Robert Dodd : Hi. Congratulations on the quarter on the credit quality. On the — if you go back to the couple of questions on the swap question, should we view this as kind of a onetime event just take opportunity on more of a near-term strategy? Obviously, you’ve got a couple of maturities in ’24, a couple more in ’25. Should I be assuming that you’re likely to swap those as well? Or if you replace them with like-for-like kind of structures? Or was it really a one-off thing?
Penni Roll: Yeah. Thanks for the question. Honestly, it’s hard to say. This is something we assess on a deal-by-deal basis. And as I said before, it’s rare that we actually do this. We just thought this was an interesting opportunity in the current market. So we would look to make this assessment upon each issuance as we go into 2024. We have $1.1 billion of maturities that are effectively resolved at this point. And so we will kind of continue to assess when it’s appropriate and good for us to go to the market. But when we do that, we will make the assessment on swapping at that time.
Robert Dodd : Got it. Thank you. And then the second one, talk about atypical things. I mean, you now, of course, are very, very low. If I look at new defaults, anything like that, any kind of credit metric is very, very good. Can you give us any comment, is that entirely the result of portfolio company performance? Or has there been any typical behavior from sponsors may be putting in more equity when it’s not actually acquired. Again, I wouldn’t necessarily expect that. But the credit quality of the loans is held in remarkably well. So any color on — is there anything unusual about that? Or is it just portfolio company performance?
Kipp DeVeer: No, I don’t think there’s anything unusual at all. I mean, we mentioned in the prepared remarks that to the extent we’ve actually look to some of the private equity partners we’ve had a long time to support companies with capital they have. But more than anything, to your question, I think we’re actually seeing pretty good underlying performance in the portfolio of companies. It’s better than I would have expected. If you asked me a year ago, which is why we’re optimistic for ’24 and beyond. And I do expect some companies will perhaps have some problems, the clock ticks along, but — and that’s my expectation for modestly higher defaults, but we’re feeling pretty constructive on where we are in terms of the economy and the portfolio.
Robert Dodd : Thank you.
Kipp DeVeer: Thanks for your questions.
Operator: Our next question comes from Kenneth Lee with RBC Capital Markets. Please proceed with your question.
Kenneth Lee : Hi, thanks for taking my question. Wonder if you could just talk about any kind of outlook in terms of opportunities around being able to partner with banks or any opportunity related to the change in regulatory framework on the bank side there. Thanks.
Kipp DeVeer: Sure. I mean I’ll go maybe up a level and just say a in terms of our management and our credit platform here, we see extraordinary opportunity to potentially partner with the banks. We bought a sizable portfolio as folks had seen from a bank this year. And the dialogue around the banks and some of their concerns relative to their balance sheets and their capacity continues to drive a lot of really interesting conversations with those counterparties. But to come back into this company specifically, while I think that Ares Capital Corporation can potentially participate in those opportunities. I think there are other parts of the credit platform that are frankly more engaged in those discussions because, as you know, most banks, which is obviously why our companies had so much success and has gotten so large really don’t engage in middle market corporate lending anymore.
So our expectation that they’d be selling the types of loans that this company would want to buy seems to me, at least to be pretty low. Most of the assets that we think will eventually be discussed and potentially for sale from some of the banks probably are a little bit outside of the mandate of this company. But I can tell you that as a platform, those discussions are very vibrant, and I would expect them to be ongoing for a while.
Kenneth Lee : Got you. Very helpful there. And then one final follow-up question. This is actually just a follow-up on Robert’s question previously. In terms of the portfolio support you’re seeing, I wonder if you just provide a little bit more color around there, in terms of — I think in your prepared remarks, you said you were relatively pleased with what you’re seeing. I wonder if you could just expand upon that. Thanks.
Kipp DeVeer: I’m sorry. I missed that there for a second. Could your repeat that one, please.
Kenneth Lee : Yeah. Just in terms of the portfolio support you’re seeing from the PE sponsors, in the prepared remarks, you mentioned you’re really pleased with what you’re seeing so far. Wondering if you could just provide a little bit more color or expand upon those remarks there. Thanks.
Kipp DeVeer: I think we’re pleased with the support that we’ve seen from the private equity community. And I don’t really know what else to say. I mean when asked in situations where it’s required. We’ve seen partners and private equity companies and obviously, feel good about their continued ownership in those companies. I mean the good news here is we, as a team, have been doing this with a lot of the same private equity firms for a long time. It’s very common that we have several, if not more than several, investments with a single private equity firm. So that relationship and that trust has been built over time, and we’ve just seen great partnership from that community as they try to figure things out. And as I mentioned, I think it’s some it’s a more challenging environment to be an owner of assets today than it is to be a lender to those assets because when problems occur, the dialogue tends to be one of us turning to ownership and saying, what’s the plan.
And very often, the plan is equity support is required, and we’ve seen it follow on pretty well.
Mitch Goldstein : Yeah, the benefit also of being leveraged 40% or 30% to 40% loan to value provides a lot of cushion such that in a slower environment, the actual owners are, as you can see, willing to put money in because they need to. And we’ve been the beneficiaries of being where we sit in the cap structure.
Kipp DeVeer: Yeah. I mean I think if they need to, but they also are doing it economically, right? They’re looking at investments that they’ve made, in what are good companies that they want to support and own. And while maybe the duration of their investment is going to extend a little bit and perhaps the return on that investment has to come down overtime. With higher rates, they’re supporting these companies because they view that follow-on support is a good investment, right, one that’s going to generate a return for their investors. And that gives us a lot of confidence that we have strong partners and that we’re invested in good companies.
Kenneth Lee : Got you. Very helpful there. Thanks, again.
Kipp DeVeer: Sure. Yeah, you’re welcome. Sorry, I missed that first half.
Operator: Our next question comes from Mark Hughes with Truist Securities. Please proceed with your question.
