PennantPark banks strong Q4 with BDCs

PennantPark’s NASDAQ-listed offerings both reported positive net asset value growth in the fourth quarter as the underlying senior secured debt investments within the portfolios booked strong gains. The PennantPark Investment Corporation (NASDAQ: PNNT) saw net asset value growth per share of 14.5% in the fourth quarter with an investment portfolio, including investments in the PennantPark Senior Loan Fund, totaling $1.2 billion. “We are pleased with the substantial increase in net asset value this past quarter due to material appreciation in value of several equity co-investments,” said Arthur Penn, chairman and CEO at the $3.5 billion firm. “We believe that we can generate increased income over time by rotating those equity positions into yield generating debt instruments. Additionally, we have the ability to grow the PNNT balance sheet and our PSLF JV which should also generate additional income for the Company.” The PSLF JV was formed in August. Pantheon acquired a 28% stake or $35 million in PennantPark’s special purpose vehicle PennantPark Investment Corp. The overall PNNT portfolio totaled 81 companies with an average investment size of $13.9 million and a weighted average yield on interest bearing debt investments of 9.3% with investments including first lien and second lien secured debt and preferred and common equity. The $1 billion listed PennantPark Floating Rate Capital (NASDAQ: PFLT) reported yield on its debt investments of 7.3% for the fourth quarter and net asset value growth of 4.3%. Penn commented that the firm is pleased with the ‘efficient, low cost CLO financing’ completed in late January for its PennantPark Senior Secured Loan (PSSL) joint venture. The long-term financing sets the joint venture up for growth. He added that the firm sees the combination of the PSSL joint venture, the rotation of equity positions into yield generating debt instruments and a more optimized PFLT balance sheet should position the BDC well for increased income. Shares in both PFLT and PNNT were trading higher following the company’s announced earnings.

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