KBRA Assigns Ratings to Goldman Sachs Private Credit Corp.
Goldman Sachs Private Credit Corp. (GSCR) has been assigned issuer and senior unsecured debt ratings of BBB by KBRA with a Stable Outlook. The company has strong ties to Goldman Sachs, with access to capital through its significant wealth channels of $900+ billion and a $55 billion global senior direct lending platform. GSCR has a solid management team with a long track record in the private debt markets, and its $1.2 billion investment portfolio is almost entirely comprised of first lien senior secured loans. The company's funding profile is fully secured, and it plans to issue senior unsecured debt when market opportunities allow. As of November 1, 2023, GSCR has raised gross proceeds of approximately $1.4 billion with no shares tendered.
Positive
Strong ties to Goldman Sachs with access to significant wealth channels and a global senior direct lending platform
Solid management team with a long track record in the private debt markets
Investment portfolio almost entirely comprised of first lien senior secured loans
Funding profile is fully secured
Raised gross proceeds of approximately $1.4 billion as of November 1, 2023
12/06/2023 - 04:45 PM
NEW YORK --(BUSINESS WIRE)--
KBRA assigns issuer and senior unsecured debt ratings of BBB to Goldman Sachs Private Credit Corp. (“GSCR” or “the company”). The rating Outlook is Stable.
Key Credit Considerations
The ratings and Outlook are supported by Goldman Sachs Private Credit Corp.’s ties to Goldman Sachs' (“GS”) $3 trillion $55 billion $900 + billion, robust deal sourcing and research, a 400+ sponsor network, and strong banking relationships. Additionally, the company has a solid management team, which has a long track record working with the private debt markets with each member of senior management having 20 or more years of experience in the industry. Also, the ratings are supported by GSCR’s $1.2 billion 98.3% ), including broadly syndicated loans (BSLs). The company intends to maintain a minimum of 90% of its investment portfolio in first lien senior secured debt. As of September 30, 2023, the average portfolio company EBITDA was $116 million 22.0% ), Diversified Consumer Services (9.6% ), Diversified Financial Services (8.6% ), and Media (7.0% ). With an unseasoned portfolio, there were no non-accruals, as of September 30, 2023. Leverage was only 0.22x, reflective of the company’s strong capital raises of +$100 million per month and its conservative investment deployment. GSCR targets its leverage at 1.0x, lower than its peers, though appropriate for a perpetual BDC that requires more liquidity for potential redemptions. The company’s funding profile is fully secured and includes two bank facilities with $736 million 60% unsecured debt to total debt outstanding over the next several years.
GSCR is structured as a continuously offered, perpetual private BDC that does not intend to seek a liquidity event. As a continuously offered BDC, GSCR raises capital monthly and offers up to 5% of its shares for repurchase quarterly. Share repurchases are at the direction of the Board of Directors and should markets become disrupted, such that the company’s business would be severely affected by repurchases, the company has no obligation to repurchase any shares. As of November 1, 2023, the company has raised gross proceeds of approximately $1.4 billion $100 million $50 million 25% of total investments, as of September 30, 2023.
The rating strengths are counterbalanced by the potential risk related to the company’s illiquid investments, fully secured funding profile, and retained earnings constraints as a Regulated Investment Company (RIC).
GSCR is an externally managed, non-diversified closed-end management investment company that has elected to be treated as a Business Development Company (BDC) under the 1940 Act and intends to elect to be treated as an RIC, which among other things, must distribute to its shareholders at least 90% of the company’s investment company taxable income. The company was formed as a Delaware Corporation in March 2022, began investing activities in April 2023, and is managed by Goldman Sachs Asset Management, L.P. (“GSAM”), an affiliate of Goldman Sachs & Co. LLC. The company’s public BDC, Goldman Sachs BDC, Inc. (NYSE: GSBD) is rated by KBRA (Issuer and Senior Unsecured Debt: BBB/Stable).
Rating Sensitivities
Over the medium term, a rating upgrade is not expected. A rating downgrade and/or Outlook change to Negative from Stable could be considered if there is a significant downturn in the U.S. economy with negative impact on GSCR’s earnings performance, asset quality, and leverage. A significant change in senior management and/or risk management policies could also lead to negative rating action.
To access rating and relevant documents, click here.
Methodologies
Financial Institutions: Finance Company Global Rating Methodology
ESG Global Rating Methodology
Disclosures
A description of all substantially material sources that were used to prepare the credit rating and information on the methodology(ies) (inclusive of any material models and sensitivity analyses of the relevant key rating assumptions, as applicable) used in determining the credit rating is available in the Information Disclosure Form(s) located here.
Information on the meaning of each rating category can be located here.
Further disclosures relating to this rating action are available in the Information Disclosure Form(s) referenced above. Additional information regarding KBRA policies, methodologies, rating scales and disclosures are available at www.kbra.com.
About KBRA
Kroll Bond Rating Agency, LLC (KBRA) is a full-service credit rating agency registered with the U.S. Securities and Exchange Commission as an NRSRO. Kroll Bond Rating Agency Europe Limited is registered as a CRA with the European Securities and Markets Authority. Kroll Bond Rating Agency UK Limited is registered as a CRA with the UK Financial Conduct Authority. In addition, KBRA is designated as a designated rating organization by the Ontario Securities Commission for issuers of asset-backed securities to file a short form prospectus or shelf prospectus. KBRA is also recognized by the National Association of Insurance Commissioners as a Credit Rating Provider.
Doc ID: 1002730
View source version on businesswire.com: https://www.businesswire.com/news/home/20231206627961/en/
Analytical Contacts
Teri Seelig, Managing Director (Lead Analyst)
teri.seelig@kbra.com
Claudia McPherson, Senior Director
claudia.mcpherson@kbra.com
Joe Scott, Senior Managing Director (Rating Committee Chair)
joe.scott@kbra.com
Business Development Contact
Constantine Schidlovsky, Senior Director
constantine.schidlovsky@kbra.com
Source: Kroll Bond Rating Agency, LLC
KBRA has assigned issuer and senior unsecured debt ratings of BBB to GSCR with a Stable Outlook.
GSCR has strong ties to Goldman Sachs, with access to capital through its significant wealth channels of $900+ billion and a $55 billion global senior direct lending platform.
GSCR's $1.2 billion investment portfolio is almost entirely comprised of first lien senior secured loans.
GSCR's funding profile is fully secured, and it plans to issue senior unsecured debt when market opportunities allow.
As of November 1, 2023, GSCR has raised gross proceeds of approximately $1.4 billion with no shares tendered.
