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Golub Capital BDC's CEO Discusses F1Q 2012 Results - Earnings Call Transcript

The decrease for the quarter ended September 30 was primarily a result of two factors. First was unrealized losses on investments of $1.8 million or $0.08 per share, which were caused by a combination of market yield adjustments and write-downs on two non-earning investments.

And the second factor was an unrealized loss of $1.7 million or $0.08 a share on the mark-to-market adjustments on the broadly syndicated bonds that are referenced in our total return swap. And I just want to highlight that the unrealized loss on the total returns swap has already partially reversed as of November 30. The appreciation on the total return swap is been roughly $1.4 million. So, $1.4 million of this $1.7 million loss in the September 30 quarter is already reversed.

Turning to page three of the investor presentation; new originations for the quarter totaled $60 million, that's down from $136 million in the June 30 quarter. We expected the decline, in fact, we talked about the expectation of a decline here in our last ā€“ in our call ā€“ earnings call. Originations were unusually high in the June 30 quarter. Prepayments also slowed during the quarter, and overall net fund's growth was $21 million for the quarter, about 5%.

As I've said in previous calls, one of our goals is to increase the percentage of investments in unitranche and junior debt in the portfolio and Iā€™m pleased to report that we continue to make progress for that goal in the quarter ended September 30. Of our originations, 68% were in the unitranche product category and that allowed us to increase the overall percentage of unitranche investments in the portfolio from 35% of total investments at June 30 to 39% as of September 30. As I mentioned, our weighted average investments spread increased by 20 basis points this quarter in large part due to the shifting asset mix.

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