Golub BDC sets sights on ‘one-stop’ loans

The firm’s NAV per share rose to $15.88 in Q1, up from $15.74 in Q4.

Though most of the $97.1 million that Golub Capital BDC invested in mid-market credit last quarter were senior secured loans, the firm plans to hop back on the ‘one-stop’ loan wagon going forward.

“Due to a few larger traditional senior secured investments this quarter, senior secured investments represented the majority or our new investments, but in future quarters we anticipate that the majority of the originations asset mix was going to shift back to one stops,” David Golub, chief executive officer, said on Friday’s earnings call.

“We continue to believe that one stops are the most attractive product from a risk-reward perspective in the current market,” he added.

Senior secured investments accounted for 53 percent, or $51.46 million, of the total amount invested last quarter. This compares with 38 percent, or $36.9 million, being one-stop loans, 8 percent investments, or $7.7 million, from the firm’s senior loan fund and 1 percent equity co-investments, or $971,000, the earnings results show.

The first quarter’s majority of senior secured investments strays from the firm’s investment mix in the fourth quarter, when 70 percent of the BDCs $113.6 million in new originations then were one-stop deals, as Private Debt Investor reported.

Over the quarter ending 31 March, Golub BDC’s total new investments (mid-market and non-mid-market) came to $106 million, with a weighted average return of 6.4 percent, slightly down from the 6.9 percent return new investments showed in the previous quarter. 

Ross Teune, chief financial officer, attributed the slight dip in return on new investments to the quarter’s “asset mix with traditional senior loans representing the majority of new investments” while “market spreads continued to compress”.

Golub BDC’s net asset value per share rose to $15.88 over the three-month period, up from $15.74 per share at 31 December, according to the earnings results.

The firm’s total loan portfolio was valued at $1.73 billion as of 31 March, compared to $1.6 billion at the same time last year.