PennantPark Floating Rate Capital Ltd.

PFLT

US70806A1060

Closed End Funds

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May. 02	PennantPark Floating Rate Capital Ltd. Declares its Monthly Distribution for May 2024, Payable on June 3, 2024	CI
Apr. 02	PennantPark Floating Rate Capital Ltd. Declares Monthly Distribution for April 2024, Payable on May 1, 2024	CI

PENNANTPARK FLOATING RATE CAPITAL : MANAGEMENT'S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION AND RESULTS OF OPERATIONS (form 10-K)

November 18, 2020 at 04:09 pm EST

FORWARD-LOOKING STATEMENTS



This Report, including Management's Discussion and Analysis of Financial
Condition and Results of Operations, contains statements that constitute
forward-looking statements, which relate to us and our consolidated subsidiaries
regarding future events or our future performance or future financial condition.
These forward-looking statements are not historical facts, but rather are based
on current expectations, estimates and projections about our Company, our
industry, our beliefs and our assumptions. The forward-looking statements
contained in this Report involve risks and uncertainties, including statements
as to:



  • our future operating results;

• our business prospects and the prospects of our prospective portfolio

companies, including as a result of the current pandemic caused by COVID-19;






   •  changes in political, economic or industry conditions, the interest rate
      environment or conditions affecting the financial and capital markets that
      could result in changes to the value of our assets, including changes from
      the impact of the current COVID-19 pandemic;




   •  our ability to continue to effectively manage our business due to the
      significant disruptions caused by the current COVID-19 pandemic;




   •  the dependence of our future success on the general economy and its impact


      on the industries in which we invest;

• the impact of a protracted decline in the liquidity of credit markets on our


      business;




  • the impact of investments that we expect to make;

• the impact of fluctuations in interest rates and foreign exchange rates on


      our business and our portfolio companies;




  • our contractual arrangements and relationships with third parties;

• the valuation of our investments in portfolio companies, particularly those


      having no liquid trading market;




   •  the ability of our prospective portfolio companies to achieve their
      objectives;




   •  our expected financings and investments and ability to fund capital
      commitments to PSSL;




  • the adequacy of our cash resources and working capital;

• the timing of cash flows, if any, from the operations of our prospective


      portfolio companies;




  • the impact of price and volume fluctuations in the stock market;

• the ability of our Investment Adviser to locate suitable investments for us


      and to monitor and administer our investments;




   •  the impact of future legislation and regulation on our business and our


      portfolio companies; and

• the impact of the Brexit and other world economic and political issues.




We use words such as "anticipates," "believes," "expects," "intends," "seeks,"
"plans," "estimates" and similar expressions to identify forward-looking
statements. You should not place undue influence on the forward-looking
statements as our actual results could differ materially from those projected in
the forward-looking statements for any reason, including the factors in "Risk
Factors" and elsewhere in this Report.

Although we believe that the assumptions on which these forward-looking
statements are based are reasonable, any of those assumptions could prove to be
inaccurate, and, as a result, the forward-looking statements based on those
assumptions also could be inaccurate. Important assumptions include our ability
to originate new loans and investments, certain margins and levels of
profitability and the availability of additional capital. In light of these and
other uncertainties, the inclusion of a projection or forward-looking statement
in this Report should not be regarded as a representation by us that our plans
and objectives will be achieved.

We have based the forward-looking statements included in this Report on
information available to us on the date of this Report, and we assume no
obligation to update any such forward-looking statements. Although we undertake
no obligation to revise or update any forward-looking statements in this Report,
whether as a result of new information, future events or otherwise, you are
advised to consult any additional disclosures that we may make directly to you
or through reports that we in the future may file with the SEC, including
reports on Form 10-Q/K and current reports on Form 8-K.

You should understand that under Section 27A(b)(2)(B) of the Securities Act and
Section 21E(b)(2)(B) of the Exchange Act, the "safe harbor" provisions of the
Private Securities Litigation Reform Act of 1995 do not apply to forward-looking
statements made in periodic reports we file under the Exchange Act.

The following analysis of our financial condition and results of operations should be read in conjunction with our Consolidated Financial Statements and the related notes thereto contained elsewhere in this Report.

Overview

PennantPark Floating Rate Capital Ltd. is a BDC whose objectives are to generate
both current income and capital appreciation while seeking to preserve capital
by investing primarily in Floating Rate Loans and other investments made to U.S.
middle-market companies.

We believe that Floating Rate Loans to U.S. middle-market companies offer
attractive risk-reward to investors due to a limited amount of capital available
for such companies. We use the term "middle-market" to refer to companies with
annual revenues between $50 million and $1 billion. Our investments are
typically rated below investment grade. Securities rated below investment grade
are often referred to as "leveraged loans" or "high yield" securities or "junk
bonds" and are often higher risk compared to debt instruments that are rated
above investment grade and have speculative characteristics. However, when
compared to junk bonds and other non-investment grade debt, senior secured
Floating Rate Loans typically have more robust capital-preserving qualities,
such as historically lower default rates than junk bonds, represent the senior
source of capital in a borrower's capital structure and often have certain of
the borrower's assets pledged as collateral. Our debt investments may generally
range in maturity from three to ten years and are made to U.S. and, to a limited
extent, non-U.S. corporations, partnerships and other business entities which
operate in various industries and geographical regions.

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Under normal market conditions, we generally expect that at least 80% of the
value of our managed assets will be invested in Floating Rate Loans and other
investments bearing a variable-rate of interest. We generally expect that first
lien secured debt will represent at least 65% of our overall portfolio. We also
generally expect to invest up to 35% of our overall portfolio opportunistically
in other types of investments, including second lien secured debt and
subordinated debt and, to a lesser extent, equity investments. We seek to create
a diversified portfolio by generally targeting an investment size between $5
million and $30 million, on average, although we expect that this investment
size will vary proportionately with the size of our capital base.

Our investment activity depends on many factors, including the amount of debt
and equity capital available to middle-market companies, the level of merger and
acquisition activity for such companies, the general economic environment and
the competitive environment for the types of investments we make. We have used,
and expect to continue to use, our debt capital, proceeds from the rotation of
our portfolio and proceeds from public and private offerings of securities to
finance our investment objectives.

Organization and Structure of PennantPark Floating Rate Capital Ltd.

PennantPark Floating Rate Capital Ltd., a Maryland corporation organized in
October 2010, is a closed-end, externally managed, non-diversified investment
company that has elected to be treated as a BDC under the 1940 Act. In addition,
for federal income tax purposes we elected to be treated, and intend to qualify
annually, as a RIC under the Code.

Our investment activities are managed by the Investment Adviser. Under our
Investment Management Agreement, we have agreed to pay our Investment Adviser an
annual base management fee based on our average adjusted gross assets as well as
an incentive fee based on our investment performance. We have also entered into
an Administration Agreement with the Administrator. Under our Administration
Agreement, we have agreed to reimburse the Administrator for our allocable
portion of overhead and other expenses incurred by the Administrator in
performing its obligations under our Administration Agreement, including rent
and our allocable portion of the costs of compensation and related expenses of
our Chief Compliance Officer, Chief Financial Officer and their respective
staffs. Our board of directors, a majority of whom are independent of us,
provides overall supervision of our activities, and the Investment Adviser
supervises our day-to-day activities.



COVID-19 Developments



COVID-19 was first detected in December 2019 in the city of Wuhan in China and
has since been identified as a global pandemic by the World Health Organization.
In response, governmental authorities of affected jurisdictions, including those
in the United States, have imposed travel restrictions and required the
temporary closures of many corporate offices, retail stores, manufacturing
facilities, factories and other common places of public congregation. These
restrictions and "stay-at-home" orders have essentially resulted in the shutdown
of all non-essential businesses, as defined by each governmental authority
imposing the respective orders. The economic impact resulting from such
restrictions has adversely affected the business operations of some, if not all,
of our portfolio companies, as well as our own operations and the operations of
our Adviser. While some jurisdictions have either lifted or started to ease
certain restrictions on businesses, it is possible that a resurgence of COVID-19
will require additional closures in the future. We cannot predict with any level
of certainty the magnitude of the ongoing impact to our business operations or
the business operations of our portfolio companies due to the business and
supply-chain disruptions caused by the COVID-19 pandemic and the resulting
governmental responses. However, we expect such adverse effects to continue for
the duration of the pandemic, and potentially for some time thereafter.



Due to the nature of these governmental restrictions and their potentially
long-lasting duration, some portfolio companies, especially those in vulnerable
industries such as retail, food and beverage and travel, have experienced
significant financial distress and may default on their financial obligations to
us and their other capital providers. Moreover, certain of our portfolio
companies that remain subject to prolonged and severe financial distress, have
substantially curtailed their operations, deferred capital expenditures,
furloughed or laid off workers and/or terminated relationships with their
service providers. These developments will likely continue to impact the value
of our investments in such portfolio companies.



The COVID-19 pandemic will likely continue to have an adverse impact on the
global economy and result in a period, however long, of global economic
slowdown. Particularly, COVID-19 presents material uncertainty and risk with
respect to our future performance and financial results as well as the future
performance and financial results of our portfolio companies. While we are
unable to predict the ultimate adverse effect of COVID-19 on our results of
operation, we have identified certain factors that are likely to affect market,
economic and geopolitical conditions, and thereby may adversely affect our
business, including:



  • U.S. and global economic slowdowns;


  • changes in interest rates, including LIBOR;


    •  limited availability of credit, both in the United States and
       internationally;


  • disruptions to supply-chains and price volatility;

• changes to existing laws and regulations, or the imposition of new laws and


       regulations; and


  • uncertainty regarding future governmental and regulatory policies.




The business disruption and financial harm resulting from COVID-19 experienced
by our portfolio companies are likely to reduce, over time, the amount of
interest and dividend income that we receive from such investments and may
require us to provide an increase of capital to such companies in the form of
follow on investments. In connection with the adverse effects of the COVID-19
pandemic, we may also need to restructure the capitalization of some of our
portfolio companies, which could result in reduced interest payments, an
increase in the amount of PIK interest we receive or a permanent reduction in
the value of our investments. If our net investment income decreases, the
percentage of our cash flows dedicated to debt servicing and distribution
payments to stockholders would subsequently increase. If such cash flows cannot
be sustained, we may be required to reduce the amount of our future
distributions to stockholders. As of September 30, 2020, we had three portfolio
companies on non-accrual status, and the continuing impact of the COVID-19
pandemic may result in additional portfolio investments being placed on
non-accrual status in the future.



We have had a significant reduction in our net asset value as of September 30,
2020 as compared to our net asset value as of September 30, 2019, which was
primarily due to the immediate adverse economic effects of the COVID-19
pandemic, the continuing uncertainty surrounding its long-term impact as well as
the re-pricing of credit risk in the broadly syndicated credit market. The
decrease in net asset value as of September 30, 2020 as compared to prior year
primarily resulted from a decrease in the fair value of some of our portfolio
company investments, which led to an increase in unrealized depreciation in
respect of our portfolio company investments. In addition, our investment
valuations are inherently less certain than they would be absent the impact of
the COVID-19 pandemic and related market volatility and the values assigned as
of this date may materially differ from the values that may ultimately be
realized.



Additionally, as of September 30, 2020 and 2019, our asset coverage ratio, as
computed in accordance with the 1940 Act, was 168% and 179%, respectively. Our
Credit Facility includes standard covenants and events of default provisions. If
we fail to make payments required under such facility or breach the covenants
therein, it could result in a default under the Credit Facility. Failure to cure
such default or obtain a waiver from the appropriate party would result in an
event of default, and the Lenders may accelerate the repayment of our
indebtedness under the Credit Facility, such that all amounts owed are due
immediately at the time of default. Such an action would negatively affect our
liquidity, business, financial condition, results of operations, cash flows and
ability to pay distributions to our stockholders.



We are also subject to financial risks, including changes in market interest
rates. As of September 30, 2020, our debt portfolio consisted of 99%
variable-rate investments. The variable-rate loans are usually based on a
floating interest rate index such as LIBOR and typically have durations of three
months after which they reset to current market interest rates. Variable-rate
investments subject to a floor generally reset by reference to the current
market index after one to nine months only if the index exceeds the floor. In
addition, the Credit Facility currently bears interest at LIBOR (or an
alternative risk-free floating interest rate index) plus 200 basis points and,
after the revolving period ends in October 2021, the rate will reset to LIBOR
(or an alternative risk-free floating interest rate index) plus 425 basis
points. In connection with the COVID-19 pandemic, the U.S. Federal Reserve and
other central banks have reduced interest rates, which has caused LIBOR to
decrease. Due to such rates, our gross investment income has decreased, which
could result in a decrease in our net investment income if such decreases in
LIBOR are not offset by, among other things, a corresponding increase in

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the spread over LIBOR that we earn on such loans or a decrease in the interest rate of our floating interest rate liabilities tied to LIBOR. See "Item 7A. Quantitative and Qualitative Disclosures About Market Risk" below.





In addition, we activated our business continuity planning strategy. Our
priority has been to safeguard the health of our employees and to ensure
continuity of business operations on behalf of our investors. As a result of the
execution of our business continuity planning strategy, nearly all of our
employees are working remotely. Our systems and infrastructure have continued to
support our business operations. We implemented a heightened level of
communication across senior management, our investment team and our board of
directors, and we have proactively engaged with our vendors on a regular basis
to ensure they continue to meet our criteria for business continuity.

Revenues



We generate revenue in the form of interest income on the debt securities we
hold and capital gains and dividends, if any, on investment securities that we
may acquire in portfolio companies. Our debt investments, whether in the form of
first lien secured debt, second lien secured debt or subordinated debt,
typically have a term of three to ten years and bear interest at a floating or
fixed rate. Interest on debt securities is generally payable quarterly or
semiannually. In some cases, our investments provide for deferred interest
payments or PIK interest. The principal amount of the debt securities and any
accrued but unpaid interest generally becomes due at the maturity date. In
addition, we may generate revenue in the form of amendment, commitment,
origination, structuring or diligence fees, fees for providing significant
managerial assistance and possibly consulting fees. Loan origination fees, OID
and market discount or premium are capitalized and accreted or amortized using
the effective interest method as interest income or, in the case of deferred
financing costs, as interest expense. Dividend income, if any, is recognized on
an accrual basis on the ex-dividend date to the extent that we expect to collect
such amounts. From time to time, the Company receives certain fees from
portfolio companies, which are non-recurring in nature. Such fees include loan
prepayment penalties, structuring fees and amendment fees, and are recorded as
other investment income when earned. Litigation settlements are accounted for in
accordance with the gain contingency provisions of ASC Subtopic 450-30, Gain
Contingencies, or ASC 450-30.

Expenses



Our primary operating expenses include the payment of a management fee and the
payment of an incentive fee to our Investment Adviser, if any, our allocable
portion of overhead under our Administration Agreement and other operating costs
as detailed below. Our management fee compensates our Investment Adviser for its
work in identifying, evaluating, negotiating, consummating and monitoring our
investments. Additionally, we pay interest expense on the outstanding debt and
unused commitment fees on undrawn amounts, under our various debt facilities. We
bear all other direct or indirect costs and expenses of our operations and
transactions, including:

• the cost of calculating our NAV, including the cost of any third-party

valuation services;

• the cost of effecting sales and repurchases of shares of our common stock

and other securities;

• fees payable to third parties relating to, or associated with, making


       investments, including fees and expenses associated with performing due
       diligence and reviews of prospective investments or complementary
       businesses;

• expenses incurred by the Investment Adviser in performing due diligence and


       reviews of investments;


  • transfer agent and custodial fees;


  • fees and expenses associated with marketing efforts;


  • federal and state registration fees and any exchange listing fees;


  • federal, state, local and foreign taxes;


  • independent directors' fees and expenses;


  • brokerage commissions;

• fidelity bond, directors and officers, errors and omissions liability

insurance and other insurance premiums;

• direct costs such as printing, mailing, long distance telephone and staff;

• fees and expenses associated with independent audits and outside legal costs;

• costs associated with our reporting and compliance obligations under the

1940 Act and applicable federal and state securities laws; and

• all other expenses incurred by either the Administrator or us in connection

with administering our business, including payments under our

Administration Agreement that will be based upon our allocable portion of

overhead, and other expenses incurred by the Administrator in performing

its obligations under our Administration Agreement, including rent and our

allocable portion of the costs of compensation and related expenses of our

Chief Compliance Officer, Chief Financial Officer and their respective

staffs.




Generally, during periods of asset growth, we expect our general and
administrative expenses to be relatively stable or to decline as a percentage of
total assets and increase during periods of asset declines. Incentive fees,
interest expense and costs relating to future offerings of securities would be
additive to the expenses described above.

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PORTFOLIO AND INVESTMENT ACTIVITY



As of September 30, 2020, our portfolio totaled $1,086.9 million and consisted
of $968.6 million of first lien secured debt (including $125.4 million in PSSL),
$29.9 million of second lien secured debt and $88.4 million of preferred and
common equity (including $39.9 million in PSSL). Our debt portfolio consisted of
99% variable-rate investments. As of September 30, 2020, we had three portfolio
companies on non-accrual, representing 2.1% and 1.8% of our overall portfolio on
a cost and fair value basis, respectively. Overall, the portfolio had net
unrealized depreciation of $29.9 million. Our overall portfolio consisted of 102
companies with an average investment size of $10.7 million, had a weighted
average yield on debt investments of 7.3%, and was invested 89% in first lien
secured debt (including 12% in PSSL), 3% in second lien secured debt and 8% in
preferred and common equity (including 4% in PSSL). As of September 30, 2020,
97% of the investments held by PSSL were first lien secured debt.

As of September 30, 2019, our portfolio totaled $1,081.7 million and consisted
of $944.9 million of first lien secured debt (including $122.2 million in PSSL),
$34.4 million of second lien secured debt and $102.4 million of preferred and
common equity (including $50.0 million in PSSL). Our debt portfolio consisted of
99% variable-rate investments. As of September 30, 2019, we had one portfolio
company on non-accrual, representing 0.4% and zero of our overall portfolio on a
cost and fair value basis, respectively. Overall, the portfolio had net
unrealized depreciation of $3.5 million. Our overall portfolio consisted of 95
companies with an average investment size of $11.4 million, had a weighted
average yield on debt investments of 8.7%, and was invested 87% in first lien
secured debt (including 11% in PSSL), 3% in second lien secured debt and 10% in
preferred and common equity (including 5% in PSSL). As of September 30, 2019,
97% of the investments held by PSSL were first lien secured debt.

For the year ended September 30, 2020, we invested $436.7 million in 19 new and
95 existing portfolio companies with a weighted average yield on debt
investments of 8.0%. Sales and repayments of investments for the same period
totaled $396.9 million.

For the year ended September 30, 2019, we invested $640.1 million in 28 new and
83 existing portfolio companies with a weighted average yield on debt
investments of 8.8%. Sales and repayments of investments for the same period
totaled $527.3 million.

PennantPark Senior Secured Loan Fund I LLC





As of September 30, 2020, PSSL's portfolio totaled $393.0 million, consisted of
45 companies with an average investment size of $8.7 million and had a weighted
average yield on debt investments of 6.8%. As of September 30, 2019, PSSL's
portfolio totaled $488.5 million, consisted of 45 companies with an average
investment size of $10.9 million and had a weighted average yield on debt
investments of 7.6%.



For the year ended September 30, 2020, PSSL invested $87.1 million (of which
$86.7 million was purchased from the Company) in 11 new and two existing
portfolio companies with a weighted average yield on debt investments of 7.4%.
PSSL's sales and repayments of investments for the same period totaled $172.6
million.



For the year ended September 30, 2019, PSSL invested $228.6 million (of which
$89.6 million was purchased from the Company) in 16 new and 16 existing
portfolio companies with a weighted average yield on debt investments of 8.1%.
PSSL's sales and repayments of investments for the same period totaled $159.9
million.

CRITICAL ACCOUNTING POLICIES

The preparation of our Consolidated Financial Statements in conformity with GAAP
requires management to make estimates and assumptions that affect the reported
amount of our assets and liabilities at the date of the Consolidated Financial
Statements and the reported amounts of income and expenses during the reported
periods. In the opinion of management, all adjustments, which are of a normal
recurring nature, considered necessary for the fair presentation of financial
statements have been included. Actual results could differ from these estimates
due to changes in the economic and regulatory environment, financial markets and
any other parameters used in determining such estimates and assumptions. We may
reclassify certain prior period amounts to conform to the current period
presentation. We have eliminated all intercompany balances and transactions.
References to ASC serve as a single source of accounting literature. Subsequent
events are evaluated and disclosed as appropriate for events occurring through
the date the Consolidated Financial Statements are issued. In addition to the
discussion below, we describe our critical accounting policies in the notes to
our Consolidated Financial Statements.

Investment Valuations



We expect that there may not be readily available market values for many of our
investments which are or will be in our portfolio, and we value such investments
at fair value as determined in good faith by or under the direction of our board
of directors using a documented valuation policy and a consistently applied
valuation process, as described in this Report. With respect to investments for
which there is no readily available market value, the factors that the board of
directors may take into account in pricing our investments at fair value
include, as relevant, the nature and realizable value of any collateral, the
portfolio company's ability to make payments and its earnings and discounted
cash flow, the markets in which the portfolio company does business, comparison
to publicly traded securities and other relevant factors. When an external event
such as a purchase transaction, public offering or subsequent equity sale
occurs, we consider the pricing indicated by the external event to corroborate
or revise our valuation. Due to the inherent uncertainty of determining the fair
value of investments that do not have a readily available market value, the
price used in an actual transaction may be different than our valuation and the
difference may be material.

Our portfolio generally consists of illiquid securities, including debt and
equity investments. With respect to investments for which market quotations are
not readily available, or for which market quotations are deemed not reflective
of the fair value, our board of directors undertakes a multi-step valuation
process each quarter, as described below:

(1) Our quarterly valuation process begins with each portfolio company or

investment being initially valued by the investment professionals of our

Investment Adviser responsible for the portfolio investment;

(2) Preliminary valuation conclusions are then documented and discussed with

the management of our Investment Adviser;

(3) Our board of directors also engages independent valuation firms to conduct

independent appraisals of our investments for which market quotations are

not readily available or are readily available but deemed not reflective

of the fair value of the investment. The independent valuation firms

review management's preliminary valuations in light of their own

independent assessment and also in light of any market quotations obtained

from an independent pricing service, broker, dealer or market maker;

(4) The audit committee of our board of directors reviews the preliminary

valuations of our Investment Adviser and those of the independent

valuation firms on a quarterly basis, periodically assesses the valuation

methodologies of the independent valuation firms, and responds to and

supplements the valuation recommendations of the independent valuation

firms to reflect any comments; and

(5) Our board of directors discusses these valuations and determines the fair

value of each investment in our portfolio in good faith, based on the

input of our Investment Adviser, the respective independent valuation


        firms and the audit committee.


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Our board of directors generally uses market quotations to assess the value of
our investments for which market quotations are readily available. We obtain
these market values from independent pricing services or at the bid prices
obtained from at least two brokers or dealers, if available, or otherwise from a
principal market maker or a primary market dealer. The Investment Adviser
assesses the source and reliability of bids from brokers or dealers. If the
board of directors has a bona fide reason to believe any such market quote does
not reflect the fair value of an investment, it may independently value such
investments by using the valuation procedure that it uses with respect to assets
for which market quotations are not readily available.

Fair value, as defined under ASC 820, is the price that we would receive upon
selling an investment or pay to transfer a liability in an orderly transaction
to a market participant in the principal or most advantageous market for the
investment or liability. ASC 820 emphasizes that valuation techniques maximize
the use of observable market inputs and minimize the use of unobservable inputs.
Inputs refer broadly to the assumptions that market participants would use in
pricing an asset or liability, including assumptions about risk. Inputs may be
observable or unobservable. Observable inputs reflect the assumptions market
participants would use in pricing an asset or liability based on market data
obtained from sources independent of us. Unobservable inputs reflect the
assumptions market participants would use in pricing an asset or liability based
on the best information available to us on the reporting period date.

ASC 820 classifies the inputs used to measure these fair values into the following hierarchies:

Level 1: Inputs that are quoted prices (unadjusted) in active markets for


             identical assets or liabilities, accessible by us at the

measurement


             date.

Level 2: Inputs that are quoted prices for similar assets or liabilities in


             active markets, or that are quoted prices for identical or

similar


             assets or liabilities in markets that are not active and

inputs that


             are observable for the asset or liability, either directly or
             indirectly, for substantially the full term, if applicable, of the
             financial instrument.


    Level 3: Inputs that are unobservable for an asset or liability because they
             are based on our own assumptions about how market participants would
             price the asset or liability.




A financial instrument's categorization within the valuation hierarchy is based
upon the lowest level of input that is significant to the fair value
measurement. Generally, most of our investments, our 2031 Asset-Backed Debt and
our Credit Facility are classified as Level 3. Our 2023 Notes are classified as
Level 1, as they were valued using the closing price from the primary exchange.
Due to the inherent uncertainty of determining the fair value of investments
that do not have a readily available market value, the price used in an actual
transaction may be different than our valuation and those differences may be
material.



In addition to using the above inputs to value cash equivalents, investments,
our 2023 Notes, our 2031 Asset-Backed Debt and our Credit Facility, we employ
the valuation policy approved by our board of directors that is consistent with
ASC 820. Consistent with our valuation policy, we evaluate the source of inputs,
including any markets in which our investments are trading, in determining fair
value.



Generally, the carrying value of our consolidated financial liabilities
approximates fair value. We have adopted the principles under ASC 825-10, which
provides companies with an option to report selected financial assets and
liabilities at fair value, and made an irrevocable election to apply ASC 825-10
to our Credit Facility and the 2023 Notes. We elected to use the fair value
option for our Credit Facility and the 2023 Notes to align the measurement
attributes of both our assets and liabilities while mitigating volatility in
earnings from using different measurement attributes. Due to that election and
in accordance with GAAP, we incurred expenses of zero and $4.5 million relating
to amendment costs on the Credit Facility and debt issuance costs on the 2023
Notes during the years ended September 30, 2020 and 2019, respectively. ASC
825-10 establishes presentation and disclosure requirements designed to
facilitate comparisons between companies that choose different measurement
attributes for similar types of assets and liabilities and to more easily
understand the effect on earnings of a company's choice to use fair value. ASC
825-10 also requires entities to display the fair value of the selected assets
and liabilities on the face of the Consolidated Statements of Assets and
Liabilities and changes in fair value of the Credit Facility and the 2023 Notes
are reported in our Consolidated Statements of Operations. We elected not to
apply ASC 825-10 to any other financial assets or liabilities, including the
2031 Asset-Backed Debt.



For the years September 30, 2020 and 2019, our Credit Facility and the 2023
Notes had a net change in unrealized depreciation (appreciation) of $14.2
million and less than $(0.1) million, respectively. As of September 30, 2020 and
2019, the net unrealized depreciation on our Credit Facility and the 2023 Notes
totaled $18.8 million and $4.7 million, respectively. We use a nationally
recognized independent valuation service to measure the fair value of our Credit
Facility in a manner consistent with the valuation process that the board of
directors uses to value our investments. Our 2023 Notes trade on the TASE and we
use the closing price on the exchange to determine the fair value.

Revenue Recognition



We record interest income on an accrual basis to the extent that we expect to
collect such amounts. For loans and debt investments with contractual PIK
interest, which represents interest accrued and added to the loan balance that
generally becomes due at maturity, we will generally not accrue PIK interest
when the portfolio company valuation indicates that such PIK interest is not
collectable. We do not accrue as a receivable interest on loans and debt
investments if we have reason to doubt our ability to collect such interest.
Loan origination fees, OID, market discount or premium and deferred financing
costs on liabilities, which we do not fair value, are capitalized and then
accreted or amortized using the effective interest method as interest income or,
in the case of deferred financing costs, as interest expense. We record
prepayment penalties on loans and debt investments as income. Dividend income,
if any, is recognized on an accrual basis on the ex-dividend date to the extent
that we expect to collect such amounts. From time to time, the Company receives
certain fees from portfolio companies, which are non-recurring in nature. Such
fees include loan prepayment penalties, structuring fees and amendment fees, and
are recorded as other investment income when earned.

Net Realized Gains or Losses and Net Change in Unrealized Appreciation or Depreciation



We measure realized gains or losses by the difference between the net proceeds
from the repayment or sale and the amortized cost basis of the investment, using
the specific identification method, without regard to unrealized appreciation or
depreciation previously recognized, but considering unamortized upfront fees and
prepayment penalties. Net change in unrealized appreciation or depreciation
reflects the change in the fair value of our portfolio investments, our Credit
Facility and the 2023 Notes during the reporting period, including any reversal
of previously recorded unrealized appreciation or depreciation, when gains or
losses are realized.

Foreign Currency Translation

Our books and records are maintained in U.S. dollars. Any foreign currency amounts are translated into U.S. dollars on the following basis:

1. Fair value of investment securities, other assets and liabilities - at the

exchange rates prevailing at the end of the applicable period; and

2. Purchases and sales of investment securities, income and expenses - at the

exchange rates prevailing on the respective dates of such transactions.




Although net assets and fair values are presented based on the applicable
foreign exchange rates described above, we do not isolate that portion of the
results of operations due to changes in foreign exchange rates on investments,
other assets and debt from the fluctuations arising from changes in fair value
of investments and liabilities held. Such fluctuations are included with the net
realized and unrealized gain or loss from investments and liabilities.

                                       42

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Payment-in-Kind, or PIK, Interest



We have investments in our portfolio which contain a PIK interest provision. PIK
interest is added to the principal balance of the investment and is recorded as
income. In order for us to maintain our ability to be subject to tax as a RIC,
substantially all of this income must be paid out to stockholders in the form of
dividends for U.S. federal income tax purposes, even though we may not have
collected any cash with respect to interest on PIK securities.

Federal Income Taxes



We have elected to be treated, and intend to qualify annually to maintain our
election to be treated, as a RIC under Subchapter M of the Code. To maintain our
RIC tax election, we must, among other requirements, meet certain annual
source-of-income and quarterly asset diversification requirements. We also must
annually distribute dividends for U.S. federal income tax purposes to our
stockholders out of the assets legally available for distribution of an amount
generally at least equal to 90% of the sum of our net ordinary income and
realized net short-term capital gains in excess of realized net long-term
capital losses, or investment company taxable income, determined without regard
to any deduction for dividends paid.



Although not required for us to maintain our RIC tax status, in order to
preclude the imposition of a 4% nondeductible federal excise tax imposed on
RICs, we must distribute dividends for U.S. federal income tax purposes to our
stockholders in respect of each calendar year of an amount at least equal to the
Excise tax Avoidance Requirement. In addition, although we may distribute
realized net capital gains (i.e., net long-term capital gains in excess of net
short-term capital losses), if any, at least annually, out of the assets legally
available for such distributions in the manner described above, we have retained
and may continue to retain such net capital gains or investment company taxable
income, subject to maintaining our ability to be taxed as a RIC, in order to
provide us with additional liquidity.

Because federal income tax regulations differ from GAAP, distributions in
accordance with tax regulations may differ from net investment income and net
realized gain recognized for financial reporting purposes. Differences between
tax regulations and GAAP may be permanent or temporary. Permanent differences
are reclassified among capital accounts in the Consolidated Financial Statements
to reflect their appropriate tax character. Temporary differences arise when
certain items of income, expense, gain or loss are recognized at some time in
the future.

We have formed and expect to continue to form certain taxable subsidiaries,
including the Taxable Subsidiary, which are taxed as corporations. These taxable
subsidiaries allow us to hold equity securities of certain portfolio companies
treated as pass-through entities for U.S. federal income tax purposes while
facilitating our ability to qualify as a RIC under the Code.

RESULTS OF OPERATIONS



Set forth below are the results of operations for the years ended September 30,
2020 and 2019. For information regarding results of operations for the year
ended September 30, 2018, see the Company's Form 10-K for the fiscal year ended
September 30, 2019, as filed with the SEC on November 20, 2019.

Investment Income



Investment income for the year ended September 30, 2020 was $95.5 million and
was attributable to $86.8 million from first lien secured debt and $8.7 million
from other investments. The increase in investment income over the prior year
was primarily due to the growth of our portfolio, partially offset by a decline
in LIBOR.

Investment income for the year ended September 30, 2019 was $92.9 million and
was attributable to $84.0 million from first lien secured debt and $8.9 million
from other investments.

Expenses

Expenses for the year ended September 30, 2020 totaled $52.1 million. Base
management fee for the same period totaled $11.4 million, incentive fee totaled
$9.3 million, debt related interest and expenses totaled $27.1 million, general
and administrative expenses totaled $3.9 million and provision for taxes totaled
$0.4 million. The increase in expenses compared to the prior year was primarily
due to the growth of our portfolio which resulted in higher Management Fees in
the current year.

Expenses for the year ended September 30, 2019 totaled $47.5 million. Base
management fee for the same period totaled $10.2 million, incentive fee totaled
$6.2 million (including zero on realized gains and $(1.4) million on net
unrealized gains accrued but not payable), debt related interest and expenses
totaled $27.1 million (including $4.5 million in Credit Facility amendment fees)
and general and administrative expenses totaled $4.0 million.

Net Investment Income





Net investment income totaled $43.4 million, or $1.12 per share, and $45.5
million, or $1.17 per share, for the years ended September 30, 2020 and 2019,
respectively. The decrease in net investment income compared to the prior year
was primarily due to higher Management Fees due to the growth of our portfolio,
partially offset by higher investment income in the current year.

Net Realized Gains or Losses



Sales and repayments of investments for the years ended September 30, 2020 and
2019 totaled $396.9 million and $527.3 million, respectively. Net realized
losses totaled $12.7 million and $31.4 million for the same periods,
respectively. The change in realized gains/losses was primarily due to changes
in the market conditions of our investments and the values at which they were
realized.

Unrealized Appreciation or Depreciation on Investments, the Credit Facility and the 2023 Notes



For the years ended September 30, 2020 and 2019, we reported net change in
unrealized depreciation on investments of $26.5 million and $2.6 million,
respectively. As of September 30, 2020 and 2019, our net unrealized depreciation
on investments totaled $29.9 million and $3.5 million, respectively. The net
change in unrealized appreciation/depreciation on our investments for the year
ended September 30, 2020 compared to the prior year was primarily due to changes
in the capital market conditions as well as the financial performance of certain
portfolio companies primarily driven by the market disruption caused by the
COVID-19 pandemic and the uncertainty surrounding its continued adverse economic
impact, as discussed above under "COVID-19 Developments."

For the year ended September 30, 2020 and 2019, our Credit Facility and the 2023
Notes had a net change in unrealized depreciation (appreciation) of $14.2
million and less than $(0.1) million, respectively. As of September 30, 2020 and
2019, our net unrealized depreciation on our Credit Facility and the 2023 Notes
totaled $18.8 million and $4.7 million, respectively. The net change in
unrealized depreciation for the year ended September 30, 2020 compared to the
prior year was primarily due to changes in the capital markets.

                                       43

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Net Change in Net Assets Resulting from Operations



Net change in net assets resulting from operations totaled $18.4 million, or
$0.47 per share, and $11.4 million, or $0.29 per share, for the years ended
September 30, 2020 and 2019, respectively. The decrease in net assets from
operations for the year ended September 30, 2020 compared to the prior year was
primarily due to depreciation of the portfolio primarily driven by the market
disruption caused by the COVID-19 pandemic and the uncertainty surrounding its
continued adverse economic impact, as discussed above under "COVID-19
Developments".

LIQUIDITY AND CAPITAL RESOURCES



Our liquidity and capital resources are derived primarily from proceeds of
securities offerings, debt capital and cash flows from operations, including
investment sales and repayments, and income earned. Our primary use of funds
from operations includes investments in portfolio companies and payments of fees
and other operating expenses we incur. We have used, and expect to continue to
use, our debt capital, proceeds from the rotation of our portfolio and proceeds
from public and private offerings of securities to finance our investment
objectives. As of September 30, 2020, in accordance with the 1940 Act, with
certain limited exceptions, we are only allowed to borrow amounts such that we
are in compliance with a 150% asset coverage ratio requirement after such
borrowing. For information regarding liquidity and capital resources for the
year ended September 30, 2018, see the Company's Form 10-K for the fiscal year
ended September 30, 2019, as filed with the SEC on November 20, 2019.



On April 5, 2018, our board of directors approved the application of the
modified asset coverage requirements set forth in Section 61(a)(2) of the 1940
Act, as amended by the Consolidated Appropriations Act of 2018 (which includes
the SBCAA). As a result, the asset coverage requirements applicable to us for
senior securities was reduced from 200% (i.e., $1 of debt outstanding for each
$1 of equity) to 150% (i.e., $2 of debt outstanding for each $1 of equity),
effective as of April 5, 2019, subject to compliance with certain disclosure
requirements. As of September 30, 2020 and 2019, our asset coverage ratio, as
computed in accordance with the 1940 Act, was 168% and 179%, respectively.



The annualized weighted average cost of debt for the years ended September 30,
2020 and 2019, inclusive of the fee on the undrawn commitment on the Credit
Facility, amendment costs and debt issuance costs, was 3.7% and 5.3%,
respectively (excluding amendment and debt issuance costs, such amounts are 3.7%
and 4.4%, respectively). As of September 30, 2020 and 2019, we had $211.4
million and $254.7 million of unused borrowing capacity under our Credit
Facility, respectively, subject to leverage and borrowing base restrictions.



Funding I's multi-currency Credit Facility with the Lenders was $520 million as
of September 30, 2020, subject to satisfaction of certain conditions and
regulatory restrictions that the 1940 Act imposes on us as a BDC, has an
interest rate spread above LIBOR (or an alternative risk-free floating interest
rate index) of 200 basis points, a maturity date of October 2023 and a revolving
period that ends in October 2021. As of September 30, 2020 and 2019, Funding I
had $308.6 million and $265.3 million of outstanding borrowings under the Credit
Facility, respectively. The Credit Facility had a weighted average interest rate
of 2.2% and 4.1%, exclusive of the fee on undrawn commitments, as of
September 30, 2020 and 2019, respectively.

During the revolving period, the Credit Facility bears interest at LIBOR (or an
alternative risk-free floating interest rate index) plus 200 basis points and,
after the revolving period, the rate will reset to LIBOR (or an alternative
risk-free floating interest rate index) plus 425 basis points for the remaining
two years, maturing in October 2023. The Credit Facility is secured by all of
the assets of Funding I. Both PennantPark Floating Rate Capital Ltd. and Funding
I have made customary representations and warranties and are required to comply
with various covenants, reporting requirements and other customary requirements
for similar credit facilities.

The Credit Facility contains covenants, including, but not limited to,
restrictions of loan size, currency types and amounts, industry requirements,
average life of loans, geographic and individual portfolio concentrations,
minimum portfolio yield and loan payment frequency. Additionally, the Credit
Facility requires the maintenance of a minimum equity investment in Funding I
and income ratio as well as restrictions on certain payments and issuance of
debt. The Credit Facility compliance reporting is prepared on a basis of
accounting other than GAAP. As of September 30, 2020, we were in compliance with
the covenants relating to our Credit Facility.

We own 100% of the equity interest in Funding I and treat the indebtedness of
Funding I as our leverage. Our Investment Adviser serves as collateral manager
to Funding I under the Credit Facility.

Our interest in Funding I (other than the management fee) is subordinate in
priority of payment to every other obligation of Funding I and is subject to
certain payment restrictions set forth in the Credit Facility. We may receive
cash distributions on our equity interests in Funding I only after it has made
(1) all required cash interest and, if applicable, principal payments to the
Lenders, (2) required administrative expenses and (3) claims of other unsecured
creditors of Funding I. We cannot assure you that there will be sufficient funds
available to make any distributions to us or that such distributions will meet
our expectations from Funding I. The Investment Adviser has irrevocably directed
that the management fee owed with respect to such services is to be paid to the
Company so long as the Investment Adviser remains the collateral manager.



In November 2017, we issued $138.6 million of our 2023 Notes. The 2023 Notes
were issued pursuant to a deed of trust between the Company and Mishmeret Trust
Company, Ltd. as trustee.



The 2023 Notes pay interest at a rate of 4.3% per year. As a result of the
downgrade of the 2023 Notes from "ilA+" to "ilA-" in March 2020, the interest
rate of the 2023 Notes was increased to 4.3% from 3.8%. Interest on the 2023
Notes is payable semi-annually in arrears on June 15 and December 15 of each
year, commencing June 15, 2018. The principal on the 2023 Notes will be payable
in four annual installments as follows: 15% of the original principal amount on
December 15, 2020, 15% of the original principal amount on December 15, 2021,
15% of the original principal amount on December 15, 2022 and 55% of the
original principal amount on December 15, 2023.



The 2023 Notes are general, unsecured obligations, rank equal in right of
payment with all of our existing and future senior unsecured indebtedness and
are generally redeemable at our option. The deed of trust governing the 2023
Notes includes certain customary covenants, including minimum equity
requirements, and events of default. Please refer to the deed of trust filed as
Exhibit (d)(8) to our post-effective amendment filed on December 13, 2017 for
more information. The 2023 Notes are rated ilA- by S&P Global Ratings Maalot
Ltd. and are listed on the TASE. In connection with this offering, we have dual
listed our common stock on the TASE.



The 2023 Notes have not been and will not be registered under the Securities Act
and may not be offered or sold in the United States absent registration under
the Securities Act or in transactions exempt from, or not subject to, such
registration requirements.



In September 2019, the Securitization Issuers completed the Debt Securitization.
The 2031 Asset-Backed Debt is secured by the middle market loans, participation
interests in middle market loans and other assets of the Securitization Issuer.
The Debt Securitization was executed through (A) a private placement of: (i)
$78.5 million Class A-1 Senior Secured Floating Rate Notes maturing 2031, which
bear interest at the three-month LIBOR plus 1.8%, (ii) $15.0 million Class A-2
Senior Secured Fixed Rate Notes due 2031, which bear interest at 3.7%, (iii)
$14.0 million Class B-1 Senior Secured Floating Rate Notes due 2031, which bear
interest at the three-month LIBOR plus 2.9%, (iv) $16.0 million Class B-2 Senior
Secured Fixed Rate Notes due 2031, which bear interest at 4.3%, (v) $19.0
million Class C1 Secured Deferrable Floating Rate Notes due 2031, which bear
interest at the three-month LIBOR plus 4.0%, (vi) $8.0 million Class C-2 Secured
Deferrable Fixed Rate Notes due 2031, which bear interest at 5.4%, and (vii)
$18.0 million Class D Secured Deferrable Floating Rate Notes due 2031, which
bear interest at the three-month LIBOR plus 4.8% and (B) the borrowing of $77.5
million Class A1 Senior Secured Floating Rate Loans due 2031, which bear
interest at the three-month LIBOR plus 1.8%, under a credit agreement by and
among the Securitization Issuers, as borrowers, various financial institutions,
as lenders, and U.S. Bank National Association, as collateral agent and as loan
agent. The 2031 Asset-Backed Debt is scheduled to mature on October 15, 2031. As
of both September 30, 2020 and 2019, the Company had $228.0 million of 2031
Asset-Backed Debt outstanding with a weighted average interest rate of 2.7% and
4.2%, respectively.



On the closing date of the Debt Securitization, in consideration of our transfer
to the Securitization Issuer of the initial closing date loan portfolio, which
included loans distributed to us by our wholly-owned subsidiary, the
Securitization Issuer transferred to us 100% of the Preferred Shares of the
Securitization Issuer, 100% of the Class D

                                       44

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Secured Deferrable Floating Rate Notes issued by the Securitization Issuer, and
a portion of the net cash proceeds received from the sale of the 2031
Asset-Backed Debt. The Preferred Shares of the Securitization Issuer do not bear
interest and had a stated value of $55.4 million at the closing of the Debt
Securitization.



The 2031 Asset-Backed Debt constitutes secured obligations of the Securitization
Issuers, and the indenture governing the 2031 Asset-Backed Debt includes
customary covenants and events of default. The 2031 Asset-Backed Debt has not
been, and will not be, registered under the Securities Act or any state
securities or "blue sky" laws and may not be offered or sold in the United
States absent registration with the SEC or an applicable exemption from
registration.



Our Investment Adviser serves as collateral manager to the Securitization Issuer
pursuant to a collateral management agreement between our Investment Adviser and
the Securitization Issuer, or the Collateral Management Agreement. For so long
as our Investment Adviser serves as collateral manager, it will elect to
irrevocably waive any collateral management fee to which it may be entitled
under the Collateral Management Agreement.

We may raise equity or debt capital through both registered offerings off our
shelf registration statement and private offerings of securities, securitizing a
portion of our investments among other considerations or mergers and
acquisitions. Furthermore, our Credit Facility availability depends on various
covenants and restrictions as discussed in the preceding paragraphs. The primary
use of existing funds and any funds raised in the future is expected to be for
repayment of indebtedness, investments in portfolio companies, cash
distributions to our stockholders or for other general corporate purposes. For
the years ended September 30, 2020 and 2019, we did not issue any shares.

As of September 30, 2020 and 2019, we had cash equivalents of $57.5 million and
$63.3 million, respectively, available for investing and general corporate
purposes. We believe our liquidity and capital resources are sufficient to take
advantage of market opportunities.

Our operating activities used cash of $4.9 million for the year ended
September 30, 2020, and our financing activities used cash of $0.9 million for
the same period. Our operating activities used cash primarily for our investment
activities and our financing activities used cash primarily for paying down our
Credit Facility and paying distributions to stockholders.



Our operating activities used cash of $121.4 million for the year ended
September 30, 2019, and our financing activities provided cash of $111.7 million
for the same period. Our operating activities used cash primarily for our
investment activities and our financing activities provided cash primarily from
the issuance of 2031 Asset-Backed Debt.



Senior Securities



Information about our senior securities is shown in the following table as of
September 30, 2020, 2019, 2018, 2017, 2016, 2015, 2014, 2013, 2012 and 2011. The
report of RSM US LLP, an independent registered public accounting firm, on the
Senior Securities table as of September 30, 2020, is attached as an exhibit to
this Report.



                                                                          Average
                                Total Amount        Asset Coverage      Market Value
     Class and Year            Outstanding (1)       Per Unit (2)       Per Unit (3)
     Credit Facility
     Fiscal 2020              $         308,599     $         1,677              N/A
     Fiscal 2019                        265,308               1,786              N/A
     Fiscal 2018                        333,728               2,122              N/A
     Fiscal 2017                        253,783               2,780              N/A
     Fiscal 2016                        232,908               2,601              N/A
     Fiscal 2015                         29,600              13,598              N/A
     Fiscal 2014                        146,400               2,469              N/A
     Fiscal 2013                         99,600               3,109              N/A
     Fiscal 2012                         75,500               2,263              N/A
     Fiscal 2011                         24,650               4,735              N/A
     2023 Notes
     Fiscal 2020                        138,580               1,677              N/A
     Fiscal 2019                        138,580               1,786              N/A
     Fiscal 2018                        138,580               2,122              N/A
     2031 Asset-Backed Debt
     Fiscal 2020                        228,000               1,677              N/A
     Fiscal 2019              $         228,000     $         1,786              N/A

(1) Total cost of each class of senior securities outstanding at the end of the


    period presented in thousands (000s).

(2) The asset coverage ratio for a class of senior securities representing

indebtedness is calculated as our consolidated total assets, less all

liabilities and indebtedness not represented by senior securities, divided by

senior securities representing indebtedness at par. This asset coverage ratio


    is multiplied by $1,000 to determine the Asset Coverage Per Unit.

(3) Not applicable, as senior securities are not registered for public trading in

the United States of America.

PennantPark Senior Secured Loan Fund I LLC





In May 2017, we and Kemper formed PSSL, an unconsolidated joint venture. PSSL
invests primarily in middle-market and other corporate debt securities
consistent with our strategy. PSSL was formed as a Delaware limited liability
company. As of September 30, 2020 and 2019, PSSL had total assets of $406.4
million and $506.7 million, respectively. As of the same dates, we and Kemper
had remaining commitments to fund first lien secured debt and equity interests
in PSSL in an aggregate amount of $25.3 million and $10.5 million, respectively.
PSSL invests in portfolio companies in the same industries in which we may
directly invest.



We provide capital to PSSL in the form of first lien secured debt and equity
interests. As of September 30, 2020 and 2019, we and Kemper owned 87.5% and
12.5%, respectively, of each of the outstanding first lien secured debt and
equity interests. As of the same dates, our investment in PSSL consisted of
first lien secured debt of $125.4 million (additional $15.5 million unfunded)
and $122.2 million (additional $6.4 million unfunded), respectively, and equity
interests of $53.7 million (additional $6.6 million unfunded) and $52.4 million
(additional $2.8 million unfunded), respectively.



We and Kemper each appointed two members to PSSL's four person board of
directors and investment committee. All material decisions with respect to PSSL,
including those involving its investment portfolio, require unanimous approval
of a quorum of the board of directors or investment committee. Quorum is defined
as (i) the presence of two members of the board of directors or investment
committee; provided that at least one individual is present that was elected,
designated or appointed by each member; (ii) the presence of three members of
the board of directors or investment committee, provided that the individual
that was elected, designated or appointed by the member with only one individual
present shall be entitled to cast two votes on each matter; and (iii) the
presence of four members of the board of directors or investment committee shall
constitute a quorum, provided that two individuals are present that were
elected, designated or appointed by each member.



                                       45

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Additionally, PSSL has entered into a $325.0 million senior secured revolving
credit facility which bears interest at LIBOR (or an alternative risk-free
floating interest rate index) plus 225 basis points, or the PSSL Credit
Facility, with Capital One, N.A. through its wholly-owned subsidiary,
PennantPark Senior Secured Loan Facility LLC, or PSSL Subsidiary, subject to
leverage and borrowing base restrictions.

Below is a summary of PSSL's portfolio at fair value:





                                                     September 30, 2020       September 30, 2019
Total investments                                   $        392,986,090     $        488,549,847
Weighted average cost yield on income producing
investments                                                          6.8 %                    7.6 %
Number of portfolio companies in PSSL                                 45                       45
Largest portfolio company investment                $         20,614,860     $         22,026,186
Total of five largest portfolio company
investments                                         $         93,320,993     $        102,872,275








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Below is a listing of PSSL's individual investments as of September 30, 2020:



                                                                                                  Basis Point
                                                                                 Current          Spread Above
Issuer Name                        Maturity                Industry              Coupon            Index (1)         Par              Cost          Fair Value (2)
First Lien Secured Debt-838.2%
Altamira Technologies, LLC        07/24/2025         High Tech Industries

7.00 % 3M L+600 4,856,155 $ 4,795,251 $

4,686,189

American Auto Auction Group,
LLC                               01/02/2024       Transportation: Consumer

6.00 % 3M L+500 7,670,399 7,596,860

7,440,287


By Light Professional IT
Services, LLC                     05/16/2022         High Tech Industries

7.25 % 1M L+625 10,901,843 10,774,172

10,792,825


Cadence Aerospace, LLC            11/14/2023        Aerospace and Defense

9.50 % 3M L+850 11,802,082 11,730,187


 11,322,915
Cardenas Markets LLC              11/29/2023      Beverage, Food and Tobacco          6.75 %          1M L+575      4,779,776         4,759,527           4,779,776
Centauri Group Holdings, LLC      02/12/2024        Aerospace and Defense

6.25 % 1M L+525 5,330,847 5,330,847

5,304,193


Challenger Performance
Optimization, Inc.                08/31/2023          Business Services

7.00 % 1M L+575 9,663,392 9,595,826

8,986,954

Country Fresh Holdings, LLC 05/01/2023 Beverage, Food and Tobacco 6.00 % 1M L+500 182,403

           179,976             182,403
Country Fresh Holdings, LLC
(Revolver)                        05/01/2023      Beverage, Food and Tobacco          6.00 %          1M L+500        450,110           450,111             450,110
Douglas Products and Packaging                     Chemicals, Plastics and
Company LLC                       10/19/2022                Rubber

6.75 % 3M L+575 8,836,683 8,756,358

8,704,133


                                                   Chemicals, Plastics and
Douglas Sewer Intermediate, LLC   10/19/2022                Rubber                    6.75 %          3M L+575      7,403,183         7,370,405           7,292,135
DRS Holdings III, Inc.            11/03/2025       Consumer Goods: Durable            6.75 %          1M L+575      8,022,149         7,950,609           7,875,344
                                                      Banking, Finance,

Findex Group Limited (3), (4) 05/31/2024 Insurance and Real Estate


          5.46 %          3M L+525 A $ 10,000,000         7,411,600           6,809,125
GCOM Software LLC                 11/14/2022         High Tech Industries             7.75 %          1M L+625     16,646,228        16,562,972          16,646,228
Good2Grow LLC                     11/18/2024              Beverages                   5.25 %          3M L+425      9,499,183         9,429,133           9,427,938
GSM Holdings, Inc.                06/03/2024       Consumer Goods: Durable            5.50 %          3M L+450     19,470,523        19,354,235          19,275,817
IMIA Holdings, Inc.               10/26/2025        Aerospace and Defense             5.50 %          3M L+450     12,143,568        12,097,717          12,022,132
Impact Group, LLC                 06/27/2023              Wholesale                   8.37 %          1M L+737      9,290,185         9,216,206           9,336,636
                                                     Diversified Consumer
Integrative Nutrition, LLC        09/29/2023               Services

5.75 % 1M L+475 8,587,606 8,587,606

8,458,792


                                                   Chemicals, Plastics and
K2 Pure Solutions NoCal, L.P.     12/20/2023                Rubber

8.00 % 1M L+700 19,650,000 19,436,214

19,217,700


LAV Gear Holdings, Inc.           10/31/2024          Capital Equipment

8.50 % 3M L+750 9,975,861 9,902,990

9,188,766


LSF9 Atlantis Holdings, LLC       05/01/2023                Retail                    7.00 %          1M L+600      6,843,750         6,872,048           6,631,320
                                                       Consumer Goods:
Manna Pro Products, LLC           12/08/2023             Non-Durable                  7.00 %          1M L+600      4,313,910         4,273,019           4,197,866
                                                    Media: Diversified and                    (5)            -
Marketplace Events LLC (4)        01/27/2023              Production                  0.00 %                   C $  5,730,254         4,449,786           3,623,691
                                                     Media: Advertising,
MeritDirect, LLC                  05/23/2024        Printing & Publishing             6.50 %          3M L+550      4,812,500         4,771,073

4,583,906

Mission Critical Electronics,
Inc.                              09/28/2022          Capital Equipment               6.00 %          3M L+500      5,949,731         5,927,114           5,877,737
                                                       Consumer Goods:
New Milani Group LLC              06/06/2024             Non-Durable                  6.50 %          1M L+550     14,662,500        14,568,019          13,379,531

Output Services Group, Inc. 03/27/2024 Business Services

5.50 % 1M L+450 7,803,419 7,825,029

7,101,111


PH Beauty Holdings III, Inc.      09/29/2025              Wholesale

5.19 % 1M L+500 9,792,594 9,717,936

9,156,076


                                                   Chemicals, Plastics and
Plant Health Intermediate, Inc.   10/19/2022                Rubber                    6.75 %          3M L+575      1,594,030         1,579,915           1,570,120
PlayPower, Inc.                    05/8/2026           Leisure Products               5.72 %          3M L+550      4,025,520         3,990,707           3,824,244
Sargent & Greenleaf Inc.          12/20/2024              Wholesale                   7.00 %          1M L+550      4,925,000         4,860,858           4,836,350
Schlesinger Global, Inc.          07/14/2025          Business Services               7.00 %          1M L+600     11,904,617        11,904,617          11,041,532
                                                        Healthcare and
Smile Brands Inc.                 10/14/2024           Pharmaceuticals                4.93 %          3M L+450     11,175,938        11,090,654          10,840,659
Snak Club, LLC                    07/19/2021      Beverage, Food and Tobacco          6.50 %          1M L+550      4,561,971         4,561,971           4,493,542
                                                        Healthcare and
Solutionreach, Inc.               01/17/2024           Pharmaceuticals                6.75 %          3M L+575      6,214,305         6,149,172           6,145,948
STV Group Incorporated            12/11/2026      Construction and Building           5.40 %          1M L+525      7,762,222         7,692,023           7,684,600
TeleGuam Holdings, LLC            11/20/2025          Telecommunications              5.50 %          1M L+450      8,309,797         8,272,104           8,060,503
Teneo Holdings LLC                07/18/2025          Business Services               6.25 %          1M L+525      4,950,000         4,783,595           4,764,375
                                                   Media: Broadcasting and
The Infosoft Group, LLC           09/16/2024             Subscription                 6.75 %          6M L+575      8,602,807         8,584,634           8,602,807
TPC Canada Parent, Inc. and TPC                        Consumer Goods:
US Parent, LLC                    11/24/2025             Non-Durable                  6.25 %          3M L+525      8,924,066         8,837,614           8,656,344
                                                     Diversified Consumer
TVC Enterprises, LLC              01/18/2024               Services                   6.50 %          1M L+550      9,747,335         9,747,335           9,674,230
                                                     Diversified Consumer
TWS Acquisition Corporation       06/16/2025               Services                   7.25 %          1M L+625      6,910,465         6,797,117           6,772,256
UBEO, LLC                         04/03/2024          Capital Equipment               5.50 %          3M L+450     21,930,702        21,762,065          20,614,860
Urology Management Associates,                          Healthcare and
LLC                               08/30/2024           Pharmaceuticals

6.00 % 3M L+500 11,463,443 11,311,325

11,119,540

Walker Edison Furniture Company
LLC                               09/26/2024              Wholesale

7.25 % 3M L+625 10,594,047 10,440,520

10,594,047

Whitney, Bradley & Brown, Inc. 10/18/2022 Aerospace and Defense

           8.50 %          1M L+750        254,095           250,910

251,557


Total First Lien Secured Debt                                                                                                       392,309,962

382,299,150

Second Lien Secured Debt-19.5% Country Fresh Holdings, LLC 04/29/2024 Beverage, Food and Tobacco 9.50 % 1M L+850 964,045

           964,045             889,813
                                                                                 (PIK 9.50 %)
DBI Holding, LLC, Term Loan B     03/26/2021          Business Services               9.00 %                 -         15,946            15,946

15,946


                                                                                 (PIK 9.00 %)
DBI Holding, LLC, Term Loan C     02/02/2026          Business Services               9.00 %                 -      7,977,513         7,977,513

7,977,513


                                                                                 (PIK 9.00 %)
Total Second Lien Secured Debt                                                                                                        8,957,504

8,883,272

Equity Securities-4.0%
Country Fresh Holding Company             -
Inc.                                              Beverage, Food and Tobacco                                            1,317         1,713,105                   -
DBI Holding, LLC, Series A-1              -           Business Services                  -                   -          5,034         5,034,310           1,803,668
DBI Holding, LLC, Series B                -           Business Services                  -                   -      1,065,021           236,521                   -
Total Equity Securities                                                                                                               6,983,936           1,803,668
Total Investments-861.6%                                                                                                            408,251,402         392,986,090
Cash and Cash Equivalents-24.4%
BlackRock Federal FD
Institutional 30                                                                                                                      6,005,963           6,005,963
US Bank Cash                                                                                                                          5,109,410           5,115,516
Total Cash and Cash Equivalents                                                                                                      11,115,373          11,121,479
Total Investments and Cash
Equivalents-886.0%                                                                                                                $ 419,366,775     $   404,107,569
Liabilities in Excess of Other
Assets-(786.0)%                                                                                                                                        (358,495,484 )
Members' Equity-100.0%                                                                                                                              $    45,612,085

(1) Represents floating rate instruments that accrue interest at a predetermined

spread relative to an index, typically the applicable LIBOR or "L" or Prime

rate or "P". The spread may change based on the type of rate used. The terms

in the Schedule of Investments disclose the actual interest rate in effect as


    of the reporting period. LIBOR loans are typically indexed to a 30-day,
    60-day, 90-day or 180-day LIBOR rate (1M L, 2M L, 3M L, or 6M L,
    respectively), at the borrower's option. All securities are subject to a
    LIBOR or Prime rate floor where a spread is provided, unless noted. The
    spread provided includes PIK interest and other fee rates, if any.

(2) Valued based on PSSL's accounting policy.

(3) Non-U.S. company or principal place of business outside the United States.

(4) Par amount is denominated in Australian Dollars (A$) or Canadian Dollars (C$)

as denoted.

(5) Non-income producing security.


--------------------------------------------------------------------------------


Below is a listing of PSSL's individual investments as of September 30, 2019:



                                                                                                Basis Point
                                                                                Current         Spread Above
Issuer Name                       Maturity                Industry               Coupon          Index (1)         Par              Cost          Fair Value (2)
First Lien Secured Debt-830.5%
Altamira Technologies, LLC       07/24/2025         High Tech Industries              8.28 %        3M L+600      5,000,000     $   4,927,149     $     5,000,000
American Auto Auction Group,
LLC                              01/02/2024       Transportation: Consumer            6.85 %        3M L+475      7,749,274         7,674,216           7,671,781
By Light Professional IT
Services, LLC                    05/16/2022         High Tech Industries              8.52 %        1M L+725     13,772,261        13,531,751          13,772,261
Cadence Aerospace, LLC           11/14/2023        Aerospace and Defense              8.54 %        3M L+650     11,735,208        11,644,440          11,680,054
Cardenas Markets LLC             11/29/2023      Beverage, Food and Tobacco

7.79 % 1M L+575 7,348,866 7,311,507 7,128,400 Centauri Group Holdings, LLC 02/12/2024 Aerospace and Defense

              7.36 %        1M L+525     10,422,726        10,413,416          10,396,669
Challenger Performance
Optimization, Inc.               08/31/2023          Business Services

7.87 % 1M L+575 10,127,447 10,040,432 9,874,261 Country Fresh Holdings, LLC 05/01/2023 Beverage, Food and Tobacco

           7.10 %        1M L+500        182,403           179,170

182,403

Country Fresh Holdings, LLC
(Revolver)                       05/01/2023      Beverage, Food and Tobacco           7.10 %        1M L+500        126,031           126,031             126,031
Country Fresh Holdings, LLC -                                                            -                 -                                -                   -
(Revolver) (5)                   05/01/2023      Beverage, Food and Tobacco                                         324,080
                                                      Consumer Goods:
Deva Holdings, Inc.              10/31/2023             Non-Durable

7.54 % 3M L+625 19,748,744 19,748,744 19,748,744 Douglas Products and Packaging

                    Chemicals, Plastics and
Company LLC                      10/19/2022                Rubber

7.85 % 3M L+575 12,312,500 12,157,345 12,189,375 Douglas Sewer Intermediate,

                       Chemicals, Plastics and
LLC                              10/19/2022                Rubber

7.85 % 3M L+575 8,166,594 8,116,022 8,084,928


                                                     Banking, Finance,

Findex Group Limited (3), (4) 05/31/2024 Insurance and Real Estate


          6.26 %        3M L+525 A $ 10,000,000         7,376,173           6,542,165
GCOM Software LLC                11/14/2022         High Tech Industries              8.37 %        1M L+750     17,384,864        17,263,748          17,384,864
Good2Grow LLC                    11/18/2024              Beverages

6.35 % 3M L+425 11,752,655 11,649,126 11,576,366 Good Source Solutions, Inc. 06/29/2023 Beverage, Food and Tobacco


          6.37 %        3M L+600     14,357,813        14,241,579          14,135,267
GSM Holdings, Inc.               06/03/2024       Consumer Goods: Durable             6.60 %        3M L+450     19,669,098        19,524,460          19,472,406
IMIA Holdings, Inc.              10/28/2024        Aerospace and Defense              6.60 %        3M L+450     12,406,250        12,351,255          12,344,219
Impact Group, LLC                06/27/2023              Wholesale                    8.60 %        1M L+650      9,390,185         9,296,753           9,296,283
Infrastructure Supply
Operations Pty Ltd. (3), (4)     12/12/2023              Wholesale

5.80 % 1M L+425 A $ 15,000,000 10,973,919 9,717,138


                                                    Diversified Consumer
Integrative Nutrition, LLC       09/29/2023               Services

6.85 % 1M L+475 9,974,874 9,974,874 9,974,874


                                                  Chemicals, Plastics and
K2 Pure Solutions NoCal, L.P.    12/20/2023                Rubber

7.30 % 1M L+525 19,850,000 19,586,294 19,609,815 LAV Gear Holdings, Inc. 10/31/2024 Capital Equipment

                7.60 %        3M L+550      9,925,000         9,837,686           9,916,068
Leap Legal Software Pty Ltd
(3), (4)                         09/12/2022         High Tech Industries

6.80 % 3M L+575 A $ 14,755,747 10,483,859 9,952,014


                                                       Healthcare and
Long's Drugs Incorporated        08/19/2022           Pharmaceuticals

7.10 % 1M L+500 17,820,000 17,688,160 17,641,800 LSF9 Atlantis Holdings, LLC 05/01/2023

                Retail

8.04 % 1M L+600 7,078,125 7,118,977 6,575,083


                                                      Consumer Goods:
Manna Pro Products, LLC          12/08/2023             Non-Durable

8.05 % 1M L+600 6,877,500 6,797,207 6,688,369


                                                   Media: Diversified and
Marketplace Events LLC (4)       01/27/2021              Production                   7.20 %           P+275 C $  5,760,254         4,461,926

4,350,645

Mission Critical Electronics,
Inc.                             09/28/2022          Capital Equipment                7.10 %        3M L+500      6,009,982         5,977,867           6,009,982
                                                      Consumer Goods:
New Milani Group LLC             06/06/2024             Non-Durable                   6.35 %        1M L+425     14,812,500        14,691,710          14,664,375
Olde Thompson, LLC               05/14/2024      Beverage, Food and Tobacco

6.54 % 1M L+450 11,876,667 11,757,900 11,876,667 Output Services Group, Inc. 03/27/2024 Business Services


          6.54 %        1M L+425      7,883,419         7,909,754           6,779,740
Pestell Minerals and
Ingredients Inc.                 06/01/2023      Beverage, Food and Tobacco           7.57 %        3M L+525      9,925,000         9,840,202           9,825,750
Pestell Minerals and
Ingredients Inc.                 06/01/2023      Beverage, Food and Tobacco

7.23 % 3M L+525 C $ 3,242,655 2,412,626 2,424,644 PH Beauty Holdings III, Inc. 09/29/2025

              Wholesale

7.04 % 1M L+500 9,892,519 9,804,058 9,397,893 Plant Health Intermediate,

                        Chemicals, Plastics and
Inc.                             10/19/2022                Rubber                     8.00 %        3M L+575      1,758,406         1,736,386           1,740,822
PlayPower, Inc.                   05/8/2026           Leisure Products                7.60 %        3M L+550      4,189,500         4,148,451           4,184,263
                                                       Healthcare and
Smile Brands Inc.                10/14/2024           Pharmaceuticals                 6.66 %        3M L+450     11,289,688        11,189,470          11,176,791
Snak Club, LLC                   07/19/2021      Beverage, Food and Tobacco

8.10 % 1M L+600 4,687,495 4,687,495 4,359,370 Sonny's Enterprises, LLC 12/01/2022 Capital Equipment


          6.35 %        3M L+425     15,224,842        15,227,900          15,224,842
Teneo Holdings LLC               07/18/2025          Business Services                7.29 %        1M L+525      5,000,000         4,804,110           4,762,500
                                                  Media: Broadcasting and
The Infosoft Group, LLC          12/02/2021             Subscription                  7.43 %        6M L+500      8,823,392         8,790,069           8,735,157
                                                    Diversified Consumer
TVC Enterprises, LLC             01/18/2024               Services                    7.55 %        1M L+550      9,974,874         9,974,874           9,974,874
                                                    Diversified Consumer
TWS Acquisition Corporation      06/16/2025               Services                    8.28 %        1M L+625      7,075,000         6,937,888           6,933,500
UBEO, LLC                        04/03/2024          Capital Equipment

6.78 % 3M L+450 22,248,673 22,045,879 22,026,186 Urology Management Associates,

                         Healthcare and
LLC                              08/30/2024           Pharmaceuticals                 7.04 %        3M L+450     11,572,122        11,388,612          11,572,122
Walker Edison Furniture
Company LLC                      09/26/2024              Wholesale

8.83 % 3M L+650 16,001,734 15,724,459 16,121,747 Whitney, Bradley & Brown, Inc. 10/18/2022 Aerospace and Defense

9.55 % 1M L+750 5,466,024 5,389,938 5,466,024 Total First Lien Secured Debt

                                                                                                     478,935,867

474,289,532


Second Lien Secured Debt-14.8%
Country Fresh Holdings, LLC      04/29/2024      Beverage, Food and Tobacco          10.60 %        1M L+850        870,886           870,886

870,886


                                                                                (PIK 10.60 %)
DBI Holding, LLC, Term Loan B    03/26/2021          Business Services                8.00 %        6M L+525         15,206            15,206

15,206


                                                                                 (PIK 8.00 %)
DBI Holding, LLC, Term Loan C    02/02/2026          Business Services                8.00 %               -      7,607,291         7,607,291

7,569,255


                                                                                 (PIK 8.00 %)
Total Second Lien Secured Debt                                                                                                      8,493,383

8,455,347

Equity Securities-10.2%
Country Fresh Holding Company            -
Inc.                                             Beverage, Food and Tobacco                                           1,317         1,713,106

1,124,929


DBI Holding, LLC, Series A-1             -           Business Services                   -                 -          5,034         5,034,310           4,680,039
DBI Holding, LLC, Series B               -           Business Services                   -                 -      1,065,021           236,524                   -
Total Equity Securities                                                                                                             6,983,940           5,804,968
Total Investments-855.5%                                                                                                          494,413,190         488,549,847
Cash and Cash
Equivalents-26.8%
BlackRock Federal FD                                                                                                                                   12,166,301
Institutional 30                                                                                                                   12,166,301
US Bank Cash                                                                                                                        3,156,230           3,128,580
Total Cash and Cash
Equivalents                                                                                                                        15,322,531          15,294,881
Total Investments and Cash
Equivalents-882.3%                                                                                                              $ 509,735,721     $   503,844,728
Liabilities in Excess of Other
Assets-(782.3)%                                                                                                                                      (446,736,922 )
Members' Equity-100.0%                                                                                                                            $    57,107,806

(1) Represents floating rate instruments that accrue interest at a predetermined

spread relative to an index, typically the applicable LIBOR or "L" or EURIBOR

or "E". All securities are subject to a LIBOR or Prime rate floor where a

spread is provided, unless noted. The spread provided includes PIK interest

and other fee rates, if any.

(2) Valued based on PSSL's accounting policy.

(3) Non-U.S. company or principal place of business outside the United States.

(4) Par amount is denominated in Australian Dollars (A$) or Canadian Dollars (C$)

as denoted.

(5) Represents the purchase of a security with delayed settlement or a revolving

line of credit that is currently an unfunded investment. This security does


    not earn a basis point spread above an index while it is unfunded.




                                       48


--------------------------------------------------------------------------------

Below is the financial information for PSSL:





                          Statements of Assets and Liabilities

                                                        September 30,      September 30,
                                                             2020               2019
Assets
Investments at fair value (cost-$408,251,402 and
$494,413,190, respectively)                             $  392,986,090     $  488,549,847
Cash and cash equivalents (cost-$11,115,373 and
$15,322,531, respectively)                                  11,121,479

15,294,881


Interest receivable                                          2,235,595

1,855,545


Prepaid expenses and other assets                               62,812            996,333
Total assets                                               406,405,976        506,696,606
Liabilities
Credit facility payable                                    216,969,469        308,724,305
Notes payable to members                                   143,290,000        139,650,000
Interest payable on credit facility                            490,858

1,152,544


Interest payable on members notes                               32,719             39,197
Accrued other expenses                                          10,845             22,754
Total liabilities                                          360,793,891        449,588,800
Commitments and contingencies (1)                                    -                  -
Members' equity                                             45,612,085

57,107,806


Total liabilities and members' equity                   $  406,405,976     $  506,696,606




(1) As of both September 30, 2020 and 2019, PSSL had no unfunded commitments to
    fund investments.






                                       Statements of Operations
                                                   Year Ended         Year Ended          Year Ended
                                                 September 30,       September 30,       September 30,
                                                      2020               2019                2018
Investment income:
Interest                                         $   33,260,154     $    39,288,981     $    17,744,486
Other income                                            138,795             785,111             280,080
Total investment income                              33,398,949          40,074,092          18,024,566
Expenses:
Interest and expenses on credit facility             11,865,971          16,487,783           7,654,035
Interest expense on members notes                    13,531,037          14,247,817           6,060,468
Administrative services expenses                      1,200,000           1,150,000             650,000
Other general and administrative expenses (1)           485,660             454,600             692,736
Total expenses                                       27,082,668          32,340,200          15,057,239
Net investment income                                 6,316,281           7,733,892           2,967,327
Realized and unrealized (loss) gain on
investments and credit facility foreign
  currency translations:
Net realized (loss) gain on investments                (992,974 )          (885,069 )           111,215
Net change in unrealized (depreciation)
appreciation on:
Investments                                          (9,368,121 )

(5,976,299 ) (364,201 ) Credit facility foreign currency translation (2,210,907 ) 1,887,878

             882,899
Net change in unrealized (depreciation)
appreciation on investments and credit
  facility foreign currency translations            (11,579,028 )        (4,088,421 )           518,698
Net realized and unrealized (loss) gain from
investments and credit facility foreign
  currency translations                             (12,572,002 )        (4,973,490 )           629,913
Net (decrease) increase in members' equity
resulting from operations                        $   (6,255,721 )   $     2,760,402     $     3,597,240

(1) No management or incentive fees are payable by PSSL. If any fees were to be


    charged, they would be separately disclosed in the Statements of Operations.














































                                       49

--------------------------------------------------------------------------------

Contractual Obligations

A summary of our significant contractual payment obligations at cost as of September 30, 2020, including borrowings under our Credit Facility, 2023 Notes, 2031 Asset-Backed Debt and other contractual obligations, is as follows:





                                                Payments due by period (millions)
                                               Less than       1-3         3-5        More than
                                   Total        1 year        years       years        5 years
  Credit Facility                 $ 308.6     $         -     $    -     $ 308.6     $         -
  2023 Notes                        138.6            20.8       41.6        76.2               -
  2031 Asset-Backed Debt            228.0               -          -           -           228.0
  Total debt outstanding (1)      $ 675.2     $      20.8     $ 41.6     $ 384.8     $     228.0
  Unfunded commitments to PSSL       22.1               -          -           -            22.1
  Unfunded investments (2)           73.3            14.4       14.6        38.8             5.5

Total contractual obligations $ 770.6 $ 35.2 $ 56.2 $ 423.6 $ 255.6

(1) The annualized weighted average cost of debt as of September 30, 2020,

excluding amendment costs and debt issuance costs, was 2.8% exclusive of the

fee on the undrawn commitment on the Credit Facility.

(2) Unfunded debt and equity investments are disclosed in the Consolidated

Schedule of Investments and Note 12 of our Consolidated Financial Statements.




We have entered into certain contracts under which we have material future
commitments. Under our Investment Management Agreement, which was most recently
reapproved by our board of directors, including a majority of our directors who
are not interested persons of us or the Investment Adviser, in February 2020,
PennantPark Investment Advisers serves as our investment adviser. Payments under
our Investment Management Agreement in each reporting period are equal to (1) a
management fee equal to a percentage of the value of our average adjusted gross
assets and (2) an incentive fee based on our performance.

Under our Administration Agreement, which was most recently reapproved by our
board of directors, including a majority of our directors who are not interested
persons of us, in February 2020, the Administrator furnishes us with office
facilities and administrative services necessary to conduct our day-to-day
operations. If requested to provide significant managerial assistance to our
portfolio companies, we or the Administrator will be paid an additional amount
based on the services provided. Payment under our Administration Agreement is
based upon our allocable portion of the Administrator's overhead in performing
its obligations under our Administration Agreement, including rent and our
allocable portion of the costs of our Chief Compliance Officer, Chief Financial
Officer and their respective staffs.

If any of our contractual obligations discussed above are terminated, our costs
under new agreements that we enter into may increase. In addition, we will
likely incur significant time and expense in locating alternative parties to
provide the services we expect to receive under our Investment Management
Agreement and our Administration Agreement. Any new investment management
agreement would also be subject to approval by our stockholders.

Recent Developments



Subsequent to September 30, 2020, our portfolio company, Cano Health, LLC (ITC
Rumba, LLC), entered into a business combination agreement with Jaws Acquisition
Corp ("JWS"), a special purpose acquisition vehicle, and other parties, subject
to certain closing conditions, with an expected closing late first quarter or
early second quarter 2021. Based on the closing stock price of JWS on November
13, 2020, our $2.3 million common stock fair valuation as of September 30, 2020
would increase to an estimated $9.0 million, which includes a combination of
cash and stock, assuming the transaction closes based on the agreed terms. This
would represent a net asset value increase of $0.17 per share, as of November
13, 2020. Our shares are owned by a limited partnership controlled by the
financial sponsor and are subject to customary lock up restrictions. As a
result, the fair value on December 31, 2020, may likely include an illiquidity
discount not in the public trading values indicated above. There can be no
assurance that the implied value of our equity interest will be representative
of the value ultimately realized on our equity investment.

Off-Balance Sheet Arrangements

We currently engage in no off-balance sheet arrangements other than our funding requirements for the unfunded investments described above.

Distributions



In order to be treated as a RIC for federal income tax purposes and to not be
subject to corporate-level tax on undistributed income or gains, we are
required, under Subchapter M of the Code, to annually distribute dividends for
U.S. federal income tax purposes to our stockholders out of the assets legally
available for distribution of an amount generally at least equal to 90% of
investment company taxable income, determined without regard to any deduction
for dividends paid.



Although not required for us to maintain our RIC tax status, in order to
preclude the imposition of a 4% nondeductible federal excise tax imposed on
RICs, we must distribute dividends for U.S. federal income tax purposes to our
stockholders in respect of each calendar year of an amount at least equal to the
Excise Tax Avoidance Requirement. In addition, although we may distribute
realized net capital gains (i.e., net long-term capital gains in excess of net
short-term capital losses), if any, at least annually, out of the assets legally
available for such distributions in the manner described above, we have retained
and may continue to retain such net capital gains or investment company taxable
income, subject to maintaining our ability to be taxed as a RIC, in order to
provide us with additional liquidity.

During both years ended September 30, 2020 and 2019, we declared distributions
of $1.14 per share for total distributions of $44.2 million. We monitor
available net investment income to determine if a return of capital for tax
purposes may occur for the fiscal year. To the extent our taxable earnings fall
below the total amount of our distributions for any given fiscal year,
stockholders will be notified of the portion of those distributions deemed to be
a tax return of capital. Tax characteristics of all distributions will be
reported to stockholders subject to information reporting on Form 1099-DIV after
the end of each calendar year and in our periodic reports filed with the SEC.

We intend to continue to make monthly distributions to our stockholders. Our monthly distributions, if any, are determined by our board of directors quarterly.

On November 22, 2017, we terminated our dividend reinvestment plan. The termination of the plan applies to the reinvestment of cash distributions paid on or after December 22, 2017.



We may not be able to achieve operating results that will allow us to make
distributions at a specific level or to increase the amount of these
distributions from time to time. In addition, we may be limited in our ability
to make distributions due to the asset coverage ratio for borrowings applicable
to us as a BDC under the 1940 Act and due to provisions in future credit
facilities. If we do not distribute at least a certain percentage of our income
annually, we could suffer adverse tax consequences, including possible loss of
our ability to be subject to tax as a RIC. We cannot assure stockholders that
they will receive any distributions at a particular level.

                                       50

--------------------------------------------------------------------------------

Recent Accounting Pronouncements





In May 2020, the SEC adopted rule amendments that will impact the requirement of
investment companies, including BDCs, to disclose the financial statements of
certain of their portfolio companies or certain acquired funds (the "Final
Rules"). The Final Rules adopted a new definition of "significant subsidiary"
set forth in Rule 1-02(w)(2) of Regulation S-X under the Securities Act. Rules
3-09 and 4-08(g) of Regulation S-X require investment companies to include
separate financial statements or summary financial information, respectively, in
such investment company's periodic reports for any portfolio company that meets
the definition of "significant subsidiary." The new definition of "significant
subsidiary" under Rule 1-02(w)(2) of Regulation S-X, which is tailored to
investment companies, (i) modifies the investment test and the income test, and
(ii) eliminates the asset test currently in the definition of "significant
subsidiary." The new Rule 1-02(w)(2) of Regulation S-X is intended to more
accurately capture those portfolio companies that are more likely to materially
impact the financial condition of an investment company. The Final Rules will be
effective on January 1, 2021, but voluntary compliance is permitted in advance
of the effective date. We evaluated the impact of adopting the Final Rules on
our consolidated financial statements and because the new definition of
"significant subsidiary" contained therein is specific to investment companies,
we elected to early adopt the Final Rules for our year ended September 30, 2020.
The adoption of the Final Rules did not have a material impact on our financial
statements.

Latest news about PennantPark Floating Rate Capital Ltd.

PennantPark Floating Rate Capital Ltd. Declares its Monthly Distribution for May 2024, Payable on June 3, 2024	May. 02	CI
PennantPark Floating Rate Capital Ltd. Declares Monthly Distribution for April 2024, Payable on May 1, 2024	Apr. 02	CI
PennantPark Floating Rate Capital Ltd. Declares Distribution for March 2024, Payable on April 1, 2024	Mar. 04	CI
PennantPark Floating Rate Capital Ltd. Completes Collateralized Loan Obligation	Feb. 25	CI
Transcript : PennantPark Floating Rate Capital Ltd., Q1 2024 Earnings Call, Feb 08, 2024	Feb. 08
PennantPark Floating Rate Capital Ltd. Reports Earnings Results for the First Quarter Ended December 31, 2023	Feb. 07	CI
PennantPark Floating Rate Capital Ltd. Announces Monthly Distribution, Payable on March 1, 2024	Feb. 02	CI
PennantPark Floating Rate Capital Ltd. Provides Earnings Guidance for the Quarter Ended December 31, 2023	Jan. 13	CI
PennantPark Floating Rate Capital Ltd. Announces Monthly Distribution, Payable on February 1, 2024	Jan. 03	CI
PennantPark Floating Rate Capital Ltd. Declares Monthly Distribution for December 2023, Payable on January 2, 2024	Dec. 04	CI
Transcript : PennantPark Floating Rate Capital Ltd., Q4 2023 Earnings Call, Nov 16, 2023	Nov. 16
PennantPark Floating Rate Capital Ltd. Reports Earnings Results for the Fourth Quarter Ended September 30, 2023	Nov. 15	CI
PennantPark Floating Rate Capital Ltd. Reports Earnings Results for the Full Year Ended September 30, 2023	Nov. 15	CI
PennantPark Floating Rate Capital Ltd. Announces Monthly Distribution, Payable on December 1, 2023	Nov. 02	CI
PennantPark Floating Rate Capital Keeps Monthly Distribution at $0.1025 Per Share; Payable Nov. 1 to Shareholders of Record on Oct. 17	23-10-03	MT
Pennantpark Floating Rate Capital Ltd. Declares Monthly Distribution for October 2023, Payable on November 1, 2023	23-10-03	CI
PennantPark Floating Rate Capital Ltd. Declares Monthly Distribution for September 2023, Payable on October 2, 2023	23-09-06	CI
Transcript : PennantPark Floating Rate Capital Ltd., Q3 2023 Earnings Call, Aug 10, 2023	23-08-10
PennantPark Floating Rate Capital Ltd. Reports Earnings Results for the Third Quarter and Nine Months Ended June 30, 2023	23-08-09	CI
Pennantpark Floating Rate Capital Ltd. Declares Monthly Distribution for August 2023, Payable on September 1, 2023	23-08-03	CI
PennantPark Floating Rate Capital Ltd. Declares Monthly Distribution for July 2023, Payable on August 1, 2023	23-07-06	CI
PennantPark Floating Rate Capital Keeps Monthly Distribution at $0.1025 Per Share; Payable Aug. 1 to Shareholders of Record on July 17	23-07-05	MT
UBS Initiates Coverage on PennantPark Floating Rate Capital With Neutral Rating, $11 Price Target	23-06-08	MT
Transcript : PennantPark Floating Rate Capital Ltd., Q2 2023 Earnings Call, May 11, 2023	23-05-11
PennantPark Floating Rate Capital Ltd. Reports Earnings Results for the Second Quarter and Six Months Ended March 31, 2023	23-05-11	CI

Chart PennantPark Floating Rate Capital Ltd.

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Company Profile

PennantPark Floating Rate Capital Ltd. is a closed-end, externally managed, non-diversified investment company. The investment objectives of the Company are to generate both current income and capital appreciation while seeking to preserve capital. It seeks to achieve its investment objective by investing primarily in floating rate loans, and other investments made to United States middle-market private companies whose debt is rated below investment grade. The Company generally expect to invest up to 35% of its overall portfolio opportunistically in other types of investments, including second lien secured debt, subordinated debt, and, to a lesser extent, equity investments. The Companyâs debt investments may generally range in maturity from three to ten years and are made to United States and, to a limited extent, non-United States corporations, partnerships and other business entities which operate in various industries and geographical regions.

Sector

Closed End Funds

Calendar

2024-05-07 - Q2 2024 Earnings Release

More about the company

Income Statement Evolution

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Ratings for PennantPark Floating Rate Capital Ltd.

Trading Rating

Investor Rating

ESG Refinitiv

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Analysts' Consensus

Sell

Buy

Mean consensus

OUTPERFORM

Number of Analysts

Last Close Price

11.61 USD

Average target price

11.6 USD

Spread / Average Target

-0.09%

Consensus

EPS Revisions

Estimates Revisions

Quarterly earnings - Rate of surprise

Company calendar

Sector Closed End Funds

	1st Jan change	Capi.
PENNANTPARK FLOATING RATE CAPITAL LTD.	-4.21%	715M
ARES CAPITAL CORPORATION	+3.74%	12.64B
PERSHING SQUARE HOLDINGS, LTD.	+12.28%	9.62B
SPROTT PHYSICAL URANIUM TRUST FUND	+10.01%	5.62B
FS KKR CAPITAL CORP.	-2.85%	5.43B
PIMCO DYNAMIC INCOME FUND	+8.47%	5.32B
SPROTT PHYSICAL SILVER TRUST	+14.23%	4.47B
SPROTT PHYSICAL GOLD AND SILVER TRUST	+16.04%	4.43B
MACQUARIE KOREA INFRASTRUCTURE FUND	+2.17%	4.07B
3I INFRASTRUCTURE PLC	+8.24%	3.92B

Closed End Funds

PennantPark Floating Rate Capital Ltd.

Equities

PFLT

US70806A1060

Closed End Funds

PENNANTPARK FLOATING RATE CAPITAL : MANAGEMENT'S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION AND RESULTS OF OPERATIONS (form 10-K)

EPS Revisions