Kroll Bond Rating Agency Releases Comment: PSEC’s Note Issue, Ratings of “BBB+” Maintained

NEW YORK--()--Kroll Bond Rating Agency (KBRA) currently maintains issuer and senior unsecured debt rating of BBB+ with a stable outlook to Prospect Capital Corporation (NASDAQ: PSEC) (“Prospect” or “the Company”). On December 3, 2015, PSEC announced an offering of $150 million in aggregate principal amount of 6.25% fixed rate senior unsecured retail notes maturing on June 15, 2024.

Prospect intends to use the net proceeds from the offering to redeem its $150 million in aggregate principal amount of 6.25% Convertible Notes due on December 15, 2015 and to pay down the outstanding balance on its credit facility.

PSEC is a business development company that primarily lends to and invests in middle market privately-held companies. Prospect Capital Corporation invests primarily in senior and subordinated debt and equity of U.S. and Canadian private companies in need of capital. PSEC focuses on secured lending, with approximately 72% of the balance sheet as of 6/30/2015 comprised of secured loans. PSEC is externally managed by Prospect Capital Management L.P.

In October 2015, KBRA affirmed an issuer and senior unsecured debt rating of BBB+ with a stable outlook to PSEC. The rating of Prospect Capital Corporation reflects the company’s focus on senior secured debt investments, adequate leverage metrics that are below the BDC regulatory limits, excellent asset quality performance to date, and robustness of its credit originations and monitoring. The rating is further supported by Prospect’s proven management expertise in middle market lending. These strengths are balanced by the potential risks related to PSEC’s more volatile performance embedded in equity exposures within its “buyout” portfolio and CLO investments, continued decline in interest coverage ratio, and upward trends in leverage metrics.

The ratings are assigned using KBRA’s Finance Company Rating Methodology, published April 1, 2013. The ratings and supporting rationale are available at www.kbra.com.

About Kroll Bond Rating Agency

KBRA is registered with the U.S. Securities and Exchange Commission as a Nationally Recognized Statistical Rating Organization (NRSRO). In addition, KBRA is recognized by the National Association of Insurance Commissioners (NAIC) as a Credit Rating Provider (CRP).

Contacts

Kroll Bond Rating Agency
Analytical Contacts:
Isabelle Nana, 240-394-4153
Associate
inana@kbra.com
or
Boris Alishayev, 646-731-2484
Associate Director
balishayev@kbra.com
or
Marjan Riggi, 646-731-2354
Managing Director
mriggi@kbra.com
or
Christopher Whalen, 646-731-2366
Senior Managing Director
cwhalen@kbra.com

Contacts

Kroll Bond Rating Agency
Analytical Contacts:
Isabelle Nana, 240-394-4153
Associate
inana@kbra.com
or
Boris Alishayev, 646-731-2484
Associate Director
balishayev@kbra.com
or
Marjan Riggi, 646-731-2354
Managing Director
mriggi@kbra.com
or
Christopher Whalen, 646-731-2366
Senior Managing Director
cwhalen@kbra.com