Slide 1: Barings BDC, Inc. Third Quarter 2024 Earnings Presentation
NOVEMBER 7, 2024 Barings BDC, Inc. Third Quarter 2024 Earnings Presentation
Slide 2: Important Information & Cautionary Notice Regarding Forward-Looking Statements
Important Information & Cautionary Notice 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
Slide 3: Agenda
Agenda 3Q 2024 HIGHLIGHTS (LLOYD) ERIC LLOYD Summary points of the quarter. MATTHEW FREUND BARINGS BDC MARKET UPDATE & INVESTMENT PORTFOLIO (FREUND & HIGH) BRYAN HIGH Update on the portfolio performance. ELIZABETH MURRAY BARINGS BDC FINANCIALS (MURRAY) A walk through the balance sheet, income statem
Slide 4: Who We Are
BARINGS OVERVIEW Barings is a global asset management firm that works with institutional, insurance Who We Are and intermediary clients to provide excess returns across public and private markets in fixed income, real assets and capital solutions. External AUM by Region1 EMEA 28% Americas 43% Asia P
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: Third Quarter 2024 Highlights
Third Quarter 2024 Highlights Net asset value (NAV) Total originations during the as of September 30, quarter were $125 million, NET ASSET 2024 was $11.32 per ORIGINATIONS while sales and repayments VALUE share as compared to totaled $121 million, for net $11.36 per share as of originations of $4 mi
Slide 7: Selected Financial Highlights
Selected Financial Highlights Balance Sheet Highlights 3Q 2024 2Q 2024 1Q 2024 4Q 2023 3Q 2023 Investment Portfolio, at Fair Value $2,416.7 $2,395.7 $2,527.5 $2,488.7 $2,521.6 Total Debt Outstanding (Principal) $1,372.8 $1,375.8 $1,465.4 $1,444.9 $1,521.1 Total Net Assets (Equity) $1,194.4 $1,201.9
Slide 8: Portfolio Highlights
Portfolio Highlights Senior Secured Focus $2.42B 328 PORTFOLIO SIZE ISSUER COUNT 4% 4% 16% First Lien Second Lien Mezzanine 72% 88% 4% Equity Structured 4% JV 68% SECURED DEBT FLOATING RATE 616 BPS 11.0% Diversified Industry Exposure WEIGHTED AVERAGE YIELD Finance & Insurance SPREAD 17% 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 6.1% of exposure and the top 10 issuers long-term strateg
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 — 28 REMAINING ISSUERS — 4 $100.0 $100.0 $100.0 $80.0 $8
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: Return on Equity
BBDC’s Potential for Outperformance with Lower Base Rates When Pre-Incentive Fee Net Investment Income (“PIF”) returns fall inside the catch-up band, shareholders experience ROE stability as compared to other BDCs with lower hurdle rates Higher Hurdle Rate Limits ROE Downside with Lower Base Rates
Slide 16: BBDC Net Asset Value (NAV) Per Share Bridge
BBDC Net Asset Value (NAV) Per Share Bridge BBDC’s NAV per share decreased in 3Q24 to $11.32 (September 30, 2024) from $11.36 (June 30, 2024), a decrease of 0.4%, driven primarily by net realized losses, partially offset by investment income exceeding the dividend, net unrealized appreciation and sh
Slide 17: BBDC Income Statement
BBDC Income Statement 3Q24 2Q24 1Q24 4Q23 3Q23 Investment income: Interest income $51,663 $54,927 $54,533 $57,069 $55,405 Dividend income 9,841 11,734 8,477 10,277 8,515 Fee and other income 4,289 3,769 3,474 3,152 2,650 Payment-in-kind interest income 4,802 4,198 3,124 5,085 3,979 Interest income f
Slide 18: BBDC Balance Sheet
BBDC Balance Sheet Debt-to-equity at September 30, 2024 was 1.15x, or 1.09x after adjusting for unrestricted cash and foreign currencies and net unsettled transactions September 30, June 30, March 31, December 31, September 30, 2024 2024 2024 2023 2023 Assets: Investments at fair value: Non-Control
Slide 19: BBDC Debt Summary & Maturity Profile
BBDC Debt Summary & Maturity Profile As of the end of the quarter, BBDC’s outstanding debt was split approximately 75/25 between unsecured and secured debt as a result of higher level of unsecured debt. With the closing of the revolver facility amendment, the maturity date of the facility has been e
Slide 20: BBDC Dividends Declared Per Share
BBDC Dividends Declared Per Share $0.28 $0.26$0.26$0.26$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 4Q $0.14 $0.13 $0.14 2024 dividend of $0.12 $0.12 $0.26 per share, $0.10 $0.10 unch
Slide 21: Appendix
Appendix
Slide 22: 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 September 30, June 30, March 31, December 31, September 30, 2024 2024 2024 2023 2023 Total debt (principal) $1,372,811 $1,375,823 $1,465,352 $1,444,914 $1,521,126 minus: Unrestricted cash and foreign currencies (62,781) (69
Slide 23: Barings BDC Corporate Data
Barings BDC Corporate Data BOARD OF DIRECTORS MANAGEMENT TEAM RESEARCH COVERAGE GENERAL Eric Lloyd Eric Lloyd Compass Point Corporate Headquarters Executive Chairman & CEO of BBDC, Chief Executive Officer Casey Alexander 300 South Tryon Street President of Barings (646) 448-3027 Suite 2500 Matthew F
Slide 24: 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 25: Barings
BARINGS Investing Together PUBLIC & PRIVATE FIXED INCOME | REAL ESTATE | SPECIALIST EQUITIES