OXSQ,OXSQL,OXSQZ,OXSQG - Earnings call transcript Q2 2021

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Operator

Good day, and welcome to the Oxford Square Capital Corp.

Second Quarter 2021 Earnings Conference Call. [Operator Instructions] Please note, this event is being recorded. I would now like to turn the conference over to Jonathan Cohen. Please go ahead.

Jonathan Cohen

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

Bruce Rubin

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

Jonathan Cohen

you, Bruce. Thank

expense for at or per and Square’s a June $X.X $X.XX investment net driven May value ended $X.X compared issuance prior income income an share investment per asset principally of decrease of $X.XX our onetime $X.XX prepayment net approximately was a by that stood of value prior approximately XX, share of million in as interest quarter. period resulted our baby investment a quarter. placement prior on in net well share, income which higher quarter X.X% the The XXXX, as we of $X.XX investment the $XXX,XXX reversal of income level per per fee approximately net from of the of share or status, in nonaccrual in and asset from the to For Oxford received was net a the million bonds

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

$X million approximately and of $XX.X the our of second During purchases quarter of $XXX,XXX. investment activity million, sales consisted approximately XXXX, of of repayments approximately

Directors July equivalents and of ending held which of there declared Board XXXX. $XX.X against were of unsettled million. monthly November we June cash On of distributions of per months and December approximately the share approximately for of purchases each XXXX, million, XX, of October, cash As $XX.X $X.XXX our XX,

payment and be turn our to our morning. to record can discuss portfolio call manager, regarding the over the details market. this Deep data that, found that information Additional Deep? With in I’ll was press issued Maji, release loan

Deep Maji

Jonathan. you, Thank

prices end Leveraged During prices of Loan XX. loan principal for has LCD, XXXX, That continued U.S. increasing to Index, Leveraged on the March quarter, the July by the loan versus dispersion prices, starting to par XX.XX% XX increasing Index XXXX. of quarter the market par quarter X.X% on pricing loan quarter from BB-rated B-rated quality strengthened to as ended related XX-month ended X.X%, of and average. amount default X.XX% X.XX% during the after X.XX%. March decreased to quarter at the rate at XX, XX. June prices on the the XX.XX% of CCC-rated rate trailing According decreased X.XX% since S&P/LSTA S&P/LSTA loan increasing the by XX, defined to loan as as U.S. June Loan the as credit increased

the as on as ratio, Additionally, XXXX. percentage at XX% November X%, lowest levels ended quarter a the below since level and with March in distressed XXXX price defined of below approximately the loans the – par, well

designed Moreover, quarter the quarter approximately well $XX.X the This was strong loan inflows primary comparable have by been billion our $XX a refinancing, LBO quarter activity vehicle, loan market permanent approximately bringing With $XXX XX, we approximately by said, longer-term ended as to and issuance view approximately quarter. ended was ahead on XXXX. the strategy. the capital able fund historically versus $XX.X focus of June billion Lipper $XX U.S. billion driven measured in during billion XX, of investment inflows total year-to-date total for approximately During of towards M&A our outflows during we maximize XXXX. as management continue long-term were And to a to take June total that billion return. during to portfolio strategies

Jonathan Cohen

that, operator, We call any much, we’re With note www.oxfordsquarecapital.com. Oxford been happy about the our for second questions. very additional to website performance information has open Thanks Deep. that at Square’s to posted up quarter

Operator

question ahead. Schleien Please Mickey And Ladenburg. go from with Instructions] the comes [Operator first

Mickey Schleien

Good nonaccrual new this what morning, haven’t you review we opportunity so everyone. to tell could was the quarter? had the an Jonathan, Q, us

Jonathan Cohen

on company was It called Mickey, PGI. the sheet, a balance

Mickey Schleien

And the it were issues, go what caused to on nonaccrual? which

Jonathan Cohen

generally don’t on review our disclosure companies, in portfolio sure into We be have fundamentals of that Q. I’m discussions go but of a some now, the but the think in had don’t I we’ve amount you reasonable me Mickey, there’ll can right of operating disclosure issue. front historically I

Mickey Schleien

CLO-related What as and well? – decline, your GAAP though even yields grew the why improved did the Okay. income portfolio you did

Deep Maji

redeemed. that Mickey, this is Deep. option were We couple of deals a had

flow. increase, and we had which effective expect Overall did next Income revert We – some refinancing, that causes the yields decline. that of also did kind would quarter. of one to level cash in

Mickey Schleien

pandemic. orders last Okay. much were to return like stay-at-home to And upward unclear, question. with to entering me, of how that. the it’s cycle another And the situation my COVID at if support a federal government or least Unfortunately, would we we’re provide things

of you with CLO risk? could to perhaps So that us how contend in to industries describe portfolio and you’ve the managers terms structured

Jonathan Cohen

Mickey. Sure,

of something I at think, we pandemic our We’ve and this a COVID carefully view sector fairly were tried to the I about the take accompanying slowdown think At portfolio. we’ve always year. and going is as exposure, economic part broad the always – intentionally. fairly of into of we, and worst talked sort looked the last

issues various components portfolio on certainly the looked mind. Deep, much those like our specifically you components of to address book We’ve the loan at various So of CLO issue? CLO our with we’ve at in very would looked that book.

Deep Maji

reinvestment on in Sure. longer-dated additions this focuses CLO period equity market. book, issue new quarter one Mickey, were our in the focused of in the the

period market. very book top-tier extremely especially repositioned really – the negotiations, we we one reinvestment secondary CLO purchased weighted our the As you know, in issue book period a reinvestment going to one this average were beneficial, into two an downturn. the pleased we this how large is with we the quarter. periods very again, deal and market, of length manager. the of connect X-year reinvestment that That with we’re into extended potential of And into drove crafted period the on in new able equity, And we

Mickey Schleien

another was enough period volatility if So book of the take to overall, that. there period advantage of reinvestment has

Jonathan Cohen

duration mean, we obviously, portfolio But magnitude investment of certainly, the architect We those things, entirety the book, it in hope the downturn. and and prospective any CLO to Mickey. I tried with so, depends, mind. again, much of have the on very

Mickey Schleien

Could if that? attractive from be lower-tier group? in are obviously, CLO do – versus mid-tier in world. terms of high managers, opportunities can everything you approach Or sort how us to managers staying There’s But you you this are of for Jonathan, your away top-tier are And expected the help in you enough. with would a tiered? price characterize versus And the you managers there that understand agnostic? investing lower returns

Jonathan Cohen

Mickey. Sure,

perfectly. We is of that you a the really, to the flexible broad we duration possibly think based involvement view our price be taken managers. historically, want I over have for a has invested manifested said is as with How tranche itself we can be. as first-tier CLO it everything. we’ve that in that entire as considerably and investment business, There

is as I to avail largest and lesser of think are said in and managers, price. a time, At But extent tiered book exposure collateral well, occasionally we the interested at Square. across debt to Our tranches which will you look manager first-tier investment, same any Oxford the we invest of that are be in CLO-related second has CLO or unusual and to compelling certainly there it by at opportunities the opportunities those opportunities, continues those appropriate. investment managed part equity investment our junior

Mickey Schleien

And which, on to the non-qualified Jonathan. folks asset Could CLO would for the invest helpful, you been in me. handful case, for now go-forward that ability to occurred equity that Perhaps, sector helpful in for That’s on a has that one bucket, call, just understand XX% how your follow-up to a it some us of tranche the describe basis? affects your be quarters.

Jonathan Cohen

in RIC CLO no Oxford Investment Corp. as BDC-related make compels the Capital Square us subject Mickey. a relevant at are Company universally XXXX invested non-qualified for non-qualified the or to BDC of of a in to non-qualified is the of which XXXX, XX% of investment universally Act excess provisions Sure, are asset the requirement. almost we if in Act assets time our investments. tranches

other practical our debt equity and Square at invest around CLO any investment. only assets or in of a XX% we Oxford in Corp. Capital from So perspective, can non-qualified generally

Mickey Schleien

to was that in invested – think could quarters? you – that secondary. you couple tranches equity been reconcile several So be above was me equity primary, Deep How help now CLO CLO quarter. a One you said of how for this XX% the can I new do has if Jonathan, one

Jonathan Cohen

the Mickey. The Sure, is time test investment. made of the at

at the intra – which Square the the we Oxford measurement made, intra-quarter issuance point point considered. additional deal the a But measurement, So at of mechanism that’s obviously, is at capital raised of is at test through great at baby an that bond of our the date.

Mickey Schleien

Okay. you thought. That’s Those what helpful. Thank I time. very much That’s your questions. all my are for

Jonathan Cohen

very Mickey, anything questions. group? you, questions much other the Operator, Any else? from Thank for your

Operator

no Cohen, further so have the will We CEO. back questions, Jonathan over to I conference turn

Jonathan Cohen

on the replay on Thank we to to you, like call for their Square, Thanks forward in much. much. operator, thank you Oxford look listening soon. the and very again I’d speaking interest and to very everyone continued

Operator

today’s you The attending for conference is now concluded. Thank presentation.

now may You disconnect.

Oxford Square Capital (OXSQ) 27 Jul 212021 Q2 Earnings call transcript