HG bonds: Barings BDC places 2026 notes for refinancing purposes; terms

Barings BDC Inc. today completed an upsized $350 million offering of 3.30% five-year notes due Nov. 23, 2026, at T+225. The issue was originally marketed at $300 million.

The business development company, or BDC, will use the proceeds to repay outstanding secured credit facility borrowings and for general corporate purposes, according to Moody's and Fitch, which earlier Nov. 18 assigned respective Baa3/BBB– ratings to the new bond placement.

Barings BDC is a publicly traded, externally managed BDC managed by Barings LLC, a subsidiary of Massachusetts Mutual Life Insurance Co.

Moody's said Nov. 18 that the ratings reflect benefits from the external management, including investment and funding opportunities, and Barings' "strong underwriting and risk management."

It also noted additional credit strengths from the company's investment focus on "high-quality first-lien senior secured loans and its conservative net debt-to-equity leverage."

Fitch said its BBB- rating also reflects the strength of the relationship with Barings, the first-lien focus of the investment portfolio, sound risk management, relatively low leverage, a solid liquidity profile, strong dividend coverage and sound funding flexibility. The rating agency said rating constraints include a "relatively short-operating history" and "above-average exposure to non-qualifying assets," as well as execution risks associated with the trailing acquisitions the acquisitions of MVC Capital Inc. and Sierra Income Corp.

On Sept. 21, Barings BDC announced that it would acquire Sierra Income Corp., a private BDC, for $624 million. The transaction is expected to close in the first quarter of 2022.

Terms: