Real estate investment trust American Capital Agency Corp. recorded a comprehensive loss for the first quarter of $557 million, or $1.57 per common share, and noted a decline in its net book value it attributed to temporary agency mortgage-backed securities underperformance.
“Fixed-rate agency MBS prices declined considerably more than both U.S. Treasury securities and interest rate swaps during the first quarter, as market participants began to price in an early end to the Federal Reserve’s third round of quantitative easing amid stronger economic data,” Gary Kain, president and chief investment officer, said in a press release.
“Underperformance of both TBAs and specified MBS led to the decline in our net book value,” he said. “However, as economic activity both globally and in the U.S. has weakened over the past month, interest rates have fallen again and mortgages have recovered some of their first quarter weakness.”
Kain added, “Despite what we believe to be temporary weakness in MBS valuations, our assets continue to perform as expected from a cash flow perspective. Furthermore, we view the cheapening of specified mortgages as a good opportunity to add some excellent assets at attractive valuations.”
The company’s net book value per common share is $28.93 according to its earnings.
American Capital Agency Corp. had warned in
Wilkus said in the company’s first-quarter press release that “despite the recent volatility, we believe our portfolio is appropriately positioned to create excellent risk-adjusted returns for our shareholders over the long-term.”
