Good morning, ladies and gentlemen and thank you for standing by. Welcome to the Ares Capital Corporation third quarter 2008 earnings conference call. (Operator Instructions) In addition to Ares Capital Corporation’s earnings release and quarterly report on Form 10-Q, the company is offering a webcast and slide presentation to accompany this call. Copies of the earnings release, Form 10-Q, and the slide presentation can be obtained from the company’s website at arescapitalcorp.com under the Investor Resources tab. The earnings release is located in the Press Release section. The Form 10-Q can be found in the SEC Filings section and the slide presentation is located in the Stock Information section. Ares Capital Corporation 2008 earnings press release, Form 10-Q, comments made during the course of this conference call and webcast, and its accompanying slide presentation contain forward-looking statements within the meaning of Section 21-E of the Securities Exchange Act of 1934 and are subject to risks and uncertainties. Many of these forward-looking statements can be identified by the use of the words such as “anticipate,” “believe,” “expects,” “intends,” “will,” “should,” and “may” and similar expressions. Ares Capital Corporation’s actual results could differ materially from those expressed in the forward-looking statements for any reason including those listed in its SEC filings. Any such forward-looking statements are made pursuant to available safe harbor provisions under applicable securities laws and Ares Capital Corporation assumes no obligation to update any forward-looking statements. Please note that past performance or market information is not a guarantee of future results. Also during this conference call, the company may discuss core earnings per share or core EPS which is a non-GAAP financial measure as defined by SEC Regulation G. Core EPS is the net per share increase or decrease in stockholders’ equity resulting from operations less realized and unrealized gains and losses and any incentives, management fees attributed to such unrealized gains and losses, and any income taxes related to such realized gains. A reconciliation of a core EPS to net per share increases/decreases in stockholders’ equity resulting from operations to the most directly comparable GAAP financial measures can be found in the company’s earnings press release. The company believes that the core EPS provides useful information to investors regarding financial performance because it is one method of the company’s using to measure its financial conditions and results of operations. At this time, we would like to invite participants to access the company’s slide presentation. As previously noted, you can access the presentation on the company’s website at arescapitalcorp.com and click on the November 6, 2008 presentation link under the Stock Information section of the Investor Resources tab. Now, I would like to turn the conference over to Mr. Michael Arougheti, Ares Capital Corporation President.

Thank you, Operator. Good morning everyone and thanks for joining us this morning. I’m joined today by Rick Davis, our Chief Financial Officer, Carl Drake and Scott Wims from our Finance team, and Kipp deVeer, Mitch Goldstein and Mike Smith, senior members of our Investment Advisors Management team. I hope you had a chance to review our press release and our investor presentation posted on our website. Before we get into the financial details of the third quarter, I want to take a few minutes to comment on current market events, how our long-standing strategy plays into the current market, highlight our results and then explain how we continue to manage our business through this challenging period. As you all know, we continue to experience an unprecedented period of market volatility and uncertainty. These markets are not only presenting unique opportunities but also unique risks and challenges. For all, these syndicated loan and high-yield markets were more or less stable for much of the third quarter, however, intensified selling pressure resulting from bank failures and a collapse in confidence adversely impacted these markets towards the end of September and even further through October. This was partially a result of economic weakness but it was also driven by heightened risk aversion and exacerbated by forced deleveraging among financial institutions and other highly-leveraged market participants. This supply and demand in balance has resulted in historic lows for broadly syndicated leverage loan and high-yield bond pricing. The current pricing applies to fault rates which are well in excess of the historical peak levels during past deep recessions. Although the loan market has bounced off its lows, it is still too early to know when we will see stability or recovery. Therefore, we remain cautious and highly selective on making new investments and are…

Great, thanks, Mike. Please turn to slide 3 in our presentation. As Mike outlined, our basic and diluted core EPS and net investment income were both $0.34 for the third quarter, a penny increase over the same period last year and a decrease of $0.06 from the second quarter of this year. The decline was primarily due to lower structuring fee income of about $8 million compared to the second quarter’s unusually high level and a higher share count as the incremental 24.2 million shares from the April rights offering were outstanding for a full quarter. This decline was partially offset by higher net investment spreads of 39 basis points and growth in net earning assets. The weighted average yield on our debt and income-producing securities for the third quarter was 12.26% compared to 11.28% at the end of Q2 and 11.63% during the third quarter of last year. Despite the repricing of our CP funding facility, our investment spread increased by 39 basis points over the second quarter and 252 basis points since last year reflecting our rotation strategy, improved investment returns and our attractive low-cost funding. Looking forward, we hope to see our investment spread continue to improve in the next few quarters so that we might experience a temporary minor disruption of this trend in the fourth quarter due to the volatility of LIBOR. During the spike and retreat of LIBOR in October, we incurred various timing mismatches between our asset and liability LIBOR contracts which may impact us modestly in both our assets and liability contracts reset. We closed the third quarter with a $2.1 billion investment portfolio at value covering 90 portfolio companies that have a weighted average EBITDA of $38.9 million excluding cash and cash equivalents. Our quarter-end portfolio was comprised of approximately 54%…

Great. Thanks, Rick. Now I want to say a few words about our recent investment activity and portfolio positioning before I comment on our prospects and risks under current market conditions. As Rick mentioned earlier in the third quarter, we closed $183.2 million of new commitments across 11 portfolio companies. Five of these investments were with new companies and six were with existing portfolio companies. Eight separate private equity sponsors were represented in these new transactions and one of those sponsors is a new relationship for ARCC. Slide 10 outlines our new investment activity. Of our new investments, 7% were in first lien senior secured debt, 19% in second lien senior secured debt, 62% in senior subordinated debt, and 12% were in equity and other securities. While 2% of these investments bear interest at floating rates and 86% bear interest at fixed rates. From a repayment standpoint, 80% were in first lien, 6% in second lien, 11% in subordinated debt, and 3% in equities. During the third quarter, significant new commitments included a $50 million subordinated debt investment to one of the nation’s largest outsourced laundry equipment and service providers to multi-use facilities and the #1 player on the West coast. We also committed $40 million in sub-debt to a leading dental practice management company and $35 million in a second lien term loan to the third largest outsourced physician and administrative service provider to hospital emergency rooms. Finally, we committed $22 million in mezzanine to a leading government services firm serving the DOD and related organizations. In total, our new investments provide a blended yield of 13% however, this doesn’t include any structuring fees, call protection and original issue discounts that we received in these transactions. Including such items, these investments in total returned profiles in the mid-to-high teens.…

(Operator Instructions) Our first question will come from Vernon Plack from BB&T Capital. Please go ahead. Vernon Plack - BB&T Capital: Mike, I perhaps wanted to get a little more color from you regarding the exemptive order that you are applying for. I know you just talked about it but maybe perhaps a little more anecdotal evidence or an example of how you see that helping both you as well as Ares management, and maybe some thoughts too on, I have no idea how long a process like that will actually get exemptive relief if possible.

Sure. The order as it’s drafted, and you’ll all be able to access it if you’re not able to do it already has two components to it. I want to remind everybody as a publically traded company we are unable to co-invest currently with other parts of the Ares organization which as we sit today manages in excess of $25 billion of assets that’s 250 professional worldwide. We spend a lot of time talking to you all about the synergies and benefits of that affiliation. We are one of the most active participants in the leveraged finance market across the Ares platform, however, we are currently unable to invest in transactions either in larger loans, opportunities in the secondary market or even to syndicate a ARCC originated loan to other parts of the firm. As I think about the advantages, it is really two-fold. One, it would give us the ability and a period of constrained liquidity and growth opportunity in our own balance sheet to access other pools of capital within the Ares organization to bring to the market and provide service and product to our issuers. Two, to take advantage of our capital markets’ infrastructure and research infrastructure and trading infrastructure, to be in the market taking advantage of some of the dislocation we see in the secondary markets. Some of our peers do pursue these activities on their balance sheet at the BDC and they are really not having the conflict that we do with some of the other parts of the organization. In terms of the timing, in a normal market atmosphere, it is normally a 9 to 12 month process. I remind everybody that we went through a similar process shortly after our IPO but chose for a variety of reasons not to pursue the process at that time. We have asked for an expedited review from the commission given everything that is going on in the market and the benefits to shareholders. We like to try to get people focused on it sooner rather than later but we can’t guarantee that that’s going to happen.

Our next question will come from Troy Ward from Stifel Nicolaus. Please go ahead.

There is a ton of information on the call and I apologize if I am asking you to go over something but I’ll get a lot of it on the replay. Can you talk about the portfolio rotation, you talked about $160 million recycled and another was it $190 million repriced?

$94 million repriced.

$94 million repriced which you added 2 cents and recycling added about a nickel, is that correct?

Correct.

How do you view portfolio growth, overall portfolio growth going forward? I saw where in the quarter, some of that I guess would fall in the recycling, the $22 million went into Ivy Hill I, is that correct?

Correct.

That’s at about $350 million. How do you view net portfolio growth going forward?

Again, the balance we need to strike given all of the volatility and the uncertainty in the market is to conserve liquidity until we get better visibilities to the underlying market trends and economic fundamentals while trying to judiciously take advantage of the market opportunity that sits in front of us. You will continue to see us putting capital out in this market. We’re doing as best as we can to match the capital deployed with the capital that we’re getting back and we’re using our excess liquidity, as I mentioned we have close to $350 million of liquidity now, we’re really using that to go out into market and use our scale and size to drive pricing and terms that are very attractive to us right now. I would expect over the next quarter or two to see modest portfolio growth on a net basis but I would expect to see a continued deployment of capital as we continue to aggressively recycle our underlying portfolio.

On the theme of capital preservation, as far as the dividend goes, I understand that if you add back in gains, you’re still over from ’07 to ’08, you got a very high coverage of your dividend, but clearly in this market, I think it can be surmised that late ’08 and into ’09, gains are going to be harder to come by and clearly the spillover is probably not going to be available either. How do you view the dividend in ’09, your current dividend versus your potential in ’09?

I really think that’s the question that financial institutions have to face right now. As we mentioned the last time we all got together on a call and today, we have a very clear path and strategy to grow the core earnings and get to full dividend coverage through cash distributable and operating income. The leverage that we have to pull that we talked about, are obviously deploying our current balance sheet liquidity, growing our asset management business and increasing our fee income, recycling our portfolio, repricing our portfolio, and then trying to harvest gains. We are in a market environment that is exhibiting unprecedented volatility and there is just a lot of general uncertainty. We think it would be a mistake right now to make any long-term strategic decisions and generalizations as we sit here today. We think we will get a lot better sense for where the markets and economies are going as we get through year-end and we get a look at the economic picture, as we get a look at the health or lack there of bank balance sheets, as we get some of the recent Fed action a chance to work its way though the system. I think it’s important that people appreciate that we do have a pass to get the full coverage. We are operating very significant coverage now but we have to be judicious in pulling those levers because as we sit here today, we just think that staying liquid and sitting in cash is really the most prudent thing to do right now.

I agree, I think you have the ability to get to that, but in this environment, it is going to take longer than our modeling definitely anticipated three quarters ago, and it is probably going to take even longer after we do the models this quarter. At what point do you say, we need to pull the dividend back versus it’s just going to take longer for coverage?

It’s going to be an ongoing process. We’re going to do it in dialogue with our investors in the market and it’s going to be a consistent reference to our existing liquidity position and where we perceive opportunities to use our liquidity. Again, as we sit here today, there’s a balancing that needs to occur as we get through this fourth quarter and the end of the year and see what the market opportunity is. I also want to remind everybody, that we opportunistically did a rights offering in April and communicated to our investors and market that we would be taking at least a year to fully develop and deploy the strategy that we laid out. We are executing very well against that strategy in all respects but we are really only eight or nine months into it and we want to give that strategy a chance to bear out in full. It’s something that we obviously pay a lot of attention to as I think the market should as well but from our seat, everything we said that we were going to do a year ago, we’re doing and the market opportunity is still there for us to grow the core earnings.

One final question. Can you give us a little bit of color on the portfolio at First Life Financial? I know this is a larger investment and it is in an area that has had considerable turmoil. How large is the portfolio at First Life and what does that portfolio look like and how comfortable are you with the ability with that portfolio to continue to meet and make your investments accrue?

We don’t provide specific commentary on underlying portfolio companies but we have said in the past and I will reiterate it now, the portfolio is very diversified, it’s very granular, it is predominantly senior secured debt at low leverage levels and attractive pricing. The structure of that company’s balance sheet has no mark-to-market triggers or risks on the liability side so the cash-on-cash return opportunity and that investment continues to be very sound from our perspective.

Our next question will come from Sanjay Sakhrani from KBW. Please go ahead. Sanjay Sakhrani – Keefe, Bruyette & Woods: I just had a question on credit quality. I think there were four additions to the grade 2 category. I was wondering if you could just briefly touch on those and if there were any changes in the grade 1 bucket.

It’s interesting, we spend a lot of time on the call talking about our industry overweightings and underweightings and one of the things, I think it is important for people to recognize is our portfolio is not immune to general movement or headwinds in certain industries. Most of our credit tends to, or credit weakness or credit strength, tends to be driven by company-specific performance issues. The four companies that were moved to a 2 are in a variety of industries. One is in the food business, the other is in the commercial printing business, one is a specialty retailer and one is a waste management and environmental services business. I think that when you look at those industries, clearly the printing company is experiencing pressure given what is going on in the overall economy. Our retail investment that we moved to is actually up significantly year-over-year but based on our expectations for Q4 performance in the retail environment, we are taking a cautious stance there. As we sit here today, the company is actually out-performing revenues projected year-over-year. The color there is on two rated credits for us, those are credits that make our watch list. We either have actual performance that gives us pause or we have some visibility to future performance that means we want to increase our monitoring. None of those companies are past due on their interests. We are in active dialogue with the management teams and the sponsors of those companies. As we sit here today, we don’t perceive that there is loss of principal otherwise it would be categorized as a 1. Sanjay Sakhrani – Keefe, Bruyette & Woods: Just on Ivy Hill II, how much money has been raised towards that $250 million?

All of it. Sanjay Sakhrani – Keefe, Bruyette & Woods: All of it, okay. That $75 million that you guys expect to sell to the fund, it’s possible and probable.

Yes, I would say it’s both possible and probable. There’s a number of restrictions just driven by tax and others that will affect the timing and nature of those deals. Our expectation is that those deals will occur. Sanjay Sakhrani – Keefe, Bruyette & Woods: One final one. Just broadly speaking on kind of a BDC model in the context of the present environment and the technical dislocation, I was just wondering what your thoughts were on it, is there any type of regulatory relief that’s being discussed or being vetted upon?

Just in terms of our views of the vibrancy of the BDC model? Sanjay Sakhrani – Keefe, Bruyette & Woods: Yes.

I think that everything is relative. I continue to believe that if you look at what is plaguing the financial sector in general, the primary culprit is leverage. The BDC model is given its leverage restrictions and its diversification requirements will prove to be extraordinarily resilient in getting through the current market climate. It’s obvious that there are some specific challenges that we all face as a BDC such as the slippery slope of a FAS 157 accounting its impact on NAVs, the inability to grow the balance sheet and sell stock below NAVs. There are some structural constraints to the model. As I sit here today, I view those as opportunity costs and not as real risks to the model. Just referring back to Ivy Hill II, the irony is that in the private markets, there continues to be a significant amount of demand for the assets that we are originating and that we are investing in, but I just think that the financial markets obviously have an aversion now for a whole host of reasons in investing the financial space. I don’t think that that is an indication that the BDC model is not viable, I just think that means that you just need to aggressively manage to model until you get back to normal market environments.

Our next question will come from Jim Ballan from J.P. Morgan. Please go ahead.

There is a pretty significant number in terms of the exits in the quarter which is great from a liquidity standpoint. Just given the unprecedented volatility, you had a net realized gain in the quarter. Can you give us some detail around that net gain to get me a little more comfortable with that? I know Rick might have covered this but if we could talk about that a little bit.

When you go through the queue, you will see the realized gain was predominantly from a company called Daily Candy. It is an ad-based web publisher. It was bought by Comcast for a very nice multiple and we made a very nice return on the investment. As we said on our last call, at the time that we had our last conference call, we have an extra 10 portfolio companies that were engaged in various strategic process fees and review strategic alternatives while we have to accept the current economic and M&A environment will affect some of those processes. I don’t believe it will affect all of those processes. The strategic acquirers are more cautious but still active. They’re liquid, their balance sheets are healthy. I think we will see a slowdown in repayments but as we look forward, we don’t think it will be a complete shutdown.

The investment activity in the quarter, was there any portion of that was a drawdown on the unfunded commitments? How much of the decrease in the commitments of this quarter was due to draws as opposed to just adoptions of those commitments now that the commitments have gone away?

In the quarter, about $34 million was drawdowns under our line. Let me just take a step back and spend a couple of minutes on the unfunded lines so that people appreciate exactly what those are because I know Jim you brought it up last quarter as well. If you look at the quarter, for the quarter, we reduced our total unfunded commitments which included letters of credit by about $58 million from $333 million at the end of Q2 to $275 million. Some of that is funding. It’s important to really understand what those $275 million are. When you look at the $275 million and only about $216 million of it is available subject to loan-opt restrictions and borrowing availability, etc, etc. If you then try to further boil down the $216 million, you have to think of it in two buckets. I want to make sure that people understand this. One is true revolvers that people use for their daily capital requirements and those are revolvers where there is an ability to draw down at a day’s notice. The second bucket is what we would categorize as delayed draw, CAPEX lines or multi-year acquisition lines. That first bucket of working capital revolvers was about $86.5 million at the end of the quarter. Our borrowers based on their borrowing basis were to draw down about $82 million. While we can’t be exact what their cash on hand is today, as of the most recent financial statements that they have given us based on our interaction with them, they had to collect about $76 million in cash on hand against that $82 million. As we mentioned on the last call, those revolvers are to some of our strongest portfolio companies. Just to illustrate how those revolvers are performing, during the…

The Ivy Hill II and I guess Ivy Hill I as well would also be available as some sort of funding if they were drawn down more than you expected?

I’m sorry Jim, you cut out. Can you repeat the question?

If the availability you have in Ivy Hill II would be available as additional liquidity to cover?

Oh, of course. We have $350 million of balance sheet capacity. We just raised a $250 million fund to invest in the market in partnership with our balance sheet. We have excess capacity in Ivy Hill I and again, net for the quarter today, we are seeing paydowns under these lines and they tend to be cash collateral lines. As we think about our pipeline, we’re always factoring in whether or not we see acquisitions coming down the pipe but as we mentioned last time, when they get drawn, they are very attractive assets for the balance sheet and we’re happy to own them. In theory, if we funded some in the balance sheet, we could also fund some into Ivy Hill II and liquidity is liquidity. But we do not perceive the acquisition and delayed draw lines as a significant risk to our liquidity position.

Our next question will come from Adam Waldo, a private investor. Please go ahead.

Given the really almost historically unprecedented in the leveraging environment that we’re in, presently with a slight carry-over at year-end, given the significant discount that the stock is presently trading, can you give us some sense on how you think about stock buybacks and the use of liquidity, particularly given some recent movements by other credible BDCs like Corporate Capital, or Black Rock Capital in that regard?

I think as you come to know us as a management team, we like to be thoughtful and judicious in making strategic decisions and move. I think, to date, obviously some of our peers have announced share buyback programs but they have not really utilized them so well. It’s nice to acknowledge that it’s a tool that’s available to potentially create a quarterly increase in our dividends, but we want to make focused to the extent that we are in the environment that we think it makes sense to buyback stock and we are actually buying back stock. You have to look at the accretion/dilution analysis from a buyback program. You have to weight the benefits of the buyback program against the risks of deploying significant amounts of liquidity in today’s market. I do believe personally and it is something we spend a lot of time talking about here amongst the management team, if you were to do something like a share buyback, you would want to do it meaningfully so that it would have the desired impact in creating modest incremental change. Parting with liquidity right now is something that is challenging. Just to put it in perspective, at our current share price, in order to have a share buyback and just based on the math and not the risks to potential liquidity. Just the math would require that we invest in 20%-22% returns in new money as a break-even against the share buyback. As we sit here today, we’re seeing opportunities to invest capital at those returns and higher. It’s something that’s on our radar screen. We understand the arithmetic. As we get a better sense at where this market is headed and what our opportunities to deploy capital are, it may make sense in the future. As we sit here today, we don’t see it.

Just one quick follow-up if you’ll permit me. As you look at the general environment, can you give us a sense for how you are planning for ’09 from a macro backdrop as you analogize to prior deep recessions? What is your current best guess? Do you think in the credit markets we are likely to see something like the early ‘70s, early ‘80s, early ‘30s, just general views on that given your experience?

Our hope, and again, I don’t think anybody has seen the technical dislocation that we are living through right now. Our hope is that we will get through the worst part of it through the first or second quarter of next year. One thing I will say and this is also a risk but we’re seeing significant deflation and a lot of pressure receding on the gross margin line for a lot of our portfolio companies. While we’re seeing consumer weakness and a general slowdown in corporate spending, we’re also seeing a very rapid and very significant reduction in commodity pricing and raw material input pressure which was kind of the story last year. As we look at revenues and profitability for our companies, we are seeing and we do expect to continue to see revenue slowdowns. It is being mitigated somewhat by a pretty significant margin pickup in the reduction of input costs. We are, again, being very cautious. We’re seeing a significant slowdown in October-November then we would expect in December as people try to hit the pause button and try to get a sense for where the economy’s going. Liquidity is still very, very tight and if you saw some of the feedback out of the most recent Fed survey, the market is generally liquidated in capital restraints and small businesses are finding it difficult to get capital. We have every expectation that the recent Treasury and Fed action will start to get liquidity back into the system. We think the lower interest rates are obviously going to help company cash flow. We can’t tell you exactly but we look at a lot of companies here and a lot of companies across Ares’ management platform, our expectation is that it will be deeper and longer than we saw in the last go-around. We think that all of the tools are in place and we’re seeing some evidence that we’ll try to get through this by the end of ’09.

Our next question will come from Jasper Birch from Fox-Pitt Kelton. Please go ahead.

I was just wondering if we could get some commentary on sort of how you have September, October LIBOR dislocation and you set repricing GAAP, does that expect the price flow in your CLOs?

Say that again.

There was a LIBOR dislocation, spiking up in September, October, I was wondering how did that affect your debt securitization in terms of the cash flow and the funding base? Is that something we should be looking at right now?

Rick, maybe you want to handle this quickly about where we are in regard to our fixed versus floating interest rate management and then Jasper, I will try to address the CLO question.

I think just looking at the September 30 balances, from a matched spending standpoint, roughly $130 million or so was of the exposure with our floating rate, assets exceeding our floating rate liabilities. As we have mentioned, we’ve recently put a $75 million additional hedge in place to where we will pay fixed LIBOR, 2.98% for two years to somewhat mitigate that factor. Mike, you can get into more details but the LIBOR contracts that we’ve had, we were fortunate on our facilities where we didn’t really have to reset any LIBOR contracts during the spike. There were a couple contracts that came due but it so happened that we had the options to select the prime rate instead of LIBOR, and the prime rate happened to be lower than the prevailing LIBOR rate plus our spread. We were fortunate in that regard but there may be a little mismatching just with the assets side too from our portfolio companies.

I would just highlight when you look at the net spread increases as we mentioned of 250 basis points over the last year, obviously a portion of that is a result of higher yields on new investments. A portion of that is obviously a result of interest rates coming in. I will also highlight that a lot of the new vintage loans that we invested in have LIBOR floors set at 3% or 4% and that is obviously going to be a value driver into ’09 and ’10. Back to the CLO question, if I understand it directly, the way to think about our on-balance sheet CLO is that we are borrowing floating rates and we are investing floating rates. We have $314 million in floating rate liabilities as LIBOR 34 and based on the way that financing is structured, there is a diminished amount of fixed-rate investments in that particular structure. So there is nothing in the interest rate movements that would impact that financing vehicle, if I understand the question correctly.

So there is essentially no pricing gap either in the term?

Nothing material.

I have another question, it is sort of more general especially with the Ivy Hill II fund and the investments that you are looking at right now, one, are you still looking at primary market or is it more secondary market? In the secondary market, we have been hearing from some people that there are a lot of entire asset platforms out there from funds that are getting liquidated, is that something that you guys are considering for the new investments?

Again, as I mentioned, when you look at Ares’ management as a firm, we are one of the most active participants in the liquid credit markets in addition to us being one of the more active participants in the illiquid markets. At Ares Capital Corporation, we are spending a lot of time looking at those opportunities as well as the primary market. As I mentioned in my prepared remarks, secondary markets’ pricing is driving a lot of the new structures and pricing requirements in the primary markets. It is also true that almost every day, there is a new thing that is coming out where there is a portfolio getting liquidated as a result of a hedge fund on TRX or some market-value CLO getting unwound. Again, one of the things that people have to appreciate is the dislocation in the senior loan market pricing is really a function of that phenomenon and not necessarily a perfect manifestation of credit weakness. All of these facilities are short in duration, have market value triggers and as you put out significant supply in a very short period of time and the buyers know that there is another one around the corner, the bid side of the market continues to come down very quickly and you’re in this negative feedback loop. That said, I think it’s also important that the market is very inefficient right now. On average, we’re seeing $400-$500 million a day in portfolio sales coming through the market but on average, 30%-40% of those assets are actually getting sold and the remainder are not. The bid/act spread in many of those situations is you can see something in the magnitude of 10-20 points. There is a lot of rumor and energy around loan prices but in some of these situations, the prices just aren’t clearing.

Our next question will come from John Arfstrom from RBC Capital Markets. Please go ahead.

Just one quick question, guys. In your prepared comments, you talked about the strong pipeline for repricing in the first quarter of ’09. Can you just comment on how significant that might be or how it might compare to what you did in the current quarter?

It’s going to be a function of company performance. It’s interesting and I’ll be careful as I say this. As a senior secured lender, the best environment for you to operate in is a flat cash room environment where companies are still liquid and are still prospering but have set unrealistic expectations for themselves and for their loans. What we are beginning to see now and we saw the beginnings of it in Q2 and Q3 is given the vintage of the loans that we hold in our senior secured portfolio, people are now starting to get to the point where they continue to perform year-over-year but are faced with significant covenant step-downs based on budgets that were set 2-3 years ago. The number can be quite significant, multiples of what we experienced in the third quarter but I think it’s going to take some time and it’s obviously going to be a function of how the economy performs here in the fourth quarter and first quarter.

Mr. Arougheti, at this time I show there are no further questions. Please continue with your presentation.

Great. That’s all we had for today. We appreciate everyone taking so much time to spend with us this morning. We look forward to speaking to you again next quarter. Thank you.