Oxford Square Capital Corp. 2026 Q3 Earnings Call

Welcome to the Oxford Square Capital Corp. Third Quarter 2026 Earnings Conference Call. I am joined today by Saul Rosenthal, our President, Bruce Rubin, our CFO, and Kevin Yonon, our Managing Director and Portfolio Manager. Bruce, could you open the call with a disclosure regarding forward-looking statements?

Sure, Jonathan. Today's conference call is being recorded. An audio replay of the conference call will be available for 30 days. Replay information is included in our press release that was issued earlier this morning. Please note that this call is the property of Oxford Square Capital Corp. Any unauthorized rebroadcast of this call in any 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 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 our 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. With that, I will turn the presentation back to Jonathan.

Thank you, Bruce. For the quarter ended September, Oxford Square's net investment income was approximately $4.9 million, or $0.04 per share, compared with approximately $5.1 million, or $0.05 per share, in the prior quarter. Our net asset value per share stood at $1.21, compared to a net asset value per share of $1.29 for the prior quarter. During the quarter, we distributed $0.105 per share to our common stock shareholders. For the third quarter, we recorded total investment income of approximately $9.9 million, compared to approximately $9.4 million in the prior quarter.

In the third quarter, we recorded combined net unrealized and realized losses on investments of approximately $3.3 million, or $0.03 per share, compared to combined net unrealized and realized losses on investments of approximately $1.1 million, or $0.01 per share, for the prior quarter. During the third quarter, our investment activity consisted of purchases of approximately $20.8 million and repayments of approximately $10.3 million. During the quarter ended September, we issued a total of approximately 14.1 million shares of our common stock pursuant to an at-the-market offering, resulting in net proceeds of approximately $19.4 million. On October 28th, our board of directors declared monthly distributions of one and a half cents per share for each of the months ending January, February, and March of 2027.

Additional details regarding record and payment date information can be found in our press release that was issued this morning. With that, I'll turn the call over to our portfolio manager, Kevin Yonon.

Kevin? Thank you, Jonathan. During the quarter ended September 30th, U.S. loan market performance improved versus the prior quarter.

U.S. loan prices, as defined by the Morningstar LSTA US Leveraged Loan Index, increased from 94.96% of par as of June 30th to 95.32% of par as of September 30th. According to LCD, during the quarter, there was some pricing dispersion, with BB-rated loan prices increasing 8 basis points, B-rated loan prices increasing 119 basis points, and CCC-rated loan prices decreasing 286 basis points on average. According to PitchBook LCD, the 12-month trailing default rate for the loan index decreased to 0.55% by principal amount at the end of the quarter from 0.97% at the end of June. Additionally, the default rate, including various forms of liability management exercises, which are not captured in the aforementioned default rate, remained at an elevated level of 2.97% versus 2.77% as of June 30th.

The distress ratio, defined as the percentage of loans with prices below 80% of par, ended the quarter at 7.05% compared to 6.87% at the end of June. During the quarter ended September 30, 2026, U.S.-syndicated corporate loans primary market issuance, excluding amendments and repricing transactions, was $107.4 billion, representing a 20% decrease versus the quarter ended September 30, 2025. This was driven by lower refinancing, dividend, and M&A activity, partly offset by higher LBO activity versus the prior year comparable quarter. At the same time, U.S. loan fund inflows, as measured by Lipper, were approximately $1.28 billion for the quarter ended September 30. 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.

Thank you, Kevin. Additional information about Oxford Square's third quarter performance has been posted to our website at www.oxfordsquarecapital.com. With that, operator, we are happy to open the call up for any questions.