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American Capital Agency Corp. Message Board

  • jenya.vulfson jenya.vulfson Jun 13, 2011 8:27 PM Flag

    Cannot wrap my mind around it…

    Looking at the dividend on this stock and other agency REITs one cannot help thinking the stock is priced as the Greek bonds (~50% haircut). Why is this?
    A dramatic curve fattening is unlikely – the short end is nailed by the FED probably until the elections and the long end is pretty low and, if Bill Gross to be believed, can move higher. One can see a government-inspired write downs (there is plenty of chatter about it) but, if so, it is likely to affect the agency backed paper too much, right? At the same time mainly non-agency REITs e.g. CIM and MFA are trading at much more reasonable divi… Why would the market price AGNC and similar stocks (CYS, ARR, TWO) for a Greek style default? There are plenty of very savvy folks on this board. Any comments?

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