CGBD - Earnings call transcript Q1 2020 | Carlyle Secured Lending, Inc.

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Operator

Ladies and gentlemen, thank you for standing by, and welcome to TCG BDC's First Quarter 2020 Earnings Call. [Operator Instructions]. I would now like to hand the conference over to your host, Head of Investor Relations, Daniel Harris. Sir, please go ahead.

Daniel Harris

Thank you, Operator. to First welcome Call. XXXX and morning, TCG Quarter BDC's Earnings Good which TCG night, press quarterly with of earnings issued results, available and copy Last an presentation release we website. Investor BDC's Relations detailed earnings a is on our

inherent undue we is made future Following call our based time. the and question-and-answer assumes no These session investors. webcast, on those website. should current our available today on and guarantee XX-K management any a expectations update section results to Factors reliance Any hold obligation for our cause including will and annual in and from placed a statements and forward-looking do involve to be analysts not on identified could performance TCG are remarks on statements institutional statements materially be at forward-looking Form risks today, that indicated. those being BDC of any report This not replay uncertainties, Risk actual will differ them.

I'll With Officer, turn Chief Executive to Linda Pace. our that, call over the

Linda Pace

you, and for our us on XXXX to thank this first everyone, Dan. morning Good joining call results. discuss you our Thank morning, quarter

Officer, the and our Taylor is call our on Hennigan. Chief Officer, Chief Investment me Joining today Financial Tom Boswell;

health communities and economic and current want safe on workers, our of EMS and to all us crisis business, professionals keeping our start health The care global before and frontline the I unprecedented for is we focus operating. by thanking

families impacted the this by thoughts all Our people that globe health are with been have the across of crisis. and

our remarks X Carlyle. like of investment been And health to supporting our I'd position and at portfolio teams the areas: of focus focus has safety on the our remains and my strong highlighting across priority remains Our the quick the taken crisis; results to on equally first, the today as last entered a with important, companies. improve operating our we and actions a focus third, and we've from over flexibility. with we're as benefiting discussing second, of company our our financial leverage review our relationship how Carlyle; and of quarterly month

of entered as we I'll by crisis. discussing the strength start our platform this

changes process. began XXXX as optimize investment with a course Our we And result, company our our the worked in to as good and portfolio a improve strong we implemented significant hard XXXX momentum. position of over

Our portfolio first diversified, an size to XX% first currently work loans of remains X%. approach construction with unchanged maintain high-quality a comprised lien less average lien portfolio obligor than

to and indices. have have cyclical We the sectors market half exposure portfolio the strategically our to positioned of

no exposure As and a sector. result, have direct as oil X% in to invested gas we and upstream just we crisis, over retail enter this the

And is in worth our historical the experience call, some underperformance level on CUP over what unitranche which exposure addition, the term. that quarter's turmoil. recent to say this realized portfolio is That we prior of longer driver market reiterating it last to not to credit last-out highlighted we program. losses A nearly eliminated our of is won't

deceleration, a is course, will. of remaining there high economy Of The uncertainty. level in and stages U.S. early of sharp a is the it

XX% quarter, of few like we borrowers our the as duration Ultimately, surprised this dictate crisis so level quarters. would be sit of volatility as across said, positioning. we impact we our will payment not end But next here first some portfolio. and the regular of the of the over our made That depth of payments the by today,

operational us investment to access most Carlyle match. and simply capabilities, world-class our affiliation can't provides Second, BDCs

us and teams, competitive accessing terms, changing workout navigate benefit we experienced advantages government which instance, effectively We've and regulatory of team centralized, economic rapidly benefit attractive possessed on and professionals. and For we economic capital deep in from a affairs from help dedicated environments. Carlyle's

experience Directors. it Carlyle's already benefit shareholders. earlier April, With we to several both across our view Mark's of team, Jenkins, cycles, experience a Mark strong for amount a of of Board an Global our credit tremendous company Credit, addition, joined and as brings and clear appointment years of Head in over In XX our

overview and on the Finally, capital results quarter, to let our dividend of an position. for me move

As $XX.XX several declared generally last earnings at quarter. quarter. generated asset we the metrics value of for declined top And $X.XX. quarter-over-quarter know, quarter share, ranges for you share first first dividend per alongside ranges. prerelease per of Net income the results from our our $XX.XX We investment XX% net of to end finalized previously $X.XX regular

$X.XX portfolio X/X NAV $X.XX yield nearly this The of to experienced market spread from was that of due accretion share and repurchases share. with in losses, Our benchmarks. quarter widening unrealized loss realized to per

we quarter, have our million $XXX shares of million utilized repurchased $XX inception the and today million in since $XX authorization. During through

in However, and is current preserving the objective environment or capital repurchase that a we believe to expect slow activity pause quarter. we the second primary our in

to and balance we believe TCG opportunity. significant significant investment represents continue current not earnings our BDC's stream said, and sheet That does value of capture share a price the

Let dividend. shift me discussion a our to on

we since a every income first IPO, As regular quarter. trend previously company has quarter our of dividend mentioned, continued earned which have investment our excess net our the in in

evaluating we our For dividend provide future dividend regular quarter, are will of Tom $X.XX additional color how the and on share, we levels. announcing per second common are

of severe end. of at selloff Regarding our mark-to-market moved leverage the outside quarter markets temporarily and range target capital leverage positioning, us impacts

significant we steps, we have However, selective leverage. last reduce proactive report to over to our taken pleased that asset the are month including sales

will target weather opportunities. Tom are net take to We also to X basis, now attractive investment advantage balance liquid within detail, operating and and on us our of X.Xx. a feel as that our back downside will new we range both of sheet And position well-capitalized

inside investment announced We and yield dividend by immediate extremely in of believe and no we $XX that instrument with yesterday economically will This common we be the in at shares. struck conversion to our closed Carlyle. is its that equity CGBD shareholders. impact attractive $X.X. Furthermore, million of preferred form this convertible CGBD price dilutive a a With a

creating debt capital facilities, existing the to if our Furthermore, as cash capacity future requiring financial preferred payments, under well increases in no positioning and covenants no equity, needed. markets meaningful CGBD's the instrument having access flexibility, significantly us third-party

ownership as-converted stake an investment CGBD held with we alignment XX% believe employees its by Carlyle, shareholders. Carlyle's and founders, strongly with approximately reinforces this Finally, of

Given of the economic stress nor Rather, ample duress. even plainly since onset proactively the last we sheet environment, maximize scenarios. neither were flexibility asset or of severe that most that balance in of the CGBD's have to capital month moving under been though, to the form the maintains the sales value raise ensure yesterday's and aggressively state conducted any crisis we

we very well thank not do positioned. of currently holds, future and know we like strongly you to we I'd the what While that your each time do for feel are partnership.

now Chief to Let call hand the our Boswell. Officer, Taylor me over Investment

Taylor Boswell

the on you, morning of and interest and CGBD. call Thank this thanks support Linda, in to for their everyone

underestimated made. Our months COVID-XX vastly last was late in And threat, that markets was and earnings call tightest and in a has years. At difference their were credit a time, economic February. X health what at

XX experiencing by credit we accompanied history economic in largest shock compounded selloff second this a the severity has suddenness, in the Now by been years, are crisis of its leveraged markets. recovery on cautious an of in with from remain Carlyle largest contractionary the environment. a today's The recent at we asset the in the economic up reversal fundamental trajectory the to sharp rapid right of world Despite weeks, economy. into values

the but by only we earnings power not across are significant crisis, impacts this directly the downstream economy. beginning to of disruption As the corporations impacted also broader seeing of

markets was we longer can Immense starts than volumes and But concern in uncertainty came progress deeply credit Carlyle in is panic. March In both and while the take and uncertainty any liquid well severe, private but expectation remains. that markets reasonably what discounted our function deal from selloff credit, March's effectively characterized hope. by trading all and a market throughout, by fits secondary see, measure primary levels, it will liquid orderly to With standstill. recovery not economic would

early seen healing in primary of for private have we markets April, emerging demand credit and In solutions. signs

to across borrowers the environment. and the same consequentially economy to compelling While traditional business, will bridge our most a This of advantaged market. will same. been competitively time benefit as a investment required and likely opportunity perhaps with accrue a capital expect has the CGBD the to to power, significant materially variety of the forced slow, M&A platforms from the financing back thinned staying will allow of reasons, imbalance At we through for forming. number from shareholders benefit competition pull be see supply/demand have We competitors COVID-XX for significant to

navigated CGBD stages: from constructed requiring borrowers As credit on on emergency revolving balance in behind Characterized and strain regards existing fashion, a have it amendments heard calls a we us. Without all sheet, our impacts. crisis distinct Happily, needing first, significant you X liquidity. squeeze. it meeting liquidity by prerelease, expect mark-to-market on our in timely facilities no the valuation significantly appears properly could our from pressures credit And private unprecedented extremely will these and portfolios, lenders, stage us from calls as a capital no funding. well, this impact

this In portfolios, stage significant amendment credit impacts including will it that of covenanted severe own. crisis X, the across macroeconomic consider levered generate we activity likely our

bad play X covenants to this expect not preserve and the thing will We come the out lenders to allow as value. to months. early over table This is X a coming

of maintain this one's and depending critical magnitude base said, stage, flexibility borrowing amendments and in eligibility nature, could of Therefore, quantity, balance sheet. the generation remains That right-hand income on on these to side impact their assets. it

Our we remove action taken as fortify pass already crisis, desire through decisive have month last position. to sheet balance proactive why to downside we stage this X the strong risk and is of over our

assets equity over severe rapidly within the actions have yesterday, cases. us March's as shock Specifically, allowed $XXX and mark-to-market compelling $XX sold have ensure target million will These terms. we CGBD since raised at even ample to end, And most absorb preferred of of million quarter leverage flexibility have reestablish our attractive we downside economic to prices. despite on range announced

is value with mentioned, to entails proceeds is position But much realized any of far very and maximization. well X as in portfolio for of portfolio as year-long our and borrowers relative exercise, too early as our the process this the the out we maximize our to like it portfolio gate. shots a preserve position us This performance of call here. and at individual hard Partnering level. value Stage likely work the Linda

a to deep valuations To our portfolio's liquidity each provide of companies. since to approach more profiles crisis, our assessment impact, our engaged have the of on exposure portfolio earnings been in stage with and this early color of focus we March, X, normalized on

we borrowers, have work and our stream. Immense confident has deployed arms and fantastically, would period. been our have are in we here. we performed you with this expect, continuous has critical owners As this The team throughout effort contact been around management teams

X% below of credit and exposures portfolio aerospace as leisure be focused in this food will at as beverage, our in well Our our gaming investments defense effort hotel, and in X% and each our of investments portfolio. and our

persistent On we be we and while of exposures, confident operating owners in businesses. support for value, strong and with will disruptions these we invested have significant have cooperation the of businesses the enterprise seen from whole, portions these are

ensuring can As the long-term borrowers on bridge value. without such, these quarters comparing our through focus is coming

to Carlyle Going been can expect forward, feel to have us thus positioned continue we well of the proactive you with far. drive as exceptionally as platform, value. And we to resources be the

exceptional in our we more investment Finally, current reestablished compelling We're is worth value the we while balance doing quarters. well are each on the for also our returns. believe We decreased management, ability focus see we profile, on and new access that new on leverage offers was of the attractive sheet of value far the assets. leverage our it pricing, just competition, position opportunities, this target positioned where believe coming improved and focus us shareholder to to we maximization maximizing returns our environment drive and prudent market, lower than the investment to opportunities Having current also call, approach rapidly documentation. of well portfolio our hunt to risk-adjusted are capitalize portfolio saying expanded existing the

our turn Officer, Chief time. to Tom Hennigan. Thanks, now Financial I'll again, call the over your for

Thomas Hennigan

drill then sheet Taylor. positioning. begin with of topics. our earnings, balance Thank review a important you, into and first The X deeper portfolio, valuations Today, I'll quarter

the total from Linda Total LIBOR, solid a a income investment resulted OID factors: quarter acceleration Total decrease the expenses share, to for line lower in down $XX IPO. XXXX lower As investment the in another lower primarily for net average down JV. quarter, $X.XX lower by million since to previewed, remains with million, interest This primarily were results was income lower had income our quarter management incentive of per quarterly lower onetime in credit the of income the few due prior million from decrease from fees we $XX the due quarter, million by fees. first and or quarter. total last driven quarter generation. and in $XX facility driven $XX.X $XX.X was repayments, The million in income which

Board regular XX. that's X, May payable dividend June record of XXXX declared as the of $X.XX for business the same On second at of share, our the of Directors and close to the on shareholders quarter per

economic the right the the Linda it's and as remain future pressure typically the LIBOR and now, lower likely activity. quite on on per income the refinancing to the level But tied to with impact portfolio. February, impact net early certainty our overall subsequent levels economic But positioning same noted, confident achieving in of the We since disruption. of broader we'll income see investment too of in portfolio, downturn our M&A share, frankly, and of duration current of sharp drop given predict

time, but have on clearer quarter's call. by So in position picture guidance forward to give earnings next expect not at to we're this a earnings,

on quarters in performance. quarter, run acceleration few yields the prior by yield quarters. to few driven Moving OID economic repayment LIBOR, first to the of were lower dividend the to a our leverage, XX% was from the vehicle given from and factors: the declining Lower on XX% backdrop. past down at our JV's equity compared broader line from decision activity, lower The

Given to quarters. to the we over the vehicle, expect next lower yield range in the few the leverage X% dividend the be XX% of

or but certainly this far our so accelerate with days, we're issues in anticipate coming amendments, number a quarters. had Regarding pleased portfolio, early limited We've payment performance. it's material the although of the overall we will

And thus in far Our to amendments many dialogue been we has contribute with constructive. solution. sponsors future both the regarding to cases, need sides recognize, will

require additional the material that borrowers with will from be equity. lenders, sponsors our Specifically, expectation if is supportive concessions

to On the the quarter, status. nonaccrual of to In borrower some metrics. we added first X new

when fair at So pandemic our cases, of report through results. of stood The an nonaccruals in cost. somewhat X.X. at borrowers remained see impact total the the we'll results, weighted There's risk Even environment. the we March flow many X.X% financial average internal a when X.X% our borrowers' muted value expect, of impact quarterly lag and current to rating inherent in

greater a transparency. effort in methods towards for So risk making the a we're more clarity taking closer June and our quarter, with it look at rating forward-looking view to provide

quotes. second unrealized On decline loss the net $XXX quarter. of total contributed to out and Across was our of were devaluations, drivers for about were market. our XX gapped realized points. both points, the by XXX declined and as primary million aggregate The while That loans, middle about market basis lien about yields yields valuations X/X first portfolio points across and liens X down XXX the large-cap

had In exacerbated list that historical we on markdowns watch were addition, some issues performance certain by further current deals environment. market the with

was due not and the our assumptions, as the see rate, JV. discount performance rate JV. underlying This such on the to rate, at in reinvestment our base equity valuation also default but changes a investment You'll credit markdown in

yields. So in a the quarter, we've far rebound market second seen in

However, outlook of we anticipate valuation the to cautious volatility macro further quarters. and remain in NAV coming our

was to about X.X the X.XXx, our target finish with from quarter Total to up of or were and excess tracking about combination by into giving leverage dive higher deeper turn the cash that at hold $X.X contributed beginning target a end, quarter the was prior But our statutory end, with X.XX we the and sheet At range. financing we of I'll balance in opted which outstanding quarter and the at on from alone leverage, inside impact borrowers mark-to-market our a X.Xx about valuations, quarter, end. revolver combined our resulted of falling the draws after million leverage our liquidity. $XX facilities debt on to closer range. effect of at billion within March, cushion well excess outside cash

reducing progress. Linda as we've leverage highlighted And already is both significant priorities. our and Taylor earlier, That of top said, made one

leverage the a inside our basis. reflects financial equity factoring statutory Following on equity, debt will in the which preferred repayment plus our true this Along anticipated from leverage net recent proceeds, And credit target recent will deleveraging, net sales, with will our the increase range back from as unused our below given be conversion investment X.Xx. asset after quarter $XXX cash commitments under preferred its rights at million over be facilities to $XXX million. end leverage,

unfunded to and mark-to-market commitments our sufficient We flexibility capital existing of than protect required weather current as to meet believe declines. to this further the more portfolio to additional borrowers, is

our aggressively the overall any we well manage position, to and and may positions leverage which worked challenges we capital next us over solidify quarters. for conclusion, face In liquidity few

back me Linda With let call remarks. closing some the over that, turn to for

Linda Pace

our each at truly ensure Tom. well to volatility your to you times. and We uncertain deliver take a and families by thanking I'd to future our conclude as you, of doubt, goal as our hope like doing call to for hard TCG and morning. sheet is portfolio Carlyle Thank these advantage to are BDC are opportunities and Without of well. work shareholder this joining at possible are value. healthy you manage through But balance positioned

we're your that, pleased to With questions. take

Operator

Instructions]. [Operator

line comes question Rick JPMorgan. first of of Shane from Our the

Richard Shane

-- thought about that good the affiliate am this coupon committed how the sees pricing governance from buying the at have But you obviously, I the -- both uncertainty, a a is tape. transaction It's from on insurance perspective think a if benefit very very in convert? and positive even I and and entity. the there's to curious, interesting in period It's cost, infusion, on very capital a convert the Look, value is a your transaction transaction. a also to a of a capital it perspective, signal a

Taylor Boswell

company standard question. we a take over you Thanks and we the went course our really Taylor held Board. month a a a reviewing we manager. as seriously with And of in-depth that And are options, both looked basis And of at of the thorough We vehicle. standard it's for tell lot that process the very through a very I'll we transact very of to a the April. on a them Boswell. Rick, it's fair that

And available both the was look might like end capital for feedback be felt was it being was unsecured day, on rights otherwise. sought what to a with we did cost. achieves also reverse the that terms the whether mentioned other in the offerings we everyone market. or but and at various that the ultimately, specifically terms is otherwise took of the low inquiry convertible very offered on was concluded And financing, superior comfortable what it what favorable most of debt, that this And you relatively debt, flexibility impacts Board because comes before, instrument terms

market. attractive, price a structurally compare against strike the common financings in you economically if not Those option has up XX% VWAP. a It of and the it's rate then a other So a this And covenants. last It no in has the with inside it offered it dividend PIK other meaning available characteristics over close up has and well versus attractive versus for alternatives, XX% duration. payment. generally the long

instrument financing we alternatives. think to other conducted ultimately, plainly construction of demonstrates so on a And favorable basis shareholders really relative it's CGBD for the that the

Richard Shane

And question, of being in the all with totally until hadn't as a period market is secrecy. fair. a thought I any even terms Yes. well that another which executed of do think able advantage answering having without thing there's a is of overhang in that transaction perceived in degree you higher to volatility started that's the I one Look, about

Taylor Boswell

market. than said, dilutive all the this in that unsecured of of raise an mean, we the I alternatives this chasing of really spent we've and equity equity terms lot and in matches offerings nothing I a the debt, instrument, the really, other like. And available are and is transaction time, alternatives rights as far seen, Yes. less flexibility ultimately, impact

flexibility through think it the as Board an optimal pretty independent for that Board and clear sort our and So I we be this goal our work would outcome the of for economic of hit the process the became shareholders. members

Operator

Our Cyganovich Arren next question from Citi. comes of

Arren Cyganovich

portfolio I to performance was in ability a obviously, chance end April. end at performed of different little the for April, about of quite in point look the had bit financial the or to wondering the talk if And it's bit whether at how any not pay you them this a than and companies could you've March, quarter?

Thomas Hennigan

Arren, it's Tom.

early regarding initial our results. little in sponsors their second any in So of say and liquidity can we're most our very we dialogue far, And What a is close borrowers subsequent forecasts. in cases, company A forecasts better a we updates, in say from liquidity with the the our receiving it's focus sponsors terms cases, is, hey, I'd that quarter really liquidity the those here's of lot companies those lot is blush positions. cases as the and forecast. on are receive looking of as

In financial actual bit performance, terms a of little it's early.

the we're round think get many next it's results. liquidity. bit of think I terms early April are in in a focused a much going more financials But on very to And little think significant March borrowers I the of week. that we'll I borrowers -- our for get

they good number that of quarter. ASKS, liquidity. end to certainly accelerate looking get that's costs, that a going may to additional limited manage as the X terms even And time we they the June have if in liquidity had head be so anticipate they're manage I borrowers, to of And market of liquidity, anticipate environment. far, into we think at We to weeks current the we in strides relief making to for likely next the first amendments and the some frame through create

Arren Cyganovich

to some your there's of with relief? the is provide moratoriums little a giving cross-section still obviously, well. What's to a commercial but on pretty lot help as focused finance, more and to consumer in individual opportunities, and ability type to the I borrowers company? provide banks are the bit companies deferrals payments, -- And work giving willing what of deferrals cover broad a and are amendments We of able you are

Thomas Hennigan

Yes.

certainly, shoring We are the We solution, were ask we'll position agreeable work we obviously more it a will PIK. some some offer conversations say, And think our of for our to let's with be these in would borrowers good PIK what the to short the be deal. amendment looking that's not amendments even liquidity and going where flexibility for In position and is part flexibility if an capital a amendments, interest going a amendment so month, time, significant take in if then we're have, we to better more I'd from likely of be position, is or knowing strained. for our where into extent capable borrowers. an up last liquidity And be say, of went interest we of structure. where, to to the to we're even way to convert our business, should better. is see the going PIK check for the cash a a whether amendment some situations support support amount offer our PIK. to private sponsor are to lenders we companies fair then covenant we're or And sponsor a certainly for willing, we Where of relief, to example, write the have to our significant liquidity, what equity

Arren Cyganovich

that put doesn't on a them status? from particular do PIK loan treat nonaccrual that to of you time give for if to an change how amendment that a short perspective, you nonaccrual period And

Thomas Hennigan

what's situations as in it business, recovery have the nonaccrual. on on loan. those we business. on private a payments, the of current would we of would value where situation, would factor equity at And the our PIK long-term a be who's certainly, equity view terms the see business. situation to status, irrespective That's in also no those value see supporting putting be believe we that situation a where but the we that's we're by full payment extent they where loans correct. will will if And -- not of equity sponsor stake in we in have default. And look that's the those the ground as And there's It

Operator

[Operator Instructions].

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

Finian O'Shea

the doing well. everyone want hope to I back is go convert. I to first

with I better me out missed of I'm Or And are the sort you me, of conversion terms terms on there what's color conjunction market Or for on any call. XX% Is is you this Forgive premium, it sure. in why spread? than balanced the market arrived appreciating you'd the terms rate? a -- -- the average curious and based to is it premium the that that? beginning think just any how give was to I used.

Taylor Boswell

perspective. say through of is what Fin, work, last we BDC see where converts, indications well it's a have of converts, far willing received able of I as financial are as month terms indicative converts financial the and would we've premiums details, these digging converts what And premium Taylor. outside of comp Really, for. course month, we what versus the conversion were some people would the into lot the to pulled would asked market transaction they comparable otherwise too conversion whether over April without transact be the and corporate over be of to from a

point, vehicle, the with think Carlyle feel of we shareholders the the message strong ultimately And think pretty also value I I to So comfortable embedded to mean both stock. the this is, prior but of Carlyle's in of point, support of level. I hopefully, the in view your for here a

Finian O'Shea

you'll and redeem Or is the maintain it would appreciate think plan that other still prolong to you're that. on if pay don't any comes with scenarios to price, BDC that? parent you you you it the time? or there deleverage, of where down? sort the between do share case And able that reach that And it want I capital, to to work

Taylor Boswell

when this into be intention you'll investment instrument, that long-term put X. vehicle. peel the a see has in the you it of is to in right here Our the details a for year And

of So equity. settled to it is right the and also put maturities see And is and well outside of that what our be form in settleable is other likely like. the you'll financing

which structure. definition, to that's so what that instrument with leverage the the an Act much under an really, be one equity. we Tom before, is 'XX pretty standard, by expect this in is key as instrument And that equity capital that reasons equity settled our this referenced underpins considers of while view is the it's any that other And

the it's the respect, investment in vehicle how but is the in constructed that's and and long-term structure. So a Fin, that that intention

Finian O'Shea

I it. didn't that earlier. it. catch appreciate Got I

that it able you about? Was Just SPV a for more you a did down Tom. The repay? -- how Or come had another pay with to Are one little. came just give balance on down cash? color any

Thomas Hennigan

was outstanding combination. I don't think I of position. our markdown pay was And balance -- our of think it amongst vehicle. it the just various decided loans total Overall I moving on or size. kind of that Yes. that or out was facilities managing balance, a credit loans in sheet sorry, in repayments that combination a down it in and a think

Finian O'Shea

does the was positions, the and move, were us this the right? both tell like pretty interest. just reasonably Okay. what respect if the short any middle -- a you -- dividend that apologize I I down. seems -- consistent surface, the well. the just this sub and equity And keeping in assume or MMLC, some The then one for BDC like conservative it I this mezz Any Does looking they range, much final at you're Can as bit -- one, is it may. a MMLC? materially missed loan if market I in a little

Thomas Hennigan

to end a at to this see, what level. you a vehicle of did leverage run lesser market is to XXXX What we Yes. when We the at extent. opted lower dislocated the the similar

yield lower range investment but on now right, you'll is there's mezzanine, as level dividend with a is be the the the that equity the you'll will and that you're leverage as So pay and -- beginning lower there's so level, but from more base, it that's the lower JV where total will quarter just income, yield in percentage that's the of had dividend we we've see of see be dollar same, materially X really the you a why the -- second higher be higher in a the but a which but higher down mezzanine, yield. lower a much the for income, effectively higher flip XX% see number why equity kind

LIBOR. where In on at a things the XX-day resets lot near-term time today. the aggregate, the see based some in And for level at to higher JV part, most coming frame And our the least somewhat. just one of contracts anomalies of early that April in in LIBOR down earnings, than tied the our market, were dollar is on we the is with are the amount liabilities

we'll the little market, just simple pressure, based a the LIBOR, on you'll in reset rates the pressure little particularly that'll income on rates particularly second quarter of in So more our based overall would depressed down we the the rates, market, see bit than having for the second dictate timing some when earnings, contribute to of of see quarter. a bit JV the lower

Finian O'Shea

you just sub provide down to do MMLC, revolver, And do we're the interest? convert a Or does the language what the I'm automatically that sort a there. sort your at of form asking? say, you mezz there? choice pay Does of have down, is Or get a -- of looking right? And you pay you when

Thomas Hennigan

Board it's calling JV. decision, X equity XX-XX the so is members vote between a the of a The

Our BDC PSP. and

Operator

next KBW. comes Our Lynch Ryan question of from

Ryan Lynch

well. fund I middle specifically securitizations little hopped kind the I covenants the that bucket credit market? beginning, CCC the given in have or to some recently And cushion in the I your if the of But missed dramatic with OC market late. the guys as all those, regarding this guys of we've as on swings the your well speak you Apologize of on had your both the you securitization sheet you hope in can are a balance doing comfort

Thomas Hennigan

Tom. It's Ryan. Sure,

First, I'll start the with the are vehicles one easier. -- Those at Those CLOs. static are both the JV.

with static terms at all just issues in no various So based on nature. tests of vehicles the those

CCC On baskets, vehicle key XX.X% about that market CLO, versus given the X.X%. on deal middle it's have syndicated balance CLO, BDC's on your you broadly much higher sheet a that traditional regular is, points have would that's

some CCC run CCC the broader CLO. test then seeing that. sensitivity we've OC market more insulation doubt, market, it's from we've And such -- we larger no traditional a just a issues have So but perspective, and from middle because sensitivities bucket we're got we've an much like much on got

key have have any We tests. or significant OC worry covenant about cushion to other before we

Taylor Boswell

through I a performed our liked crisis Ryan, it's we've think, very perform. with I mix funding to diversified using us. What and well much. in structure, it's to layer is very for run chosen very that And each And sheet continues us to available just Taylor. might we've of balance this sort so the And of tools

hearing prioritizing, and very on world is that really So call have have a moving us -- base hopefully, to also a a what optimize. trying is we we from we're of you're absolutely downside And the over pin alternative case do the uncertain. view we're this

we're And really actions liquidity a with from bunch target it with of good to leverage the so have fortify take and and take of course selective happy over scenarios now. what out us range, position play some accommodate drive might was any to the ourselves raise from back that number the very And asset flexibility also seen to which last our right a into you've here. month perspective, of sales, a for these at convert be

of issues the but our all level in So seeing are what we marketplace." the of uncertainty way those not given of that's are in sure We're we with long them vehicles I "We're absolute see, not today. saying, making a financing covered guess our bases anticipating of kinds

Ryan Lynch

of And determined cash? X% Okay. X% yet? missed in your in Or believe that this in maybe you cash preferred guys you determined said are whether I a going you have then it coupon or PIK. coupon you I it, do PIK to X% and you that pay Have or has the issued, guys guys with

Thomas Hennigan

hasn't Board the The quarter. determination for a coming made yet

Ryan Lynch

going ones are kind of the also, assets loans sales I And million. sell? off stronger loans? some, attractive on, how of I portion, closer that some know exit Were prices assets asset the in and would some said environment. I selling then assets then book. to a more Okay. that guess, best that's to -- be what recession-resistant of well in liquid on of And on think then I more if $XXX the case, par, your And but to more I small you're think some think, your of determined I that some better going is getting you performing to believe this are it's established, troubled that in you the the made, you over the those were April, those loans if you're of the

just XXX $XXX of talk selected? about assets how over So and were I can million the -- selected those were those how sales, you asset guess,

Taylor Boswell

first a Yes. amongst generally would our It's diversified and Taylor perspective sector. in book, leverage again. representative I The assets the portfolio, line from we pretty were assets by lien in sold yield say,

markets So result by of it of and a billion capital net liquid portfolio capability even loans And not find skewing of traditional market bids, were pleased or those in in I $XXX liquidity actually, the really at challenging think markets. weren't don't book. which well-developed we've loans. they lets that of credits, of the mainly them the got credit middle and out $X million really, risk the Carlyle is us the and good very They BSL any we're factors in significant sales sort were preponderance

that assets our did But and XXX some we line sell shade generally, a attractive. shade above those in marks. So some below, a

the priced feel in of that those of So book activity the think I we like we amount a NAV feel either a don't actions. and good as significant risk or about result skewed

Okay.

Operator

I'd like closing turn Sir? time, to this Dan Harris the over remarks. to call for At

Daniel Harris

follow-up we you, families and appreciate call this questions. attention morning, all. the directly time Thank your Please will and call We Investor safe and after Relations you we you contact stay your and happy. hope or with any

forward very talking you to next look quarter. to much. We Thank you

Operator

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

disconnect. may You now

Carlyle Secured Lending (CGBD) 6 May 202020 Q1 Earnings call transcript