Oxford Square Capital (OXSQ)2023-03-21 16:34Financial Data and Key Metrics Changes - For Q4 2022, the company's net investment income was approximately 0.13 per share, compared to 0.11 per share in the prior quarter [6] - The net asset value per share decreased to 3.34 in the previous quarter [6] - Total investment income for the fourth quarter was approximately 11.4 million in the prior quarter, driven by increased interest income from the loan portfolio [6] Business Line Data and Key Metrics Changes - The company reported net unrealized depreciation on investments of approximately 0.59 per share, compared to 0.34 per share in the prior quarter [7] - Realized gains on investments were approximately 50,000 in the prior quarter [8] - Investment activity included purchases of approximately 200,000 [9] Market Data and Key Metrics Changes - The U.S. loan market experienced volatility, with loan prices increasing from 91.92% of par to 93.06% before dropping to 92.44% by the end of December [11] - The 12-month trailing default rate for the Morningstar LSTA U.S. Leveraged Loan Index decreased to 0.72% from 0.9% at the end of September 2022 [11] - Primary market issuance was approximately 50 million, avoiding very small companies [17] Management's Comments on Operating Environment and Future Outlook - Management acknowledged that interest coverage has been maintained despite rising interest rates, with portfolio companies able to support required amortization and cash interest [18] - Concerns were raised regarding the refinancing of CLOs as many have their reinvestment periods ending, but management expects to manage this risk through selective refinancing and extensions [19] Other Important Information - The company declared monthly distributions of 9 million as of December 31 [9] Q&A Session Summary Question: Size and performance of companies in the portfolio - The company targets companies with revenues in the hundreds of millions and EBITDA typically over $50 million, avoiding very small companies [17] Question: Interest coverage performance - Interest coverage has been maintained, and portfolio companies continue to generate cash to support required amortization and cash interest [18] Question: Managing CLO refinancing risks - Management expects to refinance or reset select deals and has flexibility for reinvestment post-reinvestment period [19] Question: CLO cash yield trends - The decline in CLO cash yield was primarily due to the spread between one-month and three-month rates, with expectations for improvement starting in Q1 [20] Question: CLO distributions comparison - CLO distributions were roughly flat to down slightly from October, but are expected to pick up in April [21]