Eagle Point invests in one CLO in Q3, ends with $30.4 million net loss

By Lisa Kerner

Charlotte, N.C., Nov. 17 – Eagle Point Credit Co. Inc. chief executive officer Thomas Majewski discussed the CLO and bank loan markets during his company’s third-quarter earnings call on Tuesday.

Majewski, citing data from S&P Capital IQ, said there have been 166 U.S. CLOs issued this year through Nov. 11. This represents $87 billion in total issuance volume, which compares to $110 billion of volume through the period in 2014.

“Origination in the U.S. senior secured loan market has also been lower this year than last year,” Majewski said.

Based on the same data, there were about $209 billion of institutional term loans issued during the first nine months of the year. This compares to $333 billion of loans issued during the first nine months of last year, said Majewski.

“A number of factors have impacted the loan market this year. These factors include lower new issue supply, retail loan mutual fund outflows, as well as macro factors globally and some loan specific factors,” he said.

With the price of loans down, it has become much more of a lender’s market, according to Majewski.

Majewski also saw mark-to-market volatility in CLO securities during Q3 and said investors required wider and wider yields to invest in CLO securities.

Financial highlights

Eagle Point had a net loss for the quarter ended Sept. 30 of $30.4 million, or a loss of $2.20 per share.

This compares to net income of $6.4 million, or $0.46 per share for the second quarter, according to chief financial officer Kenneth Onorio.

The net asset value of the company was $218.6 million, or $15.82 per share, at quarter end.

Onorio said the company’s invested net capital of $38.1 million during the quarter and $107.4 million for during the first nine months of 2015.

During the third quarter, the company invested in one collateralized loan obligation equity position, three new loan accumulation facility investments and additional follow-on loan accumulation facility investments.

The weighted average effective yield on the company’s CLO equity portfolio at Sept. 30 was 16.65%, up from 16.47% as of June 30.

Eagle Point received $16.3 million of cash flow from its investment portfolio, or $1.18 per share, in the third quarter.

On Oct. 30, Eagle Point paid a distribution of $0.60 per share of common stock for stockholders of record as of Sept. 30.

Based in Greenwich, Conn., Eagle Point is an externally managed, non-diversified closed end management investment company.

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