Q1 2025 Oxford Square Capital Corp Earnings Call

Operator: Good morning, ladies and gentlemen, and welcome to the Oxford Square Capital Corp first quarter 2025 earnings conference call. At this time, all lines are in listen-only mode.

Good morning, ladies and gentlemen, and welcome to the Oxford Square Capital Corp, first quarter 2025 earnings Conference call.

At this time all lines are in listen only mode.

Operator: Following the presentation, we will conduct a question and answer session. If, at any time during this call, you require an immediate assistance, please press star zero for the operator.

Following the presentation, we will conduct a question and answer session.

Speaker Change: Yes at any time during this call you require an immediate assistance.

Please press star zero for the operator.

Operator: This call is being recorded on Friday, April 25, 2021.

Speaker Change: This call is being recorded on Friday April 27 2025.

Jonathan Cohen: I would now like to turn the conference over to Mr. Jonathan Cohen. Please go ahead. Good morning.

Speaker Change: I would now like to trying to conference over to Mr. Jonathan Cohen. Please go ahead.

Jonathan Cohen: Welcome to the Oxford Square Capital Corp first quarter 2025 earnings conference call. I'm joined today by Bruce Rubin, our Chief Financial Officer, and Kevin Yonon, Managing Director and Portfolio Manager.

Speaker Change: Good morning, welcome to the Oxford Square Capital Corp, first quarter 2025 earnings Conference call I'm joined today by Bruce Rubin, Our Chief Financial Officer, and Kevin yard and managing director and portfolio manager Bruce could you open the call with the disclosure regarding forward looking statements sure. Jonathan Today's conference call is being recorded and audio replay of the conference call will be available for 30.

Bruce Rubin: Bruce, could you open the call with the disclosure regarding forward-looking statements? Sure, Jonathan. Today's conference call has been recorded. An audio replay of the conference call will be available for 30 days. Replay information is included in our press release issued this morning.

Speaker Change: Replay information is included in our press releases issued this morning. Please note that this call is the property of Oxford Square Capital Corp. Any unauthorized rebroadcast of this call in a 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 include.

Operator: Please note that this call is the of Oxford Square Capital Corp. Any unauthorized rebroadcast of this call in any form is strictly prohibited.

Bruce Rubin: 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 the most recent filings with the SEC for important factors that could cause actual results to differ materially from those indicated in these 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.

Speaker Change: Forward looking statements and projections that reflect the company's current views with respect to among other things future events and financial performance.

Speaker Change: So you can refer to our most recent filings with the SEC Four important factors that could cause actual results to differ materially from those indicated in these 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 Dot, Oxford square capital.

Jonathan Cohen: With that, I'll turn the presentation back to Jonathan. Thanks, Bruce. For the quarter ended March 31st, Oxford Square's net investment income was approximately $6.1 million, or $0.09 per share, compared with approximately $6 million, or $0.09 per share for the prior quarter.

Jonathan Cohen: Dot com with that I'll turn the presentation back to Jonathan Thanks, Chris for the quarter ended March 31, Oxford Square as net investment income was approximately $6 $1 million or <unk> <unk> per share compared with approximately $6 million nine or nine cents per share for the prior quarter.

Jonathan Cohen: Our net asset value per share stood at $2.09 compared to a net asset value per share of $2.30 for the prior quarter. During the quarter, we distributed $0.105 per share to our common stock shareholders. For the first quarter, we recorded total investment income of approximately $10.2 million, which was approximately the same as in the prior quarter.

Jonathan Cohen: Net asset value per share stood at $2 nine compared to a net asset value per share of $2 30 for the prior quarter.

Jonathan Cohen: During the quarter, we distributed 10 five per share to our common stock shareholders for.

Jonathan Cohen: For the first quarter, we reported total investment income of approximately $10 $2 million, which was approximately the same as in the prior quarter.

Jonathan Cohen: During the first quarter, we recorded combined net unrealized and realized losses on investments of approximately $14.2 million, or $0.20 per share, compared to combined net unrealized and realized losses on investments of approximately $2.7 million, or $0.04 per share, for the prior quarter. During the first quarter, our investment activity consisted of purchases of approximately $16 million, sales of approximately $10.7 million, and repayments of approximately $8.7 million.

Jonathan Cohen: During the first quarter, we recorded combined net unrealized and realized losses on investments of approximately $14 $2 million or <unk> 20 per share compared to combined net unrealized and realized losses on investments of approximately $2 7 million or <unk> <unk> per share for the prior quarter.

Jonathan Cohen: During the first quarter, our investment activity consisted of purchases of approximately $16 million sales of approximately $10 7 million and repayments of approximately $8 7 million.

Jonathan Cohen: During the quarter ended March, 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 $3.5 million.

Jonathan Cohen: During the quarter ended March we issued a total of approximately one 3 million shares of our common stock pursuant to an aftermarket offering resulting in net proceeds of approximately $3.5 million on.

Jonathan Cohen: On April 22, 2025, our Board of Directors declared monthly distributions of 3.5 cents per share for each of the months ending July, August, and September of 2025. Additional details regarding record and payment data information can be found in our press release that was issued this morning.

Jonathan Cohen: On April 20, <unk> 2025, our board of directors declared monthly distributions of $3.05 per share for each of the months ending July August and September of 2025.

Jonathan Cohen: Additional details regarding record payment date information can be found in our press release that was issued this morning.

Kevin Yonon: That will turn the call over to our portfolio manager, Kevin Yonon. Kevin? Thank you, Jonathan.

Kevin Yard: Now I will turn the call over to our portfolio manager Kevin unit.

Kevin Yard: Thank you Jonathan.

Kevin Yonon: During the quarter ended March 31st, U.S. loan market performance weakened versus the prior quarter. U.S. loan prices, as defined by the Morningstar LSTA U.S. Leverage Loan Index, decreased from 97.33% of par as of December 31st to 96.31% of par as of March 31st. with double B-rated loan prices decreasing 82 basis. B-rated loan prices decreasing 134 basis points and CCC-rated loan prices decreasing 211 basis points on average.

Speaker Change: During the quarter ended March 31 U S. One in market performance weakened versus the prior quarter.

Speaker Change: U S loan prices as defined by the Morningstar LST of U S. Leveraged loan index decreased from 90, 733% of par as of December 31 to 90, 631% of par as of March 31.

According to LCD during the quarter there were some pricing dispersion with double B rated loan prices decreasing 82 basis points B rated loan prices decreasing 134 basis points and Triple C rated loan prices decreasing 211 basis points on average.

Kevin Yonon: While the 12-month trailing default rate for the loan index decreased to 0.82% by principal amount at the end of the quarter from 0.91% at the end of December, we note that the default rate, including various forms of liability management exercises which are not captured in this cited default rate, remained at an elevated level of 4.31%. Additionally, the distress ratio, defined as the percentage of loans with prices below 80% of par, ended the quarter at 3.21%, compared to 3.02% at the end of 2020.

Speaker Change: While the 12 month trailing default rate for the loan index decreased to <unk>, 82% by principal amount at the end of the quarter from <unk>, 91% at the end of December we note that the default rate, including various forms of liability management exercises, which are not captured in the sighted default rate remained at an elevated level of 431%. Additionally.

Speaker Change: Additionally, the distressed ratio defined as a percentage of loans with prices below 80% of par ended the quarter at three 1% compared to three 2% at the end of 2024.

Kevin Yonon: During the quarter ended March 31st, 2025, U.S. leveraged loan primary market issuance, excluding amendments and repricing transactions, was $141.1 billion, representing a 2% decrease versus the quarter ended March 31st, 2025. This was driven by lower opportunistic activity, including refinancings and the funding of dividends, partly offset by higher non-refinancing rates. including M&A and LDO activity versus the prior year comparable. At the same time, U.S.

Speaker Change: During the quarter ended March 31, 2025 U S leveraged loan primary market issuance, excluding amendments and repricing transactions was $141 1 billion.

Speaker Change: Representing a 2% decrease versus the quarter ended March 31 2024. This.

Speaker Change: This was driven by lower opportunistic activity, including refinancings, and the funding of dividends, partly offset by higher non refinancing issuance, including M&A and LBO activity versus the prior year comparable quarter at.

Speaker Change: At the same time U S loan fund inflows as measured by liver were approximately $1 $94 billion for the quarter ended March 31.

Kevin Yonon: loan fund inflows, as measured by LIBOR, were approximately $1.94 billion for the quarter ended March 31. We continue to focus on portfolio management strategies designed to maximize our long-term total return. And as a permanent capital vehicle, we historically have been able to take a longer-term view towards our investment strategy.

Jonathan Cohen: We continue to focus on portfolio management strategies designed to maximize our long term total return and 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.

Kevin Yonon: With that, I will turn the call back over to Kevin. Thanks very much, Kevin. We note that additional information about Oxford Square's first quarter performance has been posted to our website at OxfordSquareCapital.com.

Jonathan Cohen: Thanks, very much Kevin we note that additional information about Oxford square as first quarter performance has been posted to our website at Oxford square capital Dot Com and with that operator, we can open the call for any questions.

Operator: And with that, operator, we can open the calls for any questions. Thank you, ladies and gentlemen. We will now begin the question and answer session. Should you have a question, please press the star followed by the number 1. on your touchtone phone. You will hear a prompt that your hand has been raised. Should you wish to decline from the polling process, please press the star followed by the number 2. If you are using a speakerphone, please lift the handset before pressing any key.

Jonathan Cohen: Okay.

Jonathan Cohen: Okay.

Speaker Change: Thank you ladies and gentlemen, we will now begin the question and answer session.

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Operator: One moment, please, for our first question.

Speaker Change: One moment please for alloy first question.

Speaker Change: Okay.

Speaker Change: Okay.

Operator: There are no further questions or there are no questions at this time.

Speaker Change: There are no further questions sorry, there are no questions. At this time I would now like to turn the call back over to Mr. Jonathan Cohen for his closing remarks.

Jonathan Cohen: I would now like to turn the call back over to Mr. Jonathan Cohen for his closing remarks. Thank you, operator. Thanks very much to everybody who listened and participated in this call. We look forward to speaking with you again soon. Thanks very much.

Jonathan Cohen: Thank you operator, thanks, very much to everybody, who listened and participated in this call. We look forward to speaking with you again soon thanks very much.

Operator: Ladies and gentlemen, this concludes today's conference call. Thank you for your participation. You may now disconnect.

Speaker Change: Ladies and gentlemen this.

Speaker Change: Concludes today's conference call. Thank you for your participation you may now disconnect.

Speaker Change: [music].

Speaker Change: Yes.

Speaker Change: [music].