Oaktree Strategic Income Corporation Issues Shareholder Letter

LOS ANGELES, CA, March 27, 2020 (GLOBE NEWSWIRE) -- Oaktree Strategic Income Corporation (NASDAQ: OCSI) (“Oaktree Strategic Income,” “OCSI” or “we”), a specialty finance company, today issued a letter to its shareholders providing a business update amid the COVID-19 pandemic.

Dear Shareholder,

We hope this letter finds you safe and in good health. We understand that these are challenging and unprecedented times, and we wish to extend our sincere thoughts to those impacted by the COVID-19 virus. We want to assure you that Oaktree Capital Management, L.P. (“Oaktree”), OCSI’s investment adviser, has taken several measures to keep its employees safe and business functions operational. Oaktree has implemented its business continuity plans and has successfully transitioned into a virtual company with nearly all its employees working remotely around the world. As a result, Oaktree believes it remains well-positioned to safely and effectively manage OCSI and its other managed funds and accounts.

Investment Portfolio Positioning

Since Oaktree became investment adviser to OCSI in late 2017, its emphasis has been on defensively positioning the portfolio by maintaining diversity across issuers and borrowers, focusing on first lien senior secured loans and lending to larger, more diversified businesses. To that end, as of December 31, 2019, our $584 million portfolio was comprised of loans to 84 portfolio companies with an average loan size of $7 million, and 88% of these loans were in a first lien position. Additionally, since Oaktree assumed management of OCSI in October 2017, the median portfolio company EBITDA has more than doubled to $153 million as of December 31, 2019, underscoring our focus on larger businesses that Oaktree believes will be more resilient in a market downturn.

With respect to industry exposures, we have been lending to businesses that we believe operate in more defensive, less cyclical or structurally growing industries. As of December 31, 2019, our largest industry concentrations were in software, commercial services and supplies and information technology services, and we believe our exposure to energy, travel and leisure is limited.

While the market continues to evolve and it is difficult to determine the impact that COVID-19 will have, we and Oaktree are committed to proactively managing risks and situations that may arise in our portfolio.

Balance Sheet and Liquidity

We entered this environment in a strong financial position with relatively low leverage and sufficient liquidity. As of December 31, 2019, leverage was 1.07x debt-to-equity, below our target range of 1.20x to 1.60x. We continue to receive support from our lenders and this week, we amended our credit facility with Deutsche Bank to extend the maturity date, among other things. As of March 25, 2020, we had $7 million of unfunded commitments to our portfolio companies, which we have liquidity to fund¹. The following information provides a summary of our capitalization and funding profile as of December 31, 2019: