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    GSBD
    Earnings call· Jun 2026(Q2 FY26)

    Goldman Sachs BDC Q2 FY26 earnings call GSBD

    Aug 7, 2026 Source

    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

    5

    • 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

    4

    • 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

    5
    CategoryTargetConfidence
    Base dividend
    $0.32 per share
    high materiality
    High
    Supplemental dividend
    $0.03 per share
    medium materiality
    High
    Net debt-to-equity ratio
    below 1.25x
    high materiality
    High
    Stock repurchase program
    reactivate
    high materiality
    High
    Base dividend maintenance
    maintain the current $0.32 base dividend in the near term
    high materiality
    High

    Operational metrics

    32
    Private credit AUM (Goldman Sachs platform)
    $150B
    current

    The broader Goldman Sachs platform manages over $150 billion in private credit.

    GAAP Net Income (after-tax net investment income)
    $42.2Mup from $24.8M QoQ
    Q2 FY26

    Material increase from prior quarter.

    Adjusted Net Income (after-tax net investment income)
    $41.5Mup from $24.7M QoQ
    Q2 FY26

    Material increase from prior quarter.

    GAAP Net Income (after-tax net investment income)
    $24.8M
    Q1 FY26

    Prior quarter GAAP Net Income.

    Adjusted Net Income (after-tax net investment income)
    $24.7M
    Q1 FY26

    Prior quarter Adjusted Net Income.

    Net Investment Income per share
    $0.38
    Q2 FY26

    Represents an annualized yield on book value of approximately 12.6%.

    Net Asset Value per share
    $12.06down from $12.17 QoQ
    Q2 FY26

    Down modestly just under 1% from Q1 FY26.

    Trailing 12-month total dividends
    $1.54
    LTM Q2 FY26

    Total dividends paid over the last 12 months.

    Annualized yield on quarterly base dividend
    14.1%
    Q2 FY26

    Based on yesterday's closing price of $9.09.

    Private equity deal volumes
    down 38%QoQ
    Q2 FY26

    Deal activity remained subdued.

    Sponsored loan issuance
    down 33%QoQ
    Q2 FY26

    Deal activity remained subdued.

    New commitments
    $12.9M
    Q2 FY26

    Across 9 portfolio companies, 2 of which are new borrowers.

    Previously unfunded commitments funded
    $114M
    Q2 FY26

    Funded during the quarter.

    Weighted average spread on originations
    511wider than 6 months ago
    Q2 FY26

    Wider than what was originated 6 months ago.

    Weighted average loan-to-value on new deals
    37.4%
    Q2 FY26

    Reflects conservative entry points.

    Total proceeds from repayment and sales
    $146M
    Q2 FY26

    Net repayments exceeded new deployments, used to reduce leverage.

    Net debt-to-equity ratio
    1.35x
    Q2 FY26

    At the upper end of the operating range.

    Pro forma net debt-to-equity ratio
    below 1.25x
    post Q2 FY26

    Primarily due to repayment and sales activity since quarter-end.

    Total investments at fair value
    $3.2B
    Q2 FY26

    Portfolio composition.

    Portfolio composition - senior secured loans
    98.6%
    Q2 FY26

    Residual asset mix in preferred and common stock, and unsecured debt.

    Weighted average yield of total debt and income-producing investments
    9.5%decreased QoQ
    Q2 FY26

    Decreased compared to Q1 FY26.

    Weighted average net leverage (portfolio companies)
    6.2xup from 6x QoQ
    Q2 FY26

    Rose slightly from 6x last quarter.

    Interest coverage (portfolio companies)
    2xup from 1.9x QoQ
    Q2 FY26

    Increased from 1.9x last quarter.

    Nonaccruals at fair value
    2.9%down from 3.2% QoQ
    Q2 FY26

    Compared to 3.2% in the prior quarter.

    Number of companies on nonaccrual
    10down from 11 QoQ
    Q2 FY26

    Decreased from 11 to 10 during the quarter.

    Undistributed taxable income
    $100.3M
    Q2 FY26

    Held at quarter end.

    Borrowing capacity remaining under revolving credit facility
    $796M
    Q2 FY26

    As of quarter end.

    Outstanding debt across entire financing package
    $1.9B
    Q2 FY26

    Approximately.

    Unsecured debt as percentage of total principal debt
    64%
    Q2 FY26

    Excludes netting of unamortized debt issuance costs and cumulative hedging adjustments.

    One-time income from accrual restoration and OID
    $5M
    Q2 FY26

    Not necessarily expected to recur.

    Stock repurchase program authorization
    $75M
    ongoing

    Approved and authorized by the Board.

    Incentive fee expense
    $0down from outsized last quarter
    Q2 FY26

    Due to the 3-year total return look back, no fee was earned in the current quarter.

    Industry KPIs

    3
    MetricValueDetails
    Net interest income$83.7MUSD
    Performance revenueno fee earned
    Deployment realizations—

    Deals & partnerships

    1
    Burgess Pigment CompanySenior 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

    5
    Subdued M&A environment and deal flowQ2 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 uncertaintyOngoing

    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 companiesCurrent

    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 feeQ1 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 contributionQ2 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

    5

    Origination activity and deployment pace

    H2 FY26
    CurrentSlower in Q2 FY26 due to subdued M&A and higher leverage.
    TargetIncreased 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.

    Q&A highlights

    5

    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 read6 chapters

    Detailed Narrative

    01

    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.

    02

    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.

    03

    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.

    04

    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.

    05

    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.

    06

    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.

    AI-generated summary of the company’s earnings call. Not investment advice.