TCPC - Earnings call transcript Q3 2018 | BlackRock TCP Capital Corp.

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Operator

Ladies and gentlemen, good afternoon. Welcome everyone to the BlackRock TCP Capital Corporation Third Quarter 2018 Earnings Conference Call. Today's conference call is being recorded for replay purposes.

During the presentation, all participants will be in a listen-only mode. A question-and-answer session will follow the Company's formal remarks. repeat before will Q&A begin I session. Instructions] these we instructions the [Operator now the Capital to Katie now, like And I'd turn Relations President the Investor McGlynn, of call BlackRock Global TCP Corporation team. Vice to over please Katie, proceed.

Katie McGlynn

you, Thank Heather.

performance. conference statements I'll based forward-looking guarantees and estimates assumptions are this the the at future may of contain not Before we management that time call begin, and note statements on of of such

projected. Any Forward-looking today risks those differ uncertainties, materially call actual this and ended and to change of could statements statements without morning, results forward-looking are release earnings notice. September third involve and for our subject as quarter on XXXX. made XX, This from made issued the we are

site we view slide & now on select Chairman Levkowitz. We call also posted Presentations. refer a will the CEO, and over will Howard to supplemental call, Web tcpcapital.com. presentation, Investor the at earnings please which Events on I our presentation today's to link click and the Relations To turn our to

Howard Levkowitz

by portfolio I with of for I overview our everyone and thank call we our highlights, on our participating begin, here Katie. quarter followed third with of a will am our of TCPC review activity. team, Thanks, an today.

call will the CFO, to comments, third quarter. your I financial Our After Davis, then opening results questions. Paul Paul's remarks closing will our review for before the provide some

active and quarter to shrink we slide in summarized million. million, new our quarter net capital dispositions sheet of expertise let's quarter. our continue and did robust we willing potential financing deal when of the totaled of begin are as seek resulting quarter $XXX platform's our quarter, deploy presentation. appropriate for on let also balance totaling this It million the which of was tailored borrowers $XXX pipeline and $XX and our four are Now, to dispositions, flow, We with from an solutions. another originations, Despite highlights our in flexible which third existing as delivered industry strong third

earn in out-earning income of a we to declared fourth $X.XX investment $X.XX per five, XXst slide quarters share and net quarter on dividend. third today, $X.XX quarter shown our consecutive XX we exceeded And per payable which of a investment in record share As income on as our holders 'XX. dividend dividend extending of record of by December the December

held companies Turning which XX% market investment fair our billion, industries. at across end, on $X.X value senior portfolio to portfolio was wide six, had of slide a variety XX quarter investments of in debt. We of in our secured a

Our largest position portfolio. represented the only represented only XX.X% the portfolio, our and together positions largest of X.X% of taken five

X, As you across on can companies. recurring see income of set distributed side of a diverse portfolio chart the left in the Slide a is

any from income on reliant company. not are We portfolio individual

over company fact, income. In recurring our of our half to less portfolio an individual on companies X% contribute basis, than

Additionally, floating environment. last debt to X. demonstrated have over rate positioned quarter rate our a as on At from our end, investments of the several benefit we XX% were rising Slide years portfolio

Tennenbaum been August joined have predominantly by portfolio further On efforts fixed our successful Our enhanced rate Capital credit position BlackRock liabilities. X, to our platform. the Partners

value to and to and to global in profiles continue our clients. This full add our across and focus highly to an investments add largest investment range providing sources where able As value our by are to credit borrowers risk us a proprietary risk and strategies we have we access platform. can manager transactions deal we origination a Together, competitive on the remain to a of network, even part larger and platform. additional asset allows advantage of have selective management opportunities more the world's more to deep

has board our consideration shareholders, from coverage November agencies, careful approved a minimum ratio XXXX. input from our after including effective to stakeholders our XXX% X, and of XXX% and reduction Lastly, our lenders asset rating

flexibility added modestly that asset flexibility approval practical having holding for plan a leverage, date. higher including associated we a our reduce number we risks market anticipate We beneficial. variety will ratio risk/reward shareholder increase optimize weighed to at earliest which meeting seek to coverage asset to increased environments of the our determine ratio regulatory coverage shareholders that and a special of factors Ultimately, headroom in be the leverage shareholders at the with a potential Additionally, of increased provides. we to

our We are fee friendly maintaining structure. also committed investor to

plan current fee asset As leverage such, lower reduced contingent assets rate hurdle current upon the X% of rate to X% from for the management ratio, from to our and current excess conjunction we to XX% the with Xx X%. from in coverage on rate rate XX.X% the fee lower X.X%. of receiving base the Lower rate the in required consents incentives of of incentive to the

of Regardless have our Our changes superior shareholders inception. focused fundamental on annualized in analysis since total our cumulative remain basis done we leverage, adjusted any will credit and return generating hurdle we regulatory as risk remain on for incremental unchanged. returns a

also pursue and rating strong private after TCPC. continue low credit our our our grade agencies the that long-term of allows with grade rating grade to financing. sources top funding And affirmation are is our two modified investment an track pleased to of adoption record investment has and an rating diverse to cost us maintain a an Having managing We ratio. report of rating for S&P affirmed initiated Moody's asset has coverage investment of

legacy and AGY. due the portfolio Real overall the to third onto from Mex, $XX.XX Green three Moving performance, our last remained strong declined we portfolio Biologics quarter, NAV while mentioned $XX.XX positions that quarter to in

in the infusion work position on received value. of our we of In we its through to each strong. owner case end Real portfolio to with a positions earnings aside prior quarter. quarter post the as volatility line maximize where good from calls, equity credit Mex, marked these during be continue As discussed the we projections, strategic Bio quality was to and the an of position continues remains AGY missed the X:XX. fundamentally of despite company These positions Green but exited

any include XX, investment investments five Real did them. loans $XXX was companies and our loans. we borrower have the which than with new in be substantially secured seven other portfolio deliver loans associated not September and Follow-on investment we existing and million relationships companies. in important non-accrual the senior Mex, Of existing of deployed, These to As sold. to is all of in now value our portfolio strong reflect continue companies in source investments an on opportunities

deal us our offer protections. and understand that businesses to creative which to financing solid creditor terms include able set are them solutions, borrower's ultimately We allows

providing secured services, a $XX third Software, dealers of million TEAM senior Our maintaining million the the loan million lending range and advisors registry top top web a investments web and commitment broker in a contractors a million services reinforce our to of $XX on structure. across in SaaS of a domains. to financial senior $XX insights to secured to value-added an service at capital loan security the with and million of senior a companies five Group, and our building U.S., secured secured construction They portfolio include provider Inc, quarter Dodge a to connection to platform Webdotcom, a borrower the top-level a Data Donuts independent of senior loan senior long-term for $XX & refinancing a information network projects, provides Eratech a Analytics, secured loan of leading that diversified $XX loan company

and processing, $XX and industries Our automotive payoff construction Enerwise. included $XX of payoff variety third a our our publishing. quarter Pharmaceuticals, totaled Dispositions third $XX and payoff quarter a Actifio in million a million of of of other investments and loan including $XXX the loan Nephron provide to to a loan payment to the to in exposure million our million

Although an the in dispositions active remain we it quarter was disciplined redeploying capital. for

has of quarter the industry approach a sourcing modest and TCPC's of portfolio debt and and portfolio benefit exited long-term New average our at disciplined yield in a XX.X% strong managing quarter weighted investments of sources our knowledge end with LIBOR. overall function had to the our relationships on The performance yield as companies in and underwriting effective investments other quarter X.X% increased constituents, been weighted yield portfolio. continues from we our deep effective portfolio fuel had to our during to average the consistent the a XX.X%. effective increases

$X.XX has As dividends at have shown and period. per our on BDC over since same IPO the XX% by outperformed as returned TCPC in XXXX share Fargo X, index eight, slide our on the Slide Wells demonstrated

record ability direct in seen middle world's of many have greatly backdrop, enhances we into seeking largest entrants TCP's capital and to Against new in years, upon the XX-year investment substantially the few manager successful track part our being opportunities this more lending build past direct asset market. lending. global the Over

disciplined informational we and from leadership unchanged. process underwriting and remain significantly resources our While benefit advantages scale BlackRock strategy

I the discuss call third quarter Now, turn will results. our will to who over financial Paul. Paul

Paul Davis

Thanks, we've Howard, and discount this Recurring $X.XX dividends shares investment Starting share public. $X.XX, was of recurring six-year OID. share have continues income of PIK total at covering record including and out-earned amortization and was dividend remaining cash of prepayment which million on share. was hello slide income, Investment both substantially The XX, unamortized on dividend more gone per of basis, our an was by quarter quarter for income everyone. based $X.XX per our income period all we $X.XX fee than share and share aggregate was our outstanding $X.XX our prepayment $X.XX income. exceeding $X.XX from interest was per cumulative This every net or quarter recurring since on the per Over $XX a end. $X.XX. was fees per interest

per of and other all primarily and per of economics share the follows for realized We net incentive the or payoff of for expenses an debt of second quarter $X.XX $X.X life investment gains recognition made. Operating rather loans. quarter expenses of and policy included share. income per compensation investment, the of income the investment per were than at share, net $X.XX it million per is during upfront Our generally recognizing $X.XX $X.XX share of our over amortizing the time conservative from $X.XX share interest of IGN the our

is equipment finance. helped deployment our which we record in three a has the $XX.X the investment noted, offsetting a been our XXth of in Street diversify of in to our portfolio, the which these past, end. of reported years and million in which write-downs ago, in Partially positions discussed two losses were per losses company investment unrealized primarily we've has one we as specialty Howard of XXth non-controlling which Street, on on about its a gain quarter. is into area third niche quarter $X.XX company portfolio post As or an comprised exited share ramping made financing successfully

company, portfolio non-accrual end, representing fair one Our credit value. at only a remains with quality the strong, portfolio debt from X.XX% of quarter

was to cash FPA With and total million. program, Howard. end, quarter at $XXX basis, of trades. outstanding now is share of which times to trading share an includes SBIC available pending over XX, net $XXX turn of leverage and equity we based slight repurchase X.XX and I'll program is million. a cash debt, This gross which settlements on leverage algorithm. net million draws $XX our of back and X.XX the on the Outstanding $XXX.X modest equivalents slide a NAV $XX.X under quarter, $XX and on net million, we at Turning common at our closed with during the made stock liquidity call times remained discount is Regulatory of million. million, our repurchases cash of quarter of

Howard Levkowitz

Paul. Thanks,

borrowing amounts provide. We a our targeting recognize that We middle-market is solutions of lending to middle and are there lending. wide variety said, to capital from good there across increasing we companies of companies to need the creative access demand continue be many industries. fundamentally for see continue that market broad strong That middle-market solutions

our us of We see a our solutions. attractive unique many BlackRock point November through for we demand date, to yield transactions In combined and At from includes nimble million quarter in approximately available effective platform continue historical to well and senior secured mentioned our And that earlier, pipeline the fourth in five sources. deal the primarily partner are borrowers an the of our is as make approximately I invested XX.X%. financing robust yield with quarter, within range. loans, $XXX.X have this products to breadth the across X,

Looking for positioned continued reasons. growth several for ahead, we believe well we're

companies First, across of our nearly decades middle-market two in cycles. investing experience market multiple

companies our long-term with investment source relationships portfolio and Second, opportunities. with provides us which ability deal unique the sources to

variety provide funding and sources cost alternatives. attractively Third, interests of on credit to debt A our private Fourth, financing platform and Fifth, finally, and with capital protection. which has aligned with our closely diverse resources, opportunities access have market-leading focus our our that significant shareholders. a quality and provide and will priced for downside our expanded partnership low of equity our scale, always BlackRock shareholders. geographic enhanced remain with been credit research our

capital process optimize Looking a to funding effectively generating recurring where earnings shareholders we from the call And preservation. on our for continued and about like for portfolio your robust future. the support. thank and all of remain to attractively focus strategy open future, unchanged. our and stream with focus We'll underwriting sources to our leadership on closing, questions. strong diverse please operator, priced We excited deploying that, In we're up would continue by performance your our the confidence to capital

Operator

Securities. comes Your O'Shea from first with Fargo Wells Instructions] [Operator Thank you. Fin question

open. is Your line

Fin O'Shea

you question. or morning Thank my taking afternoon guys. Good for

out fee think go Appreciating rates. going higher, structure start reform. anything. higher, leverage lower of if base the also the incentive hurdle Just I would the, to and the With on would course, that

So this an view do is another there that as the you lower rates philosophy hurdle sort propose? exchange you driving or of

Howard Levkowitz

a being fee. on fee We incentive part out, all reduction focus continuing as point proposal an also brining in of our reduction to to to leverage. It's a as the And we're has the management forth fee It's that process our the Thanks rate. several reduction having our to hurdle a question, Fin. a the in that of one-to-one components viewed structure. for you shareholders extent industry-leading then, in it exceed assets it. The

we will something is the If And have is we is made aspects, structure. continuing institutional on of important. these an something which we retain a common. all introduced sure that to lookback, any we'd seems our have, different putting changes is had and to that's an our wouldn't an in we're it industry-leading most very are make X% in the We have part effort which hurdle rate unique, together to that cumulative past believe be The that earnings. It's in all really structure. fact it

XX% just In fact, XX.X% levels, that with difference makes been fee if from that as big lower current long as would've it we'd from had to the we're reduction the been sense incentive this XX.X%. the we would've think retroactively proposed our But in And time, a compressed for we world is long-term going forward basis. where to make change lower. have the been to We've clearly going been think have spreads have this rates been industry-leading a on this long structure. and a a good

Fin O'Shea

just your would've us and more Sure, from start agreed. benefitted some return the, actual you One assuming sort this That's at generally given format say, you -- quality this are that are give between shareholders pipelines BKCC, expanded merging those on of equity. the that point and you color flow, question, on seeing. funnel on quantity now of from the deal can

Rajneesh Vig

now. that They these things months that the working for deals directly, sometimes we've that take your mind in we've just is Meaning, through be now are One But several It's and things. keeping one. have couple the period we've lifecycle. incremental. certainly Raj, their I gestation lengthy, on -- been I'll been all several question would quantity things can Fin. answer I been of own for Sure, to say is, rolling closed months. more a that guess for have

We're joint a are we more platform. more that seeing I side. both their And been think, opportunity benefiting as have seeing benefit, is going from We They ways. see. things that through

How data close natural we a not I that those points early lifecycle things of on immediate, that the when thesis, is positive. the prospects. excited terms think up days do and the both in So data and points the are going talk are quantity can additive ongoing expect and we the have of that forward we're quality, about and the about. more But

Fin O'Shea

in for you jump Thank Thank back that color. you. queue. I'll the

Operator

you. Thank

question next from Raymond James. with Your comes Dodd Robert

open. line is Your

Robert Dodd

Hi.

contingent new on kind on the So I fee obviously. so -- up of adjustment, is following that Howard, the said you fee, the shareholders leverage who think,

stands have it you of November now, Board as right as next year. approval So, of

the to or color just the on -- not now. incremental your it you see leverage, would So leverage will plan when more just give be the from be or how fee shareholder it a year up the timing Board use approval hypothetically, shareholders plan you things that's structure approval additional coming if Can those to give not do whether would us interact?

Howard Levkowitz

Sure. and Robert, an question good that's interesting a question.

it's do. Our now the right is focus front right in on to We shareholders. this think of the thing putting

things doing strong shareholders the benefit time. long that believers them are of in We over for the period

change our in it. that will after be to a And so future. visit on is so, going we'll of And happen vote shareholders the and to do to that the front And in them to this be going forth they expectation. we're and giving putting anything hope that's happy it

a that at little think this I premature point address to it's though.

Robert Dodd

Okay, fair enough.

or the other, discussion ratios target your when leverage, terms also in the the for leverage into you would new what what mean which -- obviously also of you obviously through have business leverage here, framework be So what's of is one but this there's not I way the if Have SBICs I guidance just under the acceptable leverage to then to goes new just this total but presume your and actually regulatory on target account. them had, rating guidance, your going take agencies is not given any they total. be? historically what's

Paul Davis

Paul, we've very in as conservatively. been And we'll consistently that which a is to had done has I'll never ratio. leverage Historically, our leverage one. This continue Sure. we've take manage target past, the

the doesn't we'll take ability use it. additional mean necessarily Just leverage have we on because to

are then and that those not times. and necessarily conversations them we not agencies time, place invest program of as still because them we've at Both on example, If SBIC X.X X.X have rating out The came just we continue was have drawn long targets. appropriate, can. because For had S&P came the is again in a rating. about leverages we'll about in X.XX with times. we put the Moody's exceed at at fully

Robert Dodd

there are I do one in and dispositions I track of what deals a drivers, material was to not stood didn't good predict. prior -- record and exit just dispositions But and reduce decision mean it. just to doing And exits of and doing, the sometimes that maybe hard But versus which not got industries about quarter you're on, then deals you've the those were terms QX or just or were terms in because to originations certain more, particularly in anything anything or if QX can, say, changed to this you kind got don't. like that appreciate Howard, of if Okay, the exposure on you out certain any, quarter that. had into -- I going the making if quarter, decision you deals. on over this obviously any,

Rajneesh Vig

and Raj, I'll it's that. Yes, to try take

said that is it's is answer, deal very no Robert. the chunky think cycle to the I short hard We've sorry, isn't. that always really there and predict. Chris, -- said We've always

of that amount sometimes a or prepayment, a seen think you've seen lower refinancings in I in larger sometimes it amount. you've

not And linear. make that to so we've really tried

us. disciplined for there we've couple isn't deals deployment risk-adjusted really or with or quarter, your that size of looked quarter, little itself were looking predict. trying in to But that to really repaid good on happen outcomes avoid dramatically there than anything may This a different terms again next opportunities. not the and stay question, it's to for of that just other tried in larger were a that hard to may And good

Howard Levkowitz

to give granularity. even little maybe just you a follow-on And

amended lender an QX, that was existing our lower an bit. a rate financing of little so albeit largest at a brought down investment, and Our an rate, expansion

times. are $XXX finance date, got financings weeks, disclosed, timing million XX.X%, QX largest was over originally Our scheduled larger QX. in our moved were as to for five loan a a that be And and to couple at in of we was

factor. the coincidental, is is It And by meaningful lumpiness the just so business. any of identifiable not this driven

Robert Dodd

I it, got Thank Okay, it. you. appreciate

Howard Levkowitz

Thank you, Robert.

Operator

you. Thank

Your Kotowski question Chris from Oppenheimer. comes next with

line Your open. is

Chris Kotowski

good afternoon. you. Thank yes, Hi,

just obviously just a that one the change, apply to structure the apply sure fee base fee on make fee presumably debt the would it just right Just incentive the the management I entire to want above amount, but applies to right? reduction I amount have times

Howard Levkowitz

XX.X% yes, over hurdle. the would That's be cumulative fee or entire correct, return X% incentive now total

Chris Kotowski

that's for a so Okay, quite give up you.

passes right once happen Next cross as leverage the threshold? XXX% does or only not you this

Howard Levkowitz

structure our Yes, the would in requirement be adjustment leverage our time what fee into change is the same the happened in that would go that effect. leverage, that at in change

Chris Kotowski

But what or does does if stay to at it below is XX one stay to you incentive fees I'm anyway? one go your XX.X down the asking

Howard Levkowitz

into If matter mechanical we're staying approved, below been has as goes effect. it this a but

Chris Kotowski

kind quarters regularly all thought picture the guess Okay, is guess I'm it And is riskier flattish then or? of of that we've wondering time I of four and or sort more the all quite now the natural portfolio of rapidly the combination I XXXX there question some above pricing I at that XXXX, had or right. kind variability throughout not more and in and the growing or lumpiness the three big is environment and or just you're is

Howard Levkowitz

things never the maybe Selection sake dollar it's of a a question, think it's for always growth I of a multiple said, today combination we've function think smaller the probably than D, above. growth targeted margin bit all the as competition in portfolio past. the it's really we've a defensive it's like We've at positioning more, of test few and same is same over There but more doing timeframe. be that I well the years a to been definitely

we've think for don't versus that the trying sourcing look said, in areas the interesting pockets flow I channel. deal the mainstream always are to find in we

the of of bit of up to little that whether outcome each the little shrink above again So to quarter aggregate all is tends individual by dynamic an the a be or deal I that grow think we lifecycle predict. driven the but it's hard a bit

both given that own you've each in the flow a and quarter the is the set, change I this its think do ways underlying character go don't seen I has think in past. So deal opportunity

Chris Kotowski

the a lot effect increasingly guess loans. reading writes highly structured discussed going Okay. Yellen view Grant and much think to not is And for by of we've that, Janet is I covenants Jim having and but leveraged lending, assume regulators about, I'm the It's all it. you about weaker I so an talking been generally about

Howard Levkowitz

deal Yellen mean portfolio, one seeing true we're when a our but and about syndicated market, that loan it interesting Janet also a middle function I be lot it'll in from that's hold talks market Correct, recognizes think really have the day there's and no names an there a we where of is of the more little flow area than that the think I ability to a better but of route, priority the financial they type there different we also that more go are answer lot rights on. a on that to deals line, put the few maybe contains of documents holding that your the including structures protections certainly certainly right a which that option covenants line an with not question, a but are mean are that have we measure but may area I if

Chris Kotowski

it All me. that's right, Thanks. from

Howard Levkowitz

Chris. Thanks,

Operator

Thank you.

next question Ryan from KBW. Your with Lynch comes

is line open. Your

Ryan Lynch

my for thanks and afternoon, Good questions. taking

grade with really one rating S&P from first the ratings. your rating investment believe have one to a you're what I forward? impressive your that, able obviously and because Investment to then so give achieve can do and I XBDC you one on do believe and I has you're that is this you of feel how ratings means us Moody's for think of The maybe that's background guys grade maintain pretty BDC's X other to this only to credit you going guys credit only now do some just

Howard Levkowitz

that. calling for acknowledging that Ryan, and out thanks for

a leveraged We we making XXXX. grade clearly We've years as first have a rating investment with to back worked we in BlackRock the vehicles that of term over and of a developed the TCP track part as managing, and history position going It I long now in organization about about the to agencies so and careful operations rated put long at were operated I leverage the but fund regulatory as us able they think to more something we've decision or record our increase that do and think us the to and very we appreciate be and we headroom. and that give was manager thought discussed to do forms didn't if this in that and rating our conversations which so added were us view understood able of a parties in and was and this in had key in a their we with make S&P part we included all that do group of that were happen counter are recently be to were to making sure number sure, it, they the to that agencies we that continue with to to we We wanted this. decision where important have from most concurrent. those pleased to we process going the and is rush coming the of proper Moody's to for

Paul Davis

agencies years was been that that, were for quarter to inception to This things on we've doing every we've obviously focused XX some a helpful helpful dividend to very rating them the was since strong I add which our fact covered the would is Paul. of them. very the this

Our was has been very stable portfolio helpful. value

great the diversified right We've sheet. markets. have access got to balance of We capital very side

to have for as and that the these agencies well of organization ratings for those very S&P dividend and pleased to performing grade and positioned things we're strongly be an continued I'm were now. investment to came been together coverage things glad have giving Moody's pleased and and rating All able stability us both growth saw has and and

Ryan Lynch

That's it. that's helpful great. Got and

platform been you're in that is have you just early maybe now really couple from what that things is still is thought, biggest transaction for on know on about being the that it's gave early the talk closed. seen been on has know I platform officially period benefit you actually you'd BlackRock guys you Now been reasons for you platform? a things three can that on biggest that benefit pretty about from months I you guys on operating change the the this there, but

Howard Levkowitz

Sure, to touch others can and on that in. try jump I can

if none and on it part of think will. their to footprint touched that second you which I was, brand we is

and of think deep define that all and potential know, I are asset the platform qualitative excitement on on from today. across is relationships to to really platform is are and early intensive relationships platform asset growing mentioned, the a middle I years about pinpoint office that context with elements on benefit. we've our there's external a management very think thing to of you some that our or additional a our the they're think is as opportune additive management will early can the with with we on I changes industries benefits to, it's those mentorship the other can that but system things it a folks even exact deepen professionals so there's you management and here the to it's very lot benefit a through down be extent then of of kind widening have more certainly the you day-to-day because or benefit some side learning, benefit new so here know can highlight ability resources leveraging compliance there categories can a that numerous that broaden we company. meat deep items, just of a the it's but we quarters environment, risk is on insight markets, that bone years as class constituents over that to them we think com to track there some class intermediaries early back Obviously there's, for have more holder I from that from by by and haven't harness say seen just on platform a to deepen There's existing folks the or risk every tied I on other is just risk put leveraged, to even still clear we with in a I the there's opportunities BlackRock of and and the whether have ongoing on good a seen funnel that indicators are we know our leading I would to fully that whether find expect a we honest go of as ability and that hard would you across an by. and meaningful track to across we're the sectors, and an ago it

Ryan Lynch

strategy. decided which the you been I as passage have increased guys Did business you just with guys whether have are or That's Have successful? been on your senior guys going to a you leverage, has of the changing that it's helpful, has strategy and guys did up the to moving and that more plan you guys mentioned? approach targeted some always do really little then know

Howard Levkowitz

and a We don't is our make have works any it keep currently business been. the well the in current very as in significant executing is change plans will we pointed so to we that our way you manner the out, that business thinking have

Ryan Lynch

you say guidance know could would say Okay. say, just I and put of range. And in past. not the sort leverage leverage at would comment last you a run range then, any be with I guys rain, increased leverage, just of a I there's provided wide on leverage, I Dodd's I providing would a one leverage you may I wide very it's up now mean But following of one the guess that haven't or Robert question the more maybe with

business for it I business going could the just about would think any sort of could lot and investors not the running you of of going guidance impact think understand think this are think to on of leverage a how how mean, risk uncertainty investors providing you makes any think wide I your BDC, sort major going helpful going would really I leverage to as going on the you a leaves forward ROEs guys I the about very guys range think it I you for know I you I that, forward? on and of myself plan has really forward. provide so be so it's encourage forward, guidance if guidance hard you operate even a

Howard Levkowitz

the away floor something will if because Yes, it do. think incentives, can historically some not it which from artificial Thank you we take set comment, stayed you we under have for would definitely as we create we it that advisement. a a

payoffs you're that bouncing can balance let you the deal last you seen to In you sometimes set but And wanting or ought two ceiling, to do sheet really don't shrink in a a that some us quarters. getting a think fact, do, you've our happen if it. be position against where you up

so, been an the to day-to-day. hesitant we we've run And impact business on create that artificial constraints have would how

very intent volatile, at those didn't loans regulatory been not in in principles absolutely and with liquidity same business careful putting where a time period our have have capture run the different a makes from in we're from or thing of do with sense risk, markets a flexibility, to the position become about the both a nice sufficient to in to respect at our headroom ourselves more being now one do anything We this extent have to time continue is max time. a but focused to we're close sort have it's short a an on any perspective. that to not very which place, of investing With regulatory and significantly leverage in expecting operating the just we more to respect

Paul Davis

our with Ryan, announcements. ranges, did think, keeps I our that. consistent made to some intend pretty peers announce add we know have did to might is I that manner and also some which periods similar in to that -- operate the investment that have we wide given say in us And continue release, we of those I grade, a

Ryan Lynch

of lot today. that's those Thanks that a business, constraints so provide and why you and your just it sense. understand just of for to uncertainty I all leads Yes, major component of makes comments the -- my a questions. time those don't

Paul Davis

Ryan. you, Thank

Operator

you. Thank

from comes Securities question with Christopher National next Your Corporation. Testa

line Your open. is

Christopher Testa

been seem my want vehicle? you just happen the to with announcement thank uncertainty stock ask be on to of BlackRock account does what future today. seem in any make I has for to and Hi they they around would primarily this, what do surrounding wanted the taking about future there questions TCPC inclined an take the discussion overhang BKCC, this seems might to do to the with into

Howard Levkowitz

entity announcements own thanks and is their committee. distinct board for own BKCC a question. independent investment Chris, and make separate their have the they and legal

appropriate might So be to to comments direct that them. it I think

of We with are and deal distinct. exemptive but getting as today on the organizational flow synergies entities our are order,

Christopher Testa

guess of that's of better performance weighing strong a outside maybe being, phrase something company's a BlackRock that, that I there's way does and understand. on very see it lot that. is, I the despite really pressure, is, to performance understanding TCP's still, under stock price the

Howard Levkowitz

comments and So same. you do we to will the your invite share

Christopher Testa

you the Yes. And you significant to there plans potential to right, is to for originations investments fair to rate BlackRock hurdle maybe that's and said, your offer ability the products enough. some business at possibly a balance new lower will All currently the any I one-to-one, that go know you regards and make enable change that offerings coming over or yielding and the no one-to-one? now new new the feasible have on in put from, sponsor to lower there's only make above product feasible relationships would sheet with

Howard Levkowitz

we're make operating to currently in huge We plan the any the don't changes business. way

from points QX, that. than If quarters, broad there of about the range pretty low, high and maybe at basis the XXX is originations on wider some it's yields to you in there's difference look a our

some And the recent and very environment gives then low been where has an flexibility long increases, notwithstanding have quickly time, and the we yield market. so, this rates more little yes, us a a been bit compression in for

us the tight one And at yields you from a in flexibility the given taking last be bit see almost a not for so, so, probably significant tighter with our in yes, can have more respect wouldn't some year LIBOR seven little are have very change. but level and in might that up deals six, priced been have are helpful any to years, investment, which increase a past book, that loan this range today, little or where some the are to really we slightly been with effective this planning gives

Christopher Testa

fair. on loan secured position, the fair green biologics, from want especially XX term the ask That's just to the I was if And on XX. can, XX value senior the just down yes. cost of on mark the notes convertible to to XX mark and Okay, I down overall question a

these historically was Just any that that a there marks? pretty different company, specifically from better are new negative wondering, past new in facing headwinds are quarters? what if quarter drove So anything

Howard Levkowitz

the marked down. various and its the has and was numbers continued Yes, that's in infusion to the infusion the securities structure of the an equity struggled in equity connection and the capital and company make with it's position gotten reevaluation

Christopher Testa

Got it.

are those all Thanks for my right, your time. All questions. Okay.

Howard Levkowitz

Thank you.

Operator

you. Thank

Securities. Your Chris next JMP question comes York with from

is line Your open.

Chris York

taking and Good my afternoon thanks guys, questions. for

asset with has pursuit has whether leverage curious BlackRock, but representation the shareholders? considered alignment to change additional the GDP, show common from alternative is So the I'm become nice from associated investing which fee manager leading directly alignment in of with managers of BDC

Howard Levkowitz

management as Board Directors frequent have buyers been of We our and of the stock.

involved, the discussion. the in decrease and was BlackRock our true with by increase it you have the those by but are fee not when we request connection And something way gone that it to most has I decided in the been incentive shareholder thought to itself, leverage, we're internally alignment outside a different to regard. that's respect rate, a that and any make always we fee, in change that's that stay But was we decided so, and directly to looked view since inquiry, been we with that a we to with which the practical go think, friendly their do all components people shareholders public shown ought to at try we've that our we also going from see as in prompted of

a I in see happens. shows shares real to And that other so that current respect that the commitment significant up in investments think, is what we'll with give a,

Chris York

Okay, is And sounds or strategy. on Raj, then good. even Howard this maybe question

curious, about and equity these years, for three willingness your in on investor putting sheet? is equity investment some XX a what street is your likelihood nicely controlling that you become or where appreciated and your balance of company portfolio could loans You've the had start which you

Rajneesh Vig

comes that, was enter do. from than start, arrangement a from into team what we I adjusted a an that it risk of would think initiative novo at we bite way business but the a different out the if pretty de the size but say operating to very with and an will, was has limited, sourcing we slow that's little a thought interesting you moment, has been it good a industry, opportunities space to

it to think of we be a differently, risking working seems little approached cat I kind now. little the and up we which a So, picking

its today. it's versus it what So, think run has to I we I would be way been to it, seems no their of doing rather that a operations because continue strategy breaking not just and making working kind and a change we of any is let change support as course strategy grow into both concept it know of in to think

Chris York

can non-yield then, yielding remind And you a me, or is that investment?

Rajneesh Vig

I'm sorry, you can repeat that question?

Chris York

income it three, Is investment today. providing that provided? XX Is

Paul Davis

Paul this and us. component is there's There definitely two component equity debt is, are growing income a for and It Davis. components, it's

Chris York

Okay. Is the equity component accruing?

Paul Davis

Yes.

Chris York

investment? investment activated Okay. then post on And then and the Paul, troubled a said, that and investment you that you was what quarter, mark

Paul Davis

a was That real mix?

Chris York

the do exit? you market to then, have And

Paul Davis

about We double, where XXX. exited the at we marches

Chris York

Okay, that's yes. it Thanks me. from

Howard Levkowitz

Thank you.

Paul Davis

Thank you.

Operator

you. Merrill Thank Hewett with America Bank from comes Lynch. of question your And Derek next

is line open. Your

Derek Hewett

Or structure you could BlackRock your the capital rating facility? forward thoughts closed and of also has credit higher leverage Good would since the flexibility want your some revolving and given on issuance your sort potential deal portfolio incremental would giving then affiliation. your with the of at now BlackRock sort investment going point, discuss morning, everyone. this any for bond Howard fund growth with or additional Paul, you you grade

Howard Levkowitz

Derek. joining have good realizes here. to us, who still morning for out Thanks its this on it's coast and somebody

are highlights you think I suggested what alternatives.

note different different sources If diversified we the of funding. our and SBA, any it have confirmation balance and clearly, on addition think grade about page from lines, sources options, are our liquidity, the today decision funding sources of of a credit so, at with our risk, have for helpful six dependent intentional. and which have funding, so of with investment you type, by both We've we of also two and as it's soon will the and of going the diversified we presentation, as on the We've are a cost a but And we ready adequate optimize we our the that not three and lenders, rest we so Moody's one perspective we have rating, source. of our liquidity, something different of and the to that we got market sheet, size, our flexibility of by keep issues, shows have look forward as new. the of we you make posted along series to future, number XX are

Derek Hewett

Okay, great. you. Thank

Howard Levkowitz

you. Thank

Operator

turn I Thank closing I'm time. further you. to remarks. for like this to the call questions And showing back would at no over Levkowitz Howard

Howard Levkowitz

our your you. questions today's appreciate This talented team to experienced, would Thanks I joining dialog and our We Thank thank today. dedicated us. call. at of like TCP for and concludes again Corp. professionals BlackRock Capital

Operator

Everyone conference. conclude disconnect. program, wonderful have may thank gentlemen, and in day. today's the you a all you and does for participating Ladies This

BlackRock TCP Capital (TCPC) 8 Nov 182018 Q3 Earnings call transcript