Q3 2025 OFS Capital Corp Earnings Call

October 31, 2025

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Speaker #1: Good day and welcome to the OFS Capital Q4 2025 earnings conference call. All participants will be in a listen-only mode. Should you need assistance, please signal a conference specialist by pressing the star key followed by zero.

Operator: Good day and welcome to the OFS Capital Corporation Q3 2025 earnings conference call. All participants will be in a listen-only mode. Should you need assistance, please signal a conference specialist by pressing the star key followed by zero. After today's presentation, there will be an opportunity to ask questions. To ask a question, you may press star then one on a touch-tone phone. To withdraw your question, please press star then two. Please note this event is being recorded. I would now like to turn the conference over to Steve Altebrando. Please go ahead.

To withdraw your question. Please press Star then two.

Please note this event is being recorded.

I would now like to turn the conference over to Steve Ultra brand of please go ahead.

Speaker #1: After today's presentation, there will be an opportunity to ask questions. To ask a question, you may press star, then one on a touch-tone phone.

Good morning, everyone and thank you for joining US also on the call today are Bilal Rashid, our chairman and Chief Executive Officer, and Kyle <unk>, The company's Chief Financial Officer, and Treasurer before.

Speaker #1: To withdraw your question, please press star, then two. Please note this event is being recorded. I would now like to turn the conference over to Steve Altebrando.

Before we begin please note that the statements made on this call and webcast may constitute forward looking statements as defined under applicable securities laws.

Such statements reflect various assumptions expectations and opinions by <unk> capital management concerning anticipated results are not guarantees of future performance and are subject to known and unknown risks uncertainties and other factors that could cause actual results to differ materially from such statements.

Speaker #1: Please go ahead.

Speaker #2: Good Good morning, everyone, and thank you for joining us. Also on the call today are Bilal Rashid, our chairman and chief executive officer, and Kyle Spina, the company's chief financial officer and treasurer.

Steve Altebrando: Good morning, everyone, and thank you for joining us. Also on the call today are Bilal Rashid, our Chairman and Chief Executive Officer, and Kyle Spina, the company's Chief Financial Officer and Treasurer. Before we begin, please note that the statements made on this call and webcast may constitute forward-looking statements as defined under applicable securities laws. Such statements reflect various assumptions, expectations, and opinions by OFS Capital Management concerning anticipated results, are not guarantees of future performance, and are subject to known and unknown risks, uncertainties, and other factors that could cause actual results to differ materially from such statements. The uncertainties and other factors are in some way beyond management's control, including the risk factors described from time to time in our filings with the SEC.

Speaker #2: Before we begin, please note that the statements made on this call and webcast may constitute forward-looking statements as defined under applicable securities laws. Such statements reflect various assumptions, expectations, and opinions by OFS Capital Management concerning anticipated results are not guarantees of future performance and are subject to known and unknown risks, uncertainties, and other factors that could cause actual results to differ materially from such statements.

The uncertainties and other factors are in some way beyond management's control, including the risk factors described from time to time in our filings with the SEC.

Although we believe these assumptions are reasonable any of those assumptions could prove incorrect and as a result of forward looking statements based on those assumptions also could be incorrect.

Should not place undue reliance on these forward looking statements <unk> capital undertakes no duty to update any forward looking statements made herein and all forward looking statements speak only as of the date of this call.

Speaker #2: The uncertainties and other factors are in some way beyond management's control, including the risk factors described from time to time in our filings with the SEC.

With that I'll turn the call over to chairman and Chief Executive Officer Bilal Rashid.

Speaker #2: Although we believe these assumptions are reasonable, any of those assumptions could prove incorrect, and as a result, the forward-looking statements based on those assumptions also could be incorrect.

Steve Altebrando: Although we believe these assumptions are reasonable, any of those assumptions could prove incorrect, and as a result, the forward-looking statements based on those assumptions also could be incorrect. You should not place undue reliance on these forward-looking statements. OFS Capital undertakes no duty to update any forward-looking statements made herein, and all forward-looking statements speak only as of the date of this call. With that, I'll turn the call over to Chairman and Chief Executive Officer Bilal Rashid.

Thank you Steve Yes.

Yesterday, we announced our third quarter earnings.

Net investment income was 22 cents per share compared to 25 cents per share in the prior quarter.

Speaker #2: You should not place undue reliance on these forward-looking statements. OFS Capital undertakes no duty to update any forward-looking statements made herein and all forward-looking statements speak only as of the date of this call.

This decline was primarily due to higher input costs.

This decline was primarily due to higher interest costs.

Which were expected as part of our ongoing initiatives.

Speaker #2: With that, I'll turn the call over to chairman and chief executive officer Bilal Rashid.

Which were expected as part of our ongoing initiatives.

To refinance our existing bonds and extend the maturities of our debt.

Speaker #3: Thank you, Steve. Yesterday, we announced our third quarter earnings. Net investment income was $0.22 per share, compared to $0.25 per share in the prior quarter.

Bilal Rashid: Thank you, Steve. Yesterday, we announced our Q3 earnings. Net investment income was $0.22 per share compared to $0.25 per share in the prior quarter. This decline was primarily due to higher interest costs, which were expected as part of our ongoing initiative to refinance our existing bonds and extend the maturities of our debt. Net asset value at September 30 was $10.17 per share compared to $10.91 per share in the prior quarter. The decrease was largely driven by a markdown on our equity investments, most notably our position in Penn Steel Holdings, and unrealized depreciation on our CLO equity investments attributable to underlying loan spread tightening. Overall, we believe our credit portfolio is stable. During the quarter, we had one loan placed on non-accrual status, and one loan was taken off of non-accrual and moved to performing status.

Net asset value at September 30 was $10.17 per share compared to $10 91 per share in the prior quarter.

Speaker #3: This decline was primarily due to higher interest costs, which were expected as part of our ongoing initiative to refinance our existing bonds and extend the maturities of our debt.

The decrease was largely driven by a markdown on our equity investments most notably our position in band still holdings.

The decrease was largely driven by a markdown on our equity investments, most notably our position in <unk> holdings.

And unrealized depreciation on our CLO equity investments.

Speaker #3: Net asset value at September 30th was $10.17 per share, compared to $10.91 per share in the prior quarter. The decrease was largely driven by a markdown on our equity investments.

Pivotal.

Favorable.

Two underlying loan spread tightening.

Overall.

We believe our credit portfolio is stable.

During the quarter.

During the quarter, we had one loan placed on nonaccrual status.

Had one loan placed on nonaccrual status.

Speaker #3: Most notably, our position in Fan Steel Holdings, and unrealized depreciation on our CLO equity investments attributable to underlying loan spread tightening. Overall, we believe our credit portfolio is stable.

And one loan was taken off of non accrual and move to performing status.

And one loan was taken off of non accrual and moved to performing status.

While we remain steadfast on preserving capital.

We are strategically focused on efforts to improve our net investment income over the long term.

This includes ongoing efforts to monetize our minority equity position in France too.

Speaker #3: During the quarter, we had one loan placed on non-accrual status and one loan was taken off of non-accrual and moved to performing status. While we remain steadfast on preserving capital, we are strategically focused on efforts to improve our net investment income over the long term.

Largest positions in the portfolio with a fair value of approximately $78 5 million at quarter end.

Largest position in the portfolio with a fair value of approximately $78 5 million at quarter end.

Bilal Rashid: While we remain steadfast on preserving capital, we are strategically focused on efforts to improve our net investment income over the long term. This includes ongoing efforts to monetize our minority equity position in Penn Steel Holdings, our largest position in the portfolio, with a fair value of approximately $78.5 million at Q4. The fundamental performance of the company continued to improve, and the long-term outlook remains strong in our view. The reduced valuation mark reflects the challenging market conditions to monetize this asset despite the improved performance. While we remain confident in the portfolio company's long-term potential, a near-term exit could improve our net investment income and reduce concentration risk. However, we recognize this may come at the cost of realizing the investment's full fundamental value.

The fundamental performance of the company.

Continue to improve and the long term outlook remains strong in our view.

<unk> to improve and the long term outlook remains strong in our view.

Speaker #3: This includes ongoing efforts to monetize our minority equity position in Fan Steel, our largest position in the portfolio. With a fair value of approximately $78.5 million at quarter end.

The reduced valuation mark reflects the challenging market conditions to monetize this asset despite the improved performance.

While we remain confident in the portfolio company's long term potential.

While we remain confident in the portfolio company's long term potential near term exit could improve our net investment income and reduce concentration risk.

Speaker #3: The fundamental performance of the company continued to improve, and the long-term outlook remains strong, in our view. The reduced valuation mark reflects the challenging market conditions to monetize this asset, despite the improved performance.

Near term exit could improve our net investment income and reduce concentration risk.

However, we recognize this may come at the cost of realizing the investments fundamental value.

However, we recognize this may come at the cost of realizing the investments Paul fundamental value.

As a reminder, our initial $200000 investment in <unk> in 2014 has generated approximately $4 $2 million in distributions to date and approximately 20 times return on our cost.

As a reminder.

Initial $200000 investment in advance team in 2014 has generated approximately $4 2 million in distributions to date and approximately 20 times return on our cost.

Speaker #3: While we remain confident in the portfolio company's long-term potential, a near-term exit could improve our net investment income and reduce concentration risk. However, we recognize that this may come at the cost of realizing the investment's full fundamental value.

Looking forward the <unk>.

Looking forward the broader economic outlook remains uncertain.

<unk> economic outlook remains uncertain.

On the monetary front.

Speaker #3: As a reminder, our initial $200,000 investment in Fan Steel in 2014 has generated approximately $4.2 million in distributions to date. And approximately 20 times return on our cost.

Bilal Rashid: As a reminder, our initial $200,000 investment in Penn Steel Holdings in 2014 has generated approximately $4.2 million in distributions to date, an approximately 20X return on our cost. Looking forward, the broader economic outlook remains uncertain. On the monetary front, so far this year, the Fed has lowered interest rates by 50 basis points, and there is potential for further reductions in the near term. Given that the vast majority of our loan portfolio is floating rate, continued rate cuts could reduce our net investment income. Despite this backdrop, we remain comfortable with the overall health of our portfolio. We have deliberately constructed our loan portfolio to be resilient by avoiding highly cyclical industries and maintaining our strong diversification. Our loan portfolio is entirely composed of first and second lien senior secured loans, reflecting our commitment to positioning higher in the capital structure.

So far this year.

The fed has lowered interest rates by 50 basis points and there is potential for further reductions in the near term.

Given that the vast majority of our loan portfolio is floating rate.

Continued rate cuts could reduce our net investment income.

Speaker #3: Looking forward, the broader economic outlook remains uncertain. On the monetary front, so far this year, the Fed has lowered interest rates by 50 basis points, and there is potential for further reductions in the near term.

Despite this backdrop, we remain comfortable with the overall health of our portfolio.

Despite this backdrop we have.

Remain comfortable with the overall health of our portfolio.

We have deliberately constructed our loan portfolio to be resilient.

Avoiding highly cyclical industries and maintaining a strong diversification.

Voiding highly cyclical industries and maintaining a strong diversification.

Speaker #3: Given that the vast majority of our loan portfolio is floating rate, continued rate cuts could reduce our net investment income. Despite this backdrop, we remain comfortable with the overall health of our portfolio.

Our loan portfolio is entirely composed of first and second lien senior secured loans, reflecting our commitment to positioning higher in the capital structure.

Speaker #3: We have deliberately constructed our loan portfolio to be resilient, by avoiding highly cyclical industries and maintaining our strong diversification. Our loan portfolio is entirely composed of first and second lien senior secured loans, reflecting our commitment to positioning higher in the capital structure.

As for new originations middle market M&A activity. This year has remained below expectations. However, we remain actively engaged with our existing portfolio companies and are prepared to deploy additional capital if needed.

As for new originations middle market M&A activity. This year has remained below expectations.

However, we remain actively engaged with our existing portfolio companies.

Prepared to deploy additional capital if needed.

As we mentioned on our last call.

As we mentioned on our last call early in the third quarter, we began the process of refinancing our $125 million.

Early in the third quarter, we began the process of refinancing our $125 million.

Speaker #3: As for new originations, middle market M&A activity this year has remained below expectations. However, we remain actively engaged with our existing portfolio companies and are prepared to deploy additional capital if needed.

Bilal Rashid: As for new originations, middle market M&A activity this year has remained below expectations. However, we remain actively engaged with our existing portfolio companies and are prepared to deploy additional capital if needed. As we mentioned on our last call, early in the Q3, we began the process of refinancing our $125 million unsecured notes that were due to mature in February 2026. In July, we completed a $69 million unsecured public bond offering. These new public notes mature in July 2028. In August, we continued the refinancing process by completing a private placement of a $25 million unsecured note. This new private note matures in August 2029. Following the completion of these offerings, we repaid $94 million of the February 2026 notes in August, resulting in a leverage-neutral refinancing. We believe these actions have further strengthened our capital position and enhanced our operational flexibility.

Unsecured notes that were due to mature in February 2026 inch.

Unsecured notes.

That was due to mature in February 2026.

In July <unk>.

Completed a $69 million unsecured public bond offering.

These new public notes mature in July 2028.

Speaker #3: As we mentioned on our last call, early in the third quarter, we began the process of refinancing our $125 million unsecured notes that were due to mature in February 2026.

In August we continued our refinancing process by completing a private placement of a $25 million unsecured note.

In August we continued the refinancing process by completing a private placement of a $25 million unsecured note.

This new private note matures in August 2029.

Speaker #3: In July, we completed a $69 million unsecured public bond offering. These new public notes mature in July 2028. In August, we continued the refinancing process by completing a private placement of a $25 million unsecured note.

Following the completion of these offerings, we repaid $94 million. After February 2026 notes in August.

Following the completion of these offerings, we repaid $94 million of the February 2026 notes in August.

<unk> in a leverage neutral refinancing.

Turning in a leverage neutral refinancing.

We believe these actions have further strengthened our capital position and enhanced our operational flexibility.

Speaker #3: This new private note matures in August 2029. Following the completion of these offerings, we repaid $94 million of the February 2026 notes in August.

In addition, the public bonds have a non call period of only one year, while the private unsecured note is pre payable at any time, providing.

In addition, the public bonds have a non call period of only one year, while the private unsecured note is pre payable at anytime providing.

Providing us additional flexibility and an evolving rate environment.

Speaker #3: Resulting in a leveraged neutral refinancing. We believe these actions have further strengthened our capital position and enhanced our operational flexibility. In addition, the public bonds have a non-call period of only one year, while the private unsecured note is prepayable at any time.

We expect to repay the remaining $31 million on the February 2026 nodes ahead of the majority.

Bilal Rashid: In addition, the public bonds have a non-call period of only one year, while the private unsecured note is prepayable at any time, providing us additional flexibility in an evolving rate environment. We expect to repay the remaining $31 million on the February 2026 notes ahead of the maturity. Additionally, during the quarter, we elected to reduce the size of our floating rate facility with BNP Paribas from $150 million to $80 million. We took this action as we embark on deleveraging the balance sheet. We believe our liquidity position remains sufficient, supported by our $25 million Bank of California floating rate corporate line of credit, which was undrawn at the end of the quarter. As we continue to navigate this uncertain environment, we remain confident in the experience and capabilities of our advisor.

Additionally, during the quarter, we elected to reduce the size of a floating rate facility with BNP paribas from $150 million to $80 million we.

Speaker #3: Providing us additional flexibility in an evolving rate environment. We expect to repay the remaining $31 million on the February 2026 notes ahead of the maturity.

We took this action as we embark on Delevering the balance sheet.

We believe our liquidity position remains sufficient.

Imported by our $25 million of Banc of California floating rate corporate line of credit, which was undrawn at the end of the quarter.

Boarded by a $25 million of Banc of California floating rate corporate line of credit, which was undrawn at the end of the quarter.

Speaker #3: Additionally, during the quarter, we elected to reduce the size of our floating rate facility with BNP Paribas from $150 million to $80 million. We took this action as we embark on de-levering the balance sheet.

As we continue to navigate this uncertain environment, we remain confident in the experience and capabilities of our adviser.

Speaker #3: We believe our liquidity position remains sufficient, supported by our $25 million Bank of California floating rate corporate line of credit, which was undrawn at the end of the quarter.

With approximately $4 $1 billion in assets under management.

With approximately $4 $1 billion in assets under management across the known in structured credit markets.

Cross the known in structured credit markets.

<unk> expertise across industries, and a track record spanning more than 25 years and multiple credit cycles. We believe we are well positioned to manage through this ongoing uncertainty.

With that I'll turn the call over to Kyle <unk>, our Chief Financial Officer to give you more details and color for the quarter.

With that I'll turn the call over to Kyle <unk> Pina.

Bilal Rashid: With approximately $4.1 billion in assets under management across the loan and structured credit markets, deep expertise across industries, and a track record spanning more than 25 years and multiple credit cycles, we believe we are well positioned to manage through this ongoing uncertainty. With that, I'll turn the call over to Kyle Spina, our Chief Financial Officer, to give you more details and color for the quarter.

Chief Financial Officer to give you more details and color for the quarter.

Thanks, Paul and good morning, everyone.

You All mentioned, we posted net investment income of $2 $9 million or 22 per share for the third quarter, which was down <unk> <unk> per share from the second quarter.

Topline income increased $75000 quarter over quarter, however expenses increased by $418000 leading to the decline in net investment income.

Kyle Spina: Thanks, Bilal, and good morning, everyone. As Bilal mentioned, we posted net investment income of $2.9 million, or $0.22 per share for Q3, which was down $0.03 per share from Q2. Top line income increased $75,000 quarter over quarter, however, expenses increased by $418,000, leading to the decline in net investment income. As we alluded to on our last call, we announced yesterday that we are reducing the quarterly distribution to $0.17 per share for Q4 of 2025. This adjusted distribution rate represented an implied 8.8% annualized yield based on the market price of our common stock as of September 30. In light of ongoing interest rate cuts, coupled with our increased cost of financing, we determined it an appropriate time to better align our distribution rate with our net investment income.

As we alluded to on our last call, we announced yesterday that we are reducing the quarterly distribution to <unk> 17 per share for the fourth quarter of 2025.

As we alluded to on our last call.

We announced yesterday that we are reducing the quarterly distribution to <unk> 17 per share for the fourth quarter of 2025.

This suggests distribution rate, representing an implied eight 8% annualized yield based on the market price of our common stock as of September 30th.

This suggests distribution rate, representing an implied eight 8% annualized yield based on the market price of our common stock as of September 30.

In light of ongoing interest rate cuts, coupled with our increased cost of financing.

We determined at an appropriate time to better align our distribution rate with our net investment income.

We believe this step will allow us to preserve capital as we focus on deleveraging and strengthening our balance sheet in this uncertain economic environment.

Despite this reduction we remain focused on improving our long term returns as we continue exploring avenues to monetize our equity investment in advanced steel.

Our net asset value per share decreased by approximately 7% or 74 cents this quarter.

Kyle Spina: We believe this step will allow us to preserve capital as we focus on deleveraging and strengthening our balance sheet in this uncertain economic environment. Despite this reduction, we remain focused on improving our long-term returns as we continue exploring avenues to monetize our equity investment in Penn Steel Holdings. Our net asset value per share decreased by approximately 7%, or $0.74 this quarter. As Bilal described, the decline in our investment portfolio at fair value was most pronounced in our equity holdings, including $4.5 million of unrealized depreciation on our equity investment in Penn Steel Holdings. We also observed more meaningful net unrealized depreciation in our CLO equity investments, totaling $4.0 million, attributable to spread tightening in the underlying loan collateral. We placed one loan on non-accrual status during the quarter, representing 1.8% of the total portfolio at fair value.

As Bilal described the decline in our investment portfolio at fair value was most pronounced in our equity holdings, including $4 $5 million of unrealized depreciation on our equity investment in fan steel.

As Bilal described the decline in our investment portfolio at fair value was most pronounced in our equity holdings.

Including $4 $5 million of unrealized depreciation on our equity investment in fan steel.

We also observed more meaningful net unrealized depreciation in our CLO equity holdings.

<unk> $4.0 million.

<unk> to spread tightening in the underlying loan collateral.

Attributable to spread tightening in the underlying loan collateral.

We placed one loan on non accrual status during the quarter, representing one 8% of the total portfolio at fair value.

We also placed one loan back on accrual status during the quarter. Following the completion of a restructuring transaction.

We also placed one loan back on accrual status during the quarter.

The completion of a restructuring transaction.

Overall, our loan portfolio was relatively stable quarter over quarter based on our internal credit ratings.

At quarter end, our regulatory asset coverage ratio was 157% a decrease of three percentage points from the prior quarter.

As we discussed last quarter, we closed on $94 million of new bond issuances during the quarter between the public and private offering the proceeds of which were utilized to partially refinance our 475% unsecured notes scheduled to mature in February 2026, and leveraged neutral transactions.

Kyle Spina: We also placed one loan back on accrual status during the quarter following the completion of a restructuring transaction. Overall, our loan portfolio was relatively stable Q4 over Q4 based on our internal credit ratings. At Q2, our regulatory asset coverage ratio was 157%, a decrease of 3 percentage points from the prior quarter. As we discussed last quarter, we closed on $94 million of new bond issuances during the quarter between a public bond offering and private placement, the proceeds of which were utilized to partially refinance our 4.75% unsecured notes scheduled to mature in February 2026 in leverage-neutral transactions. We are pleased with the execution on these deals, which extended our debt maturities, though obviously they are priced wider than where our existing notes were issued in early 2021 in a near-zero rate environment.

We are pleased with the execution on these deals which extended our debt maturities. So obviously, they're priced wider than where our existing notes were issued in early 2021, and a near zero rate environment.

Following the completion of these transactions, we have a more manageable $31 million remaining outstanding on our February 2026, unsecured notes, which we intend to repay in advance of the maturity date.

Turning to the income statement total investment income increased approximately 1% to $10 $6 million this quarter.

Turning to the income statement.

Total investment income increased approximately 1% to $10 $6 million this quarter.

This was primarily driven by nonrecurring dividend and fee income recognized during the quarter totaling approximately zero point $6 million.

Kyle Spina: Following the completion of these transactions, we have a more manageable $31 million remaining outstanding on our February 2026 unsecured notes, which we intend to repay in advance of the maturity date. Turning to the income statement, total investment income increased approximately 1% to $10.6 million this quarter. This was primarily driven by non-recurring dividend and fee income recognized during the quarter, totaling approximately $0.6 million. Total expenses increased by approximately 6% during the period to $7.6 million. This was primarily due to an approximately $700,000 increase in total interest expense, largely driven by the higher coupon on our new unsecured note issuances. Looking ahead, we anticipate further net interest margin compression attributable to lower reference rates following the Fed's aggregate 50 basis point rate cuts so far this year and the impact of any potential future reductions.

We are pleased with the execution on these deals which extended our debt maturities. So obviously, they are priced wider than where our existing notes were issued in early 2021 and in near zero rate environment.

Total expenses increased by approximately 6% during the period to $7 $6 million. This was primarily due to an approximately $700000 increase in total interest expense.

Total expenses increased by approximately 6% during the period to $7 6 million. This was primarily due to an approximately $700000 increase in total interest expense.

Following the completion of these transactions. We have a more manageable 31 million remaining outstanding on our February 2026, unsecured notes, which we intend to repay in advance from the maturity date.

Largely driven by the higher coupons on our new unsecured note issuances.

Turning to the income statement, total investment income increased approximately 1% to 10.6 million. This quarter.

Looking ahead, we anticipate further net interest margin compression attributable to lower reference rates. Following the feds aggregate 50 basis point rate cuts so far this year and the impact of any potential future reductions.

This was primarily driven by non-recurring dividend and fee income recognized during the quarter totaling approximately 0.6 million.

We expect this will impact yields on our predominantly floating rate bond portfolio.

Total expenses increased by approximately 6% During the period to 7.6 million. This was primarily due to an approximately increase in total interest expense

In addition, we anticipate higher interest costs related to the refinancing of our February 2026 unsecured notes.

Largely driven by the higher coupon on our new unsecured note issuances.

Turning to our investments we believe the majority of our loan portfolio remains solid while we continue to closely monitor certain borrowers performing below our expectations.

Kyle Spina: We expect this will impact yields on our predominantly floating rate loan portfolio. In addition, we anticipate higher interest costs related to the refinancing of our February 2026 unsecured notes. Turning to our investments, we believe the majority of our loan portfolio remains solid while we continue to closely monitor certain borrowers performing below our expectations. As mentioned, overall, we were neutral relative to the number of issuers with loans on non-accrual status Q4 over Q4, with one new loan placed on non-accrual status and one loan placed back on accrual status during the Q3. With respect to our loan portfolio, we are committed to being senior in the capital structure and selective in our underwriting, with 88% of our loan holdings being in first lien positions based on fair value. During the quarter, we committed $8.3 million to a new middle market debt investment.

Looking ahead. We anticipate further net, interest margin compression attributable, to lower reference rates. Following the fed's aggregate 50 basis, point rate, Cuts so far this year and the impact of any potential future reductions,

As mentioned overall, we were neutral relative to the number of issuers with loans on non accrual status quarter over quarter with one new loan placed on nonaccrual status and one loan placed back on accrual status during the third quarter.

As mentioned overall, we were unusual relative to the number of issuers with loans on non accrual status quarter over quarter with one new loan placed on nonaccrual status and one loan placed back on accrual status during the third quarter.

We expect this will impact the yields on our predominantly floating rate bomb portfolio.

In addition, we anticipate higher interest costs related to the refinancing of our February 2026 unsecured notes.

With respect to our loan portfolio, we are committed to being senior in the capital structure and selective in our underwriting with.

With 88% of our loan holdings being in first lien positions based on fair value.

During the quarter, we committed $8 $3 million to a new middle market debt investment. In addition, we continue to focus on add on opportunities for growth with our existing issuers and as of quarter end had $18 $3 million in unfunded commitments to our portfolio of companies.

As mentioned overall, we were neutral relative to the number of issuers with loans. And non across status quarter over quarter with 1 new loan, placed on nicro status and 1 loan. Placed back on a rule status during the third quarter.

The majority of our investments are in loans and 100% of our loan portfolio was senior secured at quarter end.

The majority of our investments are in loans and 100% of our loan portfolio was senior secured at quarter end base.

With respect to our loan portfolio, we are committed to being senior in the capital structure and selective in our underwriting.

Based on amortized cost this quarter and our investment portfolio was comprised of approximately 69% senior secured loans, 23% structured finance securities and 8% equity Securities.

With 88% of our loan Holdings. Being in first Lane positions, based on fair value.

Based on amortized cost this quarter and our investment portfolio was comprised of approximately 69% senior secured loans, 23% structured finance securities and 8% equity Securities.

Kyle Spina: In addition, we continue to focus on add-on opportunities for growth with our existing issuers and, as of Q2, had $18.3 million in unfunded commitments to our portfolio companies. The majority of our investments are in loans, and 100% of our loan portfolio was senior secured at Q2. Based on amortized costs as of Q2, our investment portfolio was comprised of approximately 69% senior secured loans, 23% structured finance securities, and 8% equity securities. At the end of the quarter, we had investments in 57 unique issuers totaling $370.2 million at fair value. On the interest-bearing portion of the portfolio, the weighted average performing investment income yield decreased modestly to 13.3%, which is down about 0.3% Q3 over Q4. The decrease in yield was primarily due to the impact of net change in non-accrual positions.

At the end of the quarter.

We had investments in 57 unique issuers totaling $372 million at fair value.

During the quarter, we committed $8.3 million to a new Middle Market Z investment. In addition, we continue to focus on add-on opportunities for growth with our existing issuers, and as of quarter-end, we had $18.3 million in unfunded commitments to our portfolio companies.

On the interest bearing portion of the portfolio. The weighted average performing investment income yield decreased modestly to 13, 3%, which was down about 0.3% quarter over quarter.

On the interest bearing portion of the portfolio. The weighted average performing investment income yield decreased modestly to 13, 3%, which is down about 0.3% quarter over quarter.

The majority of our investments are in loans, and 100% of our loan portfolio is senior secured at quarter end.

The decrease in yield was primarily due to the impact of net change in non accrual positions.

Based on advertised costs as of the quarter end, our investment portfolio is comprised of approximately 69% senior secured loans, 23% structured finance securities, and 8% equity securities.

This metric includes all interest prepayment fee and amortization of deferred loan fee income, but excludes syndication fee income if applicable.

At the end of the quarter.

We had investments in 57 unique issuers, totaling 370.2 million of fair value.

With that I'll turn the call back over to ball for concluding remarks.

With that I'll turn the call back over to Paul for concluding remarks.

Thank you Kyle.

In today's continued uncertain economic environment, we remain focused on preserving capital and strengthening our balance sheet.

And the interest bearing portion of the portfolio, the waiter average performing investment income, yield decreased modestly to 13.3% which is down about 0.3% quarter over quarter.

Kyle Spina: This metric includes all interest, prepayment fee, and amortization of deferred loan fee income, but excludes syndication fee income if applicable. With that, I'll turn the call back over to Bilal for concluding remarks.

The decrease in yield was primarily due to the impact of net change and not a growth positions.

In that regard, we have taken meaningful steps to extend the maturities of our debt and secured financing that gives us operational flexibility over the coming years.

This metric includes all interest prepayment fee and amortization of deferred loan fee income. But excludes syndication fee income if applicable

As we look ahead, we are.

Bilal Rashid: Thank you, Kyle. In today's continued uncertain economic environment, we remain focused on preserving capital and strengthening our balance sheet. In that regard, we have taken meaningful steps to extend the maturities of our debt and secure financing that gives us operational flexibility over the coming years. As we look ahead, we are focused on defensively positioning our balance sheet, which includes our decision to reduce the distribution rate as well as our ongoing plans to reduce our debt. We believe our loan portfolio remains generally stable and well positioned to withstand this market. Its diversification across multiple industries continues to serve us well, and we maintain our focus on investing higher in the capital structure. As with prior quarters, we remain focused on increasing our net investment income over the long term, specifically through our efforts to monetize certain non-interest-earning equity positions, including our investment in Penn Steel Holdings.

With that, I'll turn the call back over to Bilal for concluding remarks.

Our focused on defensively positioning our balance sheet, which includes our decision to reduce the distribution rate as well as our ongoing plans to reduce our debt.

Thank you, Kyle.

We believe our loan portfolio remains generally stable and well positioned to withstand this market.

It's diversification across multiple industries continues to serve us well and.

In today's continued uncertain, economic environment. We remain focused on preserving capital and strengthening our balance sheet. In that regard. We have taken meaningful steps to extend the majority of our debt and secure financing. That gives us operational flexibility over the coming years.

And we maintain our focus on investing higher in the capital structure.

As with prior quarters, we remain focused on increasing our net investment income over the long term.

As we look ahead, we are focused on defensively positioning our balance sheet, which includes our decision to reduce the distribution rate, as well as our ongoing plans to reduce our debt.

Specifically through our efforts to monetize certain non interest, earning equity positions, including our investment in benzene.

We believe our loan portfolio remains generally stable and well positioned to withstand this market.

Our team's long standing experience and investment discipline has driven consistent results.

Its diversification across multiple Industries, continues to serve, as well.

Since 2011, the BDC has invested more than $2 billion with an annualized net realized loss of just two 5%.

And we maintain our focus on investing higher in the capital structure.

Since 2011, the BDC has invested more than $2 billion with an annualized net realized loss of just two 5%.

While continuing to generate attractive risk adjusted returns on our portfolio.

As with prior quarters, we remain focused on increasing our net investment income over the long term, specifically through our efforts to monetize certain non-interest-earning equity positions, including our investment in fan teams.

As always we will continue to rely on the size experience and reputation of our adviser with.

Bilal Rashid: Our team's long-standing experience and investment discipline have driven consistent results. Since 2011, the BDC has invested more than $2 billion, with an annualized net realized loss of just 0.25%, while continuing to generate attractive risk-adjusted returns on our portfolio. As always, we will continue to rely on the size, experience, and reputation of our advisor. With a $4.1 billion corporate credit platform and affiliation with a $30 billion asset management group, our advisor brings deep credit experience and long-standing banking and capital markets relationships. Our corporate credit platform has gone through multiple credit cycles over the last 25 plus years. Our advisor and affiliates are also strongly aligned with shareholders as they maintain an approximately 23% ownership in the company. With that, operator, please open the call for questions.

As always we will continue to rely on the size experience and reputation of our adviser.

Our teams long-standing experience and investment discipline has driven consistent results.

With a $4 1 billion corporate credit platform and the affiliation with a $30 billion of asset management group.

With a $4 1 billion corporate credit platform and affiliation with a $30 billion asset management group.

The advisor brings deep credit experience and long standing banking and capital markets relationships.

Advisor brings deep credit experience and long standing banking and capital markets relationships.

Since 2011, the BDC has invested more than $2 billion, with an annualized net realized loss of just 0.25%.

Our corporate credit platform has gone through multiple credit cycles over the last 25 plus years.

While continuing to generate attractive risk, adjusted Returns on our portfolio.

Our advisor and affiliates.

As always, we will continue to rely on the size, experience, and reputation of our advisor.

Our advisor and affiliates.

Also strongly aligned with shareholders as they maintain an approximately 23% ownership in the company.

With $4.1 billion in corporate credit, a platform, and affiliation, along with a $30 billion asset management group.

With that operator.

Please open the call for questions.

Our advisor brings deep credit experience and long-standing banking and capital markets relationships.

We will now begin the question and answer session.

To ask a question you May Press Star then one on your Touchtone phone.

To ask a question.

Our corporate credit platform has gone through multiple credit cycles over the last 25 plus years.

May Press Star then one on your Touchtone phone.

If you are using a speakerphone please pick up your handset before pressing the team.

If at any time. Your question has been addressed and you would like to withdraw your question. Please press Star then two.

Our advisor and Affiliates are also strongly aligned with shareholders as they maintain an approximately 23% ownership in the company.

With that operator.

At this time, we will pause momentarily to assemble our roster.

Please open the call for questions.

At this time, we will pause momentarily to assemble our roster.

Operator: We will now begin the question and answer session. To ask a question, you may press star, then one on your touch-tone phone. If you are using a speakerphone, please pick up your handset before pressing the keys. If at any time your question has been addressed and you would like to withdraw your question, please press star, then two. At this time, we will pause momentarily to assemble our roster. This concludes our question and answer session and concludes the conference call today. Thank you for attending today's presentation. You may now disconnect.

We will now begin the question and answer session.

to ask a question, you may press star then 1 on your touchtone phone,

This concludes our question and answer session and concludes the conference call today.

If you are using a speakerphone, please pick up your handset before pressing the keys.

Thank you for attending today's presentation you may now disconnect.

if at any time your question has been addressed and you would like to withdraw your question, please press star then 2

At this time, we will pause momentarily to assemble our roster.

With our question and answer session, and concludes the conference call. Today,

Thank you for attending today's presentation. You may now disconnect.

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