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| And I would say, except for healthcare services, it's done a very, very good job |
| And the thing we always point to is 2021 was a record year in volumes for us, and I'm sure all of us up here, we had fantastic years putting new money to work |
| We're seeing that the economic underpinnings of the economy, revenue, and EBITDA are growing, and their economy remains healthy despite everyone worrying about the lag effective rate increases, credit tightening |
| Credit performance was really strong last year |
| And certainly, it's our activities depend on our origination depending you know, having M&A and assets trading will drive activity, but, it's not the only factor, right? And I think as a large BDC, one of the larger BDCs and all of us up here are enjoying the benefit of having a large portfolio |
| So there may be some there was great tailwinds last year on those wins might shift a bit, but credit quality in that environment should be a positive |
| So that strength and stability of the balance sheet allows us to be patient and navigate periods of stress in a much calmer way, right? There's no triggers that are making us sell our assets, so we can sit there and work together with our partners, the owners of the assets to achieve better outcomes |
| And so I think we've been able to be much better at picking industries and have the flexibility to do so versus being kind of own the market |
| We had our IPO back in 2004, so we've got a 20-year public track record out there delivering industry leading results |
| But because we're better holders of that credit, we have better liability structures, we're able to attract talent |
| Generally speaking, we benefit from good credit performance and over earning our dividend to drive net asset value that was flat |
| To compete in what, surely what we think is the highest quality opportunity set |
| Our recoveries are actually quite good |
| Certainly, the market backdrop has been very favorable |
| And we have a much better ability to get high recoveries on our problems |
| Get great returns, great deals |
| And then you fast forward 20 years, here you see a substantial influx of very talented, very well-known institutional managers in the space that are, in my view, operating and working to operate and make this space better |
| And so we have the good fortune to be able to provide capital into those existing portfolio companies |
| And so the return on equity is pretty good |
| Economy's better |
| I think last year, though, was a real testimony to the strength of the quality of the companies in the direct lending space |
| It continues to be very good |
| And if you have a diversified portfolio and the problems get back $0.80 to $0.90 on the dollar, you're going to have great returns |
| We are aligned all the time, and we take comfort in each other having very high quality underwriting standards |
| So it's a remarkable evolution |
| We've got excellent relationships with these private equity firms |
| The economy was very good |
| It was very profitable model to distribute the risk, and earn fees |
| And that allows us to achieve all those factors, allow us to achieve the lower loss rates |
| Really good management teams |
| Statement |
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| So there's a little bit of an adverse selection also that these smaller lenders are suffering from |
| I think that there still had been, and maybe still some of you may feel this way, a lingering misperception that we're lending to kind of subprime borrowers that in moments of weakness, that there's going to be this great ripple effect, and it's just misplaced |
| Unidentified Company Representative I think it's funny how when rates are going up, everybody's worried about credit quality and credits could explode the business |
| Could you talk about what's going on here? And, specifically, what are you seeing within your portfolio, portfolio companies? Craig Packer So a year ago, everybody was worried about credit performance |
| If rates go down, that's going to hurt our income |
| There's an expectation that they're going to come down but until they actually come down, we're going to continue to be cautious |
| Unidentified Company Representative I find it fascinating all the talk out there about banks competing with private credit, and the world's going to explode and structures are going to collapse |
| They're just losing share |
| The business model is more painful for banks |
| And we're a new entrant eight years in, but there's very, it's very few, and it's very difficult to come in now and recreate that |
| I think this is one of the things that's underestimated about direct lending |
| So I think even when there are issues, we had a few, not too many |
| There's high capital charges |
| So you would start to see those leading indicators pointing to signs of stress if companies were struggling with liquidity |
| So that misconception around lower credit quality is just really kind of not true |
| So there's always something to worry about |
| M&A activity was really slow last year |
| What I would say is that the regulatory environment is only getting tougher |
| There's, I think, continue maybe it won't go down as much or as fast |
| It's a drop in the bucket in the investment grade bond market |
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