Goldman Sachs BDC Inc (GSBD) 2016 Q4 法說會逐字稿

Good morning. My name is Dennis, and I will be your conference facilitator today. I would like to welcome everyone to the Goldman Sachs, BDC, Inc. fourth-quarter 2016 earnings conference call.

(Operator Instructions)

I'll now turn the call over to Ms. Katherine Schneider, Head of Investor Relations at Goldman Sachs BDC. Katherine, you may begin your conference.

Thanks, Dennis. Good morning, everyone.

Before we begin today's call, I would like to remind our listeners that today's remarks may include forward-looking statements. These statements represent the Company's beliefs regarding future events that, by their nature, are uncertain and outside of the Company's control. The Company's actual results and financial condition may differ, possibly materially, from what is indicated in these forward-looking statements as a result of a number of factors, including those described from time to time in the Company's SEC filings. This audiocast is copyrighted material of Goldman Sachs BDC, Inc., and may not be duplicated, reproduced, or rebroadcast without our consent.

Yesterday after the market closed, the Company issued an earnings press release and posted a supplemental earnings presentation, both of which can be found on the homepage of our website at www.goldmansachsbdc.com under the Investor Resources section. These documents should be reviewed in conjunction with the Company's Form 10-K, filed yesterday with the SEC. This conference call is being recorded today, March 1, 2017, for replay purposes.

With that, I'll turn the call over to Brendan McGovern, Chief Executive Officer of Goldman Sachs, BDC.

Thank you, Katherine. Good morning, everyone, and thank you for joining us for our fourth-quarter earnings conference call.

To outline the call, I'll start by providing an overview of our results for the fourth quarter and provide key highlights for 2016. I'll then turn the call over to Jon Yoder to discuss our investment activity and portfolio metrics. Jonathan Lamm, our CFO, will discuss our financial results in greater detail. And finally, I'll conclude with some closing remarks before opening the line for Q&A.

We are pleased to report solid results for the fourth quarter and full year, 2016. Net investment income per share was $0.50 for the fourth quarter, which brought net investment income per share for the full year to $2.10. For the full-year ended 2016, our NII return on common equity was 11.3%. You'll also note that our net investment income continued to meaningfully exceed our dividend. This quarter, NII covered our dividend by 111%. For the full year 2016, NII covered our dividend by 117%. We believe this performance is a result of attractive yields on our assets, and our continued focus on maintaining an efficient expense structure. As we announced after the close yesterday, our Board declared a $0.45 per share dividend, payable to shareholders of record as of March 31.

Moving on to investment performance and credit quality. Since our inception in 2012, and including investment activity through our strategic joint venture, we have made over 100 discrete loans to companies in our target middle-market universe, and have generated a gross unlevered IRR of 13.3% on fully exited investments. We are pleased that 2016 demonstrated a continuation of this track record, with similarly strong results on fully exited investments. Of our 100-plus investments since inception, just two have gone through a balance sheet restructuring, and in both situations we've been able to attain a stake in the company that we believe gives us the potential to recover our investment capital. We believe that this is evidence of our prudence in negotiating terms and structures that give us meaningful control over our collateral and demonstrates the focus and expertise we bring to managing underperforming investments.

As we close the year, we had two investments on nonaccrual status, representing 1.4% of the portfolio at fair value. The first investment, Iracore, is a manufacturer of pipes containing an elastomer lining that is used primarily in oil and gas applications. Our investment thesis centered on the existing installed base of the Company's pipes that need to be relined on a recurring basis. We underwrote a first-lien investment at a low-leverage multiple of debt to EBITDA in conjunction with a sponsor that invested a significant amount of cash equity beneath our debt. Subsequently, oil prices fell dramatically and Iracore's customers reduced their capital budgets, pushing out maintenance of their existing pipes. While management has undertaken efforts to preserve liquidity through right-sizing its cost structure, the company did not pay its coupon in December. Currently, we and other lenders are engaged in negotiations with Iracore, and we expect to reach a consensual agreement shortly.

Consistent with the outcome of the two restructurings since inception we referenced earlier, we are aiming to retain a meaningful stake in the company that could enable us with the opportunity to recoup our initial investment, should the operating environment improve. We look forward to providing you an update on the status of this investment on our next quarterly conference call.

The other investment we had on nonaccrual status as of quarter end was our loan to Washington Inventory Services, or WIS. WIS provides physical inventory counting and other services for retailers and operates in what I would characterize as an attractive duopolistic market structure. While top line numbers for the company have been solid, WIS has experienced margin pressure resulting from execution-related inefficiencies and high labor costs. Notwithstanding this dynamic, we are hopeful that with active management, WIS will be able to mitigate these issues by taking advantage of its strong market position. We are actively engaged with the company and its advisors and are focused on obtaining a favorable outcome for our investment.

We are pleased to report that we placed our investments in NTS Communications back on accrual status during the quarter. As you may recall, we previously worked with NTS and its sponsor back in July to provide additional capital and flexibility in order to facilitate more aggressive investment in the company's fiber telecommunications network and to promote subscriber growth. NTS has executed well against this plan, with capital programs coming in on time and below budget, and new fiber subscriber additions showing positive trends.

During the quarter, we were hard at work on the right side of our balance sheet as well. We achieved a significant milestone by issuing $115 million in principal amount of convertible notes. We believe this demonstrates our ability to access the institutional, unsecured financial market on attractive terms, and provides our shareholders with the benefit of greater diversity and funding sources, and increased financial flexibility. In addition, we enhanced the terms of our revolving credit facility by extending the maturity date for an additional year, to December 2021, and upsizing the total commitments to $605 million. We are one of a handful of BDCs that was successful last year in both continuing to extend the maturity date of its revolving credit facility and attracting new capital to increase the size. We believe this is a reflection of the strength of our platform.

In addition, subsequent to quarter end, our Board of Directors renewed the Company's stock repurchase plan for an additional year, which extends the plan to March 18, 2018. Under the plan, the Company may repurchase up to $25 million of its common stock if the market price is below the Company's most recently announced NAV per share, subject to certain limitations. We believe that buying back shares at a discount to NAV, should the opportunity arise, is an attractive use of the Company's capital.

With that, let me turn the call over to Jon Yoder.

Thanks, Brendan.

During 2016, we continued to execute on our strategy of leveraging the relationships and capabilities of Goldman Sachs to directly originate loans to middle-market companies primarily located in the United States. In fact, 100% of all new originations during the year were direct originations, and were not purchased in the broadly syndicated market. We continue to believe that this direct-origination strategy presents an attractive investment opportunity, since it allows us to command a premium price for our capital, earn origination fees for our investors, and negotiate terms and structures that provide meaningful downside protection relative to what is available in the broadly syndicated loan market.

Earlier in January of this year, we were successful in getting an exemptive order from the SEC that allows us to invest together with other funds managed by the GSAM credit alternatives platform, as we originate new opportunities. While obtaining the exemptive order will not change our investment strategy, we believe that it is a significant development for our shareholders. In particular, it will allow us to more effectively utilize our size when competing against other lenders for opportunities, while at the same time it should reduce concentration risk as we add more single names to our portfolio.

With that as backdrop, we were pleased with our investment activity during the fourth quarter. We had gross originations of $110.3 million, and new investment commitments and fundings of $90.3 million, including an additional $8.5 million investment in the Senior Credit Fund. Sales and repayment activity totaled $55.9 million, resulting in net portfolio growth of 2% quarter over quarter. New investment commitments were across two new portfolio companies and three existing portfolio companies. Sales and repayment activity totaled $55.9 million, primarily resulting from the full repayment by one portfolio company, and a partial syndication of our investment in another portfolio company.

During the course of 2016, the broader trend across credit was tighter spreads and looser terms. Yet despite these trends, the weighted average yield of our investment portfolio at cost was relatively unchanged during the year. We began 2016 at 10.9% and ended the year at 10.6%. Furthermore, none of the new loan originations that we did during 2016 were covenant-light. And all had financial maintenance covenants. Again, we think this speaks to both the strength of our sourcing, as well as our careful, consistent underwriting standards.

As of December, 2016, total investments in our portfolio were $1.167 billion at fair value, comprised of 91.5% senior-secured loans. This includes 36.1% in first lien; 26.6% in first lien, last out Unitranche; 28.8% in second lien; and about 30 basis points in unsecured debt; 1.5% in preferred and common stock; and 6.7% in the Senior Credit Fund. We also had $7 million of unfunded commitments as of December 31, bringing total investments and commitments to $1.174 billion. The portfolio continues to be diversified, with investments in 40 portfolio companies, operating across 26 different industries, with no significant industry concentration. The weighted average net debt to EBITDA of the companies in our investment portfolio at quarter end was 4.8 times, versus 4.6 times as of last quarter. The weighted average interest coverage of the companies in our investment portfolio was 2.7 times, slightly lower than 2.9 times at the end of the prior quarter.

Turning to the Senior Credit Fund, we are very pleased with the continued growth of this investment, where we have earned a 14.5% return on our invested capital over the past year. We and our partner were able to grow investments in the Senior Credit Fund by 22% during the quarter, and by 68% year over year. Our investment in the Senior Credit Fund now represents approximately 7% of the Company's total investment portfolio, and is the Company's largest single investment. During the quarter, we and our partner originated $106 million of investments for the Senior Credit Fund in six new companies and six existing portfolio companies, bringing the total size of the investment portfolio to $480 million. All of these new investments were in first-lien, senior-secured, floating-rate loans with interest rate floors. The Senior Credit Fund had sales and repayments of $16 million, driven primarily by the repayment of one portfolio company and a partial sale of another portfolio company. Total activity in the Senior Credit Fund resulted in net portfolio growth of $87 million during the quarter. The Senior Credit Fund portfolio remains well-diversified, with investments in 37 portfolio companies operating across 22 different industries, and again, with no significant industry concentration.

I will now turn the call over to Jonathan to walk through our financial results.

Thanks, Jon.

We ended the fourth quarter of 2016 with total portfolio investments at fair value of $1.167 billion, outstanding debt of $503 million, and net assets of $665 million. Our net investment income per share was $0.50 as compared to $0.51 in the prior quarter. As Brendan mentioned earlier, our Board of Directors declared a first-quarter dividend of $0.45 per share, payable to shareholders of record as of March 31. For each of the trailing six quarters, we have out-earned our dividend on a net investment income basis. We believe that this is a testament to the earnings power of our portfolio as well as to our efficient expense structure. During the quarter, our average debt-to-equity ratio was 0.71 times, as compared to 0.74 times during the previous quarter. The decrease in average leverage was primarily attributed to repayments that occurred at the beginning of the quarter, coupled with new portfolio investments made near the end of the quarter. We ended the quarter with a debt-to-equity ratio of 0.76 times.

Turning to the income statement. Our total investment income for the fourth quarter was $30.5 million, down from $34 million last quarter, primarily driven by the classification of Iracore and WIS as nonaccrual investments, and a decline in prepayment-related income. Total expenses before taxes were $12 million for the fourth quarter as compared to $15 million in the prior quarter. Expenses were down quarter over quarter, primarily driven by a decrease in incentive fees. The lower incentive fees were attributed to our incentive fee structure. We net our capital losses, whether realized or unrealized, against pre-incentive net investment income for the purposes of calculating incentive fees. During the quarter, we had net unrealized appreciation on certain investments, which resulted in a reduction in incentive fees paid to GSAM. We believe this is a differentiated fee structure that is a tangible benefit to our shareholders. We ended the quarter with net asset value per share at $18.31, down approximately 1.5% from the prior quarter, driven by unrealized appreciation on certain investments. Our supplemental earnings presentation provides a NAV bridge to walk you through these changes.

As Brendan mentioned earlier, we were active during the fourth quarter in executing on our financing strategy. In October, we closed on an issuance of $115 million principal amount of 4.5% convertible notes. The convertible notes mature on April 1, 2022, unless repurchased or converted in accordance with the terms prior to such dates. Net proceeds of the offering were used to pay down a portion of the debt under our revolving credit facility. We are very pleased with the terms that we were able to achieve in this offering.

With this offering, we also considered the impact to our total blended cost of financing, by limiting the offering to 23% of our debt capacity at the top end of our target leverage ratio. We believe this mix delivers our shareholders the benefits we were seeking to achieve without unduly increasing the overall cost of financing. In addition, we amended our revolving credit facility to extend the maturity by one year to December, 2021, and upsized the total commitments to $605 million.

We closed 2016 with LIBOR at approximately 1%. That leaves us in the unique position of being positively exposed from an NII perspective to either an increase or decrease at interest rates. LIBOR goes up from 1%, we will collect more interest income in our loan portfolio, as we would generally be above LIBOR floors on those loans. If LIBOR goes down from 1%, the LIBOR floors in our loans will generally protect us from reductions in interest income collected, while the expense of financing our portfolio will go down. For additional detail related to the interest rate sensitivity of our portfolio, please refer to item 7a of our 10-K on page 92.

With that, I will turn it back to Brendan.

Great. Thanks, Jonathan. Overall we were very pleased to have produced a solid quarter and solid 2016 for our shareholders. We do not take the privilege of managing our capital for granted, and we continue to work very hard in 2017 in an effort to deliver again this year. So with that, and on behalf of the GSAM Team, we thank you for your time and continued support.

And now, Dennis, please open up the line for Q&A.

(Operator Instructions)

Doug Mewhirter, with SunTrust. Please go ahead.

Good morning.

Hey Doug, how are you?

I noticed the -- your originations this quarter were most -- or actually all second lien. Is it a matter of just what happened to come across the table? Has there been a pricing difference where maybe the first lien and stretch seniors and Unitranche's are maybe getting a little tight for you?

I'll let Jon take a crack.

Sure. Doug, I think that first of all, I wouldn't necessarily draw again, broad conclusions from a single quarter.

You're right that the -- we really did two new originations in the quarter. And both of those were second liens. I'd say that generally speaking there has been pressure on spreads.

I think that you know, the -- there are selective opportunities where there's less pressure on spreads in the second-lien market, that in certain cases can make it more attractive. But again, every investment we look at, we look at on an individual basis and try to figure out the most attractive risk adjustment return attachment point in the structure.

So as we've always done, and as we expect to continue to do, we don't start with a top-down of you know, we think we want more first liens, or we want more Unitranches or we want more second liens. Rather we really start with the bottoms up of looking at the individual opportunities and deciding where we think the best risk adjustment returns are.

And that said, I think at the risk of repeating myself, for sure, there are times where it seems as though spreads on first liens have tightened a bit relative to spreads on second liens.

So there's been a couple of opportunities there. But again, would not suggest there's any broad trends from it.

Good. Thanks. That's helpful. Going back to looking at your leverage and also looking at maybe your prospects. Your leverage is I think, what, 0.76. And looking at your pipeline and your maybe might be exited, do you feel comfortable with your regulatory capacity and your range of expected leverage you might want to hit in the next couple quarters?

Our take a crack at that. Doug, I think you're right.

I think as Jonathan Lamm referenced in the prepared remarks, we ended the quarter at 0.76 times leverage, I think the average leverage during the course of the quarter was 0.71 times. So we've characterized that as being right where we want to be from the perspective of the total portfolio construct. I think we find ourselves in a pretty good and enviable position. I think we've got good accretive access to the equity capital markets, should that be an opportunity that presents itself.

But we're also very mindful of looking at the overall pipeline of investments; not just what we're seeing prospectively for new investments, but also what might be coming out of the portfolio. Often we're trying to manage the total capitalization to the optimal range to produce very attractive net investment income.

So this quarter relatively new to prepayment activity, we alluded to some of that in the quarter. But we do anticipate that trend picking up, which of course provides us with incremental capital for new opportunities. Broadly speaking, really not concerned about access capital access to capital in order to execute on the business plan.

Jon Yoder mentioned more broadly as well in the prepared remarks, that we also have exempt to relief across our platform.

So generally speaking, as we look to execute on new investment opportunities, plenty of capital for us to pursue those investments. All the while, our focus here for Goldman Sachs BDC is ensuring that the total capitalization, the total capital structure is one where we can really deliver efficiency and deliver attractive returns.

Okay, thanks. And my last question, just a quick numbers question. What is your -- the capacity on your Senior Credit Fund? Before you would have to get it upsized either from a third-party leverage or from your partner?

We've got, I mean we've run it at two to one very efficiently. We closed the quarter at under $80 million invested from each of us and our partner. So we can go up to $100 million of incremental, or $20 million from each of us and our partner in incremental equity. And then lever that two to one. So that gets you to another $120 million of investable assets.

And then, broadly speaking, Doug, I think again, we may have mentioned the BDC's investment in the SCF is just under 7% of our total assets. The other constraint we would have is the -- this is a nonqualifying asset. We are constrained to the tune of 30% of the total assets can be of that ilk.

So clearly, plenty of capacity from that perspective as well, given the current capitalization.

Okay, thanks. That's it to all my questions.

Jonathan Bock, with Wells Fargo. Please go ahead.

Hi, guys. Fin O'Shea for Jonathan this morning. Thank you for taking our questions.

The first one we had on coinvestment. It looks like you got the exemptive order in January, but one of the first smaller question on one of these deals was syndicated. I wanted to know if that was internal or external?

And then just more broadly, how will the origination and allocation policies look? Will we see larger deals originated from the BDC and distributed? Or will they be originated from the advisor and allocated accordingly?

So Fin, the answer to your question is on the first one, the syndication that we did from the BDC was one to third parties. It was an opportunity where we were able to earn a nice syndication fee as part of that because we led the facility.

Regarding your second question of going forward with the exemptive relief, what is our intent? The intent is to allocate new opportunities effectively pro rata amongst the GSBD, the Company obviously, and the other accounts that we manage. We're in the fortunate position of having all of our accounts pursuing the same investment strategy. When we have a new opportunity, we allocate across those accounts.

And generally speaking, those allocations are done on the basis of the capital size, the relative capital size of the different accounts. So again, we think that's a really good development for our shareholders because not only does it help us competitively in really unlocking the full origination capabilities of the platform, but also you know, it should result in probably more single name diversification than what you've seen historically from us in the BDC.

And Fin, it's Jonathan. Just with respect to the advisor originating versus the allocation across the various BDCs, all fees associated with those originations, syndication income and anything else that were to ensue, would all go to the vehicles and not to the advisor. Just for clarification.

This is a topic and an issue that I would say is a core competency of GSAM. I'd say we are a very large, very scaled asset manager. It's not uncommon for us to have different accounts pursuing the same investment strategies, and we have very tried and true and longstanding policies and procedures to ensure that there is an appropriate and equitable accounting and allocation of those different investment opportunities.

We view this as a really, really attractive outcome for the platform. More broadly, Doug asked the question about our constraints around capital. And if you don't have capital in this space, it's very challenging to be a solutions provider to those that are looking for capital.

So I think we found ourselves in a very unique, very attractive and very enviable position of being able to manage a good scale full of capital, and at the same time, give us the flexibility and the ability to, again, manage this BDC in a way that it's going to continue to have the Business be appropriately capitalized, efficiently capitalized, and produce attractive returns as a consequence of that.

So with the benefit of more scale, we can pursue the same investment opportunities in the core of the middle market; the strategy that we found to be very successful. Do it with a bigger scale pool of capital; and therefore, be a very attractive solutions provider for borrowers.

We appreciate the color. Thank you very much. Just one more on Bolttech, which look to be markdown this quarter. We can see the Unitranche -- you know, originated in 2013. You're obviously probably pretty amortized there.

Just given the exposure in last out Unitranche, can you kind of walk us through the typical say, super-senior creditor rights that the bank or whatever lender might have? Can they put this back to you? Can they effectuate any sort of capital call? If you could just shed some light on potential risks in this section of your book?

I'll speak broadly, and then specifically to Bolttech. Generally speaking, when you look across -- and I think if you look at our disclosure, we're very pointed in describing the portion of our book that is las out portions of Unitranche.

Generally speaking in that strategy, we, our last out portion tends to be the majority of the capital in that tranche. And as a consequence of that, generally speaking, the provider of the larger amount of capital usually has a better of the overall rights in that arrangement. For Bolttech specifically, you're exactly right. That's a total tranche size of $39 million; the first out has amortized down with cash flow generated by the Company and other sources from $10 million initially, down to about $3 million today. So when you think about that loan, total tranche size $30 million, $3 million of first out, and $36 million roughly of last out. So, the rights really exist with us, broadly speaking, as the super super majority of that capital.

So there are no abilities for them to just to pointedly call capital from us. We could take the opportunity to simply pay that piece back. So there's a whole host of outcomes that could ensue there. But suffice to say, we like that position where we are really driving outcomes as compared to being a very small sliver of that total capitalization. And then, therefore, finding ourselves at the behest of that lender who might have more heft and more leverage in those negotiations.

So generally speaking, really not concerned with that inter-credit relationship in that Bolttech situation.

That helps a lot. One more small one, and then you can cut us off here. I just wanted to follow on Doug's question on the post-quarter pipeline and origination. Did you give a number there? Did I hear any guidance of that being strong? And I apologize.

No worries, Fin. We did not give any specific guidance or numbers around first quarter originations or repayments. So there's nothing specific data-wise to point to there.

I think the commentary was more around expectations, in some cases, known repayments that we've seen. That certainly colors our views on overall capitalization and our ability to execute on investment opportunities.

Okay. Thanks so much.

Our pleasure.

Leslie Vandegrift, with Raymond James. Please go ahead.

Good morning. Quick question on one of the new investments, I know you talked about earlier, the second liens in the quarter. But specifically ACS acquisitions. It was priced at L plus 13%. That's higher than a lot of mez debt right now. I was just curious, what was built in there?

Correct. So let me take a crack, Leslie, at describing the investment overall. So, ASC. They're really into the Company's Animal Supply core. So basically Animal Supply is a distributor of pet food supplies and pet food products. So it's a segment of the market that we quite like.

It has tended to be quite durable over cycles. There's a large trend going on more broadly in society; the humanization of pets. A lot of disposable income being put towards this segment of the consumer market that has proven to be quite steady and attractive.

We were able, by virtue of having a really powerful direct [realization] platform, to structure this transaction, to read this transaction, on what we think are very attractive terms. Jon talked about it a little bit in one of the earlier questions. I would say we are seeing, on a few different occasions, situations where Unitranche as a solution taps out and ends up not being the preferred outcome for borrowers and so that affords -- well, in this specific case, the opportunity to provide what we think is a really attractive second-lien loan.

I think evidence of that is also reflected in the syndication that we're able to put in place as well. Effectively, we originated this as you described, L 13. Also, at a pretty significant discounts to par, we were able to syndicate 20 of the 50 at par, which again, I think, is really evidence of the third party's view of the attractiveness of that asset.

That gives rise to some syndication fees this quarter that Jonathan Lamm eluded to.

All right. Thank you. Just a follow-up on one of Doug's original questions on the prepayment income. I know it was a bit slower this past quarter, but -- and it can be lumpy. Kind of a base run right there, maybe on an annual basis that you guys tend to see?

It does tend to be lumpy. It was like $1 million in Q3.

It was much lower numbers this quarter, so I'd say you'll see that number range anywhere between zero and $2 million or $3 million at the high. But each quarter is really unpredictable.

The way, Leslie, to look at it would be, there's always timing elements on any quarter-to-quarter basis. Over a longer-term period, a year for example, I think would give you a much better baseline of what to expect. I think, challenging on a quarter-over-quarter basis to model that.

Okay. All right. One last follow-up on Fin's question about Bolttech. Thank you for the original color on that.

It went from 79% last quarter to 56% on the fair value cost. And we saw Iracore, which obviously, is a very different company, do something similar; go from 62% last quarter to nonaccrual at about a little over 30% or 36% right now.

So if we're seeing these larger marks certainly going to down 56%, should we be ready for that to possibly go nonaccrual next quarter?

It's fair to say Leslie, when you see a markdown, I think that's evidence of increased risk. But certainly not just positive of the accrual status on a go-forward basis. I think you could look last year on this Q4 call, we were talking about GTL and Securus as investments that we had taken. Relatively significant, but unrealized marks on and is the case here at Bolttech as well. Securus is something we marked down to 55% of par in Q4 of last year.

Dial the clock forward, it's public knowledge that the sponsor there is actually in market trying to sell that business, which could give rise to a repayment of that investment should that come to pass. So certainly fair to say that risk increases when marks are down. I think when you look at our experience, we've been pretty transparent when that happens. You'll see that flow throughout our portfolio.

But in many cases, we've also earned that back over time. So I wouldn't necessarily draw specific conclusions about the direction of marks with the forward accrual status. But I think it's fair to say that the risk does increase as the mark does go down.

Perfect. Thank you very much for answering my questions.

(Operator Instructions)

Christopher Testa, National Securities.

Hey, good morning, guys. Thanks for taking my questions. Just curious on the attachment points being up pretty decently on the year and obviously quarter over quarter. How much of that is from EBITDA decline in the portfolio companies versus increased subordination and second-lien exposure?

So I think I don't have a number at hand to say it's 20% this and 80% that. Or the like. I will limit my comments to just sort of color.

We did get repaid on some of our lower attachment point loans during the year. And obviously, some of new ones that we originated as is common, that you'll start at the higher attachment point, and then it works its way down as you'd expect over time as companies grow or they amortize down. So it's a function of, I'd say, mix in terms of the nature of the companies that have been in the portfolio, is probably the bigger driver of the change.

Okay, great. That's good color. And just on the syndication that you discussed, could you give the dollar amount of the fee if you're able to do so?

I'm just curious if the syndication, if you were selling out a different portion of the capital stack? Or just you know, a pro rata type slice of it?

Chris it was $550,000. We originated the loan at 7.25% and syndicated $20 million at par.

It was not a syndication of a first out. It was a sale of the par passu second obligation that we underwrote.

Okay that's helpful. Thank you. And on the second-lien originations you did during the quarter, were those two investments new or existing portfolio companies?

Those were both new portfolio companies.

Got it. And I'm just curious on the dividend, obviously, you guys have been out earning it even with minimal fee income. Just curious what your thoughts are on a potential special or a bump up in the regular dividend level?

Chris, I think we view, especially given where our stock has traded at the premium value that the spill-over income actually provides incremental value to shareholders. We're now -- we've closed the quarter at the top end of our target leverage ratio 0.76 times. And as you spill over income even into perpetuity and current excise tax of 4%, that is a very, very good trade-off relative to issuing new shares where you'd be obligated to pay a dividend at a much higher level than that 4% excise tax.

The way we think about it, at lease at this point in the context of where we're capitalized, and the opportunities that we have, we think that spilling it over is an attractive value-added proposition for shareholders.

Okay great. That's all for me, thank you for taking my questions.

At this time there are no further questions. Please continue with any closing remarks.

Once again, we thank you all for your time and your continued support. Please feel free to reach out to the Team if you have any other questions. Thank you very much and have a good day.

Ladies and gentlemen, this does conclude the Goldman Sachs BDC, Inc. fourth-quarter 2016 earnings conference call. Thank you for your participation. You may now disconnect.