Fitch downgrades Goldman Sachs BDC outlook

Fitch Ratings revised Goldman Sachs BDC's outlook to negative on May 15 while affirming the business development company's Long-Term Issuer Default Rating and unsecured debt rating at BBB-, and its senior secured debt rating at BBB. Fitch said the change reflected weaker asset-cushion coverage as leverage rose, non-accruals stayed elevated and realized losses mounted in parts of the portfolio. Goldman Sachs BDC, which trades as GSBD and is externally managed by Goldman Sachs Asset Management, had held a stable outlook in Fitch's prior July 2025 review. Fitch said Goldman Sachs Group's own A rating and positive outlook were unchanged. ### What exactly did Fitch change — and what did it leave alone? Fitch's May 15 rating action changed the outlook to negative from stable, but it did not cut Goldman Sachs BDC's ratings. The agency affirmed GSBD's Long-Term Issuer Default Rating and unsecured debt rating at BBB-, and affirmed its senior secured debt rating at BBB. Fitch said a one-notch downgrade could follow if Goldman Sachs BDC does not rebuild its asset-coverage cushion to a level the agency considers appropriate for the company's risk profile. The agency published the action after the market close on Friday. ### Which numbers drove the outlook revision? GSBD's gross leverage was 1.40x as of March 31, 2026, up from 1.33x at the end of 2025, according to Fitch. Net leverage rose to 1.37x from 1.27x over the same period and was above the company's 1.25x target, Fitch said. Fitch said the company's gross leverage implied an asset-coverage cushion of 12.4% in the first quarter, down from 17.8% a year earlier. The agency said that level sat at the low end of its benchmark range for the BBB category. Non-accruals were 3.2% of the debt portfolio at fair value and 4.7% at cost as of March 31, 2026, Fitch said. The agency also said net realized losses were 3.6% of the average portfolio at value in 2025, above the rated peer average. ### What is happening inside the portfolio? Fitch said recent portfolio-company restructurings and impairments produced above-average realized losses. The agency also pointed to a continued high share of paid-in-kind income, or PIK income, which lets borrowers satisfy some interest obligations with additional debt rather than cash. Fitch said Goldman Sachs BDC's credit performance could remain under pressure in the near term because of elevated interest rates, above-average exposure to 2021 and first-half 2022 vintages, and what it called a challenging macroeconomic backdrop. Those conditions, Fitch said, could lead to more amendment requests, more PIK income and more non-accruals. ### What did Goldman Sachs BDC report before Fitch acted? Goldman Sachs BDC said on May 7 that first-quarter net investment income was $0.22 per share and earnings per share were negative $0.12. The company reported net asset value per share of $12.17 at March 31 and declared a second-quarter 2026 base dividend of $0.32 per share. The company said its ending net debt-to-equity ratio was 1.37x at March 31, up from 1.27x at December 31. Goldman Sachs BDC also said 98.7% of its portfolio at fair value was invested in senior secured loans at quarter-end. ### How does Goldman Sachs fit into the structure? Goldman Sachs Group is not the rated entity in this action, Fitch said, but it is the parent of Goldman Sachs Asset Management, the external manager of Goldman Sachs BDC. Fitch said that affiliation supports access to deal flow and risk-management capabilities. Fitch also said GSBD's ratings continue to reflect above-average exposure to first-lien investments, low exposure to equity investments, sufficient liquidity and sound funding flexibility. Those factors supported the affirmation even as the outlook turned negative. ### What comes next for investors and creditors to watch? The next formal checkpoint is Goldman Sachs BDC's second-quarter results, which will show whether leverage, non-accruals and asset coverage improved from the March 31 levels Fitch cited. Fitch said failure to improve the cushion could result in a one-notch downgrade from BBB-. Goldman Sachs BDC's May 7 earnings release said the company filed its first-quarter Form 10-Q with the Securities and Exchange Commission. Fitch's full rating action commentary, published May 15, lays out the thresholds and portfolio metrics the agency said it will monitor in coming quarters.