"Capital Southwest is an internally managed BDC that provides loans to lower-middle-market companies and earns interest on those loans. It borrows at lower rates, lends at higher rates, and passes the spread through to shareholders as income."
"Pre-tax net investment income per share has been running between $0.59 and $0.61 in recent quarters. Against the combined $0.64 quarterly payout, overall NII coverage sits at roughly 94%."
"The Fed funds rate currently sits at 3.75%, down 75 basis points from 4.5% a year ago. The compression is reflected in CSWC's portfolio yield, which has declined from 13.26% roughly five quarters ago to 11.3% in Q3 FY2026."
Capital Southwest Corporation trades at a price-to-book ratio of 1.40x, indicating a 32% premium over its book value. As an internally managed BDC, it provides loans to lower-middle-market companies, earning interest on a diversified $2.01 billion investment portfolio. The company maintains a net investment income coverage of approximately 94% against its quarterly payout. The Fed funds rate impacts its portfolio yield, which has decreased from 13.26% to 11.3%. A further decline in rates poses a risk to annual net investment income.
Read at 24/7 Wall St.
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