Slide 1: Barings BDC, Inc. Second Quarter 2022 Earnings Presentation
Barings BDC, Inc. Second Quarter 2022 Earnings Presentation August 9, 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 2Q 2022 HIGHLIGHTS (Lloyd) What were the summary points of the quarter? IAN FOWLER BARINGS BDC MARKET UPDATE & INVESTMENT PORTFOLIO (Fowler) Update on the portfolio performance. BRYAN HIGH BARINGS BDC FINANCIALS (Bock) A walk through the balance sheet, income statement, NAV bridge
Slide 4: 2Q 2022 Highlights
2Q 2022 Highlights BARINGS
Slide 5: Credit Spreads and BDC Equity Prices through July 31st
Credit Spreads and BDC Equity Prices through July 31st The risk-off mentality was apparent across asset classes in Q2, though prices began to rebound post-quarter end BROADLY-SYNDICATED LOAN BROADLY-SYNDICATED LOAN BDC EQUITY PRICES SPREADS PRICES 1,000 $100 $650 $98 $600 900 $96 $550 800 $94 $500 $
Slide 6: Second Quarter 2022 Highlights
Second Quarter 2022 Highlights Net asset value (NAV) as of Total originations during the quarter were June 30, 2022 was $11.41 per share as $352 million, while sales and repayments NET ASSET VALUE ORIGINATIONS compared to $11.86 as of totaled $299 million, for net originations of March 31, 2022 $53
Slide 7: Selected Financial Highlights
Selected Financial Highlights Balance Sheet Highlights 2Q 2022 1Q 2022 4Q 2021 3Q 2021 2Q 2021 Investment Portfolio, at Fair Value $2,389.1 $2,403.4 $1,800.6 $1,652.5 $1,575.1 Total Debt Outstanding (Principal) $1,539.4 $1,482.2 $1,380.2 $1,037.7 $1,043.5 Total Net Assets (Equity) $1,252.9 $1,317.6
Slide 8: Barings BDC Market Update & Investment Portfolio
Barings BDC Market Update & Investment Portfolio
Slide 9: Investment Activity
Investment Activity Summary of investment activity during the quarter ended June 30, 2022 • Middle-Market Loans: • Net increase in investments of $3 million • Total MML fundings were $227 million • Includes $156 million in 22 new portfolio companies • Includes $71 million in 43 existing portfolio co
Slide 10: All-In Senior Investment Spreads
All-In Senior Investment Spreads Middle-market spreads continued to widen in the second quarter, although the velocity reflects a more measured adjustment in contrast to spread movements in the broadly-syndicated loan market QUARTERLY MIDDLE-MARKET SPREADS ACROSS THE CAPITAL STRUCTURE 1,100 1,000 90
Slide 11: Middle-Market Spreads
Middle-Market Spreads Unitranche spreads continue to compress and approach all time tights relative to 1L/2L loan executions Spread Differential: Average 1L Term Loan Spread by Cov-Lite Unitranche Unitranche vs 1L/2L EBITDA Size (bps) Volume ($bn) 650 60 725 24.0 700 22.0 625 50 675 20.0 650 18.0 62
Slide 12: Portfolio Bridge – 1Q22 to 2Q22
Portfolio Bridge – 1Q22 to 2Q22 In the second quarter we originated $227 million of Middle-Market Loans, made $125 million of Cross-Platform Investments (including JVs), and had $299 million of repayments/sales Dollar amounts in millions. Total may not foot due to rounding. 12
Slide 13: Aggregate Portfolio Characteristics (as of June 30, 2022)
Aggregate Portfolio Characteristics (as of June 30, 2022) Middle Market Cross Platform Acquired MVC Acquired SIC Total Total Investments and Commitments ($mm) $1,494 $729 $138 $308 $2,668 Unfunded Commitments ($mm) $157 $117 $0 $5 $279 Total Investments at Fair Value ($mm) $1,337 $612 $138 $303 $2,3
Slide 14: Portfolio Rotation
Portfolio Rotation While the acquisitions of MVC Capital and Sierra Income diversified the Barings BDC portfolio, our core focus remains first lien investments $1,948MM $441MM $2,389MM 100% 90% 34% 80% 70% 65% 72% 60% First Lien 27% Second Lien & Mezz 50% Structured 40% Equity & JV 8% 30% 13% 10% 20
Slide 15: Top Investments
Top 10 Investments Top 10 Holdings (as of June 30, 2022) Principal % of Issuer Moody's Industry Segment Cost Fair Value Amount Portfolio Banking, Finance, Eclipse Business Capital, LLC Cross Platform $11,636 $101,328 $127,530 5.3% Insurance and Real Estate Security Holdings B.V. Services: Business M
Slide 16: Barings BDC Financials
Barings BDC Financials BARINGS
Slide 17: Net Asset Value Per Share (NAV) Bridge – 1Q22 to 2Q22
Net Asset Value Per Share (NAV) Bridge – 1Q22 to 2Q22 BBDC’s NAV per share decreased in 2Q22 to $11.41 from $11.86, driven primarily by unrealized depreciation Total may not foot due to rounding. 17
Slide 18: Barings BDC Portfolio Summary as of June 30, 2022
Barings BDC Portfolio Summary as of June 30, 2022 2Q 2022 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 FX Total Share Middle-Market Lending North America $949,854 $952,550 $950,145 ($30)
Slide 19: Barings BDC Income Statement
Barings BDC Income Statement 2Q22 1Q22 4Q21 3Q21 2Q21 Investment income: Interest income $40,784 $32,069 $25,783 $24,622 $26,819 Dividend income 7,246 7,693 5,546 2,867 395 Fee and other income 5,072 1,197 3,830 4,488 2,568 Payment-in-kind interest income 2,474 2,798 1,445 3,006 3,371 Interest incom
Slide 20: Barings BDC Balance Sheet
Barings BDC Balance Sheet Debt-to-equity at June 30, 2022 was 1.23x, or 1.00x(1) after adjusting for cash and foreign currencies, short-term investments and unsettled transactions June 30, March 31, December 31, September 30, June 30, 2022 2022 2021 2021 2021 Assets: Investments at fair value: Non-C
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) $3,000,000 $2,750,000 Cash, ST Cash, ST Investments & Other Investments & Other Assets Assets $2,500,000 $440,402 ING
Slide 22: Debt Summary and Maturity Profile
Debt Summary and Maturity Profile Barings BDC increased the size of its Revolving Credit Facility by $100mm in April to $1.065 billion As of 6/30/2022 As of 3/31/22 As of 12/31/21 As of 9/30/21 Principal Principal Principal Principal Principal Principal Principal Principal Interest Amount Amount Amo
Slide 23: Liquidity Summary
Liquidity Summary Barings BDC has adequate available liquidity to support its unused capital commitments Debt / Net Debt-to-Equity Ratio Scenarios Debt / Net Debt Debt / Net Debt-to- Outstanding Total Net Assets Equity Ratio(1) Debt-to-equity ratio, June 30, 2022 $1,539.4 $1,252.9 1.23x Adjust for c
Slide 24: Quarterly Dividends
Quarterly Dividends Barings BDC declared a 3Q22 dividend of $0.24 per share, unchanged from 2Q22 BBDC DIVIDENDS DECLARED PER SHARE $0.25 $0.24 $0.24 $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 1
Slide 25: 3Q 2022 Origination Pipeline
3Q 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 773 494 525 500 500 466 338 325 361 290 154 175 193 0 72 CLO Corp. Credit CMBS EETC U.S. Loans 2,000 1,500 1,514 BB 1,000 934 690 691 655 500 425 621 572 475 206 256 245 0 CLO Corp. Credit U.S. L
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 2Q22 1Q22 Premium/ Discount Premium/ Discount Dollars Deployed 1 Dollars Deployed 1 Asset Class All-in Spre
Slide 28: Investment Activity Since Quarter End and Investment Pipeline
Investment Activity Since Quarter End and Investment Pipeline • From July 1, 2022 through August 5, 2022, Barings BDC made approximately $215 million of new commitments, of which approximately $171 million closed and funded; in addition, BBDC funded $12 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, 2022 2022 2021 2021 2021 Total debt (principal) $1,539,380 $1,482,217 $1,380,189 $1,037,664 $1,043,452 minus: Cash and foreign currencies (197,770) (154,43
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 President of Barings Derek Hewett Charlotte, NC