Trinity’s weighted average cost of debt declines by 40 bps during Q4

By Devika Patel

Knoxville, Tenn., March 4 – Trinity Capital Inc. saw its weighted average cost of debt fall 40 basis points last quarter and also sold $75 million of new notes in December.

“For Q4, our weighted average cost of debt, including interest and fee amortization was 6.7%, which was a 40-basis-point decrease from 7.1% in the previous quarter,” treasurer and chief financial officer David Lund said on the company’s fourth quarter and year ended Dec. 31, 2021 earnings conference call on Thursday.

“The decrease was primarily driven by the lower cost of our debt under our 4.375% August 2026 notes and 4.2% December 2026 notes,” Lund said.

In December 2021, the company closed a public offering of $75 million of 4.25% notes due 2026, which management reports will drive down Trinity’s cost of capital.

“Our major goal for 2021 was to strengthen our balance sheet and increase our funding capabilities to manage the growth that we are currently experiencing, while also positioning the company for continued growth in 2022,” chairman and chief executive officer Steven L. Brown said on the call.

“To that end, we made several moves in Q4, including issuing $75 million of 4.25% notes due in December 2026, adding our key bank credit facility and initiating an ATM program.

“Collectively, these moves will drive our cost of capital down while increasing our capacity to fuel our growth,” Brown said.

As of Dec. 31, 2021, the company had approximately $254.8 million in available liquidity, including $31.7 million in unrestricted cash and cash equivalents.

At the end of the quarter, the company had approximately $223.1 million in available borrowing capacity under its credit facilities with Credit Suisse and KeyBank.

On Dec. 10, Trinity sold $75 million of 4.25% senior notes (Egan-Jones: BBB) due Dec. 15, 2026 in line with talk.

The notes priced at par.

Initial price talk was 4.25%.

Keefe, Bruyette & Woods Inc. was the bookrunner.

Proceeds will be used to pay down the company’s credit facility. Any remaining proceeds will be used in accordance with the company’s investment objective and investment strategy.

Trinity Capital is a Phoenix-based specialty lending company.

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