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Oaktree Specialty Lending Corporation's Q3 2025 earnings confirm my thesis: the recent dividend cut is insufficient to sustain the payout or NAV. Key headwinds include declining net investment income, portfolio write-downs, shrinking spreads, and an unfavorable interest rate outlook. While OCSL could increase leverage or manage asset quality, these measures are unlikely to restore sustainable dividend coverage.
LOS ANGELES, CA, Aug. 05, 2025 (GLOBE NEWSWIRE) -- Oaktree Specialty Lending Corporation (NASDAQ: OCSL) (“Oaktree Specialty Lending” or the “Company”), a specialty finance company, today announced its financial results for the fiscal quarter ended June 30, 2025.
Oaktree Specialty Lending Corporation is a business development company, or BDC, currently paying a yield of 11.25%. OCSL is rated investment grade by Moody's and Fitch. Compared to peers, OCSL stock offers a higher yield but lags in price performance.
Similar preferred shares trade at materially different prices. One of these preferred shares is surprisingly expensive. One of the best BDCs is nearing an incredibly rare threshold.
LOS ANGELES, CA, July 02, 2025 (GLOBE NEWSWIRE) -- Oaktree Specialty Lending Corporation (NASDAQ:OCSL) (“Oaktree Specialty Lending” or the “Company”) today announced that it will report its financial results for the third fiscal quarter ended June 30, 2025 before the opening of the Nasdaq Global Select Market on Tuesday, August 5, 2025. Management will host a conference call to discuss the results on the same day at 11:00 a.m.
I am increasingly cautious on BDCs due to rising non-accruals, weaker earnings, and looser underwriting amid intense competition for private credit deals. Elevated interest rates are suppressing BDC valuations and making it harder for borrowers to service debt, leading to fewer quality investment opportunities. Dividend coverage is weakening across many BDCs, with higher non-accruals and PIK income threatening the sustainability of distributions investors rely on.
We take a look at the action in business development companies through the fourth week of May and highlight some of the key themes we are watching. BDC sector pulled back 2% this week, but remains up 2.5% month-to-date; valuations are about 5% below historic averages. Despite headlines of credit stress, BDC portfolios' interest income continues to offset markdowns and non-accruals, supporting solid total NAV returns.
We take a look at the action in business development companies through the first week of May and highlight some of the key themes we are watching. BDCs fell around 1.5% this week due to a couple of weak Q1 reports, with the sector still below pre-Liberation Day levels. Despite recent dips, historically resilient BDCs are showing strong ROE figures, suggesting selective opportunities for patient investors.
Oaktree Specialty Lending Corporation (NASDAQ:OCSL ) Q2 2025 Earnings Conference Call May 1, 2025 11:00 AM ET Company Participants Clark Koury – Head-Investors Matt Pendo – President Armen Panossian – Chief Executive Officer and Chief Investment Officer Chris McKown – Chief Financial Officer and Treasurer Conference Call Participants Finian O'Shea – Wells Fargo Melissa Wedel – JPMorgan Paul Johnson – KBW Operator Welcome and thank you for joining Oaktree Specialty Lending Corporation's Second Fiscal Quarter 2025 Conference Call. Today's conference call is being recorded.