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Prospect Floating Rate and Alternative Income Fund
Middle-Market Credit Solution for Income-Focused Investors

49

Portfolio Companies

11.1%

Weighted Average Yield 1

17

Diverse Industries

95%

Underlying Secured Investments

96%

Floating Rate and Alternative Investments 2

10.0%

Distribution Rate 3

FUND OVERVIEW

Prospect Floating Rate and Alternative Income Fund, Inc. (the “Fund” or “PFLOAT”), is a non-traded business development company (“BDC”) that invests primarily in the debt of privately-owned U.S. middle-market companies. The Fund seeks to provide income largely from investing in senior and secured floating rate credits, while building a portfolio of investments across the broad range of economic sectors. The priority in class hierarchy demonstrates the hypothetical capital structure for the Fund’s investments in senior and secured loans.

3

Market Opportunity

There is significant current market opportunity in the U.S. senior and secured loan market.

Growth of Private Credit

Private credit is increasing as a segment of the total addressable sub-investment grade credit market. Private credit consisted 8% of the $0.9 trillion market in 2005 versus 27% of the $3.8 trillion market in 2023.4

Demand for Financing

Private credit industry research suggests the asset class will grow from $1.0 trillion in 2023 to $2.3 trillion in 2027, suggesting an opportunity for alternative sources to meet the continued demand for financing5

Uncertain Economic Environment

During the Great Financial Crisis, the total return of middle market direct lending outperformed other selected credit investments. Between 2005-2008, rising rates through market bottom increased 29.0% within private credit versus syndicated loans decreasing (18.8%), high yield decreasing (13.5%), and investment grade corporate bonds increasing 5.4%6

Demand for Credit

The large amount of uninvested capital held by private equity buyout funds, estimated at $1,500 trillion, continues to drive deal activity and demand for credit7

Track Record

The Fund’s successful track record in the senior and secured loan market employs a proven and repeatable investment process.

Stable Current Income Generation

The Fund seeks attractive risk-adjusted investments with favorable terms, and the 10.0% distribution rate is over 6.6% higher than 5-year treasuries.8

Inflation and Rising Interest Rate Hedge

95% of the Fund’s investments are floating rate, providing a natural hedge against inflation and rising interest rates.

Varied Portfolio

The Fund is invested in 49 distinct companies with low exposure to cyclical industries.

Senior Secured Loans

First-lien senior secured loans are the most senior positions in a company’s capital structure, providing the Fund with the most downside protection compared to any other investment in the company. 

  1. Weighted average loan coupon assumes the 1-month or 3-month SOFR rate elected by the respective borrower. Excludes Structured Subordinated Notes and Equity and is weighted by principal balance.
  2. On a fair market value basis, the portfolio is 95% floating rate debt.
  3. Declared distribution rate is based on the most recent quarter end net asset value per share and is calculated by annualizing the monthly common share distributions from July through October 2025. Historical declared distributions: 8.50% per annum declared for November 2024 to April 2025, 5.00% per annum declared for May 2025 to June 2025. Distributions are not guaranteed and may be modified at our discretion. Any future distributions may exceed our earnings, and therefore portions of the distribution may be a return of money that you originally invested and represent a return of capital for tax purposes.
  4. Declared distribution rate is based on the most recent quarter end net asset value per share and is calculated by annualizing the monthly common share distributions from July through October 2025. Historical declared distributions: 8.50% per annum declared for November 2024 to April 2025, 5.00% per annum declared for May 2025 to June 2025. Distributions are not guaranteed and may be modified at our discretion. Any future distributions may exceed our earnings, and therefore portions of the distribution may be a return of money that you originally invested and represent a return of capital for tax purposes.
  5. Source: Bloomberg (“High Yield”) and LCD (“Senior Loans”) as of March 31, 2024. Preqin (“Private Credit”) as of September 30, 2023, which is the latest data available. Total addressable US subinvestment grade credit market defined as the aggregate of the US high yield bonds, US leveraged loans and North American private credit markets. Leveraged loans refer to broadly syndicated loans. Private Credit includes BDCs.
  6. Preqin, as of December 2022
  7. Per Cliffwater Direct Lending Index, Credit Suisse Leveraged Loan Index & IEC BofA High Yield Index, Bloomberg US Corporate Bond Index. Past performance is not indicative of future returns.
  8. Source: Preqin, as of May 28, 2024. For illustrative purposes only. Represents private equity dry powder in North America only. Dry powder is a term for uncalled capital commitments.
  9. Assumes 5 year treasury rate of 3.4% (Bloomberg 09/26/2025).