Good morning and welcome to the Oxford Lane Capital Corp.’s Fourth Fiscal Quarter Earnings Release and Conference Call. All participants will be in listen-only mode. [Operator Instructions] Please note this event is being recorded. I would now like to now turn the conference over to Jonathan Cohen, CEO. Please go ahead..

Thanks very much. Good morning everyone and welcome to the Oxford Lane Capital Corp.’s fourth fiscal quarter 2019 earnings conference call. I’m joined today by Bruce Rubin, our Chief Financial Officer; and Deep Maji, our Senior Managing Director and Portfolio Manager.

Bruce, could you open the call today with the disclosure regarding forward-looking statements?.

Sure, Jonathan. 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 could 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.

During this call, we will use terms defined in the earnings release and also refer to non-GAAP measures. For definitions and reconciliations to GAAP and to obtain copies of our latest SEC filings, please visit our website at www.oxfordlanecapital.com. With that, I’ll turn the presentation back to Jonathan..

we note that none of these values represented a total return to shareholders; the weighted average yield of our CLO debt investments at current cost was 11.7%, up from 11.2% as of December 31. The weighted average GAAP effective yield of our CLO equity investments at current cost was 15.7%, down from 15.8% as of December 31.

the weighted average cash yield of our CLO equity investments at current cost was 20.3%, up from 19.8% as of December 31. We note that the cash yields calculated on our CLO equity investments are based on the cash distributions we received for which we were entitled to receive at each respective period end.

During the quarter ended March 31st, we made additional CLO investments of approximately $154.4 million, and we received $89.3 million from sales and repayments of our CLO investments. With that, I will turn the call over to our Portfolio manager, Deep Maji..

Thank you, Jonathan. During the quarter ending March 31st, the U.S. loan market as measured by the S&P/ LSTA Leveraged Loan Index increased from a price of 93.84% of par to 96.41% of par as of March 31, 2019. We believe that the recovering U.S. loan prices during the first quarter was principally driven by increased U.S.

CLO issuance and demand, slower U.S. loan mutual fund and ETF outflows, several large loan pay downs and a limited forward primary loan calendar. However, the market continued to lag the broader market and as such, according to Wells Fargo CLO research, the median U.S.

CLO equity net asset value is estimated to be 48.1% as of April 1, 2019, which remains approximately 20 points below October 1, 2018 level of 78.2%. As we mentioned, last quarter we believe that the fundamentals across the U.S. loan market continued to be stable. U.S. loan default rate remains low.

According to Leveraged Commentary and Data, also known as LCD, a service provided by S&P Global, the S&P/LSTA Leveraged Loan Index trailing 12-month default rate is approximately 0.93% by principal amount, which is the lowest level in nearly seven years and remains well below its historical average of approximately 3% according to LCD.

The loan maturity wall continues to be termed out. According to LCD, there are approximately $90 billion of loan scheduled to be repaid by year-end 2021. This aggregate amount represents less than 10% of the overall size of the S&P/LSTA Leveraged Loan Index. Lastly, the current corporate loan market continues to be stable.

The share of performing loans in the S&P/LSTA Leveraged Loan Index priced below $0.80 on the dollar, stood at 2.5% as of March 31, 2019 according to LCD. This figure has decreased from 2.7% as of December 2018 and remains well below the post-crisis highs of 12.1% in February of 2016. In the first quarter of 2019, U.S.

CLO new issuance resumed from a subdued levels at the end of 2018. According to LCD, U.S. CLO new issuance was approximately $29 billion in the first quarter, which compared to $32 billion from the same period in 2018.

Over the past year, the weighted average cost of CLO debt financing for a typical five-year reinvestment period, new-issued CLO has increased from approximately [indiscernible] 140 in the first quarter of 2018 to approximately [indiscernible] 200 by the end of the first quarter of 2019. The confluence of the recent increase in U.S.

loan prices and no material improvement in CLO debt spreads continued to put pressure on an already challenged new-issued CLO equity arbitrage. As such, we continue to find interesting opportunities in the secondary CLO market, which is where we are primarily focused.

As we mentioned last quarter, we believe that this is an attractive environment for CLO equities. According to LCD, as of April 23, 2019, approximately 23% of S&P/LSTA Leveraged Loan Index traded at a price of par or higher.

This environment may allow CLO managers to buy preforming loan assets in the secondary market at discounts to par, which may build CLO asset value and spread over time, ultimately accruing to the benefit of CLO equity.

We continue to generally position our portfolio in longer reinvestment period, CLO equity positions, which may allow our CLO managers to take advantage of the market environment that we have today. That being said, we continue to evaluate a variety of CLO equity profiles that are available to us in the secondary market.

With that, I will turn the call back over to Jonathan Cohen..

Thanks very much, Deep. We note that additional information about Oxford Lane's fourth quarter fiscal performance has been uploaded to our website at www.oxfordlanecapital.com. And with that, operator, we’re happy to open the call for any questions..

[Operator Instructions] This concludes our question-and-answer session. I would like to turn the conference back over to Jonathan Cohen for any closing remarks..

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Thanks very much, operator. And I’d like to thank everyone for their interest in Oxford Lane Capital Corp. and we look forward to speaking to you again soon. Thanks very much..

The conference is now concluded. Thank you for attending today's presentation. You may now disconnect..