Financial Data and Key Metrics Changes - For the September quarter, the company's net investment income (NII) was $79.4 million, equating to $0.17 per common share, with a net asset value of $3 billion or $6.45 per common share [4] - The net debt to total assets ratio stood at 28.2%, with unsecured debt plus unsecured perpetual preferred accounting for 80.8% of total debt plus preferred [4] - Monthly common shareholder distributions of $0.045 per share were announced for November, December, and January, totaling over $4.6 billion distributed since the IPO [4] Business Line Data and Key Metrics Changes - The company has increased its focus on first lien senior secured middle market loans, with the first lien mix rising by 701 basis points to 71.1% from June 2024 [5] - The second lien senior secured middle market loans mix decreased by 292 basis points to 13.5%, while subordinated structured notes decreased by 808 basis points to 0.3% [5][8] - Investments during the quarter included a new investment in The Ridge, a healthcare services provider, and follow-on investments in existing portfolio companies [8] Market Data and Key Metrics Changes - As of September 2025, the company held 92 portfolio companies across 32 different industries, with an aggregate fair value of $6.5 billion [7] - The middle market lending strategy represented 85% of investments at cost, an increase of 864 basis points from June 2024 [7] - The real estate property portfolio at National Property REIT Corp represented 14% of investments at cost, with an unlevered investment level gross cash IRR of 24% since inception [9] Company Strategy and Development Direction - The company is repositioning its business by rotating assets into first lien senior secured loans and focusing on companies with less than $50 million of EBITDA, where competition is lower [5][10] - Future asset sale proceeds are expected to be redeployed primarily into more first lien senior secured loans and selected equity-linked investments [10] - The company aims to enhance portfolio company operations and utilize a cost-efficient floating rate revolver [6] Management's Comments on Operating Environment and Future Outlook - Management highlighted a strong recurring revenue profile, with interest income making up 97% of total investment income [10] - Non-accruals as a percentage of total assets stood at approximately 0.7% based on fair market value, indicating a focus on capital preservation [10] - The company is optimistic about the future, focusing on smaller companies in the lower middle market to achieve higher yields [21] Other Important Information - The company completed the institutional issuance of approximately $168 million in senior unsecured notes due 2030, primarily for refinancing existing indebtedness [12] - As of September, the combined balance sheet cash and undrawn revolving credit facility commitments stood at $1.5 billion, with $4.2 billion of unencumbered assets [12] - The weighted average cost of unsecured debt financing was 4.54% as of September 30, 2025 [13] Q&A Session Summary Question: Inquiry about equity-linked rotation and consumer finance holdings - Management indicated a preference for first lien and senior secured loans, with a focus on optimizing the portfolio by evaluating each investment based on foregone yield and IRR [16][19] - The company is actively rotating appreciated assets into more income-producing properties, particularly in real estate, while maintaining a thoughtful approach to asset sales [20][22] Question: Discussion on the Israeli bond and unsecured financing - Management confirmed that the Israeli bond issuance is a new channel and not a one-off, with plans to continue expanding their presence in diversified financing [29][30] - The company emphasized the importance of diversified funding sources to mitigate counterparty risk and maintain a strong credit profile [32][33]

Financial Performance - Net Investment Income (NII) for the quarter ended September 30, 2025, was $79,350,000, a decrease of 11.7% from $89,877,000 in the same quarter of 2024[2] - Net Income applicable to common shareholders was $48,087,000, compared to a loss of $165,069,000 in the same quarter of 2024[2] - Total interest income (excluding PIK interest income) for the three months ended September 30, 2025, was $136,978,000, down from $151,471,000 for the same period in 2024, a decrease of about 9.6%[25] - Net investment income for the three months ended September 30, 2025, was $79,350,000, compared to $89,877,000 for the same period in 2024, reflecting a decline of approximately 11.7%[25] - The net increase in net assets resulting from operations applicable to common stockholders for the three months ended September 30, 2025, was $48,087,000, compared to a loss of $165,069,000 for the same period in 2024[25] - Total operating expenses decreased to $78,274,000 for the three months ended September 30, 2025, down from $106,431,000 for the same period in 2024, a reduction of about 26.4%[25] - The diluted net increase from operations applicable to common stockholders was $0.08 for the three months ended September 30, 2025, compared to a diluted net decrease of $0.38 for the same period in 2024[26] Asset and Investment Overview - Total assets decreased to $6,641,870,000 from $7,592,705,000 year-over-year, reflecting a decline of 12.5%[2] - Total investments at fair value decreased to $6,513,456,000 as of September 30, 2025, from $6,673,516,000 as of June 30, 2025, representing a decline of approximately 2.4%[23] - Control investments at fair value increased to $3,710,632,000 as of September 30, 2025, from $3,696,367,000 as of June 30, 2025, reflecting a growth of about 0.4%[23] - The first lien senior secured loans increased to 71.1% of the investment portfolio, up 701 basis points from June 2024[6] - The company primarily invests in private, middle-market companies in the U.S. with annual revenues of less than $750 million and enterprise values of less than $1 billion[28] - The typical investment involves a senior and secured loan of less than $250 million, focusing on capital for refinancings, acquisitions, and growth initiatives[28] - The company also invests in senior and secured debt and controlling equity positions in real estate investment trusts (REITs), generating current yields from developed properties[30] Cash and Distributions - The company declared monthly cash distributions of $0.0450 per share for November 2025, December 2025, and January 2026, totaling approximately $4.6 billion in cumulative distributions since inception[3] - Cash and cash equivalents increased to $86,541,000 as of September 30, 2025, from $50,788,000 as of June 30, 2025, marking a significant increase of approximately 70.5%[23] - The dividend payable decreased to $21,288,000 as of September 30, 2025, from $28,836,000 as of June 30, 2025, a decline of approximately 26.4%[23] - Total distributions to common stockholders were $0.14 per share for the three months ended September 30, 2025, down from $0.18 per share in the same period of 2024[26] Debt and Financing - The weighted average cost of unsecured debt financing was 4.54%, reflecting an increase of 0.02% from the previous quarter[17] - The company has a total of $2.1 billion in revolving credit facility commitments, with $2.4 million remaining of debt maturing during calendar year 2025[13] Net Asset Value - The net asset value (NAV) per common share decreased to $6.45 from $8.10 year-over-year[2] - The net asset value per common share as of September 30, 2025, was $6.45, down from $6.56 as of June 30, 2025, indicating a decrease of approximately 1.7%[23] - Net asset value per common share decreased from $8.74 at the beginning of the period to $6.45 at the end of the period, representing a decline of approximately 26.2%[26] Future Outlook - Forward-looking statements made by the company are subject to various risks and uncertainties, and actual results may vary materially from those projected[35] - The internal rate of return (IRR) calculations are gross of general expenses and are historical results, not necessarily indicative of future performance[27] Corporate Events - The company will host an earnings call on November 7, 2025, at 9:00 a.m. Eastern Time[21]

Investment Activity - For the three months ended September 30, 2025, the company acquired $20,048 in new investments and completed follow-on investments totaling approximately $50,170, resulting in gross investment originations of $91,567[515]. - The company received full repayments totaling $82,219 and recorded repayments of approximately $234,660 during the same period[515]. - Total investments in portfolio companies decreased to $91,567 in Q3 2025 from $290,639 in Q3 2024, representing a decline of 68.5%[530]. - Investments in new portfolio companies significantly dropped to $20,048 in Q3 2025 compared to $213,056 in Q3 2024, a decrease of 90.6%[530]. - Total investments repaid or sold increased to $234,660 in Q3 2025 from $282,328 in Q3 2024, marking a rise of 18.5%[530]. Portfolio Composition - As of September 30, 2025, the company has $6,513,456, or 216.8% of its net assets applicable to common shares, invested in 92 portfolio investments and CLOs[522]. - As of September 30, 2025, total investments amounted to $6,532,842, with a portfolio fair value of $6,513,456, showing a slight increase from $6,693,501 and $6,673,516 as of June 30, 2025[526]. - Control investments represented 52.3% of the portfolio fair value at $3,710,632, while non-control/non-affiliate investments accounted for 47.5% at $2,772,003 as of September 30, 2025[526]. - The consumer finance sector represented 11.4% of the total investments with a fair value of $1,047,551, an increase from 16.1% as of June 30, 2025[528]. - Residential real estate investment trusts (REITs) accounted for 14.2% of the portfolio fair value at $1,245,263, down from 19.1% in the previous quarter[528]. Investment Performance - The annualized current yield across all performing interest-bearing investments was 11.8% as of September 30, 2025, compared to 12.2% as of June 30, 2025[523]. - The total interest-bearing investments reached $5,554,987, with a fair value of $5,068,460 as of September 30, 2025[527]. - Investment income for the three months ended September 30, 2025, was $157,624, a decrease of 19.7% from $196,308 in 2024[584]. - Net investment income decreased to $79,350 for the three months ended September 30, 2025, down 11.4% from $89,877 in 2024[584]. - The net change in unrealized gains for the portfolio was $599 for the three months ended September 30, 2025, a significant improvement from a loss of $123,767 in the same period of 2024[604]. Debt and Financing - As of September 30, 2025, the company's debt consists of a Revolving Credit Facility, Public Notes, and Prospect Capital InterNotes®[564]. - As of September 30, 2025, the total outstanding debt was $1,935,415, with a net carrying value of $1,921,191[565]. - The Revolving Credit Facility has commitments of $2,121,500, with an accordion feature allowing increases up to $2,250,000, maturing on June 28, 2029[569]. - The company borrowed $215,000 and made repayments totaling $387,743 under the Revolving Credit Facility during the three months ended September 30, 2025[610]. - The company has $678,827 available for borrowing under the Revolving Credit Facility as of September 30, 2025[570]. Preferred Stock and Dividends - The company is no longer offering several series of preferred stock, focusing on the 7.50% Preferred Stock for future offerings[613]. - The preferred stock dividend reinvestment plan allows holders to reinvest dividends at a price of $25.00 for certain series and $23.75 for others if they elect to do so[616]. - The company declared monthly dividends for its 7.50% Preferred Stock at $0.156250 per share for December 2025, January 2026, and February 2026[657]. - The company announced monthly dividends for its Floating Rate Preferred Stock at $0.135417 per share for December 2025, January 2026, and February 2026[657]. - The company’s common stock dividends are set at $0.0450 per share for November 2025, December 2025, and January 2026[658]. Risk and Compliance - The company is subject to financial market risks, including changes in interest rates and equity price risk, due to geopolitical uncertainties[678]. - Interest rate sensitivity may materially affect the company's net investment income due to floating interest rates on loans[679]. - The company is in compliance with the financial covenants of the Deed of Trust as of September 30, 2025[661]. - Legal and other restrictions on resale may affect the liquidity of the company's investments[675]. - Changes in the market environment may cause realized gains or losses on investments to differ from unrealized gains or losses[676].

Core Viewpoint - Prospect Capital Corporation reported its financial results for the fiscal quarter ending September 30, 2025, showing a net investment income of $79.35 million, a slight increase from the previous quarter, but a decrease compared to the same quarter last year. The company also declared distributions to common shareholders and highlighted its investment strategy focusing on first lien senior secured loans and real estate investments. Financial Results - Net Investment Income ("NII") for the quarter was $79,350,000, compared to $79,043,000 in the previous quarter and $89,877,000 in the same quarter last year [2] - NII per Common Share remained at $0.17, unchanged from the previous quarter but down from $0.21 year-over-year [2] - Total Assets decreased to $6,641,870,000 from $6,804,938,000 in the previous quarter and $7,592,705,000 year-over-year [2] - Net Income applicable to Common Shareholders was $48,087,000, a significant recovery from a loss of $226,369,000 in the previous quarter and a loss of $165,069,000 in the same quarter last year [2] - Distributions to Common Shareholders totaled $62,393,000, slightly up from $61,181,000 in the previous quarter but down from $77,358,000 year-over-year [2] Investment Strategy - The company has focused on first lien senior secured middle market loans, increasing its first lien mix by 701 basis points to 71.1% from June 2024 [7] - The second lien senior secured middle market loans decreased by 292 basis points to 13.5% [7] - The company exited its subordinated structured notes portfolio, reducing its mix to 0.3% [7] - Investments in real estate properties have yielded an unlevered investment-level gross cash IRR of 24% since the inception of this strategy in 2012 [9] Portfolio Update - Total Investments as of September 30, 2025, were $6,532,842,000, down from $6,693,501,000 in the previous quarter and $7,329,338,000 year-over-year [12] - The number of portfolio companies decreased to 92 from 97 in the previous quarter and 117 year-over-year [12] - The annualized current yield for all investments was 9.1%, down from 9.6% in the previous quarter [12] Capital and Liquidity - The company has a diversified funding profile, including a $2.1 billion revolving credit facility and various debt instruments [15] - On October 30, 2025, the company completed an institutional issuance of approximately $168 million in senior unsecured notes due 2030 [16] - The weighted average cost of unsecured debt financing was 4.54%, reflecting a slight increase from the previous periods [20] Dividend Information - The company declared monthly cash distributions of $0.0450 per share for November 2025, December 2025, and January 2026 [5] - Cumulative distributions to common shareholders since inception amount to approximately $4.6 billion, with $21.79 per share distributed [5]

Core Viewpoint - Prospect Capital Corporation has successfully priced an institutional offering of approximately $167 million in 5.5% Series A Notes due 2030, indicating strong interest from institutional investors and enhancing its financing sources [1][2]. Group 1: Offering Details - The offering consists of 5.5% Series A Notes with an aggregate principal amount of approximately $167 million, maturing on December 31, 2030 [1][4]. - The Notes will bear interest at a rate of 5.5% per annum, payable quarterly starting March 31, 2026 [2]. - The offering is expected to close on October 30, 2025, with trading on the Tel Aviv Stock Exchange commencing on November 2, 2025 [4]. Group 2: Financial Structure - The Notes are general senior unsecured obligations of Prospect and will rank equally with existing and future senior unsecured debt [3]. - The Notes are rated ilAA- by S&P Global Ratings Maalot Ltd., indicating a strong credit quality [5]. Group 3: Company Overview - Prospect Capital Corporation is a business development company that primarily lends to and invests in middle market privately-held companies, aiming for both current income and long-term capital appreciation [7].

Group 1 - Prospect Capital (NASDAQ: PSEC) is focusing on optimizing its operating footprint while maintaining current dividend coverage, which may help recover positive sentiment for its common shares despite ongoing NAV erosion [1] - The equity market is characterized by daily price fluctuations that can lead to significant long-term wealth creation or destruction [1] - Pacifica Yield aims to create long-term wealth by targeting undervalued high-growth companies, high-dividend stocks, REITs, and green energy firms [1]

Core Insights - Artificial intelligence (AI) is identified as the greatest investment opportunity of the current era, with a strong emphasis on the urgent need for energy to support its growth [1][2][3] - The demand for energy from AI technologies is expected to surge, leading to a potential crisis in power supply and rising electricity prices [2][3][7] - A specific company is highlighted as a key player in the energy sector, poised to benefit from the increasing energy demands of AI data centers [3][6][8] Energy Demand and Infrastructure - AI technologies, particularly large language models like ChatGPT, consume energy equivalent to that of a small city, raising concerns about the sustainability of current power grids [2][3] - The company in focus owns critical nuclear energy infrastructure assets, positioning it strategically within the U.S. energy landscape [7][8] - The company is capable of executing large-scale engineering, procurement, and construction (EPC) projects across various energy sectors, including oil, gas, and renewables [7][8] Financial Position and Market Potential - The company is noted for being debt-free and holding a significant cash reserve, which is nearly one-third of its market capitalization [8][10] - It has an equity stake in another AI-related company, providing investors with indirect exposure to multiple growth opportunities in the AI sector [9][10] - The stock is described as undervalued, trading at less than seven times earnings, which presents a compelling investment opportunity [10][11] Market Trends and Future Outlook - The ongoing trends of onshoring and increased U.S. LNG exports are expected to drive demand for the company's services, particularly under the current political climate [5][7][14] - The influx of talent into the AI sector is anticipated to lead to rapid advancements and innovative ideas, further solidifying AI's role as a disruptive force in traditional industries [12][13] - The overall sentiment is that investing in AI and its supporting infrastructure is crucial for capitalizing on future growth opportunities [11][15]

Core Insights - Prospect Capital CEO John Barry acquired 384,000 shares at an average price of approximately $2.66 each, indicating a strong personal investment in the company [4] - Following this acquisition, Barry's total holdings in Prospect Capital have reached 84.4 million shares, representing about 18% of the company [4]

Core Viewpoint - Prospect Capital Corp. (NASDAQ: PSEC) presents an attractive investment opportunity due to its significant discount to net asset value and a yield exceeding 20%, appealing particularly to income-focused investors [1]. Group 1: Investment Appeal - The current discount to net asset value for Prospect Capital Corp. makes it a tempting option for investors seeking income [1]. - The yield of over 20% is highlighted as a key factor that may attract income-focused investors [1]. Group 2: Investor Profile - The article reflects a perspective aimed at helping lower and middle-class workers build investment portfolios centered on high-quality, dividend-paying companies [1]. - The author emphasizes a buy-and-hold investment strategy, prioritizing quality over quantity in stock selection [1].

Core Viewpoint - Prospect Capital Corp. (NASDAQ: PSEC) presents an attractive investment opportunity due to its significant discount to net asset value and a yield exceeding 20%, appealing particularly to income-focused investors [1]. Group 1 - The company is characterized as a lower-quality investment, which may tempt investors seeking high yields [1]. - The current yield of over 20% is highlighted as a key factor for income-focused investors [1]. - The article emphasizes the importance of conducting due diligence before making investment decisions [1]. Group 2 - The author expresses a personal investment philosophy focused on quality blue-chip stocks, BDCs, and REITs, aiming to supplement retirement income through dividends [1]. - There is a goal to assist lower and middle-class workers in building high-quality, dividend-paying investment portfolios [1].