OFS Credit Company Provides December 2023 Net Asset Value Update

Rhea-AI Summary

OFS Credit Company, Inc. (NASDAQ: OCCI) announced an estimated net asset value (NAV) per share of common stock as of December 31, 2023, ranging between $7.61 and $7.71. The company advises that these estimates may differ from future NAV determinations due to potential impacts from events such as the ongoing war between Russia and Ukraine, the conflict in Israel, instability in the banking systems, recession risks, and market volatility. The preliminary financial data included in the press release has not been audited by KPMG LLP.

Financial Analyst

An examination of OFS Credit Company's announcement of its net asset value (NAV) estimate reveals a critical data point for investors and market analysts. The disclosed NAV range of $7.61 to $7.71 per share is a pivotal indicator of the company's financial health and asset valuation as of December 31, 2023. Assessing the company's performance requires understanding the significance of the NAV, which represents the per-share value of a company's assets minus its liabilities. It is a standard metric for investment companies, particularly those dealing with collateralized loan obligation (CLO) securities, which involve pools of loans packaged and sold as investable assets.

The fact that this estimate has not undergone the usual financial closing procedures and is unaudited adds a layer of uncertainty. Investors typically rely on audited financials for accuracy; hence, the current estimate might be subject to significant adjustments. The acknowledgment of potential material impacts from external factors such as interest and inflation rates, geopolitical tensions and market volatility underscores the risks inherent in investment in CLOs. These factors can affect the default rates and recovery values of the underlying loans in CLOs, thereby impacting OFS Credit's NAV.

For stakeholders, the short-term implications include the need to monitor upcoming audited reports and market conditions that could materially alter the company's financial position. Long-term considerations involve evaluating the company's risk management strategies in the face of the mentioned macroeconomic and geopolitical challenges.

Market Research Analyst

From a market perspective, OFS Credit's NAV estimate announcement could influence investor sentiment towards the company's shares. The stated NAV provides a benchmark against which current and prospective investors can gauge the company's share price and decide on their investment strategies. However, the volatility of CLO markets and the sensitivity to macroeconomic factors mentioned in the announcement are crucial for investors to consider. These factors can lead to significant fluctuations in the value of CLO securities, potentially affecting future NAVs and the company's ability to generate returns.

Furthermore, the explicit mention of risks such as the war in Ukraine and the conflict in Israel, along with banking instability, suggests that OFS Credit's investment portfolio might be exposed to international market risks. This exposure could lead to increased due diligence by investors who are assessing the company's geographic and sectoral diversification and its ability to mitigate such risks.

Investors should be aware that the NAV is a snapshot in time and may not fully capture the company's future performance, particularly in a rapidly changing economic environment. The long-term impact will depend on how the company navigates these risks and the resilience of its investment strategy in an uncertain global economic landscape.

Risk Management Expert

From a risk management standpoint, OFS Credit's disclosure highlights the importance of understanding the risk profile of an investment company that deals with CLOs. The company's mention of not undergoing typical quarter-end financial closing procedures suggests that the reported NAV is preliminary and may not reflect certain adjustments or valuations that could arise from a comprehensive risk assessment.

The potential adverse effects on the company's net investment income and the underlying value of its investments due to factors such as interest and inflation rates, geopolitical unrest and banking system instability, are indicative of the credit and market risk associated with CLO investments. These investments are sensitive to changes in credit conditions and economic cycles, which can affect the performance of the underlying loans and, consequently, the returns to investors.

Risk management strategies, such as stress testing the portfolio against various economic scenarios and ensuring adequate liquidity, are essential for the company to withstand adverse conditions. Investors should consider the robustness of OFS Credit's risk management framework when evaluating the company's long-term stability and its ability to protect and grow its NAV.

CHICAGO--(BUSINESS WIRE)-- OFS Credit Company, Inc. (NASDAQ: OCCI) (“OFS Credit”, the “Company”, “we”, “us” or “our”), an investment company that primarily invests in collateralized loan obligation (“CLO”) equity and debt securities, today announced the following net asset value (“NAV”) estimate as of December 31, 2023.

• Management’s unaudited estimate of the range of our NAV per share of our common stock as of December 31, 2023 is between $7.61 and $7.71. This estimate is not a comprehensive statement of our financial condition or results for the month ended December 31, 2023. This estimate did not undergo the Company’s typical quarter-end financial closing procedures. We advise you that current estimates of our NAV per share may differ materially from future NAV estimates or determinations, including the determination for the period ending January 31, 2024, which will be reported in our monthly report on Form N-PORT.

Our financial condition, including the fair value of our portfolio investments, and results of operations may be materially impacted after December 31, 2023 by circumstances and events that are not yet known. To the extent our portfolio investments are adversely impacted by elevated interest and inflation rates, the ongoing war between Russia and Ukraine, the current conflict in Israel, instability in the U.S. and international banking systems, the risk of recession or a shutdown of U.S. government services and related market volatility, or by other factors, we may experience a material adverse impact on our future net investment income, the underlying value of our investments, our financial condition and the financial condition of our portfolio investments.

The preliminary financial data included in this press release has been prepared by, and is the responsibility of, OFS Credit’s management. KPMG LLP has not audited, reviewed, compiled, or applied agreed-upon procedures with respect to the preliminary financial data. Accordingly, KPMG LLP does not express an opinion or any other form of assurance with respect thereto.

About OFS Credit Company, Inc.

OFS Credit is a non-diversified, externally managed closed-end management investment company. The Company’s investment objective is to generate current income, with a secondary objective to generate capital appreciation primarily through investment in CLO debt and subordinated securities. The Company's investment activities are managed by OFS Capital Management, LLC, an investment adviser registered under the Investment Advisers Act of 1940¹, as amended, and headquartered in Chicago, Illinois with additional offices in New York and Los Angeles.

Forward-Looking Statements

Statements in this press release regarding management's future expectations, beliefs, intentions, goals, strategies, plans or prospects may constitute forward-looking statements. Forward-looking statements can be identified by terminology such as “anticipate”, “believe”, “could”, “could increase the likelihood”, “estimate”, “expect”, “intend”, “is planned”, “may”, “should”, “will”, “will enable”, “would be expected”, “look forward”, “may provide”, “would” or similar terms, variations of such terms or the negative of those terms. Such forward-looking statements involve known and unknown risks, uncertainties and other factors including those risks, uncertainties and factors referred to in documents that may be filed by OFS Credit from time to time with the Securities and Exchange Commission, as well as elevated interest and inflation rates, the ongoing war between Russia and Ukraine, the current conflict in Israel, instability in the U.S. and international banking systems, the risk of recession or a shutdown of U.S government services and related market volatility on our business, our portfolio companies, our industry and the global economy. As a result of such risks, uncertainties and factors, actual results may differ materially from any future results, performance or achievements discussed in or implied by the forward-looking statements contained herein. OFS Credit is providing the information in this press release as of this date and assumes no obligations to update the information included in this press release or revise any forward-looking statements, whether as a result of new information, future events or otherwise.

¹ Registration does not imply a certain level of skill or training

View source version on businesswire.com: https://www.businesswire.com/news/home/20240112421946/en/

INVESTOR RELATIONS:

OFS Credit Company, Inc.

Steve Altebrando, 646-652-8473

saltebrando@ofsmanagement.com

MEDIA RELATIONS:

Bill Mendel

212-397-1030

bill@mendelcommunications.com

Source: OFS Credit Company, Inc.

FAQ

What is the estimated range of NAV per share of OFS Credit Company, Inc. (OCCI) as of December 31, 2023?

The estimated range of NAV per share of OCCI as of December 31, 2023 is between $7.61 and $7.71.

What events may impact the future net investment income and financial condition of OCCI?

Events such as elevated interest and inflation rates, the ongoing war between Russia and Ukraine, the conflict in Israel, instability in the U.S. and international banking systems, the risk of recession, and related market volatility may impact the future net investment income and financial condition of OCCI.

Has the preliminary financial data in the press release been audited by KPMG LLP?

No, the preliminary financial data included in the press release has not been audited by KPMG LLP.