So, the real driver, the real volatility is all driven by the incentive fees. So, to the extent we continue to have favorable performance, you heard Jesse’s comments about our expectations at Main Street for the first quarter. As I said earlier, there is a lot of overlap between our portfolio and MSC Income Fund’s portfolio. It is not 100%, but you can apply a little bit of a read-through from our results and our expectations to MSC Income Funds. So, given that, we expect MSC Income Fund to continue to perform well and continue to generate positive contributions to us from an incentive fee standpoint. But the real productivity or growth year-over-year versus that $33 million number that you referenced is really going to be more dictated by the incentive fee coming off the performance of not just MSC Income Fund, but also the private loan funds that we manage.
Our ability to continue to produce positive results there is going to really be the driver of that outcome.
Mark Hughes: Great. Thank you.
Dwayne Hyzak: Thank you.
Operator: Thank you. Our next question comes from the line of Eric Zwick with Hovde Group. Please proceed with your question.
Eric Zwick: Good morning, everyone. Just one question for me this morning, given the fact that both the Fed and the futures market are projecting declines in short-term interest rates at some point during 2024, obviously the timing and magnitude remain up for debate. But I’m wondering, can you provide an update on your interest rate sensitivity, maybe in terms of the potential impact to DNII per share for each 25 basis point reduction?
Dwayne Hyzak: Sure, Eric. Thanks for the question, and thanks for joining us this morning. We, like other — I think all the other BDCs, you’ll provide what we think is a pretty granular table, both in our SEC filings and in our investor presentation. So, you’ll see that when we post all that later this morning. But in general, we have historically and continue to view our position to be a little less sensitive than other BDCs as purely attributable to the fact that our lower middle market strategy is predominately fixed rate as opposed to floating whereas most the spaces as you know is a 100% if not 100% or close to 100% floating. So, we do think we have a little bit less sensitivity. So, we’ve — you are not seeing the same benefits that this space may have seen over the last 12 or 18 months.
But, if rates come down, we should see less of an impact going forward. But for your benefit, if you look at our portfolio and our obligations of 12/31/2023, so as of yearend a 25 basis point change would be just over $0.04 a year. I think it’s about $0.045. So, if you look at that and annualize it, you kind of get $0.18 a year. Just remember that assumption is a very, very aggressive calculation because it assumes those rate change day one of the year. Obviously given the curve as you know, that wouldn’t happen. And in practice, it also likely wouldn’t happen. It will happen kind of on a curve basis over the balance of the quarter and the year. So, the impact will likely be lower than that. But that’s the best way that we and I think the other BDCs have been able to deliver that interest rate sensitivity historically and continue to provide it today.
Eric Zwick: Great. Thanks, Dwayne. I appreciate the color. That’s all from me today.
Dwayne Hyzak: Thank you, Eric. Appreciate it.
Operator: Thank you.
Dwayne Hyzak: I think guys that would be the last question there. So, again, we appreciate everyone’s participation. I really appreciate the questions. We love responding to questions. So, we appreciate the individuals that joined and asked us questions. And, we’ll look forward to talking to everyone again in May after our first quarter 2024 results are released.
Operator: And ladies and gentlemen, thank you for your participation. This does conclude today’s teleconference. You may disconnect your lines. And have a wonderful day.
