Financial Data and Key Metrics Changes - The company's NAV increased by 4.9% to $11.52 per share, primarily driven by the recovery in credit spreads, which positively impacted the fair value of the broadly syndicated loan portfolio [9][10][20] - Net investment income was $0.16 per share, consistent with the previous quarter and exceeding the first quarter dividend of $0.12 per share [10][20] - The company reported $25.4 million of net unrealized depreciation, recovering a significant portion of the $52.3 million unrealized depreciation recorded in the fourth quarter [11][20] Business Line Data and Key Metrics Changes - The middle market portfolio increased to $289 million at quarter end, with investments totaling $65 million made during the quarter [10][15] - The broadly syndicated loan (BSL) portfolio consisted of approximately $838 million, with a diversified portfolio of 111 investments across multiple industries [16] - The middle market portfolio was spread across 25 companies, up from 19 at the end of 2018, with a median EBITDA size of approximately $34 million [17] Market Data and Key Metrics Changes - The first quarter saw a modest recovery in BDC stock prices, reflecting the increase in credit spreads, despite a slight market weakening in March [8][9] - Average spreads in the middle market remained stable, with first lien spreads at 501 basis points and yields at 7.8% [17][18] - The overall leverage in the market showed slight increases, with senior leverage for the BSL portfolio remaining consistent at a weighted average of 4.9 times senior debt to EBITDA [16][19] Company Strategy and Development Direction - The company aims to repurchase up to 2.5% of outstanding shares trading below NAV and up to 5% if trading below 0.9 of NAV, reflecting a commitment to shareholder alignment [13] - A joint venture with the State of South Carolina Retirement System was announced, aiming to diversify the asset pool and enhance risk-adjusted returns [24][25] - The focus remains on maintaining a predominantly first lien senior secured strategy while exploring opportunities across various asset classes [17][19] Management's Comments on Operating Environment and Future Outlook - Management noted that the earnings pressure from the new credit facility is expected to be temporary as they leverage the credit line effectively [10][20] - The company remains optimistic about the recovery of unrealized losses and the overall performance of the portfolio, with continued improvements expected in the second quarter [11][45] - Management emphasized the importance of maintaining attractive credit spreads and not chasing yield, even in a fluctuating LIBOR environment [33][34] Other Important Information - The company has experienced a significant increase in operational capacity with the new $800 million corporate credit facility, which is expected to enhance liquidity [12][20] - The share repurchase program has already seen approximately 1.5% of outstanding shares purchased, demonstrating the company's commitment to capital allocation [13] Q&A Session Summary Question: Follow-up on the joint venture and its rationale - Management clarified that the joint venture allows for investments in both non-qualified and qualified assets, enhancing diversification and return potential [30] Question: Managing downside risk with LIBOR trends - Management stated that they continue to implement 1% LIBOR floors in deals and do not focus on fixed-rate deals, maintaining a floating rate approach [33] Question: Funding plans for the attractive pipeline in middle market deals - Management indicated a balanced approach between BSL sales and leveraging existing debt capacity to fund new investments [36] Question: Clarification on unrealized loss recovery - Management explained that they have recovered approximately half of the unrealized loss from the previous quarter, with ongoing improvements noted [45] Question: Static CLO structure and its implications - Management confirmed that the static CLO allows for limited flexibility in asset sales but provides lower financing costs and matches the duration of liabilities with assets [66] Question: Goals for the joint venture and expected returns - Management emphasized that the joint venture is primarily about diversification and risk-adjusted returns rather than simply boosting ROE [58]

Table of Contents UNITED STATES SECURITIES AND EXCHANGE COMMISSION Washington, D.C. 20549 __________________________________________________________ Form 10-Q __________________________________________________________ (Mark One) ý QUARTERLY REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934 For the quarterly period ended March 31, 2019 OR ¨ TRANSITION REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934 For the transition period from to | --- | --- | |---- ...

Financial Data and Key Metrics Changes - The company's net asset value (NAV) decreased by 7.8% to $10.98 per share, primarily due to unrealized losses from credit spread movements [10][21] - Net investment income for the fourth quarter was $0.16 per share, an increase from $0.06 per share in the third quarter, exceeding the fourth quarter dividend of $0.10 per share [12][21] - The investment portfolio totaled over $1.1 billion, supported by $570 million in borrowings under the broadly syndicated loan portfolio [13][22] Business Line Data and Key Metrics Changes - The middle market portfolio saw significant growth, with 13 new investments totaling $162 million, bringing the total value to over $230 million by year-end [12][14] - The company invested approximately $846 million in liquid, broadly syndicated loans and $249 million in private middle market loans as of December 31 [15][16] - Over 20% of the total portfolio is now comprised of middle market loans, with 19 investments across 12 industries [16][17] Market Data and Key Metrics Changes - The fourth quarter experienced significant volatility, with liquid credit markets and BDC stock prices declining by approximately 4.5% and 15% respectively [7][9] - Senior and unit tranche spreads remained relatively flat, while mezzanine spreads tightened and second lien spreads widened due to market volatility [18] Company Strategy and Development Direction - The company aims to focus on quality investments with appropriate risk-adjusted returns, emphasizing a predominantly first lien, senior secured debt strategy [19][60] - A share repurchase plan was approved, targeting to repurchase 2.5% of outstanding shares when trading below NAV, and 5% if trading below 0.9 NAV [28][29] - The company is exploring a joint venture with an institutional investor, which could provide differentiated returns to shareholders [25] Management's Comments on Operating Environment and Future Outlook - Management noted that the underlying performance of portfolio companies remains strong despite market sell-offs, indicating resilience in fundamentals [9][10] - The company does not attempt to time the market but focuses on underwriting deals assuming economic and credit cycles [42] - Management expressed confidence in the ability to find quality transactions despite current market conditions [19][60] Other Important Information - The company has entered into an $800 million corporate revolving credit facility to support its middle market portfolio expansion [13][22] - Approximately 60% of unrealized losses from the fourth quarter have been recovered in early 2019 [13][21] Q&A Session Summary Question: Insights on new buybacks and market dislocation - Management discussed the mechanics of the buyback program and emphasized a long-term approach to purchasing shares below NAV [35][37] Question: Concerns about tech deals and leverage levels - Management acknowledged the high leverage levels in tech deals but highlighted the strong credit fundamentals of technology companies [39] Question: Economic outlook and underwriting strategy - Management stated that they do not time the market and focus on risk-adjusted returns, evaluating second lien opportunities based on multiple factors [42][43] Question: Portfolio structure and second lien growth - Management confirmed a focus on first lien investments but will opportunistically consider second lien investments if they present attractive risk-adjusted returns [60][61] Question: Impact of LIBOR increases on portfolio yield - Management emphasized the importance of portfolio diversification and maintaining LIBOR floors to manage downside risk [45][47] Question: Future funding sources and potential securitization - Management expressed openness to exploring securitization as a funding source to drive lower costs of liabilities [57]

UNITED STATES SECURITIES AND EXCHANGE COMMISSION Washington, D.C. 20549 Form 10-K (Mark One) (Address of principal executive of ices) þ ANNUAL REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934 For the fiscal year ended December 31, 2018 OR ¨ TRANSITION REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934 For the transition period from to Commission file number 814-00733 Barings BDC, Inc. | --- | --- | |----------------------------------------------------- ...