Eagle Point Income (NYSE:EIC) reported a higher net asset value and positive GAAP return for the second quarter of 2026, as loan prices and collateralized loan obligation valuations recovered from first-quarter volatility.
Net asset value rose 4% to $12.52 per share as of June 30, from $11.99 at the end of March. The company generated a GAAP return on common equity of 7.1% for the quarter and paid aggregate cash distributions of $0.33 per common share.
Portfolio activity and investment deployment
Eagle Point deployed $39 million into new investments during the quarter at a weighted-average effective yield of 17.9%. The company allocated capital among CLO debt, CLO equity and complementary credit investments that management viewed as offering attractive risk-adjusted returns.
The company also rotated capital away from certain underperforming CLO collateral managers and toward higher-conviction CLO and private-credit opportunities. Majewski said the repositioning resulted in some realized losses, though those losses had largely been recognized as unrealized losses in previous periods and had minimal additional impact on second-quarter NAV.
Elevated refinancing, reset and call activity led to the early repayment of some CLO debt investments. Because several of those investments had been purchased below par, repayment at par allowed the company to realize gains earlier than initially expected, Majewski said.
Eagle Point completed one reset and two refinancings involving CLO equity positions during the quarter. The transactions produced weighted-average financing-cost savings of 33 basis points, while the reset extended the related CLO’s reinvestment period by five years.
As of June 30, CLO debt accounted for about 59% of the portfolio, while CLO equity represented approximately 19%. Non-CLO investments represented roughly 22% of the portfolio, including infrastructure credit, portfolio debt securities, asset-backed securities and other credit investments.
Majewski highlighted a specialty-finance investment involving Sports Illustrated Tickets that was secured by World Cup tickets. The transaction was originated by the Eagle Point team and generated a 1.2-times multiple of invested capital after being fully realized in June following a seven-month holding period.
Loan and CLO market conditions
Senior Principal and Portfolio Manager Dan Ko said the S&P UBS Leveraged Loan Index rose 1.9% during the second quarter and returned another 0.8% in July. Corporate revenue and EBITDA growth remained positive across the broadly syndicated loan market, though performance continued to vary by sector and issuer.
The trailing 12-month loan default rate stood at 1.0% at quarter-end, down from 1.4% at March 31 and below the long-term average of 2.5%. Eagle Point’s look-through exposure to defaulted loans was 36 basis points, which Ko said was substantially below the broader market average.
While software remained a focal point for investors assessing the effects of AI, Ko said the company believed market concerns earlier in the year had overstated the likely effect on the broader software sector. He noted that CLO debt investments provide diversification and structural protections against weakness in individual borrowers or sectors.
The weighted-average market price of the company’s look-through underlying loan portfolio was 95.30 at quarter-end, creating opportunities for par building through discounted loan purchases, according to Ko.
CLO issuance totaled $33 billion in the second quarter, compared with $47 billion in the first quarter. However, reset volume increased to $55 billion from $32 billion, while refinancing activity climbed to $39 billion from $24 billion. Ko said the company expects refinancing and reset activity to remain robust.
Financial results, distributions and capital structure
Chief Accounting Officer Lena Umnova said net investment income was $0.37 per share during the second quarter. Net investment income less realized investment losses was $0.29 per share, compared with $0.34 per share in the first quarter and $0.39 per share of net investment income and realized gains in the second quarter of 2025.
Including unrealized portfolio gains, GAAP net income was $20 million, or $0.84 per share, compared with a GAAP net loss of $0.95 per share in the first quarter and GAAP net income of $0.49 per share a year earlier.
Recurring cash flows from investments totaled $12 million, or $0.52 per share, exceeding common-stock distributions and expenses. The company paid three monthly distributions of $0.11 per common share during the quarter and declared monthly distributions at the same level for the remainder of 2026.
As of June month-end, preferred equity securities represented 12% of total assets less current liabilities, below Eagle Point’s normal target range of 25% to 35%. The company expects leverage to increase over time through continued issuance of its 6% Series AA and Series AB Convertible Perpetual Preferred Stock. It issued $1 million of Series AA preferred stock during the second quarter.
Management said the company’s revolver was fully undrawn at quarter-end. As of the end of July, Eagle Point had more than $53 million of cash and revolver capacity, net of pending transactions. Its unaudited NAV estimate for July was between $12.30 and $12.40 per share, representing a 1% decline from June at the midpoint.
In response to analyst questions, Ko said lower recent cash flows were mainly related to the CLO equity portion of the portfolio, where loan-spread compression during 2025 has become more visible as loan coupons reset. He also noted that some CLO equity holdings contain semiannual-paying bonds, creating variability in quarterly payments. He said management expects cash flows to recover over time, with CLO debt income potentially increasing if base rates rise.
About Eagle Point Income (NYSE:EIC)
Eagle Point Income Company (NYSE: EIC) is a closed-end management investment company that primarily invests in the equity and junior debt tranches of collateralized loan obligations (CLOs). Launched in 2019 and domiciled in Maryland, the company seeks to provide shareholders with high current income and the potential for capital appreciation by focusing on structured credit opportunities. Eagle Point Income maintains a diversified portfolio of CLO equity positions, targeting both seasoned and newly issued transactions across multiple risk profiles.
The company’s investment strategy centers on identifying mispriced or underfollowed CLO tranches, where it believes its team’s deep industry expertise can add value.
