Barings Bdc, Inc. · NYSE:BBDC
Barings Bdc — Q4 2021 Earnings Presentation
31 slides from Barings Bdc's earnings presentation, Feb 24, 2022
Slide 1: Barings BDC, Inc. Fourth Quarter 2021 Earnings Presentation
Barings BDC, Inc. Fourth Quarter 2021 Earnings Presentation February 23, 2022
Slide 2: Disclaimers and Cautionary Notes Regarding Forward-Looking Statements
Disclaimers and Cautionary Notes Regarding Forward-Looking Statements Cautionary Notice: Certain statements contained in this presentation are "forward-looking" statements. Investors are cautioned not to place undue reliance on forward-looking statements, which speak only as of the date on which the
Slide 3: Agenda
Agenda ERIC LLOYD 4Q 2021 HIGHLIGHTS (Lloyd) What were the summary points of the quarter? IAN FOWLER BBDC MARKET UPDATE & INVESTMENT PORTFOLIO (Fowler) Update on the portfolio performance. BRYAN HIGH BBDC FINANCIALS (Bock) A walk through the balance sheet, income statement, NAV bridge and liquidity.
Slide 4: 4Q 2021 Highlights
4Q 2021 Highlights BARINGS
Slide 5: Credit Spreads & BDC Equity Prices
Credit Spreads & BDC Equity Prices BSL spreads and prices were little changed in 4Q and remained at pre-COVID levels, while BDC equity prices traded in a fairly narrow band (before breaking out to new four-year highs in Q1) BROADLY-SYNDICATED LOAN BROADLY-SYNDICATED LOAN BDC EQUITY PRICES SPREADS PR
Slide 6: Fourth Quarter 2021 Highlights
Fourth Quarter 2021 Highlights Net asset value (NAV) as of Total originations during the quarter were December 31, 2021 was $11.36 per $671 million, while sales and repayments NET ASSET VALUE ORIGINATIONS share as compared to $11.40 as of totaled $453 million, for net originations of September 30, 2
Slide 7: Selected Financial Highlights
Selected Financial Highlights Balance Sheet Highlights 4Q 2021 3Q 2021 2Q 2021 1Q 2021 4Q 2020 Investment Portfolio, at Fair Value $1,800.6 $1,652.5 $1,575.1 $1,602.1 $1,495.8 Total Debt Outstanding (Principal) $1,380.2 $1,037.7 $1,043.5 $986.1 $944.7 Total Net Assets (Equity) $741.9 $744.8 $744.1 $
Slide 8: BBDC Market Update & Investment Portfolio
BBDC Market Update & Investment Portfolio
Slide 9: Investment Activity
Investment Activity Summary of investment activity during the quarter ended December 31, 2021 • Middle-Market Loans: • Net increase in investments of $66 million • Total MML fundings were $503 million • Includes $375 million in 44 new portfolio companies • Includes $128 million in 29 existing portfo
Slide 10: All-In Senior Investment Spreads
All-In Senior Investment Spreads Spreads in most segments of the direct lending market were flat to slightly up in the fourth quarter; non-bank middle market loans were an exception as spreads tightened ~15bps vs the prior quarter QUARTERLY MIDDLE-MARKET SPREADS ACROSS THE CAPITAL STRUCTURE 1,100 1,
Slide 11: Middle Market Spreads
Middle Market Spreads Unitranche spreads continue to compress and approach all time tights relative to 1L/2L loan executions Spread Differential: Average 1L Term Loan Spread by Cov-Lite Unitranche Unitranche vs 1L/2L EBITDA Size (bps) Volume ($bn) 650 60 725 24.0 700 22.0 625 50 675 20.0 650 18.0 62
Slide 12: Portfolio Bridge – 3Q21 to 4Q21
Portfolio Bridge – 3Q21 to 4Q21 In the fourth quarter we originated $503 million of Middle-Market Loans, made $168 million of Cross-Platform Investments (including JVs), and had $453 million of sales/paydowns $ in millions. Total may not foot due to rounding. 12
Slide 13: Aggregate Portfolio Characteristics (as of December 31, 2021)
Aggregate Portfolio Characteristics (as of December 31, 2021) Middle Market Acquired MVC Cross Platform Total Total Investments and Commitments ($mm) $1,361 $150 $525 $2,035 Unfunded Commitments ($mm) $180 $0 $55 $235 Total Investments at Fair Value ($mm) $1,181 $150 $470 $1,801 Assets on Non-Accrua
Slide 14: MVC Portfolio Rotation
MVC Portfolio Rotation While the MVC Capital acquisition diversified the Barings BDC portfolio, our core focus remains first lien investments $1,651MM $150MM $1,801MM 100% 2% 90% 80% 70% 66% 68% 74% 60% First Lien Second Lien & Mezz 50% Structured Equity & JV 40% 30% 13% 9% 20% 2% 2% 32% 10% 15% 17%
Slide 15: Top 10 Investments
Top 10 Investments Top 10 Holdings (as of December 31, 2021) Principal % of Issuer Moody's Industry Segment Cost Fair Value Amount Portfolio Banking, Finance, Eclipse Business Capital, LLC Cross Platform $6,363,637 $96,042,933 $99,223,914 5.5% Insurance and Real Estate Investment Funds and Thompson
Slide 16: BBDC Financials
BBDC Financials BARINGS
Slide 17: Net Asset Value Per Share (NAV) Bridge – 3Q21 to 4Q21
Net Asset Value Per Share (NAV) Bridge – 3Q21 to 4Q21 BBDC’s NAV per share declined slightly in 4Q21 to $11.36 from $11.40 Total may not foot due to rounding. 17
Slide 18: BBDC Portfolio Summary as of December 31, 2021
BBDC Portfolio Summary as of December 31, 2021 4Q 2021 Portfolio Summary 4Q 4Q 4Q 4Q Unrealized Unrealized Unrealized Unrealized App (Dep) - App (Dep) - App (Dep) - App (Dep) - Per Par Cost Fair Value Price Credit FX Total Share Middle-Market Lending North America $892,965 $888,777 $889,113 ($191) $
Slide 19: BBDC Income Statement
BBDC Income Statement 4Q21 3Q21 2Q21 1Q21 4Q20 Investment income: Interest income $25,783,323 $24,622,330 $26,819,189 $25,214,241 $17,433,263 Dividend income 5,546,089 2,866,668 394,901 71,500 — Fee and other income 3,830,268 4,488,346 2,568,455 2,133,175 1,700,084 Payment-in-kind interest income 1,
Slide 20: BBDC Balance Sheet
BBDC Balance Sheet Debt-to-equity at December 31, 2021 was 1.86x, or 1.49x(1) after adjusting for cash and foreign currencies, short- term investments and unsettled transactions December 31, September 30, June 30, March 31, December 31, 2021 2021 2021 2021 2020 Assets: Investments at fair value: Non
Slide 21: Asset and Liability Mix
Asset and Liability Mix Barings BDC seeks to match its assets with a diversified mix of secured and unsecured debt FUNDING MIX BY SENIORITY (000’S) FUNDING MIX BY ASSET CLASS (000’S) $2,250,000 Cash, ST Investments & Cash, ST Investments $2,000,000 Other Assets & Other Assets $360,312 $360,312 ING F
Slide 22: Debt Summary and Maturity Profile
Debt Summary and Maturity Profile BBDC issued its first public unsecured notes in November As of 12/31/21 As of 9/30/21 As of 6/30/21 Principal Principal Principal Principal Principal Principal Interest Amount Amount Amount Amount Amount Amount Borrower Rate Collateral Maturity Date Committed Outsta
Slide 23: Liquidity Summary
Liquidity Summary Pro Forma for the SIC acquisition, BBDC has liquidity under its senior secured revolving credit agreement and unsecured debt commitment, with cushion to support its unused capital commitments of $209 million Standalone BBDC as of December 31, 2021 Debt / Net Debt Debt / Net Debt-to
Slide 24: Quarterly Dividends
Quarterly Dividends BBDC declared a 1Q22 dividend of $0.23 per share, up from $0.22 in 4Q21 BBDC DIVIDENDS DECLARED PER SHARE $0.25 $0.23 $0.22 $0.21 $0.20 $0.20 $0.19 $0.17 $0.16 $0.16 $0.16 $0.15 $0.15 $0.14 $0.13 $0.12 $0.10 $0.10 $0.05 $0.03 $0.00 3Q18 4Q18 1Q19 2Q19 3Q19 4Q19 1Q20 2Q20 3Q20 4Q2
Slide 25: 1Q 2022 Origination Pipeline
1Q 2022 Origination Pipeline
Slide 26: Relative Value in Credit Asset Classes
Relative Value in Credit Asset Classes 3 Year Lookback (Wide/Tight/Current): 1,500 1,400 1,200 1,000 BBB 773 500 400 500 466 347 338 325 290 233 76 175 193 0 72 CLO Corp. Credit CMBS EETC U.S. Loans 2,000 1,500 1,514 BB 1,000 704 685 691 655 621 500 206 308 322 206 256 245 0 CLO Corp. Credit U.S. Lo
Slide 27: New Investment Illiquidity and Complexity Premiums
New Investment Illiquidity and Complexity Premiums Barings BDC seeks to generate excess shareholder return via illiquidity and complexity premiums across its wide investment frame of reference 4Q21 Premium/ Discount Dollars Deployed Asset Class All-in Spread (bps)1 To Market Indices ($mm) (bps) US I
Slide 28: Investment Activity Since Quarter End and Investment Pipeline
Investment Activity Since Quarter End and Investment Pipeline • From January 1, 2022 through February 22, 2022, Barings BDC made approximately $126 million of new commitments, of which approximately $105 million closed and funded; in addition, BBDC funded $8 million of previously-committed delayed d
Slide 29: Appendix
Appendix
Slide 30: Appendix: Reconciliation of Debt-to-Net Debt and Calculation of Net Debt-to-Equity Ratio
Appendix: Reconciliation of Debt-to-Net Debt and Calculation of Net Debt-to- Equity Ratio December 31, September 30, June 30, March 31, December 31, 2021 2021 2021 2021 2020 Total debt (principal) $1,380,189,256 $1,037,664,367 $1,043,452,480 $986,144,523 $944,660,707 minus: Cash and foreign currenci
Slide 31: Appendix: Barings BDC Corporate Data
Appendix: Barings BDC Corporate Data Board of Directors Corporate Officers Research Coverage Corporate Headquarters ERIC LLOYD ERIC LLOYD BANK OF AMERICA 300 South Tryon Street Chairman and CEO of BBDC, Chief Executive Officer MERRILL LYNCH Suite 2500 President of Barings Derek Hewett Charlotte, NC