Goldman Sachs BDC(US:GSBD)2024-08-08 20:53Investment Overview - The company has originated approximately $8.13 billion in aggregate principal amount of debt and equity investments from its formation in 2012 through June 30, 2024[151]. - As of June 30, 2024, the total investments amounted to $3,770.78 million, with a fair value of $3,518.74 million[160]. - The portfolio includes $3,423.49 million in first lien/senior secured debt, with a fair value of $3,245.85 million[160]. - The company focuses on lending to middle-market companies, defined as those with annual EBITDA between $5 million and $200 million[151]. - The company expects to qualify annually for tax treatment as a regulated investment company (RIC) under the Internal Revenue Code[151]. Financial Performance - Total investment income for the three months ended June 30, 2024, was $108.62 million, a decrease from $112.08 million for the same period in 2023[171]. - Net investment income after taxes for the three months ended June 30, 2024, was $66.96 million, compared to $64.50 million for the same period in 2023[172]. - Net realized and unrealized gains (losses) for the three months ended June 30, 2024, were $(121.39) million, a significant decline from $1.33 million for the same period in 2023[171]. - Interest income from investments decreased to $95.19 million for the three months ended June 30, 2024, down from $102.48 million for the same period in 2023[174]. - Payment-in-kind (PIK) income increased to $11.86 million for the three months ended June 30, 2024, compared to $8.79 million for the same period in 2023[174]. - The company reported a net increase (decrease) in net assets from operations of $(54.21) million for the three months ended June 30, 2024, compared to an increase of $65.66 million for the same period in 2023[171]. - The company experienced a net unrealized depreciation on investments of $(89.51) million for the three months ended June 30, 2024, compared to an appreciation of $6.35 million for the same period in 2023[171]. Investment Quality and Risk - Non-accrual investments rose to $284.73 million, accounting for 7.6% of total investments as of June 30, 2024, compared to 3.8% as of December 31, 2023[168]. - The median EBITDA for portfolio companies increased to $63.11 million as of June 30, 2024, from $53.98 million as of December 31, 2023[163]. - The percentage of performing debt bearing a floating rate was 99.5% as of June 30, 2024, compared to 99.9% as of December 31, 2023[163]. - The company may invest in covenant-lite loans, which have fewer financial maintenance covenants, potentially increasing risk in case of borrower default[151]. - The weighted average leverage (net debt/EBITDA) remained stable at 6.1x as of June 30, 2024[163]. Expenses and Fees - The management fee and incentive fee are the primary operating expenses, compensating the investment adviser for investment management[157]. - Total net expenses for the three months ended June 30, 2024, were $40.42 million, down from $46.70 million for the same period in 2023[171]. - Incentive fees decreased to $0 million and $10.88 million for the three and six months ended June 30, 2024, down from $7.84 million and $30.14 million for the same periods in 2023, driven by the performance of the investment portfolio[175]. Debt and Leverage - The company utilizes leverage through a revolving credit facility and various notes, aiming for an asset coverage ratio of at least 150% after borrowing[159]. - As of June 30, 2024, the asset coverage ratio based on the aggregate amount outstanding of senior securities was 181%, compared to 187% as of December 31, 2023[181]. - The company has a Revolving Credit Facility with a committed borrowing amount of $1,695.00 million, which can be increased to $2,542.50 million under certain conditions[188]. - The company issued $360.00 million of 3.75% unsecured notes due 2025, with interest payable semi-annually[191]. - The company issued $500.00 million of 2.875% unsecured notes due 2026, with interest payable semi-annually[192]. - The company issued $400.00 million of 6.375% unsecured notes due 2027, with interest payable semi-annually starting September 11, 2024[193]. Market and Interest Rate Sensitivity - A 300 basis point increase in interest rates would result in an increase of $81.08 million in interest income and a net income of $61.73 million[200]. - A 200 basis point increase would yield $54.05 million in interest income and a net income of $41.15 million[200]. - A 100 basis point increase would generate $27.03 million in interest income and a net income of $20.58 million[200]. - A 25 basis point decrease in interest rates would lead to a decrease of $6.76 million in interest income and a net income loss of $5.15 million[200]. - The company regularly measures its exposure to interest rate risk and manages it by comparing interest rate sensitive assets to liabilities[199]. - Interest rate sensitivity is a key factor in the company's earnings, influenced by the difference between investment and borrowing rates[199]. - The company acknowledges that significant changes in market interest rates could materially affect net investment income[199]. Shareholder Returns - The company declared a quarterly distribution of $0.45 per share on August 8, 2024, payable on October 28, 2024[198]. - The company has a voluntary dividend reinvestment plan (DRIP) for automatic reinvestment of cash distributions, with certain stockholders opting out[185]. - The company had a stock repurchase plan authorized for up to $75.00 million, which was temporarily suspended during the March Offering and expired on August 17, 2023[184]. Future Outlook - The company expects to generate cash from future offerings of securities, borrowings, and cash flows from operations to fund investments and operating expenses[180]. - The company may enter into credit facilities secured by certain assets, with terms depending on market conditions and business performance[181]. - Future hedging against interest rate fluctuations may involve using futures, options, and forward contracts[200].