Oaktree Specialty Lending (OCSL) - 2022 Q1 - Quarterly Report

PART I — FINANCIAL INFORMATION Item 1. Consolidated Financial Statements This section presents Oaktree Specialty Lending Corporation's unaudited consolidated financial statements and notes for Q4 2021 Consolidated Statements of Assets and Liabilities This statement provides a snapshot of the company's financial position, detailing assets, liabilities, and net assets Consolidated Assets and Liabilities Summary | Category | December 31, 2021 (in thousands) | September 30, 2021 (in thousands) | | :----------------------------------- | :--------------------------------- | :--------------------------------- | | ASSETS | | | | Total investments at fair value | $2,588,623 | $2,556,629 | | Cash and cash equivalents | $43,765 | $29,334 | | Total assets | $2,699,939 | $2,636,387 | | LIABILITIES AND NET ASSETS | | | | Total liabilities | $1,374,878 | $1,323,564 | | Total net assets | $1,325,061 | $1,312,823 | | Total liabilities and net assets | $2,699,939 | $2,636,387 | - Total assets increased by $63.55 million from September 30, 2021, to December 31, 2021, primarily driven by an increase in total investments at fair value and cash and cash equivalents[10] - Net assets increased by $12.24 million, resulting in a net asset value per common share of $7.34 as of December 31, 2021, up from $7.28 as of September 30, 2021[10] Consolidated Statements of Operations This statement details the company's revenues, expenses, net investment income, and overall net assets from operations Consolidated Statements of Operations Summary | Metric | Three months ended Dec 31, 2021 (in thousands) | Three months ended Dec 31, 2020 (in thousands) | | :----------------------------------- | :--------------------------------------------- | :--------------------------------------------- | | Total investment income | $64,941 | $38,204 | | Total expenses | $30,088 | $28,186 | | Net expenses | $29,338 | $28,186 | | Net investment income | $32,295 | $10,018 | | Net unrealized appreciation (depreciation) | $(4,586) | $47,556 | | Net realized gains (losses) | $9,321 | $8,215 | | Net increase (decrease) in net assets resulting from operations | $39,408 | $65,544 | | Net investment income per common share | $0.18 | $0.07 | | Earnings (loss) per common share | $0.22 | $0.46 | - Total investment income increased significantly by $26.74 million (70.0%) year-over-year, primarily driven by higher interest income from non-control/non-affiliate investments and a substantial increase in dividend income from control investments[12] - Net investment income more than tripled, rising from $10.02 million in Q4 2020 to $32.30 million in Q4 2021, despite an increase in total expenses[12] - Net unrealized appreciation shifted to depreciation, from $47.56 million appreciation in Q4 2020 to $4.59 million depreciation in Q4 2021, impacting the overall net increase in net assets[12] Consolidated Statements of Changes in Net Assets This statement tracks movements in the company's net assets, reflecting operations, stockholder distributions, and capital transactions Consolidated Statements of Changes in Net Assets Summary | Metric | Three months ended Dec 31, 2021 (in thousands) | Three months ended Dec 31, 2020 (in thousands) | | :------------------------------------------------- | :--------------------------------------------- | :--------------------------------------------- | | Net increase (decrease) in net assets from operations | $39,408 | $65,544 | | Distributions to stockholders | $(27,956) | $(15,506) | | Net increase (decrease) in net assets from stockholder transactions | $(27,956) | $(15,506) | | Net increase (decrease) in net assets from capital share transactions | $786 | $0 | | Total increase (decrease) in net assets | $12,238 | $50,038 | | Net assets at end of period | $1,325,061 | $964,917 | | Net asset value per common share | $7.34 | $6.85 | - Total increase in net assets significantly decreased from $50.04 million in Q4 2020 to $12.24 million in Q4 2021, primarily due to the shift from net unrealized appreciation to depreciation in operations[14] - Distributions to stockholders increased by $12.45 million year-over-year, reflecting higher payouts[14] - Net asset value per common share increased to $7.34 at the end of Q4 2021 from $6.85 in Q4 2020[14] Consolidated Statements of Cash Flows This statement details cash generated and used by operating, investing, and financing activities, showing liquidity Consolidated Statements of Cash Flows Summary | Category | Three months ended Dec 31, 2021 (in thousands) | Three months ended Dec 31, 2020 (in thousands) | | :------------------------------------------------- | :--------------------------------------------- | :--------------------------------------------- | | Net cash provided by (used in) operating activities | $23,185 | $16,072 | | Net cash provided by (used in) financing activities | $(7,504) | $(30,594) | | Net increase (decrease) in cash and cash equivalents and restricted cash | $14,422 | $(14,862) | | Cash and cash equivalents and restricted cash, end of period | $46,057 | $24,234 | - Net cash provided by operating activities increased by $7.11 million year-over-year, primarily due to higher net increase in net assets from operations and significant changes in operating assets and liabilities, including an increase in payables from unsettled transactions[17] - Financing activities shifted from a net use of $30.59 million in Q4 2020 to a net use of $7.50 million in Q4 2021, driven by increased borrowings under credit facilities offsetting higher cash distributions[17] - The company experienced a net increase in cash and cash equivalents and restricted cash of $14.42 million in Q4 2021, a significant improvement from a net decrease of $14.86 million in Q4 2020[17] Consolidated Schedule of Investments as of December 31, 2021 This schedule provides a detailed breakdown of the company's investment portfolio by type, industry, and fair value Investment Portfolio Summary (December 31, 2021) | Investment Type | Cost (in thousands) | Fair Value (in thousands) | | :----------------------------------- | :------------------------ | :------------------------ | | Control Investments | $272,970 | $259,469 | | Affiliate Investments | $18,845 | $18,120 | | Non-Control/Non-Affiliate Investments | $2,283,055 | $2,311,034 | | Total Portfolio Investments | $2,574,870 | $2,588,623 | | Cash and Cash Equivalents and Restricted Cash | $46,057 | $46,057 | | Total Portfolio Investments and Cash | $2,620,927 | $2,634,680 | - Non-Control/Non-Affiliate investments constitute the largest portion of the portfolio, representing 174.4% of net assets at fair value[39] - The portfolio includes various debt instruments (First Lien Term Loans, Second Lien Term Loans, Subordinated Debt, Fixed Rate Bonds) and equity interests (Common Units, Preferred Units, Warrants) across diverse industries such as Application Software, Health Care Services, Pharmaceuticals, and Multi-Sector Holdings[19][21][23][25][27][29][31][33][35][37] Derivative Instruments (December 31, 2021) | Derivative Instrument | Notional Amount to be Purchased (in thousands) | Notional Amount to be Sold (in thousands) | Maturity Date | Counterparty | Cumulative Unrealized Appreciation/(Depreciation) (in thousands) | | :-------------------------------- | :------------------------------------------- | :---------------------------------------- | :------------ | :-------------------------- | :---------------------------------------------------------- | | Foreign currency forward contract | $49,542 | €42,652 | 2/10/2022 | JPMorgan Chase Bank, N.A. | $999 | | Foreign currency forward contract | $54,395 | £40,109 | 2/10/2022 | JPMorgan Chase Bank, N.A. | $76 | | Interest rate swap | $350,000 | N/A | 1/15/2027 | Royal Bank of Canada | $(5,931) | Consolidated Schedule of Investments as of September 30, 2021 This schedule details the company's investment portfolio by type, industry, and fair value for comparative analysis Investment Portfolio Summary (September 30, 2021) | Investment Type | Cost (in thousands) | Fair Value (in thousands) | | :----------------------------------- | :------------------------ | :------------------------ | | Control Investments | $283,599 | $270,765 | | Affiliate Investments | $18,763 | $18,289 | | Non-Control/Non-Affiliate Investments | $2,236,759 | $2,267,575 | | Total Portfolio Investments | $2,539,121 | $2,556,629 | | Cash and Cash Equivalents and Restricted Cash | $31,635 | $31,635 | | Total Portfolio Investments and Cash | $2,570,756 | $2,588,264 | - Non-Control/Non-Affiliate investments represented 172.7% of net assets at fair value, indicating a slight increase in concentration compared to the prior quarter[66] - The portfolio composition remained diverse across industries, with Application Software, Multi-Sector Holdings, and Pharmaceuticals being prominent sectors[47][49][51][53][55][57][59][61][63][65] Derivative Instruments (September 30, 2021) | Derivative Instrument | Notional Amount to be Purchased (in thousands) | Notional Amount to be Sold (in thousands) | Maturity Date | Counterparty | Cumulative Unrealized Appreciation/(Depreciation) (in thousands) | | :-------------------------------- | :------------------------------------------- | :---------------------------------------- | :------------ | :-------------------------- | :---------------------------------------------------------- | | Foreign currency forward contract | $52,186 | £37,709 | 11/12/2021 | JPMorgan Chase Bank, N.A. | $1,339 | | Foreign currency forward contract | $46,663 | €39,736 | 11/12/2021 | JPMorgan Chase Bank, N.A. | $573 | | Interest rate swap | $350,000 | N/A | 1/15/2027 | Royal Bank of Canada | $(2,108) | Notes to Consolidated Financial Statements This section provides detailed explanations and disclosures supporting the consolidated financial statements Note 1. Organization Oaktree Specialty Lending Corporation is a BDC and RIC, externally managed by Oaktree, providing flexible financing solutions - Oaktree Specialty Lending Corporation (the "Company") is a specialty finance company regulated as a Business Development Company (BDC) and has elected to be treated as a Regulated Investment Company (RIC) for U.S. federal income tax purposes[70] - The Company's investment objective is to generate current income and capital appreciation by providing flexible financing solutions, including first and second lien loans, unsecured and mezzanine loans, bonds, preferred equity, and certain equity co-investments[71] - The Company is externally managed by Oaktree Fund Advisors, LLC ("Oaktree"), a subsidiary of Oaktree Capital Group, LLC ("OCG")[72] - On March 19, 2021, the Company acquired Oaktree Strategic Income Corporation ("OCSI"), issuing 39,400,011 shares of its common stock to former OCSI stockholders[73] Note 2. Significant Accounting Policies This section outlines key accounting principles for financial statements, including fair value measurements and revenue recognition - The Consolidated Financial Statements are prepared in accordance with GAAP, following ASC Topic 946 for investment companies[74] - Investments are valued at fair value according to ASC 820, which prioritizes observable market prices (Level 1, 2) over entity-specific inputs (Level 3) The Board of Directors determines fair value with assistance from independent valuation firms[78][82][86] - Revenue recognition policies include accrual-based interest income (adjusted for OID), PIK interest income (accrued if collectible), and fee income (recognized upon investment closing or as earned) Dividend income is recognized on the ex-dividend date for public securities and record date for private equity[93][95][96][98] - The Company uses foreign currency forward contracts and interest rate swaps to mitigate exposure to foreign exchange and interest rate fluctuations, respectively Foreign currency forwards are marked-to-market, while interest rate swaps are designated as hedging instruments[91][92] - As a RIC, the Company is generally not subject to U.S. federal income tax on distributed taxable income It uses taxable subsidiaries to hold certain equity investments and accounts for their income taxes using the liability method, recognizing deferred tax assets and liabilities[105][106] Note 3. Portfolio Investments This note details the composition and valuation of the investment portfolio, including joint ventures and concentrations Investment Portfolio Composition by Type | Investment Type | Dec 31, 2021 (Fair Value, in thousands) | Sep 30, 2021 (Fair Value, in thousands) | | :----------------------------------- | :-------------------------------------- | :-------------------------------------- | | Investments in debt securities | $2,290,199 | $2,259,924 | | Investments in equity securities | $107,859 | $107,222 | | Debt investments in the JVs | $152,104 | $151,832 | | Equity investments in the JVs | $38,461 | $37,651 | | Total | $2,588,623 | $2,556,629 | - As of December 31, 2021, 87.4% of the portfolio at fair value consisted of senior secured debt, and 6.9% consisted of subordinated debt, including JV debt investments[109] Debt Investment Portfolio by Rate Type | Rate Type | Dec 31, 2021 (% of Debt Fair Value) | Sep 30, 2021 (% of Debt Fair Value) | | :----------------------------------- | :---------------------------------- | :---------------------------------- | | Floating rate debt securities | 91.59% | 91.45% | | Fixed rate debt securities | 8.41% | 8.55% | | Total | 100.00% | 100.00% | - The majority of investments (85.1% of total fair value) were categorized as Level 3, indicating significant unobservable inputs in their valuation[112] - The portfolio is geographically diverse, with the Northeast, Midwest, and West regions representing the largest concentrations Application Software and Multi-Sector Holdings are the largest industry concentrations[132][134] Senior Loan Fund JV I, LLC SLF JV I is a joint venture with Kemper, co-investing in senior secured loans, with the company holding an 87.5% interest - The Company co-invests in senior secured loans and other corporate debt securities with Kemper through SLF JV I, owning 87.5% of the LLC equity interests and outstanding subordinated notes[137] Company's Investment in SLF JV I | Metric | Dec 31, 2021 (in thousands) | Sep 30, 2021 (in thousands) | | :----------------------------------- | :-------------------------- | :-------------------------- | | Company's SLF JV I Notes (Cost/Fair Value) | $96,250 | $96,250 | | Company's LLC equity interests (Cost) | $49,322 | $49,322 | | Company's LLC equity interests (Fair Value) | $38,461 | $37,651 | | Interest income from SLF JV I Notes (Q4 2021) | $2,000 | $1,800 (Q4 2020) | | Dividend income from SLF JV I LLC equity (Q4 2021) | $500 | $0 (Q4 2020) | SLF JV I Portfolio Summary | SLF JV I Portfolio Summary | Dec 31, 2021 | Sep 30, 2021 | | :----------------------------------- | :----------- | :----------- | | Senior secured loans (principal amount) | $362,106 | $344,196 | | Weighted average interest rate | 5.76% | 5.60% | | Number of borrowers | 61 | 55 | | Largest exposure to a single borrower | $9,813 | $9,875 | - SLF JV I had a senior revolving credit facility with Deutsche Bank AG, with $220.0 million outstanding as of December 31, 2021, accruing interest at LIBOR plus 2.00% per annum[138] OCSI Glick JV LLC Glick JV is a joint venture with GF Equity Funding, investing in senior secured loans, with the company holding an 87.5% interest - The Company became party to the Glick JV LLC agreement on March 19, 2021, co-investing in senior secured loans with GF Equity Funding, owning 87.5% of the LLC equity interests and Glick JV Notes[162][163] Company's Investment in Glick JV | Metric | Dec 31, 2021 (in thousands) | Sep 30, 2021 (in thousands) | | :----------------------------------- | :-------------------------- | :-------------------------- | | Company's Glick JV investment (Cost) | $50,588 | $50,705 | | Company's Glick JV investment (Fair Value) | $55,854 | $55,582 | | Interest income from Glick JV Notes (Q4 2021) | $1,081 | N/A (Q4 2020) | | Dividend income from Glick JV LLC equity (Q4 2021) | $0 | N/A (Q4 2020) | Glick JV Portfolio Summary | Glick JV Portfolio Summary | Dec 31, 2021 | Sep 30, 2021 | | :----------------------------------- | :----------- | :----------- | | Senior secured loans (principal amount) | $140,078 | $126,512 | | Weighted average current interest rate | 6.05% | 5.86% | | Number of borrowers | 44 | 37 | | Largest loan exposure to a single borrower | $6,820 | $6,907 | - The Glick JV had a senior revolving credit facility with Deutsche Bank AG, with $71.9 million outstanding as of December 31, 2021, bearing interest at LIBOR plus 2.25% per annum[164] Note 4. Fee Income The company's total fee income for Q4 2021 decreased to $0.9 million, with recurring fees from servicing and exit fees Fee Income Summary | Metric | Three months ended Dec 31, 2021 (in thousands) | Three months ended Dec 31, 2020 (in thousands) | | :----------------------------------- | :--------------------------------------------- | :--------------------------------------------- | | Total fee income | $912 | $3,352 | | Recurring fee income | $200 | $100 | - Total fee income decreased by $2.44 million (72.8%) year-over-year, from $3.35 million in Q4 2020 to $0.91 million in Q4 2021[12][188] - Recurring fee income, primarily from servicing and exit fees, increased slightly from $0.1 million to $0.2 million[188] Note 5. Share Data and Net Assets This note details earnings per share, changes in net assets, distributions, and common stock issuances Earnings per Share Earnings per common share decreased in Q4 2021 due to a larger share count, despite increased net assets from operations Earnings Per Share Details | Metric | Three months ended Dec 31, 2021 (in thousands) | Three months ended Dec 31, 2020 (in thousands) | | :----------------------------------- | :--------------------------------------------- | :--------------------------------------------- | | Net increase (decrease) in net assets from operations | $39,408 | $65,544 | | Weighted average common shares outstanding | 180,381 | 140,961 | | Earnings (loss) per common share | $0.22 | $0.46 | - Earnings per common share decreased by $0.24 year-over-year, from $0.46 in Q4 2020 to $0.22 in Q4 2021[191] - Weighted average common shares outstanding increased by 39,420 shares, from 140,961 in Q4 2020 to 180,381 in Q4 2021[191] Changes in Net Assets Net assets increased by $12.24 million in Q4 2021, driven by income and gains, offset by depreciation and distributions Changes in Net Assets Summary | Metric | Three months ended Dec 31, 2021 (in thousands) | Three months ended Dec 31, 2020 (in thousands) | | :------------------------------------------------- | :--------------------------------------------- | :--------------------------------------------- | | Net assets at beginning of period | $1,312,823 | $914,879 | | Net investment income | $32,295 | $10,018 | | Net unrealized appreciation (depreciation) | $(4,586) | $47,556 | | Net realized gains (losses) | $9,321 | $8,215 | | Distributions to stockholders | $(27,956) | $(15,506) | | Total increase (decrease) in net assets | $12,238 | $50,038 | | Net assets at end of period | $1,325,061 | $964,917 | - Net assets increased by $12.24 million in Q4 2021, compared to a $50.04 million increase in Q4 2020[192] - The increase in net assets was primarily driven by net investment income of $32.30 million and net realized gains of $9.32 million, partially offset by net unrealized depreciation of $4.59 million and distributions of $27.96 million[192] Distributions The company declared a quarterly distribution of $0.155 per share for Q4 2021, with increased payouts and DRIP share issuance Quarterly Distributions to Stockholders | Date Declared | Payment Date | Amount per Share | Cash Distribution (in millions) | DRIP Shares Issued | DRIP Shares Value (in millions) | | :---------------- | :------------- | :--------------- | :------------------------------ | :----------------- | :------------------------------ | | Oct 13, 2021 | Dec 31, 2021 | $0.155 | $27.2 | 107,971 | $0.8 | | Nov 13, 2020 | Dec 31, 2020 | $0.11 | $15.0 | 93,964 | $0.5 | - The distribution per share increased from $0.11 in Q4 2020 to $0.155 in Q4 2021[197] - For the Q4 2021 distribution, new shares were issued under the DRIP, whereas in Q4 2020, shares were purchased on the open market[197][198] Common Stock Issuances During Q4 2021, 107,971 common shares were issued through the dividend reinvestment plan, with no other issuances - 107,971 shares of common stock were issued under the dividend reinvestment plan (DRIP) during the three months ended December 31, 2021[199] - There were no other common stock issuances during the three months ended December 31, 2021, or December 31, 2020[199] Note 6. Borrowings This note details the company's debt facilities, including terms, outstanding amounts, interest rates, and covenant compliance Syndicated Facility The Syndicated Facility increased to $1.0 billion, with $495.0 million outstanding, maturing in May 2026, and compliant with covenants - On December 10, 2021, the Syndicated Facility increased by $50 million to $1.0 billion, with an accordion feature allowing further increases up to $1.25 billion or net worth[201] - As of December 31, 2021, $495.0 million was outstanding under the Syndicated Facility, with a fair value of $495.0 million The facility matures on May 4, 2026, and LIBOR loans accrue interest at 2.00% over LIBOR[202][206] - The company was in compliance with all financial covenants, including an asset coverage ratio of not less than 1.50 to 1.00 and an EBITDA to interest expense ratio of not less than 2.25 to 1.00[205] Syndicated Facility Interest Expense and Rate | Metric | Three months ended Dec 31, 2021 (in millions) | Three months ended Dec 31, 2020 (in millions) | | :----------------------------------- | :-------------------------------------------- | :-------------------------------------------- | | Interest expense (inclusive of fees) | $3.8 | $3.2 | | Weighted average interest rate | 2.174% | 2.323% | Citibank Facility The Citibank Facility increased to $200 million, with $155.0 million outstanding, extended reinvestment period, and LIBOR-based interest - On November 18, 2021, the Citibank Facility increased by $50 million to $200 million, with the reinvestment period extended to November 18, 2023, and maturity to November 18, 2024[208] - As of December 31, 2021, $155.0 million was outstanding under the Citibank Facility, with a fair value of $155.0 million Borrowings accrue interest at LIBOR plus between 1.25% and 2.25% per annum[209][210] - The weighted average interest rate for borrowings under the Citibank Facility was 1.830% for the three months ended December 31, 2021, with interest expense of $0.8 million[210] 2025 Notes The company has $300.0 million in 3.500% unsecured notes due February 2025, ranking senior to subordinated debt - The Company issued $300.0 million in 3.500% unsecured notes due February 25, 2025, with net proceeds of $293.8 million[211] - The 2025 Notes are general unsecured obligations, ranking senior to expressly subordinated debt, equally with other unsubordinated liabilities, but effectively junior to secured and subsidiary indebtedness[212] - Interest is paid semi-annually on February 25 and August 25 The notes are redeemable at the company's option prior to maturity at par plus a 'make-whole' premium, if applicable[213] 2025 Notes Details | Metric | As of Dec 31, 2021 (in millions) | As of Sep 30, 2021 (in millions) | | :----------------------------------- | :------------------------------- | :------------------------------- | | Principal | $300.0 | $300.0 | | Net carrying value | $296.1 | $295.7 | | Fair Value | $312.8 | $314.5 | 2027 Notes The company issued $350.0 million in 2.700% unsecured notes due January 2027, with an interest rate swap for alignment - The Company issued $350.0 million in 2.700% unsecured notes due January 15, 2027, with net proceeds of $344.8 million[215] - The 2027 Notes are general unsecured obligations, ranking senior to expressly subordinated debt, equally with other unsubordinated liabilities, but effectively junior to secured and subsidiary indebtedness[216] - Interest is paid semi-annually on January 15 and July 15 The company entered into an interest rate swap to receive a fixed 2.700% and pay LIBOR plus 1.658% on a $350 million notional amount[217][220] 2027 Notes Details | Metric | As of Dec 31, 2021 (in millions) | As of Sep 30, 2021 (in millions) | | :----------------------------------- | :------------------------------- | :------------------------------- | | Principal | $350.0 | $350.0 | | Net carrying value | $339.4 | $343.0 | | Fair Value | $347.4 | $351.1 | Note 7. Taxable/Distributable Income and Dividend Distributions This note reconciles net assets to taxable income, discusses RIC status, deferred taxes, and accumulated earnings Taxable/Distributable Income Reconciliation | Metric | Three months ended Dec 31, 2021 (in thousands) | Three months ended Dec 31, 2020 (in thousands) | | :----------------------------------- | :--------------------------------------------- | :--------------------------------------------- | | Net increase (decrease) in net assets from operations | $39,408 | $65,544 | | Net unrealized (appreciation) depreciation | $4,586 | $(47,556) | | Taxable/Distributable Income (estimate) | $22,270 | $13,767 | - Taxable/Distributable Income increased by $8.50 million (61.7%) year-over-year, from $13.77 million in Q4 2020 to an estimated $22.27 million in Q4 2021[225] - The company recognized a total benefit for income tax related to realized and unrealized losses of $2.4 million in Q4 2021, compared to a provision of $0.2 million in Q4 2020[228][229] - As of September 30, 2021, the company had net capital loss carryforwards of $547.9 million to offset future net capital gains[223] Note 8. Realized Gains or Losses and Net Unrealized Appreciation or Depreciation This note details realized gains/losses from investment sales and net changes in fair value (unrealized appreciation/depreciation) Realized Gains or Losses The company recorded net realized gains of $9.3 million in Q4 2021, slightly higher than prior year, from various exits Net Realized Gains (Losses) | Metric | Three months ended Dec 31, 2021 (in millions) | Three months ended Dec 31, 2020 (in millions) | | :----------------------------------- | :-------------------------------------------- | :-------------------------------------------- | | Net realized gains (losses) | $9.3 | $8.2 | | Key Contributors (Q4 2021): | | | | Foreign currency forward contracts | $3.0 | N/A | | OmniSYS Acquisition Corporation | $2.0 | N/A | | First Star Speir Aviation Limited | $1.9 | N/A | | Key Contributors (Q4 2020): | | | | PLATO Learning Inc. | N/A | $7.8 | | L Squared Capital | N/A | $1.4 | | BX Commercial Mortgage Trust 2020-VIVA | N/A | $1.2 | - Net realized gains increased by $1.1 million year-over-year, from $8.2 million in Q4 2020 to $9.3 million in Q4 2021[233] Net Unrealized Appreciation or Depreciation The company shifted from net unrealized appreciation to depreciation in Q4 2021, primarily due to exited and debt investments Net Unrealized Appreciation (Depreciation) | Metric | Three months ended Dec 31, 2021 (in millions) | Three months ended Dec 31, 2020 (in millions) | | :----------------------------------- | :-------------------------------------------- | :-------------------------------------------- | | Net unrealized appreciation (depreciation) | $(4.6) | $47.6 | | Components (Q4 2021): | | | | Net unrealized depreciation (exited investments) | $4.7 | N/A | | Net unrealized depreciation (debt investments) | $1.8 | N/A | | Net unrealized depreciation (foreign currency forward contracts) | $0.8 | N/A | | Net unrealized appreciation (equity investments) | $(2.8) | N/A | | Components (Q4 2020): | | | | Net unrealized appreciation (debt investments) | N/A | $27.2 | | Net unrealized appreciation (exited investments) | N/A | $12.8 | | Net unrealized appreciation (equity investments) | N/A | $9.9 | | Net unrealized depreciation (foreign currency forward contracts) | N/A | $2.4 | - Net unrealized appreciation (depreciation) shifted from a positive $47.6 million in Q4 2020 to a negative $4.6 million in Q4 2021[235] - The Q4 2021 depreciation was primarily driven by exited investments ($4.7 million), debt investments ($1.8 million), and foreign currency forward contracts ($0.8 million), partially offset by $2.8 million in equity investment appreciation[235] Note 9. Concentration of Credit Risks The company manages credit risk by depositing cash with high-credit-quality financial institutions and monitoring their stability - The Company's cash deposits with financial institutions may exceed FDIC insurance limits, posing a concentration of credit risk[236] - Credit risk is mitigated by depositing cash with high-credit-quality financial institutions and continuously monitoring their financial stability[236] Note 10. Related Party Transactions This note details relationships and transactions with Oaktree, its external manager, and Oaktree Administrator, including fee structures - As of December 31, 2021, the company had a liability of $26.2 million for unpaid base management and incentive fees payable to Oaktree, down from $32.6 million as of September 30, 2021[237] - As of December 31, 2021, $3.5 million was included in 'Due to affiliate' for unpaid administrative and other reimbursable expenses payable to Oaktree Administrator, down from $4.4 million as of September 30, 2021[255] Investment Advisory Agreement The Investment Advisory Agreement with Oaktree outlines a two-component fee structure: base management and incentive fees - The Investment Advisory Agreement with Oaktree (formerly OCM) governs the payment of base management fees and incentive fees[238][239] - The agreement requires annual approval by the Board of Directors or a majority of outstanding voting securities and can be terminated with 60 days' notice or upon assignment[240] Base Management Fee The base management fee is 1.50% annually of gross assets, with a reduced rate on excess assets and a $6 million waiver applied - The base management fee is calculated at an annual rate of 1.50% of total gross assets (excluding cash and cash equivalents), with a reduced rate of 1.00% on gross assets exceeding 200% of net asset value[241] - A $6 million waiver of base management fees was implemented over two years following the March 19, 2021, mergers, at a rate of $750,000 per quarter[241] Base Management Fee Incurred | Metric | Three months ended Dec 31, 2021 (in millions) | Three months ended Dec 31, 2020 (in millions) | | :----------------------------------- | :-------------------------------------------- | :-------------------------------------------- | | Base management fee incurred (net of waiver) | $9.2 | $6.5 | Incentive Fee The incentive fee has two parts: income-based (Part I) and capital gains-based (Part II), with specific calculation methodologies - The incentive fee consists of two parts: Part I (incentive fee on income) and Part II (capital gains incentive fee)[243] - Part I is calculated quarterly based on pre-incentive fee net investment income, subject to a 1.50% hurdle rate and a 'catch-up' provision, with no accumulation of amounts from quarter to quarter[243][245] Incentive Fees Incurred | Metric | Three months ended Dec 31, 2021 (in millions) | Three months ended Dec 31, 2020 (in millions) | | :----------------------------------- | :-------------------------------------------- | :-------------------------------------------- | | Part I incentive fee incurred | $6.5 | $4.1 | | Part II incentive fee expensed (GAAP accrual) | $1.8 | $9.5 | - Part II is determined annually based on cumulative realized capital gains (net of losses and unrealized depreciation) from October 1, 2018, excluding merger-related accounting adjustments that would increase the fee[247] Indemnification The Investment Advisory Agreement includes an indemnification clause protecting Oaktree from damages, except in cases of gross negligence - Oaktree and its affiliates are entitled to indemnification from the Company for damages and expenses arising from services under the Investment Advisory Agreement[249] - Indemnification is not applicable in cases of willful misfeasance, bad faith, gross negligence, or reckless disregard of duties[249] Administrative Services Oaktree Administrator provides administrative services, reimbursed at cost, covering office facilities and financial reporting - Oaktree Administrator provides administrative services, including office facilities, record-keeping, financial reporting, and portfolio collection functions[250][251] - The Company reimburses Oaktree Administrator for allocable overhead and compensation costs at cost, with no profit or markup[252] Administrative Expenses Accrued | Metric | Three months ended Dec 31, 2021 (in millions) | Three months ended Dec 31, 2020 (in millions) | | :----------------------------------- | :-------------------------------------------- | :-------------------------------------------- | | Administrative expenses accrued | $0.5 | $0.4 | Note 11. Financial Highlights This note presents key financial metrics and ratios, including net asset value, total return, and asset coverage, for performance overview Key Financial Highlights | Metric | Three months ended Dec 31, 2021 | Three months ended Dec 31, 2020 | | :----------------------------------- | :------------------------------ | :------------------------------ | | Net asset value per share at end of period | $7.34 | $6.85 | | Per share market value at end of period | $7.46 | $5.57 | | Total return | 7.92% | 17.34% | | Common shares outstanding at end of period | 180,469 | 140,961 | | Net assets at end of period (in thousands) | $1,325,061 | $964,917 | | Ratio of net investment income to average net assets (annualized) | 9.65% | 4.21% | | Ratio of net expenses to average net assets (annualized) | 8.77% | 11.83% | | Asset coverage ratio at end of period | 200.81% | 236.67% | - Net asset value per share increased from $7.28 at the beginning of Q4 2021 to $7.34 at the end, while market value per share increased from $7.06 to $7.46[258] - Total return for the three months ended December 31, 2021, was 7.92%, a decrease from 17.34% in the prior year[258] - The asset coverage ratio decreased from 236.67% in Q4 2020 to 200.81% in Q4 2021, while the ratio of net investment income to average net assets significantly increased from 4.21% to 9.65%[258] Note 12. Derivative Instruments The company uses foreign currency forward contracts and an interest rate swap to mitigate foreign exchange and interest rate risks - The Company uses foreign currency forward contracts to mitigate foreign exchange rate fluctuations and an interest rate swap to align fixed-rate debt with its predominantly floating-rate investment portfolio[261][262] Derivative Instruments Summary | Derivative Instrument | Notional Amount to be Purchased (in thousands) | Notional Amount to be Sold (in thousands) | Maturity Date | Cumulative Unrealized Appreciation/(Depreciation) (in thousands) | | :-------------------------------- | :------------------------------------------- | :---------------------------------------- | :------------ | :---------------------------------------------------------- | | Foreign currency forward contracts (Dec 31, 2021) | $103,937 | €42,652, £40,109 | 2/10/2022 | $1,075 | | Foreign currency forward contracts (Sep 30, 2021) | $98,849 | £37,709, €39,736 | 11/12/2021 | $1,912 | | Interest rate swap (Dec 31, 2021) | $350,000 | N/A | 1/15/2027 | $(5,931) | | Interest rate swap (Sep 30, 2021) | $350,000 | N/A | 1/15/2027 | $(2,108) | - As of December 31, 2021, $3.5 million was paid to the Royal Bank of Canada to cover collateral obligations under the interest rate swap agreement[262] Note 13. Commitments and Contingencies Off-balance sheet arrangements include unfunded commitments to portfolio companies and joint ventures, totaling $295.3 million Unfunded Commitments | Category | Dec 31, 2021 (in millions) | Sep 30, 2021 (in millions) | | :----------------------------------- | :------------------------- | :------------------------- | | Unfunded commitments to portfolio companies | $242.8 | $212.4 | | Unfunded commitments to JVs | $49.0 | $49.0 | | Unfunded limited partnership interests | $3.5 | $3.5 | | Total unfunded commitments | $295.3 | $264.9 | - Total unfunded commitments increased by $30.4 million from September 30, 2021, to December 31, 2021[269] - These commitments are subject to portfolio companies' satisfaction of certain financial and nonfinancial covenants and involve varying degrees of credit risk[269] Note 14. Subsequent Events On January 28, 2022, the Board declared a quarterly distribution of $0.16 per share, payable on March 31, 2022 - On January 28, 2022, the Board of Directors declared a quarterly distribution of $0.16 per share[272] - The distribution is payable in cash on March 31, 2022, to stockholders of record on March 15, 2022[272] Schedule of Investments in and Advances to Affiliates (Three months ended December 31, 2021) This schedule details control and affiliate investments, including fair values, additions, reductions, and income for Q4 2021 Control and Affiliate Investments (Q4 2021) | Investment Type | Fair Value as of Oct 1, 2021 (in thousands) | Gross Additions (in thousands) | Gross Reductions (in thousands) | Fair Value as of Dec 31, 2021 (in thousands) | % of Total Net Assets | | :----------------------------------- | :------------------------------------------ | :----------------------------- | :------------------------------ | :------------------------------------------- | :---------------------- | | Control Investments | $270,765 | $1,555 | $(12,851) | $259,469 | 19.6% | | Affiliate Investments | $18,289 | $3,519 | $(3,688) | $18,120 | 1.4% | | Total Control & Affiliate Investments | $289,054 | $5,074 | $(16,539) | $277,589 | 21.0% | - Control investments saw a net reduction in fair value of $11.29 million, while affiliate investments had a net reduction of $0.17 million during the quarter[275] - Interest, fees, or dividends credited in income for control investments totaled $7.41 million, and for affiliate investments, $0.34 million[275] - The company realized a net gain of $1.87 million from control investments during the period, primarily from the sale of First Star Speir Aviation Limited[275] Schedule of Investments in and Advances to Affiliates (Three months ended December 31, 2020) This schedule details control and affiliate investments, including fair values, additions, reductions, and income for Q4 2020 Control and Affiliate Investments (Q4 2020) | Investment Type | Fair Value as of Oct 1, 2020 (in thousands) | Gross Additions (in thousands) | Gross Reductions (in thousands) | Fair Value as of Dec 31, 2020 (in thousands) | % of Total Net Assets | | :----------------------------------- | :------------------------------------------ | :----------------------------- | :------------------------------ | :------------------------------------------- | :---------------------- | | Control Investments | $201,385 | $12,750 | $(6,375) | $207,760 | 21.5% | | Affiliate Investments | $6,509 | $2,765 | $(303) | $8,971 | 0.9% | | Total Control & Affiliate Investments | $207,894 | $15,515 | $(6,678) | $216,731 | 22.5% | - Control investments saw a net increase in fair value of $6.38 million, while affiliate investments had a net increase of $2.46 million during the quarter[279] - Interest, fees, or dividends credited in income for control investments totaled $2.49 million, and for affiliate investments, $0.11 million[279] - No net realized gains or losses were recorded for control or affiliate investments during the period[279] Item 2. Management's Discussion and Analysis of Financial Condition and Results of Operations Management discusses the company's financial performance, condition, critical accounting estimates, portfolio, and recent developments Business Overview Oaktree Specialty Lending Corporation is a BDC and RIC providing credit solutions to middle-market companies, externally managed by Oaktree - The company is a specialty finance company regulated as a Business Development Company (BDC) and a Regulated Investment Company (RIC), externally managed by Oaktree[286][287] - Investment objective is to generate current income and capital appreciation through flexible financing solutions for middle-market companies (enterprise values $100 million-$750 million), including first/second lien loans, unsecured/mezzanine loans, bonds, preferred equity, and equity co-investments[288] - Oaktree focuses on situational lending, select sponsor lending, and stressed sector/rescue lending for new investment opportunities[289] - The company aims to rotate its portfolio into 'core investments' and has reduced 'non-core' investments by approximately $800 million at fair value since October 2017, with approximately $95 million remaining as of December 31, 2021[290] - The company completed a merger with Oaktree Strategic Income Corporation (OCSI) on March 19, 2021, issuing 39,400,011 shares of common stock to former OCSI stockholders[291] Business Environment and Developments The business environment faces COVID-19 disruptions and LIBOR transition, while the company seeks attractive middle-market returns - The COVID-19 pandemic (including the Omicron variant) continues to cause disruptions in supply chains and economic activity, particularly impacting transportation, oil-related, hospitality, tourism, and entertainment industries[292] - Despite ongoing uncertainty, the company believes attractive risk-adjusted returns can be achieved in the middle market due to Oaktree's extensive credit investing experience[294][295] - As of December 31, 2021, 91.6% of the debt investment portfolio (at fair value and cost) bore interest at floating rates indexed to LIBOR or an alternate base rate[296] - The phase-out of LIBOR by June 30, 2023, necessitates renegotiating credit agreements and incorporating fallback language in loan agreements, with SOFR being a potential replacement[296] Critical Accounting Estimates This section outlines critical accounting estimates for investment valuation and revenue recognition, adhering to GAAP principles - Investment valuation is a critical accounting estimate, following ASC 820, which defines fair value and prioritizes observable market prices over entity-specific inputs[297] - The fair value hierarchy categorizes inputs into Level 1 (quoted prices in active markets), Level 2 (observable inputs other than Level 1 prices), and Level 3 (unobservable inputs reflecting management's best estimate)[298] - Valuation techniques include transaction precedent, enterprise value (EV) analysis (using EBITDA, revenue, or asset multiples), and market yield technique, especially for illiquid debt investments[302] - Revenue recognition policies for interest income (including OID and PIK interest) are on an accrual basis, contingent on expected collectibility Fee income is recognized upon investment closing or as services are rendered[309][311] Investment Valuation Investment valuation is a critical estimate, using fair value hierarchy and various techniques, with 90.0% of the portfolio valued by market data - Investment valuation is performed in accordance with ASC 820, prioritizing observable market prices (Level 1, 2) over unobservable inputs (Level 3)[297][298] - Valuation techniques include transaction precedent, enterprise value (EV) analysis (using EBITDA, revenue, or asset multiples), and market yield technique for illiquid debt investments[302] - As of December 31, 2021, 90.0% of the portfolio at fair value was valued based on market quotations, transaction precedent, or corroborated by independent valuation firms[305] - The fair value of investments as of December 31, 2021, was $2,588.6 million, up from $2,556.6 million at September 30, 2021, primarily due to new originations[308] Revenue Recognition Revenue recognition policies cover interest income (including OID and PIK) and fee income, based on accrual and collectibility - Interest income, adjusted for accretion of original issue discount (OID), is recorded on an accrual basis to the extent amounts are expected to be collected Investments are placed on non-accrual status when collectibility is doubtful[309] - Payment-in-kind (PIK) interest is generally recorded on an accrual basis if expected to be collected, increasing the loan balance and recorded cost bases of investments[311] - Fee income, including capital structuring, servicing, amendment, and prepayment fees, is recognized upon investment closing or as earned/services rendered[96] Portfolio Composition The portfolio consists of loans and equity in private companies, with significant Q4 2021 originations and exits, predominantly senior secured debt - During the three months ended December 31, 2021, the company originated $299.9 million of investment commitments and funded $240.8 million of investments[313] - The company received $235.0 million of proceeds from prepayments, exits, other paydowns, and sales, exiting 10 portfolio companies during the same period[313] Investment Portfolio Composition by Type (Cost and Fair Value) | Investment Type | Dec 31, 2021 (Cost %) | Sep 30, 2021 (Cost %) | Dec 31, 2021 (Fair Value %) | Sep 30, 2021 (Fair Value %) | | :----------------------------------- | :-------------------- | :-------------------- | :-------------------------- | :-------------------------- | | Senior secured debt | 86.94% | 85.85% | 87.43% | 86.72% | | Debt investments in the JVs | 5.70% | 5.79% | 5.88% | 5.94% | | Preferred equity | 2.60% | 2.60% | 2.53% | 2.49% | | LLC equity interests of the JVs | 1.92% | 1.94% | 1.49% | 1.47% | | Common equity and warrants | 1.82% | 2.15% | 1.63% | 1.71% | | Subordinated debt | 1.02% | 1.67% | 1.04% | 1.67% | | Total | 100.00% | 100.00% | 100.00% | 100.00% | - Application Software, Multi-Sector Holdings, and Pharmaceuticals were the top three industries by fair value as of December 31, 2021[317] The Joint Ventures This section details the company's two joint ventures, SLF JV I and Glick JV, co-investing in middle-market senior secured loans Senior Loan Fund JV I, LLC SLF JV I is a joint venture with Kemper, where the company holds an 87.5% interest in LLC equity and subordinated notes - The company co-invests in senior secured loans and other corporate debt securities with Kemper through SLF JV I, holding 87.5% of the LLC equity interests and outstanding subordinated notes[318][319] Company's Investment in SLF JV I | Metric | Dec 31, 2021 (in millions) | Sep 30, 2021 (in millions) | | :----------------------------------- | :------------------------- | :------------------------- | | Company's SLF JV I Notes (Cost/Fair Value) | $96.3 | $96.3 | | Company's LLC equity interests (Fair Value) | $38.5 | $37.7 | | Interest income from SLF JV I Notes (Q4 2021) | $2.0 | $1.8 (Q4 2020) | | Dividend income from SLF JV I LLC equity (Q4 2021) | $0.5 | $0 (Q4 2020) | SLF JV I Portfolio Summary | SLF JV I Portfolio Summary | Dec 31, 2021 | Sep 30, 2021 | | :----------------------------------- | :----------- | :----------- | | Senior secured loans (principal amount) | $362,106 | $344,196 | | Weighted average interest rate | 5.76% | 5.60% | | Number of borrowers | 61 | 55 | OCSI Glick JV LLC Glick JV is a joint venture with GF Equity Funding, where the company holds an 87.5% interest in LLC equity and subordinated notes - The company co-invests in senior secured loans with GF Equity Funding through the Glick JV, holding 87.5% of the LLC equity interests and Glick JV Notes[325][326] Company's Investment in Glick JV | Metric | Dec 31, 2021 (in millions) | Sep 30, 2021 (in millions) | | :----------------------------------- | :------------------------- | :------------------------- | | Company's Glick JV investment (Cost) | $50.6 | $50.7 | | Company's Glick JV investment (Fair Value) | $55.9 | $55.6 | | Interest income from Glick JV Notes (Q4 2021) | $1.1 | N/A | | Dividend income from Glick JV LLC equity (Q4 2021) | $0 | N/A | Glick JV Portfolio Summary | Glick JV Portfolio Summary | Dec 31, 2021 | Sep 30, 2021 | | :----------------------------------- | :----------- | :----------- | | Senior secured loans (principal amount) | $140,078 | $126,512 | | Weighted average current interest rate | 6.05% | 5.86% | | Number of borrowers | 44 | 37 | Discussion and Analysis of Results and Operations This section analyzes Q4 2021 financial performance, comparing investment income, expenses, and net asset movements to prior year Comparison of three months ended December 31, 2021 and December 31, 2020 This comparison highlights significant year-over-year changes in investment income, expenses, and net asset movements, impacting overall growth Total Investment Income Total investment income increased by $26.7 million (70.0%) in Q4 2021, driven by a larger portfolio and higher dividend income Total Investment Income Breakdown | Metric | Three months ended Dec 31, 2021 (in millions) | Three months ended Dec 31, 2020 (in millions) | | :----------------------------------- | :-------------------------------------------- | :-------------------------------------------- | | Total investment income | $64.9 | $38.2 | | Interest income from portfolio investments | $60.1 | $34.7 | | PIK interest | $4.7 | $3.1 | | Fee income | $0.9 | $3.4 | | Dividend income | $3.9 | $0.1 | - Total investment income increased by $26.7 million (70.0%) year-over-year, from $38.2 million in Q4 2020 to $64.9 million in Q4 2021[332] - The increase was primarily driven by a $25.4 million increase in interest income due to a larger investment portfolio and higher OID accretion, and a $3.8 million increase in dividend income[332] - Fee income decreased by $2.4 million, mainly due to lower prepayment fees[332] Expenses Net expenses increased by $1.2 million (4.1%) in Q4 2021, mainly due to higher interest and management fees, partially offset by lower incentive fees Net Expenses Breakdown | Metric | Three months ended Dec 31, 2021 (in millions) | Three months ended Dec 31, 2020 (in millions) | | :----------------------------------- | :-------------------------------------------- | :-------------------------------------------- | | Net expenses | $29.3 | $28.2 | | Interest expense | $9.4 | $6.1 | | Base management fee (net of waivers) | $9.2 | $6.5 | | Part I incentive fee | $6.5 | $4.1 | | Part II incentive fee | $1.8 | $9.5 | | Professional fees | $1.3 | $0.9 | - Net expenses increased by $1.2 million (4.1%) year-over-year, from $28.2 million in Q4 2020 to $29.3 million in Q4 2021[333] - Key drivers for the increase included higher interest expense ($3.3 million), base management fees ($2.7 million), and Part I incentive fees ($2.3 million)[333] - The increase was partially offset by $7.8 million lower accrued Part II incentive fees due to lower capital gains[333] Net Investment Income Net investment income increased by $22.3 million in Q4 2021, driven by higher investment income, partially offset by increased expenses and taxes Net Investment Income Summary | Metric | Three months ended Dec 31, 2021 (in millions) | Three months ended Dec 31, 2020 (in millions) | | :----------------------------------- | :-------------------------------------------- | :-------------------------------------------- | | Net investment income | $32.3 | $10.0 | | Total investment income | $64.9 | $38.2 | | Net expenses | $29.3 | $28.2 | | Provision for taxes on net investment income | $3.3 | $0 | - Net investment income increased by $22.3 million year-over-year, from $10.0 million in Q4 2020 to $32.3 million in Q4 2021[334] - This increase was primarily a result of the $26.7 million increase in total investment income, partially offset by a $1.2 million increase in net expenses and a $3.3 million increase in the provision for taxes on net investment income[334] Realized Gain (Loss) The company recorded aggregate net realized gains of $9.3 million in Q4 2021, slightly higher than prior year, from various exits Net Realized Gains (Losses) | Metric | Three months ended Dec 31, 2021 (in millions) | Three months ended Dec 31, 2020 (in millions) | | :----------------------------------- | :-------------------------------------------- | :-------------------------------------------- | | Net realized gains (losses) | $9.3 | $8.2 | - Net realized gains increased by $1.1 million year-over-year, from $8.2 million in Q4 2020 to $9.3 million in Q4 2021[336] - These gains resulted from the exits or restructurings of various investments[336] Net Unrealized Appreciation (Depreciation) The company shifted from net unrealized appreciation to depreciation in Q4 2021, primarily due to exited and debt investments Net Unrealized Appreciation (Depreciation) | Metric | Three months ended Dec 31, 2021 (in millions) | Three months ended Dec 31, 2020 (in millions) | | :----------------------------------- | :-------------------------------------------- | :-------------------------------------------- | | Net unrealized appreciation (depreciation) | $(4.6) | $47.6 | | Components (Q4 2021): | | | | Net unrealized depreciation (exited investments) | $4.7 | N/A | | Net unrealized depreciation (debt investments) | $1.8 | N/A | | Net unrealized depreciation (foreign currency forward contracts) | $0.8 | N/A | | Net unrealized appreciation (equity investments) | $(2.8) | N/A | | Components (Q4 2020): | | | | Net unrealized appreciation (debt investments) | N/A | $27.2 | | Net unrealized appreciation (exited investments) | N/A | $12.8 | | Net unrealized appreciation (equity investments) | N/A | $9.9 | | Net unrealized depreciation (foreign currency forward contracts) | N/A | $2.4 | - Net unrealized appreciation (depreciation) shifted from a positive $47.6 million in Q4 2020 to a negative $4.6 million in Q4 2021[338] - The Q4 2021 depreciation was primarily driven by exited investments ($4.7 million), debt investments ($1.8 million), and foreign currency forward contracts ($0.8 million), partially offset by $2.8 million in equity investment appreciation[338] Financial Condition, Liquidity and Capital Resources The company funds investments through equity, debt, and cash flow, targeting a 0.85x-1.0x debt-to-equity ratio, with increased cash in Q4 2021 - The company funds its investment portfolio and operations through equity, debt, and operational cash flow, with a target debt-to-equity ratio of 0.85x to 1.0x[339][340] - In Q4 2021, the company experienced a net increase in cash and cash equivalents (including restricted cash) of $14.4 million, compared to a net decrease of $14.9 million in Q4 2020[341][342] - As of December 31, 2021, the company had $46.1 million in cash, $550.0 million in undrawn capacity on credit facilities, and $295.3 million in unfunded commitments[343][346] - The company's asset coverage ratio was 200.8% as of December 31, 2021, with a debt to equity ratio of 0.98x[340] Contractual Obligations Total contractual obligations amounted to $1.42 billion as of December 31, 2021, primarily due in 3-5 years and more than 5 years Contractual Obligations Summary | Contractual Obligations | Total (in thousands) | Less than 1 year (in thousands) | 1-3 years (in thousands) | 3-5 years (in thousands) | More than 5 years (in thousands) | | :-----------------------------------