Q3 2025 Prospect Capital Corp Earnings Call
Operator: Good day and welcome to the Prospect Capital 3rd Fiscal Quarter Earnings Release and Conference Call. All participants will be in listen-only mode. Should you need assistance, please signal a conference specialist by pressing the star key followed by zero.
Good day and welcome to the prospect capital third fiscal quarter earnings release and conference call. All participants will be in listen only mode should you need assistance. Please suddenly conference specialist by pressing the star key followed by zero.
Operator: After today's presentation, there will be an opportunity to ask questions. To ask a question, you may press star then one on a touch-tone phone. To withdraw your question, please press star then two. Please note this event is being recorded.
After todays presentation, there will be an opportunity to ask questions to ask a question you May Press Star then one on a touchtone phone to withdraw your question. Please press Star then two please note. This event is being recorded I would like now to turn the conference over to Mr. John Barry Chairman and CEO. Please go ahead.
John Barry: I would like now to turn the conference over to Mr. John Barry, Chairman and CEO. Please go ahead. Thank you, Alan.
Speaker Change: Thank you Alan.
John Barry: Joining me on the call today are Greer Isaac, our President and COO, and Kristen Van Dask, our CFO. Thanks, John.
Speaker Change: Joining me on the call today are Greer logic, our president and C O L and Christian van to ask our CFO Christian.
Speaker Change: Thanks, Jon.
John Barry: This call contains forward-looking statements that are intended to be subject to safe harbor protection. future results are highly likely to vary materially. we do not undertake to update our forward-looking statements.
Speaker Change: This call contains forward looking statements that are intended to be subject to safe Harbor protection for.
Speaker Change: Future results are highly likely to vary materially.
John Barry: We do not undertake to update our forward looking statements for additional disclosure see our earnings press release, and 10-Q filed previously and available on our website Prospect Street Dot Com now I'll turn the call back over to John.
John Barry: For additional disclosure, see our earnings press release and 10-Q filed previously and available on our website, ProspectStreet.com.
Kristen Van Dask: Now I'll turn the call back over to Thank you, Kristen.
John Barry: Thank you Kristen.
Kristen Van Dask: In the March quarter, our Net Investment Income, or NII, was $83.5 million, 19 cents per common share. Our NAV was $3.2 billion, $7.25 per common share. At March 31st, our net debt-to-total-assets ratio was 28.7%. Unsecured debt plus unsecured preferred is 87.5% of total debt plus preferred for prospects.
John Barry: In the March quarter, our net investment income or NII was $83 $5 million.19 per common share.
John Barry: N a V was $3.2 billion $7.25 per common share.
John Barry: At March 31st our net debt to total assets ratio was 28.7%.
John Barry: Unsecured debt.
John Barry: Unsecured preferred is 87.5% of total debt plus preferred for prospect.
Kristen Van Dask: Since inception over 20 years ago, through our August 22-5 declared distribution. We will have distributed over $4.5 billion, or $21.57 per share. We are announcing monthly common shareholder distributions of four and a half cents per share for each of May, June, July, and August.
John Barry: Since inception over 20 years ago through our August 22, five declared distributions.
John Barry: We will have distributed over four and a half a billion dollars or $21.57 per share.
John Barry: We are announcing monthly common shareholder distributions of four and a half cents per share for each of May June July and August.
Kristen Van Dask: We plan on announcing our next set of shareholder distributions in August. Our preferred shareholder cash distributions continue at the contractual rates of such distributions.
John Barry: We plan on announcing our next set of shareholder distributions.
John Barry: August.
John Barry: Our preferred shareholder cash distributions continue at the contractual rates.
John Barry: Such distributions.
Kristen Van Dask: Thank you.
Greer Isaac: I'll now turn the call over to Greer. Thank you, John. Over the past two decades, Prospect Capital Corporation has invested $11.8 billion in over 325 exited investments. that have earned a 13% unlevered investment-level gross cash internal rate of return to Prospect Capital Corp. This two-decade time period includes the GFC and has been dominated in general by low interest rates. As of March 2025, we held 114 portfolio companies across 33 different industries with an aggregate fair value of $6.9 billion. For the March quarter, our portfolio at fair value comprised 65.5% first lien debt. That's up 650 basis points from the prior year.
Greer: I'll now turn the call over to Greer.
Greer: Thank you John over the past two decades prospect Capital Corporation has invested $11 8 billion and over 300 and twenty-five exited investments that have earned a 13% unlevered investment level gross cash internal rate of return.
Greer: <unk> Capital Corporation.
Greer: This two decade time period includes the G F C and that's been dominated in general by low interest rates.
Greer: As of March 2025, we held 114 portfolio companies across 33 different industries with an aggregate fair value of $6 9 billion.
Greer: For the March quarter, our portfolio at fair value comprised 65.5% first lien debt, that's up 650 basis points from the prior year.
Greer Isaac: 10.5% Senior secured second lien debt that's down 410 basis points from the prior year, 4.2% subordinated structured notes with underlying secured first lien collateral that's down 310 basis points as a mix from the prior year, and 19.8% unsecured debt in equity investment. resulting in 80.2% of our investments being assets with underlying secure debt benefiting from Borrower Pledge Collateral. In our middle market lending strategy, we continue to focus on first lien, senior secured loans during the quarter, with such investments totaling $149 million of our $196 million of originations during the quarter. Investments during the quarter included our new platform investment in Taos Footwear, a leading innovative footwear brand with a two-decade history, and other follow-on investments in existing portfolio companies to support acquisitions, working capital needs, organic growth initiatives, and other objectives.
Greer: 10.5%.
Greer: Senior secured second lien debt, that's down 410 basis points from the prior year.
Greer: 4.2% subordinated structured notes with underlying secured first lien collateral that's down 310 basis points as a mix from the prior year and.
Greer: Resolving an 80.2% of our investments being assets with underlying secured debt benefitting from borrower pledged collateral.
Greer: Such investments totaling a $149 million over 196 million of originations during the quarter.
Greer: Investments during the quarter included our new platform investment in Taos footwear.
Greer: Leading innovative footwear brand with a two decade history and.
Greer: Other follow on investments in existing portfolio companies to support acquisitions working capital needs organic growth initiatives and other objectives are.
Greer Isaac: Our subordinated structured notes portfolio, as of March, represented 4.2% of our investment portfolio, a reduction of 310 basis points from 7.3% as of March 2024. Since the inception of this strategy in 2011 and through March of 2025, we've exited 15 subordinated structured note investments, earning an unlevered investment-level gross cash internal rate of return of 12.1% and cash-on-cash multiple of 1.3 times. As of March 2025, based on fair value and excluding investments being redeemed, the remaining subordinated structured notes portfolio had a trailing 12-month average cash yield of 30.2% and an annualized gap yield of 4.4%, with the difference between cash yield and gap yield, representing amortization of our cost base.
Greer: Our subordinated structured notes portfolio as of March represented four 2% of our investment portfolio a reduction of 310 basis points from seven 3% as of March 'twenty 'twenty four.
Greer: Since the inception of this strategy in 2011 and through March of 2025, we've exited 15 subordinated structured notes investments, earning an unlevered investment level gross cash and trying to rate of return of 12, 1% and cash on cash multiple of.
Greer: 1.3 times.
Greer: As of March 2025, based on fair value and excluding investments being redeemed the remaining subordinated structured notes portfolio had a trailing 12 month average cash yield of 32%.
Greer: An annualized GAAP yield of four 4% with a difference.
Greer: Between cash yield and GAAP yield representing amortization of our cost basis.
Greer Isaac: We expect to continue to amortize and exit our subordinated structured notes portfolio and to reinvest primarily into first lien, senior secured, middle market loans.
Greer: We expect to continue to amortize and exit.
Greer: Our subordinated structured notes portfolio and to reinvest primarily first lien senior secured middle market loans.
Greer Isaac: In our real estate property portfolio at National Property Recorp, or NPRC, since the inception of this strategy in 2012 and through March 2025, we've exited 52 property investments, earning an unlevered investment-level gross cash IRR of 24%, and cash-on-cash multiple of 2.4 times. We exited an additional property in the recently completed March 2025 quarter. The remaining real estate property portfolio includes 58 properties. paid us an income yield of 4.5% for the March quarter. Prospects aggregate investments in NPRC at a $460 million unrealized gain as of March. We expect to continue to redeploy future asset sale proceeds primarily into property value add capital investment and first lien middle market loans.
Greer: And our real estate property portfolio at National property, REIT Corp, or in PRC.
Greer: Since the inception of this strategy in 2012 and through March 2025, we've exited at 52 property investments.
Greer: Earning an unlevered investment level gross cash IRR of 24%.
Greer: And cash on cash multiple of 2.4 times.
Greer: We exited an additional property in the recently completed March 'twenty twenty-five quarter.
Greer: The remaining real estate property portfolio includes 58 properties.
Greer: They paid us an income yield of four 5% for the March quarter.
Greer: Prospects aggregate investments in NPR C at a $460 million unrealized gain as of March.
Greer: We expect to continue to redeploy future asset sale proceeds primarily into property value add capital investments and first lien middle market loans.
Greer Isaac: Prospect's approach is one that generates attractive risk-adjusted yields. In our performing interest-bearing investments, we're generating an annualized yield of 11.5% as of March. Our interest income in the March quarter was 93% of total investment income, reflecting a strong recurring revenue profile for our business. Payment-in-kind income for the quarter ended March was $19.5 million, down nearly 50% from the June 2024 quarter. Non-accruals as a percentage of total assets stood at approximately 0.6% in March. Our weighted average EBITDA per portfolio company stood at just under $100 million. Investment originations in the March quarter aggregated $196 million and were comprised of $149 million of first lien loans or 76% of total originations.
Greer: Aspects approach is one that generates attractive risk adjusted yields and our performing interest bearing investments were generating an annualized yield of 11, 5% as of March a.
Greer: Our interest income in the March quarter was 93% of total investment income, reflecting a strong recurring revenue profile for our business.
Greer: Payment in kind income for the quarter ended March was $19 5 million down nearly 50% from the June 'twenty 'twenty four quarter.
Greer: Non accruals as a percentage of total assets stood at approximately <unk>, 6% in March.
Greer: Our weighted average EBITDA per portfolio company stood at just under $100 million.
Greer: Investment originations in the March quarter, aggregated $196 million and were comprised of $149 million of first lien loans or 76% of total originations.
Greer Isaac: We also experienced $192 million of repayments and exits as a validation of our capital preservation objective resulting in net originations of $4.5 million. During the March quarter, our originations comprised 81% middle market lending, 4.9% middle market lending and buyouts. 14.1% real estate and 0% in subordinated structured notes.
Greer: We also experienced $192 million of repayments and exits as a validation of our capital preservation objective.
Greer: Building in net originations of $4 5 million.
Greer: During the March quarter, our originations comprised 81% middle market lending.
Greer: 4.9% middle market lending and buyouts.
Greer: 14.1% real estate and zero percent in subordinated structured notes.
Greer Isaac: So far in the current June 2025 quarter, we've booked $65 million in originations and experienced $20 million of repayments. Originations have consisted of 75.5% middle market lending and 21.3% real estate.
Greer: So far in the current June 2025 quarter, we've booked $65 million in originations and experienced 20 million of repayments originations have consisted of 75, 5% middle market lending and 21, 3% real estate.
Kristen: Thank you I'll now turn the call over to Kristen Kristen.
Kristen Van Dask: I'll now turn the call over to Kristen. Kristen? We believe our prudent leverage, diversified access to matched book funding, substantial majority of unencumbered assets, weighting toward unsecured fixed rate debt, and avoidance of unfunded asset commitments all demonstrate balance sheet strength, as well as substantial liquidity to capitalize on attractive opportunities. Our company has locked in a ladder of liabilities extending 27 years into the future. Our unfunded eligible commitments to portfolio companies totals approximately $43 million, of which $17 million are considered at our sole discretion, representing approximately 0.6% and 0.2% of our assets as of March 2025 respectively.
Kristen: We believe our prudent leverage diversified access to matched book funding substantial majority of unencumbered assets weighting toward unsecured fixed rate debt and avoidance of unfunded asset commitments, all demonstrate balance sheet strength as well as substantial liquidity to capitalize on attractive opportunities.
Speaker Change: Our company has locked in a ladder of liabilities extending 27 years into the future.
Speaker Change: Our unfunded eligible commitments to portfolio companies totals approximately 43 million of which 17 million are considered at our sole discretion.
Speaker Change: Presenting approximately <unk>, 6% and 0.2% of our assets as of March 2025, respectively.
Kristen Van Dask: Our combined balance sheet cash and undrawn revolving credit facility commitments stood at $1.7 billion as of March, and we held $4.4 billion of our assets as unencumbered assets, representing approximately 63% of our portfolio. The remaining assets are pledged to Prospect Capital Funding, a non-recourse SPV. We currently have $2.12 billion of commitments from 48 banks, demonstrating strong support of our company from the lender community with a diversity unmatched by any other company in our industry. The facility does not mature until June 2029 and revolves until June 2020. our John pricing continues to be SOFR plus 2.05%.
Speaker Change: Our combined balance sheet cash and Undrawn revolving credit facility commitments stood at one 7 billion as of March and we held $4 4 billion of our assets as unencumbered assets, representing approximately 63% of our portfolio.
Speaker Change: The remaining assets are pledged to prospect capital funding a nonrecourse SPV we.
Speaker Change: We currently have 2.12 billion of commitments from 48 banks, demonstrating strong support of our company from the lender community with the diversity unmatched by any other company in our industry.
Speaker Change: The facility does not mature until June 2029, and revolves until June 2028 are John pricing continues to be so far plus 2.05 per cent.
Kristen Van Dask: Outside of our revolver, we have access to diversified funding sources across multiple investor types and have successfully issued securities in an array of markets. Prospect has issued multiple types of unsecured debt, institutional non-convertible bonds, institutional convertible bonds, retail baby bonds, and retail program notes. All of these types of unsecured debt have no financial covenants, no asset restrictions, and no cross defaults with our revolvers. As of March, unsecured term debt represents 78% of all of Prospect's indebted debt. We have tasked the unsecured term debt market on multiple occasions to ladder our maturities and to extend our liability duration out 27 years, with our debt maturities extending through 2052.
Speaker Change: Outside of our revolver, we have access to diversified funding sources across multiple investor types and have successfully issued securities and an array of markets.
Speaker Change: Prospect has issued multiple types of unsecured debt.
Speaker Change: Institutional nonconvertible bond institutional convertible bonds retail baby bonds and retail program notes.
Speaker Change: All of these types of unsecured debt have no financial covenants, no asset restrictions and no cross defaults with our revolver.
Speaker Change: As of March unsecured term debt represents 78% of all of prospects indebtedness.
Speaker Change: We have tapped the unsecured term debt market on multiple occasions to ladder, our maturities and to extend our liability duration out 27 years with our debt maturities extending through 2052.
Kristen Van Dask: With so many banks and debt investors across so many unsecured and non-recourse debt tranches, we have substantially reduced our counterparty risk. On March 31st, 2025, our weighted average cost of unsecured debt financing was $4.33%.
Speaker Change: With so many banks and debt investors across so many unsecured and nonrecourse debt tranches, we have substantially reduced our counterparty risk.
Speaker Change: At March 31st 2025, our weighted average cost of unsecured debt financing was $4 three 3%.
Kristen Van Dask: Now I'll turn the call back over to Thank you, Kristen.
John Barry: Now I'll turn the call back over to John.
John Barry: Thank you Kristen.
Operator: I think we can take questions now. Apologies for the disruption, everyone. We will now begin this question and answer session. To ask a question, you may press star, then 1 on your touchtone phone. If you're using a speakerphone, please pick up your handset before pressing the keys. If at any time your question has been addressed and you would like to withdraw it, please press star, then 2.
Speaker Change: I think we can take questions now.
Speaker Change: Hmm.
Speaker Change: Apologies for the disruption everyone. We will now begin the question and answer session to ask a question you May Press Star then one on your Touchtone phone if youre using a speakerphone. Please pick up your handset before pressing the keys if at anytime. Your question has been addressed and you would like to withdraw it. Please press Star then two.
Operator: At this time, we will pause momentarily to assemble our list.
Speaker Change: At this time, we will pause momentarily to assemble our list.
Finian O'shea: Our first question comes from Finian O'Shea from Wells Fargo. Please go ahead. Hey, everyone. Good morning. The first question on the top line. Other income from the control, namely NP REIT, had been a pretty recurring feature for a while, and that was, you know, very low, if not anything, this quarter. Seeing how we should think about that, if this should bounce back or this reflects the new sort of rack rate total earnings.
Speaker Change: Our first question comes from Finian O'shea from Wells Fargo. Please go ahead.
Finian O'shea: Hey, everyone. Good morning.
Speaker Change: The first question on on the topline.
Finian O'shea: Other income from the control.
Speaker Change: <unk> right.
Finian O'shea: It had been.
Finian O'shea: Pretty recurring.
Finian O'shea: This feature for a while and that was.
Finian O'shea: Very low if not anything this quarter seeing how we should think about that is if this should.
Finian O'shea: Bounce back or the new this reflects the new sort of rack rate.
Finian O'shea: Total earnings thanks.
Greer Isaac: Thank you, Penny, and Greer, you want to take that one? Sure. So we had had, as you can see in our financials, for multiple periods going back a few years actually. fairly significant other income coming out of NPRC associated with a real estate book. Primarily associated with exit-related income as we had successfully completed our value-added capital improvement program and exited assets. Pacing of such exits understandably slowed a bit as the Fed hiked and, in particular, 10-year Treasuries spiked. We think things are starting to normalize.
Damian: Thank you Damian.
Finian O'shea: Greer you wanted to take that one.
Finian O'shea: Sure.
Finian O'shea: So we had had.
Finian O'shea: As you can see in our financials for multiple periods going back a few years actually.
Finian O'shea: Hum fairly significant other income coming coming out of in PRC associated with our real estate book.
Finian O'shea: Primarily associated with exit related income.
Finian O'shea: We had successfully completed our value add capital improvement program and exited asset the pacing of such exits understandably slowed a bit.
Finian O'shea: As the fed hikes and in particular, our 10 year treasuries spiked.
Things are starting to normalize.
Greer Isaac: Whenever you have sharp movements in macro indices like that, it tends to make buyers and sellers pause, but we're looking to achieve a value of maximizing orderly reduction in the size of NPRC and our real estate portfolio. We just sold an additional asset, as we mentioned, in the quarter just completed. We have some additional assets we're exploring as well and other ways to unlock potential capital upstairs from NPRC. That business line, as we discussed a couple of quarters ago, has achieved terrific total returns for us. Twenty-four percent IRRs after exiting several dozen, I think over 50 investments in the last two decades, or nearly two decades, of making these investments, but lower on the current yield side of things.
Finian O'shea: You have sharp movements in.
Finian O'shea: Macro indices like that it tends to make.
Finian O'shea: <unk> and sellers pause, but we're looking to achieve a value maximizing the orderly reduction in the size of NPR C and our real estate portfolio. We just sold an additional assets as we mentioned in the quarter.
Finian O'shea: <unk> completed we have some additional assets, we're exploring as well in other ways to unlock.
Finian O'shea: Potential capital.
Finian O'shea: Upstairs from and PRC.
Finian O'shea: That business line as we discussed a couple of quarters ago has achieved terrific total returns for us.
Finian O'shea: 4%.
Finian O'shea: Irr's.
Finian O'shea: After exiting.
Finian O'shea: Several does anything over 50.
Finian O'shea: Investments in the last two decades of nearly two decades of making these investments.
Finian O'shea: But lower on the current yield side of things, that's more competitive and at least as it relates to compared with middle market lending.
Greer Isaac: that's more competitive in, at least as it relates to, compared with middle market lending. It's competitive in a low short-term interest rate environment, but not as competitive in a higher rate environment that we find ourselves here. Still today, within 100 basis points of peak, so for Fed tightening. So that other income line, you may see some activity there. In the future, we're not really guiding to anything specifically.
Finian O'shea: Competitive in a low short term interest rate environment, but not as competitive.
Finian O'shea: The higher rate environment that we find ourselves here still today.
Finian O'shea: Within 100 basis points of peak so for for a fed tightening so that other income line you may see some activity there in the future we don't we're not.
Finian O'shea: Guiding to anything specifically.
Greer Isaac: It depends on the pacing and. of those exits as they transition. a very helpful. Thanks. So I say that remains subdued for a little while.
Finian O'shea: It depends on the pacing and magnitude of those of those exits as they transpire.
Speaker Change: That's very helpful. Thanks.
Speaker Change: So I'd say that remains subdued for a little while.
Finian O'shea: The you have the incentive fee this quarter that that wasn't wasn't full, you assume that comes back. And everyone you know, the whole industry being mostly floating rate is now sort of pretty tight on on dividend coverage, with SOFR pointed down, you know, I think you said you declared through August.
Speaker Change: The you have the incentive fee this.
Speaker Change: This quarter that that wasn't wasn't full you assume that comes back.
Speaker Change: And everyone the whole industry being mostly floating rate is now.
Speaker Change: Sort of pretty tight on on dividend coverage with sofa pointed down.
Speaker Change: Yeah.
Speaker Change: Yeah, I think you said you declared through August.
Speaker Change: Yeah.
Greer Isaac: is there, you know, another lever to pull on on leverage or adding to other sort of higher yielding investments, like how do we think about? dividend coverage, I guess, beyond August at today's SOFR curve.
Speaker Change: Is there another.
Speaker Change: Other lever to pull on.
Speaker Change: Our leverage or.
Speaker Change: Adding to other sort of higher yielding investments like how do we think about.
Speaker Change: Dividend coverage I guess beyond August at today's Sofer curve.
Speaker Change: Right.
Greer Isaac: So I think yes and yes to both of those. First of all, we've been prioritizing more and more sort of lower middle market and core or traditional middle market lending. We have not been big fans of the upper end of the market and what's transpired, especially in the last couple of years, and have been prioritizing our originations in the less efficient part of the market where spreads are wider and also where SOFR floors are much higher. As you pointed out, what went up can and already has started to and is projected to, based on the forward curve that you mentioned, go down again.
Speaker Change: So I think yes, and yes to both of those.
Speaker Change: First of all we've been prioritizing more and more.
Speaker Change: Sort of lower middle market and core or traditional middle market lending.
Speaker Change: We have not been big fans of the upper end of the market and what's transpired, especially in the last couple of years and had been prioritizing our originations in the less efficient.
Speaker Change: Part of the market, where spreads are wider and also where so for floors are.
Speaker Change: Higher as you pointed out what went up.
Speaker Change: Can and already has started to and is projected to based on the forward curve do you mentioned go down again and it will be in a symmetrical fashion for others with low to no so for floors.
Greer Isaac: And it'll be in a symmetrical fashion for others with low to no SOFR floors, prioritizing the upper end of the market where competition is fierce, spreads are tight, floors are low, and covenants are nonexistent from a seat-at-the-table standpoint. Lower end of the market, we get the opposite of all those things, wider spreads, higher floors, better covenants that act as a repricing event. So we're getting that from our focus on lower end of the market, number one. Number two, there's a portfolio rotation aspect occurring, which we're looking to boost our One area is our subordinated structured notes portfolio, or CLO equity portfolio, which is down to only 4% of our assets, but is a low gap contributor, high cash contributor, which is amortization of our cost basis.
Speaker Change: Prioritizing the upper end of the market where competition is fierce.
Speaker Change: Reds are tight floors or low end.
Speaker Change: And covenants are.
Speaker Change: Non existent from a seat at the table standpoint, lower end of the market, we get the opposite of all those things wider spreads.
Speaker Change: Higher floors, better covenants that act as a repricing event. So we're getting that from our focus on lower end of the market number one number two there's a portfolio rotation aspects occurring.
Speaker Change: Which we're looking to boost our yields.
Speaker Change: One area is our subordinated structured notes portfolio, our CLO equity portfolio.
Speaker Change: Which is down to only 4% of our assets but.
Speaker Change: Is the low GAAP contributor high cash contributor, which is amortization of our cost basis, so without unlocks capital that could be invested in high returning deals real estate, just significant storehouse of value for us.
Greer Isaac: So that unlocks capital that could be invested in high returning deals. Real estate is a significant storehouse of value for us. Our real estate book is only yielding about 4.5%. Again, that's a total return strategy, lower on yield, attractive for total returns. And we think rotating those assets selectively, prudently, in an orderly value maximizing way, as I mentioned to the last question, is also going to help to boost our yield. And then we're also under-levered, significantly under-levered from a standpoint of debt to total cap only around 30% or so. Our leverage is half or less than half compared to peer companies in the industry, which reflects conservatism.
Speaker Change: Our real estate book is only yielding about four and a half.
Percent again at the total return strategy lower on yield.
Speaker Change: Attractive for total returns and we think rotating.
Speaker Change: Those assets selectively prudently in an orderly value maximizing way.
Mentioned to the last question is also going to help to boost or yield and then we're also under levered significantly under Levered from a standpoint of debt to total cap only around 30% or so our leverage is half or less than <unk>.
Speaker Change: Half of of the compare to.
Speaker Change: Peer companies in the industry, which reflects conservatism. It also reflects being careful and reluctant about.
Greer Isaac: It also reflects being careful and reluctant about tying up too much of our balance sheet with more expensive financing with debt. less borrower-friendly call protections along the way. So we've liked having locked-in capital at three to four percent rates from several years ago. We're being advantageous and opportunistic as it pertains to thinking about such issuance. And we have multiple areas of financing to look at that can be adjusted over time based on what's happening with short- and medium-term prevailing rates in more of a programmatic fashion as we raise significant capital there. So all those are available levers to pull that we're looking at to enhance net investment.
Speaker Change: Tying up too much of our balance sheet with.
Speaker Change: More expensive.
Speaker Change: Financing with.
Les a borrower friendly call protections along the way so we'd like to having locked in capital with 3% to 4% rates from several years ago were being advantageous and opportunistic.
Speaker Change: As it pertains to thinking about.
Speaker Change: Such issuance and we have multiple areas of financing to look at that.
Speaker Change: That can be adjusted over time based on what's happening with short and medium term prevailing rates.
Speaker Change: In more of a programmatic fashion as we raised significant capital there. So all of those are available levers to pull there we're looking at to enhance.
Speaker Change: Net investment income.
Finian O'shea: One more on that, like this quarter on the multiple sources, the program notes slowed, Preferred races were pretty good.
Speaker Change: Yes.
Speaker Change: One more on that like the this quarter on the multiple sources.
Speaker Change: The program notes slowed.
Speaker Change: Preferred raises were pretty good.
Greer Isaac: I know that's sort of the preferreds are sort of in between, but just considering them leveraged for now, is that, should we anticipate that continues like a more of a ramp on the prefs as opposed to, you know, traditional unsecured debt? I think you'll look at us prioritizing both unsecured debt and preferred unsecured financing of course is a significant de-risker of the balance sheet and we've been big fans of that. We also have our $2.1 billion revolving credit facility with close to 50 banks, more than any other company. in our industry. We all know what has transpired in the last few weeks.
No thats sort of the preferreds are sort of in between but just considering them leverage for now.
Speaker Change: Is that.
Speaker Change: Should we anticipate that continues like a more of a ramp on the prefs.
Speaker Change: As opposed to traditional unsecured debt.
Speaker Change: I think you'll look at us prioritizing both.
Speaker Change: Unsecured debt and preferred unsecured financing of course is a significant de risk or of the balance sheet.
Speaker Change: And we've been big fans of that we also have our <unk> $1 billion revolving credit facility with close to 50 banks more than any other company in.
Speaker Change: Our industry.
Speaker Change:
Speaker Change: We all know what has transpired in the last few weeks.
Greer Isaac: And at the tail end of the last quarter, just tremendous volatility. So it's no surprise you saw issuance slow during that sort of a period. from our program notes. But we have multiple areas to look to with program notes, with preferreds, and in other types of financing as well. I think we've issued more diversified financing in our history than any other company in the industry. You know, pioneering the first convertible notes, printing the first institutional bond, printing the first and perpetual preferred, and so on and so on. So we're always looking at different avenues that help with cost of capital, but also provide a diversity in access, including during more volatile time periods.
Speaker Change: And at the tail end of the last quarter, just tremendous volatility. So it's no surprise that you saw issuance slow during that.
Speaker Change: Period.
Speaker Change: From our program notes, but we have multiple areas to look to.
Speaker Change: With program notes with the preferreds and and other types of financing as well I think we've issued more diversified financing in our history than any other company in the industry pioneering the first convertible notes.
Speaker Change: The first institutional bond.
Speaker Change: Printing, the first and only perpetual preferred and so on and so on so we're always looking at different avenues.
Speaker Change: That help with cost of capital.
Speaker Change: But also provide diversity and access including during more volatile time periods, having this programmatic type of issuance is very valuable and differentiating about our company.
Greer Isaac: Having this programmatic type of issuance is very valuable and differentiating about our company that tends to be sticky. Maybe the volumes can fluctuate a bit, but it's available in there and represents more just-in-time type of helpful.
Speaker Change: It tends to be sticky maybe the volumes.
Speaker Change: Fluctuate a bit but it's available in there and represents more just in time type of type of financing.
Speaker Change: Okay.
Finian O'shea: That's all for me.
Greer: Helpful. That's all for me thanks, so much Greer.
Greer Isaac: Thanks so much, Greer.
Greer Isaac: Thank you, Vinny.
Speaker Change: Thank you Vinnie.
Operator: Good, thank you.
Greer: Alright, thank you.
Speaker Change: Yeah.
Operator: This concludes our question and answer session.
Speaker Change: This concludes our question and answer session I would like to hand, the call back over to Mr. John Barry.
John Barry: I would like to hand the call back over to Mr. John Barry. Okay, thank you everyone. Have a lovely morning and a great weekend. Thank you very much. Bye now.
Speaker Change: Okay. Thank you everyone have a lovely morning, and a great weekend. Thank you very much bye now.
Operator: This concludes our question and answer session.
Speaker Change: This concludes our question and answer session. This.
Operator: This concludes our call.
This concludes our call. Thank you for attending this conference you may now disconnect.
Operator: Thank you for attending Earth Conference.
Operator: You may now disconnect.
Speaker Change: [music].