Goldman Sachs BDC, Inc. (GSBD) Q4 2016 Earnings Report, Transcript and Summary

Good morning. My name is Dennis, and I'll be your conference facilitator today. I would like to welcome everyone to the Goldman Sachs BDC, Inc., Fourth Quarter 2016 Earnings Conference Call. Please note that all participants will be in listen-only mode until the end of the call, when we will open up the line for questions. I will now turn the call over to Ms. Katherine Schneider, Head of Investor Relations at Goldman Sachs BDC. Katherine, you may begin your conference.

Thanks, Dennis. Good morning everyone. Before we begin today's call, I would like to remind our listeners that today's remarks may include forward-looking statements. These statements represent the Company's beliefs regarding future events that, by their nature, are uncertain and outside of the Company's control. The Company's actual results and financial condition may differ, possibly materially, from what is indicated in these forward-looking statements as a result of a number of factors, including those described from time-to-time in the Company's SEC filings. This audiocast is copyrighted material of Goldman Sachs BDC, Inc., and may not be duplicated, reproduced, or rebroadcast without our consent. Yesterday after the market closed, the Company issued an earnings press release and posted a supplemental earnings presentation, both of which can be found on the home page of our Web site, at www.goldmansachsbdc.com, under the Investor Resources section. These documents should be reviewed in conjunction with the Company's Form 10-K, filed yesterday with the SEC. This conference call is being recorded today, March 01, 2017, for replay purposes. With that, I'll turn the call over to Brendan McGovern, Chief Executive Officer of Goldman Sachs BDC.

Thank you, Katherine. Good morning, everyone, and thank you for joining us for our fourth quarter earnings conference call. To outline the call, I'll start by providing an overview of our results for the fourth quarter and provide key highlights for 2016. I'll then turn the call over to Jon Yoder to discuss our investment activity and portfolio metrics. Jonathan Lamm, our CFO, will discuss our financial results in greater detail. And finally, I'll conclude with some closing remarks before opening the line for Q&A. We are pleased to report solid results for the fourth quarter and full year 2016. Net investment income per share was $0.50 for the fourth quarter, which brought net investment income per share for the full year to $2.10. For the full year ended 2016, our NII return on common equity was 11.3%. You’ll also note that our net investment income continued to immensely exceed our dividends. This quarter NII cover our dividend by 111%. For the full year 2016, NII covered our dividend by 117%. We believe this performance is result of attractive yields on our assets, and our continued focus on maintaining an efficient expense structure. As we announced after the close yesterday, our Board declared a $0.45 per share dividend payable to shareholder record as of March 31st. Moving on to investment performance and credit quality. Since our inception in 2012 and including investment activity through our strategic joint venture, we have made over 100 discrete loans to companies in our target middle market universe, and have generated a gross unlevered IRR of 13.3% on fully exit investments. We are pleased that 2016 demonstrated a continuation of this stock record with similarly strong results on fully exit investments. Of our 100 plus investments since inception, just two have gone through a balance sheet restructuring. And in both situations, we have been able to attain a stake in the Company that we believe gives us the potential to recover our invested capital. We believe that this is evidence of our prudence in negotiating terms and structures that give us meaningful control over our collateral, and demonstrates the focus and expertise we bring to managing underperforming investments. As we close the year, we had two investments on non-accrual status, representing 1.4% of the portfolio at fair value. The first investment, Iracore, is a manufacturer of pipes containing an elastomer lining that’s used primarily in oil and gas applications. Our investment thesis centered on the existing installed base of the Company’s pipes that need to realigned on a recurring basis. We underwrote a first lien investment at a low leverage multiple of debt to EBITDA in conjunction with a sponsor that invested a significant amount of cash equity beneath our debt. Subsequently, oil prices fell dramatically and Iracore’s customers reduced their capital budgets, pushing out maintenance of their existing pipes. While management has undertaken efforts to preserve liquidity through rightsizing its cost structure, the Company did not pay its coupon in December. Currently, we and other lenders are engaged in negotiations with Iracore and we expect to reach a consensual agreement shortly. Consistent with the outcome of the two restructurings since inception we referenced earlier, we’re aiming to attain a meaningful stake in the company that could enable us with the opportunity to recoup our initial investments, should the operating environment improve. We look forward to providing you an update on the progress of this investment in our next quarterly conference call. The other investment we had on non-accrual status as of quarter end was our loan to Washington Inventory Services, or WIS. WIS provides physical inventory counting and other services to retailers and operates in, what I would characterize as an attractive [indiscernible] market structure. Numbers for the company have been solid. WIS has experienced margin pressure, resulting from execution related inefficiencies and high labor cost. Notwithstanding with the dynamic, we are hopeful that with active management, WIS will be able to mitigate these issues by taking advantage of its strong market position. We are actively engaged with the company and its advisors and are focused on obtaining a favorable outcome for our investments. We are pleased to report that we placed our investment in NTS communications back on accrual status from the quarter. As you may recall, we’ve previously worked with NTS and its sponsor back in July to provide additional capital and flexibility in order to facilitate more aggressive investment in the company’s fiber and telecommunications network and to promote subscriber growth. NTS has executed well against this plan with capital programs coming in on-time and below budget, and new fiber subscriber additions showing positive trends. During the quarter, we were hard at work on the right side of our balance sheet as well. We achieved a significant milestone by issuing $115 million in principle amount of convertible notes. We believe this demonstrates our ability to access the institutional unsecured financing market on attractive terms and provides our shareholders with the benefit of greater diversity and funding sources and increase financial flexibility. In addition, we enhanced the terms of our revolving credit facility by extending the maturity date for an additional year to December 2021, and upsizing the total commitments to $605 million. We are one of a handful of the B2Cs that were successful last year, in both continuing to extend maturity of its revolving credit facility and attracting new capital to increase its size. We believe that this is a reflection of the strength for our platform. In addition, subsequent to quarter-end, our Board of Directors renewed the Company’s stock repurchase plan to an additional year, which extends the plan to March 18, 2018. Under the plan, the Company may repurchase up to 25 million of its common stock if the market price is below the Company’s most recently announced NAV per share, subject to certain limitations. We believe that buying back shares at a discount to NAV should the opportunity arise, is in fact a use of the Company’s capital. With that, let me turn the call over to Jon Yoder.

Thanks, Brendon. During 2016, we continued to execute on our strategy of leveraging the relationships and capabilities of Goldman Sachs to directly originate loans to middle market companies, primarily located in the United States. In fact, 100% of all new originations during the year were direct originations and were not purchased in the broadly syndicated market. We continue to believe that this direct origination strategy presents an attractive investment opportunity, since it allows us to command a premium price for our capital, earn origination fees for our investors, and negotiate terms and structures that provide meaningful downside protection relative to what is available in a broadly syndicated loan market. Early in January of this year, we were successful in getting an exemptive order from the SEC that allows us to invest together with other funds managed by the GSAM Credit Alternatives platform as we originate new opportunities. While obtaining the exemptive order we will not change our investment strategy, we believe that it is a significant development for our shareholders. In particular, it will allow us to more effectively utilize our size when competing against other lenders for opportunities, while at the same time it should reduce concentration risk as we add more single names to our portfolio. With that as a backdrop, we are pleased with our investment activity during the fourth quarter. We had gross originations of $110.3 million and new investment commitments and fundings of $90.3 million, including an additional $8.5 million investment in the senior credit fund. Sales and repayments activity totaled $55.9 million, resulting in net portfolio growth of 2% quarter-over-quarter. New investment commitments were across two new portfolio companies and three existing portfolio companies. Sales and repayment activity totaled $55.9 million, primarily resulting from a full repayment by one portfolio company and a partial syndication of our investment in another portfolio company. During the course of 2016, the broader trend across credit was tighter spreads and looser terms. Yet despite these trends, the weighted average yield of our investment portfolio at cost was relatively unchanged during the year. We began 2016 at 10.9% and ended the year at 10.6%. Furthermore, none of the new loan originations that we did during 2016 were covenant light and all had financial maintenance covenants. Again, we think this speaks to both the strength of our sourcing, as well as our careful consistent underwriting standards. As of December 2016, total investments in our portfolio were $1.167 billion at fair value comprised of 91.5% senior secured loans. This includes 36.1% in first lien; 26.6% in first lien/last-out unitranche; 28.8% in second lien; and about 30 basis points in unsecured debt; 1.5% in preferred and common stock and 6.7% in the senior credit fund. We also had $7 million of unfunded commitments, as of December 31, bringing total investments and commitments to $1.174 billion. The portfolio continues to be diversified with investments in 40 portfolio companies operating across 26 different industries with no significant industry concentration. The weighted average net debt to EBITDA of the companies in our investment portfolio at quarter-end was 4.8 times versus 4.6 times as of last quarter. The weighted-average interest coverage of the companies in our investment portfolio was 2.7 times, slightly lower than 2.9 times at the end of the prior quarter. Turning to the senior credit fund, we are very pleased with the continued growth of this investment, where we have earned 14.5% return on our invested capital over the past year. We and our partner were able to grow investments in the senior credit fund by 22% during the quarter, and by 68% year-over-year. Our investment in the senior credit fund now represents approximately 7% of the Company’s total investment portfolio, and is the Company’s largest single investment. During the quarter, we and our partner originated $106 million of investments for the senior credit fund in six new companies and six existing portfolio companies, bringing the total size of the investment portfolio to $480 million. All of these new investments were in first lien senior secured floating rate loans with interest rate floors. The senior credit fund had sales and repayments of $16 million, driven primarily by the repayment of one portfolio company and a partial sale of another portfolio company. Total activity in the senior credit fund resulted in net portfolio growth of $87 million during the quarter. The senior credit fund portfolio remains well diversified with investments in 37 portfolio companies operating across 22 different industries, and again with no significant industry concentration. I’ll now turn the call over to Jonathan to walk through our financial results.

Thanks Jon. As of the fourth quarter of 2016, we’ve total portfolio investments at fair value of $1.167 million outstanding debt of $503 million and net assets of 665 million. Our net investment income per share was $0.50 as compared to $0.51 in the prior quarter. As Brendon mentioned earlier, our Board of Directors declared a first quarter dividend of $0.45 per share payable to shareholders of record as of March 31st. For each of the trailing six quarters, we have out-earned our dividend on a net investment income basis. We believe that this is a testament to the earnings power of our portfolio, as well as to our efficient expense structure. During the quarter, our average debt-to-equity ratio was 0.71 times as compared to 0.74 times during the previous quarter. The decrease in average leverage was primarily attributed to repayments that occurred at the beginning of the quarter, coupled with new portfolio investments made near the end of the quarter. We ended the quarter with a debt-to-equity ratio of 0.76 times. Turning to the income statement. Our total investment income for the fourth quarter was $30.5 million, down from $34 million last quarter, primarily driven by the classification of Iracore and WIS as non-accrual investments and a decline in prepayment related income. Total expenses before taxes were $12 million for the fourth quarter as compared to $15 million in the prior quarter. Expenses were down quarter-over-quarter, primarily driven by a decrease in incentive fees. The lower incentive fees were attributed to our incentive fee structure. We net our capital losses, whether realized or unrealized, against pre-incentive net investment income for the purposes of calculating incentive fees. During the quarter, we had net unrealized depreciation on certain investments, which resulted in a reduction in incentive fees paid to GSAM. We believe there is differentiated fee structure that is a tangible benefit to our shareholders. We ended the quarter with net asset value per share at $18.31, down approximately 1.5% from the prior quarter, driven by unrealized depreciation on certain investments. Our supplemental earnings presentation provides a NAV bridge to walk you through these changes. As Brendan mentioned earlier, we were active during fourth quarter in executing on our financing strategy. In October, we closed on an issuance of $115 million principal amount of 4.5% convertible notes. The convertible notes mature on April 01, 2022 unless repurchased or converted in accordance with the terms prior to such date. Net proceeds of the offering were used to pay down a portion of the debt under our revolving credit facility. We are very pleased with the terms that we were able to achieve in this offering. With this offering, we also considered the impact to our total blended cost to financing by limiting the offering to 23% of our debt capacity at the top end of our target leverage ratio. We believe this mix delivers our shareholders the benefits we were seeking to achieve without unduly increasing overall cost of financing. In addition, we amended our revolving credit facility to extend the maturity by one year to December 2021, and upsize the total commitments to $605 million. We closed 2016 with LIBOR at approximately 1%. That leaves us to the unique position of being positively exposed from an NII perspective, to either an increase or decrease in interest rates. LIBOR goes up from 1%. We will collect more interest income on our loan portfolio as we would generally be above LIBOR floors on those loans. If LIBOR goes down from 1%, the LIBOR floors in our loans will generally protect us from reductions in interest income collective while the expense of financing our portfolio will go down. For additional detail related to the interest rate sensitivity of our portfolio, please refer to item 7A of our 10-K on page 92. With that, I will turn it back to Brendan.

Great. Thanks, Jonathan. So overall, we are very pleased to have produced a solid quarter and solid 2016 for our shareholders. We do not take the privilege of managing our capital for granted and we continue to work very hard in 2017 in an effort to deliver again this year. So, with that and on behalf of GSAM team, we thank you for your time and continued support. And now, Dennis, please open up the line for Q&A.

Ladies and gentlemen, we will now take a moment to compile the Q&A roster [Operator Instructions]. And our first question comes from the line of Doug Mewhirter with SunTrust. Please go ahead.

Good morning. I noticed the originations this quarter were most -- were actually all are second lien. Is it a matter of just what happened to come across the table? Is there been a pricing difference where maybe the first lien and stretched seniors and unitraches are maybe getting a little tight for you?

I'll let Jon Yoder take a crack.

Doug I think that, first of all, I wouldn’t necessarily drop again broad conclusions from a single quarter. You’re right that really did two new originations in the quarter and both of those were second lien. I would say tha, generally speaking, there has been pressure on spreads. I think that there are selective opportunities where there is less pressure on spreads in the second lien market that in certain cases can make it more attractive. But again every investment we look at, we look at on an individual basis and try to figure out the most attractive risk adjustment return attachment points in the structure. So, as we’ve always done and as we expect to continue to do, we don’t start with a top down of, we think we want more first liens or we want more unitranches or we want more second liens, rather we really start with the bottoms up of looking at the individual opportunities and deciding where we think that that’s risk adjusted returns are. And that said, and I think at the risk of repeating myself for sure there are times where it seems as though spreads on first liens have tightened a bit relative to spreads on second liens. So, there has been a couple of opportunities there, but again, would not suggest there’s any broad trends from it.

Going back to your leverage and also looking at maybe your prospects, your leverage is, I think 0.76. And looking at your pipeline and your -- maybe what might be exited. Do you feel comfortable with your regulatory capacity and your range of expected leverage you might want to hit in the next couple of quarters?

Yes, I’ll take a crack at that. So, Doug, I think you’re right. I think as Jonathan Lamm referenced in the prepared remarks, we ended the quarter at 0.76 times leverage, I think the average leverage during the course of the quarter was 0.71 times. So, we’ve characterized that as being right where we wanted to be from the perspective of the total portfolio construct. I think we find ourselves in a pretty good and enviable position. I think we’ve got good accretive access to the equity capital markets, should that be an opportunity that presents itself. But we’re also very mindful of looking at the overall pipeline of investments, not just what we’re seeing prospectively for new investments, but also what might be coming out of the portfolio; ultimately, trying to manage the total capitalization to the optimal range to produce very effective net investment income. So, this quarter relatively new prepayment activity, we eluded to some of that in the quarter. But we do anticipate that trend picking up, which of course provide us with incremental capital for new opportunities. So broadly speaking, really not concerned about access to capital in order to execute on the business plan. Jon Yoder mentioned more broadly as well in the prepared remarks that we also have exemptive release across our platform. So, generally speaking, as we look to execute on new investment opportunities, plenty of capital for us to pursue those investments, all the while our focus here for Goldman Sachs BDC is ensuring that the total capitalization and total capital structure is going where we can really deliver efficiency and deliver attractive returns.

And my last question, just a quick numbers question. What is your -- the capacity on your senior credit fund before you would have to get it upsized either from third-party leverage or from your partner?

We’ve got, I mean, we’ve run it at 2:1 very efficiently. We closed the quarter at under $80 million invested from each of us at our -- and our partner. So we can go up to $100 million of incremental -- or $20 million from each of us and our partner in incremental equity and then lever that 2:1, so that gets you to another $120 million of investible assets.

And then broadly speaking, Doug, I think again we may have mentioned the BDC’s investment in SCF is just under 7% of our total assets. The other constrain we would have is the -- this is non-qualifying asset. So we’re constrained to 30% of the total assets can be of that look. So clearly plenty of capacity from that perspective as well given the current capitalization.

Your next question is from the line of Jonathan Bock with Wells Fargo. Please go ahead.

This is Shane for Jonathan this morning, thank you for taking our questions. The first one we had on co-investment. It looks like you’ve got the exemptive order in January, but one of the first smaller question or one of these deals was syndicated, and I want to know if that was internal or external? And then just more broadly, how will the origination and allocation policies look, what we see larger deals originated from the BDC and distributed, or will they be originated from the advisor and allocated accordingly?

So, the answer to your question is, on the first one, the syndication that we did from the BDC was one to third parties. It was an opportunity where we were able to earn a nice syndication fee as part of that, because we led the facility. Regarding your second question of going forward with the exemptive relief what is our intent. The intent is to allocate new opportunities effectively pro rata amongst the GSBD, the Company obviously and the other accounts that we manage. We are in the fortunate position of having all of our accounts pursuing the same investment strategy. So, when we have a new opportunity, we allocate across those accounts. And generally speaking, those allocations are done on the basis of the capital size, the relative capital size of the different accounts. So, again, we think it’s a really good development for our shareholders, because not only does it help us competitively in really unlocking the full origination capabilities of the platform, but also it should result in probably more single lien diversification than what you’ve seen historically from us in the BDC.

Just with respect to the advisor originating versus the allocation across the various BDCs, all fees associated with those origination, syndication income and anything else to ensue would all go to the vehicles and not to the advisor, it's the clarification.

The only thing I would add, this is a topic and issue that I’d say is a core competency of GSAM. Obviously, we’re a very larger scale asset manager, it's not uncommon for us to have different accounts pursuing within investment strategies. And we have very tried and true and longstanding policies and procedures since where that there is an appropriate accounting and allocation of those different investment opportunities. We view this as a really, really attractive outcome for the platform. More broadly, Doug asked the question about our constraints around capital. And if you don’t have capital in the space, it's very challenging to be a solutions provider to those that are looking for capital. So, I think we find ourselves in a very unique very attractive, very enviable position of being able to manage a good scale to a capital. And at the same time, give us the flexibility and the ability to again manage BDC and where this is going to continue to have the business be, appropriately capitalize efficiently capitalize and produce attractive returns as a consequence of that. So, with the benefit of more scale, we can pursue the same investment opportunities in the core of the middle market the strategy that we found to be very successful, do in the bigger scale pool of capital. And therefore be very attractive solutions provider for borrowers.

Just one more on Bolttech which look to be a markdown this quarter we can see the unitranche, but originating in 2013. So you’re obviously probably pretty amortized there. Just given the exposure and last out unitranche. Can you walk us through the typical say super senior credits or rights that the bank or whatever lender might have? Can they put this back to you, can they fluctuate any sort of capital call, if you could just shed some light on potential risks in this section of your book.

Yes. I’ll see broadly and then specifically to Bolttech. So, generally speaking, when you look across and I think if you look at our disclosure, we’re very pointed in describing the portion of our book that is wrapped up portions of unitranche. Generally speaking, in that strategy, we -- our wrapped up portion tends to be the majority of the capital in that tranche. And as a consequence of that, generally speaking, the provider of the large amount of capital usually has the better of the overall rights in that arrangement. For Bolttech, specifically, you’re exactly right that’s a total tranche size of $39 million, the first half has amortized down with cash were generated by the company, and other sources from $10 million initially down to about $3 million today. So, when you think about that loan, total tranche size $30 million, $3 million of first out and $36 million roughly of last out. So, the rights really exist with us, broadly speaking, as the super-super majority of that capital. And so there are no abilities for them just to point really call capital from us. We could take the opportunity to simply pay that piece back. And so, there is a whole host of outcomes that could ensue there. But I’d like to say we like that position where we are really driving outcomes as compared to being a very small sliver of that total capitalization. And then therefore, finding ourselves at the -- we have still that lender who might have more heft and more leverage in those negotiations. So generally speaking really not concerned with that inner credit relationship in that Bolttech situation.

And one more just follow-on and then you can cut us off here. I just wanted to follow on Doug’s question on the post quarter pipeline and the origination. Did you give a number there, did I hear any guidance of that being strong and I apologize if…

No worries, we did not give any specific guidance or numbers around post quarter originations or repayments. So, there is nothing specific data wise to point to that. I think the commentary was more around expectations in some cases known repayments that we’ve seen that certainly callers, our views on overall capitalization and our ability to execute on the investment opportunities.

Your next question is from the line of Leslie Vandergrift with Raymond James. Please go ahead

Quick question on one of the new investments, I know you talked about earlier the second liens in the quarter. But specifically, ACS acquisition, one of the new ones, it was priced at for 13%, that’s higher than a lot of mez there right now. And just curious what was built in there?

Correct. So, let me take a crack, Leslie, at describing the investment overall. So, ASC, the real name for the company is Animal Supply Corp. So, basically Animal Supply is a distributor of pet food supplies, pet food products. And so, it’s a segment of the market that we quite like, has tended to be quite durable over cycles. There is a large trend going on more broadly in society, the humanization of pets a lot the income being put towards this segment of the consumer market that has proven to be quite steady and attractive. And so, we were able by virtue of having a really powerful direct realization platform to structure this transaction, to lead this transaction on what we think are very attractive terms. Jon talked about it a little bit in one of the earlier questions. I would say we are seeing on a few different occasions, situations where unitranche as a solution passed out and ends up not being with preferred outcome for borrowers. And so that affords, while in this specific case, the opportunity to arrive what we think is a really attractive second lien loan. I think evidence of that is also reflected in the syndication that we were able to put in place as well. So effectively, we originated this as you described L13, also at pretty significant discounts to par. We’re able to syndicate 20 of the 50 at par, which again I think is really evidence of third party's view of the attractiveness of that asset. So, that gives rise to some syndication fee this quarter that Jonathan and I have alluded to.

And then just a follow up on one of Doug's original questions on the prepayment income, I know it was a bit slower this past quarter, but -- and it can be lumpy. But kind of a base run right there and maybe on an annual basis that you guys tend to see?

It does tend to be lumpy, just like $1 million in Q3 and it was much lower number this quarter. So I would say you will see that number range anywhere between zero and $2 million or $3 million at high, but each quarter is really unpredictable.

The way to look at it would be, there is always timing elements on any quarter-to-quarter basis. I think overall longer term period, a year for example, I think would give you a much better base line of what you expect. But I think challenging on a quarter-over-quarter basis to model that.

And then one last follow-up on question about Bolttech, and thank you for the original color on that. So it went from 79% last quarter to 56% on the provided cost, and we saw Iracore, which obviously is very different company, do something similar, go from 62% last quarter to non-accrual at about I think a little over 30% or 36% right now. And so if we’re seeing these larger marks, it's certainly going down to 56%. Should we be ready for that to possibly on non-accrual next quarter?

It's fair to say when you see a markdown I think that’s evidence of increased risk, but certainly not just positive of the accrual status on a go forward basis. I think you can look last year on this Q4 call we were talking about GSAM and securities as investments that we have taken relatively significant, but unrealized markdown as is case here in Bolttech as well secure. So I think we marked down 55% of par in Q4 of last year to have a path forward. It’s probably acknowledge that the sponsor has actually in market trying to sell that business, which could give rise to repayment of that investment should that come to pass. So certainly fair to say that risk increases when marks are down. I think, when you look at our experience, we’ve been pretty transparent when that happens. So, you’ll see that flow through our portfolio. But in many cases, we’ve also earned that back overtime. And so, I wouldn’t necessarily draw specific conclusions about the direction of marks with the forward accrual status. But I think fair to say that risk does increase as mark does go down.

[Operator Instructions] And our next question is from the line of Christopher Testa with National Securities. Please go ahead.

I was just curious on the attachment points being up pretty decently on year and obviously quarter-over-quarter. How much of that is from EBITDA declines in the portfolio companies versus increased subordination and second lien exposure?

I don’t have a number at hand to say its 20% this and 80% that, or the like, what I eluded in my comments to just sort of color. We did get repaid on some of our lower attachment points loans during the year, and obviously some of the new ones that we originated as is common you will start at the higher attachment point, and then it works its way down as you would expect overtime as companies grow or they amortize down. So, it’s a function of, I’d say, mix in terms of the nature of the companies that have been in the portfolio, is probably the bigger driver of the change.

And just on the syndication that you discussed, could you give the dollar amount of the fee, if you’re able to do so. And just curious if the syndication if you were selling out a different portion of the capital stack, or just pro rata type slice of it?

Chris, it was $550,000. We originated below that, maybe $7 million in a quarter, and syndicated $20 million at par.

And then it was -- it was not a syndication of a first out, it was a sale of the second obligation that we did.

And on the second lien originations, you did during the quarter. Were those two investments new or existing portfolio companies?

Those are both new portfolio companies.

And just curious so, on the dividend obviously, you guys have been out-earning at even with minimal fee income. Just curious what your thoughts are on potential special or bump-up in the regular dividend level?

Chris, I think, we’ve used, especially given our stock has traded at the premium value that the spillover income actually provides incremental value to shareholders, where now we closed the quarter at the top end of our target leverage ratio of 0.76 times. And as you spillover income, even into perpetuity and current excise tax of 4%, that is a very, very good trade-off relative to issuing new shares where you’d be obligated to pay a dividend at a much higher level than that 4% excise tax. So, the way we think about it, at least at this point in the context of where we’re capitalized and the opportunities that we have, we think that spilling it over is an attractive value added proposition for shareholders.

At this time, there are no further questions. Please continue with any closing remarks.

Well, once again, we thank you all for your time and you continued support. Please feel free to reach out to the team if you have any other questions. Thank you very much and have a good day.

Ladies and gentlemen, this does conclude the Goldman Sachs BDC, Inc., fourth quarter 2016 earnings conference call. Thank you for your participation. You may now disconnect.