"The single most important figure for a BDC investor is whether net investment income (NII) covers the distribution. It does not. Q4 NII per share came in at $0.07, which annualizes to roughly $0.28. The annualized distribution is $0.42."
"Shareholders are receiving about 50% more in cash than the portfolio is actually earning, with the gap effectively a return of capital. That capital is visibly eroding."
"The CLO equity book is feeling the squeeze. The effective yield on those positions compressed from roughly 10% in Q3 to 9% in Q4, a single-quarter drop."
"Full-year 2025 realized losses totaled around $17 million, and NAV per share has fallen every quarter of 2025, with a 27% decline in book value over four quarters."
Oxford Square Capital, a business development company, offers a headline yield over 21% through monthly distributions. However, its net investment income does not cover these payouts, leading to a return of capital. The company has experienced a 27% decline in net asset value over 2025, with significant realized losses. The CLO equity investments, which drive the high yield, are under pressure, and the effective yield has dropped. Portfolio stress is evident, with one company already on non-accrual status.
Read at 24/7 Wall St.
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