So tell us a little bit more about what the authors found.

Okay.

So the headline I think is, is striking.

We have to interpret it with, you know, some publication bias 'cause they're looking at the literature, and people may not be publishing, you know, negative results.

But, um, uh, of a hundred and fourteen patients, a hundred and eleven of them, or ninety-seven, uh, percent or more, had termination of, of super refractory status after, uh, the re- the reported intervention.

So that ninety-seven percent is sort of the headline number of, of stopping status.

And then, um, if when the authors looked at the final or the last reported follow-up about-- of the one fourteen and fifty-seven or fifty percent were Engel class one, so free of, of sort of disabling seizures.

So what other take-homes do you get from this paper? What, what are you gonna think about doing differently, if anything, after reading this paper?

Do you mind just quickly explaining to our audience what the index is and how it has been constructed, and most specifically, what it covers here in Europe?

Thanks, Gordon, for having us on the podcast.

So the KBRA DLD Europe Index includes 400 European companies held by public U.S. BDCs.

These borrowers are direct lending issuers, totaling $31 billion in BDC holdings.

While this represents only a fraction compared to the 3,000 U.S. companies and $300 billion tracked by the KBRA DLD U.S.

Direct Lending Index, growth in the European Index is notable.

the number of European direct lending companies has doubled since the index launched in February of 2024.

So turning back to you, Eric, so how has the market progressed in terms of defaults in European loans? Where are we relative to the recent past and where do you think we are heading in the near future?

So first of all, what are you seeing at KBRA? And maybe we can talk about your 2026 default rate forecast at the same time.

Yeah, sure.

So I don't dispute the emerging cracks.

The DLD group at KBRA, we have a watch list, which we call our default radar.

And we highlight companies on default radar that are showing signs of stress.

Now, there are two tiers.

We have our red tier and we have our orange tier.

Should investors be thinking about the asset class in terms of not just defaults and so forth, but also the recoveries? Because that's ultimately what matters is how much money you get back.

What are you forecasting for software?

Right, so the software forecast remains unchanged, still at two-point-five percent.

Previously forecasted Medallia is expected to account for more than eighty percent of the sector's two-point-three billion in two thousand twenty-six default volume.

Now, while the sector is anticipated to generate roughly ten defaults, most are expected to be relatively small.

Given the software universe, which exceeds a hundred billion, additional large defaults will be required to materially move the needle this year.

Furthermore, the market is coming to an understanding that not all software firms are distressed, and far from it, and not all defaults happen at once.

Given the impact of AI on the sector, we will watch this closely, but sectors suffering a shock tend to absorb that impact over time.

Did that change? And how is that tracked?