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Sixth Street Specialty Lending, Inc. - Quarter Report: 2023 September (Form 10-Q)

10-Q

 

 

UNITED STATES

SECURITIES AND EXCHANGE COMMISSION

WASHINGTON, DC 20549

 

FORM 10-Q

 

(Mark One)

QUARTERLY REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934.

For the quarterly period ended September 30, 2023

OR

TRANSITION REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934.

For the transition period from to

Commission File Number 001-36364

 

Sixth Street Specialty Lending, Inc.

(Exact name of registrant as specified in its charter)

 

 

Delaware

27-3380000

(State or other jurisdiction of

incorporation or organization)

(I.R.S. Employer

Identification No.)

 

 

2100 McKinney Avenue, Suite 1500,

Dallas, TX

75201

(Address of principal executive offices)

(Zip Code)

Registrant’s telephone number, including area code: (469) 621-3001

Not applicable

Former name, former address and former fiscal year, if changed since last report.

 

Securities registered pursuant to Section 12(b) of the Act:

 

Title of each class

Trading Symbol(s)

Name of each exchange on which registered

Common Stock, par value $0.01 per share

TSLX

The New York Stock Exchange

Indicate by check mark whether the registrant (1) has filed all reports required to be filed by Section 13 or 15(d) of the Securities Exchange Act of 1934 during the preceding 12 months (or for such shorter period that the registrant was required to file such reports), and (2) has been subject to such filing requirements for the past 90 days. Yes No

Indicate by check mark whether the registrant has submitted electronically every Interactive Data File required to be submitted pursuant to Rule 405 of Regulation S-T (§232.405 of this chapter) during the preceding 12 months (or for such shorter period that the registrant was required to submit such files). Yes No

Indicate by check mark whether the registrant is a large accelerated filer, an accelerated filer, a non-accelerated filer, a smaller reporting company, or an emerging growth company. See the definitions of “large accelerated filer,” “accelerated filer,” “smaller reporting company,” and “emerging growth company” in Rule 12b-2 of the Exchange Act.

 

Large accelerated filer

Accelerated filer

Non-accelerated filer

Smaller reporting company

 

Emerging growth company

If an emerging growth company, indicate by check mark if the registrant has elected not to use the extended transition period for complying with any new or revised financial accounting standards provided pursuant to Section 13(a) of the Exchange Act.

Indicate by check mark whether the registrant is a shell company (as defined in Rule 12b-2 of the Exchange Act). Yes No

The number of shares of the registrant’s common stock, $.01 par value per share, outstanding at November 2, 2023 was 87,546,498.

 

 

 

 

1


 

SIXTH STREET SPECIALTY LENDING, INC.

 

 

INDEX

 

PAGE

NO.

 

 

 

 

 

PART I.

 

FINANCIAL INFORMATION

 

4

 

 

 

 

 

Item 1.

 

Financial Statements

 

4

 

 

 

 

 

 

 

Consolidated Balance Sheets as of September 30, 2023 (Unaudited) and December 31, 2022

 

4

 

 

 

 

 

 

 

Consolidated Statements of Operations for the three and nine months ended September 30, 2023 and 2022 (Unaudited)

 

5

 

 

 

 

 

 

 

Consolidated Schedules of Investments as of September 30, 2023 (Unaudited) and December 31, 2022

 

6

 

 

 

 

 

 

 

Consolidated Statements of Changes in Net Assets for the three and nine months ended September 30, 2023 and 2022 (Unaudited)

 

21

 

 

 

 

 

 

 

Consolidated Statements of Cash Flows for the nine months ended September 30, 2023 and 2022 (Unaudited)

 

23

 

 

 

 

 

 

 

Notes to Consolidated Financial Statements (Unaudited)

 

24

 

 

 

 

 

Item 2.

 

Management’s Discussion and Analysis of Financial Condition and Results of Operations

 

48

 

 

 

 

 

Item 3.

 

Quantitative and Qualitative Disclosures About Market Risk

 

68

 

 

 

 

 

Item 4.

 

Controls and Procedures

 

69

 

 

 

 

 

PART II.

 

OTHER INFORMATION

 

70

 

 

 

 

 

Item 1.

 

Legal Proceedings

 

70

 

 

 

 

 

Item 1A.

 

Risk Factors

 

70

 

 

 

 

 

Item 2.

 

Unregistered Sales of Equity Securities and Use of Proceeds

 

73

 

 

 

 

 

Item 3.

 

Defaults Upon Senior Securities

 

73

 

 

 

 

 

Item 4.

 

Mine Safety Disclosures

 

73

 

 

 

 

 

Item 5.

 

Other Information

 

73

 

 

 

 

 

Item 6.

 

Exhibits

 

74

 

 

 

 

 

SIGNATURES

 

75

 

 

 

2


 

CAUTIONARY STATEMENT REGARDING FORWARD-LOOKING STATEMENTS

This report contains forward-looking statements that involve substantial risks and uncertainties. These forward-looking statements are not historical facts, but rather are based on current expectations, estimates and projections about us, our current and prospective portfolio investments, our industry, our beliefs, and our assumptions. Words such as “anticipates,” “expects,” “intends,” “plans,” “believes,” “seeks,” “estimates,” “would,” “should,” “targets,” “projects,” 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 our control and difficult to predict, that could cause actual results to differ materially from those expressed or forecasted in the forward-looking statements.

In addition to factors previously identified elsewhere in the reports and other documents Sixth Street Specialty Lending, Inc. has filed with the Securities and Exchange Commission, or SEC, the following factors, among others, could cause actual results to differ materially from forward-looking statements or historical performance:

an economic downturn, including the current and future economic effects of the COVID-19 pandemic, could impair our portfolio companies’ abilities to continue to operate, which could lead to the loss of some or all of our investments in those portfolio companies;
such an economic downturn could disproportionately impact the companies in which we have invested and others that we intend to target for investment, potentially causing us to experience a decrease in investment opportunities and diminished demand for capital from these companies;
such an economic downturn could also impact availability and pricing of our financing;
an inability to access the capital markets could impair our ability to raise capital and our investment activities;
inflation could negatively impact our business, including our ability to access the debt markets on favorable terms, or could negatively impact our portfolio companies; and
the risks, uncertainties and other factors we identify in the section entitled “Risk Factors” in this report, in our Annual Report on Form 10-K for the year ended December 31, 2022, filed with the SEC on February 16, 2023, and elsewhere in our filings with the SEC.

Although we believe that the assumptions on which these forward-looking statements are based are reasonable, some of those assumptions are based on the work of third parties and any of those assumptions could prove to be inaccurate; as a result, forward-looking statements based on those assumptions also could prove to be inaccurate. In light of these and other uncertainties, the inclusion of a projection or forward-looking statement in this report should not be regarded as a representation by us that our plans and objectives will be achieved. You should not place undue reliance on these forward-looking statements, which apply only as of the date of this report. We do not undertake any obligation to update or revise any forward-looking statements or any other information contained herein, except as required by applicable law.

The “TSLX” and “TAO” marks are marks of Sixth Street.

3


 

PART I. FINANCIAL INFORMATION

Item 1. Financial Statements

Sixth Street Specialty Lending, Inc.

Consolidated Balance Sheets

(Amounts in thousands, except share and per share amounts)

(Unaudited)

 

 

 

September 30,

 

 

December 31,

 

 

 

2023

 

 

2022

 

Assets

 

 

 

 

 

 

Investments at fair value

 

 

 

 

 

 

Non-controlled, non-affiliated investments (amortized cost of $3,010,089 and $2,707,442, respectively)

 

$

3,052,300

 

 

$

2,717,170

 

Controlled, affiliated investments (amortized cost of $75,289 and $67,284, respectively)

 

 

60,977

 

 

 

70,755

 

Total investments at fair value (amortized cost of $3,085,378 and $2,774,726, respectively)

 

 

3,113,277

 

 

 

2,787,925

 

Cash and cash equivalents (restricted cash of $26,890 and $15,437, respectively)

 

 

29,880

 

 

 

25,647

 

Interest receivable

 

 

23,460

 

 

 

18,846

 

Prepaid expenses and other assets

 

 

7,458

 

 

 

4,529

 

Total Assets

 

$

3,174,075

 

 

$

2,836,947

 

Liabilities

 

 

 

 

 

 

Debt (net of deferred financing costs of $23,436 and $17,760, respectively)

 

$

1,623,010

 

 

$

1,441,796

 

Management fees payable to affiliate

 

 

11,661

 

 

 

10,526

 

Incentive fees on net investment income payable to affiliate

 

 

11,151

 

 

 

10,918

 

Incentive fees on net capital gains accrued to affiliate

 

 

11,147

 

 

 

6,064

 

Other payables to affiliate

 

 

4,256

 

 

 

3,265

 

Other liabilities

 

 

27,028

 

 

 

22,809

 

Total Liabilities

 

 

1,688,253

 

 

 

1,495,378

 

Commitments and contingencies (Note 8)

 

 

 

 

 

 

Net Assets

 

 

 

 

 

 

Preferred stock, $0.01 par value; 100,000,000 shares authorized; no shares
   issued and outstanding

 

 

 

 

 

 

Common stock, $0.01 par value; 400,000,000 shares authorized, 88,210,748
   and
82,053,537 shares issued, respectively; and 87,546,498 and 81,389,287
   shares outstanding, respectively

 

 

882

 

 

 

821

 

Additional paid-in capital

 

 

1,401,245

 

 

 

1,294,751

 

Treasury stock at cost; 664,250 and 664,250 shares held, respectively

 

 

(10,459

)

 

 

(10,459

)

Distributable earnings

 

 

94,154

 

 

 

56,456

 

Total Net Assets

 

 

1,485,822

 

 

 

1,341,569

 

Total Liabilities and Net Assets

 

$

3,174,075

 

 

$

2,836,947

 

Net Asset Value Per Share

 

$

16.97

 

 

$

16.48

 

 

The accompanying notes are an integral part of these consolidated financial statements.

4


 

Sixth Street Specialty Lending, Inc.

Consolidated Statements of Operations

(Amounts in thousands, except share and per share amounts)

(Unaudited)

 

 

Three Months Ended

 

 

Nine Months Ended

 

 

 

September 30, 2023

 

 

September 30, 2022

 

 

September 30, 2023

 

 

September 30, 2022

 

Income

 

 

 

 

 

 

 

 

 

 

 

 

Investment income from non-controlled, non-affiliated investments:

 

 

 

 

 

 

 

 

 

 

 

 

Interest from investments

 

$

107,240

 

 

$

73,769

 

 

$

299,542

 

 

$

198,047

 

Dividend income

 

 

798

 

 

 

3

 

 

 

2,204

 

 

 

1,361

 

Other income

 

 

4,366

 

 

 

2,741

 

 

 

11,197

 

 

 

6,091

 

Total investment income from non-controlled, non-affiliated investments

 

 

112,404

 

 

 

76,513

 

 

 

312,943

 

 

 

205,499

 

Investment income from non-controlled, affiliated investments:

 

 

 

 

 

 

 

 

 

 

 

 

Interest from investments

 

 

 

 

 

 

 

 

 

 

 

133

 

Total investment income from non-controlled, affiliated investments

 

 

 

 

 

 

 

 

 

 

 

133

 

Investment income from controlled, affiliated investments:

 

 

 

 

 

 

 

 

 

 

 

 

Interest from investments

 

 

2,029

 

 

 

1,325

 

 

 

5,599

 

 

 

3,520

 

Other income

 

 

2

 

 

 

1

 

 

 

4

 

 

 

3

 

Total investment income from controlled, affiliated investments

 

 

2,031

 

 

 

1,326

 

 

 

5,603

 

 

 

3,523

 

Total Investment Income

 

 

114,435

 

 

 

77,839

 

 

 

318,546

 

 

 

209,155

 

Expenses

 

 

 

 

 

 

 

 

 

 

 

 

Interest

 

 

35,042

 

 

 

18,851

 

 

 

95,971

 

 

 

40,416

 

Management fees

 

 

11,928

 

 

 

10,330

 

 

 

34,071

 

 

 

29,148

 

Incentive fees on net investment income

 

 

11,151

 

 

 

7,882

 

 

 

31,139

 

 

 

22,483

 

Incentive fees on net capital gains

 

 

2,577

 

 

 

(22

)

 

 

5,083

 

 

 

(7,720

)

Professional fees

 

 

1,921

 

 

 

2,002

 

 

 

5,427

 

 

 

5,300

 

Directors’ fees

 

 

215

 

 

 

181

 

 

 

571

 

 

 

546

 

Other general and administrative

 

 

1,413

 

 

 

1,268

 

 

 

3,615

 

 

 

4,013

 

Total expenses

 

 

64,247

 

 

 

40,492

 

 

 

175,877

 

 

 

94,186

 

Management fees waived (Note 3)

 

 

(267

)

 

 

(189

)

 

 

(822

)

 

 

(201

)

Net Expenses

 

 

63,980

 

 

 

40,303

 

 

 

175,055

 

 

 

93,985

 

Net Investment Income Before Income Taxes

 

 

50,455

 

 

 

37,536

 

 

 

143,491

 

 

 

115,170

 

Income taxes, including excise taxes

 

 

461

 

 

 

356

 

 

 

1,777

 

 

 

1,456

 

Net Investment Income

 

 

49,994

 

 

 

37,180

 

 

 

141,714

 

 

 

113,714

 

Unrealized and Realized Gains (Losses)

 

 

 

 

 

 

 

 

 

 

 

 

Net change in unrealized gains (losses):

 

 

 

 

 

 

 

 

 

 

 

 

Non-controlled, non-affiliated investments

 

 

13,067

 

 

 

(9,080

)

 

 

32,483

 

 

 

(71,428

)

Non-controlled, affiliated investments

 

 

 

 

 

 

 

 

 

 

 

(14,350

)

Controlled, affiliated investments

 

 

(8,797

)

 

 

(2,686

)

 

 

(17,783

)

 

 

9,488

 

Translation of other assets and liabilities in foreign currencies

 

 

5,470

 

 

 

9,223

 

 

 

2,466

 

 

 

15,095

 

Interest rate swaps

 

 

 

 

 

(2,591

)

 

 

174

 

 

 

(7,184

)

Total net change in unrealized gains (losses)

 

 

9,740

 

 

 

(5,134

)

 

 

17,340

 

 

 

(68,379

)

Realized gains (losses):

 

 

 

 

 

 

 

 

 

 

 

 

Non-controlled, non-affiliated investments

 

 

5,332

 

 

 

278

 

 

 

11,768

 

 

 

708

 

Non-controlled, affiliated investments

 

 

 

 

 

 

 

 

 

 

 

13,673

 

Controlled, affiliated investments

 

 

 

 

 

55

 

 

 

 

 

 

55

 

Interest rate swaps

 

 

 

 

 

2,251

 

 

 

 

 

 

2,251

 

Foreign currency transactions

 

 

(246

)

 

 

(199

)

 

 

40

 

 

 

(231

)

Total net realized gains (losses)

 

 

5,086

 

 

 

2,385

 

 

 

11,808

 

 

 

16,456

 

Total Net Unrealized and Realized Gains (Losses)

 

 

14,826

 

 

 

(2,749

)

 

 

29,148

 

 

 

(51,923

)

Increase (Decrease) in Net Assets Resulting from Operations

 

$

64,820

 

 

$

34,431

 

 

$

170,862

 

 

$

61,791

 

Earnings (Loss) per common share—basic and diluted

 

$

0.74

 

 

$

0.43

 

 

$

2.03

 

 

$

0.80

 

Weighted average shares of common stock outstanding—basic and diluted

 

 

87,251,340

 

 

 

79,476,419

 

 

 

84,313,169

 

 

 

77,250,889

 

 

The accompanying notes are an integral part of these consolidated financial statements.

5


 

Sixth Street Specialty Lending, Inc.

Consolidated Schedule of Investments as of September 30, 2023

(Amounts in thousands, except share amounts)

(Unaudited)

6


 

Company (1)(6)

 

Investment

 

Initial
Acquisition
Date

 

Reference
Rate and
Spread

 

Interest Rate

 

 

Amortized
Cost
(2)(8)

 

 

Fair Value (9)

 

Percentage
of Net Assets

Debt Investments

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Automotive

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Bestpass, Inc. (3)(5)

 

First-lien loan ($39,900 par, due 5/2029)

 

5/26/2023

 

SOFR + 5.75%

 

11.07%

 

$

38,810

 

$

39,202

 

2.6%

Carlstar Group, LLC (3)

 

First-lien loan ($26,118 par, due 7/2027)

 

7/8/2022

 

SOFR + 6.60%

 

11.92%

 

 

25,508

 

 

26,378

 

1.8%

 

 

 

 

 

 

 

 

 

 

 

64,318

 

 

65,580

 

4.4%

Business Services

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Acceo Solutions, Inc. (3)(4)(5)

 

First-lien loan (CAD 57,353 par, due 10/2025)

 

7/6/2018

 

C + 4.75%

 

10.14%

 

 

43,340

 

 

42,633
 (CAD
57,640)

 

2.9%

Alpha Midco, Inc. (3)(5)

 

First-lien loan ($68,794 par, due 8/2025)

 

8/15/2019

 

SOFR + 7.65%

 

12.99%

 

 

68,125

 

 

69,660

 

4.7%

BCTO Ignition Purchaser, Inc. (3)

 

First-lien holdco loan ($30,913 par, due 10/2030)

 

4/18/2023

 

SOFR + 9.00%

 

14.31% PIK

 

 

30,045

 

 

30,449

 

2.0%

Dye & Durham Corp. (3)(4)

 

First-lien loan (CAD 36,778 par, due 12/2027)

 

12/3/2021

 

C + 5.75%

 

11.26%

 

 

28,026

 

 

27,483
 (CAD
37,157)

 

1.8%

 

 

First-lien revolving loan (CAD 1,086 par, due 12/2026)

 

12/3/2021

 

C + 5.75%

 

11.26%

 

 

715

 

 

804
 (CAD
1,086)

 

0.1%

ExtraHop Networks, Inc. (3)(5)

 

First-lien loan ($64,162 par, due 7/2027)

 

7/22/2021

 

SOFR + 7.60%

 

12.92%

 

 

63,157

 

 

63,681

 

4.3%

ForeScout Technologies, Inc. (3)

 

First-lien loan ($2,788 par, due 8/2026)

 

7/1/2022

 

SOFR + 9.10%

 

14.49% (incl. 9.00% PIK)

 

 

2,737

 

 

2,803

 

0.2%

 

 

First-lien loan ($2,566 par, due 8/2026)

 

8/17/2020

 

SOFR + 9.10%

 

14.49% (incl. 9.00% PIK)

 

 

2,554

 

 

2,572

 

0.2%

Galileo Parent, Inc. (3)

 

First-lien loan ($64,904 par, due 5/2030)

 

5/3/2023

 

SOFR + 7.25%

 

12.64%

 

 

63,030

 

 

63,930

 

4.3%

 

 

First-lien revolving loan ($4,471 par, due 5/2029)

 

5/3/2023

 

SOFR + 7.25%

 

12.64%

 

 

4,189

 

 

4,320

 

0.3%

Hornetsecurity Holding GmbH (3)(4)

 

First-lien loan (EUR 3,335 par, due 11/2029)

 

11/14/2022

 

E + 6.50%

 

10.30%

 

 

3,150

 

 

3,335
 (EUR
3,150)

 

0.2%

Information Clearinghouse, LLC and MS Market Service, LLC (3)(5)

 

First-lien loan ($17,685 par, due 12/2026)

 

12/20/2021

 

SOFR + 6.65%

 

12.05%

 

 

17,361

 

 

17,596

 

1.2%

Mitnick Corporate Purchaser, Inc. (3)(9)

 

First-lien loan ($330 par, due 5/2029)

 

5/2/2022

 

SOFR + 4.60%

 

9.97%

 

 

330

 

 

317

 

0.0%

Netwrix Corp. (3)

 

First-lien loan ($36,456 par, due 6/2029)

 

6/9/2022

 

SOFR + 5.00%

 

10.30%

 

 

35,952

 

 

36,456

 

2.5%

 

 

First-lien revolving loan ($718 par, due 6/2029)

 

6/9/2022

 

SOFR + 5.00%

 

10.24%

 

 

682

 

 

718

 

0.0%

OutSystems Luxco SARL(3)(4)(5)

 

First-lien loan (EUR 3,180 par, due 12/2028)

 

12/8/2022

 

E + 5.75%

 

9.72%

 

 

3,083

 

 

3,180
 (EUR
3,004)

 

0.2%

ReliaQuest Holdings, LLC (3)(5)

 

First-lien loan ($76,220 par, due 10/2026)

 

10/8/2020

 

SOFR + 7.25%

 

12.62%

 

 

75,271

 

 

77,172

 

5.2%

Wrangler TopCo, LLC (3)

 

First-lien loan ($4,153 par, due 7/2029)

 

7/7/2023

 

SOFR + 7.50%

 

12.88%

 

 

4,041

 

 

4,095

 

0.3%

 

 

 

 

 

 

 

 

 

 

 

445,788

 

 

451,204

 

30.4%

Chemicals

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Erling Lux Bidco SARL(3)(4)

 

First-lien loan (EUR 9,625 par, due 9/2028)

 

9/6/2022

 

E + 6.75%

 

10.61%

 

 

9,514

 

 

10,257
 (EUR
9,688)

 

0.7%

 

 

First-lien loan (GBP 10,217 par, due 9/2028)

 

9/6/2022

 

S + 6.75%

 

11.94%

 

 

11,276

 

 

12,533
 (GBP
10,269)

 

0.8%

 

 

First-lien revolving loan (GBP 312 par, due 9/2028)

 

9/6/2022

 

S + 6.75%

 

11.94%

 

 

400

 

 

382
 (GBP
313)

 

0.0%

 

 

 

 

 

 

 

 

 

 

 

21,190

 

 

23,172

 

1.5%

Communications

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Banyan Software Holdings, LLC (3)(4)

 

First-lien loan ($19,850 par, due 10/2026)

 

1/27/2023

 

SOFR + 7.35%

 

12.67%

 

 

18,803

 

 

19,651

 

1.3%

Celtra Technologies, Inc. (3)(5)

 

First-lien loan ($34,256 par, due 11/2026)

 

11/19/2021

 

SOFR + 7.10%

 

12.42%

 

 

33,521

 

 

33,742

 

2.3%

IntelePeer Holdings, Inc.

 

First-lien loan ($33,925 par, due 12/2024) (3)

 

12/2/2019

 

SOFR + 8.40%

 

13.79%

 

 

33,899

 

 

33,586

 

2.3%

 

 

Convertible note ($4,619 par, due 5/2028)

 

5/12/2021

 

7.00%

 

7.00% PIK

 

 

4,590

 

 

4,803

 

0.3%

 

 

 

 

 

 

 

 

 

 

 

90,813

 

 

91,782

 

6.2%

Education

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Astra Acquisition Corp. (3)

 

Second-lien loan ($43,479 par, due 10/2029)

 

10/25/2021

 

SOFR + 8.99%

 

14.53%

 

 

42,796

 

 

34,566

 

2.3%

Destiny Solutions Parent Holding Company (3)(5)

 

First-lien loan ($59,700 par, due 6/2026)

 

6/8/2021

 

SOFR + 5.85%

 

11.17%

 

 

58,941

 

 

59,103

 

4.0%

EMS Linq, Inc. (3)

 

First-lien loan ($56,216 par, due 12/2027)

 

12/22/2021

 

SOFR + 6.35%

 

11.67%

 

 

55,240

 

 

54,916

 

3.7%

 

 

 

 

 

 

 

 

 

 

 

156,977

 

 

148,585

 

10.0%

Financial Services

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Alaska Bidco Oy (3)(4)

 

First-lien loan (EUR 727 par, due 5/2030)

 

5/30/2023

 

E + 6.25%

 

10.39%

 

 

754

 

 

763
 (EUR
720)

 

0.1%

BCTO Bluebill Buyer, Inc. (3)(5)

 

First-lien loan ($28,164 par, due 7/2029)

 

7/20/2023

 

SOFR + 7.25%

 

12.64%

 

 

27,122

 

 

27,319

 

1.8%

BTRS Holdings, Inc.(3)

 

First-lien loan ($46,580 par, due 12/2028)

 

12/16/2022

 

SOFR + 8.00%

 

13.41%

 

 

45,277

 

 

46,323

 

3.1%

Bear OpCo, LLC (3)(5)

 

First-lien loan ($21,082 par, due 10/2024)

 

10/10/2019

 

SOFR + 7.65%

 

12.97%

 

 

20,953

 

 

21,345

 

1.4%

BlueSnap, Inc. (3)(5)

 

First-lien loan ($42,000 par, due 10/2024)

 

10/25/2019

 

SOFR + 7.15%

 

12.54%

 

 

41,786

 

 

42,223

 

2.8%

Ibis Intermediate Co. (3)(5)

 

First-lien loan ($1,514 par, due 5/2027)

 

5/28/2021

 

SOFR + 4.65%

 

10.07%

 

 

1,359

 

 

1,593

 

0.1%

Ibis US Blocker Co. (3)

 

First-lien loan ($15,419 par, due 5/2028)

 

5/28/2021

 

SOFR + 8.40%

 

13.82% PIK

 

 

15,196

 

 

15,342

 

1.0%

Kyriba Corp.(3)

 

First-lien loan ($20,382 par, due 4/2025)

 

4/9/2019

 

SOFR + 9.25%

 

14.72% (incl. 9.00% PIK)

 

 

20,255

 

 

20,433

 

1.4%

 

 

First-lien loan (EUR 10,617 par, due 4/2025)

 

4/9/2019

 

E + 9.00%

 

13.14% (incl. 9.00% PIK)

 

 

11,782

 

 

11,269
 (EUR
10,644)

 

0.8%

 

 

First-lien revolving loan ($1,411 par, due 4/2025)

 

4/9/2019

 

SOFR + 7.50%

 

12.97%

 

 

1,399

 

 

1,415

 

0.1%

 

 

First-lien revolving loan (EUR 336 par, due 4/2025)

 

4/9/2019

 

E + 7.25%

 

11.39%

 

 

374

 

 

356
 (EUR
336)

 

0.0%

Passport Labs, Inc.

 

First-lien loan ($24,349 par, due 4/2026) (3)

 

4/28/2021

 

SOFR + 8.40%

 

13.79%

 

 

24,174

 

 

24,294

 

1.6%

7


 

 

 

Convertible Promissory Note A ($694 par, due 9/2024)

 

3/2/2023

 

8.00%

 

8.00%

 

 

694

 

 

943

 

0.1%

Ping Identity Holding Corp. (3)

 

First-lien loan ($22,727 par, due 10/2029)

 

10/17/2022

 

SOFR + 7.00%

 

12.32%

 

 

22,165

 

 

23,040

 

1.6%

PrimeRevenue, Inc. (3)

 

First-lien loan ($15,007 par, due 12/2024)

 

12/31/2018

 

SOFR + 7.15%

 

12.55%

 

 

14,997

 

 

15,113

 

1.0%

TradingScreen, Inc. (3)(5)

 

First-lien loan ($47,318 par, due 4/2027)

 

4/30/2021

 

SOFR + 6.35%

 

11.72%

 

 

46,421

 

 

47,081

 

3.2%

Volante Technologies, Inc.

 

First-lien loan ($2,500 par, due 9/2028)

 

9/29/2023

 

16.50%

 

16.50% PIK

 

 

2,438

 

 

2,438

 

0.2%

 

 

 

 

 

 

 

 

 

 

 

297,146

 

 

301,290

 

20.3%

Healthcare

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

BCTO Ace Purchaser, Inc. (3)

 

First-lien loan ($69,231 par, due 11/2027) (5)

 

11/23/2020

 

SOFR + 8.45%

 

13.87%

 

 

68,271

 

 

69,577

 

4.7%

 

 

Second-lien loan ($5,401 par, due 1/2030)

 

1/23/2023

 

SOFR + 10.70%

 

16.05% PIK

 

 

5,266

 

 

5,374

 

0.4%

Edge Bidco B.V (3)(4)(5)

 

First-lien loan (EUR 3,520 par, due 2/2029)

 

2/24/2023

 

E + 7.00%

 

10.97% (incl. 3.25% PIK)

 

 

3,590

 

 

3,727
 (EUR
3,520)

 

0.3%

Homecare Software Solutions, LLC (3)(5)

 

First-lien loan ($65,000 par, due 10/2026)

 

10/6/2021

 

SOFR + 5.70%

 

11.03%

 

 

63,942

 

 

64,675

 

4.4%

Merative L.P. (3)(5)

 

First-lien loan ($70,103 par, due 6/2028)

 

6/30/2022

 

SOFR + 7.25%

 

12.65%

 

 

68,127

 

 

69,052

 

4.6%

Raptor US Buyer II Corp. (3)

 

First-lien loan ($15,609 par, due 3/2029)

 

3/24/2023

 

SOFR + 6.75%

 

12.14%

 

 

15,083

 

 

15,413

 

1.0%

SL Buyer Corp. (3)(5)

 

First-lien loan ($31,475 par, due 7/2029)

 

7/7/2023

 

SOFR + 7.00%

 

12.32%

 

 

30,096

 

 

30,520

 

2.1%

 

 

 

 

 

 

 

 

 

 

 

254,375

 

 

258,338

 

17.5%

Hotel, Gaming and Leisure

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

ASG II, LLC (3)(5)

 

First-lien loan ($60,693 par, due 5/2028)

 

5/25/2022

 

SOFR + 6.40%

 

11.77%

 

 

59,414

 

 

60,693

 

4.1%

IRGSE Holding Corp. (3)(6)

 

First-lien loan ($30,261 par, due 6/2024)

 

9/29/2015

 

SOFR + 9.65%

 

15.04%

 

 

28,594

 

 

30,034

 

2.0%

 

 

First-lien revolving loan ($24,752 par, due 6/2024)

 

9/29/2015

 

SOFR + 9.65%

 

15.04%

 

 

24,752

 

 

24,564

 

1.7%

 

 

 

 

 

 

 

 

 

 

 

112,760

 

 

115,291

 

7.8%

Human Resource Support Services

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Axonify, Inc. (3)(4)(5)

 

First-lien loan ($40,920 par, due 5/2027)

 

5/5/2021

 

SOFR + 7.65%

 

13.02%

 

 

40,312

 

 

40,920

 

2.7%

bswift, LLC (3)(5)

 

First-lien loan ($44,470 par, due 11/2028)

 

11/7/2022

 

SOFR + 6.63%

 

11.91%

 

 

43,287

 

 

44,582

 

3.0%

Elysian Finco Ltd. (3)(4)(5)

 

First-lien loan ($18,955 par, due 1/2028)

 

1/31/2022

 

SOFR + 6.65%

 

11.95%

 

 

18,528

 

 

19,356

 

1.3%

Employment Hero Holdings Pty Ltd. (3)(4)

 

First-lien loan (AUD 32,270 par, due 12/2026)

 

12/6/2021

 

B + 6.50%

 

10.72%

 

 

34,791

 

 

32,067
 (AUD
49,685)

 

2.2%

HireVue, Inc.(3)

 

First-lien loan ($54,113 par, due 5/2029)

 

5/3/2023

 

SOFR + 7.25%

 

12.34%

 

 

52,422

 

 

53,350

 

3.6%

PageUp People, Ltd. (3)(4)(5)

 

First-lien loan (AUD 13,916 par, due 12/2025)

 

1/11/2018

 

B + 5.25%

 

9.36%

 

 

10,500

 

 

8,982
 (AUD
13,916)

 

0.6%

 

 

First-lien loan (GBP 3,258 par, due 12/2025)

 

10/28/2021

 

S + 5.28%

 

10.47%

 

 

4,487

 

 

3,976
 (GBP
3,258)

 

0.3%

 

 

First-lien loan ($11,441 par, due 12/2025)

 

10/28/2021

 

SOFR + 5.35%

 

10.67%

 

 

11,431

 

 

11,441

 

0.8%

PayScale Holdings, Inc. (3)(5)

 

First-lien loan ($71,379 par, due 5/2027)

 

5/3/2019

 

SOFR + 6.35%

 

11.74%

 

 

70,985

 

 

71,379

 

4.8%

PrimePay Intermediate, LLC (3)(5)

 

First-lien loan ($34,462 par, due 12/2026)

 

12/17/2021

 

SOFR + 7.15%

 

12.54%

 

 

33,697

 

 

34,290

 

2.3%

 

 

 

 

 

 

 

 

 

 

 

320,440

 

 

320,343

 

21.6%

Insurance

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Disco Parent, Inc. (3)

 

First-lien loan ($4,545 par, due 3/2029)

 

3/30/2023

 

SOFR + 7.50%

 

12.92%

 

 

4,431

 

 

4,495

 

0.3%

Internet Services

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Arrow Buyer, Inc. (3)

 

First-lien loan ($33,125 par, due 7/2030)

 

6/30/2023

 

SOFR + 6.50%

 

11.89%

 

 

32,225

 

 

32,514

 

2.2%

Bayshore Intermediate #2, L.P. (3)

 

First-lien loan ($35,464 par, due 10/2028)

 

10/1/2021

 

SOFR + 7.60%

 

13.00% PIK

 

 

34,947

 

 

35,198

 

2.4%

 

 

First-lien revolving loan ($480 par, due 10/2027)

 

10/1/2021

 

SOFR + 6.60%

 

11.87%

 

 

444

 

 

461

 

0.0%

Coupa Holdings, LLC (3)

 

First-lien loan ($43,191 par, due 2/2030)

 

2/27/2023

 

SOFR + 7.50%

 

12.82%

 

 

42,092

 

 

43,066

 

2.9%

CrunchTime Information, Systems, Inc. (3)(5)

 

First-lien loan ($59,651 par, due 6/2028)

 

6/17/2022

 

SOFR + 6.00%

 

11.32%

 

 

58,579

 

 

59,651

 

4.0%

EDB Parent, LLC (3)(5)

 

First-lien loan ($61,858 par, due 7/2028)

 

7/7/2022

 

SOFR + 6.75%

 

12.14%

 

 

60,612

 

 

61,394

 

4.1%

Higher Logic, LLC (3)(5)

 

First-lien loan ($53,658 par, due 1/2025)

 

6/18/2018

 

SOFR + 6.75%

 

12.14%

 

 

53,464

 

 

53,792

 

3.6%

LeanTaaS Holdings, Inc. (3)(5)

 

First-lien loan ($35,413 par, due 7/2028)

 

7/12/2022

 

SOFR + 7.50%

 

12.89%

 

 

34,602

 

 

35,556

 

2.4%

Lithium Technologies, LLC (3)

 

First-lien loan ($57,009 par, due 1/2025)

 

10/3/2017

 

SOFR + 9.00%

 

14.37% (incl. 4.50% PIK)

 

 

56,996

 

 

55,726

 

3.8%

Lucidworks, Inc. (3)(5)

 

First-lien loan ($8,764 par, due 2/2027)

 

2/11/2022

 

SOFR + 7.50%

 

12.82% (incl. 3.50% PIK)

 

 

8,763

 

 

8,717

 

0.6%

Piano Software, Inc. (3)(5)

 

First-lien loan ($51,218 par, due 2/2026)

 

2/25/2021

 

SOFR + 7.10%

 

12.42%

 

 

50,545

 

 

50,706

 

3.3%

SMA Technologies Holdings, LLC(3)(5)

 

First-lien loan ($36,833 par, due 10/2028)

 

10/31/2022

 

SOFR + 6.75%

 

12.07%

 

 

35,406

 

 

36,649

 

2.5%

 

 

 

 

 

 

 

 

 

 

 

468,675

 

 

473,430

 

31.8%

Manufacturing

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

ASP Unifrax Holdings, Inc. (9)

 

First-lien loan ($1,133 par, due 12/2025) (3)

 

8/25/2023

 

SOFR + 3.90%

 

9.29%

 

 

1,051

 

 

1,055

 

0.1%

 

 

First-lien loan (EUR 364 par, due 12/2025) (3)

 

9/14/2023

 

E + 3.75%

 

7.72%

 

 

357

 

 

354
 (EUR
335)

 

0.0%

 

 

Unsecured Note ($227 par, due 9/2029)

 

8/31/2023

 

7.50%

 

7.50%

 

 

119

 

 

123

 

0.0%

Avalara, Inc (3)

 

First-lien loan ($38,636 par, due 10/2028)

 

10/19/2022

 

SOFR + 7.25%

 

12.64%

 

 

37,701

 

 

38,424

 

2.6%

Skylark UK DebtCo Limited (3)(4)

 

First-lien loan ($16,340 par, due 9/2030)

 

9/7/2023

 

SOFR + 6.25%

 

11.65%

 

 

15,705

 

 

15,697

 

1.1%

 

 

First-lien loan (EUR 4,851 par, due 2/2029)

 

9/7/2023

 

E + 6.25%

 

10.08%

 

 

5,051

 

 

5,021
 (EUR
4,742)

 

0.3%

 

 

First-lien loan (GBP 16,640 par, due 12/2025)

 

9/7/2023

 

S + 6.25%

 

11.44%

 

 

20,194

 

 

19,852
 (GBP
16,265)

 

1.3%

 

 

 

 

 

 

 

 

 

 

 

80,178

 

 

80,526

 

5.4%

Office Products

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

8


 

USR Parent, Inc. (3)(5)

 

ABL FILO term loan ($17,500 par, due 4/2027)

 

4/25/2022

 

SOFR + 6.50%

 

11.83%

 

 

17,185

 

 

17,369

 

1.2%

Oil, Gas and Consumable Fuels

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Laramie Energy, LLC (3)

 

First-lien loan ($27,317 par, due 2/2027)

 

2/21/2023

 

SOFR + 7.10%

 

12.42%

 

 

26,724

 

 

27,055

 

1.8%

Murchison Oil and Gas, LLC (3)

 

First-lien loan ($29,478 par, due 6/2026)

 

6/30/2022

 

SOFR + 8.65%

 

14.04%

 

 

28,986

 

 

29,887

 

2.0%

TRP Assets, LLC (3)

 

First-lien loan ($65,000 par, due 12/2025)

 

12/3/2021

 

SOFR + 7.76%

 

13.15%

 

 

64,299

 

 

67,310

 

4.5%

 

 

 

 

 

 

 

 

 

 

 

120,009

 

 

124,252

 

8.3%

Other

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Omnigo Software, LLC (3)(5)

 

First-lien loan ($40,045 par, due 3/2026)

 

3/31/2021

 

SOFR + 6.60%

 

11.92%

 

 

39,492

 

 

39,745

 

2.7%

Retail and Consumer Products

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

99 Cents Only Stores LLC (3)

 

ABL FILO term loan ($25,000 par, due 5/2025)

 

9/6/2017

 

SOFR + 8.65%

 

14.05%

 

 

24,845

 

 

25,000

 

1.7%

American Achievement, Corp. (3)(14)

 

First-lien loan ($27,089 par, due 9/2026)

 

9/30/2015

 

SOFR + 6.35%

 

11.68% (incl. 11.19% PIK)

 

 

26,260

 

 

20,452

 

1.4%

 

 

First-lien loan ($1,355 par, due 9/2026)

 

6/10/2021

 

SOFR + 14.10%

 

19.43% (incl. 18.93% PIK)

 

 

1,355

 

 

102

 

0.0%

 

 

Subordinated note ($4,740 par, due 9/2026)

 

3/16/2021

 

SOFR + 1.15%

 

6.40% PIK

 

 

545

 

 

71

 

0.0%

Bed Bath and Beyond Inc. (3)(15)

 

ABL FILO term loan ($15,375 par, due 8/2027)

 

9/2/2022

 

SOFR + 9.90%

 

15.22%

 

 

15,055

 

 

15,029

 

1.0%

 

 

Roll Up DIP term loan ($25,914 par, due 9/2024)

 

4/24/2023

 

SOFR + 7.90%

 

13.22% (incl. 13.22% PIK)

 

 

25,914

 

 

25,331

 

1.7%

 

 

Super-Priority DIP term loan ($4,946 par, due 9/2024)

 

4/24/2023

 

SOFR + 7.90%

 

13.22%

 

 

4,946

 

 

4,835

 

0.3%

Cordance Operations, LLC (3)

 

First-lien loan ($47,006 par, due 7/2028)

 

7/25/2022

 

SOFR + 9.25%

 

14.62%

 

 

46,095

 

 

47,006

 

3.1%

Neuintel, LLC (3)(5)

 

First-lien loan ($57,701 par, due 12/2026)

 

12/20/2021

 

SOFR + 7.65%

 

13.02%

 

 

56,869

 

 

57,990

 

3.9%

Project P Intermediate 2, LLC (3)

 

ABL FILO term loan ($71,250 par, due 5/2026)

 

11/8/2021

 

SOFR + 8.10%

 

13.42%

 

 

70,344

 

 

72,141

 

4.9%

Rapid Data GmbH Unternehmensberatung (3)(4)

 

First-lien loan (EUR 4,495 par, due 7/2029)

 

7/11/2023

 

E + 6.50%

 

10.15%

 

 

4,666

 

 

4,625
 (EUR
4,368)

 

0.3%

Tango Management Consulting, LLC (3)(5)

 

First-lien loan ($54,052 par, due 12/2027)

 

12/1/2021

 

SOFR + 6.85%

 

12.18%

 

 

53,318

 

 

53,512

 

3.6%

 

 

First-lien revolving loan ($9 par, due 12/2027)

 

12/1/2021

 

P + 6.85%

 

15.25%

 

 

(56)

 

 

(29)

 

0.0%

 

 

 

 

 

 

 

 

 

 

 

330,156

 

 

326,065

 

21.9%

Transportation

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Project44, Inc. (3)(5)

 

First-lien loan ($35,139 par, due 11/2027)

 

11/12/2021

 

SOFR + 6.40%

 

11.76%

 

 

34,210

 

 

34,864

 

2.3%

Marcura Equities LTD (3)(4)

 

First-lien loan ($31,667 par, due 8/2029)

 

8/11/2023

 

SOFR + 7.75%

 

13.14% (incl. 4.25% PIK)

 

 

30,641

 

 

31,146

 

2.1%

 

 

First-lien revolving loan ($1,667 par, due 8/2029)

 

8/11/2023

 

SOFR + 7.00%

 

12.39%

 

 

1,585

 

 

1,625

 

0.1%

 

 

 

 

 

 

 

 

 

 

 

66,436

 

 

67,635

 

4.5%

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Total Debt Investments

 

 

 

 

 

 

 

 

 

 

2,890,369

 

 

2,909,102

 

195.8%

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Equity and Other Investments

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Business Services

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Dye & Durham, Ltd. (4)(10)

 

Common Shares (126,968 shares)

 

12/3/2021

 

 

 

 

 

 

3,909

 

 

1,248
 (CAD
1,688)

 

0.1%

Mitnick TA Aggregator, LP (11)(13)

 

Membership Interest (0.43% ownership)

 

5/2/2022

 

 

 

 

 

 

5,243

 

 

5,243

 

0.4%

ReliaQuest, LLC (11)(13)

 

Class A-1 Units (567,683 units)

 

11/23/2021

 

 

 

 

 

 

1,120

 

 

1,324

 

0.1%

 

 

Class A-2 Units (2,580 units)

 

6/21/2022

 

 

 

 

 

 

6

 

 

8

 

0.0%

Sprinklr, Inc. (10)(11)

 

Common Shares (315,005 shares)

 

6/24/2021

 

 

 

 

 

 

2,716

 

 

4,360

 

0.3%

Warrior TopCo LP (11)(12)

 

Class A Units (423,728 units)

 

7/7/2023

 

 

 

 

 

 

424

 

 

424

 

0.0%

 

 

 

 

 

 

 

 

 

 

 

13,418

 

 

12,607

 

0.9%

Communications

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Celtra Technologies, Inc. (11)

 

Class A Units (1,250,000 units)

 

11/19/2021

 

 

 

 

 

 

1,250

 

 

1,250

 

0.1%

IntelePeer Holdings, Inc. (11)

 

Series C Preferred Shares (1,816,295 shares)

 

4/8/2021

 

 

 

 

 

 

1,816

 

 

1,866

 

0.1%

 

 

Series D Preferred Shares (1,598,874 shares)

 

4/8/2021

 

 

 

 

 

 

2,925

 

 

2,004

 

0.1%

 

 

280,000 Warrants

 

2/28/2020

 

 

 

 

 

 

183

 

 

 

0.0%

 

 

106,592 Warrants

 

4/8/2021

 

 

 

 

 

 

 

 

 

0.0%

 

 

 

 

 

 

 

 

 

 

 

6,174

 

 

5,120

 

0.3%

Education

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Astra 2L Holdings II LLC (11)

 

Membership Interest (10.17% ownership)

 

1/13/2022

 

 

 

 

 

 

3,255

 

 

594

 

0.0%

EMS Linq, Inc. (11)

 

Class B Units (5,522,526 units)

 

12/22/2021

 

 

 

 

 

 

5,523

 

 

4,763

 

0.4%

RMCF IV CIV XXXV,
   LP.
(11)

 

Partnership Interest (11.94% ownership)

 

6/8/2021

 

 

 

 

 

 

1,000

 

 

1,410

 

0.1%

 

 

 

 

 

 

 

 

 

 

 

9,778

 

 

6,767

 

0.5%

Financial Services

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

AvidXchange, Inc. (10)(11)

 

Common Shares (50,179 shares)

 

10/15/2021

 

 

 

 

 

 

256

 

 

476

 

0.0%

Newport Parent Holdings, LP (11)

 

Class A-2 Units (131,569 units)

 

12/10/2020

 

 

 

 

 

 

4,177

 

 

9,607

 

0.6%

Oxford Square Capital Corp. (4)(10)

 

Common Shares (1,620 shares)

 

8/5/2015

 

 

 

 

 

 

6

 

 

5

 

0.0%

Passport Labs, Inc. (11)

 

17,534 Warrants

 

4/28/2021

 

 

 

 

 

 

192

 

 

2

 

0.0%

TradingScreen, Inc. (11)(13)

 

Class A Units (600,000 units)

 

5/14/2021

 

 

 

 

 

 

600

 

 

600

 

0.1%

9


 

 

 

 

 

 

 

 

 

 

 

 

5,231

 

 

10,690

 

0.7%

Healthcare

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Caris Life Sciences, Inc. (11)

 

Series C Preferred Shares (1,915,114 shares)

 

10/13/2020

 

 

 

 

 

 

3,500

 

 

6,703

 

0.5%

 

 

Series D Preferred Shares (1,240,740 shares)

 

5/11/2021

 

 

 

 

 

 

10,050

 

 

9,573

 

0.6%

 

 

633,376 Warrants

 

9/21/2018

 

 

 

 

 

 

192

 

 

1,196

 

0.1%

 

 

569,991 Warrants

 

4/2/2020

 

 

 

 

 

 

250

 

 

893

 

0.1%

Merative L.P. (11)(13)

 

989,691 Class A-1 Units

 

6/30/2022

 

 

 

 

 

 

9,897

 

 

9,897

 

0.7%

Raptor US Buyer II Corp. (11)(12)

 

2,027 Ordinary Shares

 

3/24/2023

 

 

 

 

 

 

203

 

 

203

 

0.0%

 

 

2,027 Class A

 

3/24/2023

 

 

 

 

 

 

203

 

 

203

 

0.0%

 

 

2,027 Class B

 

3/24/2023

 

 

 

 

 

 

203

 

 

203

 

0.0%

 

 

2,027 Class C

 

3/24/2023

 

 

 

 

 

 

203

 

 

203

 

0.0%

 

 

2,027 Class D

 

3/24/2023

 

 

 

 

 

 

203

 

 

203

 

0.0%

 

 

2,027 Class E

 

3/24/2023

 

 

 

 

 

 

203

 

 

203

 

0.0%

 

 

2,027 Class F

 

3/24/2023

 

 

 

 

 

 

203

 

 

203

 

0.0%

 

 

2,027 Class G

 

3/24/2023

 

 

 

 

 

 

203

 

 

203

 

0.0%

 

 

2,027 Class H

 

3/24/2023

 

 

 

 

 

 

203

 

 

203

 

0.0%

 

 

2,027 Class I

 

3/24/2023

 

 

 

 

 

 

203

 

 

203

 

0.0%

 

 

 

 

 

 

 

 

 

 

 

25,919

 

 

30,292

 

2.0%

Hotel, Gaming and Leisure

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

IRGSE Holding Corp. (7)(11)

 

Class A Units (33,790,171 units)

 

12/21/2018

 

 

 

 

 

 

21,842

 

 

6,336

 

0.4%

 

 

Class C-1 Units (8,800,000 units)

 

12/21/2018

 

 

 

 

 

 

100

 

 

43

 

0.0%

 

 

 

 

 

 

 

 

 

 

 

21,942

 

 

6,379

 

0.4%

Human Resource Support Services

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Axonify, Inc. (4)(11)(13)

 

Class A-1 Units (3,780,000 units)

 

5/5/2021

 

 

 

 

 

 

3,780

 

 

3,837

 

0.3%

bswift, LLC (11)(12)

 

Class A-1 Units (2,393,509 units)

 

11/7/2022

 

 

 

 

 

 

2,394

 

 

2,394

 

0.2%

DaySmart Holdings, LLC (11)(13)

 

Class A Units (166,811 units)

 

10/1/2019

 

 

 

 

 

 

1,347

 

 

2,030

 

0.1%

Employment Hero Holdings Pty Ltd. (4)(11)

 

Series E Preferred Shares (113,250 shares)

 

3/1/2022

 

 

 

 

 

 

2,134

 

 

2,493
 (AUD
3,862)

 

0.2%

 

 

 

 

 

 

 

 

 

 

 

9,655

 

 

10,754

 

0.8%

Internet Services

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Bayshore Intermediate #2, L.P. (11)(13)

 

Co-Invest Common Units (8,837,008 units)

 

10/1/2021

 

 

 

 

 

 

8,837

 

 

8,152

 

0.5%

 

 

Co-Invest 2 Common Units (3,493,701 units)

 

10/1/2021

 

 

 

 

 

 

3,494

 

 

3,223

 

0.2%

Lucidworks, Inc. (11)

 

Series F Preferred Shares (199,054 shares)

 

8/2/2019

 

 

 

 

 

 

800

 

 

800

 

0.1%

Piano Software, Inc. (11)

 

Series C-1 Preferred Shares (418,527 shares)

 

12/22/2021

 

 

 

 

 

 

3,000

 

 

3,000

 

0.2%

 

 

Series C-2 Preferred Shares (27,588 shares)(12)

 

11/18/2022

 

 

 

 

 

 

198

 

 

198

 

0.0%

SMA Technologies Holdings, LLC (11)(12)

 

Class A Units (1,300 shares)

 

11/21/2022

 

 

 

 

 

 

1,300

 

 

1,300

 

0.1%

 

 

Class B Units (923,250 shares)

 

11/21/2022

 

 

 

 

 

 

 

 

 

0.0%

 

 

 

 

 

 

 

 

 

 

 

17,629

 

 

16,673

 

1.1%

Marketing Services

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Validity, Inc. (11)

 

Series A Preferred Shares (3,840,000 shares)

 

5/31/2018

 

 

 

 

 

 

3,840

 

 

10,944

 

0.7%

Oil, Gas and Consumable Fuels

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Murchison Oil and Gas, LLC (13)

 

13,355 Preferred Units

 

6/30/2022

 

 

 

 

 

 

13,355

 

 

14,891

 

1.0%

TRP Assets, LLC (11)(13)

 

Partnership Interest (1.89% ownership)

 

8/25/2022

 

 

 

 

 

 

8,732

 

 

11,811

 

0.8%

 

 

 

 

 

 

 

 

 

 

 

22,087

 

 

26,702

 

1.8%

Pharmaceuticals

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

TherapeuticsMD, Inc. (4)(11)

 

14,256 Warrants

 

8/5/2020

 

 

 

 

 

 

1,029

 

 

 

0.0%

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Retail and Consumer Products

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

American Achievement, Corp. (11)

 

Class A Units (687 units)

 

3/16/2021

 

 

 

 

 

 

 

 

50

 

0.0%

Copper Bidco, LLC

 

Trust Certificates (132,928 Certificates)

 

12/7/2020

 

 

 

 

 

 

 

 

7

 

0.0%

 

 

Trust Certificates (996,958 Certificates) (9)

 

1/30/2021

 

 

 

 

 

 

2,589

 

 

10,727

 

0.7%

Neuintel, LLC (11)(13)

 

Class A Units (1,176,494 units)

 

12/21/2021

 

 

 

 

 

 

3,000

 

 

2,468

 

0.2%

 

 

 

 

 

 

 

 

 

 

 

5,589

 

 

13,252

 

0.9%

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Structured Credit

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Allegro CLO Ltd, Series 2018-1A, (3)(4)(9)

 

Structured Credit ($1,000 par, due 6/2031)

 

5/26/2022

 

SOFR + 3.11%

 

8.42%

 

 

973

 

 

953

 

0.1%

American Money Management Corp CLO Ltd, Series 2016-18A (3)(4)(9)

 

Structured Credit ($1,500 par, due 5/2031)

 

6/22/2022

 

SOFR + 3.31%

 

8.70%

 

 

1,356

 

 

1,455

 

0.1%

Ares CLO Ltd, Series 2021-59A (3)(4)(9)

 

Structured Credit ($1,000 par, due 4/2034)

 

6/23/2022

 

SOFR + 6.51%

 

11.86%

 

 

897

 

 

906

 

0.0%

Ares Loan Funding I Ltd, Series 2021-ALFA, Class E (3)(4)(9)

 

Structured Credit ($1,000 par, due 10/2034)

 

6/24/2022

 

SOFR + 6.96%

 

12.27%

 

 

943

 

 

925

 

0.0%

Bain Capital Credit CLO Ltd, Series 2018-1A (3)(4)(9)

 

Structured Credit ($500 par, due 4/2031)

 

10/15/2020

 

SOFR + 5.61%

 

10.96%

 

 

428

 

 

421

 

0.0%

Battalion CLO Ltd, Series 2021-21A (3)(4)(9)

 

Structured Credit ($1,300 par, due 7/2034)

 

7/13/2022

 

SOFR + 3.56%

 

8.87%

 

 

1,167

 

 

1,222

 

0.1%

Benefit Street Partners CLO Ltd, Series 2015-BR (3)(4)(9)

 

Structured Credit ($2,500 par, due 7/2034)

 

7/13/2022

 

SOFR + 4.11%

 

9.44%

 

 

2,190

 

 

2,500

 

0.2%

Benefit Street Partners CLO Ltd, Series 2015-8A (3)(4)(9)

 

Structured Credit ($1,425 par, due 1/2031)

 

9/13/2022

 

SOFR + 3.01%

 

8.34%

 

 

1,282

 

 

1,334

 

0.1%

10


 

Carlyle Global Market Strategies CLO Ltd, Series 2014-4RA (3)(4)(9)

 

Structured Credit ($1,000 par, due 7/2030)

 

5/26/2022

 

SOFR + 3.16%

 

8.47%

 

 

917

 

 

928

 

0.1%

Carlyle Global Market Strategies CLO Ltd, Series 2016-1, Ltd (3)(4)(9)

 

Structured Credit ($1,600 par, due 4/2034)

 

2/15/2023

 

SOFR + 6.86%

 

12.19%

 

 

1,427

 

 

1,467

 

0.1%

Carlyle Global Market Strategies CLO Ltd, Series 2018-1A (3)(4)(9)

 

Structured Credit ($1,550 par, due 4/2031)

 

8/11/2020

 

SOFR + 6.01%

 

11.34%

 

 

1,259

 

 

1,386

 

0.1%

CarVal CLO III Ltd, Series 2019-2A (3)(4)(9)

 

Structured Credit ($1,000 par, due 7/2032)

 

6/30/2022

 

SOFR + 6.70%

 

12.03%

 

 

901

 

 

957

 

0.1%

Cedar Funding CLO Ltd, Series 2018-7A (3)(4)(9)

 

Structured Credit ($1,000 par, due 1/2031)

 

7/21/2022

 

SOFR + 4.81%

 

10.14%

 

 

871

 

 

867

 

0.0%

CIFC CLO Ltd, Series 2018-3A (3)(4)(9)

 

Structured Credit ($1,000 par, due 7/2031)

 

6/16/2022

 

SOFR + 5.76%

 

11.07%

 

 

902

 

 

928

 

0.1%

CIFC CLO Ltd, Series 2021-4A (3)(4)(9)

 

Structured Credit ($1,000 par, due 7/2033)

 

7/14/2022

 

SOFR + 6.26%

 

11.57%

 

 

899

 

 

950

 

0.1%

Crown Point CLO Ltd, Series 2021-10A (3)(4)(9)

 

Structured Credit ($1,000 par, due 7/2034)

 

6/14/2022

 

SOFR + 7.11%

 

12.44%

 

 

903

 

 

925

 

0.1%

Dryden Senior Loan Fund, Series 2018-55A (3)(4)(9)

 

Structured Credit ($1,000 par, due 4/2031)

 

7/25/2022

 

SOFR + 3.11%

 

8.42%

 

 

925

 

 

928

 

0.1%

Dryden Senior Loan Fund, Series 2020-86A (3)(4)(9)

 

Structured Credit ($1,500 par, due 7/2034)

 

8/17/2022

 

SOFR + 6.76%

 

12.07%

 

 

1,451

 

 

1,358

 

0.1%

Eaton CLO Ltd, Series 2015-1A (3)(4)(9)

 

Structured Credit ($2,500 par, due 1/2030)

 

6/23/2022

 

SOFR + 2.76%

 

8.09%

 

 

2,252

 

 

2,394

 

0.2%

Eaton CLO Ltd, Series 2020-1A (3)(4)(9)

 

Structured Credit ($1,000 par, due 10/2034)

 

8/11/2022

 

SOFR + 6.51%

 

11.82%

 

 

934

 

 

962

 

0.1%

GoldenTree CLO Ltd, Series 2020-7A (3)(4)(9)

 

Structured Credit ($1,000 par, due 4/2034)

 

6/17/2022

 

SOFR + 6.76%

 

12.09%

 

 

921

 

 

984

 

0.1%

Gulf Stream Meridian, Series 2021-4A (3)(4)(9)

 

Structured Credit ($1,015 par, due 7/2034)

 

6/3/2022

 

SOFR + 6.61%

 

11.98%

 

 

941

 

 

920

 

0.0%

Gulf Stream Meridian, Series 2021-6A (3)(4)(9)

 

Structured Credit ($2,000 par, due 1/2037)

 

9/12/2022

 

SOFR + 6.62%

 

11.93%

 

 

1,849

 

 

1,785

 

0.1%

Jefferson Mill CLO Ltd, Series 2015-1A (3)(4)(9)

 

Structured Credit ($1,000 par, due 10/2031)

 

5/23/2022

 

SOFR + 3.81%

 

9.14%

 

 

906

 

 

937

 

0.0%

KKR CLO Ltd, 49A (3)(4)(9)

 

Structured Credit ($1,000 par, due 7/2035)

 

6/2/2022

 

SOFR + 8.26%

 

13.33%

 

 

977

 

 

959

 

0.1%

Madison Park CLO, Series 2018-28A (3)(4)(9)

 

Structured Credit ($1,000 par, due 7/2030)

 

6/28/2022

 

SOFR + 5.51%

 

10.82%

 

 

908

 

 

948

 

0.0%

Magnetite CLO Ltd, Series 2021-30A (3)(4)(9)

 

Structured Credit ($1,000 par, due 10/2034)

 

6/13/2022

 

SOFR + 6.46%

 

11.81%

 

 

919

 

 

956

 

0.1%

MidOcean Credit CLO Ltd, Series 2016-6A (3)(4)(9)

 

Structured Credit ($3,500 par, due 4/2033)

 

5/23/2022

 

SOFR + 3.78%

 

9.11%

 

 

3,165

 

 

3,231

 

0.2%

MidOcean Credit CLO Ltd, Series 2018-9A (3)(4)(9)

 

Structured Credit ($1,100 par, due 7/2031)

 

6/1/2022

 

SOFR + 6.31%

 

11.64%

 

 

964

 

 

952

 

0.1%

Octagon 57 LLC, Series 2021-1A (3)(4)(9)

 

Structured Credit ($1,000 par, due 10/2034)

 

5/24/2022

 

SOFR + 6.86%

 

12.17%

 

 

949

 

 

916

 

0.0%

Octagon Investment Partners 18 Ltd, Series 2018-18A (3)(4)(9)

 

Structured Credit ($1,000 par, due 4/2031)

 

7/26/2022

 

SOFR + 2.96%

 

8.27%

 

 

911

 

 

925

 

0.1%

Octagon Investment Partners 38 Ltd, Series 2018-1A (3)(4)(9)

 

Structured Credit ($2,800 par, due 7/2030)

 

9/20/2022

 

SOFR + 3.21%

 

8.54%

 

 

2,489

 

 

2,620

 

0.2%

Park Avenue Institutional Advisers CLO Ltd, Series 2018-1A (3)(4)(9)

 

Structured Credit ($1,000 par, due 10/2031)

 

9/23/2022

 

SOFR + 3.59%

 

8.92%

 

 

868

 

 

922

 

0.0%

Pikes Peak CLO, Series 2021-9A (3)(4)(9)

 

Structured Credit ($2,000 par, due 10/2034)

 

8/31/2022

 

SOFR + 6.84%

 

12.20%

 

 

1,782

 

 

1,894

 

0.1%

RR Ltd, Series 2020-8A (3)(4)(9)

 

Structured Credit ($1,000 par, due 4/2033)

 

8/22/2022

 

SOFR + 6.66%

 

11.97%

 

 

954

 

 

980

 

0.1%

Signal Peak CLO LLC, Series 2018-5A (3)(4)(9)

 

Structured Credit ($333 par, due 4/2031)

 

8/9/2022

 

SOFR + 5.91%

 

11.26%

 

 

301

 

 

297

 

0.0%

Southwick Park CLO Ltd, Series 2019-4A (3)(4)(9)

 

Structured Credit ($1,000 par, due 7/2032)

 

5/25/2022

 

SOFR + 6.51%

 

11.84%

 

 

931

 

 

925

 

0.0%

Stewart Park CLO Ltd, Series 2015-1A (3)(4)(9)

 

Structured Credit ($1,000 par, due 1/2030)

 

7/25/2022

 

SOFR + 2.86%

 

8.17%

 

 

926

 

 

922

 

0.0%

Voya CLO Ltd, Series 2018-3A (3)(4)(9)

 

Structured Credit ($2,750 par, due 10/2031)

 

6/22/2022

 

SOFR + 6.01%

 

11.32%

 

 

2,435

 

 

2,391

 

0.2%

Wind River CLO Ltd, Series 2014-2A (3)(4)(9)

 

Structured Credit ($1,500 par, due 1/2031)

 

6/23/2022

 

SOFR + 3.16%

 

8.47%

 

 

1,405

 

 

1,339

 

0.1%

Wind River CLO Ltd, Series 2017-1A (3)(4)(9)

 

Structured Credit ($3,000 par, due 4/2036)

 

7/14/2022

 

SOFR + 3.98%

 

9.29%

 

 

2,630

 

 

2,721

 

0.2%

Wind River CLO Ltd, Series 2018-3A (3)(4)(9)

 

Structured Credit ($2,000 par, due 1/2031)

 

12/12/2022

 

SOFR + 5.91%

 

11.24%

 

 

1,710

 

 

1,705

 

0.1%

 

 

 

 

 

 

 

 

 

 

 

52,718

 

 

53,995

 

3.6%

Total Equity and Other Investments

 

 

 

 

 

 

 

 

 

 

195,009

 

 

204,175

 

13.7%

Total Investments

 

 

 

 

 

 

 

 

 

$

3,085,378

 

$

3,113,277

 

209.5%

11


 

 

 

 

Interest Rate Swaps as of September 30, 2023

 

 

 

Company
Receives

 

Company
Pays

 

Maturity Date

 

Notional
Amount

 

 

Fair
Market
Value

 

 

Upfront
(Payments) /
Receipts

 

 

Change in
Unrealized
Gains / (Losses)

 

Interest rate swap (a)

 

SOFR + 2.54%

 

3.875%

 

11/1/2024

 

$

2,500

 

 

$

 

 

$

 

 

$

 

Interest rate swap (a)(b)(c)(d)

 

3.875%

 

SOFR + 2.51%

 

11/1/2024

 

 

300,000

 

 

 

(12,882

)

 

 

 

 

 

3,611

 

Interest rate swap (a)(b)(c)(d)

 

3.875%

 

SOFR + 2.72%

 

11/1/2024

 

 

50,000

 

 

 

(2,258

)

 

 

 

 

 

667

 

Interest rate swap (a)(b)

 

2.50%

 

SOFR + 2.17%

 

8/1/2026

 

 

300,000

 

 

 

(34,724

)

 

 

 

 

 

941

 

Interest rate swap (a)(b)

 

6.95%

 

SOFR + 2.99%

 

8/14/2028

 

 

300,000

 

 

 

(6,079

)

 

 

 

 

 

(6,079

)

Total Hedge Accounting Swaps

 

 

 

 

 

 

 

 

952,500

 

 

 

(55,943

)

 

 

 

 

 

(860

)

Cash collateral

 

 

 

 

 

 

 

 

 

 

 

63,368

 

 

 

 

 

 

 

Total derivatives

 

 

 

 

 

 

 

$

952,500

 

 

$

7,425

 

 

$

 

 

$

(860

)

 

(a)
Contains a variable rate structure. Bears interest at a rate determined by SOFR.
(b)
Instrument is used in a hedge accounting relationship. The associated change in fair value is recorded along with the change in fair value of the hedged item within interest expense.
(c)
$2.5 million in aggregate notional value of these instruments is no longer designated as instruments in a hedge accounting relationship. The associated change in fair value of the de-designated portion is recorded within unrealized gain/(loss).
(d)
The fair market value of this instrument is presented net with the $2.5 million in aggregate notional value of instruments no longer designated as instruments in a hedge accounting relationship.
(1)
Certain portfolio company investments are subject to contractual restrictions on sales.
(2)
The amortized cost represents the original cost adjusted for the amortization of discounts and premiums, as applicable, on debt investments using the effective interest method.
(3)
Investment contains a variable rate structure, subject to an interest rate floor. Variable rate investments bear interest at a rate that may be determined by reference to either Euro Interbank Offer Rate (“Euribor” or “E”), Canadian Dollar Offered Rate (“CDOR” or “C”), Secured Overnight Financing Rate (“SOFR”) which may also contain a credit spread adjustment depending on the tenor election, Bank Bill Swap Bid Rate (“BBSY” or “B”), Sterling Overnight Interbank Average Rate (“SONIA” or “S”) or an alternate base rate (which can include the Federal Funds Effective Rate or the Prime Rate or “P”), all of which include an available tenor, selected at the borrower’s option, which reset periodically based on the terms of the credit agreement. For investments with multiple interest rate contracts, the interest rate shown is the weighted average interest rate in effect at September 30, 2023.
(4)
This portfolio company is not a qualifying asset under Section 55(a) of the Investment Company Act of 1940, as amended (the “1940 Act”). Under the 1940 Act, the Company may not acquire any non-qualifying asset unless, at the time such acquisition is made, qualifying assets represent at least 70% of total assets. Non-qualifying assets represented 11.0% of total assets as of September 30, 2023.

12


 

(5)
In addition to the interest earned based on the stated interest rate of this investment, which is the amount reflected in this schedule, the Company may be entitled to receive additional interest as a result of an arrangement with other members in the syndicate to the extent an investment has been allocated to “first out” and “last out” tranches, whereby the “first out” tranche will have priority as to the “last out” tranche with respect to payments of principal, interest and any amounts due thereunder and the Company holds the “last out” tranche.
(6)
Under the 1940 Act, the Company is deemed to be both an “Affiliated Person” of and “Control,” as such terms are defined in the 1940 Act, this portfolio company, as the Company owns more than 25% of the portfolio company’s outstanding voting securities or has the power to exercise control over management or policies of such portfolio company (including through a management agreement). Transactions during the nine months ended September 30, 2023 in which the Company was an Affiliated Person of and was deemed to Control a portfolio company are as follows:

Controlled, Affiliated Investments during the nine months ended September 30, 2023

 

Company

 

Fair
Value at
December 31,
2022

 

 

Gross
Additions (a)

 

 

Gross
Reductions
(b)

 

 

Net Change
In Unrealized
Gain/(Loss)

 

 

Realized
Gain/(Loss)

 

 

Transfers

 

 

Fair
Value at
September 30,
2023

 

 

Other
Income

 

 

Interest
Income

 

IRGSE Holding Corp.

 

$

70,755

 

 

$

8,005

 

 

$

 

 

$

(17,783

)

 

$

 

 

$

 

 

$

60,977

 

 

$

4

 

 

$

5,599

 

Total

 

$

70,755

 

 

$

8,005

 

 

$

 

 

$

(17,783

)

 

$

 

 

$

 

 

$

60,977

 

 

$

4

 

 

$

5,599

 

 

(a)
Gross additions include increases in the cost basis of investments resulting from new investments, payment-in-kind interest or dividends, the amortization of any unearned income or discounts on debt investments, as applicable.
(b)
Gross reductions include decreases in the cost basis of investments resulting from principal collections related to investment repayments or sales, and the amortization of any premiums on debt investments, as applicable. When an investment is placed on non-accrual status, any cash flows received by the Company may be applied to the outstanding principal balance.

 

(7)
As of September 30, 2023, the estimated cost basis of investments for U.S. federal tax purposes was $3,096,469, resulting in estimated gross unrealized gains and losses of $147,820 and $125,469, respectively.
(8)
In accordance with Financial Accounting Standards Board Accounting Standards Codification Topic 820, Fair Value Measurements (“ASC Topic 820”), unless otherwise indicated, the fair values of all investments were determined using significant unobservable inputs and are considered Level 3 investments. See Note 6 for further information related to investments at fair value.
(9)
This investment is valued using observable inputs and is considered a Level 2 investment. See Note 6 for further information related to investments at fair value.
(10)
This investment is valued using observable inputs and is considered a Level 1 investment. See Note 6 for further information related to investments at fair value.
(11)
This investment is non-income producing.
(12)
All or a portion of this security was acquired in a transaction exempt from registration under the Securities Act of 1933, and may be deemed to be “restricted securities” under the Securities Act. As of September 30, 2023, the aggregate fair value of these securities is $6,346, or 0.4% of the Company’s net assets.
(13)
Ownership of equity investments may occur through a holding company or partnership.
(14)
Investment is on non-accrual status as of September 30, 2023.
(15)
In addition to the principal amount outstanding and accrued interest owed on this investment, the Company is entitled to a separate Make-Whole Amount (the “Make-Whole”) of $11.4 million. The Make-Whole is a contractual obligation of the borrower and accrues interest on the balance outstanding. The Make-Whole is included on the Company’s consolidated balance sheet within other assets, net of any valuation allowance. Given uncertainty relating to collectability of the Make-Whole, the Company has applied a full valuation allowance against the amount of the Make-Whole balance outstanding.

The accompanying notes are an integral part of these consolidated financial statements.

 

13


 

Sixth Street Specialty Lending, Inc.

Consolidated Schedule of Investments as of December 31, 2022

(Amounts in thousands, except share amounts)

 

Company (1)(6)

 

Investment

 

Initial
Acquisition
Date

 

Reference
Rate and
Spread

 

Interest Rate

 

 

Amortized
Cost
(2)(8)

 

 

Fair Value (9)

 

Percentage
of Net Assets

Debt Investments

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Automotive

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Carlstar Group, LLC (3)

 

First-lien loan ($33,575 par, due 7/2027)

 

7/8/2022

 

SOFR + 6.60%

 

10.92%

 

$

32,739

 

$

33,049

 

2.5%

Business services

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Acceo Solutions, Inc. (3)(4)(5)

 

First-lien loan (CAD 57,353 par, due 10/2025)

 

7/6/2018

 

C + 4.75%

 

9.49%

 

 

43,241

 

 

42,540 
(CAD
57,640)

 

3.2%

Alpha Midco, Inc. (3)(5)

 

First-lien loan ($68,720 par, due 8/2025)

 

8/15/2019

 

SOFR + 7.63%

 

12.21%

 

 

67,831

 

 

69,242

 

5.2%

Dye & Durham Corp. (3)(4)

 

First-lien loan (CAD 34,220 par, due 12/2027)

 

12/3/2021

 

C + 5.75%

 

10.69%

 

 

25,076

 

 

24,113
(CAD
32,672)

 

1.8%

 

 

First-lien revolving loan (CAD 1,448 par, due 12/2026)

 

12/3/2021

 

P + 6.75%

 

11.20%

 

 

1,095

 

 

1,069
(CAD
1,448)

 

0.1%

ExtraHop Networks, Inc. (3)(5)

 

First-lien loan ($57,950 par, due 7/2027)

 

7/22/2021

 

L + 7.50%

 

12.23%

 

 

56,812

 

 

56,791

 

4.2%

ForeScout Technologies, Inc. (3)

 

First-lien loan ($2,606 par, due 8/2026)

 

7/1/2022

 

L + 9.00%

 

13.72% (incl. 9.00% PIK)

 

 

2,533

 

 

2,489

 

0.2%

 

 

First-lien loan ($6,502 par, due 8/2026)

 

8/17/2020

 

L + 9.50%

 

14.23% (incl. 9.50% PIK)

 

 

6,412

 

 

6,421

 

0.5%

Hornetsecurity Holding GmbH (3)(4)

 

First-lien loan (EUR 3,150 par, due 11/2029)

 

11/14/2022

 

E + 6.50%

 

8.26%

 

 

3,140

 

 

3,213
(EUR
3,011)

 

0.2%

Information Clearinghouse, LLC and MS Market Service, LLC (3)(5)

 

First-lien loan ($17,820 par, due 12/2026)

 

12/20/2021

 

SOFR + 6.65%

 

11.16%

 

 

17,433

 

 

17,375

 

1.3%

Mitnick Corporate Purchaser, Inc. (3)(10)

 

First-lien loan ($333 par, due 5/2029)

 

5/2/2022

 

SOFR + 4.85%

 

8.94%

 

 

333

 

 

311

 

0.0%

Netwrix Corp. (3)

 

First-lien loan ($36,119 par, due 6/2029)

 

6/9/2022

 

SOFR + 5.00%

 

9.70%

 

 

35,515

 

 

35,119

 

2.6%

OutSystems Luxco SARL(3)(4)(5)

 

First-lien loan (EUR 3,004 par, due 12/2028)

 

12/8/2022

 

E + 5.75%

 

7.74%

 

 

3,060

 

 

3,112
(EUR
2,916)

 

0.2%

ReliaQuest Holdings, LLC (3)(5)

 

First-lien loan ($63,477 par, due 10/2026)

 

10/8/2020

 

SOFR + 7.25%

 

11.83%

 

 

62,411

 

 

63,477

 

4.7%

TIBCO Software Inc. (10)

 

First-lien note ($13,000 par, due 3/2029)

 

9/20/2022

 

6.50%

 

6.50%

 

 

10,924

 

 

10,944

 

0.8%

 

 

First-lien loan ($12,000 par, due 3/2029) (3)

 

9/20/2022

 

SOFR + 4.60%

 

9.19%

 

 

10,947

 

 

10,680

 

0.8%

WideOrbit, Inc. (3)

 

First-lien loan ($35,548 par, due 7/2025)

 

7/8/2020

 

L + 8.50%

 

12.88%

 

 

35,213

 

 

36,347

 

2.7%

 

 

 

 

 

 

 

 

 

 

 

381,976

 

 

383,243

 

28.5%

Chemicals

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Erling Lux Bidco SARL(3)(4)

 

First-lien loan (EUR 7,239 par, due 9/2028)

 

9/6/2022

 

E + 6.75%

 

8.73%

 

 

6,908

 

 

7,326
(EUR
6,864)

 

0.5%

 

 

First-lien loan (GBP 10,217 par, due 9/2028)

 

9/6/2022

 

S + 6.75%

 

10.20%

 

 

11,245

 

 

11,922
(GBP
9,911)

 

0.9%

 

 

 

 

 

 

 

 

 

 

 

18,153

 

 

19,248

 

1.4%

Communications

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Celtra Technologies, Inc. (3)(5)

 

First-lien loan ($34,650 par, due 11/2026)

 

11/19/2021

 

L + 7.00%

 

11.38%

 

 

33,764

 

 

33,264

 

2.5%

IntelePeer Holdings, Inc.

 

First-lien loan ($34,677 par, due 12/2024) (3)

 

12/2/2019

 

L + 8.25%

 

12.63%

 

 

34,633

 

 

33,983

 

2.5%

 

 

Convertible note ($4,382 par, due 5/2028)

 

5/12/2021

 

6.50%

 

6.50% PIK

 

 

4,350

 

 

4,240

 

0.3%

 

 

 

 

 

 

 

 

 

 

 

72,747

 

 

71,487

 

5.3%

Education

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Astra Acquisition Corp. (3)

 

Second-lien loan ($43,479 par, due 10/2029)

 

10/25/2021

 

L + 8.88%

 

13.26%

 

 

42,743

 

 

40,762

 

3.0%

Destiny Solutions Parent Holding Company (3)(5)

 

First-lien loan ($60,000 par, due 6/2026)

 

6/8/2021

 

L + 5.75%

 

10.13%

 

 

59,046

 

 

58,350

 

4.3%

EMS Linq, Inc. (3)

 

First-lien loan ($56,216 par, due 12/2027)

 

12/22/2021

 

L + 6.25%

 

10.63%

 

 

55,103

 

 

53,291

 

4.0%

 

 

 

 

 

 

 

 

 

 

 

156,892

 

 

152,403

 

11.3%

Financial Services

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

BTRS Holdings, Inc.(3)

 

First-lien loan ($45,180 par, due 12/2028)

 

12/16/2022

 

SOFR + 8.00%

 

12.50%

 

 

43,688

 

 

43,465

 

3.2%

Bear OpCo, LLC (3)(5)

 

First-lien loan ($20,169 par, due 10/2024)

 

10/10/2019

 

SOFR + 7.65%

 

11.97%

 

 

19,953

 

 

20,169

 

1.5%

BlueSnap, Inc. (3)(5)

 

First-lien loan ($42,000 par, due 10/2024)

 

10/25/2019

 

L + 6.75%

 

11.48%

 

 

41,646

 

 

41,889

 

3.1%

G Treasury SS, LLC (3)(5)

 

First-lien loan ($65,859 par, due 4/2024)

 

4/9/2018

 

SOFR + 8.40%

 

12.94%

 

 

65,709

 

 

65,859

 

4.9%

Ibis Intermediate Co. (3)(5)

 

First-lien loan ($1,526 par, due 5/2027)

 

5/28/2021

 

L + 5.00%

 

9.73%

 

 

1,416

 

 

1,565

 

0.1%

Ibis US Blocker Co. (3)

 

First-lien loan ($13,957 par, due 5/2028)

 

5/28/2021

 

L + 8.25%

 

12.98% PIK

 

 

13,713

 

 

13,643

 

1.0%

Jonas Collections and Recovery, Inc. (3)(5)

 

First-lien loan ($19,125 par, due 6/2026)

 

6/21/2021

 

L + 5.25%

 

10.40%

 

 

18,832

 

 

18,790

 

1.4%

Kyriba Corp.(3)

 

First-lien loan ($19,051 par, due 4/2025)

 

4/9/2019

 

L + 9.00%

 

13.73% (incl. 9.00% PIK)

 

 

18,870

 

 

19,147

 

1.4%

 

 

First-lien loan (EUR 9,924 par, due 4/2025)

 

4/9/2019

 

E + 9.00%

 

11.20% (incl. 9.00% PIK)

 

 

11,004

 

 

10,645
(EUR
9,974)

 

0.8%

 

 

First-lien revolving loan ($1,411 par, due 4/2025)

 

4/9/2019

 

L + 7.25%

 

11.98%

 

 

1,394

 

 

1,418

 

0.1%

 

 

First-lien revolving loan (EUR 336 par, due 4/2025)

 

4/9/2019

 

E + 7.25%

 

9.45%

 

 

372

 

 

358
(EUR
336)

 

0.0%

Passport Labs, Inc. (3)

 

First-lien loan ($23,390 par, due 4/2026)

 

4/28/2021

 

L + 8.25%

 

12.58% (incl. 4.125% PIK)

 

 

23,169

 

 

22,783

 

1.7%

Ping Identity Holding Corp. (3)

 

First-lien loan ($22,727 par, due 10/2029)

 

10/17/2022

 

SOFR + 7.00%

 

11.32%

 

 

22,116

 

 

21,977

 

1.6%

PrimeRevenue, Inc. (3)

 

First-lien loan ($22,507 par, due 12/2023)

 

12/31/2018

 

L + 7.00%

 

11.38%

 

 

22,434

 

 

22,507

 

1.7%

TradingScreen, Inc. (3)(5)

 

First-lien loan ($44,663 par, due 4/2027)

 

4/30/2021

 

L + 6.25%

 

10.66%

 

 

43,648

 

 

43,769

 

3.3%

 

 

 

 

 

 

 

 

 

 

 

347,964

 

 

347,984

 

25.8%

14


 

Company (1)(6)

 

Investment

 

Initial
Acquisition
Date

 

Reference
Rate and
Spread

 

Interest Rate

 

 

Amortized
Cost
(2)(8)

 

 

Fair Value (9)

 

Percentage
of Net Assets

Healthcare

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

BCTO Ace Purchaser, Inc. (3)(5)

 

First-lien loan ($63,565 par, due 11/2026)

 

11/23/2020

 

SOFR + 7.70%

 

12.10%

 

 

62,440

 

 

62,930

 

4.7%

Caris Life Sciences, Inc.

 

First-lien loan ($5,000 par, due 9/2023)

 

9/21/2018

 

11.30%

 

11.30%

 

 

4,967

 

 

5,100

 

0.4%

 

 

First-lien loan ($3,750 par, due 4/2025)

 

4/2/2020

 

11.30%

 

11.30%

 

 

3,601

 

 

3,900

 

0.3%

 

 

Convertible note ($2,602 par, due 9/2023)

 

9/21/2018

 

8.00%

 

8.00%

 

 

2,602

 

 

5,848

 

0.4%

Homecare Software Solutions, LLC (3)(5)

 

First-lien loan ($65,000 par, due 10/2026)

 

10/6/2021

 

SOFR + 5.70%

 

10.02%

 

 

63,733

 

 

63,213

 

4.7%

Integrated Practice Solutions, Inc. (3)(5)

 

First-lien loan ($46,312 par, due 10/2024)

 

6/30/2017

 

L + 7.50%

 

11.89%

 

 

45,590

 

 

46,312

 

3.5%

Merative L.P. (3)(5)

 

First-lien loan ($70,103 par, due 6/2028)

 

6/30/2022

 

SOFR + 7.25%

 

11.84%

 

 

67,906

 

 

67,299

 

5.0%

 

 

 

 

 

 

 

 

 

 

 

250,839

 

 

254,602

 

19.0%

Hotel, Gaming and Leisure

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

ASG II, LLC (3)(5)

 

First-lien loan ($58,048 par, due 5/2028)

 

5/25/2022

 

SOFR + 6.35%

 

10.67%

 

 

56,609

 

 

56,260

 

4.2%

IRGSE Holding Corp. (3)(7)

 

First-lien loan ($30,261 par, due 6/2023)

 

9/29/2015

 

L + 9.50%

 

14.19%

 

 

28,595

 

 

29,807

 

2.2%

 

 

First-lien revolving loan ($16,747 par, due 6/2023)

 

9/29/2015

 

L + 9.50%

 

14.23%

 

 

16,747

 

 

16,492

 

1.2%

 

 

 

 

 

 

 

 

 

 

 

101,951

 

 

102,559

 

7.6%

Human Resource Support Services

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Axonify, Inc. (3)(4)(5)

 

First-lien loan ($47,122 par, due 5/2026)

 

5/5/2021

 

SOFR + 7.65%

 

11.83%

 

 

46,204

 

 

46,190

 

3.4%

bswift, LLC (3)(5)

 

First-lien loan ($44,806 par, due 11/2028)

 

11/7/2022

 

SOFR + 6.63%

 

10.81%

 

 

43,430

 

 

43,574

 

3.2%

Elysian Finco Ltd. (3)(4)(5)

 

First-lien loan ($17,314 par, due 1/2028)

 

1/31/2022

 

SOFR + 6.65%

 

10.99%

 

 

16,831

 

 

17,107

 

1.3%

Employment Hero Holdings Pty Ltd. (3)(4)

 

First-lien loan (AUD 50,000 par, due 12/2026)

 

12/6/2021

 

B + 6.50%

 

9.77%

 

 

34,664

 

 

32,839
(AUD
51,076)

 

2.4%

PageUp People, Ltd. (3)(4)(5)

 

First-lien loan (AUD 14,520 par, due 12/2025)

 

1/11/2018

 

B + 5.50%

 

9.28%

 

 

10,899

 

 

9.534
(AUD
14,059)

 

0.7%

 

 

First-lien loan (GBP 3,766 par, due 12/2025)

 

10/28/2021

 

S + 5.62%

 

8.55%

 

 

5,184

 

 

4,439
(GBP
3,690)

 

0.3%

 

 

First-lien loan ($12,011 par, due 12/2025)

 

10/28/2021

 

L + 5.50%

 

10.65%

 

 

11,997

 

 

11,771

 

0.9%

PayScale Holdings, Inc. (3)(5)

 

First-lien loan ($68,775 par, due 5/2024)

 

5/3/2019

 

L + 5.75%

 

10.48%

 

 

68,199

 

 

67,572

 

5.0%

PrimePay Intermediate, LLC (3)(5)

 

First-lien loan ($32,242 par, due 12/2026)

 

12/17/2021

 

SOFR + 7.15%

 

11.73%

 

 

31,297

 

 

31,355

 

2.3%

Modern Hire, Inc. (3)(5)

 

First-lien loan ($28,878 par, due 5/2024)

 

5/15/2019

 

L + 7.00%

 

11.38%

 

 

28,624

 

 

28,950

 

2.2%

Workwell Acquisition Co. (3)(5)

 

First-lien loan ($23,798 par, due 10/2025)

 

10/19/2020

 

SOFR + 7.40%

 

11.80%

 

 

23,433

 

 

23,441

 

1.7%

 

 

 

 

 

 

 

 

 

 

 

320,762

 

 

316,772

 

23.4%

Internet Services

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Bayshore Intermediate #2, L.P. (3)

 

First-lien loan ($32,194 par, due 10/2028)

 

10/1/2021

 

L + 7.75%

 

12.04% PIK

 

 

31,631

 

 

31,308

 

2.3%

 

 

First-lien revolving loan ($780 par, due 10/2027)

 

10/1/2021

 

L + 6.75%

 

10.89%

 

 

737

 

 

714

 

0.1%

CrunchTime Information, Systems, Inc. (3)(5)

 

First-lien loan ($53,121 par, due 6/2028)

 

6/17/2022

 

SOFR + 6.00%

 

10.32%

 

 

51,969

 

 

51,766

 

3.9%

EDB Parent, LLC (3)(5)

 

First-lien loan ($56,963 par, due 7/2028)

 

7/7/2022

 

SOFR + 7.00%

 

11.58%

 

 

55,607

 

 

55,539

 

4.1%

Higher Logic, LLC (3)(5)

 

First-lien loan ($55,820 par, due 1/2025)

 

6/18/2018

 

SOFR + 7.25%

 

11.83%

 

 

55,506

 

 

55,541

 

4.1%

LeanTaaS Holdings, Inc. (3)(5)

 

First-lien loan ($27,782 par, due 7/2028)

 

7/12/2022

 

SOFR + 7.50%

 

12.08%

 

 

26,906

 

 

26,709

 

2.0%

Lithium Technologies, LLC (3)

 

First-lien loan ($54,700 par, due 1/2024)

 

10/3/2017

 

SOFR + 8.00%

 

12.06%

 

 

54,651

 

 

53,469

 

4.0%

 

 

First-lien revolving loan ($1,320 par, due 1/2024)

 

10/3/2017

 

SOFR + 8.00%

 

12.06%

 

 

1,323

 

 

1,245

 

0.1%

Lucidworks, Inc. (3)(5)

 

First-lien loan ($8,330 par, due 2/2027)

 

2/11/2022

 

SOFR + 7.50%

 

11.82% (incl. 3.50% PIK)

 

 

8,330

 

 

8,170

 

0.6%

Piano Software, Inc. (3)(5)

 

First-lien loan ($51,312 par, due 2/2026)

 

2/25/2021

 

SOFR + 7.10%

 

11.42%

 

 

50,454

 

 

50,029

 

3.7%

SMA Technologies Holdings, LLC(3)(5)

 

First-lien loan ($36,833 par, due 10/2028)

 

10/31/2022

 

SOFR + 6.75%

 

11.07%

 

 

35,258

 

 

35,268

 

2.6%

 

 

 

 

 

 

 

 

 

 

 

372,372

 

 

369,758

 

27.5%

Manufacturing

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Avalara, Inc (3)

 

First-lien loan ($38,636 par, due 10/2028)

 

10/19/2022

 

SOFR + 7.25%

 

11.83%

 

 

37,601

 

 

37,255

 

2.8%

Office Products

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

USR Parent, Inc. (3)(5)

 

ABL FILO term loan ($19,000 par, due 4/2027)

 

4/25/2022

 

SOFR + 6.50%

 

10.62%

 

 

18,634

 

 

18,478

 

1.4%

Oil, Gas and Consumable Fuels

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Murchison Oil and Gas, LLC (3)

 

First-lien loan ($26,873 par, due 6/2026)

 

6/30/2022

 

SOFR + 8.65%

 

13.23%

 

 

26,345

 

 

26,781

 

2.0%

TRP Assets, LLC (3)

 

First-lien loan ($57,818 par, due 12/2025)

 

12/3/2021

 

SOFR + 7.76%

 

12.34%

 

 

56,927

 

 

58,468

 

4.4%

 

 

 

 

 

 

 

 

 

 

 

83,272

 

 

85,249

 

6.4%

Other

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Omnigo Software, LLC (3)(5)

 

First-lien loan ($40,353 par, due 3/2026)

 

3/31/2021

 

SOFR + 6.60%

 

10.92%

 

 

39,655

 

 

39,445

 

2.9%

Retail and Consumer Products

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

99 Cents Only Stores LLC (3)

 

ABL FILO term loan ($25,000 par, due 5/2025)

 

9/6/2017

 

L + 8.50%

 

13.23%

 

 

24,782

 

 

25,063

 

1.9%

American Achievement, Corp. (3)

 

First-lien loan ($27,171 par, due 9/2026)

 

9/30/2015

 

L + 6.25%

 

10.38% (incl. 9.88% PIK)

 

 

26,339

 

 

20,922

 

1.6%

 

 

First-lien loan ($1,363 par, due 9/2026) (15)

 

6/10/2021

 

L + 14.00%

 

18.13% (incl. 17.63% PIK)

 

 

1,362

 

 

78

 

0.0%

15


 

Company (1)(6)

 

Investment

 

Initial
Acquisition
Date

 

Reference
Rate and
Spread

 

Interest Rate

 

 

Amortized
Cost
(2)(8)

 

 

Fair Value (9)

 

Percentage
of Net Assets

 

 

Subordinated note ($4,740 par, due 9/2026) (15)

 

3/16/2021

 

L + 1.00%

 

4.75% PIK

 

 

545

 

 

71

 

0.0%

Bed Bath and Beyond Inc. (3)

 

ABL FILO term loan ($55,000 par, due 8/2027)

 

9/2/2022

 

SOFR + 7.90%

 

12.30%

 

 

53,696

 

 

53,900

 

4.0%

Cordance Operations, LLC (3)

 

First-lien loan ($32,907 par, due 7/2028)

 

7/25/2022

 

SOFR + 8.75%

 

13.27%

 

 

32,091

 

 

32,135

 

2.4%

Neuintel, LLC (3)(5)

 

First-lien loan ($56,400 par, due 12/2026)

 

12/20/2021

 

L + 6.25%

 

10.76%

 

 

55,414

 

 

55,272

 

4.1%

Project P Intermediate 2, LLC (3)

 

ABL FILO term loan ($73,125 par, due 5/2026)

 

11/8/2021

 

L + 8.00%

 

12.41%

 

 

71,976

 

 

72,943

 

5.4%

Tango Management Consulting, LLC (3)(5)

 

First-lien loan ($44,674 par, due 12/2027)

 

12/1/2021

 

L + 6.75%

 

10.49%

 

 

43,752

 

 

42,997

 

3.2%

 

 

 

 

 

 

 

 

 

 

 

309,957

 

 

303,381

 

22.6%

Transportation

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Project44, Inc. (3)(5)

 

First-lien loan ($35,139 par, due 11/2027)

 

11/12/2021

 

L + 6.25%

 

11.41%

 

 

34,043

 

 

33,901

 

2.5%

Total Debt Investments

 

 

 

 

 

 

 

 

 

 

2,579,557

 

 

2,568,814

 

188.1%

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Equity and Other Investments

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Business Services

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Dye & Durham, Ltd. (4)(11)

 

Common Shares (126,968 shares)

 

12/3/2021

 

 

 

 

 

 

3,909

 

 

1,538
(CAD
2,284)

 

0.1%

Mitnick TA Aggregator, LP (12)(13)(14)

 

Membership Interest (0.43% ownership)

 

5/2/2022

 

 

 

 

 

 

5,243

 

 

5,243

 

0.4%

ReliaQuest, LLC (12)(14)

 

Class A-1 Units (567,683 units)

 

11/23/2021

 

 

 

 

 

 

1,120

 

 

1,512

 

0.1%

 

 

Class A-2 Units (2,580 units)(13)

 

6/21/2022

 

 

 

 

 

 

6

 

 

9

 

0.0%

Sprinklr, Inc. (11)(12)

 

Common Shares (484,700 shares)

 

6/24/2021

 

 

 

 

 

 

4,180

 

 

3,960

 

0.3%

WideOrbit, Inc. (12)

 

1,567,807 Warrants

 

7/8/2020

 

 

 

 

 

 

327

 

 

4,869

 

0.4%

 

 

 

 

 

 

 

 

 

 

 

14,785

 

 

17,131

 

1.3%

Communications

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Celtra Technologies, Inc. (12)

 

Class A Units (1,250,000 units)

 

11/19/2021

 

 

 

 

 

 

1,250

 

 

1,250

 

0.1%

IntelePeer Holdings, Inc. (12)

 

Series C Preferred Shares (1,816,295 shares)

 

4/8/2021

 

 

 

 

 

 

1,816

 

 

1,794

 

0.1%

 

 

Series D Preferred Shares (1,598,874 shares)

 

4/8/2021

 

 

 

 

 

 

2,925

 

 

1,923

 

0.1%

 

 

280,000 Warrants

 

2/28/2020

 

 

 

 

 

 

183

 

 

 

0.0%

 

 

106,592 Warrants

 

4/8/2021

 

 

 

 

 

 

 

 

 

0.0%

 

 

 

 

 

 

 

 

 

 

 

6,174

 

 

4,967

 

0.3%

Education

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Astra 2L Holdings II LLC (12)(13)

 

Membership Interest (10.17% ownership)

 

1/13/2022

 

 

 

 

 

 

3,255

 

 

2,555

 

0.2%

EMS Linq, Inc. (12)

 

Class B Units (5,522,526 units)

 

12/22/2021

 

 

 

 

 

 

5,523

 

 

4,763

 

0.4%

RMCF IV CIV XXXV,
   LP.
(12)

 

Partnership Interest (11.94% ownership)

 

6/8/2021

 

 

 

 

 

 

1,000

 

 

1,190

 

0.1%

 

 

 

 

 

 

 

 

 

 

 

9,778

 

 

8,508

 

0.7%

Financial Services

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

AvidXchange, Inc. (11)(12)

 

Common Shares (200,721 shares)

 

10/15/2021

 

 

 

 

 

 

1,022

 

 

1,995

 

0.1%

Newport Parent Holdings, LP (12)

 

Class A-2 Units (131,569 units)

 

12/10/2020

 

 

 

 

 

 

4,177

 

 

4,845

 

0.4%

Oxford Square Capital Corp. (4)(11)

 

Common Shares (1,620 shares)

 

8/5/2015

 

 

 

 

 

 

6

 

 

5

 

0.0%

Passport Labs, Inc. (12)

 

17,534 Warrants

 

4/28/2021

 

 

 

 

 

 

192

 

 

71

 

0.0%

TradingScreen, Inc. (12)(14)

 

Class A Units (600,000 units)

 

5/14/2021

 

 

 

 

 

 

600

 

 

600

 

0.0%

 

 

 

 

 

 

 

 

 

 

 

5,997

 

 

7,516

 

0.5%

Healthcare

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Caris Life Sciences, Inc. (12)

 

Series C Preferred Shares (362,319 shares)

 

10/13/2020

 

 

 

 

 

 

1,000

 

 

1,310

 

0.1%

 

 

Series D Preferred Shares (1,240,740 shares)

 

5/11/2021

 

 

 

 

 

 

10,050

 

 

8,668

 

0.6%

 

 

633,376 Warrants

 

9/21/2018

 

 

 

 

 

 

192

 

 

1,270

 

0.1%

 

 

569,991 Warrants

 

4/2/2020

 

 

 

 

 

 

250

 

 

959

 

0.1%

Merative L.P. (12)(13)(14)

 

989,691 Class A-1 Units

 

6/30/2022

 

 

 

 

 

 

9,897

 

 

9,897

 

0.7%

 

 

 

 

 

 

 

 

 

 

 

21,389

 

 

22,104

 

1.6%

Hotel, Gaming and Leisure

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

IRGSE Holding Corp. (7)(12)

 

Class A Units (33,790,171 units)

 

12/21/2018

 

 

 

 

 

 

21,842

 

 

24,413

 

1.8%

 

 

Class C-1 Units (8,800,000 units)

 

12/21/2018

 

 

 

 

 

 

100

 

 

43

 

0.0%

 

 

 

 

 

 

 

 

 

 

 

21,942

 

 

24,456

 

1.8%

Human Resource Support Services

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Axonify, Inc. (4)(12)(14)

 

Class A-1 Units (3,780,000 units)

 

5/5/2021

 

 

 

 

 

 

3,780

 

 

4,262

 

0.3%

bswift, LLC (12)(13)

 

Class A-1 Units (2,393,509 units)

 

11/7/2022

 

 

 

 

 

 

2,394

 

 

2,394

 

0.2%

ClearCompany, LLC (12)(14)

 

Series A Preferred Units (1,429,228 units)

 

8/24/2018

 

 

 

 

 

 

2,014

 

 

4,869

 

0.4%

DaySmart Holdings, LLC (12)(14)

 

Class A Units (166,811 units)

 

10/1/2019

 

 

 

 

 

 

1,347

 

 

1,798

 

0.1%

Employment Hero Holdings Pty Ltd. (4)(12)(13)

 

Series E Preferred Shares (113,250 shares)

 

3/1/2022

 

 

 

 

 

 

2,134

 

 

2,034
(AUD
3,164)

 

0.2%

 

 

 

 

 

 

 

 

 

 

 

11,669

 

 

15,357

 

1.2%

Internet Services

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Bayshore Intermediate #2, L.P. (12)(14)

 

Common Units (12,330,709 units)

 

10/1/2021

 

 

 

 

 

 

12,331

 

 

11,375

 

0.8%

Lucidworks, Inc. (12)

 

Series F Preferred Shares (199,054 shares)

 

8/2/2019

 

 

 

 

 

 

800

 

 

800

 

0.1%

Piano Software, Inc. (12)

 

Series C-1 Preferred Shares (418,527 shares)

 

12/22/2021

 

 

 

 

 

 

3,000

 

 

3,000

 

0.2%

 

 

Series C-2 Preferred Shares (27,588 shares)(13)

 

11/18/2022

 

 

 

 

 

 

198

 

 

198

 

0.0%

16


 

Company (1)(6)

 

Investment

 

Initial
Acquisition
Date

 

Reference
Rate and
Spread

 

Interest Rate

 

 

Amortized
Cost
(2)(8)

 

 

Fair Value (9)

 

Percentage
of Net Assets

SMA Technologies Holdings, LLC (12)(13)

 

Class A Units (1,300 shares)

 

11/21/2022

 

 

 

 

 

 

1,300

 

 

1,300

 

0.1%

 

 

Class B Units (923,250 shares)

 

11/21/2022

 

 

 

 

 

 

 

 

 

0.0%

 

 

 

 

 

 

 

 

 

 

 

17,629

 

 

16,673

 

1.2%

Marketing Services

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Validity, Inc. (12)

 

Series A Preferred Shares (3,840,000 shares)

 

5/31/2018

 

 

 

 

 

 

3,840

 

 

11,520

 

0.9%

Oil, Gas and Consumable Fuels

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Murchison Oil and Gas, LLC (13)(14)

 

13,355 Preferred Units

 

6/30/2022

 

 

 

 

 

 

13,355

 

 

13,088

 

1.0%

TRP Assets, LLC (12)(13)(14)

 

Partnership Interest (1.89% ownership)

 

8/25/2022

 

 

 

 

 

 

8,067

 

 

10,205

 

0.8%

 

 

 

 

 

 

 

 

 

 

 

21,422

 

 

23,293

 

1.8%

Pharmaceuticals

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

TherapeuticsMD, Inc. (4)(12)

 

14,256 Warrants

 

8/5/2020

 

 

 

 

 

 

1,028

 

 

 

0.0%

 

 

65,250 Warrants (13)

 

7/29/2022

 

 

 

 

 

 

409

 

 

365

 

0.0%

 

 

 

 

 

 

 

 

 

 

 

1,437

 

 

365

 

Retail and Consumer Products

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

American Achievement, Corp. (12)

 

Class A Units (687 units)

 

3/16/2021

 

 

 

 

 

 

 

 

50

 

0.0%

Copper Bidco, LLC (10)

 

Trust Certificates (132,928 Certificates)

 

12/7/2020

 

 

 

 

 

 

 

 

665

 

0.0%

 

 

Trust Certificates (996,958 Certificates)

 

1/30/2021

 

 

 

 

 

 

3,041

 

 

12,462

 

0.9%

Neuintel, LLC (12)(14)

 

Class A Units (1,176,494 units)

 

12/21/2021

 

 

 

 

 

 

3,000

 

 

2,618

 

0.2%

 

 

 

 

 

 

 

 

 

 

 

6,041

 

 

15,795

 

1.1%

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Structured Credit

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Allegro CLO Ltd, Series 2018-1A, (3)(4)(10)

 

Structured Product ($1,000 par, due 6/2031)

 

5/26/2022

 

L + 2.85%

 

5.36%

 

 

924

 

 

848

 

0.1%

American Money Management Corp CLO Ltd, Series 2016-18A (3)(4)(10)

 

Structured Product ($1,500 par, due 5/2031)

 

6/22/2022

 

L + 3.05%

 

6.06%

 

 

1,347

 

 

1,309

 

0.1%

Ares CLO Ltd, Series 2021-59A (3)(4)(10)

 

Structured Product ($1,000 par, due 4/2034)

 

6/23/2022

 

L + 6.25%

 

9.03%

 

 

894

 

 

875

 

0.1%

Ares Loan Funding I Ltd, Series 2021-ALFA, Class E (3)(4)(10)

 

Structured Product ($1,000 par, due 10/2034)

 

6/24/2022

 

L + 6.70%

 

9.21%

 

 

918

 

 

881

 

0.1%

Bain Capital Credit CLO Ltd, Series 2018-1A (3)(4)(10)

 

Structured Product ($500 par, due 4/2031)

 

10/15/2020

 

L + 5.35%

 

8.13%

 

 

424

 

 

383

 

0.0%

Battalion CLO Ltd, Series 2021-21A (3)(4)(10)

 

Structured Product ($1,300 par, due 7/2034)

 

7/13/2022

 

L + 3.30%

 

5.81%

 

 

1,158

 

 

1,158

 

0.1%

Benefit Street Partners CLO Ltd, Series 2015-BR (3)(4)(10)

 

Structured Product ($2,500 par, due 7/2034)

 

7/13/2022

 

L + 3.85%

 

6.56%

 

 

2,179

 

 

2,285

 

0.2%

Benefit Street Partners CLO Ltd, Series 2015-8A (3)(4)(10)

 

Structured Product ($1,425 par, due 1/2031)

 

9/13/2022

 

L + 2.75%

 

5.46%

 

 

1,265

 

 

1,214

 

0.1%

Carlyle Global Market Strategies CLO Ltd, Series 2014-4RA (3)(4)(10)

 

Structured Product ($1,000 par, due 7/2030)

 

5/26/2022

 

L + 2.90%

 

5.41%

 

 

892

 

 

844

 

0.1%

Carlyle Global Market Strategies CLO Ltd, Series 2018-1A (3)(4)(10)

 

Structured Product ($1,550 par, due 4/2031)

 

8/11/2020

 

L + 5.75%

 

8.46%

 

 

1,246

 

 

1,241

 

0.1%

CarVal CLO III Ltd, Series 2019-2A (3)(4)(10)

 

Structured Product ($1,000 par, due 7/2032)

 

6/30/2022

 

L + 6.44%

 

9.15%

 

 

897

 

 

887

 

0.1%

Cedar Funding CLO Ltd, Series 2018-7A (3)(4)(10)

 

Structured Product ($1,000 par, due 1/2031)

 

7/21/2022

 

L + 4.55%

 

7.26%

 

 

861

 

 

847

 

0.1%

CIFC CLO Ltd, Series 2018-3A (3)(4)(10)

 

Structured Product ($1,000 par, due 7/2031)

 

6/16/2022

 

L + 5.50%

 

8.24%

 

 

897

 

 

850

 

0.1%

CIFC CLO Ltd, Series 2021-4A (3)(4)(10)

 

Structured Product ($1,000 par, due 7/2033)

 

7/14/2022

 

L + 6.00%

 

8.51%

 

 

879

 

 

909

 

0.1%

Crown Point CLO Ltd, Series 2021-10A (3)(4)(10)

 

Structured Product ($1,000 par, due 7/2034)

 

6/14/2022

 

L + 6.85%

 

9.56%

 

 

900

 

 

871

 

0.1%

Dryden Senior Loan Fund, Series 2018-55A (3)(4)(10)

 

Structured Product ($1,000 par, due 4/2031)

 

7/25/2022

 

L + 2.85%

 

5.36%

 

 

900

 

 

883

 

0.1%

Dryden Senior Loan Fund, Series 2020-86A (3)(4)(10)

 

Structured Product ($1,500 par, due 7/2034)

 

8/17/2022

 

L + 6.50%

 

9.24%

 

 

1,417

 

 

1,307

 

0.1%

Eaton CLO Ltd, Series 2015-1A (3)(4)(10)

 

Structured Product ($2,500 par, due 1/2030)

 

6/23/2022

 

L + 2.50%

 

5.21%

 

 

2,227

 

 

2,183

 

0.2%

Eaton CLO Ltd, Series 2020-1A (3)(4)(10)

 

Structured Product ($1,000 par, due 10/2034)

 

8/11/2022

 

L + 6.25%

 

8.76%

 

 

931

 

 

888

 

0.1%

GoldenTree CLO Ltd, Series 2020-7A (3)(4)(10)

 

Structured Product ($1,000 par, due 4/2034)

 

6/17/2022

 

L + 6.50%

 

9.21%

 

 

918

 

 

914

 

0.1%

Gulf Stream Meridian, Series 2021-4A (3)(4)(10)

 

Structured Product ($1,015 par, due 7/2034)

 

6/3/2022

 

L + 6.35%

 

8.86%

 

 

932

 

 

872

 

0.1%

Gulf Stream Meridian, Series 2021-6A (3)(4)(10)

 

Structured Product ($2,000 par, due 1/2037)

 

9/12/2022

 

L + 6.36%

 

8.87%

 

 

1,799

 

 

1,718

 

0.1%

Jefferson Mill CLO Ltd, Series 2015-1A (3)(4)(10)

 

Structured Product ($1,000 par, due 10/2031)

 

5/23/2022

 

L + 3.55%

 

6.26%

 

 

901

 

 

870

 

0.1%

KKR CLO Ltd, 49A (3)(4)(10)

 

Structured Product ($1,000 par, due 7/2035)

 

6/2/2022

 

L + 8.00%

 

10.17%

 

 

966

 

 

909

 

0.1%

Madison Park CLO, Series 2018-28A (3)(4)(10)

 

Structured Product ($1,000 par, due 7/2030)

 

6/28/2022

 

L + 5.25%

 

7.76%

 

 

881

 

 

877

 

0.1%

17


 

Company (1)(6)

 

Investment

 

Initial
Acquisition
Date

 

Reference
Rate and
Spread

 

Interest Rate

 

 

Amortized
Cost
(2)(8)

 

 

Fair Value (9)

 

Percentage
of Net Assets

Magnetite CLO Ltd, Series 2021-30A (3)(4)(10)

 

Structured Product ($1,000 par, due 10/2034)

 

6/13/2022

 

L + 6.20%

 

8.98%

 

 

917

 

 

909

 

0.1%

MidOcean Credit CLO Ltd, Series 2016-6A (3)(4)(10)

 

Structured Product ($3,500 par, due 4/2033)

 

5/23/2022

 

L + 3.52%

 

6.23%

 

 

3,151

 

 

2,971

 

0.2%

MidOcean Credit CLO Ltd, Series 2018-9A (3)(4)(10)

 

Structured Product ($1,100 par, due 7/2031)

 

6/1/2022

 

L + 6.05%

 

8.76%

 

 

959

 

 

828

 

0.1%

Octagon 57 LLC, Series 2021-1A (3)(4)(10)

 

Structured Product ($1,000 par, due 10/2034)

 

5/24/2022

 

L + 6.60%

 

9.11%

 

 

924

 

 

872

 

0.1%

Octagon Investment Partners 18 Ltd, Series 2018-18A (3)(4)(10)

 

Structured Product ($1,000 par, due 4/2031)

 

7/26/2022

 

L + 2.70%

 

5.44%

 

 

890

 

 

855

 

0.1%

Octagon Investment Partners 38 Ltd, Series 2018-1A (3)(4)(10)

 

Structured Product ($2,800 par, due 7/2030)

 

9/20/2022

 

L + 2.95%

 

5.66%

 

 

2,456

 

 

2,436

 

0.2%

Park Avenue Institutional Advisers CLO Ltd, Series 2018-1A (3)(4)(10)

 

Structured Product ($1,000 par, due 10/2031)

 

9/23/2022

 

L + 3.33%

 

6.04%

 

 

863

 

 

870

 

0.1%

Pikes Peak CLO, Series 2021-9A (3)(4)(10)

 

Structured Product ($2,000 par, due 10/2034)

 

8/31/2022

 

L + 6.58%

 

9.35%

 

 

1,782

 

 

1,721

 

0.1%

RR Ltd, Series 2020-8A (3)(4)(10)

 

Structured Product ($1,000 par, due 4/2033)

 

8/22/2022

 

L + 6.40%

 

8.91%

 

 

929

 

 

909

 

0.1%

Shackelton CLO Ltd, Series 2015-7RA (3)(4)(10)

 

Structured Product ($1,000 par, due 7/2031)

 

5/23/2022

 

L + 3.33%

 

5.84%

 

 

890

 

 

855

 

0.1%

Signal Peak CLO LLC, Series 2018-5A (3)(4)(10)

 

Structured Product ($1,000 par, due 4/2031)

 

8/9/2022

 

L + 5.65%

 

8.43%

 

 

896

 

 

824

 

0.1%

Southwick Park CLO Ltd, Series 2019-4A (3)(4)(10)

 

Structured Product ($1,000 par, due 7/2032)

 

5/25/2022

 

L + 6.25%

 

8.96%

 

 

928

 

 

867

 

0.1%

Stewart Park CLO Ltd, Series 2015-1A (3)(4)(10)

 

Structured Product ($1,000 par, due 1/2030)

 

7/25/2022

 

L + 2.60%

 

5.11%

 

 

897

 

 

888

 

0.1%

Voya CLO Ltd, Series 2018-3A (3)(4)(10)

 

Structured Product ($2,750 par, due 10/2031)

 

6/22/2022

 

L + 5.75%

 

8.26%

 

 

2,382

 

 

2,166

 

0.1%

Whitebox CLO I Ltd, Series 2020-2A (3)(4)(10)

 

Structured Product ($1,125 par, due 10/2034)

 

7/12/2022

 

L + 3.35%

 

6.13%

 

 

1,005

 

 

1,056

 

0.0%

Wind River CLO Ltd, Series 2014-2A (3)(4)(10)

 

Structured Product ($1,500 par, due 1/2031)

 

6/23/2022

 

L + 2.90%

 

5.41%

 

 

1,347

 

 

1,293

 

0.0%

Wind River CLO Ltd, Series 2017-1A (3)(4)(10)

 

Structured Product ($3,000 par, due 4/2036)

 

7/14/2022

 

L + 3.72%

 

6.46%

 

 

2,617

 

 

2,624

 

0.1%

Wind River CLO Ltd, Series 2018-3A (3)(4)(10)

 

Structured Product ($2,000 par, due 1/2031)

 

12/12/2022

 

L + 5.65%

 

6.46%

 

 

1,680

 

 

1,659

 

0.1%

 

 

 

 

 

 

 

 

 

 

 

53,066

 

 

51,426

 

4.4%

Total Equity and Other Investments

 

 

 

 

 

 

 

 

 

 

195,169

 

 

219,111

 

16.8%

Total Investments

 

 

 

 

 

 

 

 

 

$

2,774,726

 

$

2,787,925

 

204.9%

 

 

 

Interest Rate Swaps as of December 31, 2022

 

 

 

Company
Receives

 

Company
Pays

 

Maturity Date

 

Notional
Amount

 

 

Fair
Market
Value

 

 

Upfront
(Payments) /
Receipts

 

 

 

Change in
Unrealized
Gains / (Losses)

 

Interest rate swap (a)

 

4.50%

 

L + 1.99%

 

1/22/2023

 

$

150,000

 

 

$

(231

)

 

$

 

 

 

$

(3,292

)

Interest rate swap (a)(e)

 

L + 2.28%

 

3.875%

 

11/1/2024

 

 

2,500

 

 

 

 

 

 

128

 

 

 

 

 

Interest rate swap (a)(b)

 

4.50%

 

L + 2.37%

 

8/1/2022

 

 

 

 

 

 

 

 

 

 

 

 

(1,192

)

Interest rate swap (a)(b)

 

4.50%

 

L + 1.59%

 

8/1/2022

 

 

 

 

 

 

 

 

 

 

 

 

(751

)

Interest rate swap (a)(b)

 

4.50%

 

L + 1.60%

 

8/1/2022

 

 

 

 

 

 

 

 

 

 

 

 

(112

)

Interest rate swap (a)(b)

 

L + 2.11%

 

4.50%

 

8/1/2022

 

 

 

 

 

 

 

 

1,252

 

 

 

 

(924

)

Interest rate swap (a)(b)

 

L + 2.11%

 

4.50%

 

8/1/2022

 

 

 

 

 

 

 

 

96

 

 

 

 

(70

)

Interest rate swap (a)(b)

 

L + 2.11%

 

4.50%

 

8/1/2022

 

 

 

 

 

 

 

 

904

 

 

 

 

(394

)

Interest rate swap (a)(b)

 

L

 

0.16%

 

7/30/2022

 

 

 

 

 

 

 

 

 

 

 

 

(13

)

Total Non Hedge Accounting Swaps

 

 

 

 

 

 

 

 

152,500

 

 

 

(231

)

 

 

2,380

 

 

 

 

(6,748

)

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Interest rate swap (a)(c)(d)

 

3.875%

 

L + 2.25%

 

11/1/2024

 

 

300,000

 

 

 

(16,493

)

 

 

 

 

 

 

(20,489

)

Interest rate swap (a)(c)(d)

 

3.875%

 

L + 2.46%

 

11/1/2024

 

 

50,000

 

 

 

(2,925

)

 

 

 

 

 

 

(3,302

)

Interest rate swap (a)(c)

 

2.50%

 

L + 1.91%

 

8/1/2026

 

 

300,000

 

 

 

(35,665

)

 

 

 

 

 

 

(25,426

)

Total Hedge Accounting Swaps

 

 

 

 

 

 

 

 

650,000

 

 

 

(55,083

)

 

 

 

 

 

 

(49,217

)

Cash collateral

 

 

 

 

 

 

 

 

 

 

 

57,786

 

 

 

 

 

 

 

 

Total

 

 

 

 

 

 

 

$

802,500

 

 

$

2,472

 

 

$

2,380

 

 

 

$

(55,965

)

 

18


 

a)
Contains a variable rate structure. Bears interest at a rate determined by three-month LIBOR.
b)
Interest rate swap was terminated or matured during the period.
c)
Instrument is used in a hedge accounting relationship. The associated change in fair value is recorded along with the change in fair value of the hedged item within interest expense.
d)
$2.5 million in aggregate notional value of these instruments is no longer designated as instruments in a hedge accounting relationship. The associated change in fair value of the de-designated portion is recorded within unrealized gain/(loss).
e)
The fair market value of this instrument is presented net with the $2.5 million in aggregate notional value of instruments no longer designated as instruments in a hedge accounting relationship.

 

(1)
Certain portfolio company investments are subject to contractual restrictions on sales.
(2)
The amortized cost represents the original cost adjusted for the amortization of discounts and premiums, as applicable, on debt investments using the effective interest method.
(3)
Investment contains a variable rate structure, subject to an interest rate floor. Variable rate investments bear interest at a rate that may be determined by reference to either London Interbank Offered Rate (“LIBOR” or “L”), Euro Interbank Offer Rate (“Euribor” or “E”), Canadian Dollar Offered Rate (“CDOR” or “C”), Secured Overnight Financing Rate (“SOFR”) which may also contain a credit spread adjustment depending on the tenor election, Bank Bill Swap Bid Rate (“BBSY” or “B”), Sterling Overnight Interbank Average Rate (“SONIA” or “S”) or an alternate base rate (which can include the Federal Funds Effective Rate, the Canadian Prime rate, or the Prime Rate or “P”), all of which include an available tenor, selected at the borrower’s option, which reset periodically based on the terms of the credit agreement. For investments with multiple interest rate contracts, the interest rate shown is the weighted average interest rate in effect at December 31, 2022.
(4)
This portfolio company is not a qualifying asset under Section 55(a) of the Investment Company Act of 1940, as amended (the “1940 Act”). Under the 1940 Act, the Company may not acquire any non-qualifying asset unless, at the time such acquisition is made, qualifying assets represent at least 70% of total assets. Non-qualifying assets represented 9.7% of total assets as of December 31, 2022.
(5)
In addition to the interest earned based on the stated interest rate of this investment, which is the amount reflected in this schedule, the Company may be entitled to receive additional interest as a result of an arrangement with other members in the syndicate to the extent an investment has been allocated to “first out” and “last out” tranches, whereby the “first out” tranche will have priority as to the “last out” tranche with respect to payments of principal, interest and any amounts due thereunder and the Company holds the “last out” tranche.
(6)
Under the 1940 Act, the Company is deemed to be an “Affiliated Person” of, as defined in the 1940 Act, this portfolio company, as the Company owns more than 5% of the portfolio company’s outstanding voting securities. Transactions during the year ended December 31, 2022 in which the Company was an Affiliated Person of the portfolio company are as follows:

 

Non-controlled, Affiliated Investments during the year ended December 31, 2022

 

Company

 

Fair
Value at
December 31, 2021

 

 

Gross
Additions (a)

 

 

Gross
Reductions
(b)

 

 

Net Change
In Unrealized
Gain/(Loss)

 

 

Realized
Gain/(Loss)

 

 

Transfers

 

 

Fair
Value at
December 31,
2022

 

 

Other
Income

 

 

Interest
Income

 

MD America Energy,
   LLC
(c)

 

$

27,017

 

 

$

 

 

$

(12,667

)

 

$

(14,350

)

 

$

13,608

 

 

$

 

 

$

 

 

$

 

 

$

133

 

 Total

 

$

27,017

 

 

$

 

 

$

(12,667

)

 

$

(14,350

)

 

$

13,608

 

 

$

 

 

$

 

 

$

 

 

$

133

 

 

(a)
Gross additions include increases in the cost basis of investments resulting from new investments, payment-in-kind interest or dividends, the amortization of any unearned income or discounts on debt investments, as applicable.
(b)
Gross reductions include decreases in the cost basis of investments resulting from principal collections related to investment repayments or sales, and the amortization of any premiums on debt investments, as applicable. When an investment is placed on non-accrual status, any cash flows received by the Company are applied to the outstanding principal balance.
(c)
Includes investment in SMPA Holdings, LLC of 15,000 common equity units.

 

(7)
Under the 1940 Act, the Company is deemed to be both an “Affiliated Person” of and “Control,” as such terms are defined in the 1940 Act, this portfolio company, as the Company owns more than 25% of the portfolio company’s outstanding voting securities or has the power to exercise control over management or policies of such portfolio company (including through a management agreement). Transactions during the year ended December 31, 2022 in which the Company was an Affiliated Person of and was deemed to Control a portfolio company are as follows:

 

 

19


 

Controlled, Affiliated Investments during the year ended December 31, 2022

 

Company

 

Fair
Value at
December 31, 2021

 

 

Gross
Additions (a)

 

 

Gross
Reductions
(b)

 

 

Net Change
In Unrealized
Gain/(Loss)

 

 

Realized
Gain/(Losses)

 

 

Transfers

 

 

Fair
Value at
December 31,
2022

 

 

Other
Income

 

 

Interest
Income

 

IRGSE Holding Corp.

 

$

59,779

 

 

$

4,420

 

 

$

 

 

$

6,556

 

 

$

 

 

$

 

 

$

70,755

 

 

$

5

 

 

$

5,064

 

Mississippi Resources,
   LLC

 

 

 

 

 

 

(1,553

)

 

 

1,498

 

 

 

55

 

 

 

 

 

 

 

 

 

Total

 

$

59,779

 

 

$

4,420

 

 

$

(1,553

)

 

$

8,054

 

 

$

55

 

 

$

 

 

$

70,755

 

 

$

5

 

 

$

5,064

 

 

(a)
Gross additions include increases in the cost basis of investments resulting from new investments, payment-in-kind interest or dividends, the amortization of any unearned income or discounts on debt investments, as applicable.
(b)
Gross reductions include decreases in the cost basis of investments resulting from principal collections related to investment repayments or sales, and the amortization of any premiums on debt investments, as applicable. When an investment is placed on non-accrual status, any cash flows received by the Company are applied to the outstanding principal balance.

 

(8)
As of December 31, 2022, the estimated cost basis of investments for U.S. federal tax purposes was $2,787,005 resulting in estimated gross unrealized gains and losses of $109,609 and $105,786, respectively.
(9)
In accordance with Financial Accounting Standards Board Accounting Standards Codification Topic 820, Fair Value Measurements (“ASC Topic 820”), unless otherwise indicated, the fair values of all investments were determined using significant unobservable inputs and are considered Level 3 investments. See Note 6 for further information related to investments at fair value.
(10)
This investment is valued using observable inputs and is considered a Level 2 investment. See Note 6 for further information related to investments at fair value.
(11)
This investment is valued using observable inputs and is considered a Level 1 investment. See Note 6 for further information related to investments at fair value.
(12)
This investment is non-income producing.
(13)
All or a portion of this security was acquired in a transaction exempt from registration under the Securities Act of 1933, and may be deemed to be “restricted securities” under the Securities Act. As of December 31, 2022, the aggregate fair value of these securities is $47,288, or 3.5% of the Company’s net assets.
(14)
Ownership of equity investments may occur through a holding company or partnership.
(15)
Investment is on non-accrual status as of December 31, 2022.

20


 

Sixth Street Specialty Lending, Inc.

Consolidated Statements of Changes in Net Assets

(Amounts in thousands, except share amounts)

(Unaudited)

 

 

 

Common Stock

 

 

Treasury Stock

 

 

 

 

 

 

 

 

 

 

 

 

Shares

 

 

Par
Amount

 

 

Shares

 

 

Cost

 

 

Paid in Capital in
Excess of Par

 

 

Distributable
Earnings

 

 

Total Net
Assets

 

Balance at December 31, 2022

 

 

81,389,287

 

 

$

821

 

 

 

664,250

 

 

$

(10,459

)

 

$

1,294,751

 

 

$

56,456

 

 

$

1,341,569

 

Net increase (decrease) in net assets resulting from operations:

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Net investment income

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

42,937

 

 

 

42,937

 

Net change in unrealized gains (losses) on investments and
   foreign currency translation

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

4,777

 

 

 

4,777

 

Net realized gains (losses) on investments and foreign
   currency transactions

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

5,238

 

 

 

5,238

 

Dividends to stockholders:

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Stock issued in connection with dividend reinvestment plan

 

 

362,578

 

 

 

3

 

 

 

 

 

 

 

 

 

6,245

 

 

 

 

 

 

6,248

 

Dividends declared from distributable earnings

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

(44,764

)

 

 

(44,764

)

Tax reclassification of stockholders' equity in accordance with
   GAAP
(1)

 

 

 

 

 

 

 

 

 

 

 

 

 

 

(403

)

 

 

403

 

 

 

 

Balance at March 31, 2023

 

 

81,751,865

 

 

$

824

 

 

 

664,250

 

 

$

(10,459

)

 

$

1,300,593

 

 

$

65,047

 

 

$

1,356,005

 

Net increase (decrease) in net assets resulting from operations:

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Net investment income

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

48,784

 

 

 

48,784

 

Net change in unrealized gains (losses) on investments and
   foreign currency translation

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

2,822

 

 

 

2,822

 

Net realized gains (losses) on investments and foreign
   currency transactions

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

1,484

 

 

 

1,484

 

Increase (decrease) in Net Assets Resulting from Capital Share
   Transactions:

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Issuance of common stock, net of offering and
   underwriting costs

 

 

5,175,000

 

 

 

52

 

 

 

 

 

 

 

 

 

89,238

 

 

 

 

 

 

89,290

 

Dividends to stockholders:

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Stock issued in connection with dividend reinvestment plan

 

 

314,366

 

 

 

3

 

 

 

 

 

 

 

 

 

5,578

 

 

 

 

 

 

5,581

 

Dividends declared from distributable earnings

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

(43,437

)

 

 

(43,437

)

Balance at June 30, 2023

 

 

87,241,231

 

 

$

879

 

 

 

664,250

 

 

$

(10,459

)

 

$

1,395,409

 

 

$

74,700

 

 

$

1,460,529

 

Net increase (decrease) in net assets resulting from operations:

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Net investment income

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

49,994

 

 

 

49,994

 

Net change in unrealized gains (losses) on investments and
   foreign currency translation

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

9,740

 

 

 

9,740

 

Net realized gains (losses) on investments and foreign
   currency transactions

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

5,086

 

 

 

5,086

 

Increase (decrease) in Net Assets Resulting from Capital Share
   Transactions:

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Issuance of common stock, net of offering and
   underwriting costs

 

 

 

 

 

 

 

 

 

 

 

 

 

 

(85

)

 

 

 

 

 

(85

)

Dividends to stockholders:

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Stock issued in connection with dividend reinvestment plan

 

 

305,267

 

 

 

3

 

 

 

 

 

 

 

 

 

5,921

 

 

 

 

 

 

5,924

 

Dividends declared from distributable earnings

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

(45,366

)

 

 

(45,366

)

Balance at September 30, 2023

 

 

87,546,498

 

 

$

882

 

 

 

664,250

 

 

$

(10,459

)

 

$

1,401,245

 

 

$

94,154

 

 

$

1,485,822

 

 

 

(1)
The Company’s tax year end is March 31st.

 

 

The accompanying notes are an integral part of these consolidated financial statements.

21


 

 

 

Common Stock

 

 

Treasury Stock

 

 

 

 

 

 

 

 

 

 

 

 

Shares

 

 

Par
Amount

 

 

Shares

 

 

Cost

 

 

Paid in Capital in
Excess of Par

 

 

Distributable
Earnings

 

 

Total Net
Assets

 

Balance at December 31, 2021

 

 

75,771,542

 

 

$

761

 

 

 

296,044

 

 

$

(4,291

)

 

$

1,189,275

 

 

$

90,103

 

 

$

1,275,848

 

Net increase (decrease) in net assets resulting from operations:

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Net investment income

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

35,712

 

 

 

35,712

 

Net change in unrealized gains (losses) on investments and
   foreign currency translation

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

(8,495

)

 

 

(8,495

)

Net realized gains (losses) on investments and foreign
   currency transactions

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

13,668

 

 

 

13,668

 

Dividends to stockholders:

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Stock issued in connection with dividend reinvestment plan

 

 

299,138

 

 

 

3

 

 

 

 

 

 

 

 

 

6,771

 

 

 

 

 

 

6,774

 

Dividends declared from distributable earnings

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

(39,522

)

 

 

(39,522

)

Tax reclassification of stockholders' equity in accordance with
   GAAP
(1)

 

 

 

 

 

 

 

 

 

 

 

 

 

 

(351

)

 

 

351

 

 

 

 

Balance at March 31, 2022

 

 

76,070,680

 

 

$

764

 

 

 

296,044

 

 

$

(4,291

)

 

$

1,195,695

 

 

$

91,817

 

 

$

1,283,985

 

Net increase (decrease) in net assets resulting from operations:

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Net investment income

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

40,822

 

 

 

40,822

 

Net change in unrealized gains (losses) on investments and
   foreign currency translation

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

(54,751

)

 

 

(54,751

)

Net realized gains (losses) on investments and foreign
   currency transactions

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

404

 

 

 

404

 

Dividends to stockholders:

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Stock issued in connection with dividend reinvestment plan

 

 

268,835

 

 

 

2

 

 

 

 

 

 

 

 

 

5,836

 

 

 

 

 

 

5,838

 

Dividends declared from distributable earnings

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

(34,339

)

 

 

(34,339

)

Balance at June 30, 2022

 

 

76,339,515

 

 

$

766

 

 

 

296,044

 

 

$

(4,291

)

 

$

1,201,531

 

 

$

43,953

 

 

$

1,241,959

 

Net increase (decrease) in net assets resulting from operations:

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Net investment income

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

37,180

 

 

 

37,180

 

Net change in unrealized gains (losses) on investments and
   foreign currency translation

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

(5,134

)

 

 

(5,134

)

Net realized gains (losses) on investments and foreign
   currency transactions

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

2,385

 

 

 

2,385

 

Increase in Net Assets Resulting from Capital share Transactions:

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Conversion of convertible notes

 

 

4,360,125

 

 

 

44

 

 

 

 

 

 

 

 

 

77,598

 

 

 

 

 

 

77,642

 

Decrease in Net Assets Resulting from Capital share Transactions:

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Purchases of treasury stock

 

 

(180,542

)

 

 

 

 

 

180,542

 

 

 

(3,000

)

 

 

 

 

 

 

 

 

(3,000

)

Dividends to stockholders:

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Stock issued in connection with dividend reinvestment plan

 

 

651,867

 

 

 

6

 

 

 

 

 

 

 

 

 

11,032

 

 

 

 

 

 

11,038

 

Dividends declared from net investment income

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

(34,018

)

 

 

(34,018

)

Balance at September 30, 2022

 

 

81,170,965

 

 

$

816

 

 

 

476,586

 

 

$

(7,291

)

 

$

1,290,161

 

 

$

44,366

 

 

$

1,328,052

 

 

(1)
The Company’s tax year end is March 31st.

 

 

The accompanying notes are an integral part of these consolidated financial statements.

22


 

Sixth Street Specialty Lending, Inc.

Consolidated Statements of Cash Flows

(Amounts in thousands)

(Unaudited)

 

 

Nine Months Ended

 

 

Nine Months Ended

 

 

 

September 30, 2023

 

 

September 30, 2022

 

Cash Flows from Operating Activities

 

 

 

 

 

 

Increase (decrease) in net assets resulting from operations

 

$

170,862

 

 

$

61,791

 

Adjustments to reconcile increase (decrease) in net assets resulting from operations
   to net cash provided by (used in) operating activities:

 

 

 

 

 

 

Net change in unrealized (gains) losses on investments

 

 

(14,700

)

 

 

76,290

 

Net change in unrealized (gains) losses on foreign currency transactions

 

 

(2,466

)

 

 

(15,095

)

Net change in unrealized (gains) losses on interest rate swaps

 

 

(174

)

 

 

7,184

 

Net realized (gains) losses on investments

 

 

(11,768

)

 

 

(14,436

)

Net realized (gains) losses on foreign currency transactions

 

 

(371

)

 

 

(63

)

Net realized (gains) losses on interest rate swaps

 

 

 

 

 

(2,251

)

Net amortization of discount on investments

 

 

(12,798

)

 

 

(12,957

)

Amortization of deferred financing costs

 

 

3,725

 

 

 

4,306

 

Amortization of discount on debt

 

 

623

 

 

 

571

 

Purchases and originations of investments, net

 

 

(634,940

)

 

 

(735,864

)

Proceeds from investments, net

 

 

41,412

 

 

 

19,657

 

Repayments on investments

 

 

318,913

 

 

 

392,576

 

Paid-in-kind interest

 

 

(11,667

)

 

 

(9,623

)

Changes in operating assets and liabilities:

 

 

 

 

 

 

Interest receivable

 

 

(3,472

)

 

 

(9,439

)

Interest receivable paid-in-kind

 

 

(1,142

)

 

 

384

 

Prepaid expenses and other assets

 

 

(2,929

)

 

 

(26

)

Management fees payable to affiliate

 

 

1,135

 

 

 

761

 

Incentive fees on net investment income payable to affiliate

 

 

233

 

 

 

(1,907

)

Incentive fees on net capital gains accrued to affiliate

 

 

5,083

 

 

 

(7,721

)

Payable to affiliate

 

 

991

 

 

 

1,281

 

Other liabilities

 

 

3,530

 

 

 

(34,241

)

Net Cash Provided by (Used in) Operating Activities

 

 

(149,920

)

 

 

(278,822

)

Cash Flows from Financing Activities

 

 

 

 

 

 

Borrowings on debt

 

 

1,227,844

 

 

 

1,024,568

 

Repayments on debt

 

 

(1,037,681

)

 

 

(586,635

)

Deferred financing costs

 

 

(9,402

)

 

 

(4,296

)

Equity offering expenses

 

 

(479

)

 

 

 

Public offering

 

 

89,684

 

 

 

 

Conversion of convertible notes

 

 

 

 

 

(22,348

)

Purchases of treasury stock

 

 

 

 

 

(3,000

)

Dividends paid to stockholders

 

 

(115,813

)

 

 

(115,154

)

Net Cash Provided by (Used in) Financing Activities

 

 

154,153

 

 

 

293,135

 

Net Increase (Decrease) in Cash, Cash Equivalents, and Restricted Cash

 

 

4,233

 

 

 

14,313

 

Cash, cash equivalents, and restricted cash, beginning of period

 

 

25,647

 

 

 

15,967

 

Cash, Cash Equivalents, and Restricted Cash, End of Period

 

$

29,880

 

 

$

30,280

 

Supplemental Information:

 

 

 

 

 

 

Interest paid during the period

 

$

88,765

 

 

$

34,012

 

Excise and other taxes paid during the period

 

$

2,427

 

 

$

1,607

 

Dividends declared during the period

 

$

133,567

 

 

$

107,879

 

 

 

 

 

 

 

 

Non-Cash Financing Activities:

 

 

 

 

 

 

Reinvestment of dividends during the period

 

$

17,753

 

 

$

23,651

 

Common stock issued in settlement of convertible notes during the period

 

$

 

 

$

77,642

 

 

The accompanying notes are an integral part of these consolidated financial statements.

23


 

Sixth Street Specialty Lending, Inc.

Notes to Consolidated Financial Statements

(Unaudited)

(Amounts in thousands, unless otherwise indicated)

 

1. Organization and Basis of Presentation

Organization

Sixth Street Specialty Lending, Inc. (the “Company”) is a Delaware corporation formed on July 21, 2010. The Company was formed primarily to lend to, and selectively invest in, middle-market companies in the United States. The Company has elected to be regulated as a business development company (“BDC”) under the 1940 Act. In addition, for tax purposes, the Company has elected to be treated as a regulated investment company (“RIC”) under Subchapter M of the Internal Revenue Code of 1986, as amended (the “Code”). The Company is managed by Sixth Street Specialty Lending Advisers, LLC (the “Adviser”). On June 1, 2011, the Company formed a wholly-owned subsidiary, TC Lending, LLC, a Delaware limited liability company. On March 22, 2012, the Company formed a wholly-owned subsidiary, Sixth Street SL SPV, LLC, a Delaware limited liability company. On May 19, 2014, the Company formed a wholly-owned subsidiary, Sixth Street SL Holding, LLC, a Delaware limited liability company. On December 9, 2020, the Company formed a wholly-owned subsidiary, Sixth Street Specialty Lending Sub, LLC, a Cayman Islands limited liability company.

On March 21, 2014, the Company completed its initial public offering (“IPO”) and the Company’s shares began trading on the New York Stock Exchange (“NYSE”) under the symbol “TSLX.”

Basis of Presentation

The accompanying consolidated financial statements are prepared in accordance with accounting principles generally accepted in the United States of America (“U.S. GAAP”), and include the accounts of the Company and its subsidiaries. In the opinion of management, all adjustments considered necessary for the fair presentation of the consolidated financial statements for the periods presented have been included. The results of operations for interim periods are not indicative of results to be expected for the full year. All intercompany balances and transactions have been eliminated in consolidation.

Certain financial information that is normally included in annual financial statements, including certain financial statement footnotes, prepared in accordance with U.S. GAAP, is not required for interim reporting purposes and has been condensed or omitted herein. These consolidated financial statements should be read in conjunction with the Company’s consolidated financial statements and notes related thereto included in the Company’s Annual Report on Form 10-K for the year ended December 31, 2022, which was filed with the Securities and Exchange Commission (“SEC”), on February 16, 2023.

The Company is an investment company and, therefore, applies the specialized accounting and reporting guidance in Accounting Standards Codification (“ASC”) Topic 946, Financial Services – Investment Companies.

Fiscal Year End

The Company’s fiscal year ends on December 31.

2. Significant Accounting Policies

Use of Estimates

The preparation of financial statements in conformity with U.S. GAAP requires management to make estimates and assumptions that affect the reported amounts of assets and liabilities and disclosure of contingent assets and liabilities at the date of the consolidated financial statements. Actual amounts could differ from those estimates and such differences could be material.

Cash and Cash Equivalents

Cash and cash equivalents may consist of demand deposits, highly liquid investments (e.g., money market funds, U.S. Treasury notes, and similar type instruments) with original maturities of three months or less, and restricted cash pledged as collateral for certain centrally cleared derivative instruments. Cash and cash equivalents denominated in U.S. dollars are carried at cost, which approximates fair value. The Company deposits its cash and cash equivalents with highly-rated banking corporations and, at times, cash deposits may exceed the insured limits under applicable law.

24


 

Investments at Fair Value

Loan originations are recorded on the date of the binding commitment, which is generally the funding date. Investment transactions purchased through the secondary markets are recorded on the trade date. Realized gains or losses are measured by the difference between the net proceeds received (excluding prepayment fees, if any) and the amortized cost basis of the investment without regard to unrealized gains or losses previously recognized, and include investments charged off during the period, net of recoveries. The net change in unrealized gains or losses primarily reflects the change in investment values and also includes the reversal of previously recorded unrealized gains or losses with respect to investments realized during the period.

Investments for which market quotations are readily available are typically valued at those market quotations. To validate market quotations, the Company utilizes a number of factors to determine if the quotations are representative of fair value, including the source and number of the quotations. Debt and equity securities that are not publicly traded or whose market prices are not readily available, as is the case for substantially all of our investments, are valued at fair value as determined in good faith by the Company’s Board of Directors (the “Board”), based on, among other things, the input of the Adviser, the Company’s Audit Committee and independent third-party valuation firms engaged at the direction of the Board.

As part of the valuation process, the Board takes into account relevant factors in determining the fair value of its investments, including and in combination of: the estimated enterprise value of a portfolio company (that is, the total value of the portfolio company’s net debt and equity), the nature and realizable value of any collateral, the portfolio company’s ability to make payments based on its earnings and cash flow, the markets in which the portfolio company does business, a comparison of the portfolio company’s securities to any similar publicly traded securities, and overall changes in the interest rate environment and the credit markets that may affect the price at which similar investments may be made in the future. When an external event such as a purchase transaction, public offering or subsequent equity sale occurs, the Board considers whether the pricing indicated by the external event corroborates its valuation.

The Board undertakes a multi-step valuation process, which includes, among other procedures, the following:

The valuation process begins with each investment being initially valued by the investment professionals responsible for the portfolio investment in conjunction with the portfolio management team.
The Adviser’s management reviews the preliminary valuations with the investment professionals. Agreed upon valuation recommendations are presented to the Audit Committee.
The Audit Committee reviews the valuations presented and recommends values for each investment to the Board.
The Board reviews the recommended valuations and determines the fair value of each investment; valuations that are not based on readily available market quotations are valued in good faith based on, among other things, the input of the Adviser, Audit Committee and, where applicable, other third parties including independent third-party valuation firms engaged at the direction of the Board.

The Company conducts this valuation process on a quarterly basis.

The Board has engaged independent third-party valuation firms to perform certain limited procedures that the Board has identified and requested them to perform in connection with the valuation process of investments for which no market quotations are readily available. At September 30, 2023, the independent third-party valuation firms performed their procedures over substantially all of the Company’s investments. Upon completion of such limited procedures, the third-party valuation firms concluded that the fair value, as determined by the Board, of those investments subjected to their limited procedures, appeared reasonable.

The Company applies Financial Accounting Standards Board Accounting Standards Codification Topic 820, Fair Value Measurement (“ASC Topic 820”), as amended, which establishes a framework for measuring fair value in accordance with U.S. GAAP and required disclosures of fair value measurements. ASC Topic 820 determines fair value to be the price that would be received for an investment in a current sale, which assumes an orderly transaction between market participants on the measurement date. Market participants are defined as buyers and sellers in the principal or most advantageous market (which may be a hypothetical market) that are independent, knowledgeable, and willing and able to transact. In accordance with ASC Topic 820, the Company considers its principal market to be the market that has the greatest volume and level of activity. ASC Topic 820 specifies a fair value hierarchy that prioritizes and ranks the level of observability of inputs used in determination of fair value. In accordance with ASC Topic 820, these levels are summarized below:

Level 1—Valuations based on quoted prices in active markets for identical assets or liabilities that the Company has the ability to access.
Level 2—Valuations based on quoted prices in markets that are not active or for which all significant inputs are observable, either directly or indirectly.
Level 3—Valuations based on inputs that are unobservable and significant to the overall fair value measurement.

25


 

Transfers between levels, if any, are recognized at the beginning of the quarter in which the transfers occur. In addition to using the above inputs in investment valuations, the Company applies the valuation policy approved by its Board that is consistent with ASC Topic 820. Consistent with the valuation policy, the Company evaluates the source of inputs, including any markets in which its investments are trading (or any markets in which securities with similar attributes are trading), in determining fair value. When a security is valued based on prices provided by reputable dealers or pricing services (that is, broker quotes), the Company subjects those prices to various additional criteria in making the determination as to whether a particular investment would qualify for treatment as a Level 2 or Level 3 investment. For example, the Company reviews pricing provided by dealers or pricing services in order to determine if observable market information is being used, versus unobservable inputs. Some additional factors considered include the number of prices obtained as well as an assessment as to their quality, such as the depth of the relevant market relative to the size of the Company’s position.

Due to the inherent uncertainty of determining the fair value of investments that do not have a readily available market value, the fair value of the Company’s investments may fluctuate from period to period. Additionally, the fair value of such investments may differ significantly from the values that would have been used had a ready market existed for such investments and may differ materially from the values that may ultimately be realized. Further, such investments are generally less liquid than publicly traded securities and may be subject to contractual and other restrictions on resale. If the Company were required to liquidate a portfolio investment in a forced or liquidation sale, it could realize amounts that are different from the amounts presented and such differences could be material.

In addition, changes in the market environment including the impact of changes in broader market indices and credit spreads and other events that may occur over the life of the investments may cause the gains or losses ultimately realized on these investments to be different than the unrealized gains or losses reflected herein.

Financial and Derivative Instruments

The Company recognizes all derivative instruments as assets or liabilities at fair value in its consolidated financial statements, pursuant to ASC Topic 815 Derivatives and Hedging, further clarified by the FASB’s issuance of the Accounting Standards Update (“ASU”) No. 2017-12, Derivatives and Hedging, which was adopted in 2019 by the Company. For all derivative instruments designated in a hedge accounting relationship, the entire change in the fair value of the hedging instrument shall be recorded in the same line item of the Consolidated Statements of Operations as the hedged item. The Company uses certain interest rate swaps as derivative instruments to hedge the Company’s fixed rate debt, and therefore both the periodic payment and the change in fair value for the effective hedge, if applicable, will be recognized as components of interest expense in the Consolidated Statements of Operations. For derivative contracts entered into by the Company that are not designated in a hedge accounting relationship, the Company presents changes in the fair value through current period earnings.

In the normal course of business, the Company has commitments and risks resulting from its investment transactions, which may include those involving derivative instruments. Derivative instruments are measured in terms of the notional contract amount and derive their value based upon one or more underlying instruments. While the notional amount gives some indication of the Company’s derivative activity, it generally is not exchanged, but is only used as the basis on which interest and other payments are exchanged. Derivative instruments are subject to various risks similar to non-derivative instruments including market, credit, liquidity, and operational risks. The Company manages these risks on an aggregate basis as part of its risk management process.

Derivatives, including the Company’s interest rate swaps, for which broker quotes are available are typically valued at those broker quotes.

Offsetting Assets and Liabilities

Foreign currency forward contract and interest rate swap receivables or payables pending settlement are offset, and the net amount is included with receivable or payable for foreign currency forward contracts or interest rate swaps in the consolidated balance sheets when, and only when, they are with the same counterparty, the Company has the legal right to offset the recognized amounts, and it intends to either settle on a net basis or realize the asset and settle the liability simultaneously.

Foreign Currency

Foreign currency amounts are translated into U.S. dollars on the following basis:

cash and cash equivalents, market value of investments, outstanding debt on revolving credit facilities, other assets and liabilities: at the spot exchange rate on the last business day of the period; and
purchases and sales of investments, borrowings and repayments of such borrowings, income and expenses: at the rates of exchange prevailing on the respective dates of such transactions.

26


 

Although net assets and fair values are presented based on the applicable foreign exchange rates described above, the Company does not isolate that portion of the results of operations resulting from changes in foreign exchange rates on investments from the fluctuations arising from changes in fair values of investments held. Such fluctuations are included with the net realized and unrealized gain or loss from investments. The Company’s current approach to hedging the foreign currency exposure in its non-U.S. dollar denominated investments is primarily to borrow the par amount in local currency under the Company’s Revolving Credit Facility to fund these investments. Fluctuations arising from the translation of foreign currency borrowings are included with the net change in unrealized gains (losses) on translation of assets and liabilities in foreign currencies on the Consolidated Statements of Operations.

Investments denominated in foreign currencies and foreign currency transactions may involve certain considerations and risks not typically associated with those of domestic origin, including unanticipated movements in the value of the foreign currency relative to the U.S. dollar.

Equity Offering Expenses

The Company records expenses related to equity offerings as a reduction of capital upon completion of an offering of registered securities. The costs associated with renewals of the Company’s shelf registration statement are expensed as incurred.

Debt Issuance Costs

The Company records origination and other expenses related to its debt obligations as deferred financing costs, which are presented as a direct deduction from the carrying value of the related debt liability. These expenses are deferred and amortized using the effective interest method, or straight-line method, over the stated maturity of the debt obligation.

Interest and Dividend Income Recognition

Interest income is recorded on an accrual basis and includes the amortization of discounts and premiums. Discounts and premiums to par value on securities purchased or originated are amortized into interest income over the contractual life of the respective security using the effective interest method. The amortized cost of investments represents the original cost adjusted for the amortization of discounts and premiums, if any.

Unless providing services in connection with an investment, such as syndication, structuring or diligence, all or a portion of any loan fees received by the Company will be deferred and amortized over the investment’s life using the effective interest method.

Loans are generally placed on non-accrual status when principal or interest payments are past due 30 days or more or when management has reasonable doubt that the borrower will pay principal or interest in full. Accrued and unpaid interest is generally reversed when a loan is placed on non-accrual status. Interest payments received on non-accrual loans may be recognized as income or applied to principal depending upon management’s judgment regarding collectability. Non-accrual loans are restored to accrual status when past due principal and interest has been paid and, in management’s judgment, the borrower is likely to make principal and interest payments in the future. Management may determine to not place a loan on non-accrual status if, notwithstanding any failure to pay, the loan has sufficient collateral value and is in the process of collection.

Dividend income on preferred equity securities is recorded on an accrual basis to the extent that such amounts are payable by the portfolio company and are expected to be collected. Dividend income on common equity securities is recorded on the record date for private portfolio companies or on the ex-dividend date for publicly-traded portfolio companies.

Other Income

From time to time, the Company may receive fees for services provided to portfolio companies by the Adviser. The services that the Adviser provides vary by investment, but may include syndication, structuring, diligence fees, or other service-based fees and fees for providing managerial assistance to our portfolio companies and are recognized as revenue when earned.

Earnings per share

The Company's earnings per share (“EPS”) amounts have been computed based on the weighted-average number of shares of common stock outstanding for the period. Basic EPS is computed by dividing net increase (decrease) in net assets resulting from operations by the weighted average number of shares of common stock outstanding during the period.

27


 

Reimbursement of Transaction-Related Expenses

The Company may receive reimbursement for certain transaction-related expenses in pursuing investments. Transaction-related expenses, which are expected to be reimbursed by third parties, are typically deferred until the transaction is consummated and are recorded in Prepaid expenses and other assets on the date incurred. The transaction-related costs of pursuing investments not otherwise reimbursed are borne by the Company and for successfully completed investments included as a component of the investment’s cost basis.

Cash advances received in respect of transaction-related expenses are recorded as Cash and cash equivalents with an offset to Other liabilities or Other payables to affiliates. Other liabilities or Other payables to affiliates are relieved as reimbursable expenses are incurred.

Income Taxes, Including Excise Taxes

The Company has elected to be treated as a RIC under Subchapter M of the Code, and the Company intends to operate in a manner so as to continue to qualify for the tax treatment applicable to RICs. To qualify as a RIC, the Company must, among other things, distribute to its stockholders in each taxable year generally at least 90% of its investment company taxable income, as defined by the Code, and net tax-exempt income for that taxable year. To maintain its RIC status, the Company, among other things, has made and intends to continue to make the requisite distributions to its stockholders, which generally relieves the Company from corporate-level U.S. federal income taxes.

The Company evaluates tax positions taken or expected to be taken in the course of preparing its financial statements to determine whether the tax positions are “more-likely-than-not” to be sustained by the applicable tax authority. Tax positions not deemed to meet the “more-likely-than-not” threshold are reserved and recorded as a tax benefit or expense in the current year. All penalties and interest associated with income taxes are included in income tax expense. Conclusions regarding tax positions are subject to review and may be adjusted at a later date based on factors including, but not limited to, on-going analyses of tax laws, regulations and interpretations thereof.

Depending on the level of taxable income earned in a tax year, the Company can be expected to carry forward taxable income (including net capital gains, if any) in excess of current year dividend distributions from the current tax year into the next tax year and pay a nondeductible 4% U.S. federal excise tax on such taxable income, as required. To the extent that the Company determines that the estimated current year annual taxable income will be in excess of estimated current year dividend distributions from such income, the Company accrues excise tax on estimated excess taxable income.

For the three and nine months ended September 30, 2023, the Company recorded a net expense of $0.5 million and $1.8 million, respectively, for U.S. federal excise tax and other taxes. For the three and nine months ended September 30, 2022, the Company recorded a net expense of $0.4 million and $1.5 million, respectively, for U.S. federal excise tax and other taxes.

Dividends to Common Stockholders

Dividends to common stockholders are recorded on the record date. The amount to be paid out as a dividend is determined by the Board and is generally based upon the earnings estimated by the Adviser. Net realized long-term capital gains, if any, would generally be distributed at least annually, although the Company may decide to retain such capital gains.

The Company has adopted a dividend reinvestment plan that provides for reinvestment of any dividends declared in cash on behalf of stockholders, unless a stockholder elects to receive cash. As a result, if the Board authorizes, and it declares, a cash dividend, then the stockholders who have not “opted out” of the dividend reinvestment plan will have their cash dividends automatically reinvested in additional shares of the Company’s common stock, rather than receiving the cash dividend. The Company expects to use newly issued shares to satisfy the dividend reinvestment plan.

 

Recent Accounting Standards and Regulatory Updates

In December 2022, the Financial Accounting Standards Board issued Accounting Standards Update 2022-06 (“ASU 2022-06”) “Reference Rate Reform (Topic 848): Deferral of the Sunset Date of Topic 848.” Topic 848 provides optional expedients and exceptions for applying generally accepted accounting principles to contract modifications and hedging relationships, subject to meeting certain criteria, that reference LIBOR or another reference rate expected to be discontinued. ASU 2022-06 defers the sunset date of Topic 848 from December 31, 2022, to December 31, 2024, after which entities will no longer be permitted to apply the relief in Topic 848. ASU 2022-06 is effective for all entities in scope upon issuance of ASU 2022-06. The adoption of this guidance did not have a material impact on the Company’s financial position, result of operations or cash flows.

28


 

3. Agreements and Related Party Transactions

Administration Agreement

On March 15, 2011, the Company entered into the Administration Agreement with the Adviser. Under the terms of the Administration Agreement, the Adviser provides administrative services to the Company. These services include providing office space, equipment and office services, maintaining financial records, preparing reports to stockholders and reports filed with the SEC, and managing the payment of expenses and the oversight of the performance of administrative and professional services rendered by others. Certain of these services are reimbursable to the Adviser under the terms of the Administration Agreement. In addition, the Adviser is permitted to delegate its duties under the Administration Agreement to affiliates or third parties and the Company pays or reimburses the Adviser for certain expenses incurred by any such affiliates or third parties for work done on its behalf.

In February 2017, the Board of Directors of the Company and the Adviser entered into an amended and restated administration agreement (the “Administration Agreement”) reflecting certain clarifications to the agreement to provide greater detail regarding the scope of the reimbursable costs and expenses of the Administrator’s services.

In November 2023, the Board renewed the Administration Agreement. Unless earlier terminated as described below, the Administration Agreement will remain in effect until November 2024, and may be extended subject to required approvals. The Administration Agreement may be terminated by either party without penalty on 60 days’ written notice to the other party.

No person who is an officer, director or employee of the Adviser or its affiliates and who serves as a director of the Company receives any compensation from the Company for his or her services as a director. However, the Company reimburses the Adviser (or its affiliates) for the allocable portion of the costs of compensation, benefits, and related administrative expenses of the Company’s officers who provide operational and administrative services to the Company pursuant to the Administration Agreement, their respective staffs and other professionals who provide services to the Company (including, in each case, employees of the Adviser or an affiliate). Such reimbursable amounts include the allocable portion of the compensation paid by the Adviser or its affiliates to the Company’s Chief Financial Officer, Chief Compliance Officer, and other professionals who provide operational and administrative services to the Company pursuant to the Administration Agreement, including individuals who provide “back office” or “middle office” financial, operational, legal and/or compliance services to the Company. The Company reimburses the Adviser (or its affiliates) for the allocable portion of the compensation paid by the Adviser (or its affiliates) to such individuals based on the percentage of time those individuals devote, on an estimated basis, to the business and affairs of the Company and in acting on behalf of the Company. The Company may also reimburse the Adviser or its affiliates for the allocable portion of overhead expenses (including rent, office equipment and utilities) attributable thereto. Directors who are not affiliated with the Adviser receive compensation for their services and reimbursement of expenses incurred to attend meetings.

For the three and nine months ended September 30, 2023 the Company incurred expenses of $0.9 million and $2.1 million, respectively, for administrative services payable to the Adviser under the terms of the Administration Agreement, which is included in Other general and administrative expenses in the Consolidated Statements of Operations. For the three and nine months ended September 30, 2022, the Company incurred expenses of $0.8 million and $2.2 million, respectively, for administrative services payable to the Adviser under the terms of the Administration Agreement.

Investment Advisory Agreement

On April 15, 2011, the Company entered into the Investment Advisory Agreement with the Adviser. The Investment Advisory Agreement was subsequently amended on December 12, 2011. Under the terms of the Investment Advisory Agreement, the Adviser provides investment advisory services to the Company. The Adviser’s services under the Investment Advisory Agreement are not exclusive, and the Adviser is free to furnish similar or other services to others so long as its services to the Company are not impaired. Under the terms of the Investment Advisory Agreement, the Company will pay the Adviser the Management Fee and may also pay certain Incentive Fees.

The Management Fee is calculated at an annual rate of 1.5% based on the average value of the Company’s gross assets calculated using the values at the end of the two most recently completed calendar quarters, adjusted for any share issuances or repurchases during the period. The Management Fee is payable quarterly in arrears.

For the three and nine months ended September 30, 2023 Management Fees (gross of waivers) were $11.9 million and $34.1 million, respectively. For the three and nine months ended September 30, 2022, Management Fees (gross of waivers) were $10.3 million and $29.1 million, respectively.

Any waived Management Fees are not subject to recoupment by the Adviser.

The Adviser intends to waive a portion of the Management Fee payable under the Investment Advisory Agreement by reducing the Management Fee on assets financed using leverage over 200% asset coverage (in other words, over 1.0x debt to equity) (the

29


 

“Leverage Waiver”). Pursuant to the Leverage Waiver, the Adviser intends to waive the portion of the Management Fee in excess of an annual rate of 1.0% (0.250% per quarter) on the average value of the Company's gross assets as of the end of the two most recently completed calendar quarters that exceeds the product of (i) 200% and (ii) the average value of our net asset value at the end of the two most recently completed calendar quarters. For the three and nine months ended September 30, 2023, the Adviser waived Management Fees of $0.3 million and $0.8 million, respectively, pursuant to the Leverage Waiver. For the three and nine months ended September 30, 2022, the Advisor waived Management Fees of $0.2 million pursuant to the Leverage Waiver.

The Incentive Fee consists of two parts, as follows:

1.
The first component, payable at the end of each quarter in arrears, equals 100% of the pre-Incentive Fee net investment income in excess of a 1.5% quarterly “hurdle rate,” the calculation of which is further explained below, until the Adviser has received 17.5% of the total pre-Incentive Fee net investment income for that quarter and, for pre-Incentive Fee net investment income in excess of 1.82% quarterly, 17.5% of all remaining pre-Incentive Fee net investment income for that quarter. The 100% “catch-up” provision for pre-Incentive Fee net investment income in excess of the 1.5% “hurdle rate” is intended to provide the Adviser with an Incentive Fee of 17.5% on all pre-Incentive Fee net investment income when that amount equals 1.82% in a quarter (7.28% annualized), which is the rate at which catch-up is achieved. Once the “hurdle rate” is reached and catch-up is achieved, 17.5% of any pre-Incentive Fee net investment income in excess of 1.82% in any quarter is payable to the Adviser.

Pre-Incentive Fee net investment income means dividends, interest and fee income accrued by the Company during the calendar quarter, minus the Company’s operating expenses for the quarter (including the Management Fee, expenses payable under the Administration Agreement to the Administrator, and any interest expense and dividends paid on any issued and outstanding preferred stock, but excluding the Incentive Fee). Pre-Incentive Fee net investment income includes, in the case of investments with a deferred interest feature (such as original issue discount, debt instruments with pay-in-kind interest and zero coupon securities), accrued income that the Company may not have received in cash. Pre-Incentive Fee net investment income does not include any realized capital gains, realized capital losses or unrealized capital gains or losses.

2.
The second component, payable at the end of each fiscal year in arrears, equaled 15% through March 31, 2014 and, beginning April 1, 2014, equals a weighted percentage of cumulative realized capital gains from the Company’s inception to the end of that fiscal year, less cumulative realized capital losses and unrealized capital losses. This component of the Incentive Fee is referred to as the Capital Gains Fee. Each year, the fee paid for this component of the Incentive Fee is net of the aggregate amount of any previously paid Capital Gains Fee for prior periods. For capital gains that accrue following March 31, 2014, the Incentive Fee rate is 17.5%. The Company accrues, but does not pay, a capital gains Incentive Fee with respect to unrealized capital gains because a capital gains Incentive Fee would be owed to the Adviser if the Company were to sell the relevant investment and realize a capital gain. The weighted percentage is intended to ensure that for each fiscal year following the completion of the IPO, the portion of the Company’s realized capital gains that accrued prior to March 31, 2014, is subject to an Incentive Fee rate of 15% and the portion of the Company’s realized capital gains that accrued beginning April 1, 2014 is subject to an Incentive Fee rate of 17.5%. As of March 31, 2020, there were no remaining investments that were made prior to April 1, 2014, and as a result, the Incentive Fee rate of 17.5% is applicable to any future realized capital gains.

For purposes of determining whether pre-Incentive Fee net investment income exceeds the hurdle rate, pre-Incentive Fee net investment income is expressed as a rate of return on the value of the Company’s net assets at the end of the immediately preceding calendar quarter.

Section 205(b)(3) of the Investment Advisers Act of 1940, as amended, or the Advisers Act, prohibits the Adviser from receiving the payment of fees on unrealized gains until those gains are realized, if ever. There can be no assurance that such unrealized gains will be realized in the future.

For three and nine months ended September 30, 2023, Incentive Fees were $13.7 million and $36.2 million, respectively, of which $11.2 million and $31.1 million, respectively, were realized and payable to the Adviser. For the three and nine months ended September 30, 2022, Incentive Fees were $7.9 million and $14.8 million, respectively, of which $7.9 million and $22.5 million, respectively, were realized and payable to the Adviser. For the three and nine months ended September 30, 2023, $2.6 million and $5.1 million, respectively, of Incentive Fees was accrued related to Capital Gains Fees. For the three and nine months ended September 30, 2022, less than ($0.1) million and ($7.7) million, respectively, of Incentive Fees was accrued related to the reversal of Capital Gains Fees. As of September 30, 2023, the Capital Gains Fees accrued are not contractually payable to the Adviser.

Any waived Incentive Fees are not subject to recoupment by the Adviser.

Since the Company’s IPO, with the exception of its waiver of Management Fees and certain Incentive Fees attributable to the Company’s ownership of certain investments and the Leverage Waiver, the Adviser has not waived its right to receive any Management Fees or Incentive Fees payable pursuant to the Investment Advisory Agreement.

30


 

In November 2023, the Board renewed the Investment Advisory Agreement. Unless earlier terminated as described below, the Investment Advisory Agreement will remain in effect until November 2024, and may be extended subject to required approvals. The Investment Advisory Agreement will automatically terminate in the event of an assignment and may be terminated by either party without penalty on 60 days’ written notice to the other party.

From time to time, the Adviser may pay amounts owed by the Company to third-party providers of goods or services, including the Board, and the Company will subsequently reimburse the Adviser for such amounts paid on its behalf. Amounts payable to the Adviser are settled in the normal course of business without formal payment terms.

4. Investments at Fair Value

Under the 1940 Act, the Company is required to separately identify non-controlled investments where it owns 5% or more of a portfolio company’s outstanding voting securities as investments in “affiliated” companies. In addition, under the 1940 Act, the Company is required to separately identify investments where it owns more than 25% of a portfolio company’s outstanding voting securities and/or had the power to exercise control over the management or policies of such portfolio company as investments in “controlled” companies. Detailed information with respect to the Company’s non-controlled, non-affiliated; non-controlled, affiliated; and controlled, affiliated investments is contained in the accompanying consolidated financial statements, including the consolidated schedules of investments. The information in the tables below is presented on an aggregate portfolio basis, without regard to whether they are non-controlled, non-affiliated; non-controlled, affiliated; or controlled, affiliated investments.

Investments at fair value consisted of the following at September 30, 2023 and December 31, 2022:

 

 

 

September 30, 2023

 

 

 

Amortized Cost (1)

 

 

Fair Value

 

 

Net Unrealized
Gain (Loss)

 

First-lien debt investments

 

$

2,806,313

 

 

$

2,832,772

 

 

$

26,459

 

Second-lien debt investments

 

 

48,062

 

 

 

39,940

 

 

 

(8,122

)

Mezzanine debt investments

 

 

35,994

 

 

 

36,390

 

 

 

396

 

Equity and other investments

 

 

142,292

 

 

 

150,179

 

 

 

7,887

 

Structured credit investments

 

 

52,717

 

 

 

53,996

 

 

 

1,279

 

Total Investments

 

$

3,085,378

 

 

$

3,113,277

 

 

$

27,899

 

 

 

 

December 31, 2022

 

 

 

Amortized Cost (1)

 

 

Fair Value

 

 

Net Unrealized
Gain (Loss)

 

First-lien debt investments

 

$

2,529,317

 

 

$

2,517,894

 

 

$

(11,423

)

Second-lien debt investments

 

 

42,743

 

 

 

40,762

 

 

 

(1,981

)

Mezzanine debt investments

 

 

7,497

 

 

 

10,158

 

 

 

2,661

 

Equity and other investments

 

 

142,103

 

 

 

167,685

 

 

 

25,582

 

Structured credit investments

 

 

53,066

 

 

 

51,426

 

 

 

(1,640

)

Total Investments

 

$

2,774,726

 

 

$

2,787,925

 

 

$

13,199

 

 

(1)
The amortized cost represents the original cost adjusted for the amortization of discounts or premiums, as applicable, on debt investments using the effective interest method.

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The industry composition of investments at fair value at September 30, 2023 and December 31, 2022 is as follows:

 

 

 

September 30, 2023

 

 

December 31, 2022

 

Automotive

 

 

2.1

%

 

 

1.2

%

Business Services

 

 

14.9

%

 

 

14.4

%

Chemicals

 

 

0.8

%

 

 

0.7

%

Communications

 

 

3.1

%

 

 

2.7

%

Education

 

 

5.0

%

 

 

5.8

%

Financial Services

 

 

10.0

%

 

 

12.8

%

Healthcare

 

 

9.3

%

 

 

9.9

%

Hotel, Gaming and Leisure

 

 

3.9

%

 

 

4.5

%

Human Resource Support Services

 

 

10.6

%

 

 

11.9

%

Insurance

 

 

0.1

%

 

 

 

Internet Services

 

 

15.7

%

 

 

13.9

%

Manufacturing

 

 

2.6

%

 

 

1.3

%

Marketing Services

 

 

0.4

%

 

 

0.4

%

Office Products

 

 

0.6

%

 

 

0.7

%

Oil, Gas and Consumable Fuels

 

 

4.8

%

 

 

3.9

%

Other

 

 

3.0

%

 

 

3.3

%

Retail and Consumer Products

 

 

10.9

%

 

 

11.4

%

Transportation

 

 

2.2

%

 

 

1.2

%

Total

 

 

100.0

%

 

 

100.0

%

 

The geographic composition of investments at fair value at September 30, 2023 and December 31, 2022 is as follows:

 

 

 

September 30, 2023

 

 

December 31, 2022

 

United States

 

 

 

 

 

 

Midwest

 

 

11.1

%

 

 

11.6

%

Northeast

 

 

25.9

%

 

 

25.4

%

South

 

 

21.5

%

 

 

24.3

%

West

 

 

31.0

%

 

 

30.7

%

Australia

 

 

1.9

%

 

 

2.2

%

Canada

 

 

4.4

%

 

 

4.3

%

Finland (1)

 

 

0.0

%

 

 

 

Germany

 

 

0.3

%

 

 

0.1

%

Luxembourg

 

 

0.1

%

 

 

0.1

%

Netherlands

 

 

0.1

%

 

 

 

Norway

 

 

0.7

%

 

 

0.7

%

United Kingdom

 

 

3.0

%

 

 

0.6

%

Total

 

 

100.0

%

 

 

100.0

%

 

(1)
Value sums to less than 0.1%.

5. Derivatives

 

Interest Rate Swaps

The Company enters into interest rate swap transactions from time to time to hedge fixed rate debt obligations and certain fixed rate debt investments. The Company’s interest rate swaps are all with one counterparty and are centrally cleared through a registered commodities exchange. Refer to the consolidated schedule of investments for additional disclosure regarding these interest rate swaps.

32


 

Cash flows related to the Company's derivatives are included within operating activities on the Consolidated Statements of Cash Flows. The following tables present the amounts paid and received on the Company’s interest rate swap transactions, excluding upfront fees, for the three and nine months ended September 30, 2023 and 2022:

 

 

 

 

 

 

 

 

For the Three Months Ended September 30, 2023

 

 

For the Nine Months Ended September 30, 2023

 

 

 

Maturity Date

 

Notional Amount

 

 

Paid

 

 

Received

 

 

Net

 

 

Paid

 

 

Received

 

 

Net

 

Interest rate swap (1)

 

1/22/2023

 

$

 

 

$

 

 

$

 

 

$

 

 

$

(663

)

 

$

431

 

 

$

(232

)

Interest rate swap

 

11/1/2024

 

 

300,000

 

 

 

(5,911

)

 

 

2,906

 

 

 

(3,005

)

 

 

(16,744

)

 

 

8,719

 

 

 

(8,025

)

Interest rate swap

 

11/1/2024

 

 

50,000

 

 

 

(1,011

)

 

 

484

 

 

 

(527

)

 

 

(2,859

)

 

 

1,453

 

 

 

(1,406

)

Interest rate swap

 

11/1/2024

 

 

2,500

 

 

 

(24

)

 

 

49

 

 

 

25

 

 

 

(72

)

 

 

140

 

 

 

68

 

Interest rate swap

 

8/1/2026

 

 

300,000

 

 

 

(5,651

)

 

 

1,854

 

 

 

(3,797

)

 

 

(15,913

)

 

 

5,563

 

 

 

(10,350

)

Interest rate swap

 

8/14/2028

 

 

300,000

 

 

 

(2,909

)

 

 

2,375

 

 

 

(534

)

 

 

(2,909

)

 

 

2,375

 

 

 

(534

)

Total

 

 

 

$

952,500

 

 

$

(15,506

)

 

$

7,668

 

 

$

(7,838

)

 

$

(39,160

)

 

$

18,681

 

 

$

(20,479

)

 

(1)
As of September 30, 2023, this interest rate swap had either matured or been terminated due to repayment of the underlying investment or security.

 

 

 

 

 

 

 

 

For the Three Months Ended September 30, 2022

 

 

For the Nine Months Ended September 30, 2022

 

 

 

Maturity Date

 

Notional Amount

 

 

Paid

 

 

Received

 

 

Net

 

 

Paid

 

 

Received

 

 

Net

 

Interest rate swap

 

8/1/2022

 

$

115,000

 

 

$

(427

)

 

$

460

 

 

$

33

 

 

$

(2,159

)

 

$

3,048

 

 

$

889

 

Interest rate swap

 

8/1/2022

 

 

50,000

 

 

 

(150

)

 

 

200

 

 

 

50

 

 

 

(706

)

 

 

1,325

 

 

 

619

 

Interest rate swap

 

8/1/2022

 

 

7,500

 

 

 

(23

)

 

 

30

 

 

 

7

 

 

 

(106

)

 

 

198

 

 

 

92

 

Interest rate swap

 

8/1/2022

 

 

27,531

 

 

 

(117

)

 

 

101

 

 

 

(16

)

 

 

(730

)

 

 

474

 

 

 

(256

)

Interest rate swap

 

8/1/2022

 

 

2,160

 

 

 

(9

)

 

 

8

 

 

 

(1

)

 

 

(57

)

 

 

37

 

 

 

(20

)

Interest rate swap

 

8/1/2022

 

 

42,819

 

 

 

(171

)

 

 

149

 

 

 

(22

)

 

 

(1,134

)

 

 

737

 

 

 

(397

)

Interest rate swap

 

1/22/2023

 

 

150,000

 

 

 

(1,620

)

 

 

1,688

 

 

 

68

 

 

 

(3,591

)

 

 

5,063

 

 

 

1,472

 

Interest rate swap

 

11/1/2024

 

 

300,000

 

 

 

(3,374

)

 

 

2,907

 

 

 

(467

)

 

 

(7,708

)

 

 

8,719

 

 

 

1,011

 

Interest rate swap

 

11/1/2024

 

 

50,000

 

 

 

(589

)

 

 

484

 

 

 

(105

)

 

 

(1,356

)

 

 

1,453

 

 

 

97

 

Interest rate swap

 

11/1/2024

 

 

2,500

 

 

 

(24

)

 

 

28

 

 

 

4

 

 

 

(72

)

 

 

64

 

 

 

(8

)

Interest rate swap

 

8/1/2026

 

 

300,000

 

 

 

(3,115

)

 

 

1,854

 

 

 

(1,261

)

 

 

(6,894

)

 

 

5,563

 

 

 

(1,331

)

Total

 

 

 

$

1,047,510

 

 

$

(9,619

)

 

$

7,909

 

 

$

(1,710

)

 

$

(24,513

)

 

$

26,681

 

 

$

2,168

 

 

33


 

 

For the three and nine months ended September 30, 2023, the Company recognized no net unrealized gains/losses and $0.2 million in net unrealized gains, respectively, on interest rate swaps not designated as hedging instruments in the Consolidated Statements of Operations related to the swap transactions. For the three and nine months ended September 30, 2023, the Company recognized net unrealized gains of $3.3 million and $0.9 million, respectively, on interest rate swaps designated as hedging instruments in the Consolidated Statements of Operations. For the three and nine months ended September 30, 2023, this amount is offset by an increase of $2.5 million and an increase of $4.3 million, respectively, for a change in the carrying value of the 2024 Notes, an increase of $0.3 million and an increase of $0.9 million, respectively, for a change in carrying value of the 2026 Notes and a decrease of $(6.1) million for a change in carrying value of the 2028 Notes.

For the three and nine months ended September 30, 2022, the Company recognized $2.6 million and $7.2 million, respectively, in net change in unrealized losses, on interest rate swaps not designated as hedging instruments in the Consolidated Statement of Operations related to the swap transactions. For the three and nine months ended September 30, 2022, the Company recognized $2.3 million in realized gains on interest rate swaps not designated as hedging instruments in the Consolidated Statement of Operations related to the unwind of unrealized gains on interest rate swaps related to upfront fee payments received on interest rates swaps associated with the 2022 Convertible Notes. For the three and nine months ended September 30, 2022, the Company recognized $17.1 million and $52.4 million in net change in unrealized losses, respectively, on interest rate swaps designated as hedging instruments as a component of interest expense in the Consolidated Statement of Operations. For the three and nine months ended September 30, 2022, this amount is offset by a decrease of $7.4 million and $24.3 million, respectively, for a change in the carrying value of the 2024 Notes and a decrease of $9.7 million and $28.1 million, respectively, for a change in carrying value of the 2026 Notes.

As of September 30, 2023, the swap transactions had a fair value of $(55.9) million which is netted against cash collateral on the Company’s consolidated balance sheet. As of December 31, 2022, the swap transactions had a fair value of $(55.3) million which is netted against cash collateral on the Company’s consolidated balance sheet.

The Company is required under the terms of its derivatives agreements to pledge assets as collateral to secure its obligations underlying the derivatives. The amount of collateral required varies over time based on the mark-to-market value, notional amount and remaining term of the derivatives, and may exceed the amount owed by the Company on a mark-to-market basis. Any failure by the Company to fulfill any collateral requirement (e.g., a so-called “margin call”) may result in a default. In the event of a default by a counterparty, the Company would be an unsecured creditor to the extent of any such overcollateralization.

As of September 30, 2023, $26.9 million of cash was pledged as collateral under the Company’s derivative agreements and is included in restricted cash as a component of cash and cash equivalents on the Company’s Consolidated Balance Sheet. As of December 31, 2022, $15.4 million of cash was pledged as collateral under the Company’s derivative agreements and is included in restricted cash as a component of cash and cash equivalents on the Company’s Consolidated Balance Sheet.

The Company may enter into other derivative instruments and incur other exposures with the same or other counterparties in the future.

6. Fair Value of Financial Instruments

Investments

The following tables present fair value measurements of investments as of September 30, 2023 and December 31, 2022:

 

 

Fair Value Hierarchy at September 30, 2023

 

 

 

Level 1

 

 

Level 2

 

 

Level 3

 

 

Total

 

First-lien debt investments

 

$

 

 

$

1,726

 

 

$

2,831,046

 

 

$

2,832,772

 

Second-lien debt investments

 

 

 

 

 

 

 

 

39,940

 

 

 

39,940

 

Mezzanine debt investments

 

 

 

 

 

123

 

 

 

36,267

 

 

 

36,390

 

Equity and other investments

 

 

6,088

 

 

 

10,728

 

 

 

133,363

 

 

 

150,179

 

Structured credit investments

 

 

 

 

 

53,996

 

 

 

 

 

 

53,996

 

Total investments at fair value

 

$

6,088

 

 

$

66,573

 

 

$

3,040,616

 

 

$

3,113,277

 

Interest rate swaps

 

 

 

 

 

(55,943

)

 

 

 

 

 

(55,943

)

Total

 

$

6,088

 

 

$

10,630

 

 

$

3,040,616

 

 

$

3,057,334

 

 

34


 

 

 

Fair Value Hierarchy at December 31, 2022

 

 

 

Level 1

 

 

Level 2

 

 

Level 3

 

 

Total

 

First-lien debt investments

 

$

 

 

$

21,935

 

 

$

2,495,959

 

 

$

2,517,894

 

Second-lien debt investments

 

 

 

 

 

 

 

 

40,762

 

 

 

40,762

 

Mezzanine debt investments

 

 

 

 

 

 

 

 

10,158

 

 

 

10,158

 

Equity and other investments

 

 

7,498

 

 

 

13,128

 

 

 

147,059

 

 

 

167,685

 

Structured credit investments

 

 

 

 

 

51,426

 

 

 

 

 

 

51,426

 

Total investments at fair value

 

$

7,498

 

 

$

86,489

 

 

$

2,693,938

 

 

$

2,787,925

 

Interest rate swaps

 

 

 

 

 

(55,314

)

 

 

 

 

 

(55,314

)

Total

 

$

7,498

 

 

$

31,175

 

 

$

2,693,938

 

 

$

2,732,611

 

Transfers between levels, if any, are recognized at the beginning of the quarter in which the transfers occur.

The following tables present the changes in the fair value of investments for which Level 3 inputs were used to determine the fair value as of and for the three and nine months ended September 30, 2023:

 

 

As of and for the Three Months Ended

 

 

 

September 30, 2023

 

 

 

First-lien
debt
investments

 

 

Second-lien
debt
investments

 

 

Mezzanine
 debt
investments

 

 

Equity
and other
investments

 

 

Total

 

Balance, beginning of period

 

$

2,777,390

 

 

$

39,708

 

 

$

40,237

 

 

$

136,186

 

 

$

2,993,521

 

Purchases or originations

 

 

176,758

 

 

 

 

 

 

 

 

 

1,062

 

 

 

177,820

 

Repayments / redemptions

 

 

(142,031

)

 

 

 

 

 

(102

)

 

 

 

 

 

(142,133

)

Sales Proceeds

 

 

 

 

 

 

 

 

 

 

 

(5,380

)

 

 

(5,380

)

Paid-in-kind interest

 

 

3,830

 

 

 

207

 

 

 

996

 

 

 

 

 

 

5,033

 

Net change in unrealized gains (losses)

 

 

10,480

 

 

 

1

 

 

 

(2,373

)

 

 

(4,371

)

 

 

3,737

 

Net realized gains (losses)

 

 

(173

)

 

 

 

 

 

 

 

 

3,366

 

 

 

3,193

 

Net amortization of discount on securities

 

 

4,792

 

 

 

24

 

 

 

9

 

 

 

 

 

 

4,825

 

Transfers within Level 3

 

 

 

 

 

 

 

 

(2,500

)

 

 

2,500

 

 

 

 

Transfers into (out of) Level 3

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Balance, End of Period

 

$

2,831,046

 

 

$

39,940

 

 

$

36,267

 

 

$

133,363

 

 

$

3,040,616

 

 

 

 

As of and for the Nine Months Ended

 

 

 

September 30, 2023

 

 

 

First-lien
debt
investments

 

 

Second-lien
debt
investments

 

 

Mezzanine
 debt
investments

 

 

Equity
and other
investments

 

 

Total

 

Balance, beginning of period

 

$

2,495,959

 

 

$

40,762

 

 

$

10,158

 

 

$

147,059

 

 

$

2,693,938

 

Purchases or originations

 

 

594,216

 

 

 

4,850

 

 

 

29,806

 

 

 

3,122

 

 

 

631,994

 

Repayments / redemptions

 

 

(318,424

)

 

 

 

 

 

(102

)

 

 

 

 

 

(318,526

)

Sales Proceeds

 

 

 

 

 

 

 

 

 

 

 

(11,188

)

 

 

(11,188

)

Paid-in-kind interest

 

 

10,127

 

 

 

401

 

 

 

1,139

 

 

 

 

 

 

11,667

 

Net change in unrealized gains (losses)

 

 

37,626

 

 

 

(6,140

)

 

 

(2,270

)

 

 

(17,299

)

 

 

11,917

 

Net realized gains (losses)

 

 

(198

)

 

 

 

 

 

 

 

 

8,438

 

 

 

8,240

 

Net amortization of discount on securities

 

 

11,740

 

 

 

67

 

 

 

36

 

 

 

 

 

 

11,843

 

Transfers within Level 3

 

 

 

 

 

 

 

 

(2,500

)

 

 

2,500

 

 

 

 

Transfers into (out of) Level 3

 

 

 

 

 

 

 

 

 

 

 

731

 

 

 

731

 

Balance, End of Period

 

$

2,831,046

 

 

$

39,940

 

 

$

36,267

 

 

$

133,363

 

 

$

3,040,616

 

 

35


 

 

Certain of the Company's investment positions in Copper Bidco, LLC were transferred into Level 3 from Level 2 for fair value measurement purposes during the nine months ended September 30, 2023, as a result of changes in the observability of inputs into the security valuation for this portfolio company.

The following tables present the changes in the fair value of investments for which Level 3 inputs were used to determine the fair value as of and for the three and nine months ended September 30, 2022:

 

 

 

As of and for the Three Months Ended

 

 

 

September 30, 2022

 

 

 

First-lien
debt
investments

 

 

Second-lien
debt
investments

 

 

Mezzanine
 debt
investments

 

 

Equity
and other
investments

 

 

Total

 

Balance, beginning of period

 

$

2,295,057

 

 

$

41,523

 

 

$

10,397

 

 

$

137,581

 

 

$

2,484,558

 

Purchases or originations

 

 

243,794

 

 

 

 

 

 

 

 

 

8,355

 

 

 

252,149

 

Repayments / redemptions

 

 

(21,559

)

 

 

 

 

 

 

 

 

 

 

 

(21,559

)

Sale Proceeds

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Paid-in-kind interest

 

 

2,796

 

 

 

 

 

 

65

 

 

 

 

 

 

2,861

 

Net change in unrealized gains (losses)

 

 

(7,332

)

 

 

(344

)

 

 

(494

)

 

 

(3,547

)

 

 

(11,717

)

Net realized gains

 

 

55

 

 

 

 

 

 

 

 

 

 

 

 

55

 

Net amortization of discount on securities

 

 

3,328

 

 

 

18

 

 

 

1

 

 

 

 

 

 

3,347

 

Transfers within Level 3

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Transfers into (out of) Level 3

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Balance, End of Period

 

$

2,516,139

 

 

$

41,197

 

 

$

9,969

 

 

$

142,389

 

 

$

2,709,694

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

As of and for the Nine Months Ended

 

 

 

September 30, 2022

 

 

 

First-lien
debt
investments

 

 

Second-lien
debt
investments

 

 

Mezzanine
 debt
investments

 

 

Equity
and other
investments

 

 

Total

 

Balance, beginning of period

 

$

2,298,856

 

 

$

 

 

$

18,549

 

 

$

117,233

 

 

$

2,434,638

 

Purchases or originations

 

 

622,416

 

 

 

54

 

 

 

 

 

 

41,131

 

 

 

663,601

 

Repayments / redemptions

 

 

(383,428

)

 

 

(10

)

 

 

 

 

 

 

 

 

(383,438

)

Sale Proceeds

 

 

 

 

 

 

 

 

 

 

 

(18,315

)

 

 

(18,315

)

Paid-in-kind interest

 

 

9,433

 

 

 

 

 

 

190

 

 

 

 

 

 

9,623

 

Net change in unrealized gains (losses)

 

 

(43,946

)

 

 

(1,629

)

 

 

(6,640

)

 

 

(13,816

)

 

 

(66,031

)

Net realized gains

 

 

168

 

 

 

 

 

 

 

 

 

14,022

 

 

 

14,190

 

Net amortization of discount on securities

 

 

12,640

 

 

 

53

 

 

 

4

 

 

 

 

 

 

12,697

 

Transfers within Level 3

 

 

 

 

 

 

 

 

(2,134

)

 

 

2,134

 

 

 

 

Transfers into (out of) Level 3

 

 

 

 

 

42,729

 

 

 

 

 

 

 

 

 

42,729

 

Balance, End of Period

 

$

2,516,139

 

 

$

41,197

 

 

$

9,969

 

 

$

142,389

 

 

$

2,709,694

 

 

Astra Acquisition Corp. was transferred into Level 3 from Level 2 for fair value measurement purposes during the nine months ended September 30, 2022, as a result of changes in the observability of inputs into the security valuation for this portfolio company.

The following table presents information with respect to the net change in unrealized gains or losses on investments for which Level 3 inputs were used in determining fair value that are still held by the Company at September 30, 2023 and 2022:

 

 

Net Change in Unrealized

 

 

Net Change in Unrealized

 

 

 

Gains or (Losses)

 

 

Gains or (Losses)

 

 

 

for the Three Months Ended

 

 

for the Three Months Ended

 

 

 

September 30, 2023 on

 

 

September 30, 2022 on

 

 

 

Investments Held at

 

 

Investments Held at

 

 

 

September 30, 2023

 

 

September 30, 2022

 

First-lien debt investments

 

$

11,306

 

 

$

(8,880

)

Second-lien debt investments

 

 

1

 

 

 

(344

)

Mezzanine debt investments

 

 

411

 

 

 

(494

)

Equity and other investments

 

 

(1,400

)

 

 

(3,547

)

Total

 

$

10,318

 

 

$

(13,265

)

 

36


 

 

 

 

Net Change in Unrealized

 

 

Net Change in Unrealized

 

 

 

Gains or (Losses)

 

 

Gains or (Losses)

 

 

 

for the Nine Months Ended

 

 

for the Nine Months Ended

 

 

 

September 30, 2023 on

 

 

September 30, 2022 on

 

 

 

Investments Held at

 

 

Investments Held at

 

 

 

September 30, 2023

 

 

September 30, 2022

 

First-lien debt investments

 

$

40,214

 

 

$

(39,664

)

Second-lien debt investments

 

 

(6,140

)

 

 

(1,629

)

Mezzanine debt investments

 

 

976

 

 

 

(6,639

)

Equity and other investments

 

 

(9,947

)

 

 

797

 

Total

 

$

25,103

 

 

$

(47,135

)

 

The following tables present the fair value of Level 3 Investments at fair value and the significant unobservable inputs used in the valuations as of September 30, 2023 and December 31, 2022. The tables are not intended to be all-inclusive, but instead capture the significant unobservable inputs relevant to the Company’s determination of fair values.

 

 

 

September 30, 2023

 

 

 

 

 

Valuation

 

Unobservable

 

Range (Weighted

 

Impact to Valuation
from an

 

 

Fair Value

 

 

Technique

 

Input

 

Average)

 

Increase to Input

First-lien debt investments

 

$

2,831,046

 

 

Income approach (1)

 

Discount rate

 

9.8% — 18.0% (14.5%)

 

Decrease

Second-lien debt investments

 

 

39,940

 

 

Income approach (2)

 

Discount rate

 

15.5% — 15.5% (15.5%)

 

Decrease

Mezzanine debt investments

 

 

36,267

 

 

Income approach (3)

 

Discount rate

 

15.0% — 22.5% (15.6%)

 

Decrease

Equity and other investments

 

 

133,363

 

 

Market Multiple (4)

 

Comparable multiple

 

2.0x — 22.5x (6.8x)

 

Increase

Total

 

$

3,040,616

 

 

 

 

 

 

 

 

 

(1)
Includes $20.6 million of debt investments which were valued using an asset valuation waterfall.
(2)
Includes $34.6 million of debt investments which were valued using an asset valuation waterfall.
(3)
Includes $0.1 million of debt investments which were valued using an asset valuation waterfall.
(4)
Includes $10.3 million of equity investments which were valued using an asset valuation waterfall, $2.1 million of equity investments using a Black-Scholes model, and $14.9 million using discounted cash flow analysis.

 

 

December 31, 2022

 

 

 

 

 

Valuation

 

Unobservable

 

Range (Weighted

 

Impact to Valuation
from an

 

 

Fair Value

 

 

Technique

 

Input

 

Average)

 

Increase to Input

First-lien debt investments

 

$

2,495,959

 

 

Income approach (1)

 

Discount rate

 

9.3% — 18.5% (15.1%)

 

Decrease

Second-lien debt investments

 

 

40,762

 

 

Income approach

 

Discount rate

 

19.6% — 19.6% (19.6%)

 

Decrease

Mezzanine debt investments

 

 

10,158

 

 

Income approach (2)

 

Discount rate

 

14.5% — 18.0% (16.0%)

 

Decrease

Equity and other investments

 

 

147,059

 

 

Market Multiple (3)

 

Comparable multiple

 

2.0x — 26.6x (7.9x)

 

Increase

Total

 

$

2,693,938

 

 

 

 

 

 

 

 

 

 

(1)
Includes $21.0 million of first-lien debt investments which were valued using an asset valuation waterfall.
(2)
Includes $0.1 million of debt investments which were valued using an asset valuation waterfall.
(3)
Includes $38.4 million of equity investments which were valued using an asset valuation waterfall, $7.5 million of equity investments using a Black-Scholes model, and $13.1 million using a discounted cash flow analysis.

The Company typically determines the fair value of its performing Level 3 debt investments utilizing a yield analysis. In a yield analysis, a price is ascribed for each investment based upon an assessment of current and expected market yields for similar investments and risk profiles. Additional consideration is given to the expected life, portfolio company performance since close, and other terms and risks associated with an investment. Among other factors, a determinant of risk is the amount of leverage used by the portfolio company relative to the total enterprise value of the company, and the rights and remedies of our investment within each portfolio company’s capital structure.

Significant unobservable quantitative inputs typically considered in the fair value measurement of the Company’s Level 3 debt investments primarily include current market yields, including relevant market indices, but may also include quotes from brokers, dealers, and pricing services as indicated by comparable investments. If debt investments are credit impaired, an enterprise value analysis may be used to value such debt investments; however, in addition to the methods outlined above, other methods such as a liquidation or wind-down analysis may be utilized to estimate enterprise value. For the Company’s Level 3 equity investments, multiples of similar companies’ revenues, earnings before income taxes, depreciation and amortization (“EBITDA”) or some combination thereof and comparable market transactions are typically used.

37


 

Financial Instruments Not Carried at Fair Value

Debt

The fair value of the Company’s Revolving Credit Facility, which is categorized as Level 3 within the fair value hierarchy, as of September 30, 2023 and December 31, 2022, approximates its carrying value as the outstanding balance is callable at carrying value.

The following table presents the fair value of the Company’s 2023 Notes, 2024 Notes, 2026 Notes and 2028 Notes, as of September 30, 2023 and December 31, 2022.

 

 

 

September 30, 2023

 

 

December 31, 2022

 

 

 

Outstanding
Principal

 

 

Fair
Value
(1)

 

 

Outstanding
Principal

 

 

Fair
Value
(1)

 

2023 Notes

 

$

 

 

$

 

 

$

150,000

 

 

$

149,640

 

2024 Notes

 

 

347,500

 

 

 

336,716

 

 

 

347,500

 

 

 

332,853

 

2026 Notes

 

 

300,000

 

 

 

264,725

 

 

 

300,000

 

 

 

261,750

 

2028 Notes

 

 

300,000

 

 

 

296,360

 

 

 

 

 

 

 

Total

 

$

947,500

 

 

$

897,801

 

 

$

797,500

 

 

$

744,243

 

(1)
The fair value is based on broker quotes received by the Company and is categorized as Level 2 within the fair value hierarchy.

Other Financial Assets and Liabilities

The carrying amounts of the Company’s assets and liabilities, other than investments at fair value and the 2023 Notes, 2024 Notes, 2026 Notes and 2028 Notes, approximate fair value due to their short maturities or their close proximity of the originations to the measurement date. Under the fair value hierarchy, cash and cash equivalents are classified as Level 1 while the Company’s other assets and liabilities, other than investments at fair value and Revolving Credit Facility, are classified as Level 2.

 

7. Debt

Revolving Credit Facility

On August 23, 2012, the Company entered into a senior secured revolving credit agreement with Truist Bank (as a successor by merger to SunTrust Bank), as administrative agent, and J.P. Morgan Chase Bank, N.A., as syndication agent, and certain other lenders (as amended and restated, the “Revolving Credit Facility”).

As of March 31, 2023, aggregate commitments under the facility were $1.585 billion. Pursuant to an amendment to the Revolving Credit Facility dated as of June 12, 2023 (the “Fourteenth Amendment”), the aggregate commitments under the facility were increased to $1.710 billion. The facility includes an uncommitted accordion feature that allows the Company, under certain circumstances, to increase the size of the facility to up to $2.0 billion.

Pursuant to the Fourteenth Amendment, with respect to $1.465 billion in commitments, the revolving period, during which period the Company, subject to certain conditions, may make borrowings under the facility, was extended to June 11, 2027 and the stated maturity date was extended to June 12, 2028. For the remaining $245.0 million of commitments, (A) with respect to $25.0 million of commitments, the revolving period ends January 31, 2024 and the stated maturity is January 31, 2025, (B) with respect to $50.0 million of commitments, the revolving period ends on February 4, 2025 and the stated maturity is February 4, 2026 and (C) with respect to $170.0 million of commitments, the revolving period ends April 24, 2026 and the stated maturity is April 23, 2027.

The Company may borrow amounts in U.S. dollars or certain other permitted currencies. As of September 30, 2023, the Company had outstanding debt denominated in Australian dollars (AUD) of 66.9 million, British pounds (GBP) of 32.5 million, Canadian dollars (CAD) of 100.2 million, and Euro (EUR) of 37.7 million on its Revolving Credit Facility, included in the Outstanding Principal amount in the table below.

The Revolving Credit Facility also provides for the issuance of letters of credit up to an aggregate amount of $75 million. As of September 30, 2023 and December 31, 2022 the Company had $0.2 million and less than $0.1 million, respectively, of letters of credit issued through the Revolving Credit Facility. The amount available for borrowing under the Revolving Credit Facility is reduced by any letters of credit issued through the Revolving Credit Facility.

Amounts drawn under the Revolving Credit Facility, including amounts drawn in respect of letters of credit, bear interest at either the applicable reference rate plus an applicable credit spread adjustment, plus a margin of either 1.75% or 1.875%, or the base rate plus a margin of either 0.75% or 0.875%, in each case, based on the total amount of the borrowing base relative to the sum of the total commitments (or, if greater, the total exposure) under the Revolving Credit Facility plus certain other designated secured debt. The

38


 

Company may elect either the applicable reference rate or base rate at the time of drawdown, and loans may be converted from one rate to another at any time, subject to certain conditions. The Company also pays a fee of 0.375% on undrawn amounts and, in respect of each undrawn letter of credit, a fee and interest rate equal to the then applicable margin while the letter of credit is outstanding.

The Revolving Credit Facility is guaranteed by Sixth Street SL SPV, LLC, TC Lending, LLC and Sixth Street SL Holding, LLC. The Revolving Credit Facility is secured by a perfected first-priority security interest in substantially all the portfolio investments held by the Company and each guarantor. Proceeds from borrowings may be used for general corporate purposes, including the funding of portfolio investments.

The Revolving Credit Facility includes customary events of default, as well as customary covenants, including restrictions on certain distributions and financial covenants. In accordance with the terms of the Fourteenth Amendment, the financial covenants require:

an asset coverage ratio of no less than 1.5 to 1 on the last day of any fiscal quarter;
stockholders’ equity of at least $500 million plus 25% of the net proceeds of the sale of equity interests after January 31, 2020; and
a minimum asset coverage ratio of no less than 2 to 1 with respect to (i) the consolidated assets of the Company and the subsidiary guarantors (including certain limitations on the contribution of equity in financing subsidiaries) to (ii) the secured debt of the Company and its subsidiary guarantors plus unsecured senior securities of the Company and its subsidiary guarantors that mature within 90 days of the date of determination (the “Obligor Asset Coverage Ratio”).

The Revolving Credit Facility also contains certain additional concentration limits in connection with the calculation of the borrowing base, based on the Obligor Asset Coverage Ratio.

As of September 30, 2023 and December 31, 2022, the Company was in compliance with the terms of the Revolving Credit Facility.

2022 Convertible Notes

In February 2017, the Company issued in a private offering $115.0 million aggregate principal amount convertible notes due August 2022 (the “2022 Convertible Notes”). The 2022 Convertible Notes were issued in a private placement only to qualified institutional buyers pursuant to Rule 144A under the Securities Act. The 2022 Convertible Notes were unsecured, and bore interest at a rate of 4.50% per year, payable semiannually. In June 2018, the Company issued an additional $57.5 million aggregate principal amount of 2022 Convertible Notes. The additional 2022 Convertible Notes were issued with identical terms, and were fungible with and were part of a single series with the previously outstanding $115.0 million aggregate principal amount of the Company’s 2022 Convertible Notes issued in February 2017. In connection with the offering of 2022 Convertible Notes in February 2017 and the reopening in June 2018, the Company entered into interest rate swaps to align the interest rates of its liabilities with its investment portfolio, which consists of predominately floating rate loans. The notional amount of the interest rate swaps matched the amount of principal outstanding, and matured on August 1, 2022, matching the maturity date of the 2022 Convertible Notes.

On August 1, 2022, the 2022 Convertible Notes matured in accordance with the governing indenture. Holders of $79.2 million aggregate principal amount of notes provided valid notice of conversion and were subject to the combination settlement method previously elected by the Company, with a specified cash amount (as defined in the indenture governing the 2022 Convertible Notes) of $20.00 per $1,000 principal amount of the 2022 Convertible Notes and any additional amounts in stock based on the applicable conversion rate as described in the indenture. In accordance with the settlement method, the Company issued a total of 4,360,125 shares of common stock, or $77.6 million at the adjusted conversion price per share of $17.92. The remaining balance of the notes that were not converted into newly issued shares of common stock were settled with existing cash resources, including through utilization of the Company’s Revolving Credit Facility. The interest rate swaps associated with the principal amount of the notes outstanding were terminated on the date of maturity of the 2022 Convertible Notes.

 

2023 Notes

In January 2018, the Company issued $150.0 million aggregate principal amount of unsecured notes that matured on January 22, 2023 (the “2023 Notes”). The principal amount of the 2023 Notes was payable at maturity. The 2023 Notes bore interest at a rate of 4.50% per year, payable semi-annually commencing on July 22, 2018, and were redeemable in whole or in part at the Company’s option at any time at par plus a “make whole” premium. Total proceeds from the issuance of the 2023 Notes, net of underwriting discounts and offering costs, were $146.9 million. The Company used the net proceeds of the 2023 Notes to repay outstanding

39


 

indebtedness under the Revolving Credit Facility. The 2023 Notes matured on January 22, 2023 and were fully repaid in cash. The swap transaction associated with the issuance of the 2023 Notes also matured on January 22, 2023.

2024 Notes

In November 2019, the Company issued $300.0 million aggregate principal amount of unsecured notes that mature on November 1, 2024 (the “2024 Notes”). The principal amount of the 2024 Notes is payable at maturity. The 2024 Notes bear interest at a rate of 3.875% per year, payable semi-annually commencing on May 1, 2020, and may be redeemed in whole or in part at our option at any time at par plus a “make whole” premium. Total proceeds from the issuance of the 2024 Notes, net of underwriting discounts, offering costs and original issue discount were $292.9 million. The Company used the net proceeds of the 2024 Notes to repay outstanding indebtedness under the Revolving Credit Facility.

On February 5, 2020, the Company issued an additional $50.0 million aggregate principal amount of unsecured notes that mature on November 1, 2024. The additional 2024 Notes are a further issuance of, fungible with, rank equally in right of payment with and have the same terms (other than the issue date and the public offering price) as the initial issuance of 2024 Notes. Total proceeds from the issuance of the additional 2024 Notes, net of underwriting discounts, offering costs and original issue premium were $50.1 million. The Company used the net proceeds of the 2024 Notes to repay outstanding indebtedness under the Revolving Credit Facility.

In connection with the 2024 Notes offering and the reopening of the 2024 Notes, the Company entered into interest rate swaps to align the interest rates of its liabilities with the Company’s investment portfolio, which consists of predominately floating rate loans. The notional amount of the two interest rates swaps is $300.0 million and $50.0 million, respectively, each of which matures on November 1, 2024, matching the maturity date of the 2024 Notes. As a result of the swaps, the Company’s effective interest rate on the 2024 Notes is SOFR plus 2.54% (on a weighted average basis). The interest expense related to the 2024 Notes is offset by proceeds received from the interest rate swaps designated as a hedge. The swap adjusted interest expense is included as a component of interest expense on the Company’s Consolidated Statements of Operations. As of September 30, 2023, and December 31, 2022, the effective hedge interest rate swaps had a fair value of $(15.1) million and $(19.4) million, respectively, which is offset within interest expense by an equal, but opposite, fair value change for the hedged risk on the 2024 Notes.

During the year ended December 31, 2020, the Company repurchased on the open market and extinguished $2.5 million in aggregate principal amount of the 2024 Notes for $2.4 million. In connection with the repurchase of the 2024 Notes, the Company entered into a floating-to-fixed interest rate swap with a notional amount equal to the amount of 2024 Notes repurchased, which had the effect of reducing the notional exposure of the fixed-to-floating interest rate swaps, which were entered into in connection with the issuance of the 2024 Notes, to match the remaining principal amount of the 2024 Notes outstanding. As a result of the swap, the Company’s effective interest rate on the outstanding 2024 Notes is SOFR plus 2.54% (on a weighted average basis).

2026 Notes

On February 3, 2021, the Company issued $300.0 million aggregate principal amount of unsecured notes that mature on August 1, 2026 (the “2026 Notes”). The principal amount of the 2026 Notes is payable at maturity. The 2026 Notes bear interest at a rate of 2.50% per year, payable semi-annually commencing on August 1, 2021, and may be redeemed in whole or in part at the Company’s option at any time at par plus a “make whole” premium. Total proceeds from the issuance of the 2026 Notes, net of underwriting discounts, offering costs and original issue discount, were $293.7 million. The Company used the net proceeds of the 2026 Notes to repay outstanding indebtedness under the Revolving Credit Facility.

In connection with the issuance of the 2026 Notes, the Company entered into an interest rate swap to align the interest rates of its liabilities with the Company’s investment portfolio, which consists of predominately floating rate loans. The notional amount of the interest rate swap is $300.0 million, which matures on August 1, 2026, matching the maturity date of the 2026 Notes. As a result of the swap, the Company’s effective interest rate on the 2026 Notes is SOFR plus 2.17%.. The interest expense related to the 2026 Notes is offset by proceeds received from the interest rate swaps designated as a hedge. The swap adjusted interest expense is included as a component of interest expense on the Company’s Consolidated Statements of Operations. As of September 30, 2023 and December 31, 2022 the effective hedge interest rate swaps had a fair value of $(34.7) million and $(35.7) million, respectively, which is offset within interest expense by an equal, but opposite, fair value change for the hedged risk on the 2026 Notes.

2028 Notes

On August 14, 2023, the Company issued $300.0 million aggregate principal amount of unsecured notes that mature on August 14, 2028 (the “2028 Notes”). The principal amount of the 2028 Notes is payable at maturity. The 2028 Notes bear interest at a rate of 6.95% per year, payable semi-annually commencing on February 14, 2024, and may be redeemed in whole or in part at the Company’s option at any time at par plus a “make whole” premium. Total proceeds from the issuance of the 2028 Notes, net of

40


 

underwriting discounts, offering costs and original issue discount, were $293.9 million. The Company used the net proceeds of the 2028 Notes to repay outstanding indebtedness under the Revolving Credit Facility.

In connection with the issuance of the 2028 Notes, the Company entered into an interest rate swap to align the interest rates of its liabilities with the Company’s investment portfolio, which consists of predominately floating rate loans. The notional amount of the interest rate swap is $300.0 million, which matures on August 14, 2028, matching the maturity date of the 2028 Notes. As a result of the swap, the Company’s effective interest rate on the 2028 Notes is SOFR plus 2.99%. The interest expense related to the 2028 Notes is offset by proceeds received from the interest rate swaps designated as a hedge. The swap adjusted interest expense is included as a component of interest expense on the Company’s Consolidated Statements of Operations. As of September 30, 2023 the effective hedge interest rate swaps had a fair value of $(6.1) million which is offset within interest expense by an equal, but opposite, fair value change for the hedged risk on the 2028 Notes.

For the three and nine months ended September 30, 2023 and 2022, the components of interest expense related to the 2023 Notes, 2024 Notes, 2026 Notes and 2028 Notes were as follows:

 

 

Three Months Ended

 

 

Nine Months Ended

 

 

 

September 30, 2023

 

 

September 30, 2022

 

 

September 30, 2023

 

 

September 30, 2022

 

Interest expense

 

$

7,963

 

 

$

6,929

 

 

$

18,840

 

 

$

20,787

 

Accretion of original issue discount

 

 

237

 

 

 

193

 

 

 

623

 

 

 

571

 

Amortization of deferred financing costs

 

 

555

 

 

 

607

 

 

 

1,469

 

 

 

1,801

 

Total Interest Expense

 

$

8,755

 

 

$

7,729

 

 

$

20,932

 

 

$

23,159

 

 

Total interest expense in the table above does not include the effect of the interest rate swaps related to the 2023 Notes, 2024 Notes, 2026 Notes and 2028 Notes. During the three and nine months ended September 30, 2023, the Company received $7.7 million and $18.7 million, respectively, and paid $(15.5) million and $(39.2) million, respectively, related to the settlements of its interest rate swaps, excluding upfront fees, related to the 2023 Notes, 2024 Notes, 2026 Notes and 2028 Notes. During the three and nine months ended September 30, 2022, the Company received $7.0 million and $20.9 million, respectively, and paid $8.7 million and $19.6 million, respectively, related to the settlements of its interest rate swaps, excluding upfront fees, related to the 2023 Notes, 2024 Notes and 2026 Notes. These net amounts are reflected in interest expense in the Company’s Consolidated Statements of Operations. See Note 5 for further information about the Company’s interest rate swaps.

As September 30, 2023 and December 31, 2022, the components of the carrying value of the 2023 Notes, 2024 Notes, 2026 Notes and 2028 Notes and the stated interest rate were as follows:

 

 

 

September 30, 2023

 

 

December 31, 2022

 

 

 

2024 Notes

 

 

2026 Notes

 

 

2028 Notes

 

 

2023 Notes

 

 

2024 Notes

 

 

2026 Notes

 

Principal amount of debt

 

$

347,500

 

 

$

300,000

 

 

$

300,000

 

 

$

150,000

 

 

$

347,500

 

 

$

300,000

 

Original issue discount, net of accretion

 

 

(434

)

 

 

(1,172

)

 

 

(1,751

)

 

 

(1

)

 

 

(721

)

 

 

(1,468

)

Deferred financing costs

 

 

(1,109

)

 

 

(2,120

)

 

 

(4,198

)

 

 

(39

)

 

 

(1,869

)

 

 

(2,679

)

Fair value of an effective hedge

 

 

(15,140

)

 

 

(34,724

)

 

 

(6,079

)

 

 

 

 

(19,418

)

 

 

(35,665

)

Carrying value of debt

 

$

330,817

 

 

$

261,984

 

 

$

287,972

 

 

$

149,960

 

 

$

325,492

 

 

$

260,188

 

Stated interest rate

 

 

3.88

%

 

 

2.50

%

 

 

6.95

%

 

 

4.50

%

 

 

3.88

%

 

 

2.50

%

 

The stated interest rate in the table above does not include the effect of the interest rate swaps. As of December 31, 2022, the Company’s swap-adjusted interest rate on the 2023 Notes, 2024 Notes and 2026 Notes was three month LIBOR plus 1.99%, 2.28% (on a weighted average basis), and 1.91%, respectively. On September 25, 2023, the Company’s swap-adjusted interest rate on the 2024 Notes and 2026 Notes transitioned to SOFR plus 2.54% (on a weighted average basis), and SOFR plus 2.17%, respectively. As of September 30, 2023, the Company's swap-adjusted interest rate on the 2024 Notes, 2026 Notes and 2028 Notes was SOFR plus 2.54% (on a weighted average basis), 2.17%, and 2.99%, respectively.

As of September 30, 2023, the Company was in compliance with the terms of the indentures governing the 2024 Notes, 2026 Notes and 2028 Notes. As of December 31, 2022, the Company was in compliance with the terms of the indentures governing the 2023 Notes, 2024 Notes and 2026 Notes.

In accordance with the 1940 Act, with certain limitations, the Company is allowed to borrow amounts such that its asset coverage, as defined in the 1940 Act, is at least 150% after such borrowing. As of September 30, 2023 and December 31, 2022, the Company’s asset coverage was 187.3% and 188.6%, respectively.

41


 

Debt obligations consisted of the following as of September 30, 2023 and December 31, 2022:

 

 

 

September 30, 2023

 

 

 

Aggregate
Principal
Amount
Committed

 

 

Outstanding
Principal

 

 

Amount
Available
(1)

 

 

Carrying
Value
(2)(3)

 

Revolving Credit Facility

 

$

1,710,000

 

 

$

758,247

 

 

$

951,572

 

 

$

742,237

 

2024 Notes

 

 

347,500

 

 

 

347,500

 

 

 

 

 

 

330,817

 

2026 Notes

 

 

300,000

 

 

 

300,000

 

 

 

 

 

 

261,984

 

2028 Notes

 

 

300,000

 

 

 

300,000

 

 

 

 

 

 

287,972

 

Total Debt

 

$

2,657,500

 

 

$

1,705,747

 

 

$

951,572

 

 

$

1,623,010

 

 

(1)
The amount available may be subject to limitations related to the borrowing base under the Revolving Credit Facility and asset coverage requirements.
(2)
The carrying values of the Revolving Credit Facility, 2024 Notes, 2026 Notes and 2028 Notes are presented net of the combination of deferred financing costs and original issue discounts totaling $16.0 million, $1.5 million, $3.3 million and $5.9 million, respectively.
(3)
The carrying values of the 2024 Notes, 2026 Notes and 2028 Notes are presented inclusive of an incremental $(15.1) million, $(34.7) million and $(6.1) million, respectively, which represents an adjustment in the carrying values of the 2024 Notes, 2026 Notes and 2028 Notes, each resulting from a hedge accounting relationship.

 

 

 

 

December 31, 2022

 

 

 

Aggregate
Principal
Amount
Committed

 

 

Outstanding
Principal

 

 

Amount
Available
(1)

 

 

Carrying
Value
(2)(3)

 

Revolving Credit Facility

 

$

1,585,000

 

 

$

719,328

 

 

$

865,672

 

 

$

706,156

 

2023 Notes

 

 

150,000

 

 

 

150,000

 

 

 

 

 

 

149,960

 

2024 Notes

 

 

347,500

 

 

 

347,500

 

 

 

 

 

 

325,492

 

2026 Notes

 

 

300,000

 

 

 

300,000

 

 

 

 

 

 

260,188

 

Total Debt

 

$

2,382,500

 

 

$

1,516,828

 

 

$

865,672

 

 

$

1,441,796

 

(1)
The amount available may be subject to limitations related to the borrowing base under the Revolving Credit Facility and asset coverage requirements.
(2)
The carrying values of the Revolving Credit Facility, 2023 Notes, 2024 Notes and 2026 Notes are presented net of the combination of deferred financing costs and original issue discounts totaling $13.2 million, less than $0.1 million, $2.6 million and $4.1 million, respectively.
(3)
The carrying values of the 2024 Notes and 2026 Notes are presented inclusive of an incremental $(19.4) million and $(35.7) million, respectively, which represents an adjustment in the carrying values of the 2024 Notes and 2026 Notes, each resulting from a hedge accounting relationship.

 

For the three and nine months ended September 30, 2023 and 2022, the components of interest expense were as follows:

 

 

Three Months Ended

 

 

Nine Months Ended

 

 

 

September 30, 2023

 

 

September 30, 2022

 

 

September 30, 2023

 

 

September 30, 2022

 

Interest expense

 

$

24,752

 

 

$

14,632

 

 

$

69,073

 

 

$

34,439

 

Commitment fees

 

 

803

 

 

 

892

 

 

 

2,070

 

 

 

3,268

 

Amortization of deferred financing costs

 

 

1,413

 

 

 

1,424

 

 

 

3,725

 

 

 

4,306

 

Accretion of original issue discount

 

 

237

 

 

 

193

 

 

 

623

 

 

 

571

 

Swap settlement

 

 

7,837

 

 

 

1,710

 

 

 

20,480

 

 

 

(2,168

)

Total Interest Expense

 

$

35,042

 

 

$

18,851

 

 

$

95,971

 

 

$

40,416

 

Average debt outstanding (in millions)

 

$

1,730.8

 

 

$

1,490.9

 

 

$

1,671.8

 

 

$

1,287.1

 

Weighted average interest rate

 

 

7.5

%

 

 

4.4

%

 

 

7.1

%

 

 

3.3

%

 

8. Commitments and Contingencies

Portfolio Company Commitments

From time to time, the Company may enter into commitments to fund investments; such commitments are incorporated into the Company’s assessment of its liquidity position. The Company’s senior secured revolving loan commitments are generally available on

42


 

a borrower’s demand and may remain outstanding until the maturity date of the applicable loan. The Company’s senior secured delayed draw term loan commitments are generally available on a borrower’s demand and, once drawn, generally have the same remaining term as the associated loan agreement. Undrawn senior secured delayed draw term loan commitments generally have a shorter availability period than the term of the associated loan agreement.

As of September 30, 2023 and December 31, 2022, the Company had the following commitments to fund investments in current portfolio companies:

 

 

 

September 30, 2023

 

 

December 31, 2022

 

Alaska Bidco Oy - Delayed Draw & Revolver

 

$

221

 

 

$

 

Alpha Midco, Inc. - Delayed Draw

 

 

630

 

 

 

910

 

American Achievement, Corp. - Revolver

 

 

2,403

 

 

 

2,403

 

Arrow Buyer, Inc. - Delayed Draw

 

 

7,645

 

 

 

ASG II, LLC - Delayed Draw

 

 

4,307

 

 

 

6,952

 

Avalara, Inc. - Revolver

 

 

3,864

 

 

 

3,864

 

Axonify, Inc. - Delayed Draw

 

 

4,193

 

 

 

6,113

 

Banyan Software Holdings, LLC - Delayed Draw

 

 

20,000

 

 

 

Bayshore Intermediate #2, L.P. - Revolver

 

 

1,918

 

 

 

1,618

 

BCTO Ace Purchaser, Inc. - Delayed Draw

 

 

1,733

 

 

 

6,556

 

BCTO Bluebill Buyer, Inc. - Delayed Draw

 

 

5,586

 

 

 

Bear OpCo, LLC - Delayed Draw

 

 

1,543

 

 

 

2,606

 

BlueSnap, Inc. - Delayed Draw & Revolver

 

 

2,500

 

 

 

2,500

 

BTRS Holdings, Inc. - Delayed Draw & Revolver

 

 

7,239

 

 

 

8,638

 

Carlstar Group, LLC - Revolver

 

 

8,500

 

 

 

8,500

 

Cordance Operations, LLC - Delayed Draw & Revolver

 

 

3,494

 

 

 

12,093

 

Coupa Holdings, LLC - Delayed Draw & Revolver

 

 

6,809

 

 

 

CrunchTime Information Systems, Inc. - Delayed Draw

 

 

154

 

 

 

7,101

 

Disco Parent, Inc. - Revolver

 

 

455

 

 

 

Dye & Durham Corp. - Delayed Draw & Revolver

 

 

2,015

 

 

 

6,280

 

EDB Parent, LLC - Delayed Draw

 

 

13,142

 

 

 

18,037

 

Edge Bidco B.V. - Delayed Draw & Revolver

 

 

1,312

 

 

 

Elysian Finco Ltd. - Delayed Draw & Revolver

 

 

5,180

 

 

 

6,792

 

Employment Hero Holdings Pty Ltd. - Delayed Draw & Revolver

 

 

8,390

 

 

 

8,816

 

EMS Linq, Inc. - Revolver

 

 

8,784

 

 

 

8,784

 

Erling Lux Bidco SARL - Delayed Draw & Revolver

 

 

3,052

 

 

 

5,618

 

ExtraHop Networks, Inc. - Delayed Draw

 

 

11,838

 

 

 

17,050

 

ForeScout Technologies, Inc. - Delayed Draw & Revolver

 

 

3,425

 

 

 

3,425

 

G Treasury SS, LLC - Delayed Draw

 

 

 

 

3,400

 

Galileo Parent, Inc. - Revolver

 

 

5,625

 

 

 

Hirevue, Inc. - Revolver

 

 

6,887

 

 

 

Hornetsecurity Holding GmbH - Delayed Draw & Revolver

 

 

2,025

 

 

 

2,041

 

Ibis Intermediate Co. - Delayed Draw

 

 

6,338

 

 

 

6,338

 

IRGSE Holding Corp. - Revolver

 

 

248

 

 

 

253

 

Kyriba Corp. - Delayed Draw & Revolver

 

 

45

 

 

 

45

 

Laramie Energy, LLC - Delayed Draw

 

 

7,683

 

 

 

LeanTaaS Holdings, Inc. - Delayed Draw

 

 

39,587

 

 

 

47,218

 

Lithium Technologies, LLC - Revolver

 

 

 

 

1,979

 

Lucidworks, Inc. - Delayed Draw

 

 

833

 

 

 

833

 

Marcura Equities LTD - Delayed Draw & Revolver

 

 

11,667

 

 

 

Murchison Oil and Gas, LLC - Delayed Draw

 

 

3,257

 

 

 

9,772

 

Netwrix Corp. - Delayed Draw & Revolver

 

 

12,568

 

 

 

13,881

 

Neuintel, LLC - Delayed Draw

 

 

 

 

4,200

 

OutSystems Luxco SARL - Delayed Draw

 

 

2,120

 

 

 

2,137

 

PageUp People, Ltd. - Delayed Draw & Revolver

 

 

 

 

5,764

 

Passport Labs, Inc. - Delayed Draw & Revolver

 

 

2,778

 

 

 

2,778

 

Ping Identity Holding Corp. - Revolver

 

 

2,273

 

 

 

2,273

 

PrimePay Intermediate, LLC - Delayed Draw

 

 

 

 

2,474

 

PrimeRevenue, Inc. - Delayed Draw & Revolver

 

 

6,250

 

 

 

6,250

 

Project44, Inc. - Delayed Draw

 

 

19,861

 

 

 

19,861

 

Rapid Data GmbH Unternehmensberatung - Delayed Draw & Revolver

 

 

5,994

 

 

 

ReliaQuest Holdings, LLC - Delayed Draw

 

 

10,009

 

 

 

22,752

 

SkyLark UK DebtCo - Delayed Draw & Revolver

 

 

12,186

 

 

 

SL Buyer Corp. - Delyaed Draw

 

 

13,175

 

 

 

Tango Management Consulting, LLC - Delayed Draw & Revolver

 

 

13,989

 

 

 

26,576

 

TRP Assets, LLC - Delayed Draw & Membership Interest

 

 

1,000

 

 

 

7,806

 

WideOrbit, Inc. - Revolver

 

 

 

 

4,756

 

Wrangler TopCo, LLC - Revolver

 

 

424

 

 

 

Total Portfolio Company Commitments (1)(2)

 

$

327,154

 

 

$

338,043

 

 

43


 

(1)
Represents the full amount of the Company’s commitments to fund investments on such date. Commitments may be subject to limitations on borrowings set forth in the agreements between the Company and the applicable portfolio company. As a result, portfolio companies may not be eligible to borrow the full commitment amount on such date.
(2)
The Company’s estimate of the fair value of the current investments in these portfolio companies includes an analysis of the fair value of any unfunded commitments.

Other Commitments and Contingencies

As of September 30, 2023 the Company had an unfunded commitment of EUR 0.9 million to a new borrower that is not a current portfolio company. As of December 31, 2022 the Company did not have any unfunded commitments to fund investments to new borrowers that were not current portfolio companies as of such date.

From time to time, the Company may become a party to certain legal proceedings incidental to the normal course of its business. As of September 30, 2023 and December 31, 2022, management is not aware of any material pending or threatened litigation that would require accounting recognition or financial statement disclosure.

9. Net Assets

On February 23, 2021, the Company issued a total of 4,000,000 shares of common stock at $21.30 per share. Net of underwriting fees and offering costs, the Company received total cash proceeds of $84.9 million. Subsequent to the offering the Company issued an additional 49,689 shares on March 24, 2021 pursuant to the overallotment option granted to underwriters and received, net of underwriting fees, total cash proceeds of $1.0 million.

During the three months ended December 31, 2021, the Company issued a total of 2,324,820 shares of common stock as settlement for the conversion of $42.8 million principal amount of the 2022 Convertible Notes.

On August 1, 2022, the Company issued a total of 4,360,125 shares of common stock, or $77.6 million as settlement for the conversion of $79.2 million principal amount of the 2022 Convertible Notes.

On May 15, 2023, the Company issued a total of 4,500,000 shares of common stock at $17.33 per share. Net of underwriting fees and offering costs, the Company received total cash proceeds of $77.6 million. Subsequent to the offering, the Company issued an additional 675,000 shares on June 12, 2023 pursuant to the overallotment option granted to underwriters and received, net of underwriting fees, additional total cash proceeds of $11.7 million.

The Company has a dividend reinvestment plan, whereby the Company may buy shares of its common stock in the open market or issue new shares in order to satisfy dividend reinvestment requests. The number of shares to be issued to a stockholder is determined by dividing the total dollar amount of the cash dividend or distribution payable to a stockholder by the market price per share of the Company’s common stock at the close of regular trading on the NYSE on the payment date of a distribution, or if no sale is reported for such day, the average of the reported bid and ask prices. However, if the market price per share on the payment date of a cash dividend or distribution exceeds the most recently computed net asset value per share, the Company will issue shares at the greater of (i) the most recently computed net asset value per share and (ii) 95% of the current market price per share (or such lesser discount to the current market price per share that still exceeded the most recently computed net asset value per share). Shares purchased in open market transactions by the plan administrator will be allocated to a stockholder based on the average purchase price, excluding any brokerage charges or other charges, of all shares of common stock purchased in the open market.

Pursuant to the Company’s dividend reinvestment plan, the following tables summarize the shares issued to stockholders who have not opted out of the Company’s dividend reinvestment plan during the nine months ended September 30, 2023 and 2022. All shares issued to stockholders in the tables below are newly issued shares.

 

 

Nine Months Ended

 

 

 

September 30, 2023

 

 

 

 

 

 

 

Date

 

 

 

Date Declared

 

Dividend (1)

 

Record Date

 

Shares Issued

 

Shares Issued

 

February 16, 2023

 

Supplemental

 

February 28, 2023

 

March 20, 2023

 

 

61,590

 

February 16, 2023

 

Base

 

March 15, 2023

 

March 31, 2023

 

 

300,988

 

May 8, 2023

 

Supplemental

 

May 31, 2023

 

June 20, 2023

 

 

23,686

 

May 8, 2023

 

Base

 

June 15, 2023

 

June 30, 2023

 

 

290,680

 

August 3, 2023

 

Supplemental

 

August 31, 2023

 

September 20, 2023

 

 

35,504

 

August 3, 2023

 

Base

 

September 15, 2023

 

September 29, 2023

 

 

269,763

 

Total Shares Issued

 

 

 

 

 

 

 

 

982,211

 

 

44


 

 

 

 

Nine Months Ended

 

 

 

September 30, 2022

 

 

 

 

 

 

 

Date

 

 

 

Date Declared

 

Dividend (1)

 

Record Date

 

Shares Issued

 

Shares Issued

 

November 2, 2021

 

Base

 

December 15, 2021

 

January 14, 2022

 

 

233,542

 

February 17, 2022

 

Supplemental

 

February 28, 2022

 

March 31, 2022

 

 

65,596

 

February 17, 2022

 

Base

 

March 15, 2022

 

April 18, 2022

 

 

239,376

 

May 3, 2022

 

Supplemental

 

May 31, 2022

 

June 30, 2022

 

 

29,459

 

May 3, 2022

 

Base

 

June 15, 2022

 

July 15, 2022

 

 

294,337

 

August 2, 2022

 

Base

 

September 15, 2022

 

September 30, 2022

 

 

357,530

 

Total Shares Issued

 

 

 

 

 

 

 

 

1,219,840

 

 

(1)
See Note 11 for further information on base, supplemental and special dividends.

On August 4, 2015, the Company's Board authorized the Company to acquire up to $50 million in aggregate of the Company’s common stock from time to time over an initial six month period, and has continued to authorize the refreshment of the $50 million amount authorized under and extension of the stock repurchase program prior to its expiration since that time, most recently as of May 8, 2023. The amount and timing of stock repurchases under the program may vary depending on market conditions, and no assurance can be given that any particular amount of common stock will be repurchased.

During the three and nine months ended September 30, 2023, no shares were repurchased. During the three and nine months ended September 30, 2022, the Company repurchased 180,542 shares at a weighted average share price of $16.62 inclusive of commissions, for a total cost of $3.0 million.

10. Earnings per share

The following table sets forth the computation of basic and diluted earnings per common share for the three and nine months ended September 30, 2023 and 2022:

 

 

Three Months Ended

 

 

Nine Months Ended

 

 

 

September 30, 2023

 

 

September 30, 2022

 

 

September 30, 2023

 

 

September 30, 2022

 

Earnings per common share—basic and diluted

 

 

 

 

 

 

 

 

 

 

 

 

Numerator for basic earnings per share

 

$

64,820

 

 

$

34,431

 

 

$

170,862

 

 

$

61,791

 

Denominator for basic weighted average shares

 

 

87,251,340

 

 

 

79,476,419

 

 

 

84,313,169

 

 

 

77,250,889

 

Earnings per common share—basic and diluted

 

$

0.74

 

 

$

0.43

 

 

$

2.03

 

 

$

0.80

 

 

11. Dividends

The Company has historically paid a dividend to stockholders on a quarterly basis. The Company has a dividend framework that provides for a quarterly base dividend and a variable supplemental dividend, subject to satisfaction of certain measurement tests and the approval of the Board.

The following tables summarize dividends declared during the nine months ended September 30, 2023 and 2022:

 

 

 

Nine Months Ended

 

 

 

September 30, 2023

 

Date Declared

 

Dividend

 

Record Date

 

Payment Date

 

Dividend per Share

 

February 16, 2023

 

Supplemental

 

February 28, 2023

 

March 20, 2023

 

$

0.09

 

February 16, 2023

 

Base

 

March 15, 2023

 

March 31, 2023

 

 

0.46

 

May 8, 2023

 

Supplemental

 

May 31, 2023

 

June 20, 2023

 

 

0.04

 

May 8, 2023

 

Base

 

June 15, 2023

 

June 30, 2023

 

 

0.46

 

August 3, 2023

 

Supplemental

 

August 31, 2023

 

September 20, 2023

 

 

0.06

 

August 3, 2023

 

Base

 

September 15, 2023

 

September 29, 2023

 

 

0.46

 

Total Dividends Declared

 

 

 

 

 

 

 

$

1.57

 

 

45


 

 

 

 

Nine Months Ended

 

 

 

September 30, 2022

 

Date Declared

 

Dividend

 

Record Date

 

Payment Date

 

Dividend per Share

 

February 17, 2022

 

Supplemental

 

February 28, 2022

 

March 31, 2022

 

$

0.11

 

February 17, 2022

 

Base

 

March 15, 2022

 

April 18, 2022

 

 

0.41

 

May 3, 2022

 

Supplemental

 

May 31, 2022

 

June 30, 2022

 

 

0.04

 

May 3, 2022

 

Base

 

June 15, 2022

 

July 15, 2022

 

 

0.41

 

August 2, 2022

 

Base

 

September 15, 2022

 

September 30, 2022

 

 

0.42

 

Total Dividends Declared

 

 

 

 

 

 

 

$

1.39

 

 

The dividends declared during the nine months ended September 30, 2023 and 2022 were derived from net investment income, determined on a tax basis.

12. Financial Highlights

The following per share data and ratios have been derived from information provided in the consolidated financial statements. The following are the financial highlights for one share of common stock outstanding during the nine months ended September 30, 2023 and 2022.

 

 

Nine Months Ended

 

 

Nine Months Ended

 

 

 

September 30, 2023

 

 

September 30, 2022

 

Per Share Data (8)

 

 

 

 

 

 

Net asset value, beginning of period

 

$

16.48

 

 

$

16.84

 

 

 

 

 

 

 

 

Net investment income (1)

 

 

1.68

 

 

 

1.47

 

Net realized and unrealized
   gain (loss)
(1)

 

 

0.35

 

 

 

(0.67

)

Total from operations

 

 

2.03

 

 

 

0.80

 

Issuance of common stock, net of
   offering costs
(2)

 

 

0.03

 

 

 

0.04

 

Settlement of 2022 Convertible Notes (2)

 

 

 

 

 

0.08

 

Repurchase of common stock (2)

 

 

 

 

 

(0.01

)

Dividends declared from net
   investment income
(2)

 

 

(1.57

)

 

 

(1.39

)

Total increase (decrease) in net assets

 

 

0.49

 

 

 

(0.48

)

Net Asset Value, End of Period

 

$

16.97

 

 

$

16.36

 

Per share market value at end of
   period

 

$

20.44

 

 

$

16.34

 

Total return based on market value
   with reinvestment of dividends
(3)

 

 

23.65

%

 

 

-24.69

%

Total return based on market value (4)

 

 

25.14

%

 

 

-24.20

%

Total return based on net asset
   value
(5)

 

 

12.49

%

 

 

5.43

%

Shares Outstanding, End of Period

 

 

87,546,498

 

 

 

81,170,965

 

Ratios / Supplemental Data (6)

 

 

 

 

 

 

Ratio of net expenses to average
   net assets
(7)

 

 

16.71

%

 

 

9.92

%

Ratio of net investment income
     to average net assets

 

 

13.39

%

 

 

11.82

%

Portfolio turnover

 

 

16.12

%

 

 

21.31

%

Net assets, end of period

 

$

1,485,822

 

 

$

1,328,052

 

 

(1)
The per share data was derived by using the weighted average shares outstanding during the period.
(2)
The per share data was derived by using the actual shares outstanding at the date of the relevant transactions.
(3)
Total return based on market value with dividends reinvested is calculated as the change in market value per share during the period plus declared dividends per share, assuming reinvestment of dividends, divided by the beginning market value per share.
(4)
Total return based on market value is calculated as the change in market value per share during the period plus declared dividends per share, divided by the beginning market value per share.

46


 

(5)
Total return based on net asset value is calculated as the change in net asset value per share during the period plus declared dividends per share, divided by the beginning net asset value per share.
(6)
The ratios reflect an annualized amount.
(7)
The ratio of net expenses to average net assets in the table above reflects the Adviser’s waivers of its right to receive a portion of the Management Fee pursuant to the Leverage Waiver for the nine months ended September 30, 2023 and 2022. Excluding the effects of the waivers, the ratio of net expenses to average net assets would have been 16.79% and 9.94%, respectively, for the nine months ended September 30, 2023 and 2022.
(8)
Table may not sum due to rounding.

 

13. Subsequent Events

The Company’s management has evaluated subsequent events through the date of issuance of the consolidated financial statements included herein. There have been no subsequent events, except as already disclosed, that occurred during such period that would require disclosure in this Form 10-Q or would be required to be recognized in the consolidated financial statements as of and for the three and nine months ended September 30, 2023.

47


 

ITEM 2. MANAGEMENT’S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION AND RESULTS OF OPERATIONS

The information contained in this section should be read in conjunction with the consolidated financial statements and notes thereto appearing elsewhere in this report. This discussion also should be read in conjunction with the “Cautionary Statement Regarding Forward-Looking Statements” set forth on page 3 of this Quarterly Report on Form 10-Q.

Overview

Sixth Street Specialty Lending, Inc. is a Delaware corporation formed on July 21, 2010. The Adviser is our external manager. We have four wholly owned subsidiaries, TC Lending, LLC, a Delaware limited liability company, which holds a California finance lender and broker license, Sixth Street SL SPV, LLC, a Delaware limited liability company, in which we hold assets that were previously used to support our asset-backed credit facility, Sixth Street SL Holding, LLC, a Delaware limited liability company, in which we hold certain investments, and Sixth Street Specialty Lending Sub, LLC, a Cayman Islands limited liability company, in which we plan to hold certain investments.

We have elected to be regulated as a BDC under the 1940 Act and as a RIC under the Code. We made our BDC election on April 15, 2011. As a result, we are required to comply with various statutory and regulatory requirements, such as:

the requirement to invest at least 70% of our assets in “qualifying assets”
source of income limitations;
asset diversification requirements; and
the requirement to distribute (or be treated as distributing) in each taxable year at least 90% of our investment company taxable income and tax-exempt interest for that taxable year.

Our shares are listed on the NYSE under the symbol “TSLX.”

Our Investment Framework

We are a specialty finance company focused on lending to middle-market companies. Since we began our investment activities in July 2011, through September 30, 2023, we have originated more than $28.6 billion aggregate principal amount of investments and retained approximately $9.8 billion aggregate principal amount of these investments on our balance sheet prior to any subsequent exits and repayments. We seek to generate current income primarily in U.S.-domiciled middle-market companies through direct originations of senior secured loans and, to a lesser extent, originations of mezzanine and unsecured loans and investments in corporate bonds, equity securities, and other instruments.

By “middle-market companies,” we mean companies that have annual EBITDA, which we believe is a useful proxy for cash flow, of $10 million to $250 million, although we may invest in larger or smaller companies on occasion. As of September 30, 2023, our core portfolio companies, which exclude certain investments that fall outside of our typical borrower profile and represent 92.8% of our total investments based on fair value, had weighted average annual revenue of $209.0 million and weighted average annual EBITDA of $69.2 million.

We invest in first-lien debt, second-lien debt, mezzanine and unsecured debt and equity and other investments. Our first-lien debt may include stand-alone first-lien loans; “last out” first-lien loans, which are loans that have a secondary priority behind super-senior “first out” first-lien loans; “unitranche” loans, which are loans that combine features of first-lien, second-lien and mezzanine debt, generally in a first-lien position; and secured corporate bonds with similar features to these categories of first-lien loans. Our second-lien debt may include secured loans, and, to a lesser extent, secured corporate bonds, with a secondary priority behind first-lien debt.

The debt in which we invest typically is not rated by any rating agency, but if these instruments were rated, they would likely receive a rating of below investment grade (that is, below BBB- or Baa3 as defined by Standard & Poor’s and Moody’s Investors Services, respectively), which is often referred to as “junk.”

The companies in which we invest use our capital to support organic growth, acquisitions, market or product expansion and recapitalizations (including restructurings). As of September 30, 2023, the largest single investment based on fair value represented 2.5% of our total investment portfolio.

As of September 30, 2023, the average investment size in each of our portfolio companies was approximately $23.8 million based on fair value. Portfolio companies includes investments in structured credit investments, which include each series of collateralized loan obligation as a portfolio company investment. When excluding investments in structured credit investments the average investment in our remaining portfolio companies was approximately $34.4 million as of September 30, 2023.

48


 

Through our Adviser, we consider potential investments utilizing a four-tiered investment framework and against our existing portfolio as a whole:

Business and sector selection. We focus on companies with enterprise value between $50 million and $1 billion. When reviewing potential investments, we seek to invest in businesses with high marginal cash flow, recurring revenue streams and where we believe credit quality will improve over time. We look for portfolio companies that we think have a sustainable competitive advantage in growing industries or distressed situations. We also seek companies where our investment will have a low loan-to-value ratio.

We currently do not limit our focus to any specific industry and we may invest in larger or smaller companies on occasion. We classify the industries of our portfolio companies by end-market (such as healthcare, and business services) and not by the products or services (such as software) directed to those end-markets.

As of September 30, 2023, the largest industry represented 15.7% of our total investment portfolio based on fair value.

Investment Structuring. We focus on investing at the top of the capital structure and protecting that position. As of September 30, 2023, approximately 92.3% of our portfolio was invested in secured debt, including 91.0% in first-lien debt investments. We carefully perform diligence and structure investments to include strong investor covenants. As a result, we structure investments with a view to creating opportunities for early intervention in the event of non-performance or stress. In addition, we seek to retain effective voting control in investments over the loans or particular class of securities in which we invest through maintaining affirmative voting positions or negotiating consent rights that allow us to retain a blocking position. We also aim for our loans to mature on a medium term, between two to six years after origination. For the three months ended September 30, 2023, the weighted average term on new investment commitments in new portfolio companies was 6.2 years.

Deal Dynamics. We focus on, among other deal dynamics, direct origination of investments, where we identify and lead the investment transaction. A substantial majority of our portfolio investments are sourced through our direct or proprietary relationships.

Risk Mitigation. We seek to mitigate non-credit-related risk on our returns in several ways, including call protection provisions to protect future interest income. As of September 30, 2023, we had call protection on 81.6% of our debt investments based on fair value, with weighted average call prices of 107.1% for the first year, 103.5% for the second year and 101.2% for the third year, in each case from the date of the initial investment. As of September 30, 2023, 99.7% of our debt investments based on fair value bore interest at floating rates, with 100% of these subject to interest rate floors, which we believe helps act as a portfolio-wide hedge against inflation.

Relationship with our Adviser and Sixth Street

Our Adviser is a Delaware limited liability company. Our Adviser acts as our investment adviser and administrator and is a registered investment adviser with the SEC under the Advisers Act. Our Adviser sources and manages our portfolio through a dedicated team of investment professionals predominately focused on direct lending, which we refer to as our Investment Team. Our Investment Team is led by our Chairman and Chief Executive Officer and our Adviser’s Co-Chief Investment Officer Joshua Easterly and our Adviser’s Co-Chief Investment Officer Alan Waxman, both of whom have substantial experience in credit origination, underwriting and asset management. Our investment decisions are made by our Investment Review Committee, which includes senior personnel of our Adviser and affiliates of Sixth Street Partners, LLC, or “Sixth Street.”

Sixth Street is a global investment business with over $70 billion of assets under management as of September 30, 2023. Sixth Street’s direct lending platforms include Sixth Street Specialty Lending, Sixth Street Lending Partners, which is aimed at U.S. upper middle-market loan originations, Sixth Street Specialty Lending Europe, which is aimed at European middle-market loan originations. Additional Sixth Street core platforms include Sixth Street TAO, which has the flexibility to invest across all of Sixth Street’s private credit market investments, Sixth Street Opportunities, which focuses on actively managed opportunistic investments across the credit cycle, Sixth Street Credit Market Strategies, which is the firm’s “public-side” credit investment platform focused on investment opportunities in broadly syndicated leveraged loan markets, Sixth Street Growth, which provides financing solutions to growing companies, Sixth Street Fundamental Strategies, which primarily invests in secondary credit, and Sixth Street Agriculture, which invests in niche agricultural opportunities. Sixth Street has a long-term oriented, highly flexible capital base that allows it to invest across industries, geographies, capital structures and asset classes. Sixth Street has extensive experience with highly complex, global public and private investments executed through primary originations, secondary market purchases and restructurings, and has a team of over 560 investment and operating professionals. As of September 30, 2023, sixty-seven (67) of these personnel are dedicated to direct lending, including fifty-three (53) investment professionals.

Our Adviser consults with Sixth Street in connection with a substantial number of our investments. The Sixth Street platform provides us with a breadth of large and scalable investment resources. We believe we benefit from Sixth Street’s market expertise, insights into industry, sector and macroeconomic trends and intensive due diligence capabilities, which help us discern market

49


 

conditions that vary across industries and credit cycles, identify favorable investment opportunities and manage our portfolio of investments. Sixth Street and its affiliates will refer all middle-market loan origination activities for companies domiciled in the United States to us and conduct those activities through us. The Adviser will determine whether it would be permissible, advisable or otherwise appropriate for us to pursue a particular investment opportunity allocated to us.

On December 16, 2014, we were granted an exemptive order from the SEC that allows us to co-invest, subject to certain conditions and to the extent the size of an investment opportunity exceeds the amount our Adviser has independently determined is appropriate to invest, with certain of our affiliates (including affiliates of Sixth Street) in middle-market loan origination activities for companies domiciled in the United States and certain “follow-on” investments in companies in which we have already co-invested pursuant to the order and remain invested. On January 16, 2020, we filed a further application for co-investment exemptive relief with the SEC to better align our existing co-investment relief with more recent SEC exemptive orders. Subsequent further applications were also made, most recently as June 29, 2022. On August 3, 2022, the SEC granted the new order in response to our application.

We believe our ability to co-invest with Sixth Street affiliates is particularly useful where we identify larger capital commitments than otherwise would be appropriate for us. We expect that with the ability to co-invest with Sixth Street affiliates we will continue to be able to provide “one-stop” financing to a potential portfolio company in these circumstances, which may allow us to capture opportunities where we alone could not commit the full amount of required capital or would have to spend additional time to locate unaffiliated co-investors.

Under the terms of the Investment Advisory Agreement and Administration Agreement, the Adviser’s services are not exclusive, and the Adviser is free to furnish similar or other services to others, so long as its services to us are not impaired. Under the terms of the Investment Advisory Agreement, we will pay the Adviser the base management fee, or the Management Fee, and may also pay certain incentive fees, or the Incentive Fees.

Under the terms of the Administration Agreement, the Adviser also provides administrative services to us. These services include providing office space, equipment and office services, maintaining financial records, preparing reports to stockholders and reports filed with the SEC, and managing the payment of expenses and the oversight of the performance of administrative and professional services rendered by others. Certain of these services are reimbursable to the Adviser under the terms of the Administration Agreement.

Key Components of Our Results of Operations

Investments

We focus primarily on the direct origination of loans to middle-market companies domiciled in the United States.

Our level of investment activity (both the number of investments and the size of each investment) can and does vary substantially from period to period depending on many factors, including the amount of debt and equity capital generally available to middle-market companies, the level of merger and acquisition activity for such companies, the general economic environment and the competitive environment for the types of investments we make.

In addition, as part of our risk strategy on investments, we may reduce certain levels of investments through partial sales or syndication to additional investors.

Revenues

We generate revenues primarily in the form of interest income from the investments we hold. In addition, we may generate income from dividends on direct equity investments, capital gains on the sale of investments and various loan origination and other fees. Our debt investments typically have a term of two to six years, and, as of September 30, 2023, 99.7% of these investments based on fair value bore interest at a floating rate, with 100% of these subject to interest rate floors. Interest on debt investments is generally payable monthly or quarterly. Some of our investments provide for deferred interest payments or PIK interest. For the three and nine months ended September 30, 2023, 4.5% and 4.0%, respectively, of our total investment income was comprised of PIK interest.

Changes in our net investment income are primarily driven by the spread between the payments we receive from our investments in our portfolio companies against our cost of funding, rather than by changes in interest rates. Our investment portfolio primarily consists of floating rate loans, and our credit facilities, 2024 Notes, 2026 Notes and 2028 Notes, after taking into account the effect of the interest rate swaps we have entered into in connection with these securities, all bear interest at floating rates. Macro trends in base interest rates like SOFR or other reference rates may affect our net investment income over the long term. However, because we generally originate loans to a limited number of portfolio companies each quarter, and those investments also vary in size, our results in any given period—including the interest rate on investments that were sold or repaid in a period compared to the interest rate of

50


 

new investments made during that period—often are idiosyncratic, and reflect the characteristics of the particular portfolio companies that we invested in or exited during the period and not necessarily any trends in our business.

In addition to interest income, our net investment income is also driven by prepayment and other fees, which also can vary significantly from quarter to quarter. The level of prepayment fees is generally correlated to the movement in credit spreads and risk premiums, but also will vary based on corporate events that may take place at an individual portfolio company in a given period—e.g., merger and acquisition activity, initial public offerings and restructurings. As noted above, generally a small but varied number of portfolio companies may make prepayments in any quarter, meaning that changes in the amount of prepayment fees received can vary significantly between periods and can vary without regard to underlying credit trends.

Loan origination fees, original issue discount and market discount or premium are capitalized, and we accrete or amortize such amounts as interest income using the effective interest method for term instruments and the straight-line method for revolving or delayed draw instruments. Repayments of our debt investments can reduce interest income from period to period. We record prepayment premiums on loans as interest income when earned. We also may generate revenue in the form of commitment, amendment, structuring, syndication or due diligence fees, fees for providing managerial assistance and consulting fees. The frequency or volume of these items of revenue may fluctuate significantly.

Dividend income on common equity investments is recorded on the record date for private portfolio companies or on the ex-dividend date for publicly traded portfolio companies.

Our portfolio activity also reflects the proceeds of sales of investments. We recognize realized gains or losses on investments based on the difference between the net proceeds from the disposition and the amortized cost basis of the investment without regard to unrealized gains or losses previously recognized. We record current period changes in fair value of investments that are measured at fair value as a component of the net change in unrealized gains (losses) on investments in the Consolidated Statements of Operations.

Expenses

Our primary operating expenses include the payment of fees to our Adviser under the Investment Advisory Agreement, expenses reimbursable under the Administration Agreement and other operating costs described below. Additionally, we pay interest expense on our outstanding debt. We bear all other costs and expenses of our operations, administration and transactions, including those relating to:

calculating individual asset values and our net asset value (including the cost and expenses of any independent valuation firms);
expenses, including travel expenses, incurred by the Adviser, or members of our Investment Team, or payable to third parties, in respect of due diligence on prospective portfolio companies and, if necessary, in respect of enforcing our rights with respect to investments in existing portfolio companies;
the costs of any public offerings of our common stock and other securities, including registration and listing fees;
the Management Fee and any Incentive Fee;
certain costs and expenses relating to distributions paid on our shares;
administration fees payable under our Administration Agreement;
costs of preparing financial statements and maintaining books and records and filing reports or other documents with the SEC (or other regulatory bodies) and other reporting and compliance costs, and the compensation of professionals responsible for the preparation of the foregoing, including the allocable portion of the compensation of our Chief Financial Officer, Chief Compliance Officer and other professionals who spend time on those related activities (based on the percentage of time those individuals devote, on an estimated basis, to our business and affairs);
debt service and other costs of borrowings or other financing arrangements;
the Adviser’s allocable share of costs incurred in providing significant managerial assistance to those portfolio companies that request it;
amounts payable to third parties relating to, or associated with, making or holding investments;
transfer agent and custodial fees;
costs of hedging;
commissions and other compensation payable to brokers or dealers;
taxes;

51


 

Independent Director fees and expenses;
the costs of any reports, proxy statements or other notices to our stockholders (including printing and mailing costs), the costs of any stockholders’ meetings and the compensation of investor relations personnel responsible for the preparation of the foregoing and related matters;
our fidelity bond;
directors and officers/errors and omissions liability insurance, and any other insurance premiums;
indemnification payments;
direct costs and expenses of administration, including audit, accounting, consulting and legal costs; and
all other expenses reasonably incurred by us in connection with making investments and administering our business.

We expect that during periods of asset growth, our general and administrative expenses will be relatively stable or will decline as a percentage of total assets, and will increase as a percentage of total assets during periods of asset declines.

Leverage

While as a BDC the amount of leverage that we are permitted to use is limited in significant respects, we use leverage to increase our ability to make investments. The amount of leverage we use in any period depends on a variety of factors, including cash available for investing, the cost of financing and general economic and market conditions, however, under the 1940 Act, our total borrowings are limited so that our asset coverage ratio cannot fall below 150% immediately after any borrowing, as defined in the 1940 Act. In any period, our interest expense will depend largely on the extent of our borrowing and we expect interest expense will increase as we increase leverage over time within the limits of the 1940 Act. In addition, we may dedicate assets as collateral to financing facilities from time to time.

Market Trends

We believe trends in the middle-market lending environment, including the limited availability of capital from traditional regulated financial institutions, strong demand for debt capital and specialized lending requirements, are likely to continue to create favorable opportunities for us to invest at attractive risk-adjusted rates.

Subsequent to the global financial crisis, the implementation of regulatory changes such as Basel III requirements, Leverage Lending Guidance, and the Volcker Rule, tightened risk appetites and reduced the capacity of traditional lenders to serve middle-market companies. We believe that these dynamics create a significant opportunity for us to directly originate investments. We also believe that the large amount of uninvested capital held by private equity firms will continue to drive deal activity, which may in turn create additional demand for debt capital.

This market dynamic is further exacerbated by the specialized due diligence and underwriting capabilities, as well as extensive ongoing monitoring, required for middle-market lending. We believe middle-market lending is generally more labor-intensive than lending to larger companies due to smaller investment sizes and the lack of publicly available information on these companies. As a result, the opportunities for dedicated private lenders such as us has continued to expand.

An imbalance between the supply of, and demand for, middle-market debt capital creates attractive pricing dynamics for investors such as BDCs. The negotiated nature of middle-market financings also generally provides for more favorable terms to the lenders, including stronger covenant and reporting packages, better call protection and lender-protective change of control provisions. We believe that BDCs have flexibility to develop loans that reflect each borrower’s distinct situation, provide long-term relationships and a potential source for future capital, which renders BDCs, including us, attractive lenders.

 

Portfolio and Investment Activity

As of September 30, 2023, our portfolio based on fair value consisted of 91.0% first-lien debt investments, 1.3% second-lien investments, 1.2% mezzanine debt investments, 4.8% equity and other investments and 1.7% structured credit investments. As of December 31, 2022, our portfolio based on fair value consisted of 90.3% first-lien debt investments, 1.5% second-lien debt investments, 0.4% mezzanine debt investments, 6.0% equity and other investments and 1.8% structured credit investments.

As of September 30, 2023 and December 31, 2022, our weighted average total yield of debt and income producing securities at fair value (which includes interest income and amortization of fees and discounts) was 14.2% and 13.5%, respectively, and our weighted

52


 

average total yield of debt and income-producing securities at amortized cost (which includes interest income and amortization of fees and discounts) was 14.3% and 13.4%, respectively.

As of September 30, 2023 and December 31, 2022, we had investments in 131 portfolio companies (including 42 structured credit investments, which include each series of collateralized loan obligation as a separate portfolio company investment) and 121 portfolio companies (including 43 structured credit investments, which include each series of collateralized loan obligation as a separate portfolio company investment), respectively, with an aggregate fair value of $3,113.3 million and $2,787.9 million, respectively.

For the three months ended September 30, 2023, the principal amount of new investments funded was $151.6 million in eight new portfolio companies and two existing portfolio companies. For this period, we had $158.9 million aggregate principal amount in exits and repayments.

For the three months ended September 30, 2022, the principal amount of new investments funded was $274.4 million in 25 new portfolio companies and six existing portfolio companies. For this period, we had $15.8 million aggregate principal amount in exits and repayments.

Our investment activity for the three months ended September 30, 2023 and 2022 is presented below (information presented herein is at par value unless otherwise indicated).

 

 

 

Three Months Ended

 

($ in millions)

 

September 30, 2023

 

 

September 30, 2022

 

New investment commitments:

 

 

 

 

 

 

Gross originations (1)

 

$

1,004.2

 

 

$

1,910.1

 

Less: Syndications/sell downs (1)

 

 

798.4

 

 

 

1,525.5

 

Total new investment commitments

 

$

205.8

 

 

$

384.6

 

Principal amount of investments funded:

 

 

 

 

 

 

First-lien

 

$

151.0

 

 

$

239.6

 

Second-lien

 

 

 

 

 

 

Mezzanine

 

 

0.2

 

 

 

 

Equity and other

 

 

0.4

 

 

 

8.1

 

Structured Credit

 

 

 

 

 

26.7

 

Total

 

$

151.6

 

 

$

274.4

 

Principal amount of investments sold or repaid:

 

 

 

 

 

 

First-lien

 

$

152.5

 

 

$

15.8

 

Second-lien

 

 

 

 

 

 

Mezzanine

 

 

 

 

 

 

Equity and other

 

 

3.6

 

 

 

 

Structured Credit

 

 

2.8

 

 

 

 

Total

 

$

158.9

 

 

$

15.8

 

Number of new investment commitments in
   new portfolio companies

 

 

8

 

 

 

25

 

Average new investment commitment amount in
   new portfolio companies

 

$

24.8

 

 

$

14.2

 

Weighted average term for new investment
   commitments in new portfolio companies
   (in years)

 

 

6.2

 

 

 

6.1

 

Percentage of new debt investment commitments
   at floating rates

 

 

98.7

%

 

 

97.0

%

Weighted average interest rate of new
   investment commitments

 

 

12.9

%

 

 

10.4

%

Weighted average spread over reference rate of new
   floating rate investment commitments

 

 

7.7

%

 

 

7.8

%

Weighted average interest rate on investments
   fully sold or paid down

 

 

13.0

%

 

 

12.0

%

 

(1)
Includes affiliates of Sixth Street

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As of September 30, 2023 and December 31, 2022, our investments consisted of the following:

 

 

 

September 30, 2023

 

 

December 31, 2022

 

($ in millions)

 

Fair Value

 

 

Amortized Cost

 

 

Fair Value

 

 

Amortized Cost

 

First-lien debt investments

 

$

2,832.8

 

 

$

2,806.3

 

 

$

2,517.9

 

 

$

2,529.3

 

Second-lien debt investments

 

 

39.9

 

 

 

48.1

 

 

 

40.8

 

 

 

42.7

 

Mezzanine debt investments

 

 

36.4

 

 

 

36.0

 

 

 

10.1

 

 

 

7.5

 

Equity and other investments

 

 

150.2

 

 

 

142.3

 

 

 

167.7

 

 

 

142.1

 

Structured credit investments

 

 

54.0

 

 

 

52.7

 

 

 

51.4

 

 

 

53.1

 

Total

 

$

3,113.3

 

 

$

3,085.4

 

 

$

2,787.9

 

 

$

2,774.7

 

 

The following tables show the fair value and amortized cost of our performing and non-accrual investments as of September 30, 2023 and December 31, 2022:

 

 

 

September 30, 2023

 

 

December 31, 2022

 

($ in millions)

 

Fair Value

 

 

Percentage

 

 

Fair Value

 

 

Percentage

 

Performing

 

$

3,092.6

 

 

 

99.3

%

 

$

2,787.7

 

 

 

100.0

%

Non-accrual (1)

 

 

20.7

 

 

 

0.7

 

 

 

0.2

 

 

 

0.0

 

Total

 

$

3,113.3

 

 

 

100.0

%

 

$

2,787.9

 

 

 

100.0

%

 

 

 

September 30, 2023

 

 

December 31, 2022

 

($ in millions)

 

Amortized Cost

 

 

Percentage

 

 

Amortized Cost

 

 

Percentage

 

Performing

 

$

3,057.2

 

 

 

99.1

%

 

$

2,772.8

 

 

 

99.9

%

Non-accrual (1)

 

 

28.2

 

 

 

0.9

 

 

 

1.9

 

 

 

0.1

 

Total

 

$

3,085.4

 

 

 

100.0

%

 

$

2,774.7

 

 

 

100.0

%

 

(1)
Loans are generally placed on non-accrual status when principal or interest payments are past due 30 days or more or when management has reasonable doubt that the borrower will pay principal or interest in full. Accrued and unpaid interest is generally reversed when a loan is placed on non-accrual status. Non-accrual loans are restored to accrual status when past due principal and interest has been paid and, in management’s judgment, the borrower is likely to make principal and interest payments in the future. Management may determine to not place a loan on non-accrual status if, notwithstanding any failure to pay, the loan has sufficient collateral value and is in the process of collection. See “–Critical Accounting Policies – Interest and Dividend Income Recognition.”

The weighted average yields and interest rates of our performing debt investments at fair value as of September 30, 2023 and December 31, 2022 were as follows:

 

 

 

September 30, 2023

 

 

December 31, 2022

 

Weighted average total yield of debt and income
   producing securities
(1)

 

 

14.2

%

 

 

13.5

%

Weighted average interest rate of debt and income
   producing securities

 

 

13.7

%

 

 

13.1

%

Weighted average spread over reference rate of all floating
   rate investments

 

 

8.4

%

 

 

8.7

%

 

(1)
Weighted average total portfolio yield at fair value was 13.5% at September 30, 2023 and 12.8% at December 31, 2022.

The Adviser monitors our portfolio companies on an ongoing basis. The Adviser monitors the financial trends of each portfolio company to determine if it is meeting its business plans and to assess the appropriate course of action for each company. The Adviser has a number of methods of evaluating and monitoring the performance of our investments, which may include the following:

assessment of success of the portfolio company in adhering to its business plan and compliance with covenants;
periodic and regular contact with portfolio company management and, if appropriate, the financial or strategic sponsor, to discuss financial position, requirements and accomplishments;
comparisons to other companies in the industry;
attendance at, and participation in, board meetings; and
review of monthly and quarterly financial statements and financial projections for portfolio companies.

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As part of the monitoring process, the Adviser regularly assesses the risk profile of each of our investments and, on a quarterly basis, grades each investment on a risk scale of 1 to 5. Risk assessment is not standardized in our industry and our risk assessment may not be comparable to ones used by our competitors. Our assessment is based on the following categories:

An investment is rated 1 if, in the opinion of the Adviser, it is performing as agreed and there are no concerns about the portfolio company’s performance or ability to meet covenant requirements. For these investments, the Adviser generally prepares monthly reports on investment performance and intensive quarterly asset reviews.
An investment is rated 2 if it is performing as agreed, but, in the opinion of the Adviser, there may be concerns about the company’s operating performance or trends in the industry. For these investments, in addition to monthly reports and quarterly asset reviews, the Adviser also researches any areas of concern with the objective of early intervention with the portfolio company.
An investment will be assigned a rating of 3 if it is paying its obligations to us as agreed but a material covenant violation is expected. For these investments, in addition to monthly reports and quarterly asset reviews, the Adviser also adds the investment to its “watch list” and researches any areas of concern with the objective of early intervention with the portfolio company.
An investment will be assigned a rating of 4 if a material covenant has been violated, but the company is making its scheduled payments on its obligations to us. For these investments, the Adviser generally prepares a bi-monthly asset review email and generally has monthly meetings with the portfolio company’s senior management. For investments where there have been material defaults, including bankruptcy filings, failures to achieve financial performance requirements or failure to maintain liquidity or loan-to-value requirements, the Adviser often will take immediate action to protect its position. These remedies may include negotiating for additional collateral, modifying investment terms or structure, or payment of amendment and waiver fees.
A rating of 5 indicates an investment is in default on its interest and/or principal payments. For these investments, our Adviser reviews the investments on a bi-monthly basis and, where possible, pursues workouts that achieve an early resolution to avoid further deterioration of our investment. The Adviser retains legal counsel and takes actions to preserve our rights, which may include working with the portfolio company to have the default cured, to have the investment restructured or to have the investment repaid through a consensual workout.

The following table shows the distribution of our investments on the 1 to 5 investment performance rating scale at fair value as of September 30, 2023 and December 31, 2022. Investment performance ratings are accurate only as of those dates and may change due to subsequent developments relating to a portfolio company’s business or financial condition, market conditions or developments, and other factors.

 

 

 

 

September 30, 2023

 

 

December 31, 2022

 

Investment

 

 

Investments at

 

 

 

 

 

Investments at

 

 

 

 

Performance

 

 

Fair Value

 

 

Percentage of

 

 

Fair Value

 

 

Percentage of

 

Rating

 

 

($ in millions)

 

 

Total Portfolio

 

 

($ in millions)

 

 

Total Portfolio

 

 

1

 

 

$

2,759.3

 

 

 

88.6

%

 

$

2,472.8

 

 

 

88.7

%

 

2

 

 

 

232.4

 

 

 

7.5

 

 

 

293.6

 

 

 

10.5

 

 

3

 

 

 

100.9

 

 

 

3.2

 

 

 

21.3

 

 

 

0.8

 

 

4

 

 

 

 

 

 

 

 

 

 

 

 

 

 

5

 

 

 

20.7

 

 

 

0.7

 

 

 

0.2

 

 

 

0.0

 

Total

 

 

$

3,113.3

 

 

 

100.0

%

 

$

2,787.9

 

 

 

100.0

%

 

Results of Operations

Operating results for the three and nine months ended September 30, 2023 and 2022 were as follows:

 

 

 

Three Months Ended

 

 

Nine Months Ended

 

($ in millions)

 

September 30, 2023

 

 

September 30, 2022

 

 

September 30, 2023

 

 

September 30, 2022

 

Total investment income

 

$

114.4

 

 

$

77.8

 

 

$

318.5

 

 

$

209.2

 

Less: Net expenses

 

 

64.0

 

 

 

40.3

 

 

 

175.0

 

 

 

94.0

 

Net investment income before income taxes

 

 

50.4

 

 

 

37.5

 

 

 

143.5

 

 

 

115.2

 

Less: Income taxes, including excise taxes

 

 

0.5

 

 

 

0.4

 

 

 

1.8

 

 

 

1.5

 

Net investment income

 

 

49.9

 

 

 

37.1

 

 

 

141.7

 

 

 

113.7

 

Net realized gains (losses) (1)

 

 

5.1

 

 

 

2.4

 

 

 

11.8

 

 

 

16.5

 

Net change in unrealized gains (losses) (1)

 

 

9.8

 

 

 

(5.1

)

 

 

17.4

 

 

 

(68.4

)

Net increase (decrease) in net assets resulting from operations

 

$

64.8

 

 

$

34.4

 

 

$

170.9

 

 

$

61.8

 

(1)
Includes foreign exchange hedging activity.

55


 

 

Investment Income

 

 

Three Months Ended

 

 

Nine Months Ended

 

($ in millions)

 

September 30, 2023

 

 

September 30, 2022

 

 

September 30, 2023

 

 

September 30, 2022

 

Interest from investments

 

$

109.3

 

 

$

75.1

 

 

$

305.1

 

 

$

201.7

 

Dividend income

 

 

0.8

 

 

 

0.0

 

 

 

2.2

 

 

 

1.4

 

Other income

 

 

4.3

 

 

 

2.7

 

 

 

11.2

 

 

 

6.1

 

Total investment income

 

$

114.4

 

 

$

77.8

 

 

$

318.5

 

 

$

209.2

 

 

Interest from investments, which includes amortization of upfront fees and prepayment fees, increased from $75.1 million for the three months ended September 30, 2022 to $109.3 million for the three months ended September 30, 2023. The increase in interest from investments was primarily the result of an increase in interest earned due to an increase in reference rates for the period ended September 30, 2023 compared to the same period in 2022 and a larger average portfolio size for the period ended September 30, 2023 compared to the same period in 2022. Accelerated amortization of upfront fees, which were primarily from unscheduled paydowns, increased from $0.1 million for the three months ended September 30, 2022 to $1.6 million for the three months ended September 30, 2023. Prepayment fees increased from $0.3 million for the three months ended September 30, 2022 to $0.9 million for the three months ended September 30, 2023. Accelerated amortization of upfront fees and prepayment fees primarily resulted from a partial paydown on one portfolio investment and earning prepayment fees on one portfolio investment during the three months ended September 30, 2022 and from full paydowns on three portfolio investments, partial paydowns on eight portfolio investments and earning prepayment fees on six portfolio investments during the three months ended September 30, 2023. Other income increased from $2.7 million for the three months ended September 30, 2022 to $4.3 million for the three months ended September 30, 2023, primarily due to increased amendment fees during the three months ended September 30, 2023 compared to the same period in 2022.

Interest from investments, which includes amortization of upfront fees and prepayment fees, increased from $201.7 million for the nine months ended September 30, 2022 to $305.1 million for the nine months ended September 30, 2023. The increase in interest from investments was primarily the result of an increase in interest earned due to an increase in reference rates for the period ended September 30, 2023 compared to the same period in 2022 and a larger average portfolio size for the period ended September 30, 2023 compared to the same period in 2022. Accelerated amortization of upfront fees from unscheduled paydowns decreased from $3.6 million for the nine months ended September 30, 2022 to $2.8 million for the nine months ended September 30, 2023. Prepayment fees decreased from $6.9 million for the nine months ended September 30, 2022 to $2.3 million for the nine months ended September 30, 2023. Accelerated amortization of upfront fees and prepayment fees primarily resulted from full paydowns on seven portfolio investments, partial paydowns on eight portfolio investments, a partial realization of one portfolio investment, a realization of one portfolio investments and earning prepayment fees on nine portfolio investments during the nine months ended September 30, 2022 and full paydowns on seven portfolio investments, partial paydowns on 12 portfolio investments, a partial realization of three portfolio investments and earning prepayment fees on eight portfolio investments during the nine months ended September 30, 2023. Other income increased from $6.1 million for the nine months ended September 30, 2022 to $11.2 million for the nine months ended September 30, 2023, primarily due to increased amendment and miscellaneous fees earned during the nine months ended September 30, 2023 compared to the same period in 2022.

Expenses

Operating expenses for the three and nine months ended September 30, 2023 and 2022 were as follows:

 

 

Three Months Ended

 

 

Nine Months Ended

 

($ in millions)

 

September 30, 2023

 

 

September 30, 2022

 

 

September 30, 2023

 

 

September 30, 2022

 

Interest

 

$

35.0

 

 

$

18.9

 

 

$

96.0

 

 

$

40.4

 

Management fees (net of waivers)

 

 

11.7

 

 

 

10.1

 

 

 

33.2

 

 

 

28.9

 

Incentive fees related to pre-incentive fee net investment
   income (net of waivers)

 

 

11.2

 

 

 

7.9

 

 

 

31.1

 

 

 

22.5

 

Incentive fees related to realized/unrealized capital gains

 

 

2.6

 

 

 

 

 

5.1

 

 

 

(7.7

)

Professional fees

 

 

1.9

 

 

 

2.0

 

 

 

5.4

 

 

 

5.3

 

Directors fees

 

 

0.2

 

 

 

0.2

 

 

 

0.6

 

 

 

0.6

 

Other general and administrative

 

 

1.4

 

 

 

1.2

 

 

 

3.6

 

 

 

4.0

 

Net Expenses

 

$

64.0

 

 

$

40.3

 

 

$

175.0

 

 

$

94.0

 

 

56


 

 

Interest

Interest expense, including other debt financing expenses, increased from $18.9 million for the three months ended September 30, 2022 to $35.0 million for the three months ended September 30, 2023. This increase was primarily due to an increase in the average interest rate on our debt outstanding and an increase in the average debt outstanding from $1,490.9 million for the three months ended September 30, 2022 to $1,730.8 million for the three months ended September 30, 2023. The average interest rate on our debt outstanding increased from 4.4% for the three months ended September 30, 2022 to 7.5% for the three months ended September 30, 2023.

Interest expense, including other debt financing expenses, increased from $40.4 million for the nine months ended September 30, 2022 to $96.0 million for the nine months ended September 30, 2023. This increase was primarily due to an increase in the average interest rate on our debt outstanding and an increase in the average debt outstanding from $1,287.1 million for the nine months ended September 30, 2022 to $1,671.8 million for the nine months ended September 30, 2023. The average interest rate on our debt outstanding increased from 3.3% for the nine months ended September 30, 2022 to 7.1% for the nine months ended September 30, 2023.

Management Fees

Management Fees (gross of waivers) increased from $10.3 million for the three months ended September 30, 2022 to $11.9 million for the three months ended September 30, 2023 due to an increase in average assets for the three months ended September 30, 2023 compared to the same period in 2022. Management Fees (net of waivers) increased from $10.1 million for the three months ended September 30, 2022 to $11.7 million for the three months ended September 30, 2023. The Adviser waived Management Fees of $0.3 million for the three months ended September 30, 2023 pursuant to the Leverage Waiver. The Adviser waived Management Fees of $0.2 million for the three months ended September 30, 2022 pursuant to the Leverage Waiver.

Management Fees (gross of waivers) increased from $29.1 million for the nine months ended September 30, 2022 to $34.1 million for the nine months ended September 30, 2023 due to an increase in average assets for the nine months ended September 30, 2023 compared to the same period in 2022. Management Fees (net of waivers) increased from $28.9 million for the nine months ended September 30, 2022 to $33.2 million for the nine months ended September 30, 2023. The Adviser waived Management Fees of $0.8 million for the nine months ended September 30, 2023 pursuant to the Leverage Waiver. The Adviser waived Management Fees of $0.2 million for the nine months ended September 30, 2022 pursuant to the Leverage Waiver.

Any waived Management Fees are not subject to recoupment by the Adviser.

Incentive Fees

Incentive Fees related to pre-Incentive Fee net investment income increased from $7.9 million for the three months ended September 30, 2022 to $11.2 million for the three months ended September 30, 2023. This increase resulted from an increase in reference rates for the three months ended September 30, 2023 and a larger average portfolio size for the period ended September 30, 2023 compared to the same period in 2022. The Adviser did not waive any Incentive Fees related to pre-Incentive Fee net investment income for the three months ended September 30, 2023 or 2022. For the three months ended September 30, 2022, less than $(0.1) million of Incentive Fees were accrued related to the reversal of Capital Gains Fees. For the three months ended September 30, 2023, $2.6 million of Incentive Fees were accrued related to Capital Gains Fees. As of September 30, 2023, these accrued Incentive Fees are not contractually payable to the Adviser.

Incentive Fees related to pre-Incentive Fee net investment income increased from $22.5 million for the nine months ended September 30, 2022 to $31.1 million for the nine months ended September 30, 2023. This increase resulted from an increase in reference rates for the nine months ended September 30, 2023 and a larger average portfolio size for the period ended September 30, 2023 compared to the same period in 2022. The Adviser did not waive any Incentive Fees related to pre-Incentive Fee net investment income for the nine months ended September 30, 2023 or 2022. For the nine months ended September 30, 2022, $(7.7) million of Incentive Fees were accrued related to the reversal of Capital Gains Fees. For the nine months ended September 30, 2023, $5.1 million of Incentive Fees were accrued related to Capital Gains Fees. As of September 30, 2023, these accrued Incentive Fees are not contractually payable to the Adviser.

57


 

Professional Fees and Other General and Administrative Expenses

Professional fees decreased from $2.0 million for the three months ended September 30, 2022 to $1.9 million for the three months ended September 30, 2023. Other general and administrative expenses increased from $1.2 million for the three months ended September 30, 2022 to $1.4 million for the three months ended September 30, 2023.

Professional fees increased from $5.3 million for the nine months ended September 30, 2022 to $5.4 million for the nine months ended September 30, 2023. Other general and administrative expenses decreased from $4.0 million for the nine months ended September 30, 2022 to $3.6 million for the nine months ended September 30, 2023.

Income Taxes, Including Excise Taxes

We have elected to be treated as a RIC under Subchapter M of the Code, and we intend to operate in a manner so as to continue to qualify for the tax treatment applicable to RICs. To qualify as a RIC, we must, among other things, distribute to our stockholders in each taxable year generally at least 90% of our investment company taxable income, as defined by the Code, and net tax-exempt income for that taxable year. To maintain our RIC status, we, among other things, have made and intend to continue to make the requisite distributions to our stockholders, which generally relieve us from corporate-level U.S. federal income taxes.

Depending on the level of taxable income earned in a tax year, we can be expected to carry forward taxable income (including net capital gains, if any) in excess of current year dividend distributions from the current tax year into the next tax year and pay a nondeductible 4% U.S. federal excise tax on such taxable income, as required. To the extent that we determine that our estimated current year annual taxable income will be in excess of estimated current year dividend distributions from such income, we accrue excise tax on estimated excess taxable income.

For the three and nine months ended September 30, 2023, we recorded a net expense of $0.5 million and $1.8 million, respectively, for U.S. federal excise tax and other taxes. For the three and nine months ended September 30, 2022, we recorded a net expense of $0.4 million and $1.5 million, respectively, for U.S. federal excise tax and other taxes.

Net Realized and Unrealized Gains and Losses

The following table summarizes our net realized and unrealized gains (losses) for the three and nine months ended September 30, 2023 and 2022:

 

 

 

Three Months Ended

 

 

Nine Months Ended

 

($ in millions)

 

September 30, 2023

 

 

September 30, 2022

 

 

September 30, 2023

 

 

September 30, 2022

 

Net realized gains (losses) on investments

 

$

5.3

 

 

$

0.3

 

 

$

11.8

 

 

$

14.4

 

Net realized gains (losses) on foreign currency transactions

 

 

(0.1

)

 

 

(0.2

)

 

 

0.0

 

 

 

(0.2

)

Net realized gains (losses) on foreign currency investments

 

 

(0.2

)

 

 

 

 

(0.2

)

 

 

0.1

 

Net realized gains (losses) on foreign currency borrowings

 

 

0.1

 

 

 

(0.0

)

 

 

0.2

 

 

 

(0.1

)

Net realized gains (losses) on interest rate swaps

 

 

 

 

2.3

 

 

 

 

 

2.3

 

Net Realized Gains (Losses)

 

$

5.1

 

 

$

2.4

 

 

$

11.8

 

 

$

16.5

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Change in unrealized gains on investments

 

$

24.6

 

 

$

12.6

 

 

$

56.3

 

 

$

23.0

 

Change in unrealized (losses) on investments

 

 

(20.3

)

 

 

(24.3

)

 

 

(41.6

)

 

 

(99.3

)

Net Change in Unrealized Gains (Losses) on
   Investments

 

$

4.3

 

 

$

(11.7

)

 

$

14.7

 

 

$

(76.3

)

 

 

 

 

 

 

 

 

 

 

 

 

 

Unrealized gains (losses) on foreign currency borrowings

 

 

5.6

 

 

 

9.2

 

 

 

2.8

 

 

 

15.1

 

Unrealized gains (losses) on foreign currency cash

 

 

(0.1

)

 

 

(0.0

)

 

 

(0.3

)

 

 

(0.0

)

Unrealized gains (losses) on interest rate swaps

 

 

 

 

(2.6

)

 

 

0.2

 

 

 

(7.2

)

Net Change in Unrealized Gains (Losses) on Foreign
   Currency Transactions and Interest Rate Swaps

 

$

5.5

 

 

$

6.6

 

 

$

2.7

 

 

$

7.9

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Net Change in Unrealized Gains (Losses)

 

$

9.8

 

 

$

(5.1

)

 

$

17.4

 

 

$

(68.4

)

 

58


 

For the three and nine months ended September 30, 2023, we had net realized gains on investments of $5.3 million and $11.8 million, respectively, primarily driven by two investment and three investments, respectively. For the three and nine months ended September 30, 2023, we had net realized losses of $0.1 million and net realized gains of less than $0.1 million, respectively, on foreign currency transactions, primarily as a result of translating foreign currency related to our non-USD denominated investments. For the three and nine months ended September 30, 2023, we had net realized losses of $0.2 million and $0.2 million, respectively, on foreign currency investments. For the three and nine months ended September 30, 2023, we had net realized gains of $0.1 million and $0.2 million, respectively, on foreign currency borrowings, primarily as a result of payments on our revolving credit facility.

For the three months ended September 30, 2023, we had $24.6 million in unrealized gains on 97 portfolio company investments, which was offset by $20.3 million in unrealized losses on 40 portfolio company investments. Unrealized gains resulted from an increase in fair value, primarily due to tightening credit spreads and positive portfolio company specific developments. Unrealized losses primarily resulted from the reversal of prior period unrealized gains due to realizations and negative portfolio company specific developments. For the nine months ended September 30, 2023, we had $56.3 million in unrealized gains on 117 portfolio company investments, which was offset by $41.6 million in unrealized losses on 25 portfolio company investments. Unrealized gains resulted from an increase in fair value, primarily due to tightening credit spreads and positive portfolio company specific developments. Unrealized losses primarily resulted from the reversal of prior period unrealized gains due to realizations and negative portfolio company specific developments.

For the three and nine months ended September 30, 2023, we had unrealized gains on foreign currency borrowings of $5.6 million and $2.8 million, respectively, on foreign currency borrowings, as a result of fluctuations in the AUD, CAD, EUR and GBP exchange rates. For the three and nine months ended September 30, 2023, we had unrealized losses on foreign currency cash of $0.1 million and $0.3 million, respectively. For the three and nine months ended September 30, 2023, we had no unrealized gains (losses) and $0.2 million of unrealized gains, respectively, on interest rate swaps not designated in a hedge accounting relationship, due to fluctuations in interest rates and the periodic settlement of interest rate swaps.

For the three and nine months ended September 30, 2022, we had net realized gains on investments of $0.3 million and $14.4 million, respectively, primarily driven by one investment and one investment, respectively. For the three and nine months ended September 30, 2022, we had net realized losses of $0.2 million on foreign currency transactions, primarily as a result of translating foreign currency related to our non-USD denominated investments. For the nine months ended September 30, 2022, we had net realized gains of $0.1 million, on foreign currency investments. For the three and nine months ended September 30, 2022, we had net realized losses of less than $0.1 million and $0.1 million, respectively, on foreign currency borrowings. The net realized gains and losses on foreign currency borrowings were a result of payments on our revolving credit facility. For the three and nine months ended September 30, 2022, we had net realized gains on interest rate swaps of $2.3 million related to the reversal of unrealized gains for upfront fees on the interest rate swaps associated with the 2022 Convertible Notes.

For the three months ended September 30, 2022, we had $12.6 million in unrealized gains on 30 portfolio company investments, which was offset by $24.3 million in unrealized losses on 88 portfolio company investments. Unrealized gains resulted from an increase in fair value, primarily due to positive portfolio company specific developments. Unrealized losses primarily resulted from widening credit spreads, and also lesser impacts from the reversal of prior period unrealized gains due to realizations and negative portfolio company specific developments. For the nine months ended September 30, 2022, we had $23.0 million in unrealized gains on 17 portfolio company investments, which was offset by $99.3 million in unrealized losses on 110 portfolio company investments. Unrealized gains resulted from an increase in fair value, primarily due to positive portfolio company specific developments. Unrealized losses primarily resulted from widening credit spreads, and also lesser impacts from the reversal of prior period unrealized gains due to realizations and negative portfolio company specific developments.

For the three and nine months ended September 30, 2022, we had unrealized gains on foreign currency borrowings of $9.2 million and $15.1 million, respectively, on foreign currency borrowings, as a result of fluctuations in the AUD, CAD, EUR and GBP exchange rates. For the three and nine months ended September 30, 2022, we had unrealized losses on foreign currency cash of less than $0.1 million. For the three and nine months ended September 30, 2022, we had unrealized losses on interest rate swaps of $2.6 million and $7.2 million, respectively, due to fluctuations in interest rates and the periodic settlement of interest rate swaps and the reversal of unrealized gains less for upfront fees received on the interest rate swaps associated with the 2022 Convertible Notes.

Realized Gross Internal Rate of Return

Since we began investing in 2011 through September 30, 2023, weighted by capital invested, our exited investments have generated an average realized gross internal rate of return to us of 17.5% (based on total capital invested of $6.9 billion and total proceeds from these exited investments of $8.7 billion). Ninety percent of these exited investments resulted in a realized gross internal rate of return to us of 10% or greater.

59


 

Gross IRR, with respect to an investment, is calculated based on the dates that we invested capital and dates we received distributions, regardless of when we made distributions to our stockholders. Initial investments are assumed to occur at time zero, and all cash flows are deemed to occur on the fifteenth of each month in which they occur.

Gross IRR reflects historical results relating to our past performance and is not necessarily indicative of our future results. In addition, gross IRR does not reflect the effect of Management Fees, expenses, Incentive Fees or taxes borne, or to be borne, by us or our stockholders, and would be lower if it did.

Average gross IRR is the average of the gross IRR for each of our exited investments (each calculated as described above), weighted by the total capital invested for each of those investments.

Average gross IRR on our exited investments reflects only invested and realized cash amounts as described above, and does not reflect any unrealized gains or losses in our portfolio.

Internal rate of return, or IRR, is a measure of our discounted cash flows (inflows and outflows). Specifically, IRR is the discount rate at which the net present value of all cash flows is equal to zero. That is, IRR is the discount rate at which the present value of total capital invested in each of our investments is equal to the present value of all realized returns from that investment. Our IRR calculations are unaudited.

Capital invested, with respect to an investment, represents the aggregate cost basis allocable to the realized or unrealized portion of the investment, net of any upfront fees paid at closing for the term loan portion of the investment. Capital invested also includes realized losses on hedging activity, with respect to an investment, which represents any inception-to-date realized losses on foreign currency forward contracts allocable to the investment, if any.

Realized returns, with respect to an investment, represents the total cash received with respect to each investment, including all amortization payments, interest, dividends, prepayment fees, upfront fees, administrative fees, agent fees, amendment fees, accrued interest, and other fees and proceeds. Realized returns also include realized gains on hedging activity, with respect to an investment, which represents any inception-to-date realized gains on foreign currency forward contracts allocable to the investment, if any.

Interest Rate and Foreign Currency Hedging

We use interest rate swaps to hedge our fixed rate debt and certain fixed rate investments. We have designated certain interest rate swaps to be in a hedge accounting relationship. See Note 2 for additional disclosure regarding our accounting for derivative instruments designated in a hedge accounting relationship. See Note 5 for additional disclosure regarding these derivative instruments and the interest payments paid and received. See Note 7 for additional disclosure regarding the carrying value of our debt.

Our current approach to hedging the foreign currency exposure in our non-U.S. dollar denominated investments is primarily to borrow the par amount in local currency under our Revolving Credit Facility to fund these investments. For the nine months ended September 30, 2023 and 2022, we had $2.9 million and $15.1 million of unrealized gains, respectively, on the translation of our non-U.S. dollar denominated debt into U.S. dollars; such amounts approximate the corresponding unrealized losses on the translation of our non-U.S. dollar denominated investments into U.S. dollars for the nine months ended September 30, 2023 and 2022. See Note 2 for additional disclosure regarding our accounting for foreign currency. See Note 7 for additional disclosure regarding the amounts of outstanding debt denominated in each foreign currency at September 30, 2023. See our consolidated schedule of investments for additional disclosure regarding the foreign currency amounts (in both par and fair value) of our non-U.S. dollar denominated investments.

Financial Condition, Liquidity and Capital Resources

Our liquidity and capital resources are derived primarily from proceeds from equity issuances, advances from our credit facilities, and cash flows from operations. The primary uses of our cash and cash equivalents are:

investments in portfolio companies and other investments and to comply with certain portfolio diversification requirements;
the cost of operations (including paying our Adviser);
debt service, repayment, and other financing costs; and
cash dividends to the holders of our shares.

We intend to continue to generate cash primarily from cash flows from operations, future borrowings and future offerings of securities. We may from time to time enter into additional debt facilities, increase the size of existing facilities or issue debt securities.

60


 

Any such incurrence or issuance would be subject to prevailing market conditions, our liquidity requirements, contractual and regulatory restrictions and other factors. In accordance with the 1940 Act, with certain limited exceptions, we are only allowed to incur borrowings, issue debt securities or issue preferred stock if immediately after the borrowing or issuance the ratio of total assets (less total liabilities other than indebtedness) to total indebtedness plus preferred stock, is at least 150%. For more information, see “Key Components of Our Results of Operations — Leverage” above. As of September 30, 2023 and December 31, 2022, our asset coverage ratio was 187.3% and 188.6%, respectively. We carefully consider our unfunded commitments for the purpose of planning our capital resources and ongoing liquidity, including our financial leverage. Further, we maintain sufficient borrowing capacity within the 150% asset coverage limitation under the 1940 Act and the asset coverage limitation under our credit facilities to cover any outstanding unfunded commitments we are required to fund.

Cash and cash equivalents as of September 30, 2023, taken together with cash available under our credit facilities, is expected to be sufficient for our investing activities and to conduct our operations in the near term. As of September 30, 2023, we had approximately $1.0 billion of availability on our Revolving Credit Facility, subject to asset coverage limitations.

As of September 30, 2023, we had $29.9 million in cash and cash equivalents, including $26.9 million of restricted cash, an increase of $4.2 million from December 31, 2022. During the nine months ended September 30, 2023, cash used in operating activities was $149.9 million, primarily attributable to funding portfolio investments of $634.9 million and other operating activities of $46.2 million, which was offset by repayments and proceeds from investments of $360.3 million and an increase in net assets resulting from operations of $170.9 million. Cash provided by financing activities was $154.2 million during the period due to borrowings of $1,227.8 million and proceeds from the issuance of common stock $89.2 million, which was offset by paydowns on our debt of $1,037.7 million, dividends paid to stockholders of $115.8 million and deferred financing costs of $9.4 million.

Equity

On February 23, 2021, we issued a total of 4,000,000 shares of common stock at $21.30 per share. Net of underwriting fees and offering costs, we received total cash proceeds of $84.9 million. Subsequent to the offering we issued an additional 49,689 shares on March 24, 2021 pursuant to the overallotment option granted to underwriters and received, net of underwriting fees, total cash proceeds of $1.0 million.

During the three months ended December 2021, we issued a total of 2,324,820 shares of common stock, or $42.3 million, as settlement for the conversion of $42.8 million principal amount of the 2022 Convertible Notes.

On August 1, 2022, we issued a total of 4,360,125 share of common stock, or $77.6 million, as settlement for the conversion of $79.2 million principal amount of the 2022 Convertible Notes.

On May 15, 2023, we issued a total of 4,500,000 shares of common stock at $17.60 per share. Net of underwriting fees and offering costs, we received total cash proceeds of $77.6 million. Subsequent to the offering we issued an additional 675,000 shares on June 12, 2023 pursuant to the overallotment option granted to underwriters and received, net of underwriting fees, total cash proceeds of $11.7 million.

During the nine months ended September 30, 2023 and 2022, we also issued 982,211 and 1,219,840 shares of our common stock, respectively, to investors who have not opted out of our dividend reinvestment plan for proceeds of $17.8 million and $23.7 million, respectively.

On August 4, 2015, our Board authorized us to acquire up to $50 million in aggregate of our common stock from time to time over an initial six month period, and has continued to authorize the refreshment of the $50 million amount authorized under and extension of the stock repurchase program prior to its expiration since that time, most recently as of May 8, 2023. The amount and timing of stock repurchases under the program may vary depending on market conditions, and no assurance can be given that any particular amount of common stock will be repurchased.

During the three and nine months ended September 30, 2022, we repurchased 180,542 shares at a weighted average share price of $16.62 inclusive of commissions, for a total cost of $3.0 million. No shares were repurchased during the nine months ended September 30, 2023.

61


 

Debt

Revolving Credit Facility

On August 23, 2012, we entered into a senior secured revolving credit agreement with Truist Bank (as a successor by merger to SunTrust Bank), as administrative agent, and J.P. Morgan Chase Bank, N.A., as syndication agent, and certain other lenders (as amended and restated, the “Revolving Credit Facility”).

As of March 31, 2023, aggregate commitments under the facility were $1.585 billion. Pursuant to an amendment to the Revolving Credit Facility dated as of June 12, 2023 (the “Fourteenth Amendment”), the aggregate commitments under the facility were increased to $1.710 billion. The facility includes an uncommitted accordion feature that allows the Company, under certain circumstances, to increase the size of the facility to up to $2.0 billion.

Pursuant to the Fourteenth Amendment, with respect to $1.465 billion in commitments, the revolving period, during which period the Company, subject to certain conditions, may make borrowings under the facility, was extended to June 11, 2027 and the stated maturity date was extended to June 12, 2028. For the remaining $245.0 million of commitments, (A) with respect to $25.0 million of commitments, the revolving period ends January 31, 2024 and the stated maturity is January 31, 2025, (B) with respect to $50.0 million of commitments, the revolving period ends on February 4, 2025 and the stated maturity is February 4, 2026 and (C) with respect to $170.0 million of commitments, the revolving period ends April 24, 2026 and the stated maturity is April 23, 2027.

We may borrow amounts in U.S. dollars or certain other permitted currencies. As of September 30, 2023, we had outstanding debt denominated in Australian Dollars (AUD) of 66.9 million, British pounds (GBP) of 32.5 million, Canadian Dollars (CAD) of 100.2 million, and Euro (EUR) of 37.7 million on our Revolving Credit Facility, included in the outstanding principal amount in the table below.

The Revolving Credit Facility also provides for the issuance of letters of credit up to an aggregate amount of $75.0 million. As of September 30, 2023 and December 31, 2022 the Company had $0.2 million and less than $0.1 million letters of credit issued through the Revolving Credit Facility. The amount available for borrowing under the Revolving Credit Facility is reduced by any letters of credit issued through the Revolving Credit Facility.

Amounts drawn under the Revolving Credit Facility, including amounts drawn in respect of letters of credit, bear interest at either the applicable reference rate plus an applicable credit spread adjustment, plus a margin of either 1.75% or 1.875%, or the base rate plus a margin of either 0.75% or 0.875%, in each case, based on the total amount of the borrowing base relative to the sum of the total commitments (or, if greater, the total exposure) under the Revolving Credit Facility plus certain other designated secured debt. We may elect either the applicable reference rate or base rate at the time of drawdown, and loans may be converted from one rate to another at any time, subject to certain conditions. We also pay a fee of 0.375% on undrawn amounts and, in respect of each undrawn letter of credit, a fee and interest rate equal to the then applicable margin while the letter of credit is outstanding.

The Revolving Credit Facility is guaranteed by Sixth Street SL SPV, LLC, TC Lending, LLC and Sixth Street SL Holding, LLC. The Revolving Credit Facility is secured by a perfected first-priority security interest in substantially all the portfolio investments held by us and each guarantor. Proceeds from borrowings may be used for general corporate purposes, including the funding of portfolio investments.

The Revolving Credit Facility includes customary events of default, as well as customary covenants, including restrictions on certain distributions and financial covenants. In accordance with the terms of the Fourteenth Amendment, the financial covenants require:

an asset coverage ratio of no less than 1.5 to 1 on the last day of any fiscal quarter;
stockholders’ equity of at least $500 million plus 25% of the net proceeds of the sale of equity interests after January 31, 2020; and
minimum asset coverage ratio of no less than 2 to 1 with respect to (i) the consolidated assets of the Company and the subsidiary guarantors (including certain limitations on the contribution of equity in financing subsidiaries) to (ii) the secured debt of the Company and its subsidiary guarantors plus unsecured senior securities of the Company and its subsidiary guarantors that mature within 90 days of the date of determination (the “Obligor Asset Coverage Ratio”).

The Revolving Credit Facility also contains certain additional concentration limits in connection with the calculation of the borrowing base, based on the Obligor Asset Coverage Ratio.

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2022 Convertible Notes

In February 2017, we issued in a private offering $115.0 million aggregate principal amount convertible notes due August 2022 (the “2022 Convertible Notes”). The 2022 Convertible Notes were issued in a private placement only to qualified institutional buyers pursuant to Rule 144A under the Securities Act. The 2022 Convertible Notes were unsecured, and bore interest at a rate of 4.50% per year, payable semiannually. In June 2018, we issued an additional $57.5 million aggregate principal amount of 2022 Convertible Notes. The additional 2022 Convertible Notes were issued with identical terms, and were fungible with and were part of a single series with the previously outstanding $115.0 million aggregate principal amount of our 2022 Convertible Notes issued in February 2017. In connection with the offering of 2022 Convertible Notes in February 2017 and the reopening in June 2018, we entered into interest rate swaps to align the interest rates of our liabilities with our investment portfolio, which consists of predominately floating rate loans. The notional amount of the interest rate swaps matched the amount of principal outstanding, and matured on August 1, 2022, matching the maturity date of the 2022 Convertible Notes.

On August 1, 2022, the 2022 Convertible Notes matured in accordance with the governing indenture. Holders of $79.2 million aggregate principal amount of notes provided valid notice of conversion and were subject to the combination settlement method previously elected by us, with a specified cash amount (as defined in the indenture governing the 2022 Convertible Notes) of $20.00 per $1,000 principal amount of the 2022 Convertible Notes and any additional amounts in stock based on the applicable conversion rate as described in the indenture. In accordance with the settlement method, we issued a total of 4,360,125 shares of common stock, or $77.6 million at the adjusted conversion price per share of $17.92. The remaining balance of the notes that were not converted into newly issued shares of common stock were settled with existing cash resources, including through utilization of our Revolving Credit Facility. The interest rate swaps associated with the principal amount of the notes outstanding were terminated on the date of maturity of the 2022 Convertible Notes.

2023 Notes

In January 2018, we issued $150.0 million aggregate principal amount of unsecured notes that matured on January 22, 2023 (the “2023 Notes”). The principal amount of the 2023 Notes was payable at maturity. The 2023 Notes bore interest at a rate of 4.50% per year, payable semi-annually commencing on July 22, 2018, and were redeemable in whole or in part at our option at any time at par plus a “make whole” premium. Total proceeds from the issuance of the 2023 Notes, net of underwriting discounts and offering costs, were $146.9 million. We used the net proceeds of the 2023 Notes to repay outstanding indebtedness under the Revolving Credit Facility. The 2023 Notes matured on January 22, 2023 and were fully repaid in cash. The swap transaction associated with the issuance of the 2023 Notes also matured on January 22, 2023.

2024 Notes

In November 2019, we issued $300.0 million aggregate principal amount of unsecured notes that mature on November 1, 2024 (the “2024 Notes”). The principal amount of the 2024 Notes is payable at maturity. The 2024 Notes bear interest at a rate of 3.875% per year, payable semi-annually commencing on May 1, 2020, and may be redeemed in whole or in part at our option at any time at par plus a “make whole” premium. Total proceeds from the issuance of the 2024 Notes, net of underwriting discounts, offering costs and original issue discount were $292.9 million. We used the net proceeds of the 2024 Notes to repay outstanding indebtedness under the Revolving Credit Facility.

On February 5, 2020, we issued an additional $50.0 million aggregate principal amount of unsecured notes that mature on November 1, 2024. The additional 2024 Notes are a further issuance of, fungible with, rank equally in right of payment with and have the same terms (other than the issue date and the public offering price) as the initial issuance of 2024 Notes. Total proceeds from the issuance of the additional 2024 Notes, net of underwriting discounts, offering costs and original issue premium were $50.1 million. We used the net proceeds of the 2024 Notes to repay outstanding indebtedness under the Revolving Credit Facility.

In connection with the 2024 Notes offering and reopening of the 2024 Notes, we entered into interest rate swaps to align the interest rates of our liabilities with our investment portfolio, which consists of predominately floating rate loans. The notional amount of the two interest rates swaps is $300.0 million and $50.0 million, respectively, each of which matures on November 1, 2024, matching the maturity date of the 2024 Notes. As a result of the swaps, our effective interest rate on the 2024 Notes is SOFR plus 2.54% (on a weighted average basis).

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During the year ended December 31, 2020, we repurchased on the open market and extinguished $2.5 million in aggregate principal amount of the 2024 Notes for $2.4 million. These repurchases resulted in a gain on extinguishment of debt of less than $0.1 million. This gain is included in the extinguishment of debt in the accompanying Consolidated Statements of Operations. In connection with the repurchase of the 2024 Notes, we entered into a floating-to-fixed interest rate swap with a notional amount equal to the amount of 2024 Notes repurchased, which had the effect of reducing the notional exposure of the fixed-to-floating interest rate swaps, which were entered into in connection with the issuance of the 2024 Notes, to match the remaining principal amount of the 2024 Notes outstanding. As a result of the swap, our effective interest rate on the outstanding 2024 Notes is SOFR plus 2.54% (on a weighted average basis).

2026 Notes

On February 3, 2021, we issued $300.0 million aggregate principal amount of unsecured notes that mature on August 1, 2026 (the “2026 Notes”). The principal amount of the 2026 Notes is payable at maturity. The 2026 Notes bear interest at a rate of 2.50% per year, payable semi-annually commencing on August 1, 2021, and may be redeemed in whole or in part at our option at any time at par plus a “make whole” premium. Total proceeds from the issuance of the 2026 Notes, net of underwriting discounts, offering costs and original issue discount, were $293.7 million. We used the net proceeds of the 2026 Notes to repay outstanding indebtedness under the Revolving Credit Facility.

In connection with the issuance of the 2026 Notes, we entered into an interest rate swap to align the interest rates of our liabilities with our investment portfolio, which consists of predominately floating rate loans. The notional amount of the interest rate swap is $300.0 million, which matures on August 1, 2026, matching the maturity date of the 2026 Notes. As a result of the swap, our effective interest rate on the 2026 Notes SOFR plus 2.17%.

2028 Notes

On August 14, 2023, we issued $300.0 million aggregate principal amount of unsecured notes that mature on August 14, 2028 (the “2028 Notes”). The principal amount of the 2028 Notes is payable at maturity. The 2028 Notes bear interest at a rate of 6.95% per year, payable semi-annually commencing on February 14, 2024, and may be redeemed in whole or in part at our option at any time at par plus a “make whole” premium. Total proceeds from the issuance of the 2028 Notes, net of underwriting discounts, offering costs and original issue discount, were $293.9 million. We used the net proceeds of the 2028 Notes to repay outstanding indebtedness under the Revolving Credit Facility.

In connection with the issuance of the 2028 Notes, we entered into an interest rate swap to align the interest rates of our liabilities with our investment portfolio, which consists of predominately floating rate loans. The notional amount of the interest rate swap is $300.0 million, which matures on August 14, 2028, matching the maturity date of the 2028 Notes. As a result of the swap, our effective interest rate on the 2028 Notes is SOFR plus 2.99%.

Debt obligations consisted of the following as of September 30, 2023 and December 31, 2022:

 

 

 

September 30, 2023

 

 

 

Aggregate Principal

 

 

Outstanding

 

 

Amount

 

 

Carrying

 

($ in millions)

 

Amount Committed

 

 

Principal

 

 

Available (1)

 

 

Value (2)(3)

 

Revolving Credit Facility

 

$

1,710.0

 

 

$

758.2

 

 

$

951.6

 

 

$

742.2

 

2024 Notes

 

 

347.5

 

 

 

347.5

 

 

 

 

 

330.8

 

2026 Notes

 

 

300.0

 

 

 

300.0

 

 

 

 

 

262.0

 

2028 Notes

 

 

300.0

 

 

 

300.0

 

 

 

 

 

288.0

 

Total Debt

 

$

2,657.5

 

 

$

1,705.7

 

 

$

951.6

 

 

$

1,623.0

 

(1)
The amount available may be subject to limitations related to the borrowing base under the Revolving Credit Facility and asset coverage requirements.
(2)
The carrying values of the Revolving Credit Facility, 2024 Notes, 2026 Notes and 2028 Notes are presented net of the combination of deferred financing costs and original issue discounts totaling $16.0 million, $1.5 million, $3.3 million and $5.9 million, respectively.
(3)
The carrying values of the 2024 Notes, 2026 Notes and 2028 Notes are presented inclusive of an incremental $(15.1) million, $(34.7) million and $(6.1) million, respectively, which represents an adjustment in the carrying values of the 2024 Notes, 2026 Notes and 2028 Notes, each resulting from a hedge accounting relationship.

 

64


 

 

 

December 31, 2022

 

 

 

Aggregate Principal

 

 

Outstanding

 

 

Amount

 

 

Carrying

 

($ in millions)

 

Amount Committed

 

 

Principal

 

 

Available (1)

 

 

Value (2)(3)

 

Revolving Credit Facility

 

$

1,585.0

 

 

$

719.3

 

 

$

865.7

 

 

$

706.2

 

2023 Notes

 

 

150.0

 

 

 

150.0

 

 

 

 

 

149.9

 

2024 Notes

 

 

347.5

 

 

 

347.5

 

 

 

 

 

325.5

 

2026 Notes

 

 

300.0

 

 

 

300.0

 

 

 

 

 

260.2

 

Total Debt

 

$

2,382.5

 

 

$

1,516.8

 

 

$

865.7

 

 

$

1,441.8

 

 

(1)
The amount available may be subject to limitations related to the borrowing base under the Revolving Credit Facility and asset coverage requirements.
(2)
The carrying values of the Revolving Credit Facility, 2023 Notes, 2024 Notes and 2026 Notes are presented net of the combination of deferred financing costs and original issue discounts totaling $13.2 million, less than $0.1 million, $2.6 million and $4.1 million, respectively.
(3)
The carrying values of the 2024 Notes and 2026 Notes are presented inclusive of an incremental $(19.4) million and $(35.7) million, which represents an adjustment in the carrying values of the 2024 Notes and 2026 Notes, each resulting from a hedge accounting relationship.

 

As of September 30, 2023 and December 31, 2022, we were in compliance with the terms of our debt arrangements. We intend to continue to utilize our credit facilities to fund investments and for other general corporate purposes.

Off-Balance Sheet Arrangements

Portfolio Company Commitments

From time to time, we may enter into commitments to fund investments. We incorporate these commitments into our assessment of our liquidity position. Our senior secured delayed draw term loan commitments are generally available on a borrower’s demand and, once drawn, generally have the same remaining term as the associated loan agreement. Undrawn senior secured delayed draw term loan commitments generally have a shorter availability period than the term of the associated loan agreement. As of September 30, 2023 and December 31, 2022, we had the following commitments to fund investments in current portfolio companies:

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($ in millions)

 

September 30, 2023

 

 

December 31, 2022

 

Alaska Bidco Oy - Delayed Draw & Revolver

 

$

0.2

 

 

$

 

Alpha Midco, Inc. - Delayed Draw

 

 

0.6

 

 

 

0.9

 

American Achievement, Corp. - Revolver

 

 

2.4

 

 

 

2.4

 

Arrow Buyer, Inc. - Delayed Draw

 

 

7.6

 

 

 

ASG II, LLC - Delayed Draw

 

 

4.3

 

 

 

7.0

 

Avalara, Inc. - Revolver

 

 

3.9

 

 

 

3.9

 

Axonify, Inc. - Delayed Draw

 

 

4.2

 

 

 

6.1

 

Banyan Software Holdings, LLC - Delayed Draw

 

 

20.0

 

 

 

Bayshore Intermediate #2, L.P. - Revolver

 

 

1.9

 

 

 

1.6

 

BCTO Ace Purchaser, Inc. - Delayed Draw

 

 

1.7

 

 

 

6.6

 

BCTO Bluebill Buyer, Inc. - Delayed Draw

 

 

5.6

 

 

 

Bear OpCo, LLC - Delayed Draw

 

 

1.5

 

 

 

2.6

 

BlueSnap, Inc. - Delayed Draw & Revolver

 

 

2.5

 

 

 

2.5

 

BTRS Holdings, Inc. - Delayed Draw & Revolver

 

 

7.2

 

 

 

8.6

 

Carlstar Group, LLC - Revolver

 

 

8.5

 

 

 

8.5

 

Cordance Operations, LLC - Delayed Draw & Revolver

 

 

3.5

 

 

 

12.0

 

Coupa Holdings, LLC - Delayed Draw & Revolver

 

 

6.8

 

 

 

CrunchTime Information Systems, Inc. - Delayed Draw

 

 

0.2

 

 

 

7.1

 

Disco Parent, Inc. - Revolver

 

 

0.5

 

 

 

Dye & Durham Corp. - Delayed Draw & Revolver

 

 

2.0

 

 

 

6.3

 

EDB Parent, LLC - Delayed Draw

 

 

13.1

 

 

 

18.0

 

Edge Bidco B.V. - Delayed Draw & Revolver

 

 

1.3

 

 

 

Elysian Finco Ltd. - Delayed Draw & Revolver

 

 

5.2

 

 

 

6.8

 

Employment Hero Holdings Pty Ltd. - Delayed Draw & Revolver

 

 

8.4

 

 

 

8.8

 

EMS Linq, Inc. - Revolver

 

 

8.8

 

 

 

8.8

 

Erling Lux Bidco SARL - Delayed Draw & Revolver

 

 

3.1

 

 

 

5.6

 

ExtraHop Networks, Inc. - Delayed Draw

 

 

11.8

 

 

 

17.1

 

ForeScout Technologies, Inc. - Delayed Draw & Revolver

 

 

3.4

 

 

 

3.4

 

G Treasury SS, LLC - Delayed Draw

 

 

 

 

3.3

 

Galileo Parent, Inc. - Revolver

 

 

5.6

 

 

 

Hirevue, Inc. - Revolver

 

 

6.9

 

 

 

Hornetsecurity Holding GmbH - Delayed Draw & Revolver

 

 

2.0

 

 

 

2.0

 

Ibis Intermediate Co. - Delayed Draw

 

 

6.3

 

 

 

6.3

 

IRGSE Holding Corp. - Revolver

 

 

0.2

 

 

 

0.3

 

Kyriba Corp. - Delayed Draw & Revolver

 

0.0

 

 

 

Laramie Energy, LLC - Delayed Draw

 

 

7.7

 

 

 

LeanTaaS Holdings, Inc. - Delayed Draw

 

 

39.6

 

 

 

47.2

 

Lithium Technologies, LLC - Revolver

 

 

 

 

2.0

 

Lucidworks, Inc. - Delayed Draw

 

 

0.8

 

 

 

0.8

 

Marcura Equities LTD - Delayed Draw & Revolver

 

 

11.7

 

 

 

Murchison Oil and Gas, LLC - Delayed Draw

 

 

3.3

 

 

 

9.8

 

Netwrix Corp. - Delayed Draw & Revolver

 

 

12.6

 

 

 

13.9

 

Neuintel, LLC - Delayed Draw

 

 

 

 

4.2

 

OutSystems Luxco SARL - Delayed Draw

 

 

2.2

 

 

 

2.1

 

PageUp People, Ltd. - Delayed Draw & Revolver

 

 

 

 

5.8

 

Passport Labs, Inc. - Delayed Draw & Revolver

 

 

2.8

 

 

 

2.8

 

Ping Identity Holding Corp. - Revolver

 

 

2.3

 

 

 

2.3

 

PrimePay Intermediate, LLC - Delayed Draw

 

 

 

 

2.5

 

PrimeRevenue, Inc. - Delayed Draw & Revolver

 

 

6.3

 

 

 

6.3

 

Project44, Inc. - Delayed Draw

 

 

19.9

 

 

 

19.9

 

Rapid Data GmbH Unternehmensberatung - Delayed Draw & Revolver

 

 

6.0

 

 

 

ReliaQuest Holdings, LLC - Delayed Draw

 

 

10.0

 

 

 

22.7

 

SkyLark UK DebtCo - Delayed Draw & Revolver

 

 

12.2

 

 

 

SL Buyer Corp. - Delyaed Draw

 

 

13.2

 

 

 

Tango Management Consulting, LLC - Delayed Draw & Revolver

 

 

14.0

 

 

 

26.6

 

TRP Assets, LLC - Delayed Draw & Membership Interest

 

 

1.0

 

 

 

7.8

 

WideOrbit, Inc. - Revolver

 

 

 

 

4.8

 

Wrangler TopCo, LLC - Revolver

 

 

0.4

 

 

 

Total Portfolio Company Commitments (1)(2)

 

$

327.2

 

 

$

338.0

 

 

(1)
Represents the full amount of our commitments to fund investments on such date. Commitments may be subject to limitations on borrowings set forth in the agreements between us and the applicable portfolio company. As a result, portfolio companies may not be eligible to borrow the full commitment amount on such date.
(2)
Our estimate of the fair value of the current investments in these portfolio companies includes an analysis of the fair value of any unfunded commitments.

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Other Commitments and Contingencies

As of September 30, 2023 the Company had an unfunded commitment of EUR 0.9 million to a new borrower that is not a current portfolio company. As of December 31, 2022 the Company did not have any unfunded commitments to fund investments to new borrowers that were not current portfolio companies as of such date.

From time to time, we may become a party to certain legal proceedings incidental to the normal course of our business. As of September 30, 2023, management is not aware of any material pending or threatened litigation that would require accounting recognition or financial statement disclosure.

We have certain contracts under which we have material future commitments. Under the Investment Advisory Agreement, our Adviser provides us with investment advisory and management services. For these services, we pay the Management Fee and the Incentive Fee.

Under the Administration Agreement, our Adviser furnishes us with office facilities and equipment, provides us clerical, bookkeeping and record keeping services at such facilities and provides us with other administrative services necessary to conduct our day-to-day operations. We reimburse our Adviser for the allocable portion (subject to the review and approval of our Board) of expenses incurred by it in performing its obligations under the Administration Agreement, the fees and expenses associated with performing compliance functions and our allocable portion of the compensation of our Chief Compliance Officer, Chief Financial Officer and other professionals who spend time on those related activities (based on a percentage of time those individuals devote, on an estimated basis, to our business and affairs). Our Adviser also offers on our behalf significant managerial assistance to those portfolio companies to which we are required to offer to provide such assistance.

Contractual Obligations

A summary of our contractual payment obligations as of September 30, 2023 is as follows:

 

 

 

Payments Due by Period

 

 

 

 

 

 

Less than

 

 

 

 

 

 

 

 

 

 

($ in millions)

 

Total

 

 

1 year

 

 

1-3 years

 

 

3-5 years

 

 

After 5 years

 

Revolving Credit Facility

 

$

758.2

 

 

$

 

 

$

 

 

$

758.2

 

 

$

 

2024 Notes

 

 

347.5

 

 

 

 

 

 

347.5

 

 

 

 

 

 

 

2026 Notes

 

 

300.0

 

 

 

 

 

 

300.0

 

 

 

 

 

 

 

2028 Notes

 

 

300.0

 

 

 

 

 

 

 

 

 

300.0

 

 

 

 

Total Contractual Obligations

 

$

1,705.7

 

 

$

 

 

$

647.5

 

 

$

1,058.2

 

 

$

 

 

In addition to the contractual payment obligations in the tables above, we also have commitments to fund investments and to pledge assets as collateral under the terms of our derivatives agreements.

Distributions

We have elected and qualified to be treated for U.S. federal income tax purposes as a RIC under subchapter M of the Code. To maintain our RIC status, we must distribute (or be treated as distributing) in each taxable year dividends for tax purposes equal to at least 90 percent of the sum of our:

investment company taxable income (which is generally our ordinary income plus the excess of realized net short-term capital gains over realized net long-term capital losses), determined without regard to the deduction for dividends paid, for such taxable year; and
net tax-exempt interest income (which is the excess of our gross tax exempt interest income over certain disallowed deductions) for such taxable year.

As a RIC, we (but not our stockholders) generally will not be subject to U.S. federal income tax on investment company taxable income and net capital gains that we distribute to our stockholders.

We intend to distribute annually all or substantially all of such income. To the extent that we retain our net capital gains or any investment company taxable income, we generally will be subject to corporate-level U.S. federal income tax. We may choose to retain our net capital gains or any investment company taxable income, and pay the U.S. federal excise tax described below.

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Amounts not distributed on a timely basis in accordance with a calendar year distribution requirement are subject to a nondeductible 4% U.S. federal excise tax payable by us. To avoid this tax, we must distribute (or be treated as distributing) during each calendar year an amount at least equal to the sum of:

98% of our net ordinary income excluding certain ordinary gains or losses for that calendar year;
98.2% of our capital gain net income, adjusted for certain ordinary gains and losses, recognized for the twelve-month period ending on October 31 of that calendar year; and
100% of any income or gains recognized, but not distributed, in preceding years.

While we intend to distribute any income and capital gains in the manner necessary to minimize imposition of the 4% U.S. federal excise tax, sufficient amounts of our taxable income and capital gains may not be distributed to avoid entirely the imposition of this tax. In that event, we will be liable for this tax only on the amount by which we do not meet the foregoing distribution requirement.

We intend to pay quarterly dividends to our stockholders out of assets legally available for distribution. All dividends will be paid at the discretion of our Board and will depend on our earnings, financial condition, maintenance of our RIC status, compliance with applicable BDC regulations and such other factors as our Board may deem relevant from time to time.

To the extent our current taxable earnings for a year fall below the total amount of our distributions for that year, a portion of those distributions may be deemed a return of capital to our stockholders for U.S. federal income tax purposes. Thus, the source of a distribution to our stockholders may be the original capital invested by the stockholder rather than our income or gains. Stockholders should read any written disclosure carefully and should not assume that the source of any distribution is our ordinary income or gains.

We have adopted an “opt out” dividend reinvestment plan for our common stockholders. As a result, if we declare a cash dividend or other distribution, each stockholder that has not “opted out” of our dividend reinvestment plan will have their dividends or distributions automatically reinvested in additional shares of our common stock rather than receiving cash dividends. Stockholders who receive distributions in the form of shares of common stock will be subject to the same U.S. federal, state and local tax consequences as if they received cash distributions.

Related-Party Transactions

We have entered into a number of business relationships with affiliated or related parties, including the following:

the Investment Advisory Agreement;
the Administration Agreement; and
an ongoing agreement with an affiliate of TPG Global, LLC governing, inter alia, the parties’ respective ownership of and rights to use the “Sixth Street” and “TPG” trademarks and certain variations thereof.

Critical Accounting Policies

The preparation of our consolidated financial statements requires us to make estimates and assumptions that affect the reported amounts of assets, liabilities, revenues, and expenses. Changes in the economic environment, financial markets, and any other parameters used in determining such estimates could cause actual results to differ. Our critical accounting policies, including those relating to the valuation of our investment portfolio, are described in our Annual Report on Form 10-K for the year ended December 31, 2022, filed with the SEC on February 16, 2023, and elsewhere in our filings with the SEC.

ITEM 3. QUANTITATIVE AND QUALITATIVE DISCLOSURES ABOUT MARKET RISK

We are subject to financial market risks, including valuation risk, interest rate risk and currency risk.

Valuation Risk

We have invested, and plan to continue to invest, primarily in illiquid debt and equity securities of private companies. Most of our investments will not have a readily available market price, and we value these investments at fair value as determined in good faith by our Board in accordance with our valuation policy. There is no single standard for determining fair value. As a result, determining fair value requires that judgment be applied to the specific facts and circumstances of each portfolio investment while employing a consistently applied valuation process for the types of investments we make. If we were required to liquidate a portfolio investment in a forced or liquidation sale, we may realize amounts that are different from the amounts presented and such differences could be material.

68


 

Interest Rate Risk

Interest rate sensitivity refers to the change in earnings that may result from changes in the level of interest rates. We also fund portions of our investments with borrowings. Our net investment income is affected by the difference between the rate at which we invest and the rate at which we borrow. Accordingly, we cannot assure you that a significant change in market interest rates will not have a material adverse effect on our net investment income.

We regularly measure our exposure to interest rate risk. We assess interest rate risk and manage our interest rate exposure on an ongoing basis by comparing our interest rate-sensitive assets to our interest rate-sensitive liabilities. Based on that review, we determine whether or not any hedging transactions are necessary to mitigate exposure to changes in interest rates.

As of September 30, 2023, 99.7% of our debt investments based on fair value in our portfolio bore interest at floating rates, with 100.0% of these subject to interest rate floors. Our credit facilities also bear interest at floating rates, and in connection with our 2024 Notes, 2026 Notes and 2028 Notes, which bear interest at fixed rates, we entered into fixed-to-floating interest rate swaps in order to align the interest rates of our liabilities with our investment portfolio.

Assuming that our consolidated balance sheet as of September 30, 2023 were to remain constant and that we took no actions to alter our existing interest rate sensitivity, the following table shows the annualized impact of hypothetical base rate changes in interest rates (considering interest rate floors for floating rate instruments):

 

($ in millions)

 

 

 

 

 

 

 

 

 

Basis Point Change

 

Interest Income

 

 

Interest Expense

 

 

Net Interest Income

 

Up 300 basis points

 

$

88.8

 

 

$

51.2

 

 

$

37.6

 

Up 200 basis points

 

$

59.2

 

 

$

34.1

 

 

$

25.1

 

Up 100 basis points

 

$

29.6

 

 

$

17.1

 

 

$

12.5

 

Down 25 basis points

 

$

(7.4

)

 

$

(4.3

)

 

$

(3.1

)

Down 50 basis points

 

$

(14.8

)

 

$

(8.5

)

 

$

(6.3

)

 

Although we believe that this analysis is indicative of our existing sensitivity to interest rate changes, it does not adjust for changes in the credit market, credit quality, the size and composition of the assets in our portfolio and other business developments that could affect our net income. Accordingly, we cannot assure you that actual results would not differ materially from the analysis above.

We may in the future hedge against interest rate fluctuations by using hedging instruments such as additional interest rate swaps, futures, options and forward contracts. While hedging activities may mitigate our exposure to adverse fluctuations in interest rates, certain hedging transactions that we may enter into in the future, such as interest rate swap agreements, may also limit our ability to participate in the benefits of changes in interest rates with respect to our portfolio investments.

Currency Risk

From time to time, we may make investments that are denominated in a foreign currency. These investments are translated into U.S. dollars at each balance sheet date, exposing us to movements in foreign exchange rates. We may employ hedging techniques to minimize these risks, but we cannot assure you that such strategies will be effective or without risk to us. We may seek to utilize instruments such as, but not limited to, forward contracts to seek to hedge against fluctuations in the relative values of our portfolio positions from changes in currency exchange rates. We also have the ability to borrow in certain foreign currencies under our Revolving Credit Facility. Instead of entering into a foreign exchange forward contract in connection with loans or other investments we have made that are denominated in a foreign currency, we may borrow in that currency to establish a natural hedge against our loan or investment. To the extent the loan or investment is based on a floating rate other than a rate under which we can borrow under our Revolving Credit Facility, we may seek to utilize interest rate derivatives to hedge our exposure to changes in the associated rate.

ITEM 4. CONTROLS AND PROCEDURES

Evaluation of Disclosure Controls and Procedures. As of the end of the period covered by this report, we carried out an evaluation, under the supervision and with the participation of our management, including our Chief Executive Officer and Chief Financial Officer, of the effectiveness of the design and operation of our disclosure controls and procedures (as defined in Rule 13a-15 under the Exchange Act). Based on that evaluation, our Chief Executive Officer and Chief Financial Officer have concluded that our current disclosure controls and procedures are effective in timely alerting them to material information relating to us that is required to be disclosed by us in the reports we file or submit under the Exchange Act.

Changes in Internal Control over Financial Reporting. There have been no changes in our internal control over financial reporting that occurred during our most recently completed fiscal quarter that have materially affected, or are reasonably likely to materially affect, our internal control over financial reporting.

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PART II – OTHER INFORMATION

From time to time, we may be a party to certain legal proceedings in the ordinary course of business, including proceedings relating to the enforcement of our rights under loans to or other contracts with our portfolio companies. We are not currently subject to any material legal proceedings, nor, to our knowledge, is any material legal proceeding threatened against us.

Item 1A. Risk Factors.

In addition to the other information set forth in this report, you should carefully consider the risk factors discussed in Part I, “Item 1A. Risk Factors” in our Annual Report on Form 10-K for the fiscal year ended December 31, 2022 and the risk factors set forth below, which could materially affect our business, financial condition and/or operating results. These risks are not the only risks facing our Company. Additional risks and uncertainties not currently known to us or that we currently deem to be immaterial also may materially and adversely affect our business, financial condition and/or operating results.

Pursuant to Section 61(a)(2)(C)(ii) of the 1940 Act, the principal risk factors associated with our senior securities are set forth below. However, since we already use leverage in optimizing our investment portfolio, the principal risk factors associated with our senior securities do not represent material changes to the risk factors previously disclosed in our Annual Report on Form 10-K for the fiscal year ended December 31, 2022.

Legislation allows us to incur additional leverage.

Under the 1940 Act, a BDC generally is not permitted to incur borrowings, issue debt securities or issue preferred stock unless immediately after the borrowing or issuance the ratio of total assets (less total liabilities other than indebtedness) to total indebtedness plus preferred stock is at least 200%. However, under the SBCAA, which became law in March 2018, BDCs have the ability to elect to become subject to a lower asset coverage requirement of 150%, subject to the receipt of the requisite board or stockholder approvals under the SBCAA and satisfaction of certain other conditions.

On October 8, 2018, our stockholders approved the application of the minimum asset coverage ratio of 150% to us, as set forth in Section 61(a)(2) of the 1940 Act, as amended by the SBCAA. As a result and subject to certain additional disclosure requirements, as of October 9, 2018, our minimum asset coverage ratio was reduced from 200% to 150%. In other words, pursuant to Section 61(a) of the 1940 Act, as amended by the SBCAA, we are permitted to potentially increase our maximum debt-to-equity ratio from an effective level of one-to-one to two-to-one.

As a result, you may face increased investment risk. We may not be able to implement our strategy to utilize additional leverage successfully. Any impact on returns or equity or our business associated with additional leverage may not outweigh the additional risk. See “We borrow money, which magnifies the potential for gain or loss and increases the risk of investing in us.

Regulations governing our operation as a BDC affect our ability to, and the way in which we, raise additional capital.

The 1940 Act imposes numerous constraints on the operations of BDCs. See “ITEM 1. BUSINESS—Regulation as a Business Development Company” in our Annual Report on Form 10-K for the year ended December 31, 2022, filed with the SEC on February 16, 2023, for a discussion of BDC limitations. For example, BDCs are required to invest at least 70% of their total assets in securities of nonpublic or thinly traded U.S. companies, cash, cash equivalents, U.S. government securities and other high-quality debt investments that mature in one year or less. These constraints may hinder the Adviser’s ability to take advantage of attractive investment opportunities and to achieve our investment objective.

We may need to periodically access the debt and equity capital markets to raise cash to fund new investments in excess of our repayments, and we may also need to access the capital markets to refinance existing debt obligations to the extent such maturing obligations are not repaid with availability under our revolving credit facilities or cash flows from operations.

Regulations governing our operation as a BDC affect our ability to raise additional capital, and the ways in which we can do so. Raising additional capital may expose us to risks, including the typical risks associated with leverage, and may result in dilution to our current stockholders. The 1940 Act limits our ability to incur borrowings and issue debt securities and preferred stock, which we refer to as senior securities, requiring that after any borrowing or issuance the ratio of total assets (less total liabilities other than indebtedness) to total indebtedness plus preferred stock, is at least 150%.

We may need to continue to borrow from financial institutions and issue additional securities to fund our growth. Unfavorable economic or capital market conditions may increase our funding costs, limit our access to the capital markets or could result in a decision by lenders not to extend credit to us. An inability to successfully access the capital markets may limit our ability to refinance

70


 

our existing debt obligations as they come due and/or to fully execute our business strategy and could limit our ability to grow or cause us to have to shrink the size of our business, which could decrease our earnings, if any. Consequently, if the value of our assets declines or we are unable to access the capital markets we may be required to sell a portion of our investments and, depending on the nature of our leverage, repay a portion of our indebtedness at a time when this may be disadvantageous. Also, any amounts that we use to service our indebtedness would not be available for distributions to our common stockholders. If we borrow money or issue senior securities, we will be exposed to typical risks associated with leverage, including an increased risk of loss.

If we issue preferred stock, the preferred stock would rank senior to common stock in our capital structure. Preferred stockholders would have separate voting rights on certain matters and may have other rights, preferences or privileges more favorable than those of our common stockholders. The issuance of preferred stock could have the effect of delaying, deferring or preventing a transaction or a change of control that might involve a premium price for holders of our common stock or otherwise be in your best interest. Holders of our common stock will directly or indirectly bear all of the costs associated with offering and servicing any preferred stock that we issue. In addition, any interests of preferred stockholders may not necessarily align with the interests of holders of our common stock and the rights of holders of shares of preferred stock to receive dividends would be senior to those of holders of shares of our common stock.

Our Board may decide to issue additional common stock to finance our operations rather than issuing debt or other senior securities. However, we generally are not able to issue and sell our common stock at a price below net asset value per share. We may, however, elect to issue and sell our common stock, or warrants, options or rights to acquire our common stock, at a price below the then-current net asset value of our common stock if our Board determines that the sale is in our best interests and the best interests of our stockholders, and our stockholders have approved our policy and practice of making these sales within the preceding 12 months. Pursuant to approval granted at a special meeting of stockholders held on May 25, 2023, we are currently permitted to sell or otherwise issue shares of our common stock at a price below our then-current net asset value per share, subject to the approval of our Board and certain other conditions. Such stockholder approval expires on May 25, 2024. We may in the future seek such approval again; however, there is no assurance such approval will be obtained. In any such case, the price at which our securities are to be issued and sold may not be less than a price that, in the determination of our Board, closely approximates the market value of those securities (less any distribution commission or discount). In the event we sell shares of our common stock at a price below net asset value per share, existing stockholders will experience net asset value dilution. This dilution would occur as a result of the sale of shares at a price below the then current net asset value per share of our common stock and would cause a proportionately greater decrease in the stockholders’ interest in our earnings and assets and their voting interest in us than the increase in our assets resulting from such issuance. As a result of any such dilution, our market price per share may decline. Because the number of shares of common stock that could be so issued and the timing of any issuance is not currently known, the actual dilutive effect cannot be predicted.

In addition to issuing securities to raise capital as described above, we could securitize our investments to generate cash for funding new investments. To securitize our investments, we likely would create a wholly owned subsidiary, contribute a pool of loans to the subsidiary and have the subsidiary issue primarily investment grade debt securities to purchasers who we would expect would be willing to accept a substantially lower interest rate than the loans earn. We would retain all or a portion of the equity in the securitized pool of loans. Our retained equity would be exposed to any losses on the portfolio of investments before any of the debt securities would be exposed to the losses. An inability to successfully securitize our investment portfolio could limit our ability to grow or fully execute our business and could adversely affect our earnings, if any. The successful securitization of our investment could expose us to losses because the portions of the securitized investments that we would typically retain tend to be those that are riskier and more apt to generate losses. The 1940 Act also may impose restrictions on the structure of any securitization. In connection with any future securitization of investments, we may incur greater set-up and administration fees relating to such vehicles than we have in connection with financing of our investments in the past.

We borrow money, which magnifies the potential for gain or loss and increases the risk of investing in us.

As part of our business strategy, we borrow from and may in the future issue additional senior debt securities to banks, insurance companies and other lenders. Holders of these loans or senior securities would have fixed-dollar claims on our assets that have priority over the claims of our stockholders. If the value of our assets decreases, leverage will cause our net asset value to decline more sharply than it otherwise would have without leverage. Similarly, any decrease in our income would cause our net income to decline more sharply than it would have if we had not borrowed. This decline could negatively affect our ability to make dividend payments on our common stock. Our ability to service our borrowings depends largely on our financial performance and is subject to prevailing economic conditions and competitive pressures. In addition, the Management Fee is payable based on our gross assets, including cash and assets acquired through the use of leverage, which may give our Adviser an incentive to use leverage to make additional investments. The amount of leverage that we employ will depend on our Adviser’s and our Board’s assessment of market and other factors at the time of any proposed borrowing. We cannot assure you that we will be able to obtain credit at all or on terms acceptable to us.

71


 

Our credit facilities and indentures governing our indebtedness also impose financial and operating covenants that restrict our business activities, remedies on default and similar matters. As of September 30, 2023, we are in compliance with the covenants of our credit facilities and indentures. However, our continued compliance with these covenants depends on many factors, some of which are beyond our control. Accordingly, although we believe we will continue to be in compliance, we cannot assure you that we will continue to comply with the covenants in our credit facilities and indentures. Failure to comply with these covenants could result in a default. If we were unable to obtain a waiver of a default from the lenders or holders of that indebtedness, as applicable, those lenders or holders could accelerate repayment under that indebtedness. An acceleration could have a material adverse impact on our business, financial condition and results of operations. Lastly, we may be unable to obtain additional leverage, which would, in turn, affect our return on capital.

As of September 30, 2023, we had $1,705.7 million of outstanding indebtedness, which had an annualized interest cost of 7.53% under the terms of our debt, excluding fees (such as fees on undrawn amounts and amortization of upfront fees) and giving effect to the swap-adjusted interest rates on our 2024 Notes, 2026 Notes and 2028 Notes. As of September 24, 2023, as adjusted to give effect to the interest rate swaps, the interest rate on the 2024 Notes was three-month LIBOR plus 2.28% (on a weighted-average basis), and the interest rate on the 2026 Notes was three-month LIBOR plus 1.91%. On September 25, 2023, the swap-adjusted interest rate on the 2024 Notes and 2026 Notes transitioned to SOFR plus 2.54% (on a weighted average basis), and SOFR plus 2.17%, respectively. On September 30, 2023, the swap-adjusted interest rate on the 2028 Notes was SOFR plus 2.99%.

For us to cover these annualized interest payments on indebtedness, we must achieve annual returns on our investments of at least 4.1%. Since we generally pay interest at a floating rate on our debt, an increase in interest rates will generally increase our borrowing costs. We expect that our annualized interest cost and returns required to cover interest will increase if we issue additional debt securities.

In order to assist investors in understanding the effects of leverage, the following table illustrates the effect of leverage on returns from an investment in our common stock assuming various annual returns, net of expenses. Leverage generally magnifies the return of stockholders when the portfolio return is positive and magnifies their losses when the portfolio return is negative. Actual returns may be greater or less than those appearing in the table. The calculations in the table below are hypothetical and actual returns may be higher or lower than those appearing below.

Effects of Leverage Based on Actual Amount of Borrowings Incurred by us as of September 30, 2023

 

Assumed Return on Our Portfolio

(net of expenses) (1)

    -10%

    -5%

    0%

    5%

    10%

Corresponding return to stockholder (2)

-30

%

-19.3

%

-8.6

%

2.0

%

12.7

%

(1)
The assumed portfolio return is required by SEC regulations and is not a prediction of, and does not represent, our projected or actual performance. Actual returns may be greater or less than those appearing in the table. Pursuant to SEC regulations, this table is calculated as of September 30, 2023. As a result, it has not been updated to take into account any changes in assets or leverage since September 30, 2023.
(2)
In order to compute the “Corresponding return to stockholder,” the “Assumed Return on Our Portfolio” is multiplied by the total value of our assets at September 30, 2023 to obtain an assumed return to us. From this amount, the interest expense (calculated by multiplying the weighted average stated interest rate of 7.53% by the approximately $1,705.7 million of principal debt outstanding) is subtracted to determine the return available to stockholders. The return available to stockholders is then divided by the total value of our net assets at September 30, 2023 to determine the “Corresponding return to stockholder.”

Our indebtedness could adversely affect our business, financial conditions or results of operations.

We cannot assure you that our business will generate sufficient cash flow from operations or that future borrowings will be available to us under our credit facilities or otherwise in an amount sufficient to enable us to pay our indebtedness or to fund our other liquidity needs. We may need to refinance all or a portion of our indebtedness on or before it matures. We cannot assure you that we will be able to refinance any of our indebtedness on commercially reasonable terms or at all. If we cannot service our indebtedness, we may have to take actions such as selling assets or seeking additional equity. We cannot assure you that any such actions, if necessary, could be effected on commercially reasonable terms or at all, or on terms that would not be disadvantageous to our stockholders or on terms that would not require us to breach the terms and conditions of our existing or future debt agreements.

72


 

Even in the event the value of your investment declines, the Management Fee and, in certain circumstances, the Incentive Fee will still be payable to the Adviser.

Even in the event the value of your investment declines, the Management Fee and, in certain circumstances, the Incentive Fee will still be payable to the Adviser. The Management Fee is calculated as a percentage of the value of our gross assets at a specific time, which would include any borrowings for investment purposes, and may give our Adviser an incentive to use leverage to make additional investments. In addition, the Management Fee is payable regardless of whether the value of our gross assets or your investment have decreased. The use of increased leverage may increase the likelihood of default, which would disfavor holders of our common stock. Given the subjective nature of the investment decisions that our Adviser will make on our behalf, we may not be able to monitor this potential conflict of interest.

The Incentive Fee is calculated as a percentage of pre-Incentive Fee net investment income. Since pre-Incentive Fee net investment income does not include any realized capital gains, realized capital losses or unrealized capital gains or losses, it is possible that we may pay an Incentive Fee in a quarter in which we incur a loss. For example, if we receive pre-Incentive Fee net investment income in excess of the quarterly minimum hurdle rate, we will pay the applicable Incentive Fee even if we have incurred a loss in that quarter due to realized and unrealized capital losses. In addition, because the quarterly minimum hurdle rate is calculated based on our net assets, decreases in our net assets due to realized or unrealized capital losses in any given quarter may increase the likelihood that the hurdle rate is reached in that quarter and, as a result, that an Incentive Fee is paid for that quarter. Our net investment income used to calculate this component of the Incentive Fee is also included in the amount of our gross assets used to calculate the Management Fee.

Also, one component of the Incentive Fee is calculated annually based upon our realized capital gains, computed net of realized capital losses and unrealized capital losses on a cumulative basis. As a result, we may owe the Adviser an Incentive Fee during one year as a result of realized capital gains on certain investments, and then incur significant realized capital losses and unrealized capital losses on the remaining investments in our portfolio during subsequent years. Incentive Fees earned in prior years cannot be clawed back even if we later incur losses.

In addition, the Incentive Fee payable by us to the Adviser may create an incentive for the Adviser to make investments on our behalf that are risky or more speculative than would be the case in the absence of such a compensation arrangement. The Adviser receives the Incentive Fee based, in part, upon capital gains realized on our investments. Unlike the portion of the Incentive Fee that is based on income, there is no hurdle rate applicable to the portion of the Incentive Fee based on capital gains. As a result, the Adviser may have an incentive to invest more in companies whose securities are likely to yield capital gains, as compared to income-producing investments. Such a practice could result in our making more speculative investments than would otherwise be the case, which could result in higher investment losses, particularly during cyclical economic downturns.

Item 2. Unregistered Sales of Equity Securities and Use of Proceeds

None.

Item 3. Defaults Upon Senior Securities.

Not applicable.

Item 4. Mine Safety Disclosures.

Not applicable.

Item 5. Other Information.

Rule 10b5-1 Trading Plans

During the three months ended September 30, 2023, none of our directors or officers (as defined in Rule 16a-1(f) under the Exchange Act) adopted or terminated any contract, instruction or written plan for the purchase or sale of our securities that was intended to satisfy the affirmative defense conditions of Rule 10b5-1(c) under the Exchange Act or any “non-Rule 10b5-1 trading arrangement” as defined in Item 408(c) of Regulation S-K.

73


 

Item 6. Exhibits.

(a)
Exhibits.

3.1

 

Second Amended and Restated Bylaws dated July 10, 2023 (incorporated by reference to Exhibit 3.1 to the Company’s

Current Report on Form 8-K/A filed on July 17, 2023)

 

4.1

 

Indenture, dated as of January 22, 2018, between TPG Specialty Lending, Inc. and Wells Fargo Bank, National Association, as Trustee (incorporated by reference to Exhibit 4.1 to the Company's Current Report on Form 8-K filed on January 22, 2018)

 

4.2

 

Fourth Supplemental Indenture, dated as of August 14, 2023, between Sixth Street Specialty Lending, Inc. and Computershare Trust Company, N.A., as successor to Wells Fargo Bank, National Association, as Trustee

(incorporated by reference to Exhibit 4.2 to the Company's Current Report on Form 8-K filed on August 14, 2023)

 

4.3

 

Form of 6.950% Note Due 2028 (incorporated by reference to Exhibit 4.3 to the Company's Current Report on Form 8-K filed on August 14, 2023)

 

31.1

 

Certification of Chief Executive Officer Pursuant to 18 U.S.C. Section 1350, as Adopted Pursuant to Section 302 of the Sarbanes-Oxley Act of 2002

 

31.2

 

Certification of Chief Financial Officer Pursuant to 18 U.S.C. Section 1350, as Adopted Pursuant to Section 302 of the Sarbanes-Oxley Act of 2002

 

32

 

Certification of CEO and CFO Pursuant to 18 U.S.C. Section 1350, as Adopted Pursuant to Section 906 of the Sarbanes-Oxley Act of 2002

 

101.INS

 

Inline XBRL Instance Document - the instance document does not appear in the Interactive Data File because XBRL tags are embedded within the Inline XBRL document.

101.SCH

 

Inline XBRL Taxonomy Extension Schema Document

101.CAL

 

Inline XBRL Taxonomy Extension Calculation Linkbase Document

101.DEF

 

Inline XBRL Taxonomy Extension Definition Linkbase Document

101.LAB

 

Inline XBRL Taxonomy Extension Label Linkbase Document

101.PRE

 

Inline XBRL Taxonomy Extension Presentation Linkbase Document

104

 

Cover Page Interactive Data File (embedded within the Inline XBRL document)

 

 

74


 

SIGNATURES

Pursuant to the requirements of the Securities Exchange Act of 1934, as amended, the registrant has duly caused this report to be signed on its behalf by the undersigned thereunto duly authorized.

 

 

 

SIXTH STREET SPECIALTY LENDING, INC.

 

 

 

 

 

Date: November 2, 2023

 

By:

 

/s/ Joshua Easterly

 

 

 

 

Joshua Easterly

 

 

 

 

Chief Executive Officer

 

 

 

 

 

Date: November 2, 2023

 

By:

 

/s/ Ian Simmonds

 

 

 

 

Ian Simmonds

 

 

 

 

Chief Financial Officer

 

75