Oaktree Specialty Lending Corporation (OCSL) Q3 2026 Earnings Report, Transcript and Summary

Welcome and thank you for joining Oaktree Specialty Lending Corporation's Third Fiscal Quarter 2026 Conference Call. Today's conference call has been recorded. [Operator Instructions] I'll now turn the call to Alison Mermey, OCSL's Head of Investor Relations. Please go ahead.

Thank you, operator. Our third quarter 2026 earnings release, which we issued this morning, along with the accompanying slide presentation, can be accessed on the investor section of our website, oaktreespecialtylending.com. Before we begin, I want to remind you that the comments on today's call include forward-looking statements reflecting current views with respect to, among other things, future operating results and financial performance. Actual results could differ materially from those implied or expressed in the forward-looking statements. Please refer to the relevant SEC filings for a discussion of these factors in further detail. Oaktree undertakes no duty to update or revise any forward-looking statements. I'd also like to remind you that nothing on this call constitutes an offer to sell or solicitation of an offer to purchase any interest in an Oaktree fund. Investors and others should note that OCSL uses the investor section of its corporate website to announce material information. The company encourages investors, the media, and others to review information that it shares on its website. On today's call, Matt Pendo, President of OCSL, will begin with a progress report on objectives we set out for fiscal 2026 and an overview of our third quarter results. Armen Panossian, our CEO and Co-Chief Investment Officer, will then provide a market update. Raghav Khanna, our Co-Chief Investment Officer, will cover portfolio activity. And Chris McKown, our CFO and Treasurer, will close with a review of our financial results before we open the call for questions. Now I'll turn the call over to Matt Pendo, President of OCSL. Matt.

Thank you, Alison, and good morning, everyone. With 3 quarters of fiscal 2026 complete, we want to assess our progress against 2 of our primary objectives. First, reducing non-accruals through exits and monetization events, and second, maintaining a flexible balance sheet. Starting with the first objective, reducing non-accruals. As of June 30, 2026, non-accruals were approximately 1.8% of the total debt portfolio at fair value, down 80 basis points sequentially, and down 140 basis points year-over-year. In the last 2 quarters alone, we exited 5 non-accrual positions, leaving 6 investments on non-accrual. More than 85% of the decline in non-accrual dollars over the past year is due to proceeds received and investments returning to accrual status. The most significant portfolio development this quarter was Thrasio. Through a series of asset sales, Thrasio repaid approximately $25 million, or a little over 80% of our loans, including paying off the entire first-out term loan and about 75% of the second out term loan. The remaining second-out position was returned to accrual status and we expect it to be repaid in the next few months. Raghav will discuss Thrasio in more detail in his remarks. Turning to the second objective, maintaining a flexible balance sheet, we ended the quarter with net leverage of approximately 1.02x compared to 1.04x at the end of March and below the midpoint of our 0.9x to 1.25x target range. Available liquidity was nearly $700 million at quarter end, up about $30 million from last quarter. We believe this combination of conservative leverage and ample liquidity positions us well to invest into an evolving private credit market. Furthermore, we plan to address the $350 million of unsecured notes that mature in January 2027 over the next several quarters. Turning to our third fiscal quarter financial highlights. Adjusted net investment income was $32.2 million or approximately $0.37 per share, down slightly from $33.7 million or $0.38 per share in the prior quarter. The slight decrease primarily reflected our lower use of leverage, a lighter than average quarter of non-recurring income, and the payment of a partial income-based incentive fee, which Chris will walk through in more detail. For the quarter, our Board declared a total cash dividend of $0.33 per share. The dividend is composed of a base cash dividend of $0.30 per share and a supplemental dividend of $0.03 per share. This is consistent with our policy of paying a supplemental dividend equal to 50% of adjusted net investment income in excess of the base dividend. The dividends are payable in cash on September 30, 2026, to stockholders of record on September 15, 2026. With that, I'll turn the call over to Armen to discuss the market environment.

Thank you, Matt. On our last call, I described the volatility in direct lending as more a period of recalibration than a systemic issue. I also walked through specific investor concerns around direct lending, including rising impairments, the use of leverage, liquidity mismatches, software exposure in an AI-driven world, and refinancing risk. On today's call, I want to provide a brief market update, take stock of how these concerns are evolving, and explain how they inform our approach at Oaktree. First, the market backdrop. The June quarter was less volatile than the March quarter. Credit and equity markets stabilized, and the general tone was less bearish, although dispersion continued to be a dominant theme. For example, the broadly syndicated loans market showed a bifurcated recovery. Spreads for single B and single B+ loans retraced most of the widening experienced during the March quarter and ended June close to December 2025 levels. New issuance in the broadly syndicated loan market also resumed, and many transactions priced at or through the tight end of initial price talk. However, the recovery has not been uniform. The spread on traded B- credits remain wider than they were in late 2025, and new issuance among lower-rated borrowers remains limited. The direct lending market was also more subdued. Spreads remain wider than 2025 levels, while direct lending deal value declined to a 2.5-year low. The decline in deal flow largely reflected the slowdown in private equity activity, with quarterly deal value also declining to a multi-year low. Sponsors continue to face a difficult exit environment amid a wide bid-ask spread between sellers and buyers, geopolitical uncertainty, a less predictable macroeconomic outlook, and the possibility of slower growth alongside persistent inflation. In this environment, the balance between private credit borrowers and lenders has improved. Competition has generally been more rational and underwriting standards have strengthened. On average, loans issued in calendar 2026 offer more attractive terms than transactions completed in 2024 and 2025. During the June quarter, new sponsor-backed first lien direct loans were pricing in the range of SOFR plus 500 to 550 basis points, consistent with the March quarter and above the 2025 tights of SOFR plus 450 to 475. However, competition for new deals, especially in middle market first lien direct lending, increased towards the end of June and compressed average spreads closer to 500 basis points. Now I'll turn to the specific concerns we highlighted last quarter, beginning with impairment risk. Across the direct lending industry, credit issues have continued to arise. While industry data for non-accruals has been mixed in recent quarters, OCSL's non-accruals are down approximately 280 basis points from its peak in March of 2025. Our work is not complete, yet our progress reflects an active, hands-on approach to challenged credits. We have successfully pursued monetizations, restructured investments, and when necessary, made difficult decisions to exit positions to avoid tying up capital and to minimize losses. The second concern is the use of leverage. The statutory debt-to-equity limit for BDCs is 2:1. And essentially all BDCs operate under that limit today. Our concern is not the level of leverage at BDCs, which by historical standards and compared to other levered vehicles is relatively modest, but how leverage is used. At Oaktree, we view leverage as an output of the investment environment, not as a way to achieve a particular earnings or dividend target. When we find compelling investments with appropriate downside protection, we are prepared to deploy capital and allow leverage to increase. When the opportunity set is less attractive, we are comfortable maintaining greater liquidity and operating at lower leverage. At quarter end, OCSL's net leverage was 1.02x, positioning us below the midpoint of our target range and preserving capacity to invest as opportunities emerge. The next risk and the source of continued headlines this quarter is liquidity or asset liability mismatches in non-traded BDCs. Redemption requests at several large non-traded vehicles remained elevated during the June quarter, in some cases reaching the mid to high teens as a percentage of equity. This highlights the potential mismatch between the liquidity expectations of investors in non-traded BDCs and the less liquid profiles of the underlying private credit assets. We expect it may take several quarters for existing redemption queues to normalize and for net flows in non-traded BDCs to inflect positive. As a reminder, OCSL is a permanent capital vehicle and does not face redemption risk. Against this backdrop, we view headwinds in the non-traded BDC market as a net positive for permanent capital public BDCs with dry powder. Net outflows from non-traded BDCs reduce competition for new investments, and it may create opportunities in the form of secondary portfolio purchases and industry consolidation, which we are positioned to evaluate. The final and perhaps most debated risk is software exposure and related refinancing risk. Investors across credit and equity markets have spent considerable time analyzing software and potential AI disruption. As investors dig in, they're beginning to discern between the riskiest businesses and those with more defensible business models. Software is not a monolithic category, and AI exposure is not evenly distributed. The greatest risk is likely concentrated where business model disruption intersects with high leverage, limited free cash flow, and a near or medium-term refinancing need. Many loans originated in 2020 and 2021 were underwritten when base rates were near 0, valuation multiples were at peak levels, and the implications of AI were not yet apparent. A meaningful portion of that cohort, especially ARR-based loans, will mature in 2027 and 2028. Refinancing those investments will be an important test for the market. The outcomes will be issuer-specific and active portfolio management will remain essential. These direct lending issues will take multiple quarters and in some cases years to play out. No one could predict precisely how they will materialize. Our focus remains on the factors we can control: disciplined underwriting, portfolio management, and balance sheet flexibility. The current risk environment does not mean that investors should avoid private credit. Rather, it means lenders should be discerning and demand greater downside protection. There are several ways the market could evolve from here. If geopolitical uncertainty diminishes or the macroeconomic outlook improves, sponsors may become more willing to transact. A recovery in M&A and private equity exits could increase demand for financing at a time when the supply of direct lending capital has become more disciplined. That would be a positive outcome for direct lending deal flow and spreads. On the other hand, if transaction activity remains limited, while capital continues to flow into private credit, even if at a slower pace, we may see further spread tightening. The outlook for interest rates has also evolved over the year. Persistent inflation has reduced confidence in the pace of future rate cuts and increased the possibility that base rates will remain higher for longer. While higher rates support higher income from floating rate loans, they also increase interest burdens for borrowers. Interest coverage continues to be a metric we monitor closely. This uncertainty is why we are focused on what we can control, especially maintaining a nimble balance sheet. It also brings us back to the importance of the broader Oaktree and Brookfield platform. In an environment where traditional sponsor-backed middle market activity remains subdued, the ability to source beyond U.S. sponsor-backed direct lending becomes increasingly valuable. Across the combined platform, we are evaluating opportunities in direct lending, asset-backed finance, liquid credit, situational lending, non-U.S. direct lending, and secondary transactions. We can compare relative value across those markets and allocate capital where we believe the risk-adjusted return is compelling. With that, I'll turn the call over to Raghav for a review of our portfolio and investment activity.

Thanks, Armen. I'll start with our progress on non-accruals, then discuss new originations and our pipeline before closing with portfolio metrics. Beginning with Thrasio, which, as Matt mentioned, was the most significant portfolio development of the quarter. Thrasio is an Amazon aggregator that has been on non-accrual since December 2023 due to an overly aggressive growth strategy after COVID. Over the last 2 years, the company reduced its cost infrastructure and streamlined its operations to focus on its strongest brands. During the June quarter, Thrasio sold several of its largest brands, including stain remover, Hate Stains, to Church & Dwight for a $325 million gross purchase price. Proceeds from these asset sales were used to repay 100% of the first-out term loan, and the majority of the second-out. We marked the remaining second-out position up from 80% in the prior quarter to 99%, returned it to accrual status, and expect the remaining second out loan to be fully repaid over the next few months from additional asset sale proceeds. We believe Thrasio illustrates the value of our workout expertise and cooperative efforts with other creditor owners to reposition a company through a restructuring and maximize recoveries in a relatively short timeframe. Throughout the workout process, we were actively engaged with the company and other stakeholders to realize a return of our capital. The result was a conversion of a non-accrual position into cash proceeds and the remaining piece into an income-producing loan that should be paid off in the near term. Next, The Avery, our investment in a condominium project that we have discussed on prior calls, also continues to perform ahead of our underwriting expectations. Through June 30, 12 units closed year-to-date, compared with our full year 2026 budget of 6 units. Since quarter end, additional units have been sold and others are under contract. Our June 30 blended mark of 79, up from 65 at March 31st, reflects only the units closed to the end of the quarter. At quarter end, 6 investments were on non-accrual, representing approximately 1.8% of the total debt portfolio at fair value, down from 2.6% last quarter and 3.2% 1 year ago. Importantly, 97% of the sequential decline in non-accruals was a result of proceeds received to pay down debt. Turning to investment activity and the pipeline. New investment commitments totaled $206 million in the quarter, stable compared to $204 million in the prior quarter. Proceeds from prepayments, exits, other paydowns and sales were $263 million, down from $334 million last quarter. The weighted average yield on new debt investments was 10.0%, up from 9.2% in the prior quarter, reflecting higher spreads on new private originations. Oaktree's capabilities around sourcing, underwriting, and structuring bespoke deals helps us achieve a healthy yield on new originations. As Armen mentioned, the investment opportunities we are reviewing today are generally more attractive than what we saw over the past 2 years. Transactions under review often feature more lender-friendly terms, including stronger documentation and structural protections, lower leverage, and lower loan-to-value. The median spread on opportunities in our pipeline has ranged from SOFR plus 550 to 575 basis points, above broader market averages, which we believe reflects our differentiated sourcing capabilities. While activity in middle market direct lending remains measured, our opportunity set is supplemented by transactions sourced across the broader Oaktree and Brookfield private credit ecosystem. One new origination that demonstrates our unique capabilities is Zayo Group, a fiber infrastructure company. Commercial fiber infrastructure products provide high-speed data broadband connectivity between business locations, data centers, cloud provider networks, and the global internet. In May, OCSL, alongside other Oaktree funds, funded approximately 60% of a private junior warehouse securitization facility to support the financing for Zayo's acquisition of Crown Castle's fiber infrastructure network. This facility is priced at SOFR plus 675 basis points with junior lien supported by Crown Castle's fiber network assets and carries a corporate guarantee from a parent entity that provides support to our facility ahead of the sponsor equity and features other lender-friendly terms uncommon in traditional public ABS deals. This was not our first involvement with Zayo. Prior to this transaction, OCSL purchased Zayo's first lien, first-out, post-LME broadly syndicated term loan at a discounted par. That loan has since been partially repaid with proceeds from ABS issuance, and the remaining position has appreciated to approximately par. We believe our investments in Zayo highlight several of Oaktree's strengths: consideration of relative value across the company's capital structure, identifying mispriced public credit, structuring complex private transactions supported by strong documentation, and collaborating across Oaktree's investment teams to source differentiated opportunities beyond just traditional sponsor-backed direct lending. Looking at total portfolio metrics as of June 30, 82% of the portfolio at fair value was first lien senior secured debt and the weighted average yield on debt investments was 9.3%. The portfolio remains well diversified with the average debt position representing approximately 65 basis points of the total portfolio at fair value, and no single position exceeding 2.1% of fair value. The median EBITDA of our portfolio companies was approximately $189 million, up about 4% sequentially. Portfolio company weighted average leverage was 5.1x, slightly better than 5.2x last quarter, and interest coverage improved to 2.4x from 2.1x. And now turning to an update on software exposure. Based on GICS industry group classification, software represents 20% of the portfolio at fair value, down slightly from the prior quarter. Our high AI risk software exposure remains unchanged at approximately 3% of the performing debt portfolio at fair value. And with that, I'll turn the call over to Chris to review our financial results.

Thank you, Raghav. In our third fiscal quarter ended June 30, 2026, adjusted total investment income was $69.2 million, down slightly compared to $69.7 million in the prior quarter. The modest change primarily reflected a smaller average portfolio balance from operating with lower leverage and a decrease in non-recurring income, partially offset by placing the Thrasio second-out loan back onto accrual status. The average non-recurring income for the trailing 8 quarters has been about $3.8 million, while this quarter came in slightly below $2 million. This was not unexpected. Although non-recurring income is inherently episodic, it can skew directionally lower during and after a period of intense market volatility. We delivered adjusted net investment income of $32.2 million, or approximately $0.37 per share, compared to $33.7 million, or $0.38 per share, in the prior quarter. The slight quarter-over-quarter decline was driven by lower total investment income and higher income-based or Part 1 incentive fees, partially offset by lower interest expense. To spend a moment on the incentive fee, last quarter we paid no Part 1 incentive fee as a result of our total return hurdle. This quarter we paid $2.4 million, or approximately $0.03 per share. For context, a full incentive fee would have been approximately $6 million or about $0.07 per share. In other words, the incentive fee this quarter was roughly half of what it would have otherwise have been, reflecting our progress in reducing non-accruals, but partially offset by the continuing overhang from prior quarters' losses under the total return hurdle. We believe this mechanism is working as designed, aligning the fees Oaktree earns with the total returns shareholders receive. NAV per share was $15.70 as of June 30, 2026, stable compared to $15.69 as of March 31, 2026. PIK income represented approximately 7.8% of adjusted total investment income during the quarter compared to 5.5% last quarter. Increased PIK was largely driven by 2 names that were underwritten with PIK optionality to support the issuer's growth and strategic initiatives. Importantly, the EBITDA, leverage, and interest coverage of our portfolio companies electing to PIK are roughly in line with the metrics for our overall portfolio. And consistent with last quarter, approximately 2/3 of our PIK income relates to investments that were structured with the option to PIK at origination. Our net leverage ratio at quarter end was approximately 1.02x, down slightly from 1.04x last quarter, and total debt outstanding was $1.45 billion. Our long-term target leverage range of 0.9x to 1.25x remains unchanged. As of June 30th, the weighted average interest rate on debt outstanding was 5.9%, unchanged from the prior quarter. Unsecured debt represented 65% of total debt at quarter end. We have a healthy level of dry powder with liquidity of approximately $699 million, including $40 million of cash and $659 million of undrawn capacity under our credit facilities. Unfunded commitments, excluding those related to joint ventures, were approximately $208 million. Turning to our joint ventures. Together, the JVs held approximately $524 million of investments across 135 portfolio companies and generated aggregate returns on equity of approximately 11.3% during the quarter. Leverage at the JVs was 2.1x compared to 1.9x last quarter. During the quarter, we converted approximately 25% of the Kemper JV's subordinated note into equity. This did not have a material impact on the total earnings recognized from the JV, but the income came in the form of a combination of interest income and dividend income instead of exclusively interest income. With that, I'll turn the call back to the operator for Q&A.

[Operator Instructions] Your first question comes from the line of Rick Shane with JPMorgan.

Look, I think you've highlighted the benefits of a more constrained supply of capital and competition. At the same time, arguably there are macro headwinds facing portfolio companies, whether it's elevated energy prices, higher labor costs, higher interest rates. When you think about the risks associated with the macro factors, and you talk about the opportunity for better structure related to more muted competition, where do you sort of put yourself in the cycle of returns? Do you sort of net out that gives you mid-cycle returns? Are you at a point now where you actually think you can extract higher above-cycle returns, realizing that returns aren't static across a 10-year period?

Thanks, Rick. It's Armen. Look, I don't think we're at mid-cycle returns. I think we are seeing some spread widening caused by the outflows from the semi-liquid or semi-traded -- sorry, untraded BDCs -- just given the maturity profile of the 2021, 2022 LBOs that were done that still have maturities coming in 2027 through '29, we think that there's still going to be greater volatility ahead of us, greater opportunity to deploy with wider spread, better return, tighter terms. So we are, I would say at this point, kind of conserving our capital, maintaining ourselves in a more defensive and risk-averse posture. We really want to be able to lean into the market on the back of what we think will be more volatility. So it's not -- I wouldn't characterize it as mid-cycle. I would say we're sort of 75 -- maybe 50 to 75 basis points wide of where we were 6 months ago. I just don't think that that's fully baking in the inflation that we would expect in a continued conflict with Iran. I don't think that's reflective of the full extent of disruption in software driven by AI, and there's a whole host of other kind of macro indicators that are beneath the surface, but are indicating some weakness. The overall economic picture, if you just kind of step out -- step back to the 50,000-foot level, on average, things look okay. It looks like we're -- it looks like the economy is handling things okay. But beneath the surface, there's cause for concern and I don't think we're seeing the maximum opportunity set at this time.

Got it. Yes, look, I really appreciate the thoughtfulness of that answer. I think we're sort of wrestling with the same things as we look at the world across a pretty wide coverage universe. Things seem to be holding up pretty well, but at the same time you see these sort of little spots on the mosaic that make you wonder a little bit. So I appreciate the answer and it's consistent with how we see the world too.

[Operator Instructions] Your next question comes from the line of Finian O'Shea with Wells Fargo Securities.

So, Armen, just picking up on that dialogue with Rick. And some of your opening remarks seemed a little more constructive on the spread widening. Although those have come in a little bit, but I think you were constructive on that and you have ample leverage. So seeing your overall posture in terms of leaning in and then maybe, how attractive you view sponsor versus other more [indiscernible] or liquid type exposures that tend to come in the book here and there.

Yes, thanks, Fin. Look, I would say that the market is better today than what it was 6 months ago in terms of deployment. The volatility amongst -- in fund flows has created that opportunity. The pace of deal flow is slower. It's just -- there's not as much deal volume, whether it's for non-sponsored or for sponsor-backed transactions. It just seems that with the base rate picture remaining elevated, spreads widening a little bit, uncertainty in the broader economy, the war with Iran, there's reasons why the deal volume is a little slower. If deal volume was at a normal pace, I think we would see even more spread widening than we have seen. So look, it's better than 6 months ago. Is it as good as it could be or we would expect it to become? No. In terms of comparing public versus private credit and maybe a couple other asset classes, everything has tightened, other than sponsor first lien lending and some other forms of private credit, which I'll touch on. If you look at the high-quality part of the broadly syndicated loan market or the high yield market, and you looked at the BBs and B+ types of credits, they are at their all-time tights in high yield bonds. And they're near their tights, even in broadly syndicated loans. It's really in CCCs or stressed near-defaulted securities where you really have no bid in the market for those public securities. So achieving the average spread in the broadly syndicated loan index or the high yield index is not very easy to do because there's -- it's sort of a bifurcated market. The high quality is trading super tight. The low quality is trading super wide and there's very little in between. So with that tightening on a like-for-like basis, where you look at high-quality credit and private credit, high-quality credit and public credit, the public credit side, I would say, has tightened over the last 12 to 24 months. On the private side, it was tight until about 6 months ago and it's widened. So on a relative value basis, in terms of just purely return per unit of risk, I would say private credit looks better today relative to public credit than it did. Now, stepping away from that for a moment, I think where there is a meaningful opportunity that is unmet by capital is in the asset-backed finance space. So providing capital to specialty lenders that are developing portfolios, diversified portfolios of contractual cash flow streams. It's a pretty bespoke market. There is not a standard under which lenders and borrowers interact or transact, and that inefficiency creates pretty nice opportunities. So when possible, as a firm we are leaning into that area. It is not a great fit for BDCs as it is not a qualifying asset. So we have to be mindful of how much of it that we do, but we do see that flow. It helps inform our relative value perspective on sponsor lending, non-sponsor lending, public credit and then more specialty areas of lending. So it rounds out the picture and we'll selectively invest in those areas in the BDC when possible.

Great. That's helpful. And sort of a tie-in there, also in the remarks, you flagged consolidation in the industry. Does that -- is that driven by -- are you seeing more of it? Or are you more front-footed or maybe expect it to come on the go-forward or anything we could -- anything to help us learn of your thinking there?

I might make a quick comment. I'll throw it over to Matt Pendo. He might have a more refined view on this, but look, I mean, there is some consolidation happening. There are portfolios of loans for sale as well. I wouldn't say that we as a firm are looking to do anything that is material in that space. We're always looking for opportunities to expand our reach and our sourcing capabilities. And sometimes that means partnering with, or potentially even buying a platform that could help on that front. But that isn't something that is super critical. It is not something that we're actively working on now, but we're certainly open-minded and a participant in the markets. But you shouldn't expect for us to be a meaningful participant in M&A, at least based on kind of what I -- the information at hand at this time. Matt, do you have anything to add to that?

I think that's a good summary. As Armen said, we'll continue to look at things and be smart and aware of things, but there's nothing really close now and it's not a critical priority for us.

Your next question comes from the line of Peter Troisi with Barclays.

Good to see the non-accruals decline in the quarter. But, as was noted in the prepared remarks, that did come with some hard decisions in the portfolio and that flowed through the P&L. There was about $15 million of realized losses this quarter. So I guess the question is, how do you think the rating agencies will view the trade-off of lower non-accruals versus higher realized credit losses?

Yes, appreciate the question. This is Chris. I'll take a first go at that and maybe pass it over to Matt as well for some additional comments. But yes, I think the realized losses, well, we never like to take realized losses. Those were names that had been marked down several years ago, in some cases. In the case of Dominion, which was the largest realized loss, that was an asset that came over in connection with the BDC acquisition back in 2017. So I think -- again, we don't like to see the realized losses. I think we do appreciate and I think rating agencies appreciate that our NAV was flat quarter to quarter, and really just seeing a crystallization of some of those losses that have been long-standing. I don't know, Matt, anything to add there?

Yes, Peter, good question. I mean, I think as Chris said, it's really just kind of the geography. So I don't think that's really, I don't want to speak for the rating agencies, but not troubling to them. The things that we've been focused on with them is non-accruals, so reducing the non-accruals, which you've seen good progress there, stabilization of the NAV, so we saw that this quarter. And then our leverage, and we've continued to run leverage around 1.0x. So very, very modest, prudent at the lower end of our target range. So those are the kind of the 3 things we've been focused on with the rating agencies.

Thank you. There are no further questions at this time. I will now turn the call back to Alison for closing remarks.

Thank you, everyone, for joining us on today's call. Please feel free to reach out to me and the team with any questions. Have a great day.

This concludes today's call. Thank you for attending. You may now disconnect.