mREIT AGNC Investment Prices F-t-F Preferred-UPDATED

UPDATE–the floating rate portion will be 3 month Libor plus a spread of 4.332% beginning 4/15/2024.

The pricing term sheet is here.

mREIT AGNC Investment (NASDAQ:AGNC) has priced their new fixed-to-floating rate preferred with the lowest fixed coupon portion (from a mREIT) that we have seen in a year since Annaly (NYSE:NLY) sold a f-t-f issue with a 6.50% fixed portion in January, 2018.

The initial fixed rate coupon is priced at 6.875% which will remain fixed until 4/15/2024 at which point it will flip to a floating rate. The SEC document has not been filed as of tonight and the spread for the floating rate period was not announced in the company press release (what the hell–a press release without all the details)

The company press release, which announces the fixed rate portion of the new issue can be found here.

The preliminary prospectus can be found here.

The issues will be junk rated (not rated), cumulative and NOT qualified for preferential tax treatment.

The company will be selling 9 million shares and there will be 1.350 million shares for over allotment.

Shares will trade tomorrow on the OTC Grey market under the temporary ticker symbol of AGNCO. The permanent ticker symbol will be AGNCM.

We will post final SEC documents with further details in the morning (assuming they are filed).

4 thoughts on “mREIT AGNC Investment Prices F-t-F Preferred-UPDATED”

  1. I hate the Libor spread, and am not excited about the issue. But I also think the spread reflects the reality that when AGNC issued its last FTF preferred in August 2017, I think 3mL was under 1.3. Now, long term rates aren’t that much higher, and 3mL has doubled. The tighter spread reflects the current market. I think the problem is that in 5 years, the yield curve is not likely to be flatter. It will probably be steeper, and the spread will be unattractive whether rates go up or down.

    1. Bob-in-DE–yes this is a non starter for many investors–there are many better available options.

  2. Tim — I know you invest in tax deferred accounts, but worth noting that these mREIT (and other regular REIT) preferred are being helped by the new 199A section of the tax code. Basically, if you own this preferred in a taxable account, you only pay “ordinary” taxes on 80% of the payout; not earth shattering but a help. Keep up the great work.

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