Oxford Lane Capital Corp.

Good morning, everyone. Welcome to the Oxford Lane Capital Corp fourth fiscal quarter 2023 earnings conference call. I'm joined today by Saul Rosenthal, our president, Bruce Rubin, our chief financial officer, and Joe Kupka, our managing director. Bruce, could you please open our call with a disclosure regarding forward-looking statements? Sure, Jonathan. Today's conference call is being recorded. A replay of the call will be available for 30 days Repay information is included in our press release, as was issued earlier this morning. Please note that this call is the property of Oxford Lane Capital Corp. Any unauthorized rebroadcast of this call in any form is strictly prohibited. At this point, please direct your attention to the customary disclosure of this morning's press release regarding forward-looking information. Today's conference call includes forward-looking statements and projections that reflect the company's current views with respect to, among other things, future events and financial performance. We ask that you refer to our most recent filings with the SEC for important factors that can cause actual results to differ materially from those indicated in these projections. We do not undertake to update our public statements unless required to do so by law. During this call, we will use terms defined in the earnings release and also refer to non-GAAP measures. For definitions and reconciliations to GAAP, please refer to our earnings release posted on our website. at www.OxfordLaneCapital.com. With that, I'll turn the presentation back to Jonathan. Thanks very much, Bruce. On March 31st, 2023, our net asset value per share stood at $4.61 compared to a net asset value per share of $4.63 as of December 31st, 2022. For the quarter ended March, we recorded GAAP total investment income of approximately $66.5 million, representing a decrease of approximately $1.2 million from the prior quarter. The quarter's GAAP total investment income from our portfolio consisted of approximately $62.8 million from our CLO equity and CLO warehouse investments, and approximately $3.6 million from our CLO debt investments and from other incomes. Oxford Lane recorded GAAP net investment income of approximately $37.4 million, or 22 cents per share, for the quarter ended March, compared to approximately $41.4 million, or 26 cents per share, for the quarter ended December. Our core net investment income was approximately $37.5 million, or 22 cents per share, for the quarter ended March, compared with approximately $50.1 million, or 31 cents per share, for the quarter ended December 31st. For the March quarter, we reported net realized losses of approximately $4.9 million and net unrealized depreciation on investments of approximately $3.5 million, or 5 cents per share in total. We had a net increase in net assets resulting from operations of approximately $29 million, or 17 cents per share for the fourth fiscal quarter. As of March 31st, the following metrics applied. We note that none of these metrics represented a total return to shareholders. The weighted average yield of our CLO debt investments at current cost was 18%, up from 16.6% as of December 31st. The weighted average effective yield of our CLO equity investments at current cost was 15.8%, up from 15.7% as of December 31st. The weighted average cash distribution yield of our CLO equity investments at current cost was 16.5%, down from 18.6% as of December. We note that the cash distribution yields calculated on our CLO equity investments are based on the cash distributions we received or which we were entitled to receive at each respective period end. During the quarter ended March, we issued a total of approximately 3.9 million shares of our common stock pursuant to an at-the-market offering, resulting in net proceeds of approximately $22.6 million. During the quarter ended March, we made additional CLO investments of approximately $117.4 million, and we received approximately $24.8 million from sales and from repayments. On May 10th, our Board of Directors declared monthly common stock distributions of $0.08 per share for each of the months ending July, August, and September of 2023. And with that, I'll turn the call over to Joe Kupka.

Thank you, Jonathan. During the quarter ended March 31st, 2023, U.S. loan market performance improved versus the prior quarter. U.S. loan prices, as defined by the Morningstar LFPA U.S. Leverage Loan Index, increased from 92.44% of par as of December 31st to 94.71% of par as of February 9th, before dropping to 93.38% of par as of March 31st. According to LCD, during the quarter, there was some pricing dispersion related to credit quality, with double B rate of loan prices increasing 17 basis points, single B rate of loan prices increasing 165 basis points, and CCC-rated loan prices increasing 270 basis points on average. The 12-month trailing default rate for the loan index increased to 1.35% by principal amount at the end of the quarter from 0.72% at the end of December 2022. Additionally, the distress ratio, defined as the percentage of loans with a price below 80% of par, ended the quarter at 6.3% compared to approximately 7.4% at the end of December 2022. The increase in U.S. loan prices led to an approximate 10% increase in median U.S. CLO equity net asset values. Median junior over-collateralization cushions declined 0.2% to approximately 4.5%. Additionally, we observed loan pools within CLO portfolios modestly increased their weighted average spreads to 357 basis points compared to 354 basis points last quarter. Oxfam Lean continued to be active in the secondary market during the quarter. While most of our activity took place in the secondary market, we added two new issue CLO equity investments and one new issue CLO debt investment during the quarter. Our investment strategy during the quarter was to engage in relative value trading and to lengthen the weighted average reinvestment period of Oxford Lane's CLO equity portfolio. In the current market environment, we intend to continue to utilize an opportunistic and unconstrained CLO investment strategy across U.S. CLO equity, debt, and warehouses. as we look to maximize our long-term total return. And as a permanent capital vehicle, we have historically been able to take a longer-term view towards our investment strategy. With that, I'll turn the call back over to Jonathan.

Thanks, Joe. We note that additional information about Oxford Lane's fourth quarter performance has been uploaded to our website at www.OxfordLaneCapital.com. And with that, we're happy, operator, to open the call for any questions.