ECCU

Portfolio Management

• Actively deployed almost $200 million into new investments in primary and secondary markets, with CLO equity having a 16.9% weighted average effective yield.
• Proactively completed 16 refinancings and 11 resets during the quarter, strengthening the CLO equity portfolio's earning power.

Financials

• Third quarter recurring cash flows were $77 million (59¢ per share), down from $85 million (69¢ per share) in Q2.
• Generated net investment income less realized losses from investments of $0.16 per share, with 24¢ of net investment income offset by 8¢ of realized losses from sales on certain investments.
• NAV was $7 per share, down 4.2% from $7.31 per share as of June 30.

Capital Raising

• Utilized at-the-market program to selectively issue $26 million of common stock at a premium to NAV and $13 million of 7% series double a and b convertible perpetual preferred stock.

Market Insights

• Loan market saw repricing activity slow down post-First Brands, but 42% of loans trading above par again. CLO market had $53 billion of volume in Q3, with reset and refinancing activity up. Portfolio metrics like lower triple C exposures and higher junior OC cushion were highlighted.

Forward-Looking

• Expect to take action on over 20% of the portfolio to unlock refinancing upside in the coming months and quarters.
• Unaudited estimate of NAV as of October month-end was between $6.69 and $6.79 per share.
• Continues to have a robust pipeline of resets and refinancings planned into 2026, with over 75 corporate actions in the year and expecting more in the future.

During the third quarter, Eagle Point Credit Company deployed nearly $200 million into new investments, with CLO equity investments having a weighted average effective yield of 16.9%. Recurring cash flows came in at $77 million or 59¢ per share, a decrease from $85 million or 69¢ per share in the second quarter. The company generated net investment income less realized losses from investments of $0.16 per share. NAV stood at $7 per share, down 4.2% from $7.31 per share as of June 30. The portfolio's weighted average remaining reinvestment period (WARP) ended the quarter at 3.4 years, roughly 26% above the market average.

Risks

• Spread compression in the loan market impacting cash flows and NAV.
• Impact of events like First Brands on repricing activity and credit market sentiment, leading to slower repricing and uncertainty.
• Potential for credit market volatility affecting portfolio valuations and default rates, including uncertainty around recovery values in cases like First Brands.

Q: Gaurav Mehta asks about the timeline and impact of portfolio resets and refis.

A: Thomas Majewski states they completed many refis and resets in Q3, with over 20% of the portfolio expected to be acted on in 1-2 quarters, market-dependent, and mentions a proactive ownership program with over 75 corporate actions in the year.

Q: Mickey Schleien asks about loan spreads post-First Brands and long-term outlook.

A: Thomas Majewski discusses spread compression slowing post-First Brands, linked to the credit market's reaction, and provides long-term outlook on loan spreads tied to CLO and loan market dynamics.

Q: Eric Zwick asks about funding activity and share buyback vs ATM.

A: Thomas Majewski talks about long-term focus, current discount to NAV of the stock, and that decisions are made on a long-term basis, considering options but remaining long-term focused.

Q: Christopher Nolan asks about trailing default rate and fraud vetting.

A: Thomas Majewski explains the trailing default rate pickup was driven by First Brands, low exposure to it, and details the fraud vetting chain in the CLO market.

Q: Timothy D'Agostino asks about common stock issuance accretion to NAV and Q4 resets/refis.

A: Ken Inorio says common stock issuance created ~2-3¢ accretion to NAV, and Thomas Majewski states they continue with resets/refis but don't publish mid-quarter stats on the number done.