XML 33 R23.htm IDEA: XBRL DOCUMENT v3.22.2.2
INVESTMENTS (Tables)
 9 Months Ended
Sep. 30, 2022
Schedule of Investments [Abstract]  
Schedule of Investments Summaries of the composition of the Company’s investment portfolio at cost and fair value, and as a percentage of total investments and net assets, are shown in the following tables:
($ in thousands)CostPercentage of
Total Portfolio		Fair ValuePercentage of
Total Portfolio		Percentage of
Total
Net Assets
September 30, 2022:
Senior debt and 1st lien notes
$1,609,541 66 %$1,557,396 67 %127 %
Subordinated debt and 2nd lien notes
339,312 14 279,838 12 23 
Structured products81,105 4 67,811 3 5 
Equity shares225,140 9 279,564 12 23 
Equity warrants178 — 44 — — 
Investment in joint ventures / PE fund175,628 7 147,839 6 12 
$2,430,904 100 %$2,332,492 100 %190 %
December 31, 2021:
Senior debt and 1st lien notes
$1,217,899 68 %$1,221,598 68 %165 %
Subordinated debt and 2nd lien notes
253,551 14 240,037 13 32 
Structured products37,055 2 40,271 2 6 
Equity shares145,791 8 154,477 9 21 
Equity warrants1,111 — 1,107 — — 
Investment in joint ventures / PE fund132,417 8 143,104 8 19 
$1,787,824 100 %$1,800,594 100 %243 %
The industry composition of investments at fair value at September 30, 2022 and December 31, 2021, excluding short-term investments, was as follows:
($ in thousands)September 30, 2022December 31, 2021
Aerospace and Defense$110,440 4.7 %$91,129 5.1 %
Automotive65,696 2.8 55,875 3.1 
Banking, Finance, Insurance and Real Estate257,752 11.1 208,397 11.6 
Beverage, Food and Tobacco34,768 1.5 38,985 2.2 
Capital Equipment50,613 2.2 42,916 2.4 
Chemicals, Plastics, and Rubber85,121 3.6 32,234 1.8 
Construction and Building40,733 1.7 62,083 3.4 
Consumer goods: Durable54,859 2.4 47,316 2.6 
Consumer goods: Non-durable26,196 1.1 28,306 1.6 
Containers, Packaging and Glass37,425 1.6 10,218 0.6 
Energy: Electricity7,241 0.3 12,190 0.7 
Energy: Oil and Gas4,561 0.2 5,774 0.3 
Environmental Industries50,137 2.1 8,081 0.4 
Healthcare and Pharmaceuticals169,542 7.3 134,286 7.5 
High Tech Industries309,080 13.3 139,590 7.7 
Hotel, Gaming and Leisure49,799 2.1 27,553 1.5 
Investment Funds and Vehicles149,761 6.4 143,104 7.9 
Media: Advertising, Printing and Publishing54,147 2.3 46,414 2.6 
Media: Broadcasting and Subscription8,317 0.4 7,441 0.4 
Media: Diversified and Production64,810 2.8 52,887 2.9 
Metals and Mining34,003 1.5 10,684 0.6 
Retail42 — — — 
Services: Business381,362 16.4 342,758 19.0 
Services: Consumer78,465 3.4 65,801 3.7 
Structured Products62,603 2.7 24,662 1.4 
Telecommunications23,829 1.0 45,182 2.5 
Transportation: Cargo73,174 3.1 86,964 4.8 
Transportation: Consumer25,393 1.1 12,231 0.7 
Utilities: Electric17,291 0.7 12,857 0.7 
Utilities: Oil and Gas4,707 0.2 4,677 0.3 
Wholesale625 — — — 
Total$2,332,492 100.0 %$1,800,594 100.0 %
As of September 30, 2022 and December 31, 2021, the Jocassee investment portfolio consisted of the following investments:
($ in thousands)CostPercentage of
Total
Portfolio		Fair ValuePercentage of
Total
Portfolio
September 30, 2022:
Senior debt and 1st lien notes
$1,191,919 91 %$1,107,318 91 %
Subordinated debt and 2nd lien notes23,921 2 %22,960 2 %
Equity shares4,398 — %2,741 — %
Equity warrants31 — %13 — %
Investment in joint ventures92,061 7 %80,201 7 %
Short-term investments5,860 — %5,860 — %
$1,318,190 100 %$1,219,093 100 %
December 31, 2021:
Senior debt and 1st lien notes
$1,084,502 87 %$1,085,172 86 %
Subordinated debt and 2nd lien notes23,607 2 24,011 2 
Structured products4,569 — 5,410 1 
Equity shares5,448 1 3,887 — 
Equity warrants31 — 75 — 
Investment in joint ventures111,490 9 127,092 10 
Short-term investments12,572 1 12,572 1 
$1,242,219 100 %$1,258,219 100 %
The industry composition of Jocassee’s investments at fair value at September 30, 2022 and December 31, 2021, excluding short-term investments, was as follows:
($ in thousands)September 30, 2022December 31, 2021
Aerospace and Defense$68,990 5.7 %$71,857 5.8 %
Automotive20,022 1.7 18,626 1.5 
Banking, Finance, Insurance and Real Estate100,624 8.3 109,961 8.8 
Beverage, Food and Tobacco26,115 2.2 30,352 2.4 
Capital Equipment26,421 2.2 17,006 1.4 
Chemicals, Plastics, and Rubber31,236 2.6 24,665 2.0 
Construction and Building15,700 1.3 14,506 1.2 
Consumer goods: Durable18,181 1.5 10,294 0.8 
Consumer goods: Non-durable21,548 1.8 23,886 1.9 
Containers, Packaging and Glass22,968 1.9 25,277 2.0 
Energy: Electricity15,239 1.3 10,571 0.8 
Energy: Oil and Gas4,689 0.4 5,091 0.4 
Environmental Industries7,244 0.6 7,563 0.6 
Forest Products & Paper 271 — 475 — 
Healthcare and Pharmaceuticals125,941 10.4 128,495 10.3 
High Tech Industries158,946 13.1 171,960 13.8 
Hotel, Gaming and Leisure22,734 1.9 35,383 2.8 
Investment Funds and Vehicles80,201 6.6 127,092 10.2 
Media: Advertising, Printing and Publishing6,096 0.5 18,423 1.5 
Media: Broadcasting and Subscription34,000 2.8 37,840 3.0 
Media: Diversified and Production27,720 2.3 21,059 1.7 
Metals and Mining5,054 0.4 5,792 0.5 
Retail14,222 1.2 14,420 1.2 
Services: Business192,727 15.9 151,723 12.2 
Services: Consumer50,535 4.1 55,156 4.4 
Structured Product— — 5,409 0.4 
Telecommunications38,311 3.1 36,036 2.9 
Transportation: Cargo54,903 4.5 49,103 3.9 
Transportation: Consumer12,499 1.0 6,546 0.5 
Utilities: Electric3,181 0.2 3,265 0.3 
Utilities: Oil and Gas6,915 0.5 6,870 0.6 
Wholesale— — 945 0.1 
Total$1,213,233 100.0 %$1,245,647 100.0 %
Schedule of Investment Portfolio
The geographic composition of Jocassee’s investments at fair value at September 30, 2022 and December 31, 2021, excluding short-term investments, was as follows:
($ in thousands)September 30, 2022December 31, 2021
Australia$24,788 2.0 %$16,509 1.3 %
Austria6,141 0.5 1,115 0.1 
Belgium15,670 1.3 14,814 1.2 
Canada7,273 0.6 8,507 0.7 
Denmark889 0.1 6,960 0.6 
Finland1,733 0.1 47,992 3.9 
France124,836 10.3 3,391 0.3 
Germany51,063 4.2 6,357 0.5 
Hong Kong16,262 1.4 2,272 0.2 
Ireland3,632 0.3 123,816 9.9 
Italy— — 113,896 9.1 
Luxembourg1,608 0.1 4,766 0.4 
Netherlands32,866 2.7 3,744 0.3 
Panama939 0.1 — — 
Singapore4,905 0.4 — — 
Spain3,806 0.3 1,225 0.1 
Sweden4,104 0.4 32,150 2.6 
Switzerland5,176 0.4 965 0.1 
United Kingdom116,853 9.6 5,305 0.4 
USA790,689 65.2 851,863 68.4 
Total$1,213,233 100 %$1,245,647 100 %
As of September 30, 2022 and December 31, 2021, Jocassee had the following contributed capital and unfunded commitments from its members:
($ in thousands)
As of
September 30, 2022
As of December 31, 2021
Total contributed capital by Barings BDC, Inc.$35,000 $30,000 
Total contributed capital by all members$385,000 $330,000 
Total unfunded commitments by Barings BDC, Inc.$65,000 $20,000 
Total unfunded commitments by all members$215,000 $220,000 
As of September 30, 2022 and December 31, 2021, the Thompson Rivers investment portfolio consisted of the following investments:
($ in thousands)CostPercentage of
Total
Portfolio		Fair ValuePercentage of
Total
Portfolio
September 30, 2022:
Federal Housing Administration (“FHA”) loans $1,119,118 91 %$1,046,632 91 %
Veterans Affairs (“VA”) loans112,609 9 %105,378 9 %
$1,231,727 100 %$1,152,010 100 %
December 31, 2021:
Federal Housing Administration (“FHA”) loans$2,799,869 93 %$2,839,495 93 %
Veterans Affairs (“VA”) loans224,660 7 %223,540 7 %
$3,024,529 100 %$3,063,035 100 %
As of September 30, 2022 and December 31, 2021, Thompson Rivers had the following contributed capital and unfunded commitments from its members:
($ in thousands)
As of
September 30, 2022
As of December 31, 2021
Total contributed capital by Barings BDC, Inc.(1)$79,411 $79,414 
Total contributed capital by all members$482,083 (2)$482,120 (3)
Total unfunded commitments by Barings BDC, Inc.$— $— 
Total unfunded commitments by all members$— $— 
(1)Includes $4.4 million of dividend re-investments.
(2)Includes dividend re-investments of $32.1 million and $162.1 million of total contributed capital by related parties.
(3)Includes dividend re-investments of $32.1 million and $162.3 million of total contributed capital by related parties.
As of September 30, 2022 and December 31, 2021, Waccamaw River had the following contributed capital and unfunded commitments from its members:
($ in thousands)
As of
September 30, 2022
As of
 December 31, 2021
Total contributed capital by Barings BDC, Inc.$27,800 $19,000 
Total contributed capital by all members$126,620 (1)$82,620 (4)
Total return of capital (recallable) by Barings BDC, Inc.$(5,280)$(5,280)
Total return of capital (recallable) by all members(2)$(14,020)$(14,020)
Total unfunded commitments by Barings BDC, Inc.$2,480 $11,280 
Total unfunded commitments by all members$12,400 (3)$56,400 (5)
(1)Includes $74.6 million of total contributed capital by related parties.
(2)Includes ($7.0) million of total return of capital (recallable) by related parties.
(3)Includes $7.4 million of unfunded commitments by related parties.
(4)Includes $48.2 million of total contributed capital by related parties.
(5)Includes $33.8 million of unfunded commitments by related parties.
As of September 30, 2022, the Sierra JV investment portfolio consisted of the following investments:
($ in thousands)CostPercentage of
Total
Portfolio		Fair ValuePercentage of
Total
Portfolio
September 30, 2022:
Senior debt and 1st lien notes
$129,684 100 %$115,670 100 %
$129,684 100 %$115,670 100 %
The industry composition of Sierra JV’s investments at fair value at September 30, 2022, excluding short-term investments, was as follows:
($ in thousands)September 30, 2022
Automotive2,362 2.1 %
Banking, Finance, Insurance and Real Estate1,541 1.3 
Beverage, Food and Tobacco4,069 3.5 
Capital Equipment9,231 8.0 
Chemicals, Plastics, and Rubber2,832 2.4 
Construction and Building1,892 1.6 
Consumer goods: Durable1,365 1.2 
Containers, Packaging and Glass1,817 1.6 
Environmental Industries8,417 7.3 
Forest Products & Paper 1,790 1.5 
Healthcare and Pharmaceuticals14,272 12.3 
High Tech Industries13,825 12.0 
Media: Advertising, Printing and Publishing10,038 8.7 
Media: Diversified and Production5,407 4.7 
Retail5,647 4.9 
Services: Business11,768 10.2 
Services: Consumer8,361 7.2 
Transportation: Cargo6,181 5.3 
Transportation: Consumer4,855 4.2 
Total115,670 100.0 %
Schedule of Fair Value Measurement Inputs and Valuation Techniques
The following tables summarize the significant unobservable inputs the Adviser used in the valuation of the Company’s Level 3 debt and equity securities as of September 30, 2022 and December 31, 2021. The weighted average range of unobservable inputs is based on fair value of investments.
September 30, 2022:
($ in thousands)
Fair ValueValuation
Model		Level 3
Input		Range of
Inputs		Weighted
Average		Impact to Valuation from an Increase in Input
Senior debt and 1st lien notes(1)
$1,198,500 Yield AnalysisMarket Yield
6.9% – 33.1%
10.8%Decrease
16,479 Market ApproachAdjusted EBITDA Multiple6.0x6.0xIncrease
1,171 Market ApproachRevenue Multiple0.2x0.2xIncrease
23,823 Discounted Cash Flow AnalysisDiscount Rate
9.5% – 12.9%
11.6%Decrease
190,721 Recent TransactionTransaction Price
96.8% – 100.0%
97.9%Increase
Subordinated debt and 2nd lien notes(2)
181,741 Yield AnalysisMarket Yield
8.4% – 16.9%
12.5%Decrease
29,772 Market ApproachAdjusted EBITDA Multiple
6.25x – 9.75x
7.5xIncrease
4,495 Market ApproachRevenue Multiple0.7x0.7xIncrease
1,814 Expected RecoveryExpected Recovery$1,814$1,814Increase
8,807 Recent TransactionTransaction Price
96.0% – 100.0%
98.0%Increase
Structured products(3)
4,274 Discounted Cash Flow AnalysisDiscount Rate9.27%9.27%Decrease
Equity shares(4)
223,502 Market ApproachAdjusted EBITDA Multiple
4.3x – 43.0x
9.4xIncrease
27,103 Market ApproachRevenue Multiple
0.2x – 29.8x
13.1xIncrease
5,862 
Expected Transaction(5)
Transaction Price$5,495$5,495Increase
18,279 Recent TransactionTransaction Price
$0.00 – $953.45
$747.2Increase
Equity warrants3 Market ApproachAdjusted EBITDA Multiple
3.3x – 18.5x
3.3xIncrease
(1)Excludes investments with an aggregate fair value amounting to $31,719, which the Adviser valued using unadjusted prices from independent pricing services and independent indicative broker quotes where pricing inputs are not readily available.
(2)Excludes investments with an aggregate fair value amounting to $43,366, which the Adviser valued using unadjusted prices from independent pricing services and independent indicative broker quotes where pricing inputs are not readily available.
(3)Excludes investments with an aggregate fair value amounting to $5,208, which the Adviser valued using unadjusted prices from independent pricing services and independent indicative broker quotes where pricing inputs are not readily available.
(4)Excludes investments with an aggregate fair value amounting to $2,742, which the Adviser valued using unadjusted prices from independent pricing services and independent indicative broker quotes where pricing inputs are not readily available.
(5)Estimated proceeds expected to be received under legally binding asset purchase agreement for sale of real estate held by portfolio company.

December 31, 2021:
($ in thousands)
Fair ValueValuation
Model		Level 3
Input		Range of
Inputs		Weighted
Average		Impact to Valuation from an Increase in Input
Senior debt and 1st lien notes(1)
$717,374 Yield AnalysisMarket Yield
5.2% – 33.5%
7.7%Decrease
416,010 Recent TransactionTransaction Price
96.5% – 99.0%
97.7%Increase
Subordinated debt and 2nd lien notes(2)
107,345 Yield AnalysisMarket Yield
5.3% – 19.0%
11.5%Decrease
64,895 Market ApproachAdjusted EBITDA Multiple
0.6x – 9.0x
5.67xIncrease
40,354 Recent TransactionTransaction Price
97.0% – 100.0%
98.0%Increase
Equity shares(3)
137,393 Market ApproachAdjusted EBITDA Multiple
5.5x – 54.0x
13.1xIncrease
6,197 
Expected Transaction(4)
Transaction Price$6,197,037$6,197,037Increase
4,546 Recent TransactionTransaction Price
$1.0 – $1,000
$140.03Increase
Equity warrants864 Market ApproachAdjusted EBITDA Multiple
5.0x-6.0x
6.0xIncrease
(1)Excludes investments with an aggregate fair value amounting to $3,938, which the Company valued using unadjusted prices from independent pricing services and independent indicative broker quotes where pricing inputs are not readily available.
(2)Excludes investments with an aggregate fair value amounting to $17,974, which the Company valued using unadjusted prices from independent pricing services and independent indicative broker quotes where pricing inputs are not readily available.
(3)Excludes investments with an aggregate fair value amounting to $3,146, which the Company valued using unadjusted prices from independent pricing services and independent indicative broker quotes where pricing inputs are not readily available.
(4)Estimated proceeds expected to be received under legally binding asset purchase agreement for sale of real estate held by portfolio company.
Schedule of Fair Value, Assets Measured on Recurring Basis
The following tables present the Company’s investment portfolio at fair value as of September 30, 2022 and December 31, 2021, categorized by the ASC Topic 820 valuation hierarchy, as previously described:
 
Fair Value as of September 30, 2022
($ in thousands)Level 1Level 2Level 3Total
Senior debt and 1st lien notes
$— $94,983 $1,462,413 $1,557,396 
Subordinated debt and 2nd lien notes
— 9,843 269,995 279,838 
Structured products— 58,329 9,482 67,811 
Equity shares210 1,866 277,488 279,564 
Equity warrants— 41 3 44 
Investments subject to leveling$210 $165,062 $2,019,381 $2,184,653 
Investment in joint ventures / PE fund(1)147,839 
$2,332,492 
Fair Value as of December 31, 2021
($ in thousands)Level 1Level 2Level 3Total
Senior debt and 1st lien notes
$— $84,275 $1,137,323 $1,221,598 
Subordinated debt and 2nd lien notes
— 9,468 230,569 240,037 
Structured products— 40,271 — 40,271 
Equity shares111 3,084 151,282 154,477 
Equity warrants— 243 864 1,107 
Investments subject to leveling$111 $137,341 $1,520,038 $1,657,490 
Investment in joint ventures / PE fund(2)143,104 
$1,800,594 
(1)The Company's investments in Jocassee, Sierra JV, Thompson Rivers, Waccamaw River and MVC Private Equity Fund LP are measured at fair value using NAV and have not been categorized in the fair value hierarchy. The fair value amounts presented in this table are intended to permit reconciliation of the fair value hierarchy to the amounts presented in the Unaudited Consolidated Balance Sheet and Consolidated Balance Sheet.
(2)The Company's investments in Jocassee, Thompson Rivers, Waccamaw River and MVC Private Equity Fund LP are measured at fair value using NAV and have not been categorized in the fair value hierarchy. The fair value amounts presented in this table are intended to permit reconciliation of the fair value hierarchy to the amounts presented in the Unaudited Consolidated Balance Sheet and Consolidated Balance Sheet.
Schedule of Fair Value, Assets Measured on Recurring Basis, Unobservable Input Reconciliation
The following tables reconcile the beginning and ending balances of the Company’s investment portfolio measured at fair value on a recurring basis using significant unobservable inputs (Level 3) for the nine months ended September 30, 2022 and 2021:
Nine Months Ended
September 30, 2022:
($ in thousands)
Senior Debt
and 1st Lien
Notes
Subordinated Debt and 2nd Lien Notes
Structured ProductsEquity
Shares		Equity WarrantsTotal
Fair value, beginning of period$1,137,323 $230,569 $— $151,282 $864 $1,520,038 
New investments689,638 89,749 6,000 63,344 4 848,735 
Investments acquired in Sierra merger210,176 54,177 — 7,065 72 271,490 
Transfers into (out of) Level 3, net18,015 9,056 4,905 7,263 — 39,239 
Proceeds from sales of investments(321,758)(21,555)— (1,472)(250)(345,035)
Loan origination fees received(14,660)(1,303)— — — (15,963)
Principal repayments received(207,026)(56,443)(357)— — (263,826)
Payment-in-kind interest/dividends1,994 9,320 — 206 — 11,520 
Accretion of loan premium/discount222 89 — — — 311 
Accretion of deferred loan origination revenue6,574 1,761 — — — 8,335 
Realized gain (loss)(12,292)(2,567)— 18 (760)(15,601)
Unrealized appreciation (depreciation)(45,793)(42,858)(1,066)49,782 73 (39,862)
Fair value, end of period$1,462,413 $269,995 $9,482 $277,488 $3 $2,019,381 
Nine Months Ended
September 30, 2021:
($ in thousands)
Senior Debt
and 1st Lien
Notes
Subordinated Debt and 2nd Lien Notes
Equity
Shares		Equity WarrantsTotal
Fair value, beginning of period$1,055,717 $130,820 $44,227 $1,134 $1,231,898 
New investments585,196 83,856 96,309 163 765,524 
Transfers into Level 3, net— 2,234 3,224 — 5,458 
Proceeds from sales of investments(394,827)(8,771)(6,903)(450)(410,951)
Loan origination fees received(12,485)(1,209)— — (13,694)
Principal repayments received(170,947)(27,317)— — (198,264)
Payment-in-kind interest 685 7,721 — — 8,406 
Accretion of loan premium/discount10 211 — — 221 
Accretion of deferred loan origination revenue6,029 376 — — 6,405 
Realized gain (loss)1,837 (28)341 163 2,313 
Unrealized appreciation (depreciation)(1,464)(2,646)4,748 (386)252 
Fair value, end of period$1,069,751 $185,247 $141,946 $624 $1,397,568 
Schedule of Fee Income
Fee income for the three and nine months ended September 30, 2022 and 2021 was as follows:
Three Months Ended
Three Months Ended
Nine Months Ended
Nine Months Ended
($ in thousands)September 30, 2022September 30, 2021September 30, 2022September 30, 2021
Recurring Fee Income:
Amortization of loan origination fees$1,582 $1,144 $4,398 $3,386 
Management, valuation and other fees620 542 667 1,671 
Total Recurring Fee Income2,202 1,686 5,065 5,057 
Non-Recurring Fee Income:
Prepayment fees— 242 134 292 
Acceleration of unamortized loan origination fees1,685 1,930 4,182 3,201 
Advisory, loan amendment and other fees434 630 1,208 640 
Total Non-Recurring Fee Income2,119 2,802 5,524 4,133 
Total Fee Income$4,321 $4,488 $10,589 $9,190