Goldman Sachs private credit fund adds two more companies to non-accrual status

Rising non-accruals are the clearest test of whether private credit underwriting is holding up as borrower stress deepens. For Goldman Sachs BDC, the latest sign of strain came from two names that landed on the non-accrual list: One GI LLC and 3SI Security Systems, Inc.

Goldman Sachs BDC said in first-quarter 2026 results released May 7 that its 1st lien and senior secured debt positions in both companies were placed on non-accrual status because of financial underperformance. As of March 31, the fund had investments in 11 portfolio companies on non-accrual status, with those troubled positions representing 3.2% of the portfolio at fair value and 4.7% at amortized cost. That compares with 2.8% at amortized cost in the prior quarter, a move that shows measurable deterioration rather than a minor accounting adjustment.

The names matter. Bloomberg identified 3SI Security Systems as a security software provider and One GI as a physician-practice management group, two businesses that sit in sectors now getting a harder look from credit investors. The Bank for International Settlements has warned that private credit’s software lending is under pressure from AI-driven disruption, and said business development companies with high exposure to software firms have performed about 5 percentage points worse than those with low exposure since October 2025. That backdrop helps explain why a fund-level non-accrual update can carry more weight than it once did.

The quarter also showed how Goldman’s private credit machine is still putting money to work even as it absorbs losses. Goldman Sachs BDC reported $64.2 million of funding for previously unfunded commitments and $82.8 million of sales and repayments activity, which produced net funded investment activity of negative $2.3 million. That mix suggests a portfolio in motion, not one standing still while credit quality slips.

For Goldman Sachs Asset Management, private credit remains a strategic pillar, with the firm describing its platform as having the flexibility to invest across the capital structure and transaction type. That flexibility is part of the pitch to clients and a key part of the alternatives franchise inside Goldman Sachs Group Inc. But the latest non-accrual data also shows the discipline required to make that model work. In a market where AI disruption, margin pressure and sponsor leverage can all hit at once, the lesson for Goldman’s credit teams is straightforward: scale only matters if underwriting still catches weak names early.