Ted Goldthorpe: Yes. That’s a great question. So again, our philosophy generally speaking, is we prefer to pay a higher core dividend that our investors can wake up every day and know they’re getting versus specials. That’s generally our philosophy. That being said, you made a comment in your question, you’re dead right, which is this is like — the interest rate curve comes down pretty dramatically, like people are kind of expecting 200 basis points of cuts over the relatively — in the next couple of years. And so it doesn’t matter what we believe or not believe. So we run all of that stuff through our earnings model. And we still think that today’s dividend, we can pretty easily cover it, even if the Fed cuts rates by 200 basis points.
So we look at not only current rates, but where the market’s telling you rates are going to go. And again, I don’t see the Fed cutting rates anytime soon, but it doesn’t matter what I think. We show — we overlay our dividend coverage analysis with the forward curve. And that’s kind of how we think about our core dividend. So that means that it’s higher for longer and the Fed — and the interest rate curve is wrong, which historically it has been, then we’ll pay out specials. So again, first principals, we want to pay a high core dividend, and we don’t — and we favor that over specials. That being said, to the extent that it’s higher for longer, we’ll just pay specials to our shareholders and buy back stock.
Ryan Lynch: Okay. That’s all from me. I appreciate the time today.
Ted Goldthorpe: Thanks Ryan.
Operator: Your next question comes from the line of Steven Martin of Slater. Your line is open.
Steven Martin: As a follow-up to this last question, where did your spillover stand at the end of the year?
Jason Roos: Let me get back to you on that, Steve. I think we’re right around — I’ll have to get back to you on that. I think it’s around $0.40, but don’t quote me on that.
Ted Goldthorpe: The reason it’s complicated is because we’ve done all these mergers, we were able to generate a lot of tax benefits out of that. So even though we’ve been comfortably over earning our dividend, which would normally you could do math and just see we have a lot of spillover income. That’s been — we’ve been able to shield a lot of that just through some of these mergers. So Jason’s team has done a really good job of mitigating tax impacts. So our spillover income today is still relatively muted. But we’ll get you the exact number.
Steven Martin: Okay. On deal flow, you’ve talked a little bit about it. What do you see going on this quarter? And are you seeing new deals? Are sellers finally lowering their price expectations. What’s going on in that order?
Ted Goldthorpe: So there’s some interesting observations, just generally speaking, just based on data. So prices in Europe have come down more than a turn for the average LBO. Prices in the U.S. have not come down, again, based on trailing data. I would say I think it’s a little bit like — it’s going to take a little while for the adjustment period, like our deal flow is down pretty dramatically just for like day-to-day deal flow. The quality of our deal flow has gone way up. And the reason for it is, if you’re willing to borrow money at S plus 700, which is what we — it’s our average issuance price, you need to have a pretty compelling reason to take the money. And so a lot of what we’re seeing is instead of new LBOs, which is our core business, a lot of it is add-on acquisitions and some of the niche lending that we do.
