Shalabh Mehrish

Asked about the potential for a special dividend given the new lower distribution rate, questioned the stability of the CLO debt coupon, inquired about a recent decline in the OC cushion, and confirmed the attractiveness of share buybacks at the current discount.

Answer

The company responded that recurring cash flow is now roughly in line with the new distribution level, making a special dividend unlikely unless taxable income significantly exceeds distributions. The CLO debt coupon has been stable due to a wide variety of available opportunities, including wider-spread deals. The OC cushion decline was attributed to the expected Altice default, not widespread downgrades, and remains ample. They strongly affirmed that buying back stock at a double-digit discount is a highly attractive use of capital.

Shalabh Mehrish from VinsonCap Advisors LP asked about recurring cash flow versus the new distribution level, the potential for a special dividend, the stability of BB CLO debt coupons, the decline in the OC cushion, and the attractiveness of share repurchases.

Answer

Chairperson & CEO Thomas Majewski stated that cash flows are now roughly in line with the new distribution level and expenses, but a special dividend is unlikely due to the unpredictability of taxable income. Senior Principal & Portfolio Manager Daniel Ko noted they can still find attractive yields despite market tightening and attributed the OC cushion decline to the anticipated Altice default, not broader credit issues. Majewski concluded by affirming that repurchasing shares at the current discount is a highly attractive investment.

Shalabh Mehrish from VinsonCap Advisors asked about the potential causes for the recent significant sell-off in CLO equity closed-end funds. He also inquired about the pace of loan spread compression and sought details on the geographic focus of the new collateral manager partnership.

Answer

CEO Thomas Majewski attributed the sell-off to general market uncertainty, such as tariff concerns, which can cause a flight from perceived risk and a swing from premium to discount pricing for closed-end funds. He noted that the pace of loan spread compression has slowed significantly. He also disclosed that the first manager partnership (Muzinich & Co.) is US-based, and the new, second partnership is with Muzinich Europe, extending a successful formula.