Prospect Capital(US:PSEC)2024-05-09 15:43Financial 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]