Oaktree Specialty Lending Corporation

For the third fiscal quarter ended June 30, 2026, adjusted total investment income was $69.2 million, down slightly from $69.7 million in the prior quarter. Adjusted net investment income was $32.2 million, or approximately $0.37 per share, versus $33.7 million, or $0.38 per share, in the prior quarter. NAV per share was $15.70, compared with $15.69 at March 31, 2026. Non-accruals were approximately 1.8% of the total debt portfolio at fair value, down 80 bps sequentially and 140 bps year over year. The Board declared a total cash dividend of $0.33 per share, consisting of a $0.30 base dividend and a $0.03 supplemental dividend. Looking ahead, management said it plans to address the $350 million of unsecured notes maturing in January 2027 over the next several quarters. The company ended the quarter with net leverage of 1.02x, total debt outstanding of $1.45 billion, and liquidity of approximately $699 million, including $40 million of cash and $659 million of undrawn capacity.

Armen Panossian said the firm sees the current environment as better than six months ago, but not yet a mid-cycle return opportunity. He emphasized that outflows from non-traded BDCs, slower deal flow, and a still-elevated rate backdrop are creating better terms and wider spreads, but he believes more volatility may still lie ahead. His tone was cautious and selective: Oaktree wants to preserve dry powder, stay defensive, and lean in only when risk-adjusted returns are compelling.

Chris McKown said adjusted total investment income came in at $69.2 million and adjusted net investment income at $32.2 million, or about $0.37 per share. He attributed the quarter-over-quarter decline mainly to a smaller average portfolio balance from lower leverage, lower non-recurring income, and higher Part 1 incentive fees; the company paid $2.4 million of incentive fee this quarter versus no Part 1 fee last quarter, while a full fee would have been about $6 million. He also noted stable NAV at $15.70, liquidity of approximately $699 million, weighted average debt cost of 5.9%, and net leverage of 1.02x.

Analysts focused on whether improved market conditions justify more aggressive deployment and where Oaktree thinks returns sit in the cycle. Management said it is not seeing mid-cycle returns; instead, it sees further volatility ahead and expects better opportunities, especially as non-traded BDC outflows and 2027-2029 maturity walls create refinancing pressure. They also discussed consolidation and portfolio sales in the industry, but management said it is open-minded rather than actively pursuing meaningful M&A.