Fitch places Golub Capital BDC on watch

Fitch Ratings said it placed Golub Capital BDC, Inc. (GBDC) BBB long-term issuer default and senior unsecured ratings on rating watch negative.

The rating action follows GBDC's announced merger with Golub Capital BDC 3, Inc., which is expected to close during 2Q24, subject to stockholder approvals and other closing conditions.

On Jan. 17, GBDC announced it plans to acquire GBDC 3 in a stock-for-stock transaction. The combined entity is estimated to have $8.5 billion in combined assets with GBDC as the remaining entity.

“The RWN reflects the expectation that unsecured debt will decline to below 40% of GBDC's total debt as a result of the merger since GBDC 3 has a fully secured funding profile. Fitch had previously understood management to be more firmly committed to maintaining unsecured debt in excess of 40% of total debt, although the current actions suggest the potential for greater variability in GBDC's financial policies over time. Fitch believes GBDC will seek to issue additional unsecured debt, and the larger scale post-merger could benefit its ability to access the public bond market longer-term.

“However, upon closing of the proposed merger, GBDC's unsecured debt-to-total debt ratio will fall below the level at which Fitch expected the firm to operate when the ratings were upgraded to BBB on Dec. 5, 2023. Fitch would downgrade GBDC's ratings by one notch if unsecured debt remains below 40% of total debt at fiscal year-end 2024 (Sept. 30, 2024),” the agency said in a press release.

© 2015 Prospect News.
All content on this website is protected by copyright law in the U.S. and elsewhere. For the use of the person downloading only.
Redistribution and copying are prohibited by law without written permission in advance from Prospect News.
Redistribution or copying includes e-mailing, printing multiple copies or any other form of reproduction.