Thornburg Mortgage Announces $1.14 Billion Securitization
SANTA FE, N.M.--(BUSINESS WIRE)--Dec. 21, 1998--Thornburg Mortgage Asset Corp. (NYSE:TMA) Monday announced the issuance of $1.14 billion of AAA-rated privately placed asset-backed notes collateralized by single-family adjustable-rate mortgage ("ARM") and hybrid loans, which had been purchased over the last year by the company.
TMA Mortgage Funding Trust I, a Delaware business trust, issued the notes. The notes were issued at par, will have an interest rate that resets monthly at One-Month LIBOR plus 0.70%, and are callable by the company immediately.
The notes received a rating of AAA by Standard and Poor's and Aaa by Moody's Investors Service using a Note Guaranty Insurance Policy issued by Ambac Assurance Corp. Bear Stearns & Co. Inc. and Merrill Lynch and Co. acted as placement agents for the transaction.
In explaining the transaction, Larry A. Goldstone, president, said, "This financing provides TMA with a capital-efficient, short-term financing alternative for its high-quality mortgage loan portfolio. The company has accomplished several objectives as a result of this transaction.
"First, this transaction has allowed the company to convert its single family loan portfolio into AAA/Aaa rated LIBOR-indexed floating rate notes. Second, it provides the company with a capital-efficient means to finance virtually its entire loan portfolio over year-end. Lastly, because the notes are callable immediately at the company's option, it allows the company to explore alternative, lower cost financing options for these assets in 1999."
Goldstone added, "At present, the notes reflect debt obligations of the company, but they were simultaneously structured to be an attractive asset for our own portfolio. Therefore, it is highly likely that the company will call the AAA/Aaa rated notes in 1999, retain them as high-quality LIBOR-indexed floating rate portfolio assets and finance them in the repurchase agreement market at a much reduced cost of funds.
"This was the company's ultimate objective when the company acquired these loans in the first place, but due to the recent difficult market conditions for financing loan products, the process of converting these loans to AAA rated portfolio assets became more complicated. Further, this transaction completes the company's financing needs for its portfolio assets for 1998. We can now look forward to a better operating environment, which we believe will likely exist in 1999. |
