The chief executive of Golub Capital's business development company hailed his firm's stable second quarter, which stood “in contrast to the market environment of the last six months”.
The BDC's assets grew slightly to $1.696 billion at the end of 30 June from $1.665 billion at the end of Q1. Investment income rose to $32.1 million from $30.8 million quarter-on-quarter.
Speaking on the firm's earnings call on Friday, David Golub (pictured) said the past six months had been “marked by violent swings in liquid debt and equity markets and by some major political surprises, including Brexit right at the end of the quarter”.
“Did we predict this volatility and its causes? Not exactly. But our approach to investing starts with the assumption that there are always going to be surprises and our goal is to deliver steady results despite them,” he said.
The BDC, and Golub's overall lending business, has been focusing primarily on senior secured first lien loans for some time, with executives stressing that it is time to be careful around picking credits.
Like last quarter , the majority of the BDC's portfolio consisted of one-stop loans (at $1.2 billion). Exposure to second lien loans, subordinated debt and equity was minimal, at $37.4 million, $1.9 million and $67.9 million, respectively.
The BDC's net asset value increased to $15.88 at the end of Q2 from $15.85 as of 31 March. “We're very proud of the fact that GBDC has achieved increases in NAV per share in 15 of the last 16 quarters,” Golub said.
NAV has been falling for many other BDC managers. Golub's was down slightly last quarter, a first for the BDC.
New commitments amounted to $156 million for the quarter, with 80 percent of new originations going toward one-stop loans. The BDC now has investments across 185 portfolio companies with an average size of $8.2 million. Non-accruals were low at 0.1 percent of fair value.
“GBDC had a steady quarter and a steady first half of calendar 2016 despite a lot of market volatility and unpredictable geopolitical developments. We don't aspire to know what the next big surprises can bring, but we plan to continue to position GBDC to be resilient to the unexpected,” Golub added.