OXSQ - Earnings call transcript Q2 2020 | Oxford Square Capital Corp.

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Operator

Good day and welcome to the Oxford Square Capital Corp Second Quarter 2020 Earnings Release and Conference Call. All participants will be in listen-only mode. [Operator Instructions] Please note, that this event is being recorded. I would now like to hand the conference over to Mr. Jonathan Cohen, CEO. to over and you you sir. Thank

Jonathan Cohen

forward-looking President; much. Oxford call with Square very call. Yonon, joined Rosenthal, our regarding Good Officer; and a Chief XXXX could morning, the to I'm you our Saul by Manager. welcome Managing And today Rubin, Capital Kevin please statements. conference our Financial everyone. earnings Thanks Bruce Portfolio Corp. Bruce, Director quarter second the open disclosure

Bruce Rubin

projections. reflect www.oxfordsquarecapital.com. at call for prohibited. that presentation conference be Sure, obtain included the Please of Capital cause website differ our copies I'll audio earlier with your is from call replay unauthorized recent among We update with our Oxford of filings, call do To law. events, Corp. visit XX those over SEC forward-looking forward-looking that, Jonathan. Replay At undertake things, future available our that Today's our factors back these disclosure do We this call customer the respect in to Jonathan. turn rebroadcast to this point, Any latest not by statements financial is projections in to includes refer An filings call days. unless Company's to views so the required Today's please With information. this statements please regarding performance. for that attention the forward-looking SEC recorded. in other and being of most this ask and the our to actual was that current results could important the to release direct indicated materially morning. will information is property morning's is conference that press to Square of this in press note, release strictly issued any form

Jonathan Cohen

Bruce. Thank you,

of per For to and quarter. Square's stood investment share net $X.XX per prior income $X.XX was ended asset net share, compared at XX, and June net per a per $X.XX our net value value the share Oxford of income $X.XX the investment asset share in quarter

of of $X.X investments million compared approximately net recorded to second on the loss share of investment recognized approximately per per quarter unrealized net approximately decrease quarter. quarter In depreciation we the for operations $XX.X we losses recorded In net income the quarter million of increase net or realized unrealized share second share or $X.XX or per on second $XXX,XXX or total we we of on For XXXX, in a of the to share $X.XX of $X.XX prior for million prior prior compared a XXXX, $X.XX the per of the compared net investments per $XX.X $XX.X $X.XX second prior for of million $XX compared share, operations of quarter. $X.X realized quarter. quarter. $XX.X had approximately depreciation per million, for the quarter the assets million, to in In XXXX, investments share, for or to net or $X.XX from from assets a million total, approximately

our $X.X investments XXXX, XX, June as purchases $XX.X continue of of repayments sales million, consisted hold million, we investment of second During to that of approximately non-accrual $XX.X activity approximately quarter the two note We of debt status. of million. and approximately on

portfolio hold one status. companies preferred on our of investments in also We non-accrual equity

of I'll distributions declared Board light turn the declared our of Company's fourth the [indiscernible] Directors through As XXXX, crisis are of be XX, expected stock XXXX. common by call had Kevin distributions can any maybe by to and September. by stock market be currently quarter the $X.XXX declared current which With for over to as Directors provided of the a to the monthly our of Portfolio no of level common conditions, spread result Yonon. that, assurance of previously COVID-XX global specifically September announced by the Manager, Board the caused of company, virus, In that the in economic

Kevin Yonon

Thank Jonathan. you,

increasing quarter declining strengthened defined as by March as related but of at during a loan of loan prices XX, prices U.S. on B-rated the of pace June XX.X%, ending loan as quality BB-rated market progressed. on U.S. XX, Rating quarter According quarter, on versus LCD, dispersion agency During Leveraged XX.X% during the occurred of XXXX. pricing XX.X% loans Index continue XX.X% June quarter prices downgrades U.S. leveraged June slowed loan loan quarter XXXX, the March high par XX. XX pricing the ended increasing Loan the from the increasing XX, credit prices and S&P/LSTA XX.X% the quarterly increased with to before to CCC-rated to -- X.X%, average. to downgrades

the X-year quarter amount. XX-month Additionally, default rate at principal Leveraged S&P/LSTA Loan a by of high at the starting by after the X.X% increased quarter trailing for X.X% the end Index of the amount to principal

March period defined price percentage as year-to-date loans ratio at of where was XX at distressed compared on at X% the below the they during peaking after to primary market issuance on a issuance XX% in ended billion June par XX, XX. at XX% XX% XXXX. Finally, XX% of below the approximately quarter comparable $XXX March

outflows XX Lipper of ended billion June as moderated Additionally, outflows measured strategy. strategies this we return, approximately In vehicle, $XX XX. our the to as portfolio view continue U.S. ended permanent have billion with able approximately outflows management for longer-term a versus loan focus on long-term of to environment, capital our March take for maximize the a have quarter total been historically fund we quarter designed to $X investment towards by

Jonathan Cohen

second to additional at note has website Oxford questions. quarter operator, that performance any to posted information we're our Thanks Kevin. Square been We And that, much, open Capital for about with discussion very www.oxfordsquarecapital.com. the Corp's happy

Operator

Thank much, you very sir.

begin the Instructions] the go session. Schleien We first Please The is from Mickey line now [Operator Ladenburg. question will question-and-answer of from ahead.

Mickey Schleien

the CLO quarter; second try into as impact there was the borrowers the And March of going you very very a on in downgrades ratings about pandemic. that negative junior Jonathan, from that decline of gap see equity the which of everyone. do agencies Oxford get morning, assume CLO a quick Square's I high and level and correct? I to was and ahead in one-third the yields. cash caused were has Good -- Is the But what OC cushion, equity Yes. portfolio April, is -- to know.

Jonathan Cohen

who morning. our Deep Thank I'm Good you, runs Mickey. to to question practices over that going turn CLO now. Maji

Debdeep Maji

Yes, the for we the did the Jonathan. flow you, cash diversion that Mickey. is level yields, quarter of some you, Thank decline as cash of second Thank driving so with in experience XXXX.

an assumptions there call that and variety on the it's Mickey, into of basis yield, generally that to terms expected and know, -- that In date. or go maturity are of a yields effective you is looked date calculate forward-looking as we to a

change So, into while assumptions the were what and drives factors that by effective returns the the cash of affected go many yield. are level there in diversion

Mickey Schleien

it understand Deep. more that taking I attitude. of now wait-and-see ratings the agencies, And seems at a for least are

have equity for quarter? level in which also I earnings cash see CCC a so third that downgrades, quarter an with that those July, decisions loans; to CLO in calendar is think the looking opportunity typical month? OC were And before seen tests in the flows one-fifth April. the mind about make they the of a payment managers could we've help but about in June in in did CLO rally second they're improve their downgrades I And trends improve do

Debdeep Maji

Sure.

So, and June. April from through June ratios prices speak to CCC XX I the improved can generally and in improvement OC ratios

Mickey Schleien

Okay.

July ratios? of too the early terms tell in to it's So

Jonathan Cohen

Probably Mickey. yes, Yes.

Mickey Schleien

quarter Okay. And moving allocation, [indiscernible] on their about talking finished levels; leveraged below about Jonathan. market. the the loan portfolio In June, to pre-COVID at or rallied broadly I'm syndicated X% bids

Jonathan Cohen

Sure.

Mickey Schleien

-- are about levels. liens X% of below their the was about That the we're to now similar performance first which pre-COVID

you the opportunity debt, do when CLO those tough opportunities two for Oxford So, how alongside considering return equity the at best economic Square remains? see risk look you outlook where and adjusted

Jonathan Cohen

Mickey. Sure,

I CLO to exclusively, certain the right but lien on think syndicated the focusing loan opportunities it's not now that in and equity say primarily space. market selected first on fair we're principally,

these a and is prices. asset both So collateral of volatile their highly NAVs reside market the in terms within class; by and in values CLO terms you represented pools structures, that the of equity, as their underlying market know, also

the areas we're that focused principally right really now. on are those So

Mickey Schleien

more you fairly broken, was Jonathan; primary follow-up spreads that I work? we or characterize of talked equity And locked last was to is the market mentioned? that bid/ask were the was put sporadic, the opportunity there time about, I just about you and to would very to CLO market issues talked market And trading an in the less today equity, CLO money time wide, very those up. terms How at

Jonathan Cohen

just we and and market, things gotten regards. the the an opportunity relative those to improved that of but liquidity. has last couldn't spreads that lack gotten again, spreads ameliorated moment in liquidity asset the the there in the since money the bid/ask market believe class, of to have they certainly of this of and been have We we to those tighter, work say significantly bid/ask terms which to have referenced, could, better, and of to attributes you've things dislocation spoke; isn't be in Those has has terms in the put reverse at continue continues wideness

Mickey Schleien

parts and pressure obviously I everyone that at pandemic wrong is could which least the CLO down question in the and the market going and borrowers other here, for -- to likely of loan the understand. is further country is last Jonathan, unfortunately, direction, the occurring trend My in impact equity.

the base can or on; case of understand Board's going sort us help what's set dividend? when describe new you investment thesis Given they the

Jonathan Cohen

projected overtime, they we're at factors. flows, recent attribute is both in underlying the although values flows. looks recent to the of perspective; company performance the our different asset perspective potential the character Mickey income range Board of at period, look over tax NAV extraordinarily The structure changes financial earnings, difficult to cash that to most and our most look -- the tax CLO Sure. thing the historical of at a GAAP of the an the expected We expense and character cash firm, equity receiving,

into the continues of take to Board wide including just that factors, I So, would mentioned. I've factors say very -- and range those a account including has

Mickey Schleien

I time. Okay, are my your Thank I do this all questions you. understand. appreciate morning. for Those

Jonathan Cohen

Mickey, much. you, very Thank

Operator

see much. now. very in the I you questions Thank queue no

Jonathan Cohen

the to thank this call questions, end like and soon. in But to there right. speaking call, we'll much. guess the look for there. participation I'd and no Thank well, and in, very forward to their All Well, everyone again their Company additional we -- you interest if I we'll are you

Operator

conference Thank Ladies has you concluded. presentation. and you for gentlemen, attending now very today's call the much. Thank

now You may disconnect.

Oxford Square Capital (OXSQ) 28 Jul 202020 Q2 Earnings call transcript