Oxford Square Capital Completes $65M Public Offering to Enhance Financial Flexibility and Investment Capacity.

Oxford Square Capital completed a $65M public offering of 7.75% Notes due 2030. The proceeds will be used to repay debt, acquire investments, and support general corporate purposes. The company's overall score reflects mixed financial health, with strong cash flows and a stable equity base offset by inconsistent revenue and net profitability, alongside high leverage.

Oxford Square Capital Corp. (OXSQ) has completed a $65 million public offering of 7.75% Notes due 2030. The proceeds from this offering will be used to repay debt, acquire investments, and support general corporate purposes. The Notes, listed on NASDAQ under the symbol 'OXSQH', will mature on July 31, 2030, with interest paid quarterly. This move is expected to enhance Oxford Square’s financial flexibility and investment capacity, potentially impacting its market positioning and stakeholder interests [1].

Financial Health and Performance

According to Spark, TipRanks’ AI Analyst, OXSQ is currently rated as Neutral. The company's overall score reflects mixed financial health. Strong cash flows and a stable equity base are offset by inconsistent revenue and net profitability, alongside high leverage. Technical analysis suggests a bearish trend, while valuation indicates a high dividend yield but an expensive earnings multiple [1].

In the second quarter of 2025, Oxford Square reported net investment income (NII) of $0.08 per share, down from $0.13 in the same quarter last year. The company’s net asset value (NAV) continued its downward trend, reaching $2.06 per share, compared to $2.09 in the previous quarter and $2.43 a year ago. Despite these challenges, OXSQ maintained its quarterly distribution at $0.105 per share [3].

Portfolio Allocation and Strategy

The company demonstrated a significant strategic shift in its portfolio allocation over the past year. First-lien secured debt now represents 49.8% of the portfolio by fair value, up substantially from 34% in Q2 2024. Conversely, second-lien secured debt has been reduced to 11.0% from 31% a year ago, indicating a more defensive positioning [3].

The total fair value of investments decreased to $241.5 million across 57 portfolio companies, down from $262.9 million and 63 companies in Q3 2024. The company reported modest net realized losses on investments of $(0.03) per share and slight unrealized gains of $0.02 per share [3].

Debt Profile and Capital Structure

Oxford Square’s debt profile shows improvement in leverage metrics, with the debt-to-equity ratio decreasing to 0.73x from 0.84x in the previous quarter. The company’s total outstanding debt stood at $115.3 million as of June 30, 2025, consisting of two unsecured note issuances: $34.8 million of notes due in April 2026 (6.25% coupon) and $80.5 million due in July 2028 (5.50% coupon) [3].

The company’s total equity was $157.4 million at quarter-end, supporting the reduced leverage ratio. This improved capital structure provides additional flexibility in navigating challenging market conditions [3].

Forward Outlook

Oxford Square faces continued challenges in maintaining its investment income levels amid portfolio restructuring and cautious deployment of capital. The shift toward more secured investments may provide downside protection but could limit upside potential in the near term. The stock closed at $2.35 on August 7, 2025, down 0.51% for the day, and currently trades at a significant discount to its NAV of $2.06. The company’s consistent quarterly distribution of $0.105 per share represents an annualized yield of approximately 17.9% based on the current share price [3].

References

[1] TipRanks. (n.d.). Oxford Square Capital Completes $65M Public Offering. Retrieved from https://www.tipranks.com/news/company-announcements/oxford-square-capital-completes-65m-public-offering

[2] Seeking Alpha. (n.d.). Oxford Square Capital: Q2 GAAP NII of $0.08. Retrieved from https://seekingalpha.com/news/4481297-oxford-square-capital-gaap-nii-of-008-tii-of-952m

[3] Investing.com. (n.d.). Oxford Square Capital Corp. Q2 2025 Slides Show Shift to First-Lien Debt as Investment Income Drops. Retrieved from https://www.investing.com/news/company-news/oxford-square-q2-2025-slides-show-shift-to-firstlien-debt-as-investment-income-drops-93CH-4177337

[4] StockTitan. (n.d.). Oxford Square Capital Corp. Announces Net Asset Value and Selected Financial Results. Retrieved from https://www.stocktitan.net/news/OXSQ/oxford-square-capital-corp-announces-net-asset-value-and-selected-4cfkiww1yq9p.html