BARINGS BDC, INC. NOVEMBER 10, 2023
Barings BDC, Inc.
Third Quarter 2023 Earnings Presentation
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 are made and which reflect management's current estimates, projections, expectations or beliefs, and which are subject to risks and uncertainties that may cause actual results or events to differ materially. Forward-looking statements include, but are not limited to, Barings BDC, Inc.'s ("Barings BDC" or the "Company") the Company's distribution levels and frequency of distributions, the Company's share repurchase activity, the ability of Barings LLC to manage the Company and identify investment opportunities, and some of the factors that could cause actual results or events to differ materially from those identified in forward-looking statements are enumerated in the filings the Company makes with the Securities and Exchange Commission (the "SEC"). These statements are subject to change at any time based upon economic, market or other conditions, including with respect to Barings BDC's and its portfolio companies' results of operations and financial condition, and may not be relied upon as investment advice or an indication of Barings BDC's investment intent. Important factors that could cause actual results to differ materially from plans, estimates or expectations included in this presentation include, among others, those risk factors detailed in Barings BDC's annual report on Form 10-K for the fiscal year ended December 31, 2022, filed with the SEC on February 23, 2023, in Barings BDC's subsequently filed quarterly reports on Form 10-Q, and as may be included from time to time in Barings BDC's other filings with the SEC, including current reports on Form 8-K. In addition, there is no assurance that Barings BDC or any of its affiliates will purchase additional shares of Barings BDC at any specific discount levels or in any specific amounts or that the market price of Barings BDC's shares, either absolutely or relative to net asset value, will increase as a result of any share repurchases, or that any repurchase plan will enhance stockholder value over the long term. The Company undertakes no obligation to publicly update forward-looking statements, whether as a result of new information, future events or otherwise, unless required to do so by law.
This presentation contains statistics and other data that has been obtained from or compiled from information made available by third-party service providers. We have not independently verified such statistics or data.
These materials and any presentation of which they form a part are neither an offer to sell, or a solicitation of an offer to purchase, an interest in the Company. The information presented in this presentation is as of September 30, 2023 unless indicated otherwise.
Other 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. Investment involves risk. The value of any investments and any income generated may increase or decrease and are not guaranteed. Past performance is no indication of current or future performance. PAST PERFORMANCE IS NOT NECESSARILY INDICATIVE OF FUTURE RESULTS. Any investment results, portfolio compositions and/or examples set forth in this document are provided for illustrative purposes only and are not indicative of any future investment results, future portfolio composition or investments. The composition, size of, and risks associated with an investment may differ substantially from any examples set forth in this document. No representation is made that an investment will be profitable or will not incur losses. Where appropriate, changes in the currency exchange rates may affect the value of investments. Prospective investors should read the relevant offering documents for the details and specific risk factors of any investment vehicle discussed in this document.
2
A D M A S T E R
-
S
T
A M P
!
2
3
-
3
1
1
7
4
8
5
Agenda
ERIC LLOYD
IAN FOWLER
ELIZABETH MURRAY
BRYAN HIGH
MATTHEW FREUND
3Q 2023 HIGHLIGHTS (LLOYD)
Summary points of the quarter.
BARINGS BDC MARKET UPDATE & INVESTMENT PORTFOLIO (FOWLER)
Update on the portfolio performance.
BARINGS BDC FINANCIALS (MURRAY)
A walk through the balance sheet, income statement, NAV bridge and liquidity.
3
BARINGS OVERVIEW
Who We Are
Barings, a subsidiary of MassMutual, is a global investment manager sourcing differentiated opportunities and building portfolios across public and private fixed income, real estate and specialist equity markets.
External AUM by Region1
EMEA
28%
Americas
42%
Asia | |||
Pacific | |||
Global Headquarters | Investment Offices | Other Locations | 31% |
$347+ B | 1,200+ | 1,800+ |
ASSETS UNDER MANAGEMENT | EXTERNAL CLIENTS | PROFESSIONALS GLOBALLY |
1. Includes third party, external AUM only.
All figures are as of September 30, 2023 unless otherwise indicated. Assets shown are denominated in USD. Percentages may not equal 100 due to rounding.
4
Barings BDC Franchise
Private credit expertise delivering comprehensive exposure to the
Middle Market
with a focus on first lien loans and securities
Sponsor Backed Investments
What is it? Financing the operating companies of issuers Owned by
Private Equity firms
Assets are Directly Originated by the Barings team through proprietary relationships with leading Private Equity firms through the United States and Europe
Typical Terms
- <50% Loan to Value
- Maintenance Covenants
- EBITDA between $15 and $75
Targeted Investment Strategy Mix
5-15%
5-10%
Non-Sponsored Investments
What is it? Financing the Operating Companies of issuers irrespective of ownership. Leverages Barings brand and scale to source optimal risk adjusted return in upper middle market and opportunistic middle market transactions
Typical Terms
- <50% Loan to Value
- Maintenance Covenants
- EBITDA between $25 and $150
75-85%
The above is being shown for illustrative purposes only.
Platform Investments
What is it? BDC investments in two | Typical Terms | |
originators of uncorrelated middle | • LTV < 80% of Liquidation Value | |
market first-lien loans | • | Floating Rate |
• | Highly diversified underlying | |
loan exposures |
5
Third Quarter 2023 Highlights
NET ASSET
VALUE
NET INVESTMENT
INCOME
DIVIDEND
Net asset value (NAV)
as of September 30, 2023, was $11.25 per share as compared to $11.34 as of June 30, 2023
Net investment income for the quarter ended September 30, 2023 was $0.31 per share
The Board of Directors
approved a fourth quarter dividend of $0.26 per share, matching the $0.26 per share in the third quarter
ORIGINATIONS
PORTFOLIO
YIELD
CREDIT
PERFORMANCE
Total originations during the quarter were $138 million, while sales and repayments totaled $104 million, for net deployments of $34 million
The weighted-average portfolio
yield1 as of September 30,
2023 was 11.2%
There were two BBDC-
originated investments on non-accrual. Total non- accruals represent 1.6% of total portfolio at fair value
Data as of September 30, 2023. Refer to slide 16 for fully-reconciled income statement including numbers of shares used to calculate per-share data. 1. Yield is calculated as the weighted average of current coupon rates (USD-equivalent). Excludes equity investments and non-accrual investments
6
Selected Financial Highlights
Balance Sheet Highlights | 3Q 2023 | 2Q 2023 | 1Q 2023 | 4Q 2022 | 3Q 2022 |
Investment Portfolio, at Fair Value | $2,521.6 | $2,505.9 | $2,556.1 | $2,448.9 | $2,332.5 |
Total Debt Outstanding (Principal) | $1,521.1 | $1,497.1 | $1,494.1 | $1,454.1 | $1,376.0 |
Total Net Assets (Equity) | $1,198.2 | $1,207.6 | $1,205.0 | $1,192.3 | $1,228.1 |
Debt-to-Equity Ratio | 1.27x | 1.24x | 1.24x | 1.22x | 1.12x |
Net Debt-to-Equity Ratio | 1.18x | 1.15x | 1.19x | 1.12x | 0.99x |
Income Statement Highlights | |||||
Total Investment Income | $70.8 | $75.3 | $67.2 | $63.5 | $56.3 |
Net Investment Income | $33.3 | $33.6 | $27.5 | $37.6 | $27.9 |
Net Realized Gains/(Losses) | ($17.3) | ($48.5) | ($9.7) | $16.7 | $7.9 |
Net Unrealized Appreciation/(Depreciation) | $2.0 | $55.1 | $22.0 | ($55.7) | ($26.1) |
Net Income | $18.3 | $40.1 | $39.7 | ($1.3) | $9.9 |
Per-Share Data | |||||
Net Asset Value per Share | $11.25 | $11.34 | $11.17 | $11.05 | $11.28 |
Net Investment Income per Share (Basic and Diluted)2 | $0.31 | $0.31 | $0.25 | $0.34 | $0.26 |
Net Income per Share (Basic and Diluted)2 | $0.17 | $0.37 | $0.37 | ($0.01) | $0.09 |
Dividend per share | $0.26 | $0.25 | $0.25 | $0.24 | $0.24 |
Amounts in millions, except per-share data and ratios
- Net of cash and foreign currencies, short-term investments and net unsettled transactions. Refer to slide 21 for a reconciliation of Debt-to-Net Debt and a calculation of Net Debt-to-Equity Ratio.
- Refer to slide 16 for weighted-average shares outstanding for each period.
7
Portfolio Highlights
$2.52B | 335 |
PORTFOLIO SIZE | ISSUER COUNT |
74% | 89% |
SECURED DEBT | FLOATING RATE |
627 BPS | 11.2% |
WEIGHTED | YIELD AT |
AVERAGE SPREAD | FAIR VALUE |
1.6% | 2.3X |
ASSETS ON NON- | WEIGHTED- |
ACCRUAL AT | AVERAGE INT. |
FAIR VALUE | COVERAGE |
As of September 30, 2023. Totals may not foot due to rounding.
Senior Secured Focus
4% 5% | |||
14% | First Lien | ||
Second Lien | |||
4% | Mezzanine | ||
Equity | |||
7% | Structured | ||
67% | JV | ||
Diversified Industry Exposure
Finance & Insurance | ||||
25% | 15% | Services: Business | ||
High Tech Industries | ||||
Healthcare And Pharmaceuticals | ||||
14% | Capital Equipment | |||
3% | Aerospace And Defense | |||
Investment Funds And Vehicles | ||||
4% | ||||
Structured Products | ||||
4% | 12% | |||
Transportation: Cargo | ||||
5% | ||||
Automotive | ||||
5% | 5% | 8% | ||
Other
8
Portfolio Composition
Investment Portfolio by Issuer
- Barings BDC maintains a highly diversified portfolio, with the top issuer accounting for 6.2% of exposure and the top 10 issuers accounting for 21.8%
- Eclipse, the largest asset by market value, is itself supported by a diversified pool of asset backed loans
Eclipse Business | Rocade Holdings |
Capital, LLC, 6.2% | |
LLC, 2.4% | |
Security Holdings | |
B.V., 2.3% | |
Policy Services | |
Company, LLC, 2.0% | |
County of Gallatin | |
MT, 1.7% | |
Sierra Senior Loan | |
Strategy JV I LLC, | |
Top 10 | 1.7% |
Jocassee | |
Issuers: | Partners |
21.8% | LLC, 1.6% |
Shelf Bidco Ltd, | |
1.4% | |
Coastal Marina | |
Holdings, LLC, | |
1.4% | |
Aviation Technical | |
Other Issuers, | Services, Inc., 1.1% |
78.2% |
Investment Portfolio Strategy1
- BBDC's existing investments are substantially consistent with our long-term strategy, as Sponsored and Non-Sponsored corporate issuers accounted for 83% of the BBDC portfolio at 09/30/23
7%
8%
9%
76%
Sponsored Non-Sponsored Other Platform Investments
1. Excludes Swaps and Joint Ventures with substantially similar exposure as the broader portfolio As of September 30, 2023
9
Portfolio Composition Trends
Consistent Focus on Secured Investments
3% | 3% | 3% | 3% | 4% |
6% | 5% | 5% | 5% | 5% |
12% | 12% | 13% | 14% | 14% |
4% | 4% | 4% | 4% | 4% |
8% | 7% | 6% | 6% | 7% |
67% | 69% | 69% | 68% | 67% |
3Q 2022 | 4Q 2022 | 1Q 2023 | 2Q 2023 | 3Q 2023 | ||||||||
First Lien | Second Lien | Mezzanine | Equity | JV | Structured | |||||||
Barings BDC has consistently been comprised largely of secured investments. When accounting for the look through exposure of investments in Eclipse and Rocade; more than 85% of the portfolio is comprised of secured assets
As of September 30, 2023
Active Rotation to Barings Originated Loans
13% | 18% | 12% | 10% | 10% | 10% | 10% | |
4% | 3% | 3% | 3% | 2% | |||
6% |
87% | 84% | 86% | 87% | 87% | 88% |
76% |
MVC Sierra
Acquisition Acquisition
4Q 2020 | 1Q 2022 | 3Q 2022 | 4Q 2022 | 1Q 2023 | 2Q 2023 | 3Q 2023 | |||
Barings Originated | MVC | SIC | |||||||
Barings BDC is driving towards a portfolio focused on secured debt augmented by non-correlated investments
10
Attachments
- Original Link
- Original Document
- Permalink
Disclaimer
Barings BDC Inc. published this content on 09 November 2023 and is solely responsible for the information contained therein. Distributed by Public, unedited and unaltered, on 14 November 2023 15:12:12 UTC.
