Stellus Capital Investment Corporation (NYSE:SCM) Q3 2023 Earnings Call Transcript

Robert Ladd: Yes. So I’d say that very few requests in that way. Now there’s no question that nominal interest rates have come up roughly depending on the floors, but roughly 400-plus basis points. So all companies are bearing that difference in interest expense that they didn’t have a couple of years ago. So I think it’s reduced but – company’s cash flows, but not in a material way that’s affected performance. So when we have something that’s, again, a risk rate 3 or below, it’s really company-related specific performance versus the macro. Just can’t cover the interest expense. And just as a reminder, we do have the flexibility, which is part of your question, I think that if we got rates too high, we could certainly pick some part of the interest knowing that we’d ultimately collect that upon a refinancing or a sale.

So I’d say not a broad-based issue in the portfolio, and we’re certainly trying to be flexible when there’s a need, but we’ve had very few requests that have come just from interest rates increasing.

Paul Johnson: Got it. Thank you for the color. That’s all for me.

Robert Ladd: Yes. Thank you, Paul.

Operator: Your next question is coming from Bryce Rowe with B. Riley.

Bryce Rowe: Thanks. Good morning. Hi Rob.

Robert Ladd: Good morning, Bryce.

Todd Huskinson: Good morning, Bryce.

Bryce Rowe: Good morning. I wanted to just clarify maybe with Chris’ question about leverage in your prepared remarks, too. I mean clearly, you’re comfortable operating at 1:1 from a regulatory perspective. You’ve been active with the ATM. And I think in the second quarter, not third, you subsidize some of the offering expense to achieve NAV. Just curious, in this current backdrop, are you still interested in raising equity on the ATM over the short term, despite that 1:1 regulatory leverage target that you kind of have had over time? Thanks.

Robert Ladd: Sure. I’d say we’re certainly always interested in raising equity if it’s positive for the company. We – but given our current leverage position, I think you’d find us more of investing the capital than issuing new shares. But again, we would be open-minded and would look at that each quarter as the opportunity presents itself.

Bryce Rowe: Okay. That’s good clarification. Thank you.

Robert Ladd: Thank you.

Operator: We have reached the end of the question-and-answer session, and I will now turn the call over to Robert for closing remarks.

Robert Ladd: Okay. Thank you, Holly, very much. So we thank everyone for your support, for participating this morning on the call, and we look forward to updating you in early March when we’ll have the year-end figures.

Operator: This concludes today’s conference, and you may disconnect your lines at this time. Thank you for your participation.