THL Credit Inc. (a BDC) Sells a Note Issue
By: Tim McPartland,
THL Credit Inc. (ticker:TCRD) has priced a note issue at 6.75%. THL Credit is kind of a middle quality BDC, which has recently been shifting their investments from heavily weighted in subordinated debt toward 1st lien debt—obviously a desired move from our conservative point of view.
The new notes mature in 2021 and even though we would like to have a bit more than 6.75% these fit exactly with our current investment direction of shortening durations (away from perpetual preferreds)–thus we are buyers. Additionally at the risk of sounding like a broken record we must mention that THL Credit is a BDC and is required to have a 200% asset coverage ratio on their debt–this is a backup safety factor. Also THL is paying a common dividend of $1.36/share–one more layer of safety (this would have to be eliminated prior to preferred dividends or debt interest being affected).
Details of this issue are here– also company website links for further due diligence. We do not expect the issue to trade on the OTC prior to NYSE trading. This issue should trade in the next week, although unlike preferred stocks exactly when it will trade isn’t known until the day before trading starts.