While not avoiding software, is the bar higher now? Are there any positive signs or "green shoots" for activity in the software sector that might unlock future investment?

Management noted some public market transactions as useful data points for pricing software names. New private credit deal activity in software remains quiet due to bid-ask spreads on equity valuation (AI impact on terminal value). They see smaller add-ons and differentiation among software providers based on verticalization, switching costs, and proprietary data. “I think what we're seeing has kind of been consistent with that platform, which is for incumbent software providers that are verticalized in their industry, that own their customers with high switching costs, and own their data, so proprietary data angle. Those companies are actually performing quite well.”

Was there a catch-up amount of interest income booked in the quarter related to restoring nonaccruals to accrual status, and how much of it was one-time?

Yes, restoring Thrasio to accrual status and accelerated OID contributed to a pickup in income. Approximately $5 million of income was from one-time items not necessarily expected to recur, though future repayments could lead to similar activity. “We had around $5 million of income, I would say, from onetime items, like I said, the accelerated OID as well as a pickup from the restoration to accrual status that we wouldn't necessarily expect to recur.”

What is the specific leverage target, how aggressive will buybacks be, and why is this focus happening now given consistent legacy issues?

Post-quarter-end leverage is below 1.25x, probably closer to 1.2x. They anticipate reactivating buybacks, mixing them with new deployment opportunities. They believe they are past the worst of legacy asset markdowns and increased repayment activity in the BSL market supports reinvestment and buybacks. “With that level, we do anticipate reactivating some buyback. But we want to mix that between the stock buybacks and new opportunities that we see in the market and deployment. So it's going to be a mix between that.”

GSBD

Goldman Sachs BDC (GSBD) Q2 FY26 earnings call: guidance and Q&A

Earnings call· Jun 2026 (Q2 FY26)· Financials· Aug 7, 2026

Source: earnings call transcript

Executive summary

Goldman Sachs BDC, Inc. Q2 FY26 — Leverage Reduction and Selective Deployment

Goldman Sachs BDC, Inc. reported Q2 FY26 results marked by strong net investment income and significant progress in deleveraging its balance sheet, with the net debt-to-equity ratio falling below its target post-quarter-end. Despite a subdued M&A environment, the company capitalized on attractive spreads for new, selective deployments and demonstrated effective workout capabilities on challenged assets. The firm is positioned for reactivated stock repurchases and increased origination activity in the second half of the year.

Highlights

Net investment income (NII) increased to $0.38 per share, representing an annualized yield on book value of approximately 12.6%.
Nonaccruals decreased from 3.2% to 2.9% at fair value, with the number of companies on nonaccrual decreasing from 11 to 10.
Net debt-to-equity ratio reduced to 1.35x at quarter-end, and further to below 1.25x post-quarter-end, creating capacity for new deployment and stock repurchases.
Weighted average spread on Q2 originations was 511 basis points, wider than prior quarters, reflecting attractive economics.
Successful workout of Thrasio resulted in full paydown of senior loan and over 75% paydown of a second-out position at par, with full repayment expected in H2 2026.

Concerns

Net asset value (NAV) decreased modestly by just under 1% from $12.17 to $12.06 per share.
Deal activity remained subdued, with private equity deal volumes down 38% QoQ and sponsored loan issuance down 33% QoQ.
Approximately $5 million of Q2 NII was from non-recurring items (accelerated OID, accrual restoration), which is not expected to recur at the same level.
Weighted average net leverage rose slightly to 6.2x from 6x last quarter for the portfolio.

Guidance & targets

Category	Target	Timeline	Confidence
Base dividend	$0.32 per share high materiality	Q3 · FY26	High
Supplemental dividend	$0.03 per share medium materiality	Q2 · FY26	High
Net debt-to-equity ratio	below 1.25x high materiality	post quarter-end	High
Stock repurchase program	reactivate high materiality	going forward	High
Base dividend maintenance	maintain the current $0.32 base dividend in the near term high materiality	near term	High

Deals & partnerships

Burgess Pigment Company Senior secured first lien term loan $455M

A leading specialty minerals processor. GSBD participated alongside other vehicles in the Goldman Sachs private credit ecosystem.

Risks & headwinds

Subdued M&A environment and deal flow Q2 FY26, but pickup seen post-quarter-end.

Private equity deal volumes down 38% QoQ; sponsored loan issuance down 33% QoQ.

Mitigation:Capitalizing on wider spreads and stronger documentation for new deals; leveraging Goldman Sachs platform scale for differentiated deal flow; patient and disciplined deployment into highest conviction opportunities.

AI disruption concerns and geopolitical uncertainty Ongoing

Explicitly unquantified, but noted as adding complexity.

Mitigation:Monitoring how dynamics affect business models across the portfolio; lenders being compensated more for providing capital.

Stress in portfolio companies Current

Small number of companies carrying elevated leverage or facing sector-specific headwinds.

Mitigation:Dedicated workout and restructuring team embedded within the investment group; proactive engagement with sponsors and co-lenders to maximize recoveries (e.g., Thrasio, Senneca Holdings).

Variability in incentive fee Q1 FY26 (outsized), Q2 FY26 (no fee)

Incentive fee was "outsized last quarter, but no fee earned in the current quarter."

Mitigation:Shareholder-aligned incentive fee structure with a 3-year total return look back, tying compensation to cumulative economic value. Expected to be more muted in next couple of quarters.

Non-recurring income contribution Q2 FY26

Approximately $5 million of Q2 income from one-time items (accelerated OID, accrual restoration).

Mitigation:Acknowledged as not necessarily expected to recur, but potential for similar activity from future repayments.

What to watch in Q3 FY26

Origination activity and deployment pace

H2 FY26

Current Slower in Q2 FY26 due to subdued M&A and higher leverage.

Target Increased activity and deployment into attractive spread environment.

Why it matters

Indicates the company's ability to capitalize on improved market conditions and rotate capital into higher-quality assets.

Post quarter-end, we have also seen a pickup in M&A activity and deal flow, which positions us well to deploy into this attractive spread environment as we move through the second half of this year.

Find out whether GSBD delivers this. Inve re-checks your case every morning.

Q&A highlights

How will the pickup in M&A activity post-quarter-end translate into increased deployment for GSBD, especially considering the vehicle's turnover and legacy portfolio?

Management expects increased origination activity due to the M&A pickup and the company's reduced leverage. They anticipate adding newer originations that reflect the integrated platform, which will dilute legacy names over time.

“So we do expect that we'll have more to do on the origination side going forward. And then I think the third piece embedded in your question is really around kind of turnover of the legacy portfolio. And as we've talked about in the past, that will continue to kind of move along at its own pace. But now that our leverage is kind of where we want it to be and sort of deal volume is picking up, we'll still be able to kind of add some of the newer originations that reflect the new kind of integrated go-forward platform. And over time, that will continue to dilute the legacy names.”

asked by Arren Cyganovich (Truist Securities) · answered by Vivek Bantwal

2 min read 6 chapters

Detailed narrative

Executive Leadership Transition

Co-CEO David Miller will step down effective December 31, 2026, with Vivek Bantwal becoming sole CEO. Miller will transition to an Advisory Director role and remain on the Private Credit Investment Committee. Justin Betzen has been appointed Co-President and Co-COO, and Greg Watts and Steven Buddig will be elevated to Co-Heads of Americas Direct Lending, ensuring continuity and leveraging deep internal talent.

Market Environment and Deal Flow

The M&A environment remained subdued in Q2 FY26, with private equity deal volumes down 38% and sponsored loan issuance down 33% QoQ. However, post-quarter-end, the company observed a pickup in M&A activity and deal flow, positioning it well to deploy capital into an attractive spread environment in the second half of the year.

The contraction of available capital in direct lending has led to wider spreads, lower leverage, and stronger documentation for new deals.

Portfolio Positioning and Credit Selection

GSBD's deployment strategy in Q2 was intentionally selective, prioritizing balance sheet management and credit selection. The portfolio is diversified across 39 industries and 173 borrowers. New commitments were concentrated in healthcare, business services, and industrials, with the weighted average spread on originations at 511 basis points and loan-to-value at 37.4%, reflecting conservative entry points.

Credit Quality and Workout Capabilities

The majority of the portfolio continues to perform as anticipated, with nonaccruals decreasing to 2.9% at fair value. Stress is observed in a small number of companies with elevated leverage or sector-specific headwinds. The company leverages a dedicated workout and restructuring team, embedded within the broader investment group, to proactively manage complex situations and maximize recoveries, as demonstrated by the Thrasio and Senneca Holdings examples.

Goldman Sachs Private Credit Ecosystem Advantage

The Goldman Sachs platform manages over $150 billion in private credit, supported by 250+ investment professionals and 3,000+ investment bankers. This scale enables the platform to underwrite full commitments without syndication, as exemplified by the $455 million senior secured first lien term loan to Burgess Pigment Company, where GSBD participated alongside other vehicles, securing differentiated deal flow.

Capital Structure and Liquidity

GSBD maintains a strong liability structure with a revolving credit facility committed across 12 bank lenders and no mark-to-market provisions. As of quarter-end, $796 million of borrowing capacity remained, with approximately 64% of total debt outstanding being unsecured. The company's pro forma net debt-to-equity ratio is now below its 1.25x target, providing flexibility for new investments and stock repurchases.

Summary of the company's earnings call; see how call summaries are prepared. Not investment advice.