BBDC 10-K & 10-Q changes, risk factors and insider trading

We depend on the diligence, skill and network of business contacts of Barings’ investment professionals to source appropriate investments for us. We depend on members of Barings’ investment team to appropriately analyze our investments and the relevant investment committee to approve and monitor our portfolio investments. Barings’ investment teams evaluate, negotiate, structure, close and monitor our investments. Our future success depends on the continued availability of the members of Barings’ Investmentinvestment Committeecommittees and the other investment professionals available to Barings. We do not have employment agreements with these individuals or other key personnel of Barings, and we cannot provide any assurance that unforeseen business, medical, personal or other circumstances would not lead any such individual to terminate his or her relationship with Barings. If these individuals do not maintain their existing relationships with Barings and its affiliates or do not develop new relationships with other sources of investment opportunities, we may not be able to identify appropriate replacements or grow our investment portfolio. The loss of any Portfolio Manager, investment committee member of Barings’ Investment Committee or of other investment professionals of Barings and its affiliates may limit our ability to achieve our investment objectives and operate as we anticipate, which could have a material adverse effect on our financial condition, results of operations and cash flows. Barings evaluates, negotiates, structures, closes and monitors our investments in accordance with the terms of the Barings BDC Advisory Agreement. We can offer no assurance, however, that the investment professionals of Barings will continue to provide investment advice to us or that we will continue to have access to Barings’ investment professionals or its information and deal flow. Further, there can be no assurance that Barings will replicate its own historical success, and we caution you that our investment returns could be substantially lower than the returns achieved by other funds managed by Barings.

Typically there is not a public market for the securities of the privately held middle-market companies in which we have invested and will generally continue to invest. The AdviserValuation Designee conducts the valuation of such investments, upon which the Company’sour NAV is primarily based, in accordance with its 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 ASC Topic 820. Our current valuation policy and processes were established by the Adviser and have been approved by the Board. The Adviser 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 held by us. The Adviser uses independent third-party providers to price the portfolio, but in the event an acceptable price cannot be obtained from an approved external source, the Adviser will utilize alternative methods in accordance with internal pricing procedures established by the Adviser's pricing committee. See “Item 1. Business – Valuation Process and Determination of Net Asset Value” included in this Annual Report on Form 10-K for a detailed description of our valuation process.

Our executive officersofficers, Portfolio Managers and the members of Barings’ Investmentinvestment Committee,committees, as well as the other principals of Barings, manage other funds affiliated with Barings, including other closed-end investment companies. In addition, Barings’ investment team has responsibilitiesresponsibility for managing U.S. and global middle-market debt investments for certain other investment funds and accounts. Accordingly, they have obligations to investors in those entities, the fulfillment of which may not be in the best interests of, or may be adverse to our and our stockholders’ interests. In addition, certain of the other funds and accounts managed by Barings may provide for higher management or incentive fees, greater expense reimbursements or overhead allocations, or permit Barings and its affiliates to receive higher origination and other transaction fees, all of which may contribute to this conflict of interest and create an incentive for Barings to favor such other funds or accounts. Although the professional staff of Barings will devote as much time to our management as appropriate to enable Barings to perform its duties in accordance with the Barings BDC Advisory Agreement, the investment professionals of Barings may have conflicts in allocating their time and services among us, on the one hand, and the other investment vehicles managed by Barings or one or more of its affiliates on the other hand.

Barings, its Investmentrelevant Committee,investment committee members, or its affiliates may, from time to time, possess material non-public information, limiting our investment discretion.

Principals of Barings and its affiliates and members of Barings’ Investmentinvestment Committeecommittees may serve as directors of, or in a similar capacity with, companies in which we invest, the securities of which are purchased or sold on our behalf. In the event that material non-public information is obtained with respect to such companies, or we become subject to trading restrictions under the internal trading policies of those companies or as a result of applicable law or regulations, we could be prohibited for a period of time from purchasing or selling the securities of such companies, and this prohibition may have an adverse effect on us.

Under the Barings BDC Advisory Agreement, the Base Management Fee will be payable even if the value of your investment declines. The Base Management Fee is calculated based on our gross assets, including assets purchased with borrowed funds or other forms of leverage (but excluding cash or cash equivalents ). Accordingly, the Base Management Fee is payable regardless of whether the value of our gross assets and/or your investment has decreased during the then-current quarter and creates an incentive for Barings to incur leverage, which may not be consistent with our stockholders’ interests.

To the extent OID instruments, such as zero coupon bonds and PIK loans, constitute a significant portion of the Company’s income, investors will be exposed to typical risks associated with such income being required to be included in taxable and accounting income prior to receipt of cash, including the following: (a) the higher interest rates of PIK loans reflect the payment deferral and increased credit risk associated with these instruments, and PIK instruments generally represent a significantly higher credit risk than coupon loans; (b) PIK loans may have unreliable valuations because their continuing accruals require continuing judgments about the collectability of the deferred payments and the value of any associated collateral; (c) market prices of zero-coupon or PIK securities are affected to a greater extent by interest rate changes and may be more volatile than securities that pay interest periodically and in cash, and PIKs are usually less volatile than zero-coupon bonds, but more volatile than cash pay securities; (d) because OID income is accrued without any cash being received by the Company,us, required cash distributions may have to be paid from offering proceeds or the sale of Companyour assets without investors being given any notice of this fact; (e) the deferral of PIK interest increases the loan-to-value ratio, which is a measure of the riskiness of a loan; (f) even if the accounting conditions for income accrual are met, the borrower could still default when the Company’sour actual payment is due at the maturity of the loan; and (g) OID creates risk of non-refundable cash payments to our Adviser based on non-cash accruals that may never be realized.

•Our current indebtedness is, and it is likely that any securities or other indebtedness we may issue will be, governed by an indenture or other instrument containing covenants restricting our operating flexibility. Additionally, some of these securities or other indebtedness may be rated by rating agencies, and in obtaining a rating for such securities and other indebtedness, we may be required to abide by operating and investment guidelines that further restrict operating and financial flexibility.

Under the provisions of the 1940 Act, we are not generally able to issue and sell our common stock at a price below then-current NAV per share. We may, however, sell our common stock or warrants, options or rights to acquire our common stock, at a price below the then-current NAV per share of our common stock if the Board determines that such sale is in the best interests of us and our stockholders, and our stockholders approve such sale. We may also make rights offerings to our stockholders at prices per share less than the NAV per share, without stockholder approval but subject to applicable requirements of the 1940 Act. If we raise additional funds by issuing more common stock or senior securities convertible into, or exchangeable for, our common stock, the percentage ownership of our stockholders at that time would decrease, and they may experience dilution. Moreover, we can offer no assurance that we will be able to issue and sell additional equity securities in the future on favorable terms, or at all.

To the extent we borrow money or issue debt securities or preferred stock to make investments, our net investment income will depend, in part, upon the difference between the rate at which we borrow funds or pay interest or dividends on such debt securities or preferred stock and the rate at which we invest these funds. An increase in the general level of interest rates can be expected to lead to higher interest rates applicable to our debt investments, which may result in an increase in the amount of incentive fees payable to Barings. Rising interest rates on floating rate loans we make to portfolio companies could also drive an increase in defaults or accelerated refinancings. Some portfolio companies may be unable to refinance into fixed rate loans or repay outstanding amounts, leading to a gradual decline in the credit quality of our portfolio. In periods of rising interest rates, our cost of funds may increase because we expect that the interest rates on certain amounts we borrow will be floating. Conversely, in periods of declining interest rates, we may earn less interest income from investments and our cost of funds will also decrease, to a lesser extent, given certain of our currently outstanding indebtedness bears interest at fixed rates, resulting in lower net investment income. Additionally, in periods of declining interest rates, the rate of prepayments has historically tended to increase (as does price fluctuation) as borrowers are motivated to pay off debt and refinance at new lower rates. During such periods, we would expect reinvestment of the prepayment proceeds by us to generally be at lower rates of return than the return on the assets that were prepaid.

We may invest in derivatives and other assets that are subject to many of the same types of risks related to the use of leverage. In October 2020, the SEC adoptedUnder Rule 18f-4 under the 1940 Act regarding the ability of a BDC to use derivatives and other transactions that create future payment or delivery obligations. Under Rule 18f-4,Act, BDCs that use derivatives are subject to a value-at-risk leverage limit, a derivatives risk management program and testing requirements and requirements related to board reporting. These requirements apply unless the BDC qualifies as a “limited derivatives user,” as defined under Rule 18f-4. Under Rule 18f-4, a BDC may enter into an unfunded commitment agreement (which may include delayed draw and revolving loans) that will not be deemed to be a derivatives transaction, such as an agreement to provide financing to a portfolio company, if the BDC has, among other things, a reasonable belief, at the time it enters into such an agreement, that it will have sufficient cash and cash equivalents to meet its obligations with respect to all of its unfunded commitment agreements, in each case as it becomes due. Collectively, these requirements may limit our ability to use derivatives and/or enter into certain other financial contracts.

Because we incur additional leverage, general interest rate fluctuations may have a more significant negative impact on our investments than they would have absent such additional leverage and, accordingly, may have a material adverse effect on our operating results. A portion of our income will depend upon the difference between the rate at which we borrow funds and the interest rate on the debt securities in which we invest. Because we borrow money to make investments and may issue debt securities, preferred stock or other securities, our net investment income is dependent upon the difference between the rate at which we borrow funds or pay interest or dividends on such debt securities, preferred stock or other securities and the rate at which we invest these funds. Typically, our interest earning investments accrue and pay interest at variable rates, and our interest-bearing liabilities accrue interest at variable or potentially fixed rates. As a result, there can be no assurance that a significant change in market interest rates will not have a material adverse effect on our net investment income.

(1) Assumes $2,670.8$2,636.2 million in total assets, $1,471.0$1,439.5 million in debt outstanding, $1,190.4$1,160.7 million in net assets and an average cost of funds of 5.250%,4.866%, which was the weighted average borrowing cost of our outstanding borrowings at December 31, 2024.2025. The assumed amount of debt outstanding for this example includes $438.6$226.8 million of outstanding borrowings under our senior secured credit facility with ING Capital LLC initially entered into in February 2019 (as amended, restated and otherwise modified from time to time, the “February 2019 Credit Facility”) as of December 31, 2024,2025, $50.0$112.5 million aggregate principal amount of AugustSeries 2025 Notes (as defined below under “Management’s Discussion and Analysis of Financial Condition and Results of Operations — Liquidity and Capital Resources” included in Item 7 of Part II of this Annual Report on Form 10-K) outstanding, $175.0 million aggregate principal amount of NovemberC Notes (as defined below under “Management’s Discussion and Analysis of Financial Condition and Results of Operations — Liquidity and Capital Resources” included in Item 7 of Part II of this Annual Report on Form 10-K) outstanding, $150.0 million aggregate principal amount of February Notes (as defined below under “Management’s Discussion and Analysis of Financial Condition and Results of Operations — Liquidity and Capital Resources” included in Item 7 of Part II of this Annual Report on Form 10-K) outstanding, $350.0 million aggregate principal amount of November 2026 Notes (as defined below under “Management’s Discussion and Analysis of Financial Condition and Results of Operations — Liquidity and Capital Resources” included in Item 7 of Part II of this Annual Report on Form 10-K) outstanding, $300.0 million aggregate principal amount of February 2029 Notes (as defined below under “Management’s Discussion and Analysis of Financial Condition and Results of Operations — Liquidity and Capital Resources” included in Item 7 of Part II of this Annual Report on Form 10-K) outstanding, $300.0 million aggregate principal amount of September 2028 Notes (as defined below under “Management’s Discussion and Analysis of Financial Condition and Results of Operations — Liquidity and Capital Resources” included in Item 7 of Part II of this Annual Report on Form 10-K) outstanding, and assumed additional borrowings of $7.4$0.2 million to settle our payable from unsettled transactions as of December 31, 2024.2025.

Based on outstanding indebtedness of $2,341.1$2,324.1 million calculated assuming a 150% asset coverage ratio as of December 31, 2025 and an average cost of funds of 5.250%,4.866%, which was the weighted average borrowing cost of our outstanding borrowings at December 31, 2024,2025, our investment portfolio must experience an annual return of at least 3.46%3.21% to cover annual interest payments on our outstanding indebtedness.

We have elected to be treatedtreated, and intend to qualify annually, as a RIC under the Code, which generally allows us to avoid being subject to corporate-level U.S. federal income tax. To maintain RIC tax treatment under the Code, we must meet the following annual distribution, income source and asset diversification requirements:

Recent technological advances in AI pose risks to the Company,us, the Adviser, and our portfolio investments. The CompanyWe and our portfolio investments could also be exposed to the risks of AI if third-party service providers or any counterparties, whether or not known to the Company,us, also use AI in their business activities. We and our portfolio companies may not be in a position to control the use of AI technology in third-party products or services.

Independent of its context of use, AI technology is generally highly reliant on the collection and analysis of large amounts of data, and it is not possible or practicable to incorporate all relevant data into the model that AI technology utilizes to operate. Certain data in such models will inevitably contain a degree of inaccuracy and error—potentially materially so—and could otherwise be inadequate or flawed, which would be likely to degrade the effectiveness of AI technology. To the extent that we or our portfolio investments are exposed to the risks of AI use, any such inaccuracies or errors could have adverse impacts on the Companyus or our investments.

Certain of the Company’sour portfolio companies are in industries that could be impacted by inflation. If such portfolio companies are unable to pass any increases in their costs of operations along to their customers, it could adversely affect their operating results and impact their ability to pay interest and principal on the Company’sour loans, particularly if interest rates rise in response to inflation. In addition, any projected future decreases in the Company’sour portfolio companies’ operating results due to inflation could adversely impact the fair value of those investments. Any decreases in the fair value of the Company’sour investments could result in future realized or unrealized losses and therefore reduce the Company’sour net assets resulting from operations.

The AdviserValuation Designee conducts the valuation of such investments, upon which our NAV is primarily based, in accordance with its 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 ASC Topic 820. Our current valuation policy and processes were established by the Adviser and have been approved by the Board. The Adviser uses independent third-party providers to price the portfolio, but in the event an acceptable price cannot be obtained from an approved external source, the Adviser will utilize alternative methods in accordance with internal pricing procedures established by the Adviser’s pricing committee. As part of the valuation process, Barings may take into account the following types of factors, if relevant, in determining the fair value of our investments:

Any unrealized lossesdepreciation we experience on our loan portfolio may be an indication of future realized losses, which could reduce our income available for distribution.

As a BDC, we are required to carry our investments at market value or, if no market value is ascertainable, at the fair value as determined in good faith by the Board (or its valuation designee pursuant to Rule 2a-5 under the 1940 Act). Decreases in the market values or fair values of our investments will be recorded as unrealized depreciation. Any unrealized lossesdepreciation in our loan portfolio could be an indication of a portfolio company’s inability to meet its repayment obligations to us with respect to the affected loans. This could result in realized losses in the future and ultimately in reductions of our income available for distribution in future periods.

Our special situations investments, which consist of investments in the securities and debt of financially troubled issuers or borrowers and operationally troubled issuers or borrowers, involve a high degree of credit and market risk. Although we may invest in select companies that, in the view of Barings,the Adviser, have the potential over the long-term for capital growth, there can be no assurance that such financially troubled issuers or operationally troubled issuers can be successfully transformed into profitable operating companies. There is a possibility that we may incur substantial or total losses on investments or that such investments may not show any return for a considerable period of time. Under such circumstances, the returns generated from the investments may not compensate investors adequately for the risks assumed.

The level of analytical sophistication, both financial and legal, necessary for successful investment in companies experiencing significant business and financial difficulties is unusually high. There can be no assurance that Baringsthe Adviser will correctly evaluate the value of a company’s assets or the prospects for a successful reorganization or similar action. During an economic downturn or recession, securities of financially troubled or operationally troubled issuers and borrowers are more likely to go into default than securities of other issuers. In addition, it may be difficult to obtain information about such issuers and borrowers.

Troubled company and other asset-based investments require active monitoring and may, at times, require participation in business strategy or reorganization proceedings by Barings.the Adviser. To the extent that Baringsthe Adviser becomes involved in such proceedings, we may have a more active participation in the affairs of the issuer than that assumed generally by an investor. In addition, involvement by Baringsthe Adviser in an issuer’s reorganization proceedings could result in the imposition of restrictions limiting our ability to liquidate its position in the issuer or increase the likelihood of us being involved in litigation.

Any sale of common stock at a price below NAV would result in an immediate dilution to existing common stockholders. During periods of time in which we have authority from stockholders to issue shares of common stock at a price below NAV, such shares of common stock could be issued at a price that is substantially below the NAV per share, and the resulting dilution could be substantial. This dilution would include reduction in the NAV per share as a result of the issuance of shares at a price below the NAV per share and a proportionately greater decrease in a stockholder’s interest in the earnings and assets of the Company and voting interest in the Company than the increase in the assets, potential earnings and voting interests of the Company resulting from such issuance. In addition, such issuances or sales may adversely affect the price at which our common stock trades. We do not currently have the authorization from our stockholders to issue common stock at a price below the then-current NAV per share and there is no guarantee that we will obtain such authorization from our stockholders in the future.

Provisions of the Maryland General Corporation Law and our charter and bylawsby-laws could deter takeover attempts and have an adverse impact on the price of our common stock.

The Maryland General Corporation Law and our charter and bylawsby-laws contain provisions that may have the effect of discouraging, delaying or making difficult a change in control of our Company or the removal of our incumbent directors. Specifically, the Board has adopted a resolution explicitly subjecting us to the Maryland Business Combination Act under the Maryland General Corporation Law, which, subject to limitations, prohibits certain business combinations between us and an “interested stockholder” (defined generally as any person who beneficially owns 10% or more of the voting power of our outstanding voting stock) or an affiliate thereof for five years after the most recent date on which the stockholder becomes an interested stockholder and thereafter imposes fair price and/or super majority voting requirements on these combinations. In addition, our charter classifies the Board in three classes serving staggered three-year terms and provides that a director may be removed only for cause by the vote of at least two-thirds of the votes entitled to be cast for the election of directors generally. In addition, our bylawsby-laws provide that, subject to the satisfaction of certain procedural and informational requirements by the stockholders requesting the meeting, a special meeting of stockholders will be called by our secretary to act upon any matter that may properly be considered at a meeting of stockholders only upon the written request of the stockholders entitled to cast at least a majority of all the votes entitled to be cast on such matter at the meeting.

In addition, due to the asset coverage and NAV tests applicable to us as a BDC and under covenants under our financing agreements, we may be limited in our ability to make distributions. Further, if we invest a greater amount of assets in equity securities that do not pay current dividends, it could reduce the amount available for distribution. See “Item 5. — Market for Registrant’s Common Equity, Related Stockholder Matters and Issuer Purchases of Equity Securities — Distribution Policy” of this Annual Report on Form 10-K for further discussion of distributions.

The above-referenced restrictions on distributions may also inhibit our ability to make required interest payments to holders of our current debt including the AugustSeries 2025 Notes, the NovemberC Notes, the February Notes, the November 2026 Notes, and the February 2029 Notes and the September 2028 Notes (each as defined below under “Management’s Discussion and Analysis of Financial Condition and Results of Operations — Liquidity and Capital Resources” included in Item 7 of Part II of this Annual Report on Form 10-K), and any future debt we may issue, which may cause a default under the terms of the relevant debt agreements. Such a default could materially increase our cost of raising capital, as well as cause us to incur penalties under the terms of our debt agreements.

We may not be able to prepay the AugustSeries 2025 Notes, the NovemberC Notes, the February Notes, the November 2026 Notes, the February 2029 Notes or the FebruarySeptember 20292028 Notes upon a change in control.

The note purchase agreements governing the AugustSeries 2025 Notes, the NovemberC Notes and the February Notes, and the indentureindentures governing the November 2026 Notes, the February 2029 Notes and the FebruarySeptember 20292028 Notes, require us to offer to prepay all of the respective issued and outstanding notes upon the occurrence of certain change in control events, which could have a material adverse effect on our business, financial condition and results of operations. Upon a change in control event, holders of the notes may require us to prepay in cash some or all of the notes at a prepayment price equal to 100% of the aggregate principal amount of the notes being prepaid, plus accrued and unpaid interest to, but not including, the date of prepayment. If a change in control were to occur, we may not have sufficient funds to prepay any such accelerated indebtedness.

Our credit ratings are an assessment by rating agencies of our ability to pay our debts when due. Consequently, real or anticipated changes in our credit ratings will generally affect the value and trading prices, if any, of our outstanding unsecured notes. These credit ratings may not reflect the potential impact of risks relating to the structure or marketing of the notes. Credit ratings are not a recommendation to buy, sell or hold any security, and may be revised or withdrawn at any time by the issuing organization in its sole discretion. We undertake no obligation to maintain our credit ratings or to advise any holders of our unsecured notes of any changes in our credit ratings, except as may be required under the terms of any applicable indenture or other governing document, including the August 2020 NPA, the November 2020 NPA, the February 2021 NPA (each as defined below under “Management’s Discussion and Analysis of Financial Condition and Results of Operations — Liquidity and Capital Resources” included in Item 7 of Part II of this Annual Report on Form 10-K) and the indenture governing the November 2026 Notes, the February 2029 Notes and the FebruarySeptember 20292028 Notes. There can be no assurance that our credit ratings will remain for any given period of time or that such credit ratings will not be lowered or withdrawn entirely by the rating agency if in their judgment future circumstances relating to the basis of the credit ratings, such as adverse changes in our business or operations, so warrant. Any downgrades to us or our securities could increase our cost of capital or otherwise have a negative effect on our results of operations and financial condition. In this regard, the fixed rates of the NovemberSeries C Notes and the February Notes are subject to increase in the event that a Below Investment Grade Event (as defined in relevant note purchase agreement) occurs. The conditions of the financial markets and prevailing interest rates have fluctuated in the past and are likely to fluctuate in the future, which could have an adverse effect on the market prices and value of our unsecured notes.

An inability to raise capital, and any required sale of our investments for liquidity purposes, could have a material effect on our business, financial condition or results of operations. The debt capital that will be available to us in the future, if at all, may be at a higher cost and on less favorable terms and conditions than what we currently experience, including being at a higher cost in rising rate environments. If we are unable to raise or refinance debt, then our equity investors may not benefit from the potential for increased returns on equity resulting from leverage and we may be limited in our ability to make new commitments or to fund existing commitments to our portfolio companies. In addition, equity capital may be difficult to raise during periods of adverse or volatile market conditions because, subject to some limited exceptions, as a BDC, we are generally not able to issue additional shares of our common stock at a price less than NAV without first obtaining approval for such issuance from our stockholders and our Independent Directors. We generally seek approval from our stockholders annually so that we have the flexibility to issue up to a specified percentage of our then-outstanding shares of our common stock at a price below NAV, but in some years we may not obtain such approval.

TheGeopolitical conflict between Russia and Ukraine and in the Middle East,conflicts, and resulting market volatility, could also adversely affect the Company’sour business, operating results, and financial condition. The extent and duration or escalation of such conflicts, resulting sanctions and future market disruptions are impossible to predict, but could be significant. Any disruptions resulting from such conflicts and any future conflict (including cyberattacks, espionage or the use or threatened use of nuclear weapons) or resulting from actual or threatened responses to such actions could cause disruptions to any of our portfolio companies located in Europeaffected or the Middle Eastregions or that have substantial business relationships with companies in affected regions. It is not possible to predict the duration or extent of longer-term consequences of these conflicts, which could include further sanctions, retaliatory and escalating measures, embargoes, regional instability, geopolitical shifts and adverse effects on or involving macroeconomic conditions, the energy sector, supply chains, inflation, security conditions, currency exchange rates and financial markets around the globe. Any such market disruptions could affect our portfolio companies’ operations and, as a result, could have a material effect on our business, financial condition and results of operations.

Our business faces increasing public scrutiny related to environmental,corporate social and governance (“ESG”)responsibility activities. We risk damage to our brand and reputation if we fail to act responsibly in a number of areas, such as environmental stewardship, corporate governance and transparency and the consideration of ESGcorporate social responsibility factors in our investment processes. Adverse incidents with respect to ESGsuch corporate social responsibility activities could impact the value of our brand, the cost of our operations and relationships with investors, all of which could adversely affect our business and results of operations. At the same time, different stakeholder groups have divergent views on corporate social responsibility matters, which increases the risk that any action or lack thereof with respect to corporate social responsibility matters will be perceived negatively by at least some stakeholders and may adversely impact our reputation and business. If we do not successfully manage corporate social responsibility-related expectations across these varied stakeholder interests, it could erode stakeholder trust, impact our reputation and constrain our business.

ThereThe U.S. government has indicated its intent, made proposals and taken actions to alter its approach to international trade policy and in some cases to renegotiate, or potentially terminate, existing bilateral or multi-lateral trade agreements and treaties with foreign countries. Some foreign governments, including China, have beeninstituted ongoingretaliatory discussiontariffs andon commentary regarding potential significant changes tocertain U.S. trade policies, treaties and tariffs, creating significant uncertainty about the future relationship between the United States and other countries with respect to trade policies, treaties and tariffs.goods. These developments, or the perception that more of them could occur, may have a material adverse effect on global economic conditions and the stability of global financial markets, and may significantly reduce global trade and, in particular, trade between the impacted nations and the United States. Any of these factors could depress economic activity and restrict our portfolio companies’ access to suppliers or customers and have a material adverse effect on their business, financial condition and results of operations, which in turn would negatively impact us.

We, our subsidiaries and our portfolio companies are subject to regulation at the local, state and federal level. New legislation may be enacted or new interpretations, rulings or regulations could be adopted, including those governing the types of investments we are permitted to make, any of which could harm us and our stockholders, potentially with retroactive effect. Additionally, new regulatory initiatives related to ESGenvironmental, social and corporate governance could adversely affect 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 agreed to become our external investment adviser, we entered into anthe investmentOriginal advisoryAdvisory agreementAgreement and an administration agreement (the “Administration Agreement”) with Barings. In connection with the completion of the MVC Acquisition, we entered into 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 the Sierra Merger on February 25, 2022, we entered into the Second Amended Barings BDC Advisory Agreement with Barings. On June 24, 2023, we entered into a third amended and restated advisory agreement withthe Barings inBDC orderAdvisory Agreement 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”).terms. All other terms and provisions of the Second Amended Barings BDC Advisory Agreement between us and Barings, including with respect to the calculation of the fees payable to Barings, remained unchanged under the Barings BDC Advisory Agreement. Under the terms of the Barings BDC Advisory Agreement and the Administration Agreement, Barings serves as 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 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.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’The 2026 Co-Investment Exemptive ReliefOrder 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.

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, or 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.

During the year ended December 31, 2024,2025, we made 4566 new portfolio company investments totaling $341.7$454.9 million, made investments in existing portfolio companies totaling $298.6$233.1 million and made a $3.5$2.9 million equitydebt co-investmentinvestment alongside certainother related party affiliates in a portfolio company that specializes in providing financing to plaintiff law firms engaged in mass tort and other civil litigation. We had 4745 loans repaid totaling $360.8$271.5 million and recognized a net realized loss on these transactions of $13.5$34.8 million. We also received $213.8$195.7 million of portfolio company principal payments and sales proceeds and recognized a net realized loss on these transactions of $1.0$4.6 million. We received $17.1$34.1 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 $27.2$240.4 million of middle-market portfolio debt investments to our joint ventures, recognizing a net realized lossgain on these transactions of $0.4$1.8 million. In addition,Also, investments in four portfolio companies were restructured, which resulted in a net realized loss of $17.3$10.0 million. Lastly, we received proceeds related to the sale of equity investments totaling $38.0$28.1 million and recognized a net realized gain on such sales totaling $8.5$5.7 million.

During the year ended December 31, 2023,2024, we made 3945 new portfolio company investments totaling $264.6$341.7 million, made investments in existing portfolio companies totaling $205.9$298.6 million,million and made a $67.5$3.5 million equity co-investment alongside certain affiliates in a portfolio company that specializes in providing financing to plaintiff law firms engaged in mass tort and other civil litigation and made additional investments in existing joint venture equity portfolio companies totaling $2.5 million.litigation. We had 1747 loans repaid totaling $141.1$360.8 million and recognized a net realized loss on these transactions of $13.5 million. We also received $106.2$213.8 million of portfolio company principal payments,payments recognizingand sales proceeds and recognized a net realized loss on these repayments of $0.7$1.0 million. We received $20.5$17.1 million of return of capital from our joint venturesventures, equity, and equityroyalty rights investments. In addition, we received $99.8 million for the sale of loans, recognizing a net realized loss on these transactions of $50.3 million, and sold $160.2$27.2 million of middle-market portfolio debt investments to our joint ventures, realizingrecognizing a gainnet realized loss on these transactions of $0.1$0.4 million. In addition, investments in fivefour portfolio companies were restructured, which resulted in a net realized loss of $4.5$17.3 million. Lastly, we received proceeds related to the sale of equity investments totaling $9.9$38.0 million and recognized a net realized lossgain on such sales totaling $4.0$8.5 million.

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 December 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 Sierra Credit Support Agreement 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. As of December 31, 2024, we had eight portfolio companies with investments on non-accrual, the aggregate fair value of which was $8.0 million, which comprised 0.3% of the total fair value of our portfolio, and the aggregate cost of which was $41.6 million, which comprised 1.6% of the total cost of our portfolio. AsExcluding the non-accrual assets that are covered by the Sierra Credit Support Agreement with Barings, the non-accruals as of December 31, 2023, we had four portfolio companies with investments on non-accrual, the aggregate fair value of which was $37.2 million, which2024 comprised 1.5%0.2% of the total fair value of our portfolio,portfolio and 0.9% of the aggregate cost of which was $62.6 million, which comprised 2.5% of the total cost of our portfolio.

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. generally accepted accounting principles (“U.S. GAAP”),GAAP, we will not recognize interest income on our debt investment in Biolam for financial reporting purposes. As of December 31, 2024,2025, the cost of our debt investment in Biolam was $2.5 million and the fair value of such investment was $1.4$1.7 million.

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 December 31, 2024,2025, the cost of our first lien EURIBOR + 6.00% debt investment in GPNZ was $0.5$0.4 million and the fair value of such investment was $0.2 million.nil.

In connection with the Sierra MergerMerger, 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 December 31, 2024,2025, the cost of our debt investment in Polymer was $1.0 million and the fair value of such investment was $0.6$0.4 million.

The change in total investment income for the year ended December 31, 2024,2025, as compared to the year ended December 31, 2023,2024, was primarily due to a decrease in interestthe incomeamount of our outstanding debt investments and PIKdecreased interestweighted income,average yield on the portfolio, partially offset by increased dividends from portfolio companies and joint venture investmentsinvestments, and increased fee and otherPIK income. The decrease in interest income and PIK interest income is primarily due to the amount of our outstanding debt investments decreasingdecreased from $2,187.7$2,118.3 million as of December 31, 20232024 to $2,115.6$2,048.1 million as of December 31, 2024,2025. inIn addition to a decrease inaddition, the weighted average yield on the principal amount of our outstanding debt investments, other than non-accrual debt investments, decreased from 10.5%10.2% as of December 31, 20232024 to 10.2%9.5% as of December 31, 2025. For the year ended December 31, 2025, dividend income was $51.2 million as compared to $41.1 million for the year ended December 31, 2024. For the year ended December 31, 2024,2025, dividendPIK income was $41.1$19.0 millionmillion, as compared to $36.9$15.7 million for the year ended December 31, 2023. For the year ended December 31, 2024, acceleration of unamortized OID income and unamortized loan origination fees totaled $5.3 million, as compared to $2.5 million for the year ended December 31, 2023.2024.

Interest and other financing fees during the year ended December 31, 20242025 waswere attributable to borrowings under our senior secured revolving credit facility with ING Capital LLC (as amended, restated and otherwise modified from time to time, the “February 2019 Credit Facility”),Facility, the August 2025 Notes, the November Notes, the February Notes, the November 2026 Notes, the February 2029 Notes and the FebruarySeptember 20292028 Notes (each as defined below under “Liquidity and Capital Resources”). Interest and other financing fees during the year ended December 31, 20232024 waswere attributable to borrowings under the February 2019 Credit Facility, the August 2025 Notes, the November Notes, the February Notes andNotes, the November 2026 Notes and the February 2029 Notes. The increasedecrease in interest and other financing fees for the year ended December 31, 20242025 as compared to the year ended December 31, 2023,2024, was primarily attributable to the interest and financing fees on the February 2029 Notes, which were issued in February 2024, partially offset by lower weighted average borrowings outstanding and a lower weighted average interest raterate, onpartially theoffset Februaryby 2019increased Creditweighted Facility.average borrowings outstanding. The weighted average interest rate onwas 5.1% for the interestyear rateended swapDecember related31, 2025 as compared to the February 2029 Notes was 8.3%5.6% for the year ended December 31, 2024. For the years ended December 31, 20242025 and 2023,2024, the weighted average borrowings outstanding on the February 2019 Credit Facility were $422.4$1,539.2 million and $778.5$1,413.0 million, respectively. The weighted average interest on the February 2019 Credit Facility was 6.0% as of December 31, 2024, as compared to 7.1% as of December 31, 2023.

Base Management FeesFee

Under the terms of the Barings BDC Advisory Agreement, we pay Barings a base management fee (the “Base Management Fee”),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 Consolidated Financial Statements for additional information regarding the terms of the Barings BDC Advisory Agreement and the fee arrangements thereunder. For the years ended December 31, 20242025 and December 31, 2023,2024, the Base Management Fee was approximately $32.4$33.2 million and $32.6$32.4 million, respectively. The decreaseincrease in the Base Management Fee for the year ended December 31, 20242025 versus the year ended December 31, 20232024 is primarily related to the average value of gross assets used in the calculation decreasingincreasing from $2,611.9 million for the year ended December 31, 2023 to $2,592.3 million for the year ended December 31, 2024.2024 to $2,655.1 million for the year ended December 31, 2025. The Base Management Fee rate was 1.250% for both the years ended December 31, 20242025 and 2023.2024.

Under the Barings BDC Advisory Agreement, we pay Barings an incentiveIncentive fee.Fee. AThe portionIncome-Based of the incentive feeFee is based on our income and athe portionCapital Gains Fee is based on our capital gains. The income-basedIncome-Based feeFee will beis 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 Consolidated Financial Statements for additional information regarding the terms of the Barings BDC Advisory Agreement and the fee arrangements thereunder. For the yearyears ended December 31, 2025 and December 31, 2024, the amount of income-basedIncome-Based feesFees incurred was $31.5 million and $23.8 million.million, For the year ended December 31, 2023, the amount of income-based fees incurred was $32.0 million.respectively. The Income-Based Fee is subject to a cap (the “Incentive Fee Cap”).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 FeeFees 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 Consolidated Financial Statements for additional information regarding the terms of the Incentive Fee Cap. The Incentive Fee for both the yearyears ended December 31, 20242025 and December 31, 20232024 was limited due to the Incentive Fee Cap. The Incentive Fee Cap in 20242025 was lowerhigher than the Incentive Fee Cap in 20232024 as a result of an increase in Cumulative Pre-Incentive Fee Net Return partially offset by a greatersmaller increase in incentive fees paid in the trailing twelve quarters (or portion thereof).

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 Consolidated Financial Statements for additional information regarding the Administration Agreement. For the years ended December 31, 2025 and 2024, the amount of administration expense incurred and invoiced by Barings for expenses was approximately $1.4 million and $2.0 million, respectively. In addition to expenses incurred under the Administration Agreement, general and administrative expenses include fees payable to the Board for their service on the Board, directors’ and officers’ insurance costs, as well as legal and accounting expenses.

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 totaltotaled $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 allowsallowed for an increase in the total commitments to an aggregate of $1.2 billion subject to certain conditions and the satisfaction of specified financial covenants (the “November 2021 Amendment”).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, andwhich the allowanceallowed for an increase in the total commitments increasedto toan aggregate of $1.5 billion from $1.2 billion subject to certain conditions and the satisfaction of specified financial covenants (the “February 2022 Amendment”).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 allowsallowed 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 (the “April 2022 Amendment”).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 of the August 2018 Credit Facility on June 30, 2020, Barings BDC Senior Funding I, LLC, our indirect wholly-owned Delaware limited liability company, 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 (the “May 2023 Amendment”).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 202413, Amendment”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 $825 million from $725 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) the term SOFR plus an applicable spread of 1.875% plus a 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 dollarsbenchmark rate, which is defined as the applicable Australian dollar Screen Rate,Rate plus 2.0875%.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%.

As of December 31, 2024,2025, we were in compliance with all covenants under the February 2019 Credit Facility and we had U.S. dollar borrowings of $237.0 million outstanding under the February 2019 Credit Facility with an interest rate of 6.484% (one month SOFR of 4.509%), borrowings denominated in Swedish kronorEuros of 9.8kr€193.1 million ($0.9$226.8 million U.S. dollars) with an interest rate of 4.625% (one month STIBOR of 2.750%), borrowings denominated in British pounds sterling of £55.6 million ($69.6 million U.S. dollars) with an interest rate of 6.608% (one month SONIA of 4.700%) and borrowings denominated in Euros of €126.6 million ($131.1 million U.S. dollars) with an interest rate of 4.938%3.847% (one month EURIBOR of 3.063%1.972%). 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 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 December 31, 2024,2025, the total fair value of the borrowings outstanding under the February 2019 Credit Facility was $438.6$226.8 million. See “Note 4. Borrowings - February 20219 Credit Facility” to our Consolidated Financial Statements for additional information regarding the February 2019 Credit Facility.

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 waswere issued on September 24, 2020 and an aggregate principal amount of $25.0 million of the Series A Notes due 2025 waswere issued on September 29, 2020, both of which will maturematured on August 4, 2025 unless redeemed, purchased or prepaid prior to such date by us in accordance with their terms.2025. Interest on the August 2025 Notes iswas due semiannually in March and September, beginning in March 2021. In addition, we arewere 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 occur. Subject to the terms of the August 2020 NPA, we maycould redeemhave 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 arewere guaranteed by certain of our subsidiaries, and arewere our general unsecured obligations that rankranked pari passu with all outstanding and future unsecured unsubordinated indebtedness issued by us.

The Company’sOur permitted issuance period for the Additional Notes under the August 2020 NPA expired on February 3, 2022, prior to which date the Companywe issued no Additional Notes.

The August 2020 NPA containscontained 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 containscontained 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 judgementsjudgments 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 maycould declarehave declared all August 2025 Notes then outstanding to be immediately due and payable. As of December 31, 2024, we were in compliance with all covenants under the August 2020 NPA.

The August 2025 Notes were offered in reliance on Section 4(a)(2) of the Securities Act. The August 2025 Notes havewere not and will not be registered under the Securities Act or any state securities laws and,and unless so registered, maycould not behave 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.

The Series B Notes will maturematured on November 4, 2025, and 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 maycould redeemhave redeemed the Series B Notes andin 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, 2025, with respect to the Series B Notes, or on or before May 4, 2027, with respect to the Series C Notes, 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 judgementsjudgments 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 December 31, 2024,2025, we were in compliance with all covenants under the November 2020 NPA.

As of December 31, 2024,2025, the fair value of the outstanding Series B Notes and the Series C Notes was $61.6$111.4 million and $108.3 million, respectively.million. The fair value determinations of the Series B Notes and Series C Notes were based on a market yield approach and current interest rates, which are Level 3 inputs to the market yield model.

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 judgementsjudgments 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 December 31, 2024,2025, we were in compliance with all covenants under the February 2021 NPA.

There have been no material changes during the three months ended MarchJune 31,30, 2026 to the risk factors previously disclosed in our Annual Report on Form 10-K for the year ended December 31, 2025, which you should carefully consider before transacting in our securities. If any of such risks actually occur, our business, financial condition or results of operations could be materially adversely affected. If that happens, the market price of our securities could decline, and you may lose all or part of your investment.

The following discussion is designed to provide a better understanding of our Unaudited Consolidated Financial Statements for the three and six months ended MarchJune 31,30, 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.

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 (the “MVC Acquisition”),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 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.

As of March 31, 2026 and December 31, 2025, the weighted(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 investmentsinvestments, other than non-accrual debt investments was approximately 9.4% and 9.5%, respectively. The weighted average yield on the principal amount of all of our outstanding debt investments (including non-accrual debt investments) was approximately 9.1% and 9.0% as of March 31, 2026 and December 31, 2025, respectively.investments.

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’ $383.8$392.1 billion Global Fixed Income Platform (as of MarchJune 31,30, 2026) that invests in liquid, private and structured credit. Barings GPF manages private funds and separately managed accounts, along with multiple public vehicles.

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 MarchJune 31,30, 2026, our asset coverage ratio was 180.6%.181.2%.

The total value of our investment portfolio was $2,370.0$2,458.6 million as of MarchJune 31,30, 2026, as compared to $2,398.5 million as of December 31, 2025. As of MarchJune 31,30, 2026, we had investments in 331342 portfolio companies with an aggregate cost of $2,405.9$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 MarchJune 31,30, 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 MarchJune 31,30, 2026 and December 31, 2025, our investment portfolio consisted of the following investments:

During the threesix months ended MarchJune 31,30, 2026, we made 1334 new portfolio company investments totaling $54.7$231.0 million and made investments in existing portfolio companies totaling $54.0$139.8 million. We had 1018 loans repaid totaling $66.4$115.7 million and recognized a net realized gain on these transactions of $0.5$0.3 million. We also received $31.4$90.0 million of portfolio company principal payments and sales proceeds and recognized a net realized loss on these transactions of $0.9$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 $22.3$27.2 million of return of capital from our joint ventures, equity, and royalty rights investments. Also, investments in onethree portfolio companycompanies were restructured, which resulted in a net realized loss of $4.5$11.6 million. Lastly, we received proceeds related to the sale of equity investments and the Sierra Income Corporation (“Sierra”) collateralized loan obligation (“CLO”) investments acquired in the Sierra Merger totaling $5.3$8.1 million and recognized a net realized loss on such sales totaling $3.2$3.6 million.

During the threesix months ended MarchJune 31,30, 2025, we made 1433 new portfolio company investments totaling $128.2$266.9 million and made investments in existing portfolio companies totaling $78.7$139.0 million. We had 1024 loans repaid totaling $66.1$125.2 million and recognized a net realized loss on these transactions of $10.2$27.9 million. We also received $33.9$69.4 million of portfolio company principal payments and sales proceeds and recognized a net realized loss on these transactions of $0.4$0.1 million. We received $5.2$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 $1.1$9.1 million and recognized a net realized loss on such sales totaling $7.1$1.7 million.

Total portfolio investment activity for the threesix months ended MarchJune 31,30, 2026 and 2025 was as follows:

The following table shows the classification of our investments by risk rating as of MarchJune 31,30, 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.

(1) Excludes 9.1% member interest in Jocassee Partners LLC.Jocassee.

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 MarchJune 31,30, 2026, we had 1011 portfolio companies with investments on non-accrual, the aggregate fair value of which was $23.9$13.7 million, which comprised 1.0%0.6% of the total fair value of our portfolio, and the aggregate cost of which was $48.2$38.3 million, which comprised 2.0%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 MarchJune 31,30, 2026 comprised 0.6%0.2% of the total fair value of our portfolio and 1.3%0.9% of the aggregate cost of our portfolio. As of December 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 MarchJune 31,30, 2026 is provided below:

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 MarchJune 31,30, 2026, the cost of our debt investment in Acogroup was $8.1 million and the fair value of such investment was $2.5$1.6 million.

During the quarter ended December 31, 2025, we placed our first lien EURIBOR + 4.00% 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 first lien EURIBOR + 4.00% debt investment in Bariacum for financial reporting purposes. As of MarchJune 31,30, 2026, the cost of our first lien EURIBOR + 4.00% debt investment in Bariacum was $3.3 million and the fair value of such investment was nil.

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 MarchJune 31,30, 2026, the cost of our debt investment in Biolam was $2.6$2.5 million and the fair value of such investment was $1.3 million.

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 MarchJune 31,30, 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 $0.2$0.1 million.

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 MarchJune 31,30, 2026, the cost of our subordinated debt investment in Eurofins was $1.4$1.5 million and the fair value of such investment was nil.

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 MarchJune 31,30, 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.

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 MarchJune 31,30, 2026, the cost of our debt investment in Polymer was $1.0 million and the fair value of such investment was $0.3 million.

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 MarchJune 31,30, 2026, the cost of our debt investments in RA Outdoors was $16.4 million and the fair value of such investments was $10.2$8.6 million.

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 MarchJune 31,30, 2026, the cost of our debt investments in Terrybear was $0.3 million and the fair value of such investments was $0.2 million.

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 MarchJune 31,30, 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 $7.4$7.5 million, or 0.3% of the total fair value of our portfolio.

Comparison of the three and six months ended MarchJune 31,30, 2026 and MarchJune 31,30, 2025

Operating results for the three and six months ended MarchJune 31,30, 2026 and 2025 were as follows:

The change in total investment income for the three and six months ended MarchJune 31,30, 2026, as compared to the three and six months ended MarchJune 31,30, 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, partially offset by increased dividends from portfolio companies and joint venture investments.income. The amount of our outstanding debt investments decreased from $2,218.0$2,243.3 million as of MarchJune 31,30, 2025 to $1,998.8$2,078.3 million as of MarchJune 31,30, 2026. In addition, the weighted average yield on the principal amount of our outstanding debt investments, other than non-accrual debt investments, decreased from 9.9%9.8% as of MarchJune 31,30, 2025 to 9.4% as of MarchJune 31,30, 2026. For the three and six months ended MarchJune 31,30, 2026, fee and other income was $2.7$3.7 million and $6.4 million, respectively, as compared to $3.6$4.9 million and $8.5 million for the three monthsand ended March 31, 2025. For the threesix months ended MarchJune 31,30, 2026,2025, dividend income was $11.9 million as compared to $10.7 million for the three months ended March 31, 2025.respectively.

Interest and other financing fees during the three months ended March 31, 2026 were attributable to borrowings under the February 2019 Credit Facility, the Series C Notes of the November Notes, the February Notes, the November 2026 Notes, the February 2029 Notes and the September 2028 Notes (each as defined below under “Liquidity and Capital Resources”). Interest and other financing fees during the three months ended March 31, 2025 were attributable to borrowings under the February 2019 Credit Facility, the August 2025 Notes (as defined below under “Liquidity and Capital Resources”), the Series B Notes and Series C Notes of the November Notes, the February Notes, the November 2026 Notes and the February 2029 Notes. The decrease in interest and other financing fees for the three and six months ended MarchJune 31,30, 2026 as compared to the three and six months ended MarchJune 31,30, 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 MarchJune 31,30, 2026. For the three and six months ended MarchJune 31,30, 2026, the weighted average borrowings outstanding on the February 2019 Credit Facility waswere $211.7$305.0 million and $259.9 million, respectively, as compared to $410.1$559.1 million and $485.1 million, for the three and six months ended MarchJune 31,30, 2025.2025, respectively. The weighted average interest rate on the February 2019 Credit Facility for the three and six months ended MarchJune 31,30, 2026 was 4.1%4.8% and 4.5%, respectively, as compared to 5.9%5.8% and 5.9%, for the three and six months ended MarchJune 31,30, 2025.2025, respectively. For the three and six months ended MarchJune 31,30, 2026, the weighted average unsecured debt outstanding was $1,182.3$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 MarchJune 31,30, 2025. The weighted average interest rate on the unsecured debt for both the three and six months ended MarchJune 31,30, 2026 was 5.1% as compared to 4.9% for both the three and six months ended MarchJune 31,30, 2025.

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 MarchJune 31,30, 20262026, 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 $8.3$8.2 million and $8.0$16.2 million, respectively.

The increasedecrease in the Base Management Fees for the three months ended MarchJune 31,30, 2026 versus the three months ended MarchJune 31,30, 2025 is primarily related to the average value of gross assets increasingdecreasing from $2,566.0$2,621.7 million as of the end of the two most recently completed calendar quarters prior to MarchJune 31,30, 2025 to $2,654.1$2,537.0 million as of the end of the two most recently completed calendar quarters prior to MarchJune 31,30, 2026. For both the three and six months ended MarchJune 31,30, 2026 and 2025, the Base Management Fee rate was 1.250%.

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 MarchJune 31,30, 2026, the amount of Income-Based Fees incurred were $4.7$5.0 million and $9.7 million, respectively, as compared to $7.7$11.1 million and $18.9 million, for the three and six months ended MarchJune 31,30, 2025.2025, 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 MarchJune 31,30, 2026 and MarchJune 31,30, 2025, was limited to the Incentive Fee Cap. The Incentive Fee Cap for the three and six months ended MarchJune 31,30, 2026 was lower than the Incentive Fee Cap for the three and six months ended MarchJune 31,30, 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).

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 MarchJune 31,30, 20262026, 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 $0.3$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.

Net realized gains (losses) during the three and six months ended MarchJune 31,30, 2026 and 2025 were as follows:

During the three months ended MarchJune 31,30, 2026, we recognized net realized lossesgains totaling $10.8$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 $8.2 million, a net loss on foreign currency transactions of $2.4 million and a net loss on forward currency contracts of $0.2$7.1 million. The net loss on our investment portfolio predominantly related to a $4.5$7.2 million loss on the restructuring of thetwo portfolio company investments in one portfolio company,and a $6.9$2.2 million loss on the sale and exit of fiveone 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 $3.6$4.7 million on the sale of equity investments in twothree portfolio companies. The net losses on these exits were predominantly reclassified from net unrealized depreciation and the $6.9$9.1 million loss on the Sierra CLO investments isacquired in the Sierra Merger was covered by the Prior Sierra Credit Support Agreement (as defined in “Note 2. Agreements and Related Party Transactions”) with Barings.

Net unrealized appreciation (depreciation) during the three and six months ended MarchJune 31,30, 2026 and 2025 was as follows:

During the three months ended MarchJune 31,30, 2026, we recorded net unrealized appreciationdepreciation totaling $4.9$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 $7.4$9.0 million related to the net realized losses on the sales / exits of certain investments,investments net unrealized appreciation related to forward currency contracts of $5.5 million, unrealized appreciation of $5.3 million on the Sierra Credit Support Agreement with Barings,and net unrealized appreciation related to foreign currency transactions of $4.1 million, and a deferred tax asset of $0.1 million, partially offset by net unrealized depreciation on our current portfolio of $17.5$1.2 million. The net unrealized depreciation on our current portfolio of $17.5$14.8 million was driven primarily by broad market moves for investments of $6.9 million, the credit or fundamental performance of investments of $8.7$6.9 million,million and the impact of foreign currency exchange rates on investments of $6.2 million and broad market moves for investments of $2.6$1.0 million.

During the threesix months ended MarchJune 31,30, 2025,2026, we recorded net unrealized appreciationdepreciation totaling $7.3$24.5 million, consisting of net unrealized appreciationdepreciation on our current portfolio of $17.0$32.4 million,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 $16.9$16.3 million related to the net realized losses on the sales / exits of certain investments, unrealized appreciation of $3.8 million on the MVC Credit Support Agreement (as defined in “Note 2. Agreements and Related Party Transactions”) with Barings, andnet unrealized appreciation related to foreign currency transactions of $0.6$5.3 million on the Sierra Credit Support Agreement with Barings, partially offset byand net unrealized depreciationappreciation related to forward currency contracts of $22.3 million, net unrealized depreciation related to foreign currency transactions of $7.8 million and deferred taxes of $1.0$2.3 million. The net unrealized appreciationdepreciation on our current portfolio of $17.0$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 $14.8 million and broad market moves for investments of $7.9 million, partially offset by the credit or fundamental performance of investments of $5.7$7.3 million.

For the threesix months ended MarchJune 31,30, 2026, we experienced a net increase in cash in the amount of $28.9$3.1 million. During that period, our operating activities provided $68.0$83.7 million in cash, with proceeds from sales or repayments of portfolio investments totaling $181.1$342.3 million and other cash collections from investments exceeding purchases of portfolio investments of $108.7$368.9 million. In addition, our financing activities used net cash of $39.1$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 $27.2$54.4 million, partially offset by net borrowings under the February 2019 Credit Facility of $68.2$53.8 million. As of MarchJune 31,30, 2026, we had $95.7$69.9 million of cash and foreign currencies on hand, including $15.8$18.3 million of restricted cash.

For the threesix months ended MarchJune 31,30, 2025, we experienced a net increasedecrease in cash in the amount of $9.3$42.1 million. During that period, our operating activities used $7.8$60.5 million in cash, consisting primarily of purchases of portfolio investments of $167.2$409.2 million, partially offset by proceeds from sales or repayments of portfolio investments totaling $122.4$274.6 million. In addition, our financing activities provided net cash of $17.0$18.4 million, consisting of net borrowings under the February 2019 Credit Facility of $51.2$86.0 million, partially offset by dividends paid in the amount of $32.7$65.3 million and share repurchases of $1.5$2.3 million. As of MarchJune 31,30, 2025, we had $100.6$49.3 million of cash and foreign currencies on hand, including $7.3$4.7 million of restricted cash.

As of MarchJune 31,30, 2026, we were in compliance with all covenants under the February 2019 Credit Facility and had U.S. dollar borrowings of $130.0$122.5 million outstanding under the February 2019 Credit Facility with a weighted average interest rate of 6.179%5.594% (one month SOFR of 3.671%3.619%), borrowings denominated in Canadian dollars of C$5.0C$2.0 million ($3.6$1.4 million U.S. dollars) with an interest rate of 4.445%4.451% (one month CORRA of 2.570%2.576%) and borrowings denominated in Euros of €138.1134.1 million ($159.1$153.3 million U.S. dollars) with a weighted average interest rate of 3.851%4.056% (one month EURIBOR of 1.976%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 MarchJune 31,30, 2026, the total fair value of the borrowings outstanding under the February 2019 Credit Facility was $292.7$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.

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 MarchJune 31,30, 2026, we were in compliance with all covenants under the November 2020 NPA.

As of MarchJune 31,30, 2026, the fair value of the outstanding Series C Notes was $109.0$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.

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 MarchJune 31,30, 2026, we were in compliance with all covenants under the February 2021 NPA.

As of MarchJune 31,30, 2026, the fair value of the outstanding Series E Notes was $66.8$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.