I am studying the newer Carlyle Credit Income Fund 8.75 % Term Preferred (CCIA) for a potential small position. It meets my hurdle–high yield, monthly payer and mandatory redemption in 2028.
This fund is newer, although technically it has been around for a long while–in a completely different form. The fund was previously the Vertical Income Fund which was bought by Carlyle recently–the portfolio sold off and the fund rebranded as a CLO owner.
The fund is small – about $150 million (including proceeds of this term preferred offering), but I suspect they will grow the assets fast–these funds make their living on fees–and the larger they are the more the fees.
This fund can be compared to Eagle Point Credit (ECC) or Oxford Lane (OXLC)–they own collateralized loan obligations–typically the equity tranche (meaning the higher risk tranch). Because they are organized as a closed end fund they are required to have asset coverage ratio of 200% for preferred shares. With this new term preferred CCIF should have about 300% coverage as the new preferred is their only leverage.
The main difference when comparing these companys is size and history. ECC and OXLC are much larger and have been around for years.
Currently shares are trading around $25.40 and this is where they are likely to stay for a while as Eagle Point Credit who bought 800,000 in a private placement on 11/21/2023 for $24.25 has been selling shares in the $25.40-$25.60 area–this may keep the share price tamped down for a while.
Haven’t bought this yet–but probably will take a small position.
The issue has a coupon of