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A Bargain in Eagle Point Credit Term Preferred??

Always on the search for more dividend income in these times of low coupons I have been looking at the newer Eagle Point Credit 6.50% term preferred (ECCC) which was issued on 6/10/2021.

This is a monthly payor and has kind of a strange price pattern as compared to most preferreds–in particular term preferreds. As you can see below only 15-20 days after issuance the share price touched $27/share–crazy, but not unusual in the current ‘food fight’ for yield. The shares price now is in the $25.25 area. Being a monthly paying preferred there is not much movement on ex-dividend dates so it seems folks just got carried away to the upside in the initial couple of weeks and now are exiting.

While I don’t particularly like Eagle Point Credit because of their devotion to CLO’s I do love monthly payors in particular when they have sold off and present a potential good buying opportunity.

ECC has a number of other issues outstanding which may present decent opportunities (which can be seen here), but it would seem to me of all the issues they have outstanding (some term preferreds–some baby bonds) this issue presents 1 or 2% of upside potential–with a reasonable coupon.

Lots of moving parts in these ECC issues–yield to call, some close 1st call dates, some issues with longer maturities to redemption than I traditionally like –some are baby bonds (superior in the capital stack) and some term preferreds.

I am not recommending these–I bought some earlier today–just sharing a few thoughts.

16 thoughts on “A Bargain in Eagle Point Credit Term Preferred??”

  1. RE: ECCC Does anyone know the yield to maturity and yield to call at 20.70/share?
    Big thanks.

    1. Dan–yield to first call date is around 33% (6/16/2024) and yield to maturity of around 10-11% (6/30/2031).

  2. There is an offering active in that security so it will take a while for It to go higher !

  3. While it’s true ECC invests in CLOs the asset coverage requirement here of 200% provides very strong protection. This has to be complied with quarterly, if not in compliance ECC must sell assets or raise capital to get into compliance or cannot pay dividends. ECCW has 300% coverage. In terms of credit risk, remember, we just went through the COVID recession and market volatility and these preferreds were not even minimally close to being impaired, in fact coverage was always maintained. This was the case in all recent period of market turmoil. Long several of these issues.

  4. guys, currently bought an unhealthy long position here, as I have liquidated my ECCB position for longer call duration in ECCC. GL to us!!!


  5. Guess we were thinking alike–bought a small amount earlier today 🙂
    Anticipate losing my ECCX and Y in the near future….although I never know why some good yields go well beyond call date.

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