I don't see anyone, in any mREIT site I've checked out, that mentions Bernanke's comments today (covered in MarketWatch article)...We had DUDLEY earlier talking about 'leverage' and now Benny brings it up again today, of the things that concern him...'reaching for yield'...Read the article...He says it better than I can. Bottom line, I'd expect at some point to have these "regulators" (SEC) begin to tell mREITS just how much leverage they use, and then give them x amount of time to comply. So, I'd expect that if their ability to use the amount of leverage they are currently employing is curtailed, that could mean less profits and (further) declining dividend payouts...No more double-digit stuff, most likely, esp given the narrow spreads....not to mention the (next wave of possible) FHA refi stuff coming, with new, liberal rules. (WHY I went into ALL PREFERRED REIT stock...to avoid the pressures of possible declining dividends on the COMMON STOCK...I'll take the fixed amt. payout at 8%, on the preferreds). I'd now do a rant about how BENNY has skkreuued old people, hunting for yield, to feed themselves, as a 0.01% saving's account ain't cutting it @!...He ought to be in jail !! ...(ps...his comments today 'dropped the sector"...no one says that...odd??)
I mentioned what he said in some post probably unreplied to.. at the bottom.. Probably because I DIDN'T USE BIG LETTERS. Ben shouldn't be so critical, this is the env he created. Want HY, want crazy leverage. Try CZR bonds. 59c/$ for 10% yield.. 5900=10kpar val=1k annual=16.9% yield=23.4 YTM (yield to maturity). Just to be clear.. I'm not telling anyone to do that. Its just an example of very high yield - crazy leverage. The 1st priority senior loans are backed by the principal of subordinate debt holders.. Its usually the case, is it not?
59c/$ is probably a 52 week low for the debt.. There are quite a few ways people "reach for yield".. Leveraging the wimpy returns of agency MBS is probably the most benign. There are leveraged high yield debt funds aplenty.. some even hold the CZR debt to goose their income generation while retaining very generous expense ratios And I'm talking about 2018 unsecured 12.75% @ 69c/$, not the 2nd pri senior secured i referenced
That would be a fun party.....down goes agnc, down goes agnc.
hey philly, do ya think perhaps the agnc plan to outsourc mgmnt. with the same ex-govt. Employees currently running things, does not bode well for the sp. $35mil. A year seems high to me. but like cim....nly's extra homework. this practice should be illegal.