Eagle Point Income: The 2026 Term Preferred Shares Offer A 8% YTM

Core Viewpoint - Eagle Point Income (NYSE:EIC) focuses on BB tranches of CLO debt and has a strong emphasis on preferred shares with a mandatory repayment date in October 2026, which are viewed similarly to bond investments due to their fixed end date and liability classification on the balance sheet [4][8][11]. Financial Overview - As of the end of September, Eagle Point Income reported total assets of approximately $213 million and net assets of about $208 million, with total liabilities at $72.7 million, of which $67.5 million consists of preferred shares [10][11]. - The company generated a total investment income of nearly $7 million in Q3, primarily from interest income, with total expenses amounting to $3.4 million, resulting in a net investment income of $3.5 million [32][34]. - The preferred shares offer a 5% dividend yield, with monthly payments of approximately $0.104 per share, costing the company about $160,000 monthly [8][35]. Investment Strategy - The company maintains a focus on BB-rated CLO debt, which constitutes almost 75% of its portfolio, while B-rated debt and equity tranches account for smaller portions [12][30]. - The required asset coverage ratio for preferred shares is 200%, with the actual coverage exceeding 300%, indicating a strong safety net for investors [11][36]. - The yield to maturity for the preferred shares is approximately 8%, making them an attractive investment option [8][36].