Q3 2025 FS Investment Corp Earnings Call

It works by F. S case management at the conclusion of the Companys remarks, we will begin the question and answer session at which time I will give you instructions on entering the queue.

Please note that this conference is being recorded at this time and our client hand head of Investor Relations will proceed with the introduction with client hand, you may begin.

Speaker #2: Good morning ladies and gentlemen . Welcome to the FS KKR Capital Corp third quarter 2020 Earnings Conference call . Your lines will be in a listen only mode during remarks by Fsc's management .

Thank you good morning, and welcome to our first particular capital Corp, third quarter 2025 earnings Conference call.

Dan Pietrzak: Yeah. I'll start, and Steven can add to it, and then we charge extra for bonus questions. I think we're probably not in the business of trying to give out multi-year sort of forward guidance because it's quite hard, right? It's a question of where does SOFR go? I think you see that, I think not just us, but probably the whole industry has got a lower fee income number where we sit this quarter. Probably a bunch of variables that go into that. We did take into account what I think you're talking about, right? The forward curve. We know we have the benefit of some cheaper liabilities that were issued in a different rate environment that will get refinanced to kind of think about that base, and then being mindful about paying out the supplemental ahead of that.

Please note that that's kicking our capital Corp may be referred to as S. K the fund or the company throughout the call.

Speaker #2: At the conclusion of the company's remarks , we will begin the question and answer session , at which time I will give you instructions on entering the Q .

Today's conference call is being recorded and an audio replay of the call will be available for 30 days.

Speaker #2: Please note that this conference is being recorded . At this time , Anna Kleinhenn Head of Investor Relations will proceed with the introduction .

Replay information is included in our press release.

Issued yesterday.

Speaker #2: Miss kleinen , you may begin .

In addition, if SK has posted on its website a presentation containing supplemental financial information with respect to its portfolio and financial performance for the quarter ended September 30th 2025.

Speaker #3: Thank you . Good morning and welcome to FS KKR Capital Corp third Quarter 2020 Earnings Conference Call . Please note that FS KKR Capital Corp may be referred to as FSK , the fund or the company throughout the call .

A link to todays webcast and the presentation is available on the for investors section of the company's website under events and presentation.

Speaker #3: Today's conference call is being recorded and an audio replay of the call will be available for 30 days . Replay information is included in a press release that FSK issued yesterday .

Dan Pietrzak: I think we were pretty deliberate in coming up with that $0.45 estimate.

Please note that this call is the property of Apollo Sky any unauthorized rebroadcast of this call in any form is strictly prohibited.

Finian O'Shea: Awesome. Thank you, Dan.

Dan Pietrzak: Okay. Have a good day.

Speaker #3: In addition , FSK has posted on its website a presentation containing supplemental financial information with respect to its portfolio and financial performance for the quarter ended September 30th , 2025 .

Today's conference call includes forward looking statements and are subject to risks and uncertainties that could affect F. S K or the economy generally.

Operator: Our next question comes from Aaron Signovich at TrueList.

Finian O'Shea: Thanks. With respect to the PRG restructuring in October, can you provide any details in terms of what you received in return, and was it close to the mark, etc.?

We ask that you refer to F of Skus, most recent filings with the SEC for important factors and risks that could cause actual results or outcomes to differ materially from these statements.

Speaker #3: A link to today's webcast and the presentation is available on the investors section of the company's website under Events and Presentations . Please note that this call is the property of FSK .

S. K does not undertake to update its forward looking statements unless required to do so by law.

Dan Pietrzak: Yeah, I mean, it's probably, just in a quite simple manner, it was a fairly messy capital structure because it had gone through a bunch of changes over the years. That messy capital structure was difficult, I think, to allow the company to go forward, not just from a financial perspective, but a governance perspective. I think that was the real driver.

Speaker #3: Any unauthorized rebroadcast of this call , in any form is strictly prohibited . Today's conference call includes forward looking statements and are subject to risks and uncertainties that could affect FSK or the economy generally .

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

Such measures reconciliations to the most directly comparable GAAP measures can be found in <unk> third quarter earnings release that was filed with the SEC on November five 2025.

Speaker #3: We ask that you refer to Fsc's most recent filings with the SEC for important factors and risks that could cause actual results or outcomes to differ materially from these statements .

non-GAAP information should be considered supplemental in nature and should not be considered in isolation or as a substitute for the related financial information prepared in accordance with GAAP.

Finian O'Shea: I'm sorry, but what did you receive in exchange?

Speaker #3: FSK does not undertake to update its forward looking statements unless required to do so . By law . In addition , this call will include certain non-GAAP financial measures .

Dan Pietrzak: Well, from a value perspective, we were effectively in the same spot. From a governance perspective, though, I think we're sort of significantly different because we were effectively already equity, but there was a bunch of other tranches of equity in there that complicated the matter. That's my point about cleaning it.

In addition, these non-GAAP financial measures may not be the same as similarly named measures reported by other companies.

Speaker #3: For such measures , reconciliations to the most directly comparable GAAP measures can be found in Fsc's third quarter earnings release that was filed with the SEC on November 5th , 2025 .

To obtain copies of the company's latest SEC filings. Please visit our website.

Speaking on today's call will be Michael Forman, Chief Executive Officer, and Chairman, Dan Pietrzak, Chief Investment Officer, and President and Steven Lilly Chief Financial Officer.

Finian O'Shea: Okay. That makes sense. The $1 billion that's coming due in January, the unsecured debt. You did an issuance recently. Was that kind of partial payment ahead of that? What's the—I mean, obviously, you didn't pay it down, but kind of thought to use that cash kind of towards that. Are you expecting to use the credit facilities to initially pay that and then kind of hit the market whenever you see it as attractive?

Speaker #3: non-GAAP information should be considered supplemental in nature and should not be considered in isolation or as a substitute for the related financial information prepared in accordance with GAAP .

Also joining us on the call today are co chief operating officers drew O'toole and Ryan Wilson.

Now I'll turn the call over to Michael.

Speaker #3: In addition , these non-GAAP financial measures may not be the same as similarly named measures reported by other companies . To obtain copies of the company's latest SEC filings , please visit Fsc's website .

Thank you Anna and good morning, everyone. Thank you all for joining <unk> third quarter 2025 earnings conference call.

I'd like to start today's call with a few market observations we.

Speaker #3: Speaking on today's call will be Michael Forman Chief Executive Officer and Chairman Dan Pietrzak , chief Investment officer and president and Steven Lilly Chief Financial Officer .

We believe the BDC industry in general.

S. K in particular are resilient.

The BDC and <unk> ability to navigate historical periods of volatility.

Dan Pietrzak: Yeah. I mean, I think that's pretty well said. I think the team has done a good job about being mindful about the liability side of the balance sheet, right? We're consistently extending the revolver to make sure we've got, roughly, always going back to that five years. We want to access and continue to access the unsecured bond market consistently. Clearly, the $400 was done in advance of that, and we've got $3.7 billion of available liquidity. I think liability tied to these balance sheets is very important. We spent a lot of time thinking about that. I think with that available liquidity, we feel in a good spot.

Speaker #3: Also joining us on the call today are Co-Chief operating officers , drew O'Toole and Ryan Wilson . I'll now turn the call over to Michael .

Whether due to interest rate adjustments asset prices inflationary pressures or spread compression has been strong.

Speaker #4: Thank you . Anna , and good morning , everyone . Thank you all for joining Fsc's . Third quarter 2020 earnings conference call .

The primary reasons. So many BDC successfully navigated prior periods of volatility has been the lowly levered capital structures with which many companies including SK operate.

Speaker #4: I'd like to start today's call with a few market observations . We believe that BDC industry in general and FSK in particular , are resilient .

When interest rates began moving up just a few years ago in response to inflationary pressures many industry observers became overwhelmingly negative and their predictions for bdcs.

Speaker #4: The BDC industry's ability to navigate historical periods of volatility , whether due to interest rate adjustments , asset prices , inflationary pressures or spread compression , has been strong .

Not only did the vast majority of BDC portfolio companies navigate this period of adjustment.

Finian O'Shea: Okay. Thank you.

Dan Pietrzak: Thank you.

<unk> operators did as well with many of us delivering sustained quarters of higher levels of net investment income and higher dividends for shareholders.

Speaker #4: The primary reason so many BDC successfully navigated prior periods of volatility has been the lowly levered capital structures with which many companies , including FSK , operate .

Operator: Our next question comes from Ethan Kay at Lucid Capital Markets.

Finian O'Shea: Hey, guys. Thanks for taking my question here. Wanted to get your thoughts on kind of how, or if you guys are thinking about share buybacks. You indicated kind of intention to pay out 100% of NII with this new dividend framework. There's obviously many factors that kind of come into play when making these capital allocation decisions. The stock's still trading at a meaningful discount. Excuse me, wondering whether it's something you've considered or if you're kind of more comfortable returning all of NII to shareholders through the dividend.

As interest rates have started declining many industry observers once again are predicting difficult times ahead for bdcs.

Speaker #4: When interest rates began moving up just a few years ago , in response to inflationary pressures , many industry observers became overwhelmingly negative in their predictions for BDC .

At its heart the BDC industry as a spread lending business built on the back of diversified pools of assets and strong balance sheets.

So while we expect the federal reserve will continue to reduce rates over the coming quarters that reduction in rates will be immediately helpful. Two portfolio companies from an interest burden standpoint, and likely will generate additional M&A activity.

Speaker #4: Not only did the vast majority of BDC portfolio companies navigate this period of adjustment , BDC operators did as well , with many of us delivering sustained quarters of higher levels of net investment income and higher dividends for shareholders .

Speaker #4: As interest rates have started declining , many industry observers once again are predicting difficult times ahead for BDCs . At its heart , the BDC industry is a spread lending business built on the back of diversified pools of assets and strong balance sheets .

We also believe that while net net investment income levels necessarily will decline from their recent highs.

Dan Pietrzak: Yeah. Good morning, Ethan. I think we have been quite active over the years on the share buyback sort of side. I think, I don't look at the team here, but it's probably roughly $500 million over sort of those years. I think it's something that we do obviously talk about with the board, we think about as a management team. I think you have to be mindful about things on the other side, right? Where you're sitting versus target leverage, if you do have kind of thoughts or concerns around the forward macro. I think we feel pretty good with what we're seeing kind of out there, but it is a little bit of a bumpy environment. I think it does all get factored in there. It will be something that we do consider.

<unk> in particular and the BDC industry in general are well positioned to continue providing investors with an attractive current income stream as compared to the risk free rate.

Speaker #4: So while we expect the Federal Reserve will continue to reduce rates over the coming quarters , that reduction in rates will be immediately helpful to portfolio companies from an interest burden standpoint and likely will generate additional M&A activity .

And with that I'd like to turn to a quick overview of <unk> quarterly results and a few comments on our forward dividend strategy, which will begin in the first quarter of 2026.

During the third quarter S. K generated net investment income and adjusted net investment income of 57 per share.

Speaker #4: We also believe that while net net investment income levels necessarily will decline from the recent highs , FSK in particular and the BDC industry in general are well positioned to continue providing investors with an attractive current income stream as compared to the risk free rate .

As it compared to our public guidance of approximately 58 cents at 57 per share respectively.

Additionally, our net asset value increased to 21 99 compared to <unk> 21, 93 as of the end of the second quarter.

Speaker #4: And with that , I'd like to turn to a quick overview of Fsc's quarterly results and a few comments on our forward dividend strategy , which will begin in the first quarter of 2026 .

Finian O'Shea: Understood. Switching gears a little, you mentioned 60% of fundings were to kind of add-ons or existing relationships. This quarter, you also mentioned you're seeing a growing number of opportunities from new issuers. Wondering whether you think we're kind of approaching maybe an inflection in terms of new borrower fundings overtaking incumbent fundings, and to the extent those generate better fees, what that might mean for fee income, which, as you mentioned, looks pretty muted this quarter and maybe could be a tailwind going forward.

On October 8th 2025, we announced that our board declared a fourth quarter distribution totaling 70 per share consisting of our base distribution of <unk> 64 per share and a supplemental distribution of <unk> <unk> per share.

Speaker #4: During the third quarter, FSK generated net investment income and adjusted net investment income of $0.57 per share, as compared to our public guidance of approximately $0.58 and $0.57 per share, respectively.

And costs and plating or forward dividend strategy, we considered the prevailing interest rate environment, the overall investing environment and future unsecured debt maturities.

Speaker #4: Additionally , our net asset value increased to 21.99 compared to 21.93 . As of the end of the second quarter . On October 8th , 2025 .

Additional considerations included annualized BDC dividend yields on.

Net asset values over various market cycles, and our projected level of spillover income as of December 31 of this year.

Speaker #4: We announced that our board declared a fourth quarter distribution totaling $0.70 per share , consisting of our base distribution of $0.64 per share and a supplemental distribution of $0.06 per share .

Dan Pietrzak: Yeah. You got a couple of points in there, right? I think us, like the larger sort of platforms, like the incumbency positions, that is benefit or beneficial and kind of useful as you build out your portfolio. We are busier as it relates to pipeline and deal flow. We were busier in the third quarter than the second quarter. I think the second quarter, we were busier than any of the prior eight quarters on an individual basis. I think the market has sort of put tariffs behind it, although I'm not sure the full impact of tariffs has necessarily flowed through. I think there's general consensus on sort of where rates are going. I think we've seen that valuation gap or that willing buyer, willing seller sort of piece come together.

Finally, we actively listen to investors in terms of their views of our historical base plus supplemental dividend policy as we were one of the first bdcs to implement such a policy some years ago.

Speaker #4: In contemplating our forward dividend strategy , we considered the prevailing interest rate environment , the overall investing environment and future unsecured debt maturities .

The culmination of this process. The following conclusions first investors appreciate the base plus supplemental strategy as a method of receiving additional dividend income on a real time basis.

Speaker #4: Additional considerations included annualized BDC dividend yields on net asset values over various market cycles , and our projected level of spillover income . As of December 31st of this year , finally , we actively listen to investors in terms of their views of our historical base .

Next we believe <unk> annualized dividend yield expressed as a percentage of our net asset value will continue to be very competitive with our peer group and we will have the ability to vary over time as our net investment income Barry's, thereby maximizing current income to our investors.

Speaker #4: Plus supplemental dividend policy . As we were one of the first BDCs to implement such a policy some years ago , the culmination of this process yielded the following conclusions .

Dan Pietrzak: I think if you go to the bank earnings calls, they were definitely talking about how their capital markets businesses or their M&A businesses were more active. Obviously, some of those are much larger sort of deals. When you do factor all that together with, I think there's still a real push from private equity LPs to get a return of capital. We know there's a lot of dry powder out there. I think we're constructive on that. I think everybody's talked about that for a long time. I don't think we're in the business of trying to predict that anymore. We do know that we're busier. I think it will have an impact on fee income, which could be positive, although I would note, I mean, kind of the upfront fees and the OIDs have probably narrowed in line with sort of spreads coming down.

For 2026, we expect <unk> total distribution to equate to an annualized yield on our net asset value of approximately 10%.

Speaker #4: First , investors appreciate the base plus supplemental strategy as a method of receiving additional dividend income on a real time basis . Next , we believe Fsc's annualized dividend yield , expressed as a percentage of our net asset value , will continue to be very competitive with our peer group and will have the ability to vary over time as our net investment income varies , thereby maximizing current income to our investors .

Insistent with the BDC industry as long term yield of between 9% and 10%.

We currently expect our quarterly distribution will be comprised of a base distribution of approximately <unk> 45 per share and will be supplemented by our quarterly net investment income over and above this level.

During the first quarter of 2026, we currently expect our total distribution will approximate 55 per share based on future interest rates the refi.

Speaker #4: For 2026 . We expect Fsc's total distribution to equate to an annualized yield on our net asset value of approximately 10% , consistent with the BDC industry's long term yield of between 9% and 10% .

Refinance activities on the right side of the balance sheet and overall investment yields we expect our total quarterly distributions will vary over time.

Speaker #4: We currently expect our quarterly distribution will be comprised of a base distribution of approximately $0.45 per share , and will be supplemented by our quarterly net investment income over and above this level during the first quarter of 2026 , we currently expect our total distribution will approximate $0.55 per share based on future interest rates .

And with that I'll turn the call over to Dan.

Thanks, Michael from a macro standpoint, we have seen encouraging signs in the broader market, which.

Dan Pietrzak: I think we are of an opinion as the market gets busier, some of that can unwind a bit, but I would just be mindful about that.

Which point to continued growth in capital markets activity.

Finian O'Shea: Understood. Appreciate it. Thanks, guys.

Momentum in M&A is building and we are seeing that strength reflected on our own pipeline as the number of deals we evaluated in the third quarter increased by approximately 30% year over year.

Dan Pietrzak: Thank you.

Operator: Our next question comes from Kenneth Lee at RBC Capital Markets.

Speaker #4: Refinanced activities on the right side of the balance sheet , and overall investment yields , we expect our total quarterly distribution will vary over time , and with that , I'll turn the call over to Dan .

Finian O'Shea: Hey, good morning. Thanks for taking my question. Just to follow up on a previous question, you mentioned that when you went about setting your base distribution level, you were pretty deliberate and looked at the forward curves. I just want to assess how resilient you think that the base distribution level is being set through various economic cycles and various rate scenarios. Just want to tease that out a little bit more. Thanks.

While some economic indicators have shown pockets of weakness the overall labor market continues to remain healthy supported by solid corporate earnings.

Speaker #5: Thanks , Michael . From a macro standpoint , we have seen encouraging signs in the broader market , which point to continued growth in capital markets activity momentum and M&A is building .

Additionally, higher FICO score consumers continue to spend on accelerated levels.

Looking ahead, if the fed can engineer a soft landing and tariff concerns can be put behind us we believe economic conditions could continue to improve.

Speaker #5: And we are seeing that strength reflected in our own pipeline as the number of deals we evaluated in the third quarter increased by approximately 30% year over year .

Separately, we would note there has been a significant amount of attention to certain specific default in the broader marketplace.

Dan Pietrzak: Yeah. No, I mean, I don't think we would have said it if we didn't have a degree of confidence for where we kind of saw the various variables going forward. You are correct. I think there's a lot of sort of pieces of that puzzle in there. Just to say it again, we did look at where that forward curve would go. We did look at refinancing those liabilities. We did not give ourselves a lot of benefit in there for what would be kind of upside levers, right? I.e., if spreads do sort of gap back out, or a big benefit of assets rotating out of a non-income-producing bucket into an income-producing bucket. I think we put all that together to try to be mindful about that. As we talked about in the last call, we wanted to get ahead of this.

Speaker #5: While some economic indicators have shown pockets of weakness , the overall labor market continues to remain healthy , supported by solid corporate earnings .

We believe those are not private credit matters and a very specific situation and names. We would also note we have no exposure to first brands or Tri color.

Speaker #5: Additionally , higher Fico score , consumers continue to spend at accelerated levels . Looking ahead , if the fed can engineer a soft landing and tariff concerns can be put behind us , we believe economic conditions could continue to improve .

Trade tensions and the recent government shutdown continue to heightened our awareness around U S government and tariff related exposures.

Our portfolio has low single digit exposure to U S government and related borrowers and while there could be timing effects on payments or short term liquidity constraints.

Speaker #5: Separately , we would note there has been a significant amount of attention to certain specific defaults in the broader marketplace . We believe those are not private credit matters and are very specific situation and names .

Those risks have yet to materialize.

Additionally, ongoing tariff discussions continue to drive market volatility.

Speaker #5: We would also note we have no exposure to first brands or Tricolore . Trade tensions and the recent government shutdown continue to heighten our awareness around U.S.

But as we have stated in the past our exposure to tariff impacted businesses remains in the low to mid single digits.

Speaker #5: government and tariff related exposures . Our portfolio has low single digit exposure to U.S. government related borrowers , and while there could be timing effects on payments or short term liquidity constraints , those risks have yet to materialize .

Both topics are on our watch list, so and are being closely monitored.

We are seeing attractive opportunities in the origination market with a growing number of opportunities coming from new issuers, which further reflects the steady pickup in M&A activity.

Dan Pietrzak: We wanted to provide transparency in there. The only point that I would make, because I think it is important, I do think investors need to look at the total distribution number, though, right? We gave some thoughts about where that sets for Q1 and for all of 2026. Clearly, in these earlier years, especially when those lower-priced fixed-rate debt instruments are outstanding, there's some additional earnings there. I would be focused on the total, but the components are the base and the supplemental.

Our focus remains on U S based direct lending and top of the capital structure risk.

Speaker #5: Additionally , ongoing tariff discussions continue to drive market volatility . But as we have stated in the past , our exposure to tariff impacted businesses remains in the low to mid single digits .

In addition asset based finance investments remain.

An important and complementary part of the portfolio, providing incremental yield while outperforming traditional corporate credit from a default perspective.

Speaker #5: Both topics are on our watch list , though , and are being closely monitored . We are seeing attractive opportunities in the origination market with a growing number of opportunities coming from new issuers , which further reflects the steady pickup in M&A activity .

During the quarter, we had two realizations with within our ABS portfolio.

Our investment in Caliban commercial finance was repaid in full ahead of its 2026 maturity.

Finian O'Shea: Gotcha. Very helpful there. One follow-up, if I may, you commented on seeing some increased potential deal activity. What are you seeing in terms of spreads on some of the newer investments there? Have you seen a potential pickup or widening just given the amount of deal activity there? Thanks.

Speaker #5: Our focus remains on US based direct lending and top of the capital structure risk . In addition , asset based finance investments remain in an important and complementary part of the portfolio , providing incremental yield while outperforming traditional corporate credit from a default perspective .

<unk>. This is an asset based lending platform for capital intensive businesses with a focus on retail and industrial companies.

We initially made this investment in November of 2020, and the repayment resulted in a 13, 3% IRR.

Additionally, our investment in Weber was successfully exited in connection with the company's acquisition of Blackstone products.

Dan Pietrzak: Yeah. We haven't seen that. To be honest, Ken, I think we're probably still in that early days of the deal activity. I think you got to be probably looking at the other side of what the inflows are to the market. I think we've talked about for some time now where we've been in a bit of this technical, whereby a fair amount of capital has been raised for the space, and the M&A volumes were at just a little lower level. I think it's going to take a little bit more time for that to unwind if it's going to impact spreads, although I could foresee that as happening. I think we probably were expecting a little bit more continued volatility in the market across some of the higher-profile defaults that we had mentioned in our prepared remarks. I think that lasted for.

Speaker #5: During the quarter , we had two realizations with within our ABF portfolio , our investment in Calladine commercial finance was repaid in full ahead of its 2026 maturity .

However, as a manufacturer and distributor of outdoor barbecues and grill accessories.

We initially invested in Webber in December of 2023, Vienna, and accounts receivable financing facility.

Speaker #5: Calladine is an asset based lending platform for capital intensive businesses with a focus on retail and industrial companies . We initially made this investment in November of 2020 and the repayment resulted in a 13.3% IRR .

Exit resulted in a 16, 8% IRR.

Yes.

Turning to our investment activity during the third quarter, we originated approximately $1 $1 billion of new investments.

Speaker #5: Additionally , our investment in Weber was successfully exited in connection with the company's acquisition of Blackstone Products . Weber is a manufacturer and distributor of outdoor barbecues and grill accessories .

Approximately 60% of our new investments were focused on add on financings to existing portfolio companies and long term KKR relationships.

Our new investments combined with $1 billion of net sales and repayments when factoring in sales to our joint venture equated to a net portfolio increase of $109 million.

Speaker #5: We initially invested in Weber in December of 2023 via an accounts receivable financing facility . The exit resulted in a 16.8% IRR . Turning to our investment activity during the third quarter , we originated approximately $1.1 billion of new investments .

Dan Pietrzak: A little bit, but when I'm talking a little bit, I'm talking like a couple of days. I think that's kind of on our mind as well. I'm not seeing that yet, but we are seeing pretty high-quality companies access the direct lending market, which we view as a positive.

New originations consisted of approximately 65% in first lien loans, 7% in subordinated debt, 15% in asset based finance investments, 12% and capital cost of the joint venture and 1% in other or equity investments.

Speaker #5: Approximately 60% of our new investments were focused on add on financings to existing portfolio companies and long term KKR relationships . Our new investments , combined with $1 billion of net sales and repayments when factoring in sales to our joint venture , equated to a net portfolio increase of $109 million .

Finian O'Shea: Gotcha. Very helpful there. Thanks again.

Our new direct lending commitments at a weighted average EBITDA of approximately $162 million six two turns of leverage through our security at a weighted average coupon of approximately sofa plus 472 basis points.

Dan Pietrzak: Thanks. Have a good day.

Operator: Our next question comes from Robert Dodd at Raymond James. Robert, your line is open.

Speaker #5: New originations consisted of approximately 65% in first line loans , 7% in subordinated debt , 15% in asset based finance investments , 12% in capital .

We continue to focus on upper middle market companies with EBITDA in the $50 million to $150 million range across a diverse set of industries and sectors.

As of September 30, the weighted average EBITDA of our portfolio companies was $240 million and the median EBITDA was $115 million.

Speaker #5: Calls to the joint venture , and 1% in other or equity investments . Our new direct lending commitments had a weighted average EBITDA of approximately $162 million , 6.2 turns of leverage through our security and a weighted average coupon of approximately Sofr , plus 472 basis points .

Dan Pietrzak: We can go to the next question and try to go back to Robert if he's maybe on mute.

Our portfolio of companies reported a weighted average year on year EBITDA growth rate of approximately 4% across companies in which we have invested in since April of 2018.

Operator: Our next question comes from Alyssa Wiedel at JPMorgan.

Steven Lilly: Good morning. Thanks for taking my questions today. First, I want to clarify the new dividend policy in 2026. When you target sort of a 100% payout ratio, I understand that to be sort of on an annual basis. Quarterly might be a slight mismatch. Am I understanding that right? Is that versus GAAP or adjusted NII?

Interest coverage levels remain healthy with median third quarter coverage at one eight times.

Speaker #5: We continue to focus on upper middle market companies with EBITDA in the 50 to $150 million range across a diverse set of industries and sectors .

Our governance and workout team has made significant progress on certain investments, which we discussed during our second quarter earnings call in August.

Speaker #5: As of September 30th , the weighted average EBITDA of our portfolio companies was $240 million , and the median EBITDA was $115 million .

Specific company updates are as follows.

Dan Pietrzak: Yeah, I think your kind of initial thought there is right. There could be some mismatches on a quarterly basis, and then focused on GAAP.

We completed a restructuring of production resource group or <unk> in October, resulting in a market aligned capital structure and.

Speaker #5: Our portfolio companies reported a weighted average year on year EBITDA growth rate of approximately 4% across companies in which we have invested in since April of 2018 .

And we in our BDC co lender will exercise effective control of the company.

Steven Lilly: Got it. Thank you. As the board was reassessing the dividend policy going forward, it seems like there was a focus on resiliency within a lower rate environment for some period of time. Since we've also seen pressure on asset yields, and again, that's also exacerbated by the capital formation we've seen in the industry, I'm curious if the board also considered any adjustments to the fee structure for FSK. Thank you.

Speaker #5: Interest coverage levels remain healthy , with median third quarter coverage at 1.8 times . Our governance and workout team has made significant progress on certain investments , which we discussed during our second quarter earnings call in August .

And while pricing and industry pressure remains we believe the company will be in a much better positioned to create value going forward.

Restructuring efforts associated with 48 40 are progressing based.

Based upon progress to date, we anticipate being in a position to discuss the finalization of the restructuring on our fourth quarter earnings call.

Speaker #5: Specific company updates are as follows . We completed a restructuring of Production Resource Group , or PRG in October . Resulting in a market aligned capital structure .

KBS continues to perform in line with plan and we are pleased with the workout teams efforts here as we were able to effectuate change and stabilize the business quite quickly and there continues to be strategic interest and KBS.

Speaker #5: And we and our BDC Calendar will exercise effective control of the company. And while pricing and industry pressure remain, we believe the company will be in a much better position to create value going forward.

Dan Pietrzak: Yeah. No, thanks, Alyssa. I think you're correct in the sense of trying to factor all the pieces together here. Because it is more than just benchmark rates. It is spreads, it is all of the other sort of factors we've talked about. The couple of points I would make is, one, the idea of the base and supplemental is not a new concept for us, right? We've really been in that land for some time. We were really in kind of the $0.60 base with supplementals on top of that, and then we amended that $0.60 to $0.64 over time. I think that's not a new concept. To be fair, I think we're not declaring those dividends formally for Q1 and 2026, but we are trying to be pretty transparent with the market for kind of where we see this going. I think we.

During the third quarter no investments were added to nonaccrual status and one company was removed from non accrual status.

Speaker #5: Restructuring efforts associated with 4840 are progressing based upon progress to date . We anticipate being in a position to discuss the finalization of the restructuring on our fourth quarter earnings call .

Our first lien investment in new era of technology was restructured during the quarter into a new accruing first lien loan and revolver and.

And we also received new preferred stock and common equity.

Speaker #5: KBS continues to perform in line with plan, and we are pleased with the workout team's efforts here, as we were able to effectuate change and stabilize the business quite quickly. There continues to be strategic interest in KBS.

The restructuring resulted in $29 million of cost and $18 million of fair value being removed from non accrual status.

As of the end of the third quarter non accruals represented 5% of our portfolio on a cost basis, and two 9% of our portfolio on a fair value basis.

Speaker #5: During the third quarter , no investments were added to Nonaccrual status , and one company was removed from Nonaccrual status . Our first lien investment in New ERA technology was restructured during the quarter into a new , accruing first lean loan and revolver , and we also received new preferred stock in common equity .

This compares to five 3% of our portfolio on a cost basis, and 3% of our portfolio on a fair value basis as of June 30th.

Dan Pietrzak: By definition, kind of have to look at fees consistently or on an annual basis with the board. I think those dialogues will continue. I think where we do look at kind of the fee structure today, I think it lines up with the peers in the space. Yes, that is something we have to have the conversations with the board on a consistent basis about.

Pro forma for the <unk> restructuring, which closed subsequent to quarter end, our non accrual rate would be three 6% on a cost basis and one 9% on a fair value basis, assuming the remainder of the portfolio is unchanged.

Speaker #5: The restructuring resulted in $29 million of costs and $18 million of fair value being removed from Nonaccrual status . As of the end of the third quarter .

Speaker #5: Non-accruals represented 5% of our portfolio on a cost basis and 2.9% of our portfolio on a fair value basis. This compares to 5.3% of our portfolio on a cost basis and 3% of our portfolio on a fair value basis.

We also believe it is helpful to provide the market with information based upon <unk> assets originated by KKR credit.

Non accruals relating to the 90% of the portfolio, which has been originated by KKR credit in the skincare advisor were three 4% on a cost basis, and one 8% on a fair value basis as of the end of the third quarter.

Speaker #5: As of June 30th . Pro forma for the PRG restructuring , which closed subsequent to quarter end , our non-accrual rate would be 3.6% on a cost basis and 1.9% on a fair value basis .

Operator: Our next question comes from Paul Johnson at KBW.

Paul Johnson: Yeah. Thank you. Good morning. Thanks for taking my questions. It looks like the JV dividend income might have been a little bit higher this quarter. I was just curious, what is sort of kind of the capacity of the JV or the dry powder, so to speak? Is the JV fully deployed at this point, or is there sort of additional leverage that could be deployed there?

This compares to three 8% on a cost basis and 2% on a fair value basis as of the end of the second quarter.

Speaker #5: Assuming the remainder of the portfolio is unchanged . We also believe it is helpful to provide the market with information based upon fsc's assets originated by KKR credit .

With that I'll turn the call over to Steven.

Thanks, Dan.

As of September 30, FX case investment portfolio had a fair value of $13 4 billion consisting of 224 portfolio companies at the end of the third quarter. Our 10 largest portfolio companies represented approximately 20% of the fair value of our investment portfolio.

Speaker #5: Non-accruals relating to the 90% of the portfolio , which has been originated by KKR credit and the FSK Care Advisor , were 3.4% on a cost basis and 1.8% on a fair value basis .

Dan Pietrzak: Yeah. We do have additional sort of dry powder there to deploy into that. We have talked about the joint venture with kind of maybe an ultimate target of roughly 15%. We're getting to kind of that neighborhood, but we still do have some capacity there. I think the joint venture has been a good partnership, not just with our sort of partner there, but from a hopefully yield enhancer, if that's the right sort of term for FSK sort of generally. I think you can expect that to live in kind of that 12% to 15% range on a consistent basis.

Speaker #5: As of the end of the third quarter . This compares to 3.8% on a cost basis and 2% on a fair value basis .

Compared to 19% as of the end of the second quarter.

We remain focused on senior secured investments as our portfolio consisted of approximately 58% first lien loans and.

Speaker #5: As of the end of the second quarter , with that , I'll turn the call over to Steven .

Speaker #6: Thanks , Dan . As of September 30th , Fsc's investment portfolio had a fair value of $13.4 billion , consisting of 224 portfolio companies .

63% senior secured debt.

September 30th.

In addition, our joint venture represented approximately 13% of the fair value of our portfolio.

Speaker #6: At the end of the third quarter , our ten largest portfolio companies represented approximately 20% of the fair value of our investment portfolio compared to 19% as of the end of the second quarter .

As a result, when investors consider our entire portfolio looking through to the investments in our joint venture in first lien loans total approximately 68% of our total portfolio.

Paul Johnson: Thanks, that's helpful. One kind of higher-level question I'd ask is just your comments on tariffs. You still have a declining but small sort of watchlist related to the tariff issues, where we've seen a lot of BDCs with declining watchlists, some essentially to zero at this point, it becoming mainly a non-issue. I'm just curious on your comment there. Are you seeing kind of latent tariff issues start to percolate in the economy, or is this just still kind of a normal sort of belated flow-through of all the significant tariff changes earlier this year?

Senior secured investments totaled approximately 73% of our portfolio.

Speaker #6: We remain focused on senior secured investments as our portfolio consisted of approximately 58% . First line loans in 63% . Senior secured debt as of September 30th .

At September 30.

The weighted average yield on accruing debt investments was 10, 5% as of September 30th.

Speaker #6: In addition , our joint venture represented approximately 13% of the fair value of our portfolio . As a result , when investors consider our entire portfolio looking through to the investments in our joint venture in first line loans , total approximately 68% of our total portfolio and senior secured investments total approximately 73% of our portfolio .

Decrease of 10 basis points compared to 10, 6%.

June 30.

As a reminder, the calculation of weighted average yield.

Adjusted to exclude the accretion associated with the merger without that scale.

Turning to our quarterly operating results.

Total investment income was $373 million for the third quarter, a decrease of $25 million compared to the second quarter.

Speaker #6: As of September 30th . The weighted average yield on accruing debt investments was 10.5% . As of September 30th , a decrease of ten basis points compared to 10.6% as of June 30th .

The primary components of our total investment income during the third quarter were as follows.

Dan Pietrzak: Yeah. No, it's a good and fair question. I think we do have a handful of names that are in that kind of single-digit number where we are kind of quite mindful about tariff exposure, right? I think the fortunate news is that number is low because we've generally avoided what I would call heavy cyclical businesses, or consumer retail-related names, which probably have that higher number. I think we have seen an impact on that small number of names. I think we're working with those names to get through that. The comment I made about the tariff point on the other side is, I think the market has gotten itself to the point of understanding or feeling like they know where the administration is or lives on these sort of tariff points.

Total interest income was $285 million, representing a decrease of $13 million quarter over quarter.

Speaker #6: As a reminder , the calculation of weighted average yield is adjusted to exclude the accretion associated with the merger with FSR . Turning to our quarterly operating results , our total investment income was $373 million for the third quarter , a decrease of $25 million compared to the second quarter .

The decline in interest income was driven by lower base rates.

Repayment of higher yielding investments and the flow through of assets previously placed on non accrual status during the second quarter.

Dividend and fee income totaled $88 million a.

A decrease of $12 million quarter over quarter.

Speaker #6: The primary components of our total investment income during the third quarter were as follows . Total interest income was $285 million , representing a decrease of $13 million quarter over quarter .

As we noted on our second quarter earnings call, we anticipated a decline in third quarter dividend income.

Due to the timing of distributions from certain investments, which were paid during the second quarter.

Speaker #6: The decline in interest income was driven by lower base rates . The repayment of higher yielding investments , and the flow through of assets previously placed on Nonaccrual status during the second quarter .

Our total dividend and fee income is summarized as follows.

$59 million of dividend income from our joint venture.

Dan Pietrzak: I am not sure, though, the overall kind of broader economy has felt the full impact yet, right? I'm not sure that's a company-specific name versus a macro point, but that's kind of on our mind. I would say the same thing for government-related names. I mean, we have to see how this shutdown could impact folks. You still have kind of the Doge sort of points out there. I put them in a similar bucket, where I'm not sure we've fully kind of seen the full impact of that yet play out, but it's something we're pretty mindful about.

Other dividends from various portfolio companies totaling approximately $25 million during the quarter.

Speaker #6: Dividend and fee income totaled $88 million , a decrease of $12 million quarter over quarter . As we noted on our second quarter earnings call , we anticipated a decline in third quarter dividend income , primarily due to the timing of distributions from certain ADF investments , which were paid during the second quarter .

And fee income totaling approximately $4 million.

During the quarter.

The decline in fee income quarter over quarter.

Primarily was due to lower upfront fees associated with the mix of new investments during the quarter lower prepayment fees due to the age of investments that repaid during the quarter.

Speaker #6: Our total dividend and fee income is summarized as follows $59 million of dividend income from our joint venture . Other dividends from various portfolio companies , totaling approximately $25 million during the quarter , and fee income totaling approximately $4 million during the quarter .

And fewer amendments during the third quarter.

Our total expenses were $210 million during the third quarter, a decrease of $15 million compared to the second quarter.

Paul Johnson: Very helpful. Thanks. That's helpful for me.

The change in total expenses, primarily was driven by a decrease in interest expense due to lower leverage utilization during the quarter.

Dan Pietrzak: Okay, thank you.

Speaker #6: The decline in fee income quarter over quarter primarily was due to lower upfront fees associated with the mix of new investments during the quarter , lower prepayment fees due to the age of investments that repaid during the quarter , and fewer amendments during the third quarter .

Operator: Our next question comes from Heli Schatz at Raymond James.

The primary components of our total expenses were as follows.

Steven Lilly: Good morning. Thanks for the question. A little bit of a broader market question, has the recent disruption of the First Brands, Tricolor default started to impact any competitive factors in the asset-based finance side of the market?

Our interest expense totaled $116 million, a decrease of $9 million quarter over quarter.

Our weighted average cost of debt was five 3% as of September 30.

Speaker #6: Our total expenses were $210 million during the third quarter , a decrease of $15 million compared to the second quarter . The change in total expenses primarily was driven by a decrease in interest expense due to lower leverage utilization during the quarter .

Yes.

Dan Pietrzak: Yeah. Good morning. Fair question. I think the short answer is no, right? I think the broader answer is, I think those handful of deals have brought some kind of highlights to the space. I think they're all very unique and bespoke situations as it relates to the name. It does seem like there's some real, either fraud-related matters or otherwise there. I think both of those companies operate, I think, in either difficult segments or have some history around those. I think we feel really good about where we sit with regards to our asset-backed business. I think anyone who's done this long enough uses these as moments to kind of relook at your own sort of book, which we've been sort of doing. I think you haven't seen a big shakeout there. I do think it is a very prominent question on investors' minds, right?

Management fees totaled $51 million, a decrease of $2 million quarter over quarter.

Incentive fees totaled $33 million, a decrease of $3 million quarter over quarter.

Other expenses totaled $10 million.

Speaker #6: The primary components of our total expenses were as follows . Our interest expense totaled $116 million , a decrease of $9 million quarter over quarter .

A decrease of $1 million quarter over quarter.

Lastly, we incurred $4 million of excise tax during the third quarter related to the Finalization of 2020 for tax items related to certain international and ABL investments.

Speaker #6: Our weighted average cost of debt was 5.3% as of September 30th . Management fees totaled $51 million , a decrease of $2 million quarter over quarter .

The detailed bridge and our net asset value per share on a quarter over quarter basis is as follows.

Speaker #6: Incentive fees totaled $33 million , a decrease of $3 million quarter over quarter . Other expenses totaled $10 million , a decrease of $1 million quarter over quarter .

Our ending <unk> 2025, net asset value per share.

Of $21 93 zones was increased by GAAP net investment income of <unk> 57 per share.

Speaker #6: Lastly , we incurred $4 million of excise tax during the third quarter related to the finalization of 2024 fax items related to certain international and ABS investments .

It was increased by <unk> 19 per share due to an increase in the overall value of our investment portfolio.

Our net asset value per share was reduced by <unk> <unk> per share total quarterly distributions paid during the quarter.

Speaker #6: The detailed bridge in our net asset value per share on a quarter over quarter basis is as follows . Our ending to Q 2025 net asset value per share of $21.93 was increased by GAAP , net investment income of $0.57 per share , and was increased by $0.19 per share due to an increase in the overall value of our investment portfolio .

With some of these activities results in our September 32025, net asset value per share of $21 99.

Dan Pietrzak: Both institutional and wealth, which could extend out some timelines or kind of otherwise there, which are pretty fair kind of comments or questions on their side. I don't think from a regular way, new investment perspective.

From a forward looking guidance perspective, we expect fourth quarter 2025, GAAP net investment income to approximate 51 per share.

Steven Lilly: Got it. Thank you.

We expect our adjusted net investment income to approximate 56 cents per share.

Operator: I'm showing no further questions at this time. I would now like to turn it back to Dan Pietrzak for closing remarks.

Speaker #6: Our net asset value per share was reduced by our $0.70 per share total quarterly distribution paid during the quarter . The sum of these activities results in our September 30th , 2025 net asset value per share of $21.99 .

The detailed components of our fourth quarter guidance are as follows.

Dan Pietrzak: Well, we want to thank everyone for your time today. We're always available if there are any other questions. We look forward to talking with you on our next call. Have a good day.

Our recurring interest income on a GAAP basis is expected to approximate $270 million.

We expect recurring dividend income associated with our joint venture to approximate $57 million.

Operator: Thank you for your participation in today's conference. This does conclude the program.

Speaker #6: From a forward looking guidance perspective , we expect fourth quarter 2025 GAAP net investment income to approximate $0.51 per share , and we expect our adjusted net investment income to approximate $0.56 per share .

Steven Lilly: Goodbye.

Operator: You may now disconnect.

We expect fee and other dividend income to approximate $33 million.

From an expense standpoint, we expect our management fees to approximate $50 million, we expect incentive fees to approximate $29 million.

Speaker #6: The detailed components of our fourth quarter guidance are as follows . Our recurring interest income on a GAAP basis is expected to approximate $270 million .

We expect our interest expense to approximate $109 million and.

And we expect other G&A expenses to approximate $9 million.

Speaker #6: We expect recurring dividend income associated with our joint venture to approximate $57 million . We expect fee and other dividend income to approximate $33 million from an expense standpoint , we expect our management fees to approximate $50 million .

During the fourth quarter, we expect our excise taxes will approximate $20 million.

We expect the net effect of excise taxes to be partially offset by the accretion of our investments due to merger accounting.

Turning to our capital structure in September we issued $400 million of six 1% to 5% unsecured notes due 2031.

Speaker #6: We expect incentive fees to approximate $29 million . We expect our interest expense to approximate $109 million , and we expect other G&A expenses to approximate $9 million .

Which subsequently were swapped to floating rate interest rate swap agreements at a weighted average spread of sofa plus two 748%.

Speaker #6: During the fourth quarter . We expect our excise taxes will approximate $20 million . We expect the net effect of excise taxes to be partially offset by the accretion of our investments due to merger accounting .

Proceeds were used to repay a portion of the outstanding debt on our revolver.

As of September 30, our gross and net debt to equity levels were 120% and 116% respectively.

Speaker #6: Turning to our capital structure, in September, we issued $400 million of 6.125% unsecured notes due 2031, which subsequently were swapped.

Compared to 131% and 120% at June 30.

Our leverage remains within our target leverage range of one to 125 times net debt to equity.

Speaker #6: The floating rate via an interest rate swap agreement at a weighted average spread of Sofr plus 2.748% . Proceeds were used to repay a portion of the outstanding debt on our revolver .

At the end of the third quarter, our available liquidity was $3 7 billion.

And approximately 64% of our drawn balance sheet and 44% of our committed balance sheet was comprised of unsecured debt.

Speaker #6: As of September 30th , our gross and net debt to equity levels were 120% and 116% , respectively , compared to 131% and 120% at June 30th .

And with that I'll turn the call back to Michael for a few closing remarks before we open the call for questions.

Thanks Steven.

Speaker #6: Our leverage remains within our target . Leverage range of 1 to 1.25 times net debt to equity at the end of the third quarter , our available liquidity was $3.7 billion and approximately 64% of our drawn balance sheet and 44% of our committed balance sheet was comprised of unsecured debt .

We're pleased with our third quarter results and we're also pleased to announce our 2026 distribution strategy, which we expect will result in an annualized yield of approximately 10% on our net asset value.

From a forward looking perspective, the pickup in M&A activity is positive to see as we believe our investment platform is particularly well suited to capitalize on this increased activity.

Speaker #6: And with that , I'll turn the call back to Michael for a few closing remarks before we open the call for questions .

On behalf of the team.

We thank you all for joining the call and for your continued support operator, we'd like to open the call for questions.

Speaker #4: Thanks , Steven . We are pleased with our third quarter results , and we're also pleased to announce our 2026 distribution strategy , which we expect will result in annualized yield of approximately 10% on our net asset value from a forward looking perspective , the pickup in M&A activity is positive .

Thank you at this time, we will conduct a question and answer session to ask a question during this.

You will need to press star one on your telephone and wait for your name to be announced to withdraw. Your question. Please press star one one again, please stand by while we compile the Q&A roster.

Speaker #4: To see as we believe our investment platform is particularly well suited to capitalize on this increased activity . On behalf of the team , we thank you all for joining the call and for your continued support .

Our first question comes from Finian O'shea at Wells Fargo Securities.

Speaker #4: Operator we'd like to open the call for questions .

Speaker #2: Thank you . At this time , we will conduct the question and answer session . To ask a question during this , you will need to press star one one on your telephone and wait for your name to be announced .

Hey, everyone. Good morning.

So it looks like there was some improvement.

On a on a few of the legacy names equity.

Which is of course very welcome.

Speaker #2: To withdraw your question , please press star one . One again . Please stand by while we compile the Q&A roster . Our first question comes from Finian O'Shea at Wells Fargo Securities .

Question as it relates to that as.

To what extent is.

Is this indicative of.

Some of you and the team advancing toward exiting these investments. Thank you.

Hey, good morning.

A fair question.

I think we have.

Speaker #7: Hey everyone . Good morning . So it looks like there was some improvement on a , on a on a few of the legacy names .

They are pretty happy with the work that our workout and governance team has done across these names.

Speaker #7: Equity , which is of course very welcome . Question as it relates to that is to what extent is this indicative of of you and the team advancing toward exiting these investments ?

We've talked about several of them on calls in the past.

I think some of them are complicated because they're effectively minority equity investments.

Where we don't have perfect.

Governance or control.

That said I will talk about some of the names like global generally we've seen a really good job by the management team there a real evolution of that.

Speaker #7: Thank you .

Speaker #5: Good morning Kevin . You know , a fair question . I think we have been pretty happy with the the work that our workout and governance team has done across these names .

Balance sheet and kind of around sort of ROE you think grows I think we talked about the PRT restructuring which is positive.

Speaker #5: You know , we've talked about several of them on kind of calls in the past . You know , I think some of them are complicated because they're effectively minority equity investments where we don't have sort of perfect , governance or control .

AWS has done a bit of a benefit from from tariff so.

We are very very focused on looking to monetize their for a bunch of different reasons, including being able to redeploy and more interest bearing assets, but progress.

Speaker #5: I think . That said , on we've talked about this in the past on some of the names , like Global Jet , we've seen a really good job by the management team there .

Okay. That's helpful. Thanks and.

Steven a follow up I am sure a question we all have.

Speaker #5: A real evolution of that balance sheet and kind of their own sort of Roe figures . I think we talked about the PRG restructuring , which is positive .

On the dividend as is where.

What sort of progress you've made towards your targets on spillover and what that might mean.

Speaker #5: JWA has got a bit of a benefit from , from tariffs . So it you know , we are very , very focused on looking to monetize there for a bunch of different reasons , including being able to redeploy in more interest bearing assets .

For I guess for I guess as an input to your formula on the variable, but also potential specials.

Speaker #5: But progress .

This year next year or whenever thanks.

Speaker #7: Okay . That's helpful . Thanks . And Steven , a follow up , I'm sure a question we all have on the dividend is is where what sort of progress you made toward your targets on spillover and what that might mean .

Yes, Thanks Pam.

We certainly have made progress during 2025, which was our goal.

I think we'll end the year.

<unk> cleaning out the little north of $100 million of spillover.

Obviously with our.

Partnership investments blockers that exists to an international partnerships, yes, there is.

Speaker #7: For for I guess I guess as an input to your formula on the variable . But also potential specials , you know , this year or next year or whenever .

The way those flow through in terms of our obligation tax obligation, which does impact spillover because theres a build on the other side. So I think to the heart of your question. If we end the year when we go through the estimates at that time period.

Speaker #7: Thanks .

Speaker #6: Yeah . Thanks , Ben . We certainly have made progress during 2025 , which was our goal . You know , I think we'll end the year probably cleaning out a little north of 100 million of of spillover .

Where with the reduction in the dividend going into 2026, if we have a balance there that I think our expectation would be to make a one time distribution or so too.

Speaker #6: Obviously with our partnership investments , you know , blockers that exist to an international partnerships , you know , there is just the way those flow through in terms of our obligation tax obligation , which does impact spillover .

Shareholder something first half of next year that would get us to the remaining part of our target balance of plus or minus two quarters' worth of dividends.

On an ongoing basis and then also incumbent in the dividend strategy is that we.

Speaker #6: There's a build on the other side . So I think to the heart of your question , if we end the year , you know , when we go through the estimates at that time period where with the reduction in the dividend going into 2026 , if we have a balance there , then I think our expectation would be to make a one time distribution or so to shareholder something .

I think the market you and the market should expect us to.

On a full annual basis, 100% of our gap.

Net investment income, yes, it may not hit that every quarter given that we pay excise tax in the fourth quarter.

Speaker #6: First half of next year . That would get us to the remaining part of our target balance of plus or minus two quarters worth of dividends on an ongoing basis .

But for the full year, we would be paying basically 100% of NII.

And will you have a sorry to sneak in a bonus question here like.

Speaker #6: And then also incumbent in the dividend strategy is that we I think the market you and the market should expect us to pay on a on a full annual basis , 100% of our GAAP net investment income .

In the out years, if you look at the sofa curfew.

Not be that much above 45.

Of course, we will see but let's just go with it.

You're going to want this sort of degree of headroom.

Speaker #6: It may not hit that every quarter , given that , you know , we pay excise tax in the fourth quarter , but , you know , for the full year , we would be paying basically 100% of NII .

Given your sort of commitment to the variable nature like if youre NOI goes to 45 are we going to see 35, plus 10 or something like that.

Speaker #7: And will you have a sorry to sneak in a bonus question here . Like in the out years , if you look at the Sofr curve , you might not be that much above the 45 .

Yes, I'll start and David can add to it and that we charge extra for bonus questions.

Yes.

I think we're probably not in the business of trying to give out multi year sort of forward guidance because its quite hard right at this question.

Awareness Ofer go.

Speaker #7: You know , of course we'll see . But let's just go with it . Are you going to want this sort of degree of headroom , given your sort of commitment to the variable nature , like if your NOI goes to 45 , are we going to see 35 plus ten or something like that ?

Yes, I think you see that I think not just us, but probably the whole industry has got a lower fee income number where we said this quarter.

There's probably a bunch of variables that go into that we did take into account what I think youre talking about right.

Speaker #5: Yeah , I'll start and Stephen can add to it . And we charge extra for bonus questions . You know I think we're we're probably not in the business of trying to give out , you know , multi-year sort of forward guidance because it's quite hard .

The forward curve.

No we have the benefit of some cheaper liabilities that were issued at a different rate environment that will get refinanced to kind of think about that.

Base, and then being mindful of paying out the supplemental ahead of that but I think we were pretty deliberate in coming up with that 45 estimate.

Speaker #5: Right . It's a question of , where does Sofr go . I think , you see , I think not just us , but probably the whole industry has got a lower fee income number where we sit this quarter , you know , so probably a bunch of variables that go into that , you know , we did take into account what I think you're talking about , right .

Awesome. Thank you Dan.

Okay have a good day.

Our next question comes from Eric <unk> at your list.

Speaker #5: The , you know , the forward curve . You know , we know we have you know , the benefit of some cheaper liabilities that were issued in a different rate environment that will get refinanced to kind of think about that base .

Thanks.

With respect to the Pier G restructuring in October can you provide any details in terms of more what you received in return and was it close to the market et cetera.

Speaker #5: And then , you know , being mindful about paying out the supplemental ahead of that . But I think we were pretty deliberate in coming up with that 45 cent estimate .

Yes.

It's probably.

Just in a quite simple matter it was a fairly messy.

Speaker #7: Awesome . Thank you .

Speaker #8: Did .

<unk> capital structure, because it had gone through a bunch of changes over the years.

Speaker #5: Have a good day .

Speaker #2: Our next question comes from Aaron Sinovic at Truist .

And that.

<unk> capital structure was difficult I think to allow the company to go forward not just from a financial perspective, but a governance perspective so.

Speaker #9: Thanks . With respect to the PRG restructuring in October , can you provide any details in terms of , you know , where what you received in return ?

So I think that was the real driver.

Speaker #9: And was it close to the mark , etc. ?

I'm, sorry, but what did you receive in exchange.

Speaker #5: Yeah , I mean , it it's probably just an a quite simple manner . It was a fairly , you know , messy capital structure because it had gone through a bunch of changes over the years and that , you know , messy capital structure was difficult , I think , to allow the company to go forward , not just from a financial perspective , but a governance perspective .

Well.

From a value perspective, we were.

Actively in the same spot.

From a from a governance perspective, though I think we're sort of significantly different.

We're effectively already equity, but there was a bunch of other tranches of equity and there is a complicated the matter.

That got us thinking about planning.

Okay that makes sense.

And then the.

Speaker #5: So I think that was the real driver .

The 1 billion Thats coming due in January the unsecured debt.

Speaker #9: I'm sorry, but what did you receive in exchange?

You didn't.

Speaker #10: Well , from a value perspective , we were .

And issuance recently was that kind of.

Speaker #5: Effectively in the same spot , you know , from , from a from a governance perspective , though , I think we're sort of significantly different because we were effectively already equity .

Partial payment ahead of that.

And what's the <unk>.

Obviously, you didn't pay it down but.

Kind of the thought to use that cash kind of towards that and then are you expecting to use the credit facilities to initially pay that and then kind of hit the market whenever you see it as attractive.

Speaker #5: But there was a bunch of other tranches of equity in there that complicated the matter . That's my point about cleaning it .

Speaker #9: Okay . That makes sense . And then the the 1 billion that's coming due in January , the debt you did an issuance recently was that kind of , you know , partial payment ahead of that .

Yeah, I mean, I think that's pretty well set I think I think the team has done a good job about being mindful about the liability side of the balance sheet right.

Consistently extending the revolver to make sure we've got.

Roughly always going back to that five years.

Speaker #9: And what's the I mean , obviously you didn't pay it down , but kind of the thought to use that cash kind of towards that .

To access and continued access the unsecured bond market consistently.

Clearly the 400 was done in advance of that and we've got $3 7 billion of available liquidity. So I think we <unk>.

Speaker #9: And then are you expecting to use the credit facilities to initially pay that and then kind of hit the market whenever you see it as attractive ?

The liability side of the balance sheet is a very important and we felt a lot of time thinking about that but I think what that available liquidity, we feel in a good spot okay.

Speaker #5: Yeah , I mean , I think that's pretty well said . I think I think the team has done a good job about being mindful about the liability side of the balance sheet .

Okay. Thank you.

Thank you.

Speaker #5: Right . We're consistently extending the revolver to make sure we've got , you know , roughly always going back to that five years .

Our next question comes from Ethan Kaye at Lucid capital markets.

Speaker #5: We want to access and continue to access the unsecured bond market consistently . You know , clearly the 400 was done in advance of that .

Hey, guys. Thanks for taking my question here wanted to get your thoughts on kind of how or if you guys are thinking about share buybacks, you indicated kind of intention to pay out 100% of NII.

Speaker #5: And we've got $3.7 billion of available liquidity . So I think we liability size of these balance sheets are very important . We spent a a lot of time thinking about that .

Speaker #5: But I think with that available liquidity , we feel in a good spot .

With this new dividend framework in there.

Obviously, many factors that kind of come into play when making these capital allocation decisions, but.

Speaker #9: Okay .

The stock still trading at a meeting meaningful discounts so.

Speaker #2: next question comes from Ethan Kay at Lucid Capital Markets .

Excuse me wondering whether it's something you've considered or if youre kind of more comfortable.

Speaker #12: Hey guys . Thanks for taking my question here . I wanted to get your thoughts on kind of how or if you guys are thinking about share buybacks .

Returning all of NII to shareholders through through the dividend.

Yes. Good morning, I think we have been quite active over the years on the share buyback set aside I think.

Speaker #12: You indicated kind of intention to pay out 100% of of NII . With this new dividend framework . And you know , there's obviously many factors that kind of come into play when making these capital allocation decisions .

Look at the team here, that's probably roughly $500 million.

Over.

Speaker #12: But you know , the stock still trading at a meeting , meaningful discount . So excuse me . Wondering whether it's something you've considered or if you're kind of more comfortable , you know , returning all of NII to shareholders through through the dividend .

Over those years.

It's something that we do obviously talk about with the board.

We think about as a management team I think you have to be mindful about things on the other side right where you're sitting.

Versus target leverage if you do have.

Speaker #5: Yeah . Good morning Ethan . You know , I think we have been quite active over the years on the share buyback , sort of side .

Kind of thoughts or concerns around the forward macro I think we feel pretty good with what we're seeing kind of out there, but it is a little bit of a bumpy environment. So I think it does all get factored in there.

Speaker #5: I think I know look at the team here . But it's probably roughly $500 million over sort of those years . I think it's something that we do .

But it will be something.

We do consider.

Understood and then switching gears a little.

Speaker #5: You know , obviously talk about with the board . We think about as a management team . I think you have to be mindful about things .

You mentioned, 60% of fundings were to kind of add ons or existing relationships. This quarter. You. Also mentioned you are seeing a growing number of opportunities from new issuers I'm wondering whether you think we're kind of approaching.

Speaker #5: On the other side . Right , where you're sitting , you know , versus target leverage . You know , if you do have , you know , kind of thoughts or concerns around the forward macro , I think we feel pretty good with what we're seeing kind of out there .

Kind of thoughts or concerns around the forward macro I think we feel pretty good with what we're seeing kind of out there, but it is a little bit of a bumpy environment. So I think it does all get factored in there.

Maybe an inflection in terms of.

New borrower fundings kind of overtaking incumbent fundings and to the extent those generate better fees, what that might mean for for fee income, which as you mentioned look pretty muted this quarter and.

But it will be something that we do consider.

Understood.

Then switching gears, you mentioned, 60% of fundings were to kind of add ons or existing relationships. This quarter. You also mentioned youre seeing.

Maybe it could be a tailwind going forward.

Yes, you got a couple of points in there right.

Yes, I think us like the larger sort.

Growing number of opportunities from new issuers I'm wondering whether you think we're kind of approaching maybe an inflection in terms of.

So to platforms like the incumbency positions that is benefit beneficial in kind of a useful as you build out your portfolio.

New borrower fundings kind of overtaking incumbent fundings and to the extent those generate better fees, what that might mean for for fee income, which you mentioned looks pretty muted this quarter.

We are busier as it relates to the pipeline and deal flow.

We were busier in the third quarter than the second quarter I think the second quarter, we were busier than any of the prior eight quarters on an individual basis.

Maybe it could be a tailwind going forward.

I think the market.

Yes, you got a couple of points in there right.

As you know sort of put tariffs behind it although I'm not sure the full impact of tariffs as I site flow through I think there's general consensus on sort of where rates are going so I think we've seen.

Yes, I think us like though the larger.

On a platform like the incumbency positions that is benefit are beneficial and kind of useful as you build out your portfolio.

That valuation gap or that willing buyer willing seller sort of piece come together I think if you go to the bank earnings calls they were definitely talking about how their capital markets businesses or are there M&A businesses were more active obviously some of those are much larger so the deals but when.

We are busier as it relates to the pipeline and deal flow.

We were busy in the third quarter than the second quarter I think the second quarter, we were busier than any of the prior eight quarters on an individual basis.

I think the market.

When you do factor all of that together with.

As sort of put tariffs behind it although I'm not sure the full impact of tariffs as I cite flowed through I think there's general consensus onset of where rates are going so I think we've seen.

I think theres still a real push from.

Private equity Lps to get a return of capital, we know Theres a lot of dry powder out there.

I think we're constructive on that I think.

Everybody has talked about that for a long time. So I don't think we are in the business of trying to predict that anymore, but we do know that we're busier I think it will have an impact.

That valuation gap or that willing buyer willing seller sort of piece come together I think if you go to the bank earnings calls they were definitely talking about how their capital markets businesses or the M&A businesses were more active obviously some of those are much larger so the deals but.

On fee income, which could be positive, although I would note I mean.

The upfront fees and the OID is that's probably.

When you do factor all of that together with.

I think theres still a real push from.

Narrowed.

Aligned with sort of spreads coming down I think.

Private equity Lps to get a return of capital, we know Theres a lot of dry powder out there.

Of an opinion as the market gets busier some of that can unwind a bit but I would just be mindful about that.

I think we're constructive on that I think.

Everybody has talked about that for a long time. So I don't think we are in the business of trying to predict that anymore, but we do know that we're busier I think it will have an impact.

Understood I appreciate it thanks guys.

Thank you.

Our next question comes from Kenneth Lee RBC capital markets.

On fee income, which could be positive, although I would note I mean kind.

Hey, good morning, Thanks for taking my question just a follow up on a previous question.

The upfront fees and the OID is that's probably.

You mentioned that when you went about setting your base distribution level, you were pretty deliberate and looked at the forward curves.

Narrowed.

And what sort of spreads coming down I think.

We are of an opinion as the market gets busier some of that can unwind a bit but I would just be mindful about that.

I just want to assess.

How resilient do you see the base distribution level is being set through.

Understood I appreciate it thanks guys.

Thank you.

Various economic cycles and in various rate scenarios, just wanted to tease that out a little bit more thanks.

Our next question comes from Kenneth Lee RBC capital markets.

Yeah, No I mean its.

Hey, good morning, Thanks for taking my question just a follow up on that on a previous question.

I don't think we would have said it if we didn't have a degree of confidence for.

You mentioned that when you went about setting your base distribution level, you were pretty deliberate and looked at the forward curves.

Where are we kind of saw the various variables going forward. You are correct I think there's a lot of sort of pieces of that puzzle in there.

But just to say it again, we did look at where that forward curve would go we did look at refinancing those liabilities.

I just want to SaaS.

How resilient do you think the base distribution level is being set through.

We did not give ourselves a lot of benefit in there or what would be kind of upside levers right E spreads due to the GAAP back out.

Various economic cycles and various rate scenarios, just wanted to tease that out a little bit more thanks.

Yes no.

I don't think we would have said it if we didn't have a degree of confidence for.

Or.

Big benefit of.

Assets rotating out of a non income producing bucket into an income producing bucket. So.

Where are we kind of saw the various variables going forward. You are correct I think theres a lot of sort of pieces of that puzzle in there.

Yeah.

I think we put all of that together.

But just to say it again, we did look at where that forward curve would go we did look at refinancing those liabilities.

To try to be mindful about that and.

We.

We as we talked about on the last call. We wanted to get ahead of this we wanted to provide transparency in their <unk>.

We did not give ourselves a lot of benefit in there or what will be kind of upside levers E.

That I would make is I think it is important I do think investors need to look at the total distribution number though right.

E spreads to sort of get back out.

Or.

The benefit of.

Sure.

Assets rotating out of a non income producing bucket into an income producing bucket. So.

And we gave some thoughts about where that sets for Q1 and for all of 2006.

Yes.

But clearly in these earlier years, especially when those.

I think we put all that together.

To try to be mindful about that and.

Lower prices fixed rate debt instruments are outstanding there is some additional earnings so I would be focused on the total but the components are those days in the sub level.

No.

<unk>.

We as we've talked about in the last call. We wanted to get ahead of this we wanted to provide transparency and theyre. The only point that I would make is I think it is important I do think investors need to look at that total distribution number though right.

Got you very helpful. There.

One follow up if I may you commented on seeing some some increased.

Potential deal activity.

Sure.

We gave some thoughts about where that sets for Q1 and for all of 2006.

What are you seeing in terms of spreads on some of the newer investments there.

But clearly in these earlier years, especially when those lower priced fixed rate debt instruments are outstanding. There is some additional earnings so I wouldn't be focused on the total but the components are those dates and the subtle out.

Have you seen a potential pick up more widening just given the amount of deal activity there. Thanks.

Yes, the way we haven't seen that.

To be honest I think I think we're probably still in that early days of the deal activity I think you've got to be.

Got you very helpful. There.

Probably looking at the other side of what the inflows are to the market.

And one follow up if I may you commented on seeing some some increased.

I think we've talked about for some time now where we've been in a bit of this technical.

Potential deal activity.

What are you seeing in terms of spreads on some of the newer investments there.

Whereby a fair amount of capital has been raised for the space and the M&A volumes were at just at a lower level. So I think it's going to take a little bit more time for that to unwind, if it's going to impact spreads, although I could foresee that is.

Have you seen a potential pick up more widening just given the amount of deal activity there. Thanks.

Yes, we haven't seen that.

To be honest I think I think we're probably still in that early days of the deal activity I think you've got to be.

Happening.

Think we probably were expecting a little bit more continued volatility in the market across some of the higher profile defaults that we had mentioned.

Probably looking at the other side of what the inflows are to the market.

Yes, I think we've talked about for some time now where we've been a bit of this technical.

Our prepared remarks, I think that lasted for.

Whereby.

A little bit, but I'm talking a little bit I'm talking like a couple of days.

A fair amount of capital has been raised for the space and the M&A volumes were at just at a lower level. So I think it's going to take a little bit more time for that to unwind, if it's going to impact spreads. Although I could foresee that is happening I think we probably were expecting a little bit more continued.

But I think that is kind of on our minds as well.

So not seeing that yet.

But we are seeing pretty high quality companies.

Access to the direct lending market, which we view as a positive.

Got you very helpful. Thanks again.

<unk> in the market across some of the higher profile defaults that we had mentioned in our prepared remarks I think that lasted for.

Thanks have a good day.

Our next question comes from Robert Dodd at Raymond James.

A little bit, but I am talking a little bit I'm talking like a couple of days.

Robert Your line is open.

But I think thats kind of on our mind as well.

So not seeing that yet.

But we are seeing pretty high quality companies.

Access the direct lending market, which we view as a positive.

We can go to the next question to John to go back to Robert are these.

Maybe on mute.

Got you.

Helpful. There. Thanks again.

Oh.

Thanks have a good day.

Our next question comes from Elisa leader at J P. Morgan.

Our next question comes from Robert Dodd at Raymond James.

Good morning, Thanks for taking my questions today.

First I want to clarify the new dividend policy in 2026, when you target sort of a 100% payout ratio I understand that to be sort of on an annual basis.

Robert Your line is open.

Quarterly might be a slight mismatch I understanding that right and then is that person GAAP or adjusted NII.

We can go to the next question to John to go back to Robert.

Maybe on mute.

Yes, I think your kind of initial thought there is righted.

Okay.

Our next question comes from Melissa.

There could be some mismatches on a quarterly basis and that focused on GAAP.

At J P. Morgan.

Good morning, Thanks for taking my questions today.

Okay got it thank you.

First I want to clarify the new dividend policy in 2026.

Then.

Has the board was reassessing the dividend policy going forward. It seems like there is a focus on.

When you target sort of a 100% payout ratio I understand that to be sort of on an annual basis.

Resiliency within a lower.

Quarterly might be a slight mismatch I understanding that right and then is that versus GAAP or adjusted NII.

The lower rate environment for some period of time.

Since we are also seeing pressure on asset yields and again Thats also exacerbated by the capital formation, we've seen in the industry I'm curious if the board also considering any.

Yeah, I think your kind of initial thought there is righted.

There could be some mismatches on a quarterly basis and that focused on GAAP.

Thanks to the fee structure for FSA. Thank you.

Okay got it. Thank you and then as the board was reassessing the dividend policy going forward. It seems like there is a.

Yeah, no. Thanks Melissa.

You're correct in the sense of China.

Factor all the pieces together here.

Focus on.

Resiliency within a lower.

Because it is more than just benchmark rates. It is spreads. It is all of the other sort of factors. We've talked about a couple of points I would make is is.

The lower rate environment for some period of time.

Since we are also seeing pressure on asset yields and again Thats also exacerbated by the capital formation, we've seen in the industry I'm curious if the board also have considered any adjustments to the fee structure for FSA. Thank you.

One.

The idea of the base and supplemental is not a new concept for us.

<unk>.

Really been in that land for some time.

Yeah, no. Thanks a lot.

We were really in kind of the 60 sent base with supplemental is on top of that and then we amended that 60% to 64 over time, So I think thats not a new concept.

I think youre correct in the sense of China.

Factor all the pieces together here.

Because it is more than just benchmark rates. It is spreads. It is all of the other sort of factors we've talked about a couple of points I would make is.

And to be fair I think we're not declaring those dividends formerly.

For Q1, and 26, but we are trying to be pretty transparent with the market for kind of where we see this going.

One.

The idea of the base and supplemental is not a new concept for us.

I think we.

By by definition kind of have to look at these consistently or on an annual basis with our board.

We've really been in that land for some time.

We were really in kind of the 60 sent base with supplemental is on top of that and then we amended that $60 to 64 over time. So I think that's not a new concept.

Those dialogues will continue.

And I think when you do look at kind of the fee structure today, I think it lines up with the.

Some of the peers in this space, but yes that is something we have to have the conversations with the board occupancy basis is up.

And to be fair I think we're not declaring those dividends formerly.

For Q1, and 26, but we arent trying to be pretty transparent with the market for kind of where we see this going.

Okay.

I think we.

By by definition kind of have to look at these consistently or on an annual basis with the board.

Our next question comes from Paul Johnson at K B W.

Yes. Thank you good morning, Thanks for taking my questions.

Dialogues will continue.

And I think when you do look at kind of the fee structure today, I think it lines up with the.

I see okay, and then I might have been a little bit higher this quarter. I was just curious what is sort of kind of the.

Sort of the peers in this space, but yes that is something we have to have the conversations with the board item basis is up.

Capacity in the JV or the dry powder so to speak.

Okay.

Is that.

As the JV fully deployed at this point or is there sort of a.

Additional leverage that could be deployed.

Deployed there.

Our next question comes from Paul Johnson at K B W.

Yes, we do have additional sort of dry powder, there to deploy into that we have talked about.

Yes. Thank you.

Thanks for taking my questions.

Joint venture with kind of maybe an ultimate target of roughly 15%.

The JV income.

Might've been a little bit higher this quarter I was just curious.

So we're getting to kind of that neighborhood.

We still do have some capacity there I think the joint venture has been a good partnership not just.

What is sort of kind of the.

<unk> and the JV or the dry powder so to speak.

With us or a partner there but.

Is that.

As the JV fully deployed at this point or is there sort of additional leverage that could be deployed.

From a.

Hopefully a yield enhancer.

If that's the right sort of term for FSA, so that generally but I think you can expect that to live in.

Deployed there.

Yes, we do have additional dry powder, there to deploy into that we have talked about.

That 12% to 15% range on a consistent basis.

Yes.

The joint venture with kind of maybe an ultimate target of roughly 15%.

Thanks, that's helpful. And then one kind of higher level question I'd ask is just your comments on tariffs and.

So we're getting to kind of that neighborhood.

But we still do have some capacity there I think the joint venture has been a good partnership not just.

You still have.

The declining but small sort of watch list.

With us or a partner there but.

Related to kind of the tariffs issues, we're seeing a lot of.

From a.

Hopefully a yield enhancer.

That's the right sort of term for FX case, so that generally but I think you can expect that to live in.

<unk> with declining watch list some.

Essentially to zero at this point.

It became mainly a non issue. So I'm just curious on your commentary are you seeing kind of late and tariff issues.

Kind of that 12% to 15% range on a consistent basis.

Yes.

Thanks, that's helpful. And then one kind of higher level question I'd ask is your condo.

Start to percolate kind of an NDA.

The economy.

On tariffs and.

Sure.

Is it still kind of.

You still have.

Just kind of a normal sort of related flow through of all the significant tariff changes earlier this year.

The declining but small sort of watch list.

Related to kind of the tariffs issues, we're seeing a lot of.

Yes.

Bdcs with declining watch list.

It's a good and fair question I think we do have.

Essentially to zero at this point.

A handful of names that are in that kind of single digit number of where we are.

Mainly a non issue. So I'm just curious on your commentary are you seeing kind of latent tariff issues.

Yes.

Quite mindful about tariff exposure right.

Start to percolate kind of NDA.

Yes.

I think the fortunate news as that number is low because we have generally avoided.

Economy.

Sure.

This is still kind of.

I'd call have the cyclical businesses or consumer retail related names, which probably have that higher number.

Just kind of a normal sort of related flow through all of them.

The significant tariff changes earlier this year.

So I think we have seen an impact on that small number of names I think were working.

Yes.

Good and fair question I think we do have.

With those names.

To get through that.

A handful of names.

The comment I made about the tariff on the other side is.

That are in that kind of single digit number of where we are kind of.

There is I think the market has gotten itself to the point of.

While mindful about tariff exposure right.

Understanding or feeling like they know where the administration is our lives on the tariff points I am not sure that out of the overall kind of broader economy has felt the full impact yet right. So I'm not sure. That's a company specific name versus a macro point, but thats kind of all in our mind.

Yes.

I think the fortunate news as that number is low because we have generally avoided.

What I would call have the cyclical businesses or consumer retail related names, which probably have that higher number.

So I think we have seen an impact on that small number of names I think we're working with those names.

I'd say the same thing for <unk>.

To get through that.

Government related names I mean, we have to see how this shutdown could impact folks you still have kind of a does sort of points out there.

Comment I made about the tariff on on the other side is yes.

There is I think the market has gotten itself to the point of sale.

I'll put them in a similar bucket.

Understanding our feeling like they know what the administration is our lives on the set of tariff points I am not sure, though the overall kind of broader economy has felt the full impact yet right. So I'm not sure. That's a company specific name versus a macro point, but thats kind of all in our mind.

Where I'm not sure we fully kind of seeing the full impact of that yet kind of play out, but it's something we're pretty mindful about.

Okay.

Very helpful. Thanks, That's all for me.

Okay. Thank you.

And I would say the same thing for.

Our next question comes from Hilli shot at Raymond James.

Government related names I mean, we have to see how this shutdown could impact folks you still have kind of the doe's sort of points out there.

Good morning, Thanks for the question.

Little bit of a broader market question, but how does the recent disrupt disruption of Dara first brands tricolor default started to impact any competitor competitive factors in the asset backed finance side of the market.

Devin is similar bucket.

Where I'm not sure we fully kind of seeing the full impact of that yet kind of play out, but it's something we're pretty mindful about.

Yeah.

Yes, good morning.

A fair question.

Very helpful. Thanks, That's all for me.

I think the short answer is no, but I think the broader answer is yes.

Okay. Thank you.

Our next question comes from Hilli sat at Raymond James.

I think those handful of deals.

Good morning, Thanks for the question.

Brought some kind of highlights of the space.

A little bit of a broader market question, but how does the recent disrupt disruption of their first brands tricolor default started to impact any competitor competitive factors in the asset backed finance side of the market.

I think they are all very unique and bespoke situations as it relates to the name and it does seem like there is some real.

Either fraud related matters or otherwise there.

Yes, good morning.

I think.

A fair question.

Both of those companies.

<unk>.

I think the short answer is no right I think the broader answer is I think.

Operator, I think in either difficult.

<unk> or had some history around those so I think we feel really good about where we sit with regards to our asset backed business I think anyone who's done. This long enough uses these as moments to kind of re look at your own sort of book.

Those handful of deals.

Brought some kind of a highlight to the space.

I think they are all very unique and bespoke situations as it relates to the name and it does seem like there is some real.

Once we have been sort of doing but I think you haven't seen a big shakeout. There I do think it is a.

Either fraud related matters or otherwise there.

I think.

Ari prominent question on investors' minds.

Both of those companies.

Yes.

Operator, I think in either difficult segments or had some history around those yes, I think we feel really good about where we sit with regards to our asset backed business I think anyone who's done this long enough.

Both institutional and wealth.

<unk> could extend out some timelines or kind of otherwise there, which are pretty fair kind of comments or questions on their side, but I don't think from a regular way new investment perspective.

Got it thank you.

Uses these his moment.

We look at your own sort of book.

Once we have been sort of doing but I think you haven't seen a big shakeout there I do think it is.

I'm showing no further questions at this time I would now like to turn it back to Dan Pietrzak for closing remarks.

A very prominent question on investors' minds right.

Well, we want to thank everyone for your time today, we're always available if there any other questions and we look forward to talking with you on our next call have a good day.

Both institutional and wealth, which could extend out some timelines or kind of otherwise there, which are pretty fair kind of comments or questions on their side, but I don't think from a regular way new investment perspective.

Thank you for your participation in today's conference. This does conclude the goodbye and you may now disconnect.

Got it thank you.

I'm showing no further questions at this time I would now like to turn it back to Dan Pietrzak for closing remarks.

Well, we want to thank everyone for your time today, we're always available if there any other questions and we look forward to talking with you on our next call have a good day.

Thank you for your participation in today's conference. This does conclude the goodbye and you may now disconnect.

Okay.

[music].

Okay.

Yes.