Carlyle Secured Lending, Inc. - Quarter Report: 2018 September (Form 10-Q)

UNITED STATES

SECURITIES AND EXCHANGE COMMISSION

Washington, D.C. 20549

FORM 10-Q



x	QUARTERLY REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934

For the quarterly period ended September 30, 2018



o	TRANSITION REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934

For the transition period to

Commission File No. 000-54899

TCG BDC, INC.

(Exact name of Registrant as specified in its charter)



Maryland		80-0789789
(State or other jurisdiction of incorporation or organization)		(I.R.S. Employer Identification Number)

520 Madison Avenue, 40th Floor, New York, NY 10022

(Address of principal executive office) (Zip Code)

(212) 813-4900

(Registrant’s telephone number, including area code)

N/A

(Former name, former address and former fiscal year, if changed since last report)

Indicate by check mark whether the registrant (1) has filed all reports required to be filed by Section 13 or 15(d) of the Securities Exchange Act of 1934 during the preceding 12 months (or for such shorter period that the registrant was required to file such reports), and (2) has been subject to such filing requirements for the past 90 days: Yes ☒ No ☐

Indicate by check mark whether the registrant has submitted electronically every Interactive Data File required to be submitted pursuant to Rule 405 of Regulation S-T (§232.405 of this chapter) during the preceding 12 months (or for such shorter period that the registrant was required to submit such files). Yes ☐ No ☐

Indicate by check mark whether the registrant is a large accelerated filer, an accelerated filer, a non-accelerated filer, or a smaller reporting company. See definitions of “large accelerated filer,” “accelerated filer,” and “smaller reporting company” in Rule 12b-2 of the Exchange Act. (Check one):



Large accelerated filer	x	Accelerated filer	o

Non-accelerated filer	o	Smaller reporting company	o

Emerging Growth Company	o

If an emerging growth company, indicate by check mark if the registrant has elected not to use the extended transition period for complying with any new or revised financial accounting standards provided pursuant to Section 13(a) of the Exchange Act. ☐

Indicate by check mark whether the registrant is a shell company (as defined in Rule 12b-2 of the Exchange Act). Yes ☐ No x

Indicate the number of shares outstanding of each of the issuer’s classes of common stock, as of the latest practicable date.



Class	Outstanding at November 6, 2018
Common stock, $0.01 par value	62,568,651

TCG BDC, INC.

INDEX




Part I.	Financial Information
Item 1.	Financial Statements
	Consolidated Statements of Assets and Liabilities as of September 30, 2018 (unaudited) and December 31, 2017	3
	Consolidated Statements of Operations for the three month and nine month periods ended September 30, 2018 (unaudited) and September 30, 2017 (unaudited)	4
	Consolidated Statements of Changes in Net Assets for the nine month periods ended September 30, 2018 (unaudited) and September 30, 2017 (unaudited)	5
	Consolidated Statements of Cash Flows for the nine month periods ended September 30, 2018 (unaudited) and September 30, 2017 (unaudited)	6
	Consolidated Schedules of Investments as of September 30, 2018 (unaudited) and December 31, 2017	7
	Notes to Consolidated Financial Statements (unaudited)	27
Item 2.	Management’s Discussion and Analysis of Financial Condition and Results of Operations	64
Item 3.	Quantitative and Qualitative Disclosures About Market Risk	94
Item 4.	Controls and Procedures	95
Part II.	Other Information
Item 1.	Legal Proceedings	96
Item 1A.	Risk Factors	96
Item 2.	Unregistered Sales of Equity Securities and Use of Proceeds	98
Item 3.	Defaults Upon Senior Securities	98
Item 4.	Mine Safety Disclosures	98
Item 5.	Other Information	99
Item 6.	Exhibits	99
	Signatures	100

TCG BDC, INC.

CONSOLIDATED STATEMENTS OF ASSETS AND LIABILITIES

(dollar amounts in thousands, except per share data)



	September 30, 2018			December 31, 2017
ASSETS	(unaudited)
Investments, at fair value
Investments—non-controlled/non-affiliated, at fair value (amortized cost of $1,820,646 and $1,782,488, respectively)	$	1,781,621		$	1,779,584
Investments—non-controlled/affiliated, at fair value (amortized cost of $13,595 and $16,273, respectively)	13,973			15,431
Investments—controlled/affiliated, at fair value (amortized cost of $224,001 and $172,251, respectively)	223,404			172,516
Total investments, at fair value (amortized cost of $2,058,242 and $1,971,012, respectively)	2,018,998			1,967,531
Cash and cash equivalents	112,911			32,039
Receivable for investment sold	—			7,022
Deferred financing costs	4,126			3,626
Interest receivable from non-controlled/non-affiliated investments	4,895			5,066
Interest receivable from non-controlled/affiliated investments	10			42
Interest and dividend receivable from controlled/affiliated investments	6,881			5,981
Prepaid expenses and other assets	20			76
Total assets	$	2,147,841		$	2,021,383
LIABILITIES
Secured borrowings (Note 6)	$	554,299		$	562,893
Notes payable, net of unamortized debt issuance costs of $3,292 and $1,947, respectively (Note 7)	445,908			271,053
Payable for investments purchased	—			9,469
Due to Investment Adviser	131			69
Interest and credit facility fees payable (Notes 6 and 7)	4,478			5,353
Dividend payable (Note 9)	23,150			30,481
Base management and incentive fees payable (Note 4)	12,992			13,098
Administrative service fees payable (Note 4)	116			95
Other accrued expenses and liabilities	2,025			1,568
Total liabilities	1,043,099			894,079
Commitments and contingencies (Notes 8 and 11)
NET ASSETS
Common stock, $0.01 par value; 200,000,000 shares authorized; 62,568,651 shares and 62,207,603 shares issued and outstanding at September 30, 2018 and December 31, 2017, respectively	626			622
Paid-in capital in excess of par value	1,179,432			1,172,807
Offering costs	(1,633		)	(1,618		)
Total distributable earnings (loss)	(73,683		)	(44,507		)
Total net assets	$	1,104,742		$	1,127,304
NET ASSETS PER SHARE	$	17.66		$	18.12

The accompanying notes are an integral part of these consolidated financial statements.

TCG BDC, INC.

CONSOLIDATED STATEMENTS OF OPERATIONS

(dollar amounts in thousands, except per share data)

(unaudited)



	For the three month periods ended						For the nine month periods ended
	September 30, 2018			September 30, 2017			September 30, 2018			September 30, 2017
Investment income:
From non-controlled/non-affiliated investments:
Interest income	$	41,736		$	34,684		$	122,722		$	93,564
Other income	1,925			1,318			6,410			7,900
Total investment income from non-controlled/non-affiliated investments	43,661			36,002			129,132			101,464
From non-controlled/affiliated investments:
Interest income	418			834			1,303			834
Total investment income from non-controlled/affiliated investments	418			834			1,303			834
From controlled/affiliated investments:
Interest income	3,401			3,012			9,230			7,333
Dividend income	3,800			2,800			11,550			5,860
Total investment income from controlled/affiliated investments	7,201			5,812			20,780			13,193
Total investment income	51,280			42,648			151,215			115,491
Expenses:
Base management fees (Note 4)	7,543			6,999			22,031			17,781
Incentive fees (Note 4)	5,449			5,321			16,763			15,459
Professional fees	869			361			2,590			1,957
Administrative service fees (Note 4)	179			184			550			522
Interest expense (Notes 6 and 7)	10,372			5,922			26,896			16,694
Credit facility fees (Note 6)	583			521			1,689			1,553
Directors’ fees and expenses	92			121			283			355
Other general and administrative	478			472			1,318			1,293
Total expenses	25,565			19,901			72,120			55,614
Waiver of base management fees (Note 4)	—			2,333			—			5,927
Net expenses	25,565			17,568			72,120			49,687
Net investment income (loss) before taxes	25,715			25,080			79,095			65,804
Excise tax expense	30			—			70			169
Net investment income (loss)	25,685			25,080			79,025			65,635
Net realized gain (loss) and net change in unrealized appreciation (depreciation) on investments:
Net realized gain (loss) from:
Non-controlled/non-affiliated investments	(4,633		)	172			(2,987		)	(7,724		)
Net change in unrealized appreciation (depreciation):
Non-controlled/non-affiliated investments	(14,795		)	279			(36,121		)	808
Non-controlled/affiliated investments	(76		)	976			1,220			(976		)
Controlled/affiliated investments	(101		)	(964		)	(862		)	(526		)
Net realized gain (loss) and net change in unrealized appreciation (depreciation) on investments	(19,605		)	463			(38,750		)	(8,418		)
Net increase (decrease) in net assets resulting from operations	$	6,080		$	25,543		$	40,275		$	57,217
Basic and diluted earnings per common share (Note 9)	$	0.10		$	0.41		$	0.64		$	1.15
Weighted-average shares of common stock outstanding—Basic and Diluted (Note 9)	62,568,651			61,840,100			62,546,168			49,915,318

The accompanying notes are an integral part of these consolidated financial statements.

TCG BDC, INC.

CONSOLIDATED STATEMENTS OF CHANGES IN NET ASSETS

(dollar amounts in thousands)

(unaudited)



	For the nine month periods ended
	September 30, 2018			September 30, 2017
Increase (decrease) in net assets resulting from operations:
Net investment income (loss)	$	79,025		$	65,635
Net realized gain (loss) on investments	(2,987		)	(7,724		)
Net change in unrealized appreciation (depreciation) on investments	(35,763		)	(694		)
Net increase (decrease) in net assets resulting from operations	40,275			57,217
Capital transactions:
Common stock issued, net of offering and underwriting costs	(15		)	365,505
Reinvestment of dividends	6,629			202
Dividends declared (Note 12)	(69,451		)	(62,708		)
Net increase (decrease) in net assets resulting from capital share transactions	(62,837		)	302,999
Net increase (decrease) in net assets	(22,562		)	360,216
Net assets at beginning of period	1,127,304			764,137
Net assets at end of period	$	1,104,742		$	1,124,353

The accompanying notes are an integral part of these consolidated financial statements.

TCG BDC, INC.

CONSOLIDATED STATEMENTS OF CASH FLOWS

(dollar amounts in thousands)

(unaudited)



	For the nine month periods ended
	September 30, 2018			September 30, 2017
Cash flows from operating activities:
Net increase (decrease) in net assets resulting from operations	$	40,275		$	57,217
Adjustments to reconcile net increase (decrease) in net assets resulting from operations to net cash provided by (used in) operating activities:
Amortization of deferred financing costs	1,601			694
Net accretion of discount on investments	(8,636		)	(8,403		)
Paid-in-kind interest	(3,049		)	(778		)
Net realized (gain) loss on investments	2,987			7,724
Net change in unrealized (appreciation) depreciation on investments	35,763			694
Cost of investments purchased and change in payable for investments purchased	(632,498		)	(1,011,782		)
Proceeds from sales and repayments of investments and change in receivable for investments sold	551,819			541,111
Changes in operating assets:
Interest receivable	263			(3,138		)
Dividend receivable	(960		)	(1,475		)
Prepaid expenses and other assets	(244		)	(13		)
Changes in operating liabilities:
Due to Investment Adviser	62			(113		)
Interest and credit facility fees payable	(875		)	1,193
Base management and incentive fees payable	(106		)	1,829
Administrative service fees payable	21			(37		)
Other accrued expenses and liabilities	(314		)	290
Net cash provided by (used in) operating activities	(13,891		)	(414,987		)
Cash flows from financing activities:
Proceeds from issuance of common stock, net of offering and underwriting costs	(15		)	357,495
Borrowings on SPV Credit Facility and Credit Facility	681,650			597,450
Repayments of SPV Credit Facility and Credit Facility	(690,244		)	(440,566		)
Repayments of Debt Assumed from NFIC Acquisition	—			(42,128		)
Proceeds from issuance of 2015-1R Notes	449,200			—
Redemption of 2015-1 Notes	(273,000		)	—
Debt issuance costs paid	(2,675		)	(968		)
Dividends paid in cash	(70,153		)	(59,636		)
Net cash provided by (used in) financing activities	94,763			411,647
Net increase (decrease) in cash and cash equivalents	80,872			(3,340		)
Cash and cash equivalents, beginning of period	32,039			38,489
Cash and cash equivalents, end of period	$	112,911		$	35,149
Supplemental disclosures:
Debt issuance costs payable	$	771		$	36
Interest paid during the period	$	26,969		$	15,423
Taxes, including excise tax, paid during the period	$	105		$	169
Dividends declared during the period	$	69,451		$	62,708
Reinvestment of dividends	$	6,629		$	202
Cost of investments received in the NFIC Acquisition from shares issued (Note 13)	$	—		$	(8,046	)
Shares issued in consideration of NFIC Acquisition (Note 13)	$	—		$	8,046
Debt assumed from NFIC Acquisition (Note 13)	$	—		$	42,128

The accompanying notes are an integral part of these consolidated financial statements.

TCG BDC, INC.

CONSOLIDATED SCHEDULE OF INVESTMENTS

As of September 30, 2018

(dollar amounts in thousands)

(unaudited)



Investments—non-controlled/non-affiliated ⁽¹⁾	Industry	Reference Rate & Spread ⁽²⁾	Interest Rate⁽²⁾	Acquisition Date	Maturity Date	Par/ Principal Amount		Amortized Cost ⁽⁶⁾		Fair Value ⁽⁷⁾		Percentage of Net Assets
First Lien Debt (78.64%)
Achilles Acquisition LLC^{(2) (3) (4) (5) (13) (15)}	Banking, Finance, Insurance & Real Estate	L + 6.00%	8.24%	6/6/2017	6/6/2023	$	51,738	$	50,618	$	52,262	4.73	%
Advanced Instruments, LLC ^{(2) (3) (4) (5) (13) (15)}	Healthcare & Pharmaceuticals	L + 5.25%	7.35%	11/1/2016	10/31/2022	20,017		19,758		19,968		1.81
Aero Operating, LLC (Dejana Industries, Inc.)^{(2) (3) (4) (5) (13) (15)}	Business Services	L + 7.25%	9.35%	1/5/2018	12/29/2022	2,796		2,769		2,797		0.25
Alpha Packaging Holdings, Inc. ^{(2) (3) (4) (13)}	Containers, Packaging & Glass	L + 4.25%	6.64%	6/26/2015	5/12/2020	2,874		2,872		2,874		0.26
Alpine SG, LLC ^{(2) (3) (13)}	High Tech Industries	L + 6.00%	8.34%	2/2/2018	11/16/2022	6,245		6,187		6,219		0.56
AMS Group HoldCo, LLC ^{(2) (3) (4) (5) (13) (15)}	Transportation: Cargo	L + 6.00%	8.39%	9/29/2017	9/29/2023	31,499		30,864		31,035		2.81
Analogic Corporation ^{(2) (3) (4) (13) (15)}	Healthcare & Pharmaceuticals	L + 6.00%	8.21%	6/22/2018	6/22/2024	35,337		34,596		34,954		3.16
Avenu Holdings, LLC ^{(2) (3) (4) (5)}	Sovereign & Public Finance	L + 5.25%	7.49%	9/28/2018	9/28/2024	39,154		38,474		38,716		3.50
BeyondTrust Software, Inc.^{(2) (3) (4) (13)}	Software	L + 6.25%	8.60%	11/21/2017	11/21/2023	16,873		16,655		17,041		1.54
Brooks Equipment Company, LLC ^{(2) (3) (4) (13)}	Construction & Building	L + 5.00%	7.31%	6/26/2015	8/29/2020	2,502		2,493		2,502		0.23
Capstone Logistics Acquisition, Inc. ^{(2) (3) (4) (13)}	Transportation: Cargo	L + 4.50%	6.74%	6/26/2015	10/7/2021	14,306		14,230		14,306		1.29
Captive Resources Midco, LLC ^{(2) (3) (4) (13) (15)}	Banking, Finance, Insurance & Real Estate	L + 5.75%	7.99%	6/30/2015	12/18/2021	29,941		29,693		29,915		2.71
Central Security Group, Inc. ^{(2) (3) (4) (13)}	Consumer Services	L + 5.63%	7.87%	6/26/2015	10/6/2021	38,706		38,428		38,504		3.49
Chemical Computing Group ULC (Canada) ^{(2) (3) (5) (8) (13) (15)}	Software	L + 5.50%	7.74%	8/30/2018	8/30/2023	15,794		15,629		15,641		1.42
CIP Revolution Holdings, LLC ^{(2) (3) (4) (5) (13) (15)}	Media: Advertising, Printing & Publishing	L + 6.00%	8.24%	8/19/2016	8/19/2021	20,277		20,137		20,220		1.83
CircusTrix Holdings, LLC ^{(2) (3) (4) (5) (13) (15)}	Hotel, Gaming & Leisure	L + 5.50%	7.74%	2/2/2018	12/16/2021	9,235		9,019		9,174		0.83
Colony Hardware Corporation ^{(2) (3) (4) (13)}	Construction & Building	L + 6.00%	8.24%	9/4/2015	10/23/2021	23,999		23,781		23,918		2.17
Comar Holding Company, LLC ^{(2) (3) (5) (13) (15)}	Containers, Packaging & Glass	L + 5.25%	7.41%	6/18/2018	6/18/2024	27,152		26,493		26,839		2.43
Continuum Managed Services Holdco, LLC ^{(2) (3) (4) (5) (13) (15)}	High Tech Industries	L + 6.00%	8.24%	6/20/2017	6/8/2023	22,713		22,134		22,784		2.06
Dade Paper & Bag, LLC ^{(2) (3) (4) (5) (13)}	Forest Products & Paper	L + 7.50%	9.74%	6/9/2017	6/10/2024	49,375		48,565		49,128		4.45
Datto, Inc. ^{(2) (3) (5) (13) (15)}	High Tech Industries	L + 8.00%	10.15%	12/7/2017	12/7/2022	35,622		35,158		36,290		3.28
Dent Wizard International Corporation ^{(2) (3) (4)}	Automotive	L + 4.00%	6.23%	4/28/2015	4/7/2020	888		886		887		0.08
Derm Growth Partners III, LLC (Dermatology Associates) ^{(2) (3) (4) (5) (13) (15)}	Healthcare & Pharmaceuticals	L + 6.00%	8.39%	5/31/2016	5/31/2022	51,721		51,289		51,573		4.67
DermaRite Industries, LLC ^{(2) (3) (5) (13) (15)}	Healthcare & Pharmaceuticals	L + 7.00%	9.24%	3/3/2017	3/3/2022	22,274		22,027		21,779		1.97
Dimensional Dental Management, LLC ^{(2) (3) (5) (12) (15)}	Healthcare & Pharmaceuticals	L + 6.75%	8.99%	2/12/2016	2/12/2021	33,674		33,150		28,603		2.59
Direct Travel, Inc. ^{(2) (3) (4) (5) (13) (15)}	Hotel, Gaming & Leisure	L + 6.50%	8.84%	10/14/2016	12/1/2021	35,381		34,938		35,381		3.20

TCG BDC, INC.

CONSOLIDATED SCHEDULE OF INVESTMENTS (Continued)

As of September 30, 2018

(dollar amounts in thousands)

(unaudited)



Investments—non-controlled/non-affiliated (1)	Industry	Reference Rate & Spread ⁽²⁾	Interest Rate ⁽²⁾	Acquisition Date	Maturity Date	Par/ Principal Amount		Amortized Cost ⁽⁶⁾			Fair Value ⁽⁷⁾			Percentage of Net Assets
First Lien Debt (78.64%) (continued)
EIP Merger Sub, LLC (Evolve IP) ^{(2) (3) (4) (5) (12) (13)}	Telecommunications	L + 5.75%	7.99%	6/7/2016	6/7/2022	$	36,093	$	35,400		$	35,469		3.21	%
Emergency Communications Network, LLC ^{(2) (3) (4) (5) (13)}	Telecommunications	L + 6.25%	8.49%	6/1/2017	6/1/2023	24,687		24,503			24,493			2.22
Ensono, LP^{(2) (3) (13)}	Telecommunications	L + 5.25%	7.49%	4/30/2018	6/27/2025	8,645		8,640			8,732			0.79
Frontline Technologies Holdings, LLC ^{(2) (3) (5) (15)}	Software	L + 6.50%	8.74%	9/18/2017	9/18/2023	38,902		38,531			38,529			3.49
FWR Holding Corporation^{(2) (3) (4) (5) (13) (15)}	Beverage, Food & Tobacco	L + 5.75%	7.99%	8/21/2017	8/21/2023	41,185		40,165			41,304			3.74
Global Franchise Group, LLC^{(2) (3) (4) (13) (15)}	Beverage, Food & Tobacco	L + 5.75%	7.99%	9/15/2017	12/18/2019	13,230		13,159			13,230			1.20
Green Energy Partners/Stonewall LLC^{(2) (3) (4) (13)}	Energy: Electricity	L + 5.50%	7.89%	6/26/2015	11/13/2021	19,800		19,527			19,434			1.76
GRO Sub Holdco, LLC (Grand Rapids) ^{(2) (3) (4) (5) (13) (15)}	Healthcare & Pharmaceuticals	L + 6.00%	8.39%	2/28/2018	2/22/2024	7,416		7,210			7,032			0.64
Hummel Station LLC^{(2) (3) (4) (13)}	Energy: Electricity	L + 6.00%	8.24%	2/3/2016	10/27/2022	14,963		14,299			14,364			1.30
Hydrofarm, LLC ^{(2) (5)}	Wholesale	L + 10.00% (30% cash/70% PIK)	12.16%	5/15/2017	5/12/2022	19,728		19,371			15,935			1.44
iCIMS, Inc. ^{(2) (3) (5) (15)}	Software	L + 6.50%	8.64%	9/12/2018	9/12/2024	20,025		19,601			19,806			1.79
Indra Holdings Corp. (Totes Isotoner) ^{(2) (3) (5)}	Non-durable Consumer Goods	L + 4.25%	6.49%	4/29/2014	5/1/2021	18,965		17,478			9,420			0.85
Innovative Business Services, LLC ^{(2) (3) (5) (13) (15)}	High Tech Industries	L + 5.50%	7.84%	4/5/2018	4/5/2023	16,348		15,804			15,986			1.45
Legacy.com Inc. ^{(2) (3) (5) (12)}	High Tech Industries	L + 6.00%	8.34%	3/20/2017	3/20/2023	17,000		16,685			17,151			1.55
Maravai Intermediate Holdings, LLC ^{(2) (3) (5) (13)}	Healthcare & Pharmaceuticals	L + 4.25%	6.38%	8/2/2018	8/2/2025	20,000		19,807			19,900			1.81
Metrogistics LLC ^{(2) (3) (4) (13)}	Transportation: Cargo	L + 6.50%	8.80%	12/13/2016	9/30/2022	17,633		17,455			17,566			1.59
Moxie Liberty LLC ^{(2) (3) (4) (13)}	Energy: Electricity	L + 6.50%	8.89%	10/16/2017	8/21/2020	9,899		9,151			9,290			0.84
National Carwash Solutions, Inc. ^{(2) (3) (4) (5) (15)}	Automotive	L + 6.00%	8.12%	8/7/2018	4/28/2023	5,917		5,724			5,789			0.52
National Technical Systems, Inc. ^{(2) (3) (4) (5) (13) (15)}	Aerospace & Defense	L + 6.25%	8.36%	6/26/2015	6/12/2021	26,283		26,039			25,503			2.31
NES Global Talent Finance US LLC (United Kingdom) ^{(2) (3) (4) (8) (13)}	Energy: Oil & Gas	L + 5.50%	7.84%	5/9/2018	5/11/2023	7,827		7,683			7,732			0.70
NMI AcquisitionCo, Inc. ^{(2) (3) (4) (5) (13) (15)}	High Tech Industries	L + 6.75%	8.99%	9/6/2017	9/6/2022	51,552		50,726			50,534			4.57
OnCourse Learning Corporation^{(2) (3) (4) (5) (13)}	Consumer Services	L + 6.50%	8.83%	9/12/2016	9/12/2021	39,174		38,834			39,174			3.55
Payment Alliance International, Inc. ^{(2) (3) (5) (12)}	Business Services	L + 6.05%	8.53%	9/15/2017	9/15/2021	24,055		23,628			24,154			2.19
Plano Molding Company, LLC ^{(2) (3) (5)}	Hotel, Gaming & Leisure	L + 7.50%	9.67%	5/1/2015	5/12/2021	14,939		14,749			13,792			1.25
PPT Management Holdings, LLC ^{(2) (3) (5)}	Healthcare & Pharmaceuticals	L + 7.50% (100% PIK)	9.69%	12/15/2016	12/16/2022	26,004		25,851			21,945			1.99
PricewaterhouseCoopers Public Sector LLP ^{(2) (3) (15)}	Aerospace & Defense	L + 3.25%	4.51%	5/1/2018	5/1/2023	—		(135		)	(94		)	(0.01	)

TCG BDC, INC.

CONSOLIDATED SCHEDULE OF INVESTMENTS (Continued)

As of September 30, 2018

(dollar amounts in thousands)

(unaudited)



Investments—non-controlled/non-affiliated (1)	Industry	Reference Rate & Spread ⁽²⁾	Interest Rate ⁽²⁾	Acquisition Date	Maturity Date	Par/ Principal Amount		Amortized Cost ⁽⁶⁾		Fair Value ⁽⁷⁾		Percentage of Net Assets
First Lien Debt (78.64%) (continued)
Prime Risk Partners, Inc.^{(2) (3) (5) (15)}	Banking, Finance, Insurance & Real Estate	L + 5.00%	7.39%	8/15/2017	8/13/2023	$	1,932	$	1,892	$	1,907	0.17	%
Prime Risk Partners, Inc. ^{(2) (3) (5) (12) (15)}	Banking, Finance, Insurance & Real Estate	L + 5.00%	7.39%	8/15/2017	8/13/2023	24,389		23,887		24,022		2.17
Product Quest Manufacturing, LLC ^{(2) (3) (5) (15)}	Containers, Packaging & Glass	L + 6.75%	10.00%	9/21/2017	3/31/2019	4,051		4,051		4,051		0.37
Product Quest Manufacturing, LLC ^{(2) (3) (5) (10) (12)}	Containers, Packaging & Glass	L + 5.75%	7.84%	9/9/2015	9/9/2020	33,000		32,270		—		—
Prowler Acquisition Corp. (Pipeline Supply and Service, LLC) ^{(2) (3) (4) (13)}	Wholesale	L + 4.50%	6.79%	12/1/2017	1/28/2020	14,791		14,368		14,756		1.34
PSI Services LLC ^{(2) (3) (5)}	Business Services	L + 5.00%	7.24%	9/19/2018	1/20/2023	4,546		4,484		4,511		0.41
QW Holding Corporation (Quala) ^{(2) (3) (4) (5) (13)}	Environmental Industries	L + 6.75%	8.85%	8/31/2016	8/31/2022	36,271		35,649		35,832		3.24
Smile Doctors, LLC ^{(2) (3) (4) (5) (13) (15)}	Healthcare & Pharmaceuticals	L + 5.75%	8.26%	10/6/2017	10/6/2022	15,573		15,444		15,550		1.41
SolAero Technologies Corp. ^{(2) (3) (5) (10)}	Telecommunications	L + 5.25%	6.51%	5/24/2016	12/10/2020	24,362		23,787		16,391		1.48
SolAero Technologies Corp.^{(2) (3) (5) (15)}	Telecommunications	L + 7.25% cash, 4.00% PIK	13.51%	9/6/2018	10/31/2018	1,382		1,382		1,382		0.13
SPay, Inc. ^{(2) (3) (4) (5) (13) (15)}	Hotel, Gaming & Leisure	L + 5.75%	7.91%	6/15/2018	6/15/2024	19,909		19,325		19,540		1.77
Superior Health Linens, LLC^{(2) (3) (4) (5) (13) (15)}	Business Services	L + 7.00%	9.24%	9/30/2016	9/30/2021	20,995		20,772		20,645		1.87
Surgical Information Systems, LLC ^{(2) (3) (4) (5) (12) (13)}	High Tech Industries	L + 4.85%	7.09%	4/24/2017	4/24/2023	27,708		27,487		27,495		2.49
T2 Systems Canada, Inc. ^{(2) (3) (4)}	Transportation: Consumer	L + 6.75%	8.99%	5/24/2017	9/28/2022	3,989		3,913		3,996		0.36
T2 Systems, Inc. ^{(2) (3) (4) (5) (13) (15)}	Transportation: Consumer	L + 6.75%	9.34%	9/28/2016	9/28/2022	32,400		31,808		32,423		2.94
The Hilb Group, LLC ^{(2) (3) (5) (12) (15)}	Banking, Finance, Insurance & Real Estate	L + 6.00%	9.38%	6/24/2015	6/24/2021	42,437		41,814		42,456		3.84
The Topps Company, Inc. ^{(2) (3) (4) (13)}	Non-durable Consumer Goods	L + 6.00%	8.39%	6/26/2015	10/2/2020	22,188		22,128		22,188		2.01
Trump Card, LLC ^{(2) (3) (4) (5) (13) (15)}	Transportation: Cargo	L + 5.50%	7.89%	6/26/2018	4/21/2022	7,605		7,558		7,561		0.68
TSB Purchaser, Inc. (Teaching Strategies, LLC) ^{(2) (3) (4) (13) (15)}	Media: Advertising, Printing & Publishing	L + 6.00%	8.33%	5/14/2018	5/14/2024	28,099		27,396		27,394		2.48
Tweddle Group, Inc. ^{(2) (3) (5)}	Media: Advertising, Printing & Publishing	L + 4.50%	6.66%	9/17/2018	9/17/2023	2,409		2,374		2,409		0.22
VRC Companies, LLC ^{(2) (3) (4) (5) (13) (15)}	Business Services	L + 6.50%	8.74%	3/31/2017	3/31/2023	45,521		44,661		45,521		4.12
Watchfire Enterprises, Inc. ^{(2) (3) (13)}	Media: Advertising, Printing & Publishing	L + 4.00%	6.39%	6/9/2017	10/2/2020	1,248		1,240		1,248		0.11
Westfall Technik, Inc. ^{(2) (3) (5) (15)}	Chemicals, Plastics & Rubber	L + 5.00%	7.33%	9/13/2018	9/13/2024	7,543		7,162		7,168		0.65
Winchester Electronics Corporation ^{(2) (3) (4) (5) (13)}	Capital Equipment	L + 6.50%	8.74%	10/14/2016	6/30/2022	38,147		37,944		38,147		3.45
Zemax Software Holdings, LLC ^{(2) (3) (13) (15)}	Software	L + 5.75%	7.99%	6/25/2018	6/25/2024	10,274		10,127		10,214		0.92

TCG BDC, INC.

CONSOLIDATED SCHEDULE OF INVESTMENTS (Continued)

As of September 30, 2018

(dollar amounts in thousands)

(unaudited)



Investments—non-controlled/non-affiliated (1)	Industry	Reference Rate & Spread ⁽²⁾	Interest Rate ⁽²⁾	Acquisition Date	Maturity Date	Par/ Principal Amount		Amortized Cost (6)		Fair Value (7)		Percentage of Net Assets
First Lien Debt (78.64%) (continued)
Zenith Merger Sub, Inc. ^{(2) (3) (4) (5) (13) (15)}	Business Services	L + 5.50%	7.89%	12/13/2017	12/13/2023	$	11,377	$	11,222	$	11,369	1.03	%
First Lien Debt Total								$	1,634,873	$	1,587,656	143.72	%

Second Lien Debt (8.45%)
Access CIG, LLC ^{(2) (5) (13) (15)}	Business Services	L + 7.75%	9.99%	2/14/2018	2/27/2026	$	2,593	$	2,551	$	2,563	0.23	%
AmeriLife Group, LLC^{(2) (3) (5) (13)}	Banking, Finance, Insurance & Real Estate	L + 8.75%	10.99%	7/9/2015	1/10/2023	22,000		21,703		22,000		1.99
Argon Medical Devices Holdings, Inc. ^{(2) (3) (5) (13)}	Healthcare & Pharmaceuticals	L + 8.00%	10.24%	11/2/2017	1/23/2026	7,500		7,467		7,547		0.68
Confie Seguros Holding II Co. ^{(2) (3) (5) (13)}	Banking, Finance, Insurance & Real Estate	L + 9.50%	11.74%	6/29/2015	5/8/2019	9,000		8,972		8,856		0.80
Drew Marine Group Inc. ^{(2) (3) (4) (5) (13)}	Chemicals, Plastics & Rubber	L + 7.00%	9.24%	11/19/2013	5/19/2021	12,500		12,486		12,455		1.13
Paradigm Acquisition Corp. ^{(2) (3) (5)}	Business Services	L + 8.50%	10.97%	10/6/2017	10/12/2025	9,600		9,512		9,696		0.88
Pathway Partners Vet Management Company LLC ^{(2) (3) (5) (15)}	Consumer Services	L + 8.00%	10.24%	10/4/2017	10/10/2025	15,355		15,187		15,077		1.36
Pharmalogic Holdings Corp. ^{(2) (3) (5) (15)}	Healthcare & Pharmaceuticals	L + 8.00%	10.24%	6/7/2018	12/11/2023	563		560		563		0.05
Project Accelerate Parent, LLC ^{(2) (3) (5) (13)}	Software	L + 8.50%	10.62%	1/2/2018	1/2/2026	22,500		21,975		22,642		2.05
Prowler Acquisition Corp. (Pipeline Supply and Service, LLC) ^{(2) (3) (5)}	Wholesale	L + 8.50%	10.83%	1/24/2014	7/28/2020	3,000		2,971		2,939		0.27
Q International Courier, LLC ^{(2) (3) (5)}	Transportation: Cargo	L + 8.25%	10.49%	9/19/2017	9/19/2025	18,750		18,406		18,864		1.71
Reladyne, Inc. ^{(2) (3) (4) (5) (13)}	Wholesale	L + 9.50%	11.84%	4/19/2018	1/21/2023	10,000		9,824		9,860		0.89
Santa Cruz Holdco, Inc. ^{(2) (3) (5)}	Non-durable Consumer Goods	L + 8.25%	10.59%	12/15/2017	12/13/2024	17,138		16,980		17,386		1.57
Ultimate Baked Goods MIDCO, LLC (Rise Baking) ^{(2) (3) (5)}	Beverage, Food & Tobacco	L + 8.00%	10.13%	8/9/2018	8/9/2026	8,333		8,172		8,209		0.75
Watchfire Enterprises, Inc. ^{(2) (3) (5)}	Media: Advertising, Printing & Publishing	L + 8.00%	10.31%	10/2/2013	10/2/2021	7,000		6,948		7,000		0.64
Zywave, Inc. ^{(2) (3) (5)}	High Tech Industries	L + 9.00%	11.31%	11/18/2016	11/17/2023	4,950		4,891		5,000		0.45
Second Lien Debt Total								$	168,605	$	170,657	15.45	%

TCG BDC, INC.

CONSOLIDATED SCHEDULE OF INVESTMENTS (Continued)

As of September 30, 2018

(dollar amounts in thousands)

(unaudited)



Investments—non-controlled/non-affiliated ⁽¹⁾	Industry	Acquisition Date	Shares/ Units	Cost		Fair Value ⁽⁷⁾		Percentage of Net Assets
Equity Investments (1.15%) ^{(5) (16)}
ANLG Holdings, LLC	Healthcare & Pharmaceuticals	6/22/2018	879,689	$	880	$	880	0.08	%
Avenu Holdings, LLC	Sovereign & Public Finance	9/28/2018	172,413	172		172		0.02
CIP Revolution Holdings, LLC	Media: Advertising, Printing & Publishing	8/19/2016	30,000	300		339		0.03
Dade Paper & Bag, LLC	Forest Products & Paper	6/9/2017	1,500,000	1,500		2,059		0.19
DecoPac, Inc.	Non-durable Consumer Goods	9/29/2017	1,500,000	1,500		1,559		0.14
Derm Growth Partners III, LLC (Dermatology Associates)	Healthcare & Pharmaceuticals	5/31/2016	1,000,000	1,000		1,793		0.16
GRO Sub Holdco, LLC (Grand Rapids)	Healthcare & Pharmaceuticals	3/29/2018	500,000	500		369		0.03
Legacy.com Inc.	High Tech Industries	3/20/2017	1,500,000	1,500		1,470		0.13
North Haven Goldfinch Topco, LLC	Containers, Packaging & Glass	6/18/2018	2,314,815	2,315		2,378		0.22
Power Stop Intermediate Holdings, LLC	Automotive	5/29/2015	7,150	369		1,918		0.17
Rough Country, LLC	Durable Consumer Goods	5/25/2017	754,775	755		1,143		0.10
SiteLock Group Holdings, LLC	High Tech Industries	4/5/2018	446,429	446		446		0.04
T2 Systems Parent Corporation	Transportation: Consumer	9/28/2016	555,556	556		805		0.07
Tailwind HMT Holdings Corp.	Energy: Oil & Gas	11/17/2017	2,000,000	2,000		2,564		0.23
THG Acquisition, LLC (The Hilb Group, LLC)	Banking, Finance, Insurance & Real Estate	6/24/2015	1,500,000	1,500		3,132		0.29
Tweddle Holdings, Inc.	Media: Advertising, Printing & Publishing	9/17/2018	17,208	—		—		—
Zenith American Holding, Inc.	Business Services	12/13/2017	1,561,644	1,562		1,968		0.18
Zillow Topco LP	Software	6/25/2018	312,500	313		313		0.03
Equity Investments Total				$	17,168	$	23,308	2.11	%
Total investments—non-controlled/non-affiliated				$	1,820,646	$	1,781,621	161.28	%



Investments—non-controlled/affiliated ^{(5) (14)}	Industry	Reference Rate & Spread ⁽²⁾	Interest Rate ⁽²⁾	Acquisition Date	Maturity Date	Par/ Principal Amount		Amortized Cost ⁽⁶⁾			Fair Value ⁽⁷⁾		Percentage of Net Assets
First Lien Debt (0.69%)
TwentyEighty, Inc. - Revolver ^{(2) (3) (15)}	Business Services	L + 8.00%	10.26%	1/31/2017	3/21/2020	$	—	$	(4	)	$	—	—	%
TwentyEighty, Inc. - (Term A Loans) ^{(2) (3)}	Business Services	L + 8.00%	10.39%	1/31/2017	3/21/2020	364		363			364		0.03
TwentyEighty, Inc. - (Term B Loans)	Business Services	N/A	8.00% (4.00% cash, 4.00% PIK)	1/31/2017	3/21/2020	6,923		6,761			6,784		0.61
TwentyEighty, Inc. - (Term C Loans)	Business Services	N/A	9.00% (0.25% cash, 8.75% PIK)	1/31/2017	3/21/2020	6,964		6,475			6,825		0.62
First Lien Debt Total								$	13,595		$	13,973	1.26	%

TCG BDC, INC.

CONSOLIDATED SCHEDULE OF INVESTMENTS (Continued)

As of September 30, 2018

(dollar amounts in thousands)

(unaudited)



Investments—non-controlled/affiliated ^{(5) (14) (16)}	Industry	Acquisition Date	Shares/ Units	Cost		Fair Value ⁽⁷⁾		Percentage of Net Assets
Equity Investments (0.00%)
TwentyEighty Investors LLC	Business Services	1/31/2017	69,786	$	—	$	—	—	%
Equity Investments Total				$	—	$	—	—	%
Total investments—non-controlled/affiliated				$	13,595	$	13,973	1.26	%



Investments—controlled/affiliated	Industry	Reference Rate & Spread ⁽²⁾	Interest Rate ⁽²⁾	Acquisition Date	Maturity Date	Par Amount/ LLC Interest		Cost		Fair Value ⁽⁷⁾		Percentage of Net Assets
Investment Fund (11.07%) ⁽⁸⁾
Middle Market Credit Fund, LLC, Mezzanine Loan ^{(2) (5) (9) (11)}	Investment Fund	L + 9.00%	11.28%	6/30/2016	3/22/2019	$	122,000	$	122,000	$	122,000	11.04	%
Middle Market Credit Fund, LLC, Subordinated Loan and Member’s Interest^{(5) (11)}	Investment Fund	N/A	0.001%	2/29/2016	3/1/2021	102,001		102,001		101,404		9.18
Investment Fund Total								$	224,001	$	223,404	20.22	%
Total investments—controlled/affiliated								$	224,001	$	223,404	20.22	%
Total investments								$	2,058,242	$	2,018,998	182.76	%

(1)

Unless otherwise indicated, issuers of debt and equity investments held by TCG BDC, Inc. (together with its consolidated subsidiaries, “we,” “us,” “our,” “TCG BDC” or the “Company”) are domiciled in the United States. Under the Investment Company Act of 1940, as amended (together with the rules and regulations promulgated thereunder, the “Investment Company Act”), the Company would be deemed to “control” a portfolio company if the Company owned more than 25% of its outstanding voting securities and/or held the power to exercise control over the management or policies of the portfolio company. As of September 30, 2018, the Company does not “control” any of these portfolio companies. Under the Investment Company Act, the Company would be deemed an “affiliated person” of a portfolio company if the Company owns 5% or more of the portfolio company’s outstanding voting securities. As of September 30, 2018, the Company is not an “affiliated person” of any of these portfolio companies. Certain portfolio company investments are subject to contractual restrictions on sales.

(2)

Variable rate loans to the portfolio companies bear interest at a rate that is determined by reference to either LIBOR (“L”) or an alternate base rate (commonly based on the Federal Funds Rate or the U.S. Prime Rate), which generally resets quarterly. For each such loan, the Company has indicated the reference rate used and provided the spread and the interest rate in effect as of September 30, 2018. As of September 30, 2018, the reference rates for our variable rate loans were the 30-day LIBOR at 2.26%, the 90-day LIBOR at 2.40% and the 180-day LIBOR at 2.60%.


(3)	Loan includes interest rate floor feature, which is generally 1.00%.

(4)

Denotes that all or a portion of the assets are owned by the Company’s wholly owned subsidiary, TCG BDC SPV LLC (the “SPV”). The SPV has entered into a senior secured revolving credit facility (as amended, the “SPV Credit Facility”). The lenders of the SPV Credit Facility have a first lien security interest in substantially all of the assets of the SPV (see Note 6, Borrowings). Accordingly, such assets are not available to creditors of the Company or Carlyle Direct Lending CLO 2015-1R LLC (formerly known as Carlyle GMS Finance MM CLO 2015-1 LLC) (the “2015-1 Issuer”).

(5)

Denotes that all or a portion of the assets are owned by the Company. The Company has entered into a senior secured revolving credit facility (as amended, the “Credit Facility” and, together with the SPV Credit Facility, the “Facilities”). The lenders of the Credit Facility have a first lien security interest in substantially all of the portfolio investments held by the Company (see Note 6, Borrowings). Accordingly, such assets are not available to creditors of the SPV or the 2015-1 Issuer.


(6)	Amortized cost represents original cost, including origination fees and upfront fees received that are deemed to be an adjustment to yield, adjusted for the accretion/amortization of discounts/premiums, as applicable, on debt investments using the effective interest method.

(7)

Fair value is determined in good faith by or under the direction of the Board of Directors of the Company (see Note 2, Significant Accounting Policies, and Note 3, Fair Value Measurements), pursuant to the Company’s valuation policy. The fair value of all first lien and second lien debt investments, equity investments and the investment fund mezzanine loan was determined using significant unobservable inputs.


(8)	The Company has determined the indicated investments are non-qualifying assets under Section 55(a) of the Investment Company Act. Under the Investment Company Act, the Company may not acquire any non-qualifying assets unless, at the time such acquisition is made, qualifying assets represent at least 70% of the Company’s total assets.


(9)	Represents a corporate mezzanine loan, which is subordinated to senior secured term loans of the portfolio company/investment fund.

TCG BDC, INC.

CONSOLIDATED SCHEDULE OF INVESTMENTS (Continued)

As of September 30, 2018

(dollar amounts in thousands)

(unaudited)


(10)	Loan was on non-accrual status as of September 30, 2018.

(11)

Under the Investment Company Act, the Company is deemed to be an “affiliated person” of and “control” this investment fund because the Company owns more than 25% of the investment fund’s outstanding voting securities and/or has the power to exercise control over management or policies of such investment fund. See Note 5, Middle Market Credit Fund, LLC, for more details. Transactions related to investments in controlled affiliates for the nine month period ended September 30, 2018 were as follows:



Investments—controlled/affiliated	Fair Value as of December 31, 2017		Additions/Purchases		Reductions/Sales/ Paydowns			Net Realized Gain (Loss)		Net Change in Unrealized Appreciation (Depreciation)			Fair Value as of September 30, 2018		Dividend and Interest Income
Middle Market Credit Fund, LLC, Mezzanine Loan	$	85,750	$	74,150	$	(37,900	)	$	—	$	—		$	122,000	$	9,230
Middle Market Credit Fund, LLC, Subordinated Loan and Member’s Interest	86,766		15,500		—			—		(862		)	101,404		11,550
Total investments—controlled/affiliated	$	172,516	$	89,650	$	(37,900	)	$	—	$	(862	)	$	223,404	$	20,780

(12)

In addition to the interest earned based on the stated interest rate of this loan, which is the amount reflected in this schedule, the Company is entitled to receive additional interest as a result of an agreement among lenders as follows: Dimensional Dental Management, LLC (4.53%), EIP Merger Sub, LLC (Evolve IP) (3.76%), Legacy.com Inc. (4.06%), Payment Alliance International Inc. (2.70%), Prime Risk Partners, Inc. (1.84%), Product Quest Manufacturing, LLC (3.55%), Surgical Information Systems, LLC (0.90%) and The Hilb Group, LLC (3.34%). Pursuant to the agreement among lenders in respect of this loan, this investment represents a first lien/last out loan, which has a secondary priority behind the first lien/first out loan with respect to principal, interest and other payments.


(13)	Denotes that all or a portion of the assets are owned by the 2015-1 Issuer and secure the notes issued in connection with a term debt securitization completed by the Company on June 26, 2015 (see Note 7, Notes Payable). Accordingly, such assets are not available to the creditors of the SPV or the Company.


(14)	Under the Investment Company Act, the Company is deemed an “affiliated person” of this portfolio company because the Company owns 5% or more of the portfolio company’s outstanding voting securities. Transactions related to investments in non-controlled affiliates for the nine month period ended September 30, 2018 were as follows:



Investments—non-controlled/affiliated	Fair Value as of December 31, 2017			Purchases/ Paid-in-kind interest		Sales/ Paydowns			Net Accretion of Discount		Net Realized Gain (Loss)		Net Change in Unrealized Appreciation (Depreciation)		Fair value as of September 30, 2018		Interest Income
TwentyEighty, Inc. - Revolver	$	(20	)	$	—	$	—		$	2	$	—	$	18	$	—	$	3
TwentyEighty, Inc. - (Term A Loans)	3,760			—		(3,526		)	18		—		112		364		252
TwentyEighty, Inc. - (Term B Loans)	6,360			207		—			60		—		157		6,784		473
TwentyEighty, Inc. - (Term C Loans)	5,331			442		—			119		—		933		6,825		575
TwentyEighty Investors LLC (Equity)	—			—		—			—		—		—		—		—
Total investments—non-controlled/affiliated	$	15,431		$	649	$	(3,526	)	$	199	$	—	$	1,220	$	13,973	$	1,303


(15)	As of September 30, 2018, the Company had the following unfunded commitments to fund delayed draw and revolving senior secured loans:



Investments—non-controlled/non-affiliated	Type	Unused Fee		Par/ Principal Amount		Fair Value
First and Second Lien Debt—unfunded delayed draw and revolving term loans commitments
Access CIG, LLC	Delayed Draw	0.10	%	$	127	$	—
Achilles Acquisition LLC	Delayed Draw	1.00		686		7
Advanced Instruments, LLC	Revolver	0.50		1,167		(3		)
Aero Operating LLC (Dejana Industries, Inc.)	Revolver	1.00		405		—

TCG BDC, INC.

CONSOLIDATED SCHEDULE OF INVESTMENTS (Continued)

As of September 30, 2018

(dollar amounts in thousands)

(unaudited)



Investments—non-controlled/non-affiliated	Type	Unused Fee		Par/ Principal Amount		Fair Value
AMS Group HoldCo, LLC	Delayed Draw	1.00	%	$	4,009	$	(50	)
AMS Group HoldCo, LLC	Revolver	0.50		1,968		(24		)
Analogic Corporation	Revolver	0.50		3,365		(33		)
Captive Resources Midco, LLC	Delayed Draw	1.25		3,571		(3		)
Captive Resources Midco, LLC	Revolver	0.50		2,143		(1		)
Chemical Computing Group ULC	Revolver	0.50		903		(8		)
CIP Revolution Holdings, LLC	Revolver	0.50		931		(3		)
CircusTrix Holdings, LLC	Delayed Draw	1.00		1,115		(7		)
Comar Holding Company, LLC	Delayed Draw	1.00		5,136		(47		)
Comar Holding Company, LLC	Revolver	0.50		2,129		(19		)
Continuum Managed Services HoldCo, LLC	Delayed Draw	1.00		1,917		5
Continuum Managed Services HoldCo, LLC	Revolver	0.50		2,500		7
Datto, Inc.	Revolver	0.50		726		13
Derm Growth Partners III, LLC (Dermatology Associates)	Revolver	0.50		975		(3		)
DermaRite Industries LLC	Revolver	0.50		1,428		(30		)
Dimensional Dental Management, LLC	Delayed Draw	1.00		9,584		—
Direct Travel, Inc.	Delayed Draw	1.00		1,872		—
Frontline Technologies Holdings, LLC	Delayed Draw	1.00		7,705		(62		)
FWR Holding Corporation	Delayed Draw	1.00		6,778		16
FWR Holding Corporation	Revolver	0.50		1,667		4
Global Franchise Group, LLC	Revolver	0.50		495		—
GRO Sub Holdco, LLC (Grand Rapids)	Delayed Draw	1.00		7,000		(179		)
GRO Sub Holdco, LLC (Grand Rapids)	Revolver	0.50		562		(14		)
iCIMS, Inc.	Revolver	0.50		1,252		(13		)
Innovative Business Services, LLC	Delayed Draw	1.00		3,886		(63		)
Innovative Business Services, LLC	Revolver	0.50		2,232		(36		)
National Carwash Solutions, Inc.	Delayed Draw	1.00		3,817		(47		)
National Carwash Solutions, Inc.	Revolver	0.50		571		(7		)
National Technical Systems, Inc.	Revolver	0.50		2,500		(84		)
NMI AcquisitionCo, Inc.	Revolver	0.50		435		(9		)
Pathway Partners Vet Management Company LLC	Delayed Draw	1.00		2,700		(42		)
Pharmalogic Holdings Corp.	Delayed Draw	1.00		237		—
PricewaterhouseCoopers Public Sector LLP	Revolver	0.50		6,250		(94		)
Prime Risk Partners, Inc.	Delayed Draw	0.50		457		(5		)

TCG BDC, INC.

CONSOLIDATED SCHEDULE OF INVESTMENTS (Continued)

As of September 30, 2018

(dollar amounts in thousands)

(unaudited)



Investments—non-controlled/non-affiliated	Type	Unused Fee		Par/ Principal Amount		Fair Value
Prime Risk Partners, Inc.	Delayed Draw	0.50	%	$	5,694	$	(69	)
Product Quest Manufacturing, LLC	Revolver	0.50		1,906		—
Smile Doctors, LLC	Delayed Draw	1.00		8,020		(7		)
Smile Doctors, LLC	Revolver	0.50		1,047		(1		)
SolAero Technologies Corp.	Delayed Draw	4.75		921		—
SPay, Inc.	Delayed Draw	1.00		10,227		(123		)
SPay, Inc.	Revolver	0.50		545		(7		)
Superior Health Linens, LLC	Revolver	0.50		2,100		(32		)
T2 Systems, Inc.	Revolver	0.50		1,760		1
The Hilb Group, LLC	Delayed Draw	1.00		18,276		5
TSB Purchaser, Inc. (Teaching Strategies, LLC)	Revolver	0.50		1,891		(44		)
Trump Card, LLC	Revolver	0.50		635		(3		)
TwentyEighty, Inc. (f/k/a Miller Heiman, Inc.)	Revolver	0.50		607		—
VRC Companies, LLC	Delayed Draw	0.75		11,509		—
VRC Companies, LLC	Revolver	0.50		970		—
Westfall Technik, Inc.	Delayed Draw	1.00		17,241		(231		)
Westfall Technik, Inc.	Revolver	0.50		3,233		(43		)
Zemax Software Holdings, LLC	Revolver	0.50		1,285		(6		)
Zenith Merger Sub, Inc.	Revolver	0.50		2,153		(1		)
Total unfunded commitments				$	185,221	$	(1,395	)


(16)	Security acquired in transaction exempt from registration under the Securities Act of 1933, as amended (the “Securities Act”), and may be deemed to be “restricted securities” under the Securities Act, unless otherwise noted. As of September 30, 2018, the aggregate fair value of these securities is $23,308, or 2.11% of the Company’s net assets.

TCG BDC, INC.

CONSOLIDATED SCHEDULE OF INVESTMENTS (Continued)

As of September 30, 2018

(dollar amounts in thousands)

(unaudited)

As of September 30, 2018, investments at fair value consisted of the following:



Type	Amortized Cost		Fair Value		% of Fair Value
First Lien Debt (excluding First Lien/Last Out)	$	1,414,147	$	1,402,279	69.46	%
First Lien/Last Out Unitranche	234,321		199,350		9.87
Second Lien Debt	168,605		170,657		8.45
Equity Investments	17,168		23,308		1.15
Investment Fund	224,001		223,404		11.07
Total	$	2,058,242	$	2,018,998	100.00	%

The rate type of debt investments at fair value as of September 30, 2018 was as follows:



Rate Type	Amortized Cost		Fair Value		% of Fair Value of First and Second Lien Debt
Floating Rate	$	1,803,837	$	1,758,677	99.23	%
Fixed Rate	13,236		13,609		0.77
Total	$	1,817,073	$	1,772,286	100.00	%

The industry composition of investments at fair value as of September 30, 2018 was as follows:



Industry	Amortized Cost		Fair Value		% of Fair Value
Aerospace & Defense	$	25,904	$	25,409	1.26	%
Automotive	6,979		8,594		0.43
Banking, Finance, Insurance & Real Estate	180,079		184,550		9.14
Beverage, Food & Tobacco	61,496		62,743		3.11
Business Services	134,756		137,197		6.80
Capital Equipment	37,944		38,147		1.89
Chemicals, Plastics & Rubber	19,648		19,623		0.97
Construction & Building	26,274		26,420		1.31
Consumer Services	92,449		92,755		4.59
Containers, Packaging & Glass	68,001		36,142		1.79
Durable Consumer Goods	755		1,143		0.06
Energy: Electricity	42,977		43,088		2.13
Energy: Oil & Gas	9,683		10,296		0.51
Environmental Industries	35,649		35,832		1.77
Forest Products & Paper	50,065		51,187		2.54
Healthcare & Pharmaceuticals	239,539		232,456		11.51
High Tech Industries	181,018		183,375		9.08

TCG BDC, INC.

CONSOLIDATED SCHEDULE OF INVESTMENTS (Continued)

As of September 30, 2018

(dollar amounts in thousands)

(unaudited)



Industry	Amortized Cost		Fair Value		% of Fair Value
Hotel, Gaming & Leisure	$	78,031	$	77,887	3.86	%
Investment Fund	224,001		223,404		11.07
Media: Advertising, Printing & Publishing	58,395		58,610		2.90
Non-durable Consumer Goods	58,086		50,553		2.50
Software	122,831		124,186		6.15
Sovereign & Public Finance	38,646		38,888		1.93
Telecommunications	93,712		86,467		4.28
Transportation: Cargo	88,513		89,332		4.42
Transportation: Consumer	36,277		37,224		1.84
Wholesale	46,534		43,490		2.16
Total	$	2,058,242	$	2,018,998	100.00	%

The geographical composition of investments at fair value as of September 30, 2018 was as follows:



Geography	Amortized Cost		Fair Value		% of Fair Value
Canada	$	15,629	$	15,641	0.78	%
United Kingdom	7,683		7,732		0.38
United States	2,034,930		1,995,625		98.84
Total	$	2,058,242	$	2,018,998	100.00	%

The accompanying notes are an integral part of these consolidated financial statements.

TCG BDC, INC.

CONSOLIDATED SCHEDULE OF INVESTMENTS

As of December 31, 2017

(dollar amounts in thousands)

(unaudited)



Investments—non-controlled/non-affiliated ⁽¹⁾	Industry	Interest Rate⁽²⁾	Maturity Date	Par/ Principal Amount		Amortized Cost ⁽⁶⁾		Fair Value ⁽⁷⁾		Percentage of Net Assets
First Lien Debt (77.04%)
Access CIG, LLC^{(2)(3)(4)(13)(16)}	Business Services	L + 5.00% (1.00% Floor)	10/17/2021	$	18,149	$	18,054	$	18,263	1.62	%
Achilles Acquisition LLC ^{(2)(3)(4)(5)(13)(15)}	Banking, Finance, Insurance & Real Estate	L + 6.00% (1.00% Floor)	6/6/2023	40,910		39,931		40,523		3.59
Advanced Instruments, LLC^{(2)(3)(4)(5)(13)(15)(16)}	Healthcare & Pharmaceuticals	L + 5.25% (1.00% Floor)	10/31/2022	10,421		10,227		10,421		0.92
Alpha Packaging Holdings, Inc. ^{(2)(3)(4)(13)}	Containers, Packaging & Glass	L + 4.25% (1.00% Floor)	5/12/2020	2,896		2,894		2,896		0.26
AMS Group HoldCo, LLC ^{(2)(3)(4)(5)(13)(15)}	Transportation: Cargo	L + 6.00% (1.00% Floor)	9/29/2023	29,925		29,254		29,925		2.65
Anaren, Inc. ^{(2)(3)(4)(13)}	Telecommunications	L + 4.50% (1.00% Floor)	2/18/2021	3,802		3,789		3,809		0.34
Audax AAMP Holdings, Inc. ^(2)(3)(5)	Durable Consumer Goods	L + 7.50% (1.00% Floor)	1/31/2018	12,487		12,459		12,362		1.10
BeyondTrust Software, Inc. ^{(2)(3)(4)(5)(13)}	Software	L + 6.25% (1.00% Floor)	11/21/2023	17,000		16,758		16,910		1.50
Brooks Equipment Company, LLC ^{(2)(3)(4)(13)}	Construction & Building	L + 5.00% (1.00% Floor)	8/29/2020	2,546		2,535		2,546		0.23
Capstone Logistics Acquisition, Inc. ^{(2)(3)(4)(13)(16)}	Transportation: Cargo	L + 4.50% (1.00% Floor)	10/7/2021	19,198		19,081		18,895		1.68
Captive Resources Midco, LLC ^{(2)(3)(4)(5)(13)(15)(16)}	Banking, Finance, Insurance & Real Estate	L + 6.00% (1.00% Floor)	12/18/2021	30,900		30,635		30,783		2.73
Central Security Group, Inc.^{(2)(3)(4)(13)(16)}	Consumer Services	L + 5.63% (1.00% Floor)	10/6/2021	39,007		38,668		38,941		3.45
CIP Revolution Holdings, LLC ^{(2)(3)(4)(5)(13)(15)}	Media: Advertising, Printing & Publishing	L + 6.00% (1.00% Floor)	8/19/2021	19,048		18,917		18,993		1.68
Colony Hardware Corporation ^{(2)(3)(4)(13)}	Construction & Building	L + 6.00% (1.00% Floor)	10/23/2021	22,071		21,838		22,049		1.96
Continuum Managed Services Holdco, LLC ^{(2)(3)(4)(5)(13)(15)(16)}	High Tech Industries	L + 8.75% (1.00% Floor)	6/8/2023	22,885		22,208		23,237		2.06
Dade Paper & Bag, LLC^{(2)(3)(4)(5)(16)}	Forest Products & Paper	L + 7.50% (1.00% Floor)	6/10/2024	49,750		48,822		49,884		4.42
Datto, Inc. ^{(2)(3)(5)(15)(16)}	High Tech Industries	L + 8.00% (1.00% Floor)	12/7/2022	35,622		35,082		35,818		3.18
Dent Wizard International Corporation^{(2)(3)(4)(16)}	Automotive	L + 4.75% (1.00% Floor)	4/7/2020	895		893		894		0.08
Derm Growth Partners III, LLC (Dermatology Associates) ^{(2)(3)(4)(5)(13)(15)}	Healthcare & Pharmaceuticals	L + 6.50% (1.00% Floor)	5/31/2022	50,658		50,104		50,441		4.47
DermaRite Industries, LLC^{(2)(3)(5)(13)(15)(16)}	Healthcare & Pharmaceuticals	L + 7.00% (1.00% Floor)	3/3/2022	20,003		19,729		19,850		1.76
Dimensional Dental Management, LLC^{(2)(3)(5)(12)(15)(16)}	Healthcare & Pharmaceuticals	L + 6.75% (1.00% Floor)	2/12/2021	33,674		33,038		33,514		2.97
Direct Travel, Inc. ^{(2)(3)(4)(5)(13)(15)}	Hotel, Gaming & Leisure	L + 6.50% (1.00% Floor)	12/1/2021	29,623		29,136		29,708		2.64
EIP Merger Sub, LLC (Evolve IP) ^{(2)(3)(5)(12)(13)(16)}	Telecommunications	L + 6.25% (1.00% Floor)	6/7/2021	27,284		26,618		26,738		2.37
Emergency Communications Network, LLC ^{(2)(3)(4)(5)(13)(16)}	Telecommunications	L + 6.25% (1.00% Floor)	6/1/2023	24,875		24,669		24,850		2.20
EP Minerals, LLC^{(2)(3)(4)(13)}	Metals & Mining	L + 4.50% (1.00% Floor)	8/20/2020	7,920		7,901		7,931		0.70
FCX Holdings Corp. ^{(2)(3)(4)(13)(16)}	Capital Equipment	L + 4.50% (1.00% Floor)	8/4/2020	3,820		3,823		3,824		0.34
Frontline Technologies Holdings, LLC ^{(2)(3)(5)(15)}	Software	L + 6.50% (1.00% Floor)	9/18/2023	39,197		38,757		39,159		3.47

TCG BDC, INC.

CONSOLIDATED SCHEDULE OF INVESTMENTS (Continued)

As of December 31, 2017

(dollar amounts in thousands)

(unaudited)



Investments—non-controlled/non-affiliated ⁽¹⁾	Industry	Interest Rate⁽²⁾	Maturity Date	Par/ Principal Amount		Amortized Cost ⁽⁶⁾		Fair Value ⁽⁷⁾		Percentage of Net Assets
First Lien Debt (77.04%) (continued)
FWR Holding Corporation ^{(2)(3)(4)(5)(13)(15)}	Beverage, Food & Tobacco	L + 6.00% (1.00% Floor)	8/21/2023	$	36,692	$	35,525	$	36,098	3.20	%
Global Franchise Group, LLC ^{(2)(3)(4)(5)(13)(15)}	Beverage, Food & Tobacco	L + 5.75% (1.00% Floor)	12/18/2019	14,468		14,345		14,468		1.28
Global Software, LLC ^{(2)(3)(4)(13)(16)}	High Tech Industries	L + 5.25% (1.00% Floor)	5/2/2022	20,800		20,501		20,774		1.84
Green Energy Partners/Stonewall LLC^{(2)(3)(4)(13)}	Energy: Electricity	L + 5.50% (1.00% Floor)	11/13/2021	19,950		19,621		19,334		1.71
Hummel Station LLC ^{(2)(3)(5)(13)(16)}	Energy: Electricity	L + 6.00% (1.00% Floor)	10/27/2022	15,000		14,375		13,905		1.23
Hydrofarm, LLC ^{(2)(5)(13)(16)}	Wholesale	L + 7.00%	5/12/2022	18,763		18,640		18,241		1.62
Indra Holdings Corp. (Totes Isotoner) ^{(2)(3)(5)(13)}	Non-durable Consumer Goods	L + 4.25% (1.00% Floor)	5/1/2021	18,965		17,224		11,222		1.00
Legacy.com Inc. ^{(2)(3)(5)(12)}	High Tech Industries	L + 6.00% (1.00% Floor)	3/20/2023	17,000		16,653		17,558		1.56
Metrogistics LLC ^{(2)(3)(4)(13)}	Transportation: Cargo	L + 6.50% (1.00% Floor)	9/30/2022	17,978		17,774		17,921		1.59
Moxie Liberty LLC ^{(2)(3)(5)(13)}	Energy: Electricity	L + 6.50% (1.00% Floor)	8/21/2020	9,975		9,008		9,148		0.81
National Technical Systems, Inc.^{(2)(3)(4)(5)(13)(15)(16)}	Aerospace & Defense	L + 6.25% (1.00% Floor)	6/12/2021	26,351		26,072		24,817		2.20
NES Global Talent Finance US LLC (United Kingdom) ^{(2)(3)(4)(8)(13)}	Energy: Oil & Gas	L + 5.50% (1.00% Floor)	10/3/2019	13,600		13,439		13,369		1.19
NMI AcquisitionCo, Inc. ^{(2)(3)(4)(5)(15)}	High Tech Industries	L + 6.75% (1.00% Floor)	9/6/2022	51,091		50,112		50,944		4.52
OnCourse Learning Corporation ^{(2)(3)(4)(5)(13)(15)}	Consumer Services	L + 6.50% (1.00% Floor)	9/12/2021	35,905		35,513		35,740		3.17
Payment Alliance International, Inc.^{(2)(3)(5)(12)(16)}	Business Services	L + 6.05% (1.00% Floor)	9/15/2021	26,544		25,983		26,464		2.35
Pelican Products, Inc. ^{(2)(3)(4)(13)}	Containers, Packaging & Glass	L + 4.25% (1.00% Floor)	4/11/2020	3,585		3,589		3,581		0.32
Plano Molding Company, LLC ^{(2)(3)(4)(5)(16)}	Hotel, Gaming & Leisure	L + 7.50% (1.00% Floor)	5/12/2021	19,523		19,263		16,934		1.50
PMG Acquisition Corporation ^{(2)(3)(4)(5)(13)(15)}	Healthcare & Pharmaceuticals	L + 6.25% (1.00% Floor)	5/22/2022	27,025		26,649		27,161		2.41
PPT Management Holdings, LLC^{(2)(3)(4)(5)(13)}	Healthcare & Pharmaceuticals	L + 6.00% (1.00% Floor)	12/16/2022	24,750		24,572		23,443		2.08
Prime Risk Partners, Inc. ^{(2)(3)(5)(15)}	Banking, Finance, Insurance & Real Estate	L + 5.75% (1.00% Floor)	8/13/2023	1,639		1,594		1,650		0.15
Prime Risk Partners, Inc. ^{(2)(3)(5)(12)(15)}	Banking, Finance, Insurance & Real Estate	L + 5.75% (1.00% Floor)	8/13/2023	20,521		19,959		21,032		1.87
Product Quest Manufacturing, LLC ^{(2)(3)(5)(10)(12)}	Containers, Packaging & Glass	L + 6.75% (1.00% Floor)	9/9/2020	33,000		32,270		19,487		1.73
Product Quest Manufacturing, LLC^{(2)(3)(5)(15)(16)}	Containers, Packaging & Glass	L + 6.75% (3.25% Floor)	3/31/2019	2,729		2,729		2,729		0.24
Prowler Acquisition Corp. (Pipeline Supply and Service, LLC) ^{(2)(3)(4)(13)}	Wholesale	L + 4.50% (1.00% Floor)	1/28/2020	14,910		14,285		14,133		1.25
QW Holding Corporation (Quala) ^{(2)(3)(4)(5)(13)}	Environmental Industries	L + 6.75% (1.00% Floor)	8/31/2022	36,549		35,772		35,715		3.17
Reliant Pro Rehab, LLC ^{(2)(3)(5)(12)}	Healthcare & Pharmaceuticals	L + 10.00% (1.00% Floor)	12/28/2018	24,563		24,544		24,563		2.18
Smile Doctors, LLC ^{(2)(3)(5)(13)(15)}	Healthcare & Pharmaceuticals	L + 5.75% (1.00% Floor)	10/6/2022	9,059		8,930		9,011		0.80

TCG BDC, INC.

CONSOLIDATED SCHEDULE OF INVESTMENTS (Continued)

As of December 31, 2017

(dollar amounts in thousands)

(unaudited)



Investments—non-controlled/non-affiliated ⁽¹⁾	Industry	Interest Rate⁽²⁾	Maturity Date	Par/ Principal Amount		Amortized Cost ⁽⁶⁾		Fair Value ⁽⁷⁾		Percentage of Net Assets
First Lien Debt (77.04%) (continued)
SolAero Technologies Corp. ^{(2)(3)(4)(5)(16)}	Telecommunications	L + 5.25% (1.00% Floor)	12/10/2020	$	24,828	$	24,221	$	23,416	2.08	%
Superior Health Linens, LLC^{(2)(3)(4)(5)(13)(15)(16)}	Business Services	L + 6.50% (1.00% Floor)	9/30/2021	21,061		20,788		21,026		1.87
Surgical Information Systems, LLC ^{(2)(3)(4)(5)(12)(13)(16)}	High Tech Industries	L + 5.00% (1.00% Floor)	4/24/2023	30,000		29,728		30,075		2.67
T2 Systems Canada, Inc. ^{(2)(3)(4)(16)}	Transportation: Consumer	L + 6.75% (1.00% Floor)	9/28/2022	4,009		3,926		3,950		0.35
T2 Systems, Inc. ^{(2)(3)(4)(5)(13)(15)(16)}	Transportation: Consumer	L + 6.75% (1.00% Floor)	9/28/2022	32,649		31,956		32,146		2.85
The Hilb Group, LLC ^{(2)(3)(5)(12)(15)}	Banking, Finance, Insurance & Real Estate	L + 6.00% (1.00% Floor)	6/24/2021	38,622		38,132		38,204		3.39
The SI Organization, Inc.^{(2)(3)(4)(5)(13)}	Aerospace & Defense	L + 4.75% (1.00% Floor)	11/23/2019	14,300		14,310		14,419		1.28
The Topps Company, Inc. ^{(2)(3)(4)(13)}	Non-durable Consumer Goods	L + 6.00% (1.25% Floor)	10/2/2020	23,130		22,970		22,991		2.04
TruckPro, LLC ^{(2)(3)(4)(13)}	Automotive	L + 5.00% (1.00% Floor)	8/6/2018	8,860		8,850		8,831		0.78
Tweddle Group, Inc. ^{(2)(3)(4)(13)}	Media: Advertising, Printing & Publishing	L + 6.00% (1.00% Floor)	10/24/2022	7,356		7,266		7,264		0.64
Vetcor Professional Practices, LLC ^{(2)(3)(4)(5)(13)(15)}	Consumer Services	L + 6.25% (1.00% Floor)	4/20/2021	38,868		38,502		38,725		3.43
Vistage Worldwide, Inc. ^{(2)(3)(4)(13)(16)}	Business Services	L + 5.50% (1.00% Floor)	8/19/2021	32,916		32,753		32,916		2.92
VRC Companies, LLC ^{(2)(3)(4)(5)(13)(15)(16)}	Business Services	L + 6.50% (1.00% Floor)	3/31/2023	38,600		37,873		38,541		3.42
W/S Packaging Group Inc. ^{(2)(3)(4)(16)}	Containers, Packaging & Glass	L + 5.00% (1.00% Floor)	8/9/2019	4,004		3,887		3,789		0.34
Watchfire Enterprises, Inc. ^(2)(3)(13)	Media: Advertising, Printing & Publishing	L + 4.25% (1.00% Floor)	10/2/2020	1,362		1,351		1,362		0.12
Winchester Electronics Corporation ^{(2)(3)(4)(5)(13)}	Capital Equipment	L + 6.50% (1.00% Floor)	6/30/2022	36,547		36,292		36,933		3.28
Zenith Merger Sub, Inc. ^{(2)(3)(4)(5)(13)(15)}	Business Services	L + 5.50% (1.00% Floor)	12/12/2023	15,290		15,069		15,198		1.35
Zest Holdings, LLC ^{(2)(3)(4)(13)(16)}	Durable Consumer Goods	L + 4.25% (1.00% Floor)	8/16/2023	3,431		3,423		3,453		0.31
First Lien Debt Total						$	1,526,058	$	1,515,845	134.46	%
Second Lien Debt (12.51%)
AIM Group USA Inc. ^{(2)(3)(4)(5)(13)}	Aerospace & Defense	L + 9.00% (1.00% Floor)	8/2/2022	$	23,000	$	22,737	$	23,230	2.06	%
AmeriLife Group, LLC ^{(2)(3)(5)(13)(16)}	Banking, Finance, Insurance & Real Estate	L + 8.75% (1.00% Floor)	1/10/2023	22,000		21,647		21,817		1.94
Argon Medical Devices, Inc. ^{(2)(3)(4)(5)(16)}	Healthcare & Pharmaceuticals	L + 9.50% (1.00% Floor)	6/23/2022	25,000		24,447		25,000		2.22
Argon Medical Devices Holdings, Inc. ^{(2)(3)(5)(16)}	Healthcare & Pharmaceuticals	L + 8.00% (1.00% Floor)	1/23/2026	7,500		7,465		7,515		0.67
Berlin Packaging L.L.C. ^{(2)(3)(13)(16)}	Containers, Packaging & Glass	L + 6.75% (1.00% Floor)	10/1/2022	1,146		1,140		1,153		0.10
Confie Seguros Holding II Co.^{(2)(3)(5)(13)}	Banking, Finance, Insurance & Real Estate	L + 9.50% (1.25% Floor)	5/8/2019	9,000		8,959		8,715		0.77

TCG BDC, INC.

CONSOLIDATED SCHEDULE OF INVESTMENTS (Continued)

As of December 31, 2017

(dollar amounts in thousands)

(unaudited)



Investments—non-controlled/non-affiliated ⁽¹⁾	Industry	Interest Rate⁽²⁾	Maturity Date	Par/ Principal Amount		Amortized Cost ⁽⁶⁾		Fair Value⁽⁷⁾		Percentage of Net Assets
Second Lien Debt (12.51%) (continued)
Drew Marine Group Inc. ^{(2)(3)(4)(5)(13)(16)}	Chemicals, Plastics & Rubber	L + 7.00% (1.00% Floor)	5/19/2021	$	12,500	$	12,484	$	12,456	1.10	%
Genex Holdings, Inc. ^{(2)(3)(5)(16)}	Banking, Finance, Insurance & Real Estate	L + 7.75% (1.00% Floor)	5/30/2022	8,990		8,915		8,924		0.79
Paradigm Acquisition Corp. ^{(2)(3)(5)(17)}	Business Services	L + 8.50% (1.00% Floor)	10/12/2025	9,600		9,507		9,584		0.85
Pathway Partners Vet Management Company LLC ^{(2)(3)(5)(15)(16)}	Consumer Services	L + 8.00% (1.00% Floor)	10/10/2025	7,751		7,644		7,741		0.69
Pexco LLC ^{(2)(3)(5)(16)}	Chemicals, Plastics & Rubber	L + 8.00% (1.00% Floor)	5/8/2025	20,000		19,818		20,362		1.81
Prowler Acquisition Corp. (Pipeline Supply and Service, LLC) ^(2)(3)(5)	Wholesale	L + 8.50% (1.00% Floor)	7/28/2020	3,000		2,967		2,485		0.22
Q International Courier, LLC ^{(2)(3)(5)(16)}	Transportation: Cargo	L + 8.25% (1.00% Floor)	9/19/2025	18,750		18,384		18,621		1.65
Reladyne, Inc. ^{(2)(3)(4)(13)}	Wholesale	L + 9.50% (1.00% Floor)	1/21/2023	5,000		4,884		4,929		0.44
Rough Country, LLC ^{(2)(3)(5)(13)(16)}	Durable Consumer Goods	L + 8.50% (1.00% Floor)	11/25/2023	42,500		41,311		42,802		3.80
Santa Cruz Holdco, Inc. ^(2)(3)(5)	Non-durable Consumer Goods	L + 8.25% (1.00% Floor)	12/13/2024	17,138		16,967		17,079		1.51
Superion, LLC (fka Ramundsen Public Sector, LLC) ^(2)(3)(13)	Sovereign & Public Finance	L + 8.50% (1.00% Floor)	2/1/2025	1,800		1,784		1,820		0.16
Watchfire Enterprises, Inc.^(2)(3)(5)	Media: Advertising, Printing & Publishing	L + 8.00% (1.00% Floor)	10/2/2021	7,000		6,941		7,000		0.62
Zywave, Inc. ^(2)(3)(5)	High Tech Industries	L + 9.00% (1.00% Floor)	11/17/2023	4,950		4,886		5,000		0.44
Second Lien Debt Total						$	242,887	$	246,233	21.84	%



Investments—non-controlled/non-affiliated ⁽¹⁾	Industry	Shares/ Units	Cost		Fair Value ⁽⁷⁾		Percentage of Net Assets
Equity Investments (0.89%) ⁽⁵⁾
CIP Revolution Holdings, LLC	Media: Advertising, Printing & Publishing	30,000	$	300	$	369	0.03	%
Dade Paper & Bag, LLC	Forest Products & Paper	1,500,000	1,500		2,140		0.19
DecoPac, Inc.	Non-durable Consumer Goods	1,500,000	1,500		1,500		0.13
Derm Growth Partners III, LLC (Dermatology Associates)	Healthcare & Pharmaceuticals	1,000,000	1,000		1,796		0.16
GS Holdco LLC (Global Software, LLC)	High Tech Industries	1,000,000	1,001		1,550		0.14
Legacy.com Inc.	High Tech Industries	1,500,000	1,500		1,739		0.15
Power Stop Intermediate Holdings, LLC	Automotive	7,150	369		1,191		0.11
Rough Country, LLC	Durable Consumer Goods	754,775	755		873		0.08
T2 Systems Parent Corporation	Transportation: Consumer	555,556	556		499		0.04
Tailwind HMT Holdings Corp.	Energy: Oil & Gas	2,000,000	2,000		2,000		0.18
THG Acquisition, LLC (The Hilb Group, LLC)	Banking, Finance, Insurance & Real Estate	1,500,000	1,500		2,287		0.20
Zenith American Holding, Inc.	Business Services	1,561,644	1,562		1,562		0.14
Equity Investments Total			$	13,543	$	17,506	1.55	%
Total investments—non-controlled/non-affiliated			$	1,782,488	$	1,779,584	157.85	%

TCG BDC, INC.

CONSOLIDATED SCHEDULE OF INVESTMENTS (Continued)

As of December 31, 2017

(dollar amounts in thousands)

(unaudited)



Investments—non-controlled/affiliated ^(5)(14)	Industry	Interest Rate⁽²⁾	Maturity Date	Par/ Principal Amount		Amortized Cost ⁽⁶⁾			Fair Value ⁽⁷⁾			Percentage of Net Assets
First Lien Debt (0.78%)
TwentyEighty, Inc. - Revolver ^(2)(3)(15)	Business Services	L + 8.00%	3/21/2020	$	—	$	(6	)	$	(20	)	—	%
TwentyEighty, Inc. - (Term A Loans) ⁽²⁾⁽³⁾	Business Services	L + 3.50% cash, 4.50% PIK	3/21/2020	3,890		3,871			3,760			0.33	%
TwentyEighty, Inc. - (Term B Loans)	Business Services	1.00% cash, 7.00% PIK	3/21/2020	6,715		6,494			6,360			0.57	%
TwentyEighty, Inc. - (Term C Loans)	Business Services	0.25% cash, 8.75% PIK	3/21/2020	6,521		5,914			5,331			0.47	%
First Lien Debt Total						$	16,273		$	15,431		1.37	%



Investments—non-controlled/affiliated ^(5)(14)	Industry	Shares/ Units	Cost		Fair Value ⁽⁷⁾		Percentage of Net Assets
Equity Investments (0.00%)
TwentyEighty Investors LLC	Business Services	69,786	$	—	$	—	—		%
Equity Investments Total			$	—	$	—	$	—
Total investments—non-controlled/affiliated			16,273		15,431		1.37		%



Investments—controlled/affiliated	Industry	Interest Rate⁽²⁾		Maturity Date	Par Amount/ LLC Interest		Cost		Fair Value⁽⁷⁾		Percentage of Net Assets
Investment Fund (8.77%) ⁽⁸⁾
Middle Market Credit Fund, LLC, Mezzanine Loan ^{(2)(5)(9)(11)}	Investment Fund	L + 9.00%		6/22/2018	$	85,750	$	85,750	$	85,750	7.61	%
Middle Market Credit Fund, LLC, Subordinated Loan and Member’s Interest ^(5)(11)	Investment Fund	0.001	%	3/1/2021	86,501		86,501		86,766		7.70
Investment Fund Total							$	172,251	$	172,516	15.31	%
Total investments—controlled/affiliated							$	172,251	$	172,516	15.31	%
Total investments							$	1,971,012	$	1,967,531	174.53	%

(1)

Unless otherwise indicated, issuers of debt and equity investments held by the Company are domiciled in the United States. Under the Investment Company Act, the Company would be deemed to “control” a portfolio company if the Company owned more than 25% of its outstanding voting securities and/or held the power to exercise control over the management or policies of the portfolio company. As of December 31, 2017, the Company does not “control” any of these portfolio companies. Under the Investment Company Act, the Company would be deemed an “affiliated person” of a portfolio company if the Company owns 5% or more of the portfolio company’s outstanding voting securities. As of December 31, 2017, the Company is not an “affiliated person” of any of these portfolio companies.

(2)

Variable rate loans to the portfolio companies bear interest at a rate that may be determined by reference to either LIBOR or an alternate base rate (commonly based on the Federal Funds Rate or the U.S. Prime Rate), which generally resets quarterly. For each such loan, the Company has provided the interest rate in effect as of December 31, 2017. As of December 31, 2017, all of our LIBOR loans were indexed to the 90-day LIBOR rate at 1.69%, except for those loans as indicated in Notes 16 and 17 below.


(3)	Loan includes interest rate floor feature.


(4)	Denotes that all or a portion of the assets are owned by the SPV. The SPV has entered into the SPV Credit Facility. The lenders of the SPV Credit Facility have a first lien security interest in substantially all of the assets of the SPV (see Note 6, Borrowings). Accordingly, such assets are not available to creditors of the Company or the 2015-1 Issuer.


(5)	Denotes that all or a portion of the assets are owned by the Company. The Company has entered into the Credit Facility. The lenders of the Credit Facility have a first lien security interest in substantially all of the portfolio investments held by the Company (see Note 6, Borrowings). Accordingly, such assets are not available to creditors of the SPV or the 2015-1 Issuer.


(6)	Amortized cost represents original cost, including origination fees and upfront fees received that are deemed to be an adjustment to yield, adjusted for the accretion/amortization of discounts/premiums, as applicable, on debt investments using the effective interest method.

(7)


(8)	The Company has determined the indicated investments are non-qualifying assets under Section 55(a) of the Investment Company Act. Under the Investment Company Act, the Company may not acquire any non-qualifying assets unless, at the time such acquisition is made, qualifying assets represent at least 70% of the Company’s total assets.


(9)	Represents a corporate mezzanine loan, which is subordinated to senior secured term loans of the portfolio company/investment fund.

TCG BDC, INC.

CONSOLIDATED SCHEDULE OF INVESTMENTS (Continued)

As of December 31, 2017

(dollar amounts in thousands)

(unaudited)


(10)	Loan was on non-accrual status as of December 31, 2017.


(11)	Under the Investment Company Act, the Company is deemed to be an “affiliated person” of and “control” this investment fund because the Company owns more than 25% of the investment fund’s outstanding voting securities and/or has the power to exercise control over management or policies of such investment fund. See Note 5, Middle Market Credit Fund, LLC, for more details.

(12)

In addition to the interest earned based on the stated interest rate of this loan, which is the amount reflected in this schedule, the Company is entitled to receive additional interest as a result of an agreement among lenders as follows: Dimensional Dental Management, LLC (4.58%), EIP Merger Sub, LLC (Evolve IP) (3.97%), Legacy.com Inc. (4.11%), Payment Alliance International, Inc. (2.70%), Prime Risk Partners, Inc. (3.32%), Product Quest Manufacturing, LLC (3.54%), Reliant Pro Rehab (nil), Surgical Information Systems, LLC (1.01%) and The Hilb Group, LLC (3.38%). Pursuant to the agreement among lenders in respect of this loan, this investment represents a first lien/last out loan, which has a secondary priority behind the first lien/first out loan with respect to principal, interest and other payments.


(13)	Denotes that all or a portion of the assets are owned by the 2015-1 Issuer and secure the notes issued in connection with the 2015-1 Debt Securitization (see Note 7, Notes Payable). Accordingly, such assets are not available to the creditors of the SPV or the Company.


(14)	Under the Investment Company Act, the Company is deemed an “affiliated person” of this portfolio company because the Company owns 5% or more of the portfolio company’s outstanding voting securities.

TCG BDC, INC.

CONSOLIDATED SCHEDULE OF INVESTMENTS (Continued)

As of December 31, 2017

(dollar amounts in thousands)

(unaudited)


(15)	As of December 31, 2017, the Company had the following unfunded commitments to fund delayed draw and revolving senior secured loans:



First and Second Lien Debt—unfunded delayed draw and revolving term loans commitments	Type	Unused Fee		Par/ Principal Amount		Fair Value
Achilles Acquisition LLC	Delayed Draw	1.00	%	$	2,051	$	(18	)
Advanced Instruments, LLC	Revolver	0.50	%	1,167		—
AMS Group HoldCo, LLC	Delayed Draw	1.00	%	5,491		—
AMS Group HoldCo, LLC	Revolver	0.50	%	2,315		—
Captive Resources Midco, LLC	Delayed Draw	1.25	%	3,571		(11		)
Captive Resources Midco, LLC	Revolver	0.50	%	2,143		(7		)
CIP Revolution Holdings, LLC	Revolver	0.50	%	1,331		(5		)
Continuum Managed Services HoldCo, LLC	Delayed Draw	1.00	%	1,917		25
Continuum Managed Services HoldCo, LLC	Revolver	0.50	%	2,500		32
Datto, Inc.	Revolver	0.50	%	726		4
Derm Growth Partners III, LLC (Dermatology Associates)	Revolver	0.50	%	2,420		(10		)
DermaRite Industries LLC	Revolver	0.50	%	3,848		(28		)
Dimensional Dental Management, LLC	Delayed Draw	1.00	%	9,584		(35		)
Direct Travel, Inc.	Delayed Draw	1.00	%	4,118		7
Frontline Technologies Holdings, LLC	Delayed Draw	1.00	%	7,705		(6		)
FWR Holding Corporation	Delayed Draw	1.00	%	9,333		(111		)
FWR Holding Corporation	Revolver	0.50	%	3,889		(46		)
Global Franchise Group, LLC	Revolver	0.50	%	495		—
National Technical Systems, Inc.	Revolver	0.50	%	2,500		(161		)
NMI AcquisitionCo, Inc.	Revolver	0.50	%	1,280		(4		)
OnCourse Learning Corporation	Revolver	0.50	%	1,324		(6		)
Pathway Partners Vet Management Company LLC	Delayed Draw	1.00	%	3,410		(3		)
Prime Risk Partners, Inc.	Delayed Draw	0.50	%	768		4
Prime Risk Partners, Inc.	Delayed Draw	0.50	%	9,562		163
PMG Acquisition Corporation	Revolver	0.50	%	2,356		9
Product Quest Manufacturing, LLC	Revolver	0.50	%	3,229		—
Smile Doctors, LLC	Delayed Draw	1.00	%	6,345		(26		)
Smile Doctors, LLC	Revolver	0.50	%	827		(3		)
Superior Health Linens, LLC	Revolver	0.50	%	2,617		(4		)
T2 Systems, Inc.	Revolver	0.50	%	1,760		(26		)
The Hilb Group, LLC	Delayed Draw	1.00	%	3,594		(36		)
TwentyEighty, Inc. (f/k/a Miller Heiman, Inc.)	Revolver	0.50	%	607		(20		)
Vetcor Professional Practices, LLC	Delayed Draw	1.00	%	8,248		(31		)
VRC Companies, LLC	Delayed Draw	0.75	%	3,294		(8		)
VRC Companies, LLC	Revolver	0.50	%	401		(1		)
Zenith Merger Sub, Inc.	Revolver	0.50	%	1,648		(9		)
Total unfunded commitments				$	118,374	$	(371	)


(16)	As of December 31, 2017, this LIBOR loan was indexed to the 30-day LIBOR rate at 1.56%.


(17)	As of December 31, 2017, this LIBOR loan was indexed to the 180-day LIBOR rate at 1.84%.

TCG BDC, INC.

CONSOLIDATED SCHEDULE OF INVESTMENTS (Continued)

As of December 31, 2017

(dollar amounts in thousands)

(unaudited)

As of December 31, 2017, investments at fair value consisted of the following:



Type	Amortized Cost		Fair Value		% of Fair Value
First Lien Debt (excluding First Lien/Last Out)	$	1,295,406	$	1,293,641	65.75	%
First Lien/Last Out Unitranche	246,925		237,635		12.08
Second Lien Debt	242,887		246,233		12.51
Equity Investments	13,543		17,506		0.89
Investment Fund	172,251		172,516		8.77
Total	$	1,971,012	$	1,967,531	100.00	%

The rate type of debt investments at fair value as of December 31, 2017 was as follows:



Rate Type	Amortized Cost		Fair Value		% of Fair Value of First and Second Lien Debt
Floating Rate	$	1,772,810	$	1,765,818	99.34	%
Fixed Rate	12,408		11,691		0.66
Total	$	1,785,218	$	1,777,509	100.00	%

The industry composition of investments at fair value as of December 31, 2017 was as follows:



Industry	Amortized Cost		Fair Value		% of Fair Value
Aerospace & Defense	$	63,119	$	62,466	3.17	%
Automotive	10,112		10,916		0.55
Banking, Finance, Insurance & Real Estate	171,272		173,935		8.84
Beverage, Food & Tobacco	49,870		50,566		2.57
Business Services	177,862		178,985		9.10
Capital Equipment	40,115		40,757		2.07
Chemicals, Plastics & Rubber	32,302		32,818		1.67
Construction & Building	24,373		24,595		1.25
Consumer Services	120,327		121,147		6.16
Containers, Packaging & Glass	46,509		33,635		1.71
Durable Consumer Goods	57,948		59,490		3.02
Energy: Electricity	43,004		42,387		2.15
Energy: Oil & Gas	15,439		15,369		0.78
Environmental Industries	35,772		35,715		1.82
Forest Products & Paper	50,322		52,024		2.64
Healthcare & Pharmaceuticals	230,705		232,715		11.83
High Tech Industries	181,671		186,695		9.49
Hotel, Gaming & Leisure	48,399		46,642		2.37
Investment Fund	172,251		172,516		8.77
Media: Advertising, Printing & Publishing	34,775		34,988		1.78
Metals & Mining	7,901		7,931		0.40
Non-durable Consumer Goods	58,661		52,792		2.68
Software	55,515		56,069		2.85
Sovereign & Public Finance	1,784		1,820		0.09
Telecommunications	79,297		78,813		4.01
Transportation: Cargo	84,493		85,362		4.34
Transportation: Consumer	36,438		36,595		1.86
Wholesale	40,776		39,788		2.03
Total	$	1,971,012	$	1,967,531	100.00	%

TCG BDC, INC.

CONSOLIDATED SCHEDULE OF INVESTMENTS (Continued)

As of December 31, 2017

(dollar amounts in thousands)

(unaudited)

The geographical composition of investments at fair value as of December 31, 2017 was as follows:



Geography	Amortized Cost		Fair Value		% of Fair Value
United Kingdom	$	13,439	$	13,369	0.68	%
United States	1,957,573		1,954,162		99.32
Total	$	1,971,012	$	1,967,531	100.00	%

The accompanying notes are an integral part of these consolidated financial statements.

TCG BDC, INC.

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (unaudited)

As of September 30, 2018

(dollar amounts in thousands, except per share data)

1. ORGANIZATION

TCG BDC, Inc. (together with its consolidated subsidiaries, “we,” “us,” “our,” “TCG BDC” or the “Company”) is a Maryland corporation formed on February 8, 2012, and structured as an externally managed, non-diversified closed-end investment company. The Company is managed by its investment adviser, Carlyle Global Credit Investment Management L.L.C. (“CGCIM” or “Investment Adviser”), a wholly owned subsidiary of The Carlyle Group L.P. The Company has elected to be regulated as a business development company (“BDC”) under the Investment Company Act of 1940, as amended (together with the rules and regulations promulgated thereunder, the “Investment Company Act”). In addition, the Company has elected to be treated, and intends to continue to comply with the requirements to qualify annually, as a regulated investment company (“RIC”) under Subchapter M of the Internal Revenue Code of 1986, as amended (together with the rules and regulations promulgated thereunder, the “Code”).

The Company’s investment objective is to generate current income and capital appreciation primarily through debt investments in U.S. middle market companies, which the Company defines as companies with approximately $10 million to $100 million of earnings before interest, taxes, depreciation and amortization (“EBITDA”), which the Company believes is a useful proxy for cash flow. The Company seeks to achieve its investment objective primarily through direct originations of secured debt, including first lien senior secured loans (which may include stand-alone first lien loans, first lien/last out loans and “unitranche” loans) and second lien senior secured loans (collectively, “Middle Market Senior Loans”), with the balance of its assets invested in higher yielding investments (which may include unsecured debt, mezzanine debt and investments in equities). The Middle Market Senior Loans are generally made to private U.S. middle market companies that are, in many cases, controlled by private equity firms. Depending on market conditions, the Company expects that between 70% and 80% of the value of its assets will be invested in Middle Market Senior Loans. The Company expects that the composition of its portfolio will change over time given the Investment Adviser’s view on, among other things, the economic and credit environment (including with respect to interest rates) in which the Company is operating.

The Company invests primarily in loans to middle market companies whose debt, if rated, is rated below investment grade, and, if not rated, would likely be rated below investment grade if it were rated (that is, below BBB- or Baa3, which is often referred to as “junk”). Exposure to below investment grade instruments involves certain risks, including speculation with respect to the borrower’s capacity to pay interest and repay principal.

On May 2, 2013, the Company completed its initial closing of capital commitments (the “Initial Closing”) and subsequently commenced substantial investment operations. Effective March 15, 2017, the Company changed its name from “Carlyle GMS Finance, Inc.” to “TCG BDC, Inc.” On June 19, 2017, the Company closed its initial public offering (“IPO”), issuing 9,454,200 shares of its common stock (including shares issued pursuant to the exercise of the underwriters’ over-allotment option on July 5, 2017) at a public offering price of $18.50 per share. Net of underwriting costs, the Company received cash proceeds of $169,488. Shares of common stock of TCG BDC began trading on the NASDAQ Global Select Market under the symbol “CGBD” on June 14, 2017.

Until December 31, 2017, the Company was an “emerging growth company,” as that term is used in the Jumpstart Our Business Startups Act of 2012. As of June 30, 2017, the market value of the common stock held by non-affiliates exceeded $700,000. Accordingly, the Company ceased to be an emerging growth company as of December 31, 2017.

The Company is externally managed by the Investment Adviser, an investment adviser registered under the Investment Advisers Act of 1940, as amended. Carlyle Global Credit Administration L.L.C. (the “Administrator”) provides the administrative services necessary for the Company to operate. Both the Investment Adviser and the Administrator are wholly owned subsidiaries of Carlyle Investment Management L.L.C., a subsidiary of The Carlyle Group L.P. “Carlyle” refers to The Carlyle Group L.P. and its affiliates and its consolidated subsidiaries (other than portfolio companies of its affiliated funds), a global alternative asset manager publicly traded on NASDAQ Global Select Market under the symbol “CG”. Refer to the sec.gov website for further information on Carlyle.

TCG BDC SPV LLC (the “SPV”) is a Delaware limited liability company that was formed on January 3, 2013. The SPV invests in first and second lien senior secured loans. The SPV is a wholly owned subsidiary of the Company and is consolidated in these consolidated financial statements commencing from the date of its formation, January 3, 2013.

On June 9, 2017, pursuant to the Agreement and Plan of Merger, dated May 3, 2017 (the “Agreement”), by and between the Company and NF Investment Corp. (“NFIC”), NFIC merged with and into the Company (the “NFIC Acquisition”), with the Company as the surviving entity. The NFIC Acquisition was accounted for as an asset acquisition. NFIC SPV LLC (the “NFIC SPV” and, together with the SPV, the “SPVs”) is a Delaware limited liability company that was formed on June 18, 2013. Upon the consummation of the NFIC Acquisition, the NFIC SPV became a wholly owned subsidiary of the Company and is consolidated in these consolidated financial statements commencing from the closing date of the NFIC Acquisition, June 9, 2017.

On June 26, 2015, the Company completed a $400,000 term debt securitization (the “2015-1 Debt Securitization”). The notes offered in the 2015-1 Debt Securitization (the “2015-1 Notes”) were issued by Carlyle Direct Lending CLO 2015-1R LLC (formerly known as Carlyle GMS Finance MM CLO 2015-1 LLC) (the “2015-1 Issuer”), a wholly owned and consolidated subsidiary of the Company. On August 30, 2018, the 2015-1 Issuer refinanced the 2015-1 Debt Securitization (the “2015-1 Debt Securitization Refinancing”) by redeeming in full the 2015-1 Notes and issuing new notes (the “2015-1R Notes”). The 2015-1R Notes are secured by a diversified portfolio of the 2015-1 Issuer consisting primarily of first and second lien senior secured loans. Refer to Note 7 for details. The 2015-1 Issuer is consolidated in these consolidated financial statements commencing from the date of its formation, May 8, 2015.

On February 29, 2016, the Company and Credit Partners USA LLC (“Credit Partners”) entered into an amended and restated limited liability company agreement, which was subsequently amended on June 24, 2016 (as amended, the “Limited Liability Company Agreement”) to co-manage Middle Market Credit Fund, LLC (“Credit Fund”). Credit Fund primarily invests in first lien loans of middle market companies. Credit Fund is managed by a six-member board of managers, on which the Company and Credit Partners each have equal representation. The Company and Credit Partners each have 50% economic ownership of Credit Fund and have commitments to fund, from time to time, capital of up to $400,000 each. Refer to Note 5, Middle Market Credit Fund, LLC, for details.

As a BDC, the Company is required to comply with certain regulatory requirements. As part of these requirements, the Company must not acquire any assets other than “qualifying assets” specified in the Investment Company Act unless, at the time the acquisition is made, at least 70% of its total assets are qualifying assets (with certain limited exceptions).

To qualify as a RIC, the Company must, among other things, meet certain source-of-income and asset diversification requirements and timely distribute to its stockholders generally at least 90% of its investment company taxable income, as defined by the Code, for each year. Pursuant to this election, the Company generally does not have to pay corporate level taxes on any income that it distributes to stockholders, provided that the Company satisfies those requirements.

2. SIGNIFICANT ACCOUNTING POLICIES

Basis of Presentation

The consolidated financial statements have been prepared on the accrual basis of accounting in accordance with accounting principles generally accepted in the United States (“US GAAP”). The Company is an investment company for the purposes of accounting and financial reporting in accordance with Financial Accounting Standards Board ("FASB") Accounting Standards Codification (“ASC”) Topic 946, Financial Services—Investment Companies (“ASC 946”). The consolidated financial statements include the accounts of the Company and its wholly owned subsidiaries, the SPVs and the 2015-1 Issuer. All significant intercompany balances and transactions have been eliminated. US GAAP for an investment company requires investments to be recorded at fair value. The carrying value for all other assets and liabilities approximates their fair value.

The interim financial statements have been prepared in accordance with US GAAP for interim financial information and pursuant to the requirements for reporting on Form 10-Q and Articles 6 and 10 of Regulation S-X. Accordingly, certain disclosures accompanying the annual consolidated financial statements prepared in accordance with US GAAP are omitted. In the opinion of management, all adjustments considered necessary for the fair presentation of consolidated financial statements for the interim period presented have been included. These adjustments are of a normal, recurring nature. This Form 10-Q should be read in conjunction with the Company’s annual report on Form 10-K for the year ended December 31, 2017. The results of operations for the three month and nine month periods ended September 30, 2018 are not necessarily indicative of the operating results to be expected for the full year.

Use of Estimates

The preparation of consolidated financial statements in conformity with US GAAP requires management to make assumptions and estimates that affect the reported amounts of assets and liabilities and disclosure of contingent assets and liabilities at the date of the financial statements and the reported amounts of revenues and expenses during the reporting period.

Management’s estimates are based on historical experiences and other factors, including expectations of future events that management believes to be reasonable under the circumstances. It also requires management to exercise judgment in the process of applying the Company’s accounting policies. Assumptions and estimates regarding the valuation of investments and their resulting impact on base management and incentive fees involve a higher degree of judgment and complexity and these assumptions and estimates may be significant to the consolidated financial statements. Actual results could differ from these estimates and such differences could be material.

Investments

Investment transactions are recorded on the trade date. Realized gains or losses are measured by the difference between the net proceeds from the repayment or sale and the amortized cost basis of the investment using the specific identification method without regard to unrealized appreciation or depreciation previously recognized, and includes investments charged off during the period, net of recoveries. Net change in unrealized appreciation or depreciation on investments as presented in the accompanying Consolidated Statements of Operations reflects the net change in the fair value of investments, including the reversal of previously recorded unrealized appreciation or depreciation when gains or losses are realized. See Note 3 for further information about fair value measurements.

Cash and Cash Equivalents

Cash and cash equivalents consist of demand deposits and highly liquid investments (e.g., money market funds, U.S. treasury notes) with original maturities of three months or less. Cash equivalents are carried at amortized cost, which approximates fair value. The Company’s cash and cash equivalents are held with two large financial institutions and cash held in such financial institutions may, at times, exceed the Federal Deposit Insurance Corporation insured limit.

Revenue Recognition

Interest from Investments and Realized Gain/Loss on Investments

Interest income is recorded on an accrual basis and includes the accretion of discounts and amortization of premiums. Discounts from and premiums to par value on debt investments purchased are accreted/amortized into interest income over the life of the respective security using the effective interest method. The amortized cost of debt investments represents the original cost, including origination fees and upfront fees received that are deemed to be an adjustment to yield, adjusted for the accretion of discounts and amortization of premiums, if any. At time of exit, the realized gain or loss on an investment is the difference between the amortized cost at time of exit and the cash received at exit using the specific identification method.

The Company may have loans in its portfolio that contain payment-in-kind (“PIK”) provisions. PIK represents interest that is accrued and recorded as interest income at the contractual rates, increases the loan principal on the respective capitalization dates, and is generally due at maturity. Such income is included in interest income in the Consolidated Statements of Operations. As of September 30, 2018 and December 31, 2017, the fair value of the loans in the portfolio with PIK provisions was $52,871 and $15,451, respectively, which represents approximately 2.6% and 0.8% of total investments at fair value, respectively. For the three month and nine month periods ended September 30, 2018, the Company earned $1,478 and $1,907 in PIK income, respectively. For the three month and nine month periods ended September 30, 2017, the Company earned $778 in PIK income.

Dividend Income

Dividend income from the investment fund is recorded on the record date for the investment fund to the extent that such amounts are payable by the investment fund and are expected to be collected.

Other Income

Other income may include income such as consent, waiver, amendment, syndication and prepayment fees associated with the Company’s investment activities as well as any fees for managerial assistance services rendered by the Company to the portfolio companies. Such fees are recognized as income when earned or the services are rendered. The Company may receive fees for guaranteeing the outstanding debt of a portfolio company. Such fees are amortized into other income over the life of the guarantee. The unamortized amount, if any, is included in other assets in the accompanying Consolidated Statements of Assets and Liabilities. For the three month and nine month periods ended September 30, 2018, the Company earned $1,925 and $6,410, respectively, in other income, primarily from syndication and prepayment fees. For the three month and nine month periods ended September 30, 2017, the Company earned $1,318 and $7,900, respectively, in other income, primarily from syndication and prepayment fees.

Non-Accrual Income

Loans are generally placed on non-accrual status when principal or interest payments are past due 30 days or more or when there is reasonable doubt that principal or interest will be collected in full. Accrued and unpaid interest is generally reversed when a loan is placed on non-accrual status. Interest payments received on non-accrual loans may be recognized as income or applied to principal depending upon management’s judgment regarding collectability. Non-accrual loans are restored to accrual status when past due principal and interest are paid current and, in management’s judgment, are likely to remain current. Management may not place a loan on non-accrual status if the loan has sufficient collateral value and is in the process of collection. As of September 30, 2018 and December 31, 2017, the fair value of the loans in the portfolio on non-accrual status was $16,391 and $19,487, respectively, which represents approximately 0.8% and 1.0% of total investments at fair value, respectively. The remaining first and second lien debt investments were performing and current on their interest payments as of September 30, 2018 and December 31, 2017.

SPV Credit Facility, Credit Facility, 2015-1R Notes and 2015-1 Notes Related Costs, Expenses and Deferred Financing Costs (See Note 6, Borrowings, and Note 7, Notes Payable)

Interest expense and unused commitment fees on the SPV Credit Facility and Credit Facility are recorded on an accrual basis. Unused commitment fees are included in credit facility fees in the accompanying Consolidated Statements of Operations.

The SPV Credit Facility and Credit Facility are recorded at carrying value, which approximates fair value.

Deferred financing costs include capitalized expenses related to the closing or amendments of the SPV Credit Facility and Credit Facility. Amortization of deferred financing costs for each credit facility is computed on the straight-line basis over the respective term of each credit facility. The unamortized balance of such costs is included in deferred financing costs in the accompanying Consolidated Statements of Assets and Liabilities. The amortization of such costs is included in credit facility fees in the accompanying Consolidated Statements of Operations.

Debt issuance costs include capitalized expenses including structuring and arrangement fees related to the offering of the 2015-1R Notes and 2015-1 Notes. Amortization of debt issuance costs for the notes is computed on the effective yield method over the term of the notes, except for a portion that was accelerated in connection with the 2015-1 Debt Securitization Refinancing as described in Note 7. The unamortized balance of such costs is presented as a direct deduction to the carrying amount of the notes in the accompanying Consolidated Statements of Assets and Liabilities. The amortization of such costs is included in interest expense in the accompanying Consolidated Statements of Operations.

The notes are recorded at carrying value, which approximates fair value.

Offering Costs

Offering costs consist primarily of fees and expenses incurred in connection with the offering of shares, including legal, underwriting, printing and other costs, as well as costs associated with the preparation and filing of applicable registration statements. Offering costs are charged against equity when incurred. During the three month and nine month periods ended September 30, 2018, $30 of offering costs were incurred, 50% of which were paid by the Investment Adviser. During the three month and nine month periods ended September 30, 2017, $3,028 of offering costs were incurred, 50% of which were paid by the Investment Adviser.

Income Taxes

For federal income tax purposes, the Company has elected to be treated as a RIC under the Code, and intends to make the required distributions to its stockholders as specified therein. In order to qualify as a RIC, the Company must meet certain minimum distribution, source-of-income and asset diversification requirements. If such requirements are met, then the Company is generally required to pay income taxes only on the portion of its taxable income and gains it does not distribute.

The minimum distribution requirements applicable to RICs require the Company to distribute to its stockholders at least 90% of its investment company taxable income (“ICTI”), as defined by the Code, each year. Depending on the level of ICTI earned in a tax year, the Company may choose to carry forward ICTI in excess of current year distributions into the next tax year. Any such carryover ICTI must be distributed before the end of that next tax year through a dividend declared prior to filing the final tax return related to the year which generated such ICTI.

In addition, based on the excise distribution requirements, the Company is subject to a 4% nondeductible federal excise tax on undistributed income unless the Company distributes in a timely manner an amount at least equal to the sum of (1) 98% of its ordinary income for each calendar year, (2) 98.2% of capital gain net income (both long-term and short-term) for the one-year period ending October 31 in that calendar year and (3) any income realized, but not distributed, in the preceding year. For this purpose, however, any ordinary income or capital gain net income retained by the Company that is subject to corporate income tax is considered to have been distributed. The Company intends to make sufficient distributions each taxable year to satisfy the excise distribution requirements.

The Company evaluates tax positions taken or expected to be taken in the course of preparing its consolidated financial statements to determine whether the tax positions are “more-likely than not” to be sustained by the applicable tax authority. All penalties and interest associated with income taxes, if any, are included in income tax expense. The SPVs and the 2015-1 Issuer are disregarded entities for tax purposes and are consolidated with the tax return of the Company. For the three month and nine month periods ended September 30, 2018, the Company incurred $30 and $70, respectively, in excise tax expense. For the three month and nine month periods ended September 30, 2017, the Company incurred $0 and $169, respectively, in excise tax expense.

Dividends and Distributions to Common Stockholders

To the extent that the Company has taxable income available, the Company intends to make quarterly distributions to its common stockholders. Dividends and distributions to common stockholders are recorded on the record date. The amount to be distributed is determined by the Board of Directors each quarter and is generally based upon the taxable earnings estimated by management and available cash. Net realized capital gains, if any, are generally distributed at least annually, although the Company may decide to retain such capital gains for investment.

Prior to July 5, 2017, the Company had an “opt in” dividend reinvestment plan. Effective on July 5, 2017, the Company converted the “opt in” dividend reinvestment plan to an “opt out” dividend reinvestment plan that provides for reinvestment of dividends and other distributions on behalf of the stockholders, other than those stockholders who have “opted out” of the plan. As a result of adopting the plan, if the Board of Directors authorizes, and the Company declares, a cash dividend or distribution, the stockholders who have not elected to “opt out” of the dividend reinvestment plan will have their cash dividends or distributions automatically reinvested in additional shares of the Company’s common stock, rather than receiving cash. Each registered stockholder may elect to have such stockholder’s dividends and distributions distributed in cash rather than participate in the plan. For any registered stockholder that does not so elect, distributions on such stockholder’s shares will be reinvested by State Street Bank and Trust Company, the Company’s plan administrator, in additional shares. The number of shares to be issued to the stockholder will be determined based on the total dollar amount of the cash distribution payable, net of applicable withholding taxes. The Company intends to use primarily newly issued shares to implement the plan so long as the market value per share is equal to or greater than the net asset value per share on the relevant valuation date. If the market value per share is less than the net asset value per share on the relevant valuation date, the plan administrator would implement the plan through the purchase of common stock on behalf of participants in the open market, unless the Company instructs the plan administrator otherwise.

Functional Currency

The functional currency of the Company is the U.S. Dollar and all transactions were in U.S. Dollars.

Recent Accounting Standards Updates

The FASB issued Accounting Standards Update (“ASU”) 2014-9, Revenue from Contracts with Customers (Topic 606) (“ASU 2014-9”) in May 2014 and subsequently issued several amendments to the standard. ASU 2014-9, and related amendments, provide comprehensive guidance for recognizing revenue from contracts with customers. Entities are able to recognize revenue when the entity transfers promised goods or services to customers in an amount that reflects the consideration to which the entity expects to be entitled to in exchange for those goods or services. The guidance includes a five-step framework that requires an entity to: (i) identify the contract(s) with a customer, (ii) identify the performance obligations in the contract, (iii) determine the transaction price, (iv) allocate the transaction price to the performance obligations in the contract, and (v) recognize revenue when the entity satisfies a performance obligation. The guidance in ASU 2014-9, and the related amendments, was effective for the Company on January 1, 2018. The Company has adopted the ASU on January 1, 2018, which did not have a material impact on the Company’s consolidated financial statements.

In November 2016, the FASB issued ASU 2016-18, Statement of Cash Flows (Topic 230) - Restricted Cash. ASU 2016-18 clarifies the presentation of restricted cash in the statement of cash flows by requiring the amounts described as restricted cash be included with cash and cash equivalents when reconciling the beginning of period and end of period total amounts shown on the statement of cash flows. If cash and cash equivalents and restricted cash are presented separately on the statement of financial position, a reconciliation of these separate line items to the total cash amount included in the statement of cash flows are required either in the footnotes or on the face of the statement of cash flows. This guidance was effective for annual reporting periods, and the interim periods within those periods, beginning after December 15, 2017 and early adoption was permitted. The Company has adopted the ASU on January 1, 2018, which did not have a material impact on the Company’s consolidated financial statements.

In August 2018, the Securities and Exchange Commission adopted amendments to certain disclosure requirements intended to eliminate redundant, duplicative, overlapping, outdated, or superseded, in light of other SEC disclosure requirements, US GAAP requirements, or changes in the information environment in its Disclosure Update and Simplification release (the “DUS Release”). In part, the DUS Release requires an investment company to present distributable earnings in total, rather than showing the three components of distributable earnings. The compliance date for the DUS Release was for all filings on or after November 5, 2018. Management has adopted the DUS Release on November 5, 2018, except as noted below, which did not have a material impact on the Company’s consolidated financial statements.

In September 2018, related to the DUS Release, the FASB issued Compliance and Disclosure Interpretation 105.09 guidance (“CDI 105.09”) on compliance with the new requirement to present changes in shareholders’ equity in interim financial statements within Form 10-Q filings. The DUS Release requires disclosure of changes in shareholders’ equity within a registrant’s Form 10-Q filing on a quarter-to-date and year-to-date basis for both the current year and prior year comparative periods. CDI 105.09 notes that the SEC would not object if a registrant first discloses the changes in shareholders’ equity in its Form 10-Q for the quarter that begins after November 5, 2018. The Company expects to adopt the new requirement to present changes in shareholders’ equity in interim financial statements within Form 10-Q filings starting with the quarter that begins on January 1, 2019 and is not expected to have a material impact on the Company’s consolidated financial statements.

3. FAIR VALUE MEASUREMENTS

The Company applies fair value accounting in accordance with the terms of ASC Topic 820, Fair Value Measurement (“ASC 820”). ASC 820 defines fair value as the amount that would be exchanged to sell an asset or transfer a liability in an orderly transfer between market participants at the measurement date. The Company values securities/instruments traded in active markets on the measurement date by multiplying the closing price of such traded securities/instruments by the quantity of shares or amount of the instrument held. The Company may also obtain quotes with respect to certain of its investments, such as its securities/instruments traded in active markets and its liquid securities/instruments that are not traded in active markets, from pricing services, brokers, or counterparties (i.e., “consensus pricing”). When doing so, the Company determines whether the quote obtained is sufficient according to US GAAP to determine the fair value of the security. The Company may use the quote obtained or alternative pricing sources may be utilized including valuation techniques typically utilized for illiquid securities/instruments.

Securities/instruments that are illiquid or for which the pricing source does not provide a valuation or methodology or provides a valuation or methodology that, in the judgment of the Investment Adviser or the Company’s Board of Directors, does not represent fair value shall each be valued as of the measurement date using all techniques appropriate under the circumstances and for which sufficient data is available. These valuation techniques may vary by investment and include comparable public market valuations, comparable precedent transaction valuations and/or discounted cash flow analyses. The process generally used to determine the applicable value is as follows: (i) the value of each portfolio company or investment is initially reviewed by the investment professionals responsible for such portfolio company or investment and, for non-traded investments, a standardized template designed to approximate fair market value based on observable market inputs, updated credit statistics and unobservable inputs is used to determine a preliminary value, which is also reviewed alongside consensus pricing, where available; (ii) preliminary valuation conclusions are documented and reviewed by a valuation committee comprised of members of senior management; (iii) the Board of Directors engages a third-party valuation firm to provide positive assurance on portions of the Middle Market Senior Loans and equity investments portfolio each quarter (such that each non-traded investment other than Credit Fund is reviewed by a third-party valuation firm at least once on a rolling twelve month basis) including a review of management’s preliminary valuation and conclusion on fair value; (iv) the Audit Committee of the Board of Directors (the “Audit Committee”) reviews the assessments of the Investment Adviser and the third-party valuation firm and provides the Board of Directors with any recommendations with respect to changes to the fair value of each investment in the portfolio; and (v) the Board of Directors discusses the valuation recommendations of the Audit Committee and determines the fair value of each investment in the portfolio in good faith based on the input of the Investment Adviser and, where applicable, the third-party valuation firm.

All factors that might materially impact the value of an investment are considered, including, but not limited to the assessment of the following factors, as relevant:


•	the nature and realizable value of any collateral;


•	call features, put features and other relevant terms of debt;


•	the portfolio company’s leverage and ability to make payments;


•	the portfolio company’s public or private credit rating;


•	the portfolio company’s actual and expected earnings and discounted cash flow;


•	prevailing interest rates and spreads for similar securities and expected volatility in future interest rates;


•	the markets in which the portfolio company does business and recent economic and/or market events; and


•	comparisons to comparable transactions and publicly traded securities.

Investment performance data utilized are the most recently available financial statements and compliance certificates received from the portfolio companies as of the measurement date which in many cases may reflect a lag in information.

Due to the inherent uncertainty of determining the fair value of investments that do not have a readily available market value, the fair value of the Company’s investments may fluctuate from period to period. Because of the inherent uncertainty of valuation, these estimated values may differ significantly from the values that would have been reported had a ready market for the investments existed, and it is reasonably possible that the difference could be material.

In addition, changes in the market environment and other events that may occur over the life of the investments may cause the realized gains or losses on investments to be different from the net change in unrealized appreciation or depreciation currently reflected in the consolidated financial statements as of September 30, 2018 and December 31, 2017.

US GAAP establishes a hierarchical disclosure framework which ranks the level of observability of market price inputs used in measuring investments at fair value. The observability of inputs is impacted by a number of factors, including the type of investment and the characteristics specific to the investment and state of the marketplace, including the existence and transparency of transactions between market participants. Investments with readily available quoted prices or for which fair value can be measured from quoted prices in active markets generally have a higher degree of market price observability and a lesser degree of judgment applied in determining fair value.

Investments measured and reported at fair value are classified and disclosed based on the observability of inputs used in determination of fair values, as follows:

•

Level 1—inputs to the valuation methodology are quoted prices available in active markets for identical investments as of the reporting date. The types of financial instruments in Level 1 generally include unrestricted securities, including equities and derivatives, listed in active markets. The Company does not adjust the quoted price for these investments, even in situations where the Company holds a large position and a sale could reasonably impact the quoted price.

•

Level 2—inputs to the valuation methodology are either directly or indirectly observable as of the reporting date and are those other than quoted prices in active markets. The type of financial instruments in this category generally includes less liquid and restricted securities listed in active markets, securities traded in other than active markets, government and agency securities, and certain over-the-counter derivatives where the fair value is based on observable inputs.

•

Level 3—inputs to the valuation methodology are unobservable and significant to overall fair value measurement. The inputs into the determination of fair value require significant management judgment or estimation. Financial instruments that are in this category generally include investments in privately-held entities and certain over-the-counter derivatives where the fair value is based on unobservable inputs.

In certain cases, the inputs used to measure fair value may fall into different levels of the fair value hierarchy. In such cases, an investment’s level within the fair value hierarchy is based on the lowest level of input that is significant to the overall fair value measurement. The Investment Adviser’s assessment of the significance of a particular input to the fair value measurement in its entirety requires judgment, and considers factors specific to the investment.

Transfers between levels, if any, are recognized at the beginning of the quarter in which the transfers occur. For the three month and nine month periods ended September 30, 2018 and 2017, there were no transfers between levels.

The following tables summarize the Company’s investments measured at fair value on a recurring basis by the above fair value hierarchy levels as of September 30, 2018 and December 31, 2017:



	September 30, 2018
	Level 1		Level 2		Level 3		Total
Assets
First Lien Debt	$	—	$	—	$	1,601,629	$	1,601,629
Second Lien Debt	—		—		170,657		170,657
Equity Investments	—		—		23,308		23,308
Investment Fund
Mezzanine Loan	—		—		122,000		122,000
Subtotal	$	—	$	—	$	1,917,594	$	1,917,594
Investments measured at net asset value ⁽¹⁾							101,404
Total							$	2,018,998



	December 31, 2017
	Level 1		Level 2		Level 3		Total
Assets
First Lien Debt	$	—	$	—	$	1,531,276	$	1,531,276
Second Lien Debt	—		—		246,233		246,233
Equity Investments	—		—		17,506		17,506
Investment Fund
Mezzanine Loan	—		—		85,750		85,750
Subtotal	$	—	$	—	$	1,880,765	$	1,880,765
Investments measured at net asset value ⁽¹⁾							86,766
Total							$	1,967,531


(1)	Amount represents the Company’s subordinated loan and member’s interest investments in Credit Fund. The fair value of these investments has been estimated using the net asset value of the Company’s ownership interests in Credit Fund.

The changes in the Company’s investments at fair value for which the Company has used Level 3 inputs to determine fair value and net change in unrealized appreciation (depreciation) included in earnings for Level 3 investments still held are as follows:



	Financial Assets For the three month period ended September 30, 2018
	First Lien Debt			Second Lien Debt			Equity Investments		Investment Fund - Mezzanine Loan			Total
Balance, beginning of period	$	1,555,528		$	160,905		$	22,354	$	114,000		$	1,852,787
Purchases	182,283			11,579			172		27,000			221,034
Sales	(34,447		)	—					—			(34,447		)
Paydowns	(83,804		)	(1,800		)	—		(19,000		)	(104,604		)
Accretion of discount	2,215			113			—		—			2,328
Net realized gains (losses)	(4,633		)	—			—		—			(4,633		)
Net change in unrealized appreciation (depreciation)	(15,513		)	(140		)	782		—			(14,871		)
Balance, end of period	$	1,601,629		$	170,657		$	23,308	$	122,000		$	1,917,594
Net change in unrealized appreciation (depreciation) included in earnings related to investments still held as of September 30, 2018 included in net change in unrealized appreciation (depreciation) on investments on the Consolidated Statements of Operations	$	(15,014	)	$	(121	)	$	782	$	—		$	(14,353	)



	Financial Assets For the nine month period ended September 30, 2018
	First Lien Debt			Second Lien Debt			Equity Investments			Investment Fund - Mezzanine Loan			Total
Balance, beginning of period	$	1,531,276		$	246,233		$	17,506		$	85,750		$	1,880,765
Purchases	486,132			45,671			4,625			74,150			610,578
Sales	(95,484		)	(3,960		)	(2,775		)	—			(102,219		)
Paydowns	(285,911		)	(118,467		)	—			(37,900		)	(442,278		)
Accretion of discount	6,164			2,472			—			—			8,636
Net realized gains (losses)	(4,764		)	2			1,775			—			(2,987		)
Net change in unrealized appreciation (depreciation)	(35,784		)	(1,294		)	2,177			—			(34,901		)
Balance, end of period	$	1,601,629		$	170,657		$	23,308		$	122,000		$	1,917,594
Net change in unrealized appreciation (depreciation) included in earnings related to investments still held as of September 30, 2018 included in net change in unrealized appreciation (depreciation) on investments on the Consolidated Statements of Operations	$	(34,417	)	$	1,845		$	2,726		$	—		$	(29,846	)



	Financial Assets For the three month period ended September 30, 2017
	First Lien Debt			Second Lien Debt			Structured Finance Obligations			Equity Investments		Investment Fund - Mezzanine Loan			Total
Balance, beginning of period	$	1,270,078		$	250,765		$	2,597		$	10,722	$	113,100		$	1,647,262
Purchases	267,658			28,875			—			1,500		7,600			305,633
Sales	(20,610		)	—			—			—		—			(20,610		)
Paydowns	(26,731		)	(12,500		)	(43		)	—		(8,400		)	(47,674		)
Accretion of discount	1,548			284			—			—		—			1,832
Net realized gains (losses)	141			—			31			—		—			172
Net change in unrealized appreciation (depreciation)	(1,434		)	1,359			—			1,330		—			1,255
Balance, end of period	$	1,490,650		$	268,783		$	2,585		$	13,552	$	112,300		$	1,887,870
Net change in unrealized appreciation (depreciation) included in earnings related to investments still held as of September 30, 2017 included in net change in unrealized appreciation (depreciation) on investments on the Consolidated Statements of Operations	$	(1,053	)	$	1,519		$	—		$	1,330	$	—		$	1,796



	Financial Assets For the nine month period ended September 30, 2017
	First Lien Debt			Second Lien Debt			Structured Finance Obligations			Equity Investments		Investment Fund - Mezzanine Loan			Total
Balance, beginning of period	$	1,139,548		$	171,864		$	5,216		$	6,474	$	62,384		$	1,385,486
Purchases	800,283			125,935			—			5,256		91,760			1,023,234
Sales	(149,302		)	(2,978		)	—			—		—			(152,280		)
Paydowns	(294,552		)	(29,893		)	(2,792		)	—		(41,844		)	(369,081		)
Accretion of discount	7,821			582			—			—		—			8,403
Net realized gains (losses)	(7,710		)	(3		)	(11		)	—		—			(7,724		)
Net change in unrealized appreciation (depreciation)	(5,438		)	3,276			172			1,822		—			(168		)
Balance, end of period	$	1,490,650		$	268,783		$	2,585		$	13,552	$	112,300		$	1,887,870
Net change in unrealized appreciation (depreciation) included in earnings related to investments still held as of September 30, 2017 included in net change in unrealized appreciation (depreciation) on investments on the Consolidated Statements of Operations	$	(9,517	)	$	3,627		$	127		$	1,822	$	—		$	(3,941	)

The Company generally uses the following framework when determining the fair value of investments that are categorized as Level 3:

Investments in debt securities are initially evaluated to determine whether the enterprise value of the portfolio company is greater than the applicable debt. The enterprise value of the portfolio company is estimated using a market approach and an income approach. The market approach utilizes market value (EBITDA) multiples of publicly traded comparable companies and available precedent sales transactions of comparable companies. The Company carefully considers numerous factors when selecting the appropriate companies whose multiples are used to value its portfolio companies. These factors include, but are not limited to, the type of organization, similarity to the business being valued, relevant risk factors, as well as size, profitability and growth expectations. The income approach typically uses a discounted cash flow analysis of the portfolio company.

Investments in debt securities that do not have sufficient coverage through the enterprise value analysis are valued based on an expected probability of default and discount recovery analysis.

Investments in debt securities with sufficient coverage through the enterprise value analysis are generally valued using a discounted cash flow analysis of the underlying security. Projected cash flows in the discounted cash flow typically represent the relevant security’s contractual interest, fees and principal payments plus the assumption of full principal recovery at the security’s expected maturity date. The discount rate to be used is determined using an average of two market-based methodologies. Investments in debt securities may also be valued using consensus pricing.

Investments in equities are generally valued using a market approach and/or an income approach. The market approach utilizes EBITDA multiples of publicly traded comparable companies and available precedent sales transactions of comparable companies. The income approach typically uses a discounted cash flow analysis of the portfolio company.

Investments in the subordinated loan and member’s interest of the investment fund are valued using the net asset value of the Company’s ownership interest in the investment fund and investments in the mezzanine loan of the investment fund are valued using discounted cash flow analysis with expected repayment rate of principal and interest.

The following tables summarize the quantitative information related to the significant unobservable inputs for Level 3 instruments which are carried at fair value as of September 30, 2018 and December 31, 2017:



	Fair Value as of September 30, 2018		Valuation Techniques	Significant Unobservable Inputs	Range
	Fair Value as of September 30, 2018		Valuation Techniques	Significant Unobservable Inputs	Low		High		Weighted Average
Investments in First Lien Debt	$	1,377,818	Discounted Cash Flow	Discount Rate	5.51	%	19.99	%	9.57	%
	207,420		Consensus Pricing	Indicative Quotes	49.67		101.00		97.68
	16,391		Income Approach	Discount Rate	14.59	%	14.59	%	14.59	%
			Market Approach	Comparable Multiple	6.85x		6.85x		6.85x
Total First Lien Debt	1,601,629
Investments in Second Lien Debt	153,414		Discounted Cash Flow	Discount Rate	8.87	%	14.89	%	10.83	%
	17,243		Consensus Pricing	Indicative Quotes	100.63		101.00		100.84
Total Second Lien Debt	170,657
Investments in Equity	23,308		Income Approach	Discount Rate	7.90	%	11.03	%	8.92	%
			Market Approach	Comparable Multiple	7.31x		14.70x		10.26x
Total Equity Investments	23,308
Investments in Investment Fund—Mezzanine Loan	122,000		Income Approach	Repayment Rate	100.00	%	100.00	%	100.00	%
Total Investment Fund—Mezzanine Loan	122,000
Total Level 3 Investments	$	1,917,594



	Fair Value as of December 31, 2017		Valuation Techniques	Significant Unobservable Inputs	Range
	Fair Value as of December 31, 2017		Valuation Techniques	Significant Unobservable Inputs	Low		High		Weighted Average
Investments in First Lien Debt	$	1,369,558	Discounted Cash Flow	Discount Rate	4.85	%	17.40	%	8.18	%
	142,231		Consensus Pricing	Indicative Quotes	59.17		100.83		95.93
	19,487		Income Approach	Discount Rate	9.78	%	9.78	%	9.78	%
			Market Approach	Comparable Multiple	8.33x		8.33x		8.33x
Total First Lien Debt	1,531,276
Investments in Second Lien Debt	211,365		Discounted Cash Flow	Discount Rate	7.61	%	18.26	%	9.43	%
	34,868		Consensus Pricing	Indicative Quotes	96.83		100.58		99.23
Total Second Lien Debt	246,233
Investments in Equity	17,506		Income Approach	Discount Rate	7.60	%	10.61	%	8.81	%
			Market Approach	Comparable Multiple	7.80x		14.69x		10.41x
Total Equity Investments	17,506
Investments in Investment Fund—Mezzanine Loan	85,750		Income Approach	Repayment Rate	100.00	%	100.00	%	100.00	%
Total Investment Fund—Mezzanine Loan	85,750
Total Level 3 Investments	$	1,880,765

The significant unobservable inputs used in the fair value measurement of the Company’s investments in first and second lien debt securities are discount rates, indicative quotes and comparable EBITDA multiples. Significant increases in discount rates would result in a significantly lower fair value measurement. Significant decreases in indicative quotes or comparable EBITDA multiples in isolation may result in a significantly lower fair value measurement.

The significant unobservable inputs used in the fair value measurement of the Company’s investments in equities are discount rates and comparable EBITDA multiples. Significant increases in discount rates would result in a significantly lower fair value measurement. Significant decreases in comparable EBITDA multiples would result in a significantly lower fair value measurement.

Financial instruments disclosed but not carried at fair value

The following table presents the carrying value and fair value of the Company’s secured borrowings disclosed but not carried at fair value as of September 30, 2018 and December 31, 2017:



	September 30, 2018				December 31, 2017
	Carrying Value		Fair Value		Carrying Value		Fair Value
Secured borrowings	$	554,299	$	554,299	$	562,893	$	562,893
Total	$	554,299	$	554,299	$	562,893	$	562,893

The carrying values of the secured borrowings approximate their respective fair values and are categorized as Level 3 within the hierarchy. Secured borrowings are valued generally using discounted cash flow analysis. The significant unobservable inputs used in the fair value measurement of the Company’s secured borrowings are discount rates. Significant increases in discount rates would result in a significantly lower fair value measurement.

The following table represents the carrying values (before debt issuance costs) and fair values of the Company’s 2015-1R Notes and 2015-1 Notes disclosed but not carried at fair value as of September 30, 2018 and December 31, 2017:



	September 30, 2018					December 31, 2017
2015-1R Notes ⁽¹⁾	Carrying Value		Fair Value		2015-1 Notes ⁽¹⁾	Carrying Value		Fair Value
AAA/AAA Class A-1-1-R Notes	$	234,800	$	234,800	Aaa/AAA Class A-1A Notes	$	160,000	$	160,064
AAA/AAA Class A-1-2-R Notes	50,000		49,835		Aaa/AAA Class A-1B Notes	40,000		40,020
AAA/AAA Class A-1-3-R Notes	25,000		25,000		Aaa/AAA Class A-1C Notes	27,000		27,014
AA Class A-2-R Notes	66,000		66,000		Aa2 Class A-2 Notes	46,000		46,027
A Class B Notes	46,400		46,242
BBB- Class C Notes	27,000		26,908
Total	$	449,200	$	448,785		$	273,000	$	273,125

(1) On August 30, 2018, the 2015-1 Issuer refinanced the 2015-1 Notes by redeeming in full the 2015-1 Notes and issuing the new 2015-1R Notes. Refer to Note 7 for details.

The fair value determination of the Company’s 2015-1R Notes and 2015-1 Notes was based on the market quotation(s) received from broker/dealer(s). These fair value measurements were based on significant inputs not observable and thus represent Level 3 measurements as defined in the accounting guidance for fair value measurement.

The carrying value of other financial assets and liabilities approximates their fair value based on the short term nature of these items.

4. RELATED PARTY TRANSACTIONS

Investment Advisory Agreement

On April 3, 2013, the Company’s Board of Directors, including a majority of the directors who are not “interested persons” as defined in Section 2(a)(19) of the Investment Company Act (the “Independent Directors”), approved an investment advisory agreement (the “Original Investment Advisory Agreement”) between the Company and the Investment Adviser in accordance with, and on the basis of an evaluation satisfactory to such directors as required by, Section 15(c) of the Investment Company Act.

The Original Investment Advisory Agreement was amended on September 15, 2017 (as amended, the “First Amended and Restated Investment Advisory Agreement”) after the approval of the Company’s Board of Directors, including a majority of the Independent Directors, at an in-person meeting of the Board of Directors held on May 30, 2017 and the approval of the Company’s stockholders at a special meeting of stockholders held on September 15, 2017. The First Amended and Restated Investment Advisory Agreement amended the Original Investment Advisory Agreement to, among other things, (i) reduce the incentive fee payable by the Company to the Investment Adviser from an annual rate of 20% to an annual rate of 17.5%, (ii) delete the incentive fee payment deferral test described below, and (iii) include in the pre-incentive fee net investment income, in the case of investments with a deferred interest feature, accrued income that the Company has not yet received in cash.

On August 6, 2018, the First Amended and Restated Investment Advisory Agreement was further amended (as amended, the “Investment Advisory Agreement”) after the approval of the Company’s Board of Directors, including a majority of the Independent Directors, at an in-person meeting of the Board of Directors held on August 6, 2018. The Investment Advisory Agreement amended the First Amended and Restated Investment Advisory Agreement to incorporate a one-third (0.50%) reduction in the 1.50% annual base management fee rate charged by the Investment Adviser on assets financed using leverage in excess of 1.0x debt to equity, effective July 1, 2018.

The initial term of the Investment Advisory Agreement is two years from September 15, 2017 and, unless terminated earlier, the Investment Advisory Agreement will renew automatically for successive annual periods, provided that such continuance is specifically approved at least annually by the vote of the Board of Directors and by the vote of a majority of the Independent Directors. The Investment Advisory Agreement will automatically terminate in the event of an assignment and may be terminated by either party without penalty upon at least 60 days’ written notice to the other party. Subject to the overall supervision of the Board of Directors, the Investment Adviser provides investment advisory services to the Company. For providing these services, the Investment Adviser receives fees from the Company consisting of two components—a base management fee and an incentive fee.

Effective September 15, 2017, the base management fee is calculated and payable quarterly in arrears at an annual rate of 1.50% of the average value of the gross assets at the end of the two most recently completed fiscal quarters; provided, however, effective July 1, 2018, the base management fee is calculated at an annual rate of 1.00% of the average value of the gross assets

as of the end of the two most recently completed calendar quarters that exceeds the product of (A) 200% and (B) the average value of the Company’s net asset value at the end of the two most recently completed calendar quarters. The base management fee will be appropriately adjusted for any share issuances or repurchases during such fiscal quarter and the base management fees for any partial month or quarter will be pro-rated. The Company’s gross assets exclude any cash and cash equivalents and include assets acquired through the incurrence of debt from use of the SPV Credit Facility, Credit Facility, 2015-1R Notes and 2015-1 Notes (see Note 6, Borrowings, and Note 7, Notes Payable). For purposes of this calculation, cash and cash equivalents include any temporary investments in cash-equivalents, U.S. government securities and other high quality investment grade debt investments that mature in 12 months or less from the date of investment.

Prior to September 15, 2017, under the Original Investment Advisory Agreement, the base management fee was calculated and payable quarterly in arrears at an annual rate of 1.50% of the average daily gross assets of the Company for the period adjusted for share issuances or repurchases. Prior to the IPO, the Investment Adviser waived its right to receive one-third (0.50%) of the 1.50% base management fee. Any waived base management fees are not subject to recoupment by the Investment Adviser. The fee waiver terminated when the IPO had been consummated. As previously disclosed, in connection with the IPO, the Investment Adviser agreed to continue the fee waiver until the completion of the first full quarter after the consummation of the IPO. As a result, beginning October 1, 2017, the base management fee is calculated at an annual rate of 1.50% of the Company’s gross assets; provided, however, effective July 1, 2018, the base management fee is calculated at an annual rate of 1.00% of the average value of the gross assets as of the end of the two most recently completed calendar quarters that exceeds the product of (A) 200% and (B) the average value of the Company’s net asset value at the end of the two most recently completed calendar quarters.

The incentive fee has two parts. The first part is calculated and payable quarterly in arrears based on the pre-incentive fee net investment income for the immediately preceding calendar quarter. The second part is determined and payable in arrears based on capital gains as of the end of each calendar year.

Pre-incentive fee net investment income means interest income, dividend income and any other income (including any other fees (other than fees for providing managerial assistance), such as commitment, origination, structuring, diligence and consulting fees or other fees that the Company receives from portfolio companies) accrued during the calendar quarter, minus the operating expenses accrued for the quarter (including the base management fee, expenses payable under the administration agreement, and any interest expense or fees on any credit facilities or outstanding debt and dividends paid on any issued and outstanding preferred stock, but excluding the incentive fee). Pre-incentive fee net investment income includes, in the case of investments with a deferred interest feature, accrued income that the Company has not yet received in cash. Pre-incentive fee net investment income does not include any realized capital gains, realized capital losses or unrealized capital appreciation or depreciation.

Effective September 15, 2017, pre-incentive fee net investment income, expressed as a rate of return on the value of the Company’s net assets at the end of the immediately preceding calendar quarter, will be compared to a “hurdle rate” of 1.50% per quarter (6% annualized) or a “catch-up rate” of 1.82% per quarter (7.28% annualized), as applicable.

Pursuant to the Investment Advisory Agreement, the Company pays its Investment Adviser an incentive fee with respect to its pre-incentive fee net investment income in each calendar quarter as follows:


•	no incentive fee based on pre-incentive fee net investment income in any calendar quarter in which its pre-incentive fee net investment income does not exceed the hurdle rate of 1.50%;

•

100% of pre-incentive fee net investment income with respect to that portion of such pre-incentive fee net investment income, if any, that exceeds the hurdle rate but is less than 1.82% in any calendar quarter (7.28% annualized). The Company refers to this portion of the pre-incentive fee net investment income (which exceeds the hurdle rate but is less than 1.82%) as the “catch-up.” The “catch-up” is meant to provide the Investment Adviser with approximately 17.5% of the Company’s pre-incentive fee net investment income as if a hurdle rate did not apply if this net investment income exceeds 1.82% in any calendar quarter; and


•	17.5% of the amount of pre-incentive fee net investment income, if any, that exceeds 1.82% in any calendar quarter (7.28% annualized) will be payable to the Investment Adviser. This reflects that once the hurdle rate is reached and the catch-up is achieved, 17.5% of all pre-incentive fee investment income thereafter is allocated to the Investment Adviser.

The second part of the incentive fee is determined and payable in arrears as of the end of each calendar year (or upon termination of the Investment Advisory Agreement, as of the termination date), and equals 17.5% of realized capital gains, if

any, on a cumulative basis from inception through the date of determination, computed net of all realized capital losses on a cumulative basis and unrealized capital depreciation, less the aggregate amount of any previously paid capital gain incentive fees, provided that, the incentive fee determined at the end of the first calendar year of operations may be calculated for a period of shorter than twelve calendar months to take into account any realized capital gains computed net of all realized capital losses on a cumulative basis and unrealized capital depreciation.

Prior to the September 15, 2017, under the Original Investment Advisory Agreement, pre-incentive fee net investment income, which did not include, in the case of investments with a deferred interest feature, accrued income that the Company has not yet received in cash, and was expressed as a rate of return on the average daily Hurdle Calculation Value (as defined below) throughout the immediately preceding calendar quarter, was compared to a “hurdle rate” of 1.50% per quarter (6% annualized) or a “catch-up” of 1.875% per quarter (7.50% annualized), as applicable. “Hurdle Calculation Value” meant, on any given day, the sum of (x) the value of net assets as of the end of the calendar quarter immediately preceding such day plus (y) the aggregate amount of capital drawn from investors (or reinvested in the Company pursuant to a dividend reinvestment plan) from the beginning of the current quarter to such day minus (z) the aggregate amount of distributions (including share repurchases) made by the Company from the beginning of the current quarter to such day, but only to the extent such distributions were not declared and accounted for on the books and records in a previous quarter. In addition, under the Original Investment Advisory Agreement, the Company deferred payment of any incentive fee otherwise earned by the Investment Adviser if, during the most recent four full calendar quarter periods ending on or prior to the date such payment is to be made, the sum of (a) the aggregate distributions to stockholders and (b) the change in net assets (defined as gross assets less indebtedness and before taking into account any incentive fees payable during the period) is less than 6.0% of net assets (defined as gross assets less indebtedness) at the beginning of such period. These calculations were adjusted for any share issuances or repurchases. Any deferred incentive fees were carried over for payment in subsequent calculation periods.

As previously disclosed, in connection with the IPO, the Investment Adviser agreed to charge 17.5% instead of 20% with respect to the entire calculation of the incentive fee beginning on the first full quarter following the consummation of the IPO until the earlier of (i) October 1, 2017 and (ii) the date that the Company’s stockholders vote on the approval of the amendment to the Original Investment Advisory Agreement. The Company’s stockholders voted to approve the Investment Advisory Agreement on September 15, 2017.

For the three month and nine month periods ended September 30, 2018, base management fees were $7,543 and $22,031, respectively, incentive fees related to pre-incentive fee net investment income were $5,449 and $16,763, respectively, and there were no incentive fees related to realized capital gains. For the three month and nine month periods ended September 30, 2017, base management fees were $4,666 and $11,854 (net of waiver of $2,333 and $5,927, respectively), incentive fees related to pre-incentive fee net investment income were $5,321 and $15,459, respectively, and there were no incentive fees related to realized capital gains. For the three month and nine month periods ended September 30, 2018 and 2017, there were no accrued capital gains incentive fees based upon the cumulative net realized and unrealized appreciation (depreciation) from inception through September 30, 2018 and 2017, respectively, as computed in accordance with the Investment Advisory Agreement. The accrual for any capital gains incentive fee under US GAAP in a given period may result in an additional expense if such cumulative amount is greater than in the prior period or a reduction of previously recorded expense if such cumulative amount is less than in the prior period. If such cumulative amount is negative, then there is no accrual.

As of September 30, 2018 and December 31, 2017, $12,992 and $13,098, respectively, were included in base management and incentive fees payable in the accompanying Consolidated Statements of Assets and Liabilities.

On April 3, 2013, the Investment Adviser entered into a personnel agreement with The Carlyle Group Employee Co., L.L.C. (“Carlyle Employee Co.”), an affiliate of the Investment Adviser, pursuant to which Carlyle Employee Co. provides the Investment Adviser with access to investment professionals.

Administration Agreement

On April 3, 2013, the Company’s Board of Directors approved an administration agreement (the “Administration Agreement”) between the Company and the Administrator. Pursuant to the Administration Agreement, the Administrator provides services and receives reimbursements equal to an amount that reimburses the Administrator for its costs and expenses and the Company’s allocable portion of overhead incurred by the Administrator in performing its obligations under the Administration Agreement, including the Company’s allocable portion of the compensation paid to or compensatory distributions received by the Company’s officers (including the Chief Compliance Officer and Treasurer) and respective staff who provide services to the Company, operations staff who provide services to the Company, and any internal audit staff, to the extent internal audit performs a role in the Company’s Sarbanes-Oxley Act internal control assessment. Reimbursement under the Administration Agreement occurs quarterly in arrears.

The initial term of the Administration Agreement is two years from April 3, 2013 and, unless terminated earlier, the Administration Agreement will renew automatically for successive annual periods, provided that such continuance is specifically approved at least annually by (i) the vote of the Board of Directors or by a majority vote of the outstanding voting securities of the Company and (ii) the vote of a majority of the Company’s Independent Directors. On February 26, 2018, the Company’s Board of Directors, including a majority of the Independent Directors, approved the continuance of the Administration Agreement for a one year period. The Administration Agreement may not be assigned by a party without the consent of the other party and may be terminated by either party without penalty upon at least 60 days’ written notice to the other party.

For the three month and nine month periods ended September 30, 2018, the Company incurred $179 and $550, respectively, and for the three month and nine month periods ended September 30, 2017, the Company incurred $184 and $522, respectively, in fees under the Administrative Agreement, which were included in administrative service fees in the accompanying Consolidated Statements of Operations. As of September 30, 2018 and December 31, 2017, $116 and $95, respectively, was unpaid and included in administrative service fees payable in the accompanying Consolidated Statements of Assets and Liabilities.

Sub-Administration Agreements

On April 3, 2013, the Administrator entered into sub-administration agreements with Carlyle Employee Co. and CELF Advisors LLP (“CELF”) (the “Carlyle Sub-Administration Agreements”). Pursuant to the Carlyle Sub-Administration Agreements, Carlyle Employee Co. and CELF provide the Administrator with access to personnel. The sub-administration agreement between the Administrator and CELF was terminated effective as of February 26, 2018.

On April 3, 2013, the Administrator entered into a sub-administration agreement with State Street Bank and Trust Company (“State Street” and, such agreement, the “State Street Sub-Administration Agreement” and, together with the Carlyle Sub-Administration Agreements, the “Sub-Administration Agreements”). On March 11, 2015, the Company’s Board of Directors, including a majority of the Independent Directors, approved an amendment to the State Street Sub-Administration Agreement. The initial term of the State Street Sub-Administration Agreement ends on April 1, 2017 and, unless terminated earlier, the State Street Sub-Administration Agreement will renew automatically for successive annual periods, provided that such continuance is specifically approved at least annually by (i) the vote of the Board of Directors or by the vote of a majority of the outstanding voting securities of the Company and (ii) the vote of a majority of the Company’s Independent Directors. On February 26, 2018, the Company’s Board of Directors, including a majority of the Independent Directors, approved the continuance of the State Street Sub-Administration Agreement for a one year period. The State Street Sub-Administration Agreement may be terminated upon at least 60 days’ written notice and without penalty by the vote of a majority of the outstanding securities of the Company, or by the vote of the Board of Directors or by either party to the State Street Sub-Administration Agreement.

For the three month and nine month periods ended September 30, 2018, fees incurred in connection with the State Street Sub-Administration Agreement, which amounted to $191 and $572, respectively, were included in other general and administrative in the accompanying Consolidated Statements of Operations. For the three month and nine month periods ended September 30, 2017, fees incurred in connection with the State Street Sub-Administration Agreement, which amounted to $209 and $531, respectively, were included in other general and administrative in the accompanying Consolidated Statements of Operations. As of September 30, 2018 and December 31, 2017, $192 and $196, respectively, was unpaid and included in other accrued expenses and liabilities in the accompanying Consolidated Statements of Assets and Liabilities.

Board of Directors

The Company’s Board of Directors currently consists of five members, three of whom are Independent Directors. On April 3, 2013, the Board of Directors established an Audit Committee consisting of its Independent Directors. The Board of Directors also established a Nominating and Governance Committee of the Board of Directors and a Compensation Committee of the Board of Directors and may establish additional committees in the future. For the three month and nine month periods ended September 30, 2018, the Company incurred $92 and $283, respectively, and for the three month and nine month periods ended September 30, 2017, the Company incurred $121 and $355, respectively, in fees and expenses associated with its Independent Directors' services on the Company's Board of Directors and the Audit Committee. As of September 30, 2018 and December 31, 2017, $0 and $25, respectively, was unpaid and included in other accrued expenses and liabilities in the accompanying Consolidated Statements of Assets and Liabilities.

Transactions with Credit Fund

For the three month and nine month periods ended September 30, 2018, the Company sold 1 and 4 investments, respectively, to Credit Fund for proceeds of $29,700 and $85,002, respectively, and realized gains of $0. For the three month and nine month periods ended September 30, 2017, the Company sold 0 and 16 investments, respectively, to Credit Fund for proceeds of $0 and $113,321, respectively, and realized gains of $0 and $190, respectively. See Note 5, Middle Market Credit Fund, LLC, for further information about Credit Fund.

5. MIDDLE MARKET CREDIT FUND, LLC

Overview

On February 29, 2016, the Company and Credit Partners entered into the Limited Liability Company Agreement to co-manage Credit Fund, a Delaware limited liability company that is not consolidated in the Company’s consolidated financial statements. Credit Fund primarily invests in first lien loans of middle market companies. Credit Fund is managed by a six-member board of managers, on which the Company and Credit Partners each have equal representation. Establishing a quorum for Credit Fund’s board of managers requires at least four members to be present at a meeting, including at least two of the Company’s representatives and two of Credit Partners’ representatives. The Company and Credit Partners each have 50% economic ownership of Credit Fund and have commitments to fund, from time to time, capital of up to $400,000 each. Funding of such commitments generally requires the approval of the board of Credit Fund, including the board members appointed by the Company. By virtue of its membership interest, the Company and Credit Partners each indirectly bear an allocable share of all expenses and other obligations of Credit Fund.

Together with Credit Partners, the Company co-invests through Credit Fund. Investment opportunities for Credit Fund are sourced primarily by the Company and its affiliates. Portfolio and investment decisions with respect to Credit Fund must be unanimously approved by a quorum of Credit Fund’s investment committee consisting of an equal number of representatives of the Company and Credit Partners. Therefore, although the Company owns more than 25% of the voting securities of Credit Fund, the Company does not believe that it has control over Credit Fund (other than for purposes of the Investment Company Act). Middle Market Credit Fund SPV, LLC (the “Credit Fund Sub”) and MMCF CLO 2017-1 LLC (the “2017-1 Issuer”), each a Delaware limited liability company, were formed on April 5, 2016 and October 6, 2017, respectively. Credit Fund Sub and the 2017-1 Issuer are wholly owned subsidiaries of Credit Fund and are consolidated in Credit Fund’s consolidated financial statements commencing from the date of their respective formations. Credit Fund Sub and the 2017-1 Issuer primarily invest in first lien loans of middle market companies. Credit Fund and its wholly owned subsidiaries follow the same Internal Risk Rating System as the Company.

Credit Fund, the Company and Credit Partners entered into an administration agreement with Carlyle Global Credit Administration L.L.C., the administrative agent of Credit Fund (in such capacity, the “Administrative Agent”), pursuant to which the Administrative Agent is delegated certain administrative and non-discretionary functions, is authorized to enter into sub-administration agreements at the expense of Credit Fund with the approval of the board of managers of Credit Fund, and is reimbursed by Credit Fund for its costs and expenses and Credit Fund’s allocable portion of overhead incurred by the Administrative Agent in performing its obligations thereunder.

Selected Financial Data

Since inception of Credit Fund and through September 30, 2018 and December 31, 2017, the Company and Credit Partners each made capital contributions of $1 and $1 in members’ equity, respectively, and $102,000 and $86,500 in subordinated loans, respectively, to Credit Fund. As of September 30, 2018 and December 31, 2017, Credit Fund had borrowings of $122,000 and $85,750, respectively, in mezzanine loans under a revolving credit facility with the Company (the “Credit Fund Facility”). As of September 30, 2018 and December 31, 2017, Credit Fund had total subordinated loans and members’ equity outstanding of $202,808 and $173,532, respectively. As of September 30, 2018 and December 31, 2017, the Company’s ownership interest in such subordinated loans and members’ equity was $101,404 and $86,766, respectively, and in such mezzanine loans was $122,000 and $85,750, respectively.

As of September 30, 2018 and December 31, 2017, Credit Fund held cash and cash equivalents totaling $29,561 and $19,502, respectively.

As of September 30, 2018 and December 31, 2017, Credit Fund had total investments at fair value of $1,198,432 and $984,773, respectively, which comprised of first lien senior secured loans and second lien senior secured loans to 60 and 51 portfolio companies, respectively. As of September 30, 2018 and December 31, 2017, no loans in Credit Fund’s portfolio were on non-accrual status or contained PIK provisions. All investments in the portfolio were floating rate debt investments with an interest rate floor. The portfolio companies in Credit Fund are U.S. middle market companies in industries similar to those in

which the Company may invest directly. Additionally, as of September 30, 2018 and December 31, 2017, Credit Fund had commitments to fund various undrawn revolving and delayed draw senior secured loans to its portfolio companies totaling $103,217 and $72,458, respectively.

Below is a summary of Credit Fund’s portfolio, followed by a listing of the loans in Credit Fund’s portfolio as of September 30, 2018 and December 31, 2017:



	As of September 30, 2018			As of December 31, 2017
Senior secured loans ⁽¹⁾	$	1,207,375		$	993,380
Weighted average yields of senior secured loans based on amortized cost ⁽²⁾	7.13		%	6.80		%
Weighted average yields of senior secured loans based on fair value ⁽²⁾	7.12		%	6.79		%
Number of portfolio companies in Credit Fund	60			51
Average amount per portfolio company ⁽¹⁾	$	20,123		$	19,478


(1)	At par/principal amount.

(2)

Weighted average yields include the effect of accretion of discounts and amortization of premiums and are based on interest rates as of September 30, 2018 and December 31, 2017. Weighted average yield on debt and income producing securities at fair value is computed as (a) the annual stated interest rate or yield earned plus the net annual amortization of OID and market discount earned on accruing debt included in such securities, divided by (b) total first lien and second lien debt at fair value included in such securities. Weighted average yield on debt and income producing securities at amortized cost is computed as (a) the annual stated interest rate or yield earned plus the net annual amortization of OID and market discount earned on accruing debt included in such securities, divided by (b) total first lien and second lien debt at amortized cost included in such securities. Actual yields earned over the life of each investment could differ materially from the yields presented above.



Consolidated Schedule of Investments as of September 30, 2018 (unaudited)
Investments ⁽¹⁾	Industry	Reference Rate & Spread ⁽²⁾	Interest Rate ⁽²⁾	Maturity Date	Par/ Principal Amount		Amortized Cost ⁽⁵⁾		Fair Value ⁽⁶⁾
First Lien Debt (99.51% of fair value)
Acrisure, LLC ^{(2) (3) (4)}	Banking, Finance, Insurance & Real Estate	L + 4.25%	6.59%	11/22/2023	$	20,938	$	20,894	$	20,999
Acrisure, LLC ^{(2) (3) (4)}	Banking, Finance, Insurance & Real Estate	L + 3.75%	5.99%	11/22/2023	11,970		11,956		12,049
Advanced Instruments, LLC ^{(2) (3) (4) (7) (10) (11)}	Healthcare & Pharmaceuticals	L + 5.25%	7.35%	10/31/2022	11,820		11,719		11,790
Ahead, LLC ^{(2) (3) (4) (7) (10)}	High Tech Industries	L + 4.50%	6.89%	6/29/2023	20,312		20,206		20,277
Alpha Packaging Holdings, Inc. ^{(2) (3) (4) (11)}	Containers, Packaging & Glass	L + 4.25%	6.64%	5/12/2020	16,902		16,868		16,902
AM Conservation Holding Corporation ^{(2) (3) (4) (11)}	Energy: Electricity	L + 4.50%	7.14%	10/31/2022	38,408		38,164		38,408
AQA Acquisition Holding, Inc. ^{(2) (3) (4) (7) (10) (11)}	High Tech Industries	L + 4.25%	6.64%	5/24/2023	27,197		27,099		27,197
Big Ass Fans, LLC ^{(2) (3) (4) (11)}	Capital Equipment	L + 3.75%	6.14%	5/21/2024	7,795		7,760		7,815
Borchers, Inc. ^{(2) (3) (4) (7) (10) (11)}	Chemicals, Plastics & Rubber	L + 4.50%	6.89%	11/1/2024	15,629		15,570		15,629
Brooks Equipment Company, LLC ^{(2) (3) (4) (11)}	Construction & Building	L + 5.00%	7.31%	8/29/2020	6,118		6,108		6,118
Clearent Newco, LLC^{(2) (3) (4) (7) (10)}	High Tech Industries	L + 4.00%	6.24%	3/20/2024	24,264		23,856		24,133
DBI Holding LLC ^{(2) (3) (4) (11)}	Transportation: Cargo	L + 5.25%	7.51%	8/1/2021	34,617		34,378		33,977
DecoPac, Inc. ^{(2) (3) (4) (7) (10) (11)}	Non-durable Consumer Goods	L + 4.25%	6.64%	9/29/2024	12,729		12,598		12,654
Dent Wizard International Corporation ^{(2) (3) (4)}	Automotive	L + 4.00%	6.23%	4/7/2020	24,317		24,233		24,281
DTI Holdco, Inc.^{(2) (3) (4) (11)}	High Tech Industries	L + 4.75%	6.95%	9/30/2023	19,130		18,978		18,540
EIP Merger Sub, LLC (Evolve IP) ^{(2) (3) (4) (8) (11)}	Telecommunications	L + 5.75%	7.99%	6/7/2022	22,434		21,975		22,016
EIP Merger Sub, LLC (Evolve IP) ^{(2) (3) (9) (11)}	Telecommunications	L + 5.75%	7.99%	6/7/2022	1,500		1,467		1,474
Empower Payments Acquisitions, Inc. ^{(2) (3) (4) (11)}	Media: Advertising, Printing & Publishing	L + 4.50%	6.74%	11/30/2023	17,194		16,917		17,194
Exactech, Inc. ^{(2) (3) (4)}	Healthcare & Pharmaceuticals	L + 3.75%	5.99%	2/14/2025	12,935		12,877		12,935
Executive Consulting Group, LLC, Inc. ^{(2) (3) (4) (7) (10)}	Business Services	L + 4.50%	6.89%	6/20/2024	15,356		15,199		15,294
Golden West Packaging Group LLC ^{(2) (3) (4) (11)}	Containers, Packaging & Glass	L + 5.25%	7.49%	6/20/2023	30,424		30,212		30,348
HMT Holding Inc. ^{(2) (3) (4) (7) (10) (11)}	Energy: Oil & Gas	L + 4.50%	6.74%	11/17/2023	35,301		34,693		35,227
J.S. Held LLC ^{(2) (3) (4) (10) (11)}	Banking, Finance, Insurance & Real Estate	L + 4.50%	6.76%	9/25/2024	20,360		20,180		20,360
Jensen Hughes, Inc. ^{(2) (3) (4) (7) (10) (11)}	Utilities: Electric	L + 4.50%	6.74%	3/22/2024	28,387		28,280		28,377
Kestra Financial, Inc. ^{(2) (3) (4) (11)}	Banking, Finance, Insurance & Real Estate	L + 4.25%	6.64%	6/24/2022	21,792		21,583		21,877
MAG DS Corp. ^{(2) (4) (7) (10)}	Aerospace & Defense	L + 4.75%	6.99%	6/6/2025	22,181		21,970		22,047
Maravai Intermediate Holdings, LLC ^{(2) (3) (4)}	Healthcare & Pharmaceuticals	L + 4.25%	6.38%	8/2/2025	30,000		29,703		29,850
Mold-Rite Plastics, LLC ^{(2) (3) (4)}	Chemicals, Plastics & Rubber	L + 4.50%	6.89%	12/14/2021	14,887		14,826		14,887
MSHC, Inc. ^{(2) (3) (4) (7) (10) (11)}	Construction & Building	L + 4.25%	6.64%	7/31/2023	23,639		23,571		23,621



Consolidated Schedule of Investments as of September 30, 2018 (unaudited)
Investments ⁽¹⁾	Industry	Reference Rate & Spread ⁽²⁾	Interest Rate ⁽²⁾	Maturity Date	Par/ Principal Amount		Amortized Cost ⁽⁵⁾		Fair Value ⁽⁶⁾
Newport Group Holdings II, Inc. ^{(2) (3) (4)}	Banking, Finance, Insurance & Real Estate	L + 3.75%	5.90%	9/13/2025	$	15,000	$	14,929	$	14,990
North American Dental Management, LLC ^{(2) (3) (4) (7) (10) (11)}	Healthcare & Pharmaceuticals	L + 5.00%	7.24%	7/7/2023	32,489		31,824		32,190
North Haven CA Holdings, Inc. (CoAdvantage) ^{(2) (3) (4) (7) (10) (11)}	Business Services	L + 4.50%	6.74%	10/2/2023	28,598		28,300		28,598
Odyssey Logistics & Technology Corporation ^{(2) (3) (4) (11)}	Transportation: Cargo	L + 3.50%	5.99%	10/12/2024	19,850		19,762		19,932
Output Services Group ^{(2) (3) (4) (7) (10)}	Media: Advertising, Printing & Publishing	L + 4.25%	6.49%	3/26/2024	17,487		17,417		17,479
PAI Holdco, Inc. (Parts Authority) ^{(2) (3) (4) (7) (10) (11)}	Automotive	L + 4.25%	6.49%	1/5/2025	19,110		19,018		19,110
Paradigm Acquisition Corp.^{(2) (3) (4) (11)}	Business Services	L + 4.25%	6.49%	10/12/2024	23,324		23,272		23,324
Park Place Technologies, Inc. ^{(2) (3) (4)}	High Tech Industries	L + 4.00%	6.24%	3/29/2025	14,962		14,891		14,961
Pasternack Enterprises, Inc. (Infinite RF) ^{(2) (3) (4)}	Capital Equipment	L + 4.00%	6.10%	7/2/2025	20,127		20,126		20,183
Pharmalogic Holdings Corp. ^{(2) (3) (4) (7) (10)}	Healthcare & Pharmaceuticals	L + 4.00%	6.24%	6/11/2023	7,035		7,012		7,032
Ping Identity Corporation ^{(2) (3) (4)}	High Tech Industries	L + 3.75%	5.99%	1/25/2025	4,987		4,970		4,994
Premier Senior Marketing, LLC ^{(2) (3) (4) (11)}	Banking, Finance, Insurance & Real Estate	L + 5.00%	7.24%	7/1/2022	15,685		15,588		15,659
Premise Health Holding Corp. ^{(2) (3) (4) (10)}	Healthcare & Pharmaceuticals	L + 3.75%	6.14%	7/10/2025	13,897		13,829		13,896
Propel Insurance Agency, LLC ^{(2) (3) (4) (7) (10)}	Banking, Finance, Insurance & Real Estate	L + 4.50%	6.83%	6/1/2024	20,425		19,847		20,158
PSI Services LLC ^{(2) (3) (4) (7) (10) (11)}	Business Services	L + 5.00%	7.24%	1/20/2023	29,996		29,523		29,765
Q Holding Company^{(2) (3) (4) (11)}	Automotive	L + 5.00%	7.24%	12/18/2021	17,144		17,099		17,068
QW Holding Corporation (Quala) ^{(2) (3) (4) (7) (10) (11)}	Environmental Industries	L + 6.75%	8.85%	8/31/2022	9,729		9,342		9,453
Restaurant Technologies, Inc. ^{(2) (3) (4) (11)}	Retail	L + 4.75%	7.01%	11/23/2022	17,238		17,119		17,237
Situs Group Holdings Corporation^{(2) (3) (4)}	Banking, Finance, Insurance & Real Estate	L + 4.50%	6.74%	2/26/2023	10,740		10,733		10,793
Sovos Brands Intermediate, Inc. ^{(2) (3) (4) (7) (10) (11)}	Beverage, Food & Tobacco	L + 4.50%	6.79%	7/18/2024	22,351		22,216		22,351
Surgical Information Systems, LLC ^{(2) (3) (4) (9) (11)}	High Tech Industries	L + 4.85%	7.09%	4/24/2023	27,708		27,484		27,495
Systems Maintenance Services Holding, Inc. ^{(2) (3) (4) (11)}	High Tech Industries	L + 5.00%	7.24%	10/28/2023	24,071		23,964		19,707
T2 Systems Canada, Inc. ^{(2) (3) (4)}	Transportation: Consumer	L + 6.75%	8.99%	9/28/2022	2,653		2,603		2,655
T2 Systems, Inc. ^{(2) (3) (4) (7) (10) (11)}	Transportation: Consumer	L + 6.75%	9.34%	9/28/2022	15,813		15,509		15,826
The Original Cakerie, Co. (Canada) ^{(2) (3) (4) (11)}	Beverage, Food & Tobacco	L + 5.00%	7.20%	7/20/2022	9,065		9,009		9,048
The Original Cakerie, Ltd. (Canada) ^{(2) (3) (4) (7) (10)}	Beverage, Food & Tobacco	L + 4.50%	6.74%	7/20/2022	6,757		6,712		6,740
ThoughtWorks, Inc. ^{(2) (3) (4) (7) (10) (11)}	Business Services	L + 4.00%	6.24%	10/12/2024	10,260		10,223		10,339
U.S. Acute Care Solutions, LLC ^{(2) (3) (4) (11)}	Healthcare & Pharmaceuticals	L + 5.00%	7.24%	5/15/2021	31,748		31,569		31,421
U.S. TelePacific Holdings Corp. ^{(2) (3) (4) (11)}	Telecommunications	L + 5.00%	7.39%	5/2/2023	26,660		26,436		26,194
Upstream Intermediate, LLC ^{(2) (3) (4) (7) (10)}	Healthcare & Pharmaceuticals	L + 4.50%	6.65%	1/3/2024	18,417		18,333		18,417
Valet Waste Holdings, Inc. ^{(2) (3) (4) (7)}	Construction & Building	L + 4.00%	6.26%	9/28/2025	12,000		11,973		12,017



Consolidated Schedule of Investments as of September 30, 2018 (unaudited)
Investments ⁽¹⁾	Industry	Reference Rate & Spread ⁽²⁾	Interest Rate ⁽²⁾	Maturity Date	Par/ Principal Amount		Amortized Cost ⁽⁵⁾		Fair Value ⁽⁶⁾
Valicor Environmental Services, LLC ^{(2) (3) (4) (7) (10) (11)}	Environmental Industries	L + 4.75%	6.90%	6/1/2023	$	26,513	$	25,810	$	26,278
WIRB - Copernicus Group, Inc. ^{(2) (3) (4) (7) (10) (11)}	Healthcare & Pharmaceuticals	L + 4.25%	6.49%	8/12/2022	16,517		16,414		16,495
WRE Holding Corp.^{(2) (3) (4) (7) (10) (11)}	Environmental Industries	L + 4.75%	6.99%	1/3/2023	7,337		7,258		7,148
Zywave, Inc.^{(2) (3) (4) (7) (10) (11)}	High Tech Industries	L + 5.00%	7.34%	11/17/2022	17,296		17,154		17,295
First Lien Debt Total							$	1,191,108	$	1,192,524
Second Lien Debt (0.49% of fair value)
Paradigm Acquisition Corp. ^{(2) (3) (11)}	Business Services	L + 8.50%	10.97%	10/12/2025	$	4,800	$	4,756	$	4,848
Zywave, Inc. ^{(2) (3) (11)}	High Tech Industries	L + 9.00%	11.31%	11/17/2023	1,050		1,037		1,060
Second Lien Debt Total							$	5,793	$	5,908
Total Investments							$	1,196,901	$	1,198,432


(1)	Unless otherwise indicated, issuers of investments held by Credit Fund are domiciled in the United States. As of September 30, 2018, the geographical composition of investments as a percentage of fair value was 1.32% in Canada and 98.68% in the United States. Certain portfolio company investments are subject to contractual restrictions on sales.

(2)

Variable rate loans to the portfolio companies bear interest at a rate that is determined by reference to either LIBOR or an alternate base rate (commonly based on the Federal Funds Rate or the U.S. Prime Rate), which generally resets quarterly. For each such loan, Credit Fund has indicated the reference rate used and provided the spread and the interest rate in effect as of September 30, 2018. As of September 30, 2018, the reference rates for Credit Fund’s variable rate loans were the 30-day LIBOR at 2.26%, the 90-day LIBOR at 2.40% and the 180-day LIBOR at 2.60%.


(3)	Loan includes interest rate floor feature, which is generally 1.00%.

(4)

Denotes that all or a portion of the assets are owned by Credit Fund Sub. Credit Fund Sub has entered into a revolving credit facility (the “Credit Fund Sub Facility”). The lenders of the Credit Fund Sub Facility have a first lien security interest in substantially all of the assets of Credit Fund Sub. Accordingly, such assets are not available to creditors of Credit Fund or the 2017-1 Issuer.


(5)	Amortized cost represents original cost, including origination fees and upfront fees received that are deemed to be an adjustment to yield, adjusted for the accretion/amortization of discounts/premiums, as applicable, on debt investments using the effective interest method.


(6)	Fair value is determined in good faith by or under the direction of the board of managers of Credit Fund, pursuant to Credit Fund’s valuation policy, with the fair value of all investments determined using significant unobservable inputs, which is substantially similar to the valuation policy of the Company provided in Note 3, Fair Value Measurements.


(7)	Denotes that all or a portion of the assets are owned by Credit Fund. Credit Fund has entered into the Credit Fund Facility. The lenders of the Credit Fund Facility have a first lien security interest in substantially all of the assets of Credit Fund. Accordingly, such assets are not available to creditors of Credit Fund Sub or the 2017-1 Issuer.

(8)

Credit Fund receives less than the stated interest rate of this loan as a result of an agreement among lenders. The interest rate reduction is 1.20% on EIP Merger Sub, LLC (Evolve IP). Pursuant to the agreement among lenders in respect of this loan, this investment represents a first lien/first out loan, which has first priority ahead of the first lien/last out loan with respect to principal, interest and other payments.

(9)

In addition to the interest earned based on the stated interest rate of this loan, which is the amount reflected in this schedule, Credit Fund is entitled to receive additional interest as a result of an agreement among lenders as follows: EIP Merger Sub, LLC (Evolve IP) (3.76%) and Surgical Information Systems, LLC (0.90%). Pursuant to the agreement among lenders in respect of these loans, these investments represent a first lien/last out loan, which has a secondary priority behind the first lien/first out loan with respect to principal, interest and other payments.


(10)	As of September 30, 2018, Credit Fund had the following unfunded commitments to fund delayed draw and revolving senior secured loans:



First Lien Debt—unfunded delayed draw and revolving term loans commitments	Type	Unused Fee		Par/ Principal Amount		Fair Value
Advanced Instruments, LLC	Revolver	0.50	%	$	1,333	$	(3	)
Ahead, LLC	Revolver	0.50		4,688		(6		)
AQA Acquisition Holding, Inc.	Revolver	0.50		2,459		—
Borchers, Inc.	Revolver	0.50		1,935		—
Clearent Newco, LLC	Delayed Draw	1.00		4,988		(22		)
Clearent Newco, LLC	Revolver	0.50		644		(3		)
DecoPac, Inc.	Revolver	0.50		2,143		(11		)
Executive Consulting Group, LLC.	Revolver	0.50		2,368		(8		)
HMT Holding Inc.	Revolver	0.50		4,444		(8		)
J.S. Held LLC	Delayed Draw	1.00		4		—
Jensen Hughes, Inc.	Delayed Draw	1.00		337		—
Jensen Hughes, Inc.	Revolver	0.50		1,591		—
MAG DS Corp.	Revolver	0.50		2,772		(15		)
MSHC, Inc.	Delayed Draw	—		6,252		(4		)
North American Dental Management, LLC	Delayed Draw	1.00		4,646		(35		)
North American Dental Management, LLC	Revolver	0.50		2,727		(20		)
North Haven CA Holdings, Inc. (CoAdvantage)	Revolver	0.50		6,114		—
Output Services Group	Delayed Draw	4.25		2,518		(1		)
PAI Holdco, Inc. (Parts Authority)	Delayed Draw	1.00		657		—
Pharmalogic Holdings Corp.	Delayed Draw	1.00		2,947		(1		)
Premise Health Holding Corp.	Delayed Draw	1.00		1,103		—
Propel Insurance Agency, LLC	Delayed Draw	0.50		7,143		(64		)
Propel Insurance Agency, LLC	Revolver	0.50		2,381		(21		)
PSI Services LLC	Revolver	0.50		754		(6		)
QW Holding Corporation (Quala)	Delayed Draw	1.00		7,515		(91		)
QW Holding Corporation (Quala)	Revolver	0.50		5,498		(66		)
Sovos Brands Intermediate, Inc.	Revolver	0.50		2,432		—
T2 Systems, Inc.	Revolver	0.50		1,173		1
The Original Cakerie, Ltd. (Canada)	Revolver	0.50		1,365		(3		)
ThoughtWorks, Inc.	Delayed Draw	2.00		1,714		11
Upstream Intermediate, LLC	Revolver	0.50		1,446		—
Valicor Environmental Services, LLC	Revolver	0.50		2,955		(24		)
WIRB - Copernicus Group, Inc.	Delayed Draw	1.00		7,200		(7		)
WIRB - Copernicus Group, Inc.	Revolver	0.50		1,000		(1		)
WRE Holding Corp.	Delayed Draw	1.06		2,336		(44		)
WRE Holding Corp.	Revolver	0.50		247		(5		)
Zywave, Inc.	Revolver	0.50		1,388		—
Total unfunded commitments				$	103,217	$	(457	)


(11)	Denotes that all or a portion of the assets are owned by the 2017-1 Issuer and secure the notes issued in connection with a $399,900 term debt securitization completed by Credit Fund on December 19, 2017 (the “2017-1 Debt Securitization”). Accordingly, such assets are not available to creditors of Credit Fund or Credit Fund Sub.



Consolidated Schedule of Investments as of December 31, 2017
Investments ⁽¹⁾	Industry	Interest Rate ⁽²⁾	Maturity Date	Par/ Principal Amount		Amortized Cost ⁽⁵⁾		Fair Value ⁽⁶⁾
First Lien Debt (99.39% of fair value)
Acrisure, LLC ^{(2)(3)(4)(11)}	Banking, Finance, Insurance & Real Estate	L + 4.25% (1.00% Floor)	11/22/2023	$	21,097	$	21,055	$	21,291
Advanced Instruments, LLC ^{(2)(3)(4)(7)(10)(11)(13)}	Healthcare & Pharmaceuticals	L + 5.25% (1.00% Floor)	10/31/2022	11,910		11,793		11,910
Alpha Packaging Holdings, Inc. ^{(2)(3)(4)(13)}	Containers, Packaging & Glass	L + 4.25% (1.00% Floor)	5/12/2020	16,860		16,812		16,860
AM Conservation Holding Corporation ^{(2)(3)(4)(13)}	Energy: Electricity	L + 4.50% (1.00% Floor)	10/31/2022	38,700		38,433		38,553
AMS Finco, S.A.R.L. (Alexander Mann Solutions) (United Kingdom) ^{(2)(3)(4)(11)(13)}	Business Services	L + 5.50% (1.00% Floor)	5/26/2024	24,875		24,646		24,875
Anaren, Inc. ^(2)(3)(4)	Telecommunications	L + 4.50% (1.00% Floor)	2/18/2021	9,993		9,971		9,993
AQA Acquisition Holding, Inc. ^{(2)(3)(4)(7)(10)(13)}	High Tech Industries	L + 4.50% (1.00% Floor)	5/24/2023	27,403		27,288		27,403
Big Ass Fans, LLC ^{(2)(3)(4)(13)}	Capital Equipment	L + 4.25% (1.00% Floor)	5/21/2024	8,000		7,964		8,010
Borchers, Inc. ^{(2)(3)(4)(7)(10)(13)}	Chemicals, Plastics & Rubber	L + 4.50% (1.00% Floor)	11/1/2024	15,748		15,694		15,665
Brooks Equipment Company, LLC ^{(2)(3)(4)(13)}	Construction & Building	L + 5.00% (1.00% Floor)	8/29/2020	7,061		7,045		7,061
DBI Holding LLC ^{(2)(3)(4)(11)(13)}	Transportation: Cargo	L + 5.25% (1.00% Floor)	8/1/2021	19,800		19,659		19,833
DecoPac, Inc. ^{(2)(3)(4)(7)(10)(13)}	Non-durable Consumer Goods	L + 4.25% (1.00% Floor)	9/29/2024	13,414		13,270		13,415
Dent Wizard International Corporation ^{(2)(3)(4)(11)}	Automotive	L + 4.75% (1.00% Floor)	4/7/2020	24,502		24,382		24,475
DTI Holdco, Inc. ^{(2)(3)(4)(11)(13)}	High Tech Industries	L + 5.25% (1.00% Floor)	9/30/2023	19,750		19,575		19,663
EIP Merger Sub, LLC (Evolve IP) ^{(2)(3)(4)(8)(11)(13)}	Telecommunications	L + 6.25% (1.00% Floor)	6/7/2022	22,663		22,127		22,153
EIP Merger Sub, LLC (Evolve IP) ^{(2)(3)(9)(11)(13)}	Telecommunications	L + 6.25% (1.00% Floor)	6/7/2022	1,500		1,462		1,470
Empower Payments Acquisitions, Inc. ^{(2)(3)(4)(13)}	Media: Advertising, Printing & Publishing	L + 5.50% (1.00% Floor)	11/30/2023	17,325		17,018		17,325
FCX Holdings Corp. ^{(2)(3)(4)(11)}	Capital Equipment	L + 4.50% (1.00% Floor)	8/4/2020	18,491		18,438		18,512
Golden West Packaging Group LLC ^{(2)(3)(4)(11)(13)}	Containers, Packaging & Glass	L + 5.25% (1.00% Floor)	6/20/2023	20,895		20,709		20,895
HMT Holding Inc. ^{(2)(3)(4)(7)(10)(13)}	Energy: Oil & Gas	L + 4.50% (1.00% Floor)	11/17/2023	35,062		34,387		34,709
J.S. Held LLC ^{(2)(3)(4)(7)(10)(13)}	Banking, Finance, Insurance & Real Estate	L + 5.50% (1.00% Floor)	9/27/2023	18,204		18,018		18,144
Jensen Hughes, Inc. ^{(2)(3)(4)(7)(10)(11)(13)}	Utilities: Electric	L + 5.00% (1.00% Floor)	12/4/2021	20,963		20,784		20,963
Kestra Financial, Inc. ^{(2)(3)(4)(13)}	Banking, Finance, Insurance & Real Estate	L + 5.25% (1.00% Floor)	6/24/2022	17,206		17,009		17,203
Mold-Rite Plastics, LLC ^{(2)(3)(4)(11)}	Chemicals, Plastics & Rubber	L + 4.50% (1.00% Floor)	12/14/2021	15,000		14,946		14,993
MSHC, Inc. ^{(2)(3)(4)(13)}	Construction & Building	L + 4.25% (1.00% Floor)	7/31/2023	10,000		9,957		10,032
North American Dental Management, LLC ^{(2)(3)(4)(7)(10)(11)(13)}	Healthcare & Pharmaceuticals	L + 5.00% (1.00% Floor)	7/7/2023	23,978		23,157		23,577
North Haven CA Holdings, Inc. (CoAdvantage) ^{(2)(3)(4)(7)(10)(13)}	Business Services	L + 4.50% (1.00% Floor)	10/2/2023	31,565		31,237		31,436
Odyssey Logistics & Technology Corporation ^{(2)(3)(4)(11)(13)}	Transportation: Cargo	L + 4.25% (1.00% Floor)	10/12/2024	20,000		19,906		19,998
PAI Holdco, Inc. (Parts Authority) ^{(2)(3)(4)(7)(10)(11)(13)}	Automotive	L + 4.75% (1.00% Floor)	12/30/2022	16,564		16,459		16,515
Paradigm Acquisition Corp. ^{(2)(3)(4)(13)}	Business Services	L + 4.25% (1.00% Floor)	10/12/2024	23,500		23,445		23,554



Consolidated Schedule of Investments as of December 31, 2017
Investments ⁽¹⁾	Industry	Interest Rate ⁽²⁾	Maturity Date	Par/ Principal Amount		Amortized Cost ⁽⁵⁾		Fair Value ⁽⁶⁾
Pasternack Enterprises, Inc. (Infinite RF) ^{(2)(3)(4)(11)}	Capital Equipment	L + 5.00% (1.00% Floor)	5/27/2022	$	20,228	$	20,134	$	20,174
Premier Senior Marketing, LLC ^{(2)(3)(4)(11)(13)}	Banking, Finance, Insurance & Real Estate	L + 5.00% (1.00% Floor)	7/1/2022	11,675		11,606		11,628
PSI Services LLC ^{(2)(3)(4)(7)(10)(11)(13)}	Business Services	L + 5.00% (1.00% Floor)	1/20/2023	30,676		30,171		30,082
Q Holding Company ^{(2)(3)(4)(13)}	Automotive	L + 5.00% (1.00% Floor)	12/18/2021	17,277		17,227		17,277
QW Holding Corporation (Quala) ^{(2)(3)(4)(7)(10)(11)(13)}	Environmental Industries	L + 6.75% (1.00% Floor)	8/31/2022	11,453		10,879		10,933
Radiology Partners, Inc. ^{(2)(3)(4)(7)(10)(12)}	Healthcare & Pharmaceuticals	L + 5.75% (1.00% Floor)	12/4/2023	25,793		25,494		25,642
Restaurant Technologies, Inc. ^{(2)(3)(4)(11)(13)}	Retail	L + 4.75% (1.00% Floor)	11/23/2022	17,369		17,241		17,219
Sovos Brands Intermediate, Inc. ^{(2)(3)(4)(7)(10)(13)}	Beverage, Food & Tobacco	L + 4.50% (1.00% Floor)	7/18/2024	21,568		21,419		21,633
Superion (fka Ramundsen Public Sector, LLC) ^{(2)(3)(4)(13)}	Sovereign & Public Finance	L + 4.25% (1.00% Floor)	2/1/2024	3,970		3,955		4,000
Surgical Information Systems, LLC ^{(2)(3)(4)(9)(11)(13)}	High Tech Industries	L + 5.00% (1.00% Floor)	4/24/2023	30,000		29,728		30,075
Systems Maintenance Services Holding, Inc. ^{(2)(3)(4)(11)(13)}	High Tech Industries	L + 5.00% (1.00% Floor)	10/28/2023	24,255		24,126		20,617
T2 Systems Canada, Inc. ^(2)(3)(4)	Transportation: Consumer	L + 6.75% (1.00% Floor)	9/28/2022	2,673		2,617		2,634
T2 Systems, Inc. ^{(2)(3)(4)(7)(10)(13)}	Transportation: Consumer	L + 6.75% (1.00% Floor)	9/28/2022	15,929		15,577		15,679
Teaching Strategies, LLC ^{(2)(3)(4)(7)(10)(11)(13)}	Media: Advertising, Printing & Publishing	L + 4.75% (1.00% Floor)	2/27/2023	17,964		17,803		17,952
The Original Cakerie, Ltd. (Canada) ^{(2)(3)(4)(7)(10)(11)}	Beverage, Food & Tobacco	L + 5.00% (1.00% Floor)	7/20/2021	6,939		6,879		6,922
The Original Cakerie, Co. (Canada) ^{(2)(3)(11)(13)}	Beverage, Food & Tobacco	L + 5.50% (1.00% Floor)	7/20/2021	3,585		3,572		3,579
ThoughtWorks, Inc. ^{(2)(3)(11)(13)}	Business Services	L + 4.50% (1.00% Floor)	10/12/2024	8,000		7,980		8,032
U.S. Acute Care Solutions, LLC ^{(2)(3)(4)(13)}	Healthcare & Pharmaceuticals	L + 5.00% (1.00% Floor)	5/15/2021	32,030		31,808		31,537
U.S. TelePacific Holdings Corp. ^{(2)(3)(4)(13)}	Telecommunications	L + 5.00% (1.00% Floor)	5/2/2023	29,850		29,566		28,581
Valicor Environmental Services, LLC ^{(2)(3)(4)(7)(10)(11)(13)}	Environmental Industries	L + 5.00% (1.00% Floor)	6/1/2023	27,047		26,576		26,984
WIRB - Copernicus Group, Inc. ^{(2)(3)(4)(13)}	Healthcare & Pharmaceuticals	L + 5.00% (1.00% Floor)	8/12/2022	14,838		14,780		14,838
WRE Holding Corp. ^{(2)(3)(4)(7)(10)(11)(13)}	Environmental Industries	L + 4.75% (1.00% Floor)	1/3/2023	5,367		5,283		5,279
Zest Holdings, LLC ^{(2)(3)(4)(11)}	Durable Consumer Goods	L + 4.25% (1.00% Floor)	8/16/2023	19,152		19,107		19,272
Zywave, Inc. ^{(2)(3)(4)(7)(10)(13)}	High Tech Industries	L + 5.00% (1.00% Floor)	11/17/2022	17,663		17,508		17,663
First Lien Debt Total						$	977,682	$	978,718
Second Lien Debt (0.61% of fair value)
Paradigm Acquisition Corp. ^{(2)(3)(12)(13)}	Business Services	L + 8.50% (1.00% Floor)	10/12/2025	$	4,800	$	4,753	$	4,792
Superion, LLC (fka Ramundsen Public Sector, LLC) ^(2)(3)(13)	Sovereign & Public Finance	L + 8.50% (1.00% Floor)	2/1/2025	200		198		202
Zywave, Inc. ^(2)(3)(13)	High Tech Industries	L + 9.00% (1.00% Floor)	11/17/2023	1,050		1,036		1,061
Second Lien Debt Total						$	5,987	$	6,055
Total Investments						$	983,669	$	984,773


(1)	Unless otherwise indicated, issuers of investments held by Credit Fund are domiciled in the United States. As of December 31, 2017, the geographical composition of investments as a percentage of fair value was 1.07% in Canada, 2.52% in the United Kingdom and 96.41% in the United States.

(2)

Variable rate loans to the portfolio companies bear interest at a rate that may be determined by reference to either LIBOR (“L”) or an alternate base rate (commonly based on the Federal Funds Rate or the U.S. Prime Rate (“P”)), which generally resets quarterly. For each such loan, Credit Fund has provided the interest rate in effect as of December 31, 2017. As of December 31, 2017, all of Credit Fund’s LIBOR loans were indexed to the 90-day LIBOR rate at 1.69%, except for those loans as indicated in Notes 11 and 12 below.


(3)	Loan includes interest rate floor feature.


(4)	Denotes that all or a portion of the assets are owned by Credit Fund Sub. Credit Fund Sub has entered into the Credit Fund Sub Facility. The lenders of the Credit Fund Sub Facility have a first lien security interest in substantially all of the assets of Credit Fund Sub. Accordingly, such assets are not available to creditors of Credit Fund or the 2017-1 Issuer.


(5)	Amortized cost represents original cost, including origination fees and upfront fees received that are deemed to be an adjustment to yield, adjusted for the accretion/amortization of discounts/premiums, as applicable, on debt investments using the effective interest method.


(6)	Fair value is determined in good faith by or under the direction of the board of managers of Credit Fund, pursuant to Credit Fund’s valuation policy, with the fair value of all investments determined using significant unobservable inputs, which is substantially similar to the valuation policy of the Company provided in “—Critical Accounting Policies—Fair Value Measurements.”


(7)	Denotes that all or a portion of the assets are owned by Credit Fund. Credit Fund has entered into the Credit Fund Facility. The lenders of the Credit Fund Facility have a first lien security interest in substantially all of the assets of Credit Fund. Accordingly, such assets are not available to creditors of Credit Fund Sub or the 2017-1 Issuer.

(8)

Credit Fund receives less than the stated interest rate of this loan as a result of an agreement among lenders. The interest rate reduction is 1.25% on EIP Merger Sub, LLC (Evolve IP). Pursuant to the agreement among lenders in respect of this loan, this investment represents a first lien/first out loan, which has first priority ahead of the first lien/last out loan with respect to principal, interest and other payments.

(9)

In addition to the interest earned based on the stated interest rate of this loan, which is the amount reflected in this schedule, Credit Fund is entitled to receive additional interest as a result of an agreement among lenders as follows: EIP Merger Sub, LLC (Evolve IP) (3.97%) and Surgical Information Systems, LLC (1.01%). Pursuant to the agreement among lenders in respect of this loan, this investment represents a first lien/last out loan, which has a secondary priority behind the first lien/first out loan with respect to principal, interest and other payments.


(10)	As of December 31, 2017, Credit Fund had the following unfunded commitments to fund delayed draw and revolving senior secured loans:



First Lien Debt—unfunded delayed draw and revolving term loans commitments	Type	Unused Fee		Par/ Principal Amount		Fair Value
Advanced Instruments, LLC	Revolver	0.50	%	$	1,333	$	—
AQA Acquisition Holding, Inc.	Revolver	0.50	%	2,459		—
Borchers, Inc.	Revolver	0.50	%	1,935		(9		)
DecoPac, Inc.	Revolver	0.50	%	1,457		—
HMT Holding Inc.	Revolver	0.50	%	4,938		(43		)
Jensen Hughes, Inc.	Delayed Draw	1.00	%	1,180		—
Jensen Hughes, Inc.	Revolver	0.50	%	2,000		—
J.S. Held LLC	Delayed Draw	1.00	%	2,253		(7		)
North American Dental Management, LLC	Delayed Draw	1.00	%	13,354		(134		)
North American Dental Management, LLC	Revolver	0.50	%	2,727		(27		)
North Haven CA Holdings, Inc. (CoAdvantage)	Revolver	0.50	%	3,362		(12		)
PAI Holdco, Inc. (Parts Authority)	Delayed Draw	1.00	%	3,286		(8		)
PSI Services LLC	Revolver	0.50	%	302		(6		)
QW Holding Corporation (Quala)	Delayed Draw	1.00	%	7,515		(171		)
QW Holding Corporation (Quala)	Revolver	0.50	%	3,849		(88		)
Radiology Partners, Inc.	Delayed Draw	1.00	%	2,483		(12		)
Radiology Partners, Inc.	Revolver	0.50	%	1,725		(9		)
Sovos Brands Intermediate, Inc.	Revolver	0.50	%	3,378		9
T2 Systems, Inc.	Revolver	0.50	%	1,173		(17		)
Teaching Strategies, LLC	Revolver	0.50	%	1,900		(1		)
The Original Cakerie, Ltd. (Canada)	Revolver	0.50	%	1,665		(3		)
Valicor Environmental Services, LLC	Revolver	0.50	%	2,838		(6		)
WRE Holding Corp.	Delayed Draw	1.04	%	3,435		(32		)
WRE Holding Corp.	Revolver	0.50	%	748		(7		)
Zywave, Inc.	Revolver	0.50	%	1,163		—
Total unfunded commitments				$	72,458	$	(583	)


(11)	As of December 31, 2017, this LIBOR loan was indexed to the 30-day LIBOR rate at 1.56%.


(12)	As of December 31, 2017, this LIBOR loan was indexed to the 180-day LIBOR rate at 1.84%.


(13)	Denotes that all or a portion of the assets are owned by the 2017-1 Issuer and secure the notes issued in connection with the 2017-1 Debt Securitization. Accordingly, such assets are not available to creditors of Credit Fund or Credit Fund Sub.

Below is certain summarized consolidated financial information for Credit Fund as of September 30, 2018 and December 31, 2017, respectively. Credit Fund commenced operations in May 2016.



	September 30, 2018		December 31, 2017
	(unaudited)
Selected Consolidated Balance Sheet Information
ASSETS
Investments, at fair value (amortized cost of $1,196,901 and $983,669, respectively)	$	1,198,432	$	984,773
Cash and other assets	37,001		26,441
Total assets	$	1,235,433	$	1,011,214
LIABILITIES AND MEMBERS’ EQUITY
Secured borrowings	$	552,250	$	377,686
Notes payable, net of unamortized debt issuance costs of $1,897 and $2,051, respectively	323,614		348,938
Mezzanine loans	122,000		85,750
Other liabilities	34,761		25,308
Subordinated loans and members’ equity	202,808		173,532
Liabilities and members’ equity	$	1,235,433	$	1,011,214



	For the three month periods ended					For the nine month periods ended
	September 30, 2018		September 30, 2017			September 30, 2018		September 30, 2017
	(unaudited)		(unaudited)			(unaudited)		(unaudited)
Selected Consolidated Statement of Operations Information:
Total investment income	$	21,738	$	14,914		$	60,129	$	33,802
Expenses
Interest and credit facility expenses	13,858		8,809			37,615		21,204
Other expenses	796		356			1,565		1,041
Total expenses	14,654		9,165			39,180		22,245
Net investment income (loss)	7,084		5,749			20,949		11,557
Net realized gain (loss) on investments	—		—			—		—
Net change in unrealized appreciation (depreciation) on investments	314		(2,076		)	427		(889		)
Net increase (decrease) resulting from operations	$	7,398	$	3,673		$	21,376	$	10,668

Debt

Credit Fund Facility

On June 24, 2016, Credit Fund entered into the Credit Fund Facility with the Company pursuant to which Credit Fund may from time to time request mezzanine loans from the Company, which was subsequently amended on June 5, 2017, October 2, 2017, November 3, 2017, June 22, 2018 and June 29, 2018. The maximum principal amount of the Credit Fund Facility is $175,000. The maturity date of the Credit Fund Facility is March 22, 2019. Amounts borrowed under the Credit Fund Facility bear interest at a rate of LIBOR plus 9.00%.

During the three month periods ended September 30, 2018 and 2017, there were mezzanine loan borrowings of $27,000 and $7,600, respectively, and repayments of $19,000 and $8,400, respectively, under the Credit Fund Facility. During the nine month periods ended September 30, 2018 and 2017, there were mezzanine loan borrowings of $74,150 and $91,760, respectively, and repayments of $37,900 and $41,844, respectively, under the Credit Fund Facility. As of September 30, 2018 and December 31, 2017, there were $122,000 and $85,750 in mezzanine loans outstanding, respectively.

As of September 30, 2018 and December 31, 2017, Credit Fund was in compliance with all covenants and other requirements of the Credit Fund Facility.

Credit Fund Sub Facility

On June 24, 2016, Credit Fund Sub closed on the Credit Fund Sub Facility with lenders, which was subsequently amended on May 31, 2017, October 27, 2017 and August 24, 2018. The Credit Fund Sub Facility provides for secured borrowings during the applicable revolving period up to an amount equal to $640,000. The facility is secured by a first lien security interest in substantially all of the portfolio investments held by Credit Fund Sub. The maturity date of the Credit Fund Sub Facility is May 22, 2024. Amounts borrowed under the Credit Fund Sub Facility bear interest at a rate of LIBOR plus 2.25%.

During the three month periods ended September 30, 2018 and 2017, there were secured borrowings of $101,300 and $59,900, respectively, and repayments of $0 and $39,784, respectively, under the Credit Fund Sub Facility. During the nine month periods ended September 30, 2018 and 2017, there were secured borrowings of $210,565 and $357,305, respectively, and repayments of $36,001 and $39,784, respectively, under the Credit Fund Sub Facility. As of September 30, 2018 and December 31, 2017, there was $552,250 and $377,686 in secured borrowings outstanding, respectively.

As of September 30, 2018 and December 31, 2017, Credit Fund Sub was in compliance with all covenants and other requirements of the Credit Fund Sub Facility.

2017-1 Notes

On December 19, 2017, Credit Fund completed the 2017-1 Debt Securitization. The notes offered in the 2017-1 Debt Securitization (the “2017-1 Notes”) were issued by the 2017-1 Issuer, a wholly owned and consolidated subsidiary of Credit Fund, and are secured by a diversified portfolio of the 2017-1 Issuer consisting primarily of first and second lien senior secured loans. The 2017-1 Debt Securitization was executed through a private placement of the 2017-1 Notes, consisting of $231,700 of Aaa/AAA Class A-1 Notes, which bear interest at the three-month LIBOR plus 1.17%; $48,300 of Aa2/AA Class A-2 Notes, which bear interest at the three-month LIBOR plus 1.50%; $15,000 of A2/A Class B-1 Notes, which bear interest at the three-month LIBOR plus 2.25%; $9,000 of A2/A Class B-2 Notes which bear interest at 4.30%; $22,900 of Baa2/BBB Class C Notes which bear interest at the three-month LIBOR plus 3.20%; and $25,100 of Ba2/BB Class D Notes which bear interest at the three-month LIBOR plus 6.38%. The 2017-1 Notes are scheduled to mature on January 15, 2028. Credit Fund received 100% of the preferred interests issued by the 2017-1 Issuer (the “2017-1 Issuer Preferred Interests”) on the closing date of the 2017-1 Debt Securitization in exchange for Credit Fund’s contribution to the 2017-1 Issuer of the initial closing date loan portfolio. The 2017-1 Issuer Preferred Interests do not bear interest and had a nominal value of $47,900 at closing.

6. BORROWINGS

In accordance with the Investment Company Act, the Company is currently only allowed to borrow amounts such that its asset coverage, as defined in the Investment Company Act, is at least 150% after such borrowing. As of September 30, 2018 and December 31, 2017, asset coverage was 210.09% and 234.86%, respectively. During the three month and nine month periods ended September 30, 2018, there were secured borrowings of $258,600 and $681,650, respectively, under the SPV Credit Facility and Credit Facility and repayments of $289,406 and $690,244, respectively, under the SPV Credit Facility and Credit Facility. During the three month and nine month periods ended September 30, 2017, there were secured borrowings of $291,450 and $597,450, respectively, under the SPV Credit Facility and Credit Facility and repayments of $44,278 and $440,566, respectively, under the SPV Credit Facility and Credit Facility. As of September 30, 2018 and December 31, 2017, there was $554,299 and $562,893, respectively, in secured borrowings outstanding.

SPV Credit Facility

The SPV closed on May 24, 2013 on the SPV Credit Facility, which was subsequently amended on June 30, 2014, June 19, 2015, June 9, 2016, May 26, 2017 and August 9, 2018. The SPV Credit Facility provides for secured borrowings during the applicable revolving period up to an amount equal to the lesser of $400,000 (the borrowing base as calculated pursuant to the terms of the SPV Credit Facility) and the amount of net cash proceeds and unpledged capital commitments the Company has received, with an accordion feature that can, subject to certain conditions, increase the aggregate maximum credit commitment up to an amount not to exceed $750,000, subject to restrictions imposed on borrowings under the Investment Company Act and certain restrictions and conditions set forth in the SPV Credit Facility, including adequate collateral to support such borrowings. The SPV Credit Facility has a revolving period through May 21, 2021 and a maturity date of May 23, 2023. Borrowings under the SPV Credit Facility bear interest initially at the applicable commercial paper rate (if the lender is a conduit lender) or LIBOR (or, if applicable, a rate based on the prime rate or federal funds rate) plus 2.00% per year through May 21, 2021, with pre-determined future interest rate increases of 0.875%-1.75% following the end of the revolving period. The SPV is also required to pay an undrawn commitment fee of between 0.50% and 0.75% per year depending on the drawings

under the SPV Credit Facility. Payments under the SPV Credit Facility are made quarterly. The lenders have a first lien security interest on substantially all of the assets of the SPV.

As part of the SPV Credit Facility, the SPV is subject to limitations as to how borrowed funds may be used and the types of loans that are eligible to be acquired by the SPV including, but not limited to, restrictions on sector and geographic concentrations, loan size, payment frequency, tenor and minimum investment ratings (or estimated ratings). In addition, borrowed funds are intended to be used primarily to purchase first lien loan assets, and the SPV is limited in its ability to purchase certain other assets (including, but not limited to, second lien loans, covenant-lite loans, revolving and delayed draw loans and discount loans) and other assets are not permitted to be purchased (including, but not limited to paid-in-kind loans and structured finance obligations). The SPV Credit Facility has certain requirements relating to asset coverage, interest coverage, collateral quality and portfolio performance, including limitations on delinquencies and charge offs, certain violations of which could result in the immediate acceleration of the amounts due under the SPV Credit Facility. The SPV Credit Facility is also subject to a borrowing base that applies different advance rates to assets held by the SPV based generally on the fair market value of such assets. Under certain circumstances as set forth in the SPV Credit Facility, the Company could be obliged to repurchase loans from the SPV.

As of September 30, 2018 and December 31, 2017, the Company was in compliance with all covenants and other requirements of the SPV Credit Facility.

Credit Facility

The Company closed on March 21, 2014 on the Credit Facility, which was subsequently amended on January 8, 2015, May 25, 2016, March 22, 2017 and September 25, 2018. The maximum principal amount of the Credit Facility is $413,000, subject to availability under the Credit Facility, which is based on certain advance rates multiplied by the value of the Company’s portfolio investments (subject to certain concentration limitations) net of certain other indebtedness that the Company may incur in accordance with the terms of the Credit Facility. Proceeds of the Credit Facility may be used for general corporate purposes, including the funding of portfolio investments. Maximum capacity under the Credit Facility may be increased to $620,000 through the exercise by the Company of an uncommitted accordion feature through which existing and new lenders may, at their option, agree to provide additional financing. The Credit Facility includes a $20,000 limit for swingline loans and a $5,000 limit for letters of credit. The Company may borrow amounts in U.S. dollars or certain other permitted currencies. Amounts drawn under the Credit Facility, including amounts drawn in respect of letters of credit, bear interest at either LIBOR plus an applicable spread of 2.25%, or an “alternative base rate” (which is the highest of a prime rate, the federal funds effective rate plus 0.50%, or one month LIBOR plus 1.00%) plus an applicable spread of 1.25%. The Company may elect either the LIBOR or the “alternative base rate” at the time of drawdown, and loans may be converted from one rate to another at any time, subject to certain conditions. The Company also pays a fee of 0.375% on undrawn amounts under the Credit Facility and, in respect of each undrawn letter of credit, a fee and interest rate equal to the then-applicable margin under the Credit Facility while the letter of credit is outstanding. The availability period under the Credit Facility will terminate on March 22, 2022 and the Credit Facility will mature on March 22, 2023. During the period from March 22, 2022 to March 22, 2023, the Company will be obligated to make mandatory prepayments under the Credit Facility out of the proceeds of certain asset sales, other recovery events and equity and debt issuances.

Subject to certain exceptions, the Credit Facility is secured by a first lien security interest in substantially all of the portfolio investments held by the Company. The Credit Facility includes customary covenants, including certain financial covenants related to asset coverage, shareholders’ equity and liquidity, certain limitations on the incurrence of additional indebtedness and liens, and other maintenance covenants, as well as usual and customary events of default for senior secured revolving credit facilities of this nature.

As of September 30, 2018 and December 31, 2017, the Company was in compliance with all covenants and other requirements of the Credit Facility.

Summary of Facilities

The Facilities consisted of the following as of September 30, 2018 and December 31, 2017:



	September 30, 2018
	Total Facility		Borrowings Outstanding		Unused Portion ⁽¹⁾		Amount Available ⁽²⁾
SPV Credit Facility	$	400,000	$	280,399	$	119,601	$	2,647
Credit Facility	413,000		273,900		139,100		139,100
Total	$	813,000	$	554,299	$	258,701	$	141,747

	December 31, 2017
	Total Facility		Borrowings Outstanding		Unused Portion ⁽¹⁾		Amount Available ⁽²⁾
SPV Credit Facility	$	400,000	$	287,393	$	112,607	$	27,147
Credit Facility	413,000		275,500		137,500		137,500
Total	$	813,000	$	562,893	$	250,107	$	164,647


(1)	The unused portion is the amount upon which commitment fees are based.


(2)	Available for borrowing based on the computation of collateral to support the borrowings and subject to compliance with applicable covenants and financial ratios.

As of September 30, 2018 and December 31, 2017, $2,482 and $3,140, respectively, of interest expense, $324 and $186, respectively, of unused commitment fees and $23 and $23, respectively, of other fees were included in interest and credit facility fees payable. For the three month and nine month periods ended September 30, 2018, the weighted average interest rates were 4.35% and 4.10%, respectively, and the average principal debt outstanding was $532,998 and $542,996, respectively. For the three month and nine month periods ended September 30, 2017, the weighted average interest rates were 3.40% and 3.24%, respectively, and the average principal debt outstanding was $406,498 and $402,787, respectively. As of September 30, 2018 and December 31, 2017, the weighted average interest rates were 4.44% and 3.56%, respectively, based on floating LIBOR rates.

For the three month and nine month periods ended September 30, 2018 and 2017, the components of interest expense and credit facility fees were as follows:



	For the three month periods ended				For the nine month periods ended
	September 30, 2018		September 30, 2017		September 30, 2018		September 30, 2017
Interest expense	$	5,922	$	3,535	$	16,897	$	9,916
Facility unused commitment fee	341		309		923		925
Amortization of deferred financing costs	210		183		664		541
Other fees	32		29		102		89
Total interest expense and credit facility fees	$	6,505	$	4,056	$	18,586	$	11,471
Cash paid for interest expense	$	6,803	$	2,698	$	17,555	$	9,043

7. Notes Payable

On June 26, 2015, the Company completed the 2015-1 Debt Securitization. The 2015-1 Notes were issued by the 2015-1 Issuer, a wholly-owned and consolidated subsidiary of the Company. The 2015-1 Debt Securitization was executed through a private placement of the 2015-1 Notes, consisting of $160,000 of Aaa/AAA Class A-1A Notes; $40,000 of Aaa/AAA Class A-1B Notes; $27,000 of Aaa/AAA Class A-1C Notes; and $46,000 of Aa2 Class A-2 Notes. The 2015-1 Notes were issued at par and were scheduled to mature on July 15, 2027. The Company received 100% of the preferred interests issued by the 2015-1 Issuer (the “2015-1 Issuer Preferred Interests”) on the closing date of the 2015-1 Debt Securitization in exchange for the Company’s contribution to the 2015-1 Issuer of the initial closing date loan portfolio. The 2015-1 Issuer Preferred Interests do not bear interest and had a nominal value of $125,900 at closing. In connection with the contribution, the Company made customary representations, warranties and covenants to the 2015-1 Issuer in the purchase agreement. The Class A-1A, Class A-1B and Class A-1C and Class A-2 Notes are included in these consolidated financial statements. The 2015-1 Issuer Preferred Interests were eliminated in consolidation.

On the closing date of the 2015-1 Debt Securitization, the 2015-1 Issuer effected a one-time distribution to the Company of a substantial portion of the proceeds of the private placement of the 2015-1 Notes, net of expenses, which distribution was used to repay a portion of certain amounts outstanding under the SPV Credit Facility and the Credit Facility. As part of the

2015-1 Debt Securitization, certain first and second lien senior secured loans were distributed by the SPV to the Company pursuant to a distribution and contribution agreement. The Company contributed the loans that comprised the initial closing date loan portfolio (including the loans distributed to the Company from the SPV) to the 2015-1 Issuer pursuant to a contribution agreement.

On August 30, 2018, the Company and the 2015-1 Issuer closed the 2015-1 Debt Securitization Refinancing. On the closing date of the 2015-1 Debt Securitization Refinancing, the 2015-1 Issuer, among other things, (a) refinanced the issued Class A-1A Notes by redeeming in full the Class A-1A Notes and issuing new AAA Class A-1-1-R Notes in an aggregate principal amount of $234,800 which bear interest at the three-month LIBOR plus 1.55%; (b) refinanced the issued Class A-1B Notes by redeeming in full the Class A-1B Notes and issuing new AAA Class A-1-2-R Notes in an aggregate principal amount of $50,000 which bear interest at the three-month LIBOR plus 1.48% for the first 24 months and the three-month LIBOR plus 1.78% thereafter; (c) refinanced the issued Class A-1C Notes by redeeming in full the Class A-1C Notes and issuing new AAA Class A-1-3-R Notes in an aggregate principal amount of $25,000 which bear interest at 4.56%; (d) refinanced the issued Class A-2 Notes by redeeming in full the Class A-2 Notes and issuing new Class A-2-R Notes in an aggregate principal amount of $66,000 which bear interest at the three-month LIBOR plus 2.20%; (e) issued new single-A Class B Notes and BBB- Class C Notes in aggregate principal amounts of $46,400 and $27,000, respectively, which bear interest at the three-month LIBOR plus 3.15% and the three-month LIBOR plus 4.00%, respectively; (f) reduced the 2015-1 Issuer Preferred Interests by approximately $21,375 from a nominal value of $125,900 to approximately $104,525 at close; and (g) extended the reinvestment period end date and maturity date applicable to the 2015-1 Issuer to October 15, 2023 and October 15, 2031, respectively. Following the 2015-1 Debt Securitization Refinancing, the Company retained the 2015-1 Issuer Preferred Interests. The 2015-1R Notes in the 2015-1 Debt Securitization Refinancing were issued by the 2015-1 Issuer and are secured by a diversified portfolio of the 2015-1 Issuer consisting primarily of first and second lien senior secured loans.

On the closing date of the 2015-1 Debt Securitization Refinancing, the 2015-1 Issuer effected a one-time distribution to the Company of a substantial portion of the proceeds of the private placement of the 2015-1R Notes, net of expenses, which distribution was used to repay a portion of certain amounts outstanding under the SPV Credit Facility and the Credit Facility. As part of the 2015-1 Debt Securitization Refinancing, certain first and second lien senior secured loans were distributed by the SPV to the Company pursuant to a distribution and contribution agreement. The Company contributed the loans that comprised the initial closing date loan portfolio (including the loans distributed to the Company from the SPV) to the 2015-1 Issuer pursuant to a contribution agreement. Future loan transfers from the Company to the 2015-1 Issuer will be made pursuant to a sale agreement and are subject to the approval of the Company’s Board of Directors. Assets of the 2015-1 Issuer are not available to the creditors of the SPV or the Company. In connection with the issuance and sale of the 2015-1R Notes, the Company made customary representations, warranties and covenants in the purchase agreement.

During the reinvestment period, pursuant to the indenture governing the 2015-1R Notes, all principal collections received on the underlying collateral may be used by the 2015-1 Issuer to purchase new collateral under the direction of Investment Adviser in its capacity as collateral manager of the 2015-1 Issuer and in accordance with the Company’s investment strategy.

The Investment Adviser serves as collateral manager to the 2015-1 Issuer under a collateral management agreement (the “Collateral Management Agreement”). Pursuant to the Collateral Management Agreement, the 2015-1 Issuer pays management fees (comprised of base management fees, subordinated management fees and incentive management fees) to the Investment Adviser for rendering collateral management services. As per the Collateral Management Agreement, for the period the Company retains all of the 2015-1 Issuer Preferred Interests, the Investment Adviser does not earn management fees for providing such collateral management services. The Company currently retains all of the 2015-1 Issuer Preferred Interests, thus the Investment Adviser did not earn any management fees from the 2015-1 Issuer for the three month and nine month periods ended September 30, 2018 and 2017. Any such waived fees may not be recaptured by the Investment Adviser.

Pursuant to an undertaking by the Company in connection with the 2015-1 Debt Securitization Refinancing, the Company has agreed to hold on an ongoing basis the 2015-1 Issuer Preferred Interests with an aggregate dollar purchase price at least equal to 5% of the aggregate outstanding amount of all collateral obligations by the 2015-1 Issuer for so long as any securities of the 2015-1 Issuer remain outstanding. As of September 30, 2018, the Company was in compliance with its undertaking.

The 2015-1 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 2015-1 Issuer.

As of September 30, 2018, there were 62 first lien and second lien senior secured loans with a total fair value of approximately $558,195 and cash of $36,651 securing the 2015-1R Notes. The pool of loans in the securitization 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 governing the 2015-1R Notes.

For the nine month periods ended September 30, 2018 and 2017, the effective annualized weighted average interest rates, which include amortization of debt issuance costs on the 2015-1R Notes and 2015-1 Notes, were 4.14% and 3.27%, respectively, based on floating LIBOR rates, excluding the one-time impact of the 2015-1 Debt Securitization Refinancing. As of September 30, 2018 and December 31, 2017, the weighted average interest rates were 4.14% and 3.44%, respectively, based on floating LIBOR rates.

For the three month and nine month periods ended September 30, 2018 and 2017, the components of interest expense on the 2015-1R Notes and 2015-1 Notes were as follows:



	For the three month periods ended				For the nine month periods ended
	September 30, 2018		September 30, 2017		September 30, 2018		September 30, 2017
Interest expense	$	3,613	$	2,336	$	9,061	$	6,625
Amortization of deferred financing costs	837		51		938		153
Total interest expense and credit facility fees	$	4,450	$	2,387	$	9,999	$	6,778
Cash paid for interest expense	$	4,456	$	2,213	$	9,414	$	6,380

Related to the 2015-1 Debt Securitization Refinancing, $652 of debt issuance costs were immediately expensed on August 30, 2018 in lieu of continuing to amortize over the term of the notes.

8. COMMITMENTS AND CONTINGENCIES

A summary of significant contractual payment obligations was as follows as of September 30, 2018 and December 31, 2017:



	SPV Credit Facility and Credit Facility				2015-1R Notes / 2015-1 Notes
Payment Due by Period	September 30, 2018		December 31, 2017		September 30, 2018		December 31, 2017
Less than 1 Year	$	—	$	—	$	—	$	—
1-3 Years	—		—		—		—
3-5 Years	554,299		562,893		—		—
More than 5 Years	—		—		449,200		273,000
Total	$	554,299	$	562,893	$	449,200	$	273,000

In the ordinary course of its business, the Company enters into contracts or agreements that contain indemnification or warranties. Future events could occur that lead to the execution of these provisions against the Company. The Company believes that the likelihood of such an event is remote; however, the maximum potential exposure is unknown. No accrual has been made in the consolidated financial statements as of September 30, 2018 and December 31, 2017 for any such exposure.

The Company had the following unfunded commitments to fund delayed draw and revolving senior secured loans as of the indicated dates:



	Par Value as of
	September 30, 2018		December 31, 2017
Unfunded delayed draw commitments	$	132,485	$	78,991
Unfunded revolving term loan commitments	52,736		39,383
Total unfunded commitments	$	185,221	$	118,374

9. NET ASSETS

The Company has the authority to issue 200,000,000 shares of common stock, $0.01 per share par value.

During the nine month period ended September 30, 2018, the Company issued 361,048 shares for $6,629 through the reinvestment of dividends. The following table summarizes capital activity during the nine month period ended September 30, 2018:



	Common Stock			Capital in Excess of Par Value		Offering Costs			Accumulated Net Investment Income (Loss)			Accumulated Net Realized Gain (Loss) on Investments			Accumulated Net Unrealized Appreciation (Depreciation) on Investments			Total Net Assets
	Shares	Amount		Capital in Excess of Par Value		Offering Costs			Accumulated Net Investment Income (Loss)			Accumulated Net Realized Gain (Loss) on Investments						Total Net Assets
Balance, beginning of period	62,207,603	$	622	$	1,172,807	$	(1,618	)	$	2,522		$	(43,548	)	$	(3,481	)	$	1,127,304
Reinvestment of dividends	361,048	4		6,625		—			—			—			—			6,629
Offering costs	—	—		—		(15		)	—			—			—			(15		)
Net investment income (loss)	—	—		—		—			79,025			—			—			79,025
Net realized gain (loss) on investments	—	—		—		—			—			(2,987		)	—			(2,987		)
Net change in unrealized appreciation (depreciation) on investments	—	—		—		—			—			—			(35,763		)	(35,763		)
Dividends declared	—	—		—		—			(69,451		)	—			—			(69,451		)
Balance, end of period	62,568,651	$	626	$	1,179,432	$	(1,633	)	$	12,096		$	(46,535	)	$	(39,244	)	$	1,104,742

During the nine month period ended September 30, 2017, the Company issued 20,157,530 shares for $367,221, including the reinvestment of dividends. In connection with the NFIC Acquisition, the Company issued 434,233 shares of common stock valued at approximately $8,046. See Note 13 for additional information regarding the NFIC Acquisition. In connection with the Company's IPO, the Company issued 9,454,200 shares of common stock (including shares issued pursuant to the exercise of the underwriters' over-allotment option) at a public offering price of $18.50 per share. Net of underwriting costs, the Company received cash proceeds of $169,488. The following table summarizes capital activity during the nine month period ended September 30, 2017:



	Common Stock			Capital in Excess of Par Value		Offering Costs			Accumulated Net Investment Income (Loss)			Accumulated Net Realized Gain (Loss) on Investments			Accumulated Net Unrealized Appreciation (Depreciation) on Investments			Total Net Assets
	Shares	Amount		Capital in Excess of Par Value		Offering Costs			Accumulated Net Investment Income (Loss)			Accumulated Net Realized Gain (Loss) on Investments						Total Net Assets
Balance, beginning of period	41,702,318	$	417	$	799,580	$	(74	)	$	(3,207	)	$	(25,357	)	$	(7,222	)	$	764,137
Common stock issued	20,146,560	202		366,817		—			—			—			—			367,019
Reinvestment of dividends	10,970	—		202		—			—			—			—			202
Offering costs	—	—		—		(1,514		)	—			—			—			(1,514		)
Net investment income (loss)	—	—		—		—			65,635			—			—			65,635
Net realized gain (loss) on investments	—	—		—		—			—			(7,724		)	—			(7,724		)
Net change in unrealized appreciation (depreciation) on investments	—	—		—		—			—			—			(694		)	(694		)
Dividends declared	—	—		—		—			(62,708		)	—			—			(62,708		)
Balance, end of period	61,859,848	$	619	$	1,166,599	$	(1,588	)	$	(280	)	$	(33,081	)	$	(7,916	)	$	1,124,353

The following table summarizes total shares issued and proceeds received related to capital activity during the nine month period ended September 30, 2018:



	Shares Issued	Proceeds Received
January 17, 2018*	361,048	$	6,629
Total	361,048	$	6,629

* Represents shares issued upon the reinvestment of dividends

The following table summarizes total shares issued and proceeds received related to capital activity during the nine month period ended September 30, 2017:



	Shares Issued	Proceeds Received
January 24, 2017*	5,837	$	108
April 24, 2017	5,133	94
May 19, 2017	2,141,416	39,488
June 9, 2017	8,116,711	149,997
June 9, 2017**	434,233	8,046
June 19, 2017***	9,000,000	161,505
July 5, 2017	454,200	7,983
Total	20,157,530	$	367,221

* Represents shares issued upon the reinvestment of dividends

** Represents shares issued in accordance with the elections of the NFIC stockholders pursuant to the NFIC Acquisition (see Note 13, NFIC Acquisition)

*** Represents shares issued and net proceeds received in connection with the Company’s IPO

Subscription transactions during the nine month period ended September 30, 2017 were executed at an offering price at a premium to net asset value due to the requirement to use prior quarter net asset value as offering price unless it would result in the Company selling shares of its common stock at a price below the current net asset value and also in order to effect a reallocation of organizational costs to subsequent investors. Additionally, on June 19, 2017, the Company closed its IPO, issuing 9,454,200 shares of its common stock at a public offering price of $18.50 per share. Net of underwriting and offering costs, the common stock issued in the IPO and net asset value experienced dilution during the period, and such subscription and IPO transactions increased/(decreased) net asset value by $(0.10) per share for the nine month period ended September 30, 2017.

The Company computes earnings per common share in accordance with ASC 260, Earnings Per Share. Basic earnings per common share were calculated by dividing net increase (decrease) in net assets resulting from operations attributable to the Company by the weighted-average number of common shares outstanding for the period.

Basic and diluted earnings per common share were as follows:



	For the three month periods ended				For the nine month periods ended
	September 30, 2018		September 30, 2017		September 30, 2018		September 30, 2017
Net increase (decrease) in net assets resulting from operations	$	6,080	$	25,543	$	40,275	$	57,217
Weighted-average common shares outstanding	62,568,651		61,840,100		62,546,168		49,915,318
Basic and diluted earnings per common share	$	0.10	$	0.41	$	0.64	$	1.15

The following table summarizes the Company’s dividends declared during the two most recent fiscal years and the current fiscal year to-date:



Date Declared	Record Date	Payment Date	Per Share Amount
March 10, 2016	March 14, 2016	April 22, 2016	$	0.40
June 8, 2016	June 8, 2016	July 22, 2016	$	0.40
September 28, 2016	September 28, 2016	October 24, 2016	$	0.40
December 29, 2016	December 29, 2016	January 24, 2017	$	0.41
December 29, 2016	December 29, 2016	January 24, 2017	$	0.07	⁽¹⁾
March 20, 2017	March 20, 2017	April 24, 2017	$	0.41
June 20, 2017	June 30, 2017	July 18, 2017	$	0.37
August 7, 2017	September 29, 2017	October 18, 2017	$	0.37
November 7, 2017	December 29, 2017	January 17, 2018	$	0.37
December 13, 2017	December 29, 2017	January 17, 2018	$	0.12	⁽¹⁾
February 26, 2018	March 29, 2018	April 17, 2018	$	0.37
May 2, 2018	June 29, 2018	July 17, 2018	$	0.37
August 6, 2018	September 28, 2018	October 17, 2018	$	0.37


⁽¹⁾	Represents a special dividend.

10. CONSOLIDATED FINANCIAL HIGHLIGHTS

The following is a schedule of consolidated financial highlights for the nine month periods ended September 30, 2018 and 2017:



	For the nine month periods ended
	September 30, 2018			September 30, 2017
Per Share Data:
Net asset value per share, beginning of period	$	18.12		$	18.32
Net investment income (loss) (1)	1.27			1.31
Net realized gain (loss) and net change in unrealized appreciation (depreciation) on investments	(0.62		)	(0.20		)
Net increase (decrease) in net assets resulting from operations	0.65			1.11
Dividends declared (2)	(1.11		)	(1.15		)
Effect of offering price of subscriptions and the offering price of common stock in the IPO, net of underwriting and offering costs (3)	—			(0.10		)
Net asset value per share, end of period	$	17.66		$	18.18
Market price per share, end of period	$	16.70		$	18.82

Number of shares outstanding, end of period	62,568,651			61,859,848
Total return based on net asset value (4)	3.59		%	5.51		%
Total return based on market price (5)	(11.13		)%	5.73		%
Net assets, end of period	$	1,104,742		$	1,124,353
Ratio to average net assets (6):
Expenses net of waiver, before incentive fees	4.89		%	3.68		%
Expenses net of waiver, after incentive fees	6.37		%	5.34		%
Expenses gross of waiver, after incentive fees	6.37		%	5.97		%
Net investment income (loss) (7)	6.97		%	7.03		%
Interest expense and credit facility fees	2.52		%	1.95		%
Ratios/Supplemental Data:
Asset coverage, end of period	210.09		%	232.00		%
Portfolio turnover	28.44		%	34.13		%
Weighted-average shares outstanding	62,546,168			49,915,318


(1)	Net investment income (loss) per share was calculated as net investment income (loss) for the period divided by the weighted average number of shares outstanding for the period.


(2)	Dividends declared per share was calculated as the sum of dividends declared during the period divided by the number of shares outstanding at each respective quarter-end date (refer to Note 9).


(3)	Increase (decrease) is due to the offering price of subscriptions and the issuance of common stock in the IPO, net of underwriting and offering costs during the period (refer to Note 9).

(4)

Total return based on net asset value (not annualized) is based on the change in net asset value per share during the period plus the declared dividends, assuming reinvestment of dividends in accordance with the dividend reinvestment plan, divided by the beginning net asset value for the period. Total return for the nine month periods ended September 30, 2018 and 2017 is inclusive of $0.00 and $(0.10), respectively, per share increase (decrease) in net asset value for the periods related to the offering price of subscriptions and the offering price of common stock in the IPO, net of underwriting and offering costs during the period. Excluding the effects of these common stock issuances, total return (not annualized) would have been 3.59% and 6.06%, respectively (refer to Note 9).


(5)	Total return based on market value (not annualized) is calculated as the change in market value per share during the period plus the declared dividends, assuming reinvestment of dividends in accordance with the dividend reinvestment plan, divided by the beginning market price for the period.


(6)	These ratios to average net assets have not been annualized.


(7)	The net investment income ratio is net of the waiver of base management fees, which terminated on September 30, 2017.

11. LITIGATION

The Company may become party to certain lawsuits in the ordinary course of business. The Company does not believe that the outcome of current matters, if any, will materially impact the Company or its consolidated financial statements. As of September 30, 2018 and December 31, 2017, the Company was not subject to any material legal proceedings, nor, to the Company’s knowledge, is any material legal proceeding threatened against the Company.

In addition, portfolio investments of the Company could be the subject of litigation or regulatory investigations in the ordinary course of business. The Company does not believe that the outcome of any current contingent liabilities of its portfolio investments, if any, will materially affect the Company or these consolidated financial statements.

12. TAX

The Company has not recorded a liability for any uncertain tax positions pursuant to the provisions of ASC 740, Income Taxes, as of September 30, 2018 and December 31, 2017.

In the normal course of business, the Company is subject to examination by federal and certain state, local and foreign tax regulators. As of September 30, 2018 and December 31, 2017, the Company had filed tax returns and therefore is subject to examination.

The Company’s taxable income for each period is an estimate and will not be finally determined until the Company files its tax return for each year. Therefore, the final taxable income, and the taxable income earned in each period and carried forward for distribution in the following period, may be different than this estimate. The estimated tax character of dividends declared for nine month periods ended September 30, 2018 and 2017 was as follows:



	For the nine month periods ended
	September 30, 2018		September 30, 2017
Ordinary income	$	69,451	$	62,708
Tax return of capital	$	—	$	—

13. NFIC ACQUISITION

On June 9, 2017 (the "Acquisition Date"), the Company closed the NFIC Acquisition, with the Company as the surviving entity. As of the effective time of the NFIC Acquisition, each share of common stock of NFIC was converted into the right to receive a mixture of cash and shares of common stock of the Company, in accordance with the elections of the NFIC stockholders (the “Elections”). Based on the results of the Elections, the NFIC stockholders received in the aggregate 434,233 shares of common stock of the Company and approximately $145,602 in cash.

The NFIC Acquisition was accounted for under the asset acquisition method of accounting in accordance with ASC Topic 805, Business Combinations. As the acquirer for accounting purposes, the Company allocated the purchase price based on the estimated fair value of NFIC’s assets acquired and liabilities assumed as of the Acquisition Date. There was no goodwill created because the NFIC Acquisition was accounted for as an asset acquisition.

The Company used the fair market value of NFIC’s assets and liabilities as of the Acquisition Date to account for the NFIC Acquisition. The following table summarizes the assets and liabilities of NFIC as of the Acquisition Date:



ASSETS
Total investments, at fair value	$	190,672
Cash and other assets	12,464
Total assets	$	203,136
LIABILITIES
Secured borrowings	$	42,128
Other accrued expenses and liabilities	7,360
Total liabilities	49,488
NET ASSETS
Total net assets	$	153,648

On June 9, 2017, the debt assumed as part of the NFIC Acquisition was fully repaid.

During the three month and nine month periods ended September 30, 2017, the Company incurred $322 in professional fees and other costs related to the NFIC Acquisition. The Company determined that the fair value of the net assets acquired equaled the purchase price excluding these costs. Accordingly, these costs related to the NFIC Acquisition were expensed.

14. SUBSEQUENT EVENTS

Subsequent events have been evaluated through the date the consolidated financial statements were issued. There have been no subsequent events that require recognition or disclosure through the date the consolidated financial statements were issued, except as disclosed below.

Subsequent to September 30, 2018, the Company borrowed $15,600 under the Credit Facility and SPV Credit Facility to fund investment acquisitions. The Company also voluntarily repaid $92,630 under the Credit Facility and SPV Credit Facility.

On November 5, 2018, the Company’s Board of Directors approved a $100 million stock repurchase program. Pursuant to the program, the Company is authorized to repurchase up to $100 million in the aggregate of its outstanding common stock in the open market and/or through privately negotiated transactions at prices not to exceed the Company’s net asset value per share as reported in its most recent financial statements, in accordance with the guidelines specified in Rule 10b-18 of the Exchange Act. The timing, manner, price and amount of any repurchases will be determined by the Company, in its discretion, based upon the evaluation of economic and market conditions, stock price, available cash, applicable legal and regulatory requirements and other factors, and may include purchases pursuant to Rule 10b5-1 of the Exchange Act. The program is expected to be in effect until November 5, 2019, or until the approved dollar amount has been used to repurchase shares. The program does not require the Company to repurchase any specific number of shares and there can be no assurance that any shares will be repurchased under the program. The program may be suspended, extended, modified or discontinued by the Company at any time.

On November 5, 2018, the Board of Directors declared a quarterly dividend of $0.37 per share, which is payable on January 17, 2019 to stockholders of record as of December 28, 2018.

Item 2. Management’s Discussion and Analysis of Financial Condition and Results of Operations.

(dollar amounts in thousands, except per share data, unless otherwise indicated)

CAUTIONARY STATEMENT REGARDING FORWARD-LOOKING STATEMENTS

We have included or incorporated by reference in this Form 10-Q, and from time to time our management may make, “forward-looking statements”. These forward-looking statements are not historical facts, but instead relate to future events or the future performance or financial condition of TCG BDC, Inc. (together with its consolidated subsidiaries, “we,” “us,” “our,” “TCG BDC” or the “Company”). These statements are based on current expectations, estimates and projections about us, our current or prospective portfolio investments, our industry, our beliefs, and our assumptions. The forward-looking statements contained in this Form 10-Q and the documents incorporated by reference herein involve a number of risks and uncertainties, including statements concerning:


•	our, or our portfolio companies’, future business, operations, operating results or prospects;


•	the return or impact of current and future investments;


•	the impact of any protracted decline in the liquidity of credit markets on our business;


•	the impact of fluctuations in interest rates on our business;


•	currency fluctuations could adversely affect the results of our investments in foreign companies, particularly to the extent that we receive payments denominated in foreign currency rather than U.S. dollars;


•	our future operating results;


•	the impact of changes in laws, policies or regulations (including the interpretation thereof) affecting our operations or the operations of our portfolio companies;


•	the valuation of our investments in portfolio companies, particularly those having no liquid trading market;


•	our ability to recover unrealized losses;


•	market conditions and our ability to access alternative debt markets and additional debt and equity capital;


•	our contractual arrangements and relationships with third parties;


•	the general economy and its impact on the industries in which we invest;


•	the financial condition of and ability of our current and prospective portfolio companies to achieve their objectives;


•	competition with other entities and our affiliates for investment opportunities;


•	the speculative and illiquid nature of our investments;


•	the use of borrowed money to finance a portion of our investments;


•	our expected financings and investments;


•	the adequacy of our cash resources and working capital;


•	the loss of key personnel;


•	the costs associated with being a public entity;


•	the timing, form and amount of any dividend distributions;


•	the timing of cash flows, if any, from the operations of our portfolio companies;


•	the ability to consummate acquisitions;


•	the ability of our investment adviser to locate suitable investments for us and to monitor and administer our investments;


•	the ability of The Carlyle Group Employee Co., L.L.C. to attract and retain highly talented professionals that can provide services to our investment adviser and administrator;


•	our ability to maintain our status as a business development company; and


•	our intent to satisfy the requirements of a regulated investment company under Subchapter M of the Internal Revenue Code of 1986, as amended.

We use words such as “anticipates,” “believes,” “expects,” “intends,” “will,” “should,” “may,” “plans,” “continue,” “believes,” “seeks,” “estimates,” “would,” “could,” “targets,” “projects,” “outlook,” “potential,” “predicts” and variations of these words and similar expressions to identify forward-looking statements, although not all forward-looking statements include these words. Our actual results and condition could differ materially from those implied or expressed in the forward-looking statements for any reason, including the factors set forth in “Risk Factors” in Part I, Item 1A of our annual report on Form 10-K for the year ended December 31, 2017 and Part II, Item 1A of and elsewhere in this Form 10-Q.

We have based the forward-looking statements included in this Form 10-Q on information available to us on the date of this Form 10-Q, and we assume no obligation to update any such forward-looking statements. Although we undertake no obligation to revise or update any forward-looking statements, whether as a result of new information, future events or otherwise, you are advised to consult any additional disclosures that we may make directly to you or through reports that we have filed or in the future may file with the Securities and Exchange Commission (the “SEC”), including our annual reports on Form 10-K, quarterly reports on Form 10-Q and current reports on Form 8-K.

OVERVIEW

The following discussion and analysis of our financial condition and results of operations should be read in conjunction with Part I, Item 1 of this Form 10-Q “Financial Statements.” This discussion contains forward-looking statements and involves numerous risks and uncertainties, including, but not limited to those described in Part I, Item 1A of our annual report on Form 10-K for the year ended December 31, 2017 and Part II, Item 1A of this Form 10-Q “Risk Factors.” Our actual results could differ materially from those anticipated by such forward-looking statements due to factors discussed under “Risk Factors” and “Cautionary Statements Regarding Forward-Looking Statements” appearing elsewhere in this Form 10-Q.

We are a Maryland corporation formed on February 8, 2012, and structured as an externally managed, non-diversified closed-end investment company. We have elected to be regulated as a BDC under the Investment Company Act. We have elected to be treated, and intend to continue to comply with the requirements to qualify annually, as a RIC under Subchapter M of the Code.

Our investment objective is to generate current income and capital appreciation primarily through debt investments in U.S. middle market companies, which we define as companies with approximately $10 million to $100 million of EBITDA. We seek to achieve our investment objective primarily through direct originations of Middle Market Senior Loans, with the balance of our assets invested in higher yielding investments (which may include unsecured debt, mezzanine debt and investments in equities). We generally make Middle Market Senior Loans to private U.S. middle market companies that are, in many cases, controlled by private equity firms. Depending on market conditions, we expect that between 70% and 80% of the value of our assets will be invested in Middle Market Senior Loans. We expect that the composition of our portfolio will change over time given our Investment Adviser’s view on, among other things, the economic and credit environment (including with respect to interest rates) in which we are operating.

On June 9, 2017, we acquired NFIC, a BDC managed by our Investment Advisor. As a result, we issued 434,233 shares of common stock and paid approximately $145,602 in cash to the NFIC stockholders, and acquired approximately $153,648 in net assets.

On June 19, 2017, we closed our IPO, issuing 9,454,200 shares of our common stock (including shares issued pursuant to the exercise of the underwriters’ over-allotment option on July 5, 2017) at a public offering price of $18.50 per share. Net of underwriting costs, we received cash proceeds of $169,488. Shares of common stock of TCG BDC began trading on the NASDAQ Global Select Market under the symbol “CGBD” on June 14, 2017.

We are externally managed by our Investment Adviser, an investment adviser registered under the Advisers Act. Our Administrator provides the administrative services necessary for us to operate. Both our Investment Adviser and our Administrator are wholly owned subsidiaries of Carlyle Investment Management L.L.C., a subsidiary of Carlyle.

In conducting our investment activities, we believe that we benefit from the significant scale and resources of Carlyle, including our Investment Adviser and its affiliates. We have operated our business as a BDC since we began our investment activities in May 2013.

Investments

Our level of investment activity can and does vary substantially from period to period depending on many factors, including the amount of debt available to middle market companies, the general economic environment and the competitive environment for the type of investments we make.

Revenue

We generate revenue primarily in the form of interest income on debt investments we hold. In addition, we generate income from dividends on direct equity investments, capital gains on the sales of loans and debt and equity securities and various loan origination and other fees. Our debt investments generally have a stated term of five to eight years and generally bear interest at a floating rate usually determined on the basis of a benchmark such as LIBOR. Interest on these debt investments is generally paid quarterly. In some instances, we receive payments on our debt investments based on scheduled amortization of the outstanding balances. In addition, we receive repayments of some of our debt investments prior to their scheduled maturity date. The frequency or volume of these repayments fluctuates significantly from period to period. Our portfolio activity also reflects the proceeds of sales of securities. We may also generate revenue in the form of commitment, origination, amendment, structuring or due diligence fees, fees for providing managerial assistance and consulting fees.

Expenses

Our primary operating expenses include the payment of: (i) investment advisory fees, including base management fees and incentive fees, to our Investment Adviser pursuant to an investment advisory agreement (the “Investment Advisory Agreement”) between us and our Investment Adviser; (ii) costs and other expenses and our allocable portion of overhead incurred by our Administrator in performing its administrative obligations under an administration agreement (the “Administration Agreement”) between us and our Administrator; and (iii) other operating expenses as detailed below:


•	the costs associated with the private offering of our common stock prior to our IPO;


•	the costs of any other offerings of our common stock and other securities, if any;


•	calculating individual asset values and our net asset value (including the cost and expenses of any independent valuation firms);


•	expenses, including travel expenses, incurred by our Investment Adviser, or members of our Investment Adviser team managing our investments, or payable to third parties, performing due diligence on prospective portfolio companies and, if necessary, expenses of enforcing our rights;


•	the base management fee and any incentive fee payable under our Investment Advisory Agreement;


•	certain costs and expenses relating to distributions paid on our shares;


•	administration fees payable under our Administration Agreement and sub-administration agreements, including related expenses;


•	debt service and other costs of borrowings or other financing arrangements;


•	the allocated costs incurred by our Investment Adviser in providing managerial assistance to those portfolio companies that request it;


•	amounts payable to third parties relating to, or associated with, making or holding investments;


•	the costs associated with subscriptions to data service, research-related subscriptions and expenses and quotation equipment and services used in making or holding investments;


•	transfer agent and custodial fees;


•	costs of hedging;


•	commissions and other compensation payable to brokers or dealers;


•	federal and state registration fees;


•	any U.S. federal, state and local taxes, including any excise taxes;


•	independent director fees and expenses;


•	costs of preparing financial statements and maintaining books and records, costs of preparing tax returns, costs of Sarbanes-Oxley Act compliance and attestation and costs of filing reports or other documents with the SEC (or other

regulatory bodies), and other reporting and compliance costs, including registration and listing fees, and the compensation of professionals responsible for the preparation or review of the foregoing;


•	the costs of any reports, proxy statements or other notices to our stockholders (including printing and mailing costs), the costs of any stockholders’ meetings and the compensation of investor relations personnel responsible for the preparation of the foregoing and related matters;


•	the costs of specialty and custom software for monitoring risk, compliance and overall portfolio, including any development costs incurred prior to the filing of our election to be regulated as a BDC;


•	our fidelity bond;


•	directors and officers/errors and omissions liability insurance, and any other insurance premiums;


•	indemnification payments;


•	direct fees and expenses associated with independent audits, agency, consulting and legal costs; and


•	all other expenses incurred by us or our Administrator in connection with administering our business, including our allocable share of certain officers and their staff compensation.

We expect our general and administrative expenses to be relatively stable or to decline as a percentage of total assets during periods of asset growth and to increase during periods of asset declines.

PORTFOLIO AND INVESTMENT ACTIVITY

As of September 30, 2018, the fair value of our investments was approximately $2,018,998, comprised of 116 investments in 94 portfolio companies/investment fund across 27 industries with 57 sponsors. As of December 31, 2017, the fair value of our investments was approximately $1,967,531, comprised of 107 investments in 90 portfolio companies/investment fund across 28 industries with 57 sponsors.

Based on fair value as of September 30, 2018, our portfolio consisted of approximately 87.8% in secured debt (79.3% in first lien debt (including 9.9% in first lien/last out loans) and 8.5% in second lien debt), 11.1% in Credit Fund and 1.2% in equity investments. Based on fair value as of September 30, 2018, approximately 0.8% of our debt portfolio was invested in debt bearing a fixed interest rate and approximately 99.2% of our debt portfolio was invested in debt bearing a floating interest rate, which primarily are subject to interest rate floors.

Based on fair value as of December 31, 2017, our portfolio consisted of approximately 90.3% in secured debt (77.8% in first lien debt (including 12.1% in first lien/last out loans) and 12.5% in second lien debt), 8.8% in Credit Fund and 0.9% in equity investments. Based on fair value as of December 31, 2017, approximately 0.7% of our debt portfolio was invested in debt bearing a fixed interest rate and approximately 99.3% of our debt portfolio was invested in debt bearing a floating interest rate, which primarily are subject to interest rate floors.

Our investment activity for the three month periods ended September 30, 2018 and 2017 is presented below (information presented herein is at amortized cost unless otherwise indicated):



	For the three month periods ended
	September 30, 2018			September 30, 2017
Investments:
Total investments, beginning of period	$	1,971,064		$	1,727,680
New investments purchased	228,534			310,633
Net accretion of discount on investments	2,328			1,832
Net realized gain (loss) on investments	(4,633		)	172
Investments sold or repaid	(139,051		)	(68,284		)
Total Investments, end of period	$	2,058,242		$	1,972,033
Principal amount of investments funded:
First Lien Debt (excluding First Lien/Last Out)	$	181,334		$	213,164
First Lien/Last Out Unitranche	3,547			60,081
Second Lien Debt	11,766			29,250
Structured Finance Obligations	—			—
Equity Investments	190			1,500
Investment Fund	34,500			12,600
Total	$	231,337		$	316,595
Principal amount of investments sold or repaid:
First Lien Debt (excluding First Lien/Last Out)	$	(98,023	)	$	(47,407	)
First Lien/Last Out Unitranche	(24,770		)	(63		)
Second Lien Debt	(1,801		)	(12,500		)
Structured Finance Obligations	—			—
Equity Investments	—			—
Investment Fund	(19,000		)	(8,400		)
Total	$	(143,594	)	$	(68,370	)
Number of new funded investments	11			11
Average amount of new funded investments	$	20,776		$	28,239
Percentage of new funded debt investments at floating interest rates	100		%	100		%
Percentage of new funded debt investments at fixed interest rates	—		%	—		%

As of September 30, 2018 and December 31, 2017, investments consisted of the following:



	September 30, 2018				December 31, 2017
	Amortized Cost		Fair Value		Amortized Cost		Fair Value
First Lien Debt (excluding First Lien/Last Out)	$	1,414,147	$	1,402,279	$	1,295,406	$	1,293,641
First Lien/Last Out Unitranche	234,321		199,350		246,925		237,635
Second Lien Debt	168,605		170,657		242,887		246,233
Equity Investments	17,168		23,308		13,543		17,506
Investment Fund	224,001		223,404		172,251		172,516
Total	$	2,058,242	$	2,018,998	$	1,971,012	$	1,967,531

The weighted average yields ⁽¹⁾ for our first and second lien debt, based on the amortized cost and fair value as of September 30, 2018 and December 31, 2017, were as follows:



	September 30, 2018				December 31, 2017
	Amortized Cost		Fair Value		Amortized Cost		Fair Value
First Lien Debt (excluding First Lien/Last Out)	8.88	%	8.96	%	8.35	%	8.36	%
First Lien/Last Out Unitranche	10.20	%	11.99	%	10.02	%	10.41	%
First Lien Debt Total	9.07	%	9.33	%	8.62	%	8.68	%
Second Lien Debt	11.01	%	10.88	%	10.44	%	10.30	%
First and Second Lien Debt Total	9.25	%	9.48	%	8.86	%	8.90	%

(1)

Total weighted average yields (which includes the effect of accretion of discount and amortization of premiums) of our first and second lien debt investments as measured on an amortized cost basis increased from 8.86% to 9.25% from December 31, 2017 to September 30, 2018. The increase in weighted average yields was primarily due to the increase in 90-day LIBOR from 1.69% to 2.40%, partially offset by borrower refinancing and loans placed on non-accrual status.

The following table summarizes the fair value of our performing and non-performing investments as of September 30, 2018 and December 31, 2017:



	September 30, 2018				December 31, 2017
	Fair Value		Percentage		Fair Value		Percentage
Performing	$	2,002,607	99.2	%	$	1,948,044	99.0	%
Non-accrual ⁽¹⁾	16,391		0.8		19,487		1.0
Total	$	2,018,998	100.0	%	$	1,967,531	100.0	%

(1)

Loans are generally placed on non-accrual status when principal or interest payments are past due 30 days or more or when there is reasonable doubt that principal or interest will be collected in full. Accrued and unpaid interest is generally reversed when a loan is placed on non-accrual status. Interest payments received on non-accrual loans may be recognized as income or applied to principal depending upon management’s judgment regarding collectability. Non-accrual loans are restored to accrual status when past due principal and interest has been paid current and, in management’s judgment, likely to remain current. Management may not place a loan on non-accrual status if the loan has sufficient collateral value and is in the process of collection. See Note 2 to the consolidated financial statements included in Part I, Item 1 of this Form 10-Q for more information on the accounting policies.

See the Consolidated Schedules of Investments as of September 30, 2018 and December 31, 2017 in our consolidated financial statements in Part I, Item 1 of this Form 10-Q for more information on these investments, including a list of companies and type and amount of investments.

As part of the monitoring process, our Investment Adviser has developed risk policies pursuant to which it regularly assesses the risk profile of each of our debt investments and rates each of them based on the following categories, which we refer to as “Internal Risk Ratings”:

Internal Risk Ratings Definitions



Rating		Definition
1		Performing—Low Risk: Borrower is operating more than 10% ahead of the base case.

2		Performing—Stable Risk: Borrower is operating within 10% of the base case (above or below). This is the initial rating assigned to all new borrowers.

3		Performing—Management Notice: Borrower is operating more than 10% below the base case. A financial covenant default may have occurred, but there is a low risk of payment default.

4		Watch List: Borrower is operating more than 20% below the base case and there is a high risk of covenant default, or it may have already occurred. Payments are current although subject to greater uncertainty, and there is moderate to high risk of payment default.

5		Watch List—Possible Loss: Borrower is operating more than 30% below the base case. At the current level of operations and financial condition, the borrower does not have the ability to service and ultimately repay or refinance all outstanding debt on current terms. Payment default is very likely or may have occurred. Loss of principal is possible.

6		Watch List—Probable Loss: Borrower is operating more than 40% below the base case, and at the current level of operations and financial condition, the borrower does not have the ability to service and ultimately repay or refinance all outstanding debt on current terms. Payment default is very likely or may have already occurred. Additionally, the prospects for improvement in the borrower’s situation are sufficiently negative that impairment of some or all principal is probable.

Our Investment Adviser’s risk rating model is based on evaluating portfolio company performance in comparison to the base case when considering certain credit metrics including, but not limited to, adjusted EBITDA and net senior leverage as well as specific events including, but not limited to, default and impairment.

Our Investment Adviser monitors and, when appropriate, changes the investment ratings assigned to each debt investment in our portfolio. In connection with our quarterly valuation process, our Investment Adviser reviews our investment ratings on a regular basis. The following table summarizes the Internal Risk Ratings as of September 30, 2018 and December 31, 2017:



	September 30, 2018				December 31, 2017
	Fair Value		% of Fair Value		Fair Value		% of Fair Value
(dollar amounts in millions)
Internal Risk Rating 1	$	104.7	5.91	%	$	73.7	4.15	%
Internal Risk Rating 2	1,298.0		73.24		1,399.6		78.74
Internal Risk Rating 3	224.7		12.68		170.2		9.57
Internal Risk Rating 4	119.1		6.72		103.3		5.81
Internal Risk Rating 5	9.4		0.53		30.7		1.73
Internal Risk Rating 6	16.4		0.92		—		—
Total	$	1,772.3	100.00	%	$	1,777.5	100.00	%

As of each of September 30, 2018 and December 31, 2017, the weighted average Internal Risk Rating of our debt investment portfolio was 2.3 and 2.2, respectively. As of September 30, 2018 and December 31, 2017, 11 and 10 of our debt investments, with an aggregate fair value of $144.9 million and $134.0 million, respectively, were assigned an Internal Risk Rating of 4-6 (the “Watch List”). As of September 30, 2018 and December 31, 2017, two and one first lien debt investment in the portfolio with a fair value of $16.4 million and $19.5 million, respectively, were on non-accrual status, which represented approximately 0.8% and 1.0%, respectively, of total investments at fair value. The remaining first and second lien debt investments were performing and current on their interest payments as of September 30, 2018 and December 31, 2017.

During the nine month period ended September 30, 2018, 5 investments with fair value of $78.5 million were downgraded to the Watch List due to changes in financial condition and performance of the respective portfolio companies, 2 investments with fair value of $17.4 million were upgraded and removed from the Watch List due to improved performance of the portfolio company, and 2 investments with fair value of $16.2 million at December 31, 2017 were removed from the Watch List due to repayments in full.

CONSOLIDATED RESULTS OF OPERATIONS

For the three month and nine month periods ended September 30, 2018 and 2017

The net increase or decrease in net assets from operations may vary substantially from period to period as a result of various factors, including the recognition of realized gains and losses and net change in unrealized appreciation and depreciation. As a result, quarterly comparisons may not be meaningful.

Investment Income

Investment income for the three month and nine month periods ended September 30, 2018 and 2017 was as follows:



	For the three month periods ended				For the nine month periods ended
	September 30, 2018		September 30, 2017		September 30, 2018		September 30, 2017
First Lien Debt	$	39,437	$	29,336	$	110,801	$	84,922
Second Lien Debt	4,543		7,461		19,343		17,255
Equity Investments	—		—		63		2
Investment Fund	7,201		5,812		20,780		13,193
Cash	99		39		228		119
Total investment income	$	51,280	$	42,648	$	151,215	$	115,491

The increase in investment income for the three month and nine month periods ended September 30, 2018 from the comparable periods in 2017 was primarily driven by our increasing invested balance, an increase in LIBOR, and increased interest and dividend income from Credit Fund. As of September 30, 2018, the size of our portfolio increased to $2,058,242 from $1,972,033 as of September 30, 2017, at amortized cost, and total principal amount of investments outstanding increased to $2,089,143 from $2,008,693 as of September 30, 2017. As of September 30, 2018, the weighted average yield of our first and second lien debt increased to 9.25% from 8.61% as of September 30, 2017 on amortized cost, primarily due to the increase in LIBOR, partially offset by borrower refinancing and loans placed on non-accrual status.

Interest income on our first and second lien debt investments is dependent on the composition and credit quality of the portfolio. Generally, we expect the portfolio to generate predictable quarterly interest income based on the terms stated in each loan’s credit agreement. As of September 30, 2018 and 2017, two and one first lien debt investments in the portfolio were on non-accrual with fair value of $16,391 and $22,808, respectively, which represents approximately 0.8% and 1.16% of total investments at fair value, respectively. The remaining first and second lien debt investments were performing and current on their interest payments as of September 30, 2018 and 2017.

For the three month periods ended September 30, 2018 and 2017, the Company earned $1,925 and $1,318, respectively, in other income. For the nine month periods ended September 30, 2018 and 2017, the Company earned $6,410 and $7,900, respectively, in other income. The decrease in other income for the nine month period ended September 30, 2018 from the comparable period in 2017 was primarily driven by lower syndication fees and prepayment fees.

Our total dividend and interest income from investments in Credit Fund totaled $7,201 and $20,780 for the three month and nine month periods ended September 30, 2018, respectively. Our total dividend and interest income from investments in Credit Fund totaled $5,812 and $13,193 for the three month and nine month periods ended September 30, 2017, respectively. The increase was primarily driven by increased invested balance of Credit Fund for three month and nine month periods ended September 30, 2018 from the comparable periods in 2017 and an increase in LIBOR.

Net investment income for the three month and nine month periods ended September 30, 2018 and 2017 was as follows:



	For the three month periods ended				For the nine month periods ended
	September 30, 2018		September 30, 2017		September 30, 2018		September 30, 2017
Total investment income	$	51,280	$	42,648	$	151,215	$	115,491
Net expenses	25,595		17,568		72,190		49,856
Net investment income (loss)	$	25,685	$	25,080	$	79,025	$	65,635

Expenses



	For the three month periods ended				For the nine month periods ended
	September 30, 2018		September 30, 2017		September 30, 2018		September 30, 2017
Base management fees	$	7,543	$	6,999	$	22,031	$	17,781
Incentive fees	5,449		5,321		16,763		15,459
Professional fees	869		361		2,590		1,957
Administrative service fees	179		184		550		522
Interest expense	10,372		5,922		26,896		16,694
Credit facility fees	583		521		1,689		1,553
Directors’ fees and expenses	92		121		283		355
Other general and administrative	478		472		1,318		1,293
Excise tax expense	30		—		70		169
Total expenses	25,595		19,901		72,190		55,783
Waiver of base management fees	—		2,333		—		5,927
Net expenses	$	25,595	$	17,568	$	72,190	$	49,856

Interest expense and credit facility fees for the three month and nine month periods ended September 30, 2018 and 2017 were comprised of the following:



	For the three month periods ended				For the nine month periods ended
	September 30, 2018		September 30, 2017		September 30, 2018		September 30, 2017
Interest expense	$	10,372	$	5,922	$	26,896	$	16,694
Facility unused commitment fee	341		309		923		925
Amortization of deferred financing costs	210		183		664		541
Other fees	32		29		102		87
Total interest expense and credit facility fees	$	10,955	$	6,443	$	28,585	$	18,247
Cash paid for interest expense	$	11,259	$	4,910	$	26,969	$	15,422

The increase in interest expense for the three month and nine month periods ended September 30, 2018 compared to the comparable periods in 2017 was driven by increased drawings under the Facilities related to increased deployment of capital for investments, an increase in LIBOR, and a one-time acceleration of $652 of amortization of debt issuance costs related to the 2015-1 Debt Securitization Refinancing. For the three month period ended September 30, 2018, the average interest rate increased to 4.33% from 3.41% for the comparable period in 2017, and average principal debt outstanding increased to $867,285 from $679,498 for the comparable period in 2017. For the nine month period ended September 30, 2018, the average interest rate increased to 4.12% from 3.25% for the comparable period in 2017, and average principal debt outstanding increased to $836,649 from $675,787 for the comparable period in 2017.

The increase in base management fees (and related waiver of base management fees, which terminated on September 30, 2017) and incentive fees related to pre-incentive fee net investment income for the three month and nine month periods ended September 30, 2018 from the comparable period in 2017 were driven by our deployment of capital, increasing invested balance, and termination of the waiver. For the three month periods ended September 30, 2018 and 2017, base management fees were $7,543 and $4,666, respectively, (net of waiver of $0 and $2,333, respectively), incentive fees related to pre-incentive fee net investment income were $5,449 and $5,321, respectively, and there were no incentive fees related to realized capital gains. For the nine month periods ended September 30, 2018 and 2017, base management fees were $22,031 and $11,854, respectively, (net of waiver of $0 and $5,927, respectively), incentive fees related to pre-incentive fee net investment income were $16,763 and $15,459, respectively, and there were no incentive fees related to realized capital gains. The accrual for any capital gains incentive fee under accounting principles generally accepted in the United States (“US GAAP”) in a given period may result in an additional expense if such cumulative amount is greater than in the prior period or a reduction of previously recorded expense if such cumulative amount is less than in the prior period. If such cumulative amount is negative, then there is no accrual. See Note 4 to the consolidated financial statements included in Part I, Item 1 of this Form 10-Q for more information on the incentive and base management fees. For the three month and nine month periods ended September 30, 2018 and 2017, there were no accrued capital gains incentive fees based upon the cumulative net realized and unrealized appreciation (depreciation) as of September 30, 2018 and 2017, respectively.

Professional fees include legal, rating agencies, audit, tax, valuation, technology and other professional fees incurred related to the management of the Company. Administrative service fees represent fees paid to the Administrator for our allocable portion of overhead and other expenses incurred by the Administrator in performing its obligations under the administration agreement, including our allocable portion of the cost of certain of our executive officers and their respective staff. Other general and administrative expenses include insurance, filing, research, subscriptions and other costs.

Net Realized Gain (Loss) and Net Change in Unrealized Appreciation (Depreciation) on Investments

During the three month and nine month periods ended September 30, 2018, we had realized gains on 0 and 2 investments, respectively, totaling approximately $0 and $1,777, respectively, which were offset by realized losses on 2 and 5 investments, respectively, totaling approximately $4,633 and $4,764, respectively. During the three month and nine month periods ended September 30, 2018, we had a change in unrealized appreciation on 46 and 70 investments, respectively, totaling approximately $11,082 and $16,797, respectively, which was offset by a change in unrealized depreciation on 65 and 62 investments, respectively, totaling approximately $26,054 and $52,560, respectively. During the three month and nine month periods ended September 30, 2017, we had realized gains on 4 and 13 investments, respectively, totaling approximately $181 and $593, respectively, which were offset by realized losses on 1 and 8 investments, respectively, totaling approximately $9 and $8,317, respectively. During the three month and nine month periods ended September 30, 2017, we had a change in unrealized appreciation on 59 and 60 investments, respectively, totaling approximately $13,191 and $29,089, respectively, which was offset by a change in unrealized depreciation on 44 and 70 investments, respectively, totaling approximately $12,900 and $29,783, respectively. In particular, effective September 17, 2018, Tweddle Group, Inc. completed a restructuring whereby a portion of the first lien debt held by us was exchanged into equity. As a result, $3,832 of unrealized depreciation was reversed and we realized a loss of $4,087 during the nine month period ended September 30, 2018. Effective January 31, 2017, TwentyEighty, Inc. (fka Miller Heiman, Inc.) completed a restructuring whereby the first lien debt held by us was converted into new term loans and equity. As a result, $10,943 of unrealized depreciation was reversed and we realized a loss of $7,738 on the investment during the nine month period ended September 30, 2017.

Net realized gain (loss) and net change in unrealized appreciation (depreciation) by the type of investments for the three month and nine month periods ended September 30, 2018 and 2017 were as follows:



	For the three month periods ended					For the nine month periods ended
	September 30, 2018			September 30, 2017		September 30, 2018			September 30, 2017
Net realized gain (loss) on investments	$	(4,633	)	$	172	$	(2,987	)	$	(7,724	)
Net change in unrealized appreciation (depreciation) on investments	(14,972		)	291		(35,763		)	(694		)
Net realized gain (loss) and net change in unrealized appreciation (depreciation) on investments	$	(19,605	)	$	463	$	(38,750	)	$	(8,418	)



	For the three month periods ended											For the nine month periods ended
	September 30, 2018						September 30, 2017					September 30, 2018						September 30, 2017
Type	Net realized gain (loss)			Net change in unrealized appreciation (depreciation)			Net realized gain (loss)		Net change in unrealized appreciation (depreciation)			Net realized gain (loss)			Net change in unrealized appreciation (depreciation)			Net realized gain (loss)			Net change in unrealized appreciation (depreciation)
First Lien Debt	$	(4,633	)	$	(15,513	)	$	141	$	(1,434	)	$	(4,764	)	$	(35,784	)	$	(7,710	)	$	(5,437	)
Second Lien Debt	—			(140		)	—		1,359			2			(1,294		)	(3		)	3,275
Structured Finance Obligations	—			—			31		—			—			—			(11		)	172
Equity Investments	—			782			—		1,330			1,775			2,177			—			1,822
Investment Fund	—			(101		)	—		(964		)	—			(862		)	—			(526		)
Total	$	(4,633	)	$	(14,972	)	$	172	$	291		$	(2,987	)	$	(35,763	)	$	(7,724	)	$	(694	)

Net change in unrealized depreciation in our investments for the three month and nine month periods ended September 30, 2018 compared to the comparable period in 2017 was primarily driven by the unrealized depreciation in Product

Quest Manufacturing, LLC due to its bankruptcy filing, as well as due to changes in various inputs utilized under our valuation methodology, including, but not limited to, market spreads, leverage multiples and borrower ratings, and the impact of exits.

MIDDLE MARKET CREDIT FUND, LLC

Overview

On February 29, 2016, we and Credit Partners entered into an amended and restated limited liability company agreement, which was subsequently amended on June 24, 2016 (as amended, “the Limited Liability Company Agreement”) to co-manage Credit Fund, a Delaware limited liability company that is not consolidated in the Company’s consolidated financial statements. Credit Fund primarily invests in first lien loans of middle-market companies. Credit Fund is managed by a six-member board of managers, on which we and Credit Partners each have equal representation. Establishing a quorum for Credit Fund’s board of managers requires at least four members to be present at a meeting, including at least two of our representatives and two of Credit Partners’ representatives. We and Credit Partners each have 50% economic ownership of Credit Fund and have commitments to fund, from time to time, capital of up to $400,000 each. Funding of such commitments generally requires the approval of the board of Credit Fund, including the board members appointed by us. By virtue of its membership interest, the Company and Credit Partners each indirectly bear an allocable share of all expenses and other obligations of Credit Fund.

Together with Credit Partners, we co-invest through Credit Fund. Investment opportunities for Credit Fund are sourced primarily by us and our affiliates. Portfolio and investment decisions with respect to Credit Fund must be unanimously approved by a quorum of Credit Fund’s investment committee consisting of an equal number of representatives of us and Credit Partners. Therefore, although we own more than 25% of the voting securities of Credit Fund, we do not believe that we have control over Credit Fund (other than for purposes of the Investment Company Act). Middle Market Credit Fund SPV, LLC (the “Credit Fund Sub”) and MMCF CLO 2017-1 LLC (the “2017-1 Issuer”), each a Delaware limited liability company, were formed on April 5, 2016 and October 6, 2017, respectively. Credit Fund Sub and 2017-1 Issuer are wholly owned subsidiaries of Credit Fund and are consolidated in Credit Fund’s consolidated financial statements commencing from the date of their respective formations. Credit Fund Sub and the 2017-1 Issuer primarily invest in first lien loans of middle market companies. Credit Fund and its wholly owned subsidiaries follow the same Internal Risk Rating system as us.

Credit Fund, we and Credit Partners entered into an administration agreement with Carlyle Global Credit Administration L.L.C., the administrative agent of Credit Fund (in such capacity, the “Administrative Agent”), pursuant to which the Administrative Agent is delegated certain administrative and non-discretionary functions, is authorized to enter into sub-administration agreements at the expense of Credit Fund with the approval of the board of managers of Credit Fund, and is reimbursed by Credit Fund for its costs and expenses and Credit Fund’s allocable portion of overhead incurred by the Administrative Agent in performing its obligations thereunder.

Selected Financial Data

As of September 30, 2018 and December 31, 2017, Credit Fund held cash and cash equivalents totaling $29,561 and $19,502, respectively.

As of September 30, 2018 and December 31, 2017, Credit Fund had total investments at fair value of $1,198,432 and $984,773, respectively, which was comprised of first lien senior secured loans and second lien senior secured loans to 60 and 51 portfolio companies, respectively. As of September 30, 2018 and December 31, 2017, no loans in Credit Fund’s portfolio were on non-accrual status or contained PIK provisions. All investments in the portfolio were floating rate debt investments with an interest rate floor. The portfolio companies in Credit Fund are U.S. middle market companies in industries similar to those in which the Company may invest directly. Additionally, as of September 30, 2018 and December 31, 2017, Credit Fund had commitments to fund various undrawn revolvers and delayed draw investments to its portfolio companies totaling $103,217 and $72,458, respectively.

Below is a summary of Credit Fund’s portfolio, followed by a listing of the loans in Credit Fund’s portfolio as of September 30, 2018 and December 31, 2017:



	As of September 30, 2018			As of December 31, 2017
Senior secured loans ⁽¹⁾	$	1,207,375		$	993,380
Weighted average yields of senior secured loans based on amortized cost ⁽²⁾	7.13		%	6.80		%
Weighted average yields of senior secured loans based on fair value ⁽²⁾	7.12		%	6.79		%
Number of portfolio companies in Credit Fund	60			51
Average amount per portfolio company ⁽¹⁾	$	20,123		$	19,478


(1)	At par/principal amount.

(2)



Consolidated Schedule of Investments as of September 30, 2018 (unaudited)
Investments ⁽¹⁾	Industry	Reference Rate & Spread ⁽²⁾	Interest Rate ⁽²⁾	Maturity Date	Par/ Principal Amount		Amortized Cost ⁽⁵⁾		Fair Value⁽⁶⁾
First Lien Debt (99.51% of fair value)
Acrisure, LLC ^{(2) (3) (4)}	Banking, Finance, Insurance & Real Estate	L + 4.25%	6.59%	11/22/2023	$	20,938	$	20,894	$	20,999
Acrisure, LLC ^{(2) (3) (4)}	Banking, Finance, Insurance & Real Estate	L + 3.75%	5.99%	11/22/2023	11,970		11,956		12,049
Advanced Instruments, LLC ^{(2) (3) (4) (7) (10) (11)}	Healthcare & Pharmaceuticals	L + 5.25%	7.35%	10/31/2022	11,820		11,719		11,790
Ahead, LLC ^{(2) (3) (4) (7) (10)}	High Tech Industries	L + 4.50%	6.89%	6/29/2023	20,312		20,206		20,277
Alpha Packaging Holdings, Inc. ^{(2) (3) (4) (11)}	Containers, Packaging & Glass	L + 4.25%	6.64%	5/12/2020	16,902		16,868		16,902
AM Conservation Holding Corporation ^{(2) (3) (4) (11)}	Energy: Electricity	L + 4.50%	7.14%	10/31/2022	38,408		38,164		38,408
AQA Acquisition Holding, Inc. ^{(2) (3) (4) (7) (10) (11)}	High Tech Industries	L + 4.25%	6.64%	5/24/2023	27,197		27,099		27,197
Big Ass Fans, LLC ^{(2) (3) (4) (11)}	Capital Equipment	L + 3.75%	6.14%	5/21/2024	7,795		7,760		7,815
Borchers, Inc. ^{(2) (3) (4) (7) (10) (11)}	Chemicals, Plastics & Rubber	L + 4.50%	6.89%	11/1/2024	15,629		15,570		15,629
Brooks Equipment Company, LLC ^{(2) (3) (4) (11)}	Construction & Building	L + 5.00%	7.31%	8/29/2020	6,118		6,108		6,118
Clearent Newco, LLC^{(2) (3) (4) (7) (10)}	High Tech Industries	L + 4.00%	6.24%	3/20/2024	24,264		23,856		24,133
DBI Holding LLC ^{(2) (3) (4) (11)}	Transportation: Cargo	L + 5.25%	7.51%	8/1/2021	34,617		34,378		33,977
DecoPac, Inc. ^{(2) (3) (4) (7) (10) (11)}	Non-durable Consumer Goods	L + 4.25%	6.64%	9/29/2024	12,729		12,598		12,654
Dent Wizard International Corporation ^{(2) (3) (4)}	Automotive	L + 4.00%	6.23%	4/7/2020	24,317		24,233		24,281
DTI Holdco, Inc.^{(2) (3) (4) (11)}	High Tech Industries	L + 4.75%	6.95%	9/30/2023	19,130		18,978		18,540
EIP Merger Sub, LLC (Evolve IP) ^{(2) (3) (4) (8) (11)}	Telecommunications	L + 5.75%	7.99%	6/7/2022	22,434		21,975		22,016
EIP Merger Sub, LLC (Evolve IP) ^{(2) (3) (9) (11)}	Telecommunications	L + 5.75%	7.99%	6/7/2022	1,500		1,467		1,474
Empower Payments Acquisitions, Inc. ^{(2) (3) (4) (11)}	Media: Advertising, Printing & Publishing	L + 4.50%	6.74%	11/30/2023	17,194		16,917		17,194
Exactech, Inc. ^{(2) (3) (4)}	Healthcare & Pharmaceuticals	L + 3.75%	5.99%	2/14/2025	12,935		12,877		12,935
Executive Consulting Group, LLC, Inc. ^{(2) (3) (4) (7) (10)}	Business Services	L + 4.50%	6.89%	6/20/2024	15,356		15,199		15,294
Golden West Packaging Group LLC ^{(2) (3) (4) (11)}	Containers, Packaging & Glass	L + 5.25%	7.49%	6/20/2023	30,424		30,212		30,348
HMT Holding Inc. ^{(2) (3) (4) (7) (10) (11)}	Energy: Oil & Gas	L + 4.50%	6.74%	11/17/2023	35,301		34,693		35,227
J.S. Held LLC ^{(2) (3) (4) (10) (11)}	Banking, Finance, Insurance & Real Estate	L + 4.50%	6.76%	9/25/2024	20,360		20,180		20,360
Jensen Hughes, Inc. ^{(2) (3) (4) (7) (10) (11)}	Utilities: Electric	L + 4.50%	6.74%	3/22/2024	28,387		28,280		28,377
Kestra Financial, Inc. ^{(2) (3) (4) (11)}	Banking, Finance, Insurance & Real Estate	L + 4.25%	6.64%	6/24/2022	21,792		21,583		21,877
MAG DS Corp. ^{(2) (4) (7) (10)}	Aerospace & Defense	L + 4.75%	6.99%	6/6/2025	22,181		21,970		22,047
Maravai Intermediate Holdings, LLC ^{(2) (3) (4)}	Healthcare & Pharmaceuticals	L + 4.25%	6.38%	8/2/2025	30,000		29,703		29,850
Mold-Rite Plastics, LLC ^{(2) (3) (4)}	Chemicals, Plastics & Rubber	L + 4.50%	6.89%	12/14/2021	14,887		14,826		14,887
MSHC, Inc. ^{(2) (3) (4) (7) (10) (11)}	Construction & Building	L + 4.25%	6.64%	7/31/2023	23,639		23,571		23,621
Newport Group Holdings II, Inc. ^{(2) (3) (4)}	Banking, Finance, Insurance & Real Estate	L + 3.75%	5.90%	9/13/2025	15,000		14,929		14,990



Consolidated Schedule of Investments as of September 30, 2018 (unaudited)
Investments ⁽¹⁾	Industry	Reference Rate & Spread ⁽²⁾	Interest Rate ⁽²⁾	Maturity Date	Par/ Principal Amount		Amortized Cost ⁽⁵⁾		Fair Value⁽⁶⁾
First Lien Debt (99.51% of fair value)
North American Dental Management, LLC ^{(2) (3) (4) (7) (10) (11)}	Healthcare & Pharmaceuticals	L + 5.00%	7.24%	7/7/2023	$	32,489	$	31,824	$	32,190
North Haven CA Holdings, Inc. (CoAdvantage) ^{(2) (3) (4) (7) (10) (11)}	Business Services	L + 4.50%	6.74%	10/2/2023	28,598		28,300		28,598
Odyssey Logistics & Technology Corporation ^{(2) (3) (4) (11)}	Transportation: Cargo	L + 3.50%	5.99%	10/12/2024	19,850		19,762		19,932
Output Services Group ^{(2) (3) (4) (7) (10)}	Media: Advertising, Printing & Publishing	L + 4.25%	6.49%	3/26/2024	17,487		17,417		17,479
PAI Holdco, Inc. (Parts Authority) ^{(2) (3) (4) (7) (10) (11)}	Automotive	L + 4.25%	6.49%	1/5/2025	19,110		19,018		19,110
Paradigm Acquisition Corp.^{(2) (3) (4) (11)}	Business Services	L + 4.25%	6.49%	10/12/2024	23,324		23,272		23,324
Park Place Technologies, Inc. ^{(2) (3) (4)}	High Tech Industries	L + 4.00%	6.24%	3/29/2025	14,962		14,891		14,961
Pasternack Enterprises, Inc. (Infinite RF) ^{(2) (3) (4)}	Capital Equipment	L + 4.00%	6.10%	7/2/2025	20,127		20,126		20,183
Pharmalogic Holdings Corp. ^{(2) (3) (4) (7) (10)}	Healthcare & Pharmaceuticals	L + 4.00%	6.24%	6/11/2023	7,035		7,012		7,032
Ping Identity Corporation ^{(2) (3) (4)}	High Tech Industries	L + 3.75%	5.99%	1/25/2025	4,987		4,970		4,994
Premier Senior Marketing, LLC ^{(2) (3) (4) (11)}	Banking, Finance, Insurance & Real Estate	L + 5.00%	7.24%	7/1/2022	15,685		15,588		15,659
Premise Health Holding Corp. ^{(2) (3) (4) (10)}	Healthcare & Pharmaceuticals	L + 3.75%	6.14%	7/10/2025	13,897		13,829		13,896
Propel Insurance Agency, LLC ^{(2) (3) (4) (7) (10)}	Banking, Finance, Insurance & Real Estate	L + 4.50%	6.83%	6/1/2024	20,425		19,847		20,158
PSI Services LLC ^{(2) (3) (4) (7) (10) (11)}	Business Services	L + 5.00%	7.24%	1/20/2023	29,996		29,523		29,765
Q Holding Company^{(2) (3) (4) (11)}	Automotive	L + 5.00%	7.24%	12/18/2021	17,144		17,099		17,068
QW Holding Corporation (Quala) ^{(2) (3) (4) (7) (10) (11)}	Environmental Industries	L + 6.75%	8.85%	8/31/2022	9,729		9,342		9,453
Restaurant Technologies, Inc. ^{(2) (3) (4) (11)}	Retail	L + 4.75%	7.01%	11/23/2022	17,238		17,119		17,237
Situs Group Holdings Corporation^{(2) (3) (4)}	Banking, Finance, Insurance & Real Estate	L + 4.50%	6.74%	2/26/2023	10,740		10,733		10,793
Sovos Brands Intermediate, Inc. ^{(2) (3) (4) (7) (10) (11)}	Beverage, Food & Tobacco	L + 4.50%	6.79%	7/18/2024	22,351		22,216		22,351
Surgical Information Systems, LLC ^{(2) (3) (4) (9) (11)}	High Tech Industries	L + 4.85%	7.09%	4/24/2023	27,708		27,484		27,495
Systems Maintenance Services Holding, Inc. ^{(2) (3) (4) (11)}	High Tech Industries	L + 5.00%	7.24%	10/28/2023	24,071		23,964		19,707
T2 Systems Canada, Inc. ^{(2) (3) (4)}	Transportation: Consumer	L + 6.75%	8.99%	9/28/2022	2,653		2,603		2,655
T2 Systems, Inc. ^{(2) (3) (4) (7) (10) (11)}	Transportation: Consumer	L + 6.75%	9.34%	9/28/2022	15,813		15,509		15,826
The Original Cakerie, Co. (Canada) ^{(2) (3) (4) (11)}	Beverage, Food & Tobacco	L + 5.00%	7.20%	7/20/2022	9,065		9,009		9,048
The Original Cakerie, Ltd. (Canada) ^{(2) (3) (4) (7) (10)}	Beverage, Food & Tobacco	L + 4.50%	6.74%	7/20/2022	6,757		6,712		6,740
ThoughtWorks, Inc. ^{(2) (3) (4) (7) (10) (11)}	Business Services	L + 4.00%	6.24%	10/12/2024	10,260		10,223		10,339
U.S. Acute Care Solutions, LLC ^{(2) (3) (4) (11)}	Healthcare & Pharmaceuticals	L + 5.00%	7.24%	5/15/2021	31,748		31,569		31,421
U.S. TelePacific Holdings Corp. ^{(2) (3) (4) (11)}	Telecommunications	L + 5.00%	7.39%	5/2/2023	26,660		26,436		26,194
Upstream Intermediate, LLC ^{(2) (3) (4) (7) (10)}	Healthcare & Pharmaceuticals	L + 4.50%	6.65%	1/3/2024	18,417		18,333		18,417
Valet Waste Holdings, Inc. ^{(2) (3) (4) (7)}	Construction & Building	L + 4.00%	6.26%	9/28/2025	12,000		11,973		12,017



Consolidated Schedule of Investments as of September 30, 2018 (unaudited)
Investments ⁽¹⁾	Industry	Reference Rate & Spread ⁽²⁾	Interest Rate ⁽²⁾	Maturity Date	Par/ Principal Amount		Amortized Cost ⁽⁵⁾		Fair Value⁽⁶⁾
First Lien Debt (99.51% of fair value)
Valicor Environmental Services, LLC ^{(2) (3) (4) (7) (10) (11)}	Environmental Industries	L + 4.75%	6.90%	6/1/2023	$	26,513	$	25,810	$	26,278
WIRB - Copernicus Group, Inc. ^{(2) (3) (4) (7) (10) (11)}	Healthcare & Pharmaceuticals	L + 4.25%	6.49%	8/12/2022	16,517		16,414		16,495
WRE Holding Corp.^{(2) (3) (4) (7) (10) (11)}	Environmental Industries	L + 4.75%	6.99%	1/3/2023	7,337		7,258		7,148
Zywave, Inc.^{(2) (3) (4) (7) (10) (11)}	High Tech Industries	L + 5.00%	7.34%	11/17/2022	17,296		17,154		17,295
First Lien Debt Total							$	1,191,108	$	1,192,524
Second Lien Debt (0.49% of fair value)
Paradigm Acquisition Corp. ^{(2) (3) (11)}	Business Services	L + 8.50%	10.97%	10/12/2025	$	4,800	$	4,756	$	4,848
Zywave, Inc. ^{(2) (3) (11)}	High Tech Industries	L + 9.00%	11.31%	11/17/2023	1,050		1,037		1,060
Second Lien Debt Total							$	5,793	$	5,908
Total Investments							$	1,196,901	$	1,198,432


(1)	Unless otherwise indicated, issuers of investments held by Credit Fund are domiciled in the United States. As of September 30, 2018, the geographical composition of investments as a percentage of fair value was 1.32% in Canada and 98.68% in the United States. Certain portfolio company investments are subject to contractual restrictions on sales.

(2)

Variable rate loans to the portfolio companies bear interest at a rate that is determined by reference to either LIBOR or an alternate base rate (commonly based on the Federal Funds Rate or the U.S. Prime Rate), which generally resets quarterly. For each such loan, Credit Fund has indicated the reference rate used and provided the spread and the interest rate in effect as of September 30, 2018. As of September 30, 2018, the reference rates for Credit Fund’s variable interest loans were the 30-day LIBOR at 2.26%, the 90-day LIBOR at 2.40% and the 180-day LIBOR rate at 2.60%.


(3)	Loan includes interest rate floor feature which is generally 1.00%.

(4)


(5)	Amortized cost represents original cost, including origination fees and upfront fees received that are deemed to be an adjustment to yield, adjusted for the accretion/amortization of discounts/premiums, as applicable, on debt investments using the effective interest method.


(6)	Fair value is determined in good faith by or under the direction of the board of managers of Credit Fund, pursuant to Credit Fund’s valuation policy, with the fair value of all investments determined using significant unobservable inputs, which is substantially similar to the valuation policy of the Company provided in “—Critical Accounting Policies—Fair Value Measurements.”


(7)	Denotes that all or a portion of the assets are owned by Credit Fund. Credit Fund has entered into the Credit Fund Facility. The lenders of the Credit Fund Facility have a first lien security interest in substantially all of the assets of Credit Fund. Accordingly, such assets are not available to creditors of Credit Fund Sub or the 2017-1 Issuer.

(8)

(9)


(10)	As of September 30, 2018, Credit Fund had the following unfunded commitments to fund delayed draw and revolving senior secured loans:



First Lien Debt—unfunded delayed draw and revolving term loans commitments	Type	Unused Fee		Par/ Principal Amount		Fair Value
Advanced Instruments, LLC	Revolver	0.50	%	$	1,333	$	(3	)
Ahead, LLC	Revolver	0.50		4,688		(6		)
AQA Acquisition Holding, Inc.	Revolver	0.50		2,459		—
Borchers, Inc.	Revolver	0.50		1,935		—
Clearent Newco, LLC	Delayed Draw	1.00		4,988		(22		)
Clearent Newco, LLC	Revolver	0.50		644		(3		)
DecoPac, Inc.	Revolver	0.50		2,143		(11		)
Executive Consulting Group, LLC.	Revolver	0.50		2,368		(8		)
HMT Holding Inc.	Revolver	0.50		4,444		(8		)
J.S. Held LLC	Delayed Draw	1.00		4		—
Jensen Hughes, Inc.	Delayed Draw	1.00		337		—
Jensen Hughes, Inc.	Revolver	0.50		1,591		—
MAG DS Corp.	Revolver	0.50		2,772		(15		)
MSHC, Inc.	Delayed Draw	—		6,252		(4		)
North American Dental Management, LLC	Delayed Draw	1.00		4,646		(35		)
North American Dental Management, LLC	Revolver	0.50		2,727		(20		)
North Haven CA Holdings, Inc. (CoAdvantage)	Revolver	0.50		6,114		—
Output Services Group	Delayed Draw	4.25		2,518		(1		)
PAI Holdco, Inc. (Parts Authority)	Delayed Draw	1.00		657		—
Pharmalogic Holdings Corp.	Delayed Draw	1.00		2,947		(1		)
Premise Health Holding Corp.	Delayed Draw	1.00		1,103		—
Propel Insurance Agency, LLC	Delayed Draw	0.50		7,143		(64		)
Propel Insurance Agency, LLC	Revolver	0.50		2,381		(21		)
PSI Services LLC	Revolver	0.50		754		(6		)
QW Holding Corporation (Quala)	Delayed Draw	1.00		7,515		(91		)
QW Holding Corporation (Quala)	Revolver	0.50		5,498		(66		)
Sovos Brands Intermediate, Inc.	Revolver	0.50		2,432		—
T2 Systems, Inc.	Revolver	0.50		1,173		1
The Original Cakerie, Ltd. (Canada)	Revolver	0.50		1,365		(3		)
ThoughtWorks, Inc.	Delayed Draw	2.00		1,714		11
Upstream Intermediate, LLC	Revolver	0.50		1,446		—
Valicor Environmental Services, LLC	Revolver	0.50		2,955		(24		)
WIRB - Copernicus Group, Inc.	Delayed Draw	1.00		7,200		(7		)
WIRB - Copernicus Group, Inc.	Revolver	0.50		1,000		(1		)
WRE Holding Corp.	Delayed Draw	1.06		2,336		(44		)
WRE Holding Corp.	Revolver	0.50		247		(5		)
Zywave, Inc.	Revolver	0.50		1,388		—
Total unfunded commitments				$	103,217	$	(457	)


(1)	Denotes that all or a portion of the assets are owned by the 2017-1 Issuer and secure the notes issued in connection with a $399,900 term debt securitization completed by Credit Fund on December 19, 2017 (the “2017-1 Debt Securitization”). Accordingly, such assets are not available to creditors of Credit Fund or Credit Fund Sub.



Consolidated Schedule of Investments as of December 31, 2017
Investments ⁽¹⁾	Industry	Interest Rate ⁽²⁾	Maturity Date	Par/ Principal Amount		Amortized Cost ⁽⁵⁾		Fair Value ⁽⁶⁾
First Lien Debt (99.39% of fair value)
Acrisure, LLC ^{(2)(3)(4)(11)}	Banking, Finance, Insurance & Real Estate	L + 4.25% (1.00% Floor)	11/22/2023	$	21,097	$	21,055	$	21,291
Advanced Instruments, LLC ^{(2)(3)(4)(7)(10)(11)(13)}	Healthcare & Pharmaceuticals	L + 5.25% (1.00% Floor)	10/31/2022	11,910		11,793		11,910
Alpha Packaging Holdings, Inc. ^{(2)(3)(4)(13)}	Containers, Packaging & Glass	L + 4.25% (1.00% Floor)	5/12/2020	16,860		16,812		16,860
AM Conservation Holding Corporation ^{(2)(3)(4)(13)}	Energy: Electricity	L + 4.50% (1.00% Floor)	10/31/2022	38,700		38,433		38,553
AMS Finco, S.A.R.L. (Alexander Mann Solutions) (United Kingdom) ^{(2)(3)(4)(11)(13)}	Business Services	L + 5.50% (1.00% Floor)	5/26/2024	24,875		24,646		24,875
Anaren, Inc. ^(2)(3)(4)	Telecommunications	L + 4.50% (1.00% Floor)	2/18/2021	9,993		9,971		9,993
AQA Acquisition Holding, Inc. ^{(2)(3)(4)(7)(10)(13)}	High Tech Industries	L + 4.50% (1.00% Floor)	5/24/2023	27,403		27,288		27,403
Big Ass Fans, LLC ^{(2)(3)(4)(13)}	Capital Equipment	L + 4.25% (1.00% Floor)	5/21/2024	8,000		7,964		8,010
Borchers, Inc. ^{(2)(3)(4)(7)(10)(13)}	Chemicals, Plastics & Rubber	L + 4.50% (1.00% Floor)	11/1/2024	15,748		15,694		15,665
Brooks Equipment Company, LLC ^{(2)(3)(4)(13)}	Construction & Building	L + 5.00% (1.00% Floor)	8/29/2020	7,061		7,045		7,061
DBI Holding LLC ^{(2)(3)(4)(11)(13)}	Transportation: Cargo	L + 5.25% (1.00% Floor)	8/1/2021	19,800		19,659		19,833
DecoPac, Inc. ^{(2)(3)(4)(7)(10)(13)}	Non-durable Consumer Goods	L + 4.25% (1.00% Floor)	9/29/2024	13,414		13,270		13,415
Dent Wizard International Corporation ^{(2)(3)(4)(11)}	Automotive	L + 4.75% (1.00% Floor)	4/7/2020	24,502		24,382		24,475
DTI Holdco, Inc. ^{(2)(3)(4)(11)(13)}	High Tech Industries	L + 5.25% (1.00% Floor)	9/30/2023	19,750		19,575		19,663
EIP Merger Sub, LLC (Evolve IP) ^{(2)(3)(4)(8)(11)(13)}	Telecommunications	L + 6.25% (1.00% Floor)	6/7/2022	22,663		22,127		22,153
EIP Merger Sub, LLC (Evolve IP) ^{(2)(3)(9)(11)(13)}	Telecommunications	L + 6.25% (1.00% Floor)	6/7/2022	1,500		1,462		1,470
Empower Payments Acquisitions, Inc. ^{(2)(3)(4)(13)}	Media: Advertising, Printing & Publishing	L + 5.50% (1.00% Floor)	11/30/2023	17,325		17,018		17,325
FCX Holdings Corp. ^{(2)(3)(4)(11)}	Capital Equipment	L + 4.50% (1.00% Floor)	8/4/2020	18,491		18,438		18,512
Golden West Packaging Group LLC ^{(2)(3)(4)(11)(13)}	Containers, Packaging & Glass	L + 5.25% (1.00% Floor)	6/20/2023	20,895		20,709		20,895
HMT Holding Inc. ^{(2)(3)(4)(7)(10)(13)}	Energy: Oil & Gas	L + 4.50% (1.00% Floor)	11/17/2023	35,062		34,387		34,709
J.S. Held LLC ^{(2)(3)(4)(7)(10)(13)}	Banking, Finance, Insurance & Real Estate	L + 5.50% (1.00% Floor)	9/27/2023	18,204		18,018		18,144
Jensen Hughes, Inc. ^{(2)(3)(4)(7)(10)(11)(13)}	Utilities: Electric	L + 5.00% (1.00% Floor)	12/4/2021	20,963		20,784		20,963
Kestra Financial, Inc. ^{(2)(3)(4)(13)}	Banking, Finance, Insurance & Real Estate	L + 5.25% (1.00% Floor)	6/24/2022	17,206		17,009		17,203
Mold-Rite Plastics, LLC ^{(2)(3)(4)(11)}	Chemicals, Plastics & Rubber	L + 4.50% (1.00% Floor)	12/14/2021	15,000		14,946		14,993
MSHC, Inc. ^{(2)(3)(4)(13)}	Construction & Building	L + 4.25% (1.00% Floor)	7/31/2023	10,000		9,957		10,032
North American Dental Management, LLC ^{(2)(3)(4)(7)(10)(11)(13)}	Healthcare & Pharmaceuticals	L + 5.00% (1.00% Floor)	7/7/2023	23,978		23,157		23,577
North Haven CA Holdings, Inc. (CoAdvantage) ^{(2)(3)(4)(7)(10)(13)}	Business Services	L + 4.50% (1.00% Floor)	10/2/2023	31,565		31,237		31,436
Odyssey Logistics & Technology Corporation ^{(2)(3)(4)(11)(13)}	Transportation: Cargo	L + 4.25% (1.00% Floor)	10/12/2024	20,000		19,906		19,998
PAI Holdco, Inc. (Parts Authority) ^{(2)(3)(4)(7)(10)(11)(13)}	Automotive	L + 4.75% (1.00% Floor)	12/30/2022	16,564		16,459		16,515
Paradigm Acquisition Corp. ^{(2)(3)(4)(13)}	Business Services	L + 4.25% (1.00% Floor)	10/12/2024	23,500		23,445		23,554



Consolidated Schedule of Investments as of December 31, 2017
Investments ⁽¹⁾	Industry	Interest Rate ⁽²⁾	Maturity Date	Par/ Principal Amount		Amortized Cost ⁽⁵⁾		Fair Value ⁽⁶⁾
First Lien Debt (99.39% of fair value)
Pasternack Enterprises, Inc. (Infinite RF) ^{(2)(3)(4)(11)}	Capital Equipment	L + 5.00% (1.00% Floor)	5/27/2022	$	20,228	$	20,134	$	20,174
Premier Senior Marketing, LLC ^{(2)(3)(4)(11)(13)}	Banking, Finance, Insurance & Real Estate	L + 5.00% (1.00% Floor)	7/1/2022	11,675		11,606		11,628
PSI Services LLC ^{(2)(3)(4)(7)(10)(11)(13)}	Business Services	L + 5.00% (1.00% Floor)	1/20/2023	30,676		30,171		30,082
Q Holding Company ^{(2)(3)(4)(13)}	Automotive	L + 5.00% (1.00% Floor)	12/18/2021	17,277		17,227		17,277
QW Holding Corporation (Quala) ^{(2)(3)(4)(7)(10)(11)(13)}	Environmental Industries	L + 6.75% (1.00% Floor)	8/31/2022	11,453		10,879		10,933
Radiology Partners, Inc. ^{(2)(3)(4)(7)(10)(12)}	Healthcare & Pharmaceuticals	L + 5.75% (1.00% Floor)	12/4/2023	25,793		25,494		25,642
Restaurant Technologies, Inc. ^{(2)(3)(4)(11)(13)}	Retail	L + 4.75% (1.00% Floor)	11/23/2022	17,369		17,241		17,219
Sovos Brands Intermediate, Inc. ^{(2)(3)(4)(7)(10)(13)}	Beverage, Food & Tobacco	L + 4.50% (1.00% Floor)	7/18/2024	21,568		21,419		21,633
Superion (fka Ramundsen Public Sector, LLC) ^{(2)(3)(4)(13)}	Sovereign & Public Finance	L + 4.25% (1.00% Floor)	2/1/2024	3,970		3,955		4,000
Surgical Information Systems, LLC ^{(2)(3)(4)(9)(11)(13)}	High Tech Industries	L + 5.00% (1.00% Floor)	4/24/2023	30,000		29,728		30,075
Systems Maintenance Services Holding, Inc. ^{(2)(3)(4)(11)(13)}	High Tech Industries	L + 5.00% (1.00% Floor)	10/28/2023	24,255		24,126		20,617
T2 Systems Canada, Inc. ^(2)(3)(4)	Transportation: Consumer	L + 6.75% (1.00% Floor)	9/28/2022	2,673		2,617		2,634
T2 Systems, Inc. ^{(2)(3)(4)(7)(10)(13)}	Transportation: Consumer	L + 6.75% (1.00% Floor)	9/28/2022	15,929		15,577		15,679
Teaching Strategies, LLC ^{(2)(3)(4)(7)(10)(11)(13)}	Media: Advertising, Printing & Publishing	L + 4.75% (1.00% Floor)	2/27/2023	17,964		17,803		17,952
The Original Cakerie, Ltd. (Canada) ^{(2)(3)(4)(7)(10)(11)}	Beverage, Food & Tobacco	L + 5.00% (1.00% Floor)	7/20/2021	6,939		6,879		6,922
The Original Cakerie, Co. (Canada) ^{(2)(3)(11)(13)}	Beverage, Food & Tobacco	L + 5.50% (1.00% Floor)	7/20/2021	3,585		3,572		3,579
ThoughtWorks, Inc. ^{(2)(3)(11)(13)}	Business Services	L + 4.50% (1.00% Floor)	10/12/2024	8,000		7,980		8,032
U.S. Acute Care Solutions, LLC ^{(2)(3)(4)(13)}	Healthcare & Pharmaceuticals	L + 5.00% (1.00% Floor)	5/15/2021	32,030		31,808		31,537
U.S. TelePacific Holdings Corp. ^{(2)(3)(4)(13)}	Telecommunications	L + 5.00% (1.00% Floor)	5/2/2023	29,850		29,566		28,581
Valicor Environmental Services, LLC ^{(2)(3)(4)(7)(10)(11)(13)}	Environmental Industries	L + 5.00% (1.00% Floor)	6/1/2023	27,047		26,576		26,984
WIRB - Copernicus Group, Inc. ^{(2)(3)(4)(13)}	Healthcare & Pharmaceuticals	L + 5.00% (1.00% Floor)	8/12/2022	14,838		14,780		14,838
WRE Holding Corp. ^{(2)(3)(4)(7)(10)(11)(13)}	Environmental Industries	L + 4.75% (1.00% Floor)	1/3/2023	5,367		5,283		5,279
Zest Holdings, LLC ^{(2)(3)(4)(11)}	Durable Consumer Goods	L + 4.25% (1.00% Floor)	8/16/2023	19,152		19,107		19,272
Zywave, Inc. ^{(2)(3)(4)(7)(10)(13)}	High Tech Industries	L + 5.00% (1.00% Floor)	11/17/2022	17,663		17,508		17,663
First Lien Debt Total						$	977,682	$	978,718

Second Lien Debt (0.61% of fair value)
Paradigm Acquisition Corp. ^{(2)(3)(12)(13)}	Business Services	L + 8.50% (1.00% Floor)	10/12/2025	$	4,800	$	4,753	$	4,792
Superion, LLC (fka Ramundsen Public Sector, LLC) ^(2)(3)(13)	Sovereign & Public Finance	L + 8.50% (1.00% Floor)	2/1/2025	200		198		202
Zywave, Inc. ^(2)(3)(13)	High Tech Industries	L + 9.00% (1.00% Floor)	11/17/2023	1,050		1,036		1,061
Second Lien Debt Total						$	5,987	$	6,055
Total Investments						$	983,669	$	984,773


(1)	Unless otherwise indicated, issuers of investments held by Credit Fund are domiciled in the United States. As of December 31, 2017, the geographical composition of investments as a percentage of fair value was 1.07% in Canada, 2.52% in the United Kingdom and 96.41% in the United States.

(2)


(3)	Loan includes interest rate floor feature.


(4)	Denotes that all or a portion of the assets are owned by Credit Fund Sub. Credit Fund Sub has entered into the Credit Fund Sub Facility. The lenders of the Credit Fund Sub Facility have a first lien security interest in substantially all of the assets of Credit Fund Sub. Accordingly, such assets are not available to creditors of Credit Fund.


(5)	Amortized cost represents original cost, including origination fees and upfront fees received that are deemed to be an adjustment to yield, adjusted for the accretion/amortization of discounts/premiums, as applicable, on debt investments using the effective interest method.


(6)	Fair value is determined in good faith by or under the direction of the board of managers of Credit Fund, pursuant to Credit Fund’s valuation policy, with the fair value of all investments determined using significant unobservable inputs, which is substantially similar to the valuation policy of the Company provided in “—Critical Accounting Policies—Fair Value Measurements.”


(7)	Denotes that all or a portion of the assets are owned by Credit Fund. Credit Fund has entered into the Credit Fund Facility. The lenders of the Credit Fund Facility have a first lien security interest in substantially all of the assets of Credit Fund. Accordingly, such assets are not available to creditors of Credit Fund Sub.

(8)

(9)

In addition to the interest earned based on the stated interest rate of this loan, which is the amount reflected in this schedule, Credit Fund is entitled to receive additional interest as a result of an agreement among lenders as follows: EIP Merger Sub, LLC (Evolve IP) (3.97%) and Surgical Information Systems, LLC (1.01%). Pursuant to the agreement among lenders in respect of this loan, this investment represents a first lien/last out loan, which has a secondary priority behind the first lien/first out loan with respect to principal, interest and other payments.


(10)	As of December 31, 2017, Credit Fund had the following unfunded commitments to fund delayed draw and revolving senior secured loans:



First Lien Debt—unfunded delayed draw and revolving term loans commitments	Type	Unused Fee		Par/ Principal Amount		Fair Value
Advanced Instruments, LLC	Revolver	0.50	%	$	1,333	$	—
AQA Acquisition Holding, Inc.	Revolver	0.50	%	2,459		—
Borchers, Inc.	Revolver	0.50	%	1,935		(9		)
DecoPac, Inc.	Revolver	0.50	%	1,457		—
HMT Holding Inc.	Revolver	0.50	%	4,938		(43		)
Jensen Hughes, Inc.	Delayed Draw	1.00	%	1,180		—
Jensen Hughes, Inc.	Revolver	0.50	%	2,000		—
J.S. Held LLC	Delayed Draw	1.00	%	2,253		(7		)
North American Dental Management, LLC	Delayed Draw	1.00	%	13,354		(134		)
North American Dental Management, LLC	Revolver	0.50	%	2,727		(27		)
North Haven CA Holdings, Inc. (CoAdvantage)	Revolver	0.50	%	3,362		(12		)
PAI Holdco, Inc. (Parts Authority)	Delayed Draw	1.00	%	3,286		(8		)
PSI Services LLC	Revolver	0.50	%	302		(6		)
QW Holding Corporation (Quala)	Delayed Draw	1.00	%	7,515		(171		)
QW Holding Corporation (Quala)	Revolver	0.50	%	3,849		(88		)
Radiology Partners, Inc.	Delayed Draw	1.00	%	2,483		(12		)
Radiology Partners, Inc.	Revolver	0.50	%	1,725		(9		)
Sovos Brands Intermediate, Inc.	Revolver	0.50	%	3,378		9
T2 Systems, Inc.	Revolver	0.50	%	1,173		(17		)
Teaching Strategies, LLC	Revolver	0.50	%	1,900		(1		)
The Original Cakerie, Ltd. (Canada)	Revolver	0.50	%	1,665		(3		)
Valicor Environmental Services, LLC	Revolver	0.50	%	2,838		(6		)
WRE Holding Corp.	Delayed Draw	1.04	%	3,435		(32		)
WRE Holding Corp.	Revolver	0.50	%	748		(7		)
Zywave, Inc.	Revolver	0.50	%	1,163		—
Total unfunded commitments				$	72,458	$	(583	)


(11)	As of December 31, 2017, this LIBOR loan was indexed to the 30-day LIBOR rate at 1.56%.


(12)	As of December 31, 2017, this LIBOR loan was indexed to the 180-day LIBOR rate at 1.84%.


(13)	Denotes that all or a portion of the assets are owned by the 2017-1 Issuer and secure the notes issued in connection with the 2017-1 Debt Securitization. Accordingly, such assets are not available to creditors of Credit Fund or Credit Fund Sub.

Below is certain summarized consolidated financial information for Credit Fund as of September 30, 2018 and December 31, 2017, respectively. Credit Fund commenced operations in May 2016.



	September 30, 2018		December 31, 2017
	(unaudited)
Selected Consolidated Balance Sheet Information
ASSETS
Investments, at fair value (amortized cost of $1,196,901 and $983,669, respectively)	$	1,198,432	$	984,773
Cash and other assets	37,001		26,441
Total assets	$	1,235,433	$	1,011,214
LIABILITIES AND MEMBERS’ EQUITY
Secured borrowings	$	552,250	$	377,686
Notes payable, net of unamortized debt issuance costs of $1,897 and $2,051, respectively	323,614		348,938
Mezzanine loans	122,000		85,750
Other liabilities	34,761		25,308
Subordinated loans and members’ equity	202,808		173,532
Liabilities and members’ equity	$	1,235,433	$	1,011,214



	For the three month periods ended					For the nine month periods ended
	September 30, 2018		September 30, 2017			September 30, 2018		September 30, 2017
	(unaudited)		(unaudited)			(unaudited)		(unaudited)
Selected Consolidated Statement of Operations Information:
Total investment income	$	21,738	$	14,914		$	60,129	$	33,802
Expenses
Interest and credit facility expenses	13,858		8,809			37,615		21,204
Other expenses	796		356			1,565		1,041
Total expenses	14,654		9,165			39,180		22,245
Net investment income (loss)	7,084		5,749			20,949		11,557
Net realized gain (loss) on investments	—		—			—		—
Net change in unrealized appreciation (depreciation) on investments	314		(2,076		)	427		(889		)
Net increase (decrease) resulting from operations	$	7,398	$	3,673		$	21,376	$	10,668

Debt

Credit Fund Facility

On June 24, 2016, Credit Fund entered into the Credit Fund Facility with the Company pursuant to which Credit Fund may from time to time request mezzanine loans from us, which was subsequently amended on June 5, 2017, October 2, 2017, November 3, 2017, June 22, 2018 and June 29, 2018. The maximum principal amount of the Credit Fund Facility is $175,000. The maturity date of the Credit Fund Facility is March 22, 2019. Amounts borrowed under the Credit Fund Facility bear interest at a rate of LIBOR plus 9.00%.

Credit Fund Sub Facility

2017-1 Notes

On December 19, 2017, Credit Fund completed a $399,900 term debt securitization (the “2017-1 Debt Securitization”). The notes offered in the 2017-1 Debt Securitization (the “2017-1 Notes”) were issued by the 2017-1 Issuer, a wholly owned and consolidated subsidiary of Credit Fund, and are secured by a diversified portfolio of the 2017-1 Issuer consisting primarily of first and second lien senior secured loans. The 2017-1 Debt Securitization was executed through a private placement of the 2017-1 Notes, consisting of $231,700 of Aaa/AAA Class A-1 Notes, which bear interest at the three-month LIBOR plus 1.17%; $48,300 of Aa2/AA Class A-2 Notes, which bear interest at the three-month LIBOR plus 1.50%; $15,000 of A2/A Class B-1 Notes, which bear interest at the three-month LIBOR plus 2.25%; $9,000 of A2/A Class B-2 Notes which bear interest at 4.30%; $22,900 of Baa2/BBB Class C Notes which bear interest at the three-month LIBOR plus 3.20%; and $25,100 of Ba2/BB Class D Notes which bear interest at the three-month LIBOR plus 6.38%. The 2017-1 Notes are scheduled to mature on January 15, 2028. Credit Fund received 100% of the preferred interests issued by the 2017-1 Issuer (the “2017-1 Issuer Preferred Interests”) on the closing date of the 2017-1 Debt Securitization in exchange for Credit Fund’s contribution to the

2017-1 Issuer of the initial closing date loan portfolio. The 2017-1 Issuer Preferred Interests do not bear interest and had a nominal value of $47,900 at closing.

FINANCIAL CONDITION, LIQUIDITY AND CAPITAL RESOURCES

We generate cash from the net proceeds of offerings of our common stock and through cash flows from operations, including investment sales and repayments as well as income earned on investments and cash equivalents. We may also fund a portion of our investments through borrowings under the Facilities, as well as through securitization of a portion of our existing investments.

The SPV closed on May 24, 2013 on the SPV Credit Facility, which was subsequently amended on June 30, 2014, June 19, 2015, June 9, 2016 and May 26, 2017 and August 9, 2018. The SPV Credit Facility provides for secured borrowings during the applicable revolving period up to an amount equal to the lesser of $400,000 (the borrowing base as calculated pursuant to the terms of the SPV Credit Facility) and the amount of net cash proceeds and unpledged capital commitments the Company has received, with an accordion feature that can, subject to certain conditions, increase the aggregate maximum credit commitment up to an amount not to exceed $750,000, subject to restrictions imposed on borrowings under the Investment Company Act and certain restrictions and conditions set forth in the SPV Credit Facility, including adequate collateral to support such borrowings. The SPV Credit Facility imposes financial and operating covenants on us and the SPV that restrict our and its business activities. Continued compliance with these covenants will depend on many factors, some of which are beyond our control.

We closed on March 21, 2014 on the Credit Facility, which was subsequently amended on January 8, 2015, May 25, 2016 and March 22, 2017 and September 25, 2018. The maximum principal amount of the Credit Facility is $413,000, subject to availability under the Credit Facility, which is based on certain advance rates multiplied by the value of the Company’s portfolio investments (subject to certain concentration limitations) net of certain other indebtedness that the Company may incur in accordance with the terms of the Credit Facility. Proceeds of the Credit Facility may be used for general corporate purposes, including the funding of portfolio investments. Maximum capacity under the Credit Facility may be increased, subject to certain conditions, to $620,000 through the exercise by the Company of an uncommitted accordion feature through which existing and new lenders may, at their option, agree to provide additional financing. The Credit Facility includes a $20,000 limit for swingline loans and a $5,000 limit for letters of credit. Subject to certain exceptions, the Credit Facility is secured by a first lien security interest in substantially all of the portfolio investments held by the Company. The Credit Facility includes customary covenants, including certain financial covenants related to asset coverage, shareholders’ equity and liquidity, certain limitations on the incurrence of additional indebtedness and liens, and other maintenance covenants, as well as usual and customary events of default for senior secured revolving credit facilities of this nature.

Although we believe that we and the SPV will remain in compliance, there are no assurances that we or the SPV will continue to comply with the covenants in the Credit Facility and SPV Credit Facility, as applicable. Failure to comply with these covenants could result in a default under the Credit Facility and/or the SPV Credit Facility that, if we or the SPV were unable to obtain a waiver from the applicable lenders, could result in the immediate acceleration of the amounts due under the Credit Facility and/or the SPV Credit Facility, and thereby have a material adverse impact on our business, financial condition and results of operations.

For more information on the SPV Credit Facility and the Credit Facility, see Note 6 to the consolidated financial statements in Part I, Item 1 of this Form 10-Q.

The primary use of existing funds and any funds raised in the future is expected to be for investments in portfolio companies, repayment of indebtedness, cash distributions to our stockholders and for other general corporate purposes.

On June 26, 2015, we completed the 2015-1 Debt Securitization. The 2015-1 Notes were issued by Carlyle Direct Lending CLO 2015-1R LLC (formerly known as Carlyle GMS Finance MM CLO 2015-1 LLC) (the “2015-1 Issuer”), a wholly owned and consolidated subsidiary of us. On August 30, 2018, the 2015-1 Issuer refinanced the 2015-1 Debt Securitization (the “2015-1 Debt Securitization Refinancing”) by redeeming in full the 2015-1 Notes and issuing new notes (the “2015-1R Notes”). The 2015-1R Notes are secured by a diversified portfolio of the 2015-1 Issuer consisting primarily of first and second lien senior secured loans. On the closing date of the 2015-1 Debt Securitization Refinancing, the 2015-1 Issuer, among other things, (a) refinanced the issued Class A-1A Notes by redeeming in full the Class A-1A Notes and issuing new AAA Class A-1-1-R Notes in an aggregate principal amount of $234,800 which bear interest at the three-month LIBOR plus 1.55%; (b) refinanced the issued Class A-1B Notes by redeeming in full the Class A-1B Notes and issuing new AAA Class A-1-2-R Notes in an aggregate principal amount of $50,000 which bear interest at the three-month LIBOR plus 1.48% for the first 24 months and the three-month LIBOR plus 1.78% thereafter; (c) refinanced the issued Class A-1C Notes by redeeming in full the Class

A-1C Notes and issuing new AAA Class A-1-3-R Notes in an aggregate principal amount of $25,000 which bear interest at 4.56%; (d) refinanced the issued Class A-2 Notes by redeeming in full the Class A-2 Notes and issuing new Class A-2-R Notes in an aggregate principal amount of $66,000 which bear interest at the three-month LIBOR plus 2.20%; (e) issued new single-A Class B Notes and BBB- Class C Notes in aggregate principal amounts of $46,400 and $27,000, respectively, which bear interest at the three-month LIBOR plus 3.15% and the three-month LIBOR plus 4.00%, respectively; (f) reduced the 2015-1 Issuer Preferred Interests by approximately $21,375 from a nominal value of $125,900 to approximately $104,525 at close; and (g) extended the reinvestment period end date and maturity date applicable to the 2015-1 Issuer to October 15, 2023 and October 15, 2031, respectively. In connection with the contribution, we have made customary representations, warranties and covenants to the 2015-1 Issuer. The Class A-1-1-R, Class A-1-2-R, Class A-1-3-R, Class A-2-R, Class B and Class C Notes are included in the consolidated financial statements included in Part I, Item 1 of this Form 10-Q. The 2015-1 Issuer Preferred Interests were eliminated in consolidation. For more information on the 2015-1R Notes, see Note 7 to the consolidated financial statements in Part I, Item 1 of this Form 10-Q.

As of September 30, 2018 and December 31, 2017, the Company had $112,911 and $32,039, respectively, in cash and cash equivalents. The Facilities consisted of the following as of September 30, 2018 and December 31, 2017:



	September 30, 2018
	Total Facility		Borrowings Outstanding		Unused Portion ⁽¹⁾		Amount Available ⁽²⁾
SPV Credit Facility	$	400,000	$	280,399	$	119,601	$	2,647
Credit Facility	413,000		273,900		139,100		139,100
Total	$	813,000	$	554,299	$	258,701	$	141,747



	December 31, 2017
	Total Facility		Borrowings Outstanding		Unused Portion ⁽¹⁾		Amount Available ⁽²⁾
SPV Credit Facility	$	400,000	$	287,393	$	112,607	$	27,147
Credit Facility	413,000		275,500		137,500		137,500
Total	$	813,000	$	562,893	$	250,107	$	164,647


(1)	The unused portion is the amount upon which commitment fees are based.


(2)	Available for borrowing based on the computation of collateral to support the borrowings and subject to compliance with applicable covenants and financial ratios.

The following were the carrying values (before debt issuance costs) and fair values of the Company’s 2015-1R Notes and 2015-1 Notes disclosed but not carried at fair value as of September 30, 2018 and December 31, 2017:



	September 30, 2018					December 31, 2017
2015-1R Notes ⁽¹⁾	Carrying Value		Fair Value		2015-1 Notes ⁽¹⁾	Carrying Value		Fair Value
AAA/AAA Class A-1-1-R Notes	$	234,800	$	234,800	Aaa/AAA Class A-1A Notes	$	160,000	$	160,064
AAA/AAA Class A-1-2-R Notes	50,000		49,835		Aaa/AAA Class A-1B Notes	40,000		40,020
AAA/AAA Class A-1-3-R Notes	25,000		25,000		Aaa/AAA Class A-1C Notes	27,000		27,014
AA Class A-2-R Notes	66,000		66,000		Aa2 Class A-2 Notes	46,000		46,027
A Class B Notes	46,400		46,242
BBB- Class C Notes	27,000		26,908
Total	$	449,200	$	448,785		$	273,000	$	273,125

(1) On August 30, 2018, the 2015-1 Issuer refinanced the 2015-1 Notes by redeeming in full the 2015-1 Notes and issuing the new 2015-1R Notes. Refer to Note 7 for details.

As of September 30, 2018 and December 31, 2017, we had a combined $1,003,499 and $835,893, respectively, of outstanding consolidated indebtedness under our Facilities and notes. Our annualized interest cost as of September 30, 2018 and December 31, 2017, was 4.12% and 3.52%, excluding fees (such as fees on undrawn amounts and amortization of upfront fees).

Equity Activity

On June 9, 2017, in connection with the NFIC Acquisition, the Company issued 434,233 shares of common stock valued at approximately $8,046. See Note 13 to the consolidated financial statements in Part I, Item 1 of this Form 10-Q for additional information regarding the NFIC Acquisition.

Shares issued as of September 30, 2018 and December 31, 2017 were 62,568,651 and 62,207,603, respectively.

The following table summarizes activity in the number of shares of our common stock outstanding during the nine month periods ended September 30, 2018 and 2017:



	For the nine month periods ended
	September 30, 2018	September 30, 2017
Shares outstanding, beginning of period	62,207,603	41,702,318
Common stock issued	—	20,146,560
Reinvestment of dividends	361,048	10,970
Shares outstanding, end of period	62,568,651	61,859,848

Contractual Obligations

A summary of our significant contractual payment obligations was as follows as of September 30, 2018 and December 31, 2017:



	SPV Credit Facility and Credit Facility				2015-1R Notes / 2015-1 Notes
Payment Due by Period	September 30, 2018		December 31, 2017		September 30, 2018		December 31, 2017
Less than 1 Year	$	—	$	—	$	—	$	—
1-3 Years	—		—		—		—
3-5 Years	554,299		562,893		—		—
More than 5 Years	—		—		449,200		273,000
Total	$	554,299	$	562,893	$	449,200	$	273,000

As of September 30, 2018 and December 31, 2017, $280,399 and $287,393, respectively, of secured borrowings were outstanding under the SPV Credit Facility and $273,900 and $275,500, respectively, were outstanding under the Credit Facility. As of September 30, 2018 and December 31, 2017, $449,200 of 2015-1R Notes and $273,000 of 2015-1 Notes, respectively, were outstanding. For the three month and nine month periods ended September 30, 2018, we incurred $10,372 and $26,896, respectively, of interest expense and $341 and $923, respectively, of unused commitment fees. For the three month and nine month periods ended September 30, 2017, we incurred $5,922 and $16,694, respectively, of interest expense and $309 and $925, respectively, of unused commitment fees.

OFF BALANCE SHEET ARRANGEMENTS

In the ordinary course of our business, we enter into contracts or agreements that contain indemnifications or warranties. Future events could occur which may give rise to liabilities arising from these provisions against us. We believe that the likelihood of such an event is remote; however, the maximum potential exposure is unknown. No accrual has been made in these consolidated financial statements as of September 30, 2018 and December 31, 2017 included in Part I, Item 1 of this Form 10-Q for any such exposure.

We have in the past and may in the future become obligated to fund commitments such as revolving credit facilities, bridge financing commitments, or delayed draw commitments.

We had the following unfunded commitments to fund delayed draw and revolving senior secured loans as of the indicated dates:



	Principal Amount as of
	September 30, 2018		December 31, 2017
Unfunded delayed draw commitments	$	132,485	$	78,991
Unfunded revolving term loan commitments	52,736		39,383
Total unfunded commitments	$	185,221	$	118,374

Pursuant to an undertaking by us in connection with the 2015-1 Debt Securitization, we agreed to hold on an ongoing basis Preferred Interests with an aggregate dollar purchase price at least equal to 5% of the aggregate outstanding amount of all collateral obligations by the 2015-1 Issuer for so long as any securities of the 2015-1 Issuer remains outstanding. As of September 30, 2018 and December 31, 2017, we were in compliance with this undertaking.

DIVIDENDS AND DISTRIBUTIONS TO COMMON STOCKHOLDERS

Prior to July 5, 2017, we had an “opt in” dividend reinvestment plan. Effective on July 5, 2017, we converted our “opt in” dividend reinvestment plan to an “opt out” dividend reinvestment plan that provides for reinvestment of our dividends and other distributions on behalf of our stockholders, other than those stockholders who have “opted out” of the plan. As a result of adopting the plan, if our Board of Directors authorizes, and we declare, a cash dividend or distribution, our stockholders who have not elected to “opt out” of our dividend reinvestment plan will have their cash dividends or distributions automatically reinvested in additional shares of our common stock, rather than receiving cash. Each registered stockholder may elect to have such stockholder’s dividends and distributions distributed in cash rather than participate in the plan. For any registered stockholder that does not so elect, distributions on such stockholder’s shares will be reinvested by State Street Bank and Trust Company, our plan administrator, in additional shares. The number of shares to be issued to the stockholder will be determined based on the total dollar amount of the cash distribution payable, net of applicable withholding taxes. We intend to use primarily newly issued shares to implement the plan so long as the market value per share is equal to or greater than the net asset value per share on the relevant valuation date. If the market value per share is less than the net asset value per share on the relevant valuation date, the plan administrator would implement the plan through the purchase of common stock on behalf of participants in the open market, unless we instruct the plan administrator otherwise.

The following table summarizes our dividends declared during the two most recent fiscal years and the current fiscal year to-date:



Date Declared	Record Date	Payment Date	Per Share Amount
2016
March 10, 2016	March 14, 2016	April 22, 2016	$	0.40
June 8, 2016	June 8, 2016	July 22, 2016	$	0.40
September 28, 2016	September 28, 2016	October 24, 2016	$	0.40
December 29, 2016	December 29, 2016	January 24, 2017	$	0.41
December 29, 2016	December 29, 2016	January 24, 2017	$	0.07	⁽¹⁾
Total			$	1.68
2017
March 20, 2017	March 20, 2017	April 24, 2017	$	0.41
June 20, 2017	June 30, 2017	July 18, 2017	$	0.37
August 7, 2017	September 29, 2017	October 18, 2017	$	0.37
November 7, 2017	December 29, 2017	January 17, 2018	$	0.37
December 13, 2017	December 29, 2017	January 17, 2018	$	0.12	⁽¹⁾
Total			$	1.64
2018
February 26, 2018	March 29, 2018	April 17, 2018	$	0.37
May 2, 2018	June 29, 2018	July 17, 2018	$	0.37
August 6, 2018	September 28, 2018	October 17, 2018	$	0.37
November 5, 2018	December 28, 2018	January 17, 2019	$	0.37
Total			$	1.48


(1)	Represents a special dividend.

ASSET COVERAGE

In accordance with the Investment Company Act, a BDC is only allowed to borrow amounts such that its “asset coverage,” as defined in the Investment Company Act, satisfies the minimum asset coverage ratio specified in the Investment Company Act after such borrowing. “Asset coverage” generally refers to a company’s total assets, less all liabilities and indebtedness not represented by “senior securities,” as defined in the Investment Company Act, divided by total senior securities representing indebtedness and, if applicable, preferred stock. “Senior securities” for this purpose includes borrowings from banks or other lenders, debt securities and preferred stock.

Prior to March 23, 2018, BDCs were required to maintain a minimum asset coverage ratio of 200%. On March 23, 2018, an amendment to Section 61(a) of the Investment Company Act was signed into law to permit BDCs to reduce the minimum asset coverage ratio from 200% to 150%, so long as certain approval and disclosure requirements are satisfied. Under the 200% minimum asset coverage ratio, BDCs are permitted to borrow up to one dollar for investment purposes for every one dollar of investor equity, and under the 150% minimum asset coverage ratio, BDCs are permitted to borrow up to two dollars for investment purposes for every one dollar of investor equity. In other words, Section 61(a) of the 1940 Act, as amended, permits BDCs to potentially increase their debt-to-equity ratio from a maximum of 1 to 1 to a maximum of 2 to 1.

On April 9, 2018 and June 6, 2018, the Board of Directors, including a “required majority” (as such term is defined in Section 57(o) of the Investment Company Act), and the stockholders of the Company, respectively, approved the application to the Company of the 150% minimum asset coverage ratio set forth in Section 61(a)(2) of the 1940 Act. As a result, the minimum asset coverage ratio applicable to the Company was reduced from 200% to 150%, effective as of June 7, 2018, the first day after the Company's 2018 Annual Meeting.

As of September 30, 2018 and December 31, 2017, the Company had total senior securities of $1,003,499 and $835,893, respectively, consisting of secured borrowings under the Facilities and the Notes Payable, and had asset coverage ratios of 210.09% and 234.86%, respectively. For a discussion of the principal risk factors associated with these senior securities, see Part II, Item 1A of this Form 10‑Q.

CRITICAL ACCOUNTING POLICIES

The preparation of our consolidated financial statements requires us to make estimates and assumptions that affect the reported amounts of assets, liabilities, revenues, and expenses. Changes in the economic environment, financial markets, and any other parameters used in determining such estimates could cause actual results to differ. Our critical accounting policies, including those relating to the valuation of our investment portfolio, are described below. The critical accounting policies should be read in connection with our consolidated financial statements in Part I, Item 1 of this Form 10-Q and in Part II, Item 8 of the Company’s annual report on Form 10-K for the year ended December 31, 2017.

Fair Value Measurements

The Company applies fair value accounting in accordance with the terms of Financial Accounting Standards Board ASC Topic 820, Fair Value Measurement (“ASC 820”). ASC 820 defines fair value as the amount that would be exchanged to sell an asset or transfer a liability in an orderly transfer between market participants at the measurement date. The Company values securities/instruments traded in active markets on the measurement date by multiplying the closing price of such traded securities/instruments by the quantity of shares or amount of the instrument held. The Company may also obtain quotes with respect to certain of its investments, such as its securities/instruments traded in active markets and its liquid securities/instruments that are not traded in active markets, from pricing services, brokers, or counterparties (i.e., “consensus pricing”). When doing so, the Company determines whether the quote obtained is sufficient according to US GAAP to determine the fair value of the security. The Company may use the quote obtained or alternative pricing sources may be utilized including valuation techniques typically utilized for illiquid securities/instruments.

by the investment professionals responsible for such portfolio company or investment and, for non-traded investments, a standardized template designed to approximate fair market value based on observable market inputs, updated credit statistics and unobservable inputs is used to determine a preliminary value, which is also reviewed alongside consensus pricing, where available; (ii) preliminary valuation conclusions are documented and reviewed by a valuation committee comprised of members of senior management; (iii) the Board of Directors engages a third-party valuation firm to provide positive assurance on portions of the Middle Market Senior Loans and equity investments portfolio each quarter (such that each non-traded investment other than Credit Fund is reviewed by a third-party valuation firm at least once on a rolling twelve month basis) including a review of management’s preliminary valuation and conclusion on fair value; (iv) the Audit Committee of the Board of Directors (the “Audit Committee”) reviews the assessments of the Investment Adviser and the third-party valuation firm and provides the Board of Directors with any recommendations with respect to changes to the fair value of each investment in the portfolio; and (v) the Board of Directors discusses the valuation recommendations of the Audit Committee and determines the fair value of each investment in the portfolio in good faith based on the input of the Investment Adviser and, where applicable, the third-party valuation firm.

All factors that might materially impact the value of an investment are considered, including, but not limited to the assessment of the following factors, as relevant:


•	the nature and realizable value of any collateral;


•	call features, put features and other relevant terms of debt;


•	the portfolio company’s leverage and ability to make payments;


•	the portfolio company’s public or private credit rating;


•	the portfolio company’s actual and expected earnings and discounted cash flow;


•	prevailing interest rates and spreads for similar securities and expected volatility in future interest rates;


•	the markets in which the portfolio company does business and recent economic and/or market events; and


•	comparisons to comparable transactions and publicly traded securities.

Investments measured and reported at fair value are classified and disclosed based on the observability of inputs used in determination of fair values, as follows:

•

Level 1—inputs to the valuation methodology are quoted prices available in active markets for identical investments as of the reporting date. The types of financial instruments included in Level 1 generally include unrestricted securities, including equities and derivatives, listed in active markets. The Company does not adjust the quoted price for these investments, even in situations where the Company holds a large position and a sale could reasonably impact the quoted price.


•	Level 2—inputs to the valuation methodology are either directly or indirectly observable as of the reporting date and are those other than quoted prices in active markets. The type of financial instruments in this category generally

includes less liquid and restricted securities listed in active markets, securities traded in other than active markets, government and agency securities, and certain over-the-counter derivatives where the fair value is based on observable inputs.

•

Level 3—inputs to the valuation methodology are unobservable and significant to overall fair value measurement. The inputs into the determination of fair value require significant management judgment or estimation. Financial instruments that are included in this category generally include investments in privately-held entities and certain over-the-counter derivatives where the fair value is based on unobservable inputs.

Transfers between levels, if any, are recognized at the beginning of the quarter in which the transfers occur.

The Company generally uses the following framework when determining the fair value of investments that are categorized as Level 3:

Investments in debt securities that do not have sufficient coverage through the enterprise value analysis are valued based on an expected probability of default and discount recovery analysis.

Investments in Credit Fund’s subordinated loan and member’s interest are valued using the net asset value of the Company’s ownership interest in the funds and investments in Credit Fund’s mezzanine loans are valued using discounted cash flow analysis with expected repayment rate of principal and interest.

The carrying values of the secured borrowings and notes payable approximate their respective fair values and are categorized as Level 3 within the hierarchy. Secured borrowings are valued generally using discounted cash flow analysis. The significant unobservable inputs used in the fair value measurement of the Company’s secured borrowings are discount rates. Significant increases in discount rates would result in a significantly lower fair value measurement. The fair value determination of the Company’s notes payable was based on the market quotation(s) received from broker/dealer(s). These fair

value measurements were based on significant inputs not observable and thus represent Level 3 measurements as defined in the accounting guidance for fair value measurement.

The carrying value of other financial assets and liabilities approximates their fair value based on the short term nature of these items.

See Note 3 to the consolidated financial statements in Part I, Item 1 of this Form 10-Q for further information on fair value measurements.

Use of Estimates

The preparation of consolidated financial statements in Part I, Item 1 of this Form 10-Q in conformity with US GAAP requires management to make assumptions and estimates that affect the reported amounts of assets and liabilities and disclosure of contingent assets and liabilities at the date of the financial statements and the reported amounts of revenues and expenses during the reporting period. Management’s estimates are based on historical experiences and other factors, including expectations of future events that management believes to be reasonable under the circumstances. It also requires management to exercise judgment in the process of applying the Company’s accounting policies. Assumptions and estimates regarding the valuation of investments and their resulting impact on base management and incentive fees involve a higher degree of judgment and complexity and these assumptions and estimates may be significant to the consolidated financial statements in Part I, Item 1 of this Form 10-Q. Actual results could differ from these estimates and such differences could be material.

Investments

Investment transactions are recorded on the trade date. Realized gains or losses are measured by the difference between the net proceeds from the repayment or sale and the amortized cost basis of the investment using the specific identification method without regard to unrealized appreciation or depreciation previously recognized, and includes investments charged off during the period, net of recoveries. Net change in unrealized appreciation or depreciation on investments as presented in the Consolidated Statements of Operations in Part I, Item 1 of this Form 10-Q reflects the net change in the fair value of investments, including the reversal of previously recorded unrealized appreciation or depreciation when gains or losses are realized.

Revenue Recognition

Interest from Investments and Realized Gain/Loss on Investments

Dividend Income

Dividend income from the investment fund is recorded on the record date for the investment fund to the extent that such amounts are payable by the investment fund and are expected to be collected.

Other Income

Non-Accrual Income

Income Taxes

The SPVs and the 2015-1 Issuer are disregarded entities for tax purposes and are consolidated with the tax return of the Company.

Dividends and Distributions to Common Stockholders

Item 3. Quantitative and Qualitative Disclosures About Market Risk.

We are subject to financial market risks, including changes in the valuations of our investment portfolio and interest rates.

Valuation Risk

Our investments may not have a readily available market price, and we value these investments at fair value as determined in good faith by our Board of Directors in accordance with our valuation policy. There is no single standard for determining fair value in good faith. As a result, determining fair value requires that judgment be applied to the specific facts and circumstances of each portfolio investment while employing a consistently applied valuation process for the types of investments we make. Due to the inherent uncertainty of determining the fair value of investments that do not have a readily available market value, the fair value of our investments may fluctuate from period to period. Because of the inherent uncertainty of valuation, these estimated values may differ significantly from the values that would have been used had a ready market for the investments existed, and it is possible that the difference could be material.

Interest Rate Risk

As of September 30, 2018, on a fair value basis, approximately 0.8% of our debt investments bear interest at a fixed rate and approximately 99.2% of our debt investments bear interest at a floating rate, which primarily are subject to interest rate floors. Interest rates on the investments held within our portfolio of investments are typically based on floating LIBOR, with many of these investments also having a LIBOR floor. Additionally, our Facilities are also subject to floating interest rates and are currently paid based on floating LIBOR rates.

Interest rate sensitivity refers to the change in earnings that may result from changes in the level of interest rates. There can be no assurance that a significant change in market interest rates will not have a material adverse effect on our income in the future.

The following table estimates the potential changes in net cash flow generated from interest income, should interest rates increase or decrease by 100, 200 or 300 basis points. Interest income is calculated as revenue from interest generated from our settled portfolio of debt investments held as of September 30, 2018 and December 31, 2017, excluding structured finance obligations and Credit Fund. These hypothetical calculations are based on a model of the settled debt investments in our portfolio, excluding Credit Fund, held as of September 30, 2018 and December 31, 2017, and are only adjusted for assumed changes in the underlying base interest rates and the impact of that change on interest income. Interest expense is calculated based on outstanding secured borrowings and notes payable as of September 30, 2018 and December 31, 2017 and based on the terms of our Facilities, 2015-1R Notes and 2015-1 Notes. Interest expense on our Facilities and notes payable is calculated using the interest rate as of September 30, 2018 and December 31, 2017, adjusted for the hypothetical changes in rates, as shown below. We intend to continue to finance a portion of our investments with borrowings and the interest rates paid on our borrowings may impact significantly our net interest income.

We regularly measure exposure to interest rate risk. We assess interest rate risk and manage interest rate exposure on an ongoing basis by comparing our interest rate sensitive assets to our interest rate sensitive liabilities. Based on that review, we determine whether or not any hedging transactions are necessary to mitigate exposure to changes in interest rates.

Based on our Consolidated Statements of Assets and Liabilities as of September 30, 2018 and December 31, 2017, the following table shows the annual impact on net investment income of base rate changes in interest rates for our settled debt investments (considering interest rate floors for variable rate instruments), excluding Credit Fund, and outstanding secured borrowings and notes payable assuming no changes in our investment and borrowing structure:



	As of September 30, 2018									As of December 31, 2017
Basis Point Change	Interest Income			Interest Expense			Net Investment Income			Interest Income			Interest Expense			Net Investment Income
Up 300 basis points	$	53,288		$	(29,355	)	$	23,933		$	52,780		$	(24,325	)	$	28,455
Up 200 basis points	$	35,525		$	(19,570	)	$	15,955		$	35,187		$	(16,217	)	$	18,970
Up 100 basis points	$	17,763		$	(9,785	)	$	7,978		$	17,593		$	(8,108	)	$	9,485
Down 100 basis points	$	(17,722	)	$	9,785		$	(7,937	)	$	(9,663	)	$	8,108		$	(1,555	)
Down 200 basis points	$	(23,339	)	$	19,570		$	(3,769	)	$	(9,850	)	$	13,380		$	3,530
Down 300 basis points	$	(23,683	)	$	22,704		$	(979	)	$	(10,038	)	$	13,380		$	3,342

Item 4. Controls and Procedures.

Evaluation of Disclosure Controls and Procedures

As of the end of the period covered by this report, we carried out an evaluation, under the supervision and with the participation of our management, including our Chief Executive Officer (Principal Executive Officer) and our Chief Financial Officer (Principal Financial Officer), of the effectiveness of the design and operation of our disclosure controls and procedures (as defined in Rule 13a-15 of the Securities Exchange Act of 1934, as amended (the “Exchange Act”)). Based on that evaluation, our Chief Executive Officer and our Chief Financial Officer have concluded that our current disclosure controls and procedures are effective in timely alerting them of material information relating to the Company that is required to be disclosed by us in the reports we file or submit under the Exchange Act.

Changes in Internal Controls over Financial Reporting

There have been no changes in our internal control over financial reporting during the three month period ended September 30, 2018 that have materially affected, or are reasonably likely to materially affect, our internal control over financial reporting.

PART II—OTHER INFORMATION

Item 1. Legal Proceedings.

The Company may become party to certain lawsuits in the ordinary course of business. The Company is not currently subject to any material legal proceedings, nor, to our knowledge, is any material legal proceeding threatened against the Company. See also Note 11 to the consolidated financial statements in Part I, Item 1 of this Form 10-Q.

Item 1A. Risk Factors.

Except for as set forth below, there have been no material changes to the risk factors previously disclosed in our annual report on Form 10-K for the year ended December 31, 2017. For a discussion of our potential risks and uncertainties, see the information under the heading “Risk Factors” in our annual report on Form 10-K for the year ended December 31, 2017 filed with the SEC on February 27, 2018, which is accessible on the SEC’s website at sec.gov.

New Legislation allows us to incur additional leverage.

Prior to March 23, 2018, under the Investment Company Act, a BDC generally was not permitted to incur borrowings, issue debt securities or issue preferred stock unless immediately after the borrowing or issuance the ratio of total assets (less total liabilities other than indebtedness) to total indebtedness plus preferred stock, is at least 200%. On March 23, 2018, an amendment to Section 61(a) of the 1940 Act was signed into law to permit BDCs to reduce the minimum asset coverage ratio from 200% to 150%, so long as certain approval and disclosure requirements are satisfied. Under the 200% minimum asset coverage ratio, BDCs are permitted to borrow up to one dollar for investment purposes for every one dollar of investor equity, and under the 150% minimum asset coverage ratio, BDCs are permitted to borrow up to two dollars for investment purposes for every one dollar of investor equity. In other words, Section 61(a) of the 1940 Act, as amended, permits BDCs to potentially increase their debt-to-equity ratio from a maximum of 1 to 1 to a maximum of 2 to 1.

As a result, we may incur additional indebtedness in the future and you may face increased investment risk.

Regulations governing our operation as a BDC affect our ability to, and the way in which we will, raise additional capital. As a BDC, the necessity of raising additional capital may expose us to risks, including the typical risks associated with leverage.

We may issue debt securities or preferred stock and/or borrow money from banks or other financial institutions, which we refer to collectively as “senior securities,” up to the maximum amount permitted by the Investment Company Act. In addition, we may seek to securitize certain of our loans. Under the provisions of the Investment Company Act, we are permitted, as a BDC, to issue senior securities only in amounts such that our asset coverage ratio, as defined in the Investment Company Act, equals at least 150% of total assets less all liabilities and indebtedness not represented by senior securities, after each issuance of senior securities. If the value of our assets declines, we may be unable to satisfy this test, which may prohibit us from paying dividends and could prevent us from maintaining our status as a RIC or may prohibit us from repurchasing shares of our common stock. If that happens, we may be required to sell a portion of our investments and, depending on the nature of our leverage, repay a portion of our indebtedness at a time when such sales may be disadvantageous. Accordingly, any failure to satisfy this test could have a material adverse effect on our business, financial condition or results of operations. As of September 30, 2018, our asset coverage calculated in accordance with the Investment Company Act was 210.09%. Also, any amounts that we use to service our indebtedness would not be available for distributions to our common stockholders. Furthermore, as a result of issuing senior securities, our common stockholders would also be exposed to typical risks associated with increased leverage, including an increased risk of loss resulting from increased indebtedness.

If we issue preferred stock, the preferred stock would rank “senior” to common stock in our capital structure, preferred stockholders would have separate voting rights on certain matters and might have other rights, preferences, or privileges more favorable than those of our common stockholders, and the issuance of preferred stock could have the effect of delaying, deferring or preventing a transaction or a change of control that might involve a premium price for holders of our common stock or otherwise be in their best interest.

We borrow money, which magnifies the potential for gain or loss on amounts invested and may increase the risk of investing in us.

As part of our business strategy, we, including through our wholly owned subsidiaries, borrow money from time to time, and may in the future issue additional senior debt securities to banks, insurance companies and other lenders. Holders of these loans or senior securities would have fixed-dollar claims on our assets that are superior to the claims of our stockholders. If the value of our assets decreases, leverage will cause our NAV to decline more sharply than it otherwise would have without leverage. Similarly, any decrease in our income would cause our net income to decline more sharply than it would have if we had not borrowed. This decline could negatively affect our ability to make dividend payments on our common stock.

Our ability to service our borrowings depends largely on our financial performance and is subject to prevailing economic conditions and competitive pressures. In addition, our management fees are payable based on our gross assets, including assets acquired through the use of leverage (but excluding cash and any temporary investments in cash-equivalents), which may give our Investment Adviser an incentive to use leverage to make additional investments. The amount of leverage that we employ will depend on our Investment Adviser’s and our Board’s assessment of market and other factors at the time of any proposed borrowing. We cannot assure you that we will be able to obtain credit at all or on terms acceptable to us.

In addition to having fixed-dollar claims on our assets that are superior to the claims of our common stockholders, obligations to lenders may be secured by a first priority security interest in our portfolio of investments and cash. In the case of a liquidation event, those lenders would receive proceeds to the extent of their security interest before any distributions are made to our stockholders. In addition, as the holder of the Preferred Interests of the 2015-1 Issuer (i.e., the subordinated class of the 2015-1 Securitization), we may be required to absorb losses with respect to the 2015-1 Debt Securitization.

Our Facilities and the 2015-1R Notes impose financial and operating covenants that restrict our business activities, remedies on default and similar matters. As of September 30, 2018, we were in material compliance with the operating and financial covenants of our Facilities and the 2015-1R Notes. However, our continued compliance with these covenants depends on many factors, some of which are beyond our control. Accordingly, although we believe we will continue to be in compliance, we cannot assure you that we will continue to comply with the covenants in our Facilities and the 2015-1R Notes. Failure to comply with these covenants could result in a default. If we were unable to obtain a waiver of a default from the lenders or holders of that indebtedness, as applicable, those lenders or holders could accelerate repayment under that indebtedness, which may result in cross-acceleration of other indebtedness. An acceleration could have a material adverse impact on our business, financial condition and results of operations. Lastly, we may be unable to obtain additional leverage, which would, in turn, affect our return on capital.

As of September 30, 2018, we had a combined $1.0 billion of outstanding consolidated indebtedness under our Facilities and 2015-1R Notes. Our annualized interest cost as of September 30, 2018, was 4.31%, excluding fees (such as fees on undrawn amounts and amortization of upfront fees). Since we generally pay interest at a floating rate on our Facilities and 2015-1R Notes, an increase in interest rates will generally increase our borrowing costs.

The following table illustrates the effect of leverage on returns from an investment in our common stock assuming various annual returns on our portfolio, net of expenses. The calculations in the table below are hypothetical, and actual returns may be higher or lower than those appearing in the table below.



	Effects of Leverage Based on the Actual Amount of Borrowings Incurred by the Company as of September 30, 2018
Assumed annual returns on the Company’s portfolio (net of expenses)	(10)%	(5)%	0%	5%	10%
Corresponding return to common stockholder ⁽¹⁾	(23.35)%	(13.63)%	(3.91)%	5.81%	15.53%


(1)	As of September 30, 2018, the Company had (i) $2.1 billion in total assets (ii) $1.0 billion in outstanding indebtedness, (iii) $1.1 billion in net assets and (iv) a weighted average interest rate, excluding fees (such as fees on undrawn amounts and amortization of financing costs), of 4.31%.

Based on outstanding indebtedness of $1.0 billion as of September 30, 2018, and the weighted average effective annual interest rate, excluding fees (such as fees on undrawn amounts and amortization of financing costs), of 4.31% as of that date, the Company’s investment portfolio at fair value would have had to produce an annual return of approximately 2.0% to cover annual interest payments on the outstanding debt.

Our indebtedness could adversely affect our business, financial conditions or results of operations.

We cannot assure you that our business will generate sufficient cash flow from operations or that future borrowings will be available to us under our credit facilities or otherwise in an amount sufficient to enable us to repay our indebtedness or to fund our other liquidity needs. We may need to refinance all or a portion of our indebtedness on or before it matures. We cannot assure you that we will be able to refinance any of our indebtedness on commercially reasonable terms or at all. If we cannot service our indebtedness, we may have to take actions such as selling assets or seeking additional equity. We cannot assure you that any such actions, if necessary, could be effected on commercially reasonable terms or at all, or on terms that would not be disadvantageous to our stockholders or on terms that would not require us to breach the terms and conditions of our existing or future debt agreements.

Our fee structure may induce our Investment Adviser to pursue speculative investments and incur leverage, and investors may bear the cost of multiple levels of fees and expenses.

The incentive fees payable by us to our Investment Adviser may create an incentive for our Investment Adviser to pursue investments on our behalf that are riskier or more speculative than would be the case in the absence of such compensation arrangement. The incentive fees payable to our Investment Adviser are calculated based on a percentage of our return on invested capital. This may encourage our Investment Adviser to use leverage to increase the return on our investments. In particular, a portion of the incentive fees payable to the Investment Adviser is calculated based on the Company’s pre-incentive fee net investment income, expressed as a rate of return on the value of the Company’s net assets at the end of the immediately preceding calendar quarter, subject to a “hurdle rate” of 1.50% per quarter (6% annualized) and a “catch-up rate” of 1.82% per quarter (7.28% annualized). See Note 4 to the consolidated financial statements included in Part I, Item 1 of this Form 10-Q. Accordingly, an increase in leverage may make it easier for the Company to meet or exceed the hurdle rate applicable to the income-based incentive fee and may result in an increase in the amount of income-based incentive fee payable to the Investment Adviser.

Under certain circumstances, the use of leverage may increase the likelihood of default, which would impair the value of our securities. In addition, our Investment Adviser receives the incentive fees based, in part, upon net capital gains realized on our investments. Unlike that portion of the incentive fees based on income, there is no hurdle rate applicable to the portion of the incentive fees based on net capital gains. As a result, our Investment Adviser may have a tendency to invest more capital in investments that are likely to result in capital gains as compared to income producing securities. Such a practice could result in our investing in more speculative securities than would otherwise be the case, which could result in higher investment losses, particularly during economic downturns.

The “catch-up” portion of the incentive fees may encourage our Investment Adviser to accelerate or defer interest payable by portfolio companies from one calendar quarter to another, potentially resulting in fluctuations in timing and dividend amounts.

Moreover, because the base management fees payable to our Investment Adviser are payable based on our gross assets, including those assets acquired through the use of leverage, our Investment Adviser has a financial incentive to incur leverage which may not be consistent with our stockholders’ interests.

We may invest, to the extent permitted by law, in the securities and instruments of other investment companies, including private funds, and, to the extent we so invest, bear our ratable share of any such investment company’s expenses, including management and performance fees. We also remain obligated to pay management and incentive fees to our Investment Adviser with respect to the assets invested in the securities and instruments of other investment companies. With respect to each of these investments, each of our stockholders bears his or her share of the management and incentive fees of our Investment Adviser as well as indirectly bearing the management and performance fees and other expenses of any investment companies in which we invest.

Item 2. Unregistered Sales of Equity Securities and Use of Proceeds.

We did not sell any equity securities during the period covered in this report that were not registered under the Securities Act of 1933, as amended.

Item 3. Defaults Upon Senior Securities.

Not applicable.

Item 4. Mine Safety Disclosures.

Not applicable.

Item 5. Other Information.

Item 6. Exhibits.



10.1		Second Amended and Restated Investment Advisory Agreement, dated August 6, 2018, by and between the Company and Carlyle Global Credit Investment Management L.L.C. *

10.2		Fifth Amendment to the Loan and Servicing Agreement, dated as of August 9, 2018, among TCG BDC SPV LLC, as borrower, TCG BDC, Inc., as servicer and transferor, each of the Conduit Lenders, Liquidity Banks, Lender Agents and Institutional Lenders party thereto, Citibank, N.A. as collateral and administrative agent, Wells Fargo Bank, National Association, as account bank, backup servicer and collateral administrator, and Citibank, N.A., as lead arranger*

10.3		First Supplemental Indenture, dated as of August 30, 2018, between Carlyle Direct Lending CLO 2015-1R LLC, as issuer, and State Street Bank and Trust Company, as trustee*

10.4		Omnibus Amendment No. 4, dated as of September 25, 2018, among TCG BDC, Inc., as borrower, the Lenders party thereto and HSBC Bank USA, N.A, as administrative agent and collateral agent*

31.1		Certification of Chief Executive Officer (Principal Executive Officer) Pursuant to Rule 13a-14(a) of the Securities Exchange Act of 1934, as amended.*

31.2		Certification of Chief Financial Officer (Principal Financial Officer) Pursuant to Rule 13a-14 of the Securities Exchange Act of 1934, as amended.*

32.1		Certification of Chief Executive Officer (Principal Executive Officer) Pursuant to 18 U.S.C. Section 1350, as Adopted Pursuant to Section 906 of the Sarbanes-Oxley Act of 2002.*

32.2		Certification of Chief Financial Officer (Principal Financial Officer) Pursuant to 18 U.S.C. Section 1350, as Adopted Pursuant to Section 906 of the Sarbanes-Oxley Act of 2002.*

* Filed herewith

SIGNATURES

Pursuant to the requirements of the Securities Exchange Act of 1934, the registrant has duly caused this report to be signed on its behalf by the undersigned thereunto duly authorized.



	TCG BDC, INC.

Dated: November 6, 2018	By	/s/ Thomas M. Hennigan
		Thomas M. Hennigan Chief Financial Officer (principal financial officer)

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