FS Credit Opportunities Corp.

Thank you all for joining us for FS Credit Opportunity Corps' fourth quarter 2025 earnings conference call. Please note that FS Credit Opportunities Corps may be referred to as FSEO, the fund, or the company throughout the call. Today's conference call is being recorded and an audio replay of the call will be available for 30 days. Replay information is included in a press release that FSTO issued on February 6, 2026. In addition, FSTO has posted on its website a presentation containing supplemental financial information with respect to its portfolio and financial performance for the quarter ended December 31, 2025. A link to today's webcast and the presentation is available on the company's webpage at www.futurestandard.com under Investor Relations. Please note that this call is the property of FSCO. Any unauthorized rebroadcast of this call in any form is strictly prohibited. Today's conference call includes forward-looking statements with regard to future events, performance, or operations of FSCO. These forward-looking statements are subject to the inherent uncertainties in predicting future results and conditions. Certain factors could cause actual results to differ materially from those projected in these forward-looking statements. We ask that you refer to FSEO's most recent filings with the SEC for important factors and risks that could cause actual results or outcome to differ materially from these statements. FSEO does not undertake to update its forward-looking statements unless required to do so by law. Additionally, information related to past performance, while helpful as an evaluative tool, is not necessarily indicative of future results, the achievement of which cannot be assured. Investors should not view the past performance of FSEO or information about the market as indicative of FSEO's future results. Speaking on today's call will be Andrew Beckman, Head of FS Global Credit and Portfolio Manager for FSEO, and Nick Halva, Director of Research for FS Global Credit and Portfolio Manager for FSEO. Following our prepared remarks, we will conduct a Q&A session. I will now turn the call over to Andrew.

Thank you, Josh, and thank you all for joining. We're pleased with the results we delivered for our shareholders during the fourth quarter of 2025 across several key fronts. First, FSEO delivered a net return of 1.69% based on the fund's net asset value, bringing the net total return for 2025 to 10.89%. outperforming senior secured loans by 499 basis points and high yield by 239 basis points. It is worth noting that the portfolio remained highly weighted to first lien senior secured loans throughout the year, representing approximately 83% of the portfolio's fair value as of December 31, 2025. The fund paid distributions of approximately 20 cents per share during the quarter compared to net investment income of 12 cents per share, including NAV depreciation of 8 cents per share. While contributors significantly outweighed detractors during the quarter, the fund's exposure to the second lean term loan of MBS Services Holdings, a North American studio operating and production services company, was the largest detractor during the quarter. The company has experienced weakness in its operations amid the broader slowdown in film and television production. Second, the fund continued to deliver an attractive monthly distribution. As of February 20th, 2026, the annualized distribution yield was approximately 11.4% based on NAV and 14.6% based on market price. Following year end, the fund declared and paid monthly distributions of 6 cents and 78, 6.78 cents per share for January and February. Third, the fund deployed 182 million in the fourth quarter, bringing net investment activity to 541 million in 2025, with both figures excluding portfolio hedges and unfunded commitments. We continue to benefit from our robust deal sourcing engine, which includes our team and firm-wide origination network, our sponsor coverage, our intermediary coverage, and our private sourcing partnership with JPMorgan to finance directly originated investments. Finally, on October 21, 2025, the fund completed the issuance of $200 million of fixed-rate term preferred securities, consisting of $50 million due in 2028 and $150 million due in 2020-30. Proceeds were used to refinance preferred shares maturing in 2025 and early 2026. This represents the fund's sixth and seventh term preferred issuance since its listing in November 2022. We believe our continued access to the capital markets and the favorable pricing reflect both the portfolio's strong credit quality and the market's confidence in our strategy and management team. Given the sharp sell-off in the software sector in recent weeks, we thought it would be helpful to provide context on FSEO's portfolio and our perspective on recent market movements. FSEO's software and services exposure was 8.8% as of December 31, 2025, and was well diversified by position size, with no single investment included in the fund's top 10 holdings at year-end. Our approach remains focused on mature, cash flow-generative businesses with defensive business models. While software appears to have been treated as a single category amid the sell-off, we believe outcomes will diverge meaningfully over time. In our view, the most at-risk segments are companies with limited differentiation and low switching costs such as lightweight workflow tools, collaboration apps, commoditized dashboards, and seat-based productivity overlays. In these segments, it is certainly possible AI-native competitors can replicate function quickly, increasing competitive pressure. Conversely, we believe the most defensible segments include deeply embedded systems of record, security, and control layers, and vertical software with extensive integrations and compliance during switching costs. In these categories, AI is more likely to be layered onto incumbent platforms rather than replace them outright, reinforcing the durability of established providers. I'll now turn the call over to Nick to provide our perspective on the markets and discuss our investment activity during the quarter.

Thanks, Andrew. High yield and leveraged loan markets delivered modest gains in the fourth quarter of 2025. The performance was increasingly defined by sector dispersion and a more cautious investor tone into the year end. High-yield bonds returned 135 basis points in December, bringing full-year gains to 8.5%, with BB-rated credits leading performance and spreads tightening to three-month lows amid a dovish Fed backdrop and resilient corporate earnings. Leveraged loans gained 5.9% for the year. Their performance lagged high-yield, particularly in the software sector, where spreads widened sharply and returns turned negative. Credit fundamentals remain broadly stable, with default volumes subdued and concentrated in the handful of issuers. However, recovery rates declined to multi-year lows, with trailing 12-month recoveries falling to 26.8% for high-yield bonds and 34.8% for loans, well below their 25-year averages, reflecting a rise in liability management exercises and distressed exchanges. Market technicals were supported by strong demand from CLOs, which helped offset outflows from traditional mutual funds and ETFs. Private credit market activity remained strong heading into year-end. While the following figures reflect sponsor-backed transactions only, they underscore broader momentum across private credit. U.S.-sponsored lending rose 21% quarter over quarter to $105 billion, driven by a strong rebound in buyouts, add-on M&A, and dividend recapitalizations as improving rate visibility and stronger public markets unlocked pent-up sponsor demand. Pricing continued to compress, though relative value across segments remained intact. Large cap spreads tightened to SOFR plus 493 basis points, while core and lower middle market spreads ended the quarter at SOFR plus 503 and 513 basis points, respectively. Covenant discipline remains a key point of differentiation across the market. Covenant Lite structures continue to migrate higher in 2025, but remain concentrated amongst large issuers. In the fourth quarter, Covenant Lite terms were still rare for borrowers below $50 million of EBITDA, while issuers above that threshold, particularly those with 100 million plus EBITDA, accounted for the majority of Covenant Lite issuance. Larger borrowers continue to benefit from heightened competition between private and public markets, whereas we see more robust covenant packages in the lower middle market. Turning to our investment activity during the quarter, we continue to favor private credit, where we see more compelling relative value than in public markets. Approximately 90% of new investment activity was in privately originated investments, 97% of which were in first lien senior secured loans. Originations were strong in the fourth quarter, supported by our robust sourcing network. This includes direct sponsor coverage, non-bank intermediaries, incumbent borrowers, bespoke non-sponsored deal flow, and our sourcing partnership with J.P. Morgan. We made five new private credit investments in the fourth quarter, weighted to lower and core middle market companies, which we believe represents a competitive sweet spot. These businesses are of meaningful scale and domestically focused, yet often overlooked by larger credit managers due to their size and balance sheet profile. Because these companies often fall outside of the standard criteria of traditional bank lenders, we can generally negotiate favorable terms and structure investments that mitigate downside risk. All new originations during the quarter were in sponsor-backed businesses. Within sponsored lending, we do not compete against the large direct lending funds and instead lend to small or emerging sponsors where there's typically less competition and greater potential to capture a yield premium. In 2025, approximately 68% and 32% of our private credit originations were in sponsor and non-sponsor deals, respectively. Non-sponsored lending opportunities comprise a wide range of borrowers that in many cases have never accepted outside capital. This includes multi-generational family-owned businesses, sole proprietors, or other tightly held businesses. We favor these types of investments because there's often a strong ability to control deal terms and create highly structured investments to protect our downside. In 2025, We originated 19 new private credit investments at a weighted average spread of SOFR plus 661 basis points. Approximately 95% of these investments included one or more maintenance covenants. By contrast, approximately 90% of the broadly syndicated loan issuance in 2025 was covenant-like, meeting loans that typically lack maintenance covenants. When considering the excess spread we earn over those markets, plus the covenants and other negotiated protections we've discussed, we believe the fund is well-positioned to deliver strong risk-adjusted returns for clients. Sales, exits, and repayments totaled $253 million during the fourth quarter, compared with purchases of $182 million. We've actively deployed excess liquidity from these sales and repayments into an attractive investment pipeline of private credit deals in the first quarter of 2026. As of December 31st, private credit investments represented approximately 75% of the portfolio based on fair market value. Approximately 90% of the portfolio consisted of senior secured debt. First lien loans represented 83% of the portfolio, second lien loans represented 4%, while senior secured bonds represented 3%. Unsecured debt and asset-based finance investments each represented 2% of the portfolio, while equity and other investments represented 6%. All metrics are quoted on a fair value basis. Turning to the liability side of our balance sheet, we believe our cost structure gives us a competitive edge with approximately 58% of drawn leverage as of December 31st, 2025, comprised of preferred shares which provide favorable regulatory treatment versus traditional term and revolving debt facilities and flexibility in the types of assets we can borrow against. I'll now turn it back to Andrew to discuss our forward outlook.