September 2020 SBIC Leverage Pricing Determined
September 15, 2020
$685,450,000 in Small Business Investment Companies (SBIC) debentures priced at a record low interest rate
September 15, 2020 (Washington, D.C.) – The Small Business Investor Alliance (SBIA), the leading association for lower middle market private equity funds and investors, today announced that $685,450,000 of Small Business Investment Companies (SBIC) debentures were priced at an interest rate of 1.034%. This price reflects a 38 basis point spread from the Ten-Year Treasury rate and a 35 basis point spread from the Ten-Year mid swaps rate. This is the lowest interest rate of SBIC debentures ever – cutting nearly in half from the previous all-time low of 2.051%.
This rate of 1.034% is the new base rate applied to the SBIC leverage drawn between the last pooling in March and Sept. 8, 2020. This rate does not include the annual, reserving, or drawing fees. SBIC debentures are non-amortizing, fixed rate notes with no prepayment penalty. The base rate does not include a number of additional fees that the U.S. Small Business Administration (SBA) charges SBICs. The previous pool of debentures priced in March 2020 at 2.078%, in September 2019 at 2.283% and in March 2019 at 3.113%.
“For 3 of the 6 months covered in this pricing period, a large portion of the entire U.S. economy was in a pandemic-induced shut down. As our economy reopens and begins to heal, access to patient capital from Small Business Investment Companies is at the core of solving many of the challenges facing small business. Ensuring the availability of sufficient amounts of credit for small businesses, at affordable interest rates, is vital to our economic recovery, to support American workers and to sustain American jobs,” said SBIA President Brett Palmer.
About the Small Business Investor Alliance (SBIA)
The Small Business Investor Alliance (SBIA) is the premier organization of lower middle market private equity funds and investors. SBIA works on behalf of its members as a tireless advocate for policies that promote competitive markets and robust domestic investment for growing small businesses. SBIA has been playing a pivotal role in promoting the growth and vitality of the private equity industry for over 60 years. For more information, visit www.SBIA.org or call (202) 628-5055.