Prospect Originations Rebound After a Two-Quarter Slide
Gross originations reached $166.32 million in the three months ended June 30, 2026, and annualized current yield on performing interest-bearing loans was 11.8%.
Prospect Capital Corporation (PSEC), a Maryland closed-end business development company that lends to privately held U.S. middle-market companies, recorded gross investment originations of $166.32 million in the three months ended June 30, 2026, reversing two consecutive quarters of weaker origination.
The rebound was led by new investments of $97.17 million and follow-on loans of $27.64 million, which more than offset revolver advances of $20.80 million and PIK interest of $20.71 million. Repayments were $45.83 million, including $21.43 million of full repayments, $24.36 million of partial prepayments, amortization and return of capital, and no sales. The company remains focused on secured lending to middle-market borrowers, primarily first-lien and second-lien loans, with select equity.
Total investments had a fair value of $6.34 billion as of June 30, 2026, equal to 216.5% of net assets applicable to common shares, across 91 portfolio companies and other investments. Annualized current yield was 11.8% on performing interest-bearing investments excluding equity and non-accrual loans, and 9.0% across all investments. Control investments were $3.64 billion, or 57.5% of fair value; non-control and non-affiliate investments were 42.1%. First-lien debt and revolving lines were $4.29 billion, or 88.0% of interest-bearing fair value; second lien was 11.8%. Consumer finance was the largest industry at 18.1% of fair value, followed by residential REITs at 17.1% and health care providers at 12.0%.
The company issued $6.92 million of Prospect Capital InterNotes at a 7.01% weighted average stated rate to extend its borrowing base, with maturities from April 2029 to June 2033 and net proceeds of $6.83 million. It repaid $1.85 million of InterNotes at par and recognized a $37,000 net loss on extinguishment. It repurchased $25.00 million of 3.437% 2028 Notes at a weighted average price of 93.44%, recognizing a $1.52 million net realized gain, and repurchased $677,000 of 3.364% 2026 Notes at 99.02%. Remaining public notes include $264.5 million of 3.364% 2026 Notes, $254.7 million of 3.437% 2028 Notes and $182.2 million of 5.50% 2030 Notes.
Preferred-to-common conversions produced a $5.34 million loss from redemption of preferred stock in the quarter, after 1,597,774 Series A1, 568,950 Series A3, 19,289 Series M1 and 106,743 Series M3 shares converted into 21,457,011 common shares. On May 8, 2026, the company entered an at-the-market agreement with A.G.P. / Alliance Global Partners to sell up to 16,000,000 shares, or $400 million in aggregate liquidation preference, of Series A Preferred Stock. It issued 626,888 Series A5 shares for net proceeds of $14.10 million, 88,489 Series M5 shares for $2.15 million, and 65,692 Series A shares for $1.10 million, excluding offering costs and preferred dividend reinvestment.
On July 7, 2026, stockholders authorized the company to sell common stock below net asset value per share in one or more offerings over the next 12 months, subject to conditions including a 25% daily cap on shares sold. Dividend reinvestment issued 998,885, 1,275,870 and 985,754 common shares in April, May and June.
During the year ended June 30, 2026, the company extended maturities on several first-lien facilities, including National Property REIT Corp. to March 31, 2027, PeopleConnect Holdings to January 22, 2028, Belnick to May 14, 2029, Spartan Energy Services to January 26, 2030, CP Energy Services to April 4, 2030, and Credit Central Loan Company to November 30, 2029. Weighted average rates on new first-lien debt for the year were 11.30%.