Goldman Sachs BDC's Q2 2025: Unpacking Contradictions in Leverage, Investment Activity, and Dividend Policy

Leverage and investment activity, portfolio yield trends, dividend policy and leverage target, investment activity and leverage expectations are the key contradictions discussed in Goldman Sachs BDC's latest 2025Q2 earnings call.



Leadership and Organizational Changes:
- Alex Chi, Co-President and Co-CEO of Goldman Sachs BDC, stepped down after 31 years with the firm.
- Vivek Bantwal, previously Global Co-Head of Private Credit, joined as Co-CEO alongside David Miller; Tucker Greene assumed the additional role of President.
- These changes were driven by Alex Chi's personal decision to pursue another professional opportunity, and the company aims to maintain the strength of the platform under new leadership.

Funding and Dividend Structure:
- Goldman Sachs BDC declared a third-quarter base dividend per share of $0.32 and a special dividend of $0.16 per share.
- The company ended the quarter with a net debt-to-equity ratio of 1.12x.
- The focus remains on delivering dividends through core earnings power and realizing exit of legacy portfolio companies while rotating into new vintage credits.

Investment Activity and Portfolio Performance:
- The company made new investment commitments of approximately $247.9 million across 15 portfolio companies in Q2.
- Repayments totaled $288 million, primarily driven by full repayments and exits of 10 portfolio companies.
- This was due to the unique position of the company in a competitive deal environment, allowing for selective credit quality and disciplined investment decisions.

Credit Quality and Nonaccrual Status:
- Investments on nonaccrual status were 1.6% at fair value, a decrease from 1.9% as of March 31, 2025.
- Streamland Media was placed on nonaccrual status due to financial underperformance, while Kawa's preferred stock position was exited.
- The improvement in credit quality was attributed to restructuring efforts and exits of nonperforming assets.

M&A Market and Macroeconomic Conditions:
- Despite policy volatility and macroeconomic uncertainties, the M&A market remained resilient with total M&A dollar volumes up 29% year-over-year in the first half of 2025.
- The company believes uncertainty will persist, particularly in tariff-sensitive industries, driving companies to reevaluate their strategic ambitions.
- The strength of the M&A market is supported by a persistent lack of DPI and rapidly accelerating innovation in sectors less sensitive to tariffs.