Mickey Schleien: My question are just the following. We have this dynamic where the regional banks have their problems, obviously, and that may boost your opportunity in the lower middle market. But we also have large commercial banks constraining their lending and the BSL market is very tough for most lenders — I mean, portfolio companies unless they are very high-quality. So that would imply you have opportunities up and down the middle market. But I’ve heard that spreads are actually pretty tight in the lower middle market. So I’d like to ask you, where do you see the best risk-adjusted returns today in terms of allocating your capital given the structure of PFLT?
Arthur Penn: Look, in the core middle market or some may call it the lower middle market, we are not seeing tight spreads. So you may be hearing that from some of the people who focus on the upper middle market. But we’re seeing very wide spreads. We’re seeing increased opportunity to do thorough due diligence, meaningful covenants, OID. So I don’t know where you heard it from. It might be someone who’s not in our market, but I can tell you, it’s a good environment for us.
Operator: And our next question comes from Mark Hughes from Truist.
Mark Hughes: Art, could you comment on how the pipeline is looking, how 2Q may be shaping up in terms of investment activity? What you might see happening through the balance of the year to the extent anyone can see it?
Arthur Penn: Yes. Look, things are starting to loosen up a little bit. There’s starting to be more deal flow. No guarantees. It’s never guaranteed from incoming inquiry to what we actually end up investing in since we are so selective. But it is starting to get busier. Our deal flow is starting to gain steam. Which of those deals end up on this side of June 30 or the other side of June 30? Your guess is as good as mine. Usually, it does take us at least a month, and usually 2 to 3 months to properly diligence, negotiate and execute a loan. First quarter was — is always seasonally slow. It was first calendar quarter we’re talking. It was slower this year because of the turmoil in the market. And frankly, buyers and sellers need to figure out where the new equilibrium is, where they meet, given higher interest rates, given some economic uncertainty. So we’re feeling like it’s going to be a busier second half of the year. We’ll see.
Mark Hughes: Very good. And then the CLO financing, any observations about this around the kind of the structure? You mentioned that you’re getting generally more well known. Does that help in terms of the economics or is that more just the ability to transact? And if so, what’s the tempo on that? When can you do the next one, so to speak?
Arthur Penn: Yes. So for now at PFLT, we are set at this point with securitizations, although we’re always looking at the market and opportunities. So there may be other securitizations within the PFLT complex at some point. The PFLT complex means — also means including the joint venture. Look, I think getting well-known means more investors come to the table, it means an easier execution, and it could mean a tighter pricing. So the fact that our name in the — in the middle market CLO market is now getting very well known. Our performance has been good. Our performance through COVID was really excellent. So we’re pleased, and we thought the execution that we just got for the JV was attractive. And it’s another form of financing that we will look to look to in the future as one of the many options that we have.
Operator: And at this time, we have no further questions. I’d like to turn the call back to our speakers for any closing remarks.
Arthur Penn: I just want to thank everybody for their time today and your support, and we look forward to speaking to you next in early August when the June 30 numbers come out. So thank you very much. Have a good day, and have a great weekend.
Operator: Thank you. And ladies and gentlemen, that does conclude today’s conference. We appreciate your participation, and have a wonderful day.
