Mark Hughes: And then, Jonathan, you mentioned a modest impact from a non-recurring, I think, interest expense item. Did you size that or can you?
Jonathan Lamm: It was a little less than a penny, but close to a penny. It was related to effectively the takeout of one of our CLOs.
Mark Hughes: And then with the capital markets activity this quarter, how does that — what’s the incremental impact on interest expense kind of before or after?
Jonathan Lamm: So the unsecured that we issued this quarter relative to the unsecureds that we took out, which were on swap we actually — it was accretive to interest expense.
Operator: [Operator Instructions] And our next question comes from the line of Robert Dodd with Raymond James.
Robert Dodd: On all your comments on second lien, 40% repaid in the quarter and then that got redeployed. So on the one hand, all your second liens are repaying quite nicely, probably faster than you’d like. And then on the other hand, yes, there was one you know accrual, which was second lien. So can you give us kind of an update on your thoughts on like where you would like that to be as a percentage of the portfolio? Obviously, spreads can be a little higher, not crazy because they tend to be much bigger companies. But what’s your view on — would you like to actually increase that from here and is that realistic if the first lien BSL market comes back and all of the second lien tend to be behind that? So is there room to grow it and would you like to?
Craig Packer: Look, our approach to second lien has been really consistent since inception. We only do them on really high quality businesses that are large and under — and stable with lots of equity cushion beneath us. We are favorable on doing second liens in those types of companies if the attachment point and the detachment point are appropriate. And, obviously, the reason we like them is they generate meaningfully higher spread. And so if those opportunities present themselves then we’ll do them. If they don’t, we won’t. The environment in the last six to nine months just hasn’t been a lot of second liens. The sponsors are really there with [branch] financing. And so we haven’t seen a lot, we certainly haven’t seen ones that were attractive to us.
So in this market environment, I’m happy to run primarily first lien portfolio, the first lien percentages as it’s the highest it’s been for us in years. So [Technical Difficulty] portfolio if we get a get an environment where there are more second lien opportunities that hit our investment criteria, then we would take it, take the percentage back up. I’m certainly comfortable where we were running if not even a bit higher. But I just don’t I don’t see that happening in the short term given the deal flow that we’re seeing. So we don’t solve for percentages. We solve for the best opportunities that we’re seeing. And right now, it’s primarily unitranche. And it stands to reason if given how strong the syndicated market is that as new deal flow reappears that we’ll see more second lien opportunities as the year unfolds.
Haven’t seen it yet but wouldn’t surprise me if we did. And if that’s the case, then we’ll strongly look at those opportunities.
Robert Dodd: On your comment on — haven’t necessarily seen deal activity materialize yet, which obviously is true. Are you seeing any increase in books coming in, et cetera? Is the preliminary stages of deal activity ramping up and then it’s hitting gridlock when it comes to buyers and sellers agreeing on price, or what can you — give us a sense of what the stages of the pipeline look like? I mean, is it close to a big ramp up in activity or is that just not really here yet?
Craig Packer: So I made the comment a minute ago, so you might not have heard it, but just to repeat it. In the last four to six weeks, we’ve seen more activity that could result in de novo M&A. Some take private opportunities and some sponsor to sponsor opportunities and some add on acquisitions. So I would say green shoots for new M&A but not yet coming to full fruition. I think there’s some chatter about pure M&A processes pick up with books and the sponsors have spent some chatter on that. I’m sort of too early for me to really say that that’s going to result in a lot more deal flow. But first quarter was light. I think that we’re seeing green shoots that could result in more deal flow as the next — the deal flow we’re seeing coming today might not close in the second quarter, right, that might be third quarter activity.
So I think the first half of the year will still be a kind of light deal flow environment. But hopefully by the third quarter things have improved.
Operator: [Operator Instructions] There are no further questions at this time. I’d like to hand the call back to Craig Packer for closing remarks.
Craig Packer: All right. Well, I guess we’ve worn everyone out or we’ve answered everything in our prepared remarks. Look, we appreciate everyone spending time with us today. If you have any further questions, please reach out to our team. Really pleased with the quarter and look forward to speaking with everyone soon. Have a great day.
Operator: This concludes today’s conference. If you please disconnect your lines at this time. Have a great day.
