Garrett Edson - Senior Vice President, ICR Tom Majewski - Chief Executive Officer Ken Onorio - Chief Financial Officer.

Christopher Testa - National Securities Douglas Crimmins - Relative Value Partners.

Good morning. My name is Virgil, and I will be your conference operator today. At this time, I would like to welcome everyone to the Eagle Point Credit Company First Quarter 2018 Earnings Conference Call. All lines have been placed on mute to prevent any background noise.

After the speakers' remarks, there will be a question-and-answer session [Operator Instructions]. Thank you. Garrett Edson, Senior Vice President, ICR, you may begin your conference..

Thank you, Virgil and good morning. By now, everyone should have access to our earnings announcement and investor presentation, which was released prior to this call, which may also be found on our Web site at eaglepointcreditcompany.com.

Before we begin our formal remarks, we need 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 those projected in such forward-looking statements and projected financial information.

Further information on factors that could impact the Company and the statements and projections contained herein, please refer to the Company's filings with the Securities and Exchange Commission.

Each forward-looking statement and projection of financial information made during this call is based on 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.

A replay of this call can be accessed for 30 days via the Company's Web site eaglepointcreditcompany.com. Earlier today, we filed our Form 10-Q first quarter 2018 financial statements and first quarter investor presentation with the Securities and Exchange Commission.

Financial statements in our first quarter investor presentation are also available on the Company's Web site. Financial statements can be found by following the financial statements and reports quick link on our Web site. The investor presentation can be found by following the investor presentation and portfolio information quick link on our Web site.

I would now like to introduce Tom Majewski, Chief Executive Officer of Eagle Point Credit Company..

Thank you, Garret. And welcome everyone to Eagle Point Credit Company's first quarter earnings call. If you haven't done so already, we invite you to download our supplemental investor presentation from our Web site, which provides additional information regarding our portfolio and the underlying corporate loan obligors.

As we've done previously, I'll provide some high level commentary on the quarter then I'll turn the call over to Ken who will walk us through the first quarter financials in a little more detail. I'll then return to talk about the macro environment, our strategy and provide some updates on recent activity.

And of course, we'll open the call to questions at the end. The first quarter really picked up right where we left off in 2017 as we continue to actively deploy capital into new investments. We opportunistically harvested gains and completed resets of a number of CLOs in our portfolio.

During the quarter, we deployed approximately $91.6 million in gross capital into new investment. The new CLO equity repurchase had a significantly higher weighted average effective yield than the weighted average for our overall portfolio. That overall weighted average of our CLO equity portfolio also increased quarter over quarter.

Additionally, where we saw opportunity and appropriate pricing, we sold certain CLO equity and debt investments, and we locked in about $1.8 million of realized gains during the quarter. We also leveraged our advisors competitive strength and broader portfolio, and closed on four resets during the first quarter.

Beyond our portfolio activity, which makes up I guess the left side of our balance sheet, we've also sought to create value for shareholders on the right side of the Company's balance sheet. During the quarter, we completed a common stock offering at a premium to NAV, which has the effect of increasing NAV for all shareholders.

In April, we closed on an offering of our new 11 or 6 and 11.16% 10 year ECC X notes. These new X notes are over seven years longer than the Z notes they replace and were 31.25 basis points less expensive. In fact, the new notes represent the lowest cost of funds that the Company has ever obtained. These savings will fall directly to ECC's bottom line.

We're utilizing proceeds from the ECC X offering to effectively refinance our 7% ECC Z notes next week, which will then extend the weighted average maturity of our preferred stock and unsecured notes outstanding to over eight years.

Importantly, all of our financing is fixed rate, which provides us with certainty and cost visibility, which is particularly important in a rising rate environment. We’re prudently capitalizing on the capabilities of our advisor and our overall platform to significantly improve the Company's overall positioning.

For the first quarter, we generated net investment income and realized gains of $0.50 per common share and that's a one penny increase from the prior quarter, but it is still below our common distribution rate of $0.60 per quarter.

During the first quarter, as I mentioned, we deployed approximately $91 million of capital on a gross basis in both the primary and secondary market. We made six primary CLO equity purchases, representing $35.9 million, nine strategic CLO debt purchases and made investments in six loan accumulation facilities.

During the quarter, one of our loan accumulation facilities was converted into a CLO. The new CLO equity investments that went in the ground had a weighted average effective yield of 17.37% measured at the time of investment. And once again, that's well above the overall weighted average of our CLO equity portfolio, which as of March 31st was 14.54%.

This continues to demonstrate our ability to source accretive investments in a strong credit market through our advisors’ investment process. On the monetization side, we sold $24.8 million of CLO equity, as well as $9.5 million of CLO debt securities. Together, these sales allowed us to realize $1.8 million of net gains versus amortized cost.

While we typically underwrite investments with a long-term hold mindset, we do sell investments when our advisor believes the price available is better than what our outlook for the investment warrant. Looking back, we're pleased that we've had realized gains in seven of the last eight quarters.

We discussed on our last call, the capabilities and deep experience of our advisor, which proactively gets involved throughout the investment process and lifecycle to try and create additional value throughout the lives of our investments.

Our advisors’ active management of the end of an investment life is just as important as investment selection at the outset. As our portfolio continues to season, our advisor expects us to become increasingly active with respect to reset.

Our existing portfolio, comprising positions in dozens of CLOs where ECC and other clients of our advisor collectively own the majority of the CLOs equity class, as well as the evergreen structure of the company, provides us with a meaningful advantage in pursuing additional value for CLO reset.

We believe there are few other investors with as many majority positions as our advisor. In the first quarter, we priced four resets, bringing the total number of the resets that the Company has been involved in from January 2017 through the first quarter of this year to 10.

The reset completed in the first quarter created new reinvestment periods of up to five years for those CLOs, and reduced those CLO’s weighted average cost of debt. Importantly, our advisor has a robust pipeline of future resets under evaluation for the Company’s portfolio.

As a reminder, a reset typically causes a one-time reduction in CLO equity cash flows as the costs associated with the reset are paid out of the CLO’s waterfall on the next payment date.

However, while the near-term cash flow may be reduced, we believe this is money very well spent and that our investments will harvest increased cash flows to our CLO equity securities in the future, had we not taken these actions. Of course, wherever possible, our advisor seeks to keep those service provider costs to a minimum.

As of March 31st, the weighted average effective yield on our CLO equity portfolio was 14.54%, that’s up from 14.42% in the prior quarter, but down from 16.2% as of March 31, 2017.

A modest increase suggests that we may have reached an inflection point after a year of declining yield due to the market wide reduction in loan spreads, aided by our recent investments, as well as our proactive refi and reset activity.

As I've noted previously and shared with you multiple times, the weighted average effective yield that we use includes an allowance for future credit losses. A summary of investment-by-investment changes in expected deals are included in our quarterly investor presentation as well.

On the capital front, in addition to our underwritten common stock offering and the ECC X notes that I mentioned earlier, we utilized our at-the-market program during the quarter to issue approximately 296,000 common shares, all at a premium to NAV. Ken will provide more particulars.

But since we began the program last summer running through the first quarter of this year, we’ve received net proceeds from the sale of new common stock of about $16.5 million. In April and in the beginning of May, we’ve deployed a net $15.8 million of capital across CLO equity and debt investments, as well as loan accumulation facilities.

Through May 11th, in the second quarter, one additional CLO has been reset. In addition to resetting existing investments, we continue to actively pursue new primary investments, which we expect to price into CLOs and that we expect to benefit from some of the lowest financing spreads we’ve achieved on any investments in our portfolio.

Our team continues to work hard to find attractive opportunities. And we believe the Company is well-positioned to capitalize on them. Overall, our long-term outlook for our portfolio remains quite favorable. We believe the recent investments continue to position the Company very well.

As you've seen over the past couple quarters, we continue to purchase CLO equity securities where weighted average effective yields are meaningfully above the overall CLO portfolio effective yield. Many of our newly created CLOs benefit from some of the lowest debt spreads than any of our CLOs. We’re very happy with what's going in the ground today.

After Ken’s marks, I'll take you through the current state of the corporate loan and CLO markets, as well as our outlook for the remainder of 2018. I'll now turn the call over to Ken..

Thanks, Tom. Let’s go through the first quarter in a bit more detail. For the first quarter of 2018, the Company reported net investment income and realized capital gains of approximately $10.3 million in the aggregate, or $0.50 per common share.

This was comprised of the net investment income of $0.41 per common share and net realized capital gains of $0.09 per common share. This compares to net investment income and net realized capital gain of $0.49 per common share in the previous quarter and $0.60 per common share in the first quarter of 2017.

When unrealized portfolio depreciation is included, the Company recorded GAAP net income of approximately $8.1 million or $0.39 per common share for the first quarter of 2018. This compares to net income of $0.68 per common share in the previous quarter, and $0.05 per common share in the first quarter of 2017.

The Company's first quarter net income was comprised of total investment income of $70 million and net realized capital gains of $1.8 million, which were partially offset by total expenses of $8.5 million and net unrealized depreciation or mark-to-market losses of $2.2 million.

At the beginning of the first quarter, the Company held $1.4 million of cash, net of pending investments. As of March 31st, that amount was $8.3 million, reflecting our common equity capital raise and a number of opportunistic sales during the quarter.

As a result of deploying $41.1 million in net capital during the first quarter, there was a significant amount of capital that only generated income for a portion of the quarter, which we expect to generate full income going forward. As of March 31st, the Company's net asset value was approximately $355 million or $16.65 per common share.

Each month, we publish on our Web site an unaudited managing estimate of the Company's monthly NAV, as well as quarterly NII and realized capital gains or losses. Management’s unaudited estimate of the range of the Company's NAV as of April 30th was between $16.71 and $16.81 per common share.

Based on the range of midpoint, this is an increase of approximately 0.7% since prior month. Net GAAP return on common equity in the first quarter was 2.55%. The Company's asset coverage ratios at March 31st for preferred stock and debt as calculated pursuant to investment company act requirements were 290% and 581% respectively.

These measures are above the statutory minimum coverage requirements of 200% and 300% respectively. As of March 31, the Company had debt and preferred securities outstanding totaling approximately 35% of the Company's total assets less current liabilities, below the 37% noted in the prior quarter.

These previously communicated management expectations under current market conditions of generally operating the Company with leverage in the form of debt and/or preferred stock within a range of 25% to 35% of total assets. Moving on to our portfolio activity in the second quarter through may 11th.

Investments that have reached their first payment date are generating cash flows in line with our expectations. In the second quarter of 2018 as of May 11th, the Company received total cash flows on its investment portfolio, including the proceeds from called investments, totaling $28.8 million or $1.35 per common share.

This compares to $22.7 million of total cash flow received during full first quarter of 2018. Consistent with prior quarter, we want to highlight that some of our investments are expected to make payments later in the quarter.

During the first quarter, we paid three distributions of $0.20 per share of common stock as scheduled and on April 2nd, to peg monthly distributions of $0.20 per share of common stock for each of April, May and June.

We completed an underwritten public offering in the first quarter of over 2.2 million shares of common stock, including the full exercise of the greenshoe at an offering price of $18.25 per share. The Company received total net proceeds of approximately $38.8 million.

Pursuant to our at-the-market offering program for common stock and 7.75% Series B preferred stock, during the first quarter, the Company sold approximately 296,000 shares of its common stock at a premium to NAV for total net proceeds for the Company of approximately $5.2 million.

As Tom previously mentioned, subsequent to quarter end, the Company announced a closed an underwritten public offering of 6.6875% unsecured notes due 2028 resulting in net proceeds to the Company of approximately $65 million inclusive of the partial exercise of the greenshoe.

The Company also announced it will redeem 100% or $60 million aggregate principal amount of its 7% 2020, ECC Z notes on may 24th, effectively conducting a refinancing by using the vast majority of the ECC X proceeds with fully reading the EEC Z notes.

This will result in lowering the Company's ongoing interest costs, while also extending its debt maturities. In the second quarter, the Company will be required to take a charge of $1.6 million related to ECC Z’s unamortized issuance costs as a result of the full redemption.

For period subsequent to the quarter ending March 31, 2018, the Company is changing its accounting policy related to newly issued debt securities and preferred stock by electing to recognize debt issuance costs in the period in which such costs are incurred.

In prior periods when issuing debt securities are preferred stock, the Company amortized such expenses over the stated maturity of the security. Beginning in the second quarter of 2018, the Company will now take a onetime of upfront charge of such expenses.

Issuance costs related to ECC A, B and Y will continue to be accounted for under the old policy.

For the quarter ending June 30, 2018, management estimates one-time non-recurring costs related to the issuance of ECC X notes and the acceleration of the unamortized issuance costs associated with the redemption of the Z notes will impact NII and realized gains and losses for the quarter by approximately $0.20 per common share.

Unlike last year, we do not expect the need to pay a special distribution for the tax year ending November 30, 2017 as taxable income came in slightly below the Company's common distributions for the same period.

However, we would like to point out a meaningful diver of lower taxable income was a result of the significant amount of refinancings and resets, the Company directed and/or participated in during 2017, which allows for the accelerated expense recognition of previously unamortized debt issuance costs and original issue discount within the CLO structures.

I would now like to hand the call back over to Tom to discuss the current status of our portfolio and the overall market..

Great, thank you very Kim. Let me first take the call participants through some macro loan and CLO market observations, and we could talk about how they may impact the Company. And then I’ll touch a little further on some of our recent portfolio activity.

Through April 24th, the Credit Suisse Leverage Loan Index generated a total return of 2.05%, generally in line with where that index was at that time last year. And according to J.P. Morgan and their index, over 70% of loans in their index are trading par.

During the first quarter, we saw loan fund flows reverse course from the end of 2017 with open-end loan mutual funds observing about $2.9 billion in retail inflows according to data from J.P. Morgan.

While a significant amount of loans continue to trade above par, we believe that the muted amount of fund inflows is still acting as a bit of a headwind for further loan refinancing or repricing activity. Indeed, during the first quarter of 2018, we saw a fair bit left amount of loan repricing than we did in the first quarter of 2017.

It's still happening just at a slower rate, which is good for us we believe. The total amount of institutional corporate loans outstanding was $994 billion as of March 31st, a 12% increase from the prior year and 4% up from the end of 2017, according to S&P Capital IQ.

Institutional new loan volume was about $130 billion in the first quarter, keeping pace with last year's record performance and driven significantly still by refinancing, which made up a big part of the activity. The institutional corporate loan market is large and provides a broad investible market for our CLOs to invest and reinvest in.

In terms of corporate defaults for large cap loans rate -- default rates remain quite low with a lagging 12 month default rate of only 2.4% at the end of March, according to S&P Capital IQ.

And we and others certainly expect rates to remain around these levels due to minimal and pending maturities, certainly in an economy that’s gaining in robustness and the large majority of the loan market consisting of covenant like loans. The Company's overall credit expense remained below long-term averages.

Should volatility and price dislocations occur, we believe the Company and its investments will be well-positioned to take advantage of those opportunities.

In the CLO market through April 24th, we’ve seen about $39 billion of new CLO issuance along with about $37 billion of resets, and $9 billion of refinancing, putting the new issue and resets on pace to match or beat last year's records according to information from Deutsche Bank.

For the full year of 2018, our advisor continues to estimate between $90 billion and $110 billion of new issue volume, about $70 billion of resets and approximately $30 billion of refinancing.

With the expectations for interest rates to be consistently rising in 2018 and ’19, floating-rate CLO debt interest remain strong with new issue AAAs often pricing a little over 100 basis points for some of the most well-known collateral managers.

BBs further down in the capital structure, which softened in March and April, now appear more keenly did as well.

So far this quarter, we’ve reset one CLO and we’ve also deployed net capital of $15.8 million across CLO equity debt and loan accumulation facilities so far in the quarter, putting that undeployed capital to use as opportunistically as possible.

Beyond seeking to maximize the value of our investments, we continue to maintain good visibility on our new investment pipeline for the next few quarters. To sum up, the start of the year was a very positive one for the Company. We deployed over $90 million of new capital into new investments.

We’ve reset five CLOs so far this year and have a robust pipeline of resets under evaluation or negotiation. The weighted average affected yield on our CLO equity portfolio increased versus the prior quarter. We issued stock via an offering and through the ATM, both at premiums to NAV, helping to build NAV for all shareholders.

And we issued unsecured debt with the lowest cost of capital that Company has ever achieved. And through the refinancing of the Zs, or repayment of them, we significantly lengthened the Company's debt and preferred stock maturity profile.

We’re very proud of all those accomplishments and we’ll continue to be very proactive in our management of the Company in order to create long-term value for our stockholders. We thank you for your time and interest in Eagle Point. Ken and I will now open the call to questions..

[Operator Instructions] Your first question comes from [Allison] [indiscernible] from Oppenheimer. Please go ahead..

So you guys have expressed confidence in the past that net investment income plus realized gains should be able to shake your distribution level. And I’m curious about some of the specific drivers that we could look at to gauge progress on that front in the current environment.

Perhaps it’s something you’ve done in the CLO liability management, perhaps on the asset side or some mix.

But I am curious about how you guys would attribute the main drivers of that?.

It’s a couple of part answer. I’ll try and keep it as distinct as possible. The credit expense part of the equation remains low. Though, we continue to reserve credit expense. And we have dynamic of loan spreads compressing, although at a slower pace than it has been in the past.

And our ability to put in new CLOs in the ground with lower cost debt and refinance and reset existing CLOs to get their debt cost down. Those are the different calculus of some of those. Obviously, loan spreads coming down are bad. Our ability to refi, reset and put new stuff in the ground to achieve embedded financing is good.

The challenge we face is the pace of those are different and the granularity of those are different.

And we have over a thousand different corporate loans, but was -- I think I used this analogy in the past, fans coming out and golf ball size stuff that we’re trying to tackle, because we have 50 or 60 different CLO securities or more that we’re managing on the right side.

What’s played out is the net of all of those things, some favorable some unfavorable, that we've seen the weighted average effective yield in the portfolio actually starts to tick-up.

This is the first quarter and more than I can recall unfortunately that we’ve had the weighted average yield move up on the overall portfolio and the people we’re putting in the ground today is certainly very accretive.

The common raise that we did in January does have a slight effect of distorting, so that added about 2 million -- a little over 2 million shares to the share count. A lot of that didn't start earning until later in the quarter as well, so that weighs things down.

We look at it pro forma the earnings without the effect of those shares or the earnings and it certainly would have been higher.

The key part of our doing that raise, mindful we do have an ATM available to us, was to get the Company back in line with the leverage target that we have set we had gone that such above it when we got the live done back in August of last year. It was important to us to get the, couple of that with the special last year.

We wanted to get the ratio back in our targeted range. But that certainly hurt earnings a few more cents. So start looking at the yields flattened out, if anything, picking up a little bit. We’re back on side where we want to be within our own leverage guidelines, and we’re putting good stuff in the ground.

And we’ve got a pretty strong pipeline of resets. One has already closed this quarter. Others have price but not yet closed. And I can look at our trading floor right now and see people working on others as we speak. So our part of optimizing the right side of the CLO’s balance sheet I’d say is well underway..

And I guess one follow up that I would have is just mechanically when you do, you said a CLO.

Is there like a time horizon where you get a yield benefit perhaps in six to nine months as you work out the cost that you have to pay to do that? Or is this not -- is that not necessarily how the yield model works?.

For GAAP purposes, it is accretive as soon as it closes. So closing of a reset, we refresh the model, it’s basically significantly a new model at that point and the yield from the old deal is disregarded and income has been accrued at that higher rate immediately.

So unfortunately, we have -- we've done a bunch -- I think we’ve done 10 since the beginning of last year. We have a number of CLOs.

If you look for our portfolio, that has non-call dates in the second quarter of this year, third quarter of this year, which suggests those were 2016 vintage CLOs, which would, by virtue of that vintage, have some of the highest debt costs outstanding. We have some with AAAs in the 150s and obviously are in a market where it’s very low 100 today.

Some of those are coming off of non-call. As we speak, we are working as keenly as possible to get those resets, which will be -- we believe some of the most potent resets that was ever done..

Your next question comes from Christopher Testa from National Securities. Please go ahead. .

Just curious, Tom, could you talk about the either par value or amortized cost of the total four resets during the quarter?.

Yes, we’re looking to find the numbers there, hang on..

No problem..

Let me just walk through the specific transactions. Before that closed I don’t have them, but the total fair value as of March 31st of these was $25.777 million and the four transactions were CISE funding 2014, CISE 15-3, Octagon XVII, and CHL 14-2..

And what would you say -- could you quantify how much that impact to the portfolio cash distributions for the quarter, which were down pretty materially?.

So a couple of things on that. So each of those -- depending on the timing, some could have been Q1 payment changes some could have been Q2 payment changes..

So two parts to that question, the four there that we spoke about in the first quarter that’s going to generate $0.06 impact to cash flow in subsequent quarter. The one -- for 2017 we’re having $0.08 to $0.09 impact in the current quarter….

As you see the reset happens in December and affects the January payment, so the Q1 effective the April payment….

But there’ll always be a quarter lag in the cash flow recognition….

So there’ll still be somewhat of a lag from the resets done in your first quarter -- in the first quarter -- for the current quarter now?.

Although -- yes, although the cash flows received to-date are $28 million we said versus $22 million in all of the first quarter. So despite what Ken said, which is a 100% accurate, cash flows are back up a whole bunch. And was down in the first quarter was three or four resets in fourth quarter of last year..

And I know Tom you have spoken about obviously the 2016 vintages which have some of the highest CLO debt costs are coming due when obviously probably, and I do see you guys to do more refinances.

I am just wondering if you could give us ballpark number of how much -- how much of your book has the non-call period expiring through the next couple of quarters?.

They’re with me, one second, we have that number. Just looking at the pipeline, I’d estimate $60 million plus of potential resets and refis during the second quarter..

Got it….

They’re fixed on the fair value of that portfolio as of March 31st, obviously there’s no assurance any of those transactions will happen. It’s subject to the wins in the market. But in current market conditions, we’d expect to be able to get a lot of those done.

And if you look at in our portfolio summary page, you look at Pages 4 and 5 of the investor presentation where we list the non-call, you can see a fair number of 2018 non-call days and you can see they’re generating non-trivial amounts of income.

And if we are able to get a refinancing or reset off and lower the cost, you would, call it -- expect the income and cash to increase in future. Also if you look through Pages 4 and 5, we added a column -- Ken, added just a couple of quarters ago, a refi reset call column.

And of the 50 investment or one through 50, not everyone -- once they’re done, they’re not listed. But the vast majority of the portfolio of the first phase we’ve opened and maybe judgmentally here 30% to 40% of those listed on Page 5, but you can see the non-call days how we drive through things to get to them...

Yes, that’s definitely very helpful, thank you. And speaking, I guess more philosophically, on the refi and reset side. Assuming that you have let’s say the ability to refinance $60 million at fair value during the current quarter.

Is this an environment where you just want to get all the refinances done at once, or are you still looking to maybe stagger that in case spreads tighten ever further and you're getting more favorable costs? Or are we still low on the liability cost side of things that you would say, well, why wait for an additional 5 bps of spread tightening, let’s just take what we could get now?.

Very good question, and one we debate a fair bit. The savings on the deals, particularly the 16 deals, it has the potential to be so radical. We’ve got deals with 150 and 160 AAAs, and we’ve even done 100 and 110 to pivot.

And if it’s 90 next week, we’ll try then; but the stage A, it’s so significantly opportunity cost to wait and find out is pretty high; but then B, we’ve also got a bunch more deals to do in the second half of the year as well, because if you look through that non-call page, you'll see we won't be bored in the summer or the fall once we get through the near-term batch, there's plenty more rolling off of non-call later in the year.

Most of our investment activity frankly, in 2016 occurred in the second half of the year. So while call-out -- we'd expect more things rolling off of non-call the second half and into January in 2019..

And you guys have been pretty active, especially in the current quarter with the purchases of CLO debt, which you call strategic. Are these -- Tom, are these generally CLO debt where you’re trading at a discount to par, and you have -- you know that the deal is coming up on being called soon, and you’re making these opportunistic purchases.

Or is there something else to that?.

In nearly all cases, there’re opportunistic purchases where they’re at a discount, and we expect the bonds to total lag at par. In one or two cases, there may have been -- let me -- any of them -- so CIFC 15-3 was a reset that we did in the first quarter. ECC did end up buying a little bit of a single-B in that deal.

And as of the end of the quarter, we haven’t sold, and I won't go any further from there. But there was one where it made sense to take a little bit of debt, it was so cheap, but with a goal of selling it again in the future, could be something that happened.

So a few of them have been done in conjunction with the reset, you will see -- and then some done in advance, you will see cut order 15-1. We’ve bought some paper -- we actually bought a big block of flagship 8 single-Bs where ECC is the majority holder, or that single-B on the flagship.

So everything we put in the ground we put in the ground for a reason. We’re not a CLO debt fund, but sometimes that can be very attractive..

And last one for me, if I may. Ken, you had alluded to that you guys are changing the accounting policy in terms of debt issuance costs.

Just wondering what induced the change there?.

So it’s a one more reporting NII on a go forward basis, probably tripping in about $0.05 to a penny per quarter on amortization of debt issuance cost.

We think it’s better to reflect and absorb these costs upfront and have a cleaner presentation, meaning no amortization of deferred debt issuance on a go forward basis, we think that will be more applicable reporting..

As we thought about calling the Zs, we have million and a half bucks or some number like that of unamortized cost..

Right….

Maybe absolute right decision, but then as I got gees, now we got to take a charge now for a million and half, let’s just expense it, we’re done and we’re never going to have to -- well, except for the three securities where we still have unamortized issuance cost for anything new we put out, we’ll make the right decision on that day and we won't have to worry about original cost..

Okay, that makes sense. And just drilling down a little into the details on how this is going to be presented. I know that you’re going to have basically, I guess, a realized loss on debt extinguishment of about $1.6 million.

But then the financing costs you had alluded to pertaining to the note issuance that you guys completed in the second quarter, that’s going to be impacted, that’s going to be above the NII line on your actual interest expense line..

So both of these items are going to be above the line as internally we expect….

Okay….

Yes, the extinguishment of the Zs wouldn’t qualify for the realized loss accounting….

Got it, okay….

But not extraordinary….

Yes, not extraordinary and the guidance term non-recurring for reporting at….

Okay, got it.

So it’s going to be that realized loss, as well as the issuance cost above the NII line and you’re expecting roughly $0.20 per share impact from those together?.

That’s correct..

Your next question comes from Douglas Crimmins from RVP. Please go ahead..

I got a question. Just help me think about how we should be thinking about you guys going forward with respect to secondary equity offerings. The last one kind of the wisp as you guys were whispering a deal out there. The stock traded off around 7% or 8% and is trading comfortably above 19.5%. And then there was about 5% plus of expenses.

So the net, we’re down about 13%. And then the net proceeds were a very small premium to NAV, so there was not particularly accretive, et cetera. And I mean is this the philosophy going forward, we’ve even see some BDCs where the management company pays some portion of the fees.

But just help me understand how the other go forward equity issuance concept is going to work?.

Very good question, and indeed there was some downward pressure on the stock price prior to issuance, don't know specifically what drove it, but we acknowledge the price movement for sure. Overall, and the driver for that issuance, was to get our leverage ratio in line with management of 25 to 35.

We had gone above it when the issued the Ys, and we were thrilled to get the Ys done, and we said it’s worth an exception. But the goal was to get back in line with that, and the total proceeds, which was in the mid-30s millions was enough, we sized it just to get with the shoe get back on size with that. We do have the ATM.

We shared we did about 290,000 shares in the first quarter. That is a more elegant way to introduce capital into the company. Obviously, the exact direction anything goes, I suspect we’ll see a mix of all of those over time.

Although, as we've gotten more comfortable with how the stock behaves with the ATM, we may end up doing more on that side of the ledger and versus big bang offerings..

And what’s expense load on the ATMs?.

The cap is up to 2%, sometimes we were able to do at even less than that. .

Yes, I mean we just saw….

We’re bigger shareholders there, we get the….

I understand….

We get that price movement as well. The ATM is far more efficient, and it’s more of just-in-time capital versus raise -- the hidden costs than it is raise $35 million or whatever now, deploy it versus a million coming in on a day when you need it, is a more elegant way to do it..

There are no further questions at this time. I will turn the call back over to the presenters..

Great, thank you very much again for dialing into the call today. We appreciate everyone’s continued interest and support of Eagle Point Credit Company. To the extent folks have follow-up questions, please feel free to give Ken or I, or the team at ICR a call, we’d be happy to speak further. Thank you very much, and have a good day..

This concludes today’s call, and you may now disconnect..