Sixth Street Specialty Lending Inc

Previous wording

We are a specialty finance company focused on lending to middle-market companies. Since we began our investment activities in July 2011, through March 31, 2024, we have originated more than $36.0 billion aggregate principal amount of investments and retained approximately $10.2 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.

Current wording

We are a specialty finance company focused on lending to middle-market companies. Since we began our investment activities in July 2011, through June 30, 2024, we have originated approximately $37.9 billion aggregate principal amount of investments and retained approximately $10.4 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.

Previous wording

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 March 31, 2024, our core portfolio companies, which exclude certain investments that fall outside of our typical borrower profile and represent 96.3% of our total investments based on fair value, had weighted average annual revenue of $275.5 million and weighted average annual EBITDA of $92.5 million.

Current wording

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 June 30, 2024, our core portfolio companies, which exclude certain investments that fall outside of our typical borrower profile and represent 97.9% of our total investments based on fair value, had weighted average annual revenue of $310.4 million and weighted average annual EBITDA of $104.4 million.

Previous wording

The companies in which we invest use our capital to support organic growth, acquisitions, market or product expansion and recapitalizations (including restructurings). As of March 31, 2024, the largest single investment based on fair value represented 2.6% of our total investment portfolio.

Current wording

The companies in which we invest use our capital to support organic growth, acquisitions, market or product expansion and recapitalizations (including restructurings). As of June 30, 2024, the largest single investment based on fair value represented 2.4% of our total investment portfolio.

Previous wording

As of March 31, 2024, the average investment size in each of our portfolio companies was approximately $27.3 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 $33.5 million as of March 31, 2024.

Current wording

As of June 30, 2024, the average investment size in each of our portfolio companies was approximately $30.4 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 $31.5 million as of June 30, 2024.

Previous wording

As of March 31, 2024, the largest industry represented 17.0% of our total investment portfolio based on fair value.

Current wording

As of June 30, 2024, the largest industry represented 16.8% of our total investment portfolio based on fair value.

Previous wording

Investment Structuring. We focus on investing at the top of the capital structure and protecting that position. As of March 31, 2024, approximately 93.1% of our portfolio was invested in secured debt, including 92.3% 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 seven years after origination. For the three months ended March 31, 2024, the weighted average term on new investment commitments in new portfolio companies was 6.4 years.

Current wording

Investment Structuring. We focus on investing at the top of the capital structure and protecting that position. As of June 30, 2024, approximately 93.6% of our portfolio was invested in secured debt, including 92.8% 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 seven years after origination. For the six months ended June 30, 2024, the weighted average term on new investment commitments in new portfolio companies was 6.1 years.

Previous wording

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 March 31, 2024, we had call protection on 78.1% of our debt investments based on fair value, with weighted average call prices of 106.7% for the first year, 103.3% for the second year and 101.1% for the third year, in each case from the date of the initial investment. As of March 31, 2024, 99.6% 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.

Current wording

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 June 30, 2024, we had call protection on 75.1% of our debt investments based on fair value, with weighted average call prices of 106.5% for the first year, 103.3% for the second year and 101.0% for the third year, in each case from the date of the initial investment. As of June 30, 2024, 99.6% of our debt investments based on fair value bore interest at floating rates, with 100.0% of these subject to interest rate floors, which we believe helps act as a portfolio-wide hedge against inflation.

Previous wording

Sixth Street is a global investment business with over $77 billion of assets under management as of March 31, 2024. 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 600 investment and operating professionals. As of March 31, 2024, sixty-seven (67) of these personnel are dedicated to direct lending, including fifty-three (53) investment professionals.

Current wording

Sixth Street is a global investment business with over $78 billion of assets under management as of June 30, 2024. 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 610 investment and operating professionals. As of June 30, 2024, sixty-six (66) of these personnel are dedicated to direct lending, including fifty-one (51) investment professionals.

Previous wording

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 seven years, and, as of March 31, 2024, 99.6% 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 months ended March 31, 2024 and 2023, 6.9% and 3.1%, respectively, of our total investment income was comprised of PIK interest.

Current wording

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 seven years, and, as of June 30, 2024, 99.6% of these investments based on fair value bore interest at a floating rate, with 100.0% 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 six months ended June 30, 2024, 7.7% and 7.3%, respectively, of our total investment income was comprised of PIK interest.

Previous wording

As of March 31, 2024, our portfolio based on fair value consisted of 92.3% first-lien debt investments, 0.8% second-lien investments, 1.2% mezzanine debt investments, 4.8% equity and other investments and 0.9% structured credit investments. As of December 31, 2023, our portfolio based on fair value consisted of 91.3% first-lien debt investments, 1.1% second-lien debt investments, 1.2% mezzanine debt investments, 4.7% equity and other investments and 1.7% structured credit investments.

Current wording

As of June 30, 2024, our portfolio based on fair value consisted of 92.8% first-lien debt investments, 0.8% second-lien investments, 1.3% mezzanine debt investments, 4.9% equity and other investments and 0.2% structured credit investments. As of December 31, 2023, our portfolio based on fair value consisted of 91.3% first-lien debt investments, 1.1% second-lien debt investments, 1.2% mezzanine debt investments, 4.7% equity and other investments and 1.7% structured credit investments.

Previous wording

As of March 31, 2024 and December 31, 2023, 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 13.8% and 14.1%, respectively, and our weighted average total yield of debt and income-producing securities at amortized cost (which includes interest income and amortization of fees and discounts) was 14.0% and 14.2%, respectively.

Current wording

As of June 30, 2024 and December 31, 2023, 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 13.8% and 14.1%, respectively, and our weighted average total yield of debt and income-producing securities at amortized cost (which includes interest income and amortization of fees and discounts) was 13.9% and 14.2%, respectively.

Previous wording

As of March 31, 2024 and December 31, 2023, we had investments in 124 portfolio companies (including 24 structured credit investments, which include each series of collateralized loan obligation as a separate portfolio company investment) and 136 portfolio companies (including 42 structured credit investments, which include each series of collateralized loan obligation as a separate portfolio company investment), respectively, with an aggregate fair value of $3,380.0 million and $3,283.1 million, respectively.

Current wording

As of June 30, 2024 and December 31, 2023, we had investments in 109 portfolio companies (including 4 structured credit investments, which include each series of collateralized loan obligation as a separate portfolio company investment) and 136 portfolio companies (including 42 structured credit investments, which include each series of collateralized loan obligation as a separate portfolio company investment), respectively, with an aggregate fair value of $3,317.1 million and $3,283.1 million, respectively.

Previous wording

For the three months ended March 31, 2024 the principal amount of new investments funded was $162.8 million in nine new portfolio companies and five existing portfolio companies. For this period, we had $108.6 million aggregate principal amount in exits and repayments.

Current wording

For the three months ended June 30, 2024, the principal amount of new investments funded was $163.6 million in eight new portfolio companies and five existing portfolio companies. For this period, we had $290.3 million aggregate principal amount in exits and repayments.

Previous wording

For the three months ended March 31, 2023, the principal amount of new investments funded was $138.9 million in seven new portfolio companies and five existing portfolio companies. For this period, we had $50.8 million aggregate principal amount in exits and repayments.

Current wording

For the three months ended June 30, 2023, the principal amount of new investments funded was $240.0 million in six new portfolio companies and four existing portfolio companies. For this period, we had $114.0 million aggregate principal amount in exits and repayments.

Previous wording

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 Estimates”

Current wording

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 Estimates– Interest and Dividend Income Recognition.”

Previous wording

Weighted average total portfolio yield at fair value was 13.1% at March 31, 2024 and 13.4% at December 31, 2023.

Current wording

Weighted average total portfolio yield at fair value was 13.0% at June 30, 2024 and 13.4% at December 31, 2023.

Previous wording

Operating results for the three months ended March 31, 2024 and 2023 were as follows:

Current wording

Operating results for the three and six months ended June 30, 2024 and 2023 were as follows:

Previous wording

Interest from investments, which includes amortization of upfront fees and prepayment fees, increased from $90.1 million for the three months ended March 31, 2023 to $104.6 million for the three months ended March 31, 2024. 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 March 31, 2024 compared to the same period in 2023 and a larger average portfolio size for the period ended March 31, 2024 compared to the same period in 2023. Paid-in-kind interest income increased from $3.0 million for the three months ended March 31, 2023 to $8.1 million for the three months ended March 31, 2024 due to increased PIK election. Dividend income increased from $0.6 million for the three months ended March 31, 2023 to $0.8 million for the three months ended March 31, 2024 due to increased investments in dividend yielding securities compared to the same period in 2023. Other income increased from $2.8 million for the three months ended March 31, 2023 to $4.3 million for the three months ended March 31, 2024, primarily due to increased miscellaneous fee income during the three months ended March 31, 2024 compared to the same period in 2023.

Current wording

Interest from investments, which includes amortization of upfront fees and prepayment fees, increased from $98.1 million for the three months ended June 30, 2023 to $105.0 million for the three months ended June 30, 2024. 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 June 30, 2024 compared to the same period in June 30, 2023 and a larger average portfolio size for the period ended June 30, 2024 compared to the same period in 2023. Paid-in-kind interest income increased from $4.6 million for the three months ended June 30, 2023 to $9.4 million for the three months ended June 30, 2024 due to increased PIK election. Dividend income increased from $0.8 million for the three months ended June 30, 2023 to $1.8 million for the three months ended June 30, 2024 due to increased investments in dividend yielding securities compared to the same period in 2023. Other income increased from $4.1 million for the three months ended June 30, 2023 to $5.6 million for the three months ended June 30, 2024, primarily due to increased amendment fees during the three months ended June 30, 2024 compared to the same period in 2023.

Previous wording

Operating expenses for the three months ended March 31, 2024 and 2023 were as follows:

Current wording

Operating expenses for the three and six months ended June 30, 2024 and 2023 were as follows:

Previous wording

Interest expense, including other debt financing expenses, increased from $28.5 million for the three months ended March 31, 2023 to $39.0 million for the three months ended March 31, 2024. 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 $1,569.4 million for the three months ended March 31, 2023 to $1,883.9 million for the three months ended March 31, 2024. The average interest rate on our debt outstanding increased from 6.7% for the three months ended March 31, 2023 to 7.6% for the three months ended March 31, 2024.

Current wording

Interest expense, including other debt financing expenses, increased from $32.4 million for the three months ended June 30, 2023 to $39.2 million for the three months ended June 30, 2024. 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 $1,713.0 million for the three months ended June 30, 2023 to $1,857.8 million for the three months ended June 30, 2024. The average interest rate on our debt outstanding increased from 7.1% for the three months ended June 30, 2023 to 7.7% for the three months ended June 30, 2024.

Previous wording

Management Fees (gross of waivers) increased from $10.7 million for the three months ended March 31, 2023 to $12.6 million for the three months ended March 31, 2024 due to an increase in average assets for the three months ended March 31, 2024 compared to the same period in 2023. Management Fees (net of waivers) increased from $10.5 million for the three months ended March 31, 2023 to $12.2 million for the three months ended March 31, 2024. The Adviser waived Management Fees of $0.4 million for the three months ended March 31, 2024 and $0.3 million for the three months ended March 31, 2023 pursuant to the Leverage Waiver.

Current wording

Management Fees (gross of waivers) increased from $11.4 million for the three months ended June 30, 2023 to $12.8 million for the three months ended June 30, 2024 due to an increase in average assets for the three months ended June 30, 2024 compared to the same period in 2023. Management Fees (net of waivers) increased from $11.1 million for the three months ended June 30, 2023 to $12.5 million for the three months ended June 30, 2024. The Adviser waived Management Fees of $0.3 million for the three months ended June 30, 2024 pursuant to the Leverage Waiver. The Adviser waived Management Fees of $0.3 million for the three months ended June 30, 2023 pursuant to the Leverage Waiver.

Previous wording

For the three months ended March 31, 2024 and 2023, Incentive Fees were $10.1 million and $11.3 million, respectively, of which $10.9 million and $9.5 million, respectively, were realized and payable to the Adviser. The increase in Incentive Fees was primarily due to higher net investment income for the three months ended March 31, 2024 compared to the same period in 2023. For the three months ended March 31, 2024 and 2023, $(0.8) million and $1.8 million, respectively, of Incentive Fees were accrued related to Capital Gains Fees. As of March 31, 2024, these accrued Incentive Fees are not contractually payable to the Adviser.

Current wording

Incentive Fees related to pre-Incentive Fee net investment income increased from $10.5 million for the three months ended June 30, 2023 to $11.4 million for the three months ended June 30, 2024. This increase resulted from an increase in reference rates for the three months ended June 30, 2024. The Adviser did not waive any Incentive Fees related to pre-Incentive Fee net investment income for the three months ended June 30, 2024 or 2023. For the three months ended June 30, 2024 and 2023, $(1.3) million and $0.7 million, respectively, of Incentive Fees were accrued related to Capital Gains Fees. As of June 30, 2024, these accrued Incentive Fees are not contractually payable to the Adviser.

Previous wording

Professional fees increased from $1.7 million for the three months ended March 31, 2023 to $1.8 million for the three months ended March 31, 2024. Other general and administrative expenses increased from $1.0 million for the three months ended March 31, 2023 to $1.3 million for the three months ended March 31, 2024.

Current wording

Professional fees increased from $1.8 million for the three months ended June 30, 2023 to $2.1 million for the three months ended June 30, 2024. Other general and administrative expenses increased from $1.2 million for the three months ended June 30, 2023 to $1.3 million for the three months ended June 30, 2024.

Previous wording

For the three months ended March 31, 2024 and 2023, we recorded a net expense of $0.8 million and $0.4 million, respectively, for U.S. federal excise tax and other taxes.

Current wording

For the three and six months ended June 30, 2024, we recorded a net expense of $1.2 million and $2.1 million, respectively, for U.S. federal excise tax and other taxes. For the three and six months ended June 30, 2023, we recorded a net expense of $0.9 million and $1.3 million, respectively, for U.S. federal excise tax and other taxes.

Previous wording

The following table summarizes our net realized and unrealized gains (losses) for the three and three months ended March 31, 2024 and 2023:

Current wording

The following table summarizes our net realized and unrealized gains (losses) for the three and six months ended June 30, 2024 and 2023:

Previous wording

For the three months ended March 31, 2024, we had $15.4 million in unrealized gains on 75 portfolio company investments, which was offset by $27.1 million in unrealized losses on 69 portfolio company investments. Unrealized gains for the three months ended March 31, 2024 resulted from an increase in fair value, primarily due to positive valuation adjustments, unwind of prior period unrealized losses, and changes in credit spreads. Unrealized losses for the three months ended March 31, 2024 resulted from the reversal of prior period unrealized gains due to realizations, negative credit-related adjustments and changes in credit spreads.

Current wording

For the three months ended June 30, 2024, we had $13.9 million in unrealized gains on 57 portfolio company investments, which was offset by $21.8 million in unrealized losses on 73 portfolio company investments. Unrealized gains primarily resulted from tightening credit spreads and positive portfolio company specific developments. Unrealized losses primarily resulted from negative portfolio company specific developments and the reversal of prior period unrealized gains due to realizations. For the six months ended June 30, 2024, we had $23.7 million in unrealized gains on 63 portfolio company investments, which was offset by $43.2 million in unrealized losses on 89 portfolio company investments. Unrealized gains primarily resulted from tightening credit spreads and positive portfolio company specific developments. Unrealized losses primarily resulted from negative portfolio company specific developments and the reversal of prior period unrealized gains due to realizations.

Previous wording

For the three months ended March 31, 2024 and 2023, we had net realized gains on investments of $2.2 million and $4.8 million, respectively. For the three months ended March 31, 2024 and 2023, we had $0.6 net realized losses and net realized gains of $0.2 million, respectively, on foreign currency transactions, primarily as a result of translating foreign currency related to our non-USD denominated investments. For the three months ended March 31, 2024 and 2023, we had net realized losses of $0.6 million and no net gain or loss, respectively, on foreign currency investments. For the three months ended March 31, 2024 and 2023, we had net realized gains of $1.1 million and $0.2 million, respectively, on foreign currency borrowings, primarily as a result of payments on our revolving credit facility.

Current wording

For the three and six months ended June 30, 2023, we had net realized gains on investments of $1.6 million and $6.4 million, respectively, primarily driven by one investment and one investment, respectively. For the three and six months ended June 30, 2023, we had net realized losses of $0.1 million and net realized gains of $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 six months ended June 30, 2023, we had net realized losses of less than $0.1 million, respectively, on foreign currency investments. For the three and six months ended June 30, 2023, we had net realized losses of less than $0.1 million and net realized gains of $0.2 million on foreign currency borrowings. The net realized gains and losses on foreign currency borrowings were a result of payments on our revolving credit facility.

Previous wording

For the three months ended March 31, 2023, we had $24.0 million in unrealized gains on 99 portfolio company investments, which was offset by $18.4 million in unrealized losses on 29 portfolio company investments. Unrealized gains for the three months ended March 31, 2023 resulted from an increase in fair value, primarily due to positive valuation adjustments, unwind of prior period unrealized losses, and changes in credit spreads. Unrealized losses for the three months ended March 31, 2023 resulted from the reversal of prior period unrealized gains due to realizations, negative credit-related adjustments and changes in credit spreads.

Current wording

For the three months ended June 30, 2023, we had $18.0 million in unrealized gains on 102 portfolio company investments, which was offset by $13.1 million in unrealized losses on 30 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, lesser impacts from the reversal of prior period unrealized gains due to realizations and negative portfolio company specific developments. For the six months ended June 30, 2023, we had $40.0 million in unrealized gains on 108 portfolio company investments, which was offset by $29.6 million in unrealized losses on 26 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.

Previous wording

For the three months ended March 31, 2024, we had unrealized gains on foreign currency borrowings of $4.7 million, and for the three months ended March 31, 2023, we had unrealized losses of $0.7 million on foreign currency borrowings, as a result of fluctuations in the AUD, CAD, EUR, SEK and GBP exchange rates. For the three months ended March 31, 2024 and 2023, we had unrealized gains on foreign currency cash of less than $0.1 million and unrealized losses of $0.3 million, respectively. For the three months ended March 31, 2024 and 2023, we had no net unrealized gains on interest rate swaps and net unrealized gains of $0.2 million, respectively, due to fluctuations in interest rates and the periodic settlement of interest rate swaps.

Current wording

For the three and six months ended June 30, 2023, we had unrealized losses on foreign currency borrowings of $2.0 million and $2.7 million, respectively, on foreign currency borrowings, as a result of fluctuations in the AUD, CAD, EUR and GBP exchange rates. For the three and six months ended June 30, 2023, we had unrealized gains on foreign currency cash of less than $0.1 million and unrealized losses of $0.3 million, respectively. For the three and six months ended June 30, 2023, we had unrealized losses on interest rate swaps of $0.1 million and unrealized gains of $0.2 million, respectively, due to fluctuations in interest rates and the periodic settlement of interest rate swaps.

Previous wording

Since we began investing in 2011 through March 31, 2024, weighted by capital invested, our exited investments have generated an average realized gross internal rate of return to us of 17.4% (based on total capital invested of $7.1 billion and total proceeds from these exited investments of $9.1 billion). Ninety-one percent of these exited investments resulted in a realized gross internal rate of return to us of 10% or greater.

Current wording

Since we began investing in 2011 through June 30, 2024, weighted by capital invested, our exited investments have generated an average realized gross internal rate of return to us of 17.3% (based on total capital invested of $7.5 billion and total proceeds from these exited investments of $9.5 billion). Ninety two percent of these exited investments resulted in a realized gross internal rate of return to us of 10% or greater.

Previous wording

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 three months ended March 31, 2024 and 2023, we had $4.7 million of unrealized gains and $0.7 million of unrealized losses, respectively, on the translation of our non-U.S. dollar denominated debt into U.S. dollars; such amounts approximate the corresponding unrealized gains and losses on the translation of our non-U.S. dollar denominated investments into U.S. dollars for the three months ended March 31, 2024 and 2023. 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 March 31, 2024. 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.

Current wording

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 six months ended June 30, 2024 and 2023, we had $3.0 million of unrealized gains and $2.7 million of unrealized losses, respectively, on the translation of our non-U.S. dollar denominated debt into U.S. dollars; such amounts approximate the corresponding unrealized gains and losses on the translation of our non-U.S. dollar denominated investments into U.S. dollars for the six months ended June 30, 2024 and 2023. 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 June 30, 2024. 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.

Previous wording

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. 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 March 31, 2024 and December 31, 2023, our asset coverage ratio was 184.5% and 181.6%, 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.

Current wording

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. 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 June 30, 2024 and December 31, 2023, our asset coverage ratio was 189.9% and 181.6%, 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.

Previous wording

Cash and cash equivalents as of March 31, 2024, 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 March 31, 2024, we had approximately $1.1 billion of availability on our Revolving Credit Facility, subject to asset coverage limitations.

Current wording

Cash and cash equivalents as of June 30, 2024, 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 June 30, 2024, we had approximately $1.2 billion of availability on our Revolving Credit Facility, subject to asset coverage limitations.

Previous wording

As of March 31, 2024, we had $35.9 million in cash and cash equivalents, including $29.1 million of restricted cash. During the three months ended March 31, 2024, cash used in operating activities was $65.5 million, primarily attributable to funding portfolio investments of $211.3 million and other operating activities of $17.1 million, which was offset by repayments and proceeds from investments of $115.4 million and an increase in net assets resulting from operations of $47.5 million. Cash provided by financing activities was $76.2 million during the period due to borrowings of $621.9 million and proceeds from the issuance of common stock $81.5 million, which was offset by paydowns on our debt of $578.9 million, dividends paid to stockholders of $43.3 million and deferred financing costs of $5.0 million.

Current wording

As of June 30, 2024, we had $34.6 million in cash and cash equivalents, including $29.5 million of restricted cash. During the six months ended June 30, 2024, cash provided by operating activities was $59.7 million, primarily attributable to an increase in net assets resulting from operations of $94.9 million and repayments and proceeds from investments of $433.7 million, which was offset by funding portfolio investments of $458.9 million and other operating activity of $10.0 million. Cash used in financing activities was $(50.3) million during the period, primarily attributable to paydowns on our Revolving Credit Facility of $905.2 million, dividends paid to stockholders of $85.6 million, deferred financing costs of $8.8 million, which was offset due to borrowings of $856.0 million and proceeds from the issuance of common stock $93.3 million.

Previous wording

In May 2023, we issued a total of 4,500,000 shares of common stock at $17.33 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, additional total cash proceeds of $11.7 million.

Current wording

On May 15, 2023, we issued a total of 4,500,000 shares of common stock at $17.33 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.

Previous wording

On March 5, 2024, we issued a total of 4,000,000 shares of common stock at $20.52 per share. Net of underwriting fees and offering costs, we received total cash proceeds of $81.5 million. Subsequent to the offering, the Company issued an additional 600,000 shares on April 1, 2024 pursuant to the overallotment option granted to underwriters and received, net of underwriting fees, additional total cash proceeds of $12.0 million.

Current wording

On March 5, 2024, we issued a total of 4,000,000 shares of common stock at $20.52 per share. Net of underwriting fees and offering costs, we received total cash proceeds of $81.5 million. Subsequent to the offering, the Company issued an additional 600,000 shares on April 1, 2024 pursuant to the overallotment option granted to underwriters and received, net of offering and underwriting fees, additional total cash proceeds of $11.9 million.

Previous wording

During the three months ended March 31, 2024 and 2023, we also issued 292,057 and 362,578 shares of our common stock, respectively, to investors who have not opted out of our dividend reinvestment plan for proceeds of $5.9 million and $6.2 million, respectively.

Current wording

During the six months ended June 30, 2024 and 2023, we also issued 587,706 and 676,944 shares of our common stock, respectively, to investors who have not opted out of our dividend reinvestment plan for proceeds of $11.9 million and $11.8 million, respectively.

Previous wording

No shares were repurchased for the three months ended March 31, 2024 and 2023.

Current wording

No shares were repurchased for the three and six months ended June 30, 2024 and 2023.

Previous wording

As of March 31, 2024, aggregate commitments under the facility were $1.685 billion. The facility includes an uncommitted accordion feature that allows us, under certain circumstances, to increase the size of the facility to up to $2.0 billion.

Current wording

As of June 30, 2024, aggregate commitments under the facility were $1.7 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.

Previous wording

Pursuant to the Fourteenth Amendment, with respect to $1.465 billion in commitments, the revolving period, during which period we, 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 $220.0 million of commitments, (A) 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 (B) with respect to $170.0 million of commitments, the revolving period ends April 24, 2026 and the stated maturity is April 23, 2027.

Current wording

Pursuant to the Fourteenth Amendment dated June 12, 2023, with respect to $1.465 billion in commitments, the revolving period, during which period we, 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 $220.0 million of commitments, (A) 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 (B) with respect to $170.0 million of commitments, the revolving period ends April 24, 2026 and the stated maturity is April 23, 2027.