Capital Southwest Delivers Steady Q3, Raises Capital and Launches First-Out Loan JV

Overview

• Pre-tax net investment income came in at $0.60 per share, with management citing strong recurring earnings across the portfolio.
• Liquidity increased through a $350 million 5.95% note issuance and roughly $53 million raised via an at-the-market program, lifting available liquidity to about $438 million and net asset value to $16.75.
• The company formed a first-out senior loan joint venture to target larger transactions with tighter spreads, with each partner committing $50 million and first-out leverage targeted at no more than 1.5x debt to EBITDA.
• The on-balance credit portfolio grew to $1.8 billion, remained approximately 99% first-lien, and posted a 11.3% weighted yield, leverage of about 3.6x EBITDA, and 1.5% non-accruals, supported by $244 million of new commitments including $199 million across eight new companies.
• Total March-quarter dividends were declared at $0.64 per share, including a $0.06 supplemental, supported by undistributed taxable income of $1.02 per share after $44.5 million of realized gains and an additional $6.8 million realized post-quarter.