Question-and-Answer Session
Operator
(Operator Instructions) Your first question comes from the line of Sanjay Sakhrani with KBW.
Sanjay Sakhrani - Keefe, Bruyette & Woods
Thank you. Jim, I think you talked about the technical rally in the markets this quarter and I guess I was wondering if you think of that current levels are sustainable and maybe you could just tie that into a discussion on how we should think about portfolio growth? Thanks.
James C. Zelter
Sure. Well, certainly the world, as I started, I think the depths of the market were that first week in March -- March 5th, March 2nd. When you go back to a lot of the charts and there has been a strong rally in the bank loan market, been a strong rally in a variety of high-yield indexes and quite frankly, if you look at a triple C index, those rallies, the riskier the assets, the more that they have rallied since that point in time. It’s covered a lot of assets around the globe and whether it’s commodities or equities and credit, they’ve all gotten a dramatic bid.
I do think that we are back to, if you look at where the indexes now are, I think they reflect a more rational view of defaults and recoveries than they did at year-end. And I think while we are -- what you are hearing Patrick say and you are hearing me say is we appreciate the technical rally but it’s -- you know, we are not off to the races in a new marketplace. We are back to what we think there’s appropriate value in these names, in the high-yield or the bank loan indexes. A lot of the distressed sales that occurred occurred in retrospect in levels that really were indeed distressed sales.
So we -- I view and I’ve been in the credit markets for quite a long time, I believe that the current levels reflect some of the realistic issues that are confronting the marketplace in high yield and loans. And I would also say that really the last six to eight weeks, you’ve seen a real re-opening of the high-yield market but the loan markets only recently reopened. You still have a lot of work to be done in getting a new buoyant, new issue loan market.
So in our mind, as Patrick said, we in summary spent our time focusing on our liquidity, realizing that’s a crucial issue for all the BDCs, and did some optimization. We like our portfolio. We are very comfortable with a lion’s share of the assets in there and only when we really want to optimize something, we’ll pull that trigger. But portfolio construction going forward, we have a strategy that we are relative value investor in this space. That’s proven well to us thus far. We’ve constantly wanted to upgrade our portfolio because we have found that the companies that are able to withstand the headwinds of this economic challenge cycle are the larger companies. So we are -- what you are hearing me say is we applaud what’s going on in the capital markets. It’s good for all credit issuers. It’s good for all the recovery of these companies. It gives them more optionality but we are -- and we are looking to put new money to work certainly but we are doing so in a -- with moderate caution because we still think that there are fundamental challenges to the underlying economy and commercial real estate, which we’ll take some time to deal with over the next 12 to 36 months.
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