The following is a summary of the Oaktree Specialty Lending Corporation (OCSL) Q4 2024 Earnings Call Transcript:

Financial Performance:

• Oaktree Specialty Lending Corporation reported an adjusted Net Investment Income (NII) of $45 million for Q4 2024, equivalent to $0.55 per share, which remained consistent with Q3 results.

• The company's adjusted total investment income for the fiscal year 2024 was $179 million, or $2.23 per share.

• A decrease in net expenses was achieved through lower management and interest expenses, partially offset by a modest decline in investment income due to some investments moving to nonaccrual status.

• Net Asset Value (NAV) per share slightly decreased from $18.19 to $18.09.

Business Progress:

• Oaktree continued its strategic focus on primarily first lien loans, increasing its portfolio allocation from 76% to 82% in this category.

• The company reported strong liquidity with $908 million of undrawn capacity under its credit facilities and $64 million of unrestricted cash.

• Significant investment activity included $259 million in new investment commitments during Q4, continuing to target both sponsored and non-sponsored companies.

• The company successfully restructured two investments previously on nonaccrual and maintained a disciplined investment approach despite a competitive market.

Opportunities:

• Oaktree's investment strategy, particularly its focus on first lien loans, has been adapted to leverage opportunities in a diverse range of industries and larger companies to mitigate risks.

• Management is optimistic about a surge in M&A and IPO activity in early 2025 following recent political shifts, potentially expanding their pipeline of deals significantly.

Risks:

• An increase in nonaccrual investments during Q4 affected earnings and net asset value, highlighting credit risks associated with certain portfolio companies.

• The elevated interest rate environment poses a challenge, especially for companies with high leverage, reflecting broader market risks.

• Fluctuations in the credit markets and the need for refinancing towards cost-effective capital pose risks amid tighter credit availability.

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