Labor Market & Economy - The report suggests the U S economy is "not too bad" but inflationary worries remain and the job market feels like it is softening [7] - Unemployment rate rose due to a large jump in the number of people looking for work, increasing the labor force significantly [3] - Weekly jobless claims are at 220,000, similar to levels at the beginning of October [6] - Difficulties adjusting for college graduates who haven't found work may be causing measurement problems in the labor force [4][5] Federal Reserve (The Fed) - The Fed's next move is uncertain, with arguments for both holding and cutting rates based on job creation, inflation, and unemployment rate [2] - Fed Governor Lisa Cook suggests monitoring how unexpected losses in private credit may spread to the broader U S financial system due to increased complexity and interconnections with leverage firms [7] - The Fed may be raising the issue of private credit risks to draw attention, as they lack supervisory ability in this area [14] Private Credit & Financial System Risks - Private credit has grown tremendously, particularly in areas where regulators lack oversight [9] - Concerns exist about interconnections among private lenders and potential contagion if borrowers default [9][11] - Key indicators to watch for stress in the financial system include default rates and the rate of fallen angels [11] - Private lending is primarily to private companies, making it difficult to get a complete picture of the credit world, but subprime loan interest rates may offer insights [12]

Financial Data and Key Metrics Changes - For Q3 2025, the company's net investment income was approximately $5.6 million, or $0.07 per share, compared to approximately $5.5 million, or $0.08 per share, in the prior quarter [4] - The net asset value per share decreased to $1.95 from $2.06 in the prior quarter [4] - Total investment income for the third quarter was approximately $10.2 million, up from approximately $9.5 million in the prior quarter [4] - The company recorded combined net unrealized and realized losses on investments of approximately $7.5 million, or $0.09 per share, compared to losses of approximately $1.1 million, or $0.01 per share, in the prior quarter [4] Business Line Data and Key Metrics Changes - Investment activity included purchases of approximately $58.1 million and repayments of approximately $31.3 million during the quarter [5] - The company issued approximately 5.4 million shares of common stock, resulting in net proceeds of approximately $11.8 million [5] - Issued $74.8 million of 7.75% unsecured notes due July 2030 and fully repaid $34.8 million of 6.25% unsecured notes due April 2026 [5] Market Data and Key Metrics Changes - U.S. loan market performance was stable, with loan prices slightly decreasing from 97.07% of par to 97.06% of par [6] - The 12-month trailing default rate for the loan index increased to 1.47% from 1.11% at the end of June [6] - The distress ratio ended the quarter at 2.88%, down from 3.06% at the end of June [7] - U.S. leveraged loan primary market issuance was $133.7 billion, representing a 22% increase compared to the same quarter in the previous year [7] Company Strategy and Development Direction - The company focuses on portfolio management strategies designed to maximize long-term total return, taking a longer-term view towards investment strategy [7] - The company is considering additional purchases in CLO equity and junior debt tranches, which will be accompanied by appropriate levels of sales [16] Management's Comments on Operating Environment and Future Outlook - Management noted that the cash and equivalents balance increased to $51 million, primarily due to timing from ATM issuances [17] - The company is running a relatively lightly leveraged portfolio, which is a consideration for improving net investment income [19] Other Important Information - The board of directors declared monthly distributions of $0.035 per share for January, February, and March of 2026 [5] Q&A Session Summary Question: What types of investments were found attractive during the quarter? - The company purchased CLO equity pieces from top-tier managers, focusing on steady, predictable cash flow [12] - On the loan side, the focus was on higher quality credits with lower spreads and opportunistic trades in less liquid names [13][16] Question: What is the outlook for potential new additions in Q4? - The company anticipates focusing more on the secondary market for leveraged loans, capturing opportunities at par or below [16] Question: What is the reason for the increase in cash and equivalents? - The increase is primarily attributed to timing related to ATM issuances [17] Question: Has there been consideration for a reverse stock split? - The company is continuously considering viable ideas, including a reverse stock split [18] Question: What levers are available to improve the run rate of net investment income? - The company is considering its lightly leveraged portfolio as one element to improve net investment income [19]