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spk01: Hello everyone and welcome to GBDC's earnings call for the fiscal year and quarter ended September 30th, 2023. Before we begin, I'd like to take a moment to remind our listeners that remarks made during this call may contain forward-looking statements within the meaning of the Private Securities Litigation Reform Act of 1995. Statements other than statements of historical facts made during this call may constitute forward-looking statements and are not guarantees of future performance or results and involve a number of risks and uncertainties. Actual results may differ materially from those in the forward-looking statements as a result of a number of factors, including those described from time to time in GBDC's SEC filings. For materials we intend to refer to on today's earnings call, please visit the Investor Resources tab on the home page of our website, which is .golubcapitalbdc.com and click on the events presentations link. Our earnings release is also available on our website in the Investor Resources section. As a reminder, this call is being recorded. With that, I'm pleased to turn the call over to David Gollib, Chief Executive Officer of GBDC.
spk07: Hello everybody and thanks for joining us today. I'm joined today by Chris Erickson, our Chief Financial Officer, and by Matt Benton, our Chief Operating Officer. For those of you who are new to GBDC, let me start with a quick recap on our investment strategy. Our investment strategy is, and since inception it has been, to focus on providing first-lean senior-secured loans to healthy, resilient middle market companies, generally companies that are backed by strong partnership-oriented private equity sponsors. Yesterday, we issued our earnings press release for the quarter and fiscal year ended September 3rd year, and we posted an earnings presentation on our website. We'll be referring to this presentation during today's call. I'm going to start, as usual, with some headlines, and I'm going to then lead into a summary of performance for the quarter. Then Matt and Chris are going to go through financial results for the quarter in more detail, and finally I'll wrap up with our outlook for the coming period. After that, we'll take some questions. The headline is that GBDC had an excellent fiscal fourth quarter. You got a glimpse of this in the preliminary fiscal Q4 results that GBDC announced on October 17th. Let me touch on some of the highlights. Adjusted net investment income per share was 50 cents, a record. Also of note, this represented an adjusted NII return on average equity of 13.3%. Adjusted earnings per share came to 60 cents. This corresponds to an adjusted return on equity of 16%. Credit results were very strong. We had net realized and unrealized gains for the quarter of 10 cents per share. We saw a decrease in non-accruals and we saw stable internal performance ratings. These factors altogether drove a 19 cent increase quarter over quarter in NAV per share, a sequential increase of 1.3%, bringing NAV per share to $15.02 as of September 30. GBDC's excellent results for the quarter capped off a very strong fiscal 2023. Over the year, we saw $1.73 of adjusted NII per share, $1.52 of adjusted earnings per share, $1.40 per share of distributions paid. You'll recall that GBDC increased our base quarterly distribution by seven cents per share during the fiscal year and introduced a new variable supplemental distribution framework. We saw strong credit results. I view fiscal 2023 as one of GBDC's best years ever from a credit perspective. And GBDC's investment manager during the year permanently reduced its base management fee rate from .375% to .0% per annum. That was effective July 1. In short, we executed on our investment strategy, we leveraged the competitive advantages of the Gallup Capital Platform, and we raised the bar for shareholders. With that, let me hand the floor to Matt to walk through our results in more detail.
spk06: Thanks, David.
spk07: I'm
spk06: going to start on slide four. As David just previewed, GBDC's earnings for the quarter ended September 30 at four record setting. Adjusted NII per share was 50 cents, a 13% split will increase from the prior quarter's 44 cents per share of adjusted NII. This corresponds to an adjusted NII ROAE of 13.3%. Net income per share increased to 60 cents from 43 cents per share of the prior quarter and represented an adjusted ROAE of 16%. GBDC's record profitability was driven by three key factors. First and foremost, credit. GBDC had a net realized and unrealized gain on investments of 10 cents per share. This gain was due to both strong credit fundamentals and tightening credit spreads in the market. The second key driver was continued higher base rates. Finally, fiscal Q4 benefited from the previously announced reduction of GBDC's base management of C rate to 1% per annum. The portfolio balance sheet update generally reflects a continuation of trend from the June 30th, 2023 quarter. Net funds declined by .49% sequentially. While we saw modest uptake in deal activity in calendar Q3 relative to the first half of the year, the pace of new investments remained muted. This is perfectly fine for GBDC. Its model doesn't depend on fee income from new originations or repayments to drive strong returns. The overall credit performance of GBDC's investment portfolio remained strong. Non-accruals continued to decrease. Non-accruals as a percentage of total debt investments at cost decreased to .6% from .8% at 6.30 2023. As a percentage of total debt investments at fair value, non-accruals decreased to .2% from .5% at 6.30 2023. To put this in context, non-accruals are now back where they were in March and June of 2022. Turning to internal performance ratings, these also remained strong. Investments in rating categories 1 and 2 represented 30 basis points of the total portfolio at fair value. This is the lowest level of 1s and 2s since March 2018. NAV per share increased by 130 basis points on a sequential basis to $15.02. NAV per share is now more than 200 basis points higher than at the start of the year, even as GBDC delivered higher distributions to shareholders during this period. Higher profitability and higher NAV, we obviously think this is a good combo. And finally, net leverage declined modestly to 1.21 times. Turning now to distributions, the board declared a regular quarterly distribution of 37 cents per share payable on December 29, 2023 to shareholders of record as of December 8, 2023. You'll recall that the board increased GBDC's base distribution from 33 cents per share to 37 cents per share in the quarter ended 6.30 2023. Adjusted NII per share significantly exceeded the company's regular quarterly distribution, resulting in a distribution coverage ratio of 135%. Moreover, based on the new variable supplemental distribution framework we discussed last quarter, the board also authorized a supplemental distribution of 7 cents per share payable on December 15, 2023 to shareholders of record as of December 1, 2023. As a reminder, the variable supplemental distribution framework is to give shareholders a clear line of sight into how we plan to balance the likelihood that GBDC will continue to generate excess income all else equal on the one hand, with our focus on NAV growth and resilience on the other hand. You can find additional detail about the variable supplemental distribution framework on page 23 of the earnings presentation. In total, the board approved 44 cents per share of distributions in respect of fiscal Q4 performance. This corresponds to an annualized dividend yield of approximately .7% based on GBDC's NAV per share as of September 30, 2023. I'm going to turn it over to Chris now to provide more detail on our results.
spk03: Thanks, Matt. Turning to slide seven, you can see how the key earnings drivers Matt just described translated into solid growth in NAV per share. The combination of high short-term interest rates, attractive credit spreads, and GBDC's locked-in low-cost leverage profile drove record-adjusted NII per share of 50 cents, a level meaningfully higher than dividends paid out. In addition, the reversal of prior unrealized depreciation on investments contributed to 10 cents per share of adjusted net realized and unrealized gains. Together, these results drove a net asset value per share increase to $15.02, up 19 cents per share from the prior quarter. Let's now go through the details of GBDC's financial results for the quarter ended September 30, 2023. We've already covered the key points on slide nine, so we'll start on slide 10, which summarizes our origination activity for the quarter. Net funds growth quarter over quarter was modestly negative as funding of new investment commitments, delay draw term loan funding, and positive fair value changes of existing investments were outpaced by exits and sales of investments. Marketwide deal activity has been slow since last year and remained slow in the September 30 quarter. While we saw a modest uptick in deal activity in calendar Q3 and in our pipeline for calendar Q4, our sense is that a significant rebound is more likely to be a 2024 event. Amid this relatively slow new deal environment, Gallup Capital has remained highly selective, closing approximately .4% of deals reviewed calendar year to date. That's meaningfully lower than our typical 2 to 4% selectivity rate and reflects our focus on quality over quantity. The asset mix of new investments shown in the middle of the slide remain predominantly one stop loans. Looking at the bottom of the slide, the weighted average rate on new investments decreased by 20 basis points this quarter. The decrease was primarily due to tighter spreads on investments, which tightened by 50 basis points sequentially. This is generally consistent with what we are seeing in the market. Spreads on new transactions have tightened since earlier in the year, but they're still relatively attractive, especially in the context of other deal terms like EBITDA definitions, equity leakage, and leverage still remaining more lender friendly. Slide 11 shows GBC's overall portfolio mix. As you can see, the portfolio breakdown by GBC's average investment type remain consistent quarter over quarter with one stop loans continuing to represent around 85% of the portfolio at fair value. Slide 12 shows that GBC's portfolio remain highly diversified by Obligor with an average investment size of approximately 30 basis points. We are big believers in moderating asymmetric credit risk through position size, which we believe has served GBC well in previous credit cycles and will continue to be important in the context of future credit cycles. As of September 30, 2023, 94% of our investment portfolio consisted of first lien senior secured floating rate loans to borrowers across a diversified range of what we believe to be resilient industries. The economic analysis on slide 13 continues to showcase the asset sensitive nature of GBC's balance sheet in an environment of rising interest rates. Let's walk through how to interpret the chart. Start with the dark blue line, which is our investment income yield. As a reminder, investment income yield includes the amortization of fees and discounts. GBC's investment income yields increased by 60 basis points primarily from rising interest rates and recognizing previously deferred interest from one former non-accrual investment returning to accrual status during the quarter. By contrast, our cost of debt to teal line only increased 10 basis points. As a result, our weighted average net investment spread to gold line increased by 50 basis points over the prior quarter. With that, I will turn the floor back over to Matt. Thanks,
spk06: Chris. Let's move on to slides 14 and 15 and take a closer look at credit quality metrics. The overall message is that credit trends remain solid and stable. On slide 14, you can see the non-accruals decreased by 30 basis points sequentially to .2% of total debt investments at fair value. We returned one investment to accrual status, which was offset by the addition of one investment to non-accrual status and fiscal Q4. Slide 15 shows the trend in internal performance ratings on GBC's investments. As of September 30, 2023, around 85% of GBC's investments were rated 4 or 5, which means they're performing as expected or better than expected at underwriting. The proportion of loans rated 1 and 2, which are the loans we believe are most likely to see significant credit impairment, remain very low at 30 basis points of the portfolio at fair value. The proportion of loans rated 3 increased modestly to 14.6%. You'll recall in our slides that loans are expected to perform below expectations or expected to perform below expectations. When a loan migrates to category 3, it automatically triggers heightened scrutiny and oversight. It doesn't mean that we necessarily expect the default or loss. Given today's uncertain environment, we think it's prudent to be proactive about moving credits down to category 3. We'd rather have false positives than miss opportunities for early intervention. This idea of airing on the side of enhanced scrutiny was also the motivation for the portfolio resiliency work that we first described in Q4 2022. You'll recall that this work was designed to screen our middle market portfolio for potential vulnerability on a number of dimensions, for example, interest rates, inflation, quality of earnings, and to focus our resources on shoring up credits that appeared more vulnerable. We didn't see meaningful surprises in our recent quarterly portfolio resiliency review, and we haven't seen meaningful new problem credits here today. As we've discussed in prior quarters, we don't believe that backward-looking average credit metrics are particularly useful for identifying credit issues. We believe our approach of evaluating risk, abagor by abagor, on multiple forward-looking dimensions is a more rigorous foundation for managing the portfolio prospectively, as opposed to review of interest coverage ratios and historical financial results. That said, in the spirit of providing some additional context around our portfolio, and based on the information from portfolio companies available to us as of September 30, 2023, we did want to provide some specific portfolio level credit statistics for everyone. Let's start with interest coverage. The weighted average interest coverage ratio for GVDC borrowers is 1.9 times, and .3% of GVDC's portfolio company investments at their value have a portfolio interest coverage below 1 times. We also wanted to share how interest coverage might change in the context of even higher base rates. When we adjust for potential higher rates, 50 basis points above current base rates, again based on information currently available to us, and as of September 30, 2023, we would expect a proportion of our portfolio at their value with sub-1 times interest coverage to grow only to 10%. We attribute this stability to our focus on lending to resilient borrowers and resilient industries. Finally, we wanted to share underlying portfolio leverage. The weighted average loaned value for the portfolio was 46% based upon the fair value of the portfolio as of September 30, 2023. As a reminder, these credit metrics are based on financial information received from and that are the responsibility of our portfolio companies. It is often provided on a lag as compared to the period presented. Okay, we're going to skip past slides 16 through 19. These slides have more detail on GVDC's financial statements, dividend history, and other key metrics. I'll wrap up this section by reviewing GVDC's liquidity and investment capacity on slide 20 and 21. Let's focus on the key takeaways on slide 21. Our weighted average cost of debt for the quarter ended September 30, 2023, was 5.2%, which we believe is among the lowest in our peer group. 46% of our debt funding is in the form of unsecured notes, the majority of which have maturities in 2026 and 2027. We issued these fixed rate notes for the weighted average coupon of .7% and did not swap any of them out for floating rate exposure. We ended the quarter with almost $875 million of liquidity from unrestricted cash, undrawn commitments on our meaningfully over collateralizable revolver, and the unused unsecured revolver provided by our advisor. GVDC's robust liquidity represents 4.6 times its current unfunded asset commitments and almost 2 times the amount of our unsecured notes due in April of 2024. The diversification, flexibility, and low cost of GVDC's funding structure is an important element that underpins our three investment grade credit ratings from Fitch, Moody's, and S&P. I would highlight on the ratings front that Moody's upgraded GVDC's outlook to positive in early October. As a reminder, Fitch also has GVDC's outlook as positive. We think this puts GVDC and Select Company in this regard. Now I'll hand it back over to David for closing remarks and Q&A.
spk07: Thanks, Matt. So to sum up, GVDC had an excellent quarter and an excellent fiscal year ended September 30th. Higher rates helped, a lower base management fee also helped, but the key driver was strong credit results. And GVDC's strong credit results, they didn't just happen. They were the result of capital's processes working again. Over the last 13 years that GVDC has been a public company, its credit results have been best in class and fiscal 23 was no different. Our origination team found us opportunities to lend to resilient businesses and resilient industries backed by top quality sponsors. Our underwriting teams, they carefully selected borrowers that were likely to pay us back across a wide range of different scenarios. Ballot capital selectivity ratio of .4% on a year to date basis, it shows that deal teams are prioritizing quality over quantity. And our portfolio monitoring, it always emphasizes early intervention after careful name by name portfolio reviews. Let me wrap up by talking about our outlook. Overall, I'm cautiously optimistic. I want to talk some more about both the reason for the optimism and the reason for the consciousness. Let's talk about the optimism first. The economy continues to surprise to the upside. That's a positive. We're also seeing some improvement in middle market M&A activity. That's also a positive. I think the competitive position of Gallup Capital's really never been stronger. That's a third positive. From a credit perspective, there are also some good signs. As Matt reported, the vast preponderance of the portfolio is performing well. And while high rates add a fixed charge burden for borrowers, the flip side is extra interest income for GBDC. And this gives us a greater margin of safety. Finally, we now have over a year's worth of data about how our portfolio companies are handling higher rates. And so we think we have a good handle on where vulnerabilities are most likely to emerge. And where we see that, we're on it. Okay, so that's the reason for optimism. Let me talk now about the consciousness. Why the consciousness? I'm cautious because I don't trust anybody's macro predictions these days. Consensus was wrong in thinking we'd see a recession this year. It was also wrong about the post-pandemic boom. It was wrong about inflation being transitory. And then it was wrong about inflation being stubborn. It's been wrong a lot lately. By implication, I think we need to be very humble these days when we make predictions. Yogi Berra had it right when he said, predicting things is hard, especially about the future. I think that's especially true today. Having said this, the very unpredictability of the environment that we're in, it leads me to think that investors today ought to particularly value resilient investments. By resilient investments, I mean investments that will do well across a range of different macro scenarios. I think GBDC is exactly this kind of resilient investment. Our resiliency is partially attributable to the detailed -by-company resiliency analysis that we've previously discussed, which we now run on a quarterly basis. We've also stepped up our engagement with sponsors and management teams where we see potential for issues arising. From an earnings power perspective, GBDC's asset-sensitive balance sheet positions the company very well for a -interest-grade environment like the one we're in. GBDC's new lower-based management fee rate permanently raises GBDC's ROE profile in any interest-rate environment. GBDC's new variable supplemental distribution policy paves the way for more of this earnings power to be distributed to shareholders when prudent to do so. Now, don't mistake me for some kind of Pollyanna. I think optimism and caution, they actually go -in-hand in uncertain environments like the one we're in right now. But GBDC has always done well by staying laser-focused on credit and by continually raising bar for shareholders. That's what we're doing now. That's what we did in 2023. And that's how we plan to navigate the coming period. With that, let me open the floor for questions.
spk08: Thank you. If you have a question, it is star one on your telephone keypad. To withdraw your question, simply press star one again. Your first question comes from the line of Phinney and O'Shea with Wells Fargo. Your line is open.
spk04: Hey, everyone. Good morning. David, appreciate some of the macro commentary at the end. Just wanted to drill into that a bit. It sounds like there are green shoots in M&A, which should be good for activity. But can you juxtapose that against the meaningful direct lending inflows we're seeing in the non-traded perpetual BDC channel? How is that impacting the terms and spreads we're seeing today? And do you think there's enough M&A to go around in light of this very powerful fundraising? Thank you.
spk07: Thanks, Phin. So it's interesting. We are seeing some countervailing forces right now. On the one hand, we started off, say, summer of 22 in a particularly lender-friendly environment. The BSL market was dislocated as a consequence of the rise in interest rates and the swoon in equity and debt markets generally. There wasn't a robust ability for borrowers to get new deals done in the broadly syndicated market. And consequently, there was a lot of demand in private markets, even though M&A was relatively slow. That meant there was a robust pool of deals for us and for other private credit players to choose from. In the last, I would say, six weeks, we've seen a pretty significant increase in the level of M&A activity. And I think from an origination standpoint, Q4 will be a markedly higher quarter for us and for the industry than the last several quarters have been. Having said that, to your point, we've seen a lot of fundraising in direct lending strategies aimed at very large deals, aimed at this BSL replacement market. We play in that market, but that's about I don't know, it's about 20% of what we do, whereas we have a whole series of competitors where it's basically 100% of what they do. We've seen some very significant spread compression and shift toward more borrower-friendly terms and activity in that space. And that's been a trend for months now, but I do think that it's accelerated in the last six weeks or so. For us, this is not a great problem because our focus is on the traditional middle market. I do think you're going to start to see indicia of spread compression in next quarter's earnings from the players who focus on the larger market.
spk04: Helpful, thank you. And I also appreciate the color you gave on interest coverage. For the names that have tighter interest coverage, I'm sure that's sort of a spectrum. To what extent are you seeing sponsors put money in and if not very much, do you see 2024 as sort of a make or break time frame in the need for the sponsor to come up with money and capitalize these companies that you know, that is if interest rates remain high? Any color on that topic, thank you.
spk07: So the question is, what about companies that are tight on interest coverage or fixed charge coverage? How are they managing that? And the answer is we're seeing a number of different approaches. We're absolutely seeing sponsors step up and put incremental equity in a large number cases. We're also seeing companies undertake other strategies in order to create liquidity. Sometimes that's the creation of a hold code note or a new pick preferred issuance. Sometimes it's also growth. Growth has done a good job for many of our borrowers of creating more free cash flow generation that's enabled the formerly tight ratios to look better. So we're seeing different companies approach this in a variety of different ways. I don't think there's one clear pattern to point to. I do think that private equity sponsors are being pretty constructive in addressing liquidity needs in their portfolio companies. Awesome. Thanks so much.
spk08: Your next question comes from the line of Robert Dodd with Raymond James. Your line is open.
spk02: Hi guys. Congratulations on the quarter on the credit quality. So two questions. One's kind of on to Finn and David, your comments there that you've seen some spread compression in the upper end of the market and also that the terms are shifting to a little bit more borrower friendly at that end of the market. I think it was Chris or maybe Matt in their trademark said that you've seen the overall spread compression, but the EBITDA definitions and total leverage was still favorable overall. And so I tend to imply that you hadn't seen that shift in the bulk, like the 80% of the other stuff. How confident are you that the terms will continue to be diverged between the top end of the market and the more cool middle market as we go into 2024? Or do you think they're going to converge in 2024 even in the core middle markets going to shift to a much more borrower friendly set of structures? Hopefully that question is clear.
spk07: Here's how I would describe it for Robert. There's always, think of it as a pendulum. There's always a swinging between more borrower friendly and more lender friendly conditions. And the swing tends to happen first in the broadly syndicated market. Today that market is not terribly active. So the first place we're really seeing it is in the BSL replacement market, the larger end of the direct lending market. And to Finn's point, that's the place that's seen the most inflows, those capital inflows through these non-traded BBC structures. I don't think the middle market and the larger market are disconnected. I think things tend to happen in the middle market with a lag and to a more modulated degree. And I think that's the pattern we'll see again in 2024.
spk02: Got it. Thank you. And then the second one, unrelated to that, on your unsecured notes, you do have an April 24 maturity. I mean, you've got plenty of liquidity on the Volvo to pay it off if you wanted to, but can you give us the thoughts on what that is with a positive outlook? I presume you don't want your unsecured mix to shrink too much, positive accumulating agencies, that is. So can you give us some thoughts? And obviously borrowing costs are higher today on fixed rate, but would you be looking to swap or anything like that on that, if you were to refinance that?
spk07: So all good questions that we're actively looking at, I think your statement is correct that over time we want to maintain unsecureds as a really meaningful the right hand side of the GBDC balance sheet. And we're going to always be looking at when's the right time to issue and in connection with issuing whether the right decision is to swap into floating or not. I think these are all under active consideration. Thank you.
spk08: Your next question comes from the line of Ryan Lynch with KBW. Your line is open.
spk05: Hey, good morning. My first question I had was just related to credit quality. When I look at your overall credit statistics, non-accruals, loss in your portfolio, they've been really, really good on a bottom line standpoint. But I'm just curious when I look at your portfolio monitoring and rating scale, there's been a pretty meaningful uptake, maybe a doubling of those rated three credits over the last year. Those aren't credits that are significantly underperforming, but there is maybe some worries in there. So how should investors think about, overall credit's been fantastic thus far, but those rated three credits have maybe doubled over the last year. How should investors think about that?
spk07: So it's a great question, Ryan, and it's one that's a little challenging for us. It's challenging because we're
spk00: naturally
spk07: conservative. So we, and Matt talked about this to a degree, we have an internal modus operandi of downgrading credits to three, maybe earlier than some of our peers. And we do that because it's part of our process. It's part of what happens after that is it triggers a higher level of monitoring. It triggers a level of involvement with management teams and with sponsors. It triggers a whole series of activities that we think are integral to our sustaining that long-term favorable track record that you just alluded to. The place where we see the greatest correlation with future credit losses is in category one and two credits. And you didn't mention it, but I will. It's actually fallen over the course of the last year. It's gone from .3% to 0.3%. That's an exceptionally low number. So I think you've got to look at the whole picture. Anybody who says that the increase in interest rates that we've seen is irrelevant from a credit perspective doesn't know math. Math does make interest fixed-charge coverage much harder at today's interest levels than they were in 2021, all things being equal. And our rating system reflects this. Our approach to credit decision-making and credit monitoring reflects this.
spk05: Okay, that's helpful background and all that. The other question I had was you mentioned spreads sort of compressing. Maybe some of this is more focused on some of the upper middle market, but certainly spreads compressing a little bit, maybe some borrower friendly terms more in the upper middle market. We'll see if that translates to the core middle market. But my question is why? Why is that occurring? Just because from a high level, and that's not something commonly we've heard from others as well, I'm just curious. There's been a lot of capital raised, and it's been, I feel, pretty consistent throughout 2023 from private credit looking to deploy. But now that it seems that there's starting to become some increases in deal flow and deal activity, we see now there's a pretty big supply potentially of coming onto the marketplace of guys looking for additional credit out there. It seems like that would actually better balance the supply and demand issue, but it seems that now that there's actually an increase in deal flow and activity, it seems that that's actually becoming more borrower friendly, which seems a little bit counterintuitive. More people are coming to the market looking for credit. It seems like that would maybe work a little bit more in the favor of the lender side. I'd love to just hear you explain what you're seeing and why.
spk07: I don't have an answer for you on that. I think you're correct in your description of what we're seeing, and I'm not sure I have a better explanation than you do on the why. Dynamics like this tend to be a function of supply and demand, so I think we'll get a better sense for those dynamics over the course of the coming months. I think it may get worse from a spread standpoint. It wouldn't shock them.
spk05: Okay. Just the last question I had was you and others have talked about seeing a little green shoes and maybe a pickup and activity. In order for that activity, you're talking about maybe a little bit of a rebound now and into the year end and then potentially a bigger pickup and activity into 2024. I'm just curious, in order for that deal activity to actually cross the finish line and come to fruition, do you get the sense that market conditions just have to stay the same and stabilize right around here, or does there anything have to change like a cut in base rate, a much stronger growing economy, or do you think if we just stabilize right around these levels from an economic standpoint, do you think you'll continue to see a big uptick in deals crossing the finish line of 2024?
spk07: I think the things that reduce uncertainty would help. So by way of example, if we get more data suggesting that the economy is continuing to grow, that inflation is continuing to grind lower, that would be helpful. If we got internationally some good news in respect of the two wars that are underway, that would be helpful. I think the biggest obstacle right now to seeing a significant rebound, a significant and sustained rebound in deal activity is the level of uncertainty out there. Having said that, I think we've had a fair bit of time go by since June 22 when the M&A environment took a sudden slowdown in the context of higher rates and the swoon in both equity and credit markets. I think that's helped a lot in recalibrating valuation expectations on the part of both buyers and sellers. There's still in many cases a gap, but I think that gap has narrowed and I think continued reduction in uncertainty would help in further narrowing.
spk05: Understood. That's all for me today. I appreciate the time. Thanks, Ryan.
spk08: There are no further questions at this time. I will turn the call back to Mr. David Golub for closing remarks.
spk07: Thank you all for giving us a bit of your time today. I hope you found this call helpful. We look forward to talking to you next quarter and as always, if you have any questions in the interim, please feel free to reach out. Have a great Thanksgiving, everybody.
spk08: This concludes today's conference call. We thank you for joining. You may now disconnect your line.
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