Once again mortgage REIT Redwood Trust (RWT) is coming to market with a new issuance of baby bonds. This will be the 3rd issuance by this company in 1 year. Previous issues were sold on 1/17/2024 and 6/13/2024 with 9.125% and 9% respectively. The company also has a 10% fixed rate reset preferred outstanding (RWT-A).
I have not reviewed the company financials lately, but on the surface they are certainly racking up a lot of high yield debt.
The preliminary prospectus can be read here.
Thanks to J for posting this in Reader alerts just a bit ago. EarlyBird chimed in with some added detail.
Users who liked this:
While I am known to dabble in the gutter I just cannot get excited to rush out and buy this type of material. I have passed on so many news issues lately.
RWTN has the same 9.125% coupon and trades for $25.37. How much of that
37 cents is interest earned but not yet paid? Do you calculate from the last ex date or the last pay date?
Another one that yields 9%! I continue to be amazed how the use of leverage and securization allows a company to make money borrowing at 9% while dealing with mortgages yielding 7%. Leverage is a very sharp double edged sword that will cut sharply when the mortgage business turns down due to foreclosures etc. That hasn’t stopped me from dabbling in a couple of these though….. I’ve resisted my greed in loading up too much on them and I keep a close rein on them. The slightest hint of trouble and I’m gone …..
DJ think of the area RWT is in. Similar to Pacific Plasaides. High end housing on steep hillsides and narrow roads.
Hollywood of the North
RWT PR today FYI – In response to the Los Angeles wildfires, we continue to assess the impact to our business and we are currently monitoring the affected areas. While the fires are ongoing and the full extent of their total impact is yet to be determined, based on our assessments to date, we have not identified circumstances that we believe would have a material adverse impact on our business.