Barings(BBDC)2024-11-06 21:20Investment Portfolio - As of September 30, 2024, the total value of the investment portfolio was $2,416.7 million, down from $2,488.7 million as of December 31, 2023[358]. - The company had investments in 328 portfolio companies with an aggregate cost of $2,446.9 million as of September 30, 2024, compared to 336 portfolio companies with an aggregate cost of $2,535.6 million as of December 31, 2023[358]. - The total investment portfolio fair value was $2,416,714,000, a decrease from $2,488,715,000 on December 31, 2023[360]. - The total fair value of investments in joint ventures and private equity funds was $104,243,000 as of September 30, 2024, down from $110,066,000 at the end of 2023[360]. - The fair value of investments categorized as Risk Rating 1 increased to $250,611,000 (10.5% of total portfolio) as of September 30, 2024, compared to $207,279,000 (8.5%) at the end of 2023[370]. - The fair value of investments in Risk Rating Category 2 decreased to $1,542,076,000 (65.0%) from $1,787,077,000 (73.0%)[370]. Investment Income - The company generates revenues primarily from interest income, loan origination fees, and dividend income from debt securities[350]. - Total investment income for the three months ended September 30, 2024, was $70.851 million, slightly up from $70.846 million in the same period of 2023[383]. - Net investment income after taxes for the three months ended September 30, 2024, was $30.185 million, compared to $33.309 million for the same period in 2023[383]. - Dividends from portfolio companies for the three months ended September 30, 2024, were $9.8 million, up from $8.5 million in the same period of 2023[384]. - Total recurring fee and other income for the three months ended September 30, 2024, was $2,322,000, compared to $2,258,000 for the same period in 2023, reflecting a 2.83% increase[472]. - Total non-recurring fee and other income for the three months ended September 30, 2024, was $1,967,000, significantly higher than $392,000 for the same period in 2023[472]. - Total fee and other income for the nine months ended September 30, 2024, reached $11,532,000, compared to $10,250,000 for the same period in 2023, indicating a 12.47% increase[472]. Expenses and Losses - Total operating expenses for the three months ended September 30, 2024, were $39.633 million, an increase from $37.125 million in the same period of 2023[385]. - The company experienced a net realized loss of $12.6 million from the restructuring of investments in two portfolio companies during the nine months ended September 30, 2024[361]. - Net realized losses for Q3 2024 totaled $10.9 million, primarily from an $8.5 million loss on the investment portfolio and a $2.9 million loss on forward currency contracts[396]. - During the nine months ended September 30, 2024, net realized losses amounted to $24.3 million, with $17.6 million from the investment portfolio and $7.5 million from forward currency contracts[396]. - The company reported a net loss on its investment portfolio of $62.1 million for the nine months ended September 30, 2023, primarily due to a $43.6 million loss on debt investments[397]. Debt and Borrowings - The company had U.S. dollar borrowings of $131.0 million outstanding under the February 2019 Credit Facility, with a weighted average interest rate of 7.105%[410]. - The fair value of the borrowings outstanding under the February 2019 Credit Facility was $347.8 million as of September 30, 2024[411]. - The company issued $50.0 million in aggregate principal amount of Series A senior unsecured notes due August 2025, with a fixed interest rate of 4.66% per year[412]. - The Series B Notes and Series C Notes under the November 2020 NPA have fixed interest rates of 4.25% and 4.75% per year, respectively[417]. - The company had net repayments under the February 2019 Credit Facility totaling $377.1 million during the nine months ended September 30, 2024[404]. - The February 2019 Credit Facility was increased to $1,065.0 million as of April 1, 2022, with a maturity date extended to February 21, 2026[406]. Share Repurchase and Distributions - The company authorized a share repurchase program allowing for the repurchase of up to $30.0 million of common stock, which terminated on March 1, 2024[440]. - During the nine months ended September 30, 2024, the company did not repurchase any shares under the share repurchase program[440]. - The company authorized a new 12-month share repurchase program allowing for the repurchase of up to $30.0 million of common stock starting March 1, 2024[441]. - The company intends to pay quarterly distributions to stockholders, with a declared distribution of $0.26 per share payable on December 11, 2024[449]. Risk Management - The company is exposed to foreign currency fluctuations, with investments translated into U.S. dollars based on spot rates[495]. - Interest rate risk management systems are in place to monitor and hedge against fluctuations, utilizing instruments like interest rate swaps and options[494]. - The complexity of transitioning away from LIBOR could materially affect the company's financial condition and operations[492]. - A hypothetical increase of 300 basis points in interest rates could result in a net income increase of $36.121 million, while a decrease of 50 basis points could lead to a net income decrease of $6.020 million[496]. Investment Strategy - The company focuses on investing in senior secured private debt investments in well-established middle-market businesses across various industries[348]. - The company employs a strategy that targets investments with relatively low levels of cyclicality and operating risk, enhancing returns through prudent leverage[349]. - The company must distribute at least 90% of its investment company taxable income (ICTI) to maintain its status as a regulated investment company (RIC)[445]. - The company has historically met its minimum distribution requirements and continually monitors compliance with the Code[443].