Goldman Sachs BDC NYSE: GSBD reported second-quarter 2026 net investment income of $0.38 per share, up from the prior quarter, as higher investment income and the absence of an incentive fee supported results. The company also announced that Co-Chief Executive Officer David Miller will step down from the role effective Dec. 31, with Co-CEO Vivek Bantwal set to become sole CEO.
Miller, who has worked at Goldman Sachs for 22 years and has 34 years of private-credit industry experience, will remain co-CEO through year-end. He will then become an advisory director of Goldman Sachs and remain on the Private Credit Investment Committee. Justin Betzen has become co-president and co-chief operating officer alongside Tucker Greene, while Greg Watts and Steven Budig will become co-heads of Americas Direct Lending.
Second-Quarter Financial Results
GAAP net investment income totaled $42.2 million, while adjusted after-tax net investment income was $41.5 million. Those figures compared with $24.8 million and $24.7 million, respectively, in the first quarter. Total investment income rose to $83.7 million from $78.8 million in the preceding quarter.
Chief Financial Officer and Treasurer Stan Matuszewski said income benefited from the restoration of certain investments to accrual status and from repayment activity. He said approximately $5 million of income reflected items that would not necessarily recur, including accelerated original issue discount income and income associated with restored accrual investments.
The company did not earn an incentive fee during the quarter. Matuszewski said the outcome reflected GSBD’s three-year total-return lookback provision, which links advisory compensation to cumulative shareholder value, including gains and losses as well as income. The structure had resulted in an “outsized” incentive fee in the prior quarter, he said.
Net asset value was $12.06 per share at June 30, down modestly from $12.17 per share at the end of the first quarter. The company said a portion of unrealized appreciation during the quarter was broad-based, while the remaining portion was tied to investments that had previously undergone workouts or restructurings and continued to face performance pressure.
GSBD’s board declared a third-quarter base dividend of $0.32 per share for shareholders of record as of Sept. 30, 2026, as well as a $0.03 supplemental dividend for shareholders of record as of Aug. 31, 2026. The company said it had $100.3 million, or $0.89 per share, of undistributed taxable income at quarter-end. Matuszewski said management expects to maintain the $0.32 base dividend in the near term, while continuing to assess interest-rate trends, new-investment spreads and portfolio earnings.
Selective Deployment and Lower Leverage
Management described private-equity dealmaking and sponsored loan issuance as subdued during the second quarter. Bantwal said private-equity deal volume declined 38% quarter over quarter, while sponsored loan issuance fell 33%. However, he said reduced available capital in direct lending has led borrowers and sponsors to accept wider spreads, lower leverage and stronger documentation.
GSBD made approximately $12.9 million of new commitments across nine portfolio companies during the quarter, including two new borrowers, and funded about $114 million of previously unfunded commitments. Greene said the company’s new commitments were concentrated outside software, with more activity in healthcare, business services and industrials.
The weighted average spread on second-quarter originations was 511 basis points wider than originations made six months earlier, according to Greene. The weighted average loan-to-value ratio on new deals was 37.4%.
Repayments and sales generated $146 million in proceeds, exceeding new deployment and allowing GSBD to reduce leverage. Net debt-to-equity was 1.35x at quarter-end, though management said it had fallen below the company’s 1.25x target after quarter-end, primarily due to further repayment and sales activity. Miller said pro forma leverage was closer to 1.2x and that the lower level could support a mix of new investments and renewed stock repurchases.
The board previously authorized a 10b5-1 repurchase program for up to $75 million of common stock, subject to specified limitations including leverage. Matuszewski said the company’s lower leverage provides flexibility to resume repurchases under that program.
Portfolio and Credit Quality
At quarter-end, GSBD had $3.2 billion of investments at fair value. Senior secured loans accounted for 98.6% of the portfolio, with the remainder consisting of preferred and common equity and unsecured debt. The weighted average yield on debt and income-producing investments at amortized cost declined to 9.5%.
Weighted average net leverage across portfolio companies increased to 6.2x from 6x in the first quarter, while interest coverage improved to 2x from 1.9x. Greene said the portfolio spans 173 borrowers across 39 industries.
Non-accrual investments declined to 2.9% of fair value from 3.2% in the prior quarter. The number of companies on non-accrual fell to 10 from 11 after one borrower returned to accrual status. Greene said the non-accruals were idiosyncratic rather than evidence of a broader portfolio trend.
Miller highlighted recoveries at Thrasio, an Amazon e-commerce aggregator that emerged from bankruptcy in 2024. He said GSBD received full repayment on its senior loan and more than 75% repayment at par on a second-out position during the quarter, with full repayment expected in the second half of 2026.
He also discussed Senneca Holdings, a specialty industrial door manufacturer held since 2018. GSBD negotiated a two-and-a-half-year maturity extension with first-lien lenders and elevated Goldman Sachs’ subordinated notes in the capital structure, increasing seniority and cash-pay income. The company’s first-out term loan in Senneca returned to accrual status during the quarter.
Market Outlook
Management said M&A activity and deal flow picked up after quarter-end, which could provide more opportunities for new deployment in the second half of 2026. Bantwal said the company has recently been signing new transactions and expects increased origination activity as leverage returns to its target level.
On software lending, Bantwal said GSBD remains active in evaluating opportunities but has been selective amid uncertainty over how artificial intelligence could affect company valuations and terminal values. He said vertically focused software providers with high switching costs, strong customer relationships and proprietary data have generally performed well within the portfolio.
About Goldman Sachs BDC (NYSE:GSBD)
Goldman Sachs BDC, Inc NYSE: GSBD is an externally managed, closed-end, non-diversified management investment company organized as a business development company (BDC) under the U.S. Investment Company Act of 1940. The company's primary objective is to generate current income and capital appreciation through debt and equity investments in U.S. middle-market companies. It principally invests in senior secured loans, mezzanine debt, preferred equity and, to a lesser extent, common equity, focusing on sponsor-backed transactions and special-situation financings.
The fund is advised by affiliates of Goldman Sachs Asset Management's Private Credit Group, leveraging the firm's global research capabilities and risk management infrastructure.
This instant news alert was generated by narrative science technology and financial data from MarketBeat in order to provide readers with the fastest reporting and unbiased coverage. Please send any questions or comments about this story to contact@marketbeat.com.
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