Item 5. Market for Registrant’s Common Equity
Item 5. Market for Registrant’s Common Equity, Related Stockholder Matters and Issuer Purchases of Equity Securities.
Common Stock and Holders
Our common stock is traded on the New York Stock Exchange, or NYSE, under the ticker symbol “BBDC.” As of February 23, 2022, there were approximately 97 holders of record of our common stock. This number does not include stockholders for whom shares are held in “nominee” or “street name.”
Distributions Declared
The table below shows the detail of our distributions for the years ended December 31, 2021 and 2020:
Year Ended December 31,
2021 2020
Amount % of Total Amount % of Total
Ordinary income $ 0.79 96.3 % $ 0.65 100.0 %
Tax return of capital 0.03 3.7 — —
Total reported on IRS Form 1099-DIV $ 0.82 100.0 % $ 0.65 100.0 %
Each year, a statement on IRS Form 1099-DIV identifying the source(s) of the distribution (i.e., paid from ordinary income, paid from net capital gains on the sale of securities, and/or a return of paid in capital surplus which is a nontaxable distribution) is mailed to our stockholders. To the extent that our distributions for a fiscal year exceed current and accumulated earnings and profits, a portion of those distributions may be deemed a return of capital to our stockholders for U.S. federal income tax purposes. Thus, the source of a distribution to our stockholders may be the original capital invested by the stockholder rather than our taxable ordinary income or capital gains. Stockholders should read any written disclosure accompanying a dividend payment carefully and should not assume that any distribution is taxable as ordinary income or capital gains.
Ordinary income is reported on IRS Form 1099-DIV as either qualified or non-qualified and capital gain distributions are reported on IRS Form 1099-DIV in various subcategories which have differing tax treatments to stockholders. Those subcategories are not presented herein.
We estimate the source of our distributions as required by Section 19(a) of the 1940 Act to determine whether payment of dividends are expected to be paid from any other source other than net investment income accrued for current period or certain cumulative periods, but we will not be able to determine whether any specific distribution will be treated as made out of our taxable earnings or as a return of capital until after the end of our taxable year. Any amount treated as a return of capital will reduce a stockholder’s adjusted tax basis in his or her common stock, thereby increasing his or her potential gain or reducing his or her potential loss on the subsequent sale or other disposition of his or her common stock. On a quarterly basis, for any payment of dividends estimated to be paid from any other source other than net investment income accrued for current period or certain cumulative periods based on the Section 19(a) requirement, we post a Section 19(a) notice through the Depository Trust Company’s Legal Notice System and our website, as well as send our registered stockholders a printed copy of such notice along with the dividend payment. The estimates of the source of the distribution are interim estimates based on GAAP that are subject to revision, and the exact character of the distributions for tax purposes cannot be determined until the final books and records are finalized for the calendar year. Therefore, these estimates are made solely in order to comply with the requirements of Section 19(a) of the 1940 Act and should not be relied upon for tax reporting or any other purposes and could differ significantly from the actual character of distributions for tax purposes.
Distribution Policy
We generally intend to make distributions on a quarterly basis to our stockholders of substantially all of our income. In order to avoid certain excise taxes imposed on RICs, we must distribute during each calendar year an amount at least equal to the sum of (i) 98.0% of our ordinary income for the calendar year, (ii) 98.2% of our capital
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gains in excess of capital losses for the calendar year, and (iii) any ordinary income and net capital gains for the preceding year that were not distributed during such year. We will not be subject to excise taxes on amounts on which we are required to pay corporate income tax (such as retained net capital gains). In order to obtain the tax benefits applicable to RICs, we will be required to distribute to our stockholders with respect to each taxable year at least 90.0% of our ordinary income and realized net short-term capital gains in excess of realized net long-term capital losses. We may retain for investment realized net long-term capital gains in excess of realized net short-term capital losses. We may make deemed distributions to our stockholders of any retained net capital gains. If this happens, our stockholders will be treated as if they received an actual distribution of the capital gains we retain and then reinvested the net after-tax proceeds in our common stock. Our stockholders also may be eligible to claim a tax credit (or, in certain circumstances, a tax refund) equal to their allocable share of the tax we paid on the capital gains deemed distributed to them. Please refer to “Business — Material U.S. Federal Income Tax Considerations” included in Item 1 of Part I of this Annual Report on Form 10-K for further information regarding the consequences of our retention of net capital gains. We may, in the future, make actual distributions to our stockholders of some or all realized net long-term capital gains in excess of realized net short-term capital losses. We can offer no assurance that we will achieve results that will permit the payment of any cash distributions and, if we issue senior securities, we will be prohibited from making distributions if doing so causes us to fail to maintain the asset coverage ratio and related requirements stipulated by the 1940 Act or if distributions are limited by the terms of any of our borrowings or financing arrangements. See “Business — Regulation of Business Development Companies” included in Item 1 of Part I of this Annual Report on Form 10-K.
We have adopted a dividend reinvestment plan that provides for reinvestment of our distributions on behalf of our common stockholders, unless a common stockholder elects to receive cash as provided in “Business — Dividend Reinvestment Plan” included in Item I of Part I of this Annual Report on Form 10-K.
Stockholders who receive dividends in the form of stock generally are subject to the same federal, state and local tax consequences as are stockholders who elect to receive their dividends in cash. A stockholder’s basis for determining gain or loss upon the sale of stock received in a dividend from us will be equal to the total dollar amount of the dividend payable to the stockholder. Any stock received in a dividend will have a holding period for tax purposes commencing on the day following the day on which the shares are credited to the U.S. stockholder’s account.
Sales of Unregistered Equity Securities
We did not sell any equity securities during the period covered by this report that were not registered under the Securities Act of 1933, as amended (the “Securities Act”).
Issuer Purchases of Equity Securities
During the three months ended December 31, 2021, in connection with our dividend reinvestment plan for our common stockholders, we directed the Plan Administrator to purchase 56,343 shar es of our common stock for an aggregate of $ 625,097 in the open market in order to satisfy our obligati ons to deliver shares of common stock to our stockholders with respect to our dividend declared on November 9, 2021.
Performance Graph
The following graph compares the cumulative total return on our common stock with the cumulative total return of the Nasdaq Composite Index, the NYSE Composite Index and the Wells Fargo Business Development Company Index for the five years ended December 31, 2021. This comparison assumes $100.00 was invested in our common stock (or that of Triangle Capital Corporation ("TCAP"), prior to the Transactions) at the closing price of our common stock on December 31, 2016 and in the comparison groups and assumes the reinvestment of all cash dividends on the ex-dividend date prior to any tax effect. The stock price performance shown on the graph below is not necessarily indicative of future price performance.
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Comparison of Annual Cumulative Total Return(1)
among Barings BDC, Inc., the Nasdaq Composite Index, the NYSE Composite Index
and the Wells Fargo Business Development Company Index
12/31/16 3/31/17 6/30/17 9/30/17 12/31/17 3/31/18 6/30/18 9/30/18 12/31/18
Barings BDC, Inc. 100.00 107.01 101.71 85.67 59.06 71.33 73.70 88.01 80.03
NASDAQ Composite Index 100.00 110.13 114.71 121.67 129.64 132.99 141.79 152.29 125.96
NYSE Composite Index 100.00 104.58 107.78 112.54 118.73 116.09 117.41 123.58 108.10
Wells Fargo Business Development Company Index 100.00 106.09 102.97 103.43 102.56 101.32 106.45 113.61 98.42
3/31/19 6/30/19 9/30/19 12/31/19 3/31/20 6/30/20 9/30/20 12/31/20
Barings BDC, Inc. 88.20 89.64 93.76 96.35 71.31 77.19 79.30 92.97
NASDAQ Composite Index 147.13 152.82 153.09 172.17 148.15 193.99 215.80 249.51
NYSE Composite Index 121.47 125.72 126.09 135.68 101.15 117.55 126.26 145.16
Wells Fargo Business Development Company Index 115.57 121.56 125.62 139.16 87.93 111.79 116.58 137.01
3/31/21 6/30/21 9/30/21 12/31/21
Barings BDC, Inc. 102.80 110.86 117.96 120.31
NASDAQ Composite Index 256.88 281.74 281.10 304.85
NYSE Composite Index 156.84 167.21 164.00 175.18
Wells Fargo Business Development Company Index 162.68 179.72 190.81 203.45
(1) From December 31, 2016 to December 31, 2021.
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Senior Securities Table of Barings BDC, Inc.
(dollar amounts in thousands, except per unit data)
Information about our senior securities is shown as of the dates indicated in the below table. The report of our independent registered public accounting firm, KPMG LLP, on the senior securities table as of December 31, 2021, is attached as an exhibit to this annual report on Form 10-K.
Class and Year(1) Total Amount
Outstanding
Exclusive of
Treasury
Securities(2) Asset
Coverage per
Unit(3) Involuntary
Liquidating
Preference per
Unit(4) Average Market
Value per
Unit(5)
2019 Notes
2012 $ 69,000 $ 1,580 — $ 25.92
2013 69,000 2,259 — 25.99
2014 69,000 2,215 — 25.74
December 2022 Notes
2012 80,500 1,580 — 25.03
2013 80,500 2,259 — 24.94
2014 80,500 2,215 — 25.05
2015 80,500 1,972 — 25.23
2016 80,500 2,124 — 25.15
2017 80,500 2,120 — 25.51
March 2022 Notes
2015 86,250 1,972 — 25.46
2016 86,250 2,124 — 25.58
2017 86,250 2,120 — 25.85
SBA-guaranteed debentures payable (6)
2012 213,605 1,580 — N/A
2013 193,285 2,259 — N/A
2014 224,780 2,215 — N/A
2015 224,968 1,972 — N/A
2016 250,000 2,124 — N/A
2017 250,000 2,120 — N/A
May 2011 Credit Facility
2012 — 1,580 — N/A
2013 11,221 2,259 — N/A
2014 62,620 2,215 — N/A
2015 131,257 1,972 — N/A
2016 127,011 2,124 — N/A
2017 125,315 2,120 — N/A
August 2018 Credit Facility (7)
2018 570,000 1,988 — N/A
2019 107,200 1,851 — N/A
February 2019 Credit Facility (8)
2019 245,288 1,851 — N/A
2020 719,661 1,760 — N/A
2021 655,189 1,538 — N/A
Debt Securitization
2019 318,210 1,851 — N/A
August 2025 Notes
2020 50,000 1,760
— N/A
2021 50,000 1,538 — N/A
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Class and Year(1) Total Amount
Outstanding
Exclusive of
Treasury
Securities(2) Asset
Coverage per
Unit(3) Involuntary
Liquidating
Preference per
Unit(4) Average Market
Value per
Unit(5)
Series B Notes
2020 62,500 1,760
— N/A
2021 62,500 1,538 — N/A
Series C Notes
2020 112,500 1,760
— N/A
2021 112,500 1,538 — N/A
Series D Notes
2021 80,000 1,538 — N/A
Series E Notes
2021 70,000 1,538 — N/A
November 2026 Notes
2021 350,000 1,538 — N/A
Total Senior Securities
2012 363,105 1,580 — N/A
2013 354,006 2,259 — N/A
2014 436,900 2,215 — N/A
2015 522,975 1,972 — N/A
2016 543,761 2,124 — N/A
2017 572,820 2,120 — N/A
2018 570,000 1,988 — N/A
2019 670,698 1,851 — N/A
2020 944,661 1,760
— N/A
2021 1,380,189 1,538 — N/A
(1) The information in the senior securities tables for 2017 - 2019 and for years prior to 2016 is unaudited. An independent registered public accounting firm has performed agreed-upon procedures related to the accuracy of the total amount outstanding exclusive of treasury securities as of December 31, 2017, 2018 and 2019 and the asset coverage per unit as of December 31, 2017, 2018 and 2019.
(2) Total amount of each class of senior securities outstanding at the end of the period presented.
(3) Asset coverage per unit is the ratio of the carrying value of our total consolidated assets, less all liabilities and indebtedness not represented by senior securities, to the aggregate amount of senior securities representing indebtedness. Asset coverage per unit is expressed in terms of dollar amounts per $1,000 of indebtedness. All prior period ratios have been conformed with this current presentation.
(4) The amount to which such class of senior security would be entitled upon the involuntary liquidation of the issuer in preference to any security junior to it. The “—” indicates information which the SEC expressly does not require to be disclosed for certain types of senior securities.
(5) Average market value per unit for our unsecured notes issued in March 2012 due 2019 (the “2019 Notes”), our unsecured notes issued in October 2012 and November 2012 due 2022 (the “December 2022 Notes”) and our unsecured notes issued in February 2015 due 2022 (the “March 2022 Notes”) represent the average of the daily closing prices as reported on the NYSE for each security during 2012, 2013, 2014, 2015, 2016 and 2017, as applicable. Average market value per unit for our SBA-guaranteed debentures payable, our terminated credit facility initially entered into in May 2011 (the “May 2011 Credit Facility”), Barings BDC Senior Funding I, LLC's terminated credit facility initially entered into in August 2018 with Bank of America, N.A. (the "August 2018 Credit Facility"), the February 2019 Credit Facility, our $449.3 million term debt securitization in May 2019 (the “Debt Securitization”), the August 2025 Notes, the November Notes, the February Notes and the November 2026 Notes are not applicable because these senior securities are not registered for public trading.
(6) We have obtained exemptive relief from the SEC to permit us to exclude the SBA-guaranteed debentures payable from the 200% asset coverage test under the Investment Company Act.
(7) The August 2018 Credit Facility was terminated at our election in June 2020.
(8) The remaining notes issued in connection with the Debt Securitization were repaid in full in October 2020.
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Item 6. [ Reserved ] .