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Understanding Prospect Capital’s Decline in Originations

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Sep. 4 2017, Updated 9:07 a.m. ET

Fall in originations

Prospect Capital (PSEC) witnessed a substantial fall in its originations in fiscal 4Q17, compared with fiscal 3Q17. In fiscal 4Q17, its total originations stood at $223.1 million, and in fiscal 3Q17, total originations stood at $449.6 million.

The originations in fiscal 4Q17 came in the following proportions:

  • structured credit: 32%
  • syndicated debt: 31%
  • third-party sponsored deals: 31%
  • real estate: 1%
  • online lending: 4%
  • operating buyouts: 1%

In fiscal 4Q17, Prospect saw a sequential rise in total repayments. Total repayments in fiscal 4Q17 stood at $352 million, while in fiscal 3Q17, total repayments stood at $302 million.

In fiscal 2017, Prospect Capital reported total originations totaling $1.48 billion, compared with $0.97 billion in fiscal 2016. In fiscal 2017, originations came in the following proportions:

  • structured credit: 12%
  • syndicated debt: 27%
  • third-party sponsored deals: 38%
  • online lending: 12%
  • operating buy-outs: 2%
  • real estate: 8%
  • aircraft leasing: 1%

However, in fiscal 2017, Prospect Capital made total repayments totaling $1.4 billion, compared with $1.33 billion in fiscal 2016.

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Expected revenues

For the September 2017 quarter, Prospect Capital (PSEC) is expected to report revenues of nearly $173.9 million. Other investment management companies (XLF) are expected to report the following revenues for the same quarter:

  • BlackRock Capital Investment (BKCC): $24.4 million
  • Ares Capital Management (ARCC): $298.5 million
  • Apollo Investment (AINV): ~$68.3 million
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