PennantPark Floating Rate Capital Ltd.

Previous wording

We are subject to various covenants under Funding I’s Credit Facility which, if not complied with, could result in reduced availability and/or mandatory prepayments under Funding I’s Credit Facility, our 2026 Notes, our 2031 Asset-Backed Debt, 2036-R Asset-Backed Debt, and our 2036 Asset-Backed Debt.

Current wording

We are subject to various covenants under Funding I’s Credit Facility which, if not complied with, could result in reduced availability and/or mandatory prepayments under Funding I’s Credit Facility, our 2026 Notes, our 2036-R Asset-Backed Debt, our 2036 Asset-Backed Debt, and our 2037 Asset-Backed Debt.

Previous wording

In addition to the asset coverage ratio requirements, the Credit Facility contains various covenants applicable to Funding I, which restricts our ability to borrow funds, and, the indenture governing our 2026 Notes, the indentures governing our 2031 Asset-Backed Debt, 2036-R Asset-Backed Debt, the indenture governing our 2036 Asset-Backed Debt contain various covenants which, if not complied with, could accelerate repayment of the 2026 Notes, the 2031 Asset-Backed Debt, the 2036-R Asset-Backed Debt, and the 2036 Asset-Backed Debt, respectively. For example, the Credit Facility’s income coverage covenant, or test, requires us to maintain a ratio whereby the aggregate amount of interest received on the portfolio loans must equal at least 125% of the interest payable in respect to the Lenders and other parties. Failure to satisfy the various covenants under the Credit Facility could accelerate repayment under the Credit Facility or otherwise prevent us from receiving distributions under the payment waterfall. This could materially and adversely affect our liquidity, financial condition and results of operations. Funding I’s borrowings under the Credit Facility are collateralized by the assets in Funding I’s investment portfolio. The agreements governing the Credit Facility require Funding I to comply with certain financial and operational covenants. These covenants include:

Current wording

In addition to the asset coverage ratio requirements, the Credit Facility contains various covenants applicable to Funding I, which restricts our ability to borrow funds, and, the indenture governing our 2026 Notes, the indenture governing our 2036-R Asset-Backed Debt, the indenture governing our 2036 Asset-Backed Debt, and the indenture governing our 2037 Asset-Backed Debt contain various covenants which, if not complied with, could accelerate repayment of the 2026 Notes, the 2036-R Asset-Backed Debt, the 2036 Asset-Backed Debt, and 2037 Asset-Backed Debt, respectively. For example, the Credit Facility’s income coverage covenant, or test, requires us to maintain a ratio whereby the aggregate amount of interest received on the portfolio loans must equal at least 125% of the interest payable in respect to the Lenders and other parties. Failure to satisfy the various covenants under the Credit Facility could accelerate repayment under the Credit Facility or otherwise prevent us from receiving distributions under the payment waterfall. This could materially and adversely affect our liquidity, financial condition and results of operations. Funding I’s borrowings under the Credit Facility are collateralized by the assets in Funding I’s investment portfolio. The agreements governing the Credit Facility require Funding I to comply with certain financial and operational covenants. These covenants include:

Previous wording

Our continued compliance with these covenants depends on many factors, some of which are beyond our control. A material decrease in our NAV in connection with additional borrowings could result in an inability to comply with our obligation to restrict the level of indebtedness that we are able to incur in relation to the value of our assets or to maintain a minimum level of stockholders’ equity in Funding I or to result in the ability of the trustee and our note holders to accelerate amounts due under the indenture governing our 2026 Notes or the indenture governing our 2031 Asset-Backed Debt, 2036-R Asset-Backed Debt or 2036 Asset-Backed Debt. This could have a material adverse effect on our operations, as it would reduce availability under the Credit Facility and could trigger mandatory prepayment obligations under the terms of the Credit Facility.

Current wording

Our continued compliance with these covenants depends on many factors, some of which are beyond our control. A material decrease in our NAV in connection with additional borrowings could result in an inability to comply with our obligation to restrict the level of indebtedness that we are able to incur in relation to the value of our assets or to maintain a minimum level of stockholders’ equity in Funding I or to result in the ability of the trustee and our note holders to accelerate amounts due under the indenture governing our 2026 Notes or the indenture governing our 2036-R Asset-Backed Debt, 2036 Asset-Backed Debt, or 2037 Asset-Backed Debt. This could have a material adverse effect on our operations, as it would reduce availability under the Credit Facility and could trigger mandatory prepayment obligations under the terms of the Credit Facility.

Previous wording

Wemake long-term loans and debt investments, which may involve a high degree of repayment risk. Our investments with a deferred interest feature, such as OID income and PIK interest, could represent a higher credit risk than investments that must pay interest in full in cash on a regular basis. We invest in companies that may have limited financial resources, typically are highly leveraged and may be unable to obtain financing from traditional sources. Accordingly, a general economic downturn or severe tightening in the credit markets could materially impact the ability of our borrowers to repay their loans, which could significantly damage our business. Numerous other factors may affect a borrower’s ability to repay its loan, including the failure to meet its business plan or a downturn in its industry. A portfolio company’s failure to satisfy financial or operating covenants imposed by us or other lenders could lead to defaults and, potentially, termination of its loans or foreclosure on the secured assets.

Current wording

We make long-term loans and debt investments, which may involve a high degree of repayment risk. Our investments with a deferred interest feature, such as OID income and PIK interest, could represent a higher credit risk than investments that must pay interest in full in cash on a regular basis. We invest in companies that may have limited financial resources, typically are highly leveraged and may be unable to obtain financing from traditional sources. Accordingly, a general economic downturn or severe tightening in the credit markets could materially impact the ability of our borrowers to repay their loans, which could significantly damage our business. Numerous other factors may affect a borrower’s ability to repay its loan, including the failure to meet its business plan or a downturn in its industry. A portfolio company’s failure to satisfy financial or operating covenants imposed by us or other lenders could lead to defaults and, potentially, termination of its loans or foreclosure on the secured assets. This could trigger cross-defaults under other agreements and jeopardize our portfolio company’s ability to meet its obligations under the loans or debt securities that we hold. In addition, our portfolio companies may have, or may be permitted to incur, other debt that ranks senior to or equally with our securities. This means that payments on such senior-ranking securities may have to be made before we receive any payments on our subordinated loans or debt securities. Deterioration in a borrower’s financial condition and prospects may be accompanied by deterioration in any related collateral and may adversely affect our financial condition and results of operations.

Previous wording

Effective internal controls over financial reporting are necessary for us to provide reliable financial reports and, together with adequate disclosure controls and procedures, are designed to prevent fraud. Any failure to implement required new or improved controls, or difficulties encountered in their implementation could cause us to fail to meet our reporting obligations. In addition, any testing by us conducted in connection with Section 404 of the Sarbanes-Oxley Act of 2002, or the subsequent testing by our independent registered public accounting firm (when undertaken, as noted below), may reveal deficiencies in our internal controls over financial reporting that are deemed to be significant deficiencies, material weaknesses or that may require prospective or retroactive changes to our consolidated financial statements or identify other areas for further attention or improvement. We have identified material weaknesses in our internal controls over financial reporting in the past and may identify other material weaknesses or significant deficiencies in the future. Inferior internal controls could also cause investors and lenders to lose confidence in our reported financial information, which could have a negative effect on the trading price of our common stock.

Current wording

Effective internal controls over financial reporting are necessary for us to provide reliable financial reports and, together with adequate disclosure controls and procedures, are designed to prevent fraud. Any failure to implement required new or improved controls, or difficulties encountered in their implementation could cause us to fail to meet our reporting obligations. In addition, any testing by us conducted in connection with Section 404 of the Sarbanes-Oxley Act of 2002, or the subsequent testing by our independent registered public accounting firm (when undertaken, as noted below), may reveal deficiencies in our internal controls over financial reporting that are deemed to be significant deficiencies, material weaknesses or that may require prospective or retroactive changes to our consolidated financial statements or identify other areas for further attention or improvement. We have identified material weaknesses in our internal controls over financial reporting and may identify other material weaknesses or significant deficiencies in the future. Inferior internal controls could also cause investors and lenders to lose confidence in our reported financial information, which could have a negative effect on the trading price of our common stock.

Previous wording

Our current debt is governed by the terms of the Credit Facility, the indenture governing our 2026 Notes, the indenture governing the 2031 Asset-Backed Debt, the indenture governing the 2036-R Asset-Backed Debt, and the indenture governing the 2036 Asset-Backed Debt, and future debt may be governed by an indenture or other instrument containing covenants restricting our operating flexibility. We, and indirectly our stockholders, bear the cost of issuing and servicing debt. Any convertible or exchangeable securities that we issue in the future may have rights, preferences and privileges more favorable than those of our common stock and may also carry leverage related risks. Leverage magnifies the potential risks for loss and the risks of investing in us, both as detailed below.

Current wording

Our current debt is governed by the terms of the Credit Facility, the indenture governing our 2026 Notes, the indenture governing the 2036-R Asset-Backed Debt, the indenture governing the 2036 Asset-Backed Debt, the indenture governing the 2037 Asset-Backed Debt, and future debt may be governed by an indenture or other instrument containing covenants restricting our operating flexibility. We, and indirectly our stockholders, bear the cost of issuing and servicing debt. Any convertible or exchangeable securities that we issue in the future may have rights, preferences and privileges more favorable than those of our common stock and may also carry leverage related risks. Leverage magnifies the potential risks for loss and the risks of investing in us, both as detailed below.

Previous wording

We have indebtedness outstanding pursuant to the Credit Facility, 2026 Notes, the 2031 Asset-Backed Debt, the 2036-R Asset-Backed Debt, and the 2036 Asset-Backed Debt and expect in the future to borrow additional amounts under the Credit Facility or otherwise, subject to market availability, and, may increase the size of the 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 the 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 the 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 the use of leverage would cause the NAV 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.

Current wording

We have indebtedness outstanding pursuant to the Credit Facility, 2026 Notes, the 2036-R Asset-Backed Debt, the 2036 Asset-Backed Debt, and the 2037 Asset-Backed Debt, and expect in the future to borrow additional amounts under the Credit Facility or otherwise, subject to market availability, and, may increase the size of the 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 the 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 the 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 the use of leverage would cause the NAV 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.

Previous wording

As of September 30, 2024 and 2023, our asset coverage ratio, as computed in accordance with the 1940 Act, was 174% and 230%, respectively. Since our leverage was 135% and 76% of our net assets as of September 30, 2024 and 2023, respectively, we would have to receive an annual return of at least 4.0% and 2.4%, respectively, to cover annual interest payments.

Current wording

As of September 30, 2025 and 2024, our asset coverage ratio, as computed in accordance with the 1940 Act, was 160% and 174%, respectively. Since our leverage was 166% and 135% of our net assets as of September 30, 2025 and 2024, respectively, we would have to receive an annual return of at least 3.8% and 4.0%, respectively, to cover annual interest payments.

Previous wording

As of September 30, 2024, we had outstanding borrowings of $443.9 million under the Credit Facility, zero outstanding under our 2023 Notes, $185.0 million under our 2026 Notes, $266.0 million outstanding under the 2036-R Asset-Backed Debt, and $287.0 million outstanding under the 2036 Asset-Backed Debt. Our consolidated debt outstanding was $1,181.9 million and had a weighted average annual interest rate at the time of 7.0%, exclusive of the fees on the undrawn commitment on the Credit Facility. This example is for illustrative purposes only, and actual interest rates on the Credit Facility or any future borrowings are likely to fluctuate. The costs associated with our borrowings, including any increase in the management fee or incentive fee payable to our Investment Adviser, are and will be borne by our stockholders.

Current wording

As of September 30, 2025, we had outstanding borrowings of $683.9 million under the Credit Facility, $185.0 million outstanding under our 2026 Notes, $266.0 million outstanding under the 2036-R Asset-Backed Debt, $287.0 million outstanding under the 2036 Asset-Backed Debt, and $361.0 million outstanding under the 2037 Asset-Backed Debt. Our consolidated debt outstanding was $1,782.9 million and had a weighted average annual interest rate at the time of 6.1%, exclusive of the fees on the undrawn commitment on the Credit Facility. This example is for illustrative purposes only, and actual interest rates on the Credit Facility or any future borrowings are likely to fluctuate. The costs associated with our borrowings, including any increase in the management fee or incentive fee payable to our Investment Adviser, are and will be borne by our stockholders.

Previous wording

The following table is designed to illustrate the effect on the return to a holder of our common stock of the leverage created by our use of borrowing as of September 30, 2024 of 55.8% of total assets (including such borrowed funds), at the current interest rate at the time of 7.0%, and assumes hypothetical annual returns on our portfolio of minus 10 to plus 10 percent. The table also assumes that we will maintain a constant level of leverage and weighted average interest rate. The amount of leverage and cost of borrowing that we use will vary from time to time. As can be seen, leverage generally increases the return to stockholders when the portfolio return is positive and decreases return when the portfolio return is negative. Actual returns may be greater or less than those appearing in the table.

Current wording

The following table is designed to illustrate the effect on the return to a holder of our common stock of the leverage created by our use of borrowing as of September 30, 2025 of 61.0% of total assets (including such borrowed funds), at the current interest rate at the time of 6.1%, and assumes hypothetical annual returns on our portfolio of minus 10 to plus 10 percent. The table also assumes that we will maintain a constant level of leverage and weighted average interest rate. The amount of leverage and cost of borrowing that we use will vary from time to time. As can be seen, leverage generally increases the return to stockholders when the portfolio return is positive and decreases return when the portfolio return is negative. Actual returns may be greater or less than those appearing in the table.

Previous wording

As a result of any issuance of debt securities and borrowings under the Credit Facility, the 2026 Notes, the 2036-R Asset-Backed Debt and the 2036 Asset-Backed Debt, we would be exposed to typical risks associated with leverage, including an increased risk of loss and an increase in expenses, which are ultimately borne by our common stockholders. Payment of interest on such debt securities must take preference over any other distributions or other payments to our common stockholders. If we issue additional debt securities in the future, it is likely that such securities will be governed by an indenture or other instrument containing covenants restricting our operating flexibility. In addition, such securities may be rated by rating agencies, and in obtaining a rating for such securities, we may be required to abide by operating and investment guidelines that could further restrict our operating flexibility. Furthermore, any cash that we use to service our indebtedness would not be available for the payment of distributions to our common stockholders.

Current wording

As a result of any issuance of debt securities and borrowings under the Credit Facility, the 2026 Notes, the 2036-R Asset-Backed Debt, the 2036 Asset-Backed Debt, and the 2037 Asset-Backed Debt, we would be exposed to typical risks associated with leverage, including an increased risk of loss and an increase in expenses, which are ultimately borne by our common stockholders. Payment of interest on such debt securities must take preference over any other distributions or other payments to our common stockholders. If we issue additional debt securities in the future, it is likely that such securities will be governed by an indenture or other instrument containing covenants restricting our operating flexibility. In addition, such securities may be rated by rating agencies, and in obtaining a rating for such securities, we may be required to abide by operating and investment guidelines that could further restrict our operating flexibility. Furthermore, any cash that we use to service our indebtedness would not be available for the payment of distributions to our common stockholders.

Previous wording

We could experience fluctuations in our quarterly operating results due to a number of factors, including the interest rate payable on the debt securities we acquire, the default rate on such securities, the level of our expenses, variations in, and the timing of the recognition of, realized and unrealized gains or losses, the degree to which we encounter competition in our markets and general economic conditions. However, as a result of our irrevocable election to apply the fair value option to the Credit Facility, future decreases of fair value of our debt is expected to have a corresponding increase to our NAV. Similarly, future increases in the fair value of our debt may have a corresponding decrease to our NAV. Any future indebtedness that we elect the fair value option for may have similar effects on our NAV as the Credit Facility. This is expected to mitigate volatility in our earnings and NAV. As a result, results for any period should not be relied upon as being indicative of future performance.

Current wording

Wecould experience fluctuations in our quarterly operating results due to a number of factors, including the interest rate payable on the debt securities we acquire, the default rate on such securities, the level of our expenses, variations in, and the timing of the recognition of, realized and unrealized gains or losses, the degree to which we encounter competition in our markets and general economic conditions. However, as a result of our irrevocable election to apply the fair value option to the Credit Facility, future decreases of fair value of our debt is expected to have a corresponding increase to our NAV. Similarly, future increases in the fair value of our debt may have acorresponding decrease to our NAV. Any future indebtedness that we elect the fair value option for may have similar effects on our NAV as the Credit Facility. This is expected to mitigate volatility in our earnings and NAV. As a result, results for any period should not be relied upon as being indicative of future performance.

Previous wording

A portfolio company’s failure to satisfy financial or operating covenants imposed by us or other lenders could lead to defaults and potential termination of its debt and foreclosure on its secured assets, which could trigger cross-defaults under other agreements and jeopardize our portfolio company’s ability to meet its obligations under the debt securities that we hold. We may incur expenses to the extent necessary to seek recovery upon default or to negotiate new terms with a defaulting portfolio company, and any restructuring could further cause adverse effects on our business. Depending on the facts and circumstances of our investments and the extent of our involvement in the management of a portfolio company, upon the bankruptcy of a portfolio company, a bankruptcy court may recharacterize our debt investments as equity investments and subordinate all or a portion of our claim to that of other creditors. This could occur regardless of how we may have structured our investment. In addition, we cannot assure you that a bankruptcy court would not take actions contrary to our interests.

Current wording

Aportfolio company’s failure to satisfy financial or operating covenants imposed by us or other lenders could lead to defaults and potential termination of its debt and foreclosure on its secured assets, which could trigger cross-defaults under other agreements and jeopardize our portfolio company’s ability to meet its obligations under the debt securities that we hold. We may incur expenses to the extent necessary to seek recovery upon default or to negotiate new terms with a defaulting portfolio company, and any restructuring could further cause adverse effects on our business. Depending on the facts and circumstances of our investments and the extent of our involvement in the management of a portfolio company, upon the bankruptcy of a portfolio company, a bankruptcy court may recharacterize our debt investments as equity investments and subordinateall or a portion of our claim to that of other creditors. This could occur regardless of how we may have structured our investment. In addition, we cannot assure you that a bankruptcy court would not take actions contrary to our interests.

Previous wording

Our Investment Adviser is entitled to incentive compensation for each fiscal quarter in an amount equal to a percentage of the excess of our investment income for that quarter (before deducting incentive compensation, net operating losses and certain other items) above a threshold return for that quarter. Our Pre-Incentive Fee Net Investment Income for incentive compensation purposes excludes realized and unrealized capital losses that we may incur in the fiscal quarter, even if such capital losses resultin a net loss on our Consolidated Statements of Operations for that quarter. Thus, we may be required to pay the Investment Adviser incentive compensation for a fiscal quarter even if there is a decline in the value of our portfolio, NAV or we incur a net loss for that quarter. In addition, increases in interest rates may increase the amount of incentive fees we pay to the Investment Adviser even though our performance relative to the market has not increased.

Current wording

Our Investment Adviser is entitled to incentive compensation for each fiscal quarter in an amount equal to a percentage of the excess of our investment income for that quarter (before deducting incentive compensation, net operating losses and certain other items) above a threshold return for that quarter. Our Pre-Incentive Fee Net Investment Income for incentive compensation purposes excludes realized and unrealized capital losses that we may incur in the fiscal quarter, even if such capital losses result in a net loss on our Consolidated Statements of Operations for that quarter. Thus, we may be required to pay the Investment Adviser incentive compensation for a fiscal quarter even if there is a decline in the value of our portfolio, NAV or we incur a net loss for that quarter. In addition, increases in interest rates may increase the amount of incentive fees we pay to the Investment Adviser even though our performance relative to the market has not increased.

Previous wording

Shares of BDCs may trade at a market price that is less than the NAV that is attributable to those shares. Our shares have traded above and below our NAV. Our shares closed on The New York Stock Exchange at $11.57 and $10.66 on September 30, 2024 and 2023, respectively. Our NAV per share was $11.31 and $11.13 as of the same dates, respectively. The possibility that our shares of common stock will trade at a discount from NAV or at a premium that is unsustainable over the long term is separate and distinct from the risk that our NAV will decrease. It is not possible to predict whether our shares will trade at, above or below NAV in the future.

Current wording

Shares of BDCs may trade at a market price that is less than the NAV that is attributable to those shares. Our shares have traded above and below our NAV. Our shares closed on The New York Stock Exchange at $8.89 and $11.57 on September 30, 2025 and 2024, respectively. Our NAV per share was $10.83 and $11.31 as of the same dates, respectively. The possibility that our shares of common stock will trade at a discount from NAV or at a premium that is unsustainable over the long term is separate and distinct from the risk that our NAV will decrease. It is not possible to predict whether our shares will trade at, above or below NAV in the future.

Previous wording

Since our initial listing on The Nasdaq Global Select Market to our voluntarily withdrawal of the principal listing of common shares from the Nasdaq Stock Market LLC effective at market close on April 13, 2022 and subsequent listing and trading of the Company's common stock on the New York Stock Exchange, which commenced April 14, 2022, our shares of common stock have traded at a wide range of prices. We can offer no assurance that our shares of common stock will not display similar volatility in future periods.

Current wording

Since our initial listing on The Nasdaq Global Select Market to our voluntarily withdrawal of the principal listing of common shares from the Nasdaq Stock Market LLC effective at market close on April 13, 2022 and subsequent listing and trading of the Company's common stock on the New York Stock Exchange, which commenced

Previous wording

The 2026 Notes are not secured by any of our assets or any of the assets of our subsidiaries. As a result, the 2026 Notes are effectively subordinated to any secured indebtedness we or our subsidiaries have currently incurred and may incur in the future (or any indebtedness that is initially unsecured to which we subsequently grant security) to the extent of the value of the assets securing such indebtedness. In any liquidation, dissolution, bankruptcy or other similar proceeding, the holders of any of our existing or future secured indebtedness and the secured indebtedness of our subsidiaries may assert rights against the assets pledged to secure that indebtedness in order to receive full payment of their indebtedness before the assets may be used to pay other creditors, including the holders of the 2026 Notes. As of September 30, 2024, we had $443.9 million outstanding under the Credit Facility. The Credit Facility is secured by substantially all of the assets of Funding I, and the indebtedness under the Credit Facility is therefore effectively senior in right of payment to the 2026 Notes to the extent of the value of such assets.

Current wording

The 2026 Notes are not secured by any of our assets or any of the assets of our subsidiaries. As a result, the 2026 Notes are effectively subordinated to any secured indebtedness we or our subsidiaries have currently incurred and may incur in the future (or any indebtedness that is initially unsecured to which we subsequently grant security) to the extent of the value of the assets securing such indebtedness. In any liquidation, dissolution, bankruptcy or other similar proceeding, the holders of any of our existing or future secured indebtedness and the secured indebtedness of our subsidiaries may assert rights against the assets pledged to secure that indebtedness in order to receive full payment of their indebtedness before the assets may be used to pay other creditors, including the holders of the 2026 Notes. As of September 30, 2025, we had $683.9 million outstanding under the Credit Facility. The Credit Facility is secured by substantially all of the assets of Funding I, and the indebtedness under the Credit Facility is therefore effectively senior in right of payment to the 2026 Notes to the extent of the value of such assets.

Previous wording

The 2026 Notes are obligations exclusively of PennantPark Floating Rate Capital Ltd. and not of any of our subsidiaries. None of our subsidiaries is or acts as a guarantor of the 2026 Notes, and the 2026 Notes are not required to be guaranteed by any subsidiaries we may acquire or create in the future. Our secured indebtedness with respect to the Credit Facility is held through Funding I, and our secured indebtedness with respect to the 2036 Asset-Backed Debt and 2036-R Asset-Backed Debt, (collectively, the "Asset-Backed Debt") is held through the 2036 Securitization Issuer and the 2036-R Securitization Issuers, respectively. The assets of any such subsidiaries are not directly available to satisfy the claims of our creditors, including holders of the 2026 Notes.

Current wording

The 2026 Notes are obligations exclusively of PennantPark Floating Rate Capital Ltd. and not of any of our subsidiaries. None of our subsidiaries is or acts as a guarantor of the 2026 Notes, and the 2026 Notes are not required to be guaranteed by any subsidiaries we may acquire or create in the future. Our secured indebtedness with respect to the Credit Facility is held through Funding I, and our secured indebtedness with respect to the 2036 Asset-Backed Debt, 2036-R Asset-Backed Debt and 2037 Asset-Backed Debt (collectively, the "Asset-Backed Debt") is held through the 2036 Securitization Issuer, the 2036-R Securitization Issuers and the 2037 Securitization Issuers, respectively. The assets of any such subsidiaries are not directly available to satisfy the claims of our creditors, including holders of the 2026 Notes.

Previous wording

We are subject to certain risks as a result of our interests in connection with the 2036-R Securitization and the 2036 Securitization and our equity interests in the 2036-R Securitization Issuers and the 2036 Securitization Issuer.

Current wording

We are subject to certain risks as a result of our interests in connection with the 2036-R Securitization, the 2036 Securitization and the 2037 Securitization and our equity interests in the 2036-R Securitization Issuers, the 2036 Securitization Issuer and the 2037 Securitization Issuer.

Previous wording

An event of default in connection with the 2036-R Securitization or the 2036 Securitization could give rise to a cross-default under our other material indebtedness.

Current wording

An event of default in connection with the 2036-R Securitization or the 2036 Securitization or the 2037 Securitization could give rise to a cross-default under our other material indebtedness.

Previous wording

The documents governing our other material indebtedness contain customary cross-default provisions that could be triggered if an event of default occurs in connection with the 2036-R Securitization or the 2036 Securitization. An event of default with respect to our other indebtedness could lead to the acceleration of such indebtedness and the exercise of other remedies as provided in the documents governing such other indebtedness. This could have a material adverse effect on our business, financial condition, results of operations and cash flows and may result in our inability to make distributions sufficient to maintain our ability to be subject to tax as a RIC.

Current wording

The documents governing our other material indebtedness contain customary cross-default provisions that could be triggered if an event of default occurs in connection with the 2036-R Securitization, the 2036 Securitization or the 2037 Securitization. An event of default with respect to our other indebtedness could lead to the acceleration of such indebtedness and the exercise of other remedies as provided in the documents governing such other indebtedness. This could have a material adverse effect on our business, financial condition, results of operations and cash flows and may result in our inability to make distributions sufficient to maintain our ability to be subject to tax as a RIC.We may not receive cash distributions in respect of our indirect ownership interests in the 2036 Securitization Issuer, 2036-R Securitization Issuers or the 2037 Securitization Issuer .

Previous wording

Apart from fees payable to us in connection with our role as servicer of the Securitization Loans and the reimbursement of related amounts under the documents governing the 2036 Securitization and the 2036-R Securitization, we receive cash in connection with the 2036-R Securitization and the 2036 Securitization only to the extent that the Depositor receives payments in respect of its equity interests in the Securitization Issuers. The respective holders of the equity interests in the 2036 Securitization Issuer and the 2036-R Securitization Issuers are the residual claimants on distributions, if any, made by the 2036 Securitization Issuer or the 2036-R Securitization Issuers, as applicable, after the holders of the 2036 Asset-Backed Debt (the “2036 Securitization Debtholders”), and the holders of the 2036-R Asset-Backed Debt (the “2036-R Securitization Debtholders”), as applicable, and other claimants have been paid in full on each payment date or upon maturity of the 2036 Asset-Backed Debt or 2036-R Asset-Backed Debt, as applicable, subject to the priority of payments under the documents governing the 2036 Securitization and the 2036-R Securitization, as applicable. To the extent that the value of the 2036 Securitization Issuer’s and the 2036-R Securitization Issuer’s portfolio of loans is reduced as a result of conditions in the credit markets (relevant in the event of a liquidation event), other macroeconomic factors, distressed or defaulted loans or the failure of individual portfolio companies to otherwise meet their obligations in respect of the loans, or for any other reason, the ability of the 2036 Securitization Issuer or the 2036-R Securitization Issuers to make cash distributions in respect of the 2036 Financing Subsidiary’s or the R-Depositor's equity interests, as applicable, would be negatively affected and consequently, the value of the equity interests in the 2036 Securitization Issuer or the 2036-R Securitization Issuers, as applicable, would also be reduced. In the event that we fail to receive cash indirectly from the 2036 Securitization Issuer or the 2036-R Securitization Issuers, we could be unable to make distributions, if at all, in amounts sufficient to maintain our ability to be subject to tax as a RIC.

Current wording

Debt as applicable, and other claimants have been paid in full on each payment date or upon maturity of the 2036 Asset-Backed Debt, 2036-R Asset-Backed Debt and 2037 Asset-Backed Debt as applicable, subject to the priority of payments under the documents governing the 2036 Securitization, the 2036-R Securitization and the 2037 Securitization as applicable. To the extent that the value of the 2036 Securitization Issuer’s, 2036-R Securitization Issuer’s and the 2037 Securitization Issuer’s portfolio of loans is reduced as a result of conditions in the credit markets (relevant in the event of a liquidation event), other macroeconomic factors, distressed or defaulted loans or the failure of individual portfolio companies to otherwise meet their obligations in respect of the loans, or for any other reason, the ability of the 2036 Securitization Issuer, the 2036-R Securitization Issuers and the 2037 Securitization Issuers to make cash distributions in respect of the 2036 Financing Subsidiary’s, the R-Depositor's equity interests or the 2037 Financing Subsidiary's as applicable, would be negatively affected and consequently, the value of the equity interests in the 2036 Securitization Issuer, the 2036-R Securitization Issuers or the 2037 Securitization Issuer as applicable, would also be reduced. In the event that we fail to receive cash indirectly from the 2036 Securitization Issuer, the 2036-R Securitization Issuers or the 2037 Securitization Issuers, we could be unable to make distributions, if at all, in amounts sufficient to maintain our ability to be subject to tax as a RIC.

Previous wording

The interests of the 2036 Securitization Debtholders and the 2036-R Securitization Debtholders may not be aligned with our interests.

Current wording

The interests of the 2036 Securitization Debtholders, the 2036-R Securitization Debtholders and the 2037 Securitization Debtholders may not be aligned with our interests.

Previous wording

The 2036 Asset-Backed Debt and the 2036-R Asset-Backed Debt constitute debt obligations ranking senior in right of payment to the rights of the holders of the equity interests in the 2036 Securitization Issuer and the 2036-R Securitization Issuers, as residual claimants in respect of distributions, if any, made by the 2036 Securitization Issuer and the 2036-R Securitization Issuers. As such, there are circumstances in which the interests of the 2036 Securitization Debtholders and the 2036-R Securitization Debtholders may not be aligned with the interests of holders of the equity interests in the 2036 Securitization Issuer or the 2036-R Securitization Issuers, as applicable. For example, under the terms of the documents governing the 2036 Securitization and the 2036-R Securitization, the 2036 Securitization Debtholders and the 2036-R Securitization Debtholders, as applicable, have the right to receive payments of principal and interest prior to holders of the equity interests.

Current wording

The 2036 Asset-Backed Debt, the 2036-R Asset-Backed Debt and the 2037 Asset-Backed Debt constitute debt obligations ranking senior in right of payment to the rights of the holders of the equity interests in the 2036 Securitization Issuer, the 2036-R Securitization Issuers and the 2037 Securitization Issuers, as residual claimants in respect of distributions, if any, made by the 2036 Securitization Issuer, the 2036-R Securitization Issuers and the 2037 Securitization Issuer. As such, there are circumstances in which the interests of the 2036 Securitization Debtholders, the 2036-R Securitization Debtholders and the 2037 Securitization Debt holders may not be aligned with the interests of holders of the equity interests in the 2036 Securitization Issuer or the 2036-R Securitization Issuers or the 2037 Securitization Issuers as applicable. For example, under the terms of the documents governing the 2036 Securitization, 2036-R Securitization, 2037 Securitization, the 2036 Securitization Debtholders, the 2036-R Securitization Debtholders and the 2037 Securitization Debtholders, as applicable, have the right to receive payments of principal and interest prior to holders of the equity interests.

Previous wording

For as long as the 2036 Asset-Backed Debt or the 2036-R Asset-Backed Debt remain outstanding, the respective 2036 Securitization Debtholders and 2036-R Securitization Debtholders, as applicable, have the right to act in certain circumstances with respect to the applicable securitization loans in ways that may benefit their interests but not the interests of the respective holders of the equity interests in the 2036 Securitization Issuer or the 2036-R Securitization Issuers, as applicable, including by exercising remedies under the documents governing the 2036 Securitization or the 2036-R Securitization.

Current wording

For as long as the 2036 Asset-Backed Debt, the 2036-R Asset-Backed Debt or the 2037 Asset Backed Debt remain outstanding, the respective 2036 Securitization Debtholders, 2036-R Securitization Debtholders and 2037 Securitization Debtholders as applicable, have the right to act in certain circumstances with respect to the applicable securitization loans in ways that may benefit their interests but not the interests of the respective holders of the equity interests in the 2036 Securitization Issuer, the 2036-R Securitization Issuers or 2037 Securitization Issuers as applicable, including by exercising remedies under the documents governing the 2036 Securitization, the 2036-R Securitization or 2037 Securitization.

Previous wording

If an event of default occurs, the 2036 Securitization Debtholders or the 2036-R Securitization Debtholders, as applicable, will be entitled to determine the remedies to be exercised, subject to the terms of the documents governing the 2036 Securitization and the 2036-R Securitization, as applicable. For example, upon the occurrence of an event of default with respect to the 2036 Asset-Backed Debt or the 2036-R Asset-Backed Debt, as applicable, the applicable trustee may and will at the direction of the holders of a majority of the applicable 2036 Asset-Backed Debt or the 2036-R Asset-Backed Debt, as applicable, declare the principal, together with any accrued interest, of the debt to be immediately due and payable. This would have the effect of accelerating the principal on such debt, triggering a repayment obligation on the part of the 2036 Securitization Issuer or the 2036-R Securitization Issuers, as applicable. The 2036 Asset-Backed Debt or the 2036-R Asset-Backed Debt then outstanding will be paid in full before any further payment or distribution on the equity interest is made. There can be no assurance that there will be sufficient funds through collections on the applicable securitization loans or through the proceeds of the sale of the applicable securitization loans in the event of a bankruptcy or insolvency to repay in full the obligations under the 2036 Asset-Backed Debt or the 2036-R Asset-Backed Debt, or to make any distribution to holders of the equity interests in the 2036 Securitization Issuer or the 2036-R Securitization Issuers.

Current wording

If an event of default occurs, the 2036 Securitization Debtholders, the 2036-R Securitization Debtholders or the 2037 Securitization Debtholders as applicable, will be entitled to determine the remedies to be exercised, subject to the terms of the documents governing the 2036 Securitization, the 2036-R Securitization and the 2037 Securitization as applicable. For example, upon the occurrence of an event of default with respect to the 2036 Asset-Backed Debt, the 2036-R Asset-Backed Debt or the 2037 Asset-Backed Debt as applicable, the applicable trustee may and will at the direction of the holders of a majority of the applicable 2036 Asset-Backed Debt, the 2036-R Asset-Backed Debt or 2037 Asset-Backed Debt as applicable, declare the principal, together with any accrued interest, of the debt to be immediately due and payable. This would have the effect of accelerating the principal on such debt, triggering a repayment obligation on the part of the 2036 Securitization Issuer, the 2036-R Securitization Issuers or 2037 Securitization Issuer as applicable. The 2036 Asset-Backed Debt, the 2036-R Asset-Backed Debt or the 2037 Asset-Backed Debt then outstanding will be paid in full before any further payment or distribution on the equity interest is made. There can be no assurance that there will be sufficient funds through collections on the applicable securitization loans or through the proceeds of the sale of the applicable securitization loans in the event of a bankruptcy or insolvency to repay in full the obligations under the 2036 Asset-Backed Debt, the 2036-R Asset-Backed Debt or the 2037 Asset-Backed Debt or to make any distribution to holders of the equity interests in the 2036 Securitization Issuer, the 2036-R Securitization Issuers or the 2037 Securitization Issuer.

Previous wording

Remedies pursued by the 2036 Securitization Debtholders or the 2036-R Securitization Debtholders could be adverse to our interests as the indirect holder of the equity interests in the 2036 Securitization Issuer and the 2036-R Securitization Issuers, as applicable. The 2036 Securitization Debtholders and the 2036-R Securitization Debtholders have no obligation to consider any possible adverse effect on such other interests. Thus, there can be no assurance that any remedies pursued by the 2036 Securitization Debtholders or the 2036-R Securitization Debtholders will be consistent with our best interests, or that we will receive, indirectly through the 2036 Financing Subsidiary or the R-Depositor, any payments or distributions upon an acceleration of the 2036 Asset-Backed Debt or the 2036-R Asset-Backed Debt, as applicable. Any failure of the 2036 Securitization Issuer to make distributions in respect of the equity interests that we indirectly hold, whether as a result of an event of default and the acceleration of payments on the 2036 Asset-Backed Debt or the 2036-R Asset-Backed Debt, as applicable, or otherwise, could have a material adverse effect on our business, financial condition, results of operations and cash flows and may result in our inability to make distributions sufficient to maintain our ability to be subject to tax as a RIC.

Current wording

Remedies pursued by the 2036 Securitization Debtholders, the 2036-R Securitization Debtholders or the 2037 Securitization Debtholders could be adverse to our interests as the indirect holder of the equity interests in the 2036 Securitization Issuer, the 2036-R Securitization Issuers and the 2037 Securitization Issuers, as applicable. The 2036 Securitization Debtholders, the 2036-R Securitization Debtholders and the 2037 Securitization Debtholders have no obligation to consider any possible adverse effect on such other interests. Thus, there can be no assurance that any remedies pursued by the 2036 Securitization Debtholders, the 2036-R Securitization Debtholders or the 2036-R Securitization Debtholders will be consistent with our best interests, or that we will receive, indirectly through the 2036 Financing Subsidiary, the R-Depositor or the 2037 Financing Subsidiary any payments or distributions upon an acceleration of the 2036 Asset-Backed Debt, the 2036-R Asset-Backed Debt or the 2037 Asset-Backed Debt, as applicable. Any failure of the 2036 Securitization Issuer or 2037 Securitization Issuer to make distributions in respect of the equity interests that we indirectly hold, whether as a result of an event of default and the acceleration of payments on the 2036 Asset-Backed Debt, the 2036-R Asset-Backed Debt or the 2037 Asset Backed Debt, as applicable, or otherwise, could have a material adverse effect on our business, financial condition, results of operations and cash flows and may result in our inability to make distributions sufficient to maintain our ability to be subject to tax as a RIC.

Previous wording

We have certain repurchase obligations with respect to the securitization loans transferred in connection with the 2036 Securitization and the 2036-R Securitization.

Current wording

We have certain repurchase obligations with respect to the securitization loans transferred in connection with the 2036 Securitization, the 2036-R Securitization and the 2037 Securitization.

Previous wording

As part of each of the 2036 Securitization and the 2036-R Securitization, we entered into master loan agreements under which we would be required to repurchase any of the securitization loans (or participation interest therein) which were sold to the 2036 Securitization Issuer or the 2036-R Securitization Issuers, as applicable, in breach of certain customary representations and warranties made by us, the 2036 Financing Subsidiary or the R-Depositor with respect to such securitization loans or the legal structure of the 2036 Securitization or the 2036-R Securitization, as applicable. To the extent that there is a breach of such representations and warranties and we fail to satisfy any such repurchase obligation, the applicable securitization trustee may, on behalf of the 2036 Securitization Issuer or the 2036-R Securitization Issuers, as applicable, bring an action against us to enforce these repurchase obligations.

Current wording

As part of each of the 2036 Securitization, the 2036-R Securitization and the 2037 Securitization, we entered into master loan agreements under which we would be required to repurchase any of the securitization loans (or participation interest therein) which were sold to the 2036 Securitization Issuer, the 2036-R Securitization Issuers or the Securitization Issuers, as applicable, in breach of certain customary representations and warranties made by us, the 2036 Financing Subsidiary, the R-Depositor or the 2037-Financing Subsidiary with respect to such securitization loans or the legal structure of the 2036 Securitization, the 2036-R Securitization or the 2037 Securitization, as applicable. To the extent that there is a breach of such representations and warranties and we fail to satisfy any such repurchase obligation, the applicable securitization trustee may, on behalf of the 2036 Securitization Issuer, the 2036-R Securitization Issuers or the 2037 Securitization, as applicable, bring an action against us to enforce these repurchase obligations.

Previous wording

At any time, the federal income tax laws governing RICs or the administrative interpretations of those laws or regulations may be amended. The Biden Administration has enacted significant changes to the existing U.S. tax rules that include, among others, a minimum tax on book income and profits of certain multinational corporations, and there are a number of proposals in the U.S. Congress that would similarly modify the existing U.S. tax rules. The likelihood of any new legislation being enacted is uncertain. Any new laws, regulations or interpretations may take effect retroactively and could adversely affect the taxation of us or our shareholders. Therefore, changes in tax laws, regulations or administrative interpretations or any amendments thereto could diminish the value of an investment in our shares or the value or the resale potential of our investments.

Current wording

At any time, the federal income tax laws governing RICs or the administrative interpretations of those laws or regulations may be amended. The Trump Administration has enacted significant changes to the existing U.S. tax rules that include, among others, a minimum tax on book income and profits of certain multinational corporations, and there are a number of proposals in the U.S. Congress that would similarly modify the existing U.S. tax rules. The likelihood of any new legislation being enacted is uncertain. Any new laws, regulations or interpretations may take effect retroactively and could adversely affect the taxation of us or our shareholders. Therefore, changes in tax laws, regulations or administrative interpretations or any amendments thereto could diminish the value of an investment in our shares or the value or the resale potential of our investments.

Previous wording

Our business relies on secure information technology systems. These systems are subject to potential attacks, including through adverse events that threaten the confidentiality, integrity or availability of our information resources (i.e., cyber incidents). These attacks could involve gaining unauthorized access to our information systems for purposes of misappropriating assets, stealing confidential information, corrupting data or causing operational disruption and result in disrupted operations, misstated or unreliable financial data, liability for stolen assets or information, increased cybersecurity protection and insurance costs, litigation and damage to our business relationships, any of which could have a material adverse effect on our business, financial condition and results of operations. As our reliance on technology has increased, so have the risks posed to our information systems, both internal and those provided by the Investment Adviser and third-party service providers. We, along with our Investment Adviser, have implemented processes, procedures and internal controls to help mitigate cybersecurity risks and cyber intrusions, but these measures, as well as our increased awareness of the nature and extent of the risk of a cyber incident, may be ineffective and do not guarantee that a cyber incident will not occur or that our financial results, operations or confidential information will not be negatively impacted by such an incident. In addition, the costs related to cyber or other security threats or disruptions may not be fully insured or indemnified by other means. Furthermore, cybersecurity continues to be a key priority for regulators around the world, and some jurisdictions have enacted laws requiring companies to notify individuals of data security breaches involving certain types of personal data. If we fail to comply with the relevant laws and regulations, we could suffer financial losses, a disruption of our businesses, liability to investors, regulatory intervention or reputational damage.

Current wording

As our reliance on technology has increased, so have the risks posed to our information systems, both internal and those provided by our Investment Adviser and other third-parties. We, along with our Investment Adviser, have implemented processes, procedures and internal controls to help mitigate cybersecurity risks and cyber-attacks, but these measures, as well as our increased awareness of the nature and extent of the risk of a cyber attack, may be ineffective and do not guarantee that a cyber attack will not occur or that our financial results, operations or confidential information will not be negatively impacted by such an attack. Further, our contracts may not contain limitations of liability, and even where they do, there can be no assurance that limitations of liability in our contracts are sufficient to protect us from liabilities, damages or claims related to our privacy and data security obligations. Further, although we maintain cyber liability insurance, this insurance may not provide adequate coverage against potential liabilities related to any experienced cybersecurity attack or breach.