Why MFA Financial, Inc. (NYSE: MFA) stock is under pressure

Free $100 Forex No-Deposit Bonus

MFA Financial, Inc. (NYSE: MFA) stock fell over 1.8% in the pre-market session of June 17th, 2020 (Source: Google finance) after the company posted lower than expected results for the first quarter of FY 20. During April and May, the company had significantly reduced the balance sheet in an effort to raise liquidity. Many of the asset sales, particularly on mortgage-backed securities, were at prices significantly higher than the price levels that existed in late-March. The sales during the month of April alone of legacy non-agencies, CRTs, and MSR-related assets had generated over $150 million of realized gains versus March 31 marks. The net losses for the first quarter on residential whole loans measured at fair value through earnings were $52.8 million, including declines in the fair value of the underlying loans of $74.6 million, which is offset by $21.8 million of coupon interest payments and other gains realized during the quarter.

Meanwhile, the company has announced a $500 million capital raise through a private senior secured loan agreement to be funded by certain funds and accounts managed by subsidiaries of Apollo Global Management, Inc. (together with such funds and accounts, “Apollo”), including subsidiaries of Athene Holding Ltd. (Athene), to which Apollo provides asset management and advisory services. The Company is signing commitments for a non-mark-to-market term borrowing facility of about $1.65 billion from Barclays and Athene. The Company anticipates that this capital raise and borrowing facility will enable it to exit the previously announced forbearance agreement entered into on June 1, 2020 , and will pay accumulated unpaid dividends on its Series B and Series C preferred stock issues.

Moreover, MFA’s residential mortgage investment portfolio had fallen by $3 billion during the first quarter, mainly due to asset sales and market value changes.  Assets with an amortized cost basis totaling $2.3 billion were sold for $2.1 billion, which resulted in realized losses of $238.4 million.  Prior to the onset of the COVID-19 pandemic in mid-March, MFA had acquired about $1.1 billion of residential whole loans during the first quarter.

MFA in the first quarter of FY 20 has reported the adjusted loss per share of $1.08, missing the analysts’ estimates for the adjusted earnings per share of 14 cents. The company had reported the adjusted revenue of $61,701,000 in the first quarter of FY 20, missing the analysts’ estimates for revenue of $152,300,000.

Copyright © 2020. All Rights Reserved. FXDailyReport.Com
Risk Warning: Trading CFDs is a high risk activity and you may lose more than your initial deposit. You should never invest money that you cannot afford to lose. FXDailyReport.com will not accept any liability for loss or damage as a result of reliance on the information contained within this website including data, quotes, charts and buy/sell signals. Please be fully informed regarding the risks and costs associated with trading the financial markets.