OXSQ Stock: Dividend vs NII, NAV $1.29, CLO Equity and Baby Bonds

What OXSQ is, and which filings this page reads

Oxford Square Capital Corp. is a business development company (BDC) in Greenwich, Connecticut, managed by Oxford Square Management, LLC, which shares its officers and offices with two other CLO-focused vehicles: Oxford Lane Capital Corp., a closed-end fund, and Oxford Park Income Fund (10-Q, Related Party note). Its fiscal year is the calendar year. The latest annual report is the Form 10-K filed March 6, 2026 (accession 0001213900-26-024280) and the latest quarterly report is the Form 10-Q filed August 10, 2026. The last filing on EDGAR as of October 16, 2026 is the Form 8-K of September 14, 2026; no report for the September 30, 2026 quarter exists yet. For the whole listed universe see our list of BDC stocks, where OXSQ's NAV fell 37.4% in four quarters, one of the steepest declines of 49 BDCs, and for how non-accruals and PIK compare across the sector see the BDC census. If the vocabulary is new, start with what a BDC is.

Two premises we checked. First, OXSQG and OXSQH are not preferred stock: they are the 5.50% Notes due 2028 and the 7.75% Notes due 2030, listed on Nasdaq, and the older 6.25% notes (OXSQZ) were redeemed in three steps and delisted after September 19, 2025 (8-Ks of May 14, June 18 and August 20, 2025). Second, the dividend has not been cut recently: the monthly rate in every earnings release from February 2025 to July 2026 is $0.035, and the problem is what stands under it, which is the subject of the next sections.

Seven quarters: NII, distributions and NAV

Each row combines the earnings release (NAV and price), the 10-Q or 10-K (NII and distributions to stockholders, in dollars) and our division. The sixth column adds back the one non-cash item the company itself discloses: in a CLO equity position, cash distributions received are larger than the effective-yield income booked as NII, and the 10-Q records the difference as “reductions to the cost value of our CLO equity investments”. That is cash that came in but did not pass through NII, so columns five and six bracket how well the payout was covered. Column six is not a company measure, NII still contains non-cash PIK interest and discount accretion that it does not remove, and the 10-K gives the cost reduction only for the full year 2024 ($13.0 million), so the first row has none.

Three readings. First, over the seven quarters NII was $37.9 million and distributions $59.2 million, 64.0% (our arithmetic), and coverage fell every quarter from the first quarter of 2025 to the first quarter of 2026, before NII rose from $4.1 million to $5.1 million in the June 2026 quarter. Second, even with the CLO cost reduction added back, the June 2026 quarter shows $7.9 million against $10.5 million, 75.5%. Third, the per-share story hides the dollar story: NII per share was $0.09 in the first two quarters and $0.05 in the last two, against $0.105 of distributions every quarter (earnings releases), but the number of shares sharing that NII rose from 69.8 million at December 31, 2024 to 105.1 million at June 30, 2026, up 50.6% (our arithmetic).

By year, NII was $27.4 million against $29.5 million of distributions in 2023 (92.7%), $26.4 million against $26.7 million in 2024 (99.2%), $22.6 million against $32.1 million in 2025 (70.3%) and $9.3 million against $19.8 million in the first half of 2026 (46.9%) (10-K and 10-Q; our arithmetic). The statements label every dollar of those distributions as coming from net investment income and show no tax return of capital; the 10-K adds that “the ultimate tax character of the Company’s earnings cannot be determined until tax returns are prepared after the end of the fiscal year”.

The same $0.035 on 54% more shares

The rate per share has not moved. What moved is the share count and the income earned on it. At 69,758,938 shares on December 31, 2024 the monthly distribution cost $2.44 million; at 107,707,775 shares on August 7, 2026 (10-Q cover) it costs $3.77 million, $11.31 million a quarter and $45.2 million a year (our arithmetic). The first half of 2026 produced $9.3 million of NII, or $18.6 million annualized, 41% of that annual cost on today's share count (our arithmetic). The board has declared $0.035 for October, November and December 2026, with record dates of October 16, November 16 and December 17 and payment on the last day of each month (release of July 31, 2026). The next declaration, for January to March 2027, normally comes with the third-quarter release.

On the June 30, 2026 closing price of $1.32 printed in the release, $0.42 a year is 31.8% (our arithmetic), a ratio that is only as current as that price. The filings do not give a later price, and nothing on this page is a forecast of the dividend. The 10-Q itself says the company “may not be able to achieve operating results that will allow us to make distributions at a specific level”.

NAV from $7.50 to $1.29: ten years and one bridge

The 10-K's financial highlights carry ten years of per-share data. The table is theirs; the price-to-NAV column is our arithmetic.

Two things stand out. NII per share has not been close to the 2019 level of $0.81 since, and from 2016 to 2025 the table's distributions add up to $6.38 a share (our arithmetic), nearly as much as the $6.21 fall in NAV from $7.50 to $1.29. And since the end of 2022 the stock has traded at or above NAV at every year-end, a premium that matters because the 10-K says the company is “not generally able to issue and sell our common stock at a price below net asset value per share” without a board determination and stockholder approval.

The bridge from December 2023 to June 2026. NAV per share was $2.55 on December 31, 2023 and $1.29 on June 30, 2026, a fall of $1.26. The financial highlights break the three periods into the same lines, so we can sum them (our arithmetic):

Net losses are 93% of the $1.26 decline, distributions above NII ($0.23) another 18%, and issuing stock above NAV gave back 11% (our arithmetic: 93% + 18% - 11% = 100%). The first quarter of 2026 was the sharpest: NAV fell from $1.69 to $1.32 as the company recorded $30.7 million of net realized losses “primarily attributable to a restructuring of a senior secured loan and an extinguishment of a CLO equity position” (10-Q, March 31, 2026). Telos CLO 2014-5 appears in the December 31, 2025 schedule at a cost of $18.2 million and a fair value of zero and is absent from the June 30, 2026 schedule, and the largest unrealized change of the quarter was a $18.2 million reversal on that name, which fits that description (our reading; the filing does not tie the two). Most of that realized loss had been marked before: the 10-Q shows $30.3 million of reversal of prior unrealized depreciation, so the fall in NAV came from $30.2 million of new gross unrealized depreciation in the quarter against $1.0 million of appreciation.

CLO equity: 35.7% of fair value, 50.3% of cost

At June 30, 2026 the portfolio was $252.8 million at fair value on a cost of $386.4 million: senior secured notes of 20 companies at $147.2 million (58.2%), CLO equity at $90.3 million (35.7%) and equity and other investments at $15.4 million (6.1%) (10-Q). CLO equity cost $194.3 million, so the CLO book is half of what the company paid and carried at 46.5% of that (our arithmetic). Senior secured notes are carried at 88.9% of their $165.5 million cost.

What the schedule of investments adds, line by line, is how unevenly that is spread. Of the 27 CLO equity note positions (we exclude 5 further lines of fee notes), 11 have a 0.00% estimated yield: cost $55.9 million, fair value $7.9 million, 14.1% of cost (our arithmetic). The other 16 have cost $137.3 million and fair value $80.3 million, 58.5%. The estimated yield is the company's own forward-looking rate on the position. For the positions held at both dates, those yields fell between December 2025 and June 2026:

The full list of 27 positions, with cost, principal, acquisition date and both yields, is in the CSV. Two patterns are worth reading. First, the oldest positions have been marked toward zero while new ones come in near cost: the four positions bought on May 5 to 11, 2026 (CBAMR 2017-1, Dryden 109, Park Blue CLO 2022-II and Rockford Tower CLO 2025-3) cost $19.9 million, 10.2% of the CLO book at cost (our arithmetic), carry estimated yields of 22.02% to 26.76% and are valued at 89% to 99% of cost. Second, the income reflects this: income from securitization vehicles was $3.5 million in Q2 2026, 37.3% of investment income, and the weighted average effective yield on CLO equity at cost was 8.1% against 8.8% at December 31, 2024, while the cash distribution yield on the income-producing positions fell from 16.2% to 12.4% (earnings releases).

Debt investments are the steadier half: a weighted average yield of 14.95% at June 30, 2026, no debt investment on non-accrual (10-Q) and preferred equity in one portfolio company on non-accrual with a fair value of about $6.9 million (release). PIK interest was $0.90 million in Q2 2026, 9.5% of investment income (our arithmetic). Of the debt portfolio, 23.6% of principal ($43.8 million) is graded 3, “Closer monitoring is required”, and carried at $17.9 million. Qualifying assets were 69.4% of total assets, below the 70% line that limits new non-qualifying purchases (10-Q).

For a Prospect-adviser vehicle that still holds CLO equity see Priority Income Fund; Prospect Capital's own page covers a BDC that has left CLO equity.

Selling shares to fund a payout above earnings: the ATM

OXSQ has an at-the-market program of up to $150.0 million with Lucid Capital Markets and Ladenburg Thalmann; an amendment dated May 5, 2026 moved it to a new N-2 registration statement (8-K, Exhibit 1.1). Each quarter's sales are in the statement of changes in net assets. All figures below are net of fees, and the net price per share is our arithmetic.

Over the seven quarters the company raised $69.8 million net, more than the $59.2 million it distributed and well above the $37.9 million of NII (our arithmetic). Because it sold above NAV, issuance added $0.08, $0.03 and $0.03 to NAV per share in 2024, 2025 and the first half of 2026, but each quarter's net price came closer to NAV: $2.74 against $2.30 in late 2024, $1.58 against $1.29 in June 2026. Shares outstanding rose from 69.8 million to 105.1 million at June 30, 2026 and 107.7 million on August 7, and on May 8, 2026 the company raised its authorized shares from 100,000,000 to 300,000,000 (8-K, Item 5.03); 93.4 million were outstanding at March 31.

The quarter-end prices show the other side. At September 30, 2025 the stock closed at $1.59, 0.82 times NAV, and on October 30, 2025 the board authorized a $25 million repurchase program for the following 12 months. “During the year ended December 31, 2025, no common stock was repurchased”, the 10-K says, and the 10-Q reports none in the first six months of 2026; the program expires October 30, 2026 and the release says it “does not require” any specific purchase. By June 30, 2026 the stock was back above NAV at 1.02 times, after being 1.34 times at March 31.

The baby bonds: OXSQG and OXSQH

The two listed notes are unsecured, pay interest quarterly on January 31, April 30, July 31 and October 31, and make up all of the company's borrowings. The fair value is the closing price on the last day of the period (10-Q).

OXSQH was sold in August 2025: an underwriting agreement for $65.0 million on July 31, with $9.75 million more under the underwriters' option, so $74.8 million outstanding, and the 8-K says the proceeds would primarily repay indebtedness; the 6.25% notes were then redeemed in full by September 19, 2025 (8-Ks of July 31, August 7 and August 20, 2025; 10-K). On September 14, 2026 the company told the trustee it would redeem $15,000,000 of the $80.5 million OXSQG notes on October 14, 2026 at $25 per note plus accrued interest, selected by lottery through DTC (8-K and Form N-23C-2, accession 0001213900-26-099703 and -26-099699). If completed, $65.5 million of OXSQG would remain and debt would be $140.3 million (our arithmetic). The filings do not say what pays for it and no filing confirms completion as of October 16, 2026; the company held $34.6 million of cash and equivalents at June 30.

What the notes cost: stated interest was $2.56 million in Q2 2026 and $2.79 million with amortized issuance costs, 54% of NII (our arithmetic), at a weighted average effective rate of 7.22%; the 10-Q gives a weighted average stated rate of 6.58% and a weighted average maturity of 3.1 years. Asset coverage was 185% against a 150% minimum, 191% at December 31, 2025; debt of $155.3 million principal is 1.15 times net assets of $135.0 million (our arithmetic), or 1.13 times on the $152.1 million carrying value used in our BDC list. Interest expense was $9.2 million in 2025 against $7.8 million in 2024 and $10.8 million in 2023 (10-K).

What the adviser is paid, and who else it manages

Under the investment advisory agreement, the base fee is 2.00% of gross assets, so it is charged on assets bought with the notes. A fee waiver letter adopted unilaterally by Oxford Square Management in 2016 sets up a parallel calculation with a 1.50% base fee, a fixed 7.00% hurdle, a quarterly preferred return of 1.75% of NAV, a catch-up to 2.1875% and 20% above, and a “Total Return Requirement”: no incentive fee unless 20% of the cumulative net increase in net assets from operations over the quarter and the eleven before it exceeds the incentive fees already accrued or paid. The lower of the two combined results is paid (10-K). The base fee was $961,643 in Q2 2026, 2.85% of net assets annualized (our arithmetic), and no incentive fee was recorded in 2024, 2025 or the first half of 2026; in 2023 it was $3,705,387.

Oxford Square Management also advises or administers Oxford Lane Capital Corp. and Oxford Park Income Fund, both CLO equity and junior debt vehicles, and the Oxford Gate funds. The 10-Q says allocation decisions follow a written policy and that on January 6, 2026 OXSQ received an updated co-investment exemptive order that replaces the 2017 one and requires that allocations be “fair and equitable” to it, with fewer board approvals. For a holder, the point is that OXSQ's CLO purchases sit beside similar purchases by related funds, and the 10-Q flags the resulting conflicts of interest.

What happened recently, in dates

• January 6, 2026: updated SEC co-investment order received (10-Q).
• March 3 and 6, 2026: fourth-quarter release (NAV $1.69, NII $5.4 million) and the 10-K.
• April 29, 2026: first-quarter release: NAV $1.32, NII $4.1 million, net realized losses $30.7 million, 7.2 million shares sold.
• May 5 to 11, 2026: four CLO equity positions bought (cost $19.9 million); ATM agreement amended (May 5); authorized shares raised to 300,000,000 (May 8).
• May 26, 2026: PricewaterhouseCoopers dismissed and Ernst & Young engaged as auditor, with no disagreements reported (8-K of May 29).
• July 31, 2026: second-quarter release: NAV $1.29, NII $5.1 million, distributions of $0.035 declared for October to December.
• August 10, 2026: Form 10-Q (107,707,775 shares at August 7).
• August 20, 2026: annual meeting. Two directors were elected for terms to 2029 and EY was ratified; 56.0 million of the 105.1 million shares entitled to vote were counted, including 33.5 million broker non-votes (8-K Item 5.07; our arithmetic).
• September 14, 2026: notice to redeem $15.0 million of OXSQG on October 14.
• Next: October 16 record date (payment October 30), October 30 expiry of the buyback authorization, and the third-quarter release and 10-Q, last year on November 4 and 7.

What a holder or reader can do with this

This is a checklist built from the filings, not a recommendation.

• Read coverage both ways. NII per share of $0.05 against $0.105 is 48.9% in dollars. The company-disclosed CLO cost reduction lifts the cash view to about 75% in the June quarter; neither view reaches 100%, and the gap is closed by share sales and NAV.
• Do the share-count math each quarter. Third-quarter NII has to be set against about 108 million shares times $0.105, roughly $11.3 million, plus whatever the ATM added since August (our arithmetic).
• Watch price against NAV. The ATM only works above NAV, and the stock was at 0.82 times NAV on September 30, 2025 and 1.34 times on March 31, 2026. The NAV for September 30, 2026 will come with the third-quarter report.
• Read the CLO schedule, not the total. 11 positions carry 0.00% estimated yield; the new May 2026 positions carry 22% to 27%. Ask which one drives the next NAV move.
• If you hold OXSQG or OXSQH, the maturity and call dates are in the table above; OXSQG redemption on October 14 is by lottery, so not every holder is redeemed.
• Taxes. The tax character of distributions is set after year end; see our 1099-DIV timeline.

FAQ

All figures are from Oxford Square Capital Corp.'s SEC filings (CIK 1259429) read on EDGAR on October 16, 2026: the Forms 10-K for 2025 and 2024 (accessions 0001213900-26-024280 and 0001213900-25-020801); the Forms 10-Q for March 31, June 30 and September 30, 2025 and March 31 and June 30, 2026 (0001213900-25-037835, -25-074439, -25-107316, -26-050934 and -26-087243); the earnings releases (Exhibit 99.1 to the 8-Ks of February 28, April 25, August 7 and November 4, 2025 and March 3, April 29 and July 31, 2026, accessions 0001213900-25-018766, -25-035264, -25-072831, -25-105636, -26-022728, -26-048831 and -26-084087); and the 8-Ks and notices of May 14, June 18, July 31, August 7, August 20, 2025 and May 5, May 8, May 29, August 20 and September 14, 2026 (0001213900-25-043381, -25-055645, -25-070608, -25-073091, -25-078975, -26-052505, -26-054051, -26-062870, -26-092208 and -26-099703, plus Form N-23C-2 0001213900-26-099699). Ratios, sums across quarters, the position-level aggregates and the cash-coverage bracket are our arithmetic; the CLO cost reduction is the company's disclosure, the combined coverage is not a company measure. This is analysis of public documents, not investment, legal or tax advice.