Finian O’Shea, an analyst from Wells Fargo, maintained the Buy rating on Sixth Street Specialty Lending (TSLX – Research Report). The associated price target is $21.00.
Finian O’Shea has given his Buy rating due to a combination of factors observed in the current market trends for private credit. O’Shea notes that while there are challenges in the market, such as overallocation by pension funds, there is a significant investor appetite coming from outside the US and the retail sector, which may introduce additional cyclical risks. Despite these risks, the spreads in the market are tightening, and there is a shift in the types of deals being made, indicating a dynamic environment that could benefit Sixth Street Specialty Lending.
Moreover, O’Shea acknowledges that Sixth Street Specialty Lending’s returns on equity are consistently strong, similar to when interest rates were at zero, suggesting a robust business model that can weather different economic climates. The potential for growth in adjacent businesses, such as credit secondaries and private investment grade in collaboration with the insurance sector, is also seen as an attractive opportunity. This diversification strategy, coupled with the company’s solid track record, underpins the Buy rating provided by O’Shea.
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Sixth Street Specialty Lending (TSLX) Company Description:
TPG Specialty Lending, Inc. is a specialty finance company, which focuses on lending to middle-market companies. Its investment comprises first-lien debt, second-lien debt, mezzanine and unsecured debt and equity, and other investments. The company was founded in July 2011 and is headquartered in Fort Worth, TX.
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