Street Calls of the Week
Investing.com - Clear Street initiated coverage of Sound Point Meridian Capital (NYSE:SPMC), a $352.53 million market cap company currently trading at $17.35, with a Buy rating and a $20.00 price target on Wednesday.
The research firm highlighted SPMC’s position as a focused CLO equity investor backed by Sound Point Capital Management’s $45 billion alternative credit platform since its June 2024 IPO.
Clear Street noted that the fund offers investors exposure to CLO equity delivering a 13.1% weighted-average GAAP portfolio yield and nearly 20% estimated cash yield.
While the portfolio shows some concentration with top five investments representing approximately 20% of fair value, the underlying diversification across CLO collateral and defensive sector tilts toward software and healthcare provide balanced risk exposure, according to Clear Street.
The firm acknowledged near-term challenges as tight loan spreads pressure CLO equity yields and valuations, which have contributed to NAV compression since the company’s IPO.
In other recent news, Sound Point Meridian Capital , Inc. completed a public offering of 2,300,000 shares of 7.875% Series B Preferred Stock, resulting in a total value of $57.5 million. This offering included 300,000 shares issued as part of the underwriters’ full exercise of their overallotment option. Oppenheimer & Co. Inc. acted as the representative of the underwriters for this transaction. Sound Point Meridian Capital also reported management’s unaudited estimates for its financial results as of June 30, 2025. The company estimated its net asset value per share of common stock ranged between $18.45 and $18.55. Additionally, the estimated net investment income was between $0.48 and $0.58 per share, with a realized gain or loss ranging between $0.04 and a loss of $0.06 per share. Earlier, the company announced the commencement of an underwritten public offering of its Series B Preferred Shares, which received a ’BBB’ rating from Egan-Jones Ratings Company.
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