Oaktree Specialty Lending Corporation (NASDAQ:OCSL) Q1 2019 Earnings Conference Call Transcript

Feb 07, 2019 • 11:00 am ET

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Oaktree Specialty Lending Corporation (NASDAQ:OCSL) Q1 2019 Earnings Conference Call Transcript

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Presentation
Operator
Operator

Welcome, and thank you for joining Oaktree Specialty Lending Corporation's First Fiscal Quarter 2019 Conference Call. Today's conference call is being recorded.

(Operator Instructions)

Now I would like to introduce Michael Mosticchio of Investor Relations, who will host today's conference call. Mr. Mosticchio, you may begin.

Executive
Michael Mosticchio

Thank you, operator, and welcome to Oaktree Specialty Lending Corporation's first fiscal quarter conference call.

Our earnings release, which we issued this morning, and the accompanying slide presentation can be accessed on the Investors section of our website at oaktreespecialtylending.com.

Our speakers today are Oaktree Specialty Lending's Chief Executive Officer and Chief Investment Officer Edgar Lee; Chief Financial Officer and Treasurer, Mel Carlisle; and Chief Operating Officer, Matt Pendo.

We will be happy to take your questions following their prepared remarks.

Before we begin, I want to remind you that comments on today's call include forward-looking statements reflecting our current views with respect to, among other things, our future operating results and financial performance. Our actual results could differ materially from those implied or expressed in the forward-looking statements.

Please refer to our SEC filings for a discussion of these factors in further detail. We undertake no duty to update or revise any forward-looking statements.

I'd also like to remind you that nothing on this call constitutes an offer to sell or a solicitation of an offer to purchase any interest in any Oaktree funds. Investors and others should note that Oaktree Specialty Lending uses the Investors section of its corporate website to announce material information. Accordingly, the Company encourages investors, the media and others to visit our corporate website to obtain investor-related materials.

With that, I would now like to turn the call over to Edgar Lee.

Executive
Edgar Lee

Thank you, Mike, and welcome, everyone, to our first quarter earnings conference call. We appreciate your interest in OCSL.

We are pleased to report another strong quarter of financial performance.

NAV per share increased $0.10 or 1.6% from the previous quarter, marking the fourth consecutive quarter of NAV growth.

Our strong and diversified investment portfolio led to net investment income per share of $0.12 in the first quarter. We maintained this momentum even against the backdrop of a widespread sell-off in the equity and credit markets, including a 3% decline in the broadly-syndicated bank loan market.

In addition, we continue to reduce the overall risk in the portfolio, exiting $30 million in non-core investments during the quarter, including $18 million of non-income generating equity positions. Since January 1, we've exited another $56 million of non-core investments, including a significant recovery on our investment in Maverick, which I will talk about in more detail later.

And finally, we originated $231 million of investment commitments with attractive yields.

Delving further into the environment for direct lending, the volatility that impacted the equity and high-yield markets spilled into the broadly-syndicated loan market late in 2018. This resulted in spread widening and a corresponding decline in loan values. The impact on middle-market loans was less significant due to the typical lag