Blackstone Secured Lending Fund (NYSE:BXSL) Q2 2025 Earnings Call Transcript

Blackstone Secured Lending Fund (NYSE:BXSL) Q2 2025 Earnings Call Transcript August 6, 2025

Blackstone Secured Lending Fund misses on earnings expectations. Reported EPS is $0.77 EPS, expectations were $0.81.

Operator: Good day, and welcome to the Blackstone Secured Lending Second Quarter 2025 Earnings Call. Today’s conference is being recorded. [Operator Instructions] At this time, I’d like to turn the conference over to Ms. Stacy Wang, Head of Stakeholder Relations. Please go ahead.

Stacy Wang: Good morning, and welcome to Blackstone Secured Lending Fund’s Second Quarter Conference Call. Joining me today are Brad Marshall, Co-Chief Executive Officer; Jonathan Bock, Co-Chief Executive Officer; Carlos Whitaker, President; Teddy Desloge, Chief Financial Officer; and other members of the management team. Earlier today, we issued a press release with a presentation of our results and filed our 10-Q, both of which are available on the Shareholder Resources section of our website, www.bxsl.com. We will be referring to that presentation throughout today’s call. I’d like to remind you that this call may include forward-looking statements, which are uncertain and outside of the firm’s control and may differ materially from actual results.

We do not undertake any duty to update these statements. For some of the risks that could affect results, please refer to the Risk Factors section of our Form 10-Q filed earlier today. The audio cast is copyright material of Blackstone and may not be duplicated without consent. With that, I’ll turn the call over to Brad Marshall.

Brad Marshall: Thank you for joining us for our second quarter earnings call. Before we begin our call today, I want to address the tragic events on Monday, July 28, where 4 innocent people were killed in a senseless act of violence at our 345 Park Avenue headquarters. This included our beloved colleague, Wesley LePatner. Our thoughts and prayers with Wesley and the other victims’ families and friends and all those who are impacted in one way or another by this awful event. With this type of tragedy so recent, it’s hard to shift to discussing the quarter. But if you knew Wesley, who had a seamlessly impossible mix of fierce drive, warmth and care for all those around her, she would find a way to lead through this. So with that heavy transition, I will begin with some thoughts on the current environment and our views heading into the second half of 2025.

From the start of the quarter until now, we can all agree that a lot has changed. Just rewinding back to April, volatility hit across asset classes. BXSL stock saw nearly 5x its average trading volume. Public credit markets temporarily shut down and investor sentiment collapsed due in part to tariffs and geopolitical instability. Despite this short period of heightened uncertainty, we have seen positive trends reemerge over the past few months. markets are back to being open. Equities have hit all-time highs. Inflation has remained muted, and we are seeing signs of macro clarity. You saw some of this materialize towards the end of the second quarter as we saw our net deployment increase compared to the first quarter. Although some of that activity came from existing portfolio companies looking to grow, we have seen a nearly 50% increase in new Blackstone Credit Insurance or BXCI global private credit deal screenings this past quarter versus the fourth quarter of last year.

And while not every BXCI deal that comes through BXCI’s screening is suitable for investments by BXSL, this is consistent with our general view from last year that deal activity would pick up meaningfully in 2025. The drivers we believe are rooted with the prospect of lower short-term interest rates, tighter credit spreads in the public and private markets, mitigated economic uncertainty and continued revenue growth combined, of course, with a pent-up desire to transact. Now let’s turn to Slide 4. BXSL reported another strong quarter amidst the volatility in April. Our net investment income, or NII, of $0.77 per share this quarter represented an 11.2% annualized return on equity and is made up overwhelmingly of interest income rather than income from PIK or dividends.

We believe the quality of BXSL’s income has historically created a robust income stream for our investors. Net asset value per share decreased slightly by $0.06 quarter-over-quarter to $27.33. Our distribution of $0.77 per share was 100% covered by our net investment income per share and represented an 11.3% annualized distribution yield, one of the highest among our traded BDC peers with as much of their portfolio invested in first lien senior secured assets. Finally, credit quality remains strong with 0.3% of investments on nonaccrual at cost and at 0.1% at fair market value. We had no new names added to the nonaccrual list this quarter. And since BXSL’s inception, our nonaccrual rate has never exceeded 30 basis points at cost. Moving to Slide 5.

As mentioned earlier, we’ve continued to prepare ourselves for what we believe will be a period of heightened deal activity with a focus on activity within our existing portfolio companies as well as new assets. We are also spending a large amount of time on making sure we maximize the efficiency of our operating costs and our liabilities. And while the overall pipeline investment activity has picked up, there continues to be a range in the quality of deals being offered to the market. As such, we will seek to continue our disciplined approach and use our cost advantage to continue to focus on quality and not reach for risk. Leading the market with lower fees and expenses compared to our traded BDC peers is a top priority for us as it can potentially create a stronger portfolio over time.

And yes, despite a more positive outlook on the economy, which can be a good time to take on risk, not all sectors and businesses will perform equally. So we will still share a healthy amount of caution going into the second half of the year. At BXCI, we have a team of 113 people in our CIO office, larger than most credit platforms in their entirety. They spend all their time reviewing data, identifying insights across the 5,000 companies we are investing across our platform and then using that information to help our portfolio managers identify themes and build portfolios for our investors. You’ll hear many of the same themes from the team this morning. But I would highlight that the quarter was supported by consistency in both performance with no new assets on nonaccrual and yield with a healthy pickup in deal activity as indicated by the BXCI pipeline and increase in net deployment post Liberation Day.

With that, I will pass over to my colleague, Jonathan.

Jonathan Gerald Bock: Thank you, Brad. And I want to echo the points made on our BXCI platform scale before jumping into a few more highlights. Our scale allows us to be active with existing companies. We can expand our portfolio with new borrowers while also potentially enhancing the quality of our existing investments. And to Brad’s point, we have over 110-plus, right, in our CIO office focused on investment management, portfolio insights and portfolio operations using extensive credit expertise to provide long-term views of the market regardless of the economic state. The team has developed a reputation for being a valued partner with the ability to provide speed, creativity, flexibility and certainty of execution. In an uncertain economic environment, not only does our CIO office leverage Blackstone’s scaled insights to help identify and proactively mitigate portfolio risks, but our BXCI value creation program also supports our portfolio companies by seeking to enhance revenue and lower cost.

For example, this quarter, BXCI achieved an estimated 13% savings on average on direct material and services costs for a health care provider and services company, simply by professionalizing spend management and leveraging our e-sourcing platform. Now with that, let’s turn to Slide 6. We ended the quarter with $13.3 billion of investments at fair value, over a 17% increase from $11.3 billion year-over-year. In Q2, BXSL also added 15 new portfolio borrowers to our portfolio, while exiting 4 positions, netting a total of 295 companies. Ending leverage and average leverage ticked down slightly compared to prior quarter at 1.13 and 1.13x, respectively, remaining near the middle of our target range of 1 to 1.25x. Our weighted average yield on performing debt investments at fair value was 10.2% this quarter, consistent with last quarter.

The yields on new debt investment fundings and assets sold and repaid during the quarter averaged 9.8% and 10.3%, respectively. Turning to Slide 7. 98% of BXSL investments are in first lien senior secured loans and 99% of those loans are to companies owned by financial sponsors who generally have significant equity value in these capital structures demonstrated by an average loan-to-value of 46.9%. Our portfolio also has an LTM EBITDA base averaging around $219 million, with year-over-year EBITDA growth of nearly 11%. This growth percentage is nearly 2x larger than that of companies in the Lincoln International private market database from last quarter. Turning to Slide 8, which focuses on our industry exposure. Recall, we focus on domestic businesses in less capital-intensive sectors with our highest exposures in the software, professional services and health care providers and services industries.

This quarter, over 99% of the new private debt investments during the quarter were first lien senior secured positions with an average LTV below 40%, meaning there’s a significant amount of capital beneath our loans. Our relentless focus on first lien senior secured debt in lower default rate industries is what we view as a defensive position for investors. We believe this is further evidenced when we look at the various portfolio metrics compared to the weighted average of our traded BDC peers just in the first quarter. Our low nonaccrual rate of 0.3% at cost compared to 2.7% for the market average. Our PIK as a percentage of total investment income at 6.4% compared to 11.3% for peers. And our stressed debt investments marked below 80 is at 0.7% compared to 4.3% for the market average.

I’ll conclude with some points on our documents and recent amendment activity. As a reminder, when we negotiate our credit agreements, especially as a leading lender, we place a significant focus on control and important document protections and have remained consistent with this approach. And if we take a look at our recent amendments, 2Q saw an uptick in activity, but nearly 90% of the amendments were associated with add-ons, M&A, DDTL extensions, immaterial technical matters or changes to terms. And with that, I’ll turn it over to my colleague, Carlos.

Carlos Whitaker: Thanks, John. Turning to Slide 9. BXSL maintained its dividend distribution of $0.77 per share as we remain focused on delivering high-quality yield to shareholders. Earlier, Brad emphasized that the strength of BXSL’s portfolio is owed to the scale and platform of Blackstone and BXCI, and I’d like to echo this point. Our BXCI platform has allowed us to be active with existing companies but can also help expand the portfolio through new borrowers that we believe are quality assets. In addition, certain credits find us and prefer to work with BXCI due to what we believe is a large credit franchise that is a differentiator in the market. As an example, BXSL’s largest new investment into a new portfolio company for the quarter was a BXCI-led $500 million debt financing for acuity delivery systems, a clinical documentation improvement specialist for health systems that improves coding and billing accuracy.

In addition to leading the transaction, BXCI committed nearly the entire financing package across the capital structure. We believe a few key differentiating factors allowed BXCI to win the deal. First, adviser and sponsor relationships. We evaluated a past opportunity with Acuity through a strong adviser relationship. And while the company did not consummate that deal, we were able to build rapport with the company’s sponsor and maintain dialogue for this new investment. We worked hand-in-hand with the sponsor on a structure before BXCI was formally asked to provide up to 100% of the financing. As a reminder, BXCI has a team of senior investment professionals who engage with hundreds of our top financial sponsors. In addition, we have a dedicated team within BXCI that covers strategic relationships with M&A and sell-side advisers globally, sharing data that can help drive deal flow.

Second, extensive diligence and sector knowledge. We utilized our internal Blackstone expertise and differentiated market insights in health care and health care services, along with, as mentioned, our knowledge of the company from a previous opportunity. BXCI has a dedicated health care and life sciences team of 13 people globally and a portfolio of $35 billion. This team is further supported by Blackstone’s private equity teams covering these sectors, which are viewed as leaders in the market. As a result of this extensive expertise, we were able to fully evaluate the borrower and target market with our deep diligence process in a very timely manner. And finally, flexibility. BXCI offered a one-stop service with multiple tranches of debt, creating ample flexibility best suited for the company’s needs.

In an increasingly competitive private credit market, we believe we differentiate ourselves as not just a lender but as a value-added partner, helping credits grow equity value. As we have mentioned in the past, all BXCI private credit investments, including BXSL portfolio companies have full access to the value creation program at no additional cost to the borrower. We offer this because we understand the significant value this program can bring to the investment portfolio. And with that, I will turn it over to Teddy.

Teddy Desloge: Thanks, Carlos. I’ll start with our operating results on Slide 10. In the second quarter, BXSL’s net investment income was $176 million or $0.77 per share, representing 100% coverage to our dividend on a per share basis. Total investment income for the quarter was up $17.7 million or 5.4% year-over-year, driven by increased interest income. We experienced lower repayment activity in the second quarter compared to the first quarter and as a result, experienced less of an earnings benefit from accelerated OID and fees generated in the quarter. Interest income, excluding payment in kind, fees and dividends, represented approximately 93% of total investment income in the quarter. Turning to the balance sheet on Slide 11.

We ended the quarter with over $13.3 billion of total portfolio investments at fair value, nearly $7.1 billion of outstanding debt and over $6.2 billion of total net assets. NAV per share at quarter end was $27.33, down slightly from $27.39 in the first quarter. NAV per share was supported by $0.03 from issuance from our ATM program at a premium to NAV, offset by $0.04 of realized losses and $0.05 of unrealized losses in the portfolio, primarily concentrated to a small number of positions. Moving to Slide 12. BXSL funded over $500 million in the quarter and committed over $600 million. Net funded investment activity was up for the quarter at $345 million with $175 million of repayments down approximately 80% quarter-over-quarter. This represented an annualized repayment rate of 5% of the portfolio at fair value, down from nearly 30% for the prior quarter.

Next, Slide 13 outlines our attractive and diverse liability profile, which includes 39% of drawn debt in unsecured bonds that are not swapped. These bonds have a weighted average fixed coupon of less than 3%, which we view as a key advantage in an elevated rate environment and contributed to an overall weighted average interest rate on our borrowings of 5.03%, up slightly from 5.01% last quarter. This also compares to a weighted average yield at fair value on our performing debt investments of 10.2%, consistent with the first quarter. The overall weighted average maturity of our funding facilities is 3.3 years, a key point we continue to monitor with our $2.9 billion of debt maturing within the next 2 years. Further, we continue to optimize our cost of capital.

Just this week, we closed an amend and extend on our BXSL revolving credit facility, which eliminated the 10 basis point credit spread adjustment for extending loans. With this amendment, based on our research, we believe we have the tightest priced revolver among our BDC traded peers. Whether it’s through amendments or new issuance, we continue to be focused on driving down our cost of capital. BXSL’s overall cost of debt, again, at 5.03% is one of the lowest across our traded BDC peers compared to last quarter. This, along with results from our assets has earned us one of the highest ratings among BDCs with a Baa2 and stable outlook by Moody’s, BBB flat by Fitch and BBB- on positive outlook by S&P. Additionally, total liquidity was nearly $3 billion of cash and undrawn debt available to borrower at these low financing costs, while ending leverage as of June 30 was 1.13 turns, near the midpoint of our target range of 1 to 1.25 turns.

With that, I’ll pause and ask the operator to open it up for questions. Thank you.

Q&A Session

Operator: [Operator Instructions] The first question comes from the line of Robert Dodd with Raymond James.

Robert James Dodd: First of all, my condolences, obviously, for the events of July. On the questions, obviously, looking at the quarter, you had $0.77 ROE north of 11% on an income basis, but the dividend is $0.77. SOFR right now is still north of 4%. It was a low activity quarter, but SOFR is probably not staying at 4% and the forward curve says it’s going down near term. So what’s your view on the sustainability of the dividend, a, and b, how proactive would you expect to be in terms of adjusting extremely proactively or being willing to wait a little bit and see if the market shifts and maybe burn some short-term NAV. Any thoughts there?

Brad Marshall: Thanks, Robert. This is Brad. Maybe I’ll start, and I appreciate your comments. On the dividend, we obviously look at this regularly. I think you pointed this out or someone else did, but our dividend is about 15% higher than the average BDC. So it’s starting from a very high place. What we do when we look at the dividend level is we look at long-term signals, what is ahead of us, not kind of short- term deal activity necessarily or any other short-term drivers. So when we see long-term kind of changes, then we talk about changing our dividend. I think you’re right, base rates are expected to come down. And to us, that would potentially be a signal to look at the long-term dividend. We do have a lot of surplus, as you point out.

The deal activity has been fairly slow. It’s been picking up nicely, however. So we’re going to look at that as well. We’re underlevered, at least where we’d like to be. So we have some earnings driver there. Any time the deal activity picks up, there’s lots of turnover that drives fee income. So there’s lots of things to weigh on the dividend. Robert. So we digest all of that. And like I said, because we have a very high dividend to start with and because we have a lot of surplus to work with and because we have these other drivers, we’re going to factor all of that into what we do going forward.

Robert James Dodd: Got it. Got it. If I can, the follow-up is kind of related to deal activity. I mean, you said, I think deal screenings this quarter are up 50% since the fourth quarter of ’24. So I mean — and ’24 wasn’t super active, but it wasn’t inactive. So I mean that points to a good outlook. One of the market hopes right now seems to be that if activity picks up meaningfully, that there will be spread compression trends that had been a theme over the last probably 18 months will reverse and activity increases will result in spreads expanding. I’d just like your thoughts on that, how realistic do you think that is, particularly for you guys, if you follow — you’re focusing on the pure quality end of the spectrum, does activity raise the prospect of portfolio spreads rising? Or is that perhaps an expectation you don’t have?

Brad Marshall: I think that’s a good question. We don’t have a crystal ball. I do think there is a lot of excess capital looking to be put to work both in the private equity and private credit space. So typically, the pace of activity may sometimes drive spreads. But the 2 bigger things that ultimately impacts spreads. One is the supply and demand dynamic. And I think that is — there’s a lot of capital to be deployed, as I mentioned. So if deal activity accelerates all at the same time, then you could see spreads widen pretty quickly. And then it’s the public markets. Remember, the private markets kind of drive towards a premium to the public markets for a variety of reasons. And the public market has tightened quite a bit over the past 12 months.

So if that continues to tighten, then that’s a little bit of a headwind. If it widens, that’s a tailwind. So we’ll be watching that as well. And remember — Robert, just remember what drives spreads as well as risk. And you pointed this out, but we do have — tend to focus on higher quality, lower-risk assets, which tend to be larger companies. But spreads correspond to risk. And as in these environments, when spreads compress, some people start to reach for risk and they give a lot of colorful explanation why they’re doing that. But the markets are efficient. So if there’s higher spreads, then it’s probably kind of higher risk assets. And we’re pretty focused, as you know, on maintaining that bar very high from a quality standpoint.

Operator: The next question comes from the line of Arren Cyganovich with Truist Securities.

Arren Saul Cyganovich: I was hoping you could talk a little bit about the types of deals you’re seeing. You obviously referenced a big increase in your pipeline or at least in reviewing. Are these more M&A type of deals? Are they refinancing? And are there any particular industries that are seeing more activity than others?

Teddy Desloge: Yes, I’m happy to take that. Thanks, Arren. So I would say — I’d put it in a couple of different categories. Number one is existing activity within the portfolio. We’ve had a lot of activity where we have incumbency. In fact, if you just look at the quarter, the vast majority of what we deployed is where we have incumbency. That is M&A within our existing portfolio, our companies and sponsors using DDTLs using incrementals, us growing as they’re growing their platform portfolio companies. There have been a few refinancings as well. We’ve done a couple of deals this year that were public capital structures that benefited from a private solution with a little bit more flexibility. We have a team that’s highly engaged with public capital structures and sponsors that might benefit from that.

So we think that’s going to be a benefit as well. And then in terms of the market, we see the full market, right? If you look at our portfolio and just what we deployed in the quarter, average EBITDA was right around $150 million. If you look at our existing portfolio, we have about 40% of our portfolio that’s sub-$100 million. So we’re seeing the lower middle market, the large cap space. I think to Brad’s comments, we still like the relative value and the risk in the large cap space there.

Brad Marshall: And what I would just add, Arren, is I think the past maybe 12 months, it’s been very much what Teddy said and focus on our incumbent names and them growing. And now you see the shift towards new M&A. August will be probably the busiest month we’ve had since 2021. So people are taking less vacation, I guess, as a result. But that’s a nice sign that the markets are reopening. Jon Gray talked about this on Blackstone’s earnings call. There’s just better clarity on the direction of the economy. Cost of capital has come down, and there’s just this pent-up desire to transact, themes that we talked about at the end of last year that we said would happen this year are happening, a little bit delayed because of the liberation Day. But nonetheless, you’re seeing the wheel start to move nicely.

Arren Saul Cyganovich: Great. I appreciate the color. And then just quickly, do you have an estimate for spillover income for the quarter?

Teddy Desloge: Yes. Thanks, Arren. Spillover income is $1.86 which is just under 2.5 full quarters at our current dividend.

Operator: [Operator Instructions]. The next question comes from Melissa Wedel with JPMorgan.

Melissa Wedel: I wanted to revisit your comments about repayment activity. Obviously, it was pretty low in Q2, and you’ve talked about how busy this upcoming quarter is. Just as you expect that pipeline to continue growing and strengthening into the back half of this year, I’m curious if you expect repayment activity to sort of proportionately grow with that and kind of rebound off of what seemed like really low Q2 levels.

Teddy Desloge: Yes. Thanks, Melissa. Yes, so you’re right. Q1 was what I would say is an abnormally high repayment quarter. Q2 was the opposite of that, right? We went from what was 28% annualized to 5%. I think a normalized level is somewhere in between that. This quarter, we had a couple of companies that were sold to strategics — sorry, this quarter being Q2. As we look forward as the M&A market picks up and to Brad’s comments, 50% increase in activity since Q4. And if you look at our sell-side reads, which is another leading indicator of activity, those are up 70% in the second quarter versus Q1. That would lead us to believe that repayments would likely normalize higher from what’s a low base today as well.

Melissa Wedel: Okay. Appreciate that. I also just wanted to touch base again the spillover income of $1.86. I appreciate the update on that number. Can you just remind us, it sounds like you’re always going to be assessing the dividend payout or the dividend level in the context of the earnings part of the portfolio and definitely hear your point that you feel like it’s coming from an elevated level already versus peers. When you think about that spillover income of $1.86 and what you can do with it, do you have any thoughts about how much could be too much? Is that a scenario? Could there be a scenario where there’s too much spillover income in your view? Or if you’re trading at a premium to NAV, is that just not the case, there is no such thing as too much.

Brad Marshall: Well, 2 separate topics, I guess, just one on the dividend. Again, in the short term, based on deal activity and what happens during the — in the portfolio, that won’t drive any longer-term change in our dividend levels, and that would be an instance where we would use the spillover income. We haven’t used it ever. So just as a note, we don’t have a policy of trying to use our spillover to support the dividend for long-term purposes. So it’s really kind of this long-term view, Melissa, on where we want to set the dividend based on the market backdrop or to spreads, base rates, deal activity, et cetera. And that will kind of drive our decision around the dividend and therefore, how we use the spillover income.

Operator: The next question comes from the line of Finian O’Shea with Wells Fargo Securities.

Finian Patrick O’Shea: I want to go back to the dividend you hit on a little bit with Robert in the beginning. But I guess more of a saying a hypothetical if SOFR just stays here or it goes down, but you want to keep that 15% or so premium to the space. On that matter, you did slow down the ATM again meaningfully. So are you sort of tightly managing to the $0.77 dividend as the main driver of how you pull that ATM lever? Or is it, say, more returns driven and thereby, should we expect earnings upside as you lever up into a greater origination environment.

Brad Marshall: Thanks, Fin. So listen, our job is to balance risk and returns. So I think during the quarter, the quarter was disrupted a little bit with liberation Day and deal activity was much lighter than I think we were originally anticipating. Therefore, our capital needs to fund that pipeline were more limited. And really, that’s kind of why we access the ATM to make sure we’ve got access to capital to fund attractive opportunities for our investors, building more diversity in the portfolio is always top of mind. So that will continue to be the driver for us around what the deal activity, what the capital needs are for our portfolio. It’s important to recognize just as the asset deployment sometimes slows, we do very much focus on other parts of kind of what drives returns for our investors.

So if you think about what those drivers are, it’s your operating expenses, it’s your fees, it’s your liabilities and of course, the assets. And I would say this quarter, we almost spent more time driving down those costs lower. Teddy talked about the liabilities. We have now repriced the revolver to be the lowest in the market. As you know, our fees are 33% lower than the average BDC. We have that look back, which has contributed to earnings the past couple of quarters and our operating expenses, which we continue to perform very well on at 20 basis points, which is 60% lower than the average BDC. So to me, it’s like to drive returns for investors, there’s all these different things that will contribute to that, and we’re focused on all of them.

They’re all important, and we’ll raise capital as we see appropriate for the risk environment.

Operator: The final question comes from the line of Casey Alexander with Compass Point.

Casey Jay Alexander: Yes. Good morning, everybody. And again, let me echo the sentiment about the loss in your family. That’s a terrible tragedy, and we have great feelings for you in regards to that and our condolences. Your results are obviously very good, but let me indulge in just a little bit of analytical nitpicking because that’s what we’re supposed to do here. The last 4 quarters have all experienced net investment losses. So part A of the question is, should investors be concerned about that trend? And secondly, your largest loan on the books, Medallia was marked down a couple of points this quarter to 87% of par, which is evidence of some degree of stress. Can you give us a feel for where you sit with Medallia. So those 2 questions, I think, are somewhat connected.

Brad Marshall: Yes. Thanks, Casey. I appreciate the comment. And I would say that on the marks of the assets, I would say that, that would be a pretty good signal that there’s a pretty robust valuation process that is underway across all our assets. No surprises like you’ve seen with other situations. So if the company underperforms a quarter, then we’re going to address that with the mark. If you look at BXSL since we started, our realized gains exceed our realized losses, and that’s because of kind of the approach we have with managing our assets. So I wouldn’t read too much into the marks other than companies are going to perform well. Some companies perform less well, and that’s reflected in the marks and over a long period of time, even if you go back to our beginnings back in 2005, I think our realized loss rate is sub-10 basis points.

So a pretty long track record of managing through different situations with assets. As it relates to Medallia, we took the markdown again this quarter. The company is underperforming our expectations and the mark reflects that. I would say the sponsor is highly focused on it. We’re focused on it. They’ve been supportive, we’ve been supportive. But the company has underperformed, and that’s why the mark is lower, and we’ll continue to kind of see what we can do with that asset because your observation is correct. It’s one of our larger positions.

Teddy Desloge: The only thing I would add there on just the fundamental environment and what we’re seeing in the portfolio. I would say the latest data reinforces the resilient trends overall that we’re seeing, right? 11% EBITDA growth. Bock mentioned it in the prepared remarks, that’s versus mid-single-digit growth for the overall market. So we characterize the environment as positive stable growth. I think we expected to see more deceleration across the portfolio than we have seen. I think the other dynamic is our companies are projecting similar growth this year. So that, coupled with their view that they’re increasing CapEx budgets, those are signs of continued confidence in the macro backdrop. So overall, seeing healthy performance in the portfolio, and that’s reflected in the marks, right? We have 70 basis points of exposure marked below 80, 1.7% below 85, that’s well inside from what we understand the average of the traded peer set.

Operator: At this time, I’ll turn the call back to Ms. Stacy Wang for any additional or closing remarks.

Stacy Wang: Thank you, Jennifer. That concludes our call today. Thank you, everyone, for joining us, and we look forward to speaking to you next quarter.