Blackstone Inc. · NYSE:BX
Blackstone — Blackstone Loan Financing — Q1 2022 Earnings Presentation
54 slides from Blackstone's earnings presentation, Mar 31, 2022
Slide 1: Blackstone Loan Financing Limited
HIGHLY CONFIDENTIAL & TRADE SECRET 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 MARCH 2022 FOR PROFESSIONAL INVESTORS ONLY. NOT FOR DISTRIBUTION TO RETAIL INVESTORS.
Slide 2: Table of Contents
TABLE OF CONTENTS HIGHLY CONFIDENTIAL & TRADE SECRET I. Overview 2 II. First Quarter 2022 Results 7 III. Performance 14 IV. Portfolio Activity 17 V. Market Themes 20 VI. Portfolio and Market Outlook 26 VII. Appendix 28 VIII. Key Risk Factors 39 IX. Important Disclosure Information 42 Blackstone | 1
Slide 3: I. Overview
HIGHLY CONFIDENTIAL & TRADE SECRET I. Overview Blackstone | 2
Slide 4: Blackstone Loan Financing Limited (BGLF) strategy overview
BLACKSTONE LOAN FINANCING LIMITED (“BGLF”) HIGHLY CONFIDENTIAL & TRADE SECRET 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% 23.7% ▪ Leveraged exposure to European and US floating rate s
Slide 5: BGLF and BCF Highlights
BGLF AND BCF HIGHLIGHTS HIGHLY CONFIDENTIAL & TRADE SECRET 46 9 €29.3M €8.0M BCF change in BGLF change in net CLO positions, all CLO vintage years net assets(6) assets(6) actively managed by 5.3% 10.5% BXC(1) >700 0.03% BGLF 1Q’21 NAV BGLF LTM dividend total return(7) yield(8) underlying loan since
Slide 6: Blackstone Corporate Funding (BCF) Structure
BLACKSTONE CORPORATE FUNDING (“BCF”) STRUCTURE HIGHLY CONFIDENTIAL & TRADE SECRET Private Unitholders Public Shareholders ▪ €912 million committed capital 461 million shares: ▪ €0 million undrawn capital ▪ 91% third parties (416 million) ▪ 9% Blackstone (43 million) BCF EUR BGLF €833.7 million NAV(1
Slide 7: Investment Opportunity Overview
INVESTMENT OPPORTUNITY OVERVIEW HIGHLY CONFIDENTIAL & TRADE SECRET Access to Blackstone ▪ Strategic partnership to the well-recognised 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
Slide 8: II. First Quarter 2022 Results
HIGHLY CONFIDENTIAL & TRADE SECRET II. First Quarter 2022 Results Blackstone | 7
Slide 9: First Quarter 2022 Results
FIRST QUARTER 2022 RESULTS HIGHLY CONFIDENTIAL & TRADE SECRET ▪ 1Q’22 total return of 5.3% and 23.7% LTM. BGLF declared a dividend of 1.75c in 1Q’22, resulting in a BGLF Earnings LTM dividend yield of 10.53%. The target annual dividend for 2022 is €0.07-€0.08 per share(1) & Distributions ▪ BGLF’s ne
Slide 10: BGLF Earnings & Distributions
BGLF EARNINGS & DISTRIBUTIONS HIGHLY CONFIDENTIAL & TRADE SECRET ▪ BGLF LTM distribution yield of 10.53%(1), supported by uninterrupted cash flows from each CLO since inception ▪ The Board declared a 1Q’22 dividend of 1.75c, the first of three flat payments before a final variable payment to be dete
Slide 11: BCF – Loan Portfolio Activity
BCF – LOAN PORTFOLIO ACTIVITY HIGHLY CONFIDENTIAL & TRADE SECRET 1Q ’22 Portfolio Activity Highlights(1) 1Q ’22 Underlying Loan Portfolio Activity(2) (€ in billions) Added 35 new issuers, sold 30 issuers WA spread up by 2bp to 3.57% Gross 2.5 purchases B2 average facility rating Diversification amon
Slide 12: Diversified Assets
DIVERSIFIED ASSETS HIGHLY CONFIDENTIAL & TRADE SECRET ▪ Diversified portfolio of 733 issuers invested across multiple sectors, geographies, and vintages ▪ Portfolio of primarily senior secured and floating rate assets Country Allocations Moody’s Rating Distribution 4.4% Others >Ba2 4.3% 14.0% Ba2 3.
Slide 13: Diversified CLO Liabilities
DIVERSIFIED CLO LIABILITIES HIGHLY CONFIDENTIAL & TRADE SECRET ▪ Diversified portfolio of 46(1) CLOs spanning 9 vintage years ▪ Approximately 60% of the CLO portfolio can potentially be refinanced in the next 12 months, subject to market conditions (i.e. lowering cost of debt and/or extending period
Slide 14: BCF Investment Activity
BCF INVESTMENT ACTIVITY HIGHLY CONFIDENTIAL & TRADE SECRET ▪ EUR CLOs WAC broadly flat quarter on quarter. Higher financing cost for balance sheet loans as a result of increased capacity to purchase assets ▪ US CLO WAC increased predominantly due to a) higher reference rates and b) higher CLO cost o
Slide 15: III. Performance
HIGHLY CONFIDENTIAL & TRADE SECRET III. Performance Blackstone | 14
Slide 16: 1Q'22 BGLF Return Analysis
1Q’22 BGLF RETURN ANALYSIS HIGHLY CONFIDENTIAL & TRADE SECRET BGLF’s 1Q’22 NAV total return was 5.25% Contributors to Total Return Directly EUR CLO US CLO US CLO BCF Cash BCF BGLF Held Loans Equity Equity Warehouses & Expenses 6% 0.26% 0.26% 5.33% 5.25% 1.17% 2.93% 0.06% 0.06% -0.08% 5% -0.16% 4% 1.
Slide 17: BGLF Monthly € NAV Total Return Performance
BGLF MONTHLY € NAV TOTAL RETURN PERFORMANCE HIGHLY CONFIDENTIAL & TRADE SECRET Jan Feb Mar Apr May Jun Jul Aug Sep Oct Nov Dec YTD 2022 BGLF € NAV 1.22% 0.45% 3.51% 5.25% European Loans 0.29% -0.90% 0.09% -0.53% US Loans 0.36% -0.50% 0.04% -0.10% 2021 BGLF € NAV 2.79% 0.67% 0.20% 1.27% 1.28% 4.00% 1
Slide 18: IV. Portfolio Activity
HIGHLY CONFIDENTIAL & TRADE SECRET IV. Portfolio Activity Blackstone | 17
Slide 19: New Securitisations, Resets, and Refinancings – 1Q'22
NEW SECURITISATIONS, RESETS, AND REFINANCINGS – 1Q ’22 HIGHLY CONFIDENTIAL & TRADE SECRET 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 f
Slide 20: Summary of BCF Investment Portfolio
SUMMARY OF BCF INVESTMENT PORTFOLIO HIGHLY CONFIDENTIAL & TRADE SECRET ▪ Increase in CLO portfolio weighting due to addition of one European and one US CLO new issue ▪ Decrease in WA portfolio NIM by 3 bp mainly driven by higher US CLO financing costs (increase in underlying reference rates and CLO
Slide 21: V. Market Themes
HIGHLY CONFIDENTIAL & TRADE SECRET V. Market Themes Blackstone | 20
Slide 22: Global Credit Spreads and Prices
GLOBAL CREDIT SPREADS AND PRICES HIGHLY CONFIDENTIAL & TRADE SECRET Spread to Maturity Yield to Maturity (L+ / E+) 1,000 11% 800 9% 600 E+499 7% 400 5% 4.59% L+430 4.49% 200 3% Mar-18 Jan-19 Nov-19 Aug-20 Jun-21 Mar-22 Mar-18 Jan-19 Nov-19 Aug-20 Jun-21 Mar-22 S&P LL Index S&P Euro LL Index S&P LL I
Slide 23: Global Loan Return by Quality
GLOBAL LOAN RETURN BY QUALITY HIGHLY CONFIDENTIAL & TRADE SECRET Higher rated loans are outperforming year to date, consistent with the flight to quality European Loan Returns by Quality US Loan Returns by Quality BB B CCC BB B CCC 0.00% 0.00% -0.01% -0.08% -0.35% -0.50% -0.50% -0.57% -1.00% -1.00%
Slide 24: Global CLO Arbitrage
GLOBAL CLO ARBITRAGE HIGHLY CONFIDENTIAL & TRADE SECRET The average quarterly arb declined in 1Q ’22 as more volatile markets contributed to higher 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 2
Slide 25: Credit Market Supply
CREDIT MARKET SUPPLY HIGHLY CONFIDENTIAL & TRADE SECRET Loan issuance off to a slow start in 2022 U.S. and European Loan Gross Issuance ($/€ in billions) 120 99 100 93 90 81 83 81 78 80 71 68 67 58 60 49 45 44 41 40 40 32 33 31 34 26 28 22 19 22 22 21 17 17 19 20 15 13 13 13 13 12 9 10 11 9 8 8 7 7
Slide 26: CLO Issuance
CLO ISSUANCE HIGHLY CONFIDENTIAL & TRADE SECRET CLO new issuance expected to be lower versus the record pace in 2021, given broader market uncertainty U.S. and European CLO New Issue Volume ($/€ in billions) 200 $187 180 160 140 $129 $119 $119 120 100 $93 80 60 $46 $40 € 39 40 € 30 € 27 € 21 € 22 20
Slide 27: VI. Portfolio and Market Outlook
HIGHLY CONFIDENTIAL & TRADE SECRET VI. Portfolio and Market Outlook Blackstone | 26
Slide 28: Portfolio and Market Outlook
PORTFOLIO AND MARKET OUTLOOK HIGHLY CONFIDENTIAL & TRADE SECRET Portfolio and Market Outlook ▪ Markets have become increasingly volatile as the year has progressed, with inflation concerns, aggressive central bank policy, Chinese lockdowns, the war in Ukraine, and ongoing supply chain disruption all
Slide 29: VII. Appendix
HIGHLY CONFIDENTIAL & TRADE SECRET VII. Appendix Blackstone | 28
Slide 30: BCF Look Through Portfolio Details
BCF LOOK THROUGH PORTFOLIO DETAILS HIGHLY CONFIDENTIAL & TRADE SECRET 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 4 224 6,310 Media Broadca
Slide 31: European CLO Securitisation Investment Details
EUROPEAN CLO SECURITISATION INVESTMENT DETAILS HIGHLY CONFIDENTIAL & TRADE SECRET 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 Dive
Slide 32: US CLO Securitisation Investment Details (Cont'd)
US CLO SECURITISATION INVESTMENT DETAILS (CONT’D) HIGHLY CONFIDENTIAL & TRADE SECRET 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 Diver
Slide 33: Vertical Retention Investments
VERTICAL RETENTION INVESTMENTS HIGHLY CONFIDENTIAL & TRADE SECRET Refi / Highest of Remaining BCF Position Valuation as Ann. Cum. Interest Defaulted Closing Reset Non-Call Deal Size BCF Cost WA Cost Gross Caa / CCC / RI Period Position as % of % of BCF Cash-on- Cash-on- NIM Diversion Assets % of Dat
Slide 34: Redeemed or Fully Sold CLOs
REDEEMED OR FULLY SOLD CLOs HIGHLY CONFIDENTIAL & TRADE SECRET Sale/ BCF Position Current Valuation as Realised IRR WA Ann. Distribution Region Vintage Exit Method Redemption Prior To Exit (m) % of BCF NAV(1) To Date(2) Through Last Payment(3) Date Myers Park U.S. 2018 Sale Mar-21 $26.4 N/A 11.1%* 1
Slide 35: CLO Securitisation Performance by Vintage – Current Portfolio
CLO SECURITISATION PERFORMANCE BY VINTAGE – CURRENT PORTFOLIO HIGHLY CONFIDENTIAL & TRADE SECRET ▪ CLO securitisations continued to generate positive, uninterrupted cashflows ▪ EU and U.S. CLO 1Q’22 ann. cash on cash distributions reverted to normalised levels due to absence of one-off outsized dist
Slide 36: BGLF Monthly € NAV Total Return Performance
BGLF MONTHLY € NAV TOTAL RETURN PERFORMANCE HIGHLY CONFIDENTIAL & TRADE SECRET Trailing 12 months ending: March ‘18 March ‘19 March ‘20 March ‘21 March ‘22 Discrete Performance BGLF € NAV 0.07% 12.45% -6.02% 20.67% 23.66% European Loans 3.01% 1.66% -11.49% 21.13% 2.31% US Loans 4.64% 3.33% -9.51% 20
Slide 37: BGLF Total Returns Since Inception
BGLF TOTAL RETURNS SINCE INCEPTION HIGHLY CONFIDENTIAL & TRADE SECRET BGLF has delivered a solid return in excess off the loan market across multiple time periods Annualised Net Total Return 25% 23.7% 20% 16.0% 15% 11.9% 9.5% 8.9% 10% 8.0% 6.4% 5.3% 4.8% 5% 4.1% 4.0% 3.9% 3.2% 3.1% 2.8% 3.2% 2.3% 0%
Slide 38: Summary Term Sheet
SUMMARY TERM SHEET HIGHLY CONFIDENTIAL & TRADE SECRET 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 rele
Slide 39: Blackstone Corporate Funding (BCF) Investment Process
BLACKSTONE CORPORATE FUNDING (“BCF”) INVESTMENT PROCESS HIGHLY CONFIDENTIAL & TRADE SECRET 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 favourab
Slide 40: VIII. Key Risk Factors
HIGHLY CONFIDENTIAL & TRADE SECRET VIII.Key Risk Factors Blackstone | 39
Slide 41: Key Risk Factors
KEY RISK FACTORS AS DETERMINED BY THE ENTITIES DISTRIBUTING THIS COMMUNICATION HIGHLY CONFIDENTIAL & TRADE SECRET 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
Slide 42: Key Risk Factors
KEY RISK FACTORS AS DETERMINED BY THE ENTITIES DISTRIBUTING THIS COMMUNICATION HIGHLY CONFIDENTIAL & TRADE SECRET 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, w
Slide 43: IX. Important Disclosure Information
HIGHLY CONFIDENTIAL & TRADE SECRET IX. Important Disclosure Information Blackstone | 42
Slide 44: Notes to 'BGLF and BCF Highlights'
NOTES TO ‘BGLF AND BCF HIGHLIGHTS’ HIGHLY CONFIDENTIAL & TRADE SECRET 1) As of 31 March 2022. Excludes CLOs in the process of being redeemed. 2) Data as of end 31 March 2022 using internal Blackstone Credit data calculated on 21 April 2022. Reflects directly held loans and look through holdings of C
Slide 45: Important Disclosure Information
IMPORTANT DISCLOSURE INFORMATION HIGHLY CONFIDENTIAL & TRADE SECRET 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 an
Slide 46: Important Disclosure Information
IMPORTANT DISCLOSURE INFORMATION HIGHLY CONFIDENTIAL & TRADE SECRET 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
Slide 47: Important Disclosure Information (Cont'd)
IMPORTANT DISCLOSURE INFORMATION (CONT’D) HIGHLY CONFIDENTIAL & TRADE SECRET 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
Slide 48: Important Disclosure Information (Cont'd)
IMPORTANT DISCLOSURE INFORMATION (CONT’D) HIGHLY CONFIDENTIAL & TRADE SECRET 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 af
Slide 49: Important Disclosure Information (Cont'd)
IMPORTANT DISCLOSURE INFORMATION (CONT’D) HIGHLY CONFIDENTIAL & TRADE SECRET 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 m
Slide 50: Important Disclosure Information (Cont'd)
IMPORTANT DISCLOSURE INFORMATION (CONT’D) HIGHLY CONFIDENTIAL & TRADE SECRET Russian Invasion of Ukraine On February 24, 2022, Russian troops began a full-scale invasion of Ukraine and, as of the date of this Material, the countries remain in active armed conflict. Around the same time, the United S
Slide 51: Important Disclosure Information (Cont'd)
IMPORTANT DISCLOSURE INFORMATION (CONT’D) HIGHLY CONFIDENTIAL & TRADE SECRET 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
Slide 52: Important Disclosure Information (Cont'd)
IMPORTANT DISCLOSURE INFORMATION (CONT’D) HIGHLY CONFIDENTIAL & TRADE SECRET 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 (
Slide 53: Important Disclosure Information (Cont'd)
IMPORTANT DISCLOSURE INFORMATION (CONT’D) HIGHLY CONFIDENTIAL & TRADE SECRET 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 (INCLUDI
Slide 54: Important Disclosure Information (Cont'd)
IMPORTANT DISCLOSURE INFORMATION (CONT’D) HIGHLY CONFIDENTIAL & TRADE SECRET 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 Peopl
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