BlackRock TCP Capital (US:TCPC)2020-08-06 22:14Financial Data and Key Metrics Changes - The net asset value increased by 3.8% in Q2 2020, reflecting a 1.6% net market value gain on investments [6][7] - Net investment income for Q2 was $0.36 per share, fully covering the dividend of $0.36 per share [28] - The overall effective yield on the debt portfolio decreased to 9.8%, primarily due to a significant decline in LIBOR [22][23] Business Line Data and Key Metrics Changes - The portfolio had a fair market value of approximately $1.6 billion, substantially unchanged from the prior quarter [13] - 92% of investments are in senior secured debt, with limited exposure to severely affected sectors [13][14] - The company deployed $56 million in new investments during Q2, with net dispositions of $46 million [17] Market Data and Key Metrics Changes - Total non-accruals were just 0.6% of the portfolio at fair value as of June 30 [7] - The company has limited direct exposure to sectors severely impacted by the pandemic, such as retail and airlines [13] - The company’s loans to impacted industries are supported by strong collateral protections [13] Company Strategy and Development Direction - The company is focused on preserving capital for shareholders while seeking to invest in companies with strong management teams [42] - The strategy includes emphasizing seniority, industry diversity, and leading negotiations on deal terms [21] - The company aims to help portfolio companies navigate the current dislocation while delivering attractive returns [43] Management's Comments on Operating Environment and Future Outlook - There is significant uncertainty about the remainder of 2020, but the pace of new deals has picked up modestly [41] - The company remains cautious in deployment but is in a solid position to opportunistically invest [41] - Management expressed confidence in the portfolio's ability to perform through economic cycles [42] Other Important Information - The board decided to reduce the quarterly dividend to $0.30 per share due to the decline in LIBOR and uncertainty in the operating environment [12] - The company welcomed Andrea Petro to the board, enhancing diversity [10] - Total liquidity at quarter-end was $348 million, including available leverage of $328 million [37] Q&A Session Summary Question: Nature of new loans and competition level - The new loans included strategic acquisitions and were made under favorable terms due to the company's strong relationships with borrowers [48][49] Question: Continuation of amendment activity - Amendment activity has decreased but remains present as companies adjust to the current environment [62] Question: Update on airline loans and collateral values - Loans to Mesa and OneSky continue to perform, with collateral values supported by strong asset backing [73][74] Question: Dividend sustainability and prepayment expectations - The board set the dividend at a sustainable level, considering historical prepayment activity and current operating conditions [78][79] Question: LIBOR floors and pricing for loans sold - The weighted average LIBOR floor across the portfolio is 1.1%, and the company was pleased with the prices achieved on loans sold [84]