On September 21, 2011, the SBIC Funding Corporation completed pricing on
$558,685,000 in pooling of SBA debentures with a coupon rate of 2.877%. This is
the lowest pricing on SBA-pooled debentures in more than 50 years of the SBA
Program, and follows on the previous all-time low September 2010 issuance of
$563 million at 3.215%.
The pricing of the pool is a critical component to the cost of funds used by
SBIC Funds. Once pooled, the interest rate on the SBA debentures becomes fixed
for a 10-year period. The SBIC Fund is only responsible for a semi-annual
interest-only payment on the SBA debentures until the SBA debentures are repaid.
The SBA debentures must be repaid within 10 years. In addition, there are no
The September 2011 pool included 261 separate issuances to 49 SBIC Funds
located in the United States. Credit Suisse Securities (USA) LLC, J.P. Morgan
Securities LLC, and Goldman, Sachs & Co. served as the underwriters.
The historical pooling information is reflected in our chart (click
The Private Equity Practice Group at McGuireWoods LLP is dedicated to keeping
clients advised of new legislative and business developments as they occur. If
you have any questions regarding these issues, please feel free to contact Mark
A. Kromkowski (312.849.8170), Bryan P. Bylica (312.750.3617), your primary
attorney at McGuireWoods LLP, or any of the authors.