Sound Point Meridian Capital Inc's Q4 2025: Unpacking Contradictions in CLO Equity Markets and Unrealized Gains

CLO equity market perspective, unrealized gains, and portfolio composition are the key contradictions discussed in Sound Point Meridian Capital Inc's latest 2025Q4 earnings call.



Investment Income and Portfolio Performance:
- Sound Point Meridian Capital reported net investment income (NII) of $13.4 million or $0.66 per share for Q4, with a net realized loss on exited investments of $0.08 per common share.
- The net asset value per share ended at $18.78, down from $20.52 at the end of 2025Q3, primarily due to unrealized losses resulting from uncertainties surrounding new administration tariffs and reduced government spending.

Deployment and CLO Activity:
- The company deployed approximately $70.6 million in six CLO warehouse investments, purchasing four CLO equity investments with an amortized cost and weighted average GAAP yield of $16.9 million and 16.15%, respectively.
- The weighted average GAAP yield on the CLO equity portfolio decreased to 14.0% as of March 31, mainly due to loan repricings in the underlying portfolios and slightly offset by CLO refinancing and reset activity.

Liquidity and Financing:
- Sound Point Meridian Capital maintained significant liquidity with approximately $9.9 million in cash and an outstanding debt of 24.5% of total assets.
- The company entered into a two-year $100 million revolving credit facility and a five-year $57.5 million Series A preferred offering, providing flexibility for future capital deployment.

Dividend Distribution:
- The company declared monthly income distributions of $0.25 per share, with an annualized dividend yield of 15%.
- Distributions were sustained despite the general market uncertainties, primarily due to the defensive positioning of the portfolio with newer CLO investments and longer reinvestment periods.