Release Date: August 13, 2024
For the complete transcript of the earnings call, please refer to the full earnings call transcript.
Positive Points
- Oxford Square Capital Corp (OXSQ, Financial) reported an increase in net investment income to $7.7 million or $0.13 per share, up from $6.5 million or $0.11 per share in the previous quarter.
- The company's net asset value per share slightly increased to $2.43 from $2.42 in the prior quarter.
- Total investment income rose to approximately $11.4 million compared to $10.7 million in the previous quarter.
- Oxford Square Capital Corp (OXSQ) successfully issued approximately 2.9 million shares through an at-the-market offering, generating net proceeds of approximately $8.9 million.
- The Board of Directors declared monthly distributions of $0.035 per share for the months of November, October, and December 2024.
Negative Points
- Oxford Square Capital Corp (OXSQ) recorded net unrealized and realized losses on investments of approximately $2.5 million or $0.04 per share.
- The US loan market performance weakened modestly during the quarter, with loan prices slightly decreasing.
- The distress ratio, indicating loans with prices below 80% of par, increased to 4.42% from 3.51% at the end of March 2024.
- The 12-month trailing market default rate increased to 4.31% when including out-of-court liability management transactions.
- Despite increased primary market issuance, M&A and LBO activity remained relatively limited, indicating potential challenges in market opportunities.
Q & A Highlights
Q: Can you provide an overview of Oxford Square's financial performance for the second quarter of 2024?
A: Jonathan Cohen, CEO, reported that Oxford Square's net investment income for the quarter was approximately $7.7 million or $0.13 per share, up from $6.5 million or $0.11 per share in the previous quarter. The net asset value per share was $2.43, slightly higher than the $2.42 in the prior quarter. Total investment income was approximately $11.4 million, compared to $10.7 million in the previous quarter.
Q: What were the key investment activities during the quarter?
A: Jonathan Cohen, CEO, stated that the company made purchases of approximately $28.8 million, sales of about $3.4 million, and repayments of approximately $15.8 million. Additionally, Oxford Square issued around 2.9 million shares of common stock through an at-the-market offering, resulting in net proceeds of approximately $8.9 million.
Q: How did the US loan market perform during the quarter?
A: Kevin Yonon, Managing Director and Portfolio Manager, noted that US loan market performance modestly weakened. The Morningstar LSTA US Leveraged Loan Index showed a decrease in loan prices from 96.69% of par to 96.54% of par. There was pricing dispersion with BB-rated loan prices decreasing 19 basis points, B-rated loan prices decreasing 18 basis points, and CCC-rated loan prices increasing 187 basis points on average.
Q: What is the current status of the market default rate and distress ratio?
A: Kevin Yonon, Managing Director and Portfolio Manager, reported that the 12-month trailing market default rate for the Morningstar LSTA US Leveraged Loan Index decreased to 0.92% by principal amount at the end of the quarter, down from 1.14% at the end of March 2024. The distress ratio, defined as the percentage of loans with prices below 80% of par, ended the quarter at 4.42%, up from 3.51% at the end of March 2024.
Q: What are the future distribution plans for Oxford Square?
A: Jonathan Cohen, CEO, announced that the Board of Directors declared monthly distributions of $0.035 per share for each of the months ending November, October, and December of 2024. Further details regarding record and payment dates can be found in the company's release.
For the complete transcript of the earnings call, please refer to the full earnings call transcript.
