8-K: Carlyle Credit Income Fund Announces Third Quarter 2024 Financial Results, Maintains High Dividend Yield

Carlyle Credit Income Fund reported its third quarter 2024 financial results, highlighting a strong dividend yield and continued investment in CLO equity.

Summary

• Carlyle Credit Income Fund (CCIF) announced its financial results for the third quarter ending June 30, 2024.
• The fund invested $12.2 million in new CLO equity investments with a weighted average GAAP yield of 19.49%.
• The aggregate portfolio weighted average GAAP yield was 20.26% as of June 30, 2024.
• CCIF maintained a monthly dividend of 10.5 cents per share through November 2024, which equates to a 14.81% annualized dividend based on the share price as of August 20, 2024, or 16.49% based on the fund's NAV as of July 31, 2024.
• The fund sold 680,000 common shares through its ATM program for net proceeds of $5.5 million.
• Net investment income for the third quarter was $0.32 per common share, and the net asset value per common share was $7.68 as of June 30, 2024.
• The total fair value of investments was $138.0 million as of June 30, 2024.
• The fund's recurring cash flows per share increased to $0.81 in Q3 2024 from $0.64 per share in Q2 2024.

Sentiment

Score: 7

Explanation: The sentiment is positive due to the high dividend yield, continued investment in CLO equity, and increased recurring cash flows. However, there are some minor negatives such as a slight decrease in net investment income per share and a decrease in NAV per share.

Positives

• The fund successfully funded $12.2 million in new CLO investments with a high yield of 19.49%.
• The portfolio's overall weighted average GAAP yield is a strong 20.26%.
• The monthly dividend is being maintained at $0.105 per share through November 2024, providing a high annualized yield.
• The fund sold shares at a premium to NAV through its ATM program, generating $5.5 million in net proceeds.
• Recurring cash flows per share increased from $0.64 to $0.81, indicating improved cash generation.

Negatives

• Net investment income per share slightly decreased from $0.33 in Q2 2024 to $0.32 in Q3 2024.
• The net asset value per share decreased from $7.88 in Q2 2024 to $7.68 as of June 30, 2024.
• The fund experienced net realized and unrealized losses of $2.651 million in Q3 2024.

Risks

• The document contains forward-looking statements that involve substantial risks and uncertainties.
• The fund's performance is subject to market conditions and the performance of its underlying CLO investments.
• There is no guarantee that future dividends will match or exceed historical rates or will be paid at all.
• The fund's actual yields earned over the life of each investment could differ materially from the yields presented.

Future Outlook

The fund remains optimistic about market opportunities in the CLO market for the remainder of 2024 and will continue to source compelling CLO equity investments.

Management Comments

• Lauren Basmadjian, CCIF's Chief Executive Officer, stated that they are pleased with the progress and accomplishments during their first year as CCIF's investment advisor.
• She highlighted the rotation of the portfolio into CLO equity, the issuance of $52 million of preferred stock, growth through the ATM program, and the increase in the dividend.

Industry Context

The announcement reflects the ongoing activity in the CLO market, with CCIF actively participating in sourcing and funding new investments. The fund's focus on CLO equity aligns with the broader trend of investors seeking higher yields in the current market environment.

Comparison to Industry Standards

• CCIF's focus on CLO equity is similar to other closed-end funds and BDCs that seek higher yields in the credit markets.
• The reported weighted average GAAP yield of 20.26% is competitive within the CLO equity space, where yields are generally higher than traditional fixed income.
• The fund's dividend yield of 14.81% to 16.49% is attractive compared to many other income-generating investments.
• Comparable companies include other BDCs and closed-end funds that invest in CLOs, such as Eagle Point Credit Company (ECC) and Oxford Lane Capital Corp. (OXLC), although direct comparisons should consider differences in portfolio composition and leverage.

Stakeholder Impact

• Shareholders will benefit from the high dividend yield and the fund's continued investment in CLO equity.
• The fund's performance will impact the market price of its common and preferred shares.
• The fund's investment activity will affect the CLO market and the underlying loan obligors.

Next Steps

• The fund will host a conference call on August 22, 2024, to discuss the third quarter financial results.
• CCIF will continue to source compelling CLO equity investments.

Key Dates

Keywords

CLO, collateralized loan obligations, dividend, yield, investment, Carlyle Credit Income Fund, CCIF, net asset value, ATM program, preferred shares