Horizon Technology Finance Investment Portfolio Positioned to Generate Additional Net Investment Income

Horizon Technology Finance (NASDAQ:HRZN), a leading specialty finance company that provides capital in the form of secured loans to venture capital backed companies in the technology, life science, healthcare information and services, and cleantech industries, have announced the potential positive impact to its investment portfolio of a rising interest rate environment following the Federal Open Market Committee’s (FOMC) increase in the federal funds rate target range by 25 basis points. Horizon expects each 25 basis points increase in the LIBOR rate will contribute approximately $264,000, or $0.02 per share, of net investment income (NII) annually to its operating results, calculated on the basic weighted shares outstanding as of September 30, 2016.
As quoted in the press release:

“For some time, Horizon has been shifting its focus to floating rate loans in anticipation of higher interest rates,” said Robert D. Pomeroy, Jr., Chairman and Chief Executive Officer of Horizon. “As of September 30, 2016, 97% of the outstanding principal amount of our debt investments bore interest at floating rates with coupons that are structured to increase when interest rates rise. As a result, we believe Horizon is well positioned to experience both increasing income and expanding net interest margin in a rising interest rate environment, which the FOMC has signaled to in its comments.”

Based on Horizon’s September 30, 2016 consolidated statement of assets and liabilities (without adjustment for potential changes in the credit market, credit quality, size and composition of assets on the consolidated statement of assets and liabilities or other business developments that could affect net income), the following table shows the annual impact on the change in NII resulting from changes in interest rates, which assumes no changes in the Company’s investments and borrowings:

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