Eagle Point Credit Company · NYSE:ECC
Eagle Point Credit — Q1 2020 Earnings Presentation
38 slides from Eagle Point Credit's earnings presentation, May 21, 2020
Slide 1: Eagle Point Credit Company Quarterly Update – 1Q 2020
EAGLE POINT CREDIT COMPANY QUARTERLY UPDATE – 1Q 2020 MAY 21, 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 years(1) Eagle Point believes CLO equity provides an attractive way to obtain exposure to senior secured loans Specialized
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 share(1) ECC Cumulative Distributions Per Share(2) $16.00 $14.00 $13.40 $12.80 $12.20 $12.00 $11.60 $11.00 $10.40 $9.80 $10.00 $9.20 $8.60 $8.00 $8.00 $7.40 $6.35 $6.00 $5.75
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 – May 14, 2020: ECC generated a total return(1) of -40.57% versus -11.67% for the Wells Fargo BDC Index(2) (annualized net total return of -8.9% for ECC versus -2.2% for the Wells Fargo BDC Ind
Slide 9: ECC By The Numbers
INTRODUCTION TO ECC ECC By The Numbers We believe that ECC has a portfolio which would be difficult to replicate Number of 17.6% Current Distribution Rate(1) 80 Resets Refis Monthly Distribution(1) $0.08 Calls(2) Average Years of CLO Exposure to 17 Experience of Senior Investment Team 97.8% Floating
Slide 10: Securities Outstanding
INTRODUCTION TO ECC Securities Outstanding Adviser and Senior Investment Team have $9.2 million invested in ECC, ECCB, ECCY and ECCX(3) Common Stock Preferred Stock and Unsecured Notes NYSE Ticker ECC NYSE Ticker ECCB ECCY ECCX Series B Unsecured Notes Unsecured Notes Term Preferred Stock Descriptio
Slide 11: Senior Investment Team and Investment Process
SENIOR INVESTMENT TEAM AND INVESTMENT PROCESS
Slide 12: Experienced Senior Investment Team
INTRODUCTION TO ECC Experienced Senior Investment Team Thomas Majewski Daniel Ko Daniel Spinner, Chief Executive Officer Principal and Portfolio CAIA Member of ECC’s Board Manager Principal and Portfolio of Directors Manager 24 18 14 14 24 18 Years in Years in Years in Years in Years in Years in Fin
Slide 13: Private Equity Approach to Fixed Income Investing
INTRODUCTION TO ECC Private Equity Approach to Fixed Income Investing Eagle Point employs a process that we believe is more akin to a private equity-style investment approach than to the typical process used by many investors in fixed income securities Proactive sourcing of investment opportunitie
Slide 14: CLO Equity Overview
© EAGLI CREDIT H POINT COMPANY
Slide 15: Why Invest in CLO Equity?
CLO EQUITY OVERVIEW Why Invest in CLO Equity? We believe that CLO equity provides an attractive way to obtain exposure to loans Distribution of CLO Equity IRRs CLO Equity Attributes U.S. CLOs (2002 – 2011 Vintages)(1) CLO equity has historically generated strong absolute Potential for strong abs
Slide 16: The CLO Market is Large and Important to the Loan Market
CLO EQUITY OVERVIEW The CLO Market is Large and Important to the Loan Market The CLO market is the largest source of capital for the U.S. senior secured loan market U.S. Leveraged Loans Outstanding ($ Billions)1 U.S. CLO Outstanding ($ Billions)2 CLOs Oustanding ($B) CLO Count (#) $673 $680 $1,300 $
Slide 17: Positive Loan Market Track Record
CLO EQUITY OVERVIEW Positive Loan Market Track Record Since 1992 through 2019, the CSLLI has generated positive total returns in 26 of the past 28 years Credit Suisse Leveraged Loan Index (“CSLLI”) Annual Total Return(1) 44.9% Annualized Return: 5.0%(1) 11.2% 11.0% 10.3% 10.0% 9.9% 9.4% 8.9% 8.3% 8.
Slide 18: Senior Secured Loans are the Raw Materials of CLOs
CLO EQUITY OVERVIEW Senior Secured Loans are the Raw Materials of CLOs Senior secured loans represent direct credit exposure 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 f
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 45 bps higher than the average of 304 bps Credit Suisse Leveraged Loan Index (“CSLLI”) Spread(1) 450 bps Spread Average Average: 304 bps 409 400 bps 391 386 386 387 376 357
Slide 20: Loan Repayment Rate
CLO EQUITY OVERVIEW Loan Repayment Rate Annual Repayment Rate Annual Repayment Rate Average 60% 56.4% Average: 33.2% 48.9% 48.2% 46.9% 44.7% 40.1% 40% 38.7% 38.1% 37.3% 35.2% 29.6% 23.6% 26.9% 27.6% Cumulative 24.1% 23.9% Repayments 21.7% 21.1% 20% 14.8% 8.8% 0% 2003 2004 2005 2006 2007 2008 2009 20
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 Q1 2020 Q3 2019 Q2 2019 Q1 2019 (Unaudited) Q4 2019 (Unaudited) (Unaudited) (Unaudited) U.S. GAAP Net Investment Income ("NII") before Non-Recurring Expenses(2) $0.36 $0.27 $0.37 $0.36 $0.35 U.S. GAAP Realized
Slide 24: Quarterly Snapshot Trend: Portfolio Cash Coverage
ECC SUPPLEMENTAL INFORMATION (1) Quarterly Snapshot Trend ECC Portfolio Cash Coverage Per Common Share(2) $1.13 CASH DISTRIBUTIONS RECEIVED(3) $1.08 $1.05 $1.02 $0.97 $0.17 RECURRING PORTFOLIO $0.01 $0.11 $0.22 $0.90 $0.12 $0.06 $0.36 $0.36 $0.34 $0.30 $0.26 $0.24 $0.60 $0.60 $0.60 $0.60 $0.60 $0.60
Slide 25: Quarterly Snapshot Trend
ECC SUPPLEMENTAL INFORMATION (1) Quarterly Snapshot Trend Q1 2020 Q3 2019 Q2 2019 Q1 2019 (Unaudited) Q4 2019 (Unaudited) (Unaudited) (Unaudited) (Figures below are in millions, except for per share amounts and shares outstanding) Distributions Received From CLO Equity(2)(3) $28.75 $29.04 $26.23 $43
Slide 26: Portfolio Details – Q1 2020
ECC SUPPLEMENTAL INFORMATION (1) Portfolio Details – Q1 2020 Years Years Income Cash Income Q1 Cash Weighted Weighted Remaining Remaining in Accrued Received Accrued Return of Received as % Junior Senior Average Average CLO Equity Holdings in Non-Call Reinvestment During Q1 During Q1 During Q4 Capit
Slide 27: Portfolio Details – Q1 2020 (Cont.)
ECC SUPPLEMENTAL INFORMATION (1) Portfolio Details – Q1 2020 (Cont.) Years Years Income Cash Income Q1 Cash Weighted Weighted Remaining Remaining in Accrued Received Accrued Return of Received as % Junior Senior Average Average CLO Equity Holdings in Non-Call Reinvestment During Q1 During Q1 During
Slide 28: Portfolio Details – Holdings as of April 2020
ECC SUPPLEMENTAL INFORMATION (1) Portfolio Details – Holdings as of April 2020 Junior OC Junior OC CLO Equity Holdings Cash Received Cash Received Cushion as of CLO Equity Holdings Cash Received Cash Received Cushion as of (as of April 30, 2020) During Q2 2020 During Q1 2020 QoQ Change April 30, 202
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 CLO Equity Holdings Effective Yield Effective Yield Change in (as of March 31, 2020) as
Slide 30: Additional Information
ECC SUPPLEMENTAL INFORMATION (1) Additional Information Income Cash Income Accrued Received Reconciliation to U.S. GAAP Unaudited Financial Accrued Loan Accumulation Facility Holdings Capital During During Realized Statements During (as of March 31, 2020) Invested Q1 2020 Q1 2020 Gain/(Loss) (as of
Slide 31: Portfolio Investments and Underlying Portfolio Characteristics
ECC SUPPLEMENTAL INFORMATION Portfolio Investments and Underlying Portfolio Characteristics As of March 31, 2020, ECC’s portfolio was invested across 96 investments Summary of ECC’s Portfolio of Investments(1) CLO Debt 6.3% CLO Equity 83.4% (15 Investments) (77 Investments) Loan Accumulation Facilit
Slide 32: Obligor and Industry Exposures
ECC SUPPLEMENTAL INFORMATION Obligor and Industry Exposures As of March 31, 2020, ECC has exposure to 1,523 unique underlying borrowers across a range of industries Obligor and Industry Exposure Top 10 Underlying Obligors(1) % Total Top 10 Industries of Underlying Obligors(1,2) % Total Altice 0.9% T
Slide 33: Maturity Distribution of Underlying Obligors
ECC SUPPLEMENTAL INFORMATION Maturity Distribution of Underlying Obligors Only 8.1% of ECC’s underlying loan portfolio is scheduled to mature prior to 2023 Maturity Distribution of Underlying Obligors(1) 30% 28.6% 24.9% % of Fund Exposure 20% 18.7% 11.9% 10% 7.9% 5.2% 2.5% 0.4% 0% 2020 2021 2022 202
Slide 34: Selected Market Data
© EAGLI CREDIT H POINT COMPANY
Slide 35: Credit Fundamentals
APPENDIX 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)2 (EBITDA/In
Slide 36: Credit Fundamentals
1Q08 7.5% 1Q08 16.9% 1. 2Q08 9.7% 2Q08 16.5% 3Q08 0.1% 3Q08 11.1% loans. 4Q08 (6.8%) 4Q08 (4.9%) Source: S&P LCD. 1Q09 (17.8%) 1Q09 (7.3%) 2Q09 (15.2%) 2Q09 (11.3%) 3Q09 9.7% 3Q09 (3.2%) APPENDIX 4Q09 15.4% 4Q09 12.9% 1Q10 9.4% 1Q10 5.2% 2Q10 15.0% 2Q10 8.0% Credit Fundamentals 3Q10 24.5% 3Q10 14.5%
Slide 37: Liquidity Considerations
APPENDIX 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 125 $74.80 100 $35.4 $52.0 $52.2 75
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) [email protected] (203) 340 8510
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