Eagle Point Credit Company Sells a Term Preferred

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Smaller Closed End Investment company Eagle Point Credit Company (ticker:ECC) has sold a nice Term Preferred issue. The issue has a 7.75% coupon and will be redeemed in 2022.

Recall that closed end investment companies are required to maintain a asset coverage ratio of 200% giving an added level of safety.

This issue is a monthly payer and if not redeemed in 2022 as scheduled they will have to pay a penalty rate that will be 9.75% the first year, 11.75% the next year and so on until redemption.


Note that Eagle Point Credit invests in CLO’s (collateralized loan obligations) and for those that want further information on these here is a good article that is on Eagle Point as well as Oxford Lane (we own the term preferreds of Oxford Lane).  CLO’s can be complex instruments as they are comprised of various ‘packages’ of loans and equity of less than investment grade companies.  Similar to BDC’s we do not want to own too much in this arena if we are looking into a steep recession (we think there may be a recession not too far out–but anything ‘deep’?).

Details of the issue are here.

We will be buying this issue for our personal holdings as well as in the 2015 Blended Income Portfolio.

Tim McPartland

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Tim McPartland
Tim McPartland is a private investor with over 45 years of investing experience. His analysis, research and writing is devoted to the hunt for income producing securities of all types, but in particular specializing in preferred stocks, exchange traded debt and Master Limited Partnerships.
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