Barings Corporate Investors Reports Preliminary First Quarter 2024 Results and Announces Increased Quarterly Cash Dividend Of $0.39 Per Share

Rhea-AI Summary

The Board of Trustees of Barings Corporate Investors (NYSE: MCI) reported its preliminary first quarter 2024 financial results. Net investment income rose to $8.1 million ($0.40 per share) from $7.4 million ($0.36 per share) in the previous quarter, driven by higher base rates. Net realized gains increased to $1.8 million ($0.08 per share) from $0.5 million ($0.02 per share). Net asset value per share grew to $17.28 from $16.77. The Board declared a quarterly dividend of $0.39 per share, up 2.6% from the previous $0.38 per share, payable on June 14, 2024.

The Trust made eight new investments worth $13.3 million and 29 add-on investments totaling $10.2 million. Five loans were repaid at par for $19.2 million, and two equity investments were realized, generating gains of $1.5 million. As of March 31, 2024, the Trust had $7.9 million in cash and $35.0 million in borrowings. Shareholders elected Clifford M. Noreen and Edward P. Grace III as trustees for three-year terms.

Positive

• Net investment income increased to $8.1 million from $7.4 million.
• Quarterly dividend raised by 2.6% to $0.39 per share.
• Net asset value per share grew to $17.28 from $16.77.
• Realized net capital gains increased to $1.8 million from $0.5 million.
• Eight new investments totaling $13.3 million.
• 29 add-on investments totaling $10.2 million.
• Two equity investments realized, generating gains of $1.5 million.

Negative

• Net unrealized appreciation decreased to $0.6 million from $1.1 million.
• Cash reserves stood at $7.9 million with $35.0 million in borrowings.
• Unfunded commitments totaled $19.5 million as of March 31, 2024.

Insights

Financial Analyst

The increase in net investment income from $7.38 million to $8.07 million (or 11.7% increase) is an encouraging sign for investors, indicating that the company is effectively managing its investments to generate higher returns. This increase is primarily due to higher base rates, which is a positive indicator of the company's ability to capitalize on prevailing economic conditions.

The net asset value (NAV) per share has increased from $16.77 to $17.28, reflecting an overall healthier balance sheet and potentially making the stock more attractive to investors. The rise in NAV per share is credited to the net investment income and net unrealized appreciation on the Trust’s investment portfolio. This demonstrates effective management of the portfolio and favorable market conditions.

A notable aspect is the increased quarterly cash dividend from $0.38 per share to $0.39 per share, continuing a seven-quarter trend. This incremental increase implies strong income generation and a commitment to sharing profits with shareholders. Dividends are a critical component for income-focused investors, offering them a steady return on their investments.

Overall, the financial results reveal a solid performance in Q1 2024, with positive income growth, an enhanced NAV and higher dividends. However, retail investors should remain vigilant of how macroeconomic factors might impact future results. Additionally, while the quarter’s performance shows promise, ongoing scrutiny is necessary to confirm whether these trends are sustainable long-term.

Market Research Analyst

The information provided about Barings Corporate Investors' strategies, particularly their focus on 1st lien senior secured middle-market investments, gives insight into the Trust’s investment philosophy. This approach has been successful in navigating economic cycles by focusing on quality businesses with defensive characteristics. The company’s consistency in strategy can build confidence among investors looking for stable and reliable performance.

Additionally, the portfolio activity detailed in the report, including making eight new investments totaling $13.3 million and 29 add-on investments totaling $10.2 million, indicates proactive management. This level of detailed involvement in portfolio management suggests that the Trust is continually seeking value and enhancing its positions, which could be beneficial for future performance.

The repayment of five loans at par totaling $19.2 million and realized gains on two equity investments suggests an effectively managed exit strategy, essential for maintaining liquidity and capitalizing on profitable opportunities. Investors should see these moves as a positive demonstration of the Trust’s ability to not only invest wisely but to exit profitably as well.

For retail investors, understanding that the Trust has cash of $7.9 million and borrowings of $35.0 million is critical. While the liquidity position seems comfortable, the borrowings need to be monitored for any potential impact on leverage and financial stability.

CHARLOTTE, N.C.--(BUSINESS WIRE)-- The Board of Trustees of Barings Corporate Investors (NYSE: MCI) (the "Trust") met on May 16, 2024 and would like to report its preliminary financial results for the first quarter of 2024.

Financial Highlights(1)	Three Months Ended March 31, 2024						Three Months Ended December 31, 2023
	Total Amount			Per Share(5)			Total Amount			Per Share(4)
Net investment income(2)	$	8,072,938		$	0.40		$	7,379,615		$	0.36
Net realized (losses) / gains(3)	$	1,770,637		$	0.08		$	480,613		$	0.02
Net unrealized appreciation / (depreciation)	$	552,329		$	0.03		$	1,093,175		$	0.05
Net increase in net assets resulting from operations	$	10,293,583		$	0.51		$	9,075,093		$	0.45
Total net assets (equity)	$	350,763,288		$	17.28		$	339,826,094		$	16.77

(1) All figures for 2024 are unaudited

(2) December 31, 2023 figures net of approximately $0.04 per share of excise tax.

(3) December 31, 2023 figures net of approximately $0.01 per share of capital gains tax

(4) Based on shares outstanding at the end of the period of 20,261,719

(5) Based on shares outstanding at the end of the period of 20,298,644

Key Highlights:

Commenting on the quarter, Christina Emery, President, stated, "The Trust earned $0.40 per share of net investment income, net of taxes, for the first quarter of 2024, compared to $0.36 per share in the previous quarter. The increase in net investment income was predominantly due to higher base rates. The Trust has increased dividends for the last seven quarters, which is further confirmation of our credit philosophy, where we focus on leading businesses backed by strong sponsor ownership and conservative capital structures. This approach has historically generated stable returns and relative stability during economic stress. During the quarter, Barings continued to drive origination flow into quality, 1st lien senior secured middle-market investments. When constructing portfolios, we focus on investing in high-quality businesses that are leaders in their space and offer defensive characteristics that will allow them to perform through economic cycles.”

The Board of Trustees declared a quarterly dividend of $0.39 per share, payable on June 14, 2024, to shareholders of record on May 31, 2024. This represents an increase of $0.01 per share or 2.6% over the previous dividend of $0.38 per share.

During the three months ended March 31, 2024, the Trust reported total investment income of $10.1 million, net investment income of $8.1 million, or $0.40 per share, and a net increase in net assets resulting from operations of 10.2 million, or $0.51 per share.

Net asset value ("NAV") per share as of March 31, 2024, was $17.28, as compared to $16.77 as of December 31, 2023. The increase in NAV per share was primarily attributable to net investment income, net of taxes, of $0.40 per share, net unrealized appreciation on the Trust’s investment portfolio of approximately $0.03 per share and realized gains of approximately $0.08 per share.

The next scheduled meeting of the Board of Trustees will be held on August 15, 2024.

Recent Portfolio Activity

During the three months ended March 31, 2024, the Trust made eight new investments totaling $13.3 million and 29 add-on investments in existing portfolio companies totaling $10.2 million. During the three months ended March 31, 2024, the Trust had five loans repaid at par totaling $19.2 million and realized two equity investments that generated realized gains of $1.5 million.

Liquidity and Capitalization

As of March 31, 2024, the Trust had cash of $7.9 million and $35.0 million of borrowings outstanding. The Trust had unfunded commitments of $19.5 million as of March 31, 2024.

Net Capital Gains

The Trust realized net capital gains of $1,770,637 or $0.08 per share during the quarter ended March 31, 2024. By comparison, for the quarter ended December 31, 2023, the Trust realized net capital gains of $480,613 or $0.052 per share.

Annual Meeting

At the Annual Meeting, which was held on Thursday, May 16, 2024, shareholders elected Clifford M. Noreen as an Interested Trustee and Edward P. Grace III as an Independent Trustee, each for three-year terms.

About Barings Corporate Investors

Barings Corporate Investors is a closed-end management investment company advised by Barings LLC. Its shares are traded on the New York Stock Exchange under the trading symbol ("MCI").

About Barings LLC

Barings is a $406+ billion* global investment manager sourcing differentiated opportunities and building long-term portfolios across public and private fixed income, real estate, and specialist equity markets. With investment professionals based in North America, Europe and Asia Pacific, the firm, a subsidiary of MassMutual, aims to serve its clients, communities, and employees, and is committed to sustainable practices and responsible investment. Learn more at www.barings.com.

*Assets under management as of March 31, 2024

Per share amounts are rounded to the nearest cent.

PAST PERFORMANCE IS NOT NECESSARILY INDICATIVE OF FUTURE RESULTS

Cautionary Notice: Certain statements contained in this press release may be "forward looking" statements. Investors are cautioned not to place undue reliance on forward-looking statements, which speak only as of the date on which they are made and which reflect management’s current estimates, projections, expectations or beliefs, and which are subject to risks and uncertainties that may cause actual results to differ materially. These statements are subject to change at any time based upon economic, market or other conditions and may not be relied upon as investment advice or an indication of the fund's trading intent. References to specific securities are not recommendations of such securities, and may not be representative of the fund's current or future investments. We undertake no obligation to publicly update forward looking statements, whether as a result of new information, future events, or otherwise.

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MediaRelations@barings.com

Source: Barings Corporate Investors

FAQ

What were Barings Corporate Investors' Q1 2024 financial results?

Net investment income was $8.1 million ($0.40 per share), and net realized gains were $1.8 million ($0.08 per share). Net asset value per share increased to $17.28.

What is the dividend declared by Barings Corporate Investors in Q1 2024?

A quarterly dividend of $0.39 per share, representing a 2.6% increase from the previous $0.38 per share, payable on June 14, 2024.

How did Barings Corporate Investors' net asset value change in Q1 2024?

The net asset value per share increased to $17.28 from $16.77 as of December 31, 2023.

What were the new investments made by Barings Corporate Investors in Q1 2024?

The Trust made eight new investments totaling $13.3 million and 29 add-on investments totaling $10.2 million.

How much in loans were repaid to Barings Corporate Investors in Q1 2024?

Five loans were repaid at par, totaling $19.2 million.

What was Barings Corporate Investors' cash and borrowings status in Q1 2024?

As of March 31, 2024, the Trust had cash reserves of $7.9 million and $35.0 million in borrowings.