they got another 50m SBIC debt plus 30m or so on balance sheet and i read 60m they can rotate from 9% paper to higher...
so we got one of the few BDCs earning their dividend...27c vs NII 29c. i did a model and the share count was higher given full qtr from prior qtr offering and they had extra cash on balance sheet this qtr.
i think they can do 30-32c sustainable NII once deployed so should see dividend tweak up 1c per qtr over next 2-3 qtrs would think.
NAV down 22c but looks like share count and write-offs in the p&l.
either way we 7% discount to NAV and they raring their dividend!
What is the availability of borrowed fund for you? PNNT: We can extend the revolver - or due secured debt. We have options. We look at cost and flexibility. With an average yield of 13.5% on new investments - are you being rewarded for the risk? you are taking? Do SBIC exemption from SEC, does that change your targeted leverage? PNNT: We are in the deal business. We just have to find a few good deals. We do feel that we are compensated for the risks - are we would not have done the deals. Returns are compressing. Mezzanine debts with yields in the mid teens are good returns. As to our leverage - it is good to have that freedom. Great to have capital for 10 years with no covenants. We could get to one to one - but expect to end at .6x.
What were yield on pre-payments vs. new deals? PNNT: Repayments were at 14% yields and new investments were at 13%. The market turmoil could bring fear into the market and make the deals more attractive. It is easier to be a good investor when there is more fear in the market. Exits were pure re-finance - and they were de-leveraging and able to attain lower cost debt.
Has warehouse credit facility pricing and availability changed? PNNT: Current rates are going at 2.75% to 3.25% cost of credit revolvers. No one has lost a dime lending to BDCs. Our leverage is limited. The switch to SBA funding comes at an expense that should hurt NII. Are you banking undistributed NII for that eventuality? PNNT: Based on our dry powder - we do expect to ramp up income. We are going to have to pay more for our debt going forward. We will stick with mezzanine loans and not senior debt - keeping up the yields.
Newer investments came with larger dollar sizes - is that a trend? PNNT: Size has gradually grown, but we will increase that prudently. Two investment were mezzanine - and one was first lien / last out. It is better structure that second lien, but it is still subordinated.
A dividend that is covered by NII/share is great. But a falling NAV is not. And the NAV was down due to unrealized depreciation of $17 million for Q2-11. How much discussion in the earnings release was on that? I found none.
And there were no non-accrual stats in the earnings release. My search for 'nonaccruals' [and non-accruals] failed to generate any hits.
The weighted average yield fell to 13.1% from 13.4% - while at the same time their investments in senior debt [the safest debt] fell and subordinated debt [the riskier debt] rose. But floating rate debt did rise from 51% to 53% - and that partially explains the falling yields. And the percentage of the portfolio in equity rose to 9% from 8%.
It is my opinion that management should produce an earnings release that explains the quarter's performance - and not one that leaves as many questions as this one.
As usual Factoids is right on. Now here is an intelligent poster who fully understands BDC's. His posts are intelligent and well thought out. In addition he can actually spell and put complete sentences together. This alone makes him an exception to the board.
I agree, and the NNI this past quarter was right in line with analysts' expectations. My guess is that the dividend will rise either next time around or by the end of the year.