What changed in this filing

/stocks — the workspaceLOADING

Item 1. Financial Statements

2020-11-09 compared with 2020-08-05 · 378 added, 392 removed, 1971 unchanged (28% of the section changed)

2 unchanged sentences

Consolidated Balance Sheets

September 30,

2020 December 31, 2019

Investments at fair value:

Non-Control / Non-Affiliate investments (cost of $1,033,046,789 and $1,085,866,720 as of June 30, 2020 and December 31, 2019, respectively) $ 960,061,063 $ 1,066,845,054

Affiliate investments (cost of $16,658,270 and $10,158,270 as of June 30, 2020 and December 31, 2019, respectively) 15,933,845 10,229,813

Short-term investments (cost of $58,046,476 and $96,568,940 as of June 30, 2020 and December 31, 2019, respectively) 58,046,124 96,568,940

Non-Control / Non-Affiliate investments (cost of $903,128,567 and $1,085,866,720 as of September 30, 2020 and December 31, 2019, respectively) $ 886,610,176 $ 1,066,845,054

Affiliate investments (cost of $18,258,270 and $10,158,270 as of September 30, 2020 and December 31, 2019, respectively) 19,158,075 10,229,813

Short-term investments (cost of $210,503,875 and $96,568,940 as of September 30, 2020 and December 31, 2019, respectively) 210,503,390 96,568,940

Total investments at fair value 1,116,271,641 1,173,643,807

Cash 7,112,312 13,567,849

Foreign currencies (cost of $7,532,555 and $8,360,011 as of September 30, 2020 and December 31, 2019, respectively) 7,675,046 8,423,716

Interest and fees receivable 7,749,841 5,265,980

10 unchanged sentences

Debt securitization 177,536,048 316,664,474

Notes payable 49,534,479 —

Total liabilities 696,589,668 681,760,129

Commitments and contingencies (Note 7)

Common stock, $0.001 par value per share (150,000,000 shares authorized, 47,961,753 and 48,950,803 shares issued and outstanding as of June 30, 2020 and December 31, 2019, respectively) 47,962 48,951

Common stock, $0.001 par value per share (150,000,000 shares authorized, 47,961,753 and 48,950,803 shares issued and outstanding as of September 30, 2020 and December 31, 2019, respectively) 47,962 48,951

Additional paid-in capital 846,636,727 853,766,370

7 unchanged sentences

Ended Three Months

Ended Six Months Ended Six Months Ended

2020 June 30,

2019 June 30,

2020 June 30,

Ended Nine Months Ended Nine Months Ended

September 30,

2020 September 30,

2019 September 30,

2020 September 30,

Investment income:

24 unchanged sentences

Non-Control / Non-Affiliate investments (19,477,823) (1,066,536) (36,233,667) (1,146,287)

Net realized gains (losses) on investments (16,597,865) 50,024 (16,755,844) (79,751)

Net realized losses on investments (19,477,823) (1,066,536) (36,233,667) (1,146,287)

Foreign currency transactions (1,028,262) 83,037 (1,089,787) 83,037

Net realized gains (losses) (16,514,997) 50,024 (16,817,369) (79,751)

Net realized losses (20,506,085) (983,499) (37,323,454) (1,063,250)

Net unrealized appreciation (depreciation):

18 unchanged sentences

Capital Total Distributable Earnings (Loss) Total

Three Months Ended June 30, 2019 Number

Three Months Ended September 30, 2019 Number

of Shares Par

Balance, March 31, 2019 50,690,659 $ 50,691 $ 879,033,345 $ (294,922,722) $ 584,161,314

Balance, June 30, 2019 50,314,275 $ 50,314 $ 875,245,919 $ (292,216,528) $ 583,079,705

Net investment income — — — 7,987,175 7,987,175

2 unchanged sentences

Loss on extinguishment of debt — — — (13,357) (13,357)

Income tax benefit — — — 17,493 17,493

Dividends / distributions — — — (6,935,311) (6,935,311)

Purchases of shares in repurchase plan (895,733) (895) (8,894,010) — (8,894,905)

Balance, June 30, 2019 50,314,275 $ 50,314 $ 875,245,919 $ (292,216,528) $ 583,079,705

Balance, September 30, 2019 49,418,542 $ 49,419 $ 866,351,909 $ (293,956,348) $ 572,444,980

Common Stock Additional

Capital Total Distributable Earnings (Loss) Total

Three Months Ended June 30, 2020 Number

Three Months Ended September 30, 2020 Number

of Shares Par

Balance, March 31, 2020 48,288,822 $ 48,289 $ 848,982,942 $ (403,286,323) $ 445,744,908

Balance, June 30, 2020 47,961,753 $ 47,962 $ 846,636,727 $ (356,211,495) $ 490,473,194

Net investment income — — — 7,960,166 7,960,166

4 unchanged sentences

Dividends / distributions — — — (7,673,880) (7,673,880)

Purchases of shares in repurchase plan (327,069) (327) (2,346,215) — (2,346,542)

Balance, June 30, 2020 47,961,753 $ 47,962 $ 846,636,727 $ (356,211,495) $ 490,473,194

Balance, September 30, 2020 47,961,753 $ 47,962 $ 846,636,727 $ (320,707,748) $ 525,976,941

See accompanying notes.

3 unchanged sentences

Capital Total Distributable Earnings (Loss) Total

Six Months Ended June 30, 2019 Number

Nine Months Ended September 30, 2019 Number

of Shares Par

7 unchanged sentences

Purchases of shares in repurchase plan (1,865,522) (1,865) (18,542,340) — (18,544,205)

Balance, June 30, 2019 50,314,275 $ 50,314 $ 875,245,919 $ (292,216,528) $ 583,079,705

Balance, September 30, 2019 49,418,542 $ 49,419 $ 866,351,909 $ (293,956,348) $ 572,444,980

Common Stock Additional

Capital Total Distributable Earnings (Loss) Total

Six Months Ended June 30, 2020 Number

Nine Months Ended September 30, 2020 Number

of Shares Par

2 unchanged sentences

Net realized loss on investments / foreign currency transactions — — — (37,323,454) (37,323,454)

Net unrealized depreciation of investments / foreign currency transactions — — — (54,352,743) (54,352,743)

Net unrealized appreciation of investments / foreign currency transactions — — — 1,594,639 1,594,639

Loss on extinguishment of debt — — — (660,066) (660,066)

2 unchanged sentences

Purchases of shares in repurchase plan (989,050) (989) (7,129,643) — (7,130,632)

Balance, June 30, 2020 47,961,753 $ 47,962 $ 846,636,727 $ (356,211,495) $ 490,473,194

Balance, September 30, 2020 47,961,753 $ 47,962 $ 846,636,727 $ (320,707,748) $ 525,976,941

See accompanying notes.

1 unchanged sentence

Unaudited Consolidated Statements of Cash Flows

Six Months Ended Six Months Ended

June 30, 2020 June 30, 2019

Nine Months Ended Nine Months Ended

September 30, 2020 September 30, 2019

Cash flows from operating activities:

7 unchanged sentences

Net realized loss on investments 36,233,667 1,146,287

Net realized loss on foreign currency transactions 61,525 —

Net unrealized (appreciation) depreciation of investments 54,740,381 (27,249,195)

Net unrealized appreciation of foreign currency transactions (387,638) —

Net realized (gain) loss on foreign currency transactions 1,089,787 (83,037)

Net unrealized appreciation of investments (3,351,051) (25,080,089)

Net unrealized (appreciation) depreciation of foreign currency transactions 1,756,412 (374,278)

Payment-in-kind interest accrued, net of payments received (577,090) —

14 unchanged sentences

Repayment of debt securitization (139,897,128) (7,468,690)

Proceeds from notes 50,000,000 —

Financing fees paid (544,874) (8,246,692)

2 unchanged sentences

Net cash provided by (used in) financing activities (12,028,248) 16,632,719

Net increase (decrease) in cash (3,538,061) 499,620

Cash, beginning of period 21,991,565 12,426,982

Cash, end of period $ 18,453,504 $ 12,926,602

Net increase (decrease) in cash and foreign currencies (7,204,207) 411,121

Cash and foreign currencies, beginning of period 21,991,565 12,426,982

Cash and foreign currencies, end of period $ 14,787,358 $ 12,838,103

Supplemental disclosure of cash flow information:

3 unchanged sentences

Unaudited Consolidated Schedule of Investments

June 30, 2020

September 30, 2020

Portfolio Company Industry Type of Investment (1) (2)

25 unchanged sentences

11,581,395 11,374,840 11,320,814

Alliant Holdings LP (0.9%)* (6) (8)

Property & Casualty Insurance First Lien Senior Secured Term Loan (LIBOR + 2.75%, 2.9% Cash, Acquired 09/18, Due 05/25) 4,910,038 4,916,270 4,643,373

Air Canada 2020-2 Class B Pass Through Trust (1.5%)* (5)

Airlines Structured Secured Note - Class B (9.0% Cash, Acquired 09/20, Due 10/25) 7,500,000 7,500,000 7,852,969

7,500,000 7,500,000 7,852,969

11 unchanged sentences

9,735,797 9,549,448 9,468,062

Anagram Holdings, LLC

(2.7%)* (3) (5) (7)

Chemicals, Plastics, & Rubber First Lien Senior Secured Note (10.0% Cash, 5.0% PIK, Acquired 08/20, Due 08/25) 13,673,780 12,526,549 14,220,731

13,673,780 12,526,549 14,220,731

Anchorage Capital CLO Ltd:

12 unchanged sentences

Apex Tool Group, LLC

Industrial Machinery First Lien Senior Secured Term Loan (LIBOR + 5.25%, 6.5% Cash, Acquired 08/18, Due 08/24) 7,054,987 6,937,646 6,292,625

(0.4%)* (5) (6) (8) (9)

Applied Systems Inc.

(1.0%)* (6) (8)

Application Software First Lien Senior Secured Term Loan (LIBOR + 3.25%, 4.3% Cash, Acquired 09/19, Due 09/24) 4,937,940 4,965,194 4,791,481

Industrial Machinery First Lien Senior Secured Term Loan (LIBOR + 5.25%, 6.5% Cash, Acquired 08/18, Due 08/24) 2,041,814 1,999,069 1,931,556

2,041,814 1,999,069 1,931,556

5 unchanged sentences

Unaudited Consolidated Schedule of Investments — (Continued)

June 30, 2020

September 30, 2020

Portfolio Company Industry Type of Investment (1) (2)

5 unchanged sentences

Air Freight & Logistics First Lien Senior Secured Term Loan (LIBOR + 4.75%, 5.8% Cash, Acquired 06/19, Due 06/24) 5,368,480 5,286,234 5,243,394

4,667,670 4,580,193 4,405,835

Ascend Learning, LLC (1.0%)* (6) (8)

IT Consulting & Other Services First Lien Senior Secured Term Loan (LIBOR + 3.0%, 4.0% Cash, Acquired 09/18, Due 07/24) 4,936,548 4,944,790 4,686,660

First Lien Senior Secured Term Loan (LIBOR + 6.0%, 6.2% Cash, Acquired 07/20, Due 06/24) 2,000,318 1,961,993 2,000,318

7,368,798 7,248,227 7,243,712

17 unchanged sentences

Advertising First Lien Senior Secured Term Loan (LIBOR + 3.25%, 4.25% Cash, Acquired 08/18, Due 03/25) 4,917,073 4,895,932 3,650,926

First Lien Senior Secured Term Loan (LIBOR + 4.50%, 5.5% Cash, Acquired 08/18, Due 03/25) (7)

750,000 550,978 562,500

5,667,073 5,446,910 4,213,426

Bass Pro Group, LLC (0.4%)* (5) (8) (10)

12 unchanged sentences

1,458,053 1,365,873 1,436,182

Berlin Packaging LLC (1.0%)* (6) (8)

Forest Products /Containers First Lien Senior Secured Term Loan (LIBOR + 3.0%, 3.2% Cash, Acquired 08/18, Due 11/25) 4,937,028 4,946,645 4,665,491

4,937,028 4,946,645 4,665,491

Blackhawk Network Holdings Inc.

12 unchanged sentences

7,532,846 7,487,168 7,397,255

Carlson Travel, Inc (0.4%)* (5) (7)

Business Travel Management First Lien Senior Secured Note (6.8% Cash, Acquired 09/20, Due 12/25) 3,000,000 2,362,500 2,265,000

3,000,000 2,362,500 2,265,000

Carlyle Aviation Partners Ltd.

4 unchanged sentences

Unaudited Consolidated Schedule of Investments — (Continued)

June 30, 2020

September 30, 2020

Portfolio Company Industry Type of Investment (1) (2)

5 unchanged sentences

Cineworld Group PLC

(0.4%)* (3) (5) (8) (11)

Leisure Products First Lien Senior Secured Term Loan (LIBOR + 2.25%, 2.5% Cash, Acquired 4/20, Due 2/25) 2,981,586 1,989,848 1,971,156

2,981,586 1,989,848 1,971,156

Clarios Global LP (0.4%)* (5) (8) (9)

Auto Parts & Equipment First Lien Senior Secured Term Loan (LIBOR + 3.5%, 3.6% Cash, Acquired 3/20, Due 4/26) 1,984,962 1,801,408 1,930,991

1,984,962 1,801,408 1,930,991

Classic Collision (Summit Buyer, LLC) (1.1%)* (5) (7) (8) (10)

20 unchanged sentences

2,869,873 2,871,724 2,704,855

Core & Main LP (0.8%)* (6) (8)

Building Products First Lien Senior Secured Term Loan (LIBOR + 2.75%, 3.8% Cash, Acquired 09/18, Due 08/24) 3,959,391 3,973,700 3,762,649

3,959,391 3,973,700 3,762,649

CPI International Inc.

(0.9%)* (6) (8)

Electronic Components First Lien Senior Secured Term Loan (LIBOR + 3.5%, 4.5% Cash, Acquired 08/18, Due 07/24) 4,722,788 4,728,810 4,431,534

CSL DualCom (2.4%)* (3) (5) (7) (8) (12)

Tele-communications First Lien Senior Secured Term Loan (GBP LIBOR + 5.5%, 5.6% Cash, Acquired 09/20, Due 09/27) 12,829,485 12,128,593 12,341,964

12,829,485 12,128,593 12,341,964

3 unchanged sentences

12,354,672 12,124,446 12,058,967

Davis Vision Incorporation

(0.8%)* (6) (8)

Managed Health Care First Lien Senior Secured Term Loan (LIBOR + 3.0%, 4.0% Cash, Acquired 08/18, Due 12/24) 3,949,367 3,947,664 3,774,134

3,949,367 3,947,664 3,774,134

Diamond Sports Group, LLC (0.2%)* (5) (8) (9)

1 unchanged sentence

992,481 785,480 765,868

Dimora Brands, Inc.

(0.6%)* (6) (8)

Building Products First Lien Senior Secured Term Loan (LIBOR + 3.5%, 4.6% Cash, Acquired 08/18, Due 08/24) 2,938,760 2,941,402 2,812,040

2,938,760 2,941,402 2,812,040

Distinct Holdings, Inc.

5 unchanged sentences

2,862,667 2,597,617 2,757,703

Edelman Financial Center, LLC, The (1.0%)* (6) (8)

Investment Banking & Brokerage First Lien Senior Secured Term Loan (LIBOR + 3.0%, 3.2% Cash, Acquired 09/18, Due 07/25) 4,937,343 4,970,893 4,702,820

4,937,343 4,970,893 4,702,820

Series 2019-1A (0.6%)* (3) (5) (8) (10)

5 unchanged sentences

4,825,914 4,861,718 4,584,618

Barings BDC, Inc.

Unaudited Consolidated Schedule of Investments — (Continued)

June 30, 2020

Portfolio Company Industry Type of Investment (1) (2)

Amount Cost Fair

Envision Healthcare Corp.

5 unchanged sentences

11,893,750 11,763,359 11,655,875

ExGen Renewables IV, LLC (0.5%)* (3) (6) (8)

Electric Utilities First Lien Senior Secured Term Loan (LIBOR + 3.0%, 4.0% Cash, Acquired 09/18, Due 11/24) 2,787,424 2,808,008 2,696,833

2,787,424 2,808,008 2,696,833

Eyemart Express LLC (0.3%)* (6) (8) (9)

1 unchanged sentence

1,422,131 1,425,756 1,373,537

Fieldwood Energy LLC

(0.4%)* (4) (5) (6) (8)

Oil & Gas Equipment & Services First Lien Senior Secured Term Loan (LIBOR + 5.25%, 7.0% Cash, Acquired 08/18, Due 04/22) 10,000,000 10,063,022 1,816,700

10,000,000 10,063,022 1,816,700

Filtration Group Corporation (0.9%)* (6) (7) (8)

Industrial Machinery First Lien Senior Secured Term Loan (LIBOR + 3.0%, 3.2% Cash, Acquired 09/18, Due 03/25) 4,748,978 4,776,205 4,511,529

Barings BDC, Inc.

Unaudited Consolidated Schedule of Investments — (Continued)

September 30, 2020

Portfolio Company Industry Type of Investment (1) (2)

Amount Cost Fair

F24 (Stairway BidCo Gmbh)) (0.7%)* (3) (5) (7) (8) (14)

Software Services First Lien Senior Secured Term Loan (EURIBOR + 6.5%, 6.5% Cash, Acquired 08/20, Due 08/27) $ 3,912,838 $ 3,770,493 $ 3,731,425

3,912,838 3,770,493 3,731,425

Flex Acquisition Holdings, Inc.

Foundation Risk Partners, Corp.

(0.3%)* (5) (8) (10)

Paper Packaging First Lien Senior Secured Term Loan (LIBOR + 3.25%, 4.7% Cash, Acquired 08/18, Due 06/25) 5,418,688 5,429,097 5,093,566

Financial Services First Lien Senior Secured Term Loan (LIBOR + 4.75%, 5.8% Cash, Acquired 09/20, Due 11/23) 1,458,333 1,195,833 1,195,833

Second Lien Senior Secured Term Loan (LIBOR + 8.50%, 9.5% Cash, Acquired 09/20, Due 11/24) 486,111 325,694 325,694

1,944,444 1,521,527 1,521,527

6 unchanged sentences

1,250,000 909,635 1,187,548

Graftech International Ltd.

(1.0%)* (3) (6) (8)

Specialty Chemicals First Lien Senior Secured Term Loan (LIBOR + 3.5%, 4.5% Cash, Acquired 08/18, Due 02/25) 5,169,225 5,204,360 5,022,780

5,169,225 5,204,360 5,022,780

Gulf Finance, LLC (0.1%)* (5) (8) (9)

1 unchanged sentence

1,050,973 938,230 738,309

Harbor Freight Tools USA Inc.(1.2%)* (6) (8)

Specialty Stores First Lien Senior Secured Term Loan (LIBOR + 2.5%, 3.3% Cash, Acquired 08/18, Due 08/23) 5,949,142 5,907,173 5,714,924

5,949,142 5,907,173 5,714,924

Hayward Industries, Inc.

(1.4%)* (5) (6) (8)

Leisure Products First Lien Senior Secured Term Loan (LIBOR + 3.5%, 3.7% Cash, Acquired 08/18, Due 08/24) 6,991,992 7,011,721 6,712,312

Hawaiian Airlines 2020-1 Class B Pass Through Certificates (1.4%)* (5)

Airlines Structured Secured Note - Class B (11.3% Cash, Acquired 08/20, Due 09/25) 7,500,000 7,500,000 7,544,657

7,500,000 7,500,000 7,544,657

4 unchanged sentences

Insurance First Lien Senior Secured Term Loan (EURIBOR + 5.0%, 5.0% Cash, Acquired 09/19, Due 09/26) 9,980,450 9,208,134 9,730,939

First Lien Senior Secured Term Loan (EURIBOR + 6.0%, 6.0% Cash, Acquired 07/20, Due 09/26) 1,047,298 809,090 820,844

11,027,748 10,017,224 10,551,783

6 unchanged sentences

22,140,638 21,885,536 22,091,928

Hub International Limited (1.0%)* (6) (8)

Property & Casualty Insurance First Lien Senior Secured Term Loan (LIBOR + 3.0%, 4.0% Cash, Acquired 08/18, Due 04/25) 4,937,028 4,941,249 4,686,079

4,937,028 4,941,249 4,686,079

HW Holdco, LLC (Hanley Wood LLC) (1.4%)* (5) (7) (8) (10)

1 unchanged sentence

7,527,218 7,388,421 7,339,037

Barings BDC, Inc.

Unaudited Consolidated Schedule of Investments — (Continued)

June 30, 2020

Portfolio Company Industry Type of Investment (1) (2)

Amount Cost Fair

Hyperion Materials & Technologies, Inc.

6 unchanged sentences

8,229,921 8,163,688 7,214,349

(0.5%)* (5) (8)

Healthcare First Lien Senior Secured Term Loan (LIBOR + 5.0%, 6.0% Cash, Acquired 09/18, Due 06/21) 2,453,415 2,466,732 2,355,278

2,453,415 2,466,732 2,355,278

Institutional Shareholder Services, Inc.

2 unchanged sentences

4,951,685 4,826,396 4,803,134

Internet Brands, Inc.

(0.8%)* (6) (8)

Entertainment First Lien Senior Secured Term Loan (LIBOR + 3.75%, 4.8% Cash, Acquired 08/18, Due 09/24) 3,959,391 3,979,736 3,803,272

3,959,391 3,979,736 3,803,272

ION Trading Technologies Ltd.

(1.4%)* (3) (6) (8)

Electrical Components & Equipment First Lien Senior Secured Term Loan (LIBOR + 4.0%, 5.1% Cash, Acquired 08/18, Due 11/24) 6,942,334 6,929,967 6,644,785

International Wire Group Inc.

Electrical Components & Equipment Second Lien Senior Secured Note (10.8% Cash, Acquired 08/20, Due 08/21) 2,500,000 2,262,170 2,237,500

2,500,000 2,262,170 2,237,500

5 unchanged sentences

Aerospace & Defense First Lien Senior Secured Term Loan (LIBOR + 4.5%, 5.0% Cash, 2.0% PIK, Acquired 11/19, Due 12/26) (11)

10,432,352 10,176,058 10,145,462

First Lien Senior Secured Term Loan (EURIBOR + 4.5%, 4.5% Cash, 2.0% PIK, Acquired 11/19, Due 12/26) (15)

1,951,595 1,791,142 1,897,926

12,383,947 11,967,200 12,043,388

Barings BDC, Inc.

Unaudited Consolidated Schedule of Investments — (Continued)

September 30, 2020

Portfolio Company Industry Type of Investment (1) (2)

Amount Cost Fair

JetBlue 2019-1 Class B Pass Through Trust (1.0%)* (5)

Airlines Structured Secured Note - Class B (8.0% Cash, Acquired 08/20, Due 11/27) $ 5,000,000 $ 5,000,000 $ 5,163,463

5,000,000 5,000,000 5,163,463

Kenan Advantage Group Inc.

10 unchanged sentences

9,261,163 9,229,943 9,033,179

Learfield Communications, LLC (1.3%)* (5) (8) (9) (19)

First Lien Senior Secured Term Loan (LIBOR + 3.25%, 4.3% Cash, Acquired 08/20, Due 12/23) 137,159 96,697 116,184

First Lien Senior Secured Term Loan (PRIME + 2.00%, 5.3% Cash, 10.0% PIK, Acquired 08/20, Due 12/23) 7,000,000 6,931,678 6,947,500

7,137,159 7,028,375 7,063,684

LTI Holdings, Inc.

12 unchanged sentences

2,227,543 2,188,757 2,135,693

Men's Wearhouse, Inc.

(The) (0.3%)* (5) (6) (8)

Apparel Retail First Lien Senior Secured Term Loan (LIBOR + 3.25%, 4.3% Cash, Acquired 08/18, Due 04/25) 9,794,863 9,870,619 1,567,178

Music Reports, Inc.

(1.2%)* (5) (7) (8) (10)

Nautilus Power, LLC (0.6%)* (6) (8)

Independent Power Producers & Energy Traders First Lien Senior Secured Term Loan (LIBOR + 4.25%, 5.3% Cash, Acquired 09/18, Due 05/24) 3,142,456 3,154,177 3,007,927

Media & Entertainment First Lien Senior Secured Term Loan (LIBOR + 6.25%, 7.3% Cash, Acquired 08/20, Due 08/26) 6,592,972 6,428,148 6,428,148

6,592,972 6,428,148 6,428,148

3 unchanged sentences

2,500,000 2,476,304 2,499,470

Barings BDC, Inc.

Unaudited Consolidated Schedule of Investments — (Continued)

June 30, 2020

Portfolio Company Industry Type of Investment (1) (2)

Amount Cost Fair

(0.8%)* (5) (6) (8)

Specialized Finance First Lien Senior Secured Term Loan (LIBOR + 3.25%, 3.4% Cash, Acquired 08/18, Due 02/27) $ 3,959,386 $ 3,939,591 $ 3,682,229

3,959,386 3,939,591 3,682,229

NGS US Finco, LLC (f/k/a Dresser Natural Gas Solutions) (2.3%)* (5) (7) (8) (9)

5 unchanged sentences

1,984,491 1,790,303 1,918,586

Omaha Holdings LLC (Gates Global LLC) (1.0%)* (6) (8)

Auto Parts & Equipment First Lien Senior Secured Term Loan (LIBOR + 2.75%, 3.8% Cash, Acquired 09/18, Due 03/24) 4,936,548 4,962,954 4,743,184

4,936,548 4,962,954 4,743,184

Omnitracs, LLC (0.9%)* (6) (8)

Application Software First Lien Senior Secured Term Loan (LIBOR + 2.75%, 3.0% Cash, Acquired 08/18, Due 03/25) 4,562,506 4,551,461 4,278,490

4,562,506 4,551,461 4,278,490

Options Technology Ltd.

2 unchanged sentences

11,034,649 10,787,963 10,755,587

Ortho-Clinical Diagnostics Bermuda Co.

(0.9%)* (6) (8)

Health Care Services First Lien Senior Secured Term Loan (LIBOR + 3.25%, 3.4% Cash, Acquired 08/18, Due 06/25) 4,859,694 4,861,752 4,534,726

4,859,694 4,861,752 4,534,726

Panther BF Aggregator 2 LP

(0.4%)* (5) (8)

Auto Parts & Equipment First Lien Senior Secured Term Loan (LIBOR + 3.5%, 3.7% Cash, Acquired 03/20, Due 04/26) 1,989,974 1,798,919 1,890,476

1,989,974 1,798,919 1,890,476

Pare SAS (SAS Maurice MARLE) (0.9%)* (3) (5) (7) (8) (14)

1 unchanged sentence

4,734,565 4,413,816 4,637,507

PAREXEL International Corp.

(0.7%)* (5) (6) (8)

Pharmaceuticals First Lien Senior Secured Term Loan (LIBOR + 2.75%, 2.9% Cash, Acquired 09/18, Due 09/24) 3,576,234 3,563,123 3,381,794

3,576,234 3,563,123 3,381,794

Patriot New Midco 1 Limited (Forensic Risk Alliance) (1.6%)* (3) (5) (7) (8)

Diversified Financial Services First Lien Senior Secured Term Loan (LIBOR + 5.75%, 6.8% Cash, Acquired 02/20, Due 02/27) (11)

First Lien Senior Secured Term Loan (EURIBOR + 5.75%, 5.8% Cash, Acquired 02/20, Due 02/27) 8,452,988 7,967,816 7,924,308

4,720,287 4,591,360 4,445,391

Penn Engineering & Manufacturing Corp.

First Lien Senior Secured Term Loan (EURIBOR + 5.75%, 5.8% Cash, Acquired 02/20, Due 02/27) (15)

4,158,610 3,758,277 3,916,425

Industrial Conglomerates First Lien Senior Secured Term Loan (LIBOR + 2.75%, 3.8% Cash, Acquired 09/18, Due 06/24) 1,635,962 1,646,255 1,570,523

8,878,897 8,349,637 8,361,816

2 unchanged sentences

2,932,331 2,941,028 2,800,376

Barings BDC, Inc.

Unaudited Consolidated Schedule of Investments — (Continued)

September 30, 2020

Portfolio Company Industry Type of Investment (1) (2)

Amount Cost Fair

Playtika Holding Corp.

2 unchanged sentences

3,850,000 3,569,560 3,848,576

PODS Enterprises, Inc.

(0.9%)* (6) (8)

Packaging First Lien Senior Secured Term Loan (LIBOR + 2.75%, 3.8% Cash, Acquired 09/18, Due 12/24) 4,861,313 4,873,222 4,639,540

4,861,313 4,873,222 4,639,540

Premier Technical Services Group (Project Graphite) (0.5%)* (3) (5) (7) (8) (13)

1 unchanged sentence

2,940,259 2,677,987 2,706,073

Pro Mach Inc.

(1.1%)* (5) (6) (8)

Industrial Machinery First Lien Senior Secured Term Loan (LIBOR + 2.75%, 2.9% Cash, Acquired 08/18, Due 03/25) 5,894,737 5,880,032 5,495,015

5,894,737 5,880,032 5,495,015

ProAmpac Intermediate Inc.

(1.9%)* (5) (6) (8)

Packaged Foods & Meats First Lien Senior Secured Term Loan (LIBOR + 3.5%, 4.5% Cash, Acquired 08/18, Due 11/23) 9,821,105 9,831,133 9,342,326

9,821,105 9,831,133 9,342,326

Barings BDC, Inc.

Unaudited Consolidated Schedule of Investments — (Continued)

June 30, 2020

Portfolio Company Industry Type of Investment (1) (2)

Amount Cost Fair

Process Equipment, Inc.

8 unchanged sentences

Software First Lien Senior Secured Term Loan (LIBOR + 8.25%, 9.3% Cash, Acquired 04/20, Due 04/27) 9,870,877 9,588,196 9,662,601

LLC units (104,384 units, Acquired 04/20) 104,384 104,384

Class A Units (104.4 units, Acquired 04/20) 104,384 136,564

Class B Units (38,426.7 units, Acquired 4/20) — —

9,870,877 9,692,580 9,799,165

3 unchanged sentences

2,062,238 1,983,472 1,996,942

Qlik Technologies Inc.

(Alpha Intermediate Holding, Inc.) (1.0%)* (6) (8)

Application Software First Lien Senior Secured Term Loan (LIBOR + 3.5%, 5.4% Cash, Acquired 08/18, Due 04/24) 4,936,387 4,936,541 4,730,688

4,936,387 4,936,541 4,730,688

Radiate HoldCo, LLC (0.3%)* (5) (8) (9)

1 unchanged sentence

1,746,415 1,746,415 1,713,669

Refinitiv US Holdings, Inc.(0.6%)* (5)

Data Processing & Outsourced Services First Lien Senior Secured Term Loan (LIBOR + 3.25%, 3.4% Cash, Acquired 03/20, Due 10/25) 3,020,382 2,741,337 2,947,138

3,020,382 2,741,337 2,947,138

Renaissance Learning, Inc.

Recovery Point Systems, Inc.

(2.2%)* (5) (7) (8) (10)

Application Software First Lien Senior Secured Term Loan (LIBOR + 3.25%, 4.0% Cash, Acquired 08/18, Due 05/25) 5,363,951 5,360,661 5,151,163

Technology First Lien Senior Secured Term Loan (LIBOR + 6.5%, 7.5% Cash, Acquired 08/20, Due 07/26) 11,795,776 11,564,165 11,559,860

11,795,776 11,564,165 11,559,860

Reynolds Group Holdings Ltd.

Refinitiv US Holdings, Inc.

(0.6%)* (5) (9)

Packaging First Lien Senior Secured Term Loan (LIBOR + 2.75%, 2.9% Cash, Acquired 09/18, Due 02/23) 4,935,964 4,951,009 4,703,480

Data Processing & Outsourced Services First Lien Senior Secured Term Loan (LIBOR + 3.25%, 3.4% Cash, Acquired 03/20, Due 10/25) 3,012,716 2,745,948 2,979,908

3,012,716 2,745,948 2,979,908

Series 2019-6A

(0.4%)* (3) (5) (10)

Structured Finance Structured Secured Note - Class D (LIBOR + 6.75%, 7.0% Cash, Acquired 03/20, Due 04/30) 2,000,000 1,649,961 1,849,426

21 unchanged sentences

11,096,056 10,617,570 10,301,308

SIWF Holdings, Inc.

(Spring Windows Fashions, LLC) (1.1%)* (6) (8)

Home Furnishings First Lien Senior Secured Term Loan (LIBOR + 4.25%, 5.3% Cash, Acquired 08/18, Due 06/25) 5,924,433 5,956,756 5,509,723

5,924,433 5,956,756 5,509,723

SK Blue Holdings, LP (Polar US Borrower LLC) (0.8%)* (6) (7) (8)

Commodity Chemicals First Lien Senior Secured Term Loan (LIBOR + 4.75%, 4.9% Cash, Acquired 09/18, Due 10/25) 4,139,599 4,137,617 3,891,223

4,139,599 4,137,617 3,891,223

Smile Brands Group Inc.

2 unchanged sentences

5,851,605 5,808,132 5,657,743

Barings BDC, Inc.

Unaudited Consolidated Schedule of Investments — (Continued)

June 30, 2020

Portfolio Company Industry Type of Investment (1) (2)

Amount Cost Fair

Solenis International, LLC (f/k/a

Solenis Holdings, L.P.) (1.1%)* (5) (6) (8)

Specialty Chemicals First Lien Senior Secured Term Loan (LIBOR + 4.0%, 4.4% Cash, Acquired 08/18, Due 06/25) $ 5,391,234 $ 5,418,365 $ 5,156,500

5,391,234 5,418,365 5,156,500

Springbrook Software (SBRK Intermediate, Inc.) (1.9%)* (5) (7) (8) (10)

1 unchanged sentence

10,442,083 10,214,537 10,191,155

SRS Distribution, Inc.

(1.0%)* (6) (8)

Building Products First Lien Senior Secured Term Loan (LIBOR + 3.25%, 4.3% Cash, Acquired 09/18, Due 05/25) 4,949,622 4,881,192 4,666,256

4,949,622 4,881,192 4,666,256

Syniverse Holdings, Inc.

2 unchanged sentences

10,263,158 10,235,328 7,876,974

Barings BDC, Inc.

Unaudited Consolidated Schedule of Investments — (Continued)

September 30, 2020

Portfolio Company Industry Type of Investment (1) (2)

Amount Cost Fair

Tahoe Subco 1 Ltd.

6 unchanged sentences

6,840,506 6,664,086 5,719,416

Tempo Acquisition LLC (1.1%)* (6) (8)

Investment Banking & Brokerage First Lien Senior Secured Term Loan (LIBOR + 2.75%, 2.9% Cash, Acquired 09/18, Due 05/24) 5,561,088 5,576,381 5,269,130

5,561,088 5,576,381 5,269,130

The Hilb Group, LLC

(1.8%)* (5) (7) (8) (9) (10)

Insurance Brokerage First Lien Senior Secured Term Loan (LIBOR + 5.75%, 6.8% Cash, Acquired 12/19, Due 12/26) 9,767,134 9,503,409 9,474,877

5 unchanged sentences

Transit Technologies LLC

(1.1%)* (5) (7) (8) (10)

Software First Lien Senior Secured Term Loan (LIBOR + 4.75%, 5.0% Cash, Acquired 02/20, Due 02/25) 6,785,305 6,575,927 6,014,494

3 unchanged sentences

24,589,328 24,418,931 24,343,435

Triumph Group Inc.

(0.7%)* (3) (5)

Aerospace & Defense First Lien Senior Secured Note (8.9% Cash, Acquired 08/20, Due 06/24) 3,266,000 3,266,000 3,478,290

3,266,000 3,266,000 3,478,290

Truck-Lite Co., LLC (3.4%)* (5) (7) (8) (10)

3 unchanged sentences

Power Distribution Solutions First Lien Senior Secured Term Loan (LIBOR + 4.75%, 5.8% Cash, Acquired 09/18, Due 09/23) 15,637,813 15,464,677 15,345,385

LLC Units (361.5 units, Acquired 09/18) 361,505 493,944

Class A LLC Units (361.5 units, Acquired 09/18) 361,505 365,533

15,637,813 15,826,182 15,710,918

6 unchanged sentences

1,491,380 1,494,324 1,242,036

UKFast Leaders Limited (5.4%)* (3) (5) (7) (8) (18)

Technology First Lien Senior Secured Term Loan (GBP LIBOR + 6.75%, 6.8% Cash, Acquired 09/20, Due 9/27) 22,912,134 22,121,627 22,224,770

Super Senior Secured Term Loan (GBP LIBOR + 3.25%, 3.3% Cash, Acquired 09/20, Due 3/27) 6,248,763 6,033,283 6,061,300

29,160,897 28,154,910 28,286,070

USF Holdings LLC (U.S.

2 unchanged sentences

3,088,580 3,093,550 2,665,444

USI Holdings Corp.

(1.0%)* (6) (8)

Property & Casualty Insurance First Lien Senior Secured Term Loan (LIBOR + 3.0%, 3.3% Cash, Acquired 08/18, Due 05/24) 4,936,548 4,932,157 4,674,911

4,936,548 4,932,157 4,674,911

USIC Holdings, Inc.

(United States Infrastructure Corp.) (0.8%)* (6) (8)

Packaged Foods & Meats First Lien Senior Secured Term Loan (LIBOR + 3.25%, 4.3% Cash, Acquired 08/18, Due 12/23) 3,931,135 3,946,196 3,739,493

3,931,135 3,946,196 3,739,493

USLS Acquisition, Inc.

2 unchanged sentences

16,430,096 16,194,004 14,884,078

Barings BDC, Inc.

Unaudited Consolidated Schedule of Investments — (Continued)

June 30, 2020

Portfolio Company Industry Type of Investment (1) (2)

Amount Cost Fair

Utac Ceram (2.6%)* (3) (5) (8) (14)

Business Services First Lien Senior Secured Term Loan (EURIBOR + 5.75%, 5.8% Cash, Acquired 09/20, Due 09/27) 14,071,806 13,503,424 13,597,762

14,071,806 13,503,424 13,597,762

Validity, Inc.

2 unchanged sentences

5,051,351 4,915,036 4,724,276

Veritas Bermuda Intermediate Holdings Ltd.

(0.9%)* (6) (8)

Technology Distributors First Lien Senior Secured Term Loan (LIBOR + 4.5%, 5.5% Cash, Acquired 09/18, Due 01/23) 4,936,093 4,786,298 4,551,077

4,936,093 4,786,298 4,551,077

VF Holding Corp.

(Vertafore, Inc.)(0.5%)* (5) (6) (8)

Systems Software First Lien Senior Secured Term Loan (LIBOR + 3.25%, 3.4% Cash, Acquired 08/18, Due 07/25) 2,464,969 2,464,969 2,318,623

2,464,969 2,464,969 2,318,623

Wilsonart, LLC (1.0%)* (6) (8)

Building Products First Lien Senior Secured Term Loan (LIBOR + 3.25%, 4.3% Cash, Acquired 11/18, Due 12/23) 4,936,387 4,936,388 4,749,742

4,936,387 4,936,388 4,749,742

Winebow Group, LLC, (The) (2.6%)* (5) (8) (9)

2 unchanged sentences

7,141,980 4,813,864 4,999,386

17,929,698 14,884,519 13,895,911

Barings BDC, Inc.

Unaudited Consolidated Schedule of Investments — (Continued)

September 30, 2020

Portfolio Company Industry Type of Investment (1) (2)

Amount Cost Fair

World 50, Inc.

(2.6%)* (5) (7) (8) (9)

Broadcasting First Lien Senior Secured Term Loan (LIBOR + 4.75%, 5.8% Cash, Acquired 01/20, Due 01/26) 10,650,223 10,402,176 10,247,420

Professional Services First Lien Senior Secured Term Loan (LIBOR + 5.25%, 6.3% Cash, Acquired 01/20, Due 01/26) $ 13,945,025 $ 13,607,509 $ 13,535,173

13,945,025 13,607,509 13,535,173

9 unchanged sentences

Short-Term Investments:

BNY Mellon Investment Advisor, Inc.

Money Market Fund Dreyfus Government Cash Management Fund (0.1% yield) 66,771 66,771

BlackRock, Inc.

Money Market Fund BlackRock Liquidity Temporary Fund (0.13% yield) 21,000,000 21,000,000

21,000,000 21,000,000

7 unchanged sentences

JPMorgan Chase & Co.

(1.3%)* (5) (6)

Money Market Fund JPMorgan Prime Money Market Fund (0.16% yield) 26,856,855 26,856,370

1 unchanged sentence

Subtotal Short-Term Investments 210,503,875 210,503,390

Total Investments, June 30, 2020 (210.8%)* $ 1,053,855,836 $ 1,107,751,535 $ 1,034,041,032

Barings BDC, Inc.

Unaudited Consolidated Schedule of Investments — (Continued)

June 30, 2020

Total Investments, September 30, 2020 (212.23%)* $ 929,268,108 $ 1,131,890,712 $ 1,116,271,641

Foreign Currency Forward Contracts:

Description Notional Amount to be Purchased Notional Amount to be Sold Settlement Date Unrealized Appreciation (Depreciation)

Foreign currency forward contract (CAD) C$13,495,000 $10,081,420 10/02/20 $ 21,550

Foreign currency forward contract (CAD) $10,255,950 C$13,495,000 10/02/20 152,979

Foreign currency forward contract (EUR) €4,672,157 $5,487,094 10/02/20 (8,286)

7 unchanged sentences

Foreign currency forward contract (SEK) $92,284 821,594kr 01/05/21 362

Total Foreign Currency Forward Contracts, June 30, 2020 $ (5,964)

Total Foreign Currency Forward Contracts, September 30, 2020 $ 149,441

* Fair value as a percentage of net assets.

4 unchanged sentences

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 either LIBOR 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.

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, 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 June 30, 2020 represented 211% of the Company’s net assets, are subject to legal restrictions on sales.

(2) All of the Company’s portfolio company investments (including joint venture and short-term investments), which as of September 30, 2020 represented 212.2 % 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.

Barings BDC, Inc.

Unaudited Consolidated Schedule of Investments — (Continued)

September 30, 2020

(3) Investment is not a qualifying investment as defined under Section 55(a) of the 1940 Act.

Non-qualifying assets represent 17.4% of total investments at fair value as of June 30, 2020.

Non-qualifying assets represent 19.2 % of total investments at fair value as of September 30, 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).

(4) Non-accrual investment.

(5) Some or all of the investment is or will be encumbered as security for the Company's credit facility entered into in February 2019 (and subsequently amended in December 2019) with ING Capital LLC (the "February 2019 Credit Facility").

(6) Some or all of the investment is encumbered as security for the Company's $449.3 million term debt securitization entered into in May 2019 (the "Debt Securitization").

(7) The fair value of the investment was determined using significant unobservable inputs.

(8) Debt investment includes interest rate floor feature

(4) As defined in the 1940 Act, the Company is deemed to be an “affiliated person” of the portfolio company as the Company owns 5% or more of the portfolio company's voting securities (“non-controlled affiliate”).

Transactions related to investments in non-controlled affiliates for the six months ended June 30, 2020 were as follows:

Transactions related to investments in non-controlled affiliates for the nine months ended September 30, 2020 were listed below:

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

Portfolio Company Type of Investment(a)

10 unchanged sentences

Gross reductions also include net increases in unrealized depreciation or net decreases in unrealized appreciation.

(6) Some or all of the investment is encumbered as security for the Company's $449.3 million term debt securitization entered into in May 2019 (the "Debt Securitization").

(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, 2020 was 0.14825%.

(10) The interest rate on these loans is subject to 3 Month LIBOR, which as of September 30, 2020 was 0.23388%.

(11) The interest rate on these loans is subject to 6 Month LIBOR, which as of September 30, 2020 was 0.25975%.

(12) The interest rate on these loans is subject to 3 Month GBP LIBOR, which as of September 30, 2020 was 0.06088%.

(13) The interest rate on these loans is subject to 6 Month GBP LIBOR, which as of September 30, 2020 was 0.08750%.

(14) The interest rate on these loans is subject to 3 Month EURIBOR, which as of September 30, 2020 was -0.498%.

(15) The interest rate on these loans is subject to 6 Month EURIBOR, which as of September 30, 2020 was -0.480%.

(16) The interest rate on these loans is subject to 3 Month STIBOR, which as of September 30, 2020 was -0.084%.

(17) The interest rate on these loans is subject to 2 Month LIBOR, which as of September 30, 2020 was 0.19388%.

(18) The interest rate on these loans is subject to 1 month GBP LIBOR, which as of September 30, 2020 was 0.04538%.

(19) The interest rate on these loans is subject to Prime, which as of September 30, 2020 was 3.25% .

(20) The interest rate on these loans is subject to 1 Month EURIBOR, which as of September 30, 2020 was -0.529%.

See accompanying notes.

648 unchanged sentences

and its wholly-owned subsidiaries.

The effects of all intercompany transactions between Barings BDC, Inc.

and its wholly-owned subsidiaries have been eliminated in consolidation.

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.

20 unchanged sentences

The Company adopted the aforementioned guidance on January 1, 2020 and it did not have a material impact on the Company’s consolidated financial statements.

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

Barings BDC, Inc.

Notes to Unaudited Consolidated Financial Statements — (Continued)

exceptions for applying 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.

Share Purchase Programs

4 unchanged sentences

Upon completion of the 10b5-1 Plan, the Adviser had purchased 5,084,302 shares of the Company's common stock pursuant to the 10b5-1 Plan.

As of June 30, 2020, the Adviser owned a total of 13,639,681 shares of our common stock, or 28.4% of the total shares outstanding.

As of September 30, 2020, the Adviser owned a total of 13,639,681 shares of our common stock, or 28.4% of the total shares outstanding.

On February 25, 2019, the Company adopted a share repurchase plan, pursuant to Board approval, for the purpose of repurchasing shares of the Company's common stock in the open market during the 2019 fiscal year (the "2019 Share Repurchase Plan").

5 unchanged sentences

A broker selected by the Company was delegated the authority to repurchase shares on the Company's behalf in the open market, pursuant to, and under the terms and limitations of, the 2019 Share Repurchase Plan.

During the three and six months ended June 30, 2019, the Company repurchased a total of 376,384 shares and 969,789 shares, respectively, of its common stock in the open market under the 2019 Share Repurchase Plan at an average price of $10.06 per share and $9.95 per share, respectively, including broker commissions.

During the three and nine months ended September 30, 2019, the Company repurchased a total of 895,733 shares and 1,865,522 shares, respectively, of its common stock in the open market under the Share Repurchase Plan at an average price of $9.93 per share and $9.94 per share, respectively, including broker commissions.

On February 27, 2020, the Board approved an open-market share repurchase program for the 2020 fiscal year (the “2020 Share Repurchase Program”).

2 unchanged sentences

There is no assurance that the Company will purchase shares at any specific discount levels or in any specific amounts.

During the three and six months ended June 30, 2020, the Company repurchased a total of 327,069 and 989,050 shares, respectively, of its common stock in the open market under the 2020 Share Repurchase Program at an average price of $7.17 and $7.21 per share, respectively, including broker commissions.

Barings BDC, Inc.

Notes to Unaudited Consolidated Financial Statements — (Continued)

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.

AGREEMENTS AND RELATED PARTY TRANSACTIONS

3 unchanged sentences

The Company’s stockholders approved the Advisory Agreement at a July 24, 2018 special meeting of stockholders.

Barings BDC, Inc.

Notes to Unaudited Consolidated Financial Statements — (Continued)

Advisory Agreement

19 unchanged sentences

Base Management Fees for any partial month or quarter are appropriately pro-rated.

For the three and nine months ended September 30, 2020, the Base Management Fee determined in accordance with the terms of the Advisory Agreement was approximately $3.4 million and $10.9 million, respectively.

For the three and nine months ended September 30, 2019, the Base Management Fee was approximately $3.3 million and $8.8 million, respectively.

As of September 30, 2020, the Base Management Fee of $3.4 million for the three months ended September 30, 2020 was unpaid and included in "Base management fees payable" in the accompanying Unaudited Consolidated Balance Sheet.

As of December 31, 2019, the Base Management Fee of $3.3 million for the three months ended December 31, 2019 was unpaid and included in "Base management fees payable" in the accompanying Consolidated Balance Sheet.

Barings BDC, Inc.

Notes to Unaudited Consolidated Financial Statements — (Continued)

For the three and six months ended June 30, 2020, the Base Management Fee determined in accordance with the terms of the Advisory Agreement was approximately $3.6 million and $7.5 million, respectively.

For the three and six months ended June 30, 2019, the amount of Base Management Fee incurred was approximately $3.1 million and $5.6 million, respectively.

As of June 30, 2020, the Base Management Fee of $3.6 million for the three months ended June 30, 2020 was unpaid and included in "Base management fees payable" in the accompanying Unaudited Consolidated Balance Sheet.

Incentive Fee

13 unchanged sentences

(1) (a) With respect to the Pre-2020 Period, no 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;

Barings BDC, Inc.

Notes to Unaudited Consolidated Financial Statements — (Continued)

(b) With respect to the Post-2019 Period, no Income-Based Fee for any calendar quarter in which the Company’s Pre-Incentive Fee Net Investment Income (as defined in paragraph (ii) above) does 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);

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

Barings BDC, Inc.

Notes to Unaudited Consolidated Financial Statements — (Continued)

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 exceeds the hurdle rate but is less than 2.5% (10% annualized) (the "Post-2019 Catch-Up Amount").

14 unchanged sentences

If the Advisory 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.

The Company did not pay any Incentive Fee for the three or six months ended June 30, 2020 or 2019.

Barings BDC, Inc.

Notes to Unaudited Consolidated Financial Statements — (Continued)

The Company did not pay any Incentive Fee for the three or nine months ended September 30, 2020 or 2019.

Payment of Company Expenses

Under the 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 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 Advisory Agreement, will be borne by the Company.

Barings BDC, Inc.

Notes to Unaudited Consolidated Financial Statements — (Continued)

Administration Agreement

9 unchanged sentences

• 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 six months ended June 30, 2020, the Company incurred and was invoiced by the Adviser for expenses of approximately $0.2 million and $0.6 million, respectively, under the terms of the Administration Agreement, which amount is included in "General and administrative expenses" in the accompanying Unaudited Consolidated Statements of Operations.

For the three and six months ended June 30, 2019, the Company incurred and was invoiced by the Adviser for expenses of approximately $0.9 million and $1.4 million, respectively, under the terms of the Administration Agreement, which amount is included in "General and administrative expenses" in the accompanying Unaudited Consolidated Statements of Operations.

As of June 30, 2020, the administrative expenses for the three months ended June 30, 2020 were unpaid and included in "Administrative fees payable" in the accompanying Unaudited Consolidated Balance Sheet.

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 amount is included in "General and administrative expenses" in the accompanying Unaudited Consolidated Statements of Operations.

For the three and nine months ended September 30, 2019, the Company incurred and was invoiced by the Adviser for expenses of approximately $0.5 million and $1.9 million, respectively, under the terms of the Administration Agreement, which amount is included in "General and administrative expenses" in the accompanying Unaudited Consolidated Statements of Operations.

As of September 30, 2020, the administrative expenses for the three months ended September 30, 2020 were unpaid and included in "Administrative fees payable" in the accompanying Unaudited Consolidated Balance Sheet.

As of December 31, 2019, the administrative expenses of $0.4 million incurred for the three months ended December 31, 2019 were unpaid and included in "Administrative fees payable" in the accompanying Consolidated Balance Sheet.

Barings BDC, Inc.

Notes to Unaudited Consolidated Financial Statements — (Continued)

Portfolio Composition

Excluding the Company's investments in its joint ventures and short-term money market funds, as of June 30, 2020 and December 31, 2019 approximately $350.9 million and $509.9 million, respectively, or 36.5% and 47.8%, respectively, of the Company's investment portfolio was invested in syndicated senior secured loans, approximately $596.9 million and $556.9 million, respectively, or 62.2% and 52.2%, respectively, of the Company's investment portfolio was invested in senior secured, middle-market, private debt and equity investments and approximately $12.3 million and $0.0 million, respectively, or 1.3% and 0.0%, respectively, of the Company's investment portfolio was invested in structured products.

The Company invests 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 products, bonds and other fixed income securities.

Structured products 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.

Barings BDC, Inc.

Notes to Unaudited Consolidated Financial Statements — (Continued)

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.

3 unchanged sentences

Total Portfolio Percentage of

June 30, 2020:

September 30, 2020:

Senior debt and 1 st lien notes

16 unchanged sentences

$ 1,192,613,930 100 % $ 1,173,643,807 100 % 206 %

During the three months ended June 30, 2020, the Company purchased $10.5 million in syndicated senior secured loans, made new investments in two middle-market portfolio companies totaling $11.9 million, consisting of two senior secured private debt investments and one minority equity investment, made one new joint venture equity investment totaling $1.5 million, made additional debt investments in seven existing portfolio companies totaling $5.6 million and made an additional investment in one joint venture equity portfolio company totaling $5.0 million.

During the six months ended June 30, 2020, the Company purchased $38.3 million in syndicated senior secured loans, purchased $11.5 million in structured product investments, made new investments in 12 middle-market portfolio companies totaling $91.3 million, consisting of 12 senior secured private debt investments, one subordinated debt investment and two minority equity investments, made one new joint venture equity investment totaling $1.5 million, made additional debt investments in 14 existing portfolio companies totaling $19.0 million and made an additional investment in one joint venture equity portfolio company totaling $5.0 million.

During the three months ended June 30, 2019, the Company purchased $2.9 million in syndicated senior secured loans, made seven new senior secured private middle-market debt investments totaling $67.1 million, made one joint venture equity investment totaling $5.2 million and made additional debt investments in four existing portfolio companies totaling $5.2 million.

During the six months ended June 30, 2019, the Company purchased $3.6 million in syndicated senior secured loans, made thirteen new middle-market debt investments totaling $130.1 million, consisting of twelve senior secured private debt investments and one second lien private debt investment, made one joint venture equity investment totaling $5.2 million and made additional debt investments in four existing portfolio companies totaling $6.9 million.

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.

During the three months ended September 30, 2019, the Company made 12 new investments totaling $106.4 million, six investments in existing portfolio companies totaling $13.9 million and one new joint venture equity investment totaling $10.2 million.

During the nine months ended September 30, 2019, the Company made 26 new investments totaling $245.9 million, six investments in existing portfolio companies totaling $12.2 million and one new joint venture equity investment totaling $10.2 million.

Barings BDC, Inc.

Notes to Unaudited Consolidated Financial Statements — (Continued)

The industry composition of investments at fair value at June 30, 2020 and December 31, 2019, excluding short-term investments, was as follows:

June 30, 2020 December 31, 2019

The industry composition of investments at fair value at September 30, 2020 and December 31, 2019, excluding short-term investments, was as follows:

September 30, 2020 December 31, 2019

Aerospace and Defense $ 58,442,645 6.4 % $ 71,899,486 6.7 %

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Containers, Packaging and Glass 6,748,576 0.8 % 32,465,070 3.0 %

Electrical Components & Equipment 2,237,500 0.3 % — — %

Electricity 15,710,919 1.7 % 16,561,352 1.5 %

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Equity contributions will be called from each member on a pro-rata basis, based on their equity commitments.

As of June 30, 2020, Jocassee had $70.0 million in senior secured private middle-market debt investments, $349.5 million in U.S.

syndicated senior secured loans, $96.6 million in European syndicated senior secured loans, $24.8 million in structured product investments, $6.7 million in an equity investment, $13.5 million in a joint venture investment and $67.5 million in a short-term investment.

As of September 30, 2020, Jocassee had $118.6 million in senior secured private middle-market debt investments, $370.0 million in U.S.

syndicated senior secured loans, $152.1 million in European syndicated senior secured loans, $23.8 million in structured product investments, $6.2 million in an equity investment, $28.8 million in a joint venture investment and $24.4 million in short-term investments.

As of December 31, 2019, Jocassee had $41.3 million in senior secured private middle-market debt investments, $140.8 million in U.S.

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The Company may sell portions of its investments via assignment to Jocassee.

Since inception, as of June 30, 2020 and December 31, 2019, the Company had sold $66.9 million and $36.1 million, respectively, of its investments to Jocassee.

Since inception, as of September 30, 2020 and December 31, 2019, the Company had sold $107.1 million and $36.1 million, respectively, of its investments to Jocassee.

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:

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In addition, the Company does not control Jocassee due to the allocation of voting rights among Jocassee members.

As of June 30, 2020 and December 31, 2019, Jocassee had the following commitments, contributions and unfunded commitments from its members:

As of June 30, 2020

As of September 30, 2020 and December 31, 2019, Jocassee had the following commitments, contributions and unfunded commitments from its members:

As of September 30, 2020

Member Total Commitments Contributed Capital Return of Capital (not recallable) Unfunded Commitments

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On April 28, 2020, Thompson Rivers LLC (“Thompson Rivers”) was formed as a Delaware limited liability company.

On May 13, 2020, Barings BDC, Inc.

(the “Company”) entered into a limited liability company agreement (“LLC Agreement”) with Jocassee.

On May 13, 2020, the Company entered into a limited liability company agreement (“LLC Agreement”) with Jocassee.

The Company and Jocassee have committed to initially provide $10.0 million and $90.0 million, respectively, of equity capital to Thompson Rivers.

Equity contributions (and equity ownership) is on a pro-rata basis, based on their equity commitments (10% for the Company and 90% for Jocassee).

As of June 30, 2020, Thompson Rivers had $15.1 million in private student loan asset-backed securities, $17.6 million in commercial mortgage-backed securities, and $8.2 million in cash .

Equity contributions (and equity ownership) are on a pro-rata basis, based on their equity commitments (10% for the Company and 90% for Jocassee).

As of September 30, 2020, Thompson Rivers had $79.5 million in commercial mortgage-backed securities and $7.7 million in cash.

Barings BDC, Inc.

3 unchanged sentences

In addition, the Company does not control Thompson Rivers due to the allocation of voting rights among Thompson Rivers members.

As of June 30, 2020, Thompson Rivers had the following commitments, contributions and unfunded commitments from its members:

As of June 30, 2020

As of September 30, 2020, Thompson Rivers had the following commitments, contributions and unfunded commitments from its members:

As of September 30, 2020

Member Total Commitments Contributed Capital Return of Capital (not recallable) Unfunded Commitments

42 unchanged sentences

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.

The total number of senior secured, middle-market investments and the percentage of the Company's total senior secured, middle-market investment portfolio on which the Procedures were performed are summarized below by period:

The total number of middle-market investments and the percentage of the Company's total middle-market investment portfolio on which the Procedures were performed are summarized below by period:

For the quarter ended:

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June 30, 2020 33 53%

September 30, 2020 66 100%

(1) Exclusive of the fair value of new middle-market investments made during the quarter for which the Procedures were not performed and certain middle-market investments repaid subsequent to the end of the reporting period.

For September 30, 2020, the Procedures were performed on two of the seven investments made during the quarter.

Upon completion of the Procedures, the valuation firm concluded that, with respect to each investment reviewed by the valuation firm, the fair value of those investments subjected to the Procedures appeared reasonable.

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Income Approach

The Company utilizes an Income Approach model in valuing its private debt investment portfolio, which consists of middle-market senior secured loans with floating reference rates.

The Company utilizes an Income Approach model in valuing its private debt investment portfolio, which consists primarily of middle-market senior secured loans with floating reference rates.

As independent pricing service provider and broker quotes have not historically been consistently relevant and reliable, the fair value is determined using an internal index-based pricing model that takes into account both the movement in the spread of one or more performing credit indices as well as changes in the credit profile of the borrower.

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Additionally, the Company may estimate the fair value of a debt security using the Enterprise Value Waterfall approach when the Company does not expect to receive full repayment.

Barings BDC, Inc.

Notes to Unaudited Consolidated Financial Statements — (Continued)

To estimate the enterprise value of the portfolio company, the Company primarily uses a valuation model based on a transaction multiple, which generally is the original transaction multiple, and measures of the portfolio company’s financial performance.

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For certain non-performing assets, the Company may utilize the liquidation or collateral value of the portfolio company's assets in its estimation of enterprise value.

Barings BDC, Inc.

Notes to Unaudited Consolidated Financial Statements — (Continued)

Valuation of Investment in Jocassee

5 unchanged sentences

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 June 30, 2020 and December 31, 2019.

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, 2020 and December 31, 2019.

The weighted average range of unobservable inputs is based on fair value of investments.

June 30, 2020:

September 30, 2020:

Fair Value Valuation

11 unchanged sentences

(1) Excludes investments with an aggregate fair value amounting to $14,783,231, 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 $4,999,386, which the Company valued using unadjusted prices from independent pricing services and independent indicative broker quotes where pricing inputs are not readily available.

December 31, 2019:

15 unchanged sentences

Notes to Unaudited Consolidated Financial Statements — (Continued)

The following tables present the Company’s investment portfolio at fair value as of June 30, 2020 and December 31, 2019, categorized by the ASC Topic 820 valuation hierarchy, as previously described:

Fair Value as of June 30, 2020

The following tables present the Company’s investment portfolio at fair value as of September 30, 2020 and December 31, 2019, categorized by the ASC Topic 820 valuation hierarchy, as previously described:

Fair Value as of September 30, 2020

Level 1 Level 2 Level 3 Total

24 unchanged sentences

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 six months ended June 30, 2020 and 2019:

Six Months Ended

June 30, 2020:

Nine Months Ended

September 30, 2020:

and 1 st Lien

2 unchanged sentences

New investments 206,929,866 660,263 512,299 208,102,428

Transfers in (out) of Level 3, net 19,063,921 (2,312,500) — 16,751,421

Transfers into Level 3, net 19,063,921 1,996,471 — 21,060,392

Proceeds from sales of investments (91,889,896) (415,977) — (92,305,873)

4 unchanged sentences

Accretion of deferred loan origination revenue 1,653,596 26,081 — 1,679,677

Realized loss (311,196) — — (311,196)

Unrealized depreciation (31,616,478) (301,944) (202,605) (32,121,027)

Realized gain (loss) 70,946 (26,253) — 44,693

Unrealized appreciation (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

Six Months Ended

June 30, 2019:

Nine Months Ended

September 30, 2019:

and 1 st Lien

9 unchanged sentences

Realized loss (47,768) — — (47,768)

Unrealized appreciation (depreciation) 3,729,357 91,288 67,833 3,888,478

Unrealized appreciation 1,501,737 124,484 179,835 1,806,056

Fair value, end of period $ 407,702,937 $ 9,689,289 $ 695,660 $ 418,087,886

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 $10.0 million and $(32.6) million during the three and six months ended June 30, 2020 was related to portfolio company investments that were still held by the Company as of June 30, 2020.

Pre-tax net unrealized appreciation on Level 3 investments of $2.3 million and $3.2 million during the three and six months ended June 30, 2019 was related to portfolio company investments that were still held by the Company as of June 30, 2019.

Exclusive of short-term investments, during the six months ended June 30, 2020, the Company made investments of approximately $153.3 million in portfolio companies to which it was not previously contractually committed to provide such financing.

During the six months ended June 30, 2020, the Company made investments of $13.3 million in portfolio companies to which it was previously committed to provide such financing.

Exclusive of short-term investments, during the six months ended June 30, 2019, the Company made investments of approximately $139.9 million in portfolio companies to which it was not previously contractually committed to provide such financing.

During the six months ended June 30, 2019, the Company made investments of $6.2 million in portfolio companies to which it was previously committed to provide such financing.

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 September 30, 2020 was related to portfolio company investments that were still held by the Company as of September 30, 2020.

Pre-tax net unrealized appreciation on Level 3 investments of $3.1 million and $19.6 million during the three and nine months ended September 30, 2019 was related to portfolio company investments that were still held by the Company as of September 30, 2019.

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.

Exclusive of short-term investments, during the nine months ended September 30, 2019, the Company made investments of approximately $257.5 million in portfolio companies to which it was not previously contractually committed to provide such financing.

During the nine months ended September 30, 2019, the Company made investments of $10.7 million in portfolio companies to which it was previously committed to provide such financing.

Barings BDC, Inc.

14 unchanged sentences

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 outstanding 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.

As of June 30, 2020, the Company does not “Control” any of its portfolio companies for the purposes of the 1940 Act.

As of September 30, 2020, the Company does not “Control” any of its portfolio companies for the purposes of the 1940 Act.

Under the 1940 Act, the Company is deemed to be an Affiliated Person of a company in which the Company has invested if it owns at least 5.0%, but no more than 25.0%, of the outstanding voting securities of such company.

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Payment-in-Kind Interest

As of June 30, 2020 and December 31, 2019, the Company held investments that contained PIK interest provisions, and the Company may hold additional investments with PIK interest provisions in the future.

As of September 30, 2020 and December 31, 2019, the Company held investments that contained PIK interest provisions, and the Company may hold additional investments with PIK interest provisions in the future.

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.

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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 six months ended June 30, 2020 and 2019 was as follows:

Three Months Ended Three Months Ended Six Months Ended Six Months Ended

June 30, 2020 June 30, 2019 June 30, 2020 June 30, 2019

Fee income for the three and nine months ended September 30, 2020 and 2019 was as follows:

Three Months Ended Three Months Ended Nine Months Ended Nine Months Ended

September 30, 2020 September 30, 2019 September 30, 2020 September 30, 2019

Recurring Fee Income:

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Concentration of Credit Risk

As of both June 30, 2020 and December 31, 2019, there were no individual investments representing greater than 10% of the fair value of the Company’s portfolio.

As of June 30, 2020 and December 31, 2019, the Company’s largest single portfolio company investment, excluding short-term investments, represented approximately 2.4% and 2.3%, respectively, of the fair value of the Company’s portfolio, exclusive of short-term investments.

As of both September 30, 2020 and December 31, 2019, there were no individual investments representing greater than 10% of the fair value of the Company’s portfolio.

As of September 30, 2020 and December 31, 2019, the Company’s largest single portfolio company investment, excluding short-term investments, represented approximately 3.1% and 2.3%, 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.

As of June 30, 2020, $768.6 million of the investment portfolio were or will be pledged as collateral for the February 2019 Credit Facility, and $296.5 million of the investment portfolio were pledged as collateral for the Debt Securitization.

As of September 30, 2020, $965.3 million of the Company's assets were or will be pledged as collateral for the February 2019 Credit Facility, and $257.3 million of the Company's assets were pledged as collateral for the Debt Securitization.

Investments Denominated in Foreign Currencies

As of June 30, 2020 the Company held one investment that was denominated in Swedish kronas, nine investments that were denominated in Euros and three investments that were denominated in British pounds sterling.

As of September 30, 2020 the Company held one investment that was denominated in Swedish kronas, eleven investments that were denominated in Euros and five investments that were denominated in British pounds sterling.

As of December 31, 2019, the Company held one investment that was denominated in Swedish kronas, five investments that were denominated in Euros and two investments that were denominated in British pounds sterling.

3 unchanged sentences

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 the six months ended June 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

In addition, during the nine months ended 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

Barings BDC, Inc.

Notes to Unaudited Consolidated Financial Statements — (Continued)

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.

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.

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Additionally, any unrealized appreciation related to portfolio investments held by the Taxable Subsidiary (net of unrealized depreciation related to portfolio investments held by the Taxable Subsidiary) is reflected net of applicable federal and state income taxes in the Company's Consolidated Statements of Operations, with the related deferred tax assets or liabilities included in "Accounts payable and accrued liabilities" in the Company's Unaudited and Audited Consolidated Balance Sheets.

For federal income tax purposes, the cost of investments owned as of June 30, 2020 and December 31, 2019 was approximately $1,108.2 million and $1,192.7 million, respectively.

As of June 30, 2020, net unrealized depreciation on the Company's investments (tax basis) was approximately $74.7 million, consisting of gross unrealized appreciation, where the fair

For federal income tax purposes, the cost of investments owned as of September 30, 2020 and December 31, 2019 was approximately $1,132.2 million and $1,192.7 million, respectively.

As of September 30, 2020, net unrealized depreciation on

Barings BDC, Inc.

Notes to Unaudited Consolidated Financial Statements — (Continued)

value of the Company's investments exceeds their tax cost, of approximately $3.2 million and gross unrealized depreciation, where the tax cost of the Company's investments exceeds their fair value, of approximately $78.0 million.

The cost of investments owned (tax basis) listed above does not include the RIC's basis in the Taxable Subsidiary.

As of June 30, 2020 and December 31, 2019, the cost (tax basis) of the RIC's investment in the Taxable Subsidiary was approximately $18.4 million and $18.0 million, respectively.

the Company's investments (tax basis) was approximately $18.7 million, consisting of gross unrealized appreciation, where the fair value of the Company's investments exceeds their tax cost, of approximately $9.7 million and gross unrealized depreciation, where the tax cost of the Company's investments exceeds their fair value, of approximately $28.4 million.

As of December 31, 2019, net unrealized depreciation on the Company's investments (tax basis) was approximately $20.1 million, consisting of gross unrealized appreciation, where the fair value of the Company's investments exceeds their tax cost, of approximately $2.5 million and gross unrealized depreciation, where the tax cost of the Company's investments exceeds their fair value, of approximately $22.6 million.

The Company had the following borrowings outstanding as of June 30, 2020 and December 31, 2019:

Issuance Date Maturity Date Interest Rate as of June 30, 2020 June 30, 2020 December 31, 2019

The Company had the following borrowings outstanding as of September 30, 2020 and December 31, 2019:

Issuance Date Maturity Date Interest Rate as of September 30, 2020 September 30, 2020 December 31, 2019

Credit Facilities:

7 unchanged sentences

Total Debt Securitization $ 177,536,048 $ 316,664,474

September 24, 2020 - August 2025 Notes August 4, 2025 4.660% $ 25,000,000 $ —

September 29, 2020 - August 2025 Notes August 4, 2025 4.660% 25,000,000 —

Deferred financing fees)

Total Notes $ 49,534,479 $ —

August 2018 Credit Facility

10 unchanged sentences

Effective August 14, 2019, the Company further reduced its Class A-1 Loan Commitments, and therefore total commitments, under the August 2018 Credit Facility from $250.0 million to $177.0 million.

Effective October 29, 2019, the Company further reduced its Class A-1 Loan Commitments, and therefore total commitments, under the August 2018 Credit Facility from $177.0 million to $150.0 million.

Effective January 21, 2020, the Company further reduced its Class A-1 Loan Commitments, and therefore total commitments, under the August 2018 Credit Facility from $150.0 million to $80.0 million.

Effective April 23, 2020, the Company further reduced its Class A-1 Loan Commitments, and therefore total commitments, under the August 2018 Credit Facility from $80.0 million to $30.0 million.

Finally, effective June 26, 2020, the Company further reduced its Class A-1 Loan Commitments, and therefore total

Effective October 29, 2019, the Company further reduced its Class A-1 Loan Commitments, and therefore total

Barings BDC, Inc.

Notes to Unaudited Consolidated Financial Statements — (Continued)

commitments, under the August 2018 Credit Facility from $30.0 million to zero.

commitments, under the August 2018 Credit Facility from $177.0 million to $150.0 million.

Effective January 21, 2020, the Company further reduced its Class A-1 Loan Commitments, and therefore total commitments, under the August 2018 Credit Facility from $150.0 million to $80.0 million.

Effective April 23, 2020, the Company further reduced its Class A-1 Loan Commitments, and therefore total commitments, under the August 2018 Credit Facility from $80.0 million to $30.0 million.

Finally, effective June 26, 2020, the Company further reduced its Class A-1 Loan Commitments, and therefore total commitments, under the August 2018 Credit Facility from $30.0 million to zero.

In connection with these reductions, the pro rata portion of the unamortized deferred financing costs related to the August 2018 Credit Facility was written off and recognized as a loss on extinguishment of debt in the Company's Consolidated Statements of Operations.

19 unchanged sentences

and (e) the decline of BSF’s NAV below a specified threshold.

Borrowings of BSF were considered borrowings by Barings BDC, Inc.

for purposes of complying with the asset coverage requirements under the 1940 Act applicable to business development companies.

The obligations of BSF under the August 2018 Credit Facility were non-recourse to Barings BDC, Inc.

Borrowings of BSF were considered borrowings by the Company for purposes of complying with the asset coverage requirements under the 1940 Act applicable to business development companies.

The obligations of BSF under the August 2018 Credit Facility were non-recourse to the Company.

As of December 31, 2019, BSF had borrowings of $107.2 million, outstanding under the August 2018 Credit Facility with an interest rate of 2.940%.

9 unchanged sentences

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 1.25% (or 1.00% if the Company receives an investment grade credit rating), (ii) the applicable LIBOR rate plus 2.25% (or 2.00% if the Company receives 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 2.25% (or 2.00% if the Company receives an investment grade credit rating) or (iv) for borrowings denominated in Australian dollars, the applicable Australian dollars Screen Rate, plus 2.45% (or 2.20% if

Barings BDC, Inc.

Notes to Unaudited Consolidated Financial Statements — (Continued)

the Company receives an investment grade credit rating).

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%.

6 unchanged sentences

In connection with the February 2019 Credit Facility, the Company also entered into new collateral documents.

As of June 30, 2020, the Company was in compliance with all covenants under the February 2019 Credit Facility.

As of June 30, 2020, the Company had U.S.

As of September 30, 2020, the Company was in compliance with all covenants under the February 2019 Credit Facility.

As of September 30, 2020, the Company had U.S.

dollar borrowings of $325.0 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 ($1.4 million U.S.

dollars) with an interest rate of 2.00% (one month STIBOR of 0.000%), borrowings denominated in British pounds sterling of £40.3 million ($52.1 million U.S.

dollars) with an interest rate of 2.375% (one month GBP LIBOR of 0.125%), borrowings denominated in Euros of €38.0 million ($55.0 million U.S.

dollars) with an interest rate of 2.25% (one month EURIBOR of 0.000%) and borrowings denominated in Canadian dollars of C$13.6 million ($10.0 million U.S.

dollars) with an interest rate of 2.78% (one month CDOR of 0.530%).

dollars) with a weighted average interest rate of 2.063% (weighted average one month GBP LIBOR of 0.063% ) and borrowings denominated in Euros of €72.6 million ($85.1 million U.S.

dollars) with an interest rate of 2.00% (weighted average one month EURIBOR of 0.000% ).

The borrowings denominated in foreign currencies were translated into U.S.

9 unchanged sentences

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 June 30, 2020 and December 31, 2019, the total fair value of the borrowings outstanding under the February 2019 Credit Facility was $342.9 million and $245.3 million, respectively.

As of September 30, 2020 and December 31, 2019, the total fair value of the borrowings outstanding under the February 2019 Credit Facility was $463.7 million and $245.3 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.

2 unchanged sentences

Term debt securitizations are also known as collateralized loan obligations and are a form of secured financing incurred by the Company, which is consolidated by the Company for financial reporting purposes and subject to its overall asset coverage requirement.

The notes offered in the Debt Securitization (collectively, the “2019 Notes”) were issued by Barings BDC Static CLO Ltd.

2019-I (“BBDC Static CLO Ltd.”) and Barings BDC Static CLO 2019-I, LLC, wholly-owned and consolidated subsidiaries of the Company (collectively, the “Issuers”), and are secured by a diversified portfolio of senior secured loans and participation interests therein.

The Debt Securitization was executed through a private placement of approximately $296.8 million of AAA(sf) Class A-1 Senior Secured Floating Rate 2019 Notes (“Class A-1 2019 Notes”), which bear interest at the three-month LIBOR plus 1.02%;

$51.5 million

The notes offered in the

Barings BDC, Inc.

Notes to Unaudited Consolidated Financial Statements — (Continued)

of AA(sf) Class A-2 Senior Secured Floating Rate 2019 Notes (“Class A-2 2019 Notes”), which bear interest at the three-month LIBOR plus 1.65%;

and $101.0 million of Subordinated 2019 Notes which do not bear interest and are not rated.

Debt Securitization (collectively, the “2019 Notes”) were issued by Barings BDC Static CLO Ltd.

$51.5 million of AA(sf) Class A-2 Senior Secured Floating Rate 2019 Notes (“Class A-2 2019 Notes”), which bore interest at the three-month LIBOR plus 1.65%;

and $101.0 million of Subordinated 2019 Notes which did not bear interest and were not rated.

The Company retained all of the Subordinated 2019 Notes issued in the Debt Securitization in exchange for the Company’s sale and contribution to BBDC Static CLO Ltd.

of the initial closing date portfolio, which included senior secured loans and participation interests therein distributed to the Company by BSF.

The 2019 Notes are scheduled to mature on April 15, 2027;

however, the 2019 Notes may be redeemed by the Issuers, at the direction of the Company as holder of the Subordinated 2019 Notes, on any business day after May 9, 2020.

The 2019 Notes were scheduled to mature on April 15, 2027;

however, the 2019 Notes could be redeemed by the Issuers, at the direction of the Company as holder of the Subordinated 2019 Notes, on any business day after May 9, 2020.

In connection with the sale and contribution, the Company made customary representations, warranties and covenants to the Issuers.

The Class A-1 2019 Notes and Class A-2 2019 Notes are the secured obligations of the Issuers, the Subordinated 2019 Notes are the unsecured obligations of BBDC Static CLO Ltd., and the indenture governing the 2019 Notes includes customary covenants and events of default.

The 2019 Notes have not been, and will not be, registered under the Securities Act or any state securities or “blue sky” laws and may not be offered or sold in the United States absent registration with the SEC or an applicable exemption from registration.

As of June 30, 2020, the Company was in compliance with all covenants under the Class A-1 2019 Notes and Class A-2 2019 Notes.

The Class A-1 2019 Notes and Class A-2 2019 Notes were the secured obligations of the Issuers, the Subordinated 2019 Notes are the unsecured obligations of BBDC Static CLO Ltd., and the indenture governing the 2019 Notes included customary covenants and events of default.

The 2019 Notes were not registered under the Securities Act or any state securities or “blue sky” laws and could not be offered or sold in the United States absent registration with the SEC or an applicable exemption from registration.

As of September 30, 2020, the Company was in compliance with all covenants under the Class A-1 2019 Notes and Class A-2 2019 Notes.

The Company serves as collateral manager to BBDC Static CLO Ltd.

under a collateral management agreement and has agreed to irrevocably waive all collateral management fees payable pursuant to the collateral management agreement.

The Class A-1 2019 Notes and the Class A-2 2019 Notes issued in connection with the Debt Securitization have floating rate interest provisions based on the three-month LIBOR that reset quarterly, except that LIBOR for the first interest accrual period was calculated by reference to an interpolation between the rate for deposits with a term equal to the next shorter period of time for which rates were available and the rate appearing for deposits with a term equal to the next longer period of time for which rates were available.

During the three and six months ended June 30, 2020, $64.8 million and $91.8 million, respectively, of the Class A-1 2019 Notes were repaid.

As of June 30, 2020, the Company had borrowings of $174.9 million outstanding under the Class A-1 2019 Notes with an interest rate of 2.239% (three month LIBOR of 1.219%) and borrowings of $51.5 million outstanding under the Class A-2 2019 Notes with an interest rate of 2.869% (three month LIBOR of 1.219%).

The Class A-1 2019 Notes and the Class A-2 2019 Notes issued in connection with the Debt Securitization had floating rate interest provisions based on the three-month LIBOR that reset quarterly, except that LIBOR for the first interest accrual period was calculated by reference to an interpolation between the rate for deposits with a term equal to the next shorter period of time for which rates were available and the rate appearing for deposits with a term equal to the next longer period of time for which rates were available.

During the three and nine months ended September 30, 2020, $48.1 million and $139.9 million, respectively, of the Class A-1 2019 Notes were repaid.

As of September 30, 2020, the Company had borrowings of $126.8 million outstanding under the Class A-1 2019 Notes with an interest rate of 1.295% (three month LIBOR of 0.275%) and borrowings of $51.5 million outstanding under the Class A-2 2019 Notes with an interest rate of 1.925% (three month LIBOR of 0.275%).

During the year ended December 31, 2019, $30.0 million of the Class A-1 2019 Notes were repaid.

As of December 31, 2019, the Company had borrowings of $266.7 million outstanding under the Class A-1 2019 Notes with an interest rate of 3.021% and borrowings of $51.5 million outstanding under the Class A-2 2019 Notes with an interest rate of 3.651%.

As of June 30, 2020, the total fair value of the Class A-1 2019 Notes and the Class A-2 2019 Notes was $174.2 million and $51.2 million, respectively.

As of September 30, 2020, the total fair value of the Class A-1 2019 Notes and the Class A-2 2019 Notes was $126.1 million and $51.0 million, respectively.

As of December 31, 2019, the total fair value of the Class A-1 2019 Notes and the Class A-2 2019 Notes was $266.8 million and $51.5 million, respectively.

The fair value determinations of the Company’s 2019 Notes were based on a market yield approach and current interest rates, which are Level 3 inputs to the market yield model.

On October 15, 2020, the remaining 2019 Notes were repaid in full.

August 2025 Notes

On August 3, 2020, the Company entered into a Note Purchase Agreement (the "Note Purchase Agreement") with Massachusetts Mutual Life Insurance Company governing the issuance of (i) $50.0 million in aggregate principal amount of Series A senior unsecured notes (the "Series A Notes") due August 2025 with a fixed interest rate of 4.66% per year, and (ii) up to $50.0 million in aggregate principal amount of additional senior unsecured notes (the "Additional Notes" and, collectively with the Series A Notes, the "August 2025 Notes") due August 2025 with a fixed interest rate per year to be determined, in each case, to qualified institutional investors in a private placement.

An aggregate principal amount of $25.0 million of the Series A Notes was issued on September 24, 2020 and an aggregate principal amount of $25.0 million of the Series A Notes 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 or its affiliates in accordance with their terms.

Interest on the August 2025 Notes will be due semiannually in March and September, beginning in March 2021.

In addition, the Company is obligated to offer to repay the August 2025 Notes

Barings BDC, Inc.

Notes to Unaudited Consolidated Financial Statements — (Continued)

at par if certain change in control events occur.

The August 2025 Notes are the Company's general unsecured obligations that rank pari passu with all outstanding and future unsecured unsubordinated indebtedness issued by the Company.

The Note Purchase Agreement contains customary terms and conditions 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, minimum shareholders’ equity, maximum net debt to equity ratio and minimum asset coverage ratio.

The Note Purchase Agreement 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.

As of September 30, 2020, the Company was in compliance with all covenants of the Note Purchase Agreement.

The August 2025 Notes were offered in reliance on Section 4(a)(2) of 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, 2020, the fair value of the outstanding Series A Notes was $50.0 million.

The fair value of the Series A Notes is based on a market yield approach and current interest rates, which are Level 3 inputs to the market yield model.

DERIVATIVE INSTRUMENTS

2 unchanged sentences

Forward currency contracts are considered undesignated derivative instruments.

The following table presents the Company's foreign currency forward contracts as of June 30, 2020 and December 31, 2019:

As of June 30, 2020:

The following table presents the Company's foreign currency forward contracts as of September 30, 2020 and December 31, 2019:

As of September 30, 2020:

Description Notional Amount to be Purchased Notional Amount to be Sold Maturity Date Gross Amount of Recognized Assets Balance Sheet Location of Net Amounts

Foreign currency forward contract (EUR) €1,215,998 $1,366,015 07/02/20 $ (267) Accounts payable and accrued liabilities

Foreign currency forward contract (EUR) $1,353,787 €1,215,998 07/02/20 (11,961) Accounts payable and accrued liabilities

Foreign currency forward contract (EUR) $569,769 €506,305 10/02/20 (52) Accounts payable and accrued liabilities

Foreign currency forward contract (GBP) £1,861,505 $2,289,223 07/02/20 10,854 Accounts payable and accrued liabilities

Foreign currency forward contract (GBP) $2,298,265 £1,861,505 07/02/20 (1,812) Accounts payable and accrued liabilities

Foreign currency forward contract (GBP) £1,117,883 $1,380,590 10/02/20 1,394 Accounts payable and accrued liabilities

Foreign currency forward contract (SEK) $57,195 571,416kr 07/02/20 (4,138) Accounts payable and accrued liabilities

Foreign currency forward contract (SEK) 571,416kr $61,196 07/02/20 137 Accounts payable and accrued liabilities

Foreign currency forward contract (SEK) $51,626 481,556kr 10/02/20 (119) Accounts payable and accrued liabilities

Foreign currency forward contract (CAD) C$13,495,000 $10,081,420 10/02/20 $ 21,550 Prepaid expenses and other assets

Foreign currency forward contract (CAD) $10,255,950 C$13,495,000 10/02/20 152,979 Prepaid expenses and other assets

Foreign currency forward contract (EUR) €4,672,157 $5,487,094 10/02/20 (8,286) Prepaid expenses and other assets

Foreign currency forward contract (EUR) $5,374,120 €4,672,157 10/02/20 (104,687) Prepaid expenses and other assets

Foreign currency forward contract (EUR) $3,412,466 €2,906,604 01/05/21 (3,740) Prepaid expenses and other assets

Foreign currency forward contract (GBP) £1,285,558 $1,594,070 10/02/20 67,899 Prepaid expenses and other assets

Foreign currency forward contract (GBP) $1,696,763 £1,285,558 10/02/20 34,794 Prepaid expenses and other assets

Foreign currency forward contract (GBP) $529,136 £415,299 01/05/21 (8,147) Prepaid expenses and other assets

Foreign currency forward contract (SEK) $80,985 751,190kr 10/02/20 (2,947) Prepaid expenses and other assets

Foreign currency forward contract (SEK) 751,190kr $84,268 10/02/20 (336) Prepaid expenses and other assets

Foreign currency forward contract (SEK) $92,284 821,594kr 01/05/21 362 Prepaid expenses and other assets

Total $ 149,441

Barings BDC, Inc.

Notes to Unaudited Consolidated Financial Statements — (Continued)

As of December 31, 2019:

10 unchanged sentences

Total $ (23,559)

As of June 30, 2020 and December 31, 2019, the total fair value of the Company's foreign currency forward contracts was ($5,964) and ($23,559), respectively.

As of September 30, 2020 and December 31, 2019, the total fair value of the Company's foreign currency forward contracts was $149,441 and $(23,559), 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.

5 unchanged sentences

The Company maintains sufficient borrowing capacity to cover unused commitments to extend financing.

The balances of unused commitments to extend financing as of June 30, 2020 and December 31, 2019 were as follows:

Portfolio Company Investment Type June 30,

The balances of unused commitments to extend financing as of September 30, 2020 and December 31, 2019 were as follows:

Portfolio Company Investment Type September 30,

2020 December 31, 2019

8 unchanged sentences

Contabo Finco S.À R.L(4) Delayed Draw Term Loan 218,718 1,013,849

CSL Dualcom(5) Delayed Draw Term Loan 3,421,195 —

Dart Buyer, Inc.(1) Delayed Draw Term Loan 2,430,569 4,294,503

DreamStart Bidco SAS(6) Acquisition Facility 954,222 —

Foundation Risk Partners, Corp.

Delayed Draw Term Loan 15,555,555 —

Heartland, LLC(1) Delayed Draw Term Loan 8,729,695 8,729,695

11 unchanged sentences

Springbrook Software (SBRK Intermediate, Inc.)(1) Delayed Draw Term Loan 3,896,663 3,896,663

Stairway BidCo GmbH(10) Delayed Draw Term Loan 2,134,276 —

The Hilb Group, LLC(1) Delayed Draw Term Loan 1,923,114 2,904,066

3 unchanged sentences

Truck-Lite Co., LLC(1) Delayed Draw Term Loan 2,884,615 3,205,128

USLS Acquisition, Inc.(1) Delayed Draw Term Loan 450,466 —

Utac Ceram(11) Delayed Draw Term Loan 3,166,156 —

Validity, Inc.(1) Delayed Draw Term Loan — 898,298

3 unchanged sentences

(2) Actual commitment amount is denominated in Euros (€75,039) which was translated into U.S.

dollars using the June 30, 2020 spot rate.

dollars using the September 30, 2020 spot rate.

(3) Actual commitment amount is denominated in Euros (€405,337) which was translated into U.S.

dollars using the June 30, 2020 spot rate.

(4) June 30, 2020 commitment amount is denominated in Euros (€186,516) which was translated into U.S.

dollars using the June 30, 2020 spot rate.

dollars using the September 30, 2020 spot rate.

(4) September 30, 2020 commitment amount is denominated in Euros (€186,516) which was translated into U.S.

dollars using the September 30, 2020 spot rate.

December 31, 2019 commitment amount was denominated in Euros (€903,207) which was translated into U.S.

dollars using the December 31, 2019 spot rate.

(5) Actual commitment amount is denominated in British pounds sterling (£2,646,346) which was translated into U.S.

dollars using the using the September 30, 2020 spot rate.

Barings BDC, Inc.

Notes to Unaudited Consolidated Financial Statements — (Continued)

(6) Actual commitment amount is denominated in Euros (€813,731) which was translated into U.S.

dollars using the June 30, 2020 spot rate.

dollars using the September 30, 2020 spot rate.

(7) September 30, 2020 commitment amount is denominated in Euros (€8,356,897) which was translated into U.S.

dollars using the September 30, 2020 spot rate.

December 31, 2019 commitment amount was denominated in Euros (€2,321,187) which was translated into U.S.

dollars using the December 31, 2019 spot rate.

(7) June 30, 2020 commitment amount is denominated in British pounds sterling (£876,042) which was translated into U.S.

dollars using the June 30, 2020 spot rate.

(8) September 30, 2020 commitment amount is denominated in British pounds sterling (£876,042) which was translated into U.S.

dollars using the September 30, 2020 spot rate.

December 31, 2019 commitment amount was denominated in British pounds sterling (£979,743) which was translated into U.S.

dollars using the December 31, 2019 spot rate.

(8) June 30, 2020 commitment amount is denominated in British pounds sterling (£336,466) which was translated into U.S.

dollars using the June 30, 2020 spot rate.

(9) September 30, 2020 commitment amount is denominated in British pounds sterling (£146,466) which was translated into U.S.

dollars using the September 30, 2020 spot rate.

December 31, 2019 commitment amount was denominated in British pounds sterling (£762,941) which was translated into U.S.

dollars using the December 31, 2019 spot rate.

Barings BDC, Inc.

Notes to Unaudited Consolidated Financial Statements — (Continued)

(10) September 30, 2020 commitment amount is denominated in British pounds sterling (€1,820,044) which was translated into U.S.

dollars using the September 30, 2020 spot rate.

(11) September 30, 2020 commitment amount is denominated in British pounds sterling (€2,700,000) which was translated into U.S.

dollars using the September 30, 2020 spot rate.

The Company and certain of its former executive officers have been named as defendants in two putative securities class action lawsuits, each filed in the United States District Court for the Southern District of New York (and then transferred to the United States District Court for the Eastern District of North Carolina) on behalf of all persons who purchased or otherwise acquired our common stock between May 7, 2014 and November 1, 2017.

25 unchanged sentences

COVID-19 Developments

During the three and six months ended June 30, 2020, the spread of the Coronavirus and the COVID-19 pandemic had a significant impact on the U.S economy.

The Company had a significant reduction in its net asset value as of June 30, 2020 as compared to its net asset value as of December 31, 2019, which was primarily the result of the impact of the COVID-19 pandemic.

The decrease in net asset value as from December 31, 2019 to June 30, 2020 resulted primarily from an increase in the aggregate unrealized depreciation of the Company's investment portfolio resulting from decreases in the fair value of some of its portfolio company investments primarily due to the immediate adverse economic effects of the COVID-19 pandemic and the continuing uncertainty surrounding COVID-19's long-term impact, as well as the re-pricing of credit risk in the broadly syndicated credit market.

From March 31, 2020 to June 30, 2020, the Company did experience unrealized appreciation on its broadly syndicated loan portfolio of $31.6 million, which partially offset the $82.6 million of unrealized depreciation on the broadly syndicated loan portfolio that occurred from December 31, 2019 to March 31, 2020.

During the three and nine months ended September 30, 2020, the spread of the Coronavirus and the COVID-19 pandemic had a significant impact on the U.S economy.

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.

2 unchanged sentences

FINANCIAL HIGHLIGHTS

The following is a schedule of financial highlights for the six months ended June 30, 2020 and 2019:

Six Months Ended June 30,

The following is a schedule of financial highlights for the nine months ended September 30, 2020 and 2019:

Nine Months Ended September 30,

Per share data:

2 unchanged sentences

Net realized loss on investments / foreign currency transactions(1) (0.77) (0.02)

Net unrealized appreciation (depreciation) on investments / foreign currency transactions(1) (1.12) 0.54

Net unrealized appreciation on investments / foreign currency transactions(1) 0.03 0.50

Total increase (decrease) from investment operations(1) (0.29) 0.94

Dividends paid to stockholders from net investment income (0.32) (0.25)

Dividends/distributions paid to stockholders from net investment income (0.48) (0.39)

Purchases of shares in share repurchase plan 0.05 0.06

16 unchanged sentences

Total return is not annualized.

MVC ACQUISITION

On August 10, 2020, the Company entered into an Agreement and Plan of Merger (the “Merger Agreement”) among MVC Capital, Inc., a Delaware corporation (“MVC”), Mustang Acquisition Sub, Inc., a Delaware corporation and wholly owned subsidiary of the Company (“Acquisition Sub”), 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 MVC, with MVC continuing as the surviving company and as a wholly-owned subsidiary of the Company (the “First Step”) and, immediately thereafter, MVC will merge with and into the Company, with the Company continuing as the surviving company (the “Second Step” and, together with the First Step, the “Merger”).

The boards of directors of both the Company and MVC, 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)(1)(A) of the Code of 1986.

In the First Step, each share of MVC common stock issued and outstanding immediately prior to the effective time of the First Step (excluding any shares cancelled pursuant to the Merger Agreement) will be converted into the right to receive (i) $0.39492 per share in cash, without interest, from Barings (such amount of cash, the “Cash Consideration”) and (ii) 0.94024 (the "Exchange Ratio," such ratio as may be adjusted pursuant to the Merger Agreement) of a validly issued, fully paid and non-assessable share of the Company's common stock, par value $0.001 per share (the “Share Consideration” and together with the Cash Consideration, the “Merger Consideration”).

Pursuant to the Merger Agreement, total value of the consideration to be received by MVC stockholders at closing is subject to adjustment as set forth in the Merger Agreement and may be different than the estimated total consideration described herein depending on a number of factors, including the number of outstanding

Barings BDC, Inc.

Notes to Unaudited Consolidated Financial Statements — (Continued)

shares of the Company's and MVC's common stock, the payment of tax dividends by MVC, undistributed investment company taxable income and undistributed net capital gains of MVC and changes of the Euro-to-U.S.

dollar exchange rate relating to certain of MVC’s investments between April 30, 2020 and the closing date.

Consummation of the First Step, which is currently anticipated to occur during the fourth quarter of fiscal year 2020, is subject to certain customary closing conditions, including (1) adoption of the Merger Agreement by a majority of the outstanding shares of MVC's common stock, (2) approval of the issuance of the Company's common stock in the First Step by a majority of the votes cast by the Company's stockholders on the matter, (3) approval of the issuance of the Company’s common stock in connection with the First Step 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, as amended, (4) the absence of certain legal impediments to the consummation of the Merger, (5) effectiveness of the registration statement for the Company's common stock to be issued as consideration in the First Step, (6) approval for listing on the New York Stock Exchange of the Company's common stock to be issued as consideration in the First Step, (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 (the "HSR Act")).

Early termination of the waiting period under the HSR Act was granted on September 30, 2020.

In addition, the Company and MVC will take steps necessary to provide for the repayment at closing of MVC’s credit facilities and the redemption or assumption of MVC’s 6.25% senior notes due November 30, 2022.

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 $7.0 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, 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.

SUBSEQUENT EVENTS

Subsequent to June 30, 2020, the Company made approximately $60.6 million of new private debt commitments, of which $15.7 million closed and funded.

The $15.7 million of investments consist of two first lien senior secured debt investments with a weighted average yield of 14.0%.

Subsequent to September 30, 2020, the Company made approximately $155.4 million of new commitments, of which $130.6 million closed and funded.

The $130.6 million of investments consist of $128.5 million of first lien senior secured debt investments and a $2.1 million second lien senior secured term loan with a combined weighted average yield of 6.2%.

In addition, the Company funded $8.7 million of previously committed delayed draw term loans.

On August 3, 2020, the Company entered into a Note Purchase Agreement (the "Note Purchase Agreement") with Massachusetts Mutual Life Insurance Company governing the issuance of (i) $50,000,000 in aggregate principal amount of Series A senior unsecured notes (the "Series A Notes") due August 2025 with a fixed interest rate of 4.66% per year, and (ii) up to $50,000,000 in aggregate principal amount of additional senior unsecured notes (the "Additional Notes" and, collectively with the Series A Notes, the "August 2025 Notes") due August 2025 with a fixed interest rate per year to be determined, in each case, to qualified institutional investors in a private placement.

An aggregate principal amount of $25,000,000 of the Series A Notes is expected to be issued in September 2020 (subject to the satisfaction of customary closing conditions contained in the Note Purchase Agreement) and will mature on August 4, 2025, and an aggregate principal amount of $25,000,000 of the Series A Notes is expected to be issued in December 2020 (subject to the satisfaction of customary closing conditions contained in the Note Purchase Agreement) and mature on August 4, 2025, in each case unless redeemed, purchased or prepaid prior to such date by the Company or its affiliates in accordance with their terms.

Interest on the August 2025 Notes will be due semiannually.

In addition, the Company is obligated to offer to repay the August 2025 Notes at par if certain change in control

On October 15, 2020, the 2019 Notes were repaid in full.

See Note 5 to our Unaudited Consolidated Financial Statements for information regarding the 2019 Notes.

On November 4, 2020, the Company entered into a Note Purchase Agreement (the “November NPA”) governing the issuance of (1) $62.5 million in aggregate principal amount of Series B senior unsecured notes (“Series B Notes”) due November 2025 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 (“Series C Notes” and, collectively with the Series B Notes, the “November Notes”) due November

Barings BDC, Inc.

Notes to Unaudited Consolidated Financial Statements — (Continued)

events occur.

2027 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 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 or its affiliates in accordance with their terms.

Interest on the November Notes will be due semiannually.

In addition, the Company is obligated to offer to repay the November Notes at par if certain change in control events occur.

The August 2025 Notes will be the Company's general unsecured obligations that rank pari passu with all outstanding and future unsecured unsubordinated indebtedness issued by the Company.

On August 5, 2020 the Board declared a quarterly distribution of $0.16 per share payable on September 16, 2020 to holders of record as of September 9, 2020.

In connection with the November NPA, also on November 4, 2020, the Company amended the Note Purchase Agreement entered into on August 3, 2020 to reduce the aggregate principal amount of unissued Additional Notes from $50.0 million to $25.0 million.

On November 9, 2020 the Board declared a quarterly distribution of $0.17 per share payable on December 2, 2020 to holders of record as of November 25, 2020.

See Note 7 to our Unaudited Consolidated Financial Statements for information regarding the potential impact of the COVID-19 pandemic.

1 unchanged sentence

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What changed 10-Q

Item 1. Financial Statements