Robin:
Thank you for joining us on today’s call. Tia please open the line for questions.
Tia:
Ladies and Gentlemen if you would like to ask questions press start 1. If your question has been answered or you wish to withdraw your question press start 2. Questions will be taken in order received. Let us start 1 to begin.
Robin:
The 1st question comes from Alyna Ken Worrington of JP Morgan please proceed.
Alyna Ken Worrington:
Hi, Good morning first on the environment I think FSAM had fairly robust assumptions for AUM growth in 4th quarter 2015, given 4 q is seasonally strong and almost over. Can you give us an update on how the lending environment has been in the quarter?
Answer:The opportunities that are presented from the market are pretty great, you have a high yield and the environment for one stop is probably increasing yields by 50 to 100 basis points of course that cuts 2 ways but we’re really excited to invest capital in this quarter. Fortunately for us we have very very little energy exposure in the 2 BDCs and in hedge fund and in PS Ops so we didn’t have impact that some of our peers who have over to 10% exposure, including one of our peers with the largest companies at 6.3%. I mean it’s ’ really cut very differently across the peer group. So we see a lot of opportunity we are able to take advantage of it. Having said that right,We are not able to raise capital at the BDCs, we won’t raise capital below book and because of that some of that was anticipated I think by some of the analysts but we don’t foresee raising capital at either BDCs for quite a while as we are going to wait for them straight above book so in that case, we’ve had to tamper our broke plans at least especially at FSC, as we enter our max leverage range that we really want. FSFR, of course having much opportunity to grow including as an edge, more leverage lines, it will continue to add assets which we seek plenty of.
Question: FSG treating at us at a succession discount NAV, assuming that it continues to trade below NAV for a period of time, how is your plan in resource allocation changed to continue to drive growth at FSAM?
Answer: Well, we always knew that we had to diversify the asset strategy away from the BDCs, you can’t be reliant on the two BDCs to a large extent withheld products because they do have some institutional holders. We feel like we’re being praised successful developing the institutional side of the business, however I think from FSFR, at the ability to invest in senior-senior assets which are terrific in this market and the ability to lever a bit more, and we believe that it will trade very well. FSC may take a little longer, however both of them are very well positioned for the down cycle because we’ve rotated into very senior securities so the good news is we’re very defensively positioned in both, but you’re right to grow FSAM as aggressively as we would like. We’d require FSC which is a large contributor to grow faster and we don’t see that happening in 2015.
