1 unchanged sentence
We are subject to financial market risks, including changes in interest rates.
−Removed: Uncertainty with respect to the rising interest rates, inflationary pressures, risks in respect of a failure to increase the U.S.
−Removed: debt ceiling, the war in Ukraine and Russia and health epidemics and pandemics introduced significant volatility in the financial markets, and the effects of this volatility has materially impacted and could continue to materially impact our market risks.
+Added: Uncertainty with respect to interest rates, inflationary pressures, risks in respect of a failure to increase the U.S.
+Added: debt ceiling or a downgrade in the U.S.
+Added: credit rating, the war between Ukraine and Russia, certain regional bank failures, an inflationary environment, the ongoing war in the Middle East and health epidemics and pandemics introduced significant volatility in the financial markets, and the effects of this volatility have materially impacted and could continue to materially impact our market risks.
Because we fund a portion of our investments with borrowings, our net investment income is 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.
−Removed: In a low interest rate environment, including a reduction of LIBOR and SOFR to zero, the difference between the total interest income earned on interest earning assets and the total interest expense incurred on interest bearing liabilities may be compressed, reducing our net interest income and potentially adversely affecting our operating results.
−Removed: Conversely, in a rising interest rate environment, such as the current economic environment, such difference could potentially increase thereby increasing our net investment income.
+Added: In a low interest rate environment, including a reduction of SOFR to zero, the difference between the total interest income earned on interest earning assets and the total interest expense incurred on interest bearing liabilities may be compressed, reducing our net interest income and potentially adversely affecting our operating results.
+Added: Conversely, in a rising interest rate environment, such as the recent economic environment, such difference could potentially increase thereby increasing our net investment income.
During the fiscal year ended December 31, 2023, certain investments in our comprehensive investment portfolio had floating interest rates.
−Removed: These floating rate investments were primarily based on floating LIBOR or SOFR and typically have durations of one to three months after which they reset to current market interest rates.
+Added: These floating rate investments were primarily based on floating SOFR and typically have durations of one to three months after which they reset to current market interest rates.
Additionally, some of these investments have floors.
The Company also has revolving credit facilities that are generally based on floating SOFR.
−Removed: Assuming no changes to our balance sheet as of December 31, 2022 and no new defaults by portfolio companies, a hypothetical one percent decrease in LIBOR and SOFR on our comprehensive floating rate assets and liabilities would decrease our net investment income by ten cents per average share over the next twelve months.
−Removed: Assuming no changes to our balance sheet as of December 31, 2022 and no new defaults by portfolio companies, a hypothetical one percent increase in LIBOR and SOFR on our comprehensive floating rate assets and liabilities would increase our net investment income by approximately ten cents per average share over the next twelve months.
−Removed: However, we may hedge against interest rate fluctuations from time to time by using standard hedging instruments such as futures, options, swaps and forward contracts subject to the requirements of the 1940 Act.
+Added: Assuming no changes to our balance sheet as of December 31, 2023 and no new defaults by portfolio companies, a hypothetical one percent decrease in SOFR on our comprehensive floating rate assets and liabilities would decrease our net investment income by six cents per average share over the next twelve months.
+Added: Assuming no changes to our balance sheet as of December 31, 2023 and no new defaults by portfolio companies, a hypothetical one percent increase in SOFR on our comprehensive floating rate assets and liabilities would increase our net investment income by approximately six cents per average share over the next twelve months.
+Added: However, we may hedge against interest rate fluctuations from time to time by using
+Added: standard hedging instruments such as futures, options, swaps and forward contracts 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 any benefits of certain changes in interest rates with respect to our portfolio of investments.
−Removed: At December 31, 2022, we have no interest rate hedging instruments outstanding on our balance sheet.
−Removed: Increase (Decrease) in LIBOR and SOFR
+Added: At December 31, 2023, we had no interest rate hedging instruments outstanding on our balance sheet.
+Added: Increase (Decrease) in SOFR
Increase (Decrease) in Net Investment Income Per Share Per Year
4 unchanged sentences
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.