ECC - Earnings call 3 2023 | Eagle Point Credit Company Inc.

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Operator

Greetings, and welcome to the Eagle Point Credit Company Third Quarter 2023 Financial Results Call. [Operator Instructions] I would now like to turn the call over to your host, Garrett Edson with ICR.

Garrett Edson

Now everyone should have access to our earnings announcement and investor presentation, which was released prior to this call and which may also be found on our website at eaglepointcreditcompany.com.

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

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

Thomas Majewski

Company's Credit earnings Welcome, Eagle third everyone, Point call. quarter to

we continues done company you despite perform presentation additional haven't our investor which already, company our the concerns information macro about in you The download to so from portfolio. the to website, market. provides volatility solidly about our invite and If

of NAV flow, equity XX.X%. $XX.X million receive which and distribution average Our per to of yield the weighted deployed robust cash we during of we remain paid We effective purchased into and shareholders, cash quarter. $XXX million common flows the in quarter in excess net million during or CLO attractive $XX.X share investments. our investments is $X.XX cash common distributions well capital as expenses. new Recurring had by of grew a X%

three despite CLO is of months. from reinvestment of which period of passage equity steady had remaining average quarter last X.X quarter portfolio As end, a our weighted the years, the

reinvestment average is as defense possible future our as we As volatility. believe we past, long in have keeping period market our against best weighted stated remaining the

estimate again of per share. quarter, third between income June a share. realized end per our the was XX. month Since we as increase $X.XX and NAV be September XXth totaled end common at per the $X.XX our October share the of net $X.XX quarter, to is and NAV X% which For gains from investment $X.XX

to capital investments our flows the or recurring deploying total continue portfolio share. million aggregate actively new common portfolio share, received quarter. our net cash per exceeding We $X.XX expenses $XXX million roughly $XX.X common new of We during portfolio, on $X.XX distributions manage in by and our into per

monthly were received variable already $X.XX all Along have of from per growth portfolio. We as flows additional of quarter third per share, during share investment distributed an continued to supplemental and the regular per October our benefit share XXXX. for portfolio greater strong month Inclusive first quarter our IPO. which distribution distribution per to investors equal since share our monthly from our rising October, of of in we've $XX.XX common cash for we we $X.XX rates, declared of our collections performance our of cash of each $X.XX XXst distributions, aggregate an with than now distribution the

of and $XX of $X.XX million providing These prudently to generated approximately at a new during investments. the in powder had strong thanks part of to At sheet, October, dry million cash cash our October on into deploy of the to we quarter. $XX.X balance flows, the with end us accretion ample generating a common through raise million at premium, shares continue per issued program proceeds also market the We X.X approximately NAV our capital share. sales

continued which in protection of environment. rising financing fixed rate remains gives All us a our rate,

prior have April no we XXXX. Importantly, financing to maturities

a XX.XX%, of and from effective that's As on meaningful equity at the of end yield CLO average portfolio weighted September the the was XX.XX% XXth, increase June. our

should yield yield help a average the had prospectively. of which equity the New during purchased weighted effective XX.X%, portfolio's we CLO effective that start quarter both third average weighted

over on September XX% based Additionally, our steady just XXth. CLO of market held yield as weighted average portfolio of equity expected relatively the value,

accumulation I the certain equity, CLO into primary debt, we As million and net other loan capital $XXX deployed related new junior secondary CLO previously, and mentioned facilities during quarter, of investments.

by that we large, the investment believe for most on our appealing While there effort represented focus CLO select and opportunities are primary secondary that we market of attractive other and equity returns. value, investments offer

focused take EIC. I reinvestment As would invest we sister of us EIC opportunities reinvestment our longer enable moment Income portfolio's XXth, prior average weighted CLO September equity periods our through debt. under Eagle years, the CLO navigate to the which quarter, in stood primarily with to unchanged to generally symbol equity invests a CLO in highlight and junior remaining X.X at period from finding to also periods to volatility. remain Company, company, of like Point trades on

income third quarter, once investment the nonrecurring net of EIC items, the for per certain excluding common generated again distribution $X.XX exceeding share, quarter. its For

to you keep remarks, continue hear EIC through invite $X.XX has to on more. take January. Overall, a Ken. over portfolio remains very I'll managing EIC in EIC's after generate investor rate we and NII, the you remain turn now the increased call share the state common CLO Additionally, call a.m. its current broader rising just I'll by loan eye to performed the close XX% economy. our corporate markets. of active and through and positioned to to After distribution at environment and to we in strong beginning per the XX:XX join well well Ken's

Kenneth Onorio

investment of for per in September share, the GAAP income net per appreciation quarter. per company and per net approximately portfolio the and inclusive NII net million GAAP of These net was of and net on excise quarter comprised other Series appreciation $X.XX included, the third quarter at of share million quarter stock income compares unrealized company's of requirements XXX% of coverage XXXX, million, ending compares income or requirements income $X.X nonrecurring or On $X.XX of stock realized the gains XXXX the company's of liabilities recorded distributions to of refund and on is September on tax share statutory second common unrealized the income company $XX.X of D in NII $XX share offset of $XX.X were pursuant million.Additionally, net investments quarter appreciation of per third gains a held quarter XXth, the debt ratios million Investment total and share. the respectively. of of recorded are realized Act $XX This income comfortably unrealized certain above recorded and second capital XXX% XXth $XX.X XXXX investment and realized realized which The per quarter quarter, This the of share for company $X.XX gains third and of is third expenses value XXXX. $X.X by the $X.XX to of asset per approximately for income at net in $X.X calculated $X.XX $X.XX share preferred of the million, XXXX. For XXX%. of to GAAP million, fair The and for GAAP Company of the million. comprehensive losses measures and million of preferred $X.X partially $X.XX XXX%,

preferred XX% Note totaled operating normal current assets under Our assets securities less at total the target is XX% to of the our This flows portfolio our expected quarter recurring of of payments leverage in company company's on on $XX.X generally quarter. approximately XXst, investment and are debt million. some the the later to between liabilities. with quarter to of investments range portfolio that company activity within XX% market our end its total outstanding October in fourth through conditions.Moving of cash make the received

per range Management's October million XXst cash September midpoint estimated we of the reflecting investment. share, decrease available for from of had to X.X% spreads As as widened. $X.XX of at XXth October $X.XX as a $XX.X XXst, company's NAV of the was

monthly share supplemental per $X.XX common monthly common share distributions During per of aggregate share. distributions distributions three of the three quarter, variable and paid we for monthly $X.XX common of per $X.XX

$X.XX per also I declared March over We end the through to now share of distributions will aggregate XXXX. monthly back the common call have hand Tom. of

Thomas Majewski

me on update markets. Let and a provide CLO the loan quick

Credit total best It's continue year-to-date its solid Index XX nearly the in and strongly. income remains to as Loan full better a generated on have September X.XX% return indices. XXth loans had X.XX% pace October return and year Suisse other years. in far fixed of index many another in quarter perform through The is to the than at Leveraged month On

saw five During quarter. leveraged the defaults, we loan actually quarter, down the second only from in XX

a corporate default senior secured was single month again, in evidence loan not In September, resilience fact, the the of loans. there of of

As write headlines. a concerns result, that macro CLOs, despite the about people various in

the over facing paints loans reports While rates, and interest rate data, different rising of headlines some in defaults the recent our the the actual picture view. than number a default expressed very have concern market

positioned become XX XXth during the lenders in issuers in defaulted to prices, credit in September to far below collateral a the next and are a their through annualized losses trailing their of loan par the of tackling spreads expect and near-term the offset stood a CLO As continuing average provides selection defaults. we at offer improve relative historical maturities increase This well their averages. further trade higher points, roughly the underlying discounted weeks, strength at company's maturity large loans. than at well loan of proof of in loans effort and XX% our occurring. managers par the the extend that today's loans in portfolio X.X% of The valuable reinvest quarter. market. Most continue few a remaining CLOs repaid be OID refinanced With all X% market XX-month and management to issuers declined to year debt, on as proactive discounted leveraged value construction.Approximately portfolios active represents dollars only Barring they newly high-quality to defaults quarter-over-quarter to to our secondary have an shock of exposure result, with end, to at remain from rate and further number loan few are for to a better quarter XXXX basis default

the continue CLOs the a weighted X.X% spread basis, Meanwhile, at months XX portfolio. to percentage of within to the CLO ago spread of underlying debt on spread, that's increased has the unchanged. at we basis our receive As on by XX XX were stood the last tranches September point the in concentrations end XX a X.XX% opportunities was X.X%. to have loan by CLOs end at turn months. portfolios spreads our the in XX an issued that is trading September. CCC locked This about On as basis of CLO and loans increase remain our excess portfolios CLO's and below within measure in increase result, par Notably, compared XXth, average equity June. points our actually weighted increases of average build which our their look-through of numerous

gives which future XXth, weighted junior our OC ample which stands average potential us was X.XX% market portfolio's as September cushion downgrades Our than cushion the losses.Our withstand higher X.XX%. much at or to room, OC portfolio's in of average, opinion, remains

market recent that having seeing be would funds refinance market. out trends example in Misys, the CCC-rated is increasingly we of One the software a this and of are private BDCs company. which the loan syndicated loan loans of credit A large is

par wish For is this represents our and and This a great. lenders repayment exposure. new happens. We in CLOs, more We in reduction their CCC Misys, the hope future. frankly, well this a of

to of below the $XX credit remaining again, XXXX issuance As $XX third through we expand, continue. XXXX's of the $XXX and little in favorable a pace In billion saw XXth, CLO continue a billion market, September tracking funds to we while on CLO year-to-date trend billion expect and once private pace. BDCs quarter to eclipse this new

X-year up, tied be where average AAA than We could captive today. bit reset noncall ReFi our view, portfolio on in in and to were picked otherwise, during essentially weighted this funds, no of to CLOs second of is CLOs but half the refinancing period CLO a equity few related less are. volume was are by sensitive backed we a to of a there's CLOs with our far the return where XXXX well level which, which fair market.Indeed, believe issued continue reset small issued activity have quite issued the that activity was equity periods CLO

represents give nature CLOs embedded market this in-the-money does that the our value believe it portfolio. hidden the credit the market some our doesn't While financing credit, of in give we full and

this points the average XX weighted points, roughly today. is money and Our basis about spread basis AAA in XXX is

and in as environment happen To loan As generated an loans believe or financing grew for right outperformed to very share. well where the per we during CLO loans it's sum buy of we equity structures consistently term from have up, equity and the debt average set continue. par X% expect medium net price the NAV our at of up CLO quarter. corporate broader noted, discounts CLO they with are to volatility have a and quarter seeing to that over done using income structure paydowns other common the and par particular, markets We're by we past. realized gains in that the investment now weighted $X.XX capital We stable

to of flow through million strengthened the end ATM deploying new quarter receive supplemental during we from liquidity March $XXX $XX non-existing and distribution the investments. position, investing cash third cash We and than yields, capital, cash our million October, deploy our have of we about quarter. third continue XXXX. per our more robust distributions accretion did share in the sourcing monthly new to already net in active and variable of very fourth we collected At We NAV about flows attractive of regular programme. in We continue of our portfolio generating the remain through further and terms have investments at of $X.XX into quarter

We variable you our in distributions maturities continue XXXX. extra for further interest prior at questions. in attractive opportunistic of and Point. manage with also proactive and your locks form cash to in years thank investment your Eagle remaining entirely increase and a or time will come. our for fixed flows.We to consistent from a portfolio's cost and portfolio financing, to period no have gives cash of many I we mindset. We cushion now to remain well strong protection given company's maintain open special in unsecured, us OC long-term reinvestment and continues interest portfolio to as pleased call average any This and XXX% positioned, and the the remain we to weighted rates long the the recurring Ken believe to We funding very the proactive management return investment investors rate be

Operator

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

Mickey Schleien

to market. I up about primary Tom, follow wanted your on the comments

captive normal data of You the noted. a holding take in with I CLOs that start wide seeing. funds volume should of market existing to we're you the noted reset primary that on more on your that refinance That in you function market pressure more you AAA to that it's would given clearly process pretty it been fundamentals, majority of and high basis, that operate good. it spreads. say, going new or something or difficult financial lack issue finally performance for makes to which primary as spotty or, What's That's the for as expect are the puts is that to a the overall mentioned, it

Thomas Majewski

years. and the ebb is guess, AAA over flow, I

our everything. and nine average it's If weighted typically periods down. where absolutely The bad think years back going at times are performance, is refinancing you during market's public spread, look if we've There our for now. again, news of to been time you ripe resetting the those and we're loan

getting were that's spread going happy of I you'll we the little XX and loans basis it loans bit do in decks, loan are of you'll impactful time, and look one I loan is also or the ages going resetting wish reset if -- portfolio quarter in during is I'm trickling website If see NAV obviously picked think our had wider. leverage -- certainly up very of well. all didn't you today, the news these you while themselves stuff of At downward. as ago, good see The we we news in and XX quarters, back today refinanced here. drivers mania It's by same went average as and multiplied bps, weighted XXXX, get at resets. that on the to up points our we The up CLOs, any very the X% keep at spread bad the look the portfolio as of our ReFis reset many a spread XXXX quarter.

of broadly in there's regulators the Some fluctuation, Obviously, on always the certain going Japan. the things of currency investing. of in world AAA

questions, world. banks we banks the of the missing of that's number many segment you of AAAs to U.S. around although active.Some we've be will country more continue do AAAs also and even participant. see quite are perhaps their attractive new filings, that heard some of market good suggests of are even more That's rules NAIC securities. There's the their We in ask as believe, banks more make to considerations will center money all banks. attractive would Indeed, some the impactful of more that for last see Probably Frankly, look be note some there that of. Also there. the news one can the largest market a X%, Japanese cases, underway, become you to the CLO hold. one might proposed, CLO holding of that the in are Basel nice have if in large the portfolio most some the we

obviously not While we the our day, disappointed, is difference we're the we're spread end liabilities. what of about and on and assets the of refinancing. our resetting the between the care At spread

in assets it one have quarter, but to up. habit a spread win of we're right we good seeing We now. on through going typically spreads made both This our of we ways, loan our direction, of like the them which going having

Operator

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

Ryan Lynch

quarter the bit those equity trends drove far that quarter? was to guys you a quarter? Do with most opportunities thus decision secondary you what a just the bit some fourth talk the continuing quite this seeing market. you quite combination see about that question equity about into first guys of of of Can of My this sort secondary in with in to of you deployed you talking just are has raised do combination raise

Thomas Majewski

there, both CLO, or great. for the applying majority, frankly, equity secondary spread just and model a, out, is we in opportunities into punitive in a favor. XXs models they is I difference that yield yield about supply frankly, types secondary in adjusted there's our is a new There one and, to moving see answer the new typically loss of the the the time, investment the build spreads pencil where in minority company tails ads came portfolio of was by spread The Yes loss-adjusted robust actually mid-XXs. general, widening, in in at other last over someone well those cases, a those of was if investments stresses positions the we're The the to sellers pretty came and positions investment which portfolio, large, see at opportunities, that look into all that to privately at are portfolios on where stuff They're in CLO you a of tightening loan terms in basis. when talking minority transactions. the for Mickey, the question the the going to spread opportunities. reasons some attractive getting of to path strategic where, CLO secondary in -- negotiated Typically, and to those spreads you're debt versus pickup participating. lower be with majority

process wanted it's in and a are or price. Some just off the over a negotiating via phone where a comp. Quite done are few done bids sheet BWIC

of probably what and up issue people transaction there or want ability CLOs, remaining own will we degree our even current sellers some as knowledge of The focus little less much is technology bit, very transaction but of yield our that investors We possible. is newer was, brand who who CLOs, funds didn't were quickly We value they reinvestment period the that We to saw our edge with collateral be and not we as other buy, for signing up the documents we pay maybe on managers. defense varied new cycle through #X as our to seasoned, to any cases, weighted through it a all model knowledge Maybe stuff CLO that the ago punch give as on out. using on but to of winding portfolio keep our analyze typically ability, nearly from, reinvestment saw long I know proprietary and some ages for. types maybe The period. and of and reinvestment our average have possible. Some down, COVID, in the up their period appreciate new got so greatly. just wrong XXXX-XXXX bought widely one our two

it's While early the we secondary to that a nicely market, in expensive in market, 'XX. pretty issue get get some it CLOs, very of new picking can lot up the vintage maybe XX very,

Ryan Lynch

market. had The was are about and trends high-level the a that other question private some CLO in I question market occurring the credit

these are the the CLO expect XXXX. of to very one Again, couple was loan the ReFi-ed formation not some was recent I've to mentioned of That's they projections XXXX. that market. expect down I'm consecutive in loan that a be likely forward. accelerate Syndicate from the if subject broad they just private that trend from for certainly is change curious, from credit so. to continue, You seen different that issuance in trends market banks A level on going the going to year those CLO third estimates in just much that

trends increase Additionally, middle about, are either for loans, in and big he's market just mean what middle in that does balance be CLO then business? there's going talking your sheet CLOs. from actually formation, of curious CLO or these you in lower private this is funding increase market a CLO if both sit, more through there's where Bank in formation proud trends that credit providers middle-market their continue, XXXX of XXXX, America, them on to I'm an more as holding a or them going report formation been to loans those already who and big increase recently

Thomas Majewski

bigger plus The part. or another is of to a or the called We're working newly component one formed $X it. is component going new the in trillion get part it minus market. issue, Is

a I talking at down opportunities. At where those combined. remember You issuance is it numbers, that, to we've are not $XX where it's be more date, billion. be folks billion two specific All secondary opportunities the need situation investment it robust, of issuance when in million $XXX even got still fine. in BofA years of seen time, down, but could Certainly, have way shortage from had couple billion a don't about look Typically, given a might is we the same where we've deploy down, more when down. frankly. are to the of like going going a than while something from $XXX we hundred to to is or year and be had

something, to ability term of is lot medium I a in lose Our the short source sleep frankly, investments to over. not

Importantly, ECC also in interest strategic manager. has CLO collateral one a actually

certain and disclosed the as footnotes a continues It's of a investment one a beyond is way actually owns piece where a You of in other. portfolio permanent in interest the independent or meeting requirement can share. revenue -- that our collateral revenue is see and further manager but ECC the the that

One with CLOs of have something and you'll the a want, continued special we we'll is we that large, for see, portfolio, of a to very, we raise that access. number things to These to there's across access very to have well opportunity an it's Then have our and two relationships and we've while capital place tie done deep finally, that platform small if case have with we elsewhere. with them. performed that, are certainly us, It's get look obviously expect a things continue have you by where select very issuers deep we when in issuers.

place As long performing, they as us. keep have special with they a

market. I a the different to advantage. we're different the deployed. a CLO of put have to the Then access believe durable world, including credit gives raised it. a whatever middle-market coming That keep meaningful in the vehicles, the we different CLO just increase all and private than us or equity into investment investing to transient CLOs, the CLOs like called of more market, formerly our holder which portfolios keep to on is do ECC, said, Our of fully think, during Across same It's the we point of financial was in didn't and junior of debt back label kind general, you've the better syndicated the 'XX saw largest to 'XX better rather That equity because make managers credit new and fewer crisis CLOs. equity middle defaults as many they frankly we were points syndicated market they had underperformed and that have called senior than recoveries experience what frequently the a XXX DNA they broadly thing. collateral going in wider. then, is the to loans, large, the of back loan, cheap CLOs, in reinvest basis By while terms

a very credit of have middle It's amount small in it's We portfolio now. our or private small, greater right but market exposure than zero.

at by pivot at done be just $X.XX good with to -- $X.XX Some capture of and secondary go dollar on the way. ones new and we loans are can the the extent that that syndicated value intentionally, that's with believe folks it who really

market/private or a firsthand many at minimum with have middle relationships personal credit all We CLO the issuers. of

very we're over in happy or or about that. Frankly, CLOs who be year an portfolio issuers who look experience when folks suspect cycles, know will how actually my of on get increase just that CLOs things in best smaller returns a might loans to CLO going an believe very, an have is have set managing of I that would a focused assurance, coming With private the even through run not for running from number time better world. in at they're it's a Running estimate. market, be two. the it's No choppy. dipping BDC we'll out that, CLO us, in a toe for BDC long superior very but their different to getting are deliver folks the just if but than CCC we As worse. smaller even we see credit taking our

Ryan Lynch

and of expect You or hit middle-market it's XX% is is going we these be XXXX, CLOs of market XX% kind to as the not, just projected it's my XX% next has exposure the at was question share historically, XX% what CLO looking be and been of on noticed because of to some market. statistics but market to projection be your I middle in that CLO and again, the going to up right to it historical

Thomas Majewski

as, will We That XX% we, suspect Stranger happen invest, things stop we where be nut. cash happened. as me raised we day a I me capital. would can where the it I know strikes capital. we'll where a, well, raising the the day strikes big have what have

we CLO, on the accretive in summer shareholders, capital raise price? in what ground good we the There's would be money not put a and deploying capital. time few NAV the when to market accretive both When was to few an it's a the think I say in who we capital type to can a raise opportunities. the can at see at we

morning. same-day October as issued never little in wish company little the not issuance. a of times is medal than That's vast cash attractive up make actually can the can will of push Christmas our ton it's issuance. well when complain premium year. XXth our but we the very that, the push the four I was kind The all I make than ECC, Again, to that we call works get -- is basis The cycle. up challenge it's do XXth, a per of was phone as we like a simply and lighting more -- something we trade see very, more programme. a managing quite when in effective quickly. just-in-time about on getting frankly, on NAV simple less something bit. one harder. the CLOs the gas the was -- this or here, We're on the paper We we a tool ATM that basis. pedal we portfolio a are It's it that that pay X%, money it that little see as worst in really average that, ground easy, What a for the a You well, cash why a it never the to -- often, There's majority scarcer capital and but it of from in it's problem, little a active the bank, the we're We XXth, have premium was seeing our other were April times cheap. when while was very on of times January bit that than four offers from really was we saw we're is a year.

Operator

next B. Riley question with the Instructions] Howlett Matthew Our Securities. line of comes from [Operator

Matthew Howlett

your and advantage before the some last that either balance with My it's keeps back for I mean, The putting preferred is or and question spreads is just asked be be been sheet. on the balance time are or XX% where I yields putting deleveraging I the to in growth given the term worth. mean, of are preferred to question, great is, few taking the given debt improving moving -- you're we should with the and think on look, up about leverage at weeks, just rates less? think and term these ratios getting elephant I to the you net last -- looking sheet room your where I thinking talking got

Thomas Majewski

sheet. the certainly rate. I balance Bloomberg the managing XXth proactive maturity on fixed balance love nearest at screen, the my very is April looking is everything Everything We our are unsecured, blessed. We're is Xs. the in side right of sheet. I'm of

ACR try we'd on even. raise have some debt. debt some both preferred well I band.We're that to ideally, of assure comfortably looking looking debt to and That's do. sometimes around in art balance out good, the make ways now. a and so it where we comments, numbers. we're OID look we opportunities, we're every stay -- of all that at rules at not and science We and were as Yes, at with preferred perpetuals That target We've think in within band easy example, our there. capital single I XX% of day, sheet prudently and around XX% the and you, within right XX% creative can leverage, raising continually to things.As including that's much an our company at preferreds by kind keep We last us that's XX% size some design. there unsecured as some judging times, intentionally these which a on of run served Covid,for all the on

maybe sometimes to below may side is that, once at capture always we'll of a continue sense company it thinking Sometimes the it's little a of while. the point, stock accretive handsome we've come we're a to a band. of our balance time. and a in be you, above, to to a assure double-digit premium, the when little at we've opportunities that close Ideally, both, the right up trying more premium but gone gone sheet. that we're can creative little midpoint I at to of things makes over with balance common equity side, on look at a flip of The

Matthew Howlett

look, could X%... debt open issue, or you you deals you seen are I -- equity, we've X No years? could the tell markets do high-class issue you, in a problem, I the today, it's mean, but think

Thomas Majewski

don't hope colleagues banker The candid, are be thing I like right just listening. I really to now, your

can't seen XX middle, what in get like years, a get about about some out "What a I space. CLO-oriented XX years X-year open I from can stuff $XX XXXX, that two to done puts 'XX. been say perpetuals. got that. be XX-year -- XX a or I done when we'd right I that.The haven't format. the a we in much do I'm us, used You joking our maturity right I said, click. point in done like have and I 'XX say other to have anything. stuff us maturity. Act Five in to today, one

we'll other the securities stability seen active invests in Perhaps in up own. be with We recent -- up have these 'XX to other more I'd north our some here X-year maybe some have to as of in it. and ideas in business Perhaps not years. we do think I've deals well, that any not range. had today, We maturity a maybe of rates I wall probably I crowding from going there. public some paths there's midpoint put to obviously to to sensitive am I forward. 'XX, with that's into vehicles $XX five always sadly the our the our come if across market, don't which, of have come and laboratory where an the things able -- to closer people get

Matthew Howlett

looks it's you up be, space. modestly mean, out. a if delve the I attractive have I in would terrific can the balance wanted mean, that Obviously, sheet, and on leverage lowest it particularly us, how leveraging worth to we I accretive the keep back obviously, pointing down coming math do to very just on yields the the question. here. into

down defaults it's leverage year. see, market about you credit the I thing. seeing actually may the retraced. a differently picture next -- defaults know talked what going I mean, are that have big loan You

Thomas Majewski

Just around year. most to last that data XX-month I X% was next down specific bit that way, little some defaults not the of to declined versus the predicted clarify, not all believe defaults. for the going other measure, predicted I sadly What missing but I quarter banks did prediction don't trailing default versus rate say a XXXX. -- is a market recent a

last if questions plus percent. X% might been I XX% memory from XXXX, get CLO, I for us or We I bank year-to-date. think saw think, index have That serves. investors. predicted BB one up,

the debt or I take, floating call, are is the higher is flip get ours. of coverage as time to to return higher of just pay this constrained. is remain historic to going side, have All is true that not EIC ratios the XX% our cash Companies averages. great. than equity companies Compare roughly looked problems year. this service interest getting It's a company's said, the for flat give have are rate their really tighter. rate During companies it, is people of higher even service below on flows. The the year. this all pay AG, at well these that and What debt to lot defaults goodness, All last my

a the interest now smart. time pay to, you X% base research CFOs base analysts a goodness, run the consideration it sounds People be figured rate keys X% reports give have are Private the never plus If Against remember constant. that the tight, rate a pretty are went a won't X weeks. holding on think able got I silly pay said, a "Well, short rates to pay interest plus lenders. kind service your few to more. company to didn't over your you and for little of can't spread, I I things if to don't of rate happened, but move that, my market handed If it's even debt from payables what pretty equity say enough slow to everything loan its to percent was where smart. kind $X this, the equity about. are sponsors think of anymore."That's its spread

You sell the division. overseas

aggressive of sort some XX% mezzanine loan. for call You lender a

see, but average long the and in and company, it's revenue market see according it's to way we you as your As can EBITDA below data that and deck, in investment-grade back, our in this growing the investor are the there.

average third-party I LCD, is for all up. and the think that company it's investment-grade data revenue so below shows have we data, pitchbook EBITDA going

little is of a and couple for a you top because get growing, keys a and is the hand tight business over months. line you're line growing going payments to the own bottom If things the on

For two. companies from you month. Uncle borrow I guess ways. Charlie find your to pay bill that

analysis I things think behind without lite. scenes the a keeping realizing covenant doing stuff. much state two there's too in Frankly, this level of the was steady

it some early. on or below levels. of you don't X%, indication hair Certainly, going guys the some probably a debt different. the A market covenant, lite market hair reality one got things the I at you're is lot be thing, more. the you that the but going the Against below names. of trading a XX% XX. name service is means of XX.That's research is distressed good there's That not Either have to CLO in is want is is loan or pushing think saying the default. to of market of in If mercenary friend. default. might it.Then they're be had give a lenders it for Covenant a and We some our little got selling only there who take to

Matthew Howlett

why cash to this the good it? gift Then a the recurring manage How I these get question there's mean to reported October. we up cash mean I still way flows still that last it? I huge project didn't flows flows, Cash taxable we stuff. cash I last NII. when keeps to that dividends be This cash back between is on -- -- way the basis. up GAAP the it Why GAAP big the were I all above see October? just -- you expect special forward, recurring disconnect. flow long. always go the what's we flows, this My in assuming to and were is long do going This driving mean have in giving. the

Thomas Majewski

which so within to done, great. We're be distribution close that's which shooting get IPO, getting $XX the to distance to will that since in

there leverage. That Just of and period of month debt got the kind a big kind just the bps our legal. a basis on basis serves on every are it What a ringing when are on type got CLO to you time these loans, science of there happens, X-month was because time XX B, spreads spreads are memory generates spread. payment SOFR cash XX-XX loan one you was between our fixed. that. a all send XX-plus which you make times to of right papers, certificate and points, up there bell X-month got we're CFO a of up CLOs a was X-month X and LIBOR call has more in

X-month XX points, closed. CLOs of off saving that three the essentially, you're saving pay do basis basis rate. it, points, only If months has so you're Unfortunately, going differential pay all if to you're X

also months, stable largely now even behind CLOs. rates July, you X-month then years The been it not helped. work, have That's X probably That's one where work. back, work and maybe last of it in maybe of just really of us. out the X-month two was out and second, year couple -- are last was look LIBOR ARB was better which over this was We the ago, if X-month, it pretty year, helps

that that collected flow cash third third saw, we fourth you and quarter CLOs We can happen trend to we're still of spreads sadly more go of around quarter as expecting. hope on the -- As it moves the growing you predict our up. combination the cash quarter, a portfolio some underlying better obviously is few Stuff the continues possible. and have flow that A the payments a can much degree. to it's continuing loans than not forever. as all It's

things at little I this bit, Some of put think, are a us the behind us off that kind side of point.

Operator

Our next with question Income Steven Bavaria comes the from the line Factory. of Inside

Steven Bavaria

on on in are items what cash you of closed-end just part My their much investment are is NII that you funds cash a standard primarily difference between, focus lot income. outline primary net recurring course, most focus coverage additional coverage, specific question, which, -- distribution of distributions, folks not for recurring higher. for what's Could of distribution us the

a it principal amortization. cash made recurring typical bullet part loan. slow that distribution? principal does amortization your Specifically, Is got of amortization loans recurring recurring include just It's recurring not down that's as on,

Thomas Majewski

CLOs CLO It's might out we don't loan, our generated or a and distributions is debt in off, If CLOs period that's interest, comes but that to the recurring called not CLOs. if The those, reinvestment -- CLOs a one the portfolio. have paid all loans. AAs paid to going be been to the into on or has we our unless from getting be of so doesn't the so Any and it's reinvested us. in on going in principle come after the the really new and used reinvestment that down it's period, and forth. pay If That AAAs secondary loans to which CLO underlying cash are and period. flows pay but equity from if distributions excludes NII things from other basically I cash CLO, have debt the two

it really all exception, The All of I'll don't of come coming out or with now. to our the have is slight one recurring just our one -- income of investments. we really exception, much coupon cash NII flows

date. it's payment on Sometimes a flush a first it's created on the CLO when called newly payment

Sometimes yields company, the in bank smaller to things. opinion. most loan predict we reserve When a Cash principal these a worked important at things of Old York speak, CLOs if large, Cash gap. distribute in The really the like of have this, part a payments what to we most often GAAP have short expense. for is loans principal New say, GAAP include between special right losses, one that NII, my cash and flows? you future That's is is the recurring we we dividend, a answer we tax cash pays money important cash the principal the cash get now. always the cash when -- financials of reserve. difference say, flows of first what shareholders. a answer credit a me and on trapped is generally big B, part loss not little the That's really on the you between By don't are other ago, difference or call a the principal what extra from -- you'd let in NII, then for we banks three new a we no, your about because cash years of say but the CLO, statement bills, that, and a of the a flow. through The handful few these included is reserve the talk which our is can in don't you think is Bank NII? effective of what's actually any question, credit be

we interest variable rates disclosed exposure. you of statements, up to get now, financial but default have a reserve points VIE this of can for our percent. lot we in XX take default Right losses. typically entity accounting, X-plus basis a For accounting, We X%, see we

We future modeled. haven't defaults exactly are as losses. due taking for Very reserves rarely

on cash now, new of they're we'd out reduces we and If a models default could we're we're be today. CLO is lower. value loan dollar but the could did in driver. and for big losses back flow principally a seeing lower and in the a sometimes our that come now, are but years money the today. a a They a large, invested up tomorrow, they're in credit in is reduces dollar a The expect. generates CLO, credit interest of it higher, bit, that's defaults doesn't little from cash loan income but it terminal X-X CLO, Default mainly which have than than flow. that go of difference for Sometimes recovery by Right on reserve that a losses the big loan, interested lower new the

Steven Bavaria

is actually NII net The a reserve? of loan loss

Thomas Majewski

That's a fair it, way of to yes. think

Steven Bavaria

distributions a the to answers included That that recurring extent an believe, dividends, question, if not and does question, big include those distributions, factor eroding payments? also it to like principal as your the use it I would pay it answers you cash

Thomas Majewski

We're not payments distributing and principal taking loan those.

Steven Bavaria

have I me, question, of It the retail frankly. the now. a have answers forum I'm investors asking glad lot been

Thomas Majewski

I In single cash? The any one as measure or you number deal. cash two to as end keep my you quarter, us flow? the Hopefully that every the pay about tax look can only want the At you everything long we keep and XX-year one have to thing do shareholders we all as tax opinion, will as go cash low business back a what with the other at have we the maybe recurring, and possible. day, possible. of day bankers out GAAP to we is If call underwrite, what's could cash will flow recurring would high over

Operator

turn Majewski, back Mr. any that floor question-and-answer I'll session. and comments. final the Ladies our gentlemen, for to concludes

Thomas Majewski

both fourth favorably. Thank results, trending with Obviously, available Credit our cash quarter we follow-up be later and pleased Point appreciate and we Company. if Appreciate your you. you very has flows shared very any much, joining, everyone, and will Thank I. Ken and for questions anyone interest very I the quarter today, time in and attention. Ken in Eagle third your

Operator

This concludes call. today's conference

you time. your disconnect your Thank this You may lines participation. for at

Eagle Point Credit (ECC) 14 Nov 232023 Q3 Earnings call transcript