Sixth Street Specialty Lending, Inc. Prices Public Offering of $350.0 million 6.125% Unsecured Notes due 2029
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Insights
The announcement by Sixth Street Specialty Lending, Inc. regarding its underwritten public offering of $350 million in 6.125% notes due 2029 is a significant financial move. The decision to pay down outstanding debt under its revolving credit facility using the net proceeds indicates a strategic approach to capital management. By potentially re-borrowing for new investments, TSLX is balancing debt repayment with the pursuit of growth opportunities. This action aligns with prudent financial management practices, as it may improve the company's leverage ratios and interest coverage metrics, which are vital indicators of financial health scrutinized by investors and credit rating agencies.
Furthermore, the interest rate swap that TSLX intends to enter into is a sophisticated financial strategy to hedge interest rate risk. Given that TSLX's investment portfolio primarily consists of floating rate loans, this swap could mitigate the impact of fluctuating interest rates, thus stabilizing the company's interest expense over time. This could be particularly beneficial in an environment where interest rates are volatile or expected to rise, as it would protect the company's margins and profitability.
The involvement of prominent financial institutions as joint book-running managers and co-managers, such as BofA Securities, Goldman Sachs & Co. LLC and J.P. Morgan, suggests a strong market interest and confidence in the offering by TSLX. The diversity and number of institutions involved also enhance the distribution capabilities for the notes, potentially leading to a successful capital raise. This offering could signal to the market that TSLX is taking active steps to optimize its capital structure, which might be interpreted as a positive indicator of the company's financial strategy and future prospects.
Investors should monitor the closing of the offering and the subsequent utilization of the proceeds for new investments, as these actions will likely influence TSLX's performance. The company's ability to deploy capital effectively into new investments that align with its investment objectives and strategies will be crucial in determining the long-term return on this capital raise. Additionally, the terms of the notes and the 'make-whole' premium provision are also key factors that could affect investor perception and the company's financial flexibility.
The issuance of notes and the accompanying legal documentation, such as the pricing term sheet, preliminary prospectus supplement and prospectus, are governed by regulations enforced by the SEC. These documents provide investors with essential information, including investment objectives, risks, charges and expenses, which are critical for making informed investment decisions. It is also important to note that the 'make-whole' premium is a legal provision that protects the note holders in case of early redemption by the company, ensuring they receive compensation for the potential loss of future interest payments.
Investors should be aware that the offering's successful closure is subject to customary closing conditions, which typically include regulatory approvals and the satisfaction of certain legal and financial criteria. Any deviations or delays in meeting these conditions could impact the timing or completion of the offering. Moreover, the legal framework surrounding the offering, including the interest rate swap, requires meticulous disclosure and compliance with SEC regulations, which serves to maintain market integrity and protect investor interests.
TSLX expects to use the net proceeds of the offering to pay down outstanding debt under its revolving credit facility. However, through re-borrowing under the revolving credit facility, TSLX intends to make new investments in accordance with its investment objectives and strategies outlined in the preliminary prospectus supplement and the accompanying prospectus described below in greater detail.
In connection with the offering, TSLX intends to enter into an interest rate swap to better align the interest rates of its liabilities with its investment portfolio, which consists of predominately floating rate loans.
BofA Securities, Goldman Sachs & Co. LLC, J.P. Morgan and SMBC Nikko are acting as joint book-running managers for this offering. Morgan Stanley, RBC Capital Markets, HSBC, Wells Fargo Securities, Citigroup, Truist Securities, Mizuho and MUFG are also acting as book-running managers for this offering. Keefe, Bruyette & Woods, A Stifel Company, Oppenheimer & Co., ICBC Standard Bank, Raymond James, B. Riley Securities, Citizens Capital Markets, Hovde Group, LLC, Ladenburg Thalmann and R. Seelaus & Co., LLC are acting as co-managers for this offering. The offering is expected to close on January 16, 2024, subject to customary closing conditions.
Investors are advised to carefully consider the investment objectives, risks, charges and expenses of the Company before investing. The pricing term sheet dated January 8, 2024, the preliminary prospectus supplement dated January 8, 2024 and the accompanying prospectus dated December 22, 2023, each of which have been or will be filed with the Securities and Exchange Commission (“SEC”), contain this and other information about the Company and should be read carefully before investing.
The information in the pricing term sheet, the preliminary prospectus supplement, the accompanying prospectus and this press release is not complete and may be changed. The pricing term sheet, the preliminary prospectus supplement, the accompanying prospectus and this press release are not offers to sell any securities of TSLX and are not soliciting an offer to buy such securities in any state or jurisdiction where such offer and sale is not permitted.
A shelf registration statement relating to these securities is on file with the SEC and is effective. The offering may be made only by means of a preliminary prospectus supplement and an accompanying prospectus, copies of which may be obtained from BofA Securities, Inc., NC1-022-02-425, 201 North Tryon Street,
About Sixth Street Specialty Lending, Inc.
TSLX is a specialty finance company focused on lending to middle-market companies. The Company seeks to generate current income primarily in
Forward-Looking Statements
Statements included herein may constitute “forward-looking statements,” which relate to future events or the Company’s future performance or financial condition. These forward-looking statements are not historical facts, but rather are based on current expectations, estimates and projections about the Company, its current and prospective portfolio investments, its industry, its beliefs and opinions, and its assumptions. Words such as “anticipates,” “expects,” “intends,” “plans,” “will,” “may,” “continue,” “believes,” “seeks,” “estimates,” “would,” “could,” “should,” “targets,” “projects,” “outlook,” “potential,” “predicts” and variations of these words and similar expressions are intended to identify forward-looking statements. These statements are not guarantees of future performance and are subject to risks, uncertainties and other factors, some of which are beyond the Company’s control and difficult to predict and could cause actual results to differ materially from those expressed or forecasted in the forward-looking statements including, without limitation, the risks, uncertainties and other factors identified in the Company’s filings with the SEC. Investors should not place undue reliance on these forward-looking statements, which apply only as of the date on which the Company makes them. The Company does not undertake any obligation to update or revise any forward-looking statements or any other information contained herein, except as required by applicable law.
View source version on businesswire.com: https://www.businesswire.com/news/home/20240108603066/en/
Investors:
Cami VanHorn
469-621-2033
IRTSLX@sixthstreet.com
Media:
Patrick Clifford
617-793-2004
pclifford@sixthstreet.com
Source: Sixth Street Specialty Lending, Inc.
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