Eagle Point Credit Company · NYSE:ECC
Eagle Point Credit — Q3 2021 Earnings Presentation
38 slides from Eagle Point Credit's earnings presentation, Nov 16, 2021
Slide 1: Eagle Point Credit Company Quarterly Update – 3Q 2021
EAGLE POINT CREDIT COMPANY QUARTERLY UPDATE – 3Q 2021 NOVEMBER 16, 2021
Slide 2: Important Information
I M P O R TA N T I N F O R M AT I O N 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 fo
Slide 3: Table of Contents
TA B 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
INTRODUCTION TO EAGLE POINT CREDIT COMPANY
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 27 of the Attractive Asset Class past 29 years1 Eagle Point believes CLO equity provides an attractive way to obtain exposure to senior secured loans Sp
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 pays a monthly distribution of $0.12 per share of common stock1 ECC Cumulative Common Distributions Per Share2 $16.00 $14.90 $14.12 $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
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 29, 2021: ECC generated a total return1 of 77.15% versus 72.62% for the S&P BDC Index2 (annualized net total return of 8.43% for ECC versus 8.03% 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 10.2% 118 Current Resets Refis Re-Pricings Monthly Distribution1 $0.12 Distribution Rate1 Calls2 Exposure to Average Years of CLO 17 Experience of Senior Investment Team 97.9% Floating Rate Senior Secured Loans3 Number of Underlying Numbe
Slide 10: Securities Outstanding
I N T R O D U C T I O N TO E C C Securities Outstanding Adviser and Senior Investment Team have $22.9 million invested in ECC, ECCB, ECCY and ECCX1 Common Stock Preferred Stock and Unsecured Notes NYSE Ticker ECC NYSE Ticker ECCB ECCC ECCY ECCX ECCW Series B Series C Term Preferred Stock Term Prefer
Slide 11: Senior Investment Team and Investment Process
SENIOR INVESTMENT TEAM AND INVESTMENT PROCESS
Slide 12: Experienced Senior Investment Team
INVESTMENT PROCESS Experienced Senior Investment Team Thomas Majewski Daniel Ko Daniel Spinner, Chief Executive Officer Principal and Portfolio CAIA Member of ECC’s Board Manager Principal and Portfolio of Directors Manager 25 19 15 15 24 18 Years in Years in Years in Years in Years in Years in Fina
Slide 13: Private Equity Approach to Fixed Income Investing
INVESTMENT PROCESS Private Equity Approach to Fixed Income Investing Eagle Point employs a process that we believe is more akin to a private equity-style investment approach than to the typical process used by many investors in fixed income securities Proactive sourcing of investment opportunities
Slide 14: CLO Equity Overview
© EAGLI CREDIT H POINT COMPANY
Slide 15: Why Invest in CLO Equity?
C L O E Q U I T Y O V E RV I E W Why Invest in CLO Equity? We believe that CLO equity provides an attractive way to obtain exposure to loans Distribution of CLO Equity IRRs CLO Equity Attributes U.S. CLOs (2002 – 2011 Vintages)1 CLO equity has historically generated strong absolute Potential for
Slide 16: The CLO Market is Large and Important to the Loan Market
C L O E Q U I T Y O V E RV I E W The CLO Market is Large and Important to the Loan Market The CLO market is the largest source of capital for the U.S. senior secured loan market U.S. Leveraged Loans Outstanding1 U.S. CLOs Outstanding2 CLOs Oustanding ($B) CLO Count (#) $832 $1,500 2,000 $1,301 $800
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 2020, the CSLLI generated positive total returns in 27 of the 29 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%
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 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 l
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 Credit Suisse Leveraged Loan Index (“CSLLI”) Spread1 Ten Year Average: 450 bps 376 bps Spread Long Term Average Ten Year Average Long Term Average: 409 306 bps 400 bps 391 386 386 387 376 357 359 358 3
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 Average: 60% 56.4% 32.6% 48.9% 48.2% 46.9% 44.7% 40.1% 40% 38.7% 38.1% 37.3% 29.6% 26.9% 27.6% 27.6% 23.6% Cumulative 24.1% Rep
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 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
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 TA L I N F O R M AT I O N 1 Income Statement and Balance Sheet Highlights Q3 2021 Q2 2021 Q1 2021 Q3 2020 (Unaudited) (Unaudited) (Unaudited) Q4 2020 (Unaudited) U.S. GAAP Net Investment Income ("NII") before Non-Recurring Expenses2 $0.37 $0.32 $0.29 $0.24 $0.29 U.S. GAAP Rea
Slide 24: Distribution and Expense Coverage
E C C S U P P L E M E N TA L I N F O R M AT I O N 1 Distribution and Expense Coverage ECC Portfolio Recurring Cash Flows2 $1.23 CASH DISTRIBUTIONS RECEIVED3 $1.09 $1.00 RECURRING PORTFOLIO $0.87 $0.61 $0.54 $0.48 $0.41 $0.53 $0.07 $0.32 $0.28 $0.31 $0.22 $0.22 $0.24 $0.24 $0.24 $0.24 $0.30 Q3 2020 Q
Slide 25: Quarterly Snapshot Trend
E C C S U P P L E M E N TA L I N F O R M AT I O N 1 Quarterly Snapshot Trend Q3 2021 Q2 2021 Q1 2021 Q3 2020 (Unaudited) (Unaudited) (Unaudited) Q4 2020 (Unaudited) (Figures below are in millions, except for per share amounts and shares outstanding) Distributions Received From CLO Equity2,3 $41.98 $
Slide 26: Portfolio Details – Q3 2021
E C C S U P P L E M E N TA L I N F O R M AT I O N 1 Portfolio Details – Q3 2021 Years Years Income Cash Income Weighted Weighted Return of Q3 Cash Senior CLO Equity Holdings Remaining in Remaining in Accrued Received Accrued CCC+/Caa1 Junior OC Average Average Diversity Vintage Refi/Reset/Call Capit
Slide 27: Portfolio Details – Q3 2021 (Cont.)
E C C S U P P L E M E N TA L I N F O R M AT I O N 1 Portfolio Details – Q3 2021 (Cont.) Years Years Income Cash Income Weighted Weighted Return of Q3 Cash Senior CLO Equity Holdings Remaining in Remaining in Accrued Received Accrued CCC+/Caa1 Junior OC Average Average Diversity Vintage Refi/Reset/Ca
Slide 28: Portfolio Details – Holdings as of October 2021
E C C S U P P L E M E N TA L I N F O R M AT I O N 1 Portfolio Details – Holdings as of October 2021 CLO Equity Holdings Cash Received Cash Received CLO Equity Holdings Cash Received Cash Received QoQ Change Junior OC Cushion QoQ Change Junior OC Cushion (as of October 31, 2021) During Q4 2021 During
Slide 29: Changes in Effective Yield
E C C S U P P L E M E N TA L 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 CLO Equity Holdings Effective Yield Effective Yield Change in Effective Yield
Slide 30: Additional Information
E C C S U P P L E M E N TA L I N F O R M AT I O N 1 Additional Information Income Cash Received Reconciliation to Unaudited U.S. GAAP Financial Income Loan Accumulation Facility Holdings Capital Realized Accrued During During Statements Accrued During (as of September 30, 2021) Invested Gain/(Loss)
Slide 31: Portfolio Investments and Underlying Portfolio Characteristics
E C C S U P P L E M E N TA L I N F O R M AT I O N Portfolio Investments and Underlying Portfolio Characteristics As of September 30, 2021, ECC’s portfolio was invested across 133 CLO investments Summary of ECC’s Portfolio of Investments1 Cash 0.9% Other 1.2% CLO Debt 6.9% Loan Accumulation Facilitie
Slide 32: Obligor and Industry Exposures
E C C S U P P L E M E N TA L I N F O R M AT I O N Obligor and Industry Exposures As of September 30, 2021, ECC has exposure to 1,704 unique underlying borrowers across a range of industries Obligor and Industry Exposure Top 10 Underlying Obligors1 % Total Top 10 Industries of Underlying Obligors1,2
Slide 33: Maturity Distribution of Underlying Obligors
E C C S U P P L E M E N TA L I N F O R M AT I O N Maturity Distribution of Underlying Obligors Maturity Distribution of Underlying Obligors1 30% 24.6% 22.7% % of Fund Exposure 19.4% 20% 16.4% Prior to 2024, only 4.2% of ECC’s underlying 12.7% loan portfolio matures 10% 3.7% 0.1% 0.4% 0% 2021 2022 20
Slide 34: Selected Market Data
© EAGLI CREDIT H POINT COMPANY
Slide 35: Credit Fundamentals
S E L E C T E D M A R 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 Average Leverage Multiples of Newly Issued Loans Average Interest Coverage Multiples of Newly Issued Loans
Slide 36: Credit Fundamentals
1. 2Q09 (15.2%) 2Q09 (11.3%) 3Q09 9.7% 3Q09 (3.2%) 4Q09 15.4% 4Q09 12.9% Source: S&P LCD. 1Q10 9.4% 1Q10 5.2% 2Q10 15.0% 2Q10 8.0% 3Q10 24.5% 3Q10 14.5% 4Q10 20.2% 4Q10 13.7% 1Q11 19.6% 1Q11 21.0% 2Q11 17.0% 2Q11 18.0% Credit Fundamentals 3Q11 14.8% 3Q11 14.0% 4Q11 9.6% 4Q11 14.0% 1Q12 12.8% 1Q12 12
Slide 37: Liquidity Considerations
S E L E C T E D M A R 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 $184.
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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