OXSQ

• Capital raising and distributions:

  • The firm issued approximately 11.3 million common shares via an at-the-market offering in Q2 2026, generating net proceeds of approximately $17.8 million.
  • On July 29, 2026, the Board of Directors declared monthly distributions of 3.5 cents per share for the months of October, November, and December 2026.

• Market and portfolio performance:

  • U.S. loan market performance improved in Q2 2026 compared to the prior quarter: The Morningstar LSTA U.S. Leverage Loan Index rose from 94.63% of par at Q1 end to 94.96% of par at Q2 end.
  • Pricing dispersion across rating tiers: BB rated loans increased 32 bps, B rated loans increased 42 bps, and CCC rated loans increased 6 bps on average.
  • The 12-month trailing default rate for the index (by principal) fell to 0.97% at Q2 end from 1.44% at Q1 end. Including uncounted liability management exercises, the elevated default rate decreased to 2.77% from 3.48% in the prior quarter.
  • U.S. loan fund inflows totaled approximately $1 billion for Q2 2026.

• Investment strategy:

  • As a permanent capital vehicle, the firm maintains a long-term approach to investing focused on maximizing long-term total return.

Management did not provide any formal forward-looking financial or operational guidance, nor any revisions to prior guidance, in this call. Management declined to provide projections on when net investment income will cover the current distribution level, noting only that management is optimistic about recently deployed capital and will provide updates in future filings and calls.

Oxford Square Capital Corp. is a business development company focused on investments, and does not report separate product segments in this earnings call. Aggregate investment performance for Q2 2026: Net investment income was approximately $5.1 million (5 cents per share), up from approximately $4.1 million in the prior quarter. Combined net unrealized and realized losses on investments were approximately $1.1 million (1 cent per share), a significant improvement from the prior quarter's combined net losses of approximately $29.7 million (34 cents per share). Net asset value per share as of quarter end was $1.29. During the quarter, the firm purchased approximately $19.9 million in investments and received $500,000 in investment repayments.

Management included the standard SEC-required warning that forward-looking statements carry inherent uncertainty, and actual results may differ materially from projections due to undisclosed material factors referenced in the firm's recent SEC filings. No additional specific operational, market, or credit risks were discussed in detail during this call.

Q: The firm made $19.9 million in new investments in the quarter. What are the key characteristics of these investments, including security type, yield, and market? / A: All $19.9 million in purchases this quarter were secondary market CLO equity tranches. The investments have cash-on-cash returns and forward effective yields in the low 20% range, aligned with the firm's current investment thesis that secondary CLO equity offers compelling cash-on-cash opportunities.

Q: The quarter saw a sharp reduction in losses from the prior quarter, with smaller unrealized losses. Was this improvement primarily a market rebound from last quarter's markdowns? / A: The improvement in unrealized losses was principally a rebound from the marked-down valuation levels recorded in the prior quarter, with no other major contributing factors.

Q: A non-accrual debt position from last quarter is no longer listed as a non-accrual, and no sales were recorded. What happened with this position? / A: The position completed a restructuring during the quarter that closed successfully. The firm now holds a new first lien term loan and common equity in the restructured entity, and the new first lien term loan is currently on accrual. The valuation mark for the position was consistent with the prior quarter, so no additional gains or losses were recorded.

Q: Net investment income rose quarter-over-quarter, but NII per share is still below the current dividend per share. How will the firm grow NII to cover the dividend, and how long will this take? / A: Management does not provide forward-looking performance projections, but stated that it is optimistic about the yield of recently deployed capital, including the CLO equity investments from this quarter, and will share updates as performance develops.