Key Points – Ellington Credit reported a GAAP net loss of $0.86 per share for Q1 2026, driven mainly by mark-to-market losses in CLO equity as volatility hit the CLO market.
Management said the weakness looked more like a technical dislocation than a deterioration in underlying credit quality. – The company raised $54 million through 8.5% senior unsecured notes to strengthen its balance sheet and invest during the selloff
Most of the proceeds were deployed by the end of April, helping the CLO portfolio grow to about $328 million. – Conditions improved in April, with estimated NAV rising to $4.29 per share midpoint from $4.09 at quarter-end and the company posting a nearly 7% monthly economic return. Management said it expects Adjusted Net Investment Income to rebuild into the low 20-cent range per share as recent investments begin contributing more fully. Ellington Credit (NYSE:EARN) reported a GAAP net loss of $0.86 per share for the quarter ended March 31, 2026, as volatility in the collateralized loan obligation market weighed on asset valuations, particularly CLO equity holdings.
Chief Executive Officer Larry Penn said the first calendar quarter was marked by “continued volatility in the CLO market,” with broader market conditions pressuring valuations and driving a decline in net asset value. However, Penn said the company’s active trading strategy and bias toward higher positions in the capital stack helped it outperform peers. “We believe that the first quarter largely represented a technical dislocation that reset valuations and expanded the opportunity set rather than a fundamental deterioration in underlying credit quality,” Penn said. CLO Equity Marks Drive Quarterly Loss Chief Financial Officer Chris Smernoff said the quarterly loss was primarily driven by mark-to-market losses in CLO equity, while CLO mezzanine debt was comparatively more resilient.