OCSL · Oaktree Specialty Lending Corporation

Oaktree Specialty Lending Corporation's second fiscal quarter 2026 results showed moderated investment income primarily due to lower reference rates and reduced non-recurring fee activity, with total investment income declining to $70.4 million from $75.1 million in the prior quarter. Adjusted total investment income of $69.7 million reflected a $4.7 million decrease, partly offset by lower net expenses of $36.0 million, down $2.4 million from reduced Part I incentive fees and interest expense amid declining rates. This resulted in GAAP net investment income of $34.4 million ($0.39 per share), down from $36.7 million ($0.42 per share). CEO Armen Panossian noted progress in reducing non-accrual investments and redeploying capital from exits, focusing on portfolio quality amid market-driven spread widening in software investments. NAV declined to $15.69 per share from $16.30, driven by $52.7 million in adjusted net realized and unrealized losses on certain debt and equity positions. Portfolio activity included $204.1 million in new commitments at a 9.2% weighted average yield on debt, offset by $334.1 million in proceeds, leading to a net contraction. Non-accruals improved to 2.6% of debt investments at fair value from 3.1%, with the portfolio remaining 83.7% first lien, 91% floating-rate, and yielding 9.3% on debt. Leverage was conservatively managed at 1.04x net debt to equity, below the 0.90x-1.25x target midpoint, supporting $671 million in liquidity. The board adjusted the cash dividend to $0.34 per share ($0.30 quarterly + $0.04 supplemental), payable June 30, 2026, reflecting taxable income coverage while preserving capital amid market dislocation.