Core Viewpoint - Prospect Capital Corporation has successfully extended and increased its revolving credit facility commitments, reflecting strong support from a diverse group of banks, which positions the company favorably for future investments and financing needs [1][2][4]. Group 1: Credit Facility Details - The total commitments for the revolving credit facility now aggregate to $2.1215 billion, supported by 48 banks with a combined asset base exceeding $7.5 trillion, marking it as the largest number of lenders for any business development company's credit facility [2]. - The facility includes an accordion feature that allows for an increase in total commitments up to $2.25 billion [2]. - The term of the facility spans five years from the initial closing, maturing on June 28, 2029, with a revolving period lasting four years until June 28, 2028, followed by a one-year amortization period [3]. Group 2: Company Overview - Prospect Capital Corporation operates as a business development company, focusing on lending to and investing in private businesses, aiming to generate current income and long-term capital appreciation through both debt and equity investments [5]. - The company has elected to be treated as a business development company under the Investment Company Act of 1940, complying with various regulatory requirements [6].

Core Insights - Prospect Capital Corporation has surpassed its 20th anniversary and is recognized as one of the largest publicly traded business development companies (BDCs) with total assets of $7.9 billion as of the end of the recent fiscal year [1] - The company has invested over $20 billion and has achieved more than 300 portfolio company exits throughout its history [1] Company Background - Founded in 2004, Prospect is one of the few BDCs established before the Global Financial Crisis, distinguishing it from many other BDCs with shorter histories [2] - Prospect is managed by Prospect Capital Management, which has over 120 employees and a nearly 37-year history of managing risk and investor capital through three major business cycles [3] Industry Innovations - Prospect has been an innovator in the BDC industry, achieving several firsts, including: - First BDC to receive an investment grade rating post the Global Financial Crisis, starting with S&P in November 2009 and currently holding five such ratings [3] - First BDC to acquire another BDC (Patriot Capital in December 2009) [3] - First BDC to complete at-the-market issuance programs for common stock (beginning March 2010) and listed senior unsecured notes (beginning July 2018) [3] - First BDC to issue a convertible bond (December 2010) and medium-term program notes (February 2012) [3] - First BDC to issue senior unsecured institutional notes post the Global Financial Crisis (March 2013) [3] - First BDC to issue non-traded perpetual preferred stock to unaffiliated investors (October 2020) and traded perpetual preferred stock (July 2021) [3] Investment Focus - Prospect is a business development company that focuses on lending to and investing in private businesses, aiming to generate both current income and long-term capital appreciation through debt and equity investments [5]

Core Insights - Seeking Alpha introduces Steve Richter as a new contributing analyst with extensive experience in financial analysis and investment [2] Group 1: Analyst Background - Steve Richter has over 30 years of experience, primarily as a credit analyst and executive for large banks, and has also worked as a buy-side analyst specializing in project finance [2] - He holds an undergraduate degree in finance and accounting, a master's in finance, and has completed a credit training program with a major bank, earning the CFA designation [2] - Steve has been investing for over 25 years, initially in rental real estate and mutual funds, and shifted focus to individual stocks and options in 2010 [2] Group 2: Investment Strategy - For the first decade, Steve's portfolio concentrated on growth stocks, but he repositioned it to focus on dividend stocks, including REITs and BDCs, just before the COVID-19 pandemic [2] - Over the past ten years, Steve has achieved double-digit returns, including the last two years, despite the shift away from a growth-only strategy [2] - Currently, the focus is on building a portfolio of undervalued stocks with solid fundamentals across various industries, benefiting from a strong and growing dividend stream as well as capital appreciation [2]

Financial Data and Key Metrics Changes - For the June quarter, the company's net investment income (NII) was $102.9 million, equating to $0.25 per common share, with a net asset value (NAV) of $3.71 billion or $8.74 per common share [3] - The net debt to total assets ratio stood at 30.5%, with unsecured debt plus preferred making up 80.3% of total debt plus preferred [3][4] - The company announced monthly common shareholder distributions of $0.06 per share for September and October, marking the 86th consecutive distribution [4] Business Line Data and Key Metrics Changes - As of June 30, the portfolio at fair value comprised 60.3% first lien debt (up 3.8% from the prior year), 13.6% second lien debt (down 2.8%), 6.9% subordinated structured notes (down 1.7%), and 19.2% unsecured debt and equity investments (up 0.7%) [5] - The company exited $198 million of second lien debt in the current September quarter, resulting in a further decline to 11.3% [6] - The annualized yield as of June was 12.1%, with interest income making up 89.2% of total investment income [6] Market Data and Key Metrics Changes - The company held 117 portfolio companies as of June, a decrease of five from the prior quarter, with a fair value of $7.7 billion [7] - Non-accruals as a percentage of total assets were approximately 0.3%, reflecting a 0.1% decrease from the prior quarter [8] - The weighted average middle-market portfolio net leverage was 5.5 times EBITDA, consistent with the prior quarter [8] Company Strategy and Development Direction - The company is focused on increasing first lien exposure while reducing second lien and subordinated structured notes to mitigate portfolio risk [6] - The investment strategy includes significant capital deployment in the real estate sector, particularly in multifamily properties, with a focus on value-added acquisitions [9][10] - The company has a strong balance sheet with substantial liquidity, having locked in liabilities extending 28 years into the future [14][15] Management's Comments on Operating Environment and Future Outlook - Management expressed confidence in the company's ability to meet obligations, citing five investment-grade ratings and strong lender support [16] - The company is not contemplating any drastic measures regarding preferred stock conversions, emphasizing stability and ongoing performance [18][20] - Management highlighted the successful performance of the REIT segment, with a 21% IRR on exited properties, indicating a robust investment strategy [11][32] Other Important Information - The company has successfully completed an amended credit facility with a new five-year maturity, increasing commitments to $2.12 billion [15] - The weighted average cost of unsecured debt financing was 4.25%, reflecting slight increases from previous periods [16] Q&A Session All Questions and Answers Question: Trends in preferred to convertible preferred conversions - Management indicated that the recent conversions were driven by a specific large holder needing liquidity, and such conversions are not anticipated to be a recurring trend [30] Question: Circumstances under which the Board might force conversion - Management clarified that there has been no discussion or contemplation of invoking such measures, emphasizing the company's strong financial position [19][20] Question: Impact of CLO reclassifications on earnings trajectory - Management stated that the reclassification did not affect NAV and is a standard accounting practice, indicating it is not a significant concern [24][31] Question: Details on the $20 million investment in the REIT - Management explained that the investment was for value-added capital expenditures and ongoing upgrades, which are typical for multifamily properties [28][32]

Core Insights - Prospect Capital Corporation reported financial results for the fiscal quarter and year ended June 30, 2024, marking its 20th anniversary as a leading provider of private debt and equity to U.S. middle-market companies [1][2]. Financial Performance - Total assets amounted to $7.9 billion, with a net investment income (NII) of $102.9 million for the quarter ended June 30, 2024, compared to $112.8 million for the same quarter in 2023 [6][8]. - NII per common share was $0.25 for the quarter, down from $0.28 year-over-year [6][8]. - The company reported a net income applicable to common shareholders of $147.4 million for the fiscal year, a significant recovery from a loss of $172.5 million in the previous year [8][39]. Investment Strategy - 81% of the portfolio is in first lien, secured, or underlying secured assets, with a diversified strategy including middle-market lending (52%), buyouts (19%), real estate (19%), and subordinated structured notes (7%) [2][5]. - Prospect has invested $20.9 billion across 423 investments since inception, with 303 exits [2][12]. Cash Distributions - Cumulative distributions to common shareholders since 2004 total $4.3 billion, equating to $21.12 per share, which is 2.4 times the June 2024 NAV per share [4][11]. - The company declared monthly cash distributions of $0.06 per share for September and October 2024, marking the 85th and 86th consecutive distributions at this rate [9][10]. Credit Facility and Liquidity - On June 28, 2024, Prospect completed an amended and extended credit facility with $2.1 billion in commitments from 48 commercial banks, increasing by $168 million since March 31, 2024 [3][23]. - The balance sheet cash and undrawn revolving credit facility commitments totaled approximately $1.4 billion as of August 27, 2024 [22][25]. Portfolio Update - As of June 30, 2024, total investments at fair value were $7.7 billion, with a current yield of 9.8% across all investments [15][20]. - The weighted average EBITDA of the middle-market loan portfolio companies was $107.3 million, with a weighted average net leverage ratio of 5.5x [10][45]. Market Position - Prospect has maintained higher total returns of 38.7% over five years compared to the publicly-traded BDC median of 37.0% [5]. - The company holds investment-grade ratings from multiple agencies, including S&P and Moody's, reflecting its strong asset and risk management [30].

AntonioSolano/iStock via Getty Images I previously covered Prosect Capital (NASDAQ:PSEC) back in March and downgraded my rating to a hold due to the BDC's growing vulnerabilities surrounded the prolonged period of elevated interest rates. I wanted to revisit the business development company after its most recent earnings and reassess valuation based on the performance and growth of its net assets. I also wanted to provide some thoughts as I believe that the possibility of interest rate cuts are higher now. ...

PM Images The loan quality profile of Prospect Capital Corporation (NASDAQ:PSEC) continued to look very healthy in the last quarter, as did the business development company's dividend coverage setup. The BDC is also originating a healthy amount of new loans which will add to Prospect Capital's net investment income moving forward and that therefore could further improve the BDC's dividend coverage. I think that Prospect Capital's 37% discount to net asset value is not appropriate and when taking into accoun ...

mrPliskin/E+ via Getty Images Introduction Prospect Capital (NASDAQ:PSEC) is a popular BDC amongst dividend investors and retirees as a result of its steady, monthly dividend. But while many of its peers have enjoyed strong price appreciation over the past year, the BDC has seen its share price decline double-digits over the same period, a result of its portfolio quality and weaker fundamentals. BDCs with superior underwriting quality share prices have risen while those with weaker fundamentals have lagged, ...

Financial Data and Key Metrics Changes - As of March 2024, the company's net investment income (NII) was $94.4 million, equating to $0.23 per common share, with a net asset value (NAV) of $3.74 billion or $8.99 per common share, reflecting an increase of $0.07 from the prior quarter [20] - The net debt-to-equity ratio stood at 46.2% as of March 31, 2024 [20] - The weighted average cost of unsecured debt financing was 4.14%, a slight decrease of 0.01% from the previous quarter [6] Business Line Data and Key Metrics Changes - The portfolio at fair value comprised 59% first lien debt (up 0.3%), 14.6% second lien debt (down 0.9%), 7.3% subordinated structured notes (down 0.6%), and 19.1% unsecured debt and equity investments (up 1.2%) [21] - Originations in the March quarter totaled $219 million, with net originations exceeding $105 million after accounting for $114 million in repayments, sales, and exits [24] - The structured notes portfolio generated a GAAP yield of 3.3% and a cash yield of 22.1% in the March quarter [10] Market Data and Key Metrics Changes - The company held 122 portfolio companies with a fair value of $7.8 billion, an increase of approximately $175 million from the prior quarter [22] - Asset concentration in the energy industry was 1.4%, with minimal exposure in the hotel, restaurant, leisure, and retail sectors at 0.3% each [23] Company Strategy and Development Direction - The company is focusing on distressed sellers to capitalize on opportunities for recapitalization and liquidity generation [26] - The investment strategy includes a significant focus on preferred equity structures with third-party capital support [25] - The company has locked in a ladder of liabilities extending 28 years into the future, demonstrating balance sheet strength and liquidity [12] Management's Comments on Operating Environment and Future Outlook - Management emphasized the importance of prudent leverage and diversified access to funding, which positions the company well to capitalize on attractive opportunities [12] - The company noted that its structured credit business has delivered attractive cash yields, highlighting the benefits of strong collateral underwriting and favorable risk-adjusted opportunities [28] Other Important Information - The company has raised $1.8 billion in aggregate issuance of perpetual preferred stock, including $69.4 million in the March 2024 quarter [6] - The company has five investment-grade ratings, more than any other company in its industry, which has helped reduce counterparty risk [5] Q&A Session Summary Question: What is the company's outlook on future distributions? - The company plans to announce monthly common shareholder distributions of $0.06 per share for May, June, July, and August, with the next set of distributions to be announced in August [20]

Exhibit 99.1 Prospect Capital Announces March 2024 Financial Results and Declares 84 Consecutive $0.06 Dividend th NEW YORK, May 8, 2024 (GLOBE NEWSWIRE) – Prospect Capital Corporation (NASDAQ: PSEC) ("Prospect", "our", or "we") today announced financial results for our fiscal quarter ended March 31, 2024. FINANCIAL RESULTS | All amounts in $000's except | Quarter Ended | | Quarter Ended | Quarter | | | Ended | | --- | --- | --- | --- | --- | --- | --- | --- | | per share amounts (on weighted average basis ...