Key Highlights

  • Net asset value per common share fell to USD 5.36 at September 30, 2026, from USD 5.71 at June 30, 2026, while net Assets applicable to common stockholders were USD 2,875.1 million.
  • Net Investment income was USD 76.4 million, or USD 0.15 per share, compared with USD 79.4 million, or USD 0.17, in the quarter ended September 30, 2025.
  • Net realized and unrealized losses on investments were USD 98.6 million, so net assets from operations decreased USD 21.6 million versus an increase of USD 78.0 million.
  • Total investment income was USD 151.7 million against USD 157.6 million, and common distributions were USD 0.11 per share against USD 0.12.

Investment Losses Outweigh Steady Income

Prospect Capital (NASDAQ:PSEC) filed its report for the fiscal first quarter of 2027, the three months ended September 30, 2026, on November 4, 2026. The Business Development Company is externally managed and lends to and invests in privately held middle market companies. Net investment income of USD 76.4 million was down 3.8% (calculated) from USD 79.4 million, while net realized and unrealized losses on investments reached USD 98.6 million, including a realized loss of USD 71.6 million and an unrealized loss of USD 27.0 million. Net assets resulting from operations fell USD 21.6 million, against a USD 78.0 million gain a year earlier.

Dilution, Distributions and the NAV Bridge

The filing explains the USD 0.35 decline in NAV per share through three channels. Net realized and unrealized losses cost USD 0.20 per weighted share, share issuance through Dividend reinvestment and preferred conversions diluted NAV by USD 0.15, and distributions of USD 0.16 per weighted share to common and preferred holders exceeded net investment income of USD 0.15. Shares outstanding rose to 536.3 million from 512.7 million at June 30, 2026, after 20.5 million shares were issued on preferred conversions. Common distributions of USD 0.11 per share were paid, and dividend reinvestment issued about 3.1 million shares over three months. The annualized ratio of net investment income to average common net assets was 10.53%. Stockholders authorized sales of stock below NAV on July 7, 2026.

Debt Buybacks, Maturities and Credit Risk

Interest and credit Facility expense fell to USD 30.6 million from USD 33.7 million, and the company repurchased USD 33.9 million of its 3.437% 2028 notes at 93.92% of par, booking a gain of USD 1.4 million. A USD 263.2 million Tranche of 3.364% notes is due November 15, 2026. Gross originations were USD 90.5 million against repayments of about USD 257.4 million. The reported per-share Market Value was USD 2.08 at quarter end against NAV of USD 5.36, a calculated discount of about 61%. Control investments swung from a USD 14.2 million unrealized gain to a USD 239.6 million unrealized loss, while non-control investments moved the other way, with a USD 221.0 million unrealized gain offset by USD 203.2 million of realized losses.

Where Things Stand

Mostly investment losses and share issuance, not weaker income. Net investment income slipped only 3.8%, calculated, but a USD 98.6 million investment loss and USD 0.15 of dilution pulled NAV per share down. Prospect Capital (NASDAQ:PSEC) paid distributions of USD 0.11 per share, below the USD 0.15 of net investment income, yet NAV still fell. Next markers are the November 15, 2026 note maturity, the next NAV mark, further preferred conversions and whether the below-NAV issuance authority is used.