Oxford Square Capital Corp. 5.50% Notes due 2028

What they do

Oxford Square Capital Corp. operates as a closed-end, non-diversified management investment company regulated as a BDC and taxed as a RIC. It invests primarily in corporate debt securities, with additional exposure to CLO structured finance investments, including warehouse facilities. The company targets investments of $5.0 million to $25.0 million per portfolio company, often in below-investment-grade debt. Investment activities are managed by Oxford Square Management, an affiliate controlled by the CEO and President.

Revenue drivers

• Corporate debt securities — Primary focus, generating interest income from fixed and variable rate loans to portfolio companies.
• CLO structured finance investments — Investments in equity and junior debt tranches of CLO vehicles, providing distributions and potential capital appreciation.
• Warehouse facilities — Early-stage CLO vehicles intended to aggregate loans for potential traditional CLO formation, contributing to investment pipeline.

Recent performance

Net income swung from $5.9 million in 2024 to a loss of $18.7 million in 2025. Diluted EPS declined from $0.42 in 2024 to $0.30 in 2025. Operating cash flow turned negative at -$13.7 million in 2025. As of June 30, 2026, total assets were $290.6 million, shareholder equity was $135.0 million, and cash was $34.6 million.

Strategy

The company aims to maximize total return by investing in a diversified portfolio of corporate debt and CLO investments. It focuses on companies with at least one year of operations, positive cash flow, and financial backing from sponsors. Leverage is used as part of the strategy to enhance returns, with long-term debt of $127.5 million as of year-end 2023. Management seeks attractive risk-adjusted returns while maintaining qualifying asset ratios as required by BDC regulations.

Risks

• Credit risk on below-investment-grade debt — Portfolio companies are generally below investment grade, exposing the company to potential defaults and losses.
• Interest rate volatility — Leverage and variable-rate investments make results sensitive to interest rate changes.
• CLO valuation risk — CLO investments have no liquid trading market, increasing valuation uncertainty.
• Leverage and liquidity risk — The use of leverage and negative operating cash flow may strain liquidity and access to capital markets.

Outlook

Management has declared distributions for October, November, and December 2026, indicating expected cash flows. The forward-looking statements emphasize assumptions about originating new investments and access to capital markets. Uncertainty around economic conditions, tariffs, and supply chain disruptions could affect portfolio company performance. No specific numeric guidance was provided.