ARCC - Earnings call transcript Q4 2019 | Ares Capital Corporation

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Operator

Good afternoon. Welcome to Ares Capital Corporation’s Fourth Quarter and Year Ended December 31, 2019 Earnings Conference Call. At this time all participants are in a listen-only mode.

As a reminder, this conference is being recorded on Wednesday, February 12, 2020.

I will now turn the call over to Mr. of Director Managing Stilmar, Investor Relations. John

John Stilmar

you, thank Kate, and everybody. afternoon, good Great,

similar well documents believes, me reminders. subject forward-looking conference can such of as important with to words call use of be intends, the made webcast Let will, such Many some should, statements course risks Comments and start expressions. of and forward-looking may contain statements during expects, uncertainties. the and and identified anticipates, as are the accompanying these as this by

The including materially forward-looking such such obligation Company’s Ares from those forward-looking statements no results could any actual differ in statements. filings. expressed for those SEC assumes update in any its Corporation reason, Capital to listed

guarantee results. of Please future market note also past a performance that or not information is

call, core certain core During useful provides financial by the its earnings the as defined as discuss one measure is that Regulation or information company per of condition performance to share regarding company method uses results believes measures EPS may SEC to company and the non-GAAP G, financial core investors operation. because a it tool The this EPS. conference

A reconciliation share equity or directly this for per from the of to stockholders’ found most measure in comparable accompanying EPS operations, the financial can slide presentation net resulting GAAP decrease be increase the core in call.

release In addition, reconciliation this morning filed found earnings the of also with on our may these X-K. measures in SEC Form be

section QX link company’s company’s found on of website. be and the www.arescapitalcorp.com Capital Earnings December warranty earnings also Ares independently relating and Resources of in release or on this on XXXX, information. XX-K information on sources was Presentation presentation, to can XXXX at Corporation’s available in the clicking makes website has from discussed quarter company’s including company fourth this to Investor are no accordingly, and verified, of the homepage presentation information been website. ended earnings The portfolio third-party XX, Certain respect the by derived the not representation the companies the

DeVeer, turn I Corporation’s would to now Executive Chief like Kipp the over Officer. to Ares Capital Mr. call

Kipp DeVeer

thank Hello of Thanks, Officer, Smith; John. joining management you and members other team. our here with for Co-President, to everyone, us. Michael Chief several Financial our and Penni our Roll, I’m

fourth I’ll by year on some full our company’s highlighting current conditions. then quarter position results and start thoughts and and the market provide

which reported we strong morning finish core This for quarter a Capital of is great to share, earnings Corporation. per $X.XX fourth Ares year a

of borrowing of of portfolio $X.XX Our active year facilities. benefited cost year modest per from core our investing low earnings utilization higher and for an the share growth

for of We of GAAP credit and stable asset per generated per drove $XX.XX to year-end. results, earnings $X.XX demonstrate portfolio per these Supporting for share continues at share net to growth our strong another which year, year $X.XX the share value performance. fourth the quarter

the we increasingly Looking financial large beyond is small well is Capital are company the Ares for market companies positioned. and believe results, and solutions. but middle these market The for upper markets addressable strong private accessing opportunity growing,

approximately lot by in as smaller their of share alternative typically syndicated the deals review we we solution our attractive increased a factor for is offer with We We major the see here that than come deals companies sponsors. a larger more where a that execution feel of risk pipeline market transactions annually since XX% evidence we this of is XXXX. concrete think increased

strongest market large can highly borrowers, in pipeline, critical selective market origination platform, long our we we is and market are large reviewing conditions. sponsors choose we to a participants. which and our reach companies, relationships with benefit direct invest from remain deal competitive these By expands, extensive As believe and opportunity within standing financial what the

view to new borrowers. of closing in borrowers of closed the the the deals we investments our Over for cautious lowest of resulting we’ve market, we’ve X% about due only rate the years, with on second new much selective past XX a evaluated became in of to XXXX plus increasingly And decade.

core borrowers. portfolio incumbent finance allows of which to believe One is us of companies, the of requirements flow important most the deal growth we our our of sources expanding best

Our is activity accounted of the in our incumbent portfolio quarter. fourth company of XXXX XX% our for and investments investing half in

believe team reflect spent company’s differentiated propositions and and these typically We often operations. a risk we have opportunities and management observing provide investments attractive years lower as

opportunity had put secular new have more we’ve of While to to what sector these that investing for to on our Ares long-term have strong pressure flows counteract business. expanding drive continue trends undoubtedly capital an been Capital, the

entrants and deals reduce our terms often newer view, on and to capital. deploy their win acquiesce In pricing to

finding Given stable and slow for underwriting growing we’re our stringent flow, see reasons, and host and including breadth and good more we structure. ourselves deal of more the news The a our a pricing of passing is criteria different and economy.

momentum After activity. end continued and this in are likely environment a has XXXX remain, positive bit XXXX financing spent healthy The into things credit to although difficult we of of to terms XXXX. seeing with is a most the slow markets

focused belief see surprised are companies America. presidential to regard wait uncertainty with a we’re exists the sponsors we deal of policy not needed the M&A activity. longer With to U.S. this outcomes for that at wide particularly a a potential seemingly from growth highly to that There’s corporate rates also support this that and are with on in fact election lot and investors and in accommodative point. and variety approach a and see upcoming have monetary mind, of companies, interest low an

of be on should the additional our financing. beginning $X.X billion Finally, billion bank increase. building Since providers volatility of that sources in market opportunistic on on both capital committed to maturities strengthened of of are today, XXXX, through over we committed by so an to capital extended positioned closing these markets, kinds of focused bank financial financing from we’ve we’re and position capacity new we’ve markets and $X.X deep

be $X strength fourth full of company. undrawn quarter and Penni to for more some billion over of sheet our approximately results. credit have a commitments continues source that currently our turn believe we things the I’ll detail progress, the this provide on and Given to year to now balance

Penni Roll

and Thank afternoon. you, good Kipp,

core per $X.XX the of quarter $X.XX were fourth quarter XXXX XXXX. fourth for third consistent compared quarter for Our of the the earnings with of for $X.XX to and share XXXX

Excluding two per share fee from the quarter largely fourth XXXX impact of $X.XXX the with were expired prior earnings XXXX. core waiver, the our consistent quarters

for the quarter XXXX of earnings GAAP the quarter per which of were share of XXXX quarter Our $X.XX and third to $X.XX for fourth compares for $X.XX, the XXXX. fourth

$X.XX per compared share strong GAAP and of for to XXXX XXXX. income of share earnings As core financial with Kipp a net $X.XX closed mentioned, $X.XX XXXX per results with compared we to $X.XX for

of investment $XX.X of totaled of As December and total fair billion XX, portfolio XXXX had we billion. $XX.X our value assets

investments December and average and X.X% of XX, weighted total debt at yield XXXX average on was compared and the As producing as amortized to securities on respectively XXXX. cost cost yield other X% XX, our amortized to and was XX.X% weighted and September compared at XX, X.X% the XXXX at income December an respectively X.X% X.X% at

in due on third declines our quarter portfolio largely to year-end The down from were LIBOR. the yields

in and XXXX saw could the yields early that XX headwind until all-in during floors. Our from a modest we the a reverse to trend but of LIBOR, to basis – about our began upward This earnings for declining month us year rising continue reversal course points throughout LIBOR XXXX. XXXX LIBOR reduce in with further one created benefited reaching

an our excluding LIBOR rate of the floor floating certificates, year-end, was rate of these SDLP investments average in At XX% in had investments investment our XX% approximately total floating of X.X%. portfolio and

and documents We focused whenever to on continue floors add on possible. amending on existing investments investments to be obtaining LIBOR new floors LIBOR

Importantly X.X%. new LIBOR higher were we floor, of approximately our to commitments a negotiate with for a floor this quarter average able

of right quarter the December side and year-end $XX.XX $XX.XX in was asset stockholders’ equity value balance net the $X.X hand per billion to of versus $XX.XX a Moving at our a XX, ago XXXX. XXXX resulting sheet, at share

XX, XX, X.XX of our XXXX. compares cash net debt-to-equity $XXX available debt-to-equity million and X.XX was X.XX As and of ratio times times. times December ratio respectively X.XX to of This at September our was times

at bit to with hoping the leverage current we but have range add now, targets cautious end our reach would to were We front. of on the we that low ended X.X be of the times. behind solely lagged XXXX I by that higher leverage a are to X.XX target our we investing

on increasing access As and sources focused our XXXX throughout extending efficient and committed Kipp of mentioned, we to debt capital.

XXXX, the notes. $XXX And that mature $XXX feature at we During prepaid million facility of of scheduled in quarter advantage funding revolving of the to upsized taking we of fourth early million. notes our XXXX, the January were SMBC’s by of unsecured redemption X.XXX% originally par par

capital. approximately As of $X December available XXXX, billion XX, had we of

cost to note under is X.XX%. just in issued execution the over maturing of $X next issuance costs maturing next the XXXX, to continued We calendar bank is not market BDC capital history on in until January raising years and increasing below lines In current term front, our today’s debt and our have all-in capital our notes now we’ve This January, year-end, the $XXX of the no be Post a available lowest unsecured rates. with billion. XXXX. active million two coupon maturity of unsecured July was we over

of by the rate floating Wells Wells our credit bank January SMBC The March maturity combined $XXX facilities credit in now our funding earliest upsized facilities, our by a year. for one the secured XXXX. maturity extended As and Fargo facility facilities we and is million for

income Before I discuss our conclude, undistributed our I dividend. and want to taxable

We of $XX once in market $XXX dividends an at through from we XXXX, reached our estimate income. we a XXXX, undistributed steady undistributed end in share increase having supports level. currently or conditions. per again $X.XX the $X.XX a spillover or out-earned an our meaningful of spillover For per varying We strong believe dividend resulting goal share our income that of and the million increase million maintaining paid, taxable XXXX’s

XX, the dividend we end, which regular a that of of share, quarter XXXX, higher for our is regular regular first that XXXX. our This March $X.XX to To or quarter is we XXXX. record throughout of this dividend with per a This dividend reporting on stockholders XX, quarter first dividend shareholders. on declared stable consistent payable represents paid morning XXnd consecutive quarterly announced March

to that, the Now year. with over activities and walk through to our like for turn call Michael investment I’d quarter to the the

Michael Smith

on our detail investments minutes more to for update pipeline. and then activity Thanks, Penni and an would both post fiscal performance a afternoon. and few provide XXXX. portfolio quarter-end good the I and of and fourth our quarter like on backlog I will providing year-end spend

our During $X.X quarter. XXXX, new in fourth of team billion of the investment XX including borrowers transactions, billion commitments commitments across XXX originated $X.X to

million, $XXX set from year our throughout quality breadth of of industries. million The distinct XX year of which than to the more range capabilities. give high investments more financed should came Our from our insight the a $XX across the to this EBITDA we diverse companies sourcing companies investors

As from Kipp our other new half of the borrowers came XXXX, growing and to mentioned commitments significant a earlier, were pipeline of opportunities. in investment existing and half

For evaluated the an EBITDA to in into new across that average EBITDA for debt transaction lending we requires year. which industries financing, volume company times to billion full the million. and approximately reviewed more than geographies diversified and roughly assumes of translates average six $XXX had potential one $XXX of $XX year billion were X,XXX If we the XXXX, opportunities, five this

and year-end the is XXXX of inclusive in loans, similar SDLP As secured XXXX. senior portfolio XX% which XXXX, portfolio to the at composition our the was far at as investment portfolio year-end composition of

companies portfolio portfolio average middle-market. weighted while the $XX greater $XXX our The continued reflects EBITDA million to average prominence our of upper hold million, on of EBITDA our position, large of our focus gives

an fair diversify quarter, average portfolio broaden We this X.X%. borrowers and only hold at value our with XXX reaching position continued to of different

wide free performance to our large company. through believe Ivy focused is a of economic have Excluding likely aggregate in resilient of positioned underscoring flow, that is Hill, perform material on on is single no just SDLP at investments was largest single fair a borrower of variety our diversified the We impact which our well and the portfolio and portfolio, name conditions. our cash value, X.X% and high non-cyclical industries to

regard industry investment our to with of believe with We You we portfolio this standards. is may to conform to broader at consistent have classifications. revised noticed clarity classification and the our provides that presentation market year-end, stakeholders the more portfolio GICS more

our resides industry review each of portfolio and can GICS-driven our investments. You companies of which schedule

our portfolio stable. quality to of credit be The continues

was which generated past average X% weighted portfolio EBITDA consistent months, the of growth over Our XX quarter. this with past

total six Our X.X% number that leaving amortized of than companies companies XXXX list cost lower is at year-end off, slightly the added came year-end to last XXXX non-accrual X.X% and at the non-accrual ratio in below XXXX. reported companies the of non-accrual were year-end. at Two on

XXXX, the our million, quarter commitments closing were for investment a call to which update realized this commitments, over January made we on X, activity. approximately turn X some generating were repaid gains new funded. back of million million $XXX brief totaling same let remarks, From Kipp provide on through we I the me million Over Before $XX post period, on exited February $XXX exit. investment net of $XXX of or investment

documentations, X, these backlog of pipeline million portion at investments respectively. subject our our and or As not stood may sell $XXX $XXX post backlog are and may close, to roughly contains that million, that February Note of approvals and investments and we still a closings.

turn I’ll Kipp. that, to over With it back

Kipp DeVeer

NAV and In strong quarter Michael. fourth another our closing, continued Thanks earnings year off capped a successful solid of growth. lot,

a we’ve broadest origination to plan positioned and the see the balance deal borrowers flow, past of maintaining of amount with had deep to years; in execute for focusing selective our that investing portfolio, sources continue highest same liquidity. in XX maintaining the sheet being quality highly on investments strong defensively a We the on capabilities

We we confident but able side, are XXXX with company. the investment the to opportunities for caution still compelling we’re find investing enter on continued that

advantages, also the from market benefit the which optimistic companies our We growth platform capital. to competitive the about shift remain seek more of to ARCC believe allow middle and we’re will position continue as seeing private secular we and

It effort their credit efforts facilities looking and always our superb year in to investment our monitoring teams a our relations finally, for and out in company. on the long-term and for teams representing the teams tremendous finance for for job portfolio compliance in our D.C.; out XXXX fantastic work debt; to accounting the legal I and extending a team, investor in would and and the the always advancing thanks their continued do Reflecting for management us the close originating prepared was ARCC. like remarks, thank portfolio; and to who

remarks. our line be prepared concludes That open the to questions. happy We’d for

Operator

to [Operator to please follow-on. wish ask one a note courtesy a Instructions] as Please may and who a question, yourself to single those question limit

any of additional investor address you be reenter available questions, team to queue. If further may will conclusion relations call. at you the The today’s questions have the

question first Rick The from JPMorgan. with Please go ahead. comes Shane

Rick Shane

non-accrual. understand Hey guys, movements thanks sure the question. want that the I in taking for we to make the

at is want change. is developed not quarter sure to new us that that a new that make terms names in the Sometimes, this appears this what It and just non-accrual VPROP, there. on looking correctly of to we’re and it was non-accrual non-accrual before,

Kipp DeVeer

That’s true.

new So small the Ioxus one there is are One VPROP, venture the two from portfolio. other legacy loan non-accruals. old called was a

Rick Shane

perspective. interest point pretty – from on want the it. investment this a make and you understand providing the impact’s is sure basis. impact Kipp, Got cost also benign at income a VPROP we marks a risks do an little but bit relatively low, large have been And, so there The relatively the mind to

Kipp DeVeer

mean, can take I Penni look. Yes. a quick

one we’ve period probably the gas she upsized We’ve years. over has quite investments fracking number. for sand the been a that of and industry. the distributes It’s interest process is drilling oil But, and look, for Vista and a income that fracking time. drilling of company the the industry, long think in I privately-held it

of stress of all comps been a If that are think regions, This are some drilling the you high-quality overcapacity. their that largely see fair news of this has space, a in assets the I in in lot you’ll look there’s There’s industry. public in assets good quite at i.e., is, go company, Texas. that amount

been XXXX it’s of the was its the for as has assets because advantages. business industry company logistics sand difficult the being nice oversupply a because that job a in the year That had growing mines commodity So had of over years the price, said, done and sand overbuilt. industry,

just You collapse. commodity price saw

team a with think there is the I on day-to-day work we’re So mark we’re restructuring. management I being the on there. there engaged but mean, do working cautious real to

Rick Shane

very you Thank Great. much.

Penni Roll

sorry. – And I’m then Yes.

Rick Shane

I’m sorry, Penni.

Kipp DeVeer

them. the don’t but Penni know from you you I if need may Yes. numbers have

Rick Shane

Yes. Please go ahead.

Penni Roll

did on Sorry. for for $X.XX look it’s in But earnings quarter a a look it the as you net you of of XXXX, a at the little XXXX. we loss non-accrual Yes, at had loss we XXXX, year’s loss about full bit put earnings if to share, fourth if fee.

Kipp DeVeer

Yes.

you is mean, couple got, larger a keep people or look, invested a in this, if to form some or us an consistent BDCs may news some have So company. got or shape follow is, our impact allows the a all income of The the emphasize really to the And we’ve may bumps and with it difficult good other we’ve company’s single operating have I tried where in I that diversity to as too, right? on be analysts, very obviously, it’s highly road. quarter-to-quarter, diversified we unlike defaults way, the any dividend even in along even even generate names, profile and of

Rick Shane

Got very you much. it. Thank guys

Kipp DeVeer

Rick. Thanks,

Operator

is Citi. next ahead. Arren from go question of Cyganovich Please The

Arren Cyganovich

hark you to in much, see was credit last on that on X% on release, I quarter didn’t Not that that too in non-accrual. there of were quality intra-quarter but exited? exits got non-accruals, the based mentioned that something the and then non-accrual anything Thanks. Was but had large

Kipp DeVeer

not that. noticed I had

old on Dan three is it? realized. Indra there sure I was the back Holdings. names for we One, put have PetroFlow. know was were on non-accrual So – gas that at that I’m oil you an recognition names The I’m saying, yes. and non-accrual, – looking is called which years sorry. what of

Arren Cyganovich

Okay.

Kipp DeVeer

we specific quarter, numbers you but that’s Arren, offline, if you, can nothing want check this the with in But the… but

Arren Cyganovich

just I them. possible It’s missed

equity of – amount ATM. you raised in terms of in the then Okay. And small a

leverage in, to you’re obviously, you to end. low not quite would utilize that at in you as why that be range the wanted your when curious Just

Kipp DeVeer

I think we accretive or of offering and Yes, to to bought amounts in program have raise think us a about equity way convenient way. ATM as of think marketed small and larger a the not a

So to for a it’s the good the long-term we the Obviously, so to want over we long requires haul view planning that. company think its as grow company. just long-range on just take continue we equity growth,

Arren Cyganovich

Thank you. Okay.

Kipp DeVeer

You’re welcome.

Operator

is of Ryan Lynch question ahead. Please KBW. next go The from

Ryan Lynch

for thanks equity on and I did questions. afternoon, follow want good the Hey, up my ATM offering. to taking

expect we overall going leverage So continue deployments your complement quarter deployments that to equity grew your this capital issued had right just Or as manage still actually expect via as ATM that and offerings? you we some growth, grow? guys the guys should leverage because actually well to should portfolio you ATM equity should but we Are leverage. target are actually expect this you to around level now –

Kipp DeVeer

not we’d up. we’re direction the that Yes, take – to like look, the leverage is

You’ve has ATM been seen quarters. over it of we the minimal last the useful but a that be Again, issuance found tool. to couple

yes, to and, i.e., So probably and equity the well. answer raise as take grow of to up going with I leverage we’re a bit is think that, little simple portfolio continue the

Ryan Lynch

And had follow-up, in year about wanted talk XXXX. dividend. really I a you to strong my the Obviously, then Okay. guys

special and pretty actually paid your while out dividends grew even You some dividend, meaningfully. a income paying still spillover out special

shows strong I the had. it think you results

made, one said about year. start not all? declaring policy decision in the did unlike in far XXXX the for a guys kind which quarterly why XXXX. XXXX, at of special Can declare special dividend declare you was little to just bit so guys a is of You talk And you to dividends not that

Kipp DeVeer

Sure.

the dividend really we year last net gains additional sort that had in we because XXXX. unusual of if remember, we significant really you announced for So – announced,

Number and down points as the couple are benefited think that XXXX. into or shareholders There curve one, a LIBOR being payouts that is are obviously, being I things last so different basis from months, with look XX in XX forward the throughout there’s So forecasted so forward we’re lower, we today. XXXX. of a cautious that

seen is dividend because investors as conditioned I’d space in time. negative us the thing have ramifications companies. say we’ve cautious other The obviously where from a we’ve dividend now long a the been pretty to other around running cuts, there company be This is, are look,

as specials the year. in quarter, future, the comment, and you LIBOR get us think good we I off further environment being, time performance. do I that just Ryan. we’re look at to thought to conservative the So we we’d but this into roll wanting just for from last the providing and let that the May being evaluate year the appreciate allow it

Ryan Lynch

for Okay. my appreciate I Thank questions. taking time. you the

Kipp DeVeer

Thanks.

Operator

is Joseph question next from ahead. The of Kyle go Please Jefferies.

Kyle Joseph

good and for Hey, thanks much afternoon, very taking questions. my

quarter, the dynamics and can or us yield sense give in sense a timing you to quarter. Just the first, a us the for give the better repayments? deployments of pace Just in for

Kipp DeVeer

that and to I and provide really if in don’t guidance color. mean, don’t I want of to – you typically that’s so terms I gave that said, company, slow. We okay, kind want backlog question some activity don’t don’t as of provide We this all is Smitty I Kyle. that. look, numbers pipeline with answer directly, of

look the is that quarter-to-quarter. So four you pacing quarters, tell if I our you over reasonably would last consistent

and guidance then So provide last probably want of QX. by like divide quarters any I you last number take you don’t tells year, regarding to can looked But four really pipeline backlog adjusted, and probability and it a the six what four the to the over and weeks. subtract that it get last

Kyle Joseph

– were about of talking deployment was I Kipp. your sorry, of no, backed the QX sort of in any terms Oh, the quarter?

Kipp DeVeer

go say don’t I’d your modeling that have know. look. on have think or don’t and that’s I to but we to, of going I I it’s to I thought nothing I’m in your sure don’t, change remarkable, QX, front the not just nothing going actually back quarter. exercise us.

Kyle Joseph

leverage raise other the you’re banks from follow-up, just seeing refresh commented you you stepping then just competitive where of sort space. any Got And in guys then it. us on have Can on seen many BDCs? rates back given, And gone. or also we’ve either BDC my peers changes

Kipp DeVeer

side and people. the We’ve obviously fronts capital based the activity it’s LIBOR the And year, say of largely a see again, approach we’re wait of I’d competitive. comment still spread I lot left we’re because LIBOR made watching of about No, been business. got on this in a for brought A start space. lot the of what, you a foreign and LIBOR. sheet around half If had anywhere liabilities I I of see floating at balance really also the stability. We for I the side, the really away any don’t curve from to guess, But can’t in rate. tell I need right decreases, see but view to have on assets floating about same, kind has it up. don’t slower terms see into I don’t plus looking

hope So, that question. I the answers

Kyle Joseph

Thanks It questions. does. very much answering my for

Operator

Your RBC Kenneth is Lee next of Capital Markets. go ahead. question Please

Kenneth Lee

for question. Thanks Hi. my taking

Just funding one you’ve the maturities to efforts funding embarked recently you’ve costs, in of extended terms sources. diversify recently and on also

you given wondering, current environment, your right funding to changes any now? whether Thanks. Just the mix anticipate further

Kipp DeVeer

I’ll tenure tried or let sort average we think secured and unsecured fixed maturity it in-line to the think we We’ve and where duration I of balanced do. and with between average liabilities Penni keep don’t comment the of but keep floating average between the assets. of

Penni Roll

forward. strong We as we just to move of to of same I sheet, January. watch the same when see a the as to far see issue markets did mean, really issue I as a the the it’s But back think, we as continue usual. we and into like balance into composition market in I the try markets lot

Kenneth Lee

just you think, favorable is breakdowns sectors what are just when invest at And in, lines terms the most to up If the a non-cyclical looking you that the the current which to snapshot that favorable the tend – follow-up. in realizing least to in environment, also industry Gotcha. how prefer just and but of there just industries. Thanks. pipeline in or realized may at the this investment I one and backlog

Kipp DeVeer

we’ve healthcare the mix places I pipeline issues, what backlog the mentioned that us services Yes. we’re mean oil I’m way and think cautious But past. is as industry being are reported with that gas, I of in the seen from similar. albeit kept you’ve some Smitty changing it Very probably business. we retail, places the where The quarter. sure. have and we the seen generally in-line the aspects this

Kenneth Lee

you Thank much. Okay. very

Operator

of is Point. ahead. Compass go question The next from Alexander Casey Please

Casey Alexander

question a area I has has Good just to BDCs been originations been couple afternoon. of lend of no I loans to. or Hi. that morning, and sub-debt solar in which power have follow-up. kind good made the your an in one tricky industry, for noticed

what those? that you to I into was wondering, So was those led kind unique and go lend interesting about or ahead of opportunities

Kipp DeVeer

Yes, a Thanks market little of is Yes. we did, different. the structure Casey. that bit

You tend like to longer senior out more, mezzanine see paper equity paper financing. or termed behind,

we one is develop one So, integrated scale other million I in of $XXX U.S. of projects. the think solar the did deal the a developer vertically residential to a hundred, utility solar a

our and to they So power days. no look, were investments long that this We’ve making so the in been experience investing time think, found team for we’ve had We got defaults past in vertical, that’s here great two a have speak space a this us. quarter these interesting. particularly had actually

unusual. deals to two nothing, nothing that So same come we’re quarter. just happen Maybe the in

Casey Alexander

All taking right. I for my it. Thanks appreciate question.

Kipp DeVeer

welcome. you’re Yes,

Operator

Fin The Wells O’Shea Fargo. question with ahead. is from next go Please

Fin O’Shea

for Thanks taking afternoon. Good question. Hi. my

Just SDLP. on the a small one

syndicated I and as for the SDLP about market size this a execution the peers talking unitranche this look in opening investment the some with of your some remarks perhaps opportunity, in leg-up well we risk as year? on at a think in candidate would in

Kipp DeVeer

mean, it’ll I grow. think I Maybe.

be could is or so, SDLP whether we whole on That in but point our they own deals a be as not. being non-banks these overall, getting our beneficiary, I some a likely done and it’s a a either said, to those an these deals the by continue phenomenon balance all of of beneficiary, larger I SDLP perhaps do increase. think will with company or that’s the think can size the sheet Fin on your to

Fin O’Shea

valuation wrong, Thank Sure. I’m in Hill? for around a improvements? obviously change business to course quarter, quarter. That’s mark bit. the but dividend just the me been Hill. Ivy the in normal look this then moves a also for color. one, of Ivy little the into fourth if up of sort Anything This any you on thing was Correct And the

Kipp DeVeer

a quarter. increased you’re No, – bit it in returns. I dividend little don’t to But got less generating more value a Yes. increase. cash so their obviously, CLO, was under-invested, just mean, it think drag mean, a actually the I cash better work maybe look, I this just was they fair were with vehicles. in And they

a say, for spreads the other i.e., rather. a that’s have thing conditions that’s them them, I’d have look, for tightened favorable, benefit or market more been The and beneficiary

Fin O’Shea

all Okay. Thank me. for you. That’s

Kipp DeVeer

Thanks, Fin.

Operator

ahead. with next from Dodd The Instructions] Robert [Operator James, go please Raymond question is

Robert Dodd

that it, can has they In where expect but already. seem achieve the Should get? but XX%, book, said Or slightly higher the we the The guys. you round of to is a were on slightly on so get in on they to new the the floors? the with the end I which new seems little LIBOR floors, falling, you to floor them. them, the be commitments in Any upper color numbers, the that relatively – uploading XX% issue, stable? that Hi better, on odd at harder commitments, getting getting are as upper, book higher easy are stay of that? gave LIBOR floors, but book markets mean, at floor color I and floors you the to floating appreciate has

Kipp DeVeer

I I is yes. general the Yes, think mean, answer

it With to be obviously the forces of of, to the going the and floors. XX were When insist LIBOR up. us was months short expectation the whatever increase, cautious call it more rates LIBOR that market and changes, that prospect ago, rest upon likely that was

curve and I’d think basis it’s we side. last think the XX point the that particularly on showing to easier the that LIBOR say gotten quarters, with over two in direction, it’ll continue I decline So forward a do

focused pretty we’re be going it. think to on I

Robert Dodd

Thank you. it. appreciate I

Kipp DeVeer

Welcome.

Operator

concludes for Mr. This back like session. remarks. DeVeer Kipp question-and-answer turn to conference any over our the I’d closing to

Kipp DeVeer

joining for up your everybody catch thank just and in company I’d the the quarter. and call next you interest we’ll all with

Operator

and Ladies concludes today. call gentlemen, our this for conference

XX, you part to the be X-XXX-XXX-XXXX archived at of X:XX by and an hour the any +X-XXX-XXX-XXXX. dialing today’s collars this conference callers XXXX after one of missed to dialing available call approximately by PM, If February will domestic call of end call replay international through

six you two webcast concluded. one investor one the an section reference the will conference now archived Thank The homepage replay resources conference website. zero of please For available located six all on also Capital today’s seven disconnect. replays be number attending for Please on link three Ares of has presentation. a

Ares Capital (ARCC) 12 Feb 202019 Q4 Earnings call transcript