BlackRock TCP Capital Corp (NASDAQ:TCPC) Q3 2019 Earnings Conference Call - Final Transcript

Nov 06, 2019 • 01:00 pm ET

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BlackRock TCP Capital Corp (NASDAQ:TCPC) Q3 2019 Earnings Conference Call - Final Transcript

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Q & A
Operator
Operator

[Operator Instructions] Our first question comes from Chris Kotowski with Oppenheimer & Company. Your line is open.

Analyst
Chris Kotowski

Yes, good afternoon, or morning in your case. I was just wondering, it seems like you've been fairly active on the right hand side of the balance sheet with the new notes and just noticed the reduction of the facility. And, I was wondering, is that all just kind of opportunistic or is there kind of a programmatic move on your -- in your view to move towards more fixed rate liabilities or is there a strategy or it was primarily optimistic or -- and -- or is the strategy just broadening and diversifying as always?

Executive
Howard M. Levkowitz

Chris, it's Howard. Thanks for the question. Our liability management is really a function of our risk management perspective and wanting to diversify our sources of funding. We have two revolvers in SBA facility, a series of note facilities and a convert and we had expanded our revolver capacity earlier in the year when it was attractive to do so. And when it became attractive to issue the 3.9% notes, the summer we did so, but then, we looked at it and felt we had more credit capacity than we needed and we have good relationships with our banks, so we were able to unwind a portion of the incremental facilities debt that we had taken on. We had taken on incremental debt from both of our lenders and just unwound it from one of them.

Analyst
Chris Kotowski

Okay. And then, the one area where you seem to be running up towards capacity is on the SBA debentures. Can you remind us of where you stand on potentially expanding that?

Executive
Howard M. Levkowitz

Currently we still got some cash available in the SBIC and IFC [Phonetic] dropdowns, so we can -- we still have the capacity to use that, but are in process of looking at expanding our SBIC facility as well.

Analyst
Chris Kotowski

Okay. And then, finally for me, you always provide that interest rate sensitivity chart on Page 7 and obviously, we had, I guess, one rate cut in July and one in October. And I'm just kind of curious how long -- just from the narrow point of view of an analyst who's trying to model out the next couple of quarters, how long before we kind of feel that impact, given kind of the rollovers in your portfolio?

Executive
Howard M. Levkowitz

So, Chris, this is Howard again. You are feeling it. It's rolling through. Most of our assets are on three month resets. Not all of them, but most of them. As are the floating rate liabilities. So they may not all flow through concurrently, but you're getting it real time. We've had compression year-over-year in LIBOR of about 66 basis points and so the reason our overall portfolio yield is down this quarter is a combination of two things. As we discussed, we exited a few of our second lien positions in our one larger junior note, which were higher yielding positions at