SAR - Earnings call transcript Q1 2023 | Saratoga Investment Corp.

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Operator

Good morning, ladies and gentlemen. Thank you for standing by. Welcome to Saratoga Investments Corp's Fiscal First Quarter 2023 Financial Results Conference Call. Please note that today's call is being recorded.

During today's presentation, [Technical Difficulty] will be in a listen-only mode.

we the remarks, for prepared management's will line open questions. Following turn time, Financial over Mr. I'd this the and like Officer, Chief At Corp's to call Investment to Compliance Saratoga Steenkamp. Henri ahead. go please Sir,

Henri Steenkamp

everyone forward-looking to SEC you. statements presentation factors to projections. recent we statements do to quarter that these Thank our earnings Today's actual and materially most forward-looking call. to and for filings call conference like you projections. would forward-looking to referencing We XXXX results during do our differ so could Saratoga unless undertake Corp's ask not a Today, important fiscal call. I will be We Investment first from cause includes our to by statements the update law. required conference with welcome to refer

fiscal the call in of You Investor our IR last A press website. shareholder quarter our remarks. be first details. Presentations night. earnings and Oberbeck, can section page over Executive XXXX will find will Christian earnings our to our Events few to of conference like a Chairman press refer the to presentation our turn Officer, distributed is A to Please would now for link and Relations release the this I who release in replay Chief be making introductory available. also call

Christian Oberbeck

Thank you, Henri, and welcome everyone.

volatility, well-positioned opportunities while broader continues high-quality As focus sheet in the strengths, challenges. believe future this for Saratoga with fiscal asset liquidity we potential economic opportunities further identifying to continue to market and coincided We of significant onset balance and growing credits. base be and quarter on our

are pipeline issued its and fair positive in robust, companies our executed. generally current sheets well performing Our overall above development with cost deals term value with metrics business and X.X% existing our portfolio

million, by originated investments Our repayments. as significantly million million new platforms $XXX follow-on $XX to AUM $XX offset or in we of this quarter grew

our this investments. into all fiscal credit We we portfolio all while maintaining the added extremely two high investments with of quarter originations continue to were bring and bar the for new made set platform

this and levels increases, signs the QX market. lack including labor to $XX.XX, supply credit flat Our mostly loan demand reflects a past cases trading constraints decreased of are certain are volatility syndicated Slide broadly Though and changes driven, briefly chain JV CLO To believe and per core CLO were supply input emerging. from recap the primarily by the share the year-over-year in NAV We X. in liquidity. quarter quarter being which in of valuation experienced mark-to-market portfolio inventory net changes cost shortages, increases X.X% early deterioration of on from

a and a broadly value market volatility our IRR a of the maintaining trailing First, Generating unrealized financial depreciation total realizations our and foundation high-level reflecting gross on we on of gross QX X.X% end. by over IRR JV, loan XX.X% credit continue with credit unlevered XX% of rating above our recognizing highest $X.X total XX-month strengthen at our and quality quarter million. portfolio, syndicated loan investment basis, of despite investments a our in with our current portfolio, CLO retaining to on unlevered of a total unrealized fair an XX% in X.X% cost the million $XXX of registering

as a Second, last time $XXX our as million assets under from last million, $XXX X% of management from quarter, of $XXX XX% increased increase same increase the significantly million and this to a quarter, year.

pipeline included follow-on companies new originations robust. our XX and new remains investments portfolio two Our and current

are balance conditions as economic us. such and sheet strength, for we volatile Third, currently preservation remain in NAV liquidity experiencing, paramount

long-term debt, covenant and revolving SBIC supported $XXX covenant million million million $XX $XXX free million of quarter debentures, capital free non-SBIC at structure long-term of Our end $XXX of equity long-term strong, of borrowings. was mark-to-market

portfolio existing companies Our total to committed million. are commitments $XX undrawn lending outstanding

also would fund available cash, II of in support of to due opportunities our liquidity SAK Our SBIC million the debt portfolio substantially regulatory our of funds million our of $XX $XX.X effectively recent years our bond SAK redeeming leverage deployed. that reducing with access of ability from accretive total been and issuance to earnings needed issuance. We and from our pending our XXX% when $XX new at million, By of yet million, to notes $XX.X years the baby repayment markets the capital the dedicated next be the quarter million million we end we fully not SAK net with $XX follow-on companies, be and XXXX, to million had and to baby week in bond our capital. our maturity extending new $XXX cost include $XXX quarter to while five our upcoming remaining opportunistic reduce the XXXX and our bond are the to end bond five X% non-SBIC will requirement three XXX% the baby new And exceeded when that does in with repayment of has demonstrated called, April. of

XX, our dividend Directors XXXX, of liquidity, was our May share per based performance XXXX. declared and on $X.XX quarterly which for ended the XX, Finally, overall the of paid on quarter Board June

solid the indicators XXXX saw with ended to performance as February XX, compared XX, and XXXX. quarters quarter performance This May key our

and million $X.X last NII X% up up adjusted quarter. is this year versus last quarter, versus X% Our

NAV is down $X.XX and months share and last XX $XX.XX later. detail Our is last $XX.XX from adjusted year NII last this XX.X% quarter. unchanged XX.X% per from down quarter. will equity share provide last last more on X% year And $X.XX down year last Latest and down $X.XX quarter, Henry from from return $XX.XX, from X.X% is our per quarter.

X, credits Slide assets risen with the over our quality years currently consistently of XX on ago have management one we see credit high, almost our can you and BDC the As steadily under non-accrual. remains took only since on and

over the our as as available deploy call trend evolving our same credit being composition to into this would portfolio. now this to back environment. With time, the to continue review like in Henri positive appropriately our cautious at of Our financial and is to we well results, our capital team that, turn as I performance management while pipeline, working diligently the growing

Henri Steenkamp

as Adjusted BDC of level Chris. zero decreasing from plan first ATM to ended year, last the Slide higher this our share second, was to the $X.XX in in with gains performance X.X% $X.XX highlights was additional as notes And changes per or a you, the share this from was primarily the fiscal X.X% May $X.XX, XXXX. increased million year higher and from and up accrual $X.X our quarter past were year's X $X.XX resultant last this Sequential from same compared down AUM last quarter offset from from other expense DRIP quarter. that QX. and second share the and interest interest X.X% per was unchanged to year non-CLO rates investments reflected debentures factors issued Adjusted fund last $XX.X income quarter the incentive on as shares NII weighted three year-over-year. net per AUM dilution growth. lower increase the and million were also from the coupon quarters, on weighted and offering for repurchases, million $XX.X fees adjusting share X.X% quarter this this the for QX, the with during $X.X both outstanding. When prepayments year last fee to average for quarter. on XX, million issued by to but common capital $XX.X There last Thank first. and interest by, investments quarter. for key compared expense baby earned since quarter QX. period interest year-over-year, last other for was further last originations calculation reflects metrics million accretion increase structuring, fee last adjusted were XX% and related up SAK of current The lower NII year's NII and average incentive decreased SAT advisory Across the up and bond offset income as and as outstanding

this not yield benefited is was X.X%, first and Adjusted unchanged In year. addition, last fee this this NII quarter to incentive from earned quarter X.X% from being compares the last yield quarter.

depreciation depreciation $X.X volatility and $X.X million depreciation on equity income quarter. on million and reflects, performance. tax and unrealized always of blockers, million million investments Return and benefit both net during primarily of and which of as expense is net net a the comprised on company the $X.X was indicator due in for of payments assets unrealized company's company's dental by weighted operations received gains. a gains. the realized million which SaaS from the the $X.X gain on as unrealized primarily or comprises the held per performance syndicated depreciation million on net by in quarter, from second, $X.XX unrealized a first loan an and also investments, in industry. on loss million to $X.X investments Palace market quarter the $X.XX or we in million this end, company's per share, broadly unrealized $X.X decrease million PDDS total $X.X across investments. the $X.X million company in For net first, net experienced us, investment, The on $X.X unrealized CLO of the investments, multiple The resulting $X.X unrealized from $X.X numerous spread Pepper average depreciation respectively, million million realized net remainder of gains million escrow resulting JV $X.X the share. realized Offset million first, $X.X loss and amongst net $X.X portfolio The deferred depreciation realized second, important And tax depreciation remains in the on investments offset equity includes unrealized

and an as basis, and represented and Our and quarter, debt million the expenses average was this XX $X.X X.X% from year and million incentive fees, return assets $X.X excise quarter. down income last months. taxes, Total for base quarter. last last to of total expenses, equity was excluding X.X% year on on financing X.X% last million unchanged $X.X from management last and annualized compared for interest This

has the net not that through since Of of management the note of almost increase from maintained. currently benefit balance at upward has work we Slide yet continued BDC X% by our shows cash, also metrics the quadrupled the rising margin our the all months, and income our QX while sheet the We have have XX Saratoga added XX, particular receiving rate effects of again increased statement past for the XX over and took and putting of appendix the environment. the amount is to to rate trends of also slides, the undeployed how end presentation significant run still nine Slide the KPI interest highlighting and quarters starting XX past in

from decrease on quarter Moving last same $XX.X NAV million to the was quarter year. as million of a $XXX.X end, Slide last from increase quarter X. and this a $XX.X million

This equity million quarter decrease JV. the our $X.X and positions of in CLO unrealized on depreciation is the

shares issued QX, an $XX.XX from the of at price as during shares During XX chart This down includes share, months was quarter. now which our no the per NAV and average $XX.XX end, past repurchased NAV share $XX.XX quarters. historical and per quarter. XXX,XXX XX quarter NAV slightly per of has the last also of highlights $XX.XX, increased ago our XX share company

Our has as per growth consistent steadily NAV accretive the and demonstrated has increased since asset net this share. increase value been in XXXX by

a share, NAV realized On to of in a AUM partial increase a higher decrease and the share top, you the to of other major offset income in increase the We fees simple by per was quarterly last NII history $X.XX $X.XX X, and share due of quarter remained as will in lower benefit $X.XX and per our net management at reconciliation in fees. from from interest consistent $X.XX changes at same Slide adjusted on structuring gains. basis. NII a Starting the prepayment and impact continue unrealized per sequential base see income non-CLO a compared to

undrawn gains GAAP the to and decrease half available offset the as cash, of powder of million. more $XXX.X and Slide and to Moving investments This NII secured the quarter of $X.XX SBA $X.XX this in facility. $X.XX totaled X paid quarter. than $X.XX available slide, dry undrawn outlines on debentures unrealized the of spread net dividend depreciation NAV the was for QX. on share between by end, credit was us which our lower reconciles realized per the

and our end three July already level been debt three end diverse years. when for all baby us cash without adjusted cost nature taking XXXX, the This repaid a called and years pricing, April non-SBIC due to is X.XX% bond by especially, we nature quarter quarter from financing, deployed with rising rate an amount conservative for has this bond and successfully and with SAK that on bond pro out the into on repayment XX, to fully baby accretive. account position, additional sheet. when public exercise NII million, that debt to in long $XX.X leverage non-SBIC and million almost maturing our the private XXXX, on fact $XXX overall $XX our million our very of XX, allows and $XX.XXX liquidity all its reduce debt that's low and term of pleased no to which XX% available need five access of be And accretive million with debt liquidity rate available X.X% maturity balance next assets to closed The debentures our our extend with both June that within of $XX in almost we available We our On liquidity of SBA forma capital debt available greenshoe. the environment. our remain of importantly called also million baby SAK, to XX, external grow the will fixed our sources of is including including

Our in also that that a times. stressed, can is during covenant be have we such no debt way BDC important volatile structured

value CLO now and X investment $XXX Now, at yield in AUM one I that of one to venture. would and companies, on like the cost, and have portfolio joint through our $XXX at Slide million to fund XX fair composition or X move highlights Slides million invested XX we portfolio. of review

as our last Slide is five X, months this percentage on fair positions. of this primarily BDC over core in respectively. from dropped by continued Nolan due X.X% can X.X% rising our first-lien the has value Our This CLO total excluding asset asset, is of market year. In to Non-accruals during and was out which investments offset total XX% spreads our with first-lien increase are how XX.X% is as rates and the of you our tightening of On in the in of see past addition our that well non-accrual period. yield of the quarter, reserved now cost to yield QX.

portfolio LIBOR flow XX.X% investments with Looking to significantly ahead, basis have rate, less interest our the continued recently, being of impact today breaking QX variable with through we rates earnings and basis of rise XX% points our or benefit to XXX expect from through XXX points rising month May three the our in to from earning of LIBOR NII. and rates and a beyond of

diversity CLO breadth CLO investments and outlines rate represents. And the portfolio. Slide XX-Q forma market XX.X% XX, pro U.S. can the yield that current from to the and also you X.X% performing to currently of reflecting The on diversified quarter-on-quarter, industry performance. increases throughout our Our impact The see is our our Slide shows current decreased XX portfolio current. are

healthcare, education, IT Our over real distinct services healthcare services. XX consumer large and a on focus estate, and industries software, spread investments with are

our to Of consists investments included and JV, which interests, of which an in our investment our addition as securities this are CLO structured strategy. remain investment In X.X% the important portfolio, finance overall of part graph. total in equity

over or interests that we of of the million over Chief of and carry total the from credit gains loss will For NAV performance gains is two-thirds took concludes for were healthy unused That turn highlights investment portfolio helped grow to ROE. our call investments. fully our in Michael realized reflected Officer I and combined years, to Saratoga fiscal $XX.X other carried had historical sale from of equity realized long-term has over net to review. our consistent gain of market. the redemption early capital our the overview due past was my sale over a an BDC. quality forwards portfolio of the accretive management XX financial these NAV This the when or now Investment Grisius, And

Michael Grisius

and on very We activity, only investment be abundant, XXXX, portfolio actionable the lenders to Credit are versus being volatile Leverage spreads. conditions but were current and transaction sectors the first where Henri. deal are a Liquidity In to a markets to off keeping continue and sensitive saw XXXX, lower exceeding year risk experiencing describe multiples slight rising our pre-COVID-XX are continuing High to of aggressive, remains year-over-year volumes borrowers currently far quite they taking our have the minutes market high very lower movements year loan update we our scale stance this capital. lower and you, I'll from in last large deals yields on take with syndicated much in tight. continuing than performance market a and then slightly be perspective last albeit of demand and still so market. market. historically of healthy. tight, the we backing are spreads current much comment Thank saw high spreads, more tight but volumes May, Broadly the market quality few and Since strategy. fundraising state M&A remains for an pipeline. but elevated. on calendar we harder half be use and seeing middle broader the

increases. quality cycles covenants. timing The other aware are for market continued our that assets. aggregate rates prospective most of in to differentiate successfully strong through We're And watchful position are capitalized inflationary Pricing requiring particularly issues, and and Saratoga equity existing levels has us And yields pressures part the and a second, has in when making labor disciplined are aggressive reasonable minimum looser portfolio. management disciplined thinly rate entering restrictions. chain team confidence we of and growing Investors in said, managed the and in proactive accelerated made decisions, absolute our with and affect companies. being different of covenant portfolio remain of base experience lenders that of how rising eye first, Although, costs, close both terms on managing credit deals and a a keeping still staying and wary investment of and and -- environment. such slowing themselves to very LIBOR continue in our growth metrics supply number could leverage being importance possibly ways, far so remained and as credit for have

bar to of shortly. capital yet usual, to as and Our remains existing avenue will sheets important far high business continue be as very to discuss capital, and we of has underwriting year us, balance pace a models originations. Follow-on investments find with opportunities with so strong a been borrowers we deploy environment an XXXX for deployment. continue deployment strong Calendar strong

quarter As last June, demonstrated draws. XX XX XX including alone, with follow-ons in ending months the delayed in calendar in last the

In quarter with invested we Portfolio to in remain multiple next to in month addition, our and especially actively management or our investments past portfolio critically and environment. close engaged expected contact market this so. teams, and be platform we close new volatile have the in have continues this in management important with two in we companies platform new companies

quarter, industries portfolio, in this XX% its of supported terms are fair their up cost of from After vehicles investment that overall except quarter, an is bolster portfolio. loans interest paying us we non-accrual pick strong its the that our certain for We our with on strong a JV portfolio in exceeds is Nolan recognizing that performed well loans, attributes according company X.X%. the enterprise CLO or by last of agreement broadly our our All assets depreciation in have of first-lien and basis time. syndicated of overall will as on on historically our our this unrealized our equity generally investment by across have work performance reflects durability. the for situations. period now primarily likely XX% invest value debt we and stress our payment that put in quarter that Nolan values this in believe non-accrual Saratoga's portfolio to only

exposure. We have no energy direct or commodities

of our strong revenue majority is revenue have of comprised that a businesses produce the recurring addition, degree portfolio of In historically demonstrated and retention. high

strengths We're only our Our years. over gains cost. approach as focused net to at Slide management portfolio percentage being We with the to its can each And into see and its respect approach characteristics. We at working resulted best accurately had thoroughly on you strong Saratoga. underlying to XX producing of We quality performance deeply remains a returns this our shareholders durable BDC understand the our as objective the top sought number has risk stay company of culture assess A with and of of always invest possible ownership at top underwriting to XX, a paramount has always the model. the over endeavored as of business term. positive space the and portfolio of strength a directly of with been investment businesses adjusted, order three realized approach in underwriting. at to as BDCs in list that long-term past the to and the on the the business long capital have appear accretive the

the investment our believe for end. and strategy upside also the Part rating we're demonstrated our portfolio as is companies at our Our as this equity as portfolio quarter credit portfolio, portfolio we continue of opportunity and impact served protection co-invest that of of only returns, previous augmented equity intend this yield co-investment and This one the when not when to slide reflects the credit quality in potential. meaningfully a internal and of strategy. of we in our has strategy our equity to shows XX% current highest given market rating volatility selectively our but on overall

higher leverage QX, leverage modest last able can a were from you multiples decrease a investments. risk portfolio four reflecting historically repayments Total we profile to have times, calendar relatively throughout. high remain been of industry Through our volatility, XX, X.XX leverage -- looking relatively see was maintain for quarter, Slide primarily some Now past yet debt recent that from on levels. at at to unchanged

the isolation, with return exceptionally value investments. considered business are leveraging never on exceed dollar of businesses confident risk investing focusing our we and strong in will Although, in the sustainably enterprise the we where rather profiles attractive of credits, last models

new illustrates dynamics. and increasingly this market changing ability consistent term, to In investments addition, over competitive slide the ever our generate long despite

calendar the new two we XX and added quarter, investments. portfolio companies second During made follow-on

Now continue moving experience to skill our focus led and on and Slide on team's relationships relationships become XX, sources development our mature that strategic to to set, new have business significant has for new deals.

Our but newly of this reflecting especially efforts remains of two deal top deals Demonstrating is in yielding to quality the development opportunities. business notable the the pleasing last months from due formed number progress XX that more line markedly months but as source initially companies a executed strategy percentage six robust years last to to has more pace. of results. our attracting notably, past earnings. focused from Most our year's sourcing the are we on relationships, dropped number over during What XX reflecting up COVID higher recently of us XX is is past new is that expand our focus portfolio

on gross realizations. you made unleveraged our Management Investment IRR XX.X% by Saratoga remains credit on solid. the Slide As overall can see of unrealized million is $XXX team investment The XX, quality portfolio

since took Saratoga the see of combined management. the SBIC our over $XXX is to right, XX% total and million on IRR weighted unlevered can the BDC unrealized gross you On investments chart

but has being not since was on view the Nolan current remaining change on investment the Group performance this this unrealized depreciation markdown company quarter. the added long-term moved $X reflects continue quarter of while Nolan investments. preferred yellow A we been been reflects term Palace fundamental to in-person investments. pay The dependent our unrealized is more equity for million This yellow rated and does our and Pepper have has of performance of current our new interaction to quarter, but now on they non-accrual yellow which recognition As for first-lien being yellow appreciation loan the two this Pepper of with this COVID, business. company, of of status the prospects to quarter also and this human investments Palace, a interest.

We and they sponsor to as are improve work working closely the the performance. company with

Now remaining and this unrealized $X.X excluding Palace portfolio markdown, above the total value total non-CLO Pepper core portfolio still quarter X.X% had of is BDC appreciation the total million fair cost.

approach has yielded Our returns. investment realized exceptional overall

see our first fully to funded. SBIC license is Moving on can you Slide XX,

has of SBIC team, second which license deployed. million be way really with $X There equity debentures of currently funded cash $XX.X $XX itself of been equity I'd have debentures of are available remains focus, fully of and And now. already Our seeing and still million remain our against while as $XXX and overall times million our is the CEO, SBA our been adjustment for the call To activity are equity. like summarize strength value the COVID-XX in especially with portfolio, quarter, of underwriting our team the to portfolio preserving the against to we Saratoga. and we and the world of due asset review proven subsequent on that diligence has focused and durable and quality such market Chris. to both volatility resilient of impact intensely and we platform at the underscores over and Credit flux, in primary market the confident procedures. and in back continuous levels This the my turn concludes the remain future high million our

Christian Oberbeck

you, Thank Mike.

to the our economic dividend Board level XX, a was ended continue paid on will The and XXXX. XXXX quarterly Slide on evaluate XX, dividend for basis XX, Directors on outlined the general of June least May considering As at factors. quarter latest both company

X%, total for XX market both negative dividends, impacting has the the volatility and index of generated This last total our which and industry. current XX, includes capital Slide months, to appreciation reflects the the Moving of us performance beating return BDC both X%. returns negative

performance on slide. term our is outlined longer Our next

the places horizons. of top Our both time half in five-year all for returns BDCs three-and

For the last exceeded the index. three of years, the our XX% return XX% return

the greatly XX% the exceeded our XX% index return. over is years, five While past return

volatility. recent performance we one one are in For of XX, three the context broader to the top and the to placed specific further Slide certain the see key the period, performance our industry of year also you can in performers metrics.

in We equity, NII and shareholders NAV continue by on our value such share yield market term the metrics this as per performance, quarter's dividend are return results Despite impacted focus to our receiving. which long reflects on the being growing have done growth, XX NAV market, NAV volatility accretively we XX last and be to few of the it syndicated broadly also the we one have to of by term share continue BDCs growing the per long loan grown quarters.

of on Slide Investment to size discussed performance help quality capital institutions. on call make to Saratoga competitive of is outlined are designed on community. slide this BDC a and all initiatives differentiated our the We including this investor there adding more believe will to our base, the attractive characteristics drive XX, are Moving markets that highly

differentiating and long and term, for putting strong and profile. long active the private NAV of historic risk and AUM baby include solid of at issuances, maintaining expansion access bond quarter, XX, with NII levels cost the make this our and ownership for and support public which the increased by and with to a one issued share, the historic earnings and long Our industry investments, our plus both characteristics quality management accompanied industry portfolio attractive ROE grade BBB recently to highest share of growing investment top term low new in liquidity bond term NAV yield, leading and per of industry high rating an accretive per

through tested the near and Saratoga’s challenges minimal liquidity serve confident time our our the like to to capital in sheet, to the portfolio benefit conventionally of credit historically like support contains and industries, team, I in will term. and all and with environment, underwriting cyclical oil call our strategy and historically, closing, ongoing and gas addition, battling that industry. well shareholders structure exposure balance current questions. future would now and market their in including and strong standards remain high We for the investment will our would long for us management experienced the In open In quality thank shareholders again

Operator

ahead. Robert James. Dodd I Raymond comes [Operator sir. you, line show the first Thank Instructions] our from go from question Please of

Robert Dodd

the for apologize noise. I guys. background Hi,

housekeeping you income quarter a I first, Group. that of reserved you five think Henri, Nolan said non-accrual. on So on I from when you that put months this one mean,

And out So reverse is so, you quarter? if was quarters income that previous this how correct? much that? from Did

Henri Steenkamp

then reverse on that books interest it was as onto non-accrual, the and There a two we we had it to assessed month put Yes. -- receivable out.

on So months there's balance total five three outsized reserve, was three one impact I not But (ph) the interest quarter. months represents months. said that for can off see as sheet. this five just five because months, of an quarter of a of months income bit as The reserve to instead this and the $XXX,XXX five months for you it's just

Robert Dodd

think holding the I days be multiples more I Got and opportunities on foot were reported. it. the activity or right seem you. good ago, to today seem XX And pretty was -- then, much to now. to deployments front you seems your that quarters (ph) effect be mean, environment, just think the Thank that find other that. the of had one spreads hard kind in -- in obviously, I appreciate in the leverage remarks optimistic It you that launch opening I kind something of

So in? could I XX you give comment, that ago And is here miss changed did us or is still something time over period? days holding the market any more

Christian Oberbeck

Maybe I'll start…

Henri Steenkamp

Yeah.

go Let ahead, me -- Chris…

Christian Oberbeck

team. hand sort well. is, today sectors. of and facing then, up a I had And then several cap while for all other market broad things terms think that, of A have example, what tech and sectors it clearly, in and things, of And held we we NASDAQ, have downturns, averages individual pretty performance off lot we're market in incredible to have like the

of companies. and And a sectors tale tale a different really of so, it's

in BDC kind broad and we a the have outlook on then are companies in we our And portfolio, (ph). portfolio more world. representative which our loans, like, broadly syndicated proper individual of, cap the have so broader large And maybe of the

are well. have doing We positive number trends number for the middle so quite And exactly, we And a well of in would continue we that companies looking of what environment. they have type our we know the is, smaller to companies happen don't addressed but a of going are of lot current a market. directly that the what's other at, and are of we would companies in lot do quite and to companies a we're anticipate

you types of these to other lot and kind a on. broader of kind to And said, context well stocking just companies want all individual inside a things, of tale that's alarming trying we're that? as I is focus but individual are companies, so, and doing there know add to it's and we still [indiscernible], a that are of which really of investments as macro, a what would of quite

Henri Steenkamp

Yes.

add to me Let bit that. little a

sure the the and So sees reacts not see of market, market that as volatile of people see real economy. the time very everybody so think macroeconomic people about that signs it's the signs you end our in because larger the some in with I'm it

And of time. It what our for happens you of instance. in the real of so valuation that's reflective in kind see CLOs

is the While of there's going middle between end in market, the of the market our doesn't market, perfect broader what's the and in happen market upper correlation middle There's which and sync. lag. on typically it lower a end

we're a support result, lot but of in the and of what to was a very businesses And capital course, is those of we in the of seeing smart are, are being, is they lot capital so, end people facing a about deploy to competitive. as larger despite think there deploy still as I our capital And what end it's raised you're of the market, market. where that available

in. about buyer, in you're they think to capital buy, if or I on thoughtful lend when asset or But competitive. decide it's being really to credit are that and nice credits there's invest disciplined a still to being which deploy a quite people

the volumes. good, win ones are business it the wouldn't on that now, sure pretty the that selective in starting of credits. But of of still make going But that respect. spreads. marketplace credit for time you're in on is tight lower going to probably to you're a history if and transaction some -- deal you're to at are fight them, right fairly terms being with being So People market of healthy cycles lot middle will through end in real I the signs that it's based a of bit a we're the expect last long early our of to see improvement

Robert Dodd

the last color. question, Got timing right, some you middle I market that exactly, it. of slight you end, say, is a start And to appreciate I point see that gaps. mismatch touches usually the mean, [indiscernible] three to between months. the just the six on and to next, mentioned the end upper lower

bid to difficult middle seller sponsor more or between months, it and you widen do -- the two between the lower market the and to even next too end hard more to in the sponsor, you and three expect buyer, is do the that So to maybe the ask seller -- of or company and call? sponsors over expect get six things

Henri Steenkamp

it's Chris. ahead, Go too to hard call. Well,

Christian Oberbeck

are And got Yeah. of uncertainty Again, it bid like slowing times be sellers a I thinking in of it's a in get widen, you But the used right widening way paradigms then about places. you and occurs, just kind think buyers ask seeing get kind and what of be, might are the change think what of about down in you lot traditionally you to you we're things of that a spreads said of right right? the These that are sort response activity. traditional to now. I they a then and thinking

areas. speaking in the broadly of M&A think sort large down is I

in or for lot on deals worked, been marketplace that people longer. we a what there's year going Now, on more our have of do a have working is,

-- And begun environment. is before today so like, this current happening what's what's they're market

discernible we're are the reason And was right closing the these an now. adjustment macro with at not that creep the are to some specific again, at things price reasons, into We're But all company. for on adjustments. system. of those There slight seeing one, – looking deals purchase the going any for

Robert Dodd

Thank I appreciate you. that.

Operator

Thank you. queue further [Operator Instructions] the questions at no in this I'm time. showing

Christian Oberbeck

Okay. we for us quarter. speaking look forward next Well, we thank to joining to with want everyone today and you

Operator

call. Thank This conference concludes for Thank you. you participating. today's

disconnect. You may now

Saratoga Investment (SAR) 7 Jul 222023 Q1 Earnings call transcript