Kohlberg Capital (NASDAQ:KCAP) is a business development company and an internally managed investment company with a portfolio of approximately $200 million. KCAP primarily invests in senior secured term loans, mezzanine debt and equity securities primarily in privately-held middle market companies. Based in New York City, KCAP provides investment services to clients primarily throughout the United States. Kohlberg Capital has benefited from low interest rates as a result of the economic downturn, as its fixed income securities have benefited and the company has acquired low interest financing. In March 2011, KCAP issued $60 million of five-year, unsecured convertible notes, and the company plans to deploy capital from the new debt as well as existing portfolio repayments into new investments in 2011. 
Kohlberg Capital has seen business growth as well as sustainable, recurring revenues based on several factors in its business model. Firstly, the company's revenues are not dependent on capital gains. Moreover, the company benefits from stable interest income from secured loan and CLO portfolios and the company absorbs a recurring asset management fee.
Kohlberg Capital holds a significant portion of its portfolio in fixed income investments, including Mezzanine securities and high-yield bonds. The current low interest rates as a result of the economic downturn are beneficial for the returns these fixed income investments in KCAP's portfolio, which lose value as interest rates increase. In addition, low interest rates make investment in KCAP's common stock attractive since the company offers a competitive dividend rate.
Lower interest rates prompted Kohlberg Capital to issue more debt in the form of convertible notes in March 2011 at 8.75%. Operating margin has gone up for KCAP as interest expense has gone down significantly, decreasing the overall expenses. At the same time, excess cash sitting on the company's balance sheet, approximately a quarter of total assets, are earning less interest income. 
Kohlberg Capital competes with business development companies who offer asset management services.