It repaid faster than we thought it would. And it was because the company was performing well or had performed well through COVID. And there was a strategic acquirer for that business that was willing to pay a price that was accretive to the sponsor’s view of that business. So — but I wouldn’t say that there’s a long line of conversations that are being teed up with us that indicate that there is this short-term M&A deal volume wave happening. But I would also say that M&A deal volume is slightly elevated in terms of our forward pipeline as we look at it today versus maybe 12 or 18 months ago. So, prepayments will should be higher over the next 12 months than they were in let’s say late 2022 and most of 2023. I would expect sponsor-to-sponsor transactions to pick up sponsor-to-strategic sales to pick up.
But I don’t think it’s going to be quite at the same speeds that we were used to pre-COVID especially.
Matt Pendo: Yes. And Melissa one of the reasons it’s hard to predict is if you go back over the last two years over 50% of our portfolio has actually turned over, which all that occurred during a rising rate environment. So, one would have thought it would be a little bit lower. So, it’s really difficult to predict. It’s idiosyncratic as Armen mentioned like in Melissa & Doug. So, it’s tough to kind of project out for the next year on that point.
Melissa Wedel: Yes, fair enough. That’s really helpful though. I hope I didn’t miss this, but I know you talked about median EBITDA in the portfolio and leverage being pretty steady quarter-on-quarter. Just curious what you’re seeing in terms of your portfolio company revenue and EBITDA trends generally sort of on a year-over-year basis. Thank you.
Armen Panossian : Melissa, this is going to be like 20,000 feet, 30,000 feet. But I would say, generally speaking, revenue is generally for the portfolio that is sort of stable to increasing modestly. EBITDA, I would say, is stable. I wouldn’t — it’s not — I wouldn’t say it’s materially higher by any stretch and certainly not weaker in any sort of consistent way or observable way across the portfolio. So, I would say, unlevered performance of businesses, so ignoring the elevated cost of borrowing and how much that’s gone up over the last two years. Companies generally have seen higher revenue over the last two or three years by a few percentage points annually and EBITDA sort of flat to slightly up generally.
Melissa Wedel: Thanks, Armen.
Operator: [Operator Instructions] Our next question comes from Bryce Rowe with B. Riley. Please go ahead.
Bryce Rowe: Thanks, guys. Good morning. Maybe I wanted to start with this discussion around spreads and some level of spread compression that you’ve seen. Can you speak to the level of spread that you’ve seen with the $100 million that you funded here in April and then how the pipeline looks from a spread perspective, maybe relative to what you’ve seen over the last six months?
Armen Panossian : Yes. It’s a good question. So in this $100 million that we have funded in April, spreads are in the mid-500s. I think that this is kind of — let’s give you some directional feedback. In late 2022, early 2023, that’s probably where the top tick was on spreads. And where we saw a typical first lien or unitranche sponsor-led financing, even though the deal flow was pretty light during that time frame, the spreads were 50, maybe as much as 700 spread at that point in time. But since then, I think the market is trending towards more of a 500 to 550 spread. In really lightly levered situations, you might even see an occasional deal print even inside of 500, but that would be, I would say, atypical. But there’s certainly — the market is not at 650 anymore or even above 600 anymore. It’s certainly more in the low — low to mid-500s at this point, as we look at the market going forward.
Bryce Rowe: Okay. That’s helpful, Armen. And then wanted to ask about balance sheet leverage, both at OCSL and then within the JVs. You noted an uptick in balance sheet leverage at the JVs. I think it was up 1.1 to 1.3. Is that — is there more appetite to take leverage at the JVs higher? And then from, I guess, an on-balance sheet OCSL perspective, no real change from a balance sheet leverage perspective year-over-year or quarter-over-quarter. What’s the appetite there? Are you still trying to manage to maybe the lower end of your targeted balance sheet leverage range?
Matt Stewart : Hi, it’s Matt Stewart. As you noted, we did raise leverage at the JVs to 1.3 times on the back of the heavy new issue volume and the new facility that we put in last year. Our target there is to get to 1.5 to 1.75 times as we rotate into a more first lien broadly syndicated portfolio. So we do have additional room to grow the JV and ROE at those JVs. And then on balance sheet, we ended the quarter a little bit over one times net leverage. So we do have capacity. As Armen noted, we did fund about $100 million so far this quarter. So we are closer to 1.1 currently. But we will operate and leave capacity for additional fundings if we do get some volatility. Even at 1.1, we have significant room to get to the top side of our leverage target at 1.25.
Bryce Rowe: Okay. All right. Last one for me. If you look at the slide deck and the secondary public market activity, $92 million for the second quarter is one of the heavier quarters from an origination perspective within that secondary public. And the secondary market price looks like $0.98, so a little bit higher than what you might have done in the past. Just kind of wanted to understand the thought process there being that that’s typically a little bit more opportunistic and you see maybe a lower secondary purchase price when you see that level of volume associated with it.
Armen Panossian: Yeah. This is Armen. We’ve made some rotations in the publicly traded book. We had some higher spread names that are atypical of public markets just kind of higher than average in the public. We also bought some CLO BBs in the new issue market that were in the high 90s. So these are performing loan positions and solid CLO portfolios in structured credit where we were getting sort of better than normal public spreads. And in the case of CLO BBs, our spreads are in the mid-700s. These aren’t like a big change in the portfolio but when we do see some CLO issuance that is strong really fueled by a big demand or a strong demand for AAA CLOs sometimes we find the BB tranche has choppier placement and we’re able to get — step in there in partnership with our structured credit team and trading activities to be able to get some outsized pricing on CLO BBs as again as the CLO market opens up in terms of new issuance.
