Carlyle Credit Income Fund 8.75% Series A Preferred Shares due 2028

CCIA

Market cap $52.9M

Carlyle Credit Income Fund has launched the 7.375% Carlyle Credit Income Fund NT 28, maturing in 2028, with a $25 par value. Preferreds have a decent asset coverage ratio, and preferred dividends are well-covered by common share distributions, indicating low risk to payments. The IPO credit spread for CCID aligns with sector peers, but yield comparisons show more attractive alternatives with similar or better credit quality.

Carlyle Credit Income Fund has refinanced its preferred shares, issuing 7.375% Series D Preferred Shares due 2028 at a lower coupon. CCID offers a shorter duration and lower cost of capital, benefiting from falling rates and increased market familiarity with CCIF's portfolio. The new CCID shares are callable from October 2026, so investors should focus on yield-to-worst and avoid paying significant premiums.

Carlyle Credit Income Fund will call its 8.75% Series A Preferred Shares on November 3, 2025, pending a new $50M financing. Investors will receive $25/share par plus accrued interest, with total payout estimated at $25.27 per share by maturity when including the October 2025 payment date. With only one month of duration left, CCIA now acts as a short-term cash equivalent, offering little arbitrage opportunity above par.

Carlyle Credit Income Fund (CCIF) Q3 2025 Earnings Call Transcript

Carlyle Credit Income Fund (CCIF) Q2 2025 Earnings Call Transcript

The CLO Equity CEF sector has doubled in size over the past two years, driven by new entrants and favorable market conditions. Key catalysts include a benign default environment, tightening credit spreads, and the attractiveness of floating-rate assets amid a flat/inverted yield curve. CLO Equity funds benefit from embedded options like reinvestment and call options, which enhance returns during periods of market volatility.

CCIA's valuation metrics have normalized, making it comparable to similar securities, despite the fund's small AUM and risky underlying asset class, CLO equity. Significant market downturns can cause CCIA to trade below par, with attractive entry points emerging when YTM exceeds 8%. CCIA has shown high volatility compared to peers, indicating the potential for significant price declines, especially during market stress or a recession.

Carlyle Credit Income Fund (NYSE:CCIF ) Q1 2025 Earnings Conference Call February 27, 2025 10:00 AM ET Company Participants Nishil Mehta - Principal Executive Officer and President Lauren Basmadjian - CEO Nelson Joseph - CFO Conference Call Participants Randy Binner - B. Riley Securities Erik Zwick - Lucid Capital Markets Operator Good day and thank you for standing by.

CCIA shares have rallied to $26.68, representing a 6.72% premium over par, reducing the yield to maturity to 6.7%, which is low relative to comparable securities. While the coupon rate is 8.75%, the current yield is only 8.2%, and the YTM has become less attractive given the tenor, volatility, and alternatives available in the market. The recent price surge is likely driven by large-scale buying in an illiquid market, without any substantial changes in the fund's fundamentals to justify the low YTM.