Annaly Capital Management, a mortgage investing REIT, on Tuesday priced a $1.3 billion additional offering of stock, its second trip to the equity well within two months.
If the underwriter overallotment is exercised, the stock sold would represent roughly 12% of shares outstanding including the January raise.
Research firm Sandler O'Neill called the timing of the offering a surprise "given the close proximity to a similarly-sized raise in early January," but noted that market conditions are good. "Specifically, spreads are historically wide given a further steepening in the yield curve since year end, and we estimate the shares were trading near 1.2x BV [book value] given the decline in MBS prices since the beginning of the year."
The New York-based firm plans to use the proceeds to buy MBS in the open market.
In trading Tuesday, Annaly's shares were down 50 cents to $17.44 but still near a 52-week high.
According to Sandler, "there has been a flurry of agency MBS equity raises in the past six months, which have increasingly been well-received by investors, as the shares have generally performed well following the early morning weakness on the day after the offering was announced."
Credit Suisse was the lead book-running manager on the offering.
