PennantPark Floating Rate Capital Ltd. Upsizes Credit Facility to $611 Million

Rhea-AI Summary

PennantPark Floating Rate Capital (NYSE: PFLT) has announced an increase in its credit facility to $611 million from $436 million, led by Truist Bank. The pricing remains at SOFR plus 236 basis points. Arthur Penn, CEO, emphasized the support from existing lending partners and the strategic benefits this expansion brings, including higher yields and lower leverage. The credit facility is secured by all assets of PennantPark Floating Rate Funding I, , a subsidiary of the company, and includes customary covenants.

PennantPark Floating Rate Capital primarily invests in U.S. middle-market private companies through floating rate senior secured loans. Managed by PennantPark Investment Advisers, the company is part of a broader credit platform with $7.5 billion in investable capital. The firm was founded in 2007 and offers flexible financing solutions to middle market borrowers.

Positive

• Credit facility increased to $611 million from $436 million.
• Maintained pricing at SOFR plus 236 basis points.
• Expansion indicates strong lender confidence in PFLT's track record.
• Enhanced ability to serve middle-market sponsor and borrower clients.
• Better positioning to capture opportunities in the core middle market.
• Higher yields and lower leverage expected due to the expanded facility.

Negative

• Secured by all assets of PennantPark Floating Rate Funding I, , increasing risk exposure.
• Includes customary covenants which may limit operational flexibility.

Insights

Financial Analyst

The increase in PennantPark Floating Rate Capital Ltd.'s credit facility to $611 million from $436 million reflects a positive signal of lender confidence and the company's solid track record. The unchanged pricing at SOFR plus 236 basis points indicates that the credit risk perception remains stable, which is a favorable sign for investors. This expanded facility enhances the company's liquidity position and ability to finance more middle-market clients, potentially leading to higher returns. However, investors should also consider the potential risks associated with increased leverage, which could impact the company’s financial stability during economic downturns. Overall, this strategic move likely aims to capitalize on favorable market conditions and the demand for middle-market financing.

Market Research Analyst

This upsized credit facility positions PennantPark Floating Rate Capital Ltd. to better serve the core middle-market segment, which can be strategic in achieving higher yields and lower leverage. The middle-market often presents attractive opportunities, but it can also be more volatile and less liquid compared to the upper middle-market. By enhancing their lending capabilities, PennantPark can capture a larger share of this segment. However, it's important to monitor the broader economic environment, as shifts could influence the performance of middle-market companies and, subsequently, the returns on these loans. This move likely reflects confidence in the steady demand for middle-market financing but comes with its own set of sector-specific risks.

MIAMI, June 04, 2024 (GLOBE NEWSWIRE) -- PennantPark Floating Rate Capital Ltd. (the "Company") (NYSE: PFLT) announced that as result of expanded lender partner relationships, it has upsized its credit facility, led by Truist Bank (the “Credit Facility”) to $611 million from $436 million. Pricing on this facility remained unchanged at SOFR plus 236 basis points.

“We are appreciative of the support from all of our existing lending partners and pleased to have expanded our relationships. Their support highlights the confidence they have in our excellent long term track record,” said Arthur Penn, Chairman and Chief Executive Officer of PFLT. “This increased facility will expand our ability to serve middle-market sponsor and borrower clients by providing them with more comprehensive senior secured solutions. This enhanced credit facility positions us well to capture the opportunity in the core middle market, where our capital is strategic to our borrowers. As a result, the package of risk adjusted return we receive is attractive and includes higher yields, lower leverage and covenants which are not available in the upper middle market.”

The Credit Facility is secured by all of the assets held by PennantPark Floating Rate Funding I, LLC, a wholly-owned subsidiary of the Company, and includes customary covenants, including minimum asset coverage and minimum equity requirements.

ABOUT PENNANTPARK FLOATING RATE CAPITAL LTD.

PennantPark Floating Rate Capital Ltd. is a business development company which primarily invests in U.S. middle-market private companies in the form of floating rate senior secured loans, including first lien secured debt, second lien secured debt and subordinated debt. From time to time, the Company may also invest in equity investments. PennantPark Floating Rate Capital Ltd. is managed by PennantPark Investment Advisers, LLC.

ABOUT PENNANTPARK INVESTMENT ADVISERS, LLC

PennantPark is a leading middle market credit platform, managing approximately $7.5 billion of investable capital, including available leverage. Since its inception in 2007, PennantPark has provided investors access to middle market credit by offering private equity firms and their portfolio companies as well as other middle market borrowers a comprehensive range of creative and flexible financing solutions. PennantPark is headquartered in Miami, and has offices in New York, Chicago, Houston, Los Angeles and Amsterdam.

FORWARD-LOOKING STATEMENTS

This press release may contain “forward-looking statements” within the meaning of the Private Securities Litigation Reform Act of 1995. You should understand that under Section 27A(b)(2)(B) of the Securities Act and Section 21E(b)(2)(B) of the Securities Exchange Act of 1934, as amended (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 PennantPark Floating Rate Capital Ltd. files under the Exchange Act. All statements other than statements of historical facts included in this press release are forward-looking statements and are not guarantees of future performance or results and involve a number of risks and uncertainties. Actual results may differ materially from those in the forward-looking statements as a result of a number of factors, including those described from time to time in filings with the Securities and Exchange Commission. PennantPark Floating Rate Capital Ltd. undertakes no duty to update any forward-looking statement made herein. You should not place undue influence on such forward-looking statements as such statements speak only as of the date on which they are made.

CONTACT:
Richard T. Allorto, Jr.
PennantPark Floating Rate Capital Ltd.
(212) 905-1000
www.pennantpark.com

FAQ

What is the new credit facility amount for PennantPark Floating Rate Capital (PFLT)?

The new credit facility amount for PennantPark Floating Rate Capital (PFLT) is $611 million.

What are the terms of the new credit facility for PFLT?

The pricing on the new credit facility remains unchanged at SOFR plus 236 basis points.

Why did PennantPark Floating Rate Capital (PFLT) increase their credit facility?

PennantPark Floating Rate Capital (PFLT) increased their credit facility to expand their ability to serve middle-market sponsor and borrower clients with more comprehensive senior secured solutions.

Who led the increased credit facility for PFLT?

The increased credit facility for PFLT was led by Truist Bank.

What kind of investments does PennantPark Floating Rate Capital (PFLT) primarily focus on?

PennantPark Floating Rate Capital (PFLT) primarily invests in U.S. middle-market private companies through floating rate senior secured loans.