NEW YORK, May 29, 2026, 09:41 (EDT)
Prospect Capital Corp. shares moved up in early Friday trading in New York, with investors looking at a new portfolio-company sale that may return cash to one of the more watched income stocks around. The Nasdaq-listed BDC was recently quoted at $2.37, gaining 5 cents, or roughly 2.1%.
Prospect said May 27 it will sell Valley Electric to MYR Group Inc. for gross proceeds of about $328 million. Prospect expects net exit proceeds of around $280 million, with a realized gross annualized IRR of 20.4% over the deal’s life. Robert Melman, Prospect’s managing director, said the transaction is an example of Prospect’s “multi decade track record” backing middle-market companies. Prospect Street
The expected net proceeds now work out to about 9.5% of Prospect’s net asset value to common shareholders as of March 31. Net asset value, or NAV, is assets minus liabilities, a book value metric BDC investors watch. Prospect showed March-quarter NAV at $2.95 billion, or $6.05 per common share, down from $7.25 last year.
The stock is still well under its NAV. That discount shows investors have doubts about the asset marks, dividend strength and returns ahead, despite one sale that looks solid on paper.
MYR said it will acquire Valley Holdings and its units like Valley Electric and Comet Electric for around $328 million, pending adjustments. The company plans to pay using cash it already has and by tapping its revolving credit line. Together, the companies brought in yearly revenue averaging more than $400 million over the past two years.
MYR Chief Executive Rick Swartz said Valley Electric and Comet Electric “bring high-quality workforces and strong management teams.” Swartz said picking up the two companies will help boost MYR’s commercial and industrial segment and widen its geographic footprint. GlobeNewswire
Prospect is changing its portfolio mix. The company said this month it has been putting more money into first-lien senior secured loans, while stepping back from some equity-linked and real estate assets. As of March 31, first-lien debt made up 72.0% of its investments at cost.
Dividend is still the main part of the Prospect trade. The company set monthly payouts of $0.035 per common share for May to August. That follows net investment income of $0.16 a share in the March quarter. Net investment income, which is what’s left after expenses and financing costs, is the main number BDC investors watch to see if the payout is safe.
The BDC group traded mixed, so Prospect’s move didn’t track the rest of the sector. Ares Capital Corp. dropped 0.3% to $18.81, but Main Street Capital Corp. edged up 0.3% to $51.29 early on.
Memorial Day cut the trading week short, with markets closed Monday. Nasdaq has May 25 as closed for 2026 in its holiday calendar, and says the next U.S. market holiday will be Juneteenth on June 19.
The downside is still in play. The Valley deal has to clear regulators and meet closing terms, plus leave space for price changes. Some of the gain may already show up in Prospect’s NAV. The big cash payout gives Prospect little cushion if credit losses go up or portfolio income drops.
Investors face a straightforward setup. If the Valley sale closes around July 1, Prospect gets cash and some support for its exit plan. But if the deal slips, the cash comes in short, or NAV faces new issues, attention turns back to Prospect’s discount and whether the monthly dividend can hold up.
