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ARMOUR Residential REIT, Inc. Message Board

  • divyinvstr divyinvstr Jul 27, 2011 8:45 AM Flag

    Collateral Haircuts

    An increase in collateral "haircuts" of 10% would decrease the maximum obtainable leverage level by that 10% but would not necessarily force a round of leverage reduction. If, for example, ARR had been able to borrow up to a 10X leveraged level,an increase in collateral haircuts by 10% would reduce the maximum potential to 9X.

    To the extent that ARR is already more than 10% below current maximum leverage levels, reducing leverage would not be necessary. Additional collateral would need to be posted but would be available.

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