Palmer Square Capital BDC Inc.

Welcome to the Palmer Square Capital BDC's fourth quarter and year end 2023 earnings call. At this time, all participants are in elicit mode only. A question and answer session will follow the prepared remarks. As a reminder, this conference call is being recorded. At this time, I'd like to turn the call over to Andrew Weatherburn Maxwell, Investor Relations. You may now begin.

Good morning and welcome to Palmer Square Capital BDC's fourth quarter and year-end 2023 earnings call. Joining me this morning are Chris Long, Chairman and Chief Executive Officer, Angie Long, Chief Investment Officer, Matt Bloomfield, President, and Jeff Fox, Chief Financial Officer and Director. Palmer Square Capital BDC's fourth quarter and fiscal year-end 2023 financial results were released earlier today. and can also be accessed on Palmer Square's investor relations website at palmersquarebdc.com. We have also arranged for a replay of today's event that can be accessed on our website for the next six months. During this call, I want to remind you that the forward-looking statements we make are based on current expectations. The statements on this call that are not purely historical are forward-looking statements. These forward-looking statements are not a guarantee of future performance, and are subject to uncertainties and other factors that could cause actual results to differ materially from those expressed in the forward-looking statements, including and without limitation market conditions caused by uncertainties surrounding interest rates, changing economic conditions, and other factors we identified in our filings with the SEC. Although we believe that the assumptions on which these forward-looking statements are based on are reasonable, Any of those assumptions can prove to be inaccurate, and as a result, the forward-looking statements based on those assumptions can be incorrect. You should not place undue reliance on these forward-looking statements. Parma Square Capital BDC assumes no obligation to update the forward-looking statements unless required by law. To obtain copies of SEC-related filings, please visit our website at parmasquarebdc.com. With that, I will now turn the call over to Chris Long.

Good morning, everyone. Thank you for joining us today. We're thrilled to have you with us. This is our first earnings call as a publicly traded company, so I want to welcome our new shareholders, prospective investors, and recently initiated analysts. I'm going to offer a brief overview of the opportunity we see for the Palmer Square BDC, an overview of our IPO in January, and then turn it over to the team to discuss our market outlook, portfolio update, and financial performance. We started Promer Square Capital Management, the parent investment advisor to PSBD's investment advisor in 2009 amidst the financial crisis to deliver superior relative value opportunities across corporate and structured credit. Today, the broader firm manages close to $30 billion in assets and has invested over $45 billion of capital since inception. Notably, Palmer Square has established its reputation in the global corporate and structured credit market as the top ranked CLO issuer by deal volume in 2023. This strong performance during a difficult environment for CLO issuance demonstrates our ability to find attractive opportunities and deliver for our investors across market conditions. The performance also highlights the merits of our durable relative value driven approach that we are excited to bring to a broader range of investors through PSBD. PalmerSquare's platform is focused on corporate and structured credit across three significant strategies. Opportunistic, income in short duration, and finally, private and structured credit. PSBD was launched in 2019 and we started investing in early 2020. We will continue to benefit from the broader Palmer Square platform with our deep credit expertise, strong relationships across capital markets, and thoughtful approach to liability structures. Unlike traditional direct lending models, we believe our model offers investors attractive risk-adjusted returns through a more liquid and transparent strategy given our ability to invest across the syndicated and direct lending markets We are incredibly excited about the long-term opportunity for our strategy, and especially in this present moment in time, given the compelling risk return we see in today's market. As you evaluate our offering amidst the broader sector, we want you to understand three critically important tenets about our investment profile. First, we have a differentiated strategy across markets that provides more optionality and the ability to be more agile than the broader BDC sector. This means we have more upside potential with the ability to generate long-term total return through building NAV. Second, because our strategy is more liquid and focused on larger borrowers, we believe our portfolio offers more stability and less risk to our investors. In short, we believe PSBD generates more competitive yield than the broader landscape with significantly less risk. And third, we are extremely committed to enhanced transparency, offering monthly NAV updates and estimates, as well as a unique fee structure that charges only on net assets. Let's dive deeper into those three points and review how these attributes are growth drivers for us. First, our differentiated investment strategy offers the opportunity to invest across multiple markets and deliver long-term total return through NAV expansion. This ability to invest across the liquid and private markets at scale gives us multiple shots on goal. We can drive returns for investors through both attractive income generation and purchasing discounted loans to generate NAV growth and total return. Specifically, our team has the ability to identify the best relative value in the larger, more liquid parts of the market in both the broadly syndicated market and private credit. We've already seen private credit issuers return to the broadly syndicated loan market to refinance at tighter spreads. And we expect the overlap between the two markets will continue to grow. The broader BDC industry is frequently constrained by illiquid assets and portfolio adjustment challenges in the face of economic disruption. We believe we have the ability to capitalize across various markets due to the multifaceted nature of our investment capabilities and strategy. Importantly, our emphasis on higher quality, shorter duration, and liquid credits should enable us to opportunistically rotate investments. This is the case when attractive relative value opportunities arise or when we are able to capitalize on market dislocations. Again, our ability to drive growth in a uniquely curated, high-quality portfolio should grow NAV and drive long-term shareholder returns. My second takeaway is that we have constructed an opportunistic portfolio that we believe generates strong returns while mitigating risk. We focus on investing in large, broadly syndicated loans and large private credit. Our focus is on loans to larger companies with strong fundamentals in positions that are senior in the capital structure. We also maintain a smaller pocket for opportunistic investments where our firm possesses specialized investment capabilities. This includes structured credit and European credit. Our portfolio is supported by a rigorous investment process focused on downside protection and overall credit quality. We have thoughtful credit analysis and cash flow based lending techniques and a focus on strong structural protection and limited downside. Our highly liquid and first lien weighted portfolio will limit risk and allow us to deploy capital quickly. In addition, we can generate excess returns during periods of elevated market volatility. My last point is our commitment to enhance transparency in shareholder alignment relative to the broader BDC landscape. Our fee structure is unique to other externally managed publicly traded BDCs. We only charge a management fee on net not gross assets. At Palmer Square, we want to be rewarded when we attract more equity capital that grows net asset value, not for taking on leverage. With our current debt to equity ratio, the base management fee payable would represent approximately 70 basis points of our growth assets and 1.75% of net assets. We also plan to continue our practice of publishing monthly NAVs. For our liquid assets, this NAV is based on live, actionable prices. As recently announced, our NAV per share as of January 31st, 2024 was $17.17. We believe this disclosure is best in class and reinforces our alignment with shareholders. To close, I want to offer a little more color around our IPO last month. On January 17th, PSBD priced a public offering of approximately 5.5 million shares on the New York Stock Exchange at a price of $16.45 per share. Gross proceeds from the IPO totaled approximately $90 million. The team is delighted with the outcome of the offering and could not be more excited to embark on this journey as a public company. I'll now hand the call over to Angie to discuss our outlook for the year and how we have already put this capital to good use.