Fall 2019 SBIC Debenture Coupon Rate Decreases to 2.283 Percent

September 18, 2019

In September 2019, the SBIC Funding Corporation completed a pooling of SBA debentures in the amount of $991 million. The SBA debentures have a coupon rate of 2.283 percent. This most recent pricing reflects a decrease from the March 2019 rate of 3.113 percent.

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 semi-annual 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.

SBIC Debentures Chart Sept 2019

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), Bryan P. Bylica (+1 312 750 3617), your primary attorney at McGuireWoods, or any of the other authors.

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