Carlyle Secured Lending(US:CGBD)2021-02-24 21:57Financial Data and Key Metrics Changes - The company generated net investment income of $0.38 per common share and declared a total dividend of $0.37 per share, which includes a base dividend of $0.32 and a supplemental dividend of $0.05 [9][28] - Net asset value per share increased by 2.5% quarter-over-quarter from $15.01 to $15.39, driven by improved loan valuations and credit performance [10] - Total investment income for the fourth quarter was $44 million, up from $43 million in the prior quarter, attributed to increased OID accretion, prepayment fees, and higher fee income [26] Business Line Data and Key Metrics Changes - The fourth quarter saw an active origination environment with $205 million deployed across 26 transactions at an average yield of 8.1%, outpacing repayments of $133 million at an approximate yield of 7.8% [20] - Total dividend income from joint ventures was $6.5 million, up over 10% versus the prior quarter, while total assets at the JVs remained flat at about $1.3 billion [29] Market Data and Key Metrics Changes - The U.S. GDP growth has slowed somewhat in the first quarter of 2021, but a strong rebound is expected due to fiscal stimulus and vaccinations [18] - The leverage finance markets have shown buoyant conditions, with demand for high yield and syndicated loans outstripping supply [19] Company Strategy and Development Direction - The company aims to leverage its relationship with Carlyle to enhance origination capabilities and diversify risk factors in its portfolio [13] - The focus remains on defensive asset selection and portfolio construction to generate sustainable income for shareholders [12] Management's Comments on Operating Environment and Future Outlook - Management expressed confidence in the credit trajectory of the portfolio and prospects for sustained income generation entering 2021 [7] - The company remains vigilant on risk but believes that COVID-impacted borrowers have largely addressed their liquidity issues [24] Other Important Information - The company resumed its share repurchase program, repurchasing 1 million shares, resulting in $0.08 of accretion to net asset value [10] - Total debt outstanding was approximately $1 billion at quarter end, down from $1.1 billion, providing flexibility to invest in new opportunities [34] Q&A Session Summary Question: Can you provide insights on the amendments and the recovery of portfolio companies? - Management noted that borrowers have generally addressed liquidity issues, with some sectors like travel and aerospace starting to show signs of recovery [40][41] Question: What happens at maturity of the convert? - The convert has no maturity date, allowing for various optional redemption or conversion scenarios [43] Question: Will the core dividend be restored? - Management plans to maintain the current dividend policy of $0.32 regular plus supplemental dividends, without immediate plans to change [46][45] Question: How do you expect the average size of your borrower to change? - The company does not anticipate a significant change in borrower size but will adjust based on market conditions [49] Question: Are you experiencing any pressure on LIBOR floors? - In the core middle market, there is stability in LIBOR floors, while some pressure is noted in the upmarket segment [53] Question: What is the current average floor on your debt investments? - The average floor across the total portfolio is approximately 80 to 90 basis points, with most loans having a typical floor of 1% [56][57] Question: Do you anticipate any sizable repayments in the near term? - Management expects a return to more normalized levels of repayments throughout 2021, with limited repayments noted in the first quarter [59]