Goldman Sachs BDC Inc (GSBD) 2017 Q1 法說會逐字稿

Good morning. This is Brent, and I will be your conference facilitator today. I would like to welcome everyone to the Goldman Sachs BDC, Inc. First Quarter 2017 Earnings Conference Call. (Operator Instructions)

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

Thanks, Brent. Welcome 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 belief 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 those forward-looking statements as a result of the number of factors, including those described from time-to-time in the company's SEC filing. This audio cast is copyright 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-Q filed yesterday with the SEC. This conference is being recorded today May 5, 2017, for replay purposes.

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

Thank you, Katherine. Good morning, everyone, and thank you for joining us for our first quarter earnings conference call. As usual, I'll start by providing an overview of our first quarter results and provide key highlights for the quarter. 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 we open the line for Q&A.

We are pleased to report another solid quarter for our shareholders. Net investment income per share was $0.49 in Q1, as compared to $0.50 per share for Q4 2016. Earnings per share were $0.40, up significantly from $0.15 from the prior quarter. On an annualized basis, our net investment income produced an 11% yield on book equity. As we announced after close yesterday, our board declared a $0.45 per share dividend payable to shareholders of record as of June 30th. This quarter marked the seventh consecutive quarter where our net investment income meaningfully exceeded our dividend.

Moving on to investment activity. The first quarter is typically notable for its seasonably muted transaction levels. Given that backdrop, we are particularly pleased to report strong new originations activity during the quarter, with gross originations of $112.6 million. As we have been anticipating, repayment activity also picked up during the quarter, and as a result, the overall portfolio levels were essentially flat quarter-over-quarter. Average and ending debt-to-equity, during the quarter was 0.7x and 0.76x, respectively. We continue to produce solid portfolio growth in our Senior Credit Fund which increased by 8.9% quarter-over-quarter. At 7.9% of total assets, our investment in the Senior Credit Fund is the company's single largest position and it continues to produce attractive returns. The trailing 12-month of return on this investment is approximately 14%.

Turning to the market. For much of the quarter, investors were focused on the potential for a series of rate hikes over the course of the year. This drove significant investor interest in floating rate asset classes including bank loans. The new capital flowing into bank loans caused a contraction spreads for broadly syndicated loans. While the middle market is somewhat insulated from fund flows given the illiquidity of the asset class, we did see broadly syndicated loan investors who are hungry for paper dipped down into the upper middle market. This bid for paper resulted in a yield compression in the upper middle market and borrowers took advantage of lower bond cost to refinance at lower levels.

Reflecting this activity -- reflecting this reality, our repayments during the quarter were skewed toward upper middle market portfolio companies. We saw less competition from broadly syndicated loan buyers in the core of the middle market where we generally operate and accordingly less pressure on yields. Finally, we're pleased to report that subsequent quarter to end, the company's investment grade rating and stable outlook was reaffirmed by Standard & Poor's. This positive rating reflects the company's largely senior secured investment portfolio, strong earnings metrics and affiliation with Goldman Sachs, that provided shareholders with access to our proprietary sourcing capabilities, leading infrastructure and operational benefits.

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

Great. Thanks, Brendan. So we are pleased to report a strong quarter of new origination activity. We had new investment commitments and fundings of $112.6 million and $107.5 million, respectively, including an additional $13.4 million investment into the Senior Credit Fund. New investment commitments were across 6 new portfolio companies and 4 existing portfolio companies. Sales and repayment activity totaled $110.3 million, driven primarily by full repayments from 3 portfolio companies. The full repayments were from our $59 million second lien investments in Highwinds Capital, our $12 million second lien investment in Hutchinson Technology, and our $24 million first lien investment in Dispensing Dynamics.

I'd like to pause on our largest repayment during the quarter, which was Highwinds Capital. In July 2013, we made a second lien loan to Highwinds Capital, which is a digital content delivery network operator. Our investment thesis was centered on the company's stable business profile with sensible cash flows demonstrated by the company's proven history of subscriber retention. Furthermore, we believe that the company benefited from attractive, macro tailwinds as more and more content is consumed digitally.

Over the past 3.5 years, Highwinds has been able to successfully execute its growth strategy both organically and through accretive acquisitions. During the first quarter, Highwinds sold the majority of its business to a private equity sponsor, which resulted in the repayment of our second lien loan at a premium to par. We were able to achieve a gross IRR on this investment of 16%. While the company's success allowed it to graduate to a lower cost of capital, we were able to participate in the new first lien loan supporting the acquisition of Highwinds by the private equity sponsor through the Senior Credit Fund.

We think that this is a good demonstration of the synergies and strategic value that the Senior Credit Fund brings to our shareholders. Namely, it allows us to continue to drive value from our domain expertise and relationship with the borrower even as that borrower grows and graduates for that lower cost of capital. As of March 31, total investments in our portfolio were $1,164,000,000 at fair value. Comprised of 90.1% senior secured loans, including 34.9% in first lien, 27.2% in first-lien/last-out unitranche, and 28% in second lien debt as well as 0.30 basis points in unsecured debt, 1.7% in preferred and common stock and about 8% in the Senior Credit Fund.

We also had $11.9 million of unfunded commitments as of the end of the quarter, bringing total investments and commitments to $1,176,000,000. The portfolio continues to be well diversified with investments in 43 portfolio companies operating across 26 different industries, with no major industry concentration. Both the overall portfolio yield and credit quality were relatively stable during the quarter. The weighted average yield on our total investment portfolio at cost this quarter was 10.5% versus 10.6% in the prior quarter. The weighted average net debt-to-EBITDA of the companies in our investment portfolio at quarter end was 4.6x, slightly down from 4.8x the prior quarter. The weighted average interest coverage of the companies in our investment portfolio was 2.7x, which was unchanged from the prior quarter.

Turning to the Senior Credit Fund. We're very pleased with the continued growth of this investment where we've earned a 14% return on our invested capital over the trailing 12 months. We and our partner were able to grow investments in the Senior Credit Fund by 9% during the quarter, and by 53% year-over-year. Our investment in the Senior Credit Fund now represents approximately 8% of the company's total investment portfolio, and is the company's largest single investment.

During the quarter, we and our partner originated $76 million of investments for the Senior Credit Fund in 4 new companies, and 1 existing portfolio company, bringing the total size of the investment portfolio to $522 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 $31.8 million, resulting in net portfolio growth of $41.7 million during the quarter. The Senior Credit Fund portfolio also remains well diversified with investments in 38 companies, operating across 23 different industries.

With that, I'll turn the call over to Jonathan, to walk through our financial results.

Thanks, Jon. We ended the first quarter of 2017, with total portfolio investments at fair value of $1,164,000,000. Outstanding debt of $506 million, and net assets of $664 million. Our net investment income per share was $0.49 as compared to $0.50 in the prior quarter. Earnings per share were $0.40 as compared to $0.15 in the prior quarter. As Brendan mentioned earlier, our Board of Directors declared a second quarter dividend of $0.45 per share, payable to shareholders of record as of June 30. This is the seventh consecutive quarter that we have outearned our dividend on a net investment income basis.

During the quarter, our average debt-to-equity ratio was 0.7x as compared to 0.71x during the previous quarter. And we ended the first quarter with the debt-to-equity ratio of 0.76x consistent with the prior quarter. Turning to the income statement. Our total investment income for the first quarter was $32.2 million, up from $30.5 million last quarter primarily driven by an increase in interest income including prepayment-related income, partially offset by a decline in other income. Total expenses before taxes were $13.9 million for the first quarter, as compared to $12 million in the prior quarter. Expenses were up quarter-over-quarter primarily driven by an increase in incentive fees, partially offset by a decline in other operating expenses.

As we have discussed in the past, incentives fees can change quarterly as we net our capital losses whether realized or unrealized against pre-incentive net investment income in the calculation. We ended the quarter with net asset value per share at $18.26, down approximately 27 basis points from the prior quarter driven by unrealized depreciation on certain investments. Our supplemental earnings presentation provides a NAV bridge to walk you through these changes.

During the quarter, our Board of Directors renewed the company's stock repurchase plan to March 18, 2018, to 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 be opportunity arise is an attractive use of a company's capital. Those stock repurchases were made during the quarter or subsequent to quarter end.

With that, I will turn it back to Brendan.

Great. Thanks, Jonathan. Overall, Q1 was characterized by steady, consistent performance by underlying portfolio investments, which facilitate strong net investment income to support attractive distributions to our shareholders. We remain focused on seeking out investment opportunities that generated attractive risk adjusted returns, and we are appreciative of the opportunity to continue to manage our shareholder's capital.

And now Brent, please open the line for questions.

(Operator Instructions) Your first question comes from the line of Doug Mewhirter with SunTrust.

First, could you give us an update any on your 2 nonaccruals? Whether there's been any -- the movement on there towards reconciliation or exit?

Sure. Thanks, Doug. Starting with Iracore, if you look at the Q, we actually had a pretty subsequent events disclosure on Iracore. So we were successful post-quarter end in getting Iracore restructured. The substance of that is we converted our debt investment into equity of the company. We also made a $3 million investment to refinance out what was an existing debt of the company, which will be a performing loan at 10%. So overall, pleased with the outcome, I think, if you look at the situation overall clearly, not where we wanted to be. But by virtue of the restructuring while there is an accounting realized loss that we're taking here on the backend we own close to 20% of the company for business that we are hopeful over the cycle can generate good, attractive returns and return back to its old levels of probability and gives us a chance to earn back the full amount of our invested capital potentially over time. So pleased with the outcome, and the opportunity that we have going forward with that investment. WIS is the other nonaccrual as of quarter end, that situation is ongoing so a little bit more challenging to comment with specificity there, Doug. But suffice to say we're in ongoing negotiations with all the stakeholders within the ecosystem of that investment, and as is always the case we'll continue to fight to optimize the outcome on behalf of our investors.

And just one thing I would let me add, I guess, on Iracore is as Brendan said, it's -- post-quarter end we [effect with] the transaction in as a result from an accounting perspective we will have some unrealized convert to realize, but we don't expect a material change in value from where we were marked at quarter end.

That's helpful. The -- another bigger -- maybe picture question, you talked about how the -- as you go a little higher into the upper middle market it's more competitive, but your -- your sort of core wheelhouse is still relatively insulated, I was wondering a little bit about this the SCF, and that the average loan is a little bit large or the average EBITDA of your company is a little bit larger. So I don't know if that sort of qualifies as maybe the lower end of upper middle market in your eyes. So what does that mean for your outlook for that environment?

Good question, Doug. I think the data you're referencing is correct. If you look at the SCF, it's slightly a bigger companies, I'll probably be off by a little bit here but medium EBITDA probably in the low 60s, for the companies in the SCF maybe in the mid-60s. Still very much middle market types of investment, so I think when you look back over this past quarter, quite pleased with the production there. As we mentioned we grew that by close to 9% quarter-over-quarter, I would say the underwrite remains consistent from a quality perspective and from a yield perspective in those other loans. We have had some repayment activity there but so are able to grow that portfolio. Not really a beta approach to that market. So we continue to leverage the sourcing engine of the platform to find and differentiate opportunities. So always tough to predict. Going forward, certainly originations can be lumpy as can repayments. So want to avoid trying to predict going forward, but certainly, in the context of what we describe as a more competitive environment this quarter particularly for the upper middle market quite pleased with our performance in the production and the quarterly of the production there.

And one thing I'd also add to that, Doug, is obviously in the Senior Credit Fund, the -- it's less sensitive than our balance sheet is to asset yields, and is more sensitive to financing yields because it is levered 2:1. And so the other phenomenon as spreads have contracted for upper middle market loans, we've seen spreads on financing of those loans also contract. And so we're certainly very mindful of that and I think if you project out in the future what we'll be very thoughtful about how we can take advantage of contracting spreads of the financing side as well.

Great. And just 2 last numbers related questions very quick, and it's just more me saving some calculations. First, what were the, I guess, your call fees and accelerated OID in the quarter in that interest income line and also what was your sort of give back on the incentive fees this quarter? For your slight unrealized loss position?

So we had approximately $1.3 million in terms of call fees and accelerated appreciation -- accretion relative to the investments that were repaid and there was approximately $0.01 related to the incentive fee in terms of -- penny a share in terms of -- related to the incentive fee in terms of give back due to the markdowns.

Your next question comes from the line of Leslie Vandegrift with Raymond James.

First of all, just a quick modeling one on here. The spillover income as of the end of the quarter, do you guys have that?

Its $0.75 a share -- of total undistributed net investment income.

Perfect. And on -- I know you were talking about it a minute ago the Washington Inventory Services update discussing ongoing negotiations. But I guess, have you seen that go against you a bit, the markdown came down about 30% from where it was a quarter ago, so has that turned a bit, seeming less likely to pay back?

I would say a few things Leslie. One, no dramatic changes in the underlying performance of the company. So as I mentioned, we are in the middle of ongoing negotiations as we speak, though. So [I] -- we certainly don't want to comment on that. So we remain hopeful that there could be opportunities to optimize the outcome here. So certainly don't want to project forward what might be the case particularly as we're in throes of that discussion.

Okay. All right. And -- on the -- you talked about the upper middle market spread compressions and just kind of the market dynamics in general, right now. And you mentioned the Senior Credit Fund impact. But you guys also have the private BDC right now that is ramping up and do you have the idea that the public could coinvest with it? If you start doing coinvestments there, would they not be that larger upper middle market size?

Leslie, it's Jon Yoder here. So look, I think, one of the things that we've always tried to do and we think it's really critical to success in middle market lending is to stay true to the middle market. And so as we've sized capital both initially for our Goldman Sachs BDC, GSBD but also as we thought about how much capital we're willing to manage on a private basis. We've specifically targeted amounts that we feel we can comfortably deploy into our core middle market strategy. And so the other thing we've done with our private BDC is as you may know, it's structured as a capital call facility, so that we can draw capital only when and if we find attractive opportunities in our core investment -- our core strategy. So we're not under pressure to simply deploy capital just because we got to get -- we've got shares issue that we have to get some income earning assets that -- to be able to pay that dividend. So I mean, it was frankly, deciding how much capital to manage and the form in which you're able to draw that capital is frankly core in our view to have been successful in this strategy.

I think, Leslie, the only other thing to add there and you mentioned it, we did get exemption release this quarter that you'll see that in the 10-Q as well, which is a critical outcome here and a great outcome for as a platform and for GSBD shareholders in particular. So as Jon mentioned, we're not anticipating any change in strategy in terms of moving up to bigger borrowers rather with the benefit of the exemptive order, we can be much more meaningful in the context of each tranche that we're participating in. The heft that we have allows us to drive those negotiations to an even greater degree. So we get the benefit of that scale capital base, with also the thoughtful approach Jon described in the capital call facility, no pressure to do the deals that are just in front of us, but rather to do the right deals. And I think again, when you look at this quarter particularly with the full benefit of that in place, we're seeing that come to fruition. So we remain pleased overall.

Yes. Also, I was just going to add one more point on this, just to reiterate. I think we talked about this on the last call, but for anybody who was not able to join that call, I think it's worth reiterating. We think that the private BDC that we have in the coinvest order and coupled with that is a significant driver of value to our GSBD, our Goldman Sachs BDC shareholders, because we believe it will allow us to add increasing amount of diversity to the portfolio. Positions, once they get allocated between the 2 companies obviously, the position sizes will get smaller on an individual name basis within GSBD, which we think is a very positive trend and then you're starting to see that play out already even this quarter, which is the first quarter we've operated with that coinvestment release. You saw the number of portfolio companies always starting to tick up. So we think that's a hugely valuable thing to shareholders as well.

Okay. And then, I guess, and my follow-up on that would be then with the idea that you coinvest, they get the smaller percentage, so you do have the smaller investments in the public BDC. But with -- you're talking about capital call based on the private side, so you can sit out if it's not as attractive you want it to be, but does that not mean that when there is only a few good deals in a quarter, and you're going to split them now between the public and private, does that not mean that we can slow down on a much faster rate as that occurs on the public side?

Well, I think, Leslie, if I understand the question, I think the harder question is and I think it speaks to the core competencies, how do we manage the capital base of the public BDC to optimize outcomes. So I think when you look back historically, yes, I think we've been quite thoughtful, quite prudent overall about how to do that. Our core focus is always with our public BDC of trying to optimize investment returns. And so when you think through the components of that being able to allocate opportunities when they're available is important. So we're incredibly thoughtful, spend a lot of time thinking through how to manage that overall. And again, it comes through this quarter when we did have this coinvest order in place, we were able to be quite productive overall, maintain these leverage profile that we desired within the overall portfolio. So that's our goal, that's what we'll continue to endeavor to do.

All right. Last question, and I promise. And then, I'll let you go. But on the Senior Credit Fund obviously, nice growth in it this quarter. Will we see there be off and on when -- the private, when you guys coinvest with the private. Can you coinvest with the private in the Senior Credit Fund or do those kind of have to be separate?

We cannot coinvest with the SCF and any other funds. But I think, as you know, Leslie, they're different investment mandates as well. So generally speaking, when we're doing deals we're generally not splitting them between the BDC, the public BDC and SCF. The SCF is really focused almost exclusively on senior debt, lower asset yields, generally lower leverage attached end points. So we don't really view that as a constraint.

Okay. So the private won't either then? Okay.

Correct.

You next question comes from the line of Jonathan Bock with Wells Fargo.

Fin O'Shea for Jonathan this morning. Not to stretch the market spread compression theme to too much, but the general -- generally what we're hearing thus far is that it is more on the upper market as opposed to core book. Looking at what went off and came on this quarter about $100 million each way, the spread differential there, I think, we were calculating about 4% of NOI annually. So correct me if I'm wrong, would this be -- can you kind of walk us through how fundamental this is in the conditions today, or is it more singular, transient -- to something that should smooth out? If you can kind of just breakdown the attribution there, sure.

Sure, Fin. So it's a good question and you're obviously right in terms of this quarter, I would say though a couple of things. First of all, if you look back over the last 4 quarters, in 2 of the last 4 quarters including the fourth quarter of last year, the yields on new originations actually exceeded the yields on repayments. So it's hard to discern a trend from any individual quarter and certainly, again, looking back a little bit even a few quarters you'll see that there is no discernible trend. This quarter, I think, the yields on repayments were particularly elevated because of that Highwinds repayment. I highlighted in the prepared remarks, but that was a 13.5% yielding piece of paper. So -- and that was by far the largest repayment that we had this quarter and so that is going to very much bring up your weighted average yield on the repayments because of that, that one deal. But as I say, if you look at the -- the broader trends if you will, or certainly the trends going back the last couple of quarters, I think you're going to be -- you'll see that there is no discernible trend in terms of the onboarding yields versus the off -- departing yields, if you will.

I will just add at similarly -- yes, Jon alluded to Highwinds as the high yields investment. There are not a tremendous number of other large extremely high-yielding investments in the portfolio. It's not as though we pursue the barbell approach of very high-yielding mezz investments versus other very low yielding investments. So there's relative consistency across the portfolio from a yield perspective, overall. I think Jon also alluded to the fact this was a 2013 vintage deal that we had the opportunity to do a handful of add-ons over time. So a bit of an anomaly for sure. I think not something that portends a trend going forward. You also referenced a 4 point NOI spread, I want to make sure I understand that because I'm not sure you're looking at it correctly. I suspect you might be looking at the 10-Q where we describe 9.5% investment yields, which are really just a stated interested rate. So a few things to note there, that actually -- if that's something you're referencing, it's actually excludes for example follow-on investments, which means it excludes our Senior Credit Fund investments. It also excludes other sources of yield, including OID in that calculations. So as we look at and Jon Yoder said this, as we look at the recent history, our origination yields on a yield basis, have been more like 10.8%, 10.5% for the last several quarters. And in fact, if you're going back to Q4 actually it's substantially higher even than that number. So look, I think it's an appropriate question. Certainly, there's a lot of bark and commentary on the topic. We continue to be pleased with how we're performing in the context of that market environment, finding good transactions that are meeting our yield bogeys. In fact, without really changing the asset mix at any discernible degree as well.

Yes. You're correct, Brendan. It was just core book core yield, but I appreciate all the color, of course. And then just a couple company-specific names, I'll ask them both at once and move along. Can you just provide an update on NTS? I think that was marked, it was a previous nonaccrual name, if I'm wrong. And then can you describe or just give a little more color on the nature of the Bolttech add-on. What kind of size or what kind of -- how -- just the infusion in general, that came along there and why didn't it help? Should that have helped some marked, how should we look at that?

I'll take Bolttech. I'll turn to Jon for NTS briefly. So Bolttech -- no change quarter-over-quarter to the mark. I think we're right about $0.55, but you did note correctly, Fin, that we did a small add-on investment in that type of [sous] tranche. The -- we came to an arrangement with the sponsor where we put in a small amount of capital they actually put in a multiple of the amount of capital that we put in that same tranche. And so yes, overall, it is certainly helpful to the company. That's capital that is intended to come into the business as to facilitate some growth initiatives that they have in store. And so far, overall not a ton to report on execution there, but frankly not a ton of change quarter-over-quarter in the company's results. So we're pleased and heartened that the sponsor who's got the vast majority of the capital beneath us is putting in. Like I said, a multiple of what we're putting into support that initiative. And overall, we're hopeful. We'll obviously remain watchful of the investment, but hopeful that could help get that performance improving.

Yes, and I guess, just on NTS. The -- you're right that we marked down a couple of points, I wouldn't call it -- characterize it as a particularly significant move for the quarter. There's obviously, as you know, a lot of different inputs that we take into coming to our fair market value considerations, but in terms of the underlying performance of the company, the company's actually doing just fine. Modestly in excess for this plan for the year, so we feel like the trends in that company are actually, say, cautiously optimistic about the trends in that company.

Your next question comes from the line of Christopher Testa with National Securities.

Just curious just for the -- looking at the second quarter relative to the first, just wondering how much of the volume quarter-to-date that you've seen in the pipeline has been new money versus refinance and where you see the trend going?

So in terms of -- I would say that the -- in the upper middle market is, as we kind of talked about, largely refinancing-driven and we -- I think, we're continuing to see that across the markets. In the sort of what we think of it as the core of the middle market, there is actually been a fairly decent amount of new financing activity. And what we're kind of seeing there is that there has been and I think this pretty well documented at this point, quite a bit of capital that's flowed into private equity in recent years, and when I say recent years really going back to since the financial crisis. And so at the same time, as companies have kind of reached the size that are -- that they start to attract offers from private equity buyers, given the amount of capital there is in competition for assets, which is driving up valuation multiples. And so we're seeing, I'd say, companies get sold perhaps little bit earlier in this market than they would've in the past. So the companies that perhaps are only $7 million, $9 million, $10 million EBITDA suddenly are attracting a lot of interest, whereas the prefinancial crisis or earlier, companies like that may have been left to mature a little bit more before they would attract significant private equity interest. So I'd say in that regard, because of that private equity bid there's probably the trend line is that there is more companies -- new companies, but probably more of the smaller side of -- compared to the historical standards that are looking for new money financing.

And Chris, I'm just kind of -- ticking through my head that the deals in the quarter and Jon is absolutely right. 4 of the deals we did were 4 new transactions purchases of companies by new investor where our capital supported that. Just 1 refinancing transaction, 1 the other was an add-on to an existing investment that actually supported an acquisition. So overall, that's the trend line activity. At least as evidenced by our origination this quarter, fairly robust and we're finding good opportunities to participate.

That's great color. And just looking at the originations, I know that you guys have not done a whole lot of unitranche and that remains very popular product with the sponsor community. Just wondering if you think that the structures there are not favorable or just not as favorable compared to the SCF, just curious how you're thinking about the unitranche investments there?

Yes. I think, I'd say generally speaking, yes, we tend to be agnostic, Christopher. We look at each transaction on its merits and when you look at the overall portfolio, there is a pretty good mix of different types of transactions as between the first lien, I think we're about 35% of the book into first lien. Some of that you can characterized as you unitranche. I think when you look at the yields, will certainly be more consistent with unitranche. We've also got about another quarter of the book in bifurcated unitranche, that's been an area that we think is actually very attractive. Where from our perspective, we're trying to cherry-pick the most attractive part of the company's capital structure to optimize returns for our investors. Frankly, it's a lot more work than just simply buying the whole tranche but we think we can get a much greater benefit to our investors in those transactions. One of the deals we did this quarter, myON, was of that ilk. Nice company, recurring cash flow business for a software into services type business model, Francisco portfolio company with nice growth profile. So we were able to take what was a competitive offering with an all-in cost of capital consistent with a very strong credit profile as a borrower. But again, find what we think is the best part of that capital structure with the benefit of a pretty modest amount of first lien leverage there. So we continue to hustle and find out opportunities across all the various tranches of debt.

Okay. Great. And do you know how of the second lien book is sponsored?

Don't have that number off the top of our heads but we can certainly come back to you, Chris, off-line and get you that detail.

Yes, I mean, I'm going to say that at the -- certainly, the -- I don't know the number that's handy there. But it's going to be the vast, vast majority of the second lien book of sponsor. We do very little nonsponsor in second lien.

Your next question comes from the line of Derek Hewett with Bank of America Merrill Lynch.

Most of my questions have been asked and answered. But it looks like you guys are pushing up against the $100 million capital commitment for the Senior Credit Fund, have there been discussions with your partner to expand the program at this point?

Yes, you're absolutely right there, good catch. I think for the benefit of the broader audience, both we and our partner have committed $100 million when we first put that partnership together. I think, as of the end of the quarter, we've each drawn about $90 million. So if you think about our 10-plus their 10-plus leverage, frankly, plus some repayments, certainly plenty of capital for us to continue to execute on the strategy as we sit here today. But in light of where we've gotten and I'd say over the course of the entire relationship, we have had and we do continue to have conversations more recently with an eye toward expanding that. It certainly has been a successful investment opportunity. So nothing to report just yet. But you can rest assured we will focus on it and look forward to communicating back to you quite shortly on results there.

Okay. Great. And then lastly, what percentage of the overall portfolio has been originated by the -- your global wealth group and have we seen a kind of similar percentage based on new originations?

Yes. So on the nonsponsored side today it's about 1/5 of the book. And the vast majority of that has come through our private wealth channel. I would say in terms of new origination, the pipeline continues to be very, very active in that channel. I kind of alluded to this earlier, but there -- one trend line that's certainly we're seeing, is that entrepreneurs and families that own companies are certainly taking note of the relatively rich valuations they were able to obtain from private equity sponsors. And so we're seeing more of those businesses get sold earlier than perhaps they would have in the past. The value though that we still derive in those situations is it because the environment for private equity is quite competitive right now in terms of finding deals, we think that -- we know that private equity firms are very, very anxious to tap into our network of relationships with these family and entrepreneur-owned companies. And so that in turn solidifies our relationship with those private equity firms and in turn helps us drive even more attractive terms from those firms in sponsored deals. Whether we're actually -- whether our pipeline is deals where we're providing financing or whether that's -- our pipeline is resulting in referrals to private equity firms who then, we sort of say, solidify that relationship and command better terms and deals as a result there -- as a result of that. That's -- we think that, that channel provides us with value in both ways.

(Operator Instructions) At this time, there are no further questions, please continue with any closing remarks.

Thanks, Brent. And thank you all for your questions and engagement. We do appreciate it and of course, if you do have more questions please feel free to reach out directly to us over the course of the day. Thank you very much.

Ladies and gentlemen, this does conclude the Goldman Sachs BDC, Inc. First Quarter 2017 Earnings Conference Call. Thank you for your participation.