Thomas Majewski - Chief Executive Officer Kenneth Onorio - Chief Financial Officer.

Greg Mason - KBW Fred Small - Compass Point Research.

Ladies and gentlemen, thank you for standing by. Welcome to the Eagle Point Credit Company Fourth Quarter 2014 Earnings Release Conference Call and webcast. During the call, all participants will be in a listen-only mode.

After the presentation, we will conduct a question-and-answer session, instructions will be provided at that time [Operator Instructions] Please note that this call is being recorded today, Friday February 27, 2015 at 11:00 Eastern Time. I would now like to turn the meeting over to your host for today’s call. Tom Majewski, Chief Executive Officer.

Please go ahead Mr. Majewski..

Good morning, and welcome everyone to the Eagle Point Credit Company Fourth Quarter Earnings Call. This is Tom Masjewski and I am the Chief Executive Officer of Eagle Point Credit Company. I am joined this morning by Ken Onorio who is the Company’s Chief Financial Officer.

I would like to ask Ken to provide a discussion regarding forward-looking statements..

Thank you, Tom. This is Ken Onorio speaking. The matters discussed in this call include forward-looking statements that risks and uncertainties that may cause the company’s actual results to differ materially from those projected in such forward-looking statements.

For further information on factors that could impact the company and the statements contained herein, please refer to the Company’s filing with the Securities and Exchange Commission. We disclaim any obligation to update our forward looking statements unless required by law.

A replay of this telephone call can be accessed for 30 days via our website eaglepointcreditcompany.com Later today, the company will file its N-CSR [ph] with the Securities and Exchange Commission providing information regarding the Company as of December 31, 2014. In addition the Company’s annual report is currently available on our website.

I would now like to hand the call back over to Tom..

Great. Thank you, Ken. Ken and I plan to address five topics with our call participants today. Number one is the company’s fourth quarter results and investment activity during the quarter. Number two, is an update on the company’s ramp up and how we are doing meeting the targets.

Number three, is an update on the broad CLO market and loan market as well. The fourth, is an update on our application for an exemptive relief, and then finally fifth is an update on our dividend plans. At the end of the call we’ll be happy to take questions from any call participants.

To begin with the company’s fourth quarter results, during the period from October 6, 2014 through December 31, 2014 the company had a net loss of approximately $4.3 million or $0.30 per common share.

This reflects net investment income of $4.3 million, a realized gain of $0.5 million which was offset by an unrealized loss of approximately $9.1 million. As of December 31, 2014 the company’s net asset value was approximately $263.6 million or $19.08 per common share.

The principle difference net investment income and the net loss for the company relates to an unrealized mark-to-market loss of approximately $0.66 per common share. The CLO equity market broadly faced mark-to-market pressure particularly during the month of December.

We do not however believe the price movement during the month was indicative of a material change in the fundamental value of the company’s portfolio. Further, we have recently observed an increase in demand for CLO securities and note that the prices of many CLO securities have been trading higher in recent weeks.

During the period from October 1, 2014 through December 31 the company made 14 CLO equity investments and one loan accumulation facility investment. The total amount of capital invested during the period was $96.8 million. The weighted average expected yield on these new investments is 15.38%.

Importantly, when we sight unexpected yields we highlight that our projections include a meaningful allowance for credit losses in the underlying senior secured loan portfolio. As of December 31, 2014 on a look through basis, the company had exposure to approximately 1019 distinct corporate obligors.

The largest look through obligor represented 1% of the company’s total assets, the top 10 largest look through obligors represented about 7% of the company’s total assets. Additional information regarding the company’s portfolio and underlying loan obligors can be found in the company’s annual report which is available on our website.

Overall, we are pleased with the company’s portfolios, those investments that have reached their first payment period are generating strong cash flows, indeed so far in the first quarter of 2015 the company has received cash flows on its investment portfolio totaling $8.9 million.

A number of the CLOs in the portfolio as of December 31 have not yet made their first equity distribution and we believe the company’s cash flows will be even higher in the second quarter. Moving to the second agenda item, I would now like to discuss the company’s progress in achieving its ramp up targets.

We have now invested or committed all of the proceeds from the IPO. In the first quarter through February 25, 2015 the company made one additional CLO equity investment and opened two additional loan accumulation facilities. The weighted average expected yield on these new investments is 15.17%.

We believe the volatility in the broader equity and credit markets that we observed in December and January rendered this an opportune time for knowledgeable and experienced investors with long term oriented capital to be investing in CLO equity.

We believe the investments that were made during the fourth quarter and thus far in the first quarter were the product of our deep relationships and rigorous investment process. While much of the company’s focus has been on new issues CLOs we have also selectively taken advantage of secondary market opportunities.

In order to maintain compliance with the rich diversity rules some of the equity investments that the company made were minority equity investments still in line with the company’s investment objectives and strategies.

As previously disclosed, the company has applied for exemptive relief from the SEC to co-invest in negotiated transactions with other clients of our advisor. If the company obtains such relief the company expects to increase its exposure to majority CLO equity positions in the future.

Ken will provide an update on our exemptive relief application later in the call. Moving onto the third agenda item, I’d like to offer call participants an update on the overall US CLO and senior secured loan markets. According to data published by S&P Capital IQ through February 25, there have been 23 CLOs issued in the United States this year.

This represents 12.5 billion in issuance volumes which compares to $9.6 billion of volume through the same day in 2014. The senior secured loan market was reasonably active during the fourth quarter of 2014 although meaningfully slower than the prior quarter.

Based on information published by LCD there were over 43 billion of institutional term loans issued during the fourth quarter. We believe that the level of new issuance in conjunction with the over 830 billion of existing loans outstanding continues to provide a large market for our CLOs to invest and re-invest.

We have seen a slowdown in supply of new senior secured loans which has brought upward pressure to the prices in the loan market recently. This price movement both helps and hurts companies like Eagle Point. Since our last investor call on November 17, we have observed non trivial price movements both up and down in loan prices.

According to data provided by Credit Suisse the average price of loans on November 17, 2014 was $97.71 [ph] on the dollar. That average reached a low of $95.48 on December 16, and has since recovered to $96.99 as of February 23.

We believe this price volatility is one of the drivers in the movement of the market price of CLO equity and as a result the movement in unrealized mark-to-market changes that are factored into the company’s net asset value. Though perhaps counter intuitive we welcome periods of measured loan price volatility.

It is during these periods that CLO collateral managers enabled with long term non mark-to-market financing are best able to reposition their loan portfolios often building par and increasing spread.

While Mark’s may be lower on CLO securities in the short term, we believe many CLOs now are better positioned to generate stronger cash flows today than they were just three months ago. As I mentioned earlier, with loan prices rallying we are now also seeing a general increase in the market price of many CLO securities.

We discussed in our prior call that the market was beginning to digest the impact of the new risk pretention requirements. Broadly these regulations require securitizes to keep meaningful skin in the game in securitization transactions. The requirements are now expected to take force in late 2016.

The market is continuing to assess structures that satisfy the risk retention requirements although our consensus view has not been reached. We are in regular discussions with outside counsel and other market participants discussing a number of structural approaches that we believe may satisfy the requirements.

We suspect however that it will be sometime before the market reaches a definitive view on this topic.

Assessing a securitizes co-investment in a CLO has long been an important part of our advisors investment process, we believe the company’s long term investment approach positions it well to be a high value add capital provider in the CLO market in the coming years. I’ll now turn the call back over to Ken Onorio..

Thank you, Tom. Call participants may recall that in July of 2014, the company filed an application seeking exemptive relief to allow the company to jointly invest in negotiated transactions with other clients of our advisor. We filed an amended application on January 30.

On February 18, the SEC posted a notice of our application on its website which will remain open until March 16. Accordingly, we expect to have a further update on our exemptive relief application prior to the end of the calendar quarter. Finally, I would like to give investors an update regarding the company’s dividend plans.

You may recall that the company paid an initial distribution of $0.55 per common share for the quarter ended December 31, 2014 on January 26, 2015. That distribution represented approximately 12% annualized rate based on the company’s IPO price of $20.

The company intends to pay its next quarterly distribution for the first quarter of 2015 which it expects it to clear in the next two weeks. We expect the distribution to be in line with our prior distribution of 12% per annum of the IPO price.

As a registered investment company, we are required to pay substantially all of our taxable income as dividend to shareholders. With the company’s portfolio now fully ramped the company may generate taxable income in excess of our current base dividend. If earned, such access income will also need to be distributed to shareholders.

The company plans to evaluate the need for special dividends on a semiannual basis. That concludes the management’s presentation of Eagle Point Credit Company’s fourth quarter update. At this point, we will open the call to questions..

[Operator Instructions] Your first question comes from the line of Greg Mason with KBW. Your line is open..

Great, good morning.

I was wondering if you could maybe quantify a little bit on how much higher the CLO prices have gone here in the market in the Q1 versus the December third year types of pricing?.

Hey Greg, good morning, how are you?.

Good morning..

Good. Broadly we were seeing CLO equity securities broadly trading up between half a point and perhaps two points of dollar price of late. Volume is beginning to pick up and the malaise perhaps that had come over the market towards the end of December is certainly behind us.

If anything, we’re seeing new CLOs getting upsized and number of CLO secondary BUX particularly around equity getting a fair bit attention. So, directionally positive, you broadly if I had to say it, half a point to two points of dollar price, although every security obviously could vary..

We’ll see when the SEC filling come out, but kind of what is the average price that you’re now holding the CLO equity at relative to either your cost or par?.

Relative to pars is a tricky measure. In that – in most cases CLO equity is bought at a price other than par. You can see the fair value and the par amounts of the securities that we hold in the filing which is already on the website.

In terms of actual dollar prices, it certainly varies on a security by security basis, some are certainly in the 90s and probably some are in the 70s and 60s at this point. It certainly does depend a little bit where a CLO is in its lifecycle.

And that, if you think broadly a new issue CLO might come to existence that $0.95 on the dollar, with the passage of time and with the reserve for credit losses within the CLO you might expected to end its life on the call date at around $0.60 on the dollar. So you do expect a sort of a partial march downward in price.

Broadly the newer CLOs are going to be at the higher end of that range and the lower end of the CLOs will be at – the older CLOs will be at the lower end of that range.

If I had to wager or guess as to the weighted average market price, it’s probably around 80 give or take right now about recognizing, recognizing there’s different seasoning in the portfolio..

Great. One more question then I’ll hop back in the queue. On your kind of average yield of 15% effective yield on your CLO activity book, some of the other guys that have come out with their CLO equity investments like American Capital Senior flow is round 13.5%, but I think Oxford Lane is around 12%, effective yield.

Obviously yours are a lot higher, can you talk about how you generate that skeptics can conclude that your assumptions are more aggressive and the effective yield modeling? So just address kind of the GAAP difference between some of you peers that have announced versus your 15%?.

Sure. Our expected yields may kind of three or four very important assumptions. We assume the LIBOR forward curve which has the impact of reducing the potency of the LIBOR Floors. So we assume that that goes away. We do assume that little bit of a ramp period for defaults but then on an ongoing basis roughly 2% of the portfolio defaulting per annum.

And then we also include spread compression assuming that new loans that are reinvested are less yield be on a spread over LIBOR basis than they are today. That’s consistent across all of our CLO activity.

Looking at our portfolio and we have CLO equity securities with expected yields as low as 12% frankly, and some with expected yields as high as 18%.

Some of the new names, probably the highest ones in our portfolio you would see today are some of the contributed assets, which are some of the originated investments that are kind of part of the long term Eagle Point creation program. And then Part B some of the newer investments which if you reconcile our Q3 versus Q4 schedule of investments.

And you’ll see some new names have popped up frankly buying in December, although frankly there were not as many sellers as we’re able to pick up some very high yields on some of the later investments that we’ve made during the quarter. So, our assumptions are laid out in the financials.

There are some ranges, but we think we’ve taken a conservative assumption against each of those and we do try and buy these at very attractive prices. We miss obviously on the vast majority of things that we try to buy..

Great. Thanks, Tom..

Thank you..

[Operator Instructions] Your next question comes from the line of Steven Barberia [ph] of Private Investor. Your line is open..

Hello, Tom..

Hi, Steve.

How are you?.

I’m fine.

How are you?.

Great. Thank you..

Just a question, you reported presumably that GAAP income of a loss of $0.30 per share. And then of that there’s a mark-to-market which is such that I guess is a paper loss of $0.66 per share. So if you back out the $0.66 that would show I guess $0.36 of sort of GAAP gain without that paper loss.

There is more to your distribution than just that $0.36 to come with $0.55 or more than you have available for your distributions.

So, could you give a little flavor of what additional cash flow there is there?.

Sure, sure..

If that makes – if my question make sense..

Yes. A very question, Steve. The company had net investment income of approximately $4.3 million and we had a realized gain of approximately $0.5 million.

The things that are not factored in there is that the company was not fully ramped up at the end of the quarter and obviously not through the quarter either, so we were beginning to deploy the IPO proceeds during that period, but obviously they don’t start earning and so we actually make the investment.

So the net investment income of $4.3 million in our opinion by no means reflects the full earnings power of this portfolio. Against that we also talked about cash flows certainly in our prior earnings call and then we talk about here the cash flows already received year to-date in the first quarter of 2015.

Importantly those cash flows do include deemed amount of return of capital and that the cash flows that are portfolio generates is an excess of the expected yield on any individual portfolio item. So it’s probably two takeaways we’d like to give. We had very strong cash flows and we gave the exactly number.

I think it was $8.9 million, so far received in the first quarter. We expect that number to be meaningful higher in the second quarter and that’s attributable to that the portfolio was not fully ramped up..

Great. I don’t I don’t know if I’m still on. That sounds good. Can I ask just one clarifying question, a lot of closed in fund investors who look at this thing.

The NAV from period to period is pretty irrelevant then since its mostly effected by paper losses or gains, but fairly irrelevant to the cash flow generating capacity of the portfolio, is that pretty fair to say..

This is Ken here. That’s correct..

Thanks..

Your next question comes from the line of Fred Small with Compass Point Research. Your line is open..

Hey, good morning, Fred..

Good morning. Thanks.

I just wanted to ask about sort of, I think that in the release or in the annual report, its somewhere sort of $73 million or $75 million of investments through the end of fourth quarter and just looking at the cash flow statement I just wanted to reconcile that, because I guess, sort of $80 or $85 just been net of purchase of investment and proceeds of sales for investments?.

So Fred, this is Ken here. In the cash flow statement another item that you would need to look to reconcile would be the amount of unsettled trades at period end..

Okay. Great..

Okay..

Your next question comes from the line of Greg Mason with KBW. Your line is open..

Great. Thanks. I wanted to follow-up on one more thing on kind of the dividend versus taxable income, obviously with the cash flows splitting up pretty high early on here from these CLOs. You have significantly taxable income, but you kind of in your commentary said, ultimately when we exist these they could be at $0.60 on the dollar.

So, at some point down the road there is likely to be a big taxable lost.

So just wanted to get your views on just your dividend philosophy right now when taxable income could be meaningfully higher versus as the portfolio seasons and those losses start coming through the taxable income likely goes down meaningful, so, just kind of your view on the tax generation right now versus the GAAP yield in the dividend?.

Very good question, and obviously to the extend losses are not realized in the underlying portfolios than the liquidation value, it’s obviously much greater than that 60, but our expected yields typically assume that over time for GAAP we’ll require to amortize the expected loss relatively evenly throughout our ownership period.

Tax is a cash items for when those losses get recognized. We believe the 12% dividend yield is very solid and the portfolio fully ramped up, it should be more than able to comfortable service that from both a GAAP earning and a tax earnings point of view.

What Ken had alluded to you of considering a special dividend on a semiannual basis would give rise, would be given rise to the extent defaults continue to stay very low in the underlying CLO portfolios.

We would have to payout an additional distribution beyond the base 12 dividend, but we expect that to be – right now, we would expect that to be non-trivial but not radical either that amount.

But the way we look at the base dividend and the way we size that as we believe the company’s portfolio can continue to service that across the range of market cycles..

Great. Appreciate that. Thanks..

Your next question comes from the line Fred Small with Compass Point Research. Your line is open..

Hey, sir I got cut off there after first one. So, just two follow-ups.

First one on the – so when I’m looking at the cash flow statement, the proceeds from sales of investments, if there are net gains there, is there a place where – is that on the income statement what shows up there the net gains on those sales?.

Sure. So the cash flow statement and statement of operations are reflecting two periods. One is obviously when we organize as an LLC and the second one is from October 6, through December 31, which one we went public and were corporation.

The realized gains on investments are reflected in the cash flow statement is $531,000 in the second comp on the statement of operations..

So, that $0.5 million there is directly related to the $60 million of proceeds from sales and investments.

Is that the way we to think about it?.

Yes. That’s correct..

Okay. Got it.

And then the second one, just with – I guess the proceeds fully deployed now from the initial raise, how you guys thinking capital going forward whether it’s sort of preferred or common or levering up a little bit, can you sort of walk us through that?.

Very good question, Fred. I mean, there is kind of two things that were continuing to assess.

The most notable certainly is – the company is beginning to consider possibility for preferred share offering, our prospect is contemplated that it would issue – such a preferred could be issued in the first year, obviously a market conditions both in the capital markets and the investing markets for us will determine if we do that, but it is something that’s under consideration now for some time between not and the first anniversary of the IPO.

We would also expect, while certainly every investment in the portfolio was underwritten on whole to maturity basis.

It wouldn’t surprise me if we had some degree over the next one to two quarters of portfolio rotation into other transactions perhaps where we are the majority investor to the extend there is a positive progress on the exemptive relief application. So right now, our focus is you got the portfolio deployed which is the first and most important thing.

The earnings power prospectively is certainly meaningfully stronger than the net investment that we’ve seen to-date. We’ll continue to look to optimize the portfolio wherever possible. The next two to three things we would hope to do is hopefully we have some progress on the exemptive application.

We will continue evaluate the opportunity issue long terms preferred and we will look from time to time to make relative value trades which hopefully will lead to additional gains and could also than be additional special dividends..

Okay. Thanks..

[Operator Instructions] There are no further questions at this time. Mr. Majewski, I’ll turn the call back over to you..

Great. Thank you much. We appreciate everyone joining the call here this morning. We’re very pleased with where the Company is headed and we’re certainly very pleased to have the ramp up completed which is one of the most important things we have contemplated in the prospectus.

Going forward I’ll keep an eye on and I guess in the next two weeks we expect to announce our next distribution. And we look forward to continuing our dialogue with many of our shareholders in the coming months. Thank you very much for joining the cal this morning..

This concludes today’s conference call. You may now disconnect..