Fall 2014 SBIC Debenture Coupon Rates Move Lower to 3.015%

September 26, 2014

On September 16, 2014, the SBIC Funding Corporation completed a pooling of SBA debentures in the amount of $1,007,590,000. The SBA debentures have a coupon rate of 3.015%. This most recent pricing reflects a decrease from the March 2014 rate of 3.191% and the September 2013 rate of 3.644% 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.