CION Investment (US:CION)2022-05-15 21:30Financial Data and Key Metrics Changes - Net investment income for Q1 2022 increased to $0.34 per share compared to $0.32 per share for Q4 2021, reflecting growth in the portfolio with net funded portfolio activity of $77 million [7] - Total investment income for the quarter was $41.7 million, up from $40.4 million in the prior quarter, while total operating expenses increased to $22.2 million from $21.7 million [27] - The debt-to-equity ratio at the end of the quarter was 95%, up from 89% at the end of Q4 2021, indicating growth through additional leverage [28] Business Line Data and Key Metrics Changes - New investment commitments totaled $155 million, with 15 new investments funded, over 50% of which were to new portfolio companies [8][22] - The portfolio composition at quarter end included 198 investments across 115 portfolio companies, with 93.9% in senior secured debt, including 91.8% in first lien debt [23] Market Data and Key Metrics Changes - The total new market loan issuance was $149.1 billion, a 35% decline from Q1 2021, with new issue spreads for institutional loans increasing to 453 basis points in March 2022 [18] - Despite high net inflows into the loan market, the overall sentiment shifted negatively, with key indexes reflecting declines in performance [20] Company Strategy and Development Direction - The company aims to pursue growth in a prudent and measured manner, focusing on high-quality investment opportunities while managing risks [14] - The strategy includes utilizing leverage primarily to finance first-lien debt investments rather than relying on the capital structure of portfolio companies [14] Management's Comments on Operating Environment and Future Outlook - Management acknowledged rising interest rates and their potential impact on borrowing costs but expects a net positive effect on net investment income as rates rise [10] - The company remains optimistic about future prospects, emphasizing its focus on high-quality senior secured investments and credit discipline [32] Other Important Information - The company successfully increased its total debt capacity by $150 million during the quarter, enhancing liquidity to support growth [9][13] - The NAV at the end of the quarter was $16.20 per share, a slight decrease from $16.34 per share at the end of Q4 2021, driven by mark-to-market adjustments [28] Q&A Session Summary Question: Insights on new origination in business services - The company indicated that the focus on business services was a combination of defensive underwriting and the available deal flow in the market [34][35] Question: Impact of liquid market conditions on private credit spreads - Management noted that they are always monitoring the liquid market for good value credits, but recent conditions have not been attractive for spreads [36][37] Question: Coordination of 10b5-1 with the next lock-up - Management confirmed that the next lock-up is on July 5, and they plan to refocus on the 10b5 plan around late Q3 and Q4 [39]