Q2 2025 Oxford Square Capital Corp Earnings Call
Speaker #2: Good morning, ladies and gentlemen. And welcome to the Oxford Square Capital Corp. second quarter 2025 earnings conference call. At this time, all lines are in listen-only mode.
Speaker #2: Following the presentation, we will conduct a question-and-answer session. If at any time during this call you require immediate assistance, please press star zero. Followed by the zero.
Speaker #2: Operator, this call is being recorded on Thursday, August 7, 2025. I will now like to turn the conference over to Jonathan H. Cohen, CEO, please go head.
Speaker #3: Good morning. Welcome to the Oxford Square Capital Corp. second quarter 2025 earnings conference call. I'm joined today by Saul Rosenthal, our president, Vince Guerrera, our controller, and vice president of finance, and Kevin Yonon, our managing director and portfolio manager.
Speaker #3: Vince, could ou open the call with a disclosure regarding forward-looking statements?
Speaker #4: Sure, Jonathan. Today's conference call is being recorded, and audio replay of the conference call will be available for 30 days. Replay information is included in ur press release that was issued this morning.
Speaker #4: Please note that this call is the property of Oxford Square Capital Corp. Any unauthorized rebroadcast of this call, any form, is strictly prohibited. At this point, please direct your ention to the customary disclosure in this morning's press release regarding forward-looking information.
Speaker #4: 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.
Speaker #4: We ask that you refer to our most recent filings with SEC for important factors that could cause actual results to differ materially from those indicated in those projections.
Speaker #4: 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 #4: With that, I will turn the presentation back over to Jonathan.
Speaker #3: Thanks, Vince. For the quarter-ended June, Oxford Square's net investment income was approximately $5.5 million, or 8 cents per share, compared with approximately $6.1 million, or 9 cents per share, in the prior quarter.
Speaker #3: Our net asset value per share stood at $2.06, compared to a net asset value per share of $2.09 for the prior quarter. During the quarter, we distributed 10.5 cents per share to our common stock shareholders.
Speaker #3: For the second quarter, we recorded total investment income of approximately $9.5 million, as compared to approximately $10.2 million, in the prior quarter. In the second quarter, we recorded combined net unrealized and realized losses on investments of approximately $1.1 million, or 1 cent per share, compared to combined net unrealized and realized losses on investments of approximately $14.2 million, or 20 cents per share, for the prior quarter.
Speaker #3: During the second quarter, our investment activity consisted of repayments of approximately $233,000. During the quarter-ended June, we issued a total of approximately $4.9 million shares of our common stock, pursuant to an at-the-market offering, resulting in net proceeds of approximately $11.6 million.
Speaker #3: On June 30th, our board of directors declared monthly distributions of 3.5 cents per share for each of the months ending October/November/December of 2025. Additional details regarding record and payment date information can be found in our press release that was issued this morning.
Speaker #3: On August 1st, we announced that we priced an underwritten public offering of $65 million in aggregate principal amount of $7.25% unsecured notes due 2030, which will be used for investments and for repayment of existing debt.
Speaker #3: With that, I'll turn the call over to our portfolio manager, Kevin Yonon. Kevin?
Speaker #5: Thank you, Jonathan. During the quarter-ended June 30th, US loan market performance strengthened versus the prior quarter. US loan prices, as defined by the three-star LSTA US leveraged loan index, increased from 96.31% a par as of March 31st to 97.07% a par as of June 30th.
Speaker #5: According to LCD, during the quarter, there were pricing dispersions, with double B-rated loan prices increasing 35 basis points; B-rated loan prices increasing 68 basis points; and triple C-rated loan prices increasing 235 basis points on average.
Speaker #5: According to PitchBook LCD, while the 12-month trailing default rate for the loan index increased to 1.11% by principal amount at the end of the quarter, from 0.82% at the end of March, we note that the default rate, including various forms of liability management exercises, which are not captured in this cited default rate, remain at an elevated level of 4.46%.
Speaker #5: Additionally, the distress ratio, defined as the percentage of loans with prices below 80% a par, ended quarter at 3.06%, compared to 3.21% at the end of March.
Speaker #5: During the quarter-ended June 30th, 2025, US leveraged loan primary market issuance excluding amendments in repricing transactions was 76.3 billion, representing a 48% decrease versus the quarter-ended June 30th, 2024.
Speaker #5: This was driven by lower opportunistic activity, including refinancings in the funding of dividends, partly offset by higher non-refinancing issuance, including M&A and LBO activity, versus the prior year comparable quarter.
Speaker #5: At the same time, US loan fund outflows, as measured by LIPA, were approximately 5.94 billion, for the quarter-ended June 30th. We continue to focus on portfolio management strategies designed to maximize our -term total returns, and as a permanent capital vehicle, we historically have been able to take a longer-term view towards our estment strategy, with that, I will turn the call back over to Jonathan.
Speaker #3: Thank you, Kevin, very much. additional information about Oxford Square's second quarter performance has been posted to our website, at www.oxfordsquarecapital.com. And with that, operator, we're happy to the call up for any questions.
Speaker #1: 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 1.
Speaker #1: On your touch, don't 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 2.
Speaker #1: If ou are using a speakerphone, please leave the handset before pressing any keys. One moment, please, for your first question. I am showing no questions at this time.
Speaker #1: I will now turn the call back to Mr. Cohen.
Speaker #3: Thank you very much. We'd like to thank everyone on the call and listening to the replay for their interest in Oxford Square. We look forward to speaking to you in soon.
Speaker #3: Thanks very much.