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pflt-10q_20191231.htm

UNITED STATES

SECURITIES AND EXCHANGE COMMISSION

WASHINGTON, D.C. 20549

FORM 10-Q

(Mark One)


☒	QUARTERLY REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934

FOR THE QUARTERLY PERIOD ENDED DECEMBER 31, 2019


☐	TRANSITION REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934

FOR THE TRANSITION PERIOD FROM TO

COMMISSION FILE NUMBER: 814-00891

PENNANTPARK FLOATING RATE CAPITAL LTD.

(Exact name of registrant as specified in its charter)

MARYLAND		27-3794690
(State or other jurisdiction of incorporation or organization)		(I.R.S. Employer Identification No.)

590 Madison Avenue, 15^th Floor New York, N.Y.		10022
(Address of principal executive offices)		(Zip Code)

(212) 905-1000

(Registrant’s Telephone Number, Including Area Code)

Securities registered pursuant to Section 12(b) of the Act:


Title of Each Class	Trading Symbol(s)	Name of Each Exchange on Which Registered
Common Stock, par value $0.001 per share	PFLT	The Nasdaq Stock Market LLC

Indicate by check mark whether the registrant (1) has filed all reports required to be filed by Section 13 or 15(d) of the Securities Exchange Act of 1934 during the preceding 12 months (or for such shorter period that the registrant was required to file such reports), and (2) has been subject to such filing requirements for the past 90 days. Yes ☒ No ☐

Indicate by check mark whether the registrant has submitted electronically every Interactive Data File required to be submitted pursuant to Rule 405 of Regulation S-T (§232.405 of this chapter) during the preceding 12 months (or for such shorter period that the registrant was required to submit such files). Yes ☐ No ☐

Indicate by check mark whether the registrant is a large accelerated filer, an accelerated filer, a non-accelerated filer, a smaller reporting company, or an emerging growth company. See the definitions of “large accelerated filer,” “accelerated filer,” “smaller reporting company,” and “emerging growth company” in Rule 12b-2 of the Exchange Act.

If an emerging growth company, indicate by check mark if the registrant has elected not to use the extended transition period for complying with any new or revised financial accounting standards provided pursuant to Section 13(a) of the Exchange Act. ☐

Indicate by check mark whether the registrant is a shell company (as defined in Rule 12b-2 of the Exchange Act). Yes ☐ No ☒

The number of shares of the registrant’s common stock, $0.001 par value per share, outstanding as of February 5, 2020 was 38,772,074.

PENNANTPARK FLOATING RATE CAPITAL LTD.

FORM 10-Q FOR THE QUARTER ENDED DECEMBER 31, 2019

TABLE OF CONTENTS


PART I. CONSOLIDATED FINANCIAL INFORMATION

Item 1. Consolidated Financial Statements

Consolidated Statements of Assets and Liabilities as of December 31, 2019 (unaudited) and September 30, 2019		4

Consolidated Statements of Operations for the three months ended December 31, 2019 and 2018 (unaudited)		5

Consolidated Statements of Changes in Net Assets for the three months ended December 31, 2019 and 2018 (unaudited)		6

Consolidated Statements of Cash Flows for the three months ended December 31, 2019 and 2018 (unaudited)		7

Consolidated Schedules of Investments as of December 31, 2019 (unaudited) and September 30, 2019		8

Notes to Consolidated Financial Statements (unaudited)		16

Report of Independent Registered Public Accounting Firm		30

Item 2. Management’s Discussion and Analysis of Financial Condition and Results of Operations		31

Item 3. Quantitative and Qualitative Disclosures About Market Risk		42

Item 4. Controls and Procedures		43

PART II. OTHER INFORMATION

Item 1. Legal Proceedings		44

Item 1A. Risk Factors		44

Item 2. Unregistered Sales of Equity Securities and Use of Proceeds		44

Item 3. Defaults Upon Senior Securities		44

Item 4. Mine Safety Disclosures		45

Item 5. Other Information		45

Item 6. Exhibits		46

SIGNATURES		47

PART I—CONSOLIDATED FINANCIAL INFORMATION

We are filing this Quarterly Report on Form 10-Q, or the Report, in compliance with Rule 13a-13 as promulgated by the Securities and Exchange Commission, or the SEC, under the Securities Exchange Act of 1934, as amended, or the Exchange Act. In this Report, except where the context suggests otherwise, the terms “Company,” “we,” “our” or “us” refer to PennantPark Floating Rate Capital Ltd. and its wholly-owned consolidated subsidiaries; “Funding I” refers to PennantPark Floating Rate Funding I, LLC; “Taxable Subsidiary” refers to PFLT Investment Holdings, LLC; “PSSL” refers to PennantPark Senior Secured Loan Fund I LLC, an unconsolidated joint venture; “PennantPark Investment Advisers” or “Investment Adviser” refers to PennantPark Investment Advisers, LLC; “PennantPark Investment Administration” or “Administrator” refers to PennantPark Investment Administration, LLC; “2023 Notes” refers to our 3.83% Series A notes due 2023; “1940 Act” refers to the Investment Company Act of 1940, as amended; “SBCAA” refers to the Small Business Credit Availability Act; “Code” refers to the Internal Revenue Code of 1986, as amended; “RIC” refers to a regulated investment company under the Code; “BDC” refers to a business development company under the 1940 Act; “MCG” refers to MCG Capital Corporation; and “Credit Facility” refers to our multi-currency senior secured revolving credit facility, as amended and restated with Truist Bank (formerly SunTrust Bank) and other lenders, or the Lenders; “Securitization Issuer” refers to PennantPark CLO I, Ltd.; “Securitization Issuers” refers to the Securitization Issuer and PennantPark CLO I, LLC; “Debt Securitization” refers to the $301.4 million term debt securitization completed by the Securitization Issuers; “2031 Asset-Backed Debt” refers to (i) the issuance of the Class A-1 Senior Secured Floating Rate Notes due 2031, the Class A-2 Senior Secured Fixed Rate Notes due 2031, the Class B-1 Senior Secured Floating Rate Notes due 2031, the Class B-2 Senior Secured Fixed Rate Notes due 2031, the Class C-1 Secured Deferrable Floating Rate Notes due 2031, the Class C-2 Notes Secured Deferrable Fixed Rate Notes due 2031, and the Class D Secured Deferrable Floating Notes due 2031 and (ii) the borrowing of the Class A‑1 Senior Secured Floating Rate Notes due 2031 by the Securitization Issuers in connection with the Debt Securitization; “Depositor” refers to PennantPark CLO I Depositor, LLC. References to our portfolio, our investments, our multi-currency, senior secured revolving credit facility, as amended and restated, or the Credit Facility, and our business include investments we make through our subsidiaries.

Item 1.

Consolidated Financial Statements

PENNANTPARK FLOATING RATE CAPITAL LTD. AND SUBSIDIARIES

CONSOLIDATED STATEMENTS OF ASSETS AND LIABILITIES

	December 31, 2019			September 30, 2019
	(unaudited)
Assets
Investments at fair value
Non-controlled, non-affiliated investments (cost—$983,709,595 and $886,955,156, respectively)	$	988,154,489		$	889,113,264
Non-controlled, affiliated investments (cost—$24,922,178 and $23,645,693, respectively)		16,039,827			20,430,565
Controlled, affiliated investments (cost—$174,562,500 and $174,562,500, respectively)		171,921,598			172,163,080
Total of investments (cost—$1,183,194,273 and $1,085,172,349, respectively)		1,176,115,914			1,081,706,909
Cash and cash equivalents (cost—$56,261,842 and $63,367,237, respectively)		56,292,541			63,337,728
Interest receivable		3,144,695			3,892,292
Receivable for investments sold		58,425,962			2,997,546
Prepaid expenses and other assets		402,760			441,337
Total assets		1,294,381,872			1,152,375,812
Liabilities
Distributions payable		3,683,347			3,683,347
Payable for investments purchased		85,457,647			12,033,794
Credit Facility payable, at fair value (cost—$335,307,500 and $265,307,500, respectively) (See Notes 5 and 10)		334,040,510			263,988,583
2023 Notes payable, at fair value (par—$138,579,858) (See Notes 5 and 10)		133,826,569			135,240,084
2031 Asset-Backed Debt, net (par—$228,000,000) (See Notes 5 and 10)		224,393,947			224,321,845
Interest payable on debt		4,085,056			3,275,481
Base management fee payable (See Note 3)		2,830,159			2,728,019
Performance-based incentive fee payable (See Note 3)		2,315,834			2,532,205
Accrued other expenses		1,768,439			1,514,943
Total liabilities		792,401,508			649,318,301
Commitments and contingencies (See Note 11)
Net assets
Common stock, 38,772,074 shares issued and outstanding Par value $0.001 per share and 100,000,000 shares authorized		38,772			38,772
Paid-in capital in excess of par value		538,632,828			538,632,828
Distributable income		(36,691,236	)		(35,614,089	)
Total net assets	$	501,980,364		$	503,057,511
Total liabilities and net assets	$	1,294,381,872		$	1,152,375,812
Net asset value per share	$	12.95		$	12.97

SEE NOTES TO CONSOLIDATED FINANCIAL STATEMENTS

PENNANTPARK FLOATING RATE CAPITAL LTD. AND SUBSIDIARIES

CONSOLIDATED STATEMENTS OF OPERATIONS

(Unaudited)

	Three Months Ended December 31,
	2019			2018
Investment income:
From non-controlled, non-affiliated investments:
Interest	$	18,909,894		$	18,169,998
Other income		773,103			621,189
From non-controlled, affiliated investments:
Interest		225,353			—
From controlled, affiliated investments:
Interest		3,155,324			2,818,045
Dividend		1,575,000			1,575,000
Total investment income		24,638,674			23,184,232
Expenses:
Base management fee (See Note 3)		2,830,159			2,498,766
Performance-based incentive fee (See Note 3)		2,315,834			(1,192,409	)
Interest and expenses on debt (See Note 10)		7,307,264			5,305,478
Administrative services expenses (See Note 3)		350,000			500,000
Other general and administrative expenses		616,077			616,075
Expenses before amendment costs, debt issuance costs and provision for taxes		13,419,334			7,727,910
Credit Facility amendment costs and debt issuance costs (See Notes 5 and 10)		—			4,512,279
Provision for taxes		100,000			—
Total expenses		13,519,334			12,240,189
Net investment income		11,119,340			10,944,043
Realized and unrealized loss on investments and debt:
Net realized gain on investments:
Non-controlled, non-affiliated investments		1,012,313			923,466
Net realized gain on investments		1,012,313			923,466
Net change in unrealized depreciation on:
Non-controlled, non-affiliated investments		2,379,358			(10,041,539	)
Controlled and non-controlled, affiliated investments		(5,899,705	)		(2,364,468	)
Debt depreciation (See Notes 5 and 10)		1,361,588			5,533,693
Net change in unrealized depreciation on investments and debt		(2,158,759	)		(6,872,314	)
Net realized and unrealized loss from investments and debt		(1,146,446	)		(5,948,848	)
Net increase in net assets resulting from operations	$	9,972,894		$	4,995,195
Net increase in net assets resulting from operations per common share (See Note 7)	$	0.26		$	0.13
Net investment income per common share	$	0.29		$	0.28

SEE NOTES TO CONSOLIDATED FINANCIAL STATEMENTS

PENNANTPARK FLOATING RATE CAPITAL LTD. AND SUBSIDIARIES

CONSOLIDATED STATEMENTS OF CHANGES IN NET ASSETS

(Unaudited)

	Three Months Ended December 31,
	2019			2018
Net increase in net assets resulting from operations:
Net investment income	$	11,119,340		$	10,944,043
Net realized gain on investments		1,012,313			923,466
Net change in unrealized depreciation on investments		(3,520,347	)		(12,406,007	)
Net change in unrealized depreciation on debt		1,361,588			5,533,693
Net increase in net assets resulting from operations		9,972,894			4,995,195
Distributions to stockholders		(11,050,041	)		(11,050,041	)
Net decrease in net assets		(1,077,147	)		(6,054,846	)
Net assets:
Beginning of period		503,057,511			535,841,568
End of period	$	501,980,364		$	529,786,722

SEE NOTES TO CONSOLIDATED FINANCIAL STATEMENTS

PENNANTPARK FLOATING RATE CAPITAL LTD. AND SUBSIDIARIES

CONSOLIDATED STATEMENTS OF CASH FLOWS

(Unaudited)

	Three Months Ended December 31,
	2019			2018
Cash flows from operating activities:
Net increase in net assets resulting from operations	$	9,972,894		$	4,995,195
Adjustments to reconcile net increase in net assets resulting from operations to net cash used in operating activities:
Net change in unrealized depreciation on investments		3,520,347			12,406,007
Net change in unrealized depreciation on debt		(1,361,588	)		(5,533,693	)
Net realized gain on investments		(1,012,313	)		(923,466	)
Net accretion of discount and amortization of premium		(486,937	)		(416,480	)
Purchases of investments		(239,443,417	)		(180,731,899	)
Payment-in-kind interest		(822,850	)		(90,696	)
Proceeds from dispositions of investments		143,743,301			190,294,479
Amortization of deferred financing costs		72,101			—
Decrease (increase) in interest receivable		747,597			(368,312	)
Increase in receivable for investments sold		(55,428,416	)		—
Decrease in prepaid expenses and other assets		38,577			140,442
Increase (decrease) in payable for investments purchased		73,423,853			(59,425,597	)
Increase (decrease) in interest payable on debt		809,575			(1,017,444	)
Increase in base management fee payable		102,140			79,137
Decrease in performance-based incentive fee payable		(216,371	)		(3,111,202	)
Increase in accrued other expenses		253,496			117,770
Net cash used in operating activities		(66,088,011	)		(43,585,759	)
Cash flows from financing activities:
Distributions paid to stockholders		(11,050,041	)		(11,050,041	)
Borrowings under Credit Facility (See Notes 5 and 10)		86,000,000			104,500,000
Repayments under Credit Facility (See Notes 5 and 10)		(16,000,000	)		(87,320,020	)
Net cash provided by financing activities		58,949,959			6,129,939
Net decrease in cash and cash equivalents		(7,138,052	)		(37,455,820	)
Effect of exchange rate changes on cash		92,865			412,033
Cash and cash equivalents, beginning of period		63,337,728			72,224,183
Cash and cash equivalents, end of period	$	56,292,541		$	35,180,396
Supplemental disclosure of cash flow information:
Interest paid	$	6,425,587		$	6,322,922
Taxes paid	$	37,086		$	—
Non-cash exchanges and conversions	$	—		$	—

SEE NOTES TO CONSOLIDATED FINANCIAL STATEMENTS

PENNANTPARK FLOATING RATE CAPITAL LTD. AND SUBSIDIARIES

CONSOLIDATED SCHEDULE OF INVESTMENTS

DECEMBER 31, 2019

(Unaudited)

Issuer Name	Maturity	Industry	Current Coupon			Basis Point Spread Above Index ⁽¹⁾		Par / Shares		Cost		Fair Value ⁽²⁾
Investments in Non-Controlled, Non-Affiliated Portfolio Companies—196.9% ^{(3), (4)}
First Lien Secured Debt—182.3%
18 Freemont Street Acquisition, LLC	08/11/2025	Hotels, Restaurants and Leisure		10.04	%	1M L+800			15,000,000	$	14,709,949	$	15,075,000
Advantage Sales & Marketing	07/23/2021	Food and Staples Retailing		4.98	%	1M L+325			11,324,401		10,826,427		10,923,291
Altamira Technologies, LLC	07/24/2025	IT Services		7.93	%	3M L+600			6,459,375		6,366,284		6,459,375
Altamira Technologies, LLC (Revolver) ^{(7), (9)}	07/24/2025	IT Services	—				—		2,156,250		—		—
American Auto Auction Group, LLC	01/02/2024	Transportation: Consumer		6.60	%	3M L+475			7,446,285		7,366,113		7,371,822
American Insulated Glass, LLC	12/21/2023	Building Products		7.79	%	3M L+550			14,887,500		14,645,994		14,589,750
American Insulated Glass, LLC ^{(7), (9)}	12/21/2023	Building Products	—				—		649,351		—		(12,987	)
American Teleconferencing Services, Ltd.	12/08/2021	Telecommunications		8.40	%	3M L+650			9,664,269		9,590,682		6,958,274
API Holdings III Corp.	05/11/2026	Electronic Equipment, Instruments, and Components		6.05	%	1M L+425			5,970,000		5,940,568		5,940,150
BEI Precision Systems & Space Company, Inc.	04/28/2023	Aerospace and Defense		7.45	%	3M L+550			11,695,406		11,621,807		11,578,452
By Light Professional IT Services, LLC	05/16/2022	High Tech Industries		7.98	%	3M L+625			29,597,884		29,384,020		29,597,884
By Light Professional IT Services, LLC (Revolver) ^{(7), (9)}	05/16/2022	High Tech Industries	—				—		2,504,092		—		—
Cadence Aerospace, LLC	11/14/2023	Aerospace and Defense		8.43	%	3M L+650			2,860,808		2,842,366		2,857,375
Cano Health, LLC	12/23/2021	Healthcare and Pharmaceuticals		7.98	%	1M L+650			33,743,008		33,449,063		33,743,008
Cardenas Markets LLC	11/29/2023	Beverage, Food and Tobacco		7.45	%	1M L+575			3,825,025		3,829,551		3,672,024
Centauri Group Holdings, LLC	02/12/2024	Aerospace and Defense		7.20	%	3M L+525			3,273,579		3,267,972		3,257,212
CHA Holdings, Inc.	04/10/2025	Environmental Industries		6.46	%	3M L+450			7,347,589		7,321,580		7,310,851
CHA Holdings, Inc. ^{(7), (9)}	04/10/2025	Environmental Industries	—				—		53,571		—		(268	)
Challenger Performance Optimization, Inc. (Revolver) ⁽⁷⁾	08/31/2023	Business Services		7.51	%	1M L+575			569,158		569,158		549,237
Challenger Performance Optimization, Inc. (Revolver) ^(7), (9)	08/31/2023	Business Services	—				—		142,289		—		(4,980	)
Confluent Health, LLC	06/24/2026	Health Providers and Services		6.80	%	1M L+500			3,980,000		3,940,819		3,960,100
Digital Room Holdings, Inc.	05/22/2026	Media: Advertising, Printing and Publishing		6.80	%	1M L+500			9,950,000		9,806,465		9,800,750
Douglas Products and Packaging Company LLC	10/19/2022	Chemicals, Plastics and Rubber		7.69	%	3M L+575			14,304,044		14,135,098		14,161,004
Douglas Products and Packaging Company LLC (Revolver)⁽⁷⁾	10/19/2022	Chemicals, Plastics and Rubber		9.50	%	P+475			585,490		585,490		579,635
Douglas Products and Packaging Company LLC (Revolver)^{(7), (9)}	10/19/2022	Chemicals, Plastics and Rubber		—			—		3,805,686		—		(38,057	)
Douglas Sewer Intermediate, LLC	10/19/2022	Chemicals, Plastics and Rubber		7.69	%	3M L+575			9,791,985		9,734,134		9,694,065
DRS Holdings III, Inc.	11/03/2025	Personal Products		7.61	%	1M L+575			5,000,000		4,950,412		4,951,000
DRS Holdings III, Inc. (Revolver)⁽⁷⁾	11/03/2025	Personal Products		7.55	%	1M L+575			36,149		36,149		35,794
DRS Holdings III, Inc. (Revolver)^{(7), (9)}	11/03/2025	Personal Products	—				—		867,568		—		(8,503	)
East Valley Tourist Development Authority	09/30/2020	Hotel, Gaming and Leisure		10.06	%	3M L+800			18,540,775		18,437,131		18,355,367
ECM Industries, LLC	12/23/2025	Electronic Equipment, Instruments, and Components		6.29	%	1M L+450			5,101,476		5,050,601		5,050,461
ECM Industries, LLC (Revolver) ⁽⁷⁾	12/23/2025	Electronic Equipment, Instruments, and Components		6.29	%	1M L+450			310,215		310,215		310,215
ECM Industries, LLC (Revolver) ^{(7), (9)}	12/23/2025	Electronic Equipment, Instruments, and Components	—				—		604,200		—		—
eCommission Financial Services, Inc. ⁽¹⁰⁾	10/05/2023	Banking, Finance, Insurance & Real Estate		6.70	%	1M L+500			16,502,500		16,502,500		16,502,500
eCommission Financial Services, Inc. (Revolver) ^{(7), (9), (10)}	10/05/2023	Banking, Finance, Insurance & Real Estate	—				—		5,000,000		—		—
Education Networks of America, Inc.	05/06/2021	Telecommunications		9.41	%	1M L+750			10,308,317		10,308,317		10,205,234
Education Networks of America, Inc. (Revolver) ^{(7), (9)}	05/06/2021	Telecommunications		9.42	%	1M L+750			2,196,986		2,196,986		2,175,016
Efficient Collaborative Retail Marketing Company, LLC	06/15/2022	Media: Diversified and Production		8.69	%	3M L+675			7,189,139		7,161,466		7,117,247
FlexPrint, LLC	01/02/2024	Professional Services		8.41	%	3M L+649			4,281,014		4,213,816		4,216,798
FlexPrint, LLC ^{(7), (9)}	01/02/2024	Professional Services	—				—		3,772,226		—		(28,291	)
GCOM Software LLC	11/14/2022	High Tech Industries		8.12	%	1M L+625			14,196,100		13,921,708		14,196,100
GCOM Software LLC (Revolver) ⁽⁷⁾	11/14/2022	High Tech Industries		9.00	%	P+425			1,520,000		1,520,000		1,520,000
GCOM Software LLC (Revolver) ^{(7), (9)}	11/14/2022	High Tech Industries	—				—		1,146,667		—		—
Good2Grow LLC	11/18/2024	Beverages		6.19	%	3M L+425			6,797,549		6,739,179		6,729,574
Good2Grow LLC (Revolver) ^{(7), (9)}	11/16/2023	Beverages	—				—		3,137,000		—		(31,370	)
GSM Holdings, Inc.	06/03/2024	Consumer Goods: Durable		6.51	%	3M L+450			19,276,633		19,171,231		19,083,867
GSM Holdings, Inc. (Revolver) ⁽⁷⁾	06/03/2024	Consumer Goods: Durable		8.00	%	3M L+450			1,662,846		1,662,846		1,646,218
GSM Holdings, Inc. (Revolver) ^{(7), (9)}	06/03/2024	Consumer Goods: Durable	—				—		5,463,638		—		(54,636	)
Holdco Sands Intermediate, LLC	12/19/2025	Aerospace and Defense		7.76	%	3M L+600			21,704,762		21,379,190		21,379,190
HW Holdco, LLC	12/10/2024	Media		8.14	%	1M L+625			7,472,903		7,406,970		7,472,903
HW Holdco, LLC (Revolver) ⁽⁷⁾	12/10/2024	Media		8.14	%	1M L+625			92,903		92,903		92,903
HW Holdco, LLC (Revolver) ^{(7), (9)}	12/10/2024	Media	—				—		1,358,710		—		—
IMIA Holdings, Inc. (Revolver) ^{(7), (9)}	10/28/2024	Aerospace and Defense	—				—		1,968,504		—		—
Impact Group, LLC	06/27/2023	Wholesale		8.50	%	1M L+650			12,773,147		12,711,909		12,581,550
Innova Medical Ophthalmics Inc. ^{(5), (10)}	04/13/2023	Capital Equipment		8.19	%	3M L+625			3,305,640		3,272,670		3,272,584
Innova Medical Ophthalmics Inc. (Revolver) ^{(5), (7), (10)}	04/13/2023	Capital Equipment		8.84	%	P+500			150,442		150,442		149,690
Innova Medical Ophthalmics Inc. (Revolver) ^{(5), (7), (9), (10)}	04/13/2023	Capital Equipment	—				—		380,531		—		(1,903	)
Integrative Nutrition, LLC	09/29/2023	Consumer Services		6.69	%	3M L+475			25,690,251		25,488,027		25,433,349
Integrative Nutrition, LLC (Revolver) ^{(7), (9)}	09/29/2023	Consumer Services	—				—		5,000,000		—		(50,000	)
Inventus Power, Inc.	04/30/2020	Consumer Goods: Durable		8.30	%	1M L+650			3,734,390		3,731,734		3,547,670
K2 Pure Solutions NoCal, L.P. (Revolver) ⁽⁷⁾	12/20/2023	Chemicals, Plastics and Rubber		7.02	%	1M L+525			714,286		714,286		702,357
K2 Pure Solutions NoCal, L.P. (Revolver) ^{(7), (9)}	12/20/2023	Chemicals, Plastics and Rubber	—				—		714,286		—		(11,928	)
Kentucky Downs, LLC	03/07/2025	Hotels, Restaurants and Leisure		9.94	%	1M L+800			5,429,692		5,329,756		5,429,692
Kentucky Downs, LLC ^{(7), (9)}	03/07/2025	Hotels, Restaurants and Leisure	—				—		1,344,828		—		—
KHC Holdings, Inc.	10/31/2022	Wholesale		7.94	%	3M L+600			6,662,994		6,607,314		6,662,994
KHC Holdings, Inc. (Revolver) ⁽⁷⁾	10/30/2020	Wholesale		5.97	%	1M L+425			572,581		572,581		572,581
KHC Holdings, Inc. (Revolver) ^{(7), (9)}	10/30/2020	Wholesale	—				—		637,097		—		—
Lago Resort & Casino, LLC	03/07/2022	Hotel, Gaming and Leisure		11.44	%	3M L+950			9,290,500		9,207,521		9,151,143
LAV Gear Holdings, Inc.	10/31/2024	Capital Equipment		7.44	%	1M L+550			8,336,111		8,291,649		8,372,790
LAV Gear Holdings, Inc. (Revolver) ⁽⁷⁾	10/31/2024	Capital Equipment		7.45	%	1M L+550			507,937		507,937		510,171
LAV Gear Holdings, Inc. (Revolver) ^{(7), (9)}	10/31/2024	Capital Equipment		—			—		1,079,365		—		4,747

SEE NOTES TO CONSOLIDATED FINANCIAL STATEMENTS

PENNANTPARK FLOATING RATE CAPITAL LTD. AND SUBSIDIARIES

CONSOLIDATED SCHEDULE OF INVESTMENTS—(Continued)

DECEMBER 31, 2019

(Unaudited)

Issuer Name	Maturity	Industry	Current Coupon				Basis Point Spread Above Index ⁽¹⁾			Par / Shares		Cost		Fair Value ⁽²⁾
Lash Opco, LLC	12/12/2024	Personal Products		9.25	%		P+450				9,060,240	$	8,790,344	$	8,788,432
Lash Opco, LLC (Revolver) ⁽⁷⁾	12/12/2024	Personal Products		9.25	%		P+450				1,094,901		1,094,901		1,094,901
Lash Opco, LLC (Revolver) ^{(7), (9)}	12/12/2024	Personal Products		—				—			648,282		—		—
LifeCare Holdings LLC ⁽⁷⁾	11/30/2021	Healthcare and Pharmaceuticals		0.00	%	⁽⁶⁾		—			4,736,107		4,599,788		236,805
Lombart Brothers, Inc.	04/13/2023	Capital Equipment		8.19	%		3M L+625				13,783,976		13,635,354		13,646,136
Lombart Brothers, Inc. (Revolver) ⁽⁷⁾	04/13/2023	Capital Equipment		9.75	%		P+500				510,151		510,151		507,600
Lombart Brothers, Inc. (Revolver) ^{(7), (9)}	04/13/2023	Capital Equipment	—					—			728,787		—		(3,644	)
Long Island Vision Management, LLC	09/11/2023	Healthcare and Pharmaceuticals		6.71	%		3M L+475				8,986,333		8,937,856		8,936,009
Long Island Vision Management, LLC ^{(7), (9)}	09/11/2023	Healthcare and Pharmaceuticals	—					—			930,906		—		(5,213	)
LSF9 Atlantis Holdings, LLC	05/01/2023	Retail		7.74	%		1M L+600				13,593,750		13,504,921		12,511,959
Manna Pro Products, LLC	12/08/2023	Consumer Goods: Non-Durable		7.80	%		1M L+600				8,368,750		8,309,166		8,133,588
Marketplace Events LLC	01/27/2023	Media: Diversified and Production		7.19	%		3M L+525				5,298,467		5,231,575		5,245,483
Marketplace Events LLC ⁽¹¹⁾	01/27/2023	Media: Diversified and Production		7.31	%		P+275		C	$	16,256,630		11,402,136		12,473,759
Marketplace Events LLC (Revolver) ^{(7), (9)}	01/27/2023	Media: Diversified and Production	—					—			1,703,163		—		—
MeritDirect, LLC	05/23/2024	Media		7.44	%		3M L+550				39,082,675		38,547,549		38,691,848
MeritDirect, LLC (Revolver) ^{(7), (9)}	05/23/2024	Media		—				—			4,481,655		—		(44,816	)
Mission Critical Electronics, Inc.⁽⁷⁾	09/28/2021	Capital Equipment		6.70	%		1M L+500				618,375		612,444		617,508
Mission Critical Electronics, Inc. (Revolver) ⁽⁷⁾	09/28/2021	Capital Equipment		6.70	%		1M L+500				176,678		176,678		176,431
Mission Critical Electronics, Inc. (Revolver) ^{(7), (9)}	09/28/2021	Capital Equipment	—					—			1,148,410		—		(1,608	)
Montreign Operating Company, LLC	01/24/2023	Hotel, Gaming and Leisure		10.16	%		3M L+825				27,120,836		27,309,681		23,307,104
Nuvei Technologies Corp. ^{(5), (10)}	09/28/2025	Diversified Financial Services		6.80	%		1M L+500				6,269,637		6,178,434		6,300,986
Olde Thompson, LLC	05/14/2024	Beverage, Food and Tobacco		6.05	%		1M L+425				1,513,571		1,498,436		1,513,571
Olde Thompson, LLC - Revolver ^{(7), (9)}	05/14/2024	Beverage, Food and Tobacco	—					—			2,642,857		—		—
Output Services Group, Inc.	03/27/2024	Business Services		6.38	%		1M L+450				4,501,465		3,896,309		4,276,392
Output Services Group, Inc. ^{(7), (9)}	03/27/2024	Business Services	—					—			74,527		—		(3,354	)
Ox Two, LLC	02/27/2023	Construction and Building		8.05	%		1M L+625				12,716,974		12,649,154		12,716,974
Ox Two, LLC (Revolver) ⁽⁷⁾	02/27/2023	Construction and Building		8.05	%		1M L+625				230,666		230,666		230,666
Ox Two, LLC (Revolver) ^{(7), (9)}	02/27/2023	Construction and Building	—					—			324,889		—		—
Peninsula Pacific Entertainment LLC	11/13/2024	Hotel, Gaming and Leisure		9.19	%		1M L+725				13,275,810		13,226,830		13,209,431
Plant Health Intermediate, Inc.	10/19/2022	Chemicals, Plastics and Rubber		7.69	%		3M L+575				2,108,380		2,083,705		2,087,296
PlayPower, Inc.	05/08/2026	Leisure Products		7.46	%		1M L+550				5,572,000		5,518,678		5,502,350
PRA Events, Inc.	08/08/2022	Business Services		8.95	%		1M L+700				2,572,032		2,533,353		2,572,032
Questex, LLC	09/09/2024	Media: Diversified and Production		6.89	%		3M L+500				7,406,250		7,284,808		7,332,188
Questex, LLC (Revolver) ⁽⁷⁾	09/09/2024	Media: Diversified and Production		6.91	%		3M L+500				319,149		319,149		315,957
Questex, LLC (Revolver) ^{(7), (9)}	09/09/2024	Media: Diversified and Production	—					—			877,660		—		(8,777	)
Research Horizons, LLC	06/28/2022	Media: Advertising, Printing and Publishing		7.95	%		3M L+625				7,170,861		7,103,425		6,955,736
Research Now Group, Inc. and Survey Sampling	12/20/2024	Business Services		7.41	%		3M L+550				30,451,426		29,507,638		30,405,749
International LLC
Riverpoint Medical, LLC	06/20/2025	Healthcare Equipment and Supplies		6.97	%		3M L+500				4,975,000		4,928,165		4,938,683
Riverpoint Medical, LLC (Revolver) ^{(7), (9)}	06/20/2025	Healthcare Equipment and Supplies	—					—			909,091		—		(6,636	)
Sales Benchmark Index LLC	01/3/2025	Professional Services		7.76	%		3M L+600				14,004,065		13,723,984		13,723,984
Sales Benchmark Index LLC ^{(7), (9)}	06/3/2021	Professional Services	—					—			3,231,707		—		—
Sales Benchmark Index LLC (Revolver) ^{(7), (9)}	01/3/2025	Professional Services	—					—			1,292,683		—		—
Salient CRGT Inc.	02/28/2022	High Tech Industries		8.29	%		1M L+600				1,759,183		1,741,579		1,653,632
Sargent & Greenleaf Inc.	12/20/2024	Electronic Equipment, Instruments, and Components		7.30	%		1M L+550				9,772,237		9,626,210		9,625,654
Sargent & Greenleaf Inc. (Revolver) ^{(7), (9)}	12/20/2024	Electronic Equipment, Instruments, and Components	—					—			1,056,367		—		—
Schlesinger Global, Inc.	07/14/2025	Professional Services		6.91	%		1M L+500				17,313,723		17,119,560		17,313,723
Schlesinger Global, Inc. (Revolver) ^{(7), (9)}	07/14/2025	Professional Services	—					—			1,870,302		—		—
Signature Systems Holding Company	05/03/2024	Commercial Services & Supplies		8.44	%		1M L+650				12,837,500		12,661,474		12,837,500
Signature Systems Holding Company (Revolver) ⁽⁷⁾	05/03/2024	Commercial Services & Supplies		10.25	%		P+550				768,817		768,817		768,817
Signature Systems Holding Company (Revolver) ^{(7), (9)}	05/03/2024	Commercial Services & Supplies	—					—			978,495		—		—
Smile Brands Inc. ⁽⁷⁾	10/14/2024	Healthcare and Pharmaceuticals		6.60	%		1M L+450				2,136,667		2,136,667		2,115,300
Smile Brands Inc. ^{(7), (9)}	10/14/2024	Healthcare and Pharmaceuticals	—					—			2,362,585		—		(23,626	)
Smile Brands Inc. (Revolver)⁽⁷⁾	10/14/2024	Healthcare and Pharmaceuticals		8.25	%		P+350				215,500		215,500		211,578
Smile Brands Inc. (Revolver) ^{(7), (9)}	10/14/2024	Healthcare and Pharmaceuticals	—					—			1,400,750		—		(25,494	)
Snak Club, LLC (Revolver) ⁽⁷⁾	07/19/2021	Beverage, Food and Tobacco		7.69	%		3M L+600				50,000		50,000		48,000
Snak Club, LLC (Revolver) ^{(7), (9)}	07/19/2021	Beverage, Food and Tobacco	—					—			445,136		—		(17,805	)
Solutionreach, Inc.	01/17/2024	Healthcare Technology		7.55	%		3M L+575				6,664,125		6,552,013		6,628,805
Solutionreach, Inc. (Revolver) ^{(7), (9)}	01/17/2024	Healthcare Technology	—					—			1,665,000		—		(8,824	)
Spectacle Gary Holdings, LLC	12/20/2025	Hotels, Restaurants and Leisure		11.00	%		1M L+900				13,427,027		13,024,619		13,561,297
Spectacle Gary Holdings, LLC ^{(7), (9)}	12/20/2025	Hotels, Restaurants and Leisure	—				—				972,973		—		9,730
STV Group Incorporated	12/11/2026	Construction & Engineering		7.01	%		1M L+525				21,269,646		21,056,949		21,056,949
TeleGuam Holdings, LLC	11/20/2025	Telecommunications		6.30	%		1M L+450				6,679,822		6,610,971		6,646,423
Teneo Holdings LLC	07/18/2025	Diversified Financial Services		6.99	%		1M L+525				9,975,000		9,593,287		9,451,313
Tensar Corporation	07/09/2021	Construction and Building		6.69	%		3M L+475				22,620,696		22,535,398		21,433,110
The Infosoft Group, LLC	09/16/2024	Media: Broadcasting and Subscription		7.34	%		3M L+525				18,550,054		18,402,291		18,364,553
The Original Cakerie, Co. ^{(5), (10)}	07/20/2022	Consumer Goods: Non-Durable		6.84	%		2M L+500				7,605,623		7,536,794		7,567,595
The Original Cakerie Ltd. ^{(5), (10)}	07/20/2022	Consumer Goods: Non-Durable		6.34	%		2M L+450				5,417,507		5,386,521		5,390,418
The Original Cakerie Ltd. (Revolver) ^{(5), (7), (10)}	07/20/2022	Consumer Goods: Non-Durable		6.30	%		3M L+450				397,175		397,175		395,190
The Original Cakerie Ltd. (Revolver) ^{(5), (7), (9), (10)}	07/20/2022	Consumer Goods: Non-Durable	—					—			1,021,308		—		(5,107	)
TPC Canada Parent, Inc. and TPC US Parent, LLC ^{(5), (10)}	11/24/2025	Food Products		7.04	%		3M L+525				5,000,000		4,950,401		4,973,500
Triad Manufacturing, Inc.	12/28/2020	Capital Equipment		13.05	%		1M L+1,125				7,314,323		7,278,869		7,314,323
TVC Enterprises, LLC	01/18/2024	Professional Services		7.20	%		1M L+550				5,913,870		5,814,454		5,913,870
TVC Enterprises, LLC^{(7), (9)}	01/18/2024	Professional Services	—					—			1,955,719		—		—
TVC Enterprises, LLC (Revolver) ⁽⁷⁾	01/18/2024	Professional Services		8.01	%		1M L+550				733,273		733,273		733,273
TVC Enterprises, LLC (Revolver) ^{(7), (9)}	01/18/2024	Professional Services	—					—			570,539		—		—

SEE NOTES TO CONSOLIDATED FINANCIAL STATEMENTS

PENNANTPARK FLOATING RATE CAPITAL LTD. AND SUBSIDIARIES

CONSOLIDATED SCHEDULE OF INVESTMENTS—(Continued)

DECEMBER 31, 2019

(Unaudited)

Issuer Name	Maturity		Industry	Current Coupon			Basis Point Spread Above Index ⁽¹⁾		Par / Shares		Cost		Fair Value ⁽²⁾
TWS Acquisition Corporation	06/16/2025		Diversified Consumer Services		7.99	%	1M L+625			7,075,000	$	6,910,632	$	7,075,000
TWS Acquisition Corporation (Revolver) ⁽⁷⁾	06/16/2025		Diversified Consumer Services		7.99	%	1M L+625			808,571		808,571		808,571
TWS Acquisition Corporation (Revolver) ^{(7), (9)}	06/16/2025		Diversified Consumer Services	—				—		1,819,286		—		—
Tyto Athene, LLC	08/27/2024		Aerospace and Defense		7.55	%	1M L+575			17,954,637		17,725,805		17,306,475
Tyto Athene, LLC (Revolver) ⁽⁷⁾	08/27/2024		Aerospace and Defense		7.55	%	1M L+575			4,011,364		4,011,364		3,866,553
Tyto Athene, LLC (Revolver) ^{(7), (9)}	08/27/2024		Aerospace and Defense	—				—		2,806,818		—		(101,326	)
UBEO, LLC	04/03/2024		Capital Equipment		6.76	%	3M L+450			14,154,326		14,062,790		14,012,783
UBEO, LLC (Revolver) ^{(7), (9)}	04/03/2024		Capital Equipment	—				—		2,933,333		—		(38,661	)
UniTek Global Services, Inc.	08/20/2024		Telecommunications		7.29	%	3M L+550			10,395,361		10,217,115		9,875,593
Urology Management Associates, LLC	08/30/2024		Healthcare Providers and Services		6.91	%	3M L+500			5,000,000		4,913,865		5,000,000
US Med Acquisition, Inc. ⁽⁷⁾	08/13/2021		Healthcare and Pharmaceuticals		10.44	%	1M L+850			2,988,281		2,988,281		2,988,281
Vision Purchaser Corporation	06/10/2025		Media		8.05	%	1M L+625			14,467,175		14,182,587		14,177,831
Whitney, Bradley & Brown, Inc.	10/18/2022		Aerospace and Defense		9.28	%	1M L+750			4,322,681		4,259,179		4,322,681
Total First Lien Secured Debt												925,199,275		914,871,029
Second Lien Secured Debt—5.4%
Condor Borrower, LLC ⁽⁷⁾	04/25/2025		High Tech Industries		10.68	%	3M L+875			1,655,172		1,629,011		1,638,621
DBI Holdings, LLC, Term Loan B	02/01/2026		Business Services		8.00	%		—		11,157,124		11,157,124		11,101,338
					(PIK 8.00	%)
DBI Holdings, LLC, Term Loan C ⁽⁷⁾	03/26/2021		Business Services		8.00	%		—		22,312		22,312		22,312
					(PIK 8.00	%)
DecoPac, Inc.	03/31/2025		Beverage, Food and Tobacco		10.19	%	3M L+825			9,738,580		9,644,869		9,738,580
MailSouth, Inc.	10/23/2024		Media: Advertising, Printing and Publishing		12.00	%	12M L+925			2,871,025		2,823,634		2,784,894
PT Network Intermediate Holdings, LLC ⁽⁷⁾	11/30/2024		Healthcare and Pharmaceuticals		12.00	%	3M L+1,000			1,923,030		1,905,664		1,913,414
					(PIK 12.00	%)
Total Second Lien Secured Debt												27,182,614		27,199,159
Preferred Equity— 1.9% ⁽⁶⁾
CI (PTN) Investment Holdings II, LLC		—	Healthcare and Pharmaceuticals		—			—		1,458		21,870		465
(PT Network, LLC) ^{(7), (8)}
Condor Holdings Limited ^{(5), (7), (10)}		—	High Tech Industries		—			—		88,000		10,173		10,173
Condor Top Holdco Limited ^{(5), (7), (10)}		—	High Tech Industries		—			—		88,000		77,827		77,827
DBI Holdings, LLC, Series A-1⁽⁸⁾		—	Business Services		13.00	%		—		7,041		7,040,844		5,847,514
MeritDirect Holdings, LP ^{(7), (8)}		—	Media		—			—		960		960,000		1,032,476
NXOF Holdings, Inc. (NextiraOne Federal, LLC) ⁽⁷⁾			Aerospace and Defense		—			—		490		490,000		348,112
PT Network Intermediate Holdings, LLC ^{(7), (8)}		—	Healthcare and Pharmaceuticals		11.94	%	3M L+1,000			33		429,000		452,546
Signature CR Intermediate Holdco, Inc. ⁽⁷⁾		—	Commercial Services & Supplies		12.00	%		—		1,167		1,166,993		1,169,035
TPC Holding Company, LP ^{(5), (7), (10)}		—	Food Products		—			—		409		409,011		411,056
UniTek Global Services, Inc. -		—	Telecommunications		20.00	%		—		343,861		343,861		353,670
Super Senior Preferred Equity⁽⁷⁾
UniTek Global Services, Inc. - Senior Preferred Equity⁽⁷⁾		—	Telecommunications		18.00	%		—		448,851		448,851		—
UniTek Global Services, Inc.⁽⁷⁾		—	Telecommunications		13.50	%		—		1,047,317		670,283		—
Total Preferred Equity												12,068,713		9,702,874
Common Equity/Warrants— 7.2% ⁽⁶⁾
Affinion Group Holdings, Inc. (Warrants)⁽⁷⁾		—	Consumer Goods: Durable		—			—		8,893		244,998		66,213
AG Investco LP ^{(7), (8)}		—	Software		—			—		714,652		714,652		714,652
AG Investco LP ^{(7), (8), (9)}		—	Software		—			—		285,348		—		—
Altamira Intermediate Company II, Inc.⁽⁷⁾		—	IT Services		—			—		1,437,500		1,437,500		1,535,285
By Light Investco LP ^{(7), (8)}		—	High Tech Industries		—			—		21,908		2,190,771		9,282,760
By Light Investco LP ^{(7), (8), (9)}		—	High Tech Industries		—			—		5,592		—		—
CI (Allied) Investment Holdings, LLC		—	Business Services		—			—		120,962		1,243,217		1,607,180
(Allied America, Inc.) ⁽⁷^{), (8)}
CI (PTN) Investment Holdings II, LLC		—	Healthcare and Pharmaceuticals		—			—		13,333		200,000		—
(PT Network, LLC) ^{(7), (8)}
CI (Summit) Investment Holdings, LLC		—	Construction and Building		—			—		54,907		581,995		714,198
(SFP Holding, Inc.) ⁽⁷⁾
DBI Holdings, LLC, Series B⁽⁸⁾		—	Business Services		—			—		1,489,508		330,791		—
DecoPac Holdings Inc. ⁽⁷⁾		—	Beverage, Food and Tobacco		—			—		1,633		1,632,744		3,262,794
ECM Investors, LLC ^{(7), (8)}		—	Electronic Equipment, Instruments, and Components		—			—		240,636		240,636		240,636
eCommission Holding Corporation ^{(7), (10)}			Banking, Finance, Insurance & Real Estate		—			—		20		251,156		405,767
Faraday Holdings, LLC ⁽⁷⁾		—	Construction and Building		—			—		1,141		58,044		312,388
Gauge InfosoftCoInvest, LLC		—	Media: Broadcasting and Subscription		—			—		500		143,663		608,738
(The Infosoft Group, LLC) ⁽⁷⁾
Gauge Lash Coinvest LLC ⁽⁷⁾			Personal Products							1,089,489		1,089,489		1,089,489
Gauge Schlesinger Coinvest LLC ⁽⁷⁾			Professional Services		—			—		403		403,005		557,727
Gauge TVC Coinvest, LLC (TVC Enterprises, LLC) ⁽⁷⁾			Professional Services		—			—		391,144		391,144		385,691
GCOM InvestCo LP ^{(7), (8)}		—	High Tech Industries		—			—		1,549,209		1,423,211		2,741,340
GCOM InvestCo LP ^{(7), (8), (9)}		—	High Tech Industries		—			—		450,791		—		—
Go Dawgs Capital III, LP		—	Building Products		—			—		324,675		324,675		337,662
(American Insulated Glass, LLC)^{(7), (}⁸⁾
IIN Group Holdings, LLC		—	Consumer Services		—			—		1,000		1,000,000		941,558
(Integrative Nutrition, LLC) ^{(7), (8)}
ITC Rumba, LLC (Cano Health, LLC) ^{(7), (8)}		—	Healthcare and Pharmaceuticals		—			—		25,006		543,578		816,563
ITC Rumba, LLC (Cano Health, LLC)^{(7), (8), (9)}		—	Healthcare and Pharmaceuticals		—			—		1,352		—		—
JWC/UMA Holdings, L.P. ⁽⁷⁾		—	Healthcare and Pharmaceuticals		—			—		1,000		1,000,000		1,401,387
JWC-WE Holdings, L.P.		—	Wholesale		—			—		1,381,741		1,381,741		3,782,562
(Walker Edison Furniture Company LLC) ^{(7), (8)}

SEE NOTES TO CONSOLIDATED FINANCIAL STATEMENTS

PENNANTPARK FLOATING RATE CAPITAL LTD. AND SUBSIDIARIES

CONSOLIDATED SCHEDULE OF INVESTMENTS—(Continued)

DECEMBER 31, 2019

(Unaudited)

Issuer Name	Maturity		Industry	Current Coupon			Basis Point Spread Above Index ⁽¹⁾		Par / Shares		Cost		Fair Value ⁽²⁾
Kentucky Racing Holdco, LLC (Warrants)^{(7), (8)}			Hotels, Restaurants and Leisure							87,345	$	—	$	194,143
MeritDirect Holdings, LP ^{(7), (8)}		—	Media		—			—		960		—		245,108
NXOF Holdings, Inc. (NextiraOne Federal, LLC)⁽⁷⁾		—	Aerospace and Defense		—			—		10,000		10,000		—
PT Network Intermediate Holdings, LLC ^{(7), (8)}		—	Healthcare and Pharmaceuticals							25		286,000		741,851
SBI Holdings Investments LLC (Sales Benchmark Index LLC)^{(7), (8)}		—	Professional Services		—			—		64,634		646,341		646,341
Signature CR Intermediate Holdco, Inc. ⁽⁷⁾		—	Commercial Services & Supplies		—			—		61		61,421		—
SSC Dominion Holdings, LLC		—	Capital Equipment		—			—		500		500,000		540,000
Class A (US Dominion, Inc.) ⁽⁷⁾
SSC Dominion Holdings, LLC		—	Capital Equipment		—			—		500		—		925,795
Class B (US Dominion, Inc.) ⁽⁷⁾
TPC Broadband Investors, LP^{(7), (8)}		—	Telecommunications		—			—		763,837		763,837		1,631,544
TPC Broadband Investors, LP ^{(7), (8), (9)}		—	Telecommunications		—			—		236,163		—		—
TPC Holding Company, LP^{(5), (7), (10)}		—	Food Products		—			—		21,527		21,527		12,055
UniTek Global Services, Inc. ⁽⁷⁾		—	Telecommunications		—			—		213,739		—		—
UniTek Global Services, Inc. (Warrants) ⁽⁷⁾		—	Telecommunications		—			—		23,889		—		—
WBB Equity, LLC ^{(7), (8)}		—	Aerospace and Defense		—			—		142,857		142,857		640,000
Total Common Equity/Warrants												19,258,993		36,381,427
Total Investments in Non-Controlled, Non-Affiliated Portfolio Companies												983,709,595		988,154,489
Investments in Non-Controlled, Affiliated Portfolio Companies—3.2% ^{(3), (4)}
First Lien Secured Debt—1.1%
Country Fresh Holdings, LLC ⁽⁷⁾	05/01/2023		Beverage, Food and Tobacco		6.94	%	3M L+500		1,544,161			1,507,881		1,544,161
Country Fresh Holdings, LLC (Revolver) ⁽⁷⁾	05/01/2023		Beverage, Food and Tobacco		7.01	%	3M L+500			1,867,664		1,867,664		1,867,664
Country Fresh Holdings, LLC (Revolver) ^{(7), (9)}	05/01/2023		Beverage, Food and Tobacco		—			—		878,901		—		—
Quick Weight Loss Centers, LLC⁽⁷⁾	10/12/2023		Beverage, Food and Tobacco		4.00	%		—		2,036,833		2,036,833		2,036,833
Total First Lien Secured Debt					(PIK 4.00	%)						5,412,378		5,448,658
Second Lien Secured Debt—1.1%
Country Fresh Holdings, LLC	04/29/2024		Beverage, Food and Tobacco		10.44	%	1M L+850			5,458,138		5,458,138		5,458,138
					(PIK 10.44	%)
Quick Weight Loss Centers, LLC	10/12/2023		Beverage, Food and Tobacco		4.00	%		—		235,960		235,960		235,960
Total Second Lien Secured Debt					(PIK 4.00	%)						5,694,098		5,694,098
Preferred Equity—0.0% ⁽⁶⁾
Quick Weight Loss Centers Holdings, LLC⁽⁸⁾		—	Beverage, Food and Tobacco		—			—		9,568,216		842,352		149,004
Total Preferred Equity												842,352		149,004
Common Equity/Warrants—0.9% ⁽⁶⁾
Country Fresh Holding Company Inc.		—	Beverage, Food and Tobacco		—			—	8,034			10,453,350		4,364,922
Quick Weight Loss Centers, LLC ^{(7), (8)}		—	Beverage, Food and Tobacco		—			—		60		2,520,000		383,145
Total Common Equity/Warrants												12,973,350		4,748,067
Total Investments in Non-Controlled, Affiliated Portfolio Companies												24,922,178		16,039,827
Investments in Controlled, Affiliated Portfolio Companies—34.2% ^{(3), (4)}
First Lien Secured Debt—24.3%
PennantPark Senior Secured Loan Fund I LLC ^(7), ^{(9), (10)}	05/06/2024		Financial Services		10.10	%	3M L+800			122,193,750		122,193,750		122,193,750
Total First Lien Secured Debt												122,193,750		122,193,750
Equity Interests—9.9%
PennantPark Senior Secured Loan Fund I LLC ^(7), ^{(9), (10)}		—	Financial Services		—			—		52,369		52,368,750		49,727,848
Total Equity Interests												52,368,750		49,727,848
Total Investments in Controlled, Affiliated Portfolio Companies												174,562,500		171,921,598
Total Investments—234.3%												1,183,194,273		1,176,115,914
Cash and Cash Equivalents—11.2%
BlackRock Federal FD Institutional 30												7,918,014		7,918,015
BNY Mellon Cash												48,343,828		48,374,526
Total Cash and Cash Equivalents												56,261,842		56,292,541
Total Investments and Cash Equivalents—245.5%											$	1,239,456,115	$	1,232,408,455
Liabilities in Excess of Other Assets—(145.5)%														(730,428,091	)
Net Assets—100.0%													$	501,980,364

(1)

Represents floating rate instruments that accrue interest at a predetermined spread relative to an index, typically the applicable LIBOR or “L” or Prime rate, or “P.” The spread may change based on the type of rate used. The terms in the Schedule of Investments disclose the actual interest rate in effect as of the reporting period. LIBOR loans are typically indexed to a 30-day, 60-day, 90-day or 180-day LIBOR rate (1M L, 2M L, 3M L, or 6M L, respectively), at the borrower’s option. All securities are subject to a LIBOR or Prime rate floor where a spread is provided, unless noted. The spread provided includes payment-in-kind, or PIK, interest and other fee rates, if any.

(2)	Valued based on our accounting policy (See Note 2). The value of all securities was determined using significant unobservable inputs (See Note 5).

(3)

The provisions of the 1940 Act classify investments based on the level of control that we maintain in a particular portfolio company. As defined in the 1940 Act, a company is generally presumed to be “non-controlled” when we own 25% or less of the portfolio company’s voting securities and “controlled” when we own more than 25% of the portfolio company’s voting securities.

(4)

The provisions of the 1940 Act classify investments further based on the level of ownership that we maintain in a particular portfolio company. As defined in the 1940 Act, a company is generally deemed as “non-affiliated” when we own less than 5% of a portfolio company’s voting securities and “affiliated” when we own 5% or more of a portfolio company’s voting securities.

(5)	Non-U.S. company or principal place of business outside the United States.

(6)	Non-income producing securities.

(7)	The securities, or a portion thereof, are not 1) pledged as collateral under the Credit Facility and held through Funding I; or, 2) securing the 2031 Asset-Backed Debt (See Note 10) and held through PennantPark CLO I, Ltd.

(8)	Investment is held through our Taxable Subsidiary (See Note 1).

(9)	Represents the purchase of a security with delayed settlement or a revolving line of credit that is currently an unfunded investment. This security does not earn a basis point spread above an index while it is unfunded.

(10)

The investment is treated as a non-qualifying asset under Section 55(a) of the 1940 Act. Under the 1940 Act, we may not acquire any non-qualifying asset unless, at the time the acquisition is made, qualifying assets represent at least 70% of our total assets. As of December 31, 2019, qualifying assets represent 82% of our total assets and non-qualifying assets represent 18% of our total assets.

(11)	Par amount is denominated in Canadian Dollars (C$) as denoted.

SEE NOTES TO CONSOLIDATED FINANCIAL STATEMENTS

PENNANTPARK FLOATING RATE CAPITAL LTD. AND SUBSIDIARIES

CONSOLIDATED SCHEDULE OF INVESTMENTS

SEPTEMBER 30, 2019

Issuer Name	Maturity	Industry	Current Coupon				Basis Point Spread Above Index ⁽¹⁾			Par / Shares		Cost		Fair Value ⁽²⁾
Investments in Non-Controlled, Non-Affiliated Portfolio Companies—176.7% ^{(3), (4)}
First Lien Secured Debt—162.7%
18 Freemont Street Acquisition, LLC	08/11/2025	Hotels, Restaurants and Leisure		10.04	%		1M L+800				15,000,000	$	14,702,672	$	15,000,000
Altamira Technologies, LLC	07/24/2025	IT Services		8.28	%		3M L+600				6,500,000		6,404,125		6,500,000
Altamira Technologies, LLC (Revolver) ^{(7), (9)}	07/24/2025	IT Services		—				—			2,156,250		—		—
American Auto Auction Group, LLC	01/02/2024	Transportation: Consumer		7.07	%		3M L+475				5,798,444		5,727,667		5,740,459
American Insulated Glass, LLC	12/21/2023	Building Products		8.10	%		3M L+550				14,925,000		14,670,272		14,701,125
American Insulated Glass, LLC ^{(7), (9)}	12/21/2023	Building Products		—				—			649,351		—		(9,740	)
American Teleconferencing Services, Ltd.	12/08/2021	Telecommunications		8.69	%		3M L+650				9,672,954		9,590,848		6,771,068
API Holdings III Corp.	05/11/2026	Electronic Equipment, Instruments, and Components		6.45	%		1M L+425				5,985,000		5,955,320		5,783,006
BEI Precision Systems & Space Company, Inc.	04/28/2023	Aerospace and Defense		7.61	%		3M L+550				11,730,000		11,651,612		11,612,700
By Light Professional IT Services, LLC	05/16/2022	High Tech Industries		8.56	%		3M L+625				13,096,955		12,864,397		13,096,955
By Light Professional IT Services, LLC ⁽⁷⁾	05/16/2022	High Tech Industries		—				—			15,745,817		—		—
By Light Professional IT Services, LLC (Revolver) ^{(7), (9)}	05/16/2022	High Tech Industries		—				—			2,504,092		—		—
Cadence Aerospace, LLC	11/14/2023	Aerospace and Defense		8.54	%		3M L+650				2,868,106		2,848,592		2,854,626
Cano Health, LLC	12/23/2021	Healthcare and Pharmaceuticals		8.36	%		1M L+650				23,306,224		23,094,603		23,306,224
Cardenas Markets LLC	11/29/2023	Beverage, Food and Tobacco		7.86	%		1M L+575				3,834,884		3,840,082		3,719,837
CHA Holdings, Inc.	04/10/2025	Environmental Industries		6.79	%		3M L+450				7,366,205		7,340,067		7,329,374
CHA Holdings, Inc. ^{(7), (9)}	04/10/2025	Environmental Industries		—				—			53,571		—		(268	)
Challenger Performance Optimization, Inc. (Revolver) ⁽⁷⁾	08/31/2023	Business Services		7.87	%		1M L+575				284,579		284,579		277,464
Challenger Performance Optimization, Inc. (Revolver) ^(7), (9)	08/31/2023	Business Services		—				—			426,868		—		(10,672	)
Confluent Health, LLC	06/24/2026	Health Providers and Services		7.40	%		1M L+500				4,000,000		3,960,046		3,940,000
Deva Holdings, Inc.	10/31/2023	Consumer Goods: Non-Durable		7.60	%		3M L+550				944,900		931,008		944,900
Deva Holdings, Inc. (Revolver) ^{(7), (9)}	10/31/2022	Consumer Goods: Non-Durable		—				—			2,115,000		—		—
Digital Room Holdings, Inc. ⁽⁷⁾	05/22/2026	Media: Advertising, Printing and Publishing		7.09	%		1M L+500				9,975,000		9,827,383		9,495,003
Douglas Products and Packaging Company LLC	10/19/2022	Chemicals, Plastics and Rubber		8.08	%		3M L+575				14,340,441		14,159,516		14,197,037
Douglas Products and Packaging Company LLC	10/19/2022	Chemicals, Plastics and Rubber		9.75	%		P+475				439,118		439,118		434,726
(Revolver) ^{(7), (9)}
Douglas Products and Packaging Company LLC	10/19/2022	Chemicals, Plastics and Rubber		—				—			3,952,059		—		(39,522	)
(Revolver) ^{(7), (9)}
Douglas Sewer Intermediate, LLC ⁽⁷⁾	10/19/2022	Chemicals, Plastics and Rubber		7.85	%		3M L+575				9,816,712		9,755,921		9,718,545
East Valley Tourist Development Authority	03/07/2022	Hotel, Gaming and Leisure		10.06	%		3M L+800				18,592,082		18,478,010		18,406,161
eCommission Financial Services, Inc. ⁽¹⁰⁾	10/05/2023	Banking, Finance, Insurance & Real Estate		7.07	%		1M L+500				21,564,375		21,564,375		21,564,375
eCommission Financial Services, Inc. (Revolver) ^{(7), (9), (10)}	10/05/2023	Banking, Finance, Insurance & Real Estate		—				—			5,000,000		—		—
Education Networks of America, Inc.	05/06/2021	Telecommunications		9.62	%		1M L+750				10,401,338		10,401,338		10,349,331
								(PIK 2.50	%)
Education Networks of America, Inc. (Revolver) ^{(7), (9)}	05/06/2021	Telecommunications		9.66	%		1M L+750				2,189,535		2,189,535		2,178,587
Efficient Collaborative Retail Marketing Company, LLC	06/15/2022	Media: Diversified and Production		8.85	%		3M L+675				7,250,797		7,220,335		7,178,290
FlexPrint, LLC	01/02/2024	Professional Services		8.61	%		3M L+620				4,281,014		4,213,518		4,216,799
FlexPrint, LLC ^{(7), (9)}	01/02/2024	Professional Services		—				—			3,772,226		—		(28,292	)
GCOM Software LLC	11/14/2022	High Tech Industries		8.37	%		1M L+625				12,112,187		11,880,407		12,112,187
GCOM Software LLC (Revolver) ^{(7), (9)}	11/14/2022	High Tech Industries		—				—			2,666,667		—		—
Good2Grow LLC (Revolver) ^{(7), (9)}	11/16/2023	Beverages		—				—			3,137,000		—		(31,370	)
GSM Holdings, Inc.	06/03/2024	Consumer Goods: Durable		6.66	%		3M L+450				19,325,409		19,215,204		19,132,154
GSM Holdings, Inc. (Revolver) ⁽⁷⁾	06/03/2024	Consumer Goods: Durable		6.69	%		3M L+450				5,938,737		5,938,737		5,879,350
GSM Holdings, Inc. (Revolver) ^{(7), (9)}	06/03/2024	Consumer Goods: Durable		—				—			1,187,747		—		(11,877	)
HW Holdco, LLC	12/10/2024	Media		8.39	%		1M L+625				7,491,774		7,422,604		7,491,774
HW Holdco, LLC (Revolver) ⁽⁷⁾	12/10/2024	Media		8.39	%		1M L+625				209,032		209,032		209,032
HW Holdco, LLC (Revolver) ^{(7), (9)}	12/10/2024	Media		—				—			1,242,581		—		—
IMIA Holdings, Inc. (Revolver) ^{(7), (9)}	10/28/2024	Aerospace and Defense		—				—			1,968,504		—		—
Impact Group, LLC	06/27/2023	Wholesale		8.72	%		1M L+650				12,807,129		12,742,367		12,679,058
Innova Medical Ophthalmics Inc. ^{(5), (10)}	04/13/2023	Capital Equipment		8.35	%		3M L+625				3,305,640		3,271,191		3,272,584
Innova Medical Ophthalmics Inc. (Revolver) ^{(5), (7), (10)}	04/13/2023	Capital Equipment		10.00	%		P+500				159,292		159,292		158,495
Innova Medical Ophthalmics Inc. (Revolver) ^{(5), (7), (9), (10)}	04/13/2023	Capital Equipment		—				—			371,681		—		(1,858	)
Integrative Nutrition, LLC	09/29/2023	Consumer Services		6.85	%		3M L+475				25,755,126		25,541,479		25,755,126
Integrative Nutrition, LLC (Revolver) ^{(7), (9)}	09/29/2023	Consumer Services		—				—			5,000,000		—		—
Inventus Power, Inc.	04/30/2020	Consumer Goods: Durable		8.54	%		1M L+650				4,105,494		4,100,506		3,777,055
K2 Pure Solutions NoCal, L.P. (Revolver) ⁽⁷⁾	12/20/2023	Chemicals, Plastics and Rubber		7.30	%		1M L+525				500,000		500,000		493,950
K2 Pure Solutions NoCal, L.P. (Revolver) ^{(7), (9)}	12/20/2023	Chemicals, Plastics and Rubber		—				—			928,571		—		(11,236	)
Kentucky Downs, LLC	03/07/2025	Hotels, Restaurants and Leisure		10.60	%		1M L+850				5,429,692		5,327,414		5,429,692
Kentucky Downs, LLC ^{(7), (9)}	03/07/2025	Hotels, Restaurants and Leisure		—				—			1,344,828		—		—
KHC Holdings, Inc.	10/31/2022	Wholesale		8.23	%		3M L+600				12,031,250		11,925,121		12,031,250
KHC Holdings, Inc. (Revolver) ⁽⁷⁾	10/30/2020	Wholesale		6.29	%		1M L+425				479,839		479,839		479,839
KHC Holdings, Inc. (Revolver) ^{(7), (9)}	10/30/2020	Wholesale		—				—			729,839		—		—
Lago Resort & Casino, LLC	03/07/2022	Hotel, Gaming and Leisure		11.60	%		3M L+950				9,316,000		9,224,654		9,176,260
LAV Gear Holdings, Inc.	10/31/2024	Capital Equipment		7.60	%		1M L+550				8,357,143		8,311,279		8,349,621
LAV Gear Holdings, Inc. (Revolver) ⁽⁷⁾	10/31/2024	Capital Equipment		7.61	%		1M L+550				126,984		126,984		126,870
LAV Gear Holdings, Inc. (Revolver) ^{(7), (9)}	10/31/2024	Capital Equipment		—				—			1,460,317		—		(1,314	)
LifeCare Holdings LLC ⁽⁷⁾	11/30/2021	Healthcare and Pharmaceuticals		0.00	%	⁽⁶⁾		—			4,736,107		4,599,788		94,722
Lombart Brothers, Inc.	04/13/2022	Capital Equipment		8.35	%		3M L+625				13,783,976		13,628,111		13,646,136
Lombart Brothers, Inc. (Revolver) ⁽⁷⁾	04/13/2022	Capital Equipment		10.00	%		P+500				437,272		437,272		435,086
Lombart Brothers, Inc. (Revolver) ^{(7), (9)}	04/13/2022	Capital Equipment		—				—			801,666		—		(4,009	)
Long Island Vision Management, LLC	09/11/2023	Healthcare and Pharmaceuticals		7.05	%		3M L+475				8,165,763		8,114,887		8,124,934
Long Island Vision Management, LLC ^{(7), (9)}	09/11/2023	Healthcare and Pharmaceuticals		—				—			1,788,843		—		(8,944	)
Long’s Drugs Incorporated	08/19/2022	Healthcare and Pharmaceuticals		7.10	%		1M L+500				9,900,000		9,830,562		9,801,000
Long’s Drugs Incorporated (Revolver) ^{(7), (9)}	08/19/2022	Healthcare and Pharmaceuticals		—				—			3,000,000		—		(60,000	)

SEE NOTES TO CONSOLIDATED FINANCIAL STATEMENTS

PENNANTPARK FLOATING RATE CAPITAL LTD. AND SUBSIDIARIES

CONSOLIDATED SCHEDULE OF INVESTMENTS—(Continued)

SEPTEMBER 30, 2019

Issuer Name	Maturity	Industry	Current Coupon			Basis Point Spread Above Index ⁽¹⁾			Par / Shares		Cost		Fair Value ⁽²⁾
LSF9 Atlantis Holdings, LLC	05/01/2023	Retail		8.04	%	1M L+600				13,684,375	$	13,590,322	$	12,711,826
Manna Pro Products, LLC	12/08/2023	Consumer Goods: Non-Durable		8.11	%	1M L+600				8,390,000		8,327,947		8,159,275
Marketplace Events LLC	01/27/2023	Media: Diversified and Production		7.35	%	3M L+525				5,312,015		5,243,388		5,245,616
Marketplace Events LLC ⁽¹¹⁾	01/27/2023	Media: Diversified and Production		7.20	%	P+275		C	$	16,299,990		11,428,057		12,311,171
Marketplace Events LLC (Revolver) ⁽⁷⁾	01/27/2023	Media: Diversified and Production		7.75	%	P+275				476,886		476,886		476,886
Marketplace Events LLC (Revolver) ^{(7), (9)}	01/27/2023	Media: Diversified and Production		—			—			1,226,277		—		—
MeritDirect, LLC	05/23/2024	Media		8.06	%	3M L+550				34,772,838		34,280,848		34,251,245
MeritDirect, LLC (Revolver) ^{(7), (9)}	05/23/2024	Media		—			—			4,481,655		—		(67,225	)
Mission Critical Electronics, Inc. (Revolver) ⁽⁷⁾	09/28/2021	Capital Equipment		7.18	%	1M L+500				212,014		212,014		212,014
Mission Critical Electronics, Inc. (Revolver) ^{(7), (9)}	09/28/2021	Capital Equipment		—			—			1,113,074		—		—
Montreign Operating Company, LLC	01/24/2023	Hotel, Gaming and Leisure		10.37	%	3M L+825				27,189,858		27,394,375		24,344,712
Nuvei Technologies Corp. ^{(5), (10)}	09/28/2025	Diversified Financial Services		8.43	%	P+400				19,949,780		19,652,494		19,650,534
Olde Thompson, LLC	05/14/2024	Beverage, Food and Tobacco		6.54	%	1M L+450				1,575,476		1,559,721		1,575,476
Olde Thompson, LLC - Revolver ^{(7), (9)}	05/14/2024	Beverage, Food and Tobacco		—			—			2,642,857		—		—
Output Services Group, Inc.	03/27/2024	Business Services		6.54	%	1M L+450				2,962,422		2,684,289		2,547,683
Ox Two, LLC	02/27/2023	Construction and Building		8.29	%	1M L+625				12,780,524		12,708,453		12,780,524
Ox Two, LLC (Revolver) ⁽⁷⁾	02/27/2023	Construction and Building		12.25	%	P+725				508,444		508,444		508,444
Ox Two, LLC (Revolver) ^{(7), (9)}	02/27/2023	Construction and Building		—			—			47,111		—		—
Peninsula Pacific Entertainment LLC ⁽⁷⁾	11/13/2024	Hotel, Gaming and Leisure		9.35	%	1M L+725				13,275,810		13,225,232		13,275,810
Pestell Minerals and Ingredients Inc. ^{(5), (10)}	06/01/2023	Beverage, Food and Tobacco		7.57	%	3M L+525				14,887,500		14,769,736		14,738,625
Plant Health Intermediate, Inc. ⁽⁷⁾	10/19/2022	Chemicals, Plastics and Rubber		8.00	%	3M L+575				2,113,704		2,087,235		2,092,567
PlayPower, Inc.	05/08/2026	Leisure Products		7.60	%	1M L+550				5,586,000		5,531,151		5,579,018
PRA Events, Inc.	08/08/2022	Business Services		9.11	%	1M L+700				2,585,319		2,543,697		2,585,319
Quantum Spatial, Inc.	09/04/2024	Aerospace and Defense		7.32	%	1M L+525				19,000,000		18,717,745		18,715,000
Questex, LLC	09/09/2024	Media: Diversified and Production		7.11	%	3M L+500				7,425,000		7,297,539		7,350,750
Questex, LLC (Revolver) ^{(7), (9)}	09/09/2024	Media: Diversified and Production		—			—			1,196,809		—		(11,968	)
Research Horizons, LLC	06/28/2022	Media: Advertising, Printing and Publishing		8.36	%	3M L+625				7,241,807		7,167,727		7,096,971
Research Now Group, Inc. and Survey Sampling	12/20/2024	Business Services		7.84	%	3M L+550				24,562,500		23,577,849		24,600,818
International LLC
Riverpoint Medical, LLC	06/20/2025	Healthcare Equipment and Supplies		7.39	%	3M L+500				4,987,500		4,938,821		4,961,565
Riverpoint Medical, LLC (Revolver) ^{(7), (9)}	06/20/2025	Healthcare Equipment and Supplies		—			—			909,091		—		(4,727	)
Salient CRGT Inc.	02/28/2022	High Tech Industries		8.05	%	1M L+600				1,771,740		1,752,209		1,674,294
Schlesinger Global, Inc.	07/14/2025	Professional Services		7.14	%	1M L+500				18,256,482		17,988,515		18,256,482
Schlesinger Global, Inc. ^{(7), (9)}	07/14/2025	Professional Services		—			—			4,007,789		—		—
Schlesinger Global, Inc. (Revolver) ⁽⁷⁾	07/14/2025	Professional Services		7.82	%	3M L+500				667,965		667,965		667,965
Schlesinger Global, Inc. (Revolver) ^{(7), (9)}	07/14/2025	Professional Services		—			—			1,202,337		—		—
Signature Systems Holding Company	05/03/2024	Commercial Services & Supplies		8.60	%	1M L+650				12,918,768		12,735,120		12,918,768
Signature Systems Holding Company (Revolver) ^{(7), (9)}	05/03/2024	Commercial Services & Supplies		—			—			1,747,312		—		—
Smile Brands Inc. ⁽⁷⁾	10/14/2024	Healthcare and Pharmaceuticals		6.64	%	1M L+450				2,136,667		2,136,667		2,115,300
Smile Brands Inc. ^{(7), (9)}	10/14/2024	Healthcare and Pharmaceuticals		—			—			2,362,585		—		(23,626	)
Smile Brands Inc. (Revolver)⁽⁷⁾	10/14/2024	Healthcare and Pharmaceuticals		8.61	%	P+350				242,438		242,438		238,025
Smile Brands Inc. (Revolver) ^{(7), (9)}	10/14/2024	Healthcare and Pharmaceuticals		—			—			1,373,813		—		(25,003	)
Snak Club, LLC (Revolver) ⁽⁷⁾	07/19/2021	Beverage, Food and Tobacco		8.23	%	3M L+600				50,000		50,000		46,500
Snak Club, LLC (Revolver) ^{(7), (9)}	07/19/2021	Beverage, Food and Tobacco		—			—			445,136		—		(31,160	)
Solutionreach, Inc.	01/17/2024	Healthcare Technology		7.83	%	3M L+575				13,253,400		13,019,272		13,082,432
Solutionreach, Inc. ^{(7), (9)}	01/17/2024	Healthcare Technology		—			—			1,665,000		—		(21,478	)
TeleGuam Holdings, LLC	07/25/2023	Telecommunications		7.10	%	1M L+500				7,473,846		7,393,786		7,399,108
Teneo Holdings LLC	07/18/2025	Diversified Financial Services		7.45	%	1M L+525				10,000,000		9,600,726		9,525,000
Tensar Corporation	07/09/2021	Construction and Building		6.85	%	3M L+475				22,620,696		22,523,390		21,715,869
The Infosoft Group, LLC	09/16/2024	Media: Broadcasting and Subscription		7.37	%	3M L+525				18,667,460		18,511,339		18,480,783
The Original Cakerie, Co. ^{(5), (10)}	07/20/2022	Consumer Goods: Non-Durable		7.15	%	2M L+500				7,624,976		7,550,542		7,586,851
The Original Cakerie Ltd. ^{(5), (10)}	07/20/2022	Consumer Goods: Non-Durable		6.65	%	2M L+450				5,431,292		5,398,553		5,404,135
The Original Cakerie Ltd. (Revolver) ^{(5), (7), (10)}	07/20/2022	Consumer Goods: Non-Durable		6.65	%	3M L+450				170,218		170,218		169,367
The Original Cakerie Ltd. (Revolver) ^{(5), (7), (9), (10)}	07/20/2022	Consumer Goods: Non-Durable		—			—			1,248,266		—		(6,241	)
Triad Manufacturing, Inc.	12/28/2020	Capital Equipment		13.29	%	1M L+1,125				7,710,575		7,664,214		7,633,469
TVC Enterprises, LLC	01/18/2024	Professional Services		7.61	%	1M L+550				5,928,804		5,824,179		5,928,804
TVC Enterprises, LLC^{(7), (9)}	01/18/2024	Professional Services		—			—			1,955,719		—		—
TVC Enterprises, LLC (Revolver) ⁽⁷⁾	01/18/2024	Professional Services		7.61	%	1M L+550				467,022		467,022		467,022
TVC Enterprises, LLC (Revolver) ^{(7), (9)}	01/18/2024	Professional Services		—			—			836,791		—		—
TWS Acquisition Corporation	06/16/2025	Diversified Consumer Services		8.28	%	1M L+625				7,075,000		6,906,190		6,933,500
TWS Acquisition Corporation (Revolver) ⁽⁷⁾	06/16/2025	Diversified Consumer Services		8.28	%	1M L+625				808,571		808,571		792,400
TWS Acquisition Corporation (Revolver) ^{(7), (9)}	06/16/2025	Diversified Consumer Services		—			—			1,819,286		—		(36,385	)
Tyto Athene, LLC	08/27/2024	Aerospace and Defense		7.80	%	1M L+575				18,000,068		17,763,278		17,463,665
Tyto Athene, LLC (Revolver) ⁽⁷⁾	08/27/2024	Aerospace and Defense		7.80	%	1M L+575				4,465,909		4,465,909		4,332,825
Tyto Athene, LLC (Revolver) ^{(7), (9)}	08/27/2024	Aerospace and Defense		—			—			2,352,273		—		(70,098	)
UBEO, LLC	04/03/2024	Capital Equipment		6.75	%	3M L+450				14,169,914		14,069,246		14,028,214
UBEO, LLC (Revolver) ^{(7), (9)}	04/03/2024	Capital Equipment		—			—			2,933,333		—		(38,661	)
UniTek Global Services, Inc.	08/20/2024	Telecommunications		8.42	%	3M L+550				10,395,000		10,209,742		9,771,301
US Med Acquisition, Inc. ⁽⁷⁾	08/13/2021	Healthcare and Pharmaceuticals		11.10	%	1M L+900				2,996,094		2,996,094		2,996,094
Vision Purchaser Corporation	06/10/2025	Media		8.30	%	1M L+625				3,440,998		3,373,821		3,406,588
Whitney, Bradley & Brown, Inc.	10/18/2022	Aerospace and Defense		9.55	%	1M L+750				5,187,498		5,083,748		5,187,498
Total First Lien Secured Debt												829,387,687		818,357,018
Second Lien Secured Debt—5.7%
Condor Borrower, LLC ⁽⁷⁾	04/25/2025	High Tech Industries		11.01	%	3M L+875				1,655,172		1,628,190		1,638,621

SEE NOTES TO CONSOLIDATED FINANCIAL STATEMENTS

PENNANTPARK FLOATING RATE CAPITAL LTD. AND SUBSIDIARIES

CONSOLIDATED SCHEDULE OF INVESTMENTS—(Continued)

SEPTEMBER 30, 2019

Issuer Name	Maturity		Industry	Current Coupon			Basis Point Spread Above Index ⁽¹⁾		Par / Shares		Cost		Fair Value ⁽²⁾
DBI Holdings, LLC, Term Loan B	02/01/2026		Business Services		8.00	%		—		10,639,343	$	10,639,343	$	10,586,145
					(PIK 8.00	%)
DBI Holdings, LLC, Term Loan C ⁽⁷⁾	03/26/2021		Business Services		8.00	%		—		21,276		21,276		21,276
					(PIK 8.00	%)
DecoPac, Inc. ⁽⁷⁾	03/31/2025		Beverage, Food and Tobacco		10.35	%	3M L+825			9,738,580		9,643,427		9,738,580
MailSouth, Inc.	10/23/2024		Media: Advertising, Printing and Publishing		12.00	%	12M L+925			2,871,025		2,822,554		2,784,894
McAfee, LLC ⁽⁷⁾	09/29/2025		High Tech Industries		10.62	%	1M L+850			2,187,500		2,158,107		2,205,284
PT Network Intermediate Holdings, LLC ^{(7), (8)}	11/30/2024		Healthcare and Pharmaceuticals		12.30	%	3M L+1,000			1,864,409		1,846,555		1,845,765
					(PIK 12.30	%)
Total Second Lien Secured Debt												28,759,453		28,820,565
Preferrred Equity— 1.9% ⁽⁶⁾
CI (PTN) Investment Holdings II, LLC		—	Healthcare and Pharmaceuticals		—			—		1,458		21,870		450
(PT Network, LLC) ^{(7), (8)}
Condor Holdings Limited ^{(5), (7), (10)}		—	High Tech Industries		—			—		88,000		10,173		11,325
Condor Top Holdco Limited ^{(5), (7), (10)}		—	High Tech Industries		—			—		88,000		77,827		86,640
DBI Holdings, LLC, Series A-1⁽⁸⁾		—	Business Services		13.00	%		—		7,041		7,040,844		6,545,361
MeritDirect Holdings, LP ^{(7), (8)}		—	Media		—			—		960		960,000		1,002,057
NXOF Holdings, Inc. (NextiraOne Federal, LLC) ⁽⁷⁾			Aerospace and Defense		—			—		490		490,000		362,645
PT Network Intermediate Holdings, LLC ^{(7), (8)}		—	Healthcare and Pharmaceuticals		12.14	%	3M L+1,000			33		359,000		370,570
Signature CR Intermediate Holdco, Inc. ⁽⁷⁾		—	Commercial Services & Supplies		12.00	%		—		1,167		1,166,993		1,224,860
UniTek Global Services, Inc. -		—	Telecommunications		20.00	%		—		343,861		343,861		30,743
Super Senior Preferred Equity⁽⁷⁾
UniTek Global Services, Inc. - Senior Preferred Equity⁽⁷⁾		—	Telecommunications		18.00	%		—		448,851		448,851		—
UniTek Global Services, Inc.⁽⁷⁾		—	Telecommunications		13.50	%		—		1,047,317		670,283		—
Total Preferred Equity												11,589,702		9,634,652
Common Equity/Warrants— 6.4% ⁽⁶⁾
Affinion Group Holdings, Inc. (Warrants)⁽⁷⁾		—	Consumer Goods: Durable		—			—		8,893		244,998		94,129
AG Investco LP ^{(7), (8)}		—	Software		—			—		714,652		714,652		714,652
AG Investco LP ^{(7), (8), (9)}		—	Software		—			—		285,348		—		—
Altamira Intermediate Company II, Inc.⁽⁷⁾		—	IT Services		—			—		1,437,500		1,437,500		1,437,500
By Light Investco LP ^{(7), (8)}		—	High Tech Industries		—			—		21,908		2,190,771		9,218,753
By Light Investco LP ^{(7), (8), (9)}		—	High Tech Industries		—			—		5,592		—		—
CI (Allied) Investment Holdings, LLC		—	Business Services		—			—		120,962		1,243,217		1,260,269
(Allied America, Inc.) ^{(7), (8)}
CI (PTN) Investment Holdings II, LLC		—	Healthcare and Pharmaceuticals		—			—		13,333		200,000		—
(PT Network, LLC) ^{(7), (8)}
CI (Summit) Investment Holdings, LLC		—	Construction and Building		—			—		54,907		581,995		720,588
(SFP Holding, Inc.) ⁽⁷⁾
DBI Holdings, LLC, Series B ^{(10), (8)}		—	Business Services		—			—		1,489,508		330,791		—
DecoPac Holdings Inc. ⁽⁷⁾		—	Beverage, Food and Tobacco		—			—		1,633		1,632,744		3,149,261
eCommission Holding Corporation ^{(7), (10)}			Banking, Finance, Insurance & Real Estate		—			—		20		251,156		370,436
Faraday Holdings, LLC ⁽⁷⁾		—	Construction and Building		—			—		1,141		58,044		331,562
Gauge InfosoftCoInvest, LLC		—	Media: Broadcasting and Subscription		—			—		500		143,663		497,465
(The Infosoft Group, LLC) ⁽⁷⁾
Gauge Schlesinger Coinvest LLC ⁽⁷⁾			Professional Services		—			—		403		403,005		403,005
Gauge TVC Coinvest, LLC (TVC Enterprises, LLC) ⁽⁷⁾			Professional Services		—			—		391,144		391,144		399,678
GCOM InvestCo LP ^{(7), (8)}		—	High Tech Industries		—			—		1,549,209		1,549,209		2,233,506
GCOM InvestCo LP ^{(7), (8), (9)}		—	High Tech Industries		—			—		450,791		—		—
Go Dawgs Capital III, LP		—	Building Products		—			—		324,675		324,675		331,169
(American Insulated Glass, LLC)^{(7), (8)}
IIN Group Holdings, LLC		—	Consumer Services		—			—		1,000		1,000,000		1,392,905
(Integrative Nutrition, LLC) ^{(7), (8)}
ITC Rumba, LLC (Cano Health, LLC) ⁽¹⁰⁾		—	Healthcare and Pharmaceuticals		—			—		21,529		430,576		607,059
JWC/UMA Holdings, L.P. ⁽⁷⁾		—	Healthcare and Pharmaceuticals		—			—		1,000		1,000,000		1,210,541
JWC-WE Holdings, L.P.		—	Wholesale		—			—		1,381,741		1,381,741		3,595,627
(Walker Edison Furniture Company LLC) ^{(7), (8)}
Kentucky Racing Holdco, LLC (Warrants)^{(7), (8)}			Hotels, Restaurants and Leisure							87,345		—		166,773
MeritDirect Holdings, LP ^{(7), (8)}		—	Media		—			—		960		—		98,635
NXOF Holdings, Inc. (NextiraOne Federal, LLC)⁽⁷⁾		—	Aerospace and Defense		—			—		10,000		10,000		—
PT Network Intermediate Holdings, LLC ^{(7), (8)}			Healthcare and Pharmaceuticals							25		239,333		680,580
Signature CR Intermediate Holdco, Inc. ⁽⁷⁾		—	Commercial Services & Supplies		—			—		61		61,421		29,886
SSC Dominion Holdings, LLC		—	Capital Equipment		—			—		500		500,000		540,000
Class A (US Dominion, Inc.) ⁽⁷⁾
SSC Dominion Holdings, LLC		—	Capital Equipment		—			—		500		—		728,601
Class B (US Dominion, Inc.) ⁽⁷⁾
TPC Broadband Investors, LP ⁽⁷⁾		—	Telecommunications		—			—		754,821		754,820		1,589,878
TPC Broadband Investors, LP ^{(7), (8),}⁽⁹⁾		—	Telecommunications		—			—		245,179		—		—
UniTek Global Services, Inc. ⁽⁷⁾		—	Telecommunications		—			—		213,739		—		—
UniTek Global Services, Inc. (Warrants) ⁽⁷⁾		—	Telecommunications		—			—		23,889		—		—
WBB Equity, LLC ^{(7), (8)}		—	Aerospace and Defense		—			—		142,857		142,857		498,572
Total Common Equity/Warrants												17,218,314		32,301,030
Total Investments in Non-Controlled, Non-Affiliated Portfolio Companies												886,955,156		889,113,264

SEE NOTES TO CONSOLIDATED FINANCIAL STATEMENTS

PENNANTPARK FLOATING RATE CAPITAL LTD. AND SUBSIDIARIES

CONSOLIDATED SCHEDULE OF INVESTMENTS—(Continued)

SEPTEMBER 30, 2019

Issuer Name	Maturity		Industry	Current Coupon			Basis Point Spread Above Index ⁽¹⁾		Par / Shares		Cost		Fair Value ⁽²⁾
Investments in Non-Controlled, Affiliated Portfolio Companies—4.1% ^{(3), (4)}
First Lien Secured Debt—0.9%
Country Fresh Holdings, LLC ⁽⁷⁾	05/01/2023		Beverage, Food and Tobacco		7.10	%	3M L+500		1,544,161		$	1,505,589	$	1,544,161
Country Fresh Holdings, LLC (Revolver) ⁽⁷⁾	05/01/2023		Beverage, Food and Tobacco		7.10	%	3M L+500			769,038		769,038		769,038
Country Fresh Holdings, LLC (Revolver) ^{(7), (9)}	05/01/2023		Beverage, Food and Tobacco		—			—		1,977,526		—		—
Quick Weight Loss Centers, LLC⁽⁷⁾	10/12/2023		Beverage, Food and Tobacco		4.00	%		—		2,016,667		2,016,667		2,036,833
Total First Lien Secured Debt					(PIK 4.00	%)						4,291,294		4,350,032
Second Lien Secured Debt—1.1%
Country Fresh Holdings, LLC ⁽⁷⁾	04/29/2024		Beverage, Food and Tobacco		10.60	%	1M L+850			5,314,125		5,314,125		5,314,125
					(PIK 10.60	%)
Quick Weight Loss Centers, LLC⁽⁷⁾	10/12/2023		Beverage, Food and Tobacco		4.00	%		—		233,572		233,572		235,908
Total Second Lien Secured Debt					(PIK 4.00	%)						5,547,697		5,550,033
Preferred Equity—0.2% ⁽⁶⁾
Quick Weight Loss Centers Holdings, LLC ^{(7), (8)}		—	Beverage, Food and Tobacco		—			—		9,568,216		842,352		891,816
Total Preferred Equity												842,352		891,816
Common Equity/Warrants—1.9% ⁽⁶⁾
Country Fresh Holding Company Inc. ⁽⁷⁾		—	Beverage, Food and Tobacco		—			—	8,034			10,453,350		6,864,302
Quick Weight Loss Centers, LLC ^{(7), (8)}		—	Beverage, Food and Tobacco		—			—		60		2,520,000		2,774,382
Total Common Equity/Warrants												12,973,350		9,638,684
Total Investments in Non-Controlled, Affiliated Portfolio Companies												23,654,693		20,430,565
Investments in Controlled, Affiliated Portfolio Companies—34.2% ^{(3), (4)}
First Lien Secured Debt—24.3%
PennantPark Senior Secured Loan Fund I LLC ^(7), ^{(9), (10)}	05/06/2024		Financial Services		10.10	%	3M L+800			122,193,750		122,193,750		122,193,750
Total First Lien Secured Debt												122,193,750		122,193,750
Equity Interests—9.9%
PennantPark Senior Secured Loan Fund I LLC ^(7), ^{(9), (10)}		—	Financial Services		—			—		52,369		52,368,750		49,969,330
Total Equity Interests												52,368,750		49,969,330
Total Investments in Controlled, Affiliated Portfolio Companies												174,562,500		172,163,080
Total Investments—215.0%												1,085,172,349		1,081,706,909
Cash and Cash Equivalents—12.6%
BlackRock Federal FD Institutional 30												18,053,873		18,053,873
BNY Mellon Cash												45,313,364		45,283,855
Total Cash and Cash Equivalents												63,367,237		63,337,728
Total Investments and Cash Equivalents—227.6%											$	1,148,539,586	$	1,145,044,637
Liabilities in Excess of Other Assets—(127.6)%														(641,987,126	)
Net Assets—100.0%													$	503,057,511

(1)

(2)	Valued based on our accounting policy (See Note 2). The value of all securities was determined using significant unobservable inputs (See Note 5).

(3)

(4)

(5)	Non-U.S. company or principal place of business outside the United States.

(6)	Non-income producing securities.

(7)	The securities, or a portion thereof, are not 1) pledged as collateral under the Credit Facility and held through Funding I; or, 2) securing the 2031 Asset-Backed Debt (See Note 10) and held through PennantPark CLO I, Ltd.

(8)	Investment is held through our Taxable Subsidiary (See Note 1).

(9)	Represents the purchase of a security with delayed settlement or a revolving line of credit that is currently an unfunded investment. This security does not earn a basis point spread above an index while it is unfunded.

(10)

The investment is treated as a non-qualifying asset under Section 55(a) of the 1940 Act. Under the 1940 Act, we may not acquire any non-qualifying asset unless, at the time the acquisition is made, qualifying assets represent at least 70% of our total assets. As of September 30, 2019, qualifying assets represent 79% of our total assets and non-qualifying assets represent 21% of our total assets.

(11)	Par amount is denominated in Canadian Dollars (C$) as denoted.

SEE NOTES TO CONSOLIDATED FINANCIAL STATEMENTS

PENNANTPARK FLOATING RATE CAPITAL LTD. AND SUBSIDIARIES

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS

DECEMBER 31, 2019

(Unaudited)

1. ORGANIZATION

PennantPark Floating Rate Capital Ltd. was organized as a Maryland corporation in October 2010. We are a closed-end, externally managed, non-diversified investment company that has elected to be treated as a BDC under the 1940 Act.

Our investment objectives are to generate both current income and capital appreciation while seeking to preserve capital. We seek to achieve our investment objective by investing primarily in loans bearing variable rates of interest, or Floating Rate Loans, and other investments made to U.S. middle-market private companies whose debt is rated below investment grade. Interest on Floating Rate Loans is determined periodically, on the basis of a floating base lending rate such as LIBOR, with or without a floor, plus a fixed spread. Under normal market conditions, we generally expect that at least 80% of the value of our Managed Assets, which means our net assets plus any borrowings for investment purposes, will be invested in Floating Rate Loans and other investments bearing a variable rate of interest, which may include, from time to time, variable rate derivative instruments. We generally expect that first lien secured debt will represent at least 65% of our overall portfolio. We generally expect to invest up to 35% of our overall portfolio opportunistically in other types of investments, including second lien secured debt, subordinated debt, and, to a lesser extent, equity investments.

We have entered into an investment management agreement, or the Investment Management Agreement, with the Investment Adviser, an external adviser that manages our day-to-day operations. We have also entered into an administration agreement, or the Administration Agreement, with the Administrator, which provides the administrative services necessary for us to operate.

Funding I, our wholly owned subsidiary and a special purpose entity, was organized in Delaware as a limited liability company in May 2011. We formed Funding I in order to establish the Credit Facility. The Investment Adviser serves as the collateral manager to Funding I and has irrevocably directed that the management fee owed with respect to such services is to be paid to us so long as the Investment Adviser remains the collateral manager. This arrangement does not increase our consolidated management fee. The Credit Facility allows Funding I to borrow up to $520 million at LIBOR plus 200 basis points during the revolving period. The Credit Facility is secured by all of the assets held by Funding I. See Note 10.

We have formed and expect to continue to form certain taxable subsidiaries, including the Taxable Subsidiary, which are subject to tax as corporations. These taxable subsidiaries allow us to hold equity securities of certain portfolio companies treated as pass-through entities for U.S. federal income tax purposes while facilitating our ability to qualify as a RIC under the Code.

In May 2017, we and a subsidiary of Kemper Corporation (NYSE: KMPR), Trinity Universal Insurance Company, or Kemper, formed PSSL, an unconsolidated joint venture. PSSL invests primarily in middle-market and other corporate debt securities consistent with our strategy. PSSL was formed as a Delaware limited liability company. See Note 4.

In November 2017, we issued $138.6 million of our 2023 Notes. The principal on the 2023 Notes will be payable in four annual installments as follows: 15% of the original principal amount on December 15, 2020, 15% of the original principal amount on December 15, 2021, 15% of the original principal amount on December 15, 2022 and 55% on December 15, 2023. The 2023 Notes are general, unsecured obligations and rank equal in right of payment with all of our existing and future senior unsecured indebtedness. The 2023 Notes are listed on the Tel Aviv Stock Exchange, or the TASE. In connection with this offering, we have dual listed our common stock on the TASE.

In September 2019, the Securitization Issuers completed the Debt Securitization. The 2031 Asset-Backed Debt is secured by a diversified portfolio of the Securitization Issuer consisting primarily of middle market loans and participation interests in middle market loans. The 2031 Asset-Backed Debt is scheduled to mature on October 15, 2031. On the closing date of the Debt Securitization, in consideration of our transfer to the Securitization Issuer of the initial closing date loan portfolio, which included loans distributed to us by certain of our wholly owned subsidiaries, the Securitization Issuer transferred to us 100% of the Preferred Shares of the Securitization Issuer, 100% of the Class D Secured Deferrable Floating Rate Notes issued by the Securitization Issuer, and a portion of the net cash proceeds received from the sale of the 2031 Asset-Backed Debt. See Note 10.

We are operated by a person who has claimed an exclusion from the definition of the term “commodity pool operator” under the Commodity Exchange Act and, therefore, is not subject to registration or regulation as a commodity pool operator under the Commodity Exchange Act.

2. SIGNIFICANT ACCOUNTING POLICIES

The preparation of our Consolidated Financial Statements in conformity with U.S. generally accepted accounting principles, or GAAP, requires management to make estimates and assumptions that affect the reported amount of our assets and liabilities at the date of the Consolidated Financial Statements and the reported amounts of income and expenses during the reported periods. In the opinion of management, all adjustments, which are of a normal recurring nature, considered necessary for the fair presentation of financial statements have been included. Actual results could differ from these estimates due to changes in the economic and regulatory environment, financial markets and any other parameters used in determining such estimates and assumptions. We may reclassify certain prior period amounts to conform to the current period presentation. We have eliminated all intercompany balances and transactions. References to the Financial Accounting Standards Board’s, or FASB’s, Accounting Standards Codification, as amended, or ASC, serve as a single source of accounting literature. Subsequent events are evaluated and disclosed as appropriate for events occurring through the date the Consolidated Financial Statements are issued.

Our Consolidated Financial Statements are prepared in accordance with GAAP, consistent with ASC Topic 946, Financial Services – Investment Companies, and pursuant to the requirements for reporting on Form 10-K/Q and Articles 6, 10 and 12 of Regulation S-X, as appropriate. In accordance with Article 6-09 of Regulation S-X, we have provided a Consolidated Statement of Changes in Net Assets in lieu of a Consolidated Statement of Changes in Stockholders’ Equity.

Our significant accounting policies consistently applied are as follows:

(a) Investment Valuations

We expect that there may not be readily available market values for many of the investments, which are or will be in our portfolio, and we value such investments at fair value as determined in good faith by or under the direction of our board of directors using a documented valuation policy and a consistently applied valuation process, as described in this Report. With respect to investments for which there is no readily available market value, the factors that the board of directors may take into account in pricing our investments at fair value include, as relevant, the nature and realizable value of any collateral, the portfolio company’s ability to make payments and its earnings and discounted cash flow, the markets in which the portfolio company does business, comparison to publicly traded securities and other relevant factors. When an external event such as a purchase transaction, public offering or subsequent equity sale occurs, we consider the pricing indicated by the external event to corroborate or revise our

valuation. Due to the inherent uncertainty of determining the fair value of investments that do not have a readily available market value, the price used in an actual transaction may be different than our valuation and the difference may be material. See Note 5.

Our portfolio generally consists of illiquid securities, including debt and equity investments. With respect to investments for which market quotations are not readily available, or for which market quotations are deemed not reflective of the fair value, our board of directors undertakes a multi-step valuation process each quarter, as described below:

(1)

Our quarterly valuation process begins with each portfolio company or investment being initially valued by the investment professionals of the Investment Adviser responsible for the portfolio investment;

(2)

Preliminary valuation conclusions are then documented and discussed with the management of the Investment Adviser;

(3)

Our board of directors also engages independent valuation firms to conduct independent appraisals of our investments for which market quotations are not readily available or are readily available but deemed not reflective of the fair value of the investment. The independent valuation firms review management’s preliminary valuations in light of their own independent assessment and also in light of any market quotations obtained from an independent pricing service, broker, dealer or market maker;

(4)

The audit committee of our board of directors reviews the preliminary valuations of the Investment Adviser and those of the independent valuation firms on a quarterly basis, periodically assesses the valuation methodologies of the independent valuation firms, and responds to and supplements the valuation recommendations of the independent valuation firms to reflect any comments; and

(5)

Our board of directors discusses these valuations and determines the fair value of each investment in our portfolio in good faith, based on the input of our Investment Adviser, the respective independent valuation firms and the audit committee.

Our board of directors generally uses market quotations to assess the value of our investments for which market quotations are readily available. We obtain these market values from independent pricing services or at the bid prices obtained from at least two brokers or dealers, if available, or otherwise from a principal market maker or a primary market dealer. The Investment Adviser assesses the source and reliability of bids from brokers or dealers. If the board of directors has a bona fide reason to believe any such market quote does not reflect the fair value of an investment, it may independently value such investments by using the valuation procedure that it uses with respect to assets for which market quotations are not readily available.

(b) Security Transactions, Revenue Recognition, and Realized/Unrealized Gains or Losses

Security transactions are recorded on a trade-date basis. We measure realized gains or losses by the difference between the net proceeds from the repayment or sale and the amortized cost basis of the investment, using the specific identification method, without regard to unrealized appreciation or depreciation previously recognized, but considering prepayment penalties. Net change in unrealized appreciation or depreciation reflects, as applicable, the change in the fair values of our portfolio investments, the Credit Facility and the 2023 Notes during the reporting period, including any reversal of previously recorded unrealized appreciation or depreciation, when gains or losses are realized.

We record interest income on an accrual basis to the extent that we expect to collect such amounts. For loans and debt investments with contractual PIK interest, which represents interest accrued and added to the loan balance that generally becomes due at maturity, we will generally not accrue PIK interest when the portfolio company valuation indicates that such PIK interest is not collectable. We do not accrue as a receivable interest on loans and debt investments if we have reason to doubt our ability to collect such interest. Loan origination fees, original issue discount, or OID, market discount or premium and deferred financing costs on liabilities, which we do not fair value, are capitalized and then accreted or amortized using the effective interest method as interest income or, in the case of deferred financing costs, as interest expense. We record prepayment penalties earned on loans and debt investments as income. Dividend income, if any, is recognized on an accrual basis on the ex-dividend date to the extent that we expect to collect such amounts. From time to time, the Company receives certain fees from portfolio companies, which are non-recurring in nature. Such fees include loan prepayment penalties, structuring fees and amendment fees, and are recorded as other investment income when earned. Litigation settlements are accounted for in accordance with the gain contingency provisions of ASC Subtopic 450-30, Gain Contingencies, or ASC 450-30.

Loans are placed on non-accrual status when principal or interest payments are past due 30 days or more and/or if there is reasonable doubt that principal or interest will be collected. Accrued interest is generally reversed when a loan is placed on non-accrual status. Interest payments received on non-accrual loans may be recognized as income or applied to principal depending upon management’s judgment. Non-accrual loans are restored to accrual status when past due principal and interest is paid and, in management’s judgment, are likely to remain current. As of December 31, 2019, we had one portfolio company on non-accrual, representing 0.4% and zero of our overall portfolio on a cost and fair value basis, respectively.

We have complied with the requirements of Subchapter M of the Code and have qualified to be treated as a RIC for federal income tax purposes. In this regard, we account for income taxes using the asset and liability method prescribed by ASC Topic 740, Income Taxes, or ASC 740. Under this method, income taxes are provided for amounts currently payable and for amounts deferred as tax assets and liabilities based on differences between the financial statement carrying amounts and the tax basis of existing assets and liabilities. Based upon our qualification and election to be treated as a RIC for U.S. federal income tax purposes, we typically do not incur material U.S. federal income taxes. However, we may choose to retain a portion of our calendar year income, which may result in the imposition of a U.S. federal excise tax, or we may incur taxes through our taxable subsidiaries, including the Taxable Subsidiary. For the three months ended December 31, 2019 and 2018, we recorded a provision for taxes of $0.1 million and zero, respectively, pertaining to U.S. federal excise tax.

We recognize the effect of a tax position in our Consolidated Financial Statements in accordance with ASC 740 when it is more likely than not, based on the technical merits, that the position will be sustained upon examination by the applicable tax authority. Tax positions not considered to satisfy the “more-likely-than-not” threshold would be recorded as a tax expense or benefit. Penalties or interest, if applicable, that may be assessed relating to income taxes would be classified as other operating expenses in the financial statements. There were no tax accruals relating to uncertain tax positions and no amounts accrued for any related interest or penalties with respect to the periods presented herein. The Company’s determinations regarding ASC 740 may be subject to review and adjustment at a later date based upon factors including, but not limited to, an on-going analysis of tax laws, regulations and interpretations thereof. Although the Company files both federal and state income tax returns, the Company’s major tax jurisdiction is federal.

Because U.S. federal income tax regulations differ from GAAP, distributions characterized in accordance with tax regulations may differ from net investment income and net realized gains recognized for financial reporting purposes. Differences between tax regulations and GAAP may be permanent or temporary. Permanent differences

PENNANTPARK FLOATING RATE CAPITAL LTD. AND SUBSIDIARIES

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS-(Continued)

DECEMBER 31, 2019

(Unaudited)

are reclassified among capital accounts in the Consolidated Financial Statements to reflect their tax character. Temporary differences arise when certain items of income, expense, gain or loss are recognized at some time in the future.

(d) Distributions and Capital Transactions

Distributions to common stockholders are recorded on the ex-dividend date. The amount to be paid, if any, as a distribution is determined by the board of directors each quarter and is generally based upon the earnings estimated by management. Net realized capital gains, if any, are distributed at least annually. The tax attributes for distributions will generally include ordinary income and capital gains, but may also include certain tax-qualified dividends and/or a return of capital.

Capital transactions in connection with offerings of our common stock are recorded when issued and offering costs are charged as a reduction of capital upon issuance of our common stock.

(e) Foreign Currency Translation

Our books and records are maintained in U.S. dollars. Any foreign currency amounts are translated into U.S. dollars on the following basis:

Fair value of investment securities, other assets and liabilities – at the exchange rates prevailing at the end of the applicable period; and

Purchases and sales of investment securities, income and expenses – at the exchange rates prevailing on the respective dates of such transactions.

Although net assets and fair values are presented based on the applicable foreign exchange rates described above, we do not isolate that portion of the results of operations due to changes in foreign exchange rates on investments, other assets and debt from the fluctuations arising from changes in fair values of investments and liabilities held. Such fluctuations are included with the net realized and unrealized gain or loss from investments and liabilities.

Foreign security and currency translations may involve certain considerations and risks not typically associated with investing in U.S. companies and U.S. government securities. These risks include, but are not limited to, currency fluctuations and revaluations and future adverse political, social and economic developments, which could cause investments in foreign markets to be less liquid and prices to be more volatile than those of comparable U.S. companies or U.S. government securities.

(f) Consolidation

As permitted under Regulation S-X and as explained by ASC paragraph 946-810-45-3, we will generally not consolidate our investment in a company other than an investment company subsidiary or a controlled operating company whose business consists of providing services to us. Accordingly, we have consolidated the results of our taxable subsidiaries, including the Taxable Subsidiary, Funding I and the Securitization Issuer in our Consolidated Financial Statements. We do not consolidate our non-controlling interest in PSSL. See further description of our investment in PSSL in Note 4.

(g) Asset Transfers and Servicing

Asset transfers that do not meet ASC Topic 860, Transfers and Servicing, requirements for sale accounting treatment are reflected in the Consolidated Statements of Assets and Liabilities and Consolidated Schedules of Investments as investments. The creditors of Funding I have received a security interest in all its assets and such assets are not intended to be available to the creditors of PennantPark Floating Rate Capital Ltd. or any of its affiliates.

(h) Recent Accounting Pronouncements

In August 2018, the FASB issued Accounting Standards Update, or ASU, 2018-13, Fair Value Measurement (Topic 820): Disclosure Framework - Changes to the Disclosure Requirements for Fair Value Measurement, or ASU 2018-13, which changed the fair value measurement disclosure requirements of ASC Topic 820, Fair Value Measurements and Disclosures, or ASC 820. The key provisions include new, eliminated and modified disclosure requirements. The new guidance is effective for fiscal years beginning after December 15, 2019, including interim periods therein. Early application is permitted. The Company has adopted this accounting standard update effective October 1, 2019 and the impact its of adoption was not material to the Company’s financial statements and related disclosures.

3. AGREEMENTS AND RELATED PARTY TRANSACTIONS

The Investment Management Agreement with the Investment Adviser was reapproved by our board of directors, including a majority of our directors who are not interested persons of us or the Investment Adviser, in February 2020. Under the Investment Management Agreement, the Investment Adviser, subject to the overall supervision of our board of directors, manages the day-to-day operations of and provides investment advisory services to us. The Investment Adviser serves as the collateral manager to Funding I and has irrevocably directed that the management fee owed with respect to such services is to be paid to the Company so long as the Investment Adviser remains the collateral manager. This arrangement does not increase our consolidated management fee. For providing these services, the Investment Adviser receives a fee from us consisting of two components—a base management fee and an incentive fee.

The base management fee is calculated at an annual rate of 1.00% of our “average adjusted gross assets,” which equals our gross assets (exclusive of U.S. Treasury Bills, temporary draws under any credit facility, cash and cash equivalents, repurchase agreements or other balance sheet transactions undertaken at the end of a fiscal quarter for purposes of preserving investment flexibility for the next quarter and unfunded commitments, if any) and is payable quarterly in arrears. The base management fee is calculated based on the average adjusted gross assets at the end of the two most recently completed calendar quarters, and appropriately adjusted for any share issuances or repurchases during the current calendar quarter. For example, if we sold shares on the 45th day of a quarter and did not use the proceeds from the sale to repay outstanding indebtedness, our gross assets for such quarter would give effect to the net proceeds of the issuance for only 45 days of the quarter during which the additional shares were outstanding. For the three months ended December 31, 2019 and 2018, the Investment Adviser earned a base management fee of $2.8 million and $2.5 million, respectively, from us.

The incentive fee has two parts, as follows:

One part is calculated and payable quarterly in arrears based on our Pre-Incentive Fee Net Investment Income for the immediately preceding calendar quarter. For this purpose, Pre-Incentive Fee Net Investment Income means interest income, dividend income and any other income, including any other fees (other than fees for providing managerial assistance), such as amendment, commitment, origination, prepayment penalties, structuring, diligence and consulting fees or other fees received from portfolio companies, accrued during the calendar quarter, minus our operating expenses for the quarter (including the base management fee, any expenses payable under the Administration Agreement and any interest expense or amendment fees under any credit facility and distribution paid on any issued and outstanding preferred stock, but excluding the incentive fee). Pre-Incentive Fee Net Investment Income includes, in the case of investments with a deferred interest feature (such as OID, debt instruments with PIK interest and zero coupon securities), accrued income not yet received in cash. Pre-Incentive Fee Net Investment Income does not include any realized capital gains,

PENNANTPARK FLOATING RATE CAPITAL LTD. AND SUBSIDIARIES

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS-(Continued)

DECEMBER 31, 2019

(Unaudited)

computed net of all realized capital losses or unrealized capital appreciation or depreciation. Pre-Incentive Fee Net Investment Income, expressed as a percentage of the value of our net assets at the end of the immediately preceding calendar quarter, is compared to the hurdle rate of 1.75% per quarter (7.00% annualized). We pay the Investment Adviser an incentive fee with respect to our Pre-Incentive Fee Net Investment Income in each calendar quarter as follows: (1) no incentive fee in any calendar quarter in which our Pre-Incentive Fee Net Investment Income does not exceed the hurdle rate of 1.75%, (2) 50% of our Pre-Incentive Fee Net Investment Income with respect to that portion of such Pre-Incentive Fee Net Investment Income, if any, that exceeds the hurdle rate but is less than 2.9167% in any calendar quarter (11.67% annualized) (we refer to this portion of our Pre-Incentive Fee Net Investment Income (which exceeds the hurdle but is less than 2.9167%) as the “catch-up,” which is meant to provide our Investment Adviser with 20% of our Pre-Incentive Fee Net Investment Income, as if a hurdle did not apply, if this net investment income exceeds 2.9167% in any calendar quarter), and (3) 20% of the amount of our Pre-Incentive Fee Net Investment Income, if any, that exceeds 2.9167% in any calendar quarter. These calculations are pro-rated for any share issuances or repurchases during the relevant quarter, if applicable. For the three months ended December 31, 2019 and 2018, the Investment Adviser earned $2.3 million and $0.2 million, respectively, in incentive fees on net investment income from us.

The second part of the incentive fee is determined and payable in arrears as of the end of each calendar year (or upon termination of the Investment Management Agreement, as of the termination date) and equals 20% of our realized capital gains, if any, on a cumulative basis from inception through the end of each calendar year, computed net of all realized capital losses and unrealized capital depreciation on a cumulative basis, less the aggregate amount of any previously paid capital gain incentive fees. For both periods presented herein, the Investment Adviser did not accrue an incentive fee on capital gains, as calculated under the Investment Management Agreement (as described above).

Under GAAP, we are required to accrue a capital gains incentive fee based upon net realized capital gains and net unrealized capital appreciation and depreciation on investments held at the end of each period. In calculating the capital gains incentive fee accrual, we considered the cumulative aggregate unrealized capital appreciation in the calculation, as a capital gains incentive fee would be payable if such unrealized capital appreciation were realized, even though such unrealized capital appreciation is not permitted to be considered in calculating the fee actually payable under the Investment Management Agreement. This accrual is calculated using the aggregate cumulative realized capital gains and losses and cumulative unrealized capital appreciation or depreciation. If such amount is positive at the end of a period, then we record a capital gains incentive fee equal to 20% of such amount, less the aggregate amount of actual capital gains related to incentive fees paid in all prior years. If such amount is negative, then there is no accrual for such year. There can be no assurance that such unrealized capital appreciation will be realized in the future. The incentive fee accrued for, but not payable, under GAAP on our unrealized and realized capital gains for the three months ended December 31, 2019 and 2018 was zero and $(1.4) million, respectively.

The Administration Agreement with the Administrator was reapproved by our board of directors, including a majority of the directors who are not interested persons of us, in February 2020. Under the Administration Agreement, the Administrator provides administrative services and office facilities to us. For providing these services, facilities and personnel, we have agreed to reimburse the Administrator for its allocable portion of overhead and other expenses incurred by the Administrator in performing its obligations under the Administration Agreement, including rent and our allocable portion of the costs of compensation and related expenses of our Chief Compliance Officer, Chief Financial Officer and their respective staffs. The Administrator also offers, on our behalf, significant managerial assistance to portfolio companies to which we are required to offer such assistance. Reimbursement for certain of these costs is included in administrative services expenses in the Consolidated Statements of Operations. For the three months ended December 31, 2019 and 2018, we reimbursed the Investment Adviser approximately $0.3 million, respectively, including expenses the Investment Adviser incurred on behalf of the Administrator, for services described above.

There were no transactions subject to Rule 17a-7 under the 1940 Act during both the three months ended December 31, 2019 and 2018.

For the three months ended December 31, 2019 and 2018, we sold $68.9 and $38.0 million in investments, respectively, to PSSL at fair value and recognized $0.5 and $0.2 million of net realized gains, respectively.

4. INVESTMENTS

Purchases of investments, including PIK interest, for the three months ended December 31, 2019 and 2018 totaled $240.3 million and $180.8 million, respectively. Sales and repayments of investments for the three months ended December 31, 2019 and 2018 totaled $143.7 million and $190.3 million, respectively.

Investments, cash and cash equivalents consisted of the following:

	December 31, 2019				September 30, 2019
Investment Classification	Cost		Fair Value		Cost		Fair Value
First lien	$	930,611,653	$	920,319,687	$	833,678,981	$	822,707,050
First lien in PSSL		122,193,750		122,193,750		122,193,750		122,193,750
Second lien		32,876,712		32,893,257		34,307,150		34,370,598
Equity		45,143,408		50,981,372		42,623,718		52,466,181
Equity in PSSL		52,368,750		49,727,848		52,368,750		49,969,330
Total investments		1,183,194,273		1,176,115,914		1,085,172,349		1,081,706,909
Cash and cash equivalents		56,261,843		56,292,541		63,367,237		63,337,728
Total investments and cash and cash equivalents	$	1,239,456,116	$	1,232,408,455	$	1,148,539,586	$	1,145,044,637

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NOTES TO CONSOLIDATED FINANCIAL STATEMENTS-(Continued)

DECEMBER 31, 2019

(Unaudited)

The table below describes investments by industry classification and enumerates the percentage, by fair value, of the total portfolio assets (excluding cash and cash equivalents) in such industries:

Industry Classification	December 31, 2019 ⁽¹⁾			September 30, 2019 ⁽¹⁾
Aerospace and Defense		7	%		7	%
Business Services		6			5
High Tech Industries		6			5
Hotel, Gaming and Leisure		6			7
Media		6			5
Capital Equipment		5			5
Healthcare and Pharmaceuticals		5			6
Construction and Building		4			4
Professional Services		4			3
Beverage, Food and Tobacco		3			6
Chemicals, Plastics and Rubber		3			3
Consumer Services		3			3
Hotels, Restaurants and Leisure		3			7
Media: Diversified and Production		3			4
Telecommunications		3			4
Banking, Finance, Insurance & Real Estate		2			2
Construction & Engineering		2			—
Consumer Goods: Durable		2			3
Consumer Goods: Non-Durable		2			3
Diversified Financial Services		2			3
Electronic Equipment, Instruments, and Components		2			1
Media: Advertising, Printing and Publishing		2			2
Media: Broadcasting and Subscription		2			2
Personal Products		2			—
Wholesale		2			3
Building Products		1			2
Commercial Services & Supplies		1			2
Diversified Consumer Services		1			1
Environmental Industries		1			—
Food and Staples Retailing		1			—
IT Services		1			1
Retail		1			1
Transportation: Consumer		1			—
All Other		5			—
Total		100	%		100	%

⁽¹⁾	Excludes investments in PSSL.

PennantPark Senior Secured Loan Fund I LLC

In May 2017, we and Kemper formed PSSL, an unconsolidated joint venture. PSSL invests primarily in middle-market and other corporate debt securities consistent with our strategy. PSSL was formed as a Delaware limited liability company. As of December 31, 2019, PSSL had total assets of $507.8 million. As of the same date, we and Kemper had remaining commitments to fund first lien secured debt and equity interests in PSSL in an aggregate amount of $30.5 million. PSSL invests in portfolio companies in the same industries in which we may directly invest.

We provide capital to PSSL in the form of first lien secured debt and equity interests. As of December 31, 2019, we and Kemper owned 87.5% and 12.5%, respectively, of each of the outstanding first lien secured debt and equity interests. As of the same date, our investment in PSSL consisted of first lien secured debt of $122.2 million and equity interests of $52.4 million. As of the same date, we had commitments to fund first lien secured debt to PSSL of $140.9 million, of which $18.7 million was unfunded. As of December 31, 2019, we had commitments to fund equity interests in PSSL of $60.4 million, of which $8.0 million was unfunded.

We and Kemper each appointed two members to PSSL’s four person board of directors and investment committee. All material decisions with respect to PSSL, including those involving its investment portfolio, require unanimous approval of a quorum of the board of directors or investment committee. Quorum is defined as (i) the presence of two members of the board of directors or investment committee, provided that at least one individual is present that was elected, designated or appointed by each member; (ii) the presence of three members of the board of directors or investment committee, provided that the individual that was elected, designated or appointed by the member with only one individual present shall be entitled to cast two votes on each matter; and (iii) the presence of four members of the board of directors or investment committee shall constitute a quorum, provided that two individuals are present that were elected, designated or appointed by each member.

Additionally, PSSL has entered into a $420.0 million senior secured revolving credit facility which bears interest at LIBOR plus 200 basis points, or the PSSL Credit Facility, with Capital One, N.A. through its wholly-owned subsidiary, PennantPark Senior Secured Loan Facility LLC, or PSSL Subsidiary, subject to leverage and borrowing restrictions.

Below is a summary of PSSL’s portfolio at fair value:

	December 31, 2019			September 30, 2019
Total investments	$	493,190,805		$	488,549,847
Weighted average yield on debt investments		7.4	%		7.6	%
Number of portfolio companies in PSSL		49			45
Largest portfolio company investment	$	21,972,451		$	22,026,186
Total of five largest portfolio company investments	$	100,061,867		$	102,872,275

PENNANTPARK FLOATING RATE CAPITAL LTD. AND SUBSIDIARIES

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS-(Continued)

DECEMBER 31, 2019

(Unaudited)

Below is a listing of PSSL’s individual investments as of December 31, 2019:

Issuer Name	Maturity		Industry	Current Coupon			Basis Point Spread Above Index ⁽¹⁾		Par		Cost		Fair Value ⁽²⁾
First Lien Secured Debt
Altamira Technologies, LLC	07/24/2025		High Tech Industries		7.93	%	3M L+600			4,968,750	$	4,898,753	$	4,968,750
American Auto Auction Group, LLC	01/02/2024		Transportation: Consumer		6.55	%	3M L+475			7,729,555		7,654,681		7,652,259
By Light Professional IT Services, LLC	05/16/2022		High Tech Industries		7.96	%	1M L+625			13,675,154		13,455,820		13,675,154
Cadence Aerospace, LLC	11/14/2023		Aerospace and Defense		8.43	%	3M L+650			11,705,417		11,618,814		11,691,369
Cardenas Markets LLC	11/29/2023		Beverage, Food and Tobacco		7.45	%	1M L+575			7,329,975		7,293,805		7,036,776
Centauri Group Holdings, LLC	02/12/2024		Aerospace and Defense		7.20	%	1M L+525			10,396,599		10,387,355		10,344,616
Challenger Performance Optimization, Inc.	08/31/2023		Business Services		7.55	%	1M L+575			10,127,447		10,043,474		9,772,987
Country Fresh Holdings, LLC	05/01/2023		Beverage, Food and Tobacco		7.10	%	1M L+500			182,403		179,362		182,403
Country Fresh Holdings, LLC (Revolver)	05/01/2023		Beverage, Food and Tobacco		7.01	%	1M L+500			306,075		306,075		306,075
Country Fresh Holdings, LLC - (Revolver) ⁽⁵⁾	05/01/2023		Beverage, Food and Tobacco	—			—			144,036	—		—
Douglas Products and Packaging Company LLC	10/19/2022		Chemicals, Plastics and Rubber		7.69	%	3M L+575			12,281,250		12,136,773		12,158,438
Douglas Sewer Intermediate, LLC	10/19/2022		Chemicals, Plastics and Rubber		7.69	%	3M L+575			8,146,023		8,098,916		8,064,563
DRS Holdings III, Inc.	11/03/2025		Consumer Goods: Non-Durable		7.55	%	1M L+575			8,082,770		8,004,468		8,003,559
Findex Group Limited ^{(3), (4)}	05/31/2024		Banking, Finance, Insurance and Real Estate		6.19	%	3M L+525	A	$	10,000,000		7,385,187		6,818,615
GCOM Software LLC	11/14/2022		High Tech Industries		7.96	%	1M L+625			17,237,379		17,124,994		17,237,379
Good2Grow LLC	11/18/2024		Beverages		6.19	%	3M L+425			11,329,248		11,233,370		11,215,956
GSM Holdings, Inc.	06/03/2024		Consumer Goods: Durable		6.60	%	3M L+450			19,619,454		19,481,180		19,423,260
IMIA Holdings, Inc.	10/28/2024		Aerospace and Defense		6.44	%	3M L+450			12,375,000		12,321,890		12,313,125
Impact Group, LLC	06/27/2023		Wholesale		8.44	%	1M L+650			9,365,185		9,275,424		9,224,707
Infrastructure Supply Operations Pty Ltd. ^{(3), (4)}	12/12/2023		Wholesale		5.67	%	1M L+475	A	$	15,000,000		10,985,913		10,172,038
Integrative Nutrition, LLC	09/29/2023		Diversified Consumer Services		6.69	%	1M L+475			9,949,749		9,949,749		9,850,251
K2 Pure Solutions NoCal, L.P.	12/20/2023		Chemicals, Plastics and Rubber		7.05	%	1M L+525			19,800,000		19,546,364		19,469,340
KHC Holdings, Inc.	10/31/2022		Wholesale		7.94	%	3M L+600			5,350,904		5,350,904		5,350,904
Lash Opco, LLC - Term Loan	12/12/2024		Consumer Goods: Non-Durable		9.16	%	3M L+725			7,500,000		7,277,344		7,275,000
LAV Gear Holdings, Inc.	10/31/2024		Capital Equipment		7.44	%	3M L+550			9,900,000		9,816,129		9,943,559
Leap Legal Software Pty Ltd ^{(3), (4)}	09/12/2022		High Tech Industries		6.76	%	3M L+575	A	$	14,718,247		10,461,364		10,346,192
LSF9 Atlantis Holdings, LLC	05/01/2023		Retail		7.74	%	1M L+600			7,031,250		7,068,566		6,471,703
Manna Pro Products, LLC	12/08/2023		Consumer Goods: Non-Durable		7.80	%	1M L+600			6,860,000		6,782,980		6,667,234
Marketplace Events LLC ⁽⁴⁾	01/27/2023		Media: Diversified and Production		7.31	%	P+275	C	$	5,745,254		4,456,891		4,408,350
Mission Critical Electronics, Inc.	09/28/2022		Capital Equipment		6.94	%	3M L+500			5,994,919		5,965,076		5,986,521
New Milani Group LLC	06/06/2024		Consumer Goods: Non-Durable		6.94	%	1M L+425			14,775,000		14,660,510		14,479,500
Nuvei Technologies Corp.	09/28/2025		High Tech Industries		6.80	%	P+400			12,452,133		12,514,394		12,514,394
Olde Thompson, LLC	05/14/2024		Beverage, Food and Tobacco		6.05	%	1M L+425			11,410,000		11,295,900		11,410,000
Output Services Group, Inc.	03/27/2024		Business Services		6.30	%	1M L+425			7,865,895		7,890,564		7,472,600
PH Beauty Holdings III, Inc.	09/29/2025		Wholesale		6.80	%	1M L+500			9,867,538		9,781,830		9,768,863
Plant Health Intermediate, Inc.	10/19/2022		Chemicals, Plastics and Rubber		7.69	%	3M L+575			1,753,977		1,733,464		1,736,437
PlayPower, Inc.	05/08/2026		Leisure Products		7.46	%	3M L+550			4,179,000		4,139,034		4,126,763
Schlesinger Global, Inc.	07/14/2025		Business Services		6.80	%	1M L+500			11,985,169		11,985,169		11,985,169
Smile Brands Inc.	10/14/2024		Healthcare and Pharmaceuticals		6.55	%	3M L+450			11,261,250		11,164,187		11,148,638
Snak Club, LLC	07/19/2021		Beverage, Food and Tobacco		7.69	%	1M L+600			4,687,495		4,687,495		4,499,995
Solutionreach, Inc.	01/17/2024		Healthcare and Pharmaceuticals		7.55	%	3M L+475			6,555,975		6,474,016		6,521,229
Sonny's Enterprises, LLC	12/01/2022		Capital Equipment		6.10	%	3M L+425			15,186,105		15,189,151		15,034,245
TeleGuam Holdings, LLC	11/20/2025		Telecommunications		6.30	%	1M L+450			8,430,693		8,388,539		8,388,539
Teneo Holdings LLC	07/18/2025		Business Services		6.99	%	1M L+525			4,987,500		4,798,508		4,725,656
The Infosoft Group, LLC	09/16/2024		Media: Broadcasting and Subscription		7.32	%	6M L+525			8,799,611		8,769,767		8,711,615
TPC Canada Parent, Inc. and TPC US Parent, LLC	11/24/2025		Consumer Goods: Non-Durable		7.02	%	3M L+475			9,000,000		8,912,812		8,952,300
TVC Enterprises, LLC	01/18/2024		Diversified Consumer Services		7.30	%	1M L+550			9,949,749		9,949,749		9,949,749
TWS Acquisition Corporation	06/16/2025		Diversified Consumer Services		7.99	%	1M L+625			7,075,000		6,942,097		7,075,000
UBEO, LLC	04/03/2024		Capital Equipment		6.76	%	3M L+450			22,194,395		21,998,444		21,972,451
Urology Management Associates, LLC	08/30/2024		Healthcare and Pharmaceuticals		6.80	%	3M L+500			11,550,932		11,374,716		11,550,932
Walker Edison Furniture Company LLC	09/26/2024		Wholesale		8.60	%	3M L+650			15,899,813		15,634,610		15,995,211
Whitney, Bradley & Brown, Inc.	10/18/2022		Aerospace and Defense		9.30	%	1M L+750			5,395,982		5,325,863		5,395,982
Total First Lien Secured Debt												482,172,440		479,446,351
Second Lien Secured Debt
Country Fresh Holdings, LLC	04/29/2024		Beverage, Food and Tobacco		10.60	%	1M L+850			894,487		894,487		894,487
					(PIK 10.60	%)
DBI Holding, LLC, Term Loan B	03/26/2021		Business Services		8.00	%				15,946		15,946		15,946
					(PIK 8.00	%)
DBI Holding, LLC, Term Loan C	02/02/2026		Business Services		8.00	%	—			7,977,513		7,977,513		7,937,625
					(PIK 8.00	%)
Total Second Lien Secured Debt												8,887,946		8,848,058
Equity Securities
Country Fresh Holding Company Inc.		—	Beverage, Food and Tobacco							1,317		1,713,106		715,328
DBI Holding, LLC, Series A-1		—	Business Services		—		—			5,034		5,034,310		4,181,067
DBI Holding, LLC, Series B		—	Business Services		—		—			1,065,021		236,521		-
Total Equity Securities												6,983,937		4,896,395
Cash and Cash Equivalents
BlackRock Federal FD Institutional 30												8,874,900		8,874,900
US Bank Cash												3,113,145		3,154,459
Total Cash and Cash Equivalents												11,988,045		12,029,359
Total Investments and Cash Equivalents											$	510,032,368	$	505,220,163
Liabilities in Excess of Other Assets														(448,388,336	)
Members' Equity													$	56,831,827

(1)

Represents floating rate instruments that accrue interest at a predetermined spread relative to an index, typically the applicable LIBOR or “L” or Prime rate or “P”. The spread may change based on the type of rate used. The terms in the Schedule of Investments disclose the actual interest rate in effect as of the reporting period. LIBOR loans are typically indexed to a 30-day, 60-day, 90-day or 180-day LIBOR rate (1M L, 2M L, 3M L, or 6M L, respectively), at the borrower’s option. All securities are subject to a LIBOR or Prime rate floor where a spread is provided, unless noted. The spread provided includes PIK interest and other fee rates, if any.

(2)	Valued based on PSSL’s accounting policy.

(3)	Non-U.S. company or principal place of business outside the United States.

(4)	Par amount is denominated in Australian Dollars (A$) or in Canadian Dollars (C$) as denoted.

(5)	Represents the purchase of a security with delayed settlement or a revolving line of credit that is currently an unfunded investment. This security does not earn a basis point spread above an index while it is unfunded.

PENNANTPARK FLOATING RATE CAPITAL LTD. AND SUBSIDIARIES

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS-(Continued)

DECEMBER 31, 2019

(Unaudited)

Below is a listing of PSSL’s individual investments as of September 30, 2019:

Issuer Name	Maturity		Industry	Current Coupon			Basis Point Spread Above Index ⁽¹⁾		Par		Cost		Fair Value ⁽²⁾
First Lien Secured Debt
Altamira Technologies, LLC	07/24/2025		High Tech Industries		8.28	%	3M L+600			5,000,000	$	4,927,149	$	5,000,000
American Auto Auction Group, LLC	01/02/2024		Transportation: Consumer		6.85	%	3M L+475			7,749,274		7,674,216		7,671,781
By Light Professional IT Services, LLC	05/16/2022		High Tech Industries		8.52	%	1M L+725			13,772,261		13,531,751		13,772,261
Cadence Aerospace, LLC	11/14/2023		Aerospace and Defense		8.54	%	3M L+650			11,735,208		11,644,440		11,680,054
Cardenas Markets LLC	11/29/2023		Beverage, Food and Tobacco		7.79	%	1M L+575			7,348,866		7,311,507		7,128,400
Centauri Group Holdings, LLC	02/12/2024		Aerospace and Defense		7.36	%	1M L+525			10,422,726		10,413,416		10,396,669
Challenger Performance Optimization, Inc.	08/31/2023		Business Services		7.87	%	1M L+575			10,127,447		10,040,432		9,874,261
Country Fresh Holdings, LLC	05/01/2023		Beverage, Food and Tobacco		7.10	%	1M L+500			182,403		179,170		182,403
Country Fresh Holdings, LLC (Revolver)	05/01/2023		Beverage, Food and Tobacco		7.10	%	1M L+500			126,031		126,031		126,031
Country Fresh Holdings, LLC - (Revolver) ⁽⁵⁾	05/01/2023		Beverage, Food and Tobacco		—		—			324,080	—		—
Deva Holdings, Inc.	10/31/2023		Consumer Goods: Non-Durable		7.54	%	3M L+625			19,748,744		19,748,744		19,748,744
Douglas Products and Packaging Company LLC	10/19/2022		Chemicals, Plastics and Rubber		7.85	%	3M L+575			12,312,500		12,157,345		12,189,375
Douglas Sewer Intermediate, LLC	10/19/2022		Chemicals, Plastics and Rubber		7.85	%	3M L+575			8,166,594		8,116,022		8,084,928
Findex Group Limited ^{(3), (4)}	05/31/2024		Banking, Finance, Insurance and Real Estate		6.26	%	3M L+525	A	$	10,000,000		7,376,173		6,542,165
GCOM Software LLC	11/14/2022		High Tech Industries		8.37	%	1M L+750			17,384,864		17,263,748		17,384,864
Good2Grow LLC	11/18/2024		Beverages		6.35	%	3M L+425			11,752,655		11,649,126		11,576,366
Good Source Solutions, Inc.	06/29/2023		Beverage, Food and Tobacco		6.37	%	3M L+600			14,357,813		14,241,579		14,135,267
GSM Holdings, Inc.	06/03/2024		Consumer Goods: Durable		6.60	%	3M L+450			19,669,098		19,524,460		19,472,406
IMIA Holdings, Inc.	10/28/2024		Aerospace and Defense		6.60	%	3M L+450			12,406,250		12,351,255		12,344,219
Impact Group, LLC	06/27/2023		Wholesale		8.60	%	1M L+650			9,390,185		9,296,753		9,296,283
Infrastructure Supply Operations Pty Ltd. ^{(3), (4)}	12/12/2023		Wholesale		5.80	%	1M L+425	A	$	15,000,000		10,973,919		9,717,138
Integrative Nutrition, LLC	09/29/2023		Diversified Consumer Services		6.85	%	1M L+475			9,974,874		9,974,874		9,974,874
K2 Pure Solutions NoCal, L.P.	12/20/2023		Chemicals, Plastics and Rubber		7.30	%	1M L+525			19,850,000		19,586,294		19,609,815
LAV Gear Holdings, Inc.	10/31/2024		Capital Equipment		7.60	%	3M L+550			9,925,000		9,837,686		9,916,068
Leap Legal Software Pty Ltd ^{(3), (4)}	09/12/2022		High Tech Industries		6.80	%	3M L+575	A	$	14,755,747		10,483,859		9,952,014
Long's Drugs Incorporated	08/19/2022		Healthcare and Pharmaceuticals		7.10	%	1M L+500			17,820,000		17,688,160		17,641,800
LSF9 Atlantis Holdings, LLC	05/01/2023		Retail		8.04	%	1M L+600			7,078,125		7,118,977		6,575,083
Manna Pro Products, LLC	12/08/2023		Consumer Goods: Non-Durable		8.05	%	1M L+600			6,877,500		6,797,207		6,688,369
Marketplace Events LLC ⁽⁴⁾	01/27/2021		Media: Diversified and Production		7.20	%	P+275	C	$	5,760,254		4,461,926		4,350,645
Mission Critical Electronics, Inc.	09/28/2022		Capital Equipment		7.10	%	3M L+500			6,009,982		5,977,867		6,009,982
New Milani Group LLC	06/06/2024		Consumer Goods: Non-Durable		6.35	%	1M L+425			14,812,500		14,691,710		14,664,375
Olde Thompson, LLC	05/14/2024		Beverage, Food and Tobacco		6.54	%	1M L+450			11,876,667		11,757,900		11,876,667
Output Services Group, Inc.	03/27/2024		Business Services		6.54	%	1M L+425			7,883,419		7,909,754		6,779,740
Pestell Minerals and Ingredients Inc.	06/01/2023		Beverage, Food and Tobacco		7.57	%	3M L+525			9,925,000		9,840,202		9,825,750
Pestell Minerals and Ingredients Inc.	06/01/2023		Beverage, Food and Tobacco		7.23	%	3M L+525	C	$	3,242,655		2,412,626		2,424,644
PH Beauty Holdings III, Inc.	09/29/2025		Wholesale		7.04	%	1M L+500			9,892,519		9,804,058		9,397,893
Plant Health Intermediate, Inc.	10/19/2022		Chemicals, Plastics and Rubber		8.00	%	3M L+575			1,758,406		1,736,386		1,740,822
PlayPower, Inc.	05/8/2026		Leisure Products		7.60	%	3M L+550			4,189,500		4,148,451		4,184,263
Smile Brands Inc.	10/14/2024		Healthcare and Pharmaceuticals		6.66	%	3M L+450			11,289,688		11,189,470		11,176,791
Snak Club, LLC	07/19/2021		Beverage, Food and Tobacco		8.10	%	1M L+600			4,687,495		4,687,495		4,359,370
Sonny's Enterprises, LLC	12/01/2022		Capital Equipment		6.35	%	3M L+425			15,224,842		15,227,900		15,224,842
Teneo Holdings LLC	07/18/2025		Business Services		7.29	%	1M L+525			5,000,000		4,804,110		4,762,500
The Infosoft Group, LLC	12/02/2021		Media: Broadcasting and Subscription		7.43	%	6M L+500			8,823,392		8,790,069		8,735,157
TVC Enterprises, LLC	01/18/2024		Diversified Consumer Services		7.55	%	1M L+550			9,974,874		9,974,874		9,974,874
TWS Acquisition Corporation	06/16/2025		Diversified Consumer Services		8.28	%	1M L+625			7,075,000		6,937,888		6,933,500
UBEO, LLC	04/03/2024		Capital Equipment		6.78	%	3M L+450			22,248,673		22,045,879		22,026,186
Urology Management Associates, LLC	08/30/2024		Healthcare and Pharmaceuticals		7.04	%	3M L+450			11,572,122		11,388,612		11,572,122
Walker Edison Furniture Company LLC	09/26/2024		Wholesale		8.83	%	3M L+650			16,001,734		15,724,459		16,121,747
Whitney, Bradley & Brown, Inc.	10/18/2022		Aerospace and Defense		9.55	%	1M L+750			5,466,024		5,389,938		5,466,024
Total First Lien Secured Debt												478,935,867		474,289,532
Second Lien Secured Debt
Country Fresh Holdings, LLC	04/29/2024		Beverage, Food and Tobacco		10.60	%	1M L+850			870,886		870,886		870,886
					(PIK 10.60	%)
DBI Holding, LLC, Term Loan B	03/26/2021		Business Services		8.00	%	6M L+525			15,206		15,206		15,206
					(PIK 8.00	%)
DBI Holding, LLC, Term Loan C	02/02/2026		Business Services		8.00	%	—			7,607,291		7,607,291		7,569,255
					(PIK 8.00	%)
Total Second Lien Secured Debt												8,493,383		8,455,347
Equity Securities
Country Fresh Holding Company Inc.		—	Beverage, Food and Tobacco							1,317		1,713,106		1,124,929
DBI Holding, LLC, Series A-1		—	Business Services		—		—			5,034		5,034,310		4,680,039
DBI Holding, LLC, Series B		—	Business Services		—		—			1,065,021		236,521		-
Total Equity Securities												6,983,937		5,804,968
Cash and Cash Equivalents
BlackRock Federal FD Institutional 30												12,166,301		12,166,301
US Bank Cash												3,156,230		3,128,580
Total Cash and Cash Equivalents												15,322,531		15,294,881
Total Investments and Cash Equivalents											$	509,735,718	$	503,844,728
Liabilities in Excess of Other Assets														(446,736,922	)
Members' Equity													$	57,107,806

(1)

(2)	Valued based on PSSL’s accounting policy.

(3)	Non-U.S. company or principal place of business outside the United States.

(4)	Par amount is denominated in Australian Dollars (A$) or in Canadian Dollars (C$) as denoted.

(5)	Represents the purchase of a security with delayed settlement or a revolving line of credit that is currently an unfunded investment. This security does not earn a basis point spread above an index while it is unfunded.

PENNANTPARK FLOATING RATE CAPITAL LTD. AND SUBSIDIARIES

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS-(Continued)

DECEMBER 31, 2019

(Unaudited)

Below is the financial information for PSSL:

Statements of Assets and Liabilities

	December 31, 2019		September 30, 2019
Assets
Investments at fair value (cost—$498,044,324 and $494,413,190, respectively)	$	493,190,805	$	488,549,847
Cash and cash equivalents (cost—$11,988,045 and $15,322,531, respectively)		12,029,359		15,294,881
Interest receivable		1,464,930		1,855,545
Prepaid expenses and other assets		1,084,158		996,333
Total assets		507,769,252		506,696,606
Liabilities
Payable for investments purchased		55,448,462		—
PSSL Credit Facility payable		254,456,951		308,724,305
Notes payable to members		139,650,000		139,650,000
Interest payable on PSSL Credit Facility		963,362		1,015,468
Interest payable on notes to members		39,197		176,273
Accrued other expenses		379,453		22,754
Total liabilities		450,937,425		449,588,800
Commitments and contingencies ⁽¹⁾		—		—
Members' equity		56,831,827		57,107,806
Total liabilities and members' equity	$	507,769,252	$	506,696,606

⁽¹⁾	As of December 31, 2019 and September 30, 2019, PSSL had unfunded commitments to fund investments of $0.1 million and $0.3 million, respectively.

Statements of Operations
	Three Months Ended December 31,
	2019			2018
Investment income:
Interest	$	8,768,628		$	9,541,567
Other income		—			157,913
Total investment income		8,768,628			9,699,480
Expenses:
Interest and expenses on PSSL Credit Facility		3,606,085			4,087,476
Interest expense on notes to members		3,430,557			3,220,623
Administrative services expenses		300,000			250,000
Other general and administrative expenses ⁽¹⁾		113,710			113,650
Total expenses		7,450,352			7,671,749
Net investment income		1,318,276			2,027,731
Realized and unrealized gain (loss) on investments and credit facility foreign currency translations:
Net realized gain on investments		452,477			258,233
Net change in unrealized appreciation (depreciation) on:
Investments		1,078,789			(4,035,710	)
Credit facility (appreciation) depreciation of foreign currency translations		(1,325,522	)		847,498
Net change in unrealized appreciation (depreciation) on investments and credit facility foreign currency translations		(246,733	)		(3,188,212	)
Net realized and unrealized gain (loss) from investments and credit facility foreign currency translations		205,744			(2,929,979	)
Net increase in members' equity resulting from operations	$	1,524,020		$	(902,248	)

⁽¹⁾	No management or incentive fees are payable by PSSL. If any fees were to be charged, they would be separately disclosed in the Statement of Operations.

5. FAIR VALUE OF FINANCIAL INSTRUMENTS

Fair value, as defined under ASC 820, is the price that we would receive upon selling an investment or pay to transfer a liability in an orderly transaction to a market participant in the principal or most advantageous market for the investment or liability. ASC 820 emphasizes that valuation techniques maximize the use of observable market inputs and minimize the use of unobservable inputs. Inputs refer broadly to the assumptions that market participants would use in pricing an asset or liability, including assumptions about risk. Inputs may be observable or unobservable. Observable inputs reflect the assumptions market participants would use in pricing an asset or liability based on market data obtained from sources independent of us. Unobservable inputs reflect the assumptions market participants would use in pricing an asset or liability based on the best information available to us on the reporting period date.

ASC 820 classifies the inputs used to measure these fair values into the following hierarchies:

Level 1:

Inputs that are quoted prices (unadjusted) in active markets for identical assets or liabilities, accessible by us at the measurement date.

Level 2:

Inputs that are quoted prices for similar assets or liabilities in active markets, or that are quoted prices for identical or similar assets or liabilities in markets that are not active and inputs that are observable for the asset or liability, either directly or indirectly, for substantially the full term, if applicable, of the financial instrument.

Level 3:

Inputs that are unobservable for an asset or liability because they are based on our own assumptions about how market participants would price the asset or liability.

PENNANTPARK FLOATING RATE CAPITAL LTD. AND SUBSIDIARIES

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS-(Continued)

DECEMBER 31, 2019

(Unaudited)

A financial instrument’s categorization within the valuation hierarchy is based upon the lowest level of input that is significant to the fair value measurement. Generally, most of our investments, our 2031 Asset-Backed Debt and our Credit Facility are classified as Level 3. Our 2023 Notes are classified as Level 1, as they were valued using the closing price from the primary exchange. Due to the inherent uncertainty of determining the fair value of investments that do not have a readily available market value, the price used in an actual transaction may be different than our valuation and those differences may be material.

The inputs into the determination of fair value may require significant management judgment or estimation. Even if observable market data is available, such information may be the result of consensus pricing information, disorderly transactions or broker quotes which include a disclaimer that the broker would not be held to such a price in an actual transaction. The non-binding nature of consensus pricing and/or quotes accompanied by disclaimer would result in classification as Level 3 information, assuming no additional corroborating evidence were available. Corroborating evidence that would result in classifying these non-binding broker/dealer bids as a Level 2 asset includes observable orderly market-based transactions for the same or similar assets or other relevant observable market-based inputs that may be used in pricing an asset.

Our investments are generally structured as Floating Rate Loans, mainly first lien secured debt, but also may include second lien secured debt, subordinated debt and equity investments. The transaction price, excluding transaction costs, is typically the best estimate of fair value at inception. Ongoing reviews by our Investment Adviser and independent valuation firms are based on an assessment of each underlying investment, incorporating valuations that consider the evaluation of financing and sale transactions with third parties, expected cash flows and market-based information including comparable transactions, performance multiples and yields, among other factors. These non-public investments valued using unobservable inputs are included in Level 3 of the fair value hierarchy.

A review of fair value hierarchy classifications is conducted on a quarterly basis. Changes in our ability to observe valuation inputs may result in a reclassification for certain financial assets or liabilities.

In addition to using the above inputs in cash equivalents, investments, our 2023 Notes, our 2031 Asset-Backed Debt and our Credit Facility valuations, we employ the valuation policy approved by our board of directors that is consistent with ASC 820. Consistent with our valuation policy, we evaluate the source of inputs, including any markets in which our investments are trading, in determining fair value. See Note 2.

As outlined in the table below, some of our Level 3 investments using a market approach valuation technique are valued using the average of the bids from brokers or dealers. The bids include a disclaimer, may not have corroborating evidence, may be the result of a disorderly transaction and may be the result of consensus pricing. The Investment Adviser assesses the source and reliability of bids from brokers or dealers. If the board of directors has a bona fide reason to believe any such bids do not reflect the fair value of an investment, it may independently value such investment by using the valuation procedure that it uses with respect to assets for which market quotations are not readily available. In accordance with ASC 820, Fair Value Measurement), we do not categorize any investments for which fair value is measured using the net asset value per share as a practical expedient within the fair value hierarchy.

The remainder of our investment portfolio and our long-term Credit Facility are valued using a market comparable or an enterprise market value technique. With respect to investments for which there is no readily available market value, the factors that the board of directors may take into account in pricing our investments at fair value include, as relevant, the nature and realizable value of any collateral, the portfolio company’s ability to make payments, its earnings and discounted cash flow, the markets in which the portfolio company does business, comparison to publicly traded securities and other relevant factors. When an external event such as a purchase transaction, public offering or subsequent equity sale occurs, the pricing indicated by the external event, excluding transaction costs, is used to corroborate the valuation. When using earnings multiples to value a portfolio company, the multiple used requires the use of judgment and estimates in determining how a market participant would price such an asset. These non-public investments using unobservable inputs are included in Level 3 of the fair value hierarchy. Generally, the sensitivity of unobservable inputs or combination of inputs such as industry comparable companies, market outlook, consistency, discount rates and reliability of earnings and prospects for growth, or lack thereof, affects the multiple used in pricing an investment. As a result, any change in any one of those factors may have a significant impact on the valuation of an investment. Generally, an increase in a market yield will result in a decrease in the valuation of a debt investment, while a decrease in a market yield will have the opposite effect. Generally, an increase in an earnings before interest, taxes, depreciation and amortization, or EBITDA, multiple will result in an increase in the valuation of an investment, while a decrease in an EBITDA multiple will have the opposite effect.

Our Level 3 valuation techniques, unobservable inputs and ranges were categorized as follows for ASC 820 purposes:

Asset Category

Fair value at December 31, 2019

Valuation Technique

Unobservable Input

Range of Input

(Weighted Average) ⁽¹⁾

First lien

272,193,711

Market Comparable

Broker/Dealer bids or quotes

N/A

First lien

759,949,627

Market Comparable

Market Yield

4.1% – 15.5% (8.4%)

Second lien

27,435,119

Market Comparable

Market Yield

4.1% – 12.7% (10.7%)

First lien

10,370,100

Enterprise Market Value

EBITDA multiple

5.0x – 14.7x (8.2x)

Second lien

5,458,138

Enterprise Market Value

EBITDA multiple

14.7x

Equity

50,981,372

Enterprise Market Value

EBITDA multiple

6.5x – 14.7x (11.3x)

Total Level 3 investments

1,126,388,066

Long-Term Credit Facility

334,040,510

Market Comparable

Market Yield

4.1%

Asset Category

Fair value at September 30, 2019

Valuation Technique

Unobservable Input

Range of Input

(Weighted Average) ⁽¹⁾

First lien

274,095,799

Market Comparable

Broker/Dealer bids or quotes

N/A

Second lien

2,205,284

Market Comparable

Broker/Dealer bids or quotes

N/A

First lien

661,720,734

Market Comparable

Market Yield

3.9% – 29.2% (8.3%)

Second lien

26,851,188

Market Comparable

Market Yield

3.9% – 14.2% (10.6%)

First lien

9,084,267

Enterprise Market Value

EBITDA multiple

5.0x – 10.9x (6.5x)

Second lien

5,314,125

Enterprise Market Value

EBITDA multiple

10.9x

Equity

52,466,181

Enterprise Market Value

EBITDA multiple

6.3x – 50.8x (15.4x)

Total Level 3 investments

1,031,737,579

Long-Term Credit Facility

263,988,583

Market Comparable

Market Yield

4.0%

⁽¹⁾The weighted averages disclosed in the table above were weighted by their relative fair value.

PENNANTPARK FLOATING RATE CAPITAL LTD. AND SUBSIDIARIES

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS-(Continued)

DECEMBER 31, 2019

(Unaudited)

Our investments, cash and cash equivalents, Credit Facility, 2023 Notes, and the 2031 Asset-Backed Debt were categorized as follows in the fair value hierarchy for ASC 820 purposes:

	Fair Value at December 31, 2019
Description	Fair Value		Level 1		Level 2		Level 3		Measured at Net Asset Value ⁽¹⁾
First lien	$	1,042,513,437	$	—	$	—	$	1,042,513,437	$	—
Second lien		32,893,257		—		—		32,893,257		—
Equity		100,709,220		—		—		50,981,372		49,727,848
Total investments		1,176,115,914		—		—		1,126,388,066		49,727,848
Cash and cash equivalents		56,292,541		56,292,541		—		—		—
Total investments and cash and cash equivalents	$	1,232,408,455	$	56,292,541	$	—	$	1,126,388,066	$	49,727,848
Long-Term Credit Facility	$	334,040,510	$	—	$	—	$	334,040,510	$	—
2023 Notes		133,826,569		133,826,569		—		—		—
2031 Asset-Backed Debt⁽²⁾		224,393,947		—		—		224,393,947		—
Total debt	$	692,261,026	$	133,826,569	$	—	$	558,434,457	$	—

⁽¹⁾	In accordance with ASC Subtopic 820-10, Fair Value Measurements and Disclosures, or ASC 820-10, our equity investment in PSSL is measured using the net asset value per share (or its equivalent) as a practical expedient for fair value, have not been classified in the fair value hierarchy.

⁽²⁾	We elected not to apply ASC 825-10 to the 2031 Asset-Backed Debt and thus the balance reported in the Consolidated Statement of Assets and Liabilities represents the carrying value, which approximates the fair value.

	Fair Value at September 30, 2019
Description	Fair Value		Level 1		Level 2		Level 3		Measured at Net Asset Value ⁽¹⁾
First lien	$	944,900,800	$	—	$	—	$	944,900,800	$	—
Second lien		34,370,598		—		—		34,370,598		—
Equity		102,435,511		—		—		52,466,181		49,969,330
Total investments		1,081,706,909		—		—		1,031,737,579		49,969,330
Cash and cash equivalents		63,337,728		63,337,728		—		—		—
Total investments and cash and cash equivalents	$	1,145,044,637	$	63,337,728	$	—	$	1,031,737,579	$	49,969,330
Long-Term Credit Facility	$	263,988,583	$	—	$	—	$	263,988,583	$	—
2023 Notes		135,240,084		135,240,084		—		—	$	—
2031 Asset-Backed Debt⁽²⁾		224,321,845		—		—		224,321,845		—
Total debt	$	623,550,512	$	135,240,084	$	—	$	488,310,428	$	—

⁽¹⁾	In accordance with ASC Subtopic 820-10, Fair Value Measurements and Disclosures, or ASC 820-10, our equity investment in PSSL is measured using the net asset value per share (or its equivalent) as a practical expedient for fair value, have not been classified in the fair value hierarchy.

⁽²⁾	We elected not to apply ASC 825-10 to the 2031 Asset-Backed Debt and thus the balance reported in the Consolidated Statement of Assets and Liabilities represents the carrying value, which approximates the fair value.

The tables below show a reconciliation of the beginning and ending balances for fair valued investments measured using significant unobservable inputs (Level 3):

	Three Months Ended December 31, 2019
Description	First Lien			Second lien, subordinated debt and equity investments			Totals
Beginning Balance	$	944,900,800		$	86,836,779		$	1,031,737,579
Net realized gain		976,698			35,322			1,012,020
Net change in unrealized appreciation (depreciation)		679,968			(4,051,404	)		(3,371,436	)
Purchases, PIK interest, net discount accretion and non-cash exchanges		237,379,619			3,373,585			240,753,204
Sales, repayments and non-cash exchanges		(141,423,648	)		(2,319,653	)		(143,743,301	)
Transfers in and/or out of Level 3		—			—			—
Ending Balance	$	1,042,513,437		$	83,874,629		$	1,126,388,066
Net change in unrealized (depreciation) appreciation reported within the net change in unrealized (depreciation) appreciation on investments in our Consolidated Statements of Operations attributable to our Level 3 assets still held at the reporting date.	$	534,054		$	(3,974,340	)	$	(3,440,286	)

PENNANTPARK FLOATING RATE CAPITAL LTD. AND SUBSIDIARIES

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS-(Continued)

DECEMBER 31, 2019

(Unaudited)

	Three Months Ended December 31, 2018
Description	First Lien			Second lien, subordinated debt and equity investments			Totals
Beginning Balance	$	913,297,976		$	42,517,588		$	955,815,564
Net realized gains		271,716			—			271,716
Net change in unrealized (depreciation) appreciation		(9,982,247	)		180,425			(9,801,822	)
Purchases, PIK interest, net discount accretion and non-cash exchanges		174,081,000			1,908,075			175,989,075
Sales, repayments and non-cash exchanges		(190,086,145	)		(208,334	)		(190,294,479	)
Transfers in and/or out of Level 3		—			—			—
Ending Balance	$	887,582,300		$	44,397,754		$	931,980,054
Net change in unrealized (depreciation) appreciation reported within the net change in unrealized appreciation (depreciation) on investments in our Consolidated Statements of Operations attributable to our Level 3 assets still held at the reporting date.	$	(10,488,442	)	$	180,425		$	(10,308,017	)

The table below shows a reconciliation of the beginning and ending balances for fair valued liabilities measured using significant unobservable inputs (Level 3):

	Three Months Ended December 31,
Long-Term Credit Facility	2019			2018
Beginning Balance (cost – $265,307,500 and $333,727,520, respectively)	$	263,988,583		$	332,128,815
Net change in unrealized depreciation included in earnings		51,927			(3,441,137	)
Borrowings		86,000,000			104,500,000
Repayments		(16,000,000	)		(87,320,020	)
Transfers in and/or out of Level 3		—			—
Ending Balance (cost – $335,307,500 and $350,907,500, respectively)	$	334,040,510		$	345,867,658

As of December 31, 2019, we had outstanding non-U.S. dollar borrowings on the Credit Facility. Net change in fair value from foreign currency translation on outstanding borrowings is listed below:

Foreign Currency		Amount Borrowed				Borrowing Cost				Current Value				Reset Date		Change in Fair Value
Canadian Dollar	C	$	17,500,000			$	12,407,501			$	13,495,276			January 2, 2020		$	1,087,775

As of September 30, 2019, we had outstanding non-U.S. dollar borrowings on the Credit Facility. Net change in fair value from foreign currency translation on outstanding borrowings is listed below:

Foreign Currency		Amount Borrowed				Borrowing Cost				Current Value				Reset Date		Change in Fair Value
Canadian Dollar	C	$	17,500,000			$	12,407,501			$	13,217,523			October 1, 2019		$	810,022

The carrying value of our consolidated financial liabilities approximates fair value. We have adopted the principles under ASC Subtopic 825-10, Financial Instruments, or ASC 825-10, which provides companies with an option to report selected financial assets and liabilities at fair value, and made an irrevocable election to apply ASC 825-10 to the Credit Facility and the 2023 Notes. We elected to use the fair value option for the Credit Facility and the 2023 Notes to align the measurement attributes of both our assets and liabilities while mitigating volatility in earnings from using different measurement attributes. Due to that election and in accordance with GAAP, we incurred expenses of zero and $4.5 million, respectively, relating to amendment costs on the Credit Facility during the three months ended December 31, 2019 and 2018. ASC 825-10 establishes presentation and disclosure requirements designed to facilitate comparisons between companies that choose different measurement attributes for similar types of assets and liabilities and to more easily understand the effect on earnings of a company’s choice to use fair value. ASC 825-10 also requires entities to display the fair value of the selected assets and liabilities on the face of the Consolidated Statements of Assets and Liabilities and changes in fair value of the Credit Facility and the 2023 Notes are reported in our Consolidated Statements of Operations. We elected not to apply ASC 825-10 to any other financial assets or liabilities, including our 2031 Asset-Backed Debt.

For the three months ended December 31, 2019 and 2018, the Credit Facility and the 2023 Notes had a net change in unrealized depreciation of million $1.4 million and $5.5 million, respectively. As of December 31, 2019 and September 30, 2019, the net unrealized depreciation on the Credit Facility and the 2023 Notes totaled million $6.0 and $4.7 million, respectively. We use a nationally recognized independent valuation service to measure the fair value of the Credit Facility in a manner consistent with the valuation process that the board of directors uses to value our investments. Our 2023 Notes trade on the TASE and we use the closing price on the exchange to determine the fair value.

PENNANTPARK FLOATING RATE CAPITAL LTD. AND SUBSIDIARIES

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS-(Continued)

DECEMBER 31, 2019

(Unaudited)

6. TRANSACTIONS WITH AFFILIATED COMPANIES

An affiliated portfolio company is a company in which we have ownership of 5% or more of its voting securities. A portfolio company is generally presumed to be a non-controlled affiliate when we own at least 5% but 25% or less of its voting securities and a controlled affiliate when we own more than 25% of its voting securities. Transactions related to our funded investments with both controlled and non-controlled affiliates for the three months ended December 31, 2019 were as follows:

Name of Investment	Fair value at September 30, 2019		Purchases of / Advances to Affiliates		Sale of / Distributions from Affiliates		Net Change in Unrealized Appreciation (Depreciation)			Fair value at December 31, 2019		Interest Income		Dividend Income		Net Realized Gains (Losses)
Non-Controlled Affiliates
Country Fresh Holding Company Inc.	$	14,491,626	$	1,244,931	$	—	$	(2,501,672	)	$	13,234,885	$	202,776	$	—	$	—
Quick Weight Loss Centers, LLC		5,938,939		22,554		—		(3,156,551	)		2,804,942		22,577		—		—
Total Non-Controlled Affiliates	$	20,430,565	$	1,267,485	$	—	$	(5,658,223	)	$	16,039,827	$	225,353	$	—	$	—

Controlled Affiliates
PennantPark Senior Secured
Loan Fund I LLC *	$	172,163,080	$	—	$	—	$	(241,482	)	$	171,921,598	$	3,155,324	$	1,575,000	$	—
Total Controlled Affiliates	$	172,163,080	$	—	$	—	$	(241,482	)	$	171,921,598	$	3,155,324	$	1,575,000	$	—
Total Controlled and Non-Controlled Affiliates	$	192,593,645	$	1,267,485	$	—	$	(5,899,705	)	$	187,961,425	$	3,380,677	$	1,575,000	$	—

We and Kemper are the members of PSSL, a joint venture formed as a Delaware limited liability company that is not consolidated by us for financial reporting purposes. The members of PSSL make investments in the PSSL in the form of first lien secured debt and equity interests, and all portfolio and other material decision regarding PSSL must be submitted to PSSL’s board of directors or investment committee, both of which are comprised of two members appointed by each of us and Kemper. Because management of PSSL is shared equally between us and Kemper, we do not believe we control PSSL for purposes of the 1940 Act or otherwise.

7. CHANGE IN NET ASSETS FROM OPERATIONS PER COMMON SHARE

The following information sets forth the computation of basic and diluted per share net increase in net assets resulting from operations:

	Three Months Ended December 31,
	2019		2018
Numerator for net increase in net assets resulting from operations	$	9,972,894	$	4,995,195
Denominator for basic and diluted weighted average shares		38,772,074		38,772,074
Basic and diluted net increase in net assets per share resulting from operations	$	0.26	$	0.13

8. CASH AND CASH EQUIVALENTS

Cash equivalents represent cash in money market funds pending investment in longer-term portfolio holdings. Our portfolio may consist of temporary investments in U.S. Treasury Bills (of varying maturities), repurchase agreements, money market funds or repurchase agreement-like treasury securities. These temporary investments with original maturities of 90 days or less are deemed cash equivalents and are included in the Consolidated Schedule of Investments. At the end of each fiscal quarter, we may take proactive steps to preserve investment flexibility for the next quarter by investing in cash equivalents, which is dependent upon the composition of our total assets at quarter-end. We may accomplish this in several ways, including purchasing U.S. Treasury Bills and closing out positions on a net cash basis after quarter-end, temporarily drawing down on the Credit Facility, or utilizing repurchase agreements or other balance sheet transactions as are deemed appropriate for this purpose. These amounts are excluded from average adjusted gross assets for purposes of computing the Investment Adviser’s management fee. U.S. Treasury Bills with maturities greater than 60 days from the time of purchase are valued consistent with our valuation policy. As of December 31, 2019 and September 30, 2019, cash and cash equivalents consisted of money market funds in the amounts of $56.3million and $63.3 million at fair value, respectively.

PENNANTPARK FLOATING RATE CAPITAL LTD. AND SUBSIDIARIES

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS-(Continued)

DECEMBER 31, 2019

(Unaudited)

9. FINANCIAL HIGHLIGHTS

Below are the financial highlights:

	Three Months Ended December 31,
	2019			2018
Per Share Data:
Net asset value, beginning of period	$	12.97		$	13.82
Net investment income ⁽¹⁾		0.29			0.28
Net change in realized and unrealized loss ⁽¹⁾		(0.03	)		(0.15	)
Net increase in net assets resulting from operations ⁽¹⁾		0.26			0.13
Distributions to stockholders ^{(1), (2)}		(0.29	)		(0.29	)
Net asset value, end of period	$	12.95		$	13.66
Per share market value, end of period	$	12.18		$	11.57
Total return* ⁽³⁾		7.56	%		13.06	%
Shares outstanding at end of period		38,772,074			38,772,074
Ratios** / Supplemental Data:
Ratio of operating expenses to average net assets ⁽⁴⁾		4.96	%		1.82	%
Ratio of debt related expenses to average net assets ⁽⁵⁾		5.83	%		4.84	%
Ratio of total expenses to average net assets ⁽⁵⁾		10.79	%		6.66	%
Ratio of net investment income to average net assets ⁽⁵⁾		8.88	%		10.78	%
Net assets at end of period	$	501,980,364		$	529,786,722
Weighted average debt outstanding	$	647,164,200		$	486,048,277
Weighted average debt per share ⁽¹⁾	$	16.69		$	12.54
Asset coverage per unit ⁽⁶⁾	$	1,704		$	2,103
Portfolio turnover ratio		51.44	%		74.40	%

*	Not annualized for periods less than one year.

**	Annualized for periods less than one year.

⁽¹⁾	Based on the weighted average shares outstanding for the respective periods.

⁽²⁾	The tax status of distributions is calculated in accordance with income tax regulations, which may differ from amounts determined under GAAP, and reported on Form 1099-DIV each calendar year.

⁽³⁾	Based on the change in market price per share during the periods and assumes distributions, if any, are reinvested.

⁽⁴⁾	Excludes debt related costs.

⁽⁵⁾	Includes interest and expenses on debt (annualized) as well as Credit Facility amendment and debt issuance costs, if any, (not annualized).

⁽⁶⁾

The asset coverage ratio for a class of senior securities representing indebtedness is calculated on our consolidated total assets, less all liabilities and indebtedness not represented by senior securities, divided by the senior securities representing indebtedness at par (changed from fair value). This asset coverage ratio is multiplied by $1,000 to determine the asset coverage per unit.

10. DEBT

The annualized weighted average cost of debt for the three months ended December 31, 2019 and 2018, inclusive of the fee on the undrawn commitment on the Credit Facility, amendment costs and debt issuance costs, was 4.5% and 5.3%, respectively. As of December 31, 2019, in accordance with the 1940 Act, with certain limited exceptions, we are only allowed to borrow amounts such that we are in compliance with a 150% asset coverage ratio requirement after such borrowing.

On April 5, 2018, our board of directors approved the application of the modified asset coverage requirements set forth in Section 61(a)(2) of the 1940 Act, as amended by the Consolidated Appropriations Act of 2018 (which includes the SBCAA). As a result, the asset coverage requirement applicable to us for senior securities was reduced from 200% (i.e., $1 of debt outstanding for each $1 of equity) to 150% (i.e., $2 of debt outstanding for each $1 of equity), effective as of April 5, 2019, subject to compliance with certain disclosure requirements. As of December 31, 2019 and September 30, 2019, our asset coverage ratio, as computed in accordance with the 1940 Act, was 170% and 179%, respectively.

Credit Facility

Funding I’s multi-currency Credit Facility with affiliates of Truist Bank (formerly SunTrust Bank), or the Lenders, was $520 million as of December 31, 2019, subject to satisfaction of certain conditions and regulatory restrictions that the 1940 Act imposes on us as a BDC, has an interest rate spread above LIBOR of 200 basis points, a maturity date of October 2023 and a revolving period that ends in October 2021. As of December 31, 2019 and September 30, 2019, Funding I borrowed $335.3 million and $265.3 million under the Credit Facility, respectively. The Credit Facility had a weighted average interest rate of 3.7% and 4.1%, exclusive of the fee on undrawn commitments as of December 31, 2019 and September 30, 2019, respectively. As of December 31, 2019 and September 30, 2019, we had $184.7 million and $254.7 million of unused borrowing capacity under the Credit Facility, respectively, subject to the regulatory restrictions.

During the revolving period, the Credit Facility bears interest at LIBOR plus 200 basis points and, after the revolving period, the rate sets to LIBOR plus 425 basis points for the remaining two years, maturing in October 2023. The Credit Facility is secured by all of the assets of Funding I. Both PennantPark Floating Rate Capital Ltd. and Funding I have made customary representations and warranties and are required to comply with various covenants, reporting requirements and other customary requirements for similar credit facilities.

The Credit Facility contains covenants, including, but not limited to, restrictions of loan size, industry requirements, average life of loans, geographic and individual portfolio concentrations, minimum portfolio yield and loan payment frequency. Additionally, the Credit Facility requires the maintenance of a minimum equity investment in Funding I and income ratio as well as restrictions on certain payments and issuance of debt. The Credit Facility compliance reporting is prepared on a basis of accounting other than GAAP. As of December 31, 2019, we were in compliance with the covenants relating to the Credit Facility.

We own 100% of the equity interest in Funding I and treat the indebtedness of Funding I as our leverage. Our Investment Adviser serves as collateral manager to Funding I under the Credit Facility.

PENNANTPARK FLOATING RATE CAPITAL LTD. AND SUBSIDIARIES

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS-(Continued)

DECEMBER 31, 2019

(Unaudited)

Our interest in Funding I (other than the management fee) is subordinate in priority of payment to every other obligation of Funding I and is subject to certain payment restrictions set forth in the Credit Facility. We may receive cash distributions on our equity interests in Funding I only after it has made (1) all required cash interest and, if applicable, principal payments to the Lenders, (2) required administrative expenses and (3) claims of other unsecured creditors of Funding I. The Investment Adviser has irrevocably directed that the management fee owed with respect to such services is to be paid to the Company so long as the Investment Adviser remains the collateral manager.

2023 Notes

In November 2017, we issued $138.6 million of our 2023 Notes pursuant to a deed of trust between the Company and Mishmeret Trust Company, Ltd., as trustee.

The 2023 Notes pay interest at a rate of 3.8% per year. Interest on the 2023 Notes is payable semi-annually in arrears on June 15 and December 15 of each year, commencing June 15, 2018. The principal on the 2023 Notes is payable in four annual installments as follows: 15% of the original principal amount on December 15, 2020, 15% of the original principal amount on December 15, 2021, 15% of the original principal amount on December 15, 2022 and 55% of the original principal amount on December 15, 2023.

The 2023 Notes are general, unsecured obligations, rank equal in right of payment with all of our existing and future senior unsecured indebtedness and are generally redeemable at our option. The deed of trust governing the 2023 Notes includes certain customary covenants, including minimum equity requirements, and events of default. Please refer to the deed of trust filed as Exhibit (d)(8) to our post-effective amendment filed on December 13, 2017 for further information. The 2023 Notes are rated ilA+ by S&P Global Ratings Maalot Ltd. and are listed on the TASE. In connection with this offering, we have dual listed our common stock on the TASE.

The 2023 Notes have not been and will not be registered under the Securities Act of 1933, as amended, or the Securities Act, and may not be offered or sold in the United States absent registration under the Securities Act or in transactions exempt from, or not subject to, such registration requirements.

2031 Asset-Backed Debt

In September 2019, the Company completed the 301.4 million term debt securitization. Term debt securitizations, also known as CLOs, are a form of secured financing incurred by the Company, which is consolidated by the Company and subject to the Company’s asset coverage requirements. The 2031 Asset-Backed Debt was issued by the Securitization Issuer. The 2031 Asset-Backed Debt is secured by the middle market loans, participation interests in middle market loans and other assets of the Securitization Issuer. The Debt Securitization was executed through (A) a private placement of: (i) $78.5 million Class A-1 Senior Secured Floating Rate Loans maturing 2031, which bear interest at the three-month LIBOR plus 1.80%, (ii) $15.0 million Class A-2 Senior Secured Fixed Rate Notes due 2031, which bear interest at 3.66%, (iii) $14.0 million Class B-1 Senior Secured Floating Rate Notes due 2031, which bear interest at the three-month LIBOR plus 2.90%, (iv) $16.0 million Class B-2 Senior Secured Fixed Rate Notes due 2031, which bear interest at 4.266%, (v) $19.0 million Class C‑1 Secured Deferrable Floating Rate Notes due 2031, which bear interest at the three-month LIBOR plus 4.00%, (vi) $8.0 million Class C-2 Secured Deferrable Fixed Rate Notes due 2031, which bear interest at 5.379%, and (vii) $18.0 million Class D Secured Deferrable Floating Rate Notes due 2031, which bear interest at the three-month LIBOR plus 4.75% and (B) the borrowing of $77.5 million Class A‑1 Senior Secured Floating Rate Notes due 2031, which bear interest at the three-month LIBOR plus 1.80%, under a credit agreement by and among the Securitization Issuers, as borrowers, various financial institutions, as lenders, and U.S. Bank National Association, as collateral agent and as loan agent. The annualized interest on the 2031 Asset-Backed Debt will be paid, to the extent of funds available. The reinvestment period of the Debt Securitization ends on October 15, 2023 and the 2031 Asset-Backed Debt is scheduled to mature on October 15, 2031.

On the closing date of the Debt Securitization, in consideration of our transfer to the Securitization Issuer of the initial closing date loan portfolio, which included loans distributed to us by certain of our wholly owned subsidiaries, the Securitization Issuer transferred to us 100% of the Preferred Shares of the Securitization Issuer, 100% of the Class D Secured Deferrable Floating Rate Notes issued by the Securitization Issuer, and a portion of the net cash proceeds received from the sale of the 2031 Asset-Backed Debt. The Preferred Shares of the Securitization Issuer do not bear interest and had a stated value of approximately $55.4 million at the closing of the Debt Securitization.

The 2031 Asset-Backed Debt is included in the Consolidated Statement of Assets and Liabilities as debt of the Company and the Class D Secured Deferrable Floating Rate Notes and the Preferred Shares of the Securitization Issuer were eliminated in consolidation. As of December 31, 2019 and September 30, 2019, the Company had $228.0 million of 2031 Asset-Backed Debt outstanding, respectively, with a weighted average interest rate of 4.1% and 4.2%. As of December 31, 2019 and September 30, 2019, the unamortized fees on the 2031 Asset-Backed Debt were $3.6 million and $3.7, respectively.

Our Investment Adviser serves as collateral manager to the Securitization Issuer pursuant to the Collateral Management Agreement. For so long as our Investment Adviser serves as collateral manager, it will elect to irrevocably waive any collateral management fee to which it may be entitled under the Collateral Management Agreement.

11. COMMITMENTS AND CONTINGENCIES

From time to time, we, the Investment Adviser or the Administrator may be a party to legal proceedings, including proceedings relating to the enforcement of our rights under contracts with our portfolio companies. While the outcome of these legal proceedings cannot be predicted with certainty, we do not expect that these proceedings will have a material effect upon our financial condition or results of operations. Unfunded debt and equity investments, if any, are disclosed in the Consolidated Schedules of Investments. As of December 31, 2019 and September 30, 2019, we had $85.1 million and $101.1 million, respectively, in commitments to fund investments. Additionally, as described in Note 4, the Company had unfunded commitments of up to $26.7 million and $9.2 million to PSSL as of December 31, 2019 and September 30, 2019, respectively, that may be contributed primarily for the purpose of funding new investments approved by the PSSL board of directors or investment committee.

Report of Independent Registered Public Accounting Firm

To the Stockholders and Board of Directors of PennantPark Floating Rate Capital Ltd. and its Subsidiaries

Results of Review of Interim Financial Statements

We have reviewed the accompanying consolidated statement of assets and liabilities of PennantPark Floating Rate Capital Ltd. and its Subsidiaries (collectively referred to as the “Company”), including the consolidated schedule of investments, as of December 31, 2019, and the related consolidated statements of operations, changes in net assets, and cash flows for the three-month periods ended December 31, 2019 and 2018, and the related notes to the consolidated financial statements (collectively, the interim financial information or financial statements). Based on our reviews, we are not aware of any material modifications that should be made to the accompanying interim financial information for them to be in conformity with accounting principles generally accepted in the United States of America.

We have previously audited, in accordance with the standards of the Public Company Accounting Oversight Board (United States) (PCAOB), the consolidated statement of assets and liabilities of the Company, including the consolidated schedule of investments, as of September 30, 2019, and the related consolidated statements of operations, changes in net assets, and cash flows for the year then ended (not presented herein); and in our report dated November 20, 2019, we expressed an unqualified opinion on those financial statements. In our opinion, the information set forth in the accompanying consolidated statement of assets and liabilities as of September 30, 2019, is fairly stated, in all material respects, in relation to the balance sheet from which it has been derived.

Basis for Review Results

These interim financial statements are the responsibility of the Company’s management. We conducted our reviews in accordance with the standards of the PCAOB. A review of interim financial information consists principally of applying analytical procedures and making inquiries of persons responsible for financial and accounting matters. It is substantially less in scope than an audit conducted in accordance with the standards of the PCAOB, the objective of which is the expression of an opinion regarding the financial statements taken as a whole. Accordingly, we do not express such an opinion. We are a public accounting firm registered with the PCAOB and are required to be independent with respect to the Company in accordance with U.S. federal securities laws and the applicable rules and regulations of the Securities and Exchange Commission and the PCAOB.

/s/ RSM US LLP

New York, New York

February 5, 2020

Item 2.

MANAGEMENT’S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION AND RESULTS OF OPERATIONS

FORWARD-LOOKING STATEMENTS

This Report, including Management’s Discussion and Analysis of Financial Condition and Results of Operations, contains statements that constitute forward-looking statements, which relate to us and our consolidated subsidiaries regarding future events or our future performance or future financial condition. These forward-looking statements are not historical facts, but rather are based on current expectations, estimates and projections about our Company, our industry, our beliefs and our assumptions. The forward-looking statements contained in this Report involve risks and uncertainties, including statements as to:

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our future operating results;

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our business prospects and the prospects of our prospective portfolio companies;

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the dependence of our future success on the general economy and its impact on the industries in which we invest;

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the impact of a protracted decline in the liquidity of credit markets on our business;

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the impact of investments that we expect to make;

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the impact of fluctuations in interest rates and foreign exchange rates on our business and our portfolio companies;

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our contractual arrangements and relationships with third parties;

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the valuation of our investments in portfolio companies, particularly those having no liquid trading market;

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the ability of our prospective portfolio companies to achieve their objectives;

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our expected financings and investments and ability to fund capital commitments to PSSL;

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the adequacy of our cash resources and working capital;

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the timing of cash flows, if any, from the operations of our prospective portfolio companies;

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the impact of price and volume fluctuations in the stock market;

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the ability of our Investment Adviser to locate suitable investments for us and to monitor and administer our investments;

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the impact of future legislation and regulation on our business and our portfolio companies; and

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the impact of Brexit and other world economic and political issues.

We use words such as “anticipates,” “believes,” “expects,” “intends,” “seeks,” “plans,” “estimates” and similar expressions to identify forward-looking statements. You should not place undue influence on the forward-looking statements as our actual results could differ materially from those projected in the forward-looking statements for any reason.

Although we believe that the assumptions on which these forward-looking statements are based are reasonable, any of those assumptions could prove to be inaccurate, and, as a result, the forward-looking statements based on those assumptions also could be inaccurate. Important assumptions include our ability to originate new loans and investments, certain margins and levels of profitability and the availability of additional capital. In light of these and other uncertainties, the inclusion of a projection or forward-looking statement in this Report should not be regarded as a representation by us that our plans and objectives will be achieved.

We have based the forward-looking statements included in this Report on information available to us on the date of this Report, and we assume no obligation to update any such forward-looking statements. Although we undertake no obligation to revise or update any forward-looking statements in this Report, whether as a result of new information, future events or otherwise, you are advised to consult any additional disclosures that we may make directly to you or through reports that we in the future may file with the SEC, including reports on Form 10-Q/K and current reports on Form 8-K.

You should understand that under Section 27A(b)(2)(B) of the Securities Act and Section 21E(b)(2)(B) of the Exchange Act, the “safe harbor” provisions of the Private Securities Litigation Reform Act of 1995 do not apply to forward-looking statements made in periodic reports we file under the Exchange Act.

The following analysis of our financial condition and results of operations should be read in conjunction with our Consolidated Financial Statements and the related notes thereto contained elsewhere in this Report.

Overview

PennantPark Floating Rate Capital Ltd. is a BDC whose objectives are to generate both current income and capital appreciation while seeking to preserve capital by investing primarily in Floating Rate Loans and other investments made to U.S. middle-market companies.

We believe that Floating Rate Loans to U.S. middle-market companies offer attractive risk-reward to investors due to a limited amount of capital available for such companies. We use the term “middle-market” to refer to companies with annual revenues between $50 million and $1 billion. Our investments are typically rated below investment grade. Securities rated below investment grade are often referred to as “leveraged loans” or “high yield” securities or “junk bonds” and are often higher risk compared to debt instruments that are rated above investment grade and have speculative characteristics. However, when compared to junk bonds and other non-investment grade debt, senior secured Floating Rate Loans typically have more robust capital-preserving qualities, such as historically lower default rates than junk bonds, represent the senior source of capital in a borrower’s capital structure and often have certain of the borrower’s assets pledged as collateral. Our debt investments may generally range in maturity from three to ten years and are made to U.S. and, to a limited extent, non-U.S. corporations, partnerships and other business entities which operate in various industries and geographical regions.

Under normal market conditions, we generally expect that at least 80% of the value of our Managed Assets will be invested in Floating Rate Loans and other investments bearing a variable-rate of interest. We generally expect that first lien secured debt will represent at least 65% of our overall portfolio. We also generally expect to invest up to 35% of our overall portfolio opportunistically in other types of investments, including second lien secured debt and subordinated debt and, to a lesser extent, equity investments. We seek to create a diversified portfolio by generally targeting an investment size between $5 million and $30 million, on average, although we expect that this investment size will vary proportionately with the size of our capital base.

Our investment activity depends on many factors, including the amount of debt and equity capital available to middle-market companies, the level of merger and acquisition activity for such companies, the general economic environment and the competitive environment for the types of investments we make. We have used, and expect to continue to use, our debt capital, proceeds from the rotation of our portfolio and proceeds from public and private offerings of securities to finance our investment objectives.

Organization and Structure of PennantPark Floating Rate Capital Ltd.

PennantPark Floating Rate Capital Ltd., a Maryland corporation organized in October 2010, is a closed-end, externally managed, non-diversified investment company that has elected to be treated as a BDC under the 1940 Act. In addition, for federal income tax purposes we elected to be treated, and intend to qualify annually, as a RIC under the Code.

Our investment activities are managed by the Investment Adviser. Under our Investment Management Agreement, we have agreed to pay our Investment Adviser an annual base management fee based on our average adjusted gross assets as well as an incentive fee based on our investment performance. We have also entered into an Administration Agreement with the Administrator. Under our Administration Agreement, we have agreed to reimburse the Administrator for our allocable portion of overhead and other expenses incurred by the Administrator in performing its obligations under our Administration Agreement, including rent and our allocable portion of the costs of compensation and related expenses of our Chief Compliance Officer, Chief Financial Officer and their respective staffs. Our board of directors, a majority of whom are independent of us, provides overall supervision of our activities, and the Investment Adviser supervises our day-to-day activities.

Revenues

We generate revenue in the form of interest income on the debt securities we hold and capital gains and dividends, if any, on investment securities that we may acquire in portfolio companies. Our debt investments, whether in the form of first lien secured debt, second lien secured debt or subordinated debt, typically have a term of three to ten years and bear interest at a floating or fixed rate. Interest on debt securities is generally payable quarterly. In some cases, our investments provide for deferred interest payments or PIK interest. The principal amount of the debt securities and any accrued but unpaid interest generally becomes due at the maturity date. In addition, we may generate revenue in the form of amendment, commitment, origination, structuring or diligence fees, fees for providing significant managerial assistance and possibly consulting fees. Loan origination fees, OID and market discount or premium are capitalized and accreted or amortized using the effective interest method as interest income or, in the case of deferred financing costs, as interest expense. Dividend income, if any, is recognized on an accrual basis on the ex-dividend date to the extent that we expect to collect such amounts. From time to time, the Company receives certain fees from portfolio companies, which are non-recurring in nature. Such fees include loan prepayment penalties, structuring fees and amendment fees, and are recorded as other investment income when earned. Litigation settlements are accounted for in accordance with the gain contingency provisions of ASC 450-30.

Expenses

Our primary operating expenses include the payment of a management fee and the payment of an incentive fee to our Investment Adviser, if any, our allocable portion of overhead under our Administration Agreement and other operating costs as detailed below. Our management fee compensates our Investment Adviser for its work in identifying, evaluating, negotiating, consummating and monitoring our investments. Additionally, we pay interest expense on the outstanding debt and unused commitment fees on undrawn amounts, under our various debt facilities. We bear all other direct or indirect costs and expenses of our operations and transactions, including:

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the cost of calculating our net asset value, including the cost of any third-party valuation services;

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the cost of effecting sales and repurchases of shares of our common stock and other securities;

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fees payable to third parties relating to, or associated with, making investments, including fees and expenses associated with performing due diligence and reviews of prospective investments or complementary businesses;

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expenses incurred by the Investment Adviser in performing due diligence and reviews of investments;

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transfer agent and custodial fees;

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fees and expenses associated with marketing efforts;

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federal and state registration fees and any exchange listing fees;

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federal, state, local and foreign taxes;

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independent directors’ fees and expenses;

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brokerage commissions;

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fidelity bond, directors and officers, errors and omissions liability insurance and other insurance premiums;

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direct costs such as printing, mailing, long distance telephone and staff;

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fees and expenses associated with independent audits and outside legal costs;

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costs associated with our reporting and compliance obligations under the 1940 Act and applicable federal and state securities laws; and

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all other expenses incurred by either the Administrator or us in connection with administering our business, including payments under our Administration Agreement that will be based upon our allocable portion of overhead, and other expenses incurred by the Administrator in performing its obligations under our Administration Agreement, including rent and our allocable portion of the costs of compensation and related expenses of our Chief Compliance Officer, Chief Financial Officer and their respective staffs.

Generally, during periods of asset growth, we expect our general and administrative expenses to be relatively stable or to decline as a percentage of total assets and increase during periods of asset declines. Incentive fees, interest expense and costs relating to future offerings of securities would be additive to the expenses described above.

PORTFOLIO AND INVESTMENT ACTIVITY

As of December 31, 2019, our portfolio totaled $1,176.1 million and consisted of $1,042.5 million of first lien secured debt (including $122.2 million in PSSL), $32.9 million of second lien secured debt and $100.7 million of preferred and common equity (including $49.7 million in PSSL). Our debt portfolio consisted of 99% variable-rate investments. As of December 31, 2019, we had one portfolio company on non-accrual, representing 0.4% and zero of our overall portfolio on a cost and fair value basis, respectively. Overall, the portfolio had net unrealized depreciation of $7.0 million. Our overall portfolio consisted of 102 companies with an average investment size of $11.5 million, had a weighted average yield on debt investments of 8.4%, and was invested 89% in first lien secured debt (including 10% invested in PSSL), 3% in second lien secured debt and 8% in preferred and common equity (including 4% in PSSL). As of December 31, 2019, 97% of the investments held by PSSL were first lien secured debt.

As of September 30, 2019, our portfolio totaled $1,081.7 million and consisted of $944.9 million of first lien secured debt (including $122.2 million in PSSL), $34.4 million of second lien secured debt and $102.4 million of preferred and common equity (including $50.0 million in PSSL). Our debt portfolio consisted of 99% variable-rate investments. As of September 30, 2019, we had one portfolio company on non-accrual, representing 0.4% and zero of our overall portfolio on a cost and fair value basis, respectively. Overall, the portfolio had net unrealized depreciation of $3.5 million. Our overall portfolio consisted of 95 companies with an average investment size of $11.4 million, had a weighted average yield on debt investments of 8.7%, and was invested 87% in first lien secured debt (including 11% in PSSL), 3% in second lien secured debt and 10% in preferred and common equity (including 5% in PSSL). As of September 30, 2019, 97% of the investments held by PSSL were first lien secured debt.

For the three months ended December 31, 2019, we invested $239.4 million in 10 new and 31 existing portfolio companies with a weighted average yield on debt investments of 8.2%. Sales and repayments of investments for the three months ended December 31, 2019 totaled $143.7 million.

For the three months ended December 31, 2018, we invested $180.7 million in nine new and 24 existing portfolio companies with a weighted average yield on debt investments of 8.6%. Sales and repayments of investments for the three months ended December 31, 2018 totaled $190.3 million.

PennantPark Senior Secured Loan Fund I LLC

As of December 31, 2019, PSSL’s portfolio totaled $493.2 million, consisted of 49 companies with an average investment size of $10.1 million and had a weighted average yield on debt investments of 7.4%. As of September 30, 2019, PSSL’s portfolio totaled $488.5 million, consisted of 45 companies with an average investment size of $10.9 million and had a weighted average yield on debt investments of 7.6%.

For the three months ended December 31, 2019, PSSL invested $69.1 million (of which $68.9 million was purchased from the Company) in eight new and one existing portfolio companies with a weighted average yield on debt investments of 7.5%. Sales and repayments of investments for the three months ended December 31, 2019 totaled $66.4 million.

For the three months ended December 31, 2018, PSSL invested $142.4 million (of which $38.0 million was purchased from the Company) in nine new and three existing portfolio companies with a weighted average yield on debt investments of 8.1%. PSSL’s sales and repayments of investments for the three months ended December 31, 2018 totaled $70.7 million.

CRITICAL ACCOUNTING POLICIES

The preparation of our Consolidated Financial Statements in conformity with GAAP requires management to make estimates and assumptions that affect the reported amount of our assets and liabilities at the date of the Consolidated Financial Statements and the reported amounts of income and expenses during the reported periods. In the opinion of management, all adjustments, which are of a normal recurring nature, considered necessary for the fair presentation of financial statements have been included. Actual results could differ from these estimates due to changes in the economic and regulatory environment, financial markets and any other parameters used in determining such estimates and assumptions. We may reclassify certain prior period amounts to conform to the current period presentation. We have eliminated all intercompany balances and transactions. References to ASC serve as a single source of accounting literature. Subsequent events are evaluated and disclosed as appropriate for events occurring through the date the Consolidated Financial Statements are issued. In addition to the discussion below, we describe our critical accounting policies in the notes to our Consolidated Financial Statements.

Investment Valuations

We expect that there may not be readily available market values for many of the investments which are or will be in our portfolio, and we value such investments at fair value as determined in good faith by or under the direction of our board of directors using a documented valuation policy and a consistently applied valuation process, as described in this Report. With respect to investments for which there is no readily available market value, the factors that the board of directors may take into account in pricing our investments at fair value include, as relevant, the nature and realizable value of any collateral, the portfolio company’s ability to make payments and its earnings and discounted cash flow, the markets in which the portfolio company does business, comparison to publicly traded securities and other relevant factors. When an external event such as a purchase transaction, public offering or subsequent equity sale occurs, we consider the pricing indicated by the external event to corroborate or revise our valuation. Due to the inherent uncertainty of determining the fair value of investments that do not have a readily available market value, the price used in an actual transaction may be different than our valuation and the difference may be material.

(1)

Our quarterly valuation process begins with each portfolio company or investment being initially valued by the investment professionals of our Investment Adviser responsible for the portfolio investment;

(2)

Preliminary valuation conclusions are then documented and discussed with the management of our Investment Adviser;

(3)

(4)

The audit committee of our board of directors reviews the preliminary valuations of our Investment Adviser and those of the independent valuation firms on a quarterly basis, periodically assesses the valuation methodologies of the independent valuation firms, and responds to and supplements the valuation recommendations of the independent valuation firms to reflect any comments; and

(5)

ASC 820 classifies the inputs used to measure these fair values into the following hierarchies:

Level 1:

Inputs that are quoted prices (unadjusted) in active markets for identical assets or liabilities, accessible by us at the measurement date.

Level 2:

Level 3:

Inputs that are unobservable for an asset or liability because they are based on our own assumptions about how market participants would price the asset or liability.

A financial instrument’s categorization within the valuation hierarchy is based upon the lowest level of input that is significant to the fair value measurement. Generally, most of our investments, our 2031 Asset-Backed Debt and our Credit Facility are classified as Level 3. Our 2023 Notes are classified as Level 1. Due to the inherent uncertainty of determining the fair value of investments that do not have a readily available market value, the price used in an actual transaction may be different than our valuation and those differences may be material.

For the three months ended December 31, 2019 and 2018, the Credit Facility and the 2023 Notes had a net change in unrealized depreciation of $1.4 million and $5.5 million, respectively. As of December 31, 2019 and September 30, 2019, the net unrealized depreciation on the Credit Facility and the 2023 Notes totaled million $6.0 and $4.7 million, respectively. We use a nationally recognized independent valuation service to measure the fair value of the Credit Facility in a manner consistent with the valuation process that the board of directors uses to value our investments. Our 2023 Notes trade on the TASE and we use the closing price on the exchange to determine the fair value.

Revenue Recognition

We record interest income on an accrual basis to the extent that we expect to collect such amounts. For loans and debt investments with contractual PIK interest, which represents interest accrued and added to the loan balance that generally becomes due at maturity, we will generally not accrue PIK interest when the portfolio company valuation indicates that such PIK interest is not collectable. We do not accrue as a receivable interest on loans and debt investments if we have reason to doubt our ability to collect such interest. Loan origination fees, OID, market discount or premium and deferred financing costs on liabilities, which we do not fair value, are capitalized and then accreted or amortized using the effective interest method as interest income or, in the case of deferred financing costs, as interest expense. We record prepayment penalties on loans and debt investments as income. Dividend income, if any, is recognized on an accrual basis on the ex-dividend date to the extent that we expect to collect such amounts. From time to time, the Company receives certain fees from portfolio companies, which are non-recurring in nature. Such fees include loan prepayment penalties, structuring fees and amendment fees, and are recorded as other investment income when earned.

Net Realized Gains or Losses and Net Change in Unrealized Appreciation or Depreciation

We measure realized gains or losses by the difference between the net proceeds from the repayment or sale and the amortized cost basis of the investment, using the specific identification method, without regard to unrealized appreciation or depreciation previously recognized, but considering unamortized upfront fees and prepayment penalties. Net change in unrealized appreciation or depreciation reflects the change in fair values of our portfolio investments, our Credit Facility and the 2023 Notes during the reporting period, including any reversal of previously recorded unrealized appreciation or depreciation, when gains or losses are realized.

Foreign Currency Translation

Our books and records are maintained in U.S. dollars. Any foreign currency amounts are translated into U.S. dollars on the following basis:

Fair value of investment securities, other assets and liabilities – at the exchange rates prevailing at the end of the applicable period; and

Purchases and sales of investment securities, income and expenses – at the exchange rates prevailing on the respective dates of such transactions.

PIK Interest

We have investments in our portfolio which contain a PIK interest provision. PIK interest is added to the principal balance of the investment and is recorded as income. In order for us to maintain our ability to be subject to tax as a RIC, substantially all of this income must be paid out to stockholders in the form of dividends for U.S. federal income tax purposes, even though we may not have collected any cash with respect to interest on PIK securities.

Federal Income Taxes

We have elected to be treated, and intend to qualify annually to maintain our election to be treated, as a RIC under Subchapter M of the Code. To maintain our RIC tax election, we must, among other requirements, meet certain annual source-of-income and quarterly asset diversification requirements. We also must annually distribute dividends for U.S. federal income tax purposes to our stockholders out of the assets legally available for distribution of an amount generally at least equal to 90% of the sum of our net ordinary income and realized net short-term capital gains in excess of realized net long-term capital losses, or investment company taxable income, determined without regard to any deduction for dividends paid.

Although not required for us to maintain our RIC tax status, in order to preclude the imposition of a 4% nondeductible federal excise tax imposed on RICs, we must distribute dividends for U.S. federal income tax purposes to our stockholders in respect of each calendar year of an amount at least equal to the sum of (1) 98% of our net ordinary income (subject to certain deferrals and elections) for the calendar year, (2) 98.2% of the excess, if any, of our capital gains over our capital losses, or capital gain net income (adjusted for certain ordinary losses) for the one-year period ending on October 31 of the calendar year plus (3) the sum of any net ordinary income plus capital gain net income for preceding years that was not distributed during such years and on which we did not incur any federal income tax, or the Excise Tax Avoidance Requirement. In addition, although we may distribute realized net capital gains (i.e., net long-term capital gains in excess of net short-term capital losses), if any, at least annually, out of the assets legally available for such distributions in the manner described above, we have retained and may continue to retain such net capital gains or investment company taxable income, contingent on our ability to be subject to tax as a RIC, in order to provide us with additional liquidity.

Because federal income tax regulations differ from GAAP, distributions characterized in accordance with tax regulations may differ from net investment income and net realized gain recognized for financial reporting purposes. Differences between tax regulations and GAAP may be permanent or temporary. Permanent differences are reclassified among capital accounts in the Consolidated Financial Statements to reflect their appropriate tax character. Temporary differences arise when certain items of income, expense, gain or loss are recognized at some time in the future.

RESULTS OF OPERATIONS

Set forth below are the results of operations for the three months ended December 31, 2019 and 2018.

Investment Income

Investment income for the three months ended December 31, 2019 was $24.6 million and was attributable to $22.4 million from first lien secured debt and $2.2 million from other investments. This compares to investment income for the three months ended December 31, 2018, which was $23.2 million and was attributable to $21.1 million from first lien secured debt and $2.1 million from other investments. The increase in investment income compared to the same period in the prior year was primarily due to the growth of our portfolio.

Expenses

Expenses for the three months ended December 31, 2019 totaled $13.5 million. Base management fee for the same period totaled $2.8 million, incentive fee totaled $2.3 million (including $2.3 million on net investment income and zero accrued but not payable on realized gains), debt related interest and expenses totaled $7.3 million, general and administrative expenses totaled $1.0 million, and provision for taxes of $0.1 million. This compares to expenses for the three months ended December 31, 2018, which totaled $12.2 million. Base management fee for the same period totaled $2.5 million, incentive fee totaled $(1.2) million (including $0.2 million on net investment income and $(1.4) million accrued but not payable on realized gains), debt related interest and expenses totaled $9.8 million (including $4.5 million in Credit Facility amendment costs) and general and administrative expenses totaled $1.1 million. The increase in expenses for the three months ended December 31, 2019 compared to the same period in the prior year was primarily due to increase in management and incentive fees and debt related interest and expenses due to the growth of our portfolio in the current period.

Net Investment Income

Net investment income totaled $11.1 million or $0.29 per share for the three months ended December 31, 2019. Net investment income totaled $10.9 million or $0.28 per share for the three months ended December 31, 2018, respectively. The change in net investment income compared to the same period in the prior year was primarily due to the growth of our portfolio in the current year as well as financing costs incurred in the prior year.

Net Realized Gains or Losses

Sales and repayments of investments for the three months ended December 31, 2019 totaled $143.7 million and net realized gains totaled $1.0 million. Sales and repayments of investments for the three months ended December 31, 2018 totaled $190.3 million, and net realized gains totaled $0.9 million. The change in realized gains/losses was primarily due to changes in the market conditions of our investments and the values at which they were realized.

Unrealized Appreciation or Depreciation on Investments, the Credit Facility and the 2023 Notes

For the three months ended December 31, 2019, we reported net change in unrealized depreciation on investments of $3.5 million. For the three months ended December 31, 2018, we reported net change in unrealized depreciation on investments of $12.4 million. As of December 31, 2019 and 2018, our net unrealized depreciation on investments totaled $7.0 million and $13.3 million, respectively. The net change in unrealized depreciation on our investments compared to the same period in the prior year was primarily due to changes in the capital market conditions, the financial performance of certain portfolio companies and the reversal of unrealized appreciation/depreciation on investments that were realized.

For the three months ended December 31, 2019 and 2018, the Credit Facility and the 2023 Notes had a net change in unrealized appreciation of $1.4 million and $5.5 million, respectively. As of December 31, 2019 and 2018, the net unrealized depreciation on the Credit Facility and the 2023 Notes totaled $6.0 million and $4.7 million, respectively. The net change in net unrealized depreciation compared to the same period in the prior year was primarily due to changes in the capital markets.

Net Change in Net Assets Resulting from Operations

Net change in net assets resulting from operations totaled $10.0 million or $0.26 per share, respectively, for the three months ended December 31, 2019. This compares to a net change in net assets resulting from operations of $5.0 million or $0.13 per share for the three months ended December 31, 2018. The increase net assets from operations compared to the same period in the prior year was primarily due to appreciation of the portfolio in the current period.

LIQUIDITY AND CAPITAL RESOURCES

Our liquidity and capital resources are derived primarily from proceeds of securities offerings, debt capital and cash flows from operations, including investment sales and repayments, and income earned. Our primary use of funds from operations includes investments in portfolio companies and payments of fees and other operating expenses we incur. We have used, and expect to continue to use, our debt capital, proceeds from the rotation of our portfolio and proceeds from public and private offerings of securities to finance our investment objectives. As of December 31, 2019, in accordance with the 1940 Act, with certain limited exceptions, we are only allowed to borrow amounts such that we are in compliance with a 150% asset coverage ratio requirement after such borrowing.

The annualized weighted average cost of debt for the three months ended December 31, 2019 and 2018, inclusive of the fee on the undrawn commitment on the Credit Facility, amendment costs and debt issuance costs, was 4.5% and 5.3%. As of December 31, 2019 and September 30, 2019, we had $184.7 million and $254.7 million of unused borrowing capacity under the Credit Facility, respectively, subject to the regulatory restrictions.

Funding I’s multi-currency Credit Facility with the Lenders was $520 million as of December 31, 2019, subject to satisfaction of certain conditions and regulatory restrictions that the 1940 Act imposes on us as a BDC, has an interest rate spread above LIBOR of 200 basis points, a maturity date of October 2023 and a revolving period that ends in October 2021. As of December 31, 2019 and September 30, 2019, Funding I borrowed $335.3 million and $265.3 under the Credit Facility, respectively. The Credit Facility had a weighted average interest rate of 3.7% and 4.1%, exclusive of the fee on undrawn commitments as of December 31, 2019 and September 30, 2019, respectively.

The Credit Facility contains covenants, including but not limited to, restrictions of loan size, currency types and amounts, industry requirements, average life of loans, geographic and individual portfolio concentrations, minimum portfolio yield and loan payment frequency. Additionally, the Credit Facility requires the maintenance of a minimum equity investment in Funding I and income ratio as well as restrictions on certain payments and issuance of debt. The Credit Facility compliance reporting is prepared on a basis of accounting other than GAAP. As of December 31, 2019, we were in compliance with the covenants relating to the Credit Facility.

We own 100% of the equity interest in Funding I and treat the indebtedness of Funding I as our leverage. Our Investment Adviser serves as collateral manager to Funding I under the Credit Facility.

Our interest in Funding I (other than the management fee) is subordinate in priority of payment to every other obligation of Funding I and is subject to certain payment restrictions set forth in the Credit Facility. We may receive cash distributions on our equity interests in Funding I only after it has made (1) all required cash interest and, if applicable, principal payments to the Lenders, (2) required administrative expenses and (3) claims of other unsecured creditors of Funding I. We cannot assure you that there will be sufficient funds available to make any distributions to us or that such distributions will meet our expectations from Funding I. The Investment Adviser has irrevocably directed that the management fee owed with respect to such services is to be paid to the Company so long as the Investment Adviser remains the collateral manager.

In November 2017, we issued $138.6 million of our 2023 Notes. The 2023 Notes were issued pursuant to a deed of trust between the Company and Mishmeret Trust Company, Ltd., as trustee.

The 2023 Notes pay interest at a rate of 3.8% per year. Interest on the 2023 Notes is payable semi-annually in arrears on June 15 and December 15 of each year, commencing June 15, 2018. The principal on the 2023 Notes will be payable in four annual installments as follows: 15% of the original principal amount on December 15, 2020, 15% of the original principal amount on December 15, 2021, 15% of the original principal amount on December 15, 2022 and 55% of the original principal amount on December 15, 2023.

The 2023 Notes are general, unsecured obligations, rank equal in right of payment with all of our existing and future senior unsecured indebtedness and are generally redeemable at our option. The deed of trust governing the 2023 Notes includes certain customary covenants, including minimum equity requirements, and events of default. Please refer to the deed of trust filed as Exhibit (d)(8) to our post-effective amendment filed on December 13, 2017 for more information. The 2023 Notes are rated ilA+ by S&P Global Ratings Maalot Ltd. and are listed on the TASE. In connection with this offering, we have dual listed our common stock on the TASE.

The 2023 Notes have not been and will not be registered under the Securities Act and may not be offered or sold in the United States absent registration under the Securities Act or in transactions exempt from, or not subject to, such registration requirements.

In September 2019, the Securitization Issuers completed the Debt Securitization. The 2031 Asset-Backed Debt is secured by the middle market loans, participation interests in middle market loans and other assets of the Securitization Issuer. The Debt Securitization was executed through (A) a private placement of: (i) $78.5 million Class A-1 Senior Secured Floating Rate Notes maturing 2031, which bear interest at the three-month LIBOR plus 1.80%, (ii) $15.0 million Class A-2 Senior Secured Fixed Rate Notes due 2031, which bear interest at 3.66%, (iii) $14.0 million Class B-1 Senior Secured Floating Rate Notes due 2031, which bear interest at the three-month LIBOR plus 2.90%, (iv) $16.0 million Class B-2 Senior Secured Fixed Rate Notes due 2031, which bear interest at 4.266%, (v) $19.0 million Class C‑1 Secured Deferrable Floating Rate Notes due 2031, which bear interest at the three-month LIBOR plus 4.00%, (vi) $8.0 million Class C-2 Secured Deferrable Fixed Rate Notes due 2031, which bear interest at 5.379%, and (vii) $18.0 million Class D Secured Deferrable Floating Rate Notes due 2031, which bear interest at the three-month LIBOR plus 4.75% and (B) the borrowing of $77.5 million Class A‑1 Senior Secured Floating Rate Loans due 2031, which bear interest at the three-month LIBOR plus 1.80%, under a credit agreement by and among the Securitization Issuers, as borrowers, various financial institutions, as lenders, and U.S. Bank National Association, as collateral agent and as loan agent. The 2031 Asset-Backed Debt is scheduled to mature on October 15, 2031.

On the closing date of the Debt Securitization, in consideration of our transfer to the Securitization Issuer of the initial closing date loan portfolio, which included loans distributed to us by our wholly owned subsidiary, the Securitization Issuer transferred to us 100% of the Preferred Shares of the Securitization Issuer, 100% of the Class D Secured Deferrable Floating Rate Notes issued by the Securitization Issuer, and a portion of the net cash proceeds received from the sale of the 2031 Asset-Backed Debt. The Preferred Shares of the Securitization Issuer do not bear interest and had a stated value of $55.4 million at the closing of the Debt Securitization.

The 2031 Asset-Backed Debt constitutes secured obligations of the Securitization Issuers, and the indenture governing the 2031 Asset-Backed Debt includes customary covenants and events of default. The 2031 Asset-Backed Debt has not been, and will not be, registered under the Securities Act or any state securities or “blue sky” laws and may not be offered or sold in the United States absent registration with the SEC or an applicable exemption from registration.

Our Investment Adviser serves as collateral manager to the Securitization Issuer pursuant to a collateral management agreement between our Investment Adviser and the Securitization Issuer, or the Collateral Management Agreement. For so long as our Investment Adviser serves as collateral manager, it will elect to irrevocably waive any collateral management fee to which it may be entitled under the Collateral Management Agreement.

We may raise equity or debt capital through both registered offerings off our shelf registration statement and private offerings of securities, securitizing a portion of our investments among other considerations or mergers and acquisitions. Furthermore, the Credit Facility availability depends on various covenants and restrictions as discussed in the preceding paragraphs. The primary use of existing funds and any funds raised in the future is expected to be for repayment of indebtedness, investments in portfolio companies, cash distributions to our stockholders or for other general corporate purposes. For the three months ended December 31, 2019 and 2018, we issued zero shares, respectively.

As of December 31, 2019 and September 30, 2019, we had cash equivalents of $56.3 million and $63.3 million, respectively, available for investing and general corporate purposes. We believe our liquidity and capital resources are sufficient to take advantage of market opportunities.

Our operating activities used cash of $66.1 million for the three months ended December 31, 2019, and our financing activities provided cash of $58.9 million for the same period. Our operating activities used cash primarily for our investment activities and our financing activities provided cash primarily from draws on our Credit Facility, partially offset by distributions paid to stockholders.

Our operating activities used cash of $43.6 million for the three months ended December 31, 2018 and our financing activities provided cash of $6.1 million for the same period. Our operating activities used cash primarily for our investment activities and our financing activities provided cash primarily from draws on our Credit Facility, partially offset by distributions paid to stockholders.

PennantPark Senior Secured Loan Fund I LLC

Additionally, PSSL has entered into the PSSL Credit Facility, with Capital One, N.A. through its wholly-owned subsidiary, PSSL Subsidiary, which as of December 31, 2019 allowed PSSL Subsidiary to borrow up to $420.0 million at any one time outstanding, subject to leverage and borrowing base restrictions.

Below is a summary of PSSL’s portfolio at fair value:

	December 31, 2019			September 30, 2019
Total investments	$	493,190,805		$	488,549,847
Weighted average yield on debt investments		7.4	%		7.6	%
Number of portfolio companies in PSSL		49			45
Largest portfolio company investment	$	21,972,451		$	22,026,186
Total of five largest portfolio company investments	$	100,061,867		$	102,872,275

Below is a listing of PSSL’s individual investments as of December 31, 2019:

Issuer Name	Maturity		Industry	Current Coupon			Basis Point Spread Above Index ⁽¹⁾		Par		Cost		Fair Value ⁽²⁾
First Lien Secured Debt
Altamira Technologies, LLC	07/24/2025		High Tech Industries		7.93	%	3M L+600			4,968,750	$	4,898,753	$	4,968,750
American Auto Auction Group, LLC	01/02/2024		Transportation: Consumer		6.55	%	3M L+475			7,729,555		7,654,681		7,652,259
By Light Professional IT Services, LLC	05/16/2022		High Tech Industries		7.96	%	1M L+625			13,675,154		13,455,820		13,675,154
Cadence Aerospace, LLC	11/14/2023		Aerospace and Defense		8.43	%	3M L+650			11,705,417		11,618,814		11,691,369
Cardenas Markets LLC	11/29/2023		Beverage, Food and Tobacco		7.45	%	1M L+575			7,329,975		7,293,805		7,036,776
Centauri Group Holdings, LLC	02/12/2024		Aerospace and Defense		7.20	%	1M L+525			10,396,599		10,387,355		10,344,616
Challenger Performance Optimization, Inc.	08/31/2023		Business Services		7.55	%	1M L+575			10,127,447		10,043,474		9,772,987
Country Fresh Holdings, LLC	05/01/2023		Beverage, Food and Tobacco		7.10	%	1M L+500			182,403		179,362		182,403
Country Fresh Holdings, LLC (Revolver)	05/01/2023		Beverage, Food and Tobacco		7.01	%	1M L+500			306,075		306,075		306,075
Country Fresh Holdings, LLC - (Revolver) ⁽⁵⁾	05/01/2023		Beverage, Food and Tobacco	—			—			144,036	—		—
Douglas Products and Packaging Company LLC	10/19/2022		Chemicals, Plastics and Rubber		7.69	%	3M L+575			12,281,250		12,136,773		12,158,438
Douglas Sewer Intermediate, LLC	10/19/2022		Chemicals, Plastics and Rubber		7.69	%	3M L+575			8,146,023		8,098,916		8,064,563
DRS Holdings III, Inc.	11/03/2025		Consumer Goods: Non-Durable		7.55	%	1M L+575			8,082,770		8,004,468		8,003,559
Findex Group Limited ^{(3), (4)}	05/31/2024		Banking, Finance, Insurance and Real Estate		6.19	%	3M L+525	A	$	10,000,000		7,385,187		6,818,615
GCOM Software LLC	11/14/2022		High Tech Industries		7.96	%	1M L+625			17,237,379		17,124,994		17,237,379
Good2Grow LLC	11/18/2024		Beverages		6.19	%	3M L+425			11,329,248		11,233,370		11,215,956
GSM Holdings, Inc.	06/03/2024		Consumer Goods: Durable		6.60	%	3M L+450			19,619,454		19,481,180		19,423,260
IMIA Holdings, Inc.	10/28/2024		Aerospace and Defense		6.44	%	3M L+450			12,375,000		12,321,890		12,313,125
Impact Group, LLC	06/27/2023		Wholesale		8.44	%	1M L+650			9,365,185		9,275,424		9,224,707
Infrastructure Supply Operations Pty Ltd. ^{(3), (4)}	12/12/2023		Wholesale		5.67	%	1M L+475	A	$	15,000,000		10,985,913		10,172,038
Integrative Nutrition, LLC	09/29/2023		Diversified Consumer Services		6.69	%	1M L+475			9,949,749		9,949,749		9,850,251
K2 Pure Solutions NoCal, L.P.	12/20/2023		Chemicals, Plastics and Rubber		7.05	%	1M L+525			19,800,000		19,546,364		19,469,340
KHC Holdings, Inc.	10/31/2022		Wholesale		7.94	%	3M L+600			5,350,904		5,350,904		5,350,904
Lash Opco, LLC - Term Loan	12/12/2024		Consumer Goods: Non-Durable		9.16	%	3M L+725			7,500,000		7,277,344		7,275,000
LAV Gear Holdings, Inc.	10/31/2024		Capital Equipment		7.44	%	3M L+550			9,900,000		9,816,129		9,943,559
Leap Legal Software Pty Ltd ^{(3), (4)}	09/12/2022		High Tech Industries		6.76	%	3M L+575	A	$	14,718,247		10,461,364		10,346,192
LSF9 Atlantis Holdings, LLC	05/01/2023		Retail		7.74	%	1M L+600			7,031,250		7,068,566		6,471,703
Manna Pro Products, LLC	12/08/2023		Consumer Goods: Non-Durable		7.80	%	1M L+600			6,860,000		6,782,980		6,667,234
Marketplace Events LLC ⁽⁴⁾	01/27/2023		Media: Diversified and Production		7.31	%	P+275	C	$	5,745,254		4,456,891		4,408,350
Mission Critical Electronics, Inc.	09/28/2022		Capital Equipment		6.94	%	3M L+500			5,994,919		5,965,076		5,986,521
New Milani Group LLC	06/06/2024		Consumer Goods: Non-Durable		6.94	%	1M L+425			14,775,000		14,660,510		14,479,500
Nuvei Technologies Corp.	09/28/2025		High Tech Industries		6.80	%	P+400			12,452,133		12,514,394		12,514,394
Olde Thompson, LLC	05/14/2024		Beverage, Food and Tobacco		6.05	%	1M L+425			11,410,000		11,295,900		11,410,000
Output Services Group, Inc.	03/27/2024		Business Services		6.30	%	1M L+425			7,865,895		7,890,564		7,472,600
PH Beauty Holdings III, Inc.	09/29/2025		Wholesale		6.80	%	1M L+500			9,867,538		9,781,830		9,768,863
Plant Health Intermediate, Inc.	10/19/2022		Chemicals, Plastics and Rubber		7.69	%	3M L+575			1,753,977		1,733,464		1,736,437
PlayPower, Inc.	05/08/2026		Leisure Products		7.46	%	3M L+550			4,179,000		4,139,034		4,126,763
Schlesinger Global, Inc.	07/14/2025		Business Services		6.80	%	1M L+500			11,985,169		11,985,169		11,985,169
Smile Brands Inc.	10/14/2024		Healthcare and Pharmaceuticals		6.55	%	3M L+450			11,261,250		11,164,187		11,148,638
Snak Club, LLC	07/19/2021		Beverage, Food and Tobacco		7.69	%	1M L+600			4,687,495		4,687,495		4,499,995
Solutionreach, Inc.	01/17/2024		Healthcare and Pharmaceuticals		7.55	%	3M L+475			6,555,975		6,474,016		6,521,229
Sonny's Enterprises, LLC	12/01/2022		Capital Equipment		6.10	%	3M L+425			15,186,105		15,189,151		15,034,245
TeleGuam Holdings, LLC	11/20/2025		Telecommunications		6.30	%	1M L+450			8,430,693		8,388,539		8,388,539
Teneo Holdings LLC	07/18/2025		Business Services		6.99	%	1M L+525			4,987,500		4,798,508		4,725,656
The Infosoft Group, LLC	09/16/2024		Media: Broadcasting and Subscription		7.32	%	6M L+525			8,799,611		8,769,767		8,711,615
TPC Canada Parent, Inc. and TPC US Parent, LLC	11/24/2025		Consumer Goods: Non-Durable		7.02	%	3M L+475			9,000,000		8,912,812		8,952,300
TVC Enterprises, LLC	01/18/2024		Diversified Consumer Services		7.30	%	1M L+550			9,949,749		9,949,749		9,949,749
TWS Acquisition Corporation	06/16/2025		Diversified Consumer Services		7.99	%	1M L+625			7,075,000		6,942,097		7,075,000
UBEO, LLC	04/03/2024		Capital Equipment		6.76	%	3M L+450			22,194,395		21,998,444		21,972,451
Urology Management Associates, LLC	08/30/2024		Healthcare and Pharmaceuticals		6.80	%	3M L+500			11,550,932		11,374,716		11,550,932
Walker Edison Furniture Company LLC	09/26/2024		Wholesale		8.60	%	3M L+650			15,899,813		15,634,610		15,995,211
Whitney, Bradley & Brown, Inc.	10/18/2022		Aerospace and Defense		9.30	%	1M L+750			5,395,982		5,325,863		5,395,982
Total First Lien Secured Debt												482,172,440		479,446,351
Second Lien Secured Debt
Country Fresh Holdings, LLC	04/29/2024		Beverage, Food and Tobacco		10.60	%	1M L+850			894,487		894,487		894,487
					(PIK 10.60	%)
DBI Holding, LLC, Term Loan B	03/26/2021		Business Services		8.00	%				15,946		15,946		15,946
					(PIK 8.00	%)
DBI Holding, LLC, Term Loan C	02/02/2026		Business Services		8.00	%	—			7,977,513		7,977,513		7,937,625
					(PIK 8.00	%)
Total Second Lien Secured Debt												8,887,946		8,848,058
Equity Securities
Country Fresh Holding Company Inc.		—	Beverage, Food and Tobacco							1,317		1,713,106		715,328
DBI Holding, LLC, Series A-1		—	Business Services		—		—			5,034		5,034,310		4,181,067
DBI Holding, LLC, Series B		—	Business Services		—		—			1,065,021		236,521		-
Total Equity Securities												6,983,937		4,896,395
Cash and Cash Equivalents
BlackRock Federal FD Institutional 30												8,874,900		8,874,900
US Bank Cash												3,113,145		3,154,459
Total Cash and Cash Equivalents												11,988,045		12,029,359
Total Investments and Cash Equivalents											$	510,032,368	$	505,220,163
Liabilities in Excess of Other Assets														(448,388,336	)
Members' Equity													$	56,831,827

(1)

(2)	Valued based on PSSL’s accounting policy.

(3)	Non-U.S. company or principal place of business outside the United States.

(4)	Par amount is denominated in Australian Dollars (A$) or in Canadian Dollars (C$) as denoted.

(5)	Represents the purchase of a security with delayed settlement or a revolving line of credit that is currently an unfunded investment. This security does not earn a basis point spread above an index while it is unfunded.

Below is a listing of PSSL’s individual investments as of September 30, 2019:

Issuer Name	Maturity		Industry	Current Coupon			Basis Point Spread Above Index ⁽¹⁾		Par		Cost		Fair Value ⁽²⁾
First Lien Secured Debt
Altamira Technologies, LLC	07/24/2025		High Tech Industries		8.28	%	3M L+600			5,000,000	$	4,927,149	$	5,000,000
American Auto Auction Group, LLC	01/02/2024		Transportation: Consumer		6.85	%	3M L+475			7,749,274		7,674,216		7,671,781
By Light Professional IT Services, LLC	05/16/2022		High Tech Industries		8.52	%	1M L+725			13,772,261		13,531,751		13,772,261
Cadence Aerospace, LLC	11/14/2023		Aerospace and Defense		8.54	%	3M L+650			11,735,208		11,644,440		11,680,054
Cardenas Markets LLC	11/29/2023		Beverage, Food and Tobacco		7.79	%	1M L+575			7,348,866		7,311,507		7,128,400
Centauri Group Holdings, LLC	02/12/2024		Aerospace and Defense		7.36	%	1M L+525			10,422,726		10,413,416		10,396,669
Challenger Performance Optimization, Inc.	08/31/2023		Business Services		7.87	%	1M L+575			10,127,447		10,040,432		9,874,261
Country Fresh Holdings, LLC	05/01/2023		Beverage, Food and Tobacco		7.10	%	1M L+500			182,403		179,170		182,403
Country Fresh Holdings, LLC (Revolver)	05/01/2023		Beverage, Food and Tobacco		7.10	%	1M L+500			126,031		126,031		126,031
Country Fresh Holdings, LLC - (Revolver) ⁽⁵⁾	05/01/2023		Beverage, Food and Tobacco		—		—			324,080	—		—
Deva Holdings, Inc.	10/31/2023		Consumer Goods: Non-Durable		7.54	%	3M L+625			19,748,744		19,748,744		19,748,744
Douglas Products and Packaging Company LLC	10/19/2022		Chemicals, Plastics and Rubber		7.85	%	3M L+575			12,312,500		12,157,345		12,189,375
Douglas Sewer Intermediate, LLC	10/19/2022		Chemicals, Plastics and Rubber		7.85	%	3M L+575			8,166,594		8,116,022		8,084,928
Findex Group Limited ^{(3), (4)}	05/31/2024		Banking, Finance, Insurance and Real Estate		6.26	%	3M L+525	A	$	10,000,000		7,376,173		6,542,165
GCOM Software LLC	11/14/2022		High Tech Industries		8.37	%	1M L+750			17,384,864		17,263,748		17,384,864
Good2Grow LLC	11/18/2024		Beverages		6.35	%	3M L+425			11,752,655		11,649,126		11,576,366
Good Source Solutions, Inc.	06/29/2023		Beverage, Food and Tobacco		6.37	%	3M L+600			14,357,813		14,241,579		14,135,267
GSM Holdings, Inc.	06/03/2024		Consumer Goods: Durable		6.60	%	3M L+450			19,669,098		19,524,460		19,472,406
IMIA Holdings, Inc.	10/28/2024		Aerospace and Defense		6.60	%	3M L+450			12,406,250		12,351,255		12,344,219
Impact Group, LLC	06/27/2023		Wholesale		8.60	%	1M L+650			9,390,185		9,296,753		9,296,283
Infrastructure Supply Operations Pty Ltd. ^{(3), (4)}	12/12/2023		Wholesale		5.80	%	1M L+425	A	$	15,000,000		10,973,919		9,717,138
Integrative Nutrition, LLC	09/29/2023		Diversified Consumer Services		6.85	%	1M L+475			9,974,874		9,974,874		9,974,874
K2 Pure Solutions NoCal, L.P.	12/20/2023		Chemicals, Plastics and Rubber		7.30	%	1M L+525			19,850,000		19,586,294		19,609,815
LAV Gear Holdings, Inc.	10/31/2024		Capital Equipment		7.60	%	3M L+550			9,925,000		9,837,686		9,916,068
Leap Legal Software Pty Ltd ^{(3), (4)}	09/12/2022		High Tech Industries		6.80	%	3M L+575	A	$	14,755,747		10,483,859		9,952,014
Long's Drugs Incorporated	08/19/2022		Healthcare and Pharmaceuticals		7.10	%	1M L+500			17,820,000		17,688,160		17,641,800
LSF9 Atlantis Holdings, LLC	05/01/2023		Retail		8.04	%	1M L+600			7,078,125		7,118,977		6,575,083
Manna Pro Products, LLC	12/08/2023		Consumer Goods: Non-Durable		8.05	%	1M L+600			6,877,500		6,797,207		6,688,369
Marketplace Events LLC ⁽⁴⁾	01/27/2021		Media: Diversified and Production		7.20	%	P+275	C	$	5,760,254		4,461,926		4,350,645
Mission Critical Electronics, Inc.	09/28/2022		Capital Equipment		7.10	%	3M L+500			6,009,982		5,977,867		6,009,982
New Milani Group LLC	06/06/2024		Consumer Goods: Non-Durable		6.35	%	1M L+425			14,812,500		14,691,710		14,664,375
Olde Thompson, LLC	05/14/2024		Beverage, Food and Tobacco		6.54	%	1M L+450			11,876,667		11,757,900		11,876,667
Output Services Group, Inc.	03/27/2024		Business Services		6.54	%	1M L+425			7,883,419		7,909,754		6,779,740
Pestell Minerals and Ingredients Inc.	06/01/2023		Beverage, Food and Tobacco		7.57	%	3M L+525			9,925,000		9,840,202		9,825,750
Pestell Minerals and Ingredients Inc.	06/01/2023		Beverage, Food and Tobacco		7.23	%	3M L+525	C	$	3,242,655		2,412,626		2,424,644
PH Beauty Holdings III, Inc.	09/29/2025		Wholesale		7.04	%	1M L+500			9,892,519		9,804,058		9,397,893
Plant Health Intermediate, Inc.	10/19/2022		Chemicals, Plastics and Rubber		8.00	%	3M L+575			1,758,406		1,736,386		1,740,822
PlayPower, Inc.	05/8/2026		Leisure Products		7.60	%	3M L+550			4,189,500		4,148,451		4,184,263
Smile Brands Inc.	10/14/2024		Healthcare and Pharmaceuticals		6.66	%	3M L+450			11,289,688		11,189,470		11,176,791
Snak Club, LLC	07/19/2021		Beverage, Food and Tobacco		8.10	%	1M L+600			4,687,495		4,687,495		4,359,370
Sonny's Enterprises, LLC	12/01/2022		Capital Equipment		6.35	%	3M L+425			15,224,842		15,227,900		15,224,842
Teneo Holdings LLC	07/18/2025		Business Services		7.29	%	1M L+525			5,000,000		4,804,110		4,762,500
The Infosoft Group, LLC	12/02/2021		Media: Broadcasting and Subscription		7.43	%	6M L+500			8,823,392		8,790,069		8,735,157
TVC Enterprises, LLC	01/18/2024		Diversified Consumer Services		7.55	%	1M L+550			9,974,874		9,974,874		9,974,874
TWS Acquisition Corporation	06/16/2025		Diversified Consumer Services		8.28	%	1M L+625			7,075,000		6,937,888		6,933,500
UBEO, LLC	04/03/2024		Capital Equipment		6.78	%	3M L+450			22,248,673		22,045,879		22,026,186
Urology Management Associates, LLC	08/30/2024		Healthcare and Pharmaceuticals		7.04	%	3M L+450			11,572,122		11,388,612		11,572,122
Walker Edison Furniture Company LLC	09/26/2024		Wholesale		8.83	%	3M L+650			16,001,734		15,724,459		16,121,747
Whitney, Bradley & Brown, Inc.	10/18/2022		Aerospace and Defense		9.55	%	1M L+750			5,466,024		5,389,938		5,466,024
Total First Lien Secured Debt												478,935,867		474,289,532
Second Lien Secured Debt
Country Fresh Holdings, LLC	04/29/2024		Beverage, Food and Tobacco		10.60	%	1M L+850			870,886		870,886		870,886
					(PIK 10.60	%)
DBI Holding, LLC, Term Loan B	03/26/2021		Business Services		8.00	%	6M L+525			15,206		15,206		15,206
					(PIK 8.00	%)
DBI Holding, LLC, Term Loan C	02/02/2026		Business Services		8.00	%	—			7,607,291		7,607,291		7,569,255
					(PIK 8.00	%)
Total Second Lien Secured Debt												8,493,383		8,455,347
Equity Securities
Country Fresh Holding Company Inc.		—	Beverage, Food and Tobacco							1,317		1,713,106		1,124,929
DBI Holding, LLC, Series A-1		—	Business Services		—		—			5,034		5,034,310		4,680,039
DBI Holding, LLC, Series B		—	Business Services		—		—			1,065,021		236,521		-
Total Equity Securities												6,983,937		5,804,968
Cash and Cash Equivalents
BlackRock Federal FD Institutional 30												12,166,301		12,166,301
US Bank Cash												3,156,230		3,128,580
Total Cash and Cash Equivalents												15,322,531		15,294,881
Total Investments and Cash Equivalents											$	509,735,718	$	503,844,728
Liabilities in Excess of Other Assets														(446,736,922	)
Members' Equity													$	57,107,806

(1)

(2)	Valued based on PSSL’s accounting policy.

(3)	Non-U.S. company or principal place of business outside the United States.

(4)	Par amount is denominated in Australian Dollars (A$) or in Canadian Dollars (C$) as denoted.

(5)	Represents the purchase of a security with delayed settlement or a revolving line of credit that is currently an unfunded investment. This security does not earn a basis point spread above an index while it is unfunded.

Below is the financial information for PSSL:

Statements of Assets and Liabilities

	December 31, 2019		September 30, 2019
Assets
Investments at fair value (cost—$498,044,324 and $494,413,190, respectively)	$	493,190,805	$	488,549,847
Cash and cash equivalents (cost—$11,988,045 and $15,322,531, respectively)		12,029,359		15,294,881
Interest receivable		1,464,930		1,855,545
Prepaid expenses and other assets		1,084,158		996,333
Total assets		507,769,252		506,696,606
Liabilities
Payable for investments purchased		55,448,462		—
PSSL Credit Facility payable		254,456,951		308,724,305
Notes payable to members		139,650,000		139,650,000
Interest payable on PSSL Credit Facility		963,362		1,015,468
Interest payable on notes to members		39,197		176,273
Accrued other expenses		379,453		22,754
Total liabilities		450,937,425		449,588,800
Commitments and contingencies ⁽¹⁾		—		—
Members' equity		56,831,827		57,107,806
Total liabilities and members' equity	$	507,769,252	$	506,696,606

⁽¹⁾	As of December 31, 2019 and September 30, 2019, PSSL had unfunded commitments to fund investments of $0.1 million and $0.3 million, respectively.

Statements of Operations
	Three Months Ended December 31,
	2019			2018
Investment income:
Interest	$	8,768,628		$	9,541,567
Other income		—			157,913
Total investment income		8,768,628			9,699,480
Expenses:
Interest and expenses on PSSL Credit Facility		3,606,085			4,087,476
Interest expense on notes to members		3,430,557			3,220,623
Administrative services expenses		300,000			250,000
Other general and administrative expenses ⁽¹⁾		113,710			113,650
Total expenses		7,450,352			7,671,749
Net investment income		1,318,276			2,027,731
Realized and unrealized gain (loss) on investments and credit facility foreign currency translations:
Net realized gain on investments		452,477			258,233
Net change in unrealized appreciation (depreciation) on:
Investments		1,078,789			(4,035,710	)
Credit facility (appreciation) depreciation of foreign currency translations		(1,325,522	)		847,498
Net change in unrealized appreciation (depreciation) on investments and credit facility foreign currency translations		(246,733	)		(3,188,212	)
Net realized and unrealized gain (loss) from investments and credit facility foreign currency translations		205,744			(2,929,979	)
Net increase in members' equity resulting from operations	$	1,524,020		$	(902,248	)

⁽¹⁾	Currently, no management or incentive fees are payable by PSSL. If any fees were to be charged, they would be separately disclosed in the Statements of Operations.

Contractual Obligations

A summary of our significant contractual payment obligations at cost as of December 31, 2019, including borrowings under our Credit Facility, 2023 Notes, 2031 Asset-Backed Debt and other contractual obligations, is as follows:

	Payments due by period (millions)
	Total		Less than 1 year		1-3 years		3-5 years		More than 5 years
Credit Facility	$	335.3	$	—	$	—	$	335.3	$	—
2023 Notes		138.6		20.8		41.6		76.2		—
2031 Asset-Backed Debt		228.0		—		—		—		228.0
Total debt outstanding ⁽¹⁾	$	701.9	$	20.8	$	41.6	$	411.5	$	228.0
Unfunded commitments to PSSL		26.7		—		—		—		26.7
Unfunded investments ⁽²⁾		85.1		—		13.9		57.7		13.5
Total contractual obligations	$	813.7	$	20.8	$	55.5	$	469.2	$	268.2

⁽¹⁾	The annualized weighted average cost of debt as of December 31, 2019, excluding amendment costs and debt issuance costs, was 3.9% exclusive of the fee on the undrawn commitment on the Credit Facility.

⁽²⁾	Unfunded debt and equity investments are disclosed in the Consolidated Schedule of Investments and Note 11 of our Consolidated Financial Statements.

We have entered into certain contracts under which we have material future commitments. Under our Investment Management Agreement, which was most recently reapproved by our board of directors, including a majority of our directors who are not interested persons of us or the Investment Adviser, in February 2020, PennantPark Investment Advisers serves as our investment adviser. Payments under our Investment Management Agreement in each reporting period are equal to (1) a management fee equal to a percentage of the value of our average adjusted gross assets and (2) an incentive fee based on our performance.

Under our Administration Agreement, which was most recently reapproved by our board of directors, including a majority of our directors who are not interested persons of us, in February 2020, the Administrator furnishes us with office facilities and administrative services necessary to conduct our day-to-day operations. If requested to provide significant managerial assistance to our portfolio companies, we or the Administrator will be paid an additional amount based on the services provided. Payment under our Administration Agreement is based upon our allocable portion of the Administrator’s overhead in performing its obligations under our Administration Agreement, including rent and our allocable portion of the costs of our Chief Compliance Officer, Chief Financial Officer and their respective staffs.

If any of our contractual obligations discussed above are terminated, our costs under new agreements that we enter into may increase. In addition, we will likely incur significant time and expense in locating alternative parties to provide the services we expect to receive under our Investment Management Agreement and our Administration Agreement. Any new investment management agreement would also be subject to approval by our stockholders.

Off-Balance Sheet Arrangements

We currently engage in no off-balance sheet arrangements other than our funding requirements for the unfunded investments described above.

Distributions

In order to be treated as a RIC for federal income tax purposes and to not be subject to corporate-level tax on undistributed income or gains, we are required, under Subchapter M of the Code, to annually distribute dividends for U.S. federal income tax purposes to our stockholders out of the assets legally available for distribution of an amount generally at least equal to 90% of investment company taxable income, determined without regard to any deduction for dividends paid.

During the three months ended December 31, 2019 and 2018, we declared distributions of $0.285 per share for total distributions of $11.1 million. We monitor available net investment income to determine if a return of capital for tax purposes may occur for the fiscal year. To the extent our taxable earnings fall below the total amount of our distributions for any given fiscal year, stockholders will be notified of the portion of those distributions deemed to be a tax return of capital. Tax characteristics of all distributions will be reported to stockholders subject to information reporting on Form 1099-DIV after the end of each calendar year and in our periodic reports filed with the SEC.

We intend to continue to make monthly distributions to our stockholders. Our monthly distributions, if any, are determined by our board of directors quarterly.

We may not be able to achieve operating results that will allow us to make distributions at a specific level or to increase the amount of these distributions from time to time. In addition, we may be limited in our ability to make distributions due to the asset coverage ratio for borrowings applicable to us as a BDC under the 1940 Act and due to provisions in future credit facilities. If we do not distribute at least a certain percentage of our income annually, we could suffer adverse tax consequences, including possible loss of our ability to be subject to tax as a RIC. We cannot assure stockholders that they will receive any distributions at a particular level.

Recent Accounting Pronouncements

Item 3.

Quantitative And Qualitative Disclosures About Market Risk

We are subject to financial market risks, including changes in interest rates. As of December 31, 2019, our debt portfolio consisted of 99% variable-rate investments. The variable-rate loans are usually based on a LIBOR rate and typically have durations of three months, after which they reset to current market interest rates. Variable-rate investments subject to a floor generally reset by reference to the current market index after one to nine months only if the index exceeds the floor. In regards to variable-rate instruments with a floor, we do not benefit from increases in interest rates until such rates exceed the floor and thereafter benefit from market rates above any such floor. In contrast, our cost of funds, to the extent it is not fixed, will fluctuate with changes in interest rates since it has no floor.

Assuming that the most recent Consolidated Statements of Assets and Liabilities was to remain constant, and no actions were taken to alter the existing interest rate sensitivity, the following table shows the annualized impact of hypothetical base rate changes in interest rates:

Change In Interest Rates	Change In Interest Income, Net Of Interest Expense (in thousands)			Change In Interest Income, Net of Interest Expense Per Share
Down 1%	$	(5,129	)	$	(0.13	)
Up 1%		5,129			0.13
Up 2%		10,258			0.26
Up 3%		15,714			0.41
Up 4%	$	21,194		$	0.55

Although management believes that this measure is indicative of our sensitivity to interest rate changes, it does not adjust for potential changes in the credit market, credit quality, size and composition of the assets on the Consolidated Statements of Assets and Liabilities and other business developments that could affect net increase in net assets resulting from operations or net investment income. Accordingly, no assurances can be given that actual results would not differ materially from those shown above.

Because we borrow money to make investments, our net investment income is dependent upon the difference between the rate at which we borrow funds and the rate at which we invest these funds, as well as our level of leverage. As a result, there can be no assurance that a significant change in market interest rates will not have a material adverse effect on our net investment income or net assets.

We may hedge against interest rate and foreign currency fluctuations by using standard hedging instruments such as futures, options and forward contracts or our Credit Facility subject to the requirements of the 1940 Act and applicable commodities laws. While hedging activities may insulate us against adverse changes in interest rates and foreign currencies, they may also limit our ability to participate in benefits of lower interest rates or higher exchange rates with respect to our portfolio of investments with fixed interest rates or investments denominated in foreign currencies. During the periods covered by this Report, we did not engage in interest rate hedging activities or foreign currency derivatives hedging activities.

Item 4.

Controls and Procedures

As of the period covered by this Report, we, including our Chief Executive Officer and Chief Financial Officer, evaluated the effectiveness of the design and operation of our disclosure controls and procedures (as defined in Rule 13a-15(e) under the Exchange Act). Based on that evaluation, our management, including the Chief Executive Officer and Chief Financial Officer, concluded that our disclosure controls and procedures were effective and provided reasonable assurance that information required to be disclosed in our periodic filings with the SEC is recorded, processed, summarized and reported within the time periods specified in the SEC’s rules and forms, and that such information is accumulated and communicated to our management, including our Chief Executive Officer and Chief Financial Officer, as appropriate, to allow timely decisions regarding required disclosure. However, in evaluating the disclosure controls and procedures, management recognized that any controls and procedures, no matter how well designed and operated can provide only reasonable assurance of achieving the desired control objectives, and management necessarily was required to apply its judgment in evaluating the cost-benefit relationship of such possible controls and procedures.

There have been no changes in our internal control over financial reporting that occurred during the quarter ended December 31, 2019 that have materially affected, or are reasonably likely to materially affect, our internal control over financial reporting.

PART II – OTHER INFORMATION

Item 1.

Legal Proceedings

None of us, our Investment Adviser or our Administrator, is currently subject to any material legal proceedings, nor, to our knowledge, is any material legal proceeding threatened against us, or against our Investment Adviser or Administrator. From time to time, we, our Investment Adviser or Administrator, may be a party to certain legal proceedings, including proceedings relating to the enforcement of our rights under contracts with our portfolio companies. While the outcome of these and any future legal proceedings cannot be predicted with certainty, we do not expect that these proceedings will have a material effect upon our financial condition or results of operations.

Item 1A.

Risk Factors

In addition to the other information set forth in this Report, you should consider carefully the factors discussed below, as well as in Part I “Item 1A. Risk Factors” in our Annual Report on Form 10-K for the fiscal year ended September 30, 2019 filed on November 20, 2019, which could materially affect our business, financial condition and/or operating results. The risks described below, as well as in our Annual Report on Form 10-K are not the only risks facing PennantPark Floating Rate Capital Ltd. Additional risks and uncertainties not currently known to us or that we currently deem to be immaterial also may materially and adversely affect our business, financial condition and/or operating results.

Legislation enacted in 2018 allows us to incur additional leverage.

A BDC has historically been able to issue “senior securities,” including borrowing money from banks or other financial institutions, only in amounts such that its asset coverage, as defined in Section 61(a)(2) of the 1940 Act, equals at least 200% after such incurrence or issuance. In March 2018, the Consolidated Appropriations Act of 2018 (which includes the SBCAA) was enacted which amended the 1940 Act to decrease this percentage from 200% (i.e., $1 of debt outstanding for each $1 of equity) to 150% (i.e., $2 of debt outstanding for each $1 of equity) for a BDC that has received either stockholder approval or approval of a “required majority” (as defined in Section 57(o) of the 1940 Act) of its board of directors of the application of such lower asset coverage ratio to the BDC. On April 5, 2018, our board of directors approved such reduction. As of April 5, 2019, we are able to incur additional indebtedness so long as we comply with the applicable disclosure requirement, which may increase the risk of investing in us. Under the 200% minimum asset coverage ratio, the Company was permitted to borrow up to one dollar for investment purposes for every one dollar of investor equity and, under the 150% minimum asset coverage ratio, the Company is permitted to borrow up to two dollars for investment purposes for every one dollar of investor equity. In other words, Section 61(a)(2) of the 1940 Act permits BDCs to potentially increase their debt-to-equity ratio from a maximum of 1-to-1 to a maximum of 2-to-1. In addition, since our base management fee is determined and payable based upon our average adjusted gross assets, which includes any borrowings for investment purposes, our base management fee expense may increase if we incur additional leverage.

Because we intend to distribute substantially all of our income to our stockholders to maintain our ability to be subject to tax as a RIC, we may need to raise additional capital to finance our growth. If funds are not available to us, we may need to curtail new investments, and our common stock value could decline.

In connection with satisfying the requirements to be subject to tax as a RIC for federal income tax purposes, we intend to distribute to our stockholders substantially all of our investment company taxable income and net capital gains each taxable year. However, we may retain all or a portion of our net capital gains and incur applicable income taxes with respect thereto and elect to treat such retained net capital gains as deemed dividend distributions to our stockholders.

As noted above, on April 5, 2018, our board of directors, including a “required majority” (as such term is defined in Section 57(o) of the 1940 Act), approved a reduction of our asset coverage ratio from 200% to 150%. As a result, as of April 5, 2019, the asset coverage requirement applicable to us for senior securities was reduced from 200% (i.e., $1 of debt outstanding for each $1 of equity) to 150% (i.e., $2 of debt outstanding for each $1 of equity). If we incur additional indebtedness under this provision, the risk of investing in us will increase. If the value of our assets declines, we may be unable to satisfy this asset coverage test. If that happens, we may be required to sell a portion of our investments or sell additional common stock and, depending on the nature of our leverage, to repay a portion of our indebtedness at a time when such sales and repayments may be disadvantageous. In addition, the issuance of additional securities could dilute the percentage ownership of our current stockholders in us.

We are partially dependent on our subsidiary Funding I for cash distributions to enable us to meet the distribution requirements in order to permit us to be subject to tax as a RIC. In this regard, Funding I is limited by its covenants from making certain distributions to us that may be necessary to fulfill our requirements to be subject to tax as a RIC. In such case, we would need to request a waiver of these covenants’ restrictions for Funding I to make certain distributions to enable us to be subject to tax as a RIC. We cannot assure you that Funding I will be granted such a waiver, and if Funding I is unable to obtain a waiver, compliance with the covenants may cause us to incur a corporate-level income tax.

If we incur additional debt, it could increase the risk of investing in our shares.

We have indebtedness outstanding pursuant to our Credit Facility, 2023 Notes and the 2031 Asset-Backed Debt and expect in the future to borrow additional amounts under our Credit Facility or other debt securities, subject to market availability, and, may increase the size of our Credit Facility. We cannot assure you that our leverage will remain at current levels. The amount of leverage that we employ will depend upon our assessment of the market and other factors at the time of any proposed borrowing. Lenders have fixed dollar claims on our assets that are superior to the claims of our common stockholders or preferred stockholders, if any, and we have granted a security interest in Funding I’s assets in connection with our Credit Facility borrowings. In the case of a liquidation event, those lenders would receive proceeds before our stockholders. Any future debt issuance will increase our leverage and may be subordinate to our Credit Facility. In addition, borrowings or debt issuances, also known as leverage, magnify the potential for loss or gain on amounts invested and, therefore, increase the risks associated with investing in our securities. Leverage is generally considered a speculative investment technique. If the value of our assets decreases, then leveraging would cause the net asset value attributable to our common stock to decline more than it otherwise would have had we not utilized leverage. Similarly, any decrease in our revenue would cause our net income to decline more than it would have had we not borrowed funds and could negatively affect our ability to make distributions on our common or preferred stock. Our ability to service any debt that we incur depends largely on our financial performance and is subject to prevailing economic conditions and competitive pressures.

As noted above, on April 5, 2018, our board of directors, including a “required majority” (as such term is defined in Section 57(o) of the 1940 Act), and our stockholders, respectively, approved a reduction of our asset coverage ratio. As a result, as of April 5, 2019, the asset coverage requirement applicable to us for senior securities was reduced from 200% to 150%. As of such date, we are able to incur additional indebtedness so long as we comply with the applicable disclosure requirements, which may increase the risk of investing in us.

Item 2.

Unregistered Sales of Equity Securities and Use of Proceeds

None.

Item 3.

Defaults Upon Senior Securities

None.

Item 4.

Mine Safety Disclosures

Not applicable.

Item 5.

Other Information

None.

Item 6.

Exhibits

Unless specifically indicated otherwise, the following exhibits are incorporated by reference to exhibits previously filed with the SEC:

3.1	Articles of Amendment and Restatement of the Registrant (Incorporated by reference to Exhibit 99(A) to the Registrant's Pre-Effective Amendment No. 3 to the Registration Statement on Form N-2 (File No. 333-170243), filed on March 29, 2011).

3.2	Amended and Restated Bylaws of the Registrant (Incorporated by reference to Exhibit 3.1 to the Registrant’s Current Report on Form 8-K (File No. 814-00891), filed on December 2, 2015).

4.1	Form of Share Certificate (Incorporated by reference to Exhibit 99(D) to the Registrant's Pre-Effective Amendment No. 5 to the Registration Statement on Form N-2 (File No. 333-170243), filed on April 5, 2011).

31.1*	Certification of Chief Executive Officer pursuant to Rule 13a-14 of the Securities Exchange Act of 1934, as amended.

31.2*	Certification of Chief Financial Officer pursuant to Rule 13a-14 of the Securities Exchange Act of 1934, as amended.

32.1*	Certification of Chief Executive Officer pursuant to section 906 of The Sarbanes-Oxley Act of 2002.

32.2*	Certification of Chief Financial Officer pursuant to section 906 of The Sarbanes-Oxley Act of 2002.

99.1	Privacy Policy of the Registrant (Incorporated by reference to Exhibit 99.1 to the Registrant’s Annual Report on Form 10-K (File No. 814-00891), filed on November 17, 2011).

*	Filed herewith.

SIGNATURES

Pursuant to the requirements of the Securities Exchange Act of 1934, the registrant has duly caused this Report on Form 10-Q to be signed on its behalf by the undersigned, thereunto duly authorized.


	PENNANTPARK FLOATING RATE CAPITAL LTD.

Date: February 5, 2020	By:	/s/ Arthur H. Penn
		Arthur H. Penn
		Chief Executive Officer and Chairman of the Board of Directors (Principal Executive Officer)

Date: February 5, 2020	By:	/s/ Aviv Efrat
		Aviv Efrat
		Chief Financial Officer and Treasurer (Principal Financial and Accounting Officer)

pflt-ex311_8.htm

EXHIBIT 31.1

CERTIFICATION PURSUANT TO SECTION 302

CHIEF EXECUTIVE OFFICER CERTIFICATION

I, Arthur H. Penn, Chief Executive Officer of PennantPark Floating Rate Capital Ltd., certify that:

1. I have reviewed this Report on Form 10-Q of PennantPark Floating Rate Capital Ltd.;

2. Based on my knowledge, this Report does not contain any untrue statement of a material fact or omit to state a material fact necessary to make the statements made, in light of the circumstances under which such statements were made, not misleading with respect to the period covered by this Report;

3. Based on my knowledge, the financial statements, and other financial information included in this Report, fairly present in all material respects the financial condition, results of operations and cash flows of the registrant as of, and for, the periods presented in this Report;

4. The registrant’s other certifying officer and I are responsible for establishing and maintaining disclosure controls and procedures (as defined in Exchange Act Rules 13a-15(e) and 15d-15(e)) and internal control over financial reporting (as defined in Exchange Act Rules 13a-15(f) and 15d-15(f)) for the registrant and have:

a) Designed such disclosure controls and procedures, or caused such disclosure controls and procedures to be designed under our supervision, to ensure that material information relating to the registrant, including its consolidated subsidiaries, is made known to us by others within those entities, particularly during the period in which this Report is being prepared; and

b) Designed such internal control over financial reporting, or caused such internal control over financial reporting to be designed under our supervision, to provide reasonable assurance regarding the reliability of financial reporting and the preparation of financial statements for external purposes in accordance with generally accepted accounting principles; and

c) Evaluated the effectiveness of the registrant’s disclosure controls and procedures and presented in this Report our conclusions about the effectiveness of the disclosure controls and procedures, as of the end of the period covered by this Report based on such evaluation; and

d) Disclosed in this Report any change in the registrant’s internal control over financial reporting that occurred during the registrant’s most recent fiscal quarter (the registrant’s fourth fiscal quarter in the case of an annual report) that has materially affected, or is reasonably likely to materially affect, the registrant’s internal control over financial reporting; and

5. The registrant’s other certifying officer and I have disclosed, based on our most recent evaluation of internal control over financial reporting, to the registrant’s auditors and the audit committee of the registrant’s board of directors (or persons performing the equivalent functions):

a) All significant deficiencies and material weaknesses in the design or operation of internal control over financial reporting which are reasonably likely to adversely affect the registrant’s ability to record, process, summarize and report financial information; and

b) Any fraud, whether or not material, that involves management or other employees who have a significant role in the registrant’s internal control over financial reporting.

Dated: February 5, 2020

/s/ Arthur H. Penn

Name: Arthur H. Penn

Title: Chief Executive Officer

pflt-ex312_9.htm

EXHIBIT 31.2

CERTIFICATION PURSUANT TO SECTION 302

CHIEF FINANCIAL OFFICER CERTIFICATION

I, Aviv Efrat, Chief Financial Officer of PennantPark Floating Rate Capital Ltd., certify that:

1. I have reviewed this Report on Form 10-Q of PennantPark Floating Rate Capital Ltd.;

b) Any fraud, whether or not material, that involves management or other employees who have a significant role in the registrant’s internal control over financial reporting.

Dated: February 5, 2020

/s/ Aviv Efrat

Name: Aviv Efrat

Title: Chief Financial Officer

pflt-ex321_7.htm

EXHIBIT 32.1

CERTIFICATION OF CHIEF EXECUTIVE OFFICER

PURSUANT TO

SECTION 906 OF THE SARBANES-OXLEY ACT OF 2002 (18 U.S.C. 1350)

In connection with this Report on Form 10-Q for the three months ended December 31, 2019, or the Report, of PennantPark Floating Rate Capital Ltd., or the Registrant, as filed with the Securities and Exchange Commission on the date hereof, I, Arthur H. Penn, Chief Executive Officer of the Registrant, hereby certify, to the best of my knowledge, that:


	(1)	The Report fully complies with the requirements of Section 13(a) or 15(d) of the Securities Exchange Act of 1934, as amended; and


	(2)	The information contained in the Report fairly presents, in all material respects, the financial condition and results of operations of the Registrant.

/s/ Arthur H. Penn

Name: Arthur H. Penn

Title: Chief Executive Officer

Date: February 5, 2020

pflt-ex322_6.htm

EXHIBIT 32.2

CERTIFICATION OF CHIEF FINANCIAL OFFICER

PURSUANT TO

SECTION 906 OF THE SARBANES-OXLEY ACT OF 2002 (18 U.S.C. 1350)

In connection with this Report on Form 10-Q for the three months ended December 31, 2019, or the Report, of PennantPark Floating Rate Capital Ltd., or the Registrant, as filed with the Securities and Exchange Commission on the date hereof, I, Aviv Efrat, Chief Financial Officer of the Registrant, hereby certify, to the best of my knowledge, that:


	(1)	The Report fully complies with the requirements of Section 13(a) or 15(d) of the Securities Exchange Act of 1934, as amended; and


	(2)	The information contained in the Report fairly presents, in all material respects, the financial condition and results of operations of the Registrant.

/s/ Aviv Efrat

Name: Aviv Efrat

Title: Chief Financial Officer

Date: February 5, 2020