Robert Dodd: Got it. Thank you. And then the second one, unrelated to that. On your unsecured notes, you did have an April ’24 maturity. I mean, you’ve got plenty of liquidity on the revolver to just pay it off if you wanted to. But can you give us the thoughts on what that is with a positive outlook? I presume you don’t want your unsecured mix to shrink too much? Positive outlook from the rating agencies, that is. So can you give us some thoughts and obviously, borrowing costs are higher today on a fixed rate, but would you be looking to swap or anything like that on that if you were to refinance them?
David Golub: So all good questions that we’re actively looking at. I think your statement is correct that over time we want to maintain unsecureds as really meaningful and important, the right hand side of the GBDC balance sheet. And we’re going to always be looking at when’s the right time to issue and in connection with issuing, whether the right decision is to swap into floating or not. I think these are all under active consideration.
Robert Dodd: Thank you.
Operator: Your next question comes from the line of Ryan Lynch with KBW. Your line is open.
Ryan Lynch: Hey, good morning. My first question I had was just related to credit quality. When I look at your overall credit statistics, non-accruals loss in your portfolio, they’ve been really, really good on a bottom-line standpoint. But I’m just curious when I look at your kind of portfolio monitoring and rating scale, there’s been a pretty meaningful uptick, maybe sort of a doubling of those rated 3 credits, over the last year. Those aren’t credits that are significantly underperforming, but there is maybe some worrisome there. So how should investors think about, overall credit’s been fantastic thus far, but those rated 3 credits have maybe doubled over the last year. How should investors think about that?
David Golub: So it’s a great question, Ryan, and it’s one that’s a little challenging for us. It’s challenging because we’re naturally conservative. So we — and Matt talked about this to a degree. We have an internal modus operandi of downgrading credits to 3, maybe earlier than some of our peers, and we do that because it’s part of our process. It’s part of, what happens after that is, it triggers a higher level of monitoring, it triggers a level of involvement with management teams and with sponsors. It triggers a whole series of activities that we think are integral to our sustaining that long-term favorable track record that you just alluded to. The place where we see the greatest correlation with future credit losses is in Category 1 and 2 credits.
And you didn’t mention it, but I will. It’s actually fallen over the course of the last year. It’s gone from 1.3% to 0.3%. That’s an exceptionally low number. So I think you’ve got to look at the whole picture. Anybody who says that the increase in interest rates that we’ve seen is irrelevant from a credit perspective doesn’t know math. Math does make interest coverage, fixed charge coverage, much harder at today’s interest levels than they were in 2021, all things being equal, and our rating system reflects this, our approach to credit decision-making and credit monitoring reflects this.
Ryan Lynch: Okay. That’s helpful background on all that. The other question I had was, you mentioned spreads sort of compressing. Maybe some of this is more focused on some of the upper middle market but certainly spreads compressing a little bit, maybe some borrower friendly terms more in the upper middle market, we’ll see if that translates to the kind of the core middle market. But my question is kind of why?Why is that occurring? Just because, from a high level,and that’s something commonly we’ve heard from others as well, but I’m just curious, there’s been a lot of capital raised and it’s been, I feel like, pretty consistent throughout 2023 is from private credit looking to deploy. But now that it seems that there’s starting to become some increases in deal flow and deal activity.
Now there’s a pretty big supply potentially of coming onto the marketplace of guys looking for, additional credit out there. And so it seems like that would actually better balance the supply and demand issue. But it seems that now that there’s actually an increase in deal flow and activity, it seems that, that’s actually becoming more borrower friendly, which seems a little bit counterintuitive. More people are coming to the market looking for credit. It seems like that would maybe work a little bit more in favor of the lender side. So I’d love to just hear you explain what you’re seeing and why.
David Golub: I don’t have an answer for you on that. I think you’re correct in your description of what we’re seeing. And I’m not sure I have a better explanation than you do on the why. Dynamics like this tend to be a function of supply and demand. So I think we’ll get a better sense for those dynamics over the course of the coming months. I think it may get worse from a spread standpoint. Wouldn’t shock me.
