The refinancing replaces low-cost 3.364% debt with 8.95% notes, increasing annual interest expense by roughly $14.7 million on the refinanced portion. Monitor the Q1 FY2027 10-Q for actual net investment income and NAV, as the preliminary estimates showed declining earnings. The higher coupon may pressure distributable income if portfolio yields do not increase commensurately.
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Executive Summary
Prospect Capital Corporation is issuing $300 million of 8.95% senior unsecured notes due 2031 in a registered direct offering to an institutional investor. Net proceeds of approximately $283.4 million will be used primarily to refinance existing debt, including the redemption of $263.2 million of 3.364% notes due November 2026 and/or repayment of borrowings under its revolving credit facility. The offering follows a preliminary earnings release two days ago showing declining net investment income, and the new notes carry a significantly higher coupon than the debt being refinanced.
Key Financial Metrics
Key Facts
- Offering of $300,000,000 aggregate principal amount of 8.95% Notes due 2031
- Net proceeds estimated at $283.4 million after $16.6 million in expenses
- Proceeds primarily for refinancing existing debt, including $263.2 million of 3.364% 2026 Notes being redeemed
- Notes are senior unsecured, rank pari passu with existing senior unsecured debt
- Interest rate of 8.95% per year, payable semi-annually
- Maturity date October 31, 2031
- No underwriting discounts or commissions; direct sale to institutional investor
- Preliminary Q1 FY2027 net investment income of ~$76 million, down from $78.5M prior quarter and $83.5M a year ago
- Total debt as of June 30, 2026 was approximately $1.9 billion
- As of October 28, 2026, $742.9 million outstanding under revolving credit facility
Financial Impact
$300 million debt issuance with net proceeds of $283.4 million; refinances $263.2 million of 3.364% notes at a much higher 8.95% coupon, increasing annual interest cost by approximately $14.7 million on the refinanced portion
Risk Factors
- Higher interest expense from replacing 3.364% notes with 8.95% notes could pressure net investment income
- Preliminary Q1 results show declining net investment income trend
- Notes are unsecured and effectively subordinated to $0.6 billion of secured debt
- No established trading market for the notes may limit liquidity
- Limited financial covenants in the indenture provide minimal holder protection
Market Snapshot
Documents Analyzed
This report is based on 5 SEC documents filed with EDGAR.
| Document | Accession Number |
|---|---|
| 424B5 Filing (Primary) | 0001287032-26-000300 |
| Exhibit: exfilingfees.htm | 0001287032-26-000300 |
| Document: 0001287032-26-000300-index-headers.html | 0001287032-26-000300 |
| Document: 0001287032-26-000300-index.html | 0001287032-26-000300 |
| Document: 0001287032-26-000300.txt | 0001287032-26-000300 |
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| Type | Now | ||||
|---|---|---|---|---|---|
Oct 29, 2026 2d ago | 424B5 | $1.53 | awaiting T+1 | awaiting T+1 | $1.61 (+5.34%) |
Oct 27, 2026 4d ago | 8-K | $1.52 $1.62 | ▼ −6.58% | ▼ −6.96% | $1.61 (−5.92%) |
Oct 27, 2026 5d ago | Press Release | $1.52 $1.62 | ▲ +6.58% | ▲ +6.96% | $1.61 (+5.92%) |
Oct 22, 2026 9d ago | DEFA14A | $1.48 $1.49 | ▲ +0.68% | ▼ −0.03% | $1.61 (+8.78%) |
Oct 20, 2026 11d ago | SC 13D/A | $1.47 $1.49 | ▲ +1.36% | ▲ +2.54% | $1.61 (+9.52%) |
Sep 22, 2026 5w ago | DEF 14A | $2.17 $2.18 | ▲ +0.46% | ▲ +0.54% | $1.61 (−25.81%) |
Jul 16, 2026 15w ago | 15-12G | $2.25 $2.23 | ▼ −0.89% | ▼ −0.73% | $1.61 (−28.44%) |
Jun 9, 2026 20w ago | DEFA14A | $2.24 $2.28 | ▲ +1.79% | ▲ +0.09% | $1.61 (−28.12%) |
May 7, 2026 25w ago | 8-K | $18.17 $17.70 | ▲ +2.59% | ▲ +2.82% | $1.61 (+91.14%) |
May 7, 2026 25w ago | Press Release | $2.47 $2.41 | ▼ −2.43% | ▼ −2.66% | $1.61 (−34.82%) |
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