Prospect Capital Plunges on First Dividend Cut Since 2017 (1)

Shares of Prospect Capital Corp., a $7.6 billion publicly-traded private credit fund, tumbled more than 16% Friday after the firm cut its dividend for the first time in seven years.

Prospect said in a statement that the 25% dividend cut is needed as it shifts holdings away from the riskiest slices of collateralized loan obligations and real estate investments into its core business of first-lien senior-secured loans and equity stakes in mid-sized companies.

The firm also attributed the dividend cut to the Federal Reserve’s recent rate reductions, which will lessen the amount of interest it gets from providing floating-rate ...