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Greetings and welcome to the Equal 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. As a reminder, this conference is being recorded. At this time, I will turn the conference over to Mr. Darren Dougherty from ProSig Partners. You may now begin.

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. 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? 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 29 cents per share, well in excess of our total distributions for the quarter of 18 cents 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 11 cents 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 18 cents per share in line with our distributions for the quarter. 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'll 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'll 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 35 cents per share during the quarter, and this fully covered the company's common distributions and total expenses. 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. 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've 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 the potential implications for the sector. From a CLO equity perspective, it's important to distinguish the impact in 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. 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 continues 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. 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 complimentary 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. These investments are originated through dedicated teams across the broader EaglePoint platform, giving ECC access to specialized investment expertise and opportunities across a wide range of credit markets. We remained 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 Musinich 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. Given Musinich'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 software exposure compared to many of its peers. As the Musinish 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. 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've 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've been investing across these complementary credit asset classes since 2020 and they've been growing in significance within our portfolio. ECC has an established track record of generating attractive returns in these strategies. Indeed, since 2020, we have invested over $800 million in credit assets beyond CLOs and we've 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'd also like to note that we've refreshed our investor presentation this quarter 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'll turn the call over to Ken to discuss our financial results in more detail.

Thank you, Tom, and thanks everyone for joining us today. During the third quarter, the company generated net investment income, or NII, of 31 cents per share. NII, less realized losses from investments, was 29 cents per share. This compares to negative 62 cents per share in the second quarter of 2026 and 16 cents 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 11 cents 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 gap net loss of $16 million, or $0.12 per share. This compares to gap net income of $0.53 per share in the previous quarter and gap net income of 12 cents per share in the third quarter of 2025. Third quarter cash flows from the company's investment portfolio totaled 46 million or 35 cents per share in line with the company's common distributions and total expenses. We paid three monthly distributions on our common equity of six cents 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%. 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. 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.

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? Thank you.

We'll now be conducting a question and answer session. If you'd like to ask a question at this time, you may press star 1 from your telephone keypad, and a confirmation tone will indicate your line is in the question queue. You may press star 2 if you'd 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 Stein with Clear Street. Please proceed with your questions.

Good morning, Tom. Can you hear me okay?

Good morning, Mickey. We can.

Terrific. Tom, just wanted to start at a very high level, and you sort of touched on this in your prepared remarks, but obviously, you know, broadly syndicated loan spreads have compressed more than CLO liability spreads over the past several years. I understand, I think the market understands, you know, part of that is a timing issue, but the bottom line is that the economics of CLO equity have deteriorated a lot. But do you believe we're 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? And I'm asking because it sounds like you're also have made an internal decision to sort of reduce your CLO equity exposure.

Good question. The short answer is, you know, directionally, yes. We can't ever say anything is permanent. But what's been going on in the CLO market, you know, 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've seen, and no one has exact data on this, so there's some judgmental, there's some judgment into these, into what I'm about to share, but we estimate a significant majority, over three quarters, maybe more of, we've 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 doesn't look good, we don't invest. What we've seen is, let's take our assumption, our estimate and best estimate as a given and It creates excess demand for loans because they're out buying loans left, right, and center because they've got to ramp their CLOs. And it creates excess supply of CLO debt in that if there's a certain amount of CLO debt the market wants to buy, they pump a little more into it. So if you look at our spread over time, 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. and it is today. AAAs have come in for sure, but nowhere near to the same, you know, basis point amount or percentage amount or, you know, and it's obviously the whole stack that matters. And so, like, when you think about COVID, NAV fell, you know, precipitously in March of 2020. That was not due to spread compression. That was due to, you know, fear and uncertainty and the price of loans falling, the price of CLO securities falling. Loans weren't repricing. And then, boom, we snap back, you know, in the 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. Even if the market gets soft, companies simply won't refinance and they'll just keep their tight financing longer. So we believe there's 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's a significant new trend. 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's north of 75% going into non-economic capital. And that is a shift that we don't see changing in the near term. and if it did, what that would then be is loan prices fall for a while but maybe CLO debt could tighten a bit. So 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. So 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. And 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. And the reality is The CLO equity investment strategy over the last 18 months hasn't done that. So 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, or any number of reasons, whenever possible, we're trying to include those in ECC's portfolio. And today we're here to make money in credit investments. And to your question, yes, we think there's been a minimum, a medium term shift in the market.

And 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%. But regardless, in your prepared remarks, you mentioned that you're involved in new CLOs where I guess the collateral manager is accepting a lower fee structure. So is this a situation where third-party CLO equity investors like yourselves are essentially trying to compete for these captive funds? And what does that mean on a go-forward basis for the arbitrage?

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. But 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. And where those folks, I'll say, also have the foresight to appreciate, gee, well, these folks at Eagle Point have been investing with us between 10 and 15 years. Let's keep that relationship going, even if it's a little bit smaller right now. And so they'd rather keep the, shall we say, keep the dialogue warm then say, sorry, there's nothing to do. And we've 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. But it's a pretty small list at this point.

Right, it sounds like more of an opportunistic situation than some sort of secular development. 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? And more importantly, look, the disruption of software by AI, in my mind, remains a question that is extremely difficult to answer. I'm not smart enough to know what it'll look like in three or four or five years from now. And I'm 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?

Let me answer the last part first and then the broader question. We don't put a specific... Assumption for losses on any one given sector. So we're not sitting there saying we think technology is going to default 3% and media 2%. That's not the way we look at it, and I don't 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's a lot of different flavors of technology. And then similarly, we also have technology hardware and equipment, which is different than software and services. So we don't make specific assumptions about each category. That said, or each industry, that said, if there's 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. So it could be that there's a higher default rate assigned to one of those loans or categories, but not by virtue of the category, it's by virtue of the price of the loan. To the broader question of what does all this AI stuff mean, a lot of money is changing hands. It's actually remarkably good for the U.S. economy and Real G or nominal GDP growth, you know, around six percent, give or take. I remember I was in the Pacific Rim in 2016 or 2017. The U.S. was sitting at one and a half, two percent GDP growth. And the country I was in was having six percent GDP growth. I was like, wow, this is, you know, and they were considering that slow. I couldn't 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. And in Arizona, there's the 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. So 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's creating a lot of jobs of people who do actual work. So we like that. The bigger analogy that we keep thinking about is just the similar thing with e-commerce. And 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's still pretty darn occupied but the businesses are different now than they might have been 25 years ago and maybe in some ways the mom and pop businesses are gone and things like that who couldn't compete but the impact of an Amazon and related e-commerce to retail has been an impact but it hasn't meant 60% of Main Street is empty by any stretch. You look at, you know, Amazon, you look at, I'm 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. Ken and I, we don't have a mainframe here. We have a wire room and it goes somewhere to a cloud and I'm sure with a backup and a backup to a backup. But just because this technology has advanced in a lot of other ways or e-commerce as a significant part of our GDP, it hasn't taken things away. So 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's a little further away. than I think the headlines would suggest. And there is uncertainty around the exact trajectory.

And my last question, I guess more of a technical question. Much has been discussed about liability management exercises over the last few years. So when you look at those, do you consider those a quasi default? And, you know, you make some assumption about a recovery or how do you factor that into your effective yield assumptions? That's it for me this morning.

Yeah, so there's 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's changed both how we've 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've done a lot of diligence on the broader collateral manager community on their track records handling LMEs as the first step. And then the other, you know, the other bit as we've looked at it, the way it kind of flows through, let's say a loan has gone through an LME within a CLO, the way it's 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's 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's going to flow through our effective yield.

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

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

Yeah, hi, good morning. Thanks for taking all the questions. I guess on my end, looking back over, you know, the past couple quarters, you know, obviously, we think about 25 and a lot of it was market driven. And then again, in 2026, it seems like The NAB has kind of jumped around here, 417 at 1Q and then about 450 at 2Q and then back to 417 at 3Q here. And 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 CLL equity, has that helped? Drive, maybe a more stable net asset value, or is the market also helping that? And again, it might be hard to quantify the impacts of those two, but it'd be great to hear a little bit more about that. Thank you.

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 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 NAB goes up or hopefully a combination of the two of them. The price movement on CLO equity sometimes they say is exaggerated and unwarranted. I haven't actually said that on the call today and so 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. I think we shared in the In the press release and some of the prepared remarks, you know, over since 2020, we've invested over $800 million in investments away from the CLO market. And the gross IRR on that before expenses and costs, I think, 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. It is, yeah, you know, let's say about, Three-eighths of that has actually been realized at this point, an even better IRR than the blended across all 800 million plus. So this is not just a little bit on the side. I think the company is in much better shape as a result of that investment, the expanded investment program. And when it was 5% or 10% of the portfolio, it probably doesn't warrant talking about. as it's approaching, you know, 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.

Okay, great. That's helpful. And just thinking about, you know, leverage ratios here and, you know, asset coverage, you know, end of the quarter and We have a dividend distribution at this point that

You know, supported by, you know, kind of recurring NII, forget about cash flow or anything else. Obviously, we had an additional 11 cents of net NII as a result of one investment that had an early payoff that triggered some additional interest income. But it's, you know, the 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. And then, you know, slowly and surely, while we don't have any near-term maturities, you know, we recognize the importance of being on sides of the 200 ACR, and we did announce a redemption of, well, One and a portion of securities today with the goal of maintaining onsides on that ACR. When the price of CLO securities is dropping, and it really was this time last year, we had a big drop. 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, and we're very mindful of being on sides of that. And then slowly through improved investment performance, getting back into the target ratio.

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

Thank you. The next questions are from the line of Christopher Nolan with Landberg Thelman. Please receive their questions.

Based on your answers to Mickey's questions on the market dynamics, 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?

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'm going to 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, a handful of LMEs all decaying the portfolio. Judgmentally, about two-thirds of the mark-to-market on that investment were driven by spread compression and judgmentally about one-third 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. 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. So 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, you know, a loss is a loss. It still hurts. So it's about two-thirds, one-third. Judgmentally, every investment's going to vary. The bigger bit, though, is we don't see that two-thirds movement, that two-thirds portion changing significantly, which has impacted our investment direction here.

And 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? And in particular, are you going to start looking at more off-balance sheet vehicles? That's it for me. Thank you.

Oh, like a joint venture or things like that?

Yeah, a senior loan fund or something like that.

Yeah, that's an interesting question. We do have one joint venture fund. and 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.

Not yet.

Not yet, but possibly to use some degree of joint venture structure. In one, someone else actually brings the assets. In that 2022 credit core, if someone else brings the assets, we have approval rights. They do as well. In the other one, we bring the assets, but the dual approval rights. That said, we can't shift any of our existing financing over to those boxes. That's not permitted. And it's challenging. We have some great financing opportunities. 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. So to your question, we certainly plan to expand in that direction, although I wouldn't say significantly.

Okay, thank you.

Thank you. The next question is from the line of Eric Zwick with Lucid Capital. Please proceed with your questions.

Hey, good morning. This is Justin. I'm for Eric. Just wanted to touch on the private credit investments again. Can you remind us if there's 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.

Yeah, so it's Ken here. So we would be limited up to 50%. So at any given time, we can 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.

And 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. And 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 50%. 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. And it is possible we could reopen the documents in the coming quarters.

Okay, great. And then maybe if you could just talk a little bit about current pipeline mix and yields that you're seeing out there right now.

Certainly across our... What we're putting in as private credit is not what you're seeing in a typical BDC. If you were to look at our investments versus, I won't name them, but you could pick five of your favorite BDCs. We're typically not out there in the SOFR plus 500 loan market. The things we're doing are typically kind of investments with mid-teens type returns, and that's consistent with the 18% gross returns we've achieved on $800 million of investments since 2020. The pipeline is robust across almost every sector away from the CLO portfolio, and there's plenty of CLOs to buy, just we're not particularly excited to buy them. The yield opportunity, total return opportunity we're seeing in the mid-teens in general, these are sometimes more interesting investments. It's not a cost of capital shootout. It's let's 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. And if you look through our schedule of investments, I was saying, I was commenting to Ken before we began the call, the SOI is, it used to just be a list of CLOs. There's a lot of equity securities and warrants and penny warrants and things that we've actually in many cases gotten as part of making a loan. Sometimes we'll put a little extra money in a pref or something like that where we're seeking to make investments with credit downside if something goes awry but the path of some equity upside. But the return opportunity is robust and the set that we're looking at in our pipeline is diverse across types of borrowers and the different sectors that we operate in.

Okay, great. And 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'd expect this time of year or are there any other factors, seasonality impacts that are affecting new deployment opportunities?

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

Got it. Okay.

Great. That's all for me today. Thank you. Very good.

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

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, briefly.

Yeah, sure. So we got a number of requests in the inbox to explain the nexus position on the SOI between 630 and 930, which I will do right now so everyone has the benefit of it. And 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 and the 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. 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 One 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 could 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 Malik was realized on July 30th. And we mentioned the impact on the call earlier. In addition, on the 930 SOI, which is the page nine of the unordered 930-26 financials, you'll see two equity positions in the equity section for Nexus Alpha One Intermediate LLC one for about 3 million, the other one for around 11 million, which completes the whole of that transaction. So it wasn't 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 930 financials, page 18, everyone's favorite statement, the cash flow statement, You'll see the $22 million being identified as a role of interest income capitalized upon refinancing. That's the information. I know this is a little bit technical, and if anyone would like a further explanation or ask questions, please hit the IR box, and I'll be happy to get on the phone and explain it further. I just wanted, since we got multiple requests, to address it on this call. Thank you.

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's an example of where we're looking for a credit investment with credit downside yet the potential for some equity upside and that's one that's gone very well for the company and continues to perform great. We're very happy as part of the Thank you very much. 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're approaching the hour here, so we'll wrap up the call at this point. If there are further questions on any aspect of the company, we realize this is a A change, if you were to listen to a call three or four years ago, we wouldn't have been talking about any of the stuff we're talking about today or very little of it. But this is indicative of where we're 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're deploying ECC's capital in those markets where we're finding the best opportunities. So We appreciate your time and attention today. And Ken and I will be available to take further calls or questions via email today. So thank you and have a good afternoon. Thank you.

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