UNITED STATES
SECURITIES AND EXCHANGE COMMISSION
WASHINGTON, D.C. 20549
FORM 10-Q
(Mark One)
☒
QUARTERLY REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934
FOR THE QUARTERLY PERIOD ENDED MARCH 31, 2025
OR
☐
TRANSITION REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934
FOR THE TRANSITION PERIOD FROM TO
COMMISSION FILE NUMBER: 814-00891
PENNANTPARK FLOATING RATE CAPITAL LTD.
(Exact name of registrant as specified in its charter)
MARYLAND
27-3794690
(State or other jurisdiction of incorporation or organization)
(I.R.S. Employer Identification No.)
1691 Michigan Avenue
Miami Beach, Florida
33139
(Address of principal executive offices)
(Zip Code)
(786) 297-9500
(Registrant’s Telephone Number, Including Area Code)
None
(Former name, former address and former fiscal year, if changed since last report)
Securities registered pursuant to Section 12(b) of the Act:
Title of Each Class
Trading Symbol(s)
Name of Each Exchange on Which Registered
Common Stock, par value $0.001 per share
PFLT
The New York Stock Exchange
Indicate by check mark whether the registrant (1) has filed all reports required to be filed by Section 13 or 15(d) of the Securities Exchange Act of 1934 during the preceding 12 months (or for such shorter period that the registrant was required to file such reports), and (2) has been subject to such filing requirements for the past 90 days. Yes ☒ No ☐
Indicate by check mark whether the registrant has submitted electronically every Interactive Data File required to be submitted pursuant to Rule 405 of Regulation S-T (§232.405 of this chapter) during the preceding 12 months (or for such shorter period that the registrant was required to submit such files). Yes ☒ No ☐
Indicate by check mark whether the registrant is a large accelerated filer, an accelerated filer, a non-accelerated filer, a smaller reporting company, or an emerging growth company. See the definitions of “large accelerated filer,” “accelerated filer,” “smaller reporting company,” and “emerging growth company” in Rule 12b-2 of the Exchange Act.
Large accelerated filer
☑
Accelerated filer
Non-accelerated filer
Smaller reporting company
Emerging growth company
If an emerging growth company, indicate by check mark if the registrant has elected not to use the extended transition period for complying with any new or revised financial accounting standards provided pursuant to Section 13(a) of the Exchange Act. ☐
Indicate by check mark whether the registrant is a shell company (as defined in Rule 12b-2 of the Exchange Act). Yes ☐ No ☒
The number of shares of the registrant’s common stock, $0.001 par value per share, outstanding as of May 12, 2025 was 99,217,896.
FORM 10-Q FOR THE QUARTER ENDED MARCH 31, 2025
TABLE OF CONTENTS
PART I. CONSOLIDATED FINANCIAL INFORMATION
Item 1. Consolidated Financial Statements
4
Consolidated Statements of Assets and Liabilities as of March 31, 2025 (unaudited) and September 30, 2024
Consolidated Statements of Operations for the three and six months ended March 31, 2025 and 2024 (unaudited)
5
Consolidated Statements of Changes in Net Assets for the three and six months ended March 31, 2025 and 2024 (unaudited)
6
Consolidated Statements of Cash Flows for the six months ended March 31, 2025 and 2024 (unaudited)
7
Consolidated Schedules of Investments as of March 31, 2025 (unaudited) and September 30, 2024
8
Notes to Consolidated Financial Statements (unaudited)
26
Report of Independent Registered Public Accounting Firm (PCAOB ID 49)
49
Item 2. Management’s Discussion and Analysis of Financial Condition and Results of Operations
51
Item 3. Quantitative and Qualitative Disclosures About Market Risk
68
Item 4. Controls and Procedures
69
PART II. OTHER INFORMATION
Item 1. Legal Proceedings
Item 1A. Risk Factors
Item 2. Unregistered Sales of Equity Securities and Use of Proceeds
Item 3. Defaults Upon Senior Securities
Item 4. Mine Safety Disclosures
Item 5. Other Information
Item 6. Exhibits
70
SIGNATURES
71
2
PART I—CONSOLIDATED FINANCIAL INFORMATION
We are filing this Quarterly Report on Form 10-Q, or the Report, in compliance with Rule 13a-13 as promulgated by the Securities and Exchange Commission, or the SEC, under the Securities Exchange Act of 1934, as amended, or the Exchange Act. In this Report, except where the context suggests otherwise, the terms “Company,” “we,” “our” or “us” refers to PennantPark Floating Rate Capital Ltd. and its wholly-owned consolidated subsidiaries; “Funding I” refers to PennantPark Floating Rate Funding I, LLC; “Taxable Subsidiary” refers to collectively our consolidated subsidiaries PFLT Investment Holdings II, LLC and PFLT Investment Holdings, LLC; “PSSL” refers to PennantPark Senior Secured Loan Fund I LLC, an unconsolidated joint venture; “PTSF” refers to PennantPark-TSO Senior Loan Fund, LP, an unconsolidated limited partnership; "2037 Securitization Issuer"" refers to PennantPark CLO 11, LLC, a consolidated Delaware limited liability company, “PennantPark Investment Advisers” or “Investment Adviser” refer to PennantPark Investment Advisers, LLC; “PennantPark Investment Administration” or “Administrator” refers to PennantPark Investment Administration, LLC; “2023 Notes” refers to our 4.3% Series A notes due 2023; “2026 Notes” refers to our 4.25% Notes due 2026; “1940 Act” refers to the Investment Company Act of 1940, as amended; “SBCAA” refers to the Small Business Credit Availability Act; “Code” refers to the Internal Revenue Code of 1986, as amended; “RIC” refers to a regulated investment company under the Code; “BDC” refers to a business development company under the 1940 Act; “Credit Facility” refers to our multi-currency senior secured revolving credit facility, as amended from time to time, with Truist Bank and other lenders, or the “Lenders,” entered into on August 12, 2021; “Securitization Issuer” refers to PennantPark CLO I, Ltd.; “Securitization Issuers” refers to the Securitization Issuer and PennantPark CLO I, LLC; “Debt Securitization” refers to the $301.4 million term debt securitization completed by the Securitization Issuers; “2031 Asset-Backed Debt” refers to (i) the issuance of the Class A-1 Senior Secured Floating Rate Notes due 2031, the Class A-2 Senior Secured Fixed Rate Notes due 2031, the Class B-1 Senior Secured Floating Rate Notes due 2031, the Class B-2 Senior Secured Fixed Rate Notes due 2031, the Class C-1 Secured Deferrable Floating Rate Notes due 2031, the Class C-2 Notes Secured Deferrable Fixed Rate Notes due 2031, and the Class D Secured Deferrable Floating Notes due 2031 and (ii) the borrowing of the Class A‑1 Senior Secured Floating Rate Notes due 2031 by the Securitization Issuers in connection with the Debt Securitization; and “Depositor” refers to PennantPark CLO I Depositor, LLC. 2036 Securitization Issuer refers to PennantPark CLO VIII, LLC; “2036-Debt Securitization” refers to the $350.6 million term debt securitization completed by the "2036 Securitization Issuers"; “2036 Asset-Backed Debt” refers to the issuance of the AAA(sf) Class A-1 Notes, AAA(sf) Class A-2 Notes, AA(sf) Class B Notes, A(sf) Class C Notes, BBB-(sf) Class D Notes, and the borrowing issuance of AAA(sf) Class A-1 floating rate loans. (the "Class A-1 Loans" with the 2036-Secured Notes.); “2036-R Securitization Issuers” refers to Securitization Issuer and PennantPark CLO I LLC; “2036-R Indenture” refers to that certain indenture, dated September 19, 2019, by and among the 2036-R Securitization Issuers and U.S. Bank Trust Company, National Association, as amended by the second supplemental indenture, dated June 25, 2024; “2036-R Asset-Backed Debt” refers to the issuance by the 2036-R Securitization Issuers of the following classes of notes pursuant the 2036-R Indenture (i) $203 million of A-1-R Notes, which bear interest at the three-month secured overnight financing rate (“SOFR”) plus 1.75%, (ii) $10.5 million of A-2-R Notes, which bear interest at three-month SOFR plus 1.90%, (iii) $12 million of Class B-R Notes, which bear interest at three-month SOFR plus 2.05%, (iv) $28 million of C-R Notes, which bear interest at three-month SOFR plus 2.75% and (v) $21 million of D-R Notes, which bear interest at three-month SOFR plus 4.30% (collectively, the “Secured Notes”), (B) the issuance by a 2036-R Securitization Issuer of $64 million of subordinated notes pursuant to the 2036-R Indenture (the “Subordinated Notes”) and (C) the borrowing by the Securitization Issuer of $12.5 million of Class B-R Loans, which bear interest at three-month SOFR plus 2.05% (the “Class B-R Loans”); “2037 Debt Securitization” refers to the $474.6 million term debt securitization completed by 2037 Securitization Issuer; “2037 Credit Agreement” refers to that certain credit agreement, dated as of February 20, 2025 by and among 2037 Securitization Issuer, as borrower, the various financial institutions party thereto, as lenders, and Western Alliance Trust Company, National Association, as collateral agent and as loan agent; “2037 Indenture” refers to that certain indenture, dated as of February 20, 2025 by and between 2037 Securitization Issuer and Western Alliance Trust Company, National Association; “2037 Asset-Backed Debt” refers to (A) the issuance by 2037 Securitization Issuer of the following classes of notes pursuant to the 2037 Indenture: (i) $220.5 million of AAA(sf) Class A-1 Notes, which bear interest at three-month SOFR plus 1.49%, (ii) $19.0 million of AAA(sf) Class A-2 Notes, which bear interest at three-month SOFR plus 1.60%, (iii) $28.5 million of AA(sf) Class B Notes, which bear interest at three-month SOFR plus 1.75%, (iv) $38.0 million of A(sf) Class C Notes, which bear interest at three-month SOFR plus 2.20%, (v) $28.5 million of BBB-(sf) Class D Notes (the “2037 Class D Notes”), which bear interest at three-month SOFR plus 3.60%, (collectively, the “2037 Secured Notes”), and (vi) $85.1 million of subordinated notes (“2037 Subordinated Notes” and, together with the 2037 Secured Notes, the “2037 Notes”) and (B) the borrowing by the Issuers of $10.0 million under AAA(sf) Class A-1L-A floating rate loans and $45.0 million under AAA(sf) Class A-1L-B floating rate loans (together, the “2037 Asset-Backed Loans”), which bear interest at three-month SOFR plus 1.49%. References to our portfolio, our investments, our multi-currency, senior secured revolving credit facility, as amended and restated, or the Credit Facility, and our business include investments we make through our subsidiaries.
3
PENNANTPARK FLOATING RATE CAPITAL LTD. AND SUBSIDIARIES
CONSOLIDATED STATEMENTS OF ASSETS AND LIABILITIES
(in thousands, except share and per share data)
March 31, 2025
September 30, 2024
(unaudited)
Assets
Investments at fair value
Non-controlled, non-affiliated investments (amortized cost— $2,043,844 and $1,622,669, respectively)
$
2,046,762
1,632,269
Controlled, affiliated investments (amortized cost— $361,375 and $372,271, respectively)
297,290
351,235
Total investments (amortized cost— $2,405,219 and $1,994,940, respectively)
2,344,052
1,983,504
Cash and cash equivalents (cost— $111,368 and $112,046, respectively)
111,358
112,050
Interest receivable
11,094
12,167
Receivables from investments sold
2,048
—
Distributions receivable
946
635
Due from affiliate
82
291
Prepaid expenses and other assets
2,268
198
Total assets
2,471,848
2,108,845
Liabilities
Credit Facility payable, at fair value (cost— $273,855 and $443,855, respectively)
273,790
443,880
2026 Notes payable, net (par—$185,000)
184,220
183,832
2036 Asset-Backed Debt, net (par—$287,000)
284,357
284,086
2036-R Asset-Backed Debt, net (par— $266,000)
265,300
265,235
2037 Asset-Backed Debt, net (par— $361,000)
358,083
Payable for investments purchased
20,363
Interest payable on debt
15,202
14,645
Distributions payable
9,627
7,834
Base management fee payable
5,604
4,588
Incentive fee payable
6,258
3,189
Accounts payable and accrued expenses
1,664
2,187
Deferred tax liability
612
1,712
Total liabilities
1,404,717
1,231,551
Commitments and contingencies (See Note 12)
Net assets
Common stock, 96,417,896 and 77,579,896 shares issued and outstanding, respectively Par value $0.001 per share and 200,000,000 shares authorized
96
78
Paid-in capital in excess of par value
1,189,888
976,744
Accumulated deficit
(122,853
)
(99,528
Total net assets
1,067,131
877,294
Total liabilities and net assets
Net asset value per share
11.07
11.31
SEE NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
CONSOLIDATED STATEMENTS OF OPERATIONS
(in thousands, except per share data)
(Unaudited)
Three Months Ended March 31,
Six Months Ended March 31,
2025
2024
Investment income:
From non-controlled, non-affiliated investments:
Interest
49,215
30,470
96,678
54,238
Dividend
369
577
1,085
Other income
634
1,268
2,114
3,031
From controlled, affiliated investments:
7,345
8,320
20,153
16,754
4,375
3,719
8,750
7,219
306
Total investment income
61,938
44,354
128,947
82,327
Expenses:
Interest and expenses on debt
22,529
14,688
44,890
23,630
Performance-based incentive fee
4,767
13,750
9,630
Base management fee
3,424
10,868
6,375
General and administrative expenses
1,200
1,255
2,400
2,243
Administrative services expenses
650
585
1,150
1,211
Expenses before amendment costs and provision for taxes
36,241
24,719
73,058
43,089
Provision for taxes on net investment income
225
547
450
701
Credit Facility amendment costs
442
Total expenses
36,908
25,266
73,950
43,790
Net investment income
25,030
19,088
54,997
38,537
Realized and unrealized gain (loss) on investments and debt:
Net realized gain (loss) on:
Non-controlled, non-affiliated investments
(795
4,010
386
921
Non-controlled and controlled, affiliated investments
(2,682
22,811
Provision for taxes on realized gain (loss) on investments
(21
(94
Net realized gain (loss) on investments
(3,498
23,103
Net change in unrealized appreciation (depreciation) on:
(9,630
3,278
(6,688
8,506
Controlled and non-controlled, affiliated investments
(11,146
4,466
(43,050
5,408
Provision for taxes on unrealized appreciation (depreciation) on investments
468
230
1,100
Debt appreciation (depreciation)
1
39
91
(23
Net change in unrealized appreciation (depreciation) on investments and debt
(20,307
8,013
(48,547
14,121
Net realized and unrealized gain (loss) from investments and debt
(23,805
12,023
(25,444
15,042
Net increase (decrease) in net assets resulting from operations
1,225
31,111
29,553
53,579
Net increase (decrease) in net assets resulting from operations per common share (See Note 7)
0.01
0.51
0.34
0.89
Net investment income per common share
0.28
0.31
0.64
CONSOLIDATED STATEMENTS OF CHANGES IN NET ASSETS
(in thousands, except share issue data)
Net increase (decrease) in net assets from operations:
(3,477
23,197
Net change in unrealized appreciation (depreciation) on investments
(20,776
7,744
(49,738
13,914
Net change in provision for taxes on realized and unrealized appreciation (depreciation) on investments
447
1,006
Net change in unrealized appreciation (depreciation) on debt
Distributions to stockholders:
Distribution of net investment income
(27,699
(18,818
(52,879
(36,878
Total distributions to stockholders
Capital transactions
Public offering
131,103
51,391
213,811
Offering costs
(149
(986
(648
Net increase in net assets resulting from capital transactions
130,954
50,405
213,163
Net increase (decrease) in net assets
104,480
62,698
189,837
67,106
Net assets:
Beginning of period
962,651
658,013
653,605
End of period
720,711
Capital share activity:
Shares issued from public offering
11,562,000
4,493,436
18,838,000
CONSOLIDATED STATEMENTS OF CASH FLOWS
(in thousands)
Six months ended March 31,
Cash flows from operating activities:
Adjustments to reconcile net increase (decrease) in net assets resulting from operations to net cash provided by (used in) operating activities:
Net change in unrealized (appreciation) depreciation on investments
49,738
(13,914
(91
23
Net realized (gain) loss on investments
(23,197
(921
Net accretion of discount and amortization of premium
(7,430
(2,074
Purchases of investments
(900,239
(640,899
Payment-in-kind interest
(3,076
(1,624
Proceeds from dispositions of investments
523,668
248,718
Amortization of deferred financing costs
779
761
(Increase) decrease in:
1,073
(1,465
Distribution receivable
(311
(12
Receivable for investments sold
(2,048
(2,070
894
209
(240
Increase (decrease) in:
(20,363
(988
557
2,689
1,016
665
3,069
139
(1,100
(230
Due to affiliates
(462
Account payable and accrued expenses
(523
811
Net cash provided by (used in) operating activities
(350,786
(354,550
Cash flows from financing activities:
Proceeds from public offering
Issuance of 2036 Asset-Back Debt
287,000
Issuance of 2037 Asset-Backed Debt
361,000
Capitalized borrowing costs
(2,971
(3,241
Distributions paid to stockholders
(51,086
(36,418
Repayment of 2023 notes payable
(76,219
Repayment of 2031 Asset-Backed Debt
(1,741
Borrowings under Credit Facility
235,001
331,455
Repayments under Credit Facility
(405,000
(172,000
Net cash provided by (used in) financing activities
350,107
379,241
Net increase (decrease) in cash and cash equivalents
(679
24,691
Effect of exchange rate changes on cash
(13
Cash and cash equivalents, beginning of period
100,555
Cash and cash equivalents, end of period
125,252
Supplemental disclosures:
Interest paid
43,554
20,180
Taxes paid
900
1,060
Non-cash exchanges and conversions
551
5,067
CONSOLIDATED SCHEDULE OF INVESTMENTS
(in thousands, except share data)
Issuer Name
Maturity
Industry
Current Coupon
Basis Point Spread Above Index (1)
Par / Shares
Cost
Fair Value (2)
Investments in Non-Controlled, Non-Affiliated Portfolio Companies - 191.8% (3), (4)
First Lien Secured Debt - 174.5%
A1 Garage Merger Sub, LLC
12/22/2028
Commercial Services & Supplies
9.07
%
3M SOFR+ 475
1,571
1,553
A1 Garage Merger Sub, LLC - Unfunded Revolver (6), (8)
748
ACP Avenu Buyer, LLC
10/02/2029
IT Services
9.56
3M SOFR+ 525
14,050
13,853
13,664
ACP Avenu Buyer, LLC - Unfunded Term Loan (8)
04/21/2027
5,621
(77
ACP Avenu Buyer, LLC - Funded Revolver
847
824
ACP Avenu Buyer, LLC - Unfunded Revolver (6), (8)
2,960
(81
ACP Falcon Buyer, LLC - Unfunded Revolver (6), (8)
08/01/2029
Professional Services
3,096
Ad.net Acquisition, LLC
05/07/2026
Media
10.59
3M SOFR+ 626
4,813
4,793
Ad.net Acquisition, LLC - Funded Revolver
10.55
818
Ad.net Acquisition, LLC - Unfunded Revolver (6), (8)
426
Aechelon Technology, Inc.
08/16/2029
Aerospace and Defense
11.82
1M SOFR+ 750
25,600
25,368
Aechelon Technology, Inc. - Unfunded Revolver (8)
4,719
AFC Dell Holding Corp.
04/09/2027
Distributors
9.82
3M SOFR+ 550
27,410
27,350
27,273
AFC Dell Holding Corp. - Unfunded Term Loan (8)
7,460
(37
Amsive Holding Corporation (f/k/a Vision Purchaser Corporation)
06/10/2026
10.67
3M SOFR+ 650
13,846
13,830
13,707
Anteriad, LLC (f/k/a MeritDirect, LLC)
06/30/2026
10.20
3M SOFR+ 590
12,614
12,493
Anteriad, LLC (f/k/a MeritDirect, LLC) - Incremental Term Loan
2,041
2,030
Anteriad, LLC (f/k/a MeritDirect, LLC) - Funded Revolver (6)
1,230
Anteriad, LLC (f/k/a MeritDirect, LLC) - Unfunded Revolver (8)
1,640
Applied Technical Services, LLC
12/29/2026
12,533
12,450
Applied Technical Services, LLC - Unfunded Term Loan (8)
07/17/2025
3,990
40
Applied Technical Services, LLC - Funded Revolver
12.75
2,293
Applied Technical Services, LLC - Unfunded Revolver (6), (8)
Arcfield Acquisition Corp.
10/28/2031
9.30
3M SOFR+ 500
19,491
19,472
19,393
Arcfield Acquisition Corp. - Unfunded Revolver (6), (8)
2,874
(14
Archer Lewis, LLC
08/28/2029
Healthcare Technology
10.05
3M SOFR+ 575
29,109
28,845
Archer Lewis, LLC - Unfunded Term Loan B (8)
08/28/2026
17,014
170
Archer Lewis, LLC - Unfunded Revolver (8)
3,252
ARGANO, LLC
09/13/2029
Business Services
10.07
25,639
25,415
25,331
ARGANO, LLC - Unfunded Term Loan (8)
03/13/2026
8,907
(18
ARGANO, LLC – Unfunded Revolver (8)
1,421
(17
Azureon, LLC
06/26/2029
Diversified Consumer Services
11,907
11,761
11,621
Azureon, LLC - Unfunded Term Loan (8)
06/26/2026
10,032
(140
Azureon, LLC - Funded Revolver
568
554
Azureon, LLC - Unfunded Revolver (8)
2,013
(48
Beacon Behavioral Support Service, LLC
06/21/2029
Healthcare Providers and Services
9.80
37,115
36,694
36,744
Beacon Behavioral Support Service, LLC - Unfunded Term Loan (8)
12/22/2025
7,749
Beacon Behavioral Support Service, LLC. - Funded Revolver
1,578
1,562
Beacon Behavioral Support Service, LLC - Unfunded Revolver (8)
526
(5
Best Practice Associates, LLC
11/08/2029
11.05
3M SOFR+ 675
64,117
63,229
63,316
Best Practice Associates, LLC - Unfunded Revolver (8)
5,732
(72
Beta Plus Technologies, Inc.
07/02/2029
Internet Software and Services
1M SOFR+ 575
19,705
19,166
19,163
Big Top Holdings, LLC
03/01/2030
Construction & Engineering
29,525
29,065
Big Top Holdings, LLC - Unfunded Revolver (8)
02/28/2030
4,479
BioDerm, Inc. - Funded Revolver
01/31/2028
Healthcare Equipment and Supplies
10.81
1M SOFR+ 650
1,071
1,061
CONSOLIDATED SCHEDULE OF INVESTMENTS-(Continued)
Blackhawk Industrial Distribution, Inc.
09/17/2026
9.70
3M SOFR+ 540
8,166
8,121
8,023
Blackhawk Industrial Distribution, Inc. - Unfunded Term Loan (8)
1,893
Blackhawk Industrial Distribution, Inc. - Funded Revolver (6)
1,650
1,621
Blackhawk Industrial Distribution, Inc. - Unfunded Revolver (8)
2,233
(39
BLC Holding Company, Inc.
11/20/2030
9.05
24,965
24,798
24,840
BLC Holding Company, Inc. - Unfunded Term Loan (8)
11/20/2026
14,293
36
BLC Holding Company, Inc. - Unfunded Revolver (8)
4,398
(22
Boss Industries, LLC
12/27/2030
Independent Power and Renewable Electricity Producers
23,042
22,885
22,697
Boss Industries, LLC - Funded Revolver
549
540
Boss Industries, LLC - Unfunded Revolver (8)
2,195
(33
BlueHalo Financing Holdings, LLC
10/31/2025
10.30
3M SOFR+ 600
9,531
9,510
9,484
Burgess Point Purchaser Corporation
07/25/2029
Auto Components
9.68
3M SOFR+ 535
14,886
14,202
13,190
By Light Professional IT Services, LLC
11/16/2026
High Tech Industries
10.79
1M SOFR+ 647
49,623
49,581
By Light Professional IT Services, LLC - Unfunded Revolver (6), (8)
05/16/2025
5,831
Carisk Buyer, Inc.
12/03/2029
9.55
7,434
7,354
7,360
Carisk Buyer, Inc. - Unfunded Term Loan (8)
7,868
(8
Carisk Buyer, Inc. - Unfunded Revolver (6), (8)
1,750
Carnegie Dartlet, LLC
02/07/2030
29,700
29,297
29,403
Carnegie Dartlet, LLC - Unfunded Term Loan (8)
02/09/2026
16,214
Carnegie Dartlet, LLC - Funded Revolver
4,243
4,200
Carnegie Dartlet, LLC - Unfunded Revolver (8)
1,162
Cartessa Aesthetics, LLC
06/14/2028
12,878
12,754
Cartessa Aesthetics, LLC - Funded Revolver (6)
511
Cartessa Aesthetics, LLC - Unfunded Revolver (6), (8)
927
Case Works, LLC
10/01/2029
18,725
18,580
18,613
Case Works, LLC - Unfunded Term Loan (8)
10/01/2025
1,854
Case Works - Funded Revolver
1,643
1,633
Case Works - Unfunded Revolver (8)
2,465
(15
CF512, Inc.
08/20/2026
10.51
3M SOFR+ 619
5,713
5,692
5,628
CF512, Inc. - Funded Revolver
10.34
3M SOFR+ 602
86
85
CF512, Inc. - Unfunded Revolver (6), (8)
869
CJX Borrower, LLC
07/13/2027
3M SOFR+ 576
4,615
4,555
CJX Borrower , LLC - Unfunded Term Loan (8)
556
103
CJX Borrower, LLC - Funded Revolver
247
CJX Borrower , LLC - Unfunded Revolver (8)
988
Commercial Fire Protection Holdings, LLC
09/23/2030
43,534
43,231
43,208
Commercial Fire Protection Holdings, LLC - Unfunded Term Loan (8)
09/23/2026
13,370
Commercial Fire Protection Holdings, LLC - Unfunded Revolver (8)
5,014
(38
Compex Legal Services, Inc.
02/07/2026
9.83
3M SOFR+ 555
8,787
8,778
Compex Legal Services, Inc. - Funded Revolver
703
Compex Legal Services, Inc. - Unfunded Revolver (6), (8)
Confluent Health, LLC
11/30/2028
9.32
1M SOFR+ 500
6,930
6,757
6,584
Crane 1 Services, Inc.
08/16/2027
9.69
3M SOFR+ 536
4,253
4,212
4,221
Crane 1 Services, Inc. - Unfunded Revolver (6), (8)
502
(4
C5MI Holdco, LLC
07/31/2029
28,855
28,473
C5MI Holdco, LLC. - Funded Revolver
3,334
C5MI Holdco, LLC. - Unfunded Revolver (8)
5,759
9
DRI Holding Inc.
12/21/2028
9.67
1M SOFR+ 535
6,092
5,931
6,035
Dr. Squatch, LLC
08/31/2027
Personal Products
9.65
16,785
16,654
Dr. Squatch, LLC - Unfunded Revolver (6), (8)
3,353
DRS Holdings III, Inc.
11/03/2025
Chemicals, Plastics and Rubber
9.58
5,241
5,230
DRS Holdings III, Inc. - Unfunded Revolver (6), (8)
1,426
(3
Duggal Acquisition, LLC
09/30/2030
Marketing Services
10,269
10,176
10,218
Duggal Acquisition, LLC - Unfunded Term Loan (8)
09/30/2026
4,470
22
Duggal Acquisition, LLC - Unfunded Revolver (8)
5,605
(28
Dynata, LLC - First-Out Term Loan
07/17/2028
3M SOFR+ 526
1,847
1,731
1,838
Dynata, LLC - Last-Out Term Loan
10/16/2028
10.08
11,457
10,590
Emergency Care Partners, LLC
10/18/2027
13,701
13,616
Emergency Care Partners, LLC - Unfunded Term Loan (8)
10/19/2026
6,172
Emergency Care Partners, LLC - Unfunded Revolver (8)
1,810
EDS Buyer, LLC
01/10/2029
Electronic Equipment, Instruments, and Components
10,619
10,505
EDS Buyer, LLC. - Unfunded Revolver (6), (8)
2,298
Efficient Collaborative Retail Marketing Company, LLC
12/31/2025
Media: Diversified and Production
14.06
3M SOFR+ 976
8,264
8,286
6,611
(PIK 3.75%)
ETE Intermediate II,LLC
05/25/2029
10.82
1,653
ETE Intermediate II, LLC - Funded Revolver
ETE Intermediate II, LLC - Unfunded Revolver (8)
2,043
Eval Home Health Solutions Intermediate, LLC
05/10/2030
Healthcare, Education and Childcare
10.06
14,142
13,941
Eval Home Health Solutions Intermediate, LLC - Unfunded Revolver (8)
2,640
Exigo Intermediate II, LLC - Unfunded Revolver (8)
03/15/2027
Software
689
Fairbanks Morse Defense
06/23/2028
8.80
3M SOFR+ 450
990
986
983
Five Star Buyer, Inc.
02/23/2028
Hotels, Restaurants and Leisure
11.67
3M SOFR+ 715
4,377
4,325
4,345
Five Star Buyer, Inc. - Unfunded Revolver (8)
370
Gauge ETE Blocker, LLC - Promissory Note
05/21/2029
12.56
268
GGG MIDCO, LLC
09/27/2030
40,064
39,689
39,662
GGG Midco, LLC - Unfunded Term Loan (8)
09/27/2026
12,646
GGG MIDCO, LLC – Unfunded Revolver (8)
1,311
Global Holdings InterCo LLC
03/16/2026
Diversified Financial Services
9.92
1M SOFR+ 560
4,740
4,704
4,550
Graffiti Buyer, Inc.
08/10/2027
Trading Companies & Distributors
3M SOFR+ 560
1,344
1,336
1,321
Graffiti Buyer, Inc. - Unfunded Term Loan (8)
984
(10
Graffiti Buyer, Inc. - Funded Revolver
288
283
Graffiti Buyer, Inc. - Unfunded Revolver (6), (8)
576
Hancock Roofing and Construction L.L.C.
12/31/2026
Insurance
9.93
3,993
3,957
3,973
Hancock Roofing and Construction L.L.C. - Funded Revolver (6)
750
746
Halo Buyer, Inc.
08/07/2029
Consumer products
10.32
1M SOFR+ 600
17,152
16,988
16,702
Halo Buyer, Inc. - Funded Revolver
136
128
Halo Buyer, Inc. - Unfunded Revolver (8)
2,586
Harris & Co. LLC
08/09/2030
58,164
57,689
Harris & Co. LLC. - Unfunded Term Loan B (8)
43,321
379
Harris & Co. LLC - Funded Revolver
3,700
Harris & Co. LLC - Unfunded Revolver (8)
HEC Purchaser Corp.
06/18/2029
9.75
9,602
9,498
Hills Distribution Inc.
17,176
16,989
17,004
Hills Distribution Inc. - Unfunded Term Loan (8)
11/07/2025
1,514
HW Holdco, LLC
05/11/2026
10.23
10,098
10,073
HW Holdco, LLC - Unfunded Revolver (6), (8)
1,452
IG Investments Holdings, LLC (6)
09/22/2028
4,476
4,426
4,432
IG Investments Holdings, LLC - Unfunded Revolver (6), (8)
722
(7
10
Imagine Acquisitionco, LLC - Funded Revolver
11/16/2027
9.40
3M SOFR+ 510
21
Imagine Acquisitionco, LLC - Unfunded Revolver (8)
1,172
Impact Advisors, LLC
03/19/2032
9.06
16,600
16,517
Impact Advisors, LLC - Unfunded Term Loan (8)
03/21/2027
9,723
-
Impact Advisors, LLC - Unfunded Revolver (8)
1,945
Infinity Home Services Holdco, Inc.
12/28/2028
9.76
14,808
14,714
14,748
Infinity Home Services Holdco, Inc. (CAD)
CAD 1,713
1,236
1,190
Infinity Home Services Holdco, Inc. - 3rd Amendment Unfunded Term Loan (8)
10/30/2026
7,190
(36
Infinity Home Services Holdco, Inc. - Funded Revolver
12.00
484
Infinity Home Services Holdco, Inc. - Unfunded Revolver (8)
807
Inovex Information Systems Incorporated
12/17/2030
9.57
7,980
7,923
7,920
Inovex Information Systems Incorporated - Unfunded Term Loan (8)
12/17/2026
2,800
Inovex Information Systems Incorporated - Funded Revolver
1,470
1,459
Inovex Information Systems Incorporated - Unfunded Revolver (8)
Infolinks Media Buyco, LLC
11/02/2026
5,330
5,290
Integrative Nutrition, LLC (10)
04/30/2026
Consumer Services
16,663
16,248
5,832
ITI Holdings, Inc. - Funded Revolver
03/03/2028
ITI Holdings, Inc. - Unfunded Revolver (6), (8)
218
Inventus Power, Inc.
06/30/2025
11.93
3M SOFR+ 761
4,913
4,897
Inventus Power, Inc. - Unfunded Revolver (8)
1,729
Keel Platform, LLC
01/20/2031
Metals and Mining
10,759
10,623
Keel Platform, LLC - Unfunded Term Loan (8)
2,402
18
Kinetic Purchaser, LLC
11/10/2027
10.45
3M SOFR+ 615
13,971
13,831
13,307
Kinetic Purchaser, LLC - Funded Revolver
11/10/2026
1,717
1,636
Kinetic Purchaser, LLC - Unfunded Revolver (6), (8)
(82
Lash OpCo, LLC
02/18/2027
12.14
1M SOFR+ 785
11,069
10,998
10,848
(PIK 5.10%)
Lash OpCo, LLC - Funded Revolver (6)
08/16/2026
1M SOFR+ 775
2,908
2,850
Lash OpCo, LLC - Unfunded Revolver (6), (8)
335
LAV Gear Holdings, Inc. (10)
Capital Equipment
13,653
13,415
10,144
LAV Gear Holdings, Inc. - Incremental TL
(PIK 10.00%)
416
387
520
LAV Gear Holdings, Inc. - Funded Revolver (6) (10)
1,771
1,316
Ledge Lounger, Inc.
11/09/2026
Leisure Products
11.95
3M SOFR+ 765
3,674
3,665
3,463
(PIK 1.00%)
Ledge Lounger, Inc. - Funded Revolver
660
622
Lightspeed Buyer Inc.
02/03/2027
28,046
27,917
Lightspeed Buyer Inc. - Unfunded Term Loan (8)
06/02/2025
864
Lightspeed Buyer Inc. - Unfunded Revolver (6), (8)
2,499
LJ Avalon Holdings, LLC
01/31/2030
2,795
2,762
LJ Avalon Holdings, LLC - Unfunded Term Loan (8)
1,892
LJ Avalon Holdings, LLC - Unfunded Revolver (6), (8)
1,130
Loving Tan Intermediate II, Inc.
05/31/2028
44,839
44,253
Loving Tan Intermediate II, Inc. - Unfunded Term Loan (8)
07/14/2025
23,464
235
Loving Tan Intermediate II, Inc. - Funded Revolver
2,492
Loving Tan Intermediate II, Inc. - Unfunded Revolver (8)
2,847
LSF9 Atlantis Holdings, LLC
Specialty Retail
8.55
3M SOFR+ 425
6,291
6,263
Lucky Bucks, LLC - First-out Term Loan
10/02/2028
11.97
1M SOFR+ 765
258
Lucky Bucks, LLC - Last-out Term Loan
MAG DS Corp.
04/01/2027
7,249
7,019
6,742
Marketplace Events Acquisition, LLC
12/19/2030
9.47
55,438
54,925
54,884
Marketplace Events Acquisition, LLC - Unfunded Term Loan (8)
06/19/2026
9,754
Marketplace Events Acquisition, LLC - Unfunded Revolver (8)
6,096
(61
MBS Holdings, Inc. - Unfunded Revolver (6), (8)
04/16/2027
1,157
11
MDI Buyer, Inc.
07/25/2028
Commodity Chemicals
5,091
5,041
5,015
MDI Buyer, Inc. - Unfunded Term Loan (8)
4,416
MDI Buyer, Inc. - Funded Revolver
11.50
3M SOFR+ 400
1,186
1,169
MDI Buyer, Inc. - Unfunded Revolver (6), (8)
691
Meadowlark Acquirer, LLC
12/10/2027
9.95
3M SOFR+ 565
1,948
1,931
1,919
Meadowlark Acquirer, LLC - Funded Revolver
451
445
Meadowlark Acquirer, LLC - Unfunded Revolver (8)
1,241
(19
Medina Health, LLC
10/20/2028
10.58
3M SOFR+ 625
17,730
17,495
17,819
Medina Health, LLC - Unfunded Revolver (8)
5,187
Megawatt Acquisitionco, Inc.
6,842
6,177
Megawatt Acquisitionco, Inc. - Funded Revolver
926
826
Megawatt Acquisitionco, Inc. - Unfunded Revolver (8)
2,324
(252
MOREGroup Holdings, Inc.
01/16/2030
31,680
31,288
MOREGroup Holdings, Inc. - Unfunded Term Loan (8)
01/16/2026
11,056
111
MOREGroup Holdings, Inc. - Unfunded Revolver (8)
6,634
Municipal Emergency Services, Inc.
10/01/2027
9.48
3M SOFR+ 515
3,283
3,255
Municipal Emergency Services, Inc. - Unfunded Term Loan (8)
09/28/2027
909
Municipal Emergency Services, Inc. - Funded Revolver
47
Municipal Emergency Services, Inc. - Unfunded Revolver (6), (8)
899
NBH Group LLC - Unfunded Revolver (6), (8)
08/19/2026
1,677
NORA Acquisition, LLC
08/31/2029
10.68
3M SOFR+ 635
19,700
19,380
NORA Acquisition, LLC - Funded Revolver
10.65
822
NORA Acquisition, LLC - Unfunded Revolver (6), (8)
4,657
Omnia Exterior Solutions, LLC
12/31/2029
23,635
23,455
23,458
Omnia Exterior Solutions, LLC - Unfunded Term Loan (8)
12,802
16
Omnia Exterior Solutions, LLC - Unfunded Revolver (6), (8)
(32
One Stop Mailing, LLC
05/07/2027
Air Freight and Logistics
10.69
3M SOFR+ 636
8,381
8,305
ORL Acquisition, Inc. (6)
09/03/2027
Consumer Finance
13.70
3M SOFR+ 940
4,850
4,807
4,292
(PIK 7.50%)
ORL Acquisition, Inc. - Unfunded Revolver (6), (8)
215
(25
OSP Embedded Purchaser, LLC
12/17/2029
40,540
40,133
39,932
OSP Embedded Purchaser, LLC - Unfunded Revolver (8)
2,932
(44
Output Services Group, Inc. - First-out Term Loan
12.86
3M SOFR+ 843
521
Output Services Group, Inc. - Last-out Term Loan
05/30/2028
11.11
3M SOFR+ 667
1,058
Owl Acquisition, LLC
02/04/2028
3,890
3,821
3,832
Pacific Purchaser, LLC
10.54
6,014
5,923
6,038
Pacific Purchaser, LLC - Unfunded Term Loan (8)
2,518
48
Pacific Purchaser, LLC - Unfunded Revolver (8)
1,799
PAR Excellence Holdings, Inc.
09/03/2030
27,569
27,310
27,293
PAR Excellence Holdings, Inc. - Unfunded Revolver (8)
4,692
(47
PCS Midco, Inc.
9,112
9,005
9,158
PCS Midco, Inc. - Unfunded Term Loan (8)
03/02/2026
2,249
34
PCS Midco, Inc. - Revolver
310
311
PCS Midco, Inc. - Unfunded Revolver (8)
1,461
PL Acquisitionco, LLC
11/09/2027
Textiles, Apparel and Luxury Goods
3M SOFR+ 725
5,986
5,934
4,190
(PIK 7.00%)
PL Acquisitionco, LLC - Unfunded Revolver (8)
1,145
(343
PlayPower, Inc.
08/28/2030
32,248
32,046
31,926
PlayPower, Inc. - Unfunded Revolver (8)
3,981
(40
Project Granite Buyer,Inc.
12/31/2030
18,454
18,283
18,177
Project Granite Buyer, Inc. - Unfunded Term Loan (8)
1,708
(9
Project Granite Buyer,Inc. - Unfunded Revolver (8)
2,846
(43
Pragmatic Institute, LLC
03/28/2030
550
12
Rancho Health MSO, Inc.
06/20/2029
4,298
4,279
Rancho Health MSO, Inc. - Unfunded Term Loan (8)
3,034
28
Rancho Health MSO, Inc. - Funded Revolver (6)
9.60
1,540
Rancho Health MSO, Inc. - Unfunded Revolver (6), (8)
1,760
Recteq, LLC
01/29/2026
11.45
1,440
1,435
1,433
Recteq, LLC - Funded Revolver
11.24
3M SOFR+ 700
648
645
Recteq, LLC - Unfunded Revolver (6), (8)
Riverpoint Medical, LLC
06/21/2027
9,778
9,767
Riverpoint Medical, LLC - Funded Revolver (6)
104
Riverpoint Medical, LLC - Unfunded Revolver (6), (8)
805
Ro Health, LLC
01/17/2031
16,476
16,360
16,312
Ro Health, LLC - Funded Revolver
1,941
1,922
Ro Health, LLC - Unfunded Revolver (8)
5,824
(58
RRA Corporate, LLC
08/15/2029
9.54
14,129
14,003
13,776
RRA Corporate, LLC - Unfunded Term Loan 2 (8)
08/17/2026
21,719
(326
RRA Corporate, LLC - Funded Revolver
1,899
RRA Corporate, LLC - Unfunded Revolver (8)
4,769
(119
RTIC Subsidiary Holdings, LLC
05/03/2029
41,784
41,230
40,844
RTIC Subsidiary Holdings, LLC - Funded Revolver
4,708
4,602
RTIC Subsidiary Holdings, LLC - Unfunded Revolver (8)
(106
Rural Sourcing Holdings, Inc. (HPA SPQ Merger Sub, Inc.)
06/15/2029
1,135
1,120
1,112
Rural Sourcing Holdings, Inc. (HPA SPQ Merger Sub, Inc.) - Unfunded Term Loan (8)
1,146
Rural Sourcing Holdings, Inc. (HPA SPQ Merger Sub, Inc.) - Funded Revolver
201
197
Rural Sourcing Holdings, Inc. (HPA SPQ Merger Sub, Inc.) - Unfunded Revolver (6), (8)
659
Sabel Systems Technology Solutions, LLC
10/31/2030
Government Services
26,783
26,537
Sabel Systems Technology Solutions, LLC - Unfunded Revolver (8)
3,634
Safe Haven Defense US LLC
05/23/2029
Building Products
13,489
13,310
Safe Haven Defense US LLC - Unfunded Revolver (8)
2,920
Sales Benchmark Index LLC
07/07/2026
10.53
3M SOFR+ 620
2,519
2,514
Sales Benchmark Index LLC - Funded Revolver
9.50
3M SOFR+ 520
431
Sales Benchmark Index LLC - Unfunded Revolver (6), (8)
646
Sath Industries, LLC
Event Services
10.04
11,352
11,249
11,238
Sath Industries, LLC- Unfunded Term Loan B (8)
9,865
Sath Industries, LLC - Unfunded Revolver (8)
2,466
Schlesinger Global, Inc.
12.92
3M SOFR+ 860
15,680
15,667
14,896
(PIK 5.85%)
Schlesinger Global, Inc. - Funded Revolver
1,626
1,544
Schlesinger Global, Inc. - Unfunded Revolver (6), (8)
401
(20
Seacoast Service Partners, LLC
12/20/2029
9,148
9,075
8,956
Seacoast Service Partners, LLC - Unfunded Term Loan (8)
12/21/2026
7,155
(88
Seacoast Service Partners, LLC - Funded Revolver
361
353
Seacoast Service Partners, LLC - Unfunded Revolver (8)
1,762
Seaway Buyer, LLC
06/13/2029
10.47
1,872
1,783
Sigma Defense Systems, LLC
12/20/2027
11.20
3M SOFR+ 690
20,522
20,302
Sigma Defense Systems, LLC - Funded Revolver
2,547
Sigma Defense Systems, LLC - Unfunded Revolver (6), (8)
3,007
Smartronix, LLC
02/06/2032
1M SOFR+ 450
6,000
5,941
5,980
Smile Brands Inc.
10/12/2027
Healthcare and Pharmaceuticals
10.43
1M SOFR+ 610
2,495
2,208
(PIK 1.50%)
13
Smile Brands Inc. - Funded Revolver
694
614
Smile Brands Inc. - Unfunded Revolver (6), (8)
855
(98
Smile Brands Inc. LC - Unfunded Revolver (6), (8)
100
Solutionreach, Inc.
11.44
4,651
4,643
Solutionreach, Inc. - Funded Revolver
833
830
Spendmend Holdings LLC
03/01/2028
2,625
2,604
Spendmend Holdings LLC - Unfunded Term Loan (8)
11/25/2026
3,261
Spendmend Holdings LLC - Unfunded Revolver (8)
891
Summit Behavioral Healthcare, LLC
11/24/2028
1,980
1,968
SV-Aero Holdings, LLC - Term Loan
11/01/2030
15,470
15,402
SV-Aero Holdings, LLC - Unfunded Term Loan (8)
7,259
System Planning and Analysis, Inc. (f/k/a Management Consulting & Research, LLC)
9.28
31,708
31,441
31,834
System Planning and Analysis, Inc. - Funded Revolver
9.26
774
System Planning and Analysis, Inc. (f/k/a Management Consulting & Research, LLC) - Unfunded Term Loan (8)
14
System Planning and Analysis, Inc. - Unfunded Revolver (8)
7,590
S101 Holdings, Inc.
9.96
12,376
12,268
TCG 3.0 Jogger Acquisitionco, Inc.
01/23/2029
6,834
TCG 3.0 Jogger Acquisitionco, Inc. - Funded Revolver
13.00
243
TCG 3.0 Jogger Acquisitionco, Inc. - Unfunded Revolver (8)
2,184
Team Services Group, LLC
15,373
15,156
14,927
The Bluebird Group LLC
07/28/2026
10.98
3M SOFR+ 665
8,532
8,469
The Bluebird Group LLC - Unfunded Revolver (6), (8)
862
The Vertex Companies, LLC (6)
08/31/2028
9.42
1M SOFR+ 510
8,935
8,865
8,872
The Vertex Companies, LLC - Unfunded Term Loan (8)
11/04/2026
9,122
The Vertex Companies, LLC - Unfunded Revolver (6), (8)
5,472
TPC US Parent, LLC
11/24/2025
Food Products
10.21
11,827
11,782
TransGo, LLC
12/29/2028
11,248
11,107
11,304
TransGo, LLC - Unfunded Revolver (6), (8)
4,440
Tyto Athene, LLC
04/03/2028
9.21
3M SOFR+ 490
11,928
11,836
11,785
US Fertility Enterprises, LLC - Unfunded Term Loan (8)
10/07/2026
54
Urology Management Holdings, Inc.
06/15/2027
1M SOFR+ 550
3,588
3,573
3,581
Urology Management Holdings, Inc. - Unfunded Term Loan (8)
09/03/2026
VRS Buyer, Inc.
11/22/2030
Road and Rail
9.08
8,000
7,944
7,940
VRS Buyer, Inc. - Unfunded Term Loan (8)
11/23/2026
7,644
VRS Buyer, Inc. - Unfunded Revolver (8)
3,822
(29
Walker Edison Furniture, LLC - Term Loan (10)
03/01/2029
Wholesale
7,139
6,276
Walker Edison Furniture Company, LLC - Unfunded Term Loan (8), (10)
583
(583
Walker Edison Furniture Company, LLC - Funded Junior Revolver (10)
1,667
Watchtower Intermediate, LLC
10.33
11,114
10,977
11,070
Watchtower Intermediate, LLC - Unfunded Revolver (8)
6,300
Wrench Group, LLC
10/30/2028
8.59
3M SOFR+ 426
3,465
3,460
Zips Car Wash, LLC (10)
03/31/2028
Automobiles
12,905
12,549
10,034
Zips Car Wash, LLC - DIP
11.70
3M SOFR+ 740
592
Total First Lien Secured Debt
1,893,825
1,862,523
Subordinate Debt - 0.4%
Beacon Behavioral Holdings LLC
06/21/2030
15.00
1,123
1,109
1,111
ORL Holdco, Inc. - Convertible Notes
03/08/2028
18.00
ORL Holdco, Inc. - Unfunded Convertible Notes (8)
(2
OSP Embedded Aggregator, LP - Convertible Note
05/08/2030
471
504
Schlesinger Global, LLC - Promissory Note
01/08/2026
12.31
66
StoicLane, Inc. - Convertible Notes
2,288
2,540
StoicLane, Inc. - Unfunded Convertible Notes (8)
763
84
Total Subordinate Debt
3,947
4,384
Preferred Equity - 1.8% (5)
Accounting Platform Blocker, Inc
1,075,900
1,076
Ad.net Holdings, Inc.
6,720
672
839
AFC Acquisitions, Inc. (7)
854
1,314
1,289
Anteriad Holdings, LP (f/k/a MeritDirect Holdings, LP) (6), (7)
2,018
1,878
BioDerm Holdings, LP
1,313
Cartessa Aesthetics, LLC (7)
1,437,500
1,438
2,890
Connatix Parent, LLC
5,311
C5MI Holdco, LLC. (7)
228,900
223
250
EvAL Home Health Solutions, LLC (7)
876,386
1,455
1,392
Gauge Schlesinger Coinvest LLC
64
Hancock Claims Consultants Investors, LLC (7)
116,588
76
167
Imagine Topco, LP
8.00
1,236,027
1,564
Magnolia Topco LP - Class A (7)
Magnolia Topco LP - Class B (7)
31
20
Megawatt Acquisition Partners, LLC
9,360
936
481
NXOF Holdings, Inc. (Tyto Athene, LLC) (6)
1,935
2,690
ORL Holdco, Inc. (6)
1,327
133
PL Acquisitionco, LLC (7)
122
RTIC Parent Holdings, LLC - Class A (7)
RTIC Parent Holdings, LLC - Class C (7)
18,450
1,215
1,585
RTIC Parent Holdings, LLC - Class D (7)
19,584
196
240
SP L2 Holdings LLC
135,240
33
SP L2 Holdings LLC - Unfunded (8)
77,280
TPC Holding Company, LP (6)
409
581
TWD Parent Holdings, LLC (The Vertex Companies, LLC) (6)
37
35
UniTek Global Services, Inc. - Super Senior Preferred Equity (6)
Telecommunications
20.00
320,711
321
UniTek Global Services, Inc. - Senior Preferred Equity (6)
19.00
448,851
449
UniTek Global Services, Inc. (6)
13.50
1,047,317
670
Total Preferred Equity
17,420
19,112
Common Equity/Warrants - 15.1% (5)
A1 Garage Equity, LLC (7)
647,943
ACP Big Top Holdings, L.P.
3,000,500
2,883
3,366
Ad.net Holdings, Inc. (6)
7,467
75
Aechelon InvestCo, LP
29,917
2,992
10,012
Aechelon InvestCo, LP - Unfunded (8)
33,433
Aftermarket Drivetrain Products Holdings, LLC
2,632
3,705
AG Investco LP (6), (7)
805,164
189
AG Investco LP (6), (7), (8)
194,836
Altamira Intermediate Company II, Inc. (6)
1,648
Athletico Holdings, LLC (7)
4,678
5,000
3,097
Azureon Holdings, LLC (7)
1,130,707
1,131
780
Burgess Point Holdings, LP
112
114
118
By Light Investco LP (6), (7)
22,789
687
21,472
Carisk Parent, L.P.
239,680
232
Carnegie HoldCo, LLC (7)
2,719,600
2,646
2,203
Connatix Parent, LLC (6)
38,278
421
Consello Pacific Aggregator, LLC (7)
1,025,476
973
Crane 1 Acquisition Parent Holdings, L.P. (6)
130
120
244
1,659,050
1,659
Delta InvestCo LP (Sigma Defense Systems, LLC) (6), (7)
804,615
Delta InvestCo LP (Sigma Defense Systems, LLC) (6), (7), (8)
200,255
DUGGAL EQUITY, LP
686
657
eCommission Holding Corporation (6), (9)
Banking, Finance, Insurance & Real Estate
226
590
EDS Topco, LP
1,125,000
1,125
1,625
Events TopCo, LP
1,016,800
1,017
Exigo, LLC
541,667
542
637
FedHC InvestCo LP (6), (7)
22,671
810
3,010
FedHC InvestCo LP (6), (7), (8)
3,721
Five Star Parent Holdings, LLC
655,714
656
392
Gauge ETE Blocker, LLC
374,444
374
332
Gauge Lash Coinvest LLC (6)
1,840,021
1,393
4,401
Gauge Loving Tan, LP
2,914,701
2,915
3,490
Gauge Schlesinger Coinvest LLC (6)
465
476
GCP Boss Holdco, LLC
2,194,800
2,305
GCOM InvestCo LP (6)
19,184
3,342
4,675
GGG Topco, LLC (7)
2,759,800
2,760
2,752
GMP Hills, L.P.
4,430,843
4,431
4,387
Hancock Claims Consultants Investors, LLC (6), (7)
450,000
448
333
HPA SPQ Aggregator LP
750,399
548
HV Watterson Holdings, LLC
100,000
Icon Partners V C, L.P.
1,885,663
1,886
1,844
Icon Partners V C, L.P. (6), (8)
614,337
IIN Group Holdings, LLC (7)
1,000
IHS Parent Holdngs, L.P.
1,218,045
1,218
1,850
15
Ironclad Holdco, LLC (Applied Technical Services, LLC) (6)
6,355
668
987
ITC Infusion Co-invest, LP (7)
116,032
1,195
2,353
1,734,775
1,735
410
KL Stockton Co-Invest LP (Any Hour Services) (6), (7)
Energy Equipment and Services
382,353
385
649
Lightspeed Investment Holdco LLC (6)
585,587
586
2,204
LJ Avalon, LP
1,638,043
1,638
2,424
Lucky Bucks, LLC
73,870
2,062
589
Marketplace Events Holdings, LP
40,990
4,099
4,118
46,974
30,926
MDI Aggregator, LP
11,078
1,119
1,140
Meadowlark Title, LLC (7)
819,231
806
Megawatt Acquisition Partners, LLC - Common A Equity
1,040
Municipal Emergency Services, Inc. (6)
1,973,370
2,005
3,592
NEPRT Parent Holdings, LLC (Recteq, LLC) (6), (7)
1,494
New Insight Holdings, Inc.
158,348
2,771
3,495
New Medina Health, LLC (7)
2,672,646
2,673
3,129
NFS - CFP Holdings LLC
1,337,017
1,337
1,368
NORA Parent Holdings, LLC (7)
2,544
2,525
North Haven Saints Equity Holdings, LP (7)
223,602
224
496
OceanSound Discovery Equity, LP (Holdco Sands Intermediate, LLC) (6), (7)
211,940
2,119
2,431
OES Co-Invest, LP - Class A
1,560
1,574
2,215
OHCP V BC COI, L.P.
1,166,407
1,166
758
OHCP V BC COI, L.P. (8)
83,593
OSP Embedded Aggregator, LP
1,728
1,849
Output Services Group, Inc.
80,170
642
882
1,902
2,242
PCS Parent, LP
423,247
423
444
PennantPark-TSO Senior Loan Fund, LP (6), (9)
Financial Services
11,167,847
11,168
8,624
Pink Lily Holdco, LLC (7)
Project Granite Holdings, LLC
1,139
1,142
Quad (U.S.) Co-Invest, L.P.
266,864
267
350
QuantiTech InvestCo LP (6), (7)
700
172
QuantiTech InvestCo LP (6), (7) (8)
955
QuantiTech InvestCo II LP (6), (7)
RFMG Parent, LP (Rancho Health MSO, Inc.) (6)
1,050,000
1,050
1,318
Ro Health Holdings, Inc.
536,400
536
Safe Haven Defense MidCo, LLC (7)
596
SBI Holdings Investments LLC (Sales Benchmark Index LLC) (6)
64,634
785
Sabel InvestCo, LP (7)
87,524
2,271
2,866
Sabel InvestCo, LP - Unfunded (7), (8)
131,286
Seaway Topco, LP
296
62
Seacoast Service Partners, LLC - Equity Co-Invest
372
439
427
SP L2 Holdings, LLC (Ledge Lounger, Inc.)
360,103
360
SSC Dominion Holdings, LLC - Class B (US Dominion, Inc.) (6)
1,447
StellPen Holdings, LLC (CF512, Inc.) (6)
161,538
162
SV Aero Holdings, LLC (7)
61
529
1,401
TAC LifePort Holdings, LLC (6), (7)
533,833
902
TCG 3.0 Jogger Co-Invest, LP
9,108
1,181
Tower Arch Infolinks Media, LP (Infolinks Media Buyco, LLC) (7)
223,137
398
Tower Arch Infolinks Media, LP (Infolinks Media Buyco, LLC) (7) (8)
142,469
Tinicum Space Coast Co-Invest, LLC (7)
466
4,702
4,961
UniTek Global Services, Inc.(C)
213,739
UniVista Insurance (6), (7)
400
113
Urology Partners Co., L.P.
694,444
1,167
Walker Edison Holdco LLC
36,458
3,393
Watchtower Holdings, LLC (7)
12,419
1,242
1,227
WCP IvyRehab Coinvestment, LP (7)
208
222
WCP IvyRehab QP CF Feeder, LP (7)
3,754
3,793
4,007
WCP Ivyrehab QP CF Feeder, LP. - Unfunded (7) (8)
246
UniTek Global Services, Inc.(W)
23,889
Kentucky Racing Holdco, LLC (Warrants) (7)
87,345
951
Total Common Equity/Warrants
128,652
160,743
Total Investments in Non-Controlled, Non-Affiliated Portfolio Companies
2,043,844
Investments in Controlled, Affiliated Portfolio Companies - 27.9% (3), (4)
First Lien Secured Debt - 22.3%
PennantPark Senior Secured Loan Fund I LLC (6), (9)
05/07/2029
12.29
3M SOFR+ 800
237,650
Equity Interests - 5.6%
123,725
59,640
Total Equity Interests
Total Investments in Controlled, Affiliated Portfolio Companies
361,375
Total Investments - 219.7%(11)
2,405,219
Cash and Cash Equivalents - 10.4%
Money Market - BlackRock Federal FD Institutional 30
4.43
39,820
Non-Money Market Cash
71,548
71,538
Total Cash and Cash Equivalents
111,368
Total Investments and Cash Equivalents - 230.1%
2,516,587
2,455,410
Liabilities in Excess of Other Assets - (130.1)%
(1,388,279
Net Assets - 100%
—————
17
SEPTEMBER 30, 2024
Investments in Non-Controlled, Non-Affiliated Portfolio Companies - 186.1% (3), (4)
First Lien Secured Debt - 167.8%
10.95%
3M SOFR+610
1,579
1,559
A1 Garage Merger Sub, LLC - Unfunded Term Loan (9)
453
A1 Garage Merger Sub, LLC (Revolver) (7), (9)
10.58%
3M SOFR+525
13,905
13,662
ACP Avenu Buyer, LLC - Unfunded Term Loan (9)
04/02/2025
(105
9.85%
819
ACP Avenu Buyer, LLC (Revolver) (7), (9)
(96
ACP Falcon Buyer, LLC (Revolver) (7), (9)
10.93%
3M SOFR+626
4,838
4,808
498
Ad.net Acquisition, LLC (Revolver) (7), (9)
747
12.35%
3M SOFR+750
14,000
13,862
13,719
Aechelon Technology, Inc. - Unfunded Revolver (9)
3,104
(62
Aeronix, Inc.
12/18/2028
32,753
32,332
Aeronix, Inc. - (Revolver) (9)
6,099
10.49%
3M SOFR+550
28,494
28,420
28,209
AFC Dell Holding Corp. - Unfunded Term Loan (9)
(75
06/10/2025
10.75%
3M SOFR+650
13,813
13,765
13,675
10.50%
3M SOFR+590
13,005
12,845
2,098
2,085
2,097
Anteriad, LLC (f/k/a MeritDirect, LLC) - (Revolver) (9)
2,869
12,597
12,486
12,408
Applied Technical Services, LLC - Unfunded Term Loan (9)
Applied Technical Services, LLC (Revolver)
12.75%
3M SOFR+475
1,441
1,420
Applied Technical Services, LLC (Revolver) (7),(9)
852
Arcfield Acquisition Corp. (Revolver)
08/03/2029
11.56%
1M SOFR+625
5,951
5,869
5,921
Arcfield Acquisition Corp. (Revolver) (7),(9)
08/04/2028
1,379
10.83%
3M SOFR+575
21,700
21,485
21,266
Archer Lewis, LLC - Unfunded Term Loan A (9)
08/28/2025
13,280
(133
Archer Lewis, LLC - Unfunded Term Loan B (9)
21,267
(213
Archer Lewis, LLC - Unfunded Revolver (9)
(65
10.85%
35,768
35,411
35,409
ARGANO, LLC - Unfunded Term Loan (9)
03/13/2025
ARGANO, LLC – Unfunded Revolver (9)
10.10%
25,067
24,725
(PIK 15.00%)
Beacon Behavioral Support Service, LLC - Unfunded Term Loan (9)
12/21/2025
7,565
Beacon Behavioral Support Service, LLC - Unfunded Revolver (9)
2,434
07/01/2029
10.35%
19,806
19,212
11.10%
30,873
30,358
Big Top Holdings, LLC - (Revolver) (9)
BioDerm, Inc. (Revolver)
11.70%
1M SOFR+650
582
BioDerm, Inc. (Revolver) (7), (9)
482
(6
10.90%
3M SOFR+640
8,206
8,143
8,064
Blackhawk Industrial Distribution, Inc. - Unfunded Term Loan (9)
Blackhawk Industrial Distribution, Inc. (Revolver) (7)
11.04%
874
859
Blackhawk Industrial Distribution, Inc. (9)
3,009
(51
10.60%
3M SOFR+600
6,462
6,422
6,332
Broder Bros., Co.
12/04/2025
10.97%
3M SOFR+611
3,218
10.20%
3M SOFR+535
14,962
14,219
14,075
12.18%
3M SOFR+698
46,992
46,893
By Light Professional IT Services, LLC (Revolver) (7), (9)
12/01/2029
5,473
5,397
5,390
Carisk Buyer, Inc. - Unfunded Term Loan (9)
(24
Carisk Buyer, Inc. (Revolver) (7), (9)
(26
29,850
29,410
29,402
Carnegie Dartlet, LLC - Unfunded Term Loan (9)
Carnegie Dartlet, LLC - (Revolver) (9)
5,405
12,944
12,943
Cartessa Aesthetics, LLC (Revolver) (7)
1M SOFR+575
Cartessa Aesthetics, LLC (Revolver) (7), (9)
11.21%
3M SOFR+619
5,919
5,888
5,830
CF512, Inc.(Revolver) (7), (9)
10.88%
3M SOFR+555
8,833
8,814
Compex Legal Services, Inc. (Revolver)
02/07/2025
10.80%
Compex Legal Services, Inc. (Revolver) (7), (9)
3M SOFR+500
6,965
6,771
Connatix Buyer, Inc. (7)
10.53%
3M SOFR+561
3,775
3,734
Connatix Buyer, Inc. - Funded Revolver
3M SOFR+576
281
Connatix Buyer, Inc. (9)
953
10.71%
3M SOFR+586
2,314
2,284
2,297
Crane 1 Services, Inc. (Revolver) (7), (9)
07/31/2030
44,000
43,349
43,120
C5MI Holdco, LLC - Funded Revolver
606
594
CONSOLIDATED SCHEDULE OF INVESTMENTS - (Continued)
C5MI Holdco, LLC - Unfunded Revolver (9)
8,487
(170
6,123
5,943
5,908
9.95%
16,870
16,709
Dr. Squatch, LLC (Revolver) (7), (9)
11.20%
3M SOFR+635
15,559
15,501
15,435
DRS Holdings III, Inc. (Revolver) (7), (9)
(11
9.60%
15,321
15,168
Duggal Acquisition, LLC - Unfunded Term Loan (9)
Duggal Acquisition, LLC - Unfunded Revolver (9)
07/15/2028
10.38%
3M SOFR+526
1,856
1,725
1,853
10/15/2028
11,514
10,601
ECL Entertainment, LLC
08/31/2030
8.85%
1M SOFR+400
6,209
6,147
6,223
10,673
10,544
10,513
EDS Buyer, LLC. (Revolver) (7), (9)
(34
06/15/2025
12.37%
3M SOFR+776
8,195
8,216
6,310
Eisner Advisory Group, LLC
02/23/2031
9.25%
3M SOFR+400
6,948
6,880
6,961
ETE Intermediate II, LLC - Unfunded Revolver (9)
14,492
14,275
14,347
Eval Home Health Solutions Intermediate, LLC - UnFunded Revolver (9)
Exigo Intermediate II, LLC (Revolver) (9)
9.74%
3M SOFR+450
995
996
12.21%
3M SOFR+715
4,437
4,372
Five Star Buyer, Inc. (Revolver) (9)
741
05/19/2029
12.56%
9.64%
19,243
19,051
19,050
GGG MIDCO, LLC - Unfunded Term Loan (9)
03/27/2026
30,986
GGG MIDCO, LLC – Unfunded Revolver (9)
11.43%
3M SOFR+615
4,985
4,927
4,736
10.70%
3M SOFR+560
1,351
1,341
Graffiti Buyer, Inc. - Unfunded Term Loan (9)
Graffiti Buyer, Inc. (Revolver)
432
428
Graffiti Buyer, Inc. (Revolver) (7), (9)
3,949
3,913
Hancock Roofing and Construction L.L.C. (Revolver) (7)
10.45%
680
666
Hancock Roofing and Construction L.L.C. (Revolver) (7), (9)
(1
31,992
31,720
31,432
Harris & Co. LLC. - Unfunded Term Loan A (9)
02/09/2025
39,414
(345
Harris & Co. LLC. - Unfunded Term Loan B (9)
50,296
(440
Harris & Co. LLC - Unfunded Revolver (9)
7,401
(130
06/17/2029
9.75%
9,651
9,535
9,583
11/07/2029
11.11%
7,941
7,829
7,862
Hills Distribution Inc. - Unfunded Term Loan (9)
10,812
05/10/2026
1M SOFR+590
10,410
10,389
HW Holdco, LLC (Revolver) (9)
IG Investments Holdings, LLC
11.35%
4,487
4,430
4,443
IG Investments Holdings, LLC (Revolver) (7), (9)
09/22/2027
Imagine Acquisitionco, LLC (Revolver) (9)
11/15/2027
1,193
10.96%
3M SOFR+685
4,553
4,534
4,582
CAD 1,672
1,204
1,237
Infinity Home Services Holdco, Inc. - 1st Amendment Unfunded Term Loan (9)
11/17/2025
4,288
Infinity Home Services Holdco, Inc. (Revolver)
13.75%
194
Infinity Home Services Holdco, Inc. - Unfunded Term Loan (9)
1,098
11/01/2026
5,539
5,483
5,498
Integrative Nutrition, LLC
01/31/2025
11.36%
15,776
15,747
13,567
(PIK 6.00%)
ITI Holdings, Inc. (Revolver)
12.50%
500
ITI Holdings, Inc. (Revolver) (7), (9)
165
12.46%
3M SOFR+761
4,938
4,893
4,863
Inventus Power, Inc. - Unfunded Revolver (9)
01/19/2031
10.09%
11,544
11,388
11,486
Keel Platform, LLC - Unfunded Term Loan (9)
13,802
13,970
Kinetic Purchaser, LLC (Revolver) (7)
3,435
12.94%
3M SOFR+785
10,786
10,689
10,678
Lash OpCo, LLC (Revolver) (7)
1M SOFR+785
2,833
2,805
Lash OpCo, LLC (Revolver) (7), (9)
LAV Gear Holdings, Inc.
11.64%
1M SOFR+640
13,018
13,015
12,784
LAV Gear Holdings, Inc. (Revolver) (7)
1,721
1,690
12.25%
3M SOFR+765
3,661
3,491
19
Ledge Lounger, Inc. (Revolver)
263
(PIK 1.0%)
Ledge Lounger, Inc. (Revolver) (7), (9)
395
02/03/2026
1M SOFR+535
22,309
22,150
Lightspeed Buyer Inc. (Revolver) (7), (9)
02/01/2030
10.31%
2,809
2,774
LJ Avalon Holdings, LLC - Unfunded Term Loan (9)
LJ Avalon Holdings, LLC (Revolver) (7), (9)
45,055
44,374
44,379
Loving Tan Intermediate II, Inc. - Unfunded Term Loan (9)
07/12/2025
(117
Loving Tan Intermediate II, Inc. (Revolver)
11.60%
3M SOFR+700
1,780
1,753
Loving Tan Intermediate II, Inc. - Unfunded Revolver (9)
3,559
(53
06/30/2029
9,992
10,067
12.77%
259
518
1M SOFR+550
7,289
7,007
6,852
MBS Holdings, Inc. - Funded Revolver
3M SOFR+585
MBS Holdings, Inc. (Revolver) (7), (9)
1,019
11.25%
2,021
1,988
2,002
MDI Buyer, Inc. (Revolver)
531
MDI Buyer, Inc. (Revolver) (7), (9)
242
1,958
1,938
1,909
Meadowlark Acquirer, LLC (Revolver) (9)
1,693
(42
3M SOFR+625
17,820
17,554
Medina Health, LLC (Revolver) (9)
10.11%
6,869
6,575
358
337
Megawatt Acquisitionco, Inc. - (Revolver) (9)
2,893
(162
Michael Baker International, LLC
12/01/2028
8,010
Mission Critical Electronics, Inc.
03/31/2025
11.02%
3,101
3,092
Mission Critical Electronics, Inc. (Revolver) (7), (9)
1,325
31,840
31,410
31,362
MOREGroup Holdings, Inc. - Unfunded Term Loan (9)
(55
MOREGroup Holdings, Inc. - (Revolver) (9)
(100
3M SOFR+515
1,556
1,527
Municipal Emergency Services, Inc. - Term Loan B
777
Municipal Emergency Services, Inc. - Unfunded Term Loan (9)
1,387
Municipal Emergency Services, Inc. - Unfunded Term Loan B (9)
12/16/2024
486
Municipal Emergency Services, Inc. (Revolver) (7), (9)
947
NBH Group LLC (Revolver) (7), (9)
(50
09/13/2030
9.56%
36,300
36,029
36,028
NFS - CFP Holdings LLC - Unfunded Term Loan (9)
NFS - CFP Holdings LLC - Unfunded Revolver (9)
19,800
19,449
NORA Acquisition, LLC (Revolver) (7), (9)
5,479
12/29/2029
28,744
28,498
28,313
Omnia Exterior Solutions, LLC - Unfunded Term Loan (9)
(80
12/30/2024
8,001
Omnia Exterior Solutions, LLC (Revolver) (7), (9)
(63
3M SOFR+636
8,426
8,333
ORL Acquisition, Inc.
14.00%
3M SOFR+940
4,718
4,666
ORL Acquisition, Inc. (Revolver) (7), (9)
12/15/2029
12,803
12,598
12,432
OSP Embedded Purchaser, LLC (Revolver) (9)
(85
Outcomes Group Holdings, Inc
04/02/2031
9.10%
3M SOFR+425
3,970
4,011
3M SOFR+843
12.00%
3M SOFR+668
3,893
3,812
3,825
Ox Two, LLC
05/18/2026
Construction and Building
11.12%
3M SOFR+651
22,540
22,385
Ox Two, LLC (Revolver)
3,387
09/30/2028
11.51%
4,963
4,878
4,953
Pacific Purchaser, LLC - Unfunded Term Loan (9)
3,598
Pacific Purchaser, LLC - (Revolver) (9)
9.77%
17,500
17,327
17,325
PAR Excellence Holdings, Inc. - Unfunded Revolver (9)
10.81%
7,333
PCS Midco, Inc. - Unfunded Term Loan (9)
03/01/2026
3,974
PCS Midco, Inc. - (Revolver) (9)
PH Beauty Holdings III, Inc.
09/28/2025
Consumer Products
10.17%
3M SOFR+543
7,415
7,346
11.99%
3M SOFR+725
5,798
5,735
4,638
(PIK 3.50%)
PL Acquisitionco, LLC - (Revolver) (9)
2,290
(458
1M SOFR+525
26,334
26,140
25,939
PlayPower, Inc. - Unfunded Revolver (9)
(60
Pragmatic Institute, LLC (Revolver), (5)
07/06/2028
12.82%
1,641
1,605
1,005
(PIK 12.09%)
Quantic Electronics, LLC
11/19/2026
6,579
6,530
6,546
Quantic Electronics, LLC - Funded revolver
Quantic Electronics, LLC (Revolver) (7), (9)
Rancho Health MSO, Inc. - Unfunded Term Loan (9)
3,000
30
Rancho Health MSO, Inc. (Revolver) (7)
12/18/2025
210
Rancho Health MSO, Inc. (Revolver) (7), (9)
315
11.75%
1,448
1,439
Recteq, LLC (Revolver) (7), (9)
1,296
06/20/2025
9,829
9,796
9,841
Riverpoint Medical, LLC (Revolver) (7)
Riverpoint Medical, LLC (Revolver) (7), (9)
776
19,200
19,008
RRA Corporate, LLC - Unfunded Term Loan 1 (9)
02/15/2029
11,506
RRA Corporate, LLC - Unfunded Term Loan 2 (9)
08/15/2026
1,410
1,409
1,395
RRA Corporate, LLC - Unfunded Revolver (9)
5,306
41,995
41,372
41,155
RTIC Subsidiary Holdings, LLC - Unfunded Revolver (9)
9,417
(188
1,124
1,126
Rural Sourcing Holdings, Inc. (HPA SPQ Merger Sub, Inc.) - Unfunded Term Loan (9)
06/27/2026
Rural Sourcing Holdings, Inc. (HPA SPQ Merger Sub, Inc.) (Revolver) (7), (9)
860
13,563
13,363
13,428
Safe Haven Defense US LLC - Unfunded Revolver (9)
01/03/2025
3M SOFR+620
2,527
2,524
Sales Benchmark Index LLC (Revolver) (7), (9)
1,293
Sargent & Greenleaf Inc.
12/20/2024
11.45%
1M SOFR+760
3,272
3,266
Sargent & Greenleaf Inc. (Revolver)
1M SOFR+660
1,078
Sargent & Greenleaf Inc. (Revolver) (9)
13.20%
3M SOFR+835
15,224
15,191
14,844
(PIK 5.60%)
Schlesinger Global, Inc. (Revolver)
1,539
Schlesinger Global, Inc. (Revolver) (7), (9)
1,901
1,879
1,834
12/18/2027
11.50%
3M SOFR+690
20,708
20,447
20,501
Sigma Defense Systems, LLC (Revolver) (7), (9)
3,311
Simplicity Financial Marketing Group Holdings Inc.
12/02/2026
11.73%
4,065
4,054
4,106
Simplicity Financial Marketing Group Holdings Inc. - Unfunded Term Loan (9)
4,656
93
Simplicity Financial Marketing Group Holdings Inc. - (Revolver) (9)
1,043
Skopima Consilio Parent, LLC
05/17/2028
9.46%
1M SOFR+461
584
11/23/2028
1M SOFR+610
13,521
13,323
Smartronix, LLC - (Revolver) (9)
11/23/2027
1,791
2,422
2,143
Smile Brands Inc. (Revolver)
866
766
Smile Brands Inc. (Revolver) (7), (9)
678
(78
Smile Brands Inc. LC (Revolver) (7), (9)
12.40%
4,637
Solutionreach, Inc. (Revolver) (7), (9)
10.78%
3M SOFR+565
2,253
2,232
Spendmend Holdings LLC - Unfunded Term Loan (9)
03/03/2025
1,493
Spendmend Holdings LLC (Revolver)
10.25%
357
Spendmend Holdings LLC (Revolver) (9)
535
9.31%
1M SOFR+425
1,990
1,975
1,851
10.26%
20,461
20,238
20,421
System Planning and Analysis, Inc. (f/k/a Management Consulting & Research, LLC) (Revolver) (9)
12,537
9.59%
1,630
System Planning and Analysis, Inc. - (Revolver) (9)
6,732
11.48%
12,439
12,301
12,315
S101 Holdings, Inc. - Unfunded Term Loan 2 (9)
12/15/2024
9,036
01/26/2029
11.83%
6,857
6,895
TCG 3.0 Jogger Acquisitionco, Inc. - (Revolver) (9)
2,426
10.51%
15,412
15,173
15,217
Teneo Holdings, LLC - Initial Term Loans
03/13/2031
6,987
3M SOFR+665
2,566
2,538
The Bluebird Group LLC (Revolver) (7), (9)
The Vertex Companies, LLC (7)
08/30/2027
3,377
3,333
3,356
The Vertex Companies, LLC (Revolver)
376
The Vertex Companies, LLC (Revolver) (7), (9)
10.98%
11,888
11,808
TPCN Midco, LLC
8,878
8,749
8,665
TPCN Midco, LLC - Unfunded Term Loan (9)
13,113
(184
TPCN Midco, LLC - Unfunded Revolver (9)
2,580
12,034
11,869
TransGo, LLC (Revolver) (7), (9)
TWS Acquisition Corporation
06/16/2025
11.33%
2,508
2,502
TWS Acquisition Corporation (Revolver) (7), (9)
2,628
04/01/2028
10.23%
1M SOFR+490
11,826
11,690
10.52%
1,194
1,188
Urology Management Holdings, Inc. - Unfunded Term Loan (9)
4,800
Walker Edison Furniture, LLC - Term Loan (11)
5,441
5,026
490
Walker Edison Furniture Company, LLC - Unfunded Term Loan (11)
83
(76
Walker Edison Furniture Company, LLC - Funded Junior Revolver (11)
9,055
8,929
8,964
Watchtower Intermediate, LLC - Unfunded Term Loan (9)
12/01/2025
2,100
Watchtower Intermediate, LLC (Revolver) (9)
Wildcat Buyerco, Inc.
02/26/2027
12,592
12,498
Wildcat Buyerco, Inc. - Unfunded Term Loan (9)
3,281
Wildcat Buyerco, Inc. (Revolver) (7), (9)
534
8.87%
3M SOFR+426
3,483
3,475
3,480
Zips Car Wash, LLC
12/31/2024
3M SOFR+740
13,252
13,227
12,656
(PIK 1.5%)
1,488,717
1,472,064
Subordinate Debt - 0.3%
15.00%
1,042
1,027
1,026
18.00%
ORL Holdco, Inc. - Unfunded Convertible Notes (9)
12.31%
08/15/2027
1,526
StoicLane, Inc. - Unfunded Convertible Notes (9)
2,693
Preferred Equity - 2.1% (6)
Accounting Platform Blocker, Inc -. Preferred Equity
AFC Acquisitions, Inc. (Preferred) (8)
1,400
Anteriad Holdings, LP (f/k/a MeritDirect Holdings, LP) (7), (8)
Cartessa Aesthetics, LLC (Preferred) (8)
2,560
C5MI Holdco, LLC. - Preferred Equity (8)
233
EvAL Home Health Solutions, LLC - Preferred Equity (8)
1,631
Gauge Schlesinger Coinvest LLC (Preferred Equity)
Hancock Claims Consultants Investors, LLC (Preferred Equity) (8)
149
8.00%
1,432
Magnolia Topco LP - Class A Preferred Equity (8)
Magnolia Topco LP - Class B Preferred Equity (8)
Megawatt Acquisition Partners, LLC - Preferred A Equity
842
NXOF Holdings, Inc. (Tyto Athene, LLC) (7)
2,621
ORL Holdco, Inc. (7)
PL Acquisitionco, LLC (Preferred Equity)
RTIC Parent Holdings, LLC - Class A Preferred Equity (8)
RTIC Parent Holdings, LLC - Class C Preferred Equity (8)
1,976
RTIC Parent Holdings, LLC - Class D Preferred Equity (8)
TPC Holding Company, LP (7)
662
TWD Parent Holdings, LLC (The Vertex Companies, LLC) (7)
43
UniTek Global Services, Inc. - Super Senior Preferred Equity (7)
20.00%
343,861
344
UniTek Global Services, Inc. - Senior Preferred Equity (7)
19.00%
UniTek Global Services, Inc. (7)
13.50%
16,031
18,305
Common Equity/Warrants - 15.9% (6)
A1 Garage Equity, LLC (8)
ACP Big Top Holdings, L.P. - Common Equity
3,001
3,614
Ad.net Holdings, Inc. (7)
Aechelon InvestCo, LP - Common Equity
31,675
3,168
Aechelon InvestCo, LP - Unfunded (9)
3,686
AG Investco LP (7), (8)
1,008
AG Investco LP (7), (8), (9)
Altamira Intermediate Company II, Inc. (7)
1,736
Athletico Holdings, LLC (8)
3,837
1,179
119
By Light Investco LP (7), (8)
803
18,788
Carnegie HoldCo, LLC - Common Equity (8)
2,664
2,638
Connatix Parent, LLC (7)
236
Consello Pacific Aggregator, LLC (8)
Crane 1 Acquisition Parent Holdings, L.P. (7)
220
C5MI Holdco, LLC. - Common Equity (8)
1,654
Delta InvestCo LP (Sigma Defense Systems, LLC) (7), (8)
1,500
Delta InvestCo LP (Sigma Defense Systems, LLC) (7), (8), (9)
DUGGAL EQUITY, LP – Common Equity
686,400
eCommission Holding Corporation (7), (10)
237
639
1,256
FedHC InvestCo LP (7), (8)
21,665
727
1,773
FedHC InvestCo LP (7), (8), (9)
7,566
647
285
Gauge Lash Coinvest LLC (7)
5,349
3,207
Gauge Schlesinger Coinvest LLC (7)
GCOM InvestCo LP
GGG Topco, LLC – Common Equity (8)
4,342
Hancock Claims Consultants Investors, LLC (7), (8)
275
1,870,915
1,871
Icon Partners V C, L.P. (7), (9)
629,085
IIN Group Holdings, LLC (8)
Imagine Topco, LP (Common)
1,535
Ironclad Holdco, LLC (Applied Technical Services, LLC) (7)
ITC Infusion Co-invest, LP (8)
1,175
1,745
1,985
KL Stockton Co-Invest LP (Any Hour Services) (7), (8)
884
LEP Pequod Holdings, LP
865
1,004
Lightspeed Investment Holdco LLC (7)
2,118
1,998
904
Magnolia Topco LP - Class A Common Equity (8)
Magnolia Topco LP - Class B Common Equity (8)
10,761
1,250
Meadowlark Title, LLC (8)
Municipal Emergency Services, Inc. (7)
3,157
NEPRT Parent Holdings, LLC (Recteq, LLC) (7), (8)
New Insight Holdings, Inc. - Common Equity
New Medina Health, LLC (8)
4,171
NORA Parent Holdings, LLC (8)
2,256
North Haven Saints Equity Holdings, LP (8)
241
37,561
OceanSound Discovery Equity, LP (Holdco Sands Intermediate, LLC) (7), (8)
173,638
1,761
OES Co-Invest, LP - Class A Common Equity
1,739
1,158,239
1,158
738
OHCP V BC COI, L.P. (9)
91,761
ORL Holdco, Inc
1,474
1,727,679
PAR Excellence Holdings, Inc. - Common Equity
1,902,200
PCS Parent, LP - Common Equity
PennantPark-TSO Senior Loan Fund, LP (7)(10)
9,186
Pink Lily Holdco, LLC (8)
610,583
611
341
QuantiTech InvestCo LP (7), (8)
QuantiTech InvestCo LP (7), (8), (9)
QuantiTech InvestCo II LP (7), (8)
RFMG Parent, LP (Rancho Health MSO, Inc.) (7)
1,309
Safe Haven Defense MidCo, LLC - Common Equity (8)
SBI Holdings Investments LLC (Sales Benchmark Index LLC) (7)
716
199
SSC Dominion Holdings, LLC - Class B (US Dominion, Inc.) (7)
1,385
StellPen Holdings, LLC (CF512, Inc.) (7)
141
SV Aero Holdings, LLC (8)
TAC LifePort Holdings, LLC (7), (8)
815
1,357
Tower Arch Infolinks Media, LP (Infolinks Media Buyco, LLC) (8)
221,296
Tower Arch Infolinks Media, LP (Infolinks Media Buyco, LLC) (8), (9)
144,310
21,527
TPCN Holdings, LLC - Common Equity (8)
1,053,200
1,053
749
UniVista Insurance (7), (8)
334
844
740
Watchtower Holdings, LLC (8)
1,292
WCP IvyRehab Coinvestment, LP (8)
221
WCP IvyRehab QP CF Feeder, LP (8)
3,987
WCP Ivyrehab QP CF Feeder, LP. - Unfunded (8), (9)
Wildcat Parent, LP (Wildcat Buyerco, Inc.) (7)
2,240
95
816
Kentucky Racing Holdco, LLC (Warrants) (8)
115,289
139,207
1,622,669
Investments in Controlled, Affiliated Portfolio Companies - 40.0% (3), (4)
First Lien Secured Debt - 31.3%
Marketplace Events, LLC - Super Priority First Lien Term Loan (7)
09/30/2025
3M SOFR+540
10,213
Marketplace Events, LLC - Super Priority First Lien (7)
3,122
Marketplace Events, LLC
26,771
22,558
PennantPark Senior Secured Loan Fund I LLC (7), (10)
05/06/2029
13.28%
3M SOFR+800
270,421
274,634
Equity Interests - 8.7%
New MPE Holdings, LLC - Common Equity (8)
349
20,123
101,850
56,478
76,601
372,271
Total Investments - 226.1% (12)
1,994,940
Cash and Cash Equivalents - 12.8%
Money Market - BlackRock Federal FD Institutional 81
5.03%
22,211
89,835
89,839
112,046
Total Investments and Cash Equivalents - 238.9%
2,106,986
2,095,554
Liabilities in Excess of Other Assets - (138.9)%
(1,218,260
24
25
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
march 31, 2025
1. ORGANIZATION
PennantPark Floating Rate Capital Ltd. ("Company," "we," "our" or "us") was organized as a Maryland corporation in October 2010. We are a closed-end, externally managed, non-diversified investment company that has elected to be treated as a BDC under the 1940 Act. On April 14, 2022, trading of the Company’s common stock commenced on the New York Stock Exchange after the Company voluntarily withdrew the principal listing of its common stock from the Nasdaq Stock Market LLC effective at market close on April 13, 2022.
Our investment objectives are to generate both current income and capital appreciation while seeking to preserve capital. We seek to achieve our investment objective by investing primarily in floating rate loans, and other investments made to U.S. middle-market private companies whose debt is rated below investment grade. Floating rate loans pay interest at variable rates, which are determined periodically, on the basis of a floating base lending rate such as SOFR, with or without a floor, plus a fixed spread. Under normal market conditions, we generally expect that at least 80% of the value of our managed assets will be invested in floating rate loans and other investments bearing a variable rate of interest, which may include, from time to time, variable rate derivative instruments. We generally expect that first lien secured debt will represent at least 65% of our overall portfolio. We generally expect to invest up to 35% of our overall portfolio opportunistically in other types of investments, including second lien secured debt, subordinated debt, and, to a lesser extent, equity investments.
We execute our investment strategy directly and through our wholly owned subsidiaries, our unconsolidated joint venture and unconsolidated limited partnership.The term “subsidiary” means entities that primarily engage in investment activities in securities or other assets and are wholly owned by us. The Company does not intendto create or acquire primary control of any entity which primarily engages in investment activities of securities or other assets other than entities wholly owned by theCompany. We comply with the provisions of Section 18 of the 1940 Act governing capital structure and leverage on an aggregate basis with our subsidiaries. Oursubsidiaries comply with the provisions of Section 17 of the 1940 Act related to affiliated transactions and custody. To the extent that the Company forms a subsidiaryadvised by an investment adviser other than the Investment Adviser, the investment adviser to such subsidiaries will comply with the provisions of the 1940 Act relatingto investment advisory contracts, including but not limited to, Section 15, as if it were an investment adviser to the Company under Section 2(a)(20) of the 1940 Act.
We have entered into an investment management agreement, (the "Investment Management Agreement"), with PennantPark Investment Advisers LLC (the "Investment Adviser"), an external adviser that manages our day-to-day operations. We have also entered into an administration agreement, (the "Administration Agreement"), with PennantPark Investment Administration LLC (the "Administrator"), which provides the administrative services necessary for us to operate.
Funding I, our wholly-owned subsidiary and a special purpose entity, was organized in Delaware as a limited liability company in May 2011. We formed Funding I in order to establish a credit facility. The Investment Adviser serves as the collateral manager to Funding I and has irrevocably directed that any management fee owed with respect to such services is to be paid to us so long as the Investment Adviser remains the collateral manager. This arrangement does not increase our consolidated management fee.
We have formed and expect to continue to form certain taxable subsidiaries, including the Taxable Subsidiary, which are subject to tax as corporations. These taxable subsidiaries allow us to hold equity securities of certain portfolio companies treated as pass-through entities for U.S. federal income tax purposes while facilitating our ability to qualify as a RIC under the Code.
In May 2017, we and a subsidiary of Kemper Corporation (NYSE: KMPR), Trinity Universal Insurance Company, ("Kemper"), formed PSSL, an unconsolidated joint venture. PSSL invests primarily in middle-market and other corporate debt securities consistent with our strategy. PSSL was formed as a Delaware limited liability company. See Note 4.
In November 2017, we issued $138.6 million of our 2023 Notes. The principal on the 2023 Notes were payable in four annual installments as follows: 15% of the original principal amount on December 15, 2020, 15% of the original principal amount on December 15, 2021, 15% of the original principal amount on December 15, 2022 and 55% on December 15, 2023. On December 15, 2023, the remaining 2023 Notes were repaid in full. The 2023 Notes were general, unsecured obligations and ranked equal in right of payment with all of our existing and future senior unsecured indebtedness. The 2023 Notes were listed on the TASE. In connection with this offering, we dual listed our common stock on the TASE.
On February 7, 2024, the Company filed a notice with the Israel Securities Authority and the Tel Aviv Stock Exchange Ltd (the “TASE”) voluntarily requesting to delist the Company’s common stock from trading on the TASE. The last day of trading on the TASE was May 6, 2024 and the delisting of the Company’s common stock from the TASE took effect on May 8, 2024.
In September 2019, the Securitization Issuers completed the Debt Securitization. The 2031 Asset-Backed Debt is secured by a diversified portfolio of the Securitization Issuer consisting primarily of middle market loans and participation interests in middle market loans. The 2031 Asset-Backed Debt is scheduled to mature on October 15, 2031. On the closing date of the Debt Securitization, in consideration of our transfer to the Securitization Issuer of the initial closing date loan portfolio, which included loans distributed to us by certain of our wholly-owned subsidiaries, the Securitization Issuer transferred to us 100% of the Preferred Shares of the Securitization Issuer, 100% of the Class D Secured Deferrable Floating Rate Notes issued by the Securitization Issuer, and a portion of the net cash proceeds received from the sale of the 2031 Asset-Backed Debt. See Note 10.
In July 2024, the 2031 Asset-Backed Debt was refinanced through a $351.0 million debt securitization in the form of a collateralized loan obligation, or the "2036-R Asset-Backed Debt". The Company retained $85.0 million of the debt securitization. The 2036-R Asset-Backed Debt is secured by a diversified portfolio of primarily middle market loans and participation interest in middle market loans. The 2036-R Asset-Backed Debt is schedule to mature in July 2036.
On February 22, 2024, the 2036 Securitization Issuer completed the 2036 Debt Securitization. The 2036 Asset-Backed Debt is secured by a diversified portfolio of the 2036-Securitization Issuer consisting primarily of middle market loans and participation interests in middle market loans. The 2036 Asset-Backed Debt is scheduled to mature in April 2036. On the closing date of the 2036 Debt Securitization, in consideration of our transfer to the 2036 Securitization Issuer of the initial closing date loan portfolio, which included loans distributed to us by certain of our wholly-owned subsidiaries. See Note 10.
In February 2025, the 2037 Securitization Issuer completed a $474.6 million term debt securitization (the “2037 Debt Securitization”). The Company retained $85.1 million of subordinated notes and $28.5 million of BBB-(sf) Class D Notes of the debt securitization issued by the 2037 Securitization Issuer. The 2037 Asset-Backed Debt is secured by a diversified portfolio of the 2037-Securitization Issuer consisting primarily of middle market loans and participation interests in middle market loans. The 2037 Asset-Backed Debt is scheduled to mature on April 20, 2037. See Note 10.
In March 2021 and October 2021, we issued $100.0 million and $85.0 million, respectively, in aggregate principal amount of our 2026 Notes at a public offering price per note of 99.4% and 101.5% respectively. Interest on the 2026 Notes is paid semi-annually on April 1 and October 1 of each year, at a rate of 4.25% per year, commencing October 1, 2021. The 2026 Notes mature on April 1, 2026 and may be redeemed in whole or in part at our option subject to a make-whole premium if redeemed more than three months prior to maturity. The 2026 Notes are general, unsecured obligations and rank equal in right of payment with all of our existing and future senior unsecured indebtedness. The 2026 Notes are effectively subordinated to our existing and future secured indebtedness to the extent of the value of the assets securing such indebtedness and are structurally subordinated to all existing and future indebtedness and other obligations of any of our subsidiaries, financing vehicles, or similar facilities. We do not intend to list the 2026 Notes on any securities exchange or automated dealer quotation system.
In April 2021, we formed PennantPark-TSO Senior Loan Fund LP ("PTSF"), an unconsolidated limited partnership, organized as a Delaware limited liability partnership. We sold $81.4 million in investments to a wholly-owned subsidiary of PTSF in exchange for cash in the amount of $69.5 million and an $11.9 million equity interest in PTSF representing 23.08% of the total outstanding Class A Units of PTSF. We recognized $0.4 million of realized gain upon the formation of PTSF. As of March 31, 2025, our capital commitment of $15.3 million is fully funded and we hold 23.08% of the total outstanding Class A Units of PTSF and a 4.99% voting interest in the general partner which manages PTSF. PTSF also invests primarily in middle-market and other corporate debt securities consistent with our strategy.
On February 4, 2022, we formed PFLT Investment Holdings II, LLC, a Delaware limited liability company (“Holdings II”), as a wholly owned subsidiary. On December 31, 2022, we contributed 100% of our interests in PFLT Investment Holdings, LLC ( “Holdings”) to Holdings II. Effective as of January 1, 2024, Holdings II elected to be treated as a corporation for U.S. federal income tax purposes. On January 3, 2024, we purchased an equity interest in Holdings from Holdings II and Holdings became a partnership for U.S. federal income tax purposes. The Company and Holdings II entered into a limited liability company agreement with respect to Holdings that provides for certain payments and the sharing of income, gain, loss and deductions attributable to Holdings’ investments.
In July 2024, the Company established a $500.0 million at-the-market offering program (the "2024 ATM Program") and terminated the existing $250.0 million at-the-market offering program (the "2022 ATM Program" and, together "with the 2024 ATM Program, the "ATM Programs").
During the three and six months ended March 31, 2025 we issued 11,562,000 shares and 18,838,000 shares of our common stock through the 2024 ATM Program, respectively at an average price of $11.34 per share and $11.35 per share raising $131.0 million and $213.2 million of net proceeds after commissions to the Sales Agents and inclusive of proceeds from the Investment Adviser to ensure that all shares were sold at or above NAV, respectively. During the three and six months ended March 31, 2024, we issued 4,493,436 shares of common stock through the 2022 ATM Program at an average price of $11.35 per share, raising $51.0 million of net proceeds after commissions to the Sales Agents and inclusive of proceeds from the Investment Adviser to ensure that all shares were sold at or above NAV, respectively. During the three and six months ended March 31, 2025, in connection with the share issuance, we incurred $0.2 million and $0.2 million of deferred offering costs incurred related to establishing the 2024 ATM Program to additional paid in capital, respectively. During the three and six months ended March 31, 2024, we incurred $0.6 million of deferred offering costs related to establishing the 2022 ATM Program to additional paid in capital, respectively.
We are operated by a person who has claimed an exclusion from the definition of the term “commodity pool operator” under the Commodity Exchange Act of 1936, as amended (the "Commodity Exchange Act"). The Investment Advisor intends to continue to affirm the exclusion on an annual basis and therefore, does not expect to be subject to registration or regulation as a commodity pool operator under the Commodity Exchange Act.
2. SIGNIFICANT ACCOUNTING POLICIES
The preparation of our consolidated financial statements, in conformity with U.S. generally accepted accounting principles ("GAAP") requires management to make estimates and assumptions that affect the reported amount of our assets and liabilities at the date of the Consolidated financial statements and the reported amounts of income and expenses during the reported periods. In the opinion of management, all adjustments, which are of a normal recurring nature, considered necessary for the fair presentation of financial statements have been included. Changes in the economic and regulatory environment, financial markets, the credit worthiness of our portfolio companies, and any other parameters used in determining these estimates and assumptions could cause actual results to differ from these estimates and assumptions. We may reclassify certain prior period amounts to conform to the current period presentation. We have eliminated all intercompany balances and transactions. References to the Financial Accounting Standards Board’s ("FASB’s"), Accounting Standards Codification, as amended ("ASC"), serve as a single source of accounting literature. Subsequent events are evaluated and disclosed as appropriate for events occurring through the date the Consolidated financial statements are issued.
Our consolidated financial statements are prepared in accordance with GAAP, consistent with ASC Topic 946, Financial Services – Investment Companies, and pursuant to the requirements for reporting on Form 10-K/Q and Articles 6, 10 and 12 of Regulation S-X, as appropriate. In accordance with Article 6-09 of Regulation S-X, we have provided a consolidated statement of changes in net assets in lieu of a Consolidated Statement of Changes in Stockholders’ Equity.
Our significant accounting policies consistently applied are as follows:
(a) Investment Valuations
We expect that there may not be readily available market values for many of the investments, which are or will be in our portfolio. We value such investments at fair value as determined in good faith by or under the direction of our board of directors using a documented valuation policy and a consistently applied valuation process, as described in this Report. With respect to investments for which there is no readily available market value, the factors that the board of directors may take into account in pricing our investments at fair value include, as relevant, the nature and realizable value of any collateral, the portfolio company’s ability to make payments and its earnings and discounted cash flow, the markets in which the portfolio company does business, comparison to publicly traded securities and other relevant factors. When an external event such as a purchase transaction, public offering or subsequent equity sale occurs, we consider the pricing indicated by the external event to corroborate or revise our valuation. Due to the inherent uncertainty of determining the fair value of investments that do not have a readily available market value, the price used in an actual transaction may be different than our valuation and the difference may be material. See Note 5.
Our portfolio generally consists of illiquid securities, including debt and equity investments. With respect to investments for which market quotations are not readily available, or for which market quotations are deemed not reflective of the fair value, our board of directors undertakes a multi-step valuation process each quarter, as described below:
27
Our board of directors generally uses market quotations to assess the value of our investments for which market quotations are readily available. We obtain these market values from independent pricing services or at bid prices obtained from at least two brokers or dealers, if available, or otherwise from a principal market maker or a primary market dealer. The Investment Adviser assesses the source and reliability of bids from brokers or dealers. If the board of directors has a bona fide reason to believe any such market quote does not reflect the fair value of an investment, it may independently value such investments by using the valuation procedure that it uses with respect to assets for which market quotations are not readily available.
(b) Security Transactions, Revenue Recognition, and Realized/Unrealized Gains or Losses
Security transactions are recorded on a trade-date basis. We measure realized gains or losses by the difference between the net proceeds from the repayment or sale and the amortized cost basis of the investment, using the specific identification method, without regard to unrealized appreciation or depreciation previously recognized, but considering prepayment penalties. Net change in unrealized appreciation or depreciation reflects the change in the fair values of our portfolio investments, the Credit Facility and the 2023 Notes during the reporting period, including any reversal of previously recorded unrealized appreciation or depreciation, when gains or losses are realized.
We record interest income on an accrual basis to the extent that we expect to collect such amounts. For loans and debt investments with contractual PIK interest, which represents interest accrued and added to the loan balance that generally becomes due at maturity, we will generally not accrue PIK interest when the portfolio company valuation indicates that such PIK interest is not collectable. We do not accrue as a receivable interest on loans and debt investments if we have reason to doubt our ability to collect such interest. Loan origination fees, original issue discount ("OID"), market discount or premium and deferred financing costs on liabilities, which we do not fair value, are capitalized and then accreted or amortized using the effective interest method as interest income or, in the case of deferred financing costs, as interest expense. We record prepayment penalties earned on loans and debt investments as income. Dividend income, if any, is recognized on an accrual basis on the ex-dividend date to the extent that we expect to collect such amounts. From time to time, the Company receives certain fees from portfolio companies, which may or may not be non-recurring in nature. Such fees include loan prepayment penalties, structuring fees, amendment fees and agency fees, and are recorded as other investment income when earned. Litigation settlements are accounted for in accordance with the gain contingency provisions of ASC Subtopic 450-30, Gain Contingencies, or ASC 450-30.
Loans are placed on non-accrual status when principal or interest payments are past due 30 days or more and/or if there is reasonable doubt that principal or interest will be collected. Accrued interest is generally reversed when a loan is placed on non-accrual status. Interest payments received on non-accrual loans may be recognized as income or applied to principal depending upon management’s judgment. Non-accrual loans are restored to accrual status when past due principal and interest is paid and, in management’s judgment, are likely to remain current. As of March 31, 2025, we had four portfolio companies on non-accrual status, representing 2.2% and 1.2% of our overall portfolio on a cost and fair value basis, respectively. As of September 30, 2024, we had two portfolio companies on non-accrual status, representing 0.4% and 0.2% of our overall portfolio on a cost and fair value basis, respectively.
(c) Income Taxes
We have complied with the requirements of Subchapter M of the Code and have qualified to be treated as a RIC for federal income tax purposes. In this regard, we account for income taxes using the asset and liability method prescribed by ASC Topic 740, Income Taxes ("ASC 740"). Under this method, income taxes are provided for amounts currently payable and for amounts deferred as tax assets and liabilities based on differences between the financial statement carrying amounts and the tax basis of existing assets and liabilities. Based upon our qualification and election to be treated as a RIC for U.S. federal income tax purposes, we typically do not incur material U.S. federal income taxes. However, we may choose to retain a portion of our calendar year income, which may result in the imposition of a federal excise tax, or we may incur taxes through our taxable subsidiaries, including the Taxable Subsidiary. For the three and six months ended March 31, 2025, we recorded a provision for taxes on net investment income of $0.2 million and $0.5 million, respectively, pertaining to federal excise tax. For the three and six months ended March 31, 2024, we recorded a provision for taxes on net investment income of $0.5 million and $0.7 million, respectively, pertaining to federal excise tax.
We recognize the effect of a tax position in our Consolidated Financial Statements in accordance with ASC 740 when it is more likely than not, based on the technical merits, that the position will be sustained upon examination by the applicable tax authority. Tax positions not considered to satisfy the “more-likely-than-not” threshold would be recorded as a tax expense or benefit. Penalties or interest, if applicable, that may be assessed relating to income taxes would be classified as other operating expenses in the financial statements. There were no tax accruals relating to uncertain tax positions and no amounts accrued for any related interest or penalties with respect to the periods presented herein. The Company’s determinations regarding ASC 740 may be subject to review and adjustment at a later date based upon factors including, but not limited to, an ongoing analysis of tax laws, regulations and interpretations thereof. Although the Company files both federal and state income tax returns, the Company’s major tax jurisdiction is federal.
For the three and six months ended March 31, 2025, the Company recorded a provision for taxes of $0.5 million and $1.1 million on unrealized appreciation (depreciation) on investments by the Taxable Subsidiary. For the three and six months ended March 31, 2024, the Company recorded a provision for taxes of $0.2 million and $0.2 million on unrealized appreciation (depreciation) on investments by the Taxable Subsidiary. The provision for taxes on unrealized appreciation (depreciation) on investments is the result of netting (i) the expected tax liability on gains from sales of investments and (ii) the expected tax benefit from the use of losses in the current year. As of March 31, 2025, and September 30, 2024, $0.6 million and $1.7 million, respectively, was accrued as a deferred tax liability on the Consolidated Statements of Assets and Liabilities relating to unrealized gain on investments held by the Taxable Subsidiary. During the three and six months ended March 31, 2025, the Company recorded a provision for taxes of less than $(0.1) million and $(0.1) million relating to realized gain (loss) on investments held by the Taxable Subsidiary. During the three and six months ended March 31, 2024, the Company did not record a provision for taxes relating to realized gain on investments held by the Taxable Subsidiary. During the three and six
months ended March 31, 2025, the Company paid zero in taxes on realized gains on the sale of investments held by the Taxable Subsidiary. During the three and six months ended March 31, 2024, the Company paid zero in taxes on realized gains on the sale of investments held by the Taxable Subsidiary.
We operate in a manner to maintain our election to be subject to tax as a RIC and to eliminate corporate-level U.S. federal income tax (other than the 4% excise tax) by distributing sufficient investment company taxable income and capital gain net income (if any). As a result, we will have an effective tax rate equal to 0% before the excise tax and income taxes incurred by the Taxable Subsidiary. As such, a reconciliation of the differences between our reported income tax expense and its tax expense at the federal statutory rate of 21% is not meaningful.
Because federal income tax regulations differ from GAAP, distributions in accordance with tax regulations may differ from net investment income and net realized gains recognized for financial reporting purposes. Differences between tax regulations and GAAP may be permanent or temporary. Permanent differences are reclassified among capital accounts in the Consolidated Statements of Assets and Liabilities to reflect their tax character. Temporary differences arise when certain items of income, expense, gain or loss are recognized at some time in the future.
(d) Distributions and Capital Transactions
Distributions to holders of our common stock are recorded on the ex-dividend date. The amount to be paid, if any, as a distribution is determined by the board of directors each quarter and is generally based upon the earnings estimated by management. Net realized capital gains, if any, may be distributed at least annually. The tax attributes for distributions will generally include ordinary income and capital gains but may also include certain tax-qualified dividends and/or a return of capital.
Capital transactions through offerings of our common stock are recorded when issued and offering costs are charged as a reduction of capital upon issuance of our common stock.
On July 17, 2024, we entered into equity distribution agreements (together, the "Equity Distribution Agreements") with Citizens JMP Securities, LLC, Raymond James & Associates, Inc. and Truist Securities, Inc. as the sales agents (collectively the "Sales Agents" and each a "Sales Agent") in connection with the sale of our shares of common stock, with an aggregate offering price of up to $500 million under an at-the-market offering program (the "2024 ATM Program"). The Equity Distribution Agreements provide that we may offer and sell shares of our common stock from time to time through the Sales Agents in amounts and at times to be determined by us. Actual sales will depend on a variety of factors to be determined by us from time to time, including, market conditions and the trading price of our common stock. The Investment Adviser may, from time to time, in its sole discretion, pay some or all of the commissions payable under the Equity Distribution Agreements or make additional supplemental payments to ensure that the sales price per share of our common stock in connection with all of the 2024 ATM Program offerings, net of any commissions of the Sale Agents, will not be less than our then current NAV per share. Any such payments made by the Investment Adviser will not be subject to reimbursement by us. In connection with the entry into the Equity Distribution Agreements, the Company terminated the equity distribution agreements with each of Citizens JMP Securities LLC, Raymond James & Associates, Inc. and Truist Securities, Inc. in connection with the 2022 ATM Program.
(e) Foreign Currency Translation
Our books and records are maintained in U.S. dollars. Any foreign currency amounts are translated into U.S. dollars on the following basis:
Although net assets and fair values are presented based on the applicable foreign exchange rates described above, we do not isolate that portion of the results of operations due to changes in foreign exchange rates on investments, other assets and debt from the fluctuations arising from changes in fair value of investments and liabilities held. Such fluctuations are included with the net realized and unrealized gain or loss from investments and liabilities.
Foreign security and currency translations may involve certain considerations and risks not typically associated with investing in U.S. companies and U.S. government securities. These risks include, but are not limited to, currency fluctuations and revaluations and future adverse political, social and economic developments, which could cause investments in foreign markets to be less liquid and prices to be more volatile than those of comparable U.S. companies or U.S. government securities.
(f) Consolidation
As permitted under Regulation S-X and as explained by ASC paragraph 946-810-45-3, we will generally not consolidate our investment in a company other than an investment company wholly-owned subsidiary or a controlled operating company whose business consists of providing services to us. Accordingly, we have consolidated the results of our taxable subsidiaries, including the Taxable Subsidiary, Funding I, Securitization Issuer, the 2036-Securitization Issuer, and 2037 Securitization Issuer in our Consolidated Financial Statements. We do not consolidate our non-controlling interest in PSSL or PTSF. See further description of our investment in PSSL in Note 4.
(g) Asset Transfers and Servicing
Asset transfers that do not meet ASC Topic 860, Transfers and Servicing, requirements for sale accounting treatment are reflected in the Consolidated Statements of Assets and Liabilities and the Consolidated Schedules of Investments as investments. The creditors of Funding I have received a security interest in all of its assets and such assets are not intended to be available to our creditors or any of our affiliates.
(h) Recent Accounting Pronouncements
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In March 2020, the FASB issued Accounting Standards Update, or ASU, No. 2020-04, “Reference Rate Reform (Topic 848): Facilitation of the Effects of Reference Rate Reform on Financial Reporting.” The guidance provides optional expedients and exceptions for applying GAAP to contract modifications, hedging relationships and other transactions, subject to meeting certain criteria, that reference LIBOR or another reference rate expected to be discontinued because of the reference rate reform. ASU 2020-04 is effective for all entities as of March 12, 2020 through December 31, 2022. The FASB approved an (optional) two year extension to December 31, 2024, for transitioning away from LIBOR. The Company utilized the optional expedients and exceptions provided by ASU 2020-04 during the three and six months ended March 31, 2025, the effect of which was not material to the Consolidated Financial Statements and the notes thereto.
In June 2022, the FASB issued Accounting Standards Update 2022-03, Fair Value Measurement (Topic 820): Fair Value Measurement of Equity Securities Subject to Contractual Sale Restrictions, or ASU 2022-03, which changed the fair value measurement disclosure requirements of ASC Topic 820, Fair Value Measurements and Disclosures, or ASC 820. The amendments clarify that a contractual restriction on the sale of an equity security is not considered part of the unit of account of the equity security and, therefore, is not considered in measuring fair value. The amendments also clarify that an entity cannot, as a separate unit of account, recognize and measure a contractual sale restriction. The new guidance is effective for fiscal years beginning after December 15, 2023, including interim periods therein. Early application is permitted. The Company has adopted the new accounting standard, the effect of which was not material to the consolidated financial statements and the notes thereto.
In November 2023, the Financial Accounting Standards Board (FASB) issued ASU 2023-07, Segment Reporting (Topic 280), Improvements to Reportable Segment Disclosures to improve reportable segment disclosure requirements through enhanced disclosures about significant segment expenses. ASU 2023-07 expands public entities' segment disclosure by requiring disclosure of significant segment expenses that are regularly provided to the chief operating decision maker and included within each reported measure of segment profit or loss, an amount and description of its composition for other segment items and interim disclosure of a reportable segment's profit or loss and assets. All disclosure requirements of ASU 2023-07 are required for entities with a single reportable segment. ASU 2023-07 is effective for fiscal years beginning after December 15, 2023, and interim periods for our fiscal years beginning December 15, 2024, and should be applied on a retrospective basis to all periods presented, noting early adoption is permitted. The Company is currently evaluating the impact of this standard on its consolidated financial statements and related disclosures.
In December 2023, the FASB issued ASU 2023 - 09 "Improvements to Income Tax Disclosures" ("ASU 2023 - 09"). ASU 2023 - 09 intends to improve the transparency of income tax disclosures. ASU 2023 - 09 is effective for fiscal years beginning after December 15, 2024 and is to be adopted on a prospective basis with the option to apply retrospectively. We are currently assessing the impact of this guidance, however, we do not expect a material impact to our consolidated financial statements and related disclosures.
3. AGREEMENTS AND RELATED PARTY TRANSACTIONS
(a) Investment Management Agreement
The Investment Management Agreement was reapproved by our board of directors, including a majority of our directors who are not interested persons of us or the Investment Adviser, in May 2025. Under the Investment Management Agreement, the Investment Adviser, subject to the overall supervision of our board of directors, manages the day-to-day operations of and provides investment advisory services to us. The Investment Adviser serves as the collateral manager to Funding I and has irrevocably directed that any management fee owed with respect to such services is to be paid to the Company so long as the Investment Adviser remains the collateral manager. This arrangement does not increase our consolidated management fee. For providing these services, the Investment Adviser receives a fee from us consisting of two components— a base management fee and an incentive fee.
Base Management Fee
The base management fee is calculated at an annual rate of 1.00% of our “average adjusted gross assets,” which equals our gross assets (net of U.S. Treasury Bills, temporary draws under any credit facility, cash and cash equivalents, repurchase agreements or other balance sheet transactions undertaken at the end of a fiscal quarter for purposes of preserving investment flexibility for the next quarter and unfunded commitments, if any) and is payable quarterly in arrears. The base management fee is calculated based on the average adjusted gross assets at the end of the two most recently completed calendar quarters, and appropriately adjusted for any share issuances or repurchases during the current calendar quarter. For example, if we sold shares on the 45th day of a quarter and did not use the proceeds from the sale to repay outstanding indebtedness, our gross assets for such quarter would give effect to the net proceeds of the issuance for only 45 days of the quarter during which the additional shares were outstanding. For the three and six months ended March 31, 2025 we recorded a base management fee of $5.6 million and $10.9 million, respectively, from us. For the three and six months ended March 31, 2024, we recorded a base management of $3.4 million and $6.4 million, respectively.
Incentive Fee
The incentive fee has two parts, as follows:
One part is calculated and payable quarterly in arrears based on our Pre-Incentive Fee Net Investment Income for the immediately preceding calendar quarter. For this purpose, Pre-Incentive Fee Net Investment Income means interest income, dividend income and any other income, including any other fees (other than fees for providing managerial assistance), such as amendment, commitment, origination, prepayment penalties, structuring, diligence and consulting fees or other fees received from portfolio companies, accrued during the calendar quarter, minus our operating expenses for the quarter (including the base management fee, any expenses payable under the Administration Agreement and any interest expense or amendment fees under any credit facility and distribution paid on any issued and outstanding preferred stock, but excluding the incentive fee). Pre-Incentive Fee Net Investment Income includes, in the case of investments with a deferred interest feature (such as OID, debt instruments with PIK interest and zero-coupon securities), accrued income not yet received in cash. Pre-Incentive Fee Net Investment Income does not include any realized capital gains, computed net of all realized capital losses or unrealized capital appreciation or depreciation. Pre-Incentive Fee Net Investment Income, expressed as a percentage of the value of our net assets at the end of the immediately preceding calendar quarter, is compared to the hurdle rate of 1.75% per quarter (7.00% annualized). We pay the Investment Adviser an incentive fee with respect to our Pre-Incentive Fee Net Investment Income in each calendar quarter as follows: (1) no incentive fee in any calendar quarter in which our Pre-Incentive Fee Net Investment Income does not exceed the hurdle rate of 1.75%, (2) 50% of our Pre-Incentive Fee Net Investment Income with respect to that portion of such Pre-Incentive Fee Net Investment Income, if any, that exceeds the hurdle rate but is less than 2.9167% in any calendar quarter (11.67% annualized) (we refer to this portion of our Pre-Incentive Fee Net Investment Income (which exceeds the hurdle but is less than 2.9167%) as the “catch-up,” which is meant to provide our Investment Adviser with 20% of our Pre-Incentive Fee Net Investment Income, as if a hurdle did not apply, if this net investment income exceeds 2.9167% in any calendar quarter), and (3) 20% of the amount of our Pre-Incentive Fee Net Investment Income, if any, that exceeds 2.9167% in any calendar quarter. These calculations are pro-rated for any share issuances or repurchases during the relevant quarter, if applicable. For the three and six months ended March 31, 2025 we recorded $6.3 million and $13.8 million, respectively, related to incentive fees on net investment income. For the three and six months ended March 31, 2024, we recoreded $4.8 million and $9.6 million, respectively, related to incentive fees on net investment income.
The second part of the incentive fee is determined and payable in arrears as of the end of each calendar year (or upon termination of the Investment Management Agreement, as of the termination date) and equals 20% of our realized capital gains, if any, on a cumulative basis from inception through the end of each calendar year, computed net of all realized capital losses and unrealized capital depreciation on a cumulative basis, less the aggregate amount of any previously paid capital gain incentive fees. For the three and six months ended March 31, 2025 and 2024, the Investment Adviser did not accrue an incentive fee on capital gains.
Under GAAP, we are required to accrue a capital gains incentive fee based upon net realized capital gains and net unrealized capital appreciation and depreciation on investments held at the end of each period. In calculating the capital gains incentive fee accrual, we considered the cumulative aggregate unrealized capital appreciation in the calculation, as a capital gains incentive fee would be payable if such unrealized capital appreciation were realized, even though such unrealized capital appreciation is not permitted to be considered in calculating the fee actually payable under the Investment Management Agreement. This accrual is calculated using the aggregate cumulative realized capital gains and losses and cumulative unrealized capital appreciation or depreciation. If such amount is positive at the end of a period, then we record a capital gains incentive fee equal to 20% of such amount, less the aggregate amount of actual capital gains related to incentive fees paid in all prior years. If such amount is negative, then there is no accrual for such year. There can be no assurance that such unrealized capital appreciation will be realized in the future. The incentive fee accrued for, but not payable, under GAAP on our unrealized and realized capital gains for the three and six months ended March 31, 2025 and 2024, was zero, respectively.
(b) Administration Agreement
The Administration Agreement with the Administrator was reapproved by our board of directors, including a majority of the directors who are not interested persons of us, in May 2025. Under the Administration Agreement, the Administrator provides administrative services and office facilities to us. For providing these services, facilities and personnel, we have agreed to reimburse the Administrator for its allocable portion of overhead and other expenses incurred by the Administrator in performing its obligations under the Administration Agreement, including rent and our allocable portion of the costs of compensation and related expenses of our Chief Financial Officer, Chief Compliance Officer, Corporate Counsel and their respective staffs. The amount billed by the Administrator may include credits related to its administrative agreement with PSSL. The Administrator also offers, on our behalf, significant managerial assistance to portfolio companies to which we are required to offer such assistance. Reimbursement for certain of these costs is included in administrative services expenses in the Consolidated Statements of Operations. For the three and six months ended March 31, 2025 we recorded administrative expenses of approximately $0.5 million and $0.9 million, related to expenses the Administrator incurred for services described above, respectively. For the three and six months ended March 31, 2024, we recorded administrative expenses of approximately $0.5 million and $0.8 million, related to expenses the Administrator incurred for services described above, respectively.
Under the Administration Agreement the Administrator may be reimbursed by the Company for the costs and expenses to be borne by the Company set forth above to include the costs and expenses allocable with respect to the provision of in-house legal, tax, or other professional advice and/or services to the Company, including performing due diligence on its prospective portfolio companies as deemed appropriate by the Administrator, where such in-house personnel perform services that would be paid by the Company if outside service providers provided the same services, subject to the Board's oversight.
(c) Other Related Party Transactions
The Company, the Investment Adviser and certain other affiliates have been granted an order for exemptive relief by the SEC for the Company to co-invest with other funds managed by the Investment Adviser. If we co-invest with other affiliated funds, our Investment Adviser will not receive compensation except to the extent permitted by the exemptive order and applicable law, including the limitations set forth in Section 57(k) of the 1940 Act.
There were no transactions subject to Rule 17a-7 under the 1940 Act during each of the three and six months ended March 31, 2025 and 2024.
For the three and six months ended March 31, 2025, we sold $52.9 million and $240.6 million in investments to PSSL at fair value, respectively, and recognized zero and $(0.1) million of net realized gain (losses). For the three and six months ended March 31, 2024, we sold $77.2 million and $139.9 million in investments to PSSL at fair value, respectively, and recognized zero of net realized gains (losses), respectively.
For the three and six months ended March 31, 2025 and 2024, we sold no investments to PTSF.
As of March 31, 2025 and September 30, 2024, PFLT had a receivable from the Administrator less than $0.1 million and $0.3 million, respectively, presented as due from affiliate on the Consolidated Statements of Assets and Liabilities. This amount relates to cash owed from agency fees and collected on behalf of the Company.
4. INVESTMENTS
For the three and six months ended March 31, 2025, purchases of investments, including payment-in-kind ("PIK") interest totaled $295.0 million and $903.3 million, respectively. Sales and repayments of investments for the three and six months ended March 31, 2025 totaled $122.4 million and $523.7 million, respectively. For the three and six months ended March 31, 2024, purchases of investments, including payment-in-kind ("PIK") interest totaled $339.1 million and $642.5 million, respectively. Sales and repayments of investments for the three and six months ended March 31, 2024, totaled $144.8 million and $248.7 million, respectively.
Investments and cash and cash equivalents consisted of the following:
($ in thousands)
Investment Classification
Fair Value
First lien
1,521,496
1,509,048
First lien in PSSL
Subordinate debt
Equity
146,072
179,855
131,312
177,635
Equity interests in PSSL
Total investments
Cash and cash equivalents
Total investments and cash and cash equivalents
The table below describes investments by industry classification and enumerates the percentage, by fair value, of the total portfolio assets (excluding cash and cash equivalents) in such industries:
Industry Classification
March 31, 2025 (1)
September 30, 2024 (1)
All Other
Total
(1) Excludes investments in PSSL
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PennantPark Senior Secured Loan Fund I LLC
In May 2017, we and Kemper formed PSSL, an unconsolidated joint venture. PSSL invests primarily in middle-market and other corporate debt securities consistent with our strategy. PSSL was formed as a Delaware limited liability company. As of March 31, 2025 and September 30, 2024, PSSL had total assets of $1,116.1 million and $988.1 million, respectively, and its investment portfolio consisted of investments in 118 and 109 portfolio companies, respectively. As of March 31, 2025, at fair value, the largest investment in a single portfolio company in PSSL was $21.2 million and the five largest investments totaled $98.7 million. As of September 30, 2024, at fair value, the largest investment in a single portfolio company in PSSL was $21.3 million and the five largest investments totaled $97.3 million. PSSL invests in portfolio companies in the same industries in which we may directly invest.
We and Kemper provide capital to PSSL in the form of first lien secured debt and equity interests. As of March 31, 2025 and September 30, 2024, we and Kemper owned 87.5% and 12.5%, respectively, of each of the outstanding first lien secured debt and equity interests. As of the same dates, our investment in PSSL consisted of first lien secured debt of $237.7 million (zero remaining unfunded) and $237.7 million (zero remaining unfunded), respectively, and equity interests of $123.7 million ($65.6 million remaining unfunded) and $101.9 million (zero remaining unfunded), respectively.
We and Kemper each appointed two members to PSSL’s four-person board of directors and investment committee. All material decisions with respect to PSSL, including those involving its investment portfolio, require unanimous approval of a quorum of the board of directors or investment committee. Quorum is defined as (i) the presence of two members of the board of directors or investment committee, provided that at least one individual is present that was elected, designated or appointed by each member; (ii) the presence of three members of the board of directors or investment committee, provided that the individual that was elected, designated or appointed by the member with only one individual present shall be entitled to cast two votes on each matter; and (iii) the presence of four members of the board of directors or investment committee shall constitute a quorum, provided that two individuals are present that were elected, designated or appointed by each member.
In December 2024, PSSL entered into a $325.0 million (increased from $260.0 million) senior secured revolving credit facility which bears interest at SOFR plus 225 basis points (including a spread adjustment) with Ally Bank through its wholly-owned subsidiary, PennantPark Senior Secured Loan Facility LLC II, or PSSL Subsidiary II, subject to leverage and borrowing base restrictions.
In January 2021, PSSL completed a $300.7 million debt securitization in the form of a collateralized loan obligation, or the “2032 Asset-Backed Debt”. The 2032 Asset-Backed Debt is secured by a diversified portfolio of PennantPark CLO II, Ltd., a wholly-owned and consolidated subsidiary of PSSL, consisting primarily of middle market loans and participation interests in middle market loans. The 2032 Asset-Backed Debt is scheduled to mature in January 2032. On the closing date of the transaction, in consideration of PSSL’s transfer to PennantPark CLO II, Ltd. of the initial closing date loan portfolio, which included loans distributed to PSSL by certain of its wholly owned subsidiaries and us, PennantPark CLO II, Ltd. transferred to PSSL 100% of the Preferred Shares of PennantPark CLO II, Ltd. and 100% of the Class E Notes issued by PennantPark CLO II, Ltd.
In May 2024, PSSL completed the refinancing of the 2032 Asset-Backed Debt through a $300.7 million debt securitization in the form of a collateralized loan obligation, or the "2036 PSSL Asset-Backed Debt". The 2036 PSSL Asset-Backed Debt is secured by a diversified portfolio of PennantPark CLO II, Ltd., a wholly-owned subsidiary of PSSL, consisting primarily of middle market loans and participation interest in middle market loans. The 2036 PSSL Asset-Backed Debt is scheduled to mature in April 2036. PSSL retained the preferred shares and Class E-R Notes through a consolidated subsidiary.
In April 2023, PSSL completed a $297.8 million debt securitization in the form of a collateralized loan obligation, or the “2035 Asset-Backed Debt”. The 2035 Asset-Backed Debt is secured by a diversified portfolio of PennantPark CLO VI, LLC, a wholly-owned and consolidated subsidiary of PSSL, consisting primarily of middle market loans and participation interests in middle market loans. The 2035 Asset-Backed Debt is scheduled to mature in April 2035. On the closing date of the transaction, in consideration of PSSL’s transfer to PennantPark CLO VI, LLC of the initial closing date loan portfolio, which included loans distributed to PSSL by certain of its wholly owned subsidiaries and us, PennantPark CLO VI, LLC transferred to PSSL 100% of the Preferred Shares of CLO VI, LLC.
In April 2025, PSSL through its wholly-owned and consolidated subsidiary, PennantPark CLO 12, LLC closed a four year reinvestment period, twelve-year final maturity $301 million debt securitization in the form of a collateralized loan obligation. The debt in this securitization is structured in the following manner: (i) $30.0 million of Class A-1 Loans, which bear interest at three-month SOFR plus 1.45%, (ii) $141.0 million of Class A-1 Notes, which bear interest at three-month SOFR plus 1.45%, (iii) $12.0 million of Class A-2 Notes, which bear interest at a three-month SOFR plus 1.60%, (iv) $21.0 million of Class B notes, which bears interest at three-month SOFR plus 1.85%, (v) $24.0 million of Class C notes, which bears interest at three-month SOFR plus 2.30%, (vi) $18.0 million Class D notes, which bears interest at three-month SOFR plus 3.30%, (vii) $55.0 million of Sub notes. PSSL will continue to retain all of the subordinated notes through a consolidated subsidiary. The reinvestment period for the term debt securitization ends in April 2029 and the debt is scheduled to mature in April 2037. The term debt securitization is expected to be approximately 100% funded at close. The proceeds from the debt will be used to repay a portion of PSSL's $325 million secured credit facility.
Below is a summary of PSSL’s portfolio at fair value:
1,060,161
913,281
Weighted average cost yield on income producing investments
10.5
11.4
Number of portfolio companies in PSSL
109
Largest portfolio company investment
21,167
21,274
Total of five largest portfolio company investments
98,701
97,292
Below is a listing of PSSL’s individual investments as of March 31, 2025 (Par and $ in thousands):
Issuer Name (6)
Basis PointSpread AboveIndex (1)
Par/Shares
Fair Value(2)
First Lien Secured Debt - 1,548.7%
SOFR+475
2,888
10/2/2029
SOFR+525
9,875
9,735
9,603
ACP Falcon Buyer, Inc.
8/1/2029
9.81
SOFR+550
18,667
18,375
18,854
5/7/2026
10.56
SOFR+626
8,663
8,630
Alpine Acquisition Corp II
11/30/2026
Containers and Packaging
10.42
SOFR+610
12,970
12,787
10,376
(PIK 7.92%)
6/30/2026
Media: Advertising, Printing & Publishing
SOFR+590
4,576
4,498
4,500
4,468
11,098
11,024
8/3/2029
SOFR+500
5,985
5,976
5,955
8/28/2029
SOFR+575
9,950
9,863
9/13/2029
9,831
Beacon Behavioral Services, LLC
6/21/2029
12,812
12,649
12,684
11/8/2029
SOFR+675
9,975
9,898
9,850
7/1/2029
4,875
4,812
4,741
2/28/2030
14,749
14,520
BioDerm, Inc.
1/31/2028
SOFR+650
8,843
8,764
8,754
9/17/2026
SOFR+540
14,895
14,734
14,634
10.31
SOFR+600
8,651
8,639
8,608
7/25/2029
Automotive
SOFR+535
440
390
SOFR+647
12,781
12,777
7/31/2029
14,925
14,729
Carisk Buyer, Inc - Amendment No.1 Term Loan
12/1/2029
9,908
2/7/2030
15,167
14,963
15,015
6/14/2028
9,490
9,395
10/1/2029
14,849
14,873
8/20/2026
SOFR+619
6,516
6,468
6,419
9/23/2030
14,829
14,813
8.44
SOFR+400
6,673
6,493
6,272
7/13/2027
SOFR+561
3,755
8/16/2027
SOFR+536
2,057
2,042
8/31/2027
14,487
14,342
2,587
2,563
11/3/2025
Consumer Goods: Durable
4,650
4,647
4,641
9/30/2030
4,975
4,931
4,950
Dynata, LLC - First Out Term Loan (5)
7/17/2028
SOFR+526
1,354
1,269
1,347
Dynata, LLC - Last Out Term Loan
SOFR+576
8,397
7,762
1/10/2029
8,820
8,730
5,970
5,935
Exigo Intermediate II, LLC
3/15/2027
SOFR+635
12,481
12,378
ETE Intermediate II, LLC
5/29/2029
12,187
11,993
Eval Home Solutions Intermediate, LLC
5/10/2030
9,045
8,920
6/23/2028
SOFR+450
10,041
10,004
9,976
9/27/2030
9.31
9,864
9,851
3/16/2026
SOFR+560
3,514
3,511
3,374
8/10/2027
3,704
3,639
9.90
2,153
2,136
8/9/2030
19,900
19,747
HEC Purchaser Corp
6/17/2029
9.72
3,672
Hills Distribution, Inc
8,912
8,800
8,823
5/10/2026
3,441
3,421
Imagine Acquisitionco, LLC
SOFR+510
9,107
8,994
9,084
5,998
5,912
8,184
8,126
8,123
Integrative Nutrition, LLC(4)
1/31/2025
11,922
11,633
4,173
6/30/2025
11.94
SOFR+761
8,122
8,099
ITI Holdings, Inc.
3/3/2028
9.94
SOFR+565
3,880
3,841
SOFR+615
13,492
13,321
12,851
2/18/2027
SOFR+785
15,118
14,971
14,816
LAV Gear Holdings, Inc. (4)(5)
15,789
15,466
11,732
LAV Gear Holdings, Inc. - Incremental Term Loan
10.00
424
394
530
2/3/2027
11,301
11,250
1/31/2030
Environmental Industries
2,546
2,507
5/31/2028
7,372
7,269
Lucky Bucks, LLC - First-Out Term Loan (5)
10/2/2028
Hotel, Gaming and Leisure
SOFR+765
Lucky Bucks, LLC - Last-Out Term Loan
MAG DS Corp
4/1/2027
2,205
2,145
2,051
Magenta Buyer, LLC - First-Out Term Loan
7/31/2028
11.30
SOFR+701
322
Magenta Buyer, LLC - Second-Out Term Loan
12.30
SOFR+801
(PIK 6.25%)
Magenta Buyer, LLC - Third-Out Term Loan
11.55
SOFR+726
1,719
(PIK 5.50%)
Marketplace Events Acquisitions, LLC
17,000
16,846
16,830
MBS Holdings, Inc.
4/16/2027
10.18
SOFR+585
8,287
7/25/2028
6,284
6,204
6,189
2,336
2,311
2,300
SOFR+625
19,102
18,848
19,198
Megawatt Acquisitionco, Inc
3/1/2030
15,593
15,392
13,899
MOREGroup Holdings, Inc
1/16/2030
13,001
12,841
10/1/2027
9.45
SOFR+515
3,378
3,344
NBH Group LLC
8/19/2026
Healthcare, Education & Childcare
10,548
10,475
8/31/2029
20,839
Omnia Exterior Solutions, LLC - Second Amendment Term Loan
12,936
12,838
12,839
5/7/2027
SOFR+636
15,598
15,433
ORL Acquisitions, Inc.
9/3/2027
SOFR+940
2,200
1,947
9,815
9,801
Output Services Group, Inc - First-Out Term Loan
SOFR+843
821
Output Services Group, Inc - Last-Out Term Loan
5/30/2028
SOFR+668
2/4/2028
3,846
11,878
11,705
11,925
PAR Excellence Holdings, Inc
9/3/2030
9.17
10,988
10,885
10,878
PCS Midco, Inc
3,852
3,803
3,871
11/9/2027
SOFR+725
8,071
8,002
5,649
(PIK 4.00%)
7/6/2028
Education
4,018
6/20/2029
18,908
18,841
1/29/2026
SOFR+715
4,783
4,776
1/17/2031
11,300
11,220
11,187
8/15/2029
4,933
5/3/2029
9,925
9,798
9,701
6/15/2029
10.03
4,314
4,250
4,227
S101 Acquisition, Inc
5,642
5,594
5,932
Safe Haven Defense US, LLC
5/23/2029
9,919
9,790
9,918
7/7/2026
10.50
SOFR+620
9,241
9,220
10,358
10,259
10,254
7/14/2025
SOFR+860
12,759
12,758
12,120
(PIK 0.50%)
6/13/2029
4,822
4,595
SOFR+690
18,453
18,238
18,452
10.40
12,046
12,033
10,661
7/17/2025
4,575
4,568
3/1/2028
4,050
4,004
SOFR+425
1,768
1,700
SV-Aero Holdings, LLC
11/1/2030
14,906
14,840
14,513
14,397
14,570
STG Distribution, LLC (fka Reception Purchaser) - First Out New Money Term Loans
10/3/2029
12.67
SOFR+835
1,888
1,790
1,869
(PIK 7.25%)
STG Distribution, LLC (fka Reception Purchaser) - Second Out Term Loans
11.92
SOFR+760
4,383
2,430
2,192
(PIK 6.50%)
TCG 3.0 Jogger Acquisitionco
1/23/2029
10.80
19,528
19,247
19,527
9.44
331
Teneo Holdings, LLC
3/13/2031
5,445
5,392
7/27/2026
10.95
SOFR+665
8,488
8,418
The Vertex Companies, LLC
8/31/2028
Construction and Engineering
17,572
17,361
17,449
Consumer Goods: Non-Durable
16,439
16,365
16,438
Transgo, LLC
17,340
17,120
17,426
4/1/2028
SOFR+490
14,670
14,593
14,494
6/15/2026
6,788
6,730
6,775
VRS Buyer, Inc
6,454
6,409
6,406
Walker Edison Furniture Company LLC (4)(5)
3/1/2029
5,964
5,069
Walker Edison Furniture Company LLC - Junior Revolving Credit Facility (4)(5)
Watchtower Buyer, LLC
12/3/2029
12,128
11,962
12,079
Zips Car Wash, LLC(4)
3/31/2028
16,298
15,874
12,672
Zips Car Wash, LLC - DIP (5)
SOFR+740
1,082,507
1,055,621
Equity Securities - 7.6%
48Forty Intermediate Holdings, Inc.
1,722
116,055
2,031
2,561
Output Services Group, Inc
126,324
1,012
1,390
Pragmatic Holdco, Inc.
134.0
Walker Edison Furniture
Total Equity Securities
8,498
4,540
Total Investments - 1,555.50%
1,091,005
Cash and Cash Equivalents - 71.3%
BlackRock Federal FD Institutional 30
4.22
7,200
Blackrock Liquidity Fed Fund Inst
4.24
18,670
JP Morgan USD Liquidity Inst
9,225
JP Morgan US Government Fund
4.16
8,482
5,047
48,624
Total Investments and Cash Equivalents —1,971.0%
1,139,629
1,108,785
Liabilities in Excess of Other Assets — (1,871.0)%
(1,040,625
Members' Equity—100.0%
68,160
Below is a listing of PSSL’s individual investments as of September 30, 2024 (Par and $ in thousands):
Issuer Name (7)
First Lien Secured Debt - 1,404.5%
2,903
2,855
9,771
10.83
18,762
18,434
18,837
11.28
8,708
8,658
Aeronix, Inc
9.85
15,880
15,665
12,722
12,213
4,717
4,613
4,625
4,584
11,155
11,058
11.56
11,115
10,967
11,059
9,836
9,825
10.35
4,900
4,828
4,753
11.18
15,423
8,888
8,797
8,776
11.00
SOFR+640
14,974
14,779
14,718
10.60
5,546
5,523
5,435
12/4/2025
10.97
SOFR+611
2,274
9/26/2029
417
5/16/2025
12.18
SOFR+698
13,084
13,059
15,243
15,025
9,539
9,431
11.21
6,751
6,682
6,649
10/28/2028
8.96
6,708
6,506
6,540
Connatix Buyer, Inc.
10.71
SOFR+586
2,068
2,052
14,562
14,398
2,600
2,420
2,509
13,805
13,788
13,694
Dynata, LLC - First Out Term Loan (6)
7/15/2028
10.38
1,360
1,264
1,358
10.88
8,439
7,769
8/31/2030
8.85
4,894
4,973
8,763
8,732
12,546
12,418
12,484
12,249
12,032
9,268
9,132
9,176
Fairbanks More Defense
6/17/2028
10,117
10,071
10,128
11.43
3,696
3,689
3,723
3,685
2,131
2,110
3,691
3,648
8,957
8,835
8,868
3,486
9,154
9,018
SOFR+685
6,029
6,089
11.75
11,287
11,274
9,707
(PIK 2.25%)
12.46
8,164
8,094
8,041
3,900
3,855
10.75
13,289
12.94
14,731
14,539
14,584
LAV Gear Holdings, Inc. (6)
11.42
SOFR+643
12,125
12,102
LAV Gear Holdings, Inc. - Term Loan Incremental
11.64
2,861
2,856
2,810
2/3/2026
10.15
11,330
11,258
10.48
2,559
2,516
11.10
7,407
7,288
7,296
Lucky Bucks, LLC - First-Out Term Loan (6)
12.77
2,218
12.13
12.38
452
11.63
1,675
Marketplace Events, LLC - Super Priority First Lien Term Loan (6)
9/30/2025
1,845
Marketplace Events, LLC - Super Priority First Lien Unfunded Term Loan (3)(6)
564
Marketplace Events, LLC (6)
9/30/2026
4,837
4,068
7,256
7,183
MBS Holdings, Inc. (New Issue) - Incremental
11.34
SOFR+660
523
514
528
MBS Holdings, Inc. (New Issue) - Second Incremental
11.09
543
4,829
4,851
MDI Buyer, Inc. - Incremental
11.25
1,416
2,348
2,319
2,289
10.85
19,199
18,911
15,671
15,453
14,794
3/31/2025
5,551
13,067
12,891
12,871
9/28/2027
3,395
3,355
10,602
10,504
10,284
20,913
15,682
15,480
14.00
2,140
2,124
1,819
13.75
3,842
5/18/2026
11.12
SOFR+651
4,307
4,282
9/30/2028
11.51
11,938
11,745
11,914
3,818
9/29/2025
10.17
SOFR+543
9,391
9,289
9,302
11.99
7,816
7,733
6,253
Pragmatic Institute, LLC (5)
12.35
SOFR+750
11,855
11,480
7,261
(PIK 12.35%)
2,775
2,758
2,761
Reception Purchaser, LLC
2/28/2028
3,656
4,825
4,796
4,777
9,830
9,776
4,336
4,266
9,973
9,873
1/3/2025
9,260
12.45
4,916
4,906
13.20
12,388
12,387
12,078
4,842
4,729
18,620
18,370
Simplicity Financial Marketing Group Holdings, Inc
12/2/2026
11,359
11,206
11,472
5/17/2028
9.46
SOFR+461
1,290
10/14/2025
11,887
11,860
10,520
12.40
4,560
10.25
4,070
4,017
1,777
10.26
14,588
14,445
14,558
19,626
19,312
19,430
343
338
5,418
5,490
07/27/26
8,521
8,427
08/31/27
7,636
7,538
7,639
TPC Canada Parent, Inc. and TPC US Parent, LLC
11/24/25
10.84
16,524
16,394
12/29/28
18,552
18,293
06/16/25
11.33
943
04/01/28
14,585
14,376
06/15/26
10.76
6,823
6,755
Walker Edison Furniture Company LLC (4)(6)
03/01/29
4,986
Walker Edison Furniture Company LLC - Junior Revolving Credit Facility (4)(6)
Walker Edison Furniture Company LLC - DDTL - Unfunded (3)(4)(6)
12/03/29
12,189
12,007
12,067
02/27/27
16,014
15,916
12/31/24
16,736
16,722
15,983
920,485
906,532
Equity Securities - 10.5%
New MPE Holdings, LLC
2,710
1,104
Walker Edison Furniture - Common Equity
6,749
38
Total Investments - 1,415.0%
928,983
Cash and Cash Equivalents - 106.0%
5.03
68,429
Total Investments and Cash Equivalents —1,521.0%
997,412
981,710
Liabilities in Excess of Other Assets — (1,421.0)%
(917,163
64,547
Below are the Consolidated Statements of Assets and Liabilities for PSSL ($ in thousands):
Investments at fair value (amortized cost—$1,091,005 and $928,983, respectively)
Cash and cash equivalents (cost—$48,624 and $68,429, respectively)
4,486
4,722
46
2,822
1,642
1,116,139
988,122
Credit facility payable
271,100
146,100
2035 Asset-backed debt, net (par—$246,000 and $246,000, respectively)
244,159
243,934
2036 Asset-backed debt, net (par—$246,000 and $246,000, respectively)
244,515
244,372
Notes payable to members
271,600
Interest payable on credit facility and asset-backed debt
8,751
9,281
Interest payable on notes to members
6,585
7,315
Accrued expenses
1,177
Due to affiliate
92
65
1,047,979
923,575
Commitments and contingencies(1)
Members' equity
Total liabilities and members' equity
Below are the Consolidated Statements of Operations for PSSL ($ in thousands):
Three months ended March 31,
26,916
56,776
52,964
205
388
788
565
27,555
27,304
57,564
53,529
Expenses:(1)
Interest and expense on credit facility and asset-backed debt
13,731
13,784
27,816
27,181
Interest expense on notes to members
8,393
8,095
17,247
16,316
Administration fees
717
414
231
906
493
23,255
22,687
47,354
45,125
4,300
4,617
10,210
8,404
Realized and unrealized gain (loss) on investments:
(7,788
(90
(6,455
(6,510
(4,252
(15,142
8,905
Net realized and unrealized gain (loss) on investments
(12,040
757
(21,597
2,395
Net increase (decrease) in members' equity resulting from operations
(7,740
5,374
(11,387
10,799
(1) No management or incentive fees are payable by PSSL. If any fees were to be charged, they would be separately disclosed in the Consolidated Statement of Operations.
5. FAIR VALUE OF FINANCIAL INSTRUMENTS
Fair value, as defined under ASC 820, is the price that we would receive upon selling an investment or pay to transfer a liability in an orderly transaction to a market participant in the principal or most advantageous market for the investment or liability. ASC 820 emphasizes that valuation techniques maximize the use of observable market inputs and minimize the use of unobservable inputs. Inputs refer broadly to the assumptions that market participants would use in pricing an asset or liability, including assumptions about risk. Inputs may be observable or unobservable. Observable inputs reflect the assumptions market participants would use in pricing an asset or liability based on market data obtained from sources independent of us. Unobservable inputs reflect the assumptions market participants would use in pricing an asset or liability based on the best information available to us on the reporting period date.
ASC 820 classifies the inputs used to measure these fair values into the following hierarchies:
Level 1:
Inputs that are quoted prices (unadjusted) in active markets for identical assets or liabilities, accessible by us at the measurement date.
Level 2:
Inputs that are quoted prices for similar assets or liabilities in active markets, or that are quoted prices for identical or similar assets or liabilities in markets that are not active and inputs that are observable for the asset or liability, either directly or indirectly, for substantially the full term, if applicable, of the financial instrument.
Level 3:
Inputs that are unobservable for an asset or liability because they are based on our own assumptions about how market participants would price the asset or liability.
A financial instrument’s categorization within the valuation hierarchy is based upon the lowest level of input that is significant to the fair value measurement. Generally, most of our investments, including our 2031 Asset-Backed Debt, 2036 Asset-Backed Debt, 2036-R Asset-Backed Debt, 2037 Asset-Backed Debt and our Credit Facility are classified as Level 3. Our 2026 Notes are classified as Level 2 as they are financial instruments with readily observable market inputs. Due to the inherent uncertainty of determining the fair value of investments that do not have a readily available market value, the price used in an actual transaction may be different than our valuation and those differences may be material.
The inputs into the determination of fair value may require significant management judgment or estimation. Even if observable market data is available, such information may be the result of consensus pricing information, disorderly transactions or broker quotes which include a disclaimer that the broker would not be held to such a price in an actual transaction. The non-binding nature of consensus pricing and/or quotes accompanied by disclaimer would result in classification as Level 3 information, assuming no additional corroborating evidence were available. Corroborating evidence that would result in classifying these non-binding broker/dealer bids as a Level 2 asset includes observable orderly market-based transactions for the same or similar assets or other relevant observable market-based inputs that may be used in pricing an asset.
Our investments are generally structured as floating rate loans, mainly first lien secured debt, but also may include second lien secured debt, subordinated debt and equity investments. The transaction price, excluding transaction costs, is typically the best estimate of fair value at inception. Ongoing reviews by our Investment Adviser and independent valuation firms are based on an assessment of each underlying investment, incorporating valuations that consider the evaluation of financing and sale transactions with third parties, expected cash flows and market-based information including comparable transactions, performance multiples and yields, among other factors. These non-public investments valued using unobservable inputs are included in Level 3 of the fair value hierarchy.
A review of fair value hierarchy classifications is conducted on a quarterly basis. Changes in our ability to observe valuation inputs may result in a reclassification for certain financial assets or liabilities.
In addition to using the above inputs to value cash equivalents, investments, our 2023 Notes, our 2026 Notes, our 2031 Asset-Backed Debt, our 2036 Asset-Backed Debt, 2036-R Asset-Backed Debt, our 2037 Asset-Backed Debt, and our Credit Facility, we employ the valuation policy approved by our board of directors that is consistent with ASC 820. Consistent with our valuation policy, we evaluate the source of inputs, including any markets in which our investments are trading, in determining fair value. See Note 2.
As outlined in the table below, some of our Level 3 investments using a market approach valuation technique are valued using the average of the bids from brokers or dealers. The bids include a disclaimer, may not have corroborating evidence, may be the result of a disorderly transaction and may be the result of consensus pricing. The Investment Adviser assesses the source and reliability of bids from brokers or dealers. If the board of directors has a bona fide reason to believe any such bids do not reflect the fair value of an investment, it may independently value such investment by using the valuation procedure that it uses with respect to assets for which market quotations are not readily available. In accordance with ASC 820, we do not categorize any investments for which fair value is measured using the net asset value per share as a practical expedient within the fair value hierarchy.
The remainder of our investment portfolio and our long-term Credit Facility are valued using a market comparable or an enterprise market value technique. With respect to investments for which there is no readily available market value, the factors that the board of directors may take into account in pricing our investments at fair value include, as relevant, the nature and realizable value of any collateral, the portfolio company’s ability to make payments, its earnings and discounted cash flow, the markets in which the portfolio company does business, comparison to publicly traded securities, discounted for lack of marketability and other relevant factors. When an external event such as a purchase transaction, public offering or subsequent equity sale occurs, the pricing indicated by the external event, excluding transaction costs, is used to corroborate the valuation. When using earnings multiples to value a portfolio company, the multiple used requires the use of judgment and estimates in determining how a market participant would price such an asset. These non-public investments using unobservable inputs are included in Level 3 of the fair value hierarchy. Generally, the sensitivity of unobservable inputs or combination of inputs such as industry comparable companies, market outlook, consistency, discount rates and reliability of earnings and prospects for growth, or lack thereof, affects the multiple used in pricing an investment. As a result, any change in any one of those factors may have a significant impact on the valuation of an investment. Generally, an increase in a market yield will result in a decrease in the valuation of a debt investment, while a decrease in a market yield will have the opposite effect. Generally, an increase in earnings before interest, taxes, depreciation and amortization, or EBITDA, multiple will result in an increase in the valuation of an investment, while a decrease in an EBITDA multiple will have the opposite effect.
41
Our Level 3 valuation techniques, unobservable inputs and ranges were categorized as follows for ASC 820 purposes ($ in thousands):
Asset Category
Fair value at March 31, 2025
Valuation Technique
Unobservable Input
Range of Input(Weighted Average) (1)
112,768
Market Comparable
Broker/Dealer bids or quotes
N/A
1,948,508
Market yield
8.5% - 21.1% (10.2%)
29,218
Enterprise Market Value
EBITDA multiple
6.0x - 10.5x (8.4x)
9,679
Revenue multiple
0.3x - 1.0.x (0.6x)
Subordinated debt
6.3% - 23.2% (20.7%)
14.5x
171,231
1.5x - 16.3x (11.3x)
Total Level 3 investments
2,275,788
Long-Term Credit Facility
5.8%
____________________________________________
Fair value at September 30, 2024
132,197
1,589,437
Market Yield
7.9% - 21.1% (9.1%)
25,063
0.8x - 9.8x (3.4x)
2,688
11.8% - 16.5% (14.0%)
5x
168,450
0.4x - 18.8x (11.0x)
1,917,839
5.4%
Our investments, cash and cash equivalents, Credit Facility, 2026 Notes, 2031 Asset-Backed Debt, 2036-R Asset-Backed Debt, 2036 Asset-Backed Debt, and 2037 Asset-Backed Debt were categorized as follows in the fair value hierarchy for ASC 820 purposes ($ in thousands):
Fair Value at March 31, 2025
Description
Level 1
Level 2
Level 3
Measured at NetAsset Value (1)
2,100,173
239,495
68,264
Long Term Credit Facility payable
2026 Notes payable(2)
2036 Asset-Backed Debt(2)
2036-R Asset-Backed Debt(2)
2037 Asset-Backed Debt (2)
Total debt
1,365,750
1,181,530
42
Fair Value at September 30, 2024
1,746,697
Second lien
2,692
234,115
65,665
1,177,033
993,201
The tables below show a reconciliation of the beginning and ending balances for fair valued investments measured using significant unobservable inputs (Level 3)
($ in thousands):
Six Months Ended March 31, 2025
First Lien
Second lien,subordinateddebt and equityinvestments
Totals
Beginning balance
171,142
Net realized gain (loss)
879
22,318
Net change in unrealized appreciation (depreciation)
(18,852
(11,597
(30,449
Purchases, PIK interest, net discount accretion and non-cash exchanges
870,397
18,472
888,869
Sales, repayments and non-cash exchanges
(498,948
(24,720
(523,668
Transfers in and/or out of Level 3
Ending balance
175,615
Net change in unrealized appreciation (depreciation) reported within the net change in unrealized appreciation (depreciation) on investments in our consolidated statements of operations attributable to our Level 3 assets still held at the reporting date.
(14,454
7,798
(6,656
Six Months Ended March 31, 2024
906,166
100,782
1,006,948
(4,920
5,841
6,393
4,924
11,317
617,010
30,293
647,303
(206,608
(44,815
(251,423
1,318,041
97,025
1,415,066
Net change in unrealized depreciation reported within the net change in unrealized depreciation on investments in our consolidated statements of operations attributable to our Level 3 assets still held at the reporting date.
(340
7,492
7,152
The table below shows a reconciliation of the beginning and ending balances for liabilities recognized at fair value and measured using significant unobservable inputs (Level 3)($ in thousands):
Long-Term Credit Facility and 2023 Notes
Beginning balance (cost – $443,855 and $85,619, respectively)
85,619
Net change in unrealized (depreciation) appreciation included in earnings
Borrowings
Repayments
(248,219
Ending balance (cost – $273,855 and $168,855 respectively)
168,878
As of March 31, 2025, we had outstanding non-U.S. dollar borrowings on our Credit Facility. The following table shows our non-U.S. dollar borrowings as of March 31, 2025 (CAD and $ in thousands):
Foreign Currency
AmountBorrowed
Borrowing Cost
Current Value
Reset Date
Unrealized appreciation (depreciation)
Canadian Dollar
CAD 2,000
4/1/2025
As of September 30, 2024 we had outstanding non-U.S. dollar borrowings on our Credit Facility. The following table shows our non-U.S dollar borrowings (CAD and $ in thousands):
1,481
10/1/2024
Generally, the carrying value of our consolidated financial liabilities approximates fair value. We have adopted the principles under ASC Subtopic 825-10, Financial Instruments, or ASC 825-10, which provides companies with an option to report selected financial assets and liabilities at fair value, and made an irrevocable election to apply ASC 825-10 to the Credit Facility. We elected to use the fair value option for the Credit Facility to align the measurement attributes of both our assets and liabilities while mitigating volatility in earnings from using different measurement attributes. Due to that election and in accordance with GAAP, we incurred $0.4 million of expenses relating to amendment costs on the Credit Facility for the three and six months ended March 31, 2025 and did not incur any expenses relating to amendment costs on the Credit Facility during the three and six months ended March 31, 2024. ASC 825-10 establishes presentation and disclosure requirements designed to facilitate comparisons between companies that choose different measurement attributes for similar types of assets and liabilities and to more easily understand the effect on earnings of a company’s choice to use fair value. ASC 825-10 also requires entities to display the fair value of the selected assets and liabilities on the face of the Consolidated Statements of Assets and Liabilities and changes in fair value of the Credit Facility are reported in our Consolidated Statements of Operations. We elected not to apply ASC 825-10 to any other financial assets or liabilities, including our 2026 Notes, 2031 Asset-Backed Debt, 2036 Asset-Backed Debt, 2036-R Asset-Backed Debt, and the 2037 Asset-Backed Debt.
For the three and six months ended March 31, 2025, the Credit Facility had a net change in unrealized appreciation (depreciation) of less than $0.1 million and $0.1 million, respectively. For the three and six months ended March 31, 2024, the Credit Facility had a net change in unrealized appreciation (depreciation) of less than $0.1 million and ($0.1) million, respectively. As of March 31, 2025 and September 30, 2024, the net unrealized appreciation (depreciation) on the Credit Facility totaled approximately $0.1 million and zero, respectively. We use a nationally recognized independent valuation service to measure the fair value of the Credit Facility in a manner consistent with the valuation process that our board of directors uses to value our investments.
6. TRANSACTIONS WITH AFFILIATED COMPANIES
An affiliated portfolio company is a company in which we have ownership of 5% or more of its voting securities. A portfolio company is generally presumed to be a non-controlled affiliate when we own at least 5% but less than 25% of its voting securities and a controlled affiliate generally when we own more than 25% of its voting securities. Transactions related to our funded investments with both controlled and non-controlled affiliates for the six months ended March 31, 2025 were as follows ($ in thousands):
Name of Investment
Gross Additions
Gross Reductions
Net Change inUnrealizedAppreciation(Depreciation)
Interest Income
Dividend/Other Income
Net RealizedGains (Losses)
Controlled Affiliates
Marketplace Events, LLC**
$57,107
$4,214
$(36,984)
$(24,337)
$—
$5,062
$306
$22,811
PennantPark Senior Secured Loan Fund I LLC *
294,128
21,875
(18,713)
15,091
Total Controlled Affiliates
$351,235
$26,089
$(43,050)
$297,290
$20,153
$9,056
* We and Kemper are the members of PSSL, a joint venture formed as a Delaware limited liability company that is not consolidated by us for financial reporting purposes. The members of PSSL make investments in PSSL in the form of first lien secured debt and equity interests, and all portfolio and other material decisions regarding PSSL must be submitted to PSSL’s board of directors or investment committee, both of which are comprised of two members appointed by each of us and Kemper. Because management of PSSL is shared equally between us and Kemper, we do not believe we control PSSL for purposes of the 1940 Act or otherwise.
** Marketplace was sold during the Q1 2025 quarter.
44
Fair Value at September 30, 2023
Sale of/ Distribution from Affiliates
Fair Value at March 31, 2024
34,027
798
3,178
38,003
2,478
PennantPark Senior Secured
Loan Fund I LLC *
260,969
2,230
263,199
14,276
294,996
301,202
7. CHANGE IN NET ASSETS FROM OPERATIONS PER COMMON SHARE
The following information sets forth the computation of basic and diluted per share net increase in net assets resulting from operations
($ in thousands, except per share data):
Numerator for net increase in net assets resulting from operations
Denominator for basic and diluted weighted average shares
90,086,785
61,151,898
85,828,775
59,936,696
Basic and diluted net increase in net assets per share resulting from operations
8. CASH AND CASH EQUIVALENTS
Cash equivalents represent cash in money market funds pending investment in longer-term portfolio holdings and for other general purposes. Our portfolio may consist of temporary investments in U.S. Treasury Bills (of varying maturities), repurchase agreements, money market funds or repurchase agreement-like treasury securities. These temporary investments with original maturities of 90 days or less are deemed cash equivalents and are included in the Consolidated Schedule of Investments. At the end of each fiscal quarter, we may take proactive steps to preserve investment flexibility for the next quarter by investing in cash equivalents, which is dependent upon the composition of our total assets at quarter-end. We may accomplish this in several ways, including purchasing U.S. Treasury Bills and closing out positions on a net cash basis after quarter-end, temporarily drawing down on the Credit Facility, or utilizing repurchase agreements or other balance sheet transactions as are deemed appropriate for this purpose. These amounts are excluded from average adjusted gross assets for purposes of computing the Investment Adviser’s management fee. U.S. Treasury Bills with maturities greater than 60 days from the time of purchase are valued consistent with our valuation policy. As of March 31, 2025, cash and cash equivalents consisted of money market funds and non-money market fund the amount of $39.8 million and $71.5 million. As of September 30, 2024, cash and cash equivalents consisted of money market funds and non-money market fund in the amounts of $22.2 million and $89.8 million at fair value, respectively.
45
9. FINANCIAL HIGHLIGHTS
Below are the financial highlights ($ in thousands, except per share data):
Per Share Data:
Net asset value, beginning of period
11.13
Net investment income (1)
Net change in realized and unrealized gain (loss) (1)
(0.30
0.25
Net increase (decrease) in net assets resulting from operations (1)
Distributions to stockholders (1), (2)
(0.62
Accretive effect of common stock issuance
0.04
Net asset value, end of period
11.40
Per share market value, end of period
11.19
11.38
Total return *(3)
2.20
12.76
Shares outstanding at end of period
96,417,896
63,228,138
Ratios** / Supplemental Data:
Ratio of operating expenses to average net assets** (4)
5.88
5.97
Ratio of debt related expenses to average net assets** (5)
7.00
Ratio of total expenses to average net assets** (5)
15.14
12.97
Ratio of net investment income to average net assets** (5)
Net assets at end of period
Weighted average debt outstanding
1,330,975
667,111
Weighted average debt per share (1)
15.51
Asset coverage per unit (6)
1,825
Portfolio turnover rate*
21.14
17.58
Note: The expense and investment income ratios above do not reflect the Company's proportionate share of income and expenses of PSSL and PTSF
* Not annualized for periods less than one year.
** Re-occurring investment income and expenses included in these ratios are annualized for periods less than one year
10. DEBT
The annualized weighted average cost of debt for the six months ended March 31, 2025 and 2024, inclusive of the fee on the undrawn commitment on the Credit Facility, amendment costs and debt issuance costs, was 6.8% and 7.1%, respectively.
On April 5, 2018, our board of directors approved the application of the modified asset coverage requirements set forth in Section 61(a)(2) of the 1940 Act, as amended by the Consolidated Appropriations Act of 2018 (which includes the Small Business Credit Availability Act, or SBCAA). As a result, the asset coverage requirement applicable to us for senior securities was reduced from 200% (i.e., $1 of debt outstanding for each $1 of equity) to 150% (i.e., $2 of debt outstanding for each $1 of equity), effective as of April 5, 2019, subject to compliance with certain disclosure requirements. As of March 31, 2025 and September 30, 2024, our asset coverage ratio, as computed in accordance with the 1940 Act, was 178% and 174%, respectively.
Credit Facility
Funding I’s multi-currency Credit Facility with affiliates of Truist Bank, or the Lenders, was upsized during the quarter ended December 31, 2024 to $736.0 million (increased from $636 million in December 2024). As of March 31, 2025, the Credit Facility has an interest rate spread above SOFR (or an alternative risk-free floating interest rate index) of 225 basis points, a maturity date of August 2029 and a revolving period that ends in August 2027. As of March 31, 2025 and September 30, 2024, Funding I had $273.9 million and $443.9 million of outstanding borrowings under the Credit Facility, respectively. The Credit Facility had a weighted average interest rate of 6.6% and 7.5%, exclusive of the fee on undrawn commitments as of March 31, 2025 and September 30, 2024, respectively. As of March 31, 2025 and September 30, 2024, we had $462.1 million and $192.1 million of unused borrowing capacity under the Credit Facility, respectively, subject to leverage and borrowing base restrictions. The Credit Facility is subject to satisfaction of certain conditions and the regulatory restrictions that the 1940 Act imposes on us as a BDC.
During the revolving period, the Credit Facility bears interest at SOFR (or an alternative risk-free floating interest rate index) plus 225 basis points and, after the revolving period, the rate will reset to Base Rate (or an alternative risk-free floating interest rate index) plus 250 basis points for the remaining two years, maturing in August 2029. In April 2025, the credit facility was amended and the Company SOFR rate decreased to 200 basis points. The Credit Facility is secured by all of the assets of Funding I. Both, we and Funding I have made customary representations and warranties and are required to comply with various covenants, reporting requirements and other customary requirements for similar credit facilities.
In April 2025, PennantPark Floating Rate Capital Ltd. amended its credit facility agreement led by Truist Bank. As part of the amendment, PennantPark Floating Rate Capital Ltd. decreased pricing to SOFR plus 200 basis points from SOFR plus 225 basis points, extended the reinvestment period one year to August 2028, extended the maturity date one year to August 2030, and increased the maximum first lien advance rate to 72.5% from 70.0%. As part of this amendment, commitments decreased from $736 million to $718 million.
The Credit Facility contains covenants, including, but not limited to, restrictions of loan size, industry requirements, average life of loans, geographic and individual portfolio concentrations, minimum portfolio yield and loan payment frequency. Additionally, the Credit Facility requires the maintenance of a minimum equity investment in Funding I and income ratio as well as restrictions on certain payments and issuance of debt. The Credit Facility compliance reporting is prepared on a basis of accounting other than GAAP. As of March 31, 2025, we were in compliance with the covenants relating to the Credit Facility.
We own 100% of the equity interest in Funding I and treat the indebtedness of Funding I as our leverage. Our Investment Adviser serves as collateral manager to Funding I under the Credit Facility.
Our interest in Funding I (other than the management fee) is subordinate in priority of payment to every other obligation of Funding I and is subject to certain payment restrictions set forth in the Credit Facility. We may receive cash distributions on our equity interests in Funding I only after it has made all required payments of (1) cash interest and, if applicable, principal to the Lenders, (2) administrative expenses and (3) claims of other unsecured creditors of Funding I. The Investment Adviser has irrevocably directed that any management fee owed with respect to such services is to be paid to the Company so long as the Investment Adviser remains the collateral manager.
2023 Notes
In November 2017, we issued $138.6 million aggregate principal amount of our 2023 Notes that matured on December 15, 2023. The 2023 Notes were issued pursuant to a deed of trust between the Company and Mishmeret Trust Company, Ltd., as trustee, in November 2017. In connection with this offering, we have dual listed our common stock on the TASE. On February 7, 2024, the Company filed a notice with the Israel Securities Authority and the Tel Aviv Stock Exchange Ltd (the “TASE”) voluntarily requesting to delist the Company’s common stock from trading on the TASE. The last day of trading on the TASE was May 6, 2024 and the delisting of the Company’s common stock from the TASE took effect on May 8, 2024.
The 2023 Notes paid interest at a rate of 4.3% per year. As a result of the downgrade of the 2023 Notes from “ilA+” to “ilA-” in March 2020, the interest rate of the 2023 Notes was increased to 4.3% from 3.8%. Interest on the 2023 Notes was payable semi-annually in arrears on June 15 and December 15 of each year, commencing June 15, 2018. The principal on the 2023 Notes was payable in four annual installments as follows: 15% of the original principal amount on December 15, 2020, 15% of the original principal amount on December 15, 2021, 15% of the original principal amount on December 15, 2022 and 55% of the original principal amount on December 15, 2023. On December 15, 2023, the remaining outstanding 2023 Notes were repaid in full.
2026 Notes
In March 2021 and in October 2021, we issued $100.0 million and $85.0 million, respectively, in aggregate principal amount of $185.0 million of our 2026 Notes at a public offering price per note of 99.4% and 101.5%, respectively. Interest on the 2026 Notes is paid semi-annually on April 1 and October 1 of each year, at a rate of 4.25% per year, commencing October 1, 2021. The 2026 Notes mature on April 1, 2026 and may be redeemed in whole or in part at our option subject to a make-whole premium if redeemed more than three months prior to maturity. The 2026 Notes are our general, unsecured obligations and rank equal in right of payment with all of our existing and future senior unsecured indebtedness. The 2026 Notes are effectively subordinated to all of our existing and future secured indebtedness to the extent of the value of the assets securing such indebtedness and structurally subordinated to all of our existing and future indebtedness and other obligations of any of our subsidiaries, financing vehicles, or similar facilities. We do not intend to list the 2026 Notes on any securities exchange or automated dealer quotation system.
2031 Asset-Backed Debt / 2036-R Asset-Backed Debt
In September 2019, the Company completed the $301.4 million term debt securitization. Term debt securitizations, also known as CLOs, are a form of secured financing incurred by the Company, which is consolidated by the Company and subject to the Company’s asset coverage requirements. The 2031 Asset-Backed Debt was issued by the Securitization Issuer. The 2031 Asset-Backed Debt is secured by the middle market loans, participation interests in middle market loans and other assets of the Securitization Issuer. The Debt Securitization was executed through (A) a private placement of: (i) $78.5 million Class A-1 Senior Secured Floating Rate Loans maturing 2031, which bear interest at the three-month SOFR plus 1.8%, (ii) $15.0 million Class A-2 Senior Secured Fixed Rate Notes due 2031, which bear interest at 3.7%, (iii) $14.0 million Class B-1 Senior Secured Floating Rate Notes due 2031, which bear interest at the three-month SOFR plus 2.9%, (iv) $16.0 million Class B-2 Senior Secured Fixed Rate Notes due 2031, which bear interest at 4.3%, (v) $19.0 million Class C‑1 Secured Deferrable Floating Rate Notes due 2031, which bear interest at the three-month SOFR plus 4.0%, (vi) $8.0 million Class C-2 Secured Deferrable Fixed Rate Notes due 2031, which bear interest at 5.4%, and (vii) $18.0 million Class D Secured Deferrable Floating Rate Loans due 2031, which bear interest at the three-month SOFR plus 4.8% and (B) the borrowing of $77.5 million Class A‑1 Senior Secured Floating Rate Notes due 2031, which bear interest at the three-month SOFR plus 1.8%, under a credit agreement by and among the Securitization Issuers, as borrowers, various financial institutions, as lenders, and U.S. Bank National Association, as collateral agent and as loan agent. The annualized interest on the 2031 Asset-Backed Debt will be paid, to the extent of funds available. The reinvestment period of the Debt Securitization ended on October 15, 2023 and the 2031 Asset-Backed Debt is scheduled to mature on October 15, 2031.
On the closing date of the Debt Securitization, in consideration of our transfer to the Securitization Issuer of the initial closing date loan portfolio, which included loans distributed to us by certain of our wholly-owned subsidiaries, the Securitization Issuer transferred to us 100% of the Preferred Shares of the Securitization Issuer, 100% of the Class D Secured Deferrable Floating Rate Notes issued by the Securitization Issuer, and a portion of the net cash proceeds received from the sale of the 2031 Asset-Backed Debt. The Preferred Shares of the Securitization Issuer do not bear interest and had a stated value of approximately $55.4 million at the closing of the Debt Securitization.
On July 25, 2024, the Company closed the refinancing of the 2031Asset-Backed Debt and upsize of a four-year reinvestment period, twelve-year final maturity $351.0 million debt securitization in the form of a collateralized loan obligation (the “2036-R Asset-Backed Debt”). The 2036-R Asset-Backed Debt was executed through: (A) the issuance by the Issuers of the following classes of notes pursuant that certain indenture, dated September 19, 2019, by and among the Issuers and U.S. Bank Trust Company, National Association, as amended by the second supplemental indenture, dated June 25, 2024): (i) $203 million of A-1-R Notes, which bear interest at the three-month SOFR plus 1.75%, (ii) $10.5 million of A-2-R Notes, which bear interest at three-month SOFR plus 1.90%, (iii) $12 million of Class B-R Notes, which bear interest at three-month SOFR plus 2.05%, (iv) $28 million of C-R Notes, which bear interest at three-month SOFR plus 2.75% and (v) $21 million of D-R Notes, which bear interest at three-month SOFR plus 4.30%, (B) the issuance by the Issuer of $64 million of subordinated notes pursuant to the Indenture and (C) the borrowing by the Issuer of $12.5 million of Class B-R Loans, which bear interest at three-month SOFR plus 2.05%, pursuant to a credit agreement, dated the closing date, by and among the Issuers, the various financial institutions and other persons party thereto, as lenders and U.S. Bank Trust Company, National Association, as loan agent and as trustee. The Replacement Debt matures in July 2036. The Replacement Debt was 100% funded at closing.
The obligations of the Issuers under the replacement are non-recourse to the Company. The Company will retain the Class D-R Notes and the Subordinated Notes through a consolidated subsidiary. As of March 31, 2025 and September 30, 2024, the Company had $266.0 million, respectively, 2036-R Asset-Backed Debt outstanding with a weighted average interest rate of 6.2% and 7.2%, respectively. As of March 31, 2025 and September 30, 2024, the unamortized fees on the 2036-R Asset-Backed Debt were $0.7 million and $0.8 million, respectively.
Our Investment Adviser serves as collateral manager to the Securitization Issuer pursuant to the Collateral Management Agreement. For so long as our Investment Adviser serves as collateral manager, it will elect to irrevocably waive any collateral management fee to which it may be entitled under the Collateral Management Agreement.
2036 Asset-Backed Debt
In February 2024, the Company completed the $350.6 million term debt securitization. Term debt securitizations, also known as CLOs, are a form of secured financing incurred by the Company, which is consolidated by the Company and subject to the Company’s asset coverage requirements. The 2036 Asset-Backed Debt was issued by the 2036 Securitization Issuer. The 2036 Asset-Backed Debt is secured by the middle market loans, participation interests in middle market loans and other assets of the 2036 Securitization Issuer. The Debt Securitization was executed through (A) a private placement of: (i) $139.5 million of AAA(sf) Class A-1 Notes, which bear interest at the three-month SOFR plus 2.30%, (ii) $14 million of AAA(sf) Class A-2 Notes, which bear interest at three-month SOFR plus 2.70%, (iii) $24.5 million of AA(sf) Class B Notes, which bear interest at three-month SOFR plus 2.90%, (iv) $28 million of A(sf) Class C Notes, which bear interest at three-month SOFR plus 3.90%, (v) $21 million of BBB-(sf) Class D Notes, which bear interest at three-month SOFR plus 5.90%, (together, the “Secured Notes”), and (vi) $63.6 million of subordinated notes (“Subordinated Notes”) and (B) the borrowing of $60.0 million AAA(sf) Class A-1 Senior Secured Floating Rate Loans (the “Class A-1 Loans” and together with the Secured Notes and Subordinated Notes, the “Debt”), which bear interest at three-month SOFR plus 2.30%, under a credit agreement (the “Credit Agreement”), dated as of the Closing Date, by and among the Issuer, as borrower, various financial institutions, as lenders, and Wilmington Trust, National Association, as collateral agent and as loan agent. The Debt is scheduled to mature on April 18, 2036.
The 2036 Asset-Backed Debt is included in the Consolidated Statement of Assets and Liabilities as debt of the Company and the Subordinated Notes of the 2036-Securitization Issuer were eliminated in consolidation. As of March 31, 2025 and September 30, 2024, the Company had $287.0 million of 2036 Asset-Backed Debt outstanding with a weighted average interest rate of 7.1% and 8.1%, respectively. As of March 31, 2025 and September 30, 2024, the unamortized fees on the 2036 Asset-Backed Debt were $2.6 million and $2.9 million, respectively.
Our Investment Adviser serves as collateral manager to the 2036-Securitization Issuer pursuant to the Collateral Management Agreement. For so long as our Investment Adviser serves as collateral manager, it will elect to irrevocably waive any collateral management fee to which it may be entitled under the Collateral Management Agreement.
2037 Asset-Backed Debt
In February 2025, the Company completed the 2037 Debt Securitization. The 2037 Notes were issued by the 2037 Securitization Issuer and are backed by a portfolio of collateral obligations consisting of middle market loans and participation interests in middle market loans as well as by other assets of the 2037 Securitization Issuer. The transaction was executed through (A) a private placement of $220.5 million of AAA(sf) Class A-1 Notes, which bear interest at the three-month SOFR plus 1.49% (the “2037 Class A-1 Notes”), (ii) $19.0 million of AAA(sf) Class A-2 Notes, which bear interest at three-month SOFR plus 1.60% (the “2037 Class A-2 Notes”), (iii) $28.5 million of AA(sf) Class B Notes, which bear interest at three-month SOFR plus 1.75% (the “2037 Class B Notes”), (iv) $38.0 million of A(sf) Class C Notes, which bear interest at three-month SOFR plus 2.20% (the “2037 Class C Notes”), (v) $28.5 million of BBB-(sf) Class D Notes, which bear interest at three-month SOFR plus 3.60%, (the “2037 Class D Notes” and, collectively with the 2037 Class A-2 Notes, the 2037 Class B Notes and the 2037 Class D Notes, the “2037 Secured Notes”), and (vi) $85.1 million of subordinated notes (the “2037 Subordinated Notes” and, together with the 2037 Secured Notes, the “2037 Notes”) and (B) the borrowing by the 2037 Securitization Issuer of $10.0 million under AAA(sf) Class A-1L-A floating rate loans (the “2037 Class A-1L-A Loans”) and $45.0 million under AAA(sf) Class A-1L-B floating rate loans (the “2037 Class A-1L-B Loans” and, together with the Class A-1L-A Loans, the “2037 Asset-Backed Loans,” and collectively with the 2037 Secured Notes and 2037 Subordinated Notes, the “2037 Asset-Backed Debt”), which bear interest at three-month SOFR plus 1.49%. The 2037 Asset-Backed Debt is scheduled to mature on April 20, 2037.
The 2037 Asset-Backed Debt is included in the Consolidated Statement of Assets and Liabilities as debt of the Company and the 2037 Class D Notes and the 2037 Subordinated Notes of the 2037 Securitization Issuer were eliminated in consolidation. The Company will continue to retain the 2037 Class D Notes and the 2037 Subordinated Notes. A portion of the proceeds received by the 2037 Securitization Issuer from the loans securing the 2037 Asset-Backed Loans and the 2037 Secured Notes may be used to purchase additional middle market loans under the direction of the Investment Adviser through April 20, 2029. As of March 31, 2025 and September 30, 2024, the Company had $361.0 million and zero of 2037 Asset-Backed Debt outstanding with a weighted average interest rate of 5.9% and zero, respectively. As of March 31, 2025 and September 30, 2024, the unamortized fees on the 2037 Asset-Backed Debt were $2.9 million and zero, respectively.
Our Investment Adviser serves as collateral manager to the 2037 Securitization Issuer pursuant to the Collateral Management Agreement. For so long as our Investment Adviser serves as collateral manager, it will elect to irrevocably waive any collateral management fee to which it may be entitled under the Collateral Management Agreement.
11. COMMITMENTS AND CONTINGENCIES
From time to time, we may be a party to legal proceedings, including proceedings relating to the enforcement of our rights under contracts with our portfolio companies. While the outcome of these legal proceedings cannot be predicted with certainty, we do not expect that these proceedings will have a material effect upon our financial condition or results of operations. Unfunded debt and equity investments, if any, are disclosed in the Consolidated Schedules of Investments. As of March 31, 2025 and September 30, 2024, we had $596.3 million and $632.2 million, respectively, in commitments to fund investments. Additionally, as described in Note 4, the Company had unfunded commitments of $65.7 million and zero to PSSL as of March 31, 2025 and September 30, 2024, respectively, that may be contributed primarily for the purpose of funding new investments approved by the PSSL board of directors or investment committee.
Report of Independent Registered Public Accounting Firm
To the Stockholders and Board of Directors of PennantPark Floating Rate Capital Ltd. and its Subsidiaries
Results of Review of Interim Financial StatementsWe have reviewed the accompanying consolidated statement of assets and liabilities of PennantPark Floating Rate Capital, Ltd. and its subsidiaries (the Company), including the consolidated schedule of investments, as of March 31, 2025, the related consolidated statements of operations and changes in net assets for the three and six month periods ended March 31, 2025 and 2024, and cash flows for the six month periods ended March 31, 2025 and 2024, and the related notes to the consolidated financial statements (collectively, the interim financial information or financial statements). Based on our reviews, we are not aware of any material modifications that should be made to the financial statements referred to above for them to be in conformity with accounting principles generally accepted in the United States of America.
We have previously audited, in accordance with the standards of the Public Company Accounting Oversight Board (United States) (PCAOB), the consolidated statement of assets and liabilities of the Company, including the consolidated schedule of investments, as of September 30, 2024, and the related consolidated statements of operations, changes in net assets, and cash flows for the year then ended (not presented herein); and in our report dated November 25, 2024, we expressed an unqualified opinion on those financial statements. In our opinion, the information set forth in the accompanying consolidated statement of assets and liabilities, including the consolidated schedule of investments, as of September 30, 2024, is fairly stated, in all material respects, in relation to the consolidated statement of assets and liabilities, including the consolidated schedule of investments, from which it has been derived.
Basis for Review ResultsThese interim financial statements are the responsibility of the Company’s management. We conducted our reviews in accordance with the standards of the PCAOB. A review of interim financial information consists principally of applying analytical procedures and making inquiries of persons responsible for financial and accounting matters. It is substantially less in scope than an audit conducted in accordance with the standards of the PCAOB, the objective of which is the expression of an opinion regarding the financial statements taken as a whole. Accordingly, we do not express such an opinion. We are a public accounting firm registered with the PCAOB and are required to be independent with respect to the Company in accordance with U.S. federal securities laws and the applicable rules and regulations of the Securities and Exchange Commission and the PCAOB.
/s/ RSM US LLP
New York, New York
May 12, 2025
Awareness Letter of Independent Registered Public Accounting Firm
To the Board of Directors and Stockholders of PennantPark Floating Rate Capital Ltd. and its Subsidiaries
We have reviewed, in accordance with the standards of the Public Company Accounting Oversight Board (United States), the unaudited interim financial information of PennantPark Floating Rate Capital Ltd. and its Subsidiaries for the periods ended March 31, 2025 and 2024, as indicated in our report dated May 12, 2025; because we did not perform an audit, we expressed no opinion on that information.
We are aware that our report referred to above, which is included in your Quarterly Report on Form 10-Q for the quarter ended March 31, 2025, is incorporated by reference in Registration Statement No.333-279726 on Form N-2.
We are also aware that the aforementioned report, pursuant to Rule 436(c) under the Securities Act of 1933, is not considered a part of the Registration Statement prepared or certified by an accountant or a report prepared or certified by an accountant within the meaning of Sections 7 and 11 of that Act.
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Item 2. MANAGEMENT’S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION AND RESULTS OF OPERATIONS
FORWARD-LOOKING STATEMENTS
This Report, including Management’s Discussion and Analysis of Financial Condition and Results of Operations, contains statements that constitute forward-looking statements, which relate to us and our consolidated subsidiaries regarding future events or our future performance or future financial condition. These forward-looking statements are not historical facts, but rather are based on current expectations, estimates and projections about our Company, our industry, our beliefs and our assumptions. The forward-looking statements contained in this Report involve risks and uncertainties, including statements as to:
We use words such as “anticipates,” “believes,” “expects,” “intends,” “seeks,” “plans,” “estimates” and similar expressions to identify forward-looking statements. You should not place undue influence on the forward-looking statements as our actual results could differ materially from those projected in the forward-looking statements for any reason, including the factors in “Risk Factors” and elsewhere in this Report.
Although we believe that the assumptions on which these forward-looking statements are based are reasonable, any of those assumptions could prove to be inaccurate, and, as a result, the forward-looking statements based on those assumptions also could be inaccurate. Important assumptions include our ability to originate new loans and investments, certain margins and levels of profitability and the availability of additional capital. In light of these and other uncertainties, the inclusion of a projection or forward-looking statement in this Report should not be regarded as a representation by us that our plans and objectives will be achieved.
We have based the forward-looking statements included in this Report on information available to us on the date of this Report, and we assume no obligation to update any such forward-looking statements. Although we undertake no obligation to revise or update any forward-looking statements in this Report, whether as a result of new information, future events or otherwise, you are advised to consult any additional disclosures that we may make directly to you or through reports that we in the future may file with the SEC, including reports on Form 10-Q/K and current reports on Form 8-K.
You should understand that under Section 27A(b)(2)(B) of the Securities Act and Section 21E(b)(2)(B) of the Exchange Act, the “safe harbor” provisions of the Private Securities Litigation Reform Act of 1995 do not apply to forward-looking statements made in periodic reports we file under the Exchange Act.
The following analysis of our financial condition and results of operations should be read in conjunction with our Consolidated Financial Statements and the related notes thereto contained elsewhere in this Report.
Overview
PennantPark Floating Rate Capital Ltd. (the "Company," "we," "our" or "us") is a business development company ("BDC") whose objectives are to generate both current income and capital appreciation while seeking to preserve capital by investing primarily in floating rate loans and other investments made to U.S. middle-market companies.
We believe that floating rate loans to U.S. middle-market companies offer attractive risk-reward to investors due to a limited amount of capital available for such companies. We use the term “middle-market” to refer to companies with annual revenues between $50 million and $1 billion. Our investments are typically rated below investment grade. Securities rated below investment grade are often referred to as “leveraged loans,” “high yield” securities or “junk bonds” and are often higher risk compared to debt instruments that are rated above investment grade and have speculative characteristics. However, when compared to junk bonds and other non-investment grade debt, senior secured floating rate loans typically have more robust capital-preserving qualities, such as historically lower default rates than junk bonds, represent the senior source of capital in a borrower’s capital structure and often have certain of the borrower’s assets pledged as collateral. Our debt investments may generally range in maturity from three to ten years and are made to U.S. and, to a limited extent, non-U.S. corporations, partnerships and other business entities which operate in various industries and geographical regions.
Under normal market conditions, we generally expect that at least 80% of the value of our managed assets will be invested in floating rate loans and other investments bearing a variable-rate of interest. We generally expect that first lien secured debt will represent at least 65% of our overall portfolio. We also generally expect to invest up to 35% of our overall portfolio opportunistically in other types of investments, including second lien secured debt and subordinated debt and, to a lesser extent, equity investments. We seek to create a diversified portfolio by generally targeting an investment size between $5 million and $30 million, on average, although we expect that this investment size will vary proportionately with the size of our capital base.
Our investment activity depends on many factors, including the amount of debt and equity capital available to middle-market companies, the level of merger and acquisition activity for such companies, the general economic environment and the competitive environment for the types of investments we make. We have used, and expect to continue to use, our debt capital, proceeds from the rotation of our portfolio and proceeds from public and private offerings of securities to finance our investment objectives.
Organization and Structure of PennantPark Floating Rate Capital Ltd.
The Company, a Maryland corporation organized in October 2010, is a closed-end, externally managed, non-diversified investment company that has elected to be treated as a BDC under the 1940 Act. In addition, for federal income tax purposes we elected to be treated, and intend to qualify annually, as a RIC under the Code.
We execute our investment strategy directly and through our wholly owned subsidiaries, our unconsolidated joint venture and unconsolidated limited partnership. The term “subsidiary” means entities that primarily engage in investments activities in securities or other assets that are wholly owned by us. The Company does not intend to create or acquire primary control of an entity which primarily engages in investment activities of securities or other assets other than entities wholly owned by the Company. We comply with the provisions of Section 18 of the 1940 Act governing capital structure and leverage on an aggregate basis with our subsidiaries. Our subsidiaries comply with the provisions of Section 17 of the 1940 Act related to affiliated transactions and custody. To the extent that the Company forms a subsidiary advised by an investment adviser other than the Investment Adviser, the investment adviser to such subsidiaries will comply with the provisions of the 1940 Act relating to investment advisory contracts, including but not limited to, Section 15, as if it were an investment adviser to the Company under Section 2(a)(20) of the 1940 Act.
Our investment activities are managed by the Investment Adviser. Under our Investment Management Agreement, we have agreed to pay our Investment Adviser an annual base management fee based on our average adjusted gross assets as well as an incentive fee based on our investment performance. We have also entered into an Administration Agreement with the Administrator. Under our Administration Agreement, we have agreed to reimburse the Administrator for our allocable portion of overhead and other expenses incurred by the Administrator in performing its obligations under our Administration Agreement, including rent and our allocable portion of the costs of compensation and related expenses of our Chief Financial Officer, Chief Compliance Officer, Corporate Counsel and their respective staffs. Our board of directors, a majority of whom are independent of us, provides overall supervision of our activities, and the Investment Adviser supervises our day-to-day activities.
Revenues
We generate revenue in the form of interest income on the debt securities we hold and capital gains and dividends, if any, on investment securities that we may acquire in portfolio companies. Our debt investments, whether in the form of first lien secured debt, second lien secured debt or subordinated debt, typically have a term of three to ten years and bear interest at a floating or fixed rate. Interest on debt securities is generally payable quarterly or semiannually. In some cases, our investments provide for deferred interest payments or PIK interest. The principal amount of the debt securities and any accrued but unpaid interest generally becomes due at the maturity date. In addition, we may generate revenue in the form of amendment, commitment, origination, structuring or diligence fees, fees for providing significant managerial assistance and possibly consulting fees. Loan origination fees, OID and market discount or premium are capitalized and accreted or amortized using the effective interest method as interest income or, in the case of deferred financing costs, as interest expense. Dividend income, if any, is recognized on an accrual basis on the ex-dividend date to the extent that we expect to collect such amounts. From time to time, the Company receives certain fees from portfolio companies, which may or may not be non-recurring in nature. Such fees include loan prepayment penalties, structuring fees and amendment fees and agency fees, and are recorded as other investment income when earned. Litigation settlements are accounted for in accordance with the gain contingency provisions of ASC Subtopic 450-30, Gain Contingencies, or ASC 450-30.
Expenses
Our primary operating expenses include the payment of a management fee and the payment of an incentive fee to our Investment Adviser, if any, our allocable portion of overhead under our Administration Agreement and other operating costs as detailed below. Our management fee compensates our Investment Adviser for its work in identifying, evaluating, negotiating, consummating and monitoring our investments. Additionally, we pay interest expense on the outstanding debt and unused commitment fees on undrawn amounts under our various debt facilities. We bear all other direct or indirect costs and expenses of our operations and transactions, including:
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Generally, during periods of asset growth, we expect our general and administrative expenses to be relatively stable or to decline as a percentage of total assets and increase during periods of asset declines. Incentive fees, interest expense and costs relating to future offerings of securities would be additive to the expenses described above.
PORTFOLIO AND INVESTMENT ACTIVITY
PennantPark Floating Rate Capital Ltd.
As of March 31, 2025, our portfolio totaled $2,344.1 million, and consisted of $2,100.2 million of first lien secured debt (including $237.7 million in PSSL), $4.4 million of subordinated debt and $239.5 million of preferred and common equity (including $59.6 million in PSSL). Our debt portfolio consisted of approximately 100% variable-rate investments. As of March 31, 2025, we had four portfolio companies on non-accrual, representing 2.2% and 1.2% of our overall portfolio on a cost and fair value basis, respectively. As of March 31, 2025, the portfolio had net unrealized depreciation of $61.2 million. Our overall portfolio consisted of 159 companies with an average investment size of $14.7 million and had a weighted average yield on debt investments of 10.5%, and was invested 90% in first lien secured debt (including 10% in PSSL), less than 1% in second lien and subordinate debt and 10% in preferred and common equity (including 3% in PSSL). As of March 31, 2025, approximately 100% of the investments held by PSSL were first lien secured debt.
As of September 30, 2024, our portfolio totaled $1,983.5 million and consisted of $1,746.7 million of first lien secured debt (including $237.7 million in PSSL), $2.7 million of second lien secured debt and subordinated debt and $234.1 million of preferred and common equity (including $56.5 million in PSSL). Our debt portfolio consisted of approximately 100% variable-rate investments. As of September 30, 2024, we had two portfolio companies on non-accrual, representing 0.4% and 0.2% of our overall portfolio on a cost and fair value basis, respectively. As of September 30, 2024, the portfolio had net unrealized depreciation of $11.4 million. Our overall portfolio consisted of 158 companies with an average investment size of $12.6 million, had a weighted average yield on debt investments of 11.5%, and was invested 88% in first lien secured debt (including 12% in PSSL), less than 1% in second lien secured debt and subordinated debt and 12% in preferred and common equity (including 3% in PSSL). As of September 30, 2024, over 99% of the investments held by PSSL were first lien secured debt.
For the three months ended March 31, 2025, we invested $293.3 million in three new and 54 existing portfolio companies at a weighted average yield on debt investments of 9.9%. For the three months ended March 31, 2025, sales and repayments of investments totaled $122.4 million, including $52.9 million of sales to PSSL. For the six months ended March 31, 2025, we invested $900.2 million in 14 new and 96 existing portfolio companies at a weighted average yield on debt investments of 10.2%. For the six months ended March 31, 2025, sales and repayments of investments totaled $523.7 million, including $240.6 million of sales to PSSL.
For the three months ended March 31, 2024, we invested $338.3 million in 11 new and 48 existing portfolio companies at a weighted average yield on debt investments of 11.6%. For the three months ended March 31, 2024, sales and repayments of investments totaled $144.8 million, including $77.2 million of sales to PSSL. For the six months ended March 31, 2024, we invested $640.9 million in 24 new and 64 existing portfolio companies at a weighted average yield on debt investments of 11.8%. For the six months ended March 31, 2024, sales and repayments of investments totaled $248.7 million, including $139.9 million of sales to PSSL.
As of March 31, 2025, PSSL’s portfolio totaled $1,060.2 million and consisted of 118 companies with an average investment size of $9.0 million and at a weighted average yield on debt investments of 10.5%. As of September 30, 2024, PSSL’s portfolio totaled $913.3 million, consisted of 109 companies with an average investment size of $8.4 million and at a weighted average yield on debt investments of 11.4%.
For the three months ended March 31, 2025, PSSL invested $60.0 million (including $52.9 million purchased from the Company) in four new and five existing portfolio companies at a weighted average yield on debt investments of 9.8%. Sales and repayments of investments for the three months ended March 31, 2025 totaled $36.8 million. For the six months ended March 31, 2025, PSSL invested $284.9 million (including $240.6 million purchased from the Company) in 21 new and 12 existing portfolio companies at a weighted average yield on debt investments of 10.2%. PSSL's sales and repayments for the same period totaled $123.4 million.
For the three months ended March 31, 2024, PSSL invested $80.1 million (including $77.2 million purchased from the Company) in six new and four existing portfolio companies at a weighted average yield on debt investments of 11.6%. For the three months ended March 31, 2024, sales and repayments of investments totaled $49.5. million For the six months ended March 31, 2024, PSSL invested $155.9 million (including $139.9 million from the Company) in 10 new and 11 existing portfolio companies at a weighted average yield on debt investments of 11.9%. Sales and repayments of investments for the six months ended March 31, 2024, totaled $77.2 million.
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At-the-Market Offering
CRITICAL ACCOUNTING POLICIES AND ESTIMATES
The preparation of our Consolidated Financial Statements in conformity with GAAP requires management to make estimates and assumptions that affect the reported amount of our assets and liabilities at the date of the Consolidated Financial Statements and the reported amounts of income and expenses during the reported periods. In the opinion of management, all adjustments, which are of a normal recurring nature, considered necessary for the fair presentation of financial statements have been included. Actual results could differ from these estimates due to changes in the economic and regulatory environment, financial markets and any other parameters used in determining such estimates and assumptions. We may reclassify certain prior period amounts to conform to the current period presentation. We have eliminated all intercompany balances and transactions. References to ASC serve as a single source of accounting literature. Subsequent events are evaluated and disclosed as appropriate for events occurring through the date the Consolidated Financial Statements are issued. In addition to the discussion below, we describe our critical accounting policies in the notes to our Consolidated Financial Statements. We discuss our critical accounting estimates in Management’s Discussion and Analysis of Financial Condition and Results of Operations in our 2024 Annual Report on Form 10-K. There have been no significant changes in our critical accounting estimates during the three months from those disclosed in our 2024 Annual Report on Form 10-K.
Investment Valuations
We expect that there may not be readily available market values for many of our investments which are or will be in our portfolio, and we value such investments at fair value as determined in good faith by or under the direction of our board of directors using a documented valuation policy and a consistently applied valuation process, as described in this Report. With respect to investments for which there is no readily available market value, the factors that the board of directors may take into account in pricing our investments at fair value include, as relevant, the nature and realizable value of any collateral, the portfolio company’s ability to make payments and its earnings and discounted cash flow, the markets in which the portfolio company does business, comparison to publicly traded securities and other relevant factors. When an external event such as a purchase transaction, public offering or subsequent equity sale occurs, we consider the pricing indicated by the external event to corroborate or revise our valuation. Due to the inherent uncertainty of determining the fair value of investments that do not have a readily available market value, the price used in an actual transaction may be different than our valuation and the difference may be material.
Our board of directors generally uses market quotations to assess the value of our investments for which market quotations are readily available. We obtain these market values from independent pricing services or at the bid prices obtained from at least two brokers or dealers, if available, or otherwise from a principal market maker or a primary market dealer. The Investment Adviser assesses the source and reliability of bids from brokers or dealers. If the board of directors has a bona fide reason to believe any such market quote does not reflect the fair value of an investment, it may independently value such investments by using the valuation procedure that it uses with respect to assets for which market quotations are not readily available.
Level 1: Inputs that are quoted prices (unadjusted) in active markets for identical assets or liabilities, accessible by us at the measurement date.
Level 2: Inputs that are quoted prices for similar assets or liabilities in active markets, or that are quoted prices for identical or similar assets or liabilities in markets that are not active and inputs that are observable for the asset or liability, either directly or indirectly, for substantially the full term, if applicable, of the financial instrument.
Level 3: Inputs that are unobservable for an asset or liability because they are based on our own assumptions about how market participants would price the asset or liability.
A financial instrument’s categorization within the valuation hierarchy is based upon the lowest level of input that is significant to the fair value measurement. Generally, most of our investments, our 2031 Asset-Backed Debt, 2036 Asset-Backed Debt, 2036-R Asset-Backed Debt, 2037 Asset-Backed Debt, and our Credit Facility are classified as Level 3. Our 2026 Notes are classified as Level 2 as they are financial instruments with readily observable market inputs. Due to the inherent uncertainty of determining the fair value of investments that do not have a readily available market value, the price used in an actual transaction may be different than our valuation and those differences may be material.
On December 3, 2020, the SEC adopted Rule 2a-5 under the 1940 Act, which establishes an updated regulatory framework for determining fair value in good faith for purposes of the 1940 Act. The new rule clarifies how fund boards of directors can satisfy their valuation obligations and requires, among other things, the boards of directors to periodically assess material valuation risks and take steps to manage those risks. The rule also permits boards of directors, subject to board oversight and certain other conditions, to designate the fund’s investment adviser to perform fair value determinations. The new rule went into effect on March 8, 2021 and had a compliance date of September 8, 2022. We came into compliance with Rule 2a-5 under the 1940 Act before the compliance date. While our board of directors has not elected to designate the Investment Adviser as the valuation designee at this time, we have adopted certain revisions to our valuation policies and procedures in order comply with the applicable requirements of Rule 2a-5 under the 1940 Act.
In addition to using the above inputs to value cash equivalents, investments, our 2026 Notes, our 2031 Asset-Backed Debt, our 2036 Asset-Backed Debt, our 2036-R Asset-Backed Debt, our 2037 Asset-Backed Debt, and our Credit Facility, we employ the valuation policy approved by our board of directors that is consistent with ASC 820. Consistent with our valuation policy, we evaluate the source of inputs, including any markets in which our investments are trading, in determining fair value.
Generally, the carrying value of our consolidated financial liabilities approximates fair value. We have adopted the principles ASC Subtopic 825-10, Financial Instruments, or ASC 825-10, which provides companies with an option to report selected financial assets and liabilities at fair value, and made an irrevocable election to apply ASC 825-10 to the Credit Facility. We elected to use the fair value option for the Credit Facility and the 2023 Notes to align the measurement attributes of both our assets and liabilities while mitigating volatility in earnings from using different measurement attributes. Due to that election and in accordance with GAAP, we incurred $0.4 million of expenses relating to amendment costs on the Credit Facility during the three and six months ended March 31, 2025 and did not incur any expenses relating to amendment costs on the Credit Facility during the three and six months ended, March 31, 2024. ASC 825-10 establishes presentation and disclosure requirements designed to facilitate comparisons between companies that choose different measurement attributes for similar types of assets and liabilities and to more easily understand the effect on earnings of a company’s choice to use fair value. ASC 825-10 also requires entities to display the fair value of the selected assets and liabilities on the face of the Consolidated Statements of Assets and Liabilities and changes in fair value of the Credit Facility are reported in our Consolidated Statements of Operations. We elected not to apply ASC 825-10 to any other financial assets or liabilities, including the 2026 Notes, the 2031 Asset-Backed Debt, the 2036 Asset-Backed Debt, the 2036-R Asset-Backed Debt, and the 2037 Asset-Backed Debt.
For the three and six months ended March 31, 2025, the Credit Facility had a net change in unrealized appreciation (depreciation) of less than $0.1 million and $0.1 million, respectively . For the three and six months ended March 31, 2024, the Credit Facility had a net change in unrealized appreciation (depreciation) of less than $0.1 million and $(0.1) million, respectively. As of March 31, 2025 and September 30, 2024, the net unrealized appreciation (depreciation) on the Credit Facility totaled approximately $0.1 million and zero, respectively. We use a nationally recognized independent valuation service to measure the fair value of the Credit Facility in a manner consistent with the valuation process that our board of directors uses to value our investments. Our 2023 Notes traded on the TASE and were fully paid off during in December 2023.
On February 7, 2024, the Company filed a notice with the Israel Securities Authority and “TASE” voluntarily requesting to delist the Company’s common stock from trading on the TASE. The last day of trading on the TASE was May 6, 2024 and the delisting of the Company’s common stock from the TASE took effect on May 8, 2024.
Revenue Recognition
We record interest income on an accrual basis to the extent that we expect to collect such amounts. For loans and debt investments with contractual PIK interest, which represents interest accrued and added to the loan balance that generally becomes due at maturity, we will generally not accrue PIK interest when the portfolio company valuation indicates that such PIK interest is not collectable. We do not accrue as a receivable interest on loans and debt investments if we have reason to doubt our ability to collect such interest. Loan origination fees, OID, market discount or premium and deferred financing costs on liabilities, which we do not fair value, are capitalized and then accreted or amortized using the effective interest method as interest income or, in the case of deferred financing costs, as interest expense. We record prepayment penalties on loans and debt investments as income. Dividend income, if any, is recognized on an accrual basis on the ex-dividend date to the extent that we expect to collect such amounts. From time to time, the Company receives certain fees from portfolio companies, which may or may not be non-recurring in nature. Such fees include loan prepayment penalties, structuring fees, amendment fees and agency fees, and are recorded as other investment income when earned.
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Net Realized Gains or Losses and Net Change in Unrealized Appreciation or Depreciation
We measure realized gains or losses by the difference between the net proceeds from the repayment or sale and the amortized cost basis of the investment, using the specific identification method, without regard to unrealized appreciation or depreciation previously recognized, but considering unamortized upfront fees and prepayment penalties. Net change in unrealized appreciation or depreciation reflects the change in the fair values of our portfolio investments, our Credit Facility, during the reporting period, including any reversal of previously recorded unrealized appreciation or depreciation, when gains or losses are realized.
Foreign Currency Translation
Payment -in-kind, or PIK Interest
We have investments in our portfolio which contain a PIK interest provision. PIK interest is added to the principal balance of the investment and is recorded as income. In order for us to maintain our ability to be subject to tax as a RIC, substantially all of this income must be paid out to stockholders in the form of dividends for federal income tax purposes, even though we may not have collected any cash with respect to interest on PIK securities.
Federal Income Taxes
We have elected to be treated and intend to qualify annually to maintain our election to be treated, as a RIC under Subchapter M of the Code. To maintain our RIC tax election, we must, among other requirements, meet certain annual source-of-income and quarterly asset diversification requirements. We also must annually distribute dividends for federal income tax purposes to our stockholders out of the assets legally available for distribution of an amount generally at least equal to 90% of the sum of our net ordinary income and realized net short-term capital gains in excess of realized net long-term capital losses, or investment company taxable income, determined without regard to any deduction for dividends paid.
Although not required for us to maintain our RIC tax status, in order to preclude the imposition of a 4% nondeductible federal excise tax imposed on RICs, we must distribute dividends for U.S. federal income tax purposes to our stockholders in respect of each calendar year of an amount at least equal to the sum of (1) 98% of our net ordinary income (subject to certain deferrals and elections) for the calendar year, (2) 98.2% of our capital gain net income (i.e., the excess, if any, of our capital gains over capital losses), adjusted for certain ordinary losses, generally for the one-year period ending on October 31 of the calendar year plus (3) any net ordinary income or capital gain net income for the preceding years that was not distributed during such years on which we did not incur any corporate income tax, or the Excise Tax Avoidance Requirement. In addition, although we may distribute realized net capital gains (i.e., net long-term capital gains in excess of net short-term capital losses), if any, at least annually, out of the assets legally available for such distributions in the manner described above, we have retained and may continue to retain such net capital gains or investment company taxable income, subject to maintaining our ability to be taxed as a RIC, in order to provide us with additional liquidity.
Because federal income tax regulations differ from GAAP, distributions in accordance with tax regulations may differ from net investment income and net realized gain recognized for financial reporting purposes. Differences between tax regulations and GAAP may be permanent or temporary. Permanent differences are reclassified among capital accounts in the Consolidated Financial Statements to reflect their appropriate tax character. Temporary differences arise when certain items of income, expense, gain or loss are recognized at some time in the future.
For the three and six months ended March 31, 2025, we recorded a provision for taxes on net investment income of $0.2 million and $0.5 million, respectively, pertaining to federal excise tax. For the three and six months ended March 31, 2024, we recorded a provision for taxes on net investment income of $0.5 million and $0.7 million, respectively, pertaining to federal excise tax.
For the three and six months ended March 31, 2025, the Company recorded a provision for taxes of $0.5 million and $1.1 million on unrealized appreciation (depreciation) on investments by the Taxable Subsidiary. For the three and six months ended March 31, 2024, the Company recorded a provision for taxes of $0.2 million and $0.2 million on unrealized appreciation (depreciation) on investments by the Taxable Subsidiary. The provision for taxes on unrealized appreciation (depreciation) on investments is the result of netting (i) the expected tax liability on gains from sales of investments and (ii) the expected tax benefit from the use of losses in the current year. As of March 31, 2025, and September 30, 2024, $0.6 million and $1.7 million, respectively, was accrued as a deferred tax liability on the Consolidated Statements of Assets and Liabilities relating to unrealized gain on investments held by the Taxable Subsidiary. During the three and six months ended March 31, 2025, the Company recorded a provision for taxes of less than $(0.1) million and $(0.1) million relating to realized gain (loss) on investments held by the Taxable Subsidiary. During the three and six months ended March 31, 2024, the Company did not record a provision for taxes relating to realized gain on investments held by the Taxable Subsidiary. During the three and six months ended March 31, 2025, the Company paid zero in taxes on realized gains on the sale of investments held by the Taxable Subsidiary. During the three and six months ended March 31, 2024, the Company paid zero in taxes on realized gains on the sale of investments held by the Taxable Subsidiary.
We have formed and expect to continue to form certain taxable subsidiaries, including the Taxable Subsidiary, which are taxed as corporations. These taxable subsidiaries allow us to hold equity securities of certain portfolio companies treated as pass-through entities for U.S. federal income tax purposes while facilitating our ability to qualify as a RIC under the Code.
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RESULTS OF OPERATIONS
Set forth below are the results of operations for the three and six months ended March 31, 2025 and 2024.
Investment Income
For the three and six months ended March 31, 2025, investment income was $61.9 million and $128.9 million, respectively, which was attributable to $56.2 million and $117.2 million from first lien secured debt and $5.7 million and $11.7 million from other investments, respectively. For the three and six months ended March 31, 2024, investment income was $44.4 million and $82.3 million, respectively, which was attributable to $39.0 million and $72.2 million from first lien secured debt and $5.4 million and $10.1 million from other investments, respectively. The increase in investment income for the three and six months ended March 31, 2025, was primarily due to the increase in the size of our debt portfolio.
For the three and six months ended March 31, 2025, expenses totaled $36.9 million and $74.0 million, respectively and were comprised of: $22.5 million and $44.9 million of debt related interest and expenses, $5.6 million and $10.9 million of base management fees, $6.3 million and $13.8 million of performance-based incentive fees, and $1.9 million and $3.6 million of general and administrative expenses, $0.2 million and $0.5 million of taxes and $0.4 million and $0.4 million in Credit Facility amendment costs. For the three and six months ended March 31, 2024, expenses totaled $25.3 million and $43.8 million, respectively and were comprised of; $14.7 million and $23.6 million of debt related interest and expenses, $3.4 million and $6.4 million of base management fee, $4.8 million and $9.6 million of performance-based incentive fee, $1.8 million and $3.5 million of general and administrative expenses and $0.5 million and $0.7 million of taxes. The increase in expenses for the three and six months ended March 31, 2025, was primarily due to the increase in interest expense from increased borrowings and an increase in base management fee and incentive fee as a result of the increase in our investment portfolio.
Net Investment Income
For the three and six months ended March 31, 2025, net investment income totaled $25.0 million or $0.28 per share, and $55.0 million or $0.64 per share, respectively. For the three and six months ended March 31, 2024, net investment income totaled $19.1 million or $0.31 per share, and $38.5 million or $0.64 per share, respectively. The increase in net investment income for the three and six months ended March 31, 2025, was primarily due to an increase in investment income partially offset by an increase in expenses.
Net Realized Gains or Losses
For the three and six months ended March 31, 2025, net realized gains (losses) totaled $(3.5) million and $23.1 million, respectively. For the three and six months ended March 31, 2024, net realized gains (losses) totaled $4.0 million and $0.9 million, respectively. The change in net realized gains (losses) was primarily due to changes in the market conditions of our investments and the values at which they were realized.
Unrealized Appreciation or Depreciation on Investments and Debt
For the three and six months ended March 31, 2025, we reported net change in unrealized appreciation (depreciation) on investments of $(20.8) million and $(49.7) million, respectively. For the three and six months ended March 31, 2024, we reported net change in unrealized appreciation (depreciation) on investments of $7.7 million and $13.9 million, respectively. As of March 31, 2025 and September 30, 2024, our net unrealized appreciation (depreciation) on investments totaled $(61.2) million and $(11.4) million, respectively. The net change in unrealized appreciation (depreciation) on our investments was primarily due to the operating performance of the portfolio companies within our portfolio, changes in the capital market conditions of our investments and realization of investments.
For the three and six months ended March 31, 2025, our Credit Facility had a net change in unrealized appreciation (depreciation) of less than $0.1 million and $0.1 million, respectively. For the three and six months ended March 31, 2024, our Credit Facility had a net change in unrealized appreciation (depreciation) of less than $0.1 million and less than $(0.1) million. As of March 31, 2025 and September 30, 2024, the net unrealized appreciation (depreciation) on the Credit Facility totaled approximately $0.1 million and zero, respectively. The net change in net unrealized (appreciation) or depreciation was primarily due to changes in the capital markets.
Net Change in Net Assets Resulting from Operations
For the three and six months ended March 31, 2025, net increase (decrease) in net assets resulting from operations totaled $1.2 million or $0.01 per share and $29.6 million or $0.34 per share, respectively. For the three and six months ended March 31, 2024, net increase (decrease) in net assets resulting from operations totaled $31.1 million or $0.51 per share and $53.6 million, or $0.89 per share, respectively. The net increase or (decrease) from operations for the three and six months ended March 31, 2025, was primarily due to operating performance of our portfolio and changes in capital market conditions of our investments along with change in size and cost yield of our debt portfolio and costs of financing.
LIQUIDITY AND CAPITAL RESOURCES
Our liquidity and capital resources are derived primarily from cash flows from operations, including income earned, proceeds from investment sales and repayments, and proceeds of securities offerings and debt financings. Our primary use of funds from operations includes investments in portfolio companies and payments of fees and other operating expenses we incur. We have used, and expect to continue to use, our debt capital, proceeds from our portfolio and proceeds from public and private offerings of securities to finance our investment objectives and operations. As of March 31, 2025, in accordance with the 1940 Act, with certain limited exceptions, we are only allowed to borrow amounts such that we are in compliance with a 150% asset coverage ratio requirement after such borrowing.
On April 5, 2018, our board of directors approved the application of the modified asset coverage requirements set forth in Section 61(a)(2) of the 1940 Act, as amended by the Consolidated Appropriations Act of 2018 (which includes the SBCAA). As a result, the asset coverage requirement applicable to us for senior securities was reduced from 200% (i.e., $1 of debt outstanding for each $1 of equity) to 150% (i.e., $2 of debt outstanding for each $1 of equity), effective as of April 5, 2019, subject to compliance with certain disclosure requirements. As of March 31, 2025 and September 30, 2024, our asset coverage ratio, as computed in accordance with the 1940 Act, was 178% and 174%, respectively.
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For the six months ended March 31, 2025 and 2024, the annualized weighted average cost of debt, inclusive of the fee on the undrawn commitment on the Credit Facility, amendment costs and debt issuance costs, was 6.8% and 7.1%, respectively. As of March 31, 2025 and September 30, 2024, we had $462.1 million and $192.1 million of unused borrowing capacity under the Credit Facility, respectively, subject to leverage and borrowing base restrictions.
Funding I’s multi-currency Credit Facility with the Lenders was $736.0 million (increased from $636 million in December 2024) as of March 31, 2025 subject to satisfaction of certain conditions and regulatory restrictions that the 1940 Act imposes on us as a BDC, has an interest rate spread above SOFR (or an alternative risk-free floating interest rate index) of 225 basis points, a maturity date of August 2029 and a revolving period that ends in August 2027. As of March 31, 2025 and September 30, 2024, PennantPark Floating Rate Funding I, LLC, our wholly-owned subsidiary, borrowed $273.9 million and $443.9 million under the Credit Facility, respectively, and the weighted average interest rate, exclusive of the fee on undrawn commitments, was 6.6% and 7.5%, respectively, exclusive of the fee on undrawn commitments.
During the revolving period, the Credit Facility bears interest at SOFR (or an alternative risk-free floating interest rate index) plus 225 basis points and, after the revolving period, the rate will reset to Base Rate (or an alternative risk-free floating interest rate index) plus 250 basis points for the remaining two years, maturing in August 2029. The Credit Facility is secured by all of the assets of Funding I. Both PennantPark Floating Rate Capital Ltd. and Funding I have made customary representations and warranties and are required to comply with various covenants, reporting requirements and other customary requirements for similar credit facilities.
The Credit Facility contains covenants, including but not limited to, restrictions of loan size, currency types and amounts, industry requirements, average life of loans, geographic and individual portfolio concentrations, minimum portfolio yield and loan payment frequency. Additionally, the Credit Facility requires the maintenance of a minimum equity investment in Funding I and income ratio as well as restrictions on certain payments and issuance of debt. The Credit Facility compliance reporting is prepared on a basis of accounting other than GAAP. As of March 31, 2025, we were in compliance with the covenants relating to our Credit Facility.
Our interest in Funding I (other than the management fee) is subordinate in priority of payment to every other obligation of Funding I and is subject to certain payment restrictions set forth in the Credit Facility. We may receive cash distributions on our equity interests in Funding I only after it has made (1) all required cash interest and, if applicable, principal payments to the Lenders, (2) required administrative expenses and (3) claims of other unsecured creditors of Funding I. We cannot assure you that there will be sufficient funds available to make any distributions to us or that such distributions will meet our expectations from Funding I. The Investment Adviser has irrevocably directed that the management fee owed with respect to such services is to be paid to the Company so long as the Investment Adviser remains the collateral manager.
In March 2021 and in October 2021, we issued $100.0 million and $85.0 million, respectively, in aggregate principal amount of our 2026 Notes at a public offering price per note of 99.4% and 101.5%, respectively. Interest on the 2026 Notes is paid semi-annually on April 1 and October 1 of each year, at a rate of 4.25% per year, commencing October 1, 2021. The 2026 Notes mature on April 1, 2026 and may be redeemed in whole or in part at our option subject to a make-whole premium if redeemed more than three months prior to maturity. The 2026 Notes are our general, unsecured obligations and rank equal in right of payment with all of our existing and future senior unsecured indebtedness. The 2026 Notes are effectively subordinated to all of our existing and future secured indebtedness to the extent of the value of the assets securing such indebtedness and structurally subordinated to all existing and future indebtedness and other obligations of any of our subsidiaries, financing vehicles, or similar facilities. We do not intend to list the 2026 Notes on any securities exchange or automated dealer quotation system.
In September 2019, the Securitization Issuers completed the Debt Securitization. The 2031 Asset-Backed Debt is secured by the middle market loans, participation interests in middle market loans and other assets of the Securitization Issuer. The Debt Securitization was executed through (A) a private placement of: (i) $78.5 million Class A-1 Senior Secured Floating Rate Notes maturing 2031, which bear interest at the three-month SOFR plus 1.8%, (ii) $15.0 million Class A-2 Senior Secured Fixed Rate Notes due 2031, which bear interest at 3.7%, (iii) $14.0 million Class B-1 Senior Secured Floating Rate Notes due 2031, which bear interest at the three-month SOFR plus 2.9%, (iv) $16.0 million Class B-2 Senior Secured Fixed Rate Notes due 2031, which bear interest at 4.3%, (v) $19.0 million Class C‑1 Secured Deferrable Floating Rate Notes due 2031, which bear interest at the three-month SOFR plus 4.0%, (vi) $8.0 million Class C-2 Secured Deferrable Fixed Rate Notes due 2031, which bear interest at 5.4%, and (vii) $18.0 million Class D Secured Deferrable Floating Rate Notes due 2031, which bear interest at the three-month SOFR plus 4.8% and (B) the borrowing of $77.5 million Class A‑1 Senior Secured Floating Rate Loans due 2031, which bear interest at the three-month SOFR plus 1.8%, under a credit agreement by and among the Securitization Issuers, as borrowers, various financial institutions, as lenders, and U.S. Bank National Association, as collateral agent and as loan agent. The 2031 Asset-Backed Debt is scheduled to mature on October 15, 2031. As of March 31, 2025 and September 30, 2024, the Company had zero of 2031 Asset-Backed Debt outstanding.
On the closing date of the Debt Securitization, in consideration of our transfer to the Securitization Issuer of the initial closing date loan portfolio, which included loans distributed to us by our wholly-owned subsidiary, the Securitization Issuer transferred to us 100% of the Preferred Shares of the Securitization Issuer, 100% of the Class D Secured Deferrable Floating Rate Notes issued by the Securitization Issuer, and a portion of the net cash proceeds received from the sale of the 2031 Asset-Backed Debt. The Preferred Shares of the Securitization Issuer do not bear interest and had a stated value of $55.4 million at the closing of the Debt Securitization.
Our Investment Adviser serves as collateral manager to the Securitization Issuer pursuant to a collateral management agreement between our Investment Adviser and the Securitization Issuer, or the Collateral Management Agreement. For so long as our Investment Adviser serves as collateral manager, it will elect to irrevocably waive any collateral management fee to which it may be entitled under the Collateral Management Agreement.
In July 2024, the 2031 Asset-Backed Debt was refinanced through a $351.0 million debt securitization in the form of a collateralized loan obligation, or the "2036-R Asset-Backed Debt". The Company retained $85.0 million of the debt securitization. The 2036-R Asset-Backed Debt was executed through: (A) the issuance by the 2036-R Securitization Issuers of the following classes of notes pursuant that certain indenture, dated September 19, 2019, by and among the 2036-R Securitization Issuers and U.S. Bank Trust Company, National Association, as amended by the second supplemental indenture, dated June 25, 2024): (i) $203 million of A-1-R Notes, which bear interest at the three-month SOFR plus 1.75%, (ii) $10.5 million of A-2-R Notes, which bear interest at three-month SOFR plus 1.90%, (iii) $12 million of Class B-R Notes, which bear interest at three-month SOFR plus 2.05%, (iv) $28 million of C-R Notes, which bear interest at three-month SOFR plus 2.75% and (v) $21 million of D-R Notes, which bear interest at three-month SOFR plus 4.30%, (B) the issuance by the issuer of $64 million of subordinated notes pursuant to the Indenture and (C) the borrowing by one of the 2036-R Securitization Issuers of $12.5 million of Class B-R Loans, which bear interest at three-month SOFR plus 2.05%, pursuant to a credit agreement, by and among the 2036-R Securitization Issuers, the various financial institutions and other persons party thereto, as lenders and U.S. Bank Trust Company, National Association, as loan agent and as trustee. The 2036-R Asset-Backed Debt matures in July 2036. As of March 31, 2025 and September 30, 2024, the Company had $266.0 million of 2036-R Asset-Backed Debt outstanding with a weighted average interest rate of 6.2% and 7.2%, respectively. As of March 31, 2025 and September 30, 2024, the unamortized fees on the 2036-R Asset-Backed Debt were $0.7 million and $0.8 million, respectively.
In February 2024, the Company completed the $350.6 million term debt securitization. Term debt securitizations, also known as CLOs, are a form of secured financing incurred by the Company, which is consolidated by the Company and subject to the Company’s asset coverage requirements. The 2036 Asset-Backed Debt was issued by the
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2036 Securitization Issuer. The 2036 Asset-Backed Debt is secured by the middle market loans, participation interests in middle market loans and other assets of the 2036 Securitization Issuer. The Debt Securitization was executed through (A) a private placement of: (i) $139.5 million of AAA(sf) Class A-1 Notes, which bear interest at the three-month secured overnight financing rate published by the Federal Reserve Bank of New York (“SOFR”) plus 2.30%, (ii) $14 million of AAA(sf) Class A-2 Notes, which bear interest at three-month SOFR plus 2.70%, (iii) $24.5 million of AA(sf) Class B Notes, which bear interest at three-month SOFR plus 2.90%, (iv) $28 million of A(sf) Class C Notes, which bear interest at three-month SOFR plus 3.90%, (v) $21 million of BBB-(sf) Class D Notes, which bear interest at three-month SOFR plus 5.90%, (together, the “Secured Notes”), and (vi) $63.6 million of subordinated notes (“Subordinated Notes”) and (B) the borrowing of $60.0 million AAA(sf) Class A-1 Senior Secured Floating Rate Loans (the “Class A-1 Loans” and together with the Secured Notes and Subordinated Notes, the “Debt”), which bear interest at three-month SOFR plus 2.30%, under a credit agreement (the “Credit Agreement”), dated as of the Closing Date, by and among the Issuer, as borrower, various financial institutions, as lenders, and Wilmington Trust, National Association, as collateral agent and as loan agent. The Debt is scheduled to mature on April 18, 2036.
The 2036 Asset-Backed Debt is included in the Consolidated Statement of Assets and Liabilities as debt of the Company and the Preferred Shares of the 2036-Securitization Issuer were eliminated in consolidation. As of March 31, 2025 and September 30, 2024, the Company had $287 million of 2036 Asset-Backed Debt outstanding with a weighted average interest rate of 7.1% and 8.1%, respectively. As of March 31, 2025, and September 30, 2024 the unamortized fees on the 2036 Asset-Backed Debt were $2.6 million and $2.9 million, respectively.
In February 2025, we completed the $474.6 million term debt securitization (the “2037 Debt Securitization”). The notes offered in the 2037 Debt Securitization were issued by the 2037 Securitization Issuer and are backed by a portfolio of collateral obligations consisting of middle market loans and participation interests in middle market loans as well as by other assets of the 2037 Securitization Issuer. The Company retained $113.6 million of the debt securitization issued by the 2037 Securitization Issuer. The transaction was executed through (A) a private placement of $220.5 million of AAA(sf) Class A-1 Notes, which bear interest at the three-month SOFR plus 1.49% (the “2037 Class A-1 Notes”), (ii) $19.0 million of AAA(sf) Class A-2 Notes, which bear interest at three-month SOFR plus 1.60% (the “2037 Class A-2 Notes”), (iii) $28.5 million of AA(sf) Class B Notes, which bear interest at three-month SOFR plus 1.75% (the “2037 Class B Notes”), (iv) $38.0 million of A(sf) Class C Notes, which bear interest at three-month SOFR plus 2.20% (the “2037 Class C Notes”), (v) $28.5 million of BBB-(sf) Class D Notes, which bear interest at three-month SOFR plus 3.60%, (the “2037 Class D Notes” and, collectively with the 2037 Class A-2 Notes, the 2037 Class B Notes and the 2037 Class D Notes, the “2037 Secured Notes”), and (vi) $85.1 million of subordinated notes (the “2037 Subordinated Notes”) and (B) the borrowing by 2037 Securitization Issuer of $10.0 million under AAA(sf) Class A-1L-A floating rate loans (the “2037 Class A-1L-A Loans”) and $45.0 million under AAA(sf) Class A-1L-B floating rate loans ( the “2037 Class A-1L-B Loans” and, together with the 2037 Class A-1L-A Loans, the “2037 Asset-Backed Loans,” and collectively with the 2037 Notes, the “2037 Asset-Backed Debt”), which bear interest at three-month SOFR plus 1.49%. The 2037 Class A-1 Loans and the 2037 Secured Notes are secured by the middle market loans, participation interests in middle market loans and other assets of the 2037 Securitization Issuer. The 2037 Asset-Backed Debt is scheduled to mature on April 20, 2037. The 2037 Asset-Backed Debt is included in the Consolidated Statement of Assets and Liabilities as debt of the Company and the 2037 Class D Notes and the 2037 Subordinated Notes of the 2037 Securitization Issuer were eliminated in consolidation. The Company will continue to retain the 2037 Class D Notes and the 2037 Subordinated Notes. A portion of the proceeds received by the 2037 Securitization Issuer from the loans securing the 2037 Class A-1 Loans and the 2037 Secured Notes may be used to purchase additional middle market loans under the direction of the Investment Adviser through April 20, 2029. As of March 31, 2025 and September 30, 2024, the Company had $361.0 million and zero of 2037 Asset-Backed Debt outstanding with a weighted average interest rate of 5.9% and zero, respectively. As of March 31, 2025 and September 30, 2024, the unamortized fees on the 2037 Asset-Backed Debt were $2.9 million and zero, respectively.
Our Investment Adviser serves as collateral manager to the 2037 Securitization Issuer pursuant to the Collateral Management Agreement. For so long as our InvestmentAdviser serves as collateral manager, it will elect to irrevocably waive any collateral management fee to which it may be entitled under the Collateral Management Agreement.
We may raise equity or debt capital through both registered offerings off our shelf registration statement and private offerings of securities, securitizing a portion of our investments among other considerations or mergers and acquisitions. Furthermore, the Credit Facility availability depends on various covenants and restrictions as discussed in the preceding paragraphs. The primary use of existing funds and any funds raised in the future is expected to be for repayment of indebtedness, investments in portfolio companies, cash distributions to our stockholders or for other general corporate purposes.
We have entered into certain contracts under which we have material future commitments. Under our Investment Management Agreement, which was most recently reapproved by our board of directors, including a majority of our directors who are not interested persons of us or the Investment Adviser, in May 2025, PennantPark Investment Advisers serves as our investment adviser. Payments under our Investment Management Agreement in each reporting period are equal to (1) a management fee equal to a percentage of the value of our average adjusted gross assets and (2) an incentive fee based on our performance.
Under our Administration Agreement, which was most recently reapproved by our board of directors, including a majority of our directors who are not interested persons of us, in May 2025, the Administrator furnishes us with office facilities and administrative services necessary to conduct our day-to-day operations. The Administration Agreement was amended on July 1, 2022. If requested to provide significant managerial assistance to our portfolio companies, we or the Administrator will
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be paid an additional amount based on the services provided. Payment under our Administration Agreement is based upon our allocable portion of the Administrator’s overhead in performing its obligations under our Administration Agreement, including rent and our allocable portion of the costs of our Chief Financial Officer, Chief Compliance Officer, Corporate Counsel and their respective staffs.
If any of our contractual obligations discussed above are terminated, our costs under new agreements that we enter into may increase. In addition, we will likely incur significant time and expense in locating alternative parties to provide the services we expect to receive under our Investment Management Agreement and our Administration Agreement. Any new investment management agreement would also be subject to approval by our stockholders.
As of March 31, 2025 and September 30, 2024, we had cash and cash equivalents of $111.4 million and $112.1 million, respectively, available for investing and general corporate purposes. We believe our liquidity and capital resources are sufficient to take advantage of market opportunities.
For the six months ended March 31, 2025, our operating activities used cash of $350.8 million and our financing activities provided cash of $350.1 million. Our operating activities used cash primarily due to our investment activities and our financing activities provided cash primarily due to borrowings under our Credit Facility, proceeds from the 2037 Asset-Backed debt and proceeds from public offerings under our 2024 ATM Program.
For the six months ended March 31, 2024, our operating activities used cash of $354.5 million and our financing activities provided cash of $379.2 million. Our operating activities used cash primarily due to our investment activities and our financing activities provided cash primarily due to borrowings under our Credit Facility and proceeds from the 2036 Asset-Backed Debt partially offset by the repayment of the 2023 Notes.
In April 2023, PSSL completed a $297.8 million debt securitization in the form of a collateralized loan obligation, or the “2035 Asset-Backed Debt”. The 2035 Asset-Backed Debt is secured by a diversified portfolio of PennantPark CLO VI, LLC, a wholly-owned and consolidated subsidiary of PSSL, consisting primarily of middle market loans and participation interests in middle market loans. The 2035 Asset-Backed Debt is scheduled to mature in April 2035. On the closing date of the transaction, in consideration of PSSL’s transfer to PennantPark CLO VI, LLC of the initial closing date loan portfolio, which included loans distributed to PSSL by certain of its wholly owned subsidiaries and us, PennantPark CLO VI, LLC transferred to PSSL 100% of the Preferred Shares of CLO VI, LLC
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Below are the consolidated statements of assets and liabilities for PSSL ($ in thousands):
(1)As of March 31, 2025 and September 30, 2024, PSSL had unfunded commitments to fund investments of zero and $0.6 million, respectively.
Below are the consolidated statements of operations for PSSL ($ in thousands):
Off-Balance Sheet Arrangements
We currently engage in no off-balance sheet arrangements other than our funding requirements for the unfunded investments described above.
Distributions
In order to be treated as a RIC for federal income tax purposes and to not be subject to corporate-level tax on undistributed income or gains, we are required, under Subchapter M of the Code, to annually distribute dividends for U.S. federal income tax purposes to our stockholders out of the assets legally available for distribution of an amount generally at least equal to 90% of our investment company taxable income, determined without regard to any deduction for dividends paid.
Although not required for us to maintain our RIC tax status, in order to preclude the imposition of a 4% nondeductible federal excise tax imposed on RICs, we must distribute dividends for federal income tax purposes to our stockholders in respect of each calendar year an amount at least equal to the Excise Tax Avoidance Requirement. In addition, although we may distribute realized net capital gains (i.e., net long-term capital gains in excess of net short-term capital losses), if any, at least annually, out of the assets legally available for such distributions in the manner described above, we have retained and may continue to retain such net capital gains or investment company taxable income, subject to maintaining our ability to be taxed as a RIC, in order to provide us with additional liquidity.
During the three and six months ended March 31, 2025, we declared distributions of $0.3075 and $0.615 per share for total distributions of $27.7 million and $52.9 million, respectively. During the three and six months ended March 31, 2024, we declared distributions of $0.3075 and $0.615 per share for total distributions of $18.8 million and $36.9 million, respectively. We monitor available net investment income to determine if a return of capital for tax purposes may occur for the fiscal year. To the extent our taxable earnings fall below the total amount of our distributions for any given fiscal year, stockholders will be notified of the portion of those distributions deemed to be a tax return of capital. Tax characteristics of all distributions will be reported to stockholders subject to information reporting on Form 1099-DIV after the end of each calendar year and in our periodic reports filed with the SEC.
We intend to continue to make monthly distributions to our stockholders. Our monthly distributions, if any, are determined by our board of directors quarterly.
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We may not be able to achieve operating results that will allow us to make distributions at a specific level or to increase the amount of these distributions from time to time. In addition, we may be limited in our ability to make distributions due to the asset coverage ratio for borrowings applicable to us as a BDC under the 1940 Act and due to provisions in future credit facilities. If we do not distribute at least a certain percentage of our income annually, we could suffer adverse tax consequences, including possible loss of our ability to be subject to tax as a RIC. We cannot assure stockholders that they will receive any distributions at a particular level.
Recent Accounting Pronouncements
We are subject to financial market risks, including changes in interest rates. As of March 31, 2025, our debt portfolio consisted of approximately 100% variable-rate investments. The variable-rate loans are usually based on a SOFR (or an alternative risk-free floating interest rate index) rate and typically have durations of three months, after which they reset to current market interest rates. Variable-rate investments subject to a floor generally reset by reference to the current market index after one to nine months only if the index exceeds the floor. In regards to variable-rate instruments with a floor, we do not benefit from increases in interest rates until such rates exceed the floor and thereafter benefit from market rates above any such floor. In contrast, our cost of funds, to the extent it is not fixed, will fluctuate with changes in interest rates since it has no floor.
Assuming that the most recent Consolidated Statements of Assets and Liabilities was to remain constant, and no actions were taken to alter the existing interest rate sensitivity, the following table shows the annualized impact of hypothetical base rate changes in interest rates:
Change in Interest Rates
Change in Interest Income, Net of Interest Expense(in thousands)
Change in Interest Income,Net of InterestExpense Per Share
Down 1%
(9,036
(0.09
Up 1%
0.09
Up 2%
18,072
0.19
Up 3%
27,108
Up 4%
36,170
0.38
Although management believes that this measure is indicative of our sensitivity to interest rate changes, it does not adjust for potential changes in the credit market, credit quality, size and composition of the assets on the Consolidated Statements of Assets and Liabilities and other business developments that could affect net increase in net assets resulting from operations or net investment income. Accordingly, no assurances can be given that actual results would not differ materially from those shown above.
Because we borrow money to make investments, our net investment income is dependent upon the difference between the rate at which we borrow funds and the rate at which we invest these funds, as well as our level of leverage. As a result, there can be no assurance that a significant change in market interest rates will not have a material adverse effect on our net investment income or net assets.
We may hedge against interest rate and foreign currency fluctuations by using standard hedging instruments such as futures, options and forward contracts or our Credit Facility subject to the requirements of the 1940 Act and applicable commodities laws. While hedging activities may insulate us against adverse changes in interest rates and foreign currencies, they may also limit our ability to participate in benefits of lower interest rates or higher exchange rates with respect to our portfolio of investments with fixed interest rates or investments denominated in foreign currencies. During the periods covered by this Report, we did not engage in interest rate hedging activities or foreign currency derivatives hedging activities.
As of the period ended March 31, 2025, we, including our Chief Executive Officer and Chief Financial Officer, evaluated the effectiveness of the design and operation of our disclosure controls and procedures (as defined in Rule 13a-15(e) of the Exchange Act). Based on that evaluation, our management, including the Chief Executive Officer and Chief Financial Officer, concluded that, our disclosure controls and procedures were effective and provided reasonable assurance that information required to be disclosed in our periodic SEC filings is recorded, processed, summarized and reported within the time periods specified in the SEC’s rules and forms, and that such information is accumulated and communicated to our management, including our Chief Executive Officer and Chief Financial Officer, as appropriate, to allow timely decisions regarding required disclosure. However, in evaluating the disclosure controls and procedures, management recognized that any controls and procedures, no matter how well designed and operated can provide only reasonable assurance of achieving the desired control objectives, and management necessarily was required to apply its judgment in evaluating the cost-benefit relationship of such possible controls and procedures.
There have been no changes in our internal control over financial reporting that occurred during the quarter ended March 31, 2025 that have materially affected, or are reasonably likely to materially affect, our internal control over financial reporting
PART II – OTHER INFORMATION
Neither us, our Investment Adviser or our Administrator, is currently subject to any material legal proceedings, nor, to our knowledge, is any material legal proceeding threatened against us, or against our Investment Adviser or Administrator. From time to time, we, our Investment Adviser or Administrator, may be a party to certain legal proceedings, including proceedings relating to the enforcement of our rights under contracts with our portfolio companies. While the outcome of these and any future legal proceedings cannot be predicted with certainty, we do not expect that these proceedings will have a material effect upon our financial condition or results of operations.
In addition to the other information set forth in this Report, you should consider carefully the factors discussed below, as well as in Part I “Item 1A. Risk Factors” in our Annual Report on Form 10-K for the fiscal year ended September 30, 2024 filed on November 26, 2024, which could materially affect our business, financial condition and/or operating results. The risks described as in our Annual Report on Form 10-K are not the only risks facing PennantPark Floating Rate Capital Ltd. Additional risks and uncertainties not currently known to us or that we currently deem to be immaterial also may materially and adversely affect our business, financial condition and/or operating results.
Changes to U.S. tariff and import/export regulations may have a negative effect on our portfolio companies.
There have been significant changes to U.S. trade policies, treaties and tariffs, and in the future there may be additional significant changes. Existing or new tariffs imposed on foreign goods imported by the United States or on U.S. goods imported by foreign countries could subject us or our portfolio companies to additional risks. Among other effects, tariffs may increase the cost of production for certain of our portfolio companies or reduce demand for their products, which could adversely affect their results of operations. We cannot predict whether, or to what extent, any tariff or other trade protections may affect our portfolio
companies or our business, financial condition or results of operations.
None.
Not applicable.
10b5-1 Disclosure
None of the officers or directors of the Company have adopted or terminated any Rule 10b5-1 trading arrangements applicable to them (if any) or the Company.
Unless specifically indicated otherwise, the following exhibits are incorporated by reference to exhibits previously filed with the SEC:
3.1
Articles of Amendment and Restatement of the Registrant (Incorporated by reference to Exhibit 99(A) to the Registrant's Pre-Effective Amendment No. 3 to the Registration Statement on Form N-2 (File No. 333-170243), filed on March 29, 2011).
3.2
Articles of Amendment to Articles of Amendment and Restatement of the Registrant (Incorporated by reference to Exhibit 3.2) to the Registrant's Quarterly Report on Form 10-Q (File No. 814-00891), filed on August 07, 2024).
3.3
Second Amended and Restated Bylaws of the Registrant (Incorporated by reference to Exhibit 3.2 to the Registrant's Quarterly Report on Form 10-Q (File No. 814-00891), filed on May 11, 2020).
4.1
Form of Share Certificate (Incorporated by reference to Exhibit 99(D) to the Registrant's Pre-Effective Amendment No. 5 to the Registration Statement on Form N-2 (File No. 333-170243), filed on April 5, 2011).
4.2
Indenture, dated as of February 20, 2025, by and between PennantPark CLO 11, LLC, as issuer, and Western Alliance Trust Company, National Association, as trustee and collateral agent (Incorporated by reference to Exhibit 99.1 to the Registrants's Current Report on Form 8-K (File No. 814-00891), filed on February 24, 2025).
10.1
Class A-1L-A Credit Agreement, dated as of February 20, 2025, by and among PennantPark CLO 11, LLC, as borrower, the various financial institutions party thereto from time to time, as lenders, and Western Alliance Trust Company, National Association, as collateral agent and as loan agent, (Incorporated by reference to Exhibit 99.2 to the Registrant’s Current Report on Form 8-K (File No. 814-00891), filed on February 24, 2025).
10.2
Class A-1L-B Credit Agreement, dated as of February 20, 2025, by and among PennantPark CLO 11, LLC, as borrower, the various financial institutions party thereto from time to time, as lenders, and Western Alliance Trust Company, National Association, as collateral agent and as loan agent, (Incorporated by reference to Exhibit 99.3 to the Registrant’s Current Report on Form 8-K (File No. 814-00891), filed on February 24, 2025).
10.3
Collateral Management Agreement, dated as of February 20, 2025, by and between PennantPark CLO 11, LLC as issuer, and PennantPark Investment Advisers, LLC, as collateral manager. (Incorporated by reference to Exhibit 99.4 to the Registrant’s Current Report on Form 8-K (File No. 814-00891), filed on February 24, 2025).
10.4
Master Loan Sale Agreement, dated as of February 20, 2025, by and between PennantPark Floating Rate Capital Ltd., as seller, and PennantPark CLO 11, LLC, as buyer (Incorporated by reference to Exhibit 99.5 to the Registrant's Current Report on Form 8-K (File No. 814-00891), filed on February 24, 2025).
31.1*
Certification of Chief Executive Officer pursuant to Rule 13a-14 of the Securities Exchange Act of 1934, as amended.
31.2*
Certification of Chief Financial Officer pursuant to Rule 13a-14 of the Securities Exchange Act of 1934, as amended.
32.1*
Certification of Chief Executive Officer pursuant to section 906 of The Sarbanes-Oxley Act of 2002.
32.2*
Certification of Chief Financial Officer pursuant to section 906 of The Sarbanes-Oxley Act of 2002.
99.1
Privacy Policy of the Registrant (Incorporated by reference to Exhibit 99.1 to the Registrant’s Annual Report on Form 10-K (File No. 814-00891), filed on November 17, 2011).
101.INS*
Inline XBRL Instance Document-the instance document does not appear in the Interactive Data File as its XBRL tags are embedded within the Inline XBRL document
101.SCH*
Inline XBRL Taxonomy Extension Schema With Embedded Linkbase Documents
101.CAL*
Inline XBRL Taxonomy Extension Calculation Linkbase Document
101.DEF*
Inline XBRL Taxonomy Extension Definition Linkbase Document
101.LAB*
Inline XBRL Taxonomy Extension Label Linkbase Document
101.PRE*
Inline XBRL Taxonomy Extension Presentation Linkbase Document
Cover Page formatted as Inline XBRL and contained in Exhibit 101
* Filed herewith.
Pursuant to the requirements of the Securities Exchange Act of 1934, the registrant has duly caused this Report on Form 10-Q to be signed on its behalf by the undersigned, thereunto duly authorized.
Date: May 12, 2025
By:
/s/ Arthur H. Penn
Arthur H. Penn
Chief Executive Officer and Chairman of the Board of Directors
(Principal Executive Officer)
/s/ Richard T. Allorto, Jr.
Richard T. Allorto, Jr.
Chief Financial Officer and Treasurer
(Principal Financial and Accounting Officer)