Good morning, ladies and gentlemen. Thank you for standing by. Welcome to Saratoga Investments Corp's Fiscal First Quarter 2023 Financial Results Conference Call. Please note that today's call is being recorded. During today's presentation, participants will be in a listen-only mode. Following management's prepared remarks, we will open the line for questions. At this time, I'd like to turn the call over to Saratoga Investment Corp's Chief Financial and Compliance Officer, Mr. Henri Steenkamp. Sir, please go ahead.

Thank you. I would like to welcome everyone to Saratoga Investment Corp's fiscal first quarter 2023 earnings conference call. Today's conference call includes forward-looking statements and projections. We ask you to refer to our most recent filings with the SEC for important factors that could cause actual results to differ materially from these forward-looking statements and projections. We do not undertake to update our forward-looking statements unless required to do so by law. Today, we will be referencing a presentation during our call. You can find our fiscal first quarter 2023 shareholder presentation in the Events and Presentations section of our Investor Relations website. A link to our IR page is in the earnings press release distributed last night. A replay of this conference call will also be available. Please refer to our earnings press release for details. I would now like to turn the call over to our Chairman and Chief Executive Officer, Christian Oberbeck, who will be making a few introductory remarks.

Thank you, Henri, and welcome everyone. As this fiscal quarter coincided with the onset of significant broader market volatility, we continue to focus on balance sheet and liquidity strengths, while identifying further opportunities and growing our asset base in high-quality credits. We believe Saratoga continues to be well-positioned for potential future economic opportunities and challenges. Our existing portfolio companies are generally performing well with our overall fair value 1.4% above its cost and our current business development pipeline robust, with positive metrics in term sheets issued and deals executed. Our AUM grew significantly this quarter to $895 million, as we originated $97 million in new platforms or follow-on investments offset by $10 million of repayments. We continue to bring new platform investments into the portfolio with two added this fiscal quarter and all of our originations were made while maintaining the extremely high credit bar we set for all investments. Our NAV per share this quarter was flat year-over-year decreased by 2.2% from Q4 to $28.69, which net of core portfolio valuation changes primarily reflects the volatility being experienced in the broadly syndicated CLO loan market. We believe the CLO and JV mark-to-market changes are mostly supply and demand driven, including a lack of trading liquidity. Though early signs of credit deterioration from input cost increases, labor shortages, supply chain constraints and in certain cases increases in inventory levels are emerging. To briefly recap the past quarter on Slide 2. First, we continue to strengthen our financial foundation in Q1 by maintaining a high-level of investment credit quality with over 95% of our loan investments retaining our highest credit rating at quarter end. Generating a 6.9% on a trailing 12-month basis, despite recognizing an $8.6 million unrealized depreciation reflecting broadly syndicated loan market volatility in the CLO and JV, and registering a gross unlevered IRR of 12% on our total unrealized portfolio, with our current fair value 1.4% above the total cost of our portfolio and a gross unlevered IRR of 16.3% on total realizations of $769 million. Second, our assets under management increased significantly to $895 million this quarter, a 9% increase from $818 million as of last quarter, and a 32% increase from $678 million, as of the same time last year. Our new originations included two new portfolio companies and 13 follow-on investments and our current pipeline remains robust. Third, in volatile economic conditions such as we are currently experiencing, balance sheet strength, liquidity and NAV preservation remain paramount for us. Our capital structure at quarter end was strong, $345 million of mark-to-market equity supported $436 million of long-term covenant-free non-SBIC debt, $217 million of long-term covenant-free SBIC debentures, and $25 million of long-term revolving borrowings. Our total committed undrawn lending commitments outstanding to existing portfolio companies are $32 million. Our quarter end regulatory leverage of 179% substantially exceeded our 150% requirement and does not yet include the pending repayment next week of our $43 million SAK baby bond that has been called, which will reduce our non-SBIC debt to $393 million, while also reducing our cost of capital. By redeeming SAK with funds from our recent $97.5 million baby bond due in 2027, we are effectively extending the maturity from the three to five years remaining to the five years of our new bond issuance. We had $171 million of liquidity at quarter end available to support our portfolio companies, with $44 million of the total dedicated to new and follow-on opportunities in our SBIC II fund and $58 million cash, net of the upcoming SAK notes repayment that would be fully accretive to earnings when deployed. And we demonstrated our ability to be opportunistic and access the capital markets when needed with the issuance of our new $97.5 million, 6% 2027 baby bond in April. Finally, based on our overall performance and liquidity, the Board of Directors declared our quarterly dividend of $0.53 per share for the quarter ended May 31, 2022, which was paid on June 29, 2022. This quarter saw solid performance with our key performance indicators as compared to the quarters ended May 31, 2021 and February 28, 2022. Our adjusted NII is $6.4 million this quarter, up 2% versus last year and up 1% versus last quarter. Our adjusted NII per share is $0.53 this quarter, down from $0.56 last year and unchanged from last quarter. Our latest 12 months return on equity is 6.9% down from 19.4% last year and 13.9% last quarter. And our NAV per share is $28.69, down $0.01 from $28.70 last year and down 2% from $29.33 last quarter. Henry will provide more detail later. As you can see on Slide 3, our assets under management have steadily and consistently risen since we took over the BDC almost 12 years ago and the quality of our credits remains high, with only one credit currently on non-accrual. Our management team is working diligently to continue this positive trend as we deploy our available capital into our growing pipeline while at the same time, being appropriately cautious in this evolving credit environment. With that, I would like to now turn the call back over to Henri to review our financial results, as well as the composition and performance of our portfolio.

Thank you, Chris. Slide 4 highlights our key performance metrics for the fiscal first quarter ended May 31, 2022. When adjusting for the incentive fee accrual related to net capital gains in the second incentive fee calculation and the interest expense on our SAK baby bond during the period that SAT was issued and also outstanding. Adjusted NII of $6.4 million was up 0.7% from last quarter and up 2.3% from $6.3 million as compared to last year's Q1. Adjusted NII per share was $0.53, down $0.03 from $0.56 per share last year and unchanged from $0.53 per share last quarter. Across the three quarters, weighted average common shares outstanding were $12.1 million for this Q1, $12.0 million for last quarter and $11.2 million for last year's Q1. There was zero accretion or dilution from the share repurchases, DRIP and ATM offering plan this quarter. The increase in adjusted NII from last year primarily reflects a higher level of investments and resultant higher interest and other income with AUM up 32% since last year, offset by, first, lower interest rates with the weighted average current coupon on non-CLO BDC investments decreasing from 9.5% to 8.5% year-over-year. And second, increased interest expense as additional notes and debentures were issued this past year to fund this AUM growth. Sequential quarter changes reflected the same factors as year-over-year, but the increase was further offset by decreased structuring, advisory and other income as the fees earned on both originations and prepayments were lower this quarter as compared to last quarter. In addition, this quarter benefited from the first incentive fee not being earned this quarter. Adjusted NII yield was 7.3%, this yield is unchanged from last quarter and compares to 8.0% last year. For this first quarter, we also experienced a net loss on investments of $9.5 million or $0.78 per weighted average share, resulting in a total decrease in net assets from operations of $1.5 million or $0.12 per share. The $9.5 million net loss was comprised of $9.3 million in net unrealized depreciation and $0.4 million of deferred tax expense on unrealized depreciation on investments held in blockers, offset by $0.2 million in net realized gains and $0.1 million income tax benefit from realized gains. The $0.2 million net realized gain on investments comprises multiple escrow payments received during the quarter. The $9.3 million net unrealized depreciation primarily reflects, first, the $3.2 million and $5.4 million unrealized depreciation on the company's CLO and JV equity investments, respectively, resulting from the volatility and the broadly syndicated loan market as of quarter end, and second, the $5.0 million unrealized depreciation on the company's Pepper Palace investments primarily due to company performance. Offset by first, $3.1 million unrealized depreciation on the company's PDDS investment, which is a SaaS company in the dental industry. And second, $1.1 million net unrealized depreciation across the remainder of the portfolio spread amongst numerous investments. Return on equity as always remains an important performance indicator for us, which includes both realized and unrealized gains. Our return on equity was 6.9% for the last 12 months. Total expenses excluding interest and debt financing expenses, base management and incentive fees, and income and excise taxes, was $2.0 million for this quarter, as compared to $1.9 million last year and $1.8 million last quarter. This represented 0.9% of average total assets on an annualized basis, down from 1.1% last year and unchanged from last quarter. We have also again added the KPI slides, starting from Slide 26 through 29 in the appendix at the end of the presentation that shows our income statement and balance sheet metrics for the past nine quarters and the upward trends we have maintained. Of particular note is Slide 29, highlighting how our net interest margin run rate has continued to increase and has almost quadrupled since Saratoga took over management of the BDC and also increased by 2% the past 12 months, while still not yet receiving the benefit of putting to work our significant amount of Q1 undeployed cash, all the effects of the currently rising rate environment. Moving on to Slide 5. NAV was $345.2 million as of this quarter end, a $10.6 million decrease from last quarter and a $24.9 million increase from the same quarter last year. This quarter $8.6 million of the decrease is unrealized depreciation on our equity positions in the CLO and JV. During Q1, the company repurchased 142,177 shares at an average price of $26.27 and issued no shares during the quarter. NAV per share was $28.69 as of quarter end, down slightly from $28.70, 12 months ago and $29.53 last quarter. This chart now also includes our historical NAV per share, which highlights our NAV per share has increased 17 of the past 20 quarters. Our net asset value has steadily increased since 2011 and this growth has been accretive as demonstrated by the consistent increase in NAV per share. On Slide 6, you will see a simple reconciliation of the major changes in NII and NAV per share on a sequential quarterly basis. Starting at the top, adjusted NII per share remained the same at $0.53 per share, a $0.17 increase in non-CLO net interest income from the partial impact of higher AUM was offset by a $0.11 decrease in other income due to lower structuring and prepayment fees as compared to last quarter and a $0.06 increase in base management fees. Moving on to the lower half of the slide, this reconciles the $0.64 NAV per share decrease for the quarter. $0.66 of GAAP NII was more than offset by $0.75 of net realized gains and unrealized depreciation on investments and the $0.53 dividend paid in Q1. Slide 7 outlines the dry powder available to us as of quarter end, which totaled $170.5 million. This was spread between our available cash, undrawn SBA debentures and undrawn secured credit facility. This quarter end level of available liquidity when adjusted for the repayment of our SAK baby bond that has already been called allows us to grow our assets by an additional 14% without the need for external financing, with $58 million of pro forma quarter end cash available and that's fully accretive to NII when deployed and $44 million of available SBA debentures with its low-cost pricing, also very accretive. On April 27, 2022, we successfully closed a $97.5 million, 6.0% baby bond due 2027, including the exercise greenshoe. And on June 14, we called out $43.125 million SAK, 7.25% baby bond to be repaid on July 14, which will reduce our non-SBIC debt to $393 million and extend our maturity on debt amount of capital from three to five years. We remain pleased with our available liquidity and leverage position, including our access to diverse sources of both public and private liquidity and especially, taking into account the overall conservative nature of our balance sheet. The fact that almost all our debt is long term in nature with no non-SBIC debt maturing within the next three years and importantly that almost all our debt is fixed rate in this rising rate environment. Our debt is also structured in such a way that we have no BDC covenant that can be stressed, important during volatile times. Now, I would like to move on to Slides 8 through 11 and review the composition and yield of our investment portfolio. Slide 8 highlights that we now have $895 million of AUM at fair value or $883 million at cost, invested in 45 portfolio companies, one CLO fund and one joint venture. Our first-lien percentage is 80% of our total investments of which 10.4% of that is in first-lien last out positions. On Slide 9, you can see how the yield on our core BDC asset, excluding our CLO as well as our total asset yield has dropped over the past year. This is primarily due to the continued tightening of spreads in our market during this period. In this quarter, the increase from rising rates was offset by the addition of Nolan to non-accrual with five months reserved in Q1. Non-accruals are now 1.1% and 1.8% of fair value and cost respectively. Looking ahead, rates have continued to rise significantly from May through today and with 98.5% of our interest-earning portfolio being variable rate, 75% of our investments with a LIBOR floor of 100 basis points or less and the three month LIBOR breaking through 200 basis points recently, we expect to benefit in Q2 and beyond from the earnings impact of rising rates to our NII. Our 10-Q outlines the pro forma impact of rate increases to our current portfolio. The CLO yield also decreased from 10.5% to 8.0% quarter-on-quarter, reflecting current market performance. The CLO is currently performing and current. Slide 10 shows our investments are diversified throughout the U.S. And on Slide 11, you can see the industry breadth and diversity that our portfolio represents. Our investments are spread over 38 distinct industries with a large focus on healthcare, software, IT services and real estate, education, consumer and healthcare services. In addition to our investments in the CLO and JV, which are included as structured finance securities in this graph. Of our total investment portfolio, 9.9% consists of equity interests, which remain an important part of our overall investment strategy. For the past 10 fiscal years, we had a combined $73.2 million of net realized gains from the sale of equity interests or sale or early redemption of other investments. And over two-thirds of these historical total gains was fully accretive to NAV due to the unused capital loss carry forwards that were carried over from when Saratoga took over management of the BDC. This consistent realized gain performance highlights our portfolio credit quality has helped grow our NAV and is reflected in our healthy long-term ROE. That concludes my financial and portfolio review. I will now turn the call over to Michael Grisius, our Chief Investment Officer for an overview of the investment market.

Thank you, Henri. I'll take a few minutes to describe our perspective on the current state of the market and then comment on our current portfolio performance and investment strategy. Since our last update in May, we saw market conditions continuing to be very aggressive, exceeding where they were pre-COVID-19 and still very much a borrower's market. Liquidity remains abundant, but lenders are being more risk sensitive backing off historically volatile sectors and taking a harder stance on the use of capital. Leverage remains elevated. In the first half of calendar year 2022, we saw high transaction volumes and M&A activity, albeit slightly lower than 2021, but continuing to be quite healthy. We currently have an actionable deal pipeline. Credit yields continue to be tight, with high multiples and tight spreads. Broadly syndicated loan markets are experiencing much lower volumes year-over-year and rising spreads, but we are only seeing slight movements so far in the lower middle market versus this broader market. High demand for quality deals and the large scale fundraising from last year are keeping spreads tight. Although, absolute yields are growing with LIBOR and so far increases. Pricing and leverage metrics remain aggressive for quality assets. Investors continue to differentiate themselves in other ways, such as accelerated timing to close and looser covenant restrictions. And that said, lenders in our market are still wary of thinly capitalized deals and for the most part are staying disciplined in terms of minimum aggregrate base levels of equity and requiring reasonable covenants. The Saratoga management team has successfully managed through a number of credit cycles and that experience has made us particularly aware of the importance of first, being disciplined when making investment decisions, and second, being proactive in managing our portfolio. We're keeping a very watchful eye on how continued inflationary pressures and labor costs, supply chain issues, rising rates and slowing growth could affect both prospective and existing portfolio companies. And we have confidence in our strong position entering a possibly different credit and rate environment. Our underwriting bar remains high as usual, yet we continue to find opportunities to deploy capital, as we will discuss shortly. Calendar year 2022 has so far been a very strong deployment environment for us, with a strong pace of originations. Follow-on investments and existing borrowers with strong business models and balance sheets continue to be an important avenue of capital deployment. As demonstrated with 43 follow-ons in the last 12 months ending in June, 11 in the last calendar quarter alone, including delayed draws. In addition, we have invested in two new platform investments in this past quarter and we have multiple new platform companies expected to close in the next month or so. Portfolio management continues to be critically important and we remain actively engaged with our portfolio companies and in close contact with our management teams, especially in this volatile market environment. All of our loans in our portfolio are paying according to their payment terms except for our Nolan investment that we put on non-accrual this quarter as we work with the company on an agreement that will likely have us pick or interest for a period of time. Nolan is our only non-accrual investment across our portfolio. After recognizing the unrealized depreciation on our CLO and JV equity this quarter, vehicles that primarily invest in broadly syndicated loans, the fair value of Saratoga's overall assets now exceeds its cost basis by 1.4%. We believe this strong performance reflects certain attributes of our portfolio that bolster its overall durability. 80% of our portfolio, up from 77% last quarter, is in first-lien debt and generally supported by strong enterprise values in industries that have historically performed well in stress situations. We have no direct energy or commodities exposure. In addition, the majority of our portfolio is comprised of businesses that produce a high degree of recurring revenue and have historically demonstrated strong revenue retention. Our approach has always been to stay focused on the quality of our underwriting. And as you can see on Slide 13, this approach has resulted in our portfolio performance being at the top of the BDC space with respect to net realized gains as a percentage of portfolio at cost. We're at the top of the list of only 14 BDCs that had a positive number over the past three years. A strong underwriting culture remains paramount at Saratoga. We approach each investment working directly with management and ownership to thoroughly assess the long-term strength of the company and its business model. We endeavor to peer as deeply as possible into a business in order to understand accurately its underlying strengths and characteristics. We always have sought durable businesses and invest capital with the objective of producing the best risk-adjusted, accretive returns to our shareholders over the long term. Our internal credit quality rating reflects the impact of current market volatility and shows 95% of our portfolio at our highest credit rating as of quarter end. Part of our investment strategy is to selectively co-invest in the equity of our portfolio companies when we're given that opportunity and when we believe in the equity upside potential. This equity co-investment strategy has not only served as a yield protection for our portfolio, but also meaningfully augmented our overall portfolio returns, as demonstrated on this slide and the previous one and we intend to continue this strategy. Now looking at leverage on Slide 14, you can see that industry debt multiples were relatively unchanged from calendar four to Q1, yet remain at historically high levels. Total leverage for our portfolio was 4.29 times, a decrease from last quarter, reflecting primarily recent repayments of some higher leverage investments. Through past volatility, we have been able to maintain a relatively modest risk profile throughout. Although, we never considered leveraging in isolation, rather focusing on investing in credits with attractive risk return profiles and exceptionally strong business models where we are confident the enterprise value of the businesses will sustainably exceed the last dollar of our investments. In addition, this slide illustrates our consistent ability to generate new investments over the long term, despite ever changing and increasingly competitive market dynamics. During the second calendar quarter, we added two new portfolio companies and made 13 follow-on investments. Now moving on to Slide 15, our team's skill set, experience and relationships continue to mature and our significant focus on business development has led to new strategic relationships that have become sources for new deals. Our top line number of deal sources remains robust but has dropped in the past two years initially due to COVID but more recently reflecting our efforts to focus on attracting a higher percentage of quality opportunities. Most notably, the number of deals executed during the last 12 months is markedly up from last year's pace, demonstrating that this more focused sourcing strategy is yielding results. What is especially pleasing to us is that six of our 10 new portfolio companies over the past 12 months are from newly formed relationships, reflecting notable progress as we expand our business development earnings. As you can see on Slide 16, our overall portfolio credit quality remains solid. The gross unleveraged IRR unrealized investment made by the Saratoga Investment Management team is 16.3% on $769 million of realizations. On the chart to the right, you can see the total gross unlevered IRR on our $839 million of combined weighted SBIC and BDC unrealized investments is 12% since Saratoga took over management. As of this quarter, we have two yellow rated investments being our Nolan Group and Pepper Palace investments. Nolan has been on yellow for a while now since COVID, being more dependent on in-person human interaction and was also added to non-accrual status this quarter. The remaining unrealized depreciation reflects the current performance of the company but does not change our view of the fundamental long-term prospects for this business. A new yellow investment this quarter is Pepper Palace, which has been moved to yellow with recognition this quarter of unrealized depreciation of $5 million on our first-lien term loan and preferred equity investments. This markdown reflects the current performance of the company, but they continue to pay interest. We are working closely with the company and the sponsor as they work to improve performance. Now excluding the Pepper Palace markdown, the remaining core non-CLO BDC portfolio had total unrealized appreciation of $4.3 million this quarter and total portfolio fair value is still 1.4% above total cost. Our overall investment approach has yielded exceptional realized returns. Moving on to Slide 17, you can see our first SBIC license is fully funded. Our second SBIC license has already been fully funded with $87.5 million of equity of which $264 million of equity in SBA debentures have been deployed. There are still $3 million of cash and $44 million of debentures currently available against that equity. To summarize the quarter, the way the portfolio has proven itself to be both durable and resilient against the impact of COVID-19 and the subsequent market adjustment and volatility really underscores the strength of our team, platform and portfolio, and our overall underwriting and due diligence procedures. Credit quality remains our primary focus, especially at times with such high activity levels as we are seeing now. And while the world is in continuous flux, we remain intensely focused on preserving asset value and we remain confident in our team and the future for Saratoga.

Thank you, Mike. As outlined on Slide 18, our latest dividend for the quarter ended May 31, 2022 was paid on June 29, 2022. The Board of Directors will continue to evaluate the dividend level on at least a quarterly basis considering both company and general economic factors. Moving to Slide 19, our total return for the last 12 months, which includes both capital appreciation and dividends, has generated total returns of negative 3%, beating the BDC index of negative 9%. This performance reflects the current market volatility impacting both us and the industry. Our longer term performance is outlined on our next slide. Our three-and five-year returns place us in the top half of all BDCs for both time horizons. For the last three years, our 20% return exceeded the 16% return of the index. While over the past five years, our 61% return greatly exceeded the index's 25% return. For the one-year period, we are also among the top three performers relative to the recent volatility. Slide 21, you can further see our performance placed in the context of the broader industry and specific to certain key performance metrics. We continue to focus on our long term metrics such as return on equity, NAV per share performance, NII yield and dividend growth, which reflects the growing value our shareholders are receiving. Despite this quarter's results being impacted by the market volatility in the broadly syndicated loan market, we continue to be one of the few BDCs to have grown NAV long term and we have done it accretively by also growing NAV per share 17 of the last 20 quarters. Moving on to Slide 22, all of our initiatives discussed on this call are designed to make Saratoga Investment a highly competitive BDC that is attractive to the capital markets community. We believe there are differentiated performance characteristics outlined on this slide that will help drive the size and quality of our investor base, including adding more institutions. Our differentiating characteristics include maintaining one of the highest levels of management ownership in the industry at 14%, access to low-cost and long-term liquidity with which to support our portfolio and make accretive investments, recently increased with our new baby bond issued this quarter, a BBB plus investment-grade rating and active public and private bond issuances, solid historic earnings per share and NII yield, strong and industry-leading historic and long-term ROE accompanied by growing NAV and NAV per share, putting us at the top of the industry for both long term, high-quality expansion of AUM and an attractive risk profile. In addition, our historically high credit quality portfolio contains minimal exposure to conventionally cyclical industries, including the oil and gas industry. We remain confident that our experienced management team, historically strong underwriting standards and time-tested investment strategy will serve us well in battling through the challenges in the current and future environment, and with our balance sheet, capital structure and liquidity will benefit Saratoga's shareholders in the near and long term. In closing, I would again like to thank all of our shareholders for their ongoing support and would like to now open the call for questions.

Thank you, sir. I show our first question comes from the line of Robert Dodd from Raymond James. Please go ahead.

Hi, guys. I apologize for the background noise. So first, a housekeeping one on Nolan Group. I mean, Henri, I think you said that you reserved five months of income from that this quarter when you put on non-accrual. So is that correct? Did you reverse out income from previous quarters this quarter? And if so, how much was that?

Yes. There was a two-month interest receivable on the books that as we then assessed it and put it onto non-accrual, we had to reverse out. So, there’s a bit of an outsized impact to interest income this quarter because instead of just three months reserve, it's five months, one off of five months for this quarter. The total reserve for the five months was $733,000 as you can see on the balance sheet. But as I said that represents five months and not just three months.

I understand. Thank you for that. Regarding the environment, I believe you mentioned about 10 days ago that it was challenging to find opportunities to take proactive steps right now. However, you seem more optimistic today that the multiples are stable, leverage spreads are active, and you had strong deployments in the recently reported quarters. Could you provide further insights? Is the market still stable? Did I overlook something from 10 days ago or have there been changes since then?

Maybe I'll start, and then hand it off to the team. Several things, I think what we're all facing today is, we have sort of broad market averages and then we have individual sectors. And clearly, NASDAQ, for example, in a lot of tech had incredible downturns, in terms of market cap and performance and things like that, while other sectors have held up pretty well. And so, it's really a tale of sectors and a tale of different companies. And so on a broad outlook and in our portfolio, we have the broadly syndicated loans, which are maybe more representative of the broader large cap world. And then we have our individual portfolio companies in the BDC proper. And so, what we have is, we have a number of our companies and a number of the companies we're looking at, are doing quite well. And we would anticipate that they would continue to do quite well in the current environment. We don't know what's going to happen exactly, but trends are positive for a lot of companies and a lot of other type of companies that we are addressing directly in the smaller middle market. And so, as I said, it's really a tale of individual companies, individual investments inside a context of kind of a broader macro, which is just as we know kind of alarming and stock and all these other types of things, but there are still a lot of companies that are doing quite well and that's what we're trying to focus on.

Yes, let me expand on that. When considering our market, it's clear that not everyone perceives the larger segment due to its volatility and its immediate response to macroeconomic indicators. This is evident in the real-time valuation of our collateralized loan obligations. While there is a relationship between the broader middle market and the upper market compared to our focus on the lower end of the middle market, it is not perfectly synchronized and often has a delay. Currently, there's a significant amount of capital available for our sector, and smart allocation of this capital is critical. Despite the conditions in the larger market, it remains highly competitive at our end. Investors are being careful about credit and discerning about where to allocate funds. However, when they find promising assets to invest in or purchase, competition is intense, leading to tighter spreads. Based on our extensive experience through various credit cycles, I don’t anticipate this situation lasting for an extended period, and we are beginning to observe signs of improvement. Nevertheless, the lower middle market remains healthy in terms of transaction volumes. Investors are selective with credits, but for those that are strong, the competition is fierce.

I understand, thank you for that insight. This relates to the final question, which is often about the timing differences observed between the lower and upper ends of the middle market, typically ranging from three to six months. You've pointed out that some gaps are beginning to appear. Do you anticipate that the gap between buyer and seller bids, whether between a sponsor and a seller or between two sponsors and a company, will widen? Will it potentially become even more challenging in the lower end of the middle market in the next three to six months, or is it too difficult to predict?

Well, it's too hard to call. Go ahead, Chris.

I believe it's common during uncertain times for the bid-ask spreads to widen. Sellers tend to reflect on past conditions while buyers consider potential future scenarios, leading to this widening and a slowdown in activity. This is a typical reaction to the changing paradigms we're currently experiencing, and you can observe this in multiple areas. Generally, M&A activity is decreasing in larger sectors. However, in our marketplace, many deals that have been in the works for a year or longer are still progressing. Current closings are related to negotiations that began before the latest market conditions. Some of these deals are finalizing with minor adjustments; for instance, we are looking at one where the purchase price was modified for broader economic reasons but not due to any specific issues with the company. These factors are gradually influencing the system.

I appreciate that. Thank you.

Thank you. I'm showing no further questions in the queue at this time.

Okay. Well, we want to thank everyone for joining us today and we look forward to speaking with you next quarter.

Thank you for participating. You may now disconnect.