Largest Pooling in SBIC Program History Becomes One of Lowest SBA-Pooled Debenture Pricings in 50 Years at 4.084%

April 15, 2011

In the largest pooling in the history of the SBIC Program, on March 15, 2011, the SBIC Funding Corporation completed pricing on $822,000,000 in pooling of SBA debentures with a coupon rate of 4.084%. This is one of the lowest pricings on SBA-pooled debentures in more than 50 years of the program, and follows the September 2010 issuance 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 pre-payment penalties.

The March 2011 pool was the largest pooling in the history of the program, and included issuances to 60 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 to view).

McGuireWoods’ Private Equity Practice

McGuireWoods’ Private Equity Practice Group  is dedicated to keeping clients advised of new legislative and business developments as they occur. If you have any questions regarding these issues, contact your primary attorney at McGuireWoods LLP, or any of the authors.