Fitch Downgrades Thornburg's IDR

The Issuer Default Rating of Thornburg Mortgage Inc., a real estate investment trust based in Santa Fe, N.M., has been downgraded from CCC to RD by Fitch Ratings as a result of defaults under the company's reverse repurchase agreements. The RD rating (which was removed from Rating Watch Negative) was assigned because the company has failed to meet a margin call for one of its reverse repo agreements "but continues to honor other classes of obligations," Fitch said. The default triggered cross-defaults under the company's other reverse repo agreements, which "represent the primary short-term funding source for the company," the rating agency said. Meanwhile, Zacks Equity Research's Analyst Blog noted that Thornburg's shares had lost 70% of their value in the previous two days. "While we think the company will be able to meet the current $300 million [margin] call on its repurchase agreements, if values on the company's mortgage assets continue to fall, [Thornburg] will not have enough cash to meet future obligations," the Zacks blog said.