Barings BDC, Inc.

At this time, I would like to welcome everyone to the Bearings BDC Inc. conference call for the quarter ended June 30, 2025. All participants are in a listen-only mode. The -and-answer session will follow the company's formal remarks. If anyone should require operator assistance during the conference, please press star zero on your telephone keypad. Today's call is being recorded and a replay will be available approximately two hours after the conclusion of the call on the company's website at .bearingsbdc.com under the investor relations section. At this time, I will turn the call over to Joe Mazzoli, head of investor relations for Bearings BDC.

Good morning and thank you for joining today's call. Please note that this call may contain forward-looking statements that include statements regarding the company's goals, beliefs, strategies, future operating results, and cash flows. Although the company believes these statements are reasonable, actual results could differ materially from those projected in forward-looking statements. These statements are based on various underlying assumptions and are subject to numerous uncertainties and risks, including those disclosed under the sections titled risk factors and forward-looking statements in the company's quarterly report on form 10Q for the quarter ended June 30th, 2025 as filed with the Securities and Exchange Commission. Bearings BDC undertakes no obligation to update or revise any forward-looking statements unless required by law. I will now turn the call over to Eric Lloyd, chief executive officer of Bearings BDC.

Thanks, Joe, and good morning, everyone. We appreciate you joining us for today's call. Please note that throughout today's call, we'll be referring to our second quarter 2025 earnings presentation that is posted on the investor relations section of our website. On the call today, I'm joined by Bearings BDC's president, Matt Freund, chief financial officer, Elizabeth Murray, and Bearings head of global private finance and BDC portfolio manager, Brian High. In the second quarter, BDC delivered another strong and consistent set of results fueled by leading credit performance and supported by the scale of our franchise. We are pleased to announce strong net investment income that was accompanied by excellent credit performance within the portfolio. Meanwhile, origination activity during the second quarter was consistent with what we experienced during the preceding period with gross originations of nearly 200 million and net originations of 32 million. Robust deployment combined with the benign credit environment and our focus on the top of the capital structure investments and middle market issuers combined to serve our investors well. We focus on the core middle market due to its lower leverage and stronger risk adjusted returns, making it the most compelling segment for BDC and our shareholders. Further, our focus on sectors that will perform resiliently across economic environments provides an additional level of stability to our portfolio. This combination of senior secured financing solutions, core middle market focus, defensive noncyclical sectors, and our global footprint offers our investors strong relative value and portfolio differentiation compared to the broader BDC sector. Consistent with how we defined our approach in past discussions, our portfolio strategy is outlined in greater detail on slide six, where we share the breakdown between sponsored, non-sponsored, and platform investments in the portfolio. We continue to successfully invest across the market and deliver compelling returns for our shareholders. As Matt will touch on in a moment, we continue to maintain cautious optimism about the broader economy. The first half of the year was marked by uncertainty on a range of fronts, and we feel that BDC is well positioned to withstand a variety of economic developments. With that said, we believe BDC investors should be more focused on alignment with the investment advisor than ever before. Private credit managers have expanded rapidly in recent years. Private equity firms have launched credit strategies. Publicly traded asset managers have entered the space to enhance fee earning assets. And smaller niche players have sought to gain a foothold in the increasingly crowded market. What sets Barings apart is our alignment of interests. We are backed by patient, long-term capital with decades of experience through multiple market cycles. This foundation allows us to build durable portfolios that can perform across economic environments. We are also proud that BDC maintains the highest hurdle rate of any listed BDC. This reflects our commitment to accountability and our focus on delivering strong, sustainable value for shareholders. Barings is a $456 billion credit-focused asset management franchise. Credit is not simply a vertical at Barings, it's our specialty and what we have developed an expertise in across countless strategies. More specifically, we have been investing in middle market companies through many cycles, which positions us well to deliver value for our shareholders amidst the market volatility that we face today. We believe our expertise in credit, with scale and track record that outstrips the broader BDC landscape, will continue to differentiate us among the broader industry. Turning our expectations for deployment in the current environment, we articulated during the first quarter that the pace of buyout opportunities was subject to a number of variables that were difficult to predict. As we move further into 2025, we will take the opportunity to reiterate that forecasting origination activity is always more of an art than it is a science, and is especially difficult in the current environment. Market sentiment feels reminiscent to 2024. Specifically, there are a handful of factors that we experienced last year that are now repeating themselves. First, our pipeline is building with more nation opportunities, which has often preceded periods of greater LBO financing. Second, qualitative guidance from sell-side investment banks indicate that the number of companies looking to transact is very strong. And lastly, the hold period for middle market private equity portfolios is stretching to some of the longest on record. All of these reasons point to increased M&A activity in the back half of the year. However, as we have experienced in the past, similar fact patterns may have a meaningful upswing in volumes. We are cautious that these leading indicators could be another false positive for activity levels in the second half of 2025. Turning to the specifics of BBDC's financial performance in the quarter, Net Asset Value per Share was $11.18, reflecting a modest decline compared to the prior quarter. Net Investment Income for the quarter was $0.28 per share, compared to $0.25 per share in the first quarter. The improvement in Net Investment Income was related to certain one-time fees and distributions received from our portfolio companies, which Elizabeth will discuss in more detail momentarily. Now digging in a bit deeper into the portfolio, we continue to actively maximize the value and legacy holdings acquired from MVC Capital in Sierra. We are seeking to dogmas these assets at attractive valuations, as we did in the first quarter. As of quarter end, bearings originated positions now make up 95% of the BBDC portfolio at fair value, up from 76% at the beginning of 2022. Our investment portfolio performed well during the second quarter, with the non-accrual rate improving to 50 basis points at fair value as of June 30, well below industry averages and comfortably below our long-term expectations. There is no substitute for fundamental credit analysis, which has always been at the core of our investment philosophy, and is reflected in the health of the BBDC portfolio today. Turning to the earnings power of the portfolio, the weighted average yields at fair value was 10.1%, unchanged from the prior quarter. Our board declared a third quarter dividend of $0.26 per share, consistent with the prior quarter. On an annualized basis, the dividend level equates to a .3% yield on our net asset value of $11.18. As we previously announced, our board declared $0.15 of supplemental dividends that will be paid in three quarterly installments during the calendar year 2025, the third of which will be paid alongside our regular third quarter dividend. We believe our portfolio is on the strong footing and we're advancing our strategic imperatives. As Matt will cover momentarily, BBDC is well positioned to navigate the current market environment and deliver consistent risk-adjusted returns in the quarters ahead. I'll now turn the call over to Matt.

Thanks, Eric. During our prior earnings call, we discussed how the rapidly evolving macroeconomic landscape was impacting our issuer base and how we worked to understand and triage anticipated challenges. Following the presidential inauguration, our team began analyzing the impacts of prospective tariffs should the administration choose to pursue them, and the net takeaway was that issuers were on alert and in some cases concerned about the future financial results, but were unable to assign a confident view of the outcome for calendar 2025, particularly after April. As we have continued throughout the year, we have continued to view the economic outlook as uncertain and believe that our intentional, durable portfolio construction is what will help us navigate the operating environment ahead. As we look ahead for opportunities in the second half of 2025, it is important to underscore the advantages of investing alongside a scaled platform backed by long-term capital. At BBDC, our structure allows us to take a patient and selective approach to capital deployment, prioritizing quality over speed. In contrast, some publicly traded asset managers have increasingly focused on growing assets rather than carefully allocating them, and over recent quarters, this shift has raised questions about the consistency of their relative value discipline. Our approach remains centered on thoughtful underwriting, long-term positioning, and a commitment to delivering durable value for shareholders. With that, I would like to offer a few observations that will help guide our areas of focus. Both interest rates and spreads have exhibited compression over the course of the past 12 months. Historically speaking, interest rates and spreads move in opposite directions when rates increase, spreads contract, and vice versa. In another interesting post-COVID development, both rates and spreads increased in tandem and have now been declining in similar capacities. We are optimistic that during the course of the next interest rate cycle, the historic relationship between interest rates and spreads will revert, such that reductions in interest rate levels will somewhat be offset by increases in interest rate spreads. That said, regardless of the direction of interest rates, investors in BBDC will continue to see a disciplined approach to investing in middle market issuers backed by both sponsored and non-sponsored ownership groups. While interest rates will ebb and flow, we believe that there is a compelling complexity premium that can accompany both sponsored and non-sponsored opportunities if the manager is able to source them. Bearing says the history of being able to source transactions that entail a complexity premium, and we anticipate leaning into these opportunities in a more intentional fashion for the duration of the year. The Bearing's network of sourcing opportunities is vast, and BBDC shareholders are appropriately positioned to take advantage of deployment into middle market corporate issuers. Eric referenced one-time fees and dividend income during the period, and we are pleased to report that some of these fees were derived exactly from the kind of unique, sponsored sourcing opportunities that I have just referenced. Post-June 30, we anticipate that assets underwritten with a complexity premium will continue providing tailwinds to our results for the balance of the year. While we are pleased with the financial results of the quarter, we are also encouraged by the credit trends in the portfolio. While we are mindful of the broader economic landscape, we have observed that macroeconomic events have not historically produced wide-thread defaults. Rather, idiosyncratic risk unique to the specific issuers has created the biggest challenge. Failed acquisitions, poor management teams, and botched ERP implementations have been responsible for more underperformance in portfolios than exogenous factors. We underwrite every transaction as though we will experience a recession during our hold period and are encouraged about the positioning of the portfolio today. For this reason, we are comforted by our current non-accrual percentage among the strongest in the sector, the small percentage of PIC, again leading in the industry, and a very small number of risk-rated five issuers in the BBDC portfolio. Turning to an overview of our current portfolio, 74% consist of secured investments, with approximately 71% of investments constituting first lien securities. Interest coverage within the portfolio remains strong, with weighted average interest coverage this quarter of 2.4 times above the industry averages and consistent with prior quarter. We believe strong interest coverage demonstrates the merits of our approach of focusing on leading companies in defensive sectors and thoroughly underwriting their ability to weather a range of economic conditions. The portfolio remains highly diversified, with the top two positions in the portfolio, Eclipse Business Capital and Rokade Holdings, being strategic platform investments. These investments provide BBDC shareholders with access to differentiated, compelling opportunities to invest in asset-backed loans and litigation funding solutions. Two specialized areas, we believe, provide attractive total return and diversification benefits. Turning briefly to portfolio quality, risk ratings exhibited positive movement during the quarter as our issuers exhibiting the most stress, classified as risk ratings 4 and 5, were 7% on a combined basis as compared to 8% in the immediately preceding quarter. The improvement in the underlying risk ratings was driven by certain upgrades to issuers that have been experiencing temporary performance challenges. The number of issuers with the greatest stress are at the lowest level since we have been disclosing these statistics, a fact that we feel is important in light of the broader macroeconomic uncertainty. Non-accruals accounted for .5% of assets on a fair value basis and .4% on a cost basis, which we believe is one of the lowest levels of non-accruals in the industry. We remain confident in the credit quality of the underlying portfolio. We expect BBDC's differentiated reach and scale, coupled with its core focus on middle market credit and unmatched alignment with shareholders, will continue driving positive outcomes in the quarters and years to come. The BBDC portfolio is a -the-cycle portfolio designed to withstand a variety of economic environments and prevailing interest rate levels. And with that, I will now turn the call over to Elizabeth. Thanks,

Matt. As both Eric and Matt have said, BBDC continues to demonstrate the durability of our core earnings, uphold -in-class credit quality, and provide strong, reliable yields to our fellow shareholders. As announced during our Q1 earnings call, the early termination of the MVC CSA, which resulted in a $23 million payout in June, further enhances our ability to generate attractive returns by redeploying capital into additional income-producing investments. On slide 16, we provided a detailed bridge of the NAV per share movement for the second quarter. As of June 30th, NAV per share was $11.18, representing a 1% decline quarter over quarter. The decline was driven by net realized losses on the portfolio, credit support agreements, and FX, which came to $0.14 per share. This was partially offset by net unrealized appreciation on the investments, credit support agreements, and FX of $0.06 per share. The net realized loss on the portfolio was primarily due to the exit of the black angus position. However, this was largely offset by the reversal of unrealized depreciation and was covered by the Sierra CSA. The valuation of the Sierra credit support agreement increased by approximately $6.4 million from $44.8 million in the first quarter to $51.2 million as of June 30th. During the second quarter, the Sierra portfolio had sales and repayments of approximately $2.7 million and had 18 positions remaining in the portfolio, down from 20 positions as of March 31st. We reported net investment income of $0.28 per share for the quarter, an increase from $0.25 per share in the prior quarter. This growth was primarily driven by higher interest income resulting from increased originations, a one-time dividend from our security holdings position, and an elevated one-time fee income. These gains were partially offset by higher incentive fees, which included the impact of the catch-up provision. Excluding the catch-up incentive fees would have been approximately $8 million. Our net leverage ratio, which is defined as regulatory leverage net of unrestricted cash and net unsettled transactions, was 1.29 times at quarter end, up modestly from 1.24 times as of March 31st. This puts us slightly above our long-term target range of 0.9 to 1.25 times. The increase in leverage was primarily driven by elevated origination activity during the quarter. We expect leverage to trend back within our target range in the second half of 2025, supported by continued asset sales to Jocossi and anticipated repayment activity. This ensures we will maintain the capacity to pursue attractive opportunities that may result from either increased turbulence in markets or an uptick in deals and potentially spreads that may result from a benign environment and reduced reduction rates. More broadly, our funding profile remains well structured and aligned with our disciplined approach to asset liability management. Our liabilities are well diversified in terms of duration, seniority, and structure with an industry-leading percentage of unsecured debt in our capital structure. As of quarter end, our unsecured debt accounted for approximately $1 billion of our funding and representing roughly 65% of our outstanding balances. Subsequent to quarter end, on August 4th, we fully repaid $50 million of private placement notes at par, including accrued and unpaid interest. Additionally, as of June 30th, we had $322 million of available capacity under our revolving credit facility, providing continued flexibility to meet funding needs and support future unsecured issuances. Now on to capital allocation. Our net investment income for the quarter was $0.28 per share, which more than covered our regular dividend. In addition, our net investment income for the first half of 2025 fully covered our -to-date regular distributions. As previously mentioned, the board declared a third quarter dividend of $0.26 per share, which when combined with the previously declared special dividend of $0.05 per share, brings the total dividend for the quarter to $0.31 per share, representing an .1% discount. Looking ahead, we feel confident in the level of our regular dividend. The durability of our portfolio's net investment income, underpinned by a diversified mix of senior secured investments and a well-ladder capital structure, gives us conviction in our ability to maintain this level. Our views are further supported by the current shape of the forward SOFR curve, which we believe will continue to provide a constructive backdrop for net investment income generation in the near term. We continue to actively use our 2025 share repurchase plan and repurchase 100,000 shares during the quarter, bringing the total shares repurchased under the current plan to 250,000. We will continue to exercise this plan as a way to deliver value to shareholders and to demonstrate our belief in the long-term value of our portfolio. To close, I'll offer a little color on the third quarter. To date, Bearing's BDC has made 59.3 million of new commitments in Q3, of which approximately 39 million closed and funded. Our overall liquidity remains strong, with over 322 million of available capital at quarter end, and we are well positioned to navigate uncertain market conditions and be a reliable capital partner to sponsors and borrowers through such uncertainty, which we expect will result in compelling investment opportunities for us to pursue on behalf of BDC shareholders. With that, I would like to open the call up for questions.

Thank you. We will now be conducting a question and answer session. If you would like to ask a question, please press star 1 on your telephone keypad. A confirmation tone will indicate your line is in the question queue. You may press star 2 to remove yourself from the queue. For participants using speaker equipment, it may be necessary to pick up your handset before pressing the star keys. One moment, please, while we poll for your questions. Our first questions come from the line of Phinney and O'Shea with Wells Fargo Securities. Please proceed with your questions.

Hi, everyone. Good morning, Elizabeth. You talked about more sales to Joe Cassie. Can you expand on maybe the profile of those if that's going to, if that would be something in more of the front book or the back book and, you know, and or more of a GPF or a solutions bent? And then on its overall leverage, you you already upset leverage this quarter. How much more it sounds like more? What's the target leverage again on that? Thank you.

I'll start with with leverage and then let me just clarify. Are you asking about leverage at the BDC? Are you asking about leverage at Chicago? Because I want to make sure I answer.

Joe Cassie.

Yeah, so I'll go ahead and hop in. In the context of kind of how Joe Cassie is currently structured and funded today, there's ample liquidity in that vehicle to absorb incremental investment capacity. I think that as we manage the leverage at BVC itself, I'm sure that so that folks recognize that it was at the higher end of our range this quarter. I think in light of kind of broader uncertainties around deployment opportunity, it's our expectation that we will continue to run it towards the higher end of the range, as well as the fact that we feel really supported by our by strong credit quality in the portfolio. So those combination of factors give us confidence that running it closer to the high end of our range is both an appropriate measure as well as a prudent one in terms of driving returns for shareholders. As we think about the investment capacity actually in the JV vehicle itself, I can report that it has ample capacity to absorb incremental investments. And you referenced kind of the front book or the back book. We think about portfolio construction in Joe Cassie the same way we think about it throughout all of our portfolios. So we're looking to drive diversification both from kind of an underlying industry perspective. We're looking to drive it from a vintage perspective. We're looking to drive it from a yield perspective where appropriate. And so it's hard to say that it's going to largely be transfers of kind of recent vintage versus older vintage. I would anticipate it'll be a mix of all of the above.

Okay, and I guess that brings to the next question. Can you talk about where the larger, maybe largest new name screen vision? Where does that sort of fit in the in the bearings platform? And then can you kind of talk about, you know, in the, you know, past year, I guess, post-Coryntia, how much like to what extent, you know, the have the GPF and cap solutions platforms blended together? Is it sort of like one unit now, but just taking a barbelled approach of 450 stuff and 850 stuff?

Yeah, hey, Fannis, Brian, just to answer that question. Obviously, there's been a lot of collaboration across the platform, not just between the teams that you referenced, but certainly in the way that we're operating across all of our investment teams. You know, there are individual investment committees depending on the asset class. But, you know, from a sourcing perspective, it's pretty centralized. From an underwriting perspective, it's pretty seamless. It's basically the same process, but, you know, perhaps different skill sets or areas where you may look to originate assets. So I wouldn't say that there's, there's no difference in terms of the underwriting standards and the way that investments get into the BDC and the collaboration continues to be consistent with, you know, the way it's been at bearings since I've been here.

Yeah, and to highlight what Brian emphasized there, Ben, is that each one has a separate and distinct investment committee for that particular asset class or strategy.

The only thing I would add specific to the issue, Fannis, is that, you know, in a small world phenomenon, that asset that you noted was actually reviewed by myself years ago. We ultimately lost it due to a financing situation that just got too tight. And so it's a name that's been familiar to bearings for a long time. And I think that the fact that it's a sponsored first lien position kind of fits a number of pools of capital within our organization.

Isn't it, it's first lien and second lien, right?

Yep. Yep.

Okay, interesting. But yeah, thanks for the call. It's very helpful and congrats on the quarter. Thanks.

Thanks, Ben.

Thank you. Our next questions come from the line of Ellie Schetz with Raymond James. Please proceed with your questions.

Good morning. Thanks for the question. So obviously you had a strong quarter of originations. Can you provide any breakdown to how much was follow on for existing borrowers versus new borrowers?

Yeah, so across the franchise, the number over the course of the past quarter has been between 60 and 70%, depending on the underlying portfolio. And I think that BBDC falls kind of squarely within that, within that range for this quarter.

Got it. And how is the pipeline looking after the second quarter closed? I know repayments were kind of high this quarter. Are they still going to be in that range? Are they down?

Yeah, but you know, in referencing Eric's commentary, we have reasons to feel very optimistic around forward visibility on origination. And so we're certainly hopeful that deployment trends will continue to be very attractive. That said, again, in keeping with Eric's comments, the fact is that this is the same profile of an economic outlook that we had a year ago and candidly two years ago. And so we want to be careful around kind of booking these originations before they actually materialize. I think that one of the overriding principles that we think about on the portfolio management front for BBDC will be to keep the portfolio invested in high quality credits. It's a very granular portfolio. And so even to the extent we start having repayments, I don't think that we have any concerns around delivering strong returns through the balance of 2025.

Okay, got it. That's helpful. And with like all your new originations this quarter, how does the yield on those compare to like the overall yield was I think .1%? Was it higher or lower or kind of in the same range?

Yep, it was about on the weighted average yield for new issuance this quarter was about 10 basis points than the overall portfolio. 10 basis points higher than the overall portfolio. So call it 10.2 on a fair value basis against the current portfolio that's 10.1.

Okay, got it. And then one more quick one. You previously sized tariffs impact as less than 5% of the portfolio with like the recent like little bit of clarity we've gotten. Do you have any update there has shifted at all?

No, no, I, it's impossible to say that the tariff risk is higher. But I think that what's much more pervasive is just a sense of uncertainty. You know, hiring has been delayed throughout the issuer base. Capital investment has been delayed throughout the issuer base. And I think that people are moving into a very defensive position. And so we are credit concerns, I would say are probably lower than they were a quarter ago, but the uncertainty more broadly from a macro perspective is definitively higher.

Okay, got it. Thanks so much for the call. I appreciate it.

Thank you. Our next questions come from the line of Derek Hewitt with Bank of America. Please proceed with your questions.

Good morning, everyone. So dividend coverage was relatively good even after adjusting for the one time items on the revenue and expense side. So how should we think about the sustainability of the dividend given the forward curve? And it looks like. I guess the first 50 basis points of rate cuts are only a penny quarterly headwind based on the sensitivity table in the queue. So I'd love to get your thoughts on that issue.

Yes, from a dividend coverage perspective, you know, you did point out we had some one time dividend and one time fees and those offset the higher incentive fees. So when we think about over the next few quarters with where the current SOFR curve is, we have confidence in earning our dividend. Now, again, if things change with rate cuts, that would could potentially change the outlook. But right now with where the SOFR curve is, we feel good about the 26 cents.

Okay, and then credit continues to be kind of remarkably strong for most kind of excluding some of the kind of the usual suspects. So I guess, where do you think we are in the credit cycle? And maybe just for the industry? How should we think about credit? Going forward, do you think over the next year or two, we're going to be kind of in the kind of in the same general vicinity? Or do you think credit could worsen for the overall industry?

Yeah, I think, you know, looking out two years is maybe a little bit difficult. But if you just sort of look at the backdrop today in terms of, you know, modest growth in North America, call it stable inflation and unemployment where it is today, the setup is pretty constructive for credit, I would say. If, you know, how that might change over the next 12 to 24 months is really anybody's guess. But in terms of the amount of activity that we're seeing, you know, some visibility and a little bit more certainty around how some of the noise back in April is going to play out, it has been helpful, I would say, in terms of building a pipeline of opportunities. And certainly, you know, as I mentioned, kind of the right backdrop for credit and at this point in the cycle.

Okay, thank you. And then maybe one more, just in terms of the amendment activity for the second quarter versus the first quarter, did you guys mention that in your prepared moraques?

Not with respect to amendment activity, no. But it was, actually, I would assess that it was lower than average. What I point you to is kind of the risk rating trends. And so the pool of most criticized assets having shrunk quarter on quarter, I think, is a good reflection of what was likely the target of our time on the underperforming side. And as a general theme, it's lower in the Q2 period than it was in prior quarters.

Okay, great. Thank you.

Thank you, Derek.

Thank you. Our next question has come from the line of Casey Alexander with Compass Point. Please proceed with your questions.

Yeah, hi. Good morning. I know shareholders appreciate the historical $86 million worth of share repurchases, but the last couple quarters, the share repurchases have been the most significant. And so the stock trades at one of the widest discounts in terms of price to NAV within its peer group. So I'm just wondering what the temper is in the prosecution of the share repurchase program and why maybe we're not taking a little bit more advantage of this exaggerated discount. And what other measures do you think that you can take to help shrink that discount in terms of price to NAV?

Yep. I mean, Casey, great question. Candidly a focus of ours day in and day out. In terms of the tactical element of it, the reality of how our quarterly cadence works is that the blackout period and our ability to repurchase shares is influenced by when our valuation cadence starts. And if you think about it over the course of the past couple of quarters where there was more opportunistic buying available, we've been talking internally about doing more strategic things like the termination of the CSA. And so whenever we start talking about terminating the CSA, then that kind of expands those blackout windows. And so while we think that we're doing, we firmly believe that we are doing shareholder accretive activities that then kind of put us in a period where we just cannot be as active on the share repurchase front. I do think that it is a core form of how we are returning capital to shareholders and how we are increasing the share price. And it will continue to be a pillar of how we execute the strategy going forward. But of course, we'll be subject to some constraints with respect to when we can actually do that based on what's happening kind of within the vehicle itself. Yeah, I think that as it relates to kind of our focus on narrowing the gap, I think that our long-term expectation is that we will continue to drive improvements in ROE. And as we are able to do that by rotating out of some of the non-income producing assets, I think that we're going to see a natural pull northward where that ROE will then continue to support and justify a higher share price and therefore narrowing the gap between NAV and the ultimate trading level.

All right. Thank you for that. My second question is that a number of BDCs in this reporting cycle have characterized, in fact, August specifically as one of the busiest months in a couple of years in terms of indication of interest of New Deal activity. Are you guys seeing the same thing? And how can you manage inflow of New Deals relative to a leverage ratio that's already pretty high?

Yeah. Look, I love the hyperbole within our industry. You just said that August has been one of the busiest months in recent memory. Well, we're only eight days in. And this is only the first full week. And so for people to be making assessments about kind of August being a really active month, I think it's just kind of an interesting data point. I would say that our pipeline is higher, for sure. If you took to the origination professionals in our business, they would echo that sentiment for sure. I think it's a little bit early in terms of calling it and to say that this will be one of the most active quarters, quote, on record. But I think that to your point, in terms of balancing deployment with the opportunities, we actually included a new slide this quarter, slide five in our earnings deck that just kind of shows the capital base that's supporting our GPF franchise. And one of the reasons that we wanted to introduce this is to reflect the fact that we have very balanced forms of capital. And so we are not driven by short term expectations to deploy, to deploy, to deploy, only to drive fee earning revenue. What we're going to do, and as we have always done, is that we are going to deploy capital in a measured way to ensure that these vehicles are performing in a diversified fashion for the benefit of the underlying investor. You've seen that we've run our leverage level at BBDC a little higher this quarter. That was a conscious decision that we made. I think that we will continue to run it towards the higher end of our range. But we anticipate keeping the capital deployed in assets that we feel like are very compelling and don't anticipate any challenges doing that throughout the balance of 2025.

All right. Thanks for taking my questions.

Thank you, Casey.

Thank you. We have reached the end of our question and answer session. I would now like to hand the call back over to Eric Lloyd for closing comments.

Thank you, operator, and thank you all who participated in today's call. BBDC is well positioned to perform in today's operating environment. With strong support from our manager and decades of experience to draw from, our senior secure portfolio of global investments will continue to deliver for our fellow shareholders. We look forward to updating you further this fall. Everybody have a great weekend.

Thank you. This does conclude today's teleconference. We appreciate your participation. You may disconnect your lines at this time. Enjoy the rest of your day.