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| BondsOnline.com: instant access to and extensive coverage of over 3.5 million stocks, bonds, indexes and other securities covering major and emerging markets and exchanges across the globe. |
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| Bonds Online |
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| 5/10/2013Market Performance |
| Municipal Bonds |
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S&P National Bond Index
|
3.00% |
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S&P California Bond Index
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2.96% |
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S&P New York Bond Index
|
3.13% |
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S&P National 0-5 Year Municipal Bond Index
|
0.70% |
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| S&P/BGCantor US Treasury Bond |
400.09 |
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| More |
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| Income Equities: |
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| Preferred Stocks |
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S&P U.S. Preferred Stock Index
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848.03 |
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S&P U.S. Preferred Stock Index (CAD)
|
636.26 |
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S&P U.S. Preferred Stock Index (TR)
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1,701.05 |
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S&P U.S. Preferred Stock Index (TR) (CAD)
|
1,276.26 |
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| REITs |
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S&P REIT Index
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174.07 |
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S&P REIT Index (TR)
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425.30 |
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| MLPs |
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S&P MLP Index
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2,469.58 |
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S&P MLP Index (TR)
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5,428.50 |
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See Data
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Mortgage REITs face mounting liquidity pressure: Fitch |
BOSTON (MarketWatch) -- Mortgage real estate investment trusts that haven't yet succumbed to the credit storm are struggling to secure funding and are facing growing liquidity problems, Fitch Ratings said Monday.
"Limited access to capital has hurt U.S. mortgage REITs, thus worsening funding profiles and growth prospects and leading to increased ratings pressure in the last several weeks," the ratings agency said in a statement.
"Recent declines in market values of unsecuritized assets and the reduction of advance rates of short-term debt employed to finance these assets have also triggered margin calls and consequently reduced liquidity," said Fitch in its special report on U.S. mortgage REITs.
Unlike equity REITs that own and operate portfolios of commercial real estate, such as apartments or office properties, mortgage REITs originate mortgage loans and invest in mortgage-backed securities.
The industry has been knocked by the turmoil gripping mortgage and credit markets. Several mortgage lenders have already filed for bankruptcy, including REITs American Home Mortgage Investment Corp. and New Century Financial Corp. The companies went under after their own lenders on which they rely for short-term funding hit them with margin calls, or demands for more payment or collateral. Other mortgage REITs such as Thornburg Mortgage Asset Corp.
Downgrades
Fitch said that over the past year, it has downgraded the issuer default ratings of several mortgage REITs, with most of the action centered on the residential side rather than commercial.
The companies are dealing with impeded financial flexibility, difficulties in the origination and sale of residential mortgages, asset markdowns which have triggered margin calls and reduced liquidity, and limited access to capital, Fitch said.
"Despite the use of longer-term, match-funded collateralized debt obligation (CDO) financing by mortgage REITs and other finance companies, which increased significantly in response to liquidity and margin call pressures experienced in 1998 by many entities in the sector, a majority of these companies continue to utilize short-term, floating-rate financing," wrote Managing Director Steven Marks in the report.
"It is primarily this mismatch of asset (longer-term, fixed-rate) and debt (shorter-term, floating-rate, subject to margin call) characteristics that concern Fitch," he said. "A mitigant to this mismatch is the use of interest rate hedging instruments; however, market value declines in assets, due to increased perceived or actual credit risk of a REIT's collateral for this short-term borrowing, can still lead to margin calls."
John Spence is a reporter for MarketWatch in Boston.
Fitch said additional ratings downgrades for mortgage REITs are possible due to liquidity concerns. |
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| Stuff to look at |
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S&P Commentary and Newsletters: S&P
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| BondsOnline Advisor |
Income Security Recommendation January 2013 Issue.
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