Fall 2015 SBIC Debenture Coupon Rates Remain at Historical Lows in Largest SBIC Offering

September 16, 2015

In September 2015, the SBIC Funding Corporation completed a pooling of SBA debentures in the amount of nearly $1.2 billion, the largest pooling in the program’s 56-year history. The SBA debentures have a coupon rate of 2.829%. This most recent pricing reflects a slight increase from the March 2015 rate of 2.517% and continues the trend of historically low rates.

The pricing of the pool is a critical component to the cost of funding used by SBIC Funds. Once pooled, the interest rate on the SBA debentures becomes fixed for a 10-year period. The SBIC Fund is responsible only for a semiannual interest payment on the SBA debentures until the SBA debentures are repaid, which must occur within 10 years. In addition, there are no prepayment penalties.

The historical pooling is reflected in our chart.

Click to view full size.

The private equity practice group at McGuireWoods 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), your primary attorney at McGuireWoods, or any of the authors.

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