United States: SBIC Interest Rates Fall Again: September 2021 Debenture Pooling
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The September 2021 Pool of Small Business Investment Company (“SBIC”) Debentures was valued at 1.304%. This most recent semi-annual pricing for SBIC debentures reflects a decrease from the rate set in March 2021 at 1.667%.
The SBIC debenture rate is set on the basis of a market-determined premium over 10-year treasury bills. This rate had increased during the March 2021 voting period, but declined during each of the previous four pooling periods.
SBICs that drew debentures between the March 2021 and September 2021 consolidations locked in the 1.304% interest rate for the 10-year term of the debentures. Interest payments on the Debentures are due semi-annually, and a lump sum payment of all of the principal amount of the Debentures is due on the tenth anniversary of the Pooling. The SBIC program also imposes an annual fee on debentures, which is currently set at 0.271%. A new rate for the annual fee will be set after September 30, 2021. 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.
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