Goldman Sachs' private credit fund cuts value by 3.7%

Goldman Sachs 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 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.