Barings Bdc, Inc. · NYSE:BBDC
Barings Bdc — Q3 2021 Earnings Presentation
31 slides from Barings Bdc's earnings presentation, Nov 10, 2021
Slide 1: Barings BDC, Inc. Third Quarter 2021 Earnings Presentation
Barings BDC, Inc. Third Quarter 2021 Earnings Presentation November 9, 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 3Q 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: 3Q 2021 Highlights
3Q 2021 Highlights BARINGS
Slide 5: Credit Spreads & BDC Equity Prices
Credit Spreads & BDC Equity Prices BSL spreads and prices were little changed in 3Q and remained at pre-COVID levels, while BDC equity prices surpassed the February 2020 peak BROADLY-SYNDICATED LOAN BROADLY-SYNDICATED LOAN BDC EQUITY PRICES SPREADS PRICES 1,000 $100 $650 $98 $600 900 $96 $550 800 $9
Slide 6: Third Quarter 2021 Highlights
Third Quarter 2021 Highlights Total originations during the quarter were Net asset value (NAV) as of September $276.0 million, while sales and repayments NET ASSET VALUE 30, 2021 was $11.40 per share as ORIGINATIONS totaled $232.4 million, for net originations of compared to $11.39 as of June 30, 20
Slide 7: Selected Financial Highlights
Selected Financial Highlights Balance Sheet Highlights 3Q 2021 2Q 2021 1Q 2021 4Q 2020 3Q 2020 Investment Portfolio, at Fair Value $1,652.5 $1,575.1 $1,602.1 $1,495.8 $1,116.3 Total Debt Outstanding (Principal) $1,037.7 $1,043.5 $986.1 $944.7 $692.0 Total Net Assets (Equity) $744.8 $744.1 $727.9 $71
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 September 30, 2021 • Middle-Market Loans: • Net decrease in investments of $45.6 million • Total MML fundings were $165.1 million • Includes $107.5 million in 16 new portfolio companies • Includes $57.6 million in 17 existin
Slide 10: All-In Senior Investment Spreads
All-In Senior Investment Spreads Spreads in most segments of the direct lending market were roughly flat in the third quarter; unitranche loans and large non-bank middle market loans were two exceptions, as spreads in these segments tightened ~30bps vs. the prior quarter QUARTERLY MIDDLE-MARKET SPRE
Slide 11: Middle Market Spreads
Middle Market Spreads Unitranche spreads continue to compress and approach all time tights relative to 1L/2L loan executions Spread Differential: Average 1L Term Loan Spread by Cov-lite Unitranche Unitranche vs 1L/2L EBITDA Size (bps) Volume (US$bn) 675 100 725 10.0 700 650 90 9.0 675 625 8.0 80 650
Slide 12: Portfolio Bridge – 2Q21 to 3Q21
Portfolio Bridge – 2Q21 to 3Q21 In the third quarter we originated $165 million of Middle-Market Loans, made $111 million of Cross-Platform Investments (including JVs and Eclipse), and had $232 million of sales/paydowns, including $17 million from the MVC portfolio $ in millions. Total may not foot
Slide 13: Aggregate Portfolio Characteristics (as of September 30, 2021)
Aggregate Portfolio Characteristics (as of September 30, 2021) Middle Market Acquired MVC Cross Platform Total Total Investments and Commitments ($mm) $1,217 $161 $360 $1,737 Unfunded Commitments ($mm) $99 $0 $36 $134 Total Investments at Fair Value ($mm) $1,118 $161 $324 $1,602 Assets on Non-Accrua
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 $1,442MM $161MM $1,602MM 100% 2% 90% 80% 70% 68% 73% 60% 80% First Lien Second Lien & Mezz 50% Structured Equity & JV 40% 30% 20% 12% 6% 30% 1% 1% 10% 13% 14%
Slide 15: Top Investments
Top 10 Investments Top 10 Holdings (as of Septmber 30, 2021) Principal % of Issuer Moody's Industry Segment Cost Fair Value Amount Portfolio Banking, Finance, Eclipse Business Capital, LLC Cross Platform $4,545,455 $94,218,724 $94,394,974 5.9% Insurance and Real Estate Security Holdings B.V. Service
Slide 16: BBDC Financials
BBDC Financials BARINGS
Slide 17: Net Asset Value Per Share (NAV) Bridge – 2Q21 to 3Q21
Net Asset Value Per Share (NAV) Bridge – 2Q21 to 3Q21 BBDC’s NAV per share increased in 3Q21 to $11.40 from $11.39 Total may not foot due to rounding. 17
Slide 18: BBDC Portfolio Summary as of September 30, 2021
BBDC Portfolio Summary as of September 30, 2021 3Q 2021 Portfolio Summary 3Q 3Q 3Q 3Q 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 $868,899 $862,222 $862,660 $858 $4
Slide 19: BBDC Income Statement
BBDC Income Statement 3Q21 2Q21 1Q21 4Q20 3Q20 Investment income: Interest income $24,622,330 $26,819,189 $25,214,241 $17,433,263 $15,217,547 Dividend income 2,866,668 394,901 71,500 — — Fee and other income 4,488,346 2,568,455 2,133,175 1,700,084 769,126 Payment-in-kind interest income 3,006,481 3,
Slide 20: BBDC Balance Sheet
BBDC Balance Sheet Debt-to-equity at September 30, 2021 was 1.39x, or 1.19x(1) after adjusting for cash and foreign currencies, short-term investments and unsettled transactions September 30, June 30, March 31, December 31, September 30, 2021 2021 2021 2020 2020 Assets: Investments at fair value: No
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 $197,051 $197,051 $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 9/30/21 As of 6/30/21 As of 3/31/21 Principal Principal Principal Principal Principal Principal Interest Amount Amount Amount Amount Amount Amount Borrower Rate Collateral Maturity Date Committed Outstand
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 $135 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 4Q21 dividend of $0.22 per share, up from $0.21 in 3Q21 BBDC DIVIDENDS DECLARED PER SHARE $0.25 $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 $0.00 3Q18 4Q18 1Q19 2Q19 3Q19 4Q19 1Q20 2Q20 3Q20 4Q20 1Q21
Slide 25: 4Q 2021 Origination Pipeline
4Q 2021 Origination Pipeline
Slide 26: Relative Value in Credit Asset Classes
Relative Value in Credit Asset Classes 3 Year Lookback (Wide/Tight/Current): 1,500 1,400 1,200 1,000 BBB 773 500 500 466 344 310 320 325 285 230 73 175 193 0 72 CLO Corp. Credit CMBS EETC U.S. Loans 2,000 1,500 1,514 BB 1,000 702 691 655 500 613 621 210 304 309 210 256 245 0 CLO Corp. Credit U.S. Lo
Slide 27: New Investment Illiquidity and Complexity Premiums
New Investment Illiquidity and Complexity Premiums Barings BDC seeks to generate excess shareholder return via illiquidity and complexity premiums across its wide investment frame of reference 3Q21 Premium/ Discount Dollars Deployed 1 Asset Class All-in Spread (bps) To Market Indices ($mm) (bps) US
Slide 28: Investment Activity Since Quarter End and Investment Pipeline
Investment Activity Since Quarter End and Investment Pipeline • From October 1, 2021 through November 8, 2021, Barings BDC made approximately $239 million of new commitments, of which approximately $164 million closed and funded; in addition, BBDC funded $4 million of previously-committed delayed dr
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 September 30, June 30, March 31, December 31, September 30, 2021 2021 2021 2020 2020 Total debt (principal) $1,037,664,367 $1,043,452,480 $986,144,523 $944,660,707 $692,016,256 minus: Cash and foreign currencie
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