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

Nov 06, 2019 • 01:00 pm ET


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


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Paul L. Davis

total of $150 million, reduced the interest rate on our SVCP facility by 25 basis points and extended the maturity of both facilities to May 2023. Our credit facility expansion gave us flexibility as we plan for the maturity of our 2019 convertible notes and with the subsequent issuance of -- in August of our $150 million of 3.9% unsecured five-year notes, we were able to then reduce our credit facility commitment by $50 million after quarter end to balance our secured and unsecured debt capital.

The unsecured note issuance and net increase in our credit facility capacity further expanded our diverse leverage program, which now includes two low-cost credit facilities, two convertible note issuances, two straight unsecured note issuances and an SBA program. Outstanding draws on our $150 million SBA program increased to $138 million at September 30.

While quarter end cash was temporarily elevated by a number of very large repayments in the last day of the quarter, net regulatory leverage, which is net of SBIC debt cash and outstanding trades decreased quarter-over-quarter from 0.98 times common equity at June 30 to 0.96 times at September 30, well within our 2:1 leverage limitation following shareholder approval of our increased leverage flexibility back in February.

I'll now turn the call back over to Howard.

Howard M. Levkowitz

Thanks, Paul. We are pleased with our strong net investment income, dividend coverage and disciplined origination activity during the quarter. Our team is focused on delivering the results our shareholders have come to expect from TCPC. Middle market borrowers continue to look for tailored financing solutions from lenders who know their businesses. However, we are cautious on the environment, given the idiosyncratic company and industry shifts we continue to observe. Given this, we continue to be disciplined in our underwriting, executing only a small number of the investment opportunities we review each quarter.

We make investment decisions based on a comprehensive analysis of each company, its management team and strategy and relevant industry dynamics. With this in mind, we continue to leverage our platform to pursue attractive investment opportunities. In the fourth quarter to date through November 5, we have invested approximately $69.2 million, primarily in five senior secured loans. The combined effective yield of these investments is approximately 10.1%.

Looking ahead, we believe we are well positioned to continue to generate strong and consistent performance for several reasons. Our 20-plus years of experience, which spans several market cycles, is a key advantage in attracting borrowers and deal sources as well as managing risk. Our robust origination platform gives us the ability to source unique and attractive investment opportunities. The scale of the BlackRock platform enhances our deal flow, supporting our selective investment approach. As a lead or co-lead on most of our investments, we take an active role in due diligence, deal structuring, establishing terms and monitoring investments. The direct relationships we form with borrowers as part of this process help protect TCPC and its shareholders. The BlackRock TCP team is structured, so that