PennantPark Investment Corporation (NASDAQ:PNNT) Q2 2019 Earnings Conference Call - Final Transcript

May 10, 2019 • 12:00 am ET

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PennantPark Investment Corporation (NASDAQ:PNNT) Q2 2019 Earnings Conference Call - Final Transcript

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Q & A
Operator
Operator

Thank you. (Operator Instructions). We'll take our first question from Kyle Joseph with Jefferies.

Analyst
Kyle Joseph

Hey, good morning guys, and thanks for taking my questions. Art, just want to get a sense for your thoughts on yields going forward obviously you guys are going through a portfolio mix shift, but on sort of apples to apples deals on the same layer of the capital spectrum, what sort of trends are you seeing in terms of yields?

Executive
Art Penn

Thanks Kyle. You know from an apples to apples basis, I think kind of the first lien is stretch senior that we're doing kind of goes anywhere from L+475 to kind of L+700 if it's a stretch senior first lien and those have kind of been consistent over the last two or three quarters. We haven't seen -- we've seen consistency obviously with the volatility in the broadly syndicated market in December. That maybe we saw a moment of increased yields but yields -- but things apples to apples are pretty stable.

Analyst
Kyle Joseph

Got it. And then just from a higher level industry question, a lot of your peers and yourselves are increasing leverage and kind of adjusting investment style to a certain extent. Just wondering if you're seeing sort of any competitive changes in the industry as the industry ramps its leverage.

Executive
Art Penn

Yeah, we haven't seen any real change obviously capital formation in BDCs has been less robust and publicly traded BDCs has been less robust in the last few years due to the applied fund fees rule. So the biggest capital formation has been in the private sector, private debt structures on a relative basis. The people who are managing both public BDCs as well as the private funds generally have been around a while, are generally rational competitors. Every once in a while, you'll see a competitor who's trying to ramp in some way, shape or form, who does stuff that's irrational, but we haven't really seen much of that recently.

So the competitive framework is pretty much consistent as it's been in the last few years. Typically most of the middle market sponsors have a handful of go-to lenders that they show deals to who are trusted lenders to them. And our goal is to get a first look and a last look, our first call and the last look so to speak on the deals and I think generally we do that and where we want to be part of a deal we want to lead a deal we have a very good hit ratio.

Analyst
Kyle Joseph

Got it, that's helpful. Thanks very much for answering my questions.

Executive
Art Penn

Thanks, Kyle.

Operator
Operator

All right. Next we'll go to Robert Don (ph) with Raymond James. Mr. Don, you maybe on mute.

Analyst
Unidentified Participant

I was in fact on mute, can you hear (inaudible). Looking at obviously the new non-accrual Hollander, any more color you can give us about what the driver was for that getting to a tipping point because obviously your mark still tends to imply that they've