Oxford Square Capital (US:OXSQ)2022-04-28 20:10Investment Portfolio - As of March 31, 2022, the fair value of the Company's investment portfolio was approximately $406.2 million[225] - The total fair value of the investment portfolio decreased to approximately $406.2 million as of March 31, 2022, down from $420.8 million as of December 31, 2021, primarily due to net unrealized depreciation of approximately $13.5 million[246] - As of March 31, 2022, the company had investments in debt securities or loans to 19 portfolio companies, with a fair value of approximately $269.7 million, and CLO equity investments of approximately $135.5 million[252] - During the three months ended March 31, 2022, the company purchased approximately $47.4 million in portfolio investments, including $27.7 million in existing portfolio companies and $19.7 million in new portfolio companies[249] - The company recognized proceeds from the sales of securities of approximately $3.4 million for the three months ended March 31, 2022, compared to $15.2 million for the year ended December 31, 2021[251] Debt Investments - The weighted average annualized yield on debt investments was approximately 8.01% as of March 31, 2022[220] - Debt investments had stated interest rates ranging from 4.21% to 10.50% with maturity dates between 3 and 95 months[220] - As of March 31, 2022, the total principal value of income-producing debt investments was approximately $280.1 million, up from $199.2 million as of March 31, 2021, representing a year-over-year increase of 40.6%[265] - The total principal outstanding on investments in CLOs as of March 31, 2022, was approximately $352.9 million, up from $311.4 million as of March 31, 2021, representing a growth of 13.4%[266] - As of March 31, 2022, senior secured notes represented 66.4% of the total portfolio, while CLO equity represented 33.4%[255] Financial Performance - Total investment income for the three months ended March 31, 2022, was approximately $9.9 million, compared to $9.4 million for the same period in 2021, reflecting an increase of 5.3%[264] - Net investment income for the three months ended March 31, 2022, was approximately $4.3 million, a decrease from $4.8 million for the same period in 2021[281] - The net decrease in net assets resulting from operations for the three months ended March 31, 2022, was approximately $8.2 million, compared to a net increase of $21.8 million for the same period in 2021[283] - Interest expense for the three months ended March 31, 2022, was approximately $3.1 million, compared to $1.9 million for the same period in 2021, indicating a significant increase due to the issuance of new unsecured notes[270] Expenses and Fees - Total expenses for the three months ended March 31, 2022, were approximately $5.6 million, an increase from $4.5 million in the same period of 2021, marking a rise of 24.4%[267] - The base management fee for the three months ended March 31, 2022, was approximately $1.6 million, an increase from $1.4 million in the same period of 2021, primarily due to an increase in weighted average gross assets[269] - The Company has received no fee income for managerial assistance to date[223] Risk and Leverage - The Company has historically borrowed funds to make investments, exposing it to leverage risks[222] - The asset coverage for borrowed amounts was approximately 220% as of March 31, 2022, compared to 227% as of December 31, 2021[289] - The company is subject to financial market risks, including changes in interest rates, which could impact investment performance[305] Interest Rate Sensitivity - A hypothetical increase of 300 basis points in base rates would result in a 23.6% increase in net investment income, while a decrease of 100 basis points would lead to a 1.9% decrease[309] - The company may hedge against interest rate fluctuations using standard hedging instruments such as futures, options, and forward contracts[306] - The transition from LIBOR to SOFR is being addressed, with legislation signed to facilitate the use of SOFR-based interest rates[307] - The company recognizes that actual results may differ materially from hypothetical analyses regarding interest rate sensitivity[308] Compliance and Governance - The Company operates as a closed-end, non-diversified management investment company regulated as a BDC under the Investment Company Act of 1940[217] - The company has implemented policies to screen transactions for potential conflicts of interest with related parties[299] - The company has adopted a Code of Business Conduct and Ethics to avoid conflicts of interest among its officers and directors[301] - The management evaluated the effectiveness of disclosure controls and procedures and concluded they were effective as of March 31, 2022[310] - The company has not made any changes to its internal control over financial reporting that would materially affect its operations during the quarter ended March 31, 2022[311] Cash and Distributions - As of March 31, 2022, cash and cash equivalents were approximately $15.1 million, an increase from $9.0 million as of December 31, 2021[285] - The company is required to distribute at least 90% of its ordinary income and short-term capital gains to avoid corporate level tax[293] - Total cash distributions declared per share since the beginning of 2021 amount to $0.420, with $0.32 classified as GAAP net investment income[296] - The company has declared distributions of $0.035 per share on multiple occasions in 2022, totaling $0.105 for the third quarter[303]