FS Credit Opportunities Corp. · NYSE:FSCO
FS Credit Opportunities — Q4 2022 Earnings Presentation
20 slides from FS Credit Opportunities's earnings presentation, March 2023
Slide 1: FS Credit Opportunities Corp. Quarter ended December 31, 2022
FS Credit Opportunities Corp. Quarter ended December 31, 2022 All information is as of December 31, 2022, unless otherwise noted.
Slide 2: FS Investments Liquid Credit & Special Situations Team
FS Investments Liquid Credit & Special Situations Team The team assumed full management of FSCO in January 2018 Andrew Beckman, Head Portfolio Manager DW Investcorp Goldman Sachs (SSG) Magnetar FS Investments Partners 1998 2004 2012 2016 2018 Nicholas Heilbut, Portfolio Manager, Director of Research
Slide 3: Leveraging the full scale of FS Investments' platform
Leveraging the full scale of FS Investments’ platform Investment + markets expertise Legal + compliance Shared insights among various research teams, Oversees approximately $26 billion in assets across including internal managers and external investment 1940 Act funds, including closed-end funds, bu
Slide 4: Robust sourcing across public & private markets
Robust sourcing across public & private markets Relationships across FS Investments’ platform provide significant sourcing competitive edge Longstanding relationships Favorable allocations Private credit presence Well-positioned with banks and capital due to platform scale and gives us access to for
Slide 5: FS Credit Opportunities Corp. overview
FS Credit Opportunities Corp. overview NYSE: FSCO $2.0B 9.21% 82% 63% 1.2 yrs. Total assets Annualized Senior secured debt2 Floating rate assets3 Average duration4 dividend rate1 Data as of December 31, 2022, unless otherwise noted. 1. As of February 28, 2023. The payment of future dividends on FSCO
Slide 6: Flexible strategy investing in public and private markets
Flexible strategy investing in public and private markets The flexibility to adjust allocations between public and private markets has been a significant driver of our ability to deliver strong risk-adjusted returns across changing economic and credit cycles for investors Public markets Private mark
Slide 7: Credit market returns in 2022
Credit market returns in 2022 Total returns by asset class Returns by credit rating in 2022 4% 5% 2% 0% 0% -2% -5% -4% -10% -6% -8% -15% -10% -12% -20% Q1 Q2 Q3 Q4 2022 BB B CCC High yield bonds Senior secured loans Bonds Loans High yield bonds are represented by the ICE BAML U.S. High Yield Bond In
Slide 8: Spreads widened and defaults modestly increased
Spreads widened and defaults modestly increased High yield and senior secured loan spreads (bps) Default rates 1,200 7% High yield bond default rate Bond spreads Loan spreads Senior secured loan default rate 1,000 6% Senior secured loan avg default rate HY bond average default rate 5% 800 4% 600 3%
Slide 9: Q4 2022 portfolio and performance highlights
Q4 2022 portfolio and performance highlights • Net investment income (NII) for the quarter ended December 31, 2022 was $32 million, or $0.16 per share, as compared to $29 million, or $0.15 per share, for the quarter ended September 30, 2022. Performance highlights • Net asset value (NAV) as of Decem
Slide 10: FSCO investment portfolio overview
FSCO investment portfolio overview $2.0B 78 63% 82% 1.2 years Total assets Portfolio companies Floating rate assets1 Senior secured debt2 Average duration3 Asset type Geographic location 56% Senior Secured Loans – 1st Lien 92% United States 10% Senior Secured Loans – 2nd Lien 8% Other 16% Senior Sec
Slide 11: Preferred financing offers competitive advantages
Preferred financing offers competitive advantages Benefits of preferred equity financings Enhanced borrowing Attractive multi-year Favorable regulatory flexibility of underlying fixed-rate borrowings treatment assets Funding source Rate Amount Outstanding ($M) Undrawn ($M) Maturity Revolving Credit
Slide 12: A phased approach to the direct listing
A phased approach to the direct listing Timeline November 14, 2022 February 13, 2023 May 15, 2023 Listing date: 1/3 of all common 90 days post-listing: an additional 180 days post-listing: the final shares available for trading 1/3 of all common shares became 1/3 of all common shares will be availab
Slide 13: Prior direct listings in perspective
Prior direct listings in perspective Valuations and stock prices have generally increased after initial downward pressure Price-to-book value (indexed) Daily trading volume as % of shares outstanding 0.90x T+180 days 1.8% T+6 days T+90 days 0.88x 0.78x 0.85x 1.6% 0.88x 1.4% 0.86x 1.2% 0.84x 1.0% 0.8
Slide 14: Appendix
Appendix 14
Slide 15: Track record of generating strong risk-adjusted returns
Track record of generating strong risk-adjusted returns FSCO has outperformed the liquid indexes since the change in management in January 2018 Since January 1, 2018 Annualized Over/Under As of December 31, 2022 YTD 1YR 3YR 5YR return performance Sharpe ratio FSCO (net NAV return) -10.69% -10.69% 1.
Slide 16: Financial highlights
Financial highlights FY 2019 1H 2020 FY 2020 1H 2021 FY 2021 1H 2022 FY 2022 $ in millions 12/31/2019 6/30/2020 12/31/2020 6/30/2021 12/31/2021 6/30/2022 12/31/2022 Investment Portfolio $1,690 $1,758 $1,900 $2,131 $2,244 $1,987 $1,825 Debt $125 $340 $385 $455 $435 $335 $285 Preferred $199 $199 $298
Slide 17: Performance
Performance As of December 31, 2022 YTD 1YR 3YR 5YR Since Jan 1, 2018 Since inception (December 13, 2013) FSCO (NAV total return) -10.69% -10.69% 1.80% 4.01% 4.01% 3.54% Credit Suisse Leverage Loan Index -1.06% -1.06% 2.34% 3.24% 3.24% 3.54% ICE BofAML U.S. High Yield Index -11.22% -11.22% -0.23% 2.
Slide 18: Disclosures
Disclosures Forward-looking statements Statements included herein may constitute "forward-looking" statements as that term is defined in Section 27A of the Securities Act of 1933, as amended, and Section 21E of the Securities Exchange Act of 1934, as amended, including statements with regard to futu
Slide 19: Risk factors
Risk factors FS Credit Opportunities Corp. (“FSCO” or the “Company”) is a non-diversified, closed-end management investment company that carries out the investment strategies generally described herein. An investment in FSCO involves a high degree of risk and may be considered speculative. The follo
Slide 20: Risk factors
Risk factors • FSCO’s investments in various types of debt securities and instruments may be secured, unsecured, rated or unrated, are subject to non-payment risk, and may be speculative in nature. • Below investment grade instruments (commonly referred to as “high yield” securities or “junk bonds”)
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