LCD: What are you doing to defend your portfolio of loans, both from the encroaching broadly syndicated loan market and competing private credit lenders?

One of the things we like about the middle market compared to large cap buyouts is that there is definitionally less competition from BSL. While we invest in leading companies with a lot of growth potential, a $30M EBITDA business isn’t likely to go BSL, so compared to some other direct lenders, the BSL market hasn’t been as much of a direct headwind to us.

On the competition from other lenders point, you have seen increased interest in the space, which we view as others realizing the attractiveness of a market that we have been leaders in for 30-plus years. We view our experience, the deep sponsor relationships we have forged over three decades, our expertise, and our position as part of a $400-plus billion AUM manager as differentiators that position us as a long-term partner for borrowers and make us a lender of choice for many top-tier sponsors in our market. Additionally, much of the capital entering the sector in recent years has focused on that upper end of the market, which, as I mentioned, we view as less attractive than the core middle market.

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