Investment Portfolio - As of September 30, 2023, the company had investments in 72 portfolio companies with an aggregate fair value of approximately $1,278 million and unfunded commitments of $109 million[179]. - The portfolio consisted of 97.7% first lien senior secured loans, 1.7% junior debt, and 0.6% equity investments[179]. - The largest industries in the portfolio were Trading Companies & Distributors (13.8%), Food Products (10.9%), and Commercial Services & Supplies (10.5%) based on fair value[181]. - The average position size based on commitment was $19.5 million, with a weighted average and median last twelve months (LTM) EBITDA of $55.8 million and $43.4 million, respectively[182]. - The weighted average loan-to-value (LTV) of debt investments at the time of initial investment was 44.5%[183]. - As of September 30, 2023, the company had one investment on non-accrual status, comprising 1.9% of total debt investments at cost[184]. Investment Income and Expenses - Total investment income for the three months ended September 30, 2023, was $41.2 million, a 100% increase from $20.5 million in the same period of 2022[199]. - Net investment income for the three months ended September 30, 2023, was $21.4 million, compared to $11.3 million for the same period in 2022, reflecting an increase of 89%[199]. - Total expenses for the three months ended September 30, 2023, were $19.8 million, significantly higher than $9.2 million in the same period of 2022, marking a 115% increase[201]. - Interest and debt financing expenses for the three months ended September 30, 2023, were $13.9 million, up from $5.5 million in the same period of 2022, reflecting a 153% increase[201]. - Investment income for the nine months ended September 30, 2023, totaled $118.3 million, up from $45.4 million in the same period of 2022, representing a 160% increase[200]. - Net investment income for the nine months ended September 30, 2023, was $62.4 million, compared to $24.6 million for the same period in 2022, indicating a 154% increase[199]. Unrealized Gains and Losses - Net unrealized losses on investments for the three months ended September 30, 2023, were $(7.5) million, compared to unrealized gains of $3.3 million in the same period of 2022[204]. - The total unrealized appreciation (depreciation) for the three months ended September 30, 2023, was $(7.5) million, compared to $7.3 million in unrealized gains for the same period in 2022[204]. - The top contributor to unrealized gains for the three months ended September 30, 2023, was Genuine Cable Group, LLC, with $0.7 million[205]. - Total unrealized appreciation (depreciation), net for the nine months ended September 30, 2023, was $(8.1) million, reflecting a challenging investment environment[208]. Financial Position and Commitments - As of September 30, 2023, the company had $75 million in senior unsecured notes outstanding and $523 million borrowed under credit facilities, with cash and cash equivalents of $29 million[212]. - The asset coverage ratio was 214% as of September 30, 2023, compared to 203% as of December 31, 2022, indicating strong leverage management[210]. - The company has aggregate capital commitments of $988.2 million, with $329.9 million undrawn from investors, representing 66.6% funding[213]. - The Corporate Credit Facility has a total commitment of $400 million, with a potential increase to $550 million under certain conditions[214]. - The Revolving Funding Facility has a total commitment of $455 million, with a maturity date of February 18, 2027[216]. - The company expects cash and cash equivalents, along with undrawn capital commitments, to be sufficient for anticipated investment activities over the next twelve months[211]. - The company has $598 million in total contractual obligations related to outstanding indebtedness as of September 30, 2023[218]. - The company anticipates that its cash and liquidity needs will continue to be met by cash generated from ongoing operations and financing activities beyond twelve months[211]. Management and Fees - The Investment Advisory Agreement was renewed for one year through March 15, 2024, with payments consisting of a base management fee and an incentive fee based on performance[230]. - The base management fee is calculated as a percentage of the fair market value of investments, excluding cash and certain securities[231]. - The Administration Agreement was also renewed for one year through March 15, 2024, with the Administrator reimbursed for administrative expenses incurred[233]. - The Administrator has engaged U.S. Bank Global Fund Services and Ultimus Fund Solutions, LLC for sub-administration services effective in 2023[233]. - Incentive fees earned by the Advisor will only be payable upon an Exchange Listing or sale of the company[232]. Interest Rate Sensitivity - Interest rate sensitivity indicates that net investment income may be adversely affected by changes in interest rates due to the use of borrowings for investments[235]. - A hypothetical decrease of 200 basis points in interest rates would result in a decrease of $14.7 million in net investment income[237]. - Conversely, a hypothetical increase of 200 basis points in interest rates would lead to an increase of $14.7 million in net investment income[237]. - The company may use hedging instruments to mitigate interest rate fluctuations, but this could limit benefits from lower interest rates[238]. - The company does not include non-accrual and non-income producing investments in its interest rate sensitivity calculations[236].
Kayne Anderson BDC, Inc.(KBDC) - 2023 Q3 - Quarterly Report