Oxford Square Capital (US:OXSQ)2021-04-27 19:13Financial Data and Key Metrics Changes - For Q1 2021, the company's net investment income was approximately $4.8 million or $0.10 per share, compared to $4.7 million or $0.10 per share in the prior quarter [8] - The net asset value per share increased to $4.88 from $4.55 in the previous quarter [8] - Total investment income for Q1 2021 was approximately $9.4 million, up from approximately $8.6 million in the prior quarter [9] - The company recorded net unrealized appreciation on investments of approximately $31 million or $0.63 per share, down from $35.7 million or $0.72 per share in the prior quarter [9] - Realized losses on investments were approximately $14.1 million or $0.28 per share, compared to $700,000 or $0.02 per share in the prior quarter [10] - The net increase in net assets from operations was approximately $21.8 million or $0.44 per share, down from $39.7 million or $0.80 per share in the prior quarter [10] Business Line Data and Key Metrics Changes - Investment activity included purchases of approximately $32.9 million, sales of approximately $1.8 million, and repayments of approximately $16.4 million during the first quarter [11] - As of March 31, the company held cash and cash equivalents of approximately $39.7 million, with unsettled purchases of approximately $10.9 million [11] Market Data and Key Metrics Changes - The U.S. loan market strengthened in Q1 2021, with loan prices increasing from 96.19% of par at the end of Q4 2020 to 97.55% of par by March 31, 2021 [14] - The 12-month trailing default rate for the S&P/LSTA Leveraged Loan Index decreased to 3.15% by principal amount, down from 3.3% at the start of the quarter [16] - Primary market issuance was approximately $182 billion, significantly higher than approximately $88 billion during the same quarter in 2020 [17] Company Strategy and Development Direction - The company intends to continue its investment strategy in CLOs and corporate loans, focusing on maximizing long-term total returns [17] - The management has not publicly announced a specific target for the percentage of the portfolio represented by CLO tranche investments [26] Management's Comments on Operating Environment and Future Outlook - Management noted that the decline in the CLO portfolio's cash yield was due to spread compression and one-time events related to resets and refinancings [22] - The company is responsive to market dynamics and aims to manage its portfolio's leverage profile accordingly [30] Other Important Information - The Board of Directors declared monthly distributions of $0.035 per share for July, August, and September 2021 [12] Q&A Session Summary Question: What caused the decline in the CLO portfolio's cash yield from the fourth quarter to the first quarter? - The decline was attributed to spread compression and expenses associated with resets and refinancings [22] Question: How would you characterize the risk-adjusted returns available in CLOs versus corporate loans? - The risks and returns in CLOs and corporate loans have similarities but also fundamental differences, with CLO equity being a levered investment in the corporate loan market [24][25] Question: What were the main drivers of this quarter's realized loss? - The realized loss was primarily due to two names that were exited, specifically Imagine Print Solutions and AMMC [27][28] Question: What is your view on the target debt-to-equity ratio for Oxford Square? - The company has not publicly stated a specific target but aims to be responsive to market conditions [30] Question: What is the status of your undistributed taxable income? - The management did not have the figure available during the call but offered to follow up separately [31]