Blackstone Inc. · NYSE:BX
Blackstone — Blackstone / GSO Loan Financing — Q3 2019 Earnings Presentation
42 slides from Blackstone's earnings presentation, Sep 30, 2019
Slide 1: Blackstone / GSO Loan Financing Limited
Blackstone / GSO Loan Financing Limited As of 30 September 2019
Slide 2: BGLF Overview
BGLF Overview CAPITAL PARTNERS
Slide 3: Blackstone / GSO Loan Financing Limited (BGLF) Strategy Overview and Fund Snapshot
Blackstone / GSO Loan Financing Limited Blackstone / GSO Loan Financing Limited (“BGLF”) A unique senior secured loan financing company that seeks to provide shareholders with stable and growing income returns Strategy Overview BGLF € NAV Total Returns Exposure to European and U.S. floating rate s
Slide 4: Investment Opportunity Overview
Blackstone / GSO Loan Financing Limited Investment Opportunity Overview Provides access to the market leading GSO loan and CLO management platform, including CLO Strength of GSO warehouse investment opportunities(1) CLO Platform Cost effective leveraged exposure to senior secured loans through t
Slide 5: Third Quarter Results
Third Quarter Results CAPITAL PARTNERS
Slide 6: Third Quarter Highlights
Blackstone / GSO Loan Financing Limited Third Quarter Highlights BGCF’s NAV grew by €70 million since June 2019, given additional equity investments from BGLF/BGLC and BGCF EUR Sponsored/originated two new CLO securitisations (one USD, one EUR) 12.7% 8.6x +€70M 3Q ‘19 BGCF NAV Growth BGLF Distri
Slide 7: Third Quarter 2019 Results
Blackstone / GSO Loan Financing Limited Third Quarter 2019 Results LTM BGLF distribution yield of 12.7%, as of 30 September 2019(1) Earnings & BGLF reinvested and/or retained amounts received in excess of 33% above the Distributions amount distributed over the last twelve months, with improving
Slide 8: Earnings & Distributions
Blackstone / GSO Loan Financing Limited Earnings & Distributions LTM BGLF distribution yield of 12.7%, as of 30 September 2019(1) BGLF reinvested and/or retained amounts received in excess of 33% above the amount distributed over the last twelve months, with improving retained earnings year to d
Slide 9: Investment Activity
Blackstone / GSO Loan Financing Limited Investment Activity Focused on maintaining the overall quality of the portfolio, trimming risk and declining primary issues where we view documentation to be weak In the third quarter, €2.6 billion of assets purchased, €1.8 billion net portfolio investment
Slide 10: Portfolio Composition
Blackstone / GSO Loan Financing Limited Portfolio Composition Diversified portfolio invested across multiple sectors, geographies, and vintages Portfolio of 99.5% senior secured and 97.3% floating rate assets Country Allocations Moody’s Rating Distribution >Ba2 6.6% Others 3.0% WA Facility Ratin
Slide 11: Capitalisation
Blackstone / GSO Loan Financing Limited Capitalisation €60 million of capital called and invested (BGCF EUR), €21 million reinvested (BGLF/BGLC) in Q3 ‘19, resulting in €81 million growth in BGCF’s equity balance Debt-to-Equity Ratio of 8.6x through financing structures(1) Balance Sheet(1) (€ in
Slide 12: Interest & Margins
Blackstone / GSO Loan Financing Limited Interest & Margins Average CLO cost of capital and warehouse leverage costs declined due to falling LIBOR Portfolio Financing Cost CLO Net Interest Margins (“NIM”) (Rolling 3 Month) 3.0% 4Q ‘18 1Q ’19 2Q ’19 3Q ’19 Weighted Weighted Weighted Weighted Average
Slide 13: Fund Overview
Fund Overview CAPITAL PARTNERS
Slide 14: Third Quarter Portfolio Activity
Blackstone / GSO Loan Financing Limited Third Quarter Portfolio Activity Portfolio trading activity during 3Q ‘19 continued to focus on maintaining the overall quality of the portfolio, trimming risk overweights in existing positions and declining primary issues where we view documentation to be w
Slide 15: Third Quarter Portfolio Activity (cont'd)
Blackstone / GSO Loan Financing Limited Third Quarter Portfolio Activity (cont’d) An important part of the Fund’s strategy is loan and portfolio vintage diversification, which provides for greater investment flexibility to participate in the primary loan market and the ability to take advantage of
Slide 16: Summary of Investment Portfolio: BGCF Portfolio
Blackstone / GSO Loan Financing Limited Summary of Investment Portfolio: BGCF Portfolio Portfolio positioning between EUR and USD exposure remains largely unchanged versus 2Q ‘19 Remaining reinvestment periods decrease slightly since last quarter due to a measured investment pace, though vintage
Slide 17: Summary of Investment Portfolio: Look Through Portfolio Data
Blackstone / GSO Loan Financing Limited Summary of Investment Portfolio: Look Through Portfolio Data Q4 ‘18 Q1 ’19 Q2 ’19 Q3 ‘19 # Issuers / Facilities 687 / 902 686 / 901 705 / 932 698 / 914 Total Gross Par Exposure (€mm) 15,676 16,556 17,129 17,769 WA Spread 3.48% 3.51% 3.52% 3.53% WA All In Rate
Slide 18: Look Through Portfolio Details
Blackstone / GSO Loan Financing Limited Look Through Portfolio Details Portfolio Total Par Moody’s Moody’s WA # WA WA All-In Par Outstanding Moody’s Industry Country Corporate Facility WA Price Maturity Facilities Spread Rate (€mm) (€mm) Rating Rating (Years) Issuer 1 5 197 5,037 Retail (Global Petr
Slide 19: CLO Securitisations Detail
Blackstone / GSO Loan Financing Limited CLO Securitisations Detail CCC and defaulted asset balances are currently low within the portfolio Refinancing Highest of Defaulted / Reset Refinancing Remaining Deal Equity BGCF BGCF Investment Valuation as Annualised Cumulative Wt. Avg. Net NIM 3 Interest Ca
Slide 20: Securitisations Detail: 3Q '19 Activity Details
Blackstone / GSO Loan Financing Limited Securitisations Detail: 3Q ‘19 Activity Details Invested €20.2 million ($22.3 million) into Southwick Park CLO (USD) and €22.1 million into Dunedin Park CLO (EUR) Funded $20.8 million into existing USD CLO warehouses New CLO Securitisations Size Investing
Slide 21: Market and Portfolio Outlook
Blackstone / GSO Loan Financing Limited Market and Portfolio Outlook Over the near term, we expect: • CLO demand to continue, resulting in 2019 issuance of approximately $115-$125 billion in the US and €30 billion in Europe, which is just 7% shy of 2018’s record issuance in the US and represents r
Slide 22: Market Overview
Market Overview CAPITAL PARTNERS
Slide 23: US and European Loan Yields and Spreads Have Increased in Recent Months
Blackstone / GSO Loan Financing Limited US and European Loan Yields and Spreads Have Increased in Recent Months Spread to Maturity Yield to Maturity L+600 E+600 9% L+550 E+550 8% 7% 6.73% L+500 E+500 L+450 E+450 6% L+400 E+400 5% 4.09% L+350 E+350 4% L+300 E+300 3% 2016 2017 2018 2019 2016 2017 2018
Slide 24: Higher Quality Loans Have Outperformed Lower Quality Loans
Blackstone / GSO Loan Financing Limited Higher Quality Loans Have Outperformed Lower Quality Loans After the 4Q ‘18 selloff, higher quality loans have rebounded faster than lower quality U.S. Loan Returns by Quality European Loan Returns by Quality (%) (%) 8% 5% 7.58% 4.61% 4.33% 7% 4% 6.28% 6% 3% 5
Slide 25: Global Weighted Average Spread Has Remained Steady in Recent Periods
Blackstone / GSO Loan Financing Limited Global Weighted Average Spread Has Remained Steady in Recent Periods After recent tightening, the global CLO arbitrage has stabilised U.S. WA Spread and Cost of Capital European WA Spread and Cost of Capital (bps) (bps) (bps) (bps) 250 400 250 425 400 375 200
Slide 26: Global CLO Issuance
Blackstone / GSO Loan Financing Limited Global CLO Issuance Global CLO issuance lags slightly year to date after a record year of issuance in 2018 CLO New Issuance ($ in billions) 161 $160 143 142 143 $140 129 $120 114 $100 92 91 $80 $60 54 $40 $20 14 3 $- US New Issue Europe New Issue Source: S&P /
Slide 27: Credit Fundamentals Remain Stable Across Global Loan Issuers
Blackstone / GSO Loan Financing Limited Although Growth Has Slowed, Credit Fundamentals Remain Stable Across the Global Loan Issuers to Which We Lend YoY Revenue Growth YoY EBITDA Growth (%) (%) 15% 15% 10% 10% 5% 3.6% 5% 4.3% 1.8% 1.5% 0% 0% 4Q17 1Q18 2Q18 3Q18 4Q18 1Q19 2Q19 4Q17 1Q18 2Q18 3Q18 4Q
Slide 28: Historical Performance
Historical Performance CAPITAL PARTNERS
Slide 29: 3Q '19 Return Analysis
Blackstone / GSO Loan Financing Limited 3Q ‘19 Return Analysis BGLF’s total net (NAV) return for 3Q ‘19 was 2.36% Contributors to Total Return Directly Held Loans EUR CLO Income Notes USD CLO Income Notes USD CLO BGCF Cash & Expenses BGLF 3.5% Warehouses 3.0% -0.81% 0.23% -0.15% 0.19% 0.19% -0.34% 2
Slide 30: 2019 Return Analysis Year to Date Through September
Blackstone / GSO Loan Financing Limited 2019 Return Analysis Year to Date Through September Stable-to-increasing net interest margin levels, combined with outperformance of assumed defaulted assets, has led to relatively strong performance year to date versus market indices Contributors to Total Ret
Slide 31: BGLF Total Returns Since Inception
Blackstone / GSO Loan Financing Limited BGLF Total Returns Since Inception 42.2% NAV and 30.6% share price cumulative total return since inception versus 17.5% and 20.9% for European loans and US loans, respectively Annualised Net Total Return 12% 11.0% 10% 8% 7.4% 7.5% 6% 4% 4.7% 4.8% 3.9% 3.4% 3.4
Slide 32: BGLF Monthly € NAV Total Return Performance
Blackstone / GSO Loan Financing Limited BGLF Monthly € NAV Total Return Performance 2019 Jan Feb Mar Apr May Jun Jul Aug Sep YTD BGLF € NAV 1.25% 1.90% 1.21% 1.26% 0.67% 1.59% 1.13% -0.19% 1.41% 10.68% European Loans 1.15% 0.93% -0.07% 0.98% -0.04% 0.13% 0.44% 0.05% 0.56% 4.19% U.S. Loans 2.30% 1.57
Slide 33: CLO Securitisation Performance by Vintage
Blackstone / GSO Loan Financing Limited CLO Securitisation Performance by Vintage CLO securitisations continue to generate positive cashflow, with the weighted average annualised distribution rate increasing quarter over quarter WA Annualised Cash on Cash Distribution Rates European CLO Income Notes
Slide 34: Additional Information
Additional Information CAPITAL PARTNERS
Slide 35: Corporate Funding Structure
Blackstone / GSO Loan Financing Limited Blackstone / GSO Corporate Funding Structure Public Shareholders Private Unitholders (538m Shares) (€673m Committed Capital, 92% Third Parties (495m) €50m Undrawn Capital) 8% Blackstone (43m) BGLF / BGLC BGCF EUR €367.4m NAV / €73.0m NAV €638.9m NAV 39.0% 61.0
Slide 36: Ways To Invest
Blackstone / GSO Loan Financing Limited Ways To Invest Public Shares Private Units Ticker / Share Class BGLF LN BGLP LN Class A Class C Fund Name Blackstone / GSO Loan Financing Ltd. Blackstone / GSO Corporate Funding EUR Fund Description Ordinary Shares QIAIF Units Fund Jurisdiction Jersey Ireland
Slide 37: CLOs Are Securitisations Backed by a Diversified Pool of Senior Secured Loans
Blackstone / GSO Loan Financing Limited CLOs Are Securitisations Backed by a Diversified Pool of Senior Secured Loans A CLO is a special purpose company that issues Payments debt and equity and uses the proceeds to invest in a diversified portfolio of senior secured loans It distributes the cash
Slide 38: Important Disclosure Information
Important Disclosure Information
Slide 39: Important Disclosure Information
Blackstone / GSO Loan Financing Limited Important Disclosure Information BGLF has engaged Blackstone / GSO Debt Funds Management Europe Limited to produce this report and BGLF (including its directors) has not been involved in the production of the report or verified the accuracy of its contents and
Slide 40: Important Disclosure Information (cont'd)
Blackstone / GSO Loan Financing Limited Important Disclosure Information (cont’d) This Presentation does not constitute a financial promotion, investment advice or an inducement or incitement to participate in any product, offering, or investment. It does not constitute or form part of any offer to
Slide 41: Important Disclosure Information (cont'd)
Blackstone / GSO Loan Financing Limited Important Disclosure Information (cont’d) Denmark This document does not constitute a prospectus under any Danish law and has not been filed with or approved by the Danish Financial Supervisory Authority as this document has not been prepared in the context of
Slide 42: Important Disclosure Information (cont'd)
Blackstone / GSO Loan Financing Limited Important Disclosure Information (cont’d) Israel No action has been or will be taken in Israel that would permit a public offering of the Fund, or distribution of this document to the public in Israel. This document has not been approved by the Israel Securiti
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