Brad Marshall: I think what you’re seeing is sponsors are holding that onto their assets for longer. So you’ve seen less sale processes. So they’re looking at their existing assets and trying to find ways to grow them, either operationally or through acquisition. So we’ve seen more companies look for growth capital in order to grow their businesses. So I expect that to continue for the balance of the year. But the other part of kind of what we’re trying to do is you look across our broader portfolio, and see where private capital solutions are a better — a better solution for the company versus the public debt that they may have trading in the market today. So that was the example Carlos went through with Park Place. We just came up with a better mousetrap and better capital structure for their long-term yield growth objectives.
And that’s kind of where — that’s what’s driving a lot of our deal flow, this ability to use our scale, go into the market, create deals. So while maybe others are seeing more muted deal activity or deal activity is really starting to accelerate.
Mark Hughes: Appreciate that. Thank you.
Operator: Thank you. We’ll go next to Paul Johnson with KBW.
Paul Johnson: Yes. Good morning. Thanks for taking my questions. Last quarter, kind of on your last question here, but — last quarter, you kind of talked about the deals or so that you had identified in the market, there were potential repricing opportunities, you’re kind of away from syndicated market, sounds like being capitalized on some of those. How many those deals [indiscernible] you kind of executed on this quarter. And do you still — you have a number of those opportunities left to that.
Jonathan Bock: Hey, Paul, this is Bock. So I would say if we’re thinking about the tighter spread environment, you recall comments from the prior call, this is essentially where we’re using incumbency to our advantage, right. And the goal is to retain the assets that are more susceptible to repayments as a result of the tightening spread environment. And those are loans that have either above market spreads, they’ve outperformed, and it’s where we have call protection generally, that’s rolled off. Now in those situations, we’ll often agree to new terms for an existing portfolio company, and that includes market or above current liquid market spreads and also receive extended call protection among a few other improvements. So to get to the question, this quarter is about less than 4% of the portfolio had some spread tightening as a result of that at around 50 to 60 basis points on average.
And we received an additional 1.5 years of call protection. So still well within the range of new unit tranche financings on companies that we know and like, and I would say that was rather muted. And more importantly, as we continue to drive additional flow throughout our broad origination framework. It’s a nice complement to ensure that we’re retaining attractive assets at the same time to Brad’s comment, growing into new portfolio companies as well.
Brad Marshall: And maybe just start with the pipeline, so as we go through this exercise of trying to identify deals like Park Place, maybe it’s in our public portfolio, maybe it’s somewhere else in our private portfolio, and create those what we call reverse kind of origination. So ideas that we’re reversing into the sponsor of the company. At the start of the year, we had 98 of those that we’re working through, and we’re still chipping our way through that list. Not all of them will resonate, not all of them will work out like our place did, but there’s a pretty healthy kind of backlog of those deals that we’re doing diligence on and negotiating with private equity sponsors.
Paul Johnson: Thank you. That’s very helpful. And then last one for me is just, I guess kind of general outlook on net leverage, or for the year activities, obviously hard to predict in a lot of capacity for growth, but kind of given the environment, do you guys have any preferences in terms of where you’re sort of operating at in terms of your leverage range? Thanks.
Brad Marshall: Yes, so we ended the quarter, right above one turn. So near the low end of the range. I would say we’ve taken some intentional steps here to build capacity to deploy and what we see is growing opportunity set, both from a volume standpoint and the fact that at 11.4% new investment yield, that’s very accretive to our dividend. So we have quite a bit of capacity to deploy. I don’t think there’s any change in message in terms of leverage target sort of one to one in the quarter is, is what we’ve said historically, and I’d expect that we’re in that range at the back half of the year.
Operator: Thank you. We’ll go next to Ken Lee with RBC.
Ken Lee: Hey, good morning, and thanks for taking my question. Just one on the liability side. How do you think about the outlook for the potential funding mix on the liability side, especially given the rates outlook? Just want to see some of the thoughts there. Thanks.
Brad Marshall: Yes, we have a lot of optionality today. Bock mentioned at $1.4 billion of liquidity, no — no maturities this year. We have 53% of our exposure today that’s an unsecured bonds. We have seen quite a bit of tightening in the market, for example, our 5-year bonds is at 160 over treasury today that’s in 65 bps versus the BDC index of closer to 215. So that is relative to even secure liabilities is — historically kind of near all-time tides just from a spread perspective. So, significant optionality will be opportunistic with it. We do have liabilities that were put in place a couple of years ago, at an average cost of capital of sub SOFR plus 200. So we’ve had to grow into as well.
Ken Lee: Got you. Great. And just one follow-up on in terms of the pipeline and what you’re seeing broadly across the BXCI platform. Wonder if I can just get a little more color around that activity, is it fair to say that most of it is around growth capital or is it just you’re seeing a lot of refi activity. Just wanted to get a little bit more granularity around that. Thanks.
Brad Marshall: Sure, Ken. Yes, it’s a mix of public to private, add on activity in existing portfolio companies. Some refinancings out of the public markets, some refinancing out of the private markets, I would say it’s a pretty healthy balance between all of those. I would say what’s lagging is just regular way sponsor to sponsor M&A activity. But even that we’ve seen an inflection point probably about 3 weeks ago, in terms of that volume starting to pick up you won’t see it, it takes a while for these fields to happen for another quarter or so. But that activity is really starting to pick up as well.
Ken Lee: Got you. Very helpful there. Thanks again.
Operator: We’ll go next to Robert Dodd with Raymond James.
Robert Dodd: Hi, guys. Good morning. On — I’ve got a question on pick, right. So PIC this quarter step up again, it’s about a little more than 6.5% of total investment income roughly slightly less than double where it was a year ago. Can you give us any color on the drivers that mean how much of that is structured as PIC versus modified PIC policy benefits [indiscernible] modified, but that was a while ago. So can you give us any color on the drivers for that direction?
Brad Marshall: Yes, you’re right, 6.5% of income, Q1 was picked, up modestly over last quarter. Nearly all of that was driven by one issuer that previously did have PICs flexibility through Q3. And that was part of the original deal. We did agree to extend that beginning in Q1. That company, by the way, has almost tripled EBITDA since we close. If you look at our PIC concentration, five companies represent about 85% of PIC exposure, all of those were originally set up with partial PIC flexibility. And we would characterize as performing [indiscernible] sort of high 90s — above 97. So I think it’s a tool in certain cases that we will use to differentiate versus the syndicated market that can come in a couple of different forms. But overall, our PIC activity was fairly concentrated to performing assets.
Robert Dodd: Got it.
Jonathan Bock: And, Robert, those companies that are picking they’re not 100% PIC. So if their coupon is 12%, 80% of that is being paid in cash and more like 20% is picking.
