Prospect Capital Announces 17% Realized Cash on Cash IRR Monetization of Diamondback Operating, LP

NEW YORK, NY--(Marketwire - January 26, 2009) - Prospect Capital Corporation (NASDAQ: PSEC) ("Prospect") announced today that Diamondback Operating, LP ("Diamondback") has repaid Prospect's $9.2 million loan in full from the sale of 65% of Diamondbank's Rock Springs oil and gas property interests. Prospect has realized an approximately 17% cash on cash internal rate of return ("IRR") on the Diamondback investment. Prospect continues to hold the right to receive 15% of any future Diamondback equity distributions.

"We are delighted to have worked with Mark and Pat Patrick to build value at Diamondback," said Mark Hull, a Vice President at Prospect Capital Management. "We look forward to providing capital to other entrepreneurs like the Patricks of Diamondback in the future."

ABOUT PROSPECT CAPITAL CORPORATION

Prospect Capital Corporation (www.prospectstreet.com) is a closed-end investment company that lends to and invests in private and microcap public businesses. Our investment objective is to generate both current income and capital appreciation through debt and equity investments.

We have elected to be treated as a business development company under the Investment Company Act of 1940 ("1940 Act"). We are required to comply with a series of regulatory requirements under the 1940 Act as well as applicable NASDAQ, federal and state laws and regulations. We have elected to be treated as a regulated investment company under the Internal Revenue Code of 1986. Failure to comply with any of the laws and regulations that apply to Prospect could have a material adverse effect on us and our shareholders.

This press release contains forward-looking statements within the meaning of the Private Securities Litigation Reform Act of 1995. Any such statements, other than statements of historical fact, are likely to be affected by other unknowable future events and conditions, including elements of the future that are or are not under the Company's control, and that the Company may or may not have considered; accordingly, such statements cannot be guarantees or assurances of any aspect of future performance. Actual developments and results are highly likely to vary materially from these estimates and projections of the future. Such statements speak only as of the time when made, and we undertake no obligation to update any such statement now or in the future.

Contact Information: For further information, contact: Grier Eliasek President and Chief Operating Officer (212) 448-9577