Sixth Street Specialty Lending, Inc.

What they do

TSLX invests primarily in directly originated, privately negotiated debt and equity of middle-market companies, with the portfolio heavily weighted toward first-lien debt. It also holds smaller positions in second-lien and mezzanine debt, equity, structured credit, and joint venture investments. It funds these investments with a mix of equity and floating-rate debt facilities, and uses fixed-to-floating swaps on its fixed-rate unsecured notes.

Revenue drivers

• First-lien debt investments — Largest portfolio category at 88.3% of fair value as of June 30, 2026, generating interest income primarily at floating rates.
• Mezzanine, second-lien, and structured credit — Smaller holdings of 0.7% second-lien, 2.0% mezzanine, and 2.7% structured credit based on fair value, generally at higher yields.
• Equity and joint venture investments — 4.7% equity and 1.6% joint venture exposure, including the Structured Credit Partners joint venture, providing potential capital gains.
• Net investment income — Reported at $0.43 per share in Q2 2026, representing an annualized ROE of 10.6% on net investment income.

Recent performance

For the second quarter ended June 30, 2026, TSLX reported net investment income and net income of $0.43 per share, with an annualized ROE of 10.6% on net investment income and 10.5% on net income. NAV per share was $16.24 at June 30, 2026, unchanged from March 31, 2026. New investment commitments totaled $114.6 million, with $136.7 million funded, and $192.1 million in exits and repayments. As of June 30, 2026, the portfolio had 137 companies with an aggregate fair value of $3,302.1 million and an average investment size of $30.9 million.

Strategy

TSLX continues to focus on directly originated, first-lien debt investments to middle-market companies. It completed an amendment to its Revolving Credit Facility on May 1, 2026, extending maturity to May 1, 2031 for $1.525 billion of commitments. It also repaid its $300 million August 1, 2026 unsecured notes using revolver capacity and cash. The company maintains a supplemental dividend policy to distribute over-earning based on its framework.

Risks

• Economic downturn — An economic downturn could impair portfolio companies' ability to operate, leading to loss of some or all investments.
• Access to capital — An inability to access capital markets could impair TSLX's ability to raise capital and fund investment activities.
• Leverage — Borrowing magnifies the potential for gain or loss and increases the risk of investing in the company.
• Inflation and interest rates — Inflation and changes in the interest rate environment could negatively impact TSLX or its portfolio companies.

Outlook

TSLX declared a third-quarter 2026 base dividend of $0.42 per share, payable September 30, 2026, with no supplemental dividend related to Q2 earnings. The supplemental dividend policy remains in place. Management noted the Revolving Credit Facility amendment extended maturity for a large portion of commitments, and that it repaid its August 2026 unsecured notes subsequent to quarter-end.