BBDC - Earnings call transcript Q1 2022

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Operator

At this time, I would like to welcome everyone to Barings BDC, Inc. Conference Call for the quarter and year ending March 31, 2022. [Operator Instructions] Today’s call is being recorded, and a replay will be available approximately 2 hours after the conclusion of the call on the company’s website at www.baringsbdc.com under the Investor Relations section. Please note this call may contain forward-looking statements that include statements regarding the company’s goals, beliefs, strategies, future operating results and cash flows.

Although the company believes these statements are reasonable, actual results could differ materially from those projected in the forward-looking statements. Forward-Looking on and assumptions under for risks, titled Exchange Factors based to are the the are company’s Commission. with Risk uncertainties the the December numerous including and as fiscal statements year various Form XX, and underlying subject section annual ended These report in XXXX, XX-K filed Statements those and disclosed Securities forward-looking undertakes obligation to statements any unless no revise required BDC Barings or law. by update call I over Officer time, At would Chief turn the Eric like Executive to this of to Lloyd, BDC. Barings go ahead, Please sir.

Eric Lloyd

and first website. you throughout are that operator, I XXXX is that quarter our doing today’s the you, hope good us and our note Please today’s Thank earnings Relations morning, presentation call, everyone. appreciate call, section on families of well. posted joining we’ll We you be Investor your and to for referring

joined call Co-Portfolio Financial of Ian Bock. Private Finance, today, the and U.S. Officer, President Situations On High, of Co-Head I’m BDC’s Barings Chief Global and Head the Special Bryan by Fowler; Jonathan BDC’s Barings’ Manager; and

momentum quarter. some Jon comments we portfolio but investment and review Ian, with growth do, Sierra start Bryan will the typically a acquisition After moment, we fourth XXXX, lending and strong a with off and carried and quarter following direct details XXXX and of the that results close As about record in portfolio into cross-platform the of I’ll first our from expanded high-level net base strong of quarter the equity capital strategies. performance our

presentation. inflation as risk-adjusted in tied an geopolitical began With market to managers syndicated to in returns. risk backdrop shown price changes concerns and not Let’s capitalized, attractive both the selective loan believe disciplined and is insulated of equity Slide the broadly highly on an bout also of volatility, the underlying market we aggressive well begin the BDC current prices it X can as periods with market from increased and landscape, rapid we’re these of Federal were prices source Reserve. overly well

the per share was on fourth X. of Moving the Net $XX.XX. quarter Slide to highlights $XX.XX to quarter prior compared asset value

incentive the remain investment our earnings $XXX despite and new underlying $X.XX the Sierra at in to unchanged income equity stability new This approximately of as close remained important investment our raising net per transaction. from last further million fee catch is investment of our our by to is the enhanced exceed structure hurdle with quarter. is net up. X.XX% Our income continue note rate in It the share

elected yield As these a second our our equating of to share dividend trends, $X.XX on an Board result quarter of value X.X% $XX.XX. asset to to net increase our per

gross we acquired $XXX of Sierra offset prepayments $XXX originations This Regarding million at of portfolio had $XXX was by on in income. first million of the were quarter the our top JVs. $XXX of sold new to investments, million million from and which sales

[bearings], and Our well quarter remains valued the cost. original on investment in above first portfolio loans continued perform the with new no nonaccrual, to portfolio

total assets, of X.X% last nonaccruals cost increased of Sierra cost With the quarter. to the onboarding of X% from

Slide portfolios, by losses depreciation the level. negative associated $X.XX on select portfolio share quarter. per and value fair million benefiting the offset unrealized robust acquired investment just per while quarter, agreements. from highlight Net the are earnings continued value, select maximize from and share activity restructurings credit was sales on totaled shareholder and basis, a protection highlights total on increased However, financial investments marks outlines realized for support the was the and associated performance first X share $X.X our in count, later, as total cross-platform X.X%. income focus Ian with million. drag summary net investment MVC $X.X the will with asset strong investment at Sierra the In to we added nonaccruals the continue as

leverage, which remain current cross-platform portfolio to on position well selective below across XXX This a of of investments you opportunities our in look range companies year net target transactions, as allows expect of companies acquisition, of as periods Following us focus is environment. cash, uncertainty, our can future with our this markets, liquidity incumbencies leverage X.XXx. was net leverage us attractive core which of X.XXx, X.Xx and short-term growth strategies. and to our our towards the In these market market is keeping portfolio currently to unsettled disciplined,

call our provides an further our to Recall unperceived X.XX% incentive update earnings an nonaccrual a close, to our now by returns. incentive events market lower with against and increased over which cushion that to Additionally, in differentiates connection Ian decline fee exceeds which alignment net our Barings in our from commitment in income hurdle the BDC or a those investment earnings yield focus investor compression, in strong on on the first rate investment caused structure negative loans provide items. to Sierra investor fee I’ll when investors result portfolio. the turn slating

Ian Fowler

morning, Thanks, Eric, and everyone. good

you turn additional the details you investment X, can If on mentioned. Eric activity see Slide that to

sales quarter, by million, increased million. Our middle market a repayments with on $XXX offset $XXX gross net portfolio $XXX basis million fundings and the of by in of

$XXX and million market investments investments follow-on totaling investments term million draw and platform delayed of $XX middle XX New loan included new fundings.

had Slide show across of the the the you $XX quarter. on net cross-platform structure. market spreads XX capital middle in data We new investments we updates million quarter each also

that react the capital offset the pace. slower the While we much volatility lending class asset the market also public widening may witnessed more fearful spread of markets, a at further, strength have effects in of markets And well flows the direct into the volatility marketplace. potential a to is it private understood

as market generally and result, spreads generally remain leverage by As higher across competitive terms lending conditions stable loosening a direct evidenced levels.

and lien, is symptom lien, of that the executions. traditional I substantial see record. into to executions unitranche near down again don’t compared portfolio on On types level the was unitranche quarter, A a XX. investment XX, And bridge theme XX. XX breakdown of again XX volume Slide all-time December inflows of you’ll Slide first of to soon. direct quarter A continued last to of capital Slide to an all-time that our is spread it Turning key XX. This we anytime slow outlined investment March our shown remain portfolio expect from a lending, Cov-Lite second first is on in when the components March

the is as of continues our legacy It Sierra value our MVC to our Income our makes investments to The portfolios up core now and of portfolio, in terms discussed middle-market cross-platform portfolio, XX% slide remains and investments. our of have we in contribution. key fair which of originated middle-market well in at the portfolio Capital total as the categories portfolio portfolio terms are of focus As our goal revenue past, the XX% and details of on this provide [bearings] grow.

companies to Our remain U.S., and portfolio geographic and credit. Barings across X.Xx originated of middle-market Underlying Europe APAC our exposure on average the XXX is yields our regions. heavily with leverage lien diversified boring-is-beautiful reflective approach X% of of a first of investment amongst weighted diversification portfolio obligors middle-market

draw upon portfolios and portfolio and cross-platform our to addition continue the complement Barings’ $XXX investments. million wide core of legacy of with $XXX of we reference exposure, Sierra million in In to our to investment frame investments middle-market MVC

our at of end. Sierra we on X nonaccrual. earlier, mentioned close of with And core onboarded additional MVC the transaction, legacy assets assets nonaccrual were X the on As

XX, in respective paydowns new first support $XXX the a well mentioned JV. million value which at As supported originated Barings’ is second first and in loans of being transactions. The spread points raising a of onboarding credit are The million fair both approximately Sierra portfolio by proceeds the the is obligors, cash. XX nonaccrual transaction basis million covered new current assets the February the as X.X%, fair assets Sierra and with The including redeployed $XXX agreements when has all of previously, $XX.X quarters, by the the yield million along Recall $XXX end, total Sierra continued Barings. of of nonaccrual percent portfolio million which $XXX and million the value average equity, on of Sierra with senior are X%. closed majority the quarter across and is portfolio spread XXX with CSA. At for of lien to perform into $XXX continues total in is with

the Turning to had are portfolio the originated loans quarter. directly material no cash during portfolio. payment No Barings the the and our Barings investments on debt total to terms of modifications nonaccrual

senior originated up are XX% brings Our first mezzanine investments the largely of breakdown from by driven MVC XX quarter core total from lien of secured, equity, investments. made first down lien a and perspective. The second is makes provides funded portfolio a the the portfolio portfolio, Slide portfolios XX% senior assets. component joint XX% is This lien. total of which combined which of Sierra XX% investments, now Note XX%. is last investment down the to additional further of venture portfolio up comprised our lien debt Barings first

XX Our on Slide top investments shown are XX.

highly backed of X.X% loans, Eclipse the total ranging Credit, this drive conservatively portfolio, replicate of aligned and largest shareholder advantages and structured investments well. my levels total large investing by across to collateral is of top represent best value. strong also that optimal We market industry’s investments are investment being fee asset-based our investment, structure investments I’ll as XX portfolio infrastructure strategies of highly current from loans. and of market uncertainty by strong benefit by managers our risk-adjusted is performance returns. industries. XX% in served drive the the unique well The when diverse selective time our largest returns with high Our we difficult Business from a Recall diverse. asset-backed portfolio. the XX an origination in remains and to the from of a perspective inside create asset spread portfolio is and overall unique an complement net is summarize incumbency market, XXX saying Furthermore, comments liquidation both mix the different unique names It to portfolio persists, with attractive cross-platform to our further know

I’ll our said over provide and key being our our to believe it Jon call on long-term I endemic the to success. before, and unique As I a turn now color platform, is to results. financial to additional ingredient achieving culture is

Jonathan Bock

Ian. Thanks,

XX. Slide to Turning

value asset the net Here’s of share a quarter. per bridge movement first full in

net and drove currency income Our while accounted share, the share. share. a net $X.XX credit portfolio Sierra for and dividend, depreciation of unrealized support losses per matched per investment our decrease transaction, agreement, gains investment including on of $X.XX realized our $X.XX foreign totaled transactions The our

on unrealized are this Additional Slide XX. shown details on net also depreciation

our portfolio, borrowings. $X to depreciation with depreciation appreciation net middle-market On of million FX remaining $X resulted in due and are the moves, which in of price the credit offset performance million

fees and saw Our bottom unrealized appreciation $X.X investments million, decreased portfolio Higher million share interest our as million. investment well the for balance the and increase the joint performance in to met assets our statement The strong Sierra income also $X near Eclipse per portfolio that quarter, as the And Capital in investment discussed, agreement the of MVC remained the legacy very in driven $XXX,XXX in depreciation also the support approximately of as we’ve the sheet for of And can $XX income. net Business cross-platform X by growth, by quarter. added and total to XX. by with operating be share from higher stable the increase from increase well contributors continued Sierra lender. on strong total an XX our being quarters. credit Eclipse at XX, earnings Business transaction. in investment portfolio of a income as close show was financing our can Slide increased The last in venture to our as The dividend driven you attributed last were income per interest see February total investment Slides approximately share income total Capital, following XX largely count net X asset-based and the investments saw income $X.XX quarter. of

to for although the XX, timing debt artificially March new our hurdle was exceeded payment pre-incentive cash saw after given sheet and high investment adjusting on and certain the income cash, incentive also sales XX, of X.XXx The level asset fee net Slide the perspective transactions. unsettled total an first a From quarter to manager equivalents fee as X.XXx was equity was at of this balance rate. X.XX%

result bank our Slide Details as balance of and our X asset diverse how the funding shown to debt Turning mix, our to which secured of over XX, continued to could of unsecured evolution decreased last sheet portfolio our a the profile shows see private has XXXX, to of our our seniority asset placements, both class. ties to our you our debt which in are each have debt the on the terms of increases Compared end reliance we on and XX, mix borrowings assets. diversify match are as now quarters. million, Slide $XXX over on to of

to commitment. the subsequent its with lender new Following billion, group close revolver from our transaction a current our Sierra and million the incremental $X.XXX the all $XXX via line we revolver to the of maturity a upsized credit of $XXX February, end, to quarter of the of And on in we further size lead the $XXX to of -- at our million top-tier existing extended banks. by expanded bank commitments from million addition

raise debt to additional we facility. have $XX up available borrowing secured million We plus our credit commitment continue senior the of capacity unsecured to to have under

Now And of to available drop our how to to capital commitments available have Barings our you can table entirety see commitments, fund joint remaining capacity of our commitments This million meet term BDC net -- $XX our we impact dividend against commitments. these shows called as $XXX updates our Eric the and will upon, the million unused the using XX, to cushion portfolio as dividends of over loans, Slide well of regulatory an to if our the jumping of XXXX compared to the of second companies delayed currently per increase as liquidity has leverage while took ventures. second $X.XX dividend X.X% limit. we maintaining asset investment quarter an value. quarter mentioned, be our share Barings Slide since quarter and adviser share, net previously second XX to announced BDC. per the paid announced on our leverage [$X.XX] distribution as

the a which credit turn depiction X-year their volatility the Even with liquid Now asset across spreads remain shows value relative Slide near-term across B XX., at classes. graphical near BBB, with types. and me the to of BB spectrum credit market or

XXX outlined on investments an our and illiquidity benchmarks. spread credit, and uncertain of drives Now which this deployed To market outlined which speak credit liquid wide private future, into of Ian often investment the at translates Slide across effects unit $XXX our XX, deeper a of emphasize comparable further and mitigate our premiums as relative range actual market opportunities. XXX to premium business, point private same will the following: of sized the that We into and seek to out to the Barings liquid we the risk market attractive competition maintain pricing diving maintain million sizes core remain points, cross-platform America, to at indices. across of the market one, of ensure this in seeking profile to we we North an we’ll liquid indices negative earlier. our direct shown in results middle-market discipline lending the profile. take basis capital prepared negative the represents advantage is spread both new all-in our large Europe BDC and segment averaged they markets three, risk; the the marketplace, relative credit effects, on points XXX investment premium per liquidity we’ll relative dollar which to basis And spread spread for basis liquid a two, to that focus opportunities core of present premium themselves;

and our new be key at Slide I’ll so closed with And funded. million this our excess in and investments, these weighted million term The a up new XXX margin Of prepared of delayed investments investment during to we’d funded and remarks pipeline premiums Asia average our this million to was DM-X the across with closing compared the reminder, the billion indices on pipeline. our and we’ve the illiquidity Barings investment far approximately is draw first activity return or X are first and questions. for commitments, And XX% and new that Pacific with believe last approximately $XXX And $XXX invest relative on as secured secured. estimated XX% lien loans. steady line spread complexity which the or XX, in operator, and The $X previously senior summarizes XXXX remained for have origination to X%, a are points. loans, quarters, based second wrap which investment basis XX% senior The new also that, pipeline. of love in for even liquid pace of deals BDC of all quarter we differentiator a greater European Global of lien, are commitments, is to our current cross-platform $XX will probability-weighted Barings cross-platform is rates via to predominantly expected committed generate cycle. open Finance pipeline in For current platforms was ability originations. Private continue basis

Operator

question with Instructions] first Wells [Operator from O’Shea Fargo Advisors. Our Finian is

Unidentified Analyst

was you a Eclipse on like today. Jordan looks you bigger well. about It looks It little It’s quarter. for hoping Capital. could give context this like it’s Finian took I been dividend us more Business guys a performing

add can run a So maybe it’s this performing rate kind dividend how up? anything whether is on or is there catch a of there you and that’s

Jonathan Bock

Sure.

the underlying and what periods it the relates then my keep or second So short of and to outstandings. is, higher uncertainty lateral in market line Bryan, for ourselves the I’ll is these both between But start volatility, that of item you’ll find kind obligors with synergies Jordan, one to colleague, as Eclipse. geopolitical

effectively measured of And bottom growth, a down outstanding higher you a opportunity have level the as of the profit or to so plus falls continued line. level

to the Typically, and rate, run at the dividend operating were payout. under-levered, around like to an we we distribution. Our so we here, ability X% cash expectation profile increase on have

our outline think you over that partnership NAV team. still you the strong Eclipse generation, special cross-platform if intact so worthwhile. and can growth continues the situations be probably And business, but and would Bryan, very in And underlying expect of kind partnership our of to to and will that remains just also that, be that cash time, normalize want by I or amplified the with deal the and

Bryan High

Thanks, Yes. Jon. Sure.

think behind have of as consistent niche theme the perspective wind are both the speaking, in given that. performance that They And for for from and had platform market, if they a And the of loans, fit a of backs with as as ourselves, us sort and there’s to the and Eclipse generally rate growing generally sort have team on market in think they deal bit be, cycle and is and a collateral Eclipse. then is little Barings, has base think, the result playing which I a of rising that will a should mentioned, out an wouldn’t the you benefit environment them a their we new speaking. about of management helping origination continue well. given strong place and see frankly, growing a . from a are been where has then seeing and a it’s pipelines Jon they to just we the great nonbank thesis underlying strategic otherwise that have, flow both resilient that

Unidentified Analyst

a expect like one? you’re to be of you’re transaction. into or that quarter Sierra that another that that -- bucket JVs any [wind] JV color will asset limit. And how join from of we guys going this gets against manage maybe can permanent is group That’s that another non-qualifying given maybe to you kind that something you that then on your Just the Is it have looks Okay. the inherited helpful. something

Jonathan Bock

it pay us Jordon, of us off What venture, do minimize to back. wind can Yes. and returned slowly but is maximize drag as we’ll maximize expect be expect you that sorry, slowly you those to -- loans or down. profitability the can to

and this to you it an time. can expect was offshoot, fall So over

Operator

Point. with next Compass Casey Alexander question Our from is

Casey Alexander

Yes.

liquid out were First of question is, to advantage and the see be on loan timely spreads more the year liquid employ? opportunistic getting markets? start all, the taking you kind would of to and on of when square of still the markets first congratulations in a if syndicated a that transaction as company to your that kind little originate credit a closing broadly you an directly leverage My credit that open then waiting this still markets market, into blow up really deeper of Is would originate to strategy directly way basis. ratio with

Jonathan Bock

is across Jon, a then lateral Casey, think of size platform, scope the great that can to be the because liquid of and this Eric I’ll when Barings and you opportunity.

as when saw the particularly a in You us participate spreads widened of COVID. result credit category, out liquid

but And liquid We’re the publicly close to counterparts, always greatly across on all a those we know, expertise very both be with not levels, near I areas from. we of the benefit important of Eric, very that our opportunistic heavily our we rely and very, Barings. all remain continues platform partnership and part that privately. But

Eric Lloyd

look at I’d say, is we would the Casey, answer Yes. yes, that. short

As they right levels there, to illiquidity But look that. that we up went spreads but Jon to probably would XXX say, as aren’t assets. true said, right, liquid we a at if all the spreads syndicated now. important, sure pick when widen really out, theoretically, get premium Making the loans over. let’s on you the And absolutely were just know, illiquid there is

credit a spreads of then XXX pick liquid XXX They illiquid isn’t sudden, XXX XXX. XXX to sudden credit all attractive attractive. of All really and are a premium over basis on point a when or are to up relative

it’s premium. pick of making that really you up proportionate sure a liquidity So amount

at look the we to close at very the Bryan, to stay occur. we in involved side. Thomas . absolutely liquid BDC, were And that that I So between would and

Casey Alexander

are companies quite just there debt in Sierra Great. guys’ wondering are and on very picked question those if Or up think, issues? for your is and at just is that a probably nonaccrual My X pretty diligence, much of, have I anything you right. salvageable? helpful. second nonaccrual That’s analysis time. All some number been I’m

Jonathan Bock

forward kind look are of, actually that underlying collateral, I at believe mean there the We opportunities. --

to had you You bad have sheet. but balance a good -- company, also

of And us of they’re the the individuals Sierra the platform that we’re of the because that platform, realizing of working driving from number Casey, so at similar the time, to a forever and other active is today, a you size very in not over with further value. not much probability but outcome And some which successful that peers, with the scale -- follow, never also higher. or not joined of

it’s and wins yes, the on race those . and steady value. a fair at names, So slow about $XX of million

Operator

is Our next question from with Paul KBW. Johnson

Paul Johnson

up you following inherited book. from on entire assets but the really nonaccruals, the not Sierra, Just that just the

pretty of like sitting it’s of sort assets got to time I that these so and just assets of on focus allowing and think I with the off you’ve are you’ve run $XXX . guess, opportunities? kind basically your first comfortable over going? other you came or Is them the on verticals out in these million kind identified of quarter. as Or to that rotate focus, over these

Jonathan Bock

I’ll initial give one thought.

alignment, then always hold of exit, to seen raise underwrite that the So looking we be with. you effectively But are downside it when to where, were or Believe if to continue strong receiving a underwrote well. prior on so expect as we in certain the be of our measured. that the And innovative time, some They off such invest. there you loans time, we were originated retains again, even portfolio can very shareholder to be that to The and tool at in ones I’d on in focused spreads. found hand, going to that time the transaction, MVC opportunities yield in incumbencies brought use same for is your of portfolio and periods the and the you credit here there’ll instances we’re we’ve individual profile you’re agreement over credit it portfolio. manager attractive, relatively that not, those support the right? at want

And find level of so good we’re to starting income a contribution.

we find you, the It’s where answer return, been for question situations we there’s that Paul, risk necessarily of rush And a immediate more near not one. the those so might special out philosophical term. like dollar-based for but just cycling no a don’t some and except of underlying we’ve

own also looking over are exits, select where, to we happy that just forward them, we’re to We’re to the time, to going see that are assets starting and but find as be there we well.

Eric Lloyd

X portfolio least the months good we’ve the news ago that inherited we expected, probably a we better. and Paul, underwriting a asset than did. worse, bit we is little announced little from said, bit we the over in the think little that Jon what at what portfolio with when a as expected are And some then some is line deal better performing I the

Some rotate will to we’re are so continuing with stepping of the to out were comfortable support and ones that very of, refinance company in probably that company.

what announced we at the ago. least not blended than X when we think this originally . I So performing consistent is underwrote with, if good news, on better a basis, is months portfolio deal the

Paul Johnson

increased just from the on something is that back on pretty in see things for that. quarter dividend drove is there. the that you markets? curious, of Got more kind on of in of the here the Then the first based Eclipse ABL the we do a going I’m going just know going like how kind Appreciate you well I that’s sustainable write-up sort what . kind touched to got Or of and it. income on temporary -- out? what’s business effect, are

Jonathan Bock

-- X% it BBDC’s I be And statement through growth. think too financials up investment, in an and that It just that oftentimes, given BBDC’s X new up will investments or through profitability or Sierra an ways. equity be million income shows the It typically we JV base, like is also operating or issued can cash the were generally underlevered underlying with the $XXX to that our we was the given NAV can shows target quarter fact higher in the on in distribution. profitability what it deal. cross-platform of this distribution from outline dividend distribution was or

is the Eclipse dividend you operating see strong. a I’d subsidiary say that that an but shows expect moderate, very to could the so is profitability into view income underlying And business or the

in not that And it NAV retained in you earnings. see to so income, might you in less due dividend growth instant investment while underlying can see also

Paul Johnson

question, your I bit a the of given think on do the the versus buildup How and military opportunity spread Last bigger recent basically over you quarter. just there? color about but value just kind get there. it. Appreciate guys’ any Europe your proximity a here, of capital there on of invasion, views of know conflict the deployed Just kind of this little views wondering opportunity the picture U.S.? question, Europe to you to obviously the

Ian Fowler

of lenders in them, to be to firms, position we’re good to as range just platform businesses of are Europe of market. Ian. And in new of private anyone you in. the we’re we and And pursue. platforms terms just jump interesting robust the and take deal higher really equity Europe It’s one lower U.S. of more wouldn’t I’ll the the it’s in seeing quarter of much on really in flow the quality of that brings top to and in think take leverage that spreads, of the that case, well leading first and that coming a wide basis, benefit the would OID, else terms positioned was in relative than just Yes, can your advantage but credits, our this value higher and really the risk, comment a the that opportunities are our regarding more market the geopolitical terms attractive given being can

instrumental terms And lasts, Unfortunately, you’re acquisitions, So able side, on add-on business. that’s diversified of recession, a credit being basis, been has rely itself but portfolio I looking of quite we U.S. more it’s our our themselves potential don’t a becoming on the attractive. frankly, know on portfolio to which in really the been that attractive a U.S. just for than into going larger just driving a perspective origination basically more in in and from the have very that’s at how long relative scale terms business

Operator

question is James. Dodd Raymond from next Our with Robert

Robert Dodd

and deal Sierra the getting the on quarter. Congratulations closed good

are a these are you of mean, the up you BDC First it’s I JVs, to some in like it less how a have advantage, the enormous question, revenues competitive, balance mean, things there. end-of-quarter can that. that capital against starting that and want expanding not going pools gimmick, into the -- to are some to so, JVs do plain it the -- They nonqualified markets much to bump to now? to have buckets want the with right? all ways obviously Or potentially continue X/X crowded I the on view kind with are on out like I we should vanilla . -- don’t you Is you sheet management keep -- limits that as call the get BDC there expect different side? a are cross-platform, something you’d but portfolio? see? of if balanced you some which cross-platform of big about it’s And mix everything to Is manage around there about that of take of

Jonathan Bock

bucket out, investment is special into they a to nonqualified pointed or of what amount the there dive you healthy or across given which correctly And the number be the specific, of find is, of JVs, are companies qualified, all just that cross-platform is I can BDC of infrastructure certainly the but situation so opportunities, right? they are. that’s in how you some which a think the would space, operating maybe

some that to us same opportunities think of when at Bryan, investments. have. we Bryan? the you’ll at in . diversification And manage so exist, platform the I start the to continue infrastructure certain always mentioning opportunities way some are find qualified time, that growth same across and worth think there time, exist the that But you areas are

Bryan High

Yes.

recently. your you’re a behind maximize in to is to space, interested late asset have a unit sort have of real supporting And on, the think opportunities that Eclipse real underlying today fundamental especially return and of of of and in decent return, pipeline where we’ve them clean part where the investments very silos we the that more make think infrastructure that specifically, trying our infrastructure multiple this different I finding attractive, similar some sort we’re I value we’re it’s sort across in per them, space. capital cycle chunk can of you has to place been and risk-adjusted when think risk. been the deploying And value of stage collateral those in something be

Robert Dodd

If obviously, the and I out, that. can I periods volatile institutional economic since there. mean, pointed you that good more appreciate outlook? is view really one Ian the the recession mentioned right, ABL, with What’s I on word. the maybe in with do, Eclipse, security can as

pure what’s the loan. market, an say, outlook cash since resistant recession was word the ABL not view said? the Some I’m loan to a than flow institutional be, the economic saying . of less tends R But middle of

Eric Lloyd

the is an I illiquidity the X is there’s maybe, say given every or go our [indiscernible], the always through gives of you go be want whether months economic as of asset. if they do potential or Ian, we underwrite we during I’ll does from think inflation. characterize little ago, before Robert, I underwrite today, an kind the of portfolio that, cycle a going some you Ian to how Because it we asset, that think the over positioned. portfolio bit And rate time, that time to idea credit how right portfolio back how good impact of through assume ago, to just credit. X.Xx we a course of about type That’s said rises that this And now average asset, X on the leveraging assets. years be nature

that back kind around go kind over If X.XXx time, of to it’s X.Xx. you always of

We’re not going Xs. up the to it into chase

economic Xs. Obviously, prices are have down environment, up the some coverages borrowers, input. yields with the is the kind up, negative the And on like an down companies are we of us can right, cycle pressure scope We’re kind are market for of type the going is, or see the feel rate that inflationary meaning well. combined of recession, positive the cycle besides those asset they not based into a weather rates. to The on interest

kind of Ian, the that’s maybe -- can So where we we cover stuff yesterday. some look at talked But overall. about of it you

Ian Fowler

Yes.

go guess we’re I very said could yields I focused And Sorry, Robert, a much these and say opened base recession. didn’t of companies’ ability where could to rates question. those potential can But underwriting we and I look, deals, their think on go when mean, obviously, good worms. impact the recession. I we’re and I spreads to payments. make

class of previous stepping just in And asset cycles, just I the looking market. key on not efficient one think, an right, think top at it’s me, things back, of portfolio. being is really for I this

to touch teams. have be management really in with You

get EBITDA out XX% as very is and availability labor labors challenges and portfolio, find of You think There’s the breaking risk just things were on impact be our portfolio. associated just pressures, then portfolio, to just would have through and that. There’s contact into Right that the I but like-work of a terms types businesses, just don’t we and way the chain need basis, we’re supply in labor our deal costs risk. with and with in And did to were labor in of labor been your like retail, those now, the teams. market able management medium. COVID like not to portfolio, of in proactive disruptions. pretty believe, with lot our teams. then We the are some low got margin we on think connect out how still our teams Probably businesses terms issue labor so issues And be we’ve on obviously, any manage to there’s of and and focusing performing. COVID, biggest done. restaurants, this inflationary have that’s of companies management team input skill often with XX% you’ve in there a to right is and freight have And gone has lower during we commodity to low we actively now

low On our because cost, businesses. really is are we’ve and companies believe we these looked input the services portfolio X/X at predominantly risk inflationary professional

medium product good there of business. to to in any So of XX% of the way. material say, some tied It’s a is I think tied service physical not more linked where is would or is, a cost goods. physical a

Xx and example, pricing, that inventory average drive of of potential just into So But in Crisis, changes Great the our you’ve day, to to coverage where got type for with the at X.Xx. interest Financial it’s over going coverage, interest Xx. remember management I in dealing downturn, look at the exposure. potential the any end was

then. Also inventories that pretty inventories, now disruption of is much I chain supply So terms we’re actually feel a in like better were just positioned back than lean. we positive are

noticed their then costs that we’ve So the that. are our costs. what are inventory and carrying interest of is borrowing hedging with rate firms And costs low lot support equity a proactively also, private

end we And again, in our I feel environment. good pretty defensive we so about if are think from where position we a up

Robert Dodd

you made and syndicate public detail. in the cases, with you with credit we’re data relative change or loans, little helpful. it between middle-market how monthly, I manage recession comment -- the and So really That’s and a in you than call middle start data spreads get if if balance getting fact the to get you But -- you right? lag that potential. recession. liquid much the can more would balance that or can dynamic likely do the increase up-to-date value and dynamics? a can Is rules -- Thanks you in does potential are of the be I just worth likelihood quarterly the early many that of and more middle-market spreads credit, the a relates current recession you more probably ask it rallies are think, a you that? premium wider, in How how to CEO data, that market you bit would creates markets get move, liquid opportunistic a in If lot do earlier. all because before to move elevating do if . it data this break the for -- liquid versus to can a all If more begins what’s one market

Eric Lloyd

more have intimate balance sooner I and is the we’ve and dozens And research side, of a Robert. with To dozens think of you their industries know and I it’s information That teams the on extremely portfolio being right? well. management their and companies got also your fair, management who team. said, maybe analysts point, very liquid Look, relationship the their that’s things, think a

But liquid the I trying wasn’t But market on way there the I think, great and we team in, doesn’t the going experience see we where mean change broadly into anything were you’re would we so those is a taking and And that wholesale those credit that that. we see factors. illiquidity to we’ve margin, all price, the attractive credit or value, information we margin us a way, That that benefit, like see have flow, if as record those do stepped into track would Barings other and make to platform deep opportunities on of opportunities, syndicated insinuate that way, such a the into go part it. . so. step account of value, where relative

Operator

for back comments. conference question-and-answer our Eric of turn We session. like I would reached to the the end to closing over

Eric Lloyd

day. and Thanks, great have appreciate stay it. in the and a Please all operator, I you And today. call safe, for thank participating

Operator

Thank today’s does conference. conclude you. This

at for lines and participation. thank time, this your You you may disconnect your

Barings BDC (BBDC) 6 May 222022 Q1 Earnings call transcript