Ryan Lynch: Okay, got you. And then, I just had one question outside of the PayPal discussion. You talked about a lot of companies and deals sort of gearing up now that will take a while to sort of incubate and could come to fruition maybe in the second quarter and beyond in 2024. I’m just curious, what sort of do you think assumptions that these companies are making in order for these deals to transact? And maybe said it differently, are these deals dependent on sort of rate cuts or stabilizing base rates? Or is the current environment if it just stays steady with rates stay where they are, the environment sort of stays stable — do you think that that’s good enough to have these deals sort of come to fruition? Just from a high level, I know every deal is specific but just kind of high level.
Dan Pietrzak: No, it’s a fair question. I think just sort of stable will be, we’ll call it, enough of a catalyst or market conditions to allow that to get done. I think you’ve had valuation mismatches for some time now between out of the seller and sort of the buyer. I think those have, we’ll call it started to narrow. I think at least of our view is we’re in an environment of higher rates for longer. And I don’t think the inflation story is done but I think it’s become — we’ll call it much more manageable and sort of under control. And I do think you have the other sort of point out there. In the private equity community, I think there is a growing amount of pressure for realizations and money to be returned to LPs. And then there’s also a lot of dry powder sort of sitting on the sidelines, right?
So that’s why I think if we could just stay in a — we’ll call it a stable type kind of macro which obviously is a lot going off. So maybe that will be sort of hard. But I think we say that, that will be the catalyst to get that done. We’ll get these deals coming to market as we get through ’24.
Operator: Our next question comes from Melissa Wedel with JPMorgan.
Melissa Wedel: I was hoping to follow up on a couple of the comments that were made, I believe, during the prepared remarks. 1 speaking to the strength of the opportunity set in asset-based finance. But then I think Steven also mentioned expecting lower asset base finance dividend income in 4Q. I was hoping we could just dig into that a little bit.
Dan Pietrzak: Yes. It’s a good and fair question. I would probably separate the 2 just for 1 second. I think the market opportunity or the investing opportunity is quite strong. It’s systematic that we believe a lot in and this place that we’ve been kind of very sort of we’ll call it focused on. I think each of the deals is a little bit different. Sometimes the deals when deployed have to get to scale before they can start to pay a dividend. So you can have a certain we’ll call it, sort of timing mismatch. And then there’s a handful of deals that we are looking to we’ll call it, do certain positive things on the liability or sort of financing side which will kind of restart that process where dividends might be slower. But if I think about it more in terms of a timing mismatch that a permanent to the point — on the dividend side.
Melissa Wedel: Got it. That’s helpful I was also hoping we could touch on 1 portfolio company. I believe Grace was on the nonaccrual list previously. It looks like it was removed and marked up back to par in 3Q. I was hoping we could just touch on that. Was that a restructuring? Do they get current. Could you give us some detail there?
Dan Pietrzak: Yes. I mean it’s been probably a multipronged restructuring over the last probably 24 months and Brian might want to sort of add to this. But I think we’ve reached what we call the next phase of that. This was a legacy adviser position that had sort of a meaningful amount of challenges. The business has kind of shrunk sort of materially. And I think there was some additional sort of capital put into it as it relates to this quarter as well which kind of triggered it sort of going off that nonaccrual list but it’s a pretty small position at this point.
Operator: Our next question comes from Robert Dodd with Raymond James.
Robert Dodd: Going back to the ABS, the dividend income for Q4. Obviously, I mean, [indiscernible] call it these days. The dividend went down this quarter. Is any of the relatively lower, still very healthy. of dividends from the asset-backed finance connected to the real estate market, we’re going to obviously have exposure in directly there? Or is there something else just normally seasonal — and that’s obviously, to your point on, that’s the timing issues and things like that. But is there a real estate back plan?
Dan Pietrzak: And I mean I’ll answer the question but if I missed something, let me know because it was a little bit hard to hear a couple of points in there. I mean I think on the example of sort of Toorak, I mean Toorak, the underlying loan performance has been quite strong. And I think we’ve been sort of happy to see that. But like a lot of sort of asset classes out there right now, that would fall on to 1 where the cost of financing, so it generally has gone up more than the yields on the underlying loans. So that has had put some sort of, we’ll call it, stress on net income or sort of ROE there. They do have the benefit of having been a very frequent issuer and having the ability to those deals revolve. So as loans repay, they can continue to add to those.
But I think this goes a little bit to Melissa’s question as we think about kind of forward financing some of those structures might kind of trap cash in the entities for sort of a longer period of time. So I’d say it’s not seasonal. We try to run that book as neutral as we can from sort of a rate perspective. But there’ll be some amount of kind of refinancing risk there or sort of term out sort of point that to be mindful.
Robert Dodd: Understood. And that does answer the question for me. On — 1 more — you talked about, obviously, there’s a little bit of spread compression now. The syndicated market seems to be showing some signs of life not all the way back yet by at I mean what are your thoughts over the more conceptual over the next 12 months call? Is there a risk spreads in the private credit market that if the syndicated market comes back more aggressively, that puts meaningful spread compression risk in the private credit side. Given base rates are so high, you can obviously — that could be handled without a problem. Does that create a dynamic where the spread compression risk is maybe elevated if the syndicated market comes back while base rates are very high.
