8-K

UNITED STATES

SECURITIES AND EXCHANGE COMMISSION

Washington, D.C. 20549

FORM 8-K

CURRENT REPORT

Pursuant to Section 13 or 15(d)

of The Securities Exchange Act of 1934

Date of Report (Date of earliest event reported): November 29, 2018

Oaktree Specialty Lending Corporation

(Exact name of registrant as specified in its charter)

Delaware	814-00755	26-1219283
(State or other jurisdiction of incorporation)	(Commission File Number)	(IRS Employer Identification No.)

333 South Grand Avenue, 28th Floor Los Angeles, CA	90071
(Address of principal executive offices)	(Zip Code)

Registrant’s telephone number, including area code: (213) 830-6300

Not Applicable

(Former name or former address, if changed since last report)

Check the appropriate box below if the Form 8-K filing is intended to simultaneously satisfy the filing obligation of the registrant under any of the following provisions:

☐ Written communications pursuant to Rule 425 under the Securities Act (17 CFR 230.425)

☐ Soliciting material pursuant to Rule 14a-12 under the Exchange Act (17 CFR 240.14a-12)

☐ Pre-commencement communications pursuant to Rule 14d-2(b) under the Exchange Act (17 CFR 240.14d-2(b))

☐ Pre-commencement communications pursuant to Rule 13e-4(c) under the Exchange Act (17 CFR 240.13e-4(c))

Indicate by check mark whether the registrant is an emerging growth company as defined in Rule 405 of the Securities Act of 1933 (17 CFR §230.405) or Rule 12b-2 of the Securities Exchange Act of 1934 (17 CFR §240.12b-2).

Emerging Growth Company  ☐

If an emerging growth company, indicate by check mark if the registrant has elected not to use the extended transition period for complying with any new or revised financial accounting standards provided pursuant to Section 13(a) of the Exchange Act.  ☐

Item 2.02. Results of Operations and Financial Condition.

On November 29, 2018, Oaktree Specialty Lending Corporation (the “Company”) issued a press release announcing its financial results for the fiscal quarter and year ended September 30, 2018. A copy of the press release is attached hereto as Exhibit 99.1.

On November 29, 2018, the Company will host a conference call to discuss its financial results for the fiscal quarter and year ended September 30, 2018. In connection therewith, the Company provided an investor presentation on its website at http://www.oaktreespecialtylending.com. A copy of the investor presentation is attached hereto as Exhibit 99.2.

The information disclosed under this Item 2.02, including Exhibits 99.1 and 99.2 hereto, is being “furnished” and is not deemed “filed” by the Company for purposes of Section 18 of the Securities Exchange Act of 1934, as amended (the “Exchange Act”), or otherwise subject to the liabilities of that Section, nor is it deemed incorporated by reference into any filing under the Securities Act of 1933, as amended, or the Exchange Act, except as shall be expressly set forth by specific reference in such filing.

Item 9.01. Financial Statements and Exhibits.

(d)	Exhibits
99.1	Press release of Oaktree Specialty Lending Corporation dated November 29, 2018
99.2	Oaktree Specialty Lending Corporation Fourth Quarter and Fiscal Year 2018 Earnings Presentation

SIGNATURE

Pursuant to the requirements of the Exchange Act, the registrant has duly caused this report to be signed on its behalf by the undersigned hereunto duly authorized.

	OAKTREE SPECIALTY LENDING CORPORATION
Date: November 29, 2018	By:	/s/ Mel Carlisle
		Name: Mel Carlisle Title: Chief Financial Officer and Treasurer

EX-99.1

Exhibit 99.1

Oaktree Specialty Lending Corporation Announces Fourth Fiscal Quarter 2018 Financial Results and Declares Distribution of $0.095 Per Share

LOS ANGELES, CA, November 29, 2018—Oaktree Specialty Lending Corporation (NASDAQ: OCSL) (“Oaktree Specialty Lending” or the “Company”), a specialty finance company, today announced its unaudited financial results for the fiscal quarter ended September 30, 2018.

Fourth Fiscal Quarter 2018 Highlights

• Total investment income of $38.2 million ($0.27 per share), up from $31.8 million ($0.23 per share) for the third fiscal quarter of 2018;

• Net investment income of $17.0 million ($0.12 per share), up from $14.4 million ($0.10 per share) for the third fiscal quarter of 2018;

• Net asset value (“NAV”) per share of $6.09, up from $5.95 for the third fiscal quarter of 2018;

• Originated $228.4 million of new investment commitments and received $267.5 million of proceeds from prepayments, exits, other paydowns and sales; and

• A quarterly dividend was declared of $0.095 per share, payable on December 28, 2018 to stockholders of record on December 17, 2018.

Management Commentary

Edgar Lee, Chief Executive Officer and Chief Investment Officer of Oaktree Specialty Lending said, “The fourth quarter completed a strong year for OCSL, highlighted by solid earnings growth and improved credit performance, including delivering the third consecutive quarter of increased NAV per share. Since we began managing OCSL a year ago, we have made significant progress in reducing credit risk in the portfolio and stabilizing NAV. During the fiscal year, we reduced non-core investments by $569 million while adding over $1.0 billion of new investments that are consistent with Oaktree’s investment philosophy. Core investments now represent 76 percent of our portfolio, up from 37 percent as of September 30, 2017. Given our substantial progress to date, we believe we are well positioned to further enhance our return on equity and deliver value to our shareholders in 2019.”

Portfolio and Investment Activity

As of September 30, 2018, the fair value of the Company’s investment portfolio was $1.5 billion and was comprised of investments in 113 companies. These included debt investments in 86 companies, the investments in Senior Loan Fund JV I, LLC (“SLF JV I”) and equity investments in 40 companies, including in SLF JV I and 2 private equity funds. Fourteen of the equity investments were in companies in which Oaktree Specialty Lending also had a debt investment.

At fair value, 95.0% of the Company’s portfolio as of September 30, 2018 consisted of debt investments, including 48.4% of first lien loans, 27.0% of second lien loans and 19.6% of unsecured debt investments, including the debt investments in SLF JV I.

As of September 30, 2018, SLF JV I had $314.2 million in assets, including senior secured loans to 40 portfolio companies. The joint venture generated income of $3.1 million for Oaktree Specialty Lending during the quarter ended September 30, 2018.

The weighted average yield on the Company’s debt investments as of September 30, 2018, including the return on the Company’s mezzanine note investments in SLF JV I, was 8.4%.

As of September 30, 2018, $1.2 billion of the Company’s debt investments, or 83.2% of the total debt portfolio, at fair value, had floating interest rates.

During the quarter ended September 30, 2018, the Company originated $228.4 million of investment commitments, including investments in 13 new and three existing portfolio companies, and funded $218.4 million of investments across new and existing portfolio companies.

During the quarter, the Company received $267.5 million of proceeds from various prepayments, exits, other paydowns and sales and exited 18 investments.

Results of Operations

Total investment income for the quarter ended September 30, 2018 was $38.2 million, including $35.3 million of cash interest income from portfolio investments, $0.5 million of payment-in-kind (“PIK”) interest income, $2.0 million of fee income and $0.4 million of dividend income. PIK interest income, net of PIK collected in cash, represented 1.1% of total investment income for the quarter ended September 30, 2018. Total investment income increased $6.4 million from the quarter ended June 30, 2018, which was primarily attributable to the acceleration of interest income and prepayments fees earned in connection with the exit of a certain investment.

Net expenses for the quarter were $21.2 million, an increase of $3.8 million from the quarter ended June 30, 2018. The increase in net expenses was due primarily to an increase in Part I incentive fees (net of fees waived) resulting from higher investment earnings during the quarter, and an increase in interest expense, which was attributable to higher levels of outstanding debt during the quarter.

Net realized and unrealized gain before taxes on the Company’s investment portfolio for the quarter ended September 30, 2018 was $16.9 million.

Liquidity and Capital Resources

As of September 30, 2018, the Company had $13.5 million of cash and cash equivalents (including restricted cash), total principal value of debt outstanding of $643.4 million and $359.0 million of undrawn capacity on its credit facility, subject to borrowing base and other limitations. The weighted average interest rate on debt outstanding was 5.1% as of September 30, 2018.

As of September 30, 2018, the Company’s total leverage ratio was 0.75x debt-to-equity.

Distribution Declaration

The Company’s Board of Directors declared a quarterly distribution of $0.095 per share, payable on December 28, 2018 to stockholders of record on December 17, 2018.

Distributions are paid primarily from distributable (taxable) income. To the extent taxable earnings for a fiscal taxable year fall below the total amount of dividend distributions for that fiscal year, a portion of those distributions may be deemed a return of capital to the Company’s stockholders.

Portfolio Asset Quality

As of September 30, 2018, there were eight investments on which the Company had stopped accruing cash and/or PIK interest or original issue discount (“OID”) income that, in the aggregate, represented 14.5% of the Company’s debt portfolio at cost and 7.0% at fair value.

($ in thousands)
Non-Accrual - Debt Investments	As of September 30, 2018			As of September 30, 2017
Non-Accrual Investments at Fair Value	$	98,760		$	67,015
Non-Accrual Investments/Total Debt Investments at Fair Value		7.0	%		4.7	%

Oaktree Specialty Lending Corporation

Consolidated Statements of Assets and Liabilities

(in thousands, except per share amounts)

	September 30, 2018			June 30, 2018 (unaudited)			September 30, 2017
ASSETS
Investments at fair value:
Control investments (cost September 30, 2018: $213,470; cost June 30, 2018: $266,097; cost September 30, 2017: $444,826)	$	196,874		$	223,421		$	305,271
Affiliate investments (cost September 30, 2018: $1,080; cost June 30, 2018: $1,080; cost September 30, 2017: $33,743)		2,161			2,161			36,983
Non-control/Non-affiliate investments (cost September 30, 2018: $1,392,383; cost June 30, 2018: $1,416,632; cost September 30, 2017: $1,279,096)		1,292,166			1,294,936			1,199,501
Total investments at fair value (cost September 30, 2018: $1,606,933; cost June 30, 2018: $1,683,809; cost September 30, 2017: $1,757,665)		1,491,201			1,520,518			1,541,755
Cash and cash equivalents		13,380			56,615			53,018
Restricted cash		109			499			6,895
Interest, dividends and fees receivable		10,272			8,102			6,892
Due from portfolio companies		1,357			15,757			5,670
Receivables from unsettled transactions		26,760			22,538			—
Deferred financing costs		5,209			5,620			1,304
Derivative asset at fair value		162			—			—
Other assets		3,008			3,108			514
Total assets	$	1,551,458		$	1,632,757		$	1,616,048
LIABILITIES AND NET ASSETS
Liabilities:
Accounts payable, accrued expenses and other liabilities	$	3,581		$	2,714		$	2,417
Base management fee and Part I incentive fee payable		8,223			7,094			6,750
Due to affiliate		3,274			4,230			1,815
Interest payable		3,365			6,338			3,167
Amounts payable to syndication partners		109			301			1
Director fees payable		—			—			184
Payables from unsettled transactions		37,236			166,903			58,691
Deferred tax liability		422			—			—
Credit facilities payable		241,000			211,000			255,995
Unsecured notes payable (net of $3,483, $3,851 and $4,737 of unamortized financing costs as of September 30, 2018, June 30, 2018 and September 30, 2017, respectively)		386,485			386,132			406,115
Secured borrowings at fair value (proceeds September 30, 2018: $12,314; proceeds June 30, 2018: $12,623; proceeds September 30, 2017: $13,489)		9,728			9,950			13,256
Total liabilities		693,423			794,662			748,391
Commitments and contingencies
Net assets:
Common stock, $0.01 par value, 250,000 shares authorized; 140,961 shares issued and outstanding as of September 30, 2018, June 30, 2018 and September 30, 2017		1,409			1,409			1,409
Additional paid-in-capital		1,492,739			1,579,278			1,579,278
Accumulated overdistributed earnings		(636,113	)		(742,592	)		(713,030	)
Total net assets (equivalent to $6.09, $5.95 and $6.16 per common share as of September 30, 2018, June 30, 2018 and September 30, 2017, respectively)		858,035			838,095			867,657
Total liabilities and net assets	$	1,551,458		$	1,632,757		$	1,616,048

Oaktree Specialty Lending Corporation

Consolidated Statements of Operations

(in thousands, except per share amounts)

	Three months ended September 30, 2018 (unaudited)			Three months ended June 30, 2018 (unaudited)			Three months ended September 30, 2017 (unaudited)			Year ended September 30, 2018			Year ended September 30, 2017
Interest income:
Control investments	$	3,687		$	2,737		$	3,126		$	12,698		$	14,230
Affiliate investments		—			161			978			2,027			3,939
Non-control/Non-affiliate investments		31,496			23,629			26,935			103,223			133,344
Interest on cash and cash equivalents		123			107			313			563			810
Total interest income		35,306			26,634			31,352			118,511			152,323
PIK interest income:
Control investments		—			1,045			1,186			3,446			6,631
Affiliate investments		—			52			196			416			788
Non-control/Non-affiliate investments		499			360			746			1,907			3,674
Total PIK interest income		499			1,457			2,128			5,769			11,093
Fee income:
Control investments		6			697			315			951			1,244
Affiliate investments		—			—			12			48			753
Non-control/Non-affiliate investments		2,028			1,728			1,355			8,433			8,510
Total fee income		2,034			2,425			1,682			9,432			10,507
Dividend and other income:
Control investments		381			1,331			570			5,010			3,954
Non-control/Non-affiliate investments		—			—			—			—			87
Total dividend and other income		381			1,331			570			5,010			4,041
Total investment income		38,220			31,847			35,732			138,722			177,964
Expenses:
Base management fee		5,767			5,909			6,808			22,652			31,369
Part I incentive fee		3,675			2,733			—			10,485			10,713
Professional fees		859			924			1,964			5,696			5,703
Directors fees		143			154			277			650			872
Interest expense		9,323			8,291			12,772			35,728			49,935
Administrator expense		336			466			660			1,687			2,217
General and administrative expenses		794			488			1,845			3,120			5,999
Loss on legal settlements		—			—			—			—			3
Total expenses		20,897			18,965			24,326			80,018			106,811
Fees waived		292			(1,548	)		(58	)		(1,342	)		(240	)
Insurance recoveries		—			—			—			—			(1,259	)
Net expenses		21,189			17,417			24,268			78,676			105,312
Net investment income		17,031			14,430			11,464			60,046			72,652
Unrealized appreciation (depreciation) on investments and foreign currency:
Control investments		26,081			97,000			(83,359	)		115,906			(71,329	)
Affiliate investments		—			72			(73	)		(2,159	)		(1,574	)
Non-control/Non-affiliate investments		21,039			1,810			(33,008	)		(13,657	)		(24,640	)
Foreign currency forward contracts		162			—			—			162			—
Net unrealized appreciation (depreciation) on investments and foreign currency		47,282			98,882			(116,440	)		100,252			(97,543	)
Net unrealized (appreciation) depreciation on secured borrowings		(87	)		377			—			2,353			(296	)
Realized gain (loss) on investments, secured borrowings and foreign currency:
Control investments		(31,331	)		(91,470	)		(728	)		(122,801	)		(59,722	)
Affiliate investments		—			—			—			2,048			—
Non-control/Non-affiliate investments		1,494			2,033			(19,765	)		6,042			(112,060	)
Foreign currency forward contracts		(436	)		—			—			(436	)		—
Net realized losses on investments, secured borrowings and foreign currency		(30,273	)		(89,437	)		(20,493	)		(115,147	)		(171,782	)
Redemption premium on unsecured notes payable		—			—			—			(120	)		—
Provision for income taxes		(622	)		—			—			(622	)		—
Net increase (decrease) in net assets resulting from operations	$	33,331		$	24,252		$	(125,469	)	$	46,762		$	(196,969	)
Net investment income per common share — basic and diluted	$	0.12		$	0.10		$	0.08		$	0.43		$	0.51
Earnings (loss) per common share — basic and diluted	$	0.24		$	0.17		$	(0.89	)	$	0.33		$	(1.39	)
Weighted average common shares outstanding — basic and diluted		140,961			140,961			140,961			140,961			141,438

Conference Call Information

Oaktree Specialty Lending will host a conference call to discuss its fourth fiscal quarter 2018 results at 11:00 a.m. Eastern Time / 8:00 a.m. Pacific Time on November 29, 2018. The conference call may be accessed by dialing (877) 507-3275 (U.S. callers) or +1 (412) 317-5238 (non-U.S. callers), participant password “Oaktree Specialty Lending.” During the earnings conference call, Oaktree Specialty Lending intends to refer to an investor presentation that will be available on the Investors section of the Oaktree Specialty Lending website, www.oaktreespecialtylending.com. Alternatively, a live webcast of the conference call can be accessed on Oaktree Specialty Lending’s website.

For those individuals unable to listen to the live broadcast of the conference call, a replay will be available on Oaktree Specialty Lending’s website, or by dialing (877) 344-7529 (U.S. callers) or +1 (412) 317-0088 (non-U.S. callers), access code 10125435, beginning approximately one hour after the broadcast.

About Oaktree Specialty Lending Corporation

Oaktree Specialty Lending Corporation (NASDAQ:OCSL) is a specialty finance company dedicated to providing customized one-stop credit solutions to companies with limited access to public or syndicated capital markets. The firm seeks to generate current income and capital appreciation by providing companies with flexible and innovative financing solutions including first and second lien loans, unsecured and mezzanine loans, and preferred equity. The company is regulated as a business development company under the Investment Company Act of 1940, as amended. Oaktree Specialty Lending is managed by Oaktree Capital Management, L.P. For additional information, please visit Oaktree Specialty Lending’s website at www.oaktreespecialtylending.com.

Forward-Looking Statements

Some of the statements in this press release constitute forward-looking statements because they relate to future events or our future performance or financial condition. The forward-looking statements may include statements as to: our future operating results and distribution projections; our business prospects and the prospects of our portfolio companies; and the impact of the investments that we expect to make. In addition, words such as “anticipate,” “believe,” “expect,” “seek,” “plan,” “should,” “estimate,” “project” and “intend” indicate forward-looking statements, although not all forward-looking statements include these words. The forward-looking statements contained in this press release involve risks and uncertainties. Our actual results could differ materially from those implied or expressed in the forward-looking statements for any reason, including the factors set forth in “Risk Factors” and elsewhere in our annual report on Form 10-K. Other factors that could cause actual results to differ materially include: changes in the economy, financial markets and political environment; risks associated with possible disruption in our operations or the economy generally due to terrorism or natural disasters; future changes in laws or regulations (including the interpretation of these laws and regulations by regulatory authorities) and conditions in our operating areas, particularly with respect to business development companies or regulated investment companies; and other considerations that may be disclosed from time to time in our publicly disseminated documents and filings.

We have based the forward-looking statements included in this presentation on information available to us on the date of this presentation, and we assume no obligation to update any such forward-looking statements. Although we undertake no obligation to revise or update any forward-looking statements, whether as a result of new information, future events or otherwise, you are advised to consult any additional disclosures that we may make directly to you or through reports that we in the future may file with the SEC, including annual reports on Form 10-K, quarterly reports on Form 10-Q and current reports on Form 8-K.

Contacts

Investor Relations:

Oaktree Specialty Lending Corporation

Michael Mosticchio

(212) 284-1900

ocsl-ir@oaktreecapital.com

Media Relations:

Financial Profiles, Inc.

Moira Conlon

(310) 478-2700

mediainquiries@oaktreecapital.com

EX-99.2

Fourth Quarter Fiscal Year 2018 Earnings Presentation November 29, 2018 Nasdaq: OCSL Exhibit 99.2

Forward Looking Statements Some of the statements in this presentation constitute forward-looking statements because they relate to future events or our future performance or financial condition. The forward-looking statements contained in this presentation may include statements as to: our future operating results and distribution projections; the ability of Oaktree Capital Management, L.P. (“Oaktree” or our “Investment Adviser”) to find lower-risk investments to reposition our portfolio and to implement our Investment Adviser’s future plans with respect to our business; our business prospects and the prospects of our portfolio companies; the impact of the investments that we expect to make; the ability of our portfolio companies to achieve their objectives; our expected financings and investments and additional leverage we may seek to incur in the future; the adequacy of our cash resources and working capital; the timing of cash flows, if any, from the operations of our portfolio companies; and the cost or potential outcome of any litigation to which we may be a party. In addition, words such as “anticipate,” “believe,” “expect,” “seek,” “plan,” “should,” “estimate,” “project” and “intend” indicate forward-looking statements, although not all forward-looking statements include these words. The forward-looking statements contained in this presentation involve risks and uncertainties. Our actual results could differ materially from those implied or expressed in the forward-looking statements for any reason, including the factors set forth in “Risk Factors” and elsewhere in our annual report on Form 10-K for the fiscal year ended September 30, 2018. Other factors that could cause actual results to differ materially include: changes in the economy, financial markets and political environment; risks associated with possible disruption in our operations or the economy generally due to terrorism or natural disasters; future changes in laws or regulations (including the interpretation of these laws and regulations by regulatory authorities) and conditions in our operating areas, particularly with respect to business development companies or regulated investment companies; and other considerations that may be disclosed from time to time in our publicly disseminated documents and filings. We have based the forward-looking statements included in this presentation on information available to us on the date of this presentation, and we assume no obligation to update any such forward-looking statements. Although we undertake no obligation to revise or update any forward-looking statements, whether as a result of new information, future events or otherwise, you are advised to consult any additional disclosures that we may make directly to you or through reports that we in the future may file with the SEC, including annual reports on Form 10-K, quarterly reports on Form 10-Q and current reports on Form 8-K. Unless otherwise indicated, data provided herein are dated as of September 30, 2018.

Accomplishments Since Oaktree Became Investment Adviser on October 17, 2017 Significant Progress Rotating Portfolio NAV Stabilization Improved Capital Structure Reduced Operating Costs ($ in millions, at fair value) 1 Operating Expenses2 Portfolio Assets NAV Per Share Key Accomplishments ($ in millions) ~28% decrease in run-rate operating expenses from 12/31/17 1 2 3 4 1Excludes investments in Senior Loan Fund JV I, LLC (“Kemper JV”), a joint venture that primarily invests in middle-market and other corporate debt securities. 2Operating expenses includes professional fees, directors fees, administrator expenses and general and administrative expenses. +102% -64% 3 consecutive quarters of NAV growth since 12/31/17

Q4 2018 Highlights Net asset value per share increased by $0.14 to $6.09 NAV continues to remain stable, increasing $0.28 per share or approximately 5% since December 31, 2017 Third consecutive quarter of NAV growth Realized gains resulting from monetizations of investments and unrealized write-ups of certain investments primarily contributed to the sequential NAV increase Net investment income per share increased by $0.02 to $0.12 Higher prepayment fees and OID acceleration on loan payoffs contributed to the increase Board of Directors declared a dividend of $0.095 per share, payable on December 28, 2018 to stockholders of record as of December 17, 2018 Monetized $32 million of non-core investments Exited one investment on non-accrual and monetized an aviation investment Core investments represented 76% of the portfolio as of September 30, 20181 Monetized approximately $20 million of non-core investments since October 1, 2018 Entered into $228 million of new investment commitments Senior secured originations represented 88% of new investment commitments Diversified across 12 industries 1Excludes investments in the Kemper JV. 1 2 3 4

Non-core Investments: 24% of portfolio Non-core Investments: 63% of portfolio Historical Portfolio Progression Non-core private loans and non-accruals currently represent only 14% of OCSL’s portfolio, down from 43% of the portfolio as of September 30, 2017 ($ in millions, at fair value) Portfolio by Category1 -64% y/y Non-core Investments 1 Excludes investments in the Kemper JV. 2 Other non-core investments includes liquid investments, investments in aviation entities, equity investments, and non-accruals. +102% y/y Core Investments Other Non-core Investments:

Note:Numbers may not sum due to rounding. Non-core Investment Portfolio Detail Non-core Investment Portfolio Characteristics Private Loans $93 million at fair value in seven companies Net leverage through tranche: 3.9x Average debt price: 90.1% Equity Investments $69 million at fair value in 27 equity positions and limited partnership interests in two third party managed funds Sold or monetized approximately $2mm during the quarter ended September 30, 2018 and approximately $20 million since October 1, 2018 Aviation $33 million at fair value in one entity Exited $17.5 million during the quarter ended September 30, 2018 Liquid Investments $31 million at fair value in four companies Comprised of publicly quoted liquid loans and bonds Average debt price: 99.9% Non-accruals $99 million at fair value in eight companies Average debt price: 39.7% (As % of non-core investment portfolio, at fair value; $ in millions) Non-core Investments by Type (At fair value; $ in millions) Non-core Portfolio Composition

Portfolio Summary as of September 30, 2018 (As % of total portfolio, at fair value; $ in millions) (As % of total portfolio, at fair value) Portfolio Composition Top 10 Industries1 Portfolio Characteristics (at fair value) Note:Numbers rounded to the nearest million or percentage point. 1Excludes the investments in the Kemper JV. $1.5 billion invested in 113 companies 95% of the total portfolio consists of debt investments $15 million average debt investment size1 8.4% weighted average yield on debt investments 83% of debt portfolio consists of floating rate investments

Portfolio Diversity OCSL’s portfolio is diverse across investments and industries (At fair value) Portfolio by Industry1,2 Diversity by Investment Size Top 10 Investments 25% Next 15 Investments 25% Remaining 87 Investments 41% Kemper JV 9% Average Investment Size $13 million1 1Excludes investments in the Kemper JV. 2Based on GICS industry classifications. Industry Group % of Portfolio Health Care Providers & Services 8.4% Software 8.3% Pharmaceuticals 5.3% Insurance 4.9% Oil, Gas & Consumable Fuels 4.8% Diversified Telecommunication Services 4.8% Diversified Financial Services 4.5% Energy Equipment & Services 4.4% Health Care Technology 3.8% Aerospace & Defense 3.4% Specialty Retail 3.2% IT Services 3.2% Remaining 25 Industries 40.9% Average Industry Exposure 2.7%

Debt Portfolio Company Metrics OCSL’s portfolio has transitioned into higher quality, larger borrowers with lower leverage, reflecting our defensive investment approach Debt Portfolio Company EBITDA Debt Portfolio Company Leverage1 Median Debt Portfolio Company EBITDA ($ in millions) OCSL’s debt portfolio leverage has decreased by 13% since 9/30/17 while middle market leverage multiples have remained elevated 1 Excludes investments in aviation entities and a $35 million recurring revenue software investment. 2 Excludes one investment on non-accrual and one venture capital investment. 3 Excludes a $10 million life sciences investment. 4 Source: S&P Global Market Intelligence. Represents issuers with EBITDA less than or equal to $50 million, adjusted for prospective cost savings or synergies. 4 9/30/17 12/31/17 3/31/18 6/30/18 9/30/18 $50 $54 $56 $99 $103 2 3 2

Q4 2018 Portfolio Originations1 $228 million of new commitments $218 million in 13 new portfolio companies and $10 million in 3 existing portfolio companies Diversified across 12 industries 8.4% weighted average yield at cost on new investments2 88% of new debt investment commitments at floating rates 93% of investments also held by other Oaktree funds Median portfolio company EBITDA: $104 million Average net leverage through tranche: 4.9x2 New Investment Highlights (As % of new investment commitments, at fair value) New Investment Industry Composition (As % of total Q4’18 commitments; $ in millions) New Investment Composition Note:Numbers rounded to the nearest million or percentage point. 1 New investments exclude fundings of existing revolver or delayed draw term loan commitments. 2 Excludes a $10 million life sciences investment.

Historical Financial Information ($ in thousands, except per share amounts) Operating Results Q4’18 Q3’18 Q2’18 Q1’18 Q4’17 Sep-18 Jun-18 Mar-18 Dec-17 Sep-17 Interest income $35,306 $26,634 $26,633 $29,938 $31,352 PIK interest income 499 1,457 1,946 1,867 2,128 Fee income 2,034 2,425 3,942 1,031 1,682 Dividend & other income 381 1,331 2,258 1,040 570 Total investment income 38,220 31,847 34,779 33,876 35,732 Base management fee 5,767 5,909 5,386 5,590 6,808 Part I incentive fee 3,675 2,733 3,247 830 - Interest expense 9,323 8,291 8,530 9,584 12,772 Other operating expenses1 2,132 2,032 2,305 4,684 4,746 Total expenses 20,897 18,965 19,468 20,688 24,326 Fees recouped/(waived) 292 (1,548) 48 (134) (58) Net expenses 21,189 17,417 19,516 20,554 24,268 Net investment income 17,031 14,430 15,263 13,322 11,464 Net realized and unrealized appreciation/(depreciation) 16,922 9,822 4,357 (43,763) (136,933) Provision for income taxes (622) - - - - Net increase/decrease in net assets resulting from operations $33,331 $24,252 $19,620 ($30,441) ($125,469) Net investment income per common share $0.12 $0.10 $0.11 $0.09 $0.08 Net realized and unrealized appreciation/(depreciation) per common share 0.12 0.07 0.03 (0.31) (0.97) Earnings (loss) per common share – diluted $0.24 $0.17 $0.14 ($0.22) ($0.89) Note:Results during Q1’18 occurred during management transition from Fifth Street Management LLC to Oaktree, which occurred on October 17, 2017. Results in prior periods occurred during management by Fifth Street Management LLC. 1Includes professional fees, directors fees, administrator expenses and general and administrative expenses.

Historical Financial Information (continued) ($ in thousands, except per share amounts) Select Balance Sheet and Other Data Q4’18 Q3’18 Q2’18 Q1’18 Q4’17 Sep-18 Jun-18 Mar-18 Dec-17 Sep-17 Investment Portfolio (at fair value) $1,491,201 $1,520,518 $1,400,684 $1,415,404 $1,541,755 Total Debt Outstanding1 637,213 607,082 579,430 623,087 675,366 Total Net Assets 858,035 838,095 827,234 819,595 867,657 Net Asset Value per share $6.09 $5.95 $5.87 $5.81 $6.16 Total Leverage 0.75x 0.73x 0.71x 0.77x 0.78x Weighted Average Yield on Debt Investments2 8.4% 8.8% 9.3% 9.0% 9.6% Cash Component of Weighted Average Yield on Debt Investments 8.2% 8.5% 8.7% 8.4% 8.5% Weighted Average Yield on Total Portfolio Investments3 8.1% 8.4% 8.6% 8.5% 8.4% Weighted Average Cost of Debt 5.1% 5.2% 4.9% 4.8% 4.3% Note:Results during Q1’18 occurred during management transition from Fifth Street Management LLC to Oaktree, which occurred on October 17, 2017. Results in prior periods occurred during management by Fifth Street Management LLC. 1Net of unamortized financing costs. 2Annual stated yield earned plus net annual amortization of original issue discount or premium earned on accruing investments, including our share of the return on debt investments in the Kemper JV. 3Annual stated yield earned plus net annual amortization of original issue discount or premium earned on accruing investments and dividend income, including our share of the return on debt investments in the Kemper JV.

Historical Portfolio Activity ($ in thousands) As of and for Three Months Ended Q4’18 Q3’18 Q2’18 Q1’18 Q4’17 Sep-18 Jun-18 Mar-18 Dec-17 Sep-17 Investments at Fair Value $1,491,201 $1,520,518 $1,400,684 $1,415,404 $1,541,755 Number of Portfolio Companies 113 116 115 122 125 Average Portfolio Company Debt Investment Size $14,800 $14,500 $14,600 $14,100 $16,400 Asset Class: Senior Secured Debt 75.4% 76.0% 76.6% 75.8% 78.0% Unsecured Debt 11.0% 10.9% 6.7% 7.0% 6.1% Equity 4.4% 3.8% 5.5% 6.0% 5.5% Kemper JV 8.7% 8.7% 9.5% 9.4% 8.7% Limited Partnership Interests 0.5% 0.6% 1.8% 1.8% 1.7% Interest Rate Type for Debt Investments: % Floating-Rate 83.2% 82.9% 84.6% 82.4% 83.6% % Fixed-Rate 16.8% 17.1% 15.4% 17.6% 16.4% Investment Activity at Cost: New Investment Commitments $228,396 $379,800 $223,200 $183,000 $155,800 New Funded Investment Activity1 $218,379 389,000 227,800 200,200 168,000 Proceeds from Prepayments, Exits, Other Paydowns and Sales 267,454 280,700 241,900 284,800 283,300 Net New Investments2 (39,058) 99,100 (18,700) (101,800) (127,500) Number of New Investment Commitments in New Portfolio Companies 13 24 9 13 9 Number of New Investment Commitments in Existing Portfolio Companies 3 4 1 1 5 Number of Portfolio Company Exits 18 28 17 17 17 Note:Results during Q1’18 occurred during management transition from Fifth Street Management LLC to Oaktree, which occurred on October 17, 2017. Results in prior periods occurred during management by Fifth Street Management LLC. Numbers may not sum due to rounding. 1New funded investment activity includes drawdowns on existing revolver commitments. 2Net new investments consists of new investment commitments less proceeds from prepayments, exits, other paydowns and sales.

Net Asset Value Per Share Bridge ($0.095) Note:Net asset value per share amounts are based on the shares outstanding at each respective quarter end. Net investment income per share, net unrealized appreciation / (depreciation), and net realized gain / (loss) are based on the weighted average number of shares outstanding for the period. 1Excludes reclassifications of net unrealized appreciation / (depreciation) to net realized gains / (losses) as a result of investments exited during the quarter. 1 1

Capital Structure Overview Funding Sources as of September 30, 2018 Capacity Outstanding Interest Rate Maturity Syndicated Credit Facility $600.0 million $241.0 million LIBOR+2.25%-2.75% November 2021 2019 Notes2 $228.8 million $228.8 million 4.875% March 2019 2024 Notes $75.0 million $75.0 million 5.875% October 2024 2028 Notes $86.3 million $86.3 million 6.125% April 2028 As of September 30, 2018 1Long-term portfolio leverage may vary depending on market conditions. 2The original issue size of these notes was $250 million. We repurchased $21 million of these notes during the quarter ended March 31, 2018. Current leverage of 0.75x, within target range of 0.70x to 0.85x debt-to-equity1 Strong support from banking partners; 14 lending participants in $600 million secured revolving credit facility Well-positioned to benefit from a rise in interest rates given fixed rate borrowings and 83% of debt portfolio consists of floating rate loans

Opportunities to Increase Return on Equity Redeploy non-interest generating investments comprised of equity, limited partnership interests and loans on non-accrual Received proceeds of $17 million from sales of limited partnership interests and exited one investment on non-accrual during the quarter ended September 30, 2018 $173 million of non-interest generating assets remain as of September 30, 2018 Monetized approximately $20 million of equity investments since October 1, 2018 Rotate into higher-yielding proprietary investments Reduced broadly syndicated loans priced at LIBOR + 4.00% or lower by $40 million during the quarter ended September 30, 2018 $17 million as of September 30, 2018 Benefit from rising interest rates as majority of debt portfolio is comprised of floating rate securities 83% of debt portfolio consisted of floating rate instruments as of September 30, 2018 Utilize additional investment capacity at the Kemper JV Invested in $295 million of investments across 41 companies as of the quarter ended September 30, 2018 94% first lien investments; 100% of debt portfolio consists of floating rate investments Total remaining investment capacity of approximately $150 million, assuming 2.0x leverage 1 2 3 4

Appendix

Portfolio Summary: Core vs. Non-core Assets1 $1.0 billion (76% of the total portfolio at fair value) Average debt price: 99.6% Represents 69 companies, increase from 66 in Q3 2018 $228 million of investments originated during Q4 2018 Non-core Investments Performing Investments $185 million (14% of the total portfolio at fair value) Represents 35 companies, a decrease from 41 in Q3 2018 Underperforming Investments $139 million (10% of the total portfolio at fair value) Represents 8 companies ($ in millions, at fair value) Note:Numbers rounded to the nearest million or percentage point. 1 Excludes investments in the Kemper JV. Core Investments +102% -75% -10%

Non-core: Performing Investments Investment Portfolio Characteristics Debt investments – $84 million at fair value in 10 companies $31 million – publicly quoted liquid positions 4 companies $53 million – privately placed debt investments 6 companies Net leverage through tranche: 3.2x Average debt price: 93.4% Aviation investments – $33 million at fair value Exited $17.5 million during the quarter ended September 30, 2018 Equity and limited partnership interests – $69 million at fair value in 27 equity positions and 2 limited partnership investments Sold or monetized approximately $2 million during the quarter ended September 30, 2018 and approximately $20 million since October 1, 2018 (As % of non-core performing investment portfolio, at fair value; $ in millions) Non-core: Performing Investments by Type ($ in millions) Non-core: Performing Portfolio Trend -75%

Non-core: Underperforming Investments Non-core: Underperforming by Type Investment Portfolio Characteristics (As % of non-core underperforming investment portfolio, at fair value; $ in millions) $139 million total debt investments $99 million on non-accrual Represents 8 companies Average debt price: 47% We continue to pursue sale processes on several of these assets During Q4 2018, we monetized one of our investments on non-accrual ($ in millions) Non-core: Underperforming Portfolio Trend -10% 1 As of September 30, 2018, unless otherwise noted Note:Numbers rounded to the nearest million or percentage point. 1 Represents an investment in an unsecured revolver that has a fair value of -$2 million.

Contact: Michael Mosticchio, Investor Relations ocsl-ir@oaktreecapital.com