Sound Point Meridian Capital 8.00% Series A Preferred Shares

SPMA

Sound Point Meridian Capital Inc is a CLO CEF fund primarily exposed to CLO equity tranches, analyzed using Moody's adapted BDC methodology. SPMC demonstrates strong asset coverage, no secured debt, and solid profitability, but its portfolio concentration in CLO equity tranches increases risk. SPMC's fixed debt appears relatively safe and close to investment grade, but the preferred shares and overall CEF CLO structure carry significant risk, which falls entirely on equity investors.

Sound Point Meridian Capital Inc., a closed-end fund (CEF) focused on high current income through investments in CLO equity and mezzanine tranches of below-investment-grade U.S. senior secured loans. SPMA offers an 8% annual dividend ($2.00), callable on Nov. 30, 2026, maturing Nov. 30, 2029, with a YTC of 7.89% and YTM of 8.16%, protected by the 1940 Act. Fund Metrics: Trades at a 1.4% discount to NAV ($18.53), tighter than peers like OXLC and ECC; GAAP NII of $0.47 vs. $0.75 dividend raises sustainability concerns.

We take a look at the action in preferreds and baby bonds through the second week of July and highlight some of the key themes we are watching. Preferreds outperformed broader markets last week; sector credit spreads have tightened, making valuations expensive and yields less attractive. Bonds offer more protection than preferreds, but preferreds provide higher yields; choice depends on issuer quality, tax treatment, and investor objectives.

SPME offers a 7.875% nominal yield, is well-covered by assets, and is priced near par, making it attractive for income-focused portfolios. Sound Point Meridian Capital's asset coverage ratio is 380%, nearly double the legal requirement, providing strong safety for preferred shareholders. SPME's risk premium and credit quality are in line with sector peers, with no deterioration since the company's last issue, and the company outperforms in total return its direct peers.

Sound Point Meridian Capital Inc (NYSE:SPMC ) Q4 2025 Earnings Conference Call May 29, 2025 11:00 AM ET Company Participants Julie Smith - IR Ujjaval Desai - CEO Kevin Gerlitz - CFO Conference Call Participants Erik Zwick - Lucid Capital Markets Tim D'Agostino - B. Riley Operator Good morning, ladies and gentlemen, and welcome to the Sound Point Meridian Capital Inc Fourth Fiscal Quarter Ended March 31, 2025 Earnings Conference Call.

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.

Collateralized loan obligation CEFs offer high yields but come with significant leverage, volatility and higher risk, making them less appropriate for all income investors. Baby bonds and preferred offerings from CLO CEFs provide safer, more stable income, balancing risk-reward when it comes to seeking income. We have new offerings in the space since our last update, leading to greater diversification potential and increasing the viability of setting up a ladder of maturities.

Sound Point Meridian Capital Inc (NYSE:SPMC ) Q3 2025 Earnings Conference Call February 12, 2025 10:00 AM ET Company Participants Peter Sceusa - Investor Relations Ujjaval Desai - Chief Executive Officer Kevin Gerlitz - Chief Financial Officer Conference Call Participants Randy Binner - B. Riley Erik Zwick - Lucid Capital Markets Operator Good morning, ladies and gentlemen, and welcome to the Sound Point Meridian Capital, Inc. Third Fiscal Quarter Ended December 31, 2024 Earnings Conference Call.

Sound Point Meridian Capital Inc's 8% Series A Term Preferred Shares, SPMA, offer an attractive yield, trading at $24.90 with a Yield to Maturity of 8.35%. SPMA's strong capital structure and significant common distributions buffer ensure preferred shareholders' confidence in financial stability and dividend payments. Despite lacking a credit rating, SPMA's underwriter credit spreads align with established CLO Equity sector companies.

We take a look at the action in preferreds and baby bonds through the second week of November and highlight some of the key themes we are watching. Preferred stocks had a strong week with a 2% total return, supported by a Treasury rally and narrowing credit spreads. Invesco Mortgage Capital is redeeming its floating-rate preferred IVR.PR.B, which will raise equity coverage.