Paul Johnson: Okay. No problem. No problem. All right. Thanks for taking my question.
Ted Goldthorpe: Thanks.
Operator: Next question comes from the line of Steven Martin with Slater. Your line is open.
Steven Martin: Hi. Most of my questions have been asked and answered. Can you talk about the trends in PIK for the quarter? And also, I know you’ve talked about the portfolio for the quarter, but you are — we’re close to the end of the quarter. Can you say anything about deployments and repayments so far or where you expect?
Patrick Schafer: Yeah. I think starting with your latter question, I think, probably, where we sit today, we might be a little bit down still for the quarter. But there’s a couple things that we’re working on just from an investment perspective. So, as I kind of mentioned to Christopher Nolan, like, just kind of depending on whether that, some of those things ultimately hit in March versus get kind of finalized in early April, obviously, affects a little bit of that. But I would say we’re probably still sort of slight net repair.
Steven Martin: Okay. And on the PIK?
Patrick Schafer: Yeah. On the PIK, look, I wouldn’t expect there to be sort of meaningful trends in any direction. As we’ve kind of talked about before, there are lots of instances where, like, our — we are — as we’re thinking about an investment in a security, sort of we’re taking the combination of cash and PIK and thinking about it as kind of an aggregate investment. So, from our perspective, if we think we can structure a higher overall returning piece of paper, but a little, a small component of that is PIK, we think that’s an attractive opportunity to do so. Obviously, there are small instances where we intentionally go into a transaction with an all-PIK security. But I think generally speaking, if you look at our PIK investment, our PIK income as a whole, broadly, it’s sort of in situations where there is a mix of cash and PIK component to the securities.
Steven Martin: Okay. And can you talk about the portfolio restructurings, leverage ratio within the portfolio, what you’re expecting in terms of…
Patrick Schafer: Yeah. I think we — no. No. Great question. I think we — it’s somewhere on our slides. I think our leverage ratios are kind of roughly flat from the portfolio quarter-over-quarter. Again, I think generally speaking, we’ve mentioned this trend, but new positions tend to be sort of, I’ll say, lower levered than perhaps legacy positions just because of the interest coverage and sort of how borrowers are thinking about that. But I would say, again, on the whole, like if you look like at our market, as well as kind of BDCs broadly, like, underlying performance of companies’ kind of continues to hold up. People are still seeing somewhat decent revenue in EBITDA trends. So, I’d say on the margin, we probably would expect kind of flat to decreasing leverage over the whole of our portfolio.
Steven Martin: And amendments…
Ted Goldthorpe: And credit quality, like you saw this last quarter, I think, non-accruals are down. I think you’re going to — I think credit quality as we sit here today is stable across the portfolio.
Steven Martin: And what about amendments and extensions?
Patrick Schafer: I would say, I — there’s probably still a little bit of an uptick in extension activity in general, just because, again, as we’ve kind of mentioned some of these trends, like the M&A market is coming back. But I think, generally speaking, sponsors obviously try and get themselves as much flexibility as they can in terms of when they might want to exit a portfolio. So, we’re definitely seeing sort of still like kind of some reasonable amount of sort of amendment — extension activity, just because, look, we like the credit, the company’s performing fine. We’re happy to give the borrower sort of the sponsor sort of two more years to decide whether they want to exit the company. But I wouldn’t say there’s kind of any uptick in sort of forced extensions and things like that. I think it’s generally a relatively stable/slash average type of environment for that sort of activity.
Steven Martin: And in the past, you’ve said you were getting paid for those or would you still make the same comment?
Patrick Schafer: Yes. We still either get a fee or some type of pricing. Again, the market right now, we are seeing where we sit today, like broadly speaking, spreads coming in as a whole in terms of new deals. So, sometimes keeping the spread the same is the same, is an economic benefit to us as opposed to some type of repricing transaction. But, yes, I’d say, generally speaking that, those activities are not for free. But again, in a situation where a company has meaningfully delevered and they want an incremental two years or three years, keeping it at, let’s say, S650 as opposed to getting priced down to S600 is actually an economic benefit to us. So I would say you’re still getting paid for it. But it sometimes, depending on the characteristics, it’s a little bit less obvious how you’re getting paid.
Steven Martin: All right. Thank you very much.
Operator: Next question comes from the line of David Mizayaki, sorry, David Miyazaki with Confluence Investment Management. Sir, line is open.
David Miyazaki: Thank you. Thank you for taking my questions. Could you just remind us what your longer term plan is for your CLO investments? You’re down to about, looks like about $9 million now that you’re holding. Where do you plan to take this in the future?
Ted Goldthorpe: Yeah. I mean, the plan is to take it to zero. I mean, we’re trying to wind down the portfolio and get the CLOs, it’s called. So the plan is to take it to zero.
David Miyazaki: Okay. That was my thought on that. And does that affect kind of where your target leverage ratio is? As that winds down, do you feel like you have more capacity to take balance sheet leverage up higher?
