Barings Bdc, Inc. · NYSE:BBDC
Barings Bdc — Q3 2022 Earnings Presentation
31 slides from Barings Bdc's earnings presentation, Nov 11, 2022
Slide 1: Barings BDC, Inc. Third Quarter 2022 Earnings Presentation
Barings BDC, Inc. Third Quarter 2022 Earnings Presentation November 10, 2022
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 JONATHAN BOCK 3Q 2022 Highlights (Bock) 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 stateme
Slide 4: 3Q 2022 Highlights
3Q 2022 Highlights BARINGS
Slide 5: Fed Rates, Loan Prices, and BDC Equity Prices through October 31st
Fed Rates, Loan Prices, and BDC Equity Prices through October 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 4.50% $100 $650 4.00% $98 $600 $96 3.50% $
Slide 6: Third Quarter 2022 Highlights
Third Quarter 2022 Highlights Net asset value (NAV) as of Total originations during the quarter September 30, 2022 was $11.28 per were $234 million, while sales and NET ASSET VALUE share as compared to $11.41 as of ORIGINATIONS repayments totaled $241 million, for net June 30, 2022 originations of -
Slide 7: Selected Financial Highlights
Selected Financial Highlights Balance Sheet Highlights 3Q 2022 2Q 2022 1Q 2022 4Q 2021 3Q 2021 Investment Portfolio, at Fair Value $2,332.5 $2,389.1 $2,403.4 $1,800.6 $1,652.5 Total Debt Outstanding (Principal) $1,376.0 $1,539.4 $1,482.2 $1,380.2 $1,037.7 Total Net Assets (Equity) $1,228.1 $1,252.9
Slide 8: Barings BDC Market Update & Investment Portfolio
Barings BDC Market Update & Investment Portfolio
Slide 9: Investment Activity
Investment Activity Summary of investment activity during the quarter ended September 30, 2022 • Middle-Market Loans: • Net decrease in investments of $14 million • Total MML fundings were $163 million • Includes $116 million in 16 new portfolio companies • Includes $47 million in 32 existing portfo
Slide 10: All-In Senior Investment Spreads
All-In Senior Investment Spreads Middle-market spreads continued to widen in the third quarter, but this occurred at a more measured pace in comparison to the spread widening seen in the broadly-syndicated loan market QUARTERLY MIDDLE-MARKET SPREADS ACROSS THE CAPITAL STRUCTURE 1,100 1,000 900 Loan
Slide 11: Loan Market Context
Loan Market Context New-issue Broadly Syndicated Loans (BSLs) continue to be issued at meaningful discounts Term Loan New-issue Average 1L Term Loan Yield by Price, LBOs EBITDA Size (bps) 100% 10.00% 9.75% 9.50% 98% 9.25% 9.00% 8.75% 8.50% 96% 8.25% 8.00% 7.75% 94% 7.50% 7.25% 7.00% 92% 6.75% 6.50%
Slide 12: Portfolio Bridge – 2Q22 to 3Q22
Portfolio Bridge – 2Q22 to 3Q22 In the third quarter we originated $163 million of Middle-Market Loans, made $72 million of Cross-Platform Investments (including JVs), and had $241 million of sales/paydowns Dollar amounts in millions. Total may not foot due to rounding. 12
Slide 13: Aggregate Portfolio Characteristics (as of September 30, 2022)
Aggregate Portfolio Characteristics (as of September 30, 2022) Middle Market Cross Platform Acquired MVC Acquired SIC Total Total Investments and Commitments ($mm) $1,472 $779 $103 $277 $2,632 Unfunded Commitments ($mm) $166 $127 $0 $6 $299 Total Investments at Fair Value ($mm) $1,307 $652 $103 $271
Slide 14: 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 $1,958MM $374MM $2,332MM 100% 90% 36% 80% 70% 67% 72% 60% First Lien 50% 27% Second Lien & Mezz Structured 40% Equity & JV 9% 30% 12% 9% 20%
Slide 15: Top Investments
Top 10 Investments Top 10 Holdings (as of September 30, 2022) Principal % of Issuer Moody's Industry Segment Cost Fair Value Amount Portfolio Banking, Finance, Eclipse Business Capital, LLC Cross Platform $10,727 $100,425 $137,295 5.9% Insurance and Real Estate Security Holdings B.V. Services: Busin
Slide 16: Barings BDC Financials
Barings BDC Financials BARINGS
Slide 17: Net Asset Value Per Share (NAV) Bridge – 2Q22 to 3Q22
Net Asset Value Per Share (NAV) Bridge – 2Q22 to 3Q22 BBDC’s NAV per share decreased in 3Q22 to $11.28 from $11.41, driven primarily by unrealized depreciation on investments Total may not foot due to rounding. 17
Slide 18: Barings BDC Portfolio Summary as of September 30, 2022
Barings BDC Portfolio Summary as of September 30, 2022 3Q 2022 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 $972,331 $977,081 $971,714
Slide 19: Barings BDC Income Statement
Barings BDC Income Statement 3Q22 2Q22 1Q22 4Q21 3Q21 Investment income: Interest income $40,639 $40,784 $32,069 $25,783 $24,623 Dividend income 7,905 7,246 7,693 5,546 2,867 Fee and other income 4,321 5,072 1,197 3,830 4,488 Payment-in-kind interest income 3,267 2,474 2,798 1,445 3,006 Interest inc
Slide 20: Barings BDC Balance Sheet
Barings BDC Balance Sheet Debt-to-equity at September 30, 2022 was 1.12x, or 0.99x(1) after adjusting for cash and foreign currencies, short-term investments and unsettled transactions September 30, June 30, March 31, December 31, September 30, 2022 2022 2022 2021 2021 Assets: Investments at fair va
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) $3,000,000 $2,750,000 Cash, ST Investments Cash, ST Investments $2,500,000 & Other Assets & Other Assets $314,496 $31
Slide 22: Debt Summary and Maturity Profile
Debt Summary and Maturity Profile Unsecured debt exceeded secured debt at quarter end, as BBDC used excess cash from sales and repayments to reduce borrowings outstanding on the Revolving Credit Facility at the end of the third quarter As of 9/30/2022 As of 6/30/2022 As of 3/31/22 As of 12/31/21 Pri
Slide 23: 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, September 30, 2022 $1,376.0 $1,228.1 1.12x Adjust
Slide 24: Quarterly Dividends
Quarterly Dividends Barings BDC declared a 3Q22 dividend of $0.24 per share, unchanged from 2Q22 BBDC DIVIDENDS DECLARED PER SHARE $0.25 $0.24 $0.24 $0.23 $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 $0.00 3Q18 4Q18 1Q19 2Q19 3Q19 4Q19 1
Slide 25: 4Q 2022 Origination Pipeline
4Q 2022 Origination Pipeline
Slide 26: Relative Value in Credit Asset Classes
Relative Value in Credit Asset Classes 3 Year Lookback (Wide/Tight/Current): 1,500 1,400 1,200 1,000 BBB 773 650 594 500 500 466 338 325 290 341 165 175 193 0 72 CLO Corp. Credit CMBS EETC U.S. Loans 2,000 1,500 1,514 1085 BB 1,000 690 691 655 500 621 575 361 427 206 256 245 0 CLO Corp. Credit U.S.
Slide 27: New Investment Illiquidity and Complexity Premiums
New Investment Illiquidity and Complexity Premiums Barings BDC seeks to generate excess shareholder return via illiquidity and complexity premiums across its wide investment frame of reference 3Q22 Premium/ Discount Dollars Deployed Asset Class All-in Spread (bps)1 To Market Indices ($mm) (bps) US I
Slide 28: Investment Activity Since Quarter End and Investment Pipeline
Investment Activity Since Quarter End and Investment Pipeline • From October 1, 2022 through November 9, 2022, Barings BDC made approximately $131 million of new commitments, of which approximately $103 million closed and funded; in addition, BBDC funded $7 million of previously-committed delayed dr
Slide 29: Appendix
Appendix BARINGS
Slide 30: 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, 2022 2022 2022 2021 2021 Total debt (principal) $1,375,989 $1,539,380 $1,482,217 $1,380,189 $1,037,664 minus: Cash and foreign currencies (137,323) (1
Slide 31: Appendix: Barings BDC Corporate Data
Appendix: Barings BDC Corporate Data Board of Directors Corporate Officers Research Coverage Corporate Headquarters ERIC LLOYD JONATHAN BOCK BANK OF AMERICA 300 South Tryon Street Executive Chairman of BBDC, Chief Executive Officer MERRILL LYNCH Suite 2500 President of Barings Derek Hewett Charlotte