Slide 1: Barings BDC, Inc. Second Quarter 2021 Earnings Presentation
Barings BDC, Inc. Second Quarter 2021 Earnings Presentation August 5, 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 2Q 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. BRYAN HIGH BBDC FINANCIALS (Bock) A walk through the balance sheet, income statement, NAV bridge and l
Slide 4: 2Q 2021 Highlights
2Q 2021 Highlights BARINGS
Slide 5: Credit Spreads & BDC Equity Prices
Credit Spreads & BDC Equity Prices BSL spreads and prices were little changed in 2Q and remained at pre-COVID levels, while BDC prices remained 6% 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
Slide 6: Second Quarter 2021 Highlights
Second Quarter 2021 Highlights Total originations during the quarter were Net asset value (NAV) as of June 30, $264.4 million, while sales and repayments NET ASSET VALUE 2021 was $11.39 per share as compared ORIGINATIONS totaled $241.5 million, for net originations of to $11.14 as of March 31, 2021
Slide 7: Selected Financial Highlights
Selected Financial Highlights Balance Sheet Highlights 2Q 2021 1Q 2021 4Q 2020 3Q 2020 2Q 2020 Investment Portfolio, at Fair Value $1,575.1 $1,602.1 $1,495.8 $1,116.3 $1,034.0 Total Debt Outstanding (Principal) $1,043.5 $986.1 $944.7 $692.0 $569.3 Total Net Assets (Equity) $744.1 $727.9 $717.8 $526.
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 June 30, 2021 • Middle-Market Loans: • Net increase in investments of $26.3 million • Total MML fundings were $240.8 million • Includes $186.6 million in 21 new portfolio companies • Includes $54.2 million in 22 existing por
Slide 10: All-In Senior Investment Spreads
All-In Senior Investment Spreads Spreads in the direct lending market continued to tighten in the second quarter, however the pace has generally slowed compared to the prior four quarters. The bank subsector continues to diverge from the non- bank subsectors QUARTERLY MIDDLE-MARKET SPREADS ACROSS TH
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: Unitranche vs 1L/2L Average 1L Term Loan Spread by EBITDA Size (bps) 725 120 725 700 110 700 675 100 675 650 650 90 625 625 Spread differential bps Avg. B
Slide 12: Portfolio Bridge – 1Q21 to 2Q21
Portfolio Bridge – 1Q21 to 2Q21 In the second quarter we originated $241 million of Middle-Market Loans, made $24 million of Cross-Platform Investments, and had $242 million of sales/paydowns, including $3 million from the MVC portfolio $ in millions. Total may not foot due to rounding. Excludes esc
Slide 13: Aggregate Portfolio Characteristics (as of June 30, 2021)
Aggregate Portfolio Characteristics (as of June 30, 2021) Middle Market Acquired MVC Cross Platform Total Total Investments and Commitments ($mm) $1,296 $178 $255 $1,729 Unfunded Commitments ($mm) $125 $0 $39 $164 Total Investments at Fair Value ($mm) $1,171 $178 $215 $1,565 Assets on Non-Accrual $0
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 $1,387MM $178MM $1,565MM 100% 5% 90% 80% 70% 60% 67% 78% First Lien 87% Second Lien & Mezz 50% Structured Equity & JV 40% 30% 20% 12% 28% 10% 5% 2% 2% 6% 9% 0
Slide 15: Top 10 Investments
Top 10 Investments Top 10 Holdings (as of June 30, 2021) Principal % of Issuer Moody's Industry Segment Cost Fair Value Amount Portfolio Security Holdings B.V. Services: Business MVC $22,636,577 $43,947,128 $47,988,756 3.1% Custom Alloy Corporation Construction and Building MVC 49,255,337 40,780,794
Slide 16: BBDC Financials
BBDC Financials BARINGS
Slide 17: Net Asset Value Per Share (NAV) Bridge – 1Q21 to 2Q21
Net Asset Value Per Share (NAV) Bridge – 1Q21 to 2Q21 BBDC’s NAV per share increased in 2Q21 to $11.39 from $11.14, predominately due to unrealized appreciation on the investment portfolio Total may not foot due to rounding. 17
Slide 18: BBDC Portfolio Summary as of June 30, 2021
BBDC Portfolio Summary as of June 30, 2021 2Q 2021 Portfolio Summary 2Q 2Q 2Q 2Q Unrealized Unrealized Unrealized 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 $932,736 $923,706 $925,026 $4,2
Slide 19: BBDC Income Statement
BBDC Income Statement 2Q21 1Q21 4Q20 3Q20 2Q20 Investment income: Interest income $26,819,189 $25,214,241 $17,433,263 $15,217,547 $15,295,679 Dividend income 394,901 71,500 — — 2,603 Fee and other income 2,568,455 2,133,175 1,700,084 769,126 650,433 Payment-in-kind interest income 3,370,885 3,173,78
Slide 20: BBDC Balance Sheet
BBDC Balance Sheet Debt-to-equity at June 30, 2021 was 1.40x, or 1.14x(1) after adjusting for cash and foreign currencies, short-term investments and unsettled transactions June 30, March 31, December 31, September 30, June 30, 2021 2021 2020 2020 2020 Assets: Investments at fair value: Non-Control
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) $1,800,000 Cash, ST Investments Cash, ST Investments & Other Assets & Other Assets $241,812 $241,812 $1,600,000 ING F
Slide 22: Debt Summary and Maturity Profile
Debt Summary and Maturity Profile BBDC has a laddered maturity profile of unsecured notes As of 6/30/21 As of 3/31/21 As of 12/31/20 Principal Principal Principal Principal Principal Principal Interest Amount Amount Amount Amount Amount Amount Borrower Rate Collateral Maturity Date Committed Outstan
Slide 23: 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 $164 million Debt / Net Debt-to-Equity Ratio Scenarios Debt / Net Debt Debt / Net Debt-to- Outstanding Total Net
Slide 24: Quarterly Dividends
Quarterly Dividends BBDC declared a 3Q21 dividend of $0.21 per share, up from $0.20 in 2Q21 BBDC DIVIDENDS DECLARED PER SHARE $0.25 $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 $0.00 3Q18 4Q18 1Q19 2Q19 3Q19 4Q19 1Q20 2Q20 3Q20 4Q20 1Q21 2Q21
Slide 25: 3Q 2021 Origination Pipeline
3Q 2021 Origination Pipeline
Slide 26: Relative Value in Credit Asset Classes
Relative Value in Credit Asset Classes 3 Year Lookback (Wide/Tight/Current): 1,500 1,400 1,200 1,000 BBB 773 500 500 466 343 290 313 325 285 175 238 72 193 0 72 CLO Corp. Credit CMBS EETC U.S. Loans 2,000 1,500 1,514 BB 1,000 704 691 655 500 583 621 227 313 313 227 256 245 0 CLO Corp. Credit U.S. Lo
Slide 27: New Investment Illiquidity and Complexity Premiums
New Investment Illiquidity and Complexity Premiums Barings BDC seeks to generate excess shareholder return via illiquidity and complexity premiums across its wide investment frame of reference 2Q21 Premium/ Discount Dollars Deployed 1 Asset Class All-in Spread (bps) To Market Indices ($mm) (bps) US
Slide 28: Investment Activity Since Quarter End and Investment Pipeline
Investment Activity Since Quarter End and Investment Pipeline • From July 1, 2021 through August 4, 2021, Barings BDC made approximately $186 million of new commitments, of which approximately $150 million closed and funded; in addition, BBDC funded $18 million of previously-committed delayed draw t
Slide 29: Appendix
Appendix
Slide 30: 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 June 30, March 31, December 31, September 30, June 30, 2021 2021 2020 2020 2020 Total debt (principal) $1,043,452,480 $986,144,523 $944,660,707 $692,016,256 $569,341,828 minus: Cash and foreign currencies (excl
Slide 31: 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 Head of Private Assets at Derek Hewett Charlotte