In accordance with applicable SEC staff guidance and interpretations, as a BDC, with certain exceptions, effective February 2, 2019, the Company is permitted to borrow amounts such that its asset coverage ratio is at least 150% after such borrowing (if certain requirements are met), rather than 200%, as previously required. As of June 30, 2023 and December 31, 2022, the Company’s asset coverage ratio based on aggregated borrowings outstanding was 175.1% and 180.0%, respectively.

The Company’s outstanding borrowings as of June 30, 2023 and December 31, 2022 were as follows:


	As of June 30, 2023									As of December 31, 2022
		Total Aggregate			Principal						Total Aggregate			Principal
		Principal Amount			Amount			Carrying			Principal Amount			Amount			Carrying
		Committed			Outstanding			Value (1)			Committed			Outstanding			Value (1)
2019-1 Debt	$		352,500	$		352,500	$		351,163	$		352,500	$		352,500	$		351,099
Revolving Advisor Loan			—			—			—			50,000			—			—
March 2026 Notes			300,000			300,000			296,952			300,000			300,000			296,392
October 2026 Notes			300,000			300,000			295,492			300,000			300,000			294,812
Sumitomo Credit Facility (2)			665,000			546,000			546,000			665,000			443,000			443,000
Total Debt	$		1,617,500	$		1,498,500	$		1,489,607	$		1,667,500	$		1,395,500	$		1,385,303

(1)

Carrying value represents aggregate principal amount outstanding less unamortized debt issuance costs.

(2)

On January 26, 2022, Gale Aviation (Offshore) Co investment, a controlled affiliate investment of the Company, entered into a letter of credit agreement with Sumitomo Mitsui Banking Corporation for $14.7 million. As of June 30, 2023, $14.7 million is outstanding on the letter of credit and the amount has been drawn against the total aggregate principal amount committed of the Sumitomo Credit Facility.

The combined weighted average interest rate (excluding deferred upfront financing costs and unused fees) of the aggregate borrowings outstanding for the six months ended June 30, 2023 and year ended December 31, 2022 were 5.1% and 3.5%, respectively.

The following table shows the contractual maturities of our debt obligations as of June 30, 2023:


	Payments Due by Period
				Less than									More than
		Total			1 year			1 — 3 years			3 — 5 years		5 years
2019-1 Debt	$		352,500	$		—	$		—	$		—	$	352,500
March 2026 Notes			300,000			—			300,000			—		—
October 2026 Notes			300,000			—			—			300,000		—
Sumitomo Credit Facility			546,000			—			—			546,000		—
Total Debt Obligations	$		1,498,500	$		—	$		300,000	$		846,000	$	352,500

On September 28, 2018 (the “2018‑1 Closing Date”), we, through BCC Middle Market CLO 2018‑1 LLC (the “2018‑1 Issuer”), a Delaware limited liability company and a wholly owned and consolidated subsidiary of the Company, completed its $451.2 million term debt securitization (the “CLO Transaction”). The notes issued in connection with the CLO Transaction (the “2018‑1 Notes”) are secured by a diversified portfolio of the 2018‑1 Issuer consisting primarily of middle market loans, the majority of which are senior secured loans (the “2018‑1 Portfolio”). At the 2018‑1 Closing Date, the 2018‑1 Portfolio was comprised of assets transferred from the Company and its consolidated subsidiaries. All transfers were eliminated in consolidation and there were no realized gains or losses recognized in the CLO Transaction.

The CLO Transaction was executed through a private placement of the following 2018‑1 Notes. The Class A‑1 A, A‑1 B, A‑2, B and C 2018‑1 Notes were issued at par and are scheduled to mature on October 20, 2030. The Company received 100% of the membership interests (the “Membership Interests”) in the 2018‑1 Issuer in exchange for its sale to the 2018‑1 Issuer of the initial closing date loan portfolio. The Membership Interests do not bear interest. At the time of the transaction, the Class A‑1 A, A‑1 B, A‑2, B and C 2018‑1 Notes were included in the consolidated financial statements and the Membership Interests were eliminated in consolidation. On March 7, 2022, the Company sold 70% of the membership equity interests of the Company’s 2018-1 Notes to SLP, which resulted in the deconsolidation of the 2018-1 Notes from the Company’s consolidated financial statements as further discussed in Note 3.

For the three months ended June 30, 2023 and 2022, the components of interest expense related to the 2018-1 Issuer were as follows:

For the six months ended June 30, 2023 and 2022, the components of interest expense related to the 2018-1 Issuer were as follows:

On August 28, 2019, the Company, through BCC Middle Market CLO 2019‑1 LLC (the “2019‑1 Issuer”), a Cayman Islands limited liability company and a wholly-owned and consolidated subsidiary of the Company, and BCC Middle Market CLO 2019‑1 Co-Issuer, LLC (the “Co-Issuer” and, together with the Issuer, the “Co-Issuers”), a Delaware limited liability company, completed its $501.0 million term debt securitization (the “2019‑1 CLO Transaction”). The notes issued in connection with the 2019‑1 CLO Transaction (the “2019‑1 Notes”) are secured by a diversified portfolio of the Co-Issuers consisting primarily of middle market loans, the majority of which are senior secured loans (the “2019‑1 Portfolio”). The Co-Issuers also issued Class A‑1L Loans (the “Loans” and, together with the 2019‑1 Notes, the “2019‑1 Debt”). The Loans are also secured by the 2019‑1 Portfolio. At the 2019‑1 closing date, the 2019‑1 Portfolio was comprised of assets transferred from the Company and its consolidated subsidiaries. All transfers were eliminated in consolidation and there were no realized gains or losses recognized in the 2019‑1 CLO Transaction.

On November 30, 2021, the Co-Issuers refinanced the 2019‑1 CLO Transaction through a private placement of $410 million of senior secured and senior deferrable notes consisting of: (i) $282.5 million of Class A‑1‑R Senior Secured Floating Rate Notes, which currently bear interest at the applicable reference rate plus 1.50% per annum; (ii) $55 million of Class A‑2‑R Senior Secured Floating Rate Notes, which bear interest at the applicable reference rate plus 2.00% per annum; (iii) $47.5 million of Class B-R Senior Deferrable Floating Rate Notes, which bear interest at the applicable reference rate plus 2.60% per annum; and (iv) $25.0 million of Class C-R Senior Deferrable Floating Rate Notes, which bear interest at the applicable reference rate plus 3.75% per annum (collectively, the “2019‑1 CLO Reset Notes”). As part of the transactions, the 2019-1 Issuer was redomiciled from Cayman to Jersey. The 2019‑1 CLO Reset Notes are scheduled to mature on October 15, 2033 and the reinvestment period ends October 15, 2025. The Company retained $32.5 million of the Class B-R Notes and $25.0 million of the Class C-R Notes. The retained notes by the Company are eliminated in consolidation. The transaction resulted in a realized loss on the extinguishment of debt of $2.3 million from the acceleration of unamortized debt issuance costs of. The obligations of the Issuer under the CLO Transaction are non-recourse to the Company.

On June 15, 2023, the Company entered into a Second Supplemental Indenture (“2019-1 Supplemental Indenture”), dated as of June 15, 2023, pursuant to Section 8.1(xxxi) of the Indenture, dated as of November 30, 2021, between BCC Middle Market CLO 2019-1, LTD, as issuer, and Wells Fargo Bank, National Association, as trustee. The 2019-1 Supplemental Indenture provides for, among other things, an adoption of an alternate reference rate of Term SOFR plus 0.26161%, effective July 1, 2023.

The 2019‑1 CLO Reset Notes was executed through a private placement of the following 2019‑1 Debt:


						Interest rate at
2019-1 Debt	Principal Amount		Spread above Index			June 30, 2023
Class A-1-R	$	282,500		1.50	% + 3 Month LIBOR		6.76	%
Class A-2-R		55,000		2.00	% + 3 Month LIBOR		7.26	%
Class B-R		15,000		2.60	% + 3 Month LIBOR		7.86	%
Total 2019-1 Debt		352,500
Membership Interests		102,250	Non-interest bearing			Not applicable
Total	$	454,750

The Loans and Class A‑1‑R, A‑2‑R, and B-R Notes are included in the consolidated financial statements of the Company. The $32.5 million of the Class B-R Notes, $25.0 million of the Class C-R Notes and Membership Interests retained by the Company are eliminated in consolidation.

The Company serves as portfolio manager of the 2019‑1 Issuer pursuant to a portfolio management agreement between the Company and the 2019‑1 Issuer. For so long as the Company serves as portfolio manager, the Company will not charge any management fee or subordinated interest to which it may be entitled.

During the reinvestment period, pursuant to the indenture and loan agreement governing the 2019‑1 Notes and Loans, respectively, all principal collections received on the underlying collateral may be used by the 2019‑1 Issuer to purchase new collateral under the direction of the Company in its capacity as portfolio manager of the 2019‑1 Issuer and in accordance with the 2019‑1 Issuer investment strategy and the terms of the indenture and loan agreement, as applicable.

The Company has agreed to hold on an ongoing basis the Membership Interests with an aggregate dollar purchase price at least equal to 5% of the aggregate amount of all obligations issued by the 2019‑1 Co-Issuers for so long as the 2019‑1 Debt remains outstanding.

The 2019‑1 Issuer pays ongoing administrative expenses to the trustee, independent accountants, legal counsel, rating agencies and independent managers in connection with developing and maintaining reports, and providing required services in connection with the administration of the 2019‑1 Issuer.

As of June 30, 2023, there were 52 first lien and second lien senior secured loans with a total fair value of approximately $479.9 million and cash of $26.2 million securing the 2019-1 Debt. As of December 31, 2022, there were 49 first lien and second lien senior secured loans with a total fair value of approximately $447.4 million and cash of $56.0 million securing the 2019-1 Debt. Assets that are pledged as collateral for the 2019-1 Debt are not directly available to the creditors of the Company to satisfy any obligations of the Company other than the Company’s obligations under the indenture and loan agreement governing the 2019-1 Debt. The creditors of the 2019-1 Co-Issuers have received security interests in such assets and such assets are not intended to be available to the creditors of the Company (or an affiliate of the Company). The 2019-1 Portfolio must meet certain requirements, including asset mix and concentration, term, agency rating, collateral coverage, minimum coupon, minimum spread and sector diversity requirements in the indenture and loan agreement governing the 2019-1 Debt. As of June 30, 2023, the Company was in compliance with its covenants related to the 2019-1 Debt.

Costs of the offering of $1.5 million were incurred in connection with the 2019‑1 CLO Reset Notes which have been recorded as debt issuance costs and presented as a reduction to the outstanding principal amount of the 2019‑1 Debt on the consolidated statements of assets and liabilities and are being amortized over the life using the effective interest method. The balance of the unamortized debt issuance costs was $1.3 million and $1.4 million as of June 30, 2023 and December 31, 2022, respectively.

For the three months ended June 30, 2023 and 2022, the components of interest expense related to the 2019‑1 Co-Issuers were as follows:

For the six months ended June 30, 2023 and 2022, the components of interest expense related to the 2019‑1 Co-Issuers were as follows:

On March 27, 2020, the Company entered into an unsecured revolving loan agreement (the “Revolving Advisor Loan”) with BCSF Advisors, LP, the investment adviser of the Company. The Revolving Advisor Loan had a maximum credit limit of $50.0 million and matured on March 27, 2023. The Revolving Advisor Loan accrued interest at the Applicable Federal Rate from the date of such loan until the loan was repaid in full.

For the three and six months ended June 30, 2023 and 2022, the Revolving Advisor Loan did not incur any interest expense.

On June 10, 2020, the Company entered into a Master Note Purchase Agreement with institutional investors listed on the Purchaser Schedule thereto (the “Note Purchase Agreement”), in connection with the Company’s issuance of $150.0 million aggregate principal amount of its 8.50% senior unsecured notes due 2023 (the “2023 Notes”). The sale of the 2023 Notes generated net proceeds of approximately $146.4 million, including an offering discount of $1.5 million and debt issuance costs in connection with the transaction, including fees and commissions, of $2.1 million.

The 2023 Notes were scheduled to mature on June 10, 2023 and could be redeemed in whole or in part at the Company’s option at any time or from time to time at the redemption prices set forth in the Note Purchase Agreement. The 2023 Notes bore interest at a rate of 8.50% per year payable semi-annually on June 10 and December 10 of each year, commencing on December 10, 2020.

On July 16, 2021 the Company repurchased $37.5 million of the 2023 Notes at a total cost of $39.5 million. This resulted in a realized loss on the extinguishment of debt of $2.5 million, which included a premium paid of $2.0 million and acceleration of unamortized debt issuance costs and original issue discount of $0.5 million.

On August 24, 2022, the Company issued a notice to the noteholders of the 2023 Notes, indicating its intention to prepay the total aggregate principal amount committed of $150,000,000, including the principal amount outstanding of $112,500,000, under the 2023 Notes pursuant to the terms of the Note Purchase Agreement governing the 2023 Notes. The Notes were prepaid at 100% of their principal amount, plus accrued and unpaid interest thereon, on September 6, 2022. This resulted in a realized loss on the extinguishment of debt of $0.7 million, which included acceleration of unamortized debt issuance costs and original issue discount of $0.7 million.

For the three months ended June 30, 2023 and 2022, the components of interest expense related to the 2023 Notes were as follows:


	For the Three Months Ended June 30,
	2023		2022
Borrowing interest expense	$	—	$	2,344
Amortization of debt issuance cost		—		137
Accretion of original issue discount		—		91
Total interest and debt financing expenses	$	—	$	2,572

For the six months ended June 30, 2023 and 2022, the components of interest expense related to the 2023 Notes were as follows:


		For the Six Months Ended June 30,
	2023			2022
Borrowing interest expense	$		—	$	4,594
Amortization of debt issuance cost			—		272
Accretion of original issue discount			—		181
Total interest and debt financing expenses	$		—	$	5,047

On March 10, 2021, the Company and U.S. Bank National Association (the “Trustee”), entered into an Indenture (the “Base Indenture”) and First Supplemental Indenture (the “First Supplemental Indenture,” and together with the Base Indenture, the “Indenture”) between the Company and the Trustee. The First Supplemental Indenture relates to the Company’s issuance of $300.0 million aggregate principal amount of its 2.95% notes due 2026 (the “March 2026 Notes”).

The March 2026 Notes will mature on March 10, 2026 and may be redeemed in whole or in part at the Company’s option at any time or from time to time at the redemption prices set forth in the Indenture. The March 2026 Notes bear interest at a rate of 2.95% per year payable semi-annually on March 10th and September 10th of each year, commencing on September 10, 2021. The March 2026 Notes are general unsecured obligations of the Company that rank senior in right of payment to all of the Company’s existing and future indebtedness that is expressly subordinated in right of payment to the March 2026 Notes, rank pari passu with all existing and future unsecured unsubordinated indebtedness issued by the Company, rank effectively junior to any of the Company’s secured indebtedness (including unsecured indebtedness that the Company later secures) to the extent of the value of the assets securing such indebtedness, and rank structurally junior to all existing and future indebtedness (including trade payables) incurred by the Company’s subsidiaries, financing vehicles or similar facilities.

The net proceeds to the Company were approximately $294.3 million, after deducting the underwriting discounts and commissions of $4.4 million and offering expenses of $1.3 million.

As of June 30, 2023 and December 31, 2022 the components of the carrying value of the March 2026 Notes were as follows:


	June 30,			December 31,
	2023			2022
Principal amount of debt	$	300,000		$	300,000
Unamortized debt issuance cost		(1,748	)		(2,069	)
Original issue discount, net of accretion		(1,300	)		(1,539	)
Carrying value of 2026 Notes	$	296,952		$	296,392

For the three months ended June 30, 2023 and 2022, the components of interest expense related to the March 2026 Notes were as follows:


	For the Three Months Ended June 30,
	2023		2022
Borrowing interest expense	$	2,212	$	2,213
Amortization of debt issuance cost		162		162
Accretion of original issue discount		120		120
Total interest and debt financing expenses	$	2,494	$	2,495

For the six months ended June 30, 2023 and 2022, the components of interest expense related to the March 2026 Notes were as follows:


		For the Six Months Ended June 30,
	2023			2022
Borrowing interest expense	$		4,425	$	4,426
Amortization of debt issuance cost			322		321
Accretion of original issue discount			239		239
Total interest and debt financing expenses	$		4,986	$	4,986

On October 13, 2021, the Company and the Trustee entered into a Second Supplemental Indenture (the “Second Supplemental Indenture”) to the Indenture between the Company and the Trustee. The Second Supplemental Indenture relates to the Company’s issuance of $300.0 million aggregate principal amount of its 2.55% notes due 2026 (the “October 2026 Notes,” and together with the March 2026 Notes, the “2026 Notes”).

The October 2026 Notes will mature on October 13, 2026 and may be redeemed in whole or in part at the Company’s option at any time or from time to time at the redemption prices set forth in the Indenture. The October 2026 Notes bear interest at a rate of 2.55% per year payable semi-annually on April 13 and October 13 of each year, commencing on April 13, 2022. The October 2026 Notes are general unsecured obligations of the Company that rank senior in right of payment to all of the Company’s existing and future indebtedness that is expressly subordinated in right of payment to the October 2026 Notes, rank pari passu with all existing and future unsecured unsubordinated indebtedness issued by the Company, rank effectively junior to any of the Company’s secured indebtedness (including unsecured indebtedness that the Company later secures) to the extent of the value of the assets securing such indebtedness, and rank structurally junior to all existing and future indebtedness (including trade payables) incurred by the Company’s subsidiaries, financing vehicles or similar facilities.

The net proceeds to the Company were approximately $293.1 million, after deducting the underwriting discounts and commissions of $6.2 million and offering expenses of $0.7 million.

As of June 30, 2023 and December 31, 2022 the components of the carrying value of the October 2026 Notes were as follows:


	June 30,			December 31,
	2023			2022
Principal amount of debt	$	300,000		$	300,000
Unamortized debt issuance cost		(2,403	)		(2,765	)
Original issue discount, net of accretion		(2,105	)		(2,423	)
Carrying value of 2026 Notes	$	295,492		$	294,812

For the three months ended June 30, 2023 and 2022, the components of interest expense related to the October 2026 Notes were as follows:


	For the Three Months Ended June 30,
	2023		2022
Borrowing interest expense	$	1,912	$	1,913
Amortization of debt issuance cost		182		182
Accretion of original issue discount		159		159
Total interest and debt financing expenses	$	2,253	$	2,254

For the six months ended June 30, 2023 and 2022, the components of interest expense related to the October 2026 Notes were as follows:


		For the Six Months Ended June 30,
	2023			2022
Borrowing interest expense	$		3,825	$	3,825
Amortization of debt issuance cost			362		362
Accretion of original issue discount			317		317
Total interest and debt financing expenses	$		4,504	$	4,504

On December 24, 2021, the Company entered into a senior secured revolving credit agreement (the “Sumitomo Credit Agreement” or the “Sumitomo Credit Facility”) as Borrower, with Sumitomo Mitsui Banking Corporation, as Administrative Agent and Sole Book Runner, and with Sumitomo Mitsui Banking Corporation and MUFG Union Bank, N.A., as Joint Lead Arrangers. The Credit Agreement is effective as of December 24, 2021.

The facility amount under the Sumitomo Credit Agreement is $300.0 million with an accordion provision to permit increases to the total facility amount up to $1.0 billion. Proceeds of the loans under the Sumitomo Credit Agreement may be used for general corporate purposes of the Company, including, without limitation, repaying outstanding indebtedness, making distributions, contributions and investments, and acquisition and funding, and such other uses as permitted under the Sumitomo Credit Agreement. The maturity date is December 24, 2026.

On July 6, 2022, the Company entered into the First Amendment to the Sumitomo Credit Agreement. The First Amendment provides for an upsize in the total commitments from lenders under the revolving credit facility governed by the Sumitomo Credit Agreement from $300.0 million to $385.0 million. The First Amendment also replaced the LIBOR benchmark provisions under the Sumitomo Credit Agreement with SOFR benchmark provisions, including applicable credit spread adjustments.

On July 22, 2022, the Company entered into the Increasing Lender/Joinder Lender Agreement (the “Joinder Agreement”), dated as of July 22, 2022, pursuant to Section 2.08(e) of the Sumitomo Credit Agreement. The Joinder Agreement provides for, among other things, an upsize in the total commitments from lenders under the revolving credit facility governed by the Sumitomo Credit Agreement from $385.0 million to $485.0 million.

On August 24, 2022, the Company entered into the Second Amendment, which provides for, among other things, an upsize in the total commitments from lenders under the Sumitomo Credit Agreement from $485.0 million to $635.0 million.

On December 14, 2022, the Company entered into a second Increasing Lender/Joinder Lender Agreement (the “Second Joinder Agreement”), dated as of December 14, 2022, pursuant to Section 2.08(e) of the Sumitomo Credit Agreement. The Second Joinder Agreement provides for, among other things, an upsize in the total commitments from lenders under the revolving credit facility governed by the Sumitomo Credit Agreement from $635.0 million to $665.0 million.

Interest under the Sumitomo Credit Agreement for (i) loans for which the Company elects the base rate option, (A) if the borrowing base is equal to or greater than the product of 1.60 and the revolving credit exposure, is payable at an “alternate base rate” (which is the greater of zero and the highest of (a) the prime rate as published in the print edition of The Wall Street Journal, Money

Rates Section, (b) the federal funds effective rate plus 0.5% and (c) the one-month Eurocurrency rate plus 1% per annum) plus 0.75% per annum and (B) if the borrowing base is less than the product of 1.60 and the revolving credit exposure, the alternate base rate plus 0.875% per annum; (ii) loans for which the Company elects the Eurocurrency option, (A) if the borrowing base is equal to or greater than the product of 1.60 and the revolving credit exposure, is payable at a rate equal to the Eurocurrency rate plus 1.75% per annum and (B) if the borrowing base is less than the product of 1.60 and the revolving credit exposure, is payable at a rate equal to the Eurocurrency rate plus 1.875% per annum; and (iii) loans for which the Company elects the risk-free-rate option, (A) if the borrowing base is equal to or greater than the product of 1.60 and the revolving credit exposure, is payable at a rate equal to risk-free-rate plus 1.8693% per annum and (B) if the borrowing base is less than the product of 1.60 and the revolving credit exposure, is payable at a rate equal to risk-free-rate plus 1.9943% per annum. The Company pays a used commitment fee of 37.5 basis points (0.375%) on the average daily unused amount of the dollar commitment.

The Sumitomo Credit Agreement includes customary affirmative and negative covenants, including certain limitations on the incurrence of additional indebtedness and liens, as well as usual and customary events of default for revolving credit facilities of this nature. As of June 30, 2023, the Company was in compliance with its covenants related to the Sumitomo Credit Facility.

As of June 30, 2023 and December 31, 2022, there were $546.0 million and $443.0 million of borrowings under the Sumitomo Credit Facility.

For the three months ended June 30, 2023 and 2022, the components of interest expense related to the Sumitomo Credit Facility were as follows:


	For the Three Months Ended June 30,
	2023		2022
Borrowing interest expense	$	9,244	$	1,160
Unused facility fee		140		137
Accretion of original issue discount		234		109
Total interest and debt financing expenses	$	9,618	$	1,406

For the six months ended June 30, 2023 and 2022, the components of interest expense related to the Sumitomo Credit Facility were as follows:


		For the Six Months Ended June 30,
	2023			2022
Borrowing interest expense	$		18,119	$	1,204
Unused facility fee			265		429
Accretion of original issue discount			466		217
Total interest and debt financing expenses	$		18,850	$	1,850