- Oxford Lane Capital surprised investors recently when it announced its estimated NAV had dropped almost 4% from a month earlier.
- This seemed out-of-step with this year's positive story about collateralized loan obligations (CLOs) and the corporate loan market generally, and OXLC in particular.
- Especially given OXLC's recent 11% distribution increase, and the strong distribution coverage outlined in its recent semi-annual report.
- Investors scratching their heads may be pleased to learn that a CLO's "paper value" may not truly reflect its actual "business value."
- To put it bluntly, a drop in loan prices that reduces the theoretical value of a CLO's equity, at least on paper, may also increase its profitability.
For further details see:
Oxford Lane Capital: The Rest Of The Story ('Business Value' Versus 'Paper Value')