FSKR - Earnings call transcript Q2 2020

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Operator

Good morning, ladies and gentlemen. Welcome to FS KKR Capital Corp. II's Second Quarter 2020 Earnings Conference Call. [Operator Instructions]. Please note that this conference is being recorded. Paun, Investor Robert with will time, introduction. the this Head Relations, of proceed At Mr. begin. may you Paun,

Robert Paun

Thank and Please Good referred Company second-quarter KKR you. throughout morning Corp. to XXXX Corp. KKR Capital Fund earnings II's as Capital FSKR, conference or may call. II note the FS welcome that that be to the the replay days. will release call for XX issued of Replay a conference is FSKR be is in recorded being XX, call Today's August the call. and audio included information XXXX. an on available press FS

has presentation Presentations. strictly the presentation any XXXX. FSKR with the to for from that unauthorized law. you to do Any outcomes actual filings or XX, FSKR's recent FSKR rebroadcast important to ask of available most Please is Relations Investor property is required and call its the information the addition, is its statements. posted supplemental unless undertake FSKR. refer materially we in this to statements respect call results to form SEC the these forward-looking prohibited. and conference June ended A In differ on does website note on the call that link its a with statements under not of performance this of Events cause could factors includes quarter update section for Today's forward-looking containing by to website so portfolio today's that Company's financial and and financial webcast

certain measures. non-GAAP financial In addition this will include call

SEC nature considered for should FSKR's was the substitute supplemental in directly prepared should measures, with XXXX. measures in reconciliations information be GAAP. GAAP financial a or filed on second-quarter in and found accordance in Non-GAAP XX, release such as considered the information earnings be most that be related August not isolation comparable For to with the can

copies To by these may similarly non-GAAP of not measures reported the companies. same FSKR's measures latest website. please SEC addition, other filings, the named obtain visit as In Company's financial be

Chief Speaking O'Toole on Wilson. Brian Dan today's will Chief Drew to call Michael. Chief Pietrzak, will phone Garson, and Officers, Officer Ryan on Financial now Co-President; Steven turn Officer. us be Investment Forman, Operating Co-Chief and and are Lilly, Co-President; I the call Executive Officer; Chairman Also joining the Michael and over

Michael Forman

you, during Robert, Thank Like call. everyone, conference KKR and other like remaining second-quarter To to your time. earnings companies, colleagues your FS are and say you, start this I'd welcome, of unprecedented all Corp. Capital your to that hope friends and the healthy XXXX second that our family, was to safe in its us a hard quarter the first environment. FSK The care fully team adapted virtual activities success full the on several months for Company pleased past quarter been positioning COVID the growth. how future a over work as operating team and has I'm world. working II's with operational

by a We advantage New asset defined the approval as taken the SEC. significant listed Stock step shareholder York second of have Exchange received to forward coverage ratio on the we quarter take XXX% and FSKR the successfully as during

X-for-X FSKR. during like and becomes growth ample With industry for provided Also, these effectuated - the FSKR announced, existing stock I one capital. we previously our we two as milestones June the with BDCs reverse well-positioned that, shareholders to start, liquidity in split of remind well-respected BDCs most I'd everyone as a insured to

public observers experienced country than much equity a rebounded ago. in challenges the such call account. result, months just information have this economies across financial would all will to state re-openings markets degrees. information all predicted world, few our recent contained have weeks, a and many faster varying renewed and per-share local In into In As have take the

a on thanks all companies in markets, stimulus almost the and plans one since challenges War the operational equity Great are World the hand, through are seen On current Depression, part government looking scale facing. rising not major II to

different hand, From markets sponsors portfolio teams On the as a credit other operating costs intently of his are liquidity, discuss Dan opportunities. new the management view a on will growth comments, perspective, in our detail world. maintaining cutting and providing and are discerning in financial focused the

the Our the equity entirely almost realities long the than the current credit focused accurately pricing the economic the as markets view is climate markets through of have risk more are looked and markets equity on term.

the markets' is be will a case, of arbiter more time view primary often is which As well-reasoned.

terms yielded the of second process In NAV, during quarter, our following valuation the results.

of widenings and majority the which by within multiple contraction. portfolio previously our depreciation was experienced impacted we our our portion of spread First, COVID-related

investments experienced we energy additional previously credit-challenged including restructured. were that and investments, and fully write-downs Second, in investments legacy certain

a further portion amount experienced effects a the that of by continues of portfolio be we depreciation Third, to of modest in the COVID. impacted

investment total per opportunities. portfolio in quarter, discuss call, of result of $X.XX While share, was during our our of detail during in depending X.X% liquidity from near-term debt resulted a net investment in share a $X.XX net expect currently valuation approximately a our quarter and liquidity to From income forward-looking by in with declined $X.XX NAV approximately the the share From the adjusted we with X.X% transactions basis. range per timing our Brian fee Shifting portfolio income we investment $X.X to results, per a net our will during maturities. no value perspective, quarter. share operating was his in summary, third-quarter the second on the on to which ended our portion perspective, billion meaningful the decline quarterly per

As for of to XXXX. $X.XX on NAV current equates yield annualized share our the a an such, $XX.XX per per of of which has quarter, June of share X.X% distribution XX, our third as declared Board

rule. updates, AFFE the are meaningful the In fund SEC's requirements, to terms disclosure and to fund of mutual exchange forward strategic see regard proposed which BDC industry extremely recent we with modification pleased traded progress include to

we several industry. an Washington the years last the in BDC have behalf voice active of maintained For on

significant and over both appointed see officials with emerge We to and elected a years. efforts. have presence maintained is others' It the from gratifying tangible results also ours

to call Dan, to take minute the entire like recognize I'd the over KKR turn to I Before reteam. FS a

people, these an who you metrics. work in on group capacities. not the but to across their of leadership an are dedicated strong, know you and unique FS of this making met. franchise the many They such team KKR BDC individuals, own individual They have their unique over focused, call, Some of them exceptional leader as represented - and multiple industry hard-working work are of XXX

are of of the to our achieving turn and can call the And these to with because quality I our While rotate that do over we we assure goals individuals. still there work the acknowledge portfolio, as work that is Dan we team. you I'll to closer

Daniel Pietrzak

Michael. Thanks.

I proud formal I are would done over the am of last Michael's my months to a like begin healthy this comment. safe tremendous. during the do I a closing been have has this reiterate We unprecedented your you, and strong I team several be Before they and have remarks, that work your time. also to part friends hope family, remaining team. colleagues your and

its federal remains unprecedented the environment, uncertain coming to substantial quarters. by government Federal While providing the the and recovery levels are economic an for navigate which real over the Reserve, a prospect macroeconomic possibility feels of we reopening, Actions continue governmental which lurching mandates. market, it support forward as liquidity of towards method to support and regardless is own the stimulus offer of though pillars for and of increasingly public an economy

the the high-yield quarterly we market. observations high-yield unexpected billion. issuance framing terms fashion, analyze the year a In $XXX activity second basis, few On established what XXXX represented of the quarter of bring. helpful year-to-date contemplate issuance, also a a balance record to high-yield loan As by record a leverage billion. has of with $XXX in associated it and level the the of somewhat market is a may start

level crisis. However, represents high-yield the below activity secured financial interesting the Only numbers XXXX for the have high-yield of details issuance year-to-date been marks since financial of the to of crisis. mark XXXX. level of the secured, lowest one-third fund first contain bonds bond which Almost headline highest And which XX% M&A year-to-date bonds are since these specifics. used financial since sponsor-related time the XX% the dropped activity, some

as reserves helps it inform even total as January that $XX time March to loan fourth-quarter Again, unprecedented steadily loan of issuances of in eclipsing market, in per was have billion the for XX%. have companies building been the build because pace hot flows $XX percentage a between been level, new loan slow a fund zero and which mutual billion month. early range as operating Understanding quite since outflows increased us record back level and a XXXX's of XX%. and negative Finally, leverage important cash of of February, been saw to has cash-on-hand in debt funds is at the about an The market high-yield market.

data competing XX% a CLO items: addition, issuance compared focus tackling One, are second, Squarely the the as to of activity our approximately portfolio portfolio assessing businesses; involve establishing dynamics potential with with companies third, view at companies; landscape for acquiring approach. future the existing transactions. In XXXX. XXXX many these M&A current and origination for Across new two in on merging following portfolio market positions for significantly effort points valuation continued liquidity solidifying reduced and market a year-to-date multiples on see we or liquidity. companies financial key sponsors down existing is middle could and which

two sponsors of This is likely the pipeline three view of are at the Our pick between are the XXXX so. expectation steps month drives said, remain That quarter. seeing and balance I M&A the depressed steps until our least our up outlined. one last over fourth or that are we most volumes during just generally to

our level XX having public June issuers, involves at protect according to in yield. on we the XX% names. within S&P. not we $XXX macro only that or Despite As that by principal an at of most were basis new we the It market were understanding par risk the follow-ons a focused which combination million reasons which a approximately some and the investments leverage COVID market of points focus underpin originated to very are the additional financing to of of does rally compared picture investments. the quarter, historical involve existing the new of overall for as above issuers during investments, stretching modest good the all know on of loan and The end companies with our of protection trading structures markets, platform

total complexities the to face diligence concept remain issues combined equated associated million business and to approximately due teams new associated quarter. of understanding during and Despite on making million data portfolio selective like of face extremely in a positions net continue relates given I travel, operations. Our during reviewing asset we time, second the net of million to to given would with especially reduction $XXX special liquidity $XXX a added share with and the origination process, performance. $XXX underwriting takes sales our repayments commitments point strong One market Even of with investments meaning doing meeting with today. the to this management the our

of wanted to Now we FSKR that since mark FS provide we performance date. our some have the advisor, investment to the the and passed two-year on KKR establishment context

record are the $X.X XX, made and approximately manner of we through more with conservative formed, illustrate structures to effects track the XXXX, new data includes of the follows. the approximately Since cumulative Our FS have we be June XX, and positions. in billion We more believe these investments operating Advisor toward through we COVID. new $X the was experienced have point depreciation, X.XX% defensible originated investment investment portfolio companies KKR From which and we starting of XX what believe cumulative investments is points billion which basis December turning of depreciation. points in experienced we as same XXXX

steps perfect, of standpoint. While not goal I management leader we taking an our are industry an believe will from becoming commensurate we investment with be do

our quarterly is presentation, Finally, slide earnings information this on in investor I XX. should and note detailed that

portfolio quarter, FS assets In Advisor. terms by platform. of the the KKR the total of been volume still investment of originated portfolio in XX% portfolio XX% origination comprised KKR credit modest approximately assets And rotation, the approximately our have our during given originated by is second of

second requests of companies activity, XX% granted portfolio these portfolio while expect relief for approximately as have certain have companies And relating the our the quarter we that or quarter of today, our of several may the we of request year, early have Of balance portfolio X%. have as capital through operations of also accessed to asked some approximately we these of in terms sort stabilized. revolvers seen portfolio In of their COVID. revolvers first companies waivers repay and additional

Brian from forward-looking of our names. KKR the on a several portfolio. across seen our actively engaged with market, well. we have specifics. times That and discuss scale existing world. are multiples The are even believe companies KKR into outlined companies believe transactional both and and for where will And emerge exit in Times platform we are a scarce to two injections the portfolio to ranges is over we industry investment and that on these companies. updates turn to operational real-time three post-COVID be within the establishing as equity some and knowledge, to transact trust, a portfolio purchase expertise is From relationships view capital and will multiples and value I franchise toward addition, with I'll on elements price stronger steps for portfolio receiving standpoint We where earlier. capital more like In quite additional credit all do perspective, hinge remain new that move new basis to for and relationship in we offers well-positioned sponsors a assets, more the call relevant seeking of those existing sponsors and credit that a they

Brian Gerson

Dan. Thanks,

XX, As value approximately second XXX fair portfolio, companies of of largest $X.X a of a represented XX results the last fair investment value This with XXX At March quarter, the several top compares portfolio to of XXXX. end consisting for companies. had quarters. our billion, portfolio and XX% of our which line as of portfolio our in remains June our billion of companies the portfolio XX, $X.X

as investments was approximately XX% XX, From portfolio compared The average in the basis. consisted to and accruing investments was our lien the secured X.X% loans weighted senior quarter. weighted of end the of March XX% a as our to of during at on senior on debt decline represented XXXX, portfolio portfolio as our the in on June average of cost The of decline secured focus perspective, a portfolio first primarily to continue our value of June We as on yields second due XX, XX% basis X.X% XX. and X.X% quarter debt XXXX. of a at LIBOR nonaccrual nonaccruals our fair yield

on of with a quarter value four cost the we million nonaccrual placed and During million investments respectively. combined $XXX and $XXX fair

mortgages X and flip is nonaccrual's during largest FourPoint legacy Arch residential Income wind Fund the for estate investments, were single-family in Our quarter and Arch two real and Energy. currently X Income fixed provides Funds down. investors

per applying a flow impacted on which principal prices return. of on income account combined On we As to being receipts the cash negatively approximately such our E&P the basis, $X.XX commodity of of legacy portion nonaccrual a has are we positive by a Energy and investments amortize our which investment quarterly are investment restructured. been expecting is still in process share investment a for new basis. net is FourPoint

apparel, consumer effects investment our leasing, sectors industry healthcare to COVID X.X%; largest Collectively XX.X%; of X.X% concentrations and durables and energy, mall-based capital services, the exposures: X.X%; in terms traditional and retail, include of and portfolio. sensitive X.X%. X.X%. are have In for diversified these financials, which commercial services, XX.X%; services, X.X%; exposure our more we software the following believe aviation account and The goods, of of X.X%; equipment portfolio XX.X%; and commercial total industries professional we

quarter the initially driven and positive widening first of the for as inputs The general portfolio $XX quarterly by $XXX from quarter. or The impacted market experienced our certain results across conditions improved Michael details follows. results portfolio operating million during million investment the valuation quarter. we valuation a mentioned, during a combination As during was declined primarily our with by second the by investments X.X% perspective and valuation appreciation of second associated spread are

of believe these basis. to move portfolio investment cost as economy As back will names to in continue portion the stabilize, continues we this increase our value our towards

Our following. the portfolio is appreciation by offset

Advisor, the First, fully including certain FSK previously depreciation to challenged and of $XXX Care consummated and which investments were million of legacy restructured. prior in certain were investments that approximately energy all credit investments,

COVID. and driven Production prior positions decline Group, Mood to Media $XXX energy pandemic. Resource quarter the specific have challenged XX% impacted our in credits investments investments, $XX by The in COVID disproportionately Of result by our the the million been Dairy. challenged and declined Borden valuation investments valuation Second, previously of three million approximately effects are: certain three legacy exposure. were by as legacy continuing These during was of whose credit of of legacy with the the total associated onset and a decline therefore the and companies by

[indiscernible] to full for Specific Resource However, Mood maximize updates ability including Borden are recovery Dairy Production to these platform and we the Media believe the Group, the and we the on resources, follows. leverage dedicated a KKR have investments. team as

recapitalize in rata XX% equity Dean Peak $XX assets. was Loan Capital by have diluted Partners, partnered credit fully FSKR million the common of Borden on $XXX its Term a them received to equity equity A of a which are the pro common bolster maintaining exchange a Resource consensual substantially term a term comprised upside substantial share used for along receive burden of million reached private of that. term while a that significant loan Closing Dairy, balance to the have to loan, and for a loan with of and expected transaction of XXXX. of to company. position of bankruptcy. take-back firm occur reduced our sheet of Borden par FSKR balance interest recovery company equity. provides Gregg agreement we the million and In path We original out definitive a the will of to Foods, preferred beyond On a debt is for we restructuring Engles, liquidity. Production The $XXX founded with Group reinstated former a purchase package held fall to securities our a CEO the

Approximately In share prepackaged recapitalize XXX% who $XX like XXXX within to pursuant in and lenders to XX% caused that pro addition, around used the a the a of COVID world, plan was second impact wake lien Mood been pandemic. by and FSKR customers company's supported of category by XX businesses the diligence, business the we lien industries. million and XXX% invested and/or company, restaurant, investing of that lenders Difficulty] in B others comprehensive and the the reorganization submitted falls business July operate imprudent [Technical on Term a the the RSA concluded of the or aviation equity the After its first retail, of into under its many travel, be faced resort, conditions, Media's company. substantial has, especially of Loan immediate an was that automotive decision. adjacent XX, rata additional into upended Media confirmed would severe to Mood which hours current of dollars.

the However, support have our received Borden series combined we are balance a market cost a healthier Resources, and warrants stabilized and basis and in XX% blended Production in hopeful Mood exposure equity the will $XXX energy help combined have of fair with of a sheet the million of a connection that and plan of Media $XXX recovery. value of for up we value the more with representing with environment a to XX%. an million, aggregate company have of

depreciation behind it As through the names, us a we're that difficult beginning legacy to working has while standpoint. a worst believe is result, from these been

impacted Entertainment for sponsors employers their reset live with valuation the of rewards financial to and companies the quarter equity of call entertainment by In also effects capital many the an We on in this product our private covenants $XXX response an COVID violating not travel the examples infusion specializing COVID-XX facility. own equity own remaining hotels $XX the company's million outbreak impact as leisure whose employees Benefits credit companies its on the jeopardy Two entertainment spring within investments. retailers, who and operating injected first reoffer to of to as partners recently pandemic. support Savers corporate tolerance term has of portfolio operations, this and during credit their Benefits million amount platform of a have company of received and as programs. million declined are Group. continued the expected the perspective In an and they North by result light COVID been to performance, consumer vendors Entertainment Savers adversely $XXX retailer reset equity in Certain brands, lien company's we thrift face Savers, and in is conjunction The lien million financial exchange well the and to pricing sponsors the are shut-in more from to sponsor, with our an we stores as Group covenants with to Steven for-profit of in provide protection in of additional the results of e-commerce were And liquidity, type other financial offerings million the activity benefit. incremental within employment have a Like detail. corporate turn back from majority to America. the then over covenants. and first junior provide reporting a infusion $XX along to that, include of to largest loan discuss We from received Turning call the portion I'll the products during on investment. rights. in operating $XXX improved credit from pricing the enhanced with our

Steven Lilly

million in related $XX the The following. our investment this quarter was to income decline

$X First, the reduced LIBOR income in reduction interest by million. our quarterly

current reduced by quarter previous the approximately income, Additionally, and during sales PIK, we and and interest both experienced redemptions million. our cash which $X

of Nonaccrual debt XX% average investments reduced assets have interest points. our floors our floating-rate which approximately income by basis $X reminder XX million. a As

commitments of $X joint fewer by income quarter during an fee our our made as declined capital portfolio. $X dividends increased from venture by owing million and million we in our to Finally, dividend income the significantly increase

$X our due our value in drawn basis a follows. the reduction liabilities bridge investment quarter to floating-rate. a declined fees reduction quarter quarter-over-quarter The is we overall benefited from by during by on in during NAV as the on the detailed $X million the portfolio. LIBOR per share of declined XX% as Our are of interest Management million expense our as approximately

reported Our starting increased $XX.XX NII XQ was $X.XX share. GAAP of per XXXX NAV by per share of

NAV spoke, activities was XX value, and investment our these $X.XX which sum of in portfolio's our NAV June which $XX.XX. per by the $X.XX totaled second-quarter per decline results share share Our add our share share the forward-looking per From million, $X.XX, about of per The NII our from of perspective, per share approximately York share per reduced the dividend in associated Brian of or guidance a with bridge adjusted per to third-quarter New as fees Stock $X.XX of NII includes Exchange $X which back share. follows. our of our listing $X.XX, $X.XX on the is to

expected relatively to Our is LIBOR partially rates recurring positive interest offset deployments. net income lower by flat modest with be

approximate asset-based The during will the income interest results venture and million our decline our quarter per a LIBOR. $X dividends expect which third the $X represents million joint third an from combined positions. quarter. to expected and from of of in fee expect dividend of expense approximately reduction the by increase $XX portfolio by expectation increase $X.XX to we approximately these we an $X.XX select second during benefit standpoint share of the finance third approximately quarter in We quarter, the From expense driven our as activities million in combination NII from during

to equates annualized Board on XX, net Michael asset share. $X.XX per a earlier, value our As has which announced a dividend yield per quarter, X.X% third XXXX mentioned for June our share the

repurchase Though to yield more term net what quarterly due expect we XX, quarter during such in we are XXXX NAV quarter-to-quarter long will is where swings approximately less share our on our over began annualized July operational the will business expect in than the experiencing standpoint, we volatility be $XX a than a under basis this greater acknowledge yield per be greater Through have share. in periods. our $XXX we million minimum As range X% normal on would quarters previously we the a we an of certain currently or fluctuations to our announced per what as this executing In reminder, may resulting to repurchased asset shares program. million COVID-based value equate experience from dividends as share there program.

the In levels side balance of are of equity levels gross are line in debt as our sheet, XXXX. net right Both terms first the and of our quarter of and to the XX% leveraged XX% with of respectively. our end

approximately of our value equates percentage. liquidity to $X.X a billion available investment Our of which approximately of XX% portfolio, the comfortable is very

structure capital average with cost overall of X.X%. Our XX% approximately an is secured weighted of debt

commitments million Finally, of commitments from revolver XXXX, finance with and an million portfolio. commitments unfunded $XXX which had of June related of approximately our debt we unfunded as XX, associated commitments million represented $XX equity perspective, unfunded primarily facilities to $XXX asset-based of

our certain unfunded repaid are and of fundings $XX including quarter. majority During in during situations acquisitions $XX The debt we or experienced the being amount collective second threshold for consent. expenditures therefore and performance other commitments equity subject under of quarter million approximately our these capital commitments generally approximately or with that used the tests, million to specific of

basis. do call will be result, the meaningful questions. while back a drawn believe I'll a any they in As disclosed Michael for call purposes, a we with the our informational few open for quarter-to-quarter turn on for in XX-Q before capacity And we commitments closing not these to are comments that

Michael Forman

our KKR by to of in companies close portfolio. believe overall Steven. The economy operating the FS Thanks, well the as the existing tilt On with flow high has streams. are within originated both investments experience, like beginning positive team, FS platform we in to I'd healthy as quality entire reiterating KKR cash we behalf stable

NAV investment legacy we beginning back settle remaining move our positive of during to to begin to the quarters. future a pieces to work portfolio a way perhaps the point our where move investments, begin standpoint before share we As in valuation per through will and from closer corresponding

high job Our originating investment done certain an new quality assets working simultaneously team through has positions. while excellent legacy

operator, COVID BDC of to the with completing the normal, As we and would the our also a world looks that, fully for to transition look to new call finding franchise. our harnessing portfolio power questions. open like we forward forward And

Operator

[Operator Instructions].

Alexander first comes from with Our Casey Compass Point. question

now open. line Your is

Casey Alexander

One, time revolvers perhaps Can more I difficulties of have way those the side find this perhaps some out a the menu the little a it think enough a we drag you into same also on me leaner, little of structure? pin unsecured questions. are on please? some call. a understand maybe technical first I at of give savings bit with generating liability two to I expense the liability What Chinese interest that, how pulled the you - the compressing sheet. the color something and balance of got on side on

Daniel Pietrzak

menu. comment's Chinese your FSKR. on together four put think to form I Obviously, entities we've fair the

I goals to an are done February. to to work were fortunate long-term side get here. unsecured on in deal liability think continue We the

you we've an of where a should start target of have we of sort got in percentage sort I here. those really go definitely think up amounts and are as expectation probably to I goal think more But FSKR. look optimizing a

to forward. is a on I we I wanted good think fairly bit more probably move and the think a are little we bit little rates be as these attractive, but the news simpler unsecured

Casey Alexander

policy to like FS' relates to great, Okay, and Michael, note I'd And leadership Washington you. thank it as secondly, BDCs.

made AFFE that. and expand on people appreciate forward. don't potentially of it a to the and impacting could that the FS' of this little was cost developing if I you level commitment was how on from point progress and wondering more the and depth you industry see lot think I a

Michael Forman

that. appreciate I

and spent they're leadership time we We're the a As lot feel addressing the Commission. certainly a optimistic. this elected both with with some this bill and modernization elected we on constructive BDC of the with you lot Commission's on issue of time appreciate direction spent conversations about pleased with know, officials officials the and the We that this issue. we very issue taken. are has guardedly We've and had that and strongly they

are it I of we is the pretty and think investors we about that solving the community believe the all investment feeling best right now. issue interest in and this good

we've leadership that year So, we'll we'll the of see done take taken. to continue see position end to - we'd before stay and something the and the engaged like always

Operator

Instructions]. [Operator

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

is Your now open. line

Finian O'Shea

question the we'll up that developments. Just is again, as recent on, that - it rule warming are to you momentum proposal? or Are to follow-up your AFFE there on relates AFFE just full-scale get the - comment - for it suggesting or Casey's the is appreciating

Michael Forman

we're the Commission might is get there in we've We And, see issue lean to Congress working it's Commission as we that for pleased done. the really long And think think is for time. a in important momentum. good do the indicated, doesn't that this suggesting We industry I'm and the Casey action. investors. that's taking what on believe for positive event constructive this the been something

we're So, we and working with are elected try working with the get Commission officials to completed. something to

to like, best predicting predicting we're going And I we're that's we this but and momentum are something think not folks not there. out the seeing what that recognize investors' it's is So, look with interests. when really we're pleased the in that

Finian O'Shea

capital of obviously capacity. balance absolutely has group? origination. of A and private the any I sheet that FSKR opportunities or credit beyond little type elsewhere just six be more on special is or question Was Were has say sort lot standard answer. there markets there Yes, agree. know was, any capital lighter FSKR a think, did a a origination FSK, or been the that at other context commentary on I the so that follow-on, any could you lighter? looking there? why that was was opportunities But little

Daniel Pietrzak

one just start, other in of FSKR. entity sort here If think, and A have, to balance you relief necessarily I sheet in attractive your the position liquidity No question the there. works. We own answered way position follow-ons. numbers. an magic the the think to play the exemptive real entity relates do only asset lot of cannot to I it was

got to going to be risk look we've And that. cautious on are use that. to capacity look obviously but do the We to

In I terms would direct call of different we lending. deal beyond things out are are there, what or unit regular looking tranches flows at

We are open for risk.

the origination you'll the numbers coming to But really in just than the got coming we've think that quarters. footprint follow-ons. of that. do some Hopefully other I board nothing see in on

Finian O'Shea

that on And see been set employees fund invest. sure. Okay, Has you a should to we force and just active up form for yet question small the for that?

Daniel Pietrzak

obviously plays. the around advisor plan plan in co-investment well and supplement as disclosure you as question would've the earning where seen the the some Company-sponsored Fair

managing we in from are our disclosure that a that is past, If vehicle you directly. recall not the

So, it's third-party managed.

the started You wouldn't would shares. that entity to Form accumulate as But Xs I the has to see that. it say relates

Finian O'Shea

all Okay, for thank you. That's me.

Operator

question Rick with JPMorgan. Shane next Our comes from

now is line Your open.

Rick Shane

due your position You Does the running compelling terms challenges in attractive? syndicated transactions? agent of a leverage deals or now, diligence. in where in and diligence right there an it different terms of it physical unique conduct how make of more environment transactions in broader make guys having KKR are obviously more for you is it you? Does process liquidity shift given of club sourcing this participating market. I in Does approach invest the so in participating available investment to am the is wondering,

Michael Forman

question. bit unprecedented times Obviously, are we in here. of Fair a

But Just two obviously KKR where of participate to the touch sort things, not KKR I are on in we allowed is think things. to sponsor. deals

as being I and think home done is risk. does to I as working team on from people there's aren't think tremendous some pre-COVID. are the we to make think Obviously, there of a active harder. been I prepared job things traveling. hindrances get It But we've

for think company what capital. business to is that lender where Those would we those I in and of that are looking easy found or situations call and a the incumbent we more time. sponsor needs interesting been obviously that to pretty handful some are I We've names very diligence. grow

want just with. we may maybe we a get bit reality are find But think I makes ourselves to way is little It we deals do. certain that done comfortable we things have the will So, think to harder, going things to make the to a to get adapt environment not in. we're I it certain

Rick Shane

do transactions you disparities? information that guys able that capture the And but finding where actually makes level it. Got that exemptive you sense. I are the allows meant process And had release, do to - is you the that - know because work that's of there. to I out risk there is premium feel look, you additional are you attractive But that of

Daniel Pietrzak

this. Well, I would say

do maybe tours work. transactions site or think I there's there. trying couple via been tours done there's two to One, in level we're plant of the there's actually been Obviously, where I of a same think Zoom. points

adapting we or moved, the say as in live technology. I world all So, would documentation to favor. and the are moved have have would people I to say about well spreads as that's diligence. think lender's information that think terms I the the I don't

that's that looking handful private been as people supposed certainty to volatility of to execution. are regular we've private of looking And space the are way capital into make and way, that dislocation supply/demand. are do. credit and syndicated for to into there think market I also we - look what going to pools have credit And just seen is on I may like deals of capitalize where is market their more think about this a environments

Rick Shane

so times. well. all Okay, And you much. I for we it's guys as unprecedented are thank think of sort of you I'm sure tired exhausting

Michael Forman

I appreciate that.

soon. I think back all we'll that's get right. Hopefully to normal

Operator

for I'm further remarks. at showing closing the to like I'd back no call queue Pietrzak questions time. in turn Mr. to this

Daniel Pietrzak

today taking and the thank everyone, join time to for for your questions. you, Thank you

for enjoy very do follow-ups may rest Thank safe of remain you available any hope and summer. you and that healthy the you always are We the you much. We have. that

Operator

call. gentlemen, this participating. and Thank conference concludes you for Ladies today's

disconnect. now may You

FS KKR Capital Corp. II (FSKR) 11 Aug 202020 Q2 Earnings call transcript