Q3 2024 Oaktree Specialty Lending Corp Earnings Call Transcript
Key Points
- Strong origination activity with $339 million of new investment commitments, marking the third consecutive quarter of commitments exceeding $300 million.
- Increased coupon income from a predominantly first lien portfolio, with first lien investments rising from 76% to 82% of the portfolio.
- Oaktree's manager waived $3.2 million of part one incentive fees for the quarter, in addition to the $1.5 million of management fees waived each quarter since the OSI II merger.
- Effective July 1, the base management fee was reduced to 1% on gross assets from 1.5%, expected to increase adjusted net investment income annually by approximately $12 million or $0.15 per share.
- The portfolio remains well-diversified across 158 companies, with 86% invested in senior secured debt and first lien positions, and a median portfolio company EBITDA of approximately $147 million.
- Adjusted net investment income (NII) was $0.55 per share, down slightly from $0.56 in the prior quarter.
- Net asset value (NAV) per share declined from $18.72 to $18.19, primarily due to unrealized losses on certain debt and equity investments.
- Investments on non-accrual status increased to 3.7% of the debt portfolio at fair value, up from 2.7% in the previous quarter.
- The weighted average portfolio spread decreased by approximately five basis points due to the rotation into primarily first lien loans.
- Higher interest rates have materially increased the interest burden for leveraged companies, heightening the potential for more borrowers to struggle with servicing debt.
Welcome and thank you for joining Oaktree Specialty Lending Corporation's third fiscal quarter conference call. Today's conference call is being recorded. (Operator Instructions)
Now I would like to introduce Dane Kleven, Head of Investor Relations, who will host today's conference call. Mr. Kleven, you may begin.
Thank you, operator. and welcome to Oaktree Specialty Lending Corporation's third fiscal quarter conference call. Our earnings release, which we issued this morning, and the accompanying slide presentation can be accessed on the investor section of our website at oaktreespecialtylending.com. Joining us on the call today are Armen Panossian, Chief Executive Officer and Chief Investment Officer; Matt Pendo, President; and Chris McKown, Chief Financial Officer and Treasurer.
Before we begin, I want to remind you that the comments on today's call include forward-looking statements reflecting our current views with respect to our future operating results and financial performance. Our
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