News about NLY

Annaly Capital Management (NLY) faced a volatile third quarter as the 10-year Treasury rate surged to a multi-decade high, weighing on fixed-income values. Book value per common share fell from $20.15 to $17.86, economic return was -7.6%, and the company posted a GAAP loss of $1.36 per share. However, earnings available for distribution (EAD) rose to $0.80 per share, more than covering its $0.75-per-share dividend, which was raised from $0.70 in June. The REIT credited its low leverage and minimal duration exposure, while its mortgage servicing rights (MSR) portfolio grew 22% to $4.3 billion and it raised $757 million of capital. The article notes Annaly has cut its dividend before and could do so again if market conditions and returns deteriorate significantly.

Annaly Capital Management reported a GAAP net loss of $1.36 per average common share for the third quarter, driven mainly by unrealized losses on its investment portfolio as interest rates rose, while earnings available for distribution (EAD) were $0.80 per share, above the $0.75 quarterly dividend. Book value fell 11.4% to $17.86 per share, and the economic return was negative 7.6% as the 10-year Treasury yield rose 82 basis points. The company raised $757 million of common equity through its at-the-market program and redeemed $442.5 million of Series I preferred stock, while economic leverage rose to 5.9x from 5.6x. Management said the Agency MBS portfolio was positioned defensively, and that housing activity is likely to stay subdued due to affordability challenges and the borrower lock-in effect, with implied volatility in September reaching its highest level in 18 months.

Annaly Capital (NLY) closed at $18.16 on October 13 and has fallen 19% over six months. The company buys mortgage bundles, mostly backed by the US government, funds them with cheap borrowing, and keeps the spread between its borrowing costs and mortgage income. Debt is 737.54% of equity, yet return on equity is 19.57%, and the government-backed part of the portfolio is said to largely cover default risk. The article warns that leverage magnifies losses if short-term rates rise faster than mortgage rates, narrowing the spread the model depends on. The shares trade at 5.08 times trailing earnings and 6.54 times expected next-year earnings, but at 1.05 times book value, meaning buyers pay slightly above the carrying value of the assets.