What changed in this filing

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Item 1. Business

2021-02-23 compared with 2020-02-25 · 139 added, 90 removed, 387 unchanged (37% of the section changed)

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We commenced investment operations in May 2013 and closed our initial public offering in June 2017.

Our investment objective is to generate current income and capital appreciation primarily through debt investments in U.S.

Our investment objective is to generate current income and, to a lesser extent, capital appreciation primarily through secured debt investments in U.S.

middle market companies.

Our core investment strategy focuses on lending to U.S.

middle market companies, which we define as companies with approximately $25 million to $100 million of earnings before interest, taxes, depreciation and amortization (“EBITDA”), which we believe is a useful proxy for cash flow.

We complement this core strategy with additive, diversifying assets including, but not limited to, specialty lending investments.

We seek to achieve our investment objective primarily through direct origination of secured debt instruments, including first lien senior secured loans (which may include stand-alone first lien loans, first lien/last out loans and “unitranche” loans) and second lien senior secured loans (collectively, “Middle Market Senior Loans”), with the balance of our assets invested in higher yielding investments (which may include unsecured debt, mezzanine debt and investments in equities).

middle market companies supported by financial sponsors, which we define as companies with approximately $25 million to $100 million of earnings before interest, taxes, depreciation and amortization (“EBITDA”), which we believe is a useful proxy for cash flow.

This core strategy is supplemented with complementary specialty lending and opportunistic investing strategies, which take advantage of the broad capabilities of Carlyle's Global Credit platform while offering risk diversifying portfolio benefits.

We seek to achieve our investment objective primarily through direct origination of secured debt instruments, including first lien senior secured loans (which may include stand-alone first lien loans, first lien/last out loans and “unitranche” loans) and second lien senior secured loans (collectively, “Middle Market Senior Loans”), with a minority of our assets invested in higher yielding investments (which may include unsecured debt, mezzanine debt and investments in equities).

We invest primarily in loans to middle market companies whose debt, if rated, is rated below investment grade, and, if not rated, would likely be rated below investment grade if it were rated (that is, below BBB- or Baa3, which is often referred to as “junk”).

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In addition, for U.S.

federal income tax purposes, we have elected to be treated as a RIC under the Code commencing with our taxable year ended December 31, 2013.

federal income tax purposes, we elected to be treated as a RIC under the Code commencing with our taxable year ended December 31, 2013.

Effective on March 15, 2017, we changed our name from “Carlyle GMS Finance, Inc.” to “TCG BDC, Inc.” On June 19, 2017, we closed our initial public offering, issuing 9,454,200 shares of our common stock (including shares issued pursuant to the exercise of the underwriters’ over-allotment option on July 5, 2017) at a public offering price of $18.50 per share.

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Our investment activities are managed by our Investment Adviser.

The principal executive offices of our Investment Adviser are located at 520 Madison Avenue, 40th Floor, New York, NY 10022, with additional offices in Chicago, Boston and Los Angeles.

The principal executive offices of our Investment Adviser are located at One Vanderbilt Avenue, Suite 3400, New York, NY 10017, with additional offices in Chicago, Boston and Los Angeles.

Our Investment Adviser is responsible for sourcing potential investments, conducting research and due diligence on prospective investments, analyzing and structuring investments and monitoring investments on an ongoing basis.

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provides our Investment Adviser with access to investment professionals that comprise our Investment Adviser’s investment team.

As of December 31, 2019 , our Investment Adviser’s investment team included a team of 125 investment professionals across the Global Credit segment.

The five members of our Investment Adviser’s investment committee have an average of over 25 years of industry experience.

As of December 31, 2020, our Investment Adviser’s investment team included a team of more than 170 investment professionals across the Global Credit segment.

Our Investment Adviser’s investment committee comprises five of the most senior credit professionals within the Global Credit segment, with backgrounds and expertise across asset classes and over 26 years of average industry experience and 10 years of average tenure.

In addition, our Investment Adviser and its investment team are supported by a team of finance, operations and administrative professionals currently employed by Carlyle Employee Co., a wholly owned subsidiary of Carlyle.

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An affiliated investment fund, account or other similar arrangement currently formed or formed in the future and managed by our Investment Adviser or its affiliates may have overlapping investment objectives and strategies with our own and, accordingly, may invest in asset classes similar to those targeted by us.

As a result, our Investment Adviser and/or its affiliates may face conflicts of interest arising out of the investment advisory activities of our Investment Adviser and other operations of Carlyle.

As a result, our Investment Adviser and/or its affiliates may face conflicts of interest arising out of the investment advisory activities of our

Investment Adviser and other operations of Carlyle.

See “ —Allocation of Investment Opportunities and Potential Conflicts of Interest ” and “ Risk Factors—Risks Related to Our Business and Structure—There are significant potential conflicts of interest, including the management of other investment funds and accounts by our Investment Adviser, which could impact our investment returns ” in Part I, Item 1A of this Form 10-K for more information.

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CGCA, a Delaware limited liability company, serves as our Administrator.

performing its obligations under the Administration Agreement, including our allocable portion of the compensation of certain of our officers and staff.

Pursuant to an administration agreement between us and the Administrator (the “Administration Agreement”), our Administrator provides services to us and we reimburse our Administrator for its costs and expenses and our allocable portion of overhead incurred by our Administrator in performing its obligations under the Administration Agreement, including our allocable portion of the compensation of certain of our officers and staff.

In addition, our Administrator has entered into a sub-administration agreement with Carlyle Employee Co.

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Our Investment Adviser and Administrator are affiliates of Carlyle.

Carlyle is a global investment firm with deep industry expertise that deploys private capital across four business segments:

Corporate Private Equity, Real Assets, Global Credit and Investment Solutions.

Carlyle is a global investment firm with deep industry expertise that deploys private capital across three business segments:

Global Private Equity, Global Credit and Investment Solutions.

With $246 billion of assets under management (“AUM”) as of December 31, 2020, Carlyle’s purpose is to invest wisely and create value on behalf of its investors, portfolio companies and the communities in which we live and invest.

Carlyle employs more than 1,775 employees, including 671 investment professionals in 32 offices across six continents, and serves more than 2,600 active carry fund investors from 94 countries.

Established in 1999 with its first high yield fund, Carlyle’s Global Credit segment advises a group of 64 active funds that span the credit spectrum:

liquid credit, illiquid credit, and real assets credit.

Taken together, these various capital sources provide the opportunity for Carlyle to offer highly customizable and creative financing solutions to borrowers to meet their specific capital needs.

In 2019, Carlyle hired several new senior investment professionals to expand Global Credit’s investment breadth and geographical presence.

Carlyle employs 1,825 employees, including 678 investment professionals in 29 offices across five continents, and serves more than 2,650 active carry fund investors from 95 countries.

Carlyle’s Global Credit segment, which currently has $55.9 billion in assets under management, advises a group of 71 active funds that pursue investment strategies across the credit spectrum, including liquid credit, illiquid credit, and real assets credit.

Since the establishment of Global Credit in 1999, these various capital sources provide the opportunity for Carlyle to offer highly customizable and creative financing solutions to borrowers to meet their specific capital needs.

In 2020, Carlyle hired several new senior investment professionals to continue to build Global Credit’s investment breadth and geographical presence.

Primary areas of focus for Carlyle’s Global Credit segment include:

Liquid Credit

• Loans and Structured Credit.

The structured credit funds invest primarily in performing senior secured bank loans through structured vehicles and other investment vehicles.

In 2019, in addition to multiple resets and refinancings, Carlyle closed three new U.S.

CLOs and two CLOs in Europe with a total of $1.8 billion and $0.9 billion, respectively, or AUM at December 31, 2019.

The structured credit funds invest primarily in performing senior secured bank loans through CLOs and other investment vehicles.

In 2020, Carlyle closed three new U.S.

CLOs and one CLO in Europe with a total of $1.3 billion and $0.6 billion, respectively, of AUM at December 31, 2020.

As of December 31, 2020, Carlyle’s loans and structured credit team advised 52 structured credit funds and two carry funds in the United States, Europe, and Asia totaling, in the aggregate, approximately $29.4 billion in AUM.

Illiquid Credit

• Direct Lending.

Carlyle’s direct lending business includes Carlyle’s BDCs, which invest primarily in first lien loans (which include unitranche, “first out” and “last out” loans) and second lien loans of middle market companies, typically defined as companies with annual EBITDA ranging from $25 million to $100 million, which often lack access to the broadly syndicated loan and bond markets.

In 2019, Carlyle expanded its direct lending capabilities by adding personnel to bolster its underwriting capabilities.

As of December 31, 2019 , Carlyle’s direct lending investment team advised six funds consisting of two BDCs (including CGBD) and four separately managed accounts, totaling, in the aggregate, approximately more than $5 billion in AUM.

Carlyle’s direct lending business includes Carlyle’s BDCs, which invest primarily in first lien loans (which include unitranche, “first out” and “last out” loans) and second lien loans of middle market companies, typically defined as companies with annual EBITDA ranging from $25 million to $100 million, that lack access to the broadly syndicated loan and bond markets.

In 2020, Carlyle expanded its direct lending capabilities by adding senior personnel to bolster its underwriting capabilities.

As of December 31, 2020, Carlyle’s direct lending investment team advised two BDCs (including the Company) and five separately managed accounts, totaling, in the aggregate, $5.0 billion in AUM.

• Opportunistic Credit.

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The team will also look to invest in special situations (i.e., event-driven opportunities that exhibit hybrid credit and equity features) as well as market dislocations (i.e., primary and secondary market investments in liquid debt instruments that arise as a result of temporary market volatility).

As of December 31, 2019 , Carlyle’s opportunistic credit team advised one fund and one separately managed account totaling, in the aggregate, more than $3 billion in AUM.

As of December 31, 2020,

Carlyle’s opportunistic credit team advised two funds and one separately managed account totaling, in the aggregate, $5.0 billion in AUM.

• Distressed Credit.

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As of December 31, 2020, Carlyle’s distressed credit team advised three funds totaling, in the aggregate, approximately $3.2 billion in AUM.

Real Assets Credit

• Aircraft Financing and Servicing.

Carlyle Aviation Partners, Ltd.

(“Carlyle Aviation Partners”) is Carlyle's multi-strategy investment platform that is engaged in commercial aviation aircraft financing and investment and providing investment management services related to the commercial aviation industry.

As of December 31, 2019 , Carlyle Aviation Partners had approximately $7 billion in AUM across four active carry funds, securitization vehicles and liquid strategies.

Energy Credit.

Carlyle’s energy credit team invests primarily in privately-negotiated mezzanine debt investments in North American energy and power projects and companies.

As of December 31, 2019 , Carlyle’s energy credit team advised two funds with approximately $3 billion in AUM.

Capital Solutions.

Carlyle Capital Solutions (“CCS”) is Carlyle's loan syndication and capital markets business that launched in 2018.

The primary focus of Carlyle Capital Solutions is to originate and syndicate loans and underwrite securities of both third parties and Carlyle portfolio companies.

(“Carlyle Aviation Partners”) is Carlyle's multi-strategy investment platform that is engaged in commercial aviation aircraft financing and investment throughout commercial aviation industry.

As of December 31, 2020, Carlyle Aviation Partners had approximately $6.1 billion in AUM across four active carry funds, in addition to securitization vehicles and liquid strategies.

• Infrastructure Debt.

Our Infrastructure debt team invests primarily in directly originated and privately negotiated debt instruments related to global infrastructure projects, primarily in the power, energy, transportation, water/waste, telecommunications and social infrastructure sectors.

The team focuses primarily on senior, subordinated, and mezzanine debt and seeks to invest primarily in developed markets within the Organization for Economic Cooperation and Development (“OECD”).

As of December 31, 2020, our infrastructure debt team managed $1.1 billion in AUM.

• Insurance Solutions.

Carlyle Insurance Solutions (“CIS”) combines our deep insurance expertise with portfolio construction capabilities, capital sourcing and asset origination strengths to provide comprehensive liability funding/reinsurance, asset management and advisory solutions for (re)insurance companies and fund investors.

The CIS team oversees the investment in Fortitude Holdings.

As of December 31, 2020, AUM related to capital raised from third-party investors to acquire a controlling interest in Fortitude Holdings was $2.6 billion, and Fortitude and AIG have committed approximately $4.7 billion of capital to-date to various Carlyle strategies.

• Global Capital Markets.

Carlyle Global Capital Markets (“GCM”) is a loan syndication and capital markets business that launched in 2018.

The primary focus of GCM is to arrange, place, underwrite, originate and syndicate loans and underwrite securities of third parties and Carlyle portfolio companies through TCG Capital Markets L.L.C.

and TCG Senior Funding L.L.C.

TCG Capital Markets is a FINRA registered broker dealer.

GCM may also act as the initial purchaser of such loans and securities.

GCM receives fees, including underwriting, placement, structuring, transaction and syndication fees, commissions, underwriting and original issue discounts, interest payments and other compensation, which may be payable in cash or securities and/or loans, in respect of the activities described above and may elect to waive such fees.

Strategic Relationships

From time to time, we may establish strategic relationships that may diversify our product offering, increase our scale, enhance our origination capabilities or provide other benefits.

To this end, in early 2016, we agreed to co-invest with Credit Partners USA LLC (“Credit Partners”), a wholly owned subsidiary of PSP Investments Holding USA LLC, an affiliate of a large Canadian pension fund, to form Credit Fund, a joint venture primarily focused on investing in first lien loans to middle market companies.

We have established, and may in the future establish, strategic relationships that may diversify our product offering, increase our scale, enhance our origination capabilities or provide other benefits.

To this end, in early 2016, we and Credit Partners USA LLC (“Credit Partners”), a wholly owned subsidiary of PSP Investments Holding USA LLC, an affiliate of a large Canadian pension fund, agreed to co-invest through Credit Fund, a joint venture primarily focused on investing in first lien loans to middle market companies.

Since its inception and through December 31, 2020, Credit Fund has invested in over $2.6 billion (before any repayments or exits) of senior secured loans.

We and Credit Partners each have 50% economic ownership of Credit Fund and have commitments to fund, from time to time, capital of up to $250 million each.

See “ —Competitive Strengths—Strategic Relationships .”

Additionally, in November 2020 we and Cliffwater Corporate Lending Fund ("CCLF"), an investment vehicle managed by Cliffwater LLC, agreed to co-invest through Middle Market Credit Fund II, LLC ("Credit Fund II"), a joint venture primarily focused on investing in senior secured loans of middle market companies.

The initial portfolio of Credit Fund II was comprised predominantly of senior secured loans contributed by TCG BDC.

We and CCLF have 84.13% and 15.87% ownership in Credit Fund II, respectively.

Competitive Strengths

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Broad Product Capabilities .

Carlyle Global Credit offers a broad range of leveraged finance products to the marketplace, which allows us to invest across the entire capital structure, as well as via specialty products such as asset-based loans.

These integrated and differentiated capabilities make our investment highly relevant to borrowers, as Carlyle Global Credit can construct comprehensive, tailored financing solutions.

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Scaled Capital Base.

With $49 billion of AUM, we believe Carlyle Global Credit’s hold sizes are among the largest in the market.

With $55.9 billion of AUM as of December 31, 2020, we believe Carlyle Global Credit’s hold sizes are among the largest in the market.

Carlyle Global Credit's ability to deploy comparatively larger amounts of capital delivers certainty of execution for borrowers and mitigates the threat of competition, resulting in the ability to drive terms and generate attractive investment opportunities.

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Our Investment Adviser's dedicated, sector aligned underwriting teams have significant experience and tenure.

These teams leverage Carlyle’s broader resources – over 670 investment professionals, 45 operating executives, information obtained through direct ownership of over 265 companies, lending relationships with over 700 companies, and in-house government affairs and economic research teams – to generate differentiated diligence insights and inform fundamental credit selection.

These teams leverage Carlyle’s broader resources – nearly 680 investment professionals, more than 50 operating executives, information obtained through direct ownership of 256 companies, lending relationships with over 700 companies, and in-house government affairs, ESG and economic research teams – to generate differentiated diligence insights and inform fundamental credit selection.

We believe our ability to draw on the experience and knowledge of these broader capabilities gives us a significant advantage during the underwriting process.

As a firm, Carlyle seeks to bring the collective power of the global platform with respect to individual investments.

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Our Investment Adviser’s investment team comprises investment professionals who have extensive middle market lending experience.

As of December 31, 2019 , the investment team included a team of 125 investment professionals across the Global Credit segment.

The five members of our Investment Adviser’s investment committee have an average of over 25 years of industry experience.

As of December 31, 2020, the investment team included a team of more than 170 investment professionals across the Global Credit segment.

We believe the breadth and depth of the investment team's experience in sourcing, structuring, executing, and monitoring a broad range of investments provides us with a significant competitive advantage in building a high quality portfolio of investments.

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According to S&P Capital IQ, as of December 31, 2020, there are over 77,000 U.S.

middle market companies generating between $20 million and $1 billion in annual revenue, compared with approximately 3,500 companies with revenue greater than $1 billion.

middle market companies generating between $20

million and $1 billion in annual revenue, compared with approximately 4,000 companies with revenue greater than $1 billion.

We believe these middle market companies, both sponsored and non-sponsored, represent a significant growth segment of the U.S.

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According to the S&P Global Market Intelligence LCD Quarterly Leveraged Lending Review (Q4 2020) and Fitch U.S.

Leveraged Loan Default Insight (January 25, 2019), middle market companies, which we primarily categorize as borrowers with EBITDA between $25 million and $100 million, are generally less levered, have larger equity contributions, and experience lower rates of default versus large cap broadly syndicated loans, which we define as loans to borrowers with greater than $100 million of EBITDA.

Leveraged Loan Default Insight (January 28, 2021), middle market companies, which we define as borrowers with EBITDA of approximately $25 million and $100 million, are generally less levered, have larger equity contributions, and experience lower rates of default versus large cap broadly syndicated loans, which we define as loans to borrowers with greater than $100 million of EBITDA.

Middle market loans relative to broadly syndicated loans also tend to achieve more attractive economics in the form of upfront fees, spreads, and prepayment penalties, and benefit from stronger defensive structures through terms including, but not limited to documentation, asset security, priority in payments, covenants, and information/governance, all of which potentially provide more favorable protection against credit deterioration.

Middle market lenders like us are also often able to complete more thorough due diligence investigations prior to investment than lenders in the broadly syndicated space.

We believe the confluence of these factors have resulted in, over the three-year period from 2017 to 2019, middle market loans driving an approximate 150 to 200 basis points spread premium over broadly syndicated loans according to the S&P Global Market Intelligence LCD Leveraged Loan Index, without taking incremental credit risk as evidenced by lower default rates and higher recovery rates as compared to broadly syndicated loans.

We believe the confluence of these factors have resulted in, over the four-year period from 2017 to 2020, middle market loans driving an approximate 150 to 200 basis points spread premium over broadly syndicated loans according to the S&P Global Market Intelligence LCD Leveraged Loan Index, without taking incremental credit risk as evidenced by lower default rates and higher recovery rates as compared to broadly syndicated loans.

Market Environment Favors Non-Traditional Lenders.

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Current and future demand for middle market financings, driven by private equity investment and upcoming maturities are expected to provide us with ample deal flow.

Current data from the Refinitiv LPC Middle Market Quarterly Report (as of December 31, 2019) suggests that approximately $597 billion of upcoming loan maturities for middle market companies are due between 2020 and 2026, and the Preqin PE North American Report suggests that there is approximately $700 billion of uninvested private equity capital as of December 31, 2019.

Current data from the Refinitiv suggests that approximately $553 billion of upcoming loan maturities for middle market companies are due between 2021 and 2027, and the Preqin PE North American Report suggests that there is approximately $865 billion of uninvested private equity capital as of December 31, 2020.

We believe these refinancings and uninvested capital will provide a steady flow of attractive opportunities for well-positioned lenders with deep and longstanding sponsor and market relationships, particularly for providers of full capital structure financing solutions.

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We primarily target loans to U.S.-based middle market companies that require capital for growth, acquisitions, recapitalizations, and refinancings, with a focus on companies controlled by private equity investment firms.

In addition, we

may also make investments in non-private equity owned public or private companies of various sizes;

In addition, we may also make investments in non-private equity owned public or private companies of various sizes;

as well as invest in certain non-U.S.-based borrowers.

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In addition, we may change our investment objective and/or investment criteria over time without notice to or consent from our investors.

Investment Criteria and Transactional Structures

We invest primarily in transactions supported by private equity sponsors.

We seek to invest in the following types of assets, with an emphasis on senior debt:

• traditional cash flow senior secured debt;

• unitranche senior secured debt financings;

• “last out” unitranche debt;

• second lien senior debt;

• traditional subordinated debt;

• preferred and common equity co-investments;

• secondary and other opportunistic asset purchases.

As noted above, we may also from time to time participate in traditional subordinated debt financings, preferred and common equity co-investments.

We may also make secondary purchases of all of the above types of investments and other securities on an opportunistic basis.

Investment Approach and Risk Monitoring of Investments

Our Investment Adviser utilizes a rigorous, systematic and consistent due diligence underwriting process to evaluate all investment opportunities.

Our Investment Adviser utilizes a robust, iterative, and heavily documented due diligence underwriting process to evaluate all investment opportunities.

Our Investment Adviser’s investment teams primarily consist of origination professionals, underwriters and portfolio management professionals.

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We believe lending to companies owned by leading private equity firms (versus non-sponsored companies) has several important and potentially defensive characteristics.

Carlyle's financial sponsor origination team covers over 200 private equity firms, generally organized on a regional basis with offices in Boston, Chicago, Los Angeles and New York.

Carlyle's financial sponsor origination team covers over 200 private equity firms, financial institutions, other middle market lenders, strategic relationships and arrangements, financial advisors, and experienced management teams, generally organized on a regional basis with offices in Boston, Chicago, Los Angeles and New York.

It is their responsibility to source specific opportunities, identify potential loan candidates, and apply creative and flexible solutions to solve clients’ financing needs.

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Transaction Screening.

After the senior originator has completed an initial screen, the investment team will prepare and present a screening memo that includes, but is not limited to, a business description, proposed transaction financing structures, preliminary financial analysis (including a cash flow forecast incorporating downside scenarios), debt and equity comparables, and the team's initial assessment of investment merits and key risks and market/industry considerations to a screening committee of senior members of the Direct Lending team (the "Screening Committee").

Based on feedback from the committee, the deal team will prepare and disseminate an outcome email that documents the takeaways from the meeting, including preferred financing structure as well as terms, key diligence items, and next steps.

After the originator and a senior investment team member have completed an initial screen, the investment team will prepare and present a screening memo that includes, but is not limited to, a business description, proposed transaction financing structures, preliminary financial analysis (including a cash flow forecast incorporating downside scenarios), debt and equity comparables, and the team's initial assessment of investment merits and key risks and market/industry considerations to a screening committee of senior members of the Direct Lending team (the "Screening Committee").

Based on feedback from the Screening Committee, the deal team will prepare and disseminate an outcome email that documents the takeaways from the meeting, including preferred financing structure as well as terms, key diligence items, and next steps.

Underwriting.

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During the investment process, the investment team works closely with the private equity sponsor / borrower in all aspects of due diligence.

Formal due diligence includes meeting with the management team, reviewing the data room and performing key financial analysis, creating a more

Formal due diligence includes meeting the management team, reviewing the data room and performing key financial analysis, creating a more

detailed financial model with sensitivities across various market environments, reviewing sell-side and third party research including industry reports and financial diligence, following up with industry experts within the Carlyle network for additional feedback and drafting the commitment papers and term sheet.

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In addition, the investment team may utilize third party expert networks to supplement its work to gain further insight into company and industry factors from various thought leaders across the company’s markets.

Carlyle recently enhanced its due diligence process by incorporating formal ESG reviews.

While ESG has always been a component of the screening process, all deals will now be thoroughly vetted using sector and sub-sector specific Sustainability Accounting Standards Board standards.

ESG diligence will further incorporate country risk assessments for corruption and anti-money laundering concerns as well.

This part of the process is iterative and involves re-screening with members of the Investment Adviser's investment committee before seeking final investment committee approval.

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• Sources and uses and capitalization table

Industry diligence, including growth, key trends, risk of disruption, competitive landscape, borrower's market position, fragmentation and consolidation, M&A trends / multiples, barriers to entry and regulatory framework

Details on core product and service offering, including revenue visibility and quality, revenue and gross profit build-up by key products / services (including price and volume trends, if applicable), and other relevant sector-specific metrics

Customer diligence, including concentration, wallet share, tenure, health of customer base, contract details (if applicable), and sales and marketing strategy

Supply chain diligence, including supplier concentration, raw material exposure and logistics

• Industry growth (including total addressable market, penetration and whitespace), key industry trends, risk of disruption (with focus on technological disruption), competitive landscape and side-by-side analysis of key competitors, borrower's market position and reputation, industry fragmentation and consolidation trends, M&A trends and valuation multiples, barriers to entry for new adjacent or substitute players and regulatory framework

• Details on core product and service offering, including revenue visibility and quality, revenue and gross profit build-up by key products / services (including price and volume trends, if applicable), concentration and margins, and other relevant sector-specific metrics

• Customer diligence, including concentration, wallet share, tenure, health of customer base, contract details (if applicable), and sales and marketing team and related strategy

• Contracts, including maturity and termination, renewal waterfalls, ability to pass through costs, exclusivity

• Supply chain diligence, including supplier concentration, raw material exposure, pricing power and logistics

• Details on operations, including IT and technology, operating footprint (including real estate and leases, if applicable), distribution, and employee base

Financial diligence, including cyclicality, seasonality, fixed and variable costs, EBITDA adjustments, capital expenditures, working capital, taxes, foreign exchange exposure, and off-balance sheet liabilities

• Financial diligence, including cyclicality, seasonality, fixed and variable costs, EBITDA adjustments, capital expenditures, working capital (including aging and write-offs), detailed, bottom up cash flow modeling with sensitivities for key business risks, tax characteristics and tax shield, accounting policies (including revenue and cost recognition), bonding requirements, foreign exchange exposure, and earn-outs and off-balance sheet liabilities

• Financial model, including detailed, bottom-up cash flow model with sensitivities for key business risks

• Debt and equity comparables

Details on management team and private equity sponsor (if applicable)

Details on legal documentation, including construction of EBITDA, affirmative and negative covenants (including financial covenants), events of default, enforcement of remedies, security and collateral package (including protections around material IP or other key collateral), voting provisions, and other key terms

• Details on management team, including quality, depth and reputation, and private equity sponsor (if applicable)

• Details on legal documentation, including construction of EBITDA and indebtedness, financial covenants and equity cures, affirmative covenants (including reporting requirements, audits, budgets, and maintaining good standing), permitted indebtedness, permitted liens and incremental facilities (including most favored nation protection), restricted payments and tax distributions, permitted acquisitions and investments, permitted divestitures and mandatory prepayments, events of default and cure periods, enforcement of remedies, security and collateral package, assignability of key contracts, leases, material IP or other key collateral, limitations on fundamental changes and transferring collateral, voting and assignment provisions, and other key terms

• Environmental, regulatory, or legal issues and insurance coverage

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We view proactive portfolio monitoring as a vital part of the investment process, which includes the continuous review by the portfolio management, underwriting and workout teams, with multiple layers of risk review and oversight.

Our Investment Adviser utilizes a proprietary credit surveillance dashboard, an objective rules-based Internal Risk Rating system and proprietary valuation model to assess risk in the portfolio.

Our Investment Adviser utilizes a proprietary credit surveillance dashboard, an Internal Risk Rating system and proprietary

valuation model to assess risk in the portfolio.

The portfolio management process involves a variety of ongoing and scheduled reviews that allow for early detection of issues and escalation to the Investment Committee and workout team to avoid credit losses.

This process includes detailed weekly portfolio dashboard updates, monthly reviews of watch list credits, quarterly meetings to conduct formal portfolio reviews, focused on technical analysis of financial performance, and portfolio diversification, and ongoing ad-hoc meetings to handle borrower-specific requests, including follow-on transactions and amendments.

This process includes detailed portfolio dashboard updates, monthly reviews of watch list credits, quarterly meetings to conduct formal portfolio reviews, focused on technical analysis of financial performance, and portfolio diversification, and ongoing ad-hoc meetings to handle borrower-specific requests, including follow-on transactions and amendments.

Our Investment Adviser supplements these processes with additional analyses and projections, including stress scenarios, to assess the potential exposure of our portfolio to variable macroeconomic factors and market conditions.

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Type—% of Fair Value 2020 2019

First Lien Debt (excluding First Lien/Last Out)

First Lien/Last Out Unitranche

First Lien Debt (excluding First Lien/Last Out Debt) 63.63 % 74.63 %

First Lien/Last Out Debt 3.41 3.68

Second Lien Debt 15.58 11.04

Equity Investments 1.86 1.02

Investment Fund

Investment Funds 15.52 9.63

Total 100.00 % 100.00 %

As of December 31,

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Floating Rate 99.09 % 99.73 %

Fixed Rate 0.91 0.27

Total 100.00 % 100.00 %

As of December 31,

Geography—% of Fair Value 2020 2019

Canada 1.35 % 1.93 %

Cyprus 0.37 0.23

Jamaica — 0.01

Luxembourg 1.64 1.72

United Kingdom 4.94 1.25

United States 91.70 94.86

Total 100.00 % 100.00 %

As of December 31,

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Aerospace & Defense 4.78 % 5.17 %

Automotive 3.22 1.87

Banking, Finance, Insurance & Real Estate 5.33 5.42

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Durable Consumer Goods 0.60 0.55

Electricity — 1.46

Oil & Gas 2.20 0.56

Environmental Industries 3.41 2.03

Forest Products & Paper

Healthcare & Pharmaceuticals 6.49 9.07

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Hotel, Gaming & Leisure 4.40 4.48

Investment Fund

Broadcast & Subscription

Investment Funds 15.52 9.63

Advertising, Printing & Publishing 2.04 1.76

Broadcast & Subscription — 2.19

Diversified & Production 1.07 —

Non-durable Consumer Goods 0.09 0.09

Retail 1.89 2.03

Software 4.70 10.63

Sovereign & Public Finance 2.06 1.76

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Transportation:

Cargo 1.61 1.99

Transportation:

Consumer 1.50 1.71

Wholesale 1.53 1.22

Total 100.00 % 100.00 %

See the Consolidated Schedules of Investments as of December 31, 2020 and 2019 in our consolidated financial statements in Part II, Item 8 of this Form 10-K for more information on these investments, including a list of companies and type, cost and fair value of investments.

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This creates potential conflicts in allocating investment opportunities among us and such other investment funds, accounts and similar arrangements, particularly in circumstances where the availability or liquidity of such investment opportunities is limited or where co-investments by us and other funds, accounts or arrangements are not permitted under applicable law, as discussed below.

For example, Carlyle sponsors several investment funds, accounts and other similar arrangements, including, without limitation, structured credit funds, future closed-end registered investment companies, BDCs, carry funds, and managed accounts.

For example, Carlyle sponsors several investment funds, accounts and other similar arrangements, including, without limitation, structured credit funds, closed-end registered investment companies, BDCs, carry funds, and managed accounts and structured credit funds it may sponsor in the future.

The SEC has granted us exemptive relief that permits us and certain of our affiliates to co-invest in suitable negotiated investments (the “Exemptive Relief”).

If Carlyle is presented with investment opportunities that generally fall within our investment objective and other board-established criteria and those of other Carlyle funds, accounts or other similar arrangements (including other existing and future affiliated BDCs) whether focused on a debt strategy or otherwise, Carlyle allocates such opportunities among us and such other Carlyle funds, accounts or other similar arrangements in a manner

consistent with the Exemptive Relief, our Investment Adviser’s allocation policies and procedures and Carlyle’s other allocation policies and procedures, where applicable, as discussed below.

arrangements in a manner consistent with the Exemptive Relief, our Investment Adviser’s allocation policies and procedures and Carlyle’s other allocation policies and procedures, where applicable, as discussed below.

More specifically, investment opportunities in suitable negotiated investments for investment funds, accounts and other similar arrangements managed by our Investment Adviser, and other funds, accounts or similar arrangements managed by affiliated investment advisers that seek to co-invest with us or other Carlyle BDCs, are allocated in accordance with the Exemptive Relief.

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Such policies and procedures may result in certain investment opportunities that are attractive to us being allocated to other funds that are not managed by our Investment Adviser.

Carlyle’s, including our Investment Adviser’s, allocation policies and procedures are designed to allocate investment opportunities fairly and equitably among its clients over time, taking into account a variety of factors which may include the sourcing of the transaction, the nature of the investment focus of each such other Carlyle fund, accounts or other similar arrangements, each fund’s, account’s or similar arrangement’s desired level of investment, the relative amounts of capital available for investment, the nature and extent of involvement in the transaction on the part of the respective teams of investment professionals, any requirements contained in the governing agreements of the Carlyle funds, accounts or other similar arrangements and other considerations deemed relevant by Carlyle in good faith, including suitability considerations and reputational matters.

Carlyle’s, including our Investment Adviser’s, allocation policies and procedures are designed to allocate investment opportunities fairly and equitably among its clients over time, taking into account a variety of factors which may include the sourcing of the transaction, the nature of the investment focus of each such other Carlyle fund, accounts or other similar arrangements, each fund’s, account’s or similar arrangement’s desired level of investment, the relative amounts of capital available for investment, the nature and extent of involvement in the transaction on the part of the respective teams of investment professionals, any requirements contained in the limited partnership agreements and other governing agreements of the Carlyle funds, accounts or other similar arrangements and other considerations deemed relevant by Carlyle in good faith, including suitability considerations and reputational matters.

The application of these considerations may cause differences in the performance of different Carlyle funds, accounts and similar arrangements that have similar strategies.

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For example, this may occur with respect to the management of unlevered and/or long-only investment funds, accounts or similar arrangements that are typically managed on a side-by-side basis with levered and/or long-short investment funds, accounts or similar arrangements.

For potential conflicts of interest in allocating investment opportunities among the Company and other investment funds, accounts or similar arrangements advised by Carlyle, see Part I, Item 1A of this Form 10-K “ Risk Factors—Risks Related

to Our Business and Structure—There are significant potential conflicts of interest, including the management of other investment funds and accounts by our Investment Adviser, which could impact our investment returns.

Election to be Taxed as a RIC

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However, a RIC is not permitted to carry forward net operating losses to subsequent years.

In addition, expenses can be used only to offset investment

company taxable income, not net capital gain.

In addition, expenses can be used only to offset investment company taxable income, not net capital gain.

Due to these limits on the deductibility of expenses, we may for U.S.

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As a result, the minimum asset coverage ratio applicable to us was reduced from 200% to 150%, effective as of June 7, 2018, the first day after our 2018 annual meeting of stockholders.

See Part I, Item 1A of this Form 10-K “Risk Factors—Risks Related to Our Business and Structure—New legislation allows us to incur additional leverage.

We may invest up to 100% of our assets in securities acquired directly from issuers in privately negotiated transactions.

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Our intention is to not write (sell) or buy put or call options to manage risks associated with the publicly traded securities of our portfolio companies.

We may enter into hedging

transactions to manage the risks associated with interest rate and currency fluctuations.

We may enter into hedging transactions to manage the risks associated with interest rate and currency fluctuations.

We may purchase or otherwise receive warrants or options to purchase the common stock of our portfolio companies in connection with acquisition financings or other investments.

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We do not intend to acquire securities issued by any investment company that exceed the limits imposed by the Investment Company Act.

Under these limits, except for registered money market funds, we generally cannot acquire more than 3% of the voting stock of any investment company, invest more than 5% of the value of our total assets in the securities of one investment company or invest more than 10% of the value of our total assets in the securities of investment companies in the aggregate.

Under these limits, except for registered money market funds, we generally cannot acquire more than 3% of the voting stock of any investment company (unless certain conditions are satisfied), invest more than 5% of the value of our total assets in the securities of one investment company or invest more than 10% of the value of our total assets in the securities of investment companies in the aggregate.

The portion of our portfolio invested in securities issued by investment companies ordinarily will subject our stockholders to additional indirect expenses.

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We are generally not able to issue and sell our common stock at a price below net asset value ("NAV") per share.

See Part I, Item 1A of this Form 10-K “Risk Factors—Risks Related to Our Business and Structure—Regulations governing our operation as a BDC affect our ability to, and the way in which we will, raise additional capital.

As a BDC, the necessity of raising additional capital may expose us to risks, including the typical risks associated with leverage.

” We may, however, sell our common stock, or warrants, options or rights to acquire our common stock, at a price below the then-current NAV of our common stock if our Board of Directors determines that such sale is in our best interests and the best interests of our stockholders, and our stockholders approve such sale.

We may, however, sell our common stock, or warrants, options or rights to acquire our common stock, at a price below the then-current NAV of our common stock if our Independent Directors determine that such sale is in our best interests and the best interests of our stockholders, and our stockholders approve such sale.

In any such case, the price at which our common stock is to be issued and sold may not be less than a price that, in the determination of our Independent Directors, closely approximates the market value of such shares (less any distributing commission or discount).

In addition, we may generally issue new shares of our common stock at a price below NAV in rights offerings to existing stockholders, in payment of dividends and in certain other limited circumstances.

Pursuant to approval granted at a special meeting of stockholders held on October 28, 2020, we are authorized, with the approval of the Board of Directors, to sell or otherwise issue shares of our common stock at a price below the then-current NAV per share, subject to certain limitations (including that the number of shares issued does not exceed 25% of our then-outstanding common stock immediately prior to each such offering).

Such stockholder approval expires on October 28, 2021.

See Part I, Item 1A of this Form 10-K “ Risk Factors—Risks Related to Our Business and Structure—Regulations governing our operation as a BDC affect our ability to, and the way in which we will, raise additional capital.

As a BDC, the necessity of raising additional capital may expose us to risks, including the typical risks associated with leverage ” and “ —The NAV per share of our common stock may be diluted if we sell shares of our common stock in one or more offerings at prices below the then current NAV per share of our common stock .”

We are subject to periodic examination by the SEC for compliance with the Investment Company Act.

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We may also invest in U.S.

Treasury bills or in repurchase agreements, provided that such agreements are fully collateralized by

cash or securities issued by the U.S.

Treasury bills or in repurchase agreements, provided that such agreements are fully collateralized by cash or securities issued by the U.S.

government or its agencies.

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Codes of Ethics

We and our Investment Adviser have each adopted a code of ethics pursuant to Rule 17j-1 under the Investment Company Act and Rule 204A-1 under the Advisers Act, respectively (collectively, the “Rule 17j-1 Codes of Ethics”), which establish procedures for personal investments and restricts certain transactions and apply to, among others, our Chief Executive Officer and Chief Financial Officer.

We have adopted a code of ethics pursuant to Rule 17j-1 under the Investment Company Act and our Investment Adviser has adopted a code of ethics pursuant to Rule 17j-1 under the Investment Company Act and Rule 204A-1 under the Advisers Act, respectively (collectively, the “Rule 17j-1 Codes of Ethics”), which establish procedures for personal investments and restricts certain transactions and apply to, among others, our Chief Executive Officer and Chief Financial Officer.

The Rule 17j-1Codes of Ethics generally do not permit investments by personnel subject to them in securities that may be purchased or sold by us.

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Sarbanes-Oxley Act of 2002

The Sarbanes-Oxley Act of 2002, as amended (the “Sarbanes-Oxley Act”) imposes a wide variety of regulatory requirements on publicly-held companies and their insiders.

The Sarbanes-Oxley Act of 2002, as amended (the “Sarbanes-Oxley Act”) imposes a wide variety of regulatory

requirements on publicly-held companies and their insiders.

Many of these requirements affect us.

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• pursuant to Rule 13a-15 of the Exchange Act, our management must prepare a report regarding its assessment of our internal control over financial reporting and must obtain an audit of the effectiveness of internal control over financial reporting performed by our independent registered public accounting firm;

pursuant to Item 308 of Regulation S-K and Rule 13a-15 of the Exchange Act, our periodic reports must disclose whether there were significant changes in our internal controls over financial reporting or in other

factors that could significantly affect these controls subsequent to the date of their evaluation, including any corrective actions with regard to material weaknesses.

• pursuant to Item 308 of Regulation S-K and Rule 13a-15 of the Exchange Act, our periodic reports must disclose whether there were significant changes in our internal controls over financial reporting or in other factors that could significantly affect these controls subsequent to the date of their evaluation, including any corrective actions with regard to material weaknesses.

The Sarbanes-Oxley Act requires us to review our current policies and procedures to determine whether we comply with the Sarbanes-Oxley Act and the regulations promulgated thereunder.

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Stockholders may obtain information regarding how we voted proxies by making a written request for proxy voting information to:

TCG BDC, Inc., c/o Carlyle Global Credit Investment Management L.L.C., 520 Madison Avenue, 40 th Floor, New York, NY 10022.

TCG BDC, Inc., c/o Carlyle Global Credit Investment Management L.L.C., One Vanderbilt Avenue, Suite 3400, New York, NY 10017.

Privacy Principles

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Our shares of common stock began trading on the Nasdaq Global Select Market under the symbol “CGBD” on June 14, 2017.

As a listed company on the Nasdaq Global Select Market, we are subject to various listing standards including

corporate governance listing standards.

As a listed company on the Nasdaq Global Select Market, we are subject to various listing standards including corporate governance listing standards.

We monitor our compliance with all listing standards and take actions necessary to ensure that we are in compliance therewith.

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We do not currently have any employees.

Our interim Treasurer and principal accounting officer, a Managing Director of Carlyle, and our Chief Compliance Officer and Secretary, a Vice President of Carlyle, are retained by our Administrator pursuant to the Carlyle Sub-Administration Agreement.

Our Chief Financial Officer, a Managing Director of Carlyle, Treasurer and Principal Accounting Officer, a Principal of Carlyle, and our Chief Compliance Officer and Secretary, a Vice President of Carlyle, are retained by our Administrator pursuant to the Carlyle Sub-Administration Agreement.

Each of these professionals performs their respective functions for us under the terms of our Administration Agreement.

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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-K

Item 1. Business