OAKTREE SPECIALTY LENDING CORP Management’s Discussion and Analysis of Financial Condition and Results of Operations (Form 10-Q)

The following discussion should be read in conjunction with our consolidated financial statements and accompanying notes included elsewhere in this Quarterly Report on Form 10-Q.

Some of the statements in this quarterly report on Form 10-Q constitute
forward-looking statements because they relate to future events or our future
performance or financial condition. The forward-looking statements contained in
this quarterly report on Form 10-Q may include statements as to:

•our future operating results and distribution projections;
•the ability of Oaktree Fund Advisors, LLC, or Oaktree, to reposition our
portfolio and to implement Oaktree's future plans with respect to our business;
•the ability of Oaktree and its affiliates to attract and retain highly talented
professionals;
•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 quarterly report on Form 10-Q
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 "Item 1A. Risk Factors" in our annual report
on Form 10-K for the year ended September 30, 2021 and elsewhere in this
quarterly report on Form 10-Q.

Other factors that could cause actual results to differ materially include:
•changes or potential disruptions in our operations, the economy, financial
markets or political environment;
•risks associated with possible disruption in our operations or the economy
generally due to terrorism, war or other geopolitical conflict (including the
current conflict between Russia and Ukraine), natural disasters or the COVID-19
pandemic;
•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, or RICs;
•general considerations associated with the COVID-19 pandemic;
•the ability to realize the anticipated benefits of the Mergers (as defined
below); 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 quarterly report
on Form 10-Q on information available to us on the date of this quarterly
report, 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 Securities and Exchange Commission, or the SEC, including annual
reports on Form 10-K, quarterly reports on Form 10-Q and current reports on Form
8-K.

All dollar amounts in the tables are in thousands, except per share and per share amounts and unless otherwise indicated.

Company overview

We are a specialty finance company dedicated to providing customized, one-stop
credit solutions to companies with limited access to public or syndicated
capital markets. We are a closed-end, externally managed, non-diversified
management investment company that has elected to be regulated as a Business
Development Company under the Investment Company Act of 1940, as amended, or the
Investment Company Act. In addition, we have qualified and elected to be treated
as a RIC under the Internal Revenue Code of 1986, as amended, or the Code, for
U.S. federal income tax purposes.

We are externally managed by Oaktree pursuant to an investment advisory
agreement, as amended from time to time, or the Investment Advisory Agreement.
Oaktree Administrator, an affiliate of Oaktree, provides certain administrative
and other
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services necessary for us to operate pursuant to an Administration Agreement, as amended from time to time, or the Administration Agreement.

Our investment objective is 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, bonds,
preferred equity and certain equity co-investments. We may also seek to generate
capital appreciation and income through secondary investments at discounts to
par in either private or syndicated transactions. Our portfolio may also include
certain structured finance and other non-traditional structures. We invest in
companies that typically possess resilient business models with strong
underlying fundamentals. We intend to deploy capital across credit and economic
cycles with a focus on long-term results, which we believe will enable us to
build lasting partnerships with financial sponsors and management teams, and we
may seek to opportunistically take advantage of dislocations in the financial
markets and other situations that may benefit from Oaktree's credit and
structuring expertise, including during the COVID-19 pandemic. Sponsors may
include financial sponsors, such as an institutional investor or a private
equity firm, or a strategic entity seeking to invest in a portfolio company.
Oaktree is generally focused on middle-market companies, which we define as
companies with enterprise values of between $100 million and $750 million. We
generally invest in securities that are rated below investment grade by rating
agencies or that would be rated below investment grade if they were rated. Below
investment grade securities, which are often referred to as "high yield" and
"junk," have predominantly speculative characteristics with respect to the
issuer's capacity to pay interest and repay principal.

In the current market environment, Oaktree intends to focus on the following
areas, in which Oaktree believes there is less competition and thus potential
for greater returns, for our new investment opportunities: (1) situational
lending, which we define to include directly originated loans to non-sponsor
companies that are hard to understand and value using traditional underwriting
techniques, (2) select sponsor lending, which we define to include financing to
support leveraged buyouts of companies with specialized sponsors that have
expertise in certain industries, and (3) stressed sector and rescue lending,
which we define to include opportunistic private loans in industries
experiencing stress or limited access to capital.

Oaktree intends to continue to rotate our portfolio into investments that are
better aligned with Oaktree's overall approach to credit investing and that it
believes have the potential to generate attractive returns across market cycles
(which we call "core investments"). Oaktree has performed a comprehensive review
of our portfolio and categorized our portfolio into core investments, non-core
performing investments and underperforming investments. Certain additional
information on such categorization and our portfolio composition is included in
investor presentations that we file with the SEC. Since an Oaktree affiliate
became our investment adviser in October 2017, Oaktree and its affiliates have
reduced the investments identified as non-core by approximately $800 million at
fair value. Over time, Oaktree intends to rotate us out of the remaining
non-core investments, which were approximately $86 million at fair value as of
March 31, 2022. Oaktree periodically reviews designations of investments as core
and non-core and may change such designations over time.

On March 19, 2021, we acquired Oaktree Strategic Income Corporation, or OCSI,
pursuant to the Merger Agreement, dated as of October 28, 2020, by and among
OCSI, us, Lion Merger Sub, Inc., our wholly-owned subsidiary, or Merger Sub,
and, solely for the limited purposes set forth therein, Oaktree. Pursuant to the
Merger Agreement, Merger Sub was first merged with and into OCSI, with OCSI as
the surviving corporation, or the Merger, and, immediately following the Merger,
OCSI was then merged with and into us, with us as the surviving company or
together with the Merger, or the Mergers. In accordance with the terms of the
Merger Agreement, at the effective time of the Merger, each outstanding share of
OCSI's common stock was converted into the right to receive 1.3371 shares of our
common stock (with OCSI's stockholders receiving cash in lieu of fractional
shares of our common stock). As a result of the Mergers, we issued an aggregate
of 39,400,011 shares of our common stock to former OCSI stockholders.

Business environment and developments

Global financial markets have experienced an increase in volatility as concerns
about the impact of higher inflation, rising interest rates, the current
conflict in Ukraine and the ongoing uncertainty related to the COVID-19 pandemic
have weighed on market participants. The current conflict in Ukraine and the
ongoing uncertainty related to the COVID-19 pandemic have created significant
disruptions in supply chains and economic activity and have had a particularly
adverse impact on certain companies in the energy, raw materials,
transportation, hospitality, tourism and entertainment industries, among others.
These uncertainties can ultimately impact the overall supply and demand of the
market through changing spreads, deal terms and structures and equity purchase
price multiples.

We are unable to predict the full effects of these macroeconomic events or how
long any further market disruptions or volatility might last. We continue to
closely monitor the impact these events have on our business, industry and
portfolio companies and will provide constructive solutions where necessary.

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Against this uncertain macroeconomic backdrop, we believe attractive
risk-adjusted returns can be achieved by making loans to middle market companies
that typically possess resilient business models with strong underlying
fundamentals. Given the breadth of the investment platform and decades of credit
investing experience of Oaktree and its affiliates, we believe that we have the
resources and experience to source, diligence and structure investments in these
companies and are well placed to generate attractive returns for investors.

As of March 31, 2022, 89.0% of our debt investment portfolio (at fair value) and
89.0% of our debt investment portfolio (at cost) bore interest at floating
rates. Most of our floating rate loans are indexed to the LIBOR and/or an
alternate base rate (e.g., prime rate), which typically resets semi-annually,
quarterly or monthly at the borrower's option. Certain loans may also be indexed
to the Secured Overnight Financing Rate, or SOFR, a new index calculated by
short-term repurchase agreements, backed by Treasury securities, or the Sterling
Overnight Index Average, or SONIA, an alternative reference rate that is based
on transactions. In July 2017, the head of the United Kingdom Financial Conduct
Authority, or the FCA, announced the desire to phase out the use of LIBOR by the
end of 2021. However, in March 2021 the FCA announced that most U.S. dollar
LIBOR would continue to be published through June 30, 2023 effectively extending
the LIBOR transition period to June 30, 2023. However, the FCA no longer compels
panel banks to continue to contribute to LIBOR and the Federal Reserve Board,
the Office of the Comptroller of the Currency, and the Federal Deposit Insurance
Corporation have encouraged banks to cease entering into new contracts that use
U.S. dollar LIBOR as a reference rate no later than December 31, 2021. The U.S.
Federal Reserve, in conjunction with the Alternative Reference Rates Committee,
a steering committee comprised of large U.S. financial institutions, supports
replacing U.S.-dollar LIBOR with SOFR. Although there have been issuances
utilizing SOFR or SONIA, it is unknown whether these alternative reference rates
will attain market acceptance as replacements for LIBOR. In anticipation of the
cessation of LIBOR, we may need to renegotiate any credit agreements extending
beyond the applicable phase out date with our prospective portfolio companies
that utilize LIBOR as a factor in determining the interest rate. Certain of the
loan agreements with our portfolio companies have included fallback language in
the event that LIBOR becomes unavailable. This language generally provides that
the administrative agent may identify a replacement reference rate, typically
with the consent of (or prior consultation with) the borrower. In certain cases,
the administrative agent will be required to obtain the consent of either a
majority of the lenders under the facility, or the consent of each lender, prior
to identifying a replacement reference rate. Certain of the loan agreements with
our portfolio companies do not include any fallback language providing a
mechanism for the parties to negotiate a new reference interest rate and will
instead revert to the base rate in the event LIBOR ceases to exist.

Critical accounting estimates

Investment appraisal

We value our investments in accordance with Financial Accounting Standards
Board, or FASB, Accounting Standards Codification, or ASC, Topic 820, Fair Value
Measurements and Disclosures, or ASC 820, which defines fair value as the amount
that would be received to sell an asset or paid to transfer a liability in an
orderly transaction between market participants at the measurement date. A
liability's fair value is defined as the amount that would be paid to transfer
the liability to a new obligor, not the amount that would be paid to settle the
liability with the creditor. ASC 820 prioritizes the use of observable market
prices over entity-specific inputs. Where observable prices or inputs are not
available or reliable, valuation techniques are applied. These valuation
techniques involve some level of management estimation and judgment, the degree
of which is dependent on the price transparency for the investments or market
and the investments' complexity.

Hierarchical levels, defined by ASC 820 and directly related to the amount of
subjectivity associated with the inputs to fair valuation of these assets and
liabilities, are as follows:


•Level 1 – Unadjusted quoted prices in active markets for identical assets or liabilities at the measurement date.

•Level 2 - Observable inputs other than Level 1 prices, such as quoted prices
for similar assets or liabilities; quoted prices in markets that are not active;
or other inputs that are observable or can be corroborated by observable market
data at the measurement date for substantially the full term of the assets or
liabilities.

•Level 3 - Unobservable inputs that reflect management's best estimate of what
market participants would use in pricing the asset or liability at the
measurement date. Consideration is given to the risk inherent in the valuation
technique and the risk inherent in the inputs to the model.

If inputs used to measure fair value fall into different levels of the fair
value hierarchy, an investment's level is based on the lowest level of input
that is significant to the fair value measurement. Our assessment of the
significance of a particular input to the fair value measurement in its entirety
requires judgment and considers factors specific to the investment. This
includes investment securities that are valued using "bid" and "ask" prices
obtained from independent third party pricing services or directly from brokers.
These investments may be classified as Level 3 because the quoted prices may be
indicative in nature for securities that are in an inactive market, may be for
similar securities or may require adjustments for investment-specific factors or
restrictions.
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Financial instruments with readily available quoted prices generally will have a
higher degree of market price observability and a lesser degree of judgment
inherent in measuring fair value. As such, Oaktree obtains and analyzes readily
available market quotations provided by pricing vendors and brokers for all of
our investments for which quotations are available. In determining the fair
value of a particular investment, pricing vendors and brokers use observable
market information, including both binding and non-binding indicative
quotations.

We seek to obtain at least two quotations for the subject or similar securities,
typically from pricing vendors. If we are unable to obtain two quotes from
pricing vendors, or if the prices obtained from pricing vendors are not within
our set threshold, we seek to obtain a quote directly from a broker making a
market for the asset. Oaktree evaluates the quotations provided by pricing
vendors and brokers based on available market information, including trading
activity of the subject or similar securities, or by performing a comparable
security analysis to ensure that fair values are reasonably estimated. Oaktree
also performs back-testing of valuation information obtained from pricing
vendors and brokers against actual prices received in transactions. In addition
to ongoing monitoring and back-testing, Oaktree performs due diligence
procedures over pricing vendors to understand their methodology and controls to
support their use in the valuation process. Generally, we do not adjust any of
the prices received from these sources.

If the quotations obtained from pricing vendors or brokers are determined to not
be reliable or are not readily available, we value such investments using any of
three different valuation techniques. The first valuation technique is the
transaction precedent technique, which utilizes recent or expected future
transactions of the investment to determine fair value, to the extent
applicable. The second valuation technique is an analysis of the enterprise
value, or EV, of the portfolio company. EV means the entire value of the
portfolio company to a market participant, including the sum of the values of
debt and equity securities used to capitalize the enterprise at a point in time.
The EV analysis is typically performed to determine (i) the value of equity
investments, (ii) whether there is credit impairment for debt investments and
(iii) the value for debt investments that we are deemed to control under the
Investment Company Act. To estimate the EV of a portfolio company, Oaktree
analyzes various factors, including the portfolio company's historical and
projected financial results, macroeconomic impacts on the company and
competitive dynamics in the company's industry. Oaktree also utilizes some or
all of the following information based on the individual circumstances of the
portfolio company: (i) valuations of comparable public companies, (ii) recent
sales of private and public comparable companies in similar industries or having
similar business or earnings characteristics, (iii) purchase prices as a
multiple of their earnings or cash flow, (iv) the portfolio company's ability to
meet its forecasts and its business prospects, (v) a discounted cash flow
analysis, (vi) estimated liquidation or collateral value of the portfolio
company's assets and (vii) offers from third parties to buy the portfolio
company. We may probability weight potential sale outcomes with respect to a
portfolio company when uncertainty exists as of the valuation date. Under the EV
technique, the significant unobservable input used in the fair value measurement
of our investments in debt or equity securities is the EBITDA, revenue or asset
multiple, as applicable. Increases or decreases in the valuation multiples in
isolation may result in a higher or lower fair value measurement, respectively.
The third valuation technique is a market yield technique, which is typically
performed for non-credit impaired debt investments. In the market yield
technique, a current price is imputed for the investment based upon an
assessment of the expected market yield for a similarly structured investment
with a similar level of risk, and we consider the current contractual interest
rate, the capital structure and other terms of the investment relative to risk
of the company and the specific investment. A key determinant of risk, among
other things, is the leverage through the investment relative to the EV of the
portfolio company. As debt investments held by us are substantially illiquid
with no active transaction market, we depend on primary market data, including
newly funded transactions and industry-specific market movements, as well as
secondary market data with respect to high yield debt instruments and syndicated
loans, as inputs in determining the appropriate market yield, as applicable.
Under the market yield technique, the significant unobservable input used in the
fair value measurement of the Company's investments in debt securities is the
market yield. Increases or decreases in the market yield may result in a lower
or higher fair value measurement, respectively.

In accordance with ASC 820-10, certain investments that qualify as investment
companies in accordance with ASC 946 may be valued using net asset value as a
practical expedient for fair value. Consistent with FASB guidance under ASC 820,
these investments are excluded from the hierarchical levels. These investments
are generally not redeemable.

We estimate the fair value of certain privately held warrants using a Black
Scholes pricing model, which includes an analysis of various factors and
subjective assumptions, including the current stock price (by using an EV
analysis as described above), the expected period until exercise, expected
volatility of the underlying stock price, expected dividends and the risk-free
rate. Changes in the subjective input assumptions can materially affect the fair
value estimates.

The fair value of our investments as of March 31, 2022 and September 30, 2021
was determined in good faith by our Board of Directors. Our Board of Directors
has and will continue to engage independent valuation firms to provide
assistance regarding the determination of the fair value of a portion of our
portfolio securities for which market quotations are not readily available or
are readily available but deemed not reflective of the fair value of the
investment each quarter, and the Board of Directors may reasonably rely on that
assistance. As of March 31, 2022, 89.8% of our portfolio at fair value was
valued either based on market quotations, the transactions precedent approach or
corroborated by independent valuation firms. However, our
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Board of Directors is responsible for the ultimate valuation of the portfolio
investments at fair value as determined in good faith pursuant to our valuation
policy and a consistently applied valuation process.

Certain factors that may be considered in determining the fair value of our
investments include the nature and realizable value of any collateral, the
portfolio company's earnings and its ability to make payments on its
indebtedness, the markets in which the portfolio company does business,
comparison to comparable publicly-traded companies, discounted cash flow and
other relevant factors. Because such valuations, and particularly valuations of
private securities and private companies, are inherently uncertain, may
fluctuate over short periods of time and may be based on estimates, our
determinations of fair value may differ materially from the values that would
have been used if a ready market for these securities existed. Due to these
uncertainties, our fair value determinations may cause our net asset value on a
given date to materially understate or overstate the value that we may
ultimately realize upon the sale of one or more of our investments.

As of March 31, 2022, we held $2,644.8 million of investments at fair value, up
from $2,556.6 million held at September 30, 2021, primarily driven by new
originations. As of March 31, 2022 and September 30, 2021, approximately 95.9%
and 97.0%, respectively, of our total assets represented investments at fair
value.

Revenue Recognition

Interest Income

Interest income, adjusted for accretion of original issue discount, or OID, is
recorded on an accrual basis to the extent that such amounts are expected to be
collected. We stop accruing interest on investments when it is determined that
interest is no longer collectible. Investments that are expected to pay
regularly scheduled interest in cash are generally placed on non-accrual status
when there is reasonable doubt that principal or interest cash payments will be
collected. Cash interest payments received on investments may be recognized as
income or a return of capital depending upon management's judgment. A
non-accrual investment is restored to accrual status if past due principal and
interest are paid in cash, and the portfolio company, in management's judgment,
is likely to continue timely payment of its remaining obligations. As of each of
March 31, 2022 and September 30, 2021, there were no investments on non-accrual
status.

In connection with our investment in a portfolio company, we sometimes receive
nominal cost equity that is valued as part of the negotiation process with the
portfolio company. When we receive nominal cost equity, we allocate our cost
basis in the investment between debt securities and the nominal cost equity at
the time of origination. Any resulting discount from recording the loan, or
otherwise purchasing a security at a discount, is accreted into interest income
over the life of the loan.

PIK Interest Income

Our investments in debt securities may contain payment-in-kind, or PIK, interest
provisions. PIK interest, which typically represents contractually deferred
interest added to the loan balance that is generally due at the end of the loan
term, is generally recorded on the accrual basis to the extent such amounts are
expected to be collected. We generally cease accruing PIK interest if there is
insufficient value to support the accrual or if we do not expect the portfolio
company to be able to pay all principal and interest due. Our decision to cease
accruing PIK interest on a loan or debt security involves subjective judgments
and determinations based on available information about a particular portfolio
company, including whether the portfolio company is current with respect to its
payment of principal and interest on its loans and debt securities; financial
statements and financial projections for the portfolio company; our assessment
of the portfolio company's business development success; information obtained by
us in connection with periodic formal update interviews with the portfolio
company's management and, if appropriate, the private equity sponsor; and
information about the general economic and market conditions in which the
portfolio company operates. Our determination to cease accruing PIK interest is
generally made well before our full write-down of a loan or debt security. In
addition, if it is subsequently determined that we will not be able to collect
any previously accrued PIK interest, the fair value of the loans or debt
securities would be reduced by the amount of such previously accrued, but
uncollectible, PIK interest. The accrual of PIK interest on our debt investments
increases the recorded cost bases of these investments in our Consolidated
Financial Statements including for purposes of computing the capital gains
incentive fee payable by us to Oaktree. To maintain our status as a RIC, certain
income from PIK interest may be required to be distributed to our stockholders,
even though we have not yet collected the cash and may never do so.
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Composition of the portfolio

Our investments principally consist of loans, common and preferred equity and
warrants in privately-held companies, Senior Loan Fund JV I, LLC, or SLF JV I, a
joint venture through which we and Trinity Universal Insurance Company, a
subsidiary of Kemper Corporation, or Kemper, co-invest in senior secured loans
of middle-market companies and other corporate debt securities, and OCSI Glick
JV LLC, or the Glick JV, a joint venture through which we and GF Equity Funding
2014 LLC, or GF Equity Funding, co-invest primarily in senior secured loans of
middle-market companies. We refer to SLF JV I and the Glick JV collectively as
the JVs. Our loans are typically secured by a first, second or subordinated lien
on the assets of the portfolio company and generally have terms of up to ten
years (but an expected average life of between three and four years).

In the six months ended March 31, 2022we are from $527.8 million investment commitments in 28 new companies and 18 existing and financed companies
$477.0 million of investments.

In the six months ended March 31, 2022we received $415.2 million proceeds from early redemptions, exits, other redemptions and sales and exited 20 portfolio companies.

A summary of the composition of our investment portfolio at cost and fair value as a percentage of total investments is shown in the following tables:

                                      March 31, 2022      September 30, 2021
Cost:
Senior secured debt                          85.67  %                85.85  %
Debt investments in the JVs                   5.52                    5.79
Preferred equity                              3.19                    2.60
Subordinated debt                             2.05                    1.67
LLC equity interests of the JVs               1.85                    1.94
Common equity and warrants                    1.72                    2.15
Total                                       100.00  %               100.00  %




                                      March 31, 2022      September 30, 2021
Fair value:
Senior secured debt                          86.36  %                86.72  %
Debt investments in the JVs                   5.74                    5.94
Preferred equity                              3.19                    2.49
Subordinated debt                             2.05                    1.67
LLC equity interests of the JVs               1.39                    1.47
Common equity and warrants                    1.27                    1.71
Total                                       100.00  %               100.00  %



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The sector composition of our portfolio at cost and fair value as a percentage of total investments was as follows:

                                                    March 31, 2022      September 30, 2021
Cost:
Application Software                                       15.35  %                14.49  %
Multi-Sector Holdings (1)                                   7.38                    7.73
Pharmaceuticals                                             5.15                    5.44
Data Processing & Outsourced Services                       4.53                    4.74
Biotechnology                                               4.41                    4.41
Industrial Machinery                                        3.44                    3.47
Health Care Services                                        3.17                    3.34
Health Care Technology                                      2.77                    0.55
Aerospace & Defense                                         2.68                    2.66
Specialized Finance                                         2.65                    2.70
Fertilizers & Agricultural Chemicals                        2.42            

2.63

Internet & Direct Marketing Retail                          2.37            

2.45

Construction & Engineering                                  2.31            

2.44

Internet Services & Infrastructure                          2.01                    1.85
Automotive Retail                                           2.00                    1.65
Personal Products                                           1.98                    4.08
Home Improvement Retail                                     1.73                    1.83
Metal & Glass Containers                                    1.73                    0.69
Airport Services                                            1.60                    1.64
Health Care Distributors                                    1.56                    0.78
Leisure Facilities                                          1.56                    0.99
Real Estate Services                                        1.52                    1.59
Diversified Support Services                                1.46                    1.60
Specialty Chemicals                                         1.40                    1.84
Oil & Gas Storage & Transportation                          1.38                    1.44
Health Care Supplies                                        1.35                    1.17
Insurance Brokers                                           1.34                    1.00
Soft Drinks                                                 1.28                    1.32
Electrical Components & Equipment                           1.24            

1.27

Integrated Telecommunication Services                       1.11            

1.85

Real Estate Operating Companies                             1.09            

1.08

Other Diversified Financial Services                        1.08            

0.63

Advertising                                                 1.05            

1.13

Oil & Gas Refining & Marketing                              1.04                    1.42
Movies & Entertainment                                      0.98                    1.02
Airlines                                                    0.97                    0.88
Distributors                                                0.95                       -
Health Care Equipment                                       0.90                    0.93
Environmental & Facilities Services                         0.74                       -
Home Furnishings                                            0.73                    0.77
Cable & Satellite                                           0.68                    1.05
Consumer Finance                                            0.54                       -
Systems Software                                            0.48                    0.26
Auto Parts & Equipment                                      0.47                    0.49
IT Consulting & Other Services                              0.44                    0.30
Air Freight & Logistics                                     0.36                    0.19
Restaurants                                                 0.35                    0.37
Leisure Products                                            0.27                    0.26
Alternative Carriers                                        0.21                    0.26
Trading Companies & Distributors                            0.20                       -
Research & Consulting Services                              0.20            

0.29

Apparel, Accessories & Luxury Goods                         0.19                    0.20
Integrated Oil & Gas                                        0.18                    0.19
Food Distributors                                           0.17                    0.18
Apparel Retail                                              0.17                       -
Housewares & Specialties                                    0.14                    0.07
Diversified Banks                                           0.13                    0.14
Technology Distributors                                     0.12                    0.12
Construction Materials                                      0.09                    0.09
Electronic Components                                       0.08                    0.40
Specialized REITs                                           0.05                       -
Education Services                                          0.04                    0.04
Communications Equipment                                    0.03                       -
Independent Power Producers & Energy Traders                   -                    0.92
Commercial Printing                                            -                    0.78
Managed Health Care                                            -                    0.73
Thrifts & Mortgage Finance                                     -            

0.63

Property & Casualty Insurance                                  -                    0.39
Food Retail                                                    -                    0.15
Total                                                     100.00  %               100.00  %


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                                                    March 31, 2022      September 30, 2021
Fair value:
Application Software                                       15.44  %                14.58  %
Multi-Sector Holdings (1)                                   7.13                    7.41
Pharmaceuticals                                             5.15                    5.56
Biotechnology                                               4.46                    4.44
Data Processing & Outsourced Services                       4.27                    4.46
Industrial Machinery                                        3.47                    3.53
Health Care Services                                        2.97                    3.31
Health Care Technology                                      2.80                    0.55
Aerospace & Defense                                         2.74                    2.72
Internet & Direct Marketing Retail                          2.67            

2.68

Specialized Finance                                         2.63            

2.69

Fertilizers & Agricultural Chemicals                        2.47            

2.64

Construction & Engineering                                  2.35            

2.47

Internet Services & Infrastructure                          2.06                    1.87
Automotive Retail                                           2.05                    1.65
Personal Products                                           2.02                    4.13
Home Improvement Retail                                     1.75                    1.82
Metal & Glass Containers                                    1.74                    0.68
Health Care Distributors                                    1.58                    0.77
Airport Services                                            1.57                    1.59
Real Estate Services                                        1.54                    1.61
Leisure Facilities                                          1.50                    0.90
Diversified Support Services                                1.48                    1.60
Insurance Brokers                                           1.41                    1.08
Health Care Supplies                                        1.37                    1.18
Specialty Chemicals                                         1.36                    1.82
Soft Drinks                                                 1.28                    1.31
Oil & Gas Storage & Transportation                          1.27            

1.35

Electrical Components & Equipment                           1.22            

1.26

Integrated Telecommunication Services                       1.17            

1.94

Real Estate Operating Companies                             1.12            

1.11

Advertising                                                 1.09            

1.19

Oil & Gas Refining & Marketing                              1.06            

1.43

Other Diversified Financial Services                        1.05                    0.62
Movies & Entertainment                                      1.02                    1.06
Airlines                                                    0.98                    0.96
Distributors                                                0.96                       -
Health Care Equipment                                       0.90                    0.93
Home Furnishings                                            0.74                    0.77
Environmental & Facilities Services                         0.74                       -
Cable & Satellite                                           0.69                    1.06
Consumer Finance                                            0.55                       -
Systems Software                                            0.47                    0.26
Auto Parts & Equipment                                      0.47                    0.48
IT Consulting & Other Services                              0.43                    0.29
Air Freight & Logistics                                     0.37                    0.19
Restaurants                                                 0.35                    0.37
Leisure Products                                            0.27                    0.26
Alternative Carriers                                        0.22                    0.27
Research & Consulting Services                              0.20            

0.30

Trading Companies & Distributors                            0.19                       -
Integrated Oil & Gas                                        0.19                    0.19
Food Distributors                                           0.17                    0.18
Apparel Retail                                              0.17                       -
Housewares & Specialties                                    0.15                    0.08
Diversified Banks                                           0.13                    0.14
Technology Distributors                                     0.12                    0.12
Electronic Components                                       0.08                    0.40
Construction Materials                                      0.08                    0.09
Specialized REITs                                           0.05                       -
Education Services                                          0.04                    0.04
Communications Equipment                                    0.03                       -
Independent Power Producers & Energy Traders                   -                    0.92
Commercial Printing                                            -                    0.79
Managed Health Care                                            -                    0.74
Thrifts & Mortgage Finance                                     -            

0.62

Property & Casualty Insurance                                  -                    0.39
Food Retail                                                    -                    0.15
Total                                                     100.00  %               100.00  %


___________________

(1) This segment includes our investments in joint ventures and certain investments in limited partnerships.

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The Joint Ventures

Senior Loan Fund JV I, LLC

In May 2014, we entered into a limited liability company, or LLC, agreement with
Kemper to form SLF JV I. We co-invest in senior secured loans of middle-market
companies and other corporate debt securities with Kemper through our investment
in SLF JV I. SLF JV I is managed by a four person Board of Directors, two of
whom are selected by us and two of whom are selected by Kemper. All portfolio
decisions and investment decisions in respect of SLF JV I must be approved by
the SLF JV I investment committee, which consists of one representative selected
by us and one representative selected by Kemper (with approval from a
representative of each required). Since we do not have a controlling financial
interest in SLF JV I, we do not consolidate SLF JV I. SLF JV I is not an
"eligible portfolio company" as defined in section 2(a)(46) of the Investment
Company Act. SLF JV I is capitalized pro rata with LLC equity interests as
transactions are completed and may be capitalized with additional subordinated
notes issued to us and Kemper by SLF JV I. The subordinated notes issued by SLF
JV I are referred to as the SLF JV I Notes. The SLF JV I Notes are senior in
right of payment to SLF JV I LLC equity interests and subordinated in right of
payment to SLF JV I's secured debt.

As of March 31, 2022 and September 30, 2021, we and Kemper owned, in the
aggregate, 87.5% and 12.5%, respectively, of the LLC equity interests of SLF JV
I and the outstanding SLF JV I Notes. As of each of March 31, 2022 and
September 30, 2021, we and Kemper had funded approximately $165.5 million to SLF
JV I, of which $144.8 million was from us. As of each of March 31, 2022 and
September 30, 2021, we had aggregate commitments to fund SLF JV I of
$35.0 million, of which approximately $26.2 million was to fund additional SLF
JV I Notes and approximately $8.8 million was to fund LLC equity interests in
SLF JV I.

Both the cost and fair value of our SLF JV I Notes were $96.3 million as of each
of March 31, 2022 and September 30, 2021. We earned interest income of
$1.9 million and $3.9 million on the SLF JV I Notes for the three and six months
ended March 31, 2022, respectively. We earned interest income of $1.7 million
and $3.5 million on the SLF JV I Notes for the three and six months ended
March 31, 2021, respectively. As of March 31, 2022, the SLF JV I Notes bore
interest at a rate of one-month LIBOR plus 7.00% per annum with a LIBOR floor of
1.00% and will mature on December 29, 2028.

The cost and fair value of the LLC equity interests in SLF JV I held by us was
$49.3 million and $36.7 million, respectively, as of March 31, 2022, and $49.3
million and $37.7 million, respectively, as of September 30, 2021. We earned
$0.7 million and $1.2 million in dividend income for the three and six months
ended March 31, 2022, respectively, with respect to our investment in the LLC
equity interests of SLF JV I. We did not earn dividend income for the three and
six months ended March 31, 2021 with respect to our investment in the LLC equity
interests of SLF JV I. The LLC equity interests of SLF JV I are dividend
producing to the extent SLF JV I has residual cash to be distributed on a
quarterly basis.

Below is a summary of the SLF JV I portfolio at March 31, 2022 and
September 30, 2021:

                                                               March 31, 2022           September 30, 2021
Senior secured loans (1)                                          $362,052                   $344,196
Weighted average interest rate on senior secured loans              5.86%                      5.60%

(2)

Number of borrowers in SLF JV I                                      60                         55
Largest exposure to a single borrower (1)                          $9,750                     $9,875
Total of five largest loan exposures to borrowers (1)              $47,621                    $46,984


__________________
(1) At principal amount.
(2) Computed using the weighted average annual interest rate on accruing senior
secured loans at fair value.

See “Note 3. Portfolio Investments” in the notes to the accompanying financial statements for more information on FSL JV I and its portfolio.

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OCSI Glick JV LLC

On March 19, 2021, as a result of the consummation of the Mergers, we became
party to the LLC agreement of the Glick JV. The Glick JV invests primarily in
senior secured loans of middle-market companies. We co-invest in these
securities with GF Equity Funding through the Glick JV. The Glick JV is managed
by a four person Board of Directors, two of whom are selected by us and two of
whom are selected by GF Equity Funding. All portfolio decisions and investment
decisions in respect of the Glick JV must be approved by the Glick JV investment
committee, consisting of one representative selected by us and one
representative selected by GF Equity Funding (with approval from a
representative of each required). Since we do not have a controlling financial
interest in the Glick JV, we do not consolidate the Glick JV. The Glick JV is
not an "eligible portfolio company" as defined in section 2(a)(46) of the
Investment Company Act. The Glick JV is capitalized as transactions are
completed. The members provide capital to the Glick JV in exchange for LLC
equity interests, and we and GF Debt Funding 2014 LLC, or GF Debt Funding, an
entity advised by affiliates of GF Equity Funding, provide capital to the Glick
JV in exchange for subordinated notes issued by the Glick JV, or the Glick JV
Notes. The Glick JV Notes are junior in right of payment to the repayment of
temporary contributions made by us to fund investments of the Glick JV that are
repaid when GF Equity Funding and GF Debt Funding make their capital
contributions and fund their Glick JV Notes, respectively.

As of March 31, 2022 and September 30, 2021, we and GF Equity Funding owned
87.5% and 12.5%, respectively, of the outstanding LLC equity interests, and we
and GF Debt Funding owned 87.5% and 12.5%, respectively, of the Glick JV Notes.
Approximately $84.0 million in aggregate commitments was funded as of each of
March 31, 2022 and September 30, 2021, of which $73.5 million was from us. As of
March 31, 2022 and September 30, 2021, we had commitments to fund Glick JV Notes
of $78.8 million, of which $12.4 million was unfunded. As of each of March 31,
2022 and September 30, 2021, we had commitments to fund LLC equity interests in
the Glick JV of $8.7 million, of which $1.6 million was unfunded.

The cost and fair value of our aggregate investment in the Glick JV was $50.6
million and $55.6 million, respectively, as of March 31, 2022. The cost and fair
value of our aggregate investment in the Glick JV was $50.7 million and
$55.6 million, respectively, as of September 30, 2021. For the three and six
months ended March 31, 2022, our investment in the Glick JV Notes earned
interest income of $1.0 million and $2.1 million, respectively. For the period
from March 19, 2021 to March 31, 2021, our investment in the Glick JV Notes
earned interest income of $0.1 million. We did not earn any dividend income for
the three and six months ended March 31, 2022 and for the period from March 19,
2021 to March 31, 2021 with respect to our investment in the LLC equity
interests of the Glick JV. The LLC equity interests of the Glick JV are income
producing to the extent there is residual cash to be distributed on a quarterly
basis.

Below is a summary of Glick JV’s portfolio at March 31, 2022 and
September 30, 2021:

                                                             March 31, 2022                September 30, 2021
Senior secured loans (1)                                        $141,187                        $126,512
Weighted average current interest rate on senior                 6.05%                           5.86%
secured loans (2)
Number of borrowers in the Glick JV                                44                              37
Largest loan exposure to a single borrower (1)                   $6,733                          $6,907
Total of five largest loan exposures to borrowers (1)           $28,141                         $28,324


__________
(1) At principal amount.
(2) Computed using the weighted average annual interest rate on accruing senior
secured loans at fair value.

See “Note 3. Portfolio Investments” in the notes to the accompanying financial statements for more information on the Glick joint venture and its portfolio.

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Discussion and analysis of results and operations

Operating results

Net increase (decrease) in net assets resulting from operations includes net
investment income, net realized gains (losses) and net unrealized appreciation
(depreciation). Net investment income is the difference between our income from
interest, dividends and fees and net expenses. Net realized gains (losses) is
the difference between the proceeds received from dispositions of investment
related assets and liabilities and their stated costs. Net unrealized
appreciation (depreciation) is the net change in the fair value of our
investment related assets and liabilities carried at fair value during the
reporting period, including the reversal of previously recorded unrealized
appreciation (depreciation) when gains or losses are realized.

Comparison of three and six months ended March 31, 2022 and March 31, 2021

Total investment income

Total investment income includes interest on our investments, fee income and dividend income.

Total investment income for the three months ended March 31, 2022 and 2021 was
$64.3 million and $41.9 million, respectively. For the three months ended
March 31, 2022, this amount consisted of $61.7 million of interest income from
portfolio investments (which included $4.7 million of PIK interest), $1.9
million of fee income and $0.7 million of dividend income. For the three months
ended March 31, 2021, this amount consisted of $39.5 million of interest income
from portfolio investments (which included $3.8 million of PIK interest), $2.3
million of fee income and $0.2 million of dividend income. The increase of $22.4
million, or 53.3%, in our total investment income for the three months ended
March 31, 2022, as compared to the three months ended March 31, 2021, was due
primarily to (1) a $22.2 million increase in interest income, which was
primarily driven by a larger investment portfolio as a result of the increase in
assets resulting from the Mergers and new originations and OID accretion that
resulted from merger-related accounting adjustments and (2) a $0.5 million
increase in dividend income mainly driven by a dividend received from one
investment that did not pay a dividend in the prior year, partially offset by a
$0.4 million decrease in fee income primarily due to lower prepayment fees.

Total investment income for the six months ended March 31, 2022 and 2021 was
$129.2 million and $80.1 million, respectively. For the six months ended
March 31, 2022, this amount consisted of $121.8 million of interest income from
portfolio investments (which included $9.3 million of PIK interest), $2.8
million of fee income and $4.6 million of dividend income. For the six months
ended March 31, 2021, this amount consisted of $74.2 million of interest income
from portfolio investments (which included $6.9 million of PIK interest), $5.6
million of fee income and $0.3 million of dividend income. The increase of $49.1
million, or 61.3%, in our total investment income for the six months ended
March 31, 2022, as compared to the six months ended March 31, 2021, was due
primarily to (1) a $47.6 million increase in interest income, which was
primarily driven by a larger investment portfolio as a result of the increase in
assets resulting from the Mergers and new originations and OID accretion that
resulted from merger-related accounting adjustments and (2) a $4.3 million
increase in dividend income mainly driven by dividends received from two
investments that did not pay dividends in the prior year, partially offset by a
$2.8 million decrease in fee income primarily due to lower prepayment fees.

Expenses

Net expenses (expenses net of fee waivers) for the three months ended March 31,
2022 and 2021 were $24.2 million and $23.8 million, respectively. Net expenses
increased for the three months ended March 31, 2022, as compared to the three
months ended March 31, 2021, by $0.4 million, or 1.6%, primarily due to (1) a
$3.3 million increase in interest expense due to higher borrowings outstanding,
(2) $2.4 million of higher base management fees (net of management fee waivers)
primarily as a result of a larger investment portfolio and (3) a $2.3 million
increase in Part I incentive fees mainly due to increased total investment
income, partially offset by $7.4 million of lower accrued Part II incentive fees
as a result of a reversal of previously accrued capital gains incentive fees
driven by unrealized losses during the current quarter and a $0.2 million
decrease in professional fees.

Net expenses (expenses net of fee waivers) for the six months ended March 31,
2022 and 2021 were $53.5 million and $52.0 million, respectively. Net expenses
increased for the six months ended March 31, 2022, as compared to the six months
ended March 31, 2021, by $1.5 million, or 2.9%, primarily due to (1) a $6.6
million increase in interest expense due to higher borrowings outstanding, (2)
$5.0 million of higher base management fees (net of management fee waivers)
primarily as a result of a larger investment portfolio, (3) a $4.6 million
increase in Part I incentive fees mainly due to increased total investment
income and (4) a $0.3 million increase in professional fees, partially offset by
$15.1 million of lower accrued Part II incentive fees as a result of a reversal
of previously accrued capital gains incentive fees driven by unrealized losses
during the current period.
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Net investment income

Primarily as a result of the $22.4 million increase in total investment income
and the $0.4 million increase in net expenses, net investment income for the
three months ended March 31, 2022 increased by $22.0 million compared to the
three months ended March 31, 2021.

Primarily as a result of the $49.1 million increase in total investment income,
the $1.5 million increase in net expenses and a $3.3 million increase in the
provision for taxes on net investment income, net investment income for the six
months ended March 31, 2022 increased by $44.3 million compared to the six
months ended March 31, 2021.

Realized gain (loss)

Realized gains or losses are measured by the difference between the net proceeds
from the sale or redemption of investments and foreign currency and the cost
basis without regard to unrealized appreciation or depreciation previously
recognized, and includes investments written-off during the period, net of
recoveries. Realized losses may also be recorded in connection with our
determination that certain investments are considered worthless securities
and/or meet the conditions for loss recognition per the applicable tax rules.

During the three months ended March 31, 2022 and 2021, we recorded aggregate net
realized gains of $1.4 million and $5.9 million, respectively, in connection
with the exits of various investments and foreign currency forward contracts.
During the six months ended March 31, 2022 and 2021, we recorded aggregate net
realized gains of $10.7 million and $14.1 million, respectively, in connection
with the exits of various investments and foreign currency forward contracts.
See "Note 8. Realized Gains or Losses and Net Unrealized Appreciation or
Depreciation" in the notes to the accompanying Consolidated Financial Statements
for more details regarding investment realization events for the three and six
months ended March 31, 2022 and 2021.

Net unrealized capital gain (loss)

Net unrealized appreciation or depreciation is the net change in the fair value
of our investments and foreign currency during the reporting period, including
the reversal of previously recorded unrealized appreciation or depreciation when
gains or losses are realized.

During the three months ended March 31, 2022 and 2021, we recorded net
unrealized appreciation (depreciation) of $(27.0) million and $65.1 million,
respectively. For the three months ended March 31, 2022, this consisted of $16.6
million of net unrealized depreciation on debt investments, $8.7 million of net
unrealized depreciation on equity investments and $3.4 million of net unrealized
depreciation related to exited investments (a portion of which resulted in a
reclassification to realized gains), partially offset by $1.7 million of net
unrealized appreciation of foreign currency forward contracts. For the three
months ended March 31, 2021, this consisted of $46.9 million of net unrealized
appreciation on debt investments, $23.3 million of net unrealized appreciation
on equity investments and $3.5 million of net unrealized appreciation of foreign
currency forward contracts, partially offset by $8.6 million of net unrealized
depreciation related to exited investments (a portion of which resulted in a
reclassification to realized gains).

During the six months ended March 31, 2022 and 2021, we recorded net unrealized
appreciation (depreciation) of $(31.6) million and $112.7 million, respectively.
For the six months ended March 31, 2022, this consisted of $18.9 million of net
unrealized depreciation on debt investments, $7.6 million of net unrealized
depreciation related to exited investments (a portion of which resulted in a
reclassification to realized gains) and $5.9 million of net unrealized
depreciation on equity investments, partially offset by $0.9 million of net
unrealized appreciation of foreign currency forward contracts. For the six
months ended March 31, 2021, this consisted of $73.7 million of net unrealized
appreciation on debt investments, $31.7 million of net unrealized appreciation
on equity investments, $6.2 million of net unrealized appreciation related to
exited investments (a portion of which resulted in a reclassification to
realized losses) and $1.1 million of net unrealized appreciation of foreign
currency forward contracts.

Financial position, liquidity and capital resources

We have a number of alternatives available to fund our investment portfolio and
our operations, including raising equity, increasing or refinancing debt and
funding from operational cash flow. We generally expect to fund the growth of
our investment portfolio through additional debt and equity capital, which may
include securitizing a portion of our investments. We cannot assure you,
however, that our efforts to grow our portfolio will be successful. For example,
our common stock has generally traded at prices below net asset value for the
past several years, and we may not be able to raise additional equity at prices
below the then-current net asset value per share. We intend to continue to
generate cash primarily from cash flows from operations, including interest
earned, and future borrowings or equity offerings. We intend to fund our future
distribution
                                       95
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obligations through cash flow from operations or with funds obtained through future equity and debt offerings or credit facilities, as we deem appropriate.

Our primary uses of funds are investments in our targeted asset classes and cash
distributions to holders of our common stock. We may also from time to time
repurchase or redeem some or all of our outstanding notes. At a special meeting
of our stockholders held on June 28, 2019, our stockholders approved the
application of the reduced asset coverage requirements in Section 61(a)(2) of
the Investment Company Act to us effective as of June 29, 2019. As a result of
the reduced asset coverage requirement, we can incur $2 of debt for each $1 of
equity as compared to $1 of debt for each $1 of equity. As of March 31, 2022, we
had $1,395.0 million in senior securities and our asset coverage ratio was
193.1%. As of March 31, 2022, our debt to equity ratio was 1.05x. This was
slightly above our target debt to equity ratio is 0.85x to 1.0x (i.e., one
dollar of equity for each $0.85 to $1.00 of debt outstanding) due to the timing
of certain investment purchases and repayments as of March 31, 2022. Over time,
we expect to be in-line with our target debt to equity ratio.

For the six months ended March 31, 2022, we experienced a net increase in cash
and cash equivalents (including restricted cash) of $10.1 million. During that
period, we used $67.5 million of net cash from operating activities, primarily
from funding $497.6 million of investments, $23.5 million of increase in due
from broker (cash held at a broker to cover collateral obligations under the
interest swap agreement) and $3.4 million of net increase in receivables from
unsettled transactions, partially offset by $416.3 million of principal payments
and sale proceeds received and the cash activities related to $72.4 million of
net investment income. During the same period, net cash provided by financing
activities was $78.4 million, primarily consisting of $115.0 million of net
borrowings under the credit facilities and $19.4 million of proceeds (net of
offering costs) from shares issued under the "at the market" offering, partially
offset by $55.7 million of cash distributions paid to our stockholders and $0.3
million of deferred financing costs paid.

For the six months ended March 31, 2021, we experienced a net increase in cash
and cash equivalents of $4.6 million. During that period, we used $113.1 million
of net cash from operating activities, primarily from funding $541.5 million of
investments and $17.0 million of net increase in receivables from unsettled
transactions, partially offset by $398.7 million of principal payments and sale
proceeds received, $20.9 million of cash acquired in the Mergers and the cash
activities related to $28.1 million of net investment income. During the same
period, net cash provided by financing activities was $118.1 million, primarily
consisting of $160.2 million of net borrowings under the credit facilities,
partially offset by $31.4 million of cash distributions paid to our
stockholders, $9.3 million of repayments of secured borrowings, $1.0 million of
repurchases of common stock under our dividend reinvestment plan, or DRIP, and
$0.4 million of deferred financing costs paid.

As of March 31, 2022, we had $41.8 million in cash and cash equivalents
(including $2.4 million of restricted cash), portfolio investments (at fair
value) of $2.6 billion, $17.3 million of interest, dividends and fees
receivable, $455.0 million of undrawn capacity on our credit facilities (subject
to borrowing base and other limitations), $3.5 million of net receivables from
unsettled transactions, $745.0 million of borrowings outstanding under our
credit facilities and $618.7 million of unsecured notes payable (net of
unamortized financing costs, unaccreted discount and interest rate swap fair
value adjustment).

As of September 30, 2021, we had $31.6 million in cash and cash equivalents
(including $2.3 million of restricted cash), portfolio investments (at fair
value) of $2.6 billion, $22.1 million of interest, dividends and fees
receivable, $470.0 million of undrawn capacity on our credit facilities (subject
to borrowing base and other limitations), $0.1 million of net receivables from
unsettled transactions, $630.0 million of borrowings outstanding under our
credit facilities and $638.7 million of unsecured notes payable (net of
unamortized financing costs, unaccreted discount and interest rate swap fair
value adjustment).

We may be a party to financial instruments with off-balance sheet risk in the
normal course of business to meet the financial needs of our portfolio
companies. As of March 31, 2022, our only off-balance sheet arrangements
consisted of $243.8 million of unfunded commitments, which was comprised of
$194.8 million to provide debt and equity financing to certain of our portfolio
companies and $49.0 million to provide financing to the JVs. As of September 30,
2021, our only off-balance sheet arrangements consisted of $264.9 million of
unfunded commitments, which was comprised of $212.4 million to provide debt and
equity financing to certain of our portfolio companies, $49.0 million to provide
financing to the JVs and $3.5 million related to unfunded limited partnership
interests. Such commitments are subject to our portfolio companies' satisfaction
of
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certain financial and non-financial covenants and may involve, to varying degrees, elements of credit risk in excess of the amount recognized in our Consolidated Statements of Assets and Liabilities.

As of March 31, 2022, we have analyzed cash and cash equivalents, availability
under our credit facilities, the ability to rotate out of certain assets and
amounts of unfunded commitments that could be drawn and believe our liquidity
and capital resources are sufficient to take advantage of market opportunities
in the current economic climate.

Contractual obligations

The following table reflects information pertaining to our principal debt
outstanding under the Syndicated Facility (as defined below), Citibank Facility
(as defined below), our 3.500% notes due 2025, or the 2025 Notes, and our 2.700%
notes due 2027, or the 2027 Notes:

                                                                                                                                      Maximum debt
                                                                                                      Weighted average debt          outstanding for
                                           Debt Outstanding                                            outstanding for the           the six months
                                          as of September 30,            Debt Outstanding               six months ended                  ended
                                                 2021                  as of March 31, 2022              March 31, 2022              March 31, 2022
Syndicated Facility                      $          495,000          $             560,000          $              545,989          $      620,000
Citibank Facility                                   135,000                        185,000                         156,429                 185,000
2025 Notes                                          300,000                        300,000                         300,000                 300,000
2027 Notes                                          350,000                        350,000                         350,000                 350,000
Total debt                               $        1,280,000          $           1,395,000          $            1,352,418



The following table reflects our contractual obligations arising from the Syndicated Facility, the Citibank Facility, the 2025 Notes and the 2027 Notes:

Payments due by period from March 31, 2022

                                                                       Less than
Contractual Obligations                            Total                 1 year           1-3 years          3-5 years           More than 5 years
Syndicated Facility                          $     560,000            $       -          $       -          $ 560,000          $                -
Interest due on Syndicated Facility                 54,475               13,300             26,600             14,575                           -
Citibank Facility                                  185,000                    -            185,000                  -                           -
Interest due on Citibank Facility                   13,149                4,984              8,165                  -                           -
2025 Notes                                         300,000                    -            300,000                  -                           -
Interest due on 2025 Notes                          30,551               10,500             20,051                  -                           -
2027 Notes                                         350,000                    -                  -            350,000                           -
Interest due on 2027 Notes (a)                      31,890                6,648             13,295             11,947                           -
Total                                        $   1,525,065            $  35,432          $ 553,111          $ 936,522          $                -


__________

(a) The interest due on the 2027 Bonds has been calculated net of the interest rate swap.

Equity Issuances

During the three and six months ended March 31, 2022, we issued an aggregate of
104,411 and 212,382 shares of common stock as part of the DRIP. There were no
common stock issuances during the six months ended March 31, 2021.

On February 7, 2022, we entered into an equity distribution agreement by and
among us, Oaktree, Oaktree Administrator and Keefe, Bruyette & Woods, Inc., JMP
Securities LLC, Raymond James & Associates, Inc. and SMBC Nikko Securities
America, Inc., as placement agents, in connection with the issuance and sale by
us of shares of common stock, having an aggregate offering price of up to $125.0
million. Sales of the common stock, if any, may be made in negotiated
transactions or transactions that are deemed to be "at the market," as defined
in Rule 415 under the Securities Act of 1933, as amended, including sales made
directly on the Nasdaq Global Select Market or similar securities exchanges or
sales made to or through a market maker other than on an exchange, at prices
related to the prevailing market prices or at negotiated prices.
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In connection with the "at the market" offering, we issued and sold the
following shares of common stock during the three and six months ended March 31,
2022:

                                                                                                                                      Average Sales
                                                Number of Shares            Gross           Placement Agent       Net Proceeds       Price per Share
                                                     Issued                Proceeds              Fees                 (1)                  (2)
"At the market" offering                             2,632,260           $  19,794          $        198          $  19,596          $        7.52


__________

(1) Net proceeds exclude placement fees of $0.2 million. (2) Represents the gross sale price before deduction of placement agent fees and estimated offering costs.

Significant capital transactions

The following table reflects the distributions per share that we have paid,
including shares issued under our DRIP, on our common stock since October 1,
2019:

                                                                                               Amount                 Cash                DRIP Shares                   DRIP Shares
Date Declared                      Record Date                    Payment Date                per Share           Distribution             Issued (1)                      Value
November 12, 2019                   December 13, 2019               December 31, 2019       $    0.095             $ 12.9 million           87,747                       $ 0.5 million
January 31, 2020                       March 13, 2020                  March 31, 2020            0.095               12.9 million          157,523                         0.5 million
April 30, 2020                          June 15, 2020                   June 30, 2020            0.095               13.0 million           87,351                         0.4 million
July 31, 2020                      September 15, 2020              September 30, 2020            0.105               14.3 million          102,404                         0.5 million
November 13, 2020                   December 15, 2020               December 31, 2020             0.11               15.0 million           93,964                         0.5 million
January 29, 2021                       March 15, 2021                  March 31, 2021             0.12               16.4 million           81,702                         0.5 million
April 30, 2021                          June 15, 2021                   June 30, 2021             0.13               22.9 million           76,979                         0.5 million
July 30, 2021                      September 15, 2021              September 30, 2021            0.145               25.5 million           85,075                         0.6 million
October 13, 2021                    December 15, 2021               December 31, 2021            0.155               27.2 million          107,971                         0.8 million
January 28, 2022                       March 15, 2022                  March 31, 2022             0.16               28.5 million          104,411                         0.8 million


 ______________

(1)The shares were purchased on the open market and distributed other than with respect to distributions paid on December 31, 2021 and March 31, 2022. New shares were issued and distributed during the three and six months ended
March 31, 2022.


Indebtedness

See “Note 6. Borrowings” to the consolidated financial statements for further details regarding our indebtedness.

Syndicated facility


As of March 31, 2022, (i) the size of our senior secured revolving credit
facility, or, as amended and/or restated from time to time, the Syndicated
Facility, pursuant to a senior secured revolving credit agreement, with the
lenders, ING Capital LLC, as administrative agent, ING Capital LLC, JPMorgan
Chase Bank, N.A., BofA Securities, Inc. and MUFG Union Bank, N.A. as joint lead
arrangers and joint bookrunners, and JPMorgan Chase Bank, N.A. and Bank of
America, N.A., as syndication agents, was $1.0 billion (with an "accordion"
feature that permits us, under certain circumstances, to increase the size of
the facility to up to the greater of $1.25 billion and our net worth (as defined
in the Syndicated Facility) on the date of such increase), (ii) the period
during which we may make drawings will expire on May 4, 2025 and the maturity
date was May 4, 2026 and (iii) the interest rate margin for (a) LIBOR loans
(which may be 1-, 2-, 3- or 6-month, at our option) was 2.00% and (b) alternate
base rate loans was 1.00%.


Each loan or letter of credit originated or assumed under the Syndicated
Facility is subject to the satisfaction of certain conditions. Borrowings under
the Syndicated Facility are subject to the facility's various covenants and the
leverage restrictions contained in the Investment Company Act. We cannot assure
you that we will be able to borrow funds under the Syndicated Facility at any
particular time or at all.
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The following table describes significant financial covenants, as of March 31,
2022, with which we must comply under the Syndicated Facility on a quarterly
basis:

                                                                                                                    December 31, 2021
     Financial Covenant                              Description                           Target Value             Reported Value (1)
Minimum shareholders' equity        Net assets shall not be less than the sum of         $600 million           $1,325 million
                                    (x) $600 million, plus (y) 50% of the
                                    aggregate net proceeds of all sales of equity
                                    interests after May 6, 2020
Asset coverage ratio                Asset coverage ratio shall not be less than          1.50:1                 2.01:1
                                    the greater of 1.50:1 and the statutory test
                                    applicable to us
Interest coverage ratio             Interest coverage ratio shall not be less than       2.25:1                 4.52:1
                                    2.25:1
Minimum net worth                   Net worth shall not be less than $550 million        $550 million           $1,172 million


 ___________

(1) As contractually required, we report financial covenants based on the last
filed quarterly or annual report, in this case our Quarterly Report on Form 10-Q
for the quarter ended December 31, 2021. We were in compliance with all
financial covenants under the Syndicated Facility based on the financial
information contained in this Quarterly Report on Form 10-Q.

As of March 31, 2022 and September 30, 2021, we had $560.0 million and
$495.0 million of borrowings outstanding under the Syndicated Facility,
respectively, which had a fair value of $560.0 million and $495.0 million,
respectively. Our borrowings under the Syndicated Facility bore interest at a
weighted average interest rate of 2.193% and 2.229% for the six months ended
March 31, 2022 and 2021, respectively. For the three and six months ended
March 31, 2022, we recorded interest expense (inclusive of fees) of $4.0 million
and $7.8 million, respectively, related to the Syndicated Facility. For the
three and six months ended March 31, 2021, we recorded interest expense
(inclusive of fees) of $3.3 million and $6.5 million, respectively, related to
the Syndicated Facility.

Citibank Facility

On March 19, 2021, as a result of the consummation of the Mergers, we became
party to a revolving credit facility, or, as amended and/or restated from time
to time, the Citibank Facility, with OCSL Senior Funding II LLC, our
wholly-owned, special purpose financing subsidiary, as the borrower, us, as
collateral manager and seller, each of the lenders from time to time party
thereto, Citibank, N.A., as administrative agent, and Wells Fargo Bank, National
Association, as collateral agent and custodian. As of March 31, 2022, we were
able to borrow up to $200 million under the Citibank Facility (subject to
borrowing base and other limitations). As of March 31, 2022, the reinvestment
period under the Citibank Facility was scheduled to expire on November 18, 2023
and the maturity date for the Citibank Facility was November 18, 2024.

As of March 31, 2022, borrowings under the Citibank Facility are subject to
certain customary advance rates and accrue interest at a rate equal to LIBOR
plus between 1.25% and 2.20% per annum on broadly syndicated loans, subject to
observable market depth and pricing, and LIBOR plus 2.25% per annum on all other
eligible loans during the reinvestment period. In addition, as of March 31,
2022, for the duration of the reinvestment period there is a non-usage fee
payable of 0.50% per annum on the undrawn amount under the Citibank Facility.
The minimum asset coverage ratio applicable to us under the Citibank Facility is
150% as determined in accordance with the requirements of the Investment Company
Act. Borrowings under the Citibank Facility are secured by all of the assets of
OCSL Senior Funding II LLC and all of our equity interests in OCSL Senior
Funding II LLC. We may use the Citibank Facility to fund a portion of our loan
origination activities and for general corporate purposes. Each loan origination
under the Citibank Facility is subject to the satisfaction of certain
conditions.

As of March 31, 2022 and September 30, 2021, we had $185.0 million and $135.0
million outstanding under the Citibank Facility, respectively, which had a fair
value of $185.0 million and $135.0 million, respectively. Our borrowings under
the Citibank Facility bore interest at a weighted average interest rate
of 2.060% and 2.191% for the six months ended March 31, 2022 and the period from
March 19, 2021 to March 31, 2021, respectively. For the three and six months
ended March 31, 2022, we recorded interest expense (inclusive of fees)
of $1.1 million and $1.9 million, respectively, related to the Citibank
Facility. For the period from March 19, 2021 to March 31, 2021, the Company
recorded interest expense (inclusive of fees) of $0.1 million related to the
Citibank Facility.

2025 Notes

On February 25, 2020, we issued $300.0 million in aggregate principal amount of
the 2025 Notes for net proceeds of $293.8 million after deducting OID of $2.5
million, underwriting commissions and discounts of $3.0 million and offering
costs of $0.7 million. The OID on the 2025 Notes is amortized based on the
effective interest method over the term of the notes.
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Tickets 2027

On May 18, 2021, we issued $350.0 million in aggregate principal amount of the
2027 Notes for net proceeds of $344.8 million after deducting OID of
$1.0 million, underwriting commissions and discounts of $3.5 million and
offering costs of $0.7 million. The OID on the 2027 Notes is amortized based on
the effective interest method over the term of the notes.

In connection with the 2027 Notes, we entered into an interest rate swap to more
closely align the interest rates of our liabilities with our investment
portfolio, which consists of predominately floating rate loans. Under the
interest rate swap agreement, we receive a fixed interest rate of 2.700% and pay
a floating interest rate of the three-month LIBOR plus 1.658% on a notional
amount of $350 million. We designated the interest rate swap as the hedging
instrument in an effective hedge accounting relationship.

The table below shows the components of the book value of the 2025 Bonds and the 2027 Bonds as at March 31, 2022 and September 30, 2021:

                                                           As of March 31, 2022                       As of September 30, 2021
($ in millions)                                      2025 Notes              2027 Notes            2025 Notes            2027 Notes
Principal                                        $     300.0               $     350.0          $       300.0          $     350.0
 Unamortized financing costs                            (2.1)                     (3.6)                  (2.6)                (4.0)
 Unaccreted discount                                    (1.5)                     (0.8)                  (1.7)                (0.9)
 Interest rate swap fair value adjustment                  -                     (23.3)                     -                 (2.1)
Net carrying value                               $     296.4               $     322.3          $       295.7          $     343.0
Fair Value                                       $     294.9               $     320.4          $       314.5          $     351.1



The below table presents the components of interest and other debt expenses
related to the 2025 Notes and the 2027 Notes for the three and six months ended
March 31, 2022:

($ in millions)                                             2025 Notes                                                  2027 Notes
                                         Three months ended          Six months ended March          Three months ended          Six months ended March
                                           March 31, 2022                   31, 2022                   March 31, 2022                   31, 2022
Coupon interest                        $           2.6               $           5.3               $           2.4               $           4.8
Amortization of financing costs and
discount                                           0.3                           0.6                           0.2                           0.4
Effect of interest rate swap                         -                             -                          (0.7)                         (1.5)
 Total interest expense                $           2.9               $           5.9               $           1.9               $           3.7
Coupon interest rate (net of effect of
interest rate swap for 2027 Notes)               3.500       %                 3.500       %                 1.877       %                 1.867       %


The below table presents the components of interest and other debt expenses
related to the 2025 Notes for the three and six months ended March 31, 2021:

($ in millions)                                                                    2025 Notes
                                                            Three months

ended in March Semester ended in March

                                                                    31, 2021                        31, 2021
Coupon interest                                             $             2.6               $             5.3
Amortization of financing costs and discount                              0.3                             0.6
 Total interest expense                                     $             2.9               $             5.9
Coupon interest rate                                                    3.500       %                   3.500       %


Regulated investment company status and distributions

We have qualified and elected to be treated as a RIC under Subchapter M of the
Code for U.S. federal income tax purposes. As long as we continue to qualify as
a RIC, we will not be subject to tax on our investment company taxable income
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(determined without regard to any deduction for dividends paid) or realized net
capital gains, to the extent that such taxable income or gains is distributed,
or deemed to be distributed as dividends, to stockholders on a timely basis.

Taxable income generally differs from net income for financial reporting
purposes due to temporary and permanent differences in the recognition of income
and expenses, and generally excludes net unrealized appreciation or
depreciation. Distributions declared and paid by us in a taxable year may differ
from taxable income for that taxable year as such distributions may include the
distribution of taxable income derived from the current taxable year or the
distribution of taxable income derived from the prior taxable year carried
forward into and distributed in the current taxable year. Distributions also may
include returns of capital.

To maintain RIC tax treatment, we must, among other things, distribute
dividends, with respect to each taxable year, of an amount at least equal to 90%
of our investment company taxable income (i.e., our net ordinary income and our
realized net short-term capital gains in excess of realized net long-term
capital losses, if any), determined without regard to any deduction for
dividends paid. As a RIC, we are also subject to a federal excise tax, based on
distribution requirements of our taxable income on a calendar year basis. We
anticipate timely distribution of our taxable income in accordance with tax
rules. We did not incur a U.S. federal excise tax for calendar years 2020 and
2021 and do not expect to incur a U.S. federal excise tax for calendar year
2022. We may incur a federal excise tax in future years.

We intend to distribute at least 90% of our annual taxable income (which
includes our taxable interest and fee income) to our stockholders. The covenants
contained in our credit facilities may prohibit us from making distributions to
our stockholders, and, as a result, could hinder our ability to satisfy the
distribution requirement associated with our ability to be subject to tax as a
RIC. In addition, we may retain for investment some or all of our net capital
gains (i.e., realized net long-term capital gains in excess of realized net
short-term capital losses) and treat such amounts as deemed distributions to our
stockholders. If we do this, our stockholders will be treated as if they
received actual distributions of the capital gains we retained and then
reinvested the net after-tax proceeds in our common stock. Our stockholders also
may be eligible to claim tax credits (or, in certain circumstances, tax refunds)
equal to their allocable share of the tax we paid on the capital gains deemed
distributed to them. To the extent our taxable earnings for a fiscal and taxable
year fall below the total amount of our dividend distributions for that fiscal
and taxable year, a portion of those distributions may be deemed a return of
capital to our stockholders.

We may not be able to achieve operating results that will allow us to make
distributions at a specific level or to increase the amount of these
distributions from time to time. In addition, we may be limited in our ability
to make distributions due to the asset coverage test for borrowings applicable
to us as a Business Development Company under the Investment Company Act and due
to provisions in our credit facilities and debt instruments. If we do not
distribute a certain percentage of our taxable income annually, we will suffer
adverse tax consequences, including possible loss of our ability to be subject
to tax as a RIC. We cannot assure stockholders that they will receive any
distributions or distributions at a particular level.

A RIC may treat a distribution of its own stock as fulfilling its RIC
distribution requirements if each stockholder elects to receive his or her
entire distribution in either cash or stock of the RIC, subject to certain
limitations regarding the aggregate amount of cash to be distributed to all
stockholders. If these and certain other requirements are met, for U.S federal
income tax purposes, the amount of the dividend paid in stock will be equal to
the amount of cash that could have been received instead of stock.

We may generate qualified net interest income or qualified net short-term
capital gains that may be exempt from U.S. withholding tax when distributed to
foreign stockholders. A RIC is permitted to designate distributions of qualified
net interest income and qualified short-term capital gains as exempt from U.S.
withholding tax when paid to non-U.S. shareholders with proper documentation.
The following table, which may be subject to change as we finalize our annual
tax filings, lists the percentage of qualified net interest income and qualified
short-term capital gains for the year ended September 30, 2021.

                                                                      

Eligible net interest Eligible short term

                          Year Ended                                          Income             Capital Gains
September 30, 2021                                                                   89.8  %                -


We have adopted a DRIP that provides for the reinvestment of any distributions
that we declare in cash on behalf of our stockholders, unless a stockholder
elects to receive cash. As a result, if our Board of Directors declares a cash
distribution, then our stockholders who have not "opted out" of the DRIP will
have their cash distributions automatically reinvested in additional shares of
our common stock, rather than receiving a cash distribution. If our shares are
trading at a premium to net asset value, we typically issue new shares to
implement the DRIP, with such shares issued at the greater of the most recently
computed net asset value per share of our common stock or 95% of the current
market value per share of our common stock on the payment date for such
distribution. If our shares are trading at a discount to net asset value, we
typically purchase shares in the open market in connection with our obligations
under the DRIP.
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Related party transactions

We have entered into the Investment Advisory Agreement with Oaktree and the
Administration Agreement with Oaktree Administrator, an affiliate of Oaktree.
Mr. John B. Frank, an interested member of our Board of Directors, has an
indirect pecuniary interest in Oaktree. Oaktree is a registered investment
adviser under the Investment Advisers Act of 1940, as amended, that is partially
and indirectly owned by Oaktree Capital Group, LLC. See "Note 10. Related Party
Transactions - Investment Advisory Agreement" and "- Administrative Services" in
the notes to the accompanying Consolidated Financial Statements.

RECENT DEVELOPMENTS

Distribution statement

On April 29, 2022, our Board of Directors declared a quarterly distribution of
$0.165 per share, payable in cash on June 30, 2022 to stockholders of record on
June 15, 2022.



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