Key Highlights

  • Common NAV per share declined to USD 5.36 on September 30, 2026 from USD 5.71 on June 30, 2026, leaving USD 2,875.1 million in net Assets attributable to common holders.
  • Net Investment income of USD 76.4 million, or USD 0.15 a share, trailed the USD 79.4 million, or USD 0.17, reported a year earlier.
  • Investment losses, realized and unrealized, totaled USD 98.6 million, so net assets from operations fell USD 21.6 million against a USD 78.0 million gain previously.
  • Total investment income of USD 151.7 million compared with USD 157.6 million, and common distributions dropped to USD 0.11 a share from USD 0.12.

Investment Losses Overwhelm Steady Income Generation

On November 4, 2026, Prospect Capital (NASDAQ:PSEC) submitted its fiscal first-quarter 2027 report, which spans the three months to September 30, 2026. This externally managed Business Development Company provides capital to privately held middle-market firms. Net investment income of USD 76.4 million slipped 3.8% (calculated) from USD 79.4 million. Realized and unrealized investment losses reached USD 98.6 million, including a USD 71.6 million realized loss and a USD 27.0 million unrealized loss. Net assets from operations dropped USD 21.6 million, after a gain of USD 78.0 million a year earlier.

Dilution, Distributions and the NAV Walk

The filing breaks the USD 0.35 decline in NAV per share into three components. Investment losses absorbed USD 0.20 per weighted share, dilution from Dividend reinvestment and preferred conversions reduced NAV by USD 0.15, and payouts of USD 0.16 per weighted share to common and preferred holders went beyond net investment income of USD 0.15. Shares outstanding climbed from 512.7 million on June 30, 2026 to 536.3 million, after preferred conversions produced 20.5 million new shares. Common distributions of USD 0.11 a share were paid, and dividend reinvestment added about 3.1 million shares over the quarter. Annualized net investment income relative to average common net assets was 10.53%, and shareholders approved selling shares below NAV on July 7, 2026. Each component is stated on a per-weighted-share basis, which keeps the comparison consistent across periods.

Note Buybacks, Upcoming Maturities and the Discount to Book

Interest and Credit Facility expense eased to USD 30.6 million from USD 33.7 million. The company retired USD 33.9 million of its 3.437% notes due 2028 at 93.92% of face value, producing a USD 1.4 million gain. A USD 263.2 million block of 3.364% notes comes due November 15, 2026. Originations were USD 90.5 million against roughly USD 257.4 million of repayments. Quarter-end Market Value per share was USD 2.08, compared with NAV of USD 5.36, a discount of roughly 61% (calculated). Control positions swung from a USD 14.2 million unrealized gain into a USD 239.6 million unrealized loss, whereas non-control positions posted a USD 221.0 million unrealized gain that was offset by USD 203.2 million of realized losses.

Where Things Stand

Largely investment losses and share issuance, rather than weaker income. Net investment income slipped only 3.8% (calculated), while a USD 98.6 million investment loss and USD 0.15 of dilution weighed on NAV per share. Each of these items reduced the per-share figure directly. Prospect Capital (NASDAQ:PSEC) paid distributions of USD 0.11 a share, below net investment income of USD 0.15, yet NAV still fell. Upcoming checkpoints include the November 15, 2026 note maturity, the next NAV mark, additional preferred conversions and whether below-NAV share sales are used.