SPMC Post its Estimated Q4 2026 NII of $0.33, down 25% and NAV of $9.63, down 9% from previous quarter. CLO equity valuations were down 5%.

CLOInvestor.com created spreadsheet

Sound Point Meridian Capital CLO equity fund (“SPMC”) just published its Q4 2026 estimated financial results and NAV (period end March 31, 2026).

www.soundpointmeridiancap.com/NAV

Q4 2026 Estimated NII and Realized Losses:

SPMC’s reported estimated Q4 2026 NII was $0.33, down 25% ($0.44) from Q3 2026, and 50% ($0.66) from Q4 2025.  The massive year over year drop in NII was mainly caused by SPMC’s portfolio average effective yield which went from 15.4% (Jan. 2025) to 11.4% (Jan. 2026), a 25% decline.  This makes sense since leverage loan spreads came in roughly 30bps during 2025. 

I am not surprised that SPMC’s NII dropped in Q4 2026, but I am a bit shocked that it dropped so much.  I think most CLO equity funds will continue to report lower NII until the underlying leverage loan spreads start to widen out.  I am hopeful that the recent hiccup in the leverage loan market will allow CLO managers to finally increase loan spreads, at least a bit.

With SPMC’s NII at $0.33 for the quarter, I think that they will or should cut its $0.20 monthly dividend payable through June.  About 50% of the dividend is ROC.  NII/Stock $ yield of 13% is very low even though its dividend yield is 24%.  They are simply destroying too much NAV each month.  Most other CLO equity funds have cut their dividends to match their NIIs.

Q1 2026 NAV:

SPMC’s March NAV was down $0.85 or 9.2%.  Based upon my calculations, SPMC’s CLO equity market value fell by about $0.60, or 5% in March.  This is in line with my earlier estimate of March CLO equity prices dropping 2% - 5%.

CLOInvestor.com/5% Drop in MV of CLO Equity

If CLO equity valuations are down roughly 5% for March, I think the market will take it as a positive, after the huge valuation drop that occurred in February (SPMC down 20%).  I expect the other CLO equity funds will report their March NAVs this week so we will have clarity on how the NAVs will impact their stock prices.

While I have done a deep dive into all SPMC’s financial statements, I would be hesitant to buy the stock until they cut their monthly $0.25 dividend to better match its NII. Also, SPMC’s NII yield of 13% is low compared to the other CLO Equity Funds.

If you have any questions or concerns, please post a commnet or email me directly at sod@cloinvestor.com