Oxford Lane Capital Corp. (NASDAQ:OXLC) Q3 2018 Earnings Conference Call Transcript

Feb 11, 2019 • 09:00 am ET

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Oxford Lane Capital Corp. (NASDAQ:OXLC) Q3 2018 Earnings Conference Call Transcript

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Presentation
Operator
Operator

Good morning and welcome to the Oxford Lane Capital Corp Third Fiscal Quarter and Earnings Release Conference Call. All participants will be in listen-only mode. (Operator Instructions) After today's presentation, there will be an opportunity to ask questions. (Operator Instructions) Please note this event is being recorded.

I would now like to turn the conference over to Jonathan Cohen, CEO. Please go ahead.

Executive
Jonathan H. Cohen

Good morning, everyone. And welcome to the Oxford Lane Capital Corp third quarter fiscal 2019 earnings conference call. I'm joined today by Saul Rosenthal, our President; Bruce Rubin, our Chief Financial Officer; and Deep Maji, our Senior Managing Director and Portfolio Manager.

Bruce, could you please open our call this morning with the disclosure regarding forward-looking statements?

Executive
Bruce L. Rubin

Sure, Johnson. 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 earlier this morning.

Please note that this call is the property of Oxford Lane 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 our 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.oxfordlanecapital.com.

With that, I'll turn the presentation back over to Jonathan.

Executive
Jonathan H. Cohen

Thanks, Bruce. We know that the fourth quarter of calendar year 2018 was characterized by significant volatility in global equity and debt markets. The S&P/LSTA Leveraged Loan Index fell from 98.6% of par on September 30th to 93.8% of par on December 31st. Against that backdrop, CLO junior debt and equity prices fell substantially during that period.

While Oxford Lane saw meaningful mark-to-market based fall in our net asset value in the December quarter, we believe that we were able to affect opportunistic purchases and sales during the quarter, and we remained comfortable with the performance of the CLO junior debt and equity positions in the portfolio. Moreover, we know that the S&P/LSTA Leveraged Loan Index has rebounded significantly since December 31st from 93.8% of par to 96% of par as of February 5, 2019.

According to the Wells Fargo CLO research team, the median US CLO equity net asset value has recovered with the increase in loan prices. After bottoming on January 2, 2019 at 24.5%, the Wells Fargo CLO research team estimates the median US CLO equity net asset value currently stands at approximately 43.3% as of February 1, 2018. We believe that recent performance has been reflected in the CLO markets that we participate in