📄 What This Document Is ✍️

This document is a Preliminary Pricing Supplement, which is essentially a detailed pricing guide for a new debt offering. 📑 When a company decides to raise money by selling bonds (or notes), they have to provide potential investors with precise pricing details, making this filing highly technical.

It is crucial to understand that this supplement is not the final offer. 👉 It establishes the proposed terms for selling three different tranches of notes, detailing the interest rates, maturity dates, and how the investment proceeds will be handled.

🏢 What Prospect Capital Corporation Does 🏦

Prospect Capital Corporation is a financial services company whose core business is lending to, and investing in, privately-held, middle-market companies. 🚀 Think of them as a major source of private capital that helps smaller, growing businesses get the funding they need to expand without going public.

The corporation operates as an externally-managed, non-diversified closed-end management investment company. 👉 This means its investments and management are handled by a separate team (Prospect Capital Management L.P.), and they are structured to focus on a specific investment strategy.

💰 The Debt Offering Details 💹

The main purpose of this filing is to set the specific terms for the sale of several notes, collectively called the "Notes." There are three distinct tranches being offered, each with different maturity dates, rates, and pricing structures.

The 2029 Notes (7.000%)

• Coupon Rate: 7.000% (This is the interest rate the investor will earn).
• Maturity Date: April 15, 2029 (This is when the principal is due).
• Selling Price: $100.000% (The investor receives 100% of the principal back).
• Net Proceeds: $32.08 (This indicates the net cash the issuer receives per $100 invested, after concessions are paid out).
• Maturity Bonus: These notes are callable at 100.000% on October 15, 2026, which is a key date for the company.

The 2031 Notes (7.250%)

• Coupon Rate: 7.250%
• Maturity Date: April 15, 2031
• Selling Price: $100.000%
• Net Proceeds: $33.23
• Maturity Bonus: Like the 2029 notes, these are callable at 100.000% on October 15, 2026.

The 2033 Notes (7.500%)

• Coupon Rate: 7.500%
• Maturity Date: April 15, 2033
• Selling Price: $100.000%
• Net Proceeds: $34.38
• Maturity Bonus: These are also callable at 100.000% on October 15, 2026.

👉 The highest-yielding note is the 7.500% note (due 2033), and the notes are all structured to be potentially redeemed by the company starting on October 15, 2026.

⚙️ Structure and Redemption Rules 🔄

The filing sets out precise mechanics for how the notes are issued and repaid. These rules protect both the company and the investors.

• Denominations: The notes will be issued and sold in units of $1,000.00.
• Ranking: The Notes are "unsecured senior obligations," meaning they rank equally in payment right with all other outstanding unsecured senior debt.
• Redemption/Call: The notes are generally redeemable at the option of Prospect Capital Corporation starting on October 15, 2026.
• Interest Calculation: Interest is paid semi-annually (April 15 and October 15) and calculated using a 360-day year (30/360 day count convention).
• Optional Redemption: The notes include a "Survivor’s Option," which allows the owner's estate to request optional repayment after the owner has held the notes for at least six months.

💸 How the Company Plans to Use the Money 📈

Prospect Capital Corporation is not just taking money; they have a clear plan for what that capital will fund.

Initially, the net proceeds will be used to maintain balance sheet liquidity. This means they plan to:

1. Repay outstanding debt under their credit facility.
2. Redeem existing Prospect Capital InterNotes® and other outstanding debt.
3. Invest in high-quality short-term debt instruments.
4. After this, they plan to use the money for long-term investments aligned with their core investment objective.

👉 The company anticipates spending substantially all of the net proceeds within six months, depending on finding appropriate investment opportunities.

🛑 Risks and Tax Complexity ⚖️

This document is highly technical because of the tax and regulatory concerns associated with global debt issuance. Investors must pay attention to these sections.

Material Risks (⚠️)

• The filing warns that historical performance is no guarantee of future results, and past trends should not be used to predict future success.
• Investors must consider additional, currently unknown risks that could significantly harm the company’s operations or financial condition.

Tax Implications (U.S. and Non-U.S. Holders)

Taxation is complex and differs based on the investor's location (U.S. vs. non-U.S.).

• U.S. Holders:
  • Ordinary Income: Stated interest is generally treated as ordinary income.
  • Original Issue Discount (OID): If the initial selling price is less than the maturity price, the difference is treated as Original Issue Discount (OID). This means the investor must include the OID in gross income in advance of receiving the cash, increasing the amount of taxable income over time.
  • Short-Term Notes: All short-term notes are treated as OID debt securities.
• Non-U.S. Holders:
  • Exemptions: Non-U.S. holders may not face U.S. federal tax withholding on interest or OID if the income is not effectively connected with a trade or business in the U.S. and the investor provides proper certification (like filing a W-8BEN).
  • Withholding: If they don't qualify for an exemption, interest payments could be subject to a 30% withholding tax.

📜 Operational and Legal Mechanics 📁

These sections detail the "how-to" of the investment, which helps investors understand who is selling the notes and how the money will move.

• Selling Group: The primary parties involved in selling these notes include InspereX LLC, Citigroup Global Markets Inc., and RBC Capital Markets, LLC.
• Clearing System (DTC): All notes are issued in a "book-entry only form" and clear through The Depository Trust Company (DTC). This means ownership is held electronically by the DTC’s nominee, Cede & Co., rather than physical certificates.
• Legal Counsel: The legality of the notes is reviewed by Russell Wininger, Deputy General Counsel at Simpson Thacher & Bartlett LLP (for the Company) and Venable LLP (for Maryland counsel). Deloitte & Touche, LLP is the independent registered public accounting firm.

🗓️ Important Dates and Contacts 📞

If you need more information or need to contact the company, here are the details:

• Investor Relations: 10 East 40th Street, 42nd Floor, New York, NY 10016
• Phone: (212) 448-0702
• Website: www.prospectstreet.com
• SEC: www.sec.gov

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🧠 The Analogy 🏦

Buying these notes is like buying a special, long-term loan from a large, sophisticated borrower. Instead of getting a simple I.O.U., you get a structured I.O.U. (the bond) with tiered pricing (the different maturity dates) and specific rules attached (the repayment and tax sections). The company isn't selling a single product; they are selling three different financial guarantees, each optimized for a different time horizon, ensuring that every detail—from the interest rate to the tax filing—is perfectly accounted for.

🧩 Final Takeaway 🎯

Prospect Capital is issuing three major debt notes with attractive rates (7.000%-7.500%) and maturity dates between 2029 and 2033. However, investors must be prepared for complex tax rules (especially related to OID) and the high likelihood that the company may call or redeem the debt early, starting in late 2026.