[8-K] Oxford Square Capital Corp. 6.25% Notes due 2026 Reports Material Event
Oxford Square Capital Corp. (NASDAQ: OXSQZ) has announced a partial redemption of its 6.25% Notes due 2026. On 18 June 2025 the company instructed U.S. Bank Trust Company, N.A. to redeem $10 million in aggregate principal value—approximately 29% of the $34.8 million currently outstanding—on 18 July 2025. Holders will receive the contractual redemption price of $25 per note plus accrued interest from 30 April 2025 up to, but not including, the redemption date.
The transaction will immediately reduce the company’s fixed-rate debt obligation bearing a 6.25% coupon, thereby lowering annual interest expense on the redeemed portion by roughly $0.6 million before tax. The early repayment also eliminates refinancing risk for the redeemed tranche and modestly improves leverage metrics, signalling management’s focus on balance-sheet optimisation.
Investors should note that this Form 8-K serves only as disclosure of the redemption decision; the official notice to noteholders will be distributed by the trustee in accordance with the indenture. No changes were announced for Oxford Square’s common stock or its 5.50% Notes due 2028, and no financial performance data accompanied the filing.
- $10 million early redemption cuts outstanding 6.25% debt by nearly 29%.
- Annual interest expense falls by roughly $0.6 million, improving earnings coverage.
- Action demonstrates management’s confidence in liquidity and proactive balance-sheet management.
- Uses cash that could have been deployed for investments or distributions.
- Only a partial redemption; $24.8 million of high-coupon notes remain outstanding.
Insights
TL;DR: Partial $10M redemption trims high-coupon debt, cuts interest costs and signals adequate liquidity—directionally positive but not game-changing for equity.
The early take-out of 29% of the 6.25% 2026 notes should save c.$0.6 million in annual interest, assuming no replacement financing. Because the notes trade at par, Oxford Square avoids a premium and maintains flexibility on the remaining $24.8 million outstanding. The move suggests sufficient cash on hand or revolver capacity, and it reduces refinancing pressure ahead of the 2026 maturity. While positive for credit metrics, the scale is modest relative to the BDC’s total assets, so the equity impact is limited but favourable.
TL;DR: Redemption removes nearly one-third of the 2026 issue, tightening float and marginally improving coverage; neutral-to-positive for remaining noteholders.
The call at par plus accrued interest is within expectations under the indenture. Reduced supply may bolster secondary-market pricing for the residual OXSQZ notes, while coverage ratios benefit from lower coupon drag. However, noteholders lose future interest on the redeemed amount and receive no make-whole premium, keeping the change largely neutral from a total-return standpoint. Overall credit quality edges higher, making the development mildly constructive.
FAQ
What did Oxford Square Capital Corp. (OXSQZ) announce on its Form 8-K?
How much of the 6.25% Notes will remain after the redemption?
What is the financial impact of the redemption on interest expense?
When should holders present their notes for redemption?
Does the filing mention any changes to the 5.50% Notes due 2028?
