Barings BDC, Inc. (NYSE:BBDC) Q4 2022 Results Conference Call February 24, 2023 9:00 AM ET
Company Participants
Eric Lloyd - Chief Executive Officer
Ian Fowler - Co-Head of Global Private Finance, President of Barings BDC
Bryan High - Head of Capital Solutions and Co-Portfolio Manager
Jonathan Landsberg - Chief Financial Officer
Conference Call Participants
Kyle Joseph - Jefferies
Casey Alexander - Compass Point
Robert Dodd - Raymond James
Ryan Lynch - KBW
Operator
At this time, I would like to welcome everyone to the Barings BDC, Inc. Conference Call for the Quarter and Year ended December 31, 2022. All participants are in a listen only mode. A question-and-answer session will follow the company’s formal remarks [Operator Instructions].
Today's call is being recorded, and a replay will be available approximately 2 hours after the conclusion of the call on the company's Web site 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 flows. 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 section titled Risk Factors and Forward-Looking Statements in the company's annual report on Form 10-K for the fiscal year ended December 31, 2022 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 Barings BDC.
Eric Lloyd
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 fourth quarter 2022 earnings presentation that is posted on the Investor Relations section of our Web site. 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, Bryan High; and the BDCs Chief Financial Officer, Jonathan Landsberg. As is customary, Ian, Bryan and Jonathan will review details of our portfolio and fourth quarter results in a moment, but 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. In a market characterized by significant concerns around inflation, economic growth and geopolitical risks and one in which the unprecedented pace of global interest rate hikes elevates volatility in both leveraged loans and BDC equities, Barings BDC continued to generate strong economic results. Turning to the fourth quarter highlights on Slide 6. Net asset value per share was $11.05 compared to the prior quarter of $11.28, down by 2%. We had one new non-accrual in the quarter, Core Scientific, which we discussed on our last call in November and on our unrealized write-down of the asset contributed $0.17 of NAV reduction. Outside of Core Scientific, the reduction in our NAV was driven primarily by unrealized write-downs tied to macroeconomic factors and spread widening as opposed to fundamental credit related factors in our portfolio. Our net investment income was $0.34 per share compared to $0.26 per share last quarter, an increase of 33% quarter-over-quarter as our portfolio benefited substantially from the rise in base rates. In addition, Barings earned no incentive income incentive fee in the quarter due to the incentive fee cap in our shareholder friendly fee structure, which includes realized and unrealized gains and losses.