Greetings. At this time, I would like to welcome everyone to the Barings BDC, Inc. Conference Call for the quarter ended March 31, 2026. 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 approximately two hours after the conclusion of the call on the company's website at barings.com under the Investor Relations section. At this time, I would like to turn the call over to Albert Pearley, Head of Investor Relations for Barings BDC. Please note that this call may contain forward-looking statements.

These 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 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 03/31/2026, as filed with the Securities and Exchange Commission. Barings BDC, Inc. undertakes no obligation to update or revise any forward-looking statements unless required by law. I will now turn the call over to Tom McDonald, Chief Executive of Barings BDC, Inc.

Thanks, Albert, and good morning, everyone. On the call today, I am joined by Barings BDC, Inc.'s President, Matthew Freund, Chief Financial Officer, Elizabeth A. Murray, Barings Head of Global Private Finance and BBDC Portfolio Manager, Bryan D. High. Before turning to the quarter, I will offer a brief perspective as we move through 2026 following the leadership transition earlier this year. I assumed the role of CEO on January 1. With nearly 30 years in the credit business across multiple cycles, my background is in fundamental credit underwriting, portfolio management, and leading leveraged credit platforms. That experience reinforces my conviction in the durability of BBDC's investment process and the importance of rigorous underwriting discipline as dispersion across credit markets becomes more pronounced. Indeed, we saw evidence of that dispersion in the past quarter and we believe it will be a clear differentiator for BBDC going forward. Our best-in-class direct origination platform focused on the core middle market is a key factor behind this differentiation. Our sourcing strength, conservative deal structures, and strong alignment with shareholders remain central to BBDC's ability to generate attractive risk-adjusted returns through the cycle. Our strategy, process, and philosophy remain firmly intact. My focus is on execution, optimization of asset-level yields, and enhancing returns on equity without compromising credit quality. Now turning to the quarter. Despite an onslaught of negative headlines in the private credit sector during the first quarter, BBDC delivered solid net investment income and maintained good credit performance, particularly within the Barings-originated portion of our portfolio. Net deployment in Q1 was slightly negative. We originated $109 million of investments against $126 million of repayments for net repayments of roughly $17 million. As a result, our total portfolio size and leverage remained essentially unchanged quarter over quarter. Our portfolio remains highly diversified and defensively positioned, and we continue to benefit from a benign credit environment. Our focus on the top of the capital structure, senior secured investments, and core middle market issuers—who tend to have lower leverage and stronger risk-adjusted returns—served us well. In addition, our emphasis on defensive, non-cyclical sectors and Barings' global footprint provides a level of stability to our portfolio across all market environments. We believe this combination of senior secured lending, a core middle market focus, defensive non-cyclical sectors, and global origination offers our investors strong relative value and meaningful differentiation within the broader BDC landscape. Overall, BBDC's portfolio performed largely as designed this quarter. Our diversified issuer base and disciplined credit approach have built an all-weather portfolio that we expect to hold up well through various macro conditions which, as Matthew will touch on in a moment, we view as broadly favorable at present. We are, however, beginning to see increased dispersion in performance across the BDC space, underscoring the importance of our disciplined credit selection and proactive credit management. Turning to our results, net asset value per share was $11.02 as of March 31, 2026, slightly lower than $11.09 at year-end 2025. This modest decline was primarily driven by the write-down in a legacy MVC asset. The core Barings portfolio continued to perform well. Net investment income for the first quarter was $0.25 per share compared to $0.27 per share in 2025. Digging a bit deeper into the portfolio, we continue to actively maximize the value of legacy holdings acquired from MVC Capital and Sierra. During the first quarter, we continued the rotation out of the Sierra portfolio, exiting approximately $19 million of legacy positions on a combined basis between directly owned assets and assets held in the Sierra JV. As Elizabeth A. Murray will comment on shortly, the benefits of active portfolio rotation are coming into sharper focus. Today, BBDC shareholders are benefiting from a nearly fully repositioned portfolio that can selectively deploy capital into the most attractive middle market opportunities across the Barings platform. Turning to the earnings power of the portfolio, the weighted average yield on debt and other income-producing securities at fair value was 10.1%. With the stabilization of base rates and spreads in private credit, we believe that portfolio yields are supportive of recent dividend declarations. Our Board declared a second quarter dividend of $0.26 per share, consistent with the prior quarter. On an annualized basis, the dividend level equates to a 9.4% yield on our net asset value of $11.02. As Matthew will discuss momentarily, we believe Barings BDC, Inc. is well positioned to navigate current market volatility and to deliver consistent risk-adjusted returns for our shareholders in the quarters ahead. I will now turn the call over to Matthew.

Thanks, Tom. As you mentioned, there has been no shortage of headlines during the past few months related to the trends in private credit. These headlines have brought attention to the asset class, reflecting a mixed understanding of private credit—both what it is and how it is positioned in underlying investor portfolios. We believe that we are currently in a period of time where the news rhetoric has become a greater source of attention than fundamental performance. Rapid adoption of private credit within the retail wealth channel has turbocharged the broader industry. In a post-COVID world, sometimes referred to as the golden age of private credit, investors readily embraced the returns of private credit with good reason. That dynamic drove substantial fundraising, increased competition, and in many cases, tightening spreads and looser structures. We are now seeing a shift. Retail flows into non-traded vehicles have become more volatile due to heightened investor caution, and institutional allocators are pacing commitments more deliberately, reducing the incremental capital entering the space. From our perspective, this is a healthy development. A slower pace of capital formation should translate into reduced competitive pressures on new originations and upward pressure on spreads. We are already seeing early signs of this in the market. While base rates remain elevated, all-in yields have held firm and underlying credit conditions have remained largely stable. For disciplined lenders like BBDC, this is beginning to look like a more attractive deployment environment. Looking ahead, as we mentioned on our prior call and as Tom alluded to, we expect 2026 to usher in a period of manager dispersion. During periods of abundant liquidity and benign credit conditions, returns across the BDC sector can compress. When defaults are low, liquidity is plentiful, and refinancing is readily available, underwriting can be masked. In that environment, beta often overwhelms alpha. We believe that period is ending. Portfolio decisions made over recent years will drive divergent outcomes ahead. Managers who chased higher leverage, looser documentation, or cyclical sectors are now more exposed, while those who have maintained discipline—focusing on resilient business models, conservative capital structures, and robust creditor protections—are better positioned to weather volatility. One topical example of a trend within our ecosystem was the increasing frequency of annual recurring revenue loans in some BDC portfolios, which are highly correlated with software issuance. Notably, BBDC does not have any loans to issuers structured on recurring revenue. We took a conservative stance in avoiding such transactions, even if it meant occasionally ceding deals to other lenders. Our public filings use a broad industry classification that does not isolate software as a standalone category. However, by our analysis, roughly 13% of our holdings are primarily software-related. This figure compares to approximately 14% in the prior quarter. Importantly, this is an underweight allocation relative to most private credit portfolios and industry benchmarks, where software represents roughly 20% of assets in our sector. The software companies we do finance are typically vertically integrated providers with robust cash flows, diversified customer bases, and significant equity cushions. We are focused on the potential AI disruption within the software sector, but believe these risks will likely take several quarters, if not years, to play out. In the meantime, our cautious approach leaves Barings BDC, Inc. well positioned should turbulence persist in the sector. Turning to the macroeconomic backdrop, the current opportunities within private credit appear more compelling than they have in recent quarters. That said, we remain vigilant to broader macro risks. Barings' private credit strategies deliberately avoid investing in highly cyclical sectors among oil and gas, metals and mining, and construction. While our issuers are not immune to volatility within the energy markets, nor the possibility of economic contraction, we feel that our defensive portfolio is well positioned against an uncertain economic backdrop. Meanwhile, the path of monetary policy remains uncertain. While there is ongoing debate around the timing and magnitude of potential rate cuts, base rates remain elevated relative to the past decade. This fact pattern continues to support strong current income for our predominantly floating rate portfolio. We believe this environment creates a compelling case to be invested in Barings BDC, Inc. It offers attractive distribution yields on a defensive portfolio. Consistent with our messaging from the prior quarter, our outlook for M&A opportunities in the coming 12 months remains cautious. We see significant interest in early-stage activity, but the conversion rates to closed transactions remain low industrywide. In comparison to our large market peers, BBDC issuers do not have the ability to access credit markets to effect the refinancing of their facilities; they simply lack the scale. As a result, we are retaining some of our strongest issuers when EV multiples do not meet sell-side expectations. Turning to an overview of our current portfolio, 75% consists of secured investments with approximately 70% of investments constituting first lien securities, both unchanged from the prior quarter. Interest coverage within the portfolio remained strong, with weighted average coverage this quarter of 2.6 times, above industry averages and slightly improved from the preceding quarter. We believe strong interest coverage demonstrates the merits of our approach—focusing on leading companies in defensive sectors and thoroughly underwriting their ability to weather a range of economic outcomes. The portfolio remains highly diversified, with the top two positions within the portfolio, Eclipse Business Capital and Rocade Holdings, being strategic platform investments. Turning to the portfolio quality, risk ratings exhibited stability during the quarter, as our issuers exhibiting the most stress, classified as risk ratings four and five, were 6% on a combined basis, down slightly from 7% on a combined basis in the immediately preceding quarter. Non-accruals remain modest and are below industry levels. Excluding assets covered by the Sierra CSA, which protects us from legacy Sierra portfolio losses, non-accruals at fair market value amounted to only 0.6% of the portfolio, versus 0.2% in the prior quarter. On an inclusive basis, non-accruals were roughly 1% of the portfolio at fair value and 2% at cost, which is among the lowest in our industry. During the quarter, three investments were placed on non-accrual—EMI, TerriBear, and a junior capital position in Eurofence. Our team remains proactive in managing credit and we remain confident in the credit quality of the underlying portfolio. We expect BBDC's differentiated reach and scale, coupled with its core focus on the middle market and unmatched alignment with shareholders, to continue driving positive outcomes in the quarters and years to come. As previously noted, BBDC is a through-the-cycle portfolio designed to withstand a variety of economic environments. I will now turn the call over to Elizabeth.

Thanks, Matt. As both Tom and Matt highlighted, BBDC delivered solid first quarter results in a dynamic market environment, achieving stable earnings and advancing our balance sheet strength. I will now walk through our financial results and key balance sheet metrics for 2026. NAV per share stood at $11.02 as of March 31, down modestly from $11.09 at year-end 2025. This 0.6% sequential decrease of NAV was primarily driven by net realized losses on a few portfolio exits, partially offset by net unrealized appreciation on investments, the Sierra CSA, and foreign currency. Net investment income for the first quarter was $0.25 per share. This compares to $0.27 per share in 2025 and $0.25 per share in the first quarter of last year. The decline in NII largely reflects slightly lower interest income due to a small dip in our weighted average portfolio yield, fewer calendar days in the quarter, and the absence of non-recurring fee income we benefited from in Q4, such as one-time prepayment and amendment fees. On the expense side, we saw a lower incentive fee accrual this quarter. Our base management fee was stable and interest expense declined approximately 10%, reflecting lower average debt outstanding. Net investment income per share of $0.25 fell just short of our $0.26 quarterly dividend, under-earning by $0.01. We had anticipated this possibility given the exceptional over-earning in recent quarters and the slightly lower portfolio income this quarter. Importantly, we maintain substantial spillover income of approximately $0.79 per share, providing us a cushion to support dividend income. In line with our commitment to consistent shareholder returns, the Board declared a quarterly dividend of $0.26 per share for 2026, unchanged from prior levels. This dividend represents a yield of roughly 9.4% on our current NAV of $11.02 per share. We will continue to manage our payout prudently. As we look ahead, we recognize that a higher-for-longer interest rate environment has bolstered our earnings over the past year, but if base rates begin to decline, we may see some natural compression in earnings and dividend coverage. Rest assured, we intend to carefully evaluate the dividend on an ongoing basis to ensure it remains appropriately aligned with our sustainable net income. Our spillover income and our industry-leading 8.25% incentive fee hurdle provide us with flexibility to maintain stable dividends even if short-term earnings fluctuate. Shifting to realized and unrealized gains and losses, we recorded net realized losses of $10.8 million in the quarter. These losses, approximately $0.08 per share, were primarily driven by a few discrete events, including the exit of our loans to Dexter Rec and the sales of five CLO investments in the legacy Sierra portfolio, as well as the restructuring of our debt investment in Transportation Insight during Q1. These realized losses were partially offset by a gain on the sale of our equity stake in Ocelot following the portfolio company’s exit during the quarter. It is important to note that the impact of these losses on NAV was largely muted by prior-period unrealized depreciation. In other words, we had already marked down these investments in previous quarters, so a significant portion of the realized loss was effectively a reclassification from unrealized to realized and did not materially reduce our current NAV. Our portfolio experienced a net unrealized appreciation of $4.9 million this quarter, or roughly $0.05 per share of NAV accretion. Key cost valuation movements included further increases in the fair value of our Sierra CSA, which I will detail in a moment, as well as gains on select performing investments in the portfolio such as Sky Vault and Security Holdings. This appreciation helped offset unrealized write-downs on a few challenged positions, including legacy MVC Auto and our debt investment in EMI. Overall, realized and unrealized results for the quarter amounted to an approximately $5.9 million decrease in net assets, which drives the slight dip in NAV I mentioned earlier. Our Sierra CSA continues to serve its intended purpose of insulating our NAV from the wind-down of the acquired Sierra portfolio. The valuation of the Sierra CSA increased by approximately $5.3 million from $60.5 million in the fourth quarter to $65.8 million as of March 31. This increase reflects continued paydowns and asset sales within the remaining Sierra portfolio—which is now down to only seven issuers with a total fair value of approximately $18 million, versus 12 issuers and $32 million at year-end—as well as updated assumptions around an accelerated termination timeline for the CSA. In fact, the Sierra joint venture exited its remaining investments and returned $16.4 million of capital to us during the first quarter. We are optimistic about terminating the CSA in the near term, which should eliminate structural complexity in our balance sheet and provide approximately $65 million for redeployment into income-producing assets. Our balance sheet remains conservatively positioned. We ended the first quarter with a net leverage ratio—defined as regulatory leverage net of unrestricted cash and net unsettled transactions—of 1.17x at quarter end, which is squarely within our target range of 0.9x to 1.25x. The net leverage of 1.17x ticked up only slightly from 1.15x at year-end. We continue to prudently manage our capital structure, which remains predominantly comprised of long-term unsecured debt. As of quarter end, roughly 80% of our outstanding debt was in unsecured notes—among the highest proportions of unsecured funding in the BDC industry—which provides significant flexibility in managing our liabilities. We ended Q1 with ample liquidity: about $95 million of cash and foreign currency on hand and over $530 million of available borrowing capacity on our $825 million credit facility. In total, we had well over $600 million of dry powder at quarter end for our financing needs and future investment opportunities. We remain an active and opportunistic participant in the investment-grade debt markets, giving us confidence in our ability to address future financing needs while preserving our balanced funding profile. Lastly, a quick note on capital allocation. As Tom mentioned, we remain focused on delivering value to our shareholders through both stable dividends and repurchases. During Q1, due to a company blackout period, we did not repurchase any shares. However, our Board authorized a new 30 million share repurchase program for 2026, reflecting our commitment to opportunistically buy back shares when trading at a meaningful discount to NAV. We intend to employ this buyback program as appropriate going forward, subject to market conditions and other considerations. In summary, Barings BDC, Inc.'s first quarter demonstrated the resilience of our earnings and the benefit of our disciplined approach. While we plan to carefully manage through potential interest rate normalization and credit headwinds, our diversified portfolio of senior secured investments, robust liquidity, and conservative balance sheet leave us well positioned to continue delivering attractive risk-adjusted returns to our shareholders. I will now turn the call back to the operator for questions and answers.

We will now open the call for questions. Our first question today is coming from Finian Patrick O’Shea with Wells Fargo Securities. Your line is now live.

Hey, everyone. Good morning. Thanks. Question on the new non-accruals—just a few smaller names, but previously they were marked in the low 90s. I am not sure if that applies to the European one, given the currency input. But can you talk about the sort of big picture, the why? Is it a tariff, inflation, commodities? And if this is a concerning trend in that regard?

Yes. Good morning, Fin. This is Matt. So the three adds to that list this quarter came in concert with removing some. With respect to the European position, that actually was carrying a fair market value of zero last quarter, so the consequence to the portfolio is immaterial. With respect to the two U.S. platforms, I would describe those events as being continued challenges in the portfolio. They do both have some element of export/import exposure, but that is not really the reason that catalyzed the move to non-accrual. Both are just operating in slightly more challenged end markets at the current moment, and after some negotiations with other members of the investor base—both on the debt and the equity side—we made the decision that it would likely be prudent to move those assets to non-accrual. In the case of one of them, we actually are in process of restructuring it and expect that to be a relatively short-lived presence with respect to the non-accrual designation. But, of course, time will tell.

Okay. That is helpful. And then, Elizabeth, you talked a bit about the CSA. I do not know that I caught all of that. So just to tease that out—to the extent you may settle the newer one early as you all did with the last one, is that something near term, just a matter of doing the paperwork? Or are there a certain amount of exits on the runway before we might see a conclusion of the other CSA?

I would say that we are optimistic that the termination will happen earlier rather than later and likely at some point this year. Thanks, Fin.

There are no further questions at this time. I would like to turn the floor back over for any further or closing comments.

Thank you, operator, and thank you to all who participated today. I look forward to deepening our engagement with investors and advancing our strategic priorities with the full BDC leadership team. BBDC is strongly positioned for the future and we remain focused on delivering consistent value for shareholders. Thank you.

Thank you. That does conclude today's teleconference and webcast. You may disconnect your line at this time and have a wonderful day. We thank you for your participation today.