Palmer Square (PSBD) Q3 2026 Earnings Call Transcript

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DATE

Wed, Nov. 4, 2026

CALL PARTICIPANTS

• Managing Director - Jeremy Goff
• Chairman and Chief Executive Officer - Chris Long
• President - Matt Bloomfield
• Chief Financial Officer and Director - Jeff Fox
• Investor Relations - Matt Bloomfield

TAKEAWAYS

• Net Investment Income -- $11.6 million or $0.38 per share, representing a decrease from $13.6 million or $0.43 per share in the prior year period driven by lower base rates.
• Total Investment Income -- $26.6 million, reflecting a 16.1% decrease from $31.7 million last year due to contractual interest income declines.
• Net Asset Value -- $13.34 per share, an increase of $0.13 from the second quarter reflecting fair value pricing moves in the syndicated loan market.
• Capital Deployment -- $115 million, consisting of 31 new investment commitments at an average value of $3.5 million.
• Portfolio Fair Value -- $1.09 billion, a 2.3% decrease from $1.11 billion at the end of the second quarter.
• Realized and Repaid Principal -- $165.8 million, driven by elevated refinancing activity and the sale of collateralized loan obligation mezzanine investments.
• Dividend Distributions -- $0.38 per share total, comprised of a $0.36 base dividend and a $0.02 supplemental distribution.
• Share Repurchases -- $5.2 million, executed under the company's expanded authorization to prioritize shareholder value.
• Debt-to-Equity Leverage -- 1.63x, decreasing from 1.71x in the previous quarter due to debt paydown and net asset value appreciation.
• Portfolio Yield -- 11.99% at fair value, compared to 11.95% at the end of the second quarter.
• Amortized Cost Yield -- 8.38% for debt and income-producing securities, reflecting the underlying yield of the current portfolio.
• Senior Secured Focus -- 97%, with 86.8% specifically held in first lien senior secured debt.
• Industry Diversification -- 45 industries, with the 10 largest investments accounting for 10.9% of the overall portfolio.
• Interest Coverage Ratio -- 2.38x, for first lien borrowers on a fair value weighted basis.
• Borrower EBITDA -- $483 million, representing the weighted average size of the company's first lien borrowers.
• Nonaccruals -- 0% at fair value, with a single portfolio company on nonaccrual status representing 96 basis points at amortized cost.
• Payment-In-Kind Income -- $578,700, representing 2.2% of total investment income for the quarter.
• CLO Financing Reset -- SOFR plus 1.39%, reduced from SOFR plus 1.72% while extending the reinvestment period to July 2031.
• Liquidity Position -- $195 million, comprised of cash and undrawn capacity on credit facilities versus $19.4 million in unfunded commitments.
• Private Credit Allocation -- 12.2% of new investments, which carried a weighted average spread of 659 basis points over the reference rate.

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RISKS

• President Bloomfield stated, "rising diesel prices resulting from ongoing geopolitical tensions in the Middle East and Europe pose additional uncertainties related to the outlook for economic growth," impacting broader credit volatility.
• Chairman and CEO Long stated, "we are closely monitoring growing opposition to data center permitting and construction, which could impact the pace of AI infrastructure development," noting a potential shift in GDP and corporate earnings trajectories.
• Bloomfield noted that "growing concerns about the costs of AI-related build-outs and the resulting impact rising AI debt levels have had on credit spreads" contributed to recent market volatility.

SUMMARY

Palmer Square Capital BDC Inc. (NYSE:PSBD) reported third quarter results focused on portfolio optimization and a disciplined capital allocation strategy through share repurchases. Management reported that the company executed a reset of its collateralized loan obligation debt, which reduced the weighted average cost of financing while extending the reinvestment period through 2031. The company prioritized share buybacks during the period, utilizing its expanded repurchase authorization to address the stock's discount to net asset value. Management stated that the investment strategy currently favors secondary market opportunities in broadly syndicated loans and direct private credit investments due to prevailing spread dynamics. The portfolio maintained a high concentration of senior secured positioning across diverse industries, with interest coverage ratios remaining stable despite heightened interest rate volatility.

• CEO Long stated, "Palmer Square platform was built for markets like these," referencing the company's ability to navigate complexity in high-interest rate and inflationary environments.
• President Bloomfield noted that the company currently sees "better relative value in private credit compared to the syndicated loan market given prevailing spread dynamics."
• Management indicated that recent sponsor feedback suggests "transaction processes are taking longer to complete and deal time lines are increasingly being extended."
• The company reduced excess capacity under its Bank of America BSL funding facility to lower associated unused fees following the successful CLO debt reset.
• Bloomfield noted that an interest coverage ratio of 2.4x provides a cushion for borrowers to absorb potential further rate increases without causing cash flow stress.
• The company reported a modest pickup in sponsor-backed M&A activity within the software sector, including high-profile refinancings for firms like Proofpoint and Sophos.

INDUSTRY GLOSSARY

• Broadly Syndicated Loan (BSL): A large commercial loan structured and arranged by a group of lenders, typically for large corporate borrowers.
• Collateralized Loan Obligation (CLO): A structured financial product that pools multiple corporate loans into various tranches of debt and equity.
• Secured Overnight Financing Rate (SOFR): A benchmark interest rate for dollar-denominated derivatives and loans that replaced LIBOR.
• Payment-In-Kind (PIK): A feature where interest is paid through additional principal on a loan rather than in cash.
• Net Asset Value (NAV): The total value of a company's assets minus its liabilities, used to value the company on a per-share basis.
• Business Development Company (BDC): A type of closed-end investment fund that invests in small and mid-sized businesses as well as distressed companies.

Full Conference Call Transcript

Operator: Hello, everyone. Welcome to Palmer Square Capital BDC's Third Quarter 2026 Earnings Call. [Operator Instructions] As a reminder, this conference call is being recorded. At this time, I'd like to turn the call over to Jeremy Goff, Managing Director. You may begin.

Jeremy Goff: Welcome to Palmer Square Capital BDC's Third Quarter 2026 Earnings Call. Joining me this afternoon are Chris Long, Chairman and Chief Executive Officer; Matt Bloomfield, President; and Jeff Fox, Chief Financial Officer and Director. Palmer Square Capital BDC's Third Quarter 2026 financial results were released earlier today and can also be accessed on Palmer Square's Investor Relations website at palmersquarebdc.com. We have also arranged for a replay of today's event that can be accessed on our website. During this call, I want to remind you that the forward-looking statements we make are based on current expectations. The statements on this call that are not purely historical are forward-looking statements.

These forward-looking statements are not a guarantee of future performance and are subject to uncertainties and other factors that could cause actual results to differ materially from those expressed in the forward-looking statements, including and without limitation, market conditions caused by uncertainties surrounding interest rates, changing economic conditions and other factors we identified in our filings with the SEC. Although we believe that the assumptions on which these forward-looking statements are based are reasonable, any of those assumptions can prove to be inaccurate. And as a result, the forward-looking statements based on those assumptions can be incorrect. You should not place undue reliance on these forward-looking statements.

The forward-looking statements made during this call are made as of the date hereof, and Palmer Square Capital BDC assumes no obligation to update the forward-looking statements unless required by law. To obtain copies of SEC-related filings, please visit our website at palmersquarebdc.com. With that, I will now turn the call over to Chris Long.

Christopher Long: Good afternoon, everyone. Thank you for joining us today for Palmer Square Capital BDC's Third Quarter 2026 Conference Call. On today's call, I will provide an overview of our third quarter results, touch on our market outlook, the current industry dynamics at play, and then turn the call to the team to discuss our portfolio activity and financial results. PSBD delivered solid financial performance in the third quarter, supported by a disciplined capital allocation strategy. We prioritized share repurchases during the quarter, buying back $5.2 million of PSBD shares under the expanded repurchase program that was announced last quarter.

This underscores our continued commitment to allocating capital in a way that prioritizes shareholder value while remaining selective in a moderate deal environment. During the third quarter, our team deployed $115 million of capital and generated total and net investment income of $26.6 million and $11.6 million, respectively. We delivered net investment income of $0.38 per share and paid a $0.38 per share total dividend, which includes a $0.02 supplemental distribution above our base dividend. Notably, our dividend payout represents an attractive 11.4% yield on NAV and 15.3% yield on the stock price as of October 30.

In further alignment with the priorities and approach I've just discussed, our Board has declared a fourth quarter base dividend of $0.36 per share with the supplemental dividend to be determined in the normal course. Turning to net asset value. Our NAV per share as of September 30, 2026, was $13.34, reflecting fair value adjustments resulting from pricing moves within the broadly syndicated loan market and an increase of $0.13 per share from the end of the second quarter. Matt will provide additional color on our broader outlook for credit and how it specifically relates to PSBD's portfolio momentarily.

But at a high level, we see a similar dynamic to what we discussed at the close of the second quarter, a multifaceted market environment that remains fluid. In the third quarter, specifically, we experienced heightened interest rate volatility late in the quarter with the 10-year Treasury yield recording one of its largest quarterly moves in history and the 30-year yield reaching multi-decade highs. Inflation remained persistent, prompting the Fed to act in September as economic data reinforced the need for a rate hike with the potential for additional increases in the months ahead. As I've shared in previous quarters, the Palmer Square platform was built for markets like these.

While the macro challenges we see today create a more complex investing environment, it is this kind of complexity that highlights the capabilities and experience of the platform behind PSBD and our ability to find opportunities and create shareholder value. As Matt will discuss, we continue to see and evaluate deals across our opportunity set in floating rate bank loans and private credit, which have continued to outperform traditional fixed income and corporate credit during the quarter. We believe the yields across the broader BDC sector, particularly given current discount to NAV, are becoming increasingly difficult for investors to ignore.

As we look at the opportunities set in front of us, we are further reassured by the resilience of corporate earnings and the relative stability of underlying credit performance, and are optimistic that attractive opportunities can arise even as deal activity remains muted by rate volatility and broader sentiment. Turning to AI and software for a moment. AI-related debt issuances continued to accelerate during the third quarter, competing with other income-generating products for investor capital. At the same time, we are closely monitoring growing opposition to data center permitting and construction, which could impact the pace of AI infrastructure development.

This remains an important trend to watch, particularly given that AI infrastructure investment represents a meaningful portion of GDP and corporate earnings growth trajectories. As we have previously discussed, we remain confident in our software portfolio, which is strategically focused on AI beneficiaries and management teams who have demonstrated an ability to adapt and innovate. As I conclude my remarks, I'd like to reiterate Palmer Square Capital Management's competitive advantage as one of the industry-leading global CLO managers.

The breadth of our platform, which provides extensive visibility across the entire broadly syndicated loan landscape, enables us to act selectively, and we believe the combined benefits to PSBD from our scale, long-standing relationships, and significant sourcing capabilities within the syndicated loan market continue to be underappreciated by the market. We remain focused on delivering the best possible outcomes for our portfolio and most importantly, our shareholders. We believe the flexibility of our liquid portfolio, combined with our active management approach and line of sight across the leveraged loan market positions us well to execute as market conditions evolve.

Looking ahead, if interest rate volatility and geopolitical uncertainty remain elevated, we expect it to continue weighing on deal activity in the fourth quarter. From our recent conversations with sponsors, we've heard anecdotally that transaction processes are taking longer to complete and deal time lines are increasingly being extended. That said, sponsors ultimately need to transact, and we expect activity to improve over time, although the pace of that improvement may be uneven. With that, I will hand the call over to Matt.

Matthew Bloomfield: Thank you, Chris. As Chris alluded to, credit performance remained consistent despite a volatile macro backdrop, which has been further compounded by inflationary pressures and the Fed increasing interest rates in September. Rising diesel prices resulting from ongoing geopolitical tensions in the Middle East and Europe pose additional uncertainties related to the outlook for economic growth. Growing concerns about the costs of AI-related build-outs and the resulting impact rising AI debt levels have had on credit spreads has further added to recent credit volatility.

In light of these dynamics and consistent with our expectations through the summer, the BSL market saw relatively subdued but steady activity during the quarter, with a pickup in deal flow following Labor Day, followed by a notable pullback as we moved into the fourth quarter. As spreads remain tight, partly driven by market technicals, we saw several private credit borrowers refinance into the BSL market to take advantage of more attractive pricing. Encouragingly, we have also seen a modest pickup in sponsor-backed M&A activity across the software sector.

This momentum, coupled with multiple high-profile software refinancings, including Proofpoint, which priced in July, and Sophos, which priced in September, demonstrates the market's willingness to underwrite risk in the sector even as lenders remain increasingly risk-averse. As we have discussed in the past, for the right opportunities in the software sector, such as these in cybersecurity, we believe there will continue to be strong relative value and total return opportunities for those willing to do the work. During the quarter, we also observed that some lenders were able to secure more favorable terms, including stronger credit documentation, wider spreads, and in one instance, additional junior capital support, which we view as a constructive development for lenders. Turning to the portfolio.

We are pleased with performance during the third quarter, generating net investment income of $0.38 per share, $0.02 above our base dividend, along with modest NAV accretion compared to the second quarter. We also continue to focus efforts on optimizing the right side of the balance sheet, and were able to reduce leverage while simultaneously returning capital to our shareholders through our share repurchase program. These results reflect our active and disciplined approach to managing both our investments and balance sheet.

As discussed on our last earnings call, during the quarter, we reset and extended our BDC CLO, lowering the weighted average cost of debt to SOFR plus 1.39% from SOFR plus 1.72% while extending the reinvestment period to July 2031 and maturity to July 2039. Given the lower cost of financing through our CLO, we also reduced excess capacity under our Bank of America BSL funding facility to reduce associated unused fees. Together, these actions help enhance our funding efficiency and reduce carrying costs while preserving liquidity and financial flexibility should M&A activity accelerate. Notably, we reduced our leverage from 1.71x in the second quarter of 2026 to 1.63x in the third quarter of 2026.

This was driven by a combination of debt paydown and NAV appreciation during the quarter. We are pleased with the strength and flexibility of our balance sheet, which positions us to capitalize on attractive investment opportunities as they arise. Importantly, share repurchases remain a top near-term priority as we evaluate capital allocation opportunities against our broader investment mandate. Tactically, we currently see better relative value in private credit compared to the syndicated loan market given prevailing spread dynamics. And within the BSL market, we see more attractive risk-adjusted returns in the secondary market compared to new issuance. Our team continues to actively evaluate these opportunities and allocate where we see the most compelling value.

And while these are how we currently see the opportunity set, given the fluidity of the market, that can certainly change. Our investment portfolio as of September 30, 2026, had a fair value of approximately $1.09 billion, diversified across 45 industries that demonstrate strong credit quality, industry and company-specific tailwinds, and a variety of end markets. This compares to a fair value of $1.11 billion at the end of the second quarter of 2026, reflecting a decrease of approximately 2.3%. In the third quarter, we invested $115 million of capital, which included 31 new investment commitments at an average value of approximately $3.5 million. During the same period, we realized approximately $165.8 million through repayments and sales.

To recap key portfolio highlights, at the end of the third quarter, our weighted average total yield to maturity of debt and income-producing securities at fair value was 11.99% and our weighted average total yield to maturity of debt and income-producing securities at amortized cost was 8.38%. We believe our focus on first lien loans, combined with diversification across industries and company size contributes to a strong credit profile with exposure to 45 different industries. Further, our 10 largest investments account for just 10.92% of the overall portfolio, and our portfolio is 97% senior secured with an average hold size of approximately $4.1 million.

On a fair value weighted basis, our first lien borrowers have a weighted average EBITDA of $483 million, senior secured leverage of 5.71x, and interest coverage of 2.38x. Additionally, new private credit loans comprised 12.2% of overall new investments at a weighted average spread of 659 basis points over the reference rate. On a fair value basis, nonaccruals represent less than 1 basis point and on an at cost basis, only 96 basis points. Our PIK income represents approximately 2.18% of total investment income, well below our peers and the industry average. We've maintained an average internal rating of 3.6 on a fair value weighted basis for all loan investments.

Our rating is derived from a unique relative value-based scoring system. Stepping back, the line between syndicated and direct lending continues to blur with borrower relationships increasingly spanning both markets. We believe our ability to invest across these financing channels is a competitive advantage, allowing us to maintain and expand incumbent relationships while leveraging knowledge of these borrowers to identify attractive investment opportunities. At the same time, we remain disciplined in our approach to capital allocation, weighing new investments against other opportunities, including share repurchases with the goal of maximizing value for shareholders. As we close out the year, we remain confident in the credit performance of our portfolio and the sustainability of the base dividend heading into 2027.

We expect recent refinancing activity to be additive to earnings power and market implied base rate expectations to be supportive as well. Now I'd like to turn the call over to Jeff, who will review our third quarter 2026 financial results.

Jeffrey Fox: Thank you, Matt. Total investment income was $26.6 million for the third quarter of 2026, down 16.1% from the $31.7 million for the comparable prior year period. Income generation during the quarter reflected contractual interest income from our investments, which was impacted by lower base rates versus the prior year as well as a modest amount of paydown-related income and fee income. Total net expenses for the third quarter were $14.9 million compared to $18 million for the prior year period. Net investment income for the third quarter of 2026 was $11.6 million or $0.38 per share compared to $13.6 million or $0.43 per share for the comparable period last year.

During the third quarter of 2026, the company had a total net realized and unrealized gains of $2.4 million compared to total net realized and unrealized losses of $10.3 million in the third quarter of 2025. This consisted of net unrealized depreciation of $2.2 million related to existing portfolio investments and net unrealized appreciation of $9.2 million related to exited portfolio investments. At the end of the third quarter, NAV per share was $13.34, increasing from $13.21 at the end of the second quarter of 2026. Moving to our balance sheet. Total assets were $1.1 billion and total net assets were $403.4 million as of September 30, 2026.

At the end of the third quarter, our debt-to-equity ratio was 1.63x compared to 1.71x at the end of the second quarter of 2026. Available liquidity, consisting of cash and undrawn capacity on our credit facilities was approximately $195 million. This compares to approximately $331 million at the end of the second quarter of 2026. Finally, on November 4, the Board of Directors declared a fourth quarter 2026 base dividend of $0.36 per share, in line with our dividend policy. Furthermore, our policy continues to distribute excess earnings in the form of a quarterly supplemental distribution. And with that, I'd now like to open the call up for questions.

Operator: [Operator Instructions] Your first question comes from the line of Kenneth Lee with RBC Capital Markets.

Kenneth Lee: Just one on the liquid loan markets there. And you mentioned in the prepared remarks that you're preferring private credit versus the more liquid side right now. And you also mentioned that spreads remain tight. Just wondering if you could give a little bit more color in terms of some of the terms and documentation that you're seeing in the BSL markets right now.

Matthew Bloomfield: Ken, it's Matt. Thank you for the question. Yes, that's right. I mean, I think on the margin, we do see a little bit better relative value, particularly from a spread perspective on the private credit portion of the market. I think with some continued outflows in non-traded BDCs, that's led to, I'd say, modest spread widening in that market. And so net-net, we think there's continued to be some interesting opportunities there. Throughout most of the third quarter, spreads remained relatively tight on the broadly syndicated side of things, talking about kind of the primary market there, especially with some of the deal flow post Labor Day.

But certainly, what we've seen over the month of October with a lot of increased rate volatility in general, there's certainly some more, I'd say, interesting opportunities in the broadly syndicated secondary market, as we mentioned in the prepared remarks. To be quite frank, we haven't seen a whole host of kind of new issues coming to the market here recently as well. So I think net-net, from our vantage point, we think there'll be some better things to do on the secondary side of things versus primary. And as we move into early next year, that tends to be a slower quarter in general from M&A activity and deal flow.

But we'll have to see how things evolve over the next few months.

Kenneth Lee: Great. Very helpful there. And just one follow-up, if I may. You briefly referenced the dividend outlook there or at least the coverage. I wonder if you could just further expand upon that, thoughts on dividend coverage, especially given the current rate outlook and sort of the potential deal activity that you see coming up.

Matthew Bloomfield: Sure. Yes, I think as we kind of look forward and model out kind of where the portfolio sits today from a spread perspective, obviously, I alluded to my comments on some more attractive spreads on the private credit side and certainly have seen some spread widening across most credit markets, if not all credit markets in October. So I feel net-net better just about where spreads are at. Obviously, base rates, we saw an increase from the Fed in September. I think the market is trying to decide which way we're headed on a go-forward basis.

But certainly, there's been a little bit more rate hikes priced in throughout next year, which from our vantage point, we would certainly view as a bit of a tailwind for yields on the portfolio, all within the fact that borrowers are still in a very good shape from an interest coverage standpoint. We sit at 2.4x interest coverage across our portfolio. So we feel like there's a good cushion for those borrowers to absorb some more rate hikes without causing too much in the way of stress from a cash flow standpoint.

So all that put together, again, we feel pretty good about where we sit from a base dividend standpoint on the go forward and certainly anticipate paying out any of the additional excess income generated through the supplementals.

Operator: Your next question comes from the line of Melissa Wedel with UBS. Your next question comes from the line of Ethan Kaye with Lucid Capital Markets.

Ethan Kaye: Just wanted to ask about interest costs going forward. I know there were maybe some puts and takes here this quarter as it relates to kind of the CLO refinancing and the excess capacity removal. Can you talk about kind of like run rate if you expect this to be kind of a good run rate going forward, what we saw in 3Q here?

Matthew Bloomfield: Ethan, it's Matt. Thank you for that question. Yes, I think we feel pretty good about kind of where the right side of the balance sheet is now post the refinancing and extension on the CLO and the downsizing on the BofA facility. All of those are obviously floating rate based. So they'll kind of matriculate wherever base rates go. But from the spreads on those perspective, we feel really good about where those are at. We got very nice execution kind of took advantage of all the comments we've made over the past several quarters about spreads being tight across most credit markets.

And so we certainly look to take advantage of that in the third quarter as well by tightening those up. So I think on a go-forward basis, those should be pretty steady state, and we feel good for the kind of medium to longer term with those facilities in place.

Ethan Kaye: Great. And then I guess one more on the portfolio turnover looked a little bit higher this quarter, certainly relative to 1H and seemingly relative to kind of what some peers have shown so far this quarter. Anything that kind of drove the elevated exit levels?

Matthew Bloomfield: I think we -- as we looked across the portfolio during the quarter, we did see a fair amount of refinancing activity on the broadly syndicated side of things. As we alluded to in some prior calls, spreads remained pretty tight and in some cases, kept tightening throughout the quarter. And so we just thought from a relative value standpoint and a risk-adjusted return standpoint that we weren't necessarily being compensated for some of those. So we just took the paydowns in those cases. We also, as you'll probably see in the 10-Q, we sold a lot of our CLO mezz investments in the quarter.

Again, as we've talked about spreads being really tight across most credit markets, we just thought there'll be better opportunities from a capital deployment and from a spread perspective in other asset classes on a go-forward basis. So those are kind of the 2 I would highlight as being kind of ones to note in the quarter. But again, we also think we've got a lot of capacity now should volatility persist and more interesting opportunities arise on the secondary side of things on the syndicated loan side.

And certainly, as we've talked about in the prepared remarks, continue to think share repurchases make a lot of sense given where discounts are and where kind of the return on equity sits from those buybacks and debt paydown as well. We mentioned in the quarter, we paid down some of our debt facilities to continue to manage the overall leverage level. So those are all things that I think look pretty consistent as we sit here today in the fourth quarter.

Ethan Kaye: Great. And one more quick one, if I may. Noticed the weighted average maturity on new investment commitments this quarter looks significantly lower, significantly less than previous quarters. Does that have to do with kind of more secondary opportunities? Or I guess, what's driving that?

Matthew Bloomfield: Yes. Good catch and noted on that. I think the main thing we've seen there is we alluded to a couple of the refinancings that got done in the quarter. Most of those are -- some of those that we've seen and certainly ones that we participated in, in this quarter tended to be kind of 2- to 3-year extensions versus full 7-year refinancings. So that's part of it. I think those -- when it's a shorter wall, those tend to be more attractive in certain situations, not every situation. But for those select refinancings we participated in, that was a dynamic at play there.

And then yes, to your other comment, secondary transactions where we can find credits that we feel very comfortable in from a credit quality standpoint and a repayment perspective to the extent we can pick those up at discounts to par and those that have shorter maturity profiles. We think that kind of pull to par or the ability to get refinanced out at par on a shorter basis makes a lot of sense for the portfolio as well.

Operator: [Operator Instructions] Your next question comes from the line of Melissa Wedel with UBS.

Melissa Wedel: Hopefully, you can hear me this time.

Matthew Bloomfield: Yes.

Melissa Wedel: I wanted to touch on the repurchase activity. Can you remind us -- if I missed it, I apologize, remind us how much remaining capacity is on that plan?

Matthew Bloomfield: Yes. Of course, Melissa, this is Matt again. We have, as of the end of the third quarter, about $24.8 million left on that plan. So quite a bit of capacity left even after the $5.2 million this quarter.

Melissa Wedel: Got it. And then, of course, leverage did come down during the quarter and you had net exits. Just wondering how you're feeling about 1.63x at the end of the third quarter and how much room you think that -- how you balance the additional attractive potential repurchases you could continue to do going forward versus new capital deployment? And basically, should -- are you managing to maintain leverage at that level? Or how are you thinking about it?

Matthew Bloomfield: Yes. I mean, I think we talked last quarter, we were comfortable at the 1.71x. We certainly didn't want to go much higher than that. But given our ability to manage leverage from a debt paydown perspective, from the liquidity in our underlying portfolio, we felt really good about that. I'd say during the quarter, as we saw those opportunities come up that I just talked about on the prior question, we just didn't think it made sense to stay involved at some of those spread levels. So we took those paydowns, certainly paid down some debt with that.

As we sit here in the fourth quarter, we'll kind of make those same judgments if things aren't attractive from a relative value standpoint. We're happy to continue to take refinancings and deploy that into some debt paydown, into share buybacks. But as I noted, in October with some of the activity we've seen in the broader markets, on the margin, things are getting a little bit more interesting from a deployment standpoint. So we'll balance all of those things, but we feel good about where we sit from a leverage standpoint. Certainly, that can come down.

I don't know that we'll take it too much higher from an opportunity deployment set, but it's something that we feel very comfortable managing, and we'll just kind of see where the opportunity set lies as we move forward through the rest of this quarter and beyond.

Melissa Wedel: Got it. I think I'm at the end of the queue, so I'll ask one more. This was a good quarter also in terms of sort of stemming the outflows on NAV or the NAV depreciation and had not just stabilization but a slight uptick quarter-over-quarter. Can you talk about how you're thinking about NAV stability going forward because that's definitely an area we get questions about.

Matthew Bloomfield: Yes. I mean, I think it was kind of to unpack the third quarter on a monthly basis, I'd say July and August were pretty steady, kind of loan prices matriculated higher in general in the syndicated loan market as things were pretty stable. The back half of September got a little more volatile. As we just talked about, October in general was a pretty volatile market in credit at large, especially with everything going on in broader rates and inflation and whatnot. But we would ultimately like to see more stability across the markets. I think it's just good from a portfolio stabilization level.

I think we've obviously increased our private credit allocation over the past couple of years to roughly 15% of the portfolio now. So there are things I think we'd look to do to hopefully make things a little bit more stable. But as I mentioned, that volatility unlocks a lot of opportunities as well when you can execute in the secondary market at discounts to par. Over the long term, we think that should lead to accretiveness across the portfolio. And sometimes there's a little bit more volatility in the short term.

But when you see good credits that go from par and trade down a few points to the extent you can take advantage of that, we think that should build things back into the portfolio and lead to good returns on a go-forward basis, too. So that's kind of how we think about it. We're cognizant of it, but also with the liquid nature of our portfolio or at least the majority of the portfolio, that's something that's a little bit part of it, I suppose.

Operator: We have reached the end of our Q&A session. I will now turn the call back to Jeremy Goff, Managing Director, for closing remarks.

Jeremy Goff: Thank you, operator, and thank you all for your time today. We look forward to updating everyone on our fourth quarter and 2026 full year results in the new year. Have a great rest of your day.

Operator: This concludes today's call. Thank you for attending. You may now disconnect.

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