Dan Pietrzak: I think that sort of term upper end of the middle market has a pretty sort of broad definition, right? I think we’re sort of talking to folks, that’s probably more in the $100 million to $150 million of EBITDA. But I think in recent sort of quarters, it’s even gone sort of beyond that as the syndicated loan market has been shut and private debt has really been, I think, the only game in town I do think we started the year as an extremely, we’ll call it, lender-friendly environment, I think we’ve probably come off that a bit and we mentioned about seeing a certain amount of spread compression. That said, I think more and more companies continue to access private debt as a financing source I think especially doing that in times of volatility and they’re looking for certainty of sort of financing.
But I think just a lot of folks are being sort of drawn to this market versus the broadly syndicated market. The broadly syndicated market is never going to go away. I think private debt just become kind of an equal sort of peer there. So, I think we’re still seeing very good structures I think the market has had a good amount of discipline as it relates to some of the documentation weaknesses that we may have seen in the broadly sort of syndicated market but just a little bit tighter on pricing, as we mentioned in our prepared remarks.
Kenneth Lee: Got you. That’s very helpful there. And then 1 follow-up, if I may. In terms of the supplemental distributions — wonder if you could just share some initial thoughts on visibility, confidence and the potential line of sight around supplementals for next year?
Dan Pietrzak: Yes and I’ll start to this and Steven Lilly might want to add to it. Obviously, we’ve had the sort of base in the supplemental and then we had the $0.15 of special for 2023. I think that, that is a good story in our mind. We’ve told the market we were going to pay sort of additional earnings as they were sort of earned by sort of FSK. I think that will put roughly at $2.95 of sort of total dividends paid for the year which I think is quite attractive for our investors and obviously a big sort of focus for ours. We feel confident to extend that special. That’s the $0.10 that was mentioned in the prepared remarks. I think by definition, that means we feel confident about the supplemental as well kind of in the near term. And I think you should expect the basin supplemental to remain in the coming quarters.
Operator: Our next question comes from Ryan Lynch with KBW.
Ryan Lynch: I had several questions on kind of the transaction with the PayPal consumer loans. I know it’s kind of a small transaction but it’s definitely interesting. So I guess, first off, how are those loans being placed on your balance sheet? I saw a small equity investment of $2 million but — are those loses going to be directly placed on your balance sheet? Or are they going to be in some sort of like SPV entity.
Dan Pietrzak: Yes. And Ryan, happy to talk about that. I mean, I don’t think it was actually a small investment, considering we’re going to buy €40 billion over the coming years. Obviously, this was a strategic transaction for both us and for PayPal. And there’s a fair amount of, I think, public sort of statements out there that we can kind of point to. I think that said, the receivables are short which is why that $40 billion number does seem high. The book will probably turn 6x per year. The €80 million that’s kind of mentioned in the script was FSK share of the overall sort of deal and the deal is the receivables are essentially going into an SPV, there are certain banks providing financing to that SPV and then FSK and the other KKR credit accounts are providing the remainder of the capital. That $2 million piece was just the initial funding but you should expect it to ramp fully over the coming quarters.
Ryan Lynch: Okay. And then so the $80 million that’s going to FSK, that was kind of I was talking about the smalls. Is that expected to grow over time? Or how do you kind of view your overall exposure to these loans? And maybe it’s too early to tell. And then I guess also, what should we expect with sort of the — it sounds like it turns over a lot which would make sense. What are sort of the return expectation for these types of loans?
Dan Pietrzak: Yes. I mean I think you should expect that number to be sort of the target at least for the near sort of medium term. It might very well sort of grow from there as the program continues to take off. I think like most things in our asset-based finance bucket, we view them as extremely attractive from we’ll call it, a downside protection basis, we think because these are either secured receivables or short-duration receivables, we have a great amount of confidence in the repayment profile. But that we’re generally trying to do deals inside this strategy at kind of, let’s call it, mid-teens plus, right? So view it as great diversification to a corporate credit book, well protected from when we think about sort of the downside and effectively return enhancing versus just regular way direct money.
Ryan Lynch: Okay. And then 1 last 1 on it. Are these sort of loans that were previously going to — I know it’s Europe, so maybe it’s not relevant but I’m thinking you mentioned earlier that kind of the slowdown of regional banks sort of lending? Are these the types of loans that would fit into like regional bank, these consumer financing type loans that this is the reason that is kind of stepping in to fill that void or where were these loans have previously been going in.
Dan Pietrzak: Yes. That wouldn’t have been the case for a transaction like this. I mean you don’t have the same regional banking model in Europe than you have in the U.S. So that sort of concept is generally not the same. This was talked about a bunch on sort of the PayPal side. This was all funded on PayPal’s balance sheet before this deal.
