The March 2013 pooling of Small Business Investment Company (“SBIC”) debentures was priced at 2.351%. This most recent semi-annual pricing of SBIC debentures is near the all-time low of 2.245%, which was reached in the previous pooling in September 2012. SBICs that drew down debentures between the September 2012 and March 2013 poolings locked in this 2.351% interest rate for the ten-year term of the debentures.
The March 2013 pooling was the largest in the SBIC program’s history. The size of the pooling reflects the increased interest in the SBIC program as a source of inexpensive capital and the rise in transactions at the end of 2012 in advance of changes to the U.S. tax code.
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 .760%. 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.