Blackstone Inc. · NYSE:BX
Blackstone — Blackstone Loan Financing — Q3 2023 Earnings Presentation
52 slides from Blackstone's earnings presentation, Sep 30, 2023
Slide 1: Blackstone Loan Financing Limited
This is a marketing communication. Please refer to the Prospectus of the Company before making a final investment decision. Blackstone Loan Financing Limited AS OF 30 SEPTEMBER 2023 FOR PROFESSIONAL INVESTORS/QUALIFIED INVESTORS USE ONLY. NOT FOR DISTRIBUTION TO RETAIL OR UNQUALIFIED INVESTORS.
Slide 2: Table of Contents
TABLE OF CONTENTS I. Overview 2 II. Third Quarter 2023 Results 7 III. Performance 14 IV. Portfolio Activity 17 V. Market Themes 20 VI. Portfolio and Market Outlook 25 VII. Appendix 27 VIII. Key Risk Factors 35 IX. Important Disclosure Information 38 Blackstone | 1
Slide 3: I. Overview
I. Overview Blackstone | 2
Slide 4: BGLF has provided investors with robust income and total NAV returns since inception
BLACKSTONE LOAN FINANCING LIMITED (“BGLF”) BGLF has provided investors with robust income and total NAV returns since inception BGLF € NAV Total Return Components(1) 16.0% Total Return(1): BGLF € NAV Euro Loan Index US Loan Index 13.4% 3 Months 4.9% 3.5% 3.4% 1 Year 9.2% 13.7% 12.5% 12.0% 9.2% 9.7%
Slide 5: BGLF and BCF Highlights
BGLF AND BCF HIGHLIGHTS 51 10 +4.9% +€9.8M CLO positions, all actively CLO vintage years BGLF 3Q’23 NAV BGLF change in managed by BXC(1) total return(6) net assets(7) 1.3x 14.9% 650+ 0.09% BGLF LTM dividend cover(8) BGLF LTM dividend yield(9) underlying issuers(2) since inception default loss rate(3
Slide 6: Blackstone Corporate Funding (BCF) Structure
BLACKSTONE CORPORATE FUNDING (“BCF”) STRUCTURE Private Unitholders Public Shareholders ▪ €912 million committed capital 443 million shares: ▪ €0 million undrawn capital ▪ 90% third parties (400 million) ▪ 10% Blackstone (43 million) BCF EUR BGLF €714.8 million NAV(1) €399.8 million NAV 65.4% 34.6% B
Slide 7: Investment Opportunity Overview
INVESTMENT OPPORTUNITY OVERVIEW Access to Blackstone ▪ Strategic partnership to the well-recognised Blackstone Credit CLO platform Credit’s CLO Platform ▪ Over 20 years of experience investing across multiple cycles(1) ▪ Low-cost levered exposure to portfolio of secured loans with diversified fundin
Slide 8: II. Third Quarter 2023 Results
II. Third Quarter 2023 Results Blackstone | 7
Slide 9: Third Quarter 2023 Results
THIRD QUARTER 2023 RESULTS ▪ 3Q’23 total return of 4.9% and 9.2% LTM. BGLF declared a dividend of 2c in 3Q’23, resulting in 14.95% LTM dividend yield BGLF Earnings ▪ The target annual dividend for 2023 is €0.08-€0.09 per share, which represents a potential dividend increase of 12.5% per & Distributi
Slide 10: BGLF Earnings & Distributions
BGLF EARNINGS & DISTRIBUTIONS ▪ BGLF LTM distribution yield of 14.9%(1), supported by uninterrupted cash flows from each CLO since inception ▪ The Board declared a 3Q’23 dividend of 2c, the third and final of three flat payments before a final variable payment to be determined at the end of the year
Slide 11: BCF – Loan Portfolio Activity
BCF – LOAN PORTFOLIO ACTIVITY 3Q ’23 Portfolio Activity Highlights(1) 3Q ’23 Underlying Loan Portfolio Activity(2) (€ in billions) Added 24 new issuers, sold 13 issuers Gross purchases WA spread up by 2bp to 3.69% 1.7 B2 average facility rating Gross Diversification among issuers, 0.8 sales sectors,
Slide 12: BCF Portfolio Composition
BCF PORTFOLIO COMPOSITION ▪ Diversified portfolio of 650+ issuers invested across multiple sectors, geographies, and vintages ▪ Portfolio of primarily senior secured and floating rate assets Country Allocations Moody’s Rating Distribution Others 4.0% >Ba2 4.2% 13.6% 5.0% Ba2 Germany 4.7% 6.1% 4.9% B
Slide 13: Diversified CLO Liabilities
DIVERSIFIED CLO LIABILITIES ▪ Diversified portfolio of 51 CLOs spanning 10 vintage years ▪ The portfolio continues to benefit from refinancing activity in 2021 and early 2022, where nearly 40% of BCF’s CLOs reduced their cost of debt and/or extended reinvestment periods. This leaves the portfolio we
Slide 14: BCF Investment Activity
BCF INVESTMENT ACTIVITY ▪ Globally, CLO WAC increased quarter on quarter predominantly due to rising European and US base rates Portfolio Financing Cost CLO Net Interest Margins (“NIM”) (rolling 3 month) Weighted Average Cost (“WAC”) 4Q ’22 1Q ’23 2Q ’23 3Q ’23 of Liabilities 2.8% 2.4% EUR CLOs 3.44
Slide 15: III. Performance
III. Performance Blackstone | 14
Slide 16: BGLF 3Q'23 Return Analysis
BGLF 3Q’23 RETURN ANALYSIS BGLF’s 3Q’23 NAV total return was 4.86% Contributors to Total Return Directly EUR CLO US CLO BCF Cash BCF BGLF Held Loans Income Notes Income Notes CLO Warehouses & Expenses 6.0% 2.23% 0.42% 5.09% 0.36% 4.86% 5.0% 1.57% 0.03% 0.03% -0.22% -0.21% -0.66% 4.0% 0.77% 2.58% 3.0
Slide 17: BGLF Monthly € NAV Total Return Performance
BGLF MONTHLY € NAV TOTAL RETURN PERFORMANCE Jan Feb Mar Apr May Jun Jul Aug Sep Oct Nov Dec YTD 2023 BGLF € NAV 1.53% 0.57% 0.80% 0.87% -1.15% -0.42% 1.46% 1.32% 2.00% 7.17% European Loan Index 2.73% 0.79% 0.02% 1.20% 0.83% 0.95% 1.15% 1.36% 0.98% 10.44% US Loan Index 2.57% 0.63% -0.10% 0.95% -0.09%
Slide 18: IV. Portfolio Activity
IV. Portfolio Activity Blackstone | 17
Slide 19: Summary of BCF Investment Portfolio
SUMMARY OF BCF INVESTMENT PORTFOLIO ▪ Relatively unchanged in portfolio weighting due to no additional CLO issuance ▪ 7bp decrease in WA portfolio NIM primarily driven by higher overall financing costs (due to an increase in base rates), which were unable to offset higher all-in rates for loans ▪ Re
Slide 20: V. Market Themes
V. Market Themes Blackstone | 19
Slide 21: Global Credit Spreads and Prices
GLOBAL CREDIT SPREADS AND PRICES Spread to Maturity Yield to Maturity (S+ / E+) 1,000 11% 10.30% 800 9% 8.87% 600 7% E+480 400 S+476 5% 200 3% Jun-18 Jul-19 Aug-20 Aug-21 Sep-22 Sep-23 Sep-18 Sep-19 Sep-20 Sep-21 Sep-22 Sep-23 S&P LL Index S&P Euro LL Index S&P LL Index S&P Euro LL Index Average Bid
Slide 22: Default Forecasts - Global
DEFAULT FORECASTS - GLOBAL US and European default rates both decreased from last quarter and currently remain below long-term historical averages Loan Historical Default Rates 16% 12% Q3 Forecast Forecast 2023 YE 2023 YE 2024 8% US 2.00% 3.50% 4.00% Europe 0.50% 3.00% 4.00% 4% 0% Dec-03 Dec-04 Dec-
Slide 23: Global CLO Arbitrage
GLOBAL CLO ARBITRAGE Average quarterly arbitrage increased in 3Q ’23 driven by falling CLO cost of capital as loan spreads continue to rise US WA Spread and Cost of Capital European WA Spread and Cost of Capital (bp) (bp) 450 450 400 400 350 350 300 300 250 250 200 200 150 150 100 100 50 50 0 0 WA L
Slide 24: CLO Issuance - Global
CLO ISSUANCE - GLOBAL YTD CLO new issuance lags behind last year in both the US and Europe U.S. and European CLO New Issue Volume ($/€ in billions) $200 $187 €50 €39 €40 $150 $129 $118 €30 €26 €30 $94 $99 $100 €22 $78 €20 €18 €20 $50 €10 $0 €0 2019 2020 2021 2022 2022 2023 2019 2020 2021 2022 2022 2
Slide 25: VI. Portfolio and Market Outlook
VI. Portfolio and Market Outlook Blackstone | 24
Slide 26: Portfolio and Market Outlook
PORTFOLIO AND MARKET OUTLOOK Portfolio and Market Outlook ▪ Global markets initially rallied over the third quarter, before rate volatility returned to spook markets as renewed geopolitical tension, uncertainty about future rate direction, resilient macro data, and the subsequent return of term prem
Slide 27: VII. Appendix
VII. Appendix Blackstone | 26
Slide 28: BCF Look Through Portfolio Details
BCF LOOK THROUGH PORTFOLIO DETAILS Total Par Moody’s Portfolio Par Moody’s WA WA Coupon WA Maturity # Facilities Outstanding Moody’s Industry Country Corporate WA Spread (€M) Facility Rating Price (All-In Rate) (Years) (€M) Rating Issuer 1 12 258 14,586 Media Broadcasting and Subscription France B2
Slide 29: European Horizontal CLO Risk Retention Investments
EUROPEAN HORIZONTAL CLO RISK RETENTION INVESTMENTS Refi / BCF Position Valuation as Cum. Interest Highest of Closing Reset Remaining RI Non-Call Deal Size BCF Cost Ann. Cash- WA Cost of Gross Defaulted Position as % of % of BCF (2) Cash-on- NIM Diversion Caa / CCC Dae Date Period (Yrs) End (€m) (€m)
Slide 30: US Horizontal CLO Risk Retention Investments
US HORIZONTAL CLO RISK RETENTION INVESTMENTS Refi / Remaining BCF Position as Valuation as Cum. Interest Highest of Closing Non-Call Deal Size BCF Cost Ann. Cash- WA Cost Gross Defaulted Reset Date RI Period Position % of % of BCF (2) Cash-on- of Debt (2) Coupon(2) NIM Diversion Caa / CCC Date End (
Slide 31: US Vertical CLO Risk Retention Investments
US VERTICAL CLO RISK RETENTION INVESTMENTS Highest of Refi / Remaining BCF Position Cum. Interest Closing Non-Call Deal Size BCF Cost Valuation as % Ann. Cash- WA Cost of Gross Caa / CCC / Defaulted Reset Date RI Period Position as % of (2) Cash-on- NIM Diversion Date End ($m) ($m) (1) of BCF NAV on
Slide 32: Redeemed or Fully Sold CLOs
REDEEMED OR FULLY SOLD CLOs Sale/Redemption BCF Position Prior Current Valuation as % WA Ann. Distribution Region Vintage Exit Method Realised IRR To Date(2) Date To Exit (m) of BCF NAV(1) Through Last Payment(3) Myers Park U.S. 2018 Sale Mar-21 $26.4 N/A 11.1%* 16.4% Greenwood Park U.S. 2018 Sale M
Slide 33: CLO Securitisation Performance by Vintage – Current Portfolio
CLO SECURITISATION PERFORMANCE BY VINTAGE – CURRENT PORTFOLIO ▪ CLO securitisations continued to generate uninterrupted cashflows, resulting in robust mid-teen average annualised distributions ▪ EU CLO 3Q’23 annualised cash on cash distributions improved on last quarter’s distributions, as the base
Slide 34: BGLF Total Returns Since Inception
BGLF TOTAL RETURNS SINCE INCEPTION BGLF has delivered strong returns versus the loan market across multiple time periods Annualised Net Total Return 16% 13.7% 13.4% 12.5% 12% 10.5% 9.2% 9.5% 8.2% 8% 5.9% 4.9% 5.0% 4.3% 3.5% 3.4% 4.0% 3.5% 4.2% 4% 3.1% 3.4% 0% -4% -8% -5.8% -12% -13.3% -16% 3Q'23 1yr
Slide 35: VIII. Key Risk Factors
VIII. Key Risk Factors Blackstone | 34
Slide 36: Key Risk Factors
KEY RISK FACTORS AS DETERMINED BY THE ENTITIES DISTRIBUTING THIS COMMUNICATION All investments are subject to risk, including the loss of the principal amount invested. Past performance does not predict future returns, and there can be no assurance that BGLF will achieve comparable results, will mee
Slide 37: Key Risk Factors
KEY RISK FACTORS AS DETERMINED BY THE ENTITIES DISTRIBUTING THIS COMMUNICATION Conflicts of Interest. There may be occasions when the Company and their affiliates will encounter potential conflicts of interest in connection with Blackstone’s activities including, without limitation, the allocation o
Slide 38: IX. Important Disclosure Information
IX. Important Disclosure Information Blackstone | 37
Slide 39: Notes to 'BGLF and BCF Highlights'
NOTES TO ‘BGLF AND BCF HIGHLIGHTS’ Portfolio stats and performance is reflective of the continuing BCF Fund, unless stated otherwise. 1) As of 30 September 2023. 2) Data as of 30 September 2023 using internal Blackstone Credit data calculated on 17 October 2023. Reflects directly held loans and look
Slide 40: BGLF Monthly € NAV Total Return Performance
BGLF MONTHLY € NAV TOTAL RETURN PERFORMANCE Trailing 12 months ending: September ’23 September ’22 September ’21 September ’20 September ’19 Discrete Performance BGLF € NAV 9.15% 7.51% 24.38% (2.88%) 11.04% European Loan Index 13.68% (5.38%) 7.58% (0.33%) 2.34% US Loan Index 12.47% (2.62%) 8.46% 0.8
Slide 41: Important Disclosure Information
IMPORTANT DISCLOSURE INFORMATION Important notice in relation to Blackstone Loan Financing Limited (“The Company” or "BGLF") This document has been issued by Blackstone Loan Financing Limited (the “Company”), and should not be taken as an inducement to engage in any investment activity and is for th
Slide 42: Important Disclosure Information
IMPORTANT DISCLOSURE INFORMATION Important notice from the entities distributing this communication BGLF has engaged Blackstone Ireland Fund Management Limited to produce this report and BGLF (including its directors) has not been involved in the production of the report or verified the accuracy of
Slide 43: Important Disclosure Information (Cont'd)
IMPORTANT DISCLOSURE INFORMATION (CONT’D) Any targets, forecasts, estimates, or similar returns set forth herein are based on Blackstone Credit’s belief about the returns that may be achievable on investments that the Fund intends to pursue. Targets, forecasts, and estimates are necessarily speculat
Slide 44: Important Disclosure Information (Cont'd)
IMPORTANT DISCLOSURE INFORMATION (CONT’D) ESG. ESG initiatives related to Blackstone's portfolio, portfolio companies, and investments (collectively, “portfolio companies”) are aspirational and not guarantees or promises that all or any such initiatives will be achieved. Statements about ESG initiat
Slide 45: Important Disclosure Information (Cont'd)
IMPORTANT DISCLOSURE INFORMATION (CONT’D) Prospective investors should be aware that an investment in the Fund involves a high degree of risk. There may be occasions when the management company of the Fund, the principals, Blackstone Credit, Blackstone and their affiliates will encounter potential c
Slide 46: Important Disclosure Information (Cont'd)
IMPORTANT DISCLOSURE INFORMATION (CONT’D) Blackstone Ireland Limited and Blackstone Ireland Fund Management Limited are authorised and regulated by the Central Bank of Ireland. Blackstone Ireland Limited, Blackstone Ireland Fund Management Limited, the funds they manage, or specific investments made
Slide 47: Important Disclosure Information (Cont'd)
IMPORTANT DISCLOSURE INFORMATION (CONT’D) AUSTRALIA The provision of this document to any person does not constitute an offer of securities or financial products of any kind to that person or an invitation to that person to apply for securities or financial products of any kind. Any such offer or in
Slide 48: Important Disclosure Information (Cont'd)
IMPORTANT DISCLOSURE INFORMATION (CONT’D) CANADA Blackstone Securities Partners L.P. (“BSP”) will serve as a placement agent for the Fund in Canada. BSP relies on the International Dealer Exemption in each province of Canada pursuant to section 8.18 of National Instrument 31‐103 Registration Require
Slide 49: Important Disclosure Information (Cont'd)
IMPORTANT DISCLOSURE INFORMATION (CONT’D) CERTAIN EEA COUNTRIES AND THE UK In the UK, Denmark, Finland, The Republic Of Ireland, this communication issued by The Blackstone Group International Partners LLP ("BGIP") of 40 Berkeley Square, London, W1J 5AL (registration number OC352581), which is autho
Slide 50: Important Disclosure Information (Cont'd)
IMPORTANT DISCLOSURE INFORMATION (CONT’D) HONG KONG The foregoing document contains information about complex products and is not an offer to sell any Securities other than: (i) to "professional investors" as defined in the Securities and Futures Ordinance (Cap. 571) of Hong Kong (“SFO”) and any rul
Slide 51: Important Disclosure Information (Cont'd)
IMPORTANT DISCLOSURE INFORMATION (CONT’D) JAPAN THE SHARES OF THE COMPANY MAY NOT BE OFFERED FOR A PUBLIC OFFERING IN JAPAN UNLESS A SECURITIES REGISTRATION STATEMENT PURSUANT TO ARTICLE 4, PARAGRAPH 1 OF THE FINANCIAL INSTRUMENTS AND EXCHANGE ACT OF JAPAN (INCLUDING ANY AMENDMENTS OR SUCCESSOR LAWS
Slide 52: Important Disclosure Information (Cont'd)
IMPORTANT DISCLOSURE INFORMATION (CONT’D) PEOPLE’S REPUBLIC OF CHINA This document and the related documents do not and are not intended to constitute a sale, an offer to sell or a solicitation of an offer to buy, directly or indirectly, any securities in the People’s Republic of China (for the purp
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