PNNT Quick Update: Starting To Pull Back
The following information was previously provided to subscribers of BDC Buzz along with target prices, dividend coverage and risk profile rankings, earnings/dividend projections, quality of management, fee agreements, and my personal positions for all Business Development Companies (“BDCs”).
Summary
PNNT has started to pull back and we thought that this might be a good time to provide a quick update.
PNNT reported results last month between its base and best case projections with ‘core NII’ of $0.133 per share and 111% coverage of the quarterly dividend.
As expected its NAV per share grew by another 5.2% mostly due to equity investments driving PNNT’s leverage (debt-to-equity) well below historical levels (0.75 net of SBA debentures).
The company has started exiting some of its non-income-producing assets which will likely be reinvested into “yield generating debt instruments”.
There was a slight decline in income from its recently formed joint-venture PSLF but is expected to grow over the coming quarters.
For more favorably priced BDCs please see “BDC Weekly Update: June 28, 2021”
PNNT March 31, 2021, Quick Update
PennantPark Investment (PNNT) reported between its base and best case projections with ‘core NII’ of $0.133 per share and 111% coverage of the quarterly dividend adjusting for $0.2 million provisions for taxes. There was a slight decline in interest and dividend income from its recently formed joint-venture PennantPark Senior Loan Fund (“PSLF”) but is expected to grow over the coming quarters. Also the company has started exiting some of its non-income-producing assets which will likely be reinvested into “yield generating debt instruments”:
Art Penn, Chairman/CEO: “We are pleased with the substantial increase in NAV this past quarter due to material appreciation in the value of several equity investments. We believe that we can generate increased income over time by rotating those equity positions into yield generating debt instruments. We are starting to see some progress on the exit of those equity investments. Additionally, we have the ability to grow the PNNT balance sheet and our PSLF JV which should also generate additional income for the Company.”
As expected its NAV per share grew by another 5.2% mostly due to equity investments driving PNNT’s leverage (debt-to-equity) well below historical levels (0.75 net of SBA debentures) giving the company plenty of growth capital for increased earnings potential.
For additional detail about PNNT including target prices, dividend coverage potential, and risk profile, please read "PNNT Updated Projections/Pricing: Dividend Increases Coming". We will update this report next month.
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