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Fair value of Financial Instruments (Tables) | 9 Months Ended
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Jun. 30, 2023
Fair Value Disclosures [Abstract] |
Summary of Unobservable Inputs and Ranges | Our Level 3 valuation techniques, unobservable inputs and ranges were categorized as follows for ASC 820 purposes ($ in thousands):
Asset Category |  | Fair value at June 30, 2023 |  |  | Valuation Technique |  | Unobservable Input |  | Range of Input (Weighted Average) (1)
First lien |  | $ | 52,268 |  |  | Market Comparable |  | Broker/Dealer bids or quotes |  | N/A
First lien |  |  | 897,976 |  |  | Market Comparable |  | Market yield |  | 8.8% - 18.5% (11.6%)
Second lien |  |  | 149 |  |  | Market Comparable |  | Market yield |  | 14.2%
Equity |  |  | 97,211 |  |  | Enterprise Market Value |  | EBITDA multiple |  | .3x - 18.8x (11.9x)
Equity |  |  | 818 |  |  | Enterprise Market Value |  | DLOM(2) |  | 21.7%
Total Level 3 investments |  | $ | 1,048,422 |  |  |  |  |  |  |
Debt Category |  |  |  |  |  |  |  |  |
Long-Term Credit Facility |  | $ | 63,917 |  |  | Market Comparable |  | Market Yield |  | 2.5%
____________________________________________ (1) The weighted averages disclosed in the table above were weighted by their relative fair value. (2) DLOM is defined as discount for lack of marketability.
Asset Category |  | Fair value at September 30, 2022 |  |  | Valuation Technique |  | Unobservable Input |  | Range of Input (Weighted Average) (1)
First lien |  | $ | 70,363 |  |  | Market Comparable |  | Broker/Dealer bids or quotes |  | N/A
First lien |  |  | 930,806 |  |  | Market Comparable |  | Market Yield |  | 8.2% - 21% (10.9%)
First lien |  |  | 8,473 |  |  | Enterprise Market Value |  | EBITDA multiple |  | 14.0x
Second lien |  |  | 147 |  |  | Market Comparable |  | Market Yield |  | 14.7%
Equity |  |  | 89,906 |  |  | Enterprise Market Value |  | EBITDA multiple |  | 3.3x - 21.4x (12.5x)
Equity |  |  | 5,232 |  |  | Enterprise Market Value |  | DLOM(2) |  | 11.8%
Total Level 3 investments |  | $ | 1,104,927 |  |  |  |  |  |  |
Debt Category |  |  |  |  |  |  |  |  |
Long-Term Credit Facility |  | $ | 167,563 |  |  | Market Comparable |  | Market Yield |  | 2.5%
(1) The weighted averages disclosed in the table above were weighted by their relative fair value. (2) DLOM is defined as discount for lack of marketability.
Summary of Investments, Cash and Cash Equivalents, Credit Facility, or Prior Credit Facility, Notes and Asset Backed Debt | Our investments, cash and cash equivalents, Credit Facility or Prior Credit Facility, as applicable, 2023 Notes, 2026 Notes and 2031 Asset-Backed Debt were categorized as follows in the fair value hierarchy for ASC 820 purposes ($ in thousands):
|  | Fair Value at June 30, 2023 |
Description |  | Fair Value |  |  | Level 1 |  |  | Level 2 |  |  | Level 3 |  |  | Measured at Net Asset Value (1) |
First lien |  | $ | 950,244 |  |  | $ | — |  |  | $ | — |  |  | $ | 950,244 |  |  | $ | — |
Second lien |  |  | 149 |  |  |  | — |  |  |  | — |  |  |  | 149 |  |  |  | — |
Equity |  |  | 154,872 |  |  |  | — |  |  |  | — |  |  |  | 98,029 |  |  |  | 56,843 |
Total investments |  |  | 1,105,265 |  |  |  | — |  |  |  | — |  |  |  | 1,048,422 |  |  |  | 56,843 |
Cash and cash equivalents |  |  | 43,994 |  |  |  | 43,994 |  |  |  | — |  |  |  | — |  |  |  | — |
Total investments and cash and cash equivalents |  | $ | 1,149,259 |  |  | $ | 43,994 |  |  | $ | — |  |  | $ | 1,048,422 |  |  | $ | 56,843 |
Credit Facility payable |  | $ | 63,917 |  |  | $ | — |  |  | $ | — |  |  | $ | 63,917 |  |  | $ | — |
2023 Notes payable |  |  | 79,260 |  |  |  | 79,260 |  |  |  | — |  |  |  | — |  |  |  | — |
2026 Notes payable (2) |  |  | 182,860 |  |  |  | — |  |  |  | 182,860 |  |  |  | — |  |  |  | — |
2031 Asset-Backed Debt(2) |  |  | 226,601 |  |  |  | — |  |  |  | — |  |  |  | 226,601 |  |  |  | — |
Total debt |  | $ | 552,638 |  |  | $ | 79,260 |  |  | $ | 182,860 |  |  | $ | 290,518 |  |  | $ | — |
(1) In accordance with ASC Subtopic 820-10, Fair Value Measurements and Disclosures, or ASC 820-10, our equity investment in PSSL and PTSF are measured using the net asset value per share (or its equivalent) as a practical expedient for fair value, and thus have not been classified in the fair value hierarchy. (2) We elected not to apply the fair value option allowed by ASC 825-10 to the 2026 Notes and the 2031 Asset-Backed Debt and thus the balance reported in the Consolidated Statement of Assets and Liabilities represents the carrying value, which approximates the fair value.
|  | Fair Value at September 30, 2022 |
Description |  | Fair Value |  |  | Level 1 |  |  | Level 2 |  |  | Level 3 |  |  | Measured at Net Asset Value (1) |
First lien |  | $ | 1,009,642 |  |  | $ | — |  |  | $ | — |  |  | $ | 1,009,642 |  |  | $ | — |
Second lien |  |  | 147 |  |  |  | — |  |  |  | — |  |  |  | 147 |  |  |  | — |
Equity |  |  | 154,465 |  |  |  | — |  |  |  | — |  |  |  | 95,138 |  |  |  | 59,327 |
Total investments |  |  | 1,164,254 |  |  |  | — |  |  |  | — |  |  |  | 1,104,927 |  |  |  | 59,327 |
Cash and cash equivalents |  |  | 47,880 |  |  |  | 47,880 |  |  |  | — |  |  |  | — |  |  |  | — |
Total investments and cash and cash equivalents |  | $ | 1,212,134 |  |  | $ | 47,880 |  |  | $ | — |  |  | $ | 1,104,927 |  |  | $ | 59,327 |
Credit Facility payable |  | $ | 167,563 |  |  | $ | — |  |  | $ | — |  |  | $ | 167,563 |  |  | $ | — |
2023 Notes payable |  |  | 96,812 |  |  |  | 96,812 |  |  |  | — |  |  |  | — |  |  |  | — |
2026 Notes payable (2) |  |  | 182,276 |  |  |  | — |  |  |  | 182,276 |  |  |  | — |  |  |  | — |
2031 Asset-Backed Debt(2) |  |  | 226,128 |  |  |  | — |  |  |  | — |  |  |  | 226,128 |  |  |  | — |
Total debt |  | $ | 672,779 |  |  | $ | 96,812 |  |  | $ | 182,276 |  |  | $ | 393,691 |  |  | $ | — |
(1) In accordance with ASC Subtopic 820-10, Fair Value Measurements and Disclosures, or ASC 820-10, our equity investment in PSSL and PTSF is measured using the net asset value per share (or its equivalent) as a practical expedient for fair value, and thus has not been classified in the fair value hierarchy. (2) We elected not to apply the fair value option allowed by ASC 825-10 to the 2026 Notes and the 2031 Asset-Backed Debt and thus the balance reported in the Consolidated Statement of Assets and Liabilities represents the carrying value, which approximates the fair value.
Reconciliation of Investments Measured at Fair Value Using Significant Unobservable Inputs Level 3 | The tables below show a reconciliation of the beginning and ending balances for fair valued investments measured using significant unobservable inputs (Level 3) ($ in thousands):
|  | Nine Months Ended June 30,2023 |
Description |  | First Lien |  |  | Second lien, subordinated debt and equity investments |  |  | Totals |
Beginning Balance |  | $ | 1,009,642 |  |  | $ | 95,285 |  |  | $ | 1,104,927 |
Net realized gain (loss) |  |  | (16,268 | ) |  |  | 2,203 |  |  |  | (14,065 | )
Net change in unrealized depreciation |  |  | 1,245 |  |  |  | (12,296 | ) |  |  | (11,051 | )
Purchases, PIK interest, net discount accretion and non-cash exchanges |  |  | 208,709 |  |  |  | 17,977 |  |  |  | 226,686 |
Sales, repayments and non-cash exchanges |  |  | (253,084 | ) |  |  | (4,991 | ) |  |  | (258,075 | )
Transfers in and/or out of Level 3 |  |  | — |  |  |  | — |  |  |  | — |
Ending Balance |  | $ | 950,244 |  |  | $ | 98,178 |  |  | $ | 1,048,422 |
Net change in unrealized depreciation reported within the net change in unrealized depreciation on investments in our Consolidated Statements of Operations attributable to our Level 3 assets still held at the reporting date. |  | $ | (13,491 | ) |  | $ | (9,234 | ) |  | $ | (22,725 | )
|  | Nine Months Ended June 30,2022 |
Description |  | First Lien |  |  | Second lien, subordinated debt and equity investments |  |  | Totals |
Beginning Balance |  | $ | 934,418 |  |  | $ | 86,771 |  |  | $ | 1,021,189 |
Net realized losses |  |  | 1,124 |  |  |  | (13,106 | ) |  |  | (11,982 | )
Net change in unrealized depreciation |  |  | (7,553 | ) |  |  | 12,411 |  |  |  | 4,858 |
Purchases, PIK interest, net discount accretion and non-cash exchanges |  |  | 539,028 |  |  |  | 25,045 |  |  |  | 564,073 |
Sales, repayments and non-cash exchanges |  |  | (404,635 | ) |  |  | (16,368 | ) |  |  | (421,003 | )
Transfers in and/or out of Level 3 |  |  | — |  |  |  | — |  |  |  | — |
Ending Balance |  | $ | 1,062,382 |  |  | $ | 94,753 |  |  | $ | 1,157,135 |
Net change in unrealized depreciation reported within the net change in unrealized depreciation on investments in our Consolidated Statements of Operations attributable to our Level 3 assets still held at the reporting date. |  | $ | (5,627 | ) |  | $ | 12,170 |  |  | $ | 6,543 |
Reconciliation of Liabilities Measured at Fair Value Using Significant Unobservable Inputs Level 3 | The table below shows a reconciliation of the beginning and ending balances for liabilities recognized at fair value and measured using significant unobservable inputs (Level 3)($ in thousands):
|  | Nine months ended June 30, |
Long-Term Credit Facility |  | 2023 |  |  | 2022 |
Beginning Balance (cost – $169,654 and $219,400, respectively) |  | $ | 167,563 |  |  | $ | 218,852 |
Net change in unrealized (depreciation) appreciation included in earnings |  |  | 1,607 |  |  |  | (5,663 | )
Borrowings |  |  | 65,000 |  |  |  | 147,254 |
Repayments |  |  | (169,709 | ) |  |  | (107,000 | )
Net realized (gain) loss |  |  | (544 | ) |  |  | — |
Transfers in and/or out of Level 3 |  |  | — |  |  |  | — |
Ending Balance (cost – $64,400 and $259,277, respectively) |  | $ | 63,917 |  |  | $ | 253,443 |
Net Change in Fair Value From Currency Translation on Outstanding Borrowings | As of September 30, 2022 we had outstanding non-U.S. dollar borrowings on our Credit Facility. Net change in fair value from currency translation on outstanding borrowings is listed below ($ in thousands):
Foreign Currency |  | Amount Borrowed |  |  | Borrowing Cost |  |  | Current Value |  |  | Reset Date |  | Change in Fair Value |
Australian Dollar |  | $ | 10,000 |  |  | $ | 7,254 |  |  | $ | 6,430 |  |  | 10/1/22 |  | $ | (824 | )

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