Dylan Hines

Dylan Hines asked about the inflection point that led to the current nonaccrual rates, contrasting them with last quarter's expectations of decreasing nonaccruals (pro forma guide of 3.6% on cost and 1.9% on fair value after the PRG restructuring).

Answer

Dan Pietrzak, Chief Investment Officer and President, clarified that the 3.6% figure was a pro forma estimate after PRG's removal, not a guide. He explained that three of the new nonaccruals are small, with the primary drivers being Dental Care Alliance (DCA) and Lionbridge Technologies. DCA's situation involved live conversations with subordinate debt holders that took an unexpected turn, while Lionbridge's active sales process was complicated by AI's impact on the business's overall mood, making the sale difficult. These events were the key drivers of the increased nonaccruals.

Dylan Hines asked about the inflection point that led to the current higher nonaccrual rates, contrasting them with last quarter's expectations of decreasing nonaccruals (pro forma 3.6% on cost and 1.9% on fair value after the PRG restructuring).

Answer

Dan Pietrzak, Chief Investment Officer and President, clarified that the 3.6% figure was a pro forma estimate after PRG's removal, not a forward-looking guide. He identified Dental Care Alliance (DCA) and Lionbridge Technologies as the primary drivers of the nonaccrual increase. DCA's situation involved complex discussions with junior debt holders, leading to an unexpected outcome, while Lionbridge's active sales process was hindered by AI's impact on market sentiment, making a sale difficult.