Palmer Square Capital BDC(US:PSBD)2021-11-15 19:05Financial Performance - The total investment income for the three months ended September 30, 2021, was $8.9 million, up from $7.9 million in the same period of 2020, indicating a growth of approximately 12.0%[170]. - The net investment income for the three months ended September 30, 2021, was $4.9 million, compared to $4.4 million in the same period of 2020, reflecting an increase of about 10.9%[170]. - The fair value of total investments as of September 30, 2021, was $877.1 million, up from $653.2 million as of December 31, 2020, marking an increase of approximately 34.5%[171]. - The net realized gains on investments for the nine months ended September 30, 2021, were $4.3 million, compared to a loss of $1.1 million in the same period of 2020[170]. - The average new investment commitment amount for the three months ended September 30, 2021, was $3.9 million, compared to $2.8 million in the same period of 2020, indicating a growth of approximately 42.0%[166]. Investment Activity - Total new investments for the three months ended September 30, 2021, were $159.8 million, compared to $26.1 million for the same period in 2020, representing a significant increase[166]. - The investment activity for the three and nine months ended September 30, 2021, reflects ongoing portfolio management and adjustments[164]. - The number of new investment commitments for the three months ended September 30, 2021, was 41, compared to 40 in the same period of 2020[166]. - The weighted average interest rate of new investment commitments was 4.80% for the three months ended September 30, 2021, compared to 5.18% for the same period in 2020[166]. - The percentage of new debt investment commitments at floating rates was 100.00% for the three months ended September 30, 2021, compared to 98.31% in the same period of 2020[166]. Debt and Financing - As of September 30, 2021, the company had $427.5 million principal outstanding under the Credit Facility, an increase from approximately $375.0 million a year earlier[182]. - The Credit Facility was increased to $725 million on September 29, 2021, providing additional liquidity for the company[188]. - The company issued 2,551,012 shares at an aggregate purchase price of $52.5 million during the nine months ended September 30, 2021[185]. - Average debt outstanding increased from $198.6 million to $411.7 million from January 23, 2020, through September 30, 2021, contributing to higher interest expenses[174]. - The asset coverage ratio was 173% as of September 30, 2021, exceeding the required minimum of 150%[184]. Risk Management - The company acknowledges various risks and uncertainties that could impact future performance, including economic conditions and the ability to manage investments effectively[156]. - Interest rate sensitivity indicates that a 100 basis point increase in interest rates could lead to an increase in net investment income by $8,127,349[223]. - A 200 basis point increase in interest rates could result in a net investment income increase of $16,254,697[223]. - The company measures exposure to interest rate and currency exchange rate fluctuations and may use hedging instruments to mitigate risks[225]. - Changes in foreign currency exchange rates may significantly impact investments denominated in foreign currencies[224]. Liquidity and Cash Flow - Cash and cash equivalents increased to $11.0 million as of September 30, 2021, up from $1.2 million a year earlier[182]. - During the nine months ended September 30, 2021, net cash used in operating activities was $61.3 million, primarily due to portfolio investments totaling $521.9 million[180]. - The company maintains sufficient liquidity to fund unfunded commitments, including cash and borrowing capacity[218]. - There are no off-balance sheet financings or liabilities other than contractual commitments and legal contingencies[219]. Company Structure and Regulation - The company is structured as an externally managed, non-diversified closed-end management investment company and has elected to be regulated as a BDC under the Investment Company Act of 1940[157]. - The investment objective is to maximize total return through current income and capital appreciation, focusing on corporate debt securities and CLO structured credit[159]. - The company expects to qualify as a regulated investment company (RIC) annually following its election in 2020[157]. - The company expects to qualify as a RIC annually, requiring distributions of at least 98% of net ordinary income and capital gains to avoid excise taxes[200]. - The valuation of portfolio investments is subject to oversight by the Board, with independent valuation providers engaged for material investments lacking readily available market quotations[209]. Dividends and Shareholder Returns - The company intends to distribute quarterly dividends to stockholders, contingent on available income, with a distribution policy requiring at least 90% of net ordinary income and net short-term capital gains to be distributed[200]. - The company has adopted a dividend reinvestment plan, allowing stockholders to reinvest dividends in additional shares unless they opt for cash[202]. Expenses - The primary operating expenses include fees to the Investment Advisor and other out-of-pocket costs related to operations and transactions[161]. - Net expenses for the three months ended September 30, 2021 were $4.0 million, an increase from $3.5 million in the same period of 2020, with significant components being $1.9 million in interest and debt financing and $1.5 million in management fees[173].