DEBT

3 Months Ended

Mar. 31, 2023

Debt Disclosure [Abstract]

DEBT

6. DEBT

The following table summarizes the Company’s and its subsidiaries’ debt obligations:

					As of March 31, 2023			As of December 31, 2022
	Debt Origination Date	Maturity	Original Borrowing Amount		Carrying Value		Interest Rate	Carrying Value		Interest Rate
Credit Facility(1)	Revolving	3/31/2027	N/A		$	795,000	5.88%	$	700,000	5.37%
2024 Senior Notes(2)	10/8/2014	10/8/2024	$	250,000	248,872		4.21	248,693		4.21
2030 Senior Notes(3)	6/15/2020	6/15/2030	400,000		396,713		3.28	396,602		3.28
2052 Senior Notes(4)	1/21/2022	2/1/2052	500,000		483,904		3.77	483,802		3.77
2051 Subordinated Notes(5)	6/30/2021	6/30/2051	450,000		444,803		4.13	444,757		4.13
Total debt obligations					$	2,369,292		$	2,273,854

(1)The revolver commitments were $1.325 billion as of March 31, 2023. Ares Holdings is the borrower under the Credit Facility. The Credit Facility has a variable interest rate based on Secured Overnight Financing Rate (“SOFR”) or a base rate plus an applicable margin, which is subject to adjustment based on the achievement of certain environmental, social and governance-related targets, with an unused commitment fee paid quarterly, which is subject to change with the Company’s underlying credit agency rating. As of March 31, 2023, base rate loans bear interest calculated based on the base rate and the SOFR loans bear interest calculated based on SOFR plus 1.00%. The unused commitment fee is 0.10% per annum. There is a base rate and SOFR floor of zero.

(2)The 2024 Senior Notes were issued in October 2014 by Ares Finance Co. LLC, an indirect subsidiary of the Company, at 98.27% of the face amount with interest paid semi-annually. The Company may redeem the 2024 Senior Notes prior to maturity, subject to the terms of the indenture governing the 2024 Notes.

(3)The 2030 Senior Notes were issued in June 2020 by Ares Finance Co. II LLC, an indirect subsidiary of the Company, at 99.77% of the face amount with interest paid semi-annually. The Company may redeem the 2030 Senior Notes prior to maturity, subject to the terms of the indenture governing the 2030 Notes.

(4)The 2052 Senior Notes were issued in January 2022 by Ares Finance Co. IV LLC, an indirect subsidiary of the Company, at 97.78% of the face amount with interest paid semi-annually. The Company may redeem the 2052 Senior Notes prior to maturity, subject to the terms of the indenture governing the 2052 Notes.

(5)The 2051 Subordinated Notes were issued in June 2021 by Ares Finance Co. III LLC, an indirect subsidiary of the Company with interest paid semi-annually at a fixed rate of 4.125%. Beginning June 30, 2026, the interest rate will reset on every fifth year based on the five-year U.S. Treasury Rate plus 3.237%. The Company may redeem the 2051 Subordinated Notes prior to maturity or defer interest payments up to five consecutive years, subject to the terms of the indenture governing the 2051 Subordinated Notes.

As of March 31, 2023, the Company and its subsidiaries were in compliance with all covenants under the debt obligations.

The Company typically incurs and pays debt issuance costs when entering into a new debt obligation or when amending an existing debt agreement. Debt issuance costs related to the 2024, 2030 and 2052 Senior Notes (the “Senior Notes”) and 2051 Subordinated Notes are recorded as a reduction of the corresponding debt obligation, and debt issuance costs related to the Credit Facility are included within other assets within the Condensed Consolidated Statements of Financial Condition. All debt issuance costs are amortized over the remaining term of the related obligation into interest expense within the Condensed Consolidated Statements of Operations.

The following table presents the activity of the Company’s debt issuance costs:

	Credit Facility		Senior Notes		Subordinated Notes
Unamortized debt issuance costs as of December 31, 2022	$	5,510	$	8,393	$	5,243
Amortization of debt issuance costs	(324)		(198)		(46)
Unamortized debt issuance costs as of March 31, 2023	$	5,186	$	8,195	$	5,197

Loan Obligations of the Consolidated CLOs

Loan obligations of the Consolidated Funds that are CLOs (“Consolidated CLOs”) represent amounts due to holders of debt securities issued by the Consolidated CLOs. The Company measures the loan obligations of the Consolidated CLOs using the fair value of the financial assets of its Consolidated CLOs.

The following loan obligations were outstanding and classified as liabilities of the Consolidated CLOs:

	As of March 31, 2023				As of December 31, 2022
	Fair Value of Loan Obligations		Weighted  Average  Interest Rate	Weighted  Average  Remaining Maturity  (in years)	Fair Value of Loan Obligations		Weighted  Average  Interest Rate	Weighted Average Remaining Maturity  (in years)
Senior secured notes	$	10,293,114	5.46%	8.5	$	10,142,545	4.84%	8.8
Subordinated notes(1)	624,893		N/A	7.5	559,175		N/A	7.8
Total loan obligations of Consolidated CLOs	$	10,918,007			$	10,701,720

(1)The notes do not have contractual interest rates; instead, holders of the notes receive distributions from the excess cash flows generated by each Consolidated CLO.

Loan obligations of the Consolidated CLOs are collateralized by the assets held by the Consolidated CLOs, consisting of cash and cash equivalents, corporate loans, corporate bonds and other securities. The assets of one Consolidated CLO may not be used to satisfy the liabilities of another Consolidated CLO. Loan obligations of the Consolidated CLOs include floating rate notes, deferrable floating rate notes, revolving lines of credit and subordinated notes. Amounts borrowed under the notes are repaid based on available cash flows subject to priority of payments under each Consolidated CLO’s governing documents. Based on the terms of these facilities, the creditors of the facilities have no recourse to the Company.

Credit Facilities of the Consolidated Funds

Certain Consolidated Funds maintain credit facilities to fund investments between capital drawdowns. These facilities generally are collateralized by the unfunded capital commitments of the Consolidated Funds’ limited partners, bear an annual commitment fee based on unfunded commitments and contain various affirmative and negative covenants and reporting obligations, including restrictions on additional indebtedness, liens, margin stock, affiliate transactions, dividends and distributions, release of capital commitments and portfolio asset dispositions. The creditors of these facilities have no recourse to the Company and only have recourse to a subsidiary of the Company to the extent the debt is guaranteed by such subsidiary. As of March 31, 2023 and December 31, 2022, the Consolidated Funds were in compliance with all covenants under such credit facilities.

The Consolidated Funds had the following revolving bank credit facilities outstanding:

				As of March 31, 2023			As of December 31, 2022
Consolidated Funds’ Debt Facilities	Maturity Date	Total Capacity		Outstanding Loan(1)		Effective Rate	Outstanding Loan(1)		Effective Rate
Credit Facilities:
	10/13/2023	$	112,817	$	77,496	6.31%	$	77,496	5.89%
	7/1/2023	18,000		15,550		6.50	15,550		6.25
	7/23/2024	100,000		10,000		7.78	75,000		7.28
	9/24/2026	150,000		—		N/A	—		N/A
	9/12/2027	54,000		—		N/A	—		N/A
Total borrowings of Consolidated Funds				$	103,046		$	168,046

(1)The fair values of the borrowings approximate the carrying value as the interest rate on the borrowings is a floating rate.