This Day On The Street
Continue to site right-arrow
This account is pending registration confirmation. Please click on the link within the confirmation email previously sent you to complete registration.
Need a new registration confirmation email? Click here

Fifth Street Finance Corp. Releases Its Newsletter For September 2012

2013 May Bring Infrastructure Spending

The upcoming election and fiscal cliff should focus investors on the challenges of fiscal policy and the dysfunction in Washington, D.C. However, we believe one area of spending has bipartisan support and should benefit after the election in 2013 -- infrastructure. Fifth Street's largest equity investment, Traffic Solutions Corporation (formerly Traffic Control & Safety Corporation), is one of the biggest independent traffic control and highway safety products and services companies in California and Hawaii. Fifth Street recently shepherded the company through a financial restructuring that ultimately saved approximately 300 jobs. Operating performance is stabilizing and should benefit significantly if the Federal government allocates more funds for domestic transportation. Fifth Street owns a majority of the equity of Traffic Solutions Corporation.

Value of the Platform

The benefits of an established origination platform are clear in this environment. Sponsors value structuring expertise, due diligence capabilities, market insight and committed hold sizes. Fifth Street's value proposition resonates with sponsors, combined with our ability to hold any piece of the debt capital structure including a one-stop transaction underwritten up to $100 million. These capabilities are providing us with an active deal pipeline. Mezzanine still represents the best risk adjusted return as more capital is flowing to first lien than mezzanine. For example, mezzanine yields are about 800 basis points wider than first lien yields versus a historic average of 500-700 basis points. 

Capital Raise Positions Us for Growth

Our growing pipeline now points to a potentially record December quarter in gross originations. To fund anticipated growth and improve our access to debt capital, we raised $91 million in a secondary offering this month. The offering was relatively small as a percent of market capitalization, and combined with the growing pipeline should keep us consistent with our pledge to not jeopardize our ability to cover the dividend with net investment income. The execution of the deal and positive stock performance after pricing are indicative of the strong level of demand for Fifth Street shares.  

2 of 4

Check Out Our Best Services for Investors

Action Alerts PLUS

Portfolio Manager Jim Cramer and Director of Research Jack Mohr reveal their investment tactics while giving advanced notice before every trade.

Product Features:
  • $2.5+ million portfolio
  • Large-cap and dividend focus
  • Intraday trade alerts from Cramer
Quant Ratings

Access the tool that DOMINATES the Russell 2000 and the S&P 500.

Product Features:
  • Buy, hold, or sell recommendations for over 4,300 stocks
  • Unlimited research reports on your favorite stocks
  • A custom stock screener
Stocks Under $10

David Peltier uncovers low dollar stocks with serious upside potential that are flying under Wall Street's radar.

Product Features:
  • Model portfolio
  • Stocks trading below $10
  • Intraday trade alerts
14-Days Free
Only $9.95
14-Days Free
To begin commenting right away, you can log in below using your Disqus, Facebook, Twitter, OpenID or Yahoo login credentials. Alternatively, you can post a comment as a "guest" just by entering an email address. Your use of the commenting tool is subject to multiple terms of service/use and privacy policies - see here for more details.
Submit an article to us!


DOW 17,698.18 -77.94 -0.44%
S&P 500 2,059.69 -8.20 -0.40%
NASDAQ 4,880.2280 -20.6570 -0.42%

Partners Compare Online Brokers

Free Reports

Top Rated Stocks Top Rated Funds Top Rated ETFs