AINV’s Unrealized and Realized Losses Intact in Fiscal 3Q17

Higher unrealized and realized losses

Apollo Investment’s (AINV) net investment income fell to $36.4 million in fiscal 3Q17 compared to $39.5 million in fiscal 2Q17. The decline was mostly due to net exits by the company over the past year as well as a marginal decline in average yields on a quarter-over-quarter basis.

AINV’s Unrealized and Realized Losses Intact in Fiscal 3Q17

Apollo Investment’s (AINV) realized and unrealized losses stood at $25 million in fiscal 3Q17 compared to realized gains of $1.6 million in fiscal 2Q16, reflecting continued pressure from investment holdings. In the first nine months of fiscal 2017, the company’s unrealized losses stood at $101.6 million, compared to $145.8 million in the prior year’s period.

The continued losses indicate there is still some pain in form of unrealized losses to be either recovered or adjusted in the upcoming quarter. However, the company has seen some consistency in the deployment of new funds, which should form the base for future growth.

Below is a look at how some of Apollo Investment’s industry peers have performed in terms of return on equity:

  • Prospect Capital (PSEC): 9%
  • Ares Capital (ARCC): 5%
  • KKR (KKR): 5%

Together, these companies form 4.6% of the PowerShares Global Listed Private Equity ETF (PSP).

Debt maturity extension

Apollo Investment (AINV) completed the funding of three transactions through co-investments in fiscal 3Q17. The company is expected to see a rise in the number of investments during fiscal 4Q17 alongside co-investment partners. It has recently completed a recapitalization in a bid to provide liquidity and capital strength.

Apollo Investment successfully extended the final maturity of the senior secured facility to December 2021, reflecting multiple steps to boost liquidity and investment buffer for the upcoming quarters.

On December 31, 2016, the company’s total outstanding debt stood at $1.0 billion, compared to $1.3 billion on March 31, 2016.

Apollo Investment’s net leverage ratio stood at 0.66x at the end of December 2016. This compares to 0.63x in the previous quarter.

In the next part, we’ll study Apollo Investment’s dividends and valuations in fiscal 3Q17.