BDC Prospect Capital to Sell Baby Bonds

Giant business dvelopment company (BDC) Prospect Capital (NYSE:PSEC) is going to be selling some baby bonds.

The baby bonds will have an early redemption feature beginning in 2021 and will have a maturity date in 2028.

Standard features will apply.  Quarterly paying, non qualified interest payments etc.

Preliminary information on the issue can be found here.

The company currently has a 6.25% baby bond outstanding (NYSE:PBB) which had been trading around $25.70–before tumbling 40 cents in the last few minutes.


17 thoughts on “BDC Prospect Capital to Sell Baby Bonds”

  1. Hey Tim did you see this article about GWSVP

    The last paragraph read “The proposed refinancing contemplates up to a $200 million senior term loan facility and up to a $50 million senior revolving credit facility.

    According to Primo, consummation of the offering and the proposed refinancing,were estimated to save the company between $5.25 million and $5.75 million in interest expenses in the second half of 2018.” (By John Brasier – Reporter, Triad Business Journal)
    Would you read this as the GWSVP is not going to get called?

    1. Hi Dave–nothing new here as far as I can tell. From the prospectus

      We intend to use the net proceeds from this offering to pay down existing indebtedness. Upon completion of the offering, we intend to refinance our remaining outstanding senior indebtedness. There can be no assurances as to whether or when we will be able to refinance our remaining outstanding senior indebtedness.

      They have a term facility from Goldman of $186 million and $88 million on GWSVP–total around $274 million. The Goldman money is costing them 9-10% and GWSVP 9.06%.

      Seems to me that all the above would be on the table as far as a refi if they can get the money at 7% (instead of the 9-10%).

      As as I said if I was a holder now I would be out–then in a month when all the refi’ing is done a person can go back in if desired. No use giving up a nice capital gain.

    2. It is definitely on the table. Strong language about cutting costs, and this is a high coupon. I got out and took my large capital gain with me. No sense loosing that on a good gamble. If they haven’t redeemed in a few months, I might consider getting back in. Things take time, and one month turns into two before some companies get things done.

      1. I think the same way, Mr. Lucky. I just jettisoned my position in CPE-A at $52.15 today. Made some easy quick money here holding 5 weeks and I am not giving it back up on a call. Especially when the coupon is begging refi at 10%.

        1. Grid–Glacier got called tonight. I also held CPE-A for years and years and got out recently.

          1. That was a great call reading the fine print Tim. Rarely does one sneak out the back door on these and you gave people who read your posts a chance to. I was always too chicken to buy CPE-A until I new oil was higher and call risk would keep it anchored. I bought 500 shares under $50.80 and it just kept rising after I bought. Your Glacier example is why I hit the sell button. Im not giving up the easy money gains.

  2. Thanks for the info Tim, and not to nitpick, but the parent company’s ticker is PSEC, not PSCE.

    1. Thanks Bruce– I knew that–never look them up just have them imbedded in 64 year old brain that malfunctions on occasion.

      Got it corrected.

  3. Thanks, Tim. 2028 maturity date is too far out for me. Gosh, jeepers, I’m old enough to be carbon dated and may well be taking a dirt nap by then.

      1. Same here, Tim. I *think* I can hang on until 2021; plus, I always prefer the shorter durations anyway.

        1. With the yield curve being so flat right now, I’m in the 2018-2020 range.

          To be honest, 12 month CDs are my top choice at the moment. The online banks have them a 2.25%

          1. Jacob–You are really short term–but I understand–I have quite a pile in KYN-F @ 3.50%–redemption 4/2020 (or sooner).

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