Q2 2026 Carlyle Credit Income Fund Earnings Call

May 20, 2026

Speaker #1: Good day, and thank you for standing by. Welcome to the Carlyle Credit Income Fund second quarter 2026 financial results and investor conference call. At this time, all participants are in a listen-only mode.

Operator: Good day, and thank you for standing by. Welcome to the Carlyle Credit Income Fund Q2 2026 financial results and investor conference call. I would now like to hand the conference over to your first speaker today, Joseph Castilla. Please go ahead.

Operator: Good day and thank you for standing by. Welcome to the Carlyle Credit Income Fund Q2 2026 financial results and investor conference call. At this time, all participants are in a listen only mode. After the speakers' presentation, there would be a question and answer session. To ask a question during this session, you will need to press star one one on your telephone. I would now like to hand the conference over to your first speaker today, Joseph Castilla. Please go ahead.

Speaker #1: After the speaker's presentation, there will be a question and an answer session. To ask a question during the session, you will need to press star 11 on your telephone.

Speaker #1: You will then hear an automated message advising that your hand is raised. To withdraw your question, please press star 11 again. Please be advised that today's conference is being recorded.

Speaker #1: I would now like to hand the conference over to your first speaker today, Joseph Castilla. Please go ahead.

Speaker #2: Good morning and welcome to Carlyle Credit Income Fund's second quarter 2026 earnings call. With me on the call today is Nishil Mehta, CCIF's principal executive officer and president, Lauren Basmadjian, CCIF's chair and Carlyle's global head of liquid credit, and Nelson Joseph, CCIF's principal financial officer.

Joseph Castilla: Good morning, welcome to Carlyle Credit Income Fund's Q2 2026 earnings call. With me on the call today is Nishil Mehta, CCIF's Principal Executive Officer and President, Lauren Basmadjian, CCIF's Chair and Carlyle's Global Head of Liquid Credit, and Nelson Joseph, CCIF's Principal Financial Officer. Last night, we issued our Q2 financial statements and a corresponding press release and earnings presentation discussing our results, which are available on the investor relations section of our website. Following our remarks today, we will hold a question and answer session for analysts and institutional investors. This call is being webcast, a replay will be available on our website. Any forward-looking statements made today do not guarantee future performance, any undue reliance should not be placed on them.

Speaker #2: Last night, we issued our Q2 financial statements and a corresponding press release and earnings presentation discussing our results, which are available on the investor relations section of our website.

Speaker #2: Following our remarks today, we will hold a question and answer session for analysts and institutional investors. This call is being webcast, and a replay will be available on our website.

Speaker #2: Any forward-looking statements made today do not guarantee future performance, and any undue reliance should not be placed on them. These statements are based on current management expectations and involve inherent risks and uncertainties, including those identified in the risk factors section of our annual report on the form NCSR.

Joseph Castilla: These statements are based on current management expectations and involve inherent risks and uncertainties, including those identified in the risk factors section of our annual report on the form NCSR. These risks and uncertainties could cause actual results to differ materially from those indicated. Carlyle Credit Income Fund assumes no obligation to update any forward-looking statements at any time. During the conference call, we may discuss adjusted net investment income per common share and core net investment income per common share, which are calculated and presented on a basis other than in accordance with GAAP. We use these non-GAAP financial measures internally to analyze and evaluate financial results and performance, and we believe these non-GAAP financial measures are useful to investors gauging the quality of the fund's financial performance, identifying trends in its results, and providing meaningful period-to-period comparisons.

Speaker #2: These risks and uncertainties could cause actual results to differ materially from those indicated. Carlyle Credit Income Fund assumes no obligation to update any forward-looking statements at any time.

Speaker #2: During the conference call, we may discuss adjusted net investment income per common share and core net investment income per common share, which are calculated and presented on a basis other than in accordance with GAAP.

Speaker #2: We use these non-GAAP financial measures internally to analyze and evaluate financial results and performance, and we believe these non-GAAP financial measures are useful to investors gauging the quality of the fund's financial performance, identifying trends in its results, and providing meaningful period-to-period comparisons.

Speaker #2: The presentation of this non-GAAP measure is not intended to be a substitute for financial results prepared in accordance with GAAP and should not be considered in isolation.

Joseph Castilla: The presentation of this non-GAAP measure is not intended to be a substitute for financial results prepared in accordance with GAAP and should not be considered in isolation. With that, I'll turn the call over to Nishil.

Speaker #2: With that, I'll turn the call over to Nishil.

Speaker #3: Thanks, Joe. Good morning, everyone, and thank you all for joining CCIF's quarterly earnings call. Seal Equity Market continues to face pressure during the quarter due to a combination of a repricing wave in January, which led to further declines in mid-average spreads, weakness in certain software-related loans due to concerns regarding AI disintermediation, and volatility from the conflict in the Middle East.

Nishil Mehta: Thanks, Joe. Good morning, everyone, and thank you all for joining CCIF's quarterly earnings call. CLO equity market continued to face pressure during the quarter due to a combination of a repricing wave in January, which led to further declines in mid-average spreads, weakness in certain software-related loans due to concerns regarding AI disintermediation, and volatility from the conflict in the Middle East. These factors weighed on loan prices, CLO equity valuations, and CLO equity cash flows across the market and within CCIF's portfolio. However, underlying credit fundamentals remained broadly stable during the quarter, and the volatility created better balance in the market with very limited repricings in February and March. To navigate this market environment, we continue to focus on optimizing the portfolio, including selectively completing refinancings and resets, and defensively position CCIF with experienced CLO managers in transactions with longer reinvestment periods.

Speaker #3: These factors weighed on loan prices, Seal Equity valuations, and Seal Equity cash flows, across the market and within CCIF's portfolio. However, underlying credit fundamentals remain broadly stable, during the quarter, and the volatility created better balance in the market, with very limited repricings in February and March.

Speaker #3: To navigate this market environment, we continue to focus on optimizing the portfolio, including selectively completing refinancings and resets, and defensively positioning CCIF with experienced dealer managers and transactions with longer reinvestment periods.

Speaker #3: I'd like to highlight the fund's activities over the last quarter, and key stats on the portfolio as of March 31st. We maintain our monthly dividend of 6 cents per share, or 21.5%, annualized based on the share price as of May 12th, which is now declared through August 2026.

Nishil Mehta: I'd like to highlight the fund's activities over the last quarter and key stats on the portfolio as of 31 March. We maintain our monthly dividend of $0.06 per share for 21.5% annualized based on the share price as of 12 May, which is now declared through August 2026. CCIF's underlying CLO investments generated an annualized cash and cash yield of 20.11% for the quarter, which resulted in $0.44 of recurring cash flows and $0.29 of core net investment income for the quarter at the fund level. Core net investment income provided dividend coverage of 161%, a revised monthly dividend of $0.06 per share. New CLO investments during the quarter totaled $1.5 million, with a weighted average GAAP yield of 11.5%.

Speaker #3: CCIF's underlying SEAL investments generate an annualized cash and cash yield of 20.11% for the quarter, which resulted in $0.44 of recurring cash flows and $0.29 of core net investment income for the quarter at the fund level.

Speaker #3: Core net investment income provided dividend coverage of 161%, and revised monthly dividend of 6 cents per share. New Seal investments during the quarter totaled 1.5 million, with a weighted average GAAP yield of 11.5%.

Speaker #3: Total sales proceeds during the quarter totaled $21.7 million, as we used the proceeds to redeem $20 million of the 7.5% Series C convertible preferred shares in cash to reduce leverage.

Nishil Mehta: Total sales proceeds during the quarter totaled $21.7 million, as we used the proceeds to redeem $20 million of the 7.5% Series C convertible preferred shares in cash to reduce leverage. Within CCIF's portfolio, we completed four resets in Q2 2026, in addition to the 26 refinancings and resets completed in calendar year 2025. Refinancings and resets reduce the cost of liabilities and extend the investment periods across CLOs and bolster equity cash flows. We expect to continue to refinance and reset the portfolio to enhance returns. The weighted average years left in investment period decreased slightly from approximately 3.4 years to 3.3 years. This provides CLO managers the opportunity to capitalize on periods of volatility through active management. There are also zero CLOs in the portfolio that were post-reinvestment period as of 31 March.

Speaker #3: Within CCIF's portfolio, we completed four resets in Q2 2026, in addition to the 26 refinancings and resets completed in calendar year 2025. Refinancings and resets reduced the cost liabilities and extended the investment periods across sealers in both share equity cash flows.

Speaker #3: We expect to continue to refinance and reset the portfolio to enhance returns. The weighted average years left during this period decreased slightly from approximately 3.4 years to 3.3 years.

Speaker #3: This provides sealer managers the opportunity to capitalize on periods of volatility through active management. There are also zero sealers in the portfolio that were post-reinvestment period as of March 31st.

Speaker #3: We believe the portfolio weighted average junior overclassification cushion of 4.18% is healthy and offsets potential defaults and losses in the underlying loan portfolios. And the average percentage of loans rated triple C by 4.1%, below the 7.5% triple C limit in sealers.

Nishil Mehta: We believe the portfolio weighted average junior overcollateralization cushion of 4.18% is healthy and offsets potential defaults and losses in the underlying loan portfolios. The average percentage of loans rated CCC by S&P was 4.1%, below the 7.5% CCC limit in CLOs. The weighted average spread of the underlying loan portfolio was 2.96%, a 10 basis point decline from the prior quarter. The continued decline in weighted average spread reflects the cumulative impact of the elevated repricing activity over the last several quarters, particularly the very high level of repricing activity experienced in January. Lower loan spreads continue to pressure the earnings power of CLO equity as resets and refinancings have not fully offset spread compression. Importantly, underlying credit fundamentals across CCIF's portfolio remain broadly stable.

Speaker #3: The weighted average spread of the underlying loan portfolio was 2.96%. A 10 basis point decline from the prior quarter. The continued decline in weighted average spread reflects a cumulative impact of the elevated repricing activity over the last several quarters.

Speaker #3: Particularly, the very high level of repricing activity experienced in January. Lower loan spreads continue to pressure the earnings power seal equity as resets and refinancings have not fully offset the spread compression.

Speaker #3: Importantly, underlying credit fundamentals across CCIF's portfolio remain broadly stable. We believe recent seal equity performance has been driven more by valuation and technical factors than broad-based credit deterioration.

Nishil Mehta: We believe recent CLO equity performance has been driven more by valuation and technical factors than broad-based credit deterioration. We remain confident in the resilience of our portfolio, which is diversified across high-quality managers and structured to navigate evolving market conditions. While liability costs have increased and equity distributions have moderated, we believe resilient credit fundamentals and continued demand for floating-rate assets will support CLO performance over time. We saw a stabilization of NAVs in April as loan prices partly retraced the declines from earlier this year. We saw very limited loan repricings. Now I will switch gears to discuss our outlook. CLO equity continues to benefit from historically attractive liability costs. Any normalization in loan spreads or increase in loan supply could improve excess spread generation over time, particularly for deals with longer reinvestment profiles.

Speaker #3: We remain confident in the resilience of our portfolio, which is diversified across high-quality managers, and structured to navigate evolving market conditions. While liability costs have increased and equity distributions have moderated, we believe resilient credit fundamentals and continued demand for floating rate assets will support sealer performance over time.

Speaker #3: We saw a stabilization of NAVs in April as loan prices partly retraced the declines from earlier this year, and we saw very limited loan repricings.

Speaker #3: Now, I will switch gears to discuss our outlook. Sealer equity continues to benefit from historically attractive liability costs. Any normalization in loan spreads or increase in loan supply could improve excess spread generation over time.

Speaker #3: Particularly for deals with longer reinvestment value. With approximately 17% of the loan market maturing by the end of 2028, we expect heightened refinancing activity, which could also lead to spread widening, benefiting sealer equity.

Nishil Mehta: With approximately 17% of the loan market maturing by end of 2028, we expect heightened refinancing activity, which could also lead to spread widening, benefiting CLO equity. Looking ahead, we believe CLO equity performance will continue to depend on manager selection, reinvestment discipline, and active credit management. We continue to position CCIF conservatively while selectively deploying capital into opportunities where we believe valuations appropriately compensate investors for underlying risk. We also continue to leverage Carlyle's in-house credit research platform to conduct a detailed bottom-up analysis across underlying loan portfolios, including software-related exposures and evolving AI-related risk. CCIF's portfolio remains highly diversified across approximately 1,850 underlying loans, with exposure to any single issuer representing less than 1% of the portfolio. In addition, the portfolio is predominantly comprised of first lien senior secured loans representing over 97% exposure, which we believe provides meaningful downside protection and structural resilience.

Speaker #3: Looking ahead, we believe sealer equity performance will continue to depend on manager selection, reinvestment discipline, and active credit management. We continue to position CCIF conservatively while selectively deploying capital into opportunities where we believe valuations appropriately compensate investors for underlying risk.

Speaker #3: We also continue to leverage Carlyle's in-house credit research platform to conduct a detailed, bottom-up analysis across underlying loan portfolios, including software-related exposures and evolving AI-related risks.

Speaker #3: CCIF's portfolio remains highly diversified across approximately 1,850 underlying loans, with exposure to any single issuer representing less than 1% of the portfolio. In addition, the portfolio is predominantly comprised of first-lean senior secure loans, representing over 97% of exposure, which we believe provides meaningful downside protection and structural resilience.

Speaker #3: With that, I will now hand the call over to Lauren to discuss the current market environment.

Nishil Mehta: With that, I will now hand the call over to Lauren to discuss the current market environment.

Speaker #1: Thank you, Nishil. I'd now like to provide an update on the recent developments across both the loan and sealer markets. Sealer liability spreads widened modestly across the capital stack, with AAA spreads widening by about 5 basis points quarter over quarter and double B spreads widening by about 150 basis points.

Lauren Basmadjian: Thank you, Nishil. I'd now like to provide an update on the recent developments across both the loan and CLO markets. CLO liability spreads widened modestly across the capital stack, with AAA spreads widening by about 5 basis points quarter-over-quarter and BB spreads widening by about 150 basis points. New issued CLO volume totaled approximately $47 billion during the quarter, compared to $44 billion in the prior year. CLO resets and refinancings totaled $28 billion and $23 billion respectively, down from $57 billion and $37 billion in Q1 2025, as wider liability spreads and increased market volatility reduced refinancing and reset activity during the quarter. The share of US CLO loans out of their reinvestment period has declined to roughly 11%, down from about 40% in 2023, reflecting a market with expanded reinvestment capacity.

Speaker #1: New issue sealer volume totaled approximately 47 billion during the quarter, compared to 44 billion in the prior year. Sealer resets and refinancings totaled 28 billion and 23 billion, respectively, down from 57 billion and 37 billion in the first quarter of 2025, as wider liability spreads and increased market volatility reduced refinancing and reset activity during the quarter.

Speaker #1: The share of US sealer loans out of the reinvestment period has declined to roughly 11%, down from about 40% in 2023, reflecting a market with expanded reinvestment capacity.

Speaker #1: Turning to the loan market, leveraged loans experienced modest weakness in the first quarter of 2026, as market volatility increased during this period. The LSTA US leveraged loan index declined 60 basis points during the quarter, as loan prices declined 2.1%.

Lauren Basmadjian: Turning to the loan market, leveraged loans experienced modest weakness in Q1 2026 as market volatility increased during this period. The LSTA US Leveraged Loan Index declined 60 basis points during the quarter as loan prices declined 2.1%. Similar to prior quarters, issuance activity was largely driven by opportunistic refinancings and a significant number of repricings in January. The market also saw an increase in LBO and M&A activity during the quarter, most notably the Electronic Arts LBO, contributing to about $51 billion of quarterly LBO and M&A volume in the broadly syndicated loan market, the highest quarterly total in more than 4 years. Credit fundamentals within the US portfolio of over 550 borrowers remained resilient in Q4 2025.

Speaker #1: Similar to prior quarters, issuance activity was largely driven by opportunistic refinancing and a significant number of repricings in January. However, the market also saw an increase in LBO and M&A activity during the quarter, most notably the electronic arts LBO, contributing to about 51 billion of quarterly LBO and M&A volumes in the broadly syndicated loan market, the highest quarterly total in more than four years.

Speaker #1: Credit fundamentals within the US portfolio of over 550 borrowers remain resilient and forth in the fourth quarter of 2025. Free cash flow generation continues to be a key focus, with over 75% of borrowers producing positive free cash flow, supported by the benefit of prior rate cuts and lower spreads on corporate loans.

Lauren Basmadjian: Free cash flow generation continues to be a key focus, with over 75% of borrowers producing positive free cash flow, supported by the benefit of prior rate cuts and lower spreads on corporate loans. Revenue and EBITDA growth remained positive at 5% and 6% year-over-year, which is similar to what we saw in Q3. Interest coverage remained healthy at 3.8x, with only a small portion of the portfolio below 1x interest coverage. Overall, borrower performance and the credit quality remained broadly stable. While Chapter 11 activity remains moderate relative to historical averages, liability management exercises continue across the market. The broadly syndicated loan default rate, inclusive of liability management exercises, has declined from a recent cycle peak of 4.4% at the end of 2024 to approximately 3% in March and further to 2.8% in April, retreating closer to historical averages.

Speaker #1: Revenue and EBITDA growth remain positive, at 5% and 6% year over year, which is similar to what we saw in the third quarter. Interest coverage remains healthy at 3.8 times, with only a small portion of the portfolio below one-time interest coverage.

Speaker #1: Overall, borrower performance and the credit quality remain broadly stable. While Chapter 11 activity remains moderate relative to historical averages, liability management exercises continue across the market.

Speaker #1: The broadly syndicated loan default rate, inclusive of liability management exercises, has declined from a recent cycle peak of 4.4% at the end of 2024 to approximately 3% in March and further to 2.8% in April, retreating closer to historical averages.

Speaker #1: With about 17% of the loan market maturing before the end of 2028, we think the next year will be busy with refinancing transactions. But unlike the last two-plus years, some of these transactions should be spread additive.

Lauren Basmadjian: With about 17% of the loan market maturing before the end of 2028, we think the next year will be busy with refinancing transactions. Unlike the last 2-plus years, some of these transactions should be spread additive. We've not yet seen software companies look to extend their maturities, but we anticipate activity among some of the larger companies with 2028 maturities, which should show the market where the true cost of capital is for supporting software. As capital for data centers remains in high demand, we are beginning to see companies access the leveraged loan market for financing, creating a new source of collateral. Given the current geopolitical, AI, and inflationary risks, we think 2026 will continue to be a year of dispersion with the haves and have-nots experiencing very different outcomes. I will now turn the call to Nelson, our CFO, to discuss the financial results.

Speaker #1: We have not yet seen software companies look to extend their maturities, but we anticipate activity among some of the larger companies with 2028 maturities, which should show the market where the true cost of capital is for performing software.

Speaker #1: As capital for data centers remains in high demand, we are beginning to see companies access the leveraged loan market for financing, creating a new source of collateral.

Speaker #1: Overall, given the current geopolitical, AI, and inflationary risks, we think 2026 will continue to be a year of dispersion with the haves and have-nots experiencing very different outcomes.

Speaker #1: I will now turn the call to Nelson, our CFO, to discuss the financial results.

Speaker #2: Thank you, Lauren. Today, I will begin with a review of our second-quarter earnings. Total investment income for the second quarter was $5.5 million, or 26 cents per share.

Nelson Joseph: Thank you, Lauren. Today, I will begin with a review of our Q2 earnings. Total investment income for Q2 was $5.5 million, or $0.26 per share.

Speaker #2: Total expenses for the quarter were $3.6 million. Total net investment income for the second quarter was $1.9 million, or 9 cents per share. Adjusted net investment income for the second quarter was $2.4 million, or 11 cents per share.

Nelson Joseph: Total expenses for the quarter were $3.6 million. Total net investment income for Q2 was $1.9 million, or $0.09 per share. Adjusted net investment income for Q2 was $2.4 million, or $0.11 per share. Adjusted NII adjusts for the $0.02 per share impact from the amortization of the OID and issuance costs for the fund's preferred shares and credit facility. Core net investment income for Q2 was $0.29 per share, providing dividend coverage of 161% on a revised monthly dividend of $0.06 per share. We believe core net investment income is a more accurate representation of CCIF's distribution requirement. Net asset value as of 31 March was $3.34 per share. Our net asset value and valuations are based on the bid size mark we received from a third party of 100% of the CLO portfolio.

Speaker #2: Adjusted NII adjusts for the 2 cents per share impact from the amortization of the OID and insurance costs for the fund's preferred shares and credit facility.

Speaker #2: Core net investment income for the second quarter was $0.29 per share, providing dividend coverage of 161% on a revised monthly dividend of $0.06 per share.

Speaker #2: We believe core net investment income is a more accurate representation of CCIF's distribution requirement. Net asset value, as of March 31, was $3.34 per share.

Speaker #2: Our net asset value and valuations are based on the bid-side mark we received from a third party of 100% of the CLO portfolio. We continue to hold one legacy real estate asset in the portfolio.

Nelson Joseph: We continue to hold 1 legacy real estate asset in the portfolio. Fair market value of the loan is $2.2 million. With that, I'll turn it back to Nishil.

Speaker #2: The fair market value of the loan is $2.2 million. With that, I'll turn it back to Nishil.

Speaker #3: Thanks, Nelson. We remain confident in the fundamentals of CCIF's portfolio. Which remains defensively positioned in the current market environment. We remain focused on experienced managers and transactions that demonstrate durable power build, strong underlying collateral quality, and a disciplined credit underwriting.

Nishil Mehta: Thanks, Nelson. We remain confident in the fundamentals of CCIF's portfolio, which remains defensively positioned in the current market environment. We remain focused on experienced managers and transactions that demonstrate durable par build, strong underlying collateral quality, and disciplined credit underwriting, including ongoing evaluation of evolving AI-related risks across certain sectors. We are deploying capital selectively, prioritizing opportunities that offer attractive relative value across both new issue and seasoned transactions. We continue to leverage the depth of the Carlyle liquid credit platform and our collaborative One Carlyle platform to source and invest in high-quality CLO portfolios through a disciplined bottom-up 15-step investment process.

Speaker #3: Including ongoing evaluation of evolving AI-related risk across certain sectors. We are deploying capital selectively, prioritizing opportunities that offer attractive relative value, across both new issue and seasoned transactions.

Speaker #3: We continue to leverage the depth of the Carlyle liquid credit platform and our collaborative One Carlyle platform to source and invest in high-quality CLO portfolios through a disciplined, bottom-up, 15-step investment process.

Speaker #4: As a reminder, to ask a question, you'll need to press star 11 on your telephone and wait for your name to be announced. To withdraw your question, please press star 11 again.

Operator: As a reminder, to ask a question, you'll need to press star 11 on your telephone and wait for your name to be announced. To withdraw your question, please press star 11 again. Please stand by while we compile our Q&A roster. Our first question will be coming from the line of Gaurav Mehta of A.G.P. Alliance Global Partners. Your line is open.

Speaker #4: Please stand by. We'll be compiling our Q&A roster. And our first question will be coming from the line of Gaurav Mehta, of AGP Alliance Global Partners.

Speaker #4: Your line is open.

Speaker #5: Thank you. Good morning. I wanted to ask on the trends you guys are seeing in April. I think you talked about stabilization of NAV and improvement in loan prices, just want to get some more color on what you guys are seeing in loan repricings and any comments on spreads and yields.

Gaurav Mehta: Thank you. Good morning. I wanted to ask on the trends you guys are seeing in April. I think you talked about stabilization of NAV and improvement in loan prices. Just want to get some more color on what you guys are seeing in loan repricings and any comments on spreads and yields.

Speaker #3: Yeah.

Nishil Mehta: Yeah.

Lauren Basmadjian: Yeah.

Speaker #6: Yeah, sorry. I'll talk about the loan repricings. We had seen a period where they stopped, up until April, but I will say that in May, they have started again.

Nishil Mehta: Sorry.

Lauren Basmadjian: Sorry. I'll talk about the loan repricings. We had seen a period where they stopped, including up until April. I will say that in May, they have started again.

Speaker #3: And I would add to that that we have market kind of stabilize over the past couple of months. And as a result, we've seen some stabilization in NAV as well.

Nishil Mehta: I would add to that we have seen the loan market kind of stabilize over the past couple of months. As a result, we've seen some stabilization in NAV as well.

Gaurav Mehta: Second question on resets and refi. Can you maybe provide some color on how much opportunity do you have for resets and refis in your portfolio for this year?

Speaker #5: Second question on resets and refi: can you maybe provide some color on how much opportunity do you have for resets and refis in your portfolio for this year?

Speaker #3: Yeah. So look, it's something that we continue to focus on because the best way to offset loan repricings is completing the accretive refinancing and resets.

Nishil Mehta: Yeah. Look, it's something that we continue to focus on, because the best way to offset loan repricings is completing the accretive refinancings and resets. We completed 4 in Q1, and now that CLO debt spreads have tightened in line with kind of overall fixed income market tightening, we expect to continue to be very active in refinancing and resetting the portfolio.

Speaker #3: We completed four in the first quarter, and now that CLO debt spreads have tightened, in line with overall fixed income market tightening, we expect to continue to be very active in refinancing and resetting the portfolio.

Speaker #5: All right. Thank you. That's all I had.

Gaurav Mehta: All right. Thank you. That's all I had.

Speaker #4: And as a reminder, to ask a question, please press star 11 on your telephone. Our next question will be coming from the line of Eric Wick of Lucid Capital Markets.

Operator: As a reminder, to ask a question, please press star 11 on your telephone. Our next question will be coming from the line of Eric Wick of Lucid Capital Markets. Your line is open, Eric.

Operator: As a reminder, to ask a question, please press star 11 on your telephone. Our next question will be coming from the line of Eric Zwick of Lucid Capital Markets. Your line is open, Eric.

Speaker #4: Your line is open, Eric.

Speaker #5: Thanks. Good morning. I wanted to start with a question on software, and I guess it may be a multi-part question. So if I look at your slide 12 in the right-hand side, I guess the first question is most of your software exposure in that high-tech category and then or is there spillover into others?

Eric Wick: Thanks. Good morning. I wanted to start with a question on software, and I guess it may be a multi-part question. If I look at your slide 12 in the right-hand side, I guess the first question is, most of your software exposure in that high tech category, and then where is there spillover into others, so maybe kind of tangential businesses that utilize software heavily as well? The second question is, if you decided you wanted to reduce software exposure in the portfolio, how easy is that to accomplish? Can you have discussions with the CLO issuers or the CLO primarily just reflective of overall leverage loan issuance? Just kind of curious how, if you wanted to reduce that or change any sector, how easy is that to accomplish?

Erik Zwick: Thanks. Good morning. I wanted to start with a question on software, and I guess it may be a multi-part question. If I look at your slide 12 in the right-hand side, I guess the first question is, most of your software exposure in that high tech category, and then where is there spillover into others, so maybe kind of tangential businesses that utilize software heavily as well? The second question is, if you decided you wanted to reduce software exposure in the portfolio, how easy is that to accomplish? Can you have discussions with the CLO issuers or the CLO primarily just reflective of overall leverage loan issuance? Just kind of curious how, if you wanted to reduce that or change any sector, how easy is that to accomplish?

Speaker #5: So maybe kind of tangential businesses that utilize software heavily as well. And then kind of the second question is if you decided you wanted to reduce software exposure in the portfolio, how easy is that to accomplish?

Speaker #5: Can you have discussions with the CLO issuers, or is the CLO primarily just reflective of overall leveraged loan issuance? I'm just kind of curious—if you wanted to reduce that or change any sector, how easy is that to accomplish?

Speaker #3: Sure. So maybe on the second part, I'll touch upon that. So software right now is around 12 to 13 percent of the overall loan market, BSL market.

Nishil Mehta: Sure. Maybe on the second part, I'll touch upon that. Software right now is around 12% to 13% of the overall loan market, BSL market. Right now, I think for CCIF, it's around 12%. The way that we can adjust our software exposure, there's two ways. One, we're always looking to optimize our portfolios. If we see a portfolio where it's not necessarily the amount of software exposure, it's utilizing our in-house credit experts and analysts to do kind of a line-by-line review of each of the loans, really looking at the quality of the software names within each CLO. We can always rotate out of a position if we don't like the risk profile, credit profile of those underlying software names.

Speaker #3: And right now, I think for CCIF, it's around 12%. So the way that we can adjust our software exposure, there's two ways. One, look, we're always looking to optimize our portfolios so if we see a portfolio where it's not necessarily the amount of software exposure, it's utilizing our in-house credit experts and analysts to do kind of a line-by-line review each of the loans.

Speaker #3: Really looking at the quality of the software names within each CLO. So we can always rotate out of a position if we don't like the risk profile and credit profile of those underlying software names.

Speaker #3: And then, two, we do have discussions with our managers on kind of software exposure—their views on software and kind of what their strategies are on software.

Nishil Mehta: 2, we do have discussions with our managers on software exposure, their views on software, and what their strategies are on software. We won't necessarily dictate to them in terms of changing their strategy, because they have ultimate discretion, but we can always rotate out of positions and CLO managers accordingly. I think the third is, I think what you're naturally going to see is software exposure decline over time. That can be a market-wide phenomenon. 1, you're probably going to see less activity in the software space, less capital markets activity, just given everything going on. 2, as new CLOs are created, we're already seeing that software exposure in newer CLOs are typically closer to half of what the current exposure is. Maybe mid to high single digits.

Speaker #3: So we won't necessarily dictate to them in terms of changing their strategy because ultimately, it's they have ultimate discretion, but we can always rotate out of positions and see what managers accordingly.

Speaker #3: And I think the third is I think what you're naturally going to see is software exposure decline over time. And that's going to be a market-wide phenomenon.

Speaker #3: One, you're probably going to see less activity in the software space, less capital markets activity, just given everything going on. And then two, as new CLOs are created, we're already seeing that software exposure in newer CLOs are typically closer to half of what the current exposure is.

Speaker #3: So maybe mid to high single digits.

Speaker #5: Thanks, Nishil. That's very helpful and insightful. And second one for me, just what was the driver of realized losses in the most recent quarter?

Eric Wick: Thanks, Nishil. That's very helpful and insightful. Second one from me, just what was the driver of realized losses in the most recent quarter?

Erik Zwick: Thanks, Nishil. That's very helpful and insightful. Second one from me, just what was the driver of realized losses in the most recent quarter?

Speaker #3: Yeah. So the one thing that we did is I think just prudent management of the capital structure. So given the decline in NAV, our leverage was higher than kind of what our target ranges.

Nishil Mehta: Yeah. The one thing that we did is, I think, just prudent management of the capital structure. Given the decline in NAV, our leverage was higher than what our target range is. We proactively sold some of our positions and used the proceeds to redeem our Series C, which is around $20 million.

Speaker #3: And so we proactively sold some of our positions and used the proceeds to redeem our Series C, which is around $20 million.

Speaker #5: Excellent. Thanks for taking my questions.

Eric Wick: Excellent. Thanks for taking my questions.

Erik Zwick: Excellent. Thanks for taking my questions.

Speaker #3: Thanks, Eric.

Nishil Mehta: Thanks, Eric.

Speaker #4: And I am sharing no further questions. I would now like to turn it back to management for closing remarks.

Operator: I am showing no further questions. I would now like to turn it back to management for closing remarks.

Speaker #7: Thank you all for joining. We look forward to speaking to everyone next quarter, if not sooner. Please feel free to reach out if you have any questions, and thank you again for your support.

Joseph Castilla: Thank you all for joining. We look forward to speaking to everyone next quarter, if not sooner. Please feel free to reach out if you have any questions, and thank you again for your support.

Operator: This concludes today's program. Thank you for participating. You may now disconnect.