OREANDA-NEWS. Fitch Ratings has affirmed Fifth Street Finance Corp.'s (FSC) Long-term Issuer Default Rating (IDR), secured debt rating, and unsecured debt rating at 'BB+'. The Rating Outlook remains Negative. A complete list of affected ratings follows at the end of this release.

On Feb. 22, 2015, Fitch downgraded FSC's Long-term IDR to 'BB+' from 'BBB-', removed the Rating Watch Negative, and assigned a Negative Rating Outlook. For more information on this rating action, please see the rating action commentary entitled 'Fitch Downgrades Fifth Street Finance Corp.'s Ratings to 'BB+'; Outlook Negative'. There has been no material change in FSC's credit profile since the previous rating actions.

Today's affirmations are being taken in conjunction with a broader industry review, which includes 10 business development companies (BDCs). For more commentary on the broader sector review, please see the release, 'Fitch Takes Several Negative Rating Actions Following BDC Peer Review', available at www.fitchratings.com.

KEY RATING DRIVERS

The rating affirmations reflect the absence on material changes in FSC's credit profile since the downgrade on Feb. 22, 2015. The rating downgrade at that time reflected FSC's higher leverage levels, combined with increased portfolio risk, an inconsistent dividend policy, material portfolio growth in a very competitive underwriting environment, asset quality deterioration, and weaker operating performance.

The Negative Rating Outlook reflects longer-term uncertainties relating to management's fundamental risk appetite regarding leverage, portfolio risk, growth, and dividend management.

RATING SENSITIVITIES

The ratings could be adversely affected by further deterioration in asset quality, which yields sizeable realized losses and prevents the firm from reducing leverage to a level commensurate with its risk profile. A reduction in dividend coverage, a weakening liquidity profile, and/or an equity market discount that puts the firm at a competitive disadvantage could also drive negative rating momentum.

Resolution of the Negative Outlook could develop over time based on a track record of sufficient dividend coverage, solid credit performance of post-crisis vintages, improved operating consistency, and the maintenance of leverage at an appropriate level given the asset risk. The portfolio risk profile will be analyzed in the context of portfolio mix and diversity and underlying portfolio company leverage and yields.

Fitch has affirmed the following ratings:

Fifth Street Finance Corp.
--Long-term IDR at 'BB+';
--Secured Debt at 'BB+';
--Unsecured Debt at 'BB+'.

The Rating Outlook is Negative.