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 June 30, 2020 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 numb ...

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, 2020 OR ¨ TRANSITION REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934 For the transition period from to | --- | --- | |---- ...

Barings BDC Inc (NYSE:BBDC) Q4 2019 Earnings Conference Call February 28, 2020 9:00 AM ET Company Participants Eric Lloyd - Chief Executive Officer Ian Fowler - President & Co-Head of Global Private Finance Tom McDonnell - Managing Director & Portfolio Manager of Barings Global High Yield Jonathan Bock - Chief Financial Officer Conference Call Participants Finian O'Shea - Wells Fargo Kyle Joseph - Jefferies Robert Dodd - Raymond James Casey Alexander - Compass Point Robert Brock - West Family Investments Op ...

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, 2019 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. | --- | --- | |----------------------------------------------------- ...

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 September 30, 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) increased from $11.52 per share at March 31 to $11.59 per share on June 30 [9] - Net investment income decreased slightly to $0.15 per share for the second quarter from $0.16 in the first quarter [9][10] - The leverage ratio remained consistent at 1.09x, with net unrealized appreciation on the portfolio of $1.9 million [12][25] Business Line Data and Key Metrics Changes - The middle-market portfolio grew to $352 million, primarily consisting of 28 first lien debt investments and 2 second lien term loans [17] - Seven new middle-market debt investments totaling $67 million were made during the quarter, with total investments of $80 million [10][15] - The average yield for the middle-market portfolio decreased from 7.8% to 7.5% [17] Market Data and Key Metrics Changes - Liquid credit spreads were relatively flat from March 31 to June 30, leading to consistent BDC stock prices [8] - Average spreads for broadly syndicated loans were down slightly to 327 basis points, with yields at 5.8% [16] - The illiquidity premium for middle-market lenders is at all-time lows, affecting competitive dynamics in the market [19] Company Strategy and Development Direction - The company aims to maintain a focus on quality investments and has set a reasonable expectation for average quarterly deployments around $100 million [11] - A joint venture with the State of South Carolina Retirement System is expected to enhance shareholder returns through effective asset management [7][27] - The company emphasizes a disciplined approach to credit and diversification in its investment strategy [19][20] Management's Comments on Operating Environment and Future Outlook - Management noted that the latter half of the second quarter saw slower deal activity but anticipates increased deal flow as summer progresses [15] - The competitive environment has intensified, with more private debt managers entering the market, making it challenging to secure attractive deals [46] - Management remains committed to delivering steady and stable operating results to build investor trust [7] Other Important Information - The share repurchase program aims to buy back up to 2.5% of outstanding shares when trading below NAV, with approximately 1.9% already repurchased [13] - The company announced a third-quarter dividend of $0.14 per share, marking the fourth consecutive increase [26] Q&A Session Summary Question: On portfolio rotation and refinancing pipeline - Management indicated that the market has improved post-quarter end, with fewer outflows from mutual funds and strong CLO demand boosting prices [31] - The improvement in BSL prices will not necessarily lead to enhanced allocations for middle-market investments due to the allocation policy being based on gross commitments [32] Question: On upfront fees for capital structuring services - The advisor does not retain a portion of upfront fees; these fees are passed on to investors as part of the economic consideration [34] Question: On asset yields and competitive behavior - The decrease in total yield is primarily driven by LIBOR movements rather than spread compression [42] - The competitive environment has become more challenging, with an increase in the number of managers competing for deals [46] Question: On joint venture ramp-up and expected ROE - The joint venture is expected to ramp up slowly over 10 quarters, with a focus on generating good returns without rushing [62] Question: On the mix of commitments and yields - The commitments made were primarily due to timing, with expectations for closing within a short timeframe [58] - The yield on new commitments was influenced by a unique capital structure opportunity, not indicative of a broader market shift [60]

Investment Portfolio and Transactions - The company sold its investment portfolio for gross proceeds of $981.2 million in cash as part of the Asset Sale Transaction[192]. - Barings invested $100.0 million in newly issued shares at net asset value, and purchased an additional $50.0 million in shares over a two-year period[192]. - As of June 30, 2019, Barings owned 13,639,681 shares, representing 27.1% of the total shares outstanding[197]. - As of June 30, 2019, the total value of the investment portfolio was $1,200.6 million, an increase from $1,121.9 million as of December 31, 2018[212]. - During the six months ended June 30, 2019, the company made new middle-market debt investments totaling $130.1 million and purchased $3.6 million in syndicated senior secured loans[214]. - The company sold $10.8 million in money market fund investments during the six months ended June 30, 2019[214]. - As of June 30, 2019, the investment portfolio consisted of 142 portfolio companies, with no single investment exceeding 10% of the total fair value[212]. - During the six months ended June 30, 2019, Barings BDC repurchased a total of 969,789 shares of common stock at an average price of $9.95 per share[253]. - Subsequent to June 30, 2019, Barings BDC made approximately $70.1 million of new middle-market private debt commitments, with $33.0 million closed at a weighted average yield of 8.9%[257]. Financial Performance - Total investment income for the six months ended June 30, 2019, was $37.9 million, compared to $51.5 million for the same period in 2018[220]. - Net investment income for the six months ended June 30, 2019, was $15.4 million, down from $22.8 million in the prior year[220]. - The company recognized a net realized loss of $79,751 during the six months ended June 30, 2019, compared to a net realized loss of $44.5 million in the same period of 2018[220]. - Total investment income for the three months ended June 30, 2019, was $19.6 million, a decrease of 23.3% compared to $25.5 million for the same period in 2018[221]. - The weighted average yield on investments decreased to 6.0% as of June 30, 2019, down from 8.7% as of June 30, 2018[221]. - Net realized gains for the three months ended June 30, 2019, were $50,024, compared to net realized losses of $37.2 million for the same period in 2018[228]. - Net unrealized appreciation for the three months ended June 30, 2019, was $1.9 million, compared to $43.0 million for the same period in 2018[232]. Debt and Financing - As of June 30, 2019, Barings BDC had borrowings of $210.5 million outstanding under the August 2018 Credit Facility with an interest rate of 3.612%[240]. - The February 2019 Credit Facility had initial commitments totaling $800.0 million, with an accordion feature allowing for an increase of up to $400.0 million[241]. - As of June 30, 2019, Barings BDC had borrowings of $75.0 million outstanding under the February 2019 Credit Facility with a weighted average interest rate of 4.963%[245]. - The Debt Securitization completed on May 9, 2019, involved approximately $296.8 million of AAA(sf) Class A-1 Senior Secured Floating Rate 2019 Notes[246]. - As of June 30, 2019, Barings BDC had borrowings of $296.8 million under the Class A-1 2019 Notes with an interest rate of 3.544%[249]. - Borrowings under the August 2018 Credit Facility could see an annual interest expense change of up to $4.2 million with a 200 basis point interest rate shift, based on outstanding borrowings as of June 30, 2019[290]. - The February 2019 Credit Facility could result in a maximum annual interest expense change of $1.5 million from a 200 basis point interest rate change, based on outstanding borrowings as of June 30, 2019[291]. - The Class A-1 and Class A-2 2019 Notes have floating rate interest provisions based on three-month LIBOR, with a potential annual interest expense fluctuation of $7.0 million from a 200 basis point change in interest rates[294]. Cash Flow and Liquidity - Cash on hand as of June 30, 2019, was $12.9 million, a significant decrease from $216.5 million as of June 30, 2018[235]. - Operating activities used $32.7 million in cash during the six months ended June 30, 2019, primarily due to portfolio investments of $171.4 million[235]. - Financing activities provided $33.2 million of cash during the six months ended June 30, 2019, mainly from net proceeds of $348.3 million from debt securitization[235]. - The company anticipates that current cash and cash equivalents, along with available borrowing capacity, will be adequate to meet cash needs for daily operations for at least the next twelve months[234]. Valuation and Accounting Estimates - The company has identified investment valuation and revenue recognition as its most critical accounting estimates[260]. - As of June 30, 2019, the total number of senior secured, middle-market investments reviewed by an independent valuation firm was 22, representing 100% of the total investments at fair value[272]. - The company utilizes Level 3 inputs for fair value measurements of certain debt and equity instruments of privately held companies, which may differ significantly from fair values in an active market[265][266]. - The fair value of investments is determined using an Income Approach model, which considers changes in the credit profile of the borrower and the discount margin of the baseline index[277][278]. - The Enterprise Value Waterfall model is used to estimate the fair value of equity securities, relying on transaction multiples and financial performance measures such as Adjusted EBITDA[279][281]. - The company maintains internal controls and procedures for pricing and valuation, with an annual review conducted by the Pricing Committee[268]. - The independent valuation firm concluded that the fair value of investments subjected to their procedures appeared reasonable[273]. - The company’s valuation methodologies are reviewed and updated regularly to adapt to changes in the marketplace[268]. Market Risks - The company's debt portfolio investments, totaling approximately $1,191.2 million, bear interest at variable rates, primarily LIBOR-based, with a potential annual investment income fluctuation of $23.8 million from a hypothetical 200 basis point change in interest rates[289]. - The company is exposed to market risks including interest rate fluctuations, which could materially affect net investment income if not matched by corresponding increases in interest income[295]. - The company may have foreign currency exposure related to certain investments, which are translated into U.S. dollars based on spot rates at each balance sheet date[296].