A Look at Prospect Capital’s Originations

Prospect Capital’s originations

Prospect Capital (PSEC) is focused on not deploying higher-risk assets with lower returns. Its strategy results in fewer originations. During its fiscal fourth quarter of 2018, as of May 9, the company had total originations of $181.5 million with total repayments of $113 million. Following is the breakdown of its originations:

  • agented non-sponsor debt: 63%
  • non-agented debt: 6%
  • agented sponsor debt: 25%
  • operating buyouts: 1%
  • real estate: 5%

A Look at Prospect Capital’s Originations

In its fiscal third quarter of 2018, Prospect Capital had total investments (fair value) of $5.7 billion. In the same period, it had 134 portfolio companies. Its investment in a secured first lien has resulted in a decline from 48.3% in the fiscal fourth quarter to 44.9% in the fiscal third quarter.

Structured credit investments

At the end of its fiscal third quarter, Prospect Capital had total structured credit investments of $944.8 million. In the same period, it had 43 structured credit investments. In 2018, its origination capabilities are mainly dependent on the interest rate environment. In a rising interest rate environment, Prospect’s origination capabilities might be restricted.

As of June 26, the enterprise value of Prospect Capital was $4.8 billion. Its peers (XLF) have the following enterprise values:

  • Ares Capital (ARCC): $11.9 billion
  • TPG Specialty Lending (TSLX): $2 billion
  • Apollo Investment (AINV): $2 billion