Kipp DeVeer: I mean I guess the only thing that comes to mind, to be honest, is most of the sponsors that we deal with are long-standing and valued sort of relationships where we’ve done multiple deals with them over multiple years. And we find that when companies are experiencing issues regardless of perhaps the driver of that issue, that if the private equity firm is kind of happily invested in the company. It’s a somewhat recent investment, particularly in the last fund or the fund prior to that, i.e., it’s fresh and they feel that they still have the ability to generate an equity return despite a blip or 2 along the way that an amendment and often the continued investment of equity in that company is good for them and it’s good for their limited partners.
It tends to be good for us as well. The places where sponsors often walk away as you would probably imagine, are either companies that are materially underperforming where they don’t see the ability to earn an equity return or recovery regardless of almost any outcome that you can create or potentially sort of that old fund problem, right? We do hear occasionally how it was in a fund that we raised 10-plus years ago, and we don’t have any more capital to support it, the funds out of its investment period, et cetera. So I think some of that is more common than a sponsor feeling good or bad about a potential investment, whether it’s rates or the supply chain, right? It tends to be just how they think about their position and obviously, their investors’ capital on a go-forward basis more than anything else.
Operator: The next question today comes from the line of Kenneth Lee from RBC.
Kenneth Lee: Just one on the portfolio activity in the fourth quarter in terms of originations and repayments both increased sequentially. Wondering how much of that was potentially due to the normal year-end seasonality? And how much of that could be due to either a shift towards larger borrowers and/or other trends, just given the elevated activity came in despite slowing economic conditions.
Kipp DeVeer: I mean don’t know — I mean I’m looking at Kort. I don’t think there was anything unusual about the fourth quarter.
Kort Schnabel: I think — it’s Kort. I think it’s a mix. It’s what you said, it’s a mix of both. It’s a little bit of the seasonality. And certainly, as we’re seeing larger borrowers and larger opportunities come in, that drove some of it also. And probably on the earlier fee question as well, obviously, fee rates are up, but we did have the opportunity to underwrite a few larger deals in the fourth quarter, and that helps drive some syndication and structuring fee income as well for us.
Kenneth Lee: Got you. Very helpful there. And just one more follow-up. In terms of the spillover income and realizing that there’s some regulatory constraints around that. Are there any other specific factors or other events that could drive a decision towards either paying out a portion in terms of a special dividend versus retaining some versus increasing the regular dividend there?
Kipp DeVeer: I mean not really beyond anything that we’ve discussed, Kenneth, to be honest.
Operator: The next question today comes from the line of Mark Hughes from Truist.
Mark Hughes: The weighted average — the portfolio weighted average EBITDA up pretty substantially over the last year. How important is that in credit performance relative to other measures like net leverage or interest coverage, how important is just the size factor?
