Blackstone Inc. · NYSE:BX
Blackstone — Blackstone Loan Financing — Q4 2021 Earnings Presentation
58 slides from Blackstone's earnings presentation, Dec 31, 2021
Slide 1: Blackstone Loan Financing Limited
This is a marketing communication. Please refer to the Prospectus of the Company before making a final investment decisions. Blackstone Loan Financing Limited AS OF 31 DECEMBER 2021 FOR PROFESSIONAL INVESTORS ONLY. NOT FOR DISTRIBUTION TO RETAIL INVESTORS.
Slide 2: Table of Contents
TABLE OF CONTENTS I. Overview 2 II. Fourth Quarter 2021 Results 7 III. Performance 14 IV. Portfolio Activity 17 V. Market Themes 22 VI. Portfolio and Market Outlook 29 VII. Appendix 31 VIII. Key Risk Factors 43 IX. Important Disclosure Information 46 Blackstone | 1
Slide 3: I. Overview
I. Overview Blackstone | 2
Slide 4: Blackstone Loan Financing Limited (BGLF) strategy overview
BLACKSTONE LOAN FINANCING LIMITED (“BGLF”) Focus on senior secured corporate loans with a goal of providing compelling income and stable NAV Strategy Overview BGLF € NAV Total Returns Components(1) 25.0% 21.8% ▪ Leveraged exposure to European and US floating rate senior secured loans and bonds, both
Slide 5: BGLF and BCF Highlights
BGLF AND BCF HIGHLIGHTS 45 8 €1,268M €434M CLO positions, all vintage years BCF net assets(6) BGLF net assets(6) actively managed by BXC(1) 21.8% 10.1% >700 0.07% BGLF LTM NAV return(7) BGLF dividend yield(8) underlying loan since inception issuers (2) default loss rate(3) ✓ Largest CLO manager glob
Slide 6: Blackstone Corporate Funding (BCF) Structure
BLACKSTONE CORPORATE FUNDING (“BCF”) STRUCTURE Private Unitholders Public Shareholders ▪ €912 million committed capital 461 million shares: ▪ €0 million undrawn capital ▪ 91% third parties (418 million) ▪ 9% Blackstone (43 million) BCF EUR BGLF €816.3 million NAV €433.6 million NAV 66.2% 33.8% BCF:
Slide 7: Investment Opportunity Overview
INVESTMENT OPPORTUNITY OVERVIEW Access to Blackstone ▪ Strategic partnership to the well-recognized Blackstone Credit CLO platform Credit’s CLO Platform ▪ 22 years of experience investing across multiple cycles(1) ▪ Low-cost levered exposure to portfolio of secured loans with diversified funding sou
Slide 8: II. Fourth Quarter 2021 Results
II. Fourth Quarter 2021 Results Blackstone | 7
Slide 9: Fourth Quarter 2021 Results
FOURTH QUARTER 2021 RESULTS ▪ 4Q’21 total return of 4.1% and 21.8% YTD; dividend yield of 10.01% (including 2.75c 4Q’21 dividend). BGLF Earnings The Board has adopted a Dividend Policy targeting an annual dividend of €0.07 - €0.08 for 2022(1) & Distributions ▪ BGLF’s net distributable earnings excee
Slide 10: BGLF Earnings & Distributions
BGLF EARNINGS & DISTRIBUTIONS ▪ BGLF LTM distribution yield of 10.09%(1), supported by uninterrupted cash flows from each CLO since inception ▪ The Board declared a 4Q’21 dividend of 2.75c dividend to deliver at the top end of its 2021 target of €0.07 - €0.08. The Board have again announced a 2022 D
Slide 11: BCF – Loan Portfolio Activity
BCF – LOAN PORTFOLIO ACTIVITY 4Q ’21 Portfolio Activity Highlights(1) 4Q ’21 Underlying Loan Portfolio Activity(2) (€ in billions) Added 46 new issuers, sold 28 issuers Gross 2.3 WA spread up by 5bp to 3.55% purchases B2 average facility rating Gross 1.0 Diversification among issuers, sales sectors,
Slide 12: BCF Loan Portfolio Composition
BCF LOAN PORTFOLIO COMPOSITION ▪ Diversified portfolio of 727 issuers invested across multiple sectors, geographies, and vintages ▪ Portfolio of primarily senior secured and floating rate assets Country Allocations Moody’s Rating Distribution 4.2% Others >Ba2 4.4% 14.9% Ba2 4.5% 3.7% Luxembourg Ba3
Slide 13: BCF CLO Portfolio Composition
BCF CLO PORTFOLIO COMPOSITION ▪ Diversified portfolio of 45(1) CLOs spanning 8 vintage years ▪ 38% of BCF CLOs are currently callable, with a further 29% exiting their non-call period in 2022. This affords multiple opportunities to reduce cost and/or extend CLO liabilities to support overall IRRs CL
Slide 14: BCF Investment Activity
BCF INVESTMENT ACTIVITY ▪ EUR CLOs WAC decrease mainly driven by redemption of previously amortising transactions with high WAC and subsequent exclusion from calculation ▪ US CLO WAC decreased predominantly as a result of reset and refinancing activity. We expect this trend to continue across the po
Slide 15: III. Performance
III. Performance Blackstone | 14
Slide 16: BGLF 4Q'21 Return Analysis
BGLF 4Q’21 RETURN ANALYSIS BGLF’s 4Q NAV total return was 4.06% Contributors to Total Return Directly EUR CLO US CLO US CLO BCF Cash BCF BGLF Held Loans Income Notes Income Notes Warehouses & Expenses 6% 1.98% 5% 0.25% 1.25% 0.02% 0.02% 4.03% 0.05% 4.06% -0.72% -0.17% -0.08% -0.02% 4% 2.47% 2.41% 3%
Slide 17: BGLF Monthly € NAV Total Return Performance
BGLF MONTHLY € NAV TOTAL RETURN PERFORMANCE Jan Feb Mar Apr May Jun Jul Aug Sep Oct Nov Dec YTD 2021 BGLF € NAV 2.79% 0.67% 0.20% 1.27% 1.28% 4.00% 1.38% 1.18% 3.19% 1.14% 0.54% 2.33% 21.82% European Loans 0.91% 0.81% 0.00% 0.43% 0.42% 0.31% 0.04% 0.48% 0.44% 0.14% 0.15% 0.42% 4.63% US Loans 1.27% 0
Slide 18: IV. Portfolio Activity
IV. Portfolio Activity Blackstone | 17
Slide 19: New Securitisations, Resets, and Refinancings – 4Q '21
NEW SECURITISATIONS, RESETS, AND REFINANCINGS – 4Q ’21 New CLO securitisations ▪ The addition of new CLOs to the BCF portfolio improves diversification across vintage and allows for additional refinancing and reset opportunities in aggregate, to take advantage of favourable market conditions as they
Slide 20: Subsequent Events – BCF Portfolio Activity
SUBSEQUENT EVENTS – BCF PORTFOLIO ACTIVITY New CLO Securitisations ▪ In January 2022, Boyce Park CLO (U.S.) was priced, extending the vintage profile of BCF to 9 years. The $762 million transaction has a 5 year reinvestment period and two year non call period, with AAA liabilities placed at S+129 ba
Slide 21: Summary of BCF Investment Portfolio
SUMMARY OF BCF INVESTMENT PORTFOLIO ▪ Marginal increase in directly held loans and US CLO warehouses due to ramping for potential new CLO originations ▪ All portfolio buckets contributing to increased WA portfolio net interest margin, with additional benefit from exclusion of redeemed CLOs from the
Slide 22: Redeemed or Fully Sold CLOs
REDEEMED OR FULLY SOLD CLOs Sale/Redemption BCF Position Current Valuation as Realised IRR To WA Ann. Distribution Region Vintage Exit Method Date Prior To Exit (m) % of BCF NAV(1) Date(2) Through Last Payment(3) Myers Park U.S. 2018 Sale Mar-21 $26.4 N/A 11.1%* 16.4% Greenwood Park U.S. 2018 Sale M
Slide 23: V. Market Themes
V. Market Themes Blackstone | 22
Slide 24: Global Credit Spreads and Prices
GLOBAL CREDIT SPREADS AND PRICES Spread to Maturity Yield to Maturity (L+ / E+) 1,000 11% 800 9% 600 7% L+457 400 5% 4.20% L+411 3.99% 200 3% Dec-18 Aug-19 Mar-20 Oct-20 May-21 Dec-21 Dec-18 Aug-19 Mar-20 Oct-20 May-21 Dec-21 S&P LL Index S&P Euro LL Index S&P LL Index S&P Euro LL Index Average Bid
Slide 25: Global CLO Arbitrage
GLOBAL CLO ARBITRAGE The average quarterly arbitrage grew in 4Q ’21 as increasing loan spreads outweighed a marginal increase in CLO weighted average cost of capital US WA Spread and Cost of Capital European WA Spread and Cost of Capital (bp) (bp) 450 450 400 400 350 350 300 300 250 250 200 200 150
Slide 26: Inflation Expectations
INFLATION EXPECTATIONS Expectations for inflation remain elevated in some developed foreign markets U.S. Treasury Yield Breakevens(1) Global Sovereign Bond 5-Year Breakevens (daily) (daily) 3.5% 5% 3.0% 4% 2.5% 3% 2.0% 2% 1.5% 1% 1.0% 0% 0.5% -1% 0.0% 2016 2017 2018 2019 2020 2021 Jan-19 Jun-19 Nov-
Slide 27: CLO Issuance
CLO ISSUANCE Record breaking activity for CLO market in 2021 U.S. and European CLO Issuance ($/€ in billions) 450 $438 400 350 $286 $285 300 250 200 $162 150 $125 € 100 100 € 46 € 46 € 41 50 € 23 0 2017 2018 2019 2020 2021 2017 2018 2019 2020 2021 US Europe New Issue Refi Reset 2022 US CLO new issue
Slide 28: Credit Market Supply
CREDIT MARKET SUPPLY Loans, CLOs, and high yield experienced record issuance in 2021; issuance is expected to remain robust in 2022 U.S. and European Loan Gross Issuance ($/€ in billions) 120 99 100 93 81 83 81 78 80 71 68 67 58 60 49 45 41 40 40 32 33 31 26 28 22 19 22 22 21 17 17 19 20 15 13 13 13
Slide 29: Market Technicals
MARKET TECNHICALS Favorable demand environment for loans with increasing flows and growing CLO manager ownership CLO Manager Share of Loan Primary (%) 80% 71% 72% 73% 68% 62% 62% 64% 61% 60% 55% 56% 53% 49% 43% 41% 43% 40% 33% 35% 28% 29% 27% 29% 21% 17% 20% N/A 0% '10 '11 '12 '13 '14 '15 '16 '17 '1
Slide 30: VI. Portfolio and Market Outlook
VI. Portfolio and Market Outlook Blackstone | 29
Slide 31: Portfolio and Market Outlook
PORTFOLIO AND MARKET OUTLOOK Portfolio and Market Outlook ▪ With 8 new CLO originations, 17 CLO refinancings and resets, 3 full sales of non retention positions, and 5 redemptions, 2021 was a very active year for the BCF portfolio, culminating in a record year for performance ▪ In 2022, BCF plans to
Slide 32: VII. Appendix
VII. Appendix Blackstone | 31
Slide 33: BCF Look Through Portfolio Details
BCF LOOK THROUGH PORTFOLIO DETAILS Portfolio Total Par Moody’s Moody’s WA Coupon WA # WA WA Par Outstanding Moody’s Industry Country Corporate Facility (All-In Maturity Facilities Price Spread (€M) (€M) Rating Rating Rate) (Years) Issuer 1 6 182 6,854 Media Broadcasting and Subscription France B2 B2
Slide 34: European CLO Securitisation Investment Details
EUROPEAN CLO SECURITISATION INVESTMENT DETAILS Highest of Refi / Remaining BCF Position Valuation Ann. Cum. Interest Defaulted Closing Non-Call Deal Size BCF Cost WA Cost Gross Caa / CCC / Reset Date RI Period Position as % of as % of BCF Cash-on- Cash-on- NIM Diversion Assets % of Date End (m) (m)
Slide 35: US CLO Securitisation Investment Details (Cont'd)
US CLO SECURITISATION INVESTMENT DETAILS (CONT’D) Highest of Refi / Remaining BCF Position Valuation Ann. Cum. Interest Defaulted Closing Non-Call Deal Size BCF Cost WA Cost Gross Caa / CCC / Reset Date RI Period Position as % of as % of Cash-on- Cash-on- NIM Diversion Assets % of Date End (m) (m) o
Slide 36: Vertical Retention Investments
VERTICAL RETENTION INVESTMENTS Refi / Highest of Remaining BCF Position Ann. Cum. Interest Defaulted Closing Reset Deal Size BCF Cost Valuation as WA Cost of Gross Caa / CCC / RI Period Position as % of Cash-on- Cash-on- NIM Diversion Assets % of Date Date (m) (m) % of BCF NAV Debt(1) Coupon(1) CCC
Slide 37: Redeemed or Fully Sold CLOs
REDEEMED OR FULLY SOLD CLOs Sale/Redemption BCF Position Current Valuation as Realised IRR To WA Ann. Distribution Region Vintage Exit Method Date Prior To Exit (m) % of BCF NAV(1) Date(2) Through Last Payment(3) Myers Park U.S. 2018 Sale Mar-21 $26.4 N/A 11.1%* 16.4% Greenwood Park U.S. 2018 Sale M
Slide 38: CLO Securitisation Performance by Vintage – Current Portfolio
CLO SECURITISATION PERFORMANCE BY VINTAGE – CURRENT PORTFOLIO ▪ CLO securitisations continued to generate positive, uninterrupted cashflows ▪ EU CLOs 4Q’21 ann. distribution increased QoQ due to closing of earlier resets and associated par flushes (reallocation of principal to income), and one new C
Slide 39: 2021 BGLF Return Analysis
2021 BGLF RETURN ANALYSIS BGLF’s 2021 NAV total return was 21.82% Contributors to Total Return Directly EUR CLO US CLO US CLO BCF Cash BCF BGLF Held Loans Income Notes Income Notes Warehouses & Expenses 25% 1.12% 0.09% 22.40% 2.45% 10.94% 0.25% 0.25% 0.25% 21.82% -0.74% 8.49% -0.83% 20% 15% 10.15% 9
Slide 40: BGLF Monthly € NAV Total Return Performance
BGLF MONTHLY € NAV TOTAL RETURN PERFORMANCE Trailing 12 months ending: December ’17 December ’18 December ’19 December ’20 December ‘21 Discrete Performance BGLF € NAV 1.38% 6.70% 14.46% -0.22% 21.82% European Loans 3.30% 0.55% 5.03% 2.38% 4.63% US Loans 4.25% 1.14% 8.17% 2.78% 5.40% BGLF € NAV net
Slide 41: BGLF Total Returns Since Inception
BGLF TOTAL RETURNS SINCE INCEPTION BGLF has delivered a solid return in excess off the loan market across multiple time periods Annualised Net Total Return 35% 31.2% 30% 25% 21.8% 20% 15% 13.2% 11.6% 10% 8.5% 8.5% 6.0% 6.8% 5.4% 5.4% 4.1% 4.6% 4.0% 4.3% 4.0% 5% 3.2% 3.4% 0.7% 0.7% 0% -0.4% -5% 4Q'21
Slide 42: Summary Term Sheet
SUMMARY TERM SHEET Blackstone Corporate Funding DAC (“BCF”) Blackstone Credit(1) is generally rebating 20% of the CLO management fees to BCF pro rata to the value of BCF’s CLO equity position. After costs allocated by Blackstone Credit to BCF in respect of the relevant CLO, the net rebate on certain
Slide 43: Blackstone Corporate Funding (BCF) Investment Process
BLACKSTONE CORPORATE FUNDING (“BCF”) INVESTMENT PROCESS Warehouse Opportunities CLO Creation ▪ First loss US CLO warehouse investments provide exposure to ▪ Aim to construct relatively lower risk loan portfolios with a loan portfolio financed at relatively favourable terms sustainable distributions
Slide 44: VIII. Key Risk Factors
VIII.Key Risk Factors Blackstone | 43
Slide 45: Key Risk Factors
KEY RISK FACTORS AS DETERMINED BY THE ENTITIES DISTRIBUTING THIS COMMUNICATION All investments are subject to risk, including the loss of the principal amount invested. Past performance is not necessarily indicative of future results, and there can be no assurance that BGLF will achieve comparable r
Slide 46: Key Risk Factors (cont'd)
KEY RISK FACTORS AS DETERMINED BY THE ENTITIES DISTRIBUTING THIS COMMUNICATION Conflicts of Interest. There may be occasions when the Company and their affiliates will encounter potential conflicts of interest in connection with Blackstone’s activities including, without limitation, the allocation o
Slide 47: IX. Important Disclosure Information
IX. Important Disclosure Information Blackstone | 46
Slide 48: Notes to 'BGLF and BCF Highlights'
NOTES TO ‘BGLF AND BCF HIGHLIGHTS’ 1) As of 31 December 2021. Excludes CLOs in the process of being redeemed. 2) Data as of end 31 December 2021 using internal Blackstone Credit data calculated on 19 January 2022. Reflects directly held loans and look through holdings of CLOs and US CLO warehouses.
Slide 49: Important Disclosure Information
IMPORTANT DISCLOSURE INFORMATION Important notice in relation to Blackstone Loan Financing Limited (“The Company” or "BGLF") This document has been issued by Blackstone Loan Financing Limited (the “Company”), and should not be taken as an inducement to engage in any investment activity and is for th
Slide 50: Important Disclosure Information
IMPORTANT DISCLOSURE INFORMATION Certain information contained herein has been obtained from published and non-published sources prepared by other parties, which in certain cases has not been updated through the date hereof. While such information is believed to be reliable for the purpose used here
Slide 51: Important Disclosure Information (Cont'd)
IMPORTANT DISCLOSURE INFORMATION (CONT’D) Any targets, forecasts, estimates, or similar returns set forth herein are based on Blackstone Credit’s belief about the returns that may be achievable on investments that the Fund intends to pursue. Targets, forecasts, and estimates are necessarily speculat
Slide 52: Important Disclosure Information (Cont'd)
IMPORTANT DISCLOSURE INFORMATION (CONT’D) Prospective investors should be aware that an investment in the Fund involves a high degree of risk. There may be occasions when the management company of the Fund, the principals, Blackstone Credit, Blackstone and their affiliates will encounter potential c
Slide 53: Important Disclosure Information (Cont'd)
IMPORTANT DISCLOSURE INFORMATION (CONT’D) Blackstone Ireland Limited and Blackstone Ireland Fund Management Limited are authorised and regulated by the Central Bank of Ireland. Blackstone Ireland Limited, Blackstone Ireland Fund Management Limited, the funds they manage, or specific investments made
Slide 54: Important Disclosure Information (Cont'd) – Australia
IMPORTANT DISCLOSURE INFORMATION (CONT’D) AUSTRALIA The provision of this document to any person does not constitute an offer of securities or financial products of any kind to that person or an invitation to that person to apply for securities or financial products of any kind. Any such offer or in
Slide 55: Important Disclosure Information (Cont'd) – Canada
IMPORTANT DISCLOSURE INFORMATION (CONT’D) CANADA These materials and the information contained herein are not, and under no circumstances are to be construed as, a prospectus, an offering memorandum, an advertisement or a public offering of securities in Canada or any province or territory thereof.
Slide 56: Important Disclosure Information (Cont'd) – EEA
IMPORTANT DISCLOSURE INFORMATION (CONT’D) SPECIAL NOTICE TO PROSPECTIVE INVESTORS IN THE EUROPEAN ECONOMIC AREA In relation to each member state of the EEA (each a “Member State”) which has implemented the Alternative Investment Fund Managers Directive (Directive (2011/61/EU)) (the “AIFMD”), this do
Slide 57: Important Disclosure Information (Cont'd) – Japan
IMPORTANT DISCLOSURE INFORMATION (CONT’D) JAPAN THE SHARES OF THE COMPANY MAY NOT BE OFFERED FOR A PUBLIC OFFERING IN JAPAN UNLESS A SECURITIES REGISTRATION STATEMENT PURSUANT TO ARTICLE 4, PARAGRAPH 1 OF THE FINANCIAL INSTRUMENTS AND EXCHANGE ACT OF JAPAN (INCLUDING ANY AMENDMENTS OR SUCCESSOR LAWS
Slide 58: Important Disclosure Information (Cont'd) – China
IMPORTANT DISCLOSURE INFORMATION (CONT’D) PEOPLE’S REPUBLIC OF CHINA This document and the related documents do not and are not intended to constitute a sale, an offer to sell or a solicitation of an offer to buy, directly or indirectly, any securities in the People’s Republic of China (for the purp
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