TCPC - Earnings call transcript Q4 2020 | BlackRock TCP Capital Corp.

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Operator

Ladies and gentlemen, good afternoon. Welcome, everyone, to BlackRock TCP Capital Corp.'s Fourth Quarter 2020 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. I McGlynn, to Capital Director now over the Corp. And Katie to of Instructions] would turn like call [Operator BlackRock TCP Global team. Investor Relations may you begin. Katy,

Katie McGlynn

Thank you, Towanda.

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

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

slide earlier call, posted to earnings XX-K, We a presentation, turn company's and filed click website please and presentation presentations. with conjunction with we our to supplemental Levkowitz. at These the will events CEO, SEC I the be and in on select Chairman Howard documents which our was reviewed link call over today. refer Investor view Relations Form today's also to will which should on the the the tcpcapital.com. To now

Howard Levkowitz

And for you Katie. us joining Thanks, today. thank

hope I Davis. are highlights me, then few quarter. TCPC we staying foremost, a key and with Officer, fourth comments performance Vig, start and portfolio Raj Financial an provide of and our safe. I'll team and will update There Chief in the our Chief XXXX, Paul on our from is First President and and several on on our healthy including the everyone with the members call Operating Officer,

risks would liquidity the results some the the I'll fourth economic expectations. including of like your exceeded and management financial On call which team year. entire teams coronavirus. to closing the earnings last hard noted review our results for robust lives the environment, comments employees will Paul the and as that, and thank well for their several magnitude opening we the our We provide call, companies, on that everyone's as quarter The questions. our impact pandemic to year's has to with before almost deliver After across flexibility Next, position. a our to at world, day-to-day had together strong the work us enabled portfolio

million are that XXXX, we our $XXX advantage we and pricing additional attractive of record also at rate of took facility, withstand more our XXXX notes. TCPC sub X.XX%, market the meaningfully enhanced and portfolio a bond liquidity proved added asset navigate issued unsecured existing eligible portfolio. dedicated our Our and QX, ability and strength to year-over-year, industries XXXX and to carefully net conditions due businesses the testament our our to Despite our through evolving strong unique and on disruption focus credit year. significant strong our team market The middle deliver of increased to be is outlook value the a to terms, replaced of Earlier environment this in in strong in we favorable In highly an skilled of cyclical issuance. diversified and constructed, a quality remains the challenging less capital was bond shareholders and We and the funding for extended index SVCP the our part downturn. performance on likely notes our better BDC month, an facility to opportunistically for our position.

first shares This repurchased NAV. accretion during of of of our the share quarter $X.XX contributed opportunistically to we million X stock Additionally, our XXXX. per

commitment addition continues Petro of specialty to our to Andrea has our Board, to and XX of diversity. Finally, Board we Directors. in years long-term Andrea finance nearly and experience our in welcomed August, credit to the

of half our winning. appointment, independent Andrea's Following are directors

quarter our fourth results. to Turning

driven our provider interest was strongly in amid an a companies. challenging value the expertise investment performance majority significant the programs. market prior increased of well outcome the private were investor Our its leverage investments. from from company. narrowing portfolio situations our financial online currently the investment with online is learning while resulting in new work as significant we by demand gains middle Edmentum special Edmentum, further a from to on deliver quarter, quarter, solutions gain pandemic. realize improved as spread reflecting Edmentum minority gains This a leading gain position of net performance. X.X% X.X% on a ability many situation the retaining to the team's credit This to equity NAV market through benefiting our on improved educational our from accelerated company our fourth at and received financial also demonstrates Among investment quarter in was a and a able our for the deep ownership in transactions

continue the our ownership Edmentum's Given believe in retained participate to of we we company, will success. ongoing

approximately Turning our unchanged $X.X billion, of debt investments of fair essentially market in of range to XX% At quarter. prior from represent our are senior a secured positioning. portfolio industries. the and value our wide portfolio year-end, a had

weighted more well. protections, most the of direct perform our our Furthermore, loans pandemic. supported Our to affected that these exposure to companies severely and airlines investments are in and toward generally businesses by industries, continue strong sectors with retail more industries by diverse limited is including in to portfolio collateral have impacted been

the As largest well quarter. investment performing in an demand the The challenges company of during flights in for again, second of country, aviation value appreciated OneSky, given strong in travel despite example, businesses our is private facing services most the charter sector. the provider jet the

year-end. XX included portfolio diverse Our at companies

of diversification of highly further million the diversified provides portfolio $XX on lease largest represents underlying its assets. given total X.X% portfolio and Our

X on is presentation of not one chart recurring left on from our the company. income of any illustrates, the the As Slide side reliant income portfolio

contribute debt which these in In are income. recurring our rate. are interest of less fact, of effect. to individual rate floors, of all companies than are floating to over XX% now X% portfolio half XX% our investments our of subject

our first of Additionally, XX% debt investments lien. are

in Market robust were activity. quarter. our origination the volumes to fourth on Moving investment

we deploying been have review. we maintaining a investing, our While the percentage disciplined we to are approach active opportunities of executing only small capital,

the we which result, fourth existing be of $XXX during with in loans, continue a and source investments XX new million we a companies two-thirds understand these portfolio an including in important were investments invested From companies opportunities. As Follow-on risk know well. existing to of are borrowers. nearly perspective, quarter, management

a As diversity lead. structure, we act in we new Co where opportunities, capital leader, we and seniority investment to the analyze continue industry as emphasize transactions

largest during an shift acceleration Our COVID. toward with a home people of result the the a benefiting fourth loan was a home elderly assistance Team settings is and team in care from from institutional care and services, quarter for investment to of leading provider away the new as disabilities.

lead company's chosen as effective X.X%. loans with fourth provided were niche Given $XX included and in our to deep had extensive industry us and the relationships The The ECI in overlooked but company's quality quarter and the Edmentum, was yield from sector acquisition, referred health [Haig business care, in the effective average financing. during within million weighted which lien well million yield second Investments experience support companies $XX as on weighted Botham] to to overall a our earlier. payoff our I yield quarter were and to effective invest the our $XXX the expertise portfolio team health focus the to a we to and loan successful strong payoffs our equity of Investments X.X%. opportunity of our and in their a from loan management Dispositions the resulting of of care debt average we X.X%. had portfolio a new exited owner. million

declined LIBOR put this points by over years, pressure our two which XX%, Over the period. or XXX portfolio last has basis on yield has

XX% rates our currently in floating However, operating rate further loans LIBOR our nearly portfolio protected any of as is largely with from floors. declines interest are

a quarter-to-date as activity impacted investment be to companies in by pandemic on environment. that minimally Our of COVID focused the the or operating first selective and the continues beneficiary impacted are

line Our current activity The secured primarily million, our on with totals $XXX effective yield. date are yield generally in a loans our combined with investment approximately to in of X portfolio in investments XX.X%. pipeline yields approximately senior

turn to the our who more will detail. results Paul? Paul, I'll Now discuss in call over financial

Paul Davis

three in fourth again we per $X.XX our share. dividend income of Net cash declared $X.XX share paying was by IPO since share. per Investment everyone. the a year income Howard, per for lowest XXXX. share. of $X.XX, dividend fully and quarter the $X.XX quarter committed the PIK fee of included and share. our every recurring We amortization $X.XX This sustainable first Thanks, $X.XX that per of of was hello, we a for was and Net level covered our of per dividend income quarter as today, to discount And income $X.XX recurring interest fourth for exceeded income quarter of income This is full PIK $X.XX. investment investment have investment remain net in years. done

reminder, of our from recognition rather is made. income, a income. policy life economics income generally of than our all amortizing As income over timing other of from conservative investment included recognizing investment of an dividend the prepayment Investment of upfront the $X.XX it also follows $X.XX income $X.XX and

it's deferred quarter quarter the fees, per fourth lumpy, Incentive quarter, share the XXXX. included in Operating expenses $X.X totaled million far of investment were debt minimal particularly per income for $X.XX other per for or share. the prepayment previously While first historically $X.XX share. year. including and $X.X has lower share interest fourth so of total in of of income been been expenses always $X.XX each is in net and $X.XX million per And fees

to call, of first As incentive deferred. earnings fees XXXX our were our quarter the related noted in income second for quarter

further our amount While quarters, hurdle, amount we over strength performance six confidence second return our its our our and hurdle. our remaining the demonstrates interest further aligns in portfolio when our with above earned voluntarily cumulative the to deferred this in the again time. shareholders performance earnings capacity those the total We was the surpassed subject believe full and over our of quarter, of

specific their on saw Amtech, from million Securus, gains and continued which $X.X per and million. companies. credit each from included in OneSky, Unrealized The million spread company a the included portfolio gains net quarter $X.X number increase net gains largest tightening $X.X share, and million improvements million net of investment gains million performance. financial continued realized assets of Our reflected net unrealized in of or our $X.XX was both at gains $X.X in $XX for $XX

These Edmentum net realized gain our valued and our on million valuations. using third-party of back our $X.X services also quotation process provided independent every our testing overall of gains oversight, investments Substantially, independent also all disposition investment. this rigorous sources. an subject is and against include including of $X.X on quarter by to valuation investment million every We prices services, quarter in this of for are

new no quarter. with in sound Our overall remains credit nonaccruals the quality fourth

leverage of to of loans at net Unfunded million. ended quarter end with CIBT on pending X.X% cash total portfolio GlassPoint, Our cost. liquidity of year which Avanti, $XXX of loan of commitments. at were $XXX $XX the of commitments $XX million, the together This to million. value and and portfolio only $XX X.X% or equaled million, fair revolver represented of companies nonaccrual, We three investments companies portfolio X% million available included at $XX less total and settlements million the

straight we new diverse a with low-cost further leverage facility issuance, record improved of program. a our of SBA the two of two a credit million extension. earlier X.XX%. program, note which funding strengthened including our million included issuing, an and issuances one $XX unsecured terms, and Furthermore, a an replacing accordion TCPC our XXXX, two-year million additional maturity on and Enhancements of this convertible During $XXX unsecured maturity included flexible additional and facility low our note we notes issued notes. opportunistically unsecured XXXX $XXX operating an adding a coupon Extending at facilities, month,

Fitch Fitch. flexibility. reaffirmed month, record for solid also investment-grade continues stable and credit, among And Our with rated and outlook. unsecured track with stable rating rating Moody's strong both other be to debt reaffirmed our Moody's items, experienced funding today, our in by TCPC outlook investment-grade noting, investment-grade Earlier their team this management

of each our of program not of debt financing, Given overly reliant we on and are the size source any laddered. well single issuances, our modest is leverage

I'll are our Our of when March points weighted liabilities the very X.XX% call the to average end we issuance, those redeem nearest XXXX. interest basis XXXX. notes to rate of success maturity Combined, from given well on And the at turn Howard. the to our over outstanding decreased down due. positioned is back XX X.XX% recent of bond now

Howard Levkowitz

significantly businesses one-third Thanks, have for the again GDP. roughly Paul. than The the companies, companies middle to emphasized collective role of past BDCs reported job appeal larger providing businesses. financing year account for that capital be investment. TCPC last in BDCs ensure key market like resilient, and businesses Middle to solutions. at sector declines the smaller proved have access that example, private companies These demonstrating to play helped these both year fewer consistent market for to

than and team the of Our been for now companies the market through the financial dot-com energy bubble two has global including lending decades XXXX, 'XX more multiple to bust cycles, crisis, pandemic. COVID-XX middle

environment include this this in than investment investors of dividends, to most and is on to drawn environment. pickup are activity. as returned market TCPC inform Overall, guided X.X% outperformed remain cash review executing companies a upon exposure we downturns those a capital our and and structured XX.X%. our index. of not by we an has navigate we focusing that throughout cyclical our are and the specific return XXXX, $XX also we're assets take have to dynamics; invested understood experience dislocation. opportunities in minimal maintain market a seek seeing has IPO highly are Wells believe and unique the in small for four, extremely share We per one transactions senior number BDC to; selective, Fargo will that of COVID structurally market, return under to uncertainty recent reflective of persistent That managing in collateral take overall diversified and decisions industries; said, translates our positioned the which we on industry annualized TCPC market improve, to in mitigation. we downside consistently The on to continue advantage continues perform more of only Since of in and its prior experience outperform periods we positions to and risk through assets portfolio this three, the secured stack; two, widely volatility, and have

team's and of firm-wide like in focus experience questions. as dedication team are their of we and even strength environment of breadth returns open would on resources with to driven Our in by and the performance to two our And date risk-adjusted generating well platform our our BlackRock. challenging of our as ability performing in underwriting entire that, these and strong both for In thank the in depth credit, our confidence this to succeed decades for operator, closing, please times. for shareholders our distressed call the

Operator

[Operator JMP Securities. will come from first Ryan Instructions] from question Our Devin

Your line open. is

Devin Ryan

First to size the past and of And capital the but question, just I you been appreciate expand you're and potential the seeing that steady the XXXX. broadly, has in to detail portfolio portfolio all given to markets the that opportunity kind grow provided, guys love maybe think Obviously, more just size the about of fairly strong the of kind couple years. expand what backdrop absolute here? for or expectations

Howard Levkowitz

the Thanks question. for Sure.

covered that returns our on as noted is very focus we about that primary vehicle, primary long-term fact We've XX.X% We're we Our on have XX the consecutive generate, quarters. think of before, been for to returns And dividend generating as the the gross assets. able our proud focus. consistent we shareholders. is for

deal to seeing extent a not focused a of doing have to the bit the grown over shrink are we we the would any And look like the not we're we we over We do see flow. us to maintain appropriate shareholders grow. but that for for size that, Like certainly to enable are growth. long right have little if on sake business, appropriate And at or time. appropriate, thing happy that opportunities term, would if growth we're consistent portfolio the

Devin Ryan

Appreciate that.

here. I that's follow-up So the guess

about can you've conditions great. been obviously, strong which hearing borrowers, is Just challenges deploying a very of more terms the it for create obviously, in But backdrop, capital.

right bit kind just most of or very given So frothy on thoughts in love like a kind broadly, kind granularity just what I'd you people more valued risk just -- I around markets? more are positive or love you I'd And guys where a now to think even in the get of some seeing being some say little is you seeing just rewards feel of we're how to the are there. get been risk that market? what's attractive So guys a

Raj Vig

Maybe not to just I highlight, addition Yes. -- just challenge on And think been to deployment. add I'll has Howard's our that. in to comments,

If had a repayments. of to just was you refinancings, a number look -- segues some think pretty quarter, the opportunity. at even incredibly the this which is just We is 'XX healthy in I but around And last out. a active lot had number. of activity We the sense second team we number, a honest, to of not be deployed good unusual setting, also your in question there's and a fourth a lot lot quarter, opportunistic in full an culminating risk record

are think of really we the I many finding in opportunity same areas.

us industries COVID and many looked pre think always the fact, in the time downside industries, view consistently I toughest both the have protection. stages very, approach predictable revenues the of the of and even of earnings. line in ways, positioned We XXXX, diligence and model through active well lets repeatable in early finding that into industry given that And find a very of recovery proprietary very defensive with the top cyclical, validation we also businesses, sources performance, a business the of is,

such a those quite of of activity as activity care, Some health software services. seeing in in ongoing bit industries, you're and

the assets, would not a in, services seen services. risk but I pickup say, portfolio, We across financial have financial financial

to There clearly spike lot of approach been that been of up The are in COVID different that pick a in the you've lot source selective doesn't the pricing. those, of areas a and taken has areas and opportunities the on since to March we've seen be tightening best and strong, been to is QX we've a that. always and would I some those to try the so focusing from rates very the pipeline on And deployment reflect from say has on change.

I our secured think we of in first remain structures, predominantly lien. defensive terms

have been some that has efforts thankful helpful in -- are of the real very We we've the covenants we of the portfolio in had XXXX. defensive through more tough sort

but we're areas long-winded us. a on I on. just focused of It's for good, we bridge areas worked that we like it way there will feels The for And the that performance, far and too maybe lot focusing asking of on, are a people saying, keep been things it's the that's has is pass strong. think, pipeline are a where So to and going okay.

Devin Ryan

No, really year well. on the the have as appreciate a made you really leave but I Yes. and color. progress nice the of it I'll liability the all end side there, congrats guys on

Operator

next Robert James. Dodd Our question comes Raymond from from

Your line open. is

Robert Dodd

on a very Congratulations NAV year. exactly earnings in performance tough the

QX, if it's piece $X.XX elevated there's it's year. mean, so year. can market If any So kind else. course anything income the you obviously, prepaid, question. payment actually muted I the activity has been back very is far, to quite year, given be expect on not going of tie Paul, appealing and feel Or to on February think, a rotation? that to normal I this borrowers of of And realize given it's in to it's terms think do right muted more kind over that? right? Obviously, portfolio this I pretty now fee of you XXXX obviously of or in was how -- be -- But this do kind environment. I Devin's quarter-to-quarter. year, prepayment the normal, On low than said prepayment to I'm the predict hard

Paul Davis

from Yes. hear question, Robert, you. thanks the good to for and

seen know the how think lot. is normal I anymore. define first to -- We've a would word what don't I I

settling deals. know So before and even we I define the market is guess if in the that do given different activity the can XXXX, I of some think a of is I cadence don't given of some thing quarters, COVID, there down

And acceleration in taking there people that real rush the to but of in business there's positive markets, both and liquid of transformations, and negative. three certainly to has two some quarters maybe the more been context X markets, model into finance in been think our -- advantage QX. of I a

as time, So still question we're it that, as respond QX, of not, that but and we maybe usual, means for lingering there of I usual in could crazy just there but have but do that and QX to it's a think best was effect business a I as think some that to be is what for and going to we're as back probably be we as business is can. hopeful some XXXX sort to

Howard Levkowitz

one to what Robert, Raj I'll said. add Howard. it's And thing just

prepayment As to it's series something rate our time, long we look remarkably, if of 'XX, there's at of pretty of but take at to repay you borrowers on even history going big over XX% 'XX, back 'XX, X back decades, quarters, XX%, consistent, periods an differentiation. tend annual a

at then QX at magnitude prepayments. in to and/or about at Certain generating just look But life know prepaid And think and the was to those seasonally higher date, X%, you income. we received prepayment not you also instruments more amounts. let I earlier maybe about comment we intended is cycle, year, this that QX, If Paul's light have QX just hadn't prepayment their typically. premium -- of last were QX QX within XX%. that, it's X% there's X%,

provide to little bit just So a information. more

Robert Dodd

appreciate I that.

the how expect there? to balance those we the Not run revolver Or but said, larger? obviously, balance bond to of low-cost don't market a I it Then prepayable, the BDCs to about Obviously, Would for next know. you of Second of well. advance unsecured? mean balance -- I would like you months there's replace a much next have particular, called March flipping August environment, side year. you another don't potentially sheet. the the year this with want additional if very opportunity other maturities little as one, you might in maturity until for to But in too be of obviously, bond. kind you of in six sheet, in you a your are one or should thinking

Paul Davis

the right with the pleased side of balance very sheet. We're

we're the market revolver lenders, those they relationships bond our been year spring. relationships have extensions million last $XXX deeply great And long-term of issue, who and during We familiar us and period with more capacity also worst our having early we appreciative believe the and provided sub aren't the and with less record a is bond index with for issues. what below liquid in low-cost is to for able that, during

Robert Dodd

And to so you back. hop got off going right one I second. I'm call to for

Paul Davis

other please. making We're not appreciate sure. we'd unmuted, Operator, sure lines are that you all

So we you our to right but unsecured -- issues today, that our balance and pay of the revolvers mentioned And we the any tremendous have revolver sheet, X gives financing having debt. us ways of of having combination bond utilize the and like ability flexibility. down to

so be And have. as we can repay can way to And some to that's that the capacity that the credit opportunity so significant pleased Obviously, with well. at very bonds other extent we considered beforehand, We're have there's today. an we something ample do liquidity maturity. perhaps in

Operator

Finian from Fargo from comes Wells question next Our O'Shea Securities.

Your open. line is

Finian O’Shea

looks Mesa it simple some as one you? for company. of was First just business there. small entity grouped a as Or it question portfolio Is on change that? in Mesa sort a maybe question air like is and was there together

Paul Davis

one to Mesa, had of We which several repaid. was exposures

with because to are airlines. our connection the liquidity commercial they into that items counterparts. so of collateralized. exposures. be it's continued cross referring in a pools broken government that, major to for that primary sheet of two balance may paid environment collateral it's But you're airline distinct their we're pleased. down And on what number Obviously, through there's and have And They've to one programs a of access been difficult out

and reduced. amortized balanced being The that why other one to continues that’s is regularly

Finian O'Shea

structure are to you the document the today. for Howard then LIBOR? away account for do loan transition from And you making the ones How

Howard Levkowitz

prime the think the for I isn't refer for instruments isn't default in anything What this or to is there successor where is else, there documents a appropriate they'll if standard but we you. rate reference that in that extent do and question. an pretty the Thanks provisions one. there to a that's rate provide account And

You default replacement to as a first the rate choice.

going time analyzing that back spent we deal So to lot believe with. a we're now, years and issue, positioned of appropriately this several

Operator

Investment. next Our from David Confluence Miyazaki question comes from

open. Your line is

David Miyazaki

appreciate the I you have XXXX. that way And navigated guys

your you're gotten long Fin's markets. pretty you airline history industry, credit surprising kind pretty of noteworthy fred leasing years of through extend to when kind more And that time observation in some back investing just industry recent time regard in it's shareholders a little also time then volatile could, exposure years. question going around avoiding And in in to airlines If your frame. the Howard, pretty XXX the notable making with do been You've and the I back disrupted XX has loans really frame. a the bit to aircraft my have at in a on wrong the in

that a how to So with that industry the at provide pandemic? can of kind and sea regard you you to industries as experienced insight other have kind of a little bit look of change

Howard Levkowitz

we for there. And have is emblematic financing expertise as but question. interesting airline very you an the think been probably Thank way industry of way pointed is It's companies, since the Sure. whole opportunistic. which the deep look I we've the portfolio, out, looked And we at at we're you we've one. XXX, the

we so And other smaller some of it good people major ones. for have done U.S. great when aren't as financing most see risk-adjusted well relationships. carriers as We've or we the financings rewards,

a is really lot we're high. And bar a the lot cyclical we're the case areas. structure, things any is We and deals of advantages haven't the our XX haven't look cyclical rewards. aircraft on deemed on. of There's in metal, in what collateral. it We've be one was of is go the at are, to seen industry industries. of focusing earlier, which the in of industries, we Raj which things hard still seen talking teams some lots deals. exposure we and less where focused of But best But the robust added of recently got way as we doing good about we've is, financing, we're risk And because activity we can financing

would and surprised I'm We pricing spring, in some probably. we it really money. the put something if you're to we think, it why needs sector, because we you things into seen is I are just important be, and have think have But do business. part out haven't in to new haven't an said come deals discipline to seeing you this would having of frankly managing to avoid where likely that's this the us asked going

choose. to but a we're continuing we're risk-adjusted evolution a we where of pipeline, look across the got see and good at rest so to things portfolio we've and I you'll that And through suspect broad of the in that enough to broad But going going gives rewards, see ability the variety sectors, the us year.

David Miyazaki

I this guys sort surprised been as come I you was Yes. across past. more even in the some honestly, than opportunities been or has has didn't perhaps really the particular in industry disrupted that it because of cycle

don't how So to any that you If to to it kind your -- you with being BlackRock were know to any BlackRock industry. that more rather in the interesting even I the interested insight BlackRock situation of be now or able pricing the manifested. and could it's on history, the or if or been that regard of legislation available or to regulation back recent the become during shift broader as has BDC generalities never and responded. have I that with modern far that of specific resources interest, with there to pandemic regard of of provide platform. part resources particular really Are hear your helpful to going gears know if is instead but part a I'd

Raj Vig

health broader just it's -- that that really an and I advantage on were certainly And that COVID. just led mind, industry but in put a that harnessed benefits as terms part David, tied the COVID, I infrastructure, of pretty all to a needed liquid, navigate I of this the industries context, accelerated XXXX, said, might there a authoritative virus estate in our And and I and appreciate take way, wanted virtually private pricing, private, in implications defensively quite having the well platform really capital own I'll three ramped trends real insight to internal lot that platform, platform through and lot presence, focus really has and BlackRock capital sectors, helps One on in and also think the up portfolio all daily the where be think, of us, with comment. industry markets we you of. literally available on keep time, that perspective a in cabs we to the is, opportunities. first to think, basis notable of we a time. would where spend I care that's even -- Raj. we before highlight take of in to us, areas where cross-asset and in positive

before, our we pricing a So understanding very in our of integration. think its helpful talked risk built is risk approach. couldn't way COVID perspective core, -- part I this that There and on we for also about have was at us cross-asset on in and have own. that management BlackRock a

we you've We terming of and that have basis BlackRock's that's on on liability and portfolio, of analysis I of sheet as for even and right the managers our out and the of a how finally, and has, at can some an with you we the intermediaries the of of side some underwriting, the changes addition movement just I but the overlay doesn't hurt. the portfolio both presence risk dedicated liability ongoing also good think issuing look sourcing, put And side, imagine, that the appreciate. think, as balance been rigor in seen into for lot debt the to quantitative a the team

don't can he a successful issuance. I maybe Howard of I'll him. know, were an -- the if not it but XXXX, we comments part advantage of COVID it, any the one. But latter to relationships those activity, hopefully, just that's some So ongoing in side related regulatory completion a we but think, of turn And on able I to has over to of take does,

Howard Levkowitz

in is to Yes. penalty applied. we the continue what on the with investors happens. that a but And be we monitor fact to VDCs sector AFFE our a way more be more institutional is of do It's broadly, continue hopefully, something in for funds. the And everybody something and we to AFFE basis advocates in is by which associated hopeful, that advocates interest rules having who's to limited effect cognizant sector a do or sector think, remain sector think that more on vehicles. act obviously are having I of rules we'll easier penalized the of the the the once part And restrictions to shareholders broadly what expand it's of. the more group everybody, to that in we see other is To result as index again, be the so mutual involved XX and continue funds, the without of

Operator

question comes Ryan next KBW. from Lynch from Our

is line open. Your

Ryan Lynch

my downturn. net Congrats, XXXX, the grow on were really I that's midst maybe year asset off, to quarter And and more to year. first first generate good actually in a guys a of a results. good And want question. you importantly, start throughout your very where strong able the value

the stronger that that having fact, you've generated results downturn. despite we pandemic last XXXX and in results in significant a were a couple the the In than of years generated XXXX

in XXXX? previous So can did years? say were why about that And what it how then your so results outperform business? reconcile you strong And your does

Howard Levkowitz

Sure. analyze wired Look, think I are to we situations. difficult

And difficult a taking special of of comes understanding was significant wasn't TCPC XXXX our that's We us had which in buy more delayed position shine. to was basis, tougher capital a at more function liquidity. If of our of and gave times, small who We of had incremental the during when effective. us in of we went think It time. down flexibility causes, capital times. it also we it in and to We nonaccrual. investing industry the sold well we partners revolvers. effective financing fact, it and really in balance you a portfolio although first not and sheet of good deployment draws appropriate stock, management. room. amount thought And And an the think the use about performance heritage We that Ultimately, in situations business, was which on had off also put proportion foremost, prepared. into assets tend ample was out did huge that, of there an a our robust also having and I was

over In dealt we And so position result. The was you the I did that an that and on we've which X-decade which hit of about track return combination the of way talked assets where one at on look think is, we has XXXX record track larger that our it's factors. a even as delis. been able over time. think But I really we emblematic record about, it's history XXXX, a think, to perform more anomalous I long company, a the have, our thought with, we've X-year take particular and we position, public a been period if XX.X%. of

Ryan Lynch

Okay. That's that. helpful color on

investment it's do to do your and I how at but positioning XXXX, what industry particular you're that case any credit and were And fearing all? actually of know that of several is a that you hearing industries coming cycle back investor. Whatever cycle things now you you a of on wholesale major any capital out name. was guys the to investing that investing philosophy we're late downturn, look a not XXXX in people or intend now prior late see do it's to to last One a we shifts going be moderate to at BDCs or to the XXXX, focus where we've particular actually recovery sort means downturn? you opposed from a cycle the heard through shift XXXX, changes structure choose downturn, over in went -- based underwriting, in whether which

Raj Vig

is, I that I'll for as short prior answer I working working, it feels And have think cycle it's no, the one. mentioned period I And the the the like question Yes. in I XXXX is if doing, is don't think things. drives unusual. answer One, down well, But I the as this because view what been some further of I we is Maybe what the think that think is us. cause -- relatively is, anything, short and and two take to it what XXXX. activity been to is performance I mean, Howard validated the things of it's the by know all

importantly, and or position, going our even improve both which an step on those to risk and to in a did sectors, that it. asset defensive structures an is ability our areas For me, give to industry ability approach we or capital and trying chasing business credit proactive way focusing it's know, and when versus that and protection more or protect whether protect us need you the happen through returns a good on be XXXX downside to maybe without yields

Certainly, very want avoid. we we've things done in focus what -- with that to consistent and or think groups are disciplined. think from that. where constantly I may evolution come to staying industry I want we nuanced and the hopefully, margin. So I where and of that there But the what put we differences And be some we our good at reevaluating context I think,

Ryan Lynch

able the kind being take the maybe And right opposite on unsecured in portfolio, risk, to question end more of sub-X% of to versus my the your which it was of debt Understood. previous kind and to that balance balance portfolio, Okay. side the side deals of that sheet, issue be guys left low-cost on change now or does of given that guys' your to you types your debt? would your unsecured put of investment that of approach willing in the sheet

Howard Levkowitz

different small long our based We don't is on the Ryan. cost a of philosophy, funding that financial and this we've move changes in think capital having a kind And been robust doing It assets in really can last scenarios. pointed through Obviously, economy. during just the the But different short-term time. is of doesn't, than our crisis. markets we of out, our just or Ultimately, downturn, you on another helpful. very we around a as lower a portfolio financing downturn do build or went what a lot cost great withstand the try changes investment we

little something if great. in But to we another doesn't in stress put borrow got bit of in don't use cases, it the against it cheaply. work our because we've more is set can just we which portfolio, a So criteria

Operator

Nolan comes Christopher next Tallman. question Ladenburg from from Our

Your line is open.

Christopher Nolan

up on following question. Howard, Ryan's

you I that look in mentioned debt XXXX terms I coupon, price your X.XXX% you the but they're thoughts is redeeming and premium at to -- wait redeem costs make-whole has that any a you in a stock XXXX? What's the mature, any below mean that there. NAV might with capital Given attractive still of the given know till that strategy them be earlier, notes, trades given unbelievably time can also

Howard Levkowitz

Yes.

see regulatory structure. that in our both under what things nice capital our flexibility and do undrawn there. capacity lot revolvers Ultimately, flexibility having we will the Significant have of headroom the means capital one significant we in of happens. We about that a of

rate fairly environment people's to obviously, of affect so price they has last the changed weeks may significantly And the want what views that interest of hold couple bonds.

makes And we so at we sense most will year. further as look what the into get

Christopher Nolan

question. follow-up a guess I And Great.

and them, cheapest just consider capital? legal facilities new you so debt be your of associated Given with nondirect a form lot revolving have this that do to of costs, guys issued forth you unsecured

Howard Levkowitz

for to long-term it's them, a at of happens financing cost of but how and question. cost-effective the utilized. good very To the overall on how you you're with I some costs, long-term are the SBA quite analytically, this to costs. gets really much attractive call think they're the your also. want analyze. We'd it really which look to to there's look also aware bonds easier can see also or financing until our rate those And facilities, coupon all-in additional on the like attention, math the you The is you to SBIC probably have wait Ultimately, at extended, Well, need what if revolvers, and end. it,

Operator

Kotowski from comes from Company. & Oppenheimer Our Chris next question

Your line is open.

Chris Kotowski

XX from the lockdowns. there's year like so for do dividend understandable never earning to and I of levels. dividend folks your anything NAVs to of and the coded guess no the or a that the reasons pre NAV kind old jerky you with herky last your that to kind having trimmed in been way XX of Knowing middle are diminution But what just back you've in

earnings of there shouldn't or kind theoretically, of in your diminution be any underlying capability. So -- earnings

I'm again, a the prior wondering, looking get forward it of to is be be back distribution? philosophically, there? to to next you get would two -- to for you the just for And or what looking so three. goal And quarter, But just or what not kind would

Howard Levkowitz

had Yes. LIBOR, said share. Thanks. cost that of you a we I a just want decrease something in about remind earlier to basically which $X.XX

very the the So yes, to we during change out. were lockdown. significant But also this math we did in is and reacting LIBOR, the set

can -- our it can pretty well. our and you K Q, and as easily in in You do your head

really stability, it very We're And our it's really covered. events so decision, well-earned been we take from to made the appropriately And primarily that knowing at as having that's focus. think portfolio. and proud was comfort our We that quarter. every looking when investors opposed LIBOR in of dividend earned dividend

benefited I quarters. had is, discussed think the of lumpy. from -- prepayment on those we at the fees significant we call, are always We our we into earlier did prepayment year. And other We've QX earnings, as couple you fees. of last the don't look thing last as

of them. quarter. slower very in had Paul And QX quarter. tends hadn't pointed we a way we be few any to In fact, seasonally material this yet out, a received

coverage. and dividend extra fees, know like always we've lumpiness But And is and knowing there's take unusual the good earnings more so certain that from prepayments also the great clockwork. We additional everything items. not a pride dividends from to comfort and that got we

Operator

I'd today's conference closing Howard that Thank back now our conclude any to you for remarks. question-and-answer does Levkowitz for over the turn conference. to like session and

Howard Levkowitz

concludes you. hard all of and I and for continued our This and dedication today. We shareholders these again in Capital questions TCP continued our call. challenging BlackRock would confidence for appreciate of Thanks professionals dialogue team like times. experienced to thank your support. I'd for also joining and Thank Corp work your thank our like us. to at today's your talented your

Operator

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

BlackRock TCP Capital (TCPC) 26 Feb 212020 Q4 Earnings call transcript