Eagle Point Credit Company · NYSE:ECC
Eagle Point Credit — Q3 2023 Earnings Presentation
37 slides from Eagle Point Credit's earnings presentation, Nov 14, 2023
Slide 1: Eagle Point Credit Company Quarterly Update – Q3 2023
EAGLE POINT CREDIT COMPANY QUARTERLY UPDATE – Q3 2023 NOVEMBER 14, 2023
Slide 2: Important Information
I M P O R TAN T I N F O R M AT I O N This presentation 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. (“ECC” or the “Company”) or any of its affiliates. This present
Slide 3: Table of Contents
TAB L E O F C O N T E N T S 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 (ECC)
INTRODUCTION TO EAGLE POINT CREDIT COMPANY(ECC)
Slide 5: Company and Adviser Overview
I N T R O D U C T I O N TO E C C 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
Slide 6: ECC Highlights
I N T R O D U C T I O N TO E C C ECC Highlights CLO Equity is an The Credit Suisse Leveraged Loan Index has generated positive total returns in 28 of the Attractive Asset Class past 31 full calendar years1 Eagle Point believes CLO equity provides an attractive way to obtain exposure to senior se
Slide 7: Cumulative Common Stock Distributions
I N T R O D U C T I O N TO E C C Cumulative Common Stock Distributions ECC currently pays an aggregate monthly distribution of $0.16 per share, inclusive of a $0.14 regular distribution and a $0.02 supplemental distribution1 ECC Cumulative Distributions Per Share2 $25.00 $19.51 $20.00 $18.13 $15.76
Slide 8: Track Record: Common Stock Total Return and Price to Book Ratio
I N T R O D U C T I O N TO E C C Track Record: Common Stock Total Return and Price to Book Ratio For the period of October 7, 2014 – October 31, 2023: ECC generated a total return1 of 84.57% versus 80.34% for the S&P BDC Index2 (annualized net total return of 6.99% for ECC versus 6.72% for the S&P
Slide 9: ECC By The Numbers
I N T R O D U C T I O N TO E C C ECC By The Numbers Number of 20.5% 130 Current Resets Refis Re-Pricings Monthly Distribution $0.16 1 Distribution Rate 1 Calls 2 Exposure to 20 96.2% Average Years of CLO Experience of Senior Floating Rate Investment Team Senior Secured Loans 3 Number of Underlying N
Slide 10: Securities Outstanding
I N T R O D U C T I O N TO E C C Securities Outstanding Advisor and Senior Investment Team have approximately $14.6 million invested in ECC, ECCC and ECCX1 Common Stock Preferred Stock and Unsecured Notes NYSE Ticker ECC NYSE Ticker ECCC ECC PRD ECCV ECCW ECCX Series C Series D Unsecured Unsecured U
Slide 11: Senior Investment Team and Investment Process
SENIOR INVESTMENT TEAM AND INVESTMENT PROCESS
Slide 12: Investment Process: Senior Investment Team
INVESTMENT PROCESS Senior Investment Team Thomas Majewski Daniel Ko Daniel Spinner, CAIA Founder and Managing Senior Principal and Portfolio Senior Principal and Portfolio Partner Manager Manager 27 Years of Experience 17 Years of Experience 26 Years of Experience Background Background Background Di
Slide 13: Private Equity Approach to Fixed Income Investing
INVESTMENT PROCESS Private Equity Approach to Fixed Income Investing Eagle Point employs a process that we believe is more akin to a private equity-style investment approach than the typical process used by many investors in fixed income securities Proactive sourcing of investment opportunities
Slide 14: CLO Equity Overview
EAGLE POINT CREDIT COMPANY
Slide 15: Why Invest in CLO Equity?
C L O E Q U I T Y O V E RV I E W Why Invest in CLO Equity? Eagle Point believes that CLO equity provides an attractive way to obtain exposure to loans Distribution of CLO Equity IRRs CLO Equity Attributes U.S. CLOs (2002 – 2011 Vintages)1 CLO equity has historically generated strong absolute Pot
Slide 16: The CLO Market is Large and Important to the Loan Market
C L O E Q U I T Y O V E RV I E W The CLO Market is Large and Important to the Loan Market The CLO market is the largest source of capital for the U.S. senior secured loan market1 U.S. Leveraged Loans Outstanding1 U.S. CLOs Outstanding2 CLOs Oustanding ($B) CLO Count (#) $1,500 $1,416 $1,410 $1,100 $
Slide 17: Positive Loan Market Track Record
C L O E Q U I T Y O V E RV I E W Positive Loan Market Track Record From 1992 through 2022, the CSLLI generated positive total returns in 28 of the 31 full calendar years Credit Suisse Leveraged Loan Index (“CSLLI”) Annual Total Return1 44.9% Annualized Return: 5.6%1 11.2% 11.0% 10.3% 10.0% 9.9% 9.9%
Slide 18: Senior Secured Loans are the Raw Materials of CLOs
C L O E Q U I T Y O V E RV I E W Senior Secured Loans are the Raw Materials of CLOs Senior Secured Loans Represent “Pure” Credit Exposure Illustrative Underlying Loan Obligors in CLOs3 Senior Senior position in a company’s capital structure Secured First lien security interest in a company’s assets
Slide 19: The Spread in Loan Market Remains at High End of Historical Range
C L O E Q U I T Y O V E RV I E W The Spread in Loan Market Remains at High End of Historical Range Historical Leveraged Loan Spreads 450 bps Spread Long Term Average Ten Year Average Ten Year Average: 370 bps 409 400 bps Long Term Average: 391 386 386 387 312 bps 379 376 361 369 352 357 359 358 350
Slide 20: Loan Market Repayment Rate
C L O E Q U I T Y O V E RV I E W Loan Market Repayment Rate Loan repayments provide capital for reinvestment within CLOs Annual Repayment Rate Annual Repayment Rate Average 60% 56.4% Average: 48.9% 31.2% 48.2% 46.9% 44.7% 40.1% 40% 38.7% 38.1% 37.3% 29.6% 30.0% 26.9% 27.6% 23.6% 24.1% Cumulative 21.
Slide 21: CLOs are Securitizations of a Portfolio of Senior Secured Loans
C L O E Q U I T Y O V E RV I E W CLOs are Securitizations of a Portfolio of Senior Secured Loans The Company 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
Slide 22: ECC Supplemental Information
ECC SUPPLEMENTAL INFORMATION
Slide 23: Income Statement and Balance Sheet Highlights
E C C S U P P L E M E N TAL I N F O R M AT I O N 1 Income Statement and Balance Sheet Highlights Q3 2023 Q2 2023 Q1 2023 Q4 2022 Q3 2022 (Unaudited) (Unaudited) (Unaudited) (Unaudited) (Unaudited) U.S. GAAP Net Investment Income ("NII") before Non-Recurring Expenses2 $0.33 $0.32 $0.34 $0.40 $0.40 U.
Slide 24: Distribution and Expense Coverage
E C C S U P P L E M E N TAL I N F O R M AT I O N 1 Distribution and Expense Coverage ECC Portfolio Recurring Cash Flows2 CASH DISTRIBUTIONS RECEIVED3 $0.90 RECURRING PORTFOLIO $0.89 $0.74 $0.77 $0.21 $0.21 $0.65 $0.10 $0.10 $0.27 $0.21 $0.19 $0.26 $0.22 $0.42 $0.42 $0.42 $0.48 $0.48 ($0.04) Q3 2022
Slide 25: Quarterly Snapshot Trend
E C C S U P P L E M E N TAL I N F O R M AT I O N 1 Quarterly Snapshot Trend Q3 2023 Q2 2023 Q1 2023 Q4 2022 Q3 2022 (Unaudited) (Unaudited) (Unaudited) (Unaudited) (Unaudited) (Figures below are in millions, except for per share amounts and shares outstanding) Distributions Received From CLO Equity2
Slide 26: Portfolio Details – Q3 2023
E C C S U P P L E M E N TAL I N F O R M AT I O N 1 Portfolio Details – Q3 2023 Years Years Weighted Income Cash Received Income Return of Q3 Cash Received Weighted CLO Equity Holdings Remaining in Remaining in CCC+ Junior OC Senior AAA Average Diversity Vintage Refi/Reset/Call Accrued During During
Slide 27: Portfolio Details – Q3 2023 (Cont.)
E C C S U P P L E M E N TAL I N F O R M AT I O N 1 Portfolio Details – Q3 2023 (Cont.) Years Years Weighted Income Cash Received Income Return of Q3 Cash Received Weighted CLO Equity Holdings Remaining in Remaining in CCC+ Junior OC Senior AAA Average Diversity Vintage Refi/Reset/Call Accrued During
Slide 28: Changes in Effective Yield
E C C S U P P L E M E N TAL I N F O R M AT I O N 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
Slide 29: Changes in Effective Yield
E C C S U P P L E M E N TAL I N F O R M AT I O N 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
Slide 30: Portfolio Investments and Underlying Portfolio Characteristics
E C C S U P P L E M E N TAL I N F O R M AT I O N Portfolio Investments and Underlying Portfolio Characteristics As of September 30, 2023 ECC’s portfolio was invested across 197 CLO investments Summary of ECC’s Portfolio of Investments1 Cash 2.6% Other 8.1% Loan Accumulation CLO Equity 73.3% Faciliti
Slide 31: Obligor and Industry Exposures
E C C S U P P L E M E N TAL I N F O R M AT I O N Obligor and Industry Exposures As of September 30, 2023, ECC has exposure to 1,789 unique underlying borrowers across a range of industries Obligor and Industry Exposure Top 10 Underlying Obligors1 % Total Top 10 Industries of Underlying Obligors1 % T
Slide 32: Maturity Distribution of Underlying Obligors
E C C S U P P L E M E N TAL I N F O R M AT I O N Maturity Distribution of Underlying Obligors Maturity Distribution of Underlying Obligors1 40% 39.2% 30% % of Fund Exposure 20% Prior to 2025, only 1.3% 17.6% of ECC’s underlying loan portfolio matures 14.3% 12.5% 10% 7.6% 7.4% 1.2% 0.1% 0% 2023 2024
Slide 33: Selected Market Data
EAGLE POINT CREDIT COMPANY
Slide 34: Credit Fundamentals
S E L E C T E D M AR K E T D ATA Credit Fundamentals Average Leverage Multiples of Outstanding Loans Average Interest Coverage Multiples of Outstanding Loans (Debt/EBITDA)1 (EBITDA/Interest)1 5.8x 5.6x 5.9x 5.1x 4.8x 5.5x 4.5x 4.8x 4.8x 5.4x 5.3x 5.2x 5.3x 5.3x 5.1x 4.6x 5.2x 4.5x 5.0x 4.5x 5.0x 5.0
Slide 35: Credit Fundamentals
1. 2Q11 17.0% 2Q11 18.0% 3Q11 14.8% 3Q11 14.0% 4Q11 9.6% 4Q11 14.0% 1Q12 12.8% 1Q12 12.0% 2Q12 12.2% 2Q12 Source: Pitchbook LCD. 9.1% outstanding loans. 3Q12 9.3% 3Q12 9.9% 4Q12 8.3% 4Q12 8.9% 1Q13 6.8% 1Q13 10.5% 2Q13 6.1% 2Q13 9.3% Credit Fundamentals 3Q13 6.8% 3Q13 11.0% 4Q13 8.8% 4Q13 13.5% 1Q14
Slide 36: Liquidity Considerations
S E L E C T E D M AR K E T D ATA 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 $200.4 $200
Slide 37: 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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