So I would say best time ever to be in our business. We’re getting private equity returns for credit risk. So we’re really excited about the environment, but deal flow is like way down. Deal flow is down, I don’t know, 75%. So the average LBO in the fourth quarter, this is the thing that’s interesting. Prices haven’t come down in the U.S., but leverage has. So the average LBO total leverage has gone from 6x to 4.4x. And what that is, is people are just backing into their fixed charge coverage ratios. So companies are asking us for a lot less leverage and despite the fact that purchase prices haven’t really come down.
Patrick Schafer: I’d say the thing I’d add to that to what Ted said is, in addition to quality going up, the aggregate total deal flow is down, quality is up and also our hit rate is theoretically up a lot as well. I just think over the last several quarters, just the general fundraising environment for private credit has been a little bit challenged. So you’re seeing more opportunities to be able to kind of either win deals or win shares of deals that perhaps would have gone to just one individual. So again, I’d say we — the deal count is down, but I don’t feel like we have a problem sourcing and finding enough attractive deals to actually refill the pipeline on repayments and things like that.
Steven Martin: Okay. And then it sounds like if leverage is down and prices aren’t that means there’s more equity being put into these situations?
Ted Goldthorpe: Yes.
Steven Martin: Okay. What are you seeing on the amendment modification — in the amendment modification category?
Ted Goldthorpe: Mean Patrick could speak to it as well. I would say we’re seeing a lot of amendments, but a lot of them are SOFR-LIBOR conversions, like we’re seeing — I mean, that’s just natural as your book ages. I would say on like what I’d call core amendments, I don’t know, non-SOFR transition. I would say it’s — they’re up. They’re up. I wouldn’t say anything alarming. We’ve had — this is the time of the year where you get a lot of amendments around delayed financials. So amendment activity is up. I wouldn’t say it’s anything to be concerned about. I mean one thing we didn’t mention on the call is for the first time in five quarters, we’re seeing margin expansion in many of our portfolio companies. So on a trailing basis at least.
And again, we all know things are going to get worse going forward. But on a trailing basis, our company is doing better because price increases are now running through the system and then labor shortages and things like supply chain are abating. So the stats in our portfolio companies are actually getting better on a trailing basis, which is kind of interesting.
Steven Martin: Good. Thanks a lot.
Ted Goldthorpe: Thank you, Steve.
Operator: Currently, there are no further questions at this time. So I’d like to hand back to our presenters.
Ted Goldthorpe: Great. Well, thank you for everyone for joining us today, and we look forward to speaking to you again in early August when we will be announcing our second quarter results. And as per always, please feel free to reach out to any member of the management team for any questions. Thank you very much.
Operator: That does conclude our conference for today. Thank you for participating. You may now all disconnect.
