Good morning, and welcome to the TICC Capital Third Quarter 2014 Earnings Conference Call. [Operator Instructions] Please also note, this event is being recorded. I would now like to turn the conference over to Jonathan Cohen, CEO. Please go ahead.

Thank you. Good morning, and welcome everyone to the TICC Capital Corp. Third Quarter 2014 Earnings Conference Call. I'm joined today by Saul Rosenthal, our President and Chief Operating Officer; Patrick Conroy, our Chief Financial Officer; and Bruce Rubin, our Controller and Treasurer. Bruce, could you open the call today with a discussion regarding forward-looking statements?

Sure, Jonathan. [Operator Instructions] Today's call is being recorded. An audio replay of the conference call will be available for 30 days. Replay information is included in our press release that was released earlier this morning. Please note that this call is the property of TICC Capital Corp. Any unauthorized rebroadcast of this call, in any form, is strictly prohibited. I'd also like to call your attention to the customary disclosure in our press release this morning regarding forward-looking information. Today's conference call includes forward-looking statements and projections, and we ask that you refer to our most recent filings at the SEC for important factors that could cause actual results to differ materially from these projections. We do not undertake to update our forward-looking statements unless required do so by law. To obtain copies of our latest SEC filings, please visit our website at www.ticc.com. With that, I'll turn the call back over to Jonathan.

Thanks, Bruce. As we noted in our press release this morning, TICC reported core net investment income of approximately $0.28 per share through the third quarter of 2014. We reported total investment income of approximately $30.2 million for the quarter compared with approximately $29.9 million for the second quarter of 2014 and approximately $27.4 million for the third quarter of 2013. For the quarter ended September 30, 2014, TICC recorded income from our investment portfolio as follows: Approximately $13.1 million from our debt investments, approximately $15.2 million from our CLO equity investments and approximately $1.9 million from all other income. Our third quarter GAAP net investment income was approximately $17.5 million or $0.29 per share, which included the impact of the capital gains incentive fee accrual reversal of approximately $838,000. Excluding the impact of that fee accrual reversal, our core net investment income was approximately $16.7 million or $0.28 per share. We also recorded net realized capital losses of approximately $3.5 million and net unrealizable depreciation of approximately $15.3 million for the quarter as we saw an increase in volatility in the debt and CLO markets in which we participate. As a result of those unrealized and realized losses, we had a net decrease in net assets resulting from operations of approximately $1.3 million for the quarter. At the same time, we believe that the credit quality of our portfolio remains stable. Our weighted average credit rating on a fair value basis stood at 2.1 at the end of the third quarter of 2014 compared to 2.1 at the end of second quarter of 2014. As a reminder, our credit rating system is based on a 1 to 5 scale, with a lower number representing a stronger credit quality. At September 30, 2014, our net asset value per share stood…

[Operator Instructions] The first question comes from Mickey Schleien of Ladenburg. Mickey M. Schleien - Ladenburg Thalmann & Co. Inc., Research Division: Jonathan, just a few questions. Can you tell me what the impact was or has been of recently wider spreads on the estimated yield you're seeing or modeling for new CLO equity tranches versus what you saw perhaps in the first half of the year?

We haven't seen an enormous impact recently. I would say that as corporate spreads have widened and then contracted and then we've seen some volatility in the market, overall, we've got the potential for wider spreads on CLO equity tranches that we see in both in the primary and the secondary markets. And that's the generalization. Mickey M. Schleien - Ladenburg Thalmann & Co. Inc., Research Division: Okay. And in terms of the unrealized losses in the quarter, was that driven more by the new non-accrual or the mark-to-market change for the wider spreads?

It was more due, Mickey, to the wider spreads and the lower marks on our CLO equity book. Mickey M. Schleien - Ladenburg Thalmann & Co. Inc., Research Division: Okay. And if I'm not mistaken, some of your deals in the past in terms of CLO had been with smaller CLO managers, and I imagine you've seen better economics with those guys. Do you think they'll be squeezed out of the market by new risk retention rules in the U.S. for CLOs? And if you agree with that, how do you think that will affect TICC's financial performance?

Well to take those questions in approximate order, Mickey, I am not sure that we would characterize ourselves as focusing primarily on smaller CLO sponsors. Our sponsor participation has been fairly broad-based and we participated in CLOs of some very large issuers and some smaller ones. Well I'm also not sure that we have necessarily either projected or generated better returns from smaller sponsors as opposed to larger sponsors. There are lots of variables. In terms of the risk retention rules and our expectation or the impact on new issuance, I think we're taking a wait-and-see approach. I don't think there's a great deal of certainty in the market as to how this will all come to pass. There's a great deal of uncertainty in fact, and we don't have a defined position yet as to what likely new primary issuance of CLO transactions will be for 2014, for 2016, or for 2015 when the rules begin to come into effect more dramatically. So the short answer is we're not certain, but we do believe we're positioned to participate in the market, whether it's primary market as we've been doing more recently or in the secondary market, which we did for quite a while when we started participating in CLO market in 2009 and 2010. Mickey M. Schleien - Ladenburg Thalmann & Co. Inc., Research Division: Jonathan, in terms of the primary markets, have you identified any opportunities that the implementation of the rules may provide you in terms of helping CLO managers put together deals, given that TICC together with Oxford Lane are fairly significant players in the market. I'm just wondering if the fact that you can provide some liquidity and low risk of execution, that there's something you can do to earn some perhaps outside economics in helping arrange some CLOs?

Sure. I think, Mickey, may be more applicable to the secondary market than the primary market, the premise being perhaps that certain institutions holding CLO transactions that are not compliant with the risk retention rules may be motivated to sell their transactions over the course of a year or 2. That's certainly a possibility. We have not yet seen much activity on that basis yet, but it's something again that we feel we're positioned to address.

[Operator Instructions] The next question will come from Mr. Greg Mason of KBW. Greg M. Mason - Keefe, Bruyette, & Woods, Inc., Research Division: My first question is on the leverage target 0.8 at quarter end. In your slide deck, you have pro forma for the new facility borrowing 0.88 debt-to-equity. Just want to talk about your comfort with running at that new 0.88 level or should we see that decline a bit?

Sure. I don't think we have, Greg, a fixed leverage target, but rather a series of leverage targets that take into account things like the cost of capital, the maturity of these various facilities and all of the other terms and conditions that we were obligated to operate under as per other -- the Citibank facility or the 2011 CLO or the 2012 CLO or any other structure. So we don't have a defined goal or a mandate either to bring the leverage ratio up or to bring it down, instead it's really seen very much against the backdrop of the nature of those various facilities. Greg M. Mason - Keefe, Bruyette, & Woods, Inc., Research Division: Do any of those facilities have any type of issues if you get to 1:1 or go above 1:1 debt-to-equity where that could become an issue?

Yes, they do. They do and they may continue to in the future as we look at other source of facilities, yes. Greg M. Mason - Keefe, Bruyette, & Woods, Inc., Research Division: Okay. So you do want to stay, give yourself some cushion to that 1:1 kind of maximum?

We do, we do. Greg M. Mason - Keefe, Bruyette, & Woods, Inc., Research Division: Okay. On the new facility, is there any revolving period on that facility and is that different than the overall term?

It is a 2-year revolver, which is runs concurrent with the term itself. Greg M. Mason - Keefe, Bruyette, & Woods, Inc., Research Division: Okay, great. And then, just want to talk a little bit about the yields on the CLO equity. You're generating 23% yields according to your slide deck, and what we've been hearing is kind of the yield over the life of CLOs over the last couple of years has been running 12% to 15%, so I just want to see if you could give us some color on you generating 23% yields today and kind of the confidence level of that continuing going forward?

Sure, Greg. That figure I think is a cash on cash return statistic, which may or may not equal to the actual economic return over time. Certainly, to the extent that we're looking at new CLOs in other than the primary or the secondary markets right now, we are not targeting a 23% return -- economic return. We're targeting a lower return based upon a series of assumptions, including a default rate. Greg M. Mason - Keefe, Bruyette, & Woods, Inc., Research Division: Is it expected that the current CLO portfolio, as LIBOR rises or default rates move up, that we will see any type of material change in that 23% rate of return off the portfolio today?

Well we're not expecting, again, a 23% economic IRR going forward. We may or may not experience a 23% cash return for a particular vehicle, but it's not the metric or the return that we're underwriting to as we purchase in the primary market or in the second market. Greg M. Mason - Keefe, Bruyette, & Woods, Inc., Research Division: Okay. But as -- do you -- that cash return though, it's what goes into the income statement, right?

Right. To answer your question more directly, Greg, and just to be clear, an increase in LIBOR, all else held constant, would result almost certainly in a diminishment in both our cash flows and our economic returns on these CLO vehicles. An increase in LIBOR in conjunction with various other metrics changing, such as a widening in corporate spreads or an increased in corporate default would have less predictable impact on our economic returns. Greg M. Mason - Keefe, Bruyette, & Woods, Inc., Research Division: Got it. So the expectation is ultimately, the cash flows are going to decline over time as you talk about your economic returns. You are taking into income though, the cash flows, is that correct? The cash flows?

Yes, we are taking into income the cash flows and historically, the actual economic returns at TICC from the CLO strategy has been very high. Greg M. Mason - Keefe, Bruyette, & Woods, Inc., Research Division: Got it. And so are we -- you mentioned that you've got lower marks on the CLO book, how much of that is related to just mark-to-market volatility in the quarter versus taking in the cash flows and the income and therefore, having to write down the ultimate end value of the equity expected to be received. Can you give us any type of breakout between those mark-to-market versus permanent loss?

Sure. The primary metric that we're looking to mark our book to on the CLO side and on the leverage loan side are actual trades in the markets or particular bids or firm bids. So my view is that our marks with respect to this quarter on the CLO equity side was primarily a function of lower prices in the market, whether or not those lower prices were in some way a manifestation of an expectation for lower future cash flows is debatable and I think uncertain. Greg M. Mason - Keefe, Bruyette, & Woods, Inc., Research Division: Okay, great. And then, one last thing, what was the new non-accrual this quarter?

It was a company called...

It will be in the Q.

Yes. It will be in the Q. I wasn't sure if we have reported it yet, but in any case we will be within a day or so, it's a company called Unitek [ph] which we've held for a while.

This concludes our question-and-answer session. I would now like to turn the conference back over to Mr. Jonathan Cohen for any closing remarks.

Thank you very much, operator. Thank you very much everyone on the call for your interest and your participation. We look forward to speaking to you again very soon. Thank you.

The conference has now concluded. Thank you for attending today's presentation. You may now disconnect.