BDC Gladstone Investment Prices a Term Preferred Issue

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Business Development Company Gladstone Investment (ticker:GAIN) has priced a new Term Preferred issue with a mandatory redemption date of 12/31/2021.

This issue will carry a coupon of 6.75% and is an unrated issue.

Dividends will be paid monthly.

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Details of the issue are here.

While Gladstone Investment Corp is not a quality BDC we will be buying this issue for the model.  Remember that BDC’s must maintain specific leverage ratios.  They must maintain net assets equal to 200% or more of their preferred stock redemption costs.  Thus the entire portfolio is available to preferred and/or debt holders while holders of the common are last in line (as usual).  This gives an added level of safety to BDC’s (and all closed end fund preferred stocks) that a typical corporation doesn’t offer.

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