Adds details from filing on non-accrual status and PIK income disclosures in paragraphs 9-13

By Manya Saini

July 1 (Reuters) - Goldman Sachs' GS.N private credit fund said on Wednesday that investors sought to repurchase roughly 3.24% of its total shares in the second quarter, extending its streak of lower redemptions compared to most of the other private credit industry players.

The bank's fund, GS Credit, once again outperformed the sector that has been grappling with elevated redemption requests, driven by investor fears that AI could hurt the earnings of software companies and their ability to repay loans.

Goldman said second-quarter repurchase requests were below its 5% quarterly repurchase cap and were fulfilled in full. It generated roughly $275 million of gross inflows during the second quarter.

Business development companies (BDCs) typically channel investor capital into private loans, making them a key part of the private credit industry.

"Across the largest non-traded BDC managers reporting second quarter activity to date, peer repurchase requests have generally ranged from approximately 10% to nearly 17% of shares outstanding," Goldman said in a letter to shareholders.

Several analysts and technology companies have argued that concerns about AI's impact on the software sector are overblown, saying established companies have businesses, proprietary data and customer relationships that will be difficult to displace.

"We continue to believe that incumbency moats — mission-critical workflows, proprietary data, deep domain expertise, regulatory complexity, and customer trust — remain powerful sources of defensibility," Goldman said.

Reuters reported in April, citing a source, that a large share of the fund's investors came through Goldman's private wealth channels, where clients have been long-term investors in private credit and are better positioned to endure illiquidity.

GS Credit's non-accrual rate, which reflects delinquencies in its loans, was well below the broader industry at 0.2% as of March 31. Loans are typically placed on non-accrual status after borrowers miss payments for 90 days or more.

In GS Credit's case, only one company in its portfolio has missed payment and is under non-accrual status. By comparison, other non-traded BDCs had non-accrual rates ranging from 0.4% to roughly 2.4%, the fund said.

It also said payment-in-kind (PIK) income accounted for 3.3% of its investment income as of March 31, below the industry average, at a time when the metric is being watched for signs of stress since amended and restructured loans often allow borrowers to defer cash payments. Only 0.3% of its PIK income came from such loans.

"We believe that we are entering a period of meaningful dispersion among private credit managers," Goldman wrote in the letter.

"Industry non-accruals appear to be normalizing, but the increase is concentrated rather than broad-based, with a handful of managers driving the bulk of the deterioration."