What Goldman Sachs BDC (GSBD) Said on Its Q3 Earnings Call

Key Points

• Third-quarter earnings declined: Net investment income fell to $35.3 million from $42.2 million, while earnings covered the $0.32-per-share base dividend. NAV dropped to $11.70 per share from $12.06.
• Credit stress increased: Investments on non-accrual rose to 4.2% of the portfolio at fair value, up from 2.9%, with 11 portfolio companies affected. The company attributed NAV losses mainly to challenges at a small number of older investments.
• GSBD reduced leverage and repurchased shares: Net debt-to-equity fell to 1.21 times from 1.35 times, and the company bought back about 1.5 million shares for $15 million, adding an estimated $0.03 per share to NAV.

Goldman Sachs BDC NYSE: GSBD reported lower third-quarter investment income as it reduced leverage and placed more loans on non-accrual, while earnings matched its base dividend of $0.32 per share.

The business development company’s net asset value fell to $11.70 per share at September 30, 2026, from $12.06 three months earlier. Co-Chief Executive Officer Vivek Bantwal attributed the decline primarily to realized and unrealized losses concentrated in a small number of older investments, which he said faced company-specific challenges.

Goldman Sachs BDC also lowered its net debt-to-equity ratio to 1.21 times from 1.35 times at the end of the second quarter, using proceeds from repayments and sales to pay down debt, fund investments and repurchase shares.

Investment Income and Dividend Coverage

GAAP after-tax net investment income declined to $35.3 million from $42.2 million in the second quarter. Total investment income fell to $75 million from $83.7 million, reflecting a smaller portfolio and income lost from investments placed on non-accrual.

Lower expenses partly offset the revenue decline. Interest and other debt expense fell to $29.1 million from $30.1 million, while management fees decreased to $7.7 million from $8.2 million. Chief Financial Officer Stan Matuszewski said no incentive fee was earned in the quarter based on the company’s trailing 12-quarter results.

The board declared a fourth-quarter base dividend of $0.32 per share for shareholders of record as of December 31. Bantwal said the board evaluates the dividend each quarter based on portfolio earnings power, interest rates and the company’s financial position.

Asked how the company might cover the dividend if incentive fees resume, Matuszewski said the fee was expected to remain “quite muted” in the fourth quarter. He also pointed to approximately $96.7 million, or $0.87 per share, of undistributed taxable income at quarter end as a potential bridge for any shortfall. The company would communicate any dividend policy changes when appropriate, he said.

Non-Accruals Increase

Investments on non-accrual rose to approximately 4.2% of the portfolio at fair value from 2.9% in the prior quarter. At amortized cost, the figure climbed to 7.3% from 5%.

Co-President and Co-Chief Operating Officer Tucker Greene said investments in two portfolio companies and additional tranches in two existing non-accrual names were placed on non-accrual during the quarter. One investment returned to accrual status after its performance improved. The number of portfolio companies with investments on non-accrual increased to 11 from 10.

Co-President and Co-Chief Operating Officer Justin Betzen said the company was working with sponsors and lender groups on the affected positions, but that resolving problems involving illiquid private companies takes time. Just under half of the total portfolio remains in investments originated before 2022, he said. Greene added that more than 64% of repayment activity this year came from older-vintage investments.

At quarter end, the portfolio totaled $2.9 billion at fair value across 168 companies in 41 industries. Senior secured debt accounted for 98.6% of investments at fair value. Greene said 89.5% of the portfolio was internally rated as generally performing as expected.

Repayments Fund New Investments and Buybacks

The company made approximately $41 million in new investment commitments across 14 portfolio companies during the quarter, including seven new borrowers. Betzen said all new portfolio-company investments were first-lien loans, with a weighted average spread of approximately 550 basis points over SOFR, slightly wider than the loans repaid during the quarter.

Greene said a nearly $50 million recurring-revenue loan was repaid at par. Recurring-revenue loans have declined to approximately 7% of the portfolio at fair value from nearly 39% in the third quarter of 2022, largely through repayments at par or conversions to traditional cash-flow structures, he said.

Goldman Sachs BDC repurchased about 1.5 million shares for approximately $15 million under its $75 million repurchase authorization. Matuszewski said the buybacks added $0.03 per share to net asset value during the quarter.

Looking ahead, Greene said the company was comfortable with its leverage level and expected primarily to recycle proceeds from continued repayments into new investments. Betzen cautioned that future lending spreads would depend on capital-market conditions and competition for deals.

About Goldman Sachs BDC (NYSE:GSBD)

Goldman Sachs BDC, Inc NYSE: GSBD is a business development company that provides financing to privately owned, middle-market companies. The company seeks to generate income and long-term capital appreciation by investing primarily in debt securities and, to a lesser extent, equity interests.

GSBD's portfolio may include senior secured loans, first-lien and unitranche investments, second-lien loans, subordinated debt, and equity-related investments. Its financing supports companies across a range of industries and is generally used for acquisitions, recapitalizations, growth initiatives, refinancing, and other corporate purposes.

Goldman Sachs BDC is externally managed by an affiliate of Goldman Sachs Asset Management and benefits from the investment platform and resources of the Goldman Sachs organization.

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