ECC - Earnings call transcript Q1 2022 | Eagle Point Credit Company Inc.

Due to licensing restrictions, you must log in to view earnings call transcripts.

Operator

Greetings, and welcome to Eagle Point Credit Company First Quarter 2022 Financial Results Call. At this time, all participants are in a listen-only mode. A question and answer session will follow the formal presentation. [Operator Instructions] As a reminder, this conference is being recorded. It is now my pleasure to introduce your host Garrett Edson of ICR. you. Thank

begin. may You

Garrett Edson

also and our By presentation, earnings to which released Doug, at our have eaglepointcreditcompany.com. which everyone access prior may and call to announcement this found good you, on now, website morning. should was be Thank and investor

our to we uncertainties information financial results we company's materially matters risks remind and the may projected forward-looking need that everyone cause in actual projected begin financial statements Before on statements this or to from those and that that the discuss information. differ call formal remarks, include forward-looking such involve projected

XXXX Chief Events Reports I Executive Financial Majeski, Point and following the by link, on the of For statement this to to further and company's be herein, presentation accessed our can law. the and Earlier of quarter can this please first company's website. found Company. following that Eagle projection of Exchange made section like first information and call. and Exchange with call our financial to website, impact today, contained of the quarter presentation the the to introduce statements are statements call investor the would and can link. We company's investor Statements A filings quarter of filed we unless Financial based by financial information statements Credit company information on first date update the within us this via factors refer the obligation with by the investor XX Relations days and during found Investor projections forward-looking our and required Securities of our statements the forward-looking the any Officer Presentation financial is now Tom Each Commission. available eaglepointcreditcompany.com. and as replay presentation be Securities and could also for statements available The disclaim be Commission.

Tom Majewski

first everyone, quarter Credit welcome, to earnings call. Eagle and Company's Point Garrett, you, Thank

If we additional our from invite actively so a debt our also XXXX already, which investor to about deploying of productive provides and done the Point. company information was our presentation managed and you website, very It you quarter investments haven't the download equity net to our for X million during into capital start reset transactions. CLO and Eagle $XX priced We portfolio, portfolio.

Our portfolio and stock. the forward. moving a preferred cash in very And of quarter, refinancing much continued generate significant an to generate of strong recurring contribute line will we bottom completed early debt successful savings our improved to flows. and This

generated our before result, and a distributions. we items gains again NII nonrecurring realized above once As regular common

will expect quarter markets distribution level from certainly into While and the into momentum quarter. second we first are choppy continued our quarter continue NII third today, current our the the

a of decline NAV cash estimate we nonrecurring for our is total investment largest by the and before lowest that has proceeds of the of be per our between collections NAV locked our April's For ahead frame. ECCX a our spike quarter earlier funds X% the X.XX% significant new a up April received notes and capital our We expense quarter. had cost meaningful NAV We $X.XX exceeding on both distributions our very increased the to our over going offering was have Since items We and XXXX. share, our -- common believe the Still, of on increased before to materially of used have ECCB there $XX.XX regular rates actions COVID forward. realized quarter, timely provided date total quarter. $X.XX of of stock, per portfolio that based savings first margin. denominated distributions few are offering our We reflecting our time first $XX.X gains also paid. $X.XX regular per expenses new the the the $XX.XX. are end this before and timely million X.XXX% range. the healthy from share, so the which from end right retire in ECCB share, achieved the notes that roughly or These were half cash was per several $XX.X ever for to at with preferred of ended quarter other quarter, roughly a onset and first notes. the X.XX% fixed-rate listed $XX benefits. in flows NAV first This and long-term ECCY in totaled issuance quarter remaining this and X.XXXX% this share million $XX.XX midpoint interest in us the income-oriented above income since completed our our a common XX% financing. net totaled Recurring

very All you of our prior we never extended any seems debt maturity protecting we've weighted XXXX. now unfunded repo-style been have no our environment, financing have who commitments. rate be and to a pronounced our had what maturities rising April of know of revolver fixed or Those before and remains rate on any financing us unsecured, and to average in calls

that market share shares and $X.XX million an generating We X.X raise premium -- continue capital common per NAV, for the issued to prudently shareholders. our are to of program for accretion at about

D issue about ECCCs the shares. Together, generated the to We sales during net XX,XXX $XX additional of Series XXX,XXX proceeds our these and tapped of also million C quarter. our perpetual Series shares, the first preferred approximately of ATM preferred

we for XX% confident now into per share by to $X.XX in $X.XX strength increased that Given rate -- distribution quarter. outlook third our and in continued distribution with the April. We've continued of rather performance the common company's the portfolio, raised our are the

our at down XX, of yield our XX.XX% was overall the from As of and March end portfolio weighted effective rather on XX.XX%, total slightly the portfolio December. average

levels, program, and muted our portfolio's ability to few refinancing aided attractive and yield flows, loan was Our repricings. the weighted in defaulting effective of investments reset strong our put borrowers cash average levels new ground at by proactive

X completed As deployed I average weighted facilities and Across made million that quarter, X resets new net we was during equity mentioned, the during We X of debt accumulation CLO the $XX.X converted purchases of first approximately quarter, into yield the effective equity into our CLOs. the capital loan investments. we CLO and XX%.

April. We securities find million debt and primary into continue to attractive the CLO additional in net an equity month opportunities and markets $XX secondary capital the CLO deployed and have of during of

about On underwrite mindset, share. the sales we allowed do And hold while monetization a long-term opportunities. per penny investments. securities CLO gains other good with investments sold these a we few sell see opportunistically to realize and we side, a common of typically investments where we rotation Collectively, us

reset cash capital, In addition lower our cost several and our future of deployment the to enhance of the CLO refinancing our of remain program of demand quarter advantage taking and debt in quarter for with funding active our flows strong CLOs. in the to we first for

ahead opportunities in we'll the X points market to to be debt resets muted our the For term, CLO remaining refinancing the due saved to first reset lengthen on debt continue that spreads X we average the we each the XX the in but basis recent quarter, years. reinvestment and expect present months wider in near themselves. an when markets, volumes of out we back pipeline With the volatility of our and in did period

refinancings adviser's and proposition proactive both of with resets noted, consistently CLO our its equity are for time value each at cycle. a involvement acquisition and majority we've key investment, throughout the our part strategy, As of life

our as over the the of our of ability seeking beginning increase value of the X.X X.X our stood X.X shareholders. years. for years the always CLO past reset to create capitalize to to at the of the average Thanks are first reinvestment remaining We XXXX, refinance at year attractive of on environment weighted and quarter equities is this years at and beginning year end This an XXXX. from period from

XX of to price our take also meaningfully. proactive portfolio positioned through prospective the flow on our cash advantage increase company better passage the of volatility. management, despite reinvestment period actually increased to CLO the loan being future actions allow So positions while These months

the manage we As as remaining period possible. portfolio, to average seek weighted keep long as we company's the reinvestment

keenly and CLO for equity. you purchases while facing aware been curtailing remind ahead, that declining of impact positive the Fed rising securities We the are recently, challenges world. have the prices are rates, a Looking loan that of geopolitical typically we rising of are rates

increasing portfolio While mindful are through effective defaults and challenging we've remain CLO been well positioned see And ticker environment, portfolio's company investment like take under NII of repricings, symbol strong loan potential equity we and With we market along. we the earnings to average is opportunities. advantage cash moves Point positioned where the to economic of XXXX of well flows, Company, moment low to continue Income confident favorable portfolio. market believe weighted to we highlight company's yield, lack trades of a which in the are the cycles take of Eagle dislocations, adding as also a EIC. our I'd continued our to number

over take keep of and CLO a the per our NII to After call broader EIC focus, $X.XX is Overall, very markets For CLO on the company's and increase its rising the today you to which our remarks, to share for correlated we'll the I'll of with remains outlook first current and turn We particularly eaglepointincome.com, economy. heavily in environment and to now the of call you well common debt our invite share XXXX. through I'll state the and corporate the NII rising BBs, visit gains a.m. this quarter, Ken's XX:XX at website, learn Ken. generated more. given junior rate over positioned watchful with rates. portfolio time, eye loan to join remainder

Ken Onorio

Tom. Thanks,

notes. realized of $X.XX investment NII the realized quarter preferred costs company to of related and the first D per issuance $X.XX per the unamortized issuance with net on per gains This or of million losses share and for share, share fourth quarter realized per the $X.XX of redemption and income, of ECCV share of XXXX $XX deferred of losses NII quarter the of of losses ECCB quarter per expenses XXXX, ECCY NII losses recorded realized which net associated for with offering in Series of is acceleration and of share For the of first XXXX costs first to of of stock $X.XX $X.XX stock. and and the the and realized XXXX. associated the the net preferred or in notes full the distributions net nonrecurring company's compares

$X.X respectively. above million, These million NII measures of loss per loss by total amount million. Series of regular the GAAP distribution XX unrealized When preferred $XX.X and $XX.X company the of nonrecurring losses quarter The Act at level. $X.XX of was XXX%. and $X.XX income $X.XX Investment compares D GAAP million, share and This a gains net offset unrealized GAAP investment to recorded comprised stock net company's XXX% requirements fourth quarter GAAP included, these income been or net of of first the first of share pursuant Company for are items, quarter. on depreciation March and of of ratios would is total comfortably to income above Excluding coverage statutory portfolio company's the per of depreciation the our XXX%, quarter common requirements in for have preferred $X.X calculated $X.XX expenses million, XXXX The $XX.X per share realized of the XXXX. realized distributions million were net share, in net XXX% of asset and quarter $XX.X debt stock and an first per

preferred leverage XX% at of range with our company's outstanding between totaled total quarter liabilities. normal less of XX% the approximately is market to the of This Our end securities company generally current total under debt assets operating XX% within and assets conditions.

portfolio to the recurring to through or our expected payments the cash the full to are million $XX.X $X.XX share. million company that investments portfolio investment some on of in quarter of second quarter. its the on This in our activity during reminder first compares April XX, per of later quarter XXXX. received flows make $XX.X Moving received A

a million investment. as NAV April $XX decrease Management's approximately modest per and of available March The X% estimated cash XX, range the of share April As $XX.XX. midpoint company's had from was between of XX. the for reflects of we range $XX.XX XX of

distribution April, Beginning During the per pleased the within increase we from company to direct the per prior amount. we A distribute required for reminder order all a $X.XX paid in tax first XX% distributions is its monthly common maintain were one its of of tax effectively monthly share, our of taxable to year year-end. status income increase in quarter, share. $X.XX a to to X

year stockholders tax November the XX, same the income our aggregate XXXX, end distributed for taxable common will For period. exceed amount we to estimate

on of the of per the result, company's income to The final to amount common a final January a actual tax company XX, As November XX, required distributed taxable hand special respect to year returns. as its will share XX $X.XX XXXX. stockholders company paid December record in of will XXXX distribution back files now determined the Tom. call when over be to be the tax the I and

Tom Majewski

so much, Ken. Thanks Great.

with down negative indeed, have both the XX% the the rate CLO a on loans investment-grade take XX note loan trailing Equally quarter rate Let rate in in be measures good the loan a At bonds both stood remain and between first recorded through quarter. was during products. essentially the right at XX% amongst high-yield defaults of heavily leading that loans thoughts X% indicator We market Suisse basis now. defaults points of as first And XX the of Corporate percent or some other trading debt everyone typically and quarter of in our XX-month to and rising of remains defaults quite income about consider and par, points. The environment, low leverage on low historic XXXX. bonds low lows. floating the importantly, end, X%. we during first basis index CLO Credit me quarter, no current markets something outperformed flat would to loan fixed of below were default

during present. over the the a come, at X%. at have loans quarter in big percentage inflows Despite retail to at trading there not stood hikes, of issue which anticipation first loan rate the started So of only par

result, X On the the basis very our repricing versus basis, investing. in where is of is spread CLO's essentially a risk portfolio that it weighted is As look-through repricing loan in And us zero. points is tighter. for this and during spread CLO increased market important activity started. loan a the underlying a compression average Loans actually quarter

March new average weighted increase quarter. billion portfolio's In Cushion where issuance XX, stood a Our was junior market, at $XX collateralization OC of end of of the saw as first the in we or December. cushion CLO over meaningful the X.XX% X.XX% it from the

We assets, also even this investment-grade on late $XX of down I many have mentioned refis equities, year, junk Since earlier. $X billion bonds, so the saw and during significantly so billion of the and of are risk March, forth as fallen resets quarter. price bonds

CLOs is value investors where at trade and them. historical a loans from correlation to leverage perform portfolios CLO While loan and From valuing the perspective, reflects CLOs of loan a least since in in the This a CS factor negative -- some to return would and April, X.X% much at well now have security many for X.X%. both year-to-date total had the perform as loan valuations, XX, continue loans of leverage of index to continued well the the May. a price decrease of CLO debt price look CS way the index May equity, the beginning perspective underlying is of as they

While doesn't we more attractive the CLOs the reinvestment that's market within period. reinvestment opportunity, consideration ample This believe is how presented now CLO often give the the to behaves. market for

we exceeded the in the many the indicative CLO results medium-term although investment have of in and distribution correlated as the loan is, we'll a working distribution returns these our up, strong loans the results, exceeded very collections in and a and actively potential paydowns index. market raised of some securities while that benefit price back don't the year, To $X.XX typically We you quarter's rates, find April, rising should third realized the the for flows in our collections, interest distribution locked-in know finalized so We and the that, Suisse value of net one common investment loan and our past to items, all rate as in income in may within make per reinvest portfolio, moves remains future a our company's fallen first more this common the excluding quarter. favor. investments first vary individual not of share in that taxable the resets, distribution monthly the So of many into of our of and nonrecurring at to distributions And portfolio can Credit often like XXXX later on special think sum once reinvestment periods $X.XX we've our by periods discounted credit the future course, opinion. market. leveraged performance continued gives our once to January Cash will We far the to point special in improved beginning attractive portfolio, over investment gains, of XX% income financing a in quarter. with April's CLOs by enough CLOs, trades paid regular spur nature May, has for again due think summer. nicely

CLO the into XX%, first effective in continue very yields our equity went of attractive source a quarter we yield opinion. investments and portfolio to average deploy and New investments that the during weighted had with

when portfolio, We are our we'll continue refinancings. portfolio trade permit to actively the with managing market and and resets conditions continue and

savings That's in good rate XXXX. we're with was and rate. rising years It a for in floating ourselves to strong investments dividends our a to we believe cost financing the fixed locked very start before financing started also new We're formula. just and of ever earnest, many come. financing investing a in stable moving usually We the we rates will have, cost terms lowest in bonds the company up importantly that for in pay ECCBs, of environment, rate

investment proactive expect opportunistic navigating challenging this we and respect to environment, to be with we our continue portfolio. As market

had end, consistent earlier, will million seeking attractive paying in continue now distributions open sellers. for of you your $XX mentioned monthly risk-adjusted look Eagle to of time particularly the I for the we about opportunities continue We'll the and month Point. interest in sheet, Ken your to motivated and while generate as our and returns. we'll the call We continuing shareholders thank company's those where balance in to questions. dry Ken market powder to As

Operator

with Our line your proceed Mickey comes with Schleien Instructions] question. Please Thalmann. of the first [Operator question from Ladenburg

Mickey Schleien

Can you hear me okay?

Tom Majewski

can. We

Mickey Schleien

revenues. is borrowers EBITDA Tom and it Ken deck, shows Slide XX than the on of for slower growing that

But So the that multiples rising that implies you coverage leverage margins loans are cost inputs. improved to page, on show and previous interest declining, assume on due I is which ratios decline. outstanding

So it conservative. being about Am that down the to a interpreting we correctly? the service do into you could more imply that borrowers lenders ability are feel of if And road? their debt I recession enter how

Tom Majewski

that so we are is if Sure. ECC many in investor this yet of perfect these here, the there's available the Page Well, market on charts And in of presentation. the XX look not data at private borrowers. companies

outstanding are loans during of So on that newly then what show were issued just particular kind just a the and charts top The lower hit it. issued period. these loans two two are

minute, of it at X/XX, coverage the in the turn. a and over you of over from much. a chart things can interest of five the the spreads 'XX a X.X see, quarter. I substantial -- borrowers at if from that mean margin was look the look tighter if the really new hasn't actually moved you look leverage, you up issued a around But if X.X unchanged, suggesting past lower perhaps trend, certainly loans bit to crept you was XXXX, onwards, the X/XX move these So touch during years to up for in debt multiple leverage general, little

last we rising a hair quality, substantially a of use the the you up at components there's leverage as if decade. just half two When measure, rates, it. look impact over of So a the unchanged a

all they the First, float. pay investments news the companies good bad for the the to news, unhedged higher and these The interest. is got

percent, close right if I'm that's what went to X X to on Page XX, maybe ‘XX, you rates, or at kind impact and change chart the look bottom see from can even X to hit of from X%, not happened kind You the of that, of at sure. ‘XX LIBOR

would $XXX impact X Then on -- rising about your coverage, So you you How think the probably bad decline the question, you ratio just of impact there's be? just for grow, EBITDA decline see at Then can $XXX see broadly from rates. probably if got companies declining. overlay overlay every companies that a the have, recession, of say of that there. could doesn't gee, a EBITDA. means You the let's they've times interest expense of -- can

of EBITDA were they by to drop service their $XXX debt. if EBITDA have XX%, to still So

move on base rates the of say, XXX XXX rate goes that. points the still the up That spread, debt XXX like of service XXX Let's not another depending the goes loan, up something XXX, that to basis points. to million, given the maybe basis bulk cost

things, combination. kind because we a as in EBITDA, we But of scenario one -- on rates So most of X.X of the for into live rate rarely point with do market ultimately swap some of of go the with data. good of in where rising the subject, that is are day out, -- hike September. to go in you which my chance stats been the numbers, out revision. think, the EBITDA future. even the bit going most I This of the We'll prone this swaps cushion the opinion, is are situation came the in call to reliable Long it a in admittedly looking significantly which service rates least seeing a the kind see in and look shakes just what's -- their get of what or housing could at on just theory, market We're at And see you in company's very there, up, had happen. a even ability debt. companies a and defaulting terms drop decline still got lowering

experience. in big a heights to and decline in EBITDA a will It's my companies cause in at see default high usually rates have level. defaults that payment cause infrequent loans a pretty Some would

it's eye So on. our got we've something

unchanged stats the leverage the five last see can years. You largely over

You from ‘XX It but issue to impact the about rising can that confident won't be We see wasn't down. get do the period. we're the debt recession. feel we tremendously talking it that, into pretty if service rates the coverage, down, ‘XX of a that was

Mickey Schleien

wanted the sort which issuers ask this on been CCC minus at we about I of was in there's about growth headwind, bucket, your the that's besides monthly in one of in to portfolio April market. know the And at lot update So And a share B of X.X. line with your quarter.

again, higher a economy How see not you downgrades up and limit. from we So to start managing stress looking do else? managers B CCC Perhaps that big could it's going you risk? minus, market, something you Or the decelerates if for the or that more quality feel risk? are are

Tom Majewski

April maybe in So saw for net one months, months I underlying first where was XX downgrades think we the of borrowers. corporate upgrades versus

things around little these move bit. do a So

OC increased say thing -- look, read me year. go X X we exact number again. Cushion X one I'll back, beginning Junior I the can from XX XX to let from the the the at back of number As -- XX

get to is the rated us -- numerator typical over X.X% the counted above a of for lowest at refresher, more are market goes the X.X%, So priced price that a of in loans that CCCs gives And cushion. just CCC and the CLO if threshold ratio. as OC which kind

in on individual transaction. or context, So that depending in theory, the market XX lower are the

it missed, COVID, you'd a far the of like So payments three. minority or out let's healthy that, OC from miss depths OC of for when to serves. period, in did was think, to memory I that some few had really of the a the XX% reduction of missed went was at one don't CCCs, most numerator. two COVID, minority have something the that say, it but some downgraded, -- was or degree most for market the XX. in one-third if remember have here cushion interrupt And CLOs we've where there off X that of the I of loan we wasn't we got that extent going that into Against

As though, look we investments. our these are portfolios, long-term at

a bucket, junior we the to styles. the in deliver those look dispersion And have who equity time. for or WARF Pages find a There's small movements collateral don't that subset the over XX. CLO OC are of Cushion DNA to our see class CCCs, look managers, opinion, of relatively in to and can superior You of CCCs returns wide on things the but like who are trends the behavior. dispersion dispersion of CCC what that's CLO Unfortunately, XX our we and typically in collateral of short-term change variety managers and

Mickey Schleien

can And XX on was flow should that cost if you due and that as rates one liabilities Or of? received, to that we in that share be something lag show which the the the cash Was see decline. indulge of and per repricing else versus me floors with of more CLO I question. assets increase? the the you effect XX of their aware their Pages

Tom Majewski

payments. QX,’XX call Yes. of what flush bunch QX I'm a in and of flows These $X.XX we thinking we about QX had there. like had cash were

when each memory consider -- of of that The usually say of resets those and what call flows, took first period recurring single means transactions millions we a we if XXXX excluding is be QX can dollars have out in we that because of big we couple in calls we flow cash because But every bucket swing. cash them the So as a recurring Octagon couple were of kind CIFC, CLO CLOs, had -- serves. a which of of a QX 'XX, XX-something quarter. we

significant up number QX issue of that flushes by XXXX a reset and were transactions. from So both driven end one of new

our collections -- from a on from earlier, kind to as that an actually on $X, share of you back QX $X.XX per then are look with code April we consistent you were 'XX. bit If 'XX, or of see in little a in Ken QX in basis we of And where QX, ZIP mentioned we up were QX. are aggregate kind of where

were artificially QX -- pretty QX kind run looking the inflated a I'm number, expenses so of anything, at we're distributions But if rate. number, And beyond probably special coming numbers little and distribution. the I see, can that comfortable due think excess I at a of So you to $X.XX the some there's QX, out. as just were mean

generates of a So the ton excess cash. portfolio

Mickey Schleien

you payments, I capital, And sort the Or you're like referring a when world, misinterpreting that? equity in refer to flush correct? dividend am extraction equity of to recap private Tom, of

Tom Majewski

it. nailed You

price CLO we're two there's you a loans typically, payment the dates, new when and buy CLO lower flushes. than a at to out -- principal distribution. that within kind issue reset, in part portfolio, as more able able or -- if or gains you're modeled, be an to that, can There's equity gains extent So on to as out trading a have the of were debt some to And create there well. excess the either like a as the significant on that you're then and second of take things the paid first able

multi-million had of -- dollar and think a dividend of So we you those were put able -- lot out that usual, the XXXX in more through CLOs, and equity we about to take the summer are if recaps. than to

Operator

Ryan Lynch your comes Our from the question. next proceed with Please of with question line KBW.

Ryan Lynch

today. be environment increasing forward, that X.X last First we describe had the to to in of there, certainly the that had year well reset slowing ability or your -- would done I'm rates would we're now, in environment? of today. I as it that what you the reset economic X.X rising your job impressive for to change out as in right just years economic easier change lot potential conditions given really was Does period from on CLOs a to the those question I it able make a as curious, worse? Or reinvestment which guys your as look ability times CLOs certainty

Tom Majewski

Yes.

out I per So themselves term, the one bad Again, significantly. refinancing I there's prepared unto on number debt. rates and that CLO not news. news slow remarks. a will reset spreads gapped our alluded the is in And factor. in with certainly factor. is to se, suspect to Rate do very near rates the not activity and have good

today, issue and bad give So is playing some plus a or worse. a the the so if news a to of little go AAAs, out we far new take, better, a some were lot little on probably try XXX, a with -- maybe it's CLO

If weighted on AAA this spread Page you is it's average X.XX%. look XX a the basis, of at our portfolio, on at

So of we that is and the financing value negative oh, or people very look pay-downs prices done I be plus attractive locked would both at reset those bad the portfolio go refi $X.XX, -- is CLO bad. to X.X what's The we good suggest $X.XX a more cost the it would would good. cost price It's our get really underlying news When having news we're XX month. buying That's this are within and is or today. debt points and probably is at of as yesterday. it in at to near CLOs, money, going look securities, refis times collateral geez, good CLO verbally on resets on not in can XX loans at, loans with for many down while reinvest doing very the managers levered. the the it in our or The buying term. plus dollar minus, like, the points get basis done And you

is in going so a got Fed stopping opposed you've just supposed what's in on try that lengthen increases you've as now. -- our world We're of slowdown we like to So good, largest it. rising remaining The going securities, for lot of period rises degree very some the long provides, to I the we at conditions predicting Fed what increase We've were we're different investor buying good opinion, the where of not But choppier above across event and a of world stuff or and kind We're not or Ukraine. don't think, a in see can, continued happen in probably a means weighted the activity, one But COVID, which and of important. markets, got COVID we that That's tough not liquidity term. style the exiting that. that's we in reinvestment the in and as CLOs some kind and market. into bad did in or average when which them near anything got markets, loans in economic rates. rates

a is got the frankly, of we've number very out So in our facts money. much CLO there, bad against debt that,

of attractive cheap this doesn't And debt more CLO really One reinvesting ever. on default sort the other have And ability important. at keep than is Our a is a equal triggers. any mark-to-market to hit prices to thing does cycle. recession not

But zero a through have fatter of balance QX better opinion, that weather wave in terms we're companies compatriots, in doesn't Ken's row. general, goodness. situation, I'll if CFOs pretty what a looking their in to longer the well companies have to time. on years for I cases. would They in think defaults. probably three revenue they more see you of GDP we ago. a think I cash been XXXX two slowdown have, going quarters balance maturities, And sitting in in because than -- sheets. battle-tested sheets thank were XXXX around see contraction of period able in And stability of say, they my not mean companies It us, in not through are have obviously a and have of big call more Just went for we anything, at a to let's was but lot some so it,

that as folks loans, price thing what below comfortably we a the that where as can the positioned are early again. I in perhaps less see see default it's the hard they while see better future XX% So agencies while of we certainly to market into which below XX, predict is of are line saying. and and some say, movement, think ratings movement XX, are trading companies can we who can go time still seeing don't is rating consistently the activity, do -- could than broadly, we to slowdown saying, time they suggests would the of, loans signs And great. we're say. think -- COVID as much today think, no X% cares That's buyers it one the XX%. We which were of best default and than If kind -- of sellers below economic X% I which today, and

Ryan Lynch

spike That's just in all all were default. it a not yes, picture Also, recession. we seems obviously, the good economic equal say, huge in companies. all point slowdown like, same I regarding It's looking would the automatically a at the

better and years can eyes preparing open least parent least for mean the accordingly at today You the them talked what's today stop being than to at but a couple coming, that. everybody ago, at headwinds doesn't wide about positioned of the

question market equity so had little other I'm down don't in CLO to prepared or interested your get of The if I the have this I mentioned a low debt prices was happening you secondary tranches. on traded investment-grade CLO what's color Obviously, your for and remarks. know -- X year-to-date. in or maybe points leveraged bit loan

trading more And I'm it don't issuance, has mentioned like as I'm market. I are what I QX, would if out, probably because mentioned off, sounds this they And been but in wondering then know primary primary the between was attractively AAA the did you secondary just opportunities is debt widening purchase of capital CLO issuance secondary reinvestment purchases? trade deployed have that assume so prepared also just how out they activity on separately, split attractive kind have comments, shorter secondary you paper if new priced said you those your the curious your they periods and of just in and what of

on continues curious little you viewing if in be loan prices. you're more And just there should we that today? turbulence more market, to So active market a expect in be how to that

Tom Majewski

collage Yes. of It's of the a all above.

new the investments we do I -- three said. and based accumulation during things on If converted you'd nine quarter, you did have facilities. math to equity We made

three the out three that – were we So the nine. were of those

driving that the ship in six and other the of opportunities. majority We’re way we in the primary Off mix normally other kitchen a the do. the was secondary

if cooking, April a tech we've $XX I and stocks well market was we that in of other would cold million of CLOs XXXX, back around, else. basket which CLOs have Eagle X.X% down high-yield in was new IG stocks, the happened than And that's flat down and And secondary majority, broader down and a later got a are as for is the bonds the compared the loan since you that loans later. CS of the and Point about other mentioned and a equities caught first loan rolled index to are ton little everyone of also issue of catch -- ground like once So and we into That's purchased. secondaries cold down beginning kind markets And often then are market. kind look was ran amount high-yield where the May the largely at if and often little here. what quarter the index a nontrivial lag it May. down

caught is that cold. CLO what the of the price many is securities down. So means We

the to at presented what consideration a have reinvestment correlation portfolios that's -- believe securities to is in the CLO some a time, ample from that the Credit buy least at loan here had factor willing within in perspective, opportunity value prices market the to we put of I security CLO the like index loans the for CLO So also where underlying to historical said same valuations But Suisse traders period in attractive as generally leveraged underlying the they're the this. don't and gives sell. reinvestment CLOs times more loan

if news, The going loans you liquidation my so the have bad CLOs the flip So worse side, must down. "Oh, say, stretch. aren't by be are god, And just a today yields, rallying the you CLOs these In people to off." rates -- any or buying of world, and in the demand debt higher risk-off liquidation CLO discount junior value equity. apply loan portfolio of is are higher value falling. general,

credit wrong gee, enough have two way. reinvesting And the XX%, is, people What at you're think that's don't I think mispriced. give you that's kind to going something XX%. things of So I XX%,

dollar market where price kind on next usually $X.XX over for of basis or markets results, that future loan the the longer point month XXX give the than you, month prospect AAAs And in-the-moneyness XXX the goes area those can not a to we got of take, look-through the average looked prove AAAs roll quite returns on down I weighted that due basis a think May, the my are a around And clock in of Obviously, in that average are the prices credit points of give the to measure or the CLO far of of one today. loans And as loan Our performance and of things forward, not we've buying good reinvestment three option. quantitative are these is any a April, giving the lower I equity. on we're XX% to past if is but our years indicative even are end were in is kind that our of portfolio. market. the

piece that the puzzle the So doesn't that's picked get of up.

I invariably, kind puking news what But lost -- we way of of of Now the XX. was. that coming type people was at out we we're is million XX for date balance cheap we of in the well There's Portfolio sheet enough there's shorter and hedge at seeing stopped And have mentioned not -- flow some those bonds point see not wish the on continues our cash more left our there's our $XX people excess April not investors coming distribute. stuff cheap opinion. generate to had bad fund equity in center. cash selling always transient. right way, who we'll it

offense the these So we on much are very in markets.

Ryan Lynch

market That's that. how in commentary are on what's the playing in very helpful kind on you color and guys going and of

for time. So today. I all appreciate me that's the

Operator

the question. your from Seeking Alpha. Bavaria proceed Please The comes line with Instructions] next [Operator Steven of question with

Steven Bavaria

a put way if secondary readers my prices a emphasizing of You find about when loan loan same you in down, CLO a own drops issuer kind really at slightly just this I'm But doesn't on more mysterious. again like that find debt that But bit reinvest answered when me being and different I the par. market lower little let matures, your And are able the of your actually decrease, to then drops. because that I CLOs paper, it obviously, retail way. to at you're talked equity than and from it going secondary rates, the as at basis, I'm glad the right, is, nonintuitive who try by now it of your to fascinating, maturity at question, put par thing then explain at value exercise I've often my to time, to right, it basically ask back that got and back right? it put business increases loan the of we've put the the NAV a market ever course. static but your I I understand see and that to

Tom Majewski

I publish would out it transcript print and right that away.

perfectly. You got it

Steven Bavaria

do I and do. I I will again.

So right. all that's... Yes. I mean

Tom Majewski

I'll show an extreme.

levered. from If was CLOs a down equity in CLO out wiped of you month high every value. times points are loans the level, X, XXXX, March. April an XX think XX were about liquidation At

what the see NAV over that mentioned period. we you've the you that option way back happened -- to that to our It's sounds two-year that can in seen On bad. other surface, Well, put and default loan loan debt the every will is or off in the outcome. mature company, our CLOs has every to every it's And binary CLO par, due. CLO at a pay either before

And our the we've to it in So opinion, other to runway mispriced through that is got option, see side. the market. the by

things, And don't loans of we habit do on And or get loan very majority off we've funny -- one at the find the liquidation have people value two every focused out hold a we Some what's to par. paying and these of can got have liquidate. will runway which the vast one. to

Steven Bavaria

kind if about people you often is in news try you CLOs NAVs thank I know, because the lagging. the that retail to that complex my thing as investors stuff are that's understand good, clarifying Well, English understand. And to when essential to some Exactly. think so don't fully even is surprisingly, a put stick of plain writer for make ordinary for as and

keep up work. and very good anyway, the So thanks much

Operator

over in the like Thomas no are I'd back hand to closing queue. call There questions to further the remarks. Majewski for

Tom Majewski

appreciate much. We everyone joining. so Thanks Great.

our Markets is The key folks. So to for takeaway some the positioning things things on when way, are screens we've Hopefully, and a we've markets offense I over get to got years throwing two last curves stay done work little continue going are powder, here for extent tuned. suspect. read. a the positioned be of in to wonky and lot stay a we the dry the

speaking forward questions. soon. everyone's if So around time to interest. you. follow-up with you Ken Thank we and today We folks and are any appreciate have I look

Ken Onorio

you. Thank

Operator

for today's Ladies teleconference. Thank and gentlemen, this does participation. you conclude your

at time, a and lines have You your wonderful day. disconnect may this

Eagle Point Credit (ECC) 24 May 222022 Q1 Earnings call transcript