UPDATE: Bank of America Downgrades TPG Specialty Lending to Neutral, Raises PT as Bullish Thesis Has Largely Played Out

In a report published Monday, Bank of America analyst Kenneth Bruce downgraded the rating on TPG Specialty Lending (NYSE: TSLX) from Buy to Neutral, but raised the price target from $18.50 to $22.00.In the report, Bank of America noted, “TSLX's operating performance has been strong with investment activity and yields coming in at the high-end of our bullish expectations, thus boosting sentiment and valuation to the high-end of the valuation range for BDC peers. At 1.45x NAV, valuation reflects healthy fundamentals, limited interest rate risk and strong technicals, in our view, relative to peers that are valued at 1.06x on average. Despite a seemingly fully valuation, we anticipate stable price performance in the near-term, given the favorable technical backdrop. Specifically, limited float and no-borrow on the stock has created a one-way market, in our view, that could persist until the end of the current lock-up period in mid-September. As such, we think TSLX is well supported by its strong ROE, NAV inflation potential and premium valuation over the near-term and will look to generate decent income distributions of roughly 7% for the foreseeable future.”TPG Specialty Lending closed on Friday at $22.43.