FIRST QUARTER 2027 EARNINGS RELEASE AND CONFERENCE CALL - PROSPECT CAPITAL CORP

Financial Performance:

• Net Investment Income (NII) for the September 2027 quarter was $76 million ($0.15 per share).
• Net Asset Value (NAV) stood at approximately $2.9 billion ($5.36 per share) as of September 30, 2027.
• Net debt to total assets ratio is 25%; unsecured debt plus perpetual preferred comprises 90.7% of total debt and preferred.
• Weighted average cost of unsecured debt financing was 4.84% as of September 30, 2027.
• Combined balance sheet cash and undrawn revolving credit facility commitments totaled $1.9 billion.
• $4.0 billion (66% of total assets) remains unencumbered.
• Non-accruals are 0.2% of total investments at fair market value and 1.8% at cost, down from the prior quarter.
• Payment-in-kind (PIK) interest income dropped 53% year-over-year to 11% of total investment income for the quarter.
• Investment originations were $90 million; repayments and exits totaled $257 million, resulting in $167 million net repayments.
• Real estate portfolio (NPRC) recorded $159 million in unrealized gains.

Guidance and Future Outlook:

• Announced monthly common shareholder distributions of 3.5 cents per share for November, December, and January.
• Board approved a $200 million common share repurchase authorization.
• Management intends to redeploy real estate exit proceeds primarily into first lien senior secured loans with select equity-linked investments.
• Debt maturities are ladder out through 2052, extending liability duration 25 years into the future.
• Second lien debt mix is projected to increase to 10% of investments at cost pro forma following recent repayments.

Business Segments and Product Lines:

• Middle market lending remains the primary strategy, representing 84% of investments at cost and 83% of Q3 originations.
• Portfolio composition at fair market value includes 85 companies across 31 industries; senior and secured debt comprises 83% of the portfolio.
• Real estate strategy (NPRC) holds 50 developed, occupied multifamily properties (15% of investments at cost); achieved 23% unlevered gross cash IRR since inception.
• Subordinated structured notes portfolio exit completed, reducing exposure by 840 basis points to nearly 0% of portfolio cost.
• Software investments are minimal at 1.8% of portfolio, significantly below the BDC industry average of 22%.

Market and Competitive Landscape:

• Prospect's portfolio demonstrates superior credit metrics versus market benchmarks: 4.8x net leverage (vs. 6.1x market), 211% cash interest coverage (vs. 160% market), and 20bps annualized loss rate (vs. 100bps market).
• Company maintains access to 48 bank commitments ($2.12 billion) totaling the largest funding base unmatched by peers.
• Historical track record includes exiting 350 of 450 total investments with a 14.5% gross cash IRR in middle market lending.
• Strong recurring revenue profile driven by interest income, which accounted for 89% of total investment income over the trailing 12 months.

Risks and Challenges:

• Forward-looking statements warn that future results may vary materially due to market conditions.
• Concentration risk in senior secured lending requires continued monitoring of first lien quality, though the portfolio historically shows low loss rates.
• Real estate portfolio rotation strategy carries execution risk regarding the timing and profitability of future exits.

Management Commentary and Tone:

• Tone is highly confident, emphasizing "prudent leverage," "substantial liquidity," and "balance sheet strengths."
• Management highlighted a "multi-decade" history of outperformance and low realized loss rates (20bps) compared to the broader middle market.
• Emphasis placed on diversification of funding sources, reducing counterparty risk, and the ability to capitalize on market opportunities due to low unfunded asset commitments ($58 million).

Analyst Questions and Answers:

• The call concluded with no analyst questions submitted during the scheduled Q&A session.
• Management provided closing remarks without further clarification or expansion requested by the floor.

Other Key Points:

• On October 14, 2026, the company elected to redeem all $263.2 million of outstanding November 2026 notes.
• Successfully priced $300 million of notes due 2031 on October 29, 2026, intended to refinance existing indebtedness.
• Historical record of repaying unsecured bondholders totals $5.5 billion across nearly 1,000 tranches.
• Unfunded eligible commitments are only 1% of total assets ($58 million), leaving significant dry powder for new deals.