3/15/2024

speaker
Brica
Moderator

Good morning all. I would like to welcome you all to the Oxford Square Capital Corp fourth quarter 2023 earnings call. My name is Brica and I will be your moderator for today's call. All lines are on mute for the presentation portion of the call with an opportunity for questions and answers at the end. If you would like to ask a question, please press star followed by one on your telephone keypad. If you change your mind and would like to remove that request to speak, please press star followed by two. I would now like to pass the conference over to your host, Chief Executive Officer of Oxford Square Capital Corp., Jonathan Cohen, to begin. So, Jonathan, please go ahead.

speaker
Jonathan Cohen
Chief Executive Officer

Good morning, everyone. Welcome to the Oxford Square Capital Corp. Fourth Quarter 2023 Earnings Conference Call. I'm joined today by Bruce Rubin, our Chief Financial Officer, Kevin Yonan, our Managing Director and Portfolio Manager, and Jeff Fianza, our Senior Accounting Manager. Jeff, could you open the call with a disclosure regarding forward-looking statements?

speaker
Jeff Fianza
Senior Accounting Manager

Thank you, Jonathan. Today's conference call is being recorded. An audio replay of the conference call will be available for 30 days. Replay information is included in our press release that was issued this morning. Please note that this call is the property of Oxford Square 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 in 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 could cause actual results to differ materially from those indicated in those projections. We do not undertake to update our forward-looking statements unless required to do so by law. To obtain copies of our latest SEC filings, please visit our website at www.OxfordSquareCapital.com. With that, I will turn the presentation back over to Jonathan.

speaker
Jonathan Cohen
Chief Executive Officer

Thank you, Jeff. For the quarter ended December, Oxford Square's net investment income was approximately $7.8 million, or 13 cents per share, compared with $6.4 million, or 11 cents per share, for the prior quarter. Our net asset value per share stood at $2.55 compared to a net asset value per share of $2.78 for the prior quarter. During the quarter, we distributed $0.105 per share. For the fourth quarter, we recorded total investment income of approximately $12.3 million as compared to approximately $13 million in the prior quarter. In the fourth quarter, we recorded net unrealized depreciation on investments of approximately $14.8 million or $0.25 per share compared to net unrealized appreciation on investments of approximately $13.9 million or $0.24 per share in the prior quarter. In the fourth quarter, we recorded realized losses of approximately $270,000. For the prior quarter, we recorded realized losses on investments of approximately $13.6 million or or 24 cents per share. During the fourth quarter, our investment activity consisted of sales of approximately $3.7 million, repayments, and repayments of approximately $800,000. We made purchases of approximately $3.5 million during the quarter ended December for that period. During the quarter, we issued a total of approximately 1.3 million shares of our common stock pursuant to an at-the-market offering. resulting in net proceeds of approximately $3.7 million. On March 14, 2024, our Board of Directors declared monthly distributions of 3.5 cents per share for each of the months ending April, May, and June of 2024. We note that additional details regarding record of payment date information can be found in our press release that was issued this morning. With that, I'll turn the call over to our portfolio manager, Kevin Yonan. Kevin?

speaker
Kevin Yonan
Managing Director & Portfolio Manager

Thank you, Jonathan. During the quarter into December 31st, 2023, U.S. loan market performance improved versus the prior quarter. U.S. loan prices, as defined by the Morningstar LSTA U.S. Leverage Loan Index, increased from 95.55% of par as of September 29th to 96.21% of par as of December 29th. According to LCD, During the quarter, there was some pricing dispersion, with BB-rated loan prices increasing 56 basis points, or 0.57%, B-rated loan prices increasing 98 basis points, or 1.01%, and CCC-rated loan prices decreasing 56 basis points, or 0.7% on average. The 12-month trailing default rate for the Morningstar LSTA U.S. Leverage Loan Index increased to 1.53% by principal amount at the end of the quarter, from 1.2% at the end of September 2023. Additionally, the distress ratio, defined as the percentage of loans with a price below 80% of par, ended the quarter at 4.54%, compared to 4.36% at the end of September 2023. During the quarter ended December 31st, 2023, U.S. leveraged loan primary market issuance was $55.3 billion, representing a 68% increase versus the quarter ended December 31st, 2022. This was driven by refinancing activity, while both M&A and LBO activity remained relatively slow. At the same time, U.S. loan fund outflows, as measured by LIPR, were approximately $500 million for the quarter ended December 31, 2023, while outflows were approximately $14.3 billion for the year ended December 31, 2023. We continue to focus on portfolio management strategies designed to maximize our long-term total return. As a permanent capital vehicle, we historically have been able to take a longer-term view towards our investment strategy. With that, I will turn the call back over to Jonathan.

speaker
Jonathan Cohen
Chief Executive Officer

Thanks very much, Kevin. Additional information about Oxford Square's fourth quarter performance has been posted to our website at www.oxfordsquarecapital.com. With that, operator, we're happy to open the call up for any questions.

speaker
Brica
Moderator

Thank you. We will now begin the Q&A session. If you would like to ask a question during this time, please press star followed by one on your telephone keypads. If you change your mind at any time, please press star, then two. And as a reminder, it is star followed by one to ask any questions. And we'll pause for a moment whilst we see if questions are registered. We have a question on the line from Roy Josephson. Your line is now open.

speaker
Roy Josephson
Analyst

What can you tell us about the new non-accrual status investment?

speaker
Jonathan Cohen
Chief Executive Officer

Certainly. Thank you very much for your question. The non-accrual is related to an investment in a private company. where we're not unfortunately allowed to disclose any further details beyond what's in the press release.

speaker
Roy Josephson
Analyst

Thank you.

speaker
Jonathan Cohen
Chief Executive Officer

Thank you very much.

speaker
Brica
Moderator

As a reminder, to ask any questions, please press star followed by one on your telephone keypads now. I would like to hand it back to Jonathan Cohen for any final remarks.

speaker
Jonathan Cohen
Chief Executive Officer

Thank you very much. We'd like to thank everyone for their interest and for their participation on this call. We look forward to speaking to you again very soon. Thanks very much.

speaker
Brica
Moderator

Thank you all for joining today's conference call with Oxford Square Capital Corp. Please enjoy the rest of your day, and you may now disconnect your lines.

Disclaimer

This conference call transcript was computer generated and almost certianly contains errors. This transcript is provided for information purposes only.EarningsCall, LLC makes no representation about the accuracy of the aforementioned transcript, and you are cautioned not to place undue reliance on the information provided by the transcript.

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