Oaktree Specialty Lending (US:OCSL)2025-11-17 23:00Investment Portfolio - As of September 30, 2025, the company held $2,847.8 million in investments at fair value, a decrease from $3,021.3 million as of September 30, 2024, primarily due to investment repayments and net realized and unrealized losses[412] - Approximately 94.8% of total assets as of September 30, 2025, represented investments at fair value, compared to 94.5% as of September 30, 2024[413] - The investment strategy targets companies with resilient business models and strong underlying fundamentals, particularly in the middle market[400] - The investment portfolio composition at cost as of September 30, 2025 was 83.11% in senior secured debt, 5.39% in debt investments in joint ventures, and 4.53% in common equity and warrants[420] - The fair value of senior secured debt increased to 85.88% of total investments as of September 30, 2025, compared to 85.21% in the previous year[420] - The company’s investment portfolio includes loans, common and preferred equity, and warrants, with loans typically secured by a first, second, or subordinated lien on the assets of the portfolio company[418] - The industry composition of the portfolio at cost showed an increase in Application Software investments to 17.64% as of September 30, 2025, up from 16.85% in 2024[422] - The company’s investments in Health Care Services increased to 5.21% at cost as of September 30, 2025, compared to 4.77% in the previous year[422] Financial Performance - For the year ended September 30, 2025, the company originated $960.5 million of investment commitments across 43 new and 32 existing portfolio companies, funding a total of $970.8 million in investments[419] - As of September 30, 2025, the total investment income was $316.8 million, a decrease of $64.9 million or 17.0% compared to $381.7 million for the year ended September 30, 2024[439] - Net investment income for the year ended September 30, 2025 decreased by $22.4 million compared to 2024, primarily due to a decrease in total investment income[441] - The company recorded net realized losses of $17.1 million for the year ended September 30, 2025, significantly lower than the $136.4 million in losses recorded in 2024[443] - For the year ended September 30, 2025, net unrealized depreciation was $(101.2) million, compared to a net unrealized appreciation of $19.1 million in 2024[445] - Net expenses for the year ended September 30, 2025 were $163.3 million, down by $43.3 million or 21.0% from $206.6 million in 2024[440] Macroeconomic Environment - The current macroeconomic environment includes increased volatility, higher inflation, and elevated interest rates, impacting overall market supply and demand[398] - The company continues to monitor macroeconomic events and their effects on its business and portfolio companies, providing constructive solutions as necessary[399] Debt and Financing - The company had $1,495.0 million in senior securities as of September 30, 2025, with an asset coverage ratio of 197.50%[448] - The company reported total debt of $1.660 billion as of September 30, 2024, decreasing to $1.495 billion by September 30, 2025[457] - The company had $615.0 million of undrawn capacity on credit facilities as of September 30, 2025[453] - The company had $286.0 million in unfunded commitments as of September 30, 2025, with $258.9 million allocated for debt and equity financing to portfolio companies[455] - The company issued $300.0 million in aggregate principal amount of the 2029 Notes on August 15, 2023, with net proceeds of $292.9 million[484] - The company reported a minimum shareholders' equity of $1,476 million against a target value of $871 million as of June 30, 2025, indicating strong compliance with financial covenants[474] Interest Rates and Risk Management - The company reported that a 250 basis point increase in interest rates would result in a net increase in net assets from operations of approximately $24.245 million[503] - The percentage of qualified net interest income for the year ended September 30, 2025, was 93.1%[496] - The company’s risk management procedures are designed to identify and analyze financial market risks, including interest rate risk[501] - The company’s interest-bearing cash and investments as of September 30, 2025, included $938.764 million indexed to the SOFR[504] - As of September 30, 2025, 90.7% of the debt investment portfolio (at fair value) bore interest at floating rates, compared to 88.4% as of September 30, 2024[502] Shareholder Distributions - The company declared a quarterly distribution of $0.55 per share on November 8, 2023, amounting to $41.7 million in cash distribution[469] - The company declared a quarterly distribution of $0.40 per share, payable in cash on December 31, 2025, to stockholders of record on December 15, 2025[498] - The company has adopted a Dividend Reinvestment Plan (DRIP) allowing stockholders to reinvest cash distributions into additional shares of common stock[496] Management and Advisory - The company is externally managed by Oaktree, which provides investment advisory and administrative services[393] - The company has entered into related party transactions with Oaktree, which includes an Investment Advisory Agreement[497]