OXLCZ - Oxford Lane Capital: The Cash Keeps Flowing And The Market Keeps Growing

2024-07-03 01:29:34 ET

Summary

• Oxford Lane Capital operates in the underserved segment of credit known as collateralized loan obligations or CLOs.
• OXLC competes with Eagle Point Credit Company to originate collateralized loan obligations and invests in the equity tranche.
• Recent growth comes with risks related to the rapid expansion of private credit over the past decade.
• Growth also presents opportunity, and OXLC has continuously disproven naysayers as it outperforms competitors and expectations.
• We explore OXLC and private credit to explain OXLC's business and where it could fit in an income portfolio.

Oxford Lane Capital Corporation ( OXLC ) is a unique closed end fund operating in a niche and underserved segment of income. OXLC is similar to Eagle Point Credit Company ( ECC ) as one of the few publicly traded participants in collateralized loan obligations or CLOs. Following up on our prior coverage of OXLC, we are revisiting the fund to see what has changed and assess the outlook of secured lending.

Over the years, the credit markets have unlocked for investors. Generally speaking, investment grade bonds have been the focus of most fixed income investors looking beyond treasuries, municipal bonds, or certificate of deposits. The bravest would venture off into high yield debt from below investment grade issuers. However, private and securitized credit were untouched by individuals aside from family offices or other ultra-high net worth individuals. Over the past decade, a variety of publicly traded companies participating in securitized credit have appeared, including OXLC and ECC. Additionally, funds focusing on the higher rated CLO tranches have appeared including Janus Henderson AAA CLO ETF ( JAAA ) and Janus Henderson B-BBB CLO ETF ( JBBB )....

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