Market Overview

KBW Downgrades THL Credit To Market Perform, Says Dividend Cut 'Necessary'

KBW Downgrades THL Credit To Market Perform, Says Dividend Cut 'Necessary'

KBW has downgraded THL Credit, Inc. (NASDAQ: TCRD) to Market Perform from Outperform citing weaker credit quality and the potential risk of dividend cut.

"Credit quality deteriorated which reduced book value and pressured earnings. The combination of weaker credit quality and lower portfolio yields as TCRD moves into more secure loans has pressured earnings to the point where we believe a dividend cut is warranted and will occur," analyst Ryan Lynch wrote in a note.

"We believe TCRD's ability to cover the dividend will become challenged once their portfolio value stabilizes and TCRD's incentive fee turns back on. We estimate TCRD's earnings will be $1.25 versus the $1.36 dividend, when incentive fees return. As such, we believe a dividend cut is in TCRD's future," Lynch continued.

Related Link: Keefe Bruyette & Woods Downgrades THL Credit to Market Perform, Lowers PT to $11.50

Lynch noted that two new portfolio companies (4 loans) were placed on non-accrual status, increasing THL's non-accruals to 7.6 percent in the second quarter, up from 2.8 percent in the prior quarter. Additionally, book value declined 2.9 percent to $11.88 due to portfolio depreciation.

Meanwhile, the analyst raised his 2016 EPS estimate to $1.49 from $1.40 on estimated reduction of incentive fee in the second half of 2016.

However, Lynch cut the price target by $1 to $11.50.

Do you have ideas for articles/interviews you'd like to see more of on Benzinga? Please email with your best article ideas. One person will be randomly selected to win a $20 Amazon gift card!

Latest Ratings for TCRD

Mar 2019UpgradesUnderperformMarket Perform
Nov 2018DowngradesOutperformMarket Perform
Mar 2018MaintainsHoldHold

View More Analyst Ratings for TCRD
View the Latest Analyst Ratings

Posted-In: KBW Ryan LynchAnalyst Color Downgrades Price Target Analyst Ratings


Related Articles (TCRD)

View Comments and Join the Discussion!

Latest Ratings

IBMWells FargoMaintains140.0
PNCWells FargoMaintains147.0
TWOUDA DavidsonMaintains17.0
IDYAOppenheimerInitiates Coverage On17.0
View the Latest Analytics Ratings
Don't Miss Any Updates!
News Directly in Your Inbox
Subscribe to:
Benzinga Trading Daily
Get pre-market outlook, mid-day update and after-market roundup emails in your inbox.
Market in 5 Minutes
Everything you need to know about the market - quick & easy.
Daily Analyst Rating
A summary of each day’s top rating changes from sell-side analysts on the street.
Thank You

Thank you for subscribing! If you have any questions feel free to call us at 1-877-440-ZING or email us at

Nevro Initiated With Buy Rating At Bank Of America

How Much Money Did Delta Lose Because Of Today's Power Outage?