A portfolio of senior secured loans—where software companies accounted for the highest percentage of borrowers—plus cash and other investments, will secure the $386.6 million collateralized debt obligation (CDO) from Golub Capital BDC 3 CLO 2.
A vast majority of the loans, at least 80%, are made to borrowers based in the U.S., as the deal covenants require, according to a pre-sale report from S&P Global Ratings, while a maximum of 30% of the loans in the collateral pool can be covenant-lite.
The rating agency expects the notes to carry interest rates of 2.60% over the three-month term Secured Overnight Financing Rate (SOFR) on the two A classes, while the class B notes should carry interest of 3.09% over the same benchmark. The deal's collateral manager, GC Advisors, will retain the subordinate $122.8 million tranche, leaving $264 million for bond investors, according to Finsight.
GreensLedge Capital Markets and KeyBanc Capital Markets are managers on the deal, while GreensLedge Capital Markets is acting as the placement agent.
Golub Capital BDC 3 CLO has a reinvestment period that ends on January 18, 2026, according to S&P.
The collateral pool is fairly well diversified, with software related industries accounting for 20% of the industries in the portfolio, both target and identified. Beyond software in the collateral pool, the industry types and their approximate percentages are:
· health care providers and services – 11%
· commercial services and supplies – 9%
· professional services – 7%
· diversified consumer services – 5.5%
Overlapped with the senior secured loans' rating distribution, about 87% are rated 'B-'; some 9% are rated 'B'; and slightly more than 7% are rated 'CCC-'.
S&P expects to assign 'AAA' ratings to both class A tranches and 'AA' on the class B notes.
