed low for April. Anything to that or just happen to be lower?
Mitch Goldstein: Yes, I don’t think there’s anything to it. It’s just a single month of data, so I wouldn’t take too much away.
Mark Hughes: Very good. Thank you.
Kipp DeVeer: Thank you.
Operator: Our next question will come from Erik Zwick with Hovde Group.
