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March 2014 Pooling Results in Lower SBIC Debenture Rate




by:
Alan B. Roth
Tamer Tullgren
Edwards Wildman Palmer LLP - Chicago Office

 
March 24, 2014

Previously published on March 21, 2014

The March 2014 pooling of Small Business Investment Company (“SBIC”) debentures was priced at 3.191%. This most recent semi-annual pricing of SBIC debentures is a reduction from the September 2013 pooling, which was priced at 3.644%.

The rate continues to be exceptionally low compared to historical average rates for SBIC debentures. In addition, the March 2014 pooling was one of the largest ever.

SBICs that drew down debentures between the September 2013 and March 2014 poolings locked in this 3.191% interest rate for the ten-year term of the debentures. Debenture interest payments are due semi-annually, and a balloon payment of the entire principal amount of the debentures is due on the tenth anniversary of the pooling. The SBIC program also imposes an annual fee on the debentures that is currently set at .355%. SBIC debentures may be prepaid in whole or in part at any time, without premium or penalty. Under current SBIC regulations, SBICs are not permitted to refinance outstanding debentures to take advantage of the new rate.



 

The views expressed in this document are solely the views of the author and not Martindale-Hubbell. This document is intended for informational purposes only and is not legal advice or a substitute for consultation with a licensed legal professional in a particular case or circumstance.
 

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Alan B. Roth
Tamer Tullgren
 
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