Mortgage REITs resume slump; Western Asset joins dividend suspension parade
30/03/2020 17:29
** Western Asset Mortgage Corp WMC.N shares down ~30% Mon
as co is among wave of mortgage REITs suspending their dividends
amid current market turmoil
** WMC late Fri suspended its Q1 common stock dividend and
estimated its book value/sh has declined 55%-60% since end-Dec
urn:newsml:reuters.com:*:nPn5bGx5fa
** Co said has met margin calls as of Fri, and increasing
portfolio liquidity and reducing leverage by selling securities
and restructuring or eliminating associated hedges
** BofA Global Research downgrades WMC to "neutral" from
"buy" and slashes PT from $10.50 to $4.00
** WMC, subsidiary of Legg Mason, Inc, manages diverse
portfolio, including both agency and non-agency RMBS
(residential mortgage-backed securities)
** Last month, Franklin Resources BEN.N said it would buy
Legg Mason and affiliates in deal expected to close in Q3 2020
** AG Mortgage Investment Trust MITT.N down 28% after co
late Fri suspended dividend payments on its common and preferred
stocks, and sold its agency RMBS portfolio urn:newsml:reuters.com:*:nBwbMnhlSa
** New York Mortgage Trust NYMT.O down 15% after co early
Mon said it sold MBS receiving proceeds of ~$1.7 bln, and
estimates its book value/sh for Q1 will decline by ~33% since
end-Dec urn:newsml:reuters.com:*:nGNX7QMHX4
** Mortgage REITs have been crushed this month; the Fed
started a new commercial MBS buying program on Fri to help
mitigate the volatility created by the COVID-19 pandemic
urn:newsml:reuters.com:*:nL1N2BM04Q
** Meanwhile, the Mortgage Bankers Association warned on Sun
in letter to the SEC and FINRA that the Fed's emergency
purchases have unintentionally put mortgage industry at risk by
forcing a deluge of margin calls on hedges lenders entered into
to protect themselves from losses, CNBC reports https://www.cnbc.com/2020/03/29/mortgage-bankers-warn-fed-purchases-of-mortgages-unbalanced-market-forcing-margin-calls.html
** On Mon, Dow Jones U.S. Mortgage REITs index and iShares
Mortgage Real Estate ETF REM.N down 8.3% and 6.6%,
respectively
(Reporting by Lance Tupper)
((lance.tupper.tr.com@reuters.net
lance.tupper@tr.com 646-223-5017))