Prospect Capital trades at 63% discount with high yield but faces credit downgrades and dividend cuts.

Prospect Capital Corporation (PSEC) is currently trading at a deep 63% discount to its net asset value, near historical lows. Its portfolio is largely senior and secured debt diversified across 31 industries. Despite offering high yields around 8.18% to 9.5%, the company has faced persistent dividend cuts, including a 22% reduction in May 2024, and a credit downgrade by S&P to BB+ due to realized losses and repeated dividend reductions. Investors should weigh the high yield against the risks of dividend cuts and credit downgrades before investing.