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Prospect Capital Corporation -- Moody's announces completion of a periodic review of ratings of Prospect Capital Corporation

·10 mins read

Announcement of Periodic Review: Moody's announces completion of a periodic review of ratings of Prospect Capital Corporation

Global Credit Research - 22 Jul 2020

New York, July 22, 2020 -- Moody's Investors Service ("Moody's") has completed a periodic review of the ratings of Prospect Capital Corporation (PSEC) and other ratings that are associated with the same analytical unit. The review was conducted through a portfolio review in which Moody's reassessed the appropriateness of the ratings in the context of the relevant principal methodology(ies), recent developments, and a comparison of the financial and operating profile to similarly rated peers. The review did not involve a rating committee. Since 1 January 2019, Moody's practice has been to issue a press release following each periodic review to announce its completion.

This publication does not announce a credit rating action and is not an indication of whether or not a credit rating action is likely in the near future. Credit ratings and outlook/review status cannot be changed in a portfolio review and hence are not impacted by this announcement. For any credit ratings referenced in this publication, please see the ratings tab on the issuer/entity page on www.moodys.com for the most updated credit rating action information and rating history.

Key rating considerations are summarized below.

PSEC's Baa3 long-term senior unsecured rating is based on the company's long history of operations and profitability compared to most BDC peers and improved capital cushion. PSEC's funding is more diverse, its debt maturities more evenly distributed, and its borrowing agreements have fewer financial covenants compared to most BDC peers, which reduces its refinancing risk. PSEC has strong liquidity, aided by ample availability under its multi-year committed revolving credit facility given its very low unfunded credit extensions to portfolio companies. Credit challenges include Moody's expectation that certain of PSEC's investments, including collateralized loan obligations and multifamily and other real estate, will demonstrate greater asset volatility than other investments.

This document summarizes Moody's view as of the publication date and will not be updated until the next periodic review announcement, which will incorporate material changes in credit circumstances (if any) during the intervening period.

The principal methodology used for this review was Finance Companies Methodology published in November 2019. Please see the Rating Methodologies page on www.moodys.com for a copy of this methodology.

This announcement applies only to EU rated and EU endorsed ratings. Non EU rated and non EU endorsed ratings may be referenced above to the extent necessary, if they are part of the same analytical unit.

This publication does not announce a credit rating action. For any credit ratings referenced in this publication, please see the ratings tab on the issuer/entity page on www.moodys.com for the most updated credit rating action information and rating history.

Mark L. Wasden Senior Vice President Financial Institutions Group Moody's Investors Service, Inc. 250 Greenwich Street New York, NY 10007 U.S.A. JOURNALISTS: 1 212 553 0376 Client Service: 1 212 553 1653 Ana Arsov MD-Financial Institutions Financial Institutions Group JOURNALISTS: 1 212 553 0376 Client Service: 1 212 553 1653 Releasing Office: Moody's Investors Service, Inc. 250 Greenwich Street New York, NY 10007 U.S.A. JOURNALISTS: 1 212 553 0376 Client Service: 1 212 553 1653

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