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Mortgage REIT New Residential Investment Corp to Sell Fixed-Rate Reset Preferred

Mortgage REIT New Residential Investment Corporation (NRZ) has announced they will be selling a new issue of fixed-rate reset preferred.

Fixed-rate reset preferreds adjust every 5 years to the 5 year treasury rate plus a fixed spread–generally the spread is quite large and FRR preferreds have been well accepted by the marketplace.

NRZ has 3 fixed-to-floating rate issues currently outstanding which can be seen here. None of the 3 are currently redeemable.

The preliminary prospectus can be read here.

Kent was right on top of this one with EarlyBird chiming in with yield talk on the resettable around 7%.

25 thoughts on “Mortgage REIT New Residential Investment Corp to Sell Fixed-Rate Reset Preferred”

  1. Sorry, I just don’t get a warm fuzzy feeling for NREZ or any of their preferred.
    I have a 30 yr with them that they inherited. I have 6 months left on my mortgage. I never refi’d, it was a adjustable originally from San Francisco savings and loan and could only be reset once a year to north coast cost of funds. Currently about 3%
    With the current market loaning 30 yr at 2.25 to 2.75% and 15 yr at 1.75% I Wouldn’t want to be caught holding any of this 7% paper. How do you pay 7% when your only making 2.50% average on new loans?They have to be taking on high risk debt and when congress starts negotiating to raise the debt ceiling and one party threatens to use the nuclear option of letting the US default on its debt your going to see some wide swings in the market
    And no, I am not trying to make a political statement. Just a observation of how bad its gotten with the two parties in government

      1. Martin,
        Was just on NRZ
        But if you think about it, Your taking in 2.5% and paying out 7% doesn’t sound like a good business model.
        Now compare that to a shipping preferred like GSL that’s 8% and the company is making money on the shipping in the container market

        1. REIT preferreds have been my bread and butter. Shipping has been my worst sector. Whatever works for you.

          1. Hello Martin,
            I am not against REIT’s I own BRG-C & D and have owned BFS-PD
            But I like to see asset backed and rental income compared to loans packaged and sold or bought and within those packages can be non-performing loans or the assets shrink if loans are re-financed.
            Look at March 2020 NRZ-B hit a low of 8.07 and 1-1/2 yrs later its still is below par. Compare that to BRG-D the low was 14.13 and its above par now.

    1. Charles M, you are mistaken about the MREIT business model. You might want to do a little more research on it.

      P.S. NRZ doesn’t own your mortgage, just the servicing rights.

      1. actually NRZ bought my last mortgage company when it was going BK and its subsidiary Shell point services my Mortgage

  2. I thought this was an interesting quote from NRZ buried in comments regarding NON-AGENCY RMBS which are 27% of their portfolio. Has reflection on other CEFs and mREITs that hold these too. For your consideration (Rod Serling):

    ‘Since the onset of the financial crisis in 2007, there has been significant volatility in the prices for non-Agency RMBS. This has resulted from a widespread contraction in capital available for this asset class, deteriorating housing fundamentals, and an increase in forced selling by institutional investors (often in response to rating agency downgrades). While the prices of these assets have recovered from their lows, from time to time there may be opportunities to acquire non-Agency RMBS at attractive risk-adjusted yields, with the potential for upside if the U.S. economy and housing market continue to strengthen.”

    Wonder why the Fed is buying?

  3. The other 3 all came to market in a small window, each deal larger then the one before. And then they all tested 6. I call these types asbestos glove issues. You’ve got to have them on before handling.

    1. IYP,
      They came so close to suspending the pfd divvies last year as they cut the common divvy by 90%. Those were tough days but then the sun came back out.

  4. Been trading the other 3 and welcome a 4th issue for more opportunity. 7% sounds high compared to where the others are trading.

    1. Actually the C is now trading well below par so that the actual yield is about 7% so that the D is priced at about the market price for the C. There are some small but potentially important differences between the D and the previous issues so one has to read the fine print. SC

      1. Don’t know about the five year reset…. But ended up being their biggest yet at 425 mm

        1. I believe the initial rate is 7% and the reset rate is 5yr T +6.223
          Unfortunately I couldn’t find a quote for the security. Anyone know if there is a temporary symbol?
          I think that’s pretty attractive in today’s market.

          1. NRZDV. qol says it started trading today and closed at 24.70. with 1.915 million shares traded. At that price load me up! I don’t see it anywhere else.

            1. It’s visible on TOS now…. trading range on the day was 24.98 to 24.60. Trading history also shows on Fido Active Trader Pro… don’t know if you can enter orders at either place.

      2. C at 6.75% plus a months accrued divs. B at 7% minus a little YTC. A is higher with lower YTC. D announced 7% and the best reset rate. I would expect either the other issues drop or D trades a good bit over par. They just don’t match.

              1. Isn’t that what all US resets are based on? Looking at recent issues, SPNT-B and CNOBP are the same.

                1. FtF MBNKP and the new FtF NYMTL are based on 3mos SOFR. Also, for Martin – NI-B is an example of a reset based off of the 5yr T-bill + other factors.

    2. Check that and the C at 23.61 close today? Call coverage until 2-25 too.
      Will be interesting to watch the opening prices.

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