Erik Zwick: That’s helpful. Thank you. And then you previously mentioned that leverage would decline as the SLP ramped up. And that has been the case over the past few quarters as leverage has come down. And I think you got still got room to increase SLP even more. So should we continue to expect leverage to come down here closer to the middle of the range over the next few quarters?
Michael Gross: I think it will — as Shiraz mentioned, it’ll move between the 1.1 and the 1.2. What we are doing, as you know, is moving, which we are substantially complete with moving lower yielding assets that we acquired with the merger with SUNS back in ’22 into the SSLP which frees up balance sheet at the parent company to invest in some of these very attractive vintages, across our four strategies. But we’re comfortable given the vintage and the quality of the assets to operate between the 1.1 and the 1.2 at this stage of the cycle.
Erik Zwick: And then, last one for me, you spent a fair amount of time in your prepared remarks talking about the opportunities that have been created in most of your kind of lending platforms from the turbulence in the regional bank market. I know this is a little bit hard to kind of maybe answer or have a strong opinion about, but just curious, what type of sightline you have, and how long does that opportunity last at this point?
Bruce Spohler: I guess we put it this way, at the moment, we think it’s going to continue to operate — exist throughout this year. I don’t really, based on our conversations, we’re not hearing a lot of dialogue from banks looking to come back in. It’s more about shedding portfolios in teams. And so it will really, we think be a great opportunity for direct lenders, private credit providers, such as SLR, to step in there, if you have these capabilities. And very often, it’s a portfolio. You really need to have the team to be able to acquire that portfolio, underwrite the portfolio, manage that portfolio. So these are not always standalone businesses. There are assets for sale. And we think those are very attractive opportunities.
But I will say in the past, when we have lost individual investments across some of our specialty finance businesses, including life sciences, where SPB was a dominant player, it was typically, by several 100 basis points to a regional bank. And so we’re just feeling that the lack of that competition is also helping us in our day to day business.
Erik Zwick: Thanks for taking my questions today.
Operator: The next question comes from Bryce Rowe with B. Riley.
Bryce Rowe: Thanks. Good morning.
Michael Gross: Good morning.
Bryce Rowe: Wanted to maybe follow up on some of Erik’s questioning there around, the environment that is providing some opportunities from within the banking space. Maybe Bruce, can you talk a little bit about, how widespread maybe the pullback is within that space? And then from a geographic perspective, how well suited the SLR platform is to take it to take advantage of? I mean is it pockets of the contrary or pockets of the regional bank space? Or is it more widespread than that?
Bruce Spohler: That’s a great question. Because to your point, it is a very regional business. We think that provides the opportunity and to some extent, a barrier for other entrants. It is a difficult — some of these lines of business are very difficult to grow organically other than on the margin, and having the opportunity to step into new gens [ph]. Because you do need feet on the street. As you know we have 19 offices around the country. Most of them are dedicated to our specialty finance businesses, both sourcing teams as well as underwriting teams, as well as management teams. I think what many people don’t appreciate is that these are asset management heavy of the loans. Once you make the loan, you’re monitoring the collateral so that you’re comfortable advancing against that collateral throughout your loan investment.
And so you need a big investment in people, and to your point does need to be regional. And so we are not seeing the dislocation in any specific region. But thankfully for us, we are finding opportunities in regions we don’t cover or industries we don’t cover. There are industry dedicated platforms that may just do factoring for the trucking sector. There are Canada-based companies, Midwest-based companies, we have a nice presence in Minneapolis and Salt Lake City, on the East Coast and the Southeast, but there are definitely pockets where we would like to have more penetration. And so dislocation feels to be widespread. And I think that we’re in the early days of participants making decisions about whether they want to exit, whether they want to JV.
We’ve had approaches to JV with people who want to still have attachment and touch points with those customers, with those corporate borrowers. But they don’t want to tie up their balance sheet. So they can partner with somebody like SLR, where we take on the assets, and they maintain the relationship, the cash management, and many of the Treasury and fee based businesses that are so lucrative for the bank. So the banks are taking a very strategic approach, and it varies across individual institutions rather than regions. But we’re open to options in the States.
Bryce Rowe: That’s great color. Appreciate it. Let’s see, maybe just shifting gears a little bit. Yeah, there’s a lot of talk about which way rates are going to move, and when. Wanted to get a sense for your portfolio or your balance sheets asset sensitivity to lower rates. How should we be thinking about different rates scenarios, over the next quarter or two? Thanks.
Bruce Spohler: I’ll kick it off for a second. To some extent, we benefit with rates staying elevated, because we do have very defensive portfolio. And as Michael mentioned, only 24% of it exposed to cash flow lending, rather than more asset-oriented strategies where you do have more cushion during higher rate environments, and more control over the investment because you have not only covenants but borrowing bases. So selfishly speaking, we do benefit by having elevated rates longer. I think it also keeps more competitors on the sidelines, as they deal with some stress in portfolios that people are starting to see, just in terms of covering this debt service, on top of inflationary pressures across their operating performance.
