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1. Company Snapshot

1.a. Company Description

PennantPark Floating Rate Capital Ltd.is a business development company.It seeks to make secondary direct, debt, equity, and loan investments.


The fund seeks to invest through floating rate loans in private or thinly traded or small market-cap, public middle market companies.It primarily invests in the United States and to a limited extent non-U.S. companies.The fund typically invests between $2 million and $20 million.


The fund also invests in equity securities, such as preferred stock, common stock, warrants or options received in connection with debt investments or through direct investments.It primarily invests between $10 million and $50 million in investments in senior secured loans and mezzanine debt.It seeks to invest in companies not rated by national rating agencies.


The companies if rated would be between BB and CCC under the Standard & Poor's system.The fund invests 30% is invested in non-qualifying assets like investments in public companies whose securities are not thinly traded or do not have a market capitalization of less than $250 million, securities of middle-market companies located outside of the United States, high-yield bonds, distressed debt, private equity, securities of public companies that are not thinly traded, and investment companies as defined in the 1940 Act.Under normal conditions, the fund expects atleast 80 percent of its net assets plus any borrowings for investment purposes to be invested in Floating Rate Loans and investments with similar economic characteristics, including cash equivalents invested in money market funds.


It expects to represent 65 percent of its portfolio through senior secured loans.In case of floating rate loans, it holds investments for a period of three to ten years.

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1.b. Last Insights on PFLT

PennantPark Floating Rate Capital Ltd.'s recent performance was negatively impacted by a decline in net investment income and net asset value due to its floating-rate loan portfolio. The company's Q3 earnings missed estimates, with earnings of $0.25 per share versus the Zacks Consensus Estimate of $0.28 per share. Additionally, the current environment has put pressure on the business development company (BDC) space, affecting PennantPark's income and dividend coverage. However, the company has made a strategic acquisition of a $250 million asset portfolio.

1.c. Company Highlights

2. PennantPark Floating Rate Capital's Q4 2025 Earnings: A Strong Finish

PennantPark Floating Rate Capital reported earnings per share (EPS) of $0.28 for the fourth fiscal quarter of 2025, driven by core net investment income. The company's net investment income was sufficient to cover the current dividend, and with the ramp-up of the PSSL 2 portfolio, this coverage is expected to continue. The portfolio grew to $2.8 billion, up from $2.4 billion in the prior quarter, with a weighted average yield on debt investments of 10.2%. The company's debt-to-equity ratio was 1.6x and 1.4x post-quarter-end after selling $309 million of assets to the PSSL JVs and paying down the revolving credit facility.

Publication Date: Nov -29

📋 Highlights
  • Core Earnings Driven by Portfolio Growth:: Q4 2025 EPS of $0.28, with a $250M portfolio acquisition projected to boost net investment income by $0.01–$0.02/share quarterly.
  • New JV Expansion and Credit Facility:: PSSL joint venture targeting $500M portfolio, secured a $150M revolving credit facility expandable to $350M.
  • Portfolio Yield and Leverage Stability:: Portfolio grew to $2.8B with 10.2% weighted average yield on debt investments; debt-to-equity ratio stabilized at 1.4x post-quarter.
  • Dividend Coverage and Value Play:: Current dividend fully covered by NII, with stock trading 17% below NAV of $10.83/share, signaling potential buyback opportunities.
  • Loan Spreads and EBITDA Strength:: New loan spreads at SOFR+4.75–5.25%, while EBITDA coverage of 4.4x debt and mid-single-digit EBITDA growth reinforce credit resilience.

Investment Portfolio and Credit Quality

The company's investment portfolio is showing solid credit quality, with double-digit revenue growth and mid-single-digit EBITDA growth in the portfolio. Although some logistics credits are choppy, the overall portfolio is healthy, with only a handful of credits experiencing issues. New deals have relatively low leverage, around the low to mid 4s, with EBITDA coverage at 4.4x debt to EBITDA. The investment in Bilight resulted in a realized gain of $0.04 a share due to a dividend recapitalization, which is a one-time gain.

Valuation and Dividend Coverage

The stock price is trading 17% below book, with a Price-to-Book Ratio of 0.85, indicating that the stock may be undervalued. The Board of Directors is considering all options, including buybacks, given that it appears to be a good value. The dividend yield is 13.41%, providing a relatively high return for investors. With a leverage range of 1.4x to 1.6x, and 1.5x as a midpoint, the company should be able to easily cover the dividend as the JV grows over time.

Outlook and Growth Prospects

The company acquired a $250 million portfolio, which is expected to increase net investment income by $0.01 to $0.02 per share quarterly. A new joint venture, PSSL, was formed with an initial targeted portfolio of $500 million and began investing this month. Analysts estimate next year's revenue growth at 8.5%, indicating a positive outlook for the company's future performance.

3. NewsRoom

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PennantPark Floating Rate Capital Ltd. Announces Monthly Distribution of $0.1025 per Share

Dec -02

Source: globenewswire.com

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PennantPark Floating Rate Capital: Maintaining Yield As Rate Cuts Begin

Dec -02

Source: seekingalpha.com

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PennantPark Floating Rate Capital (PFLT) Q4 2025 Earnings Call Transcript

Nov -25

Source: seekingalpha.com

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PennantPark (PFLT) Reports Q4 Earnings: What Key Metrics Have to Say

Nov -25

Source: zacks.com

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PennantPark (PFLT) Meets Q4 Earnings Estimates

Nov -24

Source: zacks.com

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PennantPark Floating Rate Capital Ltd. Announces Financial Results for the Fourth Quarter and Fiscal Year Ended September 30, 2025

Nov -24

Source: globenewswire.com

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3 Magnificent Ultra-High-Yield Dividend Stocks -- Sporting an Average Yield of 8.5% -- to Buy With Confidence in November

Nov -05

Source: fool.com

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PennantPark Floating Rate Capital Ltd. Announces Monthly Distribution of $0.1025 per Share

Nov -04

Source: globenewswire.com

4. Business Breakdown

4.a. Revenues by Country

4.b. Revenues by Segment

5. Expected revenues mid-term growth (8.50%)

6. Segments

Investment and Related Activities

Expected Growth: 8.5%

PennantPark Floating Rate Capital's growth is driven by increasing demand for debt financing solutions, expansion into new markets, and a strong track record of generating income and capital appreciation through its diversified investment portfolio.

7. Detailed Products

Senior Secured Loans

PennantPark Floating Rate Capital Ltd. provides senior secured loans to middle-market companies, offering a flexible and customized financing solution to support their growth and operations.

Unitranche Loans

The company offers unitranche loans, which combine senior and subordinated debt into a single loan facility, providing a simplified and efficient financing solution.

Second Lien Loans

PennantPark Floating Rate Capital Ltd. provides second lien loans, which offer a secondary lien on a company's assets, providing additional financing for growth initiatives or refinancing opportunities.

Equity Co-Investments

The company makes equity co-investments alongside its debt investments, providing additional capital and support to its portfolio companies.

Structured Equity

PennantPark Floating Rate Capital Ltd. offers structured equity investments, which provide a customized equity solution to support a company's growth and operations.

8. PennantPark Floating Rate Capital Ltd.'s Porter Forces

Forces Ranking

Threat Of Substitutes

PennantPark Floating Rate Capital Ltd. operates in a niche market, providing financing solutions to middle-market companies. While there are substitutes available, the company's expertise and relationships with its borrowers provide a competitive advantage, reducing the threat of substitutes.

Bargaining Power Of Customers

PennantPark Floating Rate Capital Ltd.'s customers are typically middle-market companies that rely on the company's financing solutions. The company's diversified portfolio and lack of concentration risk reduce the bargaining power of its customers.

Bargaining Power Of Suppliers

PennantPark Floating Rate Capital Ltd. is not heavily reliant on a single supplier, and its diversified funding sources reduce the bargaining power of its suppliers.

Threat Of New Entrants

While there are barriers to entry in the business development company (BDC) industry, new entrants can still disrupt the market. However, PennantPark Floating Rate Capital Ltd.'s established relationships and expertise provide a competitive advantage, reducing the threat of new entrants.

Intensity Of Rivalry

The BDC industry is highly competitive, with many established players competing for market share. PennantPark Floating Rate Capital Ltd. must differentiate itself through its investment strategy and relationships to maintain its market position.

9. SWOT Analysis

Strength

Weaknesses

Opportunities

Threats

10. Capital Structure

10.a. Balance Sheet

10.b. Weighted Average Cost of capital

Value
Debt Weight 53.59%
Debt Cost 7.40%
Equity Weight 46.41%
Equity Cost 12.28%
WACC 9.67%
Leverage 115.47%

11. Quality Control: PennantPark Floating Rate Capital Ltd. passed 3 out of 9 key points

12.a Historical Valuation

12.b Price/Earnings Ratio

12.c Margin Valuation

12.d Peers Valuation

Peers Group Analysis

Stock-Card
SLR Investment

A-Score: 7.7/10

Value: 6.9

Growth: 6.6

Quality: 7.8

Yield: 10.0

Momentum: 5.0

Volatility: 10.0

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Tortoise Energy Infrastructure

A-Score: 7.6/10

Value: 4.3

Growth: 6.6

Quality: 9.0

Yield: 10.0

Momentum: 6.0

Volatility: 9.7

1-Year Total Return ->

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Stock-Card
MidCap Financial

A-Score: 7.1/10

Value: 6.7

Growth: 5.8

Quality: 7.8

Yield: 10.0

Momentum: 3.0

Volatility: 9.7

1-Year Total Return ->

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Stock-Card
PennantPark Floating Rate Capital

A-Score: 7.0/10

Value: 7.5

Growth: 4.4

Quality: 8.3

Yield: 10.0

Momentum: 1.5

Volatility: 10.0

1-Year Total Return ->

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Stock-Card
WhiteHorse Finance

A-Score: 5.6/10

Value: 5.9

Growth: 3.6

Quality: 5.2

Yield: 10.0

Momentum: 0.5

Volatility: 8.3

1-Year Total Return ->

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Eagle Point Credit Company

A-Score: 5.5/10

Value: 4.2

Growth: 3.8

Quality: 6.9

Yield: 10.0

Momentum: 0.5

Volatility: 7.3

1-Year Total Return ->

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Peers Metrics

12.e Scoring Insights

12.f DCF BETA

Parameters

Short Term Growth

Short term Time

Long-Term Growth

WACC

Target Price

9.5$

Current Price

9.5$

Potential

-0.00%

Expected Cash-Flows