Eagle Point Credit Co Inc. (NYSE:ECC), a company with a market capitalization of $925 million and an impressive revenue growth of 28.3% over the last twelve months, has entered into an agreement to issue $100 million of 7.75% notes due in 2030, with an option for underwriters to purchase an additional $15 million in notes.
The new debt offering, underwritten by Lucid (NASDAQ:LCID) Capital Markets, LLC and other underwriters, will be listed on the New York Stock Exchange under the symbol "ECCU." This move by Eagle Point Credit Management LLC and Eagle Point Administration LLC aims to raise capital through the sale of these fixed-income securities.
The issuance of the 2030 Notes is a strategic financial decision by the company to secure additional funds. As per the terms outlined in the underwriting agreement, the underwriters have a 30-day option to purchase up to an additional $15 million of the 2030 Notes, potentially increasing the total amount raised.
The company's recurring cash flows decreased to $68.2 million or $0.66 per share, a decline from $71.4 million or $0.79 per share in the previous quarter. However, the company's Net Asset Value (NAV) per share saw an increase, rising from $8.44 to $8.60. Eagle Point Credit also declared monthly distributions for Q1 2025 at $0.14 per share, adding a variable distribution of $0.02 per share in Q3.
Investment firm Lucid Capital Markets initiated a Buy rating on Eagle Point Credit shares, citing the management team's expertise and the company's unique investment strategy as key factors for the positive outlook. The firm's analysis suggests that the stock should trade at 110% of their estimated year-end 2024 NAV of $8.60. Lucid Capital Markets' price target of $9.50 implies a potential for price-to-NAV multiple expansion in the short to medium term.
In terms of future expectations, Eagle Point Credit aims to enhance net investment income through proactive investments and refinancing opportunities.
Analysts from Credit Suisse noted the strong performance of the Leveraged Loan Index, suggesting a favorable investment environment for Collateralized Loan Obligations (CLOs). Despite facing challenges from loan spread compression, Eagle Point Credit remains committed to consistent cash flow generation and prudent portfolio management.
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