OCSL - Earnings call transcript Q4 2019 | Oaktree Specialty Lending Corporation

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Operator

Welcome, and thank you for joining Oaktree Specialty Lending Corporation's Fourth Fiscal Quarter 2019 Conference Call. Today's conference call is being recorded. At this time, all participants are in a listen-only mode, but will be prompted for a question-and-answer session following the prepared remarks.

Now, I would like to introduce Michael Mosticchio of Investor Relations, who will host today's conference call. Mr. begin. may you Mosticchio,

Michael Mosticchio

and conference Oaktree call. operator fiscal Lending fourth quarter welcome you, Specialty to Corporation's Thank

on of Our morning slide accessed and release, the Investors earnings which accompanying presentation, we can oaktreespecialtylending.com. website at our issued this the section be

Armen Chief Our and Treasurer. Officer and Pendo, Officer; Officer and and Mel Chief Chief speakers Panossian, Executive Officer; Investment today Matt Financial are Operating President Carlisle, Chief

their be will happy We remarks. your following to prepared questions take

include operating call statements Before among that financial I comments current we with reflecting performance. want you views today's begin, our remind other to on things, results forward-looking respect to, our future and

in Our the detail. duty no update differ forward-looking materially SEC We could or actual refer to forward-looking statements. revise Please those factors to our results discussion implied further in statements. a filings undertake or expressed for any from these of

Oaktree nothing to others any call or of an that I'd offer corporate the information encourages to company to Oaktree of material also Investors an section and announce uses on you Investors any sell purchase on its The website like the shares offer its to it note in corporate review information. that fund. solicitation this to remind that media others constitutes the should website. interest investors, Lending and Specialty

will the With call over now turn I like to that, to Matt Pendo.

Matt Pendo

conference and Thank OCSL. our appreciate We call. earnings interest everyone, your you, and quarter welcome, of Mike fourth in support to

quarter that fourth for completed report of to strong pleased the OCSL. year are fiscal year We another XXXX

NAV prior investment quarter for $X.XX $X.XX share $X.XX the fourth reported $X.XX year, share consistent with full of year. up the the fiscal NAV our and of year per from the with for seventh per $X.XX, year quarter of Net increased per income for the finishing X.X%. fiscal previous We consecutive quarter and or was NAV share growth

were exits expenses. investments reduced We the fiscal combined operating steadily and which The successful with year, over or million annual realizations XX%. lower noncore monetized growth investment by reflected $XXX and funding

year. made exits We nonaccruals the following investments during also the reducing progress of four

received our quarter, on was the of repayment non-accrual. previously full In one fourth that we investments on

when equity of also investment the to a We an led modest and debt borrower non-accrual the capital. of investing converting by we our amount on recapitalization new restructured status

few I'd in these like We the extend paid in Group, our maturity to and being maturity. departure the instead spend in a Optical U.S., largest off discussing faced at arrangement detail. account, of key into Refac following of challenges optical to year events a not the forbearance last moments the more entered not one company. a retailers the loan elected resulting with

with interest, sell interest, to We debt to par, default outcomes to covered and investments ability full equity management worked including one team's at example investment the unpaid solution is to This and maximize very a proactively underperforming and our positive of recoveries and fees. an million $XX team maximize businesses, our our company shareholders. closely for deliver value, the of on excellent all of sponsor manage was its the private which able

investment our customer, The year. loss of CloudX, last headwinds some experienced of ThingX. hardware on company is for provider restructuring CloudX in the a services the a was sector. IT status it hospitality quarter known the and during of the following formerly nonaccrual large went example Another as cloud-based and

equity, restructure worked company's investment, expansion. a our support position and our providing capital to with small amount sponsor We to and of to converting the debt the additional management team

maximize and no company, As interest majority in recovery. best we is on a puts believe balance in there sheet, debt the the we a to result, which the us obtained position

are performance initiatives. of execute will and its company, We hopeful the it we are growth successfully pleased that continue recent with the to

$XXX began of million we events, from ago to the $XXX declined portfolio. managing two have or these noncore since XX% million investments years Following OCSL

fiscal work we also which occur maximizing expect approach lending time. and continue will We continue remain risk leverage. focused We The work highlighted of to with to by investments, investing, over our the values lower non-core remaining was middle-market defensively the portfolio. year controlled on more on our to to to ongoing businesses position larger diligently our diversified

year portfolio disciplined a approximately consequently of not exits, improve net As at made and X.XX time, times debt same by at the the paid reduce our we result flexibility. the times our funding match structure of overall At and $XXX new beginning and approach, investments reduced to pace the leverage the improvements our our year-end. capital we for our to year financial from down did X.XX and costs further our of to million payoffs

facility amended, and we our credit terms financial more to we February, modify better coverage on flexibility, resulting requirements, received covenants. extended, and shareholder providing pricing upsized asset in cushion approval and In

for on Armen managing was of And portfolio responsibilities is XX, and finally, as Panossian that portfolio. OCSL. Oaktree's the team strategic September and responsible assumed BDCs know, you credit, management appointed Armen has for OCSL's CEO CIO

U.S. Armen respected extensive joined XXXX, focused assumed investor in member portfolio moved he many the of investments. on in as loan distressed credit. successful he performing XXXX Oaktree where team, and he of He credit experience management where responsibilities. group's is a to a our senior In with on opportunistic debt strategy, our investment

and the CLOs. strategy built impressive OCSL. loan makes Armen senior him ideal improved included track for investment returns leadership our experience strong background, that significant Armen's and performance and in acumen, U.S. in an role, leader growth this record In Oaktree’s

will its deep fortunate we that are talented drive years of company best to professionals have Armen Oaktree, We confident to and to ahead. bench and at the leaders highly a lead investment are from

over the call With will turn Armen. now to that, I

Armen Panossian

Thanks, hello Matt and everyone.

I'm team. the lead over the thrilled environment months many next I'd like to its with part OCSL's and to to that in I the say discussing portfolio, forward company Before the and chapter to excited market look of management and be of meeting weeks ahead. I'm you

to for senior U.S. years, loan nearly XX then group Oaktree starting been run in went our debt at group. distressed I've mentioned, Matt our As on and

strategy, the managed I with BDCs. team the While strategic quite investment familiar credit different and the I'm

team, time with the spent working strategic Throughout my alongside lot Oaktree, a career credit oftentimes at I investing of them. have

even I fact, join that two job has professionals of to their upon very outstanding repositioning I building manage and great managing hired OCSL's years. team are done the a In an and on team. over look past in that I'm fortunate strong who all of to now forward the work. portfolio some

and on our be which is couple the syndicated trends share demand I'll environment. in that direct space, mainly last institutional be view of markets experiencing There we Now, by loan years. and abundance continues by investors, ongoing an The the for driven invest of lending lending to willing impacted been BDCs, market to continue private have from overall CLOs, capital, the including vehicles. to the other same

the a As remains very result, competitive borrower and friendly. market

We loan continue broadly syndicated markets to market to remain lending growing and direct loan to see continue stable tight steadily from as syndicated meanwhile, the spreads broadly the U.S. benefit in they relatively in tightening fundamentals, the market. spreads the direct with both lending relative Borrower economy.

seeing believe the sectors number investment events isolated attractive However, more signs company-specific weakness as of loans deterioration down the that by as certain for credit opportunities economy funds. direct well a of are we We and lending OCSL in could road. held in this certain create of

can are disciplined of mindful we find investing where remain risk-adjusted we returns. best While approach, relative defensive value investment the and we in and our

investment the non-sponsor, resources of provides the are multiple a we upon set including from finance, with unique bonds. middle-market allows to drawing construct reminder, to vast origination portfolio. diversity a platform, syndicated loans, source As us of us opportunities optimally and Oaktree our channels, able sponsored broadly This and

originated we primary were to and in across Four while of secondary $XXX dynamics, million during the borrowers, balance were the investment commitments fourth markets. add-ons the nine issuers these Given of new quarter. made these existing

businesses. solutions sheet private PaySimple, company payments, Our that to balance to business as its the this Evercommerce, medium-sized following commerce firm. investment a largest future also and prominent service was capital origination an growth quarter equity small- by marketing, initiatives and support integrated was provides equity management, a seeking and recapitalize known The to platform other

allocated was equity of of The invested our X.X%, loan originations the down million. at plus all by was from quarter, which modestly funds OCSL points healthy Oaktree first was average supported priced aggregate, the in liens. cushion of attractively previous first LIBOR $XX XX%. basis debt XXX The for million and yield were and lien, a $XX In is XX%

resulted approach a a prudent competitive environment. lower conservative current on we our are today, in market has the yield investments, this slightly that While especially invest given new way overall is confident to

competitive dynamics, the an believe a broader markets evaluating interesting are attractive opportunities market we and Looking investments despite in pipeline, our present currently we that including non-sponsor the in number reward. sponsor risk ahead, of

pipeline. with today our in we new continue in advantage well investment patient, and to positioned take ample are be opportunistic That believe said, liquidity we opportunities our investment of we approach, to yet

Turning and XXth, LP and we stable maintaining overall OCSL's with and billion was industries. companies were characteristics across consisted focused X% to September Kemper first leverage more portfolio borrowers, positioning on businesses were from unsecured held June investments the XX portfolio of At portfolio, were lien, our across XX% $X.X to senior in of XXX the investments of loans, secured which portfolio's XX% relatively quarter. the X% in lower secured debt, X% by defensively interests issuers was in levels. opportunities on lending equity investments the diversity JV. larger, and remain of focusing senior diversified We an

the EBITDA market increased same million X.X overall from one to well which year at the portfolio our ago. below million end, company To times, our period relatively elevated. leverage that levels, companies remain $XXX in median Leverage $XXX unchanged at was portfolio middle

ongoing well XXXX. reducing for Fiscal continue the a returns with the our solid are the shareholders to risk In was are and positioned believe we OCSL, of non-core and summary, pleased the of our year size progress to XXXX deliver we to risk-adjusted with portfolio in we and composition attractive portfolio. in

in Now, to results to detail. financial call I will the discuss more turn over our Mel

Mel Carlisle

to quarter Armen. financial performance, OCSL strong results. also Thank full you, which delivered year contributed of another solid

million, and down fourth due million due mainly total dividend quarter-over-quarter, income OID income. fee Interest quarter was the quarter, higher from income on $XX.X higher compared loan the was payoffs the as to June was offset quarter. in that $XX.X by to income interest and decline we lower acceleration third September $X.X million million quarter. was received to by During the down $X.X in The investment partially

well was as the as Dividend sale smaller decline subsidiary to In addition, a to of June by higher due a the the quarter. in portfolio. LIBOR Refac being income result the largest We income of loan payoffs, the fee with interest lower exit lower $XXX,XXX, an income the quarter-over-quarter in from during aircraft recorded mostly was primarily higher fees the due quarter of prepayment our aviation contributor. number in

fees Overall, and fourth million in income the quarter. in Refac interest $X monetization the generated

average and the income For interest income. partially investment accretion full dividend income mainly $X up million, higher was by year, lower by total which driven was OID offset

due the and lower Net expenses incentive totaled decline The fourth driven was June interest the in quarter. million, $X.X $XX.X lower quarter income. fees, expense mainly for to the down million by from decrease investment primarily

decreased reduced and the expenses year, million For by full as year-over-year. other professional operating fees expenses we G&A $X.X

per quoted write-downs this exited for our income the fourth NAV offset of year-end, and value, investments to the asset up net our for gains puts contributing June year, of net at consistent to quarter, was full with Turning of on excess XX, level $X.XX share the some takes and in unrealized with by dividend primarily investments. at X.X% and

debt represented credit just XX, in and the X.X% which its June million $X nonaccrual than at This reinvestments quarter X.X% value December were on quality, quarter. from the fair to of as representing September XXXX is at down in of peak X.X% the status, less portfolio. Moving

Matt due that events was quarter-over-quarter The decrease discussed. two mainly to

on as second, as restructuring successful First, leverage, of quarter. the to and investment times slightly now the shrank in ratio to during portfolio decreased is leverage classified the X.XX XX debt X.XX With our from times CloudX, our in respect exit of which Refac; our the investment equity. June

exits, experienced We $XXX in million and $XXX greater the million of was which payoffs fundings. than investment

were equivalents year-end, September rate $XXX had down June million revolving of quarter. ample of million from and XX, weighted undrawn average credit total and a interest with X.X%, debt slightly the liquidity of $XXX outstanding $XX Cash was had at and capacity facility. we on million As cash the

September to from This XX XX, invested same the Leverage million had at Shifting in invested X.X now at leverage to $XXX Taking number into to compared of JV assets the of JV the million of senior times. loans venture, all Kemper as in the been slightly year-end, of was the quarter. $XXX companies. secured total would trades, of quarter. assets last net joint have the settlement down companies times June X.X account

structure $XXX capital capacity The venture's size $XX million to joint of $XXX the enhanced had from JV at credit and of increasing the also during million we year reminder, a As facility million. credit amending the its by year-end. facility undrawn

call Now, I the Matt. turn to will over

Matt Pendo

Thank you, Mel.

execute solid number and continue effectively for returns We deliver initiatives. to a OCSL through of

First, investments across us JV X.X success below long-term Kemper of ongoing X.X invest the the new target in seven million Leverage leaving well positioning plenty continued latest our opportunities. our was to longer-term of We times, times, added quarter. for runway progress in of $XX issuers.

to continue redeploying approximately able basis assuming investments, debt impact on our portfolio have the also that new income-producing to ROE be of increase XX received exit our $XX To in OCSL's now capital by illustrate current We reduce we yield earnings, annually. X.X%, of assets. are noninterest-generating points invest proceeds at can these million from of proceeds can of We invested holdings into million investments. Refac, $XX the which the would

Refac, end, quarter. a Following from million at the prior million exit $XXX $XXX quarter were the of noninterest-generating decrease in investments

OCSL leverage level. to deploying the Additionally, has increase returns ability at by the more portfolio

we plans While near-term target no to of at have we X.X are operating X.XX currently to times. range X.X times, our exceed

enhance we attractive as deploy find returns investments So, higher the opportunity have leverage. we and to

X by to a paying are announced with portfolio continue and consistent this supported dividend that prior $X.XXX is dividends to consistent performance. that we the morning, We now Turning sustainable intend the dividend, distributions.

approach. of conclusion, that our reshape In disciplined, proud portfolio assets strong work are in quarter we consistent investing results by with and Oaktree's the risk-controlled are to our fourth

portfolio OCSL's strong continued earnings. that As are we confident positioned XXXX, we have for look we to fiscal

continue to deliver platform identify that strategically investment significant Oaktree's will attractive value opportunities to to our We leverage shareholders. risk-adjusted

to Operator, joining please your in today's for for you the happy continued take on OCSL. open us your Thank call and that, interest lines. questions. With we're

Operator

now will the We [Operator Instructions] begin question-and-answer session.

Joseph Please from The first go Jefferies. question with ahead. is Kyle

Kyle Joseph

for taking guys. questions. good morning Thanks Hey my

yields investments on the of in a securities hung are rotating overall Let’s know assets? new year-over-year. rotation actually that yield there income-producing and bit you yields, if portfolio function primarily start have a come I has portfolio, on But off actual highlighted down bit. that into the at and look you a up non-income-producing really Is just

Armen Panossian

exactly right. Armen is Yes, This speaking. that's

into deploy been have assets to non-income-producing income-producing We able some loans.

Kyle Joseph

gotten obviously, book it. they've the a can to for And the is -- repayments, Got then looking but it been is. be us you outlook repayments elevated, for size sense non-core at your give that now has that

Armen Panossian

On the non-core specifically or on the overall portfolio?

Kyle Joseph

levels legacy repayment book of anticipate the how have already you guys of subsiding would portfolio, given Overall you exited? kind much

Armen Panossian

book, hard pace book to in It's would high-quality we to think of you you the we than and pace a predict of tend repayments, it, prediction make repayments I like, when the frequently have good can don't on borrowers feel good more a repayments, about you with the unfortunately. do but see

Kyle Joseph

last you seen and you've you us job revenue that's non-accruals. months? for Obviously, in of any the last -- one nice it, changes can But the performance one growth growth over give three EBITDA sort And Got any a fair. there of assets for both of then have exiting originated, sense and me. terms two guys

Armen Panossian

really a it's the depends the loans look say I or say And wouldn't is revenue EBITDA, question. we in look the loans U.S. company private broadly growth syndicated and a in I mean, median of both Yes, but meaningful there good that is would economy, anecdotally, the it mid-single-digits. at, would we and that industry. in at some the that on

as would having labor businesses, some volatility growth. well challenges of most in tight of I terms commodities. seen EBITDA is We've a growth in anemic profitability as the say, revenue Part some despite have market

and as there's as stable, strong the say year-over-year cash of in the say or tremendous it revenue terms two but ago is economy years three than is wouldn't market, So, takeaway it was wouldn't I and flow I a other growth.

Kyle Joseph

Got for Thanks answering very questions. that's helpful. much my it,

Armen Panossian

No problem. Thank you.

Operator

Rick Shane The go JPMorgan. next is ahead. from question with Please

Unidentified Analyst

I the Good was understand Rick equity that congratulations equity a morning and investment. small on restructured welcome. of Armen, guys. instead incremental Melissa debt, you position. could the made you I it on hoping today. CloudX, touch for restructuring, guys took and did some believe said It's you deal was and I

want of how willing of opportunities do you you that ultimately Given might to come high the sort or equity that up? if portfolio be rotate of illiquid positions, component restructuring other non-income-producing out the take to

Armen Panossian

a basis. question, Thanks mind in Melissa. don't don't target terms for we a the equity. have It's of case-by-case I really -- in

our recoveries In fact, zero. we would of always given on said, behalf at But shareholders. to we like to have outcomes the situations equity and with position maximize that are looking challenging

we you that a equity longer-term maximizing. to able And to is -- sometimes so, have or value to take and be bridge outcome think that medium- take do to to to

Matt Pendo

of opposed is of It's Yes. kind BDC, really the is, best we kind the kind that. results Melissa, we've since management would do to the of -- that the and of, parameters it’s one, kind best make we've think, over Matt. in worked -- just of reach kind we're to as of, name-by-name We to, taken it outcome that, point I continue The of and setting going been to broad-brush outcome, think name-by-name. approach. the

Unidentified Analyst

just-- I Okay.

Armen Panossian

-- adding equity, rather mention just those along I while, yield more I loan attached once invest also warrants equity. are some strategic in do would but our as of also, than in of kicker enhancement to positions, mean a in some of a terms kind our we towards view a

Unidentified Analyst

that investment team? Got And your it. was me, CloudX from or you is remind can a one that came legacy

Armen Panossian

it's legacy investment. No, a

Unidentified Analyst

considering? it that it and for some increased around is apologies you market allocation, of, would in guess I given I the if are be something kind volatility Okay. opportunistically missed and covered and you follow-up space already, my last syndicated question guys there you

Armen Panossian

bonds debt, right bit over broadly that for a of is out dislocated considering the syndicated is little more high-yield reason XX months. retail value and been market between the direct you're lending. $XX billion there's and that private the over than broadly relative The either market syndicated of outflows or always We're last loans, bonds,

strong while the formation, been of here tailed in it's most the off CLO And year, fourth quarter. it's

And was. there bit CLO of But even structured buy a buyer that little so that a away formation loans optimally the actually is base isn't buyer scale execution. very to meaningful fund CLO rating-sensitive it is base, weaker aren't incremental really for than universe, from which investor

-- with if do years should you if loan done in corporate So, family they that are loans those rating a spreads and are today, loan at a trading that ago discount tighter perhaps were a have than was be the BX two it's that mid-XXs.

are in opportunities invest we're so we credit add And risk scale into to seeing some looking obviously, not space. that OCSL. But of to meaningful

it's really a seeing value so are but some we relative case-by-case there. opportunities underwriting, And

Unidentified Analyst

you. Got it. Thank

Armen Panossian

Thank you.

Operator

Your with next Ryan question is ahead. Lynch go from Please KBW.

Ryan Lynch

Good questions. taking morning. my Thanks for

Welcome Armen. First, CEO as new of to OCSL. position your

Armen Panossian

Thank you.

Ryan Lynch

look structured the are the strategy lending direct range your I senior markets, of very performing Oaktree's of includes wide Armen, which background, convertibles, of credit, high-yield really you well the As as very BDCs heavy head a as That's well as mezzanine now. loans, bonds, emerging responsibilities. at oversight credit, as

your to allocate enough have you actually be you that time are to how entity? on So, time? do managing And how allocating focused OCSL in

Armen Panossian

That's a I answer. multipart a it's great think question. And

that in and team the very well. BDCs First, a it's team strategic that the place, I manages and credit know is

pertains is as seamless managing and there the of portfolio. team remaining it so to And that sort transition a

very time on global in together things the credit distressed strategy, joined similar sort in and how the informed have view crisis. in view the grew at Second, roughly investing of group, and a same evolved on financial debt by the Edgar distressed up Oaktree a I debt

fit no upon for natural departure. we given and be background will consistency really there in me was style drift Edgar Given little that most very it just to to And investment that background, over that his type. take think for the

fortunate terms a strategies. to managers team managing my In responsibilities, of other of have of portfolio each I'm individual the

various my value responsibilities those so across oversight where different of relative terms best of sharing more And attractive resides, the in are terms geographies. across the practices in and information most strategies and knowing strategies

emerging on investments And digging basis. in market so a I'm on not single-name

shareholders believe, view I with because strategies could of in for and OCSL. portfolio managers to on classes is will adjacent both that actually, influence those interfacing technical that a asset of the be underlying linear have interesting But benefit our fundamental we may our each outcomes OCSL

there. much is looking responsibilities. strategy in in material And it And that. so part the I is full-time reach OCSL to and attention Obviously, focused on my but of job, terms than is very really credit we're -- very certainly management -- a expand strategic origination of more our a portfolio the

other senior thing this strategy. the while is, our of I assistant manager, manager as promote portfolio manager over as to for earlier portfolio members from that The CEO of would year, upon for that one loan I become sole and group senior say OCSL. team strategy our did, was portfolio now and has departure my an he taken I that of the appointment

to busy, exciting but very that mind. in asset in OCSL different a I it's to certainly with manageable. And across it's time think So, very look able knowledge invest it's be and categories

Ryan Lynch

I has but and you it declined. leverage really Basically was the background decline. your really increased, and and quarter on quarter this a one split we've every had continued continue color leverage That's basically Okay. Oaktree entity, to taken transition since has see activities. And there utilization. deployment helpful your over to good capital where and on question how

bit this a rotating Now, lot period. time can have probably of of But up repayments I a leverage there's push of that, out target little know a assets you within to guys non-core that X.XX. over X.X

knitting? Can you grow it leverage? guys at now higher important that. meaningfully -- how this are seem environment, significantly change changed, prudent utilize doesn't below to really in it X.XX, that And leverage be while guys and being is to sticking so competitive and patient still your You to

Armen Panossian

a to because we're haven't our We leverage attractive there's we range the is into would balance levels that direct -- The load fact below direct just mean, that I we get like indicated. seen that opportunities. up certainly Yes, there. have lending

under five the in amount asset have than assets class significant in to in that more of lending over seven fund there's As doubled timeframe. management the a you last know, formation that been years, direct

direct we we're in, spreads direct the sponsor-backed loans cyclical in chasing in enough perspective. just levered, tightened are businesses highly done typical feel highly not that getting from attractive And and is have seeing the that market as loan our that

beaten and that loans a OCSL working the bit borrowers so originate just we for fund off are would nature, direct path, that opportunistic little or maybe with more And like in execution. classic aren't levered to a lower typical lending for the fit

as patience you origination, to until imagine, That's And what a do and in requires over on might we're to a doing. requires investment it able requires turning value. be it that stones nugget you meaningful of find a real lot focused of

leverage widen do developed But is increase pipeline market our in lending. chase highly will our We increase we to as not cyclical point that at also the going direct or we're this pipeline.

Ryan Lynch

Okay. share my environment prudent question appreciate competitive maybe that some would and of I to Yes, bring where an the the that you in regarding may very be not willingness me, next I be risk-adjusted patient seeing repurchases. is guess, returns. and to But best

you If of environment, purchase existing which deem to at the to and portfolio the do significant discount leverage, market if outside portfolio grow that opportunities to book you way a you you're one the your actually particularly is increase are. shares, don't value, can trading attractive level

are what views repurchases? your share So, on

Armen Panossian

that are repurchases, advocating different not shareholder ways many time. value. doing to considered we've share this we Well, On at enhance

we in it to grow have the shares. capacity And OCSL the First book. our of the second, all, like we float to that on reduces would use

this what But a obviously we more I seen renewed do am think have our have funnel. looking -- of pipeline, expanding year. that very to pipeline our we with deals, widening need I at sort make to a we effort familiar

to to the And we prepared could before say over share that a over have all we advocate stones need turned not we that buyback. so I'm turn

Matt Pendo

Ryan, Matt. And it's

obtaining add is together. it answer previously, to Board thing we that, that one is we're of rating. our we a and as with add mentioned investment-grade things and on focused we've question, one The it's every to to the very Just good to other get time an very discussed Armen's

leverage something our not share a obviously, is increasing ratings through from So, perspective, repurchase, a that, positive. is

kind So, we that to consideration just when whenever -- the add this. look we other -- other that's one one at of look mix at we

Ryan Lynch

which to -- sense get that would want the negative the I the that to No, I that. on say, and has investment-grade but portfolio absence makes I share trying it years, versus as that. repurchases happened shares, really actually the grow it a portfolio Yes. I would couple complement follow-up hasn't just last rating. in also could understand the a get of say seems the over growth, repurchase of nice to be that

those -- appreciate today. all the my questions. all I that's So, time are

Armen Panossian

Ryan. Thanks

Operator

Instructions] [Operator

The Family West ahead. Young with Investments. next go is from question Jim Please

Jim Young

you'd Yes, certain elaborate some mentioned specific, hi. a Thank Armen, seeing more be little you that the you. economy. and you're Could weakness in parts please? of bit

Armen Panossian

that market. on both seeing and and part Sure. the to offshore Well, are we both problems well obviously, companies of energy, production exploration as as attached services having onshore those businesses

are in some chemicals. commodity-oriented weakness seeing some We

some exposed China. Europe and are seeing those autos especially, slow are We -- that to because

issues another, watching. wouldn't there of it tied So, to say I idiosyncratic pockets are say wouldn't I weakness but we're markets are developing the the necessarily that one in is -- some

leverage are five levels ago, basis. years broad buyouts those on leverage higher were is, ago. say, generally, included aggressive years were that And I very four say they out haven't today in nature assumptions, And and than a worked that the other especially I would thing would significant companies, synergy

have supposed to synergies. in that there quite capital that into there. companies There would structures were say, on done are executing But large. not, businesses by well outliers are therefore, certainly grow and I And their those have

roost wouldn't expect some home out I have to at will point? the every markets it's very business come been say there, aggressive that we So, but and and forgiving,

Jim Young

X.X if you if is you what leverage linear Thank XX times, you'd points it'd basis? that to would you. on mentioned basis Is Okay. second ROE that benefit be from benefit times annualized to assets that about income-producing benchmark, similar the from on that that a a increase a us give benefit? you annualized incremental the is X.X you. benefit? an Thank And And by ROE Can the the question basis. some redeploy an of basically non-income

Armen Panossian

on of that like. Yes, we tip probably of this have the -- to on but it we're I if is mean happy my run and you'd follow of off-line of Armen; I you again, on up don't we're to kind should the top kind think I tongue, that. -- get that off-line, calculation my

Matt Pendo

Jim, And -- at was good never Yes. math. very Matt. never it's I'm

So, make a line. before I we let it the on numbers get give me right out sure recorded

Jim Young

Okay. for Thank much. That's you very questions. my it

Matt Pendo

Jim. Thanks

Operator

question-and-answer back our for turn to remarks. Mosticchio concludes conference the Mr. I to This closing session. like any would over

Michael Mosticchio

joining replay XX call for this hour us XXX-XXX-XXXX again non-U.S. replay days the by access beginning callers, OCSL's this broadcast. A X-XXX-XXX-XXXX the section of callers code or you website after will Thank U.S. on one call. be our XXXXXXXX, in for for earnings or with dialing approximately conference available fourth for quarter Investors for

Operator

has for conference attending concluded. Thank today's The presentation. now you

You disconnect. now may

Oaktree Specialty Lending (OCSL) 20 Nov 192019 Q4 Earnings call transcript