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Item 7A. Quantitative and Qualitative Disclosures About Market Risk

2022-03-11 compared with 2021-03-12 · 32 added, 34 removed, 6 unchanged (92% of the section changed)

QUANTITATIVE AND QUALITATIVE DISCLOSURES ABOUT MARKET RISK

are subject to financial market risks, including changes in interest rates.

Interest rate sensitivity refers to the change in

our earnings that may result from changes in the level of interest rates.

Because we fund a portion of our investments with borrowings,

our net investment income will be affected by the difference between the rate at which we invest and the rate at which we borrow.

As a result, there can be no assurance that a significant change in market interest rates will not have a material adverse effect

on our net investment income.

that the consolidated statement of assets and liabilities as of December 31, 2020 were to remain constant and that we took no

actions to alter our existing interest rate sensitivity, the following table shows the annualized impact of hypothetical base

rate changes in interest rate.

QUANTITATIVE AND QUALITATIVE DISCLOSURES

ABOUT MARKET RISK

We are subject to financial

market risks, including changes in interest rates.

Interest rate sensitivity refers to the change in our earnings that may result from

changes in the level of interest rates.

Because we fund a portion of our investments with borrowings, our net investment income will

be affected by the difference between the rate at which we invest and the rate at which we borrow.

As a result, there can be no assurance

that a significant change in market interest rates will not have a material adverse effect on our net investment income.

Assuming that the consolidated

statement of assets and liabilities as of December 31, 2021 were to remain constant and that we took no actions to alter our existing

interest rate sensitivity, the following table shows the annualized impact of hypothetical base rate changes in interest rate.

Change in Interest Rates

Increase (Decrease) in Interest Income

Increase (Decrease) in Interest Expense

Net Increase (Decrease) in Net Investment Income

Down 25 basis points

3 unchanged sentences

Up 300 basis points

The data in the table

is based on the Company’s current statement of assets and liabilities.

As of December 31, 2020, the Company had $3.8 million

in net purchases that had not yet settled.

After settlement of these purchases, the change in interest expense will be larger as

a result of the increase in the amount borrowed under the Credit Facility.

The table does not include any change in dividend income

from the Company’s money market investments.

addition, any investments we make that are denominated in a foreign currency will be subject to risks associated with changes

in currency exchange rates.

These risks include the possibility of significant fluctuations in the foreign currency markets, the

imposition or modification of foreign exchange controls, and potential illiquidity in the secondary market.

These risks will vary

depending upon the currency or currencies involved.

measure exposure to interest rate and currency exchange rate fluctuations on an ongoing basis and may hedge against interest rate

and currency exchange rate fluctuations by using standard hedging instruments such as futures, options, swaps and forward contracts

and credit hedging contracts, such as credit default swaps, in each case, subject to the requirements of the 1940 Act.

While hedging

activities may insulate us against adverse changes in interest rates, they may also limit our ability to participate in benefits

of lower interest rates with respect to our portfolio of investments with fixed interest rates.

The data in the table is based

on the Company’s current statement of assets and liabilities.

As of December 31, 2021, the Company had $86.9 million in net purchases

that had not yet settled and $11.3 million in unfunded commitments.

After settlement of these purchases, the change in interest expense

will be larger as a result of the increase in the amount borrowed under the BoA Credit Facility or WF Credit Facility, as applicable.

The table does not include any change in dividend income from the Company’s money market investments.

In addition, any investments

we make that are denominated in a foreign currency will be subject to risks associated with changes in currency exchange rates.

risks include the possibility of significant fluctuations in the foreign currency markets, the imposition or modification of foreign

exchange controls, and potential illiquidity in the secondary market.

These risks will vary depending upon the currency or currencies

We measure exposure to interest

rate and currency exchange rate fluctuations on an ongoing basis and may hedge against interest rate and currency exchange rate fluctuations

by using standard hedging instruments such as futures, options, swaps and forward contracts and credit hedging contracts, such as credit

default swaps, in each case, subject to the requirements of the 1940 Act.

While hedging activities may insulate us against adverse changes

in interest rates, they may also limit our ability to participate in benefits of lower interest rates with respect to our portfolio of

investments with fixed interest rates.

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 7A. Quantitative and Qualitative Disclosures About Market Risk