NEWS

MIAMI, April 22, 2025 (GLOBE NEWSWIRE) — PennantPark Floating Rate Capital Ltd. (PFLT) announced that it amended its credit facility agreement led by Truist Bank (the “Credit Facility”). As part of the amendment, PFLT 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 the amendment, commitments decreased from $736 million to $718 million.

“We are appreciative of the support from our lending partners. The beneficial terms, lowering the interest rate spread and increasing advance rates, are a terrific result in the current market, which will benefit our investors,” said Arthur Penn, Chairman and Chief Executive Officer of PFLT.

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.

Source: Press Release

Debt Snapshot

PFLT’s investment portfolio as of December 31, 2024 amounted to $2.194bn, with another $102mn in cash.

The BDC is financed by $1.342bn in 4 different debt facilities, including the Truist Credit Facility.

Given the $609mn outstanstanding balance, the Truist financing accounts for 45% of all debt, and is the largest single financing source.

The other borrowings consist of i) $185mn in unsecured notes, maturing in just one year – in April 2026.

ii) Two asset-backed loan securitizations, with outstandings of $284mn and $265mn.

Best To Worst

In terms of borrowing cost, the unsecured notes is the least expensive at 4.25%, followed by one of the CLO securitizations which cost 6.5% in the IVQ 2024, followed by the Truist Credit Facility, costing 6.8% and the second CLO securitization which expires in 2026, priced at 7.4%.

With the just agreed upon reduction in the spread on the Truist facility, the 2031 securitization and the Credit Facility will cost almost the same.

Liquidity

We are not clear on why PFLT reduced the Credit Facility limit – as announced above – having just increased it to $736mn a few months before – as per the 10-Q.

The goal may have been to minimize unused line fees. The percentage charged is not disclosed.

Or, one of the participant lenders in the Truist-led facility might have bolted.

In any case, with the new – lower – facility limit, PFLT has $110mn of undrawn capacity, subject to any more restrictive borrowing base calculation.

With the cash mentioned, total liquidity amounts to $212mn.

Potential Savings

Multiplying the 25 basis points savings PFLT has negotiated by the latest known balance on the Credit Facility amounts to a ($1.5mn) annual interest expense savings.

To put that into perspective, the total interest expense bill in 2024 was ($22.4mn).

The pro-forma savings – given the 84,855,896 shares outstanding – comes to under $0.02 per share per year.

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On The Edge

The BDC Reporter only puts pen to digital paper when a news development is deemed “material”, or “market moving”.

With that said, though, these amendments to PFLT’s Truist Credit facility while worth noting are unlikely – by themselves – to move the needle with investors much.

Still, every little savings helps at a time when investment activity is low and spreads – till very recently – have been narrowing.

Moreover, PFLT will – in a year’s time – be facing higher borrowing costs when its unsecured notes come off.