CCAP - Earnings call transcript Q2 2024 | Crescent Capital BDC, Inc.

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Operator

Good day, everyone and welcome to the Q2 2024 Crescent Capital BDC Earnings Conference Call. [Operator Instructions] It is now my pleasure to turn the conference over to Dan McMahon, Head of Investor Relations. Please go ahead.

Daniel McMahon

Good morning, and welcome to Crescent Capital BDC, Inc.'s Second Quarter ended June 30, 2024 Earnings Conference Call. Please note that Crescent Capital BDC may be referred to as CCAP, Crescent BDC or the company throughout the call.

start important I'll begin, we with reminders. some Before of and are webcast made to over contain call course the and Comments may this forward-looking and uncertainties. risks subject statements results reason, including listed expressed actual The from SEC those differ statements any forward-looking in those company's for in could filings. such its materially

Investor for reviewed XXXX, the crescentbdc.com. company second and of to the with posted market any quarter performance be section SEC. is information XX-Q ended or conjunction in June forward-looking assumes a XX, presentation its future of Yesterday, Please Form to Relations should the yesterday statements. company's issued at guarantee website its after results. company with the release The The presentation filed update also the press the no closed, market not obligation such note past earnings a that

recorded As replay is for purposes. a call reminder, this being

today's Speaking Chung; be Jason Henry Executive Chief President, on Lombard. Financial call Breaux; will Gerhard Chief Officer, and CCAP's Officer,

to to now that, it Jason. turn With I'd like over

Jason Breaux

Thank you you, was some June. Day you early see all great our to Hello, today. of thank joining in us for person Analyst and It at inaugural Investor everyone, in Dan. and

our per thoughts was equity I'll evening, and across NII, annualized NII portfolio. by results, translates call continued credit highlighting on with earnings, another or strong quarter some return reported which Net of XX.X%. income, $X.XX quarter performance we the start on into that our on today's followed approach investment Yesterday investment our second touch share, portfolio. an of solid

dividend, $X.XX this June declared declared with dividend share. our well regular it of When which XXXX. previously in excess coupled has equates for The With share, since dividend our highest $X.XX net which is value, strength to June the supplemental quarter the of a also XXXX, increased growth again, of to our annualized share, our regular on earnings per asset recently has per to earnings, the of our in second Board $XX.XX increased led dividend NAV. XX, been yield XX% per

gears investment and Let's discuss portfolio. shift the

into the I in spend and markets raised well in have transactions originate being been where capital specific the average In north the size quarters, markets the to quarters, like It's secret from direct billion. with of syndicated a markets syndicated that we there lending of minute significant get that the our I'd is approach seen lot Before has private credit, we on of data recent in and seek refinanced that no to recent tranche sector. new investment points, opportunities. a both competition are by $X

This middle core market is size. that we typically where segment the market, call efforts in Where our we to less markets or to access the able not we able the the of syndicated loan what are segments focus focus. lower of not is due market and issuer

with roughly the issuers of think up the end. to million $XX high on end, EBITDA million on $XXX So million $XXX low to

which is over loan past the in mega attention. direct [indiscernible] of some quarters that protection that negotiate that with collateral deem for the structural In are we core lower documentation resembled some contrast broadly the unitranche space. middle deals This few documents, with to for we the terms of features market, in our able critical public investing sponsors completed have garnered directly around syndicated significant and have

focus transactions and segment with the lead truly documentation. opportunity our to us drive Our provides

reactive be proactive on EBITDA allow versus us focused are strong as as rights, tight as about definitions generation, We our monitoring approach think portfolio to we cash to enhanced well management. which flow

do and It's for cash have that to of not businesses revenue with requirements. flow or reasons, working annual a time cash invest focus We loans. we so have in generate low long consistently we being lenders, ARR capital are operating flow history underwriting a recurring on been for able these

turn We highly approximately across the characteristics an portfolio. of to presentation, our of XXX at the highlights of fair diversified certain with portfolio with and value XX $X.X quarter a XX size billion companies portfolio. quarter. We've ended consists portfolio end, which Slides Please first of from XX% X.X% total deliberately representing investment at loans, value of portfolio that of the approximately maintained of the investment the fair average at collectively lien of an unchanged primarily prior investments quarter

We on remain across efforts noncyclical and well focus industries categorizations. XX broad our continue investing diversified to industry

entirely equity of almost sponsors companies are XX% of private investments portfolio with supported sponsor-backed Our well-capitalized and our debt end. by as quarter

our performance by performance have as our ratings of fundamental levels. portfolio, pleased We nonaccrual with and indicated been the

remained Our investments, of rated X can the companies weighted the Slide for portfolio the XX% our highest of will fair percentage quarter-over-quarter. accounted see you grade XX, receive average risk at value, on and portfolio ratings X X.X portfolio also stable and quarter-over-quarter stable of

investments was in which respectively, we of and portfolio investments at companies our status, As of value, X.X% and had flat end, debt fair X quarter representing nonaccrual cost total X.X% quarter-over-quarter. on

it I'd like turn portfolio. our the and now QX over Henry? Henry to the to activity discuss investment market, to

Henry Chung

loan and better modestly, XXXX, the declining by as second half XXXX, of clarity with half to strong which business Thanks, of X/X to in rates, demand increased of most driven of market. compared refinancing activity. LBO volume the middle-market continues activity, for represented volume fundamentals, year the approximately by of increase, pickup the Jason. albeit first first market driven the the private Middle strong nearly in credit spreads XX% on from loan half volume continued

for sponsors of second ability the remains including flexibility And the direct speed managers in and given by of as like core open, and of market Coupled and to continue in to offered uncertainty we capital, capital place the choice the the with market, expertise lending lending market direct the while Jason are in middle around the conditions the lower these execution the volumes that accelerate benefits Crescent, attract structures. the year. to return syndicated LPs from LBO of are believe discussed, we markets continued believe half pressure to for

where side XX% first page, the recent deployment you our to of Gross in investments. lien as which highlight activity. and turn was quarter the Slide on we first lien senior first $XXX in secured of totaled Please the tranche million, see can XX left-hand

higher accretive our ongoing During of via grow existing for X companies periods continue in existing borrower with of us in within refinancing platform as and seeking investments opportunities to the an we quarter, companies. to coming add-on elevated see opportunity prior million, well-performing levels incremental half Incremental investments activity This existing million portfolio universe. provides in our investments investments totaling make to from opportunistic a $XX to of incremental remaining the new M&A. pursuit of was set the we closed first overall $XX XXXX compared as percentage

and SOFR compares The gross quarter were loans basis fees average repayments a with to million in $XXX companies deployment approximately deployment basis. resulting in and approximately in of a aggregate million $XX equity-backed The new the net exits, points. private $XX sales floors, on weighted XXX million investments first to of during attractive spread

continue was We equity investments cushions value the loan borrowers back XX%. for the significant to average and weighted quarter of well-capitalized with to our new

XX. Turning please to Slide flip back the portfolio, to broader

quarter, at certain with assets yield You to can weighted primarily XX.X% second assets. coupled and lower average that modestly the in down yielding the quarter-over-quarter see of to cost income-producing exit securities came higher-yielding originated due we the

from at top as income-producing of a GACP includes Logan dividends now the of the equity the As impact This chart this WhiteHawk. JV partnership II interests reminder, dotted the includes as metric investments. in and our line the represented by well

on to XX points, investment our impact As interest a of to and borrowing June closely our drawn being floors. debt monitor XX, the basis weighted fair companies floor EBITDA strong of rate average investments based XX% backdrop. given floating portfolio which elevated costs rate well portfolio at we of the That our rate debt floating to with our of XX% have said, revenue perform with X% value Overall, year-over-year on structure average with continues weighted were liability compares continued growth.

weighted interest at X.Xx remained of at our The to quarter portfolio the companies stable compared coverage quarter. the prior as end average in investment

rate As on latest calculation a base this based reminder, annualized quarter. is each the

portfolio are our fixed to monitor continue operating managing also costs. companies We closely how

operating Our in that liquidity. aggregate positioned sheet our fixed are balance address the analysis flows available charges well cash demonstrates portfolio with companies to and

during in in our view. we of expected, at vulnerable second across decrease capacity of worth sufficient the an aggregate available all given is a quarter in XX% increase aggregate portfolio we tight the approximately that modest is with seen utilization As It saw which a the noting spreads. repricing end, quarter have requests

the companies. improvement repricing. the The invested approach ought have substantial in in strength creditworthiness reward long-standing at benefit have time is to a and portfolio of is private And Our large by continues weighted Most amount to transactions. to to in partnered or of with note and in through demonstrated order we we the our and value since our multiple underwrite with deleveraging XX%. average portfolio growth well-established firms portfolio from approximately equity the is it equity that repricing to loan whom have of applied underwrite that in relationships company

I it Gerhard. over With turn to that, now will

Gerhard Lombard

everyone. hello, and Henry, Thanks,

second of compared the to quarter $X.XX share Our the XXXX. second XXXX investment for per share $X.XX income of for per of net the for $X.XX per share prior quarter and quarter

of and $XX what of driver fee nonrecurring million decreased $X.X the for income. dividends, million. million quarter. Consisting quarter-over-quarter for we $X.X quarter this to nonrecurring prior as income investment of stock decrease classify common second amortization, primary income Total million relates to the $XX.X income The of from investment compares accelerated

large As investment structuring a investment previous by in noted quarter, investment X quarter, expect last on than nonrecurring level meaningfully and driven new quarters. our or for of platform quarter's income transactional in income last we every while was an higher some nonrecurring primarily fees increase call, realizations

XX% yield total income, represent with of prior quarter's share related income to contributing over lion's of quarters. total our recurring the investment consistent this continues income, Importantly,

portion the BDC favorably group. BDC differentiator highly total coming remain to a compares income PIK income, this which of in revenue environment years. particularly of that to believe the this We at continues modest the level will for performance investment focused on X% represent PIK in and be a income, our of peer

$X.XX. investment of primarily or supplemental was and losses. outpacing income per offset earnings $X.XX the dividend of GAAP second XXXX for the regular by net This realized result Our the net share share unrealized net and of income quarter per was

equity of our up of from million, XX, net per was in value asset resulting share $XX.XX. prior $XXX As quarter. June modestly stockholders' the

liquidity. our Slide capitalization to XX. and shift let's I'm Now on

ratio. in of and measured June noted relatively conservative have debt-to-equity I at terms generally have at operated our a Analyst historically Day, we our leverage As strategy, prioritized growth in

This ratio quarter's investment activity the in to up our quarter. X.XXx prior brought debt-to-equity X.XXx from

a closer to maintaining restrictions other cash in liquidity the while puts sufficient subject are $XXX With of of our This cash equivalents to X.Xx. undrawn leverage at. debt-to-equity million of base midpoint of million increase and to to capacity, that quarter's have range as X.Xx borrowing we $XX ratio us stated fund operating we and and investment further comfortable end, quarter activity leverage,

we to quarter XX March like average here from Facility. XXXX debt weighted total X.XX%, relates weighted X.XX% One In there to of to highlight points we've the right-hand interest plus the The are extended was on SPV Asset the rate end. our to highlighted SOFR as I'd And side borrowings XXXX. maturity no of on spread XXXX. basis the the slide, item by until May, maturities and additional tightened May as

third our share, As over positioned regular term. well we has the which Board longer dividend per $X.XX are Jason for cover quarter increased the we of recently our mentioned, believe to XXXX, of declared

calculation supplemental stockholders. dividends current also distributions We to quarterly to pursuant to plan pay provide to the continue and to declare further

Jason And closing to like with to it for that, back turn I'd remarks.

Jason Breaux

that proven with left its closing, consistent to and we one stable Crescent, of financial Day hope quarter's our NAV dividend a with We've with this coverage. cycle-tested results was profile delivers maintain CCAP At a performance the we portfolio. affiliation benefits In a continued in with Gerhard. defensively are manager. our investment portfolio everyone positioned pleased June, that Investor Thanks, Analyst thing from and

less we will As benign this experience credit has serve of to Crescent's a environments. over CCAP credit and for level of consistent selection real as differentiation approach X remained believe investors, and in point investment decades, disciplined for

private the assure want approach rapidly to landscape Even shareholders disciplined and that our we investment credit remains consistent. continues though evolve, to our

returns strong As our are we performance look continued over can deliver attractive portfolio the risk-adjusted remainder CCAP's of open And we forward the XXXX, the continue that, and line believe to for remain with we we track questions. of to on to stockholders. confident in

Operator

[Operator first Instructions] We'll our take [indiscernible]. from question

Unknown Analyst

record been, need says markets high. I very a these interest but calls questions, interest everybody they've All I is stock are the the First, They're are two little to, rates high. very high? evidence than help. What rates listened higher that are

take market. the averages, at There's you the If speculation unweighted on the record a high. going is market in

line XXXX, yield Prior bond government GDP. in XX-year the with nominal to

X% the X% tenure X% at X% if undervalued wouldn't real to So take be yield. to inflation, to you X% X% growth,

the are rates then a question. is what And number that That's second evidence have I So interest too high. one.

Jason Breaux

thanks for the Hi, for Thanks question. joining.

think we agree I would with you.

I at the high over think are interest if a high high. they're I last, XX time, years, longer let's back looking wouldn't on of period say, historically that rates would say today. we necessarily back go -- call you But them a

Unknown Analyst

And Secondly, the has created assets, assets, over space that want engage make that over. IT you the companies NAV And dividend. guys game of the because BDC game to management. or stock, go raise capital Wall are in only Street the changed once understand and stock, to buy to with game lot are the premium the smart in was a willing has a raise to buy it's stacked the sense be sell to sell to the that discount when enough stocks you dividend, space NAV,

So do with you below value, our don't repurchase? you something to guys return via capital a consider? plan Or stocks that this is have book

Jason Breaux

again. to continue It's something is evaluate. evaluate that we thanks Yes, will we and This Jason.

going compelling of stock that's evaluate at think That of going need that obviously and as of compelling. continue the that today, I look our look where something to measures. environment to we're both leverage, at those mindful we're we more we we still and because even rate asset As the yields are getting price be to said, forward is with

We are is managing leverage having a also on that benefits then point to make balance of consideration our vehicle. that take space we the with associated where the sure registered to at. into and just given have in the last fixed buybacks is And scale with charges the

it, a on transaction. manage make think to our basically a it we're of But within that instance, leveraging something are do for I target today, be if we our we would buyback is leverage, So top would to leverage. target sure

Operator

next take We'll James. Raymond Robert from question with our Dodd

Robert Dodd

would slide, got XXXX. maturing stack liability right of as in facility the debt plans? the can an color mean now, the or amortization at SMBC us on it about sheet, from the in an Looking gives XX% stands from do any it on balance thoughts window. now. your you And give that can I you've It's manage so X-month a in that? out more of -- the us expect crowded I you you to mean to ladder period couple over it's give pretty that But any years still maybe what to you that have available

Gerhard Lombard

the Yes. coupon Thanks kind as of relative know, Robert, of a it It's cost today. good capital low what about feel unsecured fixed good Gerhard. today. our have certainly you debts, it's for question. was question. Those to We a

attractive. very that's So

refinance We those are not rush in to notes a immediately.

taking of imagine, minutes with and As of structure you that a the lenders. our advantage But actively and in from few constant facility optimize made you we to opportunistically structure. capital saw opportunities market our comments as capital on the X-K and at might with we looking are are our manage the dialogue SPV and the kind we ago, prepared

should we you will take as on so as that action those And notes well maturity. expect

a debt. And about we think having necessarily laddering, sense. does a like comment unsecured of that on idea lot to maturity the our I bullet think don't large make I of

like that. idea the we think And I so of laddering

are capital. in maturity risk diversifying would your that you a the of larger otherwise way if you the on So kind market a a have time, you refinancing are all had unsecured you that single

Robert Dodd

Got appreciate it. I that.

about aggregate, shifts expect margin, I'd you is the pretty seeing any good. companies the well. portfolio because aggregate doing very on which would be the capacity portfolio the liquidity [indiscernible] the obviously, aggregate available, On Are revolver [indiscernible] sounds

on have It at But has any the the shareholders from right? monitoring set shifts been there your the high leverage liquidity of you margin. from for rate, and look companies. been But been an at ratings, cost that at anything funding doesn't increased for by the consumed higher like those you're it given when portfolio that relatively how rates prolonged the period and rates plus side have

Henry Chung

I represents can XX% watch I just focused overall our of Henry. is on on as the comment we're say by This around indicated portfolio. there's that Yes. on our margin, that. which would certainly list,

liquidity list, that necessarily liquidity. I'd some in the to creating say that time is from given as environment it of just those today, are focused It's to Within operating heightened is list. watch solve be companies -- to watch those concentrated revolver any a you performance, companies that constantly that is sit for these typically working fixed that capital backed, these some are needs it's to coupled margin, the you less seeing utilization, liquidity track than aggregate liquidity that I'd your handful resulting rate the subset we're lenders which we outside are here in not real given we an highly at that and challenges the workflow were extent the really if on we of are rate as say are not -- near-term issue. current said, the our revolver something portfolio sponsors on as well. to with sponsor look we But we're needs on. going look really really is higher basis, to And a where that of XX% a companies transactions needs charges needed. through that comments, There the are

Robert Dodd

seeing of mega needed market? step large liquidity deals the the up we where appreciate appear provide your sponsors you the sponsor the certainly, segment the to up. in point Sponsored Are those of have be differently. of acting you beginning I of different to at step the to to in seeing Are market to I continue comments mean, Jason's parts the that. well. And sponsors some as clearly?

Jason Breaux

seen the can Yes. capital. portfolio, issue really answer we our I The capital company issue fundamental down we allow position approach And bridged putting any really or of that sponsor comes fortunate think and to the short that whether a in has in get be have constituents come us that be some situation and equity that that really seen capital feel facing it process able is and they'll with to absolutely that a situations is I are. the a term our And to all given we the in investment short that short-term this or been us capital that certainly be in longer-term that's comfortable within return liquidity nature, our that amount needs respective to beneath of where think structure the where view in needs a of that's to a have be assessment and needed within they secular really credibly to something the like underwriting situation. also on we've been within for have is

I'd where do we've them say certainly that seen step seen So sponsors to in continue so. up, need we've situations the to

Operator

from We'll take with question Johnson our next Paul KBW.

Paul Johnson

Yes.

the that less of We option environment available, there But portfolio a I ask moment, any of The of PIK to so on X.Xx. of the the would across is -- to color you average be gave why in simply be much talk average the space. at is you at in than PIK if it's lower would was less income have statistics because this question just utilized there's wanted that but just the kind So just or can might wondering expect kind I X%. leverage helpful. this borrowers that higher. BDC

Jason Breaux

question. Hi, Paul. for the It's Thanks Jason.

the comment is are cash the low, since certainly and inception, and you've free stab of we're can Let on than which if bottom lower speculation A cash in I we're at thoughts. peers. around Henry why bit focused at we why chime got line have since a maybe this additional been line. very our is me we're top earning feel take that on little distributing to

do in degree a and very them for do have but high instance, PIK selectively And terms we underwrite. that underwrite we sensitivity at option. so deals a say them, that we can't have toggle deals to in PIK of of I options, don't

That don't probably ARR generate because do to falls peers a profitability they of in loans, of our in oftentimes that. have PIK necessarily some their business. feature investing who for contrast as they're more instance,

are really and loans of not so Crescent for an been. And ARR never area focus have

way amendment contained got workout you list. we And find is I Secondarily, of a is activity. they're concessions in when those cash I PIK Henry would watch say are certainly days ask mentioned, PIK. interest say, support when portfolios the have situations you've top in The the to or lenders. would relief some for our Oftentimes, write to sponsors these from other burden as also business, a looking wanting form of check within

well do sure darnest So value I would concession that And selective are that's extremely credits our to the portfolio. in from we make compensate into situations that types as put to you real those terms other know, way for our to picking, say come we that are in if ownership you we're of be to we that as choose getting on try that portfolios. would we And we of making. the

that my of hope part long won't see our So that over any a term, material time. at as you portfolio the is

Gerhard Lombard

Yes.

since think, those decile were -- much ARR of lot, fairly without 'XX, be needed A inception given from structure I able I'll That leverage structure during we be that CCAP piece, PIK shouldn't other already the something cash front a the by comment popular 'XX thing a or a to preferred the shied lot that overburdening pay-preferred to Jason in that to on was minimize and can away stretch stay as we touched needed end. income our sponsors vintage. say there, early looking top unique auctions. able to perspective, The just away but loans focus of, on of prevail to that PIK to where the especially was -- pay on from as was that I multiple were interest

a the you'll that, some think, profile that in there. out So to certainly peers relative are as minority other see of that I something our

is just I more And have seen been you would that make is point the we've of I think the us seen continued. ask X have I'll business top has numerator an basis both than we positive result, line the And a last I other We've aggregate the to on fixed the growth of surprise Revenue are ago, of and been side the with limit to that if line be But were EBITDA PIK and think contending a years now. that. quite has think growth that bottom certainly across as while fundamentals certainly coin, grown borrowers higher seen charges, strong. book. able to address

a I'd been, more ago, positive that's So several environment say, it would that's a thought We been ameliorate. certainly for requests. PIK have robust would development have quarters helped much

Paul Johnson

That's new mentioned quarter, new then as million then the looks you I in of color. there. repricing that $XXX overall? just there the And What of mix was and well in the about it then X activity, the and just great new pipeline kind on deals as within deals know activity of like the the that was kind

Jason Breaux

Let us here. pulling up Henry -- that is

Paul, can on certainly in comment broadly general does, market. just While I a seeing activity. think he We're pickup I the

XX% refinancings. albeit, it I volume most loan year, market was the driven relative middle half of to by second think half up last first of

the in about represented X/X second volume think quarter. of I LBOs

increase meaningful wanted still than So That expect still to, get a over and to. it we QX. where to lighter to said, get we

QX XX-plus over a increase think LBO percent activity. I

Henry Chung

versus those new up totaling you on part add-ons new on $XX LBOs X referenced, then million, Yes. and question, unfunded had revolvers. were XX follow platform new commitment existing platforms then the $XX that of and your first our [indiscernible] to to are fundings The And million remainder and we the repricing. back

Paul Johnson

wondering just question. just that's but that And was at. give would on I status a a helpful. looks an be written this little there It down of if like was JV performance update you bit update can Logan the where and last the then kind of quarter,

Jason Breaux

Yes.

as CLO. see a value move as is middle on in the all of the within fair And reminder, the investment the basis CLO. So cores largest market a JV you'll a the on JV, result, that just kind a quarter-to-quarter the that underlying mark-to-market of based

In our we've whole, CLO the as within very that receiving a focused that they've assessing loans projections. to onboarded in line we're the terms the distribution and that of the been And JV from asset. the since of I'd we're say relative performance on

is reinvestment expire One loan the or it's the that not to April of is coming period JV, sorry, that, that's in in thing to next August, JV CLO going next August note up, of with -- year year.

think steps the vehicle. that respect been with But of to vehicle. it's expectations performance-wise, with the about monetize here, something the kind the next line right lapses, kind as real case period thought that will that cash but we're that expecting portfolio flow So now, say around once in is that of I'd that that invested the we've been to from that's receive base evaluating here, time you

Operator

Finian We O'Shea to Wells next move with Fargo. will

Finian O'Shea

have might to It debt or like what be to the go on there'll sounded wanted discussion. perhaps seeing I look more like side of perhaps think a that back able to and keep we'll smaller down do you'll latter more and emphasis be presumably even thereby if them? be or or cost expensive this more that reduce you that that pieces if would

Gerhard Lombard

Fin, this it's Yes, is good Gerhard. a question.

through X tranches get execution size in -- unsecured But both and private not the We size, the we to that of right don't have issued notes July We're and channel. in all are We placement do maturing evaluating those February, XXXX. of now appropriately we May issuances private up best market. make and pick DCM due to see we'll sure debt placement necessarily see those costs options.

bit expect, price we we given currently are size probably price priced market sure those at that spread they'll fair than that other up kind say, I tranches at will notes we to the But those and make think appropriate. X%, X.X%, look today. that you it if of environment just that is a effect X% to little

Jason Breaux

market, Fin, opportunistic that but question, we're when be Jason, and be at the thanks the given want continue just seems wanted just today. well the for too. we market as we that looking the environment consensus we think think to about I I swapping penetrate we to to at to look very also as will add in

Finian O'Shea

the a of Okay. market. players for sticking helpful. with the Jason, competition on of extent level That's territory? opening the middle And do commentary moving lower that And to larger into follow-up, that brings? what's sort you your To see what

Jason Breaux

Yes. Thanks, Fin.

and so but say, $XX million core the of million X everybody $XX for, lower million, the middle reminder, we million $XX focus CCAP. think market, to those then their -- EBITDA to or of has market, about are I mid-market own really so. definition for deem we areas the a middle as of roughly -- we just That's -- $XXX $XX call

would I middle generally lower going in from upper mid-market. the that meaningful folks not the who been competition say after has all are market

a think sponsor I players. the a it's middle than focus. market generally upper market focus different It's different

lot work done the capital getting that and on addition a managers put of upper the significant market space needing immediately. the taking subscriptions to because In really to to that, is retail the non-traded flows of where monthly in coming middle into deal-making are side,

each beneficial So amounts to put it's certainly larger deal. capital into of

in are down do into the the folks well. mid-market say see of dip core as I upper that times. some been the the it's players middle core at would have market And core, these In -- we

with partnered So folks before. competed before, we we -- that we've

from mega tranche there into core activity times. the So deals at the the dipping down do that as is well, level of some folks

Operator

with of Bank next question America. We'll Derek Thank from you. take Hewett our

Derek Hewett

financial that lower be just expected I XX. have given market. on a Focusing end percentage little to middle higher the as the Slide would bit on the covenants. the focus of core portfolio XX% What's driving

Jason Breaux

repeat you said Can Derek, you Sorry, question? Slide your XX.

Derek Hewett

Yes. covenants. of the portfolio the I what's financial has driving that was -- XX%

on lower focus would expect and be market, I the that core higher. number Just to given the middle

have that that do legacy with driving investments any Eagle First of sort there does or So something is to from else number?

Henry Chung

No, it's markets. function I this X the of is It's Derek. think Henry the really and -- speaking, segmentation of different a

define EBITDA think below. with lower So how when middle you market $XX about and million of we

of that much those a to or to the least deals keep $XX that's middle core million deals I those going we EBITDA. in all band define should market, of All maintenance are million say In mind $XXX in one at have covenant. larger how virtually

not end situations get upper you you spectrum, size you to see that do maintenance where covenant. when So of the a have do

a mix. different function we where It's X focus. seeing the that that's as result, a So why markets you're of

point I covenants, the I'd nowadays, direct but that middle like probably side think the seeing of is, almost of kind of always band when net size of of spectrum. that say, so to middle that see here that in what out the one is on larger terms a you're company this market do inverse thing with to about we like what respect issuer market more wide and how is you in core a really that just think that's you'll function upper

Jason Breaux

asset and things said. would in to -- everything Henry have maintenance when the say highly like. just also the core, that we baskets on covenants, to would around we with necessarily like can don't having we add Derek, are protections We're negotiate focused and fullest I I in place that extent dispositions documentation just the even the and that still

syndicated covenants, this doesn't while true in mean our broadly middle then documents. financial representative that documents core loan the So look like market, is of that

Henry Chung

covenants. that's I seen, with to quite an kind some think the a real important protection maintenance point be because teeth And maintenance in get We've them. wide certain covenants situations, there Yes. can to to certainly you relative are having of oversell tendency

box to a is that stays to within that go whole the we're and But limiting presentation. situation performance. and during our the to segment the the really here collateral operating collateral this Analyst covered a credit we -- that extent the Day key sideway leakage within ensure a and may our as document our our extent that our And of ability

what that, just this that complied, does you you'll to documentation upper one that use of market. not deals of market see in if deals see are this syndicated or of kind of kind are our not were indicative or I seeing you're an construct. type public really even really then and think dig middle variant I to indicate you loan in that we would is really broadly loan barometer not variation the beneath the think So that in resemble is what But a

Derek Hewett

the peers. is PIK how I circling into would that below Okay. was PIK, realize deals characterize structured Was original was that that it? to And well that of then have, But amendments? back result you you the PIK industry or a

Henry Chung

to that This related the origination. be is is I'd that. can say to Henry. available majority was going of respond income I PIK at it Yes. to --

would in mentioned I initially So my seen lighter the a we've volume ago. have comments earlier to has quite been quarters bit that question amendments here guessed several an than of PIK actually we that

is for -- origination. second investments that component there are see be a have lien you'll a which or at really what of what to related investments majority big portfolio. going to of unsecured so our are minority the more that that will be And represent So

Operator

conclude Q&A your will Thank as time. at for call. and may participation, any And you you. our well Thank disconnect as this you session conference our

Jason Breaux

all. you Thank

Crescent Capital BDC (CCAP) 13 Aug 242024 Q2 Earnings call transcript