Fitch rates TPG Specialty convertibles BBB-

Fitch Ratings said it expects to assign an expected BBB- rating to TPG Specialty Lending, Inc.'s proposed issuance of $100 million unsecured convertible senior notes due 2022.

The expected rating is equalized with the ratings assigned to TPG Specialty’s existing senior unsecured notes as the new notes will rank equally in the capital structure.

Fitch said it does not expect a material impact on the company's leverage metrics as a result of the issuance because the proceeds will be used to repay borrowings on secured credit facilities.

The agency said it views favorably the company’s ability to access the unsecured debt market and expand the unsecured component to its overall funding structure.

Access to this market will provide the company with additional funding flexibility going forward, the agency added.

Pro forma for the issuance, unsecured debt will increase to 30.9% of total debt, from 16.4% as of Sept. 30, 2016, Fitch said.

The ratings reflect the company’s senior lending focus and lower underlying portfolio company leverage, strong asset quality performance, lower historical average leverage, solid liquidity and strong dividend coverage, the agency said.

The ratings are constrained by the company’s relatively short operating history, modest portfolio concentrations and a primarily secured funding profile, Fitch said.

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