Eagle Point Income (NYSE:EIC) reported higher net investment income for the first quarter of 2026 despite pressure on its net asset value from weaker CLO market conditions and broader credit volatility, executives said on the company’s quarterly earnings call.
Chairman and Chief Executive Officer Thomas Majewski said the company had a “strong first quarter” in which recurring cash flows covered distributions and total company expenses. He said the CLO market faced challenging conditions for much of the quarter, driven by lower loan prices, weakness in the software sector and a cautious tone across credit markets tied to the ongoing war in Iran.
Net Investment Income Rises as NAV Declines
Chief Accounting Officer Lena Umnova said Eagle Point Income generated net investment income of $0.36 per share in the first quarter, up from $0.35 per share in the fourth quarter of 2025. Net investment income less realized losses was $0.34 per share, compared with $0.03 per share in the prior quarter and net investment income and realized gains of $0.44 per share in the first quarter of 2025.
The company reported a GAAP net loss of $22 million, or $0.95 per share, including unrealized portfolio losses. That compared with a GAAP net loss of $0.60 per share in the prior quarter and a GAAP net loss of $0.46 per share in the first quarter of 2025.
Recurring cash flows from the company’s investment portfolio totaled $14 million, or $0.62 per share, during the quarter and exceeded common stock distributions and expenses, Umnova said. Eagle Point Income paid three monthly common stock distributions of $0.11 per share during the quarter and declared three monthly distributions of $0.11 per share for the third quarter of 2026.
Net asset value fell to $11.99 per share as of March 31 from $13.31 at year-end. Majewski said the decline primarily reflected negative mark-to-market adjustments on the company’s CLO debt portfolio, caused by wider spreads and weaker risk appetite for CLO junior debt. The company’s GAAP return on common equity was negative 7.2%.
Management said NAV rebounded in April, estimating month-end NAV at between $12.48 and $12.58 per share. At the midpoint, that represented a 4.5% increase from March 31.
Portfolio Activity and CLO Market Conditions
During the quarter, Eagle Point Income deployed $56 million into new investments across multiple credit asset classes at a weighted average effective yield of 16%, according to Majewski. The company also completed four resets and two refinancings of CLO equity positions, producing weighted average CLO debt cost savings of 48 basis points for those CLOs. The reset positions extended their reinvestment periods to five years.
Majewski said CLO junior debt remains central to the company’s strategy, but Eagle Point Income also increased exposure to other credit areas, including infrastructure credit, regulatory capital relief transactions, portfolio debt securities and other structured and private credit investments.
Senior Principal and Portfolio Manager Dan Ko said the S&P/LSTA Leveraged Loan Index fell 0.5% in the first quarter before rebounding 1.2% in April. He said underlying loan borrower fundamentals remained stable, with corporate revenue and EBITDA growth still positive. The trailing 12-month default rate ended the period at 1.4%, modestly higher than year-end levels but below the long-term average of 2.5%.
Ko said lower loan prices have pressured CLO valuations in the near term but have also created a more attractive reinvestment environment, with opportunities for par build, wider spreads on new investments and improved forward returns. He also said junior CLO debt securities may benefit if short-term rates rise.
“With the potential for higher short-term rates, junior CLO debt investments continue to offer attractive floating rate income potential, which we would expect to support higher income on the portfolio in the future,” Ko said.
CLO new issuance totaled $47 billion in the first quarter, down from $55 billion in the fourth quarter of 2025. Reset activity declined to $32 billion from $54 billion, while refinancing activity rose to $24 billion from $20 billion. Ko said the company expects CLO volumes to remain robust as broader markets normalize in the second quarter.
Software Exposure Draws Investor Questions
Executives addressed investor questions about the software sector, which Majewski had identified as a focus during the quarter as investors assessed potential artificial intelligence impacts on certain business models and revenue streams. He emphasized that Eagle Point Income’s exposure is principally through broadly syndicated loans rather than middle-market loans often held by business development companies.
In response to a question from Lucid Capital Markets analyst Erik Zwick about technology and software exposure, Majewski said software and services was the largest category in the company’s portfolio, but added that “not all software companies are created equally.” He said the criticality of a software tool is an important factor in assessing its vulnerability to disruption.
Majewski said the company does not set a specific target for software exposure, but “all else equal” would seek to lower it. He said the company is actively monitoring the sector and discussing exposures with collateral managers, though investment decisions depend on multiple factors.
Ko said later in the call that software-related defaults have not risen significantly so far. He said some software loans are trading lower, but about 75% of software names still trade above 90. He added that CLO collateral managers began selling some software exposure in 2025 as they anticipated AI disruption risk.
Asked by Ladenburg Thalmann analyst Christopher Nolan whether the increase in the 12-month default rate was tied to software, Ko said it was “not necessarily in a specific sector yet.” He also said the company was not seeing higher non-accruals or bank non-performing trends, and had not seen significant credit stress in healthcare unless tied to AI-related software exposure.
Capital Structure and Buybacks
Majewski said Eagle Point Income launched its 6% Series AA and Series AB convertible perpetual preferred stock offering during the quarter, providing what he described as low-cost, long-duration capital and increased financial flexibility. After quarter-end, the company completed the full redemption of its 8% Series C Term Preferred Stock, which Majewski said had been its highest-cost debt financing.
As of March 31, Umnova said preferred equity securities equaled 34% of total assets less current liabilities, within the company’s target range of 25% to 35% under normal market conditions.
The company also continued repurchasing common stock. During the first quarter, Eagle Point Income bought back almost 390,000 shares at an average discount to NAV of 19.3%, adding $0.04 per share to NAV. Since the board announced the repurchase authorization in June 2025 through March 31, the company has repurchased $50 million of common stock at an average 13% discount to NAV, resulting in $0.26 per share of NAV accretion.
Majewski said the buyback program remains open and active, though the company is no longer repurchasing shares as aggressively as in prior periods. He said management balances NAV accretion, stock liquidity and the potential impact of purchases on the share price.
“We love buying our stock cheap, we love volume in our stock, and we like to use our powder when we can really move the stock price,” Majewski said.
Looking ahead, Majewski said the company believes lower loan prices, reduced loan repricing activity and the potential for higher short-term rates are improving its earnings outlook. He said Eagle Point Income’s capital allocation and access to the broader Eagle Point platform position it to translate the environment into stronger results over time.
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.
