Golub Capital BDC, a business development company, planned a series of debt funding structure initiatives expected to reduce GBDC’s prospective borrowing costs and provide additional investment flexibility.
On Nov. 18, 2024, GBDC completed a $2.2 billion term debt securitization, also referred to as a collateralized loan obligation (CLO). The secured notes were issued by the company’s consolidated subsidiary Golub Capital BDC CLO 8 and are backed by a portfolio of collateral obligations consisting of middle market loans.
In connection with the 2024 debt securitization closing, GBDC fully redeemed three of its existing term debt securitization financings: the $602.4 million 2018 debt securitization, the $908.2 million GCIC 2018 debt securitization and the $398.9 million GBDC 3 2021 debt securitization.
On Nov. 15, 2024, GBDC also issued a notice of redemption to redeem the $386.6 million GBDC 3 2022-2 debt securitization in full, which is expected to occur on Dec. 16, 2024.
GBDC made certain changes to existing bank lending relationships. The company increased aggregate commitments under its senior secured revolving credit facility from $1,822.5 million to $1,897.5 million with the addition of one new bank lending relationship. Further, the company expects to terminate the senior secured revolving credit facility assumed in the acquisition of Golub Capital BDC 3, Inc. by merger.
GBDC believes this series of transactions represents a meaningful evolution of GBDC’s debt funding structure and is compelling for GBDC stockholders for several reasons, including a reduction in borrowing costs, an extension of GBDC’s debt maturity ladder, incremental available liquidity to make investments and maintenance of the company’s differentiated ratings profile.
“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,” Matthew Benton, chief operating officer of the company, said. “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.”
“Year-to-date Golub Capital has executed over $16 billion of securitizations across 23 unique transactions firmwide, retaining our spot as the market’s #1 issuer of middle market CLOs by volume,” Alan George, head of structured products at Golub Capital, said. “Completing the 2024 debt securitization 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.”
