Barings Bdc, Inc. · NYSE:BBDC
Barings Bdc — Q4 2022 Earnings Presentation
30 slides from Barings Bdc's earnings presentation, Feb 24, 2023
Slide 1: Barings BDC, Inc. Fourth Quarter 2022 Earnings Presentation
Barings BDC, Inc. Fourth Quarter 2022 Earnings Presentation February 23, 2023 Barings-Public
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 4Q 2022 Highlights (Lloyd) What were the summary points of the quarter? IAN FOWLER Barings BDC Market Update & Investment Portfolio (Fowler) Update on the portfolio performance. JONATHAN LANDSBERG Barings BDC Financials (Landsberg) A walk through the balance sheet, income statement
Slide 4: 4Q 2022 Highlights
4Q 2022 Highlights Barings-Public
Slide 5: Fed Rates, Loan Prices, and BDC Equity Prices through January 31st
Fed Rates, Loan Prices, and BDC Equity Prices through January 31st An unprecedented pace of Fed rate increases has contributed to further asset price volatility FEDERAL RESERVE RATE HIKE BROADLY-SYNDICATED LOAN BDC EQUITY PRICES IN HISTORICAL CONTEXT PRICES 5.00% $100 $650 4.50% $98 $600 4.00% $96 $
Slide 6: Fourth Quarter 2022 Highlights
Fourth Quarter 2022 Highlights Net asset value (NAV) as of Total originations during the quarter December 31, 2022 was $11.05 per were $240 million, while sales and NET ASSET VALUE ORIGINATIONS share as compared to $11.28 as of repayments totaled $113 million, for net September 30, 2022 originations
Slide 7: Selected Financial Highlights
Selected Financial Highlights Balance Sheet Highlights 4Q 2022 3Q 2022 2Q 2022 1Q 2022 4Q 2021 Investment Portfolio, at Fair Value $2,448.9 $2,332.5 $2,389.1 $2,403.4 $1,800.6 Total Debt Outstanding (Principal) $1,454.1 $1,376.0 $1,539.4 $1,482.2 $1,380.2 Total Net Assets (Equity) $1,192.3 $1,228.1
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 December 31, 2022 • Middle-Market Loans: • Net increase in investments of $184 million • Total MML fundings were $205 million • Includes $167 million in 21 new portfolio companies • Includes $39 million in 41 existing portfo
Slide 10: All-In Senior Investment Spreads
All-In Senior Investment Spreads Middle-market spreads continued to widen towards the end of the year, while the pace of widening in the broadly-syndicated loan market has moderated QUARTERLY MIDDLE-MARKET SPREADS ACROSS THE CAPITAL STRUCTURE 1,100 1,000 900 Loan Spread (bps) 800 700 600 500 400 300
Slide 11: Portfolio Bridge – 3Q22 to 4Q22
Portfolio Bridge – 3Q22 to 4Q22 In the fourth quarter we originated $205 million of Middle-Market Loans, made $35 million of Cross-Platform Investments (including JVs), and had $113 million of sales/paydowns $ in millions. Total may not foot due to rounding. 11 Barings-Public
Slide 12: Aggregate Portfolio Characteristics (as of December 31, 2022)
Aggregate Portfolio Characteristics (as of December 31, 2022) Middle Market Cross Platform Acquired MVC Acquired SIC Total Total Investments and Commitments ($mm) $1,703 $712 $83 $260 $2,757 Unfunded Commitments ($mm) $200 $101 $0 $7 $309 Total Investments at Fair Value ($mm) $1,503 $611 $83 $252 $2
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 $2,114MM $335MM $2,449MM 100% 90% 80% 39% 70% 69% 74% 60% First Lien 50% 23% Second Lien & Mezz 40% Structured 10% 30% Equity & JV 11% 9% 20
Slide 14: Top Investments
Top 10 Investments Top 10 Holdings (as of December 31, 2022) Principal % of Issuer Moody's Industry Segment Cost Fair Value Amount Portfolio Banking, Finance, Eclipse Business Capital, LLC Cross Platform $9,818 $102,903 $144,884 5.9% Insurance and Real Estate Security Holdings B.V. Capital Equipment
Slide 15: Barings BDC Financials
Barings BDC Financials Barings-Public
Slide 16: Net Asset Value Per Share (NAV) Bridge – 3Q22 to 4Q22
Net Asset Value Per Share (NAV) Bridge – 3Q22 to 4Q22 BBDC’s NAV per share decreased in 4Q22 to $11.05 from $11.28, driven primarily by unrealized depreciation on investments Total may not foot due to rounding. 16 Barings-Public
Slide 17: Barings BDC Portfolio Summary as of December 31, 2022
Barings BDC Portfolio Summary as of December 31, 2022 4Q 2022 Portfolio Summary 4Q 4Q 4Q 4Q Unrealized Unrealized Unrealized Unrealized App (Dep) - App (Dep) - App (Dep) - App (Dep) - Par Cost Fair Value Price Credit FX Total Per Share Middle-Market Lending North America $1,130,504 $1,133,050 $1,125
Slide 18: Barings BDC Income Statement
Barings BDC Income Statement 4Q22 3Q22 2Q22 1Q22 4Q21 Investment income: Interest income $47,996 $40,639 $40,784 $32,069 $25,783 Dividend income 7,360 7,905 7,246 7,693 5,546 Fee and other income 4,334 4,321 5,072 1,197 3,830 Payment-in-kind interest income 3,582 3,267 2,474 2,798 1,445 Interest inc
Slide 19: Barings BDC Balance Sheet
Barings BDC Balance Sheet Debt-to-equity at December 31, 2022 was 1.22x, or 1.12x(1) after adjusting for cash and foreign currencies, short- term investments and unsettled transactions December 31, September 30, June 30, March 31, December 31, 2022 2022 2022 2022 2021 Assets: Investments at fair val
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 Cash, ST Investments & Other Investments & Other $2,500,000 Assets Assets $261,022 ING
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 12/31/2022 As of 9/30/2022 As of 6/30/2022 As of 3/31/22 Principal Principal Principal Principal Principal Principal Principal Principal Interest Amount Amount Amount Amount Amount Amo
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, December 31, 2022 $1,454.1 $1,192.3 1.22x Adjust f
Slide 23: Quarterly Dividends
Quarterly Dividends Barings BDC declared a 1Q23 dividend of $0.25 per share, up $0.01 from 4Q22 BBDC DIVIDENDS DECLARED PER SHARE $0.26 $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 $0.08 $0
Slide 24: 1Q 2023 Origination Pipeline
1Q 2023 Origination Pipeline Barings-Public
Slide 25: Relative Value in Credit Asset Classes
Relative Value in Credit Asset Classes 3 Year Lookback (Wide/Tight/Current): 1,500 1,400 1,200 1,000 773 705 BBB 547 500 500 466 338 325 290 293 136 175 198 0 72 CLO Corp. Credit CMBS EETC U.S. Loans 2,000 1,500 1,514 BB 1,000 1017 690 691 655 500 621 452 308 366 206 264 245 0 CLO Corp. Credit U.S.
Slide 26: New Investment Illiquidity and Complexity Premiums
New Investment Illiquidity and Complexity Premiums Barings BDC seeks to generate excess shareholder return via illiquidity and complexity premiums across its wide investment frame of reference 4Q22 Premium/ Discount Dollars Deployed Asset Class All-in Spread (bps)1 To Market Indices ($mm) (bps) US I
Slide 27: Investment Activity Since Quarter End and Investment Pipeline
Investment Activity Since Quarter End and Investment Pipeline • From January 1, 2023 through February 21, 2023, Barings BDC made approximately $119 million of new commitments, of which approximately $74 million closed and funded; in addition, BBDC funded $4 million of previously-committed delayed dr
Slide 28: Appendix
Appendix Barings-Public
Slide 29: 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 December 31, September 30, June 30, March 31, December 31, 2022 2022 2022 2022 2021 Total debt (principal) $1,454,144 $1,375,989 $1,539,380 $1,482,217 $1,380,189 minus: Cash and foreign currencies (139,415) (13
Slide 30: 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 Executive Chairman and CEO Chief Executive Officer MERRILL LYNCH Suite 2500 of BBDC, President of Derek Hewett Charlotte, N