Prospect Floating Rate and Alternative Income Fund
Middle-Market Credit Solution for Income-Focused Investors
Market Opportunity
There is significant current market opportunity in the U.S. senior and secured loan market.
Demand For Financing
Commercial bank participation in leveraged loans has declined by ~50%, providing an opportunity for alternative sources to meet the continued demand for financing2
Rising Interest Rates
The floating rate leveraged loan market is attracting inflows from fixed income due to the Federal Reserve’s indication of rising interest rates over 2022 and beyond
Inflationary Environment
Floating rate debt is an attractive hedging instrument in the current rising yield and high inflationary environment
Demand For Credit
The large amount of uninvested capital held by private equity buyout funds, estimated at $541 billion, continues to drive deal activity and demand for credit3
1 Awarded by Capital Finance International (“CFI”) in March 2023, based in part on information submitted as of September 30, 2022 and December 31, 2022. Prospect has provided compensation to CFI for the ability to communicate the results of these awards. The awards described above may not be representative of any one investor’s experience with Prospect and should not be viewed as indicative of future performance.
2 S&P Global Market Intelligence, as of December 2020
3 Preqin, as of August 2020, for private equity buyout funds in North America
FUND OVERVIEW
Prospect Floating Rate and Alternative Income Fund, Inc. (the “Fund” or “PFLOAT”), is a non-traded business development company (“BDC”) that invests primarily in the debt of privately-owned U.S. middle-market companies. The Fund seeks to provide income largely from investing in senior and secured floating rate credits, while building a portfolio of investments across the broad range of economic sectors. The priority in class hierarchy demonstrates the hypothetical capital structure for the Fund’s investments in senior and secured loans.
The Fund’s successful track record in the senior and secured loan market employs a proven and repeatable investment process
Stable Current Income Generation
The Fund seeks attractive risk-adjusted investments with favorable terms, and the 7% distribution rate is approximately 4% higher than 5-year treasuries.
Inflation and Rising Interest Rate Hedge
98% of the Fund’s investments are floating rate, providing a natural hedge against inflation and rising interest rates.
Broad Portfolio
The Fund is invested in 48 distinct companies with low exposure to cyclical industries.
Downside Protection
First-lien senior secured loans are the most senior positions in a company’s capital structure, providing the Fund with the most downside protection compared to any other investment in the company.