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Watch CLO Holder Oxford Lane Capital

I hate to sound like a broken records, but investors have to watch the preferred stocks and debt of the Collateralized Loan Obligation (CLO) company’s and in particular right now Oxford Lane Capital Corp (OXLC). While this situation MAY turn out just fine I personally love to watch these CEF items play out–at least for education purposes.

Oxford Lane posted an update as of 4/30/2020 and it wasn’t pretty. The company is estimating a Net Asset Value of $2.67-$2.77/share. This is down 25% in the last month. The NAV on 3/31/2020 was $3.58 and was $6.81 on 12/31/2019—ouch! The common shares traded between $8 and $9.60 in January–now at $3.09–double ouch!!

The company press release can be read here.

As you all know being a closed end fund (CEF) Oxford Lane must maintain an asset coverage ratio of 200% on preferred leverage or they will need to raise cash via common share sales or through redemption of preferred shares.

The company has 3 term preferreds outstanding which are not trading too terribly bad–priced currently in the $19.00 to $23.00 range. You can see them here. Will folks panic out in the weeks ahead? Will shares then be a great bargain–or just a pure speculative bet?

Right now I am certain the company has breached the leverage limits–so we will see what the company does in the next few weeks.

We are likely to see Eagle Point Credit (ECC) and Priority Income Fund have the same issues as Oxford Lane—I will be watching.

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