Eagle Point Credit Q3 2026 Earnings Results & Report

Eagle Point Credit EPS Results

• Actual EPS: $0.31
• Consensus EPS: $0.1720
• Beat/Miss: Beat by +$0.1380
• One Year Ago EPS: N/A
• EPS Beat Rate: 2 of last 8 quarters

Eagle Point Credit Revenue Results

• Actual Revenue: N/A
• Expected Revenue: $38.86 million
• Beat/Miss: N/A
• YoY Revenue Growth: N/A

Eagle Point Credit (NYSE:ECC) Company is a publicly traded, externally managed investment company focused primarily on investments in collateralized loan obligations (CLOs). Its portfolio may include CLO equity and debt securities, as well as other investments related to CLOs and structured credit.

CLOs are investment vehicles that pool loans, often loans to businesses, and issue securities with different levels of risk and payment priority. Eagle Point’s strategy centers on these securities, with exposure principally to CLOs backed by corporate loans in the United States and, where applicable, other markets.

The company began operations in 2014 and is managed by Eagle Point Credit Management LLC. Thomas P. Majewski, founder and managing partner of the investment manager, has served as a senior leader of the company.

Eagle Point Credit Q3 2026 Earnings Call Transcript

Key Takeaways

• Positive Sentiment: Net investment income less realized losses was $0.29 per share, above the $0.18 quarterly distribution. However, $0.11 per share came from an early repayment of a private credit investment; excluding it, earnings were $0.18 per share, in line with distributions.
• Negative Sentiment: NAV fell 8% in the quarter to $4.17 per share, and management estimated October month-end NAV at $3.73–$3.83. Leverage was 49% of assets, above the company’s 27.5%–37.5% target range, prompting preferred and note redemptions to reduce leverage.
• Positive Sentiment: The company is shifting capital toward private credit investments beyond CLOs, now about 38% of the portfolio versus 16% a year earlier, with management expecting that share to grow. It cited roughly 18% gross IRRs on more than $800 million invested in these strategies since 2020, though those figures exclude company-level expenses and reflect management’s reported track record.
• Negative Sentiment: Management said CLO equity returns have been pressured by loan spread compression and increased CLO issuance supported by captive, potentially less price-sensitive capital, which it sees as a medium-term market shift. It is reducing reliance on CLO equity, while refinancing and reset activity—including 20 basis points of weighted-average debt-cost savings on reopened CLOs—offers a potential offset.

Presentation

[Operator]

Greetings, and welcome to the Eagle Point Credit Company's third quarter 2026 financial results conference call. At this time, all participants are in listen-only mode. A brief question-and-answer session will follow the formal presentation. Just a reminder, this conference is being recorded. At this time, I will turn the conference over to Mr. Darren Daugherty from Prosek Partners. You may now begin.

[Moderator]

Thank you, operator, and good morning. Welcome to Eagle Point Credit Company's earnings conference call for the third quarter of 2026. Speaking on the call today are Thomas Majewski, Chief Executive Officer, and Ken Onorio, Chief Financial Officer and Chief Operating Officer. Before we begin, I would like to remind everyone that the matters discussed on this call include forward-looking statements or projected financial information that involve risks and uncertainties that may cause the company's actual results to differ materially from such projections. For further information on factors that could impact the company and the statements or projections contained herein, please refer to the company's filings with the SEC. Each forward-looking statement or projection of financial information made during this call is based on the information available to us as of the date of this call. We disclaim any obligation to update our forward-looking statements unless required by law.

[Moderator]

Earlier today, we filed our third quarter 2026 financial statements and investor presentation, which features an updated format with the SEC. These are also available in the investor relations section of the company's website, eaglepointcreditcompany.com. A replay of this call will also be made available later today. I will now turn the call over to Thomas Majewski, Chief Executive Officer of Eagle Point Credit Company. Tom?

[Thomas Majewski, CEO at Eagle Point Credit Company]

Thanks, Darren, and good morning, everyone. We appreciate you joining the Eagle Point Credit Company earnings call this morning. I'll start by providing some highlights for the quarter. For the third quarter, our net investment income, less realized losses, was $0.29 per share, well in excess of our total distributions for the quarter of $0.18 per share. Our earnings results were boosted by income from the early repayment of a private infrastructure credit investment that was sourced through the broader Eagle Point platform. This contributed $0.11 per share to our earnings for the quarter. Excluding the contribution from this early payoff, our normalized net investment income plus realized gains would have been $0.18 per share, in line with our distributions for the quarter.

[Thomas Majewski, CEO at Eagle Point Credit Company]

This transaction demonstrates the value of our access to differentiated investment opportunities across the broader Eagle Point platform, which we expect will continue to generate incremental earnings for ECC. I will discuss this in greater detail later in my remarks. However, to foreshadow, this portion of our portfolio has performed very well, and as of quarter end, it represents about 38% of our total portfolio. Beyond this one early payoff, I will share some more color on how this portion of our portfolio has performed over time. We expect it to become an even bigger part of our portfolio in the coming quarters. In addition to our strong earnings, cash flows from the company's investments totaled $46 million, or $0.35 per share during the quarter, and this fully covered the company's common distributions and total expenses.

[Thomas Majewski, CEO at Eagle Point Credit Company]

As of September 30th, our net asset value was $4.17 per share, which is a decrease of 8% from June 30. Our GAAP return on common equity for the quarter was a negative 2.8%. Turning to the broader market environment, shifting interest rate expectations contributed to market volatility during the quarter. Despite a modest increase in leveraged loan prices, loan spreads compressed modestly early in the quarter, and CLO equity was trading at wider yields by quarter end, resulting in lower CLO equity valuations. However, with only 27.7% of loans trading above par at quarter end, repricing activity is likely to be limited in the near term, and the spread compression that pressured CLO equity in prior quarters appears to have subsided for the moment.

[Thomas Majewski, CEO at Eagle Point Credit Company]

We believe the combination of stable underlying loan spreads and opportunities to reduce CLO financing costs through refinancings and resets provides a constructive backdrop for CLO equity over time versus the past two years, which have been difficult for the CLO market broadly. Within the leveraged loan market, we have seen encouraging signs of stabilization in the software sector, including relatively limited default activity and a 3.3% increase in loan prices since the end of the first quarter. As we have discussed on prior calls, we believe concerns about AI disruption may be overstated for many software businesses, particularly those providing mission-critical solutions with strong customer retention and recurring revenues under long-term contracts. While we continue to believe AI is more likely to complement these businesses than replace them, we do remain attentive to the evolving developments and their potential implications for the sector.

[Thomas Majewski, CEO at Eagle Point Credit Company]

From a CLO equity perspective, it is important to distinguish the impact and changes in benchmark interest rates from changes in credit spreads. CLO equity is primarily a spread arbitrage investment, with both the underlying loan assets and CLO debt liabilities generally carrying floating interest rates. As a result, changes in short-term benchmark interest rates typically have limited direct impact on the CLO equity arbitrage. With CLO debt spreads remaining relatively stable during the quarter, we have been actively taking advantage of opportunities to reduce CLO debt financing costs through refinancings and resets, improving the spread between the income generated by our CLO's underlying loan assets and the cost of the CLO liabilities. During the quarter, we completed seven resets and nine refinancings within our CLO equity portfolio, and this resulted in a weighted average CLO debt cost savings of 20 basis points for those CLOs that we reopened.

[Thomas Majewski, CEO at Eagle Point Credit Company]

In addition to lowering debt costs for those CLOs that were reset, we extended their reinvestment periods to five years. These actions position our CLO equity investments to benefit from improved cash flows over time. Looking ahead, we continue to see attractive refinancing and reset opportunities, with 25% of our CLO equity portfolio having AAA spreads above 130 basis points and expected to exit their non-call period over the next year. We believe this provides meaningful opportunities to build on our progress of reducing CLO financing costs and increasing cash flows from our CLO equity portfolio. Our reset activity contributed to extending the reinvestment runway of our overall CLO equity portfolio. At quarter end, our CLO equity portfolio's weighted average remaining reinvestment period stood at 3.6 years, and this is up from 3.4 years at June 30th.

[Thomas Majewski, CEO at Eagle Point Credit Company]

This is 20% above the broader market average, and that's very important in our opinion. This extended reinvestment runway provides our CLO collateral managers with greater flexibility to capitalize on discounted loan prices and relative value trading opportunities while helping to mitigate the impact of market volatility. Turning to our investment activity, during the quarter, we deployed $62 million into new investments at a weighted average effective yield of 19.6%. Alongside our CLO equity investments, we continue to dynamically allocate capital across complementary private credit opportunities, including infrastructure credit, portfolio debt securities, regulatory capital relief transactions, asset-backed securities, specialty finance, and equipment leasing investments. As of September 30th, these investments represented about 38% of our total portfolio, and that's more than double from 16% a year ago.

[Thomas Majewski, CEO at Eagle Point Credit Company]

These investments are originated through dedicated teams across the broader Eagle Point platform, giving ECC access to specialized investment expertise and opportunities across a wide range of credit markets. We remain selectively active in the CLO primary market, opportunistically originating two new CLO transactions during the quarter. Notably, we negotiated particularly favorable collateral manager fee arrangements, including some of the most attractive rebates we've achieved in more than a decade of investing in the CLO asset class. These arrangements made the yields compelling despite the broader challenges facing much of new issue CLO equity. We also continue to make progress in our strategic partnership with Muzinich, both in Europe and in the United States. In Europe, the inaugural CLO closed during the third quarter, and they recently priced their second European CLO, and they have an active pipeline for issuance in that market.

[Thomas Majewski, CEO at Eagle Point Credit Company]

Given Muzinich's established European presence, we believe the platform can scale more quickly than it did in the United States. In the U.S., we completed a reset, extending one of the platform's CLOs to a new five-year reinvestment period, and are warehousing for the platform's eighth new issue. We are happy with how the U.S. platform has scaled and has maintained limited SOFR exposure compared to many of its peers. As the Muzinich platform expands, ECC is positioned to benefit both from our attractive CLO equity investments and our perpetual revenue-sharing arrangements. Beyond our CLO portfolio, we continue to see attractive opportunities across specialized areas of private credit where demand for creative capital remains strong. Our growing allocation to these investments gives ECC access to additional sources of income and returns that are driven by different market dynamics than CLO equity.

[Thomas Majewski, CEO at Eagle Point Credit Company]

Importantly, we remain focused on allocating capital opportunistically rather than targeting a predetermined mix of CLO equity and other private credit investments. Our approach is to deploy capital where we see the most compelling risk-adjusted return opportunities with the objective of maximizing long-term total return for our shareholders. We have been highly selective in identifying these opportunities, with a particular focus on investments backed by tangible collateral. We have applied our time-tested underwriting techniques to a wide variety of assets, ranging from power generation on one hand to a granular pool of sports and events tickets. We have been investing across these complementary credit asset classes since 2020, and they have been growing in significance within our portfolio. ECC has an established track record of generating attractive returns in these strategies.

[Thomas Majewski, CEO at Eagle Point Credit Company]

Indeed, since 2020, we have invested over $800 million in credit assets beyond CLOs, and we have generated a gross IRR, excluding company-level expenses, of approximately 18% across those investments. Of the nearly $350 million of that portfolio that has been fully realized, it generated a gross IRR of approximately 28%. As demonstrated by our third quarter results, these investments can generate meaningful investment income for ECC shareholders. This is particularly attractive when we consider the market-wide challenges that CLO equity has faced over the past two years. More broadly, we believe that access to the full breadth of the Eagle Point platform enhances our ability to pursue attractive risk-adjusted returns across different market environments. I would also like to note that we have refreshed our investor presentation this quarter.

[Thomas Majewski, CEO at Eagle Point Credit Company]

To provide shareholders with a more comprehensive view of our investment portfolio, including additional detail on our private credit investments beyond CLO equity. With that, I will turn the call over to Ken to discuss our financial results in more detail.

[Ken Onorio, CFO and COO at Eagle Point Credit Company]

Thank you, Tom, and thanks everyone for joining us today. During the third quarter, the company generated net investment income, or NII, of $0.31 per share. NII less realized losses from investments was $0.29 per share. This compares to negative $0.62 per share in the second quarter of 2026 and $0.16 per share in the third quarter of 2025. As Tom mentioned, our third quarter results benefited from the refinancing of a private credit investment, which contributed $0.11 per share to third quarter NII. Excluding this impact, our normalized NII plus realized gains from investments was $0.18 per share for the quarter, in line with our common distributions. Including unrealized losses, the company recorded a GAAP net loss of $16 million, or $0.12 per share.

[Ken Onorio, CFO and COO at Eagle Point Credit Company]

This compares to GAAP net income of $0.53 per share in the previous quarter and GAAP net income of $0.12 per share in the third quarter of 2025. Third quarter cash flows from the company's investment portfolio totaled $46 million, or $0.35 per share, in line with the company's common distributions and total expenses. We paid three monthly distributions on our common equity of $0.06 per share during the third quarter and declared monthly distributions of $0.06 per share for the first three months of 2027. We believe the current distribution level is appropriately aligned with the company's earnings potential and represents a sustainable distribution over time. As of September month-end, the company had debt and preferred equity securities outstanding, representing 49% of total assets less current liabilities. Our long-term target range is between 27.5% and 37.5%.

[Ken Onorio, CFO and COO at Eagle Point Credit Company]

Earlier today, we announced the full redemption of our ECCC term preferred equity and a 25% partial redemption of our ECCV unsecured notes. We remained focused on returning leverage to within our target range over time. Continuing with our capital structure, we currently have no debt maturities before January 2029. All of our debt and preferred equity financing is fixed rate, and a significant portion of our preferred equity financing is perpetual with no set maturity date. We believe this long-duration capital structure provides important stability and flexibility to support our investment strategy. We are unaware of any other publicly traded entity that invests primarily in CLO equity with perpetual financing and consider this to be a material competitive advantage for the company.

[Ken Onorio, CFO and COO at Eagle Point Credit Company]

Turning to our fourth quarter activity, we collected $42 million in cash flows from the investment portfolio during October and expect additional collections during the remainder of the quarter. Management's unaudited estimate of NAV as of October month-end was between $3.73 and $3.83 per share, the midpoint being a 9% decrease from quarter end. With that, I'll turn it back to Tom.

[Thomas Majewski, CEO at Eagle Point Credit Company]

Thanks, Ken. We recognize that the past two years have been a difficult period for ECC and other CLO equity investors. Looking ahead, we remain constructive both on the long-term outlook for our CLO equity portfolio and our private credit investments. Based on the opportunities we're seeing across the Eagle Point platform, we do expect CLOs to continue to become a smaller portion of our portfolio over time. We believe our ability to access differentiated investment opportunities across the broader Eagle Point platform, coupled with our proactive approach to portfolio management, positions ECC well to generate increasingly strong returns for shareholders over time. We thank you for your time and interest in Eagle Point Credit Company. Ken and I will now open the call to your questions. Operator?

[Operator]

Thank you. We will now be conducting a question-and-answer session. If you would like to ask a question at this time, you may press star one from your telephone keypad, and a confirmation tone will indicate your line is in the question queue. You may press star two if you would like to withdraw your question from the queue. For participants who are using speaker equipment, it may be necessary to pick up your handset before pressing the star keys. One moment, please, while we poll for questions. Thank you. Thank you. The first question is from the line of Mickey Schleien with Clear Street. Please proceed with your questions.

[Mickey Schleien, Analyst at Clear Street]

Good morning, Tom. Can you hear me okay?

[Thomas Majewski, CEO at Eagle Point Credit Company]

Good morning, Mickey. We can.

[Mickey Schleien, Analyst at Clear Street]

Terrific. Tom, just wanted to start at a very high level, and you sort of touched on this in your prepared remarks, but obviously, broadly syndicated loan spreads have compressed more than CLO liability spreads over the past several years. I understand, and I think the market understands, part of that is a timing issue. But the bottom line is that the economics of CLO equity have deteriorated a lot. Do you believe we are approaching some sort of a cyclical bottom in CLO equity returns, or has something fundamentally changed in the market that could keep returns depressed for an extended period of time? I am asking because it sounds like you also have made an internal decision to sort of reduce your CLO equity exposure.

[Thomas Majewski, CEO at Eagle Point Credit Company]

Good question. The short answer is, directionally, yes. We cannot ever say anything is permanent, but what has been going on in the CLO market, going on two years now, has not delivered good returns for the equity holders, just as simple as that. One of the biggest things we have seen, and no one has exact data on this, so there is some judgment into what I am about to share, but we estimate a significant majority, over three-quarters, maybe more of, I mean, we have seen some anecdotal research of new CLOs have been supported by captive CLO funds, or whether it be a fund or a collateral manager who has access to internal capital, or not folks like us or many of our competitors that everyone on this call knows well, who are profit-motivated, and if the new arbitrage does not look good, we do not invest.

[Thomas Majewski, CEO at Eagle Point Credit Company]

What we have seen is, let us take that, our assumption, our estimate and best estimate as a given. It creates excess demand for loans, because they are out buying loans left, right, and center, because they got to ramp their CLOs, and it creates excess supply of CLO debt, in that if there is a certain amount of CLO debt the market wants to buy, they pump a little more into it. If you look at our spread over time, our weighted average loan spread, if you go back like two years, in our investor decks, you can see on the CLO book, it was much, much higher than it is today. AAA have come in for sure, but nowhere near to the same basis point amount or percentage amount, and it is obviously the whole stack that matters.

[Thomas Majewski, CEO at Eagle Point Credit Company]

When you think about COVID, NAV fell precipitously in March of 2020. That was not due to spread compression. That was due to fear and uncertainty and the price of loans falling, the price of CLO securities falling. Loans weren't repricing. Then boom, we snapped back, and that year and the next year were some of the best years in the history of the company. Here, what we have is that loan spread, as loans have been repriced tighter and tighter, has just taken away that value. Just even if the market gets soft, companies simply won't refinance, and they will just keep their tight financing longer. We believe there has been, at a minimum, a medium-term shift in the market, where we used to have disciplined investors like us buying new issue CLO equity. We think that has changed by, there is a significant new trend.

[Thomas Majewski, CEO at Eagle Point Credit Company]

If we look back to the risk retention days back in 2017, 2018-ish, even then what we saw was, this is judgmental and a little bit dated at this point, half of CLOs were purchased by captive vehicles, and half were issued under what was called vertical risk retention, where the collateral manager bought 5% of each class, and a third-party investor like ourselves would have bought the majority of the equity, kind of keeping the market honest. If we say back then it was 50%, give or take, now we think it is north of 75% going into non-economic capital. That is a shift that we do not see changing in the near term. If it did, what that would then be is loan prices fall for a while, but maybe CLO debt could tighten a bit.

[Thomas Majewski, CEO at Eagle Point Credit Company]

Our job is to make money for investors, and we're frustrated with the stock price. We're frustrated with the NAV. If you look across all the public CLO funds, it's a similar story in terms of how these vehicles have performed in the underlying portfolios. What we have been doing over time, and we started talking about this as it got more significant at the beginning of the year, Eagle Point does a lot of things. A significant majority of our AUM is outside of the CLO market at this point. We're all shareholders here, and ideally, a great scenario is we could just put up a 15% gross return every year, and everything would work perfectly. The reality is, the CLO equity investment strategy over the last 18 months hasn't done that.

[Thomas Majewski, CEO at Eagle Point Credit Company]

As we've been looking and where we're finding the best investments across all the different areas at Eagle Point, when it makes sense, when it is for any number of reasons, whenever possible, we're trying to include those in ECC's portfolio. End of the day, we're here to make money on credit investments. To your question, yes, we think there's been a minimum, a medium-term shift in the market.

[Mickey Schleien, Analyst at Clear Street]

Tom, it's interesting that you bring up the topic of captive funds. Anecdotally, I've heard it could actually be meaningfully even north of 90%. Regardless, in your prepared remarks, you mentioned that you're involved in new CLOs where the, I guess, the collateral manager is accepting a lower fee structure. Is this a situation where third-party CLO equity investors like yourselves are essentially trying to compete for these captive funds? What does that mean on a go-forward basis for the arbitrage?

[Thomas Majewski, CEO at Eagle Point Credit Company]

In the case of the limited number of CLOs, new ones that we've been involved in, I kind of put them in two categories. There's a small number where the fund has a where ECC has a revenue interest in the collateral manager. There, frankly, we're even in their captive fund. I mean, you can see there's a limited partnership interest in a captive fund. There, we're supporting the building of our business that we own our ECC and other clients here own a revenue share in. The limited number of other investments we've made have been principally focused on our best-performing collateral managers who have delivered the best for us, or amongst the best, let's say, over an extended period of time.

[Thomas Majewski, CEO at Eagle Point Credit Company]

Where those folks also have the foresight to appreciate, "Gee, well, these folks at Eagle Point have been investing with us between 10 years and 15 years. Let's keep that relationship going, even though if it's a little bit smaller right now." They would rather keep, shall we say, keep the dialogue warm than say, "Sorry, there's nothing to do." We have focused to those that we believe have performed in the top bands for us and where we think have the potential to continue doing that. It is a pretty small list at this point.

[Mickey Schleien, Analyst at Clear Street]

Right. It sounds like more of an opportunistic situation than some sort of secular development.

[Thomas Majewski, CEO at Eagle Point Credit Company]

Yeah.

[Mickey Schleien, Analyst at Clear Street]

Tom, I wanted to touch on software. First of all, can you give us a sense, at least as of the end of the third quarter, what do software loans generally represent in terms of CLO collateral? More importantly, look, the disruption of software by AI, in my mind, remains a question that is extremely difficult to answer. I am not smart enough to know what it will look like in three or four or five years from now. I am really curious how collateral managers are managing that risk, and perhaps even more importantly, how are you underwriting that risk, and what assumptions are you making in that sector specifically to build your estimated yields or effective yields?

[Thomas Majewski, CEO at Eagle Point Credit Company]

Let me answer the last part first and then the broader question. We do not put a specific assumption for losses on any one given sector. We are not sitting there saying, "We think technology is going to default 3% and media 2%." That is not the way we look at it, and I do not think the market looks at it particularly that way. Even within technology, which includes software and services, which is about 9.5% of our look-through portfolio, there is a lot of different flavors. Just like healthcare, which has gone down a little bit in our portfolio, there is a lot of different flavors of technology. Similarly, we also have technology hardware and equipment, which is different than software and services. So, we do not make specific assumptions about each category or each industry.

[Thomas Majewski, CEO at Eagle Point Credit Company]

That said, if there is a significant number of loans trading at low prices that are in those categories, we do apply typically additional stresses in our effective yields for loans trading at below certain thresholds. There could be that there is a higher default rate assigned to one of those loans or categories, but not by virtue of the category. It is by virtue of the price of the loan.

[Thomas Majewski, CEO at Eagle Point Credit Company]

To the broader question of what does all this AI stuff mean, a lot of money is changing hands. It is actually remarkably good for the U.S. economy and nominal GDP growth around 6%, give or take. I remember, I was in the Pacific Rim in 2016 or 2017. The U.S. was sitting at 1.5%, 2% on a GDP growth, and the country I was in was having 6% GDP growth. I was like, "Wow, this is" And they were considering that slow.

[Thomas Majewski, CEO at Eagle Point Credit Company]

I could not even imagine us getting there. That was a decade ago. AI in the short term is definitely creating very real jobs, all the construction of data centers, the building of plants and chip plants. In Arizona, there is that Taiwan Semiconductor Company, the guy who builds all those chips for Apple, building this giant factory in Arizona in America. These are real tangible jobs that have a tremendous multiplier. That much is really good. Will some data centers and some things not work and people lose a lot of money in some categories? For sure. Will others work great? We believe so. Think back to the short-term good news is it is creating a lot of jobs of people who do actual work. We like that. The bigger analogy that we keep thinking about is just this similar thing with e-commerce.

[Thomas Majewski, CEO at Eagle Point Credit Company]

If you think back to the mid to late 1990s, early 2000s, is Amazon going to put every store out of business? No. Did it put a lot of stores out of business? Yes. You walk up and down Greenwich Avenue, it is still pretty darn occupied, but the businesses are different now than they might have been 25 years ago. Maybe that, in some ways, the mom and pop businesses are gone and things like that, who could not compete. But the impact of an Amazon and related e-commerce to retail has been an impact, but it has not meant 60% of Main Street is empty by any stretch. You look at Amazon, you look at, I am using Amazon as an example here, but you look at cloud computing. Read a stat recently, still 70% of Fortune 500 companies use mainframes for key processing.

[Thomas Majewski, CEO at Eagle Point Credit Company]

Ken and I, we do not have a mainframe here. We have a wire room, and it goes somewhere to a cloud, and I am sure with a backup and a backup to a backup. Just because this technology has advanced in a lot of other ways, or e-commerce is a significant part of our GDP, it has not taken things away. Will it be a shift? Absolutely. Does it take longer to come about? In my opinion, does the impact take longer to flow through? In my opinion, yes. Although, can it be pretty meaningful? In my opinion, the answer is yes there as well. But it is a little further away than I think the headlines would suggest. There is uncertainty around that trajectory.

[Mickey Schleien, Analyst at Clear Street]

My last question, I guess more of a technical question. Much has been discussed about liability management exercises over the last few years. When you look at those, do you consider those a quasi-default, and you make some assumption about a recovery? Or how do you factor that into your effective yield assumptions? That is it for me this morning.

[Thomas Majewski, CEO at Eagle Point Credit Company]

Yeah, so there is kind of two different ways. Some LMEs are pro rata, where every investor, every holder of the loan gets the same new package of holdings. Others are non-pro rata, where some get bigger and some get better outcomes, and others get inferior outcomes. So it has changed both how we have underwritten collateral managers, how are they able to navigate LMEs. This is different than an old-fashioned bankruptcy. Some are better at it than others, frankly, and we have done a lot of diligence on the broader collateral manager community on their track records handling LMEs as the first step.

[Thomas Majewski, CEO at Eagle Point Credit Company]

Then the other bit, as we have looked at it, the way it kind of flows through, let us say a loan has gone through an LME within a CLO, the way it is going to be captured in our analysis is, where are the securities that you get back, loans or securities, where are they marked? And that is going to drive if we apply an additional haircut for future losses on those. There are more than a few companies, unfortunately, that have had multiple LMEs. So that will continue to some degree, although hopefully, that remains relatively low. But the price on the take-back instruments and the type of instrument, different recoveries for non-senior secured loans and things like that are the ways that is going to flow through our effective yield.

[Mickey Schleien, Analyst at Clear Street]

I appreciate that. Those are all my questions this morning. Thank you for your time.

[Thomas Majewski, CEO at Eagle Point Credit Company]

Great. Thank you very much, Mickey.

[Operator]

The next question is from the line of Timothy D'Agostino with B. Riley Securities. Please proceed with your questions.

[Timothy D'Agostino, Analyst at B. Riley Securities]

Yeah. Hi, good morning. Thanks for taking all the questions. I guess on my end, looking back over the past couple quarters, obviously, we think about 2025, and a lot of it was market-driven. Then 2026, it seems like the NAV has kind of jumped around here, $4.17 at 1Q, and then about $4.50 at 2Q, and then back to $4.17 at 3Q here. I just wanted to maybe gauge and get an understanding, and it might be hard to quantify, but has the change in the investment approach, as in leaning a little bit more into infrastructure credit or regulatory capital relief, just outside of CLO equity, has that helped drive maybe a more stable net asset value, or is the market also helping that?

[Timothy D'Agostino, Analyst at B. Riley Securities]

Again, it might be hard to quantify the impacts of those two, but it would be great to hear a little bit more about that. Thank you.

[Thomas Majewski, CEO at Eagle Point Credit Company]

Short answer is yes. The longer answer, at the end of the day, the change in NAV, the price of securities, cash we receive in on our portfolio, less cash we pay out to investors and expenses of the company. To the extent we own investments that perform better, we either pay out more cash or NAV goes up, or hopefully a combination of the two of them. The price movement on CLO equity, sometimes I say is exaggerated and unwarranted. I haven't actually said that on the call today. While I think it, my hope is that it does start going back up, it's been an intentional part of our investment strategy as we've moved roughly 40% of the portfolio outside the CLO market, is to get to assets that can be more stable and most importantly, generate a higher total return.

[Thomas Majewski, CEO at Eagle Point Credit Company]

I think we shared in the press release and some of the prepared remarks, since 2020, we've invested over $800 million in investments away from the CLO market. The gross IRR on that before expenses and costs and anything was around 18%. We haven't published how much is realized versus unrealized, I don't think. Or maybe we published- One of the numbers?

[Ken Onorio, CFO and COO at Eagle Point Credit Company]

Yeah, it might be. It's in the-

[Thomas Majewski, CEO at Eagle Point Credit Company]

It is, yeah. Let's say about 3/8 of that has actually been realized at this point, an even better IRR than the blended across all $800 million+. This is not just a little bit on the side. Yeah, I think the company is in much better shape as a result of that investment, the expanded investment program. When it was 5% or 10% of the portfolio, it probably doesn't warrant talking about. As it's approaching, as it's over a third of the portfolio at this point, it does warrant talking about. We believe the investments in general will be more stable, and more importantly, deliver a higher total return in the coming quarters and years than traditional CLO equity will.

[Timothy D'Agostino, Analyst at B. Riley Securities]

Okay, great. That's helpful. Just thinking about leverage ratios here and asset coverage, end of the quarter around 204%, and obviously that minimum of 200%. You repurchased or bought back some preferred post-quarter. I guess it'd be great to just hear a little bit more about how you plan to address that in the long term, obviously staying above that 200%, and then just getting back to within your leverage target. That'd be great. Thank you.

[Thomas Majewski, CEO at Eagle Point Credit Company]

Yeah. So, one of the good We have a dividend, a distribution at this point that was supported by recurring NII. Forget about cash flow or anything else. Obviously, we had an additional $0.11 of net NII as a result of one investment that had an early payoff that triggered some additional interest income. But broadly, it's getting NII to equal or exceed our monthly distributions, which right now we're in the zone on doing. It's making investments that have the potential for appreciation, frankly, is another thing. Then, slowly and surely, while we don't have any near-term maturities, we recognize the importance of being on sides of the 200 ACR, and we did announce a redemption of 1.5 secure, or one and a portion of securities today, with the goal of maintaining on sides on that ACR.

[Thomas Majewski, CEO at Eagle Point Credit Company]

When the price of CLO securities is dropping, and it really was this time last year, we had a big drop, and we got a little closer than we'd like. We discontinued the Series AA Preferred program. It's a great piece of paper for us as a borrower. It's a great piece of paper for the investors as well. But unfortunately, the more important test for us is the 200 ACR, and we're very mindful of being on sides of that. Then slowly through improved investment performance, getting back into the target ratio.

[Timothy D'Agostino, Analyst at B. Riley Securities]

Okay, great. Thank you so much for taking my questions this morning.

[Thomas Majewski, CEO at Eagle Point Credit Company]

Thank you.

[Operator]

The next question is from the line of Christopher Nolan with Ladenburg Thalmann. Please proceed with your questions.

[Christopher Nolan, Analyst at Ladenburg Thalmann]

Tom, based on your answers to Mickey's questions on the market dynamics, is it really, I mean, from what I understand, is it really the change in the buying patterns within the CLO equity market, or are there underlying asset quality concerns related to bank loans?

[Thomas Majewski, CEO at Eagle Point Credit Company]

It's principally the earlier, but secondarily the latter. This is in the judgmental category. We looked at one kind of middle-of-the-pack investment, and how it performed, I must say, over the last two years. We did this a little while ago, and it was a negative total return investment over that timeframe. Still generating cash flow every quarter, but with spread compression, a handful of losses, a handful of defaults, a handful of loans sold at lOsses, handful of LMEs, all decaying the portfolio. Judgmentally, about 2/3 of the mark-to-market on that investment were driven by spread compression, and judgmentally, about 1/3 were due to problems with a handful of loans, but that can add up. When there's large-scale defaults and the price of all loans falls significantly, CLOs do particularly well, and the financial crisis and COVID were great examples of that.

[Thomas Majewski, CEO at Eagle Point Credit Company]

When you're in a bifurcated market where loans are either near par or at a deep discount, that's kind of the trickiest one for us. We've got the loan repricing coming in due to, we believe, principally due to the demand of return insensitive captive capital. The flip side, as you point out, there are some problems in loans, but we're not seeing 10% defaults or anything like that. But when you count loans sold at a loss, even if it doesn't default, that's still A loss is a loss. It still hurts. So it's about 2/3, 1/3 judgmentally. Every investment's going to vary. The bigger bit, though, is we don't see that 2/3 movement, that 2/3 portion changing significantly, which has impacted our investment direction here.

[Christopher Nolan, Analyst at Ladenburg Thalmann]

As a follow-up question, given the shift in the investment focus to these non-CLO type of investments, how's that going to change your funding strategy? In particular, are you going to start looking at more off-balance sheet vehicles? That's it for me. Thank you.

[Thomas Majewski, CEO at Eagle Point Credit Company]

Oh, like a joint venture or things like that?

[Christopher Nolan, Analyst at Ladenburg Thalmann]

Yeah, a senior loan fund or something like that.

[Thomas Majewski, CEO at Eagle Point Credit Company]

Yeah, that's an interesting question. We do have one joint venture. You can figure out from other public filings who it is, but Senior Secured Corp 2022, something like that, is one. That's actually been a great performer for us. I wish we had more. We have one other one, which is in the It exists, but it doesn't have any financing yet.

[Christopher Nolan, Analyst at Ladenburg Thalmann]

Not yet.

[Thomas Majewski, CEO at Eagle Point Credit Company]

Not yet, but possibly to use some degree of joint venture structure. In one, someone else actually brings the assets to the 2022 Credit Corp. Someone else brings the assets. We have approval rights, they do as well. In the other one, we bring the assets, but there's the dual approval rights. That said, we can't shift any of our existing financing over to those boxes. That's not permitted. It's challenging. We have some great financing that, unfortunately, because of the decline in NAV, we have more of that great financing relative to our capital than we'd like versus our target. To your question, we certainly plan to expand in that direction, although I wouldn't say significantly.

[Christopher Nolan, Analyst at Ladenburg Thalmann]

Okay. Thank you.

[Operator]

Thank you. The next question's from the line of Erik Zwick with Lucid Capital. Please proceed with your questions.

[Analyst at Lucid Capital]

Hey, good morning. This is Justin on for Erik. Just wanted to touch on the private credit investments again. Can you remind us, is there a cap on that concentration in the portfolio? And then maybe your thoughts on the current pipeline mix and yields that you're seeing would be great.

[Ken Onorio, CFO and COO at Eagle Point Credit Company]

Yeah. So, it's Ken here. So, yeah, we would be limited up to 50%. So, at any given time, we could never go over 50% of the portfolio related to non-CLO investment allocation. That's the rough guideline. And as Tom mentioned earlier in the call, we're roughly at 40%, but there is a cap that we cannot exceed 50% at this point in time.

[Thomas Majewski, CEO at Eagle Point Credit Company]

I'll highlight, that's under the existing documents of the vehicle. It's possible those documents could be amended in the future and things like that, obviously with ample notice to all investors. It is also measured, I'll say, at time of investment. So even if we didn't do anything in the portfolio, if the CLO equity portfolio falls, we could actually go above it. The limitation is measured at time of investment, and changes in market value. Maybe the other stuff appreciates or the CLOs depreciate, could move that ratio around. It is possible we could reopen the documents in the coming quarters.

[Analyst at Lucid Capital]

Okay, great. Maybe could you just talk a little bit about current pipeline mix and yields that you are seeing out there right now?

[Thomas Majewski, CEO at Eagle Point Credit Company]

Certainly across our. What we are putting in as private credit is not what you are seeing in a typical BDC. If you were to look at our investments versus, I will not name them, but you could pick five of your favorite BDCs. We are typically not out there in the SOFR plus 500 loan market. The things we are doing are typically kind of investments with mid-teens type returns, and that is consistent with the 18% gross returns we have achieved on $800 million of investments since 2020. The pipeline is robust across almost every sector away from the CLO portfolio, and there is plenty of CLOs to buy, just we are not particularly excited to buy them. The yield opportunity, total return opportunity we are seeing in the mid-teens in general, these are sometimes more interesting investments. It is not a cost-to-capital shootout.

[Thomas Majewski, CEO at Eagle Point Credit Company]

It is a let us roll up our sleeves and find a solution that works for a borrower, where Eagle Point is leading and originating the investment and negotiating the terms and making sure the transactions fit for us, will deliver good returns. The best ones, or the ones we like the best, are those that have good structure, good collateral, credit downside, with the path to some equity upside. If you look through our schedule of investments, I was commenting to Ken before we began the call, the SOI used to just be a list of CLOs. There is a lot of equity securities and warrants and penny warrants and things that we have actually, in many cases, gotten as part of making a loan.

[Thomas Majewski, CEO at Eagle Point Credit Company]

Sometimes we will put a little extra money in a pref or something like that, where we are seeking to make investments with credit downside if something goes awry, but the path to some equity upside. The return opportunity is robust, and the set that we are looking at in our pipeline is diverse across types of borrowers and the different sectors that we operate in.

[Analyst at Lucid Capital]

Okay, great. Then in the press release, I think you noted about $6 million of deployments in Q4 thus far, which I think is a bit slower than this time a year ago. Is that a typical pace that you would expect this time of year, or are there any other factors, seasonality impacts that are affecting new deployment opportunities?

[Thomas Majewski, CEO at Eagle Point Credit Company]

The asset coverage ratio. We have to send out the securities that we announced the redemptions of. We have to send cash out for that.

[Analyst at Lucid Capital]

Got it. Okay. Great. That is all for me today. Thank you.

[Thomas Majewski, CEO at Eagle Point Credit Company]

Very good.

[Operator]

Thank you. At this time, I will now turn the floor back to Tom for closing remarks.

[Thomas Majewski, CEO at Eagle Point Credit Company]

Great. Thank you very much. I know we've gone almost an hour here on the call. We did want to address one other thing. Do you want to tap on one point here, Ken, quickly?

[Ken Onorio, CFO and COO at Eagle Point Credit Company]

Yeah, sure. We got a number of requests in the inbox to explain the Nexus position on the SOI between 6/30 and 9/30, which I will do right now, so everyone has the benefit of it. This is all information that's on our website currently. On page 20 of the semi-annual report for June 30th, on the SOI in the infrastructure section, there's an investment called Nexus Apex Holdings, acquired in February 2026, a cost of $72 million, and a fair value of $94 million. The change, the difference between fair value and cost at June 30th was due to a minimum multiple on invested capital that we were going to receive from a repayment, and this repayment is the same transaction that Tom mentioned earlier in the call. So $22 million is related to MOIC.

[Ken Onorio, CFO and COO at Eagle Point Credit Company]

If I fast-forward to the third quarter, the first thing is on September 30th, you'll see a position in the infrastructure section called Nexus Alpha 1 Intermediate LLC, which has an acquisition date of July 30th. That is a refi of that early repayment of that initial transaction that I mentioned, and you can see that the fair value equals the principal of $94 million in that new deal, and has a cost of $76 million and a fair value of roughly the same amount of $76 million. So a good portion of that $22 million difference was recognized as income, as that MOIC was realized on July 30th, and we mentioned the impact on the call earlier.

[Ken Onorio, CFO and COO at Eagle Point Credit Company]

In addition, on the 9/30 SOI, which is the page nine of the unaudited 9/30/2026 financials, you will see two equity positions in the equity section for Nexus Alpha 1 Intermediate LLC, one for about $3 million, the other one for around $11 million, which completes the whole of that transaction. So it was not a drop in fair value in quarter-over-quarter, it was effectively a deployment after receipt of that MOIC into a new position. Additionally, on our 9/30 financials, page 18, everyone's favorite statement, the cash flow statement, you will see the $22 million being identified as a roll of interest income capitalized upon refinancing. That is the information. I know it is a little bit technical, and if anyone would like a further explanation or has questions, please hit the IR box, and I will be happy to get on the phone and explain it further.

[Ken Onorio, CFO and COO at Eagle Point Credit Company]

I just wanted, since we got multiple requests, to address it on this call. Thank you.

[Thomas Majewski, CEO at Eagle Point Credit Company]

Great. Thank you, Ken. We obviously love investments that cost $72 million that turn into $94 million within a short period of time. That may not happen every quarter, but that is an example of where we are looking for a credit investment with credit downside, yet the potential for some equity upside, and that is one that has gone very well for the company, and continues to perform great. We are very happy as part of the term out to the senior secured loan on July 30th on that investment.

[Thomas Majewski, CEO at Eagle Point Credit Company]

You will see there were multiple amounts of equity that came our way, and there is a cost associated with it there, but that was an allocation of basis, not necessarily a check that was written, because it was all kind of in one It was included, you would say, free with the purchase of that senior secured loan on July 30th. So, I know we did get a couple questions there, so thank you for providing that detail. So again, we appreciate everyone's time and questions. We are approaching the hour here, so we will wrap up the call at this point if there are further questions on any aspect of the company.

[Thomas Majewski, CEO at Eagle Point Credit Company]

We realize this is a change. If you were to listen to a call three or four years ago, we would not have been talking about any of the stuff we are talking about today, or very little of it. But this is indicative of where we are seeing the best opportunities to make money in the credit markets, and overall, our task first and foremost here is to be making money for our investors, and we are deploying ECC's capital in those markets where we are finding the best opportunities. We appreciate your time and attention today, and Ken and I will be available to take further calls or questions via email today. Thank you, and have a good afternoon.

[Operator]

Thank you. This will conclude today's conference. You may disconnect your lines at this time. We thank you for your participation. Have a wonderful day.

Participants

Executives

• Thomas Majewski, CEO
• Ken Onorio, CFO and COO

Analysts

• Moderator
• Mickey Schleien, Analyst at Clear Street
• Timothy D'Agostino, Analyst at B. Riley Securities
• Christopher Nolan, Analyst at Ladenburg Thalmann
• Analyst at Lucid Capital