Barings Bdc, Inc. · NYSE:BBDC
Barings Bdc — Q1 2023 Earnings Presentation
34 slides from Barings Bdc's earnings presentation, May 5, 2023
Slide 1: Barings BDC, Inc. First Quarter 2023 Earnings Presentation
Barings BDC, Inc. First Quarter 2023 Earnings Presentation May 4, 2023 Barings‐Public
Slide 2: Disclaimers & Cautionary Notes Regarding Forward-Looking Statements
Disclaimers & 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 they
Slide 3: Agenda
Agenda ERIC LLOYD 1Q 2023 HIGHLIGHTS (LLOYD) What were the summary points of the quarter? IAN FOWLER BARINGS BDC MARKET UPDATE & INVESTMENT PORTFOLIO (FOWLER) Update on the portfolio performance. ELIZABETH MURRAY BARINGS BDC FINANCIALS (MURRAY) A walk through the balance sheet, income statement, NAV
Slide 4: 1Q 2023 Highlights
1Q 2023 Highlights Barings‐Public
Slide 5: Fed Rates, Loan Prices & BDC Equity Prices through March 31st
Fed Rates, Loan Prices & BDC Equity Prices through March 31st An unprecedented pace of Fed rate increases has contributed to further asset price volatility FEDERAL RESERVE RATE BROADLY-SYNDICATED BDC EQUITY PRICES HIKE IN HISTORICAL CONTEXT LOAN PRICES 5.00% $100 $650 4.50% $98 $600 4.00% $96 $550 3
Slide 6: First Quarter 2023 Highlights
First Quarter 2023 Highlights NET ASSET VALUE ORIGINATIONS Net asset value (NAV) as of March 31, 2023 was $11.17 per share as Total originations during the quarter were $145 million, while sales and compared to $11.05 as of December 31, 2022 repayments totaled $54 million, for net originations of $9
Slide 7: Selected Financial Highlights
Selected Financial Highlights Balance Sheet Highlights 1Q 2023 4Q 2022 3Q 2022 2Q 2022 1Q 2022 Investment Portfolio, at Fair Value $2,556.1 $2,448.9 $2,332.5 $2,389.1 $2,403.4 Total Debt Outstanding (Principal) $1,494.1 $1,454.1 $1,376.0 $1,539.4 $1,482.2 Total Net Assets (Equity) $1,205.0 $1,192.3
Slide 8: Barings BDC Market Update & Investment Portfolio
Barings BDC Market Update & Investment Portfolio Barings‐Public
Slide 9: Investment Activity
Investment Activity Summary of investment activity during the quarter ended March 31, 2023 Middle-Market Loans: • Net increase in investments of $57 million • Total MML fundings were $89 million • Includes $56 million in 10 new portfolio companies • Includes $33 million in 39 existing portfolio comp
Slide 10: All-In Senior Investment Spreads
All-In Senior Investment Spreads Middle-market spreads have continued to widen through the first quarter, while spreads in the broadly-syndicated loan market have tightened QUARTERLY MIDDLE-MARKET SPREADS ACROSS THE CAPITAL STRUCTURE 1,100 1,000 900 Loan Spread (bps) 800 700 600 500 400 300 3Q18 4Q1
Slide 11: Portfolio Bridge – 4Q22 to 1Q23
Portfolio Bridge – 4Q22 to 1Q23 In the first quarter we originated $89 million of Middle-Market Loans, made $55 million of Cross-Platform Investments (including JVs), and had $54 million of sales/paydowns $ in millions. Total may not foot due to rounding. Excludes escrows received. 11 Barings‐Public
Slide 12: Aggregate Portfolio Characteristics (as of March 31, 2023)
Aggregate Portfolio Characteristics (as of March 31, 2023) Middle Market Cross Platform Acquired MVC Acquired SIC Total Total Investments and Commitments ($mm) $1,763 $727 $73 $258 $2,820 Unfunded Commitments ($mm) $202 $56 $0 $5 $264 Total Investments at Fair Value ($mm) $1,560 $671 $73 $252 $2,556
Slide 13: Portfolio Rotation
Portfolio Rotation While the acquisitions of MVC Capital and Sierra Income diversified the Barings BDC portfolio, our core focus remains first lien investments $2,221MM $335MM $2,556MM 100% 90% 80% 38% 70% 69% 73% 60% 50% 22% 40% 9% 30% 10% 8% 20% 3% 2% 31% 10% 18% 16% 0% BBDC Excluding MVC & SIC Ac
Slide 14: Top 10 Investments
Top 10 Investments Top 10 Holdings (as of March 31, 2023) Principal % of Issuer Moody's Industry Segment Cost Fair Value Amount Portfolio Banking, Finance, Eclipse Business Capital, LLC Cross Platform $8,909 101,999 $152,025 5.9% Insurance and Real Estate Security Holdings B.V. Capital Equipment MVC
Slide 15: Barings BDC Financials
Barings BDC Financials Barings‐Public
Slide 16: Net Asset Value Per Share (NAV) Bridge – 4Q22 to 1Q23
Net Asset Value Per Share (NAV) Bridge – 4Q22 to 1Q23 BBDC’s NAV per share increased in 1Q23 to $11.17 from $11.05, an increase of 1.1%, driven primarily by unrealized appreciation on investments Total may not foot due to rounding. 16 Barings‐Public
Slide 17: Barings BDC Portfolio Summary as of March 31, 2023
Barings BDC Portfolio Summary as of March 31, 2023 1Q 2023 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 $1,178,491 $1,177,742 $1,169,94
Slide 18: Barings BDC Income Statement
Barings BDC Income Statement 1Q23 4Q22 3Q22 2Q22 1Q22 Investment income: Interest income $51,890 $47,996 $40,639 $40,784 $32,069 Dividend income 7,874 7,360 7,905 7,246 7,693 Fee and other income 3,300 4,334 4,321 5,072 1,197 Payment-in-kind interest income 3,942 3,582 3,267 2,474 2,798 Interest inc
Slide 19: Barings BDC Balance Sheet
Barings BDC Balance Sheet Debt-to-equity at March 31, 2023 was 1.24x, or 1.19x(1) after adjusting for cash and foreign currencies, short-term investments and unsettled transactions March 31, December 31, September 30, June 30, March 31, 2023 2022 2022 2022 2022 Assets: Investments at fair value: Non
Slide 20: 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 Investments Cash, ST Investments & Other Assets & Other Assets $2,500,000 $170,807 $17
Slide 21: Debt Summary and Maturity Profile
Debt Summary and Maturity Profile BBDC’s debt is split approximately 50/50 between unsecured and secured debt As of 3/31/2023 As of 12/31/2022 As of 9/30/2022 As of 6/30/2022 Principal Principal Principal Principal Principal Principal Principal Principal Interest Amount Amount Amount Amount Amount A
Slide 22: Liquidity Summary
Liquidity Summary Barings BDC has adequate available liquidity to support its unused capital commitments Debt / Net Debt-to-Equity Ratio Scenarios Debt / Net Debt Debt / Net Debt-to- Outstanding Total Net Assets Equity Ratio(1) Debt-to-equity ratio, March 31, 2023 $1,494.5 $1,205.0 1.24x Adjust for
Slide 23: Quarterly Dividends
Quarterly Dividends Barings BDC declared a 2Q23 dividend of $0.25 per share, unchanged from 1Q23. BBDC DIVIDENDS DECLARED PER SHARE $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 $0.16 $0.15 $0.14 $0.14 $0.13 $0.12 $0.12 $0.10 $0.10
Slide 24: 2Q 2023 Origination Pipeline
2Q 2023 Origination Pipeline Barings‐Public
Slide 25: Relative Value in Credit Asset Classes
Relative Value in Credit Asset Classes 3 Year Lookback (Wide/Tight/Current): 1,600 1,400 1,400 1,200 1,200 1,000 975 BBB 800 600 681 523 500 400 361 343 253 290 297 200 142 175 225 0 72 CLO Corp. Credit CMBS EETC U.S. Loans 2,000 1,500 1,499 BB 1,000 984 698 575 475 500 575 396 282 336 284 269 0 206
Slide 26: New Investment Illiquidity & Complexity Premiums
New Investment Illiquidity & Complexity Premiums Barings BDC seeks to generate excess shareholder return via illiquidity and complexity premiums across its wide investment frame of reference 1Q23 Premium/ Discount Dollars Deployed 1 Asset Class All-in Spread (bps) To Market Indices ($mm) (bps) US IG
Slide 27: Investment Activity Since Quarter End & Investment Pipeline
Investment Activity Since Quarter End & Investment Pipeline • From April 1, 2023 through May 3, 2023, Barings BDC made approximately $3 million of new commitments, of which approximately $2 million closed and funded; in addition, BBDC funded $16 million of previously-committed debt and equity facili
Slide 28: Appendix
Appendix Barings‐Public
Slide 29: Reconciliation of Debt-to-Net Debt & Calculation of Net Debt-to-Equity Ratio
Appendix: Reconciliation of Debt-to-Net Debt & Calculation of Net Debt-to- Equity Ratio March 31, December 31, September 30, June 30, March 31, 2023 2022 2022 2022 2022 Total debt (principal) $1,494,485 $1,454,144 $1,375,989 $1,539,380 $1,482,217 minus: Cash and foreign currencies (55,395) (139,415)
Slide 30: Barings BDC Corporate Data
Appendix: Barings BDC Corporate Data BOARD OF DIRECTORS CORPORATE OFFICERS RESEARCH COVERAGE Corporate Headquarters 300 South Tryon Street Eric Lloyd Eric Lloyd Bank of America Suite 2500 Executive Chairman & CEO of BBDC, Chief Executive Officer Merrill Lynch Charlotte, NC 28202 President of Barings
Slide 31: Important Information
Important Information Any forecasts in this document are based upon Barings opinion of the market at the date of preparation and are subject to change without notice, dependent upon many factors. Any prediction, projection or forecast is not necessarily indicative of the future or likely performance
Slide 32: Important Information
Important Information Baring Asset Management Limited, which is authorized and regulated by the Financial Conduct Authority Barings Singapore Pte. Ltd. (“BSG”), a private company incorporated in Singapore, is an indirect, wholly- in the United Kingdom (Ref No. 170601) and is a Company registered in
Slide 33: Important Information
Important Information FOR PERSONS DOMICILED IN SWITZERLAND: FOR PERSONS DOMICILED IN JAPAN: This is an advertising document. This material is being provided for information purposes only. It is not an offer to buy or sell any Fund This material will be exclusively made to, and directed at, Qualified
Slide 34: Important Information
Important Information FOR PERSONS DOMICILED IN COLOMBIA: The material herein does not constitute a public offer in the Republic of Colombia. This document does not constitute a public offer in the Republic of Colombia. The offer of the fund is addressed to less than one hundred specifically identifi