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    Edwards Wildman Client Advisory: March 2014 Pooling Results in Lower SBIC Debenture Rate

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    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.

    If you have questions regarding the new debenture pricing or the SBIC program in general, please contact any of the attorneys listed on this page.

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