Barings Participation Investors · NYSE:MPV
Barings Participation Investors — Barings BDC — Q1 2021 Earnings Presentation
31 slides from Barings Participation Investors's earnings presentation, May 6, 2021
Slide 1: Barings BDC, Inc. First Quarter 2021 Earnings Presentation
Barings BDC, Inc. First Quarter 2021 Earnings Presentation May 6, 2021
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 1Q 2021 HIGHLIGHTS (Lloyd) What were the summary points of the quarter? IAN FOWLER BBDC MARKET UPDATE & INVESTMENT PORTFOLIO (Fowler) Update on the portfolio ramp and performance. TOM MCDONNELL BBDC FINANCIALS (Bock) A walk through the balance sheet, income statement, NAV bridge an
Slide 4: 1Q 2021 Highlights
1Q 2021 Highlights BARINGS
Slide 5: Credit Spreads & BDC Equity Prices
Credit Spreads & BDC Equity Prices BSL spreads and prices remained at pre-COVID levels in the first quarter, though BDC prices remained 11% below the February 2020 peak BROADLY-SYNDICATED LOAN BROADLY-SYNDICATED LOAN BDC EQUITY PRICES SPREADS PRICES 1,000 $100 $900 $850 $98 900 $800 $96 $750 800 $94
Slide 6: First Quarter 2021 Highlights
First Quarter 2021 Highlights Total originations during the quarter were Net asset value (NAV) as of March 31, $275 million, while sales and repayments NET ASSET VALUE 2021 was $11.14 per share as compared ORIGINATIONS totaled $190 million, for net originations of to $10.99 as of December 31, 2020 $
Slide 7: Selected Financial Highlights
Selected Financial Highlights Balance Sheet Highlights 1Q 2021 4Q 2020 3Q 2020 2Q 2020 1Q 2020 Investment Portfolio, at Fair Value $1,602.1 $1,495.8 $1,116.3 $1,034.0 $1,071.8 Total Debt Outstanding (Principal) $986.1 $944.7 $692.0 $569.3 $631.1 Total Net Assets (Equity) $727.9 $717.8 $526.0 $490.5
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 March 31, 2021 • Middle-Market Loans: • Net increase in investments of $86 million • Total MML fundings were $239 million • Includes $165 million in 16 new portfolio companies • Includes $73 million in 20 existing portfolio
Slide 10: All-In Senior Investment Spreads
All-In Senior Investment Spreads Direct lending spreads on new deals tightened further in the first quarter, particularly in the institutional and bank subsectors, as activity remained strong to start the year; Single-B liquid spreads continued to tighten, and are back inside of Middle-Market levels
Slide 11: Portfolio Bridge – 4Q20 to 1Q21
Portfolio Bridge – 4Q20 to 1Q21 In the first quarter we originated $239 million of Middle-Market Loans, made $36 million of Cross-Platform Investments, and had a combined $190 million of sales/paydowns, including $6 million from the MVC portfolio $ in millions. Total may not foot due to rounding. Ex
Slide 12: Aggregate Portfolio Characteristics (as of March 31, 2021)
Aggregate Portfolio Characteristics (as of March 31, 2021) Middle Market MVC Cross Platform Total Total Investments and Commitments ($mm) $1,263 $176 $256 $1,695 Unfunded Commitments ($mm) $121 $0 $46 $166 Total Investments at Fair Value ($mm) $1,142 $176 $210 $1,529 Assets on Non-Accrual $0 $0 $0 $
Slide 13: MVC Portfolio Rotation
MVC Portfolio Rotation While the MVC Capital acquisition diversified the Barings BDC portfolio, our core focus remains first lien investments $1,352MM $176MM $1,529MM 100% 6% 90% 80% 70% 60% 70% 81% First Lien 91% Second Lien & Mezz 50% Structured Equity & JV 40% 30% 20% 10% 24% 10% 2% 2% 2% 5% 7% 0
Slide 14: Top Investments
Top 10 Investments Top 10 Holdings (as of March 31, 2021) Principal % of Issuer Moody's Industry Segment Cost Fair Value Amount Portfolio Custom Alloy Corporation Construction and Building MVC $49,255,337 $40,780,794 $40,541,919 2.7% Security Holdings B.V. Services: Business MVC 14,266,951 35,530,95
Slide 15: BBDC Financials
BBDC Financials BARINGS
Slide 16: Net Asset Value Per Share (NAV) Bridge – 4Q20 to 1Q21
Net Asset Value Per Share (NAV) Bridge – 4Q20 to 1Q21 BBDC’s NAV per share increased in 1Q21 to $11.14 from $10.97, predominately due to unrealized appreciation on the investment portfolio Total may not foot due to rounding. 16
Slide 17: 1Q21 Unrealized Appreciation (Depreciation)
1Q21 Unrealized Appreciation (Depreciation) 1Q 2021 Portfolio Summary 1Q Unrealized 1Q Unrealized 1Q Unrealized 1Q Unrealized App (Dep) - App (Dep) - App (Dep) - App (Dep) - Per Par Cost Fair Value Price Credit For. Curr. Total Share Middle-Market Lending North America $937,038 $923,430 $919,851 $4,
Slide 18: BBDC Income Statement
BBDC Income Statement 1Q21 4Q20 3Q20 2Q20 1Q20 Investment income: Interest income $25,214,241 $17,433,263 $15,217,547 $15,295,679 $17,674,402 Dividend income 71,500 — — 2,603 — Fee and other income 2,133,175 1,700,084 769,126 650,433 960,993 Payment-in-kind interest income 3,173,787 749,217 342,469
Slide 19: BBDC Balance Sheet
BBDC Balance Sheet Debt-to-equity at March 31, 2021 was 1.35x, or 1.14x(1) after adjusting for cash and foreign currencies (excluding restricted), short-term investments and unsettled transactions March 31, December 31, September 30, June 30, March 31, 2021 2020 2020 2020 2020 Assets: Investments at
Slide 20: 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 FUNDING MIX BY ASSET CLASS $1,750,000 $1,750,000 Cash, ST Investments Cash, ST Investments & Other Assets & Other Assets $198,556 $198,556 $1,500,000 $1,500,000
Slide 21: Debt Summary and Maturity Profile
Debt Summary and Maturity Profile BBDC issued new unsecured notes in February 2021 totaling $150 million As of 3/31/21 As of 12/31/2020 As of 9/30/2020 Principal Principal Principal Principal Principal Principal Interest Amount Amount Amount Amount Amount Amount Borrower Rate Collateral Maturity Dat
Slide 22: Liquidity Summary
Liquidity Summary BBDC has available liquidity under its senior secured revolving credit agreement and unsecured debt commitment, with cushion to support its unused capital commitments of $166 million Debt / Net Debt-to-Equity Ratio Scenarios Debt / Net Debt Debt / Net Debt-to- Outstanding Total Net
Slide 23: Quarterly Dividends
Quarterly Dividends BBDC declared a 2Q21 dividend of $0.20 per share, up from $0.19 in 1Q21 BBDC DIVIDENDS DECLARED PER SHARE $0.25 $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 $0.00 3Q18 4Q18 1Q19 2Q19 3Q19 4Q19 1Q20 2Q20 3Q20 4Q20 1Q21 2Q21 23
Slide 24: 2Q 2021 Origination Pipeline
2Q 2021 Origination Pipeline
Slide 25: Relative Value in Credit Asset Classes
Relative Value in Credit Asset Classes 3 Year Lookback (Wide/Tight/Current): 1,500 1,400 1,200 1,000 BBB 773 500 362 500 466 315 295 325 285 175 233 75 77 193 0 CLO Corp. Credit CMBS EETC U.S. Loans 2,000 1,500 1,514 BB 1,000 752 691 655 500 570 621 248 218 303 253 245 278 0 CLO Corp. Credit U.S. Lo
Slide 26: New Investment Illiquidity and Complexity Premiums
New Investment Illiquidity and Complexity Premiums Barings BDC seeks to generate excess shareholder return via illiquidity and complexity premiums across its wide investment frame of reference 1Q21 Premium/ Discount Dollars Deployed Asset Class All-in Spread (bps)1 To Market Indices ($mm) (bps) US I
Slide 27: Investment Activity Since Quarter End and Investment Pipeline
Investment Activity Since Quarter End and Investment Pipeline • From April 1, 2021 through May 5, 2021, Barings BDC made approximately $156 million of new commitments, of which approximately $106 million closed and funded; in addition, BBDC funded $5 million of previously-committed delayed draw term
Slide 28: Appendix
Appendix BARINGS
Slide 29: 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 March 31, December 31, September 30, June 30, March 31, 2021 2020 2020 2020 2020 Total debt (principal) $986,144,523 $944,660,707 $692,016,256 $569,341,828 $631,061,734 minus: Cash and foreign currencies (exclu
Slide 30: BBDC Repurchase Program
Appendix: BBDC Repurchase Program In connection with the closing of the acquisition of MVC Capital, Inc., BBDC’s Board of Directors affirmed BBDC’s commitment to repurchase up to $15.0 million of common stock • Under the 2021 repurchase program, BBDC expects to repurchase an aggregate amount of up t
Slide 31: Barings BDC Corporate Data
Appendix: Barings BDC Corporate Data Board of Directors Investment Committee Corporate Officers Research Coverage Corporate Headquarters MICHAEL FRENO ERIC LLOYD ERIC LLOYD BANK OF AMERICA 300 South Tryon Street Chairman, CEO, and Chief Executive Officer Chief Executive Officer MERRILL LYNCH Suite 2