Oxford Square Capital ((OXSQ)) has held its Q1 earnings call. Read on for the main highlights of the call.
The recent earnings call of Oxford Square Capital Corp. painted a mixed picture of the company’s financial health. While the firm reported stable net investment income and successful capital raising through an aftermarket offering, it also faced significant challenges, including investment losses, a decline in net asset value, and a weaker performance in the US loan market.
Consistent Net Investment Income
Oxford Square Capital Corp. maintained a steady net investment income of approximately $6.1 million, or $0.09 per share, mirroring the previous quarter’s figures. This consistency highlights the firm’s ability to generate reliable income despite market fluctuations.
Stable Total Investment Income
The company reported a total investment income of around $10.2 million for the first quarter, which was roughly the same as the prior quarter. This stability in total investment income indicates a resilient performance in the face of broader market challenges.
Aftermarket Offering Success
Oxford Square Capital successfully issued approximately 1.3 million shares of common stock, resulting in net proceeds of about $3.5 million. This capital raising effort demonstrates the company’s capability to attract investment and strengthen its financial position.
Decline in Net Asset Value
The net asset value per share saw a decline from $2.30 to $2.09 compared to the previous quarter. This decrease reflects the impact of market conditions and investment losses on the company’s overall asset valuation.
Significant Investment Losses
The company recorded combined net unrealized and realized losses on investments amounting to approximately $14.2 million, or $0.20 per share. This marks a substantial increase from the $2.7 million, or $0.04 per share, reported in the prior quarter, highlighting the volatility and challenges faced in the investment landscape.
US Loan Market Weakness
The US loan market experienced a downturn, with loan prices for BB, B, and CCC rated loans declining by 82, 134, and 211 basis points, respectively. The distress ratio also increased to 3.21% from 3.02% at the end of 2024, indicating heightened stress within the market.
Forward-Looking Guidance
Looking ahead, Oxford Square Capital Corp. aims to navigate the challenging market conditions by maintaining consistent net investment income and leveraging its capital raising capabilities. The company plans to continue its investment activities, which included approximately $16 million in purchases and $10.7 million in sales during the quarter. Despite the decline in net asset value and significant investment losses, the firm remains focused on sustaining its financial performance and adapting to market dynamics.
In conclusion, Oxford Square Capital Corp.’s earnings call revealed a balanced outlook, with stable income generation and successful capital raising efforts countered by notable investment losses and a declining net asset value. The company’s ability to maintain consistent net investment income amidst a weakening US loan market will be crucial in the coming quarters.