Hello, everyone. I'm Andre Medina, Shareholder Relations Director at Patria, and welcome to the fifth edition of our PAX Talks, a deep dive into Patria's credit platform. This will be a panel discussion, and if you have questions, please submit them and we will try to get through as many as we can. Of course, before we start, I have to read the obligatory forward-looking statement. I'd like to remind everyone that today's call may include forward-looking statements which are uncertain, do not guarantee future performance, and undue reliance should not be placed on them. Patria assumes no obligation and does not intend to update any such forward-looking statements. Such statements are based on current management expectations and involve risks, including those discussed in the risk factors section of our latest 20-F annual report. Also note that no statements on this call constitute an offer to sell or a solicitation of an offer to purchase an interest in any Patria fund. Okay. With that, I'm very happy to have with us today Alexandre Coutinho, our Partner and Head of Credit in Brazil, Carlos Gundersen, Patria's Senior Director helping lead our Credit Investor Relations, and as the moderator, Rob Lee, currently Patria's Senior Advisor that I know a lot of you are familiar with. To kick off the panel, I would like to pass the word to Rob Lee. Rob. Great. Thank you, Andre, and thanks, everyone, for joining us in what I think will be an interesting discussion on private credit, which is in the news lately. Maybe a good way to start is, equity investors, I think, typically think of private credit as being monolithic, when in reality, private credit's highly diverse, when it comes to various types of strategies, product structures, targeted investors. I think Patria credit platform, in that sense, is no different in that the business may be more diverse than I think investors may realize, particularly following the Solis acquisition. Since both Carlos and Alex here represent different aspects of PAX's credit platform, I think as a starting point, and before we get into more detail, I think it'd be great if you both could take a couple of minutes to summarize the types of credit assets and structures managed in part by the pieces of the business that you represent. Summarize that, and very simplistically, the products, the structures, and the types of investors, before we'll get into more specifics around market and TAM and opportunities. Guys, thank you for joining me on this. Alex, why don't we start with you? Okay. Thank you, Rob. Concerning credit, it's interesting information that also I'm part of the Investment Credit Committee of private debt fund for Latin America, and also I'm a member of the Investment Committee of Solis. What you do here in Latin America is really different from what you can observe there in the U.S. It's much more, I would say, structured credit, although we do bilateral transactions. The scope is a little bit different. Indeed, I will do the following. Carlos, do you want to go through these pages to explain? Because it's very clear and very transparent, so it will be very helpful. I go in more details of the transactions. What do you think, Carlos? Absolutely, Alexandre Coutinho. I'll start with that. Good morning, afternoon, or evening, everybody. Today, across the Patria Credit Platform, we're managing about $12.3 billion. We mainly separate this in three sort of flagship strategies. The first one and the oldest one, which was launched in year 2000, is our hard currency high-yield strategy that invests primarily in high-yield bonds, performing bonds of Latin American companies. We've grown that strategy from $15 million in 2000 to over $5 billion, and mostly through performance. This strategy has returned 11.1% net returns per year over 26 years, so it's very impressive. 16 years ago, we started our local currency bonds strategy, which manages about $2.3 billion at the moment. This is mainly a strategy geared towards local investors who most of the time have liabilities in local currency and want to match that with a product that offers the pairing counter side. Last but not least, we have what brings us together today, private debt. We manage about $4.7 billion at the moment after the acquisition of the Solis platform. In this part, we do both. We do hard currency private credit and also local currency private credit through both the CLO platform, SMAs, or funds. Alex, back to you if you want to go deeper into any of those. Okay. Thank you, Carlos. The structures, the final investments that we perform over Latin America, I would say that we do bilateral transactions as well. The major difference when compared to the U.S. market is deep overcollateralized, so the transactions tend to want to provide loans to the companies. We have a very broad and expanded collateral, and I would say that typically is absolutely off the transaction. Basically, it's much easier to execute to these collaterals. It's much easier and faster than it is in a traditional loan. We do also a lot of securitizations in the form of CLOs, CDOs, and basically, what's their advantage? Because in this case, it's not collateral. We own the receivables. If the company file for Chapter 11, seven, doesn't matter, the collateral is ours, and we execute and receive the cash as the cash flows concerning that specific package of receivables. Solis specifically is very strong in this front. We do also the traditional asset-backed securities as well, for example, a fleet of auto loans. We provide lending to the final buyer of the cars. We have this fleet of cars. We do that for ships as well, for vessels. Because of that, our transaction is very resistant to defaults. Another aspect that is different, we have a very extended coverage of covenants. We have typically very long lists of financial operational covenants that make our process faster. Finally, I would like to mention that another angle that is very important to us is that we prefer to provide credit to companies that naturally, because all of this that I mentioned to you, companies that are very heavy in assets. For us, it's very difficult to provide loans to a service provider, to a developer of software, because it doesn't have assets to provide us collateral. Very quickly, that's what we do here in Latin America. Carlos, am I missing something here? Oh, no. You said it all, and I would like to maybe summarize it, that the biggest, or one of the biggest advantages Patria has in this market is that we can act as a credit manufacturer to basically assist companies on any type of credit they need. We can lend locally, we can lend in local currency, in hard currency, and also privately or publicly. We have different buckets in our strategies to basically accommodate that and find the best solution, both for us, our investors, and our counterparts. Great. Thanks, guys. I think that's probably a good starting point for maybe talking a little bit about the market TAM, the opportunity within the region. Obviously, in the developed world, you've seen explosive growth of private credit, broadly defined. Notwithstanding a lot of recent headlines around retail evergreen product redemptions, generally, you've seen very strong demand globally. Obviously in the U.S. and elsewhere, the markets are more developed. Can you talk a little bit about, obviously credit in general, but private credit in particular, where are we within the region in terms of its penetration rate and its ability to grow and expand? Maybe also as part of that, what's changing to drive that or not, and the competitive universe as you see it? Yeah. Maybe let me start just to paint a little bit how the market looks nowadays. If you think about the corporate solutions market in Latin America, or credit market, it's a market that in size is much bigger than most people realize. It's $2.3 trillion at the moment, where obviously, the largest chunk is dominated by the banking sector. Banks represent about 42% of the market, and that's been inherently a blue-chip, very constrained market, both by regulation, and also because they have a great business, and Alex can touch on that in a minute. They don't need to get very creative when it comes to offer credit solutions. They have their playbook, and they play by it. You have another very large market, which is the local currency bond market. That represents about $700 billion at the moment, 32% market share. Again, very large corporates, very high credit, mostly investment-grade quality market, so mostly senior unsecured, covenant-light. They cater for the very large corporates seeking credit. You have the high-yield and investment-grade markets in dollars, which has been a very strong and noble asset class over years. Again, if you want to play in that market, you need to issue at scale. Normally, if you don't issue at $300 -400 million, you won't be in the indices as such. Liquidity for those bonds is going to be constrained. What this creates, everything I've said till now, is that there's a very large mid- and small-market that is underserved. Companies seeking to look for a credit solution, $10 million, $20 million, $50 million, $100 million, don't have many obvious places to go look for those solutions. And that's where private credit has been doing its first steps. If you look at the chart here on the left, on the bottom, there's that tiny less than 1% private credit bucket, which is according to Preqin, above about 16 billion at the moment. So extremely small. And let me make a small comparison here. If you take the private credit market and compare it against the high-yield market in the US, this is all Preqin data, that represents about 79% of the high-yield market. For Europe, 124%, so much larger. If you look at Latin America, the private credit market represents 5% of the credit solutions compared to high yield. As such, we think that there is a runway for this market to grow 20x over the last 20 years. So this is like investing in the US private credit 20 years ago when it was just starting. We believe that that's an amazing opportunity. That's again, in a market with very low levels of leverage where credit penetration is very low. If you look at corporate credit against GDP in Latin America is 40%. North America is about double of that, and Europe and Asia are almost three times that. Even when you look at total debt, including households, credit cards, consumer goods, et cetera, those numbers are still much, much lower than in other economies. A good point, Carlos, and I would like to emphasize one of the aspects that you mentioned concerning the dynamics in Latin America. Once again, Latin America has this history of high inflation, and we learn how to fight for high inflation a long time ago. Fortunately or unfortunately, it comes back time to time. Because of that, the central banks, they are very fast and aggressive in increasing interest rates whenever is needed. That's the situation, for example, in Brazil. LTM, last 12 months, I would say that the real interest rate is something similar, close to 10% real return, so 10% above inflation. If you imagine that you have a bank, so basically this bank can buy government bonds with a 10% real return. Naturally a bank is leveraged. Although the Latin American banks, they are really good, they are very competent, but they don't have to do work really hard to have a really good return on equity or return on assets. Because of that, it creates an opportunity. Basically, we complement the banks, and we fulfill some blanks at the banks. They cannot provide credit because of regulation. Basel III, for example, in the case of the U.S., American banks with local presence, Volcker Rule, they have some limitations that the private credit fund they don't have. That's the reason that we have such good interest opportunity in Latin America. Because of that, I really believe that the opportunity that we are facing in Latin America is the same opportunity the private credit market faced around 2008 and really started, I would say, this market there. That's the reason that we have a very interesting return, and we have a very interesting package of collateral and covenants. We don't face that much competition because there are a couple of players, but as you can imagine Latin America is difficult to invest from New York. You have to have local presence. We do have office in Brazil, in São Paulo, in Fortaleza, in Argentina, Uruguay, Chile, Peru, Colombia. It does make a lot of sense with this local capacity to originate to do maintenance of the portfolio. This creates this opportunity. That dynamic makes our investment process very different from the process in the U.S. Something that also is important to mention, that we have private equity DNA. What does it mean? It means that our funds, usually they are long-term funds. They're closed-ended funds. You don't have this mismatch of assets and liabilities. Our funds, really, all of them, they are long-term. When we invest in private debt, usually, they are closed-ended funds with capital calls. It's another difference that is very meaningful when you compare to the U.S. market. Great. One of maybe a couple of things I think are worth maybe drilling down a bit. One is in talking about the differences of the private debt markets in the region versus the U.S. and globally is, number one, the notable absence of direct lending in the region. If you'd touch on that a little bit. Number two, based on what you've said and conversations we've had in the past is one of the concerns in developed markets you read about is covenant-light, a lot of PIKs in portfolios, and concerns about the general overall protections going down, and maybe diving into those aspects. You know why there's something different or unique about the covenant structures that you have in the region versus what we read about in the rest of the world. I think those would be two great rabbit holes to go down, and then after that, maybe we'll come back. I would like to talk about, well, what investors are you seeing? Are you seeing more global investors come into the market and different strategies? Are you seeing it expand locally as well? Carlos, if you want to start. Please. Absolutely, yes. I think when you think about, let's call it developed markets, direct lending. Because of the actors and different players we see in those markets, in our opinion, that market is primarily enterprise value-based, relying heavily on, yeah, covenant, but also sponsor support and quite broad security packages over operating companies. In contrast, when you look at LATAM, private credit here is much more structurally driven. What features our different transactions here is very hard collateral, as Alexandre Coutinho said before, cash flow controls through sale of receivables, bankruptcy remote structures, and very important, and this is a meaningful difference, with amortizing profiles. This results in protections that are less dependent on the enterprise value of the business, but more on the contractual cash flows that we can capture through our structuring. A different way of looking at it is in developed markets, collateral often supports a restructuring. In Latin America, the structure is designed to avoid needing a restructuring. We always say our mindset when we face an opportunity and we analyze the opportunity, at the end of the day, one point more or less on IRR is important, but it's not our driving force. Our driving force is our structuring-first mindset, where we basically spend a lot of time making sure that the thing we're creating, the structure we're creating works for us, works for the company, and we're protected in case something happens because we know we operate across many different markets in the regions, different industry, different dynamics, different central banks, different currencies sometimes for the different businesses. Something can happen there and something can happen to the companies. What we need to make sure is that nothing is going to happen and that our structure is robust enough so that we can fulfill our goals. Yeah, I mean. I was just going to say, this may be a stupid question. Sorry, Alexandre Coutinho, but at the risk of maybe overstating it, do you think this characterization is correct, that I think of, say, the U.S., private credit was really predominantly direct lending driven, and now in the U.S., they're diversifying into other types of private credit, whereas in the region, there is no direct lending to speak of? You immediately started in a place where maybe parts of the rest of the world are migrating to, in terms of structure and being driven outside of the LBO market. Is that overstating it? Yeah, no, there's a few points there. Alex is more eloquent than me in a few of them. I would say that because of the structure of the companies in Latin America, I want to say the vast majority of companies are still family-owned. These are families that built, created, grew these companies. These are families that have their wealth they have created over time. They're very conservative. That coupled with the environment where we live, where there's less access to credit, scarcity of capital, companies, at the end of the day, showcase much lower levels of leverage than one which you find in other places. If you look at Latin America, I think the high-yield market is 2.6 times net debt to EBITDA. In the U.S., that's four or five times, depending on the segment. Companies are very conservative when it comes to debt. As such, there's way more space to do things and lend money, also not having sponsor-backed companies because the LBO model failed when they tried to implement it in Latin America. That's why Patria's private equity verticals follows a buy and build model, right? Having that more conservative approach allows you to have better structures and more protection. Yeah. I would like to emphasize two points that Carlos mentioned. One that's concerning the covenant, and is interesting because it's strange, but it's true. We are very happy when a company creates a covenant. Why? It means that we are very close to the company, and we can monitor the company. It doesn't mean that we will necessarily charge a waiver fee or something like that. The meaning is, it means that we had the right leverage to negotiate, and we are close enough to the company to do something if it's necessary. That's one of your initial questions, Rob Lee. The second topic concerning the entrepreneurs in Latin America, and it's fascinating. It's something that I love, is to start due diligence with a new businessman. Also, it's very different than in the U.S. Here in Brazil, we are providing private debts with the traditional families, not for the new techie companies that they are working AI, et cetera. No, it's traditional company with real assets, first or second generation typically, and with the owner that's a 70-year-old guy that face all the crisis that you can imagine around the globe. That's not the first war, and it's not the second war that this guy is facing. He would try to be as conservative as possible and is curious that when you talk to a family, U.S. investors, that you are providing a private debt transaction, that the company is three times net debt to EBITDA, they get surprised. That's our average company that we're providing direct lending. It's very unique and very fascinating when you are dealing with these entrepreneurs that creates the company, that they love the company. Because of that, they are very tough in the negotiation at the same time. They accept to be very tight covenants because they will not do that anyway. It's interesting. Maybe talk a little bit about your investor base. Okay. Obviously some of the products are dollar-based, some are local. I think it may be interesting to talk about how maybe that's evolved over time, maybe with shifting regulation or as Patria itself has maybe tried to leverage its relationships. Can you talk about changes that you've seen and where you think it's going, as importantly? Yeah. Well, obviously at the very beginning, our client base was dominated by local players, pension funds, insurance companies, large family offices. For them, this has never been sort of a satellite investment. It's core. It's very close to their heart. It's something that they can relate. It's something they understand. That was originally our bread and butter. I would say around the global financial crisis, we started expanding that and catering for more sophisticated investors across the world. What you see today is that a very material portion of our client base is pension funds in North America, global consultants, Middle Eastern family offices and institutions, insurance companies. It's very varied, and it was part of an educational process of not looking at Latin America as a tactical allocation, as an opportunistic allocation, but to really drill down and understand that there is a very meaningful risk premium that hasn't been priced correctly by the market, in our opinion. That has generated consistent alpha over time. When I say that our high yield fund has delivered 11% per year, that's 370 points above the benchmark. It's not by chance. It's because there's a repeatable alpha to be caught, because the spread that those issuers are required to deliver, it's not justified with the underlying risk. I see also. Sorry. Yes, it's broadened to more institutions across the world. We are, at the moment, raising our Fund II on the hard currency side, and almost all of the advanced prospects that are in deep due diligence right now are Northern Hemisphere or developed markets institutional clients. It's transformation, this dynamic of global investors with local investors, and we have access to the most sophisticated global investors, including development agencies for specific strategies. Although it's important to mention that the return is key always. It's not only a matter of E&S positive impact. That's always is natural to us to be concerned, so it's natural to partner with them as well. The return is key. In the local markets, the same dynamic. We have a very good, strong, and close relationship with the most sophisticated local investors, delivering local return. That's naturally, we are very concerned with the balance of asset and liability management in all aspects concerning liquidity and also currency. That's the reason that is very important also to have a local presence with local investors. Given the persistency of alpha, Carlos, in your business, normally you would expect that kind of alpha over a long period of time will attract competitors or whatnot, and it will drive down the return profile. Whether it's Carlos in your part of the business or Alex in yours, are there some structural things that, in your view, limit competition? Do you think it's just there's so much opportunity, competition comes in, and there's still excess returns to be had? How do you think of that impacting the competitive landscape? I would say that the key factor here is the people. This is a people business. We have a very large credit team. If you count the Solis platform, we have over 110 credit analysts just covering Latin America. That's unheard of. Having boots on the ground, being locals in the markets where we operate, as Alex said before, having offices in São Paulo, in Fortaleza, in Buenos Aires, in Montevideo, in Santiago, in Lima, in Colombia, et cetera, that gives us access and an opportunity to unlock value where most people simply don't have the knowledge. Imagine you're a big asset manager in London. How many people do you dedicate to cover Latin America, and how much depth can you gain? I think people makes a difference. We invest in our people. We develop our people. Leadership has been there since day one. In all the strategies I've shown, the people who launched that strategy, it's still on board. We have had zero portfolio manager turnover historically in the credit vertical. That acquired and held talent and knowledge is key, because this is going to sound surprising, but most of the time when we engage with clients, it's repeated business. It's people we have been doing business before. We've lended to them in local currency, in dollars, or privately. It's people we know. I think that's the biggest difference and what has limited competition over time. Great. Maybe it's a good time, I don't know if, Andre, there's any questions from the audience to pass along? Yes, there is. Actually, just to remind everyone, if you want to submit your questions, please do email it to us. We do have a few over here. I'll read them. The first one says, for both Patria's Private Credit Fund One and the CLO FIDC business, could you talk about Patria's proprietary origination capabilities? I don't know, Coutinho, if you want to start. Carlos, do you want to talk about the private, that one, and I talk about the CLO? Yes, absolutely. You want to start or? Yeah, please. You start, please. Okay. On the private credit fund one, I would say the vast majority has been bilateral transactions where we are discussing with a company a credit solution. If it's not done with us, it doesn't get done. In some cases, we have been part of a larger negotiation. We also have done a couple secondary trades. Those were very opportunistic, interesting transactions that have been prepaid and made whole, so have been very accretive for the portfolio. I would say that due to what I mentioned at the beginning, this middle market, that's a bit forgotten because either large players are not going to look at a $50 million transaction or a $40 million transaction in the region, and there's not that many sources of capital. We have the advantage of looking at them first, and being able to reject or go ahead. Since we launched Fund I in 2024, we have deployed in the strategy $800 million. That comes after we looked at almost $23.5 billion in deal flow in that same period. That's about two years. Those were 305, I think, opportunities we looked at. That's a yearly rate of about 150 deals for $14 billion-$15 billion per year. Remember, the size of the market is $16 billion. There is a very large need of capital that comes to us. We analyze it. We make sure that everything's in place. Is it the right yield? Do we have the right protections? Do we understand the business enough? Can we create an SPV where we can capture flows before they flow into the company? If all of that is yes, we can pull the trigger and structure something. Yeah, I would say that the vast majority is proprietary negotiated. Yeah, let me talk about the CLO, CDO business, and let's split in the dynamics of Solis and the dynamics of the traditional Patria credit business. Concerning Solis, it's important to mention that they are very strong in the factoring business, in consignado, as you say in Portuguese. It's also the collectible loans from individuals that work with government entities and also in the private sector. It's important to mention in these two major industries, although they invest in all kinds of CLOs, CDOs, but these are the two most important line of business. A lot of these originator of receivables, they are in the market for some time. Some of them, they are not that huge yet in Brazil. In Solis, basically, they provide funding these originator of the receivables since zero, since a very small. Portfolio of receivables. Because of that, this origination naturally is own. You don't need someone else, and also it would be almost impossible to have someone else originating this kind of transactions to you. We are talking about a volume of between $5 billion and $6 billion, more or less. We have the traditional private debt transaction that we are including CLOs, CDOs. As I mentioned, it makes more sense to talk about structured credit in this case. In this dynamic, it's a little bit different, although also we originate 60%-70% of these transactions, but some of them, they are syndicated with other institutions, including banks. The difference is that in this line of business, basically, we are investing with very traditional players in the market. We are talking with a factoring business, they have 20-year experience, 30 years experience. They are very mature, and they are issuing their own CLOs, CDOs for years, since the inception of the Brazilian regulation about this line of business. Because of this dynamic, they can originate their own, but we structure by ourselves, and we do have relationship directly with them. Sometimes we have to do syndication these transactions. Once again, in this line of business, we are talking about 67% origination for CLO, CDOs in the traditional credit for Patria. We do have a few additional questions here. The second one says, the U.S. private credit has become more and more competitive with the structure and terms increasingly borrower-friendly. Could you talk about the typical structure in terms of deals in Patria's private credit fund? Yes. Give me one second. I'm going to share a slide just to showcase what we've done here. One second. Yes, we all have the same opinion. Sorry, there we go. Here we have the 14 transactions. There's a 15 now that I haven't included yet, but when you look at direct lending in the U.S., I would say that the majority of the things you see on the covenant package and corporate guarantees are there. The first two columns you see on this very busy chart. Okay. The added value that we can consistently add in Latin America are all the other columns, the owner guarantee, the shares, the real assets, the cash flows, the true future of receivables, and the bankruptcy remote structures. I think those are very unique to what we do. The objective of creating these structures is that we ring-fence cash flows. For example, in the telecom, the first line there, the bankruptcy remote, what it does, it captures both the monthly payments of the users of the cellphone plans in Chile, plus, the handset, the mobile phone payments. That goes into the structure. We have over a one time coverage of the entire credit facility we provided for this company on a monthly basis. Once we see that, once we have captured the cash flows, those get released to the company. If anything ever goes wrong, without the need of going to a judge or engaging in a very time-consuming judicial process, we own the trust, so we have direct access to those cash flows, which is a massive advantage. Something I mentioned before that we insist in most cases is to have amortizing structures. We don't want to face any, or minimize the refinancing risk. This also provides you the opportunity of being close to the company and identifying problems earlier. When you have a debt that's amortizing, they have to pay interest plus principal on a quarterly or semiannual basis. You can identify problems very early on and address them in time and not wait till the last day to basically be surprised by a breach or a refinancing problem that you didn't foresee. Yeah. I would like to emphasize what I mentioned before. We love companies that breach covenants. Basically, usually, we have a very long list of all kinds of covenants that you can imagine. Naturally, there are some lines of business that is even tougher. We also do project finance in our infra credit funds. As you can imagine, we have as collateral, everything. Shares, we have the assets, the contracts, the cash flow, the bank accounts. Basically, if something gets wrong, we can assume the company and sell to someone else. Also, we have technical expertise to do that if it's necessary. Fortunately or unfortunately, we used these covenants in these tools in the past, and very quickly we solve the problems. I have a couple of experience that before the company managed to file for Chapter 11, we managed to execute a collateral to get the cash and to leave the company. Something that is unusual for CLOs and CDOs in the U.S. and here in Latin America as well, but it's very common to us to include a covenant related to the seller of the receivables in their securitizations. Usually we have only covenants related to the securities, to the receivables, but we include as well the covenants related to the companies. Why? To move faster. We would like to move as fast as possible if something gets wrong inside the company. That's the reason that basically when we put together an indenture or a collateral agreement or something like that, we have hundreds of pages of documents in order to have as many tools as possible to execute and leave the problem as soon as possible with our cash back. It's very detailed, and we haven't seen a deterioration of this package over the years. Because this market in Latin America is really different, and a lot of players, they are trying to invest from London, from New York, and you have to have a local presence. In order to move fast, we have to be local and been talking directly with the owners of the company very frequently to have the feeling if some things go wrong, to help the company when it's the case, and once it's too late, to leave as soon as possible. Yeah. Maybe just to reinforce something you just said, Alex. We have access to a multilayered approach to companies. Alex, Fernando, Javier, the Senior Leadership of the company, they talk to the owners, they talk to the families. Our Co-PMs, they might talk to the CFOs, to the Investor Relations, the analysts. They're speaking with the analysts in the respective companies. That multilayered approach allows us to, one, check consistency and be very close to the companies and understand exactly what's going on. Because remember, these companies we invest in, sometimes in developed markets, they are small companies in the middle of an industry that are not very well-known. In the case of Latin America, usually, we're dealing with the leaders of each sector. We're dealing with very large corporates with very good and established businesses that need a credit solution that we can fulfill. Just going back to the structuring, something I didn't mention before that it's quite important for Latin America in hard currency, so that applies for our Private Credit Fund I and soon to come up, Fund II, is that we lend fixed. These are mostly fixed-rate loans, so we are able to lock in a very good interest rate at the moment, and are not floating as they are mostly in developed markets. Excellent. We do have a third question here, which is about our Latin High Yield outperformance of this strategy. It says, could you walk through how Patria's flagship credit fund outperformed the benchmark by 370 basis points net per annum for over 20 years? It's 26 years, but who's counting? There you go. Look, we launched that fund in the year 2000. It's been led by Fernando Tisné, our Head of Credit, since day one. If you ask him, he's going to say it's a very simple business. It's lend money to good corporates, with good contractual features, read everything, and pricing is key. We might have a lot of position in that fund, but at the end of the day, it's also very concentrated. The top 10 positions usually represent about 40% of the portfolio. The top 20, it's about 60%. We're not afraid to get our hands dirty when there's a problem, when a company's facing some issues and the bonds are trading downwards. If we understand the company, if we think that the price is an event and not a sustained loss of their capacity to fulfill their debt, we might buy on the downward stream, get involved in the restructuring, and that has been one of the levers we can apply that has been very unique. About 5% or 6% of the portfolio is in special situations, which is interesting. At the end of the day, the vast majority of this portfolio is performing bonds, that yield and the default rate has been very low. We have managed to avoid the bad situations by being close to the companies and by having a team that basically does their job and avoids the defaults. That's been the main driver of performance. Oh- That's it. Oh, sorry. Go, Rob. No, I was going to say, I know we're coming up towards the end, but I did have a question that's maybe for Alex, and this is talking about the FIDC market and structured finance. It's this growing market, this demand. Oftentimes you see businesses that maybe banks would be interested in or not, but can you talk about maybe the regulatory and banking environment in the region, how that's impacting growth in at least that part of the private credit business and what are some of those macro impacts? We want to start, Carlos. I don't know. Carlos, can you hear me? Sorry. I start. Concerning the regulation in Latin America in general and the global regulation for banks, I would say that it creates a very interesting opportunity. Specifically in the case, for example, of CLOs, CDOs, I have seen a lot of banks that's doing their calculation of capital allocation in order to optimize return on equity. They cannot buy mezzanine tranches of securitizations, and when they buy senior tranches, the capital allocation is much better than buying an equivalent risk profile. They are moving to buy senior tranches of securitizations. It's a good partnership that we can do with Latin America banks. We buy the mezzanine, but in order to do that, we have to know very well the portfolio, the origination. We define the investment criteria of the CDO, CLOs. It's creating a good opportunity to us. In the same time, to invest in liquid assets, in long-term assets, always naturally matching assets with liabilities, matching the funds. The capital allocation for the banks is extremely negative for the banks, so it creates opportunities to us. Sometimes we are alone, sometimes we are syndicating with banks. Also concerning technology, so technology is getting easier and cheaper. Once again, for securitizations, helps a lot to make a very robust and transparent and being able to monitor a portfolio of receivables and as in securitization or as collateral for transactions in both structures, and it makes the risk-return profile better. I would say that we see a lot of potential in Latin America. All this noise that we are observing now, globally speaking, is positive for the business. We are able to generate very good opportunities, investments, and create opportunities, where a lot of people see challenges. We are deploying capital with a very good risk-return profile concerning collateral, concerning covenants, once again, in return, naturally. The perspective for Latin America is extremely positive for private credit in general, locally or globally speaking, in Latin America. Am I missing something here, Carlos? I think you said it very well. At the end of the day, we are not inviting people to sell all their developed market credit or private exposure and get into this. We think this is a fantastic complement to what you already have. We all have seen what's the challenges faced by the industry. Competition in other pockets of the world is very strong. This is a market that's nascent, that the first movers will have an advantage and will capture more of the upside. I always ask a question to clients, like if you could travel in time and go 20 years back, would you invest any U.S. private credit when it was the innovative people who were doing it? The answer is mostly yes. My answer is, well, then Latin America, it's starting with the advantage that we've seen that market develop. We have learned from their mistakes. We can anticipate some of the things that will happen in this market as it evolves. We have the platform, we have the people, we have the technology to address that opportunity, to move fast, and to allocate capital with a good alpha proposition. Yeah. I would like to emphasize this aspect. For example, we learn from the mistakes of the developed markets. For example, 2008 was a very meaningful benchmark, and we learned a lot. That's the reason that we haven't seen the same mistakes in Latin America. From 2008 up to now, basically, we overcame that because the regulation in those countries improved in observation of what happened in the U.S., and also technology. Basically, we are investing in the same kinds of instruments, but with the current technology. It makes a huge difference to avoid fraud or credit, wrong analysis, et cetera. It's a good point there, Carlos. That's great. I think we're just about out of time. Andre, I don't know if there's anything else from the audience. Any last questions? Yeah. No additional questions from the audience at this time. I just think this was a very, very valuable discussion. Thank you, Coutinho. Thank you, Carlos. Thank you, Rob, so much. I don't know if you guys have any closing remarks or, Rob, if you have any additional question that you want to wrap up. No, I think we got most of them. I'm sure if anyone out there has more questions, they could pass them through to Andre, and he will pass them along to Carlos, Alex, or myself as the case may be. I just want to thank everyone for doing this. I think it was a very helpful and interesting conversation, and look forward to more of these in the future. Thank you. Thank you all. Thank you for the opportunity. Great. Thank you. Thank you very much.