Barings BDC Inc (NYSE:BBDC) Q1 2021 Earnings Conference Call May 7, 2021 9:00 AM ET Company Participants Eric Lloyd - Chief Executive Officer Ian Fowler - President & Co-Head-Global Private Finance Jonathan Bock - Chief Financial Officer Conference Call Participants Finian O'Shea - Wells Fargo Kyle Joseph - Jefferies Robert Dodd - Raymond James Casey Alexander - Compass Point Paul Johnson - KBW Operator Greetings. At this time, I would like to welcome everyone to the Barings BDC, Inc. Conference Call for th ...

Financial Data and Key Metrics Changes - The net asset value (NAV) per share increased by $0.02 to $10.99 in Q4 2020, driven by net unrealized appreciation in the investment portfolio, partially offset by dilution from the MVC Capital acquisition [7][25] - The actual net asset value rose from approximately $526 million at September 30 to almost $718 million at December 31, providing increased leverage and investment capacity [8] - Net investment income increased from $0.17 per share in Q3 to $0.19 per share in Q4, attributed to net new Barings originated investments totaling $332 million [9][29] Business Line Data and Key Metrics Changes - Net new middle market investments totaled $393 million in Q4, with gross fundings of $528 million, partially offset by sales repayments of $135 million [15] - The investment portfolio at fair value grew to almost $1.5 billion at year-end, with a $380 million increase that included a $140 million decrease in short-term cash investments [11] - The portfolio was diversified, with no single investment exceeding 2.5% of the total portfolio, and the top 10 investments representing only 21% of the total [23] Market Data and Key Metrics Changes - Broadly syndicated loan prices continued to increase, returning to pre-COVID levels, while BDC equities ended 2020 with a 21% decline [6] - Direct lending spreads tightened across different lending subsectors as volumes increased, with over 70% of middle market fundings occurring in Q4 2020 [19] - The company reported a weighted average first lien leverage of 5.2x, consistent with previous quarters [21][55] Company Strategy and Development Direction - The company aims to rotate its portfolio from broadly syndicated loans to directly originated assets, believing this will lead to long-term NAV per share accretion [7][12] - The focus on maintaining a diverse capital structure with a mix of secured and unsecured debt is intended to provide flexibility during market volatility [30][32] - The company is positioned to take advantage of a wide investment frame of reference, allowing it to participate in differentiated deal flow across public and private markets [13][36] Management's Comments on Operating Environment and Future Outlook - Management expressed confidence in the resilience and performance of the portfolio, noting that most businesses were deemed essential and performed well during COVID [54] - The expectation for 2021 includes a high likelihood of increased prepayment velocity, which could provide a near-term earnings lift from the recognition of unamortized fees [35] - The company anticipates continued strong activity in both the U.S. and European markets, with a focus on maintaining credit quality and leveraging its international presence [62] Other Important Information - The company completed the MVC Capital acquisition, which is expected to enhance its investment capacity and portfolio quality [5][12] - The company plans to initiate a stock repurchase program for up to $15 million of common stock once regulatory requirements are met [26] - The total investment portfolio is now composed of 82% first lien investments, down from 92% at the end of Q3, primarily due to the MVC Capital acquisition [22] Q&A Session Summary Question: Context on portfolio rotation benefits - Management highlighted that the current MVC Capital assets are performing as expected, and liquidity generation through transactions will support future rotation opportunities [44] Question: Revenue and EBITDA growth trends - Management noted that the portfolio's revenue and EBITDA trends are flat to up, with no non-accruals, indicating strong credit performance across the portfolio [54][55] Question: Expectations for cross-platform investments - Management indicated that cross-platform investments represent about 15% of the portfolio, and the focus will remain on maximizing illiquidity and complexity premiums [60] Question: Dividend expectations from the JV, Jocassee - Management acknowledged that while Jocassee has performed well, it has not yet generated dividends, and future expectations will depend on the JV's performance [66]

Barings BDC Inc. (NYSE:BBDC) Q3 2020 Earnings Conference Call November 10, 2020 9:00 AM ET Company Participants Eric Lloyd - Chief Executive Officer Ian Fowler - President & Co-head of Global Private Finance Jonathan Bock - Chief Financial Officer Brian High - Barings Head of U.S. Special Situations & Co-Portfolio Manager Conference Call Participants Fin O'Shea - Wells Fargo Robert Dodd - Raymond James Ryan Lynch - KBW Casey Alexander - Compass Point Kyle Joseph - Jefferies Bryce Rowe - Robert W. Baird Oper ...

Financial Performance - Net asset value (NAV) as of September 30, 2020, was $10.97 per share, compared to $10.23 as of June 30, 2020[11] - Net investment income for the quarter ended September 30, 2020, was $0.17 per share[11] - The Board of Directors approved a fourth-quarter dividend of $0.17 per share, up from $0.16 in the prior quarter[11] - Total investment income was $16329142[45] Portfolio Composition and Yield - The weighted-average portfolio yield as of September 30, 2020, was 4.3% for Initial BSL, 6.1% for Middle-Market Loans (MML), and 8.2% for Cross-Platform investments[11] - As of quarter end, 4.4% of MML were priced below 90% of cost, 9.0% of Initial BSL were priced below 80% of cost, and 2.5% of Cross-Platform investments were priced below 80% of cost[11] - Total investments at fair value were $11163 million as of September 30, 2020[12] Investment Activity - Total originations during the quarter were $145 million, while sales and repayments totaled $252 million, predominately from the Initial Broadly-Syndicated Loan (BSL) portfolio[11] - Middle-Market Loans saw a net increase in investments of $53.1 million, including $79.9 million in seven new portfolio companies[25] - Cross-Platform Investments experienced a net increase of $49.5 million with no sales[25] - From October 1, 2020, through November 3, 2020, Barings BDC made approximately $155.4 million of new commitments, of which approximately $130.6 million closed and funded[59]

Financial Performance - Total investment income for the nine months ended September 30, 2020, was $51,148,504, a decrease from $57,245,553 for the same period in 2019, reflecting a decline in LIBOR and average portfolio size[251]. - Total operating expenses for the nine months ended September 30, 2020, were $29,365,140, down from $33,888,209 in 2019, indicating improved cost management[253]. - Net investment income for the nine months ended September 30, 2020, was $21,783,364, compared to $23,357,344 in 2019, showing a slight decline[251]. - The company reported net realized losses of $37,323,454 for the nine months ended September 30, 2020, compared to losses of $1,063,250 in the same period of 2019, indicating increased volatility in investment performance[251]. - Total investment income for the three months ended September 30, 2020, was $16,329,142, a decrease of 15.5% compared to $19,304,107 for the same period in 2019[252]. - Total operating expenses for the three months ended September 30, 2020, were $8,368,976, down 26.3% from $11,316,932 in the prior year[253]. - Net realized losses for the three months ended September 30, 2020, amounted to $20,506,085, compared to $983,499 in the same period of 2019[258]. - The decrease in investment income was primarily due to a reduction in LIBOR and the average size of the portfolio[252]. Investment Portfolio - As of September 30, 2020, the total value of the investment portfolio was $1,116.3 million, down from $1,173.6 million as of December 31, 2019[242]. - The investment portfolio consisted of 115 portfolio companies as of September 30, 2020, compared to 147 as of December 31, 2019[242]. - The company made 47 new investments totaling $263.9 million during the nine months ended September 30, 2020[245]. - The company sold $307.4 million of loans during the nine months ended September 30, 2020, recognizing a net realized loss of $36.4 million[245]. - The company had 15 loans repaid at par totaling $58.5 million during the nine months ended September 30, 2020[245]. - The company had no non-accrual assets as of September 30, 2020, and December 31, 2019, indicating strong credit quality in the loan portfolio[249]. - The company had investments in senior debt and 1st lien notes valued at $833.1 million, representing 75% of the total portfolio fair value as of September 30, 2020[244]. Debt and Financing - As of September 30, 2020, the company had U.S. dollar borrowings of $325.0 million under the February 2019 Credit Facility with a weighted average interest rate of 2.188%[275]. - The total fair value of the borrowings outstanding under the February 2019 Credit Facility was $463.7 million as of September 30, 2020[276]. - The company completed a term debt securitization of $449.3 million on May 9, 2019, which included $296.8 million of AAA(sf) Class A-1 Senior Secured Floating Rate 2019 Notes[277]. - The company issued $50.0 million in Series A senior unsecured notes due August 2025 with a fixed interest rate of 4.66% per year[282]. - The company repaid the 2019 Notes in full on October 15, 2020[292]. - The company is obligated to offer to repay the August 2025 Notes at par if certain change in control events occur[282]. - The total unused commitments to extend financing as of September 30, 2020, amounted to $134,303,981, an increase from $89,496,985 on December 31, 2019[316]. COVID-19 Impact - The COVID-19 pandemic may lead to financial distress for certain portfolio companies, potentially resulting in defaults and impairments on investments[225]. - The company cannot predict the full impact of the COVID-19 pandemic on its financial condition and results of operations in the future[229]. - The company is monitoring the impacts of the COVID-19 pandemic, which may adversely affect future net investment income and the fair value of portfolio investments[229]. - The company has been operating under a 100% remote-working model due to COVID-19, ensuring service levels to partners and clients are maintained[222]. Merger Agreement - The merger agreement with MVC Capital, Inc. includes a cash consideration of $0.39492 per share and an exchange ratio of 0.94024 shares of the company's common stock[236]. - The company anticipates the consummation of the first step of the merger with MVC Capital during the fourth quarter of fiscal year 2020[239]. - The merger agreement includes termination rights, with potential fees of approximately $2.94 million payable to the company under certain conditions[241]. - The merger agreement prohibits MVC from soliciting alternative transaction proposals without certain conditions being met[238]. - The total value of the consideration to be received by MVC stockholders is subject to adjustments based on various factors, including outstanding shares and tax dividends[236]. Valuation and Commitments - The company utilizes an Income Approach model for valuing its private debt investment portfolio, primarily consisting of middle-market senior secured loans with floating reference rates[311]. - The fair value of investments is determined using Level 3 inputs when quoted prices or other inputs from Level 1 and Level 2 are not available[301]. - The company engages an independent valuation firm to perform limited procedures for third-party valuation consulting services at the end of each fiscal quarter[305]. - The independent valuation firm performed procedures on 66 senior secured, middle-market investments, representing 100% of the total investments at fair value as of September 30, 2020[306]. - The company has committed to monitoring market interest rate changes, which could impact gross investment income due to a prolonged reduction in interest rates[228].