Fair Value of Financial Instruments

3 Months Ended

Mar. 31, 2023

Fair Value Disclosures [Abstract]

Fair Value of Financial Instruments

5. Fair Value of Financial Instruments

Investments

The following tables present fair value measurements of investments as of March 31, 2023 and December 31, 2022:

	Fair Value Hierarchy at March 31, 2023
	Level 1		Level 2		Level 3		Total
First-lien debt investments	$	—	$	—	$	1,246,008	$	1,246,008
Equity and other investments		—		—		16,444		16,444
Total	$	—	$	—	$	1,262,452	$	1,262,452

	Fair Value Hierarchy at December 31, 2022
	Level 1		Level 2		Level 3		Total
First-lien debt investments	$	—	$	—	$	800,995	$	800,995
Equity and other investments		—		—		7,806		7,806
Total	$	—	$	—	$	808,801	$	808,801

Transfers between levels, if any, are recognized at the beginning of the quarter in which the transfers occur.

The following tables present the changes in the fair value of investments for which Level 3 inputs were used to determine the fair value as of and for the three months ended March 31, 2023:

	As of and for the Three Months Ended
	March 31, 2023
	First-lien debt investments			Equity and other investments		Total
Balance, beginning of period	$	800,994		$	7,806	$	808,800
Purchases or originations		436,124			8,638		444,762
Repayments / redemptions		(6,286	)		—		(6,286	)
Paid-in-kind interest		21			—		21
Net change in unrealized gains (losses)		13,761			—		13,761
Net amortization of discount on securities		1,394			—		1,394
Transfers into (out of) Level 3		—			—		—
Balance, End of Period	$	1,246,008		$	16,444	$	1,262,452

The following tables present information with respect to the net change in unrealized gains or losses on investments for which Level 3 inputs were used in determining fair value that are still held by the Company at March 31, 2023:

	Net Change in Unrealized
	Gains (Losses)
	for the Three Months Ended
	March 31, 2023 on
	Investments Held at
	March 31, 2023
First-lien debt investments	$	13,761
Equity and other investments		—
Total	$	13,761

The following tables present the fair value of Level 3 Investments at fair value and the significant unobservable inputs used in the valuations as of March 31, 2023 and December 31, 2022. The tables are not intended to be all-inclusive, but instead capture the significant unobservable inputs relevant to the Company’s determination of fair values.

	March 31, 2023
			Valuation	Unobservable	Range (Weighted	Impact to Valuation from an
	Fair Value		Technique	Input	Average)	Increase to Input
First-lien debt investments	$	1,246,008	Income approach	Discount rate	9.89% — 14.94% (13.18%)	Decrease
Equity and other investments		16,444	Market Multiple	Comparable multiple	5.8x — 13.5x (12.0x)	Increase
Total	$	1,262,452

	December 31, 2022
			Valuation	Unobservable	Range (Weighted	Impact to Valuation from an
	Fair Value		Technique	Input	Average)	Increase to Input
First-lien debt investments	$	800,995	Income approach	Discount rate	9.3% — 15.1% (13.1%)	Decrease
Equity and other investments		7,806	Market Multiple	Comparable multiple	5.8x — 13.5x (13.3x)	Increase
Total	$	808,801

The Company typically determines the fair value of its performing Level 3 debt investments utilizing a yield analysis. In a yield analysis, a price is ascribed for each investment based upon an assessment of current and expected market yields for similar investments and risk profiles. Additional consideration is given to the expected life, portfolio company performance since close, and other terms and risks associated with an investment. Among other factors, a determinant of risk is the amount of leverage used by the portfolio company relative to the total enterprise value of the company, and the rights and remedies of our investment within each portfolio company’s capital structure.

Significant unobservable quantitative inputs typically considered in the fair value measurement of the Company’s Level 3 debt investments primarily include current market yields, including relevant market indices, but may also include quotes from brokers, dealers, and pricing services as indicated by comparable investments. If debt investments are credit impaired, an enterprise value analysis may be used to value such debt investments; however, in addition to the methods outlined above, other methods such as a liquidation or wind-down analysis may be utilized to estimate enterprise value. For the Company’s Level 3 equity investments, multiples of similar companies’ revenues, earnings before income taxes, depreciation and amortization (“EBITDA”) or some combination thereof and comparable market transactions are typically used.

Financial Instruments Not Carried at Fair Value

Debt

The fair value of the Company’s Credit Facilities, which are categorized as Level 3 within the fair value hierarchy, as of March 31, 2023 and December 31, 2022, approximates their carrying value as the outstanding balance is callable at carrying value.

Other Financial Assets and Liabilities

Under the fair value hierarchy, cash and cash equivalents are classified as Level 1 while the Company’s other assets and liabilities, other than investments at fair value and Revolving Credit Facility, are classified as Level 2.