The following discussion is designed to provide a better understanding of our Unaudited Consolidated Financial Statements for the three and six months ended June 30, 2026, including a brief discussion of our business, key factors that impacted our performance and a summary of our operating results. The following discussion should be read in conjunction with the Unaudited Consolidated Financial Statements and the notes thereto included in Item 1 of this Quarterly Report on Form 10-Q, and the Consolidated Financial Statements and notes thereto and Management’s Discussion and Analysis of Financial Condition and Results of Operations contained in our Annual Report on Form 10-K for the year ended December 31, 2025. Historical results and percentage relationships among any amounts in the financial statements are not necessarily indicative of trends in operating results for any future periods.
Forward-Looking Statements
Some of the statements in this Quarterly Report constitute forward-looking statements because they relate to future events or our future performance or financial condition. Forward-looking statements may include, among other things, statements as to our future operating results, our business prospects and the prospects of our portfolio companies, the impact of the investments that we expect to make, the ability of our portfolio companies to achieve their objectives, our expected financings and investments, the adequacy of our cash resources and working capital, and the timing of cash flows, if any, from the operations of our portfolio companies. Words such as “expect,” “anticipate,” “target,” “goals,” “project,” “intend,” “plan,” “believe,” “seek,” “estimate,” “continue,” “forecast,” “may,” “should,” “potential,” variations of such words, and similar expressions indicate a forward-looking statement, although not all forward-looking statements include these words. Readers are cautioned that the forward-looking statements contained in this Quarterly Report are only predictions, are not guarantees of future performance, and are subject to risks, events, uncertainties and assumptions that are difficult to predict. Our actual results could differ materially from those implied or expressed in the forward-looking statements for any reason, including the items discussed herein, in Item 1A titled “Risk Factors” in Part I of our Annual Report on Form 10-K for the year ended December 31, 2025 and in Item 1A titled “Risk Factors” in Part II of our subsequently filed Quarterly Reports on Form 10-Q or in other reports that we may file with the Securities and Exchange Commission (the “SEC”) from time to time. Other factors that could cause our actual results and financial condition to differ materially include, but are not limited to, changes in political, economic or industry conditions, including the risks of a slowing economy, rising inflation and risk of recession, disruptions related to tariffs and other trade or sanction issues, government shutdowns and volatility in the financial services sector, including bank failures; the interest rate environment or conditions affecting the financial and capital markets; the impact of global health crises on our or our portfolio companies’ business and the U.S. and global economies; our, or our portfolio companies’, future business, operations, operating results or prospects; risks associated with possible disruption in our operations due to terrorism, geopolitical conflict or the economy generally; and future changes in laws or regulations and conditions in our or our portfolio companies’ operating areas. These statements are based on our current expectations, estimates, forecasts, information and projections about the industry in which we operate and the beliefs and assumptions of our management as of the date of filing of this Quarterly Report. We assume no obligation to update or revise any forward-looking statements, whether as a result of new information, future events or otherwise, unless we are required to do so by law. Although we undertake no obligation to revise or update any forward-looking statements, whether as a result of new information, future events or otherwise, you are advised to consult any additional disclosures that we may make directly to you or through reports that we in the future may file with the SEC, including annual reports on Form 10-K, quarterly reports on Form 10-Q and current reports on Form 8-K.
Overview of Our Business
We are a Maryland corporation incorporated on October 10, 2006. In August 2018, in connection with the closing of an externalization transaction through which Barings LLC (“Barings” or the “Adviser”) agreed to become our external investment adviser, we entered into an investment advisory agreement and an administration agreement (the “Administration Agreement”) with Barings. In connection with the completion of our acquisition of MVC Capital, Inc., a Delaware corporation, on December 23, 2020, we entered into an amended and restated investment advisory agreement (the “Amended and Restated Advisory Agreement”) with Barings on December 23, 2020, following approval of the Amended and Restated Advisory Agreement by our stockholders at our December 23, 2020 special meeting of stockholders. The terms of the Amended and Restated Advisory Agreement became effective on January 1, 2021. In connection with the completion of our acquisition of Sierra Income Corporation on February 25, 2022 (the “Sierra Merger”), we entered into a second amended and restated investment advisory agreement (the “Second Amended Barings BDC Advisory Agreement”) with the Adviser. On June 24, 2023, we entered into the third amended and restated advisory agreement with the Adviser in order to update the term of the agreement to expire on June 24 of each year subject to annual re-approval in accordance with its terms (the “Barings BDC Advisory Agreement”). All other terms and provisions of the Second Amended Barings BDC Advisory Agreement between us and the Adviser, including with respect to the calculation of the fees payable to the Adviser, remained unchanged under the Barings BDC Advisory Agreement. Under the terms of the Barings BDC Advisory Agreement and the Administration Agreement, Barings serves as
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our investment adviser and administrator and manages our investment portfolio and performs (or oversees, or arranges for, the performance of) the administrative services necessary for our operation.
An externally-managed business development company (“BDC”) generally does not have any employees, and its investment and management functions are provided by an outside investment adviser and administrator under an advisory agreement and administration agreement. Instead of directly compensating employees, we pay Barings for investment management and administrative services pursuant to the terms of an investment advisory agreement and an administration agreement. Under the terms of the Barings BDC Advisory Agreement, the fees paid to Barings for managing our affairs are determined based upon an objective and fixed formula, as compared with the subjective and variable nature of the costs associated with employing management and employees in an internally-managed BDC structure, which include bonuses that cannot be directly tied to Company performance because of restrictions on incentive compensation under the Investment Company Act of 1940, as amended (the “1940 Act”).
Barings focuses on investing our portfolio primarily in senior secured private debt investments in well-established middle-market businesses that operate across a wide range of industries. Barings believes such investments can be considered defensive in the context of a broader portfolio construction. Barings’ SEC co-investment exemptive relief under the 1940 Act permits us and Barings’ affiliated private and SEC-registered funds to co-invest in Barings-originated loans, which allows Barings to efficiently implement its senior secured private debt investment strategy for us.
Barings employs fundamental credit analysis, and targets investments in businesses with relatively low levels of cyclicality and operating risk. The holding size of each position will generally be dependent upon a number of factors including total facility size, pricing and structure, and the number of other lenders in the facility. Barings has experience managing levered vehicles, both public and private, and seeks to enhance our returns through the use of leverage with a prudent approach that prioritizes capital preservation. Barings believes this strategy and approach offers attractive risk/return with lower volatility given the potential for fewer defaults and greater resilience through market cycles. A significant portion of our investments are expected to be rated below investment grade by rating agencies or, if unrated would be rated below investment grade if they were rated. Below investment grade securities, which are often referred to as “junk,” have predominantly speculative characteristics with respect to the issuer’s capacity to pay interest and repay principal.
We generate revenues in the form of interest income, primarily from our investments in debt securities, loan origination and other fees and dividend income. Fees generated in connection with our debt investments are recognized over the life of the loan using the effective interest method or, in some cases, recognized as earned. Our senior secured, middle-market, private debt investments generally have terms of between five and seven years. Our senior secured, middle-market, first lien private debt investments generally bear interest between the Secured Overnight Financing Rate (“SOFR”) (or the applicable currency rate for investments in foreign currencies) plus 450 basis points and SOFR plus 650 basis points per annum. Our subordinated middle-market, private debt investments generally bear interest between SOFR (or the applicable currency rate for investments in foreign currencies) plus 700 basis points and SOFR plus 900 basis points per annum if floating rate, and between 8% and 15% if fixed rate. From time to time, certain of our investments may have a form of interest, referred to as payment-in-kind (“PIK”) interest, which is not paid currently but is instead accrued and added to the loan balance and paid at the end of the term. To a lesser extent, we will invest opportunistically in assets such as, without limitation, equity, special situations, structured credit (e.g., private asset-backed securities), syndicated loan opportunities and/or high yield investments.
The weighted average yields as of June 30, 2026 and December 31, 2025 were as follows:
June 30, 2026 December 31, 2025
Debt investments other than non-accrual debt investments (1) 9.4 % 9.5 %
Total debt investments (2) 9.1 % 9.0 %
Debt investments other than non-accrual debt investments and other income producing securities (3) 9.9 % 10.0 %
Total debt investments and other income producing securities (4) 9.7 % 9.6 %
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(1)Weighted average yield on debt investments other than non-accrual debt investments is computed as (a) the annual stated interest rate or yield earned on the principal amount of our accruing outstanding debt investments, divided by (b) the principal amount of our outstanding debt investments, other than non-accrual debt investments.
(2)Weighted average yield on total debt investments is computed as (a) the annual stated interest rate or yield earned on the principal amount of our accruing outstanding debt investments, divided by (b) the principal amount of our outstanding debt investments, including non-accrual debt investments.
(3)Weighted average yield on debt investments other than non-accrual debt investments and other income producing securities is computed as (a) the annual stated interest rate or yield earned on the principal amount of our accruing outstanding debt investments and other income producing securities divided by (b) the sum of the principal amount of our outstanding debt investments, other than non-accrual debt investments, and the fair value of other income producing securities. Other income producing securities represent annualized amounts of the regular dividend received by us related to our equity investments in Jocassee Partners LLC (“Jocassee”), Sierra Senior Loan Strategy JV I LLC (“Sierra JV”), Rocade Holdings LLC (“Rocade”) and Eclipse Business Capital, LLC (“Eclipse”) during the most recent quarter end.
(4)Weighted average yield on total debt investments and other income producing securities is computed as (a) the annual stated interest rate or yield earned on the principal amount of our accruing outstanding debt investments and other income producing securities divided by (b) the sum of the principal amount of our outstanding debt investments, including non-accrual debt investments, and the fair value of other income producing securities. Other income producing securities represent annualized amounts of the regular dividend received by us related to our equity investments in Jocassee, Sierra JV, Rocade and Eclipse during the most recent quarter end.
Relationship with Our Adviser, Barings
Our investment adviser, Barings, a subsidiary of Massachusetts Mutual Life Insurance Company, is a leading global asset management firm and is registered with the SEC as an investment adviser under the Investment Advisers Act of 1940, as amended. Barings’ primary investment capabilities include fixed income, private credit, real estate, equity, and alternative investments. Subject to the oversight of our Board of Directors (the “Board”), the portfolio managers manage our day-to-day operations with the support of the relevant Barings investment teams and investment committees which provide investment advisory and management services to us. Barings Global Private Finance and Capital Solutions investment teams (“Barings GPF”) is part of Barings’ $392.1 billion Global Fixed Income Platform (as of June 30, 2026) that invests in liquid, private and structured credit. Barings GPF manages private funds and separately managed accounts, along with multiple public vehicles.
Among other things, Barings (i) determines the composition of our portfolio, the nature and timing of the changes therein and the manner of implementing such changes; (ii) identifies, evaluates and negotiates the structure of the investments made by us; (iii) executes, closes, services and monitors the investments that we make; (iv) determines the securities and other assets that we will purchase, retain or sell; (v) performs due diligence on prospective portfolio companies and (vi) provides us with such other investment advisory, research and related services as we may, from time to time, reasonably require for the investment of our funds.
Under the terms of the Administration Agreement, Barings (in its capacity as our Administrator) performs (or oversees, or arranges for, the performance of) the administrative services necessary for our operation, including, but not limited to, office facilities, equipment, clerical, bookkeeping and record keeping services at such office facilities and such other services as Barings, subject to review by the Board, will from time to time determine to be necessary or useful to perform its obligations under the Administration Agreement. Barings also, on our behalf and subject to the Board’s oversight, arranges for the services of, and oversees, custodians, depositories, transfer agents, dividend disbursing agents, other stockholder servicing agents, accountants, attorneys, underwriters, brokers and dealers, corporate fiduciaries, insurers, banks and such other persons in any such other capacity deemed to be necessary or desirable. Barings is responsible for the financial and other records that we are required to maintain and will prepare all reports and other materials required to be filed with the SEC or any other regulatory authority.
Included in Barings GPF are investment teams focused on illiquid investments and are principally segmented based on the jurisdictions in which the investment teams are located. Barings GPF provides a full set of solutions to middle market issuers in their respective geographies, including first and second lien senior secured loans, unitranche structures, revolvers, mezzanine debt and equity co-investments. The Barings GPF investment team averages over 18 years of industry experience at the Managing Director and Director level. Barings believes that it has best-in-class support personnel, including expertise in risk management, legal, accounting, tax, information technology and compliance, among others. We expect to benefit from the support provided by these personnel in our operations.
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Stockholder Approval of Reduced Asset Coverage Ratio
On July 24, 2018, our stockholders voted at a special meeting of stockholders (the “2018 Special Meeting”) to approve a proposal to authorize us to be subject to a reduced asset coverage ratio of at least 150% under the 1940 Act. As a result of the stockholder approval at the 2018 Special Meeting, effective July 25, 2018, our applicable asset coverage ratio under the 1940 Act has been decreased to 150% from 200%. As a result, we are permitted under the 1940 Act to incur indebtedness at a level which is more consistent with a portfolio of senior secured debt. As of June 30, 2026, our asset coverage ratio was 181.2%.
Portfolio Composition
The total value of our investment portfolio was $2,458.6 million as of June 30, 2026, as compared to $2,398.5 million as of December 31, 2025. As of June 30, 2026, we had investments in 342 portfolio companies with an aggregate cost of $2,500.4 million. As of December 31, 2025, we had investments in 333 portfolio companies with an aggregate cost of $2,424.3 million. As of both June 30, 2026 and December 31, 2025, none of our portfolio investments represented greater than 10% of the total fair value of our investment portfolio.
As of June 30, 2026 and December 31, 2025, our investment portfolio consisted of the following investments:
($ in thousands) Cost Percentage of Total Portfolio Fair Value Percentage of Total Portfolio
June 30, 2026:
Senior debt and 1st lien notes $ 1,768,638 71 % $ 1,725,708 70 %
Subordinated debt and 2nd lien notes 236,879 9 234,415 10
Structured products 26,019 1 24,201 1
Equity shares 389,739 16 435,572 18
Equity warrants 76 — 1,267 —
Royalty rights 1,237 — 1,459 —
Investment in joint ventures 77,777 3 35,968 1
$ 2,500,365 100 % $ 2,458,590 100 %
December 31, 2025:
Senior debt and 1st lien notes $ 1,704,910 70 % $ 1,676,334 70 %
Subordinated debt and 2nd lien notes 195,392 8 190,290 8
Structured products 39,462 2 29,627 1
Equity shares 382,930 16 436,466 18
Equity warrants 76 — 1,170 —
Royalty rights 1,292 — 1,486 —
Investment in joint ventures 100,218 4 63,151 3
$ 2,424,280 100 % $ 2,398,524 100 %
Investment Activity
During the six months ended June 30, 2026, we made 34 new portfolio company investments totaling $231.0 million and made investments in existing portfolio companies totaling $139.8 million. We had 18 loans repaid totaling $115.7 million and recognized a net realized gain on these transactions of $0.3 million. We also received $90.0 million of portfolio company principal payments and sales proceeds and recognized a net realized loss on these transactions of $0.2 million. In addition, we sold $51.7 million of middle-market portfolio debt investments to our joint venture, recognizing a net realized loss on these transactions of $0.1 million. We received $27.2 million of return of capital from our joint ventures, equity, and royalty rights investments. Also, investments in three portfolio companies were restructured, which resulted in a net realized loss of $11.6 million. Lastly, we received proceeds related to the sale of equity investments and the collateralized loan obligation (“CLO”) investments acquired in the Sierra Merger totaling $8.1 million and recognized a net realized loss on such sales totaling $3.6 million.
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During the six months ended June 30, 2025, we made 33 new portfolio company investments totaling $266.9 million and made investments in existing portfolio companies totaling $139.0 million. We had 24 loans repaid totaling $125.2 million and recognized a net realized loss on these transactions of $27.9 million. We also received $69.4 million of portfolio company principal payments and sales proceeds and recognized a net realized loss on these transactions of $0.1 million. We received $9.2 million of return of capital from our joint ventures, equity, and royalty rights investments. We also received proceeds of $4.7 million related to the exit of one of our royalty rights investments and recognized a realized gain on such exit of $2.5 million. In addition, we sold $55.9 million of middle-market portfolio debt investments to our joint ventures, recognizing a net realized gain on these transactions of $0.7 million. Also, investments in two portfolio companies were restructured, which resulted in a net realized loss of $2.3 million. Lastly, we received proceeds related to the sales and exits of equity investments totaling $9.1 million and recognized a net realized loss on such sales totaling $1.7 million.
Total portfolio investment activity for the six months ended June 30, 2026 and 2025 was as follows:
Six Months EndedJune 30, 2026:($ in thousands) Senior Debtand 1st LienNotes Subordinated Debt and 2nd Lien Notes Structured Products Equity Shares Equity Warrants Royalty Rights Investment in Joint Ventures / PE Fund Total
Fair value, beginning of period $ 1,676,334 $ 190,290 $ 29,627 $ 436,466 $ 1,170 $ 1,486 $ 63,151 $ 2,398,524
New investments 279,531 89,613 — 1,682 — — — 370,826
Investment restructuring (8,462) 36 — 8,426 — — — —
Proceeds from sales of investments / return of capital (43,839) (9,893) (1,307) (11,439) — (56) (22,441) (88,975)
Loan origination fees received (3,488) (903) — — — — — (4,391)
Principal repayments received (161,603) (39,004) (3,134) — — — — (203,741)
Payment-in-kind interest /dividend 4,922 4,675 — 2,625 — — — 12,222
Accretion of loan premium /discount 661 3 — — — — — 664
Accretion of deferred loan origination revenue 4,285 493 — — — — — 4,778
Realized gain (loss) (8,278) (3,535) (9,001) 5,515 — — — (15,299)
Unrealized appreciation (depreciation) (14,355) 2,640 8,016 (7,703) 97 29 (4,742) (16,018)
Fair value, end of period $ 1,725,708 $ 234,415 $ 24,201 $ 435,572 $ 1,267 $ 1,459 $ 35,968 $ 2,458,590
Six Months EndedJune 30, 2025:($ in thousands) Senior Debtand 1st LienNotes Subordinated Debt and 2nd Lien Notes Structured Products Equity Shares Equity Warrants Royalty Rights Investment in Joint Ventures / PE Fund Total
Fair value, beginning of period $ 1,686,411 $ 165,455 $ 79,548 $ 409,129 $ 2,732 $ 5,833 $ 100,164 $ 2,449,272
New investments 334,905 46,395 7,500 17,158 — — — 405,958
Proceeds from sales of investments / return of capital (63,943) (3) (8,909) (9,037) — (4,753) (5,044) (91,689)
Loan origination fees received (6,628) (1,615) — — — — — (8,243)
Principal repayments received (127,416) (22,434) (31,909) — — — — (181,759)
Payment-in-kind interest / dividends 4,109 439 — 7,029 — — — 11,577
Accretion of loan premium / discount 785 99 11 — — — — 895
Accretion of deferred loan origination revenue 4,626 444 143 — — — — 5,213
Realized gain (loss) (18,830) (9,417) (1,355) 5,667 — 2,467 (7,348) (28,816)
Unrealized appreciation (depreciation) 37,090 13,105 629 10,590 (1,645) (2,005) 3,710 61,474
Fair value, end of period $ 1,851,109 $ 192,468 $ 45,658 $ 440,536 $ 1,087 $ 1,542 $ 91,482 $ 2,623,882
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Portfolio Risk Monitoring
The Adviser monitors our portfolio companies on an ongoing basis. As part of the monitoring process, the Adviser regularly assesses the risk profile of each of our investments and, on a quarterly basis, rates each investment on a risk scale of 1 to 5. Risk assessment is not standardized in our industry and our risk ratings may not be comparable to ones used by other companies. For additional information regarding the Adviser’s portfolio management and investment monitoring, see “Item 1. Business – Portfolio Management and Investment Monitoring” in our Annual Report on Form 10-K for the year ended December 31, 2025.
Our risk assessment is based on the following risk rating categories:
•Risk Rating 1: In the opinion of the Adviser, the issuer is performing materially above expectations at the time of underwriting and the business trends and/or risk factors are favorable.
•Risk Rating 2: In the opinion of the Adviser, the issuer is performing in a manner consistent with expectations at the time of underwriting and the current risk is believed to be similar to that at the time the asset was originated.
•Risk Rating 3: In the opinion of the Adviser, the issuer is performing below expectations at the time of underwriting and the investment risk has increased since underwriting.
•Risk Rating 4: In the opinion of the Adviser, the issuer is performing materially below expectations at the time of underwriting and the investment risk has increased materially since underwriting. Issuers with a risk rating of 4 are typically in violation of one or more debt covenants.
•Risk Rating 5: In the opinion of the Adviser, the issuer is performing substantially below expectations at the time of underwriting and indicates the investment risk has increased substantially since underwriting. Loans with a risk rating of 5 are not anticipated to be repaid in full or have a possibility to not be repaid in full, and the fair market value reflects the Adviser’s current estimate of recoverable value.
The following table shows the classification of our investments by risk rating as of June 30, 2026 and December 31, 2025. Investment risk ratings are accurate only as of those dates and may change due to subsequent developments to a portfolio company’s business or financial condition, market conditions or developments, and other factors.
($ in thousands) June 30, 2026 December 31, 2025
Risk Rating Category Fair Value (1) Percentage of Total Portfolio Fair Value (1) Percentage of Total Portfolio
Category 1 $ 174,014 7 % $ 224,463 9 %
Category 2 1,812,769 75 1,687,789 72
Category 3 299,057 12 280,262 12
Category 4 109,714 5 114,148 5
Category 5 29,856 1 53,876 2
Total $ 2,425,410 100 % $ 2,360,538 100 %
(1) Excludes 9.1% member interest in Jocassee.
Non-Accrual Assets
Generally, when interest and/or principal payments on a loan become past due, or if we otherwise do not expect the borrower to be able to service its debt and other obligations, we will place the loan on non-accrual status and will generally cease recognizing interest income on that loan for financial reporting purposes until all principal and interest have been brought current through payment or due to a restructuring such that the interest income is deemed to be collectible. As of June 30, 2026, we had 11 portfolio companies with investments on non-accrual, the aggregate fair value of which was $13.7 million, which comprised 0.6% of the total fair value of our portfolio, and the aggregate cost of which was $38.3 million, which comprised 1.5% of the total cost of our portfolio. Excluding the non-accrual assets that are covered by the New Sierra Credit Support Agreement (as defined in “Note 2. Agreements and Related Party Transactions”) with Barings, the non-accruals as of June 30, 2026 comprised 0.2% of the total fair value of our portfolio and 0.9% of the aggregate cost of our portfolio. As of December
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31, 2025, we had seven portfolio companies with investments on non-accrual, the aggregate fair value of which was $17.0 million, which comprised 0.7% of the total fair value of our portfolio, and the aggregate cost of which was $33.5 million, which comprised 1.4% of the total cost of our portfolio. Excluding the non-accrual assets that are covered by the Prior Sierra Credit Support Agreement (as defined in “Note 2. Agreements and Related Party Transactions”) with Barings, the non-accruals as of December 31, 2025 comprised 0.2% of the total fair value of our portfolio and 0.7% of the aggregate cost of our portfolio.
A summary of our non-accrual assets as of June 30, 2026 is provided below:
Acogroup
During the quarter ended June 30, 2025, we placed our debt investment in Acogroup on non-accrual status. As a result, under U.S. generally accepted accounting principles (“U.S. GAAP”), we will not recognize interest income on our debt investment in Acogroup for financial reporting purposes. As of June 30, 2026, the cost of our debt investment in Acogroup was $8.1 million and the fair value of such investment was $1.6 million.
Bariacum S.A.
During the quarter ended December 31, 2025, we placed our debt investment in Bariacum S.A., or Bariacum, on non-accrual status. As a result, under U.S. GAAP, we will not recognize interest income on our debt investment in Bariacum for financial reporting purposes. As of June 30, 2026, the cost of our debt investment in Bariacum was $3.3 million and the fair value of such investment was nil.
Biolam Group
During the quarter ended September 30, 2024, we placed our debt investment in Biolam Group, or Biolam, on non-accrual status. As a result, under U.S. GAAP, we will not recognize interest income on our debt investment in Biolam for financial reporting purposes. As of June 30, 2026, the cost of our debt investment in Biolam was $2.5 million and the fair value of such investment was $1.3 million.
Canadian Orthodontic Partners Corp.
During the quarter ended March 31, 2024, we placed our first lien senior secured debt investment in Canadian Orthodontic Partners Corp., or Canadian Orthodontics, on non-accrual status. As a result, under U.S. GAAP, we will not recognize interest income on our first lien senior secured debt investment in Canadian Orthodontics for financial reporting purposes. As of June 30, 2026, the cost of our first lien senior secured debt investment in Canadian Orthodontics was $1.9 million and the fair value of such investment was $0.1 million.
Eurofins Digital Testing International LUX Holding SARL
During the quarter ended March 31, 2026, we placed our subordinated debt investment in Eurofins Digital Testing International LUX Holding SARL, or Eurofins, on non-accrual status. As a result, under U.S. GAAP, we will not recognize interest income on our subordinated debt investment in Eurofins for financial reporting purposes. As of June 30, 2026, the cost of our subordinated debt investment in Eurofins was $1.5 million and the fair value of such investment was nil.
GPNZ II GmbH
During the quarter ended March 31, 2024, we placed our first lien EURIBOR + 6.00% debt investment in GPNZ II GmbH, or GPNZ, on non-accrual status. As a result, under U.S. GAAP, we will not recognize interest income on our first lien EURIBOR + 6.00% debt investment in GPNZ for financial reporting purposes. As of June 30, 2026, the cost of our first lien EURIBOR + 6.00% debt investment in GPNZ was $0.4 million and the fair value of such investment was nil.
Polymer Solutions Group Holdings, LLC
In connection with the Sierra Merger, we purchased our debt investment in Polymer Solutions Group Holdings, LLC, or Polymer. During the quarter ended December 31, 2024, we placed our debt investment in Polymer on non-accrual status. As a result, under U.S. GAAP, we will not recognize interest income on our debt investment in Polymer for financial reporting purposes. As of June 30, 2026, the cost of our debt investment in Polymer was $1.0 million and the fair value of such investment was $0.3 million.
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RA Outdoors, LLC
In connection with the Sierra Merger, we purchased our debt investments in RA Outdoors, LLC, or RA Outdoors. During the quarter ended September 30, 2025, we placed our debt investments in RA Outdoors on non-accrual status. As a result, under U.S. GAAP, we will not recognize interest income on our debt investments in RA Outdoors for financial reporting purposes. As of June 30, 2026, the cost of our debt investments in RA Outdoors was $16.4 million and the fair value of such investments was $8.6 million.
Scaled Agile, Inc.
During the quarter ended June 30, 2026, we placed our debt investments in Scaled Agile, Inc., or Scaled Agile, on non-accrual status. As a result, under U.S. GAAP, we will not recognize interest income on our debt investments in Scaled Agile for financial reporting purposes. As of June 30, 2026, the cost of our debt investments in Scaled Agile was $2.2 million and the fair value of such investments was $0.9 million.
Team Air Distributing, LLC
During the quarter ended June 30, 2026, we placed our debt investment in Team Air Distributing, LLC, or Team Air, on non-accrual status. As a result, under U.S. GAAP, we will not recognize interest income on our debt investment in Team Air for financial reporting purposes. As of June 30, 2026, the cost of our debt investments in Team Air was $0.8 million and the fair value of such investments was $0.7 million.
Terrybear, Inc.
During the quarter ended March 31, 2026, we placed our debt investment in Terrybear, Inc., or Terrybear, on non-accrual status. As a result, under U.S. GAAP, we will not recognize interest income on our debt investment in Terrybear for financial reporting purposes. As of June 30, 2026, the cost of our debt investments in Terrybear was $0.3 million and the fair value of such investments was $0.2 million.
PIK Non-Accrual Assets
In addition to our non-accrual assets, during the quarter ended September 30, 2024, we placed our first lien senior secured debt investment in A.T. Holdings II LTD, or A.T. Holdings, on non-accrual status only with respect to the PIK interest component of the loan. As of June 30, 2026, the cost of our debt investment in A.T. Holdings was $11.9 million, or 0.5% of the total cost of our portfolio, and the fair value of such investment was $7.5 million, or 0.3% of the total fair value of our portfolio.
Results of Operations
Comparison of the three and six months ended June 30, 2026 and June 30, 2025
Operating results for the three and six months ended June 30, 2026 and 2025 were as follows:
Three MonthsEnded Three MonthsEnded Six MonthsEnded Six MonthsEnded
($ in thousands) June 30, 2026 June 30, 2025 June 30, 2026 June 30, 2025
Total investment income $ 65,202 $ 74,398 $ 125,768 $ 138,837
Total operating expenses 34,743 43,780 69,009 81,428
Net investment income before taxes 30,459 30,618 56,759 57,409
Income taxes, including excise tax expense 1,504 808 1,904 1,208
Net investment income after taxes 28,955 29,810 54,855 56,201
Net realized gains (losses) 18,803 (15,157) 8,013 (16,227)
Net unrealized appreciation (depreciation) (29,427) 5,906 (24,546) 13,161
Net realized gains (losses) and unrealized appreciation (depreciation) on investments, credit support agreements, foreign currency transactions and forward currency contracts (10,624) (9,251) (16,533) (3,066)
Net increase in net assets resulting from operations $ 18,331 $ 20,559 $ 38,322 $ 53,135
Net increases or decreases in net assets resulting from operations can vary substantially from period to period due to various factors, including recognition of realized gains and losses and unrealized appreciation and depreciation. As a result, comparisons of net changes in net assets resulting from operations may not be meaningful.
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Investment Income
Three MonthsEnded Three MonthsEnded Six MonthsEnded Six MonthsEnded
($ in thousands) June 30, 2026 June 30, 2025 June 30, 2026 June 30, 2025
Investment income:
Total interest income $ 42,596 $ 50,217 $ 83,768 $ 95,837
Total dividend income 14,021 14,593 25,926 25,335
Total fee and other income 3,713 4,880 6,406 8,454
Total payment–in–kind interest income 4,730 4,508 9,363 8,827
Interest income from cash 142 200 305 384
Total investment income $ 65,202 $ 74,398 $ 125,768 $ 138,837
The change in total investment income for the three and six months ended June 30, 2026, as compared to the three and six months ended June 30, 2025 was primarily due to a decrease in the amount of our outstanding debt investments, decreased weighted average yield on the portfolio and decreased fee and other income. The amount of our outstanding debt investments decreased from $2,243.3 million as of June 30, 2025 to $2,078.3 million as of June 30, 2026. In addition, the weighted average yield on the principal amount of our outstanding debt investments, other than non-accrual debt investments, decreased from 9.8% as of June 30, 2025 to 9.4% as of June 30, 2026. For the three and six months ended June 30, 2026, fee and other income was $3.7 million and $6.4 million, respectively, as compared to $4.9 million and $8.5 million for the three and six months ended June 30, 2025, respectively.
Operating Expenses
Three MonthsEnded Three MonthsEnded Six MonthsEnded Six MonthsEnded
($ in thousands) June 30, 2026 June 30, 2025 June 30, 2026 June 30, 2025
Operating expenses:
Interest and other financing fees $ 19,929 $ 22,176 $ 38,863 $ 42,373
Base management fee 7,928 8,193 16,222 16,211
Incentive management fees 4,959 11,117 9,682 18,855
General and administrative expenses 1,927 2,294 4,242 3,989
Total operating expenses $ 34,743 $ 43,780 $ 69,009 $ 81,428
Interest and Other Financing Fees
The decrease in interest and other financing fees for the three and six months ended June 30, 2026 as compared to the three and six months ended June 30, 2025, was primarily attributed to lower weighted average borrowings outstanding and a lower weighted average interest rate on the February 2019 Credit Facility, partially offset by higher net unsecured debt outstanding as of June 30, 2026. For the three and six months ended June 30, 2026, the weighted average borrowings outstanding on the February 2019 Credit Facility were $305.0 million and $259.9 million, respectively, as compared to $559.1 million and $485.1 million, for the three and six months ended June 30, 2025, respectively. The weighted average interest rate on the February 2019 Credit Facility for the three and six months ended June 30, 2026 was 4.8% and 4.5%, respectively, as compared to 5.8% and 5.9%, for the three and six months ended June 30, 2025, respectively. For the three and six months ended June 30, 2026, the weighted average unsecured debt outstanding was $1,132.5 million and $1,157.3 million, respectively, as compared to $1,025.0 million for both the three and six months ended June 30, 2025. The weighted average interest rate on the unsecured debt for both the three and six months ended June 30, 2026 was 5.1% as compared to 4.9% for both the three and six months ended June 30, 2025.
Base Management Fee
Under the terms of the Barings BDC Advisory Agreement, we pay Barings a base management fee (the “Base Management Fee”), quarterly in arrears on a calendar quarter basis. The Base Management Fee is calculated based on the average value of our gross assets, excluding cash and cash equivalents, at the end of the two most recently completed calendar quarters prior to the quarter for which such fees are being calculated. Base Management Fees for any partial month or quarter are appropriately pro-rated. See “Note 2. Agreements and Related Party Transactions” to our Unaudited Consolidated Financial Statements for additional information regarding the terms of the Barings BDC Advisory Agreement and the fee arrangements thereunder. For the three and six months ended June 30, 2026, the amount of Base Management Fees incurred were approximately $7.9 million and $16.2 million, respectively. For the three and six months ended June 30, 2025, the amount of Base Management Fees incurred were approximately $8.2 million and $16.2 million, respectively.
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The decrease in the Base Management Fees for the three months ended June 30, 2026 versus the three months ended June 30, 2025 is primarily related to the average value of gross assets decreasing from $2,621.7 million as of the end of the two most recently completed calendar quarters prior to June 30, 2025 to $2,537.0 million as of the end of the two most recently completed calendar quarters prior to June 30, 2026. For both the three and six months ended June 30, 2026 and 2025, the Base Management Fee rate was 1.250%.
Incentive Fee
Under the Barings BDC Advisory Agreement, we pay Barings an incentive fee (the “Incentive Fee”). A portion of the Incentive Fee is based on our income (the “Income-Based Fee”) and a portion is based on our capital gains (the “Capital Gains Fee”). The Income-Based Fee is determined and paid quarterly in arrears based on the amount by which (x) the aggregate pre-incentive fee net investment income in respect of the current calendar quarter and the eleven preceding calendar quarters beginning with the calendar quarter that commences on or after January 1, 2021, as the case may be (or the appropriate portion thereof in the case of any of our first eleven calendar quarters that commences on or after January 1, 2021) exceeds (y) the hurdle amount as calculated for the same period. See “Note 2. Agreements and Related Party Transactions” to our Unaudited Consolidated Financial Statements for additional information regarding the terms of the Barings BDC Advisory Agreement and the fee arrangements thereunder. For the three and six months ended June 30, 2026, the amount of Income-Based Fees incurred were $5.0 million and $9.7 million, respectively, as compared to $11.1 million and $18.9 million, for the three and six months ended June 30, 2025, respectively. The Income-Based Fee is subject to a cap (the “Incentive Fee Cap”). The Incentive Fee Cap in any quarter is an amount equal to (a) 20% of the Cumulative Pre-Incentive Fee Net Return during the relevant Trailing Twelve Quarters less (b) the aggregate Income-Based Fees that were paid to the Adviser in the preceding eleven calendar quarters (or portion thereof) comprising the relevant Trailing Twelve Quarters. See “Note 2. Agreements and Related Party Transactions” to our Unaudited Consolidated Financial Statements for additional information regarding the terms of the Incentive Fee Cap.
The incentive fee for both the three and six months ended June 30, 2026 and June 30, 2025, was limited to the Incentive Fee Cap. The Incentive Fee Cap for the three and six months ended June 30, 2026 was lower than the Incentive Fee Cap for the three and six months ended June 30, 2025 as a result of an increase in Cumulative Pre-Incentive Fee Net Return partially offset by a greater increase in incentive fees paid in the trailing twelve quarters (or portion thereof).
General and Administrative Expenses
We entered into the Administration Agreement with Barings in August 2018. Under the terms of the Administration Agreement, Barings performs (or oversees, or arranges for, the performance of) the administrative services necessary for our operations. We reimburse Barings for the costs and expenses incurred by it in performing its obligations and providing personnel and facilities under the Administration Agreement in an amount to be negotiated and mutually agreed to by us and Barings quarterly in arrears; provided that the agreed-upon quarterly expense amount will not exceed the amount of expenses that would otherwise be reimbursable by us under the Administration Agreement for the applicable quarterly period, and Barings will not be entitled to the recoupment of any amounts in excess of the agreed-upon quarterly expense amount. See “Note 2. Agreements and Related Party Transactions” to our Unaudited Consolidated Financial Statements for additional information regarding the Administration Agreement. For the three and six months ended June 30, 2026, the amount of administration expenses incurred and invoiced by Barings for expenses was approximately $0.3 million and $0.7 million, respectively. For the three and six months ended June 30, 2025, the amount of administration expenses incurred and invoiced by Barings for expenses was approximately $0.4 million and $0.7 million, respectively. In addition to expenses incurred under the Administration Agreement, general and administrative expenses include fees payable to the members of our Board for their service on the Board, directors’ and officers’ insurance costs, as well as legal and accounting expenses.
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Net Realized Gains (Losses)
Net realized gains (losses) during the three and six months ended June 30, 2026 and 2025 were as follows:
Three MonthsEnded Three MonthsEnded Six MonthsEnded Six MonthsEnded
($ in thousands) June 30, 2026 June 30, 2025 June 30, 2026 June 30, 2025
Net realized gains (losses):
Non-Control / Non-Affiliate investments $ (7,077) $ 6,024 $ (15,230) $ (4,360)
Control investments (72) (17,109) (69) (24,456)
Net realized gains (losses) on investments (7,149) (11,085) (15,299) (28,816)
Credit support agreements 22,628 9,400 22,628 9,400
Foreign currency transactions 289 787 (2,153) 2,235
Forward currency contracts 3,035 (14,259) 2,837 954
Net realized gains (losses) $ 18,803 $ (15,157) $ 8,013 $ (16,227)
During the three months ended June 30, 2026, we recognized net realized gains totaling $18.8 million, which consisted primarily of a gain on the termination of the Prior Sierra Credit Support Agreement (as defined in “Note 2. Agreements and Related Party Transactions”) with Barings of $22.6 million, a net gain on forward currency contracts of $3.0 million and a net gain on foreign currency transactions of $0.3 million, partially offset by a net loss on our investment portfolio of $7.1 million. The net loss on our investment portfolio predominantly related to a $7.2 million loss on the restructuring of two portfolio company investments and a $2.2 million loss on the sale and exit of one CLO investment acquired in the Sierra Merger, partially offset by a gain of $1.1 million on the sale of one equity investment, which were all primarily reclassified from net unrealized depreciation during the three months ended June 30, 2026. The $2.2 million loss on the CLO investment acquired in the Sierra Merger was covered by the Prior Sierra Credit Support Agreement with Barings. During the six months ended June 30, 2026, we recognized net realized gains totaling $8.0 million, which consisted primarily of a gain on the termination of the Prior Sierra Credit Support Agreement with Barings of $22.6 million and a net gain on forward currency contracts of $2.8 million, partially offset by a net loss on our investment portfolio of $15.3 million and a net loss on foreign currency transactions of $2.2 million. The net loss on our investment portfolio predominantly related to a $11.6 million loss on the restructuring of three portfolio company investments, a $9.1 million loss on the sale and exit of six CLO investments acquired in the Sierra Merger and a $1.1 million loss on the exit of one debt investment, partially offset by a gain of $4.7 million on the sale of equity investments in three portfolio companies. The net losses on these exits were predominantly reclassified from net unrealized depreciation and the $9.1 million loss on the CLO investments acquired in the Sierra Merger was covered by the Prior Sierra Credit Support Agreement with Barings.
During the three months ended June 30, 2025, we recognized net realized losses totaling $15.2 million, which consisted primarily of a net loss on forward currency contracts of $14.3 million and a net loss on our investment portfolio of $11.1 million, partially offset by a gain on the termination of the MVC Credit Support Agreement (as defined in “Note 2. Agreements and Related Party Transactions”) with Barings of $9.4 million and a net gain on foreign currency transactions of $0.8 million. The net loss on our investment portfolio predominantly related to a $17.1 million loss on the exit of one loan investment and a $2.5 million loss on the restructuring of one investment, partially offset by a $5.3 million gain on the exit of three equity investments, and a $2.5 million gain on the exit of one of our royalty rights investments, which were all primarily reclassified from net unrealized depreciation during the three months ended June 30, 2025. During the six months ended June 30, 2025, we recognized net realized losses totaling $16.2 million, which consisted primarily of a net loss on our investment portfolio of $28.8 million, partially offset by a net gain on the termination of the MVC Credit Support Agreement of $9.4 million, a net gain on forward currency transactions of $2.2 million and a net gain on foreign currency contracts of $1.0 million. The net loss on our investment portfolio predominantly related to a $27.9 million loss on the exit of three loan investments, a $7.3 million loss on the exit of one equity investment, and a $2.5 million loss on the restructuring of one investment, partially offset by a $5.3 million gain on the exit of three equity investments and a $2.5 million gain on the exit of one of our royalty rights investments, which were all primarily reclassified from net unrealized depreciation during the six months ended June 30, 2025.
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Net Unrealized Appreciation (Depreciation)
Net unrealized appreciation (depreciation) during the three and six months ended June 30, 2026 and 2025 was as follows:
Three MonthsEnded Three MonthsEnded Six MonthsEnded Six MonthsEnded
($ in thousands) June 30, 2026 June 30, 2025 June 30, 2026 June 30, 2025
Net unrealized appreciation (depreciation):
Non-Control / Non-Affiliate investments $ 324 $ 8,975 $ (10,245) $ 31,205
Affiliate investments (3,837) 663 (548) (1,197)
Control investments (2,467) 17,817 (5,221) 30,447
Net unrealized appreciation (depreciation) on investments (5,980) 27,455 (16,014) 60,455
Credit support agreements (21,400) (3,000) (16,100) 1,350
Foreign currency transactions 1,200 (15,205) 5,300 (22,983)
Forward currency contracts (3,247) (3,344) 2,268 (25,661)
Net unrealized appreciation (depreciation) $ (29,427) $ 5,906 $ (24,546) $ 13,161
During the three months ended June 30, 2026, we recorded net unrealized depreciation totaling $29.4 million, consisting of unrealized depreciation of $21.4 million related to the realized gain on the termination of the Prior Sierra Credit Support Agreement with Barings, net unrealized depreciation on our current portfolio of $14.8 million, net unrealized depreciation related to forward currency contracts of $3.2 million and deferred taxes of $0.1 million, partially offset by net unrealized appreciation reclassification adjustments of $9.0 million related to the net realized losses on the sales / exits of certain investments and net unrealized appreciation related to foreign currency transactions of $1.2 million. The net unrealized depreciation on our current portfolio of $14.8 million was driven primarily by broad market moves for investments of $6.9 million, the credit or fundamental performance of investments of $6.9 million and the impact of foreign currency exchange rates on investments of $1.0 million.
During the six months ended June 30, 2026, we recorded net unrealized depreciation totaling $24.5 million, consisting of net unrealized depreciation on our current portfolio of $32.4 million and unrealized depreciation of $16.1 million on the Prior Sierra Credit Support Agreement with Barings, partially offset by net unrealized appreciation reclassification adjustments of $16.3 million related to the net realized losses on the sales / exits of certain investments, net unrealized appreciation related to foreign currency transactions of $5.3 million and net unrealized appreciation related to forward currency contracts of $2.3 million. The net unrealized depreciation on our current portfolio of $32.4 million was driven primarily by the credit or fundamental performance of investments of $15.6 million, broad market moves for investments of $9.5 million and the impact of foreign currency exchange rates on investments of $7.3 million.
During the three months ended June 30, 2025, we recorded net unrealized appreciation totaling $5.9 million, consisting of net unrealized appreciation on our current portfolio of $14.7 million, net unrealized appreciation reclassification adjustments of $12.8 million related to the net realized losses on the sales / exits of certain investments, unrealized appreciation of $6.4 million on the Prior Sierra Credit Support Agreement with Barings, partially offset by net unrealized depreciation related to foreign currency transactions of $15.2 million, unrealized depreciation of $9.4 million related to the realized gain on the termination of the MVC Credit Support Agreement with Barings and net unrealized depreciation related to forward currency contracts of $3.3 million. The net unrealized appreciation on our current portfolio of $14.7 million was driven primarily by the impact of foreign currency exchange rates on investments of $34.2 million, partially offset by the credit or fundamental performance of investments of $13.0 million and broad market moves for investments of $6.5 million.
During the six months ended June 30, 2025, we recorded net unrealized appreciation totaling $13.2 million, consisting of net unrealized appreciation on our current portfolio of $31.7 million, net unrealized appreciation reclassification adjustments of $29.8 million related to the net realized losses on the sales / exits of certain investments, unrealized appreciation of $7.0 million on the Prior Sierra Credit Support Agreement with Barings, partially offset by net unrealized depreciation related to forward currency contracts of $25.7 million, net unrealized depreciation related to foreign currency transactions of $23.0 million, unrealized depreciation of $5.6 million on the MVC Credit Support Agreement with Barings and deferred taxes of $1.0 million. The net unrealized appreciation on our current portfolio of $31.7 million was driven primarily by the impact of foreign currency exchange rates on investments of $49.0 million and broad market moves for investments of $1.3 million, partially offset by the credit or fundamental performance of investments of $18.6 million.
Liquidity and Capital Resources
We believe that our current cash and foreign currencies on hand, our available borrowing capacity under the February 2019 Credit Facility (as defined below under “Financing Transactions”) and our anticipated cash flows from operations will be
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adequate to meet our cash needs for our daily operations for at least the next twelve months. This “Liquidity and Capital Resources” section should be read in conjunction with the notes to our Unaudited Consolidated Financial Statements.
Cash Flows
For the six months ended June 30, 2026, we experienced a net increase in cash in the amount of $3.1 million. During that period, our operating activities provided $83.7 million in cash, with proceeds from sales or repayments of portfolio investments totaling $342.3 million and other cash collections from investments exceeding purchases of portfolio investments of $368.9 million. In addition, our financing activities used net cash of $80.6 million, consisting of the repayment of the $80.0 million Series D Notes (as defined below) and dividends paid in the amount of $54.4 million, partially offset by net borrowings under the February 2019 Credit Facility of $53.8 million. As of June 30, 2026, we had $69.9 million of cash and foreign currencies on hand, including $18.3 million of restricted cash.
For the six months ended June 30, 2025, we experienced a net decrease in cash in the amount of $42.1 million. During that period, our operating activities used $60.5 million in cash, consisting primarily of purchases of portfolio investments of $409.2 million, partially offset by proceeds from sales or repayments of portfolio investments totaling $274.6 million. In addition, our financing activities provided net cash of $18.4 million, consisting of net borrowings under the February 2019 Credit Facility of $86.0 million, partially offset by dividends paid in the amount of $65.3 million and share repurchases of $2.3 million. As of June 30, 2025, we had $49.3 million of cash and foreign currencies on hand, including $4.7 million of restricted cash.
Financing Transactions
February 2019 Credit Facility
On February 21, 2019, we entered into a senior secured credit facility with ING Capital LLC (“ING”), as administrative agent, and the lenders party thereto (as amended, restated and otherwise modified from time to time, the “February 2019 Credit Facility”). The initial commitments under the February 2019 Credit Facility totaled $800.0 million. Effective on November 4, 2021, we increased aggregate commitments under the February 2019 Credit Facility to $875.0 million from $800.0 million pursuant to the accordion feature under the February 2019 Credit Facility, which allowed for an increase in the total commitments to an aggregate of $1.2 billion subject to certain conditions and satisfaction of specified financial covenants. Effective on February 25, 2022, we increased aggregate commitments under the February 2019 Credit Facility to $965.0 million from $875.0 million pursuant to the accordion feature under the February 2019 Credit Facility, which allowed for an increase in the total commitments to an aggregate of $1.5 billion from $1.2 billion subject to certain conditions and the satisfaction of specified financial covenants. Effective on April 1, 2022, we increased the aggregate commitments under the February 2019 Credit Facility to $1.1 billion from $965.0 million pursuant to the accordion feature under the February 2019 Credit Facility, which allowed for an increase in the total commitments to an aggregate of $1.5 billion subject to certain conditions and the satisfaction of specified financial covenants. We can borrow foreign currencies directly under the February 2019 Credit Facility. The February 2019 Credit Facility, which is structured as a revolving credit facility, is secured primarily by a material portion of our assets and guaranteed by certain of our subsidiaries. Following the termination on June 30, 2020, of Barings BDC Senior Funding I, LLC’s, our indirect wholly-owned Delaware limited liability company (“BSF”), credit facility entered into in August 2018 with Bank of America, N.A., BSF became a subsidiary guarantor whose assets secure the February 2019 Credit Facility. Effective May 9, 2023, the revolving period of the February 2019 Credit Facility was extended to February 21, 2025, followed by a one-year repayment period, and the maturity date was extended to February 21, 2026. Effective November 5, 2024 we amended the February 2019 Credit Facility to, among other things, (a) extend the revolving period from February 21, 2025 to November 5, 2028; (b) extend the stated maturity date from February 21, 2026 to November 5, 2029; (c) adjust the interest rate charged on the February 2019 Credit Facility from an applicable spread of either the term SOFR plus 2.25% (or 2.00% for so long as we maintain an investment grade credit rating) plus a credit spread adjustment of 0.10% for borrowings with an interest period of one month, 0.15% for borrowings with an interest period of three months, or 0.25% for borrowings with an interest period of six months to an applicable spread of 1.875% plus a credit spread adjustment of 0.10%; and (d) reduce the total commitments under the facility from $1,065 million to $825 million, of which $100 million has been reallocated from revolving commitments to term loan commitments. Effective September 25, 2025, we repaid the $100.0 million term loan commitment, reducing the total commitments under the February 2019 Credit Facility to $725.0 million from $825.0 million. Effective November 13, 2025, we amended the February 2019 Credit Facility to, among other things, (a) extend the revolving period from November 5, 2028 to November 13, 2029; (b) extend the stated maturity date from November 5, 2029 to November 13, 2030; and (c) add a new €85.0 million term loan facility, increasing the total commitments under the February 2019 Credit Facility to $822.9 million from $725.0 million.
Borrowings denominated in U.S. Dollars under the February 2019 Credit Facility bear interest, subject to our election, on a per annum basis equal to (i) the alternate base rate plus 0.875% or (ii) term SOFR plus an applicable spread of 1.875% plus a
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credit spread adjustment of 0.10%. Borrowings denominated in certain foreign currencies, other than Australian dollars, bear interest on a per annum basis equal to the applicable currency rate for the foreign currency as defined in the credit agreement plus 1.875% or for borrowings denominated in Australian dollars, 1.875% plus the applicable Australian benchmark rate, which is defined as the applicable Australian dollar Screen Rate plus 0.20%. The alternate base rate is equal to the greatest of (i) the prime rate, (ii) the federal funds rate plus 0.5%, (iii) the Overnight Bank Funding Rate plus 0.5%, (iv) one-month term SOFR plus 1.0% plus a credit spread adjustment of 0.10% and (v) 1.0%.
In addition, we pay a commitment fee of 0.375% per annum on undrawn amounts of the February 2019 Credit Facility. In connection with entering into the February 2019 Credit Facility, we incurred financing fees of approximately $6.4 million, which will be amortized over the life of the February 2019 Credit Facility. In connection with all amendments to the February 2019 Credit Facility, we incurred financing fees of approximately $12.5 million, which will be amortized over the remaining life of the February 2019 Credit Facility.
As of June 30, 2026, we were in compliance with all covenants under the February 2019 Credit Facility and had U.S. dollar borrowings of $122.5 million outstanding under the February 2019 Credit Facility with a weighted average interest rate of 5.594% (one month SOFR of 3.619%), borrowings denominated in Canadian dollars of C$2.0 million ($1.4 million U.S. dollars) with an interest rate of 4.451% (one month CORRA of 2.576%) and borrowings denominated in Euros of €134.1 million ($153.3 million U.S. dollars) with a weighted average interest rate of 4.056% (one month EURIBOR of 2.181%). The borrowings denominated in foreign currencies were translated into U.S. dollars based on the spot rate at the relevant balance sheet date. The impact resulting from changes in foreign exchange rates on the February 2019 Credit Facility borrowings is included in “Net unrealized appreciation (depreciation) - foreign currency transactions” in our Unaudited Consolidated Statements of Operations.
The fair values of the borrowings outstanding under the February 2019 Credit Facility are based on a market yield approach and current interest rates, which are Level 3 inputs to the market yield model. As of June 30, 2026, the total fair value of the borrowings outstanding under the February 2019 Credit Facility was $277.2 million. See “Note 5. Borrowings — February 2019 Credit Facility” to our Unaudited Consolidated Financial Statements for additional information regarding the February 2019 Credit Facility.
August 2025 Notes
On August 3, 2020, we entered into a Note Purchase Agreement (the “August 2020 NPA”) with Massachusetts Mutual Life Insurance Company governing the issuance of (1) $50.0 million in aggregate principal amount of Series A senior unsecured notes due August 2025 (the “Series A Notes due 2025”) with a fixed interest rate of 4.66% per year, and (2) up to $50.0 million in aggregate principal amount of additional senior unsecured notes due August 2025 with a fixed interest rate per year to be determined (the “Additional Notes” and, collectively with the Series A Notes due 2025, the “August 2025 Notes”), in each case, to qualified institutional investors in a private placement. An aggregate principal amount of $25.0 million of the Series A Notes due 2025 were issued on September 24, 2020 and an aggregate principal amount of $25.0 million of the Series A Notes due 2025 were issued on September 29, 2020, both of which matured on August 4, 2025. Interest on the August 2025 Notes was due semiannually in March and September, beginning in March 2021. In addition, we were obligated to offer to repay the August 2025 Notes at par (plus accrued and unpaid interest to, but not including, the date of prepayment) if certain change in control events occurred. Subject to the terms of the August 2020 NPA, we could have redeemed the August 2025 Notes in whole or in part at any time or from time to time at our option at par plus accrued interest to the prepayment date and, if redeemed on or before November 3, 2024, a make-whole premium. The August 2025 Notes were guaranteed by certain of our subsidiaries, and were our general unsecured obligations that ranked pari passu with all outstanding and future unsecured unsubordinated indebtedness issued by us.
Our permitted issuance period for the Additional Notes under the August 2020 NPA expired on February 3, 2022, prior to which date we issued no Additional Notes.
The August 2020 NPA contained certain representations and warranties, and various covenants and reporting requirements customary for senior unsecured notes issued in a private placement, including, without limitation, affirmative and negative covenants such as information reporting, maintenance of our status as a BDC within the meaning of the 1940 Act, certain restrictions with respect to transactions with affiliates, fundamental changes, changes of line of business, permitted liens, investments and restricted payments, minimum shareholders’ equity, maximum net debt to equity ratio and minimum asset coverage ratio. The August 2020 NPA also contained customary events of default with customary cure and notice periods, including, without limitation, nonpayment, incorrect representation in any material respect, breach of covenant, cross-default under our other indebtedness or that of our subsidiary guarantors, certain judgments and orders, and certain events of bankruptcy. Upon the occurrence of an event of default, the holders of at least 66-2/3% in principal amount of the August 2025 Notes at the time outstanding could have declared all August 2025 Notes then outstanding to be immediately due and payable.
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The August 2025 Notes were offered in reliance on Section 4(a)(2) of the Securities Act. The August 2025 Notes were not registered under the Securities Act or any state securities laws and could not have been offered or sold in the United States except pursuant to an exemption from, or in a transaction not subject to, the registration requirements of the Securities Act, as applicable.
On August 4, 2025, the August 2025 Notes matured in accordance with the terms of the August 2020 NPA and we repaid in full the par amount plus accrued and unpaid interest.
November Notes
On November 4, 2020, we entered into a Note Purchase Agreement (the “November 2020 NPA”) governing the issuance of (1) $62.5 million in aggregate principal amount of Series B senior unsecured notes due November 2025 (the “Series B Notes”) with a fixed interest rate of 4.25% per year and (2) $112.5 million in aggregate principal amount of Series C senior unsecured notes due November 2027 (the “Series C Notes,” and, collectively with the Series B Notes, the “November Notes”) with a fixed interest rate of 4.75% per year, in each case, to qualified institutional investors in a private placement. Each stated interest rate is subject to a step up of (x) 0.75% per year, to the extent the applicable November Notes do not satisfy certain investment grade conditions and/or (y) 1.50% per year, to the extent the ratio of our secured debt to total assets exceeds specified thresholds, measured as of each fiscal quarter end. The November Notes were delivered and paid for on November 5, 2020.
The Series B Notes matured on November 4, 2025, in accordance with the terms of the November 2020 NPA and we repaid in full the par amount plus accrued and unpaid interest. The Series C Notes will mature on November 4, 2027 unless redeemed, purchased or prepaid prior to such date by us in accordance with their terms. Interest on the November Notes is due semiannually in May and November, beginning in May 2021. In addition, we are obligated to offer to repay the November Notes at par (plus accrued and unpaid interest to, but not including, the date of prepayment) if certain change in control events occur. Subject to the terms of the November 2020 NPA, we could have redeemed the Series B Notes in whole or in part at any time or from time to time at our option at par plus accrued interest to the prepayment date and, if redeemed on or before May 4, 2025, a make-whole premium. Subject to the terms of the November 2020 NPA, we may redeem the Series C Notes in whole or in part at any time or from time to time at our option at par plus accrued interest to the prepayment date and, if redeemed on or before May 4, 2027, a make-whole premium. The November Notes are guaranteed by certain of our subsidiaries, and are our general unsecured obligations that rank pari passu with all outstanding and future unsecured unsubordinated indebtedness issued by us.
The November 2020 NPA contains certain representations and warranties, and various covenants and reporting requirements customary for senior unsecured notes issued in a private placement, including, without limitation, affirmative and negative covenants such as information reporting, maintenance of our status as a BDC within the meaning of the 1940 Act, certain restrictions with respect to transactions with affiliates, fundamental changes, changes of line of business, permitted liens, investments and restricted payments, minimum shareholders’ equity, maximum net debt to equity ratio and minimum asset coverage ratio. The November 2020 NPA also contains customary events of default with customary cure and notice periods, including, without limitation, nonpayment, incorrect representation in any material respect, breach of covenant, cross-default under our other indebtedness or that of our subsidiary guarantors, certain judgments and orders, and certain events of bankruptcy. Upon the occurrence of an event of default, the holders of at least 66-2/3% in principal amount of the November Notes at the time outstanding may declare all November Notes then outstanding to be immediately due and payable. As of June 30, 2026, we were in compliance with all covenants under the November 2020 NPA.
The November Notes were offered in reliance on Section 4(a)(2) of the Securities Act. The November Notes have not and will not be registered under the Securities Act or any state securities laws and, unless so registered, may not be offered or sold in the United States except pursuant to an exemption from, or in a transaction not subject to, the registration requirements of the Securities Act, as applicable.
As of June 30, 2026, the fair value of the outstanding Series C Notes was $110.2 million. The fair value determinations of the Series C Notes were based on a market yield approach and current interest rates, which are Level 3 inputs to the market yield model.
February Notes
On February 25, 2021, we entered into a Note Purchase Agreement (the “February 2021 NPA”) governing the issuance of (1) $80.0 million in aggregate principal amount of Series D senior unsecured notes due February 26, 2026 (the “Series D Notes”) with a fixed interest rate of 3.41% per year and (2) $70.0 million in aggregate principal amount of Series E senior unsecured notes due February 26, 2028 (the “Series E Notes” and, collectively with the Series D Notes, the “February Notes”)
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with a fixed interest rate of 4.06% per year, in each case, to qualified institutional investors in a private placement. Each stated interest rate is subject to a step up of (x) 0.75% per year, to the extent the applicable February Notes do not satisfy certain investment grade rating conditions and/or (y) 1.50% per year, to the extent the ratio of our secured debt to total assets exceeds specified thresholds, measured as of each fiscal quarter end. The February Notes were delivered and paid for on February 26, 2021.
The Series D Notes matured on February 26, 2026, and the Series E Notes will mature on February 26, 2028 unless redeemed, purchased or prepaid prior to such date by us in accordance with the terms of the February 2021 NPA. Interest on the February Notes is due semiannually in February and August of each year, beginning in August 2021. In addition, we are obligated to offer to repay the February Notes at par (plus accrued and unpaid interest to, but not including, the date of prepayment) if certain change in control events occur. Subject to the terms of the February 2021 NPA, we could have redeemed the Series D Notes in whole or in part at any time or from time to time at our option at par plus accrued interest to the prepayment date and, if redeemed on or before August 26, 2025, a make-whole premium. Subject to the terms of the February 2021 NPA, we may redeem the Series E Notes in whole or in part at any time or from time to time at our option at par plus accrued interest to the prepayment date and, if redeemed on or before August 26, 2027, a make-whole premium. The February Notes are guaranteed by certain of our subsidiaries, and are our general unsecured obligations that rank pari passu with all outstanding and future unsecured unsubordinated indebtedness issued by us.
The February 2021 NPA contains certain representations and warranties, and various covenants and reporting requirements customary for senior unsecured notes issued in a private placement, including, without limitation, information reporting, maintenance of our status as a BDC within the meaning of the 1940 Act, and certain restrictions with respect to transactions with affiliates, fundamental changes, changes of line of business, permitted liens, investments and restricted payments. In addition, the February 2021 NPA contains the following financial covenants: (a) maintaining a minimum obligors’ net worth, measured as of each fiscal quarter end; (b) not permitting our asset coverage ratio, as of the date of the incurrence of any debt for borrowed money or the making of any cash dividend to shareholders, to be less than the statutory minimum then applicable to us under the 1940 Act; and (c) not permitting our net debt to equity ratio to exceed 2.0x, measured as of each fiscal quarter end.
The February 2021 NPA also contains customary events of default with customary cure and notice periods, including, without limitation, nonpayment, incorrect representation in any material respect, breach of covenant, cross-default under other indebtedness or that of our subsidiary guarantors, certain judgments and orders, and certain events of bankruptcy. Upon the occurrence of certain events of default, the holders of at least 66-2/3% in principal amount of the February Notes at the time outstanding may declare all February Notes then outstanding to be immediately due and payable. As of June 30, 2026, we were in compliance with all covenants under the February 2021 NPA.
The February Notes were offered in reliance on Section 4(a)(2) of the Securities Act. The February Notes have not and will not be registered under the Securities Act or any state securities laws and, unless so registered, may not be offered or sold in the United States except pursuant to an exemption from, or in a transaction not subject to, the registration requirements of the Securities Act, as applicable.
On February 26, 2026, the Series D Notes matured in accordance with the terms of the February 2021 NPA and we repaid in full the par amount plus accrued and unpaid interest.
As of June 30, 2026, the fair value of the outstanding Series E Notes was $67.2 million. The fair value determinations of the Series E Notes were based on a market yield approach and current interest rates, which are Level 3 inputs to the market yield model.
November 2026 Notes
On November 23, 2021, we entered into an Indenture (the “Base Indenture”) and a First Supplemental Indenture (the “First Supplemental Indenture” and, together with the Base Indenture, the “November 2026 Notes Indenture”) with U.S. Bank Trust Company, National Association (as successor-in-interest to U.S. Bank National Association, the “Trustee”). The First Supplemental Indenture relates to our issuance of $350.0 million aggregate principal amount of our 3.300% notes due 2026 (the “November 2026 Notes”).
The November 2026 Notes will mature on November 23, 2026 and may be redeemed in whole or in part at our option at any time or from time to time at the redemption prices set forth in the November 2026 Notes Indenture. The November 2026 Notes bear interest at a rate of 3.300% per year payable semi-annually on May 23 and November 23 of each year, commencing on May 23, 2022. The November 2026 Notes are our general unsecured obligations that rank senior in right of payment to all of our existing and future indebtedness that is expressly subordinated in right of payment to the November 2026 Notes, rank pari
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passu with all existing and future unsecured unsubordinated indebtedness issued by us, rank effectively junior to any of our secured indebtedness (including unsecured indebtedness that we later secure) to the extent of the value of the assets securing such indebtedness, and rank structurally junior to all existing and future indebtedness (including trade payables) incurred by our subsidiaries, financing vehicles or similar facilities.
The November 2026 Notes Indenture contains certain covenants, including covenants requiring us to comply with the asset coverage requirements of Section 18(a)(1)(A) as modified by Sections 61(a)(1) and (2) of the 1940 Act, whether or not we are subject to those requirements, and to provide financial information to the holders of the November 2026 Notes and the Trustee if we are no longer subject to the reporting requirements under the Securities Exchange Act of 1934, as amended (the “Exchange Act”). These covenants are subject to important limitations and exceptions that are described in the November 2026 Notes Indenture. As of June 30, 2026, we were in compliance with all covenants under the November 2026 Notes Indenture.
In addition, on the occurrence of a “change of control repurchase event,” as defined in the November 2026 Notes Indenture, we will generally be required to make an offer to purchase the outstanding November 2026 Notes at a price equal to 100% of the principal amount of such November 2026 Notes plus accrued and unpaid interest to the repurchase date.
The November 2026 Notes were offered to qualified institutional buyers pursuant to Rule 144A under the Securities Act and to certain non-U.S. persons outside the United States pursuant to Regulation S under the Securities Act. Concurrent with the closing of November 2026 Notes offering, we entered into a registration rights agreement for the benefit of the purchasers of the November 2026 Notes. Pursuant to the terms of this registration rights agreement, we filed a registration statement on Form N-14 with the SEC, which was subsequently declared effective, to permit the electing holders of the November 2026 Notes to exchange all of their outstanding restricted November 2026 Notes for an equal aggregate principal amount of new November 2026 Notes (the “Exchange Notes”). The Exchange Notes have terms substantially identical to the terms of the November 2026 Notes, except that the Exchange Notes are registered under the Securities Act, and certain transfer restrictions, registration rights, and additional interest provisions relating to the November 2026 Notes do not apply to the Exchange Notes.
As of June 30, 2026, the fair value of the outstanding November 2026 Notes was $344.1 million. The fair value determinations of the November 2026 Notes were based on a market yield approach and current interest rates, which are Level 3 inputs to the market yield model.
February 2029 Notes
On February 7, 2024, we entered into an underwriting agreement among us, Barings LLC, and Wells Fargo Securities, LLC, SMBC Nikko Securities America, Inc., BMO Capital Markets Corp., and Fifth Third Securities, Inc., in connection with the issuance and sale of $300.0 million in aggregate principal amount of our 7.000% senior unsecured notes due February 15, 2029 (the “February 2029 Notes”). The February 2029 Notes offering closed on February 12, 2024 and the February 2029 Notes were issued under a Second Supplemental Indenture, dated February 12, 2024, between us and the Trustee, to the Base Indenture (the “Second Supplemental Indenture,” and together with the Base Indenture, the “February 2029 Notes Indenture”).
The February 2029 Notes will mature on February 15, 2029 and may be redeemed in whole or in part at our option at any time or from time to time at the redemption prices set forth in the February 2029 Notes Indenture. The February 2029 Notes bear interest at a rate of 7.000% per year payable semi-annually on February 15 and August 15 of each year, commencing on August 15, 2024. The February 2029 Notes are general unsecured obligations of ours that rank senior in right of payment to all of our existing and future indebtedness that is expressly subordinated in the right of payment to the February 2029 Notes, rank pari passu with all existing and future unsecured unsubordinated indebtedness issued by us, rank effectively junior to any of our secured indebtedness (including unsecured indebtedness that we later secure) to the extent of the value of the assets securing such indebtedness, and rank structurally junior to all existing and future indebtedness (including trade payables) incurred by our subsidiaries, financing vehicles or similar facilities.
The February 2029 Notes Indenture contains certain covenants, including covenants requiring us to comply with the asset coverage requirements of Section 18(a)(1)(A) as modified by Section 61(a)(1) and (2) of the 1940 Act, whether or not we are subject to those requirements (but giving effect to exemptive relief granted to us by the SEC), and to provide financial information to the holders of the February 2029 Notes and the Trustee if we are no longer subject to the reporting requirements under the Exchange Act. These covenants are subject to important limitations and exceptions that are described in the February 2029 Notes Indenture. As of June 30, 2026, we were in compliance with all covenants under the February 2029 Notes Indenture.
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In addition, on the occurrence of a “change of control repurchase event,” as defined in the February 2029 Notes Indenture, we may be required by the holders of the February 2029 Notes to make an offer to purchase the outstanding February 2029 Notes at a price equal to 100% of the principal amount of such February 2029 Notes plus accrued and unpaid interest to the repurchase date.
The net proceeds received by us in connection with the February 2029 Notes offering were approximately $292.9 million, after deducting the underwriting discounts and estimated offering expenses payable by us.
As of June 30, 2026, the fair value of the outstanding February 2029 Notes was $298.8 million. The fair value determinations of the February 2029 Notes were based on a market yield approach and current interest rates, which are Level 3 inputs to the market yield model.
In connection with the offering of the February 2029 Notes, on February 12, 2024, we entered into a $300.0 million notional value interest rate swap. We receive a fixed rate interest at 7.00% paid semi-annually and pay semi-annually based on a compounded daily rate of SOFR plus 3.14750%. The swap transaction matures on February 15, 2029. The interest expense related to the February 2029 Notes will be equally offset by proceeds received from the interest rate swap. The swap adjusted interest expense is included as a component of interest and other financing fees in our Unaudited Consolidated Statements of Operations. As of June 30, 2026, the interest rate swap had a fair value of $(1.2) million. Depending on the nature of the balance at period end, the fair value of the interest rate swap is either included as a component of derivative assets or derivative liabilities on our Unaudited and Audited Consolidated Balance Sheets. The change in fair value of the interest rate swap is offset by the change in fair value of the February 2029 Notes. The fair value of the interest rate swap is based on unadjusted prices from independent pricing services and independent indicative broker quotes, which are Level 2 inputs.
September 2028 Notes
On September 8, 2025, we entered into an underwriting agreement among us, Barings LLC, and J.P. Morgan Securities LLC, ING Financial Markets LLC, MUFG Securities Americas Inc. and SMBC Nikko Securities America, Inc., in connection with the issuance and sale of $300.0 million in aggregate principal amount of our 5.200% senior unsecured notes due September 15, 2028 (the “September 2028 Notes”). The September 2028 Notes offering closed on September 15, 2025 and the September 2028 Notes were issued under a Third Supplemental Indenture, dated September 15, 2025, between us and the Trustee, to the Base Indenture (the “Third Supplemental Indenture,” and together with the Base Indenture, the “September 2028 Notes Indenture”).
The September 2028 Notes will mature on September 15, 2028 and may be redeemed in whole or in part at our option at any time or from time to time prior to August 15, 2028 at par value plus a “make-whole” premium calculated in accordance with the terms under “optional redemption” in the September 2028 Notes Indenture and at par value on August 15, 2028 or thereafter. The September 2028 Notes bear interest at a rate of 5.200% per year payable semi-annually on March 15 and September 15 of each year, commencing on March 15, 2026. The September 2028 Notes are general unsecured obligations of ours that rank senior in right of payment to all of our existing and future indebtedness that is expressly subordinated in right of payment to the September 2028 Notes, rank pari passu with all existing and future unsecured unsubordinated indebtedness issued by us, rank effectively junior to any of our secured indebtedness (including unsecured indebtedness that we later secure) to the extent of the value of the assets securing such indebtedness, and rank structurally junior to all existing and future indebtedness (including trade payables) incurred by our subsidiaries, financing vehicles or similar facilities.
The September 2028 Notes Indenture contains certain covenants, including covenants requiring us to comply with the asset coverage requirements of Section 18(a)(1)(A) as modified by Section 61(a)(1) and (2) of the 1940 Act, whether or not it is subject to those requirements (but giving effect to exemptive relief granted to us by the SEC), and to provide financial information to the holders of the September 2028 Notes and the Trustee if we are no longer subject to the reporting requirements under the Exchange Act. These covenants are subject to important limitations and exceptions that are described in the September 2028 Notes Indenture. As of June 30, 2026, we were in compliance with all covenants under the September 2028 Notes Indenture.
In addition, on the occurrence of a “change of control repurchase event,” as defined in the September 2028 Notes Indenture, we may be required by the holders of the September 2028 Notes to make an offer to purchase the outstanding September 2028 Notes at a price equal to 100% of the principal amount of such September 2028 Notes plus accrued and unpaid interest to the repurchase date.
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The net proceeds received by us in connection with the September 2028 Notes offering were approximately $294.7 million, after deducting the underwriting discounts and estimated offering expenses payable by us.
As of June 30, 2026, the fair value of the outstanding September 2028 Notes was $294.4 million. The fair value determinations of the September 2028 Notes were based on a market yield approach and current interest rates, which are Level 3 inputs to the market yield model.
In connection with the offering of the September 2028 Notes, on September 15, 2025, we entered into a $300.0 million notional value interest rate swap. We receive a fixed rate interest at 5.20% paid semi-annually and pays semi-annually based on a compounded daily rate of SOFR plus 2.059%. The swap transaction matures on September 15, 2028. The interest expense related to the September 2028 Notes will be equally offset by proceeds received from the interest rate swap. The swap adjusted interest expense is included as a component of interest and other financing fees in our Unaudited Consolidated Statements of Operations. As of June 30, 2026, the interest rate swap had a fair value of $(5.6) million. Depending on the nature of the balance at period end, the fair value of the interest rate swap is either included as a component of derivative assets or derivative liabilities on our Unaudited and Audited Consolidated Balance Sheets. The change in fair value of the interest rate swap is offset by the change in fair value of the September 2028 Notes. The fair value of the interest rate swap is based on unadjusted prices from independent pricing services and independent indicative broker quotes, which are Level 2 inputs.
Share Repurchase Programs
On February 20, 2025, our Board authorized a 12-month share repurchase program (the “Prior Share Repurchase Program”). Under the Prior Share Repurchase Program, we were able to repurchase, during the 12-month period commencing on March 1, 2025, up to $30.0 million in the aggregate of our outstanding common stock in the open market at prices below the then-current net asset value (“NAV”) per share. The timing, manner, price and amount of any share repurchases was determined by us, at our discretion, based upon the evaluation of economic and market conditions, our stock price, applicable legal, contractual and regulatory requirements and other factors. The Prior Share Repurchase Program terminated on March 1, 2026. The Prior Share Repurchase Program did not require us to repurchase any specific number of shares, and we could not assure stockholders that any shares would be repurchased under the Prior Share Repurchase Program. During the six months ended June 30, 2026, we did not repurchase any shares pursuant to the Prior Share Repurchase Program.
On February 19, 2026, our Board authorized a new 12-month share repurchase program (the “Share Repurchase Program”). Under the Share Repurchase Program, we may repurchase, during the 12-month period commencing on March 1, 2026, up to $30.0 million in the aggregate of our outstanding common stock in the open market at prices below the then-current NAV per share. The timing, manner, price and amount of any share repurchases will be determined by us, in our discretion, based upon the evaluation of economic and market conditions, our stock price, applicable legal, contractual and regulatory requirements and other factors. The Share Repurchase Program is expected to be in effect until March 1, 2027, unless extended or until the aggregate repurchase amount that has been approved by the Board has been expended. The Share Repurchase Program does not require us to repurchase any specific number of shares, and we cannot assure stockholders that any shares will be repurchased under the Share Repurchase Program. The Share Repurchase Program may be suspended, extended, modified or discontinued at any time. During the six months ended June 30, 2026, we did not repurchase any shares pursuant to the Share Repurchase Program.
Distributions to Stockholders
We intend to pay quarterly distributions to our stockholders out of assets legally available for distribution. We have adopted a dividend reinvestment plan (“DRIP”) that provides for reinvestment of dividends on behalf of our stockholders, unless a stockholder elects to receive cash. As a result, when we declare a dividend, stockholders who have not opted out of the DRIP will have their dividends automatically reinvested (net of applicable withholding tax) in shares of our common stock, rather than receiving cash dividends.
We have elected to be treated as a regulated investment company (“RIC”) under Subchapter M of the Internal Revenue Code of 1986, as amended (the “Code”), and intend to make the required distributions to our stockholders as specified therein. In order to maintain our tax treatment as a RIC and to obtain RIC tax benefits, we must meet certain minimum distribution, source-of-income and asset diversification requirements. If such requirements are met, then we are generally required to pay income taxes only on the portion of our taxable income and gains we do not distribute (actually or constructively) and certain built-in gains. We have historically met our minimum distribution requirements and continually monitor our distribution requirements with the goal of ensuring compliance with the Code. We can offer no assurance that we will achieve results that will permit the payment of any level of cash distributions and our ability to make distributions will be limited by the asset coverage requirement and related provisions under the 1940 Act and contained in any applicable indenture or financing agreement and related supplements. In addition, in order to satisfy the annual distribution requirement applicable to RICs, we
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may declare a significant portion of our dividends in shares of our common stock instead of in cash. As long as a portion of such dividend is paid in cash (which portion may be as low as 20% of such dividend under published guidance from the Internal Revenue Service) and certain requirements are met, the entire distribution will be treated as a dividend for U.S. federal income tax purposes. As a result, a stockholder generally would be subject to tax on 100% of the fair market value of the dividend on the date the dividend is received by the stockholder in the same manner as a cash dividend, even though most of the dividend was paid in shares of our common stock.
The minimum distribution requirements applicable to RICs require us to distribute to our stockholders each year at least 90% of our investment company taxable income (“ICTI”) as defined in the Code. Depending on the level of ICTI and net capital gain, if any, earned in a tax year, we may choose to carry forward ICTI in excess of current year distributions into the next tax year and pay a 4% U.S. federal excise tax on such excess. Any such carryover ICTI must be distributed before the end of the next tax year through a dividend declared prior to filing the final tax return related to the year which generated such ICTI.
ICTI generally differs from net investment income for financial reporting purposes due to temporary and permanent differences in the recognition of income and expenses. We may be required to recognize ICTI in certain circumstances in which we do not receive cash. For example, if we hold debt obligations that are treated under applicable tax rules as having original issue discount (“OID”) (such as debt instruments issued with warrants), we must include in ICTI each year a portion of the OID that accrues over the life of the obligation, regardless of whether cash representing such income is received by us in the same taxable year. We may also have to include in ICTI other amounts that we have not yet received in cash, such as (i) PIK interest income and (ii) interest income from investments that have been classified as non-accrual for financial reporting purposes. Interest income on non-accrual investments is not recognized for financial reporting purposes, but generally is recognized in ICTI. Because any OID or other amounts accrued will be included in our ICTI for the year of accrual, we may be required to make a distribution to our stockholders in order to satisfy the minimum distribution requirements, even though we will not have received and may not ever receive any corresponding cash amount. ICTI also excludes net unrealized appreciation or depreciation, as investment gains or losses are not included in taxable income until they are realized.
Recent Developments
Subsequent to June 30, 2026, we made approximately $107.5 million of new commitments, of which $73.6 million closed and funded. The $73.6 million of investments consists of $72.4 million of first lien senior secured debt investments and $1.2 million of equity investments. The weighted average yield of the debt investments was 9.1%. In addition, we funded $24.1 million of previously committed revolvers and delayed draw term loans.
On August 5, 2026, the Board declared a quarterly distribution of $0.26 per share payable on September 9, 2026 to holders of record as of September 2, 2026.
Critical Accounting Policies and Use of Estimates
The preparation of our unaudited financial statements in accordance with U.S. GAAP requires management to make certain estimates and assumptions that affect the reported amounts of assets and liabilities at the date of the financial statements and the reported amounts of revenues and expenses for the periods covered by such financial statements. We have identified investment valuation and revenue recognition as our most critical accounting estimates. On an ongoing basis, we evaluate our estimates, including those related to the matters described below. These estimates are based on the information that is currently available to us and on various other assumptions that we believe to be reasonable under the circumstances. Actual results could differ materially from those estimates under different assumptions or conditions. A discussion of our critical accounting policies follows.
Valuation of Investments
The most significant estimate inherent in the preparation of our financial statements is the valuation of our investments, and the related amounts of unrealized appreciation and depreciation of investments recorded. We have a valuation policy, as well as established and documented processes and methodologies for determining the fair values of portfolio company investments on a recurring (at least quarterly) basis in accordance with the 1940 Act and Financial Accounting Standards Board Accounting Standards Codification (“ASC”) Topic 820, Fair Value Measurements and Disclosures (“ASC Topic 820”). Our current valuation policy and processes were established by the Adviser and were approved by the Board.
As of June 30, 2026, our investment portfolio, valued at fair value in accordance with the Board-approved valuation policies, represented approximately 215% of our total net assets, as compared to approximately 207% of our total net assets as of December 31, 2025.
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Under ASC Topic 820, fair value is the price that would be received to sell an asset or paid to transfer a liability in an orderly transaction between a willing buyer and a willing seller at the measurement date. For our portfolio securities, fair value is generally the amount that we might reasonably expect to receive upon the current sale of the security. The fair value measurement assumes that the sale occurs in the principal market for the security, or in the absence of a principal market, in the most advantageous market for the security. If no market for the security exists or if we do not have access to the principal market, the security should be valued based on the sale occurring in a hypothetical market.
Under ASC Topic 820, there are three levels of valuation inputs, as follows:
Level 1 Inputs – include quoted prices (unadjusted) in active markets for identical assets or liabilities.
Level 2 Inputs – include quoted prices for similar assets and liabilities in active markets, and inputs that are observable for the asset or liability, either directly or indirectly, for substantially the full term of the financial instrument.
Level 3 Inputs – include inputs that are unobservable and significant to the fair value measurement.
A financial instrument is categorized within the ASC Topic 820 valuation hierarchy based upon the lowest level of input to the valuation process that is significant to the fair value measurement. For example, a Level 3 fair value measurement may include inputs that are observable (Levels 1 and 2) and unobservable (Level 3). Therefore, unrealized appreciation and depreciation related to such investments categorized as Level 3 investments within the tables in the notes to our consolidated financial statements may include changes in fair value that are attributable to both observable inputs (Levels 1 and 2) and unobservable inputs (Level 3).
Our investment portfolio includes certain debt and equity instruments of privately held companies for which quoted prices or other observable inputs falling within the categories of Level 1 and Level 2 are generally not available. In such cases, the Adviser determines the fair value of our investments in good faith primarily using Level 3 inputs. In certain cases, quoted prices or other observable inputs exist, and if so, the Adviser assesses the appropriateness of the use of these third-party quotes in determining fair value based on (i) its understanding of the level of actual transactions used by the broker to develop the quote and whether the quote was an indicative price or binding offer and (ii) the depth and consistency of broker quotes and the correlation of changes in broker quotes with the underlying performance of the portfolio company.
There is no single approach for determining fair value in good faith, as fair value depends upon the specific circumstances of each individual investment. The recorded fair values of our Level 3 investments may differ significantly from fair values that would have been used had an active market for the securities existed. In addition, changes in the market environment and other events that may occur over the life of the investments may cause the gains or losses ultimately realized on these investments to be different than the valuations currently assigned.
Investment Valuation Process
The Board must determine fair value in good faith for any or all of our investments for which market quotations are not readily available. The Board has designated the Adviser as valuation designee to perform the fair value determinations relating to the value of the assets held by us for which market quotations are not readily available. Barings has established a pricing committee that is, subject to the oversight of the Board, responsible for the approval, implementation and oversight of the processes and methodologies that relate to the pricing and valuation of assets we hold. Barings uses independent third-party providers to price the portfolio, but in the event an acceptable price cannot be obtained from an approved external source, Barings will utilize alternative methods in accordance with internal pricing procedures established by Barings’ pricing committee.
At least annually, Barings conducts reviews of the primary pricing vendors to validate that the inputs used in the vendors’ pricing process are deemed to be market observable. While Barings is not provided access to proprietary models of the vendors, the reviews have included on-site walkthroughs of the pricing process, methodologies and control procedures for each asset class and level for which prices are provided. The review also includes an examination of the underlying inputs and assumptions for a sample of individual securities across asset classes, credit rating levels and various durations, a process Barings continues to perform annually. In addition, the pricing vendors have an established challenge process in place for all security valuations, which facilitates identification and resolution of prices that fall outside expected ranges. Barings believes that the prices received from the pricing vendors are representative of prices that would be received to sell the assets at the measurement date (i.e., exit prices).
Our money market fund investments are generally valued using Level 1 inputs and our equity investments listed on an exchange or on the NASDAQ National Market System are valued using Level 1 inputs, using the last quoted sale price of that
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day. Our syndicated senior secured loans and structured product investments are generally valued using Level 2 inputs, which are generally valued at the bid quotation obtained from dealers in loans by an independent pricing service. Our middle-market, private debt and equity investments are generally valued using Level 3 inputs.
Independent Valuation
The fair value of loans and equity investments that are not syndicated or for which market quotations are not readily available, including middle-market loans, are generally submitted to independent providers to perform an independent valuation on those loans and equity investments as of the end of each quarter. Such loans and equity investments are initially held at cost, as that is a reasonable approximation of fair value on the acquisition date, and monitored for material changes that could affect the valuation (for example, changes in interest rates or the credit quality of the borrower). At the quarter end following that of the initial acquisition, such loans and equity investments are generally sent to a valuation provider which will determine the fair value of each investment. The independent valuation providers apply various methods (synthetic rating analysis, discounting cash flows, and re-underwriting analysis) to establish the rate of return a market participant would require (the “discount rate”) as of the valuation date, given market conditions, prevailing lending standards and the perceived credit quality of the issuer. Future expected cash flows for each investment are discounted back to present value using these discount rates in the discounted cash flow analysis. A range of values will be provided by the valuation provider and Barings will determine the point within that range that it will use. If the Barings pricing committee disagrees with the price range provided, it may make a fair value recommendation to Barings that is outside of the range provided by the independent valuation provider and the reasons therefore. In certain instances, we may determine that it is not cost-effective, and as a result is not in the stockholders’ best interests, to request an independent valuation firm to perform an independent valuation on certain investments. Such instances include, but are not limited to, situations where the fair value of the investment in the portfolio company is determined to be insignificant relative to the total investment portfolio.
Valuation Inputs
The Adviser’s valuation techniques are based upon both observable and unobservable pricing inputs. Observable inputs reflect market data obtained from independent sources, while unobservable inputs reflect the Adviser’s market assumptions. The Adviser’s assessment of the significance of a particular input to the fair value measurement in its entirety requires judgment and considers factors specific to the financial instrument. An independent pricing service provider is the preferred source of pricing a loan, however, to the extent the independent pricing service provider price is unavailable or not relevant and reliable, the Adviser will utilize alternative approaches such as broker quotes or manual prices. The Adviser attempts to maximize the use of observable inputs and minimize the use of unobservable inputs. The availability of observable inputs can vary from investment to investment and is affected by a wide variety of factors, including the type of security, whether the security is new and not yet established in the marketplace, the liquidity of markets and other characteristics particular to the security.
Valuation of Investments in Jocassee Partners LLC, Thompson Rivers LLC, Waccamaw River LLC and Sierra Loan Strategy JV I LLC
As Jocassee Partners LLC, Thompson Rivers LLC, Waccamaw River LLC and Sierra Loan Strategy JV I LLC are investment companies with no readily determinable fair values, the Adviser estimates the fair value of our investments in these entities using the NAV of each company and our ownership percentage as a practical expedient. The NAV is determined in accordance with the specialized accounting guidance for investment companies.
Revenue Recognition
Interest and Dividend Income
Interest income, including amortization of premium and accretion of discount, is recorded on the accrual basis to the extent that such amounts are expected to be collected. Generally, when interest and/or principal payments on a loan become past due, or if we otherwise do not expect the borrower to be able to service its debt and other obligations, we will place the loan on non-accrual status and will generally cease recognizing interest income on that loan for financial reporting purposes until all principal and interest have been brought current through payment or due to a restructuring such that the interest income is deemed to be collectible. The cessation of recognition of such interest will negatively impact the reported fair value of the investment. We write off any previously accrued and uncollected interest when it is determined that interest is no longer considered collectible.
Interest income from investments in the equity class of a CLO security (typically subordinated notes) is recorded based upon an estimation of an effective yield to expected maturity utilizing assumed cash flows in accordance with ASC Topic 325-40, Beneficial Interests in Securitized Financial Assets. We monitor the expected cash flows from these investments,
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including the expected residual payments, and the effective yield is determined and updated periodically. Any difference between the cash distribution received and the amount calculated pursuant to the effective interest method is recorded as an adjustment to the cost basis of such investments.
Dividend income on preferred equity securities is recorded on the accrual basis to the extent that such amounts are payable by the portfolio company and are expected to be collected. Dividend income on common equity is recorded on the ex-dividend date.
We may have to include interest income in our ICTI, including OID income, from investments that have been classified as non-accrual for financial reporting purposes. Interest income on non-accrual investments is not recognized for financial reporting purposes, but generally is recognized in ICTI. As a result, we may be required to make a distribution to our stockholders in order to satisfy the minimum distribution requirements to maintain our RIC tax treatment, even though we will not have received and may not ever receive any corresponding cash amount. Additionally, any loss recognized by us for U.S. federal income tax purposes on previously accrued interest income will be treated as a capital loss.
Fee and Other Income
Origination, facility, commitment, consent and other advance fees received in connection with the origination of a loan, or Loan Origination Fees, are recorded as deferred income and recognized as investment income over the term of the loan. Upon prepayment of a loan, any unamortized Loan Origination Fees are recorded as investment income. In the general course of our business, we receive certain fees from portfolio companies, which are non-recurring in nature. Such fees include loan prepayment penalties, structuring fees, covenant waiver fees and loan amendment fees, and are recorded as investment income when earned. Other income includes royalty income received in connection with revenue participation rights which is recorded on an accrual basis in accordance with revenue participation right agreements and recognized as investment income over the term of the rights.
Fee and other income for the three and six months ended June 30, 2026 and 2025 was as follows:
Three Months Ended Three Months Ended Six MonthsEnded Six MonthsEnded
($ in thousands) June 30, 2026 June 30, 2025 June 30, 2026 June 30, 2025
Recurring Fee and Other Income:
Amortization of loan origination fees $ 1,612 $ 1,909 $ 3,423 $ 3,673
Management, valuation and other fees 582 660 1,150 1,226
Royalty income 26 148 68 303
Total Recurring Fee and Other Income 2,220 2,717 4,641 5,202
Non-Recurring Fee and Other Income:
Prepayment fees 648 55 651 196
Acceleration of unamortized loan origination fees 510 656 779 1,540
Advisory, loan amendment and other fees 335 1,452 335 1,516
Total Non-Recurring Fee and Other Income 1,493 2,163 1,765 3,252
Total Fee and Other Income $ 3,713 $ 4,880 $ 6,406 $ 8,454
Payment-in-Kind (PIK) Income
We currently hold, and expect to hold in the future, some loans in our portfolio that contain PIK interest provisions. PIK interest, computed at the contractual rate specified in each loan agreement, is periodically added to the principal balance of the loan, rather than being paid to us in cash, and is recorded as interest income. Thus, the actual collection of PIK interest may be deferred until the time of debt principal repayment.
We have certain preferred equity securities in our portfolio that contain a PIK dividend provision that are accrued and recorded as dividend income at the contractual rates specified in each applicable agreement. The accrued PIK and non-cash dividends are capitalized to the cost basis of the preferred equity security and are generally collected upon redemption of the equity.
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PIK interest and dividend income for the three and six months ended June 30, 2026 and 2025 was as follows:
Three Months Ended Three Months Ended Six MonthsEnded Six MonthsEnded
($ in thousands) June 30, 2026 June 30, 2025 June 30, 2026 June 30, 2025
PIK interest income $ 4,730 $ 4,508 $ 9,363 $ 8,827
PIK interest income as a % of investment income 7.3 % 6.1 % 7.4 % 6.4 %
PIK dividend income $ 1,277 $ 3,458 $ 2,501 $ 6,607
PIK dividend income as % of investment income 2.0 % 4.6 % 2.0 % 4.8 %
Total PIK income $ 6,007 $ 7,966 $ 11,864 $ 15,434
Total PIK income as a % of investment income 9.2 % 10.7 % 9.4 % 11.1 %
PIK interest, which is a non-cash source of income at the time of recognition, is included in our taxable income and therefore affects the amount we are required to distribute to our stockholders to maintain our tax treatment as a RIC for U.S. federal income tax purposes, even though we have not yet collected the cash. Generally, when current cash interest and/or principal payments on a loan become past due, or if we otherwise do not expect the borrower to be able to service its debt and other obligations, we will place the loan on non-accrual status and will generally cease recognizing PIK interest income on that loan for financial reporting purposes until all principal and interest have been brought current through payment or due to a restructuring such that the interest income is deemed to be collectible. We write off any previously accrued and uncollected PIK interest when it is determined that the PIK interest is no longer collectible.
We may have to include in our ICTI, PIK interest income from investments that have been classified as non-accrual for financial reporting purposes. Interest income on non-accrual investments is not recognized for financial reporting purposes, but generally is recognized in ICTI. As a result, we may be required to make a distribution to our stockholders in order to satisfy the minimum distribution requirements, even though we will not have received and may not ever receive any corresponding cash amount.
Unused Commitments
In the normal course of business, we are party to financial instruments with off-balance sheet risk, consisting primarily of unused commitments to extend financing to our portfolio companies. Since commitments may expire without being drawn upon, the total commitment amount does not necessarily represent future cash requirements. As of June 30, 2026 and December 31, 2025, we believed that we had adequate financial resources to satisfy our unfunded commitments. The balances of unused commitments to extend financing as of June 30, 2026 and December 31, 2025 were as follows:
($ in thousands) June 30, 2026 December 31, 2025
Unfunded Debt Commitments:
Total unfunded delayed draw loan commitments $ 176,424 $ 173,976
Total unfunded revolving loan commitments 152,279 146,306
Total unfunded capex and acquisition facility commitments 12,514 7,443
Total unfunded debt commitments 341,217 327,725
Unfunded Equity Commitments:
Total unfunded equity commitments 65,000 65,910
Total unfunded preferred equity commitments 7,000 7,000
Total unfunded equity commitments 72,000 72,910
Total unused commitments to extend financing $ 413,217 $ 400,635
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In the normal course of business, we guarantee certain obligations in connection with our portfolio companies (in particular, certain controlled portfolio companies). Under these guarantee arrangements, payments may be required to be made to third parties if such guarantees are called upon or if the portfolio companies were to default on their related obligations, as applicable. As of June 30, 2026 and December 31, 2025, we had guaranteed €6.0 million and €4.0 million, respectively ($6.9 million U.S. dollars and $4.7 million U.S. dollars, respectively) relating to a credit facility among Santander Consumer Bank GmbH and MVC Automotive Group GmbH (“MVC Auto”), which will be in place for the holding period of the associated asset, unless terminated earlier in accordance with the terms of the credit facility. We would be required to make payments to Santander Consumer Bank GmbH if MVC Auto were to default on their related payment obligations. As of December 31, 2025, we had guaranteed €6.0 million ($7.0 million U.S. dollars) relating to credit facilities among Erste Bank and MVC Auto, that matured on June 30, 2026. None of the credit facility guarantees are recorded as a liability on our Unaudited and Audited Consolidated Balance Sheets, as such the credit facility liabilities are considered in the valuation of the investments in MVC Auto. The guarantees denominated in foreign currencies were translated into U.S. dollars based on the spot rate at the relevant balance sheet date.