Goldman Sachs BDC Rebuilds NII as Portfolio Keeps Shrinking
Goldman Sachs BDC lifted net investment income per share to $0.38 in the second quarter from $0.22 in the first, even as net asset value slipped and new investment activity dried up.
Goldman Sachs BDC (GSBD) reported net investment income of $0.38 a share for the quarter ended June 30, 2026, up from $0.22 a share in the first quarter, with adjusted net investment income rising to $0.37 a share from $0.22. The externally managed business development company put the annualized net investment income yield on book value at 12.3%.
The rebound came largely from the expense side rather than new business. Net expenses before taxes fell to $40.7 million from $53.0 million in the prior quarter, a $12.3 million drop driven by lower incentive fees tied to trailing-twelve-quarter performance. Incentive fees fell to zero in the quarter, down from $8.5 million in the second quarter of 2025, and totaled $12.4 million for the first six months of 2026 versus $15.3 million in the same period a year earlier. Total investment income rose to $83.7 million from $78.8 million in the first quarter as investments returned to accrual status, though it remained below the $90.97 million reported a year earlier.
Net asset value per share declined 0.9% sequentially to $12.06 as of June 30, from $12.17 at the end of March, and was down from $12.64 at the end of December. Net realized and unrealized losses narrowed to $18.6 million from $38.4 million in the first quarter but remained wider than the $5.2 million loss recorded a year earlier. Earnings per share on a net-increase-in-net-assets basis fell to $0.21 from $0.34 in the year-earlier quarter, even as net investment income per share held flat at $0.38 in both periods.
Credit quality showed mixed signals. Non-accrual investments as a share of the portfolio at fair value fell to 2.9% from 3.2%, while the same measure at amortized cost rose to 5.0% from 4.7%, a divergence between the two valuation bases. The number of non-accrual portfolio companies held at 10. Chase Industries' Senneca Holdings restructured position and two second-lien positions in Wine.com were added to non-accrual status due to underperformance, while Thrasio's first-lien position was restored to accrual after improved performance.
New investment activity slowed sharply. Goldman Sachs BDC made $12.9 million of new commitments in the quarter, of which only $5.0 million was funded, against $114.3 million of prior unfunded commitments that were drawn and $145.9 million of sales and repayments, for net funded investment activity of $(26.6) million. The investment portfolio's fair value fell to $3,195.2 million from $3,228.9 million at the end of March and $3,261.7 million at the end of December, even as the number of portfolio companies rose to 173 from 171.
The weighted average yield on debt investments at amortized cost declined to 9.5% from 9.9% at the end of December, while the yield at fair value rose to 11.3% from 10.9% over the same period. Weighted average portfolio leverage, measured as net debt to EBITDA at the portfolio-company level, rose to 6.2x from 5.9x.
Goldman Sachs BDC reduced its own leverage, with the net debt-to-equity ratio slipping to 1.35x as of June 30 from 1.37x at the end of March. Leverage fell further below its 1.25x target as of August 6, primarily due to repayments and asset sales. Total debt outstanding declined to $1,879.6 million from $1,920.5 million, with unsecured debt making up 63.9% of the total.
The company disclosed a new stock repurchase program of up to $75 million, approved May 6, 2026 under a 10b5-1 plan, and declared a second consecutive quarterly supplemental dividend of $0.03 a share on top of its $0.32 base dividend. The combined payout compares with a $0.35 total distribution per share recorded in the first quarter.