OXSQH — Oxford Square Capital Corp.

Oxford Square Capital Corp. (OXSQH) Q4 2025 Earnings Call Summary

1. Key Financial Results and Metrics:

• Net Investment Income: $5.4 million ($0.07 per share), slightly down from $5.6 million ($0.07 per share) in Q3 2025.
• Net Asset Value (NAV): Decreased to $1.69 per share from $1.95 in the previous quarter.
• Total Investment Income: Increased to $10.4 million from $10.2 million in Q3 2025.
• Investment Losses: Recorded combined net unrealized and realized losses of approximately $18.3 million ($0.22 per share), up from $7.5 million ($0.09 per share) in the prior quarter.
• Distributions: Declared a monthly distribution of $0.035 per share for April, May, and June 2026.
• Share Issuance: Issued approximately 4.3 million shares via an at-the-market offering, generating net proceeds of about $7.9 million.

2. Strategic Updates and Business Highlights:

• Focused on first lien loans, primarily in the B2B sector, with a total of $18 million in new investments during the quarter.
• Portfolio management strategies are being employed to maximize long-term total returns, leveraging a permanent capital structure to adopt a long-term investment view.

3. Forward Guidance and Outlook:

• The company remains optimistic about finding investment opportunities in both primary and secondary markets despite current market volatility.
• The Board has declared consistent monthly distributions for the upcoming quarter, indicating confidence in cash flow management.

4. Bad News, Challenges, or Points of Concern:

• The U.S. loan market performance declined, with loan prices falling from 97.06% to 96.64% of par.
• The distress ratio increased to 4.34%, up from 2.88%, indicating a rise in loans priced below 80% of par.
• The default rate, including liability management exercises, remains elevated at 3.35%, reflecting ongoing market pressures.
• Significant unrealized depreciation was primarily driven by markdowns in the CLO equity portion of the portfolio, indicating challenges in that segment.

5. Notable Q&A Insights:

• Management acknowledged that the increase in the distress ratio is reflective of volatility in the software market and broader concerns regarding the growth of the private credit asset class.
• The primary driver of unrealized losses was identified as the CLO equity portion of the investment portfolio, which faced a challenging quarter-end environment.
• The company sees current market conditions as creating potential opportunities for investment at lower prices, despite the overall negative sentiment in certain sectors.

Overall, while Oxford Square Capital Corp. reported stable income and strategic investment activity, it faces significant challenges from market volatility and rising distress levels in its portfolio.