Kaoboy Musings

ECC peeps, 2/13/26: Another day in paradise for CLO equity CEFs and BDCs. There are some interesting dichotomies being voiced today, one bearish and one bullish. I’ll let you figure out which one the market is latching onto. Bearish: https://x.com/specialsitsnews/status/2022260435869659598?s=46 Bullish: https://x.com/urbankaoboy/status/2022317667173142643?s=46 My own take is that the bearish view is hyperbolic and that there is a big difference between equity multiple compression and imminent mass defaults. Furthermore, even if it really does get to that point, these structures are diversified and resilient. The bearish take doesn’t even acknowledge the lack of forced selling triggers or self-healing that comes from 3.5 year WARPs. These are NOT static pools à la the CDOs of old. ECC just posted its Jan NAV, which showed benign degradation and it’s already trading at almost 20% discount. Ditto for SPMC which also reported similar NAV. OXLC getting hit the worst again because of lack of credibility in their distribution policy. ECC reports on 2/25 and I am expecting that they will cut their distribution finally now that the market is already pricing a 50% cut. Can’t control the marks or the fear in the market, but once they do that they will be on a sustainable path to NAV stability and even growth imho.