OTF: Updating our estimates

Research evidence excerpt

OTF: Updating our estimates

ce: Software portfolio avg LTVs increased to Prev. 0.29E 0.30E 0.33E 0.34E

40% from 34% q/q, reflecting updated market valuations; still substantial BVPS Basic

2025 17.09A 17.17A 17.27A 17.33A equity cushions, we note. Overall portfolio non-accruals ticked slightly 2026 16.49A 16.38E 16.26E 16.22E

lower q/q and remain very low at 0.3% of the portfolio; % of portfolio in Prev. 17.22E 17.12E 17.04E 17.04E

bottom 3 risk grades, using OTF’s internal risk metrics, declined slightly to

8.5% of the portfolio (from 8.8% in 4Q). Mgmt remaining appropriately AllPricedvaluesas ofin priorUSD unlesstradingotherwiseday's marketnoted.close, EST (unless otherwise noted).

cautious on AI risks and not seeing material signs of stress in the

portfolio currently (no pickup in amendment activity, for example). Mgmt

believes if portfolio companies perform well, they will be re-financeable.

Originations: Mgmt's comments suggest they are being very selective

on new software investments, given AI disruption risks; overall software

deal activity is expected to be tempered looking forward. Our sense is

that, on the margin, OTF may look towards digital infrastructure (AI-

enablement; GPU or data center financings) or life sciences (financing drug

development), where OTF has existing teams and capabilities, to fill in some

of the gaps for a tempered outlook on software deals. Dividends: We are

maintaining our dividend outlook for OTF, given spillover income (50c/

sh), though mgmt's comments suggest it could be somewhat longer than

previously anticipated for NII to cover the dividends as OTF ramps up its

portfolio. 1Q results: NAV/sh of $16.49 was 4.2% lower than our est, key

driver of NAV drag was widening of credit spreads in the quarter (80% of the

q/q decline).