Barings BDC, Inc. Prices Public Offering of $300 Million of 7.000% Notes due 2029
Barings BDC, Inc. (BBDC) has priced an underwritten public offering of $300 million in aggregate principal amount of 7.000% notes due 2029. The Notes will bear interest at a rate of 7.000% per year, payable semiannually, and may be redeemed in whole or in part at Barings BDC’s option at any time at par plus a “make-whole” premium, if applicable. The offering is expected to close on February 12, 2024. Barings BDC intends to use the net proceeds from this offering to repay indebtedness under the senior secured credit facility with ING Capital LLC and then may reborrow under its credit facilities for general corporate purposes, including investing in portfolio companies in accordance with its investment objective.
The announcement by Barings BDC of a $300 million notes offering at a 7.000% interest rate represents a strategic financial move that could have significant implications for the company's capital structure and liquidity. The decision to use the proceeds to repay existing debt under the senior secured credit facility with ING Capital LLC indicates a refinancing strategy aimed at optimizing the company's borrowing costs and extending the maturity profile of its debt. Given the fixed interest rate, the company is likely trying to lock in borrowing costs in anticipation of potential interest rate increases.
The interest rate of 7.000% should be compared with the current market rates for corporate debt to assess the attractiveness of the offering. If the rate is favorable relative to the current market and the credit risk profile of Barings BDC, it may indicate strong demand for the notes and a positive market perception of the company's creditworthiness. However, if the rate is higher than comparable issues, it could suggest a higher perceived risk associated with Barings BDC's credit profile.
Investors will also consider the callable feature of the notes, which allows the company to redeem them at par plus a make-whole premium. This feature provides Barings BDC with flexibility to manage its debt portfolio and potentially retire the debt early if it becomes advantageous to do so. However, for investors, the make-whole premium is a critical factor that could influence the total return on their investment.
The role of the joint bookrunners and co-managers, which includes several prominent financial institutions, is indicative of the offering's significance and the level of support and confidence in Barings BDC's market position. The diversity and caliber of the institutions involved may enhance investor confidence and could potentially lead to a successful capital raise.
From a market perspective, this offering may signal broader trends in the Business Development Company (BDC) sector, such as the current appetite for yield-generating investments amid the broader market conditions. The BDC industry is known for providing financing to small and medium-sized enterprises and the success of such offerings can be a proxy for the health of this market segment. Additionally, the terms of the offering, including the interest rate and redemption features, may influence the pricing and terms of future debt issuances within the BDC sector and beyond.
From a legal standpoint, the extensive documentation involved in the offering, including the pricing term sheet, preliminary prospectus supplement and accompanying prospectus, underscores the regulatory requirements and due diligence necessary for public offerings of this scale. The role of the Securities and Exchange Commission (SEC) in reviewing and approving these documents is a critical step in ensuring investor protection and transparency in the capital markets. Investors should be aware of the legal rights and obligations that come with holding these notes, including the implications of the make-whole premium in case of early redemption by the company.
Furthermore, the legal structure of the offering and the specific terms outlined in the prospectus will define the rights of the note holders relative to other creditors, which is a vital consideration for assessing the risk and seniority of the notes within Barings BDC's capital structure.
02/07/2024 - 04:15 PM
CHARLOTTE, N.C. --(BUSINESS WIRE)--
Barings BDC, Inc. (NYSE: BBDC) (“Barings BDC”) announced today that it has priced an underwritten public offering of $300 million 7.000% notes due 2029 (the “Notes”). The Notes will bear interest at a rate of 7.000% per year, payable semiannually, will mature on February 15, 2029 and may be redeemed in whole or in part at Barings BDC’s option at any time at par plus a “make-whole” premium, if applicable. The offering is expected to close on February 12, 2024, subject to the satisfaction of customary closing conditions.
Barings BDC intends to initially use the net proceeds from this offering to repay indebtedness under the senior secured credit facility with ING Capital LLC (“ING”), initially entered into in February 2019, as amended, restated, and otherwise modified from time to time (the “February 2019 Credit Facility”), and then may reborrow under its credit facilities for general corporate purposes, which include investing in portfolio companies in accordance with its investment objective.
Wells Fargo Securities, LLC, SMBC Nikko Securities America, Inc., BMO Capital Markets Corp., Fifth Third Securities, Inc., ING Financial Markets LLC, J.P. Morgan Securities LLC, BNP Paribas Securities Corp., MUFG Securities Americas Inc., Regions Securities LLC and SG Americas Securities, LLC are acting as joint bookrunners for this offering. BofA Securities, Inc., Citigroup Global Markets Inc., R. Seelaus & Co., LLC and Roberts & Ryan, Inc. are acting as co-managers for this offering.
Investors should carefully consider, among other things, Barings BDC’s investment objective and strategies and the risks related to Barings BDC and the offering before investing. The pricing term sheet dated February 7, 2024, the preliminary prospectus supplement dated February 7, 2024, the accompanying prospectus dated July 14, 2023, each of which has been filed with the Securities and Exchange Commission, any related free writing prospectus, and any information incorporated by reference in each, contain this and other information about Barings BDC and should be read carefully before investing.
A shelf registration statement relating to these securities is on file with the Securities and Exchange Commission and effective. The offering may be made only by means of a preliminary prospectus supplement and an accompanying prospectus, copies of which may be obtained from Wells Fargo Securities, LLC, 608 2nd Avenue South, Suite 1000, Minneapolis, MN 55402, Attn: WFS Customer Service; or by calling Wells Fargo Securities, LLC, toll-free at 1-800-645-3751; BMO Capital Markets Corp., 151 W 42nd Street, New York, New York 10036, Attn: Debt Capital Markets Syndicate, 1-866-864-7760; Fifth Third Securities, Inc., 38 Fountain Square Plaza, Cincinnati, Ohio 45263, Attn: Syndicate Department, 1-866-531-5353; or SMBC Nikko Securities America, Inc. at 277 Park Avenue, New York, New York 10172, Attn: Debt Capital Markets, 1-888-868-6856, or e-mail: prospectus@smbcnikko-si.com .
The pricing term sheet, the preliminary prospectus supplement, the accompanying prospectus and this press release are not offers to sell any securities of Barings BDC and are not soliciting an offer to buy the notes in any jurisdiction where such offer and sale is not permitted.
ABOUT BARINGS BDC
Barings BDC (NYSE: BBDC) is a publicly traded, externally managed investment company that has elected to be treated as a business development company under the Investment Company Act of 1940. Barings BDC seeks to invest primarily in senior secured loans in middle-market companies that operate across a wide range of industries. Barings BDC’s investment activities are managed by its investment adviser, Barings LLC, a leading global asset manager based in Charlotte, NC .
ABOUT BARINGS LLC
Barings is a $381 + billion* global investment manager sourcing differentiated opportunities and building long-term portfolios across public and private fixed income, real estate, and specialist equity markets. With investment professionals based in North America , Europe and Asia Pacific , the firm, a subsidiary of MassMutual, aims to serve its clients, communities and employees, and is committed to sustainable practices and responsible investment. Learn more at www.barings.com .
*Assets under management as of December 31, 2023
FORWARD-LOOKING STATEMENTS
Statements included herein may constitute “forward-looking statements,” which relate to future events or Barings BDC’s future performance or financial condition and includes statements regarding the completion of the offering, timing and the expected amount and intended use of proceeds of the offering . These forward-looking statements are not historical facts, but rather are based on current expectations, estimates and projections about Barings BDC, its current and prospective portfolio investments, its industry, its beliefs and opinions, and its assumptions. Words such as “anticipates,” “expects,” “intends,” “plans,” “will,” “may,” “continue,” “believes,” “seeks,” “estimates,” “would,” “could,” “should,” “targets,” “projects,” “outlook,” “potential,” “predicts” and variations of these words and similar expressions are intended to identify forward-looking statements. These statements are not guarantees of future performance and are subject to risks, uncertainties and other factors, some of which are beyond Barings BDC’s control and difficult to predict and could cause actual results to differ materially from those expressed or forecasted in the forward-looking statements including, without limitation, the risks, uncertainties and other factors identified in Barings BDC’s filings with the SEC. Investors should not place undue reliance on these forward-looking statements, which apply only as of the date on which Barings BDC makes them. Barings BDC does not undertake any obligation to update or revise any forward-looking statements or any other information contained herein, except as required by applicable law.
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Source: Barings BDC, Inc.
What is the underwritten public offering amount for Barings BDC, Inc. (BBDC)?
The underwritten public offering amount for Barings BDC, Inc. (BBDC) is $300 million in aggregate principal amount of 7.000% notes due 2029.
When is the expected closing date for the offering by Barings BDC, Inc. (BBDC)?
The offering is expected to close on February 12, 2024.
What does Barings BDC, Inc. (BBDC) intend to use the net proceeds from the offering for?
Barings BDC, Inc. (BBDC) intends to use the net proceeds from this offering to repay indebtedness under the senior secured credit facility with ING Capital LLC and then may reborrow under its credit facilities for general corporate purposes, including investing in portfolio companies in accordance with its investment objective.
