KBRA Affirms Ratings for Goldman Sachs Private Credit Corp.

KBRA affirms issuer and unsecured debt ratings of BBB for Goldman Sachs Private Credit Corp. 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”) $3.1 trillion of Assets Under Supervision along with SEC exemptive relief to co-invest with GS affiliates. GS provides the company with access to capital through its vast wealth channels, 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+ years of experience in the industry. Also, the ratings are supported by GSCR’s $5.3 billion investment portfolio comprised almost entirely of first lien senior secured loans (99.4%), including 4.8% first lien senior secured last out unitranche loans and 16.3% more liquid assets such as broadly syndicated loans ("BSLs"). As of September 30, 2024, the median portfolio company EBITDA was $96.1 million and the weighted average leverage was 5.6x with interest coverage of 1.8x using current base rates. As of September 30, 2024, the top three portfolio sectors were Software (15.3%), Financial Services (9.1%), and Commercial Services and Supplies (8.8%).

With an unseasoned portfolio, there were no non-accruals, as of September 30, 2024. Gross leverage was low at only 0.38x, reflective of the company’s strong capital raises averaging +$750 million per quarter and the company's 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. While the company’s funding profile remains fully secured, its secured debt to assets remains consistent with peers at 26% allowing for significant cushion for asset volatility. The funding mix includes three bank credit facilities totaling $4.2 billion having increased post quarter-end by about $1.5 billion. At 3Q24, there was adequate liquidity of $1.2 billion of bank credit availability and $293.5 million of cash and cash equivalents set against no near-term unsecured debt maturities and $1.9 billion in unfunded commitments of which a portion is tied to covenants and transactions and are not expected to be drawn

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. From inception to September 30, 2024, the company raised gross proceeds of approximately $3.8 billion with only $40.5 million shares tendered. To ensure sufficient liquidity for repurchases, the company maintains sufficient cash, available credit lines, and more liquid investments, such as BSLs.

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 a 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.

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Methodologies