Core Points - FS Credit Opportunities Corp. announced a monthly distribution of $0.06 per share for December 2024, payable on December 31, 2024 [1][3] - The current annualized distribution rate is 10.1% based on the Fund's net asset value (NAV) and 10.6% based on market price as of November 30, 2024 [2] - The Fund has generated a total return of 12.75% on NAV and 33.1% on market price year-to-date through November 30, 2024 [2] Fund Overview - FS Credit Opportunities Corp. manages approximately $2.2 billion in assets, focusing on event-driven credit, special situations, private capital solutions, and other non-traditional credit opportunities [3] - The Fund pays regular monthly cash distributions to common shareholders, which may be adjusted based on portfolio and market conditions [3] Distribution Schedule - The ex-date and record date for the December distribution is December 23, 2024, with the payment date set for December 31, 2024 [3]

Financial Data and Key Metrics Changes - The Fund delivered a net return of 3.35% based on NAV for Q3 2024, with a year-to-date net return of 12.31%, outperforming high yield bonds by approximately 430 basis points and loans by 580 basis points [9][10] - The Fund paid distributions of $0.18 per share in Q3 2024, fully covered by net investment income [12] - As of November 22, 2024, the Fund's annualized distribution yield was 10.3% based on NAV and 11.1% based on stock price [13] - Total return for FSCO shareholders was 2.6% in Q3 2024 and 27.4% year-to-date as of November 22, 2024 [14] Business Line Data and Key Metrics Changes - The Fund remained fully invested throughout Q3 2024, with purchases totaling approximately $270 million compared to sales and repayments of $233 million [24] - Approximately 59% of new investment activity was in privately originated investments, with 100% in first lien loans [26] - By asset type, 82% of the portfolio consisted of senior secured debt, while subordinated debt was 6% [26] Market Data and Key Metrics Changes - The US economy grew 5.5% in real terms since the Fed began raising interest rates in Q1 2022, with middle market companies showing an average revenue growth of nearly 13% as of June 2024 [16] - Privately originated senior loans returned 12.5% over the past year, marking the highest return outside of late 2020 and early 2021 [17] - High yield bonds returned 5.28%, outperforming senior secured loans by 324 basis points [19] - Loan defaults have risen to a 44-month high, while high yield bond default rates fell to a 26-month low as of the end of October [21] Company Strategy and Development Direction - The company focuses on businesses with strong cash flows and modest leverage profiles, investing in credits with appropriate loan-to-values [30][34] - The strategy includes leveraging the size and scale of FSCO to drive differentiated outcomes, with $2.2 billion in assets as of September 30, 2024 [35] - The company aims to dynamically allocate capital across public and private markets based on risk-return opportunities [37] Management's Comments on Operating Environment and Future Outlook - The management anticipates potential volatility driven by geopolitical conflicts and changes in US rates following the November election [29] - The portfolio is constructed to be durable over the long term, focusing on sectors with better downside protection and higher recoveries [30][34] - The management is cautious about making new investments due to tight credit spreads and weak covenants in the market [32] Other Important Information - Non-accruals are just under 3% of fair market value in the portfolio, consistent with historical levels [50] - The company successfully refinanced its leverage facility, reducing the term loan and revolver pricing [53] Q&A Session Summary Question: Insights on forward-looking dividend policy - The company will review its distribution policy based on the Fund's earnings profile, base rates, and credit spreads [42] Question: Relative value in private credit - Both private and public credit are tight, but private credit still offers a premium of 150 to 175 basis points [44] Question: Impact of weak covenants on deal volumes - Weak covenants are affecting the market, leading to increased scrutiny on transactions [45] Question: Future allocation in private credit - The company sees attractive opportunities in private credit due to spread premiums and significant dispersion [46] Question: Relative value subsectors in credit - Healthcare and media/entertainment are identified as sectors with potential for excess returns [47] Question: Macro environment outlook - Recent rate moves suggest base rates may remain higher, with a focus on floating rate assets in the portfolio [49] Question: Updates on non-accrual investments - Non-accruals are under 3% of fair market value, with one new non-accrual in LaserShip [50] Question: Fee structure relative to peers - The fee structure is justified by the nature of investments, with a significant portion in private credit [51] Question: Progress on refinancing capital structure - The company successfully refinanced its leverage facility, improving pricing and borrowing capacity [53]

Group 1 - FS Credit Opportunities Corp. (NYSE: FSCO) is a closed-end fund that is classified as "non-diversified," indicating a heavy concentration in a single sub-asset within fixed income [1] - The fund is primarily invested in senior secured debt, which is considered risky [1]

Core Points - FS Credit Opportunities Corp. announced a monthly distribution of $0.06 per share for November 2024, payable on November 29, 2024 [1][2] - The current annualized distribution rate is 10.1% based on the Fund's net asset value (NAV) and 10.8% based on market price as of October 31, 2024 [3] - The Fund has generated a total return of 12.5% on NAV and 29.2% on market price year-to-date through October 31, 2024 [3] Fund Overview - FS Credit Opportunities Corp. manages approximately $2.1 billion in assets, focusing on event-driven credit, special situations, private capital solutions, and other non-traditional credit opportunities [4] - FS Investments, the parent company, manages over $82 billion in assets and serves a diverse client base, including institutional and individual investors [7] - The firm emphasizes a high-performance culture and is committed to delivering innovative investment solutions [7]

Group 1 - FS Credit Opportunities Corp. (NYSE: FSCO) will host a conference call on November 26, 2024, at 9:00 a.m. Eastern Time to discuss its third quarter 2024 results [1] - Interested parties can register for the call via a provided URL and are encouraged to register a day in advance or at least 15 minutes before the call starts [1] - A replay of the call and an investor presentation of financial information will be available on FSCO's Investor Relations website after the market closes on November 25, 2024 [1] Group 2 - FS Investments is a global alternative asset manager managing over $82 billion in assets for various clients, including institutional investors and individual investors [3] - The firm offers access to a wide range of alternative asset classes and strategies through its investment teams and partners [3] - FS Investments is headquartered in Philadelphia and has more than 500 employees across offices in the U.S., Europe, and Asia [3]

Core Points - FS Credit Opportunities Corp. announced a monthly distribution of $0.06 per share for October 2024, payable on October 31, 2024 [1] - The current annualized distribution rate is 10.0% based on the Fund's net asset value (NAV) and 11.3% based on market price as of September 30, 2024 [2] - The Fund has approximately $2.2 billion in assets under management, focusing on event-driven credit, special situations, and private capital solutions [3] Distribution Details - The monthly distribution schedule includes an ex-date and record date of October 24, 2024, with payment on October 31, 2024 [4] - The Fund's monthly distributions are regularly paid to common shareholders and may be adjusted based on portfolio and market conditions [4] Performance Metrics - The Fund's net investment income has fully covered the monthly distribution throughout 2024 [2] - Year-to-date total return on NAV is estimated at 12.3%, while the return on market price is 22.1% through September 30, 2024 [2] Company Overview - FS Investments manages over $82 billion in assets and provides access to a variety of alternative asset classes and strategies [7] - The firm employs more than 500 individuals across offices in the U.S., Europe, and Asia, with headquarters in Philadelphia [7]

Core Points - FS Credit Opportunities Corp. announced a monthly distribution of $0.06 per share for September 2024, payable on September 30, 2024 [1] - The current annualized distribution rate is 10.1% based on the Fund's net asset value (NAV) and 11.4% based on market price as of August 31, 2024 [2] - The Fund has approximately $2.2 billion in assets under management and focuses on event-driven credit, special situations, and private capital solutions [3] Distribution Details - The distribution schedule includes an ex-date and record date of September 23, 2024, with payment on September 30, 2024 [3] - Monthly distributions are regular cash payments to common shareholders, which may be adjusted based on portfolio and market conditions [3] Fund Performance - The Fund's monthly distribution has been fully covered by net investment income throughout 2024 [2] - Year-to-date total return on NAV is estimated at 10.0%, while the return on market price is 19.8% through August 31, 2024 [2] Company Overview - FS Investments manages over $75 billion in assets and provides access to a variety of alternative asset classes and strategies [6] - The firm employs more than 500 individuals across offices in the U.S., Europe, and Asia, with headquarters in Philadelphia [6]

Financial Data and Key Metrics - The Fund delivered a net return of 2.75% based on NAV in Q2 2024, with the top 10 contributors accounting for over 40% of total realized and unrealized appreciation [5] - Year-to-date net return as of June 30, 2024, was 8.67% based on NAV, outperforming high-yield bonds by 609 basis points and loans by 432 basis points [5] - The Fund paid distributions of $0.18 per share in Q2 2024, with net investment income fully covering distributions [6] - The Fund's annualized distribution yield was 10% based on NAV and 11.5% based on the stock price as of August 30, 2024 [6] - The Fund issued $100 million of term preferred shares in May 2024, with a cash balance of approximately $104 million as of June 30, 2024 [7] Business Line Data and Key Metrics - Approximately 67% of new investment activity in Q2 2024 was in privately originated investments, with purchases weighted towards first lien senior secured loans and subordinated debt [13] - Public credit investments represented 33% of the investment activity, with 91% of purchases in first lien loans [13] - As of June 30, 2024, 83% of the portfolio consisted of senior secured debt, unchanged from the previous quarter, while subordinated debt allocation decreased to 4% from 5% in March [13] - Asset-based finance represented 4% of the portfolio, and equities under investments represented 9% [13] - Public credit comprised 48% of the portfolio, while private credit comprised 52% [13] Market Data and Key Metrics - U.S. economic growth was solid in Q2 2024, with Treasury yields rising modestly (10-year yield increased 14 basis points to 4.34%, and 2-year yield increased 10 basis points to 4.72%) [9] - Senior secured loans returned 1.85%, while high-yield bonds returned 1.05% in Q2 2024 [9] - Default rates, including distressed exchanges, ended the quarter below the 25-year average for both high-yield bonds and loans [10] - Recovery rates for high-yield bonds over the last 12 months were 40%, in line with the long-term average, while loan recoveries were 43%, below the historical average of approximately 64% [11] Company Strategy and Industry Competition - The Fund focuses on investing across public and private credit, targeting return premiums driven by balance sheet complexity, asset illiquidity, and unconventional ownership [6] - The Fund leverages its $82 billion asset management platform and deep relationships with banks, sponsors, and other investment firms to drive steady portfolio investments [12] - The Fund's strategy includes maintaining a diversified portfolio with a focus on senior debt investments, avoiding highly cyclical areas of the economy, and maintaining buying power to capitalize on market volatility [15][16] - The Fund differentiates itself by investing across public and private markets, allowing dynamic allocation to the most attractive risk-adjusted return opportunities [18] Management Commentary on Operating Environment and Future Outlook - Management expects defaults to increase through next year, with a higher pace of distressed transactions, particularly in loans [10] - The Fund is positioned to navigate potential volatility in 2024, with a focus on businesses with strong cash flows, modest leverage profiles, and experienced management teams [15] - Management believes the current discount at which the Fund's shares trade relative to NAV does not reflect the health of the portfolio or the quality of its investment program [7] - The Fund aims to generate attractive spreads over the risk-free rate, with 62% of the portfolio in floating-rate assets, providing some insulation from rate changes [23] Other Important Information - The Fund's largest sector exposures at quarter-end were consumer services, commercial and professional services, and healthcare equipment and services [14] - The Fund's leverage structure includes 58% drawn leverage as of June 30, 2024, with a focus on preferred debt financings for favorable regulatory treatment and flexibility [14] - Non-accrual investments represented 2.7% of the portfolio's fair market value, predominantly in first lien positions [40] Q&A Session Summary Question: What is the target LTV for portfolio companies? - The Fund typically targets loan-to-value (LTV) ratios between 50% and 60%, based on its view of asset or enterprise value [20] Question: Are there considerations for buying back equity? - The Fund and its Board are constantly evaluating the best use of capital, balancing share buybacks, distribution policy, and investment opportunities [21] Question: How does the expected decline in rates affect the Fund's dividend? - The Fund believes its dividend is well-protected, with a significant portion of earnings generated from fee-based income, which is less tied to rate changes [22][23] Question: How does the Fund's valuation compare to peers? - The Fund trades at a discount due to its lower absolute dividend yield on a NAV basis compared to peers that over-distribute [24] Question: How are net earnings generated from dividends and fee-based income? - Fee income is tied to originations and exits, while dividends are generated from equity stakes acquired in private transactions [25][26] Question: What are the current market spreads and pricing trends? - Private credit spreads have tightened by approximately 100 basis points, with average yields on private originations at 12.6% and public investments at 600 basis points over SOFR [27][28][31] Question: How has the macro view changed, and is the market shifting to a borrower's market? - The market is transitioning to a borrower's market, with increased competition and more favorable non-economic terms for lenders [29][30] Question: Why is private credit attractive, and what spreads are being deployed? - Private credit offers higher spreads, with the Fund focusing on opportunities in less traditional areas of the market [32][33] Question: How is the Fund positioned for a potential economic slowdown? - The Fund focuses on downside protection, investing in good businesses with strong creditor protections and sector expertise to navigate slowdowns [34][35] Question: Where are the best risk-adjusted returns in the portfolio? - The Fund prioritizes secured investments, focusing on principal protection and avoiding losses [36][37] Question: How does the Fund's fee structure compare to peers? - The Fund's fee structure sits between closed-end funds and BDCs, reflecting its hybrid public-private investment approach [38][39] Question: What is the update on non-accrual investments? - Non-accruals represent 2.7% of the portfolio, with two new non-accruals in Q2 2024 [40] Question: What are the leverage targets and capital structure plans? - Leverage was 0.48x at quarter-end, with plans to address 2024 maturities and maintain current leverage targets [41][42][44]

Core Viewpoint - FS Credit Opportunities (FSCO) is a closed-end fund that offers a diversified portfolio of credit instruments, providing significant income and capital appreciation potential despite its relatively short history since inception in November 2022 [1][2] Fund Overview - FSCO has achieved a price return of over 38% and a total return approaching 70%, supported by a high dividend yield of approximately 11.7% [1] - The fund's advisor is FS Global Advisor, with a management fee of 1.5% of average gross assets [1] Portfolio Strategy & Financials - FSCO's portfolio includes diverse credit investments across various industries, with the largest exposure in consumer services (15%), followed by healthcare equipment & services (14%) and commercial & professional services (11%) [3] - Total assets amount to $2.15 billion, spread across 82 portfolio companies, with approximately 81% structured as senior secured debt, reducing investment risk [4] - The investment portfolio has grown from $1.9 billion at the end of 2020 to $1.93 billion at the end of 2023, with net assets of $1.37 billion and a strong asset coverage ratio of 5.28x [5] Valuation & Outlook - FSCO currently trades at a discount to NAV of nearly 14%, but this discount is expected to decrease with potential interest rate cuts, which would benefit the fund's portfolio [6][7] - The NAV per share has increased from $6.56 at launch to $6.92, indicating healthy earnings generation [5][6] Interest Rate Impact - Future interest rate cuts are anticipated to create favorable conditions for FSCO's portfolio, potentially increasing the volume of borrowers and enhancing NAV growth [7][8] - FSCO holds $715 million in debt with an effective borrowing cost of 6.23%, which could decrease with lower interest rates, allowing for greater earnings retention [8] Dividend Information - The current monthly dividend is $0.06 per share, yielding 11.7%, with a coverage rate of approximately 107% based on last year's net investment income [11] - While the fund has a history of dividend increases, future raises may slow due to the impact of lower interest rates on net investment income [12] Conclusion - FSCO is well-managed with growing NAV and fully covered distributions, making it an attractive option for income-oriented investors despite the risks associated with below investment grade debt [13]

Distribution Announcement - FS Credit Opportunities Corp. announced a monthly distribution of $0.06 per share for August 2024, payable on August 30, 2024 [1][3] Financial Performance - The current annualized distribution rate is 10.1% based on the Fund's net asset value (NAV) and 11.1% based on market price as of July 31, 2024 [2] - The monthly distribution has been fully covered by the Fund's net investment income throughout 2024 [2] - The Fund has generated an estimated total return of 9.5% on NAV and 22.7% on market price year-to-date through July 31, 2024 [2] Fund Overview - FS Credit Opportunities Corp. manages approximately $2.3 billion in assets, focusing on event-driven credit, special situations, private capital solutions, and other non-traditional credit opportunities [3] - FS Investments, the parent company, manages over $75 billion in assets and serves a diverse client base including institutional investors and individual investors [6]