I think also with the general market view that we’re going to see some rate declines this year with base rates coming down, I think private equity sponsors are saying or some of them at least are thinking, well, we’ve seen peak rates, it’s sort of flat to down from here in terms of base rates. So, let’s transact. Let’s buy that business that we’ve been tracking for the last three to five years at a reasonable multiple. And I think rates will be going down or in our favor over the course of the next two years. So, they’re kind of coming off the sidelines and doing some deals there. But I wouldn’t say the trend is super strong right now, but I would say it’s noticeably different in terms of sponsor interest in deals today versus this time last year.
Paul Johnson: Got it. Appreciate it. Thanks for the detail and that’s all for me.
Operator: And our next question comes from Melissa Wedel from JPMorgan. Melissa, go ahead.
Melissa Wedel: Good morning. Thanks for taking my questions. I wanted to follow-up on the new non-accruals. Certainly understand that each situation has different potential outcomes and different timelines. I think your firm in particular is also well known for capabilities on workout. I was hoping you could, maybe provide whatever context you can for us around what a timeline could look like for some of those. Are we talking months or could this be multiple quarters? And I understand each one is unique.
Armen Panossian: Thanks, Melissa. This is Armen. I would say that, while the processes around potential restructurings could be short in a matter of sort of weeks or months. I think the process to actually maximize our recoveries will take longer. And I wouldn’t hazard a guess as to what that is, but I wouldn’t measure the final resolution or maximize recovery to be a matter of months. I would say, it’s closer to it being a year or more, generally speaking, when you have a restructuring and there’s a little bit of wood to chop from an operational standpoint, your best outcome is usually not achieved in weeks or months, unfortunately.
Melissa Wedel: Okay. Appreciate that context. Related to that, we’ve been seeing instances of lower recovery rates than maybe historical levels would suggest. Is that what’s your view on recovery rates and just sort of generally and then anything specific to the portfolio? Thanks.
Armen Panossian: Yes, so generally, the lower recovery rates are I would expect that in the broadly syndicated loan market that recovery rates will be lower, as we see defaults unfold over the next couple of years, versus historical norms. And it’s mainly because the legal protections in those documents are quite weak. And therefore, when there is a challenging situation, there is a risk that assets are stripped away from the creditors or there’s some sort of up tiering transaction that occurs to the benefit of some creditors at the expense of others. So, I would expect that there’s going to be generically, in the broadly syndicated loan market, lower recoveries. In terms of the portfolio or particularly non-accruals, for us these situations are idiosyncratic.
They’re sort of performance and execution driven by the management teams. And so, it’s not, I wouldn’t say there’s sort of like a thematic outcome or a thematic core to how we’re going to resolve these. It’s literally just blocking and tackling and every one of them is going to be different than the next.
Melissa Wedel: Thank you.
Operator: [Operator Instructions] We have no further questions at this moment. So, I would like to turn the conference over to management.
Armen Panossian: Thanks, Marlise, and thank you all for joining us on today’s conference call. A replay of this call will be available for 30 days on OCSL’s website in the Investors section or by dialing 877-344-7529 for U.S. callers or 1-412-317-0088 for non-U.S. callers with the replay access code 2845273, beginning approximately one hour after this broadcast. Thank you.
Operator: And this concludes the conference. Thank you for attending today’s presentation. You may now disconnect. Have a good day.
