Paul Johnson's questions to New Mountain Finance Corp (NMFC) leadership • Q3 2024
Question
Paul Johnson from Keefe, Bruyette & Woods sought clarification on the strategy to increase cash-paying assets, asking if it involves underwriting new assets without PIK options or simply expecting borrowers not to elect the PIK option.
Answer
John Kline, CEO, clarified that the primary strategy for reducing PIK exposure is to exit certain large, 100% PIK positions from prior vintages. He added that the company remains comfortable offering minor PIK options on new unitranche loans that are predominantly cash-pay, as the main goal is to reduce the concentration from older, fully PIK assets.