NOTE 3 - FORWARD CURRENCY CONTRACTS The Company may enter into foreign currency forward contracts from time to time to facilitate settlement of purchases and sales of investments denominated in foreign currencies and to economically hedge the impact that an adverse change in foreign exchange rates would have on the value of the Company’s investments denominated in foreign currencies. A foreign currency forward contract is a commitment to purchase or sell a foreign currency at a future date at a negotiated forward rate. These contracts are marked-to-market by recognizing the difference between the contract forward exchange rate and the forward market exchange rate on the last day of the period presented as unrealized appreciation or depreciation. Realized gains or losses are recognized when forward contracts are settled. Risks arise as a result of the potential inability of the counterparties to meet the terms of their contracts. The Company attempts to limit counterparty risk by only dealing with well-known counterparties. The Company utilizes forward foreign currency exchange contracts to protect itself against fluctuations in exchange rates. The Company may choose to renew contracts quarterly unless otherwise settled by the Company or the counterparty. The following table provides a breakdown of our forward currency contracts for the years ended December 31, 2024, 2023 and 2022. | | | | | | | | | | | | | Year ended December 31, | ($ in thousands) | | | 2024 | | | 2023 | | | 2022 | Realized gain (loss) on forward currency contracts | | $ | 13 | | $ | 27 | | $ | (3) | Unrealized appreciation (depreciation) on forward currency contracts | | | 63 | | | (40) | | | — | Total net realized and unrealized gains (losses) on forward currency contracts | | $ | 76 | | $ | (13) | | $ | (3) | | | | | | | | | | |
The value associated with unrealized gain or loss on open contracts is included in unrealized appreciation or depreciation on forward currency contracts within the consolidated statements of assets and liabilities. Open contracts as of December 31, 2024 were as follows: | | | | | | | | | | | | | | | | | Counterparty | | Currency to be sold | | Currency to be purchased | | Settlement date | | Unrealized
appreciation | | Unrealized
depreciation | Morgan Stanley | | C$ | 796 | CAD | | $ | 574 | USD | | 2/4/25 | | $ | 20 | | $ | — | Total | | | | | | | | | | | | $ | 20 | | $ | — |
The value associated with unrealized gain or loss on open contracts is included in unrealized appreciation or depreciation on forward currency contracts within the consolidated statements of assets and liabilities. Open contracts as of December 31, 2023 were as follows: | | | | | | | | | | | | | | | | | Counterparty | | Currency to be sold | | Currency to be purchased | | Settlement date | | Unrealized
appreciation | | Unrealized
depreciation | Morgan Stanley | | C$ | 1,253 | CAD | | $ | 903 | USD | | 2/7/24 | | $ | — | | $ | (43) | Total | | | | | | | | | | | | $ | — | | $ | (43) |
The following table is a summary of the average USD notional exposure to foreign currency forward contracts for the years ended December 31, 2024 and 2023: | | | | | | | | | | | Year ended December 31, | Average USD notional outstanding | | | | 2024 | | | 2023 | Forward currency contracts | | | $ | 965 | | $ | 587 |
The foreign currency forward contracts open at the end of the period are generally indicative of the volume of activity during the period. The value associated with unrealized gain or loss on open contracts is included in unrealized appreciation or depreciation on forward currency contracts within the consolidated statements of assets and liabilities. Offsetting of Derivative Instruments The Company has derivative instruments that are subject to master netting agreements. These agreements include provisions to offset positions with the same counterparty in the event of default by one of the parties. The Company’s unrealized appreciation or depreciation on derivative instruments are reported as gross assets and liabilities, respectively, in the consolidated statements of assets and liabilities. The following tables present the Company’s assets and liabilities related to derivatives by counterparty, net of amounts available for offset under a master netting arrangement and net of any collateral received or pledged by the Company for such assets and liabilities as of December 31, 2024 and 2023. | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | As of December 31, 2024 | Counterparty ($ in thousands) | | Derivative Assets
Subject to Master
Netting Agreement | | Derivative
Liabilities Subject
to Master Netting
Agreement | | Derivatives
Available for
Offset | | Non-cash
Collateral
Received | | Non-cash
Collateral
Pledged(1) | | Cash Collateral
Received(1) | | Cash Collateral
Pledged(1) | | Net Amount of
Derivative
Assets(2) | | Net Amount of
Derivative
Liabilities(3) | Morgan Stanley (CAD) | | $ | 20 | | $ | — | | $ | — | | $ | — | | $ | — | | $ | — | | $ | — | | $ | 20 | | $ | — | Total | | $ | 20 | | $ | — | | $ | — | | $ | — | | $ | — | | $ | — | | $ | — | | $ | 20 | | $ | — |
| (1) | In some instances, the actual amount of the collateral received and/or pledged may be more than the amount shown due to overcollateralization. |
| (2) | Net amount of derivative assets represents the net amount due from the counterparty to the Company in the event of default. |
| (3) | Net amount of derivative liabilities represents the net amount due from the Company to the counterparty in the event of default. |
| | | | | | | | | | | | | | | | | | | | | | | | | | | | | | As of December 31, 2023 | Counterparty ($ in thousands) | | Derivative Assets
Subject to Master
Netting Agreement | | Derivative
Liabilities Subject
to Master Netting
Agreement | | Derivatives
Available for
Offset | | Non-cash
Collateral
Received | | Non-cash
Collateral
Pledged(1) | | Cash Collateral
Received(1) | | Cash Collateral
Pledged(1) | | Net Amount of
Derivative
Assets(2) | | Net Amount of
Derivative
Liabilities(3) | Morgan Stanley (CAD) | | $ | — | | $ | 43 | | $ | — | | $ | — | | $ | — | | $ | — | | $ | — | | $ | — | | $ | 43 | Total | | $ | — | | $ | 43 | | $ | — | | $ | — | | $ | — | | $ | — | | $ | — | | $ | — | | $ | 43 |
| (1) | In some instances, the actual amount of the collateral received and/or pledged may be more than the amount shown due to overcollateralization. |
| (2) | Net amount of derivative assets represents the net amount due from the counterparty to the Company in the event of default. |
| (3) | Net amount of derivative liabilities represents the net amount due from the Company to the counterparty in the event of default. |
|