THORNBURG MORTGAGE ANNOUNCES LOWER-COST FINANCING ON $1.1 BILLION OF NOTES
SANTA FE, N.M.--(BUSINESS WIRE)--March 25, 1999--Thornburg Mortgage Asset Corp. (NYSE: TMA) Thursday announced that it has entered into a note modification agreement of the $1.1 billion TMA Mortgage Funding Trust I, Series 1998-1 Collateralized Asset-Backed Notes.
The Notes, which were issued in December 1998, have been amended by the company to decrease the coupon from a financing rate of one month LIBOR plus 0.70% to a rate of one month LIBOR plus 0.38%, effective March 25, 1999.
The Note modification will not require the company to increase its capital contribution to facilitate the financing of this collateral, and with the elimination of the call features in the original transaction, will be considered permanent financing for the company.
Based on the current outstanding balance of the Notes as of March 25, 1999, of $1,057,748,976, and including expenses incurred for the modification, the quarterly effect of the interest savings equals 3.6 cents per share.
In commenting on the modification, Larry Goldstone, president, stated, "As we intended when we issued these Notes in December, TMA is now taking advantage of better financing terms available in the capital markets.
"We are extremely pleased to have accomplished this repricing. Additionally, the company now finds itself in the position of having substantial excess liquidity and has resumed its asset acquisition strategy.
"At present, excluding capital allocated to this financing transaction and market value adjustments deemed to be temporary, the company is operating with an equity-to-asset ratio in excess of 11.5%.
"The company would like to reduce its equity-to-asset ratio to between 9.0% and 9.5%, which means that the company needs to add $650 million to $800 million in assets in the second quarter. Such asset growth could also have a positive impact on the earnings outlook over the balance of the year."
Thornburg Mortgage Asset Corp. is a high quality mortgage portfolio lending institution that invests in a portfolio of highly-rated ARM securities and high-quality ARM loans. Like most lending institutions, the company generates income both from its direct investment in these assets and the difference between the yield on its assets and the cost of its borrowings. |
