Christopher Nolan : Rob, could you expand on Ryan’s question a little bit? What is your broader economic view right now that guide your investment decisions?
Robert Ladd: So I’d say, overall, we think the economy is certainly headwinds, but not materially — has not materially changed the overall economy. Certainly inflation is of concern and has popped back up at least on a monthly basis. So we would be cautious but we don’t see any significant downturn in the foreseeable future. The one thing that will impact the economy and all of our portfolios is if you have higher and higher interest rates. And so as an example, if you went from a SOFR level today, which is in the high 4s to the high 6s or 7s that would be impactful. But at the current level, our portfolio can withstand higher rates certainly within the 100 to 200 basis points level. So I’d say cautious. But if it’s helpful, again, our overall business is to support private equity firms acquiring new businesses, professionalizing them, creating great value for their investors and therefore, for ours.
So the M&A activity is still very good in the country, and we think it’s a very good place to be investing. So I’d say we’re cautious, but positive and we expect to be quite active during this year.
Christopher Nolan : Also, given the changing interest rate environment where you now have an inverted yield curve, would there be any scenario where you guys would actually start trying to become more liability sensitive or do you actually — you start seeing the top of the interest rate tightening cycle, and you expect an easing cycle to start. Would you take appropriate measures whether through hedges or anything to try to protect your margins through a declining interest rate environment?
Robert Ladd: It’s a good thought, Chris. We’ve taken the approach over time that just kind of float, if you will, with the market. And so one approach one could take would be, though, if — could you lock in some of our loans at fixed rates at higher rates with borrowers. That would be one approach one could take. Whether that would be interesting to our borrowers is another matter. But I think that we like the approach of just having the market rights that we get. And then we certainly would look at it, but I think — I would think of us not as a firm that would be hedging interest rates.
Christopher Nolan : Another question is, how many quarters of expanding investment spreads do you anticipate?
Robert Ladd: So it looks like based on the curve that the expansion of rates will end this year. So that would be our — we’ve learned to go with the forward curve. So I recall, Todd, it expands into the third — kind of starts coming back or flattening in the third or fourth quarter of this year?
Todd Huskinson: Yes.
Robert Ladd: So we don’t expect more than that, although certainly, there’s some talk that it is going to go higher, but we would just go with the forward market curve.
Operator: Thank you. There are no further questions in queue. At this time, I would like to turn the call back to Mr. Ladd for any closing comments.
Robert Ladd : Okay. Great. Thank you very much, Ali, and thank you, everyone, for your support on being on the call. And then we’ll report, of course, the first quarter in early May and look forward to speaking with you then.
Operator: Thank you. Ladies and gentlemen, this does conclude today’s conference call. You may disconnect your lines at this time, and have a wonderful day, and we thank you for your participation.
