Oxford Square Capital Q1 Earnings Call Highlights

Key Points

• Weak quarter — Oxford Square reported Q1 net investment income of about $4.1 million ($0.05/share) and saw NAV fall to $1.32 from $1.69, recording combined net unrealized and realized losses of roughly $29.7 million (~$0.34/share).
• Capital actions — the company paid $0.105/share in distributions during the quarter, the board later declared monthly distributions of $0.035 for July–September 2026, and Oxford Square issued ~7.2 million shares via an ATM offering, raising net proceeds of about $12.3 million.
• Portfolio and market backdrop — Oxford Square added two AI investments (Invisible Technologies and Infinity Constellation) while navigating a weakening U.S. leveraged loan market—loan prices and ratings-based performance fell, default and distress ratios rose, and loan fund outflows totaled roughly $5.1 billion in the quarter.

Oxford Square Capital NASDAQ: OXSQ reported first-quarter 2026 net investment income (NII) of approximately $4.1 million, or $0.05 per share, down from approximately $5.4 million, or $0.07 per share, in the prior quarter, according to CEO Jonathan H. Cohen on the company’s earnings call.

Quarterly results and portfolio marks

Cohen said net asset value (NAV) per share declined to $1.32 at quarter-end, compared with $1.69 in the prior quarter. Total investment income for the first quarter was approximately $8.9 million, versus approximately $10.4 million in the prior quarter.

Oxford Square also posted a larger combined net unrealized and realized loss on investments. Cohen said the company recorded combined net unrealized and realized losses of approximately $29.7 million, or $0.34 per share, compared with losses of approximately $18.3 million, or $0.22 per share, in the prior quarter.

On investment activity, Cohen stated that during the quarter Oxford Square had purchases of approximately $15.8 million and repayments of approximately $400,000.

Distributions and equity issuance

During the quarter, Oxford Square distributed $0.105 per share to common shareholders, Cohen said.

After the quarter ended, the board declared monthly distributions of $0.035 per share for each of the months ending July, August, and September 2026. Cohen said additional record and payment date details were included in the company’s press release issued that morning.

Cohen also highlighted equity issuance during the quarter, saying Oxford Square issued approximately 7.2 million shares through an at-the-market offering, generating net proceeds of approximately $12.3 million.

AI-focused investments

Cohen said that over the past six months Oxford Square made two new investments in artificial intelligence companies—Invisible Technologies Inc. and Infinity Constellation Inc.—which he described as reflecting the company’s “interest and conviction that AI is creating meaningful opportunities across many industries and throughout multiple business models.”

He said the investments were made in “innovative, high-growth businesses” through what he called “attractive equity and debt structures” consistent with Oxford Square’s strategy of long-term opportunistic investments in U.S. companies. Cohen added that the company is “intrigued by the pace of AI innovation and its potential reordering of the global economy,” and said management believes its initial AI exposure positions the portfolio to participate in the theme.

Leveraged loan market backdrop

Managing Director and Portfolio Manager Kevin Yonan said U.S. loan market performance declined versus the prior quarter. He cited the Morningstar LSTA US Leveraged Loan Index, noting loan prices fell to 94.63% of par as of March 31 from 96.64% of par as of December 31.

Yonan also referenced pricing dispersion during the quarter, citing LCD data indicating that double B-rated loan prices decreased 49 basis points, B-rated loan prices fell 264 basis points, and triple C-rated loan prices decreased 537 basis points on average.

On credit conditions, Yonan said PitchBook LCD data showed the 12-month trailing default rate for the loan index increased to 1.43% by principal amount at quarter-end, up from 1.23% at the end of December. He added that the default rate including “various forms of liability management exercises,” which he said are not captured in the cited default rate, “remained at an elevated level of 3.48%.”

Yonan said the distress ratio—defined as the percentage of loans priced below 80% of par—ended the quarter at 7.23%, compared with 4.34% at the end of December.

In the primary market, Yonan said U.S. leveraged loan issuance excluding amendments and repricings was $104.9 billion for the quarter ended March 31, representing a 26% decrease versus the quarter ended March 31, 2025. He attributed the decline to lower refinancing, M&A, and dividend activity, partly offset by higher LBO activity compared to the year-ago quarter.

Yonan also said U.S. loan fund outflows, as measured by Lipper, were approximately $5.1 billion during the quarter. He said the company continues to focus on portfolio management strategies designed to maximize long-term total return, adding that as a permanent capital vehicle Oxford Square has historically been able to take a longer-term view toward its investment strategy.

Q&A

No analyst questions were asked during the call. Cohen thanked listeners for their interest and said the company looks forward to speaking again soon.

About Oxford Square Capital NASDAQ: OXSQ

Oxford Square Capital Corp. NASDAQ: OXSQ is a publicly traded business development company that provides flexible financing solutions to U.S. middle-market companies. Chartered as a closed-end management investment company, Oxford Square Capital seeks to generate current income and capital appreciation by investing primarily in secured loans, mezzanine debt and equity co-investments. The firm targets businesses with established cash flows, offering tailored capital structures designed to support growth, recapitalizations and acquisitions.

The company's investment strategy focuses on senior secured first-lien and second-lien loans, subordinated debt and preferred and common equity stakes.

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