Investcorp Credit Management BDC(US:ICMB)2021-02-11 03:24Financial Data and Key Metrics Changes - For the quarter ending December 31, 2020, the net investment income was $3 million or $0.22 per share, with a fair value of the portfolio at $257.7 million compared to $261.3 million at September 30 [20][22] - The portfolio's net increase from operations this quarter was approximately $3.1 million, with new debt investments having an average yield of 11.8% and realizations and repayments averaging 3.8% [20][21] - The weighted average yield of the debt portfolio increased by 61 basis points to 9.76% from September 30 [22] Business Line Data and Key Metrics Changes - The company made first lien investments in four portfolio companies, including three new investments, and had full realizations on four investments during the quarter [12][14] - The largest industry concentration was in professional services at 12%, followed by energy equipment and services at 10.3% [17] Market Data and Key Metrics Changes - The company has zero investments in the hospitality, restaurant, and traditional retail sectors by design, indicating a strategic focus on sectors less affected by the pandemic [9] - The portfolio companies are diversified across 24 GICS industries, with a total of 37 portfolio companies as of December 31, down from 38 at September 30 [18][22] Company Strategy and Development Direction - The company aims to maintain leverage between 1.25 times to 1.5 times, with current leverage at 1.43 times, down from 1.53 times [24][26] - The focus remains on core middle market loans, including club deals, to manage the portfolio through the current economic cycle [30][31] Management's Comments on Operating Environment and Future Outlook - Management noted robust activity in the quarter as economic and political uncertainty began to resolve, leading to increased primary loan activity [7] - The company is cautious about competition in the market, particularly regarding tighter pricing and weaker structures in larger deals [30] Other Important Information - The Board declared a distribution of $0.15 per share for the quarter ended December 31, 2020, and a supplemental distribution of $0.03 per share [27] - The company has made commitments to purchase ICMB shares, with 281,775 shares purchased since the inception of the program [28] Q&A Session Summary Question: Was Deluxe Entertainment Services one of the new investments made in the quarter? - Yes, it was part of facilitating the sale of the company, and the loan was fully paid out [34][35] Question: What was the reason for the change in yield being up roughly 50 basis points? - The average weighted yield was at 7.4%, with new investments averaging 10.64% [38][39] Question: How has COVID affected relationships with partners and sourcing business? - The company continues to partner with the same and new partners, maintaining a dialogue for sourcing new opportunities [60][61] Question: What is the status of the investment in PGi? - PGi was marked down by $2.8 million during the quarter due to a slowdown in recovery from COVID [50][52] Question: Why is the Deluxe piece on non-accrual if the investment was repaid? - It was a bridge loan to facilitate the sale, and the current valuation reflects the probability of collecting from escrows created during the sale [58][59]