Slide 1: Barings BDC, Inc. Fourth Quarter 2023 Earnings Presentation
FEBRUARY 23, 2024 Barings BDC, Inc. Fourth Quarter 2023 Earnings Presentation
Slide 2: Disclaimers & Cautionary Notes Regarding Forward-Looking Statements
Disclaimers & 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 they
Slide 3: Agenda
Agenda ERIC LLOYD 4Q 2023 HIGHLIGHTS (LLOYD) Summary points of the quarter. IAN FOWLER BARINGS BDC MARKET UPDATE & INVESTMENT PORTFOLIO (FOWLER) ELIZABETH MURRAY Update on the portfolio performance. BRYAN HIGH MATTHEW FREUND BARINGS BDC FINANCIALS (MURRAY) A walk through the balance sheet, income st
Slide 4: Who We Are
BARINGS OVERVIEW Barings, a subsidiary of MassMutual, is a global investment manager sourcing Who We Are differentiated opportunities and building portfolios across public and private fixed income, real estate and specialist equity markets. External AUM by Region1 EMEA 29% Americas 42% Asia Pacific
Slide 5: Barings BDC Franchise
Sponsor Backed Investments Barings BDC Franchise What is it? Financing the Typical Terms operating companies of issuers • <50% Loan to Value Owned by Private Equity • Maintenance Covenants firms • EBITDA between $15 and Private credit expertise delivering $75 million comprehensive exposure to the As
Slide 6: Fourth Quarter 2023 Highlights
Fourth Quarter 2023 Highlights Net asset value (NAV) Total originations during the as of December 31, quarter were $192 million, NET ASSET 2023, was $11.28 per ORIGINATIONS while sales and repayments VALUE share as compared to totaled $244 million, for net $11.25 as of September repayments of $52 mi
Slide 7: Selected Financial Highlights
Selected Financial Highlights Balance Sheet Highlights 4Q 2023 3Q 2023 2Q 2023 1Q 2023 4Q 2022 Investment Portfolio, at Fair Value $2,488.7 $2,521.6 $2,505.9 $2,556.1 $2,448.9 Total Debt Outstanding (Principal) $1,444.9 $1,521.1 $1,497.1 $1,494.1 $1,454.1 Total Net Assets (Equity) $1,196.6 $1,198.2
Slide 8: Portfolio Highlights
Portfolio Highlights Senior Secured Focus $2.49B 336 PORTFOLIO SIZE ISSUER COUNT 4% 4% 15% First Lien Second Lien Mezzanine 74% 89% 4% Equity 7% Structured 67% JV SECURED DEBT FLOATING RATE 619 BPS 11.2% Diversified Industry Exposure WEIGHTED AVERAGE YIELD Finance & Insurance SPREAD 16% Services: Bu
Slide 9: Portfolio Composition
Portfolio Composition Investment Portfolio by Issuer Investment Portfolio Strategy1 • Barings BDC maintains a highly diversified portfolio, with the top • BBDC’s existing investments are substantially consistent with our issuer accounting for 6% of total investments at fair value and the long-term s
Slide 10: Portfolio Composition Trends
Portfolio Composition Trends Consistent Focus on Secured Investments Active Rotation to Barings Originated Loans • Barings BDC has consistently been comprised largely of secured • Barings BDC is driving towards a portfolio focused on investments. When accounting for the look-through exposure of secu
Slide 11: Risk Rating Trends
1 Issuer performing materially above expectations Risk Rating Trends 2 Issuer performing consistent with expectations Portfolio performance is reflected in the shifts between the risk rating categories shown at right 3 Issuer performing modestly below expectations Non-Accruals comprise approximately
Slide 12: Credit Support Agreements
Credit Support Agreements What are the Credit Support Agreements (CSAs)? How will Barings LLC compensate Barings BDC investors for the losses? The CSAs are a form of manager support between Barings LLC and BBDC created in connection with the acquisitions of MVC and Sierra. First, Barings LLC will wa
Slide 13: Credit Support Agreements
Credit Support Agreements Based on current portfolio valuations, the Sierra CSA and the MVC CSA insulate BBDC shareholders from a meaningful portion of credit losses in the acquired portfolio Sierra Income CSA MVC Capital CSA REMAINING ISSUERS — 37 REMAINING ISSUERS — 4 1 00.0 1 00.0 0.0 0.0 0.0 0.0
Slide 14: BBDC Focuses on Shareholders
BBDC Focuses on Shareholders INCENTIVE FEE HURDLE RATE CREDIT SUPPORT AGREEMENTS Hurdle Rate 8.50% 8.00% $123 • BBDC Hurdle Rate: 8.25% 7.50% • Barings made a commitment to million • Average Externally- 7.00% protect investors supporting credit from certain losses Managed Public 6.50% emanating from
Slide 15: BBDC Net Asset Value Per Share (NAV) Bridge
BBDC Net Asset Value Per Share (NAV) Bridge BBDC’s NA has increased in 4Q23 to 11.2 (December 31, 2023) from 11.25 (September 30, 2023), an increase of 0.3%, driven primarily by net investment income exceeding the dividend, realized gains and share repurchases, offset by unrealized depreciation Tota
Slide 16: BBDC Income Statement
BBDC Income Statement 4Q23 3Q23 2Q23 1Q23 4Q22 Invest ment income: Interest incom e $57 ,069 $55,405 $55,42 4 $51 ,890 $47 ,996 Div idend incom e 1 0,2 7 7 8,51 5 1 0,2 50 7 ,87 4 7 ,3 60 Fee and other incom e 3 ,1 52 2 ,650 4,3 01 3 ,3 00 4,3 3 4 Pay m ent-in-kind interest incom e 5,085 3 ,97 9 5,1
Slide 17: BBDC Balance Sheet
BBDC Balance Sheet Debt-to-equity at December 31, 2023 was 1.21x, or 1.15x after adjusting for cash and foreign currencies and net unsettled transactions December 31, September 30, June 30, March 31, December 31, 2023 2023 2023 2023 2022 Assets: Investments at fair value: Non-Control / Non-Affiliate
Slide 18: BBDC Debt Summary & Maturity Profile
BBDC Debt Summary & Maturity Profile As of year-end, BBDC’s debt remained split approximately 50/50 between unsecured and secured debt. Pro forma for the issuance of the unsecured notes and repayment of the revolving credit facility post-December 31, 2023, this split is closer to 70/30. As of 12/31/
Slide 19: BBDC Dividends Declared Per Share
BBDC Dividends Declared Per Share $0.28 $0.26 $0.26 $0.26 $0.26 $0.25 $0.25 $0.24 $0.24 $0.24 $0.24 $0.23 $0.22 $0.22 $0.21 $0.20 $0.20 $0.19 $0.18 $0.17 $0.16 $0.16 $0.16 Barings BDC $0.16 $0.15 declared a Q1 $0.14 $0.13 $0.14 2024 dividend of $0.12 $0.12 $0.26 per share, $0.10 $0.10 unchanged from
Slide 20: Appendix
Appendix
Slide 21: Reconciliation of Debt-to-Net Debt & Calculation of Net Debt-to-Equity Ratio
Reconciliation of Debt-to-Net Debt & Calculation of Net Debt-to-Equity Ratio December 31, Sept ember 30, June 30, March 31, December 31, 2023 2023 2023 2023 2022 Total debt (principal) $1 ,444,91 4 $1 ,52 1 ,1 2 6 $1 ,497 ,087 $1 ,494,1 1 2 $1 ,454,1 44 minus: Cash and foreign currencies (7 0,52 8)
Slide 22: Barings BDC Corporate Data
Barings BDC Corporate Data BOARD OF DIRECTORS MANAGEMENT TEAM RESEARCH COVERAGE GENERAL Eric Lloyd Eric Lloyd Bank of America Corporate Headquarters Executive Chairman & CEO of BBDC, Chief Executive Officer Merrill Lynch 300 South Tryon Street President of Barings Derek Hewett Suite 2500 Ian Fowler
Slide 23: Important Information
Important Information Barings LLC, Barings Securities LLC, Barings (U.K.) Limited, Barings Australia Pty Ltd, Barings Japan Target performance is theoretical and illustrative only, and does not reflect actual performance. There is Limited, Baring Asset Management Limited, Baring International Invest
Slide 24: BARINGS
BARINGS Investing Together PUBLIC & PRIVATE FIXED INCOME | REAL ESTATE | SPECIALIST EQUITIES