BDC Prospect Capital Prices New Baby Bond

Large business development company Prospect Capital (NASDAQ:PSEC) has priced a new $25 baby bond offering with a fixed coupon of 6.875%.  This is a strong coupon for an investment grade company.  The baby bonds are rated BBB- by Standard & Poors

This is a fairly small issue with 2 million shares with another 300,000 available for over allotment so the issue will sell fairly quickly once it hits the market.

The issue will have a maturity date in 2029 with an optional early redemption date starting in 12/15/2021.

There will be no OTC Grey market trading on the baby bonds and the ticker symbol has not been yet been announced.

The final prospectus can be found here.

PSEC has 2 additional baby bonds outstanding both of which have coupons of 6.25%.

PBB was sold in 2015 and further details can be seen here.

PBY was sold in May, 2018 and further info can be seen here.

14 thoughts on “BDC Prospect Capital Prices New Baby Bond”

  1. Tim, Some of the CHS pfd quintet slid late yesterday. CHSCM set a new 52 wk low. CHSCN came within pennies of its 52-wk low. Their XD is Dec 14th.
    The Nov 13th article: “feedandgrain dot com / news / shakeup-begins-at-chs-after-fraud-overstated-profits” conveyed CHS was hoping to release corrected financial statements yesterday. Today is CHS’ end of FY19-Q1. They have yet to report: FY18-Q4, FY18 overall, correction of prior financial statements. Perhaps some news will be released today. Any thoughts or updates?

    1. Hi aarod–I watch them kind of closely – although not daily. They have lost some credibility in the marketplace with the recent 190 million dollar fraud, but I think they are very likely doing just fine.

      Personally I will take a look at the shares as I don’t have any right now and would probably get some at the right price (whatever that is).

      Maybe I will get some time to look closer an write on them in the next week.

  2. I am presently out as I flipped on a quick 50 cent gain a few weeks ago on CHSCN. Something just doesnt quite smell right. I read they have had some lax maanagement and accounting issues and some heads have started to roll. But the exact numbers and damage hasnt came out. It makes me a bit nervous to own. One can have a higher rated preferred in that 6.5% NISOP issue without much yield loss and no accounting uncertainty. The CHS issues are not rated per se, but I have read they would have been a lower BB/ high B rated if they were. Which would make sense to me anyways. I am watching.

    1. NISOP is a 100% regulated utility and though they haven’t the greatest balance sheet it’s financials do. It have a loud over them like CHSCM, CHSCN etc IF there is a horrible revelation about CHS the exit door to their preferreds will be a very crowded place. Time to just watch and see what CHS files with the SEC and not be a hero by loading up on the preferred weakness. Full disclosure: no current position in CHS, but reserving the right to flip shortly AFTER the indiscretions with their accounting are fully published and known. Wishing you profitable investing, Nomad

      1. Nomad it is getting hard to differentiate between market malaise on issues and individual preferred price movements. Many of the “old reliable trades” are breaking down….ALLY-A is slipping and NSS even went under par this morning. It may be a “repricing event” instead of call threat now. Who knows..

        1. Grid, Ive read this book before and late in the year/December there are large buy and sell orders that being done by institutional accounts and large funds to maneuver their portfolios (creating value). I am happy to “grab” ALLY.A at such a HUGE floating rate and am quite surprised Ally let’s this preferred continue above 8%. If you go to http://www.ally.com you can see what their rates are currently, the highest CD is a 5 year for 3.10%. Also, the next ALLY.A EX date isn’t until mid February which my account for some of the volatility. As for NSS, I am long this floater as well and it goes EX 12/28; I would believe that this note due 1/15/2043 and floating at a whopping 6.734% plus a climbing 3 month LIBOR will run up into the EX date.
          Peter Lunch said “It would be wonderful if we could avoid the common setbacks with timely exits.”
          No worries my friend, let them keep paying us. Nomad

          1. Nomad, I have just been lucky and spoiled. I havent seen 35 cent drops in a long time on my stuff. I guess I am a bit too price sensitive and need to relax a bit. You are right about the manipulation games…Look at PFX. It is really my only bad trade this year. But it went down in the low $14s this week and now lasted traded at about $16.75, so just a bit of short of break even from the years worth of divis collected. But still bouncing around $2 in a few days is definitely odd. But when I bought these it was own until 2032 maturity of watch it go bankrupt. And the plan is going to be carried out!

            1. Grid, both of us are swimming in the same murky pool of Phoenix (PFX). I tried earlier this year for a solid 2 weeks to add to my position, but the “fake” spread of the institutions kept running me away and wouldn’t trade my bids. A couple of times I even hit the offer and it would “mysteriously” move away higher. Really, 2032 doesn’t seem that far off considering I have plenty of tax free bonds that are about the same maturity. Fasten your seatbelts, it’s going to be a bumpy night, Nomad

          2. At present price there is really zero call risk in ALLY-A. Makes me wonder who the fool is. Could it be me as I keep buying shares?

  3. Tim-
    not sure if this is outside your scope of interest but would be very interested in your thoughts on HOBEX/HOBIX as a possible investment tool. A new fund , fees are on the high side but assets are grewing and pricing should decline. Would value your views. Many of the interesting yield funds seem to be involved in real estate one way or another. HOBEX is not and cam well recommended by a friend. Would value your take. TIA SC

    1. These are both short term bond funds. High fees, low liquidity. Doubtful fees will ever decline, and they sure won’t grow assets with fees like those. Never heard of the sponsor.

      You have many choices in short-term debt be it in OEFs, CEFs or ETFs. look for something else.

  4. For those who may be interested, White Horse Financial has a new Baby Bond also…..Ticker is WHFBZ and 6.5%, Currently trading at $24.40 Symbol is now active on TDAmeritrade

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