Sixth Street Specialty Lending (TSLX) risk factors, 2026 10-K

Risks Related to Our Business and Structure

1. 01We are dependent upon management personnel of the Adviser, Sixth Street and their affiliates for our future success
2. 02Regulations governing our operation as a BDC affect our ability to, and the way in which we, raise additional capital
3. 03common stock and the rights of holders of shares of preferred stock to receive dividends would be senior to those of holders of shares of our common stock
4. 04We borrow money, which magnifies the potential for gain or loss and increases the risk of investing in us
5. 05Our indebtedness could adversely affect our business, financial condition or results of operations
6. 06Legislation allows us to incur additional leverage
7. 07We may default under our future credit facilities
8. 08Provisions in a credit facility may limit our investment discretion
9. 09We may invest through joint ventures, partnerships or other special purpose vehicles and our investments through these vehicles may entail greater risks, or risks that we otherwise would not incur, if we otherwise made such investments directly
10. 10We operate in a highly competitive market for investment opportunities
11. 11If we are unable to source investments, access financing or manage future growth effectively, we may be unable to achieve our investment objective
12. 12Even in the event the value of your investment declines, the Management Fee and, in certain circumstances, the Incentive Fee will still be payable to the Adviser
13. 13capital losses on the remaining investments in our portfolio during subsequent years. Incentive Fees earned in prior years cannot be clawed back even if we later incur losses
14. 14To the extent that we do not realize income or choose not to retain after-tax realized net capital gains, we will have a greater need for additional capital to fund our investments and operating expenses
15. 15We will be subject to corporate-level U.S. federal income tax if we are unable to maintain our qualification as a RIC under Subchapter M of the Code, including as a result of our failure to satisfy the RIC distribution requirements
16. 16our net tax-exempt income for that taxable year
17. 17We must derive at least 90% of our gross income for each taxable year from dividends, interest, gains from the sale of or other disposition of stock or securities or similar sources
18. 18We can be expected to retain some income and capital gains in excess of what is permissible for excise tax purposes and such amounts will be subject to 4% U.S. federal excise tax
19. 19We are exposed to risks associated with changes in interest rates
20. 20We may use interest rate risk management techniques in an effort to limit our exposure to interest rate fluctuations. These techniques may include various interest rate hedging activities to the extent permitted by the 1940 Act
21. 21Our Adviser and its affiliates, officers and employees may face certain conflicts of interest
22. 22Our ability to enter into transactions with our affiliates is restricted
23. 23The Adviser’s liability is limited under the Investment Advisory Agreement, and we are required to indemnify the Adviser against certain liabilities, which may lead the Adviser to act in a riskier manner on our behalf than it would when acting for its own account
24. 24The time and resources that individuals employed by the Adviser devote to us may be diverted and we may face additional competition due to the fact that individuals employed by the Adviser are not prohibited from raising money for or managing other entities that make the same types of investments that we target
25. 25Any failure to maintain our status as a BDC would reduce our operating flexibility
26. 26We incur significant costs as a result of being a publicly traded company
27. 27We may experience fluctuations in our quarterly results
28. 28Provisions of the General Corporation Law of the State of Delaware and our certificate of incorporation and bylaws could deter takeover attempts and have an adverse effect on the price of our common stock
29. 29Certain investors are limited in their ability to make significant investments in us
30. 30The Company may be restricted from initiating transactions as a result of the receipt of material non-public information
31. 31Non-public information received by one investment team within Sixth Street is likely to restrict trading on a firm-wide basis. As a result, the Company may, in certain circumstances, decline to receive non-public information regarding a company
32. 32Our Board may change our investment objective, operating policies and strategies without prior notice or stockholder approval
33. 33Changes in tax laws may adversely affect our business
34. 34We are subject to risks associated with artificial intelligence, including the application of various forms of artificial intelligence such as machine learning technology
35. 35Failure or alleged failure to comply with applicable data protection and privacy laws and regulations could subject us to ongoing costs and, in some cases, fines and reputational harm

Risks Related to Economic Conditions

1. 36Inflation may adversely affect our business
2. 37Trade negotiations and related government actions may create global supply chain issues and regulatory uncertainty for our portfolio companies and our investment strategy and adversely affect the profitability of our portfolio companies
3. 38current and future portfolio companies and adversely affect the revenues and profitability of portfolio companies whose businesses rely on goods imported from such impacted jurisdictions
4. 39We are currently operating in a period of disruption, volatility and uncertainty in the capital markets and in the economy generally
5. 40The current state of the economy and financial markets increases the likelihood of adverse effects on our financial position and results of operations
6. 41Uncertainty about financial stability could have a significant adverse effect on our business, results of operations and financial condition
7. 42Economic recessions or downturns could impair our portfolio companies and harm our operating results

Risks Related to Our Portfolio Company Investments

1. 43Our investments are very risky and highly speculative
2. 44the companies in which we invest may have difficulty accessing the capital markets to meet future capital needs, which may limit their ability to grow or to repay their outstanding indebtedness upon maturity
3. 45The lack of liquidity in our investments may adversely affect our business
4. 46Our portfolio may be focused on a limited number of portfolio companies or industries, which will subject us to a risk of significant loss if any of these companies defaults on its obligations under any of its debt instruments or if there is a downturn in a particular industry
5. 47We may securitize certain of our investments, which may subject us to certain structured financing risks
6. 48Because we generally do not hold controlling interests in our portfolio companies, we may not be in a position to exercise control over those portfolio companies or prevent decisions by management of those portfolio companies that could decrease the value of our investments
7. 49We may not be able to realize expected returns on our invested capital
8. 50By originating loans to companies that are experiencing significant financial or business difficulties, we may be exposed to distressed lending risks
9. 51Our portfolio companies may incur debt or issue equity securities that rank equally with, or senior to, our investments in those companies
10. 52We may be exposed to special risks associated with bankruptcy cases
11. 53reorganize and may be required to liquidate assets. The debt of companies in financial reorganization will, in most cases, not pay current interest, may not accrue interest during reorganization and may be adversely affected by an erosion of the issuer’s fundamental value
12. 54Our failure to make follow-on investments in our portfolio companies could impair the value of our investments
13. 55attempt to preserve or enhance the value of our investment
14. 56Any acquisitions or strategic investments that we pursue are subject to risks and uncertainties
15. 57We cannot guarantee that we will be able to obtain various required licenses in U.S. states or in any other jurisdiction where they may be required in the future
16. 58Our investments in foreign companies may involve significant risks in addition to the risks inherent in U.S. investments
17. 59We expose ourselves to risks when we engage in hedging transactions
18. 60movements in the portfolio positions being hedged may vary, as may the time period in which the hedge is effective relative to the time period of the related exposure
19. 61The market structure applicable to derivatives imposed by the Dodd-Frank Act may affect our ability to use over-the-counter (“OTC”) derivatives for hedging purposes
20. 62If we cease to be eligible for an exemption from regulation as a commodity pool operator, our compliance expenses could increase substantially
21. 63are not marketed to the public as a commodity pool or as a vehicle for trading in CFTC-regulated derivatives
22. 64Our portfolio investments may present special tax issues
23. 65There are certain risks associated with holding debt obligations that have original issue discount or payment-in-kind interest
24. 66OID instruments may have unreliable valuations because their continuing accruals require continuing judgments about the collectability of the deferred payments and the value of any associated collateral. OID income may also create uncertainty about the source of our cash dividends

Risks Related to Our Securities

1. 67There is a risk that investors in our common stock may not receive dividends or that our dividends may not grow over time
2. 68Investing in our securities may involve a high degree of risk
3. 69The market price of our common stock may fluctuate significantly
4. 70loss of a major funding source
5. 71We cannot assure you that the market price of shares of our common stock will not decline
6. 72Sales of substantial amounts of our common stock in the public market may have an adverse effect on the market price of our common stock
7. 73Our stockholders will experience dilution in their ownership percentage if they opt out of our dividend reinvestment plan
8. 74Purchases of our common stock by us under the Company 10b5-1 Plan may result in the price of our common stock being higher than the price that otherwise might exist in the open market
9. 75Purchases of our common stock by us under the Company 10b5-1 Plan may result in dilution to our net asset value per share
10. 76We are highly dependent on information systems and systems failures could significantly disrupt our business, which may, in turn, negatively affect the market price of our common stock and our ability to pay dividends
11. 77Changes in laws or regulations governing our operations may adversely affect our business
12. 78Economic and trade sanctions could make it more difficult or costly for us to conduct our operations or achieve our business objectives
13. 79The ongoing armed conflicts as a result of the Russian invasion of Ukraine and the conflict in the Middle East may have a material adverse impact on us and our portfolio companies
14. 80We are subject to risks related to sustainability matters