NEW MOUNTAIN FINANCE CORP Management’s Discussion and Analysis of Financial Condition and Results of Operations (form 10-Q)

The information in management's discussion and analysis of financial condition
and results of operations relates to New Mountain Finance Corporation, including
its wholly-owned direct and indirect subsidiaries (collectively, "we", "us",
"our", "NMFC" or the "Company").

Forward-Looking Statements


The information contained in this section should be read in conjunction with the
financial data and consolidated financial statements and notes thereto appearing
elsewhere in this report. Some of the statements in this report (including in
the following discussion) constitute forward-looking statements, which relate to
future events or our future performance or our financial condition. The
forward-looking statements contained in this section involve a number of risks
and uncertainties, including:

•statements concerning the impact of a protracted decline in the liquidity of
credit markets;

•the general economy, including interest and inflation rates, and the COVID-19
pandemic on the industries in which we invest;

•the impact of interest rate volatility, including the decommissioning of LIBOR
and rising interest rates, on our business and our portfolio companies;

•our future operating results, our business prospects, the adequacy of our cash
resources and working capital, and the impact of the COVID-19 pandemic thereon;

•the ability of our portfolio companies to achieve their objectives and the
impact of the COVID-19 pandemic thereon;

•our ability to make investments consistent with our investment objectives,
including with respect to the size, nature and terms of our investments;

•the ability of New Mountain Finance Advisers BDC, L.L.C. (the “Investment
Adviser”) or its affiliates to attract and retain highly talented professionals;


•actual and potential conflicts of interest with the Investment Adviser and New
Mountain Capital Group, L.P. (together with New Mountain Capital, L.L.C. and its
affiliates, "New Mountain Capital") whose ultimate owners include Steven B.
Klinsky and related and other vehicles; and

•the risk factors set forth in Item 1A.-Risk Factors contained in our Annual
Report on Form 10-K for the year ended December 31, 2021 and in this Quarterly
Report on Form 10-Q.

Forward-looking statements are identified by their use of such terms and phrases
such as "anticipate", "believe", "continue", "could", "estimate", "expect",
"intend", "may", "plan", "potential", "project", "seek", "should", "target",
"will", "would" or similar expressions. Actual results could differ materially
from those projected in the forward-looking statements for any reason, including
the factors set forth in Item 1A.-Risk Factors contained in our Annual Report on
Form 10-K for the year ended December 31, 2021 and in this Quarterly Report on
Form 10-Q.

We have based the forward-looking statements included in this report on
information available to us on the date of this report. We assume no obligation
to update or revise publicly any forward-looking statements, whether as a result
of new information, future events or otherwise, except as required by law.
Although we undertake no obligation to revise or update any forward-looking
statements, you are advised to consult any additional disclosures that we may
make directly to you or through reports that we have filed or in the future may
file with the U.S. Securities and Exchange Commission (the "SEC"), including
annual reports on Form 10-K, registration statements on Form N-2, quarterly
reports on Form 10-Q and current reports on Form 8-K.

Overview


We are a Delaware corporation that was originally incorporated on June 29, 2010
and completed our initial public offering ("IPO") on May 19, 2011. We are a
closed-end, non-diversified management investment company that has elected to be
regulated as a business development company ("BDC") under the Investment Company
Act of 1940, as amended (the "1940 Act"). We have elected to be treated, and
intend to comply with the requirements to continue to qualify annually, as a
regulated investment company ("RIC") under Subchapter M of the Internal Revenue
Code of 1986, as amended (the "Code"). Since our IPO, and through June 30, 2022,
we raised approximately $942.7 million in net proceeds from additional offerings
of our common stock.

The Investment Adviser is a wholly-owned subsidiary of New Mountain Capital. New
Mountain Capital
is a firm with a track record of investing in the middle
market. New Mountain Capital focuses on investing in defensive growth companies

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across its private equity, credit and net lease investment strategies. The
Investment Adviser manages our day-to-day operations and provides us with
investment advisory and management services. The Investment Adviser also manages
other funds that may have investment mandates that are similar, in whole or in
part, to ours. New Mountain Finance Administration, L.L.C. (the
"Administrator"), a wholly-owned subsidiary of New Mountain Capital, provides
the administrative services necessary to conduct our day-to-day operations.

We have established the following wholly-owned direct and indirect subsidiaries:


•New Mountain Finance Holdings, L.L.C. ("NMF Holdings") and New Mountain Finance
DB, L.L.C. ("NMFDB"), whose assets are used to secure NMF Holdings' credit
facility and NMFDB's credit facility, respectively;
•New Mountain Finance SBIC, L.P. ("SBIC I")  and New Mountain Finance SBIC II,
L.P. ("SBIC II"), who have received licenses from the U.S. Small Business
Administration ("SBA") to operate as small business investment companies
("SBICs") under Section 301(c) of the Small Business Investment Act of 1958, as
amended (the "1958 Act") and their general partners, New Mountain Finance SBIC
G.P., L.L.C. ("SBIC I GP") and New Mountain Finance SBIC II G.P., L.L.C. ("SBIC
II GP"), respectively;
•NMF Ancora Holdings Inc. ("NMF Ancora"), NMF QID Holdings, Inc. ("NMF QID") NMF
YP Holdings Inc. ("NMF YP"), NMF Permian Holdings LLC ("NMF Permian"), NMF HB,
Inc. ("NMF HB"), NMF TRM, LLC ("NMF TRM"), NMF Pioneer, Inc. ("NMF Pioneer") and
NMF OEC, Inc. ("NMF OEC"), which serve as tax blocker corporations by holding
equity or equity-like investments in portfolio companies organized as limited
liability companies (or other forms of pass-through entities); we consolidate
our tax blocker corporations for accounting purposes but the tax blocker
corporations are not consolidated for income tax purposes and may incur income
tax expense as a result of their ownership of the portfolio companies; and
•New Mountain Finance Servicing, L.L.C. ("NMF Servicing"), which serves as the
administrative agent on certain investment transactions.

New Mountain Net Lease Corporation ("NMNLC") is a majority-owned consolidated
subsidiary of ours, which acquires commercial real estate properties that are
subject to "triple net" leases has elected to be treated, and intends to comply
with the requirements to continue to qualify annually, as a real estate
investment trust, or REIT, within the meaning of Section 856(a) of the Code.

Our investment objective is to generate current income and capital appreciation
through the sourcing and origination of debt securities at all levels of the
capital structure, including first and second lien debt, notes, bonds and
mezzanine securities. The first lien debt may include traditional first lien
senior secured loans or unitranche loans. Unitranche loans combine
characteristics of traditional first lien senior secured loans as well as second
lien and subordinated loans. Unitranche loans will expose us to the risks
associated with second lien and subordinated loans to the extent we invest in
the "last out" tranche. In some cases, our investments may also include equity
interests.

Our primary focus is in the debt of defensive growth companies, which are
defined as generally exhibiting the following characteristics: (i) sustainable
secular growth drivers, (ii) high barriers to competitive entry, (iii) high free
cash flow after capital expenditure and working capital needs, (iv) high returns
on assets and (v) niche market dominance. Similar to us, SBIC I's and SBIC II's
investment objectives are to generate current income and capital appreciation
under our investment criteria. However, SBIC I's and SBIC II's investments must
be in SBA-eligible small businesses. Our portfolio may be concentrated in a
limited number of industries. As of June 30, 2022, our top five industry
concentrations were software, healthcare services, business services, education
and investment funds (which includes our investments in our joint ventures).

As of June 30, 2022, our net asset value was approximately $1,351.6 million and
our portfolio had a fair value, as determined in good faith by the board of
directors, of approximately $3,300.2 million in 107 portfolio companies, with a
weighted average yield to maturity at cost for income producing investments
("YTM at Cost") of approximately 10.3% and a weighted average yield to maturity
at cost for all investments ("YTM at Cost for Investments") of approximately
9.1%. The YTM at Cost calculation assumes that all investments, including
secured collateralized agreements, not on non-accrual are purchased at cost on
the quarter end date and held until their respective maturities with no
prepayments or losses and exited at par at maturity. The YTM at Cost for
Investments calculation assumes that all investments, including secured
collateralized agreements, are purchased at cost on the quarter end date and
held until their respective maturities with no prepayments or losses and exited
at par at maturity. YTM at Cost and YTM at Cost for Investments calculations
exclude the impact of existing leverage. YTM at Cost and YTM at Cost for
Investments use the London Interbank Offered Rate ("LIBOR"), Sterling Overnight
Interbank Average Rate ("SONIA") and Secured Overnight Financing Rate ("SOFR")
curves at each quarter's end date. The actual yield to maturity may be higher or
lower due to the future selection of the LIBOR, SONIA and SOFR contracts by the
individual companies in our portfolio or other factors.


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Recent Developments


On July 15, 2022, we caused notices to be issued to holders of the 2017A
Unsecured Notes regarding the exercise of our option to repay all of the $55.0
million in aggregate principal amount of issued and outstanding 2017A Unsecured
Notes, which was repaid on July 14, 2022.

On August 3, 2022, our board of directors declared a third quarter 2022
distribution of $0.30 per share payable on September 30, 2022 to holders of
record as of September 16, 2022.

COVID-19 Developments


Our operating results and portfolio companies may be negatively impacted by the
ongoing COVID-19 pandemic. We have been closely monitoring, and will continue to
monitor, the impact of the COVID-19 pandemic, including new variants of
COVID-19, on all aspects of our business, including how it will impact our
portfolio companies, employees, due diligence, and the financial markets. Any
effects of the COVID-19 pandemic will likely continue for the duration of the
pandemic, which is uncertain, and for some period thereafter.

The extent of the impact of the COVID-19 pandemic on the financial performance
of our current and future investments will depend on future developments,
including the duration and spread of the virus, related advisories and
restrictions, and the health of the financial markets and economy, all of which
are highly uncertain and cannot be predicted. To the extent our portfolio
companies are adversely impacted by the effects of the COVID-19 pandemic, it may
have a material adverse impact on our future net investment income, the fair
value of our portfolio investments and our financial condition.

While general economic conditions have improved since the beginning of the
COVID-19 pandemic, we continue to see reductions in business activity and
financial transactions, supply chain interruptions and overall economic and
financial market instability both in the United States and globally. Even after
the COVID-19 pandemic subsides, the U.S. economy and most other major global
economies may continue to experience downturns, and we anticipate our business
and operations could be materially adversely affected by a prolonged recession
in the United States and other major markets.

For additional discussion on our portfolio companies, see “Monitoring of
Portfolio Investments”.

Critical Accounting Estimates


The preparation of financial statements and related disclosures in conformity
with accounting principles generally accepted in the United States ("GAAP")
requires management to make estimates and assumptions that affect the reported
amounts of assets and liabilities, disclosure of contingent assets and
liabilities at the date of the financial statements, and revenues and expenses
during the periods reported. Actual results could materially differ from those
estimates. We have identified the following items as critical accounting
policies

Basis of Accounting


We consolidate our wholly-owned direct and indirect subsidiaries: NMF Holdings,
NMF Servicing, NMFDB, SBIC I, SBIC I GP, SBIC II, SBIC II GP, NMF Ancora, NMF
QID, NMF YP, NMF Permian, NMF HB, NMF TRM, NMF Pioneer and NMF OEC and our
majority-owned consolidated subsidiary, NMNLC. We are an investment company
following accounting and reporting guidance as described in Accounting Standards
Codification Topic 946, Financial Services-Investment Companies, ("ASC 946").

Valuation and Leveling of Portfolio Investments

At all times consistent with GAAP and the 1940 Act, we conduct a valuation of
our assets, which impacts our net asset value.


We value our assets on a quarterly basis, or more frequently if required under
the 1940 Act. In all cases, our board of directors is ultimately and solely
responsible for determining the fair value of our portfolio investments on a
quarterly basis in good faith, including investments that are not publicly
traded, those whose market prices are not readily available and any other
situation where our portfolio investments require a fair value determination.
Security transactions are accounted for on a trade date basis. Our quarterly
valuation procedures are set forth in more detail below:

(1)Investments for which market quotations are readily available on an exchange
are valued at such market quotations based on the closing price indicated from
independent pricing services.

(2)Investments for which indicative prices are obtained from various pricing
services and/or brokers or dealers are valued through a multi-step valuation
process, as described below, to determine whether the quote(s) obtained is
representative of fair value in accordance with GAAP.

a.Bond quotes are obtained through independent pricing services. Internal
reviews are performed by the investment professionals of the Investment Adviser
to ensure that the quote obtained is

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representative of fair value in accordance with GAAP and, if so, the quote is
used. If the Investment Adviser is unable to sufficiently validate the quote(s)
internally and if the investment's par value or its fair value exceeds the
materiality threshold, the investment is valued similarly to those assets with
no readily available quotes (see (3) below); and

b.For investments other than bonds, we look at the number of quotes readily
available and perform the following procedures:


i.Investments for which two or more quotes are received from a pricing service
are valued using the mean of the mean of the bid and ask of the quotes obtained.
We will evaluate the reasonableness of the quote, and if the quote is determined
to not be representative of fair value, we will use one or more of the
methodologies outlined below to determine fair value;

ii.Investments for which one quote is received from a pricing service are
validated internally. The investment professionals of the Investment Adviser
analyze the market quotes obtained using an array of valuation methods (further
described below) to validate the fair value. If the Investment Adviser is unable
to sufficiently validate the quote internally and if the investment's par value
or its fair value exceeds the materiality threshold, the investment is valued
similarly to those assets with no readily available quotes (see (3) below).

(3)Investments for which quotations are not readily available through exchanges,
pricing services, brokers, or dealers are valued through a multi-step valuation
process:

a.Each portfolio company or investment is initially valued by the investment
professionals of the Investment Adviser responsible for the credit monitoring;

b.Preliminary valuation conclusions will then be documented and discussed with
our senior management;


c.If an investment falls into (3) above for four consecutive quarters and if the
investment's par value or its fair value exceeds the materiality threshold, then
at least once each fiscal year, the valuation for each portfolio investment for
which we do not have a readily available market quotation will be reviewed by an
independent valuation firm engaged by our board of directors; and

d.When deemed appropriate by our management, an independent valuation firm may
be engaged to review and value investment(s) of a portfolio company, without any
preliminary valuation being performed by the Investment Adviser. The investment
professionals of the Investment Adviser will review and validate the value
provided.

For investments in revolving credit facilities and delayed draw commitments, the
cost basis of the funded investments purchased is offset by any costs/netbacks
received for any unfunded portion on the total balance committed. The fair value
is also adjusted for the price appreciation or depreciation on the unfunded
portion. As a result, the purchase of a commitment not completely funded may
result in a negative fair value until it is called and funded.

The values assigned to investments are based upon available information and do
not necessarily represent amounts which might ultimately be realized, since such
amounts depend on future circumstances and cannot be reasonably determined until
the individual positions are liquidated. Due to the inherent uncertainty of
determining the fair value of investments that do not have a readily available
market value, the fair value of our investments may fluctuate from period to
period and the fluctuations could be material.

GAAP fair value measurement guidance classifies the inputs used in measuring
fair value into three levels as follows:


Level I-Quoted prices (unadjusted) are available in active markets for identical
investments and we have the ability to access such quotes as of the reporting
date. The type of investments which would generally be included in Level I
include active exchange-traded equity securities and exchange-traded
derivatives. As required by Accounting Standards Codification Topic 820, Fair
Value Measurements and Disclosures ("ASC 820"), we, to the extent that we hold
such investments, do not adjust the quoted price for these investments, even in
situations where we hold a large position and a sale could reasonably impact the
quoted price.

Level II-Pricing inputs are observable for the investments, either directly or
indirectly, as of the reporting date, but are not the same as those used in
Level I. Level II inputs include the following:

•Quoted prices for similar assets or liabilities in active markets;

•Quoted prices for identical or similar assets or liabilities in non-active
markets (examples include corporate and municipal bonds, which trade
infrequently);

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•Pricing models whose inputs are observable for substantially the full term of
the asset or liability (examples include most over-the-counter derivatives,
including foreign exchange forward contracts); and


•Pricing models whose inputs are derived principally from or corroborated by
observable market data through correlation or other means for substantially the
full term of the asset or liability.

Level III-Pricing inputs are unobservable for the investment and include
situations where there is little, if any, market activity for the investment.


The inputs used to measure fair value may fall into different levels. In all
instances when the inputs fall within different levels of the hierarchy, the
level within which the fair value measurement is categorized is based on the
lowest level of input that is significant to the fair value measurement in its
entirety. As such, a Level III fair value measurement may include inputs that
are both observable and unobservable. Gains and losses for such assets
categorized within the Level III table below may include changes in fair value
that are attributable to both observable inputs and unobservable inputs.

The inputs into the determination of fair value require significant judgment or
estimation by management and consideration of factors specific to each
investment. A review of the fair value hierarchy classifications is conducted on
a quarterly basis. Changes in the observability of valuation inputs may result
in the transfer of certain investments within the fair value hierarchy from
period to period.

See Item 1.-Financial Statements and Supplementary Data-Note 4. Fair Value in
this Quarterly Report on Form 10-Q for additional information on fair value
hierarchy as of June 30, 2022.


We generally use the following framework when determining the fair value of
investments where there are little, if any, market activity or observable
pricing inputs. We typically determine the fair value of our performing debt
investments utilizing an income approach. Additional consideration is given
using a market based approach, as well as reviewing the overall underlying
portfolio company's performance and associated financial risks. The following
outlines additional details on the approaches considered:

Company Performance, Financial Review, and Analysis:  Prior to investment, as
part of our due diligence process, we evaluate the overall performance and
financial stability of the portfolio company. Post investment, we analyze each
portfolio company's current operating performance and relevant financial trends
versus prior year and budgeted results, including, but not limited to, factors
affecting its revenue and earnings before interest, taxes, depreciation, and
amortization ("EBITDA") growth, margin trends, liquidity position, covenant
compliance and changes to its capital structure. We also attempt to identify and
subsequently track any developments at the portfolio company, within its
customer or vendor base or within the industry or the macroeconomic environment,
generally, that may alter any material element of our original investment
thesis. This analysis is specific to each portfolio company. We leverage the
knowledge gained from our original due diligence process, augmented by this
subsequent monitoring, to continually refine our outlook for each of our
portfolio companies and ultimately form the valuation of our investment in each
portfolio company. When an external event such as a purchase transaction, public
offering or subsequent sale occurs, we will consider the pricing indicated by
the external event to corroborate the private valuation.

For debt investments, we may employ the Market Based Approach (as described
below) to assess the total enterprise value of the portfolio company, in order
to evaluate the enterprise value coverage of our debt investment. For equity
investments or in cases where the Market Based Approach implies a lack of
enterprise value coverage for the debt investment, we may additionally employ a
discounted cash flow analysis based on the free cash flows of the portfolio
company to assess the total enterprise value. After enterprise value coverage is
demonstrated for our debt investments through the method(s) above, the Income
Based Approach (as described below) may be employed to estimate the fair value
of the investment.

Market Based Approach:  We may estimate the total enterprise value of each
portfolio company by utilizing EBITDA or revenue multiples of publicly traded
comparable companies and comparable transactions. We consider numerous factors
when selecting the appropriate companies whose trading multiples are used to
value our portfolio companies. These factors include, but are not limited to,
the type of organization, similarity to the business being valued, and relevant
risk factors, as well as size, profitability and growth expectations. We may
apply an average of various relevant comparable company EBITDA or revenue
multiples to the portfolio company's latest twelve month ("LTM") EBITDA or
revenue, or projected EBITDA or revenue to calculate the enterprise value of the
portfolio company. Significant increases or decreases in the EBITDA or revenue
multiples will result in an increase or decrease in enterprise value, which may
result in an increase or decrease in the fair value estimate of the investment.

Income Based Approach: We also may use a discounted cash flow analysis to
estimate the fair value of the investment. Projected cash flows represent the
relevant security's contractual interest, fee and principal payments plus the
assumption of full principal recovery at the investment's expected maturity
date. These cash flows are discounted at a rate established utilizing a
combination of a yield calibration approach and a comparable investment
approach. The yield calibration approach incorporates changes in the credit
quality (as measured by relevant statistics) of the portfolio company, as
compared to changes in the yield associated with comparable credit quality
market indices, between the date of origination and the
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valuation date. The comparable investment approach utilizes an average yield-to
maturity of a selected set of high-quality, liquid investments to determine a
comparable investment discount rate. Significant increases or decreases in the
discount rate would result in a decrease or increase in the fair value
measurement.

See Item 1.-Financial Statements and Supplementary Data-Note 4. Fair Value in
this Quarterly Report on Form 10-Q for additional information on unobservable
inputs used in the fair value measurement of our Level III investments as of
June 30, 2022.

NMFC Senior Loan Program III LLC


NMFC Senior Loan Program III LLC ("SLP III") was formed as a Delaware limited
liability company and commenced operations on April 25, 2018. SLP III is
structured as a private joint venture investment fund between us and SkyKnight
Income II, LLC ("SkyKnight II") and operates under a limited liability company
agreement (the "SLP III Agreement"). The purpose of the joint venture is to
invest primarily in senior secured loans issued by portfolio companies within
our core industry verticals. These investments are typically broadly syndicated
first lien loans. All investment decisions must be unanimously approved by the
board of managers of SLP III, which has equal representation from us and
SkyKnight II. SLP III has a five year investment period and will continue in
existence until April 25, 2025. The investment period may be extended for up to
one year pursuant to certain terms of the SLP III Agreement.

SLP III is capitalized with equity contributions which are called from its
members, on a pro-rata basis based on their equity commitments, as transactions
are completed. Any decision by SLP III to call down on capital commitments
requires approval by the board of managers of SLP III. As of June 30, 2022, we
and SkyKnight II have committed and contributed $140.0 million and $35.0
million, respectively, of equity to SLP III. Our investment in SLP III is
disclosed on our Consolidated Schedule of Investments as of June 30, 2022 and
December 31, 2021.

On May 2, 2018, SLP III entered into its revolving credit facility with
Citibank, N.A., which matures on January 8, 2026. Effective July 8, 2021, the
reinvestment period was extended to July 8, 2024. As of the most recent
amendment on July 8, 2021, during the reinvestment period the credit facility
bears interest at a rate of LIBOR plus 1.60% and after the reinvestment period
it will bear interest at a rate of LIBOR plus 1.90%. Prior to July 8, 2021, the
credit facility bore interest at a rate of LIBOR plus 1.70%. Effective November
23, 2020, SLP III's revolving credit facility has a maximum borrowing capacity
of $525.0 million. As of June 30, 2022 and December 31, 2021, SLP III had total
investments with an aggregate fair value of approximately $654.6 million and
$702.1 million, respectively, and debt outstanding under its credit facility of
$514.5 million and $510.9 million, respectively. As of June 30, 2022 and
December 31, 2021, none of SLP III's investments were on non-accrual.
Additionally, as of June 30, 2022 and December 31, 2021, SLP III had unfunded
commitments in the form of delayed draws of $4.5 million and $4.6 million,
respectively.

Below is a summary of SLP III's portfolio as of June 30, 2022 and December 31,
2021:

(in thousands)                                                June 30, 2022           December 31, 2021
First lien investments (1)                                  $       697,482          $        709,517
Weighted average interest rate on first lien
investments (2)                                                        5.75  %                   4.50  %
Number of portfolio companies in SLP III                                 82                        80
Largest portfolio company investment (1)                    $        23,368          $         23,489
Total of five largest portfolio company investments
(1)                                                         $        93,960          $         95,504



(1)Reflects principal amount or par value of investment.
(2)Computed as the all in interest rate in effect on accruing investments
divided by the total principal amount of investments.


See Item 1.-Financial Statements and Supplementary Data-Note 3. Investments in
this Quarterly Report on Form 10-Q for a listing of the individual investments
in SLP III's portfolio as of June 30, 2022 and December 31, 2021 and additional
information on certain summarized financial information for SLP III as of
June 30, 2022 and December 31, 2021 and for the three and six months ended
June 30, 2022 and June 30, 2021.

NMFC Senior Loan Program IV LLC


NMFC Senior Loan Program IV LLC ("SLP IV") was formed as a Delaware limited
liability company on April 6, 2021, and commenced operations on May 5, 2021. SLP
IV is structured as a private joint venture investment fund between us and
SkyKnight Income Alpha, LLC ("SkyKnight Alpha") and operates under the First
Amended and Restated Limited Liability Company Agreement of NMFC Senior Loan
Program IV LLC (the "SLP IV Agreement"). Upon the effectiveness of the SLP IV
Agreement dated May 5, 2021, the members contributed their respective membership
interests in NMFC Senior Loan Program I LLC ("SLP I") and NMFC Senior Loan
Program II LLC ("SLP II") to SLP IV. Immediately following the
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contribution of their membership interests, SLP I and SLP II became wholly-owned
subsidiaries of SLP IV. The purpose of the joint venture is to invest primarily
in senior secured loans issued by portfolio companies within our core industry
verticals. These investments are typically broadly syndicated first lien loans.
All investment decisions must be unanimously approved by the board of managers
of SLP IV, which has equal representation from us and SkyKnight Alpha. SLP IV
has a five year investment period and will continue in existence until May 5,
2028. The investment period may be extended for up to one year pursuant to
certain terms of the SLP IV Agreement.

SLP IV is capitalized with equity contributions which were transferred and
contributed from its members. As of June 30, 2022, we and SkyKnight Alpha have
transferred and contributed $112.4 million and $30.6 million, respectively, of
their membership interests in SLP I and SLP II to SLP IV. Our investment in SLP
IV is disclosed on our Consolidated Schedule of Investments as of June 30, 2022
and December 31, 2021.

On May 5, 2021, SLP IV entered into a $370.0 million revolving credit facility
with Wells Fargo Bank, National Association which matures on May 5, 2026 and
bears interest at a rate of LIBOR plus 1.60% per annum. As of June 30, 2022 and
December 31, 2021, SLP IV had total investments with an aggregate fair value of
approximately $489.8 million and $504.9 million, respectively, and debt
outstanding under its credit facility of $364.9 million and $360.1 million,
respectively. As of June 30, 2022 and December 31, 2021, none of SLP IV's
investments were on non-accrual. Additionally, as of June 30, 2022 and
December 31, 2021, SLP IV had unfunded commitments in the form of delayed draws
of $4.3 million and $6.1 million, respectively.

Below is a summary of SLP IV's consolidated portfolio as of June 30, 2022 and
December 31, 2021:

(in thousands)                                                June 30, 2022           December 31, 2021
First lien investments (1)                                  $       521,079          $        513,298
Weighted average interest rate on first lien
investments (2)                                                        5.77  %                   4.64  %
Number of portfolio companies in SLP IV                                  74                        68
Largest portfolio company investment (1)                    $        22,099          $         22,215
Total of five largest portfolio company investments
(1)                                                         $        94,413          $         99,875



(1)Reflects principal amount or par value of investment.
(2)Computed as the all in interest rate in effect on accruing investments
divided by the total principal amount of investments.


See Item 1.-Financial Statements and Supplementary Data-Note 3. Investments in
this Quarterly Report on Form 10-Q for a listing of the individual investments
in SLP IV's consolidated portfolio as of June 30, 2022 and December 31, 2021 and
additional information on certain summarized financial information for SLP IV as
of June 30, 2022 and December 31, 2021 and for the three and six months ended
June 30, 2022.

New Mountain Net Lease Corporation


NMNLC was formed to acquire commercial real estate properties that are subject
to "triple net" leases. NMNLC's investments are disclosed on our Consolidated
Schedule of Investments as of June 30, 2022.

On March 30, 2020, an affiliate of the Investment Adviser purchased directly
from NMNLC 105,030 shares of NMNLC's common stock at a price of $107.73 per
share, which represented the net asset value per share of NMNLC at the date of
purchase, for an aggregate purchase price of approximately $11.3 million.
Immediately thereafter, NMNLC redeemed 105,030 shares of its common stock held
by NMFC in exchange for a promissory note with a principal amount of $11.3
million and a 7.0% interest rate, which was repaid by NMNLC to NMFC on March 31,
2020.


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Below is certain summarized property information for NMNLC as of June 30, 2022:

                                                                                                                                              Fair Value as
                                                                           Lease                                            Total                   of
 Portfolio Company                       Tenant                       Expiration Date              Location              Square Feet          June 30, 2022
                                                                                                                       (in thousands)         (in thousands)
NM NL Holdings LP /
NM GP Holdco LLC           Various                                        Various              Various                     Various            $    98,295
NM CLFX LP                 Victor Equipment Company                      8/31/2033             TX                            423                   21,067
NM APP Canada, Corp.       A.P. Plasman, Inc.                           
9/30/2031             Canada                        436                   12,314
NM YI, LLC                 Young Innovations, Inc.                       10/31/2039            IL / MO                       212                    8,184

                                                                                                                                              $   139,860

Collateralized agreements or repurchase financings


We follow the guidance in Accounting Standards Codification Topic 860, Transfers
and Servicing-Secured Borrowing and Collateral, ("ASC 860") when accounting for
transactions involving the purchases of securities under collateralized
agreements to resell (resale agreements). These transactions are treated as
collateralized financing transactions and are recorded at their contracted
resale or repurchase amounts, as specified in the respective agreements.
Interest on collateralized agreements is accrued and recognized over the life of
the transaction and included in interest income. As of June 30, 2022 and
December 31, 2021, we held one collateralized agreement to resell with a cost
basis of $30.0 million and $30.0 million, respectively, and a fair value of
$19.4 million and $21.4 million, respectively. The collateralized agreement to
resell is on non-accrual. The collateralized agreement to resell is guaranteed
by a private hedge fund, PPVA Fund, L.P. The private hedge fund is currently in
liquidation under the laws of the Cayman Islands. Pursuant to the terms of the
collateralized agreement, the private hedge fund was obligated to repurchase the
collateral from us at the par value of the collateralized agreement. The private
hedge fund has breached its agreement to repurchase the collateral under the
collateralized agreement. The default by the private hedge fund did not release
the collateral to us, therefore, we do not have full rights and title to the
collateral. A claim has been filed with the Cayman Islands joint official
liquidators to resolve this matter. The joint official liquidators have
recognized our contractual rights under the collateralized agreement. We
continue to exercise our rights under the collateralized agreement and continue
to monitor the liquidation process of the private hedge fund. The fair value of
the collateralized agreement to resell is reflective of the increased risk of
the position.

PPVA Black Elk (Equity) LLC

On May 3, 2013, we entered into a collateralized securities purchase and put
agreement (the "SPP Agreement") with a private hedge fund. Under the SPP
Agreement, we purchased twenty million Class E Preferred Units of Black Elk
Energy Offshore Operations, LLC ("Black Elk") for $20.0 million with a
corresponding obligation of the private hedge fund, PPVA Black Elk (Equity) LLC,
to repurchase the preferred units for $20.0 million plus other amounts due under
the SPP Agreement. The majority owner of Black Elk was the private hedge fund.
In August 2014, we received a payment of $20.5 million, the full amount due
under the SPP Agreement.

In August 2017, a trustee (the "Trustee") for Black Elk informed us that the
Trustee intended to assert a fraudulent conveyance claim (the "Claim") against
us and one of its affiliates seeking the return of the $20.5 million repayment.
Black Elk filed a Chapter 11 bankruptcy petition pursuant to the U.S. Bankruptcy
Code in August 2015. The Trustee alleged that individuals affiliated with the
private hedge fund conspired with Black Elk and others to improperly use
proceeds from the sale of certain Black Elk assets to repay, in August 2014, the
private hedge fund's obligation to us under the SPP Agreement. We were unaware
of these claims at the time the repayment was received. The private hedge fund
is currently in liquidation under the laws of the Cayman Islands.

On December 22, 2017, we settled the Trustee's $20.5 million Claim for $16.0
million and filed a claim with the Cayman Islands joint official liquidators of
the private hedge fund for $16.0 million that is owed to us under the SPP
Agreement. The SPP Agreement was restored and is in effect since repayment has
not been made. We continue to exercise our rights under the SPP Agreement and
continue to monitor the liquidation process of the private hedge fund. During
the year ended December 31, 2018, we received a $1.5 million payment from our
insurance carrier in respect to the settlement. As of June 30, 2022 and
December 31, 2021, the SPP Agreement has a cost basis of $14.5 million and $14.5
million, respectively, and a fair value of $9.4 million and $10.4 million,
respectively, which is reflective of the higher inherent risk in this
transaction.

Revenue Recognition

Sales and paydowns of investments: Realized gains and losses on investments are
determined on the specific identification method.

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Interest and dividend income:  Interest income, including amortization of
premium and discount using the effective interest method, is recorded on the
accrual basis and periodically assessed for collectability. Interest income also
includes interest earned from cash on hand. Upon the prepayment of a loan or
debt security, any prepayment penalties are recorded as part of interest income.
We have loans and certain preferred equity investments in the portfolio that
contain a payment-in-kind ("PIK") interest or dividend provision. PIK interest
and dividends are accrued and recorded as income at the contractual rates, if
deemed collectible. The PIK interest and dividends are added to the principal or
share balances on the capitalization dates and are generally due at maturity or
when redeemed by the issuer. For the three and six months ended June 30, 2022,
we recognized PIK and non-cash interest from investments of approximately
$7.3 million and $15.8 million, respectively, and PIK and non-cash dividends
from investments of approximately $5.2 million and $10.3 million, respectively.
For the three and six months ended June 30, 2021, we recognized PIK and non-cash
interest from investments of approximately $5.6 million and $11.4 million,
respectively, and PIK and non-cash dividends from investments of approximately
$5.8 million and $11.0 million, respectively.

Dividend income on common equity is recorded on the record date for private
portfolio companies or on the ex-dividend date for publicly traded portfolio
companies. Dividend income on preferred securities is recorded as dividend
income on an accrual basis to the extent that such amounts are deemed
collectible.


Non-accrual income:  Investments are placed on non-accrual status when principal
or interest payments are past due for 30 days or more and when there is
reasonable doubt that principal or interest will be collected. Accrued cash and
un-capitalized PIK interest or dividends are reversed when an investment is
placed on non-accrual status. Previously capitalized PIK interest or dividends
are not reversed when an investment is placed on non-accrual status. Interest or
dividend payments received on non-accrual investments may be recognized as
income or applied to principal depending upon management's judgment of the
ultimate collectibility. Non-accrual investments are restored to accrual status
when past due principal and interest is paid and, in management's judgment, are
likely to remain current.

Other income: Other income represents delayed compensation, consent or amendment
fees, revolver fees, structuring fees, upfront fees and other miscellaneous fees
received and are typically non-recurring in nature. Delayed compensation is
income earned from counterparties on trades that do not settle within a set
number of business days after trade date. Other income may also include fees
from bridge loans. We may from time to time enter into bridge financing
commitments, an obligation to provide interim financing to a counterparty until
permanent credit can be obtained. These commitments are short-term in nature and
may expire unfunded. A fee is received for providing such commitments.
Structuring fees and upfront fees are recognized as income when earned, usually
when paid at the closing of the investment, and are non-refundable.

Monitoring of Portfolio Investments


We monitor the performance and financial trends of our portfolio companies on at
least a quarterly basis. We attempt to identify any developments within the
portfolio company, the industry or the macroeconomic environment that may alter
any material element of our original investment strategy. We have recently
consolidated our portfolio monitoring procedures by combining our previously
bifurcated system that separately (1) rated investments based on their
performance compared to expectations and (2) assigned a risk rating to each
investment based on the expected impact from the COVID-19 pandemic. As described
more fully below, our new portfolio monitoring procedures are designed to
provide a simple yet comprehensive analysis of our portfolio companies based on
their operating performance and underlying business characteristics, which in
turn forms the basis of its Risk Rating (as defined below).

We use an investment risk rating system to characterize and monitor the credit
profile and expected level of returns on each investment in the portfolio. As
such, we assign each investment a composite score ("Risk Rating") based on two
metrics - 1) Operating Performance and 2) Business Characteristics:

•Operating Performance assesses the health of the investment in context of its
financial performance and the market environment it faces. The metric is
expressed in Tiers of "1" to "4", with "1" being the worst and "4" being the
best:

•Tier 1 – Severe business underperformance and/or severe market headwinds

•Tier 2 – Significant business underperformance and/or significant market
headwinds

•Tier 3 – Moderate business underperformance and/or moderate market headwinds

•Tier 4 – Business performance is in-line with or above expectations


•Business Characteristics assesses the health of the investment in context of
the underlying portfolio company's business and credit quality, the underlying
portfolio company's current balance sheet, and the level of support from the
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equity sponsor. The metric is expressed as on a qualitative scale of “A” to “C”,
with “A” being the best and “C” being the worst.


The Risk Rating for each investment is a composite of these two metrics. The
Risk Rating is expressed in categories of Red, Orange, Yellow and Green with Red
reflecting an investment performing materially below expectations and Green
reflecting an investment that is in-line with or above expectations. The mapping
of the composite scores to these categories are below:

•Red – 1C (e.g., Tier 1 for Operating Performance and C for Business
Characteristics)


•Orange - 2C and 1B

•Yellow - 3C, 2B, and 1A

•Green – 4C, 3B, 2A, 4B, 3A, and 4A

The following table shows the Risk Rating of our portfolio companies as of
June 30, 2022:


                (in millions)                       As of June 30, 2022
                Risk Rating             Cost         Percent      Fair Value      Percent
                Red                  $    83.9         2.5  %    $     30.6         0.9  %
                Orange                    57.5         1.7  %          40.6         1.2  %
                Yellow                   214.3         6.4  %         205.3         6.2  %
                Green                  2,971.8        89.4  %       3,043.1        91.7  %
                                     $ 3,327.5       100.0  %    $  3,319.6       100.0  %


As of June 30, 2022, all investments in our portfolio had a Green Risk Rating
with the exception of nine portfolio companies that had a Yellow Risk Rating,
three portfolio companies that had an Orange Risk Rating and three portfolio
companies that had a Red Risk Rating.

As of June 30, 2022, our aggregate principal amount of our second lien term loan
in Integro Parent Inc. ("Integro") was $10.5 million. During the second quarter
of 2022, we placed an aggregate principal amount of $3.7 million of our second
lien position on non-accrual status. As of June 30, 2022, our position in
Integro on non-accrual status had an aggregate cost basis of $3.6 million, an
aggregate fair value of $2.4 million, total unearned interest income of $0.1
million and $0.1 million, respectively, for the three and six months then ended
and total unearned other income of $36 thousand and $36 thousand , respectively,
for the three and six months then ended. As of June 30, 2022, our Integro
portfolio company has a Green Risk Rating.

During the second quarter of 2022, we placed our second lien positions in
National HME, Inc. ("National HME") on non-accrual status. As of June 30, 2022,
our second lien positions in National HME had an aggregate cost basis of $36.5
million, an aggregate fair value of $8.5 million, and total unearned interest
income of $1.2 million and $1.2 million, respectively, for the three and six
months then ended. As of June 30, 2022, our National HME portfolio company has a
Red Risk Rating.

As of June 30, 2022, our aggregate principal amount of our subordinated position
and first lien term loans in American Achievement Corporation ("AAC") was $5.2
million and $29.7 million, respectively. During the first quarter of 2021, we
placed an aggregate principal amount of $5.2 million of our subordinated
position on non-accrual status. During the third quarter of 2021, we placed an
aggregate principal amount of $12.8 million of our first lien term loans on
non-accrual status. As of June 30, 2022, our positions in AAC on non-accrual
status had an aggregate cost basis of $12.8 million, an aggregate fair value of
$7.2 million and total unearned interest income of $0.3 million and $0.6
million, respectively, for the three and six months then ended. As of June 30,
2022, our AAC portfolio company has a Red Risk Rating.

During the third quarter of 2021, we placed our second lien position in Sierra
Hamilton Holdings Corporation ("Sierra") on non-accrual status. As of June 30,
2022, our second lien position in Sierra had an aggregate cost basis of $0.0
million, an aggregate fair value of $0.0 million and total unearned interest
income of $0.0 million and $0.0 million, respectively, for the three and six
months then ended. As of June 30, 2022, our Sierra portfolio company has a Red
Risk Rating.

During the first quarter of 2020, we placed our investment in our junior
preferred shares of UniTek Global Services, Inc. ("UniTek") on non-accrual
status. As of June 30, 2022, our junior preferred shares of UniTek had an
aggregate cost basis of $34.4 million, an aggregate fair value of $0.0 million
and total unearned dividend income of $1.6 million and $3.2 million,
respectively, for the three and six months then ended. During the third quarter
of 2021, we placed an aggregate principal amount of $19.8 million of our
investment in our senior preferred shares of UniTek on non-accrual status. As of
June 30, 2022,
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our senior preferred shares of UniTek had an aggregate cost basis of $19.8
million
, an aggregate fair value of approximately $7.6 million and total
unearned dividend income of approximately $1.1 million and $2.2 million,
respectively, for the three and six months then ended. As of June 30, 2022, our
UniTek portfolio company has a Green Risk Rating.


During the first quarter of 2018, we placed our first lien positions in
Education Management II LLC on non-accrual status as the portfolio company
announced its intention to wind down and liquidate the business. As of June 30,
2022, our Education Management Corporation portfolio company has an Orange Risk
Rating and an aggregate cost basis of $1.4 million, an aggregate fair value of
$0.0 million and total unearned interest income of $0.0 million and $0.0
million, respectively, for the three and six months then ended.

During the year ended December 31, 2019, our security purchased under
collateralized agreements to resell was placed on non-accrual. As of June 30,
2022
, our investment in this security has a Yellow Risk Rating and has an
aggregate cost basis of $30.0 million and an aggregate fair value
of approximately $19.4 million.

Portfolio and Investment Activity


The fair value of our investments, as determined in good faith by our board of
directors, was approximately $3,300.2 million in 107 portfolio companies at
June 30, 2022 and approximately $3,174.4 million in 106 portfolio companies at
December 31, 2021.

The following table shows our portfolio and investment activity for the six
months ended June 30, 2022 and June 30, 2021:


                                                                                      Six Months Ended
(in millions)                                                               June 30, 2022           June 30, 2021
New investments in 38 and 22 portfolio companies, respectively            $        397.1          $        300.0
Debt repayments in existing portfolio companies                                    146.9                   262.5
Sales of securities in 5 and 2 portfolio companies, respectively                   145.8                     7.0

Change in unrealized appreciation on 28 and 46 portfolio companies,
respectively

                                                                        49.9                   115.5

Change in unrealized depreciation on 79 and 61 portfolio companies,
respectively

                                                                       (92.6)                  (32.2)


Recent Accounting Standards Updates

See Item 1.-Financial Statements and Supplementary Data-Note 13. Recent
Accounting Standards Updates for details on recent accounting standards updates.


Results of Operations for the Three Months Ended June 30, 2022 and June 30, 2021

Revenue

                                      Three Months Ended
(in thousands)                June 30, 2022       June 30, 2021
Total interest income        $       50,344      $       47,081
Total dividend income                16,022              16,963
Other income                          6,744               2,517
Total investment income      $       73,110      $       66,561


Our total investment income increased by approximately $6.5 million, or 10%, for
the three months ended June 30, 2022 as compared to the three months ended
June 30, 2021. For the three months ended June 30, 2022, total investment income
of approximately $73.1 million consisted of approximately $41.0 million in cash
interest from investments, approximately $7.3 million in PIK and non-cash
interest from investments, $0.4 million in prepayment fees, net amortization of
purchase premiums and discounts of approximately $1.7 million, approximately
$10.8 million in cash dividends from investments, approximately $5.2 million in
PIK and non-cash dividends from investments and approximately $6.7 million in
other income. The increase in interest income of approximately $3.3 million
during the three months ended June 30, 2022 as compared to the three months
ended June 30, 2021 was primarily due to a higher effective interest rate of our
portfolio on larger invested balances. The decrease in dividend income for the
three months ended June 30, 2022 as compared to the three months ended June 30,
2021 was primarily driven by a decrease in cash dividends from our investments
in SLP III, SLP IV and NMNLC. Other income during the three months ended
June 30, 2022, which represents fees that are generally non-recurring in nature,
was primarily attributable to upfront, consent and amendment fees received from
21 different portfolio companies.



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Operating Expenses

                                                        Three Months Ended
(in thousands)                                  June 30, 2022       June 30, 2021
Management fee                                 $       11,770      $       13,725
Less: management fee waiver                            (1,142)             (3,804)
Total management fee                                   10,628               9,921
Incentive fee                                           7,926               7,298

Interest and other financing expenses                  20,672              17,871
Administrative expenses                                   932               1,029
Professional fees                                         817                 764
Other general and administrative expenses                 518               

466


Net expenses before income taxes                       41,493              

37,349

Income tax (benefit) expense                              (87)              

22

Net expenses after income taxes                $       41,406      $       37,371




Our total net operating expenses increased by approximately $3.8 million for the
three months ended June 30, 2022 as compared to the three months ended June 30,
2021. Our management fee increased by approximately $0.7 million, net of a
management fee waiver, and our incentive fee increased by approximately $0.6
million for the three months ended June 30, 2022 as compared to the three months
ended June 30, 2021. The increase in management and incentive fees was
attributable to higher invested balances.

Interest and other financing expenses increased by approximately $2.8 million
during the three months ended June 30, 2022 as compared to the three months
ended June 30, 2021, primarily due to larger drawn balances on the Holdings
Credit Facility and NMFC Credit Facility, higher interest rates on those
facilities and interest costs associated with the 2022A Unsecured Notes, issued
on June 15, 2022. Our total professional fees, administrative expenses and total
other general and administrative expenses for the three months ended June 30,
2022 as compared to the three months ended June 30, 2021 increased in line with
invested capital.

Net Realized Gains (Losses) and Net Change in Unrealized Appreciation
(Depreciation)

                                                                                  Three Months Ended
(in thousands)                                                           June 30, 2022           June 30, 2021
Net realized gains on investments                                      $       16,518          $          180
Net realized gains on foreign currency                                             40                       -

Net change in unrealized (depreciation) appreciation of
investments

                                                                   (32,774)                 49,808

Net change in unrealized depreciation on foreign currency                        (193)                      -
Provision for taxes                                                              (155)                      -
Net realized and unrealized (losses) gains                             $    

(16,564) $ 49,988



Our net realized gains and unrealized losses resulted in a net loss of
approximately $16.6 million for the three months ended June 30, 2022 compared to
net realized gains and unrealized gains resulting in a net gain of approximately
$50.0 million for the same period in 2021. As movement in unrealized
appreciation or depreciation can be the result of realizations, we look at net
realized and unrealized gains or losses together. The net loss for the three
months ended June 30, 2022 was primarily driven by realized and unrealized
losses in NM CLFX LP, NHME Holdings Corp. and Ansira Holdings, Inc. which was
partially offset by unrealized appreciation in Haven Midstream LLC, UniTek and
New Permian Holdco, Inc. and a realized gain in NM GLCR LP. The provision for
income taxes was attributable to equity investments that are held as of June 30,
2022 in eight of our corporate subsidiaries. The net gain for the three months
ended June 30, 2021 was primarily driven by unrealized appreciation on our
investments in TVG-Edmentum Ultimate Holdings, LLC ("Edmentum"), NM CLFX LP and
NM GLCR LP. See Monitoring of Portfolio Investments above for more details
regarding the health of our portfolio companies.


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Results of Operations for the Six Months Ended June 30, 2022 and June 30, 2021

Revenue

                                       Six Months Ended
(in thousands)                June 30, 2022       June 30, 2021
Total interest income        $       98,222      $       94,090
Total dividend income                32,794              32,625
Other income                         11,057               7,554
Total investment income      $      142,073      $      134,269


Our total investment income increased by approximately $7.8 million, or 6%, for
the six months ended June 30, 2022 as compared to the six months ended June 30,
2021. For the six months ended June 30, 2022, total investment income of
approximately $142.1 million consisted of approximately $78.9 million in cash
interest from investments, approximately $15.8 million in PIK and non-cash
interest from investments, $0.4 million in prepayment fees, net amortization of
purchase premiums and discounts of approximately $3.1 million, approximately
$22.5 million in cash dividends from investments, approximately $10.3 million in
PIK and non-cash dividends from investments and approximately $11.1 million in
other income. The increase in interest income of approximately $4.1 million
during the six months ended June 30, 2022 as compared to the six months ended
June 30, 2021 was primarily due to higher LIBOR and SOFR rates on larger
invested balances. The dividend income for the six months ended June 30, 2022 as
compared to the six months ended June 30, 2021 remained relatively flat. Other
income during the six months ended June 30, 2022, which represents fees that are
generally non-recurring in nature, was primarily attributable to upfront,
consent and amendment fees received from 32 different portfolio companies.


Operating Expenses

                                                         Six Months Ended
(in thousands)                                  June 30, 2022       June 30, 2021
Management fee                                 $       23,323      $       27,145
Less: management fee waiver                            (2,234)             (7,441)
Total management fee                                   21,089              19,704
Incentive fee                                          15,403              14,546

Interest and other financing expenses                  39,309              37,256
Administrative expenses                                 2,141               2,158
Professional fees                                       1,754               1,490
Other general and administrative expenses                 995               

908

Total expenses                                         80,691              

76,062

Less: expenses waived and reimbursed                     (238)              

Net expenses before income taxes                       80,453              

76,062

Income tax expense                                          8               

23

Net expenses after income taxes                $       80,461      $       

76,085



Our total net operating expenses increased by approximately $4.4 million for the
six months ended June 30, 2022 as compared to the six months ended June 30,
2021. Our management fee increased by approximately $1.4 million, net of a
management fee waiver, and our incentive fee increased by approximately $0.9
million for the six months ended June 30, 2022 as compared to the six months
ended June 30, 2021. The increase in management and incentive fees was
attributable to higher invested balances.

Interest and other financing expenses increased by approximately $2.1 million
during the six months ended June 30, 2022 as compared to the six months ended
June 30, 2021, primarily due to larger drawn balances on the Holdings Credit
Facility and NMFC Credit Facility and higher LIBOR rates on those facilities.
Our total professional fees, administrative expenses and total other general and
administrative expenses for the six months ended June 30, 2022 as compared to
the six months ended June 30, 2021 remained relatively flat.


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Net Realized Gains (Losses) and Net Change in Unrealized (Depreciation)
Appreciation

                                                                                   Six Months Ended
(in thousands)                                                           June 30, 2022           June 30, 2021
Net realized gains (losses) on investments                             $       35,690          $      (10,316)
Net realized gains on foreign currency                                            385                       -

Net change in unrealized (depreciation) appreciation of
investments

                                                                   (42,707)                 83,280

Net change in unrealized depreciation securities purchased under
collateralized agreements to resell

                                            (2,021)                      -
Net change in unrealized depreciation on foreign currency                        (615)                      -
Provision for taxes                                                              (157)                   (115)
Net realized and unrealized (losses) gains                             $    

(9,425) $ 72,849



Our net realized gains and unrealized losses resulted in a net loss of
approximately $9.4 million for the six months ended June 30, 2022 compared to
net realized losses and unrealized gains resulting in a net gain of
approximately $72.8 million for the same period in 2021. As movement in
unrealized appreciation or depreciation can be the result of realizations, we
look at net realized and unrealized gains or losses together. The net loss for
the six months ended June 30, 2022 was primarily driven by unrealized
depreciation in NM CLFX LP, NM APP US LLC, NHME Holdings Corp. and Ansira
Holdings, Inc. which was partially offset by unrealized appreciation in UniTek,
TVG-Edmentum Holdings, LLC, Haven Midstream LLC and New Permian Holdco, Inc. and
a realized gain in NM GLCR LP. The provision for income taxes was attributable
to equity investments that are held as of June 30, 2022 in eight of our
corporate subsidiaries. The net gain for the six months ended June 30, 2021 was
primarily driven by unrealized appreciation on our investments in Edmentum, NM
CLFX LP and NM GLCR LP. See Monitoring of Portfolio Investments above for more
details regarding the health of our portfolio companies.

Liquidity, Capital Resources, Off-Balance Sheet Arrangements, Borrowings and
Contractual Obligations


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

Since our IPO, and through June 30, 2022, we raised approximately $942.7 million
in net proceeds from additional offerings of common stock.


Our liquidity is generated and generally available through advances from the
revolving credit facilities, from cash flows from operations, and, we expect,
through periodic follow-on equity offerings. In addition, we may from time to
time enter into additional debt facilities, increase the size of existing
facilities or issue additional debt securities, including unsecured debt and/or
debt securities convertible into common stock. Any such incurrence or issuance
would be subject to prevailing market conditions, our liquidity requirements,
contractual and regulatory restrictions and other factors. On June 8, 2018 our
shareholders approved the application of the modified asset coverage
requirements set forth in Section 61(a) of the 1940 Act, which resulted in the
reduction from 200.0% to 150.0% of the minimum asset coverage ratio applicable
to us as of June 9, 2018. In accordance with the 1940 Act, with certain limited
exceptions, we are only allowed to borrow amounts such that our asset coverage,
calculated pursuant to the 1940 Act, is at least 150.0% after such borrowing
(which means we can borrow $2 for every $1 of our equity). As a result of our
exemptive relief received on November 5, 2014, we are permitted to exclude our
SBA-guaranteed debentures from the 150.0% asset coverage ratio that the we are
required to maintain under the 1940 Act. The agreements governing the NMFC
Credit Facility, the Convertible Notes and the Unsecured Notes (as defined
below) contain certain covenants and terms, including a requirement that we not
exceed a debt-to-equity ratio of 1.65 to 1.00 at the time of incurring
additional indebtedness and a requirement that we not exceed a secured debt
ratio of 0.70 to 1.00 at any time. As of June 30, 2022, our asset coverage ratio
was 178.8%.

At June 30, 2022 and December 31, 2021, we had cash and cash equivalents of
approximately $40.7 million and $58.1 million, respectively. Our cash used in
operating activities during the six months ended June 30, 2022 and June 30, 2021
was approximately $79.1 million and $9.3 million, respectively. We expect that
all current liquidity needs will be met with cash flows from operations and
other activities.

On November 3, 2021, we entered into an equity distribution agreement (the
"Distribution Agreement") with B. Riley Securities, Inc. and Raymond James &
Associates, Inc. (collectively, the "Agents"). The Distribution Agreement
provides that we may issue and sell our shares from time to time through the
Agents, up to $250.0 million worth of our common stock by means of at-the-market
("ATM") offerings.

For the three and six months ended June 30, 2022, we sold 1,218,366 shares and
2,730,202 shares, respectively, of common stock under the Distribution
Agreement. For the same period, we received total accumulated net proceeds of
approximately $16.6 million and $37.1 million, respectively, including $0.1
million and $0.4 million, respectively, of offering expenses from these sales.
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We generally use net proceeds from these ATM offerings to make investments, to
pay down liabilities and for general corporate purposes. As of June 30, 2022,
shares representing approximately $199.9 million of its common stock remain
available for issuance and sale under the Distribution Agreement.

Off-Balance Sheet Arrangements


We may become a party to financial instruments with off-balance sheet risk in
the normal course of business to meet the financial needs of our portfolio
companies. These instruments may include commitments to extend credit and
involve, to varying degrees, elements of liquidity and credit risk in excess of
the amount recognized in the balance sheet. As of June 30, 2022 and December 31,
2021, we had outstanding commitments to third parties to fund investments
totaling $280.8 million and $215.4 million, respectively, under various undrawn
revolving credit facilities, delayed draw commitments or other future funding
commitments.

We may from time to time enter into financing commitment letters or bridge
financing commitments, which could require funding in the future. As of June 30,
2022 and December 31, 2021, we had commitment letters to purchase investments in
an aggregate par amount of $62.1 million and $6.8 million, respectively. As of
June 30, 2022 and December 31, 2021, we had not entered into any bridge
financing commitments which could require funding in the future.

Borrowings


Holdings Credit Facility-On October 24, 2017, we entered into the Third Amended
and Restated Loan and Security Agreement among us, as the Collateral Manager,
NMF Holdings, as the Borrower, Wells Fargo Securities, LLC, as the
Administrative Agent and Wells Fargo Bank, National Association, as the Lender
and Collateral Custodian (as amended from time to time, the "Holdings Credit
Facility"). As of the most recent amendment on April 20, 2021, the maturity date
of the Holdings Credit Facility is April 20, 2026, and the maximum facility
amount is the lesser of $800.0 million and the actual commitments of the lenders
to make advances as of such date.

As of June 30, 2022, the maximum amount of revolving borrowings available under
the Holdings Credit Facility is $730.0 million. Under the Holdings Credit
Facility, NMF Holdings is permitted to borrow up to 25.0%, 45.0%, 67.5% or 70.0%
of the purchase price of pledged assets, subject to approval by Wells Fargo
Bank, National Association. The Holdings Credit Facility is non-recourse to us
and is collateralized by all of the investments of NMF Holdings on an investment
by investment basis. All fees associated with the origination, amending or
upsizing of the Holdings Credit Facility are capitalized on our Consolidated
Statement of Assets and Liabilities and charged against income as other
financing expenses over the life of the Holdings Credit Facility. The Holdings
Credit Facility contains certain customary affirmative and negative covenants
and events of default. In addition, the Holdings Credit Facility requires us to
maintain a minimum asset coverage ratio of 150.0%. The covenants are generally
not tied to mark to market fluctuations in the prices of NMF Holdings
investments, but rather to the performance of the underlying portfolio
companies.

As of the most recent amendment on April 20, 2021, the Holdings Credit Facility
bears interest at a rate of LIBOR plus 1.60% per annum for Broadly Syndicated
Loans (as defined in the Fifth Amendment to the Loan and Security Agreement) and
LIBOR plus 2.10% per annum for all other investments. From September 30, 2020 to
April 19, 2021, the Holdings Credit Facility bore interest at a rate of LIBOR
plus 2.00% per annum for Broadly Syndicated Loans (as defined in the Fourth
Amendment Loan and Security Agreement) and LIBOR plus 2.50% per annum for all
other investments. The Holdings Credit Facility also charges a non-usage fee,
based on the unused facility amount multiplied by the Non-Usage Fee Rate (as
defined in the Third Amended and Restated Loan and Security Agreement).

As of June 30, 2022 and December 31, 2021, the outstanding balance on the
Holdings Credit Facility was $615.5 million and $545.3 million, respectively,
and NMF Holdings was in compliance with the applicable covenants in the Holdings
Credit Facility on such dates.

See Item 1.-Financial Statements and Supplementary Data-Note 7. Borrowings in
this Quarterly Report on Form 10-Q for additional information on costs incurred
on the Holdings Credit Facility for the three and six months ended June 30, 2022
and June 30, 2021.

NMFC Credit Facility-The Amended and Restated Senior Secured Revolving Credit
Agreement, (as amended from time to time, and together with the related
guarantee and security agreement, the "RCA"), dated June 4, 2021, among us, as
the Borrower, Goldman Sachs Bank USA, as the Administrative Agent and Collateral
Agent, and Goldman Sachs Bank USA, Morgan Stanley Bank, N.A., Stifel Bank &
Trust and MUFG Union Bank, N.A., as Lenders (the "NMFC Credit Facility"), is
structured as a senior secured revolving credit facility. The NMFC Credit
Facility is guaranteed by certain of our domestic subsidiaries and proceeds from
the NMFC Credit Facility may be used for general corporate purposes, including
the funding of portfolio investments. As of the most recent amendment on June 4,
2021, the maturity date of the NMFC Credit Facility is June 4, 2026.
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As of June 30, 2022, the maximum amount of revolving borrowings available under
the NMFC Credit Facility was $198.5 million. We are permitted to borrow at
various advance rates depending on the type of portfolio investment as outlined
in the related RCA. All fees associated with the origination and amending of the
NMFC Credit Facility are capitalized on our Consolidated Statement of Assets and
Liabilities and charged against income as other financing expenses over the life
of the NMFC Credit Facility. The NMFC Credit Facility contains certain customary
affirmative and negative covenants and events of default, including certain
financial covenants related to the asset coverage and liquidity and other
maintenance covenants.

As of the most recent amendment on June 4, 2021, the NMFC Credit Facility
generally bears interest at a rate of LIBOR or SONIA plus 2.10% per annum or the
prime rate plus 1.10% per annum, and charges a commitment fee, based on the
unused facility amount multiplied by 0.375% per annum (as defined in the RCA).
Prior to June 4, 2021, the NMFC Credit Facility bore interest at a rate of LIBOR
plus 2.50% per annum or the prime rate plus 1.50% per annum, and charged a
commitment fee based on the unused facility amount multiplied by 0.375% per
annum (as defined in the RCA).

As of June 30, 2022 and December 31, 2021, the outstanding balance on the NMFC
Credit Facility was $120.9 million and $127.2 million, which included £18.8
million and £16.4 million, respectively, denominated in British Pound Sterling
("GBP") that has been converted to U.S. dollars, and NMFC was in compliance with
the applicable covenants in the NMFC Credit Facility on such dates.

See Item 1.-Financial Statements and Supplementary Data-Note 7. Borrowings in
this Quarterly Report on Form 10-Q for additional information on costs incurred
on the NMFC Credit Facility for the three and six months ended June 30, 2022 and
June 30, 2021.

Unsecured Management Company Revolver-The Uncommitted Revolving Loan Agreement,
dated March 30, 2020, by and between us, as the Borrower, and NMF Investments
III, L.L.C., as Lender, an affiliate of the Investment Adviser (the "Unsecured
Management Company Revolver"), is structured as a discretionary unsecured
revolving credit facility. The proceeds from the Unsecured Management Company
Revolver may be used for general corporate purposes, including the funding of
portfolio investments. As of the most recent amendment on December 17, 2021, the
maturity date of the Unsecured Management Company Revolver is December 31, 2024.

As of the most recent amendment on December 17, 2021, the Unsecured Management
Company Revolver bears interest at a rate of 4.00% per annum. Prior to December
17, 2021, the Unsecured Management Company Revolver bore interest at a rate of
7.00% per annum (as defined in the Uncommitted Revolving Loan Agreement). On May
4, 2020, we entered into an Amended and Restated Uncommitted Revolving Loan
Agreement with NMF Investments III, L.L.C., which increased the maximum amounts
of revolving borrowings available thereunder from $30.0 million to $50.0
million. As of June 30, 2022, the maximum amount of revolving borrowings
available under the Unsecured Management Company Revolver was $50.0 million and
no borrowings were outstanding. For the three and six months ended June 30, 2022
and June 30, 2021, amortization of financing costs were each less than $50.0
thousand, respectively.

DB Credit Facility-The Loan Financing and Servicing Agreement (the "LFSA") dated
December 14, 2018 and as amended from time to time, among NMFDB as the borrower,
Deutsche Bank AG, New York Branch ("Deutsche Bank") as the facility agent,
Lender and other agent from time to time party thereto and U.S. Bank National
Association, as collateral agent and collateral custodian (the "DB Credit
Facility"), is structured as a secured revolving credit facility and matures on
March 25, 2026.

As of June 30, 2022, the maximum amount of revolving borrowings available under
the DB Credit Facility was $280.0 million. We are permitted to borrow at various
advance rates depending on the type of portfolio investment, as outlined in the
LFSA. The DB Credit Facility is non-recourse to us and is collateralized by all
of the investments of NMFDB on an investment by investment basis. All fees
associated with the origination and amending of the DB Credit Facility are
capitalized on our Consolidated Statement of Assets and Liabilities and charged
against income as other financing expenses over the life of the DB Credit
Facility. The DB Credit Facility contains certain customary affirmative and
negative covenants and events of default. The covenants are generally not tied
to mark to market fluctuations in the prices of NMFDB investments, but rather to
the performance of the underlying portfolio companies.

The advances under the DB Credit Facility accrue interest at a per annum rate
equal to the Applicable Margin plus the lender's Cost of Funds Rate. Prior to
March 25, 2021, the Applicable Margin was equal to 2.60% during the Revolving
Period and then increases by 0.20% during an Event of Default. Effective March
25, 2021, the Applicable Margin is equal to 2.35% during the Revolving Period
and then increases by 0.20% during an Event of Default. The "Cost of Funds Rate"
for a conduit lender is the lower of its commercial paper rate and the Base Rate
plus 0.50%, and for any other lender is the Base Rate. The "Base Rate" is the
three-months LIBOR Rate but may become an alternative base rate based on
Deutsche Bank's base lending rate if certain LIBOR disruption events occur. We
are also charged a non-usage fee, based on the unused facility amount multiplied
by the Undrawn Fee Rate (as defined in the LFSA) and a facility agent fee of
0.25% per annum on the total facility amount.
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As of June 30, 2022 and December 31, 2021, the outstanding balance on the DB
Credit Facility was $189.3 million and $226.3 million, respectively, and NMFDB
was in compliance with the applicable covenants in the DB Credit Facility on
such date.

See Item 1.-Financial Statements and Supplementary Data-Note 7. Borrowings in
this Quarterly Report on Form 10-Q for additional information on costs incurred
on the DB Credit Facility for the three and six months ended June 30, 2022 and
June 30, 2021.

NMNLC Credit Facility II-The Credit Agreement (together with the related
guarantee and security agreement, the "NMNLC CA"), dated February 26, 2021, by
and between NMNLC, as the Borrower, and City National Bank, as the Lender (the
"NMNLC Credit Facility II"), is structured as a senior secured revolving credit
facility. As of the most recent amendment on March 16, 2022, the NMNLC CA
matures on February 25, 2023. The NMNLC Credit Facility II is guaranteed by us
and proceeds from the NMNLC Credit Facility II are able to be used for funding
of additional acquisition properties. As of June 30, 2022, the maximum amount of
revolving borrowings available under the NMNLC Credit Facility II is $10.0
million.

Prior to the amendment on December 7, 2021, the NMNLC Credit Facility II bore
interest at a rate of LIBOR plus 2.75% per annum, and charged a commitment fee,
based on the unused facility amount multiplied by 0.05% per annum (as defined in
the NMNLC CA). As of December 7, 2021, the NMNLC Credit Facility II bears
interest at a rate of SOFR plus 2.75% per annum with a 0.35% floor, and charges
a commitment fee, based on the unused facility amount multiplied by 0.05% per
annum (as defined in the NMNLC CA). Prior to the amendment on March 16, 2022,
the maximum amount of revolving borrowings available under the NMNLC Credit
Facility II was $20.0 million. As of the March 16, 2022 amendment and effective
May 1, 2022, the maximum amount of revolving borrowings available under the
NMNLC Credit Facility II was $10.0 million. As of June 30, 2022 and December 31,
2021, the outstanding balance on the NMNLC Credit Facility II was $2.9 million
and $15.2 million, respectively, and NMNLC was in compliance with the applicable
covenants in the NMNLC Credit Facility II on such date.

See Item 1.-Financial Statements and Supplementary Data-Note 7. Borrowings in
this Quarterly Report on Form 10-Q for additional information on costs incurred
on the NMNLC Credit Facility II for the three and six months ended June 30, 2022
and June 30, 2021.

Convertible Notes-On August 20, 2018, we closed a registered public offering of
$100.0 million aggregate principal amount of unsecured convertible notes (the
"Convertible Notes"), pursuant to an indenture, dated August 20, 2018, as
supplemented by a first supplemental indenture thereto, dated August 20, 2018
(together the "2018A Indenture"). On August 30, 2018, in connection with the
registered public offering, we issued an additional $15.0 million aggregate
principal amount of the Convertible Notes pursuant to the exercise of an
overallotment option by the underwriter of the Convertible Notes. On June 7,
2019, we closed a registered public offering of an additional $86.3 million
aggregate principal amount of the Convertible Notes. These additional
Convertible Notes constitute a further issuance of, rank equally in right of
payment with, and form a single series with the $115.0 million aggregate
principal amount of Convertible Notes that we issued in August 2018.

The Convertible Notes bear interest at an annual rate of 5.75%, payable
semi-annually in arrears on February 15 and August 15 of each year. The
Convertible Notes will mature on August 15, 2023 unless earlier converted,
repurchased or redeemed pursuant to the terms of the 2018A Indenture. We may not
redeem the Convertible Notes prior to May 15, 2023. On or after May 15, 2023, we
may redeem the Convertible Notes for cash, in whole or from time to time in
part, at our option at a redemption price, subject to an exception for
redemption dates occurring after a record date but on or prior to the interest
payment date, equal to the sum of (i) 100% of the principal amount of the
Convertible Notes to be redeemed, (ii) accrued and unpaid interest thereon to,
but excluding, the redemption date and (iii) a make-whole premium.

No sinking fund is provided for the Convertible Notes. Holders of Convertible
Notes may, at their option, convert their Convertible Notes into shares of our
common stock at any time on or prior to the close of business on the business
day immediately preceding the maturity date of the Convertible Notes. In
addition, if certain corporate events occur, holders of the Convertible Notes
may require us to repurchase for cash all or part of their Convertible Notes at
a repurchase price equal to 100.0% of the principal amount of the Convertible
Notes to be repurchased, plus accrued and unpaid interest through, but
excluding, the repurchase date.

The 2018A Indenture contains certain covenants, including covenants requiring us
to provide certain financial information to the holders of the Convertible Notes
and the trustee if we cease to be subject to the reporting requirements of the
Securities Exchange Act of 1934, as amended (the "Exchange Act"). The 2018A
Indenture also includes additional financial covenants related to our asset
coverage ratio. These covenants are subject to limitations and exceptions that
are described in the 2018A Indenture.


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The following table summarizes certain key terms related to the convertible
features of our Convertible Notes as of June 30, 2022:


                                                 Convertible Notes
Initial conversion premium                                  10.0  %
Initial conversion rate(1)                               65.8762
Initial conversion price                        $          15.18
Conversion premium at June 30, 2022                         10.0  %
Conversion rate at June 30, 2022(1)(2)                   65.8762

Conversion price at June 30, 2022(2)(3) $ 15.18
Last conversion price calculation date

              August 20, 2021




(1)Conversion rates denominated in shares of common stock per $1.0 thousand
principal amount of our Convertible Notes converted.
(2)Represents conversion rate and conversion price, as applicable, taking into
account certain de minimis adjustments that will be made on the conversion date.
(3)The conversion price in effect at June 30, 2022 was calculated on the last
anniversary of the issuance and will be calculated again on the next
anniversary, unless the exercise price shall have changed by more than 1.0%
before the anniversary.

The conversion rate will be subject to adjustment upon certain events, such as
stock splits and combinations, mergers, spin-offs, increases in dividends in
excess of $0.34 per share per quarter and certain changes in control. Certain of
these adjustments, including adjustments for increases in dividends, are subject
to a conversion price floor of $13.80 per share. In no event will the total
number of shares of common stock issuable upon conversion exceed 72.4637 per $1
principal amount. We have determined that the embedded conversion option in the
Convertible Notes is not required to be separately accounted for as a derivative
under GAAP.

The Convertible Notes are unsecured obligations and rank senior in right of
payment to our existing and future indebtedness, if any, that is expressly
subordinated in right of payment to the Convertible Notes; equal in right of
payment to our existing and future unsecured indebtedness that is not so
subordinated; effectively junior in right of payment to any of our secured
indebtedness (including existing unsecured indebtedness that we later secure) to
the extent of the value of the assets securing such indebtedness; and
structurally junior to all existing and future indebtedness (including trade
payables) incurred by our subsidiaries and financing vehicles. As reflected in
Item 1. - Financial Statements - Note 11. Earnings Per Share, the issuance is
considered part of the if-converted method for calculation of diluted earnings
per share.

As of June 30, 2022 and December 31, 2021, the outstanding balance on the
Convertible Notes was $201.2 million and $201.2 million, respectively, and NMFC
was in compliance with the terms of the 2018A Indenture on such date.


See Item 1.-Financial Statements and Supplementary Data-Note 7. Borrowings in
this Quarterly Report on Form 10-Q for additional information on costs incurred
on the Convertible Notes for the three and six months ended June 30, 2022 and
June 30, 2021.

Unsecured Notes

On May 6, 2016, we issued $50.0 million in aggregate principal amount of our
2016 Unsecured Notes (the "2016 Unsecured Notes"), pursuant to a note purchase
agreement, dated May 4, 2016, to an institutional investor in a private
placement. On September 30, 2016, we entered into an amended and restated note
purchase agreement (the "NPA") and issued an additional $40.0 million in
aggregate principal amount of 2016 Unsecured Notes to institutional investors in
a private placement. On February 16, 2021, we repaid all $90.0 million in
aggregate principal amount of the issued and outstanding 2016 Unsecured Notes.
On June 30, 2017, we issued $55.0 million in aggregate principal amount of
five-year unsecured notes that mature on July 15, 2022 (the "2017A Unsecured
Notes"), pursuant to the NPA and a supplement to the NPA. On January 30, 2018,
we issued $90.0 million in aggregate principal amount of five year unsecured
notes that mature on January 30, 2023 (the "2018A Unsecured Notes") pursuant to
the NPA and a second supplement to the NPA. On July 5, 2018, we issued $50.0
million in aggregate principal amount of five year unsecured notes that mature
on June 28, 2023 (the "2018B Unsecured Notes") pursuant to the NPA and a third
supplement to the NPA (the "Third Supplement"). On April 30, 2019, we issued
$116.5 million in aggregate principal amount of five year unsecured notes that
mature on April 30, 2024 (the "2019A Unsecured Notes") pursuant to the NPA and a
fourth supplement to the NPA (the "Fourth Supplement"). On January 29, 2021, we
issued $200.0 million in aggregate principal amount of five year unsecured notes
that mature on January 29, 2026 (the "2021A Unsecured Notes") pursuant to the
NPA and a fifth supplement to the NPA (the "Fifth Supplement"). On June 15,
2022, we issued $75.0 million in aggregate principal amount of five year
unsecured notes that mature on June 15, 2027 (the
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"2022A Unsecured Notes") pursuant to the NPA and a sixth supplement to the NPA
(the "Sixth Supplement"). The NPA provides for future issuances of unsecured
notes in separate series or tranches.

The 2016 Unsecured Notes bore interest at an annual rate of 5.313%, payable
semi-annually on May 15 and November 15 of each year. The 2017A Unsecured Notes
bear interest at an annual rate of 4.760%, payable semi-annually on January 15
and July 15 of each year. The 2018A Unsecured Notes bear interest at an annual
rate of 4.870%, payable semi-annually on February 15 and August 15 of each year.
The 2018B Unsecured Notes bear interest at an annual rate of 5.360%, payable
semi-annually on January 15 and July 15 of each year. The 2019A Unsecured Notes
bear interest at an annual rate of 5.494%, payable semi-annually on April 15 and
October 15 of each year. The 2021A Unsecured Notes bear interest at an annual
rate of 3.875%, payable semi-annually in arrears on January 29 and July 29 of
each year, which commenced on July 29, 2021. The 2022A Unsecured Notes bear
interest at an annual rate of 5.900%, payable semi-annually in arrears on June
15 and December 15 of each year. These interest rates are subject to increase in
the event that: (i) subject to certain exceptions, the underlying unsecured
notes or we cease to have an investment grade rating or (ii) the aggregate
amount of our unsecured debt falls below $150.0 million.  In each such event, we
have the option to offer to prepay the underlying unsecured notes at par, in
which case holders of the underlying unsecured notes who accept the offer would
not receive the increased interest rate. In addition, we are obligated to offer
to prepay the underlying unsecured notes at par if the Investment Adviser, or an
affiliate thereof, ceases to be our investment adviser or if certain change in
control events occur with respect to the Investment Adviser.

The NPA contains customary terms and conditions for unsecured notes issued,
including, without limitation, an option to offer to prepay all or a portion of
the unsecured notes under its governance at par (plus a make-whole amount if
applicable), affirmative and negative covenants such as information reporting,
maintenance of our status as a BDC under the 1940 Act and a RIC under the Code,
minimum stockholders' equity, minimum asset coverage ratio, and prohibitions on
certain fundamental changes at NMFC or any subsidiary guarantor, as well as
customary events of default with customary cure and notice, including, without
limitation, nonpayment, misrepresentation in a material respect, breach of
covenant, cross-default under other indebtedness of NMFC or certain significant
subsidiaries, certain judgments and orders, and certain events of bankruptcy.
The Third Supplement, Fourth Supplement, Fifth Supplement and Sixth Supplement
all include additional financial covenants related to asset coverage as well as
other terms.

On September 25, 2018, we closed a registered public offering of $50.0 million
in aggregate principal amount of our 5.75% Unsecured Notes that mature on
October 1, 2023 (the "5.75% Unsecured Notes", together with the 2016 Unsecured
Notes, 2017A Unsecured Notes, 2018A Unsecured Notes, 2018B Unsecured Notes,
2019A Unsecured Notes, 2021A Unsecured Notes and the 2022A Unsecured Notes, the
"Unsecured Notes"), pursuant to an indenture, dated August 20, 2018, as
supplemented by a second supplemental indenture thereto, dated September 25,
2018 (together, the "2018B Indenture"). On October 17, 2018, in connection with
the registered public offering, we issued an additional $1.8 million aggregate
principal amount of the 5.75% Unsecured Notes pursuant to the exercise of an
overallotment option by the underwriters of the 5.75% Unsecured Notes.

On March 8, 2021, we redeemed $51.8 million in aggregate principal amount of the
5.75% Unsecured Notes bear at a redemption price of 100% plus accrued and unpaid
interest.

The 5.75% Unsecured Notes bore interest at an annual rate of 5.75%, payable
quarterly on January 1, April 1, July 1 and October 1 of each year. The 5.75%
Unsecured Notes were listed on the New York Stock Exchange and traded under the
trading symbol "NMFX" until September 13, 2020. On September 14, 2020, the 5.75%
Unsecured Notes began trading on the NASDAQ Global Select Market (the "NASDAQ")
under the ticker symbol "NMFCL", until redeemed on March 8, 2021.

The Unsecured Notes are unsecured obligations and rank senior in right of
payment to our existing and future indebtedness, if any, that is expressly
subordinated in right of payment to the Unsecured Notes; equal in right of
payment to our existing and future unsecured indebtedness that is not so
subordinated; effectively junior in right of payment to any of our secured
indebtedness (including existing unsecured indebtedness that we later secure) to
the extent of the value of the assets securing such indebtedness; and
structurally junior to all existing and future indebtedness (including trade
payables) incurred by our subsidiaries and financing vehicles.

As of June 30, 2022 and December 31, 2021, the outstanding balance on the
Unsecured Notes was $586.5 million and $511.5 million, respectively, and we were
in compliance with the terms of the NPA as of such dates, as applicable.


See Item 1.-Financial Statements and Supplementary Data-Note 7. Borrowings in
this Quarterly Report on Form 10-Q for additional information on costs incurred
on the Unsecured Notes for the three and six months ended June 30, 2022 and
June 30, 2021.

SBA-guaranteed debentures-On August 1, 2014 and August 25, 2017, respectively,
SBIC I and SBIC II received SBIC licenses from the SBA to operate as SBICs.

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The SBIC license allows SBICs to obtain leverage by issuing SBA-guaranteed
debentures, subject to the issuance of a capital commitment by the SBA and other
customary procedures. SBA-guaranteed debentures are non-recourse to us, interest
only debentures with interest payable semi-annually and have a ten year
maturity. The principal amount of SBA-guaranteed debentures is not required to
be paid prior to maturity but may be prepaid at any time without penalty. The
interest rate of SBA-guaranteed debentures is fixed on a semi-annual basis at a
market-driven spread over U.S. Treasury Notes with ten year maturities. The SBA,
as a creditor, will have a superior claim to the assets of SBIC I and SBIC II
over our stockholders in the event SBIC I and SBIC II are liquidated or the SBA
exercises remedies upon an event of default.

The maximum amount of borrowings available under current SBA regulations for a
single licensee is $150.0 million as long as the licensee has at least $75.0
million in regulatory capital, receives a capital commitment from the SBA and
has been through an examination by the SBA subsequent to licensing. In June
2018, legislation amended the 1958 Act by increasing the individual leverage
limit from $150.0 million to $175.0 million, subject to SBA approvals.

As of June 30, 2022 and December 31, 2021, SBIC I had regulatory capital of
$75.0 million and $75.0 million, respectively, and SBA-guaranteed debentures
outstanding of $150.0 million and $150.0 million, respectively. As of June 30,
2022 and December 31, 2021, SBIC II had regulatory capital of $75.0 million and
$75.0 million, respectively, and $150.0 million and $150.0 million,
respectively, of SBA-guaranteed debentures outstanding. The SBA-guaranteed
debentures incur upfront fees of 3.435%, which consists of a 1.00% commitment
fee and a 2.435% issuance discount, which are amortized over the life of the
SBA-guaranteed debentures.

Prior to pooling, the SBA-guaranteed debentures bear interest at an interim
floating rate of LIBOR plus 0.30%. Once pooled, which occurs in March and
September each year, the SBA-guaranteed debentures bear interest at a fixed rate
that is set to the current 10-year treasury rate plus a spread at each pooling
date.

The SBIC program is designed to stimulate the flow of private investor capital
into eligible small businesses, as defined by the SBA. Under SBA regulations,
SBICs are subject to regulatory requirements, including making investments in
SBA-eligible small businesses, investing at least 25.0% of its investment
capital in eligible smaller enterprises (as defined under the 1958 Act), placing
certain limitations on the financing terms of investments, regulating the types
of financing, prohibiting investments in small businesses with certain
characteristics or in certain industries and requiring capitalization thresholds
that limit distributions to us. SBICs are subject to an annual periodic
examination by an SBA examiner to determine the SBIC's compliance with the
relevant SBA regulations and an annual financial audit of its financial
statements that are prepared on a basis of accounting other than GAAP (such as
ASC 820) by an independent auditor. As of June 30, 2022 and December 31, 2021,
SBIC I and SBIC II were in compliance with SBA regulatory requirements.

See Item 1.-Financial Statements and Supplementary Data-Note 7. Borrowings in
this Quarterly Report on Form 10-Q for additional information on our
SBA-guaranteed debentures as of June 30, 2022 and costs incurred on the
SBA-guaranteed debentures for the three and six months ended June 30, 2022 and
June 30, 2021.

Contractual Obligations

A summary of our significant contractual payment obligations as of June 30, 2022
is as follows:

Contractual Obligations Payments Due by Period

                                                                         Less than                                                       More than
(in millions)                                         Total               1 Year             1 - 3 Years           3 - 5 Years            5 Years
Holdings Credit Facility(1)                      $      615.5          $        -          $          -          $      615.5          $        -
Unsecured Notes(2)                                      586.5               195.0                 116.5                 275.0                   -
SBA-guaranteed debentures(3)                            300.0                   -                  37.5                  84.2               178.3
Convertible Notes(4)                                    201.2                   -                 201.2                     -                   -
DB Credit Facility(5)                                   189.3                   -                     -                 189.3                   -
NMFC Credit Facility(6)                                 120.9                   -                     -                 120.9                   -
NMNLC Credit Facility II(7)                               2.9                 2.9                     -                     -                   -
Total Contractual Obligations                    $    2,016.3          $    197.9          $      355.2          $    1,284.9          $    178.3




(1)Under the terms of the $730.0 million Holdings Credit Facility, all
outstanding borrowings under that facility ($615.5 million as of June 30, 2022)
must be repaid on or before April 20, 2026. As of June 30, 2022, there was
approximately $114.5 million of possible capacity remaining under the Holdings
Credit Facility.
(2)$55.0 million of the 2017A Unsecured Notes will mature on July 15, 2022
unless earlier repurchased, $90.0 million of the 2018A Unsecured Notes will
mature on January 30, 2023 unless earlier repurchased, $50.0 million of the
2018B Unsecured Notes will mature on June 28, 2023 unless earlier repurchased,
$116.5 million of the 2019A Unsecured
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Notes will mature on April 30, 2024 unless earlier repurchased, $200.0 million
of the 2021A Unsecured Notes will mature on January 29, 2026 unless earlier
repurchased and $75.0 million of the 2022A Unsecured Notes will mature on June
15, 2027 unless earlier repurchased.
(3)Our SBA-guaranteed debentures will begin to mature on March 1, 2025.
(4)The Convertible Notes will mature on August 15, 2023 unless earlier converted
or repurchased at the holder's option or redeemed by us.
(5)Under the terms of the $280.0 million DB Credit Facility, all outstanding
borrowings under that facility ($189.3 million as of June 30, 2022) must be
repaid on or before March 25, 2026. As of June 30, 2022, there was
approximately $90.7 million of possible capacity remaining under the DB Credit
Facility.
(6)Under the terms of the $198.5 million NMFC Credit Facility, all outstanding
borrowings under that facility ($120.9 million, which included £18.8 million
denominated in GBP that has been converted to U.S. dollars as of June 30, 2022)
must be repaid on or before June 4, 2026. As of June 30, 2022, there was
approximately $77.6 million of available capacity remaining under the NMFC
Credit Facility.
(7)Under the terms of the NMNLC Credit Facility II, all outstanding borrowings
under that facility ($2.9 million as of June 30, 2022) must be repaid on or
before February 25, 2023. As of June 30, 2022, there was approximately $7.1
million of available capacity remaining under the NMNLC Credit Facility II.

We have entered into an investment management and advisory agreement (the
"Investment Management Agreement") with the Investment Adviser in accordance
with the 1940 Act. Under the Investment Management Agreement, the Investment
Adviser has agreed to provide us with investment advisory and management
services. We have agreed to pay for these services (1) a management fee and
(2) an incentive fee based on our performance.

We have also entered into the administration agreement, as amended and restated
(the "Administration Agreement") with the Administrator. Under the
Administration Agreement, the Administrator has agreed to arrange office space
for us and provide office equipment and clerical, bookkeeping and record keeping
services and other administrative services necessary to conduct our respective
day-to-day operations. The Administrator has also agreed to maintain, or oversee
the maintenance of, our financial records, our reports to stockholders and
reports filed with the SEC.

If any of the contractual obligations discussed above are terminated, our costs
under any new agreements that are entered into may increase. In addition, we
would likely incur significant time and expense in locating alternative parties
to provide the services we expect to receive under the Investment Management
Agreement and the Administration Agreement.
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Distributions and Dividends

Distributions declared and paid to stockholders for the six months ended
June 30, 2022 totaled approximately $59.8 million.


The following table reflects cash distributions, including dividends and returns
of capital, if any, per share that have been declared by our board of directors
for the two most recent fiscal years and the current fiscal year to date:

                                                                                                                                              Per Share
Fiscal Year Ended                             Date Declared                     Record Date                      Payment Date                 Amount (1)
December 31, 2022
Second Quarter                                 May 3, 2022                     June 16, 2022                     June 30, 2022              $      0.30
First Quarter                               February 23, 2022                 March 17, 2022                    March 31, 2022                     0.30
                                                                                                                                            $      0.60
December 31, 2021
Fourth Quarter                              October 27, 2021                 December 16, 2021                 December 30, 2021            $      0.30
Third Quarter                                 July 29, 2021                 September 16, 2021                September 30, 2021                   0.30
Second Quarter                               April 30, 2021                    June 16, 2021                     June 30, 2021                     0.30
First Quarter                               February 17, 2021                 March 17, 2021                    March 31, 2021                     0.30
                                                                                                                                            $      1.20
December 31, 2020
Fourth Quarter                              October 28, 2020                 December 16, 2020                 December 30, 2020            $      0.30
Third Quarter                                 July 29, 2020                 September 16, 2020                September 30, 2020                   0.30
Second Quarter                               April 29, 2020                    June 16, 2020                     June 30, 2020                     0.30
First Quarter                               February 19, 2020                 March 13, 2020                    March 27, 2020                     0.34
                                                                                                                                            $      1.24




(1)Tax characteristics of all distributions paid are reported to stockholders on
Form 1099 after the end of the calendar year. For the years ended December 31,
2021 and December 31, 2020, total distributions were $116.5 million and $120.1
million, respectively, of which the distributions were comprised of
approximately 90.99% and 84.58%, respectively, of ordinary income, 0.00% and
0.00%, respectively, of long-term capital gains and approximately 9.01% and
15.42%, respectively, of a return of capital. Future quarterly distributions, if
any, will be determined by our board of directors.

We intend to pay quarterly distributions to our stockholders in amounts
sufficient to maintain our status as a RIC. We intend to distribute
approximately all of our net investment income on a quarterly basis and
substantially all of our taxable income on an annual basis, except that we may
retain certain net capital gains for reinvestment.


We maintain an "opt out" dividend reinvestment plan on behalf of our common
stockholders, pursuant to which each of our stockholders' cash distributions
will be automatically reinvested in additional shares of common stock, unless
the stockholder elects to receive cash. See Item 1- Financial Statements-Note 2.
Summary of Significant Accounting Policies for additional details regarding our
dividend reinvestment plan.
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Related Parties

We have entered into a number of business relationships with affiliated or
related parties, including the following:


•We have entered into the Investment Management Agreement with the Investment
Adviser, a wholly-owned subsidiary of New Mountain Capital. Therefore, New
Mountain Capital is entitled to any profits earned by the Investment Adviser,
which includes any fees payable to the Investment Adviser under the terms of the
Investment Management Agreement, less expenses incurred by the Investment
Adviser in performing its services under the Investment Management Agreement.

•We have entered into a fee waiver agreement (the "Fee Waiver Agreement") with
the Investment Adviser, pursuant to which the Investment Adviser agreed to
voluntarily reduce the base management fees payable to the Investment Adviser by
us under the Investment Management Agreement beginning with the quarter ended
March 31, 2021 through the quarter ending December 31, 2023. See Item 1-
Financial Statements-Note 5. Agreements for details.

•We have entered into the Administration Agreement with the Administrator, a
wholly-owned subsidiary of New Mountain Capital. The Administrator arranges our
office space and provides office equipment and administrative services necessary
to conduct our respective day-to-day operations pursuant to the Administration
Agreement. We reimburse the Administrator for the allocable portion of overhead
and other expenses incurred by it in performing its obligations to us under the
Administration Agreement, which includes the fees and expenses associated with
performing administrative, finance, and compliance functions, and the
compensation of our chief financial officer and chief compliance officer and
their respective staffs. Pursuant to the Administration Agreement and further
restricted by us, the Administrator may, in its own discretion, submit to us for
reimbursement some or all of the expenses that the Administrator has incurred on
our behalf during any quarterly period. As a result, the amount of expenses for
which we will have to reimburse the Administrator may fluctuate in future
quarterly periods and there can be no assurance given as to when, or if, the
Administrator may determine to limit the expenses that the Administrator submits
to us for reimbursement in the future. However, it is expected that the
Administrator will continue to support part of our expense burden in the near
future and may decide to not calculate and charge through certain overhead
related amounts as well as continue to cover some of the indirect costs. The
Administrator cannot recoup any expenses that the Administrator has previously
waived. For the three and six months ended June 30, 2022 approximately $0.6
million and $1.4 million, respectively, of indirect administrative expenses were
included in administrative expenses, of which approximately $0 and $0.2 million,
respectively, were waived by the Administrator. As of June 30, 2022,
approximately $0.6 million of indirect administrative expenses were included in
payable to affiliates. For the three and six months ended June 30, 2022, the
reimbursement to the Administrator represented approximately 0.02% and 0.03%,
respectively, of our gross assets.

•We, the Investment Adviser and the Administrator have entered into a
royalty-free Trademark License Agreement, as amended, with New Mountain Capital,
pursuant to which New Mountain Capital has agreed to grant us, the Investment
Adviser and the Administrator a non-exclusive, royalty-free license to use the
name "New Mountain" and "New Mountain Finance", as well as the NMF logo.

In addition, we have adopted a formal code of ethics that governs the conduct of
our officers and directors, which is available on our website at
http://www.newmountainfinance.com. These officers and directors also remain
subject to the duties imposed by the 1940 Act and the Delaware General
Corporation Law.


The Investment Adviser and its affiliates may also manage other funds in the
future that may have investment mandates that are similar, in whole or in part,
to our investment mandates. The Investment Adviser and its affiliates may
determine that an investment is appropriate for us and for one or more of those
other funds. In such event, depending on the availability of such investment and
other appropriate factors, the Investment Adviser or its affiliates may
determine that we should invest side-by-side with one or more other funds. Any
such investments will be made only to the extent permitted by applicable law and
interpretive positions of the SEC and its staff, and consistent with the
Investment Adviser's allocation procedures. On October 8, 2019, the SEC issued
an exemptive order (the "Exemptive Order"), which superseded a prior order
issued on December 18, 2017, which permits us to co-invest in portfolio
companies with certain funds or entities managed by the Investment Adviser or
its affiliates in certain negotiated transactions where co-investing would
otherwise be prohibited under the 1940 Act, subject to the conditions of the
Exemptive Order. Pursuant to the Exemptive Order, we are permitted to co-invest
with our affiliates if a "required majority" (as defined in Section 57(o) of the
1940 Act) of our independent directors make certain conclusions in connection
with a co-investment transaction, including, but not limited to, that (1) the
terms of the potential co-investment transaction, including the consideration to
be paid, are reasonable and fair to us and our stockholders and do not involve
overreaching in respect of us or our stockholders on the part of any person
concerned, and (2) the potential
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co-investment transaction is consistent with the interests of our stockholders
and is consistent with our then-current investment objective and strategies.


On March 30, 2020, an affiliate of the Investment Adviser purchased directly
from NMNLC 105,030 shares of NMNLC's common stock at a price of $107.73 per
share, which represented the net asset value per share of NMNLC at the date of
purchase, for an aggregate purchase price of approximately $11.3 million.
Immediately thereafter, NMNLC redeemed 105,030 shares of its common stock held
by NMFC in exchange for a promissory note with a principal amount of $11.3
million and a 7.0% interest rate, which was repaid by NMNLC to NMFC on March 31,
2020.

On March 30, 2020, we entered into the Unsecured Management Company Revolver
with NMF Investments III, L.L.C., an affiliate of the Investment Adviser, with a
$30.0 million maximum amount of revolver borrowings available and a maturity
date of December 31, 2022. On May 4, 2020, we entered into an Amended and
Restated Uncommitted Revolving Loan Agreement with NMF Investments III, L.L.C.,
which increased the maximum amounts of revolving borrowings available thereunder
from $30.0 million to $50.0 million. On December 17, 2021, we entered into
Amendment No. 1 to the Amended and Restated Uncommitted Revolving Loan Agreement
with NMF Investments III, L.L.C., which lowered the interest rate and extended
the maturity date from December 31, 2022 to December 31, 2024. Refer
to Borrowings for discussion of the Unsecured Management Company Revolver.
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