Eagle Point Credit, 'Reading The Tea Leaves' In Its Monthly Report

Nov. 11, 2022 4:39 PM ETEagle Point Credit Co LLC (ECC), EIC, , , , 101 Comments

Summary

  • ECC's monthly portfolio report always has useful insights into its business and performance.
  • One data point I particularly focus on is the average market price of the underlying collateral (i.e., the corporate loans) held by the CLOs whose equity ECC owns.
  • Lately, ECC is reporting that the average loan price is 91.75% of par, a whopping discount of over 8% off the loans' face values.
  • This discount has grown steadily throughout the year, just as the fund's net asset value has dropped.
  • But don't be too quick to draw negative conclusions from this, as rising and "special" distributions tell a very different story.
  • This idea was discussed in more depth with members of my private investing community, Inside the Income Factory. Learn More »

Collateralized Loan Obligations CLO is shown on the photo using the text

Andrii Dodonov

Eagle Point Credit: Reading the Tea Leaves

Eagle Point Credit (NYSE:ECC) is a closed-end fund that owns the equity in collateralized loan obligations (CLOs). CLOs are legal vehicles that essentially resemble "virtual banks." Just like when you buy the equity of

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Steven Bavaria has 50 years of international banking and credit, journalism, and investing experience. A graduate of Georgetown University and New England School of Law, he was an executive at Bank of Boston and Standard & Poor's. His Income Factory® philosophy, outlined in his book “The Income Factory”, is designed to maximize cash income with peace of mind in all market environments.

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Analyst’s Disclosure:I/we have a beneficial long position in the shares of ECC, EIC, OXLC either through stock ownership, options, or other derivatives. I wrote this article myself, and it expresses my own opinions. I am not receiving compensation for it (other than from Seeking Alpha). I have no business relationship with any company whose stock is mentioned in this article.

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