Goldman Sachs BDC(US:GSBD)2026-02-26 22:30Investment Overview - The company has originated approximately $9.88 billion in aggregate principal amount of debt and equity investments from its formation in 2012 through December 31, 2025[403]. - As of December 31, 2025, the total investments amounted to $3,395.17 million, with a fair value of $3,261.72 million, compared to $3,673.58 million and $3,475.26 million as of December 31, 2024[419]. - The portfolio includes $3,088.32 million in first lien/senior secured debt, $138.15 million in first lien/last-out unitranche, and $50.61 million in second lien/senior secured debt as of December 31, 2025[419]. - The company focuses on lending to middle-market companies, defined as those with annual EBITDA between $5 million and $200 million[406]. - The company’s investment strategy involves leading negotiations and structuring loans, typically with maturities ranging from three to ten years and investment sizes from $10 million to $75 million or more[407]. Financial Performance - The company generates revenues primarily through interest income from investments, with additional income from various fees, including commitment and origination fees[412]. - As of December 31, 2025, the total portfolio weighted average yield at amortized cost was 9.3%, down from 10.1% in 2024, and at fair value it was 10.5%, down from 13.2% in 2024[421]. - The weighted average yield on debt and income-producing investments at amortized cost was 9.9% as of December 31, 2025, down from 11.2% in 2024[422]. - The median EBITDA of portfolio companies increased to $71.75 million in 2025 from $66.14 million in 2024[422]. - Total investment income decreased from $434.37 million in 2024 to $365.57 million in 2025, a decline of approximately 15.9%[435]. - Net investment income after taxes fell from $252.55 million in 2024 to $181.57 million in 2025, representing a decrease of about 28.1%[438]. - The net increase in net assets from operations was $119.27 million in 2025, compared to $62.87 million in 2024, indicating a significant improvement[435]. Investment Quality - As of December 31, 2025, 97.2% of total investments were performing, compared to 95.5% in 2024[431]. - The fair value of investments graded as Grade 2 decreased to $2,991.99 million (91.7% of total) in 2025 from $3,238.74 million (93.2% of total) in 2024[428]. - The increase in Grade 3 investments was primarily due to $98.72 million being downgraded from Grade 2 due to financial underperformance[430]. - The weighted average interest coverage improved to 2.0x in 2025 from 1.8x in 2024[422]. Leverage and Debt Management - The company’s leverage strategy includes a senior secured revolving credit agreement and various notes, allowing it to borrow money to increase yield, subject to an asset coverage ratio of at least 150%[417]. - The asset coverage ratio was 175%, down from 181% in 2024, indicating a slight decrease in financial leverage[447]. - The company has $505.00 million borrowed under the Revolving Credit Facility to fully repay the 2026 Notes on January 15, 2026[480]. - The 2025 Notes, amounting to $360.00 million, were fully repaid on February 10, 2025, using proceeds from the Revolving Credit Facility[464]. - The company issued $400.00 million of 6.375% unsecured notes due 2027, with interest payable semi-annually starting September 11, 2024[467]. Risk Management - The company may originate "covenant-lite" loans, which have fewer financial maintenance covenants, potentially increasing risk in case of borrower default[405]. - The company expects net investment income to be affected by the difference between the rates at which it invests and borrows, indicating sensitivity to interest rate changes[486]. - Interest rate sensitivity analysis shows that a 300 basis point increase in interest rates could result in a net income increase of $41.49 million, while a 300 basis point decrease could lead to a net income decrease of $34.60 million[489]. - The company regularly measures its exposure to interest rate risk and manages it by comparing interest rate sensitive assets to liabilities[488]. - The company has entered into interest rate swaps to mitigate the impact of changes in market interest rates on its net asset value[487]. Shareholder Value - The company declared a quarterly base distribution of $0.32 per share, payable on or about April 28, 2026[483]. - The company has a stock repurchase program authorized for up to $75.00 million, aimed at repurchasing shares when trading below the NAV per share[454]. - The dividend reinvestment plan allows automatic reinvestment of cash distributions unless stockholders opt out, enhancing shareholder value[456]. Operational Changes - The Board of Directors reduced its size from seven to six directors effective February 25, 2026, due to a vacancy from a former director's retirement[484]. - The company plans to utilize existing and future funds primarily for investments in portfolio companies and general corporate purposes[448].