KBRA Publishes Rating Report for TPG Specialty Lending, Inc.

NEW YORK--()--On June 28, 2018, Kroll Bond Rating Agency (KBRA) assigned BBB+ issuer and senior unsecured debt ratings to TPG Specialty Lending, Inc. (“TSLX”, “The Company”). The Outlook is Stable.

The BBB+ issuer and senior unsecured debt ratings reflect TPG Specialty Lending’s (NYSE: TSLX) ties to TPG Sixth Street Partners (“TSSP”), the $24 billion credit and special situations alternative asset manager of TPG Global (“TPG”), a global asset manager with roughly $84 billion of assets under management inclusive of TSSP, an investment portfolio comprised almost exclusively of first lien senior secured investments and appropriate leverage. Furthermore, the Company has a solid eight-year historical track record with minimal non-accruals and a strong management team with decades of experience in middle market lending and solid risk management practices. These strengths are counterbalanced by the illiquid nature of the assets and retained earnings constraints as a Regulated Investment Company (RIC).

Formed in 2010, TPG Specialty Lending is a publicly traded, externally managed closed-end business development company (BDC) listed on the NYSE under the symbol TSLX with a market capitalization of $1.2 billion. The Company’s $1.9 billion investment portfolio consists almost entirely of senior secured first lien debt of private middle-market companies. The Company benefits from its ability to leverage the scale of its external manager’s $24 billion credit platform.

As of March 31, 2018, TSLX’s leverage was 0.8x, within the current guidelines and appropriate given the investment portfolio’s high percentage of first lien loans. The Company is considering but has not yet indicated any specific plans to lower asset coverage requirements following the changes introduced under the Small Business Credit Availability Act that allows BDCs to effectively double their leverage limit. KBRA believes if TSLX avails itself to the lower asset coverage, TSLX will act prudently in increasing its leverage moderately over several years with a continued emphasis on investing in first lien loans, the highest debt in the capital structure.

The ratings are based on KBRA’s Global Finance Company Rating Methodology, published November 28, 2017.

To access the full report, click here.

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About KBRA and KBRA Europe

KBRA is a full-service credit rating agency registered with the U.S. Securities and Exchange Commission as an NRSRO. In addition, KBRA is recognized by the National Association of Insurance Commissioners as a Credit Rating Provider and a certified Credit Rating Agency (CRA) by the European Securities and Markets Authority (ESMA). Kroll Bond Rating Agency Europe Limited is registered with ESMA as a CRA.

Contacts

Analytical:
Kroll Bond Rating Agency
Teri Seelig, 646-731-2386
Director
tseelig@kbra.com
or
Marjan Riggi, 646-731-2354
Senior Managing Director
mriggi@kbra.com
or
Boris Alishayev, 646-731-2484
Director
balishayev@kbra.com

Contacts

Analytical:
Kroll Bond Rating Agency
Teri Seelig, 646-731-2386
Director
tseelig@kbra.com
or
Marjan Riggi, 646-731-2354
Senior Managing Director
mriggi@kbra.com
or
Boris Alishayev, 646-731-2484
Director
balishayev@kbra.com