Debt

9 Months Ended

Sep. 30, 2024

Debt Disclosure [Abstract]

Debt

7. Debt

Subscription Facility

On September 1, 2022 (the “Subscription Facility Closing Date”), the Company entered into a revolving credit agreement (the “Subscription Facility”) with Wells Fargo Bank, National Association, as administrative agent (the “Administrative Agent”), letter of credit issuer, lead arranger, as a lender and aggregate commitments under the facility were $400 million.

Pursuant to an amendment to the Subscription Facility dated as of December 21, 2022 (the “Subscription Facility First Amendment”), the aggregate commitments under the Subscription Facility were upsized to $700 million. Pursuant to lender joinder agreements dated January 18, 2023 and January 27, 2023, the aggregate commitments under the Subscription Facility were upsized to $800 million and $850 million, respectively. Pursuant to lender joinder agreements dated March 28, 2023, the aggregate commitments

under the Subscription Facility were upsized to $1.3 billion. Pursuant to a lender joinder agreement dated April 27, 2023, the aggregate commitments under the Subscription Facility were upsized to $1.35 billion. Pursuant to a lender joinder agreement dated December 1, 2023, the aggregate commitments under the Subscription Facility were upsized to $1.5 billion (the “Maximum Commitment”).

On July 3, 2024, the Company exercised its option to extend the stated maturity date to August 29, 2025. The Subscription Facility will mature upon the earliest of: (i) August 29, 2025; (ii) the date upon which the Administrative Agent declares the obligations under the Subscription Facility due and payable after the occurrence of an event of default; (iii) forty-five (45) days prior to the date on which the Company’s ability to call capital commitments for purposes of repaying the obligations under the Subscription Facility is terminated; and (iv) the date the Company terminates the commitments pursuant to the Subscription Facility.

Borrowings under the Subscription Facility bear interest, at our election at the time of drawdown, at a rate per annum equal to (i) in the case of loans denominated in dollars, at our option (a) an adjusted Daily Simple SOFR rate plus 1.95%, (b) an adjusted Term SOFR rate for the applicable interest period plus 1.95% and (c) in the case of reference rate loans, 0.95% plus the greatest of (1) a prime rate, (2) the federal funds rate plus 0.50% and (3) the adjusted Daily Simple SOFR plus 1.00%, (ii) in the case of loans denominated in euros or other alternative currencies (other than sterling), the adjusted Eurocurrency Rate for the applicable interest period plus 1.95% or (iii) in the case of loans denominated in sterling, the adjusted SONIA rate plus 1.95%. SOFR loans are subject to a credit spread adjustment ranging from 0.10% to 0.25% and SONIA loans are subject to a credit spread adjustment of 0.0326%. Loans denominated in dollars may be converted from one rate applicable to dollar denominated loans to another at any time at our election, subject to certain conditions. The Company also will pay an unused commitment fee of 0.25% per annum on the unused commitments.

The Company may borrow amounts in U.S. dollars or certain other permitted currencies. As of September 30, 2024, the Company had outstanding debt denominated in British pounds (GBP) of 10.3 million and Euros (EUR) of 10.3 million on its Subscription Facility, included in the outstanding principal amount in the table below. As of December 31, 2023, the Company had outstanding debt denominated in British pounds (GBP) of 10.3 million, and Euros (EUR) of 13.4 million on its Subscription Facility, included in the outstanding principal amount in the table below.

The Subscription Facility also provides for the issuance of letters of credit up to an aggregate amount of 10% of the Maximum Commitment. As of September 30, 2024 and December 31, 2023, the Company had no outstanding letters of credit issued through the Subscription Facility. The amount available for borrowing under the Subscription Facility is reduced by any letters of credit issued through the Subscription Facility.

The Subscription Facility includes customary events of default, as well as customary covenants, including restrictions on certain distributions and financial covenants.

As of September 30, 2024 and December 31, 2023, the Company was in compliance with the terms of the Subscription Facility.

Revolving Credit Facility

On January 19, 2023 (the “Revolving Credit Facility Closing Date”), the Company entered into a senior secured revolving credit agreement (the “Revolving Credit Facility”) with Truist Bank, as administrative agent, JPMorgan Chase Bank, N.A., Royal Bank of Canada, State Street Bank and Trust Company and Wells Fargo Bank, N.A., as joint lead arrangers, and certain other lenders.

The aggregate commitments under the facility were $600 million and included an uncommitted accordion feature that allows the Company, under certain circumstances, to increase the size of the facility up to $1 billion. On February 28, 2023, the aggregate commitments under the facility were upsized to $700 million. On July 27, 2023, the aggregate commitments under the facility were upsized to $725 million. Pursuant to the first amendment to the Revolving Credit Facility dated February 8, 2024 (the “Revolving Credit Facility First Amendment”), the aggregate commitments under the Revolving Credit Facility were upsized to $1.0 billion and the stated maturity date was extended to February 8, 2029. On April 8, 2024, the aggregate commitments under the facility were upsized to $1.2 billion. On May 23, 2024, pursuant to the second amendment, the aggregate commitments under the Revolving Credit Facility were upsized to $1.375 billion, which included a term loan commitment of $100 million, due at the stated maturity. On June 27, 2024, the aggregate commitments under the Revolving Credit Facility were upsized to $1.425 billion. The facility includes an uncommitted accordion feature that allows the Company, under certain circumstances, to increase the size of the facility to up to $1.75 billion.

Borrowings under the Revolving Credit Facility, including amounts drawn in respect of letters of credit, bear interest, at our election at the time of drawdown, at a rate per annum equal to (i) in the case of loans denominated in dollars, at our option (a) adjusted Term SOFR plus 1.75% or 2.00%, based on certain borrowing base conditions and (b) an alternative base rate plus 1.75% or 2.00%, based on certain borrowing base conditions, (ii) in the case of loans denominated in other permitted currencies at the relevant rate

specified plus 1.75% or 2.00%, based on certain borrowing base conditions, plus in the case of amounts denominated in certain other permitted currencies, an adjustment. We also will pay an unused commitment fee of 0.375% per annum on the unused commitments.

The Revolving Credit Facility is guaranteed by Sixth Street LP Holding II, LLC and SSLP Lending, LLC. The Revolving Credit Facility is secured by a perfected first-priority security interest in substantially all the portfolio investments held by us and each guarantor. Proceeds from borrowings may be used for general corporate purposes, including the funding of portfolio investments.

The Revolving Credit Facility includes customary events of default, as well as customary covenants, including restrictions on certain distributions and financial covenants. In accordance with the terms of the Revolving Credit Agreement, the financial covenants require:

•an asset coverage ratio of no less than 1.5 to 1 on the last day of any fiscal quarter;

•shareholders’ equity of at least $1.1 billion plus 25% of the net proceeds of the sale of equity interests after February 8, 2024; and

•minimum asset coverage ratio of no less than 2 to 1 with respect to (i) the consolidated assets of the Company and the subsidiary guarantors (including certain limitations on the contribution of equity in financing subsidiaries) to (ii) the secured debt of the Company and its subsidiary guarantors (the “Obligor Asset Coverage Ratio”).

The Revolving Credit Facility also contains certain additional concentration limits in connection with the calculation of the borrowing base, based on the Obligor Asset Coverage Ratio.

The Company may borrow amounts in U.S. dollars or certain other permitted currencies. As of September 30, 2024, the Company had outstanding debt denominated in British pounds (GBP) of 143.7 million, Euros (EUR) 413.9 million and Swedish Krona (SEK) 78.8 million on its Revolving Credit Facility, included in the outstanding principal amount in the table below. As of December 31, 2023, the Company had outstanding debt denominated in British pounds (GBP) of 68.7 million and Euros (EUR) 95.7 million on its Revolving Credit Facility, included in the outstanding principal amount in the table below.

The Revolving Credit Facility also provides for the issuance of letters of credit up to an aggregate amount of $400 million. As of September 30, 2024, the Company had $5.9 million in outstanding letters of credit issued through the Revolving Credit Facility. As of December 31, 2023, the Company had $5.5 million in outstanding letters of credit issued through the Revolving Credit Facility. The amount available for borrowing under the Revolving Credit Facility is reduced by any letters of credit issued through the Revolving Credit Facility.

The Revolving Credit Facility includes customary events of default (with customary cure and notice provisions).

2029 Notes

On March 4, 2024, the Company issued $600 million aggregate principal amount of unsecured notes that mature on March 11, 2029 (the “2029 Notes”). The principal amount of the 2029 Notes is payable at maturity. The 2029 Notes bear interest at a rate of 6.50% per year, payable semi-annually commencing on September 11, 2024, and may be redeemed in whole or in part at the Company’s option at any time at par plus a “make whole” premium. Total proceeds from the issuance of the 2029 Notes, net of underwriting discounts, offering costs and original issue discount, were $586.0 million. The Company used the net proceeds of the 2029 Notes to repay outstanding indebtedness under the Revolving Credit Facility and Subscription Facility.

On June 10, 2024, the Company issued an additional $150 million aggregate principal amount of unsecured notes that mature on March 11, 2029. The additional 2029 Notes are a further issuance of, fungible with, rank equally in right of payment with and have the same terms (other than the issue date and the public offering price) as the initial issuance of the 2029 Notes. Total proceeds from the issuance of the additional 2029 Notes, net of underwriting discounts, offering costs and original issue premium were $147.8 million. The Company used the net proceeds of the 2029 Notes to repay outstanding indebtedness under the Revolving Credit Facility and Subscription Facility.

The Company entered into two interest rate swaps to align the interest rates of its liabilities with the Company’s investment portfolio, which consists of predominately floating rate loans. The notional amount of the two interest rates swaps is $600.0 million and $150.0 million, respectively, each of which matures on March 11, 2029, matching the maturity date of the 2029 Notes. As a result of the swap, the Company’s effective interest rate on the 2029 Notes is SOFR plus 2.45% (on a weighted average basis). The interest expense related to the 2029 Notes is offset by proceeds received from the interest rate swaps designated as a hedge. The swap adjusted interest expense is included as a component of interest expense on the Company’s Consolidated Statements of Operations. As of September 30, 2024, the effective hedge interest rate swaps had a fair value of $22.5 million which is offset within interest expense by an equal, but opposite, fair value change for the hedged risk on the 2029 Notes.

2030 Notes

On September 16, 2024, the Company issued $600 million aggregate principal amount of unsecured notes that mature on January 15, 2030 (the “2030 Notes”). The principal amount of the 2030 Notes is payable at maturity. The 2030 Notes bear interest at a rate of 5.75% per year, payable semi-annually commencing on January 15, 2025, and may be redeemed in whole or in part at the Company’s option at any time at par plus a “make whole” premium. Total proceeds from the issuance of the 2030 Notes, net of underwriting discounts, offering costs and original issue discount, were $591.7 million. The Company used the net proceeds of the 2030 Notes to repay outstanding indebtedness under the Revolving Credit Facility and Subscription Facility.

The Company entered into an interest rate swap to align the interest rate of its liability with the Company’s investment portfolio, which consists of predominately floating rate loans. The notional amount of the interest rate swap is $600.0 million which matures on January 15, 2030, matching the maturity date of the 2030 Notes. As a result of the swap, the Company’s effective interest rate on the 2030 Notes is SOFR plus 2.55%. The interest expense related to the 2030 Notes is offset by proceeds received from the interest rate swaps designated as a hedge. The swap adjusted interest expense is included as a component of interest expense on the Company’s Consolidated Statements of Operations. As of September 30, 2024, the effective hedge interest rate swaps had a fair value of $(3.2) million which is offset within interest expense by an equal, but opposite, fair value change for the hedged risk on the 2030 Notes.

For the three and nine months ended September 30, 2024, the components of interest expense related to the 2029 Notes and 2030 Notes are as follows.

	Three Months Ended		Nine Months Ended
	September 30, 2024		September 30, 2024
Interest expense	$	13,625	$	25,921
Accretion of original issue discount		294		628
Amortization of deferred financing costs		548		1,052
Total Interest Expense	$	14,467	$	27,601

Total interest expense in the table above does not include the effect of the interest rate swaps related to the 2029 Notes and 2030 Notes. During the three and nine months ended September 30, 2024, the Company received $13.1 million and $24.5 million, respectively, and paid $16.1 million and $30.2 million, respectively, related to the settlements of its interest expense in the Company's Consolidated Statement of Operations. See Note 5 for further information about the Company's interest rate swap.

As of September 30, 2024, the components of the carrying value of the 2029 Notes and 2030 Notes and the stated interest rates were as follows.

	September 30, 2024
	2029 Notes			2030 Notes
Principal amount of debt	$	750,000		$	600,000
Original issue discount, net of accretion		(5,993	)		(948	)
Deferred financing costs		(8,727	)		(7,273	)
Fair value of an effective hedge		22,547			(3,224	)
Carrying value of debt	$	757,827		$	588,555
Stated interest rate		6.50	%		5.75	%

The stated interest rate in the table above does not include the effect of the interest rate swaps. As of September 30, 2024, the Company's swap-adjusted interest rate on the 2029 Notes was SOFR plus 2.45% (on a weighted average basis). As of September 30, 2024, the Company's swap-adjusted interest rate on the 2030 Notes was SOFR plus 2.55%.

As of September 30, 2024, the Company was in compliance with the terms of the indentures governing the 2029 Notes and 2030 Notes.

In accordance with the 1940 Act, with certain limitations, the Company is allowed to borrow amounts such that its asset coverage, as defined in the 1940 Act, is at least 150% after such borrowing. As of September 30, 2024 and December 31, 2023, the Company's asset coverage was 187.4% and 245.6%, respectively.

Debt obligations consisted of the following as of September 30, 2024 and December 31, 2023:

	September 30, 2024
	Aggregate Principal Amount Committed		Outstanding Principal		Amount Available (1)		Carrying Value (2)(3)
Subscription Facility	$	1,500,000	$	951,311	$	548,689	$	947,143
Revolving Credit Facility		1,425,000		1,234,411		184,649		1,225,205
2029 Notes		750,000		750,000		—		757,827
2030 Notes		600,000		600,000		—		588,555
Total Debt	$	4,275,000	$	3,535,722	$	733,338	$	3,518,730

(1)The amount available may be subject to limitations related to the borrowing base under the Subscription Facility, Revolving Credit Facility, outstanding letters of credit issued and asset coverage requirements.

(2)The carrying values of the Subscription Facility, Revolving Credit Facility, the 2029 Notes and 2030 Notes are presented net of the combination of deferred financing costs and original issue discounts totaling $4.2 million, $9.2 million, $14.7 million and $8.2 million, respectively.

(3)The carrying value of the 2029 Notes and 2030 Notes are presented inclusive of an incremental $22.5 million and $(3.2) million, respectively, which represents an adjustment in the carrying value of the 2029 Notes and 2030 Notes, resulting from a hedge accounting relationship.

	December 31, 2023
	Aggregate Principal Amount Committed		Outstanding Principal		Amount Available (1)		Carrying Value (2)
Subscription Facility	$	1,500,000	$	1,054,733	$	445,267	$	1,051,033
Revolving Credit Facility		725,000		193,282		526,218		188,829
Total Debt	$	2,225,000	$	1,248,015	$	971,485	$	1,239,862

(1)The amount available may be subject to limitations related to the borrowing base under the Subscription Facility, the Revolving Credit Facility and asset coverage requirements.

(2)The carrying values of the Subscription Facility and the Revolving Credit Facility are presented net deferred financing costs of $3.7 million and $4.5 million, respectively.

For the three and nine months ended September 30, 2024 and 2023, the components of interest expense were as follows:

	Three Months Ended						Nine Months Ended
	September 30, 2024			September 30, 2023			September 30, 2024			September 30, 2023
Interest expense	$	44,129		$	18,233		$	117,690		$	39,563
Commitment fees		941			755			2,376			2,403
Amortization of deferred financing costs		1,606			1,423			5,724			3,690
Accretion of original issue discount		294			—			628			—
Swap settlement		3,021			—			5,676			—
Total Interest Expense	$	49,991		$	20,411		$	132,094		$	45,656
Average debt outstanding (in millions)	$	2,598.9		$	1,005.6		$	2,252.9		$	733.1
Weighted average interest rate		7.3	%		7.3	%		7.3	%		7.2	%