Document


Investment Portfolio and Balance Sheet
(dollars in millions, except per share data)	As of June 30, 2021		As of March 31, 2021		As of December 31, 2020
Investment portfolio at fair value	$1,575.1		$1,602.1		$1,495.8
Weighted average yield on performing debt investments, excluding short-term investments (at principal amount)	7.4	%	7.2	%	7.1	%


Total assets	$1,806.3		$1,727.1		$1,677.0
Debt outstanding (principal)	$1,043.5		$986.1		$944.7
Total net assets (equity)	$744.1		$727.9		$717.8
Net asset value per share	$11.39		$11.14		$10.99
Debt-to-equity ratio	1.40x		1.35x		1.32x
Net debt-to-equity ratio (adjusted for unrestricted cash, short-term investments and net unsettled transactions)	1.14x		1.14x		1.04x

Commenting on the quarter, Eric Lloyd, Chief Executive Officer, stated “The second quarter remained very active across our sponsor finance and cross platform investment strategies, and this activity continued to generate stable and consistent results. Underlying portfolio trends remain strong, NAV per share continues to increase, and our wide frame of investment reference across various private asset classes remains a unique competitive advantage as markets continue to become more competitive.”

Jonathan Bock, Chief Financial Officer, stated “At $0.22 per share of net investment income, Barings BDC continues to meet its long-term earnings target of 8.0% on NAV per share. This strong earnings profile, when combined with our best in class fee structure, provides for further earnings stability as Barings’ pre-incentive fee net operating income exceeds our 8.0% hurdle rate. As a result, I am happy to announce that our Board of Directors declared a dividend increase of 5.0% to $0.21 per share in the third quarter.”

During the three months ended June 30, 2021, the Company made 22 new investments totaling $204.2 million, made investments in existing portfolio companies totaling $54.2 million, and made net additional investments in existing joint venture equity portfolio companies totaling $6.0 million. The Company had seven loans repaid at par totaling $66.4 million and received $19.5 million of portfolio company principal payments. In addition, the Company sold $155.7 million of middle-market portfolio company debt investments to one of the Company's joint ventures, realizing a gain on these transactions of $0.9 million. Lastly, the Company recognized a net realized loss totaling $0.4 million on the disposition of an equity investment.

During the three months ended June 30, 2021, the Company recorded net unrealized appreciation totaling $14.4 million, consisting of net unrealized appreciation on our current portfolio of $12.1 million, unrealized appreciation of $2.3 million on the credit support agreement with Barings and unrealized appreciation reclassification adjustments of $0.7 million related to the net realized gains on the sales / repayments of certain investments, net of unrealized depreciation related to foreign currency transactions of $0.6 million. The net unrealized appreciation on our current portfolio of $12.1 million was driven primarily by broad market moves for investments of $7.8 million and the credit or fundamental performance of investments of $5.1 million, partially offset by the impact of foreign currency exchange rates on investments of $0.8 million.

As of June 30, 2021, the Company had cash and foreign currencies of $30.7 million, short-term money market fund investments of $10.6 million, $668.5 million of borrowings outstanding under its $800.0 million senior secured revolving credit agreement and $375.0 million aggregate principal amount of unsecured notes outstanding. In addition, the Company had a net receivable from unsettled transactions of $150.8 million and commitments from an investor to purchase an additional $25.0 million aggregate principal amount of senior unsecured notes under its Note Purchase Agreement entered into on August 3, 2020 (the “August 2020 NPA”), subject to the terms of the August 2020 NPA.

In connection with the completion of the Company’s acquisition of MVC Capital, Inc. (“MVC”), a Delaware corporation, on December 23, 2020 (the “MVC Acquisition”), the Company committed to make open-market purchases of shares of its common stock in an aggregate amount of up to $15.0 million at then-current market prices at any time shares trade below 90% of the Company’s then most recently disclosed NAV per share. Any repurchases pursuant to the authorized program will occur during the 12-month period commencing upon the filing of the Company’s quarterly report on Form 10-Q for the quarter ended March 31, 2021, which occurred on May 6, 2021, and will be made in accordance with applicable legal, contractual and regulatory requirements. During the three months ended June 30, 2021, the Company did not repurchase any shares under the authorized program.

When the Company declares and pays dividends and distributions, it determines the allocation of the distribution between current income, accumulated income, capital gains and return of capital on the basis of accounting principles generally accepted in the United States (“GAAP”). At each year end, the Company is required for tax purposes to determine the allocation based on tax accounting principles. Due to differences between GAAP and tax accounting principles, the portion of each dividend distribution that is ordinary income, capital gain or return of capital may differ for GAAP and tax purposes. The tax status of the Company's distributions can be found on the Investor Relations page of its website.

Subsequent to June 30, 2021, the Company made approximately $185.6 million of new commitments, of which $150.3 million closed and funded. The $150.3 million of investments consist of $53.9 million of first lien senior secured debt investments, $6.6 million of second lien senior secured and subordinated debt investments and an $89.8 million equity co-investment alongside certain affiliates in a portfolio company focused on directly originated, senior-secured asset-based loans to middle-market companies. The weighted average yield of the debt investments was 7.5%. In addition, the Company funded $18.4 million of previously committed delayed draw term loans.

Statements included herein or on the webcast/conference call may constitute “forward-looking statements,” which relate to future events or Barings BDC’s future performance or financial condition. Investors are cautioned not to place undue reliance on forward-looking statements, which speak only as of the date on which they are made, which reflect management’s current estimates, projections, expectations or beliefs, and which are subject to risks and uncertainties that may cause actual results to differ materially. Forward-looking statements include, but are not limited to, the ability of Barings LLC to manage Barings BDC and identify investment opportunities, are subject to change at any time based upon economic, market or other conditions, including with respect to the impact of the COVID-19 pandemic and its effects on Barings BDC's and its portfolio companies' results of operations and financial condition, and may not be relied upon as investment advice or an indication of Barings BDC's trading intent. More information on these risks and other potential factors that could affect Barings BDC's financial results, including important factors that could cause actual results to differ materially from plans, estimates or expectations included herein or made on the webcast/conference call, is included in Barings BDC’s filings with the SEC, including in the “Risk Factors” and “Management’s Discussion and Analysis of Financial Condition and Results of Operations” sections of Barings BDC's most recently filed annual report on Form 10-K and quarterly report on Form 10-Q, as well as in subsequent filings. In addition, there is no assurance that Barings BDC or any of its affiliates will purchase additional shares of Barings BDC at any specific discount levels or in any specific amounts. There is no assurance that the market price of Barings BDC’s shares, either absolutely or relative to net asset value, will increase as a result of any share repurchases, or that any repurchase plan will enhance stockholder value over the long term.

To provide additional information about the Company's results, the Company's management has discussed in this press release the Company's net debt (calculated as total debt less unrestricted cash and foreign currencies (excluding restricted cash), short-term investments and net receivables from unsettled transactions) and its net debt-to-equity ratio (calculated as net debt divided by total net assets), which are not prepared in accordance with GAAP. These non-GAAP measures are included to supplement the Company's financial information presented in accordance with GAAP and because the Company uses such measures to monitor and evaluate its leverage and financial condition and believes the presentation of these measures enhances investors' ability to analyze trends in the Company's business and to evaluate the Company's leverage and ability to take on additional debt. However, these non-GAAP measures have limitations and should not be considered in isolation or as a substitute for analysis of the Company's financial results as reported under GAAP.

These non-GAAP measures are not in accordance with, or an alternative to, measures prepared in accordance with GAAP and may be different from non-GAAP measures used by other companies. In addition, these non-GAAP measures are not based on any comprehensive set of accounting rules or principles. These measures should only be used to evaluate the Company's results of operations in conjunction with their corresponding GAAP measures. Pursuant to the requirements of Item 10(e) of Regulation S-K, as promulgated under the Securities Exchange Act of 1934, the Company has provided a reconciliation of these non-GAAP measures in the last table included in this press release.

Barings BDC, Inc. (NYSE: BBDC) is a publicly traded, externally managed investment company that has elected to be treated as a business development company under the Investment Company Act of 1940. Barings BDC seeks to invest primarily in senior secured loans in middle-market companies that operate across a wide range of industries. Barings BDC's investment activities are managed by its investment adviser, Barings LLC, a leading global asset manager based in Charlotte, NC with $382+ billion* of AUM firm-wide. For more information, visit www.baringsbdc.com.

Barings is a $382+ billion* global investment manager sourcing differentiated opportunities and building long-term portfolios across public and private fixed income, real estate, and specialist equity markets. With investment professionals based in North America, Europe and Asia Pacific, the firm, a subsidiary of MassMutual, aims to serve its clients, communities and employees, and is committed to sustainable practices and responsible investment. Learn more at www.barings.com.


	June 30, 2021		December 31, 2020
	(Unaudited)
Assets:
Investments at fair value:
Non-Control / Non-Affiliate investments (cost of $1,397,993,028 and $1,318,614,617 as of June 30, 2021 and December 31, 2020, respectively)	$	1,414,823,146	$	1,325,783,281
Affiliate investments (cost of $114,383,398 and $76,055,873 as of June 30, 2021 and December 31, 2020, respectively)	126,432,371		78,598,633
Control investments (cost of $25,826,428 and $25,826,428 as of June 30, 2021 and December 31, 2020, respectively)	23,279,660		25,855,796
Short-term investments (cost of $10,574,196 and $65,558,227 as of June 30, 2021 and December 31, 2020, respectively)	10,574,196		65,558,227
Total investments at fair value	1,575,109,373		1,495,795,937
Cash (restricted cash of $0 and $3,488,336 at June 30, 2021 and December 31, 2020, respectively)	21,559,624		62,651,340
Foreign currencies (cost of $9,194,416 and $29,555,465 as of June 30, 2021 and December 31, 2020, respectively)	9,144,010		29,836,121
Interest and fees receivable	26,718,726		21,617,843
Prepaid expenses and other assets	2,318,215		2,014,558
Credit support agreement (cost of $13,600,000 as of both June 30, 2021 and December 31, 2020)	14,300,006		13,600,000
Deferred financing fees	3,475,563		4,110,564
Receivable from unsettled transactions	153,721,772		47,412,382
Total assets	$	1,806,347,289	$	1,677,038,745
Liabilities:
Accounts payable and accrued liabilities	$	2,723,517	$	6,045,443
Interest payable	4,224,298		2,219,274
Administrative fees payable	500,000		675,000
Base management fees payable	4,891,372		3,413,270
Incentive management fees payable	3,510,339		—
Derivative liabilities	821,828		1,336,283
Payable from unsettled transactions	2,872,973		1,548,578
Borrowings under credit facilities	668,452,480		719,660,707
Notes payable (net of deferred financing fees)	374,222,921		224,335,666
Total liabilities	1,062,219,728		959,234,221
Commitments and contingencies
Net Assets:
Common stock, $0.001 par value per share (150,000,000 shares authorized and 65,316,085 shares issued and outstanding as of both June 30, 2021 and December 31, 2020)	65,316		65,316
Additional paid-in capital	1,027,707,047		1,027,707,047
Total distributable earnings (loss)	(283,644,802)		(309,967,839)
Total net assets	744,127,561		717,804,524
Total liabilities and net assets	$	1,806,347,289	$	1,677,038,745
Net asset value per share	$	11.39	$	10.99


	Three Months Ended		Three Months Ended		Six Months Ended		Six Months Ended
	June 30, 2021		June 30, 2020		June 30, 2021		June 30, 2020
Investment income:
Interest income:
Non-Control / Non-Affiliate investments	$	26,597,095	$	15,249,065	$	51,693,420	$	32,645,476
Affiliate investments	109,301		—		109,301		—
Control investments	108,429		—		215,667		—
Short-term investments	4,364		46,614		15,043		324,605
Total interest income	26,819,189		15,295,679		52,033,431		32,970,081
Dividend income:
Non-Control / Non-Affiliate investments	33,027		2,603		33,027		2,603
Affiliate investments	361,874		—		433,374		—
Total dividend income	394,901		2,603		466,401		2,603
Fee and other income:
Non-Control / Non-Affiliate investments	2,411,851		650,433		4,384,913		1,611,426
Affiliate investments	1,301		—		1,301		—
Control investments	155,303		—		315,416		—
Total fee and other income	2,568,455		650,433		4,701,630		1,611,426
Payment-in-kind interest income:
Non-Control / Non-Affiliate investments	3,068,421		191,049		6,105,745		234,621
Affiliate investments	302,464		—		438,927		—
Total payment-in-kind interest income	3,370,885		191,049		6,544,672		234,621
Interest income from cash	58		—		587		631
Total investment income	33,153,488		16,139,764		63,746,721		34,819,362
Operating expenses:
Interest and other financing fees	7,994,447		4,624,731		15,279,156		10,628,864
Base management fee	4,891,372		3,616,787		8,820,622		7,529,160
Incentive management fee	3,510,345		—		6,232,086		—
Compensation expenses	—		—		—		48,410
General and administrative expenses	2,199,666		1,369,117		4,501,103		2,789,730
Total operating expenses	18,595,830		9,610,635		34,832,967		20,996,164
Net investment income	14,557,658		6,529,129		28,913,754		13,823,198
Income taxes, including excise tax benefit	—		—		(18,038)		—
Net investment income after taxes	$	14,557,658	$	6,529,129	$	28,931,792	$	13,823,198


Barings BDC, Inc. Unaudited Consolidated Statements of Operations - (Continued)

	Three Months Ended		Three Months Ended		Six Months Ended		Six Months Ended
	June 30, 2021		June 30, 2020		June 30, 2021		June 30, 2020
Realized and unrealized gains (losses) on investments, credit support agreement and foreign currency transactions:
Net realized gains (losses):
Non-Control / Non-Affiliate investments	553,013		(16,597,865)		3,444,053		(16,755,844)
Affiliate investments	—		—		(76,631)		—

Net realized gains (losses) on investments	553,013		(16,597,865)		3,367,422		(16,755,844)
Foreign currency transactions	(210,353)		82,868		(1,185,182)		(61,525)
Net realized gains (losses)	342,660		(16,514,997)		2,182,240		(16,817,369)
Net unrealized appreciation (depreciation):
Non-Control / Non-Affiliate investments	4,304,354		63,416,644		9,661,448		(53,944,413)
Affiliate investments	7,087,294		3,037,255		9,531,991		(795,968)
Control investments	1,367,526		—		(2,601,908)		—
Net unrealized appreciation (depreciation) on investments	12,759,174		66,453,899		16,591,531		(54,740,381)
Credit support agreement	2,300,005		—		700,006		—
Foreign currency transactions	(649,766)		(1,410,589)		3,392,031		387,638
Net unrealized appreciation (depreciation)	14,409,413		65,043,310		20,683,568		(54,352,743)
Net realized gains (losses) and unrealized appreciation (depreciation) on investments, credit support agreement and foreign currency transactions	14,752,073		48,528,313		22,865,808		(71,170,112)
Loss on extinguishment of debt	—		(306,202)		—		(443,592)
Benefit from taxes	(1,700)		(2,532)		(1,290)		17,467
Net increase (decrease) in net assets resulting from operations	$	29,308,031	$	54,748,708	$	51,796,310	$	(57,773,039)
Net investment income per share—basic and diluted	$	0.22	$	0.14	$	0.44	$	0.29
Net increase (decrease) in net assets resulting from operations per share—basic and diluted	$	0.45	$	1.14	$	0.79	$	(1.19)
Dividends/distributions per share:


Total dividends/distributions per share	$	0.20	$	0.16	$	0.39	$	0.32
Weighted average shares outstanding—basic and diluted	65,316,085		47,977,481		65,316,085		48,432,437


	Six Months Ended		Six Months Ended
	June 30, 2021		June 30, 2020
Cash flows from operating activities:
Net increase (decrease) in net assets resulting from operations	$	51,796,310	$	(57,773,040)
Adjustments to reconcile net increase (decrease) in net assets resulting from operations to net cash provided by (used in) operating activities:
Purchases of portfolio investments	(538,011,699)		(171,523,304)

Repayments received / sales of portfolio investments	322,356,447		239,658,503

Purchases of short-term investments	(217,559,209)		(403,971,411)
Sales of short-term investments	272,542,440		442,510,853
Loan origination and other fees received	10,024,060		3,131,785
Net realized (gain) loss on investments	(3,367,422)		16,755,844
Net realized loss on foreign currency transactions	1,185,182		61,525
Net unrealized (appreciation) depreciation of investments	(16,591,531)		54,740,381
Net unrealized depreciation of CSA	(700,006)		—
Net unrealized appreciation of foreign currency transactions	(3,392,031)		(387,638)

Payment-in-kind interest	(6,544,672)		(234,621)
Amortization of deferred financing fees	713,365		737,617
Loss on extinguishment of debt	—		443,592

Accretion of loan origination and other fees	(3,512,943)		(1,141,713)
Amortization / accretion of purchased loan premium / discount	(3,821,935)		(604,296)



Changes in operating assets and liabilities:
Interest and fees receivables	(6,513,288)		(1,374,055)
Prepaid expenses and other assets	253,515		255,386
Accounts payable and accrued liabilities	142,144		(144,024)
Interest payable	2,011,219		(1,184,912)


Net cash provided by (used in) operating activities	(138,990,054)		119,956,472




Cash flows from financing activities:


Borrowings under credit facilities	110,731,648		108,123,996
Repayments of credit facilities	(157,861,039)		(117,200,000)

Repayment of debt securitization	—		(91,790,053)
Proceeds from notes	150,000,000		—
Financing fees paid	(191,109)		—

Purchases of shares in repurchase plan	—		(7,130,632)

Cash dividends / distributions paid	(25,473,273)		(15,497,844)
Net cash provided by (used in) financing activities	77,206,227		(123,494,533)
Net decrease in cash and foreign currencies	(61,783,827)		(3,538,061)
Cash and foreign currencies, beginning of period	92,487,461		21,991,565
Cash and foreign currencies, end of period	$	30,703,634	$	18,453,504
Supplemental disclosure of cash flow information:
Cash paid for interest	$	12,186,261	$	9,891,871


	As of June 30, 2021			As of March 31, 2021			As of December 31, 2020
Total debt (principal)	$	1,043,452,480		$	986,144,523		$	944,660,707
minus: Cash and foreign currencies (excluding restricted cash)	(30,703,634)			(37,026,688)			(88,999,125)
minus: Short-term investments	(10,574,196)			(73,565,676)			(65,558,227)
plus: Payable from unsettled transactions	2,872,973			—			1,548,578
minus: Receivable from unsettled transactions	(153,721,772)			(47,911,907)			(47,412,382)
Total net debt(1)	$	851,325,851		$	827,640,252		$	744,239,551

Total net assets	$	744,127,561		$	727,882,747		$	717,804,524

Total net debt-to-equity ratio(1)	1.14		x	1.14		x	1.04		x


Income Statement	Three Months Ended June 30, 2021		Three Months Ended March 31, 2021
(dollars in millions, except per share data)	Total Amount	Per Share(1)	Total Amount	Per Share(1)
Net investment income	$14.6	$0.22	$14.4	$0.22
Net realized gains	$0.3	$0.01	$1.8	$0.03
Net unrealized appreciation	$14.4	$0.22	$6.3	$0.10
Net increase in net assets resulting from operations	$29.3	$0.45	$22.5	$0.34
Dividends paid		$0.20		$0.19