Matthew Howlett: Thanks for taking my question. Good morning, everybody. Just to follow on that note, I mean the €“ what I was really impressed with was the junior OC, over-collateralization was up and stable 459. I mean, given €“ the downgrades are outweighing, the upgrades we see that, what’s going on in the portfolio that’s allowing the CLO junior OC tranches to be stable in that environment? Is it just reinvestment, good portfolio management? Can you just elaborate on how that’s €“ why that’s staying stable in a higher downgrade market?
Jonathan Cohen: Sure. So even though we are starting to see downgrades, the CCCs are still within their allowable 7.5% basket. So even if you see an increase in CCCs as long as it stays under 7.5%, you won’t see that impact the OC ratio. Additionally, just given this environment with a healthy discount in the leveraged loan market, CLO managers are able to build par just by going out and purchasing loans at 95%, 96%, 97%, and that’s a good way to just build par and build those OC ratios.
Matthew Howlett: Yes, right. And I noticed you’ve extended the €“ you keep extending that reinvestment period. Is that something that €“ I mean, sort of when you look at buying €“ you said €“ I think you said two new issues in the quarter. I mean you really set on improving €“ continuing to lengthen that reinvestment period? You’ve done a great job in the last year just pushing it way out?
Jonathan Cohen: Sure, Matt. As you know, we are partial to longer reinvestment periods is, I think that’s sort of a fundamental part of a lot of the thesis that we invest around. That said, we seek to be as purely opportunistic and investor as we can be, which means if there are discrete opportunities with shorter reinvestment periods or even transactions that are structures that are outside of the reinvestment periods, we will look very broadly across the asset class.
Matthew Howlett: Certainly been an opportunistic in that time and time again are today given the equity market rally, year-to-date. Two, there’s been a lot of press reports on these leverage loans hung on these investment bank balance sheets and JPMorgan’s asked about it on their call and they said, no issue. Do you foresee any issue with the banks going forward with some of the stuff on their balance sheet, does that create an opportunity for Oxford Lane, if they need to securitize and get them out? And then three, did I hear you that the credit curve is steepening. Is that good for Oxford Lane? Do you like to see the credit curve steepener or does it €“ are you indifferent to it?
Jonathan Cohen: Sure, Matt. I think the first question €“ the first part of your question was a little bit garbled. Do you mind repeating that?
Matthew Howlett: On just leveraged loan price today?
Jonathan Cohen: Oh, sure. So since year-end, the LSTA syndicated corporate U.S. loan index is up roughly 160 basis points. We’re just a little bit over 94 in the index right now, which is obviously generally good news for collateral pools that was within U.S. CLO structures. In terms of €“ yes, so I think your other question was about the pressure on some of these investment banks who have these warehouses. Now, individual loans. So I mean, Matt, our view is that to the extent that those loans or significant numbers of those loans begin to see their way into U.S. CLO collateral pools, they’re going to enter those collateral pools at prices that reflect the current risk reward of both that particular loan, that corporate obligors, risk return characteristics as well as the current state of the market. So it’s not anything that we’ve sort of worried about broadly as a market trend.
Matthew Howlett: Got you. And then the last on the credit curve. I mean is that steepening? Am I hearing you correctly that there’s been some widening been AAAs and single Bs, CCCs and single Bs?
