Oxford Square Capital Corp. Announces Net Asset Value and Selected Financial Results for the Quarter Ended September 30, 2026 and Declaration of Distributions on Common Stock for the Months Ending January 31, February 28, and March 31, 2027

Oxford Square Capital’s NAV and earnings declined, with realized losses offsetting investment income.

What the company is saying

Oxford Square Capital Corp. reports its Q3 2026 financials, highlighting a net asset value (NAV) per share of $1.21 as of September 30, 2026, down from $1.29 at June 30, 2026. The company emphasizes continued monthly distributions of $0.015 per share for January, February, and March 2027, declared on October 28, 2026. Management presents total investment income of $9.9 million for the quarter, with net investment income (NII) of $4.9 million ($0.04 per share), while total expenses rose to $5.0 million. The narrative acknowledges a net increase in net assets from operations of $1.6 million, but this is the result of $4.9 million NII, $11.3 million in net realized losses, and $7.9 million in net unrealized appreciation. The company notes portfolio yields—15.0% on debt investments and 8.1% on CLO equity investments—while mentioning that $6.8 million in preferred equity investments remain on non-accrual. The tone is factual, with no attempt to obscure the quarter’s realized losses or the declining NAV.

What the data suggests

NAV per share fell to $1.21 from $1.29 quarter-over-quarter, reflecting a continued erosion of shareholder value. Net investment income dropped to $4.9 million ($0.04 per share) from $5.1 million ($0.05 per share) in the prior quarter, while total investment income increased slightly to $9.9 million from $9.4 million. Expenses rose to $5.0 million from $4.3 million, compressing profitability. The company recorded $11.3 million in net realized losses, only partially offset by $7.9 million in net unrealized appreciation, resulting in a modest $1.6 million net increase in net assets from operations. Portfolio yields remained high—15.0% for debt investments and 12.0% for CLO equity cash distribution yield—but the presence of $6.8 million in non-accrual preferred equity signals credit stress. The company issued 14.1 million shares via an at-the-market offering, raising $19.4 million in net proceeds, which increased shares outstanding to 120.0 million. The overall financial trajectory is negative, with declining NAV, falling NII, and persistent realized losses.

Analysis

The announcement is a factual quarterly financial disclosure with no promotional or exaggerated language. All key claims are supported by realised, historical data for the quarter ended September 30, 2026, including net asset value, net investment income, investment income breakdown, expenses, and capital activity. The only forward-looking element is the declaration of monthly distributions for early 2027, which is standard for BDCs and not presented in an aspirational or hyped manner. Financial direction is negative, with NAV per share and net investment income both declining quarter-over-quarter, and significant net realized losses offsetting investment income. There is no evidence of narrative inflation or overstatement; the tone is measured and the data is comprehensive. No large capital outlay is paired with long-dated, uncertain returns, and all capital activity (share issuance, investment purchases) is reported as completed.

Risk flags

• ●The decline in NAV per share from $1.29 to $1.21 indicates ongoing erosion of shareholder value, which may signal underlying portfolio or credit issues.
• ●Net realized losses of $11.3 million for the quarter, only partially offset by unrealized appreciation, suggest persistent challenges in portfolio performance and asset quality.
• ●The $6.8 million in preferred equity investments on non-accrual status highlights credit risk within the portfolio, raising concerns about further income impairment or capital loss.
• ●Rising expenses, now at $5.0 million for the quarter, are outpacing growth in investment income, compressing net investment income and pressuring distribution sustainability.

Bottom line

Oxford Square Capital’s Q3 2026 results show deteriorating fundamentals, with NAV per share and net investment income both declining quarter-over-quarter. The company continues to pay monthly distributions, but these are being maintained despite significant realized losses and credit stress, as evidenced by $6.8 million in non-accrual preferred equity. Share issuance raised $19.4 million, but this dilutes existing shareholders and does not address the core profitability and asset quality issues. The company’s high portfolio yields are offset by realized losses and rising expenses, leading to a modest net increase in net assets from operations. Investors should focus on whether realized losses and non-accruals persist, as further NAV erosion would threaten both capital and future distributions. The most important takeaway is that headline yields mask deeper portfolio and income challenges.

Announcement summary

(NASDAQ:OXSQ) Oxford Square Capital Corp. announced its financial results for the quarter ended September 30, 2026. On October 28, 2026, the Board of Directors declared monthly distributions on common stock of $0.015 per share for January, February, and March 2027, with record dates of January 15, February 12, and March 17, 2027, and payment dates of January 29, February 26, and March 31, 2027, respectively. Net asset value (NAV) per share as of September 30, 2026 was $1.21, down from $1.29 as of June 30, 2026. Net investment income (NII) for the quarter was approximately $4.9 million, or $0.04 per share, compared to $5.1 million, or $0.05 per share, for the previous quarter. Total investment income for the quarter was approximately $9.9 million, up from $9.4 million in the prior quarter. For the quarter, investment income included $5.6 million from debt investments, $3.6 million from CLO equity investments, and $0.6 million from other income. Total expenses for the quarter were approximately $5.0 million, compared to $4.3 million for the previous quarter. As of September 30, 2026, the weighted average yield of debt investments was 15.0%, the weighted average effective yield of CLO equity investments was 8.1%, the weighted average cash distribution yield of cash income producing senior secured note investments was 8.1%, and the weighted average cash distribution yield of cash income producing CLO equity investments was 12.0%. The quarter saw a net increase in net assets resulting from operations of approximately $1.6 million, consisting of NII of $4.9 million, net realized losses of $11.3 million, and net unrealized appreciation of $7.9 million. Investment activity during the quarter included purchases of approximately $20.8 million and repayments of approximately $10.3 million, with no sales. The weighted average credit rating was 2.2 based on total fair value and 2.3 based on total principal amount as of September 30, 2026. Preferred equity investments in one portfolio company were on non-accrual status with an aggregate fair value of approximately $6.8 million. Approximately 14.1 million shares of common stock were issued through an at-the-market offering, resulting in net proceeds of approximately $19.4 million after commissions and expenses. As of September 30, 2026, there were approximately 120.0 million shares of common stock outstanding. Total assets as of September 30, 2026 were $307,077,241, and total liabilities were $161,698,208. Net assets as of September 30, 2026 were $145,379,033. Notes payable included $79,792,290 of 5.50% unsecured notes and $72,556,141 of 7.75% unsecured notes. For the three months ended September 30, 2026, interest income from debt investments was $4,688,883, payment-in-kind interest income was $944,668, income from securitization vehicles and investments was $3,623,609, and other income was $649,471. Interest expense for the quarter was $2,796,502. The ratio of expenses to average net assets for the quarter was 14.41%, and the ratio of net investment income to average net assets was 14.18%. Portfolio turnover rate for the quarter was 4.06%. Distributions per share for the quarter were $0.105. Net asset value per common share at the end of the period was $1.21. Per share market value at the end of the period was $1.28. Shares outstanding at the end of the period were 120,048,538. Net assets at the end of the period were $145,379,000. The company will hold a conference call to discuss third quarter results on October 30, 2026 at 9:00 AM ET.

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