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Prospect Capital(PSEC) - 2025 Q2 - Quarterly Report
PSECProspect Capital(PSEC)2025-02-10 21:02
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Investment Activity - For the three months ended December 31, 2024, the company acquired new investments totaling 45,694andcompletedfollow−oninvestmentsofapproximately45,694 and completed follow-on investments of approximately 65,554, resulting in gross investment originations of 134,956[517].−Thecompanyreceivedfullrepaymentstotaling134,956[517]. - The company received full repayments totaling 258,068 and additional repayments of approximately 125,295,leadingtototalrepaymentsofapproximately125,295, leading to total repayments of approximately 383,363 during the same period[517]. - As of December 31, 2024, the company has 7,132,928,or207.47,132,928, or 207.4%, of its net assets applicable to common shares invested in 114 long-term portfolio investments and CLOs[525]. - New investments in portfolio companies totaled 258,750 for the six months ended December 31, 2024, significantly higher than 49,074forthesameperiodin2023[534].−Totalinvestmentsrepaidorsoldreached49,074 for the same period in 2023[534]. - Total investments repaid or sold reached 665,691 for the six months ended December 31, 2024, compared to 224,978intheprioryear[534].PortfolioComposition−Theannualizedcurrentyieldacrossallperforminginterest−bearinginvestmentswas11.2224,978 in the prior year[534]. Portfolio Composition - The annualized current yield across all performing interest-bearing investments was 11.2% as of December 31, 2024, down from 12.1% as of June 30, 2024[526]. - Control investments represented 47.3% of the portfolio at a cost of 3,323,998 as of December 31, 2024, down from 52.9% at a cost of 3,772,329onJune30,2024[529].−FirstLienDebtaccountedfor66.03,772,329 on June 30, 2024[529]. - First Lien Debt accounted for 66.0% of the investment portfolio cost at 4,637,485 as of December 31, 2024, compared to 62.9% at 4,686,107onJune30,2024[531].−TheportfoliocompositionbyindustryshowsResidentialRealEstateInvestmentTrusts(REITs)at12.84,686,107 on June 30, 2024[531]. - The portfolio composition by industry shows Residential Real Estate Investment Trusts (REITs) at 12.8% of cost, valued at 902,516 as of December 31, 2024[533]. - The total cost of investments in the Consumer Finance sector was 659,046,representing9.4659,046, representing 9.4% of the portfolio as of December 31, 2024[533]. Valuation and Fair Value - The total valuation of the company's investments was 7,132,928, based on various valuation techniques including discounted cash flow models[542]. - The fair value of the investment in First Tower was 665,118asofDecember31,2024,reflectingapremiumof665,118 as of December 31, 2024, reflecting a premium of 200,353 to its amortized cost[547]. - The fair value of the investment in InterDent was 406,593asofDecember31,2024,showingapremiumof406,593 as of December 31, 2024, showing a premium of 31,462 to its amortized cost[549]. - Controlled investments were valued at 448,331abovetheiramortizedcostasofDecember31,2024[559].−ThefairvalueofNPRC′sinvestmentdecreasedfrom448,331 above their amortized cost as of December 31, 2024[559]. - The fair value of NPRC's investment decreased from 1,696,462 as of June 30, 2024, representing a premium of 588,151[556].DebtandFinancing−AsofDecember31,2024,thecompany’sdebtconsistedofaRevolvingCreditFacility,ConvertibleNotes,PublicNotes,andProspectCapitalInterNotes[563].−Thetotaloutstandingdebtwas588,151[556]. Debt and Financing - As of December 31, 2024, the company’s debt consisted of a Revolving Credit Facility, Convertible Notes, Public Notes, and Prospect Capital InterNotes[563]. - The total outstanding debt was 2,077,796, with a net carrying value of 2,058,256[564].−TheRevolvingCreditFacilityhadoutstandingborrowingsof2,058,256[564]. - The Revolving Credit Facility had outstanding borrowings of 301,522 as of December 31, 2024, with an effective interest rate of 2.05%[570]. - The company had 1,049,788availableforborrowingundertheRevolvingCreditFacilityasofDecember31,2024[570].−Thecompanymayseektocancelorpurchaseoutstandingdebtthroughvariousmeans,subjecttomarketconditionsandliquidityrequirements[566].IncomeandExpenses−InvestmentincomeforthesixmonthsendedDecember31,2024was1,049,788 available for borrowing under the Revolving Credit Facility as of December 31, 2024[570]. - The company may seek to cancel or purchase outstanding debt through various means, subject to market conditions and liquidity requirements[566]. Income and Expenses - Investment income for the six months ended December 31, 2024 was 381,774, a decrease of 14.6% compared to 447,187forthesameperiodin2023[587].−NetinvestmentincomeforthesixmonthsendedDecember31,2024was447,187 for the same period in 2023[587]. - Net investment income for the six months ended December 31, 2024 was 176,308, down from 222,539inthesameperiodof2023,representingadeclineof20.8222,539 in the same period of 2023, representing a decline of 20.8%[587]. - Total operating expenses for the three months ended December 31, 2024, were 99,035, a decrease of 13.2% from 114,015in2023[599].−TotalgrossbasemanagementfeeforthesixmonthsendedDecember31,2024,was114,015 in 2023[599]. - Total gross base management fee for the six months ended December 31, 2024, was 75,675, down 3.6% from 78,376in2023,attributedtoadecreaseinaveragetotalassets[600].−NetrealizedlossesfrominvestmentsforthesixmonthsendedDecember31,2024were78,376 in 2023, attributed to a decrease in average total assets[600]. - Net realized losses from investments for the six months ended December 31, 2024 were 147,023, compared to losses of 207,366inthesameperiodof2023[587].PreferredStockandShareRepurchase−Thecompanyisnolongerofferingseveralseriesofpreferredstock,focusingonthe7.50207,366 in the same period of 2023[587]. Preferred Stock and Share Repurchase - The company is no longer offering several series of preferred stock, focusing on the 7.50% Preferred Stock for future offerings[629]. - The company authorized the repurchase of up to 1.5 million shares of Series A Preferred Stock on June 16, 2022, and further authorized the repurchase of any and all outstanding Series A Preferred Stock on October 11, 2023[647]. - The Series A Preferred Stock Tender Offer commenced on October 30, 2023, with a total consideration of 16.00 per share, resulting in the purchase of 631,194 shares and a realized gain of 5,197[650].−Theestimatedvalueofthecompany′s5.505,197[650]. - The estimated value of the company's 5.50% Preferred Stock, 6.50% Preferred Stock, Floating Rate Preferred Stock, and 7.50% Preferred Stock was determined to be 25.00 per share as of December 31, 2024[671]. - The company has established redemption limits for Floating Rate Preferred Stock, allowing no more than 2% to be redeemed per month, 5% per fiscal quarter, and 20% per Annual Redemption Period[636]. Market Risks and Interest Rates - The company is subject to financial market risks due to heightened interest rates and geopolitical uncertainties[693]. - The annual impact on net investment income from a 300 basis point increase in interest rates would result in a net increase of 119,008[698].−A100basispointincreaseininterestrateswouldleadtoanetincreaseinincomeof119,008[698]. - A 100 basis point increase in interest rates would lead to a net increase in income of 39,262[698]. - A 100 basis point decrease in interest rates would result in a net decrease in income of $31,912[698]. - The company did not engage in hedging activities during the period ended December 31, 2024[700].