Ed Ross: Sure. So leverage for our core lower middle market portfolio, absent a couple of investments in the larger world, if you will, DSL world, our leverage is at 4.37x, I think. So debt-debt EBITDA — and then interest coverage was at 3.1. And what was the last question?
Bryce Rowe: I think you talked about kind of loan to value within the portfolio in the past?
Ed Ross: Yes. Loan to value is pretty stable. It’s just under 40% in the quarter.
Operator: The next question will come from Paul Johnson with KBW.
Paul Johnson: Coming within the marks on the equity portfolio, you mentioned the 1 gain this quarter. That was nice. But is there any other significant multiple movements or marks within the equity portfolio?
Ed Ross: Were there — I just want to make sure I heard you correctly. Were there notable marks changes — is that the question, Paul?
Paul Johnson: Yes.
Ed Ross: Yes. So nothing — I mean, overall, the equity portfolio performed quite well. We did have a write-down in [Fan Steel], which is our largest position, and that company continues to kind of weather the pharma destocking trend. But that — we’re kind of at the end of that, we believe. And so we expect performance to start to improve. That continues to be a very high-quality business with a very good outlook. It’s just — it’s going through this inventory destocking trend in the pharma space, and it’s kind of at the tail end of that. The rest of the portfolio really is quite stable and was — and performed well. I mean I think the equity portfolio, despite what I just mentioned with Fan Steel appreciated, in the quarter as did the debt portfolio. So it was a good quarter, very stable and very solid performance.
Paul Johnson: Thanks for that. And then just in terms of the deal flow you’re seeing in the markets, wondering trying to get your thoughts on kind of what you think of the relative value of the first lien sort of structure opportunities that you see versus any kind of subordinated opportunities that are out there today and that’s something that you’re even seeing and that makes sense?
Ed Ross: Sure. Sure. It’s a great question and it’s a tough one too. I think the market, as you well know, has moved very much to more of a first lien solution. Having said that, mezzanine investments are still a part of the market, a core part of the market is just from a market share perspective, it’s lower. And today’s world, mezzanine continues to show up for us. And so we made 2 mezzanine investments last quarter in very high-quality companies. And so we’re going to continue to look for those types of situations where we like the debt and the equity of those prospective portfolio companies. But what I would suggest is the first lien solution is a large majority of the market in what I would — and I would also expect that to continue to be a large majority of our investments as we move forward. But we are actively looking for attractive mezzanine opportunities.
Operator: Your next question will come from Erik Zwick with Hovde Group.
Erik Zwick: I wanted to first just start with a bit of a follow-up. You mentioned the active — the market is fairly active at this point and competition is, I guess, somewhat — somewhat intense impacting spreads. Curious if you’re seeing any deterioration in the market on the structure side, if you’re finding that you’re losing any deals where you’re sticking to your guns, so to speak, in terms of your credit quality standards and underwriting and others are starting to bend at all?
Ed Ross: Sure. Great question. We haven’t really seen structural changes. One of the things we like about the lower middle market is we have real maintenance covenants. Many times, we have 2 covenants, both the leverage and fixed charge. That’s a large majority of our situations on our investments. And that’s different than the upper market, if you will, the larger market, very different. And I would say the spreads to those maintenance covenants are also narrower. So we like the ability to have a seat at the table, and we have not seen any real changes from that perspective. Clearly, pricing and spreads narrowing as a part of the market in the business today, but structures have not started to change yet, which is a good thing.
And to be honest, in the lower middle market, you don’t really see a deviation away from pretty strong structures at the end of the day. So again, it’s 1 of the things we really like about the lower middle market and our ability to manage — risk manage our investments, if you will.
