Ellington Financial LLC (EFC) has disclosed a new risk, in the Debt & Financing category.
Ellington Financial LLC faces significant risks due to its investments in corporate loans and Collateralized Loan Obligations (CLOs) backed by these loans. The underlying assets of these investments are often lower-rated and may include middle-market loans, which carry higher risks due to limited liquidity, potential financial stress during economic downturns, and a greater likelihood of default. Additionally, the prevalence of covenant-lite loans among these investments poses further risk, as they provide borrowers with more flexibility that can limit lenders’ ability to manage early signs of financial distress. Such risks could adversely impact the fair value of Ellington Financial’s investments and their ability to maintain dividends to shareholders.
The average EFC stock price target is $14.38, implying 5.74% upside potential.
To learn more about Ellington Financial LLC’s risk factors, click here.