Bryce Rowe: Wanted to ask about balance sheet leverage. Obviously, you all — you finished the year over your — over the high end of your target. You’re now at 1.28x from a net debt perspective. Just any thoughts on continuing to, I guess, operate at above the target? Do you feel comfortable doing that? Or should we expect you all to try to move back down into that target range over the course of ’23?
Daniel Trolio: Yes. Bryce, we do watch that very closely and just want to point out that’s just a snapshot at a point in time at the end of the quarter. And that will fluctuate up and down throughout the quarter. But being at 1.28x net of cash is a place that, yes, it’s slightly above what we say our target is 1.2. But we’re very comfortable at that level with the cushion between 1.28 and the regulatory cap of 2x. So I would say you could expect to be around that level throughout 2023.
Bryce Rowe: Okay, that’s helpful. And then maybe just a bit of question around portfolio yield and pricing. When you get a change in the prime rate. Can you remind us when that change in rate goes into effect for your various loans? I would assume that it might vary loan by loan, but just curious if there is a general practice there.
Daniel Trolio: You are correct. It does vary loan by loan. But generally, it will be either at the time that the rate changes in effect or the first of the month following the rate change.
Bryce Rowe: Okay. And then maybe last one for me. From a — again, on the yield side of things, when we’re looking at where floors are today, do you have a good sense for kind of what the weighted average pricing for on your loans is?
Daniel Trolio: Yes, we do. With a significant amount of our portfolio funded at 3.25% prime rate and the longer period with lower prepayments, we’re looking at the floor rate, which will continue to grow as the portfolio changes as we put new loans on at the higher prime. It’s around 3.75% on average.
Operator: Our next question comes from the line of Vilas Abraham from UBS.
Vilas Abraham: Can you guys comment a little bit on the negative migration in the quarter, particularly the couple of one-rated credits that picked up there?
Gerald Michaud: Yes. Basically, we had 2 transactions that had kind of idiosyncratic events specific to the companies, one related to a strategic deal that was about to get done and then didn’t. So we downgraded that, and it’s still very early in the process. So we felt it would be appropriate to market down, and we’ll see how that goes. We’ll be working on both of those transactions over the coming quarters. Hopefully, we can get something resolved by the third quarter in both of them. So really, it was nothing more than that. And we have to work them. We took a conservative approach relative to the valuation given the macroeconomic circumstances, a better market that may have been better or more opportunities for the companies to do to get something else more positive done, but that didn’t happen yet. So that’s where we are today with them.
Vilas Abraham: Okay. And then maybe just more broadly, as you look across the industries in your portfolio, are you seeing any particular industries more stressed than others? Or are kind of all dealing in a similar fashion with the broader pressures?
