Good morning, and welcome to the Oxford Square Capital Third Quarter 2018 Earnings Conference Call. All participants will be in listen-only mode. [Operator Instructions] After today's presentation, there will be an opportunity to ask questions. [Operator Instructions] Please note this event is being recorded. I would now like to turn the conference over to Jonathan Cohen, CEO. Please go ahead, sir.

Good morning, and welcome everyone to the Oxford Square Capital Corp. Third Quarter 2018 Conference Call. I'm joined today by Saul Rosenthal, our President; and Bruce Rubin, our Chief Financial Officer. Bruce, could you open the call today, with our disclosure regarding forward-looking statements?

Sure, Jonathan. Good morning. Today's conference call is being recorded. An audio replay of the conference 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 Square 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 at 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. To obtain copies of our latest SEC filings, please visit our Web site at www.oxfordsquarecapital.com. With that, I'll turn the presentation back to Jonathan.

Thanks, Bruce. To briefly recap the past quarter, we generated a positive total return of 1.8% for our shareholders during the third quarter of 2018. That return reflected a decrease in net asset value per share, from $7.56 at the end of the June 2018 quarter, to $7.49 per share as of September 30, 2018, as well as the effect of a $0.20 per share cash distribution. For the quarter ended September 30th, we recorded GAAP net investment income of approximately $8.6 million or approximately $0.18 per share compared to $7.7 million or $0.15 per share for the quarter ended June 30, 2018. In the third quarter of 2018, we recorded a net unrealized loss on investments of $2.3 million, and a net realized gain of approximately $200,000. In total, we had a net increase in net assets from operations of $6.5 million or $0.13 per share. Following the company's results for the third quarter, the company's Board of Directors has declared a $0.20 per share distribution for the fourth quarter payable December 31, 2018 to shareholders of record as of December 17, 2018. On February 5th, 2018, the Board of Directors authorized a stock repurchase program of $25 million. Since the program's inception through September 30th, we have repurchased approximately 2.3 million shares of our common stock at a weighted average share price of $6.47 per share, totally approximately $15.1 million. Over that period, the program has produced an accretion to NAV, to net asset value per share, of approximately $0.05. On October 12, 2018, we amended our credit facility with Citibank, under which we increased the borrowing advance to $125 million. The company posted additional collateral with a principal amount of $76.4 million. All other existing terms of the facility remained unchanged, with an interest rate of three-month LIBOR plus 225 basis points. In June 30, 2018 to September 30th, the LSTA corporate loan index increased from approximately 98.1% of PAR to 98.6% of PAR. Over that same time period, corporate loan defaults remained at low levels. We note that as of September 30th, we continued to have no investments within our portfolio on non accrual status. Additional information by Oxford Square Capital Corps' third quarter performance has been posted to our Web site at www.oxfordsqaurecapital.com. And with that, Operator, we're happy to open the call up for any questions.

We will now begin the question-and-answer session. [Operator Instructions] And our first question comes from Mickey Schleien of Ladenburg.

Good morning, Jonathan. Jonathan, looking at the level of GDP growth and CPI, et cetera, it looks like the fed will continue to raise rates despite the volatility we're seeing in the equity markets. So my question is, when you underwrite your loan investments, on average, how much of an increase in interest rates do you assume borrowers can handle before interest coverage ratios get too low for you?

It's a good question, Mickey. We're looking at that from the perspective of overall leverage, how levered these various obligors are in the context of our investments in their debt. We're looking at the types of businesses that they engage in, how cyclical or non-cyclical those businesses might be. We're looking at the underlying cash flows particularly carefully. I don't think we have specific target that is applicable to all companies and all industries with all levels of leverage. Instead, we really do look at these on a one-by-one basis. And as of today, we're generally happy with the state of our portfolio in terms of prospective resilience to credit volatility. That said, as we've seen in the past when markets become dislocated, when credit spreads widen, when macroeconomic fundamentals are against us, there is inevitably an affect on the portfolio, as we and others have certainly seen in the past.

Thank you for that, Jonathan. And continuing with the volatility issue, is the volatility in the equity markets translating into the CLO markets, and are you finding unusual dislocations there that are offering you more interesting estimated yields?

The CLO market, Mickey, I think has been certainly more stable over the course of the last several months than has the overall U.S. equity market. That aspect may have widened out a bit. Prices may be a bit more volatile than they were a few months ago, but we've not seen the kind of significant volatility that we've seen in the U.S. equity markets.

That's interesting. And my last question, Jonathan, assuming we're somewhere late in the cycle and who knows if we are or we're not, but let's just assume we are, at a high level, can you give us some insight into how CLO equity that was issued prior to recessions in the past has performed subsequently?

Sure. Mickey, I'm going to hand the call over to Deep Maji, who is our Lead Portfolio Manager for CLO and Tranche Investments.

Hi, Mickey.

Hi.

So, as we've seen and as we've talked about over the last several years on some of these conference calls, CLO equities that was issued in 2007 performed very well through the coming out of the crisis. Clearly, as Jonathan alluded to, going into any sort of recession or macroeconomic volatility we're going to see kind of commensurate volatility within our portfolio, but CLO equities, as we saw from coming out of 2007, 2008, 2009, all [ph] coming out of 2015, performed well through kind of periods of volatility. Clearly there can be some mark-to-market volatility, but the overall asset class has performed you know -- in our opinion at this point.

And was that driven more by Pull-to-Par sort of opportunities or more by managers taking advantage of wider spreads having -- on the asset side of the balance sheet, but having spreads locked in on the right-hand-side of the balance sheet?

It is both of those things, Mickey, certainly.

Okay. That's it from me. Thank you.

Thank you, Mickey, very much.

And this concludes our question-and-answer session. I would like to turn the conference back to Jonathan Cohen for any closing remarks.

Thank you very much. Mickey, thank you for those questions, and thanks everyone for their interest. 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.