What changed in this filing

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Item 2. Management’s Discussion and Analysis

2022-05-05 compared with 2021-11-09 · 335 added, 247 removed, 419 unchanged (58% of the section changed)

Management’s Discussion and Analysis of Financial Condition and Results of Operations.

The following discussion is designed to provide a better understanding of our unaudited consolidated financial statements for the three and nine months ended September 30, 2021, including a brief discussion of our business, key factors that impacted our performance and a summary of our operating results.

The following discussion is designed to provide a better understanding of our unaudited consolidated financial statements for the three months ended March 31, 2022, including a brief discussion of our business, key factors that impacted our performance and a summary of our operating results.

The following discussion should be read in conjunction with the Unaudited Consolidated Financial Statements and the notes thereto included in Item 1 of this Quarterly Report on Form 10-Q, and the Consolidated Financial Statements and notes thereto and Management’s Discussion and Analysis of Financial Condition and Results of Operations contained in our Annual Report on Form 10-K for the year ended December 31, 2021.

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risks associated with possible disruption due to terrorism in our operations or the economy generally;

future changes in laws or regulations and conditions in our operating areas;

and risks related to our pending acquisition of Sierra Income Corporation.

and future changes in laws or regulations and conditions in our operating areas.

These statements are based on our current expectations, estimates, forecasts, information and projections about the industry in which we operate and the beliefs and assumptions of our management as of the date of filing of this Quarterly Report.

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The terms of the Amended and Restated Advisory Agreement became effective on January 1, 2021.

Under the terms of the Amended and Restated Advisory Agreement and the Administration Agreement, Barings serves as our investment adviser and administrator and manages our investment portfolio and performs (or oversees, or arranges for, the performance of) the administrative services necessary for our operation.

In connection with the completion of the Sierra Acquisition (as defined below), on February 25, 2022, we entered into a second amended and restated investment advisory agreement (the “New Barings BDC Advisory Agreement”) with the Adviser.

Under the terms of the New Barings BDC Advisory Agreement and the Administration Agreement, Barings serves as our investment adviser and administrator and manages our investment portfolio and performs (or oversees, or arranges for, the performance of) the administrative services necessary for our operation.

An externally-managed BDC generally does not have any employees, and its investment and management functions are provided by an outside investment adviser and administrator under an advisory agreement and administration agreement.

Instead of directly compensating employees, we pay Barings for investment and management services pursuant to the terms of the Amended and Restated Advisory Agreement (and, prior to January 1, 2021, pursuant to the terms of the Original Advisory Agreement) and the Administration Agreement.

Under the terms of the Amended and Restated Advisory Agreement (and, prior to January 1, 2021, under the terms of the Original Advisory Agreement), the fees paid to Barings for managing our affairs are determined based upon an objective and fixed formula, as compared with the subjective and variable nature of the costs associated with employing management and employees in an internally-managed BDC structure, which include bonuses that cannot be directly tied to Company performance because of restrictions on incentive compensation under the Investment Company Act of 1940, as amended (the “1940 Act”).

Instead of directly compensating employees, we pay Barings for investment management and administrative services pursuant to the terms of an investment advisory agreement and an administration agreement.

Under the terms of the New Barings BDC Advisory Agreement, the fees paid to Barings for managing our affairs are determined based upon an objective and fixed formula, as compared with the subjective and variable nature of the costs associated with employing management and employees in an internally-managed BDC structure, which include bonuses that cannot be directly tied to Company performance because of restrictions on incentive compensation under the Investment Company Act of 1940, as amended (the “1940 Act”).

Beginning in August 2018, Barings shifted our investment focus to invest in syndicated senior secured loans, bonds and other fixed income securities.

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Barings believes this strategy and approach offers attractive risk/return with lower volatility given the potential for fewer defaults and greater resilience through market cycles.

A significant portion of our investments are expected to be rated below investment grade by rating agencies or, if unrated would be rated below investment grade if they were rated.

Below investment grade securities, which are often referred to as “junk,” have predominantly speculative characteristics with respect to the issuer’s capacity to pay interest and repay principal.

We generate revenues in the form of interest income, primarily from our investments in debt securities, loan origination and other fees and dividend income.

Fees generated in connection with our debt investments are recognized over the life of the loan using the effective interest method or, in some cases, recognized as earned.

Our syndicated senior secured loans generally bear interest between LIBOR plus 300 basis points and LIBOR plus 400 points.

Our senior secured, middle-market, private debt investments generally have terms of between five and seven years.

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From time to time, certain of our investments may have a form of interest, referred to as payment-in-kind, or PIK, interest, which is not paid currently but is instead accrued and added to the loan balance and paid at the end of the term.

As of September 30, 2021 and December 31, 2020, the weighted average yield on the principal amount of our outstanding debt investments other than non-accrual debt investments was approximately 7.3% and 7.1%, respectively.

The weighted average yield on the principal amount all of our outstanding investments (including equity and equity-linked investments and short-term investments but excluding non-accrual debt investments) was approximately 6.1% and 6.4% as of September 30, 2021 and December 31, 2020, respectively.

The weighted average yield on the principal amount all of our outstanding investments (including equity and equity-linked investments and short-term investments) was approximately 6.1% and 6.5% as of September 30, 2021 and December 31, 2020, respectively.

As of March 31, 2022 and December 31, 2021, the weighted average yield on the principal amount of our outstanding debt investments other than non-accrual debt investments was approximately 7.3% and 7.2%, respectively.

The weighted average yield on the principal amount of all of our outstanding debt investments (including non-accrual debt investments) was approximately 6.8% and 6.9% as of March 31, 2022 and December 31, 2021, respectively.

Sierra Income Corporation Acquisition

On February 25, 2022, we completed our acquisition of Sierra Income Corporation, a Maryland corporation (“Sierra”), pursuant to the terms and conditions of that certain Agreement and Plan of Merger (the “Sierra Merger Agreement”), dated as of September 21, 2021, with Sierra, Mercury Acquisition Sub, Inc., a Maryland corporation and our direct wholly owned subsidiary (“Sierra Acquisition Sub”), and Barings.

To effect the acquisition, Sierra Acquisition Sub merged with and into Sierra, with Sierra surviving the merger as our wholly owned subsidiary (the “First Sierra Merger”).

Immediately thereafter, Sierra merged with and into us, with Barings BDC, Inc.

as the surviving company (the “Second Sierra Merger” and, together with the First Sierra Merger, the “Sierra Merger”).

Pursuant to the Sierra Merger Agreement, each share of Sierra common stock, par value $0.001 per share (the “Sierra Common Stock”), issued and outstanding immediately prior to the effective time of the First Sierra Merger (other than shares of Sierra Common Stock issued and outstanding immediately prior to the effective time of the First Sierra Merger that were held by a subsidiary of Sierra or held, directly or indirectly, by us or Sierra Acquisition Sub) was converted into the right to receive (i) an amount in cash from Barings, without interest, equal to $0.9783641, and (ii) 0.44973 shares of the our common stock, plus any cash in lieu of fractional shares.

As a result of the Sierra Merger, former Sierra stockholders received approximately 46.0 million shares of our common stock for their shares of Sierra Common Stock.

In connection with the Sierra Acquisition, on February 25, 2022, following the closing of the Sierra Merger, we entered into (1) the New Barings BDC Advisory Agreement, and (2) a credit support agreement (the “Sierra Credit Support Agreement”) with Barings, pursuant to which Barings has agreed to provide credit support to us in the amount of up to $100.0 million relating to the net cumulative realized and unrealized losses on the acquired Sierra investment portfolio over a 10-year period.

Agreements and Related Party Transactions” and “Note.

6 Derivative Instruments” in the Notes to our Consolidated Financial Statements included in this Quarterly Report on Form 10-Q for more information.

In addition, in connection with the closing of the Sierra Merger, our board of directors (the “Board”) affirmed our commitment to purchase in open-market transactions, pursuant to Rule 10b-18 under the Securities Exchange Act of 1934, as amended (the “Exchange Act”), and subject to our compliance with our covenant and regulatory requirements, shares of our common stock in an aggregate amount of up to $30,000,000 at then-current market prices at any time the shares of our common stock trade below 90% of our then most recently disclosed net asset value per share during the 12-month period commencing on April 1, 2022.

COVID-19 Developments

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Protecting their employees and supporting the communities in which they live and work is a priority.

Barings continues to operate with the majority of employees in the United States working remotely while maintaining service levels to our partners and clients.

In the United States, all offices are open for associates who wish to work from an office location.

In Europe and Asia-Pac a hybrid working model is now in place with the majority of associates working from office locations on average 2-3 days per week.

Barings’ return-to-office taskforce continues to plan for the safe return of associates to all office locations but is no longer targeting a set date for this given the continued uncertainty around COVID-related case numbers.

Barings has now adopted a hybrid working model globally while maintaining service levels to our partners and clients.

Barings’ return-to-office taskforce continues to monitor the COVID-19 situation globally and is prepared to adapt office working patterns as required to ensure the safety of its employees and clients who visit Barings office locations.

Barings’ cybersecurity policies are applied consistently when working remotely or in the office.

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Barings’ primary investment capabilities include fixed income, private credit, real estate, equity, and alternative investments.

Subject to the overall supervision of our board of directors (the “Board”), Barings’ Global Private Finance Group (“BGPF”) manages our day-to-day operations, and provides investment advisory and management services to us.

Subject to the overall supervision of the Board, Barings’ Global Private Finance Group (“BGPF”) manages our day-to-day operations, and provides investment advisory and management services to us.

BGPF is part of Barings’ $290.9 billion Global Fixed Income Platform that invests in liquid, private and structured credit.

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As a result, we are permitted under the 1940 Act to incur indebtedness at a level which is more consistent with a portfolio of senior secured debt.

As of September 30, 2021, our asset coverage ratio was 171.8%.

Pending Sierra Income Corporation Acquisition

On September 21, 2021, we entered into an Agreement and Plan of Merger (the “Merger Agreement”) by and among us, Mercury Acquisition Sub, Inc., a Maryland corporation and our direct wholly owned subsidiary (“Acquisition Sub”), Sierra Income Corporation, a Maryland corporation (“Sierra”), and Barings.

The Merger Agreement provides that, on the terms and subject to the conditions set forth in the Merger Agreement, Acquisition Sub will merge with and into Sierra, with Sierra continuing as the surviving company and as our wholly owned subsidiary (the “First Merger”) and, immediately thereafter, Sierra will merge with and into us, with Barings BDC, Inc.

continuing as the surviving company (the “Second Merger” and, together with the First Merger, the “Merger”).

Both the Board and the board of directors of Sierra, including all of the respective independent directors, have approved the Merger Agreement and the transactions contemplated therein.

The parties to the Merger Agreement intend the Merger to be treated as a “reorganization” within the meaning of Section 368(a) of the Internal Revenue Code of 1986, as amended (the “Code”).

In the First Merger, each share of Sierra common stock issued and outstanding immediately prior to the effective time of the First Merger (excluding any shares cancelled pursuant to the Merger Agreement) will be converted into the right to receive (i) $0.9783641 per share in cash, without interest, from Barings (such amount of cash, the “Cash Consideration”) and (ii) 0.44973 (such ratio, as may be adjusted pursuant to the Merger Agreement, the “Exchange Ratio”) of a validly issued, fully paid and non-assessable share of our common stock (the “Share Consideration” and, together with the Cash Consideration, the “Merger Consideration”).

The Merger Agreement contains representations, warranties and covenants, including, among others, covenants relating to the operation of each of our and Sierra’s businesses during the period prior to the closing of the Merger.

We and Sierra have agreed to convene and hold stockholder meetings for the purpose of obtaining the approvals required of our and Sierra’s stockholders, respectively, and our Board and the board of directors of Sierra have agreed to recommend that their respective stockholders approve the applicable proposals (as described below).

The Merger Agreement provides that Sierra shall not, and shall cause its subsidiaries and instruct its representatives not to, directly or indirectly, solicit proposals relating to alternative transactions, or, subject to certain exceptions, initiate or participate in discussions or negotiations regarding, or provide information with respect to, any proposal for an alternative transaction.

However, the Sierra board of directors may, subject to certain conditions, change its recommendation to the Sierra stockholders or, on payment of a termination fee of $11.0 million to us and the reimbursement of up to $2.0 million in expenses incurred by us and Barings, terminate the Merger Agreement and enter into an Alternative Acquisition Agreement (as defined in the Merger Agreement) for a Superior Proposal (as defined in the Merger Agreement) if it determines in good faith, after consultation with its outside legal counsel, that failure to do so would be inconsistent with the directors’ duties under applicable law.

Consummation of the First Merger, which is currently anticipated to occur during the first quarter of fiscal year 2022, is subject to certain customary closing conditions, including (1) approval of the First Merger by the holders of at least a majority of the outstanding shares of Sierra common stock entitled to vote thereon, (2) approval of the issuance of our common stock to be issued in the First Merger by a majority of the votes cast by our stockholders on the matter at our stockholders meeting, (3) approval of the issuance of our common stock in connection with the First Merger at a price below the then-current net asset value per share of our common stock, if applicable, by the vote specified in Section 63(2)(A) of the 1940 Act, (4) the absence of certain legal impediments to the consummation of the Merger, (5) effectiveness of the registration statement for our common stock to be issued as consideration in the First Merger, (6) approval for listing on the New York Stock Exchange of our common stock to be issued as consideration in the First Merger, (7) subject to certain materiality standards, the accuracy of the representations and warranties and compliance with the covenants of each party to the Merger Agreement, and (8) required regulatory approvals (including expiration of the waiting period under the Hart-Scott-Rodino Antitrust Improvements Act of 1976, as amended, or early termination thereof).

Barings, as party to the Merger Agreement, agreed to vote all shares of our common stock over which it has voting power (other than in its fiduciary capacity) in favor of the proposals to be submitted by us to our stockholders for approval relating to the Merger.

In addition, we and Sierra will take steps necessary to provide for the repayment at closing of Sierra’s existing loan agreement.

The Merger Agreement also contains certain termination rights in favor of us and Sierra, including if the First Merger is not completed on or before March 31, 2022 or if the requisite approvals of our stockholders or Sierra stockholders are not obtained.

Further, we will enter into an amendment and restatement of the Amended and Restated Advisory Agreement, effective as of the closing of the Merger, to raise the annualized hurdle rate thereunder from 8.0% to 8.25%.

Following the closing of the Merger, we will also enter into a credit support agreement with Barings, for the benefit of the combined company, to protect against net cumulative unrealized and realized losses of up to $100.0 million on the acquired Sierra investment portfolio over the next ten years.

As of March 31, 2022, our asset coverage ratio was 188.9%.

Portfolio Investment Composition

The total value of our investment portfolio was $1,652.5 million as of September 30, 2021, as compared to $1,495.8 million as of December 31, 2020.

As of September 30, 2021, we had investments in 170 portfolio companies and two money market fund with an aggregate cost of $1,633.7 million.

As of December 31, 2020, we had investments in 146 portfolio companies and two money market funds with an aggregate cost of $1,486.1 million.

As of both September 30, 2021 and December 31, 2020, none of our portfolio investments represented greater than 10% of the total fair value of our investment portfolio.

As of September 30, 2021 and December 31, 2020, our investment portfolio consisted of the following investments:

Cost Percentage of

The total value of our investment portfolio was $2,403.4 million as of March 31, 2022, as compared to $1,800.6 million as of December 31, 2021.

As of March 31, 2022, we had investments in 287 portfolio companies with an aggregate cost of $2,391.6 million.

As of December 31, 2021, we had investments in 212 portfolio companies with an aggregate cost of $1,787.8 million.

As of both March 31, 2022 and December 31, 2021, none of our portfolio investments represented greater than 10% of the total fair value of our investment portfolio.

As of March 31, 2022 and December 31, 2021, our investment portfolio consisted of the following investments:

($ in thousands) Cost Percentage of

Portfolio Fair Value Percentage of

September 30, 2021:

March 31, 2022:

Senior debt and 1 st lien notes

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Investment in joint ventures / PE fund 230,076 10 228,400 10

Short-term investments 50,000,000 3 50,000,000 3

$ 2,391,601 100 % $ 2,403,425 100 %

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Investment in joint ventures / PE fund 132,417 8 143,104 8

Short-term investments 65,558,227 4 65,558,227 4

$ 1,787,824 100 % $ 1,800,594 100 %

Investment Activity

During the nine months ended September 30, 2021, we made 59 new investments totaling $529.9 million, made investments in existing portfolio companies totaling $156.3 million, made a net new joint venture equity investment totaling $9.3 million, additional investments in joint venture equity portfolio companies totaling $30.0 million and made an $89.8 million equity co-investment alongside certain affiliates in a portfolio company focused on directly originated, senior-secured asset-based loans to middle-market companies.

We had 24 loans repaid at par totaling $196.3 million and received $32.2 million of portfolio company principal payments.

During the three months ended March 31, 2022, we made 22 new investments totaling $229.3 million, purchased $442.2 million of investments as part of the Sierra Acquisition, made investments in existing portfolio companies totaling $89.3 million and made additional investments in joint venture equity portfolio companies totaling $11.7 million.

We had four loans repaid totaling $12.4 million and received $7.5 million of portfolio company principal payments.

In addition, we sold $19.2 million of loans, recognizing a net realized gain on these transactions of $0.8 million, and sold $132.3 million of middle-market portfolio company debt investments to one of our joint ventures and realized a loss on these transactions of $0.2 million.

Lastly, we received proceeds related to the sale of equity investments totaling $1.6 million and recognized a net realized loss on such sales totaling $0.7 million.

During the three months ended March 31, 2021, we made 18 new investments totaling $172.2 million, made investments in existing portfolio companies totaling $73.2 million, made one new investment in a joint venture equity portfolio company totaling $4.5 million and made additional investments in existing joint venture equity portfolio companies totaling $25.0 million.

We had six loans repaid at par totaling $26.2 million and received $6.0 million of portfolio company principal payments.

In addition, we sold $57.1 million of loans, recognizing a net realized gain on these transactions of $2.4 million, and sold $94.7 million of middle-market portfolio company debt investments to one of our joint ventures and realized a gain on these transactions of $0.5 million.

Lastly, we received proceeds related to the sale of equity investments totaling $7.4 million and recognized a net realized gain on such sales totaling $0.7 million.

During the nine months ended September 30, 2020, we made 47 new investments totaling $263.9 million, made investments in 18 existing portfolio companies totaling $39.8 million, made one new joint venture equity investment totaling $3.1 million and made an additional investment in one existing joint venture equity portfolio company totaling $5.0 million.

We had 15 loans repaid at par totaling total $58.5 million and received $10.0 million of portfolio company principal payments.

In addition, we sold $307.4 million of loans, recognizing a net realized loss on these transactions of $36.4 million, and sold $71.0 million of middle-market portfolio company debt investments to our joint venture and realized a loss on these transactions of $1.1 million.

In addition, one loan investment was restructured.

GAAP, this restructuring was considered a material modification and as a result, we recognized a loss of approximately $0.6 million related to this restructuring.

Lastly, we received $0.3 million in escrow distributions from legacy portfolio companies, which were recognized as realized gains.

Total portfolio investment activity for the nine months ended September 30, 2021 and 2020 was as follows:

Nine Months Ended

September 30, 2021:

Lastly, we received proceeds related to the sale of an equity investment totaling $5.9 million and recognized a net realized loss on such sale totaling $0.1 million.

Total portfolio investment activity for the three months ended March 31, 2022 and 2021 was as follows:

Three Months Ended

March 31, 2022:

($ in thousands)

Notes Subordinated Debt and 2nd Lien Notes Structured Products Equity

Shares Equity Warrants Investments in Joint Ventures / PE Fund Short-term

Investments Total

Shares Equity Warrants Investments in Joint Ventures / PE Fund Total

Fair value, beginning of period $ 1,221,598 $ 240,037 $ 40,271 $ 154,477 $ 1,107 $ 143,104 $ 1,800,594

New investments 268,202 30,065 1,060 19,200 — 11,696 330,223

Investments acquired in Sierra merger 235,770 66,662 46,666 7,065 72 85,963 442,198

Proceeds from sales of investments (151,575) — — (1,388) (249) — (153,212)

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Payment-in-kind interest 1,050 6,984 — — — 8,034

Accretion of loan discounts 1,672,404 2,548,075 29,502 — — — — 4,249,981

Accretion of loan premium/discount 301 33 5 — — — 339

Accretion of deferred loan origination revenue 1,461 62 — — — — 1,523

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Fair value, end of period $ 1,555,746 $ 317,643 $ 82,014 $ 219,466 $ 156 $ 228,400 $ 2,403,425

Nine Months Ended

September 30, 2020:

Three Months Ended

March 31, 2021:

($ in thousands)

Notes Subordinated Debt and 2nd Lien Notes Structured Products Equity

Shares Investment in Joint Venture Short-term

Shares Equity Warrants Investments in Joint Ventures / PE Fund Short-term

Investments Total

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Principal repayments received (21,392) (10,120) (753) — — — — (32,265)

Payment-in-kind interest earned 236,572 35,108 — — — — 271,680

Accretion of loan discounts 1,058,002 45,338 34,660 — — — 1,138,000

Payment-in-kind interest 829 7,007 — — — — — 7,836

Accretion of loan premium/discount 645 1,319 16 — — — — 1,980

Accretion of deferred loan origination revenue 1,270 211 — — — — — 1,481

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Generally, when interest and/or principal payments on a loan become past due, or if we otherwise do not expect the borrower to be able to service its debt and other obligations, we will place the loan on non-accrual status and will generally cease recognizing interest income on that loan for financial reporting purposes until all principal and interest have been brought current through payment or due to a restructuring such that the interest income is deemed to be collectible.

As of September 30, 2021, we had one asset on non-accrual, the fair value of which was $11.0 million, which comprised 0.7% of the total fair value of our portfolio, and the cost of which was $10.1 million, which comprised 0.6% of the total cost of our portfolio.

As of December 31, 2020, we had one asset on non-accrual, the fair value of which was $3.0 million, which comprised 0.2% of the total fair value of our portfolio, and the cost of which was $3.0 million, which comprised 0.2% of the total cost of our portfolio.

A summary of our non-accrual asset as of September 30, 2021 is provided below:

As of March 31, 2022, we had seven portfolio companies with investments on non-accrual, the fair value of which was $42.9 million, which comprised 1.8% of the total fair value of our portfolio, and the cost of which was $71.3 million, which comprised 3.0% of the total cost of our portfolio.

As of December 31, 2021, we had two portfolio companies with investments on non-accrual, the fair value of which was $36.0 million, which comprised 2.0% of the total fair value of our portfolio, and the cost of which was $50.9 million, which comprised 2.9% of the total cost of our portfolio.

A summary of our non-accrual assets as of March 31, 2022 is provided below:

1888 Industrial Services, LLC

In connection with the Sierra Acquisition, we purchased our debt and equity investments in 1888 Industrial Services, LLC, or 1888.

The 1888 first lien senior secured term loan is on non-accrual status and as a result, under U.S.

GAAP, we will not recognize interest income on our first lien senior secured term loan in 1888 for financial reporting purposes.

As of March 31, 2022, the cost and fair of our first lien senior secured term loan in 1888 was $0.4 million and $0.2 million, respectively.

Black Angus Steakhouse, LLC

In connection with the Sierra Acquisition, we purchased our debt and equity investments in Black Angus Steakhouse, LLC, or Black Angus.

The Black Angus PIK term loan is on non-accrual status and as a result, under U.S.

GAAP, we will not recognize interest income on our PIK term loan in Black Angus for financial reporting purposes.

As of March 31, 2022, both the cost and fair value of our PIK term loan in Black Angus was $9.6 million.

Charming Charlie LLC

In connection with the Sierra Acquisition, we purchased our debt and equity investments in Charming Charlie, LLC, or Charming Charlie.

Charming Charlie is on non-accrual status and as a result, under U.S.

GAAP, we will not recognize interest income on our debt investments in Charming Charlie for financial reporting purposes.

As of March 31, 2022, both the cost and fair value of our debt investments in Charming Charlie was zero.

Custom Alloy Corporation

In connection with the MVC Acquisition, we purchased our debt investment in Custom Alloy Corporation, or Custom Alloy.

During the quarter ended December 31, 2021, we placed our debt investment in Custom Alloy on non-accrual status.

As a result, under U.S.

GAAP, we will not recognize interest income on our debt investment in Custom Alloy for financial reporting purposes.

As of March 31, 2022, the cost of our debt investment in Custom Alloy was $46.4 million and the fair value of such investment was $28.6 million.

Holland Acquisition Corp.

In connection with the Sierra Acquisition, we purchased our debt investment in Holland Acquisition Corp., or Holland.

Holland is on non-accrual status and as a result, under U.S.

GAAP, we will not recognize interest income on our debt investments in Holland for financial reporting purposes.

As of March 31, 2022, both the cost and fair value of our debt investments in Holland was zero.

Legal Solutions Holdings

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GAAP, we will not recognize interest income on our debt investment in Legal Solutions for financial reporting purposes.

As of September 30, 2021, the cost of our debt investment in Legal Solutions was $10.1 million and the fair value of such investment was $11.0 million.

As of March 31, 2022, the cost of our debt investment in Legal Solutions was $10.1 million and the fair value of such investment was zero.

Path Medical LLC

In connection with the Sierra Acquisition, we purchased our debt and equity investments in Path Medical LLC, or Path Medical.

Path Medical is on non-accrual status and as a result, under U.S.

GAAP, we will not recognize interest income on our debt investments in Path Medical for financial reporting purposes.

As of March 31, 2022, both the cost and fair value of our debt investments in Path Medical was $4.6 million.

Results of Operations

Three and Nine months ended September 30, 2021 and September 30, 2020

Operating results for the three and nine months ended September 30, 2021 and 2020 were as follows:

Nine Months Ended Nine Months Ended

September 30,

2021 September 30,

2020 September 30,

2021 September 30,

Comparison of the three months ended March 31, 2022 and March 31, 2021

Operating results for the three months ended March 31, 2022 and 2021 were as follows:

(in thousands) March 31,

2022 March 31,

Total investment income $ 43,757 $ 30,593

Total operating expenses 24,742 16,237

Net investment income 14,882,552 7,960,166 43,796,306 21,783,364

Net investment income before taxes 19,015 14,356

Income taxes, including excise tax provision 6 (18)

Net investment income after taxes 19,009 14,374

Net realized losses (3,761,700) (20,506,085) (1,579,460) (37,323,454)

Net realized gains (losses) (1,442) 1,839

Net unrealized appreciation 3,465 6,275

Loss on extinguishment of debt — (216,474) — (660,066)

Benefit from (provision for) taxes — 199 (1,290) 17,666

Net increase (decrease) in net assets resulting from operations $ 14,410,382 $ 43,177,627 $ 66,214,187 $ (14,587,851)

Net increase in net assets resulting from operations $ 21,032 $ 22,488

Net increases or decreases in net assets resulting from operations can vary substantially from period to period due to various factors, including recognition of realized gains and losses and unrealized appreciation and depreciation.

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Ended Three Months

Ended Nine Months Ended Nine Months Ended

September 30,

2021 September 30,

2020 September 30,

2021 September 30,

($ in thousands) March 31,

2022 March 31,

Investment income:

Interest income $ 24,622,330 $ 15,217,547 $ 76,655,759 $ 48,187,628

Dividend income 2,866,668 — 3,333,067 2,603

Fee and other income 4,488,346 769,126 9,189,976 2,380,552

Payment-in-kind interest income 3,006,481 342,469 9,551,152 577,090

Total interest income $ 32,069 $ 25,214

Total dividend income 7,693 72

Total fee and other income 1,197 2,133

Total payment-in-kind interest income 2,798 3,173

Interest income from cash — 1

Total investment income $ 43,757 $ 30,593

The change in investment income for the three and nine months ended September 30, 2021, as compared to the three and nine months ended September 30, 2020, was primarily due to an increase in the average size of our portfolio, acceleration of unamortized OID and unamortized loan origination fee income associated with repayments of loans, an increase in payment-in-kind (“PIK”) interest income and dividends from portfolio companies and joint venture investments.

For the three and nine months ended September 30, 2021, acceleration of unamortized OID income and unamortized loan origination fees totaled $1.9 million and $4.6 million, respectively, as compared to $30,549 and $0.3 million, respectively, for the three and nine months ended September 30, 2020.

For the three and nine months ended September 30, 2021, PIK interest income was $3.0 million and $9.6 million respectively, as compared to $0.3 million and $0.6 million, respectively, for the three and nine months ended September 30, 2020.

For the three and nine months ended September 30, 2021, dividends from portfolio companies and joint venture investments were $2.9 million and $3.3 million, respectively.

The amount of our outstanding debt investments was $1,407.0 million as of September 30, 2021, as compared to $929.3 million as of September 30, 2020.

This increase is in part due to the acquisition of investment assets in the MVC Acquisition.

The weighted average yield on the principal amount of our outstanding debt investments other than non-accrual debt investments was 7.3% as of September 30, 2021, as compared to 6.2% as of September 30, 2020.

The change in total investment income for the three months ended March 31, 2022, as compared to the three months ended March 31, 2021, was primarily due to an increase in the average size of our portfolio and increased dividends from portfolio companies and joint venture investments.

The increase in the average size of our portfolio was largely due to the increased middle-market investment opportunities and the investments acquired as part of the Sierra Acquisition;

however, as the Sierra Acquisition did not close until late in the first quarter of 2022, we did not receive a full quarter of investment income from the acquired Sierra portfolio.

This increase was partial offset by a decrease in payment-in-kind (“PIK”) interest income and a decrease in acceleration of unamortized OID and unamortized loan origination fee income associated with repayments of loans.

For the three months ended March 31, 2022, dividends from portfolio companies and joint venture investments were $7.7 million, as compared to $0.1 million for the three months ended March 31, 2021.

The amount of our outstanding debt investments was $2,134.2 million as of March 31, 2022, as compared to $1,451.9 million as of March 31, 2021.

This increase is in part due to the acquisition of investment assets in the Sierra Acquisition.

The weighted average yield on the principal amount of our outstanding debt investments other than non-accrual debt investments was 7.3% as of March 31, 2022, as compared to 7.2% as of March 31, 2021.

For the three months ended March 31, 2022, PIK interest income was $2.8 million, as compared to $3.2 million for the three months ended March 31, 2021.

For the three months ended March 31, 2022, acceleration of unamortized OID income and unamortized loan origination fees totaled $0.2 million, as compared to $0.4 million for the three months ended March 31, 2021.

Operating Expenses

Ended Three Months

Ended Nine Months Ended Nine Months Ended

September 30,

2021 September 30,

2020 September 30,

2021 September 30,

($ in thousands) March 31,

2022 March 31,

Operating expenses:

2 unchanged sentences

Incentive management fees 4,754 2,722

Compensation expenses — — — 48,410

General and administrative expenses 2,455 2,301

1 unchanged sentence

Interest and Other Financing Fees

Interest and other financing fees during the three and nine months ended September 30, 2021 were attributable to borrowings under the February 2019 Credit Facility, the August 2025 Notes, the November Notes and the February Notes (each as defined below under “Liquidity and Capital Resources”).

Interest and other financing fees during the three and nine months ended September 30, 2020 were attributable to borrowings under Barings BDC Senior Funding I, LLC’s credit facility entered into in August 2018 with Bank of America, N.A.

(the “August 2018 Credit Facility”), the February 2019 Credit Facility and our May 2019 $449.3 million term debt securitization (the “Debt Securitization”).

The increase in interest and other financing fees for the three and nine months ended September 30, 2021 as compared to the three and nine months ended September 30, 2020, was primarily attributable to the issuance of the August 2025 Notes, the November Notes and the February Notes and increased borrowings under the February 2019 Credit Facility, partially offset by the repayment of the Debt Securitization and the repayment of the borrowings under the August 2018 Credit Facility.

Interest and other financing fees during the three months ended March 31, 2022 were attributable to borrowings under the February 2019 Credit Facility, the August 2025 Notes, the November Notes, the February Notes and the November 2026 Notes (each as defined below under “Liquidity and Capital Resources”).

Interest and other financing fees during the three months ended March 31, 2021 were attributable to borrowings under the February 2019 Credit Facility, the August 2025 Notes, the November Notes and the February Notes.

The increase in interest and other financing fees for the three months ended March 31, 2022 as compared to the three months ended March 31, 2021, was primarily attributable to the issuance of the February Notes and the November 2026 Notes and increased borrowings under the February 2019 Credit Facility.

Base Management Fees

Under the terms of the Amended and Restated Advisory Agreement (and, prior to January 1, 2021, under the terms of the Original Advisory Agreement), we pay Barings a base management fee (the “Base Management Fee”), quarterly in arrears on a calendar quarter basis.

Under the terms of the New Barings BDC Advisory Agreement, we pay Barings a base management fee (the “Base Management Fee”), quarterly in arrears on a calendar quarter basis.

The Base Management Fee is calculated based on the average value of our gross assets, excluding cash and cash equivalents, at the end of the two most recently completed calendar quarters prior to the quarter for which such fees are being calculated.

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

See Note 2 to our Unaudited Consolidated Financial Statements for additional information regarding the terms of the Amended and Restated Advisory Agreement (and, prior to January 1, 2021, the terms of the Original Advisory Agreement) and the fee arrangements thereunder.

For the three and nine months ended September 30, 2021, the amount of Base Management Fee incurred was approximately $5.3 million and $14.1 million, respectively.

For the three and nine months ended September 30, 2020, the amount of Base Management Fee incurred was approximately $3.4 million and $10.9 million, respectively.

The increase in the Base Management Fee for the three and nine months ended September 30, 2021 versus the corresponding 2020 periods is primarily related to the average value of gross assets increasing from $981.9 million as of the end of the two most recently completed calendar quarters prior to September 30, 2020 to $1,687.6 million as of the end of the two most recently completed calendar quarters prior to September 30, 2021.The increase in the Base Management Fee attributable to the increase in our average gross assets was partially offset by a decrease in the Base Management Fee rate.

For both the three and nine months ended September 30, 2021, the Base Management Fee rate was 1.250%.

For both the three and nine months ended September 30, 2020, the Base Management Fee rate was 1.375%.

Incentive Fee (and, prior to January 1, 2021, under the terms of the Original Advisory Agreement)

Under the Amended and Restated Advisory Agreement (and, prior to January 1, 2021, under the terms of the Original Advisory Agreement), we pay Barings an incentive fee.

See Note 2 to our Unaudited Consolidated Financial Statements for additional information regarding the terms of the New Barings BDC Advisory Agreement (and, from January 1, 2021 to February 25, 2022, the terms of the Amended and Restated Advisory Agreement) and the fee arrangements thereunder.

For the three months ended March 31, 2022, the amount of Base Management Fee incurred was approximately $5.9 million.

For the three months ended March 31, 2021, the amount of Base Management Fee incurred was approximately $3.9 million.

The increase in the Base Management Fee for the three months ended March 31, 2022 versus the corresponding 2021 period is primarily related to the average value of gross assets increasing from $1,257.4 million as of the end of the two most recently completed calendar quarters prior to March 31, 2021 to $1,879.0 million as of the end of the two most recently completed calendar quarters prior to March 31, 2022.

For both the three months ended March 31, 2022 and 2021, the Base Management Fee rate was 1.250%.

Incentive Fee

Under the New Barings BDC Advisory Agreement (and, from January 1, 2021 to February 25, 2022, pursuant to the terms of the Amended and Restated Advisory Agreement), we pay Barings an incentive fee.

A portion of the incentive fee is based on our income and a portion is based on our capital gains.

The income-based fee will be determined and paid quarterly in arrears based on the amount by which (x) the aggregate pre-incentive fee net investment income in respect of the current calendar quarter and the eleven preceding calendar quarters beginning with the calendar quarter that commences on or after January 1, 2021, as the case may be (or the appropriate portion thereof in the case of any of our first eleven calendar quarters that commences on or after January 1, 2021) exceeds (y) the hurdle amount as calculated for the same period.

See Note 2 to our Unaudited Consolidated Financial Statements for additional information regarding the terms of the Amended and Restated Advisory Agreement and the fee arrangements thereunder.

For the three and nine months ended September 30, 2021, the amount of income-based fee incurred was $4.4 million and $10.7 million, respectively.

We did not incur any income-based fee for the three or nine months ended September 30, 2020.

See Note 2 to our Unaudited Consolidated Financial Statements for additional information regarding the terms of the New Barings BDC Advisory Agreement and the fee arrangements thereunder.

For the three months ended March 31, 2022, the amount of income-based fee incurred was $4.8 million, as compared to $2.7 million for the three months ended March 31, 2021.

General and Administrative Expenses

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See Note 2 to our Unaudited Consolidated Financial Statements for additional information regarding the Administration Agreement.

For the three and nine months ended September 30, 2021, the amount of administration expense incurred and invoiced by Barings for expenses was approximately $0.8 million and $1.8 million, respectively.

For the three and nine months ended September 30, 2020, the amount of administration expense incurred and invoiced by the Adviser for expenses was approximately $0.3 million and $0.9 million, respectively.

For the three months ended March 31, 2022, the amount of administration expense incurred and invoiced by Barings for expenses was approximately $1.0 million.

For the three months ended March 31, 2021, the amount of administration expense incurred and invoiced by Barings for expenses was approximately $0.5 million.

In addition to expenses incurred under the Administration Agreement, general and administrative expenses include Board fees, D&O insurance costs, as well as legal, valuation and accounting expenses.

Net Realized Gains (Losses)

Net realized gains (losses) during the three and nine months ended September 30, 2021 and 2020 were as follows:

Net realized gains (losses) during the three months ended March 31, 2022 and 2021 were as follows:

Ended Three Months

Ended Nine Months Ended Nine Months Ended

September 30,

2021 September 30,

2020 September 30,

2021 September 30,

($ in thousands) March 31,

2022 March 31,

Net realized gain (losses):

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Net realized gains (losses) $ (1,442) $ 1,839

In the three months ended September 30, 2021, we recognized net realized losses totaling $3.8 million, which consisted primarily of a net loss on foreign currency transactions of $4.7 million, partially offset by a net gain on our loan portfolio of $0.9 million.

In the nine months ended September 30, 2021, we recognized net realized losses totaling $1.6 million, which consisted primarily of a net loss on foreign currency transactions of $5.9 million, partially offset by a net gain on our loan portfolio of $4.3 million.

In the three months ended September 30, 2020, we recognized net realized losses totaling $20.5 million, which consisted

primarily of a net loss on our loan portfolio of $19.5 million and a net loss on foreign currency transactions of

$1.0 million.

In the nine months ended September 30, 2020, we recognized net realized losses totaling $37.3 million, which

consisted primarily of a net loss on our loan portfolio of $36.5 million and a net loss on foreign currency transactions of $1.1

million, partially offset by $0.2 million in escrow distributions we received from legacy portfolio companies, which were

recognized as realized gains.

During the three months ended March 31, 2022, we recognized net realized losses totaling $1.4 million, which consisted primarily of a net loss on foreign currency transactions of $1.3 million.

During the three months ended March 31, 2021, we recognized net realized gains totaling $1.8 million, which consisted primarily of a net gain on our loan portfolio of $2.8 million partially offset by a net loss on foreign currency transactions of $1.0 million.

Net Unrealized Appreciation (Depreciation)

Net unrealized appreciation (depreciation) during the three and nine months ended September 30, 2021 and 2020 was as follows:

Net unrealized appreciation (depreciation) during the three months ended March 31, 2022 and 2021 was as follows:

Ended Three Months

Ended Nine Months Ended Nine Months Ended

September 30,

2021 September 30,

2020 September 30,

2021 September 30,

($ in thousands) March 31,

2022 March 31,

Net unrealized appreciation (depreciation):

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Net unrealized appreciation (depreciation) on investments (947) 3,833

Credit support agreement — — 700,006 —

Credit support agreements (400) (1,600)

Foreign currency transactions 4,812 4,042

Net unrealized appreciation (depreciation) $ 3,315,063 $ 55,947,382 $ 23,998,631 $ 1,594,639

During the three months ended September 30, 2021, we recorded net unrealized appreciation totaling $3.3 million, consisting of net unrealized appreciation related to foreign currency transactions of $10.9 million, partially offset by net unrealized depreciation on our current portfolio of $4.7 million and unrealized depreciation reclassification adjustments of $2.9

million related to the net realized gains on the sales / repayments of certain investments.

The net unrealized depreciation on our current portfolio of $4.7 million was driven primarily by the impact of foreign currency exchange rates on investments of $6.9 million and the credit or fundamental performance of investments of $0.2 million, partially offset by broad market moves for investments of $2.4 million.

During the nine months ended September 30, 2021, we recorded net unrealized appreciation totaling $24.0 million, consisting of net unrealized appreciation on our current portfolio of $13.8 million, unrealized appreciation related to foreign currency transactions of $14.3 million and unrealized appreciation of $0.7 million on the credit support agreement with Barings, net of unrealized depreciation reclassification adjustments of $4.7 million related to the net realized gains on the sales / repayments of certain investments.

The net unrealized appreciation on our current portfolio of $13.8 million was driven primarily by broad market moves for investments of $24.0 million and the credit or fundamental performance of investments of $1.9 million, partially offset by the impact of foreign currency exchange rates on investments of $12.1 million.

During the three months ended September 30, 2020, we recorded net unrealized appreciation totaling $55.9 million, consisting of net unrealized appreciation on our current portfolio of $29.7 million and net unrealized appreciation reclassification adjustments of $28.4 million related to the net realized losses on the sales / repayments of certain investments, net of net unrealized depreciation related to foreign currency transactions of $2.1 million.

The net unrealized appreciation on our current portfolio of $29.7 million was driven primarily by the credit or fundamental performance of middle-market debt investments of $1.1 million, the impact of foreign currency exchange rates on middle-market debt investments of $1.9 million and the broad market moves for the entire investment portfolio of $26.7 million.

During the nine months ended September 30, 2020, we recorded net unrealized appreciation totaling $1.6 million, consisting of net unrealized appreciation reclassification adjustments of $51.4 million related to the net realized losses on the sales / repayments of certain investments, partially offset by net unrealized depreciation on our current portfolio of $48.1 million and net unrealized depreciation related to foreign currency transactions of $1.8 million.

The net unrealized depreciation on our current portfolio of $48.1 million was driven primarily by the credit or fundamental performance of middle-market debt investments of $4.2 million and broad market moves for the entire investment portfolio of $45.7 million, partially offset by the impact of foreign currency exchange rates on middle-market debt investments of $1.9 million.

Net unrealized appreciation $ 3,465 $ 6,275

During the three months ended March 31, 2022, we recorded net unrealized appreciation totaling $3.5 million, consisting of net unrealized appreciation on our current portfolio of $0.1 million and net unrealized appreciation related to foreign currency transactions of $4.8 million, net of unrealized depreciation of $0.4 million on the MVC credit support agreement with Barings and net unrealized depreciation reclassification adjustments of $1.0 million related to the net realized gains on the sales / repayments of certain investments.

The net unrealized appreciation on our current portfolio of $0.1 million was driven primarily by credit or fundamental performance of investments of $27.8 million, partially offset by the impact of foreign currency exchange rates on investments of $4.7 million and broad market moves for investments of $23.1 million.

During the three months ended March 31, 2021, we recorded net unrealized appreciation totaling $6.3 million, consisting of net unrealized appreciation on our current portfolio of $6.4 million and net unrealized appreciation related to foreign currency transactions of $4.0 million, net of unrealized depreciation of $1.6 million on the MVC credit support agreement with Barings and net of unrealized depreciation reclassification adjustments of $2.6 million related to the net realized gains on the sales / repayments of certain investments.

The net unrealized appreciation on our current portfolio of $6.4 million was driven primarily by broad market moves for investments of $13.8 million, partially offset by depreciation from the credit or fundamental performance of investments of $3.0 million and the impact of foreign currency exchange rates on investments of $4.4 million.

Liquidity and Capital Resources

We believe that our current cash and cash equivalents on hand, our short-term investments, our available borrowing capacity under our $800 million senior secured revolving credit facility with ING Capital LLC (as amended, restated and otherwise modified from time to time, the “February 2019 Credit Facility”) and the August 2020 NPA (as defined below under "Financing Transactions") and our anticipated cash flows from operations will be adequate to meet our cash needs for our daily operations for at least the next twelve months.

We believe that our current cash and foreign currencies on hand, our available borrowing capacity under the February 2019 Credit Facility and our anticipated cash flows from operations will be adequate to meet our cash needs for our daily operations for at least the next twelve months.

This “Liquidity and Capital Resources” section should be read in conjunction with “COVID-19 Developments” above, as well as with the notes to our Unaudited Consolidated Financial Statements.

For the nine months ended September 30, 2021, we experienced a net decrease in cash in the amount of $51.1 million.

During that period, our operating activities used $115.9 million in cash, consisting primarily of purchases of portfolio investments of $816.8 million and purchases of short-term investments of $297.6 million, partially offset by proceeds from sales or repayments of portfolio investments totaling $648.3 million and sales of short-term investments of $313.1 million.

In addition, our financing activities provided $64.8 million of cash, consisting of net proceeds of $149.8 million from the issuance of the February Notes (as defined below under “Financing Transactions”), partially offset by net repayments under the February 2019 Credit Facility of $45.8 million and dividends paid in the amount of $39.2 million.

As of September 30, 2021, we had $41.4 million of cash and foreign currencies on hand.

For the nine months ended September 30, 2020, we experienced a net decrease in cash in the amount of $7.2 million.

During that period, our operating activities provided $4.8 million in cash, consisting primarily of proceeds from sales or repayments of portfolio investments totaling $417.0 million and sales of short-term investments of $583.2 million, partially offset by purchases of portfolio investments of $316.7 million and purchases of short-term investments of $697.1 million.

In addition, our financing activities used $12.0 million of cash, consisting primarily of repayments of the Debt Securitization of $139.9 million, share repurchases of $7.1 million and dividends paid in the amount of $23.2 million, partially offset by net borrowings under the August 2018 Credit Facility and the February 2019 Credit Facility of $108.7 million and net proceeds from the August 2025 Notes issuance of $49.5 million.

As of September 30, 2020, we had $14.8 million of cash on hand.

For the three months ended March 31, 2022, we experienced a net increase in cash in the amount of $70.2 million.

During that period, our operating activities used $18.8 million in cash, consisting primarily of purchases of portfolio investments of $335.5 million, partially offset by net cash acquired from the acquisition of Sierra of $101.9 million and proceeds from sales or repayments of portfolio investments totaling $210.5 million.

In addition, our financing activities provided net cash of $89.0 million, consisting of net borrowings under the February 2019 Credit Facility (as defined below under “Financing Transactions”) of $107.7 million, partially offset by dividends paid in the amount of $15.0 million and share repurchases of $2.1 million.

As of March 31, 2022, we had $154.4 million of cash and foreign currencies on hand.

For the three months ended March 31, 2021, we experienced a net decrease in cash in the amount of $52.0 million.

During that period, our operating activities used $85.1 million in cash, consisting primarily of purchases of portfolio investments of $276.5 million and purchases of short-term investments of $198.6 million, partially offset by proceeds from sales of portfolio investments totaling $188.2 million and sales of short-term investments of $190.5 million.

In addition, our financing activities provided $33.1 million of cash, consisting of net proceeds of $149.8 million from the issuance of the February Notes, partially offset by net repayments under the February 2019 Credit Facility of $104.3 million and dividends paid in the amount of $12.4 million.

As of March 31, 2021, we had $40.5 million of cash and foreign currencies on hand.

Financing Transactions

February 2019 Credit Facility

On February 21, 2019, we entered into the February 2019 Credit Facility (as subsequently amended in December 2019), with ING Capital LLC (“ING”), as administrative agent, and the lenders party thereto.

On February 21, 2019, we entered into a senior secured credit facility with ING Capital LLC (“ING”), as administrative agent, and the lenders party thereto (as amended, restated and otherwise modified from time to time, the “February 2019 Credit Facility”).

The initial commitments under the February 2019 Credit Facility total $800.0 million.

The February 2019 Credit Facility has an accordion feature that allows for an increase in the total commitments by up to $400.0 million, subject to certain conditions and the satisfaction of specified financial covenants.

Effective on November 4, 2021, we increased aggregate commitments under the February 2019 Credit Facility to $875.0 million from $800.0 million pursuant to the accordion feature under the February 2019 Credit Facility, which allows for an increase in the total commitments to an aggregate of $1.2 billion subject to certain conditions and the satisfaction of specified financial covenants.

Effective on February 25, 2022, we increased aggregate commitments under the February 2019 Credit Facility to $965.0 million from $875.0 million pursuant to the accordion feature under the February 2019 Credit Facility, and the allowance for an increase in the total commitments increased to $1.5 billion from $1.2 billion subject to certain conditions and the satisfaction of specified financial covenants.

We can borrow foreign currencies directly under the February 2019 Credit Facility.

The February 2019 Credit Facility, which is structured as a revolving credit facility, is secured primarily by a material portion of our assets and guaranteed by certain of our subsidiaries.

Following the termination of the August 2018 Credit Facility on June 30, 2020, Barings BDC Senior Funding I, LLC became a subsidiary guarantor and its assets secure the February 2019 Credit Facility.

The revolving period of the February 2019 Credit Facility ends on February 21, 2023, followed by a one-year repayment period with a final maturity date of February 21, 2024.

Borrowings under the February 2019 Credit Facility bear interest, subject to our election, on a per annum basis equal to (i) the applicable base rate plus 1.00% (or 1.25% if we no longer maintain an investment grade credit rating), (ii) the applicable LIBOR rate plus 2.00% (or 2.25% if we no longer maintain an investment grade credit rating), (iii) for borrowings denominated in certain foreign currencies other than Australian dollars, the applicable currency rate for the foreign currency as defined in the credit agreement plus 2.00% (or 2.25% if we no longer maintain an investment grade credit rating), or (iv) for borrowings denominated in Australian dollars, the applicable Australian dollars Screen Rate, plus 2.20% (or 2.45% if we no longer maintain an investment grade credit rating).

The applicable base rate is equal to the greatest of (i) the prime rate, (ii) the federal funds rate plus 0.5%, (iii) the Overnight Bank Funding Rate plus 0.5%, (iv) the adjusted three-month applicable currency rate plus 1.0% and (v) 1.0%.

The applicable LIBOR and currency rates depend on the currency and term of the draw under the February 2019 Credit Facility, and cannot be less than zero.

Following the termination on June 30, 2020 of Barings BDC Senior Funding I, LLC’s (“BSF”) credit facility entered into in August 2018 with Bank of America, N.A.

(the “August 2018 Credit Facility”), BSF became a subsidiary guarantor and its assets secure the February 2019 Credit Facility.

The revolving period of the February 2019 Credit Facility ends on February 21, 2024, followed by a one-year repayment period with a maturity date of February 21, 2025.

Borrowings denominated in U.S.

Dollars under the February 2019 Credit Facility bear interest, subject to our election, on a per annum basis equal to (i) the alternate base rate plus 1.25% (or 1.00% for so long as we maintain an investment grade credit rating) or (ii) the term Secured Overnight Financing Rate (“SOFR”) plus 2.25% (or 2.00% for so long as we maintain an investment grade credit rating) plus a credit spread adjustment of 0.10% for borrowings with an interest period of one month, 0.15% for borrowings with an interest period of three months or 0.25% for borrowings with an interest period of six months.

The alternate 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) one-month term SOFR plus 1.0% plus a credit spread adjustment of 0.10% and (v) 1.0%.

For borrowings denominated in certain foreign currencies other than Australian dollars, the applicable currency rate for the foreign currency as defined in the credit agreement plus 2.00% (or 2.25% if we no longer maintain an investment grade credit rating) or for borrowings denominated in Australian dollars, the applicable Australian dollars Screen Rate, plus 2.20% (or 2.45% if we no longer maintain an investment grade credit rating).

In addition, we pay a commitment fee of (i) 0.5% per annum on undrawn amounts if the unused portion of the February 2019 Credit Facility is greater than two-thirds of total commitments or (ii) 0.375% per annum on undrawn amounts if the unused portion of the February 2019 Credit Facility is equal to or less than two-thirds of total commitments.

In connection with entering into the February 2019 Credit Facility, we incurred financing fees of approximately $6.4 million, which will be amortized over the life of the February 2019 Credit Facility.

As of September 30, 2021, we were in compliance with all covenants under the February 2019 Credit Facility and had U.S.

dollar borrowings of $382.0 million outstanding under the February 2019 Credit Facility with an interest rate of 2.125% (one month LIBOR of 0.125%), borrowings denominated in Swedish kronas of 12.8kr million ($1.5 million U.S.

dollars) with an interest rate of 2.000% (one month STIBOR of 0.000%), borrowings denominated in British pounds sterling of £68.3 million ($92.1 million U.S.

dollars) with an interest rate of 2.063% (one month GBP LIBOR of 0.063%), borrowings denominated in Australian dollars of A$36.6 million ($26.4 million U.S.

As of March 31, 2022, we were in compliance with all covenants under the February 2019 Credit Facility and had U.S.

dollar borrowings of $472.0 million outstanding under the February 2019 Credit Facility with an interest rate of 2.318% (one month SOFR of 0.218%), borrowings denominated in Swedish kronas of 12.8kr million ($1.4 million U.S.

dollars) with an interest rate of 2.000% (one month STIBOR of 0.000%), borrowings denominated in British pounds sterling of £77.6 million

($102.1 million U.S.

dollars) with an interest rate of 2.477% (one month SONIA of 0.477%), borrowings denominated in Australian dollars of A$36.6 million ($27.5 million U.S.

dollars) with an interest rate of 2.250% (one month AUD Screen Rate of 0.250%) and borrowings denominated in Euros of €138.6 million ($154.2 million U.S.

2 unchanged sentences

dollars based on the spot rate at the relevant balance sheet date.

The impact resulting from changes in foreign exchange rates on the February 2019 Credit Facility borrowings is included in "Net unrealized appreciation (depreciation) - foreign currency transactions" in the our Unaudited Consolidated Statements of Operations.

The 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 our Unaudited Consolidated Statements of Operations.

The fair values of the borrowings outstanding under the February 2019 Credit Facility are based on a market yield approach and current interest rates, which are Level 3 inputs to the market yield model.

As of September 30, 2021, the total fair value of the borrowings outstanding under the February 2019 Credit Facility was $662.7 million.

As of March 31, 2022, the total fair value of the borrowings outstanding under the February 2019 Credit Facility was $757.2 million.

See Note 5 to our Unaudited Consolidated Financial Statements for additional information regarding the February 2019 Credit Facility.

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An aggregate principal amount of $25.0 million of the Series A Notes due 2025 was issued on September 24, 2020 and an aggregate principal amount of $25.0 million of the Series A Notes due 2025 was issued on September 29, 2020, both of which will mature on August 4, 2025 unless redeemed, purchased or prepaid prior to such date by us in accordance with their terms.

Interest on the August 2025 Notes is due semiannually in

March and September, beginning in March 2021.

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

In addition, we are obligated to offer to repay the August 2025 Notes at par (plus accrued and unpaid interest to, but not including, the date of prepayment) if certain change in control events occur.

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Upon the occurrence of an event of default, the holders of at least 66-2/3% in principal amount of the August 2025 Notes at the time outstanding may declare all August 2025 Notes then outstanding to be immediately due and payable.

As of September 30, 2021, we were in compliance with all covenants under the August 2020 NPA.

As of March 31, 2022, we were in compliance with all covenants under the August 2020 NPA.

The August 2025 Notes were offered in reliance on Section 4(a)(2) of the Securities Act of 1933, as amended (the “Securities Act”).

The August 2025 Notes have not and will not be registered under the Securities Act or any state securities laws and, unless so registered, may not be offered or sold in the United States except pursuant to an exemption from, or in a transaction not subject to, the registration requirements of the Securities Act, as applicable.

As of September 30, 2021, the fair value of the outstanding August 2025 Notes was $50.0 million.

As of March 31, 2022, the fair value of the outstanding August 2025 Notes was $49.7 million.

The fair value determination of the August 2025 Notes was based on a market yield approach and current interest rates, which are Level 3 inputs to the market yield model.

November Notes

On November 4, 2020, we entered into a Note Purchase Agreement (the “November 2020 NPA”) governing the issuance of (1) $62.5 million in aggregate principal amount of Series B senior unsecured notes due November 2025 (the “Series B Notes”) with a fixed interest rate of 4.25% per year and (2) $112.5 million in aggregate principal amount of Series C senior unsecured notes due November 2027 (the “Series C Notes,” and, collectively with the Series B Notes, the “November Notes”) with a fixed interest rate of 4.75% per year, in each case, to qualified institutional investors in a private placement.

unsecured notes due November 2027 (the “Series C Notes,” and, collectively with the Series B Notes, the “November Notes”) with a fixed interest rate of 4.75% per year, in each case, to qualified institutional investors in a private placement.

Each stated interest rate is subject to a step up of (x) 0.75% per year, to the extent the applicable November Notes do not satisfy certain investment grade conditions and/or (y) 1.50% per year, to the extent the ratio of our secured debt to total assets exceeds specified thresholds, measured as of each fiscal quarter end.

6 unchanged sentences

The November 2020 NPA contains certain representations and warranties, and various covenants and reporting requirements customary for senior unsecured notes issued in a private placement, including, without limitation, affirmative and negative covenants such as information reporting, maintenance of our status as a BDC within the meaning of the 1940 Act, certain restrictions with respect to transactions with affiliates, fundamental changes, changes of line of business, permitted liens, investments and restricted payments, minimum shareholders’ equity, maximum net debt to equity ratio and minimum asset coverage ratio.

under our other indebtedness or that of our subsidiary guarantors, certain judgements and orders, and certain events of bankruptcy.

The November 2020 NPA also contains customary events of default with customary cure and notice periods, including, without limitation, nonpayment, incorrect representation in any material respect, breach of covenant, cross-default under our other indebtedness or that of our subsidiary guarantors, certain judgements and orders, and certain events of bankruptcy.

Upon the occurrence of an event of default, the holders of at least 66-2/3% in principal amount of the November Notes at the time outstanding may declare all November Notes then outstanding to be immediately due and payable.

As of September 30, 2021, we were in compliance with all covenants under the November 2020 NPA.

As of March 31, 2022, we were in compliance with all covenants under the November 2020 NPA.

The November Notes were offered in reliance on Section 4(a)(2) of the Securities Act.

The November Notes have not and will not be registered under the Securities Act or any state securities laws and, unless so registered, may not be offered or sold in the United States except pursuant to an exemption from, or in a transaction not subject to, the registration requirements of the Securities Act, as applicable.

As of September 30, 2021, the fair value of the outstanding Series B Notes and the Series C Notes was $62.5 million and $112.5 million, respectively.

As of March 31, 2022, the fair value of the outstanding Series B Notes and the Series C Notes was $61.1 million and $109.0 million, respectively.

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

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Upon the occurrence of certain events of default, the holders of at least 66-2/3% in principal amount of the February Notes at the time outstanding may declare all February Notes then outstanding to be immediately due and payable.

As of September 30, 2021, we were in compliance with all covenants under the February 2021 NPA.

As of March 31, 2022, we were in compliance with all covenants under the February 2021 NPA.

The February Notes were offered in reliance on Section 4(a)(2) of the Securities Act.

The February Notes have not and will not be registered under the Securities Act or any state securities laws and, unless so registered, may not be offered or sold in the United States except pursuant to an exemption from, or in a transaction not subject to, the registration requirements of the Securities Act, as applicable.

As of September 30, 2021, the fair value of the outstanding Series D Notes and the Series E Notes was $80.0 million and $70.0 million, respectively.

As of March 31, 2022, the fair value of the outstanding Series D Notes and the Series E Notes was $75.5 million and $65.2 million, respectively.

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

November 2026 Notes

On November 23, 2021, we entered into an Indenture (the “Base Indenture”) and a Supplemental Indenture (the “First Supplemental Indenture” and, together with the Base Indenture, the “Indenture”) with U.S.

Bank National Association (the “Trustee”).

The First Supplemental Indenture relates to our issuance of $350.0 million aggregate principal amount of its 3.300% notes due 2026 (the “November 2026 Notes”).

The November 2026 Notes will mature on November 23, 2026 and may be redeemed in whole or in part at our option at any time or from time to time at the redemption prices set forth in the Indenture.

The November 2026 Notes bear interest at a rate of 3.300% per year payable semi-annually on May 23 and November 23 of each year, commencing on May 23, 2022.

The November 2026 Notes are our general unsecured obligations that rank senior in right of payment to all of our existing and future indebtedness that is expressly subordinated in right of payment to the November 2026 Notes, rank pari passu with all existing and future unsecured unsubordinated indebtedness issued by us, rank effectively junior to any of our secured indebtedness (including unsecured indebtedness that we later secure) to the extent of the value of the assets securing such indebtedness, and rank structurally junior to all existing and future indebtedness (including trade payables) incurred by our subsidiaries, financing vehicles or similar facilities.

The Indenture contains certain covenants, including covenants requiring us to comply with the asset coverage requirements of Section 18(a)(1)(A) as modified by Section 61(a)(1) and (2) of the 1940 Act, whether or not it is subject to those requirements, and to provide financial information to the holders of the November 2026 Notes and the Trustee if we are no longer subject to the reporting requirements under the Exchange Act.

These covenants are subject to important limitations and exceptions that are described in the Indenture.

In addition, on the occurrence of a “change of control repurchase event,” as defined in the Indenture, we will generally be required to make an offer to purchase the outstanding November 2026 Notes at a price equal to 100% of the principal amount of such November 2026 Notes plus accrued and unpaid interest to the repurchase date.

The November 2026 Notes were offered to persons reasonably believed to be qualified institutional buyers pursuant to Rule 144A under the Securities Act and to certain non-U.S.

persons outside the United States pursuant to Regulation S under the Securities Act.

The November 2026 Notes have not been registered under the Securities Act or any state securities laws and may not be offered or sold in the United States absent registration or an applicable exemption from such registration requirements.

As of March 31, 2022, the fair value of the outstanding November 2026 Notes was $320.9 million.

The fair value determinations of the November 2026 Notes were based on a market yield approach and current interest rates, which are Level 3 inputs to the market yield model.

Share Repurchases

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

Under the 2020 Share Repurchase Program, we were authorized during fiscal year 2020 to repurchase up to a maximum of 5.0% of the amount of shares outstanding as of February 27, 2020 if shares traded below NAV per share, subject to liquidity and regulatory constraints.

Purchases under the 2020 Share Repurchase Program were made in open-market transactions and included transactions being executed by a broker selected by us that had been delegated the authority to repurchase shares on our behalf in the open market in accordance with applicable rules under the Exchange Act, including Rules 10b5-1 and 10b-18 thereunder, and pursuant to, and under the terms and limitations of, the 2020 Share Repurchase Program.

During the nine months ended September 30, 2020, we repurchased a total of 989,050 shares of our common stock in the open market under the 2020 Share Repurchase Program at an average price of $7.21 per share including broker commissions.

In addition, in connection with the closing of the MVC Acquisition on December 23, 2020, we committed to make open-market purchases of shares of our common stock in an aggregate amount of up to $15.0 million at then-current market prices at any time shares trade below 90% of our then most recently disclosed NAV per share.

In connection with the closing of the MVC Acquisition on December 23, 2020, we committed to make open-market purchases of shares of our common stock in an aggregate amount of up to $15.0 million at then-current market prices at any time shares trade below 90% of our then most recently disclosed NAV per share.

Any repurchases pursuant to the authorized program will occur during the 12-month period that commenced upon the filing of our quarterly report on Form 10-Q for the quarter ended March 31, 2021, which occurred on May 6, 2021, and will be made in accordance with applicable legal, contractual and regulatory requirements.

During the three and nine months ended September 30, 2021, we did not repurchase any shares under the authorized program.

During the three months ended March 31, 2022, we repurchased a total of 207,677 shares of our common stock in the open market under the authorized program at an average price of $10.14 per share, including broker commissions.

In connection with the completion of the acquisition of Sierra, we committed to make open-market purchases of shares of our common stock in an aggregate amount of up to $30.0 million at then-current market prices at any time shares trade below 90% of our then most recently disclosed NAV per share.

Any repurchases pursuant to the authorized program will occur during the 12-month period commencing on April 1, 2022 and are expected to be made in accordance with a Rule 10b5-1 purchase plan that qualifies for the safe harbors provided by Rules 10b5-1 and 10b-18 under the Exchange Act, as well as subject to compliance with our covenant and regulatory requirements.

Distributions to Stockholders

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In addition, in order to satisfy the annual distribution requirement applicable to RICs, we may declare a significant portion of our dividends in shares of our common stock instead of in cash.

As long as a portion of such dividend is paid in cash (which portion may be as low as 20% of such dividend under published guidance from the Internal Revenue Service) and certain requirements are met, the entire distribution will be treated as a dividend for U.S.

As long as a portion of such dividend is paid in cash (which portion may be as low as 20% of such dividend (and 10% of the dividend declared through June 30, 2022) under published guidance from the Internal Revenue Service) and certain requirements are met, the entire distribution will be treated as a dividend for U.S.

federal income tax purposes.

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For example, if we hold debt obligations that are treated under applicable tax rules as having original issue discount (such as debt instruments issued with warrants), we must include in ICTI each year a portion of the original issue discount that accrues over the life of the obligation, regardless of whether cash representing such income is received by us in the same taxable year.

We may also have to include in ICTI other amounts that we have not yet received in cash, such as (i) PIK

interest income and (ii) interest income from investments that have been classified as non-accrual for financial reporting purposes.

We may also have to include in ICTI other amounts that we have not yet received in cash, such as (i) PIK interest income and (ii) interest income from investments that have been classified as non-accrual for financial reporting purposes.

Interest income on non-accrual investments is not recognized for financial reporting purposes, but generally is recognized in ICTI.

Because any original issue discount or other amounts accrued will be included in our ICTI for the year of accrual, we may be required to make a distribution to our stockholders in order to satisfy the minimum distribution requirements, even though we will not have received and may not ever receive any corresponding cash amount.

Because any original issue discount or other amounts accrued will be included in our ICTI for the year of

accrual, we may be required to make a distribution to our stockholders in order to satisfy the minimum distribution requirements, even though we will not have received and may not ever receive any corresponding cash amount.

ICTI also excludes net unrealized appreciation or depreciation, as investment gains or losses are not included in taxable income until they are realized.

Recent Developments

Subsequent to September 30, 2021, we made approximately $238.5 million of new commitments, of which $164.4 million closed and funded.

The $164.4 million of investments consist of $124.9 million of first lien senior secured debt investments, $14.5 million of second lien senior secured and subordinated debt investments and $25.0 million of equity investments.

Subsequent to March 31, 2022, we made approximately made approximately $174.4 million of new commitments, of which $141.0 million closed and funded.

The $141.0 million of investments consists of $120.9 million of first lien senior secured debt investments, $1 6 .

2 million of second lien senior secured and subordinated debt investments and $3.8 million of equity investments.

The weighted average yield of the debt investments was 7.1%.

In addition, we funded $3.8 million of previously committed delayed draw term loans.

Effective on November 4, 2021, we increased our aggregate commitments under the February 2019 Credit Facility to $875.0 million from $800.0 million pursuant to the accordion feature under the February 2019 Credit Facility, which allows for an increase in the total commitments to an aggregate of $1.2 billion subject to certain conditions and the satisfaction of specified financial covenants.

On November 9, 2021, the Board declared a quarterly distribution of $0.22 per share payable on December 1, 2021 to holders of record as of November 24, 2021.

In addition, the Company funded $15.0 million of previously committed delayed draw term loans .

Effective on April 1, 2022, we increased aggregate commitments under the February 2019 Credit Facility to $1.1 billion from $965.0 million pursuant to the accordion feature under the February 2019 Credit Facility, which allows for an increase in the total commitments to an aggregate of $1.5 billion subject to certain conditions and the satisfaction of specified financial covenants.

On May 5, 2022, the Board declared a quarterly distribution of $0.24 per share payable on June 15, 2022 to holders of record as of June 8, 2022.

Critical Accounting Policies and Use of Estimates

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Our current valuation policy and processes were established by Barings and have been approved by the Board.

As of March 31, 2022, our investment portfolio, valued at fair value in accordance with the Board-approved valuation policies, represented approximately 182% of our total net assets, as compared to approximately 243% of our total net assets as of December 31, 2021.

Under ASC Topic 820, fair value is the price that would be received to sell an asset or paid to transfer a liability in an orderly transaction between a willing buyer and a willing seller at the measurement date.

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A financial instrument is categorized within the ASC Topic 820 valuation hierarchy based upon the lowest level of input to the valuation process that is significant to the fair value measurement.

For example, a Level 3 fair value measurement may

include inputs that are observable (Levels 1 and 2) and unobservable (Level 3).

For example, a Level 3 fair value measurement may include inputs that are observable (Levels 1 and 2) and unobservable (Level 3).

Therefore, unrealized appreciation and depreciation related to such investments categorized as Level 3 investments within the tables in the notes to our consolidated financial statements may include changes in fair value that are attributable to both observable inputs (Levels 1 and 2) and unobservable inputs (Level 3).

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A range of values will be provided by the valuation provider and Barings will determine the point within that range that it will use in making valuation recommendations to the Board, and will report to the Board on its rationale for each such determination.

Barings uses its internal valuation model as a comparison point to validate the price range provided by the valuation provider and, where applicable, in determining the point within that range that it will use in making valuation recommendations to the Board.

If Barings’ pricing committee disagrees with the price range provided, it may make a

fair value recommendation to the Board that is outside of the range provided by the independent valuation provider, and will notify the Board of any such override and the reasons therefore.

Barings uses its internal valuation model as a comparison point to validate the price range

provided by the valuation provider and, where applicable, in determining the point within that range that it will use in making valuation recommendations to the Board.

If Barings’ pricing committee disagrees with the price range provided, it may make a fair value recommendation to the Board that is outside of the range provided by the independent valuation provider, and will notify the Board of any such override and the reasons therefore.

In certain instances, we may determine that it is not cost-effective, and as a result is not in the stockholders' best interests, to request an independent valuation firm to perform an independent valuation on certain investments.

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This rule establishes requirements for determining fair value in good faith for purposes of the 1940 Act.

We will comply with the new rule’s valuation requirements on or before the SEC’s compliance date in 2022.

We will comply with the new rule’s valuation requirements on or before the SEC’s September 8, 2022 compliance date.

Valuation Techniques

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The availability of observable inputs can vary from investment to investment and is affected by a wide variety of factors, including the type of security, whether the security is new and not yet established in the marketplace, the liquidity of markets and other characteristics particular to the security.

Valuation of Investment in Jocassee, Thompson Rivers, Waccamaw River and MVC Private Equity Fund LP

We estimate the fair value of our investments in Jocassee, Thompson Rivers, Waccamaw River and MVC Private Equity Fund LP using the NAV of each company and our ownership percentage.

The NAV is determined in accordance with the specialized accounting guidance for investment companies.

Valuation of Investments in Jocassee, Thompson Rivers, Waccamaw River, Sierra JV and MVC Private Equity Fund LP

As Jocassee, Thompson Rivers, Waccamaw River, Sierra JV and MVC Private Equity Fund LP are investment companies with no readily determinable fair values, we estimate the fair value of our investments in these entities using net asset value of each company and our ownership percentage as a practical expedient.

The net asset value is determined in accordance with the specialized accounting guidance for investment companies.

Revenue Recognition

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Such fees include loan prepayment penalties, advisory, loan amendment and other fees, and are recorded as investment income when earned.

Fee income for the three and nine months ended September 30, 2021 and 2020 was as follows:

Nine Months Ended

September 30, 2021 September 30, 2020 September 30, 2021 September 30, 2020

Fee income for the three months ended March 31, 2022 and 2021 was as follows:

($ in thousands) March 31, 2022 March 31, 2021

Recurring Fee Income:

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As a result, we may be required to make a distribution to our stockholders in order to satisfy the minimum distribution requirements, even though we will not have received and may not ever receive any corresponding cash amount.

Off-Balance Sheet Arrangements

Unused Commitments

In the normal course of business, we are party to financial instruments with off-balance sheet risk, consisting primarily of unused commitments to extend financing to our portfolio companies.

Since commitments may expire without being drawn upon, the total commitment amount does not necessarily represent future cash requirements.

As of September 30, 2021 and December 31, 2020, we believed that we had adequate financial resources to satisfy our unfunded commitments.

The balances of unused commitments to extend financing as of September 30, 2021 and December 31, 2020 were as follows:

Portfolio Company Investment Type September 30, 2021 December 31, 2020

As of March 31, 2022 and December 31, 2021, we believed that we had adequate financial resources to satisfy our unfunded commitments.

The balances of unused commitments to extend financing as of March 31, 2022 and December 31, 2021 were as follows:

Portfolio Company

($ in thousands) Investment Type March 31, 2022 December 31, 2021

1888 Industrial Services, LLC(1)(2) Revolver $ 314 $ —

Acclime Holdings HK Limited(1) Delayed Draw Term Loan 1,179 1,179

ADE Holding(1)(3) Committed Capex Line — 91,814

Acclime Holdings HK Limited(1) Delayed Draw Term Loan 110 110

Air Comm Corporation, LLC(1) Delayed Draw Term Loan 11 11

Anju Software, Inc.(1) Delayed Draw Term Loan — 1,981,371

Arch Global Precision, LLC(1) Delayed Draw Term Loan — 4,193,475

Beacon Pointe Advisors, LLC(1) Delayed Draw Term Loan — 363,636

BigHand UK Bidco Limited(1)(4) Acquisition Capex Facility 376,644 —

Air Comm Corporation, LLC(1) Delayed Draw Term Loan 1,448 1,448

Amtech Software(1) Delayed Draw Term Loan 1,527 2,727

Amtech Software(1) Revolver 682 682

Portfolio Company

($ in thousands) Investment Type March 31, 2022 December 31, 2021

AnalytiChem Holding GmbH(1)(2)(3) Delayed Draw Term Loan 6,073 6,207

Aquavista Watersides 2 LTD(1)(2)(4) Bridge Revolver 489 503

Aquavista Watersides 2 LTD(1)(2)(4) Acquisition Facility 3,059 3,147

Astra Bidco Limited(1)(2)(4) Delayed Draw Term Loan 959 2,571

Avance Clinical Bidco Pty Ltd(1)(5) Delayed Draw Term Loan 1,435 3,497

Azalea Buyer, Inc.(1) Delayed Draw Term Loan 962 962

Azalea Buyer, Inc.(1) Revolver 481 481

Bariacum S.A(1)(2)(3) Acquisition Facility 2,114 2,161

Beyond Risk Management, Inc.(1)(2) Delayed Draw Term Loan 2,573 2,573

BigHand UK Bidco Limited(1)(2)(4) Acquisition Facility — 378

Black Angus Steakhouses, LLC(1) Acquisition Facility 417 —

Bounteous, Inc.(1) Delayed Draw Term Loan 2,840 2,840

British Engineering Services Holdco Limited(1)(4) Acquisition Facility — 7,006,008

Brightpay Limited(1)(2)(3) Delayed Draw Term Loan 241 432

Brightpay Limited(1)(2)(3) Delayed Draw Term Loan 141 144

BrightSign LLC(1) Revolver 1,329 1,329

British Engineering Services Holdco Limited(1)(2)(4) Bridge Revolver — 613

Canadian Orthodontic Partners Corp(1)(2)(6) Delayed Draw Term Loan 166,198 —

Brook & Whittle Holding Corp.(1) Delayed Draw Term Loan 852 —

CAi Software, LLC(1) Revolver 943 943

Canadian Orthodontic Partners Corp.(1)(2)(6) Acquisition Facility 120 167

Centralis Finco S.a.r.l.(1)(3) Acquisition Facility 451 461

Ceres Pharma NV(1)(2)(3) Delayed Draw Term Loan 2,103 2,149

CGI Parent, LLC(1)(2) Revolver 1,212 —

Classic Collision (Summit Buyer, LLC)(1)(2) Delayed Draw Term Loan 309 393

CM Acquisitions Holdings Inc.(1) Delayed Draw Term Loan 1,247,359 1,551,602

Contabo Finco S.À R.L(1)(3) Delayed Draw Term Loan 216,163 228,211

Coastal Marina Holdings, LLC(1)(2) PIK Tranche B Term Loan 1,311 1,311

Coastal Marina Holdings, LLC(1)(2) Tranche A Term Loan 3,576 3,576

Command Alkon (Project Potter Buyer, LLC)(1) Delayed Draw Term Loan 6,018 6,018

Coyo Uprising GmbH(1)(2)(3) Delayed Draw Term Loan 874 894

CSL Dualcom(1)(4) Delayed Draw Term Loan 993,478 1,007,182

Crash Champions, LLC(1) Delayed Draw Term Loan 379 5,420

CSL Dualcom(1)(4) Acquisition Term Loan 970 998

Dart Buyer, Inc.(1) Delayed Draw Term Loan 1,163 2,431

DecksDirect, LLC(1) Revolver 58 218

DreamStart Bidco SAS(1)(3) Acquisition Facility 604 617

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Eclipse Business Capital, LLC(1) Revolver 10,909 11,818

EMI Porta Holdco LLC(1) Delayed Draw Term Loan 11,212 12,458

EMI Porta Holdco LLC(1) Revolver 2,361 2,966

EPS NASS Parent, Inc.(1) Delayed Draw Term Loan 583 583

F24 (Stairway BidCo GmbH)(1)(3) Acquisition Facility 412,879 323,840

eShipping, LLC(1) Delayed Draw Term Loan 1,650 2,548

eShipping, LLC(1) Revolver 824 1,232

Events Software BidCo Pty Ltd(1)(5) Delayed Draw Term Loan 481 —

F24 (Stairway BidCo GmbH)(1)(2)(3) Delayed Draw Term Loan 396 405

Fineline Technologies, Inc.(1) Delayed Draw Term Loan 180 180

FitzMark Buyer, Inc.(1) Delayed Draw Term Loan — 1,470,588

Foundation Risk Partners, Corp.(1) Delayed Draw Term Loan 3,444,445 4,984,771

Finexvet(1)(3) Acquisition Facility 967 —

FragilePak LLC(1)(2) Delayed Draw Term Loan 2,354 2,354

Heartland, LLC(1)(2) Delayed Draw Term Loan — 5,347,666

Heilbron (f/k/a Sucsez (Bolt Bidco B.V.))(1)(2)(3) Accordion Facility — 10,225,081

Home Care Assistance, LLC(1) Delayed Draw Term Loan 173,697 —

Heartland Veterinary Partners, LLC(1) Delayed Draw Term Loan 657 657

Portfolio Company

($ in thousands) Investment Type March 31, 2022 December 31, 2021

Heavy Construction Systems Specialists, LLC(1) Revolver 2,632 2,632

HW Holdco, LLC (Hanley Wood LLC)(1)(2) Delayed Draw Term Loan 913 1,563

IGL Holdings III Corp.(1) Delayed Draw Term Loan 1,217 1,217

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INOS 19-090 GmbH(1)(2)(3) Acquisition Facility 2,481 2,535

ITI Intermodal, Inc.(1) Delayed Draw Term Loan 103 103

ITI Intermodal, Inc.(1) Revolver 124 124

Jaguar Merger Sub Inc.(1)(2) Delayed Draw Term Loan 1,781 1,961

Jaguar Merger Sub Inc.(1)(2) Revolver 490 490

Jocassee Partners LLC Joint Venture 15,000 20,000

Jon Bidco Limited(1)(2)(7) Capex & Acquisition Facility 1,585 —

Jones Fish Hatcheries & Distributors LLC(1) Revolver 418 —

Kano Laboratories LLC(1)(2) Delayed Draw Term Loan 153 153

Kene Acquisition, Inc.(1) Delayed Draw Term Loan — 322,928

Kano Laboratories LLC(1)(2) Delayed Draw Term Loan 2,830 4,544

Kemmerer Operations LLC(1) Delayed Draw Term Loan 908 —

LAF International(1)(2)(3) Acquisition Facility 178 341

Lambir Bidco Limited(1)(2)(3) Bridge Revolver 920 941

Lambir Bidco Limited(1)(2)(3) Delayed Draw Term Loan 1,841 1,881

LeadsOnline, LLC(1) Revolver 2,603 —

Lifestyle Intermediate II, LLC(1) Revolver 2,500 —

LivTech Purchaser, Inc.(1) Delayed Draw Term Loan 34 82

Marmoutier Holding B.V.(1)(2)(3) Delayed Draw Term Loan 396 405

Marmoutier Holding B.V.(1)(2)(3) Revolver 159 162

Marshall Excelsior Co.(1)(2) Revolver 1,047 —

MC Group Ventures Corporation(1) Delayed Draw Term Loan 817 817

Portfolio Company Investment Type September 30, 2021 December 31, 2020

Modern Star Holdings Bidco Pty Limited(1)(5) Capex Term Loan 1,072 1,038

Murphy Midco Limited(1)(4) Delayed Draw Term Loan 648 2,617

Narda Acquisitionco., Inc.(1) Revolver 1,311 1,311

Navia Benefit Solutions, Inc.(1) Delayed Draw Term Loan 1,261 1,261

Nexus Underwriting Management Limited(1)(2)(4) Revolver 101 103

Nexus Underwriting Management Limited(1)(2)(4) Acquisition Facility 526 541

Novotech Aus Bidco Pty Ltd(1) Capex & Acquisition Facility 809 —

OA Buyer, Inc.(1) Revolver 1,331 1,331

OAC Holdings I Corp(1) Revolver 685 —

OG III B.V.(1)(2)(3) Acquisition CapEx Facility 671 686

Options Technology Ltd.(1) Delayed Draw Term Loan — 2,604,080

Omni Intermediate Holdings, LLC(1)(2) Delayed Draw Term Loan — 817

Omni Intermediate Holdings, LLC(1)(2) Delayed Draw Term Loan 2,289 4,357

OSP Hamilton Purchaser, LLC(1) Revolver 187 187

Pacific Health Supplies Bidco Pty Limited(1)(2)(5) CapEx Term Loan 1,325 1,283

PDQ.Com Corporation(1) Delayed Draw Term Loan — 289

Premier Technical Services Group(1)(4) Acquisition Facility — 1,197,505

PDQ.Com Corporation(1) Delayed Draw Term Loan 7,753 10,948

Polara Enterprises, L.L.C.(1)(2) Revolver 545 545

Policy Services Company, LLC(1)(2) Delayed Draw Term Loan 3,772 6,944

Premium Invest(1)(2)(3) Acquisition Facility 1,892 1,933

ProfitOptics, LLC(1) Revolver 484 —

Protego Bidco B.V.(1)(2)(3) Delayed Draw Term Loan 826 844

PSC UK Pty Ltd.(1)(4) Acquisition Facility 527,876 535,157

QPE7 SPV1 BidCo Pty Ltd(1)(5) Acquisition Capex Facility 732,210 —

Questel Unite(1)(2)(3) Cap Acquisition Facility — 10,300,913

Radwell International, LLC(1) Delayed Draw Term Loan — 3,235,947

QPE7 SPV1 BidCo Pty Ltd(1)(2)(5) Acquisition Term Loan — 373

Portfolio Company

($ in thousands) Investment Type March 31, 2022 December 31, 2021

RA Outdoors, LLC(1) Revolver 741 —

Rep Seko Merger Sub LLC(1) Delayed Draw Term Loan 1,305 1,455

Reward Gateway (UK) Ltd(1)(2)(4) Acquisition Facility 657 1,061

Safety Products Holdings, LLC(1)(2) Delayed Draw Term Loan — 6,467,345

Riedel Beheer B.V.(1)(2)(3) Revolver — 230

Riedel Beheer B.V.(1)(2)(3) Delayed Draw Term Loan 150 153

Scaled Agile, Inc.(1)(2) Delayed Draw Term Loan 416 416

Scaled Agile, Inc.(1)(2) Revolver 336 336

Security Holdings B.V.(1)(2)(3) Delayed Draw Term Loan 2,225 2,274

Security Holdings B.V.(1)(2)(3) Revolver 1,113 1,137

Smartling, Inc.(1) Delayed Draw Term Loan 1,978 2,353

Smartling, Inc.(1) Revolver 1,176 1,176

Smile Brands Group, Inc.(1)(2) Delayed Draw Term Loan 418 655

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SSCP Pegasus Midco Limited(1)(4) Delayed Draw Term Loan 5,105 5,251

Superjet Buyer, LLC(1) Revolver 1,825 1,825

Syntax Systems Ltd(1)(2) Revolver 448 569

Syntax Systems Ltd(1)(2) Delayed Draw Term Loan 1,933 1,933

Tank Holding Corp(1) Revolver 873 —

Techone B.V.(1)(2)(3) Delayed Draw Term Loan 1,586 1,621

Techone B.V.(1)(2)(3) Revolver 423 432

Tencarva Machinery Company, LLC(1) Delayed Draw Term Loan 886 886

Tencarva Machinery Company, LLC(1) Revolver 1,128 1,129

The Caprock Group, Inc.

(aka TA/TCG Holdings, LLC)(1) Delayed Draw Term Loan 2,811 2,811

The Caprock Group, Inc.

(aka TA/TCG Holdings, LLC)(1) Revolver 827 827

The Hilb Group, LLC(1) Delayed Draw Term Loan 2,529 2,773

Thermacell Repellents, Inc.(1) Revolver 605 —

Transit Technologies LLC(1)(2) Delayed Draw Term Loan — 1,857

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

Utac Ceram(1)(2)(3) Delayed Draw Term Loan — 743,327

Waccamaw River(2) Joint Venture 15,680,000 —

Truck-Lite Co., LLC(1) Delayed Draw Term Loan 4,540 4,540

Turbo Buyer, Inc.(1) Delayed Draw Term Loan 1,339 2,070

Turbo Buyer, Inc.(1) Delayed Draw Term Loan 2,250 —

USLS Acquisition, Inc.(f/k/a US Legal Support, Inc.)(1)(2) Delayed Draw Term Loan 3,820 —

Victoria Bidco Limited(1)(2)(4) Delayed Draw Term Loan 458 —

Waccamaw River, LLC(2) Joint Venture 4,580 11,280

W2O Holdings, Inc.(1) Delayed Draw Term Loan 3,831 3,832

West Dermatology, LLC(1) Revolver 552 —

West Dermatology, LLC(1) Delayed Draw Term Loan 3,352 —

West Dermatology, LLC(1) PIK Delayed Draw Term Loan 144 —

Woodland Foods, Inc.(1) Revolver 1,734 2,070

ZB Holdco LLC(1) Revolver 845 —

ZB Holdco LLC(1) Delayed Draw Term Loan 1,352 —

Zeppelin Bidco Limited(1)(2)(4) Capex / Acquisition Facility 3,472 —

Zeppelin Bidco Limited(1)(2)(4) Revolver $ 579 $ —

Total unused commitments to extend financing $ 220,360 $ 234,658

13 unchanged sentences

dollars based on the spot rate at the relevant balance sheet date.

(7) Actual commitment amount is denominated in New Zealand dollars.

Commitment was translated into U.S.

dollars based on the spot rate at the relevant balance sheet date.

In the normal course of business, we guarantee certain obligations in connection with our portfolio companies (in particular, certain controlled portfolio companies).

Under these guarantee arrangements, payments may be required to be made to third parties if such guarantees are called upon or if the portfolio companies were to default on their related obligations, as applicable.

As of September 30, 2021 and December 31, 2020, we had guaranteed €9.9 million ($11.5 million U.S.

As of March 31, 2022 and December 31, 2021, we had guaranteed €9.9 million ($11.0 million U.S.

dollars and $11.3 million U.S.

5 unchanged sentences

dollars based on the spot rate at the relevant balance sheet date.

In addition, as of December 31, 2020, the Company agreed to cash collateralize a $3.5 million letter of credit for Security Holdings B.V.

The $3.5 million cash collateralization was reflected as "Restricted cash" on the accompanying Audited Consolidated Balance Sheet as of December 31, 2020.

The letter of credit expired on April 30, 2021, and as of September 30, 2021, none of the Company’s cash was restricted.

Compared sentence by sentence after normalising whitespace, quotation marks, case and digits, so re-formatting and restated figures do not read as changed language. Wording changes appear as one removal and one addition. The current filing and the prior one are authoritative.

What changed 10-Q

Item 2. Management’s Discussion and Analysis