CGBD - Goldman Sachs BDC: The Margin Of Safety Is Still Too Low To Go Long

2024-04-18 12:51:51 ET

Summary

• In my article from last year on Goldman Sachs BDC, I outlined several reasons why GSBD was too speculative for investors to go long.
• The main reasons were subpar portfolio quality, high leverage, and a slight premium over NAV.
• Since then, the BDC has performed in line with the market because of the registered stability in the portfolio and even on the adjusted NII level (if we exclude one-offs).
• Yet, the underlying portfolio has worsened, and the higher for longer could actually introduce further headwinds due to tight portfolio company interest rate coverage ratios.
• Against the backdrop of this and several new data points, in this article, I provide an update on my thesis.

In December, I published a bearish piece on Goldman Sachs BDC ( GSBD ), which ranks as the eleventh largest BDC vehicle in terms of the underlying NAV base....

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