Mickey Schleien: Art, I wanted to ask you about your view on the attractiveness of the current vintage. I mean, generally, we’re hearing that folks are quite excited about it given wider spreads and better deal terms. But your on-balance sheet portfolio declined and the SLF portfolio only grew slightly. Is there — can I interpret that to mean maybe you’re not as excited as the rest? Or was there some other reason that we didn’t see more portfolio growth this quarter at PFLT?
Art Penn: Yes. So in terms of the portfolio, we actually got some repayments kind of 2 — one of the big repayments was a company called Crash Champions, that was because the company was sold. That was about $35 million between the JV and the BDC. And then we got 2 deals adding up to about $17 million between the 2 entities. That — the leverage was so low, good old commercial banks came in. These were companies levered around 3x and they were both able to go to a commercial bank and get very attractive financing. So it’s hard to complain about that. The credits were good and we knew they were a potential-refinancing candidate. So kind of good — what good news, credit events, we are enthusiastic about the environment. We are hopeful that there will be growth here in this quarter and the quarters thereafter in both the BDC and the JV.
We’re seeing the new vintage of new deals for all the reasons we’ve mentioned, the lower leverage, the higher yields and spreads, the higher OID, tighter covenants. The more significant equity cushion really is shaping up to be a nice vintage. And as we said, we have a nice opportunity in the secondary market where if we can buy $1 for between $0.85 and $0.95 in the secondary market in a company that we know well, perhaps we used to finance — in one of our industry verticals, et cetera. The market has given us that opportunity where we can kind of say, okay, it’s probably more par in a 2- to 3-year time period and that ends up being a kind of teens return. So we’re doing a bit of that in both the JV and in the BDC. And that’s just kind of pivoting and taking advantage of some of the softness that we see elsewhere.
Mickey Schleien: I understand. That’s really helpful. A couple of more questions from me. If I’m doing the math right, it looks like the dividend to the BDC from the SLF declined pretty meaningfully in the fourth quarter versus the last couple of quarters. I understand that there’s obviously differences between cash and tax and GAAP bookkeeping. But was there some underlying reason for that? And what is the outlook for the dividend from the senior loan fund?
Art Penn: Yes. There’s no — in fact, if you look at the income coming from the JV, including the debt investment we have in the JV which is floating rate, the overall income is stable or up. But because we have into the JV, the note which flows at a very healthy spread over LIBOR, LIBOR has gone up, obviously. So the overall income we’re getting from the JV has not diminished at all. And it’s just of that overall income, more of it’s being absorbed in the debt piece. So therefore, there’s less income for the equity piece. But if you look at the — go ahead.
Mickey Schleien: So you’re looking, I don’t know — yes, on a return on invested capital basis.
Art Penn: Right. Right. So I don’t have to but it’s pretty — that known into the JV as a pretty healthy spread over LIBOR.
Mickey Schleien: Yes. I got it. My last question, marketplace advance first lien is marked well above cost. And I think it’s been like that for a couple of quarters. Does that imply that you’re expecting to exit that investment relatively soon? Or is something else there?
