Thornburg Mortgage Hit With Margin Calls; Shares Plunge 47%

Shares of Thornburg Mortgage Asset Corp. plummeted 47% to close at $7.61 Tuesday before rebounding 25% to $9.48 in AH trading after the REIT announced it is delaying a dividend payment because of margin calls. Payment of Thornburg's Q2 dividend of $0.68, which was to have taken place on August 15 to shareholders of record as of August 3, will be postponed until September 17. The company's board said it is taking this step because of "significant" upheaval in the mortgage market that has set off an "unprecedented" drop in the market value of its AAA-rated mortgage securities. The slide, which began on August 9, triggered the margin calls. The company has met its commercial paper obligations but is forced to delay funding mortgage loans to its lending partners. Its book value per share has declined to $14.28 as of Aug. 13 from $19.38 as of June 30, with most of the drop occurring over the past week. President and CEO Larry Goldstone told CNBC Thornburg has "no intention" of filing for Chapter 11 bankruptcy protection. The company is exploring other options to improve shareholder value, he said, possibly including "the opportunistic sale of our mortgage assets."

Sources: Press release, MarketWatch, Reuters
Commentary: Thornburg Mortgage's 'Unprecedented' Moratorium on Locking • Tuesday's Analyst Upgrades and Downgrades
Stocks/ETFs to watch: TMA, CFC, IMB, FNM, FRE, WFC. ETFs: DON, REM

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