Tag - Mortgage

MFA Mortgage Investments, Inc. (NYSE: MFA) said this morning that will publicly offer 7,000,000 shares at $7.90 per share for estimated gross proceeds of approximately $55.3 million.

The REIT said it intends to use the net proceeds from the offering to acquire additional high quality mortgage backed securities, on a leveraged basis, and for working capital, which could include the repayment of its repurchase agreements.

MFA said it granted its underwriters a 30-day option to purchase up to an additional 1,050,000 shares of common stock to cover over-allotments, if any.

MFA said it expects to close the transaction “on or about” Oct. 5, 2007.

Shares of MFA rose $0.18, or 2.25%, to $8.18 ahead of the opening. Shares of MFA have been trading in a range of $5.55 to $8.65 for the past 52 weeks.

Shares of Crystal River Capital Inc. (NYSE: CRZ) are tumbling today after A.G. Edwards & Sons downgraded the mortgage REIT to a “hold” rating from “buy” on mortgage industry uncertainty.

Tightening credit conditions coupled with drying liquidity continue to reverberate through the broader market and are taking their toll on Crystal River, according to A.G. Edwards & Sons analyst Gregg Mason. Mason said he thinks there is too much risk in the marketplace at this time to maintain a “buy” recommendation on the stock and as a result he is lowering his rating to “hold” for speculative investors.

Despite much uncertainty and volatility in the mortgage marketplace, Mason said he thinks that Crystal River will not get its lines of credit pulled based on his analysis of Crystal River’s repurchase agreements. Of the approximately $2 billion worth of repo credit lines Crystal River has, 90% are AAA-rated agency mortgage backed securities (MBS).

Mason postulated that if Crystal River were to lose value it would be through its risky assets used as collateral to back its repo lines. However, Crystal River has $110 million of cash available to the repo creditors for collateral losses, according to Mason. As a result, Mason estimated that Crystal River could lose half of the value of its risky assets in its repo portfolio and still provide full collateral coverage.

The biggest risk, said Mason, is Crystal River’s credit default swaps investments. Crystal River is the protection seller of credit default swaps with a notional amount of $160 million and according to Mason could potentially lose the entire amount.

Shares of Crystal River plummeted 28.4%, or $4.94, to $12.45 in afternoon trading Wednesday.