Q4 2022 Apollo Investment Corp Earnings Call

Howard T. Widra: --pandemic. We have built what we believe to be a well-diversified corporate lending portfolio of true first-lien, floating-rate loans invested in less cyclical industries.

Speaker 2: Of true first lien, floating rate loans invested in less cyclical industry.

Howard T. Widra: --the pandemic. We have done what we believe to be a well-diversified corporate revenue portfolio of true first lead floating rate loads invested in less cyclical industries.

Howard T. Widra: Our corporate lending portfolio is 94% first-lien with weighted average attached of 0.2X, a key metric which demonstrates that we are truly invested at the most senior level of capital structure.

Howard T. Widra: Our corporate revenue portfolio is 94% first lien with weighted average attachment point of 0.2, a key metric which demonstrates that we are truly invested at the most senior level of capital structure.

Howard T. Widra: Additionally, 87% of the corporate lending portfolio is sponsor-backed, which means these companies have financial and operational support from the financial sponsors who own them. We feel very good about the ability of our corporate revenue portfolio to withstand potential economic headwinds.

Howard T. Widra: Additionally, 87% of the corporate spending portfolio is sponsor-backed, which means these companies have financial and operational support from the financial sponsors who own them. We feel very good about the ability of our corporate revenue portfolio to withstand potential economic headwinds.

Howard T. Widra: In terms of new opportunities, we believe the AINV's ability to invest in loans originated by mid-cap financial is one of our most significant competitive advantages.

Howard T. Widra: In terms of new opportunities, we believe that AIC's ability to invest in loans originated by mid-cap financials is one of our significant competitive advantages. In addition to cash flow loans to middle-market sponsored-back companies, product offering includes life sciences lending, asset-base lending, lender finance, and franchise finance, products that are typically less competitive and have a lower correlation with the broader credit markets. At the end of March, these specialty products totaled approximately $340 million, representing about 16% of the AIC's corporate lending portfolio, at fair value.

Howard T. Widra: In addition to cash flow loans to middle-market sponsor-back companies, [inaudible] product offering includes life sciences lending, asset-based lending, lender finance, and franchise financing, products which are typically less competitive and have a lower correlation with the broader credit markets. At the end of March, these specialty products totaled approximately 340 million, representing about 16% of the AINV's corporate lending portfolio at fair value.

Speaker 1: Products which are typically less competitive, to have a lower correlation with the broader credit markets. At the end of March the spealtyproduct total approximate.

Speaker 1: products which are typically less competitive and have a lower correlation with the broader credit markets. At the end of March, these specialty products totaled approximately $340 million, representing about 16% of the AIC's corporate lending portfolio, at fair value.

Speaker 1: Only three hundred and forty million.

Speaker 1: Representing about 16% of the AI's corporate running portfolio, at fair value.

Howard T. Widra: Turning to our distribution for the quarter, the Board has declared a base distribution of 31 cents per share and a supplemental distribution of five cents per share for a total distribution of 36 cents per share, consistent with NII for the March quarter, adjusted for a normal level of [inaudible]. Both distributions are payable on July 7th, 2022 to shareholders on record as of June 16, 2022. With that, I'll turn the call over to Tanner to discuss the market environment and our investment activity.

Speaker 1: And it supplemental distribution of five cents per share for a total distribution of Ty.

Howard T. Widra: Turning to our distribution for the quarter, the Board has declared a base distribution of 31 cents per share and a supplemental distribution of five cents per share, for a total distribution of 36 cents per share, consistent with NII for the March quarter, adjusted for a normal level of incentive fees. Both distributions are payable on July 7th, 2022 to shareholders on record as of June 16th, 2022.

Speaker 1: six sets per share inssistent with NI for the March quarter, adjusted for a normal level of incentenc.

Speaker 2: Both distributions are payable on July seventh 2022 to share ersas a record as of June sixteenth.

Speaker 1: 22 but that I'll turn the call over to.

Speaker 1: Both distributions are payable on July 7th, 2022 to shareholders on record as of June 16th, 2022.

Speaker 1: To discuss the market environment and our investment activity.

Tanner Powell: Thanks, Howard. Beginning with the market environment, in the first quarter of 2022, risk premiums increased across asset classes as concerns about the impact of inflation on global growth and geopolitical unrest in Russia and Ukraine drove investors to the sidelines.

Howard T. Widra: With that, I'll turn the call over to Tanner to discuss the market environment and our investment.

Tanner Powell: Thanks, Howard. Beginning with the market environment, in the first quarter of 2022, risk premiums increased across asset classes as concerns about the impact of inflation on global growth and geopolitical unrest in Russia and Ukraine drove investors to the sidelines.

Tanner Powell: In the US leveraged loan and high yield markets, volatility in weakness in secondary prices resulted in significantly reduced new issuance levels compared to the record-setting price in 2021.

Tanner Powell: In the US leverage loan and high yield markets, volatility and weakness in secondary prices resulted in significantly reduced new issuance levels compared to the record set price at 2021.

Tanner Powell: This type of broader market environment benefits providers of private credit who offer borrowers fully underwritten solutions at agreed-upon pricing and terms with certainty of execution, irrespective of broader market conditions.

Tanner Powell: This type of broader market environment benefits providers of private credit who offer borrowers fully underwritten solutions at agreed-upon pricing terms with certainty of execution, irrespective of broader market conditions.

Tanner Powell: From a portfolio allocation perspective, we believe that in the current rising rate and inflationary environment, strategies focused on diversified floating-rate portfolios, particularly those with first-lien, can offer highly attractive risk-adjusted terms.

Tanner Powell: From a portfolio allocation perspective, we believe that in the current rising rate and inflationary environment, strategies focused on diversified floating-rate portfolios, particularly those with first lien can offer highly attractive risk-adjusted terms.

Tanner Powell: Moving to investment activity, mid-cap financial was very active during the March quarter, with 4.4 billion of new origination.

Tanner Powell: AINV's level of investment activity was driven by our focus on operating within our target leverage range. For AINV, new corporate lending commitment for the quarter total 116 million across 16 companies for an average new commitment of 7.2 million. 94% of the new commitments were leveraged lending with a balance in lender finance and life sciences.

Tanner Powell: Moving to investment activity, mid-cap financial was very active during the March quarter, with 4.4 billion of new origination.

Tanner Powell: AIMB's level of investment activity was driven by our focus on operating within our target leverage range. For AIMB, new corporate lending commitment for the quarter totaled 116 million across 16 companies for an average new commitment of 7.2 million.

Speaker 4: 94% of the new commitments were leveraged lending with a balance in lender finance and life sciences.

Tanner Powell: All new commitments were first-lien floating rate loans with a weighted average spread of 612 basis points and a weighted average net leverage of 4.7 times. 98% of new commitments were made pursuant to our co-investment order.

Tanner Powell: 94% of the new commitments were leverage lending with a balance in lender finance and life sciences. All new commitments were first lien floating rate loans with a weighted average spread of 612 basis points and a weighted average net leverage of 4.7. 98% of new commitments were made pursuant to our co-investment order.

Tanner Powell: 98% of new commitments were made pursuant to our co-investment order.

Speaker 3: And aweighted average net leverage of four point seven times.

Tanner Powell: Gross funding for the quarter totaled 115 million, excluding Merx revolvers. Sales and payments told over 141 million, excluding Merx revolvers. Net revolver repayments were 28 million. In aggregate, net repayments for the quarter totaled 54 [inaudible].

Speaker 3: 98% of new commitments were made pursuant to our co-investment order.

Tanner Powell: Gross funding for the quarter total 115 million, excluding [inaudible] revolvers. Sales and repayments totaled over 141 million excluding [inaudible]revolvers. Net revolver repayments were 28 million and aggregate net repayments for the quarter totaled 54 million.

Speaker 7: Net revolver repayments were 28 million. In aggregate, net repayments for the quarter totaled 54 [inaudible].

Tanner Powell: Net revolver repayments were 28 million and aggregate net repayments for the quarter totaled 54 million.

Tanner Powell: Moving to Merx, our aircraft [inaudible] portfolio company, AINV's investment in Merx had a fair value of 299 million, representing 12% of the total portfolio at the end of March. It is our intention to reduce our investment in Merx through selling aircraft and de-emphasizing its servicing business.

Tanner Powell: Moving to merks, our aircraft [inaudible] portfolio company, AIMB's Investment in March had a fair value of 299 million, representing 12% of the total portfolio at the end of March. It is our intention to reduce our investment in merks through selling aircraft and deemphasizing its servicing business.

Tanner Powell: During the quarter, we recorded a net unrealized loss of 19.7 million on our investment in Merx, primarily related to our Russian exposure. At the time of Russia's invasion of Ukraine and the imposition of sanction, the Merx owned portfolio included four aircraft on lease to two Russian airlines.

Tanner Powell: During the quarter, we recorded a net unrealized loss of 19.7 million on our investment in merks, primarily related to our Russian exposure. At the time of Russia's invasion of Ukraine and the imposition of sanctions, the merks owned portfolio included four aircraft on lease to two Russian airlines.

Tanner Powell: At the time of Russia's invasion of Ukraine and the imposition of sanctions, the merks owned portfolio included four aircraft on lease to two Russian airlines.

Tanner Powell: Three of the aircraft are in Russia and one was outside of Russia for maintenance at the time of the invasion. The three aircraft that remain in Russia have been re-registered in Russia. The aircraft that was outside of Russia remains registered in Ireland and has now been repossessed by Merx and moved to a storage facility in the EU.

Tanner Powell: Three of the aircraft are in Russia and one was outside of Russia for maintenance at the time of the invasion. The three aircraft that remain in Russia have been reregistered in Russia. The aircraft that was outside of Russia remains registered in Ireland and has now been repossessed by merks and moved to a storage facility in the EU. In response to the various sanctions imposed by the United States and the European Union, merks terminated the leases on all of these aircraft. The merks team has been actively engaged in discussions with the [inaudible] regarding the grounding and redelivery of these aircrafts. No aircraft in the own fleet are in Ukraine or on lease to Ukrainian airlines.

Tanner Powell: In response to the various sanctions imposed by the United States and the European Union, Merx terminated the leases on all of these aircraft. The Merx team has been actively engaged in discussions with the lessees regarding the grounding and redelivery of these aircraft. No aircraft in the own fleet are in Ukraine or on lease to Ukrainian airlines.

Tanner Powell: The three aircraft in Russia generated monthly rent of approximately 516,000 combined. As a reminder, Merx's own fleet is financed through several independent--All four of the aircraft that had been leased to Russian airlines were held in an aircraft securitization known as Maps 2019. The three aircraft remaining in Russia represent approximately 11% of the total adjusted base value in the collateral pool of Maps 2019.

Tanner Powell: The three aircraft in Russia generated monthly rent of approximately 516 thousand combined. As a reminder, merks own fleet is financed through several independent-- all four the aircraft that had been leased to Russian airlines were held in an aircraft securitization known as maps in 2019.

Tanner Powell: The three aircraft remaining in Russia represent approximately 11% of the total adjusted base value in the collateral pool of [inaudible] 2019.

Tanner Powell: As is standard practice and required under the terms of the leases, the lessees have an obligation to ensure the aircraft. Merx further maintains a contingent insurance policy on the aircraft. We are vigorously pursuing all claims available to us under these insurance policies. Management, based on consultation with legal Counsel, believes we have valid insurance claims for the total loss value of the aircraft. We are claiming under both the lessees policies which are placed in the Russian market and, prior to sanctions, had been reinsured with reparable insurers in the London and international markets, and our own contingent policy, which is placed by Aon with reparable insurers in the London and international markets.

Tanner Powell: As is standard practice and required under the terms of the leases, the lessees have an obligation to ensure the aircraft. Merks further maintains the contention insurance policy on the aircraft. We are vigorously pursuing all claims available to us under these insurance policies. Management, based on consultation with legal counsel, believes we have valid insurance claims for the total loss value of the aircraft. We are claiming under both the lessee policies which are placed in the Russian market and, prior to sanctions, have been reinsured with reparable insurers in the London and international markets, and our own contingent policy, which is placed by Aon with reparable insurers in the London and international markets.

Speaker 8: On honor both the alleses' policies.

Speaker 4: which are placed in the Russian market and, prior to sanctions, had been reinsured with reparable insurers in the London and international markets, and our own contingent policy, which is placed by Aon with reparable insurers in the London and international markets.

Speaker 2: which are placed in the Russian market and, prior to sanctions, have been reinsured with reparable insurers in the London and international markets, and our own contingent policy, which is placed by Aon with reparable insurers in the London and international markets.

Tanner Powell: Our valuation reflects various uncertainties, including the probability of recovery under our claims, among other factors, which resulted in a meaningful decline in the value of these aircraft during the quarter.

Tanner Powell: Our valuation reflects various uncertainties, including the probability of recovery under our claims, among other factors, which resulted in a meaningful decline in the value of these aircraft during the quarter.

Tanner Powell: Turning to the overall AINV portfolio, our investment portfolio had a fair value of 2.5 [inaudible] 139 companies in 26 different industries.

Tanner Powell: Turning to the overall AIMB portfolio, our investment portfolio had a fair value of 2.5 [inaudible] plus 139 companies in 26 different industries.

Tanner Powell: Corporate lending represented 83% of the portfolio, Merx represented 12% and the non-foreign legacy assets represented 5%. As Howard mentioned, pro forma for post-quarter in monetizations, including pending [inaudible] 3% of the portfolio at fair value.

Tanner Powell: Corporate lending represented 83% of the portfolio, merks represented 12% and the non-corn legacy assets represented 5%. As Howard mentioned, pro forma for post quarter in monetizations including pending 3% of the portfolio at fair value. First lien assets represented 94% of the corporate lending portfolio.

Speaker 9: 3% of the portfolio, add fair value.

Tanner Powell: First-lien assets represented 94% of the corporate lending portfolio. At the end of March, the weighted average spread on our corporate lending portfolio was 611 basis points.

Speaker 2: 3% of the portfolio at fair value. First lien assets represented 94% of the corporate lending portfolio.

Speaker 10: At the end of March, the weighted average spread on our corporate lending portfolio was 611 basis points.

Tanner Powell: We continue to monitor the impact of inflation on our portfolio companies. We believe our portfolio is generally weighted towards industries that are less impacted by inflation and supply chain issues. It's worth noting that none of our corporate lending portfolio companies are domiciled in Russia or the Ukraine.

Tanner Powell: At the end of March, the weighted average spread on our corporate lending portfolio was 611 basis points. We continue to monitor the impact of inflation on our portfolio companies. We believe our portfolio is generally weighted towards industries that are less impacted by inflation and supply chain issues. It's worth noting that none of our corporate lending portfolio companies are domiciled in Russia or the Ukraine.

Tanner Powell: Moving to credit metrics, at the end of March, the weighted average net leverage of the corporate lending portfolio was 5.29X, the weighted average attachment point was 0.2X, and the weighted average interest coverage ratio was 2.9X.

Tanner Powell: Moving to credit metrics, at the beginning of March, the weighted average net leverage of the corporate lending portfolio was 5.29 times. The weighted average attachment point was 0.2 two times, and the weighted average interest coverage ratio was 2.9 times.

Tanner Powell: Investments made to our co investment order represent 85% of the corporate lending portfolio at the end of the quarter. No investments were placed on nonaccrual status during the quarter.

Tanner Powell: Investments made to our co-investment order represented 85% of the corporate lending portfolio at the end of the quarter. No investments were placed on nonaccrual status during the quarter.

Tanner Powell: At the end of March, investments on non-accrual totaled 15 million or 0.6% of the total unchanged quarter-over-quarter. With that, I will now turn the call over to Greg, who will discuss the financial performance for the quarter.

Speaker 2: No investments were placed on nonaccrual status during the quarter.

Speaker 9: Zero 1% of the total unchanged quarter of the quarter. With that, I will now turn the call over to Greg, who will discuss the financial performance for the quarter.

Tanner Powell: At the end of March, investments on non-accrual totaled 15 million or 0.6% of the total unchanged quarter-over-quarter. With that, I will now turn the call over to Greg, who will discuss the financial performance for the quarter.

Speaker 2: Zero 1% of the total unchanged quarter of the quarter. With that, I will now turn the call over to Greg, who will discuss the financial performance for the quarter.

Gregory William Hunt: Thank you Tanner, and good morning everyone. I'll begin with our statement of operations. Full investment income was 54.7 million to the quarter, down slightly quarter-over-quarter. Results for the quarter reflect a slight increase in interest income and strong fee in pre-payment income. Weighted average yields cost of our corporate lending portfolio was 7.7% at the end March, up from 7.6% at the end of December. The weighted average spread of our corporate lending portfolio was 611 basis points, compared to 605 basis points at the end of December.

Gregory William Hunt: Thank you Tanner, and good morning everyone. Beginning with our AIMB statement of operations, full investment income was 54.7 million for the quarter, down slightly quarter-over-quarter. Results for the quarter reflected a slight increase in interest income and strong fee and prepayment income. Weighted average yield at cost of our corporate lending portfolio was 7.7% at the end of March, up from 7.6% at the end of December. Weighted average spread of our corporate lending portfolio was 611 basis points, compared to 605 basis points at the end of December. Net expenses for the quarter totaled $27.9 million, down 4.6 million quarter-over-quarter, primarily driven by the decrease in incentives. As a reminder, the incentive fee on income includes the total return hurdle with a rolling 12-quarter look back.

Gregory William Hunt: Net expenses for the quarter totaled $27.9 million, down 4.6 million quarter-over-quarter, primarily driven by the decrease in incentives.

Gregory William Hunt: As a reminder, AINVs incentive fee on income includes the total return hurdle with a rolling 12-quarter look back. Net loss incentive fees during the quarter totaled approximately $1 million, compared to $5.4 million last quarter. Net investment income for the March quarter was 42 cents per share and net leverage was 1.51.

Speaker 4: During the quarter total approximately $1 million, compared to five point four million last quarter. Net investment income for the March quarter was 42 cents per share and net leverage was one.

Gregory William Hunt: The net loss during the quarter totaled approximately $1 million compared to 5.4 million last quarter. Net investment income for the March quarter was 42 cents per share and net leverage was 1.5. On page 16, in the earning supplement, we disclosed the net gain or loss by strategy over the past five quarters. During the March quarter, our corporate lending book had a net gain of 3.8 million or six cents per share concentrated in a few positions. As Tanner mentioned, we recorded a $19.7 million unrealized loss on merks, or 31 cents per share, related to our exposure to Russia. We recorded an additional 6.7 million or 11 cents per share on non-foreign legacy that was driven by losses from our remaining ship investment and reflect realizational rate as Howard spoke about. Net per share at the end of March was $15.79 cents or 1.8 or 29 cents increase quarter-over-quarter.

Gregory William Hunt: On page 16, in the earnings supplement, we disclosed a net gain or loss by strategy over the past five quarters. During the March quarter, a corporate lending book had a net gain of 3.8 million or six cents per share, concentrated in a few positions. As Tanner mentioned, we recorded a $19.7 million unrealized loss on Merx or 31 cents per share related to our exposure to Russia. We recorded an additional 2.7 million or 11 cents per share on non-foreign legacy, as is driven by losses from our remaining ship investments and reflect realizational rate as Howard had spoken about.

Speaker 5: zero point five one on paid 16. in the earning supplement we asdisclosed the net game, or loss by strategy over the past five quarters. During the March quarter our corporate lending bookhad a net game- a three point million or six cents per share, concentrated in a few provisitions. As tanor mentioned, we recorded a $19.7 million unrealized loss on mercs, or 31 cents per share, related to our exposure to Russia. We recorded an additional just seven thousand or 11 cents per share, a noncoren legacy as ES driven by losses from our remaining ship investment and reflect realizational rate how it's spoken aboutnow per share. At the end of March, with 15 point $15 and 79 cents or one point, a one point eight or 29 centy crease quarter over the quarter.

Gregory William Hunt: Now per share at the end of March was $15.79 or 1.8 or 29 cents increase quarter-over-quarter. The decrease is attributable to a 36-cent per share loss in the portfolio, offset by six cents of net income relative to the distribution.

Gregory William Hunt: The decrease is attributable to a 36-cent per share loss in the portfolio, offset by 6% of net income relative to the distribution. Moving to capital, our liquidity position remains strong, with undrawn revolver capacity well in excess of unfunded commitment to borrowers. Consistent with our historical cadence, we do expect to amend our revolving credit facility in the fall. Given the increased focus on the current interest rate environment, I'd like to provide some comments on the impact of higher reference rates on our portfolio. We are well-positioned to benefit from rising interest rates. We expect increases in short term rates as they exceed the floors on our investments that have a positive impact on net income.

Gregory William Hunt: Moving to capital, our liquidity position remains strong, with undrawn revolver capacity well in excess of unfunded commitment to borrowers consistent with our historical cadence. We do expect to amend our revolving credit facility in the fall. Given the increased focus on the current interest rate environment, I'd like to provide some comments on the impact of higher reference rates on our portfolio.

Gregory William Hunt: We are well-positioned to benefit from rising interest rates. We expect increases in short-term rates as they exceed the floors on investments that have a positive impact on net income.

Speaker 13: Have a positive impact on net income.

Gregory William Hunt: The average floor on our investment is approximately 1%. Re-term interest rates increased significantly, with LIBOR increasing from 21 basis points at the end of December to 96 basis points at the end of March and, as of yesterday, LIBOR was about 150 basis points.

Gregory William Hunt: The average floor on our investments is approximately 1%. Short-term interest rates have increased significantly, with LIBOR increasing from 21 basis points at the end of December to 96 basis points at the end of March and, as of yesterday, LIBOR was about 150 basis points. Based on quarter-end rates, we estimate a hundred basis point and a 200 basis point increase in reference rates would result in annual incremental earnings of approximately seven cents and 19 cents per share.

Speaker 13: Increased significantly, with LIBOR increasing from 21 basis points at the end of December to 96 basis points at the end of March and, as of yesterday, library was about 150 basis points.

Gregory William Hunt: Based on quarter-end rates, we estimate a 100 basis point and a 200 basis point increase in reference rates would result in annual incremental earnings of approximately seven cents and 19 cents per share.

Gregory William Hunt: Regarding stock buybacks during the quarter and post-quarter-end, AINV repurchased approximately 2.4 million of stock, which leaves approximately 30 million available under our authorization for future stock repurchases. This concludes our remarks and we'd like to open up the call for questions.

Gregory William Hunt: Regarding stock buybacks, during the quarter and post-quarter-end, AIMB repurchased approximately 2.4 million of stock, which leaves us approximately 30 million available under our authorization for future stock repurchases.

Speaker 9: Excellent three million available under our authorization for future stock repurchases.

Speaker 13: This concludes our remarks and we'd like to open up the call and questions.

Operator: At this time, if you would like to ask a question, please press the star and one key on your touchtone phone. You may remove yourself from the queue at any time by pressing the pound key. Once again, that is star one to ask a question and our first question will come from Arren Cyganovich with City Global Markets.

Multiple speakers: This concludes our remarks and we'd like the open up the call for questions. At this time, if you would like to ask a question, please press the star and one key on your touchtone phone. You may remove yourself from the queue at any time by pressing the pound key. Once again, that is star one to ask a question and our first question will come from Arren Cyganovich with City Global Markets. I was wondering if you talk a little bit about the spread wide means if there's any kind of improvements in terms of documentation just given the kind of volatility we're starting to see in the more liquid markets that's starting to move down into the private markets as well.

Arren Saul Cyganovich: I was wondering if you talk a little bit about the spread widening if there's any kind of improvements in terms of documentation, just given the kind of volatility we're starting to see in the more liquid markets if that's starting to move down into the less liquid private markets as well.

Speaker 4: You know spreadwide name if there's any kind of improvements in terms of documentation, just given the kind of volatility we're starting to see in the in the more liquid markets in.

Speaker 4: And it's that starting chp to move down into the, into the less liquid private markets as well.

Howard T. Widra: The spread widening, I'd say is at least with regard to things being proposed right now. I wouldn't say the documentation is yet and obviously that's sort of like an imperfect thing to monitor this deal by deal, and has been the case really for the last I don't know year or two. There have been some groups that have driven a lot of sort of the degradation of the documents and they're still active. So the market has not moved yet, I'd say on terms, but I would expect it to. We've actually spent a lot of time discussing in the past couple of weeks about where we want to win and how we want to make choices in a market that's going to look different six weeks from now. It just takes a little while to work its way through. So I'd yes on the pricing and no on the terms.

Howard T. Widra: The spread widening, I'd say, is at least with regard to things being proposed right now. I wouldn't say the documentation is yet and obviously that's sort of like an imperfect thing to monitor this deal by deal, and as has been the case really for the last, I don't know year or two, there have been some groups that have driven a lot of sort of the degradationof of the documents and they're still active. So the market has not moved yet, I'd say on terms, but I would expect it to. We've actually spent a lot of time discussing the past couple of weeks about where we want to land and how we want to make choices in a market that's going to look different six weeks from now. It just takes a little while to work its way through. So I'd say yes on the pricing and no on the terms yet.

Speaker 1: Of the documents and the you know they.

Speaker 1: Yes they're still active, So you know.

Speaker 1: The market isnot. The market has not moved yet, I'd say on terms, but I would expect it to.

Speaker 1: Of the documents and that you know they're, you know they're still active. So about you knowthe market has not. The market has not moved yet, I'd say on terms, but I would expect it to. We've actually spent a lot of time discussing in the past couple of weeks about you know where we want to win and how we want to make choices in. In in. A market's going to look different six weeks from now just takes a little while to work its way through.

Speaker 1: We've actually spent a lot of time discuss in the past couple of weeks about you know where we want to end and how we want to make choices in a market's going to look different six weeks.

Speaker 1: You know, just takes a little while to work its way through.

Speaker 2: So I'd say yes are the pricing and no on the terms yet.

Arren Saul Cyganovich: And then you're still running kind of around one and a half times net leverage, that's super high relative to your limit, but it is higher than most PDC's that have been operating the lending portfolios. Is there an intention to bring that down or do you continue to expect to run around one and a half?

Multiple speakers: And then you're still running kind of around one and a half times that leverage, it's not super relative to your limit, but it is higher than most BBC's have been operating lending portfolios. Is there an intention to bring that down or do you continue to expect to run around one and half? I mean we've talked about our range being one point to one point six, but likely on this is the lower end of that range. So that's like usually, we don't expect necessary to creep up to one point six. So this goes to the underlying risk of the portfolio in large amount, like when we continue to focus on everybody that our attachment point is 0.2. There are a lot of loans that are listed as firstly loans that let a turn of leverage in front of them from banks.

Howard T. Widra: Yes, I mean we've talked about our range being 1.4 to 1.6, but likely, on the lower end of that range, so that's usually like we don't expect necessarily to creep up to 1.6. So this goes to the underlying risk of the portfolio in large amounts, like when we continue to focus on everybody that our attachment point is 0.2. There are a lot of loans that are listed as first-lien loans that led a turn of leverage in front of them from banks. And so, if we're 1.5 times leverage and we're true senior or we're at 1.25 leverage and we have a turn in front of us or actually the same on a risk perspective, so we feel like from a risk perspective, we're actually at a very similar range to what people are doing. There are no second liens, true first-lien, and then also some percentage of [inaudible] which have very, very low in default. So we feel like the risk level is similar to where people are, but the flip side is everybody asks the question you just asked. No, we [inaudible] okay whatever but your rate is too high, so we hear that, so we will--Our intention is to sort of like move it down as sort of like the opportunities make sense.

Speaker 1: In large amount, like when we know- we continue to focus on and they're trying to focus on everybody- that our attachment point is 0.2. there's a lot of loans that are listed as first lien, loans that let a turn of leveragegen in front of them from banks.

Speaker 2: And soif we're one point five timesides leverage and we're true senior or we're at one point two five leverage and we have a turn in front of us- are actually the same on a risk perspective. So, you know, we feel like from a risk perspective, we're actually a very similar range to what people are doing. Very, no second lien true, first lien, you know, and and then also you know some percentage of which are, you know, which have very, very low LO in the default. So we feel like the risk level is is is similar to where people are, but the flip side is: everybody asked the question you just ask.

Multiple speakers: And so if we're at one point five times leverage and we're true senior, or we're at one point two five leverage and we have a turn in front of us, they're actually the same on a risk perspective. So we feel like, from a risk perspective, we're actually in a very similar range to what people are doing, very, no second lien, true first lien, and then also some percentage of [inaudible] which have very, very low [inaudible] in default. So we feel like the risk level is similar to where people are, but the flip side is, everybody asked the question. You just ask ok whatever, but your leverage is too high. So we hear that, so our intention is to sort of like move it down as sort of like the opportunities make sense. Right, that makes sense. You should benefit from the rising rates as well. You can see some opportunities there a little bit.

Speaker 2: No we know't run okay whatever but your ree reference to.

Speaker 1: So we we'll. We hear that, So we will, we will. Our intention is to sort of likemove it down as, as sort of like, the opportunities make sense.

Arren Saul Cyganovich: Right, that makes sense and you should benefit from the rising rates as well, so that gives you some opportunity a little bit. The last question I had was on the Russian aircraft is that is seeking the insurance payment on that. Do you expect that to be a kind of a protracted process or is it something you expect to see finished within the next couple of quarters?

Arren Saul Cyganovich: The last question I had was on the Russian aircraft, seeking the insurance payment on that, do you expect that to be a kind of a protracted process or is it something that we might expect to be finished within the next couple of quarters?

Speaker 4: inor. Is it something that you might expect to be? They are finished within the next couple of quarters.

Speaker 16: They are finished within the next couple of quarters.

Tanner Powell: Yeah, I'm happy to take that one Arren. The answer is yes, it will be disputed, not surprisingly, from the other side and the insurance companies, and ultimately, it is a problem that is not unique to us, I guess, unfortunately, more broadly, and thus you have as a result, quite a bit of focus on it and quite a bit of institutional [inaudible] kind of on our side so to speak, as you would expect, broadly speaking, for less [inaudible] that are in a similar position to be treated relatively similarly. So a couple of quarters at least certainly, and it'll have a lot to do with how it progresses from here. But as I will call attention to and in our prepared remarks and also call attention to other public lessers in the statements, we think one hundred percent that our claims have merit and intend to pursue them vigorously.

Tanner Powell: I'll take that one, Arren. The answer is yes, it will be disputed, not surprisingly from the other side and the insurance companies. And ultimately, it is a problem that is not unique to us I guess unfortunately more broadly and thus you have as a result quite a bit of focus on it and quite a bit of institutional heft kind of on our side so to speak as you would expect broadly speaking for less stores that are in a similar position to be treated relatively similarly. So a couple of quarters at least certainly and it'll have a lot to do with how it progresses from here. But as I will call attention to in our prepared remarks and also call attention to other public [inaudible] in the statements, we think 100% that our claims have merit and intend to pursue them vigorously.

Speaker 7: Call attention to other public less res in the statements. We think 100% that are our claims have merit and intend to pursue them vigorously.

Arren Saul Cyganovich: Thank you.

Operator: Thank you. Our next question will come from Kyle Joseph with Jeffrey's.

Multiple speakers: Thank you. Our next question will come from Kyle Joseph with Jeffreys. Hey, good morning, thanks for taking my questions. I'll start on Merx, Tanner, obviously, some of what I would consider one time negative impacts in the quarter. Can you give us a sense for how the business is performing outside of that? Obviously, we know the domestic airline industry is crushing it but on a global basis give us some more color, given Merx's global exposure.

Kyle M. Joseph: Hey, good morning, thanks for taking my questions. I guess I'll start on Merx, Tanner, obviously some what I consider one-time negative impacts in the quarter, can you give us a sense for how the business is performing outside of that? Obviously, we know the domestic airline industry is crushing it but on a global basis give us some more color, given Merx's global exposure.

Tanner Powell: Yeah, thanks for the question Kyle, and I think your dichotomy actually is a good one. The issues in Merx and the write down that we saw was really just related to our assessment of the Russia situation and the insurance claims as we've mentioned, and more broadly we have seen a market that continues to heal itself. Obviously, it continues to be very volatile in terms of appeal prices and inflationary impacts, but we have seen a progressive healing within the broader air traffic market, which has benefited, not surprisingly, aircraft values and underline airlines as things have come back online, and that was reflected in the stability outside of the Russia situation within the Merx portfolio.

Tanner Powell: Yeah, thanks for the question Kyle, and I think your dichotomy actually is a good one. The issues in Merx and the write-down that we saw were really just related to what would be our assessment of the Russia situation and the insurance claims as we mentioned, and more broadly we have seen a market that continues to heal itself. Obviously, it continues to be very volatile in terms of appeal prices and inflationary impacts, but we have seen a progressive healing within the broader air traffic market, which has benefited, not surprisingly, aircraft values and underline airlines as things have come back online, and that was reflected in the stability outside of the Russia situation within the Merx portfolio.

Kyle M. Joseph: And then obviously you're non-accruals were stable, how is the corporate lending portfolio doing in terms of revenue in EBITDA in either growth or margins? And then can you give us any sense for your thoughts on the shift in rates impacting credit in the middle market?

Kyle M. Joseph: Got it. And then obviously, your non-accruals were stable. How is the corporate lending portfolio doing in terms of revenue and EBITDA- either growth or margins? And then can you give us your thoughts on the shift in rates impacting credit in the middle market?

Tanner Powell: Yeah, absolutely and this is something that know we track pretty closely. I'll make the same caveat that I make each and every quarter. We do our best to try to disaggregate the portfolio from those names that are particularly acquisitive to try to get as close to a more organic number. Obviously, given our capital is particularly attractive to sponsors that want to roll up industries, that gets increasingly difficult. But notwithstanding, when we do our best try to tease out those issues of comparability, we're seeing revenue fine kind of in the mid-single digits. In aggregate you've seen obviously we were in an inflationary environment even before be the invasion of Ukraine and would expect some of that to have knock on effects, particularly as it relates to oil prices and food. But we did see a slower growth on EBITDA and keep in mind that those results would not have digested kind of the most recent rise in commodity prices. And I think as a generic statement or speaking generally, I think it once again reaffirms our strategy which Howard discussed, wherein we're creating these companies oftentimes at first dollar to kind of a 60% LTV and the effects on these companies is unequivocal, hire interest rates will inevitably increase costs and there's differing levels of how inflation affects a company's earnings, but again, with how we've position the portfolio and where we're creating these companies, we think that gives us a lot of mitigation to those effects and ultimately our credit quality and loans and securities that we're invested in.

Tanner Powell: Yeah, absolutely, and this is something that we track pretty closely. I'll make the same caveat that I make each and every quarter. We do our best to try to disaggregate the portfolio from those names that are particularly acquisitive to try to get as close to a more organic number. Obviously, given our capital is particularly attractive to sponsors that want to roll up industries, that gets increasingly difficult. But notwithstanding, when we do our best try to tease out those issues of comparability, we're seeing revenue fine kind of in the mid single digits. In aggregate, you've seen, obviously we were in an inflation environment even before the invasion of Ukraine and would expect some of that to have knock on effects, particularly as it relates to oil prices and food, but we did see a slower growth on EBITDA and keep in mind that those results would not have digested kind of the most recent rise in commodity prices. And I think, as a generic statement, or speaking generally, I think it once again reaffirms our strategy which Howard discussed, wherein we're creating these companies oftentimes at first dollar took kind of a 60% LTV and the effects on these companies is unequivocal, higher interest rates will inevitably increase costs and there are differing levels of how inflationary effects affect the company's earnings. But again, with how we've positioned the portfolio and where we're creating these companies, we think that gives us a lot of mitigation to those effects and ultimately, our credit quality and the loans and securities that we were investing in.

Speaker 7: And and food, but we did see a slower growth on EBITDA and keep in mind that those results would not have the de digested kind of. The most recent rise in commodity prices and I think, as a generic statement, or are speaking generally, I think it once again reaffirms are strategy which Howard discussed, wherein we're creating these companies. Oftentimes, at first dollar took kind of a 60% LV and the effects on these companies is unequivoable, hiring interest rates will other ly, increased costs and there's different, differing levels of how inflationary effects affect compies' earnings. But again, with how we've positioned the portfolio and where we're creating these companies, we think that that gives us.

Kyle M. Joseph: Got it, thank you. And then one last one for me, just where we are in your fiscal first quarter, can you give us a sense for investment activity, not asking for guidance, but maybe just comparing it to the quarter ended March 31st for reference.

Kyle M. Joseph: Got it, thank you. And then one last one from me: just where we are in your fiscal first quarter, can you give us a sense for investment activity? Not asking for guidance, but maybe just comparing it to the quarter that ended March 31st for reference.

Tanner Powell: Yes, it remains strong and I think that's a couple of things. I think, broadly speaking, we are seeing a decline in M&A. More broadly, I think there's a little bit of- as we mentioned in our prepared remarks- private solutions- this is our uptake to shine to an extent. And then the other point there Kyle, which we tried to make at nauseam, is that the BDC and AINV really benefits from the dynamic wherein we're two and a half billion dollar fund with an origination force, sales force, that's sourcing for kind of 25 billion of capital, and so the activity levels even in markets where M&A is more challenged, our position is small relative to the overall business enables us to calibrate our originations and not suffer and even in periods where M&A might decline.

Tanner Powell: Yeah, it remains strong and I think that's a couple of things. I think broadly speaking, we are seeing a decline in M&A, more broadly I think there's a little bit of-- as we mentioned in our prepared remarks--private solutions, this is our opportunity to shine to an extent. And then the other point there, Kyle which we tried to make at nauseam is that know the BBC and AINV really benefit from the dynamic wherein we're two and a half billion dollar fund with an origination sales force that sourcing for kind of 25 billion of capital and so the activity levels even in markets where M&A is more challenged, our position is small relative to the overall business enables us to calibrate our originations and not suffer and even in periods where M&A might decline. And I'll just put a number on one thing and I think in the first quarter need capt $4.4 billion origination in April to $2.2 million net May will not be as strong as that, but as Tanner said the activity is pretty similar, the mix may be a little bit different, meaning there may be some more asset-based lending as the market moves a little bit but still the velocity is pretty good. That doesn't all trickle through to AIC, especially when we're at our 1.5 leverage, because we're picking our spots differently.

Howard T. Widra: And I'll just put a number on one thing. I think in the first quarter lien capped $4.4 billion origination in April at 2.2 billion, May will not be as strong as that but, as Tanner said, the activity is pretty similar. The mix may be a little bit different, meaning there may be some more asset-based lending as the market moves a little bit, but still the velocity is pretty good. You know that doesn't all trickle through to AINV, especially when we're at our 1.5 leverage because we're picking our spots differently.

Speaker 1: Need capt $4.4 billion origination in April to two point two billion net may, and may will not be as strong as that, But as tenor said that the activity is pretty similar, the mix may be a little bit different, meaning there may be some more asset based lending as as the market moves a little bit. But you know, still the the velocity is pretty good.

Speaker 2: You know that doesn't all trickle through to a I V, especially when we're at our 1, five leverage, because we're, you knowwe.

Speaker 1: Picking her spots.

Speaker 1: You know differently.

Speaker 1: You know that doesn't all trickle through to Hey I V, especially when we're at our 1: five leverage, because we're, you know, we're picking our spoonts know differently.

Kyle M. Joseph: Yes, that all makes sense. Thanks very much for answering my questions.

Operator: Thank you. Our next question will come from Kenneth Lee with RBC Capital Markets.

Multiple speakers: Yes, that all makes sense. Thanks very much for answering my questions. Thank you. Our next question will come from Kenneth Lee with RBC Capital Markets.

Kenneth S. Lee: Hi, good morning and thanks for taking my question. It sounds like you're making great progress on the non-core asset dispositions and by now [inaudible] is the main remainder there. Just wondering if you could just give us what's your best sense on a potential time frame or disposition there? Is that dependent on any [inaudible]?

Kenneth S. Lee: Hi, good morning and thanks for taking my question. It sounds like you're making great progress on the non-core asset dispositions and by now [inaudible] is the main remainder there. Just wondering if you could just give us what's your best sense on a potential time frame for disposition there? Is that dependent on any and kind of [inaudible]? Thanks.

Speaker 1: And cut also Neal pbackers banks.

Multiple speakers: [Howard Widra] Tanner, do you want me to do it? [Tanner Powell] I'm happy to do it, sorry. Thanks for the question, Ken. This is, as we've talked about in the in the past, a company and a technology that we're really, really excited about, and one that is squarely in the fairway of this broader, very attractive secular trends around ESG and their carbon capture technology is something that is modular, has really great attraction with companies to date, and we would expect that to only be enhanced in the years to come as that becomes even more of a focus. It is earlier stage and I think in more valuable markets, probably fewer opportunities for disposition. I think the good news with respect to-- amongst many good news, but one very good fact is that the company had raised to convert and so they have capital to execute on their business plan, but I would think of this as a longer term halt, one that will likely not avail itself of an exit within 2022, but importantly, runway to continue to execute on its growth plan and prove out it's very attractive solution to refineries and then the broader industrial complex with regards to its carbon capture technology.

Multiple speakers: Tanner, do you want me to do it? I'm happy to do it, sorry. Yeah, thanks for the question, Ken. As we've talked about in the past, a company and technology that we're really, really excited about and one that is squarely in the fairway of the broader, very attractive secular trends around ESG and their carbon capture technology is something that is modular, has really great traction with companies to date and we would expect that to only be enhanced in the years to come as that becomes even more of a focus. It is earlier stage and I think in more volatile markets probably fewer opportunities for disposition, I think the good news with respect to-- amongst many good news but one very good fact is that the company had a raise to convert, and so they have capital to execute on their business plan. But I would think of that as a longer-term hold, one that will likely not avail itself of an exit within 2022, but importantly, runway to continue to execute on its growth plan and prove out this very attractive solution to refineries and then the broader industrial complex with regards to its carbon capture technology.

Speaker 7: the company had a raise to convert, and so they have capital to execute on their business plan. But I would think of that as a longer-term hold, one that will likely not avail itself of an exit within 2022, but importantly, runway to continue to execute on its growth plan and prove out this very attractive solution to refineries and then the broader industrial complex with regards to its carbon capture technology.

Kenneth S. Lee: Very helpful there. And in terms of follow-up and impact, looking at impact of rising short-term rates on portfolio companies, would you be able to give a sense of how the portfolio expense [inaudible] ratio would be impacted if [inaudible]? Thanks.

Kenneth S. Lee: Very helpful there. And in terms of a follow-up on impact, looking at the impact of rising short-term rates on portfolio companies, would you'd be able to give us a sense of how the portfolio expense ratio would be impacted if [inaudible]? Thanks.

Speaker 1: We're to a shoppy V open here to thanks.

Tanner Powell: Yes, sure. And Ken, just to clarify, your question is at the underlying company level or at the AIMB level?

Multiple speakers: Yes sure. And Ken just to clarify, your question is that the underlying company level or at the AIMV level? The underlying portfolio company level.

Kenneth S. Lee: The underlying portfolio company level.

Tanner Powell: Yes, sure. So, we reported our interest coverage--First of all, I think there is a risk of being redundant here. Our solutions and our origination tries to focus on know stretch, senior and in a more limited way, tranche type financing and an overall a lower levered profile, which is one benefit that we have in terms of our origination and portfolio construction. As of that first quarter, when LIBOR was firmly below the floor, we were at 2.9X and so that number would not have any of the effect of anything above one but suggests some really nice cushion as rates increase. Now certainly, it will be path-dependent from here and we can all do the math to the extent that LIBOR ultimately outperformed its rising forward curve that's showing on the screen, but we're in a place of pretty good coverage and again, I think that emanates from the lower levered profile and intentional focus on a stretched senior solution from our mid-cap origination engine.

Tanner Powell: Yes, sure. So we reported our interest coverage-- first of all, I take the risk of being redundant here. Our solutions in our origination tries to focus on stretch senior and in a more limited way, unit tranche type financing, and overall a lower leverage profile, which is one benefit that we have in terms of our origination and portfolio construction. As of that first quarter, when LIBOR was firmly below the floor, we were at 2.9 times and so that number would not have any of the effect of anything above one but suggests some really nice cushion as rates increase. Now certainly it will be cap-dependent from here and we can all do the math for the extent that LIBOR [inaudible] ultimately outperformed it's rising forward curve that's showing on the screens, but we're in a place of pretty good coverage and again, I think that emanates from the lower levered profile and intentional focus on stretch senior solutions from our mid-cap origination engine.

Speaker 7: Ultimately outperforms. It's rising for curve, that's showing on the screens, but we're in a place of a pretty good coverage and again I think that emanates from, in the lower levered profile, an intentional focus on stretch senior solutions from our mid-cap origination engine.

Kenneth S. Lee: Gotta, very helpful there. Thanks.

Operator: Thank you. Our next question will come from Finian O'Shea with Wells Fargo Securities.

Finian Patrick O'Shea: Gotcha, very helpful there. Thanks. Thank you. Our next question will come from Finian O'Shea with Wells Fargo Securities.

Unknown Speaker: Hi, guys, good morning, it's Jordan on for Fin. I just have two questions for Tanner. They're kind of related so throwing both out there. It looks like if I'm looking at this correctly-Merx broke down their assets on the Merx balance sheet by 47 million for the jets in Russia. I was just hoping to get some idea on whether that reflects the full value of [inaudible] if that's like probability-weighted. And then secondly, on the AINV balance sheet, Merx is down say 20 million. Does the difference there basically reflect some probability-weighted assumption of what you'll recover? Just any color you can give on that.

Unknown Speaker: Hi guys, good morning. It's Jordan on for Fin. I just have two questions for Tanner. They're kind of related, so throwing both out there. If I'm looking at this correctly Merx wrote down their assets on the Merx balance sheet by $47 million for the jets in Russia. Just hoping to get some idea on whether that reflects based with the full value of those jets or if that's like probability waited. And then secondly, on the AIMV balance sheet, Merx is down say 20 million. Does the difference there basically reflects some probability waited assumption of what you'll recover? Just any color you can give on that.

Speaker 22: If that's like probability weighted. And then secondly, on the am B balance sheet marks is down, say Twenty million.

Speaker 3: Does difference there? Basically reflects some probability weighted.

Speaker 23: Assumption of what you'll recover, just any color you give on that.

Tanner Powell: Yes, very good question. So when we look at the [inaudible], we think that our claims are very strong and have merit and fully intend to pursue a full payout owing to the potential that it's either a negotiated solution and or it could be protracted, we took a discount to the value, the insured value, based on the methodology, based on a methodology of probability weighting that you kind of alluded to in your question there and, if you think about it, the value was somewhere in the mid-forty's and we took a hair cut to 25 million kind of on a net discounted value as what we have in our valuation on those Russia planes in particular, and assume that those proceeds take about two years to come in. And then, as it relates to the other movements within Merx, there were some know ins and outs but outside of that Russia write-down of roughly 20 million, the Merx portfolio was roughly flat and in line, and that goes to that question that we are seeing some stabilization outside of the Russia specific situation.

Speaker 4: And distress. Know we think that our claims are are very strong and have merit and fully intended pursue of full payou T, owing to the potential that it's either a negotiated solution and or, you know, could be protracted, we took a discount to the value, the insured value, based on the methodology, based on a methodology of probability waiting that you kind of alluded to in your, in your, in your question there and, if you think about it, the value was somewhere in the in the mid forty's and we took a hair cut to 20 20, five million kind of on a net discountted value. You know, as what we have in our, in our valuation on on those Russia planes in particular, and assume that those, those proceeds take about two years to to come in. And then, as it relates to the other movements within Merx, there were some know ins and nounced, but outside of that Russia, right down of the rough roughly 20 million, the March portfolio was roughly, was roughly flat and in line and that and that goes to that.

Speaker 7: Distress. You know we think that our claims are are very strong and have merit and fully intendeded pursue of full payou T owing to the potential that it's either a negotiated solution and or, you know, could be protracted, we took a discount to the value, the insured value, based on the methodology, based on a methodology of probability waiting that you kind of alluded to in your, in your, in your question there and, if you think about it, the value was somewhere in the in the mid forty's and we took a hair cut to 20 20, five million kind of on a net discountted value, you know, as what we have in our, in our valuation on on those Russia planes in particular, and assume that those, those proceeds take know about two years to to come in. So the balance sheet shows a full reduction, but the valuation rules obviously require you to value what your assets were.

Speaker 4: question that we are seeing some stabilization outside of the Russia specific situation.

Howard T. Widra: But Tanner, let me just jump in. The difference between the two, between the Merx financial statements and evaluation, is the Merx write-down of the assets was the full value under GAAP, which is the same thing you're seeing from all lessers because under GAAP if you no longer have the assets, you can't have it on the balance sheet. On the same token by GAAP, you don't put the insurance claim on the balance sheet as an asset, because it had some contingency. So the balance sheet shows the full reduction, but the valuation rules obviously require you to value what your assets were. And so Tanner just walked through an evaluation but that's why there's a difference-and it's not that different than you see from some of the big lessers who have big, big exposure. They said two things, "We've written down our exposure completely and we expect to recover a lot." Right, that's sort of what you've seen from the industry and that's what this shows, and we feel like our valuation methodology was relatively conservative versus the strength of our claims.

Speaker 2: On the same token by GAAP, you don't put the insurance claim on the balance sheet as an asset, because it had some contingency. So the balance sheet shows the full reduction, but the valuation rules obviously require you to value what your assets were.

Speaker 1: So the balance sheet shows a full reduction, but the valuation rules obviously require you to value what your assets were.

Speaker 2: And so Tanner just walked through an evaluation but that's why there's a difference-and it's not that different than you see from some of the big lessers who have big, big exposure. They said two things, "We've written down our exposure completely and we expect to recover a lot."

Speaker 1: And so Tor just walked through we evaluation. But that's why there's the difference- and it's not that different than you see from some of the big lessres who have big, big exposure. They said two things. We've written down our exposure completely and we expect to recover a lot.

Speaker 1: Right, that's sort of what you've seen from the industry and that's what this shows, and we feel like our valuation methodology was relatively conservative versus the strength of our claims.

Speaker 1: Right that's sort of what you've seen from the industry and that's what this that's's this shows, and we feel like our valuation methodology was relatively conservative versus the strength of our claims.

Unknown Speaker: Yes, I would agree, and thank you guys. That was really good color, so that's it from me.

Speaker 12: I agree, and thank you guys. That was really good color. So it's it for methank you. Our next question will come from Robert DoD with braymond James.

Operator: Thank you. Our next question will come from Robert Dodd with Raymond James.

Speaker 24: Our next question will come from Robert Dot with Raymond James.

Robert James Dodd: Morning guys. A different angle on Merx-I think, Tanner you said with the intention to reduce the investment in Merx by selling down aircraft, obviously Merx has been selling some. I mean, is the plan essentially to reduce the ownership of aircraft effectively on the AINV balance sheet to zero, i.e, take the corporate lending book up to 95% plus of all the assets and reduce that? Obviously, Merx also does some other things, or is there some in-between where you expect Merx to still be a material decent chunk of the portfolio. Can you give us any color on how big you expect to or how much you expect a shrink Merx's ownership of aircraft exposure on the BDC balance sheet if that makes sense?

Speaker 1: Morning guys, a different angle on mers. I think tear you said with the intention to reduce the investment in mers by selling down aircraft. Obviously MS have has been selling some. I mean, is the plan essentially to to reduce?

Speaker 23: The the.

Speaker 26: Ownership of aircraft effectively on the aiand the balance sheet to zero. I take the corporate lending book up to 95% plus of all the assets and reduce. Obviously merks also does some other things, or is is there some in between where you expect merk to?

Speaker 13: The ownership of aircraft effectively on the aiand B balance sheet to zero. I take corporate lending book up to 95% plus of all the assets and reduce that and obviously merks. So that's some service, some other things, or is is there some in between where you expect merks to?

Speaker 4: To still be a machine ink.

Speaker 27: And want's mclearial, but at lecent chunk of the portfolio. What can you give us any color on, on how big you expect to or how much you expect a shrink works's ownership of aircraft exposure on the BDC balance sheet, if that makes sense?

Speaker 14: To still be a midi. What's material, but at leastcent chunk of the portfolio. What can you give us any color on, on how big you expect to or how much you expect a shrink books's ownership of aircraft exposure on the BDC balance sheet, if that makes us?

Howard T. Widra: Yeah, I mean significantly it's not completely. It actually goes to what Tanner were saying before, the rest of Merx is actually sort of had, sort of, if you will like, recovered to the extent that they lease problems from COVID-19 they've been replaced and released and we were in a good spot at the same time that there was like a good market for planes and feel like there's a good market for assets. Obviously, the Russia [inaudible] some noise both with regard to just the fact that there's three planes there but also one of the assets is an insurance claim, but just putting that aside is not that large an amount. Our goal is to basically have the assets be very minimal or not part of the portfolio long-term.

Speaker 1: It actually goes towhat Tenner were saying before. The rest of merks is actually sort of had, sort of.

Speaker 11: Yes I mean we. I mean significantly, it's not completelyit actually goes to what Tenner 'were saying before. The rest of merks is actually sort of had, sort of.

Speaker 1: If you will like, recovered they, you know- to the exentthat they release. You know, lease problems from COVID-19. They, you know they've been replaced and released and we were in a good spot at the same time that there was like a good market for planes and, you know, feel like there's a good market for assets. Obviously, the Russia readate some noise both, both with regard to just the fact that there's a three planes. There would also one of the assets is an insurance claim, but but, but you putting that ascycle is not that large in amountyou know our goal is to basically, you know, have the assets be very minimal ornot a part of the port.

Speaker 11: If you will like, recovered. You know, to the extent that they were release. You know lease problems from covidthat they, you know they've been replaced and released and we were in a good spot at the same time that there was like a good market for planes and, you know, feel like there's a good market for assets. Obviously, the Russia readate some noise both, both with regard to just the fact that there's a three planes. There would also now one of the assets is an insurance claim, but but- but you putting that asideclebecause is not that large in amount. You know, our goal is to basically, you know, have the assets be very minimal or not a part of the portfolio long term.

Robert James Dodd: Got it. I appreciate it. That's a tough one. Any color you can give us on the time frame for that? Obviously, the way the average life left on a lease is four years but often it's easier to sell an asset that still under lease than one that's out. So any any color you can give us on how fast that might occur? I mean, bottom line obviously that the non-course now very small, Merx is shrinking as well, I mean what kind of timeframe could we expect you to be reporting say just the portfolio is just corporate lending?

Speaker 15: Got Goy I appreciate that the tough one on any any colorague gives on on the time frame but that obviously D the way the average life left on on a Leas is four years but often it'sit' easy to sell. That's that's still under least than one That's out. So any any colorague givesus on how fast that might occur. I mean bombline obviously that the the noncouse now O small if Mer shrinking as well. I mean what kind of time frame could we expect here to be reporting. Say just.

Speaker 28: The portfolio is just corporate lending.

Howard T. Widra: Well certainly in this calendar year you should see a significant reduction. There's a question of whether all the assets are sold together or all the assets are sold in their component parts, and if they're in there different securitizations or different pools. If they're sold in their different pools, there are some tax considerations with regard to timing- depreciation versus gain on the planes, and so that could drive some timing issues, and so if you got into the weeds your eyes would cross, but the answer is that at this time next year we would expect to be out or to have a view like to have stuff under contract. Certainly, obviously, as you know, that's no guarantee and we want to make sure, but we think our valuation is right and constructive, and we think there's a market for these planes and we're focused on it.

Speaker 16: The portfolio is just cool. Put lendingwell. Certainly in this calendar year you should see a significant reduction. You know, there's a question of whether all the assets are sold togetherther or all the assets are sold in their, in their component part, sand if they're, you know, in there's different securitizations or different pools. If they're sold in their different poolsthere's some tax considerations with regard to timing- depreciation versus gain on the planes- And so that could drive some some timing issues, and so it's. It's hard. If you got into the weeds your eyes would cross, but but the answer is that you know we would like at this time next year.

Speaker 1: we would expect to be out or to have a view like to have stuff under contract. Certainly, obviously, as you know, that's no guarantee and we want to make sure, but we think our valuation is right and constructive, and we think there's a market for these planes and we're focused on it.

Speaker 1: A view or to have a view like to have stuff under contract, then certainly obviously, as you know, that's no guarantee and what we want to make sure, but we think that we think our valuations right and constructive, we think there's a market for these planes and we're focused on it.

Speaker 11: We would expect to be, to be out or to have a, a view, or to have a view like to have stuff under contract, then certainly obviously, as you know, that's no guarantee and what we want to make sure, but we think that we think our valuations right and constructive, we think there's a market for these planes and we're focused on iti. Appreciate it and thank you.

Robert James Dodd: Got it. I appreciate it and thank you.

Operator: Thank you. Our next question will come from Melissa Wedel with JP Morgan.

Speaker 24: Our next question will come from Melissa adelult with J P Morgan.

Speaker 9: Thank youour next question will come from a Melissa adult with JP morgangood morning. Thank you for taking my questions today. Was hoping to get a little bit of clarification on the eleated prepayment FE known. Could you break that down for us sort of persia basis and what that contribution was? This sortder?

Melissa Marie Wedel: Good morning. Thank you for taking my questions today. I was hoping to get a little bit of clarification on the elevated pre-payment and fee incomes. Could you break that down for us on sort of a per-share basis and what that contribution was this quarter?

Multiple speakers: [Howard Widra] Yes, I think Greg, you have the revenue per share, just hold on. Going to pull up that detail. I mean, it was about $4.9 million, right, Greg?[Gregory Hunt] Yes. [Howard Widra] Yes, so $4.9 million. [Gregory Hunt] It's six cents, right? [Howard Widra] Yeah, I mean, it depends--how that we didn't have any incentive fees this quarter but presumably that rolls through incentive fees so it depends on how you look at that. But like if we have said our expectation for certain quarters or more for the average quarter is about three and a half million dollars per quarter. The last two quarters have been higher than that. I think the one prior to that which [inaudible] the numbers was higher than that and hope and think based on this activity that the 3.5 million is like a low estimate, but if you look at where we generated those fees from, a lot of sort of little and medium-sized fees based on sort of normal turnover of assets. So there wasn't anything disproportionately larger there.

Speaker 17: yeaha great revenar per share of going to toll updetaili mean it was. It was about $4.9 million, right?

Speaker 3: I mean, it was about $4.9 million, right.

Speaker 1: prain.

Speaker 12: Yes yes yes So $4.9 million. It's six SENS right yesi mean. It depends how that we have incentivesee this quarter butknow presumably that rolls through incentive. See So.

Speaker 11: Yes Yeah, yes. So $4.9 million. You know six SENS, right? Yes, I mean, it depends on that. We we have incentnessee this quarter, but you know presumably that roll through incentessee, So it depends on how you look at that. But like, if you know, if we have said, you know our expectation.

Speaker 2: It depends on how you look at that, but like if, if we have said our expectation.

Speaker 2: For quarters is for certain quarters are more for the average quarter is about three and a half million dollars per quarter. The last two quarters have been higher than that. I think the one prior to that which gener on the numbers was higher than that and hope and think based on this activity that the three and a half was.

Speaker 11: For quarters is for certain quarters or for the average quarter- is about three and a half million dollars per quarter. The last two quarters have been higher than thati think the one prior to that was in on the numbers- was higher than thatand hope and think, based on this activity, that the three and a half was.

Speaker 1: three five million more is like a low estimate, But if you look at where we generated those fees- from a lot, a lot of sort of little and medium sized fees.

Speaker 11: three A five million more. It is like a low estimate. But if you look at where we generated those fees from a lot a lot of sort of little and medium-sized fees.

Speaker 1: You know, based on sort of.

Speaker 1: Just you know, normal turnover of assets.

Speaker 2: So in there wasn't anything, or or?

Speaker 11: Based on sort of just normal turnover of assets. So there wasn't anything, or or?

Speaker 1: It is proportionately large there.

Multiple speakers: [Melissa Wedel] Okay, that's helpful. Thank you. And then, looking at some of the [inaudible] that you've talked about already at this quarter, is there anything we should be thinking about in terms of sort of above or below or just in line with the longer-term average of roughly three and a half million or would be like, again north of that level do you think? [Howard Widra] Yeah, I would stay with the three and a half,  only because there are lots of transactions. There are enough transactions that are scheduled to close, like in the latter part of June that could go to July so it could be below, it could be above, it's just not [inaudible]. right now. [Melissa Wedel] Okay, yeah. [Howard Widra] I mean, Tanner would you say anything different from that? [Tanner Powell] Yeah, I'd also clarify, a lot of the guidance we gave in terms of sell down has to do with the non-core, that three and a half million is really more generated by our corporate portfolio, whether pre-payment fee or acceleration of LID to the extent something comes out earlier and so that number really has to do with normal churn in our corporate lending portfolio and I would echo Howard's comment that three and a half million is a good number to stay with, understanding that it will add its flow and some quarters will be above that and some will be below.

Speaker 11: youknow disproportionately large from thereokay, that's helpful, Thank you. And then, looking at some of the excence that you talked about already at this quarter, is there anything we should be thinking about? Until the sort of above the law are just in line with that the, the longorin average, abruptly train a half M would be that purproduyou sort of again north of that level be things. Yeah I I, I would stay with the three and a half that only because you know there are, there are lots of transactions, or lots of there are enough transactions that are scheduled to close like in the latter part of juneand that could go to July . You know that are you know. So it could be low, it could be about, just not, it's not.

Speaker 2: right now. [Melissa Wedel] Okay, yeah. [Howard Widra] I mean, Tanner would you say anything different from that? [Tanner Powell] Yeah, I'd also clarify, a lot of the guidance we gave in terms of sell down has to do with the non-core, that three and a half million is really more generated by our corporate portfolio, whether pre-payment fee or acceleration of LID to the extent something comes out earlier and so that number really has to do with normal churn in our corporate lending portfolio and I would echo Howard's comment that three and a half million is a good number to stay with, understanding that it will add its flow and some quarters will be above that and some will be below.

Speaker 11: You know just right now. Yeah SER, would you say anything different from that? Yeah, I know it. Also clarify: you know a lot of the guidance we gave in terms of selldown has to do with the non.core: that three and a million is really more generated by our corporate portfolio, whether prepayment E or acceleration of O ID, to the extent something comes out earlier, and so that that number really has to do with normal churn in our in our corporate lending portfolio and with echo. How it's comment that three and a half million.

Speaker 10: And is a a good number. To stay with understanding that it we'll add and flow and some quarters will be above that and some will people up.

Speaker 18: Is a a, a good number to stay with, understanding that it will EV and flow and some quarters will be above that and some Al people are.

Melissa Marie Wedel: Certainly. Okay, I appreciate that. And then my last question is around some of the--it's really a capital allocation question- noticed the decrease quarter over quarter in share repurchase activity, taking into account your comments earlier on the call about wanting to take down leverage potentially a little bit at the margin as maybe some better-priced opportunities on new investments of the market of those as [inaudible] impact and buy volatility that filters through from the liquid market into the private market, makes me wonder if your appetite for share repurchase in sort of an outsized way like we saw in maybe the December quarter if that's reduced a bit.

Speaker 19: Would like. ok, appreciate that. And then my last question is around the- it's really a capital allocation question- noticeed the decrease quarter over quarter and should repurchase activity. You know, taking into a your comments earlier on the call about goinging to take down leverage potentially a little bit at the margin as maybe some better priced opportunity on the investment of the market, of those as pricing of impact and by volatility that filters through from the liquid market into the private market, MA me wonder if you're you know appetite for share repurchase in sort of an outsized way, like we saw maybe the December quarter. If that's reduced of it, it maybe, it maybe reduce this, but this past quarter reallythe B buyback activity was not really the result.

Howard T. Widra: It may be reduced a bit but this past quarter really the buyback activity was not really the result of let's sort of--It just had to do with our window being closed longer and having a [inaudible] plan sort of automatic purchasing at a lower level than when we do when the window is open. We either buy back at our discretion at times during the quarter and then at some point the window closes and it just depends when that occurs. Obviously, in terms of sort of weighing, de-levering versus buying stock particularly in the incremental next loan, those things all sort of--we weigh all of them. We do think buying the stock is a good use of the capital because we obviously believe in our NAV and so we think it could purchase. The flip side is, at some point you just don't want to capitalize all your capital and so we try to just balance all of that and sort of have bated a regular part of what we do. But yeah, like to just buy back in a huge way, I think, where our leverage is and where the opportunities of the market are it's not likely.

Speaker 2: You know, let let's sort of. It's just had to do with, you know, the our window being closeed longer and having a 10 y five plan doing sort of automatic purchasing at a lower level than when we do when the windows open. You know we either buy back at our discretion at times, you know during the quarter, and then at some point the window closes and it just depends when that occurs. You know obviously, in terms of sort of weighing, you know dewevering versus buying stock, person doing the incremental next loan, those things all sort of. You know we weigh all of them. We do think buying the stock is a good use of the capital because you know it's.

Speaker 2: You know we obviously would believe in our NAV and so we think it's it could purchase. The flip side is, at some point you just don't want to capibalize all your capital and so we try to just balance all of that and you know, sort of have bated a regular part of what we do but Yeah, like to just buy back in a huge way, I think, where our leverage and where the opportunities of the market are or not. You know it's not likely.

Speaker 11: Part of what we do. But Yeah, like to just buy back in a huge way. I think, where our leveragees and where the opportunities in the market are are not. You know, it's not that likely.

Melissa Marie Wedel: That's really helpful. Thanks so much.

Operator: Thank you. Once again, that is star one to ask a question. And our next question will come from Ryan Lynch with KVW.

Speaker 9: That's really helpful, very olishthank you once again. That is Star one to ask a question.

Speaker 24: And our next question will come from Ryan Lynch with KV W.

Ryan Patrick Lynch: Hey, good morning. I had another follow-up question on Merx. I just want to clarify, so I think you said the fair value of the insurance contract is around and kind of a mid-$40 million and you guys have your aircraft, or the value of those aircraft marked at around $25 million today. Did I get those numbers correct?

Speaker 8: And our next question will come from Ryan letch with kbwbiggood morning had a another follow-up question on on marks. Just want to clarify. So I think you said the fair value of the insurance contract is around and kind of a mid $4 million and you guys have your aircraft, or the value of those aircraft mark at around 25 million today. Going to get those numbers correct.

Howard T. Widra: Yeah, although the sale value is not the right number. The contractual claim--I mean, the sale value of the aircraft was 44, is that what you're saying previously and now the claim is 25? The fair value of the claim is the nominal value of the claim that's higher than the 44.

Speaker 2: I mean the fair value of the OM the aircraft was 44, is that we? You're saying previously and now it's now the claims Twenty? -five.

Speaker 11: Yes yes although the fair value is that' the right number that the contractual claim I mean the fair value of of the aircraft was 44 is that we you're saying previously andnow it's and now the claims twentty fivethat'sgot higher. The fair value of the claim is the nominal value of the claim is higher than the twentty four yes. So that was my okay. So that was that was kind of my went. So is my next question is the.

Speaker 12: N.

Speaker 12: That high the fair value of the claim? Is the nominal value of the claim that higher than the forty four.

Ryan Patrick Lynch: Okay, so that was kind of my point or my next question. I mean, I'm not as familiar with how these insurance claims- an event where you guys would expect to get the zero or expect to get all of the amount, and so the current value that you guys have it marked at is not correct and it's going to be either a bifurcated event of either zero or a pretty big gain in these, depending on how that works and obviously you guys are just doing a probability of somewhere in the middle, but is that how we should think about the end result being either a big gain or a big loss ultimately?

Speaker 30: I mean, I'm not as familiar with how these claims, these insurance claims- an event were you guys would expect to get the zero or expect to get all of the amount, and so the current value that you guys have't marked at is it's not correct and it's going to be either a bifurcated event of either zero or a pretty big gain in these, depending on on how that's, and obviously you Gu Re just doing a probability of somewhere in the middle, but it's that how we should think about the end resolve being either a big gain or or a big loss ultimately.

Speaker 20: I mean I'm not as familiar with how these claim, these insurance claim event were you guys would expect to get the zero or expect to get all of the amount and so the current value that you guys haven't marked that it's not correct and it's going to be either know a bifurcated event, either zero or a pretty big gain in these, depending on on how that works. And obviously you got you just a probability of somewhere in the middle. But's that how we should think about the end result being either a big gain or or a big loss? ultimatelyno, I don't think so. I mean, there's multiple insurance policies. The less he has a we have, and then we have comes, you know, global coverage to, there's multiple claims and and so that creates like a diversity of results and then had to that the fact that you know the more likely result is is's some kind of settlement below the full facehas value. It's only because we want to get the money to.

Howard T. Widra: No, I don't think so. I mean, there's multiple insurance policies. [inaudible] have and then global coverage so there are multiple claims and so that creates like a diversity of results. And then add to that the fact that the more likely result is some kind of settlement below the full face value. It's only because we want to get the money sooner. I mean, we think we have the right claim, but the big issue is really that if it was just us, we think the claim wouldn't be all that hard. But the insurance company has so much exposure to the industry that they're going to take a more protracted approach, but it is not binary. It is not by any means binary. I mean, I think our view is sort of like we have a valid claim, we think there's a possibility of some of the insurance that we have having arguments against it that is cut into that, and then there's also sort of room to negotiate some to end the discussion.

Speaker 11: I mean we think we have the right claim. But you know, the big issue is really that if it was just us, we think the claim wouldn't be all that hard but there's. So you know the surance companies have so much exposure of the industry that they're going to take a more protracted approach. But but it is not binary, it is not by having means binary. I mean I think you know our view is sort of like: we have that, we have a valid claim. We think you know there's a possibility of some of the insurance that we have, you know, having arguments against it that you know is cut into that and then there's also sort of room to negotiate some to and discussion that understood. And then is my other question: you know, I know, you know shipping become a smaller, small portion of your portfolio. Sounds like you are. Makes it a progress post quarter docing that? I'm just wondering, can you give us any just a background on and why those that you know that that sector, you know your exposure of that sector has been be that would just think.

Speaker 10: To end the discussion.

Ryan Patrick Lynch: Okay, understood. And then just my other question, I know shipping is becoming a smaller, smaller portion of your portfolio. It sounds like you guys are making some progress post quarter of reducing that. I'm just wondering, can you give us just a background on why that sector, your exposure in that sector has been I would just think with sort of the lack of shipping and kind of the needed to move goods around right now and over the last really several quarters, when you guys' shipping exposure has also been weak in most quarters. What's the dynamic really been [inaudible] those this investments?

Speaker 30: now and over the last really several quarters, when you guys' shipping exposure has also been weak in most quarters. What's the dynamic really been [inaudible] those this investments?

Speaker 20: With this sort the lack of shipping and kind of been needed to move goods around right now and over the last really several quarters- when you're guys shipping exposures also been weak quarters. What's the dynamic that's really been hurt those, this investment, syes I'm happy to try that- to our exposure there. Ryan is predominately in product tankers, So think refined oil products distillate, that sort of thing, and ultimately the demand for mid range product tankers in particular has a lot to do with the regional trade and where where goods are moving.

Tanner Powell: Yeah, I'm happy to try that. So our exposure there Ryan is predominately in product tankers, so think refined oil products, distillates, that sort of thing. And ultimately the demand for mid-range product tankers in particular has a lot to do with the regional trade and where goods are moving. More broadly also is when you look at the shipping, I don't want to suggest that it's a perfect inverse by interesting imagination, but there is a dynamic where in when near turmoil is lower in the curves can tango as in people anticipated it rising significantly, that pulls on supply across the chain and results in a little bit better day rates and charter rates, and in an environment like this is a little bit more challenge because there's less demand for storage. Anything that anyone can have, either a barrel oil and or a distillate or refined product that they're trying to sell anywhere they can owing to what the current prices are. And so that's just one example of a dynamic that creates the ebb and flow in those markets. And then the last point there to emphasize is the the mark levels that we have on our shifts reflect where we are intending to transact and move the exposure.

Speaker 8: More broadly also is when you look at the you know shipping, I don't I don't want to suggest that it's you know it's a perfect inverse by by interesting imagination. But there is a dynamic where in you know, when you know near turmoil is lower in the curves and contcan go as in people anticipated it rising significantly. That pulls on supply, you know, across the chain and results in a little bit better dway and charter rates and an environment like this is a little bit more challenge because there's less demand for storage anything that anyone can have, either a barrel oil and or, you know, a distillateine refined product Re they're trying to sell anywhere they CAn't owing to what the current prices are. And so you know that that just that's just one example of a dynamic that that creates the, the evban flow in the in those markets and then and so and then then. The last point there to emphasizes the you know the mark levels that we have on our shifts reflect, you know where, where we are intending to to, to transren, Act and move the exposure.

Speaker 7: More broadly also is when you look at the you know shippingi do n't. I don't want to suest that its you know. It's a perfect inverse by by interesting imagination. But there is a dynamic where in you know when you know near. Turmoil is lower in the curves and can go as in people anticipated it rising significantly that pulls on supply know across the CHA and results in a little bit better gway and charter rates and an environment. Like this is a little bit more challenge because there's less demand for storage anything that anyone can have either a barrel oil and or you know a distillateine refined product. Re. They're trying to sell anywhere. They. Can't owing to what the current prices are and so you know that's just that's just one example of a dynamic that that creates the the evand flow in the in those markets and then.

Speaker 7: And so then, the last point there to emphasize is the. The Mark levels that we have on our shifts reflect where, where we are intending to trend, Act and move the exposure understood. I appreciate the time this morning, thankyouthank.

Ryan Patrick Lynch: Understood. I appreciate the time this morning. Thank you.

Operator: Thank you. We have no further questions in the queue at this time, so I would like to turn the call back over to our speakers for any additional or closing remarks.

Speaker 14: We have no further questions in the queue at this time, So I would like to turn the call back over to our speakers for any additional or closing remarks.

Speaker 8: We have no further questions in the queq at this time, So I would like to turn the call back over to our speakers for any additional or closing remarksthank you, operator. Thank you everyone for listening to today's call. Behalf of the team. We thank you for your time today. Be' feel free free to reach out to any of us if you have any other questions. Have a good week.

Howard T. Widra: Thank you, operator. Thank you everyone for listening to today's call. On behalf of the team, we thank you for your time today. Feel free to reach out to any of us if you have any other questions. Have a good weekend.

Speaker 1: Not a good weekend.

Operator: Thank you, Ladies and gentlemen. This does conclude today's presentation. We appreciate your participation and you may disconnect at any time.