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KBW Announces Index Rebalancing for Second-Quarter 2025

Business Upturn

a day ago

Business
Business Upturn

KBW Announces Index Rebalancing for Second-Quarter 2025

NEW YORK, June 13, 2025 (GLOBE NEWSWIRE) — Keefe, Bruyette & Woods, Inc., a leading specialist investment bank to the financial services and fintech sectors, and a wholly owned subsidiary of Stifel Financial Corp. (NYSE: SF), announces the upcoming index rebalancing for the second quarter of 2025. This quarter, there are constituent changes within one of our indexes: KBW Nasdaq Premium Yield Equity REIT Index (Index Ticker: KYX, ETF Ticker: KBWY). These changes will be effective prior to the opening of business on Monday, June 23, 2025. As part of this rebalancing, below are the component-level changes across impacted indices: KBW Nasdaq Premium Yield Equity REIT Index (Index Ticker: KYX; ETF Ticker: KBWY) Drop (1) : SITE Centers Corp. (NYSE: SITC) Several of the KBW Nasdaq indexes have tradable exchange‐traded funds licensed: KBW Nasdaq Bank Index (Index Ticker: BKXSM, ETF Ticker: KBWBSM); KBW Nasdaq Capital Markets Index (Index Ticker: KSXSM); KBW Nasdaq Insurance Index (Index Ticker: KIXSM); KBW Nasdaq Regional Banking Index (Index Ticker: KRXSM, ETF Ticker: KBWRSM); KBW Nasdaq Financial Sector Dividend Yield Index (Index Ticker: KDXSM, ETF Ticker: KBWDSM); KBW Nasdaq Premium Yield Equity REIT Index (Index Ticker: KYXSM, ETF Ticker: KBWYSM); KBW Nasdaq Property and Casualty Insurance Index (Index Ticker: KPXSM, ETF Ticker: KBWPSM); KBW Nasdaq Global Bank Index (Index Ticker: GBKXSM); KBW Nasdaq Financial Technology Index (Index Ticker: KFTXSM, ETF Ticker: Not all of the listed securities may be suitable for retail investors; in addition, not all of the listed securities may be available to U.S. investors. European investors interested in FTEK LN can contact Invesco at U.S. investors cannot buy or hold FTEK LN. An investor cannot invest directly in an index. About KBW KBW (Keefe, Bruyette & Woods, Inc., operating in the U.S., and Stifel Nicolaus Europe Limited, also trading as Keefe, Bruyette & Woods Europe, operating in Europe) is a Stifel company. Over the years, KBW has established itself as a leading independent authority in the banking, insurance, brokerage, asset management, mortgage banking and specialty finance sectors. Founded in 1962, the firm maintains industry‐leading positions in the areas of research, corporate finance, mergers and acquisitions as well as sales and trading in equities securities of financial services companies. Media Contact Neil Shapiro, (212) 271-3447 [email protected]

Yahoo

a day ago

Business
Yahoo

KBW Announces Index Rebalancing for Second-Quarter 2025

NEW YORK, June 13, 2025 (GLOBE NEWSWIRE) -- Keefe, Bruyette & Woods, Inc., a leading specialist investment bank to the financial services and fintech sectors, and a wholly owned subsidiary of Stifel Financial Corp. (NYSE: SF), announces the upcoming index rebalancing for the second quarter of 2025. This quarter, there are constituent changes within one of our indexes: KBW Nasdaq Premium Yield Equity REIT Index (Index Ticker: KYX, ETF Ticker: KBWY). These changes will be effective prior to the opening of business on Monday, June 23, 2025. As part of this rebalancing, below are the component-level changes across impacted indices: KBW Nasdaq Premium Yield Equity REIT Index (Index Ticker: KYX; ETF Ticker: KBWY) Drop (1): SITE Centers Corp. (NYSE: SITC) Several of the KBW Nasdaq indexes have tradable exchange‐traded funds licensed: KBW Nasdaq Bank Index (Index Ticker: BKXSM, ETF Ticker: KBWBSM); KBW Nasdaq Capital Markets Index (Index Ticker: KSXSM); KBW Nasdaq Insurance Index (Index Ticker: KIXSM); KBW Nasdaq Regional Banking Index (Index Ticker: KRXSM, ETF Ticker: KBWRSM); KBW Nasdaq Financial Sector Dividend Yield Index (Index Ticker: KDXSM, ETF Ticker: KBWDSM); KBW Nasdaq Premium Yield Equity REIT Index (Index Ticker: KYXSM, ETF Ticker: KBWYSM); KBW Nasdaq Property and Casualty Insurance Index (Index Ticker: KPXSM, ETF Ticker: KBWPSM); KBW Nasdaq Global Bank Index (Index Ticker: GBKXSM); KBW Nasdaq Financial Technology Index (Index Ticker: KFTXSM, ETF Ticker: Not all of the listed securities may be suitable for retail investors; in addition, not all of the listed securities may be available to U.S. investors. European investors interested in FTEK LN can contact Invesco at U.S. investors cannot buy or hold FTEK LN. An investor cannot invest directly in an index. About KBW KBW (Keefe, Bruyette & Woods, Inc., operating in the U.S., and Stifel Nicolaus Europe Limited, also trading as Keefe, Bruyette & Woods Europe, operating in Europe) is a Stifel company. Over the years, KBW has established itself as a leading independent authority in the banking, insurance, brokerage, asset management, mortgage banking and specialty finance sectors. Founded in 1962, the firm maintains industry‐leading positions in the areas of research, corporate finance, mergers and acquisitions as well as sales and trading in equities securities of financial services companies. Media Contact Neil Shapiro, (212) 271-3447shapiron@

Yahoo

a day ago

Business
Yahoo

KBW Announces Index Rebalancing for Second-Quarter 2025

Yahoo

16-05-2025

Business
Yahoo

Q1 2025 Crescent Capital BDC Inc Earnings Call

Daniel Mcmahon; Senior Vice President, Head of Public Investor Relations; Crescent Capital BDC Inc Jason Breaux; Chief Executive Officer; Crescent Capital BDC Inc Henry Chung; President; Crescent Capital BDC Inc Gerhard Lombard; Chief Financial Officer; Crescent Capital BDC Inc Paul Johnson; Analyst; Keefe, Bruyette & Woods Robert Dodd; Analyst; Raymond James Finian O'Shea; Analyst; Wells Fargo Mickey M. Schleien; Analyst; Ladenburg Thalmann Operator Good morning and welcome to Crescent Capital BDC Inc.'s first quarter ended March 31, 2025, earnings conference call. Please note that Crescent Capital BDC Inc may be referred to as CCAP, Crescent BDC, or the company throughout the call. I'll start with some important reminders. Comments made over the course of this conference call and webcast may contain forward-looking statements and are subject to risks and uncertainties. The company's actual results could differ materially from those expressed in such forward-looking statements for any reason, including those listed in its SEC filings. The company assumes no obligation to update any such forward-looking statements. Please note that the past performance or market information is not guaranteed of future results. I'll now turn the call over to Dan McMahon. Daniel Mcmahon Thank you. Yesterday, after the market closed, the company issued its earnings press release for the first quarter ended March 31, 2025. And posted a presentation to the IR section of its website at The presentation should be reviewed in conjunction with the company's Form 10Q filed yesterday with the SEC. As a reminder, this call is being recorded for replay purposes. Speaking on today's call will be CAP's Chief Executive Officer, Jason Bro, President Henry Chung, and Chief Financial Officer, Gerhard Lombard. With that, I'd now like to turn it over to Jason. Jason Breaux Thank you, Dan. Hello, everyone, and thank you all for joining us. I'll start today's call by summarizing our first quarter results, follow that with some thoughts on the market and touch on our portfolio. In terms of first quarter earnings, we reported net investment income of $16.6 million or $0.45 per share compared to $20.5 million or $0.55 per share in the fourth quarter. This quarter's NII decline was primarily driven by the following factors the impact of lower base rates resulting from the two FOMC rate cuts during the fourth quarter of last year. The roll off of certain one time and non-recurring items and a reduction in dividend income from the Logan JB resulting from the end of the reinvestment period. The last driver of the quarterly change in net investment income was our loans on non-accrual, which increased to 3.5% and 1.8% of our debt investments at cost and fair value, respectively at the end of the quarter. Well, we are not pleased with the increase in non-accruals, the four names that were added this quarter are all first lane positions and represent less than 1.2% of the total portfolio at fair value and resulted from one-off credit events at certain borrowers that were independent from one another. We've consistently taken a pre-emptive and rigorous approach to both our watch lists and re-evaluating the accrual status of our investments that have not performed to underwriting expectations, recognizing that there are a wide variety of approaches to how managers think about these categorizations. Looking ahead, we believe that this quarter's earnings are reflective of our earnings baseline in the near term. With potential near term tailwinds from our SPV asset-based facility repricing and right sizing that we completed at the beginning of the quarter, which Gerhard will discuss in more detail. As well as the full quarter impact of our portfolio and target leverage. As our baseline view, this near-term outlook does not reflect the impact of any further loans we may place on non-accrual or changes in base rates. Gerhard will take you through our financial results and outlook in more detail. So let me provide an update on what we're seeing in the market and how we are positioned. Quarter one started off as an active deployment quarter. However, our near-term expectation for a sustained pickup in M&A has been tempered by tariff announcements by the White House. The 90-day tariff pause has prompted some of our sponsors to take a wait and see approach with regards to new platform activity, further adding to the backlog of deal activity that has existed for many P/E owned assets. However, we have still seen attractive investment opportunities even following the liberation Day announcements that fit our core investment mandate of first in investments in portfolio companies backed by sponsors we have supported in multiple deals. The recent volatility requires us to maintain our selectivity and underscores the importance of consistently applying our underwriting process. For our sponsors, we believe that our tenure in the direct lending space and depth of our relationships, which have been cultivated over decades, underscore our value proposition and the ability to serve as a true partner in developing bespoke capital structures. We continue to lead the majority of our transactions and drive stringent documentation. Attributes that are much more difficult to accomplish in the upper middle market BSL replacement segment in our view. Let's shift gears and discuss the investment portfolio. Please turn to slides 13 and 14 of the presentation, which highlights certain characteristics of our portfolio. We ended the quarter with just over $1.6 billion of investments at fair value across a highly diversified portfolio of 191 companies with an average investment size of approximately 0.5% of the total portfolio. Our private credit origination platform activity has provided us the opportunity to nearly double the number of portfolio companies in our portfolio since listing, even after taking into account prior acquisitions. We believe that diversification is an important component of providing stability to our shareholders in order to help mitigate the impact of one-off credit events on both our investment income and net asset value. Our top 10 largest borrowers represented 18% of the portfolio as we are believers in modulating credit risk through position size, which we believe has served Crescent well in previous credit cycles. We have consistently maintained an investment portfolio. That consists primarily of first lien loans since inception. Collectively representing 91% of the portfolio at fair value at quarter end. We continue to focus our investing efforts on noncyclical industries and remain well diversified across 20 broad industry categorizations. And we will provide some additional detail on this in his comments, but our credit framework has positioned our portfolio in a way that naturally limits our exposure to the most severe and direct impacts of the recent tariff announcements. Finally, our investments are almost entirely supported by well capitalized private equity sponsors with 99% of our debt portfolio in sponsor backed companies as a quarter end. We have partnered with our sponsors to invest in well capitalized borrowers with significant equity capital beneath us, resulting in a 39% weighted average loan to value across our investments as a quarter end. Please click the slide 17, which shows the trends and internal performance ratings. Overall, we have seen stability in the fundamental performance of our portfolio, resulting in consistency in our risk ratings and a weighted average portfolio risk rating of 2.1. On the right-hand side of the slide, you'll see that one in two rated investments representing names that are performing at or above our underwriting expectations continue to represent the lion's share or 87% of our portfolio at fair value. Moving on to our dividend, we declared a second quarter 2025 regular dividend of $0.42 per share. The dividend is payable on July 15, 2025, to stockholders of record as of June 30. Additionally, the second in a series of three previously announced $0.05 per share special dividends related to undistributed taxable income will be paid on June 13 to stockholders of record as of May 30. We have earned our dividends since CCAP's inception, and we note that our NII continues to be in excess of our base dividend in the first quarter. We have prioritized consistency and NAB stability over the long term as opposed to simply delivering a high dividend yield. This principle guided us to not aggressively raise our base dividend when the rate hiking cycle began in 2022. This marks our 37th consecutive quarter of earning our regular dividend at CCAP. Which we've accomplished while maintaining a for share within a tight band. We are proud of this track record and are focused on earning our dividend for the foreseeable future. Our view is that dividend yields in the BDC space remain elevated given the current base rate outlook and lack of meaningful fundamental headwinds that have been demonstrated in corporate credit portfolios to date. Our positioning has and always will be for the long term. With that, I will now turn the call over to Henry. Henry. Henry Chung Thanks, Jason. Please turn to slide 15 where we highlight our recent activity. Gross deployment in the first quarter totalled $105 million as you can see on the left-hand side of the page, of which 98% was in first lien investments. During the quarter, we closed 10 new platform investments totalling $78 million. These new investments or loans to private equity backed companies with a weighted average spread of approximately 565 basis points, reflecting attractive opportunities we are still able to capture while applying the selectivity inherent in our underwriting. The remaining $27 million came from incremental investments in our existing portfolio companies. The 105 million in gross deployment compares to approximately $78 million in aggregate exits, sales and repayments, resulting in net deployment of approximately $27 million for the first quarter. The liberation Day tariff announcements prompted a platform-wide bottom-up review of the potential tariff impact on all of our portfolio companies. Given our focus on service businesses with low materials components and cost of goods sold and high free cash flow conversion, the overall direct material exposure is modest at 4%. Additionally, investing in the core and lower middle market both for US and European portfolio companies naturally points us to businesses that primarily serve their respective domestic markets with limited exposure to cross-border trade from a revenue perspective. We performed a review of the potential exposure through multiple lenses. First, manufacturing businesses that source raw materials from abroad. Second, service businesses that source intermediate or finished goods from abroad. And third, business models closely tied to the transportation of goods or export of goods to the United States. For the vast majority of these businesses, we did identify mitigating factors with the ability to pass through price increases and limited supplier concentration by individual supplier or geography. The ability to increase prices was demonstrable for most of our portfolios during the recent inflationary periods experienced, particularly in labor, which represents a much larger component of direct costs in our portfolio companies and materials. Although the full extent of tariffs, including knock-on effects, remain to be fully seen, we believe CCAP's portfolio is well positioned to weather potential volatility. Turning back to the broader portfolio, please flip the 516. You can see that the weighted average yield of our income producing securities at cost came down 50 basis points quarter over quarter to 10.4%, reflecting the impact of changes in base rates. As of March 30th, 97% of our debt investments at fair value were floating rate with a weighted average floor of 79 basis points, which compares to our 55% floating rate liability structure based on debt drawn with no floors. Overall, our investment portfolio continues to perform well, with year over year weighted average revenue and even outgrowth. The weighted average interest coverage of the companies in our investment portfolio at quarter end improved to two times. As a reminder, this calculation is based on the latest annualized base rates each quarter. In terms of managing fixed operating costs, approximately 73% of aggregate revolver capacity was available across the portfolio at the quarter end, so our portfolio companies in the aggregate remained well positioned to address fixed charges with operating cash flows and available balance sheet liquidity. With that, I'll now turn it over to Gerhard. Gerhard Lombard Thanks, Henry and hello everyone. Jason previously noted, our net investment income per share of $0.45 for the first quarter of 2025 compared to $0.55 per share for the prior quarter. There were four key drivers that drove the change in this quarter's NII. The first driver was lower base rates because our investments typically have their coupons reset at the beginning of each quarter while our floating rate liabilities reset on a daily or monthly basis, there is a lag effect on the full quarter impact from changes in base rates on that investment. This is best highlighted on slide 16. This was the largest contributor to the quarter's NII decline, resulting in approximately $0.04 of net impact. The second driver was the runoff of one-time non-recurring income. Specifically, we had runoff of one-time pick income from two portfolio companies, which contributed $0.03 of NII last quarter. The third driver was the Logan JV where dividend income declined by $0.03 per share quarter over quarter. As a reminder, we acquired the Logan JV in connection with our acquisition of the first Eagle BDC in 2023. Its largest investment is a middle market CLO. We pre-emptively ended the reinvestment period for the CLO at the beginning of the quarter, almost five months before the official expiration of the reinvestment period, given elevated broadly syndicated loan prices at the start of the year. Following the volatility in the broadly syndicated loan market after the Liberation Day announcements, we opportunistically reinvested a portion of the proceeds we had held back to take advantage of attractive entry points for high quality BSL borrowers before the contractual end of the reinvestment period. Going forward, our expectation is that the dividend income attributed to the Logan JB will reduce over time as the CLO leverages with potential lumpiness in quarter-to-quarter distribution amounts. Once the CLO is fully wound down, which we estimate in our base case to take approximately 24 months, we expect to unwind the joint venture and redeploy the proceeds into crescent directly originated investment opportunities. The fourth driver Was loans we placed on non-accrual during the quarter, which drove a $0.02 per share decrease in NII on a quarter over quarter basis. As Jason noted in his comments, a diverse portfolio with minimal single obligor concentration helped mitigate outsized impacts to our investment income from non-accruals. Our GAAP earnings per share for the first quarter of 2025 was $0.11. The net investment income of $0.45 was offset by $0.34 per share of net unrealized and realized losses. As of March 31, a stockholder's equity was $727 million resulting in net asset value per share of $19.62. Now let's shift to our capitalization and liquidity. I'm on slide 19. In December 2024, we priced $115 million of new senior unsecured notes broken down into two tranches. $35 million of senior unsecured notes due in February 2028 and $80 million of senior unsecured notes due in February 2030. Both tranches were fully drawn during the first quarter of 2025. At the beginning of April, we right sized our STV as a facility from $500 million to $400 million and reduced the spread by 50 basis points from 245 to 195. This facility resizing provides us with sufficient capacity to address any potential draws on our unfunded commitments while minimizing interest expense related to excess unfunded capacity. Our equity structure reflects our target size and leverage with our current equity base today, and we have ensured that our borrowing capacity is consistent with our investment needs. As you can see on the right side of the slide, 76% of total committed debt now matures in 2028 or later, a figure that was 42% quarters ago. So, we're pleased with our progress here. The weighted average stated interest rate on a total borrowing was 6.36% as of quarter end. Pro forma for the SPV facility amendment, the weighted average interest rate would be 6.17%. This quarter's net deployment brought our debt-to-equity ratio up from 1.19 times in the prior quarter to 1.25 times, which is within our stated target leverage range of 1.1 to 1.3 times. As Jason noted, for the second quarter of 2025, a board declared a regular dividend of $0.42 per share. Additionally, the second of three previously announced $0.05 per share special cash dividends is tabled in June. Our existing variable supplemental dividend framework remains in effect as well. The cap will not pay quarter two supplemental dividend as the measurement test cap exceeded 50% of the quarter's excess available. And with that, I'd like to turn it back to Jason for closing remarks. Jason Breaux Thank you, Gerhard. Historically, in periods of market volatility, Crescent's focus on disciplined credit underwriting, capital preservation. Strong free cash flow generation and robust debt service coverage has enabled us to stay on the right side of performance and returns across managers. In clothing, we believe Crescent and CCAP will continue to be on the right side of this performance dispersion spectrum over the long term, and we look forward to delivering on that in the quarters to come. As always, we thank you for joining our call today and look forward to connecting with many of you soon, and with that operator we can open the line for questions. Operator We are now opening the floor for question-and-answer session. (Operator Instructions) Your first question comes from the line of Paul Johnson of KBW. Your line is now open. Paul Johnson Yeah, good afternoon. Thank you for taking my questions. First one just on one of the new rules this quarter, new era of technology it was marked around 71, I believe that reflect the restructuring that was recently announced for that company. And I guess the second question to that as well it looks like it might be more of a non-traditional deal for you. It looks like it might be a potentially larger company than what you are normally. Do, maybe I'm wrong there, but if you could, give us, I guess your idea on that as well, that'd be helpful. Thanks. Henry Chung Hey Paul, this is Henry. Well, with respect to new era, the, I say the mark as you noted here is, kind of be in line with, where we expect to ultimately, restructure that name it just given the timing here that I was reflective of the latest view on the earnings outlook at the time when we did our marks, but. I would expect that to be kind of roughly in line and could you, for your second part of the question, could you. A repeat which company you were asking about. Paul Johnson The same company. Yeah, I just, I, correct me if I'm wrong, but it looks like the company might be a little bit larger than what you've traditionally targeted, I was wondering if that's kind of a non-traditional deal or off there. Jason Breaux Well, hey, it's Jason. I'm just trying to clarify here I knew era on our books has not yet restructured. It sounded like you were citing a company that had restructured recently. Paul Johnson Yeah, I guess maybe I maybe I'm referencing them all in one, but I thought that there was a Yeah, potential restructuring or something going on with that company, but. I'm wrong, I can go to the next question. Jason Breaux Interesting, we can certainly reconcile and take it offline with you. To better understand if we're talking about the same company. Henry Chung Yeah, that's fine. Paul Johnson And then I guess just kind of going along with just the no rules, so wondering if you just kind of tell us maybe about the presence just kind of overall approach to working toward a resolution if it's kind of the drive fast to a. A solution to protect value or you know this this the firm kind of takes a longer game approach here and willing to fight it out to salvage value here but wondering kind of what the underlying approach is here with some of these workout situations. Jason Breaux Yeah, maybe I can start, and Henry can chime in. Crescence approach to difficult situations, typically restructuring is really first and foremost to preserve our capital and there are a variety of ways that we can do that. Ideally, if we're partnered with a private equity sponsor that a Continues to want to support the company in the form of capital and stewardship. If we feel like they're equipped to do that and the right the right group to do that, we will try to be constructive and find ways to come to an arrangement to allow them to stay involved. That said, if that is not an available option or it's not in our view a value maximizing option. We can go in a different direction which could be a few different alternatives. It could be to put the company up for sale at that point in time. It could be to reorganize the company. Through a balance sheet restructuring and take ownership, we've done all of those things in the past, and I would expect to use all of those options at our disposal in any given situation really with the foremost interest and priority and being to protect our investment. Henry Chung Yeah, I think just to add to that, one thing that we don't do when it comes to taking the approach of non-accruals is just looking to exit via a secondary sale as quickly as possible, generally what, given where our investment focus is being top of the capital structure, there's still significant enterprise value at play in a non-accrual situation that, requires. Work and time and both of those are obviously factors that we're wanting to contribute as well as capital to the extent that there's some short-term capital needs of the business that we can help solve. So, I think to answer the first part of your question more succinctly, like, yes, we do take the longer-term view and we're able to do so because of how our positioned within the capital structure. And able to make sure that we're not doing anything in a rash manner. Paul Johnson Thank you for all that. And then this last one for me, could you just tell us maybe roughly how much of the portfolio, that's been sort of crescent led or crescent sort of originated deals, that's all for me. Thank you. Henry Chung Yeah, so as I say here today, about 8% of the total fair value is acquired assets. The remaining 92% are loans that we acquired from either First Eagle or Alentra. There's only, there's really only one position of size from the Al Centra acquisition to date, but the vast majority is Crescent originated assets. Operator Your next question comes from the line of Robert Dodd of Raymond James; your line is now open. Robert Dodd Okay, one on Logan first. I mean, can you explain, I mean, I get you pre-empted the end of the reinvestment period, but I mean, effectively the dividend dropped almost 50% sequentially. I get, it's going to wind down and over the next 24 months, right? I mean, I would have expected the dividend to decline over that kind of time period rather than suddenly as soon as and then. Declined further from that lower level. So can you explain what the driver of the big sequential decline was given, I mean, the fair value of the portfolio was written or the position or the equity position was written up in the quarter versus where it was last quarter. So, what was behind that big sequential decline just because the reinvestment period ended? Henry Chung Yeah, so there's two components. This is Henry, thanks for the question. There are two components to the Logan dividend, the two largest components. We hold two tranches of the underlying middle market COO. There's a mezzanine tranche, which provides kind of a stated consistent coupon, and then there's an equity tranche which pays out based on residual cash flows. The determination date of what the residual cash flows is, there's actually about a month and a half timing mismatch between our quarter end and when those payment determination dates are. So as a result, what you'll see is the most kind of lumpy part of the cash distributions which are related to the equity tranche. What we've seen that really kind of bump around on a quarter-to-quarter basis. And with the end of the reinvestment period, I think our expectation here is that that's likely going to continue to be the case as the structure be levers. So, it's not as if the equity tranche has liked a stated coupon per se and it's consistently paying out over time. It's one component of the dividend that we receive is just going to have a little bit more volatility while we're in this deleveraging period for that structure. Robert Dodd Understood, right? I mean, and the equity just distributes your own roughly speaking, your ownership share of the residual cash flows, but I mean, did the cash flows within Logano sites. Got something else on my mind. Did the cash flow within Logan drop materially, right? Or was it a timing mismatch? I mean, basically is the dividend. Is this 1.2 kind of for now like the low, and you could see the equity, is it the low end of the equity trans volatility range, or it just seems like a pretty big drop given it doesn't sound like, I mean we don't see the details of the portfolio of Logan anymore, but it doesn't sound like the portfolio itself. You just sell some assets but then you reinvest it. I mean with the income within that vehicle down materially in quarter one. Henry Chung Yes, your observation is correct. The overall holdings of the portfolio and the credit profile did not change particularly on a quarter over quarter basis, as you may already be aware, there are over collateralization tests within COOs, and part of the residual cash flows for this particular distribution in this quarter. Were retained as part of the overcollateralization tests that are in place within the structure. So that was really kind of the driver there is those tests are not tested at quarter end, they're actually tested about a month after quarter end and that's just based on when the underlying COO is actually priced. So, I think the view there is or that's really kind of what drove. Be the difference in this particular quarter and that's why we kind of think of the distributions related to the structure as starting to be a little likely potentially lumpier on a quarter over quarter basis. I will say to the second part of your question with respect to the $1.2 million dollar distribution, kind of, a low relative to our expectations. I do think that there is some near-term upside. We did mention this during our prepared remarks, but we were able to redeploy some of the cash, or the reinvestment proceeds at a pretty favorable time post liberation Day, which is obviously after quarter end, which we think will provide some lift in terms of the near-term outlook for Logan, but. Overall, when we kind of think about from now until full wind down, we do expect just some lumpiness with the equity distribution. Robert Dodd Got it. Thank you. I appreciate that. On the non-accruals. So, obviously it went up to 3.5% on cost basis, two on the when I look at your internal ratings, right, it for last quarter, right, the high rate, the ratings four and five were under 1%, right, which was basically what one of non-accruals were at that time. So, I mean on these new non-accruals was there just zero visibility heading into quarter two that there were any, there were no warning signs at all on these new assets. I mean, can you give us, any color on that like because I mean obviously if new no calls aren't visible in in the internal risk ratings the quarter before it does raise the question of Are there more to come that we just don't know about and you don't know about yet? Henry Chung Yeah, that's a fair question, and I think how I'd characterize that is the non-accrual that we designate as non-accrual this quarter. They were all prior watches names. So, in terms of the concern around did these just come completely out of left field, and that is not, I would say that's not the case. These are companies that we've kind of a noted as watch list companies, some for several quarters now. I would say that, when you think about how we determine a company going on no accrual, it's if from our perspective it's do we think that there's sufficient near-term headwinds that sitting here today we think that there is risk to us recovering our cost based on investment and I would say that. For each of these names there were developments at the respective borrowers, not related to one another, but just at the specific borrowers that warranted that redetermination and as a result, we made that election just given that there was a further deterioration in the situation that that warranted that classification. Robert Dodd Got it. I mean, I think that's being, I mean flipping it the other way. Were any of those assets that were placed on accrual still paying cash interest? Henry Chung Let us get back to you and take that off. Robert Dodd Thank You. Henry Chung Yeah. Operator And your next question comes from the line of Finan O'Shea of Wells Fargo. Your line is now open. Finian O'Shea Hey everyone, good afternoon, and if you could let me know what the take is on the cash interest as well, I'd appreciate it. But just sticking with the non-accruals, Henry, you named a few challenged potentially challenged sectors last quarter software wasn't one of them, but three of these were. I know you just sort of outlined to Robert that it was a sort of ongoing determination on their performance, but seeing if anything is going on there, more broadly if there's a reckoning on these being too far behind, sponsors not supporting and so forth, just given the concentration and sector and the sort of surprise here. Thanks. Henry Chung Yeah, and maybe to clarify the comment on the three being in software then, because I'm looking at the names here, and these were all in different industries and they're not. Or two of them are software, but I guess is the question here, are we seeing something more broadly within the software space as a whole? Finian O'Shea Yeah, I mean, sounds like I have one wrong, so but yeah, I guess sort of still question applies its recent trend we're seeing that a lot of the lets say smaller software companies at least are seeing headwinds. Henry Chung Yeah, so I think I'll take that in two parts. The first is for one of the non-accruals within the software space, I'd say that was really just related to the end market. We were just seeing some more challenging kind of demand drivers within a specific end market that that software company was serving, which we're not heavily mixed to across. Kind of our broader software allocation as a whole, the other which I think Paul referenced as well, the new era that's a managed services provider business so I would kind of think of it as not like a pure play fast business, so to speak, and what I would kind of comment on with what we're seeing more broadly in that space as well is. There were kind of more company specific drivers there versus any particular issues that we're seeing like more broadly across the MSP space as a whole. Finian O'Shea Okay. That's helpful and then just a small one on the. Top line I know you mentioned the one-time items were light. Was there any additional headwind with timing of fundings or is it or spread compression as the portfolio moved and just seeing if there's any other headwinds on the top. Jason Breaux In terms of the deployment. Yeah, well. Finian O'Shea It just, it was a bit felt like a bit more of a drop than many. I know there's the there's the no accruals there's the one time, but seeing if there's any just, thinking about the sort of exit rate into second quarter if there were any irregularities in, yeah, deployment, so average portfolio, or spread. Henry Chung Yeah, so average portfolio, for the quarter, our portfolio is obviously or was we were net up this quarter, so I think if your kind of where to look at quarter two just assuming all else being equal, there should be a little bit of a kind of pick up just based on aggregate portfolio size on the spread piece. The way the average spread of our new investments for the quarter was 565, which was actually in excess of what we've seen over the past two or three quarters here. So, with respect to the spread piece of the equation, we actually saw some kind of good origination and origination activity attractive spread during the quarter. Jason Breaux Yeah, that was a little bit spreads were actually a bit wider in terms of Deployment platform deployment in quarter one versus quarter four for us then we were low 500 in quarter four and as Henry said mid 500s for quarter one. Finian O'Shea Okay, very good all for me, thank you so much. Thanks. Operator Our next question comes from the line of Mickey Schleien of Ladenburg Thalmann. Your line is now open. Mickey M. Schleien Yes, good afternoon, Jason, I wanted to ask you about your sentiment to the overall market. We've seen, large growth in private PDCs and all that capital that's been introduced into the market, but at the same time, risks have increased, obviously volatility has increased. We saw some spread stability. So, do you think the market's more balanced and what is your outlook for spreads? Jason Breaux Yeah, thanks a lot, Mickey. I probably try to segment the market a bit, into different sizes of the middle market, your first comment on the non-traded BDC inflows, that's no doubt significant. Last time I looked at that we were looking at probably $3 billion or so a month of inflows, and those are all coming in. Immediately and so, that's forcing deployment into the market. A Right Way as opposed to capital call structure vehicles where capital is called as deals become available, that that does put pressure certainly on spreads and what I would say though, however, is in that segment of the market, if you think about where the $3 billion is coming in, it's generally coming in. Into managers that are deploying into the upper mid-market, typically companies with even DAs of north of $200 million and not necessarily surprising when you're taking in significant inflows you've got to deploy in scale, but our estimation is 90% of the inflows are focused on the upper midmarket. So that's one piece that I would relay in terms of outlook and deal activity. We started the year with pretty good activity, and I think there was a fair amount of optimism around activity for the balance of the year that that was certainly impacted. A by an April ninth, and the 90 days pause and we're seeing news trickle in daily or weekly on that, but I do think that that has translated into a Fairly meaningful slowdown in deal activity. What did happen was good companies that still came to market were getting deals done in the private market because the public market was shut for a number of weeks. That has seemed to thaw somewhat at this point. And what our observation is on the public market is that spreads are much wider than where they were the liberation day, maybe 25 bits or so. I wouldn't say that we've seen material widening or any widening, frankly on the private side, which always tends to lag a bit, but. My hope is that after we get some resolution on tariffs and or trade deals that will give some more certainty to the market to start to transact again, which would bring that supply demand balance maybe more in line where we tend to focus is in lower and core less competition from certainly the non-traded BDCs with the significant inflows, so. We are still seeing activity, and we are going to be very selective in terms of what we're doing, particularly because CCAP on its own is a fully rounded portfolio at this point. So, we sit next to a $35 billion-dollar private credit platform that is still very active in the market and transacting, but for CCAP's purposes we will be. We will be very selective in picking which deal going forward. Mickey M. Schleien Jason, if I could follow up, given all the uncertainty that's out there, a lot of folks are focused on follow on investments, basically investing in their existing portfolio, particularly since everyone's chasing anything that doesn't have any tariff risks, so those spreads are probably not as interesting. But another way to invest in your portfolio is to buy back your stock, is the board Thinking about that, is the discount meaningful enough for that to start to occur, any guidance you could give us on that would be helpful. Jason Breaux Yeah, thanks, Mickey. This is something that we continue to evaluate. Especially now where our shares are trading relative to where they were trading at the beginning of the year. The buybacks certainly provide short term benefit, and I would note that we've always taken a long-term view with CCAP and positioning it for the long term, which includes having a stable equity base. Our goal is to keep our portfolio invested in high quality assets, not chase yields, earn our dividend and generate a stable NAV. We're also mindful of the amount of buybacks we could do given where we are in terms of the size of the portfolio and the leverage profile that we have today. So, the short answer is we will continue to look at it, but there are, various considerations that we think about in light of a buyback program. Mickey M. Schleien I understand. Those are all my questions. Thank you for your time this afternoon. Jason Breaux Thank you. Operator Thank you so much. I'd now like to hand back the call over to Jason for final remarks. Jason Breaux Well thank you everyone for your time and attention today and for the questions. We certainly appreciate your interest in CCAP, and we look forward to speaking with you soon. Operator Thank you for attending today's conference call. You may now disconnect. Goodbye. Sign in to access your portfolio

Yahoo

14-04-2025

Business
Yahoo

Sam Altman faces scrutiny at TED amid surging user growth and safety questions

-- Sam Altman, CEO of OpenAI, was pressed on stage at TED this weekend in a pointed and, at times, tense exchange with TED's Chris Anderson, as questions about AI safety, openness, and corporate responsibility took center stage. The session took a dramatic turn when Anderson revealed—seemingly by accident—that OpenAI's user base had doubled in mere weeks. 'Ten percent of the world now uses our systems a lot,' Altman admitted. Altman confirmed the figure, noting 500 million weekly active users, but was visibly surprised by the disclosure. 'I said that privately,' he replied, prompting a mix of laughter and raised eyebrows from the audience. The conversation shifted swiftly from usage scale to safety risks. Altman described experiencing no "scary moments" yet, only awe, and rejected suggestions that OpenAI is concealing a conscious or self-improving model. He acknowledged that the stakes are rising. 'Agentic AI is the most interesting and consequential safety problem we've faced,' he said, calling it a far more serious challenge than past developments. Pressed on OpenAI's evolving societal role, Altman framed its products as extensions of self—tools that will soon 'proactively push things to you.' Critics warn this raises profound privacy and autonomy concerns. In a candid moment, Altman walked back his 2023 call for a federal licensing body to regulate large AI models. 'I've since learned more about how government works,' he said. 'It's not the right framework.' Altman also hinted at OpenAI's pivot toward open source, citing competitor DeepSeek's influence. 'We were late to act, but we're going to do really well now,' he said, teasing a powerful open-source release 'near the frontier.' Related articles Keefe, Bruyette & Woods maintains First Financial Indiana at 'market perform' with a price target of $52.00 Cytta Corp. Integrates TrueWealth(™) Philosophy to Revolutionize Safety and Security, Unlocking New Horizons for Growth and Impact KBS Builders Wins $2.1 Million Contract For Multifamily Construction Project in Vermont

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Sam Altman faces scrutiny at TED amid surging user growth and safety questions

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