Golub Capital BDC restructures debt to reduce costs and enhance flexibility
Golub Capital’s business development company has announced a series of structural changes in order to reduce its borrowing costs and have additional investment flexibility.
Golub Capital BDC (GBDC), completed a $2.2bn (£1.7bn) term debt securitisation on 18 November. The secured notes were issued by the company’s subsidiary Golub Capital BDC CLO 8 and are backed by a portfolio of collateral obligations.
In connection with this, GBDC has also fully redeemed three of its legacy collateralised loan obligations. These were the $602.4m 2018 Debt Securitisation, the $908.2m GCIC 2018 Debt Securitisation and the $398.9m GBDC 3 2021 Debt Securitisation.
The company will also redeem a $386.6m debt securitisation in full, which is expected to take place on 16 December.
In addition, GBDC increased its senior secured revolving credit facility aggregate commitments from $1.82bn to $1.89bn by adding one new bank lending relationship. It is also working on terminating the senior secured revolving credit facility that was taken on in the acquisition of Golub Capital BDC 3 back in June.
These changes are expected to result in an immediate reduction in GBDC’s overall weighted average cost of debt, the company said in a statement. They also extend the weighted average maturity of GBDC’s debt funding structure and provides incremental liquidity to make investments.
GBDC said it doesn’t expect changes to its credit ratings profile.
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“GBDC has sought to deliver market-leading returns since its IPO in April 2010, and this evolution of the company’s post-GBDC 3 merger debt funding structure is a significant step in furthering that objective,” said Matthew Benton, chief operating officer of the company. “These post-merger transactions, in combination with the incentive fee rate reduction that became permanent with the merger closing, achieves efficiencies of scale for the benefit of GBDC shareholders.”
Alan George, head of structured products at Golub Capital, added: “Year-to-date Golub Capital has executed over $16bn of securitizations across 23 unique transactions firmwide, retaining our spot as the market’s #1 issuer of middle market CLOs by volume. Completing the 2024 debt securitisation for the benefit of GBDC shareholders, one of the largest CLOs on record, is a testament to the strength of the Golub Capital platform and leadership in the debt capital markets.”
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