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Goldman Sachs (GS.N) reported a decline in its private credit fund's value for the first quarter, as it saw an increase in unrealized losses and mark-downs in its portfolio, the fund said Friday.
Investors have taken a closer look at the portfolios of private credit funds known as business development companies, as advances in artificial intelligence threaten the business models of certain companies in the software sector.
Goldman Sachs BDC (GSBD.N) reported net asset value per share (NAV) of $12.17 at the end of March, which is roughly 3.7% lower than the previous quarter, it said in a late Thursday filing.
"While there have been some modest unrealized moves here, the investment team believes those are primarily a reflection of broader market spread widening, not a sign of credit deterioration," a Goldman Sachs spokesperson said.
"The team believes the fundamental health of the private credit industry remains strong and is confident in our credit selection process."
Goldman Sachs' fund disclosed a pick-up in non-accruals, where a borrower has fallen well behind on interest payments, to 4.7% of its loan portfolio at amortized cost. It reported a 2.8% non-accrual rate in the previous quarter.
"Legacy" loans underwritten before March 2022, when the fund's current management team took the helm, accounted for the vast majority of non-accruals, it noted.
About 60% of mark-downs in its portfolio were due to borrower-specific events, most notably two legacy loans to borrowres 1GI LLC and 3SI Security Systems, the fund's management said on a Friday earnings call.
Goldman Sachs BDC made new commitments of roughly $46.5 million across 17 companies, including six new borrowers, it said.
Loan repayments totaled $82.8 million in the first quarter, more than half of which was on loans originated before 2022, they said on the call, adding the fund has already received $100 million in repayments in the second quarter.
The fund declared a dividend of 32 cents per share. On Wednesday, it announced a new $75 million stock buyback program.
