Thornburg Is Outdoing Peers in Credit Quality

Saying that Thornburg Mortgage is well positioned to keep paying investors a strong dividend despite the challenging mortgage environment, analysts at Friedman Billings Ramsey here give Thornburg an "outperform" rating.

FBR gives Thornburg's stock a price target of $13, which would give it an 11% dividend yield on its estimated 2008 dividend payment.

FBR said Thornburg is taking advantage of market opportunities to build its portfolio, noting that the company recently raised $212 million from a common stock offering and convertible preferred offering. The majority of proceeds will be used to buy ARM assets for the REIT's portfolio, taking advantage of "weak pricing" in the jumbo market. "We believe this is a great time to raise capital to take advantage of weak pricing in jumbo and alt-A mortgage assets," FBR said in its report.

FBR says that despite the industry crisis, "liquidity issues have subsided" for Thornburg, which uses "repo lines" for financing, has been able to reassure investors about its funding strategy and replenish credit lines, FBR said. FBR said that Thornburg's "continued strong credit quality" also distinguishes it from rivals in the business. (c) 2008 Mortgage Servicing News and SourceMedia, Inc. All Rights Reserved. http://www.mortgageservicingnews.com/ http://www.sourcemedia.com/

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