MFA Financial, Inc. (MFA) recently announced that it has priced 8.00% senior notes, maturing 2042, for approximately $100 million. The offering is expected to close on April 11, 2012. In connection with this offering, the company has granted the underwriters a 30-day option to purchase additional notes worth up to $15 million to cover over-allotments.
Interest on the notes will be paid quarterly in arrears on January 15, April 15, July 15 and October 15 of each year, respectively, at a rate of 8.00% per year. The notes will mature on April 15, 2042, unless earlier repurchased.
The company expects to generate net proceeds of $96.5 million from the offering and plans to utilize it for acquiring additional residential mortgage-backed securities for working capital purposes, including the repayment of outstanding repurchase agreements. The offering will enable the company to attain financial flexibility.
MFA Financial reported fourth quarter 2011 net income of $68.0 million or 19 cents per share. As of December 2011, the company's cash and cash equivalents stood at $394.0 million.
MFA Financial primarily invests in portfolios of both Agency and non-Agency residential mortgage-backed securities. The company's residential mortgage backed securities (RMBS) portfolio consists of hybrid adjustable-rate, adjustable-rate and fixed-rate residential mortgage-backed securities issued or guaranteed by U.S. government-chartered entities.
MFA Financial currently retains a Zacks #4 Rank, which translates into a short-term Sell rating. We are also maintaining our long-term Underperform recommendation on the stock. One of its competitors, Capstead Mortgage Corp. (CMO) carries a Zacks #3 Rank, implying a short-term Hold rating.
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