CLO investor Eagle Point beats earnings forecast

While CLO security prices dropped during the second quarter, Eagle Point Credit Company was able to exceed its earnings forecast.

Publicly traded CLO investor Eagle Point Credit Company has reported earnings per share of $0.43 in the second quarter of 2022, beating analysts’ expectations of $0.42 per share.

The firm has significantly increased its earnings over the past year from $0.29. This follows a disappointing first quarter when the company posted earnings of $0.33, below expectations of $0.40 earnings per share.

However, NAV per common share was just $10.08 at the end of June 2022, down from $12.64 at the end of March.

EPCC’s CEO, Thomas Majewski, said: “While the reduction in CLO security prices during the quarter impacted our NAV, we have found multiple opportunities to invest in secondary CLO securities at significant discounts. We believe the recent sell-off was more technical in nature and the prices of many securities have risen so far in the third quarter.”

The firm reported that NAV has recovered during July, with estimates of between $10.79 and $10.89 per common share as of 31 July 2022.

During Q2, the firm deployed $82.4 million in net capital into CLO equity and debt investments and converted five loan accumulation facility CLOs. The weighted average effective yield of new CLO equity investments made during the quarter was 17.8 percent. EPCC received $47.8 million of recurring cash distributions during the quarter, which it said was well in excess of it’s aggregate distributions on its common stock.

A monthly distribution of $0.14 per common share was paid on 29 July and the same amount will be paid at the end of each month for the remainder of the year. The firm also announced a special distribution of $0.25 per common share in order to retain its ability to be taxed as a regulated investment company.