Barings Bdc, Inc. · NYSE:BBDC
Barings Bdc — Q1 2022 Earnings Presentation
31 slides from Barings Bdc's earnings presentation, May 6, 2022
Slide 1: Barings BDC, Inc. First Quarter 2022 Earnings Presentation
Barings BDC, Inc. First Quarter 2022 Earnings Presentation May 5, 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 1Q 2022 HIGHLIGHTS (Lloyd) What were the summary points of the quarter? IAN FOWLER BBDC MARKET UPDATE & INVESTMENT PORTFOLIO (Fowler) Update on the portfolio performance. BRYAN HIGH BBDC FINANCIALS (Bock) A walk through the balance sheet, income statement, NAV bridge and liquidity.
Slide 4: 1Q 2022 Highlights
1Q 2022 Highlights BARINGS
Slide 5: Credit Spreads and BDC Equity Prices
Credit Spreads and BDC Equity Prices BSL spreads and prices began to price in increased risks in Q1, while BDC equity prices exhibited volatility BROADLY-SYNDICATED LOAN BROADLY-SYNDICATED LOAN BDC EQUITY PRICES SPREADS PRICES 1,000 $100 $650 $98 $600 900 $96 $550 800 $94 $500 $92 700 $450 $90 $400
Slide 6: First Quarter 2022 Highlights
First Quarter 2022 Highlights Total originations during the quarter were Net asset value (NAV) as of $772 million, including $442 million of SIC March 31, 2022 was $11.86 per share as NET ASSET VALUE compared to $11.36 as of ORIGINATIONS assets, while sales and repayments totaled $173 million, for n
Slide 7: Selected Financial Highlights
Selected Financial Highlights Balance Sheet Highlights 1Q 2022 4Q 2021 3Q 2021 2Q 2021 1Q 2021 Investment Portfolio, at Fair Value $2,403.4 $1,800.6 $1,652.5 $1,575.1 $1,602.1 Total Debt Outstanding (Principal) $1,482.2 $1,380.2 $1,037.7 $1,043.5 $986.1 Total Net Assets (Equity) $1,317.6 $741.9 $744
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, 2022 • Middle-Market Loans: • Net increase in investments of $125 million • Total MML fundings were $261 million • Includes $164 million in 16 new portfolio companies • Includes $97 million in 34 existing portfolio
Slide 10: All-In Senior Investment Spreads
All-In Senior Investment Spreads Spreads in all segments of the direct lending market widened in the first quarter; the syndicated and large middle-market segments widened the most: 81bps and 20 bps vs. the prior quarter, respectively QUARTERLY MIDDLE-MARKET SPREADS ACROSS THE CAPITAL STRUCTURE 1,10
Slide 11: Middle Market Spreads
Middle Market Spreads Unitranche spreads continue to compress and approach all time tights relative to 1L/2L loan executions Spread Differential: Average 1L Term Loan Spread by Cov-Lite Unitranche Unitranche vs 1L/2L EBITDA Size (bps) Volume ($bn) 650 60 725 24.0 700 22.0 625 50 675 20.0 650 18.0 62
Slide 12: Portfolio Bridge – 4Q21 to 1Q22
Portfolio Bridge – 4Q21 to 1Q22 In the fist quarter we originated $261 million of Middle-Market Loans, made $69 million of Cross-Platform Investments (including JVs), added $442 million from Sierra, and had $173 million of sales/paydowns $ in millions. Total may not foot due to rounding. Excludes es
Slide 13: Aggregate Portfolio Characteristics (as of March 31, 2022)
Aggregate Portfolio Characteristics (as of March 31, 2022) Middle Market Cross Platform Acquired MVC Acquired SIC Total Total Investments and Commitments ($mm) $1,450 $585 $149 $440 $2,624 Unfunded Commitments ($mm) $171 $39 $0 $10 $220 Total Investments at Fair Value ($mm) $1,279 $546 $149 $430 $2,
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 $1,825MM $578MM $2,403MM 100% 90% 80% 39% 70% 65% 73% 60% First Lien 50% 27% Second Lien & Mezz 40% Structured 30% 8% Equity & JV 13% 9% 20% 3% 2% 27% 10% 19%
Slide 15: Top Investments
Top 10 Investments Top 10 Holdings (as of March 31, 2022) Principal % of Issuer Moody's Industry Segment Cost Fair Value Amount Portfolio Banking, Finance, Eclipse Business Capital, LLC Cross Platform $7,273 $96,958 $125,638 5.2% Insurance and Real Estate Sierra Senior Loan Strategy JV I Investment
Slide 16: BBDC Financials
BBDC Financials BARINGS
Slide 17: Net Asset Value Per Share (NAV) Bridge – 4Q21 to 1Q22
Net Asset Value Per Share (NAV) Bridge – 4Q21 to 1Q22 BBDC’s NAV per share increased in 1Q22 to $11.86 from $11.36 Total may not foot due to rounding. 17
Slide 18: BBDC Portfolio Summary as of March 31, 2022
BBDC Portfolio Summary as of March 31, 2022 1Q 2022 Portfolio Summary 1Q 1Q 1Q 1Q 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 $919,423 $918,036 $915,754 ($1,855) ($
Slide 19: BBDC Income Statement
BBDC Income Statement 1Q22 4Q21 3Q21 2Q21 1Q21 Investment income: Interest income $32,069 $25,783 $24,622 $26,819 $25,214 Dividend income 7,693 5,546 2,867 395 72 Fee and other income 1,197 3,830 4,488 2,568 2,133 Payment-in-kind interest income 2,798 1,445 3,006 3,371 3,173 Interest income from cas
Slide 20: BBDC Balance Sheet
BBDC Balance Sheet Debt-to-equity at March 31, 2022 was 1.12x, or 0.89x(1) after adjusting for cash and foreign currencies, short- term investments and unsettled transactions March 31, December 31, September 30, June 30, March 31, 2022 2021 2021 2021 2021 Assets: Investments at fair value: Non-Contr
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 Investments & Other & Other Assets Assets $445,985 $445,985 ING F
Slide 22: Debt Summary and Maturity Profile
Debt Summary and Maturity Profile BBDC upsized the commitment to the Revolving Credit Facility in February 2022 in conjunction with the SIC merger, which was then further upsized to $1.065 billion in early April. Our funding mix as of March 31st was comprised of 49% unsecured bonds with a weighted-a
Slide 23: Liquidity Summary
Liquidity Summary Inclusive of the SIC assets, BBDC has liquidity under its senior secured revolving credit agreement and unsecured debt commitment, with cushion to support its unused capital commitments of $220 million BBDC as of March 31, 2022 Debt / Net Debt Debt / Net Debt-to- Outstanding Total
Slide 24: Quarterly Dividends
Quarterly Dividends BBDC declared a 2Q22 dividend of $0.24 per share, up from $0.23 in 1Q22 BBDC DIVIDENDS DECLARED PER SHARE $0.25 $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 $0.00 3Q18 4Q18 1Q19 2Q19 3Q19 4Q19 1Q20 2Q20 3Q
Slide 25: 2Q 2022 Origination Pipeline
2Q 2022 Origination Pipeline
Slide 26: Relative Value in Credit Asset Classes
Relative Value in Credit Asset Classes 3 Year Lookback (Wide/Tight/Current): 1,500 1,400 1,200 1,000 BBB 773 500 415 500 466 363 338 325 290 252 107 175 193 0 72 CLO Corp. Credit CMBS EETC U.S. Loans 2,000 1,500 1,514 BB 1,000 749 691 685 655 621 500 369 242 324 206 256 245 0 CLO Corp. Credit U.S. L
Slide 27: New Investment Illiquidity and Complexity Premiums
New Investment Illiquidity and Complexity Premiums Barings BDC seeks to generate excess shareholder return via illiquidity and complexity premiums across its wide investment frame of reference 1Q22 Premium/ Discount Dollars Deployed Asset Class All-in Spread (bps)1 To Market Indices ($mm) (bps) US I
Slide 28: Investment Activity Since Quarter End and Investment Pipeline
Investment Activity Since Quarter End and Investment Pipeline • From April 1, 2022 through May 4, 2022, Barings BDC made approximately $174 million of new commitments, of which approximately $141 million closed and funded; in addition, BBDC funded $15 million of previously-committed delayed draw ter
Slide 29: Appendix
Appendix BARINGS
Slide 30: Appendix: 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, 2022 2021 2021 2021 2021 Total debt (principal) $1,482,217 $1,380,189 $1,037,664 $1,043,452 $986,145 minus: Cash and foreign currencies (excluding restric
Slide 31: Appendix: 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