Ares Capital Corporation (NASDAQ:ARCC) Q1 2023 Earnings Call Transcript

Unidentified Company Representative: And I guess to your point also around defensive and offensive, I mean we were fairly constrained in our ability to capitalize on the current market environment when we were at 1.25x leverage at the top of our range. So in order to be offensive, we sort of felt the need to delever a little bit. So now we’re in a nice spot where we could be more opportunistic.

Operator: Our next question comes from the line of Erik Zwick with Hovde Group.

Erik Zwick: Just a quick question. The press release indicated about 88% of the new loans contained interest rate floors. And I think you’ve been pretty consistent over the past few quarters, having set getting interest rate forward. Curious if that floor, if you’ve been able to move that up as the interest rate environment has gone higher. I’m curious if you could maybe keep kind of give an average rate of what it was in the first quarter.

Unidentified Company Representative: Yes. Good question. We are trying to move that floor rate up to the best of our abilities and having some success, but not a huge amount of success just because obviously, the market is the market and not everyone is pushing maybe as hard as we’re pushing. But back to the earlier question around how do you mitigate potential decreases in interest rates in the future. Certainly, that’s one effective way, and we are trying our best. But I’d say it’s any movement that we’ve been able to achieve across the overall portfolio is very small.

Erik Zwick: Got it. Understood. And are you able to ballpark at all, kind of what maybe the average floor was for new originations in Yes, it’s around 1%.

Operator: There are no further questions in the queue. I’d like to hand the call back to Mr. Kipp DeVeer for closing remarks.

Kipp DeVeer: As usual, I don’t have any, but I’ll thank everybody for their participation on the call and me good questions, and we look forward to being in touch with you all in the call next quarter. Have a good day.

Operator: Ladies and gentlemen, this concludes our conference call for today. If you missed part of today’s call, An archived replay of the call will be available approximately 1 hour after the end of the call through May 23 at 5:00 p.m. Eastern Time to demise callers by dialing 1877 and 660-6853 and to international callers by dialing 1-201-612-7415. For all replays, please reference conference number 1373-6873. An archived replay will also be available on a webcast link located on the home page of the Investor Resources section of Ares Capital’s website.