Sixth Street Specialty Lending Issues $300M in Notes

Sixth Street Specialty Lending, Inc. (NYSE:TSLX), a specialty finance company with a market capitalization of $2.17 billion and currently trading near its 52-week high of $23.66, has entered into a material definitive agreement with U.S. Bank Trust Company, National Association, as Trustee, on Monday, February 25, 2025. The agreement involves the issuance and sale of $300 million aggregate principal amount of 5.625% notes due 2030, which will mature on August 15, 2030. According to InvestingPro data, the company maintains strong financial health with a current ratio of 1.9x.

The notes, unsecured direct obligations of the company, will bear interest payable semiannually on February 15 and August 15 each year, starting August 15, 2025. Sixth Street Specialty Lending, which changed its name from TPG Specialty Lending, Inc. on December 22, 2010, has stated that the net proceeds from the offering will be used to pay down debt under its revolving credit facility. The company has demonstrated strong operational performance with revenue growth of 10.14% in the last twelve months, while maintaining a robust dividend yield of 8.87%. InvestingPro subscribers can access detailed analysis of the company’s debt structure and 8 additional exclusive insights about TSLX’s financial health.

The indenture contains several covenants, including compliance with certain provisions of the Investment Company Act of 1940, and requires the company to provide financial information to the holders of the notes and the trustee if it is no longer subject to the reporting requirements of the Securities Exchange Act of 1934.

Additionally, in the event of a change of control repurchase event, which is contingent upon a change of control and a below investment grade rating of the notes by major rating agencies, the company will be required to offer to purchase the notes at 100% of the principal amount plus accrued and unpaid interest.

The notes were offered and sold pursuant to the company’s registration statement on Form N-2, as supplemented by a preliminary prospectus supplement and a pricing term sheet filed on February 18, 2025. The transaction closed on the date of the report, February 25, 2025.

The offering was conducted in connection with an underwriting agreement between the company, its adviser Sixth Street Specialty Lending Advisers, LLC, and BofA Securities, Inc., as representative of the underwriters.

This news is based on the recent SEC filing by Sixth Street Specialty Lending, Inc.

In other recent news, Sixth Street Specialty Lending has announced a $300 million public offering of 5.625% notes, due August 15, 2030. The company plans to use the proceeds to reduce existing debt under its revolving credit facility and intends to re-borrow for new investments. Additionally, the company aims to enter into an interest rate swap to better align its liabilities with its floating rate loan portfolio. In another development, Moody’s (NYSE:MCO) Ratings upgraded Sixth Street Specialty Lending’s long-term issuer and senior unsecured ratings from Baa3 to Baa2, citing the company’s strong profitability and robust capitalization. Despite an increase in non-accruals, the company’s asset quality remains strong, with a net investment income to average assets ratio of 6.2% in 2024. Furthermore, Raymond (NSE:RYMD) James has raised the price target for TPG Specialty Lending from $22.50 to $24.00, maintaining an Outperform rating after the company’s fourth-quarter earnings exceeded expectations. Raymond James highlighted TPG Specialty Lending’s diverse investment pipeline, suggesting a favorable risk/reward scenario. These recent developments reflect ongoing strategic adjustments and favorable analyst assessments for both companies.

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