Eagle Point Credit Company · NYSE:ECC
Eagle Point Credit — Q3 2020 Earnings Presentation
38 slides from Eagle Point Credit's earnings presentation, Nov 17, 2020
Slide 1: Eagle Point Credit Company Quarterly Update – 3Q 2020
EAGLE POINT CREDIT COMPANY QUARTERLY UPDATE – 3Q 2020 NOVEMBER 17, 2020
Slide 2: Important Information
IMPORTANT INFORMATION This report and the information and views included herein do not constitute investment advice, or a recommendation or an offer to enter into any transaction with Eagle Point Credit Company Inc. (the “Company”) or any of its affiliates. This report is provided for informational
Slide 3: Table of Contents
TABLE OF CONTENTS 1. Introduction to Eagle Point Credit Company (ECC) 2. Senior Investment Team and Investment Process 3. CLO Equity Overview 4. ECC Supplemental Information 5. Selected Market Data 2
Slide 4: Introduction to Eagle Point Credit Company
INTRODUCTION TO EAGLE POINT CREDIT COMPANY
Slide 5: Company and Adviser Overview
INTRODUCTION TO ECC Company and Adviser Overview The Company: Eagle Point Credit Company Inc. (ECC) IPO Date October 7, 2014 Primary Investment To generate high current income by investing primarily in equity and junior debt tranches Objective of collateralized loan obligations, or “CLOs” Total
Slide 6: ECC Highlights
INTRODUCTION TO ECC ECC Highlights CLO Equity is an The Credit Suisse Leveraged Loan Index has generated positive total returns in 26 of the Attractive Asset Class past 28 years1 Eagle Point believes CLO equity provides an attractive way to obtain exposure to senior secured loans Specialized E
Slide 7: Cumulative Distributions Per Share of Common Stock
INTRODUCTION TO ECC Cumulative Distributions Per Share Of Common Stock ECC currently pays a monthly distribution of $0.08 per share1 ECC Cumulative Distributions Per Share2 $16.00 $13.88 $14.00 $12.80 $12.00 $10.40 $10.00 $8.00 $8.00 $6.00 $4.75 $4.00 $2.35 $2.00 $0.00 2015 2016 2017 2018 2019 Q3 20
Slide 8: Track Record: Total Return and Price to Book Ratio
INTRODUCTION TO ECC Track Record: Total Return and Price to Book Ratio For the period of October 7, 2014 – October 30, 2020: ECC generated a total return1 of –7.58% versus -0.15% for the Wells Fargo BDC Index2 (annualized net total return of -1.29% for ECC versus -0.02% for the Wells Fargo BDC Ind
Slide 9: ECC By The Numbers
INTRODUCTION TO ECC ECC By The Numbers Number of 12.0% Current Distribution Rate1 83 Resets Refis Re-Pricings Monthly Distribution1 $0.08 Calls2 Exposure to Average Years of CLO 17 Experience of Senior Investment Team 98.1% Floating Rate Senior Secured Loans3 Number of Underlying Number Loan Obligor
Slide 10: Securities Outstanding
INTRODUCTION TO ECC Securities Outstanding Adviser and Senior Investment Team have $13.4 million invested in ECC, ECCB, ECCY and ECCX1 Common Stock Preferred Stock and Unsecured Notes NYSE Ticker ECC NYSE Ticker ECCB ECCY ECCX Series B Unsecured Notes Unsecured Notes Term Preferred Stock Description
Slide 11: Senior Investment Team and Investment Process
SENIOR INVESTMENT TEAM AND INVESTMENT PROCESS
Slide 12: Experienced Senior Investment Team
INTRODUCTION TO ECC Experienced Senior Investment Team Thomas Majewski Daniel Ko Daniel Spinner, Chief Executive Officer Principal and Portfolio CAIA Member of ECC’s Board Manager Principal and Portfolio of Directors Manager 25 19 14 14 24 18 Years in Years in Years in Years in Years in Years in Fin
Slide 13: Private Equity Approach to Fixed Income Investing
INTRODUCTION TO ECC Private Equity Approach to Fixed Income Investing Eagle Point employs a process that we believe is more akin to a private equity-style investment approach than to the typical process used by many investors in fixed income securities Proactive sourcing of investment opportunitie
Slide 14: CLO Equity Overview
© EAGLI CREDIT H POINT COMPANY
Slide 15: Why Invest in CLO Equity?
CLO EQUITY OVERVIEW Why Invest in CLO Equity? We believe that CLO equity provides an attractive way to obtain exposure to loans Distribution of CLO Equity IRRs CLO Equity Attributes U.S. CLOs (2002 – 2011 Vintages)1 CLO equity has historically generated strong absolute Potential for strong absol
Slide 16: The CLO Market is Large and Important to the Loan Market
CLO EQUITY OVERVIEW The CLO Market is Large and Important to the Loan Market The CLO market is the largest source of capital for the U.S. senior secured loan market U.S. Leveraged Loans Outstanding1 U.S. CLO Outstanding2 CLOs Oustanding ($B) CLO Count (#) $1,300 $712 $1,198 $1,202 $673 1,600 Leverag
Slide 17: Positive Loan Market Track Record
CLO EQUITY OVERVIEW Positive Loan Market Track Record From 1992 through 2019, the CSLLI generated positive total returns in 26 of the 28 calendar years Credit Suisse Leveraged Loan Index (“CSLLI”) Annual Total Return1 44.9% Annualized Return: 5.5%1 11.2% 11.0% 10.3% 10.0% 9.9% 9.4% 8.9% 8.3% 8.2% 7.
Slide 18: Senior Secured Loans are the Raw Materials of CLOs
CLO EQUITY OVERVIEW Senior Secured Loans are the Raw Materials of CLOs Senior Senior position in a company’s capital structure Secured First lien security interest in a company’s assets Floating Rate Mitigates interest rate risk associated with fixed rate bonds1 Low LTV Senior secured loans often ha
Slide 19: The Spread in Loan Market Remains at High End of Historical Range
CLO EQUITY OVERVIEW The Spread in Loan Market Remains at High End of Historical Range The current CSLLI spread is approximately 51 bps higher than the average of 304 bps Credit Suisse Leveraged Loan Index (“CSLLI”) Spread1 450 bps Spread Average Average: Average: 304 bps 304 bps 409 400 bps 391 386
Slide 20: Loan Market Repayment Rate
CLO EQUITY OVERVIEW Loan Market Repayment Rate Loan repayments provide capital for reinvestment within CLOs Annual Repayment Rate Annual Repayment Rate Average Average: 60% 56.4% 32.9% 48.9% 48.2% 46.9% 44.7% 40.1% 40% 38.7% 38.1% 37.3% 29.6% 26.9% 27.6% 23.6% Cumulative 24.1% Repayments 21.1% 21.7%
Slide 21: CLOs are Securitizations of a Portfolio of Senior Secured Loans
CLO EQUITY OVERVIEW CLOs are Securitizations of a Portfolio of Senior Secured Loans ECC invests primarily in the equity and subordinated debt tranches Assets Liabilities + Equity Key CLO Structural Features Senior Debt Typically AAA rated 1. Actively managed portfolio Primarily Floating 2. Match fun
Slide 22: ECC Supplemental Information
ECC SUPPLEMENTAL INFORMATION
Slide 23: Income Statement and Balance Sheet Highlights
ECC SUPPLEMENTAL I N F O R M AT I O N 1 Income Statement and Balance Sheet Highlights Q3 2020 Q2 2020 Q1 2020 Q3 2019 (Unaudited) (Unaudited) (Unaudited) Q4 2019 (Unaudited) U.S. GAAP Net Investment Income ("NII") before Non-Recurring Expenses2 $0.29 $0.29 $0.36 $0.27 $0.37 U.S. GAAP Realized Gain/(
Slide 24: Quarterly Snapshot Trend: Portfolio Cash Coverage
ECC SUPPLEMENTAL INFORMATION 1 Quarterly Snapshot Trend ECC Portfolio Cash Coverage Per Common Share2 CASH DISTRIBUTIONS RECEIVED3 $1.08 $1.02 RECURRING PORTFOLIO $0.12 $0.22 $0.90 $0.06 $0.30 $0.26 $0.24 $0.68 $0.21 $0.53 $0.07 $0.23 $0.22 $0.60 $0.60 $0.60 $0.24 $0.24 Q3 2019 Q4 2019 Q1 2020 Q2 20
Slide 25: Quarterly Snapshot Trend
ECC SUPPLEMENTAL INFORMATION 1 Quarterly Snapshot Trend Q3 2020 Q2 2020 Q1 2020 Q3 2019 (Unaudited) (Unaudited) (Unaudited) Q4 2019 (Unaudited) (Figures below are in millions, except for per share amounts and shares outstanding) Distributions Received From CLO Equity2,3 $17.88 $20.04 $28.75 $29.04 $
Slide 26: Portfolio Details – Q3 2020
ECC SUPPLEMENTAL INFORMATION 1 Portfolio Details – Q3 2020 Years Years Income Cash Income Q3 Cash Weighted Weighted Return of Junior Senior CLO Equity Holdings Remaining Remaining in Accrued Received Accrued Received as % CCC+/Caa1 Average Average Diversity Vintage Refi/Reset/Call Capital in Q3 OC A
Slide 27: Portfolio Details – Q3 2020 (Cont.)
ECC SUPPLEMENTAL INFORMATION 1 Portfolio Details – Q3 2020 (Cont.) Years Years Income Cash Income Q3 Cash Weighted Weighted Return of Junior Senior CLO Equity Holdings Remaining Remaining in Accrued Received Accrued Received as % CCC+/Caa1 Average Average Diversity Vintage Refi/Reset/Call Capital in
Slide 28: Portfolio Details – Holdings as of October 2020
ECC SUPPLEMENTAL INFORMATION 1 Portfolio Details – Holdings as of October 2020 CLO Equity Holdings Cash Received Cash Received Junior OC CLO Equity Holdings Cash Received Cash Received Junior OC QoQ Change QoQ Change (as of October 31, 2020) During Q4 2020 During Q3 2020 Cushion (as of October 31, 2
Slide 29: Changes in Effective Yield
ECC SUPPLEMENTAL INFORMATION 1 Changes in Effective Yield The following table represents changes made to effective yields from the prior quarter end CLO Equity Holdings Effective Yield Effective Yield Change in Effective CLO Equity Holdings Effective Yield Effective Yield Change in Effective (as of
Slide 30: Additional Information
ECC SUPPLEMENTAL INFORMATION 1 Additional Information Income Cash Income Reconciliation to U.S. GAAP Unaudited Financial Loan Accumulation Facility Holdings Capital Accrued Received Realized Accrued Statements (as of September 30, 2020) Invested During During Gain/(Loss) During (as of September 30,
Slide 31: Portfolio Investments and Underlying Portfolio Characteristics
ECC SUPPLEMENTAL INFORMATION Portfolio Investments and Underlying Portfolio Characteristics As of September 30, 2020, ECC’s portfolio was invested across 111 investments Summary of ECC’s Portfolio of Investments1 CLO Debt 6.6% (21 Investments) Loan Accumulation Facilities 4.6% (5 Investments) CLO Eq
Slide 32: Obligor and Industry Exposures
ECC SUPPLEMENTAL INFORMATION Obligor and Industry Exposures As of September 30, 2020, ECC has exposure to 1,484 unique underlying borrowers across a range of industries Obligor and Industry Exposure Top 10 Underlying Obligors1 % Total Top 10 Industries of Underlying Obligors1,2 % Total Altice 1.0% T
Slide 33: Maturity Distribution of Underlying Obligors
ECC SUPPLEMENTAL INFORMATION Maturity Distribution of Underlying Obligors Only 5.4% of ECC’s underlying loan portfolio is scheduled to mature prior to 2023 Maturity Distribution of Underlying Obligors1 30% 29.0% 23.2% 20.0% % of Fund Exposure 20% 11.8% 10.6% 10% 3.9% 1.4% 0.1% 0% 2020 2021 2022 2023
Slide 34: Selected Market Data
© EAGLI CREDIT H POINT COMPANY
Slide 35: Credit Fundamentals
SELECTED MARKET DATA Credit Fundamentals Average Leverage Multiples of Outstanding Loans Average Interest Coverage Multiples of Outstanding Loans (Debt/EBITDA)1 (EBITDA/Interest)1 Average Leverage Multiples of Newly Issued Loans Average Interest Coverage Multiples of Newly Issued Loans (Debt/EBITDA)
Slide 36: Credit Fundamentals
1. 1Q08 7.5% 1Q08 16.9% 2Q08 9.7% 2Q08 16.5% 3Q08 0.1% 3Q08 11.1% 4Q08 (6.8%) 4Q08 (4.9%) Source: S&P LCD. 1Q09 (17.8%) 1Q09 (7.3%) outstanding loans. 2Q09 (15.2%) 2Q09 (11.3%) 3Q09 9.7% 3Q09 (3.2%) 4Q09 15.4% 4Q09 12.9% 1Q10 9.4% 1Q10 5.2% 2Q10 15.0% 2Q10 8.0% Credit Fundamentals 3Q10 24.5% 3Q10 14
Slide 37: Liquidity Considerations
SELECTED MARKET DATA Liquidity Considerations Secondary trading is conducted through BWICs (“Bids Wanted in Competition”) and privately negotiated sales CLO debt and equity tranches typically settle electronically via DTC and trade on a T+2 basis Annual CLO Trading Volume 150 $110.1 125 $74.8 10
Slide 38: Company Information
COMPANY INFORMATION Eagle Point Credit Company Inc. 600 Steamboat Road, Suite 202 Greenwich, CT 06830 www.EaglePointCreditCompany.com ICR (Media and Investor Relations) IR@eaglepointcredit.com (203) 340 8510
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