Fall 2016 SBIC Debenture Coupon Rates Remain at Historical Lows

September 16, 2016

In September 2016, the SBIC Funding Corporation completed a pooling of SBA debentures in the amount of $992,955,000. The SBA debentures have a coupon rate of 2.051 percent. This most recent pricing reflects a decrease from the March 2016 rate of 2.5079 percent and sets a record low.

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 (+1 312 849 8170), your primary attorney at McGuireWoods, or any of the authors.

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