2024-07-26 07:16:20 ET
Summary
- Goldman Sachs BDC maintains a high distribution rate of 11.9%. The dividend has never been cut, which makes this a reliable income investment.
- Portfolio consists of 149 companies, the majority on first lien senior secured basis, with improving credit quality. Non-accruals have decreased quarter over quarter.
- Current valuation of GSBD is attractive with potential for price recovery due to future interest rate cuts.
- Interest rate cuts may serve as a catalyst for portfolio growth, since acquiring debt would be more attractive for portfolio companies.
Overview
When I initially covered Goldman Sachs BDC ( GSBD ) in April, I rated it a hold because of the rising non-accruals within the portfolio. The higher interest rate environment seemed to be putting some strain on borrowers within GSBD's portfolio, and I wanted to see how performance improved over the next quarter. I concluded in my previous analysis that the underwriting by management may be a bit flawed, evident by the deteriorating credit quality of the portfolio. However, I believe that interest rate cuts are on the horizon and this can provide some relief to GSBD's portfolio moving forward. With that in mind, I wanted to revisit this BDC to provide some updated insights regarding the outlook and best use case....
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For further details see:
Goldman Sachs BDC: Decreasing Non-Accruals And Increased Investment Activity (Upgrade)