Form: 10-Q

Quarterly report pursuant to Section 13 or 15(d)

November 9, 2021

Documents



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, 2021
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.
(Exact name of registrant as specified in its charter)
__________________________________________________________
Maryland   06-1798488
(State or other jurisdiction of   (I.R.S. Employer
incorporation or organization)   Identification No.)
300 South Tryon Street, Suite 2500
Charlotte, North Carolina		   28202
(Address of principal executive offices)   (Zip Code)
Registrant's telephone number, including area code: (704) 805-7200
Former Name, Former Address and Former Fiscal Year, if Changed Since Last Report: N/A
Securities registered pursuant to Section 12(b) of the Act:
Title of Each Class Trading Symbol Name of Each Exchange on Which Registered
Common Stock, par value $0.001 per share BBDC The New York Stock Exchange
________________________________________________________
Indicate by check mark whether the registrant: (1) has filed all reports required to be filed by Section 13 or 15(d) of the Securities Exchange Act of 1934 during the preceding 12 months (or for such shorter period that the registrant was required to file such reports), and (2) has been subject to such filing requirements for the past 90 days.    Yes  ý    No  ¨
Indicate by check mark whether the registrant has submitted electronically every Interactive Data File required to be submitted pursuant to Rule 405 of Regulation S-T during the preceding 12 months (or for such shorter period that the registrant was required to submit such files).    Yes  ¨    No  ¨
Indicate by check mark whether the registrant is a large accelerated filer, an accelerated filer, a non-accelerated filer, a smaller reporting company, or an emerging growth company. See the definitions of "large accelerated filer," "accelerated filer," "smaller reporting company," and "emerging growth company" in Rule 12b-2 of the Exchange Act.
Large accelerated filer
¨
 Accelerated filer
¨
Non-accelerated filer
ý
 Smaller reporting company
¨
Emerging growth company
¨
If an emerging growth company, indicate by check mark if the registrant has elected not to use the extended transition period for complying with any new or revised financial accounting standards provided pursuant to Section 13(a) of the Exchange Act.
¨
Indicate by check mark whether the registrant is a shell company (as defined in Rule 12b-2 of the Exchange Act).    Yes  ¨    No  ý
The number of shares outstanding of the registrant’s common stock on November 9, 2021 was 65,316,085.


BARINGS BDC, INC.
TABLE OF CONTENTS
QUARTERLY REPORT ON FORM 10-Q
    Page
PART I – FINANCIAL INFORMATION
Item 1.
Unaudited Consolidated Schedule of Investments as of September 30, 2021
Item 2.
Item 3.
Item 4.
PART II – OTHER INFORMATION
Item 1.
Item 1A.
Item 2.
Item 3.
Item 4.
Item 5.
Item 6.
2

PART I – FINANCIAL INFORMATION

Item 1. Financial Statements.
Barings BDC, Inc.
Consolidated Balance Sheets
September 30,
2021		 December 31, 2020
(Unaudited)
Assets:
Investments at fair value:
Non-Control / Non-Affiliate investments (cost of $1,346,611,782 and $1,318,614,617 as of September 30, 2021 and December 31, 2020, respectively)
 $ 1,355,088,125  $ 1,325,783,281 
Affiliate investments (cost of $211,274,188 and $76,055,873 as of September 30, 2021 and December 31, 2020, respectively)
 222,999,987  78,598,633 
Control investments (cost of $25,826,428 as of both September 30, 2021 and December 31, 2020)
 24,394,808  25,855,796 
Short-term investments (cost of $50,000,000 and $65,558,227 as of September 30, 2021 and December 31, 2020, respectively)
 50,000,000  65,558,227 
Total investments at fair value 1,652,482,920  1,495,795,937 
Cash (restricted cash of $0 and $3,488,336 at September 30, 2021 and December 31, 2020, respectively)
30,248,388  62,651,340 
Foreign currencies (cost of $11,311,582 and $29,555,465 as of September 30, 2021 and December 31, 2020, respectively)
 11,137,184  29,836,121 
Interest and fees receivable 24,997,260  21,617,843 
Prepaid expenses and other assets 1,785,731  2,014,558 
Credit support agreement (cost of $13,600,000 as of both September 30, 2021 and December 31, 2020)
 14,300,006  13,600,000 
Deferred financing fees 3,144,557  4,110,564 
Receivable from unsettled transactions 61,438,187  47,412,382 
Total assets $ 1,799,534,233  $ 1,677,038,745 
Liabilities:
Accounts payable and accrued liabilities $ 2,710,698  $ 6,045,443 
Interest payable 4,318,110  2,219,274 
Administrative fees payable 750,000  675,000 
Base management fees payable 5,273,797  3,413,270 
Incentive management fees payable 4,442,599  — 
Derivative liabilities 228,700  1,336,283 
Payable from unsettled transactions 59,063  1,548,578 
Borrowings under credit facilities 662,664,367  719,660,707 
Notes payable (net of deferred financing fees) 374,265,334  224,335,666 
Total liabilities 1,054,712,668  959,234,221 
Commitments and contingencies (Note 7)
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 September 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) (282,950,798) (309,967,839)
Total net assets 744,821,565  717,804,524 
Total liabilities and net assets $ 1,799,534,233  $ 1,677,038,745 
Net asset value per share $ 11.40  $ 10.99 
See accompanying notes.
3


Barings BDC, Inc.
Unaudited Consolidated Statements of Operations
Three Months
Ended
Three Months
Ended
Nine Months Ended
Nine Months Ended
September 30,
2021		 September 30,
2020		 September 30,
2021		 September 30,
2020
Investment income:
Interest income:
Non-Control / Non-Affiliate investments $ 24,315,519  $ 15,205,310  $ 76,008,939  $ 47,850,786 
Affiliate investments 195,561  —  304,861  — 
Control investments 109,621  —  325,287  — 
Short-term investments 1,629  12,237  16,672  336,842 
Total interest income 24,622,330  15,217,547  76,655,759  48,187,628 
Dividend income:
Non-Control / Non-Affiliate investments 64,618  —  97,644  2,603 
Affiliate investments 2,802,050  —  3,235,423  — 
Total dividend income 2,866,668  —  3,333,067  2,603 
Fee and other income:
Non-Control / Non-Affiliate investments 4,309,939  769,126  8,694,852  2,380,552 
Affiliate investments 15,069  —  16,370  — 
Control investments 163,338  —  478,754  — 
Total fee and other income 4,488,346  769,126  9,189,976  2,380,552 
Payment-in-kind interest income:
Non-Control / Non-Affiliate investments 2,695,487  342,469  8,801,232  577,090 
Affiliate investments 310,994  —  749,920  — 
Total payment-in-kind interest income 3,006,481  342,469  9,551,152  577,090 
Interest income from cash —  —  587  631 
Total investment income 34,983,825  16,329,142  98,730,541  51,148,504 
Operating expenses:
Interest and other financing fees 8,103,044  3,738,991  23,382,201  14,367,855 
Base management fee (Note 2) 5,273,797  3,375,262  14,094,419  10,904,422 
Incentive management fees (Note 2) 4,442,607  —  10,674,693  — 
Compensation expenses —  —  —  48,410 
General and administrative expenses (Note 2) 2,281,825  1,254,723  6,782,922  4,044,453 
Total operating expenses 20,101,273  8,368,976  54,934,235  29,365,140 
Net investment income 14,882,552  7,960,166  43,796,306  21,783,364 
Income taxes, including excise tax provision 25,533  7,561  7,495  7,561 
Net investment income after taxes 14,857,019  7,952,605  43,788,811  21,775,803 
4

Barings BDC, Inc.
Unaudited Consolidated Statements of Operations — (Continued)
Three Months
Ended
Three Months
Ended
Nine Months Ended
Nine Months Ended
September 30,
2021		 September 30,
2020		 September 30,
2021		 September 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 950,286  (19,477,823) 4,394,339  (36,233,667)
Affiliate investments (24,300) —  (100,931) — 
Net realized gains (losses) on investments 925,986  (19,477,823) 4,293,408  (36,233,667)
Foreign currency transactions (4,687,686) (1,028,262) (5,872,868) (1,089,787)
Net realized losses (3,761,700) (20,506,085) (1,579,460) (37,323,454)
Net unrealized appreciation (depreciation):
Non-Control / Non-Affiliate investments (8,353,775) 56,467,202  1,307,673  2,522,789 
Affiliate investments (323,174) 1,624,230  9,208,817  828,262 
Control investments 1,115,148  —  (1,486,760) — 
Net unrealized appreciation (depreciation) on investments (7,561,801) 58,091,432  9,029,730  3,351,051 
Credit support agreement —  —  700,006  — 
Foreign currency transactions 10,876,864  (2,144,050) 14,268,895  (1,756,412)
Net unrealized appreciation 3,315,063  55,947,382  23,998,631  1,594,639 
Net realized gains (losses) and unrealized appreciation (depreciation) on investments, credit support agreement and foreign currency transactions (446,637) 35,441,297  22,419,171  (35,728,815)
Loss on extinguishment of debt —  (216,474) —  (660,066)
Benefit from (provision for) taxes —  199  (1,290) 17,666 
Net increase (decrease) in net assets resulting from operations $ 14,410,382  $ 43,177,627  $ 66,206,692  $ (14,595,412)
Net investment income per share—basic and diluted $ 0.23  $ 0.17  $ 0.67  $ 0.45 
Net increase (decrease) in net assets resulting from operations per share—basic and diluted $ 0.22  $ 0.90  $ 1.01  $ (0.30)
Dividends/distributions per share:
Total dividends/distributions per share $ 0.21  $ 0.16  $ 0.60  $ 0.48 
Weighted average shares outstanding—basic and diluted 65,316,085  47,961,753  65,316,085  48,274,397 
See accompanying notes.
5

Barings BDC, Inc.
Unaudited Consolidated Statements of Changes in Net Assets
 
Common Stock Additional
Paid-In
Capital		 Total Distributable Earnings (Loss) Total
Net
Assets
Three Months Ended September 30, 2020
 Number
of Shares		 Par
Value
Balance, June 30, 2020 47,961,753  $ 47,962  $ 846,636,727  $ (356,211,495) $ 490,473,194 
Net investment income —  —  —  7,952,605  7,952,605 
Net realized loss on investments / foreign currency transactions —  —  —  (20,506,085) (20,506,085)
Net unrealized appreciation of investments / foreign currency transactions —  —  —  55,947,382  55,947,382 
Loss on extinguishment of debt —  —  —  (216,474) (216,474)
Income tax benefit —  —  —  199  199 
Dividends / distributions —  —  —  (7,673,880) (7,673,880)
Balance, September 30, 2020 47,961,753  $ 47,962  $ 846,636,727  $ (320,707,748) $ 525,976,941 

Common Stock Additional
Paid-In
Capital		 Total Distributable Earnings (Loss) Total
Net
Assets
Three Months Ended September 30, 2021
 Number
of Shares		 Par
Value
Balance, June 30, 2021 65,316,085  $ 65,316  $ 1,027,707,047  $ (283,644,802) $ 744,127,561 
Net investment income —  —  —  14,857,019  14,857,019 
Net realized loss on investments / foreign currency transactions —  —  —  (3,761,700) (3,761,700)
Net unrealized appreciation of investments / CSA / foreign currency transactions —  —  —  3,315,063  3,315,063 
Dividends / distributions —  —  —  (13,716,378) (13,716,378)
Balance, September 30, 2021 65,316,085  $ 65,316  $ 1,027,707,047  $ (282,950,798) $ 744,821,565 

See accompanying notes.
6

Barings BDC, Inc.
Unaudited Consolidated Statements of Changes in Net Assets — (Continued)
 
Common Stock Additional
Paid-In
Capital		 Total Distributable Earnings (Loss) Total
Net
Assets
Nine Months Ended September 30, 2020
 Number
of Shares		 Par
Value
Balance, December 31, 2019 48,950,803  $ 48,951  $ 853,766,370  $ (282,940,612) $ 570,874,709 
Net investment income —  —  —  21,775,803  21,775,803 
Net realized loss on investments / foreign currency transactions —  —  —  (37,323,454) (37,323,454)
Net unrealized appreciation of investments / foreign currency transactions —  —  —  1,594,639  1,594,639 
Loss on extinguishment of debt —  —  —  (660,066) (660,066)
Income tax benefit —  —  —  17,666  17,666 
Dividends / distributions —  —  —  (23,171,724) (23,171,724)
Purchases of shares in repurchase plan (989,050) (989) (7,129,643) —  (7,130,632)
Balance, September 30, 2020 47,961,753  $ 47,962  $ 846,636,727  $ (320,707,748) $ 525,976,941 

Common Stock Additional
Paid-In
Capital		 Total Distributable Earnings (Loss) Total
Net
Assets
Nine Months Ended September 30, 2021
 Number
of Shares		 Par
Value
Balance, December 31, 2020 65,316,085  $ 65,316  $ 1,027,707,047  $ (309,967,839) $ 717,804,524 
Net investment income —  —  —  43,788,811  43,788,811 
Net realized gain on investments / foreign currency transactions —  —  —  (1,579,460) (1,579,460)
Net unrealized appreciation of investments / CSA / foreign currency transactions —  —  —  23,998,631  23,998,631 
Provision for taxes —  —  —  (1,290) (1,290)
Dividends / distributions —  —  —  (39,189,651) (39,189,651)
Balance, September 30, 2021 65,316,085  $ 65,316  $ 1,027,707,047  $ (282,950,798) $ 744,821,565 

See accompanying notes.
7

Barings BDC, Inc.
Unaudited Consolidated Statements of Cash Flows 
Nine Months Ended
Nine Months Ended
September 30, 2021 September 30, 2020
Cash flows from operating activities:
Net increase (decrease) in net assets resulting from operations $ 66,206,692  $ (14,595,412)
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 (816,807,296) (316,723,958)
Repayments received / sales of portfolio investments 648,320,213  416,989,098 
Purchases of short-term investments (297,560,179) (697,141,628)
Sales of short-term investments 313,117,605  583,220,977 
Loan origination and other fees received 13,694,096  6,075,019 
Net realized (gain) loss on investments (4,293,408) 36,233,667 
Net realized loss on foreign currency transactions 5,872,868  1,089,787 
Net unrealized appreciation of investments (9,029,730) (3,351,051)
Net unrealized appreciation of CSA (700,006) — 
Net unrealized appreciation of foreign currency transactions (14,268,895) 1,756,412 
Payment-in-kind interest (9,350,318) (577,090)
Amortization of deferred financing fees 1,086,783  1,113,839 
Loss on extinguishment of debt —  660,066 
Accretion of loan origination and other fees (6,586,842) (1,676,063)
Amortization / accretion of purchased loan premium / discount (4,249,981) (1,138,000)
Changes in operating assets and liabilities:
Interest and fees receivables (5,699,271) (2,699,114)
Prepaid expenses and other assets 1,395,903  (2,569,056)
Accounts payable and accrued liabilities 872,180  (118,876)
Interest payable 2,106,843  (1,724,576)
Net cash provided by (used in) operating activities (115,872,743) 4,824,041 
Cash flows from financing activities:
Borrowings under credit facilities 135,731,648  236,239,474 
Repayments of credit facilities (181,580,035) (127,523,364)
Repayment of debt securitization —  (139,897,128)
Proceeds from notes 150,000,000  50,000,000 
Financing fees paid (191,108) (544,874)
Purchases of shares in repurchase plan —  (7,130,632)
Cash dividends / distributions paid (39,189,651) (23,171,724)
Net cash provided by (used in) financing activities 64,770,854  (12,028,248)
Net decrease in cash and foreign currencies (51,101,889) (7,204,207)
Cash and foreign currencies, beginning of period 92,487,461  21,991,565 
Cash and foreign currencies, end of period $ 41,385,572  $ 14,787,358 
Supplemental disclosure of cash flow information:
Cash paid for interest $ 19,659,852  $ 13,372,484 
See accompanying notes.
8
Barings BDC, Inc.
Unaudited Consolidated Schedule of Investments
September 30, 2021
Portfolio Company(6)
Industry
Type of Investment(1) (2)
Principal
Amount		 Cost Fair
Value
Non–Control / Non–Affiliate Investments:
1A Smart Start LLC (0.4%)*(7) (8) (11)
Technology Distributors Second Lien Senior Secured Term Loan (LIBOR + 8.5%, 9.5% Cash, Acquired 06/21, Due 05/28) $ 3,001,138  $ 2,957,652  $ 2,961,043 
3,001,138  2,957,652  2,961,043 
1WorldSync, Inc. (2.9%)*(7) (8) (12)
IT Consulting & Other Services First Lien Senior Secured Term Loan (LIBOR + 6.25%, 7.3% Cash, Acquired 07/19, Due 07/25) 21,475,851  21,142,710  21,475,851 
21,475,851  21,142,710  21,475,851 
Accelerate Learning, Inc.
(1.0%)*(7) (8) (11)
Education Services First Lien Senior Secured Term Loan (LIBOR + 4.75%, 5.8% Cash, Acquired 12/18, Due 12/24) 7,567,965  7,479,458  7,416,606 
7,567,965  7,479,458  7,416,606 
Acclime Holdings HK Limited
(0.5%)*(3) (7) (8) (11)
Business Services First Lien Senior Secured Term Loan (LIBOR + 6.5%, 7.0% Cash, Acquired 08/21, Due 07/27) 3,750,000  3,537,413  3,532,500 
3,750,000  3,537,413  3,532,500 
Accurus Aerospace Corporation (2.8%)*(7) (8) (11)
Aerospace & Defense First Lien Senior Secured Term Loan (LIBOR + 4.5%, 5.5% Cash, 1.50% PIK, Acquired 10/18, Due 10/24) 24,779,746  24,574,939  20,889,326 
24,779,746  24,574,939  20,889,326 
ADB Safegate (0.7%)*(3) (8) (11)
Aerospace & Defense First Lien Senior Secured Term Loan (LIBOR + 7.75%, 8.8% Cash, Acquired 08/21, Due 10/25) 5,500,000  5,069,046  5,180,340 
5,500,000  5,069,046  5,180,340 
Advantage Software Company (The), LLC (2.7%)*(7)
Advertising, Printing & Publishing
First Lien Senior Secured Term Loan (LIBOR + 6.5%, 7.5% Cash, Acquired 01/21, Due 01/27)(8) (9)
18,256,407  17,821,678  18,219,894 
Class A Partnership Units (7,054.59 units, Acquired 01/21) 705,459  728,880 
Class B Partnership Units (3,496.31 units, Acquired 01/21) 22,656  1,279,300 
18,256,407  18,549,793  20,228,074 
Aftermath Bidco Corporation (1.2%)* (7) (8) (11)
Professional Services First Lien Senior Secured Term Loan (LIBOR + 5.0%, 6.0% Cash, Acquired 04/19, Due 04/25) 9,425,284  9,289,989  9,279,485 
9,425,284  9,289,989  9,279,485 
Air Canada 2020-2 Class B Pass Through Trust (1.0%)* Airlines Structured Secured Note - Class B (9.0% Cash, Acquired 09/20, Due 10/25) 6,835,161  6,835,161  7,646,572 
6,835,161  6,835,161  7,646,572 
Air Comm Corporation, LLC (0.1%)* (7) (8) (11)
Aerospace & Defense First Lien Senior Secured Term Loan (LIBOR + 5.5%, 6.3% Cash, Acquired 06/21, Due 07/27) 593,486  574,264  573,515 
593,486  574,264  573,515 
AIT Worldwide Logistics Holdings, Inc. (0.9%)*(7)
Transportation Services
Second Lien Senior Secured Term Loan (LIBOR + 7.75%, 8.5% Cash, Acquired 04/21, Due 04/28)(8) (11)
6,460,345  6,321,255  6,434,504 
 Partnership Units (348.68 units, Acquired 04/21) 348,678  509,477 
6,460,345  6,669,933  6,943,981 
Alpine US Bidco LLC (2.4%)*(7) (8) (12)
Agricultural Products Second Lien Senior Secured Term Loan (LIBOR + 9.0%, 9.8% Cash, Acquired 05/21, Due 05/29) 18,156,509  17,630,157  18,247,292 
18,156,509  17,630,157  18,247,292 
Anagram Holdings, LLC
(2.2%)*(3)
Chemicals, Plastics, & Rubber First Lien Senior Secured Note (10.0% Cash, 5.0% PIK, Acquired 08/20, Due 08/25) 14,395,213  13,413,417  16,266,591 
14,395,213  13,413,417  16,266,591 
Anju Software, Inc. (1.8%)*(7) (8) (9)
Application Software First Lien Senior Secured Term Loan (LIBOR + 5.5%, 5.6% Cash, Acquired 02/19, Due 02/25) 13,562,486  13,377,003  13,264,112 
13,562,486  13,377,003  13,264,112 
Apex Bidco Limited (0.3%)*(3) (7)
Business Equipment & Services
First Lien Senior Secured Term Loan (GBP LIBOR + 6.25%, 6.8% Cash, Acquired 01/20, Due 01/27)(8) (14)
1,964,929  1,866,874  1,939,057 
Subordinated Senior Unsecured Term Loan (8.0% PIK, Acquired 01/20, Due 07/27) 271,022  258,329  267,454 
2,235,951  2,125,203  2,206,511 
Aptus 1829. GmbH (0.6%)*(3) (7)
Chemicals, Plastics, & Rubber
First Lien Senior Secured Term Loan (EURIBOR + 6.5%, 6.5% Cash, Acquired 09/21, Due 09/27)(8) (16)
4,745,043  4,713,323  4,626,417 
Preferred Stock (13 shares, Acquired 09/21) 119,828  113,509 
Common Stock (48 shares, Acquired 09/21) 11,983  11,653 
4,745,043  4,845,134  4,751,579 
9
Barings BDC, Inc.
Unaudited Consolidated Schedule of Investments — (Continued)
September 30, 2021
Portfolio Company(6)
Industry
Type of Investment(1) (2)
Principal
Amount		 Cost Fair
Value
Apus Bidco Limited (0.5%)*(3) (7) (8) (15)
Banking, Finance, Insurance & Real Estate First Lien Senior Secured Term Loan (GBP LIBOR + 5.5%, 5.5% Cash, Acquired 02/21, Due 03/28) $ 3,884,134  $ 3,870,272  $ 3,796,407 
3,884,134  3,870,272  3,796,407 
AQA Acquisition Holding, Inc. (2.6%)*(7) (8) (11)
High Tech Industries Second Lien Senior Secured Term Loan (LIBOR + 7.5%, 8.0% Cash, Acquired 03/21, Due 03/29) 20,000,000  19,497,248  19,562,960 
20,000,000  19,497,248  19,562,960 
Arch Global Precision LLC (1.2%)*(7) (8) (9)
Industrial Machinery First Lien Senior Secured Term Loan (LIBOR + 4.75%, 4.8% Cash, Acquired 04/19, Due 04/26) 9,271,049  9,266,657  9,271,049 
9,271,049  9,266,657  9,271,049 
Archimede (1.8%)*(3) (7) (8) (17)
Consumer Services First Lien Senior Secured Term Loan (EURIBOR + 6.0%, 6.0% Cash, Acquired 10/20, Due 10/27) 13,791,505  14,031,635  13,681,173 
13,791,505  14,031,635  13,681,173 
Argus Bidco Limited (0.4%)*(3) (7) (8)
High Tech Industries
First Lien Senior Secured Term Loan (GBP LIBOR + 5.5%, 5.8% Cash, Acquired 12/20, Due 12/27)(14)
2,670,143  2,557,057  2,670,143 
First Lien Senior Secured Term Loan (LIBOR + 5.5%, 5.8% Cash, Acquired 05/21, Due 12/27)(11)
671,922  652,746  671,922 
3,342,065  3,209,803  3,342,065 
Armstrong Transport Group (Pele Buyer, LLC ) (1.0%)*(7) (8)
Air Freight & Logistics
First Lien Senior Secured Term Loan (LIBOR + 4.75%, 5.8% Cash, Acquired 06/19, Due 06/24)(11)
5,276,562  5,216,040  5,171,031 
First Lien Senior Secured Term Loan (LIBOR + 6.0%, 7.0% Cash, Acquired 07/20, Due 06/24)(12)
1,985,278  1,956,677  1,945,572 
7,261,840  7,172,717  7,116,603 
ASPEQ Heating Group LLC (1.2%)* (7) (8) (9)
Building Products, Air & Heating First Lien Senior Secured Term Loan (LIBOR + 5.25%, 6.3% Cash, Acquired 11/19, Due 11/25) 8,631,440  8,537,756  8,631,440 
8,631,440  8,537,756  8,631,440 
Auxi International (0.3%)*(3) (7) (8)
Commercial Finance
First Lien Senior Secured Term Loan (EURIBOR + 5.75%, 5.8% Cash, Acquired 12/19, Due 12/26)(17)
1,622,530  1,519,223  1,534,913 
First Lien Senior Secured Term Loan (SONIA + 6.25%, 6.3% Cash, Acquired 04/21, Due 12/26)(22)
903,395  896,358  854,611 
2,525,925  2,415,581  2,389,524 
AVSC Holding Corp. (1.5%)* Advertising
First Lien Senior Secured Term Loan (LIBOR + 3.25%, 4.3% Cash, 0.25% PIK, Acquired 08/18, Due 10/26)(8) (11)
4,876,168  4,381,092  4,336,132 
First Lien Senior Secured Term Loan (LIBOR + 4.5%, 5.5% Cash, 1.0% PIK, Acquired 08/18, Due 03/25)(8) (11)
748,251  690,105  689,191 
First Lien Senior Secured Term Loan (5.0% Cash, 10.0% PIK, Acquired 11/20, Due 10/26) 5,376,135  5,256,382  6,464,802 
11,000,554  10,327,579  11,490,125 
BDP International, Inc. (f/k/a BDP Buyer, LLC) (2.0%)*(7) (8) (9)
Air Freight & Logistics First Lien Senior Secured Term Loan (LIBOR + 4.75%, 5.8% Cash, Acquired 12/18, Due 12/24) 14,913,061  14,689,930  14,913,061 
14,913,061  14,689,930  14,913,061 
Beacon Pointe Advisors, LLC (0.1%)*(7) (8) (11)
Asset Manager & Custody Bank First Lien Senior Secured Term Loan (LIBOR + 4.5%, 5.5% Cash, Acquired 03/20, Due 03/26) 989,250  971,944  968,847 
989,250  971,944  968,847 
Benify (Bennevis AB)
(0.2%)*(3) (7) (8) (18)
High Tech Industries First Lien Senior Secured Term Loan (STIBOR + 5.25%, 5.3% Cash, Acquired 07/19, Due 07/26) 1,330,990  1,221,376  1,330,990 
1,330,990  1,221,376  1,330,990 
Bidwax (0.8%)*(3) (7) (8) (16)
Non-durable Consumer Goods First Lien Senior Secured Term Loan (EURIBOR + 6.5%, 6.5% Cash, Acquired 02/21, Due 02/28) 6,142,435  6,141,227  6,010,836 
6,142,435  6,141,227  6,010,836 
BigHand UK Bidco Limited (0.1%)*(3) (7) (8) (15)
High Tech Industries First Lien Senior Secured Term Loan (GBP LIBOR + 5.5%, 5.6% Cash, Acquired 01/21, Due 01/28) 904,698  878,496  879,072 
904,698  878,496  879,072 
Black Diamond Equipment Rentals LLC (1.4%)*(7) (25)
Equipment Rental Second Lien Loan (12.5% Cash, Acquired 12/20, Due 06/22) 10,000,000  10,000,000  10,000,000 
Warrant (4.17 units, Acquired 12/20) 1,010,000  623,862 
10,000,000  11,010,000  10,623,862 
Bounteous, Inc. (0.9%)*(7) (8) (11)
Technology First Lien Senior Secured Term Loan (LIBOR + 5.0%, 6.0% Cash, Acquired 08/21, Due 08/27) 6,886,364  6,740,007  6,736,364 
6,886,364  6,740,007  6,736,364 
10
Barings BDC, Inc.
Unaudited Consolidated Schedule of Investments — (Continued)
September 30, 2021
Portfolio Company(6)
Industry
Type of Investment(1) (2)
Principal
Amount		 Cost Fair
Value
Brightline Trains Florida LLC (0.7%)* Transportation Senior Secured Note (8.0% Cash, Acquired 08/21, Due 01/28) $ 5,000,000  $ 5,000,000  $ 4,941,125 
5,000,000  5,000,000  4,941,125 
British Airways 2020-1 Class B Pass Through Trust (0.1%)* Airlines Structured Secured Note - Class B (8.4% Cash, Acquired 11/20, Due 11/28) 836,486  836,486  979,265 
836,486  836,486  979,265 
British Engineering Services Holdco Limited (2.1%)*(3) (7) (8) (15)
Commercial Services & Supplies First Lien Senior Secured Term Loan (GBP LIBOR + 6.75%, 7.0% Cash, Acquired 12/20, Due 12/27) 15,460,203  15,064,588  15,270,266 
15,460,203  15,064,588  15,270,266 
Brown Machine Group Holdings, LLC (0.9%)*(7) (8) (10)
Industrial Equipment First Lien Senior Secured Term Loan (LIBOR + 5.25%, 6.3% Cash, Acquired 10/18, Due 10/24) 6,633,915  6,583,092  6,633,915 
6,633,915  6,583,092  6,633,915 
Cadent, LLC (f/k/a Cross MediaWorks) (0.9%)*(7) (8) (9)
Media & Entertainment First Lien Senior Secured Term Loan (LIBOR + 5.0%, 6.0% Cash, Acquired 09/18, Due 09/23) 6,913,258  6,884,704  6,913,258 
6,913,258  6,884,704  6,913,258 
Canadian Orthodontic Partners Corp.(0.2%)*(3) (7) (8) (21)
Healthcare First Lien Senior Secured Term Loan (CDOR + 6.5%, 7.5% Cash, Acquired 06/21, Due 03/26) 1,639,329  1,694,919  1,623,146 
1,639,329  1,694,919  1,623,146 
Carlson Travel, Inc (1.2%)* Business Travel Management First Lien Senior Secured Note (6.8% Cash, Acquired 09/20, Due 12/25) 3,000,000  2,362,500  2,670,000 
Super Senior Secured Term Loan (10.5% Cash, Acquired 12/20, Due 3/25) 5,915,060  5,838,792  6,210,813 
Common Stock (1,962 units, Acquired 11/20)(7)
88,290  1,962 
8,915,060  8,289,582  8,882,775 
Centralis Finco S.a.r.l. (0.1%)*(3) (7) (8) (16)
Diversified Financial Services First Lien Senior Secured Term Loan (EURIBOR + 5.25%, 5.3% Cash, Acquired 05/20, Due 05/27) 822,090  737,261  822,090 
822,090  737,261  822,090 
Cineworld Group PLC
(1.5%)*(3)
Leisure Products
First Lien Senior Secured Term Loan (LIBOR + 2.5%, 3.5% Cash, 2.5% PIK, Acquired 04/20, Due 02/25)(8) (12)
9,049,339  6,354,276  7,438,013 
Super Senior Secured Term Loan (7.0% Cash, 8.3% PIK, Acquired 11/20, Due 05/24) 1,749,570  1,544,114  2,157,079 
Super Senior Secured Term Loan (8.25% Cash, 9.3% Cash, Acquired 07/21, Due 05/24) 993,503  957,944  1,060,565 
Warrants (553,375 units, Acquired 12/20) 101,602  274,581 
11,792,412  8,957,936  10,930,238 
Classic Collision (Summit Buyer, LLC) (2.3%)*(7) (8) (11)
Auto Collision Repair Centers First Lien Senior Secured Term Loan (LIBOR + 5.25%, 6.3% Cash, Acquired 01/20, Due 01/26) 17,484,670  17,197,300  17,125,253 
17,484,670  17,197,300  17,125,253 
CM Acquisitions Holdings Inc. (2.6%)*(7) (8) (9)
Internet & Direct Marketing First Lien Senior Secured Term Loan (LIBOR + 4.75%, 5.8% Cash, Acquired 05/19, Due 05/25) 19,154,411  18,913,478  19,154,412 
19,154,411  18,913,478  19,154,412 
CMT Opco Holding, LLC (Concept Machine) (0.6%)*(7) (8)
Distributors
First Lien Senior Secured Term Loan (LIBOR + 5.0%, 6.0% Cash, Acquired 01/20, Due 01/25)(11)
4,144,368  4,086,284  4,044,903 
LLC Units (8,782 units, Acquired 01/20) 351,709  276,457 
4,144,368  4,437,993  4,321,360 
Command Alkon (Project Potter Buyer, LLC) (2.8%)*(7) (8)
Software
First Lien Senior Secured Term Loan (LIBOR + 8.25%, 9.3% Cash, Acquired 04/20, Due 04/27)(9)
20,795,747  20,250,117  20,400,377 
Class A Units (90.384 units, Acquired 04/20) 90,384  100,961 
Class B Units (33,324.69 units, Acquired 04/20) —  8,260 
20,795,747  20,340,501  20,509,598 
Contabo Finco S.À R.L (0.2%)*(3) (7) (8) (16)
Internet Software & Services First Lien Senior Secured Term Loan (EURIBOR + 4.75%, 4.8% Cash, Acquired 10/19, Due 10/26) 1,405,059  1,314,934  1,405,059 
1,405,059  1,314,934  1,405,059 
Coyo Uprising GmbH (1.2%)*(3) (7)
Technology
First Lien Senior Secured Term Loan (EURIBOR + 6.5%, 6.5% Cash, Acquired 09/21, Due 09/28)(8) (16)
8,195,509  8,050,115  7,956,473 
Class A Units (440.0 units, Acquired 09/21) 205,333  202,537 
Class B Units (191.0 units, Acquired 09/21) 445,883  439,388 
8,195,509  8,701,331  8,598,398 
11
Barings BDC, Inc.
Unaudited Consolidated Schedule of Investments — (Continued)
September 30, 2021
Portfolio Company(6)
Industry
Type of Investment(1) (2)
Principal
Amount		 Cost Fair
Value
Crash Champions (0.7%)*(7) (8) (11)
Automotive First Lien Senior Secured Term Loan (LIBOR + 5.0%, 6.0% Cash, Acquired 05/21, Due 08/25) $ 5,000,000  $ 4,908,699  $ 4,900,000 
5,000,000  4,908,699  4,900,000 
CSL DualCom (0.2%)*(3) (7) (8) (15)
Tele-communications First Lien Senior Secured Term Loan (GBP LIBOR + 5.5%, 5.5% Cash, Acquired 09/20, Due 09/27) 1,335,409  1,200,892  1,289,220 
1,335,409  1,200,892  1,289,220 
Custom Alloy Corporation (4.8%)*(7) (25)
Manufacturer of Pipe Fittings & Forgings Second Lien Loan (15.0% PIK, Acquired 12/20, Due 04/22) 45,000,185  37,043,142  32,850,135 
Revolver (15.0% PIK, Acquired 12/20, Due 04/22) 4,255,152  3,737,652  3,106,261 
49,255,337  40,780,794  35,956,396 
CW Group Holdings, LLC (0.4%)*(7)
High Tech Industries
First Lien Senior Secured Term Loan (LIBOR + 6.0%, 7.0% Cash, Acquired 01/21, Due 01/27)(8) (11)
2,826,882  2,769,209  2,826,882 
LLC Units (161,290.32 units, Acquired 01/21) 161,290  142,742 
2,826,882  2,930,499  2,969,624 
Dart Buyer, Inc. (1.6%)*(3) (7) (8) (11)
Aerospace & Defense First Lien Senior Secured Term Loan (LIBOR + 5.0%, 6.0% Cash, Acquired 04/19, Due 04/25) 12,217,301  12,035,364  12,012,230 
12,217,301  12,035,364  12,012,230 
Discovery Education, Inc. (2.5%)*(7) (8) (11)
Publishing First Lien Senior Secured Term Loan (LIBOR + 4.75%, 5.8% Cash, Acquired 10/20, Due 10/26) 18,845,063  18,558,807  18,845,063 
18,845,063  18,558,807  18,845,063 
Distinct Holdings, Inc. (0.9%)*(7) (8) (9)
Systems Software First Lien Senior Secured Term Loan (LIBOR + 4.75%, 5.8% Cash, Acquired 04/19, Due 12/23) 6,880,088  6,835,922  6,756,247 
6,880,088  6,835,922  6,756,247 
Dragon Bidco (0.4%)*(3) (7) (8) (17)
Technology First Lien Senior Secured Term Loan (EURIBOR + 6.75%, 6.8% Cash, Acquired 04/21, Due 04/28) 2,781,480  2,806,726  2,721,795 
2,781,480  2,806,726  2,721,795 
DreamStart Bidco SAS (d/b/a SmartTrade) (0.3%)*(3) (7) (8) (17)
Diversified Financial Services First Lien Senior Secured Term Loan (EURIBOR + 5.25%, 5.3% Cash, Acquired 03/20, Due 03/27) 2,150,323  1,984,101  2,109,444 
2,150,323  1,984,101  2,109,444 
Dune Group (0.5%)*(3) (7) (8)
Health Care Equipment
First Lien Senior Secured Term Loan (LIBOR + 5.75%, 5.8% Cash, Acquired 09/21, Due 09/28)(11)
3,530,280  3,468,520  3,468,500 
First Lien Senior Secured Term Loan (EURIBOR + 5.75%, 5.8% Cash, Acquired 09/21, Due 09/28)(16)
(35,248) (34,769)
3,530,280  3,433,272  3,433,731 
Dwyer Instruments, Inc. (1.1%)*(7) (8) (11)
Electric
 First Lien Senior Secured Term Loan (LIBOR + 5.50%, 6.3% Cash, Acquired 07/21, Due 07/27) 8,036,902  7,858,620  7,851,810 
8,036,902  7,858,620  7,851,810 
Ellkay, LLC (0.7%)*(7) (8) (11)
Healthcare & Pharmaceuticals First Lien Senior Secured Term Loan (LIBOR + 5.75%, 6.8% Cash, Acquired 09/21, Due 09/27) 5,000,000  4,900,303  4,900,000 
5,000,000  4,900,303  4,900,000 
Entact Environmental Services, Inc. (0.8%)*(7) (8) (11)
Environmental Industries First Lien Senior Secured Term Loan (LIBOR + 5.75%, 6.8% Cash, Acquired 02/21, Due 12/25) 5,719,232  5,668,597  5,679,198 
5,719,232  5,668,597  5,679,198 
EPS NASS Parent, Inc. (0.8%)*(7) (8) (11)
Electrical Components & Equipment First Lien Senior Secured Term Loan (LIBOR + 5.75%, 6.8% Cash, Acquired 04/21, Due 04/28) 5,827,510  5,687,300  5,718,409 
5,827,510  5,687,300  5,718,409 
F24 (Stairway BidCo Gmbh) (0.2%)*(3) (7) (8) (16)
Software Services First Lien Senior Secured Term Loan (EURIBOR + 6.0%, 6.0% Cash, Acquired 08/20, Due 08/27) 1,651,516  1,645,146  1,651,516 
1,651,516  1,645,146  1,651,516 
Ferrellgas L.P. (0.4%)*(3) (7)
Oil & Gas Equipment & Services OpCo Preferred Units (2,886 units, Acquired 03/21) 2,799,420  2,972,580 
2,799,420  2,972,580 
Fineline Technologies, Inc. (0.2%)*(7) (8) (11)
Consumer Services First Lien Senior Secured Term Loan (LIBOR + 4.75%, 5.8% Cash, Acquired 02/21, Due 02/28) 1,309,000  1,285,229  1,309,000 
1,309,000  1,285,229  1,309,000 
FitzMark Buyer, LLC (0.6%)*(7) (8) (11)
Cargo & Transportation First Lien Senior Secured Term Loan (LIBOR + 4.75%, 5.5% Cash, Acquired 12/20, Due 12/26) 4,269,265  4,193,607  4,260,727 
4,269,265  4,193,607  4,260,727 
12
Barings BDC, Inc.
Unaudited Consolidated Schedule of Investments — (Continued)
September 30, 2021
Portfolio Company(6)
Industry
Type of Investment(1) (2)
Principal
Amount		 Cost Fair
Value
Foundation Risk Partners, Corp.
(1.6%)*(7) (8) (11)
Financial Services First Lien Senior Secured Term Loan (LIBOR + 4.75%, 5.8% Cash, Acquired 09/20, Due 11/23) $ 10,255,784  $ 10,095,792  $ 10,255,784 
Second Lien Senior Secured Term Loan (LIBOR + 8.5%, 9.5% Cash, Acquired 09/20, Due 11/24) 1,722,221  1,612,762  1,722,221 
11,978,005  11,708,554  11,978,005 
FragilePak LLC (0.7%)*(7)
Transportation Services
First Lien Senior Secured Term Loan (LIBOR + 5.75%, 6.8% Cash, Acquired 05/21, Due 05/27)(8) (11)
4,696,562  4,512,234  4,524,567 
Partnership Units (937.5 units, Acquired 05/21) 937,500  925,895 
4,696,562  5,449,734  5,450,462 
FSS Buyer LLC (1.3%)*(7)
Technology
First Lien Senior Secured Term Loan (LIBOR + 5.75%, 6.5% Cash, Acquired 08/21, Due 08/28)(8) (11)
9,937,347  9,740,595  9,738,600 
LP Interest (1,160.9 units, Acquired 08/21) 11,609  11,609 
LP Units (460,652.6 units, Acquired 08/21) 51,043  51,043 
9,937,347  9,803,247  9,801,252 
GTM Intermediate Holdings, Inc. (2.1%)*(7) (25)
Medical Equipment Manufacturer Second Lien Loan (11.0% Cash, 1.0% PIK, Acquired 12/20, Due 12/24) 11,470,743  11,419,586  11,470,743 
Series A Preferred Units (923,347.4 units) 1,446,615  1,652,792 
Series C Preferred Units (460,652.6 units) 721,708  815,355 
Common Stock (2 shares, Acquired 12/20) 1,078,778  1,367,408 
11,470,743  14,666,687  15,306,298 
Gulf Finance, LLC (0.1%)*(8) (9)
Oil & Gas Exploration & Production First Lien Senior Secured Term Loan (LIBOR + 5.25%, 6.3% Cash, Acquired 10/18, Due 08/23) 1,040,300  963,345  998,251 
1,040,300  963,345  998,251 
Halo Technology Bidco, Inc. (0.5%)*(7) (8) (11)
Technology First Lien Senior Secured Term Loan (LIBOR + 5.75%, 6.8% Cash, Acquired 06/21, Due 06/27) 3,491,250  3,440,704  3,443,245 
3,491,250  3,440,704  3,443,245 
Hawaiian Airlines 2020-1 Class B Pass Through Certificates (0.9%)* Airlines Structured Secured Note - Class B (11.3% Cash, Acquired 08/20, Due 09/25) 6,092,593  6,092,593  6,969,067 
6,092,593  6,092,593  6,969,067 
Heartland, LLC (1.9%)*(7) (8) (11)
Business Services First Lien Senior Secured Term Loan (LIBOR + 4.75%, 5.8% Cash, Acquired 08/19, Due 08/25) 14,110,797  14,004,910  13,828,581 
14,110,797  14,004,910  13,828,581 
Heilbron (f/k/a Sucsez (Bolt Bidco B.V.)) (2.5%)*(3) (7) (8) (17)
Insurance First Lien Senior Secured Term Loan (EURIBOR + 5.25%, 5.3% Cash, Acquired 09/19, Due 09/26) 19,213,820  18,820,387  18,785,948 
19,213,820  18,820,387  18,785,948 
Highpoint Global LLC (0.7%)*(7) (25)
Government Services Second Lien Note (12.0% Cash, 2.0% PIK, Acquired 12/20, Due 09/22) 5,388,708  5,367,477  5,388,708 
5,388,708  5,367,477  5,388,708 
Holley Performance Products (Holley Purchaser, Inc.) (2.3%)*(7) (8) (11)
Automotive Parts & Equipment First Lien Senior Secured Term Loan (LIBOR + 5.0%, 5.1% Cash, Acquired 10/18, Due 10/25) 16,826,972  16,671,230  16,826,972 
16,826,972  16,671,230  16,826,972 
Home Care Assistance, LLC (0.5%)*(7) (8) (11)
Healthcare & Pharmaceuticals First Lien Senior Secured Term Loan (LIBOR + 5.0%, 6.0% Cash, Acquired 03/21, Due 03/27) 3,657,138  3,586,189  3,593,290 
3,657,138  3,586,189  3,593,290 
HTI Technology & Industries (2.0%)* (7) (25)
Electronic Component Manufacturing Second Lien Note (12.0% Cash, 4.8% PIK, Acquired 12/20, Due 09/24) 15,080,025  14,575,226  14,739,945 
15,080,025  14,575,226  14,739,945 
HW Holdco, LLC (Hanley Wood LLC) (1.0%)*(7) (8) (10)
Advertising First Lien Senior Secured Term Loan (LIBOR + 4.5%, 5.5% Cash, Acquired 12/18, Due 12/24) 7,450,605  7,343,894  7,450,605 
7,450,605  7,343,894  7,450,605 
IGL Holdings III Corp. (1.3%)*(7) (8) (11)
Commercial Printing First Lien Senior Secured Term Loan (LIBOR + 5.75%, 6.8% Cash, Acquired 11/20, Due 11/26) 10,179,318  9,933,240  9,907,568 
10,179,318  9,933,240  9,907,568 
IM Analytics Holding, LLC (d/b/a NVT) (0.8%)*(7) (8)
Electronic Instruments & Components
First Lien Senior Secured Term Loan (LIBOR + 7.0%, 8.0% Cash, Acquired 11/19, Due 11/23)(11)
8,147,000  8,100,534  6,256,896 
Warrant (68,950 units, Acquired 11/19) —  — 
8,147,000  8,100,534  6,256,896 
13
Barings BDC, Inc.
Unaudited Consolidated Schedule of Investments — (Continued)
September 30, 2021
Portfolio Company(6)
Industry
Type of Investment(1) (2)
Principal
Amount		 Cost Fair
Value
IM Square (0.9%)*(3) (7) (8) (16)
Banking, Finance, Insurance & Real Estate First Lien Senior Secured Term Loan (EURIBOR + 5.25%, 5.3% Cash, Acquired 05/21, Due 05/28) $ 7,185,490  $ 7,214,070  $ 7,023,198 
7,185,490  7,214,070  7,023,198 
IMIA Holdings, Inc. (2.0%)*(7) (8) (11)
Aerospace & Defense First Lien Senior Secured Term Loan (LIBOR + 5.75%, 6.8% Cash, Acquired 04/21, Due 04/27) 14,925,000  14,645,916  14,835,450 
14,925,000  14,645,916  14,835,450 
Innovad Group II BV (0.8%)*(3) (7) (8) (16)
Beverage, Food & Tobacco First Lien Senior Secured Term Loan (EURIBOR + 5.75%, 5.8% Cash, Acquired 04/21, Due 04/28) 6,375,256  6,314,463  6,203,703 
6,375,256  6,314,463  6,203,703 
INOS 19-090 GmbH (0.7%)*(3) (7) (8) (16)
Aerospace & Defense First Lien Senior Secured Term Loan (EURIBOR + 6.13%, 6.1% Cash, Acquired 12/20, Due 12/27) 5,371,919  5,490,210  5,356,008 
5,371,919  5,490,210  5,356,008 
ISS#2, LLC (d/b/a Industrial Services Solutions) (0.9%)*(7) (8) (11)
Commercial Services & Supplies First Lien Senior Secured Term Loan (LIBOR + 5.5%, 6.5% Cash, Acquired 02/20, Due 02/26) 6,736,785  6,634,234  6,346,052 
6,736,785  6,634,234  6,346,052 
Jade Bidco Limited (Jane's)
(1.1%)*(3) (7) (8)
Aerospace & Defense
First Lien Senior Secured Term Loan (LIBOR + 6.0%, 6.0% Cash, Acquired 11/19, Due 12/26)(12)
7,241,738  7,093,269  7,167,612 
First Lien Senior Secured Term Loan (EURIBOR + 6.0%, 6.0% Cash, Acquired 11/19, Due 12/26)(17)
1,338,894  1,252,089  1,325,189 
8,580,632  8,345,358  8,492,801 
Jedson Engineering, Inc. (0.4%)*(7) (25)
Engineering & Construction Management First Lien Loan (12.0% Cash, Acquired 12/20, Due 06/24) 2,650,000  2,650,000  2,650,000 
2,650,000  2,650,000  2,650,000 
JetBlue 2019-1 Class B Pass Through Trust (0.7%)* Airlines Structured Secured Note - Class B (8.0% Cash, Acquired 08/20, Due 11/27) 4,443,386  4,443,386  5,199,273 
4,443,386  4,443,386  5,199,273 
JF Acquisition, LLC (0.5%)*(7) (8) (11)
Automotive First Lien Senior Secured Term Loan (LIBOR + 5.5%, 6.5% Cash, Acquired 05/21, Due 07/24) 3,875,565  3,746,453  3,808,533 
3,875,565  3,746,453  3,808,533 
Kano Laboratories LLC (1.2%)*(7)
Chemicals, Plastics & Rubber
First Lien Senior Secured Term Loan (LIBOR + 5.0%, 6.0% Cash, Acquired 11/20, Due 09/26)(8) (11)
8,779,520  8,548,054  8,779,520 
Partnership Equity (203.2 units, Acquired 11/20) 203,198  230,306 
8,779,520  8,751,252  9,009,826 
Kene Acquisition, Inc. (En Engineering) (1.0%)*(7) (8) (9)
Oil & Gas Equipment & Services First Lien Senior Secured Term Loan (LIBOR + 4.25%, 5.3% Cash, Acquired 08/19, Due 08/26) 7,243,172  7,138,286  7,243,172 
7,243,172  7,138,286  7,243,172 
Kona Buyer, LLC (3.3%)*(7) (8) (11)
High Tech Industries First Lien Senior Secured Term Loan (LIBOR + 5.5%, 6.3% Cash, Acquired 12/20, Due 12/27) 24,244,318  23,708,135  24,244,318 
24,244,318  23,708,135  24,244,318 
LAF International (0.2%)*(3) (7) (8) (17)
Healthcare & Pharmaceuticals First Lien Senior Secured Term Loan (EURIBOR + 6.0%, 6.0% Cash, Acquired 03/21, Due 03/28) 1,506,635  1,542,469  1,470,291 
1,506,635  1,542,469  1,470,291 
Learfield Communications, LLC (1.1%)* Broadcasting
First Lien Senior Secured Term Loan (LIBOR + 3.25%, 4.3% Cash, Acquired 08/20, Due 12/23)(8) (9)
135,734  95,692  130,068 
First Lien Senior Secured Term Loan (LIBOR + 3.0%, 3.0% Cash, 10.2% PIK, Acquired 08/20, Due 12/23)(11)
7,754,000  7,704,071  7,783,077 
7,889,734  7,799,763  7,913,145 
Legal Solutions Holdings (1.5%)*(7) (24) (25)
Business Services Senior Subordinated Loan (16.0% PIK, Acquired 12/20, Due 03/22) 11,371,442  10,129,207  11,030,298 
11,371,442  10,129,207  11,030,298 
LivTech Purchaser, Inc. (0.1%)*(7) (8) (11)
Business Services First Lien Senior Secured Term Loan (LIBOR + 5.0%, 6.0% Cash, Acquired 01/21, Due 12/25) 918,023  907,182  905,523 
918,023  907,182  905,523 
MC Group Ventures Corporation (0.6%)*(7)
Business Services
First Lien Senior Secured Term Loan (LIBOR + 5.5%, 6.5% Cash, Acquired 07/21, Due 06/27)(8) (11)
3,703,504  3,595,340  3,613,089 
Partnership Units (746.66 Units, Acquired 06/21) 746,662  746,660 
3,703,504  4,342,002  4,359,749 
14
Barings BDC, Inc.
Unaudited Consolidated Schedule of Investments — (Continued)
September 30, 2021
Portfolio Company(6)
Industry
Type of Investment(1) (2)
Principal
Amount		 Cost Fair
Value
Media Recovery, Inc. (SpotSee) (1.0%)*(7) (8)
Containers, Packaging & Glass
First Lien Senior Secured Term Loan (LIBOR + 6.0%, 7.0% Cash, Acquired 11/19, Due 11/25)(11)
$ 2,947,860  $ 2,904,822  $ 2,947,860 
First Lien Senior Secured Term Loan (GBP LIBOR + 6.0%, 7.0% Cash, Acquired 12/20, Due 12/26)(14)
4,436,853  4,314,118  4,436,853 
7,384,713  7,218,940  7,384,713 
MNS Buyer, Inc. (0.1%)*(7)
Construction & Building
First Lien Senior Secured Term Loan (LIBOR + 5.5%, 6.5% Cash, Acquired 08/21, Due 08/27)(8) (9)
923,077  904,955  904,615 
Partnership Units (76.92 Units, Acquired 08/21) 76,923  76,920 
923,077  981,878  981,535 
Modern Star Holdings Bidco Pty Limited. (0.6%)*(3) (7) (8) (19)
Non-durable Consumer Goods First Lien Senior Secured Term Loan (BBSY + 6.25%, 6.8% Cash, Acquired 12/20, Due 12/26) 4,431,728  4,467,468  4,431,728 
4,431,728  4,467,468  4,431,728 
MSG National Properties (0.3%)*(3) (7) (8) (11)
Hotel, Gaming, & Leisure First Lien Senior Secured Term Loan (LIBOR + 6.25%, 7.0% Cash, Acquired 11/20, Due 11/25) 2,443,296  2,380,896  2,498,270 
2,443,296  2,380,896  2,498,270 
Murphy Midco Limited (0.6%)*(3) (7) (8) (14)
Media, Diversified & Production First Lien Senior Secured Term Loan (GBP LIBOR + 5.5%, 5.6% Cash, Acquired 11/20, Due 11/27) 4,577,225  4,296,504  4,467,552 
4,577,225  4,296,504  4,467,552 
Music Reports, Inc. (0.7%)*(7) (8) (11)
Media & Entertainment First Lien Senior Secured Term Loan (LIBOR + 5.75%, 6.8% Cash, Acquired 08/20, Due 08/26) 5,537,042  5,419,770  5,537,042 
5,537,042  5,419,770  5,537,042 
Navia Benefit Solutions, Inc. (0.3%)* (7) (8) (11)
Healthcare & Pharmaceuticals First Lien Senior Secured Term Loan (LIBOR + 5.25%, 6.3% Cash, Acquired 02/21, Due 02/27) 2,388,000  2,325,788  2,333,009 
2,388,000  2,325,788  2,333,009 
NGS US Finco, LLC (f/k/a Dresser Natural Gas Solutions) (1.6%)*(7) (8) (9)
Energy Equipment & Services First Lien Senior Secured Term Loan (LIBOR + 4.25%, 5.3% Cash, Acquired 10/18, Due 10/25) 11,795,227  11,758,918  11,571,118 
11,795,227  11,758,918  11,571,118 
Odeon Cinemas Group Limited (0.5%)*(3) (7)
Hotel, Gaming, & Leisure First Lien Senior Secured Term Loan (10.8% Cash, Acquired 02/21, Due 08/23) 3,995,750  4,042,293  4,075,665 
3,995,750  4,042,293  4,075,665 
OG III B.V. (0.4%)*(3) (7) (8) (16)
Containers & Glass Products First Lien Senior Secured Term Loan (EURIBOR + 5.75%, 5.8% Cash, Acquired 06/21, Due 06/28) 2,765,751  2,775,634  2,690,690 
2,765,751  2,775,634  2,690,690 
Omni Intermediate Holdings, LLC (1.9%)*(7) (8) (9)
Transportation First Lien Senior Secured Term Loan (LIBOR + 5.0%, 6.0% Cash, Acquired 12/20, Due 12/26) 13,930,000  13,594,798  13,930,000 
13,930,000  13,594,798  13,930,000 
Options Technology Ltd.
(1.7%)*(3) (7) (8) (11)
Computer Services First Lien Senior Secured Term Loan (LIBOR + 4.5%, 5.5% Cash, Acquired 12/19, Due 12/25) 12,319,906  12,138,737  12,319,906 
12,319,906  12,138,737  12,319,906 
Oracle Vision Bidco Limited (0.4%)*(3) (7) (8) (22)
Healthcare First Lien Senior Secured Term Loan (SONIA + 5.25%, 5.3% Cash, Acquired 06/21, Due 05/28) 3,086,103  3,138,014  3,006,380 
3,086,103  3,138,014  3,006,380 
Origin Bidco Limited (0.1%)*(3) (7) (8)
Technology
First Lien Senior Secured Term Loan (LIBOR + 5.75%, 6.8% Cash, Acquired 06/21, Due 06/28)(11)
597,094  581,261  582,346 
First Lien Senior Secured Term Loan (EURIBOR + 5.75%, 5.8% Cash, Acquired 06/21, Due 06/28)(16)
384,446  393,487  374,950 
981,540  974,748  957,296 
Pacific Health Supplies Bidco Pty Limited (1.2%)*(3) (7) (8) (20)
Healthcare & Pharmaceuticals First Lien Senior Secured Term Loan (BBSY + 6.0%, 6.5% Cash, Acquired 12/20, Due 12/25) 8,722,219  8,716,566  8,582,268 
8,722,219  8,716,566  8,582,268 
Pare SAS (SAS Maurice MARLE) (0.6%)*(3) (7) (8) (16)
Health Care Equipment First Lien Senior Secured Term Loan (EURIBOR + 6.75%, 6.8% Cash, Acquired 12/19, Due 12/26) 4,726,198  4,474,717  4,693,115 
4,726,198  4,474,717  4,693,115 
Patriot New Midco 1 Limited (Forensic Risk Alliance) (1.0%)*(3) (7) (8)
Diversified Financial Services
First Lien Senior Secured Term Loan (LIBOR + 6.75%, 7.8% Cash, Acquired 02/20, Due 02/27)(11)
4,006,241  3,917,757  3,870,029 
First Lien Senior Secured Term Loan (EURIBOR + 6.75%, 6.8% Cash, Acquired 02/20, Due 02/27)(16)
3,488,293  3,206,723  3,369,691 
7,494,534  7,124,480  7,239,720 
15
Barings BDC, Inc.
Unaudited Consolidated Schedule of Investments — (Continued)
September 30, 2021
Portfolio Company(6)
Industry
Type of Investment(1) (2)
Principal
Amount		 Cost Fair
Value
PDQ.Com Corporation (0.6%)*(7)
Business Equipment & Services
First Lien Senior Secured Term Loan (LIBOR + 4.75%, 5.8% Cash, Acquired 08/21, Due 08/28)(8) (11)
$ 4,694,533  $ 4,608,355  $ 4,607,315 
Class A-2 Partnership Units (26.32 units, Acquired 08/21) 26,316  26,320 
4,694,533  4,634,671  4,633,635 
PerTronix, LLC (0.9%)*(7) (8) (9)
Automotive First Lien Senior Secured Term Loan (LIBOR + 5.25%, 6.3% Cash, Acquired 10/20, Due 10/26) 6,525,965  6,440,766  6,525,965 
6,525,965  6,440,766  6,525,965 
Premium Franchise Brands, LLC (2.0%)*(7) (8) (11)
Research & Consulting Services First Lien Senior Secured Term Loan (LIBOR + 6.25%, 7.3% Cash, Acquired 12/20, Due 12/26) 14,852,588  14,586,908  14,555,536 
14,852,588  14,586,908  14,555,536 
Premium Invest (0.3%)*(3) (7) (8) (16)
Brokerage, Asset Managers & Exchanges First Lien Senior Secured Term Loan (EURIBOR + 6.0%, 6.0% Cash, Acquired 06/21, Due 06/28) 2,732,804  2,674,511  2,583,119 
2,732,804  2,674,511  2,583,119 
Preqin MC Limited (0.9%)*(3) (7) (8) (23)
Banking, Finance, Insurance & Real Estate First Lien Senior Secured Term Loan (SOFR + 5.5%, 5.5% Cash, Acquired 08/21, Due 07/28) 6,789,005  6,589,000  6,585,335 
6,789,005  6,589,000  6,585,335 
Process Equipment, Inc. (ProcessBarron) (0.8%)*(7) (8) (11)
Industrial Air & Material Handling Equipment First Lien Senior Secured Term Loan (LIBOR + 5.25%, 6.3% Cash, Acquired 03/19, Due 03/25) 6,173,594  6,108,998  5,642,665 
6,173,594  6,108,998  5,642,665 
Professional Datasolutions, Inc. (PDI) (1.4%)*(7) (8) (12)
Application Software First Lien Senior Secured Term Loan (LIBOR + 4.5%, 5.5% Cash, Acquired 03/19, Due 10/24) 10,869,004  10,858,773  10,782,052 
10,869,004  10,858,773  10,782,052 
Protego Bidco B.V. (0.5%)*(3) (7) (8) (16)
Aerospace & Defense First Lien Senior Secured Term Loan (EURIBOR + 5.25%, 5.3% Cash, Acquired 03/21, Due 03/27) 2,270,096  2,308,328  2,270,096 
First Lien Senior Secured Term Loan (EURIBOR + 6.0%, 6.0% Cash, Acquired 03/21, Due 03/28) 1,577,424  1,558,533  1,517,358 
3,847,520  3,866,861  3,787,454 
PSC UK Pty Ltd. (0.4%)*(3) (7) (8) (13)
Insurance Services First Lien Senior Secured Term Loan (GBP LIBOR + 6.0%, 6.5% Cash, Acquired 11/19, Due 10/24) 2,648,286  2,453,899  2,648,286 
2,648,286  2,453,899  2,648,286 
QPE7 SPV1 BidCo Pty Ltd (0.5%)*(3) (7) (8) (20)
Consumer Cyclical First Lien Senior Secured Term Loan (BBSY + 5.5%, 6.0% Cash, Acquired 09/21, Due 09/26) 4,149,193  4,022,028  4,075,972 
4,149,193  4,022,028  4,075,972 
Questel Unite (3.4%)*(3) (7) (8)
Business Services
First Lien Senior Secured Term Loan (EURIBOR + 6.25%, 6.3% Cash, Acquired 12/20, Due 12/27)(16)
18,333,313  18,730,984  18,259,980 
First Lien Senior Secured Term Loan (LIBOR + 6.25%, 6.8% Cash, Acquired 12/20, Due 12/27)(11)
6,892,270  6,799,020  6,864,701 
25,225,583  25,530,004  25,124,681 
Recovery Point Systems, Inc.
(1.6%)*(7)
Technology
First Lien Senior Secured Term Loan (LIBOR + 6.5%, 7.5% Cash, Acquired 08/20, Due 07/26)(8) (11)
11,677,818  11,480,879  11,677,818 
Partnership Equity (187,235 units, Acquired 03/21) 187,235  160,086 
11,677,818  11,668,114  11,837,904 
REP SEKO MERGER SUB LLC
(1.0%)* (7) (8) (11)
Air Freight & Logistics First Lien Senior Secured Term Loan (LIBOR + 5.0%, 6.0% Cash, Acquired 12/20, Due 12/26) 7,633,228  7,426,430  7,542,350 
7,633,228  7,426,430  7,542,350 
Resonetics, LLC (0.3%)*(7) (8) (11)
Health Care Equipment Second Lien Senior Secured Term Loan (LIBOR + 7.0%, 7.8% Cash, Acquired 04/21, Due 04/29) 2,088,364  2,048,222  2,052,475 
2,088,364  2,048,222  2,052,475 
Reward Gateway (UK) Ltd (2.2%)*(3) (7) (8) (22)
Precious Metals & Minerals First Lien Senior Secured Term Loan (SONIA + 6.75%, 6.8% Cash, Acquired 08/21, Due 06/28) 16,885,629  16,872,272  16,359,475 
16,885,629  16,872,272  16,359,475 
RPX Corporation (3.0%)*(7) (8) (11)
Research & Consulting Services First Lien Senior Secured Term Loan (LIBOR + 6.0%, 7.0% Cash, Acquired 10/20, Due 10/25) 22,693,750  22,241,517  22,183,141 
22,693,750  22,241,517  22,183,141 
Ruffalo Noel Levitz, LLC
(1.3%)*(7) (8) (11)
Media Services First Lien Senior Secured Term Loan (LIBOR + 6.0%, 7.0% Cash, Acquired 01/19, Due 05/22) 9,543,326  9,512,741  9,543,326 
9,543,326  9,512,741  9,543,326 
16
Barings BDC, Inc.
Unaudited Consolidated Schedule of Investments — (Continued)
September 30, 2021
Portfolio Company(6)
Industry
Type of Investment(1) (2)
Principal
Amount		 Cost Fair
Value
Safety Products Holdings, LLC (3.0%)*(7)
Non-durable Consumer Goods
First Lien Senior Secured Term Loan (LIBOR + 6.0%, 7.0% Cash, Acquired 12/20, Due 12/26)(8) (9)
$ 22,042,019  $ 21,602,682  $ 21,546,073 
Preferred Stock (372.1 shares, Acquired 12/20) 372,088  481,550 
22,042,019  21,974,770  22,027,623 
Scaled Agile, Inc. (0.5%)*(7) (8) (9)
Research & Consulting Services First Lien Senior Secured Term Loan (LIBOR + 4.5%, 5.5% Cash, Acquired 06/19, Due 06/24) 3,913,793  3,887,783  3,913,793 
3,913,793  3,887,783  3,913,793 
Serta Simmons Bedding LLC
(1.5%)*(8) (9)
Home Furnishings Super Priority First Out (LIBOR + 7.5%, 8.5% Cash, Acquired 6/20, Due 08/23) 7,368,676  7,229,543  7,418,930 
Super Priority Second Out (LIBOR + 7.5%, 8.5% Cash, Acquired 6/20, Due 08/23) 3,616,420  3,375,529  3,431,874 
10,985,096  10,605,072  10,850,804 
Sigmatek Systems, LLC (0.5%)*(7) (8) (11)
High Tech Industries First Lien Senior Secured Term Loan (LIBOR + 4.5%, 5.5% Cash, Acquired 01/21, Due 01/27) 3,955,075  3,884,464  3,939,255 
3,955,075  3,884,464  3,939,255 
SISU ACQUISITIONCO., INC. (1.8%)*(7) (8) (11)
Aerospace & Defense First Lien Senior Secured Term Loan (LIBOR + 5.25%, 6.3% Cash, Acquired 12/20, Due 12/26) 14,026,839  13,776,673  13,606,034 
14,026,839  13,776,673  13,606,034 
Smile Brands Group Inc.
(0.6%)*(7) (8) (11)
Health Care Services First Lien Senior Secured Term Loan (LIBOR + 5.17%, 5.4% Cash, Acquired 10/18, Due 10/24) 4,593,488  4,544,784  4,541,006 
4,593,488  4,544,784  4,541,006 
SN BUYER, LLC (2.5%)*(7) (8) (10)
Health Care Services First Lien Senior Secured Term Loan (LIBOR + 5.75%, 6.8% Cash, Acquired 12/20, Due 12/26) 18,791,130  18,456,094  18,791,130 
18,791,130  18,456,094  18,791,130 
Springbrook Software (SBRK Intermediate, Inc.) (1.4%)*(7) (8) (11)
Enterprise Software & Services First Lien Senior Secured Term Loan (LIBOR + 5.5%, 6.5% Cash, Acquired 12/19, Due 12/26) 10,372,004  10,197,959  10,372,004 
10,372,004  10,197,959  10,372,004 
SPT Acquico Limited (0.1%)*(3) (7) (8) (11)
High Tech Industries First Lien Senior Secured Term Loan (LIBOR + 4.75%, 5.8% Cash, Acquired 01/21, Due 12/27) 658,312  643,248  658,312 
658,312  643,248  658,312 
SSCP Pegasus Midco Limited (0.9%)*(3) (7) (8) (14)
Healthcare & Pharmaceuticals First Lien Senior Secured Term Loan (GBP LIBOR + 6.75%, 6.8% Cash, Acquired 12/20, Due 11/27) 6,927,047  6,383,318  6,806,240 
6,927,047  6,383,318  6,806,240 
Syniverse Holdings, Inc. (2.3%)*(8) (11)
Technology Distributors First Lien Senior Secured Term Loan (LIBOR + 5.0%, 6.0% Cash, Acquired 08/18, Due 03/23) 17,390,580  16,402,204  17,377,190 
17,390,580  16,402,204  17,377,190 
TA SL Cayman Aggregator Corp.
(0.3%)*(7)
Technology
Unsecured HoldCo Note (8.8% PIK, Acquired 07/21, Due 07/28)(8)
1,994,681  1,955,723  1,954,788 
Common Stock (1,227.79 shares, Acquired 07/21) 49,876  49,873 
1,994,681  2,005,599  2,004,661 
The Hilb Group, LLC
(2.1%)*(7) (8) (11)
Insurance Brokerage First Lien Senior Secured Term Loan (LIBOR + 5.75%, 6.8% Cash, Acquired 12/19, Due 12/26) 11,577,874  11,351,908  11,323,160 
First Lien Senior Secured Term Loan (LIBOR + 6.25%, 7.3% Cash, Acquired 12/19, Due 12/26) 4,661,299  4,469,559  4,652,567 
16,239,173  15,821,467  15,975,727 
Total Safety U.S. Inc. (0.9%)*(8) (12)
Diversified Support Services First Lien Senior Secured Term Loan (LIBOR + 6.0%, 7.0% Cash, Acquired 11/19, Due 08/25) 6,583,183  6,381,802  6,492,664 
6,583,183  6,381,802  6,492,664 
Transit Technologies LLC
(0.8%)*(7) (8) (11)
Software First Lien Senior Secured Term Loan (LIBOR + 4.75%, 5.8% Cash, Acquired 02/20, Due 02/25) 6,035,305  5,939,227  5,830,105 
6,035,305  5,939,227  5,830,105 
Transportation Insight, LLC (2.6%)*(7) (8) (9)
Air Freight & Logistics First Lien Senior Secured Term Loan (LIBOR + 4.5%, 4.6% Cash, Acquired 08/18, Due 12/24) 19,358,809  19,254,043  19,107,144 
19,358,809  19,254,043  19,107,144 
Trident Maritime Systems, Inc. (2.0%)*(7) (8) (11)
Aerospace & Defense First Lien Senior Secured Term Loan (LIBOR + 5.5%, 6.5% Cash, Acquired 02/21, Due 02/27) 14,925,000  14,690,761  14,715,572 
14,925,000  14,690,761  14,715,572 
Truck-Lite Co., LLC (3.0%)*(7) (8) (11)
Automotive Parts & Equipment First Lien Senior Secured Term Loan (LIBOR + 6.25%, 7.3% Cash, Acquired 12/19, Due 12/26) 22,127,885  21,779,394  22,127,885 
22,127,885  21,779,394  22,127,885 
17
Barings BDC, Inc.
Unaudited Consolidated Schedule of Investments — (Continued)
September 30, 2021
Portfolio Company(6)
Industry
Type of Investment(1) (2)
Principal
Amount		 Cost Fair
Value
Trystar, LLC (1.5%)*(7)
Power Distribution Solutions
First Lien Senior Secured Term Loan (LIBOR + 5.0%, 6.0% Cash, Acquired 09/18, Due 09/23)(8) (11)
$ 11,185,659  $ 11,076,678  $ 11,118,545 
Class A LLC Units (384.5 units, Acquired 09/18) 395,995  341,244 
11,185,659  11,472,673  11,459,789 
Turf Products, LLC (1.2%)*(7) (25)
Landscaping & Irrigation Equipment Distributor Senior Subordinated Debt (10.0% Cash, Acquired 12/20, Due 10/23) 8,697,056  8,383,961  8,618,783 
8,697,056  8,383,961  8,618,783 
Turnberry Solutions, Inc. (1.0%)*(7) (8) (11)
Consumer Cyclical First Lien Senior Secured Term Loan (LIBOR + 6.0%, 7.0% Cash, Acquired 07/21, Due 09/26) 7,500,000  7,354,973  7,350,000 
7,500,000  7,354,973  7,350,000 
U.S. Gas & Electric, Inc. (0.2%)*(7) (25)
Energy Services Second Lien Loan (9.5% Cash, Acquired 12/20, Due 07/25) 2,285,250  1,785,250  1,785,250 
Second Lien Loan (9.5% Cash, Acquired 12/20, Due 07/25)(26)
2,485,469  —  — 
4,770,719  1,785,250  1,785,250 
U.S. Silica Company (0.2%)*(3) (8) (9)
Metal & Glass Containers First Lien Senior Secured Term Loan (LIBOR + 4.0%, 5.0% Cash, Acquired 08/18, Due 05/25) 1,475,961  1,478,281  1,443,681 
1,475,961  1,478,281  1,443,681 
UKFast Leaders Limited (1.6%)*(3) (7) (8) (14)
Technology First Lien Senior Secured Term Loan (GBP LIBOR + 7.0%, 7.1% Cash, Acquired 09/20, Due 9/27) 12,256,215  11,387,846  12,018,579 
12,256,215  11,387,846  12,018,579 
USLS Acquisition, Inc. (f/k/a US Legal Support, Inc.) (2.2%)*(7) (8) (11)
Legal Services First Lien Senior Secured Term Loan (LIBOR + 5.75%, 6.8% Cash, Acquired 11/18, Due 11/24) 16,221,755  16,053,098  16,203,733 
16,221,755  16,053,098  16,203,733 
Utac Ceram (0.7%)*(3) (7) (8)
Business Services
First Lien Senior Secured Term Loan (EURIBOR + 5.75%, 5.8% Cash, Acquired 09/20, Due 09/27)(16)
1,738,425  1,704,583  1,701,198 
First Lien Senior Secured Term Loan (LIBOR + 5.75%, 5.8% Cash, Acquired 02/21, Due 09/27)(11)
3,517,700  3,453,425  3,442,372 
5,256,125  5,158,008  5,143,570 
Validity, Inc. (0.6%)*(7) (8) (9)
IT Consulting & Other Services First Lien Senior Secured Term Loan (LIBOR + 4.75%, 4.8% Cash, Acquired 07/19, Due 05/25) 4,783,146  4,680,384  4,720,965 
4,783,146  4,680,384  4,720,965 
Vital Buyer, LLC (1.1%)*(7)
Technology
First Lien Senior Secured Term Loan (LIBOR + 6.0%, 6.8% Cash, Acquired 06/21, Due 06/28)(8) (11)
7,841,548  7,690,607  7,701,999 
Partnership Units (16,442.9 units, Acquired 06/21) 164,429  178,156 
7,841,548  7,855,036  7,880,155 
W2O Holdings, Inc. (0.3%)*(7) (8) (11)
Healthcare Technology First Lien Senior Secured Term Loan (LIBOR + 5.0%, 6.0% Cash, Acquired 10/20, Due 06/25) 2,152,276  2,087,324  2,152,276 
2,152,276  2,087,324  2,152,276 
World 50, Inc. (1.6%)*(7) (8) (9)
Professional Services First Lien Senior Secured Term Loan (LIBOR + 5.25%, 6.3% Cash, Acquired 01/20, Due 01/26) 3,288,280  3,206,092  3,288,280 
First Lien Senior Secured Term Loan (LIBOR + 4.5%, 5.5% Cash, Acquired 09/20, Due 01/26) 9,031,837  8,863,090  8,851,200 
12,320,117  12,069,182  12,139,480 
Subtotal Non–Control / Non–Affiliate Investments (181.9%) 1,373,918,059  1,346,611,782  1,355,088,125 
Affiliate Investments: (4)
Eclipse Business Capital, LLC (12.7%)*(7)
Banking, Finance, Insurance, & Real Estate
 Second Lien Senior Secured Term Loan (7.5% Cash, Acquired 07/21, Due 07/28) 4,545,455  4,501,161  4,545,455 
Revolver (LIBOR + 7.25%, Acquired 07/21. Due 07/28)(11)
(131,956) — 
LLC Units (89,849,519 units, Acquired 07/21) 89,849,519  89,849,519 
4,545,455  94,218,724  94,394,974 
Jocassee Partners LLC (4.9%)*(3)
Investment Funds & Vehicles 9.1% Member Interest, Acquired 06/19 30,158,270  36,133,440 
30,158,270  36,133,440 
JSC Tekers Holdings (0.8%)*(3) (7) (25)
Real Estate Management Preferred Stock (9,159,085 shares, Acquired 12/20) 4,753,000  5,953,405 
Common Stock (3,201 shares, Acquired 12/20) —  — 
4,753,000  5,953,405 
18
Barings BDC, Inc.
Unaudited Consolidated Schedule of Investments — (Continued)
September 30, 2021
Portfolio Company(6)
Industry
Type of Investment(1) (2)
Principal
Amount		 Cost Fair
Value
Security Holdings B.V. (6.0%)*(3) (7) (25)
Electrical Engineering Bridge Loan (5.0% PIK, Acquired 12/20, Due 05/22) $ 5,451,205  $ 5,451,207  $ 5,451,205 
Senior Subordinated Loan (3.1% PIK, Acquired 12/20, Due 05/22) 8,953,684  8,953,685  8,953,684 
Senior Unsecured Term Loan (6.0% Cash, 9.0% PIK, Acquired 04/21, Due 04/25) 6,953,700  7,155,302  6,953,700 
Common Stock (900 shares, Acquired 12/20) 21,264,000  23,159,294 
21,358,589  42,824,194  44,517,883 
Thompson Rivers LLC (4.4%)*(3)
Investment Funds & Vehicles 7.75% Member Interest, Acquired 06/20 30,000,000  32,684,880 
30,000,000  32,684,880 
Waccamaw River LLC (1.3%)*(3)
Investment Funds & Vehicles 20% Member Interest, Acquired 02/21 9,320,000  9,315,405 
9,320,000  9,315,405 
Subtotal Affiliate Investments (29.9%) 25,904,044  211,274,188  222,999,987 
Control Investments:(5)
MVC Automotive Group Gmbh (2.2%)*(3) (7) (25)
Automotive Bridge Loan (6.0% Cash, Acquired 12/20, Due 12/21) 7,149,166  7,149,166  7,149,166 
Common Equity Interest (18,000 shares, Acquired 12/20) 9,553,000  9,080,420 
7,149,166  16,702,166  16,229,586 
MVC Private Equity Fund LP (1.1%)*(3) (25)
Investment Funds & Vehicles General Partnership Interest 224,978  201,948 
Limited Partnership Interest 8,899,284  7,963,274 
9,124,262  8,165,222 
Subtotal Control Investments (3.3%) 7,149,166  25,826,428  24,394,808 
Short-Term Investments:
BlackRock, Inc. (3.4%)* Money Market Fund BlackRock Liquidity Temporary Fund (0.04% yield) 25,000,000  25,000,000 
25,000,000  25,000,000 
JPMorgan Chase & Co. (3.4%)* Money Market Fund JPMorgan Prime Money Market Fund (0.05% yield) 25,000,000  25,000,000 
25,000,000  25,000,000 
Subtotal Short-Term Investment (6.7%) 50,000,000  50,000,000 
Total Investments, September 30, 2021 (221.9%)*
 $ 1,406,971,269  $ 1,633,712,398  $ 1,652,482,920 
Derivative Instruments
Credit Support Agreement(a)(b)(d)
Description Counter Party Settlement Date(c) Notional Amount Value Unrealized Appreciation (Depreciation)
Credit Support Agreement Barings LLC 01/01/31 $ 23,000,000  $ 14,300,006  $ 700,006 
Total Credit Support Agreement, September 30, 2021
 $ 700,006 
(a) The Credit Support Agreement covers all of the investments acquired by Barings BDC, Inc. (“the Company”) from MVC Capital, Inc. ("MVC") in connection with the MVC Acquisition (as defined in “Note 1 – Organization, Business and Basis of Presentation”) and any investments received by the Company in connection with the restructuring, amendment, extension or other modification (including the issuance of new securities) of any of the investments acquired by the Company from MVC in connection with the MVC Acquisition (collectively, the “Reference Portfolio”). Each investment that is included in the Reference Portfolio is denoted in the above Schedule of Investments with footnote (25).
(b)      The Company and Barings LLC entered into a Credit Support Agreement pursuant to which Barings LLC agreed to provide credit support to the Company in the amount of up to $23.0 million.
(c) Settlement Date means the earlier of (1) January 1, 2031 or (2) the date on which the entire Reference Portfolio has been realized or written off.
(d) See “Note 2 – Agreements and Related Party Transactions” for additional information regarding the Credit Support Agreement.
19
Barings BDC, Inc.
Unaudited Consolidated Schedule of Investments — (Continued)
September 30, 2021
Foreign Currency Forward Contracts:
Description Notional Amount to be Purchased Notional Amount to be Sold Settlement Date Unrealized Appreciation (Depreciation)
Foreign currency forward contract (AUD) A$9,000,000 $6,523,357 10/06/21 $ (22,179)
Foreign currency forward contract (AUD) $6,550,418 A$9,000,000 10/06/21 49,240 
Foreign currency forward contract (AUD) A$2,098,659 $1,507,742 01/06/22 9,026 
Foreign currency forward contract (CAD) C$6,124,048 $4,797,823 10/06/21 36,200 
Foreign currency forward contract (CAD) $4,962,973 C$6,124,048 10/06/21 128,950 
Foreign currency forward contract (CAD) $4,881,155 C$6,229,673 01/06/22 (36,660)
Foreign currency forward contract (DKK) 2,105,000kr. $328,520 10/06/21 (428)
Foreign currency forward contract (DKK) $334,772 2,105,000kr. 10/06/21 6,680 
Foreign currency forward contract (DKK) $335,107 2,142,838kr. 01/06/22 446 
Foreign currency forward contract (EUR) €13,326,630 $15,559,560 10/06/21 (114,118)
Foreign currency forward contract (EUR) $15,737,249 €13,326,630 10/06/21 291,805 
Foreign currency forward contract (EUR) $4,864,467 €4,182,593 01/06/22 6,576 
Foreign currency forward contract (GBP) £9,000,000 $12,189,271 10/06/21 (54,099)
Foreign currency forward contract (GBP) $12,254,165 £9,000,000 10/06/21 118,993 
Foreign currency forward contract (GBP) £4,465,465 $5,997,745 01/06/22 24,868 
Foreign currency forward contract (SEK) 1,787,447kr $203,104 10/06/21 1,212 
Foreign currency forward contract (SEK) $209,997 1,787,447kr 10/06/21 5,680 
Foreign currency forward contract (SEK) $203,853 1,791,942kr 01/07/22 (1,216)
Total Foreign Currency Forward Contracts, September 30, 2021
 $ 450,976 
_______________________________________________________________
*    Fair value as a percentage of net assets.
(1)All debt investments are income producing, unless otherwise noted. Eclipse Business Capital, LLC, Ferrellgas L.P., Thompson Rivers LLC and Waccamaw River LLC equity investments are income producing. All other equity and any equity-linked investments are non-income producing. The Company's Board of Directors (the "Board") determined in good faith that all investments were valued at fair value in accordance with the Company's valuation policies and procedures and the Investment Company Act of 1940, as amended (the “1940 Act”), based on, among other things, the input of the Company's external investment adviser, Barings LLC (“Barings”), the Company’s Audit Committee and independent valuation firms that have been engaged to assist in the valuation of the Company's middle-market investments. In addition, all debt investments are variable rate investments unless otherwise noted. Index-based floating interest rates are generally subject to a contractual minimum interest rate. A majority of the variable rate loans in the Company's investment portfolio bear interest at a rate that may be determined by reference to LIBOR, EURIBOR, GBP LIBOR, BBSY, STIBOR, CDOR, SOFR, SONIA or an alternate Base Rate (commonly based on the Federal Funds Rate or the Prime Rate), which typically reset semi-annually, quarterly, or monthly at the borrower's option. The borrower may also elect to have multiple interest reset periods for each loan.
(2)All of the Company’s portfolio company investments (including joint venture and short-term investments), which as of September 30, 2021 represented 221.9% of the Company’s net assets, are subject to legal restrictions on sales. The acquisition date represents the date of the Company's initial investment in the relevant portfolio company.
(3)Investment is not a qualifying investment as defined under Section 55(a) of the 1940 Act. Non-qualifying assets represent 26.4% of total investments at fair value as of September 30, 2021. Qualifying assets must represent at least 70% of total assets at the time of acquisition of any additional non-qualifying assets. If at any time qualifying assets do not represent at least 70% of the Company's total assets, the Company will be precluded from acquiring any additional non-qualifying asset until such time as it complies with the requirements of Section 55(a).
20
Barings BDC, Inc.
Unaudited Consolidated Schedule of Investments — (Continued)
September 30, 2021
(4)As defined in the 1940 Act, the Company is deemed to be an “affiliated person” of the portfolio company as the Company owns between 5% or more, up to 25% (inclusive), of the portfolio company's voting securities (“non-controlled affiliate”). Transactions related to investments in non-controlled "Affiliate Investments" for the nine months ended September 30, 2021 were as follows:
December 31, 2020
Value		 Gross Additions
(b)		 Gross Reductions (c)  Amount of Realized Gain (Loss)  Amount of Unrealized Gain (Loss)
September 30, 2021 Value
  Amount of Interest or Dividends Credited to Income(d)
Portfolio Company Type of Investment(a)
Advantage Insurance, Inc.(e)
Preferred Stock (587,001 shares) $ 5,946,641  $ —  $ (5,870,010) $ (76,631) $ —  $ —  $ 71,500 
5,946,641  —  (5,870,010) (76,631) —  —  71,500 
Eclipse Business Capital, LLC (e)
Second Lien Senior Secured Term Loan (7.5% Cash) —  4,501,161  —  —  44,294  4,545,455  80,550 
Revolver (LIBOR + 7.25%) —  4,408  (136,364) —  131,956  —  12,457 
LLC units (89,849,519 units) —  89,849,519  —  —  —  89,849,519  1,693,429 
—  94,355,088  (136,364) —  176,250  94,394,974  1,786,436 
Jocassee Partners LLC 9.1% Member Interest 22,623,820  10,000,000  —  —  3,509,620  36,133,440  — 
22,623,820  10,000,000  —  —  3,509,620  36,133,440  — 
JSC Tekers Holdings(e)
Preferred Stock (9,159,085 shares) 4,753,000  —  (4) —  1,200,409  5,953,405  — 
Common Stock (3,201 shares) —  —  —  —  —  —  — 
4,753,000  —  (4) —  1,200,409  5,953,405  — 
Security Holdings B.V(e)
Bridge Loan (5.0% PIK 5/31/2021) 5,187,508  263,697  —  —  —  5,451,205  206,690 
Senior Subordinated Loan (3.1% PIK) 8,746,454  207,230  —  —  —  8,953,684  208,872 
Senior Unsecured Term Loan (9.0% PIK) —  8,347,853  (1,168,250) (24,300) (201,603) 6,953,700  562,581 
Common Equity Interest 21,329,370  —  —  —  1,829,924  23,159,294  — 
35,263,332  8,818,780  (1,168,250) (24,300) 1,628,321  44,517,883  978,143 
Thompson Rivers LLC 7.75% Member Interest 10,011,840  20,000,000  —  —  2,673,040  32,684,880  1,330,495 
10,011,840  20,000,000  —  —  2,673,040  32,684,880  1,330,495 
Waccamaw River LLC 20% Member Interest —  9,362,416  (68,188) —  21,177  9,315,405  140,000 
—  9,362,416  (68,188) —  21,177  9,315,405  140,000 
Total Affiliate Investments $ 78,598,633  $ 142,536,284  $ (7,242,816) $ (100,931) $ 9,208,817  $ 222,999,987  $ 4,306,574 
(a)     Eclipse Business Capital, LLC, Thompson Rivers LLC and Waccamaw River LLC equity investments are income producing. All other equity and any equity-linked investments are non-income producing.
(b)     Gross additions include increases in the cost basis of investments resulting from new investments and follow-on investments.
(c)    Gross reductions include decreases in the total cost basis of investments resulting from principal repayments or sales.
(d) Represents the total amount of interest, fees or dividends credited to income for the portion of the year an investment was included in the Affiliate category.
(e) The fair value of the investment was determined using significant unobservable inputs.
21
Barings BDC, Inc.
Unaudited Consolidated Schedule of Investments — (Continued)
September 30, 2021
(5)    As defined in the 1940 Act, the Company is deemed to be both an “affiliated person” and “control” the portfolio company because it owns more than 25% of the portfolio company’s outstanding voting securities or it has the power to exercise control over the management or policies of such portfolio company (including through a management agreement). Transactions as of and during the nine months ended September 30, 2021 in which the portfolio company is deemed to be a "Control Investment" of the Company were as follows:
December 31, 2020
Value		 Gross Additions
(b)		 Gross Reductions (c)  Amount of Realized Gain (Loss)  Amount of Unrealized Gain (Loss)
September 30, 2021
Value
  Amount of Interest or Dividends Credited to Income(d)
Portfolio Company Type of Investment(a)
MVC Automotive Group GmbH(e)
Common Equity Interest $ 9,582,368  $ —  $ —  $ —  $ (501,948) $ 9,080,420  $ — 
Bridge Loan (6.0% PIK 12/31/2021) 7,149,166  —  —  —  —  7,149,166  325,287 
16,731,534  —  —  —  (501,948) 16,229,586  325,287 
MVC Private Equity Fund LP Limited Partnership Interest 8,899,284  —  —  —  (936,010) 7,963,274  — 
General Partnership Interest 224,978  1  —  —  (23,031) 201,948  478,754 
9,124,262  1  —  —  (959,041) 8,165,222  478,754 
Waccamaw River LLC 50% Member Interest —  4,500,000  (4,474,229) —  (25,771) —  — 
Total Control Investments $ 25,855,796  $ 4,500,001  $ (4,474,229) $ —  $ (1,486,760) $ 24,394,808  $ 804,041 
(a)     Equity and equity-linked investments are non-income producing, unless otherwise noted.
(b) Gross additions include increases in the cost basis of investments resulting from new investments and follow-on investments.
(c)     Gross reductions include decreases in the total cost basis of investments resulting from principal repayments or sales.
(d)    Represents the total amount of interest, fees or dividends credited to income for the portion of the year an investment was included in the Control category.
(e) The fair value of the investment was determined using significant unobservable inputs.
(6)Some or all of the investment is or will be encumbered as security for the Company's $800.0 million senior secured credit facility with ING Capital LLC initially entered into in February 2019 (as amended, restated and otherwise modified from time to time, the "February 2019 Credit Facility").
(7)The fair value of the investment was determined using significant unobservable inputs.
(8)Debt investment includes interest rate floor feature.
(9)The interest rate on these loans is subject to 1 Month LIBOR, which as of September 30, 2021 was 0.08025%.
(10)The interest rate on these loans is subject to 2 Month LIBOR, which as of September 30, 2021 was 0.11138%.
(11)The interest rate on these loans is subject to 3 Month LIBOR, which as of September 30, 2021 was 0.13013%.
(12)The interest rate on these loans is subject to 6 Month LIBOR, which as of September 30, 2021 was 0.15850%.
(13)The interest rate on these loans is subject to 1 Month GBP LIBOR, which as of September 30, 2021 was 0.04750%.
(14)The interest rate on these loans is subject to 3 Month GBP LIBOR, which as of September 30, 2021 was 0.08188%.
(15)The interest rate on these loans is subject to 6 Month GBP LIBOR, which as of September 30, 2021 was 0.17463%.
(16)The interest rate on these loans is subject to 3 Month EURIBOR, which as of September 30, 2021 was -0.54500%.
(17)The interest rate on these loans is subject to 6 Month EURIBOR, which as of September 30, 2021 was -0.52800%.
(18)The interest rate on these loans is subject to 3 Month STIBOR, which as of September 30, 2021 was -0.09900%.
(19)The interest rate on these loans is subject to 1 Month BBSY, which as of September 30, 2021 was 0.01000%.
(20)The interest rate on these loans is subject to 3 Month BBSY, which as of September 30, 2021 was 0.01960%.
(21)The interest rate on these loans is subject to 3 Month CDOR, which as of September 30, 2021 was 0.44468%.
(22)The interest rate on these loans is subject to 6 Month SONIA, which as of September 30, 2021 was 0.16350%.
(23)The interest rate on these loans is subject to 6 Month SOFR, which as of September 30, 2021 was 0.05628%.
(24)Non-accrual investment.
(25)Investment was purchased as part of the MVC Acquisition and is part of the Reference Portfolio for purposes of the Credit Support Agreement.
(26)In 2017, MVC received $5.7 million of 9.5% second lien callable notes due in 2025, in lieu of an escrow to satisfy any indemnification claims associated with MVC’s sale of its equity investment in U.S. Gas & Electric ("U.S. Gas"). Effective January 1, 2018, the cost basis of the U.S. Gas second lien loan was decreased by approximately $3.0 million due to a working capital adjustment. This loan is still subject to indemnification adjustments.


See accompanying notes.
22
Barings BDC, Inc.
Consolidated Schedule of Investments
December 31, 2020
Portfolio Company(6)
Industry
Type of Investment(1) (2)
Principal
Amount		 Cost Fair
Value
Non–Control / Non–Affiliate Investments:
1WorldSync, Inc. (4.0%)*(7) (9) (12)
IT Consulting & Other Services First Lien Senior Secured Term Loan (LIBOR + 6.25%, 7.3% Cash, Acquired 07/19, Due 07/25) $ 29,000,000  $ 28,490,102  $ 28,420,000 
29,000,000  28,490,102  28,420,000 
Accelerate Learning, Inc.
(1.0%)*(7) (9) (12)
Education Services First Lien Senior Secured Term Loan (LIBOR + 5.0%, 6.0% Cash, Acquired 12/18, Due 12/24) 7,567,965  7,461,410  7,258,435 
7,567,965  7,461,410  7,258,435 
Accurus Aerospace Corporation (2.9%)*(7) (9) (12)
Aerospace & Defense First Lien Senior Secured Term Loan (LIBOR + 5.5%, 6.5% Cash, Acquired 10/18, Due 10/24) 24,500,000  24,251,575  20,506,500 
24,500,000  24,251,575  20,506,500 
ADE Holding (d/b/a AD Education) (0.8%)*(3) (7) (9) (19)
Education Services First Lien Senior Secured Term Loan (EURIBOR + 5.0%, 5.0% Cash, Acquired 01/20, Due 01/27) 5,459,746  4,977,557  5,459,746 
5,459,746  4,977,557  5,459,746 
AEP Holdings, Inc. (1.8%)*(7) (9)
Wholesale
First Lien Senior Secured Term Loan (EURIBOR + 5.75%, 6.8% Cash, Acquired 11/20, Due 11/25) (18)
4,362,794  4,143,810  4,275,538 
First Lien Senior Secured Term Loan (LIBOR + 5.75%, 6.8% Cash, Acquired 11/20, Due 11/25) (12)
8,902,516  8,727,725  8,724,466 
13,265,310  12,871,535  13,000,004 
Aftermath Bidco Corporation (1.3%)* (7) (9) (12)
Professional Services First Lien Senior Secured Term Loan (LIBOR + 5.75%, 6.8% Cash, Acquired 04/19, Due 04/25) 9,425,284  9,265,301  9,335,155 
9,425,284  9,265,301  9,335,155 
Ahead DB Borrower, LLC. (0.3%)*(7) (9) (12)
Technology Distributors Second Lien Senior Secured Term Loan (LIBOR + 8.5%, 9.5% Cash, Acquired 10/20, Due 10/28) 2,139,295  2,076,161  2,075,117 
2,139,295  2,076,161  2,075,117 
Air Canada 2020-2 Class B Pass Through Trust (1.1%)* Airlines Structured Secured Note - Class B (9.0% Cash, Acquired 09/20, Due 10/25) 7,500,000  7,500,000  8,077,169 
7,500,000  7,500,000  8,077,169 
American Dental Partners, Inc. (1.3%)*(7) (9) (12)
Health Care Services First Lien Senior Secured Term Loan (LIBOR + 4.25%, 5.3% Cash, Acquired 11/18, Due 03/23) 9,800,000  9,786,672  9,396,240 
9,800,000  9,786,672  9,396,240 
American Scaffold, Inc. (1.3%)*(7) (9) (12)
Aerospace & Defense First Lien Senior Secured Term Loan (LIBOR + 5.25%, 6.3% Cash, Acquired 09/19, Due 09/25) 9,686,750  9,509,443  9,686,750 
9,686,750  9,509,443  9,686,750 
Anagram Holdings, LLC
(2.2%)*(3)
Chemicals, Plastics, & Rubber First Lien Senior Secured Note (10.0% Cash, 5.0% PIK, Acquired 08/20, Due 08/25) 13,673,780  12,565,289  15,588,108 
13,673,780  12,565,289  15,588,108 
Anchorage Capital CLO Ltd: Series 2013-1A (0.3%)*(3) (9) (12)
Structured Finance Structured Secured Note - Class DR (LIBOR + 6.8%, 7.0% Cash, Acquired 03/20, Due 10/30) 2,000,000  1,743,066  2,000,156 
2,000,000  1,743,066  2,000,156 
Anju Software, Inc. (1.9%)*(7) (12)
Application Software First Lien Senior Secured Term Loan (LIBOR + 6.25%, 6.4% Cash, Acquired 02/19, Due 02/25) 13,701,182  13,442,543  13,385,963 
13,701,182  13,442,543  13,385,963 
Apex Bidco Limited (0.3%)*(3) (7)
Business Equipment & Services
First Lien Senior Secured Term Loan (GBP LIBOR + 6.50%, 7.0% Cash, Acquired 01/20, Due 01/27) (9) (15)
1,992,033  1,851,359  1,950,974 
Subordinated Senior Unsecured Term Loan (8.0% PIK, Acquired 01/20, Due 07/27) 258,955  241,837  253,618 
2,250,988  2,093,196  2,204,592 
AQA Acquisition Holding, Inc. (f/k/a SmartBear) (0.7%)*(7) (9) (12)
High Tech Industries Second Lien Senior Secured Term Loan (LIBOR + 8.0%, 9.0% Cash, Acquired 10/18, Due 05/24) 4,959,088  4,877,581  4,959,088 
4,959,088  4,877,581  4,959,088 
Arch Global Precision LLC (2.3%)*(7) (12)
Industrial Machinery First Lien Senior Secured Term Loan (LIBOR + 4.75%, 5.0% Cash, Acquired 04/19, Due 04/26) 16,649,218  16,496,045  16,557,510 
16,649,218  16,496,045  16,557,510 
Archimede (0.4%)*(3) (7) (9) (17)
Consumer Services First Lien Senior Secured Term Loan (EURIBOR + 6.0%, 6.0% Cash, Acquired 10/20, Due 10/27) 2,677,354  2,510,391  2,610,420 
2,677,354  2,510,391  2,610,420 
Argus Bidco Limited (0.8%)*(3) (7) (9) (15)
High Tech Industries First Lien Senior Secured Term Loan (GBP LIBOR + 5.5%, 5.8% Cash, Acquired 12/20, Due 12/27) 5,715,005  5,383,300  5,543,555 
5,715,005  5,383,300  5,543,555 
23
Barings BDC, Inc.
Consolidated Schedule of Investments — (Continued)
December 31, 2020

Portfolio Company(6)
Industry
Type of Investment(1) (2)
Principal
Amount		 Cost Fair
Value
Armstrong Transport Group (Pele Buyer, LLC ) (1.0%)*(7) (9) (12)
Air Freight & Logistics First Lien Senior Secured Term Loan (LIBOR + 4.75%, 5.8% Cash, Acquired 06/19, Due 06/24) $ 5,354,941  $ 5,277,976  $ 5,302,778 
First Lien Senior Secured Term Loan (LIBOR + 6.0%, 7.0% Cash, Acquired 07/20, Due 06/24) 2,000,318  1,964,493  2,000,318 
7,355,259  7,242,469  7,303,096 
Ascensus Specialties, LLC
(1.0%)*(7) (9) (10)
Specialty Chemicals First Lien Senior Secured Term Loan (LIBOR + 4.75%, 4.9% Cash, Acquired 09/19, Due 09/26) 7,019,401  6,959,939  6,978,909 
7,019,401  6,959,939  6,978,909 
ASPEQ Heating Group LLC (1.2%)* (7) (9) (12)
Building Products, Air & Heating First Lien Senior Secured Term Loan (LIBOR + 5.25%, 6.3% Cash, Acquired 11/19, Due 11/25) 8,945,499  8,833,249  8,862,629 
8,945,499  8,833,249  8,862,629 
Auxi International (0.2%)*(3) (7) (9) (19)
Commercial Finance First Lien Senior Secured Term Loan (EURIBOR + 5.75%, 5.8% Cash, Acquired 12/19, Due 12/26) 1,712,970  1,514,901  1,682,438 
1,712,970  1,514,901  1,682,438 
AVSC Holding Corp.
(1.4%)*(9) (12)
Advertising First Lien Senior Secured Term Loan (LIBOR + 3.25%, 4.3% Cash, 0.25% PIK, Acquired 08/18, Due 03/25) 4,904,496  4,313,104  4,165,780 
First Lien Senior Secured Term Loan (LIBOR + 4.50%, 5.5% Cash, 1.0% PIK, Acquired 08/18, Due 03/25) 748,116  682,722  665,823 
First Lien Senior Secured Term Loan (5.0% Cash, 10.0% PIK, Acquired 11/20, Due 10/26) 4,951,086  4,816,560  5,668,994 
10,603,698  9,812,386  10,500,597 
Bass Pro Group, LLC (0.3%)*(9) (12)
General Merchandise Stores First Lien Senior Secured Term Loan (LIBOR + 5.0%, 5.8% Cash, Acquired 03/20, Due 09/24) 1,979,540  1,793,950  1,983,083 
1,979,540  1,793,950  1,983,083 
BDP International, Inc. (f/k/a BDP Buyer, LLC) (4.8%)*(7) (9) (12)
Air Freight & Logistics First Lien Senior Secured Term Loan (LIBOR + 5.25%, 6.3% Cash, Acquired 12/18, Due 12/24) 34,937,500  34,387,459  34,238,750 
34,937,500  34,387,459  34,238,750 
Beacon Pointe Advisors, LLC (0.1%)*(7) (9) (12)
Asset Manager & Custody Bank First Lien Senior Secured Term Loan (LIBOR + 5.0%, 6.0% Cash, Acquired 03/20, Due 03/26) 631,591  611,703  631,591 
631,591  611,703  631,591 
Benify (Bennevis AB)
(0.2%)*(3) (7) (9) (20)
High Tech Industries First Lien Senior Secured Term Loan (STIBOR + 5.25%, 5.3% Cash, Acquired 07/19, Due 07/26) 1,588,980  1,366,586  1,576,555 
1,588,980  1,366,586  1,576,555 
Black Diamond Equipment Rentals LLC (1.2%)*(7) (23)
Equipment Rental Second Lien Loan (12.5% Cash, Acquired 12/20, Due 06/22) 7,500,000  7,500,000  7,500,000 
Warrant (1.0 unit, Acquired 12/20) 847,000  847,000 
7,500,000  8,347,000  8,347,000 
British Airways 2020-1 Class B Pass Through Trust (0.2%)*
 Airlines Structured Secured Note - Class B (8.4% Cash, Acquired 11/20, Due 11/28) 1,500,000  1,500,000  1,661,827 
1,500,000  1,500,000  1,661,827 
British Engineering Services Holdco Limited (1.1%)*(3) (7) (9) (15)
Commercial Services & Supplies First Lien Senior Secured Term Loan (GBP LIBOR + 5.25%, 5.5% Cash, Acquired 12/20, Due 12/27) 8,667,451  7,989,566  8,191,066 
8,667,451  7,989,566  8,191,066 
Brown Machine Group Holdings, LLC (0.7%)*(7) (9) (12)
Industrial Equipment First Lien Senior Secured Term Loan (LIBOR + 5.25%, 6.3% Cash, Acquired 10/18, Due 10/24) 5,286,022  5,241,933  5,286,022 
5,286,022  5,241,933  5,286,022 
Cadent, LLC (f/k/a Cross MediaWorks) (1.0%)*(7) (9) (12)
Media & Entertainment First Lien Senior Secured Term Loan (LIBOR + 5.5%, 6.5% Cash, Acquired 09/18, Due 09/23) 7,532,846  7,490,785  7,361,851 
7,532,846  7,490,785  7,361,851 
Carlson Travel, Inc (1.0%)* Business Travel Management First Lien Senior Secured Note (6.8% Cash, Acquired 09/20, Due 12/25) 3,000,000  2,362,500  2,471,250 
Super Senior Secured Term Loan (10.5% Cash, Acquired 12/20, Due 3/25) 4,239,000  4,149,608  4,376,768 
Common Stock (1,962 units, Acquired 11/20)(7)
88,290  68,670 
7,239,000  6,600,398  6,916,688 
Carlyle Aviation Partners Ltd. (0.2%)* Structured Finance Structured Secured Note, Series 2019-2 - Class A (3.4% Cash, Acquired 3/20, Due 11/39) 912,844  826,343  863,003 
Structured Secured Note, Series 2018-2 - Class A (4.5% Cash, Acquired 3/20, Due 11/38) 432,194  391,920  408,302 
1,345,038  1,218,263  1,271,305 
24
Barings BDC, Inc.
Consolidated Schedule of Investments — (Continued)
December 31, 2020

Portfolio Company(6)
Industry
Type of Investment(1) (2)
Principal
Amount		 Cost Fair
Value
Centralis Finco S.a.r.l. (0.1%)*(3) (7) (9) (18)
Diversified Financial Services First Lien Senior Secured Term Loan (EURIBOR + 5.25%, 5.3% Cash, Acquired 05/20, Due 05/27) $ 867,913  $ 732,995  $ 867,913 
867,913  732,995  867,913 
Cineworld Group PLC
(1.1%)*(3) (9) (13)
Leisure Products First Lien Senior Secured Term Loan (LIBOR + 2.50%, 2.8% Cash, Acquired 04/20, Due 02/25) 9,070,729  5,915,501  6,121,290 
Super Senior Secured Term Loan (7.0% Cash, 8.3% PIK, Acquired 11/20, Due 05/24) 1,618,242  1,446,976  1,920,318 
Warrants (553,375 units, Acquired 12/20) 101,602  166,416 
10,688,971  7,464,079  8,208,024 
Classic Collision (Summit Buyer, LLC) (1.6%)*(7) (9) (12)
Auto Collision Repair Centers First Lien Senior Secured Term Loan (LIBOR + 4.5%, 5.5% Cash, Acquired 01/20, Due 01/26) 12,006,341  11,774,075  11,820,664 
12,006,341  11,774,075  11,820,664 
CM Acquisitions Holdings Inc. (3.4%)*(7) (9) (13)
Internet & Direct Marketing First Lien Senior Secured Term Loan (LIBOR + 4.75%, 5.8% Cash, Acquired 05/19, Due 05/25) 24,655,278  24,287,477  24,196,657 
24,655,278  24,287,477  24,196,657 
CMT Opco Holding, LLC (Concept Machine) (0.6%)*(7) (9) (12)
Distributors First Lien Senior Secured Term Loan (LIBOR + 5.0%, 6.0% Cash, Acquired 01/20, Due 01/25) 4,425,935  4,351,646  4,097,088 
LLC Units (8,309 units, Acquired 01/20) 332,904  230,492 
4,425,935  4,684,550  4,327,580 
Command Alkon (Project Potter Buyer, LLC) (3.0%)*(7) (9) (10)
Software First Lien Senior Secured Term Loan (LIBOR + 8.25%, 9.3% Cash, Acquired 04/20, Due 04/27) 22,166,804  21,527,201  21,501,800 
Class A Units (90.384 units, Acquired 04/20) 90,384  93,510 
Class B Units (33,324.69 units, Acquired 04/20) —  8,165 
22,166,804  21,617,585  21,603,475 
Confie Seguros Holding II Co. (0.3%)*(9) (12)
Insurance Brokerage Services Second Lien Senior Secured Term Loan (LIBOR + 8.5%, 8.7% Cash, Acquired 10/19, Due 11/25) 2,500,000  2,370,563  2,233,600 
2,500,000  2,370,563  2,233,600 
Contabo Finco S.À R.L (0.2%)*(3) (7) (9) (18)
Internet Software & Services First Lien Senior Secured Term Loan (EURIBOR + 4.75%, 4.8% Cash, Acquired 10/19, Due 10/26) 1,483,377  1,310,386  1,454,918 
1,483,377  1,310,386  1,454,918 
CSL DualCom (0.5%)*(3) (7) (9) (15)
Tele-communications First Lien Senior Secured Term Loan (GBP LIBOR + 5.5%, 5.6% Cash, Acquired 09/20, Due 09/27) 3,776,936  3,339,563  3,646,170 
3,776,936  3,339,563  3,646,170 
Custom Alloy Corporation (4.8%)*(7) (23)
Manufacturer of Pipe Fittings & Forgings Second Lien Loan (15.0% PIK, Acquired 12/20, Due 04/22) 39,391,300  31,434,257  31,434,257 
Revolver (15.0% PIK, Acquired 12/20, Due 04/21) 3,745,808  3,228,308  3,228,308 
43,137,108  34,662,565  34,662,565 
Dart Buyer, Inc. (1.7%)*(3) (7) (9) (12)
Aerospace & Defense First Lien Senior Secured Term Loan (LIBOR + 4.75%, 5.8% Cash, Acquired 04/19, Due 04/25) 12,310,907  12,092,929  12,188,061 
12,310,907  12,092,929  12,188,061 
Diamond Sports Group, LLC (0.1%)*(9) (10)
Broadcasting First Lien Senior Secured Term Loan (LIBOR + 3.25%, 3.4% Cash, Acquired 03/20, Due 08/26) 989,975  790,536  872,208 
989,975  790,536  872,208 
Discovery Education, Inc. (3.7%)*(7) (9) (10)
Publishing First Lien Senior Secured Term Loan (LIBOR + 4.75%, 5.8% Cash, Acquired 10/20, Due 10/26) 27,000,000  26,538,991  26,527,500 
27,000,000  26,538,991  26,527,500 
Distinct Holdings, Inc. (1.0%)*(7) (9) (10)
Systems Software First Lien Senior Secured Term Loan (LIBOR + 4.75%, 5.8% Cash, Acquired 04/19, Due 12/23) 7,516,792  7,453,665  7,475,638 
7,516,792  7,453,665  7,475,638 
DreamStart Bidco SAS (d/b/a SmartTrade) (0.3%)*(3) (7) (9) (19)
Diversified Financial Services First Lien Senior Secured Term Loan (EURIBOR + 4.5%, 4.5% Cash, 1.8% PIK, Acquired 03/20, Due 03/27) 2,232,173  1,939,189  2,176,655 
2,232,173  1,939,189  2,176,655 
Dukane IAS, LLC (0.6%)*(7) (23)
Welding Equipment Manufacturer Second Lien Note (10.5% Cash, 2.5% PIK, Acquired 12/20, Due 12/24) 4,604,374  4,604,374  4,604,374 
4,604,374  4,604,374  4,604,374 
Envision Healthcare Corp.
(0.4%)*(9) (10)
Health Care Services First Lien Senior Secured Term Loan (LIBOR + 3.75%, 3.9% Cash, Acquired 03/20, Due 10/25) 3,156,772  2,259,339  2,623,688 
3,156,772  2,259,339  2,623,688 
25
Barings BDC, Inc.
Consolidated Schedule of Investments — (Continued)
December 31, 2020

Portfolio Company(6)
Industry
Type of Investment(1) (2)
Principal
Amount		 Cost Fair
Value
Exeter Property Group, LLC (2.6%)*(7) (9) (10)
Real Estate First Lien Senior Secured Term Loan (LIBOR + 4.5%, 4.7% Cash, Acquired 02/19, Due 08/24) $ 19,363,647  $ 19,100,177  $ 18,976,374 
19,363,647  19,100,177  18,976,374 
F24 (Stairway BidCo Gmbh) (0.3%)*(3) (7) (9) (18)
Software Services First Lien Senior Secured Term Loan (EURIBOR + 6.5%, 6.5% Cash, Acquired 08/20, Due 08/27) 1,855,625  1,734,062  1,805,715 
1,855,625  1,734,062  1,805,715 
FitzMark Buyer, LLC (0.5%)*(7) (9) (10)
Cargo & Transportation First Lien Senior Secured Term Loan (LIBOR + 4.75%, 5.8% Cash, Acquired 12/20, Due 12/26) 3,529,412  3,429,854  3,429,412 
3,529,412  3,429,854  3,429,412 
Foundation Risk Partners, Corp.
(1.4%)*(7) (9) (12)
Financial Services First Lien Senior Secured Term Loan (LIBOR + 4.75%, 5.8% Cash, Acquired 09/20, Due 11/23) 8,789,777  8,575,855  8,576,718 
Second Lien Senior Secured Term Loan (LIBOR + 8.50%, 9.5% Cash, Acquired 09/20, Due 11/24) 1,722,222  1,588,593  1,602,355 
10,511,999  10,164,448  10,179,073 
GoldenTree Loan Opportunities IX, Limited: Series 2014-9A (0.2%)*(3) (9) (12)
Structured Finance Structured Secured Note - Class DR2 (LIBOR + 3.0%, 3.2% Cash, Acquired 03/20, Due 10/29) 1,250,000  916,935  1,231,963 
1,250,000  916,935  1,231,963 
GTM Intermediate Holdings, Inc. (0.9%)*(7) (23)
Medical Equipment Manufacturer Second Lien Loan (11.0% Cash, 1.0% PIK, Acquired 12/20, Due 11/24) 5,115,750  5,064,593  5,064,593 
Common Stock (2 shares, Acquired 12/20) 1,078,778  1,078,778 
5,115,750  6,143,371  6,143,371 
Gulf Finance, LLC (0.1%)*(9) (10)
Oil & Gas Exploration & Production First Lien Senior Secured Term Loan (LIBOR + 5.25%, 6.3% Cash, Acquired 10/18, Due 08/23) 1,048,305  944,246  788,105 
1,048,305  944,246  788,105 
Hawaiian Airlines 2020-1 Class B Pass Through Certificates (1.1%)* Airlines Structured Secured Note - Class B (11.3% Cash, Acquired 08/20, Due 09/25) 7,500,000  7,500,000  7,738,286 
7,500,000  7,500,000  7,738,286 
Heartland, LLC (1.2%)*(7) (9) (12)
Commercial Services & Supplies First Lien Senior Secured Term Loan (LIBOR + 4.75%, 5.8% Cash, Acquired 08/19, Due 08/25) 8,831,018  8,667,194  8,582,892 
8,831,018  8,667,194  8,582,892 
Heilbron (f/k/a Sucsez (Bolt Bidco B.V.)) (1.6%)*(3) (7) (9)
Insurance
First Lien Senior Secured Term Loan (EURIBOR + 5.25%, 5.3% Cash, Acquired 09/19, Due 09/26)(19)
10,413,655  9,216,174  10,266,128 
First Lien Senior Secured Term Loan (EURIBOR + 6.25%, 6.3% Cash, Acquired 07/20, Due 09/26) (18)
1,092,757  820,169  1,092,757 
11,506,412  10,036,343  11,358,885 
Highbridge Loan Management Ltd: Series 2014A-19 (0.1%)*(3) (9) (12)
Structured Finance Structured Secured Note - Class E (LIBOR + 6.75%, 7.0% Cash, Acquired 03/20, Due 07/30) 1,000,000  833,749  978,180 
1,000,000  833,749  978,180 
Highpoint Global LLC (0.7%)*(7) (23)
Government Services Second Lien Note (12.0% Cash, 2.0% PIK, Acquired 12/20, Due 09/22) 5,307,799  5,286,568  5,286,568 
5,307,799  5,286,568  5,286,568 
Holley Performance Products (Holley Purchaser, Inc.) (2.4%)*(7) (9) (12)
Automotive Parts & Equipment First Lien Senior Secured Term Loan (LIBOR + 5.0%, 5.2% Cash, Acquired 10/18, Due 10/25) 16,936,387  16,754,221  16,936,387 
16,936,387  16,754,221  16,936,387 
HTI Technology & Industries (1.70%)* (7) (23)
Electronic Component Manufacturing Second Lien Note (12.0% Cash, 4.8% PIK, Acquired 12/20, Due 09/24) 12,619,964  12,115,165  12,115,165 
12,619,964  12,115,165  12,115,165 
HW Holdco, LLC (Hanley Wood LLC) (1.0%)*(7) (9) (12)
Advertising First Lien Senior Secured Term Loan (LIBOR + 4.5%, 5.5% Cash, Acquired 12/18, Due 12/24) 7,527,218  7,396,115  7,527,218 
7,527,218  7,396,115  7,527,218 
Hyperion Materials & Technologies, Inc. (1.9%)*(7) (9) (12)
Industrial Machinery First Lien Senior Secured Term Loan (LIBOR + 5.5%, 6.5% Cash, Acquired 08/19, Due 08/26) 13,855,795  13,643,767  13,700,560 
13,855,795  13,643,767  13,700,560 
IGL Holdings III Corp. (1.9%)*(7) (9) (12)
Commercial Printing First Lien Senior Secured Term Loan (LIBOR + 5.75%, 6.8% Cash, Acquired 11/20, Due 11/26) 14,025,147  13,635,887  13,626,360 
14,025,147  13,635,887  13,626,360 
IM Analytics Holding, LLC (d/b/a NVT) (1.0%)*(7) (9) (12)
Electronic Instruments & Components First Lien Senior Secured Term Loan (LIBOR + 7.0%, 8.0% Cash, Acquired 11/19, Due 11/23) 8,209,191  8,147,872  6,982,738 
Warrant (68,950 units, Acquired 11/19) —  — 
8,209,191  8,147,872  6,982,738 
26
Barings BDC, Inc.
Consolidated Schedule of Investments — (Continued)
December 31, 2020

Portfolio Company(6)
Industry
Type of Investment(1) (2)
Principal
Amount		 Cost Fair
Value
INOS 19-090 GmbH (1.7%)*(3) (7) (9) (18)
Aerospace & Defense First Lien Senior Secured Term Loan (EURIBOR + 6.1%, 6.1% Cash, Acquired 12/20, Due 10/27) $ 12,275,911  $ 11,888,699  $ 11,934,913 
12,275,911  11,888,699  11,934,913 
Institutional Shareholder Services, Inc. (0.7%)*(7) (9) (12)
Diversified Support Services Second Lien Senior Secured Term Loan (LIBOR + 8.5%, 8.7% Cash, Acquired 03/19, Due 03/27) 4,951,685  4,830,132  4,951,685 
4,951,685  4,830,132  4,951,685 
International Precision Components (1.0%)*(7) (23)
Plastic Injection Molding Second Lien Loan (12.0% Cash, 2.0% PIK, Acquired 12/20, Due 10/24) 7,000,000  6,895,000  6,895,000 
7,000,000  6,895,000  6,895,000 
ISS#2, LLC (d/b/a Industrial Services Solutions) (0.9%)*(7) (9) (12)
Commercial Services & Supplies First Lien Senior Secured Term Loan (LIBOR + 5.5%, 6.5% Cash, Acquired 02/20, Due 02/26) 6,819,551  6,700,432  6,300,583 
6,819,551  6,700,432  6,300,583 
Jade Bidco Limited (Jane's)
(1.7%)*(3) (7) (9)
Aerospace & Defense
First Lien Senior Secured Term Loan (LIBOR + 4.5%, 4.8% Cash, 2.0% PIK, Acquired 11/19, Due 12/26)(13)
10,538,414  10,291,098  10,353,797 
First Lien Senior Secured Term Loan (EURIBOR + 4.5%, 4.5% Cash, 2.0% PIK, Acquired 11/19, Due 12/26)(19)
2,057,007  1,813,166  2,020,971 
12,595,421  12,104,264  12,374,768 
Jedson Engineering, Inc. (0.4%)*(7) (8) (23)
Engineering & Construction Management First Lien Loan (12.0% Cash, 3.0% PIK, Acquired 12/20, Due 06/22) 9,560,423  3,000,000  3,000,000 
9,560,423  3,000,000  3,000,000 
JetBlue 2019-1 Class B Pass Through Trust (0.7%)* Airlines Structured Secured Note - Class B (8.0% Cash, Acquired 08/20, Due 11/27) 4,721,693  4,721,693  5,048,044 
4,721,693  4,721,693  5,048,044 
Kano Laboratories LLC (1.4%)*(7) (9) (12)
Chemicals, Plastics & Rubber First Lien Senior Secured Term Loan (LIBOR + 5.0%, 6.0% Cash, Acquired 11/20, Due 09/26) 9,873,095  9,589,856  9,584,754 
Partnership Equity (227.2 units, Acquired 11/20) 227,198  227,200 
9,873,095  9,817,054  9,811,954 
Kenan Advantage Group Inc. (0.6%)* (9) (10)
Trucking First Lien Senior Secured Term Loan (LIBOR + 3.0%, 4.0% Cash, Acquired 08/18, Due 07/22) 4,265,453  4,263,951  4,217,125 
4,265,453  4,263,951  4,217,125 
Kene Acquisition, Inc. (En Engineering) (1.0%)*(7) (9) (12)
Oil & Gas Equipment & Services First Lien Senior Secured Term Loan (LIBOR + 4.25%, 5.3% Cash, Acquired 08/19, Due 08/26) 7,298,712  7,173,784  7,202,679 
7,298,712  7,173,784  7,202,679 
Kona Buyer, LLC (4.8%)*(7) (9) (12)
High Tech Industries First Lien Senior Secured Term Loan (LIBOR + 5.5%, 6.3% Cash, Acquired 12/20, Due 12/27) 35,000,000  34,132,135  34,125,000 
35,000,000  34,132,135  34,125,000 
LAC Intermediate, LLC (f/k/a Lighthouse Autism Center) (1.3%)*(7) (9) (12)
Healthcare & Pharmaceuticals First Lien Senior Secured Term Loan (LIBOR + 5.75%, 6.8% Cash, Acquired 10/18, Due 10/24) 9,218,032  9,083,136  8,987,581 
Class A LLC Units (154,320 units, Acquired 10/18) 154,320  184,312 
9,218,032  9,237,456  9,171,893 
Learfield Communications, LLC (1.0%)* Broadcasting
First Lien Senior Secured Term Loan (LIBOR + 3.25%, 4.3% Cash, Acquired 08/20, Due 12/23)(9)(10)
136,803  96,446  123,073 
First Lien Senior Secured Term Loan (LIBOR + 3.00%, 3.2% Cash, 10.0% PIK, Acquired 08/20, Due 12/23)(12)
7,181,368  7,117,163  7,133,468 
7,318,171  7,213,609  7,256,541 
Legal Solutions Holdings (1.3%)*(7) (23)
Business Services Senior Subordinated Loan (6.0% Cash, 10.0% PIK, Acquired 12/20, Due 03/22) 10,398,126  9,597,471  9,597,471 
10,398,126  9,597,471  9,597,471 
MB2 Dental Solutions, LLC (1.0%)*(7) (9) (12)
Health Care Services First Lien Senior Secured Term Loan (LIBOR + 6.5%, 6.7% Cash, Acquired 09/19, Due 09/23) 7,443,622  7,381,819  7,443,622 
7,443,622  7,381,819  7,443,622 
Media Recovery, Inc. (SpotSee) (1.3%)*(7) (9) (12)
Containers, Packaging & Glass First Lien Senior Secured Term Loan (LIBOR + 6.0%, 7.0% Cash, Acquired 11/19, Due 11/25) 9,179,626  8,873,020  9,018,983 
9,179,626  8,873,020  9,018,983 
Modern Star Holdings Bidco Pty Limited. (1.4%)*(3) (7) (9) (22)
Non-durable Consumer Goods First Lien Senior Secured Term Loan (BBSY + 6.25%, 6.8% Cash, Acquired 12/20, Due 12/26) 10,482,797  9,973,821  10,101,881 
10,482,797  9,973,821  10,101,881 
27
Barings BDC, Inc.
Consolidated Schedule of Investments — (Continued)
December 31, 2020

Portfolio Company(6)
Industry
Type of Investment(1) (2)
Principal
Amount		 Cost Fair
Value
MSG National Properties (0.3%)*(3) (7) (9) (12)
Hotel, Gaming, & Leisure First Lien Senior Secured Term Loan (LIBOR + 6.25%, 7.0% Cash, Acquired 11/20, Due 11/25) $ 2,461,759  $ 2,389,417  $ 2,474,068 
2,461,759  2,389,417  2,474,068 
Murphy Midco Limited (1.3%)*(3) (7) (9) (16)
Media, Diversified & Production First Lien Senior Secured Term Loan (GBP LIBOR + 5.50%, 5.5% Cash, Acquired 11/20, Due 11/27) 9,904,416  9,228,222  9,508,239 
9,904,416  9,228,222  9,508,239 
Music Reports, Inc. (0.8%)*(7) (9) (10)
Media & Entertainment First Lien Senior Secured Term Loan (LIBOR + 6.25%, 7.3% Cash, Acquired 08/20, Due 08/26) 5,592,972  5,459,912  5,469,461 
5,592,972  5,459,912  5,469,461 
Neuberger Berman CLO Ltd: Series 2020-36A (0.3%)*(3) (9) (12)
Structured Finance Structured Secured Note - Class E (LIBOR + 7.81%, 8.0% Cash, Acquired 03/20, Due 04/33) 2,500,000  2,476,562  2,501,790 
2,500,000  2,476,562  2,501,790 
NGS US Finco, LLC (f/k/a Dresser Natural Gas Solutions) (1.6%)*(7) (9) (10)
Energy Equipment & Services First Lien Senior Secured Term Loan (LIBOR + 4.25%, 5.3% Cash, Acquired 10/18, Due 10/25) 11,855,804  11,813,315  11,645,956 
11,855,804  11,813,315  11,645,956 
Omni Intermediate Holdings, LLC (1.4%)*(7) (9) (10)
Transportation First Lien Senior Secured Term Loan (LIBOR + 5.0%, 6.0% Cash, Acquired 12/20, Due 12/26) 10,000,000  9,700,263  9,700,000 
10,000,000  9,700,263  9,700,000 
Options Technology Ltd.
(1.3%)*(3) (7) (9) (12)
Computer Services First Lien Senior Secured Term Loan (LIBOR + 4.5%, 5.5% Cash, Acquired 12/19, Due 12/25) 9,796,552  9,583,342  9,633,049 
9,796,552  9,583,342  9,633,049 
Pacific Health Supplies Bidco Pty Limited (2.5%)*(3) (7) (9) (21)
Healthcare & Pharmaceuticals First Lien Senior Secured Term Loan (BBSY + 6.0%, 6.5% Cash, Acquired 12/20, Due 12/25) 18,489,367  17,237,355  17,919,335 
18,489,367  17,237,355  17,919,335 
Pare SAS (SAS Maurice MARLE) (0.7%)*(3) (7) (9) (19)
Health Care Equipment First Lien Senior Secured Term Loan (EURIBOR + 5.25%, 5.3% Cash, 1.5% PIK, Acquired 12/19, Due 12/26) 4,817,430  4,305,403  4,683,024 
4,817,430  4,305,403  4,683,024 
Patriot New Midco 1 Limited (Forensic Risk Alliance) (1.2%)*(3) (7) (9)
Diversified Financial Services
First Lien Senior Secured Term Loan (LIBOR + 5.75%, 6.8% Cash, Acquired 02/20, Due 02/27)(12)
4,489,471  4,372,581  4,388,907 
First Lien Senior Secured Term Loan (EURIBOR + 5.75%, 5.8% Cash, Acquired 02/20, Due 02/27) (18)
4,126,940  3,579,755  4,034,496 
8,616,411  7,952,336  8,423,403 
PerTronix, LLC (1.1%)*(7) (9) (13)
Automotive First Lien Senior Secured Term Loan (LIBOR + 5.25%, 6.3% Cash, Acquired 10/20, Due 10/26) 8,308,515  8,186,879  8,183,887 
8,308,515  8,186,879  8,183,887 
Playtika Holding Corp. (0.5%)*(9) (12)
Leisure, Amusement & Entertainment First Lien Senior Secured Term Loan (LIBOR + 6.0%, 7.0% Cash, Acquired 03/20, Due 12/24) 3,800,000  3,536,230  3,818,582 
3,800,000  3,536,230  3,818,582 
Premier Technical Services Group (Project Graphite) (0.4%)*(3) (7) (9) (15)
Construction & Engineering First Lien Senior Secured Term Loan (GBP LIBOR + 6.75%, 7.3% Cash, Acquired 08/19, Due 06/26) 3,108,900  2,681,906  3,039,998 
3,108,900  2,681,906  3,039,998 
Premium Franchise Brands, LLC (3.4%)*(7) (9) (12)
Research & Consulting Services First Lien Senior Secured Term Loan (LIBOR + 6.25%, 7.3% Cash, Acquired 12/20, Due 12/26) 25,000,000  24,501,666  24,500,000 
25,000,000  24,501,666  24,500,000 
Process Equipment, Inc. (ProcessBarron) (0.8%)*(7) (9) (12)
Industrial Air & Material Handling Equipment First Lien Senior Secured Term Loan (LIBOR + 5.25%, 6.3% Cash, Acquired 03/19, Due 03/25) 6,173,594  6,090,812  5,612,414 
6,173,594  6,090,812  5,612,414 
Professional Datasolutions, Inc. (PDI) (2.3%)*(7) (9) (12)
Application Software First Lien Senior Secured Term Loan (LIBOR + 4.5%, 5.5% Cash, Acquired 03/19, Due 10/24) 16,924,678  16,905,254  16,628,496 
16,924,678  16,905,254  16,628,496 
PSC UK Pty Ltd. (0.4%)*(3) (7) (9) (15)
Insurance Services First Lien Senior Secured Term Loan (GBP LIBOR + 6.0%, 6.5% Cash, Acquired 11/19, Due 10/24) 2,684,817  2,439,292  2,614,299 
2,684,817  2,439,292  2,614,299 
Questel Unite (3.1%)*(3) (7) (9) (18)
Business Services
First Lien Senior Secured Term Loan (EURIBOR + 6.25%, 7.3% Cash, Acquired 12/20, Due 12/27)
22,451,369  21,728,443  21,905,058 
22,451,369  21,728,443  21,905,058 
28
Barings BDC, Inc.
Consolidated Schedule of Investments — (Continued)
December 31, 2020

Portfolio Company(6)
Industry
Type of Investment(1) (2)
Principal
Amount		 Cost Fair
Value
Radwell International, LLC (1.9%)*(7) (9) (12)
Wholesale First Lien Senior Secured Term Loan (LIBOR + 4.75%, 5.8% Cash, Acquired 12/20, Due 12/26) $ 14,264,053  $ 13,916,962  $ 13,914,053 
14,264,053  13,916,962  13,914,053 
Recovery Point Systems, Inc.
(1.6%)*(7) (9) (10)
Technology First Lien Senior Secured Term Loan (LIBOR + 6.5%, 7.5% Cash, Acquired 03/20, Due 07/26) 11,795,776  11,572,084  11,766,287 
11,795,776  11,572,084  11,766,287 
REP SEKO MERGER SUB LLC
(1.2%)* (7) (9) (10)
Air Freight & Logistics First Lien Senior Secured Term Loan (LIBOR + 5.0%, 6.0% Cash, Acquired 12/20, Due 12/26) 8,545,455  8,290,487  8,345,456 
8,545,455  8,290,487  8,345,456 
RPX Corporation (2.4%)*(7) (9) (12)
Research & Consulting Services First Lien Senior Secured Term Loan (LIBOR + 6.0%, 7.0% Cash, Acquired 10/20, Due 10/25) 17,500,000  17,110,715  17,106,250 
17,500,000  17,110,715  17,106,250 
RR Ltd: Series 2019-6A
(0.3%)*(3) (12)
Structured Finance Structured Secured Note - Class D (LIBOR + 6.75%, 7.0% Cash, Acquired 03/20, Due 04/30) 2,000,000  1,661,539  2,000,124 
2,000,000  1,661,539  2,000,124 
Ruffalo Noel Levitz, LLC
(1.3%)*(7) (9) (12)
Media Services First Lien Senior Secured Term Loan (LIBOR + 6.0%, 7.0% Cash, Acquired 01/19, Due 05/22) 9,616,736  9,552,719  9,567,718 
9,616,736  9,552,719  9,567,718 
Safety Products Holdings, LLC (2.5%)* (9) (12)
Non-durable Consumer Goods
First Lien Senior Secured Term Loan (LIBOR + 6.0%, 7.0% Cash, Acquired 12/20, Due 12/26)(7)
18,108,567  17,559,056  17,555,609 
Common Stock (424.1 units, Acquired 12/20) 424,088  424,090 
18,108,567  17,983,144  17,979,699 
Scaled Agile, Inc. (0.7%)*(7) (9) (10)
Research & Consulting Services First Lien Senior Secured Term Loan (LIBOR + 4.75%, 5.8% Cash, Acquired 06/19, Due 06/24) 4,845,720  4,807,839  4,797,263 
4,845,720  4,807,839  4,797,263 
Serta Simmons Bedding LLC
(1.5%)*(9) (10)
Home Furnishings Super Priority First Out (LIBOR + 7.5%, 8.5% Cash, Acquired 6/20, Due 08/23) 7,424,499  7,234,063  7,498,744 
Super Priority Second Out (LIBOR + 7.5%, 8.5% Cash, Acquired 6/20, Due 08/23) 3,643,817  3,379,870  3,272,913 
11,068,316  10,613,933  10,771,657 
SISU ACQUISITIONCO., INC. (2.2%)*(7) (9) (12)
Aerospace & Defense First Lien Senior Secured Term Loan (LIBOR + 5.25%, 6.3% Cash, Acquired 12/20, Due 12/26) 16,132,835  15,811,282  15,810,178 
16,132,835  15,811,282  15,810,178 
SMA Holdings, Inc. (1.0%)*(7) (23)
Consulting First Lien Loan (11.0% Cash, Acquired 12/20, Due 06/24) 7,000,000  6,720,000  6,720,000 
Warrants (2.0 units, Acquired 12/20) 286,781  286,781 
7,000,000  7,006,781  7,006,781 
Smile Brands Group Inc.
(2.1%)*(7) (9) (12)
Health Care Services First Lien Senior Secured Term Loan (LIBOR + 5.17%, 5.4% Cash, Acquired 10/18, Due 10/24) 5,880,607  5,842,184  5,824,154 
First Lien Senior Secured Term Loan (LIBOR + 4.75%, 5.8% Cash, Acquired 12/20, Due 10/24) 9,310,993  9,030,258  9,024,500 
15,191,600  14,872,442  14,848,654 
SN BUYER, LLC (4.8%)*(7) (9) (12)
Health Care Services First Lien Senior Secured Term Loan (LIBOR + 6.25%, 7.3% Cash, Acquired 12/20, Due 11/26) 35,000,000  34,304,393  34,300,000 
35,000,000  34,304,393  34,300,000 
Springbrook Software (SBRK Intermediate, Inc.) (1.3%)*(7) (9) (12)
Enterprise Software & Services First Lien Senior Secured Term Loan (LIBOR + 5.75%, 6.8% Cash, Acquired 12/19, Due 12/26) 9,349,719  9,152,983  9,201,599 
9,349,719  9,152,983  9,201,599 
SSCP Pegasus Midco Limited (2.3%)*(3) (7) (9) (16)
Healthcare & Pharmaceuticals First Lien Senior Secured Term Loan (GBP LIBOR + 6.75%, 6.8% Cash, Acquired 12/20, Due 11/27) 17,664,989  16,498,614  16,733,353 
17,664,989  16,498,614  16,733,353 
Syniverse Holdings, Inc. (2.2%)*(9) (12)
Technology Distributors First Lien Senior Secured Term Loan (LIBOR + 5.0%, 6.0% Cash, Acquired 08/18, Due 03/23) 17,480,454  16,048,735  15,749,365 
17,480,454  16,048,735  15,749,365 
Team Health Holdings, Inc. (0.8%)*(9) (10)
Health Care Services First Lien Senior Secured Term Loan (LIBOR + 2.75%, 3.8% Cash, Acquired 09/18, Due 02/24) 6,822,785  6,659,174  6,058,906 
6,822,785  6,659,174  6,058,906 
29
Barings BDC, Inc.
Consolidated Schedule of Investments — (Continued)
December 31, 2020

Portfolio Company(6)
Industry
Type of Investment(1) (2)
Principal
Amount		 Cost Fair
Value
The Hilb Group, LLC
(2.1%)*(7) (9)
Insurance Brokerage
First Lien Senior Secured Term Loan (LIBOR + 5.75%, 6.8% Cash, Acquired 12/19, Due 12/26)(11)
$ 11,667,719  $ 11,413,365  $ 11,541,707 
First Lien Senior Secured Term Loan (LIBOR + 6.0%, 7.0% Cash, Acquired 12/19, Due 12/26)(12)
3,602,001  3,374,934  3,373,303 
15,269,720  14,788,299  14,915,010 
Total Safety U.S. Inc. (0.9%)* (12)
Diversified Support Services First Lien Senior Secured Term Loan (LIBOR + 6.0%, 7.0% Cash, Acquired 11/19, Due 08/25) 6,857,482  6,611,003  6,576,325 
6,857,482  6,611,003  6,576,325 
Transit Technologies LLC
(0.7%)*(7) (9) (12)
Software First Lien Senior Secured Term Loan (LIBOR + 4.75%, 5.0% Cash, Acquired 02/20, Due 02/25) 6,035,305  5,859,123  5,221,746 
6,035,305  5,859,123  5,221,746 
Transportation Insight, LLC (3.3%)*(7) (9) (12)
Air Freight & Logistics First Lien Senior Secured Term Loan (LIBOR + 4.5%, 4.6% Cash, Acquired 08/18, Due 12/24) 24,506,875  24,346,335  23,899,105 
24,506,875  24,346,335  23,899,105 
Truck-Lite Co., LLC (3.0%)*(7) (9) (12)
Automotive Parts & Equipment First Lien Senior Secured Term Loan (LIBOR + 6.25%, 7.3% Cash, Acquired 12/19, Due 12/26) 22,352,885  21,960,470  21,791,827 
22,352,885  21,960,470  21,791,827 
Trystar, LLC (2.5%)*(7) (9) (12)
Power Distribution Solutions First Lien Senior Secured Term Loan (LIBOR + 4.75%, 5.8% Cash, Acquired 09/18, Due 09/23) 17,596,398  17,384,658  17,288,461 
Class A LLC Units (384.5 units, Acquired 09/18) 395,995  339,474 
17,596,398  17,780,653  17,627,935 
Tuf-Tug, Inc. (0.1%)*(7) (23)
Safety Equipment Manufacturer Common Stock (24.6 shares, Acquired 12/20) 385,047  $ 385,047 
385,047  385,047 
Turf Products, LLC (1.2%)*(7) (23)
Landscaping & Irrigation Equipment Distributor Senior Subordinated Debt (10.0% Cash, Acquired 12/20, Due 10/23) 8,697,056  8,383,962  8,383,962 
8,697,056  8,383,962  8,383,962 
U.S. Gas & Electric, Inc. (0.2%)*(7) (23)
Energy Services Second Lien Loan (9.5% Cash, Acquired 12/20, Due 07/25) 2,285,250  1,785,250  1,785,250 
Second Lien Loan (9.5% Cash, Acquired 12/20, Due 07/25)(24)
2,485,469  —  — 
4,770,719  1,785,250  1,785,250 
U.S. Silica Company (0.2%)*(3) (9) (10)
Metal & Glass Containers First Lien Senior Secured Term Loan (LIBOR + 4.0%, 5.0% Cash, Acquired 08/18, Due 05/25) 1,487,525  1,490,312  1,299,724 
1,487,525  1,490,312  1,299,724 
UKFast Leaders Limited (3.3%)*(3) (7) (9) (14)
Technology First Lien Senior Secured Term Loan (GBP LIBOR + 6.75%, 6.8% Cash, Acquired 09/20, Due 9/27) 24,226,278  22,140,865  23,625,466 
24,226,278  22,140,865  23,625,466 
USF Holdings LLC (U.S. Farathane, LLC) (0.4%)*(9) (12)
Auto Parts & Equipment First Lien Senior Secured Term Loan (LIBOR + 3.5%, 4.5% Cash, Acquired 08/18, Due 12/21) 3,088,580  3,092,541  2,849,214 
3,088,580  3,092,541  2,849,214 
USLS Acquisition, Inc. (f/k/a US Legal Support, Inc.) (2.1%)*(7) (9) (12)
Legal Services First Lien Senior Secured Term Loan (LIBOR + 5.75%, 6.8% Cash, Acquired 11/18, Due 11/24) 16,388,428  16,165,710  15,226,488 
16,388,428  16,165,710  15,226,488 
Utac Ceram (0.2%)*(3) (7) (9) (18)
Business Services First Lien Senior Secured Term Loan (EURIBOR + 5.75%, 5.8% Cash, Acquired 09/20, Due 09/27) 1,713,064  1,524,242  1,651,143 
1,713,064  1,524,242  1,651,143 
Validity, Inc. (0.6%)*(7) (9) (10)
IT Consulting & Other Services First Lien Senior Secured Term Loan (LIBOR + 4.75%, 4.9% Cash, Acquired 07/19, Due 05/25) 5,025,862  4,896,882  4,586,098 
5,025,862  4,896,882  4,586,098 
W2O Holdings, Inc. (0.0%)* (7) (9)
Healthcare Technology Undrawn Delayed Draw Term Loan (LIBOR + 5.0%, 5.0% Cash, Acquired 10/20, Due 06/25) —  (115,981) (104,214)
—  (115,981) (104,214)
Winebow Group, LLC, (The) (2.1%)*(9) (10)
Consumer Goods First Lien Senior Secured Term Loan (LIBOR + 3.75%, 4.8% Cash, Acquired 11/19, Due 07/21) 10,599,445  10,113,510  9,690,543 
Second Lien Senior Secured Term Loan (LIBOR + 7.5%, 8.5% Cash, Acquired 10/19, Due 01/22)
7,141,980  4,813,864  5,713,584 
17,741,425  14,927,374  15,404,127 
30
Barings BDC, Inc.
Consolidated Schedule of Investments — (Continued)
December 31, 2020

Portfolio Company(6)
Industry
Type of Investment(1) (2)
Principal
Amount		 Cost Fair
Value
World 50, Inc. (1.7%)*(7) (9) (10)
Professional Services First Lien Senior Secured Term Loan (LIBOR + 5.25%, 6.3% Cash, Acquired 01/20, Due 01/26) $ 3,313,191  $ 3,218,141  $ 3,313,191 
First Lien Senior Secured Term Loan (LIBOR + 4.75%, 5.8% Cash, Acquired 09/20, Due 01/26) 9,100,607  8,905,025  8,940,436 
12,413,798  12,123,166  12,253,627 
Subtotal Non–Control / Non–Affiliate Investments (184.7%) 1,378,776,392  1,318,614,617  1,325,783,281 
Affiliate Investment: (4)
Advantage Insurance, Inc. (0.8%)*(7) (23)
Banking, Finance, Insurance, & Real Estate Preferred Stock (587,001 shares, Acquired 12/20) 5,946,641  5,946,641 
5,946,641  5,946,641 
Jocassee Partners LLC (3.2%)*(3)
Investment Funds & Vehicles 9.1% Member Interest, Acquired 06/19 20,158,270  22,623,820 
20,158,270  22,623,820 
JSC Tekers Holdings (0.7%)*(3) (7) (23)
Real Estate Management Preferred Stock (9,159,085 shares, Acquired 12/20) 4,753,000  4,753,000 
Common Stock (3,201 shares, Acquired 12/20) —  — 
4,753,000  4,753,000 
Security Holdings B.V. (4.9%)*(3) (7) (23)
Electrical Engineering Bridge Loan (5.0% PIK, Acquired 12/20, Due 05/22) 5,187,506  5,187,508  5,187,508 
Senior Subordinated Loan (3.1% PIK, Acquired 12/20, Due 05/22) 8,746,454  8,746,454  8,746,454 
Common Stock (900 shares, Acquired 12/20) 21,264,000  21,329,370 
13,933,960  35,197,962  35,263,332 
Thompson Rivers LLC (1.4%)*(3)
Investment Funds & Vehicles 10% Member Interest, Acquired 06/20 10,000,000  10,011,840 
10,000,000  10,011,840 
Subtotal Affiliate Investments (11.0%) 13,933,960  76,055,873  78,598,633 
Control Investments:(5)
MVC Automotive Group Gmbh (2.3%)*(3) (7) (23)
Other Diversified Financial Services Bridge Loan (6.0% Cash, Acquired 12/20, Due 12/21) 7,149,166  7,149,166  7,149,166 
Common Equity Interest (18,000 shares, Acquired 12/20) 9,553,000  9,582,368 
7,149,166  16,702,166  16,731,534 
MVC Private Equity Fund LP (1.3%)*(3) (23)
Investment Funds & Vehicles General Partnership Interest 224,978  224,978 
Limited Partnership Interest 8,899,284  8,899,284 
9,124,262  9,124,262 
Subtotal Control Investments (3.6%) 7,149,166  25,826,428  25,855,796 
Short-Term Investments:
BlackRock, Inc. (4.2%)* Money Market Fund BlackRock Liquidity Temporary Fund (0.08% yield) 30,000,000  30,000,000 
30,000,000  30,000,000 
JPMorgan Chase & Co. (5.0%)* Money Market Fund JPMorgan Prime Money Market Fund (0.09% yield) 35,558,227  35,558,227 
35,558,227  35,558,227 
Subtotal Short-Term Investments (9.1%) 65,558,227  65,558,227 
Total Investments, December 31, 2020 (208.4%)* $ 1,399,859,518  $ 1,486,055,145  $ 1,495,795,937 
31
Barings BDC, Inc.
Consolidated Schedule of Investments — (Continued)
December 31, 2020


Derivative Instruments
Credit Support Agreement(a)(b)(d)
Description Counter Party Settlement Date(c) Notional Amount Value Unrealized Appreciation (Depreciation)
Credit Support Agreement Barings LLC 01/01/31 $ 23,000,000  $ 13,600,000  $ — 
Total Credit Support Agreement, December 31, 2020 $ — 
(a) The Credit Support Agreement covers all of the investments acquired by the Company from MVC in connection with the MVC Acquisition (as defined in “Note 1 – Organization, Business and Basis of Presentation”) and any investments received by the Company in connection with the restructuring, amendment, extension or other modification (including the issuance of new securities) of any of the investments acquired by the Company from MVC in connection with the MVC Acquisition (collectively, the “Reference Portfolio”). Each investment that is included in the Reference Portfolio is denoted in the above Schedule of Investments with footnote (23).
(b)      The Company and Barings LLC entered into a Credit Support Agreement pursuant to which Barings LLC agreed to provide credit support to the Company in the amount of up to $23.0 million.
(c) Settlement Date means the earlier of (1) January 1, 2031 and (2) the date on which the entire Reference Portfolio has been realized or written off.
(d) See “Note 2 – Agreements and Related Party Transactions” for additional information regarding the Credit Support Agreement.
Foreign Currency Forward Contracts:
Description Notional Amount to be Purchased Notional Amount to be Sold Settlement Date Unrealized Appreciation (Depreciation)
Foreign currency forward contract (AUD) $8,471,304 A$11,378,670 01/05/21 $ (309,049)
Foreign currency forward contract (AUD) A$11,378,670 $8,610,504 01/05/21 169,849 
Foreign currency forward contract (AUD) $148,019 A$193,882 04/06/21 (1,698)
Foreign currency forward contract (EUR) $13,472,749 €11,406,604 01/05/21 (483,801)
Foreign currency forward contract (EUR) €11,406,604 $13,518,023 01/05/21 438,526 
Foreign currency forward contract (EUR) $561,754 €456,604 04/06/21 1,944 
Foreign currency forward contract (GBP) $13,554,607 £10,215,299 01/05/21 (409,190)
Foreign currency forward contract (GBP) £10,215,299 $13,717,678 01/05/21 246,118 
Foreign currency forward contract (GBP) $13,109,849 £9,672,758 04/06/21 (119,769)
Foreign currency forward contract (SEK) $141,603 1,259,406kr 01/05/21 (11,748)
Foreign currency forward contract (SEK) 1,259,406kr $152,396 01/05/21 955 
Foreign currency forward contract (SEK) $164,325 1,356,628kr 04/06/21 (1,028)
Total Foreign Currency Forward Contracts, December 31, 2020 $ (478,891)
_______________________________________________________________
*    Fair value as a percentage of net assets.
(1)All debt investments are income producing, unless otherwise noted. Equity and any equity-linked investments are non-income producing, unless otherwise noted. The Board determined in good faith that all investments were valued at fair value in accordance with the Company's valuation policies and procedures and the 1940 Act based on, among other things, the input of the Company's external investment adviser, Barings, the Company’s Audit Committee and independent valuation firms that have been engaged to assist in the valuation of the Company's middle-market investments. In addition, all debt investments are variable rate investments unless otherwise noted. Index-based floating interest rates are generally subject to a contractual minimum interest rate. A majority of the variable rate loans in the Company's investment portfolio bear interest at a rate that may be determined by reference to LIBOR, EURIBOR, GBP LIBOR, BBSY, STIBOR or an alternate Base Rate (commonly based on the Federal Funds Rate or the Prime Rate), which typically reset semi-annually, quarterly, or monthly at the borrower's option. The borrower may also elect to have multiple interest reset periods for each loan.
(2)All of the Company’s portfolio company investments (including joint venture and short-term investments), which as of December 31, 2020 represented 208.4% of the Company’s net assets, are subject to legal restrictions on sales. The acquisition date represents the date of the Company's initial investment in the relevant portfolio company.
(3)Investment is not a qualifying investment as defined under Section 55(a) of the 1940 Act. Non-qualifying assets represent 23.4% of total investments at fair value as of December 31, 2020. Qualifying assets must represent at least 70% of total assets at the time of acquisition of any additional non-qualifying assets. If at any time qualifying assets do not represent at least 70% of the Company's total assets, the Company will be precluded from acquiring any additional non-qualifying asset until such time as it complies with the requirements of Section 55(a).











32
Barings BDC, Inc.
Consolidated Schedule of Investments — (Continued)
December 31, 2020

(4)As defined in the 1940 Act, the Company is deemed to be an “affiliated person” of the portfolio company as the Company owns between 5% or more, up to 25% (inclusive), of the portfolio company's voting securities (“non-controlled affiliate”). Transactions related to investments in non-controlled "Affiliate Investments" for the year ended December 31, 2020 were as follows:
 Amount of Realized Gain (Loss)  Amount of Unrealized Gain (Loss)  Amount of Interest or Dividends Credited to Income(b) December 31, 2019
Value		 Gross Additions
(c)		 Gross Reductions (d) December 31, 2020
Value
Portfolio Company Type of Investment(a)
Advantage Insurance, Inc.(e)
Preferred Stock (587,001 shares) $ —  $ —  $ —  $ —  $ 5,946,641  $ —  $ 5,946,641 
—  —  —  —  5,946,641  —  5,946,641 
Jocassee Partners LLC 9.1% Member Interest —  2,394,007  —  10,229,813  12,394,007  —  22,623,820 
—  2,394,007  —  10,229,813  12,394,007  —  22,623,820 
JSC Tekers Holdings(e)
Common Stock (3,201 shares) —  —  —  —  —  —  — 
Preferred Stock (9,159,085 shares) —  —  —  —  4,753,000  —  4,753,000 
—  —  —  —  4,753,000  —  4,753,000 
Security Holdings B.V(e)
Bridge Loan (5.0% PIK) —  —  —  —  5,187,508  —  5,187,508 
Senior Subordinated Loan (3.1% PIK) —  —  —  —  8,746,454  —  8,746,454 
Common Stock (1,099.5 shares) —  65,370  —  —  21,329,370  —  21,329,370 
—  65,370  —  —  35,263,332  —  35,263,332 
Thompson Rivers LLC 10% Member Interest —  11,840  —  —  10,011,840  —  10,011,840 
—  11,840  —  —  10,011,840  —  10,011,840 
Total Affiliate Investments $ —  $ 2,471,217  $ —  $ 10,229,813  $ 68,368,820  $ —  $ 78,598,633 

(a)     Equity and equity-linked investments are non-income producing, unless otherwise noted.
(b) Represents the total amount of interest, fees or dividends credited to income for the portion of the year an investment was included in the Affiliate category.
(c)     Gross additions include increases in the cost basis of investments resulting from new investments and follow-on investments. Gross additions also include net increases in unrealized appreciation or net decreases in unrealized depreciation.
(d)    Gross reductions include decreases in the total cost basis of investments resulting from principal repayments or sales. Gross reductions also include net increases in unrealized depreciation or net decreases in unrealized appreciation.
(e) The fair value of the investment was determined using significant unobservable inputs.
33
Barings BDC, Inc.
Consolidated Schedule of Investments — (Continued)
December 31, 2020

(5)    As defined in the 1940 Act, the Company is deemed to be both an “affiliated person” and “control” the portfolio company because it owns more than 25% of the portfolio company’s outstanding voting securities or it has the power to exercise control over the management or policies of such portfolio company (including through a management agreement). Transactions as of and during the year ended December 31, 2020 in which the portfolio company is deemed to be a "Control Investment" of the Company are as follows:
 Amount of Realized Gain (Loss)  Amount of Unrealized Gain (Loss)  Amount of Interest or Dividends Credited to Income(b) December 31, 2019
Value		 Gross Additions
(c)		 Gross Reductions (d) December 31, 2020
Value
Portfolio Company Type of Investment(a)
MVC Automotive Group GmbH(e)
Common Equity Interest (18,000 shares) $ —  $ 29,368  $ —  $ —  $ 9,582,368  $ —  $ 9,582,368 
Bridge Loan (6.0% PIK) —  —  9,532  —  7,149,166  —  7,149,166 
—  29,368  9,532  —  16,731,534  —  16,731,534 
MVC Private Equity Fund LP Limited Partnership Interest —  —  —  —  8,899,284  —  8,899,284 
General Partnership Interest —  —  5,292  —  224,978  —  224,978 
—  —  5,292  —  9,124,262  —  9,124,262 
Total Control Investments $ —  $ 29,368  $ 14,824  $ —  $ 25,855,796  $ —  $ 25,855,796 
(a)     Equity and equity-linked investments are non-income producing, unless otherwise noted.
(b) Represents the total amount of interest, fees or dividends credited to income for the portion of the year an investment was included in the Control category.
(c)     Gross additions include increases in the cost basis of investments resulting from new investments and follow-on investments. Gross additions also include net increases in unrealized appreciation or net decreases in unrealized depreciation.
(d)    Gross reductions include decreases in the total cost basis of investments resulting from principal repayments or sales. Gross reductions also include net increases in unrealized depreciation or net decreases in unrealized appreciation.
(e) The fair value of the investment was determined using significant unobservable inputs.
(6)Some or all of the investment is or will be encumbered as security for the February 2019 Credit Facility.
(7)The fair value of the investment was determined using significant unobservable inputs.
(8)Non-accrual investment.
(9)Debt investment includes interest rate floor feature.
(10)The interest rate on these loans is subject to 1 Month LIBOR, which as of December 31, 2020 was 0.14388%.
(11)The interest rate on these loans is subject to 2 Month LIBOR, which as of December 31, 2020 was 0.19038%.
(12)The interest rate on these loans is subject to 3 Month LIBOR, which as of December 31, 2020 was 0.23838%.
(13)The interest rate on these loans is subject to 6 Month LIBOR, which as of December 31, 2020 was 0.25763%.
(14)The interest rate on these loans is subject to 2 month GBP LIBOR, which as of December 31, 2020 was 0.06088%.
(15)The interest rate on these loans is subject to 3 Month GBP LIBOR, which as of December 31, 2020 was 0.02550%.
(16)The interest rate on these loans is subject to 6 Month GBP LIBOR, which as of December 31, 2020 was 0.02988%.
(17)The interest rate on these loans is subject to 1 Month EURIBOR, which as of December 31, 2020 was -0.55400%.
(18)The interest rate on these loans is subject to 3 Month EURIBOR, which as of December 31, 2020 was -0.54500%.
(19)The interest rate on these loans is subject to 6 Month EURIBOR, which as of December 31, 2020 was -0.526%.
(20)The interest rate on these loans is subject to 3 Month STIBOR, which as of December 31, 2020 was -0.08500%.
(21)The interest rate on these loans is subject to 1 Month BBSY, which as of December 31, 2020 was 0.01000%.
(22)The interest rate on these loans is subject to 3 Month BBSY, which as of December 31, 2020 was 0.01000%.
(23)Investment was purchased as part of the MVC Acquisition and is part of the Reference Portfolio for purposes of the Credit Support Agreement.
(24)In 2017, MVC received $5.7 million of 9.5% second lien callable notes due in 2025, in lieu of an escrow to satisfy any indemnification claims associated with MVC's sale of its equity investment in U.S. Gas & Electric. Effective January 1, 2018, the cost basis of the U.S. Gas second lien loan was decreased by approximately $3.0 million due to a working capital adjustment. This loan is still subject to indemnification adjustments.


See accompanying notes.
34

Barings BDC, Inc.
Notes to Unaudited Consolidated Financial Statements

1. ORGANIZATION, BUSINESS AND BASIS OF PRESENTATION
The Company and its wholly-owned subsidiaries are specialty finance companies. The Company currently operates as a closed-end, non-diversified investment company and has elected to be treated as a business development company (“BDC”) under the 1940 Act. The Company has elected for federal income tax purposes to be treated as a regulated investment company (“RIC”) under the Internal Revenue Code of 1986, as amended (the “Code”).
Organization
The Company is a Maryland corporation incorporated on October 10, 2006. On August 2, 2018, the Company entered into an investment advisory agreement (the “Original Advisory Agreement”) and an administration agreement (the “Administration Agreement”) and became an externally-managed BDC managed by Barings LLC (“Barings” or the “Adviser”). An externally-managed BDC generally does not have any employees, and its investment and management functions are provided by an outside investment adviser and administrator under an investment advisory agreement and administration agreement. Instead of the Company directly compensating employees, the Company pays the Adviser for investment and management services pursuant to the terms of the Amended and Restated Advisory Agreement (as defined in “Note 2 – Agreements and Related Party Transactions”) (and, prior to January 1, 2021, under the terms of the Original Advisory Agreement) and the Administration Agreement. See “Note 2 – Agreements and Related Party Transactions” for additional information regarding the Company’s investment advisory agreement and administration agreement.
Basis of Presentation
The financial statements of the Company include the accounts of Barings BDC, Inc. and its wholly-owned subsidiaries. The effects of all intercompany transactions between the Company and its wholly-owned subsidiaries have been eliminated in consolidation. The Company is an investment company and, therefore, applies the specialized accounting and reporting guidance in Accounting Standards Codification (“ASC”) Topic 946, Financial Services – Investment Companies. ASC Topic 946 states that consolidation by the Company of an investee that is not an investment company is not appropriate, except when the Company holds a controlling interest in an operating company that provides all or substantially all of its services directly to the Company or to its portfolio companies. None of the portfolio investments made by the Company qualify for this exception. Therefore, the Company's investment portfolio is carried on the Unaudited and Audited Consolidated Balance Sheets at fair value, as discussed further in “Note 3 – Investments”, with any adjustments to fair value recognized as “Net unrealized appreciation (depreciation)” on the Unaudited Consolidated Statements of Operations.
The accompanying unaudited consolidated financial statements are presented in conformity with accounting principles generally accepted in the United States (“U.S. GAAP”) for interim financial information and pursuant to the requirements for reporting on Form 10-Q and Articles 6, 10 and 12 of Regulation S-X. Accordingly, certain disclosures accompanying annual consolidated financial statements prepared in accordance with U.S. GAAP are omitted. In the opinion of management, all adjustments, consisting solely of normal recurring adjustments necessary for the fair presentation of financial statements for the interim period, have been reflected in the unaudited consolidated financial statements. The current period’s results of operations are not necessarily indicative of results that ultimately may be achieved for the full fiscal year. Additionally, the unaudited consolidated financial statements and accompanying notes should be read in conjunction with the audited consolidated financial statements and notes thereto for the year ended December 31, 2020. Financial statements prepared on a U.S. GAAP basis require management to make estimates and assumptions that affect the amounts and disclosures reported in the unaudited consolidated financial statements and accompanying notes. Such estimates and assumptions could change in the future as more information becomes known, which could impact the amounts reported and disclosed herein.
Recently Issued Accounting Standards
In March 2020, the FASB issued Accounting Standards Update, 2020-04, Facilitation of the Effects of Reference Rate Reform on Financial Reporting (“ASU 2020-04”). The amendments in ASU 2020-04 provide optional expedients and exceptions for applying U.S. GAAP to contracts, hedging relationships and other transactions affected by reference rate reform if certain criteria are met. ASU 2020-04 is effective for all entities as of March 12, 2020 through December 31, 2022. The Company is currently evaluating the impact of adopting ASU 2020-04 on its consolidated financial statements.
35
Barings BDC, Inc.
Notes to Unaudited Consolidated Financial Statements — (Continued)
Share Purchase Programs
On February 27, 2020, the Board approved an open-market share repurchase program for the 2020 fiscal year (the “2020 Share Repurchase Program”). Under the 2020 Share Repurchase Program, the Company was authorized during fiscal year 2020 to repurchase up to a maximum of 5.0% of the amount of shares outstanding as of February 27, 2020 if shares traded below net asset value (“NAV”) per share, subject to liquidity and regulatory constraints.
Purchases under the 2020 Share Repurchase Program were made in open-market transactions and included transactions being executed by a broker selected by the Company that had been delegated the authority to repurchase shares on the Company's behalf in the open market in accordance with applicable rules under the Securities Exchange Act of 1934, as amended (the “Exchange Act”), including Rules 10b5-1 and 10b-18 thereunder, and pursuant to, and under the terms and limitations of, the 2020 Share Repurchase Program. During the nine months ended September 30, 2020, the Company repurchased a total of 989,050 shares of its common stock in the open market under the 2020 Share Repurchase Program at an average price of $7.21 per share including broker commissions.
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 nine months ended September 30, 2021, the Company did not repurchase any shares under the authorized program.
2. AGREEMENTS AND RELATED PARTY TRANSACTIONS
On August 2, 2018, the Company entered into the Original Advisory Agreement and the Administration Agreement with the Adviser, an investment adviser registered under the Investment Advisers Act of 1940, as amended. In connection with the MVC Acquisition, on December 23, 2020, the Company entered into an amended and restated investment advisory agreement (the “Amended and Restated Advisory Agreement”) with the Adviser, following approval of the Amended and Restated Advisory Agreement by the Company’s stockholders at its December 23, 2020 special meeting of stockholders. The terms of the Amended and Restated Advisory Agreement became effective on January 1, 2021.
The Amended and Restated Advisory Agreement amended the Original Advisory Agreement to, among other things, (i) reduce the annual base management fee payable to the Adviser from 1.375% to 1.250% of the Company’s gross assets, (ii) reset the commencement date for the rolling 12-quarter “look-back” provision used to calculate the income incentive fee and incentive fee cap to January 1, 2021 from January 1, 2020 and (iii) describe the fact that the Company may enter into guarantees, sureties and other credit support arrangements with respect to one or more of its investments, including the impact of these arrangements on the income incentive fee cap.
Investment Advisory Agreement
Pursuant to the Amended and Restated Advisory Agreement, the Adviser manages the Company's day-to-day operations and provides the Company with investment advisory services. Among other things, the Adviser (i) determines the composition of the portfolio of the Company, the nature and timing of the changes therein and the manner of implementing such changes; (ii) identifies, evaluates and negotiates the structure of the investments made by the Company; (iii) executes, closes, services and monitors the investments that the Company makes; (iv) determines the securities and other assets that the Company will purchase, retain or sell; (v) performs due diligence on prospective portfolio companies and (vi) provides the Company with such other investment advisory, research and related services as the Company may, from time to time, reasonably require for the investment of its funds.
The Amended and Restated Advisory Agreement provides that, absent fraud, willful misfeasance, bad faith or gross negligence in the performance of its duties or by reason of the reckless disregard of its duties and obligations, the Adviser, and its officers, managers, partners, agents, employees, controlling persons, members and any other person or entity affiliated with the Adviser (collectively, the “IA Indemnified Parties”), are entitled to indemnification from the Company for any damages, liabilities, costs, demands, charges, claims and expenses (including reasonable attorneys’ fees and amounts reasonably paid in settlement) incurred by the IA Indemnified Parties in or by reason of any pending, threatened or completed action, suit, investigation or other proceeding (including an action or suit by or in the right of the Company or its security holders) arising out of any actions or omissions or otherwise based upon the performance of any of the Adviser’s duties or obligations under the Amended and Restated Advisory Agreement or otherwise as an investment adviser of the Company. The Adviser’s services
36
Barings BDC, Inc.
Notes to Unaudited Consolidated Financial Statements — (Continued)
under the Amended and Restated Advisory Agreement are not exclusive, and the Adviser is generally free to furnish similar services to other entities so long as its performance under the Amended and Restated Advisory Agreement is not adversely affected.
The Adviser has entered into a personnel-sharing arrangement with its affiliate, Baring International Investment Limited (“BIIL”). BIIL is a wholly-owned subsidiary of Baring Asset Management Limited, which in turn is an indirect, wholly-owned subsidiary of the Adviser. Pursuant to this arrangement, certain employees of BIIL may serve as “associated persons” of the Adviser and, in this capacity, subject to the oversight and supervision of the Adviser, may provide research and related services, and discretionary investment management and trading services (including acting as portfolio managers) to the Company on behalf of the Adviser. This arrangement is based on no-action letters of the staff of the Securities and Exchange Commission (the “SEC”) that permit SEC-registered investment advisers to rely on and use the resources of advisory affiliates or "participating affiliates," subject to the supervision of that SEC-registered investment adviser. BIIL is a “participating affiliate” of the Adviser, and the BIIL employees are “associated persons” of the Adviser.
Under the Amended and Restated Advisory Agreement, the Company pays the Adviser (i) a base management fee (the “Base Management Fee”) and (ii) an incentive fee (the “Incentive Fee”) as compensation for the investment advisory and management services it provides the Company thereunder.
Pre-January 1, 2021 Base Management Fee
For the period from January 1, 2020 through December 31, 2020, the Base Management Fee was calculated based on the Company's gross assets, including assets purchased with borrowed funds or other forms of leverage and excluding cash and cash equivalents, at an annual rate of 1.375%.
The Base Management Fee was payable quarterly in arrears on a calendar quarter basis. The Base Management Fee was calculated based on the average value of the Company’s gross assets, excluding cash and cash equivalents, at the end of the two most recently completed calendar quarters prior to the quarter for which such fees are being calculated. Base Management Fees for any partial month or quarter were appropriately pro-rated.
Post-December 31, 2020 Base Management Fee
Beginning January 1, 2021, the Base Management Fee is calculated based on the Company’s gross assets, including assets purchased with borrowed funds or other forms of leverage and excluding cash and cash equivalents, at an annual rate of 1.25%. The Base Management Fee is payable quarterly in arrears on a calendar quarter basis. The Base Management Fee will be calculated based on the average value of the Company’s gross assets, excluding cash and cash equivalents, at the end of the two most recently completed calendar quarters prior to the quarter for which such fees are being calculated. Base Management Fees for any partial month or quarter will be appropriately pro-rated.
For the three and nine months ended September 30, 2021, the Base Management Fee determined in accordance with the terms of the Amended and Restated Advisory Agreement was approximately $5.3 million and $14.1 million, respectively. For the three and nine months ended, September 30, 2020, the Base Management Fee determined in accordance with the terms of the Original Advisory Agreement was approximately $3.4 million and $10.9 million, respectively. As of September 30, 2021, the Base Management Fee of $5.3 million for the three months ended September 30, 2021 was unpaid and included in “Base management fees payable” in the accompanying Unaudited Consolidated Balance Sheet. As of December 31, 2020, the Base Management Fee of $3.4 million for the three months ended December 31, 2020 was unpaid and included in “Base management fees payable” in the accompanying Consolidated Balance Sheet.
Pre-January 1, 2021 Incentive Fee
For the period from August 2, 2018 through December 31, 2020, under the Original Advisory Agreement, the Incentive Fee was comprised of two parts: (1) a portion based on the Company’s pre-incentive fee net investment income (the "Pre-2021 Income-Based Fee") and (2) a portion based on the net capital gains received on the Company’s portfolio of securities on a cumulative basis for each calendar year, net of all realized capital losses and all unrealized capital depreciation for that same calendar year (the "Pre-2021 Capital Gains Fee").
The Pre-2021 Income-Based Fee was calculated as follows:
(i)For each quarter from and after August 2, 2018 through December 31, 2019 (the "Pre-2020 Period"), the Pre-2021 Income-Based Fee was calculated and payable quarterly in arrears based on the Pre-Incentive Fee Net Investment Income for the immediately preceding calendar quarter for which such fees were being calculated. In respect of the Pre-2020 Period, "Pre-Incentive Fee Net Investment Income" meant interest income, dividend income and any
37
Barings BDC, Inc.
Notes to Unaudited Consolidated Financial Statements — (Continued)
other income (including any other fees, such as commitment, origination, structuring, diligence, managerial assistance and consulting fees or other fees that the Company receives from portfolio companies) accrued during the relevant calendar quarter, minus the Company’s operating expenses for such quarter (including the Base Management Fee, expenses payable under the Administration Agreement, any interest expense and any dividends paid on any issued and outstanding preferred stock, but excluding the Incentive Fee). Pre-Incentive Fee Net Investment Income included, in the case of investments with a deferred interest feature (such as original issue discount, debt instruments with payment-in-kind interest and zero coupon securities), accrued income not yet received in cash. Pre-Incentive Fee Net Investment Income did not include any realized capital gains, realized capital losses or unrealized capital appreciation or depreciation.
(ii)For each quarter beginning on and after January 1, 2020 (the "Post-2019 Period"), the Pre-2021 Income-Based Fee was calculated and payable quarterly in arrears based on the Pre-Incentive Fee Net Investment Income for the immediately preceding calendar quarter and the eleven preceding calendar quarters (or such fewer number of preceding calendar quarters counting each calendar quarter beginning on or after January 1, 2020) (each such period referred to as the "Pre-2021 Trailing Twelve Quarters") for which such fees were being calculated and was payable promptly following the filing of the Company’s financial statements for such quarter. In respect of the Post-2019 Period, "Pre-Incentive Fee Net Investment Income" meant interest income, dividend income and any other income (including any other fees, such as commitment, origination, structuring, diligence, managerial assistance and consulting fees or other fees that the Company receives from portfolio companies) accrued during the relevant Pre-2021 Trailing Twelve Quarters, minus the Company’s operating expenses for such Pre-2021 Trailing Twelve Quarters (including the Base Management Fee, expenses payable under the Administration Agreement, any interest expense and any dividends paid on any issued and outstanding preferred stock, but excluding the Incentive Fee) divided by the number of quarters that comprise the relevant Pre-2021 Trailing Twelve Quarters. Pre-Incentive Fee Net Investment Income included, in the case of investments with a deferred interest feature (such as original issue discount, debt instruments with payment-in-kind interest and zero coupon securities), accrued income not yet received in cash. Pre-Incentive Fee Net Investment Income did not include any realized capital gains, realized capital losses or unrealized capital appreciation or depreciation.
(iii)Pre-Incentive Fee Net Investment Income, expressed as a rate of return on the value of the Company’s net assets (defined as total assets less senior securities constituting indebtedness and preferred stock) at the end of the calendar quarter for which such fees were being calculated, was compared to a "hurdle rate", expressed as a rate of return on the value of the Company’s net assets at the end of the most recently completed calendar quarter, of 2% per quarter (8% annualized). The Company paid the Adviser the Pre-2021 Income-Based Fee with respect to the Company’s Pre-Incentive Fee Net Investment Income in each calendar quarter as follows:
(1)(a) With respect to the Pre-2020 Period, no Pre-2021 Income-Based Fee for any calendar quarter in which the Company’s Pre-Incentive Fee Net Investment Income (as defined in paragraph (i) above) did not exceed the hurdle rate;
(b) With respect to the Post-2019 Period, no Pre-2021 Income-Based Fee for any calendar quarter in which the Company’s Pre-Incentive Fee Net Investment Income (as defined in paragraph (ii) above) did not exceed the hurdle rate;
(2)(a) With respect to the Pre-2020 Period, 100% of the Company’s Pre-Incentive Fee Net Investment Income (as defined in paragraph (i) above) for any calendar quarter with respect to that portion of the Pre-Incentive Fee Net Investment Income for such quarter, if any, that exceeded the hurdle rate but was less than 2.5% (10% annualized) (the "Pre-2020 Catch-Up Amount"). The Pre-2020 Catch-Up Amount was intended to provide the Adviser with an incentive fee of 20% on all of the Company’s Pre-Incentive Fee Net Investment Income (as defined in paragraph (i) above) when the Company’s Pre-Incentive Fee Net Investment Income (as defined in paragraph (i) above) reached 2% per quarter (8% annualized);
(b) With respect to the Post-2019 Period, 100% of the Company’s Pre-Incentive Fee Net Investment Income (as defined in paragraph (ii) above) with respect to that portion of the Pre-Incentive Fee Net Investment Income (as defined in paragraph (ii) above), if any, that exceeded the hurdle rate but was less than 2.5% (10% annualized) (the "Post-2019 Catch-Up Amount"). The Post-2019 Catch-Up Amount was intended to provide the Adviser with an incentive fee of 20% on all of the Company’s Pre-Incentive Fee Net Investment Income (as defined in paragraph (ii) above) when the Company’s Pre-Incentive Fee Net Investment Income (as defined in paragraph (ii) above) reached 2% per quarter (8% annualized);
38
Barings BDC, Inc.
Notes to Unaudited Consolidated Financial Statements — (Continued)
(3)(a) With respect to the Pre-2020 Period, 20% of the amount of the Company’s Pre-Incentive Fee Net Investment Income (as defined in paragraph (i) above) for any calendar quarter with respect to that portion of the Pre-Incentive Fee Net Investment Income (as defined in paragraph (i) above) for such quarter, if any, that exceeded the Pre-2020 Catch-Up Amount; and
(b) With respect to the Post-2019 Period, 20% of the amount of the Company’s Pre-Incentive Fee Net Investment Income (as defined in paragraph (ii) above) for any calendar quarter with respect to that portion of the Pre-Incentive Fee Net Investment Income (as defined in paragraph (ii) above), if any, that exceeded the Post-2019 Catch-Up Amount.
However, with respect to the Post-2019 Period, the Pre-2021 Income-Based Fee paid to the Adviser would in no event be in excess of the Pre-2021 Incentive Fee Cap. With respect to the Post-2019 Period, the "Pre-2021 Incentive Fee Cap" for any quarter was an amount equal to (a) 20% of the Cumulative Net Return (as defined below) during the relevant Pre-2021 Trailing Twelve Quarters minus (b) the aggregate Pre-2021 Income-Based Fee that was paid in respect of the first eleven calendar quarters (or the portion thereof) included in the relevant Pre-2021 Trailing Twelve Quarters.
Cumulative Net Return meant (x) the aggregate net investment income in respect of the relevant Pre-2021 Trailing Twelve Quarters minus (y) any Net Capital Loss (as defined below), if any, in respect of the relevant Pre-2021 Trailing Twelve Quarters. If, in any quarter, the Pre-2021 Incentive Fee Cap was zero or a negative value, the Company paid no Pre-2021 Income-Based Fee to the Adviser for such quarter. If, in any quarter, the Pre-2021 Incentive Fee Cap for such quarter was a positive value but was less than the Pre-2021 Income-Based Fee that was payable to the Adviser for such quarter (before giving effect to the Pre-2021 Incentive Fee Cap) calculated as described above, the Company paid a Pre-2021 Income-Based Fee to the Adviser equal to the Pre-2021 Incentive Fee Cap for such quarter. If, in any quarter, the Pre-2021 Incentive Fee Cap for such quarter was equal to or greater than the Pre-2021 Income-Based Fee that was payable to the Adviser for such quarter (before giving effect to the Pre-2021 Incentive Fee Cap) calculated as described above, the Company paid an Pre-2021 Income-Based Fee to the Adviser equal to the Pre-2021 Income-Based Fee calculated as described above for such quarter without regard to the Pre-2021 Incentive Fee Cap.
Net Capital Loss in respect of a particular period meant the difference, if positive, between (i) aggregate capital losses, whether realized or unrealized, in such period and (ii) aggregate capital gains, whether realized or unrealized, in such period.
The Pre-2021 Capital Gains Fee was determined and payable in arrears as of the end of each calendar year, commencing with the calendar year ended on December 31, 2018, and was calculated at the end of each applicable year by subtracting (1) the sum of the Company’s cumulative aggregate realized capital losses and aggregate unrealized capital depreciation from (2) the Company’s cumulative aggregate realized capital gains, in each case calculated from August 2, 2018. If such amount was positive at the end of such year, then the Pre-2021 Capital Gains Fee payable for such year was equal to 20% of such amount, less the cumulative aggregate amount of Pre-2021 Capital Gains Fees paid in all prior years. If such amount was negative, then there was no Pre-2021 Capital Gains Fee payable for such year.
Post-December 31, 2020 Incentive Fee
Beginning January 1, 2021, the Incentive Fee continues to consist of two components that are independent of each other, with the result that one component may be payable even if the other is not. Under the Amended and Restated Advisory Agreement, a portion of the Incentive Fee is based on the Company's income (the “Income-Based Fee”) and a portion is based on the Company's capital gains (the “Capital Gains Fee”), each as described below:
(i) The Income-Based Fee will be determined and paid quarterly in arrears based on the amount by which (x) the aggregate “Pre-Incentive Fee Net Investment Income” (as defined below) in respect of the current calendar quarter and the eleven preceding calendar quarters beginning with the calendar quarter that commences on or after January 1, 2021, as the case may be (or the appropriate portion thereof in the case of any of the Company's first eleven calendar quarters that commences on or after January 1, 2021) (in either case, the “Trailing Twelve Quarters”) exceeds (y) the Hurdle Amount (as defined below) in respect of the Trailing Twelve Quarters. The Hurdle Amount will be determined on a quarterly basis, and will be calculated by multiplying 2.0% (8% annualized) by the aggregate of the Company's NAV at the beginning of each applicable calendar quarter comprising the relevant Trailing Twelve Quarters. For this purpose, under the Amended and Restated Advisory Agreement, “Pre-Incentive Fee Net Investment Income” means interest income, dividend income and any other income (including, without limitation, any accrued income that we have not yet received in cash and any other fees such as commitment, origination, structuring, diligence and consulting fees or other fees that we receive from portfolio companies) accrued during the calendar quarter, minus the Company's operating expenses accrued during the calendar quarter (including, without limitation, the Base Management Fee, administration expenses and any interest expense and dividends paid on any
39
Barings BDC, Inc.
Notes to Unaudited Consolidated Financial Statements — (Continued)
issued and outstanding preferred stock, but excluding the Income-Based Fee and the Capital Gains Fee). For the avoidance of doubt, Pre-Incentive Fee Net Investment Income does not include any realized capital gains, realized capital losses or unrealized capital appreciation or depreciation:
The calculation of the Income-Based Fee for each quarter is as follows:
(A) No Income-Based Fee will be payable to the Adviser in any calendar quarter in which the Company's aggregate Pre-Incentive Fee Net Investment Income for the Trailing Twelve Quarters does not exceed the Hurdle Amount;
(B) 100% of the Company's aggregate Pre-Incentive Fee Net Investment Income for the Trailing Twelve Quarters, if any, that exceeds the Hurdle Amount but is less than or equal to an amount (the “Catch-Up Amount”) determined on a quarterly basis by multiplying 2.5% (10% annualized) by the Company's NAV at the beginning of each applicable calendar quarter comprising the relevant Trailing Twelve Quarters. The Catch-Up Amount is intended to provide the Adviser with an incentive fee of 20% on all of the Company's Pre-Incentive Fee Net Investment Income when the Company's Pre-Incentive Fee Net Investment Income reaches the Catch-Up Amount for the Trailing Twelve Quarters; and
(C) For any quarter in which the Company's aggregate Pre-Incentive Fee Net Investment Income for the Trailing Twelve Quarters exceeds the Catch-Up Amount, the Income-Based Fee shall equal 20% of the amount of the Company's Pre-Incentive Fee Net Investment Income for such Trailing Twelve Quarters, as the Hurdle Amount and Catch-Up Amount will have been achieved.
Subject to the Incentive Fee Cap described below, the amount of the Income-Based Fee that will be paid to the Adviser for a particular quarter will equal the excess of the aggregate Income-Based Fee so calculated less the aggregate Income-Based Fees that were paid to the Adviser in the preceding eleven calendar quarters (or portion thereof) comprising the relevant Trailing Twelve Quarters.
(ii) The Income-Based Fee is subject to a cap (the “Incentive Fee Cap”). The Incentive Fee Cap in any quarter is an amount equal to (a) 20% of the Cumulative Pre-Incentive Fee Net Return (as defined below) during the relevant Trailing Twelve Quarters less (b) the aggregate Income-Based Fee that were paid to the Adviser in the preceding eleven calendar quarters (or portion thereof) comprising the relevant Trailing Twelve Quarters. For this purpose, “Cumulative Pre-Incentive Fee Net Return” during the relevant Trailing Twelve Quarters means (x) Pre-Incentive Fee Net Investment Income in respect of the Trailing Twelve Quarters less (y) any Net Capital Loss, if any, in respect of the Trailing Twelve Quarters. If, in any quarter, the Incentive Fee Cap is zero or a negative value, we will pay no Income-Based Fee to the Adviser in that quarter. If, in any quarter, the Incentive Fee Cap is a positive value but is less than the Income-Based Fee calculated in accordance with paragraph (i) above, we will pay the Adviser the Incentive Fee Cap for such quarter. If, in any quarter, the Incentive Fee Cap is equal to or greater than the Income-Based Fee calculated in accordance with paragraph (i) above, we will pay the Adviser the Income-Based Fee for such quarter.
“Net Capital Loss” in respect of a particular period means the difference, if positive, between (i) aggregate capital losses on the Company's assets, whether realized or unrealized, in such period and (ii) aggregate capital gains or other gains on the Company's assets (including, for the avoidance of doubt, the value ascribed to any credit support arrangement in the Company's financial statements even if such value is not categorized as a gain therein), whether realized or unrealized, in such period.
(iii) The second part of the Incentive Fee (the “Capital Gains Fee”) will be determined and payable in arrears as of the end of each calendar year (or upon termination of the Amended and Restated Advisory Agreement), commencing with the calendar year ended on December 31, 2018, and is calculated at the end of each applicable year by subtracting (1) the sum of the Company's cumulative aggregate realized capital losses and aggregate unrealized capital depreciation from (2) the Company's cumulative aggregate realized capital gains, in each case calculated from August 2, 2018. If such amount is positive at the end of such year, then the Capital Gains Fee payable for such year is equal to 20% of such amount, less the cumulative aggregate amount of Capital Gains Fees paid in all prior years commencing with the calendar year ended on December 31, 2018. If such amount is negative, then there is no Capital Gains Fee payable for such year. If this Agreement is terminated as of a date that is not a calendar year end, the termination date will be treated as though it were a calendar year end for purposes of calculating and paying a Capital Gains Fee.
Under the Amended and Restated Advisory Agreement, the "cumulative aggregate realized capital gains" are calculated as the sum of the differences, if positive, between (a) the net sales price of each investment in the Company's portfolio when sold and (b) the accreted or amortized cost basis of such investment.
40
Barings BDC, Inc.
Notes to Unaudited Consolidated Financial Statements — (Continued)
The cumulative aggregate realized capital losses are calculated as the sum of the differences, if negative, between (a) the net sales price of each investment in the Company's portfolio when sold and (b) the accreted or amortized cost basis of such investment.
The aggregate unrealized capital depreciation is calculated as the sum of the differences, if negative, between (a) the valuation of each investment in the Company's portfolio as of the applicable Capital Gains Fee calculation date and (b) the accreted or amortized cost basis of such investment.
Under the Amended and Restated Advisory Agreement, the “accreted or amortized cost basis of an investment” shall mean the accreted or amortized cost basis of such investment as reflected in the Company’s financial statements.
For the three and nine months ended September 30, 2021, the Income-Based Fee determined in accordance with the terms of the Amended and Restated Advisory Agreement was $4.4 million and $10.7 million, respectively. As of September 30, 2021, the Income-Based Fee of $4.4 million was unpaid and included in “Incentive management fees payable” in the accompanying Unaudited Consolidated Balance Sheet. The Company did not pay any Pre-2021 Income-Based Fee for the three or nine months ended September 30, 2020.
The Company did not incur any capital gains fees for either of the three or nine months ended September 30, 2021 or 2020.
Payment of Company Expenses
Under the Amended and Restated Advisory Agreement, all investment professionals of the Adviser and its staff, when and to the extent engaged in providing services required to be provided by the Adviser under the Amended and Restated Advisory Agreement, and the compensation and routine overhead expenses of such personnel allocable to such services, are provided and paid for by the Adviser and not by the Company, except that all costs and expenses relating to the Company's operations and transactions, including, without limitation, those items listed in the Amended and Restated Advisory Agreement, will be borne by the Company.
Administration Agreement
Under the terms of the Administration Agreement, the Adviser performs (or oversees, or arranges for, the performance of) the administrative services necessary for the operation of the Company, including, but not limited to, office facilities, equipment, clerical, bookkeeping and record-keeping services at such office facilities and such other services as the Adviser, subject to review by the Board, from time to time, determines to be necessary or useful to perform its obligations under the Administration Agreement. The Adviser also, on behalf of the Company and subject to oversight by the Board, arranges for the services of, and oversees, custodians, depositories, transfer agents, dividend disbursing agents, other stockholder servicing agents, accountants, attorneys, valuation experts, underwriters, brokers and dealers, corporate fiduciaries, insurers, banks and such other persons in any such other capacity deemed to be necessary or desirable.
The Company will reimburse Barings for the costs and expenses incurred by it in performing its obligations and providing personnel and facilities under the Administration Agreement in an amount to be negotiated and mutually agreed to by the Company and Barings quarterly in arrears. In no event will the agreed-upon quarterly expense amount exceed the amount of expenses that would otherwise be reimbursable by the Company under the Administration Agreement for the applicable quarterly period, and Barings will not be entitled to the recoupment of any amounts in excess of the agreed-upon quarterly expense amount. The costs and expenses incurred by the Adviser on behalf of the Company under the Administration Agreement include, but are not limited to:
•the allocable portion of the Adviser’s rent for the Company’s Chief Financial Officer and the Chief Compliance Officer and their respective staffs, which is based upon the allocable portion of the usage thereof by such personnel in connection with their performance of administrative services under the Administration Agreement;
•the allocable portion of the salaries, bonuses, benefits and expenses of the Company’s Chief Financial Officer and Chief Compliance Officer and their respective staffs, which is based upon the allocable portion of the time spent by such personnel in connection with performing administrative services for the Company under the Administration Agreement;
•the actual cost of goods and services used for the Company and obtained by the Adviser from entities not affiliated with the Company, which is reasonably allocated to the Company on the basis of assets, revenues, time records or other methods conforming with generally accepted accounting principles;
41
Barings BDC, Inc.
Notes to Unaudited Consolidated Financial Statements — (Continued)
•all fees, costs and expenses associated with the engagement of a sub-administrator, if any; and
•costs associated with (a) the monitoring and preparation of regulatory reporting, including registration statements and amendments thereto, prospectus supplements, and tax reporting, (b) the coordination and oversight of service provider activities and the direct cost of such contractual matters related thereto and (c) the preparation of all financial statements and the coordination and oversight of audits, regulatory inquiries, certifications and sub-certifications.
For the three and nine months ended September 30, 2021, the Company incurred and was invoiced by the Adviser for expenses of approximately $0.8 million and $1.8 million, respectively, under the terms of the Administration Agreement, which amounts are included in “General and administrative expenses” in the accompanying Unaudited Consolidated Statements of Operations. For the three and nine months ended September 30, 2020, the Company incurred and was invoiced by the Adviser for expenses of approximately $0.3 million and $0.9 million, respectively, under the terms of the Administration Agreement, which amounts are included in “General and administrative expenses” in the accompanying Unaudited Consolidated Statements of Operations. As of September 30, 2021, the administrative expenses of $0.8 million for the three months ended September 30, 2021 were unpaid and included in “Administrative fees payable” in the accompanying Unaudited Consolidated Balance Sheet. As of December 31, 2020, the administrative expenses of $0.7 million incurred for the three months ended December 31, 2020 were unpaid and included in “Administrative fees payable” in the accompanying Consolidated Balance Sheet.
Credit Support Agreement
In connection with the MVC Acquisition, on December 23, 2020, promptly following the closing of the Company’s merger with MVC, the Company entered into a Credit Support Agreement (the “Credit Support Agreement”) with the Adviser, pursuant to which the Adviser has agreed to provide credit support to the Company in the amount of up to $23.0 million relating to the net cumulative realized and unrealized losses on the acquired MVC investment portfolio over a 10-year period. A summary of the material terms of the Credit Support Agreement are as follows:
•The Credit Support Agreement covers all of the investments in the Reference Portfolio.
•The Adviser has an obligation to provide credit support to the Company in an amount equal to the excess of (1) the aggregate realized and unrealized losses on the Reference Portfolio over (2) the aggregate realized and unrealized gains on the Reference Portfolio, in each case from the date of the closing of the Company’s merger with MVC through the Designated Settlement Date (up to a $23.0 million cap) (such amount, the “Covered Losses”). For purposes of the Credit Support Agreement, “Designated Settlement Date” means the earlier of (1) January 1, 2031 and (2) the date on which the entire Reference Portfolio has been realized or written off. No credit support is required to be made by the Adviser to the Company under the Credit Support Agreement if the aggregate realized and unrealized gains on the Reference Portfolio exceed realized and unrealized losses of the Reference Portfolio on the Designated Settlement Date.
•The Adviser will settle any credit support obligation under the Credit Support Agreement as follows. If the Covered Losses are greater than $0.00, then, in satisfaction of the Adviser’s obligation set forth in the Credit Support Agreement, the Adviser will irrevocably waive during the Waiver Period (as defined below) (1) the incentive fees payable under the Amended and Restated Advisory Agreement (including any incentive fee calculated on an annual basis during the Waiver Period), and (2) in the event that Covered Losses exceed such incentive fee, the base management fees payable under the Amended and Restated Advisory Agreement. The “Waiver Period” means the four quarterly measurement periods immediately following the quarter in which the Designated Settlement Date occurs. If the Covered Losses exceed the aggregate amount of incentive fees and base management fees waived by the Adviser during the Waiver Period, then, on the date on which the last incentive fee or base management fee payment would otherwise be due during the Waiver Period, the Adviser shall make a cash payment to the Company equal to the positive difference between the Covered Losses and the aggregate amount of incentive fees and base management fees previously waived by the Adviser during the Waiver Period.
•The Credit Support Agreement and the rights of the Company thereunder shall automatically terminate if the Adviser (or an affiliate of the Adviser) ceases to serve as the investment adviser to the Company or any successor thereto, other than as a result of the voluntary termination by the Adviser of its investment advisory agreement with the Company. In the event of such a voluntary termination by the Adviser of the then-current investment advisory agreement with the Company, the Adviser will remain obligated to provide the credit support contemplated by the Credit Support Agreement. In the event of a non-voluntary termination of the advisory agreement or its expiration (due to non-renewal by the Board), the Adviser will have no obligations under the Credit Support Agreement.
42
Barings BDC, Inc.
Notes to Unaudited Consolidated Financial Statements — (Continued)
The Credit Support Agreement is intended to give stockholders of the combined company following the MVC Acquisition downside protection from net cumulative realized and unrealized losses on the acquired MVC portfolio and insulate the combined company’s stockholders from potential value volatility and losses in MVC’s portfolio following the closing of the MVC Acquisition. There is no fee or other payment by the Company to the Adviser or any of its affiliates in connection with the Credit Support Agreement. Any cash payment from the Adviser to the Company under the Credit Support Agreement will be excluded from the Company’s incentive fee calculations under the Amended and Restated Advisory Agreement.
When the Company and the Adviser entered into the Credit Support Agreement, it was accounted for as a deemed contribution from the Adviser and is included in "Additional paid-in capital" in the accompanying Unaudited Consolidated Balance Sheet and Consolidated Balance Sheet. In addition, the Credit Support Agreement is accounted for as a derivative in accordance with ASC 815, Derivatives and Hedging, and is included in "Credit support agreement" in the accompanying Unaudited Consolidated Balance Sheet and Consolidated Balance Sheet.
3. INVESTMENTS
Portfolio Composition
The Company invests predominately in senior secured private debt investments in well-established middle-market businesses that operate across a wide range of industries, as well as syndicated senior secured loans, structured product investments, bonds and other fixed income securities. Structured product investments include collateralized loan obligations and asset-backed securities. The Adviser's existing SEC co-investment exemptive relief under the 1940 Act permits the Company and the Adviser's affiliated private funds and SEC-registered funds to co-invest in loans originated by the Adviser, which allows the Adviser to efficiently implement its senior secured private debt investment strategy for the Company.
The cost basis of the Company's debt investments includes any unamortized purchased premium or discount, unamortized loan origination fees and PIK interest, if any. Summaries of the composition of the Company’s investment portfolio at cost and fair value, and as a percentage of total investments and net assets, are shown in the following tables:
Cost Percentage of
Total Portfolio		 Fair Value Percentage of
Total Portfolio		 Percentage of
Total
Net Assets
September 30, 2021:
Senior debt and 1st lien notes
$ 1,155,679,769  71  % $ 1,162,119,382  70  % 156  %
Subordinated debt and 2nd lien notes
192,870,460  12  190,426,410  12  26 
Structured products 18,207,625  1  20,794,178  1  3 
Equity shares 137,240,410  8  141,945,560  9  19 
Equity warrants 1,111,602  —  898,443  —  — 
Investment in joint ventures / PE fund 78,602,532  5  86,298,947  5  11 
Short-term investments 50,000,000  3  50,000,000  3  7 
$ 1,633,712,398  100  % $ 1,652,482,920  100  % 222  %
December 31, 2020:
Senior debt and 1st lien notes
$ 1,167,436,742  79  % $ 1,171,250,512  79  % 163  %
Subordinated debt and 2nd lien notes
137,776,808  9  138,767,120  9  19 
Structured products 30,071,808  2  32,508,845  2  5 
Equity shares 44,693,645  3  44,651,114  3  6 
Equity warrants 1,235,383  —  1,300,197  —  — 
Investment in joint ventures / PE fund 39,282,532  3  41,759,922  3  6 
Short-term investments 65,558,227  4  65,558,227  4  9 
$ 1,486,055,145  100  % $ 1,495,795,937  100  % 208  %

43
Barings BDC, Inc.
Notes to Unaudited Consolidated Financial Statements — (Continued)
During the three months ended September 30, 2021, the Company made 19 new investments totaling $122.1 million, made investments in existing portfolio companies totaling $60.3 million, made additional investments in existing joint venture equity portfolio companies totaling $3.8 million and made 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. During the nine months ended September 30, 2021, the Company made 59 new investments totaling $529.9 million, made investments in existing portfolio companies totaling $156.3 million, made a net new joint venture equity investment totaling $9.3 million, additional investments in joint venture equity portfolio companies totaling $30.0 million and made 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.
During the three months ended September 30, 2020, the Company made 15 new investments totaling $127.3 million, nine investments in existing portfolio companies totaling $16.3 million and an additional investment in one joint venture equity portfolio company totaling $1.6 million. During the nine months ended September 30, 2020, the Company made 47 new investments totaling $263.9 million, investments in 18 existing portfolio companies totaling $39.8 million, one new joint venture equity investment totaling $3.1 million and an additional investment in one joint venture equity portfolio company totaling $5.0 million.
44
Barings BDC, Inc.
Notes to Unaudited Consolidated Financial Statements — (Continued)
The industry composition of investments at fair value at September 30, 2021 and December 31, 2020, excluding short-term investments, was as follows:
September 30, 2021 December 31, 2020
Aerospace and Defense $ 99,448,730  6.2  % $ 82,501,170  5.8  %
Automotive 83,735,660  5.2  61,581,980  4.3 
Banking, Finance, Insurance and Real Estate 172,802,696  10.8  99,099,552  6.9 
Beverage, Food and Tobacco 24,450,995  1.5  15,404,126  1.1 
Capital Equipment 18,622,632  1.2  30,899,579  2.2 
Chemicals, Plastics, and Rubber 30,027,994  1.9  32,378,972  2.3 
Construction and Building 58,843,233  3.7  59,861,616  4.2 
Consumer goods: Durable 34,209,531  2.1  38,165,784  2.7 
Consumer goods: Non-durable 32,470,187  2.0  28,081,580  2.0 
Containers, Packaging and Glass 10,075,403  0.6  9,018,983  0.6 
Energy: Electricity 11,459,789  0.7  17,627,935  1.2 
Energy: Oil and Gas 3,970,831  0.2  788,105  0.1 
Environmental Services 5,679,198  0.3  —  — 
Healthcare and Pharmaceuticals 94,396,492  5.9  142,708,050  10.0 
High Tech Industries 166,155,701  10.4  152,413,985  10.6 
Hotel, Gaming and Leisure 17,504,174  1.1  10,682,093  0.7 
Investment Funds and Vehicles 86,298,947  5.4  41,759,922  2.9 
Media: Advertising, Printing and Publishing 67,557,194  4.2  54,123,033  3.8 
Media: Broadcasting and Subscription 5,667,110  0.4  6,464,741  0.4 
Media: Diversified and Production 38,318,298  2.4  48,200,216  3.4 
Metals and Mining 10,714,730  0.7  17,857,236  1.2 
Retail —  —  1,983,083  0.1 
Services: Business 315,121,713  19.7  209,974,914  14.7 
Services: Consumer 58,667,523  3.7  54,450,324  3.8 
Structured Products 20,794,178  1.3  32,508,845  2.3 
Telecommunications 30,684,989  1.9  43,021,001  3.0 
Transportation: Cargo 79,264,328  4.9  91,132,943  6.4 
Transportation: Consumer 4,941,125  0.3  —  — 
Utilities: Electric 9,028,422  0.6  8,987,929  0.6 
Utilities: Oil and Gas 11,571,117  0.7  11,645,956  0.8 
Wholesale —  —  26,914,057  1.9 
Total $ 1,602,482,920  100.0  % $ 1,430,237,710  100.0  %
Jocassee Partners LLC
On May 8, 2019, the Company entered into an agreement with South Carolina Retirement Systems Group Trust ("SCRS") to create and co-manage Jocassee Partners LLC ("Jocassee"), a joint venture, which invests in a highly diversified asset mix including senior secured, middle-market, private debt investments, syndicated senior secured loans and structured product investments. The Company and SCRS committed to initially provide $50.0 million and $500.0 million, respectively, of equity capital to Jocassee. Equity contributions will be called from each member on a pro-rata basis, based on their equity commitments.
45
Barings BDC, Inc.
Notes to Unaudited Consolidated Financial Statements — (Continued)
The total value of Jocassee’s investment portfolio was $1,141.6 million as of September 30, 2021, as compared to $869.6 million as of December 31, 2020. As of September 30, 2021, Jocassee’s investments had an aggregate cost of $1,123.3 million, as compared to $839.5 million as of December 31, 2020. As of September 30, 2021 and December 31, 2020, the Jocassee investment portfolio consisted of the following investments:
Cost Percentage of
Total
Portfolio		 Fair Value Percentage of
Total
Portfolio
September 30, 2021:
Senior debt and 1st lien notes
$ 973,974,678  87  % $ 982,834,210  86  %
Subordinated debt and 2nd lien notes 18,872,154  2  % 19,259,003  2  %
Structured products 4,568,790  —  % 5,226,052  —  %
Equity shares 5,757,210  —  % 4,350,284  —  %
Equity warrants 31,451  —  % 84,997  —  %
Investment in joint ventures 99,320,000  9  % 109,008,315  10  %
Short-term investments 20,802,411  2  % 20,802,411  2  %
$ 1,123,326,694  100  % $ 1,141,565,272  100  %
December 31, 2020:
Senior debt and 1st lien notes
$ 686,341,760  81  % $ 714,747,405  82  %
Subordinated debt and 2nd lien notes 10,079,164  1  10,170,127  1 
Structured products 22,981,004  3  25,626,147  3 
Equity shares 6,964,845  1  5,829,554  1 
Equity warrants 31,451  —  51,515  — 
Investment in joint ventures 90,000,000  11  90,106,560  10 
Short-term investments 23,093,064  3  23,093,055  3 
$ 839,491,288  100  % $ 869,624,363  100  %
As of September 30, 2021 and December 31, 2020, the weighted average yield on the principal amount of Jocassee’s outstanding debt investments was approximately 4.9% and 4.4%, respectively. The weighted average yield on the principal amount of all of Jocassee’s outstanding investments (including equity and equity-linked investments and short-term investments) was approximately 4.4% and 3.8% as of September 30, 2021 and December 31, 2020, respectively.
46
Barings BDC, Inc.
Notes to Unaudited Consolidated Financial Statements — (Continued)
The industry composition of Jocassee’s investments at fair value at September 30, 2021 and December 31, 2020, excluding short-term investments, was as follows:
September 30, 2021 December 31, 2020
Aerospace and Defense $ 58,735,552  5.2  % $ 21,044,217  2.5  %
Automotive 13,632,695  1.2  15,520,985  1.8 
Banking, Finance, Insurance and Real Estate 96,106,329  8.6  80,759,836  9.6 
Beverage, Food and Tobacco 31,113,536  2.8  24,931,070  2.9 
Capital Equipment 19,361,668  1.7  19,953,788  2.4 
Chemicals, Plastics, and Rubber 26,258,802  2.3  26,419,508  3.1 
Construction and Building 14,496,449  1.3  14,979,023  1.8 
Consumer goods: Durable 12,251,005  1.1  14,256,411  1.7 
Consumer goods: Non-durable 24,357,209  2.2  4,749,797  0.6 
Containers, Packaging and Glass 30,622,583  2.7  16,742,506  2.0 
Energy: Electricity 3,013,016  0.3  5,897,687  0.7 
Energy: Oil and Gas 5,082,872  0.4  4,602,739  0.5 
Environmental Industries 7,633,111  0.7  2,697,765  0.3 
Forest Products & Paper 477,258  —  —  — 
Healthcare and Pharmaceuticals 136,065,412  12.1  84,624,495  10.0 
High Tech Industries 142,874,159  12.7  75,759,051  8.9 
Hotel, Gaming and Leisure 44,568,617  4.0  49,013,967  5.8 
Investment Funds and Vehicles 109,008,315  9.7  90,106,560  10.6 
Media: Advertising, Printing and Publishing 16,448,708  1.5  9,761,091  1.2 
Media: Broadcasting and Subscription 34,656,694  3.1  40,885,203  4.8 
Media: Diversified and Production 22,280,046  2.0  12,950,796  1.5 
Metals and Mining 5,809,587  0.5  1,645,763  0.2 
Retail 15,847,552  1.4  15,962,027  1.9 
Services: Business 107,418,605  9.6  87,474,340  10.3 
Services: Consumer 48,356,109  4.3  40,177,219  4.7 
Structured Product 5,226,052  0.5  17,515,085  2.1 
Telecommunications 46,257,109  4.1  48,768,364  5.8 
Transportation: Cargo 29,756,525  2.7  4,927,508  0.6 
Transportation: Consumer 6,521,401  0.6  7,730,907  0.9 
Utilities: Electric 5,577,893  0.5  5,720,376  0.7 
Wholesale 947,992  0.1  953,224  0.1 
Total $ 1,120,762,861  100.0  % $ 846,531,308  100.0  %
47
Barings BDC, Inc.
Notes to Unaudited Consolidated Financial Statements — (Continued)
The geographic composition of Jocassee’s investments at fair value at September 30, 2021 and December 31, 2020, excluding short-term investments, was as follows:
September 30, 2021 December 31, 2020
Australia $ 14,007,413  1.2  % $ —  —  %
Austria 1,134,809  0.1  1,181,240  0.1 
Belgium 16,684,896  1.5  3,940,942  0.5 
Canada 8,549,772  0.8  5,691,085  0.7 
Denmark 3,450,136  0.3  4,839,238  0.6 
Finland 2,317,367  0.2  2,328,122  0.3 
France 118,164,658  10.5  77,599,427  9.1 
Germany 37,120,042  3.3  41,184,179  4.9 
Ireland 2,312,105  0.2  2,440,052  0.3 
Italy 927,403  0.1  607,762  0.1 
Luxembourg 2,352,386  0.2  2,512,059  0.3 
Netherlands 37,070,828  3.3  26,905,224  3.2 
Panama 964,787  0.1  965,149  0.1 
Spain 8,764,999  0.8  11,163,151  1.3 
Sweden 5,490,158  0.5  13,169,200  1.6 
Switzerland 10,901,034  1.0  13,208,446  1.6 
United Kingdom 102,236,613  9.1  76,748,680  9.0 
USA 748,313,454  66.8  562,047,352  66.3 
Total $ 1,120,762,861  100.0  % $ 846,531,308  100.0  %
Jocassee’s subscription facility with Bank of America N.A., which is non-recourse to the Company, had approximately $87.4 million and $204.9 million outstanding as of September 30, 2021 and December 31, 2020, respectively. Jocassee’s credit facility with Citibank, N.A., which is non-recourse to the Company, had approximately $316.3 million and $113.1 million outstanding as of September 30, 2021 and December 31, 2020, respectively. Jocassee’s term debt securitization, which is non-recourse to the Company, had approximately $323.0 million and $302.3 million outstanding as of September 30, 2021 and December 31, 2020, respectively.
The Company may sell portions of its investments via assignment to Jocassee. Since inception, as of September 30, 2021 and December 31, 2020, the Company had sold $500.6 million and $162.2 million, respectively, of its investments to Jocassee. As of September 30, 2021 and December 31, 2020, the Company had $61.1 million and $44.2 million, respectively in unsettled receivables due from Jocassee that were included in "Receivable from unsettled transactions" in the accompanying Unaudited and Audited Consolidated Balance Sheets. The sale of the investments met the criteria set forth in ASC 860, Transfers and Servicing for treatment as a sale and satisfies the following conditions:
•Assigned investments have been isolated from the Company, and put presumptively beyond the reach of the Company and its creditors, even in bankruptcy or other receivership;
•each participant has the right to pledge or exchange the assigned investments it received, and no condition both constrains the participant from taking advantage of its right to pledge or exchange and provides more than a trivial benefit to the Company; and
•the Company, its consolidated affiliates or its agents do not maintain effective control over the assigned investments through either: (i) an agreement that entitles and/or obligates the Company to repurchase or redeem the assets before maturity, or (ii) the ability to unilaterally cause the holder to return specific assets, other than through a cleanup call.
The Company has determined that Jocassee is an investment company under ASC, Topic 946, Financial Services - Investment Companies, however, in accordance with such guidance, the Company will generally not consolidate its investment in a company other than a substantially wholly owned investment company subsidiary, which is an extension of the operations of the Company, or a controlled operating company whose business consists of providing services to the Company. The
48
Barings BDC, Inc.
Notes to Unaudited Consolidated Financial Statements — (Continued)
Company does not consolidate its interest in Jocassee as it is not a substantially wholly owned investment company subsidiary. In addition, the Company does not control Jocassee due to the allocation of voting rights among Jocassee members.
As of September 30, 2021 and December 31, 2020, Jocassee had the following contributed capital and unfunded commitments from its members:
As of
September 30, 2021
As of December 31, 2020
Total contributed capital by Barings BDC, Inc. $ 30,000,000  $ 20,000,000 
Total contributed capital by all members $ 330,000,000  $ 220,000,000 
Total unfunded commitments by Barings BDC, Inc. $ 20,000,000  $ 30,000,000 
Total unfunded commitments by all members $ 220,000,000  $ 330,000,000 
Thompson Rivers LLC
On April 28, 2020, Thompson Rivers LLC (“Thompson Rivers”) was formed as a Delaware limited liability company. On May 13, 2020, the Company entered into a limited liability company agreement governing Thompson Rivers. Under Thompson Rivers’ current operating agreement, as amended to date, the Company has a capital commitment of $30.0 million of equity capital to Thompson Rivers, all of which has been funded as of September 30, 2021. As of September 30, 2021, aggregate commitments to Thompson Rivers by the Company and the other members under the current operating agreement total $405.0 million, all of which has been funded.
For the three and nine months ended September 30, 2021, Thompson Rivers declared $12.5 million and $16.0 million in dividends, respectively, of which $1.0 million and $1.3 million, respectively, was recognized as dividend income in the Company’s Unaudited Consolidated Statement of Operations.
As of September 30, 2021, Thompson Rivers had $3.2 billion in Ginnie Mae early buyout loans and $117.5 million in cash. As of December 31, 2020, Thompson Rivers had $715.2 million in Ginnie Mae early buyout loans. As of September 30, 2021, Thompson Rivers had 15,374 outstanding loans with an average unpaid balance of $0.2 million and weighted average coupon of 4.18%. As of December 31, 2020, Thompson Rivers had 3,023 outstanding loans with an average unpaid balance of $0.2 million and weighted average coupon of 4.65%.
As of September 30, 2021 and December 31, 2020, the Thompson Rivers investment portfolio consisted of the following investments:
Cost Percentage of
Total
Portfolio		 Fair Value Percentage of
Total
Portfolio
September 30, 2021:
Federal Housing Administration (“FHA”) loans $ 3,050,510,898  97  % $ 3,068,818,458  97  %
Veterans Affairs (“VA”) loans 104,545,047  3  % 102,597,178  3  %
$ 3,155,055,945  100  % $ 3,171,415,636  100  %
December 31, 2020:
Federal Housing Administration (“FHA”) loans $ 712,854,085  100  % $ 712,854,085  100  %
Veterans Affairs (“VA”) loans —  —  % —  —  %
$ 712,854,085  100  % $ 712,854,085  100  %
Thompson Rivers’ repurchase agreement with JPMorgan Chase Bank, which is non-recourse to the Company, had approximately $757.4 million and $670.1 million outstanding as of September 30, 2021 and December 31, 2020, respectively. Thompson Rivers’ repurchase agreement with Bank of America N.A., which is non-recourse to the Company, had approximately $894.1 million outstanding as of September 30, 2021. Thompson Rivers’ repurchase agreement with Barclays Bank, which is non-recourse to the Company, had approximately $1,220.8 million outstanding as of September 30, 2021.
49
Barings BDC, Inc.
Notes to Unaudited Consolidated Financial Statements — (Continued)
The Company has determined that Thompson Rivers is an investment company under ASC, Topic 946, Financial Services - Investment Companies, however, in accordance with such guidance, the Company will generally not consolidate its investment in a company other than a substantially wholly owned investment company subsidiary, which is an extension of the operations of the Company, or a controlled operating company whose business consists of providing services to the Company. The Company does not consolidate its interest in Thompson Rivers as it is not a substantially wholly owned investment company subsidiary. In addition, the Company does not control Thompson Rivers due to the allocation of voting rights among Thompson Rivers members.
As of September 30, 2021 and December 31, 2020, Thompson Rivers had the following contributed capital and unfunded commitments from its members:
As of
September 30, 2021
As of December 31, 2020
Total contributed capital by Barings BDC, Inc. $ 30,000,000  $ 10,000,000 
Total contributed capital by all members $ 405,000,000  (1) $ 100,000,000  (2)
Total unfunded commitments by Barings BDC, Inc. $ —  $ — 
Total unfunded commitments by all members $ —  $ — 
(1)Includes $150.0 million of total contributed capital by related parties.
(2)Includes $90.0 million of total contributed capital by related parties.
Waccamaw River LLC
On January 4, 2021, Waccamaw River LLC (“Waccamaw River”) was formed as a Delaware limited liability company. On February 8, 2021, the Company entered into a limited liability company agreement governing Waccamaw River. Under Waccamaw River’s current operating agreement, as amended to date, the Company has a capital commitment of $25.0 million of equity capital to Waccamaw River, of which approximately $14.6 million (including approximately $5.3 million of recallable return of capital) has been funded as of September 30, 2021. As of September 30, 2021, aggregate commitments to Waccamaw River by the Company and the other members under the current operating agreement total $125.0 million, of which $60.6 million (including $14.0 million of recallable return of capital) has been funded.
On September 30, 2021, Waccamaw River declared a $0.7 million dividend, of which $0.1 million was recognized as dividend income in the Company’s Unaudited Consolidated Statement of Operations. As of September 30, 2021, Waccamaw River had $33.8 million in unsecured student loans and $11.7 million in cash. As of September 30, 2021, Waccamaw River had 3,178 outstanding loans with an average loan size of $10,000, remaining average life to maturity of 44.2 months and weighted average interest rate of 10.58%.
The Company has determined that Waccamaw River is an investment company under ASC, Topic 946, Financial Services - Investment Companies, however, in accordance with such guidance, the Company will generally not consolidate its investment in a company other than a substantially wholly owned investment company subsidiary, which is an extension of the operations of the Company, or a controlled operating company whose business consists of providing services to the Company. The Company does not consolidate its interest in Waccamaw River as it is not a substantially wholly owned investment company subsidiary. In addition, the Company does not control Waccamaw River due to the allocation of voting rights among Waccamaw River members.
50
Barings BDC, Inc.
Notes to Unaudited Consolidated Financial Statements — (Continued)
As of September 30, 2021, Waccamaw River had the following contributed capital and unfunded commitments from its members:
As of
September 30, 2021
Total contributed capital by Barings BDC, Inc. $ 14,600,000 
Total contributed capital by all members $ 60,620,000  (1)
Total return of capital (recallable) by Barings BDC, Inc. $ (5,280,000)
Total return of capital (recallable) by all members $ (14,020,000) (2)
Total unfunded commitments by Barings BDC, Inc. $ 15,680,000 
Total unfunded commitments by all members $ 78,400,000  (3)
(1)Includes $35.0 million of total contributed capital by related parties.
(2)Includes ($7.0) million of total return of capital (recallable) by related parties.
(3)Includes $47.0 million of unfunded commitments by related parties.
Eclipse Business Capital Holdings LLC
On July 8, 2021, the Company made an equity investment in Eclipse Business Capital Holdings LLC (“Eclipse”) of $89.8 million, a second lien senior secured loan of $4.5 million and unfunded revolver of $13.6 million, alongside other related party affiliates. Eclipse conducts its business through Eclipse Business Capital LLC. Eclipse is one of the country’s leading independent asset-based lending (“ABL”) platforms that provides financing to middle-market borrowers in the U.S. and Canada. Eclipse provides revolving lines of credit and term loans ranging in size from $10 – $125 million that are secured by collateral such as accounts receivable, inventory, equipment, or real estate. Eclipse lends to both privately-owned and publicly-traded companies across a range of industries, including manufacturing, retail, automotive, oil & gas, services, distribution, and consumer products. The addition of Eclipse to the portfolio allows the Company to participate in an asset class and commercial finance operations that offer differentiated income returns as compared to directly originated loans. Eclipse is led by a seasoned team of ABL experts.
The Company has determined that Eclipse is not an investment company under ASC, Topic 946, Financial Services - Investment Companies. Under the scope exception in ASC 810-10-12(d), the Company is not required to consolidate Eclipse. Instead the Company accounts for its investment in Eclipse in accordance with ASC 946-320, presented as a single investment measured at fair value.
Valuation of Investments
The Company conducts the valuation of its investments, upon which its net asset value is primarily based, in accordance with its valuation policy, as well as established and documented processes and methodologies for determining the fair values of portfolio company investments on a recurring (at least quarterly) basis in accordance with the 1940 Act and FASB ASC Topic 820, Fair Value Measurements and Disclosures ("ASC Topic 820"). The Company's current valuation policy and processes were established by the Adviser and have been approved by the Board.
Under ASC Topic 820, fair value is the price that would be received to sell an asset or paid to transfer a liability in an orderly transaction between a willing buyer and a willing seller at the measurement date. For the Company’s portfolio securities, fair value is generally the amount that the Company might reasonably expect to receive upon the current sale of the security. Under ASC Topic 820, the fair value measurement assumes that the sale occurs in the principal market for the security, or in the absence of a principal market, in the most advantageous market for the security. Under ASC Topic 820, if no market for the security exists or if the Company does not have access to the principal market, the security should be valued based on the sale occurring in a hypothetical market.
Under ASC Topic 820, there are three levels of valuation inputs, as follows:
Level 1 Inputs – include quoted prices (unadjusted) in active markets for identical assets or liabilities.
Level 2 Inputs – include quoted prices for similar assets and liabilities in active markets, and inputs that are observable for the asset or liability, either directly or indirectly, for substantially the full term of the financial instrument.
Level 3 Inputs – include inputs that are unobservable and significant to the fair value measurement.
51
Barings BDC, Inc.
Notes to Unaudited Consolidated Financial Statements — (Continued)
A financial instrument is categorized within the ASC Topic 820 valuation hierarchy based upon the lowest level of input to the valuation process that is significant to the fair value measurement. For example, a Level 3 fair value measurement may include inputs that are observable (Levels 1 and 2) and unobservable (Level 3). Therefore, unrealized appreciation and depreciation related to such investments categorized as Level 3 investments within the tables below may include changes in fair value that are attributable to both observable inputs (Levels 1 and 2) and unobservable inputs (Level 3).
The Company’s investment portfolio includes certain debt and equity instruments of privately held companies for which quoted prices or other observable inputs falling within the categories of Level 1 and Level 2 are generally not available. In such cases, the Company determines the fair value of its investments in good faith primarily using Level 3 inputs. In certain cases, quoted prices or other observable inputs exist, and if so, the Company assesses the appropriateness of the use of these third-party quotes in determining fair value based on (i) its understanding of the level of actual transactions used by the broker to develop the quote and whether the quote was an indicative price or binding offer and (ii) the depth and consistency of broker quotes and the correlation of changes in broker quotes with the underlying performance of the portfolio company.
There is no single standard for determining fair value in good faith, as fair value depends upon the specific circumstances of each individual investment. The recorded fair values of the Company’s Level 3 investments may differ significantly from fair values that would have been used had an active market for the securities existed. In addition, changes in the market environment and other events that may occur over the life of the investments may cause the gains or losses ultimately realized on these investments to be different than the valuations currently assigned.
Investment Valuation Process
The Adviser has established a pricing committee that is, subject to the oversight of the Board, responsible for the approval, implementation and oversight of the processes and methodologies that relate to the pricing and valuation of assets held by the Company. The Adviser uses independent third-party providers to price the portfolio, but in the event an acceptable price cannot be obtained from an approved external source, the Adviser will utilize alternative methods in accordance with internal pricing procedures established by the Adviser's pricing committee.
At least annually, the Adviser conducts reviews of the primary pricing vendors to validate that the inputs used in the vendors’ pricing process are deemed to be market observable. While the Adviser is not provided access to proprietary models of the vendors, the reviews have included on-site walkthroughs of the pricing process, methodologies and control procedures for each asset class and level for which prices are provided. The review also includes an examination of the underlying inputs and assumptions for a sample of individual securities across asset classes, credit rating levels and various durations, a process the Adviser continues to perform annually. In addition, the pricing vendors have an established challenge process in place for all security valuations, which facilitates identification and resolution of prices that fall outside expected ranges. The Adviser believes that the prices received from the pricing vendors are representative of prices that would be received to sell the assets at the measurement date (i.e., exit prices).
The Company's money market fund investments are generally valued using Level 1 inputs and its equity investments listed on an exchange or on the NASDAQ National Market System are valued using Level 1 inputs, using the last quoted sale price of that day. The Company’s syndicated senior secured loans and structured product investments are generally valued using Level 2 inputs, which are generally valued at the bid quotation obtained from dealers in loans by an independent pricing service. The Company's middle-market, private debt and equity investments are generally valued using Level 3 inputs.
Independent Valuation
The fair value of loans and equity investments that are not syndicated or for which market quotations are not readily available, including middle-market loans, are generally submitted to independent providers to perform an independent valuation on those loans and equity investments as of the end of each quarter. Such loans and equity investments are initially held at cost, as that is a reasonable approximation of fair value on the acquisition date, and monitored for material changes that could affect the valuation (for example, changes in interest rates or the credit quality of the borrower). At the quarter end following the initial acquisition, such loans and equity investments are generally sent to a valuation provider which will determine the fair value of each investment. The independent valuation providers apply various methods (synthetic rating analysis, discounting cash flows, and re-underwriting analysis) to establish the rate of return a market participant would require (the “discount rate”) as of the valuation date, given market conditions, prevailing lending standards and the perceived credit quality of the issuer. Future expected cash flows for each investment are discounted back to present value using these discount rates in the discounted cash flow analysis. A range of values will be provided by the valuation provider and the Adviser will determine the point within that range that it will use in making valuation recommendations to the Board, and will report to the Board on its rationale for each such determination. The Adviser uses its internal valuation model as a comparison point to validate the price range provided by the valuation provider and, where applicable, in determining the point within that range that it will use in
52
Barings BDC, Inc.
Notes to Unaudited Consolidated Financial Statements — (Continued)
making valuation recommendations to the Board. If the Adviser’s pricing committee disagrees with the price range provided, it may make a fair value recommendation to the Board that is outside of the range provided by the independent valuation provider, and will notify the Board of any such override and the reasons therefore. In certain instances, the Company may determine that it is not cost-effective, and as a result is not in the stockholders' best interests, to request an independent valuation firm to perform an independent valuation on certain investments. Such instances include, but are not limited to, situations where the fair value of the investment in the portfolio company is determined to be insignificant relative to the total investment portfolio. Pursuant to these procedures, the Board determines in good faith whether the Company's investments were valued at fair value in accordance with the Company's valuation policies and procedures and the 1940 Act based on, among other things, the input of Barings, the Company’s Audit Committee and the independent valuation firm.
Valuation Techniques
The Company's valuation techniques are based upon both observable and unobservable pricing inputs. Observable inputs reflect market data obtained from independent sources, while unobservable inputs reflect the Company's market assumptions. The Company's assessment of the significance of a particular input to the fair value measurement in its entirety requires judgment and considers factors specific to the financial instrument. An independent pricing service provider is the preferred source of pricing a loan, however, to the extent the independent pricing service provider price is unavailable or not relevant and reliable, the Company will utilize alternative approaches such as broker quotes or manual prices. The Company attempts to maximize the use of observable inputs and minimize the use of unobservable inputs. The availability of observable inputs can vary from investment to investment and is affected by a wide variety of factors, including the type of security, whether the security is new and not yet established in the marketplace, the liquidity of markets and other characteristics particular to the security.
Valuation of Investment in Jocassee, Thompson Rivers, Waccamaw River and MVC Private Equity Fund LP
The Company estimates the fair value of its investments in Jocassee, Thompson Rivers, Waccamaw River and MVC Private Equity Fund LP using the NAV of each company and its ownership percentage. The NAV is determined in accordance with the specialized accounting guidance for investment companies.
53
Barings BDC, Inc.
Notes to Unaudited Consolidated Financial Statements — (Continued)
Level 3 Unobservable Inputs
The following tables summarize the significant unobservable inputs the Company used in the valuation of its Level 3 debt and equity securities as of September 30, 2021 and December 31, 2020. The weighted average range of unobservable inputs is based on fair value of investments.
September 30, 2021: Fair Value Valuation
Model		 Level 3
Input		 Range of
Inputs		 Weighted
Average		 Impact to Valuation from an Increase in Input
Senior debt and 1st lien notes(1)
$ 830,402,065  Yield Analysis Market Yield 4.9% – 30.0% 7.3% Decrease
232,774,460  Recent Transaction Transaction Price 97.0% – 100.0% 97.9% Increase
Subordinated debt and 2nd lien notes(2)
94,034,384  Yield Analysis Market Yield 8.0% – 20.0% 12.9% Decrease
64,464,151  Market Approach Adjusted EBITDA Multiple 4.5x – 9.0x 6.3x Increase
8,500,243  Recent Transaction Transaction Price 98.0% – 100.0% 99.5% Increase
Equity shares(3)
41,438,582  Market Approach Adjusted EBITDA Multiple 4.5x – 17.8x 7.2x Increase
5,953,405  Real Estate - Cost Approach Replacement Cost (CZK/m2) 1,237 to 1,892 1,892 Increase
Real Estate - Cost Approach Depreciation Factor 0.50 to 1.00 0.81 Increase
Real Estate - Income Approach Market Rent
CZK/Year		 CZK5,011,718 to CZK8,700,000 CZK5,011,718 Increase
Real Estate - Income Approach Cap Rate 6.0% to 7.0% 6.5% Decrease
Real Estate - Income Approach Adj. Factor for
Development Zone		 n/a 1.15 Increase
91,579,031  Recent Transaction Transaction Price $1 – $8,731.41 $33.2 Increase
Equity warrants 623,862  Market Approach Adjusted EBITDA Multiple 6.0x – 23.3x 6.0x Increase
(1)Excludes investments with an aggregate fair value amounting to $6,573,935, which the Company valued using unadjusted prices from independent pricing services and independent indicative broker quotes where pricing inputs are not readily available.
(2)Excludes investments with an aggregate fair value amounting to $18,247,292, which the Company valued using unadjusted prices from independent pricing services and independent indicative broker quotes where pricing inputs are not readily available.
(3)Excludes investments with an aggregate fair value amounting to $2,974,542, which the Company valued using unadjusted prices from independent pricing services and independent indicative broker quotes where pricing inputs are not readily available.
54
Barings BDC, Inc.
Notes to Unaudited Consolidated Financial Statements — (Continued)
December 31, 2020: Fair Value Valuation
Model		 Level 3
Input		 Range of
Inputs		 Weighted
Average		 Impact to Valuation from an Increase in Input
Senior debt and 1st lien notes(1)
$ 650,550,710  Yield Analysis Market Yield 4.7% – 16.2% 7.4% Decrease
3,000,000  Liquidation Analysis Adjusted EBITDA Multiple 0.05x – 0.15x 0.10x Increase
399,692,333  Recent Transaction Transaction Price 96.0% – 100.0% 97.8% Increase
Subordinated debt and 2nd lien notes(2)
109,851,771  Yield Analysis Market Yield 6.0% – 26.0% 16.7% Decrease
13,933,960  Market Approach Adjusted EBITDA Multiple 5.0x – 6.0x 5.5x Increase
4,959,088  Recent Transaction Transaction Price 100% 100% Increase
Equity shares(3)
39,178,157  Market Approach Adjusted EBITDA Multiple 0.8x – 11.8x 4.8x Increase
4,752,997  Real Estate - Cost Approach Replacement Cost (CZK/m2) 1,237 to 1,892 1,892 Increase
Real Estate - Cost Approach Depreciation Factor 0.50 to 1.00 0.81 Increase
Real Estate - Income Approach Market Rent
CZK/Year		 CZK5,011,718 to CZK8,700,000 CZK5,011,718 Increase
Real Estate - Income Approach Cap Rate 6.0% to 7.0% 6.5% Decrease
Real Estate - Income Approach Adj. Factor for
Development Zone		 n/a 1.15 Increase
227,200  Recent Transaction Transaction Price $1,000 $1,000 Increase
Equity warrants 1,133,781  Market Approach Adjusted EBITDA Multiple 4.8x-9.0x 6.0x Increase
(1)Excludes investments with an aggregate fair value amounting to $2,474,068, which the Company valued using unadjusted prices from independent pricing services and independent indicative broker quotes where pricing inputs are not readily available.
(2)Excludes investments with an aggregate fair value amounting to $2,075,117, which the Company valued using unadjusted prices from independent pricing services and independent indicative broker quotes where pricing inputs are not readily available.
(3)Excludes investments with an aggregate fair value amounting to $68,670, which the Company valued using unadjusted prices from independent pricing services and independent indicative broker quotes where pricing inputs are not readily available.

55
Barings BDC, Inc.
Notes to Unaudited Consolidated Financial Statements — (Continued)
The following tables present the Company’s investment portfolio at fair value as of September 30, 2021 and December 31, 2020, categorized by the ASC Topic 820 valuation hierarchy, as previously described:
 
Fair Value as of September 30, 2021
Level 1 Level 2 Level 3 Total
Senior debt and 1st lien notes
$ —  $ 92,368,922  $ 1,069,750,460  $ 1,162,119,382 
Subordinated debt and 2nd lien notes
—  5,180,340  185,246,070  190,426,410 
Structured products —  20,794,178  —  20,794,178 
Equity shares —  —  141,945,560  141,945,560 
Equity warrants —  274,581  623,862  898,443 
Short-term investments 50,000,000  —  —  50,000,000 
Investments subject to leveling $ 50,000,000  $ 118,618,021  $ 1,397,565,952  $ 1,566,183,973 
Investment in joint ventures / PE fund(1) 86,298,947 
$ 1,652,482,920 
Fair Value as of December 31, 2020
Level 1 Level 2 Level 3 Total
Senior debt and 1st lien notes
$ —  $ 115,533,401  $ 1,055,717,111  $ 1,171,250,512 
Subordinated debt and 2nd lien notes
—  7,947,184  130,819,936  138,767,120 
Structured products —  32,508,845  —  32,508,845 
Equity shares —  424,090  44,227,024  44,651,114 
Equity warrants —  166,416  1,133,781  1,300,197 
Short-term investments 65,558,227  —  —  65,558,227 
Investments subject to leveling $ 65,558,227  $ 156,579,936  $ 1,231,897,852  $ 1,454,036,015 
Investment in joint ventures / PE fund(1) 41,759,922 
$ 1,495,795,937 
(1)The Company's investments in Jocassee, Thompson Rivers, Waccamaw River and MVC Private Equity Fund LP are measured at fair value using NAV and have not been categorized in the fair value hierarchy. The fair value amounts presented in this table are intended to permit reconciliation of the fair value hierarchy to the amounts presented in the Unaudited Consolidated Balance Sheet and Consolidated Balance Sheet.
56
Barings BDC, Inc.
Notes to Unaudited Consolidated Financial Statements — (Continued)
The following tables reconcile the beginning and ending balances of the Company’s investment portfolio measured at fair value on a recurring basis using significant unobservable inputs (Level 3) for the nine months ended September 30, 2021 and 2020:
Nine Months Ended
September 30, 2021:
Senior Debt
and 1st Lien
Notes
Subordinated Debt and 2nd Lien Notes
Equity
Shares		 Equity Warrants Total
Fair value, beginning of period $ 1,055,717,111  $ 130,819,936  $ 44,227,024  $ 1,133,781  $ 1,231,897,852 
New investments 585,196,480  83,855,938  96,309,352  163,000  765,524,770 
Transfers into Level 3 —  2,233,600  3,223,510  —  5,457,110 
Proceeds from sales of investments (394,827,470) (8,771,000) (6,902,871) (450,000) (410,951,341)
Loan origination fees received (12,485,025) (1,209,071) —  —  (13,694,096)
Principal repayments received (170,947,104) (27,317,262) —  —  (198,264,366)
Payment-in-kind interest 684,633  7,720,972  —  —  8,405,605 
Accretion of loan discounts 9,946  210,914  —  —  220,860 
Accretion of deferred loan origination revenue 6,028,974  375,649  —  —  6,404,623 
Realized gain (loss) 1,836,833  (27,669) 340,863  163,219  2,313,246 
Unrealized appreciation (depreciation) (1,463,918) (2,645,937) 4,747,682  (386,138) 251,689 
Fair value, end of period $ 1,069,750,460  $ 185,246,070  $ 141,945,560  $ 623,862  $ 1,397,565,952 
Nine Months Ended
September 30, 2020:
Senior Debt
and 1st Lien
Notes
Subordinated Debt and 2nd Lien Notes
Equity
Shares		 Total
Fair value, beginning of period $ 555,500,307  $ 12,011,965  $ 760,716  $ 568,272,988 
New investments 206,929,866  660,263  512,299  208,102,428 
Transfers in (out) of Level 3 19,063,921  1,996,471  —  21,060,392 
Proceeds from sales of investments (91,889,896) (415,977) —  (92,305,873)
Loan origination fees received (4,744,340) (19,808) —  (4,764,148)
Principal repayments received (20,157,266) —  —  (20,157,266)
Payment-in-kind interest 236,572  35,108  —  271,680 
Accretion of loan premium 16,426  —  —  16,426 
Accretion of deferred loan origination revenue 1,653,596  26,081  —  1,679,677 
Realized loss 70,946  (26,253) —  44,693 
Unrealized depreciation (12,036,139) 631,992  (297,965) (11,702,112)
Fair value, end of period $ 654,643,993  $ 14,899,842  $ 975,050  $ 670,518,885 
All realized gains and losses and unrealized appreciation and depreciation are included in earnings (changes in net assets) and are reported on separate line items within the Company’s Unaudited Consolidated Statements of Operations. Pre-tax net unrealized appreciation (depreciation) on Level 3 investments of $(5.8) million and $3.1 million during the three and nine months ended September 30, 2021, respectively, was related to portfolio company investments that were still held by the Company as of September 30, 2021. Pre-tax net unrealized appreciation (depreciation) on Level 3 investments of $18.8 million and $(13.8) million during the three and nine months ended months ended September 30, 2020, respectively, was related to portfolio company investments that were still held by the Company as of September 30, 2020.
Exclusive of short-term investments, during the nine months ended September 30, 2021, the Company made investments of approximately $757.8 million in portfolio companies to which it was not previously contractually committed to provide such financing. During the nine months ended September 30, 2021, the Company made investments of $57.5 million in portfolio companies to which it was previously committed to provide such financing.
Exclusive of short-term investments, during the nine months ended September 30, 2020, the Company made investments of approximately $297.0 million in portfolio companies to which it was not previously contractually committed to provide such financing. During the nine months ended September 30, 2020, the Company made investments of $14.8 million in portfolio companies to which it was previously committed to provide such financing.
57
Barings BDC, Inc.
Notes to Unaudited Consolidated Financial Statements — (Continued)
Unsettled Purchases and Sales of Investments
Investment transactions are recorded based on the trade date of the transaction. As a result, unsettled purchases and sales are recorded as payables and receivables from unsettled transactions, respectively. While purchases and sales of the Company's syndicated senior secured loans generally settle on a T+7 basis, the settlement period will sometimes extend past the scheduled settlement. In such cases, the Company generally is contractually owed and recognizes interest income equal to the applicable margin ("spread") beginning on the T+7 date. Such income is accrued as interest receivable and is collected upon settlement of the investment transaction.
Realized Gain or Loss and Unrealized Appreciation or Depreciation of Portfolio Investments
Realized gains or losses are recorded upon the sale or liquidation of investments and are calculated as the difference between the net proceeds from the sale or liquidation, if any, and the cost basis of the investment using the specific identification method. Unrealized appreciation or depreciation reflects the difference between the fair value of the investments and the cost basis of the investments.
Investment Classification
In accordance with the provisions of the 1940 Act, the Company classifies investments by level of control. As defined in the 1940 Act, "Control Investments" are investments in those companies that the Company is deemed to "Control." "Affiliate Investments" are investments in those companies that are "Affiliated Persons" of the Company, as defined in the 1940 Act, other than Control Investments. "Non-Control / Non-Affiliate Investments" are those that are neither Control Investments nor Affiliate Investments. Generally, under the 1940 Act, the Company is deemed to control a company in which it has invested if the Company owns more than 25.0% of the voting securities (i.e., securities with the right to elect directors) and/or has the power to exercise control over the management or policies of such portfolio company. Generally, under the 1940 Act, “Affiliate Investments” that are not otherwise “Control Investments” are defined as investments in which the Company owns at least 5.0%, up to 25.0% (inclusive), of the voting securities and does not have the power to exercise control over the management or policies of such portfolio company.
Investment Income
Interest income, including amortization of premium and accretion of discount, is recorded on the accrual basis to the extent that such amounts are expected to be collected. Generally, when interest and/or principal payments on a loan become past due, or if the Company otherwise does not expect the borrower to be able to service its debt and other obligations, the Company will place the loan on non-accrual status and will generally cease recognizing interest income on that loan for financial reporting purposes until all principal and interest have been brought current through payment or due to a restructuring such that the interest income is deemed to be collectible. The Company writes off any previously accrued and uncollected interest when it is determined that interest is no longer considered collectible. Dividend income is recorded on the ex-dividend date.
Payment-in-Kind Interest
The Company currently holds, and expects to hold in the future, some loans in its portfolio that contain payment-in-kind ("PIK") interest provisions. PIK interest, computed at the contractual rate specified in each loan agreement, is periodically added to the principal balance of the loan, rather than being paid to the Company in cash, and is recorded as interest income. Thus, the actual collection of PIK interest may be deferred until the time of debt principal repayment.
PIK interest, which is a non-cash source of income at the time of recognition, is included in the Company’s taxable income and therefore affects the amount the Company is required to distribute to its stockholders to maintain its tax treatment as a RIC for federal income tax purposes, even though the Company has not yet collected the cash. Generally, when current cash interest and/or principal payments on a loan become past due, or if the Company otherwise does not expect the borrower to be able to service its debt and other obligations, the Company will place the loan on non-accrual status and will generally cease recognizing PIK interest income on that loan for financial reporting purposes until all principal and interest have been brought current through payment or due to a restructuring such that the interest income is deemed to be collectible. The Company writes off any accrued and uncollected PIK interest when it is determined that the PIK interest is no longer collectible.
58
Barings BDC, Inc.
Notes to Unaudited Consolidated Financial Statements — (Continued)
Fee Income
Origination, facility, commitment, consent and other advance fees received in connection with loan agreements ("Loan Origination Fees") are recorded as deferred income and recognized as investment income over the term of the loan. Upon prepayment of a loan, any unamortized Loan Origination Fees are recorded as investment income. In the general course of its business, the Company receives certain fees from portfolio companies, which are non-recurring in nature. Such fees include loan prepayment penalties, structuring fees and loan waiver and amendment fees, and are recorded as investment income when earned.
Fee income for the three and nine months ended September 30, 2021 and 2020 was as follows:
Three Months Ended
Three Months Ended
Nine Months Ended
Nine Months Ended
September 30, 2021 September 30, 2020 September 30, 2021 September 30, 2020
Recurring Fee Income:
Amortization of loan origination fees $ 1,144,236  $ 503,114  $ 3,386,163  $ 1,396,253 
Management, valuation and other fees 541,824  174,416  1,671,049  504,171 
Total Recurring Fee Income 1,686,060  677,530  5,057,212  1,900,424 
Non-Recurring Fee Income:
Prepayment fees 242,418  —  291,934  84,151 
Acceleration of unamortized loan origination fees 1,929,663  31,549  3,200,680  280,123 
Advisory, loan amendment and other fees 630,205  60,047  640,150  115,854 
Total Non-Recurring Fee Income 2,802,286  91,596  4,132,764  480,128 
Total Fee Income $ 4,488,346  $ 769,126  $ 9,189,976  $ 2,380,552 
Concentration of Credit Risk
As of both September 30, 2021 and December 31, 2020, there were no individual investments representing greater than 10% of the fair value of the Company’s portfolio. As of September 30, 2021 and December 31, 2020, the Company’s largest single portfolio company investment, excluding short-term investments, represented approximately 5.9% and 2.5%, respectively, of the fair value of the Company’s portfolio, exclusive of short-term investments. Income, consisting of interest, dividends, fees, other investment income and realization of gains or losses on equity interests, can fluctuate dramatically upon repayment of an investment or sale of an equity interest and in any given year can be highly concentrated among several portfolio companies.
The Company places its cash with financial institutions and, at times, cash may exceed insured limits under applicable law.
As of September 30, 2021, all of the Company's assets were or will be pledged as collateral for the February 2019 Credit Facility.
Investments Denominated in Foreign Currencies
As of September 30, 2021, the Company held one investment that was denominated in Canadian dollars, one investment that was denominated in Danish kroner, three investments that were denominated in Australian dollars, one investment that was denominated in Swedish kronas, 28 investments that were denominated in Euros and 16 investments that were denominated in British pounds sterling. As of December 31, 2020, the Company held two investments that were denominated in Australian dollars, one investment that was denominated in Swedish kronas, 17 investments that were denominated in Euros and 11 investments that were denominated in British pounds sterling.
At each balance sheet date, portfolio company investments denominated in foreign currencies are translated into United States dollars using the spot exchange rate on the last business day of the period. Purchases and sales of foreign portfolio company investments, and any income from such investments, are translated into United States dollars using the rates of exchange prevailing on the respective dates of such transactions.
Although the fair values of foreign portfolio company investments and the fluctuation in such fair values are translated into United States dollars using the applicable foreign exchange rates described above, the Company does not separately report that portion of the change in fair values resulting from foreign currency exchange rates fluctuations from the change in fair
59
Barings BDC, Inc.
Notes to Unaudited Consolidated Financial Statements — (Continued)
values of the underlying investment. All fluctuations in fair value are included in net unrealized appreciation (depreciation) of investments in the Company's Unaudited Consolidated Statements of Operations.
In addition, during both the nine months ended September 30, 2021 and September 30, 2020, the Company entered into forward currency contracts primarily to help mitigate the impact that an adverse change in foreign exchange rates would have on net interest income from the Company's investments and related borrowings denominated in foreign currencies. Net unrealized appreciation or depreciation on foreign currency contracts are included in "Net unrealized appreciation (depreciation) - foreign currency transactions" and net realized gains or losses on forward currency contracts are included in "Net realized gains (losses) - foreign currency transactions" in the Company's Unaudited Consolidated Statements of Operations.
Investments denominated in foreign currencies and foreign currency transactions may involve certain considerations and risks not typically associated with those of domestic origin, including unanticipated movements in the value of the foreign currency relative to the U.S. Dollar.
4. INCOME TAXES
The Company has elected for federal income tax purposes to be treated, and intends to qualify annually, as a RIC under the Code and intends to make the required distributions to its stockholders as specified therein. In order to maintain its tax treatment as a RIC, the Company must meet certain minimum distribution, source-of-income and asset diversification requirements. If such requirements are met, then the Company is generally required to pay taxes only on the portion of its taxable income and gains it does not distribute (actually or constructively) and certain built-in gains. The Company has historically met its minimum distribution requirements and continually monitors its distribution requirements with the goal of ensuring compliance with the Code.
Depending on the level of investment company taxable income (“ICTI”) and net capital gains, if any, or taxable income, the Company may choose to carry forward undistributed taxable income and pay a 4% nondeductible U.S. federal excise tax on certain undistributed income unless the Company distributes, in a timely manner, an amount at least equal to the sum of (i) 98% of net ordinary income for each calendar year, (ii) 98.2% of the amount by which capital gains exceed capital losses (adjusted for certain ordinary losses) for the one-year period ending October 31 in that calendar year and (iii) certain undistributed amounts from previous years on which the Company paid no U.S. federal income tax. Any such carryover of taxable income must be distributed before the end of that next tax year through a dividend declared prior to filing of the tax return related to the year which generated such taxable income not to be subject to U.S. federal income tax.
Taxable income generally differs from increase in net assets resulting from operations due to temporary and permanent differences in the recognition of income and expenses, and generally excludes net unrealized gains or losses, as unrealized gains or losses are generally not included in taxable income until they are realized. The Company makes certain adjustments to the classification of net assets as a result of permanent book-to-tax differences, which include differences in the book and tax basis of certain assets and liabilities, and nondeductible federal taxes or losses among other items. To the extent these differences are permanent, they are charged or credited to additional paid in capital, or total distributable earnings (loss), as appropriate.
For federal income tax purposes, the cost of investments owned as of September 30, 2021 and December 31, 2020 was approximately $1,634.4 million and $1,486.0 million, respectively. As of September 30, 2021, net unrealized appreciation on the Company's investments (tax basis) was approximately $21.9 million, consisting of gross unrealized appreciation, where the fair value of the Company's investments exceeds their tax cost, of approximately $41.6 million and gross unrealized depreciation, where the tax cost of the Company's investments exceeds their fair value, of approximately $19.7 million. As of December 31, 2020, net unrealized depreciation on the Company's investments (tax basis) was approximately $1.3 million, consisting of gross unrealized appreciation, where the fair value of the Company's investments exceeds their tax cost, of approximately $23.4 million and gross unrealized depreciation, where the tax cost of the Company's investments exceeds their fair value, of approximately $24.7 million.
In addition, the Company has wholly-owned taxable subsidiaries (the “Taxable Subsidiaries”), which hold certain portfolio investments that are listed on the Unaudited and Audited Consolidated Schedules of Investments. The Taxable Subsidiaries are consolidated for financial reporting purposes, such that the Company’s consolidated financial statements reflect the Company’s investments in the portfolio companies owned by the Taxable Subsidiaries. The purpose of the Taxable Subsidiaries is to permit the Company to hold certain portfolio companies that are organized as LLCs (or other forms of pass-through entities) and still satisfy the RIC tax requirement that at least 90% of the RIC’s gross revenue for income tax purposes must consist of qualifying investment income. Absent the Taxable Subsidiaries, a proportionate amount of any gross income of an LLC (or other pass-through entity) portfolio investment would flow through directly to the RIC. To the extent that such income did not consist of qualifying investment income, it could jeopardize the Company’s ability to qualify as a RIC and
60
Barings BDC, Inc.
Notes to Unaudited Consolidated Financial Statements — (Continued)
therefore cause the Company to incur significant amounts of federal income taxes. When LLCs (or other pass-through entities) are owned by the Taxable Subsidiaries, their income is taxed to the Taxable Subsidiaries and does not flow through to the RIC, thereby helping the Company preserve its RIC tax treatment and resultant tax advantages. The Taxable Subsidiaries are not consolidated for income tax purposes and may generate income tax expense as a result of their ownership of the portfolio companies. This income tax expense or benefit, if any, is reflected in the Company’s Unaudited Consolidated Statements of Operations. Additionally, any unrealized appreciation related to portfolio investments held by the Taxable Subsidiaries (net of unrealized depreciation related to portfolio investments held by the Taxable Subsidiaries) is reflected net of applicable federal and state income taxes, if any, in the Company's Consolidated Statements of Operations, with the related deferred tax assets or liabilities, if any, included in "Accounts payable and accrued liabilities" in the Company's Unaudited and Audited Consolidated Balance Sheets.
5. BORROWINGS
The Company had the following borrowings outstanding as of September 30, 2021 and December 31, 2020: 
Issuance Date Maturity Date
Interest Rate as of September 30, 2021
 September 30, 2021 December 31, 2020
Credit Facilities:
February 21, 2019 February 21, 2024 2.091% 662,664,367  $ 719,660,707 
Total Credit Facilities $ 662,664,367  $ 719,660,707 
Notes:
September 24, 2020 - August 2025 Notes August 4, 2025 4.660% $ 25,000,000  $ 25,000,000 
September 29, 2020 - August 2025 Notes August 4, 2025 4.660% 25,000,000  25,000,000 
November 5, 2020 - Series B Notes November 4, 2025 4.250% 62,500,000  62,500,000 
November 5, 2020 - Series C Notes November 4, 2027 4.750% 112,500,000  112,500,000 
February 25, 2021 Series D Notes February 26, 2026 3.410% 80,000,000  — 
February 25, 2021 Series E Notes February 26, 2028 4.060% 70,000,000  — 
(Less: Deferred financing fees) (734,666) (664,334)
Total Notes $ 374,265,334  $ 224,335,666 
February 2019 Credit Facility
On February 21, 2019, the Company entered into the February 2019 Credit Facility (as subsequently amended in December 2019) with ING Capital LLC ("ING"), as administrative agent, and the lenders party thereto. The initial commitments under the February 2019 Credit Facility total $800.0 million. The February 2019 Credit Facility has an accordion feature that allows for an increase in the total commitments by up to $400.0 million, subject to certain conditions and the satisfaction of specified financial covenants. The Company can borrow foreign currencies directly under the February 2019 Credit Facility. The February 2019 Credit Facility, which is structured as a revolving credit facility, is secured primarily by a material portion of the Company's assets and guaranteed by certain subsidiaries of the Company. Following the termination on June 30, 2020 of Barings BDC Senior Funding I, LLC’s (“BSF”) credit facility entered into in August 2018 with Bank of America, N.A. (the “August 2018 Credit Facility”), BSF became a subsidiary guarantor and its assets secure the February 2019 Credit Facility. The revolving period of the February 2019 Credit Facility ends on February 21, 2023, followed by a one-year repayment period with a final maturity date of February 21, 2024.
Borrowings under the February 2019 Credit Facility bear interest, subject to the Company's election, on a per annum basis equal to (i) the applicable base rate plus 1.00% (or 1.25% if the Company no longer maintains an investment grade credit rating), (ii) the applicable LIBOR rate plus 2.00% (or 2.25% if the Company no longer maintains an investment grade credit rating), (iii) for borrowings denominated in certain foreign currencies other than Australian dollars, the applicable currency rate for the foreign currency as defined in the credit agreement plus 2.00% (or 2.25% if the Company no longer maintains an investment grade credit rating) or (iv) for borrowings denominated in Australian dollars, the applicable Australian dollars Screen Rate, plus 2.20% (or 2.45% if the Company no longer maintains an investment grade credit rating). The applicable base rate is equal to the greatest of (i) the prime rate, (ii) the federal funds rate plus 0.5%, (iii) the Overnight Bank Funding Rate plus 0.5%, (iv) the adjusted three-month applicable currency rate plus 1.0% and (v) 1.0%. The applicable LIBOR and currency rates depend on the currency and term of the draw under the February 2019 Credit Facility, and cannot be less than zero.
In addition, the Company pays a commitment fee of (i) 0.5% per annum on undrawn amounts if the unused portion of the February 2019 Credit Facility is greater than two-thirds of total commitments or (ii) 0.375% per annum on undrawn amounts if
61
Barings BDC, Inc.
Notes to Unaudited Consolidated Financial Statements — (Continued)
the unused portion of the February 2019 Credit Facility is equal to or less than two-thirds of total commitments. In connection with entering into the February 2019 Credit Facility, the Company incurred financing fees of approximately $6.4 million, which will be amortized over the remaining life of the February 2019 Credit Facility.
The February 2019 Credit Facility contains certain affirmative and negative covenants, including but not limited to (i) maintaining minimum stockholders' equity, (ii) maintaining minimum obligors' net worth, (iii) maintaining a minimum asset coverage ratio, (iv) meeting a minimum liquidity test and (v) maintaining the Company's status as a regulated investment company and as a business development company. The February 2019 Credit Facility also contains customary events of default with customary cure and notice provisions, including, without limitation, nonpayment, misrepresentation of representations and warranties in a material respect, breach of covenant, cross-default to other indebtedness, bankruptcy, change of control, and material adverse effect. The February 2019 Credit Facility also permits the administrative agent to select an independent third-party valuation firm to determine valuations of certain portfolio investments for purposes of borrowing base provisions. In connection with the February 2019 Credit Facility, the Company also entered into new collateral documents. As of September 30, 2021, the Company was in compliance with all covenants under the February 2019 Credit Facility.
As of September 30, 2021, the Company had U.S. dollar borrowings of $382.0 million outstanding under the February 2019 Credit Facility with an interest rate of 2.125% (one month LIBOR of 0.125%), borrowings denominated in Swedish kronas of 12.8kr million ($1.5 million U.S. dollars) with an interest rate of 2.000% (one month STIBOR of 0.000%), borrowings denominated in British pounds sterling of £68.3 million ($92.1 million U.S. dollars) with an interest rate of 2.063% (one month GBP LIBOR of 0.063%), borrowings denominated in Australian dollars of A$36.6 million ($26.4 million U.S. dollars) with an interest rate of 2.250% (one month AUD Screen Rate of 0.250%) and borrowings denominated in Euros of €138.6 million ($160.6 million U.S. dollars) with an interest rate of 2.000% (one month EURIBOR of 0.000%). The borrowings denominated in foreign currencies were translated into U.S. dollars based on the spot rate at the relevant balance sheet date. The impact resulting from changes in foreign exchange rates on the February 2019 Credit Facility borrowings is included in "Net unrealized appreciation (depreciation) - foreign currency transactions" in the Company's Unaudited Consolidated Statements of Operations.
As of December 31, 2020, the Company had U.S. dollar borrowings of $472.0 million outstanding under the February 2019 Credit Facility with a weighted average interest rate of 2.188% (weighted average one month LIBOR of 0.188%), borrowings denominated in Swedish kronas of 12.8kr million ($1.6 million U.S. dollars) with an interest rate of 2.000% (one month STIBOR of 0.000%), borrowings denominated in British pounds sterling of £69.3 million ($94.8 million U.S. dollars) with a weighted average interest rate of 2.063% (weighted average one month GBP LIBOR of 0.063%), borrowings denominated in Australian dollars of A$36.6 million ($28.2 million U.S. dollars) with a weighted average interest rate of 2.250% (weighted average one month AUD Screen Rate of 0.050%) and borrowings denominated in Euros of €100.6 million ($123.1 million U.S. dollars) with a weighted average interest rate of 2.00% (weighted average one month EURIBOR of 0.000%). The borrowings denominated in foreign currencies were translated into U.S. dollars based on the spot rate at the relevant balance sheet date. The impact resulting from changes in foreign exchange rates on the February 2019 Credit Facility borrowings is included in "Net unrealized appreciation (depreciation) - foreign currency transactions" in the Company's Unaudited Consolidated Statements of Operations.
As of September 30, 2021 and December 31, 2020, the total fair value of the borrowings outstanding under the February 2019 Credit Facility was $662.7 million and $719.7 million, respectively. The fair values of the borrowings outstanding under the February 2019 Credit Facility are based on a market yield approach and current interest rates, which are Level 3 inputs to the market yield model.
August 2025 Notes
On August 3, 2020, the Company entered into a Note Purchase Agreement (the "August 2020 NPA") with Massachusetts Mutual Life Insurance Company governing the issuance of (1) $50.0 million in aggregate principal amount of Series A senior unsecured notes due August 2025 (the "Series A Notes due 2025") with a fixed interest rate of 4.66% per year, and (2) up to $50.0 million in aggregate principal amount of additional senior unsecured notes due August 2025 with a fixed interest rate per year to be determined (the "Additional Notes" and, collectively with the Series A Notes due 2025, the "August 2025 Notes"), in each case, to qualified institutional investors in a private placement. An aggregate principal amount of $25.0 million of the Series A Notes due 2025 was issued on September 24, 2020 and an aggregate principal amount of $25.0 million of the Series A Notes due 2025 was issued on September 29, 2020, both of which will mature on August 4, 2025 unless redeemed, purchased or prepaid prior to such date by the Company in accordance with their terms. Interest on the August 2025 Notes is due semiannually in March and September, beginning in March 2021. In addition, the Company is obligated to offer to repay the August 2025 Notes at par (plus accrued and unpaid interest to, but not including, the date of prepayment) if certain change in control events occur. Subject to the terms of the August 2020 NPA, the Company may redeem the August 2025 Notes in whole
62
Barings BDC, Inc.
Notes to Unaudited Consolidated Financial Statements — (Continued)
or in part at any time or from time to time at the Company’s option at par plus accrued interest to the prepayment date and, if redeemed on or before November 3, 2024, a make-whole premium. The August 2025 Notes are guaranteed by certain of the Company's subsidiaries, and are the Company's general unsecured obligations that rank pari passu with all outstanding and future unsecured unsubordinated indebtedness issued by the Company.
On November 4, 2020, the Company amended the August 2020 NPA to reduce the aggregate principal amount of unissued Additional Notes from $50.0 million to $25.0 million.
The August 2020 NPA contains certain representations and warranties, and various covenants and reporting requirements customary for senior unsecured notes issued in a private placement, including, without limitation, affirmative and negative covenants such as information reporting, maintenance of the Company’s status as a BDC within the meaning of the 1940 Act, certain restrictions with respect to transactions with affiliates, fundamental changes, changes of line of business, permitted liens, investments and restricted payments, minimum shareholders’ equity, maximum net debt to equity ratio and minimum asset coverage ratio. The August 2020 NPA also contains customary events of default with customary cure and notice periods, including, without limitation, nonpayment, incorrect representation in any material respect, breach of covenant, cross-default under our other indebtedness or that of our subsidiary guarantors, certain judgements and orders, and certain events of bankruptcy. Upon the occurrence of an event of default, the holders of at least 66-2/3% in principal amount of the August 2025 Notes at the time outstanding may declare all August 2025 Notes then outstanding to be immediately due and payable. As of September 30, 2021, the Company was in compliance with all covenants under the August 2020 NPA.
The August 2025 Notes were offered in reliance on Section 4(a)(2) of the Securities Act of 1933, as amended (the “Securities Act”). The August 2025 Notes have not and will not be registered under the Securities Act or any state securities laws and, unless so registered, may not be offered or sold in the United States except pursuant to an exemption from, or in a transaction not subject to, the registration requirements of the Securities Act, as applicable.
As of both September 30, 2021 and December 31, 2020, the fair value of the outstanding August 2025 Notes was $50.0 million. The fair value determination of the August 2025 Notes was based on a market yield approach and current interest rates, which are Level 3 inputs to the market yield model.
November Notes
On November 4, 2020, the Company entered into a Note Purchase Agreement (the “November 2020 NPA”) governing the issuance of (1) $62.5 million in aggregate principal amount of Series B senior unsecured notes due November 2025 (the “Series B Notes”) with a fixed interest rate of 4.25% per year and (2) $112.5 million in aggregate principal amount of Series C senior unsecured notes due November 2027 (the “Series C Notes” and, collectively with the Series B Notes, the “November Notes”) with a fixed interest rate of 4.75% per year, in each case, to qualified institutional investors in a private placement. Each stated interest rate is subject to a step up of (x) 0.75% per year, to the extent the applicable November Notes do not satisfy certain investment grade conditions and/or (y) 1.50% per year, to the extent the ratio of the Company’s secured debt to total assets exceeds specified thresholds, measured as of each fiscal quarter end. The November Notes were delivered and paid for on November 5, 2020. The Series B Notes will mature on November 4, 2025, and the Series C Notes will mature on November 4, 2027 unless redeemed, purchased or prepaid prior to such date by the Company in accordance with their terms. Interest on the November Notes is due semiannually in May and November, beginning in May 2021. In addition, the Company is obligated to offer to repay the November Notes at par (plus accrued and unpaid interest to, but not including, the date of prepayment) if certain change in control events occur. Subject to the terms of the November 2020 NPA, the Company may redeem the Series B Notes and the Series C Notes in whole or in part at any time or from time to time at the Company’s option at par plus accrued interest to the prepayment date and, if redeemed on or before May 4, 2025, with respect to the Series B Notes, or on or before May 4, 2027, with respect to the Series C Notes, a make-whole premium. The November Notes are guaranteed by certain of the Company’s subsidiaries, and are the Company's general unsecured obligations that rank pari passu with all outstanding and future unsecured unsubordinated indebtedness issued by the Company.
The November 2020 NPA contains certain representations and warranties, and various covenants and reporting requirements customary for senior unsecured notes issued in a private placement, including, without limitation, affirmative and negative covenants such as information reporting, maintenance of the Company’s status as a BDC within the meaning of the 1940 Act, certain restrictions with respect to transactions with affiliates, fundamental changes, changes of line of business, permitted liens, investments and restricted payments, minimum shareholders’ equity, maximum net debt to equity ratio and minimum asset coverage ratio. The November 2020 NPA also contains customary events of default with customary cure and notice periods, including, without limitation, nonpayment, incorrect representation in any material respect, breach of covenant, cross-default under our other indebtedness or that of our subsidiary guarantors, certain judgements and orders, and certain events of bankruptcy. Upon the occurrence of an event of default, the holders of at least 66-2/3% in principal amount of the
63
Barings BDC, Inc.
Notes to Unaudited Consolidated Financial Statements — (Continued)
November Notes at the time outstanding may declare all November Notes then outstanding to be immediately due and payable. As of September 30, 2021, the Company was in compliance with all covenants under the November 2020 NPA.
The November Notes were offered in reliance on Section 4(a)(2) of the Securities Act. The November Notes have not and will not be registered under the Securities Act or any state securities laws and, unless so registered, may not be offered or sold in the United States except pursuant to an exemption from, or in a transaction not subject to, the registration requirements of the Securities Act, as applicable.
As of both September 30, 2021 and December 31, 2020, the fair value of the outstanding Series B Notes and the Series C Notes was $62.5 million and $112.5 million, respectively. The fair value determinations of the Series B Notes and Series C Notes were based on a market yield approach and current interest rates, which are Level 3 inputs to the market yield model.
February Notes
On February 25, 2021, the Company entered into a Note Purchase Agreement (the “February 2021 NPA”) governing the issuance of (1) $80.0 million in aggregate principal amount of Series D senior unsecured notes due February 26, 2026 (the “Series D Notes”) with a fixed interest rate of 3.41% per year and (2) $70.0 million in aggregate principal amount of Series E senior unsecured notes due February 26, 2028 (the “Series E Notes” and, collectively with the Series D Notes, the “February Notes”) with a fixed interest rate of 4.06% per year, in each case, to qualified institutional investors in a private placement. Each stated interest rate is subject to a step up of (x) 0.75% per year, to the extent the applicable February Notes do not satisfy certain investment grade rating conditions and/or (y) 1.50% per year, to the extent the ratio of the Company’s secured debt to total assets exceeds specified thresholds, measured as of each fiscal quarter end. The February Notes were delivered and paid for on February 26, 2021.
The Series D Notes will mature on February 26, 2026, and the Series E Notes will mature on February 26, 2028 unless redeemed, purchased or prepaid prior to such date by the Company in accordance with the terms of the February 2021 NPA. Interest on the February Notes is due semiannually in February and August of each year, beginning in August 2021. In addition, the Company is obligated to offer to repay the February Notes at par (plus accrued and unpaid interest to, but not including, the date of prepayment) if certain change in control events occur. Subject to the terms of the February 2021 NPA, the Company may redeem the Series D Notes and the Series E Notes in whole or in part at any time or from time to time at the Company’s option at par plus accrued interest to the prepayment date and, if redeemed on or before August 26, 2025, with respect to the Series D Notes, or on or before August 26, 2027, with respect to the Series E Notes, a make-whole premium. The February Notes are guaranteed by certain of the Company’s subsidiaries, and are the Company's general unsecured obligations that rank pari passu with all outstanding and future unsecured unsubordinated indebtedness issued by the Company.
The February 2021 NPA contains certain representations and warranties, and various covenants and reporting requirements customary for senior unsecured notes issued in a private placement , including, without limitation, information reporting, maintenance of the Company’s status as a BDC within the meaning of the 1940 Act, and certain restrictions with respect to transactions with affiliates, fundamental changes, changes of line of business, permitted liens, investments and restricted payments. In addition, the February 2021 NPA contains the following financial covenants: (a) maintaining a minimum obligors’ net worth, measured as of each fiscal quarter end; (b) not permitting the Company’s asset coverage ratio, as of the date of the incurrence of any debt for borrowed money or the making of any cash dividend to shareholders, to be less than the statutory minimum then applicable to the Company under the 1940 Act; and (c) not permitting the Company’s net debt to equity ratio to exceed 2.0x, measured as of each fiscal quarter end.
The February 2021 NPA also contains customary events of default with customary cure and notice periods, including, without limitation, nonpayment, incorrect representation in any material respect, breach of covenant, cross-default under other indebtedness or that of the Company’s subsidiary guarantors, certain judgements and orders, and certain events of bankruptcy. Upon the occurrence of certain events of default, the holders of at least 66-2/3% in principal amount of the February Notes at the time outstanding may declare all February Notes then outstanding to be immediately due and payable. As of September 30, 2021, the Company was in compliance with all covenants under the February 2021 NPA.
The February Notes were offered in reliance on Section 4(a)(2) of the Securities Act. The February Notes have not and will not be registered under the Securities Act or any state securities laws and, unless so registered, may not be offered or sold in the United States except pursuant to an exemption from, or in a transaction not subject to, the registration requirements of the Securities Act, as applicable.
As of September 30, 2021, the fair value of the outstanding Series D Notes and the Series E Notes was $80.0 million and $70.0 million, respectively. The fair value determinations of the Series D Notes and Series E Notes were based on a market yield approach and current interest rates, which are Level 3 inputs to the market yield model.
64
Barings BDC, Inc.
Notes to Unaudited Consolidated Financial Statements — (Continued)

6. DERIVATIVE INSTRUMENTS
Credit Support Agreement
In connection with the MVC Acquisition, on December 23, 2020, promptly following the closing of the Company’s merger with MVC, the Company and the Adviser entered into the Credit Support Agreement, pursuant to which the Adviser has agreed to provide credit support to the Company in the amount of up to $23.0 million relating to the net cumulative realized and unrealized losses on the acquired MVC investment portfolio over a 10-year period. See “Note 2 – Agreements and Related Party Transactions” for additional information regarding the Credit Support Agreement. Net unrealized appreciation or depreciation on the Credit Support Agreement is included in "Net unrealized appreciation (depreciation) - credit support agreement" in the Company’s Unaudited Consolidated Statements of Operations.
The following tables present the fair value and aggregate unrealized depreciation of the Company's Credit Support Agreement as of September 30, 2021 and December 31, 2020:
As of September 30, 2021:
Description
 Counter Party Settlement Date Notional Amount Value Unrealized Appreciation (Depreciation)
Credit Support Agreement Barings LLC 01/01/31 $ 23,000,000  $ 14,300,006  $ 700,006 
Total Credit Support Agreement $ 700,006 
As of December 31, 2020:
Description
 Counter Party Settlement Date Notional Amount Value Unrealized Appreciation (Depreciation)
Credit Support Agreement Barings LLC 01/01/31 $ 23,000,000  $ 13,600,000  $ — 
Total Credit Support Agreement $ — 
As of September 30, 2021 and December 31, 2020, the fair value of the Credit Support Agreement was $14.3 million and $13.6 million, respectively, and is included in "Credit support agreement" in the accompanying Unaudited and Audited Consolidated Balance Sheets. The fair value of the Credit Support Agreement was determined based on an income approach, with the primary inputs being the enterprise value, the continuously annual risk-free interest rate, a measure of expected asset volatility, and the expected time until an exit event for each portfolio company in the Reference Portfolio, which are all Level 3 inputs.
Foreign Currency Forward Contracts
The Company enters into forward currency contracts from time to time to primarily help mitigate the impact that an adverse change in foreign exchange rates would have on net interest income from the Company's investments and related borrowings denominated in foreign currencies. Net unrealized appreciation or depreciation on foreign currency contracts are included in "Net unrealized appreciation (depreciation) - foreign currency transactions" and net realized gains or losses on forward currency contracts are included in "Net realized gains (losses) - foreign currency transactions" in the Company’s Unaudited Consolidated Statements of Operations. Forward currency contracts are considered undesignated derivative instruments.
65
Barings BDC, Inc.
Notes to Unaudited Consolidated Financial Statements — (Continued)
The following tables presents the Company's foreign currency forward contracts as of September 30, 2021 and December 31, 2020:
As of September 30, 2021:
Description
 Notional Amount to be Purchased Notional Amount to be Sold Maturity Date Gross Amount of Recognized Assets (Liabilities) Balance Sheet Location of Net Amounts
Foreign currency forward contract (AUD) A$9,000,000 $6,523,357 10/06/21 $ (22,179) Derivative liability
Foreign currency forward contract (AUD) $6,550,418 A$9,000,000 10/06/21 49,240  Prepaid expenses and other assets
Foreign currency forward contract (AUD) A$2,098,659 $1,507,742 01/06/22 9,026  Prepaid expenses and other assets
Foreign currency forward contract (CAD) C$6,124,048 $4,797,823 10/06/21 36,200  Prepaid expenses and other assets
Foreign currency forward contract (CAD) $4,962,973 C$6,124,048 10/06/21 128,950  Prepaid expenses and other assets
Foreign currency forward contract (CAD) $4,881,155 C$6,229,673 01/06/22 (36,660) Derivative liability
Foreign currency forward contract (DKK) 2,105,000kr. $328,520 10/06/21 (428) Derivative liability
Foreign currency forward contract (DKK) $334,772 2,105,000kr. 10/06/21 6,680  Prepaid expenses and other assets
Foreign currency forward contract (DKK) $335,107 2,142,838kr. 01/06/22 446  Prepaid expenses and other assets
Foreign currency forward contract (EUR) €13,326,630 $15,559,560 10/06/21 (114,118) Derivative liability
Foreign currency forward contract (EUR) $15,737,249 €13,326,630 10/06/21 291,805  Prepaid expenses and other assets
Foreign currency forward contract (EUR) $4,864,467 €4,182,593 01/06/22 6,576  Prepaid expenses and other assets
Foreign currency forward contract (GBP) £9,000,000 $12,189,271 10/06/21 (54,099) Derivative liability
Foreign currency forward contract (GBP) $12,254,165 £9,000,000 10/06/21 118,993  Prepaid expenses and other assets
Foreign currency forward contract (GBP) £4,465,465 $5,997,745 01/06/22 24,868  Prepaid expenses and other assets
Foreign currency forward contract (SEK) 1,787,447kr $203,104 10/06/21 1,212  Prepaid expenses and other assets
Foreign currency forward contract (SEK) $209,997 1,787,447kr 10/06/21 5,680  Prepaid expenses and other assets
Foreign currency forward contract (SEK) $203,853 1,791,942kr 01/07/22 (1,216) Derivative liability
Total $ 450,976 
As of December 31, 2020:
Description
 Notional Amount to be Purchased Notional Amount to be Sold Maturity Date Gross Amount of Recognized Assets (Liabilities) Balance Sheet Location of Net Amounts
Foreign currency forward contract (AUD) $8,471,304 A$11,378,670 01/05/21 $ (309,049) Derivative liability
Foreign currency forward contract (AUD) A$11,378,670 $8,610,504 01/05/21 169,849  Prepaid expenses and other assets
Foreign currency forward contract (AUD) $148,019 A$193,882 04/06/21 (1,698) Derivative liability
Foreign currency forward contract (EUR) $13,472,749 €11,406,604 01/05/21 (483,801) Derivative liability
Foreign currency forward contract (EUR) €11,406,604 $13,518,023 01/05/21 438,526  Prepaid expenses and other assets
Foreign currency forward contract (EUR) $561,754 €456,604 04/06/21 1,944  Derivative liability
Foreign currency forward contract (GBP) $13,554,607 £10,215,299 01/05/21 (409,190) Derivative liability
Foreign currency forward contract (GBP) £10,215,299 $13,717,678 01/05/21 246,118  Prepaid expenses and other assets
Foreign currency forward contract (GBP) $13,109,849 £9,672,758 04/06/21 (119,769) Derivative liability
Foreign currency forward contract (SEK) $141,603 1,259,406kr 01/05/21 (11,748) Derivative liability
Foreign currency forward contract (SEK) 1,259,406kr $152,396 01/05/21 955  Prepaid expenses and other assets
Foreign currency forward contract (SEK) $164,325 1,356,628kr 04/06/21 (1,028) Derivative liability
Total $ (478,891)
As of September 30, 2021 and December 31, 2020, the total fair value of the Company's foreign currency forward contracts was $0.5 million and $(0.5) million, respectively. The fair values of the Company's foreign currency forward contracts are based on unadjusted prices from independent pricing services and independent indicative broker quotes, which are Level 2 inputs.
66
Barings BDC, Inc.
Notes to Unaudited Consolidated Financial Statements — (Continued)
7. COMMITMENTS AND CONTINGENCIES
In the normal course of business, the Company is party to financial instruments with off-balance sheet risk, consisting primarily of unused commitments to extend financing to the Company's portfolio companies. Since commitments may expire without being drawn upon, the total commitment amount does not necessarily represent future cash requirements. As of September 30, 2021 and December 31, 2020, the Company believed that it had adequate financial resources to satisfy its unfunded commitments. The balances of unused commitments to extend financing as of September 30, 2021 and December 31, 2020 were as follows:
Portfolio Company Investment Type
September 30, 2021
December 31, 2020
Acclime Holdings HK Limited(1)(2) Delayed Draw Term Loan $ 3,750,000  $ — 
ADE Holding(1)(3) Committed Capex Line —  91,814 
Air Comm Corporation, LLC(1)(2) Delayed Draw Term Loan 405,027  — 
Anju Software, Inc.(1) Delayed Draw Term Loan —  1,981,371 
Arch Global Precision, LLC(1) Delayed Draw Term Loan —  4,193,475 
Beacon Pointe Advisors, LLC(1) Delayed Draw Term Loan —  363,636 
BigHand UK Bidco Limited(1)(4) Acquisition Capex Facility 376,644  — 
Bounteous, Inc.(1)(2) Delayed Draw Term Loan 613,636  — 
British Engineering Services Holdco Limited(1)(4) Acquisition Facility —  7,006,008 
British Engineering Services Holdco Limited(1)(4) Bridge Revolver 609,766  618,177 
Canadian Orthodontic Partners Corp(1)(2)(6) Delayed Draw Term Loan 166,198  — 
Centralis Finco S.a.r.l.(1)(3) Acquisition Facility 469,765  495,950 
Classic Collision (Summit Buyer, LLC)(1)(2) Delayed Draw Term Loan 486,189  1,672,446 
CM Acquisitions Holdings Inc.(1) Delayed Draw Term Loan 1,247,359  1,551,602 
Contabo Finco S.À R.L(1)(3) Delayed Draw Term Loan 216,163  228,211 
Coyo Uprising GmbH(1)(2)(3) Delayed Draw Term Loan 910,613  — 
CSL Dualcom(1)(4) Delayed Draw Term Loan 993,478  1,007,182 
Dart Buyer, Inc.(1)(2) Delayed Draw Term Loan 2,430,569  2,430,569 
DreamStart Bidco SAS(1)(3) Acquisition Facility 943,074  995,640 
Dune Group(1)(2)(3) Delayed Draw Term Loan 1,390,740  — 
Dwyer Instruments, Inc.(1)(2) Delayed Draw Term Loan 1,217,712  — 
Eclipse Business Capital, LLC(1) Revolver 13,636,364  — 
EPS NASS Parent, Inc.(1) Delayed Draw Term Loan 583,051  — 
F24 (Stairway BidCo GmbH)(1)(3) Acquisition Facility 412,879  323,840 
Fineline Technologies, Inc.(1) Delayed Draw Term Loan 180,000  — 
FitzMark Buyer, Inc.(1) Delayed Draw Term Loan —  1,470,588 
Foundation Risk Partners, Corp.(1) Delayed Draw Term Loan 3,444,445  4,984,771 
FragilePak LLC(1) Delayed Draw Term Loan 2,354,167  — 
Heartland, LLC(1)(2) Delayed Draw Term Loan —  5,347,666 
Heilbron (f/k/a Sucsez (Bolt Bidco B.V.))(1)(2)(3) Accordion Facility —  10,225,081 
Home Care Assistance, LLC(1) Delayed Draw Term Loan 173,697  — 
IGL Holdings III Corp.(1)(2) Delayed Draw Term Loan 3,408,219  5,914,219 
Innovad Group II BV(1)(2)(3) Delayed Draw Term Loan 1,859,447  — 
INOS 19-090 GmbH(1)(2)(3) Acquisition Facility 2,583,951  2,727,980 
Jocassee Partners LLC Joint Venture 20,000,000  30,000,000 
Kano Laboratories LLC(1) Delayed Draw Term Loan 4,543,950  4,543,950 
Kene Acquisition, Inc.(1) Delayed Draw Term Loan —  322,928 
LAF International(1)(2)(3) Acquisition Facility 347,685  — 
LivTech Purchaser, Inc.(1)(2) Delayed Draw Term Loan 81,977  — 
MC Group Ventures Corporation(1) Delayed Draw Term Loan 817,249  — 
67
Barings BDC, Inc.
Notes to Unaudited Consolidated Financial Statements — (Continued)
Portfolio Company Investment Type
September 30, 2021
December 31, 2020
Modern Star Holdings Bidco Pty Limited(1)(2)(5) Capex Term Loan 2,168,002  2,315,967 
Murphy Midco Limited(1)(4) Delayed Draw Term Loan 3,256,552  3,301,472 
Navia Benefit Solutions, Inc.(1) Delayed Draw Term Loan 1,600,000  — 
OG III B.V.(1)(2)(3) Acquisition Capex Facility 905,556  — 
Options Technology Ltd.(1) Delayed Draw Term Loan —  2,604,080 
Pacific Health Supplies Bidco Pty Limited(1)(2)(5) CapEx Term Loan 1,274,275  1,535,025 
PDQ.Com Corporation(1)(2) Delayed Draw Term Loan 289,389  — 
Premier Technical Services Group(1)(4) Acquisition Facility —  1,197,505 
Premium Invest(1)(2)(3) Acquisition Facility 3,340,094  — 
Protego Bidco B.V.(1)(2)(3) Delayed Draw Term Loan 860,413  — 
PSC UK Pty Ltd.(1)(4) Acquisition Facility 527,876  535,157 
QPE7 SPV1 BidCo Pty Ltd(1)(5) Acquisition Capex Facility 732,210  — 
Questel Unite(1)(2)(3) Cap Acquisition Facility —  10,300,913 
Radwell International, LLC(1) Delayed Draw Term Loan —  3,235,947 
Rep Seko Merger Sub LLC(1) Delayed Draw Term Loan 1,454,545  1,454,546 
Reward Gateway (UK) Ltd(1)(2)(4) Acquisition Facility 2,247,224  — 
Safety Products Holdings, LLC(1)(2) Delayed Draw Term Loan —  6,467,345 
Security Holdings B.V.(1)(2)(3) Delayed Draw Term Loan 2,317,900  — 
Security Holdings B.V.(1)(2)(3) Revolver 1,158,950  — 
Smile Brands Group, Inc.(1)(2) Delayed Draw Term Loan 654,691  2,148,691 
Springbrook Software (SBRK Intermediate, Inc.)(1) Delayed Draw Term Loan 2,372,538  3,489,026 
SSCP Pegasus Midco Limited(1)(4) Delayed Draw Term Loan 13,207,365  13,389,546 
The Hilb Group, LLC(1)(2) Delayed Draw Term Loan 4,070,833  5,545,939 
Transit Technologies LLC(1)(2) Delayed Draw Term Loan 1,857,017  6,035,305 
USLS Acquisition, Inc.(1) Delayed Draw Term Loan —  450,466 
Utac Ceram(1)(2)(3) Delayed Draw Term Loan —  743,327 
Waccamaw River(2) Joint Venture 15,680,000  — 
W2O Holdings, Inc.(1) Delayed Draw Term Loan 3,831,517  5,989,298 
Total unused commitments to extend financing $ 134,460,961  $ 159,236,659 

(1)The Company's estimate of the fair value of the current investments in these portfolio companies includes an analysis of the fair value of any unfunded commitments.
(2)Represents a commitment to extend financing to a portfolio company where one or more of the Company's current investments in the portfolio company are carried at less than cost.
(3)Actual commitment amount is denominated in Euros. Commitment was translated into U.S. dollars based on the spot rate at the relevant balance sheet date.
(4)Actual commitment amount is denominated in British pounds sterling. Commitment was translated into U.S. dollars based on the spot rate at the relevant balance sheet date.
(5)Actual commitment amount is denominated in Australian dollars. Commitment was translated into U.S. dollars based on the spot rate at the relevant balance sheet date.
(6)Actual commitment amount is denominated in Canadian dollars. Commitment was translated into U.S. dollars based on the spot rate at the relevant balance sheet date.
In the normal course of business, the Company guarantees certain obligations in connection with its portfolio companies (in particular, certain controlled portfolio companies). Under these guarantee arrangements, payments may be required to be made to third parties if such guarantees are called upon or if the portfolio companies were to default on their related obligations, as applicable. As of September 30, 2021 and December 31, 2020, the Company had guaranteed €9.9 million ($11.5 million U.S. dollars and $12.1 million U.S. dollars, respectively) relating to credit facilities among Erste Bank and MVC Automotive Group Gmbh ("MVC Auto"). The Company would be required to make payments to Erste Bank if MVC Auto were to default on their related payment obligations. None of the credit facility guarantees are recorded as a liability on the Company's Unaudited and Audited Consolidated Balance Sheets, as such the credit facility liabilities are considered in the valuation of the investments in MVC Auto. The guarantees denominated in foreign currencies were translated into U.S. dollars based on the spot rate at the relevant balance sheet date.
68
Barings BDC, Inc.
Notes to Unaudited Consolidated Financial Statements — (Continued)
In addition, as of December 31, 2020, the Company agreed to cash collateralize a $3.5 million letter of credit for Security Holdings B.V. The $3.5 million cash collateralization was reflected as "Restricted cash" on the accompanying Audited Consolidated Balance Sheet as of December 31, 2020. The letter of credit expired on April 30, 2021, and as of September 30, 2021, none of the Company’s cash was restricted.
Neither the Company, the Adviser, nor the Company’s subsidiaries are currently subject to any material pending legal proceedings, other than ordinary routine litigation incidental to their respective businesses. The Company, the Adviser, and the Company’s subsidiaries may from time to time, however, be involved in litigation arising out of operations in the normal course of business or otherwise, including in connection with strategic transactions. Furthermore, third parties may seek to impose liability on the Company in connection with the activities of its portfolio companies. While the outcome of any current legal proceedings cannot at this time be predicted with certainty, the Company does not expect any current matters will materially affect its financial condition or results of operations; however, there can be no assurance whether any pending legal proceedings will have a material adverse effect on the Company’s financial condition or results of operations in any future reporting period.
COVID-19 Developments
During the nine months ended September 30, 2021, the Coronavirus and the COVID-19 pandemic continued to have a significant impact on the U.S and global economies. To the extent the Company's portfolio companies are adversely impacted by the effects of the COVID-19 pandemic, it may have a material adverse impact on the Company's future net investment income, the fair value of its portfolio investments, its financial condition and the results of operations and financial condition of the Company's portfolio companies.
69
Barings BDC, Inc.
Notes to Unaudited Consolidated Financial Statements — (Continued)
8. FINANCIAL HIGHLIGHTS
The following is a schedule of financial highlights for the nine months ended September 30, 2021 and 2020:
 
Nine Months Ended September 30,
  2021 2020
Per share data:
Net asset value at beginning of period $ 10.99  $ 11.66 
Net investment income(1) 0.67  0.45 
Net realized gain (loss) on investments / foreign currency transactions(1) (0.02) (0.77)
Net unrealized appreciation (depreciation) on investments/ CSA / foreign currency transactions(1) 0.36  0.03 
Total increase (decrease) from investment operations(1) 1.01  (0.29)
Dividends/distributions paid to stockholders from net investment income (0.60) (0.48)
Purchases of shares in share repurchase plan —  0.05 
Loss on extinguishment of debt(1) —  (0.01)
Other —  0.04 
Net asset value at end of period $ 11.40  $ 10.97 
Market value at end of period(2) $ 11.02  $ 8.00 
Shares outstanding at end of period 65,316,085  47,961,753 
Net assets at end of period $ 744,821,565  $ 525,976,941 
Average net assets $ 737,202,849  $ 513,677,913 
Ratio of total expenses, including loss on extinguishment of debt and provision for taxes, to average net assets (annualized)(3) 10.01  % 7.79  %
Ratio of net investment income to average net assets (annualized) 7.98  % 5.65  %
Portfolio turnover ratio (annualized) 46.17  % 30.26  %
Total return(4) 26.83  % (16.51) %
(1)Weighted average per share data—basic and diluted; per share data was derived by using the weighted average shares outstanding during the applicable period.
(2)Represents the closing price of the Company’s common stock on the last day of the period.
(3)Does not include expenses of underlying investment companies, including joint ventures and short-term investments.
(4)Total return is based on purchase of stock at the current market price on the first day and a sale at the current market price on the last day of each period reported on the table and assumes reinvestment of dividends at prices obtained by the Company's dividend reinvestment plan during the period. Total return is not annualized.
9. SIERRA ACQUISITION
On September 21, 2021, the Company entered into an Agreement and Plan of Merger (the “Merger Agreement”) by and among the Company, Mercury Acquisition Sub, Inc., a Maryland corporation and a direct wholly owned subsidiary of the Company (“Acquisition Sub”), Sierra Income Corporation, a Maryland corporation (“Sierra”), and Barings. The Merger Agreement provides that, on the terms and subject to the conditions set forth in the Merger Agreement, Acquisition Sub will merge with and into Sierra, with Sierra continuing as the surviving company and as a wholly owned subsidiary of the Company (the “First Merger”) and, immediately thereafter, Sierra will merge with and into the Company, with the Company continuing as the surviving company (the “Second Merger” and, together with the First Merger, the “Merger”). The Board and the board of directors of Sierra, including all of the respective independent directors, have approved the Merger Agreement and the transactions contemplated therein. The parties to the Merger Agreement intend the Merger to be treated as a “reorganization” within the meaning of Section 368(a) of the Code.
In the First Merger, each share of Sierra common stock issued and outstanding immediately prior to the effective time of the First Merger (excluding any shares cancelled pursuant to the Merger Agreement) will be converted into the right to receive (i) $0.9783641 per share in cash, without interest, from Barings (such amount of cash, the “Cash Consideration”) and (ii) 0.44973 (such ratio, as may be adjusted pursuant to the Merger Agreement, the “Exchange Ratio”) of a validly issued, fully paid and non-assessable share of the Company’s common stock (the “Share Consideration” and, together with the Cash Consideration, the “Merger Consideration”).
The Merger Agreement contains representations, warranties and covenants, including, among others, covenants relating to the operation of each of the Company’s and Sierra’s businesses during the period prior to the closing of the Merger. The
70
Barings BDC, Inc.
Notes to Unaudited Consolidated Financial Statements — (Continued)
Company and Sierra have agreed to convene and hold stockholder meetings for the purpose of obtaining the approvals required of the Company’s and Sierra’s stockholders, respectively, and the Board and the board of directors of Sierra have agreed to recommend that their respective stockholders approve the applicable proposals (as described below).
The Merger Agreement provides that Sierra shall not, and shall cause its subsidiaries and instruct its representatives not to, directly or indirectly, solicit proposals relating to alternative transactions, or, subject to certain exceptions, initiate or participate in discussions or negotiations regarding, or provide information with respect to, any proposal for an alternative transaction. However, the Sierra board of directors may, subject to certain conditions, change its recommendation to the Sierra stockholders or, on payment of a termination fee of $11.0 million to the Company and the reimbursement of up to $2.0 million in expenses incurred by the Company and Barings, terminate the Merger Agreement and enter into an Alternative Acquisition Agreement (as defined in the Merger Agreement) for a Superior Proposal (as defined in the Merger Agreement) if it determines in good faith, after consultation with its outside legal counsel, that failure to do so would be inconsistent with the directors’ duties under applicable law.
Consummation of the First Merger, which is currently anticipated to occur during the first quarter of fiscal year 2022, is subject to certain customary closing conditions, including (1) approval of the First Merger by the holders of at least a majority of the outstanding shares of Sierra common stock entitled to vote thereon, (2) approval of the issuance of the Company’s common stock to be issued in the First Merger by a majority of the votes cast by the Company stockholders on the matter at the Company stockholders meeting, (3) approval of the issuance of the Company’s common stock in connection with the First Merger at a price below the then-current net asset value per share of the Company common stock, if applicable, by the vote specified in Section 63(2)(A) of the 1940 Act, (4) the absence of certain legal impediments to the consummation of the Merger, (5) effectiveness of the registration statement for the Company common stock to be issued as consideration in the First Merger, (6) approval for listing on the New York Stock Exchange of the Company common stock to be issued as consideration in the First Merger, (7) subject to certain materiality standards, the accuracy of the representations and warranties and compliance with the covenants of each party to the Merger Agreement, and (8) required regulatory approvals (including expiration of the waiting period under the Hart-Scott-Rodino Antitrust Improvements Act of 1976, as amended, or early termination thereof).
Barings, as party to the Merger Agreement, agreed to vote all shares of the Company common stock over which it has voting power (other than in its fiduciary capacity) in favor of the proposals to be submitted by the Company to its stockholders for approval relating to the Merger.
In addition, the Company and Sierra will take steps necessary to provide for the repayment at closing of Sierra’s existing loan agreement. The Merger Agreement also contains certain termination rights in favor of the Company and Sierra, including if the First Merger is not completed on or before March 31, 2022 or if the requisite approvals of the Company stockholders or Sierra stockholders are not obtained.
Further, the Company will enter into an amendment and restatement of the Amended and Restated Advisory Agreement, effective as of the closing of the Merger, to raise the annualized hurdle rate thereunder from 8.0% to 8.25%. Following the closing of the Merger, the Company will also enter into a credit support agreement with Barings, for the benefit of the combined company, to protect against net cumulative unrealized and realized losses of up to $100.0 million on the acquired Sierra investment portfolio over the next ten years.
The Company is expected to account for the Merger as an asset acquisition in accordance with the asset acquisition method of accounting as detailed in ASC 805-50, Business Combinations-Related Issues. Under asset acquisition accounting, acquiring assets in groups not only requires ascertaining the cost of the asset (or net assets), but also allocating that cost to the individual assets (or individual assets and liabilities) that make up the group. Per ASC 805-50-30-1, the acquired assets (as a group) are recognized based on their cost to the acquiring entity, which generally includes transaction costs of the asset acquisition, and no gain or loss is recognized unless the fair value of noncash assets given as consideration differs from the assets carrying amounts on the acquiring entity’s records. ASC 805-50-30-2 goes on to say asset acquisitions in which the consideration given is cash are measured by the amount of cash paid. However, if the consideration given is not in the form of cash (that is, in the form of noncash assets, liabilities incurred, or equity interests issued), measurement is based on the cost to the acquiring entity or the fair value of the assets (or net assets) acquired, whichever is more clearly evident and, thus, more reliably measured.
If the fair value of the net assets to be acquired exceeds the fair value of the Merger Consideration to be paid by the Company, then the Company would recognize a deemed contribution from Barings in an amount up to approximately $100.0 million. If the fair value of net assets to be acquired exceeds the fair value of the Merger Consideration to be paid by the Company and by Barings, then the Company would also recognize a purchase accounting gain. Alternatively, if the fair value of the net assets to be acquired is less than the fair value of the portion of the Merger Consideration to be paid by the Company,
71
Barings BDC, Inc.
Notes to Unaudited Consolidated Financial Statements — (Continued)
then the Company would recognize a purchase accounting loss. The Company expects any potential gain or loss would be classified as unrealized on the statement of operations until the underlying assets are sold.
The cost of the group of assets acquired in an asset acquisition is allocated to the individual assets acquired or liabilities assumed based on their relative fair values of net identifiable assets acquired other than “non-qualifying” assets (for example cash) and does not give rise to goodwill. The final allocation of the purchase price will be determined after the Merger is completed and after completion of a final analysis to determine the estimated relative fair values of the acquired assets and liabilities.
10. SUBSEQUENT EVENTS
Subsequent to September 30, 2021, the Company made approximately $238.5 million of new commitments, of which $164.4 million closed and funded. The $164.4 million of investments consist of $124.9 million of first lien senior secured debt investments, $14.5 million of second lien senior secured and subordinated debt investments and $25.0 million of equity investments. The weighted average yield of the debt investments was 6.7%. In addition, the Company funded $3.8 million of previously committed delayed draw term loans.
Effective on November 4, 2021, the Company increased aggregate commitments under the February 2019 Credit Facility to $875.0 million from $800.0 million pursuant to the accordion feature under the February 2019 Credit Facility, which allows for an increase in the total commitments to an aggregate of $1.2 billion subject to certain conditions and the satisfaction of specified financial covenants.
On November 9, 2021, the Board declared a quarterly distribution of $0.22 per share payable on December 1, 2021 to holders of record as of November 24, 2021.

72

Item 2. Management’s Discussion and Analysis of Financial Condition and Results of Operations.
The following discussion is designed to provide a better understanding of our unaudited consolidated financial statements for the three and nine months ended September 30, 2021, including a brief discussion of our business, key factors that impacted our performance and a summary of our operating results. The following discussion should be read in conjunction with the Unaudited Consolidated Financial Statements and the notes thereto included in Item 1 of this Quarterly Report on Form 10-Q, and the Consolidated Financial Statements and notes thereto and Management’s Discussion and Analysis of Financial Condition and Results of Operations contained in our Annual Report on Form 10-K for the year ended December 31, 2020. Historical results and percentage relationships among any amounts in the financial statements are not necessarily indicative of trends in operating results for any future periods.
Forward-Looking Statements
Some of the statements in this Quarterly Report constitute forward-looking statements because they relate to future events or our future performance or financial condition. Forward-looking statements may include, among other things, statements as to our future operating results, our business prospects and the prospects of our portfolio companies, the impact of the investments that we expect to make, the ability of our portfolio companies to achieve their objectives, our expected financings and investments, the adequacy of our cash resources and working capital, and the timing of cash flows, if any, from the operations of our portfolio companies. Words such as "expect," "anticipate," "target," "goals," "project," "intend," "plan," "believe," "seek," "estimate," "continue," "forecast," "may," "should," "potential," variations of such words, and similar expressions indicate a forward-looking statement, although not all forward-looking statements include these words. Readers are cautioned that the forward-looking statements contained in this Quarterly Report are only predictions, are not guarantees of future performance, and are subject to risks, events, uncertainties and assumptions that are difficult to predict. Our actual results could differ materially from those implied or expressed in the forward-looking statements for any reason, including the items discussed herein, in Item 1A entitled "Risk Factors" in Part I of our Annual Report on Form 10-K for the year ended December 31, 2020 and in Item 1A entitled "Risk Factors" in Part II of our subsequently filed Quarterly Reports on Form 10-Q. Other factors that could cause our actual results and financial condition to differ materially include, but are not limited to, changes in political, economic or industry conditions, the interest rate environment or conditions affecting the financial and capital markets, including with respect to changes from the impact of the COVID-19 pandemic; the length and duration of the COVID-19 outbreak in the United States as well as worldwide and the magnitude of the economic impact of that outbreak; the effect of the COVID-19 pandemic on our business prospects and the prospects of our portfolio companies, including our and their ability to achieve our respective objectives; the effect of the disruptions caused by the COVID-19 pandemic on our ability to continue to effectively manage our business and on the availability of equity and debt capital and our use of borrowed money to finance a portion of our investments; risks associated with possible disruption due to terrorism in our operations or the economy generally; future changes in laws or regulations and conditions in our operating areas; and risks related to our pending acquisition of Sierra Income Corporation. These statements are based on our current expectations, estimates, forecasts, information and projections about the industry in which we operate and the beliefs and assumptions of our management as of the date of filing of this Quarterly Report. We assume no obligation to update or revise any forward-looking statements, whether as a result of new information, future events or otherwise, unless we are required to do so by law. Although we undertake no obligation to revise or update any forward-looking statements, whether as a result of new information, future events or otherwise, you are advised to consult any additional disclosures that we may make directly to you or through reports that we in the future may file with the SEC, including annual reports on Form 10-K, quarterly reports on Form 10-Q and current reports on Form 8-K.
Overview of Our Business
We are a Maryland corporation incorporated on October 10, 2006. In August 2018, in connection with the closing of an externalization transaction through which Barings LLC (“Barings”) agreed to become our external investment adviser, we entered into an investment advisory agreement (the “Original Advisory Agreement”) and an administration agreement (the “Administration Agreement”) with Barings. In connection with the completion of our acquisition of MVC Capital, Inc., a Delaware corporation, on December 23, 2020 (the “MVC Acquisition”), we entered into an amended and restated investment advisory agreement (the “Amended and Restated Advisory Agreement”) with Barings on December 23, 2020, following approval of the Amended and Restated Advisory Agreement by our stockholders at our December 23, 2020 special meeting of stockholders. The terms of the Amended and Restated Advisory Agreement became effective on January 1, 2021. Under the terms of the Amended and Restated Advisory Agreement and the Administration Agreement, Barings serves as our investment adviser and administrator and manages our investment portfolio and performs (or oversees, or arranges for, the performance of) the administrative services necessary for our operation.
73

An externally-managed BDC generally does not have any employees, and its investment and management functions are provided by an outside investment adviser and administrator under an advisory agreement and administration agreement. Instead of directly compensating employees, we pay Barings for investment and management services pursuant to the terms of the Amended and Restated Advisory Agreement (and, prior to January 1, 2021, pursuant to the terms of the Original Advisory Agreement) and the Administration Agreement. Under the terms of the Amended and Restated Advisory Agreement (and, prior to January 1, 2021, under the terms of the Original Advisory Agreement), the fees paid to Barings for managing our affairs are determined based upon an objective and fixed formula, as compared with the subjective and variable nature of the costs associated with employing management and employees in an internally-managed BDC structure, which include bonuses that cannot be directly tied to Company performance because of restrictions on incentive compensation under the Investment Company Act of 1940, as amended (the “1940 Act”).
Beginning in August 2018, Barings shifted our investment focus to invest in syndicated senior secured loans, bonds and other fixed income securities. Since that time, Barings has transitioned our portfolio to primarily senior secured private debt investments in well-established middle-market businesses that operate across a wide range of industries. Barings’ existing SEC co-investment exemptive relief under the 1940 Act (the “Exemptive Relief”) permits us and Barings’ affiliated private and SEC-registered funds to co-invest in Barings-originated loans, which allows Barings to efficiently implement its senior secured private debt investment strategy for us.
Barings employs fundamental credit analysis, and targets investments in businesses with relatively low levels of cyclicality and operating risk. The holding size of each position will generally be dependent upon a number of factors including total facility size, pricing and structure, and the number of other lenders in the facility. Barings has experience managing levered vehicles, both public and private, and will seek to enhance our returns through the use of leverage with a prudent approach that prioritizes capital preservation. Barings believes this strategy and approach offers attractive risk/return with lower volatility given the potential for fewer defaults and greater resilience through market cycles.
We generate revenues in the form of interest income, primarily from our investments in debt securities, loan origination and other fees and dividend income. Fees generated in connection with our debt investments are recognized over the life of the loan using the effective interest method or, in some cases, recognized as earned. Our syndicated senior secured loans generally bear interest between LIBOR plus 300 basis points and LIBOR plus 400 points. Our senior secured, middle-market, private debt investments generally have terms of between five and seven years. Our senior secured, middle-market, first lien private debt investments generally bear interest between LIBOR (or the applicable currency rate for investments in foreign currencies) plus 450 basis points and LIBOR plus 650 basis points per annum. Our subordinated middle-market, private debt investments generally bear interest between LIBOR (or the applicable currency rate for investments in foreign currencies) plus 700 basis points and LIBOR plus 900 basis points per annum if floating rate, and between 8% and 15% if fixed rate. From time to time, certain of our investments may have a form of interest, referred to as payment-in-kind, or PIK, interest, which is not paid currently but is instead accrued and added to the loan balance and paid at the end of the term.
As of September 30, 2021 and December 31, 2020, the weighted average yield on the principal amount of our outstanding debt investments other than non-accrual debt investments was approximately 7.3% and 7.1%, respectively. The weighted average yield on the principal amount all of our outstanding investments (including equity and equity-linked investments and short-term investments but excluding non-accrual debt investments) was approximately 6.1% and 6.4% as of September 30, 2021 and December 31, 2020, respectively. The weighted average yield on the principal amount all of our outstanding investments (including equity and equity-linked investments and short-term investments) was approximately 6.1% and 6.5% as of September 30, 2021 and December 31, 2020, respectively.
COVID-19 Developments
The spread of the Coronavirus and the COVID-19 pandemic, and the related effect on the U.S. and global economies, has had adverse consequences for the business operations of some of our portfolio companies and has adversely affected, and threatens to continue to adversely affect, our operations and the operations of Barings, including with respect to us. Barings has taken proactive steps around COVID-19 to address the potential impacts on their people, clients, communities and everyone they come in contact with, directly or through their premises. Protecting their employees and supporting the communities in which they live and work is a priority. Barings continues to operate with the majority of employees in the United States working remotely while maintaining service levels to our partners and clients. In the United States, all offices are open for associates who wish to work from an office location. In Europe and Asia-Pac a hybrid working model is now in place with the majority of associates working from office locations on average 2-3 days per week. Barings’ return-to-office taskforce continues to plan for the safe return of associates to all office locations but is no longer targeting a set date for this given the continued uncertainty around COVID-related case numbers. Barings’ cybersecurity policies are applied consistently when working remotely or in the office.
74

While we have been carefully monitoring the COVID-19 pandemic and its impact on our business and the business of our portfolio companies, we have continued to fund our existing debt commitments. In addition, we have continued to make and originate, and expect to continue to make and originate, new loans.
We cannot predict the full impact of the COVID-19 pandemic, including its duration in the United States and worldwide and the magnitude of the economic impact of the outbreak, including with respect to the travel restrictions, business closures and other quarantine measures imposed on service providers and other individuals by various local, state, and federal governmental authorities, as well as non-U.S. governmental authorities. We are unable to predict the extent and duration of any business and supply-chain disruptions, the extent to which COVID-19 will negatively affect our portfolio companies’ operating results or the impact that such disruptions may have on our results of operations and financial condition. Depending on the duration and extent of the disruption to the operations of our portfolio companies, certain portfolio companies could experience financial distress and possibly default on their financial obligations to us and their other capital providers. Some of our portfolio companies may significantly curtail business operations, furlough or lay off employees and terminate service providers, and defer capital expenditures if subjected to prolonged and severe financial distress, which would likely impair their business on a permanent basis. These developments would likely result in a decrease in the value of our investment in any such portfolio company.
We will continue to monitor the situation relating to the COVID-19 pandemic and guidance from U.S. and international authorities, including federal, state and local public health authorities and may take additional actions based on their recommendations. In these circumstances, there may be developments outside our control requiring us to adjust our plan of operation. As such, given the dynamic nature of this situation, we cannot reasonably estimate the impacts of COVID-19 on our financial condition, results of operations or cash flows in the future. However, to the extent our portfolio companies are adversely impacted by the effects of the COVID-19 pandemic, it may have a material adverse impact on our future net investment income, the fair value of our portfolio investments, our financial condition and the results of operations and financial condition of our portfolio companies.
Relationship with Our Adviser, Barings
Our investment adviser, Barings, a wholly-owned subsidiary of Massachusetts Mutual Life Insurance Company, is a leading global asset management firm and is registered with the SEC as an investment adviser under the Investment Advisers Act of 1940, as amended. Barings’ primary investment capabilities include fixed income, private credit, real estate, equity, and alternative investments. Subject to the overall supervision of our board of directors (the “Board”), Barings’ Global Private Finance Group (“BGPF”) manages our day-to-day operations, and provides investment advisory and management services to us. BGPF is part of Barings’ $300.4 billion Global Fixed Income Platform that invests in liquid, private and structured credit. BGPF manages private funds and separately managed accounts, along with multiple public vehicles.
Among other things, Barings (i) determines the composition of our portfolio, the nature and timing of the changes therein and the manner of implementing such changes; (ii) identifies, evaluates and negotiates the structure of the investments made by us; (iii) executes, closes, services and monitors the investments that we make; (iv) determines the securities and other assets that we will purchase, retain or sell; (v) performs due diligence on prospective portfolio companies and (vi) provides us with such other investment advisory, research and related services as we may, from time to time, reasonably require for the investment of our funds.
Under the terms of the Administration Agreement, Barings performs (or oversees, or arranges for, the performance of) the administrative services necessary for our operation, including, but not limited to, office facilities, equipment, clerical, bookkeeping and record keeping services at such office facilities and such other services as Barings, subject to review by the Board, will from time to time determine to be necessary or useful to perform its obligations under the Administration Agreement. Barings also, on our behalf and subject to the Board’s oversight, arranges for the services of, and oversees, custodians, depositories, transfer agents, dividend disbursing agents, other stockholder servicing agents, accountants, attorneys, underwriters, brokers and dealers, corporate fiduciaries, insurers, banks and such other persons in any such other capacity deemed to be necessary or desirable. Barings is responsible for the financial and other records that we are required to maintain and will prepare all reports and other materials required to be filed with the SEC or any other regulatory authority.
75

Stockholder Approval of Reduced Asset Coverage Ratio
On July 24, 2018, our stockholders voted at a special meeting of stockholders (the “2018 Special Meeting”) to approve a proposal to authorize us to be subject to a reduced asset coverage ratio of at least 150% under the 1940 Act. As a result of the stockholder approval at the 2018 Special Meeting, effective July 25, 2018, our applicable asset coverage ratio under the 1940 Act has been decreased to 150% from 200%. As a result, we are permitted under the 1940 Act to incur indebtedness at a level which is more consistent with a portfolio of senior secured debt. As of September 30, 2021, our asset coverage ratio was 171.8%.
Pending Sierra Income Corporation Acquisition
On September 21, 2021, we entered into an Agreement and Plan of Merger (the “Merger Agreement”) by and among us, Mercury Acquisition Sub, Inc., a Maryland corporation and our direct wholly owned subsidiary (“Acquisition Sub”), Sierra Income Corporation, a Maryland corporation (“Sierra”), and Barings. The Merger Agreement provides that, on the terms and subject to the conditions set forth in the Merger Agreement, Acquisition Sub will merge with and into Sierra, with Sierra continuing as the surviving company and as our wholly owned subsidiary (the “First Merger”) and, immediately thereafter, Sierra will merge with and into us, with Barings BDC, Inc. continuing as the surviving company (the “Second Merger” and, together with the First Merger, the “Merger”). Both the Board and the board of directors of Sierra, including all of the respective independent directors, have approved the Merger Agreement and the transactions contemplated therein. The parties to the Merger Agreement intend the Merger to be treated as a “reorganization” within the meaning of Section 368(a) of the Internal Revenue Code of 1986, as amended (the “Code”).
In the First Merger, each share of Sierra common stock issued and outstanding immediately prior to the effective time of the First Merger (excluding any shares cancelled pursuant to the Merger Agreement) will be converted into the right to receive (i) $0.9783641 per share in cash, without interest, from Barings (such amount of cash, the “Cash Consideration”) and (ii) 0.44973 (such ratio, as may be adjusted pursuant to the Merger Agreement, the “Exchange Ratio”) of a validly issued, fully paid and non-assessable share of our common stock (the “Share Consideration” and, together with the Cash Consideration, the “Merger Consideration”).
The Merger Agreement contains representations, warranties and covenants, including, among others, covenants relating to the operation of each of our and Sierra’s businesses during the period prior to the closing of the Merger. We and Sierra have agreed to convene and hold stockholder meetings for the purpose of obtaining the approvals required of our and Sierra’s stockholders, respectively, and our Board and the board of directors of Sierra have agreed to recommend that their respective stockholders approve the applicable proposals (as described below).
The Merger Agreement provides that Sierra shall not, and shall cause its subsidiaries and instruct its representatives not to, directly or indirectly, solicit proposals relating to alternative transactions, or, subject to certain exceptions, initiate or participate in discussions or negotiations regarding, or provide information with respect to, any proposal for an alternative transaction. However, the Sierra board of directors may, subject to certain conditions, change its recommendation to the Sierra stockholders or, on payment of a termination fee of $11.0 million to us and the reimbursement of up to $2.0 million in expenses incurred by us and Barings, terminate the Merger Agreement and enter into an Alternative Acquisition Agreement (as defined in the Merger Agreement) for a Superior Proposal (as defined in the Merger Agreement) if it determines in good faith, after consultation with its outside legal counsel, that failure to do so would be inconsistent with the directors’ duties under applicable law.
Consummation of the First Merger, which is currently anticipated to occur during the first quarter of fiscal year 2022, is subject to certain customary closing conditions, including (1) approval of the First Merger by the holders of at least a majority of the outstanding shares of Sierra common stock entitled to vote thereon, (2) approval of the issuance of our common stock to be issued in the First Merger by a majority of the votes cast by our stockholders on the matter at our stockholders meeting, (3) approval of the issuance of our common stock in connection with the First Merger at a price below the then-current net asset value per share of our common stock, if applicable, by the vote specified in Section 63(2)(A) of the 1940 Act, (4) the absence of certain legal impediments to the consummation of the Merger, (5) effectiveness of the registration statement for our common stock to be issued as consideration in the First Merger, (6) approval for listing on the New York Stock Exchange of our common stock to be issued as consideration in the First Merger, (7) subject to certain materiality standards, the accuracy of the representations and warranties and compliance with the covenants of each party to the Merger Agreement, and (8) required regulatory approvals (including expiration of the waiting period under the Hart-Scott-Rodino Antitrust Improvements Act of 1976, as amended, or early termination thereof).
76

Barings, as party to the Merger Agreement, agreed to vote all shares of our common stock over which it has voting power (other than in its fiduciary capacity) in favor of the proposals to be submitted by us to our stockholders for approval relating to the Merger.
In addition, we and Sierra will take steps necessary to provide for the repayment at closing of Sierra’s existing loan agreement. The Merger Agreement also contains certain termination rights in favor of us and Sierra, including if the First Merger is not completed on or before March 31, 2022 or if the requisite approvals of our stockholders or Sierra stockholders are not obtained.
Further, we will enter into an amendment and restatement of the Amended and Restated Advisory Agreement, effective as of the closing of the Merger, to raise the annualized hurdle rate thereunder from 8.0% to 8.25%. Following the closing of the Merger, we will also enter into a credit support agreement with Barings, for the benefit of the combined company, to protect against net cumulative unrealized and realized losses of up to $100.0 million on the acquired Sierra investment portfolio over the next ten years.
Portfolio Investment Composition
The total value of our investment portfolio was $1,652.5 million as of September 30, 2021, as compared to $1,495.8 million as of December 31, 2020. As of September 30, 2021, we had investments in 170 portfolio companies and two money market fund with an aggregate cost of $1,633.7 million. As of December 31, 2020, we had investments in 146 portfolio companies and two money market funds with an aggregate cost of $1,486.1 million. As of both September 30, 2021 and December 31, 2020, none of our portfolio investments represented greater than 10% of the total fair value of our investment portfolio.
As of September 30, 2021 and December 31, 2020, our investment portfolio consisted of the following investments:
Cost Percentage of
Total
Portfolio		 Fair Value Percentage of
Total
Portfolio
September 30, 2021:
Senior debt and 1st lien notes
$ 1,155,679,769  71  % $ 1,162,119,382  70  %
Subordinated debt and 2nd lien notes 192,870,460  12  190,426,410  12 
Structured products 18,207,625  1  20,794,178  1 
Equity shares 137,240,410  8  141,945,560  9 
Equity warrants 1,111,602  —  898,443  — 
Investment in joint ventures / PE fund 78,602,532  5  86,298,947  5 
Short-term investments 50,000,000  3  50,000,000  3 
$ 1,633,712,398  100  % $ 1,652,482,920  100  %
December 31, 2020:
Senior debt and 1st lien notes
$ 1,167,436,742  79  % $ 1,171,250,512  79  %
Subordinated debt and 2nd lien notes 137,776,808  9  138,767,120  9 
Structured products 30,071,808  2  32,508,845  2 
Equity shares 44,693,645  3  44,651,114  3 
Equity warrants 1,235,383  —  1,300,197  — 
Investment in joint ventures / PE fund 39,282,532  3  41,759,922  3 
Short-term investments 65,558,227  4  65,558,227  4 
$ 1,486,055,145  100  % $ 1,495,795,937  100  %
77

Investment Activity
During the nine months ended September 30, 2021, we made 59 new investments totaling $529.9 million, made investments in existing portfolio companies totaling $156.3 million, made a net new joint venture equity investment totaling $9.3 million, additional investments in joint venture equity portfolio companies totaling $30.0 million and made 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. We had 24 loans repaid at par totaling $196.3 million and received $32.2 million of portfolio company principal payments. In addition, we sold $89.5 million of loans, recognizing a net realized gain on these transactions of $3.3 million, and sold $338.4 million of middle-market portfolio company debt investments to one of our joint ventures and realized a gain on these transactions of $0.3 million. Lastly, we received proceeds related to the sale of equity investments totaling $7.4 million and recognized a net realized gain on such sales totaling $0.7 million.
During the nine months ended September 30, 2020, we made 47 new investments totaling $263.9 million, made investments in 18 existing portfolio companies totaling $39.8 million, made one new joint venture equity investment totaling $3.1 million and made an additional investment in one existing joint venture equity portfolio company totaling $5.0 million. We had 15 loans repaid at par totaling total $58.5 million and received $10.0 million of portfolio company principal payments. In addition, we sold $307.4 million of loans, recognizing a net realized loss on these transactions of $36.4 million, and sold $71.0 million of middle-market portfolio company debt investments to our joint venture and realized a loss on these transactions of $1.1 million. In addition, one loan investment was restructured. Under U.S. GAAP, this restructuring was considered a material modification and as a result, we recognized a loss of approximately $0.6 million related to this restructuring. Lastly, we received $0.3 million in escrow distributions from legacy portfolio companies, which were recognized as realized gains.
Total portfolio investment activity for the nine months ended September 30, 2021 and 2020 was as follows:
Nine Months Ended
September 30, 2021:
 Senior Debt
and 1st Lien
Notes		 Subordinated Debt and 2nd Lien Notes Structured Products Equity
Shares		 Equity Warrants Investments in Joint Ventures / PE Fund Short-term
Investments		 Total
Fair value, beginning of period $ 1,171,250,512  $ 138,767,120  $ 32,508,845  $ 44,651,114  $ 1,300,197  $ 41,759,922  $ 65,558,227  $ 1,495,795,937 
New investments 587,828,793  88,915,939  —  99,108,772  163,000  39,320,000  297,560,178  1,112,896,682 
Proceeds from sales of investments (408,957,116) (8,771,000) (10,068,420) (7,069,461) (450,000) —  (313,117,605) (748,433,602)
Loan origination fees received (12,485,025) (1,209,071) —  —  —  —  —  (13,694,096)
Principal repayments received (191,018,231) (34,459,242) (3,037,767) —  —  —  —  (228,515,240)
Payment-in-kind interest 2,552,310  7,720,972  —  —  —  —  —  10,273,282
Accretion of loan discounts 1,672,404  2,548,075  29,502  —  —  —  —  4,249,981 
Accretion of deferred loan origination revenue 6,211,193  375,649  —  —  —  —  —  6,586,842 
Realized gain (loss) 2,438,701 (27,669) 1,212,504 507,453 163,219 — (800) 4,293,408 
Unrealized appreciation (depreciation) 2,625,841 (3,434,363) 149,514 4,747,682 (277,973) 5,219,025 — 9,029,726 
Fair value, end of period $ 1,162,119,382  $ 190,426,410  $ 20,794,178  $ 141,945,560  $ 898,443  $ 86,298,947  $ 50,000,000  $ 1,652,482,920 
78

Nine Months Ended
September 30, 2020:
 Senior Debt
and 1st Lien
Notes		 Subordinated Debt and 2nd Lien Notes Structured Products Equity
Shares		 Investment in Joint Venture Short-term
Investments		 Total
Fair value, beginning of period $ 1,050,863,369  $ 15,220,969  $ —  $ 760,716  $ 10,229,813  $ 96,568,940  $ 1,173,643,807 
New investments 266,791,834  4,877,442  31,518,233  512,299  8,100,000  697,141,627  1,008,941,435 
Proceeds from sales of investments (378,007,349) (415,977) —  (247,908) —  (583,220,976) (961,892,210)
Loan origination fees received (5,894,794) (180,225) —  —  —  —  (6,075,019)
Principal repayments received (68,510,620) —  (38,879) —  —  —  (68,549,499)
Payment-in-kind interest earned 236,572  35,108  —  —  —  —  271,680 
Accretion of loan discounts 1,058,002  45,338  34,660  —  —  —  1,138,000 
Accretion of deferred loan origination revenue 1,649,982  26,081  —  —  —  —  1,676,063 
Realized gain (loss) (36,473,291) (26,253) 3,684  247,908  —  14,285  (36,233,667)
Unrealized appreciation (depreciation) 1,387,984  (213,197) 1,646,453  (297,965) 828,262  (486) 3,351,051 
Fair value, end of period $ 833,101,689  $ 19,369,286  $ 33,164,151  $ 975,050  $ 19,158,075  $ 210,503,390  $ 1,116,271,641 
Non-Accrual Assets
Generally, when interest and/or principal payments on a loan become past due, or if we otherwise do not expect the borrower to be able to service its debt and other obligations, we will place the loan on non-accrual status and will generally cease recognizing interest income on that loan for financial reporting purposes until all principal and interest have been brought current through payment or due to a restructuring such that the interest income is deemed to be collectible. As of September 30, 2021, we had one asset on non-accrual, the fair value of which was $11.0 million, which comprised 0.7% of the total fair value of our portfolio, and the cost of which was $10.1 million, which comprised 0.6% of the total cost of our portfolio. As of December 31, 2020, we had one asset on non-accrual, the fair value of which was $3.0 million, which comprised 0.2% of the total fair value of our portfolio, and the cost of which was $3.0 million, which comprised 0.2% of the total cost of our portfolio.
A summary of our non-accrual asset as of September 30, 2021 is provided below:
Legal Solutions Holdings
In connection with the MVC Acquisition, we purchased our debt investment in Legal Solutions Holdings, or Legal Solutions. During the quarter ended September 30, 2021, we placed our debt investment in Legal Solutions on non-accrual status. As a result, under U.S. GAAP, we will not recognize interest income on our debt investment in Legal Solutions for financial reporting purposes. As of September 30, 2021, the cost of our debt investment in Legal Solutions was $10.1 million and the fair value of such investment was $11.0 million.
79

Results of Operations
Three and Nine months ended September 30, 2021 and September 30, 2020
Operating results for the three and nine months ended September 30, 2021 and 2020 were as follows:
Three Months
Ended
Three Months
Ended
 Nine Months Ended Nine Months Ended
September 30,
2021		 September 30,
2020		 September 30,
2021		 September 30,
2020
Total investment income $ 34,983,825  $ 16,329,142  $ 98,730,541  $ 51,148,504 
Total operating expenses 20,101,273  8,368,976  54,934,235  29,365,140 
Net investment income 14,882,552  7,960,166  43,796,306  21,783,364 
Income taxes, including excise tax provision 25,533  7,561  7,495  7,561 
Net investment income after taxes 14,857,019  7,952,605  43,788,811  21,775,803 
Net realized losses (3,761,700) (20,506,085) (1,579,460) (37,323,454)
Net unrealized appreciation 3,315,063  55,947,382  23,998,631  1,594,639 
Loss on extinguishment of debt —  (216,474) —  (660,066)
Benefit from (provision for) taxes —  199  (1,290) 17,666 
Net increase (decrease) in net assets resulting from operations $ 14,410,382  $ 43,177,627  $ 66,214,187  $ (14,587,851)
Net increases or decreases in net assets resulting from operations can vary substantially from period to period due to various factors, including recognition of realized gains and losses and unrealized appreciation and depreciation. As a result, quarterly comparisons of net changes in net assets resulting from operations may not be meaningful.
Investment Income
Three Months
Ended		 Three Months
Ended		 Nine Months Ended Nine Months Ended
September 30,
2021		 September 30,
2020		 September 30,
2021		 September 30,
2020
Investment income:
Interest income $ 24,622,330  $ 15,217,547  $ 76,655,759  $ 48,187,628 
Dividend income 2,866,668  —  3,333,067  2,603 
Fee and other income 4,488,346  769,126  9,189,976  2,380,552 
Payment-in-kind interest income 3,006,481  342,469  9,551,152  577,090 
Interest income from cash —  —  587  631 
Total investment income $ 34,983,825  $ 16,329,142  $ 98,730,541  $ 51,148,504 
The change in investment income for the three and nine months ended September 30, 2021, as compared to the three and nine months ended September 30, 2020, was primarily due to an increase in the average size of our portfolio, acceleration of unamortized OID and unamortized loan origination fee income associated with repayments of loans, an increase in payment-in-kind (“PIK”) interest income and dividends from portfolio companies and joint venture investments. For the three and nine months ended September 30, 2021, acceleration of unamortized OID income and unamortized loan origination fees totaled $1.9 million and $4.6 million, respectively, as compared to $30,549 and $0.3 million, respectively, for the three and nine months ended September 30, 2020. For the three and nine months ended September 30, 2021, PIK interest income was $3.0 million and $9.6 million respectively, as compared to $0.3 million and $0.6 million, respectively, for the three and nine months ended September 30, 2020. For the three and nine months ended September 30, 2021, dividends from portfolio companies and joint venture investments were $2.9 million and $3.3 million, respectively. The amount of our outstanding debt investments was $1,407.0 million as of September 30, 2021, as compared to $929.3 million as of September 30, 2020. This increase is in part due to the acquisition of investment assets in the MVC Acquisition. The weighted average yield on the principal amount of our outstanding debt investments other than non-accrual debt investments was 7.3% as of September 30, 2021, as compared to 6.2% as of September 30, 2020.
80

Operating Expenses
Three Months
Ended		 Three Months
Ended		 Nine Months Ended Nine Months Ended
September 30,
2021		 September 30,
2020		 September 30,
2021		 September 30,
2020
Operating expenses:
Interest and other financing fees $ 8,103,044  $ 3,738,991  $ 23,382,201  $ 14,367,855 
Base management fees 5,273,797  3,375,262  14,094,419  10,904,422 
Incentive management fees 4,442,607  —  10,674,693  — 
Compensation expenses —  —  —  48,410 
General and administrative expenses 2,281,825  1,254,723  6,782,922  4,044,453 
Total operating expenses $ 20,101,273  $ 8,368,976  $ 54,934,235  $ 29,365,140 
Interest and Other Financing Fees
Interest and other financing fees during the three and nine months ended September 30, 2021 were attributable to borrowings under the February 2019 Credit Facility, the August 2025 Notes, the November Notes and the February Notes (each as defined below under “Liquidity and Capital Resources”). Interest and other financing fees during the three and nine months ended September 30, 2020 were attributable to borrowings under Barings BDC Senior Funding I, LLC’s credit facility entered into in August 2018 with Bank of America, N.A. (the “August 2018 Credit Facility”), the February 2019 Credit Facility and our May 2019 $449.3 million term debt securitization (the “Debt Securitization”). The increase in interest and other financing fees for the three and nine months ended September 30, 2021 as compared to the three and nine months ended September 30, 2020, was primarily attributable to the issuance of the August 2025 Notes, the November Notes and the February Notes and increased borrowings under the February 2019 Credit Facility, partially offset by the repayment of the Debt Securitization and the repayment of the borrowings under the August 2018 Credit Facility.
Base Management Fees
Under the terms of the Amended and Restated Advisory Agreement (and, prior to January 1, 2021, under the terms of the Original Advisory Agreement), we pay Barings a base management fee (the “Base Management Fee”), quarterly in arrears on a calendar quarter basis. The Base Management Fee is calculated based on the average value of our gross assets, excluding cash and cash equivalents, at the end of the two most recently completed calendar quarters prior to the quarter for which such fees are being calculated. Base Management Fees for any partial month or quarter are appropriately pro-rated. See Note 2 to our Unaudited Consolidated Financial Statements for additional information regarding the terms of the Amended and Restated Advisory Agreement (and, prior to January 1, 2021, the terms of the Original Advisory Agreement) and the fee arrangements thereunder. For the three and nine months ended September 30, 2021, the amount of Base Management Fee incurred was approximately $5.3 million and $14.1 million, respectively. For the three and nine months ended September 30, 2020, the amount of Base Management Fee incurred was approximately $3.4 million and $10.9 million, respectively. The increase in the Base Management Fee for the three and nine months ended September 30, 2021 versus the corresponding 2020 periods is primarily related to the average value of gross assets increasing from $981.9 million as of the end of the two most recently completed calendar quarters prior to September 30, 2020 to $1,687.6 million as of the end of the two most recently completed calendar quarters prior to September 30, 2021.The increase in the Base Management Fee attributable to the increase in our average gross assets was partially offset by a decrease in the Base Management Fee rate. For both the three and nine months ended September 30, 2021, the Base Management Fee rate was 1.250%. For both the three and nine months ended September 30, 2020, the Base Management Fee rate was 1.375%.
Incentive Fee (and, prior to January 1, 2021, under the terms of the Original Advisory Agreement)
Under the Amended and Restated Advisory Agreement (and, prior to January 1, 2021, under the terms of the Original Advisory Agreement), we pay Barings an incentive fee. A portion of the incentive fee is based on our income and a portion is based on our capital gains. The income-based fee will be determined and paid quarterly in arrears based on the amount by which (x) the aggregate pre-incentive fee net investment income in respect of the current calendar quarter and the eleven preceding calendar quarters beginning with the calendar quarter that commences on or after January 1, 2021, as the case may be (or the appropriate portion thereof in the case of any of our first eleven calendar quarters that commences on or after January 1, 2021) exceeds (y) the hurdle amount as calculated for the same period. See Note 2 to our Unaudited Consolidated Financial Statements for additional information regarding the terms of the Amended and Restated Advisory Agreement and the fee arrangements thereunder. For the three and nine months ended September 30, 2021, the amount of income-based fee incurred was $4.4 million and $10.7 million, respectively. We did not incur any income-based fee for the three or nine months ended September 30, 2020.
81

General and Administrative Expenses
We entered into the Administration Agreement with Barings in August 2018. Under the terms of the Administration Agreement, Barings performs (or oversees, or arranges for, the performance of) the administrative services necessary for our operations. We will reimburse Barings for the costs and expenses incurred by it in performing its obligations and providing personnel and facilities under the Administration Agreement in an amount to be negotiated and mutually agreed to by us and Barings quarterly in arrears; provided that the agreed-upon quarterly expense amount will not exceed the amount of expenses that would otherwise be reimbursable by us under the Administration Agreement for the applicable quarterly period, and Barings will not be entitled to the recoupment of any amounts in excess of the agreed-upon quarterly expense amount. See Note 2 to our Unaudited Consolidated Financial Statements for additional information regarding the Administration Agreement. For the three and nine months ended September 30, 2021, the amount of administration expense incurred and invoiced by Barings for expenses was approximately $0.8 million and $1.8 million, respectively. For the three and nine months ended September 30, 2020, the amount of administration expense incurred and invoiced by the Adviser for expenses was approximately $0.3 million and $0.9 million, respectively. In addition to expenses incurred under the Administration Agreement, general and administrative expenses include Board fees, D&O insurance costs, as well as legal, valuation and accounting expenses.
Net Realized Gains (Losses)
Net realized gains (losses) during the three and nine months ended September 30, 2021 and 2020 were as follows:
Three Months
Ended		 Three Months
Ended		 Nine Months Ended Nine Months Ended
September 30,
2021		 September 30,
2020		 September 30,
2021		 September 30,
2020
Net realized gain (losses):
Non-Control / Non-Affiliate investments $ 950,286  $ (19,477,823) $ 4,394,339  $ (36,233,667)
Affiliate investments (24,300) —  (100,931) — 
Net realized gains (losses) on investments 925,986  (19,477,823) 4,293,408  (36,233,667)
Foreign currency transactions (4,687,686) (1,028,262) (5,872,868) (1,089,787)
Net realized gains (losses) $ (3,761,700) $ (20,506,085) $ (1,579,460) $ (37,323,454)
In the three months ended September 30, 2021, we recognized net realized losses totaling $3.8 million, which consisted primarily of a net loss on foreign currency transactions of $4.7 million, partially offset by a net gain on our loan portfolio of $0.9 million. In the nine months ended September 30, 2021, we recognized net realized losses totaling $1.6 million, which consisted primarily of a net loss on foreign currency transactions of $5.9 million, partially offset by a net gain on our loan portfolio of $4.3 million.
In the three months ended September 30, 2020, we recognized net realized losses totaling $20.5 million, which consisted
primarily of a net loss on our loan portfolio of $19.5 million and a net loss on foreign currency transactions of
$1.0 million. In the nine months ended September 30, 2020, we recognized net realized losses totaling $37.3 million, which
consisted primarily of a net loss on our loan portfolio of $36.5 million and a net loss on foreign currency transactions of $1.1
million, partially offset by $0.2 million in escrow distributions we received from legacy portfolio companies, which were
recognized as realized gains.
Net Unrealized Appreciation (Depreciation)
Net unrealized appreciation (depreciation) during the three and nine months ended September 30, 2021 and 2020 was as follows:
Three Months
Ended		 Three Months
Ended		 Nine Months Ended Nine Months Ended
September 30,
2021		 September 30,
2020		 September 30,
2021		 September 30,
2020
Net unrealized appreciation (depreciation):
Non-Control / Non-Affiliate investments $ (8,353,775) $ 56,467,202  $ 1,307,673  $ 2,522,789 
Affiliate investments (323,174) 1,624,230  9,208,817  828,262 
Control investments 1,115,148  —  (1,486,760) — 
Net unrealized appreciation (depreciation) on investments (7,561,801) 58,091,432  9,029,730  3,351,051 
Credit support agreement —  —  700,006  — 
Foreign currency transactions 10,876,864  (2,144,050) 14,268,895  (1,756,412)
Net unrealized appreciation (depreciation) $ 3,315,063  $ 55,947,382  $ 23,998,631  $ 1,594,639 
During the three months ended September 30, 2021, we recorded net unrealized appreciation totaling $3.3 million, consisting of net unrealized appreciation related to foreign currency transactions of $10.9 million, partially offset by net unrealized depreciation on our current portfolio of $4.7 million and unrealized depreciation reclassification adjustments of $2.9
82

million related to the net realized gains on the sales / repayments of certain investments. The net unrealized depreciation on our current portfolio of $4.7 million was driven primarily by the impact of foreign currency exchange rates on investments of $6.9 million and the credit or fundamental performance of investments of $0.2 million, partially offset by broad market moves for investments of $2.4 million.
During the nine months ended September 30, 2021, we recorded net unrealized appreciation totaling $24.0 million, consisting of net unrealized appreciation on our current portfolio of $13.8 million, unrealized appreciation related to foreign currency transactions of $14.3 million and unrealized appreciation of $0.7 million on the credit support agreement with Barings, net of unrealized depreciation reclassification adjustments of $4.7 million related to the net realized gains on the sales / repayments of certain investments. The net unrealized appreciation on our current portfolio of $13.8 million was driven primarily by broad market moves for investments of $24.0 million and the credit or fundamental performance of investments of $1.9 million, partially offset by the impact of foreign currency exchange rates on investments of $12.1 million.
During the three months ended September 30, 2020, we recorded net unrealized appreciation totaling $55.9 million, consisting of net unrealized appreciation on our current portfolio of $29.7 million and net unrealized appreciation reclassification adjustments of $28.4 million related to the net realized losses on the sales / repayments of certain investments, net of net unrealized depreciation related to foreign currency transactions of $2.1 million. The net unrealized appreciation on our current portfolio of $29.7 million was driven primarily by the credit or fundamental performance of middle-market debt investments of $1.1 million, the impact of foreign currency exchange rates on middle-market debt investments of $1.9 million and the broad market moves for the entire investment portfolio of $26.7 million.
During the nine months ended September 30, 2020, we recorded net unrealized appreciation totaling $1.6 million, consisting of net unrealized appreciation reclassification adjustments of $51.4 million related to the net realized losses on the sales / repayments of certain investments, partially offset by net unrealized depreciation on our current portfolio of $48.1 million and net unrealized depreciation related to foreign currency transactions of $1.8 million. The net unrealized depreciation on our current portfolio of $48.1 million was driven primarily by the credit or fundamental performance of middle-market debt investments of $4.2 million and broad market moves for the entire investment portfolio of $45.7 million, partially offset by the impact of foreign currency exchange rates on middle-market debt investments of $1.9 million.
Liquidity and Capital Resources
We believe that our current cash and cash equivalents on hand, our short-term investments, our available borrowing capacity under our $800 million senior secured revolving credit facility with ING Capital LLC (as amended, restated and otherwise modified from time to time, the “February 2019 Credit Facility”) and the August 2020 NPA (as defined below under "Financing Transactions") and our anticipated cash flows from operations will be adequate to meet our cash needs for our daily operations for at least the next twelve months. This “Liquidity and Capital Resources” section should be read in conjunction with “COVID-19 Developments” above, as well as with the notes to our Unaudited Consolidated Financial Statements.
Cash Flows
For the nine months ended September 30, 2021, we experienced a net decrease in cash in the amount of $51.1 million. During that period, our operating activities used $115.9 million in cash, consisting primarily of purchases of portfolio investments of $816.8 million and purchases of short-term investments of $297.6 million, partially offset by proceeds from sales or repayments of portfolio investments totaling $648.3 million and sales of short-term investments of $313.1 million. In addition, our financing activities provided $64.8 million of cash, consisting of net proceeds of $149.8 million from the issuance of the February Notes (as defined below under “Financing Transactions”), partially offset by net repayments under the February 2019 Credit Facility of $45.8 million and dividends paid in the amount of $39.2 million. As of September 30, 2021, we had $41.4 million of cash and foreign currencies on hand.
For the nine months ended September 30, 2020, we experienced a net decrease in cash in the amount of $7.2 million. During that period, our operating activities provided $4.8 million in cash, consisting primarily of proceeds from sales or repayments of portfolio investments totaling $417.0 million and sales of short-term investments of $583.2 million, partially offset by purchases of portfolio investments of $316.7 million and purchases of short-term investments of $697.1 million. In addition, our financing activities used $12.0 million of cash, consisting primarily of repayments of the Debt Securitization of $139.9 million, share repurchases of $7.1 million and dividends paid in the amount of $23.2 million, partially offset by net borrowings under the August 2018 Credit Facility and the February 2019 Credit Facility of $108.7 million and net proceeds from the August 2025 Notes issuance of $49.5 million. As of September 30, 2020, we had $14.8 million of cash on hand.
83

Financing Transactions
February 2019 Credit Facility
On February 21, 2019, we entered into the February 2019 Credit Facility (as subsequently amended in December 2019), with ING Capital LLC (“ING”), as administrative agent, and the lenders party thereto. The initial commitments under the February 2019 Credit Facility total $800.0 million. The February 2019 Credit Facility has an accordion feature that allows for an increase in the total commitments by up to $400.0 million, subject to certain conditions and the satisfaction of specified financial covenants. We can borrow foreign currencies directly under the February 2019 Credit Facility. The February 2019 Credit Facility, which is structured as a revolving credit facility, is secured primarily by a material portion of our assets and guaranteed by certain of our subsidiaries. Following the termination of the August 2018 Credit Facility on June 30, 2020, Barings BDC Senior Funding I, LLC became a subsidiary guarantor and its assets secure the February 2019 Credit Facility. The revolving period of the February 2019 Credit Facility ends on February 21, 2023, followed by a one-year repayment period with a final maturity date of February 21, 2024.
Borrowings under the February 2019 Credit Facility bear interest, subject to our election, on a per annum basis equal to (i) the applicable base rate plus 1.00% (or 1.25% if we no longer maintain an investment grade credit rating), (ii) the applicable LIBOR rate plus 2.00% (or 2.25% if we no longer maintain an investment grade credit rating), (iii) for borrowings denominated in certain foreign currencies other than Australian dollars, the applicable currency rate for the foreign currency as defined in the credit agreement plus 2.00% (or 2.25% if we no longer maintain an investment grade credit rating), or (iv) for borrowings denominated in Australian dollars, the applicable Australian dollars Screen Rate, plus 2.20% (or 2.45% if we no longer maintain an investment grade credit rating). The applicable base rate is equal to the greatest of (i) the prime rate, (ii) the federal funds rate plus 0.5%, (iii) the Overnight Bank Funding Rate plus 0.5%, (iv) the adjusted three-month applicable currency rate plus 1.0% and (v) 1.0%. The applicable LIBOR and currency rates depend on the currency and term of the draw under the February 2019 Credit Facility, and cannot be less than zero.
In addition, we pay a commitment fee of (i) 0.5% per annum on undrawn amounts if the unused portion of the February 2019 Credit Facility is greater than two-thirds of total commitments or (ii) 0.375% per annum on undrawn amounts if the unused portion of the February 2019 Credit Facility is equal to or less than two-thirds of total commitments. In connection with entering into the February 2019 Credit Facility, we incurred financing fees of approximately $6.4 million, which will be amortized over the life of the February 2019 Credit Facility.
As of September 30, 2021, we were in compliance with all covenants under the February 2019 Credit Facility and had U.S. dollar borrowings of $382.0 million outstanding under the February 2019 Credit Facility with an interest rate of 2.125% (one month LIBOR of 0.125%), borrowings denominated in Swedish kronas of 12.8kr million ($1.5 million U.S. dollars) with an interest rate of 2.000% (one month STIBOR of 0.000%), borrowings denominated in British pounds sterling of £68.3 million ($92.1 million U.S. dollars) with an interest rate of 2.063% (one month GBP LIBOR of 0.063%), borrowings denominated in Australian dollars of A$36.6 million ($26.4 million U.S. dollars) with an interest rate of 2.250% (one month AUD Screen Rate of 0.250%) and borrowings denominated in Euros of €138.6 million ($160.6 million U.S. dollars) with an interest rate of 2.000% (one month EURIBOR of 0.000%). The borrowings denominated in foreign currencies were translated into U.S. dollars based on the spot rate at the relevant balance sheet date. The impact resulting from changes in foreign exchange rates on the February 2019 Credit Facility borrowings is included in "Net unrealized appreciation (depreciation) - foreign currency transactions" in the our Unaudited Consolidated Statements of Operations.
The fair values of the borrowings outstanding under the February 2019 Credit Facility are based on a market yield approach and current interest rates, which are Level 3 inputs to the market yield model. As of September 30, 2021, the total fair value of the borrowings outstanding under the February 2019 Credit Facility was $662.7 million. See Note 5 to our Unaudited Consolidated Financial Statements for additional information regarding the February 2019 Credit Facility.
August 2025 Notes
On August 3, 2020, we entered into a Note Purchase Agreement (the “August 2020 NPA”) with Massachusetts Mutual Life Insurance Company governing the issuance of (1) $50.0 million in aggregate principal amount of Series A senior unsecured notes due August 2025 (the “Series A Notes due 2025”) with a fixed interest rate of 4.66% per year, and (2) up to $50.0 million in aggregate principal amount of additional senior unsecured notes due August 2025 with a fixed interest rate per year to be determined (the “Additional Notes” and, collectively with the Series A Notes due 2025, the “August 2025 Notes”), in each case, to qualified institutional investors in a private placement. An aggregate principal amount of $25.0 million of the Series A Notes due 2025 was issued on September 24, 2020 and an aggregate principal amount of $25.0 million of the Series A Notes due 2025 was issued on September 29, 2020, both of which will mature on August 4, 2025 unless redeemed, purchased or prepaid prior to such date by us in accordance with their terms. Interest on the August 2025 Notes is due semiannually in
84

March and September, beginning in March 2021. In addition, we are obligated to offer to repay the August 2025 Notes at par (plus accrued and unpaid interest to, but not including, the date of prepayment) if certain change in control events occur. Subject to the terms of the August 2020 NPA, we may redeem the August 2025 Notes in whole or in part at any time or from time to time at our option at par plus accrued interest to the prepayment date and, if redeemed on or before November 3, 2024, a make-whole premium. The August 2025 Notes are guaranteed by certain of our subsidiaries, and are our general unsecured obligations that rank pari passu with all outstanding and future unsecured unsubordinated indebtedness issued by us.
On November 4, 2020, we amended the August 2020 NPA to reduce the aggregate principal amount of unissued Additional Notes from $50.0 million to $25.0 million.
The August 2020 NPA contains certain representations and warranties, and various covenants and reporting requirements customary for senior unsecured notes issued in a private placement, including, without limitation, affirmative and negative covenants such as information reporting, maintenance of our status as a BDC within the meaning of the 1940 Act, certain restrictions with respect to transactions with affiliates, fundamental changes, changes of line of business, permitted liens, investments and restricted payments, minimum shareholders’ equity, maximum net debt to equity ratio and minimum asset coverage ratio. The August 2020 NPA also contains customary events of default with customary cure and notice periods, including, without limitation, nonpayment, incorrect representation in any material respect, breach of covenant, cross-default under our other indebtedness or that of our subsidiary guarantors, certain judgements and orders, and certain events of bankruptcy. Upon the occurrence of an event of default, the holders of at least 66-2/3% in principal amount of the August 2025 Notes at the time outstanding may declare all August 2025 Notes then outstanding to be immediately due and payable. As of September 30, 2021, we were in compliance with all covenants under the August 2020 NPA.
The August 2025 Notes were offered in reliance on Section 4(a)(2) of the Securities Act of 1933, as amended (the “Securities Act”). The August 2025 Notes have not and will not be registered under the Securities Act or any state securities laws and, unless so registered, may not be offered or sold in the United States except pursuant to an exemption from, or in a transaction not subject to, the registration requirements of the Securities Act, as applicable.
As of September 30, 2021, the fair value of the outstanding August 2025 Notes was $50.0 million. The fair value determination of the August 2025 Notes was based on a market yield approach and current interest rates, which are Level 3 inputs to the market yield model.
November Notes
On November 4, 2020, we entered into a Note Purchase Agreement (the “November 2020 NPA”) governing the issuance of (1) $62.5 million in aggregate principal amount of Series B senior unsecured notes due November 2025 (the “Series B Notes”) with a fixed interest rate of 4.25% per year and (2) $112.5 million in aggregate principal amount of Series C senior unsecured notes due November 2027 (the “Series C Notes,” and, collectively with the Series B Notes, the “November Notes”) with a fixed interest rate of 4.75% per year, in each case, to qualified institutional investors in a private placement. Each stated interest rate is subject to a step up of (x) 0.75% per year, to the extent the applicable November Notes do not satisfy certain investment grade conditions and/or (y) 1.50% per year, to the extent the ratio of our secured debt to total assets exceeds specified thresholds, measured as of each fiscal quarter end. The November Notes were delivered and paid for on November 5, 2020.
The Series B Notes will mature on November 4, 2025, and the Series C Notes will mature on November 4, 2027 unless redeemed, purchased or prepaid prior to such date by us in accordance with their terms. Interest on the November Notes is due semiannually in May and November, beginning in May 2021. In addition, we are obligated to offer to repay the November Notes at par (plus accrued and unpaid interest to, but not including, the date of prepayment) if certain change in control events occur. Subject to the terms of the November 2020 NPA, we may redeem the Series B Notes and the Series C Notes in whole or in part at any time or from time to time at our option at par plus accrued interest to the prepayment date and, if redeemed on or before May 4, 2025, with respect to the Series B Notes, or on or before May 4, 2027, with respect to the Series C Notes, a make-whole premium. The November Notes are guaranteed by certain of our subsidiaries, and are our general unsecured obligations that rank pari passu with all outstanding and future unsecured unsubordinated indebtedness issued by us.
The November 2020 NPA contains certain representations and warranties, and various covenants and reporting requirements customary for senior unsecured notes issued in a private placement, including, without limitation, affirmative and negative covenants such as information reporting, maintenance of our status as a BDC within the meaning of the 1940 Act, certain restrictions with respect to transactions with affiliates, fundamental changes, changes of line of business, permitted liens, investments and restricted payments, minimum shareholders’ equity, maximum net debt to equity ratio and minimum asset coverage ratio. The November 2020 NPA also contains customary events of default with customary cure and notice periods, including, without limitation, nonpayment, incorrect representation in any material respect, breach of covenant, cross-default
85

under our other indebtedness or that of our subsidiary guarantors, certain judgements and orders, and certain events of bankruptcy. Upon the occurrence of an event of default, the holders of at least 66-2/3% in principal amount of the November Notes at the time outstanding may declare all November Notes then outstanding to be immediately due and payable. As of September 30, 2021, we were in compliance with all covenants under the November 2020 NPA.
The November Notes were offered in reliance on Section 4(a)(2) of the Securities Act. The November Notes have not and will not be registered under the Securities Act or any state securities laws and, unless so registered, may not be offered or sold in the United States except pursuant to an exemption from, or in a transaction not subject to, the registration requirements of the Securities Act, as applicable.
As of September 30, 2021, the fair value of the outstanding Series B Notes and the Series C Notes was $62.5 million and $112.5 million, respectively. The fair value determinations of the Series B Notes and Series C Notes were based on a market yield approach and current interest rates, which are Level 3 inputs to the market yield model.
February Notes
On February 25, 2021, we entered into a Note Purchase Agreement (the “February 2021 NPA”) governing the issuance of (1) $80.0 million in aggregate principal amount of Series D senior unsecured notes due February 26, 2026 (the “Series D Notes”) with a fixed interest rate of 3.41% per year and (2) $70.0 million in aggregate principal amount of Series E senior unsecured notes due February 26, 2028 (the “Series E Notes” and, collectively with the Series D Notes, the “February Notes”) with a fixed interest rate of 4.06% per year, in each case, to qualified institutional investors in a private placement. Each stated interest rate is subject to a step up of (x) 0.75% per year, to the extent the applicable February Notes do not satisfy certain investment grade rating conditions and/or (y) 1.50% per year, to the extent the ratio of our secured debt to total assets exceeds specified thresholds, measured as of each fiscal quarter end. The February Notes were delivered and paid for on February 26, 2021.
The Series D Notes will mature on February 26, 2026, and the Series E Notes will mature on February 26, 2028 unless redeemed, purchased or prepaid prior to such date by us in accordance with the terms of the February 2021 NPA. Interest on the February Notes is due semiannually in February and August of each year, beginning in August 2021. In addition, we are obligated to offer to repay the February Notes at par (plus accrued and unpaid interest to, but not including, the date of prepayment) if certain change in control events occur. Subject to the terms of the February 2021 NPA, we may redeem the Series D Notes and the Series E Notes in whole or in part at any time or from time to time at our option at par plus accrued interest to the prepayment date and, if redeemed on or before August 26, 2025, with respect to the Series D Notes, or on or before August 26, 2027, with respect to the Series E Notes, a make-whole premium. The February Notes are guaranteed by certain of our subsidiaries, and are our general unsecured obligations that rank pari passu with all outstanding and future unsecured unsubordinated indebtedness issued by us.
The February 2021 NPA contains certain representations and warranties, and various covenants and reporting requirements customary for senior unsecured notes issued in a private placement, including, without limitation, information reporting, maintenance of our status as a BDC within the meaning of the 1940 Act, and certain restrictions with respect to transactions with affiliates, fundamental changes, changes of line of business, permitted liens, investments and restricted payments. In addition, the February 2021 NPA contains the following financial covenants: (a) maintaining a minimum obligors’ net worth, measured as of each fiscal quarter end; (b) not permitting our asset coverage ratio, as of the date of the incurrence of any debt for borrowed money or the making of any cash dividend to shareholders, to be less than the statutory minimum then applicable to us under the 1940 Act; and (c) not permitting our net debt to equity ratio to exceed 2.0x, measured as of each fiscal quarter end.
The February 2021 NPA also contains customary events of default with customary cure and notice periods, including, without limitation, nonpayment, incorrect representation in any material respect, breach of covenant, cross-default under other indebtedness or that of our subsidiary guarantors, certain judgements and orders, and certain events of bankruptcy. Upon the occurrence of certain events of default, the holders of at least 66-2/3% in principal amount of the February Notes at the time outstanding may declare all February Notes then outstanding to be immediately due and payable. As of September 30, 2021, we were in compliance with all covenants under the February 2021 NPA.
The February Notes were offered in reliance on Section 4(a)(2) of the Securities Act. The February Notes have not and will not be registered under the Securities Act or any state securities laws and, unless so registered, may not be offered or sold in the United States except pursuant to an exemption from, or in a transaction not subject to, the registration requirements of the Securities Act, as applicable.
86

As of September 30, 2021, the fair value of the outstanding Series D Notes and the Series E Notes was $80.0 million and $70.0 million, respectively. The fair value determinations of the Series D Notes and Series E Notes were based on a market yield approach and current interest rates, which are Level 3 inputs to the market yield model.
Share Repurchases
On February 27, 2020, the Board approved an open-market share repurchase program for the 2020 fiscal year (the “2020 Share Repurchase Program”). Under the 2020 Share Repurchase Program, we were authorized during fiscal year 2020 to repurchase up to a maximum of 5.0% of the amount of shares outstanding as of February 27, 2020 if shares traded below NAV per share, subject to liquidity and regulatory constraints.
Purchases under the 2020 Share Repurchase Program were made in open-market transactions and included transactions being executed by a broker selected by us that had been delegated the authority to repurchase shares on our behalf in the open market in accordance with applicable rules under the Exchange Act, including Rules 10b5-1 and 10b-18 thereunder, and pursuant to, and under the terms and limitations of, the 2020 Share Repurchase Program. During the nine months ended September 30, 2020, we repurchased a total of 989,050 shares of our common stock in the open market under the 2020 Share Repurchase Program at an average price of $7.21 per share including broker commissions.
In addition, in connection with the closing of the MVC Acquisition on December 23, 2020, we committed to make open-market purchases of shares of our 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 our then most recently disclosed NAV per share. Any repurchases pursuant to the authorized program will occur during the 12-month period that commenced upon the filing of our 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 and nine months ended September 30, 2021, we did not repurchase any shares under the authorized program.
Distributions to Stockholders
We intend to pay quarterly distributions to our stockholders out of assets legally available for distribution. We have adopted a dividend reinvestment plan (“DRIP”) that provides for reinvestment of dividends on behalf of our stockholders, unless a stockholder elects to receive cash. As a result, when we declare a dividend, stockholders who have not opted out of the DRIP will have their dividends automatically reinvested in shares of our common stock, rather than receiving cash dividends.
We have elected to be treated as a RIC under the Code, and intend to make the required distributions to our stockholders as specified therein. In order to maintain our tax treatment as a RIC and to obtain RIC tax benefits, we must meet certain minimum distribution, source-of-income and asset diversification requirements. If such requirements are met, then we are generally required to pay income taxes only on the portion of our taxable income and gains we do not distribute (actually or constructively) and certain built-in gains. We have historically met our minimum distribution requirements and continually monitor our distribution requirements with the goal of ensuring compliance with the Code. We can offer no assurance that we will achieve results that will permit the payment of any level of cash distributions and our ability to make distributions will be limited by the asset coverage requirement and related provisions under the 1940 Act and contained in any applicable indenture or financing agreement and related supplements. In addition, in order to satisfy the annual distribution requirement applicable to RICs, we may declare a significant portion of our dividends in shares of our common stock instead of in cash. As long as a portion of such dividend is paid in cash (which portion may be as low as 20% of such dividend under published guidance from the Internal Revenue Service) and certain requirements are met, the entire distribution will be treated as a dividend for U.S. federal income tax purposes. As a result, a stockholder generally would be subject to tax on 100% of the fair market value of the dividend on the date the dividend is received by the stockholder in the same manner as a cash dividend, even though most of the dividend was paid in shares of our common stock.
The minimum distribution requirements applicable to RICs require us to distribute to our stockholders each year at least 90% of our investment company taxable income, or ICTI, as defined by the Code. Depending on the level of ICTI and net capital gain, if any, earned in a tax year, we may choose to carry forward ICTI in excess of current year distributions into the next tax year and pay a 4% U.S. federal excise tax on such excess. Any such carryover ICTI must be distributed before the end of the next tax year through a dividend declared prior to filing the final tax return related to the year which generated such ICTI.
ICTI generally differs from net investment income for financial reporting purposes due to temporary and permanent differences in the recognition of income and expenses. We may be required to recognize ICTI in certain circumstances in which we do not receive cash. For example, if we hold debt obligations that are treated under applicable tax rules as having original issue discount (such as debt instruments issued with warrants), we must include in ICTI each year a portion of the original issue discount that accrues over the life of the obligation, regardless of whether cash representing such income is received by us in the same taxable year. We may also have to include in ICTI other amounts that we have not yet received in cash, such as (i) PIK
87

interest income and (ii) interest income from investments that have been classified as non-accrual for financial reporting purposes. Interest income on non-accrual investments is not recognized for financial reporting purposes, but generally is recognized in ICTI. Because any original issue discount or other amounts accrued will be included in our ICTI for the year of accrual, we may be required to make a distribution to our stockholders in order to satisfy the minimum distribution requirements, even though we will not have received and may not ever receive any corresponding cash amount. ICTI also excludes net unrealized appreciation or depreciation, as investment gains or losses are not included in taxable income until they are realized.
Recent Developments
Subsequent to September 30, 2021, we made approximately $238.5 million of new commitments, of which $164.4 million closed and funded. The $164.4 million of investments consist of $124.9 million of first lien senior secured debt investments, $14.5 million of second lien senior secured and subordinated debt investments and $25.0 million of equity investments. The weighted average yield of the debt investments was 6.7%. In addition, we funded $3.8 million of previously committed delayed draw term loans.
Effective on November 4, 2021, we increased our aggregate commitments under the February 2019 Credit Facility to $875.0 million from $800.0 million pursuant to the accordion feature under the February 2019 Credit Facility, which allows for an increase in the total commitments to an aggregate of $1.2 billion subject to certain conditions and the satisfaction of specified financial covenants.
On November 9, 2021, the Board declared a quarterly distribution of $0.22 per share payable on December 1, 2021 to holders of record as of November 24, 2021.
Critical Accounting Policies and Use of Estimates
The preparation of our unaudited financial statements in accordance with U.S. GAAP requires management to make certain estimates and assumptions that affect the reported amounts of assets and liabilities at the date of the financial statements and the reported amounts of revenues and expenses for the periods covered by such financial statements. We have identified investment valuation and revenue recognition as our most critical accounting estimates. On an ongoing basis, we evaluate our estimates, including those related to the matters described below. These estimates are based on the information that is currently available to us and on various other assumptions that we believe to be reasonable under the circumstances. Actual results could differ materially from those estimates under different assumptions or conditions. A discussion of our critical accounting policies follows.
Investment Valuation
The most significant estimate inherent in the preparation of our financial statements is the valuation of investments and the related amounts of unrealized appreciation and depreciation of investments recorded. We have a valuation policy, as well as established and documented processes and methodologies for determining the fair values of portfolio company investments on a recurring (at least quarterly) basis in accordance with the 1940 Act and FASB ASC Topic 820, Fair Value Measurements and Disclosures, or ASC Topic 820. Our current valuation policy and processes were established by Barings and have been approved by the Board.
Under ASC Topic 820, fair value is the price that would be received to sell an asset or paid to transfer a liability in an orderly transaction between a willing buyer and a willing seller at the measurement date. For our portfolio securities, fair value is generally the amount that we might reasonably expect to receive upon the current sale of the security. The fair value measurement assumes that the sale occurs in the principal market for the security, or in the absence of a principal market, in the most advantageous market for the security. If no market for the security exists or if we do not have access to the principal market, the security should be valued based on the sale occurring in a hypothetical market.
Under ASC Topic 820, there are three levels of valuation inputs, as follows:
Level 1 Inputs – include quoted prices (unadjusted) in active markets for identical assets or liabilities.
Level 2 Inputs – include quoted prices for similar assets and liabilities in active markets, and inputs that are observable for the asset or liability, either directly or indirectly, for substantially the full term of the financial instrument.
Level 3 Inputs – include inputs that are unobservable and significant to the fair value measurement.
A financial instrument is categorized within the ASC Topic 820 valuation hierarchy based upon the lowest level of input to the valuation process that is significant to the fair value measurement. For example, a Level 3 fair value measurement may
88

include inputs that are observable (Levels 1 and 2) and unobservable (Level 3). Therefore, unrealized appreciation and depreciation related to such investments categorized as Level 3 investments within the tables in the notes to our consolidated financial statements may include changes in fair value that are attributable to both observable inputs (Levels 1 and 2) and unobservable inputs (Level 3).
Our investment portfolio includes certain debt and equity instruments of privately held companies for which quoted prices or other observable inputs falling within the categories of Level 1 and Level 2 are generally not available. In such cases, we determine the fair value of our investments in good faith primarily using Level 3 inputs. In certain cases, quoted prices or other observable inputs exist, and if so, we assess the appropriateness of the use of these third-party quotes in determining fair value based on (i) our understanding of the level of actual transactions used by the broker to develop the quote and whether the quote was an indicative price or binding offer and (ii) the depth and consistency of broker quotes and the correlation of changes in broker quotes with underlying performance of the portfolio company.
There is no single standard for determining fair value in good faith, as fair value depends upon the specific circumstances of each individual investment. The recorded fair values of our Level 3 investments may differ significantly from fair values that would have been used had an active market for the securities existed. In addition, changes in the market environment and other events that may occur over the life of the investments may cause the gains or losses ultimately realized on these investments to be different than the valuations currently assigned.
Investment Valuation Process
Barings has established a pricing committee that is, subject to the oversight of the Board, responsible for the approval, implementation and oversight of the processes and methodologies that relate to the pricing and valuation of assets we hold. Barings uses independent third-party providers to price the portfolio, but in the event an acceptable price cannot be obtained from an approved external source, Barings will utilize alternative methods in accordance with internal pricing procedures established by Barings' pricing committee.
At least annually, Barings conducts reviews of the primary pricing vendors to validate that the inputs used in the vendors’ pricing process are deemed to be market observable. While Barings is not provided access to proprietary models of the vendors, the reviews have included on-site walkthroughs of the pricing process, methodologies and control procedures for each asset class and level for which prices are provided. The review also includes an examination of the underlying inputs and assumptions for a sample of individual securities across asset classes, credit rating levels and various durations, a process Barings continues to perform annually. In addition, the pricing vendors have an established challenge process in place for all security valuations, which facilitates identification and resolution of prices that fall outside expected ranges. Barings believes that the prices received from the pricing vendors are representative of prices that would be received to sell the assets at the measurement date (i.e., exit prices).
Our money market fund investments are generally valued using Level 1 inputs and our equity investments listed on an exchange or on the NASDAQ National Market System are valued using Level 1 inputs, using the last quoted sale price of that day. Our syndicated senior secured loans and structured product investments are generally valued using Level 2 inputs, which are generally valued at the bid quotation obtained from dealers in loans by an independent pricing service. Our middle-market, private debt and equity investments are generally valued using Level 3 inputs.
Independent Valuation
The fair value of loans and equity investments that are not syndicated or for which market quotations are not readily available, including middle-market loans, are generally submitted to independent providers to perform an independent valuation on those loans and equity investments as of the end of each quarter. Such loans and equity investments are initially held at cost, as that is a reasonable approximation of fair value on the acquisition date, and monitored for material changes that could affect the valuation (for example, changes in interest rates or the credit quality of the borrower). At the quarter end following the initial acquisition, such loans and equity investments are generally sent to a valuation provider which will determine the fair value of each investment. The independent valuation providers apply various methods (synthetic rating analysis, discounting cash flows, and re-underwriting analysis) to establish the rate of return a market participant would require (the “discount rate”) as of the valuation date, given market conditions, prevailing lending standards and the perceived credit quality of the issuer. Future expected cash flows for each investment are discounted back to present value using these discount rates in the discounted cash flow analysis. A range of values will be provided by the valuation provider and Barings will determine the point within that range that it will use in making valuation recommendations to the Board, and will report to the Board on its rationale for each such determination. Barings uses its internal valuation model as a comparison point to validate the price range provided by the valuation provider and, where applicable, in determining the point within that range that it will use in making valuation recommendations to the Board. If Barings’ pricing committee disagrees with the price range provided, it may make a
89

fair value recommendation to the Board that is outside of the range provided by the independent valuation provider, and will notify the Board of any such override and the reasons therefore. In certain instances, we may determine that it is not cost-effective, and as a result is not in the stockholders' best interests, to request an independent valuation firm to perform an independent valuation on certain investments. Such instances include, but are not limited to, situations where the fair value of the investment in the portfolio company is determined to be insignificant relative to the total investment portfolio. Pursuant to these procedures, the Board determines in good faith whether our investments were valued at fair value in accordance with our valuation policies and procedures and the 1940 Act based on, among other things, the input of Barings, our Audit Committee and the independent valuation firm.
The SEC has adopted new Rule 2a-5 under the 1940 Act. This rule establishes requirements for determining fair value in good faith for purposes of the 1940 Act. We will comply with the new rule’s valuation requirements on or before the SEC’s compliance date in 2022.
Valuation Techniques
Our valuation techniques are based upon both observable and unobservable pricing inputs. Observable inputs reflect market data obtained from independent sources, while unobservable inputs reflect our market assumptions. Our assessment of the significance of a particular input to the fair value measurement in its entirety requires judgment and considers factors specific to the financial instrument. An independent pricing service provider is the preferred source of pricing a loan, however, to the extent the independent pricing service provider price is unavailable or not relevant and reliable, we will utilize alternative approaches such as broker quotes or manual prices. We attempt to maximize the use of observable inputs and minimize the use of unobservable inputs. The availability of observable inputs can vary from investment to investment and is affected by a wide variety of factors, including the type of security, whether the security is new and not yet established in the marketplace, the liquidity of markets and other characteristics particular to the security.
Valuation of Investment in Jocassee, Thompson Rivers, Waccamaw River and MVC Private Equity Fund LP
We estimate the fair value of our investments in Jocassee, Thompson Rivers, Waccamaw River and MVC Private Equity Fund LP using the NAV of each company and our ownership percentage. The NAV is determined in accordance with the specialized accounting guidance for investment companies.
Revenue Recognition
Interest and Dividend Income
Interest income, including amortization of premium and accretion of discount, is recorded on the accrual basis to the extent that such amounts are expected to be collected. Generally, when interest and/or principal payments on a loan become past due, or if we otherwise do not expect the borrower to be able to service its debt and other obligations, we will place the loan on non-accrual status and will generally cease recognizing interest income on that loan for financial reporting purposes until all principal and interest have been brought current through payment or due to a restructuring such that the interest income is deemed to be collectible. The cessation of recognition of such interest will negatively impact the reported fair value of the investment. We write off any previously accrued and uncollected interest when it is determined that interest is no longer considered collectible. Dividend income is recorded on the ex-dividend date.
We may have to include interest income in our ICTI, including original issue discount income, from investments that have been classified as non-accrual for financial reporting purposes. Interest income on non-accrual investments is not recognized for financial reporting purposes, but generally is recognized in ICTI. As a result, we may be required to make a distribution to our stockholders in order to satisfy the minimum distribution requirements to maintain our RIC tax treatment, even though we will not have received and may not ever receive any corresponding cash amount. Additionally, any loss recognized by us for U.S. federal income tax purposes on previously accrued interest income will be treated as a capital loss.
Fee Income
Origination, facility, commitment, consent and other advance fees received in connection with the origination of a loan, or Loan Origination Fees, are recorded as deferred income and recognized as investment income over the term of the loan. Upon prepayment of a loan, any unamortized Loan Origination Fees are recorded as investment income. In the general course of our business, we receive certain fees from portfolio companies, which are non-recurring in nature. Such fees include loan prepayment penalties, advisory, loan amendment and other fees, and are recorded as investment income when earned.
90

Fee income for the three and nine months ended September 30, 2021 and 2020 was as follows:
Three Months
Ended
Three Months
Ended
Nine Months Ended
Nine Months Ended
September 30, 2021 September 30, 2020 September 30, 2021 September 30, 2020
Recurring Fee Income:
Amortization of loan origination fees $ 1,144,236  $ 503,114  $ 3,386,163  $ 1,396,253 
Management, valuation and other fees 541,824  174,416  1,671,049  504,171 
Total Recurring Fee Income 1,686,060  677,530  5,057,212  1,900,424 
Non-Recurring Fee Income:
Prepayment fees 242,418  —  291,934  84,151 
Acceleration of unamortized loan origination fees 1,929,663  31,549  3,200,680  280,123 
Advisory, loan amendment and other fees 630,205  60,047  640,150  115,854 
Total Non-Recurring Fee Income 2,802,286  91,596  4,132,764  480,128 
Total Fee Income $ 4,488,346  $ 769,126  $ 9,189,976  $ 2,380,552 
Payment-in-Kind (PIK) Interest Income
We currently hold, and expect to hold in the future, some loans in our portfolio that contain PIK interest provisions. PIK interest, computed at the contractual rate specified in each loan agreement, is periodically added to the principal balance of the loan, rather than being paid to us in cash, and is recorded as interest income. Thus, the actual collection of PIK interest may be deferred until the time of debt principal repayment.
PIK interest, which is a non-cash source of income at the time of recognition, is included in our taxable income and therefore affects the amount we are required to distribute to our stockholders to maintain our tax treatment as a RIC for U.S. federal income tax purposes, even though we have not yet collected the cash. Generally, when current cash interest and/or principal payments on a loan become past due, or if we otherwise do not expect the borrower to be able to service its debt and other obligations, we will place the loan on non-accrual status and will generally cease recognizing PIK interest income on that loan for financial reporting purposes until all principal and interest have been brought current through payment or due to a restructuring such that the interest income is deemed to be collectible. We write off any previously accrued and uncollected PIK interest when it is determined that the PIK interest is no longer collectible.
We may have to include in our ICTI, PIK interest income from investments that have been classified as non-accrual for financial reporting purposes. Interest income on non-accrual investments is not recognized for financial reporting purposes, but generally is recognized in ICTI. As a result, we may be required to make a distribution to our stockholders in order to satisfy the minimum distribution requirements, even though we will not have received and may not ever receive any corresponding cash amount.

91

Off-Balance Sheet Arrangements
In the normal course of business, we are party to financial instruments with off-balance sheet risk, consisting primarily of unused commitments to extend financing to our portfolio companies. Since commitments may expire without being drawn upon, the total commitment amount does not necessarily represent future cash requirements. As of September 30, 2021 and December 31, 2020, we believed that we had adequate financial resources to satisfy our unfunded commitments. The balances of unused commitments to extend financing as of September 30, 2021 and December 31, 2020 were as follows:
Portfolio Company Investment Type September 30, 2021 December 31, 2020
Acclime Holdings HK Limited(1)(2) Delayed Draw Term Loan $ 3,750,000  $ — 
ADE Holding(1)(3) Committed Capex Line —  91,814 
Air Comm Corporation, LLC(1)(2) Delayed Draw Term Loan 405,027  — 
Anju Software, Inc.(1) Delayed Draw Term Loan —  1,981,371 
Arch Global Precision, LLC(1) Delayed Draw Term Loan —  4,193,475 
Beacon Pointe Advisors, LLC(1) Delayed Draw Term Loan —  363,636 
BigHand UK Bidco Limited(1)(4) Acquisition Capex Facility 376,644  — 
Bounteous, Inc.(1)(2) Delayed Draw Term Loan 613,636  — 
British Engineering Services Holdco Limited(1)(4) Acquisition Facility —  7,006,008 
British Engineering Services Holdco Limited(1)(4) Bridge Revolver 609,766  618,177 
Canadian Orthodontic Partners Corp(1)(2)(6) Delayed Draw Term Loan 166,198  — 
Centralis Finco S.a.r.l.(1)(3) Acquisition Facility 469,765  495,950 
Classic Collision (Summit Buyer, LLC)(1)(2) Delayed Draw Term Loan 486,189  1,672,446 
CM Acquisitions Holdings Inc.(1) Delayed Draw Term Loan 1,247,359  1,551,602 
Contabo Finco S.À R.L(1)(3) Delayed Draw Term Loan 216,163  228,211 
Coyo Uprising GmbH(1)(2)(3) Delayed Draw Term Loan 910,613  — 
CSL Dualcom(1)(4) Delayed Draw Term Loan 993,478  1,007,182 
Dart Buyer, Inc.(1)(2) Delayed Draw Term Loan 2,430,569  2,430,569 
DreamStart Bidco SAS(1)(3) Acquisition Facility 943,074  995,640 
Dune Group(1)(2)(3) Delayed Draw Term Loan 1,390,740  — 
Dwyer Instruments, Inc.(1)(2) Delayed Draw Term Loan 1,217,712  — 
Eclipse Business Capital, LLC(1) Revolver 13,636,364  — 
EPS NASS Parent, Inc.(1) Delayed Draw Term Loan 583,051  — 
F24 (Stairway BidCo GmbH)(1)(3) Acquisition Facility 412,879  323,840 
Fineline Technologies, Inc.(1) Delayed Draw Term Loan 180,000  — 
FitzMark Buyer, Inc.(1) Delayed Draw Term Loan —  1,470,588 
Foundation Risk Partners, Corp.(1) Delayed Draw Term Loan 3,444,445  4,984,771 
FragilePak LLC(1) Delayed Draw Term Loan 2,354,167  — 
Heartland, LLC(1)(2) Delayed Draw Term Loan —  5,347,666 
Heilbron (f/k/a Sucsez (Bolt Bidco B.V.))(1)(2)(3) Accordion Facility —  10,225,081 
Home Care Assistance, LLC(1) Delayed Draw Term Loan 173,697  — 
IGL Holdings III Corp.(1)(2) Delayed Draw Term Loan 3,408,219  5,914,219 
Innovad Group II BV(1)(2)(3) Delayed Draw Term Loan 1,859,447  — 
INOS 19-090 GmbH(1)(2)(3) Acquisition Facility 2,583,951  2,727,980 
Jocassee Partners LLC Joint Venture 20,000,000  30,000,000 
Kano Laboratories LLC(1) Delayed Draw Term Loan 4,543,950  4,543,950 
Kene Acquisition, Inc.(1) Delayed Draw Term Loan —  322,928 
LAF International(1)(2)(3) Acquisition Facility 347,685  — 
LivTech Purchaser, Inc.(1)(2) Delayed Draw Term Loan 81,977  — 
MC Group Ventures Corporation(1) Delayed Draw Term Loan 817,249  — 
92

Portfolio Company Investment Type September 30, 2021 December 31, 2020
Modern Star Holdings Bidco Pty Limited(1)(2)(5) Capex Term Loan 2,168,002  2,315,967 
Murphy Midco Limited(1)(4) Delayed Draw Term Loan 3,256,552  3,301,472 
Navia Benefit Solutions, Inc.(1) Delayed Draw Term Loan 1,600,000  — 
OG III B.V.(1)(2)(3) Acquisition Capex Facility 905,556  — 
Options Technology Ltd.(1) Delayed Draw Term Loan —  2,604,080 
Pacific Health Supplies Bidco Pty Limited(1)(2)(5) CapEx Term Loan 1,274,275  1,535,025 
PDQ.Com Corporation(1)(2) Delayed Draw Term Loan 289,389  — 
Premier Technical Services Group(1)(4) Acquisition Facility —  1,197,505 
Premium Invest(1)(2)(3) Acquisition Facility 3,340,094  — 
Protego Bidco B.V.(1)(2)(3) Delayed Draw Term Loan 860,413  — 
PSC UK Pty Ltd.(1)(4) Acquisition Facility 527,876  535,157 
QPE7 SPV1 BidCo Pty Ltd(1)(5) Acquisition Capex Facility 732,210  — 
Questel Unite(1)(2)(3) Cap Acquisition Facility —  10,300,913 
Radwell International, LLC(1) Delayed Draw Term Loan —  3,235,947 
Rep Seko Merger Sub LLC(1) Delayed Draw Term Loan 1,454,545  1,454,546 
Reward Gateway (UK) Ltd(1)(2)(4) Acquisition Facility 2,247,224  — 
Safety Products Holdings, LLC(1)(2) Delayed Draw Term Loan —  6,467,345 
Security Holdings B.V.(1)(2)(3) Delayed Draw Term Loan 2,317,900  — 
Security Holdings B.V.(1)(2)(3) Revolver 1,158,950  — 
Smile Brands Group, Inc.(1)(2) Delayed Draw Term Loan 654,691  2,148,691 
Springbrook Software (SBRK Intermediate, Inc.)(1) Delayed Draw Term Loan 2,372,538  3,489,026 
SSCP Pegasus Midco Limited(1)(4) Delayed Draw Term Loan 13,207,365  13,389,546 
The Hilb Group, LLC(1)(2) Delayed Draw Term Loan 4,070,833  5,545,939 
Transit Technologies LLC(1)(2) Delayed Draw Term Loan 1,857,017  6,035,305 
USLS Acquisition, Inc.(1) Delayed Draw Term Loan —  450,466 
Utac Ceram(1)(2)(3) Delayed Draw Term Loan —  743,327 
Waccamaw River(2) Joint Venture 15,680,000  — 
W2O Holdings, Inc.(1) Delayed Draw Term Loan 3,831,517  5,989,298 
Total unused commitments to extend financing $ 134,460,961  $ 159,236,659 
(1)Our estimate of the fair value of the current investments in these portfolio companies includes an analysis of the fair value of any unfunded commitments.
(2)Represents a commitment to extend financing to a portfolio company where one or more of our current investments in the portfolio company are carried at less than cost.
(3)Actual commitment amount is denominated in Euros. Commitment was translated into U.S. dollars based on the spot rate at the relevant balance sheet date.
(4)Actual commitment amount is denominated in British pounds sterling. Commitment was translated into U.S. dollars based on the spot rate at the relevant balance sheet date.
(5)Actual commitment amount is denominated in Australian dollars. Commitment was translated into U.S. dollars based on the spot rate at the relevant balance sheet date.
(6)Actual commitment amount is denominated in Canadian dollars. Commitment was translated into U.S. dollars based on the spot rate at the relevant balance sheet date.
In the normal course of business, we guarantee certain obligations in connection with our portfolio companies (in particular, certain controlled portfolio companies). Under these guarantee arrangements, payments may be required to be made to third parties if such guarantees are called upon or if the portfolio companies were to default on their related obligations, as applicable. As of September 30, 2021 and December 31, 2020, we had guaranteed €9.9 million ($11.5 million U.S. dollars and $12.1 million U.S. dollars, respectively) relating to credit facilities among Erste Bank and MVC Automotive Group Gmbh, or MVC Auto. We would be required to make payments to Erste Bank if MVC Auto were to default on their related payment obligations. None of the credit facility guarantees are recorded as a liability on our Unaudited and Audited Consolidated Balance Sheets. As such, the credit facility liabilities are considered in the valuation of our investments in MVC Auto. The guarantees denominated in foreign currencies were translated into U.S. dollars based on the spot rate at the relevant balance sheet date.
93

In addition, as of December 31, 2020, the Company agreed to cash collateralize a $3.5 million letter of credit for Security Holdings B.V. The $3.5 million cash collateralization was reflected as "Restricted cash" on the accompanying Audited Consolidated Balance Sheet as of December 31, 2020. The letter of credit expired on April 30, 2021, and as of September 30, 2021, none of the Company’s cash was restricted.
Item 3. Quantitative and Qualitative Disclosures About Market Risk.
We are subject to market risk. Market risk includes risks that arise from changes in interest rates, commodity prices, equity prices and other market changes that affect market sensitive instruments. The prices of securities held by us may decline in response to certain events, including those directly involving the companies we invest in; conditions affecting the general economy; overall market changes; global pandemics; legislative reform; local, regional, national or global political, social or economic instability; and interest rate fluctuations.
In addition, we are subject to interest rate risk. Interest rate risk is defined as the sensitivity of our current and future earnings to interest rate volatility, variability of spread relationships, the difference in re-pricing intervals between our assets and liabilities and the effect that interest rates may have on our cash flows. Changes in the general level of interest rates can affect our net interest income, which is the difference between the interest income earned on interest earning assets and our interest expense incurred in connection with our interest bearing debt and liabilities. Changes in interest rates can also affect, among other things, our ability to acquire and originate loans and securities and the value of our investment portfolio. Our net investment income is affected by fluctuations in various interest rates, including LIBOR, EURIBOR, GBP LIBOR, BBSY, STIBOR, CDOR, and SONIA. Our risk management systems and procedures are designed to identify and analyze our risk, to set appropriate policies and limits and to continually monitor these risks. We regularly measure exposure to interest rate risk and determine whether or not any hedging transactions are necessary to mitigate exposure to changes in interest rates. As of September 30, 2021, we were not a party to any interest rate hedging arrangements.
In connection with the COVID-19 pandemic, the U.S. Federal Reserve and other central banks reduced certain interest rates and LIBOR decreased. A prolonged reduction in interest rates will reduce our gross investment income and could result in a decrease in our net investment income if such decreases in LIBOR are not offset by a corresponding increase in the spread over LIBOR that we earn on any portfolio investments, a decrease in in our operating expenses, including with respect to our income incentive fee, or a decrease in the interest rate of our floating interest rate liabilities tied to LIBOR.
As of September 30, 2021, approximately $1,163.2 million (principal amount) of our debt portfolio investments bore interest at variable rates, which generally are LIBOR-based (or based on an equivalent applicable currency rate), and many of which are subject to certain floors. A hypothetical 200 basis point increase or decrease in the interest rates on our variable-rate debt investments could increase or decrease, as applicable, our investment income by a maximum of $23.3 million on an annual basis.
Borrowings under the February 2019 Credit Facility bear interest, subject to our election, on a per annum basis equal to (i) the applicable base rate plus 1.00% (or 1.25% if we no longer maintain an investment grade credit rating), (ii) the applicable LIBOR rate plus 2.00% (or 2.25% if we no longer maintain an investment grade credit rating), (iii) for borrowings denominated in certain foreign currencies other than Australian dollars, the applicable currency rate for the foreign currency as defined in the credit agreement plus 2.00% (or 2.25% if we no longer maintain an investment grade credit rating) or (iv) for borrowings denominated in Australian dollars, the applicable Australian dollars Screen Rate, plus 2.20% (or 2.45% if we no longer maintain an investment grade credit rating). The applicable base rate is equal to the greatest of (i) the prime rate, (ii) the federal funds rate plus 0.5%, (iii) the Overnight Bank Funding Rate plus 0.5%, (iv) the adjusted three-month applicable currency rate plus 1.0% and (v) 1.0%. The applicable LIBOR and currency rates depend on the currency and term of the draw under the February 2019 Credit Facility, and cannot be less than zero. A hypothetical 200 basis point increase or decrease in the interest rates on the February 2019 Credit Facility could increase or decrease, as applicable, our interest expense by a maximum of $13.3 million on an annual basis (based on the amount of outstanding borrowings under the February 2019 Credit Facility as of September 30, 2021). We pay a commitment fee of (x) 0.5% per annum on undrawn amounts if the unused portion of the February 2019 Credit Facility is greater than two-thirds of total commitments or (y) 0.375% per annum on undrawn amounts if the unused portion of the February 2019 Credit Facility is equal to or less than two-thirds of total commitments.
In July 2017, the head of the U.K. Financial Conduct Authority (the “FCA”), announced that the FCA will no longer persuade or compel banks to submit rates for the calculation of LIBOR after 2021. In March 2021, the FCA confirmed that all LIBOR settings will either cease to be provided by any administrator or no longer be representative: (a) immediately after December 31, 2021, in the case of sterling, euro, Swiss franc, and Japanese yen, and the one week and two month U.S. dollar settings; and (b) immediately after June 30, 2023, in the case of the remaining U.S. dollar settings. There is currently no definitive information regarding the future utilization of LIBOR or of any particular replacement rate. As such, the potential effect of any such event on our cost of capital and net investment income cannot yet be determined. In addition, any further
94

changes or reforms to the determination or supervision of LIBOR may result in a sudden or prolonged increase or decrease in reported LIBOR, which could have an adverse impact on the market value for or value of any LIBOR-linked securities, loans, and other financial obligations or extensions of credit held by or due to us and could have a material adverse effect on our business, financial condition and results of operations.
Because we have previously borrowed, and plan to borrow in the future, money to make investments, our net investment income will be dependent upon the difference between the rate at which we borrow funds and the rate at which we invest the funds borrowed. Accordingly, there can be no assurance that a significant change in market interest rates will not have a material adverse effect on our net investment income. In periods of rising interest rates, our cost of funds would increase, which could reduce our net investment income if there is not a corresponding increase in interest income generated by our investment portfolio.
We may also have exposure to foreign currencies related to certain investments. Such investments are translated into U.S. dollars based on the spot rate at the relevant balance sheet date, exposing us to movements in the exchange rate. In order to reduce our exposure to fluctuations in exchange rates, we generally borrow in local foreign currencies under the February 2019 Credit Facility to finance such investments. As of September 30, 2021, we had borrowings denominated in Swedish kronas of 12.8kr million ($1.5 million U.S. dollars) with an interest rate of 2.000%, borrowings denominated in British pounds sterling of £68.3 million ($92.1 million U.S. dollars) with an interest rate of 2.063%, borrowings denominated in Australian dollars of A$36.6 million ($26.4 million U.S. dollars) with an interest rate of 2.250% and borrowings denominated in Euros of €138.6 million ($160.6 million U.S. dollars) with an interest rate of 2.000%.
Item 4. Controls and Procedures.
Evaluation of Disclosure Controls and Procedures
We maintain disclosure controls and procedures that are designed to ensure that information required to be disclosed in the reports that we file or submit under the Exchange Act is recorded, processed, summarized and reported within the time periods specified in the SEC’s rules and forms and that such information is accumulated and communicated to our management, including our Chief Executive Officer and Chief Financial Officer, as appropriate, to allow timely decisions regarding required disclosure. Our Chief Executive Officer and Chief Financial Officer carried out an evaluation of the effectiveness of the design and operation of our disclosure controls and procedures as of the end of the period covered by this report. Based on the evaluation of these disclosure controls and procedures, the Chief Executive Officer and Chief Financial Officer concluded that our disclosure controls and procedures were effective as of September 30, 2021. It should be noted that any system of controls, however well designed and operated, can provide only reasonable, and not absolute, assurance that the objectives of the system are met. In addition, the design of any control system is based in part upon certain assumptions about the likelihood of future events. Because of these and other inherent limitations of control systems, there can be no assurance that any design will succeed in achieving its stated goals under all potential future conditions, regardless of how remote.
Changes in Internal Control Over Financial Reporting
There were no changes in our internal control over financial reporting during the third quarter of 2021 that have materially affected, or are reasonably likely to materially affect, our internal control over financial reporting.
95

PART II – OTHER INFORMATION
Item 1. Legal Proceedings.
Neither we, the Adviser, nor our subsidiaries are currently subject to any material pending legal proceedings, other than ordinary routine litigation incidental to our respective businesses. We, the Adviser, and our subsidiaries may from time to time, however, be involved in litigation arising out of operations in the normal course of business or otherwise, including in connection with strategic transactions. Furthermore, third parties may seek to impose liability on us in connection with the activities of our portfolio companies. While the outcome of any current legal proceedings cannot at this time be predicted with certainty, we do not expect any current matters will materially affect our financial condition or results of operations; however, there can be no assurance whether any pending legal proceedings will have a material adverse effect on our financial condition or results of operations in any future reporting period.
Item 1A. Risk Factors.
You should carefully consider the risks described below and in Item 1A entitled "Risk Factors" in Part 1 of our Annual Report on Form 10-K for the year ended December 31, 2020, which was filed with the SEC on March 23, 2021, and all other information contained in this Quarterly Report on Form 10-Q, including our interim financial statements and the related notes thereto, before making a decision to purchase our securities. The risks and uncertainties described below are not the only ones facing us. Additional risks and uncertainties not currently known to us or that we currently deem to be immaterial also may have a material adverse effect on our business, financial condition and/or operating results, as well as the market price of our securities.
Risks Relating to the Sierra Merger
Sales of shares of the Company’s common stock after the completion of the Merger may cause the market price of the Company’s common stock to decline.
Based on the number of outstanding shares of Sierra’s common stock as of the close of business on September 20, 2021, the Company would issue approximately 46 million shares of the Company’s common stock pursuant to the Merger Agreement. Former Sierra stockholders may decide not to hold the shares of the Company’s common stock that they receive pursuant to the Merger Agreement. In addition, the Company’s stockholders may decide not to hold their shares of the Company’s common stock after completion of the Merger. In each case, such sales of the Company’s common stock could have the effect of depressing the market price for the Company’s common stock and may take place promptly following the completion of the Merger.
The Company’s stockholders will experience a reduction in percentage ownership and voting power in the combined company as a result of the Merger.
The Company’s stockholders will experience a substantial reduction in their respective percentage ownership interests and effective voting power in respect of the combined company relative to their respective ownership interests in the Company prior to the Merger. Consequently, the Company’s stockholders should expect to exercise less influence over the management and policies of the combined company following the Merger than they currently exercise over the management and policies of the Company.
If the Merger is consummated, based on the number of shares of the Company’s common stock and Sierra’s common stock issued and outstanding on September 20, 2021, it is expected that current stockholders of the Company will own approximately 58.7% of the Company’s outstanding common stock and former Sierra stockholders will own approximately 41.3% of the Company’s outstanding common stock. In addition, both prior to and after completion of the Merger, subject to certain restrictions in the Merger Agreement and the approval of the Company’s stockholders, the Company may issue additional shares of its common stock (including, subject to certain restrictions under the 1940 Act, at prices below the Company’s then-current net asset value (“NAV”) per share), all of which would further reduce the percentage ownership of the combined company held by current stockholders. In addition, the issuance or sale by the Company of shares of its common stock at a discount to NAV poses a risk of economic dilution to stockholders.
The NAV per share of the Company’s common stock will be diluted if the Company issues shares at a price below the then-current NAV per share in connection with the Merger.
At the special meeting of the Company’s stockholders to be held in connection with the Merger and subject to certain determinations required to be made by the Company’s board of directors, the Company’s stockholders will be asked to approve the Company’s ability to issue shares of its common stock at a price below the then-current NAV per share in connection with
96

the Merger in the event that at the time of such issuance, the Company’s then-current NAV per share is greater than the value of the shares of Sierra’s common stock being exchanged.
Under the Merger Agreement, the Exchange Ratio was fixed on September 21, 2021, at the signing of the Merger Agreement, subject to certain adjustments pursuant to the Merger Agreement. The Exchange Ratio was determined taking into account the NAV per share of each of the Company’s common stock and Sierra’s common stock as of June 30, 2021 and is not subject to adjustment based on changes in the NAV per share of the Company’s common stock or Sierra’s common stock. In that regard, regardless of the date on which the Merger is consummated and the resulting date on which the shares of the Company’s common stock are issued, the Exchange Ratio upon which the shares of the Company’s common stock will be issued will not change (except for certain customary anti-dilution adjustments). Consequently, if, on the date that the Company’s common stock is issued in connection with the Merger, the per share value of Sierra’s common stock were to decrease from its per share value as of June 30, 2021 and the NAV of the Company’s common stock were to remain the same, then the Company could be deemed to be issuing shares at a price below its then-current NAV per share. As a result, it is not known at this time whether the Company will be issuing shares of its common stock at a price below the then-current NAV per share to Sierra stockholders in connection with the Merger. The determination of whether the Company is issuing shares of its common stock at a price below the then-current NAV per share will be made at or around the time of the closing of the Merger.
If the Company were to issue shares of its common stock below its then-current NAV per share in connection with the Merger, such sales would result in an immediate dilution to the NAV per share of the Company’s common stock. This dilution would occur as a result of the issuance of shares at a price below the then-current NAV per share of the Company’s common stock and a proportionately greater decrease in the stockholders’ interest in the Company’s earnings and assets and their voting interest in the Company than the increase in the Company’s assets resulting from such issuance. Because the NAV of shares of the Company’s common stock at or around the time of the Merger is not currently known, the actual dilutive effect cannot be predicted.
The Company may be unable to realize the benefits anticipated by the Merger, including estimated cost savings, or it may take longer than anticipated to realize such benefits.
The realization of certain benefits anticipated as a result of the Merger will depend in part on the integration of Sierra’s investment portfolio with the Company’s and the integration of Sierra’s business with the Company’s. There can be no assurance that Sierra’s investment portfolio or business can be operated profitably or integrated successfully into the Company’s operations in a timely fashion or at all. The dedication of management resources to such integration may divert attention from the day-to-day business of the combined company and there can be no assurance that there will not be substantial costs associated with the transition process or there will not be other material adverse effects as a result of these integration efforts. Such effects, including incurring unexpected costs or delays in connection with such integration and failure of Sierra’s investment portfolio to perform as expected, could have a material adverse effect on the financial results of the combined company.
The Company also expects to achieve certain cost savings from the Merger when the two companies have fully integrated their portfolios. It is possible that the estimates of the potential cost savings could ultimately be incorrect. The cost savings estimates also assume the Company will be able to combine the operations of the Company and Sierra in a manner that permits those cost savings to be fully realized. If the estimates turn out to be incorrect or if the Company is not able to successfully combine Sierra’s investment portfolio or business with the operations of the Company, the anticipated cost savings may not be fully realized, or realized at all, or may take longer to realize than expected.
The announcement and pendency of the proposed Merger could adversely affect both the Company’s and Sierra’s business, financial results and operations.
The announcement and pendency of the proposed Merger could cause disruptions in and create uncertainty surrounding both the Company’s and Sierra’s business, including affecting relationships with their respective borrowers and future borrowers, which could have a significant negative impact on the Company’s future revenues and results of operations, regardless of whether the Merger is completed. In addition, the Company and Sierra have diverted, and will continue to divert, significant management resources towards the completion of the Merger, which could have a significant negative impact on each of their future revenues and results of operations.
Sierra and the Company are also subject to restrictions on the conduct of each of their businesses prior to the completion of the Merger as provided in the Merger Agreement, generally requiring Sierra and the Company to conduct their business only in the ordinary course and subject to specific limitations, including, among other things, certain restrictions on their respective ability to make certain investments and acquisitions, sell, transfer or dispose of their respective assets, amend their respective organizational documents and, in the case of Sierra, enter into or modify certain material contracts. These restrictions could
97

prevent Sierra or the Company from pursuing otherwise attractive business opportunities, industry developments and future opportunities and may otherwise have a significant negative impact on the Company’s future investment income and results of operations.
If the Merger does not close, neither the Company nor Sierra will benefit from the expenses incurred in their pursuit of the Merger and, under certain circumstances, Sierra may be required to pay an $11.0 million termination fee and to reimburse expenses incurred in connection with the Merger by the Company and Barings, subject to a maximum expense reimbursement payment of $2.0 million.
For various reasons, the Merger may not be completed. If the Merger is not completed, Sierra and the Company will have incurred substantial expenses for which no ultimate benefit will have been received. Both companies have incurred out-of-pocket expenses in connection with the Merger for investment banking, legal and accounting fees and financial printing and other related charges, much of which will be incurred even if the Merger is not completed. The Merger Agreement provides that, upon the valid termination of the Merger Agreement under certain circumstances, Sierra may be required to pay or cause to be paid to the Company a termination fee of $11.0 million and to pay the Company’s and Barings’ expenses incurred in connection with the Merger, subject to a maximum reimbursement payment of $2.0 million.
The termination of the Merger Agreement could negatively impact the Company.
The Merger may not be completed. For example, either Sierra or the Company may terminate the Merger Agreement if the Merger is not completed by March 31, 2022 (so long as the party seeking termination has not been the primary cause of the delay). If the Merger Agreement is terminated, there may be various consequences, including:
•the Company’s businesses may have been adversely impacted by the failure to pursue other beneficial opportunities due to the focus of management on the Merger, without realizing any of the anticipated benefits of completing the Merger; and
•the market price of the Company's common stock might decline to the extent that the market price prior to termination reflects a market assumption that the Merger will be completed.
Except in specified circumstances, if the Merger is not completed by March 31, 2022, either Sierra or the Company may choose not to proceed with the Merger.
Either Sierra or the Company may terminate the Merger Agreement if the effective time of the First Merger has not occurred by March 31, 2022. However, this right to terminate the Merger Agreement will not be available to Sierra or the Company if the failure of such party to perform any of its obligations under the Merger Agreement has been the primary cause of or resulted in the failure of the Merger to be complete on or before such date.
The Merger is subject to closing conditions, including stockholder approvals, that, if not satisfied or waived, will result in the Merger not being completed, which may result in material adverse consequences to the Company’s business and operations.
While there can be no assurances as to the exact timing, or that the Merger will be completed at all, the Company and Sierra are working to complete the Merger in the first quarter of 2022. The Merger is subject to closing conditions, including required regulatory approvals (including the expiration of the waiting period under the Hart-Scott-Rodino Antitrust Improvements Act of 1976, as amended, and the rules and regulations thereunder) and certain approvals of the Company’s and Sierra’s respective stockholders that, if not satisfied, will prevent the Merger from being completed. The closing condition that the Company’s stockholders approve the issuance of shares of the Company’s common stock in connection with the Merger and the issuance of shares of the Company’s common stock in connection with the Merger at a price below its then-current NAV may not be waived and must be satisfied for the Merger to be completed. The Company currently expects that all directors and executive officers of the Company will vote their shares of the Company’s common stock in favor of the proposals presented at the special meeting of the Company’s stockholders to be held in connection with the Merger. Additionally, Barings, as a party to the Merger Agreement, agreed to vote all shares of the Company’s common stock over which it has voting power (other than in its fiduciary capacity) in favor of the proposals presented at the Company’s special meeting of stockholders. Furthermore, the closing condition that Sierra stockholders approve the Merger may not be waived and must also be satisfied for the Merger to be completed. If the closing conditions to the Merger are not satisfied, including receipt of the required approvals by the stockholders of the Company and of Sierra, and the Merger is not completed, the resulting failure to complete the Merger could have a material adverse impact on the Company’s business and operations.
98

Sierra and the Company will be subject to contractual restrictions while the Merger is pending, including restrictions on pursuing alternatives to the Merger.
Uncertainty about the effect of the Merger may have an adverse effect on the Company and Sierra and, consequently, on the combined company following completion of the Merger. These uncertainties may impair the Company’s and Sierra’s abilities to motivate key personnel until the Merger is consummated and could cause those who deal with the Company and Sierra to seek to change their existing business relationships with the Company and Sierra, respectively. In addition, the Merger Agreement restricts the Company and Sierra from taking actions that they might otherwise consider to be in their best interests without the consent of the other party. These restrictions may prevent the Company and Sierra from pursuing certain business opportunities that may arise prior to the completion of the Merger, including restrictions on them pursuing alternatives to the Merger.
Subject to applicable law, each party may waive one or more conditions to the Merger without resoliciting approval from its respective stockholders.
Certain conditions to the Company’s and Sierra’s obligations to complete the Merger may be waived, in whole or in part, to the extent legally allowed, either unilaterally or by agreement of the Company and Sierra. In the event that any such waiver does not require resolicitation of stockholders, the parties to the Merger Agreement will have the discretion to complete the Merger without seeking further stockholder approval. Accordingly, the terms and conditions as set forth in the Merger Agreement and described herein, including certain protections to the Company and Sierra, may be waived. The conditions requiring the approval of the Company’s stockholders and approval of Sierra’s stockholders, however, cannot be waived.
The market price of the Company’s common stock after the Merger may be affected by factors different from those affecting the Company’s common stock or Sierra’s common stock currently.
The businesses of the Company and Sierra differ in some respects and, accordingly, the results of operations of the combined company and the market price of the Company’s common stock after the Merger may be affected by factors different from those currently affecting the independent results of operations of each of the Company and Sierra. These factors include:
•a larger stockholder base;
•a different portfolio composition; and
•a different capital structure
Accordingly, the historical trading prices and financial results of the Company may not be indicative of these matters for the combined company following the Merger.
The Merger may trigger certain “change of control” provisions and other restrictions in certain of the Company’s and Sierra’s contracts and the failure to obtain any required consents or waivers could adversely impact the combined company.
Certain agreements of the Company and Sierra or their controlled affiliates will or may require the consent of one or more counterparties in connection with the Merger. The failure to obtain any such consent may permit such counter-parties to terminate, or otherwise increase their rights or the Company’s or Sierra’s obligations under, any such agreement because the Merger may violate an anti-assignment, change of control or similar provision. If this happens, the Company or Sierra may have to seek to replace that agreement with a new agreement or seek a waiver or amendment to such agreement. The Company cannot assure you that it or Sierra will be able to replace, amend or obtain a waiver under any such agreement on comparable terms or at all.
If any such agreement is material, the failure to obtain consents, amendments or waivers under, or to replace on similar terms or at all, any of these agreements could adversely affect the financial performance or results of operations of the combined company following the Merger, including preventing the Company from operating a material part of Sierra’s business.
In addition, the consummation of the Merger may violate, conflict with, result in a breach of any provision of or the loss of any benefit under, constitute a default (or an event that, with or without notice or lapse of time or both, would constitute a default) under, or result in the termination, cancellation, acceleration or other change of any right or obligation (including any payment obligation) under the Company’s or Sierra’s agreements. Any such violation, conflict, breach, loss, default or other effect could, either individually or in the aggregate, have a material adverse effect on the financial condition, results of operations, assets or business of the combined company following completion of the Merger.
99

The combined company may not be able to obtain financing for additional capital requirements.
Following completion of the Merger, the combined company may seek significant ongoing capital funding and, although the Company anticipates that the combined company will be able to obtain such funding through cash generated from operations and subsequent debt, equity or hybrid offerings, there can be no assurances that the combined company will be able to obtain financing on acceptable terms or at all.
The Company has incurred and expects to incur substantial transaction fees and costs in connection with the Merger, whether or not the Merger is completed.
The Company has incurred and expects to incur additional material non-recurring expenses in connection with the Merger and completion of the transactions contemplated by the Merger Agreement. The Company has incurred significant legal, advisory and financial services fees in connection with the process of negotiating and evaluating the terms of the Merger. Additional significant unanticipated costs may be incurred in the course of coordinating the businesses of Sierra and the Company after completion of the Merger.
Even if the Merger is not completed, the Company will need to pay certain costs relating to the Merger incurred prior to the date the Merger was abandoned, such as legal, accounting, financial advisory, filing and printing fees. Such costs may be significant and could have an adverse effect on the Company’s future results of operations, cash flows and financial condition.
Litigation filed against Sierra or the Company in connection with the Merger could result in substantial costs and could delay or prevent the Merger from being completed.
From time to time, Sierra and the Company may be subject to legal actions, including securities class action lawsuits and derivative lawsuits, as well as various regulatory, governmental and law enforcement inquiries, investigations and subpoenas in connection with the Merger. These or any similar securities class action lawsuits and derivative lawsuits, regardless of their merits, may result in substantial costs and divert management time and resources. An adverse judgment in such cases could have a negative impact on the Company’s liquidity and financial condition or could prevent the Merger from being completed.
Item 2. Unregistered Sales of Equity Securities and Use of Proceeds.
Sales of Unregistered Securities
None.
Issuer Purchases of Equity Securities
During the three months ended September 30, 2021, in connection with our DRIP for our common stockholders, we directed the plan administrator to purchase 37,463 shares of our common stock for an aggregate of $405,517 in the open market in order to satisfy our obligations to deliver shares of common stock to our stockholders with respect to our dividend declared on August 5, 2021.
Item 3. Defaults Upon Senior Securities.
None.
Item 4. Mine Safety Disclosures.
Not applicable.
Item 5. Other Information.
Not Applicable

100

Item 6. Exhibits.
Number Exhibit
2.1
Agreement and Plan of Merger, by and among the Registrant, Mercury Acquisition Sub, Inc., Sierra Income Corporation and Barings LLC, dated as of September 21, 2021 (Filed as Exhibit 2.1 to the Registrant’s Current Report on Form 8-K filed with the Securities and Exchange Commission on September 22, 2021 and incorporated herein by reference).*
3.1
3.2
3.3
3.4
31.1
31.2
32.1
32.2
*    Exhibits and schedules to this Exhibit have been omitted in accordance with Item 601 of Regulation S-K. The registrant agrees to furnish supplementally a copy of all omitted exhibits and schedules to the SEC upon its request.
**    Filed Herewith.
***    Furnished Herewith.
101

SIGNATURES
Pursuant to the requirements of the Securities Exchange Act of 1934, the registrant has duly caused this report to be signed on its behalf by the undersigned thereunto duly authorized.
BARINGS BDC, INC.
Date: November 9, 2021 /s/    Eric Lloyd
Eric Lloyd
Chief Executive Officer
(Principal Executive Officer)
Date: November 9, 2021 /s/    Jonathan Bock
Jonathan Bock
Chief Financial Officer
(Principal Financial Officer)
Date: November 9, 2021 /s/    Elizabeth A. Murray
Elizabeth A. Murray
Principal Accounting Officer
102