So we have a small amount of middle market or private credit exposure in our portfolio right now. It’s very small, but it’s greater than zero. But some of that — intentionally, that’s with folks who we believe can pivot to the extent new secondary syndicated loans are at $0.80 on the dollar. By the really good ones at $0.85 and just be done with it and capture value that way. So we have firsthand personal relationships with all or many at a minimum of the middle market/private credit CLO issuers. As we look at the market, we believe it’s an even smaller set of folks who will know how to deliver superior returns when things get choppy. Frankly, if they’re taking out CCC loans from us, we’re very, very happy about that. And I suspect we’ll see an increase in private credit CLOs in our portfolio over the coming year or two.
No assurance, but that would be my best estimate. And with that, it’s going to be focused on an even smaller number of issuers, who actually have experience in managing CLOs through cycles, not just folks that might have run a BDC for a long time, but are just getting dipping their toe in the CLO world. And running a BDC is very different than running a CLO for better or worse.
Ryan Lynch: That’s very helpful. That what you kind of hit on my next question, was going to be what is your middle market CLO exposure, just because looking at some of these statistics as 10% to 12% has been kind of the historical market share of middle market CLOs historically, and it’s up to 22% in 2020 and it’s projected. And again, we noticed that the projection is going to be right or not, but I expect it to be 32% of the CLO market. So …
Tom Majewski: Yeah. That strikes me as the 32 strikes me as a big nut. Stranger things have happened. I suspect it will be a — the day where we — I mean, well, I know what would happen the day where we have cash where we can invest, we’ll stop raising capital and well, we raised capital. I think a few in the CLO we raise capital when we see opportunities and when it’s accretive to shareholders, both on what we can put the money in the ground debt and can we raise capital at an accretive to NAV type price? There’s a few in the market who would say, the summer was not a good time to be deploying capital. And you can see that our NAV was up 7%, while a little bit of that was from the premium issuance. The vast majority of it was from other than premium issuance.
And what we saw here was paper was cheap. So we pushed the pedal to the middle a little bit. There’s times when offers are scarcer and frankly, we’re less active on the ATM program. But it’s a very effective tool for the company in that — well, it’s not — it never is quite as simple as the trader, see something attractive in the morning. We call the bank, we issued the capital and we can do it on a same-day basis. But I wish it was that easy, but it’s something that works really well on a just-in-time basis to when we’re seeing — when the phone is lighting up more than often, we push the gas a little harder. The one challenge in managing a portfolio like ECC, we make this our worst problem. We get a ton of cash four times a year. Again, make that — I will never actually complain about that, but all the CLOs kind of pay on our January 15, April 15 cycle, so that’s why we have a little more cash than average as of October 30, is simply it’s Christmas here, really four times a year.
And we’re getting that money in the ground very, very quickly.
Ryan Lynch: Okay. I appreciate your thoughts and comments on that. That’s all for me.
Tom Majewski: Thank you.
Operator: Thank you. [Operator Instructions] Our next question comes from the line of Matthew Howlett with B. Riley Securities. Please proceed with your question.
Matthew Howlett: Hello, hi Tom. Hi Ken. Thanks for taking my question. Good morning.
Tom Majewski: Good morning.
Ken Onorio: Good morning.
Matthew Howlett: Look, I think these — the question, look, I think it’s the elephant in the room, is your balance sheet is just keeps on improving and deleveraging with the growth in net worth. My question — and I think I asked last time is, I mean, you got to be looking at putting where your ratios are putting some either preferred or term preferred or term debt on the balance sheet and given with the moving rates the last few weeks, given where you’re talking, where yields are by time, should we be thinking about getting leverage back up to that 35% and taking advantage of these great spreads before, didn’t last.
Tom Majewski: Good question. We certainly are very proactive in managing the right side of the balance sheet. The — we’re blessed. I love our balance sheet. I’m looking at my Bloomberg screen, the nearest maturity is April of 28 on the Xs. Everything is unsecured, everything is fixed rate. We have some perpetuals out there even. So that’s all good, and that’s by design. We’ve intentionally run the company with a 25% to 35% target band of leverage, including both preferred and unsecured debt. That served us well in COVID, for example, where we were on site in our ACR at all times, which that’s an art as much of a science kind of judging these things. As we look at capital raising opportunities ideally, we’d raise some comments, some preferred and some debt every single day, the OID rules on preferreds and debt sometimes make that not so easy to do.
