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Item 7. Management’s Discussion and Analysis

2021-03-16 compared with 2020-03-17 · 123 added, 115 removed, 289 unchanged (45% of the section changed)

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We bear all other expenses of our operations and transactions.

Recent Developments

The rapid spread of COVID-19, and associated impacts on the U.S.

and global economies and the financial and credit markets, initially had negatively impacted, and may again negatively impact, our business operations and the business operations of some of our portfolio companies.

We cannot at this time fully predict the impact of COVID-19 on our business or the business of our portfolio companies, its duration or magnitude or the extent to which it will negatively impact our portfolio companies’ operating results or our own results of operations or financial condition, including, without limitation, our ability to pay distributions to and repurchase shares from our shareholders.

We expect that certain of our portfolio companies will continue to experience economic distress for the foreseeable future and may significantly limit business operations if subjected to prolonged economic distress.

These developments could result in a decrease in the value of certain of our investments.

COVID-19 initially had adverse effects on our investment income and may again have adverse effects in the future.

These adverse effects may require us to restructure certain of our investments, which could result in further reductions to our investment income or in impairments on our investments.

In addition, disruptions in the capital markets have resulted in illiquidity in certain market areas.

These market disruptions and illiquidity initially had an adverse effect on our business, financial condition, results of operations and cash flows.

Unfavorable economic conditions caused by COVID-19 can also be expected to increase our funding costs and limit our access to the capital markets.

These events initially limited our investment originations, which may occur again in the future, and may also have a material negative impact on our operating results.

We will continue to carefully monitor the impact of COVID-19 on our business and the business of our portfolio companies.

Because the full effects of COVID-19 are not capable of being known at this time, we cannot estimate the impacts of COVID-19 on our future financial condition, results of operations or cash flows, including its effects on us with respect to our compliance with covenants in our financing arrangements with lenders.

We do, however, expect that it will continue to have a negative impact on our business and the financial condition of certain of our portfolio companies.

On February 11, 2021, we entered into the Note Purchase Agreement with certain purchasers, in connection with our issuance of $125,000 aggregate principal amount of our 4.50% senior unsecured notes due in 2026.

The net proceeds to us were approximately $122,300, after the deduction of placement agent fees and other financing expenses, which we used to repay debt under our secured financing arrangements.

See Note 16 to our consolidated financial statements contained in this annual report on Form 10-K for additional information regarding our 2026 Notes.

Reclassification

In 2018, unamortized original issue discounts, or OID, and market discounts/premiums received upon the early repayment of debt investments were reclassified from net realized gains on investments to interest income.

As a result, 2017 amounts have been reclassified to conform to the current presentation.

Portfolio Investment Activity for the Years Ended December 31, 2020 and 2019

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Senior secured first lien debt

$ 347,992 $ 527,869

Senior secured second lien debt

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December 31, 2020

Investments Cost(1)

Investments Fair

Percentage of

Investments Cost(1) Investments Fair

Value Percentage of

Senior secured first lien debt $ 1,266,564 $ 1,223,268 81.8 %

Senior secured second lien debt 171,480 151,506 10.1 %

Collateralized securities and structured products - debt

Collateralized securities and structured products - equity 15,305 12,131 0.8 %

Unsecured debt 5,668 5,464 0.4 %

Equity 118,638 103,405 6.9 %

Subtotal/total percentage 1,577,655 1,495,774 100.0 %

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Number of portfolio companies 119

Average annual EBITDA of portfolio companies

$81.7 million

Median annual EBITDA of portfolio companies

$56.1 million

Average annual EBITDA of portfolio companies $67.3 million

Median annual EBITDA of portfolio companies $53.2 million

Purchased at a weighted average price of par 98.18 %

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December 31, 2019

Investments Fair

Percentage of

Cost(1) Investments Fair

Value Percentage of

Senior secured first lien debt $ 1,388,942 $ 1,351,767 77.9 %

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Collateralized securities and structured products - equity 16,476 14,182 0.8 %

Unsecured debt 4,901 4,900 0.3 %

Equity 115,738 109,231 6.3 %

Subtotal/total percentage 1,797,549 1,735,545 100.0 %

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Number of portfolio companies 136

Average annual EBITDA of portfolio companies

$79.0 million

Median annual EBITDA of portfolio companies

$56.0 million

Average annual EBITDA of portfolio companies $81.7 million

Median annual EBITDA of portfolio companies $56.1 million

Purchased at a weighted average price of par 97.68 %

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The following table summarizes the composition of our investment portfolio by the type of interest rate as of December 31, 2020 and 2019, excluding short term investments of $73,597 and $29,527, respectively:

Interest Rate Allocation

Investments Cost

Investments Fair Value

Percentage of

Investments Cost

Investments Fair Value

Percentage of

Interest Rate Allocation Investments Cost Investments Fair Value Percentage of

Portfolio Investments Cost Investments Fair Value Percentage of

Floating interest rate investments $ 1,347,194 $ 1,284,282 85.9 % $ 1,648,380 $ 1,594,594 91.8 %

Fixed interest rate investments 126,962 124,816 8.3 % 66,460 65,233 3.8 %

Other income producing investments

Non-income producing equity 66,086 52,505 3.5 % 51,887 45,213 2.6 %

Other income producing investments 37,413 34,171 2.3 % 30,822 30,505 1.8 %

Total investments $ 1,577,655 $ 1,495,774 100.0 % $ 1,797,549 $ 1,735,545 100.0 %

The following table shows the composition of our investment portfolio by industry classification and the percentage, by fair value, of the total assets in such industries as of December 31, 2020 and 2019:

Industry Classification

Investments Fair Value

Percentage of

Investment Portfolio

Investments Fair Value

Percentage of

Industry Classification Investments Fair Value Percentage of

Investment Portfolio Investments Fair Value Percentage of

Investment Portfolio

Healthcare & Pharmaceuticals $ 298,944 19.9 % $ 294,947 17.0 %

Diversified & Production

Advertising, Printing & Publishing

Business 211,572 14.0 % 191,126 11.0 %

Chemicals, Plastics & Rubber 141,654 9.5 % 102,906 5.9 %

Capital Equipment

Advertising, Printing & Publishing 110,083 7.4 % 120,810 7.0 %

Diversified & Production 108,078 7.2 % 206,159 11.9 %

Consumer 85,254 5.7 % 94,058 5.4 %

Beverage, Food & Tobacco 69,975 4.7 % 68,440 3.9 %

Diversified Financials

Banking, Finance, Insurance & Real Estate

Telecommunications

Capital Equipment 65,752 4.4 % 73,586 4.2 %

High Tech Industries 55,619 3.7 % 60,197 3.5 %

Construction & Building

Consumer Goods:

Telecommunications 46,638 3.1 % 61,577 3.6 %

Banking, Finance, Insurance & Real Estate 41,211 2.8 % 62,738 3.6 %

Diversified Financials 37,214 2.5 % 66,897 3.9 %

Aerospace & Defense 35,751 2.4 % 30,378 1.8 %

Transportation:

Construction & Building 34,653 2.3 % 37,096 2.1 %

Retail 29,312 2.0 % 53,599 3.1 %

Oil & Gas 28,136 1.9 % 48,742 2.8 %

Hotel, Gaming & Leisure 21,920 1.5 % 25,081 1.4 %

Forest Products & Paper 21,686 1.4 % 24,217 1.4 %

Transportation:

Cargo 19,001 1.3 % 27,291 1.6 %

Consumer Goods:

Non-Durable 15,757 1.1 % 33,609 1.9 %

Metals & Mining 10,147 0.7 % 10,373 0.6 %

Environmental Industries

Broadcasting & Subscription

Consumer Goods:

Durable 7,417 0.5 % 31,705 1.8 %

Automotive — — 10,013 0.6 %

Subtotal/total percentage 1,495,774 100.0 % 1,735,545 100.0 %

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The following is a description of the conditions associated with each investment rating used in this ratings system:

Investment Rating

Investment Rating Description

1 Indicates the least amount of risk to our initial cost basis.

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The following table summarizes the composition of our investment portfolio based on the 1 to 5 investment rating scale at fair value as of December 31, 2020 and 2019, excluding short term investments of $73,597 and $29,527, respectively:

Investment Rating

Percentage of

Investment Portfolio

Percentage of

Investment Rating Investments

Fair Value Percentage of

Investment Portfolio Investments

Fair Value Percentage of

Investment Portfolio

1 $ 2,997 0.2 % $ 154,264 8.9 %

2 1,173,191 78.5 % 1,278,576 73.7 %

3 309,930 20.7 % 282,140 16.3 %

4 9,210 0.6 % 16,463 0.9 %

5 446 — 4,102 0.2 %

$ 1,495,774 100.0 % $ 1,735,545 100.0 %

The amount of the investment portfolio in each rating category may vary substantially from period to period resulting primarily from changes in the composition of such portfolio as a result of new investment, repayment and exit activities.

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Investments Fair

Percentage of

Value Percentage of

Senior secured first lien debt $ 1,267,552 82.8 %

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Unsecured debt 5,464 0.3 %

Equity 92,435 6.0 %

Subtotal/total percentage 1,531,559 100.0 %

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Number of portfolio companies 122

Average annual EBITDA of portfolio companies

$81.0 million

Median annual EBITDA of portfolio companies

$54.6 million

Average annual EBITDA of portfolio companies $67.3 million

Median annual EBITDA of portfolio companies $53.2 million

Purchased at a weighted average price of par 97.86 %

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Net change in unrealized depreciation on investments (19,878) (10,551)

Net increase in net assets resulting from operations

Net (decrease) increase in net assets resulting from operations $ (11,022) $ 51,844

Investment Income

For the years ended December 31, 2020 and 2019, we generated investment income of $163,842 and $201,103, respectively, consisting primarily of interest income on investments in senior secured debt, collateralized securities and structured products, and unsecured debt of 137 and 171 portfolio companies held during each respective period.

Our average investment portfolio size, excluding our short term investments, increased $113,948, from $1,680,211 during the year ended December 31, 2018 to $1,794,159 during the year ended December 31, 2019, as we deployed the net proceeds from our financing arrangements and the net proceeds from our follow-on continuous public offering, which commenced on January 25, 2016 and ended on January 25, 2019.

During 2018, our investment portfolio continued to grow due to equity available to us for investment from our follow-on continuous public offering and amounts borrowed under our financing arrangements.

As a result, we believe that reported investment income for the year ended December 31, 2018 is not representative of our stabilized or future performance.

Our average investment portfolio size, excluding our short term investments, decreased $178,500, from $1,794,159 during the year ended December 31, 2019 to $1,615,660 during the year ended December 31, 2020.

Additionally, the decrease in LIBOR during the year ended December 31, 2020 from the year ended December 31, 2019 also contributed to the decrease in interest income.

Operating Expenses

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Total operating expenses $ 85,114 $ 113,791

During the year ended December 31, 2019, the increase in interest expense was primarily the result of additional borrowings on our existing financing arrangements, which resulted in an increase in net assets and an increase in management fees.

The increase in subordinated incentive fee on income was a result of exceeding our hurdle rate of 1.875% for pre-incentive fee net investment income for each quarter during the year ended December 31, 2019, whereas for the year ended December 31, 2018, we only exceeded our hurdle rate for the three month periods ended September 30, 2018 and December 31, 2018.

During the year ended December 31, 2020, the decrease in interest expense was primarily the result of lower average borrowings on our existing financing arrangements, which resulted in a decrease in net assets and therefore a decrease in management fees.

The decrease in interest expense was also the result of a decrease in LIBOR during the year ended December 31, 2020 as compared to the year ended December 31, 2019.

The decrease in subordinated incentive fee on income was a result of exceeding our hurdle rate of 1.875% for pre-incentive fee net investment income only for the three month periods ended March 31, 2020 and December 31, 2020, whereas we exceeded such hurdle rate for each quarter during the year ended December 31, 2019.

The composition of our general and administrative expenses for the years ended December 31, 2020 and 2019 was as follows:

Years Ended December 31,

Transfer agent expense

Professional fees $ 1,490 $ 996

Transfer agent expense 1,189 1,289

Valuation expense 999 722

Accounting and administrative costs 680 567

Director fees and expenses

Insurance expense 489 421

Dues and subscriptions

Director fees and expenses 450 472

Printing and marketing expense 378 102

Dues and subscriptions 342 343

Due diligence fees — 61

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Our net investment income totaled $78,728 and $87,312 for the years ended December 31, 2020 and 2019, respectively.

The decrease in net investment income was primarily due to an increase in our subordinated incentive fees and interest expense for the year ended December 31, 2019, partially offset by an increase in investment income during the year ended December 31, 2019 compared to the year ended December 31, 2018.

The decrease in net investment income was primarily due to a decrease in our investment income during the year ended December 31, 2020 as compared to the year ended December 31, 2019.

The decrease in investment income was partially offset by a decrease in subordinated incentive fees and interest expense during the year ended December 31, 2020 as compared to the year ended December 31, 2019.

Net Realized Loss on Investments and Foreign Currency

Our net realized loss on investments and foreign currency totaled $(69,872) and $(24,917) for the years ended December 31, 2020 and 2019, respectively.

This change was mainly due to an increase in investment restructurings and the liquidation of certain portfolio companies during the year ended December 31, 2019 compared to the year ended December 31, 2018.

This change was mainly due to an increase in realized losses on the restructure and liquidation of certain investments during the year ended December 31, 2020 as compared to the year ended December 31, 2019.

Net Change in Unrealized Depreciation on Investments

The net change in unrealized depreciation on our investments totaled $(19,878) and $(10,551) for the years ended December 31, 2020 and 2019, respectively.

This change was driven by a tightening of credit spreads during the year ended December 31, 2019 that positively impacted the fair value of certain of our investments compared to a widening of credit spreads during the year ended December 31, 2018.

This change was partially offset by unrealized losses on certain underperforming investments during the year ended December 31, 2019.

Net Increase in Net Assets Resulting from Operations

For the years ended December 31, 2019 and 2018 , we recorded a net increase in net assets resulting from operations of $51,844 and $31,310 , respectively, as a result of our operating activity for the respective periods.

This change was driven primarily by unrealized losses on certain underperforming investments during the year ended December 31, 2020.

This change was partially offset by certain previously unrealized losses on certain underperforming investments becoming realized during the year ended December 31, 2020.

Net (Decrease) Increase in Net Assets Resulting from Operations

For the year ended December 31, 2020, we recorded a net decrease in net assets resulting from operations of $(11,022) as compared to a net increase in net assets resulting from operations of $51,844 for the year ended December 31, 2019 as a result of our operating activity for the respective periods.

Results of Operations for the Years Ended December 31, 2019 and 2018

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Net realized loss on investments and foreign currency (24,917) (5,619)

Net change in unrealized (depreciation) appreciation on investments

Net realized loss on total return swap

Net change in unrealized appreciation on total return swap

Net change in unrealized depreciation on investments (10,551) (53,248)

Net increase in net assets resulting from operations $ 51,844 $ 31,310

1 unchanged sentence

For the years ended December 31, 2019 and 2018, we generated investment income of $201,103 and $188,138, respectively, consisting primarily of interest income on investments in senior secured debt, collateralized securities and structured products, and unsecured debt of 171 and 215 portfolio companies held during each respective period.

Our average investment portfolio size, excluding our short term investments and TRS, increased $416,896, from $1,263,315 during the year ended December 31, 2017 to $1,680,211 during the year ended December 31, 2018, as we deployed the net proceeds from our financing arrangements and the net proceeds from our follow-on continuous public offering, which commenced on January 25, 2016 and ended on January 25, 2019.

As a result, we believe that reported investment income for the years ended December 31, 2018 and 2017 is not representative of our stabilized or future performance.

Interest income earned by loans underlying the TRS was not included in investment income in the consolidated statements of operations, but rather it was recorded as part of net realized loss on total return swap.

In lieu of extending the expiration date of the TRS beyond April 18, 2017, we entered into a traditional credit facility with Citibank on March 29, 2017.

As a result, we believe that reported investment income for the year ended December 31, 2018 is not representative of our stabilized or future performance.

Operating Expenses

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Total operating expenses $ 113,791 $ 97,961

During the year ended December 31, 2018, the increase in management fees was a direct result of the increase in our total assets, while the increase in interest expense was primarily the result of additional borrowings on our existing financing arrangements.

The increase in subordinated incentive fees was a result of exceeding our hurdle rate of 1.875% for pre-incentive fee net investment income for the three months ended September 30, 2018 and December 31, 2018.

The composition of our general and administrative expenses for the years ended December 31, 2019 and 2018 was as follows:

Years Ended December 31,

Professional fees

Transfer agent expense $ 1,289 $ 1,315

Professional fees 996 1,480

Valuation expense 722 762

Dues and subscriptions

Accounting and administrative costs 567 637

1 unchanged sentence

Insurance expense 421 408

Dues and subscriptions 343 667

Printing and marketing expense 102 273

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Our net investment income totaled $87,312 and $90,177 for the years ended December 31, 2019 and 2018, respectively.

The increase in net investment income was primarily due to an increase in the size of our investment portfolio relative to our expenses as we continued to achieve economies of scale due to proceeds received from our follow-on continuous public offering and our financing arrangements.

Net Realized Loss on Investments and Foreign Currency

Our net realized loss on investments and foreign currency totaled $(24,917) and $(5,619) for the years ended December 31, 2019 and 2018, respectively.

This change was primarily due to a decrease in realized losses on certain underperforming investments during 2018 compared to 2017.

Net Change in Unrealized (Depreciation) Appreciation on Investments

The net change in unrealized (depreciation) appreciation on our investments totaled $(53,248) and $9,448 for the years ended December 31, 2018 and 2017, respectively.

This change was driven by a widening of credit spreads during the year ended December 31, 2018 that negatively impacted the fair value of certain of our investments compared to a tightening of credit spreads during the year ended December 31, 2017.

Net Realized Loss on TRS

Our net realized loss on the TRS totaled $0 and $(13,956) for the years ended December 31, 2018 and 2017, respectively.

The components of net realized loss on the TRS are summarized below:

Years Ended December 31,

Interest and other income from TRS portfolio

Interest and other expense from TRS portfolio

Net realized loss on TRS loan sales

Net Change in Unrealized Appreciation on TRS

The net change in unrealized appreciation on the TRS totaled $0 and $15,402 for the years ended December 31, 2018 and 2017, respectively.

Unrealized appreciation recorded during the year ended December 31, 2017 was primarily due to previously unrealized depreciation becoming realized upon the expiration of the TRS.

Net Change in Unrealized Depreciation on Investments

The net change in unrealized depreciation on our investments totaled $(10,551) and $(53,248) for the years ended December 31, 2019 and 2018, respectively.

This change was partially offset by unrealized losses on certain underperforming investments during the year ended December 31, 2019.

Net Increase in Net Assets Resulting from Operations

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On March 23, 2018, an amendment to Section 61(a) of the 1940 Act was signed into law to permit BDCs to reduce the minimum “asset coverage” ratio from 200% to 150% and, as a result, to potentially increase the ratio of a BDC’s debt to equity from a maximum of 1-to-1 to a maximum of 2-to-1, so long as certain approval and disclosure requirements are satisfied.

We currently have not determined whether to seek to utilize such additional leverage.

We generated cash from the net proceeds from our continuous public offerings.

Our initial continuous public offering commenced on July 2, 2012 and ended on December 31, 2015.

Our follow-on continuous public offering commenced on January 25, 2016 and ended on January 25, 2019.

In 2021, we intend to seek the approval of our shareholders to reduce our minimum “asset coverage” ratio from 200% to 150% in accordance with the 1940 Act.

The outbreak and spread of COVID-19 have caused severe stress and uncertainty in the U.S.

and global economies as well as in the financial and credit markets.

Given the uncertainty as to the full severity and duration of the pandemic and its effects on us with respect to our compliance with covenants in our loan facilities with lenders and our borrowers’ ability to timely meet their financial obligations to us, management and our board of directors determined that it was in the best interest of our company and all of our shareholders to take certain steps disclosed below during the three months ended March 31, 2020 that were necessary to improve our cash position and preserve financial flexibility in the short term.

This “Financial Condition, Liquidity and Capital Resources” discussion should also be read in conjunction with “Recent Developments - COVID-19” above.

On March 19, 2020, our co-chief executive officers determined to (i) change the timing of declaring distributions to shareholders from quarterly to monthly;

and (ii) temporarily suspend the payment of distributions to shareholders commencing with the month ended April 30, 2020, whether in cash or pursuant to our distribution reinvestment plan, as amended and restated.

On July 15, 2020, our board of directors determined to recommence the payment of distributions to shareholders in August 2020.

Distributions in respect of future months will be evaluated by management and our board of directors based on circumstances and expectations existing at the time of consideration.

On March 19, 2020, our board of directors, including the independent directors, also determined to temporarily suspend our share repurchase program commencing with the second quarter of 2020 and included the third quarter of 2020.

On November 13, 2020, we recommenced our share repurchase program for the fourth quarter of 2020.

Share repurchases for future quarters will be evaluated by our board of directors based on circumstances and expectations existing at the time of consideration.

As of December 31, 2020 and March 11, 2021, we had $73,597 and $106,855 in short term investments, respectively, invested in a fund that primarily invests in U.S.

government securities.

Citibank Credit Facility

As of December 31, 2019 and March 12, 2020 , our outstanding borrowings under the Second Amended Citibank Credit Facility were $278,542 and $245,442, respectively, and the aggregate unfunded principal amount in connection with the Second Amended Citibank Credit Facility wa s $71,458 and $104,558, respectively.

For a detailed discussion of our Second Amended Citibank Credit Facility, refer to Note 9 to our consolidated financial statements included in this report.

JPM Credit Facility

As of December 31, 2019 and March 12, 2020 , our outstanding borrowings under the Amended JPM Credit Facility were $250,000 and the aggregate unfunded principal amount in connection with the Amended JPM Credit Facility was $25,000 .

We intend to refinance or further amend the Amended JPM Credit Facility prior to August 24, 2020.

For a detailed discussion of our Amended JPM Credit Facility, refer to Note 9 to our consolidated financial statements included in this report.

As of December 31, 2019 and March 12, 2020 , our outstanding borrowings under the amended UBS Facility were $200,000 and no additional principal amount was available for borrowing under the amended UBS Facility.

We intend to refinance or extend the amended UBS Facility prior to May 19, 2020.

As of December 31, 2020, our outstanding borrowings under the Second Amended JPM Credit Facility were $625,000 and the aggregate unfunded principal amount in connection with the Second Amended JPM Credit Facility was $75,000.

On February 26, 2021, we entered into the Third Amended JPM Credit Facility with JPM.

As of March 11, 2021, our outstanding borrowings under the Third Amended JPM Credit Facility were $500,000 and the aggregate unfunded principal amount in connection with the Third Amended JPM Credit Facility was $75,000.

For a detailed discussion of our Second Amended JPM Credit Facility and Third Amended JPM Credit Facility, refer to Note 8 to our consolidated financial statements included in this report.

As of December 31, 2020 and March 11, 2021, our outstanding borrowings under the Amended UBS Facility were $100,000 and the aggregate unfunded principal amount in connection with the Amended UBS Facility was $50,000.

For a detailed discussion of our Amended UBS Facility, refer to Note 8 to our consolidated financial statements included in this report.

MS Credit Facility

As of December 31, 2019 and March 12, 2020 , our outstanding borrowings under the Amended MS Credit Facility were $112,500 and $122,500, respectively, and the aggregate unfunded principal amount in connection with the Amended MS Credit Facility was $37,500 and $27,500, respectively.

For a detailed discussion of our Amended MS Credit Facility, refer to Note 9 to our consolidated financial statements included in this report.

On February 11, 2021, we issued $125,000 in aggregate principal amount of 4.50% fixed-rate senior unsecured notes due on February 11, 2026.

As of March 11, 2021, the Company had $125,000 in aggregate principal amount of 2026 Notes outstanding.

For a detailed discussion of our 2026 Notes, refer to Note 16 to our consolidated financial statements included in this report.

Unfunded Commitments

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To qualify for and maintain RIC tax treatment, we must, among other things, distribute in respect of each taxable year at least 90% of our net ordinary income and realized net short-term capital gains in excess of realized net long-term capital losses, if any.

In order to avoid certain excise taxes imposed on RICs, we currently intend to distribute in respect of each calendar year an amount at least equal to the sum of (1) 98.0% of our net ordinary income (taking into account certain deferrals and elections) for the calendar year, (2) 98.2% of our capital gains in excess of capital losses, or capital gain net income (adjusted for certain ordinary losses), for the one-year period ending on October 31 of the calendar year and (3) any net ordinary income and capital gain net income from preceding years that were not distributed during such years and on which we paid no federal income tax.

We will incur certain excise taxes imposed on RICs to the extent we do not distribute in respect of each calendar year an amount at least equal to the sum of (1) 98.0% of our net ordinary income (taking into account certain deferrals and elections) for the calendar year, (2) 98.2% of our capital gains in excess of capital losses, or capital gain net income (adjusted for certain ordinary losses), for the one-year period ending on October 31 of the calendar year and (3) any net ordinary income and capital gain net income from preceding years that were not distributed during such years and on which we paid no federal income tax.

For an additional discussion of our RIC status and distributions, refer to Note 2 and Note 5, respectively, of our consolidated financial statements included in this report.

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Related Party Transactions

For a discussion of our relationship with related parties including CION Securities, CIM, ICON Capital, CIG, and AIA and amounts incurred under agreements with such related parties, refer to Note 4 to our consolidated financial statements included in this report.

For a discussion of our relationship with related parties including CION Securities, CIM, CIG, and AIA and amounts incurred under agreements with such related parties, refer to Note 4 to our consolidated financial statements included in this report.

Contractual Obligations

On August 26, 2016, 34th Street entered into the JPM Credit Facility with JPM, as amended and restated on September 30, 2016, July 11, 2017, November 28, 2017 and May 23, 2018.

On August 26, 2016, 34th Street entered into the JPM Credit Facility with JPM, as amended and restated on September 30, 2016, July 11, 2017, November 28, 2017, May 23, 2018, May 15, 2020 and February 26, 2021.

See Note 8 to our consolidated financial statements for a more detailed description of the JPM Credit Facility.

On March 29, 2017, Flatiron Funding II entered into the Citibank Credit Facility with Citibank, as amended on July 11, 2017 and March 14, 2019.

See Note 9 to our consolidated financial statements for a more detailed description of the Citibank Credit Facility.

On May 19, 2017, Murray Hill Funding II entered into the UBS Facility with UBS, as amended on December 1, 2017.

On May 19, 2017, Murray Hill Funding II entered into the UBS Facility with UBS, as amended on December 1, 2017, May 19, 2020, November 12, 2020 and December 17, 2020.

See Note 8 to our consolidated financial statements for a more detailed description of the UBS Facility.

On December 19, 2017, 33rd Street entered into the MS Credit Facility with MS, as amended on July 9, 2018 and December 18, 2018.

See Note 9 to our consolidated financial statements for a more detailed description of the MS Credit Facility.

On February 11, 2021, we entered into the Note Purchase Agreement with purchasers of the 2026 Notes.

See Note 16 to our consolidated financial statements for a more detailed description of the 2026 Notes.

Commitments and Contingencies and Off-Balance Sheet Arrangements

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Compared sentence by sentence after normalising whitespace, quotation marks, case and digits, so re-formatting and restated figures do not read as changed language. Wording changes appear as one removal and one addition. The current filing and the prior one are authoritative.

What changed 10-K

Item 7. Management’s Discussion and Analysis