Day: May 17, 2024

The CLO Investor Podcast, Episode 4

Shiloh:

Hi, I am Shiloh Bates and welcome to the CLO Investor Podcast. CLO stands for collateralized Loan obligations, which are securities backed by pools of leverage loans. In this podcast, we discuss current news in the CLO industry and I interview key market players. Today I’ll be joined by Ivo Turkedjiev, a broadly syndicated CLO manager at New Mountain Capital. The CLO manager is the entity that picks the initial loans for the CLO and keeps it fully invested during its reinvestment period. The CLO manager also works to ensure the CLO passes all of its many tests. New Mountain manages approximately 40 billion of AUM, of which 10 billion is in credit products, both middle market and broadly syndicated loans. I asked Ivo to join me today because of the strong performance of the CLOs he manages. Some of the topics for today’s podcast include New Mountain’s approach to credit investing, loan recoveries, and the path to building a successful CLO management platform. Now let’s get started. Ivo, welcome to the podcast.

Ivo:

Thank you so much for having me, Shiloh.

Shiloh:

Great. Well, you and I have known each other for quite some time now. Why don’t you take a little bit of time and tell our listeners a little bit about your background?

Ivo:

Sure. I got involved in the leverage loan space. It was my first job out of college. Started in 2001 at Lehman Brothers in the leveraged finance group, underwriting leveraged loans and hired bonds. Timing was somewhat challenging Two months after I was on the job. Nine 11 happened, we didn’t even have an office, worked out of a hotel for several months until Lehman bought a building from Morgan Stanley and moved to the current bar building in Midtown. So yeah, it was very interesting because in those days, obviously 2000, it was the telecom bust, the tech bust were kind of happening, the NASDAQ was trading down massively and the nine 11 happened and there was this expectations almost that all markets are shut and are we even going to be working? Yeah,

Shiloh:

I remember

Ivo:

Lo and behold, two months after nine 11, I worked on a bond deal out of a hotel room in Midtown and the market opened rates were coming down and what was a pretty small institutional leverage loan market at the time, it was about 150 billion. It was really an emerging market really started growing as lower rates and more activity from private equity sponsors really boosted the market. But the other thing that was really boosting the market, and I didn’t know much at the time, was the emergence of a CLO product, which was really expanding. The technology was proven at that point and when more managers were getting involved and expanding what was a pretty tiny market.

Shiloh:

And so how did you end up at New Mountain?

Ivo:

So as Lehman, I actually moved to the buy side in 2003, worked for a shop called GSC Group, and I was hired because we were doing our first a regular way CLO at that time at GSC group and we’re looking to grow the business and I started as an analyst and then pretty quickly got involved in trading and portfolio management and just in time in 2008 for the financial crisis to happen and have to say at that point I really learned a lot about CLOs, how CLOs work on the spot kind of thrown in the line of fire. 2008, once Liman filed, leveraged loan prices declined in a very substantial way. Every other loan was triple Co almost. That’s how it felt. So the CLOs got really stressed and it’s interesting adults times, very few people, I mean there was some doubt in the market whether CLOs can survive the stress of a Lehman because that’s not what was modeled at the time.

And pre Leman CLOs actually were more levered than they are today. There was more risk in the structure. The equity cushions were thinner and there was more leverage through every tranche all the way down to the bottom of the stack. Yet the deals did very well. I think to the surprise of a lot of people, the self-healing mechanism, the ability to buy cheap collateral. What ended up happening is a lot of the 2060 2007 vintage deals ended up being great deals, which nobody could believe me because at the time I remember everyone thought that these transactions would fail and they didn’t. And I think post Leeman C market really took off. So actually prior to joining New Mountain, I spent almost a decade at Invesco where had various roles, but one thing that I led the CO liability investment book, we managed over a billion of CO liability investments across a couple of different strategies. So that showed me a different aspect of the CO world, not just as a manager, but also as an investor. So that was a very interesting experience. And then in 2019, I joined New Mountain to start the seal of business here at New Mountain.

Shiloh:

And so what attracted you to New Mountain?

Ivo:

New Mountain at the time when I joined the company had been around for almost 20 years. I actually got involved in the credit business right after Lehman as well, seeing an opportunity to buy loans of companies. That New Mountain, which the core private equity firm started as a private equity firm, a lot of accumulated sector knowledge and company knowledge. So when the ability to buy loans of companies that were fully underwritten at 60 cents on the dollar appeared, that was viewed as a very attractive opportunity. That portfolio allocation from a private equity fund at the time later on when to become our publicly traded BDC, new Mountain Finance Corporation, NMFC, that’s how the credit business started. And at the time when I joined New Mountain, had a really good track record of really protecting the downsides, the defensive growth mentality that we employ across all our strategies had really translated to a very low defaults rates and net gains in some of the broadly syndicated portfolios. So I thought that the firm had a really differentiated strategy and ability to analyze credit and there are over a hundred CLM managers out there, but not all of them have differentiated strategies. And I thought that I had an opportunity to create a CLO manager with the firm’s backing that was differentiated and could provide an alternative to investors.

Shiloh:

I think one of the things that appealed to me about your platform besides the track record is just that my understanding is that a lot of the loans, their LBOs were your private equity folks. They’re probably not the buyer of the company, but maybe they participated in the auction, they did due diligence on the company there, and so you have real deep expertise by the time the loan gets to you. The company’s already been circulating as an idea around New Mountain,

Ivo:

Certainly for art of the investments. That is true. But I think what we’ve done here at New Mountain, we’ve been tracking sectors. Again, we invest in defensive growth and the way we define defensive growth is we’re looking for companies and sectors that have really good medium to long-term growth trajectories, good tailwinds in their back and within those sectors, we seek to identify companies that are a cyclical that can grow and do well no matter what the general economic cycle to get there. We spend a lot of time studying industries, developing relationships within industries, getting to know companies, getting to know players, bringing a lot of executive talent from those industries as part of the New Mountain Network, in addition to companies that we’ve evaluated directly at some point in the past, we also have the ability to reach out to this broad network that we have developed and really help our credit team verify the thesis, make sure that we’re not missing stuff. You can talk to people that are operating in the industries we’re investing in day to day, and that can help us really identify potential pitfalls and risks that just sitting at the desk here in Manhattan, our analysts might not be able to identify. I think that’s really the differentiation that we’re bringing. Again, combined with sector thesis, avoiding deeply cyclical sectors where our view is that companies don’t ultimately control their own destiny.

Shiloh:

So a broadly syndicated loan. If Bank of America or JP Morgan is the underwriter, let’s say it’s a billion dollar loan, and they have to decide who they’re going to allocate that to today, a lot of times the loan’s oversubscribed, so there’s more demand for the loan than supply. Could you talk a little bit about how you think you guys are treated in that process by the banks and if you kind of punch above your weight in terms of the allocations that you get?

Ivo:

Great question. In a market like today, pretty much every new issue, loan transaction, this oversubscribed, there’s a lot of demand for loans right now on the market’s been really ripping higher for the last six months and new issue loans tend to be attractive. They come at a slight ID slight discount to par in a market where a large portion of the loans trade above par, that’s pretty attractive. So as a result of that, there’s a lot of demand as you mentioned for new issue allocations. I think the way we differentiate ourselves and punch above our weight as you put it, we do have really good relationships with sponsors. We do have a direct lending private credit business where we cover sponsors, develop relationship with these sponsors. So

Disclosure AI

Note in CLO jargon, a financial sponsor refers to a private equity firm.

Ivo:

That certainly is helpful when looking for favorable allocations. But in addition, as a sponsor ourselves, we’re active in the market financing our portfolio company. So that leads to some pretty good relationships. Our capital markets desk has really good relationships with the banks, with the underwriting banks as well, and we’re often making calls to these desks on our behalf to get a better allocation. But yes, it’s a market in which everyone is looking for their little advantage and we believe we have a couple in our pocket.

Shiloh:

So you’re in the process of building out the CLO platform there. Could you talk a little bit about just some of the challenges to getting a CLO platform up and running and how you guys have tackled those?

Ivo:

So in 2019 when I joined, we had to build the business from the ground up. What was helpful is we already had a credit business, as I mentioned earlier. So we had back office, middle office functions in place, compliance functions I benefited from a lot of the groundwork was there, but we had to set up OSCE business from scratch. What we chose to do is we chose to outsource certain functions, especially middle office, back office functions. We had to hire a team, grow the team to make sure that we have the expertise to cover all the 200 plus loans that typically go into A CLO origination and trading. Other areas where we had to expand. We hired a couple of folks that used to be CLO bankers joined me to help with structuring deals and monitoring existing transactions. So it’s a lot of work. Those first 18 months felt like the workday never ended, but pretty happy with the way things turned out. And of course my timing this time also was not great. We were six months into it when covid happened, so that threw a little bit of a range. But again, the CLO market rebounded pretty quickly and in October of 2020, we issued our first transactions. We were the first new manager to come to market after Covid and after Covid, the market came back as robust as ever. So the good thing about CLOs is it’s a market that again, has withstood the test of multiple events and

Shiloh:

have a lot of challenges,

Ivo:

A lot of challenges and keeps coming back.

Shiloh:

So at some point I imagine you’re going to want to be on all the approved lists in Asia where a lot of times you get the best debt execution there. And from my perspective as a CLO equity investor, good returns are generated both by returns on the assets that you’re managing, but also getting good debt execution. So what’s the process like in kind of educating these investors about the merits of your platform?

Ivo:

Sure. I agree a hundred percent with you that getting good debt execution is crucial to getting good equity returns and building the platform. As a newer manager, it was very important for us to get our story out and that requires a lot of investor outreach. Last month I’ve been to both Asia and to Europe speaking with investor, selling the new mountain story, showing our performance and our differentiation and sharing views on the market. That’s a repetitive process. Again, once you get on investor screens, they want to follow your performance for some time. But I think again, with more differentiated story and good performance, good performance has certainly been very helpful in getting on more and more investors approved lists, which again is crucial to tightening the spread on the liabilities and creating better equity arb for our investors.

Shiloh:

What do you think the biggest metrics the Asian investors are looking for on the debt? It seems to me that the approved lists, there are a big function of just name recognition, so that’s certainly helpful, but are they focused on the equity residual value at deals? Are they focused on how many defaulted loans or triple C rated loans? I mean, there’s tons of metrics, right? So are there any that they are particularly focused on?

Ivo:

I think some of the metrics that probably Japanese investors care a little bit more about, they care about the size of the platform. You often hear that three or 5 billion number of a UM is a minimum for an investment for a lot of the larger banks over there. In addition, track record linked of the track record three to five years track record is also very important. In addition to all the other metrics that you mentioned that I think most investors pay close attention to diversity of the portfolios, the average rating as well as Triple CS downgrades. These are all metrics that investors often ask about. They want to understand the strategy of the manager and as well as Triple CS downgrades. These are all metrics that investors often ask about. They want to understand the strategy of the manager and

Disclosure AI:

Note the range of CLO management strategies include how much diversity there is in the loan pool, if the spread on the CLO loans is low or high, and whether the CLO manager purchases second lien loans or bonds subject to the constraints of the indenture,

Ivo:

They do want to make sure that you’re following the strategy. I think as an investor, when I was investing, the last thing that I wanted to see was a manager who changed strategies Often that made the investment less predictable and it wasn’t easy to evaluate because if you’re investing, if a manager fits one strategy within a broader portfolio and then shift to a different strategy, that’s something that as an investor I did not appreciate. So I think that’s something that investors are focused on as well.

Shiloh:

I’ve never bought a aaa, but I imagine that from that perspective, none of ever defaulted. So that’s great. But you do have things that you care about would be is there a risk that I get downgraded to aa maybe that matters for capital charges around the bank. And then there’s also just kind of the platform risk where, I don’t know, a couple of senior guys leave and there’s a transition and a for aaa, I mean it’d be worse for the equity, but at the aaa, they want to see some stability, a big platform with a deep bench where whoever bought the AA isn’t going to have to explain anything kind of up the chain at the bank they’re investing from. I guess that’s the priority for those guys.

Ivo:

Yeah, no, I certainly agree with that.

Shiloh:

So I think CLO equity has had a very good last year, 2023, and then this year the trend’s continuing. So we feel good about that. I think there’s a lot of upside coming this year in terms of refis and resets, but the one headwind really I think has been loan recoveries. And so your deals have performed very well. But across the market there have been some recoveries where I guess the first lane lenders found out that they weren’t as senior and secured as they expected to be at the end of the day. So could you talk a little bit about recovery rates, where you see that going and what you do to make sure that you’re in deals where the legal documentation is up to par, if you will?

Ivo:

Sure. It’s a great question. Obviously I think this is something that we spend a lot of time talking about internally, and it’s been a big topic in the market. I think several factors are really driving the decline in recovery rates that we have seen in the last couple of years. I think from my perspective, the first defaults that we saw in 2223, once we saw rates go up and companies struggling to make their interest payments combined with the inflationary challenges that we had in the economy, supply chain disruptions, et cetera. The first companies that really defaulted were companies that in some cases should have defaulted a long time ago that had kicked the can down the road. And vision is probably the name that comes to mind as a poster child for that. Companies that had restructured multiple times in attempts to create more runway for the company when the reality was the debt burden was never sustainable and the headwinds, the secular challenges that they were facing made it impossible to grow out of the capital structure. So the recoveries in those situations ended up looking worse than they should have been because again, we had a situation where more and more debt kept coming into the business to provide a runway and ultimately impacting layering existing layers and impacting recoveries.

Disclosure AI:

Note, the layering of debt refers to the company taking on additional debt with a higher seniority than the existing debt layering is not permitted in most first lien loan credit agreements.

Ivo:

The second driver for me was you saw a lot of the secularly challenged businesses. Also the fault movie theaters is probably another poster channel for that. The business that with technological innovation became apparent that the long-term outlooks for that business are not good and the valuation kept coming down and as a result, the recoveries did not look good. The third factor and the one that we’re spending a lot of time on is the new liability management exercises that have really started to define restructurings in the loan market. Perhaps for listeners who are less familiar with the markets, with loans, the loan documents, you have a first lien package and on almost all assets typically, however, in good markets like we had in 2021 where we had a lot of money chasing deals, the covenants deteriorated and sponsors got a lot of leeway to layer debt to do things without lender approval.

Those openings created the ability for investors to come in, take advantage of these loopholes, layer the existing debt and impact negatively recoveries. It’s an unfortunate development in the market, one that we’ve been vocal against, but that certainly has impacted recoveries. And that leads, to answer your question, your initial question, how do you protect from the ace, the good deals, the deals that everybody wants? Kind of as you mentioned earlier, the oversubscribed deals, they’ll understand they have not a lot of leverage pushing back on covenants and the loan docs. So that’s necessitate really strong views on credit. Kind of going back to the way we believe we protect our investors is really by doing a lot of work upfront and making sure that we invest in businesses that have low probability of having to use these buckets, having to use these liability management exercises that ultimately could impact recoveries.

So I do think that over the next couple of years, the defaults that are going to come will have better outcome because I do think that those defaults will really be driven by good businesses that have bad capital structures that got a little overlevered when rates were zero, that could not stay prolonged 5% interest rates. So FR levels and as a result, need to restructure the balance sheets to rightsize the debt. So I do think the recoveries there will be better, but the one wild card is again, the direction in which these liability management exercises will take, and that provides a little bit of uncertainty.

Shiloh:

I think most CLO equity investors assume there’ll be a 70 cent recovery at the end of the day. Should we think of that as a number from the past or is that still attainable if you’re with the right manager and in the right deals?

Ivo:

I do think it’s a number that’s still obtainable, but I think as a market, I do expect recoveries to come a little bit lower than the historical average. I remember 10 years ago we were using 80, that kind of went down to 70. So we’ll see if time will tell what the right numbers. But with the emergence of more loan only structures and some of the leeway in the documents and these liability management exercises, which reduce recovery is kind of upfront, I do think that it’s reasonable to assume that the numbers should be a little bit lower than 70.

Shiloh:

One of the things we’ve seen in just how default rates and recovery rates are reported is that usually what makes it into the journal or to Bloomberg is the defaults and recoveries of the overall loan index. And that could be an interesting number, but what we kind of care about is the default and recovery rate in CLOs, which have a more conservative slice of that index. And then beyond that, hopefully your CLO investor is able to add value and be with managers where it’s even a more favorable cut of the loan universe. So some of the loan recoveries that were low just weren’t in CLOs anyways, so it was like a interesting headline, but more of an issue for maybe a distressed semester or A BDC. So that’s what we saw there.

Ivo:

I can say managers have gotten very sophisticated and generally manage downgrade risk and manage the fault risk before it happens. So what we do is when we see deterioration in quality and performance, we look to usually pare down the positions, seeing that we might’ve gotten the initial underwrite slightly wrong, or the company just underperformed something in the market changed. And I do think that with a lot of the restrictions that CLO indentures put on managers, most managers are very focused on protecting the downside and tail risk within their portfolios.

Shiloh:

So then there’s significant upside of my opinion for the equity coming this year from refis and resets. So we basically have mapped out all of our deals when a on-call period comes off, if there’s something to do, it could be a refinancing, it could be a reset, it could be nothing. It could be we’ve already got a good capital structure and we’re just going to take it forward. So how do you guys think about the optionality and maybe some modeling you do to kind of determine what you think the best path is for your CLOs? After the on-call expires,

Ivo:

Once the deal is out of the on-call period, we’re regularly evaluating what are the options, where is the capital structure and the money, or do we have a chance to reset the capital structure, lower the cost of liabilities, extend the deal, et cetera. So that’s part of just a regular monitoring process, and it’s always the questions once the perfect time to do it. If you wait for the absolute perfect moment, you risk the market moves away. So that’s something that factors into that decision as well. Yeah, sure, the market could tighten another 10 bips from the liabilities, but I also might miss my window of opportunity here. So it really is on the case by case basis. We look at where the deal is from a par perspective, the portfolios, how reset all the portfolios, are there any assets that have to be excluded, talk to our equity investors, get their thoughts on what the optimal timing is as well.

But it’s an ongoing process for sure, and what you’re seeing right now is I think a lot of the deals that are coming for Visa were the deals that were done in 22 and 23 that have higher cost of liabilities, where the reset is what I would describe as a no-brainer. You’re able to lower the cost of liabilities in many cases by 40 50 bps, creating a much better outcome for the equity or older deals that were done pre covid that are towards their reinvestment period. But if you have a clean portfolio, you have the ability to do something creative with the deal and reset it and extend it, or in some cases just refinance the liabilities, lower the cost of capital and keep the arbitrage going longer.

Shiloh:

One of the things we’ve seen for the 2021 vintage where we got really good debt execution, I think kind of a misconception in the market is that when the reinvestment period ends, the CLOs done reinvesting, and that’s really pretty far from the case. It’s actually true in middle market CLOs, it’s different, but in broadly syndicated, there’s so much flexibility to reinvest after the reinvestment period ends. So that typical indenture says the reinvestment period’s up, but if any loan optionally prepays, you can reinvest it subject to some constraints there. But the point is that every loan repayment almost is unscheduled. So we’ve seen a lot of deals continuing to invest two years post the reinvestment period ending. So I think that kind of ties a little bit into the refined reset conversation in that just because the reinvestment period is ending, if you have a good AAA or cost down the stack, you might be able to keep the CLO pretty full for B or plus, depends on prepayment rates and other things. If you have that good debt execution, there’s no rush to move into something else.

Ivo:

Great. I think the flexibility is there, and again, certain managers are more aggressive than others on reinvesting proceeds, but it definitely needs to study the doc as an investor, especially if you’re investing up the stack. If you’re a AAA investor, that becomes a very important part of the conversation.

Shiloh:

Yeah, if you’re a AAA from 2021, you just want your money back as soon as possible and you could reinvest it wider spreads today. So wanted to also ask, what’s one or two things that you find interesting about the CLO business? I mean, you kind of mentioned self-healing, which would be at the top of my list, but what’s one or two other things that are unique and fun about CLOs?

Ivo:

I think the clo o markets, as a manager, as an investor I guess as well, you’re always chasing the perfect arbitrage and there’s always, again, a lot of things have to align for that to happen, and it’s a very dynamic ative process of trying to pick the best timing. So that’s something that I enjoy. What is the perfect timing to come to the market with a deal and that process, creating the transaction lighting everything up, I find pretty exhilarating. The other thing that I find very fascinating about the asset class is that I think that’s something that you had mentioned before on your podcast is that the 2007 transactions that everyone thought would be real duds ended up being great deals, and that I think every market offers an opportunity even it would maybe consider to be a bad market. You have the ability to buy loans very cheap, create real principle appreciation within the portfolio, which could really drive returns in a really good market. You have the ability to lock in cheap liabilities, which create a lot of optionality to take advantage of market dislocations over the reinvestment period. So again, a dynamic product that every deal is kind of unique. Every deal has its own dynamics, and every market offers an opportunity.

Shiloh:

I started buying CLO equity about 12 years ago, and the arbitrage has always been kind of a funny concept for me. So if you study finance in grad school, you learn arbitrage is riskless profits. You buy a stock in one market and sell it in another and you make money and CLOs arbitrage is not riskless at all. That’s definitely not the business. But for 12 years, I think people have described the arbitrage as poor, and so it was poor when I started. That’s how people described it. And then it got worse from there for the most part, with the exception of 2021, I think people thought the arbitrage in 2021 was pretty good because you had lib IBOR floors and the money that was adding a nice bit to equity returns.

AI Disclosure:

Note LIBOR floors on loans protected the loan investor at times when LIBOR was near zero. LIBOR floors increased CLO income, but CLO note investors do not receive floors on the base rate. The market has transitioned from a LIBOR base rate to a SOFR base rate.

Shiloh:

Now I think it’s improving. So I think there’s more and interesting opportunities in the primary market. One of my observations also is just that whenever you hit a period where risk is up on the loans, the discounts that they trade to is never what’s realized in terms of loan losses. So for example, when I’m buying a CLO equity piece and there’s loans trading below 90, you’re going to make some adjustments there in terms of the price you’re going to pay. But the reality is all those reserves that people take when they’re buying CLO equity, in my experience, the actual loan losses tend to be much less than what people are actually reserving for, and the result is favorable returns over extended periods of time.

Ivo:

Yeah, I think if the manager continues to get credit rates and take appropriate risk, that’s a big driver. Sometimes. I think the worst thing is a manager in my experience that you can do is faced with a loss on a loan, try to replace it, buy something else at a discount to mitigate the loss, which ends up being a worse loan than the one you initially had. Then kind of create more losses, but that also again, creates, I think there’s majors who have done very well buying loans at a discount and replacing some of the losses in the portfolio over time and rebuilding the portfolios to a healthy state.

Shiloh:

Yeah, it’s been a very resilient product. So Ivo, thanks so much for coming on the podcast. Really enjoyed chatting with you and good luck building out the platform.

Ivo:

Shiloh, it was a real pleasure. Thank you for having me and good luck with the podcast.

Disclosure AI:

The content here is for informational purposes only and should not be taken as legal business tax or investment advice or be used to evaluate any investment or security. This podcast is not directed at any investors or potential investors in any Flat Rock Global Fund.

Definition Section: 

AUM refers to assets under management 

The secured overnight financing rate (SOFR) is a broad measure of the cost of borrowing cash overnight collateralized by Treasury securities. 

The London Interbank offer rate (LIBOR) was a broad measure of the cost of borrowing cash overnight for banks on an unsecured basis. 

Leveraged loans are corporate loans to companies that are not rated investment grade broadly. 

Syndicated loans are underwritten by banks, rated by nationally recognized statistical ratings organizations and often traded by market participants. 

Middle market loans are usually underwritten by several lenders with the intention of holding the investment through its maturity.

Global financial crisis or GFC refers to the banking downturn in 2008 and 2009. 

Junior Capital is financing that has a lower priority claim in debt repayment to a secured term loan 

Spread is the percentage difference in current yields of various classes of fixed income securities versus treasury bonds, or another benchmark bond measure 

Yield is income returned on investment, such as the interest received from holding a security. The yield is usually expressed as an annual percentage rate based on the investments cost. 

Current market value or face value amortization is the process by which the CLO repays its financing after the reinvestment period ends. 

General disclaimer section references to interest rate moves are based on Bloomberg data. The credit quality of fixed income securities and a portfolio is assigned by a nationally recognized statistical rating. Organizations such as Standard and Pores, Moody’s or Fitch, as an indication of an issuer’s credit worthiness ratings range from triple A highest to D lowest bonds rated Triple B or above are considered investment grade credit ratings.

Double B and below are lower rated securities, also known as junk bonds. Any mentions of specific companies are for reference purposes only and are not meant to describe the investment merits of or potential or actual portfolio changes related to securities of those companies unless otherwise noted. All discussions are based on US markets and US monetary and fiscal policies. Market forecasts and projections are based on current market conditions and are subject to change without notice, projections should not be considered a guarantee. The views and opinions expressed by the Flat Rock global speaker are those of the speaker as of the date of the broadcast and do not necessarily represent the views of the firm as a whole. Any such views are subject to change at any time based upon market or other conditions, and Flat Rock Global Disclaims, any responsibility to update such views. This material is not intended to be relied upon as a forecast, research, or investment advice.

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