Oxford Square Capital Corp. ($OXSQ)

Ladies and gentlemen, thank you for standing by. My name is Desiree, and I will be your conference operator today. At this time, I would like to welcome everyone to the Oxford Square Capital Corp. First Quarter 2026 Earnings Release Conference Call. [Operator Instructions] I would now like to turn the conference over to Jonathan Cohen, CEO. You may begin.

Thanks very much. Good morning, everyone. Welcome to the Oxford Square Capital Corp. first quarter 2026 earnings conference call. I'm joined today by Saul Rosenthal, our President; Bruce Rubin, our CFO; and Kevin Yonon, Managing Director and Portfolio Manager. Bruce, could you open the call with a disclosure regarding forward-looking statements?

Sure, Jonathan. Today's conference call is being recorded. An audio replay of the call will be available for 30 days. Replay information is included in our press release that was issued this morning. Please note that this call is the property of Oxford Square Capital Corp. Any unauthorized rebroadcast of this call in any form is strictly prohibited. At this point, please direct your attention to the customary disclosure in this morning's press release regarding forward-looking information. Today's conference call includes forward-looking statements and projections that reflect the company's current views with respect to, among other things, future events and financial performance. We ask that you refer to most recent filings with the SEC for important factors that can cause actual results to differ materially from those indicated in these projections. We do not undertake to update our forward-looking statements unless required to do so by law. To obtain copies of our latest SEC filings, please visit our website at www.oxfordsquarecapital.com. With that, I'll turn the presentation back to Jonathan.

Thanks, Bruce. For the quarter ended March, Oxford Square's net investment income was approximately $4.1 million or $0.05 per share compared with approximately $5.4 million or $0.07 per share in the prior quarter. Our net asset value per share stood at $1.32 compared to a net asset value per share of $1.69 for the prior quarter. During the quarter, we distributed $0.105 per share to our common stock shareholders. For the first quarter, we recorded total investment income of approximately $8.9 million as compared to approximately $10.4 million in the prior quarter. In the first quarter, we recorded combined net unrealized and realized losses on investments of approximately $29.7 million or $0.34 per share compared to combined net unrealized and realized losses on investments of approximately $18.3 million or $0.22 per share for the prior quarter. During the first quarter, our investment activity consisted of purchases of approximately $15.8 million and repayments of approximately $400,000. During the quarter ended March, we issued a total of approximately 7.2 million shares of our common stock pursuant to an at-the-market offering, resulting in net proceeds of approximately $12.3 million. On April 27, our Board of Directors declared monthly distributions of $0.035 per share for each of the months ending July, August and September of 2026. Additional details regarding record and payment date information can be found in our press release that was issued this morning. Over the past 6 months, we've made 2 new investments in AI companies, Invisible Technologies, Inc. and Infinity Constellation Inc., reflecting our interest and conviction that AI is creating meaningful opportunities across many industries and throughout multiple business models. These investments were made to innovative high-growth businesses through what we believe are attractive equity and debt structures consistent with Oxford Square's existing strategy of long-term opportunistic investments in U.S. companies. We're intrigued by the pace of AI innovation and its potential reordering of the global economy. We believe that our initial exposure to AI-related companies positions our portfolio to participate in this important secular theme. With that, I'll turn the call over to our portfolio manager, Kevin Yonon.

Thank you, Jonathan. During the quarter ended March 31, U.S. loan market performance declined versus the prior quarter. U.S. loan prices, as defined by the Morningstar LSTA US Leveraged Loan Index decreased from 96.64% of par as of December 31 to 94.63% of par as of March 31. According to LCD, during the quarter, there was some pricing dispersion with BB-rated loan prices decreasing 49 basis points, B-rated loan prices decreasing 264 basis points and CCC-rated loan prices decreasing 537 basis points on average. According to PitchBook LCD, the 12-month trailing default rate for the loan index increased to 1.43% by principal amount at the end of the quarter from 1.23% at the end of December. Additionally, the default rate, including various forms of liability management exercises, which are not captured in the cited default rate remained at an elevated level of 3.48%. The distress ratio, defined as the percentage of loans with prices below 80% of par, ended the quarter at 7.23% compared to 4.34% at the end of December. During the quarter ended March 31, 2026, U.S. leveraged loan primary market issuance, excluding amendments and repricing transactions, was $104.9 billion, representing a 26% decrease versus the quarter ended March 31, 2025. This was driven by lower refinancing, M&A and dividend activity, partly offset by higher LBO activity versus the prior year comparable quarter. At the same time, U.S. loan fund outflows, as measured by Lipper, were approximately $5.1 billion for the quarter ended March 31. We continue to focus on portfolio management strategies designed to maximize our long-term total return. And as a permanent capital vehicle, we historically have been able to take a longer-term view towards our investment strategy. With that, I will turn the call back over to Jonathan.

Thanks very much, Kevin. Operator, with that, we're happy to see if there's any questions on the line.

[Operator Instructions] And I show no questions. I would like to turn the call back over to Jonathan Cohen for closing remarks.

Thank you, operator. I'd like to thank everyone on the call today and everyone listening to the replay for their continued interest in Oxford Square Capital Corp. We look forward to speaking to you again soon. Thanks very much.

Ladies and gentlemen, that concludes today's call. Thank you all for joining, and you may now disconnect.