Company: ECC-PD
Filing Date: 2025-04-11
Form Type: N-2ASR
Source: 0001104659-25-034204
Chunk: 95

Company: Eagle Point Credit Co Inc.
Filing Date: 2025-04-11
Form: N-2ASR
Chunk 95
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 until the test is satisfied. Such diversion would lead to payments to the equity investors being delayed and/or reduced. 56 Cash flow CLOs do not have mark-to-market triggers and, with limited exceptions (such as the proportion of assets rated “CCC+” or lower (or their equivalent) by which such assets exceed a specified concentration limit, discounted purchases and defaulted assets), CLO covenants are generally calculated using the par value of collateral, not the market value or purchase price. As a result, a decrease in the market price of a CLO’s performing collateral portfolio does not generally result in a requirement for the CLO collateral manager to sell assets (i.e., no forced sales) or for CLO equity investors to contribute additional capital (i.e., no margin calls). Overview of Senior Secured Loans Senior secured loans have the most senior position in a borrower’s capital structure or share the senior position with other senior debt securities of the borrower. This capital structure position generally gives holders of senior secured loans a priority claim on some or all of the borrower’s assets in the event of default and therefore the lenders will be paid before certain other creditors of the borrower. Broadly syndicated senior secured loans are typically originated and structured by banks on behalf of corporate borrowers with proceeds often used for leveraged buyout transactions, mergers and acquisitions, stock repurchases, recapitalizations, refinancings, financing capital expenditures, and internal growth. Broadly syndicated senior secured loans are typically acquired through both primary bank syndications and in the secondary market, and distributed by the arranging bank to a diverse group of investors primarily consisting of CLOs, loan and high-yield bond registered funds, loan separate accounts, banks, insurance companies, finance companies and hedge funds. Senior secured loans are floating rate instruments, typically making quarterly interest payments based on a spread over LIBOR. We believe that senior secured loans represent an attractive and stable base of collateral for CLOs. In most cases, a senior secured loan will be secured by specific collateral of the issuer. In some cases, senior secured loans trade in the secondary market at a price below par (i.e., below 100% of face value). During a CLO’s reinvestment period the CLO collateral manager has the ability to purchase such discounted loans, which presents an opportunity to generate capital appreciation to the extent that the loan’s price increases or ultimately repays at par. Senior secured loans generally are negotiated between a borrower and several financial institution lenders represented by one or more lenders acting as