(The following statement was released by the rating agency)
CHICAGO, March 27 (Fitch) Fitch Ratings expects to rate Fifth
Corp's (FSC) senior unsecured notes 'BBB-'. Proceeds are
expected to be used to
pay down draws on the company's credit facilities and for
purposes, including working capital requirements. Fitch does
not expect the
issuance to have a material impact on leverage. A full list of
rating actions is
at the end of this rating action commentary.
RATING ACTION RATIONALE
The expected rating is equalized with the ratings assigned to
senior unsecured debt as the new notes will rank equally in the
structure. The equalization of the unsecured ratings with the
rating reflects FSC's relatively low leverage, its focus on
investments, and Fitch's expectation that proceeds from the
issuance will be
used to repay a portion of secured debt outstanding, thus
increasing the amount
of unsecured funding in the capital structure.
KEY RATING DRIVERS
FSC's ratings and Stable Outlook reflect Fitch's expectations
consistent operating performance in 2013, as revolver capacity
proceeds are redeployed into cash-yielding investments with
risk-adjusted returns, and the maintenance of solid asset
liquidity, and strong dividend coverage from net investment
Positive rating momentum could be influenced by consistent
performance, further portfolio diversification, stronger cash
of the dividend, and continued economical access to the
through market cycles.
Negative rating action could be driven by an increase in
leverage above the
targeted range, resulting from material unrealized depreciation,
increase in the proportion of equity holdings without a
commensurate decline in
leverage. Declines in operating performance, a prolonged
increase in non-accrual
levels and weaker dividend coverage would also be viewed
unfavorably from a
Headquartered in White Plains, NY, FSC is an externally managed
development company, formed in 2007 with an objective to
generate both current
income and capital appreciation through debt and equity
investments. As of Dec.
31, 2012, the company had investments in 92 portfolio companies
approximately $1.6 billion at fair value.
Fitch assigns the following rating:
Fifth Street Finance Corporation:
-- Senior unsecured notes 'BBB- (Exp)'.
Fitch currently rates FSC as follows:
-- Long-term Issuer Default Rating (IDR) 'BBB-';
-- Secured debt 'BBB-;
-- Unsecured debt 'BBB-'.
70 W. Madison Street
Chicago, IL 60602
Meghan Neenan, CFA
Media Relations: Brian Bertsch, New York, Tel: +1 212-908-0549,
Additional information is available at 'www.fitchratings.com'.
The ratings above
were solicited by, or on behalf of, the issuer, and therefore,
Fitch has been
compensated for the provision of the ratings.
Applicable Criteria and Related Research:
--'Global Financial Institutions Criteria' (Aug. 15, 2012);
--'Investment Manager and Alternative Funds Criteria' (Dec. 17,
Applicable Criteria and Related Research
Investment Manager and Alternative Funds Criteria
Global Financial Institutions Rating Criteria
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