Barings BDC Q1 2023 Earnings Call Transcript

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May 5, 2023

There are 8 speakers on the call.

Operator

At this time, I would like to welcome everyone to the Barron's BDC Incorporated Conference Call for the Quarter Ended March 31, 2023. All participants are in a listen only mode. A question and answer session will follow the company's formal remarks. Today's call is being recorded and a replay will be available 2 hours after the conclusion of the call on the company's website at www.baringsbdc.com under the Investor Relations section. Please note that this call may contain forward looking statements that include statements regarding the company's goals, beliefs, strategies, future operating results and cash flow.

Operator

Although the company believes these statements are reasonable, actual results could differ materially from those projected in the forward looking statements. These statements are based on various underlying assumptions and are subject to numerous uncertainties and risks, including those disclosed under the sections titled risk factors and forward looking statements in the company's quarterly report on Form 10 Q for the quarter ended March 31, 2023, as filed with the Securities and Exchange Commission. Barings BDC undertakes no obligation to update or revise any forward looking statements unless required by law. At this time, I would like to turn the call over to Eric Lloyd, Chief Executive Officer of Barron's BDC.

Speaker 1

Thank you, operator, and good morning, everyone. We appreciate you joining us for today's call. Please note that throughout today's call, we'll be referring to our Q1 2023 earnings as posted on the Investor Relations section of our website. On the call today, I'm joined by Barings Co Head of Global Private Finance and President of Barings BDC, Ian Fowler, Barings Head of Capital Solutions and Co Portfolio Manager, Brian Heine and the BDC's Chief Financial Officer, Elizabeth Murray. During today's call, Ian, Ryan and Elizabeth will review details of our portfolio and Q1 results in a moment.

Speaker 1

I'll start off with some high level comments about the quarter. Let's begin with the market backdrop shown on Slide 5 of the presentation. The continued increase in base rates has contributed to elevated volatility in BDC share prices And it's clear that investors remain concerned about rates, inflation and economic weakness. Even in this challenging environment, the BDC portfolio continues to deliver strong returns. Our strong performance stems largely from our focus on the top of the capital structure and within more expensive industries and we believe the BDC remains well positioned for any further volatility and uncertainty in the market going forward.

Speaker 1

Turn to the Q1 highlights on Slide 6. Net asset value per share was $11.17 compared to the prior quarter of $11.05 That's an increase of 1.1%. Our NAV increase quarter over quarter was driven by unrealized depreciation on our investment portfolio of $0.10 per share. Our net investment income for Q1 was $0.25 per share compared to $0.35 per share last quarter. The quarter over quarter decrease in NII is a function of our shareholder friendly fee structure, Berry did not earn an incentive fee last quarter given the total return hurdle in our incentive fee.

Speaker 1

Turning to new investments, we had gross originations of $145,000,000 in the Q1. That was offset by $54,000,000 of sales and repayments For our net portfolio increase of $91,000,000 our investment portfolio continued to perform well in the Q1. Including the acquired Sierra and MVC assets, our total non accruals are 3.8% of the portfolio on a cost basis and 1 point 1% on a fair value basis. 2 investments that account for less than 0.1% of the fair value of the portfolio were placed on non accrual in the quarter. With the exception of 2 investments, all our non accrual assets were from acquired portfolios and therefore covered by our credit support agreements.

Speaker 1

Turning to the earnings power of the portfolio, increasing base rates continue to lift the yields on our predominantly floating rate portfolio with Weighted average yields on our middle market and cross platform investments increasing to 10.6% and 10.8% respectively. We expect the heightened revenue contribution to continue given the inherent lag in base rates flowing through the portfolio as assets typically reset their coupons every 3 to 6 months. We remain conservative on our base dividend policy and our Board declared a 2nd quarter dividend of $0.25 per share equating to a 9% yield on our net asset value of 11 point Slide 7 outlines summary financial highlights for the previous 5 quarters. As I mentioned Continued strong investment performance and higher base rates drove total investment income meaningfully higher to $67,200,000 up 6% quarter over quarter. Below the line, net unrealized appreciation of $22,000,000 was primarily a function of higher valuations for several cross platform investments and stability within our portfolio broadly.

Speaker 1

Looking at liquidity, net leverage, which is leveraged net of cash and unsettled transactions was 1.19x. This is within our target leverage ratio of 0.9x to 1.25x. We continue to prioritize risk management while balancing the deployment of capital into what has become a very attractive environment for private credit. While opportunities to deploy capital are extremely attractive today, it is investments that were originated over the last few years that will dictate current performance. We remain confident in our conservative approach to underwriting and portfolio construction and believe our portfolio is well positioned to deliver strong results for shareholders over the long term.

Speaker 1

We also remain confident in BBDC's defensive positioning, particularly amid a shifting economic backdrop. With respect to the portfolio, we have continued to align our interest with those of our investors. Going forward, leverage permitting, we will remain focused on stock repurchases as we believe current trading levels offer a compelling opportunity to purchase high quality assets at a discount. And lastly, I want to make a point about personnel change Following some recent departures we've had over the last 6 months, I'd like to officially welcome Elizabeth Murray to her role as Chief Financial Officer of BBDC And I've also brought together additional teammates with related functional and deep investment expertise to support BBDC's day to day operations and portfolio management. Brian Hai, Head of Barings Capital Solutions will take on expanded leadership role overseeing portfolio construction of Barings BDC.

Speaker 1

Brian joined Barings in 2007 and has extensive experience in public and private credit, distressed debt, special situations and private equity. Brian will be supported by Matt Freund, Managing Director in our Private Finance Group, who will join the Barings BDC team to lead portfolio management. Matt brings 13 years of experience executing, underwriting and monitoring North American Private Finance Investments. Joe Mazzoli will also be joining the BDC team and brings more than 11 years of BDC research and credit market experience to the team. This adds to the continuity of Jeff and Albert and our team based approach and we look forward to continued alignment with our shareholders.

Speaker 1

I'll now turn the call over to Ian to provide an update on the market and our investment portfolio.

Speaker 2

Thanks, Eric, and good morning, everyone. If you turn to Slide 9, you can see additional details on the investment activity mentioned previously. Our middle market portfolio increased by 57,000,000 on a net basis in the quarter with gross fundings of $89,000,000 offset by repayments of $33,000,000 The increase in interest rates has had a very real impact on the amount of debt private equity buyers can undertake to support new investments, And as a result, many sellers have remained on the sidelines, anchored to 2021 valuations. This naturally has led to lower repayment activity and fewer investment opportunities in the Q1 of 2023. With that said, our backlog continues to grow as sellers likely come to terms with valuations and begin to harvest some of their stronger performing assets.

Speaker 2

Despite the general market headwinds, new middle market investments included 10 new platform investments, totaling 56,000,000 and 33,000,000 of follow on investments in delayed draw term loan fundings. We continue to deploy capital at a very attractive risk return profiles in partnership with longstanding sponsors. Our cross platform portfolio increased by $43,000,000 on a net basis in the quarter, with $55,000,000 of new originations versus $13,000,000 of repayments. One specific highlight I'd like to call to your attention to is Barings BDC purchase of an equity stake at Rokaid Holdings, LLC, one of the country's leading litigation finance platforms and specializes in providing financing to plaintiff law firms engaged in mass tort and other civil litigation. During the quarter, Barings B2C, along with other affiliated funds, invested approximately $45,000,000 in preferred and common equity in this investment.

Speaker 2

This investment provides a strategic benefit to Barings BDC Investors and allows the company to participate An uncorrelated asset class that offers differentiated income returns as compared to directly originated loans. Okay. Generates a PIK dividend at SOFR plus 6% with a 2% floor. This investment further Barings BDC already very wide investment frame of reference, which we believe is key in navigating competitive markets. Rotation out of MVC and Sierra Investments continues with $8,000,000 of sales and repayments in the quarter.

Speaker 2

Slide 10 updates the data we show you each quarter on middle market spreads across capital structure. After a brief spike and a broad slowdown In the broadly syndicated loan market, BSL spreads have reverted below middle market spreads. A bridge of our investment portfolio from December 31 to March 31, as shown on Slide 11. On Slide 12, you can see a breakdown of the key components of our investment portfolio as of March 31. As we have discussed in the past, the goal of this slide is to provide details on the key categories of our portfolio, which are the Barings originated middle market portfolio, the legacy MVC Capital and Sierra Income Portfolios, as well as our cross platform investments.

Speaker 2

The middle market portfolio remains our core focus and makes up 61% of our portfolio in terms of total investments at fair value. Our Barings originated middle market exposure is heavily diversified amongst obligors of 240 portfolio companies with a geographic diversification across the U. S, Europe and APAC regions. The underlying yield at fair value on our middle market investment portfolio is 11%, up from 10.5% last quarter, Weighted average 1st lien leverage of 5.2 times with no loans on non accrual is reflective of our boring is beautiful approach to credit. In addition to our middle market exposure, we continue to draw upon Barings' wide investment Frame of reference, to complement our core portfolio with 325,000,000 investments in the legacy MVC and Sierra portfolios and $671,000,000 of cross platform investments.

Speaker 2

Turning to our stress credits, Two portfolio 2 Barings originated assets, 2 MVC assets and 5 Sierra assets remain on non accrual. The MVC and Sierra assets are covered by the credit support agreements. As Eric previously mentioned, we have 2 new non accruals this quarter, which account for 0.1 percent of the portfolio on a fair value basis. We continue to have very little restructured pick in our portfolio, even as borrowers cope with higher base rates, wage pressures and raw material costs. Restructured PIK is what we call a loan that was originally unwritten as a fully cash pay loan where the borrowers ask for relief by converting a portion of The cash interest coupon to PIK for a period of time, we view restructured PIK as one of the early signs that can foreshadow Potential future problems.

Speaker 2

Slide 13 provides a further breakdown of the portfolio from a seniority perspective. The core Barings Originated portfolio is 73% 1st lien. Note, the combined MVC and Tierra portfolios are comprised of senior secured second lien, mezzanine debt and equity investments, which brings the first component of the total portfolio down to 69%. Our top 10 investments are shown on Slide 14. Our largest investment is 6% of the total portfolio and the top 10 investments represent 20% of the total portfolio.

Speaker 2

Recall our largest investment, Eclipse Business Capital, is backed by a large portfolio of asset backed loans, conservatively structured inside of the collateral net liquidation value. The Eclipse portfolio remains diverse from an industry perspective as well, with 44 investments spread across 17 industries and that business continues to perform quite well, contributing healthy dividend distribution to the BDC as well as sustained business growth. Finally, I would like to speak to our credit performance and portfolio broadly. The portfolio remains healthy And the number of watchlist names in the private credit portfolio has not materially moved as higher rates take hold. Businesses that were challenged prior to the increase in interest rates remain challenged.

Speaker 2

Importantly, sponsors appear supportive of underlying companies and our contributing capital to rectify liquidity challenges. Going forward, leverage will continue to be relative to the levels exhibited in 2021 2022 and the market remains lender friendly. We have been investing in private credit markets for decades and our long institutional memory has given us the discipline to construct portfolios that offers significant downside protection through its cycle. I'll now turn the call over to Elizabeth to provide additional color on our financial results.

Speaker 3

Thanks, Ian. Turning to Slide 16, here is the full bridge of the NAV per share movement Our net investment income matched the $0.25 per share dividend even with this quarter's higher incentive fees. Net unrealized depreciation from investments, CSAs and FX lifted NAV per share by $0.20 which was partially offset Additional details on the net unrealized appreciation are shown on Slide 17. Of the $22,000,000 In the Q1, approximately $8,000,000 was due to price or spread moves, while $1,000,000 was due to credit factors. The cross platform portfolio contributed $13,000,000 of credit related appreciation driven by Core Scientific and Eclipse, while the majority of the Price driven write ups was in the middle market portfolio.

Speaker 3

Notably, the legacy MVC portfolio saw total depreciation of 6,000,000 tied to underlying credit performance, while the Sierra portfolio remained relatively flat quarter over quarter. Near the bottom of Slide 17, you can see that the credit support agreements increased approximately $6,000,000 as a result of decreases in discount rates. Slide 19, 18 2019 show our income statement and balance sheet for the last 5 quarters. Our net investment income per Share was $0.25 for the quarter, driven by a 6% quarter over quarter increase in total interest Income was some of the revenue lift offset by higher incentive fees due to unrealized gains in the quarter and the incentive fees look back calculation. From a balance sheet perspective on Slide 19, total debt to equity was 1.24 times At March 31, our net leverage ratio was 1.19 times, up from 1.12 and we view the measure as more We will continue to manage the capital structure in a manner that is consistent with our investment grade rating profile.

Speaker 3

Turning to Slide 20, you can see how our funding mix ties to our asset mix, both in terms of seniority and asset class, including the significant level of support provided by with $725,000,000 of unsecured debt in our capital structure. Details of each of our borrowings are included on Slide 21, which shows the evolution of our debt profile over the last year. As of the end of the first quarter, roughly half of our funding was comprised of fixed rate Unsecured debt with a weighted average coupon of 3.79 percent. And we have over 2 years until the next bond maturity in August 2025. Turning to Slide 22, you can see the impact to our net leverage of using our available liquidity to fund our unused capital commitments.

Speaker 3

Barings BDC currently has $305,000,000 of unfunded commitments to our portfolio companies as well as 67 $1,000,000 of remaining commitments to our joint venture investments. We have available cushion against our leverage limit to meet the entirety of these Commitment is called upon as well as over $351,000,000 of available dry powder between cash on hand and availability on our As Eric mentioned earlier, the Board declared a second quarter dividend of $0.25 per share, a 9% What the current environment does suggest base rates will remain higher for longer, We continue to prefer setting a dividend payout as achievable through a market cycle and not over correct based on temporary market factors related to base rate. We believe our portfolio will continue to earn above the high hurdle in a normalized rate environment, and we expect that several of our cross platform investments, including Eclipse and our joint venture, Jakafi, will continue to generate significant distributable cash. These investments help highlight the importance of less correlated assets and the benefit of a diverse portfolio. The stability of our base rate Dividend should be thought of as an anchor to be complemented through special distributions over time.

Speaker 3

We of course are aligned with our shareholders in the way that we approach this business and we continue to believe that share repurchases at levels plays an important role in our long term capital allocation policy. We believe current BBBC trading levels present compelling opportunity and in the coming quarters we look to prioritize stock repurchases while balancing target leverage. Moving to Slide 25. This shows a graphical depiction of relative value across the BBB, BB And single B asset classes. Spreads across many classes have edged down from their highs and private credit spreads remain attractive, especially when considering the lower leverage and tighter documentation available in this market.

Speaker 3

Slide 26 outlines the premium spread on our new investments relative to liquid credit benchmarks. Excluding certain equity investments in the quarter, Barings CDC deployed $89,000,000 at an all in spread at 832 basis points, which represents a 207 basis point has slowed in recent months in concert with the slowdown in middle market M and A activity. That said, thus far in 2Q, we have made $3,000,000 of new commitments, of which $2,000,000 have closed and funded. The weighted average origination margin or DM3 of those new Commitments of 7%. We have also funded $16,000,000 of previously committed debt and equity facility.

Speaker 3

The current Barings Global Private Finance Investment Pipeline is approximately $800,000,000 on a probability weighted basis And it's predominantly 1st lien senior secured investments. As a reminder, this pipeline is estimated based on our expected closing rates for all deals in our investment pipeline. With that, operator, we will open the line for questions.

Operator

Thank you. We will now be conducting a question and answer

Speaker 2

The

Operator

confirmation It may be necessary to pick up your handset before pressing the star key. One moment please while we poll for questions. Thank you. Our first question is from Finian O'Shea with Wells Fargo. Please proceed with your question.

Speaker 4

Hi, everyone. Good morning. I appreciate the details you gave Eric on Management fortification and those are some fine additions. First question is Do those folks still have their day jobs or will they be fully dedicated to BBDC matters? And then does the new organizational lineup hold across The BDC franchise including the privates or does the makeup in those parts look different?

Speaker 1

So I appreciate the question. I appreciate you highlighting that we are the fortification of the management that was clearly a focus. So Brian, as you know, has led our Capital Solutions business, which is represented, call it 20%, 25% of the assets that come into the BDC. He will continue his responsibility running our Capital Solutions business but add to his responsibilities of the BDC franchise. So that will include BBDC as well as the other 2 BDCs the perpetual and the private that we manage that he'll have leadership responsibility over.

Speaker 1

Secondly, so he'll be spending a lot of his time on BDC but not exclusively on the BDC. Matt Freund who will move over from Ian Saller's team which is our Global Private Finance team will be 100% dedicated to the BDCs and focus on the portfolio management and investment selection within the BDC. So he will be 100% dedicated to that. Joe Mazzoli will move over. He will also be 100% dedicated to the BDC franchise and focus there.

Speaker 1

And then Elizabeth Murray as you know is 100 I'm focused on that as is Albert as is Jeff. So excluding Brian everybody else is 100% focused on The BDC franchise and then as I mentioned earlier they're also similar for the responsibilities for the other 2 BDCs. That answered your question clearly, Fin?

Speaker 4

Yes. Thank you so much. And a follow-up on the MVC related CSA, is there a line of sight on when this might settle? I know that I think the final settlement date would be in 2,031. That's obviously some time from now.

Speaker 4

Any color you can give us on what The remaining assets are to finalize or terminate before that Before we move on from that part of the portfolio.

Speaker 3

Thanks for the question. So we have 6 remaining assets in the portfolio, and we do anticipate over the next few quarters More than to either repay or sell. I do believe security holdings will be one that we hold Longer term, so to give you an exact date as to when the CSA will settle, I can't give that, but we do know it's a 10 year term. And security holdings will probably be the last remaining over the next couple of years.

Speaker 4

Okay. Thanks so much.

Operator

Thank you. Our next question is from Casey Alexander with Compass Point. Please proceed with your question.

Speaker 5

Yes. My first question, Eric, is regarding the share repurchase. There was a Significant lag between the end of the last share repurchase and the new share repurchase. The new share repurchase doesn't have a 10b5-1. You didn't repurchase any shares during the quarter.

Speaker 5

And despite Elizabeth's comment that you intend to use it without the 10b5-1 With the stock at historically low priced NAV, I mean shareholders without that Clear expectation of the 10b5-1 would have ample reason to suggest that perhaps this Repurchase authorization is not operating in the same shareholder friendly fashion as before. Can you give me some color on that?

Speaker 1

Yes, happy to. And so what happened in the Q1 is we had a limited amount of time where we were not in a blackout It was about a 2 week period of time if I recall correctly that we had that. We've balanced that at the time with some commitments We made on the origination side for deploying capital combined with our net leverage which we saw creeping up a little bit up into around that one 2 times level that we wanted to keep again in our range of 0.9 to 1.25 times. So given the small timeframe in the Q1 Combined with where our commitments were for new deals that we were going to deploy combined with our leverage made it a difficult time to make that. I made a comment as did Elizabeth definitively in this earnings call that we intend to make share repurchases In the coming quarters and I expect you and other people to hold us accountable to follow through on that as we fully intend to do that given where the trading levels are.

Speaker 5

Are you going to engage a 10b5-1 program now?

Speaker 3

It's not going to be systematic. It's going to be more strategic And Casey, I will tell you as soon as the blackout period is over, you can anticipate share repurchases will begin.

Speaker 5

Okay. Secondly, Eric, given that all of these personnel changes are internal movements, Shareholders could be forgiven for thinking that this is less of a strategic process and more shuffling the deck chairs. Can you speak to that please?

Speaker 1

Yes. I mean I guess what I'd ask is judge us going Forward and Judge Meade going forward, I would say that my intention as I looked at the changes and what the skills I wanted to bring in, I wanted to bring people With a more investment focused experience into the BDC franchise, I felt like that's a place that we could benefit Having more people that had true investment experience that are complemented by people with BDC experience versus the past where we had more BDC G experience but less investment experience in leadership roles. So that was my focus. And I can tell you when you look at the people that have been brought in, Ryan, Matt, Elizabeth who you all already know, Joe within Barings are some of our best people that have and some of our most experienced people from an investment perspective. So I understand your perspective.

Speaker 1

I could have gone outside and made some hires. I felt like knowing the people that we have internally and the competencies of them and the skills of them and frankly the way they work Together with other people on the platform, I thought that bringing the team together which is now it's a much more broader team was going to be the best thing to deliver returns on behalf of Shareholders going forward.

Speaker 5

This question is for Ian. Ian, you made the statement that it's your expectation that Sponsors will start to harvest their better performing assets, but I would simply ask why would sponsors harvest their better performing assets at this point in time when valuations is are at such low levels?

Speaker 2

Yes. So Casey, actually valuations have just Actually, just cracked a bit. So if you look at sort of the average purchase price multiple, We were at the peak. It was in the 13 times. It's dropped to 12.

Speaker 2

I think what we're seeing is that if you have a good platform that's Performing well. You have a lot of sponsors that are looking to raise their next fund. They need realizations. And so I wouldn't say that it's like a watershed of great opportunities coming to the market at this particular moment. But I think that at some point with all the dry powder on the side, you've got on one side, you've got sponsors We have to put money to work.

Speaker 2

On the other side, you've got sponsors that have to get realizations. And we do see some really attractive new platforms that come to The market and so we'll take advantage of those. But we're not chasing new platforms in the market. We continue to Rely on our portfolio, which really is generating, at this point, probably over 70% of our origination. Does that answer your question?

Speaker 5

Yes. And my last question is with ROCADE, such a differentiated asset $45,000,000 allocation to an investment that's clearly sort of outside the bounds of normality for a BDC. Can you speak to why the sizing of that position is so large?

Speaker 6

Yes, I think Casey, it's Brian. As we think about Yes. That platform on a go forward similar to Eclipse, we're looking at it as a long term play where we can get differentiated origination and ultimately be able to Have a diversified portfolio underneath that similar to Eclipse. So we brought over a portfolio basically Set up a platform, brought in a team and brought in an existing portfolio to get us started and we'll continue to originate New loans through that platform. So I would think of it similar to Eclipse and that it is a diversified pool of assets Inside a specialty finance company that will be a long term platform for this franchise.

Speaker 5

All right. Thank you for taking my questions.

Operator

Thank you. Our next question is from Sean Paul Adams with Raymond James. Please proceed with your question. Hey, guys. While your dividend coverage looks promising for the remainder of 2023, will there be a new leverage Target for 2024 to accommodate the falling sulfur curve?

Speaker 3

I think at this time, our leverage target will remain the same.

Operator

Okay, perfect. Thank you. Thank you. Our next question is from Paul Johnson with KBW. Please proceed with your question.

Speaker 7

Yes. Good morning, guys. On the incentive fee this quarter, I'm just Wondering if you can potentially give any sort of guidance for future quarters. I mean, was the incentive fee higher this quarter is due to kind of previously deferred Fees and I guess holding all else equal, do you have any sort of sense of Where that incentive fee may land future quarters, I'm kind of looking at like $6,000,000 as a full incentive fee. Is there any potential for More recapture, I guess, of those deferred fees?

Speaker 3

Yes. So in this quarter, And the reason the incentive fee was higher was because of the unrealized depreciation. So going forward, if next quarter we have unrealized depreciation, Again, there is the likelihood that there will be more recapture. So all else being equal, The portfolio remaining flat, dollars 6,000,000 to $7,000,000 I think is a good range for you to think about. To give you a guess on unrealized appreciation, we just we can't do that.

Speaker 3

And that's, I'm sure, what makes it difficult for you to model The incentive fee.

Speaker 7

Sure. I understand. That's helpful. And then I'm just kind of curious, higher level trying to understand mass tort lawsuit financing. Maybe if you could just potentially provide kind of like a brief of how that works.

Speaker 7

And then second to that, your investment in that company Seems like it's obviously a long term investment. I mean, do you kind of intend to potentially grow your investment there or you see that as pretty much fixed today?

Speaker 6

Yes, I would think of it as later stage mass tort litigation. So towards the end of the case Providing financing to litigation firms waiting for ultimate settlements to pay out at attractive what we believe are attractive In terms of we've made a commitment to sort of Grow that platform over time with a partner and are open to continuing to do that And in any way that we can raise capital around that platform on the go forward.

Speaker 3

And just so for your modeling purposes, we have invested an additional $10,000,000 post quarter end, which leaves us with about $30,000,000 of unfunded commitments.

Speaker 7

Okay. Got it. Okay. So there's unfunded commitments. Your return on that investment, I mean, it's a preferred equity investment that You may, I think it's SOFR plus 600,000,000 I thought I heard you say, but it's a preferred equity investment.

Speaker 7

I'm just Curious, I mean, is there are there opportunities for, I guess, higher returns from potentially like preferred dividends and such Coming out of Rokayne or is S600 kind of what we should think about for the return?

Speaker 6

Yes. So The cash investments into the business are at a preferred level with the contractual returns that you just referenced. And then in addition to that, we will own the majority of The equity underneath that preferred instrument and there can be special dividends made via that security over

Speaker 1

We being in the alignment with the preferred. So not it's all together. So within the BDC is where the equity is. Correct.

Operator

Thank you. There are no further questions at this time. I'd like to hand the floor back over to Eric Lloyd for any closing comments.

Speaker 1

Thank you, operator, and thank you for everybody who participated on today's call. Stay safe and have a great weekend.

Operator

This concludes today's conference. You may disconnect your lines at this time. Thank you for your participation.

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Earnings Conference Call
Barings BDC Q1 2023
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