PROSPECT FLOATING RATE AND ALTERNATIVE INCOME FUND
Middle-Market Credit Solution for Income-Focused Investors
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MARKET OPPORTUNITY
There is a significant current market opportunity in the US senior and secured loan market.
Commercial bank participation in leveraged loans has declined by ~50%, providing an opportunity for alternative sources to meet the continued demand for financing2
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
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
Floating rate debt is an attractive hedging instrument in the current rising yield and high inflationary environment
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.
LEADERSHIP
PFLOAT is managed by Prospect Capital Management L.P., a leading alternative asset manager with deep expertise in the credit markets with a 35-year history of investing in and managing high-yielding debt and equity investments using both private partnerships and registered closed-end structures.
Chairman of the Board of Directors, President and Chief Executive Officer
Chief Financial Officer
Portfolio Manager
Assistant Portfolio Manager
RESPONSIBLE INVESTMENT STRATEGY
Investment strategy that leverages the Prospect platform to source attractive senior and secured investment opportunities that have the potential to both mitigate risk and provide attractive returns for investors
1 Awarded by Capital Finance International (“CFI”) in March 2023 to Prospect Capital Management (“PCM”), PFLOAT’s investment advisor. PCM has provided compensation to CFI for the ability to communicate the result of this award. The award described above may not be representative of any one investor’s experience with PFLOAT and/or PCM 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 2022, for private equity buyout funds in North America