Brad Marshall: Listen, if you look at the U.S. leveraged finance market, it’s a little over $4 trillion. Private market has grown from what $70 million when we started to a little over a $1 trillion dollars, we expect that there’s a lot more runway, under the premise that the private solution for some issuers, regardless of whether the public market is open or closed, is a much more attractive solution for them and the best evidence of that was the largest growth period for private credit was 2021, when the public markets were wide open and sponsors, we’re looking for privacy. They were looking for certainty. They were looking for flexibility. So we’re very bullish on the long-term trends of private credit. Now getting to my earlier comments on spreads, spreads will move around a little bit.
But it’s not spreads that’s driving returns right now in private credit, its most of its coming through, increase in base rates. And so the returns in private credit will be predicated on your view and our view on how long we think base rates or interest rates will stay higher. Our view is that they’ll stay higher for longer, they may move around a little bit, but long-term trend is actually quite good so. The market opportunity is there for those investors who can create deal flow, not just rely on the M&A market and returns should stay very robust in this rate environment.
Paul Johnson: Appreciate that. And one last one, it’s just kind of a more general question, but I’m just curious because your portfolio is a decent amount of software related companies and this in case it’s pretty much across the sector as well, but I’m curious as your thoughts in terms of just the evolution of AI, I mean it would seem, it could be an a big game changer for some of your companies, both in a positive and in a negative way is that proliferates, I mean seems there could be an opportunity to maybe cannibalize I guess parts of the software sector. So I’m just curious, I mean you guys have any kind of broader thoughts on how that technology even changes. I guess the underwriting story of the software sector.
Brad Marshall: So that is a 5-hour conversation. What I will say is Blackstone has been leading the charge in terms of understanding AI, using AI. Integrating that part of our investment process, so this well, it may be new to kind of everyone on this call over the past kind of 3 to 6 months. Because of ChatGPT. It is not new to Blackstone, so every underwriting that we’ve done in this space AI has been at the forefront of our decision making. And AI has its applications and where it’s going to be impactful and where it’s not going to be impactful. So the shorter answer to the 5-hour answer is we think about it a lot. We don’t see it having issues on the portfolio that we selected in this space, but you’re right, it will have implications in parts of the market.
Paul Johnson: Appreciate that Brad. That’s all for me.
Operator: We will go next to Melissa Wedel with JPMorgan.
Melissa Wedel: Thanks for taking my questions. Wanted to follow-up on one of the comments from the prepared remarks. I think it was Brad; you were talking about expecting some dispersion in the market. I think that was related to sort of the higher for longer environment and the pressure that could put on credit. Just hoping you could elaborate on that and if it doesn’t incorporate a view on how you expect the credit cycle to evolve, could you add that in? Thank you.
Brad Marshall: So, higher rates are meant to slow down the economy. So it has two areas of impact on portfolios. One, higher rates, obviously consume more cash, so it puts a little bit of pressure on people’s cash-flows. And secondly, if you are more correlated to the overall health of the economy, then you are going to have some potential earnings top line pressure. So, that kind of – that is the driver behind our remarks that higher rates are meant to cause a little bit of a slowness. So, as I think about kind of where we will feel that next year, because really this – most of this year were just because of the lag on rates because of interest rate hedges. You haven’t seen the full impact of higher rates this year.
