The significant unrealized losses in CLO equity suggest continued near-term pressure on NAV if credit spreads remain wide. While management believes the drop is due to spread widening rather than fundamental deterioration, traders should monitor CLO market conditions and credit default rates. The maintained distribution is sustainable based on NII coverage (NII of $0.21 vs distribution of $0.24 per quarter), but any further NAV erosion could pressure future payouts.
Price Chart
Executive Summary
Ellington Credit Company reported a net loss of $21.1 million ($0.56 per share) for the quarter ended December 31, 2025, driven by significant unrealized losses in its CLO equity portfolio due to market-wide credit spread widening. Despite generating $7.8 million in net investment income ($0.21 per share), the decline in net asset value (NAV) from $5.43 to $5.19 per share reflects challenging conditions in the CLO equity market. The company maintained its quarterly distribution of $0.08 per share.
Key Financial Metrics
Key Facts
- GAAP net loss of $(21.1) million or $(0.56) per share for Q3 FY2025
- Net investment income of $7.8 million ($0.21 per share), flat vs prior quarter
- NAV per share declined from $5.43 to $5.19, a drop of $0.24, entirely offset by distributions
- Unrealized losses of $(27.5) million primarily in CLO equity investments
- CLO equity fair value declined from $196.6 million to $192.6 million
- Credit hedges increased significantly from $90.6 million to $174.8 million notional
- Company maintained distribution of $0.08 per share
Financial Impact
Net asset value declined by $0.24 per share ($4.4%) to $5.19 despite $0.24 in distributions, indicating substantial market valuation losses. Total investment portfolio declined by $25.8 million in fair value.
Segment Breakdown
| Segment | Revenue |
|---|---|
| CLO debt | $176.9M |
| CLO equity | $192.6M |
Risk Factors
- Continued widening of credit spreads in the CLO market could lead to further NAV declines
- Increased default activity in CCC-rated loans could negatively impact CLO equity values
- The company's substantial credit hedges could result in additional losses if credit conditions improve
- NII of $0.21 per share is below the $0.24 distribution rate, creating a small funding gap
Market Snapshot
Investment Themes
Documents Analyzed
This report is based on 5 SEC documents filed with EDGAR.
| Document | Accession Number |
|---|---|
| 8-K Filing (Primary) | 0001628280-26-014689 |
| Document: earn-20260304.htm | 0001628280-26-014689 |
| Document: 0001628280-26-014689-index-headers.html | 0001628280-26-014689 |
| Document: 0001628280-26-014689-index.html | 0001628280-26-014689 |
| Document: 0001628280-26-014689.txt | 0001628280-26-014689 |
Track record builds as more directional reports settle.
Filters
| Type | Now | ||||
|---|---|---|---|---|---|
Oct 22, 2026 4d ago | EFFECT | $3.58 $3.63 | ▼ −1.40% | ▼ −1.92% | $3.73 (−4.19%) |
Oct 16, 2026 10d ago | 8-K | $3.46 $3.52 | ▲ +1.73% | ▲ +1.31% | $3.73 (+7.80%) |
Oct 7, 2026 19d ago | 8-K | $3.48 $3.55 | ▲ +2.01% | ▲ +2.43% | $3.73 (+7.18%) |
Jun 12, 2026 19w ago | EFFECT | $4.61 $4.52 | ▲ +1.95% | ▲ +3.72% | $3.73 (+19.09%) |
Mar 25, 2026 30w ago | EFFECT | $4.32 $4.40 | ▲ +1.74% | ▲ +3.51% | $3.73 (−13.74%) |
Mar 4, 2026 33w ago | 8-K | $4.74 $4.50 | ▲ +5.10% | ▲ +3.79% | $3.73 (+21.29%) |
Feb 28, 2026 34w ago | Institutional Cluster | $4.78 $4.88 | ▲ +2.15% | ▲ +3.06% | $3.73 (−21.93%) |
US Market Status
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