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1. Company Snapshot

1.a. Company Description

Golub Capital BDC, Inc.(GBDC) is a business development company and operates as an externally managed closed-end non-diversified management investment company.It invests in debt and minority equity investments in middle-market companies that are, in most cases, sponsored by private equity investors.


It typically invests in diversified consumer services, automobiles, healthcare technology, insurance, health care equipment and supplies, hotels, restaurants and leisure, healthcare providers and services, IT services and specialty retails.It seeks to invest in the United States.It primarily invests in first lien traditional senior debt, first lien one stop, junior debt and equity, senior secured, one stop, unitranche, second lien, subordinated and mezzanine loans of middle-market companies, and warrants.

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1.b. Last Insights on GBDC

Golub Capital BDC's recent performance has been impacted by thin dividend coverage and a downward trending NAV per share. The company's high 12% dividend yield is at risk if net investment income declines further, particularly with more rate cuts. Despite a strong portfolio with first-lien debt and improving non-accruals, rising PIK income and higher leverage raise caution. Recent liability restructuring and portfolio growth have stabilized NII, but multiple Fed rate cuts could pressure the dividend in 2026.

1.c. Company Highlights

2. GBDC Posts Solid Q4 and Full-Year Results Amid Challenging Market Conditions

GBDC reported adjusted NII per share of $0.39 and adjusted net income per share of $0.36 for the quarter, with the company's net asset value per share ending at $14.97, up $0.34 from its IPO in 2010. For fiscal year 2025, GBDC paid $1.65 per share of cumulative distributions, representing 10.9% of end-of-year net asset value per share. The actual EPS came in at $0.39, in line with estimates. The investment income yield fell to 10.4%, driven by a modest decline in weighted average base rates and modest compression of weighted average portfolio spread.

Publication Date: Dec -07

📋 Highlights
  • Strong Financial Performance:: GBDC reported adjusted NII per share of $0.39 and adjusted net income per share of $0.36, with cumulative distributions of $1.65/share in 2025 (10.9% of NAV).
  • NAV Growth:: Net asset value per share increased to $14.97, up $0.34 since the 2010 IPO, reflecting long-term value retention.
  • Portfolio & Leverage Management:: Investment portfolio decreased to $8.8B (fair value) amid repayments, with net debt-to-equity ratio at 1.23x, showing disciplined capital structure.
  • Debt Cost Optimization:: Cost of debt dropped to 5.6% from repricing and early repayment, while investment income yield fell to 10.4% due to base rate compression.
  • Credit & Liquidity Resilience:: Nonaccruals at 30 bps and 90% of the portfolio in top 2 credit categories, alongside $1.2B liquidity, highlight robust credit quality and operational flexibility.

Credit Quality and Portfolio Performance

Despite headwinds in the direct lending market, including narrower spreads and an unusual level of defaults and credit stress, GBDC's credit quality metrics remain strong. Nonaccruals decreased to 30 basis points as a percentage of total investments at fair value, and nearly 90% of the total investment portfolio remained in GBDC's top 2 internal performance rating categories. The company's approach to private credit, making first lien senior secured loans to resilient companies backed by top-quality private equity firms, has guided the company well for decades.

Liquidity and Funding

GBDC's liquidity position remains strong, with approximately $1.2 billion of liquidity from unrestricted cash and drawn commitments on its corporate revolver and unsecured revolver. The company's debt funding structure remains highly diversified and flexible, with 49% of its debt funding in the form of unsecured notes across a well-laddered maturity profile. The cost of debt decreased to 5.6%, driven by the repricing of its syndicated corporate revolver and the early repayment of a legacy debt securitization.

Valuation and Dividend

With a dividend yield of 10.93%, GBDC's shares offer an attractive return to investors. The company's P/B Ratio stands at 0.95, indicating that its shares are trading slightly below book value. Analysts estimate next year's revenue growth at -8.4%. The Board declared a $0.39 per share distribution for the first fiscal quarter of 2026 and plans to revisit GBDC's dividend policy early next year, guided by four goals: maintaining a stable net asset value per share, minimizing excise taxes, adjusting the base distribution level infrequently, and paying a high dividend yield on NAV.

Outlook and Market Conditions

The stress in the market is expected to persist and impact different BDCs in various ways, with the gap between winners and losers widening. Winners will be those with proven competitive advantages and a long track record of low credit losses. Spreads in private credit have maintained their premium, and the risk to this premium is tied to a change in investor sentiment, which would likely affect not just private credit but also other investment categories.

3. NewsRoom

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Comparing WhiteHorse Finance (NASDAQ:WHF) and Golub Capital BDC (NASDAQ:GBDC)

Dec -03

Source: defenseworld.net

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68 Graham Value All-Star (GVAS) November Dividend Dogs Show 27 'Safer' And 17 Ideal Buys

Dec -02

Source: seekingalpha.com

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Golub Capital's Dividends Are At Risk

Nov -27

Source: seekingalpha.com

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A Rare Buying Opportunity: Blue-Chip 11-12% Yields Too Cheap To Ignore

Nov -24

Source: seekingalpha.com

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Foundations Investment Advisors LLC Reduces Position in Golub Capital BDC, Inc. $GBDC

Nov -21

Source: defenseworld.net

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Golub Capital BDC (GBDC) Q4 2025 Earnings Call Transcript

Nov -19

Source: seekingalpha.com

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Golub Capital BDC (GBDC) Meets Q4 Earnings Estimates

Nov -18

Source: zacks.com

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Golub Capital BDC, Inc. Announces Fiscal Year 2025 Fourth Quarter Financial Results

Nov -18

Source: businesswire.com

4. Business Breakdown

4.a. Revenues by Country

4.b. Revenues by Segment

5. Expected revenues mid-term growth (10.20%)

6. Segments

Investment and Related Activities

Expected Growth: 10.2%

Golub Capital BDC's investment in debt and equity securities of middle-market companies drives growth, fueled by increasing demand for alternative lending and private equity investments, as well as the company's expertise in originating and investing in these securities.

7. Detailed Products

Middle Market Lending

Golub Capital BDC, Inc. provides financing solutions to middle market companies, offering senior secured loans, one-stop loans, and second lien loans to support acquisitions, recapitalizations, and growth initiatives.

SLF FlexLoan

Golub Capital BDC's SLF FlexLoan is a flexible financing solution that provides borrowers with a single loan that combines the benefits of a first lien loan and a second lien loan.

Late Stage Lending

Golub Capital BDC provides late stage lending solutions to venture-backed companies, offering debt financing to support growth initiatives and bridge the gap to an initial public offering (IPO) or merger and acquisition (M&A) event.

Software and Technology Lending

Golub Capital BDC provides financing solutions to software and technology companies, offering debt financing to support growth initiatives, product development, and strategic acquisitions.

Healthcare Lending

Golub Capital BDC provides financing solutions to healthcare companies, offering debt financing to support growth initiatives, acquisitions, and recapitalizations.

8. Golub Capital BDC, Inc.'s Porter Forces

Forces Ranking

Threat Of Substitutes

Golub Capital BDC, Inc. operates in a niche market, providing financing solutions to middle-market companies. While there are some substitutes available, such as traditional banks and other alternative lenders, the company's specialized expertise and flexible financing options mitigate the threat of substitutes.

Bargaining Power Of Customers

Golub Capital BDC, Inc.'s customers are typically middle-market companies that require specialized financing solutions. These customers often have limited bargaining power due to their reliance on the company's expertise and financing options.

Bargaining Power Of Suppliers

Golub Capital BDC, Inc. has a diversified portfolio of investments, which reduces its reliance on any single supplier. Additionally, the company's strong reputation and financial position give it bargaining power in negotiating with suppliers.

Threat Of New Entrants

The business development company (BDC) industry has high barriers to entry, including regulatory hurdles and the need for specialized expertise. This limits the threat of new entrants and allows Golub Capital BDC, Inc. to maintain its competitive position.

Intensity Of Rivalry

The BDC industry is competitive, with several established players vying for market share. However, Golub Capital BDC, Inc.'s specialized expertise and strong reputation help it to differentiate itself and maintain a competitive position.

9. SWOT Analysis

Strength

Weaknesses

Opportunities

Threats

10. Capital Structure

10.a. Balance Sheet

10.b. Weighted Average Cost of capital

Value
Debt Weight 58.68%
Debt Cost 4.66%
Equity Weight 41.32%
Equity Cost 6.80%
WACC 5.54%
Leverage 142.02%

11. Quality Control: Golub Capital BDC, Inc. passed 3 out of 9 key points

12.a Historical Valuation

12.b Price/Earnings Ratio

12.c Margin Valuation

12.d Peers Valuation

Peers Group Analysis

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Main Street Capital

A-Score: 7.5/10

Value: 4.8

Growth: 6.0

Quality: 7.6

Yield: 9.0

Momentum: 8.0

Volatility: 9.3

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A-Score: 7.3/10

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Growth: 5.1

Quality: 8.0

Yield: 10.0

Momentum: 4.0

Volatility: 10.0

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Golub Capital BDC

A-Score: 7.1/10

Value: 6.7

Growth: 5.8

Quality: 7.9

Yield: 10.0

Momentum: 2.5

Volatility: 10.0

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Hercules Capital

A-Score: 6.7/10

Value: 6.0

Growth: 3.6

Quality: 6.8

Yield: 10.0

Momentum: 4.0

Volatility: 9.7

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Victory Capital Holdings

A-Score: 6.4/10

Value: 4.7

Growth: 6.7

Quality: 8.4

Yield: 6.0

Momentum: 6.0

Volatility: 6.7

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Corebridge Financial

A-Score: 5.6/10

Value: 6.0

Growth: 3.3

Quality: 3.2

Yield: 8.0

Momentum: 6.0

Volatility: 7.0

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Peers Metrics

12.e Scoring Insights

12.f DCF BETA

Parameters

Short Term Growth

Short term Time

Long-Term Growth

WACC

Target Price

14.27$

Current Price

14.27$

Potential

-0.00%

Expected Cash-Flows