Crescent Capital BDC, Inc. - Quarter Report: 2017 March (Form 10-Q)

Large accelerated filer

Accelerated filer

Non-Accelerated filer

☒ (Do not check if a smaller reporting company)

Smaller reporting company

Emerging growth company

Form 10-Q

UNITED STATES

SECURITIES AND EXCHANGE COMMISSION

WASHINGTON, DC 20549

FORM 10-Q

(Mark One)

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

For the quarterly period ended March 31, 2017

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

For the transition period from to

Commission file number 814-01132

Crescent Capital BDC, Inc.

(Exact Name of Registrant as Specified in Its Charter)


Delaware		47-3162282
(State or Other Jurisdiction of Incorporation or Organization)		(I.R.S. Employer Identification No.)

11100 Santa Monica Blvd., Suite 2000, Los Angeles, CA		90025
(Address of Principal Executive Offices)		(Zip Code)

Registrant’s Telephone Number, Including Area Code: (310) 235-5900

Not applicable

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 and posted on its corporate Web site, if any, every Interactive Data File required to be submitted and posted 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 and post 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 the definitions of “large accelerated filer,” “accelerated filer” and “smaller reporting company” in Rule 12b-2 of the Exchange Act.

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 Securities Exchange Act of 1934). Yes ☐ No ☒

The number of shares of the Registrant’s common stock, $.001 par value per share, outstanding at May 12, 2017 was 7,613,414.

CRESENT CAPITAL BDC, INC.

FORM 10-Q FOR THE QUARTER ENDED MARCH 31, 2017

Table of Contents


	INDEX	PAGE NO.
PART I.	FINANCIAL INFORMATION		2
Item 1.	Financial Statements		2
	Consolidated Statements of Assets and Liabilities as of March 31, 2017 (Unaudited) and December 31, 2016		2
	Consolidated Statements of Operations for the three months ended March 31, 2017 (Unaudited) and March 31, 2016 (Unaudited)		3
	Consolidated Statements of Changes in Net Assets for the three months ended March 31, 2017 (Unaudited) and March 31, 2016 (Unaudited)		4
	Consolidated Statements of Cash Flows for the three months ended March 31, 2017 (Unaudited) and March 31, 2016 (Unaudited)		5
	Consolidated Schedule of Investments as of March 31, 2017 (Unaudited)		6
	Consolidated Schedule of Investments as of December 31, 2016		12
	Notes to Consolidated Financial Statements (Unaudited)		19
Item 2.	Management’s Discussion and Analysis of Financial Condition and Results of Operations		36
Item 3.	Quantitative and Qualitative Disclosures About Market Risk		49
Item 4.	Controls and Procedures		50
PART II.	OTHER INFORMATION		51
Item 1.	Legal Proceedings		51
Item 1A.	Risk Factors		51
Item 2.	Unregistered Sales of Equity Securities and Use of Proceeds		51
Item 3.	Defaults Upon Senior Securities		51
Item 4.	[Reserved]		51
Item 5.	Other Information		51
Item 6.	Exhibits		52

CAUTIONARY STATEMENT REGARDING FORWARD-LOOKING STATEMENTS

This report contains forward-looking statements that involve substantial risks and uncertainties. These forward-looking statements are not historical facts, but rather are based on current expectations, estimates and projections about us, our current or prospective portfolio investments, our industry, our beliefs, and our assumptions. We believe that it is important to communicate our future expectations to our investors. Words such as “anticipates,” “expects,” “intends,” “plans,” “believes,” “seeks,” “estimates,” “would,” “should,” “targets,” “projects,” and variations of these words and similar expressions are intended to identify forward-looking statements. These statements are not guarantees of future performance and are subject to risks, uncertainties, and other factors, some of which are beyond our control and are difficult to predict, that could cause actual results to differ materially from those expressed or forecasted in the forward-looking statements.

The following factors and factors listed under “Risk Factors” in this report and other documents Crescent Capital BDC, Inc. has filed with the Securities and Exchange Commission, or SEC, provide examples of risks, uncertainties and events that may cause our actual results to differ materially from the expectations we describe in our forward-looking statements. The occurrence of the events described in these risk factors and elsewhere in this report could have a material adverse effect on our business, results of operation and financial position. The following factors are among those that may cause actual results to differ materially from our forward-looking statements:

•

Potential fluctuation in quarterly operating results

•

Potential impact of economic recessions or downturns

•

Adverse developments in the credit markets

•

Operation in a highly competitive market for investment opportunities

•

Regulations governing our operation as a business development company

•

Financing investments with borrowed money

•

Lack of liquidity in investments

•

Defaults by portfolio companies

•

Uncertainty as to the value of certain portfolio investments

•

Potential resignation of the Advisor and or the Administrator

•

Changes in interest rates may affect our cost of capital and net investment income

•

Potential adverse effects of price declines and illiquidity in the corporate debt markets

•

Risks associated with original issue discount (“OID”) and payment-in-kind (“PIK”) interest income

•

Risks regarding distributions

•

Potential adverse effects of new or modified laws and regulations

Although we believe that the assumptions on which these forward-looking statements are based upon are reasonable, some of those assumptions are based on the work of third parties and any of those assumptions could prove to be inaccurate; as a result, forward-looking statements based on those assumptions also could prove to be inaccurate. In light of these and other uncertainties, the inclusion of a projection or forward-looking statement in this report should not be regarded as a representation by us that our plans and objectives will be achieved. You should not place undue reliance on these forward-looking statements, which apply only as of the date of this report. We do not undertake any obligation to update or revise any forward-looking statements or any other information contained herein, except as required by applicable law. You are advised to consult any additional disclosures that we may make directly to you or through reports that we in the future may file with the SEC, including annual reports on Form 10-K, quarterly reports on Form 10-Q and current reports on Form 8-K. The safe harbor provisions of Section 21E of the 1934 Act, which preclude civil liability for certain forward-looking statements, do not apply to the forward-looking statements in this report because we are an investment company.

Crescent Capital BDC, Inc.

Consolidated Statements of Assets and Liabilities


	As of March 31, 2017 (Unaudited)			As of December 31, 2016
Assets
Investments, non-controlled and non-affiliated, at fair value (cost of $261,049,134 and $216,239,598, respectively)	$	264,390,588		$	217,920,952
Cash and cash equivalents		7,366,123			4,990,157
Cash denominated in foreign currency (cost of $228,169 and $137,495, respectively)		223,374			129,168
Receivable for investments sold		1,551,940			993,726
Interest receivable		928,337			1,478,221
Prepaid expenses and other assets		25,778			52,753

Total assets	$	274,486,140		$	225,564,977

Liabilities
Debt (net of deferred financing costs of $1,272,842 and $979,874, respectively)	$	125,641,087		$	93,670,635
Distributions payable		1,994,047			1,750,000
Management fees payable - affiliate		604,227			521,866
Income incentive fee payable - affiliate		221,558			461,537
Due to Advisor - affiliate		58,386			27,247
Due to Administrator - affiliate		145,941			154,403
Professional fees payable		201,937			145,854
Directors’ fees payable		120,875			48,375
Interest and other debt financing costs payable		653,543			449,812
Accrued expenses and other liabilities		268,013			279,220

Total liabilities	$	129,909,614		$	97,508,949

Commitments and Contingencies (Note 7)

Net Assets
Preferred stock, par value $0.001 per share (10,000 shares authorized, zero outstanding, respectively)	$	—		$	—
Common stock, par value $0.001 per share (200,000,000 shares authorized, 7,121,596 and 6,376,850 shares issued and outstanding, respectively)		7,122			6,377
Paid-in capital in excess of par value		140,728,978			125,750,640
Accumulated net realized loss		(97,746	)		(112,155	)
Accumulated distributions in excess of net investment income		(122,724	)		(49,518	)
Net unrealized appreciation (depreciation) on investments and foreign currency translation		4,060,896			2,460,684

Total Net Assets	$	144,576,526		$	128,056,028

Total Liabilities and Net Assets	$	274,486,140		$	225,564,977

Net asset value per share	$	20.30		$	20.08

See accompanying notes.

Crescent Capital BDC, Inc.

Consolidated Statements of Operations

(Unaudited)


	For the three months ended March 31, 2017			For the three months ended March 31, 2016
Investment Income:
Interest income from non-controlled and non-affiliated investments	$	4,464,724		$	2,510,128

Total investment income		4,464,724			2,510,128

Expenses:
Interest and other debt financing costs		1,045,432			454,093
Management fees (net of waiver of $303,960 and $200,556, respectively)		604,227			357,047
Income incentive fees		221,558			—
Directors’ fees		72,500			66,875
Professional fees		175,000			215,000
Organization expenses		24,338			19,471
Other general and administrative expenses		400,739			323,585

Total expenses		2,543,794			1,436,071

Net investment income before taxes		1,920,930			1,074,057

Income taxes		89			800

Net investment income after taxes		1,920,841			1,073,257

Net realized and unrealized gains (losses) on investments:
Net realized gain (loss) on investments		15,394			(461,027	)
Net realized gain (loss) on foreign currency transactions		(985	)		43,305
Net change in unrealized appreciation (depreciation) on investments and foreign currency translation		1,600,212			533,460

Net realized and unrealized gains (losses) on investments		1,614,621			115,738

Net increase in net assets resulting from operations	$	3,535,462		$	1,188,995

Per Common Share Data:
Net increase in net assets resulting from operations per share (basic and diluted):	$	0.52		$	0.28
Net investment income per share (basic and diluted):	$	0.28		$	0.25
Weighted average shares outstanding (basic and diluted):		6,741,198			4,276,179
Distributions declared per share:	$	0.28		$	0.24

See accompanying notes.

Crescent Capital BDC, Inc.

Consolidated Statements of Changes in Net Assets

(Unaudited)


	For the three months ended March 31, 2017			For the three months ended March 31, 2016
Increase (decrease) in net assets resulting from operations:
Net investment income	$	1,920,841		$	1,073,257
Net realized gain (loss) on investments and foreign currency transactions		14,409			(417,722	)
Net change in unrealized appreciation (depreciation) on investments and foreign currency translation		1,600,212			533,460

Net increase in net assets resulting from operations		3,535,462			1,188,995

Distributions to shareholders from:
Net investment income		(1,994,047	)		(1,130,001	)

Total distributions to shareholders		(1,994,047	)		(1,130,001	)

Capital transactions:
Issuance of common stock		15,000,000			12,000,000
Issuance of common stock pursuant to dividend reinvestment plan		13,131			7,024
Equity offering costs		(34,048	)		(27,239	)

Net increase in net assets resulting from capital transactions		14,979,083			11,979,785

Total increase in net assets		16,520,498			12,038,779
Net assets at beginning of period		128,056,028			77,586,238

Net assets at end of period	$	144,576,526		$	89,625,017

Accumulated distributions in excess of net investment income	$	(122,724	)	$	(222,170	)

Changes in Shares
Common stock, at beginning of period		6,376,850			4,056,316
Issuance of common stock		744,085			624,383
Issuance of common stock pursuant to dividend reinvestment plan		661			354

Common stock, at end of period		7,121,596			4,681,053

See accompanying notes.

Crescent Capital BDC, Inc.

Consolidated Statements of Cash Flows

(Unaudited)


	For the three months ended March 31, 2017			For the three months ended March 31, 2016
Cash flows from operating activities:
Net increase (decrease) in net assets resulting from operations	$	3,535,462		$	1,188,995
Adjustments to reconcile net increase (decrease) in net assets resulting from operations to net cash provided by (used for) operating activities:
Purchases of investments		(57,765,496	)		(22,463,629	)
Paid-in-kind interest income		(3,853	)		—
Proceeds from sales of investments and principal repayments		13,134,192			2,705,536
Net realized (gain) loss on investments		(15,394	)		461,027
Net change in unrealized (appreciation) depreciation on investments and foreign currency translation		(1,600,212	)		(533,460	)
Amortization of premium and accretion of discount, net		(158,985	)		(47,201	)
Amortization of deferred financing costs		172,769			114,723
Increase (decrease) in operating assets and liabilities:
(Increase) decrease in receivable for investments sold		(558,214	)		(2,819	)
(Increase) decrease in interest receivable		549,884			(345,341	)
(Increase) decrease in prepaid expenses and other assets		26,975			28,469
Increase (decrease) in payable for investments purchased		—			(6,011,625	)
Increase (decrease) in management fees payable - affiliate		82,361			20,867
Increase (decrease) in income incentive fees payable - affiliate		(239,979	)		—
Increase (decrease) in due to Advisor - affiliate		31,139			—
Increase (decrease) in due to Administrator - affiliate		(8,462	)		(60,493	)
Increase (decrease) in professional fees payable		56,083			(11,612	)
Increase (decrease) in directors’ fees payable		72,500			(4,500	)
Increase (decrease) in interest and credit facility fees and expenses payable		203,731			27,841
Increase (decrease) in accrued expenses and other liabilities		(11,207	)		(44,926	)

Net cash provided by (used for) operating activities		(42,496,706	)		(24,978,148	)

Cash flows from financing activities:
Issuance of common stock		15,000,000			12,000,000
Financing costs paid related to revolving credit facility		(465,737	)		(1,197,707	)
Distributions paid		(1,736,869	)		(917,974	)
Equity offering costs		(34,048	)		(27,239	)
Borrowings on revolving credit facility		50,200,000			13,500,000
Repayments on revolving credit facility		(18,000,000	)		—

Net cash provided by (used for) financing activities		44,963,346			23,357,080

Effect of exchange rate changes on cash denominated in foreign currency		3,532			215
Net increase (decrease) in cash, cash equivalents and foreign currency		2,470,172			(1,620,853	)
Cash, cash equivalents and foreign currency, beginning of period		5,119,325			4,767,556

Cash, cash equivalents and foreign currency, end of period	$	7,589,497		$	3,146,703

Supplemental and non-cash financing activities:
Cash paid during the period for interest	$	626,300		$	302,797
Issuance of common stock pursuant to distribution reinvestment plan	$	13,131		$	7,024
Accrued but unpaid offering costs	$	34,048		$	27,239
Accrued but unpaid distributions	$	1,994,047		$	1,130,001

See accompanying notes.

CRESCENT CAPITAL BDC, INC.

Consolidated Schedule of Investments (Unaudited)

March 31, 2017


	Investment Type	Spread Above Index *			Interest Rate			Maturity Date		Principal/ Par Amount		Cost			Percentage of Net Assets **			Fair Value
Investments⁽¹⁾
United States
Debt Investments
Automobiles & Components
POC Investors, LLC	Senior Secured First Lien		L + 550	⁽²⁾		6.65	%		10/2021	$	3,100,000	$	3,056,649			2.1	%	$	3,100,000
POC Investors, LLC⁽³⁾	Senior Secured First Lien		L + 550	⁽⁴⁾		6.50	%		10/2021		100,000		93,074			0.1			100,000

											3,200,000		3,149,723			2.2			3,200,000

Capital Goods
Alion Science and Technology Corp.	Unsecured Debt					11.00	%		08/2022		5,000,000		4,874,913			3.5			5,000,000
Brand Energy & Infrastructure Services, Inc.	Senior Secured First Lien		L + 375	⁽²⁾		4.90	%		11/2020		833,655		820,502			0.6			837,215
Doosan Infracore International, Inc.⁽⁵⁾	Senior Secured First Lien		L + 350	⁽⁴⁾		4.50	%		05/2021		596,620		599,420			0.4			604,823
MB Aerospace Holdings Inc.⁽⁵⁾	Senior Secured First Lien		L + 550	⁽²⁾		6.69	%		12/2022		4,349,833		4,314,646			3.0			4,382,457
Midwest Industrial Rubber	Senior Secured First Lien		L + 550	⁽²⁾		6.65	%		12/2021		4,089,750		4,022,209			2.8			4,089,750
Midwest Industrial Rubber⁽³⁾	Senior Secured First Lien		P + 450	⁽⁶⁾		8.50	%		12/2021		85,000		78,035			0.1			85,000
Pro Mach Group, Inc.	Senior Secured First Lien		L + 375	⁽⁴⁾		4.75	%		10/2021		736,809		741,053			0.5			739,918
Silver II US Holdings, LLC⁽⁵⁾	Senior Secured First Lien		L + 300	⁽²⁾		4.15	%		12/2019		830,597		814,754			0.5			782,493

											16,522,264		16,265,532			11.4			16,521,656

Commercial & Professional Services
ADMI Corp.	Senior Secured First Lien		L + 375	⁽²⁾		4.79	%		04/2022		982,500		991,667			0.7			992,944
Advantage Sales & Marketing, Inc.	Senior Secured First Lien		L + 325	⁽⁷⁾		4.25	%		07/2021		835,013		835,337			0.6			827,811
Advantage Sales & Marketing, Inc.	Senior Secured Second Lien		L + 650	⁽⁷⁾		7.50	%		07/2022		500,000		502,762			0.3			487,750
Asurion, LLC	Senior Secured Second Lien		L + 750	⁽⁴⁾		8.50	%		03/2021		275,000		279,167			0.2			278,850
Brickman Group, Ltd. LLC	Senior Secured Second Lien		L + 650	⁽⁴⁾		7.50	%		12/2021		500,000		501,957			0.4			504,272
DFS Intermediate Holdings, LLC^(3) (8)	Senior Secured First Lien								09/2018		—		(10,000	)		—			(20,000	)
DFS Intermediate Holdings, LLC⁽³⁾	Senior Secured First Lien		L + 525	⁽⁴⁾		6.25	%		03/2022		300,000		260,021			0.2			280,000
DFS Intermediate Holdings, LLC	Senior Secured First Lien		L + 525	⁽⁴⁾		6.25	%		03/2022		7,350,000		7,203,069			5.0			7,276,500
Emerald Expositions Holding, Inc.	Senior Secured First Lien		L + 375	⁽²⁾		4.90	%		06/2020		694,401		696,835			0.5			700,914
Hepaco, LLC⁽³⁾	Senior Secured First Lien		P + 400	⁽⁶⁾		8.00	%		08/2021		208,333		202,799			0.2			208,333
Hepaco, LLC	Senior Secured First Lien		L + 500	⁽²⁾		6.00	%		08/2022		2,935,250		2,901,740			2.0			2,935,250
Hepaco, LLC^(3) (8)	Senior Secured First Lien								08/2022		—		(16,364	)		—			—
Jordon Healthcare, Inc.	Senior Secured First Lien		L + 525	⁽²⁾		6.40	%		07/2021		2,382,000		2,356,034			1.7			2,393,910
Jordon Healthcare, Inc.⁽³⁾	Senior Secured First Lien		L + 525	⁽²⁾		6.40	%		08/2021		840,000		827,078			0.6			846,000
Jordon Healthcare, Inc.^{(3) (8)}	Senior Secured First Lien								08/2021		—		(4,811	)		—			2,250
MHS Acquisition Holdings, LLC	Senior Secured Second Lien		L + 875	⁽⁹⁾		9.86	%		03/2026		6,250,456		6,063,725			4.3			6,250,456
MHS Acquisition Holdings, LLC⁽³⁾	Senior Secured Second Lien		L + 873	⁽⁴⁾		9.73	%		03/2026		285,326		218,489			0.2			285,326
MHS Acquisition Holdings, LLC⁽³⁾	Unsecured Debt					13.50	%		03/2026		19,461		16,641			—			19,461
MHS Acquisition Holdings, LLC	Unsecured Debt					13.50	%		03/2026		493,059		483,337			0.3			493,059

See accompanying notes.

CRESCENT CAPITAL BDC, INC.

Consolidated Schedule of Investments (Unaudited)

March 31, 2017


	Investment Type	Spread Above Index *			Interest Rate			Maturity Date		Principal/ Par Amount		Cost			Percentage of Net Assets **			Fair Value
NS Intermediate Holdings, LLC	Senior Secured First Lien		L + 550	⁽⁴⁾		6.50	%		09/2021	$	2,870,642	$	2,824,793			2.0	%	$	2,870,642
NS Intermediate Holdings, LLC^(3) (8)	Senior Secured First Lien		L + 550	⁽¹⁰⁾		6.50	%		09/2021		—		(3,939	)		—			—
PowerTeam Services, LLC	Senior Secured First Lien		L + 325	⁽²⁾		4.40	%		05/2020		983,052		981,434			0.7			985,820
Survey Sampling International, LLC	Senior Secured First Lien		L + 500	⁽²⁾		6.15	%		12/2020		3,167,665		3,141,876			2.2			3,183,504
USAGM HoldCo, LLC	Senior Secured Second Lien					11.00	%		07/2023		2,000,000		1,953,298			1.4			2,058,000
USAGM HoldCo, LLC	Senior Secured Second Lien		L + 850	⁽²⁾		9.54	%		07/2023		10,000,000		9,659,846			7.0			10,150,000
Valet Waste Holdings, Inc.	Senior Secured First Lien		L + 700	⁽⁴⁾		8.00	%		09/2021		4,282,609		4,231,289			3.0			4,325,435
Valet Waste Holdings, Inc.⁽³⁾	Senior Secured First Lien		L + 700	⁽⁴⁾		8.00	%		09/2021		326,087		319,774			0.2			331,522
Vencore, Inc.	Senior Secured First Lien		L + 475	⁽²⁾		5.90	%		11/2019		485,834		486,275			0.3			491,300
William Morris Endeavor Entertainment, LLC	Senior Secured Second Lien		L + 725	⁽²⁾		8.29	%		05/2022		166,667		163,335			0.1			168,750
Xcentric Mold and Engineering Acquisition Company, LLC	Senior Secured First Lien		L + 550	⁽⁴⁾		6.50	%		01/2022		5,050,000		4,953,188			3.5			5,100,500
Xcentric Mold and Engineering Acquisition Company, LLC^(3) (8)	Senior Secured First Lien								01/2022		—		(14,000	)		—			7,000

											54,183,355		53,006,652			37.6			54,435,559

Consumer Durables & Apparel
C.F. Stinson, LLC	Senior Secured First Lien		L + 663	⁽⁴⁾		7.44	%		05/2021		3,000,000		2,947,667			2.1			3,060,000
Varsity Brands, Inc.	Senior Secured First Lien		L + 400	⁽⁴⁾		5.00	%		12/2021		982,412		990,467			0.7			997,640

											3,982,412		3,938,134			2.8			4,057,640

Consumer Services
Catapult Learning, LLC	Senior Secured First Lien		L + 650	⁽²⁾		7.54	%		07/2020		5,000,000		4,964,501			3.4			4,875,000
Centerplate, Inc.	Senior Secured First Lien		L + 375	⁽²⁾		4.81	%		11/2019		705,821		705,821			0.5			705,821
Oncourse Learning Corp.	Senior Secured First Lien		L + 650	⁽⁴⁾		7.50	%		09/2021		10,423,875		10,282,055			7.2			10,423,875
Oncourse Learning Corp.⁽³⁾	Senior Secured First Lien		L + 650	⁽⁴⁾		7.50	%		09/2021		240,000		231,943			0.2			240,000
SkillSoft Corporation	Senior Secured First Lien		L + 475	⁽⁴⁾		5.75	%		04/2021		982,368		967,675			0.6			905,885
Teaching Company, LLC	Senior Secured First Lien					4.75	%		02/2023		5,000,000		4,950,666			3.5			5,000,000
Wrench Group, LLC	Senior Secured First Lien		L + 525	⁽⁷⁾		6.27	%		03/2022		3,811,111		3,762,663			2.6			3,811,111
Wrench Group, LLC⁽³⁾	Senior Secured First Lien		L + 625	⁽²⁾		7.28	%		03/2022		66,666		53,043			—			66,667

											26,229,841		25,918,367			18.0			26,028,359

Diversified Financials
Edelman Financial Group, The	Senior Secured First Lien		L + 550	⁽²⁾		6.51	%		12/2022		2,962,500		2,912,271			2.1			2,981,016

Energy
Fairmount Santrol, Inc.⁽⁵⁾	Senior Secured First Lien		L + 350	⁽²⁾		4.65	%		09/2019		334,331		322,981			0.2			328,203
Murray Energy Corporation	Senior Secured First Lien		L + 725	⁽²⁾		8.40	%		04/2020		355,532		339,878			0.3			346,346

											689,863		662,859			0.5			674,549

Food & Staples Retailing
Good Source Solutions, Inc.	Senior Secured First Lien		L + 725	⁽²⁾		8.40	%		07/2021		2,674,173		2,650,452			1.8			2,685,699

See accompanying notes.

CRESCENT CAPITAL BDC, INC.

Consolidated Schedule of Investments (Unaudited)

March 31, 2017


	Investment Type	Spread Above Index *			Interest Rate			Maturity Date		Principal/ Par Amount		Cost			Percentage of Net Assets **			Fair Value
HLF Financing S.a r.l.⁽⁵⁾	Senior Secured First Lien		L + 550	⁽⁴⁾		6.48	%		02/2023	$	5,000,000	$	4,901,427			3.5	%	$	5,011,450

											7,674,173		7,551,879			5.3			7,697,149

Food, Beverage & Tobacco
American Seafoods Group LLC	Senior Secured Second Lien		L + 900	⁽⁴⁾		10.00	%		02/2022		5,000,000		4,888,597			3.5			5,000,000
Shearer’s Foods, Inc.	Senior Secured First Lien		L + 425	⁽²⁾		5.40	%		06/2021		740,625		734,832			0.5			743,402

											5,740,625		5,623,429			4.0			5,743,402

Health Care Equipment & Services
Alere, Inc.⁽⁵⁾	Senior Secured First Lien		L + 325	⁽⁴⁾		4.25	%		06/2022		778,274		782,985			0.6			781,192
ATI Holdings Acquisition, Inc.	Senior Secured First Lien		L + 450	⁽²⁾		5.51	%		05/2023		1,166,187		1,155,747			0.8			1,180,275
Beaver-Visitec International, Inc.⁽⁵⁾	Senior Secured First Lien		L + 500	⁽²⁾		6.15	%		08/2023		7,462,500		7,392,794			5.2			7,462,500
CDRH Parent, Inc.	Senior Secured First Lien		L + 425	⁽²⁾		5.32	%		07/2021		368,078		370,571			0.2			344,843
Centauri Health Solutions, Inc.	Senior Secured First Lien		L + 550	⁽⁴⁾		6.50	%		01/2022		8,300,000		8,138,770			5.8			8,420,682
Centauri Health Solutions, Inc.^(3) (8)	Senior Secured First Lien								01/2022		—		(21,000	)		—			15,267
ExamWorks Group, Inc.	Senior Secured Second Lien					10.50	%		07/2024		5,000,000		4,858,333			3.5			5,100,000
Heartland Dental, LLC	Senior Secured First Lien		L + 450	⁽⁴⁾		5.50	%		12/2018		982,412		985,994			0.7			989,780
NMSC Holdings, Inc.	Senior Secured Second Lien		L + 1000	⁽²⁾		11.15	%		10/2023		4,307,480		4,149,748			3.0			4,307,480
NVA Holdings, Inc.	Senior Secured First Lien		L + 350	⁽²⁾		4.65	%		08/2021		4,044,027		3,960,273			2.8			4,090,796
Onex Carestream Finance LP⁽⁵⁾	Senior Secured First Lien		L + 400	⁽²⁾		5.15	%		06/2019		417,135		417,486			0.3			403,996
Onex Carestream Finance LP⁽⁵⁾	Senior Secured Second Lien		L + 850	⁽²⁾		9.65	%		12/2019		197,728		197,728			0.1			177,814
Professional Physical Therapy	Senior Secured First Lien		L + 600	⁽²⁾		7.15	%		12/2022		7,481,250		7,409,374			5.2			7,499,953
PT Network, LLC^{(3) (8)}	Senior Secured First Lien								11/2021		—		(1,868	)		—			—
PT Network, LLC⁽³⁾	Senior Secured First Lien		L + 650	⁽²⁾		7.59	%		11/2021		212,670		204,253			0.2			212,670
PT Network, LLC	Senior Secured First Lien		L + 650	⁽²⁾		7.55	%		11/2021		2,294,250		2,272,602			1.6			2,294,250
Snow Companies, LLC	Senior Secured First Lien		L + 600	⁽⁴⁾		7.00	%		01/2022		9,326,625		9,145,652			6.5			9,419,891
Zest Holdings LLC	Senior Secured First Lien		L + 475	⁽²⁾		5.90	%		08/2020		4,950,000		4,914,334			3.4			4,925,250

											57,288,616		56,333,776			39.9			57,626,639

Household & Personal Products
Paris Presents Incorporated	Senior Secured First Lien		L + 500	⁽⁴⁾		6.00	%		01/2021		1,736,721		1,720,803			1.2			1,728,038
Paris Presents Incorporated	Senior Secured Second Lien		L + 875	⁽⁴⁾		9.75	%		01/2022		504,468		494,979			0.3			494,378

											2,241,189		2,215,782			1.5			2,222,416

Insurance
Edgewood Partners Insurance Center	Senior Secured First Lien		L + 600	⁽⁴⁾		7.00	%		03/2023		2,970,000		2,917,714			2.1			2,999,700
Integro Parent, Inc.	Senior Secured First Lien		L + 575	⁽²⁾		6.79	%		09/2022		459,633		452,296			0.3			461,931
Integro Parent, Inc.	Senior Secured First Lien		L + 575	⁽²⁾		6.86	%		10/2022		34,259		33,672			—			34,431
Integro Parent, Inc.	Senior Secured Second Lien		L + 925	⁽²⁾		10.29	%		10/2023		2,408,451		2,363,485			1.6			2,372,324
Integro Parent, Inc.	Senior Secured Second Lien		L + 925	⁽²⁾		10.27	%		10/2023		380,282		373,626			0.3			374,578

											6,252,625		6,140,793			4.3			6,242,964

See accompanying notes.

CRESCENT CAPITAL BDC, INC.

Consolidated Schedule of Investments (Unaudited)

March 31, 2017


	Investment Type	Spread Above Index *			Interest Rate			Maturity Date		Principal/ Par Amount		Cost			Percentage of Net Assets **			Fair Value
Materials
Berlin Packaging LLC	Senior Secured First Lien		L + 350	⁽⁴⁾		4.50	%		10/2021	$	977,313	$	980,925			0.7	%	$	984,291
Emerald Performance Materials, LLC	Senior Secured First Lien		L + 350	⁽⁴⁾		4.50	%		08/2021		967,308		970,531			0.7			978,191
IBC Capital Limited⁽⁵⁾	Senior Secured First Lien		L + 375	⁽²⁾		4.87	%		09/2021		835,088		825,017			0.5			820,820
Royal Holdings, Inc.	Senior Secured First Lien		L + 350	⁽²⁾		4.40	%		06/2022		837,250		839,477			0.6			846,929
Tank Holding Corp.	Senior Secured First Lien		L + 425	⁽⁴⁾		5.25	%		03/2022		914,607		921,696			0.6			918,036

											4,531,566		4,537,646			3.1			4,548,267

Media
Acosta Holdco, Inc.	Senior Secured First Lien		L + 325	⁽²⁾		4.29	%		09/2021		975,253		976,036			0.6			917,753
Charter Communications Operating, LLC⁽⁵⁾	Senior Secured First Lien		L + 225	⁽⁴⁾		3.23	%		01/2024		321,750		321,099			0.2			323,739
iHeartCommunications, Inc.⁽⁵⁾	Senior Secured First Lien		L + 675	⁽⁴⁾		7.73	%		01/2019		738,673		711,729			0.5			636,529
Rentpath, Inc.⁽⁵⁾	Senior Secured First Lien		L + 525	⁽⁴⁾		6.25	%		12/2021		982,412		990,050			0.7			969,719
Tribune Media Co.⁽⁵⁾	Senior Secured First Lien		L + 300	⁽⁴⁾		3.98	%		12/2020		164,167		164,766			0.1			165,739

											3,182,255		3,163,680			2.1			3,013,479

Real Estate
DTZ U.S. Borrower, LLC⁽⁵⁾	Senior Secured Second Lien		L + 825	⁽²⁾		9.29	%		11/2022		425,532		420,030			0.3			426,064

Retailing
Academy, Ltd.	Senior Secured First Lien		L + 400	⁽²⁾		5.04	%		07/2022		927,706		932,028			0.5			689,981
Petco Animal Supplies, Inc.	Senior Secured First Lien		L + 325	⁽²⁾		4.29	%		01/2023		165,000		162,296			0.1			155,960
Strategic Partners, Inc.	Senior Secured First Lien		L + 450	⁽⁴⁾		5.50	%		06/2023		6,483,750		6,468,711			4.5			6,556,692

											7,576,456		7,563,035			5.1			7,402,633

Software & Services
Ansira Partners, Inc.	Senior Secured First Lien		L + 650	⁽²⁾		7.65	%		12/2022		6,545,455		6,482,465			4.5			6,496,364
Ansira Partners, Inc.^(3) (8)	Senior Secured First Lien								12/2022		—		(9,114	)		—			(7,159	)
Cision US, Inc.	Senior Secured First Lien		L + 600	⁽²⁾		7.15	%		06/2023		4,962,502		4,781,523			3.5			4,996,842
Epicor Software Corporation	Senior Secured First Lien		L + 375	⁽⁴⁾		4.75	%		06/2022		970,884		972,327			0.7			974,039
Informatica Corporation⁽⁵⁾	Senior Secured First Lien		L + 350	⁽²⁾		4.65	%		08/2022		825,641		826,611			0.6			822,611
Magic Newco LLC⁽⁵⁾	Senior Secured First Lien		L + 400	⁽⁴⁾		5.00	%		12/2018		982,027		983,947			0.7			987,419
Mediaocean LLC	Senior Secured First Lien		L + 425	⁽⁴⁾		5.25	%		08/2022		6,507,014		6,449,624			4.5			6,585,651
Merrill Communications, LLC	Senior Secured First Lien		L + 525	⁽²⁾		6.29	%		06/2022		984,270		987,190			0.7			986,731
Ministry Brands Intermediate, LLC	Senior Secured First Lien		L + 500	⁽⁴⁾		6.00	%		11/2023		5,239,700		5,189,412			3.6			5,187,303
SMS Systems Maintenance Services, Inc.	Senior Secured Second Lien		L + 850	⁽²⁾		9.75	%		10/2024		4,703,478		4,552,533			3.2			4,703,478
SMS Systems Maintenance Services, Inc.	Senior Secured Second Lien					10.00	%		10/2024		9,015,000		8,732,347			6.2			9,015,000
Transportation Insight, LLC	Senior Secured First Lien		L + 525	⁽⁴⁾		6.25	%		09/2019		1,843,966		1,829,006			1.3			1,843,966

											42,579,937		41,777,871			29.5			42,592,245

Technology Hardware & Equipment
Onvoy, LLC	Senior Secured Second Lien		L + 1050	⁽²⁾		11.65	%		02/2025		2,635,052		2,510,732			1.8			2,635,052

See accompanying notes.

CRESCENT CAPITAL BDC, INC.

Consolidated Schedule of Investments (Unaudited)

March 31, 2017


	Investment Type	Spread Above Index *			Interest Rate			Maturity Date		Principal/ Par Amount		Cost		Percentage of Net Assets **			Fair Value
Telecommunication Services
Birch Communications, Inc.	Senior Secured First Lien		L + 725	⁽²⁾		8.40	%		07/2020	$	935,201	$	938,550		0.6	%	$	836,224
U.S. Telepacific Corporation	Senior Secured First Lien		L + 500	⁽²⁾		6.04	%		11/2020		980,275		982,046		0.7			988,607

											1,915,476		1,920,596		1.3			1,824,831

Transportation
Kenan Advantage Group, Inc.	Senior Secured First Lien		L + 300	⁽⁴⁾		4.00	%		07/2022		782,412		784,246		0.6			784,611
Pilot Air Freight, LLC	Senior Secured First Lien		L + 525	⁽⁴⁾		6.25	%		10/2022		3,341,625		3,310,211		2.3			3,341,625

											4,124,037		4,094,457		2.9			4,126,236

Total Debt Investments United States										$	253,937,774	$	249,707,244		175.7	%	$	254,000,156

Equity Investments
Capital Goods
Alion Science and Technology Corp.⁽¹¹⁾	Common Stock										535,714		535,714		0.4			510,378

Commercial & Professional Services
MHS Acquisition Holdings, LLC⁽¹¹⁾	Common Stock										877		876,504		0.6			876,504
Universal Services Equity Investments⁽¹¹⁾	Common Stock										1,000,000		1,000,000		0.7			1,000,000
USAGM HoldCo, LLC⁽¹¹⁾	Common Stock										238,095		238,095		0.2			238,095

											1,238,972		2,114,599		1.5			2,114,599

Health Care Equipment & Services
ExamWorks Group, Inc.⁽¹¹⁾	Common Stock										7,500		750,000		0.5			750,000

Insurance
Integro Equity⁽¹¹⁾	Common Stock										4,225		422,535		0.3			412,768

Software & Services
SMS Systems Maintenance Services, Inc.⁽¹¹⁾	Common Stock										1,142,789		1,144,521		0.8			1,142,789

Technology Hardware & Equipment
Onvoy, LLC⁽¹¹⁾	Common Stock, Class A										3,649		364,948		0.2			364,948
Onvoy, LLC⁽¹¹⁾	Common Stock, Class B										253,572		—		—			—

											257,221		364,948		0.2			364,948

Total Equity Investments United States										$	3,186,421	$	5,332,317		3.7	%	$	5,295,482

Total United States												$	255,039,561		179.4	%	$	259,295,638

France
Debt Investments
Technology Hardware & Equipment
Parkeon, Inc.⁽⁵⁾	Senior Secured First Lien		L + 575	⁽¹²⁾		5.75	%		03/2023	€	1,994,499		2,047,547		1.4			1,999,890

Total Debt Investments France										€	1,994,499	$	2,047,547		1.4	%	$	1,999,890

Total France												$	2,047,547		1.4	%	$	1,999,890

United Kingdom
Debt Investments
Software & Services
CB SDG , Ltd.⁽⁵⁾	Senior Secured First Lien		L + 650	⁽¹³⁾		7.04	%		07/2022	£	1,978,200		2,995,195		1.6			2,352,430
CB SDG , Ltd.^{(3) (5)}	Senior Secured First Lien		L + 650	⁽¹³⁾		7.04	%		07/2022		442,828		966,831		0.5			742,630

Total Debt Investments United Kingdom										£	2,421,028	$	3,962,026		2.1	%	$	3,095,060

Total United Kingdom												$	3,962,026		2.1	%	$	3,095,060

Total Investments												$	261,049,134		182.9	%	$	264,390,588

See accompanying notes.

CRESCENT CAPITAL BDC,INC.

Consolidated Schedule of Investments (Unaudited)

March 31, 2017

The majority of the investments bear interest at a rate that may be determined by reference to London Interbank Offered Rate (“LIBOR” or “L”) or Prime (“P”) and which reset daily, quarterly or semiannually. For each, the Company has provided the spread over LIBOR or Prime and the weighted average current interest rate in effect at March 31, 2017. Certain investments are subject to a LIBOR or Prime interest rate floor. For fixed rate loans, a spread above a reference rate is not applicable.

**	Percentage is based on net assets of $144,576,526 as of March 31, 2017.

(1)	All positions held are non-controlled/non-affiliated investments as defined by the Investment Company Act of 1940, as amended (“1940 Act”). Non-controlled/non-affiliated investments are investments that are neither controlled investments nor affiliated investments.

(2)	The interest rate on these loans is subject to the greater of a LIBOR floor or 3 month LIBOR plus a base rate. The 3 month LIBOR as of March 31, 2017 was 1.15%.

(3)	Position or portion thereof is an unfunded loan commitment, and no interest is being earned on the unfunded portion. See Note 7 “Commitments and Contingencies”.

(4)	The interest rate on these loans is subject to the greater of a LIBOR floor or 1 month LIBOR plus a base rate. The 1 month LIBOR as of March 31, 2017 was 0.98%.

(5)	Investment is not a qualifying investment as defined under section 55 (a) of the Investment Company Act of 1940. Qualifying assets must represent at least 70% of total assets at the time of acquisition.

(6)	The interest rate on these loans is subject to the U.S. Prime rate, which as of March 31, 2017 was 4.00%.

(7)	The interest rate on these loans is subject to the greater of a LIBOR floor or 2 month LIBOR plus a base rate. The 2 month LIBOR as of March 31, 2017 was 1.03%.

(8)	The negative cost, if applicable, is the result of the capitalized discount or unfunded commitment being greater than the principal amount outstanding on the loan. The negative fair value, if applicable, is the result of the capitalized discount or unfunded commitment on the loan.

(9)	The interest rate on these loans is subject to the greater of a LIBOR floor or 1 week LIBOR plus a base rate. The 1 week LIBOR as of March 31, 2017 was 0.95%.

(10)	The interest rate on these loans is subject to the greater of a LIBOR floor or 12 month LIBOR plus a base rate. The 12 month LIBOR as of March 31, 2017 was 1.80%.

(11)	Non-income producing security.

(12)	The interest rate on these loans is subject to the greater of a EURIBOR floor or 3 month EURIBOR plus a base rate. The 3 month EURIBOR as of March 31, 2017 was (0.33)%.

(13)	The interest rate on these loans is subject to the greater of a GBP LIBOR floor or 6 month GBP LIBOR plus a base rate. The 6 month GBP LIBOR as of March 31, 2017 was 0.49%.

See accompanying notes.

CRESCENT CAPITAL BDC, INC.

Consolidated Schedule of Investments

December 31, 2016


	Investment Type	Spread Above Index *			Interest Rate			Maturity Date		Principal/ Par Amount		Cost			Percentage of Net Assets **			Fair Value
Investments (1)
United States
Debt Investments
Automobiles & Components
POC Investors, LLC (2)	Senior Secured First Lien		L + 550	(3)		6.50	%		10/2021	$	83,333	$	76,042			0.1	%	$	83,333
POC Investors, LLC	Senior Secured First Lien		L + 550	(4)		6.50	%		10/2021		3,100,000		3,054,645			2.4			3,100,000

											3,183,333		3,130,687			2.5			3,183,333

Capital Goods
Alion Science and Technology Corp.	Unsecured Debt					11.00	%		08/2022		5,000,000		4,870,817			3.8			4,950,000
Brand Energy & Infrastructure Services, Inc.	Senior Secured First Lien		L + 375	(4)		4.75	%		11/2020		835,809		821,808			0.6			835,588
Doosan Infracore International, Inc. (5)	Senior Secured First Lien		L + 350	(3)		4.50	%		05/2021		598,673		601,635			0.5			608,030
MB Aerospace Holdings I, Inc. (5)	Senior Secured First Lien		L + 550	(4)		6.50	%		12/2022		4,360,845		4,324,305			3.4			4,349,943
Midwest Industrial Rubber (2)	Senior Secured First Lien								12/2021		85,000		77,680			0.1			80,818
Midwest Industrial Rubber	Senior Secured First Lien		L + 550	(3)		6.50	%		12/2021		4,100,000		4,029,260			3.2			4,059,651
Pro Mach Group, Inc.	Senior Secured First Lien		L + 375	(4)		4.75	%		10/2021		738,693		743,154			0.6			739,247
Silver II US Holdings, LLC (5)	Senior Secured First Lien		L + 300	(4)		4.00	%		12/2019		830,597		813,397			0.6			787,435
Univar Inc. (5)	Senior Secured First Lien		L + 325	(4)		4.25	%		07/2022		740,625		743,672			0.6			748,802

											17,290,242		17,025,728			13.4			17,159,514

Commercial & Professional Services
ADMI Corp.	Senior Secured First Lien		L + 425	(4)		5.25	%		04/2022		985,000		994,587			0.8			994,234
Advantage Sales & Marketing, Inc.	Senior Secured Second Lien		L + 650	(4)		7.50	%		07/2022		500,000		502,868			0.4			489,690
Advantage Sales & Marketing, Inc.	Senior Secured First Lien		L + 325	(4)		4.25	%		07/2021		837,154		837,496			0.6			841,549
Asurion, LLC	Senior Secured Second Lien		L + 750	(3)		8.50	%		03/2021		275,000		279,388			0.2			280,071
Asurion, LLC	Senior Secured First Lien		L + 400	(3)		5.00	%		08/2022		486,875		486,294			0.4			493,996
Brickman Group, Ltd. LLC	Senior Secured Second Lien		L + 650	(3)		7.50	%		12/2021		500,000		502,043			0.4			504,690
Emerald Expositions Holding, Inc.	Senior Secured First Lien		L + 375	(4)		4.75	%		06/2020		696,535		699,151			0.5			701,759
Hepaco, LLC (2)	Senior Secured First Lien								08/2021		208,333		202,513			0.2			208,333
Hepaco, LLC	Senior Secured First Lien		L + 500	(4)		6.00	%		08/2022		2,942,625		2,907,744			2.3			2,942,625
Hepaco, LLC (2)(6)	Senior Secured First Lien								08/2022		—		(17,089	)		—			—
Jordon Healthcare Inc.	Senior Secured First Lien		L + 525	(4)		6.25	%		07/2021		2,388,000		2,360,651			1.9			2,388,000
Jordon Healthcare Inc.(2)(6)	Senior Secured First Lien								08/2021		—		(18,741	)		—			—
NS Intermediate Holdings, LLC	Senior Secured First Lien		L + 550	(4)		6.50	%		09/2021		2,981,250		2,931,417			2.3			2,981,250
NS Intermediate Holdings, LLC (2)	Senior Secured First Lien								09/2021		16,199		12,047			—			16,199

See accompanying notes.

CRESCENT CAPITAL BDC, INC.

Consolidated Schedule of Investments

December 31, 2016


	Investment Type	Spread Above Index *			Interest Rate			Maturity Date		Principal/Par Amount		Cost			Percentage of Net Assets **			Fair Value
PowerTeam Services, LLC	Senior Secured First Lien		L + 325	(4)		4.25	%		05/2020	$	985,474	$	983,730			0.8	%	$	988,553
Survey Sampling International, LLC	Senior Secured First Lien		L + 500	(4)		6.00	%		12/2020		3,175,749		3,148,350			2.5			3,175,749
USAGM HoldCo, LLC	Senior Secured Second Lien		L + 850	(4)		9.50	%		07/2023		10,000,000		9,650,208			8.0			10,200,000
USAGM HoldCo, LLC	Senior Secured Second Lien		11.00	%					07/2023		2,000,000		1,952,052			1.6			2,060,000
Valet Waste Holdings, Inc.	Senior Secured First Lien		L + 700	(4)		8.00	%		09/2021		4,293,479		4,239,662			3.4			4,336,413
Valet Waste Holdings, Inc. (2)	Senior Secured First Lien								09/2021		326,087		319,427			0.2			331,522
Vencore, Inc.	Senior Secured First Lien		L + 475	(4)		5.75	%		11/2019		487,121		487,601			0.4			493,364
William Morris Endeavor Entertainment, LLC	Senior Secured Second Lien		L + 725	(4)		8.25	%		05/2022		250,000		244,808			0.2			253,750
William Morris Endeavor Entertainment, LLC	Senior Secured First Lien		L + 425	(4)		5.25	%		05/2021		984,810		987,734			0.8			997,125

											35,319,691		34,693,941			27.9			35,678,872

Consumer Durables & Apparel
C.F. Stinson, LLC	Senior Secured First Lien		L + 670	(7)		7.32	%		05/2021		3,000,000		2,944,942			2.3			3,000,000
Varsity Brands, Inc.	Senior Secured First Lien		L + 400	(4)		5.00	%		12/2021		984,925		993,379			0.8			1,001,176

											3,984,925		3,938,321			3.1			4,001,176

Consumer Services
Catapult Learning, LLC	Senior Secured First Lien		L + 650	(4)		7.50	%		07/2020		5,000,000		4,962,140			3.8			4,875,000
Centerplate, Inc.	Senior Secured First Lien		L + 375	(4)		4.75	%		11/2019		707,640		707,640			0.5			706,755
Oncourse Learning Corp.	Senior Secured First Lien		L + 650	(4)		7.50	%		09/2021		10,450,000		10,301,281			8.2			10,450,000
Oncourse Learning Corp. (2)	Senior Secured First Lien								09/2021		240,000		231,528			0.2			240,000
Scientific Games International, Inc. (5)	Senior Secured First Lien		L + 500	(8)		6.00	%		10/2021		983,690		986,750			0.8			997,491
SkillSoft Corporation	Senior Secured First Lien		L + 475	(9)		5.84	%		04/2021		984,887		969,364			0.7			902,713
Wrench Group, LLC (2)(6)	Senior Secured First Lien								03/2022		—		(14,433	)		—			—
Wrench Group, LLC	Senior Secured First Lien		L + 525	(4)		6.25	%		03/2022		3,840,278		3,789,365			3.0			3,840,278

											22,206,495		21,933,635			17.2			22,012,237

Diversified Financials
Edelman Financial Group, The	Senior Secured First Lien		L + 550	(4)		6.50	%		12/2022		2,970,000		2,917,848			2.3			2,993,211

Energy
Fairmount Santrol, Inc. (5)	Senior Secured First Lien		L + 350	(4)		4.50	%		09/2019		335,198		322,749			0.2			326,749
Murray Energy Corporation	Senior Secured First Lien		L + 725	(4)		8.25	%		04/2020		356,470		339,701			0.3			342,213

											691,668		662,450			0.5			668,962

Food & Staples Retailing
BJ’s Wholesale Club, Inc.	Senior Secured First Lien		L + 350	(4)		4.50	%		09/2019		818,327		820,823			0.7			827,407
BJ’s Wholesale Club, Inc.	Senior Secured Second Lien		L + 750	(4)		8.50	%		03/2020		248,809		250,649			0.2			252,281

See accompanying notes.

CRESCENT CAPITAL BDC, INC.

Consolidated Schedule of Investments

December 31, 2016


	Investment Type	Spread Above Index *			Interest Rate			Maturity Date		Principal/Par Amount		Cost			Percentage of Net Assets **			Fair Value
Good Source Solutions, Inc.	Senior Secured First Lien		L + 725	(4)		8.25	%		07/2021	$	2,699,449	$	2,674,347			2.1	%	$	2,699,448

											3,766,585		3,745,819			3.0			3,779,136

Food, Beverage & Tobacco
American Seafoods Group LLC	Senior Secured Second Lien		L + 900	(4)		10.00	%		02/2022		5,000,000		4,884,333			3.8			4,850,000
Shearer’s Foods, Inc.	Senior Secured First Lien		L + 425	(4)		5.25	%		06/2021		742,500		736,390			0.6			746,213

											5,742,500		5,620,723			4.4			5,596,213

Health Care Equipment & Services
Alere, Inc. (5)	Senior Secured First Lien		L + 325	(3)		4.25	%		06/2022		780,254		785,178			0.6			781,339
ATI Holdings Acquisition, Inc.	Senior Secured First Lien		P + 350	(10)		7.25	%		05/2023		1,169,125		1,158,311			0.9			1,186,662
Beaver-Visitec International, Inc. (5)	Senior Secured First Lien		L + 500	(4)		6.00	%		08/2023		7,481,250		7,409,181			5.8			7,481,250
CDRH Parent, Inc.	Senior Secured First Lien		L + 425	(4)		5.25	%		07/2021		369,021		371,653			0.3			338,577
Epic Health Services, Inc.	Senior Secured First Lien		L + 475	(4)		5.75	%		02/2021		171,445		169,798			0.1			171,445
Epic Health Services, Inc.	Senior Secured Second Lien		L + 825	(4)		10.25	%		08/2021		928,125		910,225			0.7			928,125
ExamWorks Group, Inc.	Senior Secured Second Lien					10.50	%		07/2024		5,000,000		4,855,211			3.9			5,000,000
Heartland Dental, LLC	Senior Secured First Lien		L + 450	(4)		5.50	%		12/2018		984,925		989,007			0.8			987,692
NMSC Holdings, Inc.	Senior Secured Second Lien		L + 1000	(4)		11.00	%		10/2023		4,307,480		4,145,844			3.4			4,350,555
NVA Holdings, Inc.	Senior Secured First Lien		L + 450	(4)		5.50	%		08/2021		4,054,162		3,966,046			3.2			4,074,433
Onex Carestream Finance LP (5)	Senior Secured First Lien		L + 400	(4)		5.00	%		06/2019		423,553		423,947			0.3			412,610
Onex Carestream Finance LP (5)	Senior Secured Second Lien		L + 850	(4)		9.50	%		12/2019		197,728		197,728			0.1			163,126
Professional Physical Therapy	Senior Secured First Lien		L + 500	(4)		6.00	%		12/2022		7,500,000		7,425,376			5.9			7,518,750
PT Network, LLC (2)(6)	Senior Secured First Lien								11/2021		—		(10,811	)		—			—
PT Network, LLC	Senior Secured First Lien		L + 650	(4)		7.50	%		11/2021		2,300,000		2,277,339			1.8			2,300,000
Zest Holdings LLC	Senior Secured First Lien		L + 475	(4)		5.75	%		08/2020		4,962,500		4,924,402			3.9			4,937,687

											40,629,568		39,998,435			31.7			40,632,251

Household & Personal Products
Paris Presents Incorporated	Senior Secured First Lien		L + 500	(3)		6.00	%		01/2021		1,741,127		1,724,253			1.3			1,732,421
Paris Presents Incorporated	Senior Secured Second Lien		L + 875	(3)		9.75	%		01/2022		504,468		494,600			0.4			494,379

											2,245,595		2,218,853			1.7			2,226,800

Insurance
Confie Seguros Holding II Co.	Senior Secured First Lien		L + 475	(3)		5.75	%		04/2022		179,147		177,390			0.1			180,357
Edgewood Partners Insurance Center	Senior Secured First Lien		L + 600	(3)		7.00	%		03/2023		2,977,500		2,923,345			2.4			2,999,831
Integro Parent, Inc.	Senior Secured First Lien		L + 575	(4)		6.75	%		09/2022		460,883		453,252			0.4			456,274
Integro Parent, Inc.	Senior Secured First Lien		L + 575	(4)		6.75	%		10/2022		34,259		33,650			—			33,917

See accompanying notes.

CRESCENT CAPITAL BDC, INC.

Consolidated Schedule of Investments

December 31, 2016


	Investment Type	Spread Above Index *			Interest Rate			Maturity Date		Principal/Par Amount		Cost			Percentage of Net Assets **			Fair Value
Integro Parent, Inc.	Senior Secured Second Lien		L + 925	(4)		10.25	%		10/2023	$	380,282	$	373,449			0.3	%	$	370,775
Integro Parent, Inc.	Senior Secured Second Lien		L + 925	(4)		10.25	%		10/2023		2,408,451		2,362,284			1.8			2,348,240

											6,440,522		6,323,370			5.0			6,389,394

Materials
Berlin Packaging LLC	Senior Secured First Lien		L + 350	(3)		4.50	%		10/2021		979,804		983,603			0.8			989,676
Emerald Performance Materials, LLC	Senior Secured First Lien		L + 350	(3)		4.50	%		08/2021		967,618		971,009			0.8			975,600
IBC Capital Limited (5)	Senior Secured First Lien		L + 375	(9)		4.99	%		09/2021		837,218		826,618			0.6			830,591
Ineos US Finance LLC (5)	Senior Secured First Lien		L + 325	(3)		4.25	%		03/2022		492,477		493,470			0.4			499,365
Royal Holdings, Inc.	Senior Secured First Lien		L + 350	(4)		4.50	%		06/2022		837,250		839,571			0.7			847,017
Tank Holding Corp.	Senior Secured First Lien		L + 425	(4)		5.25	%		03/2022		932,584		940,133			0.7			924,811

											5,046,951		5,054,404			4.0			5,067,060

Media
Acosta Holdco, Inc.	Senior Secured First Lien		L + 325	(4)		4.25	%		09/2021		985,370		986,201			0.7			963,510
iHeartCommunications, Inc. (5)	Senior Secured First Lien		L + 675	(7)		7.52	%		01/2019		738,673		708,375			0.5			603,865
Rentpath, Inc. (5)	Senior Secured First Lien		L + 525	(3)		6.25	%		12/2021		984,925		992,930			0.8			970,151
Tribune Media Co. (5)	Senior Secured First Lien		L + 300	(7)		3.77	%		12/2020		492,500		494,408			0.4			497,272

											3,201,468		3,181,914			2.4			3,034,798

Pharmaceuticals, Biotechnology & Life Sciences
Ortho-Clinical Diagnostics, Inc.	Senior Secured First Lien		L + 375	(4)		4.75	%		06/2021		837,121		828,864			0.6			832,638

Real Estate
Capital Automotive L.P. (5)	Senior Secured Second Lien		L + 500	(3)		6.00	%		04/2020		500,000		507,232			0.4			507,915
DTZ U.S. Borrower, LLC (5)	Senior Secured Second Lien		L + 825	(4)		9.25	%		11/2022		425,532		419,844			0.3			426,772

											925,532		927,076			0.7			934,687

Retailing
Academy, Ltd.	Senior Secured First Lien		L + 400	(3)		5.00	%		07/2022		930,205		934,721			0.7			862,766
Midas Intermediate Holdco II, LLC	Senior Secured First Lien		L + 350	(4)		4.50	%		08/2021		984,887		991,511			0.8			998,429
Petco Animal Supplies, Inc.	Senior Secured First Lien		L + 400	(4)		5.00	%		01/2023		165,417		162,602			0.1			166,540
Strategic Partners, Inc.	Senior Secured First Lien		L + 525	(4)		6.25	%		06/2023		6,483,750		6,468,222			5.1			6,548,587

											8,564,259		8,557,056			6.7			8,576,322

Software & Services
Ansira Partners, Inc. (2)(6)	Senior Secured First Lien								12/2022		—		(9,495	)		—			(7,159	)
Ansira Partners, Inc.	Senior Secured First Lien		L + 650	(4)		7.50	%		12/2022		6,545,455		6,480,290			5.1			6,496,364
Cision US Inc.	Senior Secured First Lien		L + 600	(4)		7.00	%		06/2023		4,975,000		4,787,830			3.9			4,940,797
Compuware Corporation	Senior Secured First Lien		L + 525	(4)		6.25	%		12/2021		983,690		969,250			0.8			991,191

See accompanying notes.

CRESCENT CAPITAL BDC, INC.

Consolidated Schedule of Investments

December 31, 2016


	Investment Type	Spread Above Index *			Interest Rate			Maturity Date		Principal/Par Amount		Cost			Percentage of Net Assets **			Fair Value
Epicor Software Corporation	Senior Secured First Lien		L + 375	(3)		4.75	%		06/2022	$	970,883	$	972,387			0.8	%	$	976,432
Informatica Corporation (5)	Senior Secured First Lien		L + 350	(4)		4.50	%		08/2022		839,375		840,401			0.6			837,365
Magic Newco LLC (5)	Senior Secured First Lien		L + 400	(3)		5.00	%		12/2018		984,595		986,788			0.8			995,366
Mediaocean LLC	Senior Secured First Lien		L + 475	(3)		5.75	%		08/2022		6,523,509		6,463,692			5.1			6,564,281
Merrill Communications, LLC	Senior Secured First Lien		L + 525	(4)		6.25	%		06/2022		986,768		989,816			0.8			984,302
Ministry Brands Intermediate, LLC	Senior Secured First Lien		L + 500	(4)		6.00	%		11/2023		4,120,000		4,079,195			3.2			4,078,800
Ministry Brands Intermediate, LLC (2)(6)	Senior Secured First Lien								11/2023		—		(11,300	)		—			(11,300	)
SMS Systems Maintenance Services, Inc.	Senior Secured Second Lien					10.00	%		10/2024		9,015,000		8,726,344			7.0			9,015,000
Tibco Software Inc.	Senior Secured First Lien		L + 550	(3)		6.50	%		12/2020		399,614		400,396			0.3			402,029
Transportation Insight, LLC	Senior Secured First Lien		L + 525	(3)		6.25	%		09/2019		1,862,644		1,846,176			1.4			1,862,644

											38,206,533		37,521,770			29.8			38,126,112

Technology Hardware & Equipment
Riverbed Technology, Inc.	Senior Secured First Lien		L + 325	(3)		4.25	%		04/2022		—		114			—			—

Telecommunication Services
Birch Communications, Inc.	Senior Secured First Lien		L + 725	(4)		8.25	%		07/2020		948,068		951,686			0.7			853,261
Charter Communications Operating, LLC (5)	Senior Secured First Lien		L + 225	(7)		2.51	%		01/2024		322,562		321,888			0.2			324,880
Level 3 Financing Inc. (5)	Senior Secured First Lien		L + 300	(4)		4.00	%		01/2020		500,000		501,315			0.4			507,500
U.S. Telepacific Corporation	Senior Secured First Lien		L + 500	(4)		6.00	%		11/2020		982,787		984,672			0.8			985,347

											2,753,417		2,759,561			2.1			2,670,988

Transportation
Kenan Advantage Group, Inc. (2)	Senior Secured First Lien								01/2017		—		8			—			196
Kenan Advantage Group, Inc.	Senior Secured First Lien		L + 300	(3)		4.00	%		07/2022		778,569		780,484			0.6			782,221
Keurig Green Mountain, Inc. (5)	Senior Secured First Lien		L + 450	(7)		5.31	%		03/2023		229,188		225,056			0.2			233,074
Pilot Air Freight, LLC	Senior Secured First Lien		L + 525	(4)		6.25	%		10/2022		3,350,000		3,317,358			2.6			3,350,000

											4,357,757		4,322,906			3.4			4,365,491

Utilities
Eastern Power, LLC	Senior Secured First Lien		L + 400	(4)		5.00	%		10/2021		938,787		943,975			0.7			949,151

Total Debt Investments United States										$	209,302,949	$	206,307,450			163.1	%	$	208,878,346

Equity Investments
Capital Goods
Alion Science and Technology Corp. (11)	Common Stock										535,714		535,715			0.4			554,894

Commercial & Professional Services
Universal Services Equity Investments (11)	Common Stock										1,000,000		1,000,000			0.8			1,000,000
USAGM HoldCo, LLC (11)	Common Stock										238,095		238,095			0.2			238,095

											1,238,095		1,238,095			1.0			1,238,095

See accompanying notes.

CRESCENT CAPITAL BDC, INC.

Consolidated Schedule of Investments

December 31, 2016


	Investment Type	Spread Above Index *			Interest Rate			Maturity Date		Principal/Par Amount		Cost		Percentage of Net Assets **			Fair Value
Health Care Equipment & Services
ExamWorks Group, Inc. (11)	Common Stock									$	7,500	$	750,000		0.6	%	$	750,000

Insurance
Integro Equity (11)	Common Stock										4,226		422,535		0.3			415,645

Software & Services
SMS Systems Maintenance Services, Inc. (11)	Common Stock										985,000		985,000		0.8			985,000

Total Equity Investments United States										$	2,770,535	$	3,931,345		3.1	%	$	3,943,634

Total United States												$	210,238,795		166.2	%	$	212,821,980

France
Debt Investments
Technology Hardware & Equipment
Parkeon, Inc. (5)	Senior Secured First Lien		E + 575	(12)		5.75	%		03/2023	€	1,994,499		2,041,092		1.6			2,022,011

Total Debt Investments France										€	1,994,499	$	2,041,092		1.6	%	$	2,022,011

Total France												$	2,041,092		1.6	%	$	2,022,011

United Kingdom
Debt Investments Software & Services
CB SDG , Ltd. (5)	Senior Secured First Lien		L + 650	(13)		7.18	%		07/2022	£	1,978,200		2,993,723		1.8			2,336,810
CB SDG , Ltd. (2)(5)	Senior Secured First Lien		L + 650	(13)		7.18	%		07/2022		442,828		965,988		0.6			740,151

Total Debt Investments United Kingdom										£	2,421,028	$	3,959,711		2.4	%	$	3,076,961

Total United Kingdom												$	3,959,711		2.4	%	$	3,076,961

Total Investments												$	216,239,598		170.2	%	$	217,920,952

The majority of the investments bear interest at a rate that may be determined by reference to London Interbank Offered Rate (“LIBOR” or “L”) or Prime (“P”) and which reset daily, quarterly or semiannually. For each, the Company has provided the spread over LIBOR or Prime and the weighted average current interest rate in effect at December 31, 2016. Certain investments are subject to a LIBOR or Prime interest rate floor. For fixed rate loans, a spread above a reference rate is not applicable.

**	Percentage is based on net assets of $128,056,028 as of December 31, 2016.

(1)	All positions held are non-controlled/non-affiliated investments as defined by the Investment Company Act of 1940, as amended (“1940 Act”). Non-controlled/non-affiliated investments are investments that are neither controlled investments nor affiliated investments.

(2)	Position or portion thereof is an unfunded loan commitment, and no interest is being earned on the unfunded portion. See Note 7 “Commitments and Contingencies”.

(3)	The interest rate on these loans is subject to a base rate plus 1 month LIBOR. As the interest rate is subject to a minimum LIBOR floor which was greater than the 1 month LIBOR rate at December 31, 2016, the prevailing rate in effect as of December 31, 2016 was the base rate plus the LIBOR floor.

(4)	The interest rate on these loans is subject to a base rate plus 3 month LIBOR. As the interest rate is subject to a minimum LIBOR floor which was greater than the 3 month LIBOR rate at December 31, 2016, the prevailing rate in effect as of December 31, 2016 was the base rate plus the LIBOR floor.

(5)	Investment is not a qualifying investment as defined under section 55 (a) of the Investment Company Act of 1940. Qualifying assets must represent at least 70% of total assets at the time of acquisition.

(6)	The negative cost, if applicable, is the result of the capitalized discount or unfunded commitment being greater than the principal amount outstanding on the loan. The negative fair value, if applicable, is the result of the capitalized discount or unfunded commitment on the loan.

(7)	The interest rate on these loans is subject to a base rate plus 1 month LIBOR.

(8)	The interest rate on these loans is subject to a base rate plus 2 month LIBOR. As the interest rate is subject to a minimum LIBOR floor which was greater than the 2 month LIBOR rate at December 31, 2016, the prevailing rate in effect as of December 31, 2016 was the base rate plus the LIBOR floor.

(9)	The interest rate on these loans is subject to a base rate plus 6 month LIBOR.

See accompanying notes.

CRESCENT CAPITAL BDC, INC.

Consolidated Schedule of Investments

December 31, 2016

(10)	The interest rate on these loans is subject to the U.S. Prime rate, which as of December 31, 2016 was 3.75%.

(11)	Non-income producing security.

(12)

The interest rate on these loans is subject to a base rate plus 3 month EURIBOR. As the interest rate is subject to a minimum EURIBOR floor which was greater than the 3 month EURIBOR rate at December 31, 2016, the prevailing rate in effect as of December 31, 2016 was the base rate plus the EURIBOR floor.

(13)

The interest rate on these loans is subject to a base rate plus 6 month GBP LIBOR. As the interest rate is subject to a minimum GBP LIBOR floor which was greater than the 6 month LIBOR rate at December 31, 2016, the prevailing rate in effect as of December 31, 2016 was the base rate plus the GBP LIBOR floor.

See accompanying notes.

CRESCENT CAPITAL BDC, INC.

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS

March 31, 2017 (Unaudited)

Note 1. Organization and Basis of Presentation

Crescent Capital BDC, Inc. (the “Company”) was formed on February 5, 2015 (“Inception”) as a Delaware corporation structured as an externally managed, closed-end, non-diversified management investment company. The Company commenced investment operations on June 26, 2015 (“Commencement”). The Company has elected to be treated as a business development company (“BDC”) under the Investment Company Act of 1940, as amended (the “1940 Act”). In addition, the Company has elected to be treated for U.S. federal income tax purposes as a regulated investment company (a “RIC”) under Subchapter M of the Internal Revenue Code of 1986, as amended (the “Code”). As a RIC, the Company will not be taxed on its income to the extent that it distributes such income each year and satisfies other applicable income tax requirements.

The Company is managed by CBDC Advisors, LLC (the “Advisor”), an investment adviser that is registered with the Securities and Exchange Commission (the “SEC”) under the Investment Advisers Act of 1940, as amended. CBDC Administration, LLC (the “Administrator”) provides the administrative services necessary for the Company to operate. Company management consists of investment and administrative professionals from the Advisor and Administrator along with the Company’s Board of Directors (the “Board”). The Advisor directs and executes the investment operations and capital raising activities of the Company subject to oversight from the Board, which sets the broad policies of the Company. The Board has delegated investment management of the Company’s investment assets to the Advisor. The Board consists of five directors, three of whom are independent.

On July 23, 2015, the Company formed CBDC Universal Equity, Inc., a wholly-owned subsidiary. This subsidiary allows the Company to hold equity securities of a portfolio company organized as a pass-through entity while continuing to satisfy the requirements of a RIC under the Code. On February 25, 2016, the Company formed Crescent Capital BDC Funding, LLC (“CBDC SPV”), a Delaware limited liability company and wholly owned subsidiary. The financial statements of these two entities are consolidated into the financial statements of the Company. All intercompany balances and transactions have been eliminated.

The Company’s primary investment objective is to maximize the total return to the Company’s stockholders in the form of current income and capital appreciation through debt and related equity investments. The Company will seek to achieve its investment objectives by investing primarily in secured debt (including senior secured, unitranche and second lien debt) and unsecured debt (including senior unsecured and subordinated debt), as well as related equity securities of private U.S. middle-market companies. The Company may purchase interests in loans or make debt investments, either (i) directly from our target companies as primary market or private credit investments (i.e., private credit transactions), or (ii) primary or secondary market bank loan or high yield transactions in the broadly syndicated “over-the-counter” market (i.e., broadly syndicated loans and bonds). Although the Company’s focus is to invest in private credit transactions, in certain circumstances it will also invest in broadly syndicated loans and bonds.

Basis of Presentation

The Company’s functional currency is the United States dollar and these consolidated financial statements have been prepared in that currency. The Company’s consolidated financial statements have been prepared in accordance with accounting principles generally accepted in the United States of America (“GAAP”) and pursuant to Regulation S-X.

Additionally, the accompanying consolidated financial statements of the Company and related financial information have been prepared pursuant to the requirements for reporting on Form 10-Q and Article 10 of Regulation S-X. Accordingly, certain disclosures accompanying annual consolidated financial statements prepared in accordance with GAAP are omitted. In the opinion of management, the unaudited interim financial results included herein contain all adjustments and reclassifications that are necessary for the fair presentation of consolidated financial statements for the periods included herein. The current period’s results of operations will not necessarily be indicative of results that ultimately may be achieved for the year ended December 31, 2017.

The Company is an investment company and, therefore, applies the specialized accounting and reporting guidance in Accounting Standards Codification (“ASC”) Topic 946, Financial Services – Investment Companies.

Note 2. Summary of Significant Accounting Policies

Use of Estimates

The preparation of the consolidated financial statements in conformity with GAAP requires management to make certain estimates and assumptions that may affect the amounts reported in the consolidated financial statements and accompanying notes. These

See accompanying notes.

consolidated financial statements reflect adjustments that in the opinion of management are necessary for the fair statement of the results for the periods presented. Although management believes that the estimates and assumptions are reasonable, changes in the economic environment, financial markets and any other parameters used in determining these estimates could cause actual results to differ materially.

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, and similar type instruments) with original maturities of three months or less. Cash and cash equivalents other than money market mutual funds, are carried at cost plus accrued interest, which approximates fair value. Money market mutual funds are carried at their net asset value, which approximates fair value. The Company deposits its cash and cash equivalents with highly-rated banking corporations and, at times, cash deposits may exceed the insured limits under applicable law.

Investment Transactions

Investments purchased on a secondary market are recorded on the trade date. Loan originations are recorded on the date of the binding commitment. Realized gains or losses are recorded on the First In, First Out (“FIFO”) method as the difference between the net proceeds received (excluding prepayment fees, if any) and the amortized cost basis of the investment without regard to unrealized gains or losses previously recognized, and include investments written off during the period, net of recoveries. The net change in unrealized gains or losses primarily reflects the change in investment fair values as of the last business day of the reporting period and also includes the reversal of previously recorded unrealized gains or losses with respect to investments realized during the period.

Investment Valuation

Investments for which market quotations are readily available are typically valued at those market quotations. To validate market quotations, the Company utilizes a number of factors to determine if the quotations are representative of fair value, including the source and number of the quotations. Debt and equity securities that are not publicly traded or whose market prices are not readily available are valued at fair value as determined in good faith by the Board, based on, among other things, the input of the Advisor, the Company’s Audit Committee and independent third-party valuation firms engaged at the direction of the Board.

The Board oversees and supervises a multi-step valuation process, which includes, among other procedures, the following:

•

The valuation process begins with each investment being initially valued by the investment professionals responsible for the portfolio investment in conjunction with the portfolio management team.

•

The Advisor’s management reviews the preliminary valuations with the investment professionals. Agreed upon valuation recommendations are presented to the Audit Committee.

•

The Audit Committee reviews the valuations presented and recommends values for each investment to the Board.

•

The Board reviews the recommended valuations and determines the fair value of each investment; valuations that are not based on readily available market quotations are valued in good faith based on, among other things, the input of the Advisor, Audit Committee and, where applicable, other third parties.

The Company applies Financial Accounting Standards Board Accounting Standards Codification 820, Fair Value Measurement (ASC 820), as amended, which establishes a framework for measuring fair value in accordance with GAAP and required disclosures of fair value measurements. ASC 820 determines fair value to be the price that would be received for an investment in a current sale, which assumes an orderly transaction between market participants on the measurement date. Market participants are defined as buyers and sellers in the principal or most advantageous market (which may be a hypothetical market) that are independent, knowledgeable, and willing and able to transact. In accordance with ASC 820, the Company considers its principal market to be the market that has the greatest volume and level of activity. ASC 820 specifies a fair value hierarchy that prioritizes and ranks the level of observability of inputs used in the determination of fair value. In accordance with ASC 820, these levels are summarized below:

Level 1—Valuations based on quoted prices in active markets for identical assets or liabilities that the Company has the ability to access.

Level 2—Valuations based on quoted prices in markets that are not active or for which all significant inputs are observable, either directly or indirectly.

Level 3—Valuations based on inputs that are unobservable and significant to the overall fair value measurement.

See accompanying notes.

When a security is valued based on prices provided by reputable dealers or pricing services (that is, broker quotes), the Company subjects those prices to various criteria in making the determination as to whether a particular investment would qualify for classification as a Level 2 or Level 3 investment. For example, the Company reviews pricing methodologies provided by dealers or pricing services in order to determine if observable market information is being used, versus unobservable inputs. Some additional factors considered include the number of prices obtained as well as an assessment as to their quality. Transfers between levels, if any, are recognized at the beginning of the period in which the transfers occur. During the three months ended March 31, 2017, the Company recorded $4,850,000 in transfers from Level 2 to Level 3 due to a decrease in observable inputs in market data. During the three months ended March 31, 2016, the Company recorded $12,000,233 in transfers from Level 3 to Level 2 due to an increase in observable inputs in market data.

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. Additionally, the fair value of such investments may differ significantly from the values that would have been used had a ready market existed for such investments and may differ materially from the values that may ultimately be realized. Further, such investments are generally less liquid than publicly traded securities and may be subject to contractual and other restrictions on resale. If the Company were required to liquidate a portfolio investment in a forced or liquidation sale, it could realize amounts that are different from the amounts presented and such differences 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 gains or losses ultimately realized on these investments to be different than the unrealized gains or losses reflected herein. See Note 4. Investments and Note 5. Fair Value of Financial Instruments for additional information on the Company’s investment portfolio.

Foreign Currency

Foreign currency amounts are translated into U.S. dollars on the following basis:

•

cash and cash equivalents, fair value of investments, outstanding debt on revolving credit facilities, other assets and liabilities: at the spot exchange rate on the last business day of the period; and

•

purchases and sales of investments, borrowings and repayments of such borrowings, income and expenses: at the rates of exchange prevailing on the respective dates of such transactions.

Although net assets and fair values are presented based on the applicable foreign exchange rates described above, the Company does not isolate that portion of the results of operations resulting from changes in foreign exchange rates on investments from the fluctuations arising from changes in fair values of investments held. Gains or losses on foreign currency transactions are included with net realized gain (loss) on foreign currency transactions on the Consolidated Statements of Operations. Fluctuations arising from the translation of foreign currency on investments and borrowings are included with net change in unrealized appreciation (depreciation) on investments and foreign currency translation on the Consolidated Statements of Operations.

The Company’s current approach to hedging the foreign currency exposure in its non-U.S. dollar denominated investments is primarily to borrow local currency under the Company’s revolving credit facility to partially or fully fund these investments.

Equity Offering and Organization Expenses

The Company has agreed to repay the Advisor for initial organization costs and equity offering costs incurred prior to the commencement of its operations up to a maximum of $1.5 million on a pro rata basis over the first $350 million of invested capital not to exceed 3 years from the initial capital commitment on June 26, 2015. To the extent such costs relate to equity offerings, these costs are charged as a reduction of capital upon the issuance of common shares. To the extent such costs relate to organization costs, these costs are expensed in the Consolidated Statements of Operations upon the issuance of common shares. The Advisor is responsible for organization and private equity offerings costs in excess of $1.5 million. See Note 7. Commitments, Contingencies and Indemnifications for additional discussion of certain related party transactions with the Advisor.

Debt Issuance Costs

The Company records costs related to issuance of debt obligations as deferred financing costs. These costs are deferred and amortized using the effective yield method, or straight-line method for revolving credit facilities, over the stated maturity life of the obligation. As of March 31, 2017 and December 31, 2016, there were $1,272,842 and $979,874, respectively, of deferred financing costs netted against debt balances on the Company’s Consolidated Statements of Assets and Liabilities.

See accompanying notes.

Interest and Dividend Income Recognition

Interest income is recorded on an accrual basis and includes the amortization of purchase discounts and premiums. Discounts and premiums to par value on securities purchased are accreted or amortized into interest income over the contractual life of the respective security using the effective yield method. The amortized cost of investments represents the original cost adjusted for the accretion and amortization of discounts and premiums, if any. Upon prepayment of a loan or debt security, any prepayment premiums, unamortized upfront loan origination fees and unamortized discounts are recorded as interest income.

Dividend income from preferred equity securities is recorded on an accrual basis to the extent that such amounts are payable by the portfolio company and are expected to be collected. Dividend income from common equity securities is recorded on the record date for private portfolio companies or on the ex-dividend date for publicly-traded portfolio companies.

Certain investments have contractual payment-in-kind (“PIK”) interest or dividends. PIK represents accrued interest or accumulated dividends that are added to the loan principal or cost basis of the investment on the respective interest or dividend payment dates rather than being paid in cash and generally becomes due at maturity or upon being called by the issuer. PIK is recorded as interest or dividend income, as applicable. If at any point the Company believes PIK is not expected to be realized, the investment generating PIK will be placed on non-accrual status. Accrued PIK interest or dividends are generally reversed through interest or dividend income, respectively, when an investment is placed on non-accrual status.

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 is paid current and, in management’s judgment, are likely to remain current. Management may determine to not place a loan on non-accrual status if the loan has sufficient collateral value and is in the process of collection. As of March 31, 2017 and December 31, 2016, no loans had been placed on non-accrual status by the Company.

Other Income

From time to time, the Company may receive fees for services provided to portfolio companies by the Advisor under the Investment Advisory Agreement. The services that the Advisor provides vary by investment, but generally include syndication, structuring or diligence fees, and fees for providing managerial assistance to the portfolio companies. The Company may also generate revenue in the form of commitment or origination fees. Loan origination fees, original issue discount and market discount or premium are capitalized; such amounts are accreted or amortized into income over the life of the loan. Fees for providing managerial assistance to the portfolio companies are generally non-recurring and are recognized as revenue when services are provided.

In certain instances where the Company is invited to participate as a co-lender in a transaction and does not provide significant services in connection with the investment, all or a portion of any loan fees received by the Company in such situations will be deferred and amortized over the investment’s life using the effective yield method.

Income Taxes

The Company has elected to be treated as a BDC under the 1940 Act. The Company also has elected to be treated as a RIC under the Internal Revenue Code. So long as the Company maintains its status as a RIC, it will generally not pay corporate-level U.S. federal income or excise taxes on any ordinary income or capital gains that it distributes at least annually to its stockholders as dividends. As a result, any tax liability related to income earned and distributed by the Company represents obligations of the Company’s stockholders and will not be reflected in the consolidated financial statements of the Company.

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. Tax positions not deemed to meet the “more-likely-than-not” threshold are reversed and recorded as a tax benefit or expense in the current year. All penalties and interest associated with income taxes are included in income tax expense. Conclusions regarding tax positions are subject to review and may be adjusted at a later date based on factors including, but not limited to, on-going analyses of tax laws, regulations and interpretations thereof. The Company accounts for income taxes in conformity with ASC Topic 740 — Income Taxes (“ASC Topic 740”). ASC Topic 740 provides guidelines for how uncertain tax positions should be recognized, measured, presented and disclosed in financial statements.

As of March 31, 2017, all tax filings of the Company since the inception on February 5, 2015 remain subject to examination by federal tax authorities. No such examinations are currently pending.

See accompanying notes.

year and (iii) any undistributed ordinary income and net capital gains from preceding years. The Company, at its discretion, may carry forward taxable income in excess of calendar year dividends and pay a 4% excise tax on this income. If the Company chooses to do so, this generally would increase expenses and reduce the amount available to be distributed to stockholders. The Company will accrue excise tax on estimated undistributed taxable income as required.

CBDC Universal Equity, Inc. has elected to be a taxable entity (the “Taxable Subsidiary”). The Taxable Subsidiary permits the Company to hold equity investments in portfolio companies which are “pass through” entities for tax purposes and continue to comply with the “source income” requirements contained in RIC tax provisions of the Code. The Taxable Subsidiary is not consolidated with the Company for income tax purposes and may generate income tax expense, benefit, and the related tax assets and liabilities, as a result of its ownership of certain portfolio investments. The income tax expense, or benefit, if any, and related tax assets and liabilities are reflected in the Company’s consolidated financial statements.

The Company intends to comply with the applicable provisions of the Code, pertaining to regulated investment companies and to make distributions of taxable income sufficient to relieve it from substantially all federal income taxes. Accordingly, no provision for income taxes is required in the consolidated financial statements.

Dividends and Distributions

Dividends and distributions to common stockholders are recorded on the record date. The amount to be paid out as a dividend is determined by the Board each quarter and is generally based upon the earnings estimated by management. Net realized capital gains, if any, are distributed at least annually, although the Company may decide to retain such capital gains for investment.

The Company has adopted a dividend reinvestment plan that provides for reinvestment of any distributions the Company declares in cash on behalf of the Company’s stockholders for those stockholders electing not to receive cash. As a result, if the Board authorizes, and the Company declares, a cash dividend, then the Company’s stockholders who have “opted in” to the Company’s dividend reinvestment plan will have their cash dividends automatically reinvested in additional shares of the Company’s common stock, rather than receiving the cash dividend.

New Accounting Standards

In May 2014, the FASB issued ASU 2014-09 (“ASU 2014-09”), “Revenue from Contracts with Customers (Topic 606).” The guidance in this ASU supersedes the revenue recognition requirements in Topic 605, Revenue Recognition. Under the new guidance, an entity should recognize revenue to depict the transfer of promised goods or services to customers in an amount that reflects the consideration to which the entity expects to be entitled in exchange for those goods or services. The amendments in ASU 2014-09 are effective for annual reporting periods beginning after December 15, 2017, including interim periods within that reporting period. Early adoption is permitted for annual reporting periods beginning after December 15, 2016 and interim periods therein. This standard will not have a material impact on the consolidated financial statements, primarily because the majority of the Company’s revenue is accounted for under FASB ASC Topic 320, “Investments – Debt and Equity Securities”, which is scoped out of this standard.

In December 2016, the FASB issued ASU 2016-19, “Technical Corrections and Improvements.” As part of this guidance, ASU 2016-19 amends FASB ASC Topic 820, “Fair Value Measurement and Disclosures” (“ASC 820”) to clarify the difference between a valuation approach and a valuation technique. The amendment also requires an entity to disclose when there has been a change in either or both a valuation approach and/or a valuation technique. ASU 2016-19 is effective on a prospective basis for financial statements issued for fiscal years, and interim periods within those fiscal years, beginning after December 15, 2016 on a prospective basis. The Company adopted this guidance during the quarter ended March 31, 2017. The adoption of this guidance did not have a material impact on the Company’s financial position, results of operations, cash flows or disclosures.

Note 3. Agreements and Related Party Transactions

Administration Agreement

On June 2, 2015, the Company entered into the Administration Agreement with the Administrator. Under the terms of the Administration Agreement, the Administrator provides administrative services to the Company. These services include providing office space, equipment and office services, maintaining financial records, preparing reports to stockholders and reports filed with the SEC, and managing the payment of expenses and the performance of administrative and professional services rendered by others. Certain of these services are reimbursable to the Administrator under the terms of the Administration Agreement. In addition, the Administrator is permitted to delegate its duties under the Administration Agreement to affiliates or third parties. To the extent the Administrator outsources any of its functions, the Company will pay the fees associated with such functions on a direct basis, without incremental profit to the Administrator.

See accompanying notes.

For the three months ended March 31, 2017 and 2016, the Company incurred administrative services expenses of $141,590 and $122,859, respectively, which are included in other general and administrative expenses on the Consolidated Statements of Operations, under the terms of the Administration Agreement, of which $145,941 and $154,403, respectively, were payable at March 31, 2017 and December 31, 2016.

Unless earlier terminated as described below, the Administration Agreement will remain in effect until June 2, 2017, and may be extended subject to required approvals. The Administration Agreement may be terminated by either party without penalty on 60 days’ written notice to the other party.

No person who is an officer, director or employee of the Administrator or its affiliates and who serves as a director of the Company receives any compensation from the Company for his or her services as a director. However, the Company reimburses the Administrator (or its affiliates) for an allocable portion of the compensation paid by the Administrator or its affiliates to the Company’s Chief Compliance Officer, Chief Financial Officer, and other professionals who spend time on such related activities (based on the percentage of time those individuals devote, on an estimated basis, to the business and affairs of the Company). The allocable portion of the compensation for these officers and other professionals are included in the administration expenses paid to Administrator. Directors who are not affiliated with the Administrator or its affiliates receive compensation for their services and reimbursement of expenses incurred to attend meetings.

On June 5, 2015, the Company entered into sub-administration, accounting, transfer agent, and custodian agreements with State Street Bank and Trust Company (“SSB”) to perform certain administrative, custodian, transfer agent and other services on behalf of the Company. The sub-administration agreements with SSB have an initial term of three years ending June 5, 2018. The Company does not reimburse the Administrator for any services for which it pays a separate sub-administrator and custodian fee to SSB. For the three months ended March 31, 2017 and 2016, the Company incurred expenses of $160,777 and $152,425, respectively, which are included in other general and administrative expenses on the Consolidated Statements of Operations, under the terms of the sub-administration agreements, of which $160,738 and $158,080, respectively, were payable at March 31, 2017 and December 31, 2016.

Investment Advisory Agreement

On June 2, 2015, the Company entered into the Investment Advisory Agreement with the Advisor. Under the terms of the Investment Advisory Agreement, the Advisor will provide investment advisory services to the Company and its portfolio investments. The Advisor’s services under the Investment Advisory Agreement are not exclusive, and the Advisor is free to furnish similar or other services to others so long as its services to the Company are not impaired. Under the terms of the Investment Advisory Agreement, the Company will pay the Advisor the Base Management Fee, as discussed below, and may also pay certain Incentive Fees, as discussed below.

The Base Management Fee is calculated and payable quarterly in arrears at an annual rate of 1.5% of the Company’s gross assets, including assets acquired through the incurrence of debt but excluding any cash and cash equivalents. The Base Management Fee is calculated based on the average value of gross assets at the end of the two most recently completed calendar quarters, and appropriately adjusted for any share issuances or repurchases during the current calendar quarter.

The Advisor, however, has agreed to waive its right to receive management fees in excess of the sum of (i) 0.25% of the aggregate committed but undrawn capital and (ii) 0.75% of the aggregate gross assets excluding cash and cash equivalents (including capital drawn to pay the Company’s expenses) during any period prior to a qualified initial public offering, as defined by the Investment Advisory Agreement (“Qualified IPO”). The Advisor will not be permitted to recoup any waived amounts at any time and the waiver agreement may only be modified or terminated prior to a Qualified IPO with the approval of the Board. For purposes of the Investment Advisory Agreement, cash equivalents means U.S. government securities and commercial paper maturing within one year of purchase.

For the three months ended March 31, 2017 and 2016, the Company incurred management fees of $604,227 and $357,047, respectively, of which $604,227 and $521,866, respectively, were payable at March 31, 2017 and December 31, 2016.

The Incentive Fees consists of two parts. The first part, the income incentive fee, is calculated and payable quarterly in arrears and (a) equals 100% of the excess of the pre-incentive fee net investment income for the immediately preceding calendar quarter, over a preferred return of 1.5% per quarter (6% annualized) (the “Hurdle”), and a catch-up feature until the Advisor has received, (i) prior to a Qualified IPO, 15%, or (ii) after a Qualified IPO, 17.5%, of the pre-incentive fee net investment income for the current quarter up to, (i) prior to a Qualified IPO, 1.7647%, or (ii) after a Qualified IPO, 1.8182% (the “Catch-up”), and (b) (i) prior to a Qualified IPO, 15% or (ii) after a Qualified IPO, 17.5%, of all remaining pre-incentive fee net investment income above the “Catch-up.”

For the three months ended March 31, 2017, the Company incurred income incentive fees of $221,558, of which $221,558 was payable at March 31, 2017. No income incentive fees were incurred during the three months ended March 31, 2016.

See accompanying notes.

The second part, the capital gains incentive fee, is determined and payable in arrears as of the end of each fiscal year (or upon a Qualified IPO or termination of the Investment Advisory Agreement), (i) prior to a Qualified IPO, 15.0%, or (ii) after a Qualified IPO, 17.5% of the Company’s realized capital gains, if any, on a cumulative basis from inception through the end of the fiscal year, computed net of all realized capital losses and unrealized capital depreciation on a cumulative basis, less the aggregate amount of any previously paid capital gain incentive fees. If a Qualified IPO occurs on a date other than the first day of a calendar quarter, the income incentive fee shall be calculated for such calendar quarter at a weighted rate calculated based on the fee rates applicable before and after a Qualified IPO based on the number of days in such calendar quarter before and after a Qualified IPO. If a Qualified IPO occurs on a date other than the first day of a fiscal year, a capital gains incentive fee shall be calculated as of the day before the Qualified IPO, with such capital gains incentive fee paid to the Advisor following the end of the fiscal year in which the Qualified IPO occurred. For the avoidance of doubt, such capital gains incentive fee shall be equal to 15.0% of the Company’s realized capital gains on a cumulative basis from inception through the day before the Qualified IPO, computed net of all realized capital losses and unrealized capital depreciation on a cumulative basis, less the aggregate amount of any previously paid capital gains incentive fees. Following a Qualified IPO, solely for the purposes of calculating the capital gains incentive fee, the Company will be deemed to have previously paid capital gains incentive fees prior to a Qualified IPO equal to the product obtained by multiplying (a) the actual aggregate amount of previously paid capital gains incentive fees for all periods prior to a Qualified IPO by (b) the percentage obtained by dividing (x) 17.5% by (y) 15.0%. In the event that the Investment Advisory Agreement shall terminate as of a date that is not a fiscal year end, the termination date shall be treated as though it were a fiscal year end for purposes of calculating and paying a capital gains incentive fee.

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 each calendar quarter, minus operating expenses for such quarter (including the base management fee, expenses payable under the Administration Agreement and any interest expense and distributions paid on any issued and outstanding debt or preferred stock, but excluding the incentive fee). Pre-incentive fee net investment income includes, in the case of investments with a deferred interest feature (such as market discount, OID, debt instruments with PIK interest, preferred stock with PIK dividends and zero coupon securities), 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. Pre-incentive fee net investment income will be compared to a “Hurdle Amount” equal to the product of (i) the Hurdle rate of 1.50% per quarter (6.00% annualized) and (ii) our net assets, at the end of the immediately preceding calendar quarter, subject to a “catch-up” provision incurred at the end of each calendar quarter. Our net pre-incentive fee investment income used to calculate this part of the incentive fee is also included in the amount of our gross assets used to calculate the 1.5% Base Management Fee.

No capital gains incentive fees were incurred for the three months ended March 31, 2017 and 2016.

From time to time, the Advisor may pay amounts owed by the Company to third-party providers of goods or services, including the Board, and the Company will subsequently reimburse the Advisor for such amounts paid on its behalf. Amounts payable to the Advisor are settled in the normal course of business without formal payment terms. See Note 7. Commitments, Contingencies and Indemnifications for additional discussion of certain related party transactions with the Advisor.

A portion of the outstanding shares of the Company’s common stock are owned by Crescent Capital Group LP (“CCG LP”). CCG LP is also the majority member of the Advisor and sole member of the Administrator. The Company has entered into a license agreement with CCG LP under which CCG LP granted the Company a non-exclusive, royalty-free license to use the name “Crescent Capital”. The Advisor has entered into a resource sharing agreement with CCG LP. CCG LP will provide the Advisor with the resources necessary for the Advisor to fulfill its obligations under the Investment Advisory Agreement.

Directors’ Fees

Each of the Company’s independent directors receive (i) an annual fee of $75,000, and (ii) $2,500 plus reimbursement of reasonable out-of-pocket expenses incurred in connection with attending each regular Board meeting and $500 each special meeting. The Company’s independent directors also receive $1,000 plus reimbursement of reasonable out-of-pocket expenses incurred in connection with each committee meeting attended. The Chairman of the Audit Committee receives an additional annual fee of $7,500. The Chairperson of the Nominating and Corporate Governance Committee and the Compensation Committee receive an additional annual fee of $2,500 and $2,500, respectively. The Company has obtained directors’ and officers’ liability insurance on behalf of the Company’s directors and officers. For the three months ended March 31, 2017 and 2016, the Company recorded directors’ fees of $72,500 and $66,875, respectively, of which $120,875 and $48,375, respectively, were payable at March 31, 2017 and December 31, 2016.

See accompanying notes.

Note 4. Investments

The Company’s investments at any time may include securities and other financial instruments or other assets of any sort, including, without limitation, corporate and government bonds, convertible securities, collateralized loan obligations, term loans, trade claims, equity securities, privately negotiated securities, direct placements, working interests, warrants and investment derivatives (such as credit default swaps, recovery swaps, total return swaps, options, forward contracts, and futures) (all of the foregoing collectively referred to in these consolidated financial statements as “investments”).

Under the 1940 Act, the Company is required to separately identify non-controlled investments where it owns 5% or more of a portfolio company’s outstanding voting securities and/or has the power to exercise control over the management or policies of such portfolio company as investments in “affiliated” companies. In addition, under the 1940 Act, the Company is required to separately identify investments where it owns more than 25% of a portfolio company’s outstanding voting securities and/or has the power to exercise control over the management or policies of such portfolio company as investments in “controlled” companies. Detailed information with respect to the Company’s non-controlled, non-affiliated; non-controlled, affiliated; and controlled affiliated investments is contained in the accompanying consolidated financial statements, including the Consolidated Schedule of Investments. The information in the tables below is presented on an aggregate portfolio basis, without regard to whether they are non-controlled non-affiliated, non-controlled affiliated or controlled affiliated investments. As of March 31, 2017 and December 31, 2016, all investments held are non-controlled/non-affiliated investments.

Certain Risk Factors

In the ordinary course of business, the Company manages a variety of risks including market risk and liquidity risk. The Company identifies, measures and monitors risk through various control mechanisms, including trading limits and diversifying exposures and activities across a variety of instruments, markets and counterparties.

Market risk is the risk of potential adverse changes to the value of financial instruments because of changes in market conditions, including as a result of changes in the credit quality of a particular issuer, credit spreads, interest rates, and other movements and volatility in security prices or commodities. In particular, the Company may invest in issuers that are experiencing or have experienced financial or business difficulties (including difficulties resulting from the initiation or prospect of significant litigation or bankruptcy proceedings), which involves significant risks. The Company manages its exposure to market risk through the use of risk management strategies and various analytical monitoring techniques.

The Company’s investments may, at any time, include securities and other financial instruments or obligations that are illiquid or thinly traded, making purchase or sale of such securities and financial instruments at desired prices or in desired quantities difficult. Furthermore, the sale of any such investments may be possible only at substantial discounts, and it may be extremely difficult to value any such investments accurately.

Investments denominated in foreign currencies and foreign currency transactions may involve certain considerations and risks not typically associated with those of domestic origin, including unanticipated movements in the value of the foreign currency relative to the U.S. dollar.

Investments at fair value consisted of the following at March 31, 2017:


Investment Type	Cost		Fair Value		Unrealized Appreciation/ (Depreciation)
Senior Secured First Lien	$	197,457,209	$	198,793,014	$	1,335,805
Senior Secured Second Lien		52,884,717		54,789,572		1,904,855
Unsecured Debt		5,374,891		5,512,520		137,629
Common Stock		5,332,317		5,295,482		(36,835	)

Total Investments	$	261,049,134	$	264,390,588	$	3,341,454

Investments at fair value consisted of the following at December 31, 2016:


Investment Type	Cost		Fair Value		Unrealized Appreciation/ (Depreciation)
Senior Secured First Lien	$	166,178,326	$	166,531,949	$	353,623
Senior Secured Second Lien		41,259,110		42,495,369		1,236,259
Unsecured Debt		4,870,817		4,950,000		79,183
Common Stock		3,931,345		3,943,634		12,289

Total Investments	$	216,239,598	$	217,920,952	$	1,681,354

See accompanying notes.

The industry composition of investments at fair value at March 31, 2017 and December 31, 2016 is as follows:


Industry	Fair Value March 31, 2017		Percentage of Fair Value			Fair Value December 31, 2016		Percentage of Fair Value
Automobiles & Components	$	3,200,000		1.21	%	$	3,183,333		1.46	%
Capital Goods		17,032,034		6.44			17,714,408		8.13
Commercial & Professional Services		56,550,158		21.39			36,916,967		16.94
Consumer Durables & Apparel		4,057,640		1.53			4,001,176		1.84
Consumer Services		26,028,359		9.85			22,012,237		10.10
Diversified Financials		2,981,016		1.13			2,993,211		1.37
Energy		674,549		0.26			668,962		0.31
Food & Staples Retailing		7,697,149		2.91			3,779,136		1.73
Food, Beverage & Tobacco		5,743,402		2.17			5,596,213		2.57
Health Care Equipment & Services		58,376,639		22.08			41,382,251		18.99
Household & Personal Products		2,222,416		0.84			2,226,800		1.02
Insurance		6,655,732		2.52			6,805,039		3.12
Materials		4,548,267		1.72			5,067,060		2.32
Media		3,013,479		1.14			3,034,798		1.39
Pharmaceuticals, Biotechnology & Life Sciences		—		—			832,638		0.38
Real Estate		426,064		0.16			934,687		0.43
Retailing		7,402,633		2.80			8,576,322		3.94
Software & Services		46,830,094		17.71			42,188,073		19.36
Technology Hardware & Equipment		4,999,890		1.89			2,022,011		0.93
Telecommunication Services		1,824,831		0.69			2,670,988		1.23
Transportation		4,126,236		1.56			4,365,491		2.00
Utilities		—		—			949,151		0.44

Total Investments	$	264,390,588		100.00	%	$	217,920,952		100.00	%

The geographic composition of investments at fair value at March 31, 2017 and December 31, 2016 is as follows:


Geographic Region	Fair Value March 31, 2017		Percentage of Fair Value			Fair Value December 31, 2016		Percentage of Fair Value
United States	$	259,295,638		98.07	%	$	212,821,980		97.66	%
United Kingdom		3,095,060		1.17			3,076,961		1.41
France		1,999,890		0.76			2,022,011		0.93

Total Investments	$	264,390,588		100.00	%	$	217,920,952		100.00	%

See accompanying notes.

Note 5. Fair Value of Financial Instruments

Investments

The following table presents fair value measurements of investments as of March 31, 2017:


Fair Value Hierarchy
	Level 1		Level 2		Level 3		Total
Senior Secured First Lien	$	—	$	95,942,606	$	102,850,408	$	198,793,014
Unsecured Debt		—		—		5,512,520		5,512,520
Senior Secured Second Lien		—		15,434,780		39,354,792		54,789,572
Common Stock		—		—		5,295,482		5,295,482

Total Investments	$	—	$	111,377,386	$	153,013,202	$	264,390,588

The following table presents fair value measurements of investments as of December 31, 2016:


Fair Value Hierarchy
	Level 1		Level 2		Level 3		Total
Senior Secured First Lien	$	—	$	101,132,842	$	65,399,107	$	166,531,949
Unsecured Debt		—		—		4,950,000		4,950,000
Senior Secured Second Lien		—		21,141,689		21,353,680		42,495,369
Common Stock		—		—		3,943,634		3,943,634

Total Investments	$	—	$	122,274,531	$	95,646,421	$	217,920,952

The following table provides a reconciliation of the beginning and ending balances for total investments that use Level 3 inputs for the three months ended March 31, 2017, based off of the fair value hierarchy at March 31, 2017:


				Senior			Senior
	Common			Secured			Secured			Unsecured
	Stock			First Lien			Second Lien			Debt		Total
Balance as of December 31, 2016	$	3,943,634		$	65,399,107		$	21,353,680		$	4,950,000	$	95,646,421
Amortized discounts/premiums		—			57,292			23,649			4,175		85,116
Paid in-kind interest		—			—			—			3,853		3,853
Net realized gain (loss)		—			5,727			17,282			—		23,009
Net change in unrealized appreciation (depreciation)		(49,125	)		1,006,162			697,321			58,446		1,712,804
Purchases		1,400,973			37,392,855			13,340,985			496,046		52,630,859
Sales/return of capital/principal repayments/paydowns		—			(1,010,735	)		(928,125	)		—		(1,938,860	)
Transfers in		—			—			4,850,000			—		4,850,000
Transfers out		—			—			—			—		—

Balance as of March 31, 2017	$	5,295,482		$	102,850,408		$	39,354,792		$	5,512,520	$	153,013,202

Net change in unrealized appreciation (depreciation) from investments still held as of March 31, 2017	$	(49,125	)	$	1,120,066		$	715,221		$	58,446	$	1,844,608

During the three months ended March 31, 2017, the Company recorded $4,850,000 in transfers from Level 2 to Level 3 due to a decrease in observable inputs in market data.

See accompanying notes.

The following table provides a reconciliation of the beginning and ending balances for total investments that use Level 3 inputs for the three months ended March 31, 2016 based off of fair value hierarchy at March 31, 2016:


			Senior			Senior
	Common		Secured			Secured			Unsecured
	Stock		First Lien			Second Lien			Debt			Total
Balance as of December 31, 2015	$	1,958,249	$	32,607,633		$	12,236,479		$	5,000,000		$	51,802,361
Amortized discounts/premiums		—		25,059			3,879			3,690			32,628
Net realized gain (loss)		—		154			—			—			154
Net change in unrealized appreciation (depreciation)		—		(207,049	)		(3,878	)		(3,690	)		(214,617	)
Purchases		—		18,970,475			372,676			—			19,343,151
Sales/return of capital/principal repayments		—		(10,870	)		—			—			(10,870	)
Transfers in		—		—			—			—			—
Transfers out		—		(4,391,077	)		(7,609,156	)		—			(12,000,233	)

Balance as of March 31, 2016	$	1,958,249	$	46,994,325		$	5,000,000		$	5,000,000		$	58,952,574

Net change in unrealized appreciation (depreciation) from investments still held as of March 31, 2016	$	—	$	(211,054	)	$	22,229		$	(3,690	)	$	(192,515	)

During the three months ended March 31, 2016, the Company recorded $12,000,233 in transfers from Level 3 to Level 2 due to an increase in observable inputs in market data.

The following tables present the fair value of Level 3 investments and the ranges of significant unobservable inputs used to value the Company’s Level 3 investments as of March 31, 2017 and December 31, 2016. These ranges represent the significant unobservable inputs that were used in the valuation of each type of investment. These inputs are not representative of the inputs that could have been used in the valuation of any one investment. For example, the highest market yield presented in the table for senior secured first lien investments is appropriate for valuing a specific investment but may not be appropriate for valuing any other investment. Accordingly, the ranges of inputs presented below do not represent uncertainty in, or possible ranges of, fair value measurements of the Company’s Level 3 investments.

Quantitative information about Level 3 Fair Value Measurements

Fair value as of
March 31, 2017

Valuation
Techniques

Unobservable

Input

Range

(Weighted Average)

Senior Secured First Lien

102,850,408

Discounted Cash
Flows

Discount Rate

5.7% - 10.0% (6.8%)

Senior Secured Second Lien

39,354,792

Discounted Cash
Flows

Discount Rate

8.5% - 10.5% (10.1%)

Unsecured Debt

5,512,520

Discounted Cash
Flows

Discount Rate

11.0% - 13.5% (11.5%)

Common Stock

5,295,482

Market Multiple

Comparable EBITDA
Multiple

6.5x - 13.9x (11.0x)


Quantitative information about Level 3 Fair Value Measurements

	Fair value as of December 31, 2016		Valuation Techniques	Unobservable Input	Range (Weighted Average)
Senior Secured First Lien	$	65,399,107	Discounted Cash Flows	Discount Rate	5.7% - 9.9% (7.1%)
Senior Secured Second Lien	$	21,353,680	Discounted Cash Flows	Discount Rate	9.8% - 10.5% (10.1%)
Unsecured Debt	$	4,950,000	Discounted Cash Flows	Discount Rate	11.2%
Common Stock	$	3,943,634	Market Multiple	Comparable EBITDA Multiple	10.5x - 13.4x (11.8x)

See accompanying notes.

As noted above, the discounted cash flows, market rate and market multiple approaches were used in the determination of fair value of certain Level 3 assets as of March 31, 2017 and December 31, 2016. The significant unobservable inputs used in the discounted cash flow approach is the discount rate used to discount the estimated future cash flows expected to be received from the underlying investment, which include both future principal and interest payments. An increase in the discount rate would result in a decrease in the fair value. Included in the consideration and selection of discount rates is risk of default, rating of the investment, call provisions and comparable company investments. The significant unobservable inputs used in the market rate approach are the effective yield on a loan given its current fair value mark and the market yields for that type of loan. An increase in the market yield would result in a decrease in the fair value. The significant unobservable inputs used in the market multiple approach are the multiples of similar companies’ earnings before income taxes, depreciation and amortization (“EBITDA”) and comparable market transactions. Increases or decreases in market EBITDA multiples would result in an increase or decrease in the fair value.

Financial Instruments Not Carried at Fair Value

Debt

The carrying value of the Company’s revolving credit facility, as of March 31, 2017 and December 31, 2016, approximates its fair value as the revolving credit facility, issued at market terms, includes a variable interest rate, as discussed in Note 6.

Note 6. Debt

Debt consisted of the following as of March 31, 2017 and December 31, 2016:


	March 31, 2017
	Aggregate Principal		Drawn		Amount		Carrying
	Amount Committed		Amount ⁽⁴⁾		Available⁽¹⁾		Value⁽²⁾
SPV Asset Facility	$	125,000,000	$	77,328,575	$	47,671,425	$	77,328,575
Revolving Credit Facility⁽³⁾⁽⁵⁾		50,000,000		50,309,591		455,538		49,585,354

Total Debt	$	175,000,000	$	127,638,166	$	48,126,963	$	126,913,929


	December 31, 2016
	Aggregate Principal		Drawn		Amount		Carrying
	Amount Committed		Amount ⁽⁴⁾		Available⁽¹⁾		Value ⁽²⁾
SPV Asset Facility	$	75,000,000	$	47,628,575	$	27,371,425	$	47,628,575
Revolving Credit Facility⁽³⁾⁽⁵⁾		50,000,000		47,809,591		2,998,009		47,021,934

Total Debt	$	125,000,000	$	95,438,166	$	30,369,434	$	94,650,509

(1)	The amount available is subject to any limitations related to the respective debt facilities’ borrowing bases and foreign currency translation adjustments.

(2)	The difference between the drawn amount and the carrying amount is attributable to the effect of foreign currency rates as of the balance sheet dates versus foreign currency rates at the time of the respective non-USD borrowings.

(3)	The Company had outstanding debt denominated in Pound Sterling (GBP) of 2.5 million and Euro (EUR) of 1.8 million on its Revolving Credit Facility.

(4)	For borrowings in non-USD, the drawn amount represents the USD equivalent at the time of borrowing (i.e cost).

(5)	Total drawn amount payable after the effect of foreign currency translation as of March 31, 2017 and December 31, 2016, was $49,544,462 and $47,006,114, respectively.

See accompanying notes.

As of March 31, 2017 and December 31, 2016, the Company was in compliance with the terms and covenants of its debt arrangements.

Revolving Credit Facility

On June 29, 2015, the Company entered into the “Revolving Credit Facility” with Natixis, New York Branch (“Natixis”), as administrative agent (the “Administrative Agent”), and Natixis and certain of its affiliates as lenders. Proceeds from the Revolving Credit Facility may be used for investment activities, expenses, working capital requirements and general corporate purposes. The Company’s obligations to the lenders are secured by a first priority security interest in the unused capital commitments (See Note 7. Commitments, Contingencies and Indemnifications) and certain investments and cash held by the Company. The Revolving Credit Facility contains certain covenants, including, but not limited to maintaining an asset coverage ratio of total assets to total borrowings of at least 2 to 1. The maximum principal amount of the Revolving Credit Facility is $50 million, subject to availability under the borrowing base. On October 23, 2015, the Company amended the Revolving Credit Facility to include a multi-currency tranche allowing the Company to borrow up to 15% of the principal amount committed under an alternative currency including Euro, Canadian Dollar and Pound Sterling (GBP). On June 29, 2016, the Company amended the Revolving Credit Facility decreasing the facility limit from $75 million to $50 million and extending the maturity date to June 29, 2017.

Borrowings under the Revolving Credit Facility bear interest at either (i) London Interbank Offered Rate (“LIBOR”) plus a margin with no LIBOR floor or (ii) at lenders’ cost of funds plus a margin. The Company may elect either the LIBOR or prime rate at the time of draw-down, and loans may be converted from one rate to another at any time, subject to certain conditions. The Company pays unused facility fees of 0.20% per annum on committed but undrawn amounts under the Revolving Credit Facility. Interest is payable monthly in arrears. Any amounts borrowed under the Revolving Credit Facility, and all accrued and unpaid interest, will be due and payable, on June 29, 2017.

Costs incurred in connection with obtaining the Revolving Credit Facility have been recorded as deferred financing costs and are being amortized over the life of the Revolving Credit Facility on a straight-line basis. As of March 31, 2017 and December 31, 2016, deferred financing costs related to the Revolving Credit Facility were $39,703 and $79,854, respectively, and were included in debt on the Consolidated Statements of Assets and Liabilities.

SPV Asset Facility

On March 28, 2016 Crescent Capital BDC Funding, LLC (“CBDC SPV”), a Delaware limited liability company and wholly owned and consolidated subsidiary of the Company, entered into a loan and security agreement (the “SPV Asset Facility”) with the Company as the collateral manager, seller and equityholder, CBDC SPV as the borrower, the banks and other financial institutions from time to time party thereto as lenders, and Wells Fargo Bank, National Association (“Wells Fargo”), as administrative agent, collateral agent, and lender. The SPV Asset Facility is effective as of March 28, 2016. On February 2017, the Company amended the SPV Asset Facility increasing the facility limit from $75 million to $125 million.

The maximum commitment amount under the SPV Asset Facility is $125 million, and may be increased with the consent of Wells Fargo or reduced upon request of the Company. Proceeds of the advances under the SPV Asset Facility may be used to acquire portfolio investments, to make distributions to the Company in accordance with the SPV Asset Facility, and to pay related expenses. The maturity date is the earlier of: (a) the date the Borrower voluntarily reduces the commitments to zero, (b) the Facility Maturity Date (March 28, 2021) and (c) the date upon which Wells Fargo declares the obligations due and payable after the occurrence of an Event of Default. Borrowings under the SPV Asset Facility bear interest at London Interbank Offered Rate (“LIBOR”) plus a margin with no LIBOR floor. The Company pays unused facility fees of 0.50% per annum on committed but undrawn amounts under the SPV Asset Facility. The SPV Asset Facility includes customary covenants, including certain limitations on the incurrence of additional indebtedness and liens, as well as usual and customary events of default for revolving credit facilities of this nature.

Also on March 28, 2016, the Company, as Seller, and CBDC SPV, as Purchaser, entered into a loan sale agreement whereby the Company will sell certain assets to CBDC SPV. CBDC SPV will be consolidated into the Company’s financial statements and no gain or loss is expected to result from the sale of assets to CBDC SPV. The Company retains a residual interest in assets contributed to or acquired by CBDC SPV through its 100% ownership of CBDC SPV. The facility size is subject to availability under the borrowing base, which is based on the amount of CBDC SPV’s assets from time to time, and satisfaction of certain conditions, including an asset coverage test and certain concentration limits.

Costs incurred in connection with obtaining the SPV Asset Facility have been recorded as deferred financing costs and are being amortized over the life of the SPV Asset Facility on a straight-line basis. As of March 31, 2017 and December 31, 2016, deferred financing costs related to the SPV Asset Facility were $1,233,139 and $900,020, respectively, and were included in debt on the Consolidated Statements of Assets and Liabilities.

See accompanying notes.

The summary information regarding the Revolving Credit Facility and the SPV Asset Facility for the three months ended March 31, 2017 and 2016 were as follows:


	For the three months ended March 31, 2017			For the three months ended March 31, 2016
Borrowing interest expense	$	820,652		$	329,206
Facility fees		52,011			10,164
Amortization of financing costs		172,769			114,723

Total	$	1,045,432		$	454,093

Weighted average interest rate		2.98	%		2.09	%
Average outstanding balance	$	111,612,497		$	63,299,163

Note 7. Commitments, Contingencies and Indemnifications

The Company’s investment portfolio may contain debt investments that are in the form of lines of credit and unfunded delayed draw commitments, which require the Company to provide funding when requested by portfolio companies in accordance with the terms of the underlying loan agreements. As of March 31, 2017 and December 31, 2016, the Company had unfunded commitments denominated in USD totaling $14,364,333 and $9,297,035, respectively, under loan and financing agreements. The Company also had outstanding an unfunded commitment denominated in GBP totaling £377,841 and £377,841 at March 31, 2017 and December 31, 2016, respectively.

Other Commitments and Contingencies

As of March 31, 2017, the Company had $379.5 million in total capital commitments from investors. Of this amount, $10.0 million was from Crescent Capital Group LP (“CCG LP”) and its affiliates. The remaining unfunded capital commitments totaled $238.5 million as of March 31, 2017.

Up to June 25, 2015, the Company’s efforts had been limited to organizational activities, the cost of which has been borne by the Advisor. The Company has agreed to repay the Advisor for initial organization costs and equity offering costs incurred prior to the commencement of its operations up to a maximum of $1.5 million on a pro rata basis over the first $350 million of invested capital not to exceed 3 years from the initial capital commitment. The Advisor incurred costs on behalf of the Company of $794,450 of equity offering costs and $567,895 of organization costs through Commencement. For the three months ended March 31, 2017, the Advisor allocated to the Company $34,048 of equity offering costs and $24,338 of organization costs, of which $58,386 was included in Due to Advisor on the Consolidated Statements of Assets and Liabilities at March 31, 2017. Since June 26, 2015 (Commencement) through March 31, 2017, the Advisor has allocated to the Company $320,050 of equity offering costs and $228,781 of organization costs.

In the normal course of business, the Company enters into contracts which provide a variety of representations and warranties, and that provide general indemnifications. Such contracts include those with certain service providers, brokers and trading counterparties. Any exposure to the Company under these arrangements is unknown as it would involve future claims that may be made against the Company; however, based on the Company’s experience, the risk of loss is remote and no such claims are expected to occur. As such, the Company has not accrued any liability in connection with such indemnifications.

See accompanying notes.

Note 8. Stockholders’ Equity

On June 26, 2015, the Company entered into subscription agreements (collectively, the “Subscription Agreements”) with several investors, including CCG LP and its affiliates, providing for the private placement of the Company’s common stock. Under the terms of the Subscription Agreements, investors are required to fund capital drawdowns to purchase the Company’s common stock up to the amount of their respective capital commitments on an as-needed basis as determined by the Company with a minimum of 10 business days’ prior notice. The remaining unfunded capital commitments related to these Subscription Agreements totaled $238.5 million and $246.7 million as of March 31, 2017 and December 31, 2016, respectively.

The following table summarizes the total shares issued and amount received related to capital drawdowns delivered pursuant to the Subscription Agreements during the three months ended March 31, 2017 and 2016:


	For the three months ended
	March 31, 2017
Quarter Ended	Shares		Amount
March 31, 2017		744,085	$	15,000,000

Total Capital Drawdowns		744,085	$	15,000,000


	For the three months ended
	March 31, 2016
Quarter Ended	Shares		Amount
March 31, 2016		624,382	$	12,000,000

Total Capital Drawdowns		624,382	$	12,000,000

Prior to the listing of the Company’s shares on an exchange, stockholders who “opt in” to the Company’s dividend reinvestment plan will have their cash dividends and distributions automatically reinvested in additional shares of the Company’s common stock, rather than receiving cash dividends and distributions. The number of shares to be issued to a stockholder is determined by dividing the total dollar amount of the cash dividend or distribution payable to a stockholder by the net asset value per share of the common stock as of the last day of the Company’s fiscal quarter or such other date and price per share as determined by the Board preceding the date such dividend was declared.

The Company has authorized 200,000,000 shares of its common stock with a par value of $0.001 per share. The Company has authorized 10,000 shares of its preferred stock with a par value of $0.001 per share. Shares of preferred stock have not been issued. On February 5, 2015, the Company issued 1,000 common shares to CCG LP. On April 15, 2015, CCG LP contributed $499,000 of additional paid-in-capital to the Company. On June 29, 2015, CCG LP exchanged its 1,000 shares issued on February 5, 2015 for 25,000 common shares, which were subsequently redeemed on June 30, 2015.

At March 31, 2017 and December 31, 2016, CCG LP and its affiliates owned 4.01% and 4.47%, respectively, of the outstanding common shares of the Company.

For the three months ended March 31, 2017, distributions made by the Company are as follows:


Quarter Ended	Total Amount		Per Share Amount
March 31, 2017	$	1,994,047	$	0.28

For the three months ended March 31, 2016, distributions made by the Company are as follows:


Quarter Ended	Total Amount		Per Share Amount
March 31, 2016	$	1,130,001	$	0.24

See accompanying notes.

Note 9. Earnings Per Share

In accordance with the provisions of ASC Topic 260 – Earnings per Share (“ASC 260”), basic earnings per share is computed by dividing earnings available to common shareholders by the weighted average number of shares outstanding during the period. Other potentially dilutive common shares, and the related impact to earnings, are considered when calculating earnings per share on a diluted basis. As of March 31, 2017 and December 31, 2016, there are no dilutive shares.

The following table sets forth the computation of the weighted average basic and diluted net increase in net assets per share from operations for the following periods:


	For the three months ended March 31, 2017		For the three months ended March 31, 2016
Net increase (decrease) in net assets resulting from operations	$	3,535,462	$	1,188,995
Weighted average common shares outstanding		6,741,198		4,276,179
Net increase (decrease) in net assets resulting from operations per common share-basic and diluted	$	0.52	$	0.28

Note 10. Income Taxes

As of March 31, 2017, the Company’s aggregate investment unrealized appreciation and depreciation for federal income tax purposes was:


Tax cost	$	261,049,134

Gross unrealized appreciation	$	5,090,928
Gross unrealized depreciation		(1,749,474	)

Net unrealized investment appreciation	$	3,341,454

As of December 31, 2016, the Company’s aggregate investment unrealized appreciation and depreciation for federal income tax purposes was:


Tax cost	$	216,264,636

Gross unrealized appreciation	$	2,754,130
Gross unrealized depreciation		(1,097,814	)

Net unrealized investment appreciation	$	1,656,316

For the three months ended March 31, 2017, the Company recognized no current or deferred income tax or benefit related to the Taxable Subsidiary. There were no deferred tax assets or liabilities related to the Taxable Subsidiary at March 31, 2017 or December 31, 2016.

See accompanying notes.

Note 11. Financial Highlights

Below is the schedule of financial highlights of the Company for the three months ended March 31, 2017 and 2016, relating to the common shares issued through March 31, 2017 pursuant to the Subscription Agreements:


	For the three months ended March 31, 2017			For the three months ended March 31, 2016
Per Share Data:⁽¹⁾
Net asset value, beginning of period	$	20.08		$	19.13
Net investment income after tax		0.28			0.25
Net realized and unrealized gains (losses) on investments⁽²⁾		0.24			0.02

Net increase (decrease) in net assets resulting from operations		0.52			0.27

Distributions declared from net investment income⁽³⁾		(0.28	)		(0.24	)
Offering costs		(0.02	)		(0.01	)

Total increase (decrease) in net assets		0.22			0.02

Net asset value, end of period	$	20.30		$	19.15
Shares outstanding, end of period		7,121,596			4,681,053
Weighted average shares outstanding		6,741,198			4,276,179
Total return⁽⁴⁾⁽⁵⁾		10.09	%		5.44	%

Ratio/Supplemental Data:
Net assets, end of period	$	144,576,526		$	89,625,017
Ratio of total expenses to average net assets⁽⁶⁾		7.51	%		6.84	%
Ratio of net investment income to average net assets⁽⁶⁾		5.77	%		5.24	%
Ratio of interest and credit facility expenses to average net assets⁽⁵⁾		3.11	%		2.18	%
Ratio of incentive fees to average net assets⁽⁵⁾		0.66	%		—	%
Portfolio turnover rate⁽⁷⁾		5.36	%		1.87	%
Asset coverage ratio⁽⁸⁾		2.13			2.31

⁽¹⁾	Based on actual number of shares outstanding at the end of the corresponding period or the weighted average shares outstanding for the period, unless otherwise noted, as appropriate.

⁽²⁾	The amount shown does not correspond with the aggregate realized and unrealized gains (losses) on investment transactions for the period as it includes the effect of the timing of equity issuances.

⁽³⁾	The per share data for distributions per share reflects the actual amount of distributions declared per share for the applicable period.

⁽⁴⁾	Total return based on net asset value is calculated as the change in net asset value per share during the period plus declared dividends per share during the period, divided by the beginning net asset value per share.

⁽⁵⁾	Annualized.

⁽⁶⁾	Annualized except for organization expenses.

⁽⁷⁾	Not annualized.

⁽⁸⁾	Asset coverage ratio is equal to (i) the sum of (A) net assets at end of period and (B) debt outstanding at end of period, divided by (ii) total debt outstanding at the end of the period.

Note 12. Subsequent Events

The Company’s management evaluated subsequent events through the date of issuance of the consolidated financial statements included herein. Other than the item below, there have been no subsequent events that occurred during such period that would require disclosure in this Form 10-Q or would be required to be recognized in the consolidated financial statements as of March 31, 2017 and for the three months ended March 31, 2017.

The Company issued common shares and received gross proceeds of approximately $10 million subsequent to March 31, 2017.

See accompanying notes.

ITEM 2. MANAGEMENT’S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION AND RESULTS OF OPERATIONS

The information contained in this section should be read in conjunction with the financial statements and notes thereto appearing elsewhere in this report. This discussion also should be read in conjunction with the “Cautionary Statement Regarding Forward Looking Statements” set forth on page 1 of this Quarterly Report on Form 10-Q.

OVERVIEW

We are a specialty finance company focused on lending to middle-market companies and are incorporated under the laws of the State of Delaware on February 5, 2015 (Inception). We have elected to be treated as a business development company (BDC) under the Investment Company Act of 1940, as amended (the 1940 Act). In addition, the Company has elected to be treated for U.S. federal income tax purposes as a regulated investment company (a “RIC”) under Subchapter M of the Internal Revenue Code of 1986, as amended (the “Code). As such, we are required to comply with various regulatory requirements, such as the requirement to invest at least 70% of our assets in “qualifying assets,” source of income limitations, asset diversification requirements, and the requirement to distribute annually at least 90% of our taxable income and tax-exempt interest.

The Company is managed by CBDC Advisors, LLC (the “Advisor”), an investment adviser that is registered with the Securities and Exchange Commission (the “SEC”) under the Investment Advisers Act of 1940. CBDC Administration, LLC (the “Administrator”) provides the administrative services necessary for the Company to operate. Company management consists of investment and administrative professionals from the Advisor and Administrator along with the Company’s Board of Directors (the “Board”). The Advisor directs and executes the investment operations and capital raising activities of the Company subject to oversight from the Board, which sets the broad policies of the Company. The Board has delegated investment management of the Company’s investment assets to the Advisor. The Board consists of five directors, three of whom are independent.

The Company’s primary investment objective is to maximize the total return to the Company’s stockholders in the form of current income and capital appreciation through debt and related equity investments. The Company seeks to achieve its investment objectives by investing primarily in secured debt (including senior secured first-lien, unitranche and senior secured second-lien debt) and unsecured debt (including senior unsecured and subordinated debt), as well as related equity securities of private U.S. middle-market companies. We may purchase interests in loans or make debt investments, either (i) directly from our target companies as primary market or private credit investments (i.e., private credit transactions), or (ii) primary or secondary market bank loan or high yield transactions in the broadly syndicated “over-the-counter” market (i.e., broadly syndicated loans and bonds). Although our focus is to invest in less liquid private credit transactions, broadly syndicated loans and bonds are generally more liquid than and complement our private credit transactions.

From February 5, 2015 (Inception) through June 25, 2015, the Company devoted substantially all of its efforts to establishing the business and raising capital commitments from private investors. On June 26, 2015, we entered into subscription agreements with several investors, including Crescent Capital Group LP and its affiliates (CCG LP), providing for the private placement of the Company’s common stock. The Company commenced investment operations on June 26, 2015 (Commencement).

KEY COMPONENTS OF OPERATIONS

Investments

We expect our investment activity to vary substantially from period to period depending on many factors, the general economic environment, the amount of capital we have available to us, the level of merger and acquisition activity for middle-market companies, including the amount of debt and equity capital available to such companies and the competitive environment for the type of investments we make. In addition, as part of our risk strategy on investments, we may reduce certain levels of investments through partial sales or syndication to additional investors.

We must not invest in any assets other than “qualifying assets” specified in the 1940 Act, unless, at the time the investments are made, at least 70% of our total assets are qualifying assets (with certain limited exceptions). Qualifying assets include investments in “eligible portfolio companies.” Pursuant to rules adopted by the SEC, “eligible portfolio companies” include certain companies that do not have any securities listed on a national securities exchange and public companies whose securities are listed on a national securities exchange but whose market capitalization is less than $250 million.

See accompanying notes.

The Investment Advisor

Our investment activities are managed by the Advisor, which will be responsible for originating prospective investments, conducting research and due diligence investigations on potential investments, analyzing investment opportunities, negotiating and structuring our investments and monitoring our investments and portfolio companies on an ongoing basis. The Advisor has entered into a Resource Sharing Agreement (the “Resource Sharing Agreement”) with Crescent Capital Group LP (“CCG LP”), pursuant to which CCG LP will provide the Advisor with experienced investment professionals (including the members of the Advisor’s investment committee) and access to the resources of CCG LP so as to enable the Advisor to fulfill its obligations under the Investment Advisory Agreement. Through the Resource Sharing Agreement, the Advisor intends to capitalize on the deal origination, credit underwriting, due diligence, investment structuring, execution, portfolio management and monitoring experience of CCG LP’s investment professionals.

Revenues

We generate revenue primarily in the form of interest income on debt investments and, to a lesser extent, capital gains and distributions, if any, on equity securities that we may acquire in portfolio companies. Certain investments may have contractual PIK interest or dividends. PIK represents accrued interest or accumulated dividends that are added to the loan principal of the investment on the respective interest or dividend payment dates rather than being paid in cash and generally becomes due at maturity or upon being called by the issuer. PIK is recorded as interest or dividend income, as applicable.

In addition, we may receive fees for services provided to portfolio companies by the Advisor under the Investment Advisory Agreement. The services that the Advisor provides vary by investment, but generally include syndication, structuring or diligence fees, and fees for providing managerial assistance to our portfolio companies. We also generate revenue in the form of commitment or origination fees. Loan origination fees, original issue discount and market discount or premium are capitalized, and we accrete or amortize such amounts into income over the life of the loan. Fees for providing managerial assistance to our portfolio companies are generally non-recurring and are recognized as revenue when services are provided. In certain instances where the Company is invited to participate as a co-lender in a transaction and does not provide significant services in connection with the investment, all or a portion of any loan fees received by the Company in such situations will be deferred and amortized over the investment’s life using the effective yield method.

Expenses

Our primary operating expenses include the payment of Management fees and Incentive fees to the Advisor under the Investment Advisory Agreement, our allocable portion of overhead expenses under the administration agreement with our Administrator (the “Administration Agreement”), operating costs associated with our sub-administration, custodian and transfer agent agreements with State Street Bank and Trust Company (the “Sub-Administration Agreements”) and other operating costs described below. The Management and Incentive fees compensate our investment adviser for its work in identifying, evaluating, negotiating, closing and monitoring our investments. We bear all other out-of-pocket costs and expenses of our operations and transactions, including:

•

allocated organization costs from the Advisor incurred prior to the commencement of our operations up to a maximum of $1.5 million;

•

the cost of calculating our net asset value, including the cost of any third-party valuation services;

•

fidelity bond, directors’ and officers’ liability insurance and other insurance premiums;

•

direct costs, such as printing, mailing, long distance telephone and staff;

•

fees and expenses associated with independent audits and outside legal costs;

•

independent directors’ fees and expenses;

•

U.S. federal, state and local taxes;

•

the cost of effecting sales and repurchases of shares of our common stock and other securities;

•

fees payable to third parties relating to making investments, including out-of-pocket fees and expenses associated with performing due diligence and reviews of prospective investments;

•

out-of-pocket fees and expenses associated with marketing efforts;

•

federal and state registration fees and any stock exchange listing fees;

•

brokerage commissions;

See accompanying notes.

•

costs associated with our reporting and compliance obligations under the 1940 Act and other applicable U.S. federal and state securities laws;

•

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

•

all other expenses reasonably incurred by us in connection with making investments and administering our business.

We have agreed to repay the Advisor for initial organization costs and equity offering costs incurred prior to the commencement of operations up to a maximum of $1.5 million on a pro rata basis over the first $350 million of invested capital not to exceed 3 years from the initial capital commitment. The Advisor is responsible for organization and private equity offerings costs in excess of $1.5 million.

We expect our general and administrative expenses to be relatively stable or decline as a percentage of total assets during periods of asset growth and to increase during periods of asset declines. Incentive Fees and costs relating to future offerings of securities would be incremental.

Leverage

Our financing facilities allow us to borrow money and lever our investment portfolio, subject to the limitations of the 1940 Act, with the objective of increasing our yield. This is known as “leverage” and could increase or decrease returns to our stockholders.

The use of leverage involves significant risks. As a BDC, with certain limited exceptions, we will only be permitted to borrow amounts such that our asset coverage ratio, as defined in the 1940 Act, equals at least 2 to 1 after such borrowing. Short-term credits necessary for the settlement of securities transactions and arrangements with respect to securities lending will not be considered borrowings for these purposes. The amount of leverage that we employ will depend on our Advisor’s and our Board assessment of market conditions and other factors at the time of any proposed borrowing.

PORTFOLIO INVESTMENT ACTIVITY

We seek to create a broad and varied portfolio that generally includes senior secured first-lien, “unitranche” (which are loans that combine features of first-lien, second-lien and mezzanine debt, generally in a first-lien position), senior secured second lien and subordinated loans and minority equity securities by investing in the securities of U.S. middle market companies. The size of our individual investments will vary proportionately with the size of our capital base. We generally invest in securities that have been rated below investment grade by independent rating agencies or that would be rated below investment grade if they were rated. These securities have speculative characteristics with respect to the issuer’s capacity to pay interest and repay principal. In addition, many of our debt investments have floating interest rates that reset on a periodic basis and typically do not fully pay down principal prior to maturity, which may increase our risk of losing part or all of our investment.

As of March 31, 2017 and December 31, 2016, our portfolio at fair value was comprised of the following:


	March 31, 2017					December 31, 2016
($ in millions)	Fair Value (1)		Percentage			Fair Value (1)		Percentage
Senior secured first-lien	$	191.3		68.5	%	$	156.9		68.9	%
Unitranche		20.4		7.3			19.4		8.5
Senior secured second-lien		56.8		20.3			42.5		18.7
Subordinated		5.6		2.0			5.0		2.2
Equity		5.3		1.9			3.9		1.7

Total investments	$	279.4		100.0	%	$	227.7		100.0	%

(1)	Includes unfunded commitments at fair value of $15.0 million and $9.8 million as of March 31, 2017 and December 31, 2016, respectively.

See accompanying notes.

The following table shows the asset mix of our new investment commitments for the three months ended March 31, 2017 and March 31, 2016:


	Three Months Ended March 31, 2017					Three Months Ended March 31, 2016
($ in millions)	Cost		Percentage			Cost		Percentage
Senior secured first-lien	$	45.0		72.2	%	$	22.4		100.0	%
Unitranche		—		—			—		—
Senior secured second-lien		15.3		24.6			—		—
Subordinated		0.6		1.0			—		—
Equity		1.4		2.2			—		—

Total investments	$	62.3		100.0	%	$	22.4		100.0	%

For the three months ended March 31, 2017, we had principal repayments of $8.2 million. For this period, we had sales of securities in eight portfolio companies aggregating approximately $4.9 million in net proceeds. For the three months ended March 31, 2017, we had a net portfolio increase of $44.8 million aggregate principal amount (amortized cost).

For the three months ended March 31, 2016, we had principal repayments of $1.5 million. For this period, we had sales of securities in seven portfolio companies aggregating approximately $1.3 million in net proceeds. For the three months ended March 31, 2016, we had a net portfolio increase of $19.3 million aggregate principal amount (amortized cost).

The following table presents certain selected information regarding our investment portfolio at fair value as of March 31, 2017 and December 31, 2016:


	March 31, 2017			December 31, 2016
Weighted average total yield to maturity of debt and income producing securities (at fair value)		7.4	%		7.3	%
Weighted average total yield to maturity of debt and income producing securities (at cost)		7.8	%		7.5	%
Weighted average interest rate of debt and income producing securities		7.4	%		7.2	%
Percentage of debt bearing a floating rate		90.5	%		90.8	%
Percentage of debt bearing a fixed rate		9.5	%		9.2	%
Number of portfolio companies		88			95

The following table shows the amortized cost of our performing and non-accrual investments as of March 31, 2017 and December 31, 2016.


	March 31, 2017					December 31, 2016
($ in millions)	Amortized Cost (1)		Percentage			Amortized Cost (1)		Percentage
Performing	$	276.2		100.0	%	$	226.1		100.0	%
Non-accrual		—		—			—		—

Total assets	$	276.2		100.0	%	$	226.1		100.0	%

(1)	Includes unfunded commitments at cost of $15.1 million and $9.9 million as of March 31, 2017 and December 31, 2016, respectively.

Loans are generally placed on non-accrual status when there is reasonable doubt that principal or interest will be collected in full. Non-accrual loans are restored to accrual status when past due principal and interest is paid current and, in management’s judgment, are likely to remain current. Management may determine to not place a loan on non-accrual status if the loan has sufficient collateral value and is in the process of collection.

The Advisor monitors our portfolio companies on an ongoing basis. The Advisor monitors the financial trends of each portfolio company to determine if it is meeting its business plans and to assess the appropriate course of action for each company. The Advisor has a number of methods of evaluating and monitoring the performance and fair value of our investments, which may include the following:

•

assessment of success of the portfolio company in adhering to its business plan and compliance with covenants;

•

review of monthly and quarterly financial statements and financial projections for portfolio companies.

•

contact with portfolio company management and, if appropriate, the financial or strategic sponsor, to discuss financial position, requirements and accomplishments;

See accompanying notes.

•

comparisons to other companies in the industry; and

•

possible attendance at, and participation in, board meetings.

As part of the monitoring process, the Advisor regularly assesses the risk profile of each of our investments and, on a quarterly basis, grades each investment on a risk scale of 1 to 5. Risk assessment is not standardized in our industry and our risk assessment may not be comparable to ones used by our competitors. Our assessment is based on the following categories:

1	Involves the least amount of risk in our portfolio. The investment/borrower is performing above expectations since investment, and the trends and risk factors are generally favorable, which may include the financial performance of the borrower or a potential exit.

2	Involves an acceptable level of risk that is similar to the risk at the time of investment. The investment/borrower is generally performing as expected, and the risk factors are neutral to favorable.

Involves an investment/borrower performing below expectations and indicates that the investment’s risk has increased somewhat since investment. The borrower’s loan payments are generally not past due and more likely than not the borrower will remain in compliance with debt covenants. An investment rating of 3 requires closer monitoring.

Involves an investment/borrower performing materially below expectations and indicates that the loan’s risk has increased materially since investment. In addition to the borrower being generally out of compliance with debt covenants, loan payments may be past due (but generally not more than 180 days past due). Placing loans on non-accrual status should be considered for investments rated 4.

Involves an investment/borrower performing substantially below expectations and indicates that the loan’s risk has substantially increased since investment. Most or all of the debt covenants are out of compliance and payments are substantially delinquent. Loans rated 5 are not anticipated to be repaid in full and the fair market value of the loan should be reduced to the anticipated recovery amount. Loans with an investment rating of 5 should be placed on non-accrual status.

The following table shows the distribution of our investments on the 1 to 5 investment performance rating scale at fair value as of March 31, 2017 and December 31, 2016. Investment performance ratings are accurate only as of those dates and may change due to subsequent developments relating to a portfolio company’s business or financial condition, market conditions or developments, and other factors.


	March 31, 2017 (1)					December 31, 2016 (1)
Investment Performance Rating	Investments at Fair Value ($ in millions)		Percentage of Total Portfolio			Investments at Fair Value ($ in millions)		Percentage of Total Portfolio
1	$	—		—	%	$	—		—	%
2		272.3		97.4			220.4		96.8
3		7.1		2.6			7.3		3.2
4		—		—			—		—
5		—		—			—		—

Total	$	279.4		100.0	%	$	227.7		100.0	%

(1)	Includes unfunded commitments at fair value of $15.0 million and $9.8 million as of March 31, 2017 and December 31, 2016, respectively.

RESULTS OF OPERATIONS

Operating results for the three months ended March 31, 2017 and March 31, 2016 were as follows:


	For the three months ended March 31, 2017		For the three months ended March 31, 2016
Total investment income	$	4,464,724	$	2,510,128
Less: Net expenses		2,543,794		1,436,071

Net investment income before taxes	$	1,920,930	$	1,074,057
Income taxes		89		800

Net investment income		1,920,841		1,073,257

See accompanying notes.


	For the three months ended March 31, 2017		For the three months ended March 31, 2016
Net realized gain (loss) on investments (1)		14,409		(417,722	)
Net unrealized appreciation (depreciation) on investments (1)		1,600,212		533,460

Net increase in net assets resulting from operations	$	3,535,462	$	1,188,995

(1)	Includes foreign exchange hedging activity.

Investment Income


	For the three months ended March 31, 2017		For the three months ended March 31, 2016
Interest from investments	$	4,444,792	$	2,509,261
Dividend Income		—		—
Other income		19,932		867

Total	$	4,464,724	$	2,510,128

Interest from investments, which includes amortization of upfront fees and prepayment fees, increased from $2.5 million for the three months ended March 31, 2016 compared to $4.4 million for the three months ended March 31, 2017, due to the increase in the size of our portfolio. The average size of our total investment portfolio increased from $152.8 million during the three months ended March 31, 2016 to $251.1 million during the three months ended March 31, 2017. We did not have dividend income for the three months ended March 31, 2017 and March 31, 2016. Other income primarily relates to the amortization of loan administration fees earned as the administration agent.

Expenses


	For the three months ended March 31, 2017		For the three months ended March 31 2016
Interest and credit facility expenses	$	1,045,432	$	454,093
Management fees		604,227		357,047
Income incentive fees		221,558		—
Directors’ fees		72,500		66,875
Professional fees		175,000		215,000
Organization expenses		24,338		19,471
Other general and administrative expenses		400,739		323,585

Total expenses	$	2,543,794	$	1,436,071

Interest and Credit Facility Expenses

Interest and credit facility expenses include interest, amortization of deferred financing costs, upfront commitment fees and unused fees on the Revolving Credit Facility and SPV Asset Facility. The Company first drew on the Revolving Credit Facility in July 2015 and first drew on the SPV Asset Facility in April 2016. Interest and credit facility expenses increased from $0.5 million for the three months ended March 31, 2016 to $1.0 million for the three months ended March 31, 2017. This increase was primarily due to an increase in the weighted average debt outstanding from $63.3 million for the three months ended March 31, 2016 to $111.6 million for the three months ended March 31, 2017. Average interest rate (excludes deferred upfront financing costs and unused fees) on our weighted average debt outstanding for the three months ended March 31, 2017 and March 31, 2016 were 3.0% and 2.1%, respectively.

Management fees

Management fees will be calculated and payable quarterly in arrears at an annual rate of 1.5% of our gross assets, including assets acquired through the incurrence of debt but excluding any cash and cash equivalents. The Advisor, however, has agreed to waive its right to receive management fees in excess of the sum of (i) 0.25% of the aggregate committed but undrawn capital and (ii) 0.75% of the aggregate gross assets excluding cash and cash equivalents (including capital drawn to pay the Company’s expenses) during any

See accompanying notes.

period prior to a qualified initial public offering, as defined by the Investment Advisory Agreement (“Qualified IPO”). Management fees, net of waived management fees, increased from $0.4 million for the three months ended March 31, 2016 to $0.6 million for the three months ended March 31, 2017 due to the increase in total assets, which increased from an average of $153.2 million for the three months ended March 31, 2016 to an average of $250.0 million for the three months ended March 31, 2017. Waived management fees for the three months ended March 31, 2017 and March 31, 2016 were approximately $0.3 million and $0.2 million, respectively. The Advisor will not be permitted to recoup any waived amounts at any time.

Income incentive fees

Income incentive fees increased from zero for three months ended March 31, 2016 to $0.2 million for the three months ended March 31, 2017 due to the Pre-Incentive Fee Net Investment Income (as defined below), expressed as a rate of return on the value of our net assets as of the preceding quarter, exceeding 1.5% per quarter (the hurdle rate). For the three months ended March 31, 2017, income incentive fees as a percentage of Pre-Incentive Fee Net Investment Income was 10.3% compared to 0.0% for the three months ended March 31, 2016. “Pre-Incentive Fee Net Investment Income” means interest income, dividend income and any other income (including any other fees such as commitment, origination, structuring, diligence and consulting fees or other fees that we receive from portfolio companies, but excluding fees for providing managerial assistance) accrued during the calendar quarter, minus operating expenses for the calendar quarter (including the base management fee, taxes, any expenses payable under the Investment Advisory Agreement and the Administration Agreement and any interest expense, but excluding the Incentive fee). Pre-Incentive Fee Net Investment Income includes accrued income that we have not yet received in cash, such as debt instruments with PIK interest, preferred stock with PIK dividends and zero coupon securities.

Professional Fees and Other General and Administrative Expenses

Professional fees generally include expenses from independent auditors, tax advisors, legal counsel and third party valuation agents. Other general and administrative expenses generally include expenses from the Sub-Administration Agreements, insurance premiums, overhead and staffing costs allocated from the Administrator and other miscellaneous general and administrative costs associated with the operations and investment activity of the Company. Professional fees remained flat at $0.2 million for the three months ended March 31, 2016 and March 31, 2017, while other general and administrative expenses increased from $0.3 million for the three months ended March 31, 2016 to $0.4 million for the three months ended March 31, 2017. The net increase in costs was due to an increase in costs associated with servicing a growing investment portfolio.

Organization expenses

We have agreed to repay the Advisor for the organization costs and offering costs (not to exceed $1.5 million) on a pro rata basis over the first $350 million of capital contributed to the Company. For the three months ended March 31, 2017, we called $15.0 million and the Advisor allocated $0.0 million of organization costs to the Company, which was included in the Consolidated Statements of Operations.

For the three months ended March 31, 2017, the Advisor also allocated $0.0 million of equity offering costs to the Company that was recorded as an offset to Paid-in capital in excess of par value on the Consolidated Statement of Assets and Liabilities.

During the three months ended March 31, 2016, we called $12.0 million and the Advisor allocated $0.0 million of organization costs to the Company, which was included in the Consolidated Statements of Operations. During the three months ended March 31, 2016, the Advisor also allocated $0.0 million of offering costs to the Company that was recorded as an offset to Paid-in capital in excess of par value on the Consolidated Statement of Assets and Liabilities.

Income Tax Expense, Including Excise Tax

We have elected to be treated as a RIC under the Code and operate in a manner so as to qualify for the tax treatment applicable to RICs. To qualify as a RIC, we must generally (among other requirements) timely distribute to our stockholders at least 90% of our investment company taxable income, as defined by the Code, for each year. In order to maintain our RIC status, we intend to make the requisite distributions to our stockholders which will generally relieve us from corporate-level income taxes.

In order for the Company not to be subject to federal excise taxes, it must distribute annually an amount at least equal to the sum of (i) 98% of its ordinary income (taking into account certain deferrals and elections), (ii) 98.2% of its net capital gains from the current year and (iii) any undistributed ordinary income and net capital gains from preceding years. Depending on the level of taxable income earned in a tax year, we may choose to carry forward such taxable income in excess of current year dividend distributions into the next tax year and pay a 4% excise tax on such income, as required. If we determine that our estimated current year taxable income will be in excess of estimated dividend distributions for the current year from such income, we accrue excise tax on estimated excess taxable income as such taxable income is earned. As of March 31, 2017, we had no accrual for U.S. federal excise tax.

See accompanying notes.

Net Realized and Unrealized Gains and Losses

We value our portfolio investments quarterly and any changes in fair value are recorded as unrealized appreciation (depreciation) on investments. For the three months ended March 31, 2017 and March 31, 2016, net realized gains (losses) and net unrealized appreciation (depreciation) on our investment portfolio were comprised of the following:


	For the three months ended March 31, 2017			For the three months ended March 31, 2016
Realized losses on investments	$	(5,964	)	$	(461,027	)
Realized gains on investments		21,357			—
Realized gains on foreign currency transactions		917			44,241
Realized losses on foreign currency transactions		(1,901	)		(936	)

Net realized gains (losses)	$	14,409		$	(417,722	)

Change in unrealized depreciation on investments	$	(162,492	)	$	418,188
Change in unrealized appreciation on investments		1,822,592			60,157
Change in unrealized depreciation on foreign currency translation		(63,420	)		—
Change in unrealized appreciation on foreign currency translation		3,532			55,115

Net unrealized appreciation (depreciation)	$	1,600,212		$	533,460

Hedging

We may, but are not required to, enter into interest rate, foreign exchange or other derivative agreements to hedge interest rate, currency, credit or other risks. Generally, we do not intend to enter into any such derivative agreements for speculative purposes. Any derivative agreements entered into for speculative purposes are not expected to be material to the Company’s business or results of operations. These hedging activities, which will be in compliance with applicable legal and regulatory requirements, may include the use of various instruments, including futures, options and forward contracts. We will bear the costs incurred in connection with entering into, administering and settling any such derivative contracts. There can be no assurance any hedging strategy we employ will be successful.

We did not enter into any interest rate, foreign exchange or other derivative agreements during the three months ended March 31, 2017 and March 31, 2016.

FINANCIAL CONDITION, LIQUIDITY AND CAPITAL RESOURCES

At March 31, 2017, we had $7.6 million in cash on hand. The primary uses of our cash and cash equivalents are for (1) investments in portfolio companies and other investments and to comply with certain portfolio diversification requirements; (2) the cost of operations (including paying our Advisor); (3) debt service, repayment, and other financing costs; and, (4) cash distributions to the holders of our common shares.

We expect to generate additional cash from (1) future offerings of our common or preferred shares; (2) borrowings from our Revolving Credit Facility, SPV Asset Facility and from other banks or lenders; and, (3) cash flows from operations.

Cash on hand of $7.6 million combined with our uncalled capital commitments of $238.5 million, $0.4 million undrawn amount on our Revolving Credit Facility and $47.7 million undrawn amount on our SPV Asset Facility, is expected to be sufficient for our investing activities and to conduct our operations for the foreseeable future.

Capital Share Activity

Since June 26, 2015 (Commencement), we have entered into subscription agreements (collectively, the “Subscription Agreements”) with several investors, including CCG LP, providing for the private placement of our common shares. Under the terms of the Subscription Agreements, investors are required to fund drawdowns to purchase our common shares up to the amount of their respective capital commitments on an as-needed basis with a minimum of 10 business days’ prior notice. At March 31, 2017, we had received capital commitments totaling $379.5 million, of which $10.0 million was from CCG LP.

Since June 26, 2015 (Commencement), pursuant to the Subscription Agreements, we have delivered nine capital drawdown notices to our investors relating to the issuance of 7,118,730 of our common shares for an aggregate offering of $141.0 million. Proceeds from

the issuance were used to fund our investing activities and for other general corporate purposes. As of March 31, 2017, the Company received all amounts relating to the nine capital drawdown notices.

See accompanying notes.

During period ended March 31, 2017, we issued 661.47 shares of our common stock to investors who have opted into our dividend reinvestment plan for proceeds of $13,131. For the three months ended March 31, 2016, we issued 354.36 shares of our common stock to investors who have opted into our dividend reinvestment plan for proceeds of $7,024.

Debt

Debt consisted of the following as of March 31, 2017 and December 31, 2016:


	March 31, 2017
($ in millions)	Aggregate Principal Amount Committed		Drawn Amount (4)		Amount Available (1)		Carrying Value (2)
SPV Asset Facility	$	125.0	$	77.3	$	47.7	$	77.3
Revolving Credit Facility (3)(5)		50.0		50.3		0.4		49.6

Total Debt	$	175.0	$	127.6	$	48.1	$	126.9


	December 31, 2016
($ in millions)	Aggregate Principal Amount Committed		Drawn Amount (4)		Amount Available (1)		Carrying Value (2)
SPV Asset Facility	$	75.0	$	47.6	$	27.4	$	47.6
Revolving Credit Facility (3)(5)		50.0		47.8		3.0		47.0

Total Debt	$	125.0	$	95.4	$	30.4	$	94.6

(1)	The amount available is subject to any limitations related to the respective debt facilities’ borrowing bases and foreign currency translation adjustments.

(2)	The difference between the drawn amount and the carrying amount is attributable to the effect of foreign currency rates as of the balance sheet dates versus foreign currency rates at the time of the respective non-USD borrowings.

(3)	The Company had outstanding debt denominated in Pound Sterling (GBP) of 2.5 million and Euro (EUR) of 1.8 million on its Revolving Credit Facility.

(4)	For borrowings in non-USD, the drawn amount represents the USD equivalent at the time of borrowing (i.e. cost).

(5)	Total drawn amount payable after the effect of foreign currency translation as of March 31, 2017 and December 31, 2016, was $49,544,462 and $47,006,114, respectively.

Revolving Credit Facility

On June 29, 2015, we entered into the Revolving Credit Facility with Natixis, New York Branch (“Natixis”) as administrative agent (the “Administrative Agent”), and Natixis and certain of its affiliates as lenders. Proceeds from the Revolving Credit Facility may be used for investment activities, expenses, working capital requirements and general corporate purposes. The maximum principal amount of the Revolving Credit Facility is $50 million, subject to availability under the borrowing base. On October 23, 2015, the Company amended the Revolving Credit Facility to include a multi-currency tranche allowing the Company to borrow up to 15% of the principal amount committed under an alternative currency including Euro, Canadian Dollar and Pound Sterling (GBP). On June 29, 2016, the Company amended the Revolving Credit Facility decreasing the facility limit from $75 million to $50 million and extending the maturity date to June 29, 2017.

SPV Asset Facility

See accompanying notes.

time party thereto as lenders, and Wells Fargo Bank, National Association (“Wells Fargo”), as administrative agent, collateral agent, and lender. The SPV Asset Facility is effective as of March 28, 2016. On February 8, 2017 the Company amended the SPV Asset Facility increasing the facility limit from $75 million to $125 million.

The maximum commitment amount under the SPV Asset Facility is $125 million, and may be increased with the consent of Wells Fargo or reduced upon request of the Company. Proceeds of the Advances under the SPV Asset Facility may be used to acquire portfolio investments, to make distributions to the Company in accordance with the SPV Asset Facility, and to pay related expenses. The maturity date is the earlier of: (a) the date the borrower voluntarily reduces the commitments to zero, (b) the Facility Maturity Date (March 28, 2021) and (c) the date upon which Wells Fargo declares the obligations due and payable after the occurrence of an Event of Default. Borrowings under the SPV Asset Facility bear interest at London Interbank Offered Rate (“LIBOR”) plus a margin with no LIBOR floor. The Company pays unused facility fees of 0.50% per annum on committed but undrawn amounts under the SPV Asset Facility. The SPV Asset Facility includes customary covenants, including certain limitations on the incurrence of additional indebtedness and liens, as well as usual and customary events of default for revolving credit facilities of this nature.

Also on March 28, 2016, the Company, as seller, and CBDC SPV, as purchaser, entered into a loan sale agreement whereby the Company will sell certain assets to CBDC SPV. We consolidate CBDC SPV in our consolidated financial statements and no gain or loss is expected to result from the sale of assets to CBDC SPV. We retain a residual interest in assets contributed to or acquired by CBDC SPV through our 100% ownership of CBDC SPV. The facility size is subject to availability under the borrowing base, which is based on the amount of CBDC SPV’s assets from time to time, and satisfaction of certain conditions, including an asset coverage test and certain concentration limits.


	For the three months ended March 31, 2017			For the three months ended March 31, 2016
Borrowing interest expense	$	820,652		$	329,206
Unused facility fees		52,011			10,164
Amortization of upfront commitment fees		140,102			45,382
Amortization of deferred financing costs		32,667			69,341

Total interest and credit facility expenses	$	1,045,432		$	454,093

Weighted average interest rate		2.98	%		2.09	%
Weighted average outstanding balance	$	111,612,497		$	63,299,163

To the extent we determine that additional capital would allow us to take advantage of additional investment opportunities, if the market for debt financing presents attractively priced debt financing opportunities, or if our Board otherwise determines that leveraging our portfolio would be in our best interest and the best interests of our stockholders, we may enter into credit facilities in addition to our Revolving Credit Facility and SPV Asset Facility. We would expect any such credit facilities may be secured by certain of our assets and may contain advance rates based upon pledged collateral. The pricing and other terms of any such facilities would depend upon market conditions when we enter into any such facilities as well as the performance of our business, among other factors. In accordance with applicable SEC staff guidance and interpretations, as a BDC, with certain limited exceptions, we are only permitted to borrow amounts such that our asset coverage ratio, as defined in the 1940 Act, is at least 2 to 1 after such borrowing. As of March 31, 2017 and December 31, 2016, our asset coverage ratio was 2.13 to 1 and 2.35 to 1, respectively. We may also refinance or repay any of our indebtedness at any time based on our financial condition and market conditions. See Note 6. Debt to our consolidated financial statements for more detail on the debt facilities.

OFF BALANCE SHEET ARRANGEMENTS

Information on our off balance sheet arrangements is contained in Note 7. Commitments, Contingencies and Indemnifications to our consolidated financial statements.

CRITICAL ACCOUNTING POLICIES

Our discussion and analysis of our financial condition and results of operations are based upon our financial statements, which have been prepared in accordance with accounting principles generally accepted in the United States of America (“GAAP”). The preparation of these financial statements requires management 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 materially. The critical accounting policies should be read in connection with our risk factors as disclosed herein and in our Registration Statement on Form 10.

See accompanying notes.

In addition to the discussion below, our critical accounting policies are further described in Note 2. Summary of Significant Accounting Policies to our consolidated financial statements.

Investment Valuation

Level 1—Valuations based on quoted prices in active markets for identical assets or liabilities that the Company has the ability to access.

Level 2—Valuations based on quoted prices in markets that are not active or for which all significant inputs are observable, either directly or indirectly.

Level 3—Valuations based on inputs that are unobservable and significant to the overall fair value measurement.

In addition to using the above inputs in investment valuations, the Company applies the valuation policy approved by its Board that is consistent with ASC 820. Consistent with the valuation policy, the Company evaluates the source of inputs, including any markets in which its investments are trading (or any markets in which securities with similar attributes are trading), in determining fair value. When a security is valued based on prices provided by reputable dealers or pricing services (that is, broker quotes), the Company subjects those prices to various criteria in making the determination as to whether a particular investment would qualify for classification as a Level 2 or Level 3 investment. For example, the Company reviews pricing methodologies provided by dealers or pricing services in order to determine if observable market information is being used, versus unobservable inputs. Some additional factors considered include the number of prices obtained as well as an assessment as to their quality. Transfers between levels, if any, are recognized at the beginning of the period in which the transfers occur. During the three months ended March 31, 2017, the Company recorded $4,850,000 in transfers from Level 2 to Level 3 due to a decrease in observable inputs in market data. During the three months ended March 31, 2016, the Company recorded $12,000,233 in transfers from Level 3 to Level 2 due to an increase in observable inputs in market data.

The Board oversees and supervises a multi-step valuation process, which includes, among other procedures, the following:

•

The valuation process begins with each investment being initially valued by the investment professionals responsible for the portfolio investment in conjunction with the portfolio management team.

•

The Advisor’s management reviews the preliminary valuations with the investment professionals. Agreed upon valuation recommendations are presented to the Audit Committee.

•

The Audit Committee reviews the valuations presented and recommends values for each investment to the Board.

•

The Company currently conducts this valuation process on a quarterly basis.

In connection with debt and equity securities that are valued at fair value in good faith by the Board, the Board will engage independent third-party valuation firms to perform certain limited procedures that the Board has identified.

may be subject to contractual and other restrictions on resale. If the Company were required to liquidate a portfolio investment in a forced or liquidation sale, it could realize amounts that are different from the amounts presented and such differences could be material.

Equity Offering and Organization Expenses

The Advisor incurred costs on behalf of the Company of $794,450 of equity offering costs and $567,895 of organization costs through Commencement. For the three month period ended March 31, 2017, the Advisor allocated to the Company $34,048 of equity offering costs and $24,338 of organization costs, of which $58,386 was included in Due to Advisor on the Consolidated Statements of Assets and Liabilities at March 31, 2017. For the three month period ended March 31, 2016, the Advisor has allocated to the Company $27,239 of equity offering costs and $19,471 of organization costs, of which $46,709 was included in Due to Advisor on the Consolidated Statements of Assets and Liabilities at March 31, 2016.

Interest and Dividend Income Recognition

Income Taxes

See accompanying notes.

As of March 31, 2017, all tax filings of the Company since the inception on February 5, 2015 remain subject to examination by federal tax authorities. No such examinations are currently pending.

In order for the Company not to be subject to federal excise taxes, it must distribute annually an amount at least equal to the sum of (i) 98% of its ordinary income (taking into account certain deferrals and elections), (ii) 98.2% of its net capital gains from the current year and (iii) any undistributed ordinary income and net capital gains from preceding years. The Company, at its discretion, may carry forward taxable income in excess of calendar year dividends and pay a 4% excise tax on this income. If the Company chooses to do so, this generally would increase expenses and reduce the amount available to be distributed to stockholders. The Company will accrue excise tax on estimated undistributed taxable income as required.

New Accounting Standards

ITEM 3. QUANTITATIVE AND QUALITATIVE DISCLOSURES ABOUT MARKET RISK

We are subject to financial market risks, including valuation risk, interest rate risk and currency risk.

Valuation Risk

We have invested, and plan to continue to invest, in illiquid debt and equity securities of private companies. These investments will generally not have a readily available market price, and we will value these investments at fair value as determined in good faith by our Board 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. If we were required to liquidate a portfolio investment in a forced or liquidation sale, we may realize amounts that are different from the amounts presented and such differences could be material. See Note 2. Summary of Significant Account Policies to our consolidated financial statements for more details on estimates and judgments made by us in connection with the valuation of our investments.

Interest Rate Risk

Interest rate sensitivity refers to the change in earnings that may result from changes in the level of interest rates. We also fund a portion of our investments with borrowings and our net investment income will be affected by the difference between the rate at which we invest and the rate at which we borrow. Accordingly, there can be no assurance that a significant change in market interest rates will not have a material adverse effect on our net investment income.

We regularly measure our exposure to interest rate risk. We assess interest rate risk and manage our 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.

As of March 31, 2017, 90.5% of the investments at fair value in our portfolio were at variable rates, subject to interest rate floors. The Revolving Credit Facility and SPV Asset Facility also bear interest at variable rates.

Assuming that our Consolidated Statements of Assets and Liabilities as of March 31, 2017 were to remain constant and that we took no actions to alter our existing interest rate sensitivity, the following table shows the annualized impact of hypothetical base rate changes in interest rates (considering interest rate floors for floating rate instruments):

($ in millions)


Basis Point Change	Interest Income			Interest Expense			Increase (decrease) in net assets resulting from operations
Up 300 basis points	$	7.5		$	3.8		$	3.7
Up 200 basis points	$	5.0		$	2.5		$	2.4
Up 100 basis points	$	2.5		$	1.3		$	1.2
Down 25 basis points	$	(0.4	)	$	(0.3	)	$	(0.1	)

Although we believe that this analysis is indicative of our existing sensitivity to interest rate changes, it does not adjust for changes in the credit market, credit quality, the size and composition of the assets in our portfolio and other business developments that could affect our net income. Accordingly, we cannot assure you that actual results would not differ materially from the analysis above.

We may in the future hedge against interest rate fluctuations by using hedging instruments such as interest rate swaps, futures, options and forward contracts. While hedging activities may mitigate our exposure to adverse fluctuations in interest rates, certain hedging transactions that we may enter into in the future, such as interest rate swap agreements, may also limit our ability to participate in the benefits of lower interest rates with respect to our portfolio investments.

Currency Risk

From time to time, we may make investments that are denominated in a foreign currency. These investments are converted into U.S. dollars at the balance sheet date, exposing us to movements in foreign exchange rates. We may employ hedging techniques to minimize these risks, but we cannot assure you that such strategies will be effective or without risk to us. We may seek to utilize instruments such as, but not limited to, forward contracts to seek to hedge against fluctuations in the relative values of our portfolio positions from changes in currency exchange rates. We also have the ability to borrow in certain foreign currencies under our Revolving Credit Facility. Instead of entering into a foreign exchange forward contract in connection with loans or other investments

See accompanying notes.

we have made that are denominated in a foreign currency, we may borrow in that currency to establish a natural hedge against our loan or investment. To the extent the loan or investment is based on a floating rate other than a rate under which we can borrow under our Revolving Credit Facility, we may seek to utilize interest rate derivatives to hedge our exposure to changes in the associated rate. As of March 31, 2017, we had £2.5 million and €1.8 million outstanding on the Revolving Credit Facility as a natural hedge against a £3.0 million investment and €1.8 million investment, respectively.

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 and Chief Financial Officer, of the effectiveness of the design and operation of our disclosure controls and procedures (as defined in Rule 13a-15 under the Securities Exchange Act of 1934). Based on that evaluation, our Chief Executive Officer and Chief Financial Officer have concluded that our current disclosure controls and procedures are effective in timely alerting them to material information relating to us that is required to be disclosed by us in the reports we file or submit under the Securities Exchange Act of 1934.

Changes in Internal Control over Financial Reporting. There have been no changes in our internal control over financial reporting that occurred during our most recently completed fiscal quarter that have materially affected, or are reasonably likely to materially affect, our internal control over financial reporting.

See accompanying notes.

PART II. OTHER INFORMATION

Item 1.

Legal Proceedings

From time to time, we may be a party to certain legal proceedings in the ordinary course of business, including proceedings relating to the enforcement of our rights under loans to or other contracts with our portfolio companies. We are not currently subject to any material legal proceedings, nor, to our knowledge, is any material legal proceeding threatened against us.

Item 1A.

Risk Factors

In addition to the other information set forth in this report, you should carefully consider the risk factors discussed in Part I, “Item 1A. Risk Factors” in our Annual Report on Form 10-K for the fiscal year ended December 31, 2016, which could materially affect our business, financial condition and/or operating results. These risks are not the only risks facing our Company. Additional risks and uncertainties not currently known to us or that we currently deem to be immaterial also may materially and adversely affect our business, financial condition and/or operating results.

Item 2.

Unregistered Sales of Equity Securities and Use of Proceeds

Sales of unregistered securities

(a) None

(b) None

(c) Issuer purchases of equity securities

The following table provides information regarding purchases of our common shares by CCG LP for each month in the three month period ended March 31, 2017:


Period	Average Price Paid per Share		Total Number of Shares Purchased		Total Number of Shares Purchased as Part of Publicly Announced Plans or Programs		Maximum Number (or Approximate Dollar Value) of Shares that May Yet Be Purchased Under the Plans or Programs
January 2017	$	—		—		—	$	4,362,861
February 2017		—		—		—		4,362,861
March 2017		—		—		—		4,362,861

Total	$	—		—		—	$	4,362,861

Item 3.

Defaults Upon Senior Securities

None.

Item 4.

[Reserved]

Item 5.

Other Information

None.

See accompanying notes.

Item 6.

Exhibits.

(a) Exhibits.


3.1		Amended and Restated Certificate of Incorporation (incorporated by reference to Exhibit 3.1 to the Company’s Registration Statement on Form 10 (File No. 000-55380) filed on June 5, 2015).

3.2		Bylaws (incorporated by reference to Exhibit 3.2 to the Company’s Registration Statement on Form 10 (File No. 000-55380) filed on June 5, 2015).

4.1		Dividend Reinvestment Plan (incorporated by reference to Exhibit 10.6 to the Company’s Registration Statement on Form 10 (File No. 000-55380) filed on June 5, 2015).

10.1		Investment Advisory Agreement, dated June 2, 2015, by and between the Company and the Advisor (incorporated by reference to Exhibit 10.1 to the Company’s Registration Statement on Form 10 (File No. 000-55380) filed on June 5, 2015).

10.2		Administration Agreement, dated June 2, 2015, by and between the Company and the Administrator (incorporated by reference to Exhibit 10.2 to the Company’s Registration Statement on Form 10 (File No. 000-55380) filed on June 5, 2015).

10.3		Trademark License Agreement, dated April 30, 2015, by and between the Company and CCG LP (incorporated by reference to Exhibit 10.3 to the Company’s Registration Statement on Form 10 (File No. 000-55380) filed on June 5, 2015).

10.4		Form of Advisory Fee Waiver Agreement by and between the Company and the Advisor (incorporated by reference to Exhibit 10.4 to the Company’s Registration Statement on Form 10 (File No. 000-55380) filed on June 5, 2015).

10.5		Form of Subscription Agreement (incorporated by reference to Exhibit 10.5 to the Company’s Registration Statement on Form 10 (File No. 000-55380) filed on June 5, 2015).

10.6		Custodian Agreement by and between the Company and State Street Bank and Trust Company (incorporated by reference to Exhibit 10.7 to the Company’s Registration Statement on Form 10 (File No. 000-55380) filed on June 5, 2015).

10.7		Revolving Credit Agreement, dated June 29, 2015, among the Company, as Borrower, Natixis, New York Branch, as Administrative Agent and Lender (incorporated by reference to Exhibit 3.2 to the Company’s Registration Statement on Form 8-K filed on July 2, 2015).

10.8		Revolving Credit Agreement, dated March 28, 2016, among the Company as the Collateral Manager, Seller and Equityholder, Crescent Capital BDC Funding, LLC as the Borrower, the banks and other financial institutions from time to time party thereto as Lenders, and Wells Fargo Bank, National Association, as Administrative Agent, Collateral Agent, and Lender (incorporated by reference to Exhibit 10.1 to the Company’s copy of the Revolving Credit Agreement on Form 8-K filed on March 28, 2016).

31.1		Certification of Chief Executive Officer, Pursuant to Rule 13a-14(a), as Adopted Pursuant to Section 302 of the Sarbanes-Oxley Act of 2002 (filed herewith).

31.2		Certification of Chief Financial Officer, Pursuant to Rule 13a-14(a), as Adopted Pursuant to Section 302 of the Sarbanes-Oxley Act of 2002 (filed herewith).

32		Certification of Chief Executive Officer and Chief 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).

See accompanying notes.

SIGNATURES

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


	Crescent Capital BDC, INC.

Date: May 12, 2017	By:	/s/ Jason A. Breaux
		Jason A. Breaux
		Chief Executive Officer

Date: May 12, 2017	By:	/s/ Mike L. Wilhelms
		Mike L. Wilhelms
		Chief Financial Officer

See accompanying notes.