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Goldman Sachs BDC (NYSE: GSBD) reported a decline in first-quarter net asset value (NAV) and lower net investment income, as unrealized losses increased and credit issues remained concentrated in older investments originated before the business development company’s integration into Goldman Sachs’ broader direct lending platform.
On the company’s first-quarter 2026 earnings call, Co-CEO Vivek Bantwal said GSBD is continuing a deliberate transition away from legacy positions and into loans sourced through the broader Goldman Sachs private credit platform. He said about 58% of the portfolio now consists of more recent originations, while 42% remains in older positions.
Bantwal said the more recent originations are performing in line with expectations, with low losses and only one name representing less than 0.5% of total non-accruals at cost. By contrast, he said legacy investments accounted for roughly 72% of losses in the quarter and more than 99.5% of non-accruals at cost.
Co-CEO David Miller said the NAV decline was driven primarily by an increase in unrealized losses, while first-quarter net investment income was also affected by a higher incentive fee accrual under GSBD’s fee structure, which includes a three-year total return look-back.
Miller said first-quarter net investment income was $0.22 per share, while NAV was $12.17 per share at quarter end, down about 3.7% from the fourth quarter.
The board declared a second-quarter 2026 base dividend of $0.32 per share, payable to shareholders of record as of June 30, 2026. Chief Financial Officer Stanley Matuszewski said net investment income for the quarter was below the quarterly dividend, but the company used a portion of undistributed taxable net income to support the dividend.
As of March 31, 2026, GSBD had approximately $94 million of undistributed taxable net income, or $0.84 per share, which Matuszewski described as a “meaningful cushion to support our dividend going forward.”
GSBD ended the quarter with non-accruals of approximately 4.7% of the portfolio at amortized cost, up from 2.8% in the prior quarter. President and Chief Operating Officer Tucker Greene said the increase was primarily tied to two legacy investments—One GI LLC and 3SI Security Systems Inc.—both placed on non-accrual status due to financial underperformance.
Greene said GSBD views the two credits as idiosyncratic situations rather than evidence of broader portfolio stress, adding that internal workout teams are engaged with the borrowers to maximize recovery.
During the question-and-answer portion of the call, Miller said about 60% of the quarter’s credit marks were related to credit-specific events, including the two new non-accruals and other legacy assets that were marked down. He said one credit operates in the PPM space, which has been challenged over the past several years, while 3SI had made acquisitions that did not perform as expected, leaving leverage elevated.
Greene added that GSBD does not view the legacy portfolio as “a category that is migrating wholesale toward non-accrual.” He said that after quarter end, the company restructured one legacy position, resulting in higher cash pay and improved seniority, and received full repayment at par on another legacy holding.
At quarter end, GSBD held total investments of $3.23 billion at fair value across 173 portfolio companies in 40 industries.
During the quarter, GSBD made approximately $46.5 million of new commitments across 17 portfolio companies, including six new and 11 existing companies. Miller said 91.6% of originations were first-lien loans.
Repayments totaled $82.8 million in the first quarter, with more than 53% coming from pre-2022 vintage loans. The weighted average yield on total debt and income-producing investments at amortized cost was 9.9%, unchanged from the fourth quarter.
Greene said portfolio company fundamentals were mixed but broadly stable. He said weighted average net debt to EBITDA increased slightly to 6.0x from 5.9x, while weighted average interest coverage decreased to 1.9x from 2.0x, which Greene attributed to rounding.
Bantwal emphasized the distinction between market-driven valuation changes and actual credit impairment. He said widening credit spreads can reduce the mark-to-market value of existing loans even when borrower credit quality remains sound, while true impairment occurs when a borrower can no longer meet its obligations, creating permanent capital loss.
He said losses in GSBD’s post-integration portfolio are viewed primarily as mark-to-market in nature, while credit impairment is concentrated in the legacy portfolio.
Bantwal also described a cautious market environment shaped by geopolitical uncertainty, artificial intelligence disruption across software, and a softer-than-anticipated mergers and acquisitions backdrop. He said M&A activity improved in the second half of 2025, leading to more closings in the first quarter of 2026, but deal volumes were skewed toward a small number of large-cap transactions and sponsor activity remained below 10-year averages.
In response to an analyst question, Bantwal said deal activity is quieter than at the end of 2025, but the pullback from some non-traded BDCs has shifted terms more toward lenders, including wider spreads, somewhat lower leverage and improved documentation.
Matuszewski said GSBD ended the quarter with $3.2 billion of portfolio investments at fair value, $1.9 billion of outstanding debt and $1.4 billion of net assets. Net debt to equity was 1.37x, up from 1.27x at the end of 2025.
The company had approximately $974 million of borrowing capacity under its revolving credit facility as of March 31. Matuszewski said 62.5% of total principal debt outstanding was unsecured debt at quarter end.
During the quarter, GSBD borrowed $505 million under its revolving credit facility to repay its 2026 notes, and issued $400 million of three-year investment-grade unsecured notes with a 5.1% coupon. Matuszewski said the bond issuance was swapped from fixed to floating to match the company’s floating-rate investments and was 7.3 times oversubscribed at peak order book levels.
Greene said the board approved a new 10b5-1 stock repurchase program authorizing the company to repurchase up to $75 million of common stock, subject to limitations. The company expects to enter the program after its 2025 plan is fully utilized or expires.
Management said it expects to continue rotating out of legacy assets and reinvesting repayments into opportunities sourced through the Goldman Sachs platform. Miller said second-quarter repayments had already exceeded $100 million from a number of legacy names, though he said the timing of the full transition is difficult to predict.
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