Golub Capital BDC holds steady despite rising credit stress and portfolio challenges.

Golub Capital BDC remains a Hold as its portfolio quality shows signs of deterioration, with nonaccrual loans rising to 1.4% and payment-in-kind (PIK) income increasing to 9%, indicating some credit stress. The fund’s software sector exposure is mostly secured with limited risk from AI disruption. Dividend coverage has improved to 1.1 times net investment income after a dividend cut, supported by wider credit spreads and opportunistic share buybacks that add value to net asset value. Despite sector headwinds, Golub Capital BDC has performed better than many peers, maintaining cautious optimism for investors.