Market Overview

Goldman Sachs BDC Positioned For Dividend Increase, Says Raymond James

Benzinga's Top Upgrades, Downgrades For August 23, 2018
Why Do Closed-End Funds Trade At Discounts Or Premiums To Their Net Asset Values?

Goldman Sachs BDC, Inc. (NYSE: GSBD) is positioned to grow its dividend, while plans to increase leverage and lower management fees provide a “win, win” situation, according to Raymond James.

The Analyst

Robert Dodd of Raymond James upgraded Goldman Sachs BDC from Outperform to Strong Buy and modestly lifted the price target from $23.50 to $24.

The Thesis

GSBD announced plans to raise leverage cap from 1x debt-to-equity to 2x if it receives shareholder approval in June, according to Dodd.

Management has indicated that increased leverage would be used in a more senior secured mix unless the junior capital market became attractive again, the analyst said.

“It is likely that GSBD will lose its investment grade for seeking this increased leverage, but given its attachment to the larger Goldman platform, we believe forward spreads on its liabilities will only increase incrementally.”

This increase in leverage will also be accompanied by a lowered base management fee. This will help position the company for attractive pricing opportunities and give it room to raise its dividend, the analyst said.

Price Action

At time of publication, shares of GSBD were trading up 5.2 percent at $20.22.

Related Links:

Why Do Closed-End Funds Trade At Discounts Or Premiums To Their Net Asset Values?

Managed Managemend: Conversations With A Closed-End Fund Advisor, Pt. 1

Latest Ratings for GSBD

Oct 2018Wells FargoMaintainsMarket PerformMarket Perform
Aug 2018CitigroupInitiates Coverage OnNeutral
May 2018Credit SuisseMaintainsNeutralNeutral

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Posted-In: Raymond James Robert DoddAnalyst Color Upgrades Analyst Ratings


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