GREENWICH, Conn.--(BUSINESS WIRE)--Eagle Point Credit Company Inc. (NYSE:ECC) (the “Company”) has today published updated portfolio information summarizing the Company’s industry exposure based on the underlying loan exposure of the CLOs in which the Company invests.
As of December 31, 2014, the Company’s estimated top ten S&P industry exposures were as follows:
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S&P Industry Exposure |
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| Business equipment & services | 8.5% | |
| Health care | 7.7% | |
| Electronics/electrical | 6.4% | |
| Leisure goods/activities/movies | 5.8% | |
| Oil and gas | 5.4% | |
| Lodging & casinos | 4.5% | |
| Telecommunications | 4.4% | |
| Financial intermediaries | 4.3% | |
| Chemicals & plastics | 4.2% | |
| Retailers (except food & drug) | 4.2% |
Source: Trustee reports for CLO securities in which the Company is invested and information provided directly from the managers of those CLOs. Exposures are determined by calculating the aggregate principal balance of the underlying collateral held by the Company’s CLO investments within the industries indicated and dividing by the aggregate principal balance of all of those CLO vehicles’ underlying collateral (excluding cash) on a weighted average basis for the Company’s investments in each of those CLO vehicles. Weighted average exposures are estimated as of December 31, 2014 and exclude certain recent CLO investments with missing or incomplete industry data.
Within the oil and gas industry, based on the most recent pricing provided to the Company by its portfolio investments, the weighted average price of the underlying loans was 91.54%. The Company believes this pricing is indicative of a demand in the market for wider yields and not a market expectation of near-term defaults.
As of the most recent pricing information available to the Company from its portfolio investments, the total amount of the Company’s oil and gas exposure with a weighted average price below 80% represents just 0.57% of the Company’s overall loan exposure.
Upon a review of the Company’s current underlying loan exposure, the Company currently anticipates no material change in its internal estimates of IRR for the Company’s CLO equity positions.
In addition, the Company believes many of its CLO collateral managers are taking advantage of the recent volatility in credit market pricing to increase the spread and build the par value of their portfolios by proactively trading and attractively reinvesting loan principal repayments and sale proceeds. The Company believes these relative value trades and accretive reinvestments during times of market volatility may position its CLOs for higher future equity cash flows.
While the Company believes the spread widening on oil and gas-related high yield credit is warranted, it is noted that senior secured loans have much less oil and gas exposure than the high yield bond market. Specifically, according to S&P Capital IQ, in December high yield bond exposure to oil and gas-related credits is approximately 17% versus approximately 5% for the senior secured loan market. Further, the Company believes senior secured loan exposure provides greater protection to creditors who enjoy a first-priority pledge on a company’s assets as compared to high yield bond investors who are “second in line” and often unsecured.
ABOUT EAGLE POINT CREDIT COMPANY INC.
The Company is a non-diversified, closed-end management investment company. The Company’s investment objective is to generate high current income and capital appreciation primarily through investment in equity and junior debt tranches of collateralized loan obligations. The Company is externally managed and advised by Eagle Point Credit Management LLC. The principals of Eagle Point Credit Management LLC are Thomas P. Majewski, Daniel W. Ko and Daniel M. Spinner. The Company makes certain unaudited portfolio information available each month on its website (www.eaglepointcreditcompany.com).
FORWARD-LOOKING STATEMENTS
This press release may contain “forward-looking statements” within the meaning of the Private Securities Litigation Reform Act of 1995. Statements other than statements of historical facts included in this press release may constitute forward-looking statements and are not guarantees of future performance or results and involve a number of risks and uncertainties. Actual results may differ materially from those in the forward-looking statements as a result of a number of factors, including those described in the prospectus and the Company’s other filings with the SEC. The Company undertakes no duty to update any forward-looking statement made herein. All forward-looking statements speak only as of the date of this press release.
Source: Eagle Point Credit Company