GlobeNewswire Inc | May 10, 2021 04:37PM EDT

May 10, 2021

NEW YORK, May 10, 2021 (GLOBE NEWSWIRE) -- Prospect Capital Corporation (NASDAQ: PSEC) (Prospect, our, or we) today announced financial results for our fiscal quarter ended March 31, 2021.

FINANCIAL RESULTS

Quarter Quarter Ended QuarterAll amounts in $000?s except Ended Ended per share amounts (on weighted average March 31, December 31, March 31, basis for period numbers) 2021 2020 2020 Net Investment Income (?NII?) $73,402 $81,561 $68,476Basic NII per Common Share $0.19 $0.21 $0.19Interest as % of Total Investment Income 87.5% 84.0% 89.8% Net Income (Loss) attributable to Common $246,008 $305,921 ($185,699)StockholdersBasic Net Income (Loss) per Common Share $0.64 $0.80 ($0.51) Distributions to Common Shareholders $69,603 $68,824 $66,192Distributions per Common Share $0.18 $0.18 $0.18 Since Oct 2017 NII per Common Share $2.74 $2.55 $2.04Since Oct 2017 Distributions per Common $2.52 $2.34 $1.80ShareSince Oct 2017 NII Less Distributions per $0.22 $0.21 $0.24Common Share Net Asset Value (?NAV?) to Common $3,634,940 $3,442,734 $2,933,375ShareholdersNAV per Common Share $9.38 $8.96 $7.98 Net of Cash Debt to Equity Ratio^(1) 56.5% 61.1% 74.1%Net of Cash Asset Coverage of Debt Ratio 276% 262% 233% Unsecured Debt as % of Total Debt 84.3% 86.8% 92.5%Unsecured and Non-Recourse Debt as % of 100.0% 100.0% 100.0%Total Debt

(1)Including our preferred stock as equity.

CASH COMMON SHAREHOLDER DISTRIBUTION DECLARATION

Prospect is declaring distributions to common shareholders as follows:

Monthly Cash Common Shareholder Record Payment Amount ($ perDistribution Date Date share)May 2021 5/27/2021 6/17/2021 $0.0600June 2021 6/28/2021 7/22/2021 $0.0600July 2021 7/28/2021 8/19/2021 $0.0600August 2021 8/27/2021 9/23/2021 $0.0600

These monthly cash distributions represent the 45th, 46th, 47th, and 48th consecutive $0.06 per share distributions to common shareholders.

Prospect expects to declare September and October 2021 distributions to common shareholders in August 2021.

Based on the declarations above, Prospects closing stock price of $8.16 at May 7, 2021 delivers to our common shareholders an annualized distribution yield of 8.8%.

Taking into account past distributions and our current share count for declared distributions, and since inception through our August 2021 declared distribution, Prospect will have distributed $18.84 per share to original common shareholders, aggregating approximately $3.4 billion in cumulative distributions to all common shareholders.

Since October 2017, our NII per common share has aggregated $2.74 while our common shareholder distributions per share have aggregated $2.52, resulting in our NII exceeding distributions during this period by $0.22 per common share.

Initiatives focused on enhancing accretive NII per share growth include (1) our recently announced $1 billion targeted perpetual preferred stock offering, (2) a greater utilization of our cost efficient revolving credit facility (with an incremental cost of approximately 1.46% at todays one month Libor), (3) retirement of higher cost liabilities (including multiple recent tender offers and repurchases), (4) issuing lower cost notes (including recent five year senior unsecured notes with coupons of approximately 3.0% to 3.7%), and (5) increased originations of senior secured debt and selected equity investments to deliver targeted risk-adjusted yields and total returns as we deploy available capital from our current underleveraged balance sheet.

Our senior management team and employee insider ownership aggregate approximately 28% of shares outstanding, representing over $1 billion of our net asset value.

Nine Months Nine MonthsAll amounts in $000?s except Ended Ended per share amounts March 31, 2021 March 31, 2020 Net Investment Income (?NII?) $212,508 $207,421Basic NII per Common Share $0.56 $0.56 Net Income (Loss) attributable to Common $719,675 $(178,837)StockholdersBasic Net Income (Loss) per Common Share $1.89 $(0.49) Distributions to Common Shareholders $206,288 $198,455Distributions per Common Share $0.54 $0.54

CASH PREFERRED SHAREHOLDER DISTRIBUTION DECLARATION

Prospect is declaring distributions to preferred shareholders at an annual rate of 5.50% of the stated value of $25 per share, from the date of issuance or, if later, from the most recent dividend payment date, as follows:

Monthly Cash Preferred Record Payment Monthly Amount ($ per share), beforeShareholder Distribution Date Date pro ration for partial periodsJune 2021 6/16/ 7/1/ $0.114583 2021 2021July 2021 7/21/ 8/2/ $0.114583 2021 2021August 2021 8/18/ 9/1/ $0.114583 2021 2021

PORTFOLIO UPDATE AND INVESTMENT ACTIVITY

As of As ofAll amounts in $000?s except March 31, per unit amounts 2021 December 31, 2020 Total Investments (at fair value) $5,883,328 $5,625,405Number of Portfolio Companies 123 122 Secured First Lien 51.8% 47.3%Other Senior Secured Debt 15.2% 21.2%Subordinated Structured Notes 12.8% 13.3%Unsecured and Other Debt 0.1% 0.0%Equity Investments 20.1% 18.2%Mix of Investments with Underlying Collateral 79.8% 81.8%Security Annualized Current Yield ? All Investments 9.4% 9.9%Annualized Current Yield ? Performing Interest 11.8% 12.2%Bearing Investments Top Industry Concentration^(1) 16.7% 16.2%Retail Industry Concentration^(1) 0.0% 0.0%Energy Industry Concentration^(1) 1.3% 1.2%Hotels, Restaurants & Leisure Concentration^(1) 0.4% 0.4% Non-Accrual Loans as % of Total Assets ^(2) 0.7% 0.7% Middle-Market Loan Portfolio Company Weighted $81,933 $83,092Average EBITDA^(3)

As of the quarter ended March 31, 2020, Prospect had a 5.05x middle-market loan portfolio company weighted average net debt leverage ratio.

(1) Excluding our underlying industry-diversified structured credit portfolio.

(2) Calculated at fair value.

(3) For additional disclosure see Middle-Market Loan Portfolio Company Weighted Average EBITDA and Net Leverage at the end of this release.

During the March 2021 and December 2020 quarters, investment originations and repayments were as follows:

All amounts in $000?s Quarter Ended Quarter Ended March 31, 2021 December 31, 2020 Total Originations $258,419 $345,578 Middle-Market Lending 77.2% 75.0%Real Estate 17.8% 24.8%Middle-Market Lending / Buyout 5.0% 0.2% Total Repayments $182,458 $338,011 Originations, Net of Repayments $75,961 $7,567

Note: For additional disclosure see Primary Origination Strategies at the end of this release.

We have invested in subordinated structured notes benefiting from individual standalone financings non-recourse to Prospect, with our risk limited in each case to our net investment. At March 31, 2021 and December 31, 2020, our subordinated structured note portfolio at fair value consisted of the following:

All amounts in $000?s except As of As of per unit amounts March 31, 2021 December 31, 2020 Total Subordinated Structured Notes $750,603 $745,390 # of Investments 39 39 TTM Average Cash Yield^(1)(2) 13.7% 13.4%Annualized Cash Yield^(1)(2) 18.6% 17.2%Annualized GAAP Yield on Fair Value^(1)(2) 15.2% 16.8%Annualized GAAP Yield on Amortized Cost^(2) 10.4% 11.4% Cumulative Cash Distributions $1,291,282 $1,256,426% of Original Investment 91.9% 89.8% # of Underlying Collateral Loans 1,718 1,677Total Asset Base of Underlying Portfolio $16,806,835 $17,063,856 Prospect TTM Default Rate 1.71% 2.06%Broadly Syndicated Market TTM Default Rate 3.15% 3.83%Prospect Default Rate Outperformance vs. 1.44% 1.77%Market

(1)Calculation based on fair value.

(2)Excludes investments being redeemed.

To date, including called investments being redeemed, we have exited nine subordinated structured notes totaling $263.4 million with an expected pooled average realized IRR of 16.7% and cash on cash multiple of 1.48 times.

Since December 31, 2017 through today, 28 of our subordinated structured note investments have completed multi-year extensions of their reinvestment periods (typically at reduced liability spreads and with increased weighted average life asset benefits). We believe further long-term optionality upside exists in our structured credit portfolio through additional refinancings and reinvestment period extensions.

To date during the June 2021 quarter, we have completed new and follow-on investments as follows:

All amounts in $000?s Quarter Ended June 30, 2021 Total Originations $67,062 Middle-Market Lending 91.9%Subordinated Structured Notes 8.1% Total Repayments $84,725Originations, Net of Repayments $(17,663)

Note: For additional disclosure see Primary Origination Strategies at the end of this release.

CAPITAL AND LIQUIDITY

Our multi-year, long-term laddered funding profile includes a revolving credit facility (with 32 lenders, an increase of two lenders from before our recent extension), program notes, listed baby bonds, institutional bonds, convertible bonds, and preferred stock under our newly launched preferred stock offering program. We have retired upcoming maturities, including a recent retirement in February 2021, and as of today have zero debt maturing until July 2022.

On April 28, 2021, we completed an amendment and upsizing of our existing revolving credit facility (the Facility) for Prospect Capital Funding, extending the term 5.0 years from such date. Pricing for amounts drawn under the Facility is one-month Libor plus 2.05%, a decrease of 0.15% from before our extension. Undrawn pricing (1) was reduced by 0.30% for above 35% and up to 60% utilization and (2) was reduced by 0.10% for above 60% utilization. Our extended facility also has improved borrowing base benefits due to a change in concentration baskets, which we estimate increased our borrowing base by approximately $150 million.

The combined amount of our balance sheet cash and undrawn revolving credit facility commitments currently stands at approximately $814 million. Our total unfunded eligible commitments to non-control portfolio companies totals approximately $24 million.

As of As of As ofAll amounts in $000?s March 31, December 31, March 31, 2021 2020 2020Net of Cash Debt to Equity Ratio^(1) 56.5% 61.1% 74.1%% of Interest-Bearing Assets at 86.7% 86.7% 86.1%Floating Rates% of Liabilities at Fixed Rates 84.3% 86.8% 92.5% % of Floating Loans with Libor Floors 91.7% 89.6% 90.1%Weighted Average Libor Floor 1.68% 1.62% 1.55% Unencumbered Assets $4,401,757 $4,208,925 $3,561,643% of Total Assets 73.3% 73.8% 68.3%

(1)Including our preferred stock as equity.

The below table summarizes our March 2021 quarter term debt issuance and repurchase/repayment activity:

All amounts in $000?s Principal Coupon MaturityDebt Issuances 2026 Notes $400,000 3.706% January 2026 Prospect Capital $28,095 1.50% ? January 2024 ? April 2031InterNotes 4.50%Debt Repurchases/Repayments 2022 Notes $51,817 4.95% July 2022 2023 Notes $4,945 5.875% March 2023 6.375% 2024 Notes $8,385 6.375% January 2024 2024 Notes $233,788 6.250% June 2024 2025 Notes $45,082 6.375% March 2025 Prospect Capital $113,822 4.00% - September 2023 ? SeptemberInterNotes 6.750% 2043

$1.0825 billion of Facility commitments have closed to date with 32 lenders. An accordion feature allows the Facility, at Prospect's discretion, to accept up to $1.5 billion of commitments. The Facility matures April 27, 2026. The Facility includes a revolving period that extends through April 27, 2025, followed by an additional one-year amortization period.

We currently have seven separate unsecured debt issuances aggregating $1.2 billion outstanding, not including our program notes, with laddered maturities extending to June 2029. At March 31, 2021, $673.3 million of program notes were outstanding with laddered maturities through October 2043.

On August 3, 2020, we launched a $1 billion 5.50% perpetual preferred stock offering program. Prospect expects to use the net proceeds from the offering program to maintain and enhance balance sheet liquidity, including repaying our credit facility and purchasing high quality short-term debt instruments, and to make long-term investments in accordance with our investment objective. The preferred stock provides Prospect with a diversified source of accretive fixed-rate capital without creating maturity risk due to the perpetual term. To date we have raised over $80 million in aggregate issuance of our perpetual preferred stock.

In connection with the preferred stock offering program, effective August 3, 2020 and as amended on October 30, 2020, we adopted and amended, respectively, a Preferred Stock Dividend Reinvestment Plan, pursuant to which holders of the preferred stock will have dividends on their preferred stock automatically reinvested in additional shares of such preferred stock at a price per share of $25.00, if they elect.

Prospect holds recently reaffirmed or initiated investment grade company ratings from Standard & Poors (BBB-), Moodys (Baa3), Kroll (BBB-), Egan-Jones (BBB), and DBRS (BBB (low)). Maintaining our investment grade ratings with prudent asset, liability, and risk management is an important objective for Prospect.

DIVIDEND REINVESTMENT PLAN

We have adopted a dividend reinvestment plan (also known as a DRIP) that provides for reinvestment of our distributions on behalf of our shareholders, unless a shareholder elects to receive cash. On April 17, 2020, our board of directors approved amendments to the Companys DRIP, effective May 21, 2020. These amendments principally provide for the number of newly-issued shares pursuant to the DRIP to be determined by dividing (i) the total dollar amount of the distribution payable by (ii) 95% of the closing market price per share of our stock on the valuation date of the distribution (providing a 5% discount to the market price of our common stock), a benefit to shareholders who participate.

HOW TO PARTICIPATE IN OUR DIVIDEND REINVESTMENT PLAN

Shares held with a broker or financial institution

Many shareholders have been automatically opted out of our DRIP by their brokers. Even if you have elected to automatically reinvest your PSEC stock with your broker, your broker may have opted out of our DRIP (which utilizes DTCs dividend reinvestment service), and you may therefore not be receiving the 5% pricing discount. Shareholders interested in participating in our DRIP to receive the 5% discount should contact their brokers to make sure each such DRIP participation election has been made through DTC. In making such DRIP election, each shareholder should specify to ones broker the desire to participate in the "Prospect Capital Corporation DRIP through DTC" that issues shares based on 95% of the market price (a 5% discount to the market price) and not the broker's own "synthetic DRIP plan (if any) that offers no such discount. Each shareholder should not assume ones broker will automatically place such shareholder in our DRIP through DTC. Each shareholder will need to make this election proactively with ones broker or risk not receiving the 5% discount. Each shareholder may also consult with a representative of such shareholders broker to request that the number of shares the shareholder wishes to enroll in our DRIP be re-registered by the broker in the shareholders own name as record owner in order to participate directly in our DRIP.

Shares registered directly with our transfer agent

If a shareholder holds shares registered in the shareholders own name with our transfer agent (less than 0.1% of our shareholders hold shares this way) and wants to make a change to how the shareholder receives dividends, please contact our plan administrator, American Stock Transfer and Trust Company LLC by calling (888) 888-0313 or by mailing American Stock Transfer and Trust Company LLC, 6201 15th Avenue, Brooklyn, New York 11219.

EARNINGS CONFERENCE CALL

Prospect will host an earnings call on Tuesday, May 11, 2021 at 11:00 am. Eastern Time. Dial 888-338-7333. For a replay prior to June 10, 2021 visit www.prospectstreet.com or call 877-344-7529 with passcode 10156358.

PROSPECT CAPITAL CORPORATION AND SUBSIDIARIESCONSOLIDATED STATEMENTS OF ASSETS AND LIABILITIES(in thousands, except share and per share data)

March 31, June 30, 2021 2020Assets (Unaudited) (Audited)Investments at fair value: Control investments (amortized cost of $2,425,409 $ 2,721,942 $ 2,259,292 and $2,286,725, respectively)Affiliate investments (amortized cost of $168,350 299,985 187,537 and $163,484, respectively)Non-control/non-affiliate investments (amortized 2,861,401 2,785,499 cost of $3,321,382 and $3,332,509, respectively)Total investments at fair value (amortized cost 5,883,328 5,232,328 of $5,915,141 and $5,782,718, respectively)Cash 100,989 44,561 Receivables for: Interest, net 10,188 11,712 Other 285 106 Deferred financing costs on Revolving Credit 7,510 9,145 FacilityDue from broker 2,955 1,063 Prepaid expenses 195 1,248 Due from Affiliate 38 ? Total Assets 6,005,488 5,300,163 Liabilities Revolving Credit Facility 343,537 237,536 Prospect Capital InterNotes(less unamortizeddebt issuance costs of $12,307 and $12,802, 660,973 667,427 respectively)Public Notes(less unamortized debt issuance 892,342 782,106 costs of $14,259 and $11,613, respectively)Convertible Notes (less unamortized debt issuance 262,755 450,598 costs of $4,518 and $8,892, respectively)Due to broker 48,669 1 Due to Prospect Capital Management 47,441 42,481 Dividends payable 23,249 22,412 Interest payable 16,731 29,066 Due to Prospect Administration 3,745 7,000 Accrued expenses 3,431 3,648 Other liabilities 775 2,027 Total Liabilities 2,303,648 2,244,302 Commitments and Contingencies Net Assets $ 3,701,840 $ 3,055,861 Components of Net Assets Convertible preferred stock, par value $0.001 pershare (140,000,000 shares authorized, with40,000,000 shares of preferred stock authorizedfor each of the Series A1, Series M1, and SeriesM2 shares and 20,000,000 shares of preferredstock authorized for the Series AA1 shares; $ 66,900 $ ? 2,654,253 and 0 Series A1 shares issued andoutstanding, respectively; 0 and 0 Series AA1shares issued and outstanding, respectively;21,760 and 0 Series M1 shares issued andoutstanding, respectively; and 0 and 0 Series M2shares issued and outstanding, respectively)Common stock, par value $0.001 per share(1,860,000,000 common shares authorized; 387 374 387,400,554 and 373,538,499 issued andoutstanding, respectively)Paid-in capital in excess of par 4,039,776 3,986,417 Total distributable loss (405,223 ) (930,930 )Net Assets $ 3,701,840 $ 3,055,861 Net Asset Value Per Common Share $ 9.38 $ 8.18

Three Months Ended Nine Months Ended March 31, March 31, 2021 2020 2021 2020 Investment Income Interest income: Control investments $ 52,056 $ 51,833 $ 151,416 $ 152,301 Affiliate investments 6,145 2,623 24,333 5,325 Non-control/non-affiliate 52,846 57,960 156,125 179,062 investmentsStructured credit 28,536 26,390 84,735 88,733 securitiesTotal interest income 139,583 138,806 416,609 425,421 Dividend income: Control investments 1,384 2,267 3,645 9,335 Non-control/non-affiliate 18 310 62 1,005 investmentsTotal dividend income 1,402 2,577 3,707 10,340 Other income: Control investments 15,877 9,440 45,493 34,012 Affiliate investments 38 ? 102 ? Non-control/non-affiliate 2,556 3,678 8,717 8,528 investmentsTotal other income 18,471 13,118 54,312 42,540 Total Investment 159,456 154,501 474,628 478,301 IncomeOperating Expenses Base management fee 29,183 26,625 83,866 82,631 Income incentive fee 18,251 17,119 53,354 51,855 Interest and credit 32,773 37,646 100,549 113,603 facility expensesAllocation of overheadfrom Prospect 2,685 4,096 10,768 13,601 AdministrationAudit, compliance and 989 421 2,267 2,729 tax related feesDirectors? fees 113 113 339 339 Other general andadministrative 2,060 5 10,977 6,122 expensesTotal Operating 86,054 86,025 262,120 270,880 ExpensesNet Investment Income 73,402 68,476 212,508 207,421 Net Realized and NetChange in Unrealized Gains (Losses) fromInvestmentsNet realized gains (losses)Control investments 121 ? 2,953 ? Affiliate investments 745 ? 4,469 ? Non-control/non-affiliate 15 26 29 (263 )investmentsNet realized gains 881 26 7,451 (263 )(losses)Net change inunrealized gains (losses)Control investments 142,379 (97,444 ) 323,967 (172,328 )Affiliate investments 21,876 (9,516 ) 107,582 20,746 Non-control/non-affiliate 20,705 (150,037 ) 87,028 (231,766 )investmentsNet change inunrealized gains 184,960 (256,997 ) 518,577 (383,348 )(losses)Net Realized and NetChange in Unrealized 185,841 (256,971 ) 526,028 (383,611 )Gains (Losses) fromInvestmentsNet realized (losses)gains on (12,835 ) 2,796 (18,415 ) (2,647 )extinguishment of debtNet Increase(Decrease) in Net 246,408 (185,699 ) 720,121 (178,837 )Assets Resulting fromOperationsPreferred stock 400 ? 446 dividendNet Increase(Decrease) in NetAssets Resulting from $ 246,008 $ (185,699 ) $ 719,675 $ (178,837 )Operationsattributable to CommonStockholders

Three Months Ended Nine Months Ended March 31, March 31, 2021 2020 2021 2020 Per Share Data - Basic Net asset value percommon share at $ 8.96 $ 8.66 $ 8.18 $ 9.01 beginning of periodNet investment income 0.19 0.19 0.56 0.56 (1)Net realized and changein unrealized gains 0.45 (0.70 ) 1.33 (1.05 ) (losses) (1)Net increase (decrease) 0.64 (0.51 ) 1.89 (0.49 ) from operations (5)Distributions of netinvestment income to ? (3 ) ? (4 ) ? (3 ) ? (4 )preferred stockholders

Distributions of netinvestment income to (0.18 ) (0.08 ) (0.51 ) (0.41 ) common stockholdersReturn of Capital to ? (6 ) (0.10 ) (0.03 ) (6 ) (0.13 ) common stockholdersCommon stock (0.02 ) ? (3 ) (0.11 ) (0.01 ) transactions(2)Offering costs fromissuance of preferred (0.01 ) ? (4 ) (0.02 ) ? (4 )stockNet asset value percommon share at end of $ 9.38 $ 7.98 $ 9.38 $ 7.98 period

Per share data amount is based on the weighted average number of common(1) shares outstanding for the period presented (except for dividends to stockholders which is based on actual rate per share). Common stock transactions include the effect of our issuance of common stock in public offerings (net of underwriting and offering costs), shares(2) issued in connection with our common stock dividend reinvestment plan, common shares issued to acquire investments and common shares repurchased below net asset value pursuant to our Repurchase Program, and common shares issued pursuant to the Holder Optional Conversion of our preferred stock. (3) Amount is less than $0.01. (4) Not applicable for the respective fiscal period. (5) Diluted net increase from operations was $0.63 and $1.88 for the three and nine months ended March 31, 2021. (6) Not finalized for the respective fiscal period.

MIDDLE-MARKET LOAN PORTFOLIO COMPANY WEIGHTED AVERAGE EBITDA AND NET LEVERAGE

Middle-Market Loan Portfolio Company Weighted Average Net Leverage (Middle-Market Portfolio Net Leverage) and Middle-Market Loan Portfolio Company Weighted Average EBITDA (Middle-Market Portfolio EBITDA) provide clarity into the underlying capital structure of PSECs middle-market loan portfolio investments and the likelihood that PSECs overall portfolio will make interest payments and repay principal. Middle-Market Portfolio Net Leverage reflects the net leverage of each of PSECs middle-market loan portfolio company debt investments, weighted based on the current fair market value of such debt investments. The net leverage for each middle-market loan portfolio company is calculated based on PSECs investment in the capital structure of such portfolio company, with a maximum limit of 10.0x adjusted EBITDA. This calculation excludes debt subordinate to PSECs position within the capital structure because PSECs exposure to interest payment and principal repayment risk is limited beyond that point. Additionally, subordinated structured notes, other structured credit, real estate investments, investments for which EBITDA is not available, and equity investments, for which principal repayment is not fixed, are also not included in the calculation. The calculation does not exceed 10.0x adjusted EBITDA for any individual investment because 10.0x captures the highest level of risk to PSEC. Middle-Market Portfolio Net Leverage provides PSEC with some guidance as to PSECs exposure to the interest payment and principal repayment risk of PSECs overall debt portfolio. PSEC monitors its Middle-Market Portfolio Net Leverage on a quarterly basis.

Middle-Market Portfolio EBITDA is used by PSEC to supplement Middle-Market Portfolio Net Leverage and generally indicates a portfolio companys ability to make interest payments and repay principal. Middle-Market Portfolio EBITDA is calculated using the EBITDA of each of PSECs middle-market loan portfolio companies, weighted based on the current fair market value of the related investments. The calculation provides PSEC with insight into profitability and scale of the portfolio companies within our overall debt investments.

These calculations include addbacks that are typically negotiated and documented in the applicable investment documents, including but not limited to transaction costs, share-based compensation, management fees, foreign currency translation adjustments and other nonrecurring transaction expenses.

Together, Middle-Market Portfolio Net Leverage and Middle-Market Portfolio EBITDA assist PSEC in assessing the likelihood that PSEC will timely receive interest and principal payments. However, these calculations are not meant to substitute for an analysis of PSECs our underlying portfolio company debt investments, but to supplement such analysis.

PRIMARY ORIGINATION STRATEGIES

Middle-Market Lending - We make directly-originated, agented loans to companies, including companies which are controlled by private equity sponsors and companies that are not controlled by private equity sponsors (such as companies that are controlled by the management team, the founder, a family or public shareholders). This debt can take the form of first lien, second lien, unitranche or unsecured loans. These loans typically have equity subordinate to our loan position. We may also purchase selected equity co-investments in such companies. In addition to directly-originated, agented loans, we also invest in senior and secured loans, syndicated loans and high yield bonds that have been sold to a club or syndicate of buyers, both in the primary and secondary markets. These investments are often purchased with a long term, buy-and-hold outlook, and we often look to provide significant input to the transaction by providing anchoring orders.

Middle-Market Lending / Buyout - This strategy involves purchasing senior and secured yield-producing debt and controlling equity positions in operating companies across various industries. We believe this strategy provides enhanced certainty of closure to sellers, and the opportunity for management to continue in their current roles. These investments are often structured in tax-efficient partnerships, enhancing returns.

Real Estate - We purchase debt and controlling equity positions in tax-efficient real estate investment trusts (REIT or REITs). The real estate investments of National Property REIT Corp. (NPRC) are in various classes of developed and occupied real estate properties that generate current yields, including multi-family properties, student housing, and self-storage. NPRC seeks to identify properties that have historically attractive occupancy rates and recurring cash flow generation. NPRC generally co-invests with established and experienced property management teams that manage such properties after acquisition.

Subordinated Structured Notes - We make investments in structured credit, often taking a significant position in subordinated structured notes (equity) and rated secured structured notes (debt). The underlying portfolio of each structured credit investment is diversified across approximately 100 to 200 broadly syndicated loans and does not have direct exposure to real estate, mortgages, or consumer-based credit assets. The structured credit portfolios in which we invest are managed by established collateral management teams with many years of experience in the industry.

ABOUT PROSPECT CAPITAL CORPORATION

Prospect Capital Corporation (www.prospectstreet.com) is a business development company that focuses on lending to and investing in private businesses. Our investment objective is to generate both current income and long-term capital appreciation through debt and equity investments.

We have elected to be treated as a business development company under the Investment Company Act of 1940 (1940 Act). We are required to comply with regulatory requirements under the 1940 Act as well as applicable NASDAQ, federal and state rules and regulations. We have elected to be treated as a regulated investment company under the Internal Revenue Code of 1986.

This press release contains forward-looking statements within the meaning of the Private Securities Litigation Reform Act of 1995, whose safe harbor for forward-looking statements does not apply to business development companies. Any such statements, other than statements of historical fact, are highly likely to be affected by other unknowable future events and conditions, including elements of the future that are or are not under our control, and that we may or may not have considered; accordingly, such statements cannot be guarantees or assurances of any aspect of future performance. Actual developments and results are highly likely to vary materially from any forward-looking statements. Such statements speak only as of the time when made. We undertake no obligation to update any such statement now or in the future.

For additional information, contact:

Grier Eliasek, President and Chief Operating Officergrier@prospectcap.comTelephone (212) 448-0702