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Strategies & Market Trends : IPPs and Merchant Energy Co.s
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To: Broken_Clock who wrote (2048)5/7/2003 8:22:10 AM
From: tom pope  Read Replies (1) of 3358
 
PK, I checked the web site of NLY and they claim not to use derivatives - just the spread between their borrowing costs and the yield on the mortgage pass-throughs they buy. So the risk is the continuance of a favorable yield curve, it seems.
History has some examples of financial institutions that have gotten into trouble that way, especially if the strategy is borrow short - lend long.
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