Oaktree Specialty Lending Corporation

Welcome, and thank you for joining Oaktree Specialty Lending's Corporation Third Fiscal Quarter 2022 Conference Call. Today's conference call is being recorded. At this time, all participants are in a listen-only mode, but will be prompted for a question and answer session following the prepared remarks. Now, I would like to introduce Michael Masticcio, Head of Investor Relations, who will host today's conference call. Mr. Mostichio, you may begin.

Thank you, Operator, and welcome to Oak Tree Specialty Lending Corporation's third fiscal quarter conference call. Our earnings release, which we issued this morning, and the accompanying slide presentation can be accessed on the Investors section of our website at oaktreespecialtylending.com. Our speakers today are Armand Knosian, Chief Executive Officer and Chief Investment Officer, Matt Pendo, President, and Chris McCown, Chief Financial Officer and Treasurer. Also joining us on the call today for the question and answer session is Matt Stewart, our Chief Operating Officer. Before we begin, I want to remind you that comments on today's call include forward-looking statements reflecting our current views with respect to, among other things, our future operating results and financial performance. Our actual results could differ materially from those implied or expressed in the forward-looking statements. Please refer to our SEC filings for discussion of these factors in further detail. We undertake no duty to update or revise any forward-looking statements. I'd also like to remind you that nothing on this call constitutes an offer to sell or solicitation of an offer to purchase any interest in any Oak Tree fund. Investors and others should note that Oak Tree Specialty Lending uses the investor section of its corporate website to announce material information. The company encourages investors, the media, and others to review the information that it shares on its website. With that, I would now like to turn the call over to Matt.

Thank you, Mike, and welcome, everyone. We appreciate your interest in and support of OCSL. Our fiscal third quarter results reflect our ability to identify and invest in attractive opportunities across public and private markets amid the recent volatility, maintain excellent credit quality, and drive strong earnings on behalf of our shareholders. Adjusted net investment income per share was 17 cents for the quarter, down slightly from the 18 cents for the prior quarter, and on par with our fiscal first quarter, demonstrating the strength of our earnings profile. As a result of our ongoing solid portfolio performance and consistent earnings, our board increased our quarterly dividend by 3% to 17 cents per share. This marked our ninth consecutive quarterly dividend increase. Our dividend is now up nearly 80% from its pre-COVID level. We've reported NAV per share of $6.89 down 5% from the prior quarter. However, the decrease was driven by broader equity and fixed-income market volatility leading to widening credit spreads and associated market-to-market write-down. Now, turning to the portfolio, we originated 132 million of new investment commitments in the second quarter. Of these, 76% were first lien loans, up from 72% in the prior quarter, and approximately half of these were in private transactions and the other half were secondary market purchases. The weighted average yield on new debt investments in the quarter was attractive at 9.2% up from 8.7% in the prior quarter. While we are highly selective and focused on new deals with favorable prices and structures, we expect to continue identifying interesting investment opportunities across private and public markets given the breadth of the Oaktree platform and our teams focus on finding the best relative value in all market conditions. We received $130 million from prepayments, paydown, and exits in the third quarter. Our non-core portfolio further declined in the quarter following a $7 million paydown in one of our debt positions. This book represented $77 million at the close of the quarter, or about 3% of the portfolio at fair value. Credit quality remains excellent, supported by our disciplined underwriting. We again had no investments and non-accrual at June 30th. Importantly, we continue to be rated investor-grade by both Moody's and Fitch, and we maintain borrowing flexibility and ample liquidity to meet funding needs. We closed the period with $455 million of undrawn capacity under our credit facilities and $34 million of cash. With no near-term maturities and significant amount of dry powder, we believe our current capital structure positions us well to invest in today's ever-changing market. The weighted average interest rate on debt outstanding was 3.2% in the June quarter, up from 2.5% the prior quarter. With that, I'll turn the call over to Armin.