Goldman Sachs BDC reported a reduction in its net asset value per share (NAV) for the first quarter, attributing the move to a rise in unrealized losses and mark-downs across its private credit portfolio, the fund said in a late Thursday filing. NAV stood at $12.17 at the end of March, about 3.7% lower than the prior quarter.
Investors have increasingly examined portfolios of private credit vehicles known as business development companies, in part because advances in artificial intelligence are creating uncertainty for firms in the software sector and prompting closer scrutiny of related credits. The fund’s management acknowledged that mark-downs and unrealized moves had increased in the quarter.
A Goldman Sachs spokesperson said: "While there have been some modest unrealized moves here, the investment team believes those are primarily a reflection of broader market spread widening, not a sign of credit deterioration." The spokesperson added: "The team believes the fundamental health of the private credit industry remains strong and is confident in our credit selection process."
On a portfolio metric, the fund disclosed that non-accruals - loans where borrowers have fallen well behind on interest payments - rose to 4.7% of its loan portfolio at amortized cost. That compares with a 2.8% non-accrual rate reported in the previous quarter. Management said that "legacy" loans underwritten before March 2022, when the current management team took charge, represented the vast majority of those non-accruals.
Portfolio mark-downs were largely driven by borrower-specific developments. Fund management told investors on a Friday earnings call that roughly 60% of mark-downs were attributable to individual borrower events, most notably two legacy loans to borrowers 1GI LLC and 3SI Security Systems.
Despite the valuation pullbacks, the fund continued to deploy capital and collect payments. It committed approximately $46.5 million across 17 companies during the quarter, including six first-time borrowers. Loan repayments during the first quarter totaled $82.8 million, with more than half of those repayments coming from loans originated before 2022. Management said the fund had already received $100 million in repayments in the second quarter.
On shareholder returns, the fund declared a dividend of $0.32 per share and, earlier in the week, announced a new $75 million stock buyback program.
Clear summary
Goldman Sachs BDC’s NAV fell to $12.17 at quarter-end, down about 3.7% from the prior quarter, driven by increased unrealized losses and mark-downs. Non-accruals rose to 4.7% of the loan book, with most tied to loans underwritten before March 2022. Management emphasized market spread widening rather than credit deterioration as the primary driver and reported ongoing portfolio activity including new commitments, substantial loan repayments and shareholder distributions.