Prospect Capital Issues Three-Tranche InterNotes Offering With Coupons Ranging From 6% to 6.5%

Three-Tranche Note Structure With Staggered Maturity Dates

Prospect Capital disclosed the pricing and terms of three distinct series of unsecured notes issued under its InterNotes program. The 2029 Notes carry a coupon rate of 6.000% and mature on August 15, 2029. The 2031 Notes offer a 6.250% coupon and mature on August 15, 2031. The 2033 Notes provide a 6.500% coupon and mature on August 15, 2033. All three series pay interest semi-annually on February 15 and August 15 of each year, with the first coupon payment scheduled for February 15, 2027.

The notes are structured as unsecured obligations of Prospect Capital and rank pari passu with other unsecured debt of the company. The disclosure indicates that notes will be sold at par value (100% of principal), with the purchasing agent acquiring notes at a discount reflective of the applicable gross concession. The 2029 Notes carry a gross concession of 1.125%, the 2031 Notes 1.700%, and the 2033 Notes 1.950%. Initial trades in the notes settle flat and will clear through the Depository Trust Company on a book-entry basis only.

Early Redemption Features and Callable Structure

All three note series are redeemable at the company's option on or after February 15, 2027, at a redemption price of $1,000 per note plus accrued and unpaid interest. The company may redeem the notes in whole or in part at any time on or after the initial optional redemption date, subject to notice requirements of not less than 5 nor more than 60 days to noteholders and the trustee. This callable structure provides Prospect Capital with flexibility to refinance or reduce outstanding debt if market conditions become favorable.

The redemption features begin almost immediately following issuance, with the first optional redemption date falling on February 15, 2027—approximately six months after the August 6, 2026 settlement date. This relatively short window before the notes become callable may influence investor demand and pricing considerations across the three tranches. The disclosure confirms that redemption terms will be further detailed in the accompanying prospectus.

Survivor's Option and Investor Protections

The disclosure indicates that all three note series include a survivor's option, though the specific terms and mechanics of this feature are not detailed in the preliminary pricing supplement. Investors are directed to review the accompanying prospectus dated February 10, 2026, and the prospectus supplement for complete information regarding this protection. The survivor's option represents an additional feature beyond the standard coupon and redemption terms, potentially offering estate or beneficiary-related protections to noteholders.

Interest accrual on all notes commences on August 6, 2026, the settlement date. The record dates for interest payments are February 1 and August 1, preceding each respective interest payment date. The first coupon payments differ slightly across the tranches: the 2029 Notes will pay $31.50, the 2031 Notes $32.81, and the 2033 Notes $34.13, reflecting the differences in coupon rates and the semi-annual accrual period from August 6, 2026, to February 15, 2027.

Trading and Settlement Mechanics for the InterNotes

The disclosure establishes a trade date of Monday, August 3, 2026, at 12:00 PM Eastern Time, with settlement scheduled for Thursday, August 6, 2026. The minimum denomination for the notes is $1,000.00, with increments of $1,000.00. All transactions settle on a flat basis through the Depository Trust Company book-entry system, with no physical certificates issued. This modern settlement structure aligns with standard market practices for institutional debt offerings.

The notes are offered through a purchasing agent and selected dealers. The purchasing agent will resell notes to agents and selected dealers at the selling price minus a concession that may be equal to or less than the gross concession received. Notes sold to level-fee advisory or investment accounts may be sold at the selling price less concession, with the selling agents retaining no compensation from the concession on such sales. The disclosure notes that agents may engage in secondary market purchases and sales of the notes but are under no obligation to make a market or maintain continuous liquidity.

Prospect Capital's Business Model and Recent Capital Event

Prospect Capital Corporation operates as an externally-managed, non-diversified closed-end management company that has elected to be treated as a business development company under the Investment Company Act of 1940. The company focuses on lending to and investing in middle-market, privately-held companies. Prospect Capital Management L.P. manages the company's investment portfolio, while Prospect Administration LLC provides administrative services necessary for operations. This structure allows the company to generate returns from both interest income on debt investments and appreciation on equity stakes in portfolio companies.

The disclosure highlights a significant recent capital event: on July 1, 2026, Prospect Capital sold its investment in Valley Electric Company, Inc., for approximately $328.0 million, subject to net asset and other post-closing purchase price adjustments and earn-out payments. This substantial liquidity event preceded the note offering by approximately four weeks. The proceeds from the Valley Electric sale may support the company's capital deployment, debt repayment, or other strategic priorities. The timing suggests the company is actively managing its balance sheet and capital structure in response to investment exits.

Indenture Framework and Legal Documentation

The notes will be issued pursuant to an Indenture dated February 16, 2012, as amended and supplemented by supplemental indentures numbered 1694, 1695, and 1696, each dated August 6, 2026, corresponding to the three note series. This framework establishes the legal rights and obligations of noteholders, including interest payment mechanics, redemption procedures, and event-of-default provisions. The use of supplemental indentures rather than standalone documents allows Prospect Capital to add new debt series under a consistent master indenture structure, reducing administrative complexity and providing continuity across offerings.

The disclosure emphasizes that investors should read the complete prospectus dated February 10, 2026, and the prospectus supplement also dated February 10, 2026, in conjunction with the preliminary pricing supplement. These documents contain detailed risk factors, including those specific to business development companies, the company's portfolio composition, and general market risks. The filing indicates that the SEC registration statement number is 333-293349, and the note offerings are filed under Rule 424(b)(2), which permits the use of preliminary and final pricing supplements to describe specific terms of securities offerings registered on Form S-3.

Risk Disclosure and Investor Considerations

The disclosure prominently references risk factors beginning on page 12 of the accompanying prospectus and pages S-7 of the prospectus supplement, as well as risks contained in Prospect Capital's most recent Annual Report on Form 10-K and other regulatory filings. Investors are cautioned that the notes are unsecured obligations of Prospect Capital and do not benefit from government guarantee or backing. The company explicitly states that neither Prospect Capital nor any subsidiary is a government-sponsored enterprise or instrumentality of the United States, and that obligations are not guaranteed by the full faith and credit of the United States government.

As an externally-managed business development company, Prospect Capital's returns and financial condition depend on the performance of its portfolio companies, market conditions affecting valuations, and the ability of borrowers to service their debt obligations. The sale of Valley Electric at a significant valuation may reflect successful deployment and exit, but investors should evaluate whether remaining portfolio holdings and future investment opportunities offer comparable risk-adjusted returns. The relatively modest spread between the coupon rates and current market levels suggests investor confidence in Prospect Capital's creditworthiness, though the offering of three tranches with increasing coupons reflects standard market pricing based on duration and maturity risk.

Registration Statement and Offering Status

The preliminary pricing supplement is filed under Rule 424(b)(2) as part of Registration Statement No. 333-293349, which was originally filed under Form S-3. This registration statement permits Prospect Capital to offer debt securities, including the InterNotes program, on a continuous or delayed basis without requiring a new registration for each offering. The preliminary supplement is dated July 27, 2026, and explicitly states that the information is not complete and may be changed prior to final pricing. The document emphasizes that neither the SEC nor any state securities regulator has approved or disapproved of the securities or passed on the adequacy or accuracy of the disclosure.

The company notes that it does not intend to list the notes on any stock exchange unless otherwise specified in a future pricing supplement. This indicates the notes will trade in the over-the-counter market through dealer networks. Prospect Capital files annual, quarterly, and current reports with the SEC, and investors may access these filings free of charge through the SEC's website at www.sec.gov or by contacting the company directly. The company's principal office is located at 10 East 40th Street, 42nd Floor, New York, NY 10016.

Market Context and Offering Timeline

The preliminary pricing supplement is dated July 27, 2026, with the trade date set for August 3, 2026, and settlement on August 6, 2026. This approximately one-week window between pricing disclosure and settlement is standard for institutional debt offerings. The coupon rates of 6.000%, 6.250%, and 6.500% reflect market conditions at the time of pricing and the relative positioning of each maturity. The three-year, five-year, and seven-year maturities provide investors with a range of duration options depending on investment objectives and portfolio positioning.

The offering comes during a period of active capital markets activity, as evidenced by the substantial Valley Electric sale in July. The contemporaneous timing of a major portfolio exit and the issuance of new debt suggests Prospect Capital may be redeploying capital, meeting debt refinancing needs, or strengthening its balance sheet for future investment opportunities. The gross concessions range from 1.125% for the shortest maturity to 1.950% for the longest maturity, a pattern consistent with standard dealer compensation structures that reward agents for their efforts in distributing longer-duration securities, which typically carry greater market risk.