NEW YORK - Prospect Capital (NASDAQ:PSEC) Corporation (NASDAQ:PSEC), a leading business development company, has expanded its preferred stock offering with Preferred Capital Securities (PCS), signaling strong market demand. The offering has garnered $1.8 billion in issuances since its initial close at the end of December 2020. This update comes amid a favorable response from various investment channels, including private wealth and institutional investors.
The non-traded preferred stock from Prospect offers features such as recurring cash income, a stable stated value, and liquidity options. These attributes, coupled with management alignment and leverage caps, have contributed to the company's dominant position in the non-traded preferred stock market for the past two years.
Prospect's President, Grier Eliasek, highlighted the current investment climate, noting the declining interest rates and the appeal of their A4/M4 preferred stock series. This series offers a 7.28% annualized floating rate dividend and a 6.50% dividend rate floor, aiming to attract income-focused investors.
PCS, acting as the dealer manager for the offering, has successfully raised $5.0 billion of capital since its inception in 2011. The ongoing offering of the Series A4 and M4 Preferred Stock is available through a prospectus supplement and accompanying prospectus, which interested parties can obtain from PCS.
Prospect Capital emphasizes its commitment to generating both current income and long-term capital appreciation through debt and equity investments. As a regulated investment company, Prospect adheres to the guidelines of the Investment Company Act of 1940 and the Internal Revenue Code of 1986.
The company cautions that any forward-looking statements are subject to change and are not guarantees of future performance, as they are likely to be influenced by unforeseen events. The information is based on a press release statement, and investors are encouraged to consult the prospectus and prospectus supplement for a comprehensive understanding of the risks and objectives before investing.
In other recent news, Prospect Capital Corporation has expanded its preferred stock offering from $2 billion to $2.25 billion, a move that involves reclassifying 20 million shares from common to preferred stock. This strategic initiative is accompanied by a revised expectation from Wells Fargo (NYSE:WFC), which has downgraded its price target for Prospect Capital from $5.00 to $4.50, citing a lower Secured Overnight Financing Rate (SOFR) curve and an anticipated increase in shares due to the conversion of preferred stocks. Wells Fargo has also adjusted its net operating income (NOI) forecasts for the company for fiscal years 2025 and 2026.
Despite these adjustments, Prospect Capital reported robust earnings for the fourth quarter of fiscal year 2024, with a net investment income of $102.9 million and a net asset value of $3.71 billion. The company has emphasized its strong balance sheet, diversified funding sources, and significant liquidity, along with a strategic shift towards first lien debt. Additionally, Prospect Capital clarified that there are no ongoing discussions about forced conversions of preferred stock by the company's board.
These recent developments indicate that Prospect Capital is making strategic decisions to maintain shareholder distributions and strengthen its investment portfolio. The company's ability to tap into the unsecured term debt market to extend liability duration and reduce counterparty risk has been noted by analysts, further highlighting its strategic approach to managing its financial health.
InvestingPro Insights
Prospect Capital Corporation's recent expansion of its preferred stock offering aligns well with its strong dividend profile. According to InvestingPro data, PSEC boasts a substantial dividend yield of 13.58%, reflecting its commitment to providing shareholders with significant returns. This high yield is particularly attractive in the current market environment, where income-focused investors are seeking stable cash flows.
InvestingPro Tips highlight that Prospect Capital has maintained dividend payments for 21 consecutive years, underscoring the company's dedication to shareholder returns and its ability to generate consistent income. This track record of dividend stability complements the appeal of its new preferred stock offerings, which feature recurring cash income and stable stated value.
The company's profitability over the last twelve months, another InvestingPro Tip, supports its ability to sustain these dividend payments. With a price-to-earnings ratio of 14.83, PSEC appears reasonably valued, especially considering its dividend history and current yield.
It's worth noting that InvestingPro offers additional tips for PSEC, providing investors with a more comprehensive analysis of the company's financial health and market position. These insights can be valuable for those considering investment in Prospect Capital's expanded preferred stock offering or its common shares.
This article was generated with the support of AI and reviewed by an editor. For more information see our T&C.