Fitch rates Sixth Street loan, notes BBB-

Fitch Ratings said it assigned expected BBB- ratings to Sixth Street Lending Partners' long-term issuer default rating, $725 million senior secured floating-rate revolver due 2028 and the planned senior unsecured debt issuance. The outlook is stable.

“The expected ratings reflect SSLP's affiliation with Sixth Street Partners, LLC, strong management team, focus on first-lien investments, appropriate leverage target, solid liquidity given undrawn capital commitments and Fitch's expectations that unsecured debt will increase to at least 20% of total debt with the proposed issuance and to at least 35% over the outlook horizon,” the agency said in a press release.

However, the rating is constrained by SSLP's swift growth over a short operating history, which has led to elevated portfolio concentrations, the below-average proportion of unsecured funding following the planned issuance and the lack of public equity markets access, although this is offset by SSLP's ability to draw on capital commitments in the near term, Fitch said.

The stable outlook reflects the view that SSLP will boost unsecured debt to at least 35% of total debt over the outlook horizon, manage leverage within its targeted range, continue to focus on first-lien investments, demonstrate solid asset quality metrics, and sustain enough liquidity and solid dividend coverage, the agency explained.

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