Fifth Street Finance Says Sees Substantial Cut in Non-Accruing Assets

Fifth Street Finance Corp. FSC released its September newsletter today. Pipeline Building as M&A Volumes Rise The cooler fall air is reinvigorating the M&A market. In the last several weeks, we began seeing a significant increase in middle market companies going to auction after a lackluster first half of calendar 2012. The increasing deal flow is driven by several sources: (1) sponsors' desire to close deals by the end of the year to show returns to their investors; (2) insufficient capacity from new CLOs, due to lower leverage levels, to refinance maturing loans from pre-credit crisis CLOs; (3) strategic buyers with large cash balances earning negligible returns; and (4) uncertainty over the election, economy, capital markets and tax policy. We expect Fifth Street will have strong originations in the December quarter as our pipeline continues to grow.