Persistent commentary about the potential insolvency of Fannie Mae (FNM) and Freddie Mac (FRE) pounded shares of agency mREITs today, as investors worried that the liquidity of this group holdings would dry up. Until recently, mortgage REITs investing in agency-backed MBS had enjoyed relative strength compared to non-agency peers because of the liquidity provided by the implicit government backing of the MBS holdings.
However, with spreads widening considerably on Fannie and Freddie debt, investors worry that the holdings of groups like Annaly Capital (NLY), Capstead Mortgage (CMO), Anworth Mortgage (ANH), and MFA Mortgage (MFA) will lose their liquidity privilege in the marketplace and lose their value, forcing painful margin calls and perhaps requiring significant asset sales.
Keep an eye on the Fannie and Freddie news in the coming days to see if agency mREIT shares can regain their liquidity privileges and recover share value.
4 comments:
Have they now lost their liquidity privledges or is this an event that could occur?
Would this be transparent to an investor? A certain spread that would tip the balance?
This is an event that could occur, but hasn't yet. I would watch MBS spreads and disclosures about asset sales and haircuts on repo agreements for the clearest signals. However, in an environment where IMB can collapse in a week and Freddie/Fannie may be nationalized, there may not be a signal in advance of the storm. Still, I am personally bullish on the agency mREITs and I believe they represent a really positive risk/reward ratio at this point.
Patrick, are other m-REIT investors/experts bullish on agency mREITs also? What is your recommendation on NLY/HTS in the short term and Q3&Q4?
Also how is the environment for capital raises for agency m-REITs. Do the traditional/institutional investors see the value beyond the webs of panic?
Hi, there is nothing worse than a debt. The thing is that recently on the market there have appeared new types of organizations - collection agencies. They help banks returned the borrowed money from the people. American Agencies has been a national leader in the collection industry for more than 30 years. It is one of the most powerful agencies in the country. browse www.pissedconsumer.com to read about this.
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