Goldman Sachs BDC Cuts Unitranche Book and Marks More Grade 4 Loans

The Tip Desk · November 11, 2026 · 4 min read

Fair value of the middle-market lender's investments fell to $2.86 billion from $3.20 billion at June 30, 2026, as non-accrual loans reached 7.3% of amortized cost.

Goldman Sachs BDC, Inc. (GSBD), a specialty finance company that lends to U.S. middle-market borrowers, shrank its investment book in the third quarter and marked a larger share of the portfolio as high-risk. Total investments at fair value declined to $2,857.96 million from $3,195.25 million at June 30, 2026, and amortized cost fell to $3,108.11 million from $3,410.98 million.

The contraction was concentrated in first-lien and unitranche paper. First Lien/Senior Secured Debt fair value dropped to $2,713.51 million from $2,963.33 million, with amortized cost at $2,845.29 million versus $3,076.04 million. First Lien/Last-Out Unitranche fair value fell to $52.35 million from $132.15 million, and amortized cost declined to $67.46 million from $140.20 million. The number of portfolio companies decreased to 168 from 173.

Cumulative originations through September 30, 2026 were approximately $9.98 billion, up from approximately $9.94 billion through June 30, 2026.

Credit quality deteriorated. Non-accrual investments at amortized cost rose to $226.44 million, or 7.3% of the total, from $171.21 million, or 5.0%. Performing investments fell to $2,881.67 million, or 92.7%, from $3,239.77 million, or 95.0%.

Grade 4 investments, which the adviser uses for credits where recouping cost basis is unlikely, increased to $124.03 million, or 4.3% of fair value, from $82.89 million, or 2.6%. The company said the increase was mainly driven by investments with an aggregate fair value of $84.46 million downgraded from Grade 3 and $29.98 million from Grade 2 due to financial underperformance. The move was partially offset by a $14.58 million upgrade to Grade 2, a $13.28 million partial repayment of a Grade 4 investment, and a $37.27 million decrease in fair value of remaining Grade 4 positions. Grade 2 investments declined to $2,555.84 million, or 89.5% of fair value, from $2,859.15 million. Grade 3 fell to $178.09 million, or 6.2%, from $198.94 million.

Total portfolio weighted average yield at amortized cost was 8.7%, versus 8.8% at June 30, and 11.2% at fair value versus 10.8%. First Lien/Senior Secured Debt yield at amortized cost declined to 9.2% from 9.3%, while fair-value yield rose to 11.4% from 11.2%. Second Lien/Senior Secured Debt yield at amortized cost rose to 5.5% from 2.8% and at fair value to 8.2% from 3.9%. Unsecured Debt yield at amortized cost was 0.7% versus 0.8%, and at fair value 2.8% versus 3.3%.

The company said the increase in First Lien/Last-Out Unitranche weighted average yield at fair value was primarily due to exits of certain investments. Comparing September 30, 2026 with December 31, 2025, it said the decrease in Second Lien/Senior Secured Debt weighted average yield at amortized cost and fair value was primarily due to Wine.com, LLC being placed on non-accrual status and the restructuring of Chase Industries, Inc. (dba Senneca Holdings). Within Unsecured Debt, the decrease was primarily due to the maturity extension of Bayside Parent, LLC (dba Pro-PT).

Weighted average yield on debt and income producing investments at amortized cost rose to 9.7% from 9.5%, and at fair value rose to 11.9% from 11.3%. Percentage of performing debt bearing a floating rate declined to 98.2% from 98.9%, and fixed-rate performing debt rose to 1.8% from 1.1%. Weighted average leverage (net debt/EBITDA) increased to 6.3x from 6.2x, while weighted average interest coverage declined to 1.9x from 2.0x. Median EBITDA rose to $77.51 million from $73.37 million. Investments where net debt to EBITDA may not be the appropriate measure of credit risk represented 8.3% of total debt investments versus 10.3%.

The adviser still uses a four-grade scale, with Grade 4 credits expected to produce a substantial loss of cost basis upon exit. Non-accrual status is applied when it is probable that principal, interest or dividends will not be collected on contractual terms.