PennantPark Floating Rate Capital: 15% Yield, 23% Discount, But A Clear No-Go
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Roberts Berzins, CFA14.11K FollowersFollow5ShareSavePlay(8min)CommentsSummaryPennantPark Floating Rate Capital remains unattractive due to excessive leverage and weak dividend coverage despite a strong credit portfolio.PFLT's P/NAV has fallen to 0.77x, and the dividend yield is ~15%, but these are supported by aggressive leverage and unconsolidated JVs.Q4 2025 core NII per share covered only 88% of the base dividend, with leverage at 1.57x—well above prudent sector norms.I avoid PFLT, favoring defensive BDCs, as current risks from leverage and market uncertainties outweigh the discounted valuation. esemelwe/iStock via Getty Images In December 2025, I decided to downgrade PennantPark Floating Rate Capital (PFLT) because of three reasons: Base dividend coverage was well below 100% (worse than for most other sector peers). Leverage was meaningfully above a This article was written byRoberts Berzins, CFA14.11K FollowersFollowRoberts Berzins has over a decade of experience in the financial management helping top-tier corporates shape their financial strategies and execute large-scale financings. He has also made significant efforts to institutionalize REIT framework in Latvia to boost the liquidity of pan-Baltic capital markets. Other policy-level work includes the development of national SOE financing guidelines and framework for channeling private capital into affordable housing stock. Roberts is a CFA Charterholder, ESG investing certificate holder, has had an internship in Chicago board of trade (albeit, being resident and living in Latvia), and is actively involved in "thought-leadership" activities to support the development of pan-Baltic capital markets.Analyst’s Disclosure: I/we have a beneficial long position in the shares of KBDC either through stock ownership, options, or other derivatives. I wrote this article myself, and it expresses my own opinions. I am not receiving compensation for it (other than from Seeking Alpha). I have no business relationship with any company whose stock is mentioned in this article. Seeking Alpha's Disclosure: Past performance is no guarantee of future results. No recommendation or advice is being given as to whether any investment is suitable for a particular investor. Any views or opinions expressed above may not reflect those of Seeking Alpha as a whole. Seeking Alpha is not a licensed securities dealer, broker or US investment adviser or investment bank. Our analysts are third party authors that include both professional investors and individual investors who may not be licensed or certified by any institute or regulatory body.