Prospect Capital Corporation (PSEC)
TASE 
Summary
PSEC Chart
Prospect Capital: The Preferred Shares Are Overpriced Versus The Bonds
Prospect Capital Corporation offers perpetual, cumulative preferred shares with a 5.35% coupon and 7.9% current yield. PSEC common equity trades at a >50% discount to NAV, reflecting market skepticism about balance sheet quality and portfolio marks. PSEC.PR.A's yield is lower than PSEC's long-dated bonds, despite greater risk in bankruptcy, making the preferred equity unattractive on a risk/reward basis.
Prospect Capital: Stocks Sink, Bonds Lure
Prospect Capital Corporation trades at a deep 63% discount to NAV, near its istorical lows. PSEC's portfolio is 84% senior and senior secured, with significant sector diversification across 31 industries. Dividend cuts have been persistent, with the payout dropping ~22% in May 2024 and multiple reductions over the past decade.
Prospect Capital: Dividend Reset Doesn't Change Anything
Prospect Capital maintains a 'Strong Buy' rating as its investment thesis, although controversial, remains intact after Q3'26 earnings. PSEC's portfolio quality remained stable at 0.7%, outperforming peers, with first liens rising to 72%. The dividend was reset to $0.035 per-share monthly due to pressure from preferred stock offerings.
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Prospect Capital Corporation Profile
| Capital Markets Industry | Financials Sector | John Francis Barry CEO | TASE Exchange | US74348T1025 ISIN |
| US Country | 130 Employees | 17 Sep 2026 Last Dividend | - Last Split | 27 Jul 2004 IPO Date |
Overview
Prospect Capital Corporation operates as a business development company, focusing primarily on the middle market and aiming to provide a broad range of financial solutions. It targets mature companies, as well as those in later stage and emerging growth phases, engaging in leveraged buyouts, refinancing, acquisitions, recapitalizations, and turnaround situations. The company places a strong emphasis on generating growth capital and addressing the needs for development, capital expenditures, and structured subordinated debt tranches, including those of collateralized loan obligations. Prospect Capital invests in secured debt, senior debt, equity, and a variety of loan formats, catering to a diverse portfolio of business needs. With a strategic eye on real estate, especially multi-family residential properties, the company encompasses a comprehensive investment approach. It primarily serves the United States and Canada, focusing on small to medium-sized private companies across multiple sectors.
Products and Services
- Mezzanine Finance & Later Stage Investments:
Specializing in providing mezzanine finance and capital for companies in their later stages, focusing on growth and transitional phases.
- Leveraged Buyouts, Refinancing, and Acquisitions:
Offering financial solutions for leveraged buyouts, refinancing existing debts, and facilitating acquisitions to drive business expansion and consolidation.
- Recapitalizations & Turnaround Initiatives:
Engaging in recapitalization efforts and providing necessary support for turnaround situations to revitalize companies.
- Growth Capital & Development:
Funding the growth capital and development needs of companies, supporting their expansion and operational advancements.
- Capital Expenditures:
Offering financing options for capital expenditures, enabling companies to invest in physical assets for their long-term benefit.
- Subordinated Debt and Collateralized Loan Obligations:
Providing subordinated debt options and investing in collateralized loan obligation tranches to offer layered financial solutions.
- Marketplace Lending & Bridge Transactions:
Engaging in marketplace lending and offering bridge loans to support companies during transitional funding periods.
- Real Estate Investments:
Making targeted investments in the real estate sector, with a particular focus on the multi-family residential real estate asset class.
- Private Debt & Equity Investments:
Investing in private debt and equity stakes in private and microcap public businesses, across various industry sectors.
- Primary and Secondary Loans/Portfolios:
Focusing on both the origination of primary loans and the acquisition of secondary loan portfolios, catering to diverse financing needs.
- Sector-Specific Investments:
Targeting investments across all industry sectors with expertise in energy and industrial sectors, including aerospace, defense, financial services, healthcare, and technology among others.
