AGNC Investment posted a -12.7% economic return in Q3 as Agency MBS, its sole investment focus, was the worst-performing sector in the Bloomberg U.S. Aggregate Bond Index. Net spread and dollar roll income fell for a third straight quarter to $0.37 per share, just above the $0.36 dividend, and tangible net book value per share dropped 16.9% to $7.13. Leverage rose to 7.9x, above its 7.0x to 7.5x target range. On the positive side, the REIT issued $992 million of equity at a significant premium to tangible book value, and CEO Peter Federico says Agency MBS valuations are more attractive now. The article concludes that AGNC is a high-risk, high-yielding leveraged bet and not the best choice for risk-averse investors seeking steady passive income.
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AGNC Investment Corp. reported a comprehensive loss of $1.28 per common share in the third quarter, as tangible net book value per share fell $1.45 to $7.13, a 16.9% decrease from $8.58 as of June 30. Net spread and dollar roll income was $0.37 per share, excluding a $0.05 catch-up premium amortization benefit; the average asset yield rose to 4.92% while the weighted average cost of funds rose to 3.09%, narrowing the net interest spread to 1.86% from 2.00%. The company raised $992 million in net proceeds by issuing 97.6 million shares at a significant premium to tangible net book value after joining the S&P MidCap 400 Index, and its leverage rose to 7.9x. The portfolio totaled $94.4 billion at fair value, economic return was negative 12.7% for the quarter, and tangible net book value had recovered 3% as of October 16.
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