Blackstone Inc. · NYSE:BX
Blackstone — Blackstone Loan Financing — Q4 2022 Earnings Presentation
58 slides from Blackstone's earnings presentation, Dec 31, 2022
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 31 DECEMBER 2022 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. Fourth Quarter 2022 Results 7 III. Performance 14 IV. Portfolio Activity 17 V. Market Themes 20 VI. Portfolio and Market Outlook 27 VII. Appendix 29 VIII. Key Risk Factors 41 IX. Important Disclosure Information 44 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) Total Return(1): BGLF € NAV European Loans US Loans 12.0% 3 Months 1.8% 2.9% 2.3% 9.9% 10.0% 9.1% 8.8% 8.8% 1 Year 5.2% -3.3% -1.1% 9.
Slide 5: BGLF and BCF Highlights
BGLF AND BCF HIGHLIGHTS 49 9 -€29.9M -€7.4M BCF change in BGLF change in net CLO positions, all CLO vintage years net assets(6) assets(6) actively managed by 1.8% 12.0% BXC(1) 675 0.08% BGLF 4Q’22 NAV BGLF LTM dividend total return(7) yield(8) underlying issuers(2) since inception default loss rate(
Slide 6: Blackstone Corporate Funding (BCF) Structure
BLACKSTONE CORPORATE FUNDING (“BCF”) STRUCTURE Private Unitholders Public Shareholders ▪ €912 million committed capital 445 million shares: ▪ €0 million undrawn capital ▪ 90% third parties (402 million) ▪ 10% Blackstone (43 million) BCF EUR BGLF €739.5 million NAV(1) €403.7 million NAV 65.7% 34.3% 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. Fourth Quarter 2022 Results
II. Fourth Quarter 2022 Results Blackstone | 7
Slide 9: Fourth Quarter 2022 Results
FOURTH QUARTER 2022 RESULTS ▪ 4Q’22 total return of 1.8% and 5.2% LTM. BGLF declared a dividend of 2.75c in 4Q’22, resulting in an aggregate payment at the upper end of its target range of €0.08 per share for the 2022 financial year BGLF Earnings ▪ The target annual dividend for 2023 has been increa
Slide 10: BGLF Earnings & Distributions
BGLF EARNINGS & DISTRIBUTIONS ▪ BGLF LTM distribution yield of 12.0%(1), supported by uninterrupted cash flows from each CLO since inception ▪ The Board declared a 4Q’22 dividend of 2.75c to deliver at the top end of its 2022 target of €0.07 - €0.08. The Board have announced a 2023 Dividend Policy t
Slide 11: BCF – Loan Portfolio Activity
BCF – LOAN PORTFOLIO ACTIVITY 4Q ’22 Portfolio Activity Highlights(1) 4Q ’22 Underlying Loan Portfolio Activity(2) (€ in billions) Added 8 new issuers, sold 28 issuers Gross 1.5 purchases WA spread flat at 3.58% B2 average facility rating Gross 1.3 Diversification among issuers, sales sectors, and g
Slide 12: BCF Portfolio Composition
BCF PORTFOLIO COMPOSITION ▪ Diversified portfolio of 675 issuers invested across multiple sectors, geographies, and vintages ▪ Portfolio of primarily senior secured and floating rate assets Country Allocations Moody’s Rating Distribution >Ba2 4.2% Others 4.6% 12.8% 3.6% Ba2 3.6% Luxembourg 7.4% Ba3
Slide 13: Diversified CLO Liabilities
DIVERSIFIED CLO LIABILITIES ▪ Diversified portfolio of 49(1) CLOs spanning 9 vintage years ▪ The portfolio continues to benefit from refinancing activity in 2021 and early 2022, where nearly 40% of CLOs reduced their cost of debt and/or extended reinvestment periods. This leaves the portfolio well p
Slide 14: BCF Investment Activity
BCF INVESTMENT ACTIVITY ▪ Globally, CLO WAC increased quarter on quarter predominantly due to rising European and US reference rates and for Europe, higher CLO cost of capital for a new deal, consistent with broader market sentiment Portfolio Financing Cost CLO Net Interest Margins (“NIM”) (rolling
Slide 15: III. Performance
III. Performance Blackstone | 14
Slide 16: 2022 BGLF 4Q'22 Return Analysis
2022 BGLF 4Q’22 RETURN ANALYSIS BGLF’s 4Q’22 NAV total return was 1.85% Contributors to Total Return Directly EUR CLO US CLO CLO BCF Cash BCF BGLF Held Loans Income Notes Income Notes Warehouses & Expenses 6.0% 1.35% 5.0% 0.70% 2.75% 4.0% 2.05% 3.0% 0.00% 0.00% 0.32% 0.32% 1.85% 2.0% 1.53% 0.68% 0.5
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 2022 BGLF € NAV 1.22% 0.45% 3.51% 0.44% -1.66% -2.11% 1.89% 1.44% -1.77% -0.62% 2.12% 0.35% 5.22% European Loans 0.29% -0.90% 0.09% -0.13% -2.44% -3.80% 2.37% 1.91% -3.39% 0.65% 1.92% 0.34% -3.28% US Loan
Slide 18: IV. Portfolio Activity
IV. Portfolio Activity Blackstone | 17
Slide 19: New Securitisations, Resets, and Refinancings – 4Q '22
NEW SECURITISATIONS, RESETS, AND REFINANCINGS – 4Q ’22 New CLO Securitisations ▪ In November 2022, BCF made an investment in the new Edmondstown Park CLO, marking its 28th European CLO equity position, 49th position overall, and fifth 2022 vintage CLO. ▪ The €379 million deal has a 4.6 year reinvest
Slide 20: Summary of BCF Investment Portfolio
SUMMARY OF BCF INVESTMENT PORTFOLIO ▪ Increase in CLO portfolio weighting due to addition of one European CLO new issue ▪ 28bp decrease in WA portfolio NIM mainly driven by rising financing costs for both loans and CLOs (increase in base rates and CLO cost of capital) ▪ Remaining CLO reinvestment pe
Slide 21: V. Market Themes
V. Market Themes Blackstone | 20
Slide 22: Global Credit Spreads and Prices
GLOBAL CREDIT SPREADS AND PRICES Spread to Maturity Yield to Maturity (L+ / E+) 1,000 11% 10.26% 800 9% 8.56% E+618 600 7% L+559 400 5% 200 3% Mar-18 Mar-19 Feb-20 Feb-21 Jan-22 Dec-22 Mar-18 Mar-19 Feb-20 Feb-21 Jan-22 Dec-22 S&P LL Index S&P Euro LL Index S&P LL Index S&P Euro LL Index Average Bid
Slide 23: Global Loan Return by Quality
GLOBAL LOAN RETURN BY QUALITY Higher quality loans have significantly outperformed over the year European Loan Returns by Quality US Loan Returns by Quality BB B CCC BB B CCC 5.00% 4.00% 2.70% 2.00% 0.42% 0.00% 0.00% -2.00% -1.33% -3.20% -5.00% -4.00% -6.00% -10.00% -8.00% -15.00% -10.00% -12.00% -2
Slide 24: 2022 Default Forecasts - Global
2022 DEFAULT FORECASTS - GLOBAL 2022 default rates have increased in line with greater market volatility, projected to continue rising in 2023 Loan Historical Default Rates 16% Blackstone Credit US Loan 2022 Default Rate: 0.97% Blackstone Credit EUR Loan 12% 2022 Default Rate: 0.24% Year End Forecas
Slide 25: Global CLO Arbitrage
GLOBAL CLO ARBITRAGE Average quarterly arb remained tight in 4Q ’22 driven by higher CLO cost of capital 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 Loan Spread WA Cost of Capital Sprea
Slide 26: Credit Market Supply - Global
CREDIT MARKET SUPPLY - GLOBAL Loan issuance for 2022 is down significantly compared to 2021 U.S. and European Loan Gross Issuance Full Year ($/€ in billions) Comparison US Europe 120 2021 $799 bn €155 bn 99 2022 $440 bn €62 bn 100 94 89 81 83 81 78 80 71 68 68 58 60 49 50 45 44 43 41 40 40 38 35 32
Slide 27: CLO Issuance - Global
CLO ISSUANCE - GLOBAL CLO managers overcame macro headwinds to achieve the third highest issuance volume on record U.S. and European CLO New Issue Volume ($/€ in billions) 200 $187 180 160 140 $129 $129 $119 $118 120 100 $94 80 60 € 45 40 € 33 € 27 € 25 € 28 € 21 20 0 2017 2018 2019 2020 2021 2022 2
Slide 28: VI. Portfolio and Market Outlook
VI. Portfolio and Market Outlook Blackstone | 27
Slide 29: Portfolio and Market Outlook
PORTFOLIO AND MARKET OUTLOOK Portfolio and Market Outlook ▪ After enduring an eventful 2022 impacted by various macro headwinds, global markets have kicked off 2023 in a more constructive mood. Central banks around the world are set to maintain a cautious stance as persistent inflation and tight lab
Slide 30: VII. Appendix
VII. Appendix Blackstone | 29
Slide 31: BCF Look Through Portfolio Details
BCF LOOK THROUGH PORTFOLIO DETAILS Portfolio Total Par Moody’s Moody’s WA WA Coupon WA Maturity # Facilities Par Outstanding Moody’s Industry Country Corporate Facility WA Spread Price (All-In Rate) (Years) (€M) (€M) Rating Rating Issuer 1 5 259 7,873 Media Broadcasting and Subscription Netherlands
Slide 32: European Horizontal CLO Risk Retention Investments
EUROPEAN HORIZONTAL CLO RISK RETENTION INVESTMENTS Refi / Highest of Remaining BCF Position Valuation Ann. Cum. Interest Defaulted Closing Reset Non-Call Deal Size BCF Cost WA Cost Gross Caa / CCC / RI Period Position as % of as % of BCF Cash-on- Cash-on- NIM Diversion Assets % of Date Date End (€m)
Slide 33: US Horizontal CLO Risk Retention Investments
US HORIZONTAL CLO RISK RETENTION INVESTMENTS Highest of Refi / Remaining BCF BCF Position as Valuation Ann. Cum. Interest Defaulted Closing Non-Call Deal Size WA Cost Gross Caa / CCC / Reset Date RI Period Position Cost % of as % of Cash-on- Cash-on- NIM Diversion Assets % of Date End ($m) of Debt(2
Slide 34: US Vertical CLO Risk Retention Investments
US VERTICAL CLO RISK RETENTION INVESTMENTS Refi / Highest of Remaining BCF Position Valuation as Ann. Cum. Interest Defaulted Closing Reset Non-Call Deal Size BCF Cost WA Cost Gross Caa / CCC / RI Period Position as % of % of BCF Cash-on- Cash-on- NIM Diversion Assets % of Date Date End ($m) ($m) of
Slide 35: Redeemed or Fully Sold CLOs
REDEEMED OR FULLY SOLD CLOs Sale/Redemption BCF Position Current Valuation as Realised IRR To WA Ann. Distribution Region Vintage Exit Method Date Prior To Exit (m) % of BCF NAV(1) Date(2) Through Last Payment(3) Myers Park U.S. 2018 Sale Mar-21 $26.4 N/A 11.1%* 16.36% Greenwood Park U.S. 2018 Sale
Slide 36: CLO Securitisation Performance by Vintage – Current Portfolio
CLO SECURITISATION PERFORMANCE BY VINTAGE – CURRENT PORTFOLIO ▪ CLO securitisations continued to generate robust, uninterrupted cashflows ▪ EU and US CLO 4Q’22 ann. cash on cash distributions were lower quarter on quarter, driven by the effect of semi-annual payments and the impact of ECB and Fed ra
Slide 37: BGLF Monthly € NAV Total Return Performance
BGLF MONTHLY € NAV TOTAL RETURN PERFORMANCE Trailing 12 months ending: December ’22 December ’21 December ’20 December ’19 December ’18 Discrete Performance BGLF € NAV 5.22% 21.82% (0.22%) 14.46% 6.70% European Loans (3.28%) 4.63% 2.38% 5.03% 0.55% US Loans (1.06%) 5.40% 2.78% 8.17% 1.14% LTM Divide
Slide 38: 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 15% 10% 9.3% 8.5% 8.1% 5.2% 5.1% 5% 3.3% 3.4% 2.9% 2.3% 3.2% 3.2% 1.8% 2.3% 2.6% 1.2% 1.8% 0% -0.4% -1.1% -3.3% -5% -6.6% -10% 4Q'22 (non annualised) 1
Slide 39: 2022 BGLF Return Analysis
2022 BGLF RETURN ANALYSIS BGLF’s 2022 NAV total return was 5.22% Contributors to Total Return Directly EUR CLO US CLO CLO BCF Cash BCF BGLF Held Loans Income Notes Income Notes Warehouses & Expenses 10.0% 7.20% 8.0% 1.14% 6.0% 0.37% 5.22% 7.26% 4.85% 2.64% 0.27% 0.27% -0.73% -0.15% 4.0% -4.56% 2.40%
Slide 40: Summary Term Sheet
SUMMARY TERM SHEET Blackstone Corporate Funding DAC (“BCF”) Blackstone Credit(1) is generally rebating 20% of the CLO management fees to BCF pro rata to the value of BCF’s CLO equity position. After costs allocated by Blackstone Credit to BCF in respect of the relevant CLO, the net rebate on certain
Slide 41: Blackstone Corporate Funding (BCF) Investment Process
BLACKSTONE CORPORATE FUNDING (“BCF”) INVESTMENT PROCESS Warehouse Opportunities CLO Creation ▪ First loss CLO warehouse investments provide exposure to a ▪ Aim to construct relatively lower risk loan portfolios with loan portfolio financed at relatively favourable terms sustainable distributions ▪ A
Slide 42: VIII. Key Risk Factors
VIII.Key Risk Factors Blackstone | 41
Slide 43: 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 is not necessarily indicative of future results, and there can be no assurance that BGLF will achieve comparable r
Slide 44: 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 45: IX. Important Disclosure Information
IX. Important Disclosure Information Blackstone | 44
Slide 46: 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 December 2022. Excludes CLOs in the process of being redeemed. 2) Data as of 31 December 2022 using internal Blackstone Credit data calculated on 30 Janua
Slide 47: 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 48: Important Disclosure Information
IMPORTANT DISCLOSURE INFORMATION Certain information contained herein has been obtained from published and non-published sources prepared by other parties, which in certain cases has not been updated through the date hereof. While such information is believed to be reliable for the purpose used here
Slide 49: 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 50: Important Disclosure Information (Cont'd)
IMPORTANT DISCLOSURE INFORMATION (CONT’D) ESG. ESG initiatives described in these Materials 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.
Slide 51: 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 52: 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 53: Important Disclosure Information (Cont'd) – Australia
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 54: Important Disclosure Information (Cont'd) – Canada
IMPORTANT DISCLOSURE INFORMATION (CONT’D) CANADA These materials and the information contained herein are not, and under no circumstances are to be construed as, a prospectus, an offering memorandum, an advertisement or a public offering of securities in Canada or any province or territory thereof.
Slide 55: Important Disclosure Information (Cont'd) – EEA and UK
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 56: Important Disclosure Information (Cont'd) – Hong Kong
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 57: Important Disclosure Information (Cont'd) – Japan
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 58: Important Disclosure Information (Cont'd) – China
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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