AB 2020 Form 10-K

Price declines and illiquidity in the corporate debt markets may adversely affect the fair value of the Fund’s portfolio investments, reducing the Fund’s net asset value through increased net unrealized depreciation. As a BDC, the Fund is required to value investments at market value or, if no market value is ascertainable, at fair value as determined in good faith by the Board. As part of the valuation process, the Fund may take into account the following types of factors, if relevant, in determining the fair value of the Fund’s investments: • a comparison of the portfolio company’s securities to publicly traded securities; • the enterprise value of the portfolio company; • the nature and realizable value of any collateral; • the portfolio company’s ability to make payments and its earnings and discounted cash flow; • the markets in which the portfolio company does business; and • changes in the interest rate environment and the credit markets generally that may affect the price at which similar investments may be made in the future and other relevant factors. Significant developments stemming from the United Kingdom’s referendum on membership in the European Union could have a material adverse effect on the Fund. On June 23, 2016, the United Kingdom (the “U.K.”) held a referendum in which a majority of voters voted in favor of leaving the European Union (the “E.U.,” and, the U.K.’s departure from the E.U., “Brexit”), and, subsequently, on March 29, 2017, the U.K. government began the formal process of leaving the E.U. On October 17, 2019, the U.K. and the E.U. reached an agreement on the conditions for Brexit. The U.K.’s departure from the E.U. took place on Friday, January 31, 2020. Brexit has created political and economic uncertainty, particularly in the U.K. and the E.U., and this uncertainty may last for years. Negotiations have commenced to determine the future terms of the U.K.’s relationship with the E.U. Events that could occur in the future as a consequence of the U.K.’s withdrawal, including the possible breakup of the U.K., may continue to cause significant volatility in global financial markets, including in global currency and credit markets. This volatility could cause a slowdown in economic activity in the U.K., the E.U. or globally, which could adversely affect the Fund’s operating results and growth prospects. Any of these effects of Brexit, and others the Fund cannot anticipate, could have unpredictable consequences for credit markets and adversely affect the Fund’s business, results of operations and financial performance. Terrorist attacks, acts of war, natural disasters or outbreaks of epidemic, pandemic or contagious diseases may affect any market for the Fund’s common stock, impact the businesses in which it invests and harm its business, operating results and financial condition. Terrorist acts, acts of war, natural disasters or outbreaks of epidemic, pandemic or contagious diseases may disrupt the Fund’s operations, as well as the operations of the businesses in which it invests. Such acts have created, and continue to create, economic and political uncertainties and have contributed to global economic instability. Future terrorist activities, military or security operations, natural disasters or outbreaks of epidemic, pandemic or contagious diseases could further weaken the domestic/global economies and create additional uncertainties, which may negatively impact the businesses in which the Fund invests directly or indirectly and, in turn, could have a material adverse impact on its business, operating results and financial condition. Losses from terrorist attacks and natural disasters are generally uninsurable. In particular, outbreaks of epidemic, pandemic or contagious diseases may cause serious harm to the Fund’s business, operating results and financial condition. Historically, disease pandemics such as the Ebola virus, Middle East Respiratory Syndrome, Severe Acute Respiratory Syndrome or the H1N1 virus, have diverted resources and priorities towards the treatment of such diseases. In December 2019, COVID-19, a strain of novel coronavirus causing respiratory illness, emerged in the city of Wuhan in the Hubei province of China (“COVID-19”). Thereafter, the global spread of COVID-19 resulted in temporary closures of corporate offices, retail outlets and other facilities around the world, which disrupted demand for the products and services of a select number of the Fund’s portfolio companies. Approximately 10% of the Fund’s commitments are in sectors affected by COVID-19 and the related social distancing measures and impacts on demand. Social distancing measures have eased since the onset of COVID-19, and demand drivers for affected portfolio companies have generally normalized. Recently, infection and hospitalization rates have begun to decline; however, a return to more stringent social distancing measures remains a risk with the continued spread of COVID-19 variants. The impact of COVID-19 on drivers of global supply and demand remains dynamic. Any prolonged disruptions may lead to a negative impact on the operating results of the Fund’s affected portfolio companies. Ultimately, these potential impacts could adversely affect the Fund’s financial condition. 45